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Car wars 


Motor groups mount 
a Chinese invasion 

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Office politics 

How to hire an 
incompetent 

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Chemicals versus 
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FINANCIAL TIMES 


s .Business. Newsoah^r 



°Pec extends oil 
production ceiling 
for whole of 1 995 

S£? eum Countries 

ent step ng- its pres- 

to £*2? C f ll ^ lg f0r a ^ 3 «®p to an attempt 
wt oU pnces - San* Arabia, Opec’s lai|- 

Ubva^ri.K^T 31116 Sections from Kuwait, 
taS^ theiu P ersuade ° a ministers to main- 

^on" <*“*« “without ^ 

<* Page 2* Editorial 

Delors books European TV programmes 

Proposals to tighten 
European broadcasting 
quotas and separately to 
ban advertising on new 
electronic information 
services are threatening 
to divide the European 
Commission, The outgo- 
ing audiovisual commis- 
sioner , Joao de Deus Pin- 
heiro, who is believed to 
have strong backing 

. _ — : — — — from Jacques Delors 

(above;, president of the Commission, will next 
week present plans to force European television 
channels to produce at least half their programmes 
within Europe. Page 22; Editorial Comment, 

Page 21 

BBV group leads Spanish telecoms battles 

Cometa-SRM, a consortium led by Bi lbao Viz- 
caya and by Vodafone, the UK telecommunications 
operator, has snatched the lead to a battle to obtain 
a mobile service licence to Spain with a cash bid of 
Ptafflbn 0688m). Page 23; Lax, Page 22; Vodafone 
results. Page 24 

Record earnings at Disney: The success of 
Walt Disney's animated features, especially The 
Lion King , more than offset a down tu rn in theme 
parks to produce record fourth-quarter earnings of 
5226m (2138m), against a loss of $78m. Group operat- 
ing profits, before losses in Euro Disney, were up 23 
per cent at 5439m. Page 23 

Cat! criticises Canadian trade tariffs: 

Canada has made progress in liberalising trade and 
industrial policies, but fingering high, trade harriers 
remain an obstacle to growth and job creation, a 
report from the Gatt secretariat says. Page 4 

He a tw av e ttfts Japan's electric i ty pro fits: 

Interim profits at Japan’s electric power companies 
rose strongly, helped by a surge in electricity 
demand due to a heatwave; Page 26 

Bailing and Hanoi to dlwuw boundaries: 

China and Vietnam agreed to work peacefully to 
resolve disputes over territorial and maritime 
boundaries, and are to discuss their rival claims to 
the Spratly atolls and the waters of the South China 
Sea. Page 6 

Alcatel CIT chief s resignation refected: 

The board of French telecoms equipment company 
Alcatel CTT, refused to accept the resignation of 
ch airman, Pierre Guidoet, who has been detained 
during investigation of alleged overtoiling of France 
Tfiltown, one of the company's biggest clients. 

Page 2 

Czech utility to launch Eurobond: Czech 
electric utility CEZ will became the first east Euro- 
pean corporation to launch a Eurobond next week, 
m a rkin g the region’s growing access to interna- 
tional debt markets. Page 27 

Detailed Imports data to be published: Data 
showing the level of import penetration to different 
sectors of the UK economy is to be published today 
for the first time for more than seven years. 

Page 11 

Merger talks collapse: Talks about what would 

have been Britain’s largest agreed merger en ded 

when Johnson Matthey, the precious metals group. 
and Cooksan, the specialist industrialist materials 
concern, said they had been ramble to agree finan- 
cial terms. Page 23; lex. Page 22 
Debt tears deter Investment In China: 

China’s rash of troubles with western creditors over 
unpaid debts is casting a pall over plan s for h eavy 
foreign investment to Chinese infrastructure, par- 
ticularly in the power sector. Page 22 

Strong demand lor TeleWest Shares to the 
flotation of TeleWest Communications ware six 
ttrnps oversubscribed and have been pneed at UEp, 
valuing the UK cable television company at £L8bn 
($2A5bn).Page23 

US business tax breaks attacked: Robert 
Reich US secretary of labour, called on the new 
conservative political majority to Congas to 
SJacktax breaks for business ;and end corporate 
welfare as we know it". Page 8 


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Milan magistrates step up investigation of Italian leader's business empire 

Berlusconi warned 
he faces questions 
in bribery probe 


D8523A 


Bty Andrew Hfll in MBan 

Italian magistrates yesterday 
warned Mr Silvio Berlusconi, the 
prime minister, that he faced 
questioning about bribery allega- 
tions as part of the “clean hands" 
investigation into political cor- 
ruption. 

The move is a sign that the 
elite team of Milan anti-corrup- 
tion magistrates is stepping up 
its investigation and the on-off 
feud with the government, which 
took office to May. 

However, in a statement broad- 
cast on television last night, Mr 
Berlusconi hit back at what he 
described as “below-the-belt" 
attempts to destabilise the gov- 
ernment, saying that “only a 
clear and explicit vote of no con- 
fidence” by the lower house oT 
the Italian parliament would 
induce him to resign. 

Partners to his fragile coalition 
rallied to his support yesterday. 

Mr Berlusconi repeated that he 
was confident the magistrates 
had no evidence for charging him 
personally with allegations that 
top managers at his Ftotovest 
business empire paid kickbacks 
to tax police to return for a 
favourable audit 

On news of the magistrates* 
decision, the lira slipped to a new 


low of LI, 035.5 against the 
D-Mark yesterday afternoon. 
Government bonds also weak- 
ened and Milan stock market 
indices fell by more than Ifi per 
cent 

International investors fear 
that the increased pressure on 
the prime minister might make it 
even more difficult for the gov- 
ernment to push tough 1995 bud- 
get measures through the senate, 
the upper house of parliament 
where the coalition does not have 
a majority. The senate starts 
debating the proposals today. 

Tagentopofi touches highest 

level Page 2 

Lex Page 22 

The magistrates* warning does 
not imply any guilt on Mr Berlus- 
coni’s part, and under special 
rules he may be interviewed at 
his official residence to Rome 
rather than to the draughty 
Milan palace of justice. 

However, the prime minis ter 
was clearly angered by the tim- 
ing of the announcement It came 
at a moment of maximum inter- 
national exposure for the Mr Ber- 
lusconi, who has been hosting 
the United Nations conference 
against international crime to 


Naples, and at a low point in his 
10 -month-old venture into poli- 
tics. 

Forza Italia, the party Mr Ber- 
lusconi founded to January, is 
recovering from a poor perfor- 
mance in regional mid local elec- 
tions on Sunday, and his govern- 
ment is engaged in a bruising 
battle with trade unions over 
planned cuts to welfare and pen- 
sion benefits. 

"We are not prepared to allow 
a disgraceful abuse of criminal 
justice to massacre the first rule 
of democracy, which says that he 
who has the votes to govern shall 
govern," the prime minister said 
on television last night 

Mr Berlusconi is likely to be 
questioned about his alleged 
involvement in two or three 
cases of bribery by subsidiaries 
of Ftotovest, the media, property 
and financial services empire he 
built from nothing. 

The prime minister has already 
admitted publicly that bribes 
were pail by the group, although 
he has pointed out that the sums 
paid - no more than LlSOm 
($81,000) In each case - were 
small by comparison with overall 
turnover. 

His brother Paolo has taken 
Continued on Page 22 



Silvio Berlusconi, at a conference in Naples yesterday, hit back at 
"below-thue-belt” attempts to destabilise the government rw. 


US threatens Serbs with tougher action 

Attacks on Bihac continue despite Nato bombing to disable airfield 


By Laura SOber in Belgrade 
and Bruce Clark hi London 

A war of nerves intensified 
between the United Nations and 
the Serb forces in Croatia and 
Bosnia yesterday as Mr William 
Perry, US defence secretary, 
threatened to follow up this 
week’s multinational bombing 
raid with much tougher action. 

Bosnian Serb leaders vowed to 
exact “painful" retribution for 
Monday’s Nato action, which dis- 
abled the airfield at Udbina in a 
Serb-held part of Croatia. 

The exchange of threats came 
amid reports of fresh Serb gains 
to the north Bosnian enclave of 
Bihac, where several villages 
were seized from Moslem-led gov- 
ernment troops and set ablaze. 
Government forces said 
hand-to-hand fighting had broken 
out in a suburb of Bihac town, a 


UN-protected area which occu- 
pies a small part of the enclave. 

Mr Perry said any future 
operations against the rebel 
Serbs to Croatia would include 
the destruction of aircraft as well 
as ground i nstalla tions 
“If they go to tomorrow or the 
next day with another bombing 
attack, then we'll go back and 
blow up their airplanes." he said. 

However Mr Andrei Kozyrev, 
the Russian foreign minister, 
said air raids against the Serbs 
should not be carried out too 
often. He said Moscow would 
withdraw its own peacekeepers 
from Bosnia if “massive air 
strikes" were launched. 

Monday’s raid, by more than 30 
aircraft from the US. the UK, 
France and the Netherlands disa- 


bled the Udbina airfield and tar- 
geted ground-to-air missile 
systems, but deliberately avoided 
destroying aircraft. 

Bosnian Serb leaders, to dose 
alliance with the Serbs of Croa- 
tia, yesterday warned of retalia- 
tion against the UN and Nato. Mr 
Radovan Karadzic, president of 
the self-proclaimed Bosnian Serb 
state, said: “We are considering 
the possibility of retaliating. We 
will determine the time and the 
targets, doing our best to make it 
very painful.” 

General Ratio Mladic, the Bos- 
nian Serb commander, told the 
head of the UN forces to former 
Yugoslavia that there was no fur- 
ther reason for peacekeepers to 
be deployed to Bosnia and he 
could not guarantee their safety. 


Relief workers warned of an 
impending humanitarian disaster 
in Bihac, where 180,000 civilians 
cannot get emergency supplies. 
UN officials said tbB Serbs 
seemed bent on preventing fur- 
ther convoys of food reaching the 
area as long as the Bosnian gov- 
ernment army went on fitting. 

The UN office to Zagreb, to an 
unusually specific warning to the 
Serbs, said there could be further 
punitive air raids if UN peace- 
keepers or the town of Bihac 


came under fire. Any further use 
of ground-to-air missiles against 
civilian targets could also incur 
punitive action, said Mr Michael 
Williams, the UN spokesman. 

Renter adds from Copenhagen: 
A Danish court yesterday jailed 
Refic Sane, a Bosnian Moslem, 
for eight years for torturing pris- 
oners of war to death to a Croat- 
run prison camp to Bosnia last 
year. The verdict was the first in 
a series of war crimes trials being 
held outside former Yugoslavia. 


US rate 
rise fears 
hit equity 
markets 


By PWBp Coggan In London 
and Lisa Brans te n m New York 

World equity markets declined 
yesterday on tears that US Inter- 
est rates would have to rise fur- 
ther to head off inflationary 
pressures. 

On Wall Street, shares fell 
a gain fn early t rading as inves- 
tors continued to worry that rate 
rises would depress the growth 
of corporate earnings. Last week, 
the Federal Reserve, the central 
KwiiTtj inc reased the federal funds 
rate by % of a percentage point 
to S.5 per cent, but analysts are 
not convinced it has done 
enough to damp inflationary 
pressures. 

After an early decline of 32 
points, the Dow Jones Industrial 
Average fluctuated sharply yes- 
terday but by 1 pm it was still 
down 11.10 at 3,758. 

Mr Thomas McManus, an 
equity market strategist at the 
securities firm Morgan Stanley, 
said the market was finally real- 
ising that the Fed was likely to 
succeed in slowing the economy. 
He said broad declines in Mor- 
gan Stanley’s index of cyclical 
stocks since October 28 indicated 
there would be a further correc- 
tion to the market 

While the US equity market 
has headed lower so far this 
week, the Treasury bond market 
has been steady. Mr Stephen 
ShoMn, chief technical analyst at 
securities firm Lehman Brothers, 
said tin's could be a signal of an 
uncoupling of the two markets. 

Monday's 45-point fall in the 
Dow hai depressed Aslan said 
European markets, with the lat- 
ter falling further once the Dow 
opened weaker yesterday. 

European share markets fell 
across the board with the FT-SE 
100 index dropping 42.3, or 
around 1.4 per cent, to 3,078.7. 
Most Eoropaui bourses declined 
by around 1 per cent, with the 
exception of Italy, where the 
Mibtel index dropped 2.8 per 
cent on news that Mr Silvio Ber- 
lusconi, prime minister, faced a 
bribery probe. 

In Tokyo, the Nikkei 225 aver- 
age fell below 19,000 for the first 
time since February while to 
Hong Kong, the Hang Seng 
Index, dropped 3£ per cent, its 
biggest one-day fall since March. 


Tokyo markets. Page 26 
World markets, Page 42 


UBS board beats challenger 
in share conversion battle 


£s22S UAE OhIZCD 


By Ian Rodger In Zurich 

Union Bank or Switzerland's 
board narrowly won a controver- 
sial proxy battle with Mr Martin 
Ebner at yesterday's extraordi- 
nary meeting which attracted a 
record 6,700 UBS shareholders. 

The board needed a two-thirds 
majority of all votes and won 663 
per cent of those cast by the com- 
pany's registered and bearer 
shareholders. The vote was over 
the board’s proposal to convert 
registered shares into bearer 
shares. Sentiment to the packed 
sports stadium to suburban Zur- 
ich during the 2 'A-hour debate 
was clearly behind the board, 
partly reflecting the presence of 
many employees who feared for 
their jobs if Mr Ebner got control. 

As expected, Mr Ebner, a Zur- 
ich broker-fund manager whose 
BK Vision is UBS's largest share- 
holder, immediately filed an 
application for an injunction to 
prevent the bank from proceed- 
ing with its plan to convert its 
registered shares. 

BK Vision claims the registered 
shareholders should have been 
allowed to vote separately on a 


plan that would strip them of 
their extra voting rights without 
compensation. “No one can leave 
this meeting with a good feeling,” 
Mr Ebner said after the vote. 
"There are no winners today." 

The board hastily put forward 
the share conversion proposal 
because it feared Mr Ebner and 
his allies were trying to win con- 
trol of the bank through the 
accumulation of registered 
shares, which have a par value 
one-fifth that of the bearers. 


Lax. 


.Page 22 


The proxy battle, which was 
really over the board's strategy 
and performance, attracted huge 
interest in Swiss financial circles. 

The number of shareholders 
who attended yesterday's meet- 
ing was double that of the last 
annual meeting in April. More 
than 88 per cent of the 35.9m 
shares with voting rights were 
represented. 

Even before the vote, the event 
was something of a moral victory 
for Mr Ebner who has been put- 
ting pressure on the UBS board 


CONTENTS 

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for three years to become more 
sensitive to shareholder interests. 

Mr Nikolaus Senn, UBS chair- 
man, said in an opening speech 
tha t raising the group's earning 
power and exercising strict con- 
trol over risk were the main 
goals for the 1990s. 

But Mr Ebner won applause for 
his complaints about the strong 
pressure put on employees and 
customers to vote their shares in 
favour of the hoard. 

BK Vision now has a week to 
produce evidence supporting its 
demand that UBS be prevented 
by injunction from converting 
the registered shares into bearer 
shares until an appeal is mad? 

If the injunction is granted, BK 
Vision will have two months to 
prepare its appeal to the commer- 
cial court This would almost cer- 
tainly mean the registered 
shares, with their extra voting 
power, would still be in existence 
for the next annual meaHng in 

April. 

At that meeting. 10 of the 23 
directors' terms expire, and Mr 
Ebner has made clear he will try 
to win shareholders’ support for 
substantial board changes. 


_43 


FT Wcrtd i 
Fonfei Evnangas ___ 38 

OM Mofeeta 32 

Options _42 

frit Bond Saves 28 

Managed Finds 3637 

Money Motets 38 

RKSrttaues 42 



Wdsmaa . 


-39-42 


Banns 


.3442 


■ Merioo. 


.13-17 


LIMITED 1994 No 32,531 Week No 47 


LONDON - PARIS - FRANKFURT ■ MEW YORK - TOKYO 


This announcement appears as a matter of record only 


£32,300,000 


= MANAGEMENT & EMPLOYEE BUY-OUT = 



LONDON GENERAL 


LONDON GENERAL TRANSPORT 
SERVICES LIMITED 

Led, structured, arranged and 
equity finance underwritten by 

Montagu Private Equity 

' Go-Underwritten by 

BancBoston Capital : 

Senior Tenn Facilities Arranged and Underwritten by ; 
NatWest Markets* Acquisition Finance' ^ , 
Lombard Business Finance . 

Advisers to Management 
Arthur Andersen : 


7X«- 


eoi'twe 


AF/87 


IONTAGU 
[RIVATE 
IQUITY 

Montagu Private Equity Limited 

10 Lower Thames Street. London EC3R 6AE 
Teh 0171-260 0923 Fax: 0171-220 7265 

AMtaiBEROf CU»n 
, Member HSBC 4EO Croup 



y. 


At. 




FINANCIAL TIMES WEDNESDAY NOVEMBER® 1994 



NEWS: EUROPE 


Tangentopoli touches the highest level 


F or a polished performer 
like Mr Silvio Berlus- 
coni, Italy’s prime min- 
ister. the task of hosting this 
week's UN conference on cross- 
border crime in Naples looked 
simple: photo opportunities 
with the UN secretary-general, 
a tough line on money launder- 
ing and the Mafia, and a 
chance to improve a dented 
international image. 

But the job seems to have 
turned into a cruel joke 
against a man already visibly 
wearied by his short experi- 
ence of politics. 

On Monday, the prime minis- 
ter was obliged to defend his 
10-month-old political move- 
ment, Form Italia, following a 
poor showing In Sunday's 
regional and local elections. 
Then, just after lunch yester- 
day, Mr Berlusconi received a 
formal warning from Milan 
magistrates that they wanted 
to question him soon about 
allegations of bribery and cor- 
ruption at the top of Fininvest. 
his private media, financial 
services and retailing group. 

Putting a brave face on the 
news, he was expected to 


The judicial shadow hanging over Silvio Berlusconi will prolong 
Italy’s damag in g political uncertainty, writes Andrew Hill 


return to Naples last night or 
this morning for the closing 
sessions of the UN conference. 

Mr Berlusconi has been sent 
the formal warning, or avoiso 
di gartmda, in his capacity as 
controlling shareholder of Fin- 
invest, and it does not imply 
that he has committed a crime. 

What is certain, however, is 
that Milan 's crack anti-corrup- 
tion magistrates would not 
have risked undermining the 
government, and upsetting the 
financial markets, without first 
ensuring that they could jus- 
tify the sending of a formal 
warning. 

They learned that lesson in 
October, when Mr Francesco 
Saverio Borrelli, who heads the 
Milan team investigating 
Italy’s bribes scandal or Tan- 
gentopoli (bribesville), told the 
press that the inquiry was 
reaching “high political lev- 
els”. Even some of his support- 
ers thought the comments ill- 
judged and they triggered the 


resignation, later retracted, of 
Mr Alfredo Biondi, the justice 
minister. Mr Borrelli was 
obliged to clarify that no 
aooiso di ganmzia was pending 
for the prime minis ter. Techni- 
cally, that may have been true. 
Apparently, Mr Berlusconi's 
name was only added to the 
list of people in line for investi- 
gation on Monday. 

The formal warning Is 
believed to relate to the Milan 
magistrates' investigation into 

bribes of L130m (£52,000) and 

Li 00 m paid to tax police by 
Mondadori, Fininvest's pub- 
lishing subsidiary, and Medi- 
olanum Vita, its life assurance 
subsidiary, in 1991 and 1992, in 
return for a favourable tax 
audit These are not new alle- 
gations. Mr Berlusconi's 
brother Paolo was arrested in 
connection with the same 
inquiry during the summer 
and later released. Both 
brothers have admitted pub- 
licly that bribes were paid, and 


Paolo has assumed responsibil- 
ity for giving the orders. 

The prime minister's line, 
repeated again yesterday 
before the formal notice of 
investigation was published, is 
that he has committed no 
crime, and therefore need not 
resign. If Fininvest’s top man- 
agers erred, it was because, 
"like thousands of other man- 
agers and entrepreneurs", they 
were victims of extortion 
rather than actively involved 
in corruption. 

B ut critics argue that this 
is not just a matter for 
Mr Berlusconi's con- 
science. The magistrates' deci- 
sion. coming so soon after 
Forza Italia's disappointing 
performance in Sunday's elec- 
tions, is bound to bolster the 
morale of the opposition par- 
ties and trade unions. 

That could make it more dif- 
ficult for Mr Berlusconi to 
push through the controversial 


1995 budget in the senate. The 
budget measures, which 
include cuts in welfare and 
pension benefits, were 
approved by the lower cham- 
ber of deputies on Monday, but 
the main government parties 
do not have a majority in the 
senate. 

The next test for Mr Berlus- 
coni's strength will be tomor- 
row's talks with Italy’s trade 
unions federations, aimed at 
averting a general strike on 
December 2, the second In as 
many months. 

It seems unlikely, however, 
that this will lead to new elec- 
tions. so soon alter the March 
poll, which was welcomed as a 
new start for a country under- 
mined by widespread corrup- 
tion. Mr Oscar Luigi Scalforo, 
the Italian president, indicated 
on Monday that in any case he 
would call for a “presidential 
government" if the coalition 
collapsed, rather than dissolve 
parliament. 


Of Forza Italia’s coalition 
partners, Mr Gianfranco Fini, 
leader of the right-wing 
National Alliance, has used 
Sunday’s election results to 
call for unity between the gov- 
ernment parties, while Mr 
Umberto Bossi, the volatile 
leader of the populist Northern 
League, indicated yesterday 
that the government should 
hold on at least until foil par- 
liamentary approval of the 
budget, due by December 8L 
What is more wonying, par- 
ticularly for the international 
image of the government, is 
tha t the prime minister should 
still be working under the 
shadow of a judicial investiga- 
tion. Defending Mr Berlusconi 
yesterday, Mr Biondi pointed 
out that the alleged crime “was 
supposed to have taken place 
when he [Mr Berlusconi] was a 
private citizen, just a business- 
man”. But political opponents 
question whether this particu- 
lar businessman rtmnid have 
taken the risk of running for 
high office without resolving a 
conflict of interest which is 
helping to prolong a period of 
damag in g pplt tinal unc ertainty- 


Commission has launched raft of court actions in move to outlaw unfair practices 

Brussels gets tough on public contracts 


By Andrew Taylor, 

Construction Correspondent 

The European Commission has 
begun to bare its teeth as it 
tries to outlaw unfair practices 
preventing companies from 
winning public sector con- 
tracts in other EU countries. It 
is thr eatenin g to seek a court 
injunction to halt work on a 
DM400m (£l64m) German 
power station contract 

Recent figures showing the 
huge amount of work still 
required to incorporate EU 
public procurement directives 
into member states' laws 
underline the scale of the task. 

Eight public works directives 
should have been included in 
domestic law by July 1, but. by 
the end of October, bad not 
happened in a third of cases, 
according the Commission. At 
that point it started 28 proceed- 
ings against governments for 
fading to include the directives 


in domestic legislation or for 
doing so incorrectly. But its 
threatened injunction, which 
could stop a live project, is an 
unusual step. 

Germany, long identified as 
one of the worst offenders, is 
the subject of legal proceedings 
on two of the eight public 
works directives and may face 
action on another four. Only 
Denmark, Luxembourg and the 
Netherlands have fulfilled 
their obligations - “with a few 
minor exceptions" - to enact 
all eight. 

The directives, which require 
ail public contracts of more 
than Ecu200,000 (£157.000) to be 
advertised in the Official Jour- 
nal of the European Communi- 
ties, seek to ensure that all EU 
companies are treated equally 
when bidding for public sector 
contracts. 

They demand that contract 
procedures and technical stan- 
dards should not be used to 


favour domestic companies. 
Contract conditions should be 
clearly stated, and standar- 
dised forms used as much as 
passible. Conditions once pub- 
lished should not changed to 
favour one bidder. 

The Co mmis sion has been 
particularly concerned about 
the practice In some southern 
Mediterranean countries of 
reopening negotiations after 
contracts have been awarded. 

In these Instances a favoured 
supplier can safely bid a very 
low price, secure in the know- 
ledge that this will subse- 
quently be renegotiated along 
with other contract conditions. 

Brussels says this may 
encourage corruption if final 
costs are not subject to open 
competition but determined by 
consultation between local offi- 
cials and the winning bidder. 

The number of legal actions 
pursued by the Commission 
against governments and pub- 


lic authorities for failing to 
apply the directives to specific 
contracts has more than dou- 
bled during the past 12 months 
to about 250. 

In one of the most recent. 
Brussels is threatening to seek 
an injunction in the European 
Court to prevent work starting 
on a steam turbine contract for 
a DM5bn power station at Lip- 
pendorf in eastern Germany. 

It wants the recently priva- 
tised eastern German electric- 
ity company, Veag, to reopen 
the bidding for the DM400m 
contract a steam turbine for 
which was awarded to a Ger- 
man subsidiary of Swiss-Swed- 
ish group Asea Brown Boveri. 

The German subsidiary of 
General Electric of the US 
which claimed it was “unfairly 
excluded from the final round 
of price negotiations" com- 
plained to a Berlin court that 
European companies, such as 
ABB and Siemens, tradition- 


ally had been been treated by 
the German power sector as 
“court suppliers". 

Legal action is not the only 
weapon at the Commission's 
disposal. Governments which 
fail to apply or police direc- 
tives properly have been 
warned that EU soft loans and 
grants, from the so-called 
structural funds, may not be 
available for public works if 
proper procedures are ignored. 

Greece and Spain, following 
warnings, have agreed to aban- 
don their practice of reopening 
negotiations after contracts 
have been awarded. 

The prize for the Commis- 
sion and companies seeking to 
break into other countries’ 
markets is large. Public pro- 
curement in the EU totalled 
Ecu595bn in 1990. equivalent to 
14.4 per cent of gross domestic 
product. Only 2 per cent of this 
was awarded to companies 
from another country. 


ADVERTISEMENT 


INVESTING IN SOUTH AFRICA 


South Africa has covered decades of 
History in a matter of months 

Richard Laubscher, chief executive of Nedcor, speaks to John Spira, 

Business Editor of a leading Johannesburg newspaper. 


Spin: Bov do you view Soolli Africa's political and economic 
outlook? 

L a nbi c h en I'm hoping (and expecting) rim the political miracle 
we’ve seen is going to be followed by an economic miracle. And 
the economic miracle will ultimately lead to a social miracle. 

The economic miracle implies sustainable growth which has to 
generate an improved quality of life for a lot mote Sooth Africans 
than the previous growth cycles have done. 

Previous growth cydea were accompanied by less labour and more 
capital employed. This time round we have to ensure that the eco- 
nomic miracle spreads the largesse; that it gets to mare people so 
that the hoped for social mhnde will ensue. 

Spin: How writ the economic miracle be achieved? 


government obliged to deliver houses and Tor the banks, who see 
rids as an opportunity to widen their diem base. 

Then. loo. the issue of privatisation is rigln there on the agenda. 
So while there's been a fair amount of rhetoric, there’s also been a 
lair amount of action. 


Spira: What k Nedcor’s inv 


IfatbeRDP? 


r. To stan with, we're in a cyclical economic upturn. For 
the present it's less robust than first anticipated: but it's not at all 
bad. 

Secondly, global economic growth is likely u> be sustained longer 
than previously predicted, the benefits for South Africa being ris- 
ing commodity prices and a heightened offtake of ou- primary and 
secondary exports. 

Thirdly, agriculture has turned strongly. Hence we haw no need to 
import, while the surpluses will go to countries where they are real- 
ly needed. 

Fourthly, the economy should enjoy a mure sustained period of 
growth on the back or the reconstruction and development pro- 
gramme (HOP), with its emphasis on bousing and electrification. 
The RDP will give ns two to three years of good economic expan- 
sion, probably adding two percentage points to the growth rale over 
this period. 

Finally, the fixed investment cycle is storting to turn up. 

Spira: What role Is the government playing in promoting eco- 
nomic growth? 

Lauhschen It's boosting confidence and confidence is a fragile 
flower which blossoms the more it grows. 

The new Cabinet has handy put a loot wrong. The almirabte dis- 
ciplines that have become rate of its cornerstones will contribute to 
an economic growth rate so robust that ii could surprise us. 

The aim of privatising and intensuionalisihg stair assets is remark- 
ably positive. It takes pressure off in c r e as es in sate borrowing and 
thus off interest rates. If the assets are internationalised, it aug- 
ments the foreign exchange reserves. The result is higher econom- 
ic growth became you have less concern over the balance of pay- 
ments. Bolstered foreign reserves enhance the likelihood of noo- 
residem foreign exchange control being lifted and the two curren- 
cies merged. 

Accordingly, the privatisation initiative has a multitude of fabulous 
benefits. 

South Africa now has several Internaiional credit ratings, which 1 
think turned out quite well Prospective Lenders who yrugta a 
tripie-B got it. The doubie-B says we haven't yet graduated to a 
rose garden. 

The ratings enable us do float our first sovereign issue far quite 
some time. I believe it will be a success. It'll be followed by patas- 
tatal issues, which will also help build reserves that are in any event 
improving on their own with die unwinding of the leads and bi gc 
And os the reserves build, there'll he a kit mare flexibility in terms 
of mooetffy policy. 

I believe tint Finance Minister Chris Liebenberg and Reserve Bank 
Governor Chris Sials will apply a more liberal strategy rotating to 
the overseas investment climate while realm og strong fiscal disci- 
pline. I suggest it will be well received internationally and. in coo- 
sequence. meaningful foreign investment will materialise. 

1 have every confidence that just as South Africa's recent political 
evolution surprised the world, so will the highly positive manner in 
which our ec on omy develop*. 

Spin: Has the aew government achieved anything c on cr ete to 

date? 

Laubscher-. I believe so. For example, after four months of hart 
negotiation, a housing accord has been reached between the banks, 
the Association of Mortgage Lenders and the government. If you 
look at what Housing Minister Joe Skno and Billy Cobben have 
done, there's a very real possibility of putting to g e th e r a boosing 
initiative and structure that’s genuinely going to build homes. 

That bousing compact is not only supported but admired. It’s a 
great deal for everyone — for the pvopk who need bouses, for a 


Laubscher: Nedcor has long behoved (hat a substantially better 
Sooth Africa Ha ahead. We sorted working to tins eod four yean 
ago with our scenario planning, some of the observations and rec- 
ommendations of which are the key to wha is happening today. 

I guess that a form of recanstnictioa and development started at 
The Perm, a Nedcor subsidiary, ten years ago. The Perm is a huge- 
ly d ominan t player in the financing of Mack housing in South 
Africa. More than 83,000 black fiunfliei fore in homes financed by 
Penn mongages- 
Further. 

* In partnership with the government, Nedcor launched the 
Sports Trust, aisied at sports development. 

* We launched the Arts Trust lalao with government), whose 
message is that art is part of beating the sort of the country. 

* We were responsible for the Green Trust, which aims at 
improving the environment. 

* We've strongly supported Cape Town's bid for the 2004 
Olympic Games, because we believe we can thereby showcase 
South Africa. 

* We've signed a deal with the IFC to start a R50 million 
franchise equity fond. 

* We've signed a deal with Germany's DEG to bring in money 
to equity fond small businesses. 

“ We’ll be announcing a dal early next year to bring credit to 
tbe previously unbraked community. The first bite looks like 
400,000 new clients, 

Spira: What progress bus Nedcor made in the broader African 
bunking market? 

Lantncben We have partnerships with some omstBrufing global 
utetnaliocm. 

In centra] and west Africa, we’re in alliance partnerships with 
SFOM (owned by BNP of Frame, Dresdner Bank of Germany and 
Bdguim’s BBL), which coven 14 sub-Saharan African countries. 
We hold a 20 percent interest in a bank m Timtwh n / i- with SFOM 
as partners, along with Rothschilds and Hill SamucL 
More recently, to cover English-speaking Africa, we bought a 20 
percent stake in Equator. Hong Kong’s and Shanghai's track 
finance bank in Africa. 

Via these deals, we’ve formed partnerships with institutions which 
have operated in Africa for quite some time, which speak the lan- 
guage and know tbe people. 

We now cover 21 countries in Africa — and the business is (tail- 
ing to How. 

Tbe southern African market comprises 100 million people. As the 
commodity cyde turns and ns the view prevails tha yon aren't 
going to wipe Africa off the international agenda, people are start- 
ing do look at southern Africa more closely than ever before, 

Whal makes os happy is thru South Africa is a perfect conduit huo 
these countries. And Nedcor has a well established infrnstracnire 
with clearly focused products and services. 

Spira: What is Nedcor doing on the wider foteroatinoal ErooC? 

Laubscher: Our operation in Hong Koog has just had is licence 
upgraded. Because we are now on the first rang of a pare banking 
licence, our funding and trade finance activios have been consid- 
erably enhanced. 

We are open in Beijing. The rdstionship between China and South 
Africa is remarkably strong. There's a huge amount of commodity 
flow and Nedcor participates on both si da of thaw transactions. 
We're in the process of upgrading our Taiwanese taking bcence. 
It's significant that the Japanese are taking a warm look at South 
Africa. They've come in with a lot of aid money and their trading 
companies have a strong presence here. 

In Europe we continue to expand. We've upgraded oar London 
office end want to revamp is trade finance capabilities. 

We've just opened a re pr esentative office in New York. America is 
proving id be a powerful friend of the new Saadi Africa. The pos- 
sibilities are exciting. 

It’s gratifying to see just how many new international clients are 
placing their business with Nedcor. I believe they've come to us 
because we've worked hard at projecting our image to them. When 



Richard Laubscher 

we Ora envisaged that change in South Africa was likely to occur, 
we mapped out ihe impHcatioas, which wc related do ifae inicroa- 
doual business climate. We networked with the embassies. 
Virtually all tbe imcmalioaal airlines hank with us. 

It's been a very clearly structured strategy in which we've invested 
a lot of money. We're now starting to see some of the payback. 


Spira: What has Nedcor been ; 
serves? 


into the community it 


Lauhschen Last year R19 million went from our bottom line into 
the community at large — on projects we regard as not only desir- 
able but with long term downstream benefits. 

We're also channeling much effort into affirmative action. We now 
have our fust black executive director in the form of Lot NdJovu. 

Spin: What of Nedcor 's financial progress and its outlook? 


m Our assets are now comfortably in excess of R5Q bit- 
lion. Shareholders have had an earnings stream compounded annu- 
ally at J9 percent over fiyeyues. An jnvestmncni in onr shares five 
years ago has produced 41 percent annually compounded. 
Nedcor - '. core businesses are running well, we're gaining market 
share. We’re highly client -focused, with the result that more and 
more people are entrusting 115 with their business. At the moment 
we can handle considerably more with our existing infrastructure. 
We’re ideally pitted in terms of the previously unbooked commu- 
nity. According to reliable estimates, only 10 percent of all adult 
Sarah Africans have cheque accounts ami only IS percent have 
credit carts. This has to be a wonderful opportunity. 

As unbundling in South Africa proceeds, we're being increasingly 
chosen as the primary hanker. We're picking up much corporate 
business here. 

An important recent survey has moved us up from seventh to sec- 
ond in terms of technology. 

Spira: Is Hare atffl taBc of p r escr ip tive hanking le gMan™ * 

Laubscher: The tune has changed dramatically since the demon. 
Mar to the election, nationalisation was mi the lip of many 
tongues. Now privatisation is the order of the day. South Africa has 
covered decades of history in a matter of months. 

The housing accord contains nothing in the way of prescriptive 
lending. It says that for banks to lend, the correct climate must pre- 
vail — and that is for government and the cummunitv 10 sort oul 
I n such a dictate, the banks have willingly commuted large num- 
bers of mortgage*. 

Tbe accent has moved away from one of prescription to one of a 
genuine desire to participate rad be involved. 

There's a strong realisation that Ihe health of the hanking sector is 
indicative of the health of the economy. It's now widely accepted 
ft* a good barometer of an economy's health is u stromJvibraiH, 
integrated, relevant banking seeux. 


If we gel the economy right. South Africa wilt be a great p| a 
banks and a great place for investors. 


? for 


NEDCOR 


8 


Ncfctif Limned. iUU Main Slixvu Johannesburg, Jooi- 
PO Box 1 144. Johannesburg. 2DOO, Republic of South Africa: 
Telephone (Oil 1630-71 II; fiu (fill) (,30-7558: 
Tedelex 4-RJ765 Ncdu 5A. 

London: Ntaftank Houu.-. 20 Ahehun*, Lune. 
latia a EG4N 7AD, England: Telephone iU7i j Mi- 


Bank plan 
to sell 
Tapie’s 
mansion 

By Andrew Jack in Paris 

Mr Bernard Tapie, the 
controversial French business- 
man and politician, could face 
the loss of his luxuri ous Pans 
honse in the next few weeks as 
part of bis legal battle with 
Credit Lyonnais. 

The embattled state-con- 
trolled bank said yesterday it 
intended to sell “as quickly as 
possible” the assets controlled 
by Mr Tapie secured against 
its loans to Him and bis net- 
work of companies if it wins 
the latest of a series of court 
battles against him today. 

first to go is likely to be tbe 
Hotel de Cavoye. Mr Tapie’s 
mansion in the fashionable 
seventh arrondissement, 
which some expats have val- 
ued at FFrl00m-FFrl60m 
(£12m-£19m). 

This may be followed rap- 
idly by attempted sales of Ids 
shares, and tee yacht Phocte 
in Marseilles. Also op for sale 
would be his collection of 
antique furniture and paint- 
ings, many of which he 
attempted to remove to secure 
hiding places earlier this year. 

The ability of Credit Lyon- 
nais to sell the assets will 
depend on a judgment today in 
the Tribunal de Grande 
Instance in Paris, resulting 
from an appeal heard last 
month in which Mr Tapie 
argued that the bank must 
stick to the original terms of 
an agreement reached in 
March to repay bis debts over 
five years. 

The bank says he foiled to 
keep bis side of the agreement, 
which included providing two 
independent expert valuations 
of his assets against which the 
repayments were to be 
secured. One estimate has put 
the total worth at FFrSOOm, 
against loans to him of about 
FFrlJJbn. 

Credit Lyonnais is under 
considerable pressure to act 
after widespread criticism of 
its losses, which reached 
FFr4Jiba in tbe first half of 
this year. Its loans to Mr Tapie 
were one of the principal 
issues raised by customers 
who took advantage of an 
open evening to voice their 
concerns. 

Mr Tapie is separately suing 
Credit Lyonnais over a claim 
that the bank Is partly respon- 
sible For the management of 
the companies he controlled, 
and over a series of advertise- 
ments which included an 
unflattering cartoon of him. A 
court is also due to deride nest 
month whether his companies 
are bankrupt and most be 
wound up. 


THE FINANCIAL TIMES 
Published by The Financial Times 
(.Europe) GmbH, Nibelungenplatz 3, 
60318 Frankfurt am Main, Germany. 
Telephone ++49 69 156 850, Fax ++49 
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David CM. Bell md Alan C. Miller. 
Printer DVM Drodc-Vertrieb uod Mar- 
keting GmbH, A dmiral-K osendah I - 
Straaae 3a. 63263 Nen-lsenburg (owned 
by Huiriyel International}. ISSN: ISSN 
0174 - 7363 . Responsible Editor Richard 
Lambert, do UK Financial Times Lim- 
ited, Number One Southwark Brfc 
London SE1 9HL, UK. Shareholders' 
the Finn octal Times (Europe) GmbH 
are: The Financial Times (Europe) Lad, 
London and F.T. (Germany Advertis- 
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above mentioned two companies ic The 
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The Company is incorporated under the 
laws of England and Wales. Chairman: 
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FRANCE: Publishing Director: D. 
Good. 168 Rue de Rivoil F-75044 Pari* 
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DENMARK: Financial Times (Scandin- 
avia) Ltd. Vimmelskafied 42A, 
DK-II6I Copenhagen K. Telephone 33 
U 44 41, Fax J3 93 53 35. 


EUROPEAN NEWS DIGEST. 



by Guichet 

The board cf Alcatel CTT, the 
company, yesterday refused to accept the reagmrtton of 

by a magistrate investigating 

TSficom, ane of the company's b iggest dtenifc 

who was toprisoDBd on 

resignation to avoid damage^totto 

Prance TSl&am. But the board, wWdi saiff ft was sheeted by 

tbe detention order, rejected the 

Mr Guichet A spokesman for Alcatel described Mr Gm cfaefa 
detention as completely unjustified and said ^investigate 
would prove his innocence. A company official m chea te d, 
however, that the chairman’s request to step down couW.be 
considered by a Mure board meeting when Mr GtocbetfeaMe 
to participate. Mr Gulchefs detention in a prison to the soma 
of pans p ushe d shares in Alcatel Alstbom, the parent com- 
pany of Alcatel GIT, down by mare than two per cent to 
FFrOL They later recovered some of tteir losses, but remain 
more than 50 per cent below their January leveL _ 
Industry analysts said that shares would remain vulnerable 
as a result of the continuing corruption Investigating The 
group is very- much in the magistrates’* rights, saw-, one 
electronics analyst at a French securities company. He added 
that investors had also been unsettled by- the damage to 
relations with. France Tfil&xan. John Ridding, Paris 

Brundtland eyes Yes vote 

Mrs Gro Tfartom Brundtland, Norway’s prime minister, yester- 
day said she was confident of winning a Yes vote in a referen- 
dum next Monday on membership of tbe European Unio n, 
despite a continuing strong lead in tbe polls by opponents of 
the move. “I don’t lot* upon tbe polls as bleakly as same- 
people do; there has been a tremendous change in recent 
weeks," she said. Although the No camp continues to lead in 
the polls, the gap has narrowed significantly since Sweden 
voted to Join the EU on November 13. Mrs BrxmdtLand said she 
believed that many people would not make up their, minds on 
the controversial issue mi til the last mtente, as happened in 
tbe EU referendnms in Finland and Sweden. She behoves that 
the prospect of isolation, faring Norwegians now that Finland 
and Sweden have derided to join toe EU would be enough to 
main* them understand whal is at stake if Norway rejects 

membership for the secondtime. ’• - 

1 don’t believe in threats, but I do believe in appeals and 
resp onsib ility and it’s my conviction that it is best for Norway 
and its future and for Europe if Norway joins. I think one 
week is ennn gh to get this point across," she said. Karen 
FossH ; Osfo 

Curb on German banks 

Germany’s newly re-elected government planned to. .curb 
hanks ’ influence on industry, Mr GCkhtar Hexrodt, economics 


minis ter, said yesterday, but indicated that any new laws 
would be more likriy to tout their seats an supervisory boards 
than force tiie sale of shareholdings. Be said banks should 
contribute to toe debate ‘instead of immediately pulling out 
the card of the constitutional court”. This was a reference to 
the threat by Mr HUmar Kopper, Deutsche Bank cham-nary to 
go to the court if the bank was forced to sell holdings and pay 
high capital gains tax. Mr Rexrodt said tbe government would 
study the extent of banks’ influence on industry before propos- 
ing laws. But if it derided to refn back existing hnklhig s or 
limit new ones, it would use legally and constitutionally 
correct methods. “One cannot expect Mr Kopper to sell hold- 
ings of the Deutsche Bank and hand-over half the proceeds to 
the state as tax.” Andrew Fisher, Frankfurt 

Hungary bank chief to quit 

Hungary's central bank governor has said he will resign 
today, ending weeks of speculation that be -would be unable to 
work with the country's new Socialist-led government. Mr 
Peter Akos Bod, appointed by toe previous conservative 
administration in 1991, said it had been dear since tbe govern- 
ment took office in July that he did not have its full su pport 
He was erne of the main architects of the previous administra- 
tion's economic policies. Top management at several large 
state companies have been purged by the government in 
recent weeks. Analysts said yesterday they did not expect Mr 
Bod's resigna t ion to have a serious impact on finanrifli mar- 
kets or central bank policies. However, they said much would 
depend on who succeeded Mr Bod who had not been due to 
step down until 1997. The front-runners are Mr Ferenc Bartha, 
government privatisation oonunissianer, and Mr Gyorgy Sur- 
anyi, ma na g i ng director of Central European Investment 
Bank, a foreign-owned local bank. Virginia Marsh, Budapest 

German court rules on N-waste 

The German environment ministry yesterday said it hoped an 
administrative court would reach a quick decision clearing - the 
way for a controversial shipment of nuclear waste to a storage 
site at Gorleben in northern Germany. The shipment )»« been 
s tanding fo r months in a railway siding at the Phflippsburg 
power station in south Germany while toe federal government 
and the state of Lower Saxony, where Gorleben is situated, did 
tattle in the courts. It was to have arrived in Gorleben today 
but the environment ministry unexpectedly stopped the ship- 
ment late an Monday after a court near Gorleben had ruled 
that the fuel rods were incorrectly loaded at Fhihppsbuig. 

Ms Monika Griefhahn, Lower Saxony's envir onment nrfnie . 
ter and the most outspoken opponent of Gorleben, doubted the 
shipment could be moved this year. The state government had 
given its approval last week under pressure from the environ- 
mCTt mimstiy. The Phfflppsburg waste would be toe first 
to Gorleben and has been fiercely resisted by people 
living near the site. Michael Lsndemann, Bonn 

ECONOMIC WATCH 


Prices inch up in France 


France: inflation . ; 

Annual % change In GPI ' 
2js — — I ; 



1.0 


Lt.t i 


1393 

Sobtck DatastroarT 


84 


French consume) 
increased by A 3 pe 
October, giving a i 
stable annualised 
rate of L7 per rent, , 
to Insee, the natio r 
tics office. The fig 
firmed the weakness 
ttonary pressures 
economy, despite 
than expected gro 
year. Consumption, 
has remained fragil, 
weakening expected 
bers figures. The 
manufactured j 
re ma ined unchanged 
her, while the ii 
energy and public si 


vices declined slightly 

pressure was provided/Kver^ SfSS 
t>7 0.9 per cent *STl**« g 

day. said the VDA “espde ha 1 ring one 1 

October, Gennany A pSSd «» 

nmon w, 

unc h a n g e d from ? rovislo P i 

and a half years, ^ 

■ The debts of Russia ^ m0ct <* 
almost smhn at to former Soviet Un 


v 




/ 


^ANQALT IMES 

Spring 
sets out 
terms for 

coalition 

S5S3«5s 

^ernm c h n /° raEr<shc « J ‘^ 


WEDNESDAY NOVEMBER 23 1994 


NEWS: EUROPE 


jJJ Dlck Spring, the Irish 
Utour party leader, set ™ 
tough aew conditions for 
Labour to go back into part- 

ftjjjjjp i" 1111 Fiarma Fail, 
inland s largest party, follow- 

S Ljf5 h we0k ,. s t break-up of the 
^2-month coalition and the res- 
illation of Mr Albert Reynolds 
as prime minister. 

Mr Spring is calling for a 
new freedom of information 
bm, an easing of the rules on 
cabinet confidentiality, more 
accountability on judicial 
appointments and a review of 
official secrets legislation. He 
also wants recent ministerial 
Pay rises rescinded. 

The Labour party is using its 
strong position in the polls to 
dictate a new liberal agenda 
before agreeing a coalition 
with the more conservative 
Fianna Fail party. 

Mr Spring's “strategy for 
renewal”, unveiled to the par- 
liamentary party over the 
weekend, is partly a response 
to last week’s crisis when Mr 
Reynolds misled par liam ent 
over the attorney-general's role 
in the controversial case of a 
paedophile priest’s extr adition 
Mr Spring has struck a popular 
chord on many of the issues. 

The question of cabinet con- 
fidentiality has already been 
challenged unsuccessfully in 
the supreme court when, dur- 
ing the beef tribunal, Mr Reyn- 
olds was accused of selective 
cabinet document leaks in the 
investigation into the misuse 
of official export credits in the 
beef industry in 199L 
Opinion remains divided 
within Labour ranks about 
whether to join forces again 
with Wanna Fail, with many of 
the Fianna Fail ministers 
Implicated in Labour eyes in 
the extradition case. Moreover, 
many Flanixa Fail MPs are still 
bitter about Mr Reynolds’ 
downfall; -which' some^-see- as 
having been precipitated by Mr 
Spring, and seem prepared to 
go into opposition. 

In this case, Mr Spring would 
have to look for a partnership 
with the conservative Fine 
Gael and one of the smaller 
parties, which could be more 
problematic given Mr Spring’s 
personal difficulties with Mr 
John Bruton, Fine Gael leader. 

The Labour leader's propos- 
als are broadly in line with 
ideas outlined by Mr Bertie 
Ahem, new Fianna Fail leader, 
on Saturday. 

But one issue of contention 
could be Northern Ireland, pol- 
icy, where Mr Spring is keen 
not to be sidelined as he was 
by Mr Reynolds. 

Mr Spring may challenge 
more traditional republican 
thinking' with his calls for a 
“balanced constitutional 
ar rangement ” - a clear refer- 
ence to the current negotia- 
tions with London on the 
framework document to pro- 
vide a durable political settle- 
ment for the province. 

Mr Spring said: “We will 
have to seek to define our 
nation more in terms of 
its people, in all their diversity, 
and less in terms of its terri- 
tory.” Many observers believe 
this is largely a negotiating 
position. 



Budget deficits twice what they should be, says Bundesbank chief 

Tietmeyer rails at Emu criteria 


Hans Tietmeyer: well accustomed to agenda-setting. 


By Christopher PeriGes 
bi Frankfurt 

After hi g hli ghting for m onths 
the inadequacies of the conver- 
gence criteria intended to 
underpin Europe's proposed 
monetary union, Germany's 
most eminent and garrulous 
spokesman on Emu yesterday 
came out with a comparatively 
clear counter-proposal. 

Mr Hans Tietmeyer, whose 
other job is president of the 
Bundesbank, said maximum 
permissible budget deficits for 
would-be Emu members under 
the Maastricht treaties were at 
least double what they should 
be. 

For a country such as Ger- 
many, he said, 1 to 15 per cent 
of gross domestic product was 
nearer the mark than the 
“unambitious” 3 per cent writ- 
ten in the treaties. 

Addressing a seminar in 
Bonn, where, as Mr Tietmeyer 
acknowledged, there is a 
strong feeling that Bundes- 


bank technocrate should run 
monetary policy and leave 
elected politicians to run the 
country and tend European 
affairs, he was careful not to 
present the formula as his own 
idea or one generated within 
the central hank. 

He used a routine trick to 
protect himself and the bank 
from charges of interfering in 
the political process, and pres- 
ented his proposal in the form 
of a public endorsement of sug- 
gestions made by others. In 
this case, the deficit parame- 
ters were pat forward last 
week by the so-called “five 
wise men", a group of indepen- 
dent advisers to the finance 

minis try. 

Another increasingly famil- 
iar ploy was put to work In the 
same speech yesterday. “Of 
course, the Bundesbank is no 
more responsible for social 
policy than it is for finance 
policy..." he said, prefacing a 
catalogue of characteristically 
uncomfortable suggestions for 


the government 

But as the Increasingly pre- 
scriptive tone of Mr Tietmey- 
er’s speeches and media inter- 
views indicates, the convention 
that central bank officials 
should avoid political interfer- 
ence is one which chafes 
sorely. 

As a one-time state secretary 
in the finance ministry, and 
responsible for the Bundes- 
bank’s foreign relations before 
his elevation to the presidency 
a year ago, Mr Tietmeyer is 
well known internationally 
and well accustomed to agen- 
da-setting. Partly as a result he 
is also proving to be far more 
confident than his predecessor, 
Mr Helmut Schlesinger - not 
to mention his current col- 
leagues on the permanent 
directorate - at manoeuvring 
on the knife-edge between 
m.maging monetary policy and 
overt politicking. 

But bis apparent command 
of the broad horizons is also 
due in part to the fact that he. 


with the occasional exception 
of Mr Otmar IssiAg, chief econ- 
omist for the Bundesbank’s 
directorate, has granted him- 
self almost exclusive rights as 
public spokesman for the 
Bundesbank. 

Mr Tietmeyer took a firm 
hold of the Bundesbank’s 
external communications after 
loose talk by some of his col- 
leagues led to confusion about 
the directorate’s policy aims 
early this year, and when, con- 
fused pyplanatinns of rampant 
money supply growth brought 
the bank’s prized credibility 
into question. 

He has not let up since. In 
the first 12 months of bis presi- 
dency he has made more than 
twice as many speeches as Mr 
Schlesinger in his last year of 
office. Mr Helmut Scheiber, his 
own successor as Bundesbank 
“foreign minister*', has hardly 
been heard at all above the 
noise of the president's con- 
stant protests that the Maas- 
tricht criteria are too sloppy 


and that the EU is ill-prepared 
politically for the great leap 
into monetary union. 

Mr Tietmeyer’s close per- 
sonal knowledge of Chancellor 
Helmut Kohl has hitherto 
helped him judge how force- 
fully he can press for his rigor- 
ous European policy prescrip- 
tions without overstewing the 
mark. Now, with the weakened 
coalition government still 
unsure of its capacity to act 
decisively, he may feel even 
more confident of speaking his 
mind and issuing his prescrip- 
tions. 

He will certainly be encour- 
aged to speak out further by 
the prospect of the looming EU 
summit in Essen on December 
9 and 10 to seal Germany’s six- 
month presidency. Whatever 
Mr Kohl’s ambitions for the 
grand occasion, Germany’s 
most listened- to Emu spokes- 
man is unlikely to allow any 
of the leaders to return home 
burdened with any misunder- 
standings. 


EU’s outstretched hand to the east begins to waver 


By Lionel Barber tn Brussels 

Germany is having second thoughts 
about inviting central and eastern 
European leaders to next month’s 
European Union summit in Essen, 
despite pledges to make tire meeting 
a cornerstone of the strategy to 
build a “wider Europe”. 

German doubts appear to stem 
from sensitivities toward France, 
which earlier this year expressed 
reservations about Germany’s 
championing of the cause of 
enlargement of the Union to the 
north and east 

But Bonn is also concerned about 
slow progress in talks on a more 


generous EU market access package 
for the former communist countries. 
Without such a deal - and a clear 
EU consensus on bow to proceed 
with enlargement to the east - Ger- 
man officials fear that the Essen 
summit could be branded as a fail- 
ure. 

Mr Jan Knlakowski, Poland’s 
ambassador to the EU, said yester- 
day the Polish government had been 
told that Chancellor Helmut Kohl 
intended to invite the central and 
east Europeans to Essen. 

However, some member states 
remained reluctant, with France 
holding out to delay the invitation 
until the next European s ummi t in 


Cannes in June 1995. “An invitation 
(s still possible,” he said, “but it is 
getting late.” 

German officials confirmed this 
account, saying that France was 
anxious to host an important event 
at the end of the EU presidency 
which it takes over from Germany 
on January l. French interest had 
grown after Spain, the successor EU 
presidency, won support for hosting 
a conference on the Mediterranean. 

“It is very important to balance 
the regions.” said one German offi- 
cial who pointed out that it might 
make more sense for France - 
rather than Germany - to take the 
credit for a successful summit on 


strategy toward the Bast 

Behind the diplomatic manoeu- 
vring ties a debate within the Euro- 
pean Union abont bow - and 
whether - to speed np the integra- 
tion of eastern Europe, starting 
with the six EU associate members: 
Poland, the Czech republic, Hun- 
gary, Slovakia, Bulgaria aud 
Romania, as well as the Baltic 
states and Slovenia. 

Germany, worried abont instabil- 
ity on Its eastern borders, is press- 
ing for early EU enlargement; possi- 
bly around the turn of the century. 
The OK shares this goal, but is wor- 
ried that more EU members may 
trigger pressure for faster political 


integration. France, backed by the 
Mediterranean bloc, wants to ensure 
that enlargement does not dilute the 
EU into a free-trade area. 

All member states are worried 
abont the cost: on present BU farm 
and regional aid policies, the EU 
budget for an enlarged Union would 
rise from EcuSOhn (E24bn) to 
Ecu45bn, and Ecu25bn to Ecn60bn 
respectively, according to a Euro- 
pean Commission official. 

Paris and Bonn have co-operated 
with the European Commissioo in 
developing a “pre-accession” strat- 
egy, the centrepiece of which is a 
consultation paper which next 
spring will set out a list of measures 


for the central and eastern Euro- 
peans to adopt to become fit for EU 
membership. 

Chrystia Freeland adds: 

Hungary has proposed a firm time- 
table to negotiate its accession to 
the EU, for talfe$ to begin as 

soon as the member states conclude 
their 1996 inter-governmental con- 
ference, leading to foil membership 
by the year 2000. 

Mr Laszlo Kovacs, the Hungarian 
foreign minister, called on the Com- 
mission to draw op its own formal 
opinion on his country’s application 
for membership before the 1996 con- 
ference begins, in order to speed up 
the process. 


French goal is 
faster decisions 


By David Buchan and 
Edward Mortimer h Paris 

France Intends to use its 
forthcoming European Union 
presidency to start pushing for 
Institutional reform in the 1966 
constitutional conference, and 
to give Europe a stronger cul- 
tural identity. 

Mr Alain Lamassoure, EU 
affairs minister, yesterday told 

seminar here that expansion 
of the Union to include three, 
and maybe four, new countries 
mart year, and the perspective 
of future enlargement to the 
east, reqnired “an institutional 
revolution”, particularly in for- 
eign policy decision-making. 

The minister suggested that 
one way of speeding Council of 
Ministers' d e cisions would be 
to hive off its lawmaking func- 
tion into public sessions, with 
open debate and votes. Its exec- 
utive role of m ana gi ng the 
Union would remain confiden- 
tial In this latter role, the 
Council “must move further 
and Caster in foreign policy and 
defence”, as illustrated by its 
shortcomings in Bosnia. 

Mr Lamassoure reiterated a 
previous suggestion that the 
EU must have some kind of 
body to define, propose and 
implement its planned com- 
mon foreign policy, just as the 
European Commission does for 
internal Union policies. 

However, he stressed that 
while the government had 


decided on the broad outlines 
of its presidency programme - 
which Prime Minister Edouard 
BaHadur is expected to unveil 
in early December - its plans 
had yet to receive the green 
light from President Francois 
Mitterrand. At last week's 
Anglo-French summit at 
Chartres, the president said 
the 1996 conference should first 
consolidate commitments of 
the Maastricht treaty before 
embarking on new initiatives. 

Separately, in an interview. 
Mr Jacques Toubon, culture 
minister, said France would 
pursue three priorities during 
its presidency. First, it would 
seek revision of the satellite 
broadcasting directive to place 
more control with countries 
such as France receiving 
English-language broadcasts 
and less with those countries, 
such as the UK, from which 
transmission took place. 

Secondly. France would try 
to interest Us partners tn com- 
mitting themselves to an inter- 
governmental convention 
requiring the teaching of at 
least two foreign languages. 
“The first foreign language 
taught would almost always be 
English, but the second might 
be French. Spanish or Ger- 
man," be said. Lastly. Paris 
would urge the EU to Increase 
funding for its “Media Pro- 
gramme” to help the distribu- 
tion and promotion of Euro- 
pean films. 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 23 *994 



NEWS: WORLD TRADE 


Asian oilmen’s troublesome pipedreams 

New routes are the key to exploiting the region’s big reserves, write Steve Levine and John Lloyd 


F ailure to find politically 
acceptable export routes 
Is impeding the flow erf 
oil and natural gas from cen- 
tral Asia to western markets. 
Three deals depend wholly or 
largely on pipeline routes out 
erf the Caspian for their viabil- 
ity. 

First, the US ofl company 
Chevron's project at Tengiz in 
gaTakhstan - in which over 
$600m has been invested and 
around $20bn is scheduled to 
be put in during the project's 
40-year life - still awaits agree- 
ment on financing a new 
export pipeline. Only 60,000 
barrels a day are allowed 
through the existing pipelines. 

Secondly, the $Bbn deal 
between a group of 10 foreign 
oil companies led by BP and 
the Azerbaijan government to 
exploit reserves off Baku was 
ratified by the Azerbaijani par- 
liament last week - but no 
route out for the oil is agreed. 

Thirdly, a deal should be 
closed by November 30 to allow 
development of the massive 
Earachaganak gas field in Kaz- 
akhstan by British Gas and 
Agip of France - bat it lacks 
transportation. 


In each case, the companies 
have sought or agreed Russian 
participation to satisfy 
Moscow’s demands that it ben- 
efits Cram the deals. But so for 
the result has been deadlock: 
“Russia does not seem so inter- 
ested in making money as in 
keeping all of these countries 
under Its thumb," says one 
frustrated oil company execu- 
tive in Alma Ata. 

The contrasting view is that 
the blockages are temporary 
and that the sheer energy 
wealth of the area will sooner 
rather than later produce 
agreements. Mr Steve Remp, 
chairman of the British ofl ser- 
vices company Ramco, a mem- 
ber of the Azerbaijani consor- 
tium, says that “what you will 
see in due course is that the 
issue will turn from being a 
liability to being a very posi- 
tive generator of income for 
the area". 

The key player in these 
increasingly grand geopolitical 
manoeuvres is Russia. Mr Yuri 
Shafrardk. the Russian energy 
minister, made clear last week 
that Russia must have a major 
stake in all energy projects. 
This policy which has meant 


that the Lukoil oil company 
and the Gasprom gas corpora- 
tion have substantial stakes in 
the Azerbaijani and Karacha- 
g gnak fields, and that Russian 
pressure has been able to block 
any pipeline deal. 

A host of different schemes 
are now being discussed by the 
states and companies involved 
- all of which would require 
multi-billion dollar financing. 

• Upgrading the existing pipe- 
line which carries Russian and 
some Chevron oC to Novoros- 
sisk. Russia’s main oil export- 
ing port on the Black Sea. 

One plan being considered 
by the Baku consortium is to 
reverse the pipeline which 
used to carry crude from the 
Russian province of Tyumen to 
the Baku refinery, so that it 
carried Azerbaijani oil out to 
join an existing pipeline to 
Novorossisk. This line could 
also carry oil from Kazakhstan. 
The largest problem comes 
after Novorossisk. Turkey, 
pressing for a line through its 
territory, has said the Bospho- 
rous straits througb which 
ships from Novorossisk must 
pass, cannot take any more 
tankers: the Russians have 


responded by proposing that 
the oil is transhipped to Bur- 
gas. on the coast of Bulgaria, 
then piped to the Greek port of 
Alexandroupolis. 

• A line through Iran or Geor- 
gia to meet an existing line 
which had carried Iraqi crude 
to the Turkish Mediterranean 
port of Ceyhan. The problem 
with this line is that it goes 
through Kurdish areas but 
avoids the Bosphorous. Fur- 
ther, Azerbaijan announced 
last week that the Iranian Oil 
Company had joined the con- 
sortium - prompting specula- 
tion that this route, or another 
through Iranian territory, 
could now be in prospect 

• A line through Georgia to 
the port of Batumi on the 
Black Sea - to be again tran- 
shipped to Burgas, piped to 

Alexandroupolis and out 
through the Mediterranean. 
Georgia would benefit from 
this - but the government is in 
no state to guarantee the secu- 
rity of the line. 

• The most radical proposal, 
under study by Mitsubishi is 
to construct a pipeline from 
Kazakhstan and Turkmenistan 
1500km through western China 



TMwnrtsk 

y: 

y^N jw Bf w a l a k 


- '- : V 


r • . . '-BAKUT?. 

TURKEY AZERBAIJAN - 



where Lt could link up with an 
existing pipeline from China's 
Tarim Basin to the coast 
• Tur kmenistan, the region's 
main gas producer, needs a 
new exit most since Russia 
controls its gas lines beyond its 
borders and has put a block on 
much of the expected Slbn 
annual proceeds from gas 


sales. Three weeks ago a $7hn 
gas pipeline project to take the 
gas to the Mediterranean was 
inaugurated - though no one 
believes the work will begin 
soon and many believe the 
project is more symbolic than 
reaL The only sure tiring is 
that the manoeuvres will con- 
tinue. 


Gatt criticises Canada’s high farm trade tariffs 


By Frances Williams In Geneva 

Canada has made considerable 
strides in liberalising trade and 
industrial policies but linger- 
ing high trade barriers remain 
an obstacle to growth and job 
creation, according to the Gatt 
secretariat in a report pub- 
lished yesterday. 

The report, the third on Can- 
ada's trade policies and prac- 
tices by the General Agree- 
ment on Tariffs and Trade, 


singles out for criticism high 
tariffs on imports of farm pro- 
duce. barriers to trade between 
the provinces and the prolifera- 
tion of anti-dumping and anti- 
subsidy suits over the last two 
years. 

It also expresses concern 
over Canada’s rapidly expand- 
ing trade with the US. noting 
the fears of trading partners 
that they may be the losers in 
diversion of trade to the US 
and Mexico, Canada's partners 


in the North American Free 
Trade Agreement fNafta). 

Gatt points out that rising 
exports have helped fuel Cana- 
da's economic recovery since 
1992 but this has been largely 
due to higher deliveries to the 
US. 

The US share in Canada's 
exports has risen from around 
75 per cent in 1990 and 1991 to 
more than 80 per cent in 1993. 
Exports to other countries 
stagnated over this period. 


Worries that Nafta, which 
came into force at the begin- 
ning of this year, could spur 
trade diversion featured promi- 
nently in yesterday's discus- 
sion of the report by Gatt's 
governing council. 

In reply. Canada said it was 
trying to diversify its trade, 
especially towards Asia. Under 
the Uruguay Round global 
trade accords. Canada will 
reduce industrial tariffs by 40 
per cent, a little above the 


average for developed nations. 
But its farm trade barriers will 
remain relatively high. 

In the short to medium term, 
the dairy, poultry and eggs sec- 
tors wifi be effectively closed 
to imports. Gatt notes. Over 
100 agricultural import quotas 
will be replaced by tariffs aver- 
aging 205 per cent in 1995 and 
174 per cent in 2000. The report 
says the estimated 500 or so 
inter-provincial trade barriers 
have become a major problem 


INVITATION TO TENDER FOR THE HIGHEST BID 
for the purchase of the assets of Kassandra Mines of the Company 
“HELLENIC CHEMICAL PRODUCTS & FERTILIZERS COMPANY S-AT 

-ETHNIKI KEPHALEOU SA. A diuinbtmi on of Assets and Liabilities” in its capacity as LiqakljIDr of "HELLENIC CHEMICAL PRODUCTS & FERTILIZERS COMPANY SA” of 20. Amalias Avenue. Athens. Greece 
(“the Company"), which has been declared by virtue of Decisioe No. 4299/1992 of the Athens Court of Appeal (in conjunction with Decisioa No. T7I4/20.7.I992 of the ume court, allowing the separate sale of the production 
units of Ibe Company) under special tiqoidttfoo, upon iasnictians of the National Bank of Greece SA and Hellenic Industrial and Development Bank SA, being crcdiwts representing more than Sir- of the chums against the 
company poraant to par.l la of article 46a of Law 1892/1990 (as supp l ement ed by article 53 of Law 2224/1994) 

INVITES TENDERS 

for the highest bid by submission of sealed binding often for the purchase by a third public auction (the “Auction'') of the assets of the production anil of Kassandra Mines of fbe Company ami for the esuhlsfamcntofagold 
plant 

BRIEF INFORMATION; Kassandra Mines are located in die region of Stratum and Olympic villages in tbe CtoflridiM Peninsula (Northern Greece) and cover an area of 1.660.400 sq.m, including woiters’ bouses, three 
ddfemnia] dauooa ore phuBs with in annual capacity of 700000 ions for the Uni two plains and 400,000 tons tor the third ooe. (If should be noted drat legal proceedings against thrStmoni Community with respect to the 
possession on an area of 16 sqim ate pending). There are proven ahwl sulphide (Pb-Za-Ag-An) ore reserves amounting to IQJ8 million tons (including M million tons of Auriferous orcV . and 4.5 million tore of probable 
reserves fof which approximately 4.1 millkio tom of Auriferous Orel , as well as 11 milKofl tons of Pyrita. 4 mQUao rocs of Cbakopyrifc, 1.2 miUion foos of PyroJocsite & Rodochrosite and 60 mill km ions of poor porphyry 
copper-gold ore reserves. There aw especially aastrectad shipping loading facilities directly into tbe Aegean Sea- The Company bolds mining conoessioa over a total area of 314 sq.Km. The mines are currently in operation 
with a personnel of 916 employees. 

OFFERING MEMORANDUM - FURTHER INFORMATION; Interested parties may obtain an Offering Memorandum describing the as&cls of Kassandra Muxs and any further information, upon execution of a 
confidentiality agreement. 

TERMS AND CONDITIONS OF THE AUCTION 

I . GENERAL; The present Auction constitutes the dtiid one to lake place, aooonfing » pangraph 11a of ankle 46a of L 1892/1990 (as supplemented by sit. S3 of Law 2224/1 994j and is subject to the terms and conditions set 
forth herein and in tbe 'Terms and Conditions of Sale" con ta l nrd in the Offering Memorandum. Sadi premstoos and other terms and conditions shall apply irrespectively of whether they are mentioned here in or not. 
Submission of binding offers shall mean accep tan ce of such provisions and other Berms and conditions. 

Z BIND IN Q QFFERS: In aider to participate in the Auction, ta mres te d parties arc hereby Invited submit sealed binding offers, not later than 19dt of Dece mb er 1994, 13.00 bouts, u tbe Athens Notary Public Mb. Ioanna 
Gavrieli - Anagmstahki, address: 18, FitOoa Str. Athens, Greece, tek +30-1-3619728, foe +30-1-36231.91. 

Binding offen should expressly stale the offered price rad tha dmnilcd term* of payment (in cash or inst a lmen t , mentio nin g tbe number of instaUnjeiics, tbe dates thereof and the proposed annual interest rate, ff any). In the 
event of not specifying a) the way of payment, b) whether the insta ll m eets bear Interest and c) tbe interest rate, then it shall be deemed that a) the offered price is payable immrefiatdy in cash, b) tbe install mm is shall bear no 
interest and c) the interest rare shall be the legal rate in force. Binding offers submitted later than the above date and offers not accompanied by a Letter of Guarantee (see below Term 3) shall neither be accepted nor considered. 
The offers shall be binding until the ndjudkotioo. Shtmid any offer be made on behalf of a third potty, this will be valid only if it has already been stated so a) the time of subtumaon. as well &> on condition that tbe parry 
submitting the offer gu aran tees that tbe third patty win cany oct tbe ob l i g atio ns, contained in the offer and in tbe contract of sale. 

3- LBH BBS OF- GU ARAN QBfc Each binding offer anal be accompan ied by a Le tter of Guarantee, issued in a cc ordance with the draft form contained in the Offering Memorandum by a bank legally operating in Greece and 
valid until the adjudication, far the amount of DRS. THREE HUNDRED AND FIFTY MILLION (350.000.000. -L Letters of Guarantee shill be returned after tbe adjudication, la tbe event of ootMompUaoce with tbe 
provisions and other terms referred to in paragraph 1 hereof, the Letter of Guarantee shall be forfeited as a penalty. 

4 - SUBMISSION OF BUSINESS PLAN AND INVESTMENT PLAN; Offers submitted should be accompanied by: 

a) A Mgg gllg tula led ,fl Hw dtiaglnpinmt rf Kirandra Mine* ni Hv Mfhlkhmotif nf a gnirt pint At1H"tt|g Iffttr ttfugt tttT Bcriness Plan should include the following: 

- Development strategy of tbe undertaking, 

-Short and Long lean plans. 

• Lines of business. 

- 10 year financial aad cash flow forecasts, 

- Internal Rate of Return (LRJL) on dm mvestmeot and ou the invested own funds, and 
-Sources and uses of funds. 

Also inefnded should be a brief descxiptkm of tbe proposed production method and of the environment measures which wtH be spplkd at the gold plant to be established. 

: for itt imptancntRiioii, financing) 

. fane schedule of e mp loym en t) 

d) APtTOB Ml regarding warranties offered as to a possible payment by instaOments aad the implementation of tbe Business, the Investment and the Employment Plans, as above 

e) InfonMttan reg a rdi ng the finan ci a l position of the int eres te d pottles, as well as, a review of their besinera activity 

s. SUBMI S SIONS ; Binding offers together with the Letter c< Guarantee, tbe investment Plan, tbe Business Plan and tbe other doccmcnta ref erred to in term 4 beremabove Shull be snhmincd stall h. in rt,r ™..+ 

a duly authorised agenL 

6. Envelopes contouring the binding offets shall be unsealed by the above mentioned Notary Public in her office on the 20tb of December 1994 at 9J0 hoars bjil Anv party having dulv submitted a binrfine offer is entitled to 

attend rad ajgn tbe deed attesting tbe unsealing of the binding offer*. 

7. As highest bidder shall be considered the participant, whore offer wm be judged, by cmdiaxs representing more than 51* of the claims against the Company [tbe -QcdiranT) upon suggestion by the Liquidator, to be the 
moat favourable. 

In asccasiiig the offers submitted, the following points will be taken into account: 

-Offer Price 

- Business Plan 

- Investment Plan 

- Emp loyment Plan 

- The env-iropmaa i mp l ic a tion s of the propos ed production methods 

- Warranties 

- Investors trustworthiness (Recording to hanking criteria) 
it should be noted that 

- for the purposes of evaluating the present value of payment by instalhnents, a 224 annul discount rafts «Kort be employed. 

- for tbe purposes of evaluating offets submitted in a foreign currency, these shall be converted into drachmae on tbe basis of tbe fixing exchange rate as set by the Bank of Greece, pertaining on the Wib ol December |<M4 

8. IT* Liquidator shall give written notice to (be highest bidder to appear mi the date and place mentioned therein aad GZBOfiCJiKJSBIBajlfoak in accordance with d» trams coqtained in bis binding offer and/or any «her 
Improved terms, which may be suggested bv the Crcditora and agreed nnon Adiwflcatiou shall be deemed m takg gfto nf»w mrcmtlrvi nf me 

9. In vtow of the feet that the Kassandra Mines are befog sold us an m-going concent. (be level of ament assets change daily. In Ibis respect, certain special terms are included to the assessment of offers in relation to the level 
of correal assets, the transfer of ownership (hereof and the possible need BO come tosotne imangement with regard to the variation of crniem assets during foe lime Intervening between the assessment of offers and adjudication. 

10. All costs and expenses of any nature, including any ta* duties, custom duties, any dm*es in favour of the state or third parties, which may ntxd to be paid (other ihan those exempted by the applicable Law) in raened n/ 
tixputicqjatxm in the Anetxm and the transfer of the assets offered hereby for sale, the sale contract, aa wefl as any other set prior or subsequent ip tire transfer of assets shall be cxctahvcly home by ihe panlcipanlsandtbc 
purchaser respectively. 

II. The Liquidator and the CrctBora shall have no IfaWHiy nor obtigsdon whatsoever towards the panicipmu in relation to the evaluation of the offers or the appointment of the highest bidder or any decision to r -n«» w 

Cmttel the Auction or any decision whatsoever fat cwwectlou with the proceedings of the AmHoa. Tbe Liquidator, the Creditors and tfa notary shall hove no liability for any legal or actual ikfrcm of ibc assets. Sutarisrion of 
binding offers shall not acute any right towards adjudication nor do participants acquire any right power or daim from this invitation and/or their particrpariDn in the Auction against tbe Liquidator nad/or Ihc Creduon fix anv 
rensoo whatsoever. y 

12. Tbia invitation has been drafted In Greek and translated into English. In any event the Greek version Stall ptevafi. 

ANNOUNCEMENT BY A THIRD PARTY 

The Liquidator has been asked by tbe Deputy Minister of Industry, Enetgy and Technology acting on behalf of the Greek Governroenl to make the following anunmcemenLc 

a. The estubiifhmeai of agold plant piqjuct has bea indmled in the "Burincss Plan for Industry 1 ' of the 2od Community Support Franxwork already approved by the E.G 

b. Tbe Greek Government guarantees the granting of all necessary installation licences concessions and other State approvals required by law. 

A copy of a letter lo the above effect, signed by the Minister m Charge wifi bo gwen to all interested parties together with tbe Offering Memorandum. 

FURTHER INFORMATION: Ror farther information, aa well ns in order to obtain a copy of the Offaiag Memorandum, please contact the Linuidalor of the Company: "EIHN1K1 KEPHALEOU S.A. AUminhiraikm uf Assets 
and Labilities”, at I. Skoolemou Street, Athens IQS fil Greece, tel: +30-I-323.K84/W7, tax; +30-1-321 .79.05 (atm. Mb. Mania Prangaka) or the Liquidator's igems Mesas. John Detsu rad Sm*» Michael ides, at 20. 
Amalias Avenue, Athens 103 57. Greece, i«L- +30-1-32360.11, fax: +30- 1-322. 11 J13. telex 215160 OXEAL 14,1 LM " “ ' 


for Canadian business, ham- 
pering' tbe free internal flow of 
goods and services. 

It also points out that file 
number of anti-dumping and 
countervailing duty actions 
has increased markedly since 
the last report in 1992, largely 
■concentrated on steel. With 
over 80 anti-dumping measures 
covering 23 products currently 
in place; Canada is the third 
largest user among Gatt mem- 
bers. the report says. 

US agrees 
to accept 
Australian 
beef tests 

By Nikki Tail in Sydney 

The US yesterday agreed to 
release for sale Australian beef 
exported after October 25 but 
said it required further testing 
of beef exported before that 
date because of possible 
contamination from a chemical 
used in the growing of 
cotton. 

Recent decisions by the US 
and Japan to temporarily ban 
the sale of Australian beef 
have clouded the industry, 
which earns around A$3bn 
fS2Jbn) of overseas revenue 
annually, making it the 
nation's third largest export 
sector. The US and Japan 
account for about three- 
quarters of those sales. 

The Cattle Council of Austra- 
lia, representing Australian 
cattle farmers, expressed relief 
that the US had agreed to 
accept the testing procedures 
which Australia now has in 
place. Samples of beef exported 
to the US before October 25 
and still in the export pipeline 
are due to be returned to 
Australia where the tests 
will be conducted later this 
week. 

Despite progress on the US 
front, Australia has yet to 
allay Japanese concerns. More- 
over, a number of smaller buy- 
ers of Australian beef - includ- 
ing Canada, South Korea, 
Taiwan and Mexico - are 
understood to have joined the 
temporary ban. According to 
federal officials, more than 
12,000 tonnes of Austr alian 
beef is being held at storage or 
customs Facilities in these 
countries, while around 30,000 
tonnes is in the Japanese pipe- 
line. 

Senator Bob Collins, federal 
primary industries minister, 
yesterday acknowledged that 
the problem was not over “by a 
long shot”, although he added 
that Australia was “hopeful" 
that other countries would 
follow the US lead. Beef 
shipments made before Octo- 
ber 25 and still in the export 
process are estimated to be 
worth between A$200m and 
A$250m. 

The problem occured when 
some formers fed cotton waste 
to cattle after normal grain 
supplies were affected by a 
severe drought on the east 
coast. The CCA has said that 
the chemical is non-toxic and 
that only a very small 
proportion of Australian cattle 
- those fed cotton waste 
from irrigated cotton - have 
any chance of being affected. 
All livestock from affected 
areas, predominantly in New 
South Wales, were being 
tested. 

However, the beef industry 
has acknowledged that the 
adverse publicity from the 
contamination issue could be 
damaging in the longer 
term. 


CONTRACTS & VENTURES 

France to supply 
Saudi frigates 

France has won a FFrl9b» ($3.7bn> contract to suppfr Saudl 
Arabia with two ‘stealth 1 frigates of its latest Fayette class. 
■ntomson-GSF, the electronics group. wiD be the prime am- 
tractor far the sanrii frigates. TOs reflects the degree to which 
the La Fayette ships, with their box-shaped superetrurtmK 
designed to minimise radar echos, contain the laudato- 
ics. The main French subcontractors to ThomsanrOT-wiKBe 
own contract Is worth 30 per cent of the total - are DCN, the 
state navy yard which will build the hulls, and Aerospatiale 
which will provide Exocet missiles. - 

The French defence industry has been complaining about 
the recent commercial offensive mounted by- its US competi- 
tors in export markets. But, strongly backed by the French 
g o vF mmtmi-j it has pulled off successes this year by sel l ing 
Mirages to Qatar mid frigates to Pakistan. The latest sate to 
Sq vrfH Arabia Is known as “Sawari 2”, following the “Sawari l" 
sate in 3980 of four French frigates. Earlier this year Thomson 
won the order to re-equip these four ships and to supply new 
land-based Crotale and Shahine missiles in a deal also worth 
around FFr€tra to the French company. David Budtan, Paris . 

Malaysia signs power contract 

Tarmac, one of Britain's biggest construction.. groups, is to 
take the lead rote in a tffiflm contract to bufld a 1.000MW 
Malaysian power station which the British group says will be 
the largest in the country. The contract has been awarded to 
General Electric of the US but Tarmac is expected to be 
responsible for about three-quarters of the work. 

The Nan by the Malaysian government on awarding public 
contracts to British companies, only recently lifted, 
meant that the successful bid involving Tarmac, Black and 
Veatch. the US power station designers, and GE only remained 
in the running if the contract was to he awarded to a non-Brit- 
ish company. TBV Power, a joint venture between Tarmac and 
Black and Veatch. will be responsible for designing,' construct- 
ing and su pply in g equipment for phase three of the Sultan 
Salahuddin Abdul Adz power station complex, at Kepar in 
Selangor state. GE is to supply the turbines. 

The power station, involving two 500 MW steam turbine 
generators, is for ihe state power utility Tenaga Naskmal 
Berhad and will supply electricity to Kuala Lumpur and the 
industrial Reiang Valley- Mr Neville S imms , Tarmac chief 
executive, said the contract, the biggest won by the group this 
year, fanned “part of the group's new strategy to concentrate 
oar efforts towards the growing markets in the Far East and 
Pacific rim". Andre to Taylor, Construction Correspondent 

Alcatel in Egypt-Jordan deal 

Alcatel Kabel Norge, the Norwegian subsidiary of Alcatel 
Alsthom, has signed a $70m contract with the power minis- 
tries of Egypt and Jordan to supply and install submarine 
cables to link their two electricity grids by 1997. The company 
will supply four cables to run 13km under the Gulf of Aqaba 
from the Egyptian resort of Taba to Aqaba on the Jordanian 
coast Ihe Kuwait-based Arab Fund for Economic and Social 
Development is providing frill financing for the deal. 

Tbe deal is tbe first phase of an eventual plan to link the 
power grids of Egypt, Jordan, Syria. Lebanon, and Turkey and 
possibly also Israel, at a later stage in the present Middle East 
peace process. The cables win run to a depth of 800m, creating 
a world record for tbe laying of high voltage cables, according 
to Mr Ole Olavsen, Alcatel Kabel Norge's Middle East area 
manag er 

The Egypt-Jordan cable contract was agreed as a submarine 
link when it was signed in August, before the recent peace 
agreement between Israel and Jordan. Egyptian electricity 
ministry officials have left open the possibility that Israel 
could join the shared grid later. Mr Olavsen said a route 
survey would begin almost immediately, cables would be made 
and tested in Norway in 1996 and the link laid in the Gulf of 
Aqaba in the first quarter of 1997. Mark Nicholson, Cairo 

US-India link on aluminium 

Reynolds Metals, the second largest US al uminium group, has 
signed several agreements to share its al uminium production 
and fabrication technology with two Indian groups: Hindustan 
Aluminium (Hindalco) and Sudarshan Aluminium (Sudal). 

As an initial step, Reynolds is completing joint feasibility 
studies in the areas of primary aluminium production, alumin- 
ium automotive applications and packaging, said Mr Sekander 
Ahma d, vice president of strategic planning for Reynolds 
International 

Reynolds will help Hindalco, a subsidiary of the Birla Group, 
with three projects at its facility in Renukoot: upgrading an 
extrusion plant, expanding alumina refining operations and 
the ins t alla tion and operation of an aluminium foil-rolling 
plant, scheduled to start in 1996. Sudal will be helped to 
upgrade its extrusion operation at Poona, which serves the 
architectural market. Kenneth Goodfnp, Mining Correspondent 

Ingersoll-Rand, the US industrial equipment group, has 
won a $6 .5m contract from Gasprom, the Ru ssian gus monop- 
oly, for German-made Klexnm ground engineering drills. UK- 
made portable compressors and other equipment Delivery will 
take place in January to February next year. Andrew Baxter 
London 

l John Brown, part of the T rafal gar House engineering divi- 
sion, is to build two multi-million dollar projects in Chile and 
New Zealand for Methanex of Canada, the world’s largest 
producer of methanoL Both projects involve expansion of 
existing Methanex plants. Terms were not disclosed but the 
P*?P0Se? .Chile contract, for which John Brown has signed a 
letter of intent, comprises most of the *275m which Methanex 
is spending on the project. Andrew Baxter, London 
■ Tokyo Seimitsu, the maker of semicoiiductor manufactur- 
ing systems, has tied up with Carf-Zeiss, the German optical 
msfruments manufacturer, to supply and market precision 
measuring instruments. The two companies will cooperate in 
Parts imd open their marketing channels to each 
other Tokyo Semutsu mil concentrate on developing instru- 
meote for measuring cyhnders and Carl-Zeiss will focus on 
ttueodmensmnal measuring instruments. The tie-up will pro- 
vide Tokyo Semutsu with a marketing route In Europe, where 
rt very little experience, and allow Carl-Zeiss to penetrate 
the Japanese market. Michiyo Nahamoto, Tokyo 


LEGAL 

NOTICES 


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1970 JAPAN 

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1994 ITALY 


* 

S 



SOMETHING STRANGE HAS HAPPENED TO THE WORLD’S 
ANNUAL AWARD FOR CONSISTENCY INCONSISTENCY 


// 


And as a result Pirelli is pleased to announce that it's tyre plant in Izmit, Turkey has received the prestigious Japanese 
TPM award for excellent factory" for 1994. An award that up fo now has been dominated by the Japanese themselves. 


JlWELU 

POWER IS NOTHING WITHOUT CONTROL. 




r53*55jEi*j 





Bank lottery becomes freedom fight 

The struggle is on to loosen Japan’s iron controls, Gerard Baker writes 


Jiang Zemin: To refrain from acts that broaden conflicts' 


Beijing, Hanoi 
aim to settle 


Spratlys row 


By Victor Mallet fn Bangkok 


China and Vietnam agreed 
yesterday to work peacefully to 
resolve their disputes over ter- 
ritorial and maritime bound- 
aries. and are to set up a group 
of experts to discuss their rival 
claims to the Spratly atolls and 
the waters of the South China 
Sea. 

A joint communique released 
at the end of a three-day visit 
to Vietnam by China’s Presi- 
dent Jiang Zemin said the two 
governments agreed to “refrain 
from all acts that make things 
more complicated or broaden 
conflicts". 

The dispute over the South 
China Sea is especially sensi- 
tive, because each country is 
seeking to exploit oil and gas 
reserves believed to lie under 
the sea bed. Both countries 
have awarded oil exploration 
contracts to US oil companies 
in disputed waters. 

Mr Qian Qichen, Chinese for- 
eign minister, said in the Viet- 
namese capital Hanoi the two 
sides could shelve disputes and 
start "joint development” if 
problems could not be resolved 
in talks immediately. 

Joint development of possi- 
ble oil and gas fields in dis- 
puted maritime areas is a 
proven method of overcoming 
conflicts between two coun- 
tries, but might not succeed in 


all areas of the South China 
Sea because there are four 
other claimants to some or all 
of the islands: Taiwan. Malay- 
sia, the Philippines and Brunei. 

Relations between Hanoi and 
Beijing have improved in the 
past few years following a war 
in 1979 in which China invaded 
northern Vie tnam to retaliate 
against the Vietnamese inva- 
sion of Cambodia and the over- 
throw of the Chinese-backed 
Khmer Rouge government in 
Phnom Penh. 

But Vietnamese officials say 
China has recently encroached 
on their territory, refused to 
open a railway link to allow 
normal trade across the land 
frontier, and let Chinese trad- 
ers smuggle cheap Chinese 
goods into Vietnam. 

Mr Jiang’s visit, the first by 
a Chinese president, may not 
have brought much in the way 
of concrete achievements, but 
suggests the two governments 
want to set aside their differ- 
ences and concentrate on the 
similar challenges each faces: 
keeping their one-party com- 
munist political systems intact 
while liberalising the economy. 

“Both of our two countries 
are now working to develop 
our economies and improve the 
livelihood of the people," Mr 
Qian said. “For that purpose 
we need to establish friendly 
relations.” 


I t started as a simple but 
ingenious marketing 
wheeze designed to lure 
customers In Japan's newly-lib- 
eralised market for bank 
deposits. But Johnan Shinkin's 
“Super Dream" account has 
become a national cause 
cetebre, a struggle by an inde- 
pendent-minded business to 
break free from the iron grip of 
regulatory controls. 

The account was launched 
two weeks ago by the nation's 
largest credit bank, with the 
novel attraction of a lottery for 
savers. The standard interest 
rate on a one-year deposit 
would be 2.1 per cent, in line 
with similar one-year rates, 
but Johnan announced that 
every six months its customers 
would be entered in a lottery, 
with dozens of prizes to a maxi- 
mum of Y50.000 (£324). Savers 
would have a one in 30 chance 
of winning a prize. 

The new account was a spec- 
tacular success with savers 
who queued outside Johnan 
Shinkin’s branches and poured 
a total of YlObn (£64m) into 
“Super Dream" deposits on the 
first day alone. 

But if it was a predictable hit 
with the public, it got an 
equally unsurprising thumbs- 
down from Johnan’s banking 
competitors. They immediately 
cried foul, claiming the 
account broke a self-imposed 


Most of Japan's main 
economic indicators are 
continuing to improve, 
according to the latest 
monthly performance index 
from the Economic Planning 
Agency. William Dawkins 
reports from Tokyo. Its leading 
index, a basket of economic 
indicators pointing to 
conditions a few months 
ahead, stood a 54.5 in 
September, the ninth month 
for which it has stayed above 
50. the dividing line between 
growth and decline. EPA 
officials expects the leading 
indicator to continue to point 
to growth in October, on the 
back of rising industrial 
ontput. Manufacturing output 
increased by 1 .6 per cent in 
tbe three months to 
September, achieving the third 
quarterly rise running, 
according to the Ministry of 
International Trade and 
Industry. Production 
continued to grow in October 
and November, said a separate 
R ank of Japan report 

yesterday. 


rule by banks that they would 
not offer cash bonuses of more 
than a few hundred yen as 
incentives to depositors to 
open accounts. 

The cuddly toy has long been 
a staple of Japanese banks' 


marketing techniques, but 
offering customers money is 
considered strictly out of 
bounds. The National Associa- 
tion of Shinkin Banks (small 
savings co-operatives} to which 
Johnan belongs, responded to 
its members' complaints by 
condemning the bank's 
scheme, upholding their objec- 
tion that it broke the voluntary 
rule, and warning other mem- 
ber? not to follow suit. 

in the public outcry that 
followed, the country’s 
Fair Trade Commission 
announced that it would inves- 
tigate the NASB itself to deter- 
mine whether its actions repre- 
sented a violation of Japan's 
anti trust legislation. 

The row has raised questions 
about the real extent of the 
freedom banks are supposed to 
enjoy as a result of financial 
liberalisation, and has aroused 
suspicions that the much- 
vaunted deregulation is not 
really much of a reform at all. 

Last month, the final restric- 
tions on bank deposit interest 
rates were lifted by the finance 
ministry. Since then banks 
have been free to offer deposi- 
tors any rate they choose. But, 
as Johnan's president. Mr 
Minoru Makabe, points out, the 
advantages have somehow not 
been felt by the depositor. 

“We have had many custom- 
ers saying they appreciate the 


cash prizes because even 
though the financial sector has 
supposedly been deregulated, 

banks Still offer similar inter ." 

est rates.” 

Mr Makabe argues that his 
rivals’ objections are actually 
based on a conspiracy to 
deprive the public of the fruits 
of deregulation. 

His lottery account repre- 
sents, in effect, an extra 0.2 per 
cent on the average deposit 
rate, a fact he claims is the real 
cause of the other banks' dis- 
comfiture. 

But in an ominous move, the 
finance ministry, which regu- 
lates the banking sector, last 
week announced the formation 
of a panel to investigate the 
account and to recommend 
what kinds of fhwneiai prod- 
ucts might be considered 
“appropriate". 

Mr Jiro Sailo, tbe top official 
at the ministry, acknowledged 
the probable legality of John- 
an's action but said: The law 
is not everything". 

Critics see the ministry’s 
move as an attempt to consoli- 
date its tight control even after 
the apparent liberalisation. 

This committee should rec- 
ommend how the ministry 
should play a props: adminis- 
trative role in the era of mar- 
ket liberalisation," said Mr 
Makabe. “It should conduct a 
drastic review of self-imposed 


rules that restrict competi- 
tion/’ 

It may prove difficult for the 
ministry to put the genie back 
in the bottle.' 

The account has won wide- 
spread support, and has come 
to be regarded as a symbol of 
the entrepreneur’s fight on 
b ehalf of the consumer against 
big government and big busi- 
ness. 

Any attempt to rein it in 
would be regarded with hostil- 
ity by the Japanese public. 

The latest agency implicitly 
to declare its hand faas been 
tbe National Tax Administra- 
tion Agency, which said cm 
Monday it would treat win- 
nings in the lottery as nan-tax- 
able. 

But the most, significant 
threat to tbe regulators’ plans 
could be the very phen om enon 
they were supposed to be 
encouraging: competition. At 
the weekend four banks 
announced they were breaking 
r anks with their association 
and launching s imilar lott- 
eries. 

Mr Toshio Taga, senior exec- 
utive manager at Shin- 

kin hank, rmp of the institu- 
tions planning to follow suit, 
said: “There is no other prodr 
uct which can collect tens of 
bUhons of yen in several days. 
This means users want it It is 
a depositors’ rebellion." 




By Gerard -Baker hi Tokyo 


Move is further sign of trouble for country’s privatisation programme 


Unilever drops $60m Kazakh plant bid 


By Steve LeVbie in Alma Ata 


The Anglo-Dutch company 
Unilever has withdrawn a 
S60m bid for two state-owned 
margarine factories in Kazakh- 
stan, in a further sign of trou- 
ble for the country's privatisa- 
tion programme. 

The withdrawal this week 
comes two months after the 
Kazakhstan parliament began 
pushing to suspend the privati- 
sation programme alleging 
that auctions had been fixed to 
benefit powerful families. 

The state privatisation com- 
mittee has set a December 1 
deadline for Unilever to submit 
a new bid for the factories. 


located at Alma Ata and Kara- 
ganda. Ms Susan Bruno of 
KPMG Peat Marwick, which 
advises the state committee, 
said. 

“They (UnileverJ are defi- 
nitely still interested. They 
want to keep this thing alive." 
Ms Bruno said in a telephone 
interview. 

Unilever won a tender for 
the plants and signed a prelim- 
inary agreement in June, a 
deal worth $60m in cash and 
investment. The deal was sup- 
posed to close in August, but 
Unilever began having diffi- 
culty obtaining licences and 
guarantees from various gov- 
ernment ministries. 


Finally, the company was 
unable to obtain a guarantee 
for a steady local supply of its 
main staple, sunflower oil. 
something that had been stipu- 
lated in the pre liminar y agree- 
ment. 

The company’s new offer 
could be lower, since it appears 
it must supply its own sun- 
flower oil from outside the 
republic, Ms Bruno said. 

The Unilever deal is impor- 
tant since it is one of three 
large initial privatisations 
meant to send a signal to for- 
eign investors that Kazakhstan 
is serious about attracting out- 
side capital 

One of the two other deals, 


RJR Nabisco’s purchase last 
g limme r of two confectionary 
plants, also seemed in doubt 
when state officials began try- 
ing to alter parts of toe con- 
tract, according to western 

As a whole, Kazakhstan’s 
seven-month-old privatisation 
programme has produced 
mixed results. 

The programme is divided 
into three parts - tenders of 
large enterprises such as toe 
confectionary and margarine 
plants: mass auctions of some 
7,500 small and medium-sized 
enterprises; and privatisation 
of small concerns such as 
shops. 


The small-scale privatisation 
appears to have gone well, dip- 
lomats and western business 
analysts say, but the sale of 
mfMiimn and large-scale enter- 
prises has been slow. 

Wester n di piinn^its [ for exam- 
ple, confirmed that the sale of 
medium-sized concerns ini- 
tially did appear to have been 
rigged. 

Many were sold to favoured 
families without prior adver- 
tisement of toe properties, they 
said. 

“A lot of them were done 
very quickly, and ended up in 
the bands of the rich and 
famous, ” said one western dip- 
lomat. 


The cost of borrowing fit Japan 
has started to Use again after 
three years easier inmetary 

conditions. " J ' 

The government’s Housing 
Doan Corporation said yester- 
day it- would raise Its mortgage, 
rates by. up' -to 035. per cent 
next month. The de cisio n, ; 
which follows recent increases . 
in other public sector loan 
rates, comes as- commercial 
banks struggle to avoid a rise, 
tn. fending rates that would fur- 
ther reduce demand for loans. 

The upward pressure on 
loading costs stems; 1 from the 
gradual rise in mosey market 
interest rates since the sum- 
mer. Having, fallen steadily, 
since late 1991 as .toe economy 
plunged Into ^recession, the 
overnight call rate - theprined- 
pal very short-term money 
market figure - touched hot 
tom- in July, reaching 2 per 
gffinA thwi it has J edged 
up to nearly 23 per cent this 
week. This rise has been 
reflected in an increase In 
bank deposit rates - three- 
month certificate of deposits 
have moved in line with toe 
overnight rate.. 

The higher cost' of funds has 
ftirfhoA trimmed- banks’ razor- 

thin landing , mar gins — the 

short-term prime lending rate 
has been unchanged at 3 per 
cent for more than a year.. 

Tbe upward drift in banks* 
borrowing costs has been 
caused by a shift in sentiment 
in ffnanrffll market s that toe 
economic recovery, which has 
so far been sluggish, is set to 
strengthen. The Bank of Japan,' 
which him adopted a bullish 
stance on economic prospects 
has allowed rates to rise in line 
with its own expectations of 
improving growth prospects. 

As band prices have fallen in 
line with global bond markets, 
long-term lending rates have 
risen and that has added to the 
pressure on short-term rates. 

Banks, however, are caught 
in a vice between increases in 
their borrowing costs, and lim- 
ited demand for lending. They 
have been reluctant to raise 
their prime rates in a stagnant 
loan market 


D O N 1 T 

CRACK 
UNDER 
PRESSURE 




CONTRACTS & TENDERS 


REPUBLIC OF GHANA 
VOLTA RIVER AUTHORTTY 
NATIONAL ELECTRIFICAnON PROJECT 


ThiaNoticeaflnvtiattantaTfcaderljfesoedby the Yalta River Authority fVRA) for - 
ihe Electrification of District Capittds in Broog Ahofo, Upper Bast and Northern 
Region. 


The foreign currency portion will be financed by latematfonal Development 
As*oa*tinc (IDA) and (he load currency portion by VRA. 


VRA invites Tenders bom reputable and experienced Companies from tlx: WjtW 
Baal: meudbet oountiim. Sw it zerland. TMwan end China « — n « fam ( Hailtn 
Co m p il e * iqsttatdiD Oign. 


Thr Scape of Works emooa of: 


• 850 km of 34 JkV Subtn msml ssion Lines. 

■ Distribution Networks in 13 District Capimlx. 

• 345/1 LSkV S ubstation at Galago. 

• 161 kVaHSkV Substation ut YotdL 


II is a nticip a ted that Tfender D o c ument* will be ready for (be above contact by 
November 21, 1994. Tfcndets abould be received by February 20 1995. 

Tbe Profile drawings on Snbtransmtarion Lines will be on iMew far 

Antocad 1L 


Eljgible contractors interested in tendering for tbe contract may obtain Umder 
Documents by submitting tbe request acc om p an ied by a certified cbeqse in the 
arramt of USttOOar USS900. It b> requested lb* ttedocameaMstoold beaembv 
Courier (DHL) to: 

VOLEA RIVER AUTHORITY 
Dimtoiv Engineering, Design and Construction 
R0.BaxM.77 
Accra, Ghaut 


Fu. No. 233 216848a 
Wes 2410 VRAKUS GH 


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WEDNESDAY NOVEMBER 23 1994 ★ 


NEWS: INTERNATIONAL 


Japan assailed 
over war sex 

Aslan w^jen r 5Si oration to compensate the 

for its troops durimr forced , to provide sexual Intercourse 
Commission of hTi»^ e second world war. the International 
government ^ It urges the Japanese 

ate 840.000 i£ as Sm f? 1 * 1 * onner comfort woman" an immedi- 

"W ^bilitaS^SmS^ V “ aag ^ 40 

time wSn t ^f 5 j°^- S -f!P ort 18 lively to embarrass Tokyo at a 
of resolving an iJS ? ^tieves it is on the point 
with itsnefghbom^ I?!? *“! b f deville<i diplomatic relations 
ama, Japan? mSS, ^■ t ^l end 01 August ** Tomiichi Muray- 
used ovenkS minister, announced a $lbn fund to be 
vocational for programmes and 

for » ™ taSfiSfST f T W0 “T “ a tolsen °f a po l0 *y 

*- not repres “ 

the worhL f? 01 ? 45 ““inent jurists from around 

which, it sat* 0 ? 1031 ° f °f the issue by Japan 

rather than ^n/ Ppears to ^ aime<i at Placating sentiments 

docum^JS, T°& of its heels and covering up 

100 000 to?no «in ieUCe ‘ Th * Japanese hnperial army abducted 
JSE ? [ va2^22 T“?L 311(1 8h*. often as young as 13. to 
senre a vast network of “comfort stations”, it notes. 

w ~ a P^ 11 does not take action, the matter should be pursued 
J*®™ 1 or by *** Unlted Nations, the ICJ 
sibffit^fvS 6 tbat 016 Sovemments also bear a respon- 
en ®onng the "comfort women" receive justice. 
Japan argues that war reparations to individuals and their 
mmUies were formally settled by the 1951 San Francisco peace 
treaiy. many governments, including South Korea and Malay- 
“J: have said they would not seek additional state-to-state 
reparations for comfort women. The acts should have been 
part of the war crimes trials after the war ended but were not, 
Decause the trials focused on acts committed against nationals 
“ Jhe allied powers, the ICJ argues. 

T*to ^ monitors and promotes rule of law a»d human 
rights worldwide. As an non-governmental o rganisatio n it has 
no formal sanctions it can impose. Its reports do, however, 
carry weight with the UN and by publishing *h<*m it bnp^c the 
international community will put pressure on governments to 
correct human rights abuses. Frances Williams, Geneva and 
Robert Rice, London 

Glaxo bribe arrest in Japan 

Japanese prosecutors arrested a doctor this week for allegedly 
receiving bribes from the Japanese arm of Glaxo , the UK 
drugs company, in arranging nlininal rests for the company's 
blood pressure drug, T-adpil Glaxo denied the ac cu sat io ns but 
has apologised “for causing a stir in society” and has with- 
drawn its application for the drug to be allowed on sale in 
Japan. It said yesterday that the application might proceed 
later. 

Prosecutors arrested Mr Teruo Sugibayashi, a doctor at a 
national hospital in Chiba, east of Tokyo, for allegedly receiv- 
ing over Ylm (£650,00(9 from Nippon Glaxo during 1991 and 
1993. The arrest follows three others earlier this month - two 
Nippon Glaxo officials and a doctor in western Japan - were 
on bribery charges. Mr Ibutxunu Suzuki, a Glaxo official, 
allegedly offered money to Mr Hldetoahi Fukada, an assistant 
doctor at Kagawa University hospital, in order to in order to 
obtain favourable rfinirai test results. LaclpU, also known by 
its generic name laddipine, is already on sale in 15 countries. 
Nippon Glaxo heeded to get local approval in order to sell the 
drug in Japan. It conducted various rKninai tests in co-opera- 
tion with Japan’s Mochida Pharmaceutical, said Glaxo.£fcrfA» 
Tercoono, Tokyo and Daniel. Green, London 

Angola ceasefire due to start 

A ceasefire ending Angola’s 
19-year civil war was due to 
go into effect at midnight last 
night Representatives of the 
warring parties agreed in 
Lusaka yesterday on final 
details of the im plementa tion 
of the ceasefire, due to come 
in effect 46 hours after the 
Angolan government and the 
Unita rebel movement signed 
a peace pact in the city on 
Sunday. African diplomats 
yesterday expressed relief 
that yesterday’s meeting, 
which put the Anal touches to 
arrangements for disengage- 
ment of the two armies and 
the monitoring of the exer- 

^ cise, had ended successfully. 

Some had feared that had Mr Jonas Savimbi, the Unita leader, 
intended to hold up the settlement, yesterday’s talks would 
have run in to difficulties. The outcome also allayed concern 
that hardliners in the MFLA government of President Eduardo 
dos Sa"«™; (pictured above left) might wish to press ahead 
with an offensive against Unita positions. Bat leaders of 
southern African states, led by the Embabwe’s President 
Robert Mugabe, had made clear to Mr dos Santos that they 
regarded the recent intensification of fighting as an browh of 
the negotiating process. African officials expressed confidence 
that the ceasefire would come into effect, but warned that 
there were likely to be breaches as a result of communications 
difficulties and indiscipline. Michael Holman, Harare 
See editorial comment 

pital drive for Kyrgyzstan 

World Bank is to co-sponsor a foreign investors confer- 
in Paris to try to get capital flowing into Kyrgyzstan, 
e market reforms, western economists say, have in many 
been a model for the Commonwealth of Independent 
s The bank and the Kyrgyz government have tovited343 
t investors from 27 nations to Panson December 7-8 The 
is meant to allow the Central Asian repuhhc to 
anadditional step to reviving its economy. Already, the 
S?c which has been following an International Monetary 
SSdp^ramme, has stabilised its currency, the 
to bring inflation below 1 per cent a 
S£3BS* western estunatesJh addition thr^years 
collapse. Kyrgyzstan appears set to become 
~rc rpmjbhc to achieve economic growth. Western 

SSileTSK that its economy »m< expand ^ * 1-2 

th* pales ta^comSudson to neighbouring 
SLn aTd^akhstan. the IMF and World Bank have 
^ l5tan ““/^Targyzstan because of its monetary 
^Ub^l^vMtaStews- Kyrgyz government offi- 
U» 1 and J*®® “jtai can be attracted to their agncul- 
tf economic revivaL Steve LeVine. Abna 

liott C3.se ‘not strong 

against Mr John Effiott, the Mslboume- 
jrosecution ^ ^^^r beaA ^ ^ Elders DO, group. 

1 businessman and . ^.sm <£32m) sham foreign 
•lation to an yesterday as “not a 

atige transact^ajte overseeing the committal hear- 
8 magistrate, adjourned the hearing 

Kr Graham -^^gcntion is due to make a final 

116x1 rtderawhether Mr Elliott, a promi- 

lission. He ^ business circles in the 1980s and 

figure. ® party, and other former Eiders 

er president of stand trial over the matter early next 
swscutwes oftbeftimA conspiracy, 
h. Theyare^g® id fa waS 0U tBning his tentative view 

steiday ’S?SdtiSthere appeared to be an "abimdance 
ib case . He » tfaat m a sham foreign 

ridence to wmoa question was what involve- 

ange dea1, Scanlon, another key Elders 

-SSSilS^ 



Armscor finds a place in new South Africa 

The close relationship has surprised most defence analysts, reports Mark Suzman 


P resident Nelson Mand- 
ela. one of the world’s 
most respected states- 
men, yesterday officially 
opened South Africa's first 
international defence show, a 
display of armour from an 
industry once aimed at thwart- 
ing the political movement be 
leads. 

The show is the first the 
country has held since the end- 
ing of the UN arms embargo in 
May. As air force aircraft and 
helicopters thundered over- 
head in honour of their Com- 
mander In Chief, Mr Johan 
Moolman, chairman of state- 
owned South African arms pro- 
curer Armscor, praised the 
government for its "supportive 
role” in helping promote the 
domestic industry's aim of 
boosting its 0.4 per cent of the 
global arms market, worth 
about R800m (£i44m), to 1-2 per 
cent 

Mr Mandela was equally 
enthusiastic. Armscor, he said, 
had developed a strategic, 
homegrown technological base 
that would use its weapons 
sales to “serve peace and secu- 
rity" rather than “death and 
destruction". 

The close relationship 
between the industry and Mr 
Mandela's African National 
Congress government has sur- 
prised most defence analysts. 


Arms exports: biggest manufacturing sale 



1982 83 84 &5 86 

Sowea: Soutti Afatcan gowwnswt 

who bad predicted the political 
movement would seek to dis- 
mantle or at least cut an indus- 
try that seems both incongru- 
ous and unnecessary in a 
post-apartheid South Africa. 

But Armscor has waged a 
successful public relations bat- 
tle to win over the new adnin- 


89 90 91 92 93 


istration. in part using a 
national advertising blitz that 
portrays it as a mainstay of 
South African industrial tech- 
nology and an important for- 
eign-exchange earner for the 
South African economy. 

"A bee has a sting fin* its 
protection." reads one typical 


ad caption, superimposed on a 
printing of a cuddly bee gath- 
ering pollen from a green and 
sunny hillside. “South Africa 
has one too: Armscor". Even 
the company's new slogan - 
"Creating wealth. Protecting 
the Nation" - is adroitly 
designed to highlight both the 
industry’s financial solvency 
and its strategic role. 

Mr Moolman claimed the 
industry, South Africa’s largest 
manufacturing exporter, con- 
tributed R3bn a year to the 
economy and employed 70,000 
people. 

Mr Joe Modise, defence min- 
ister, has long been a sup- 
porter of domestic arms manu- 
facturers. but the government 
has until recently remained 
muwfalu about harfring 1 fly»m 
wholeheartedly. Mr Joe Slovo, 
housing minister, has report- 
edly urging they be scaled 
down. Now with Mr Mandela’s 
official backing, Mr Modise 
appears to have won the day. 

Helping persuade the presi- 
dent is the fact that the indus- 
try has some genuinely com- 
petitive products to sell. 
Armscor was only formally 
created in 1977, just six months 
before the UN imposed its 
embargo, but has developed 
the successful G-5 and G-6 
artillery pieces, generally 
regarded as among the world’s 


best, as well as a range of 
sophisticated gmaiw arms and 
armoured vehicles. 

Responding to the changin g 
political climate, in 1992 it was 
divided into two companies, 
with the rump Armscor becom- 
ing primarily a procurement 
agency and its manufacturing 
arm spun off as DeneL 

A Denel subsidiary. Atlas 
Aviation, has recently gar- 
nered much international 
interest with its Rooivalk 
attack helicopter. 

In line with South Africa’s 
new intero n t i o p fl i image as a 
model global citizen, the new 
Armscor has published a set of 
ethical principles under which 
its arms trade will be con- 
ducted. At the same time it has 
undertaken to make the trade 
more transparent by drawing 
up a list oT all approved coun- 
tries to which the South Afri- 
can industry will be permitted 
to sell 

But even with official gov- 
ernment support, it is not yet 
plain sailing. 

Already implicated in having 
sold arms to Iraq, Rwanda and 
the rebel Unita movement in 
Angola, Armscor is the subject 
of a judicial commission of 
inquiry following claims in 
September that it had sold 
15,000 AK-47 rifles to a Leban- 
ese arms dealer allegedly 


trans-shipping them to Yemen, 
a proscribed country because 
of its civil war. 

At the same time, officials in 
the defence and foreign minis- 
tries are unwilling to testify to 
the commissio n in open court 
about Armscor' s past military 
relationships for fear disclo- 
sures about its secret dealings 
during the apartheid era will 
alienate many of South 
Africa's new allies. 

More important, because of 
an indictment served on Arms- 
cor and several other South 
African defence companies in 
1991 by a Philadelphia grand 
jury on charges of illegal pur- 
chase of American defence 
technology during the 1980s, 
Denel is legally barred from 
doing any business with the 
US government or any Ameri- 
can defence companies. 

This is a constraint proving 
costly in the European market 
where equipment compatibility 
with American norms is fre- 
quently a requirement in new 
weapons acquisition. But while 
the industry may not become 
the guarantor of peace Mr 
Mandela hopes, optimism is 
widespread that the exposition 
will boost the industry’s inter- 
national profile, and ethical 
controversies notwithstanding, 
Annscor’s financial goals at 
least may prove achievable. 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 23 l99f 


NEWS: THE AMERICAS 


Attack on business tax breaks 

US labour secretary queries an estimated $111 bn of subsidies 


By Jurek Martin (n Washington 

Mr Robert Reich, the secretary 
of labour, yesterday called on 
the new conservative political 
majority in Congress to attack 
tax breaks for business and 
end “corporate welfare as we 
know it”. 

Mr Reich suggested the 
savings from cutting direct 
assistance to companies could 
be used to help the economy 
create more high-wage Ameri- 
can jobs. 

In a speech on economic and 
social policy which he stressed 
represented his personal per- 
spective, Mr Reich ascribed 
Democratic losses in the mid- 
term elections to “the revolt of 
the anxious middle class”. 
Other factors might have been 
in play, but “never underesti- 
mate the political potency of a 
declining paycheck." 


“Better fiscal management.” 
he said, "cannot reverse the 
long-term decline of America's 
middle class,” a comment 
which could be viewed as a 
criticism of the Clinton admin- 
istration's emphasis to date on 
reducing the federal budget 
deficit. 

But Mr Reich was more the 
loyalist in his dissection of the 
current Republican agenda of 
deep tax cuts and the eviscera- 
tion of the social safety nets. 
Noting that the deficits accu- 
mulated under the two previ- 
ous Republican presidents now 
ate up 28 cents of every tax 
dollar, he urged: “Let's not 
whip up another toxic eco- 
nomic potion - a pinch of Laf- 
fer, a dash of Darman, the eye 
of a Newt - that all of us will 
pay for in the morning.” 

Mr Reich argued that the 
administration's policies had 


moved in the right direction in 
the last 22 months but still 
only constituted “a bare begin- 
ning.” Instead of incremental- 
ism, “let's accelerate the 
agenda of reform; streamline 
and consolidate the current 
clutter of adult education and 
job retraining programmes and 
pull the plug on those that 
don't work.” 

Warming to one of his famil- 
iar themes, but incorporating 
some Republican adages, Mr 
Reich said "Instead of feeding 
bureaucracies - federal and 
state - let’s channel resources 
directly into the pockets of 
ordinary Americans.” 

The Progressive Policy Insti- 
tute, a moderate Democratic 
think-tank, had recently identi- 
fied special tax breaks for par- 
ticular industries and agricul- 
ture currently worth in excess 
of Slllbn over a five-year 


period. Ht* invited conservative 
institutions to provide "their 
own examples of business sub- 
sidies that don’t make sense.” 

“Since we are committed to 
moving the disadvantaged 
from welfare io work, why noi 
target corporate welfare as 
well and use the savings to 
help all Americans get better 
work?” 

Meanwhile more details of 
Republican proposals sharply 
to reduce individual welfare 
entitlements continue to leak 
out. One version, likely to be 
introduced in the House in 
January, would end automatic 
eligibility for welfare, set an 
annual limit on all federal wel- 
fare spending and would 
replace longstanding food 
stamps, child-nutrition and 
school lunch programmes with 
block grants for states to 
administer as they wished. 



Reich: more training and extra rash in people’s poekets 


Helms renews venomous outburst against Clinton 


By Jurek Martin in Washington 

Senator Jesse Helms of North 
Carolina, refusing to back down or be 
muzzled, has again stated, this time 
in even more incendiary terms, that 
President Bill Clinton is unpopular 
with the US military. 

He told a local newspaper In Ral- 
eigh that “Mr Clinton better watch 


out if he comes down here [to military 
bases in the state]. He'd better have a 
bodyguard." 

This prompted the Secret Service, 
which protects the president and 
which investigates all threats against 
him, to announce yesterday it had 
asked for a transcript of the inter- 
view. It would not say if it was 
planned to grill the senator. 


Last weekend, the likely next chair- 
man of the Senate foreign relations 
committee created something of a stir 
by asserting that the president was 
unfit to be commander-in-chief. He 
said Mr Clinton was unpopular 
among servicemen because he had 
avoided the draft in Vietnam, ended 
military discrimination against homo- 
sexuals and had cut defence spending. 


The senator's latest outbursts have 
been condemned by the White House 
and the militar y high command and 
even been dismissed by the Republi- 
can hierarchy in Washington as 
unnecessarily offensive. 

But Mr Helms is about to acquire 
more clout, through his committee 
chairmanship, than he has previously 
enjoyed One indication of that was 


provided in the last 24 hours in talks 
between Mr Clinton and Mr Yitzhak 
Rabin, the Israeli prime minister. 

Mir Helms had described the Israeh- 
Syrian peace process as “a fraud” and 
threatened to block the stationing of 
any US monitoring troops on the 
Golan Heights. This prompted Mr 
Clinton, in Mr Rabin's presume, to 
issue a direct rebuttaL 



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By David PBBng 
In Buenos Aires 

Argentina’s proposal to 
establish a United Nations 
force to be deployed, during 
natural disasters will be 
debated in the General Assem- 
bly today and should be “unan- 
imously approved," according 
to Mr James Cheek, US ambas- 
sador m Buenos Aires. 

Mr Cheek, speaking after 
faikfl between Mr William 
Perry, US defence secretary, 
and Mr Oscar CamiliOo, his 
Argentine counterpart, said 
the resolution, strongly sup- 
ported by the US. already 
enjoyed the backing of 50 
national co-sponsors. 

Argentina’s proposal would 
direct the Genera! Assembly to 
study the establishment of a 
force, to be recognised by Its 
“white helmets,” and dedicated 
to alleviating the effects of nat- 
ural disasters snrfi as fanning 
and. floods and to come forward 
with concrete proposals in the 
next few months 

Mr Perry, on a visit to Braril 
and Argentina, said he had dis- 
cussed the resolution with 
President Carlos Menem, 
iodnding a proposal to estab- 
lish a centre in Argentina to 
train the force. 

Acceptance of the initiative 
would be a public-relations 
coup for Mr Menem whose 


administration has' done, much 
to ie^stabli&iteiEte 


more closely -with US foreign 
policy than almost- any. other 
Tatin American shd&-- 

Argentina is virtuaHy ahme, 
for example, in s a gpoating ae 
US embsagou against Cuba, it 
also backed the invastori of 
Haiti and,, said Mr Camilfon, 
was wlBihg to 'send a battalion 
of 300 peacekeepers to the 
in the-JKXkfew mootbs.' 

Mr Perry praised Argentina 
for its new approach, whi3i 
contrasts strongly with Its his- 
tory of non-alignment espe- 
cially . for; Its- deployment of 
troops In UN. peacekeeping 
missions to . such, regions as 


tin. 

Argentina's; immediate 
reward will be the signing next 
month of a contract .' with Lock- 
heed to run the state-owned 
Aerea Material COrdoba air- 
craftfactoiywharel8ofthfi36 
A-4M Skyfa a w ks purchased by 
A q j r puLif ta from the US earifay : 
this year w£Q be upgraded. 

Argentina is expected to pay 
S250m-$400m for the aircraft, 
including the cost / of renova- 
tion. Mr Catoilxdn said fce. 
hoped that -the input of US - 
expertise could transform the 
Cfinioha plant into a regional 
' repair centre lor civiL anA mili- 
tary aircraft. ' 


Samper renews 
drive for peace 
in Colombia 


President tries to end guerrilla 
war, reports Sarita Kendall 


P resident Ernesto Samper 
of Colombia marked his 
first 100 days in office 
last week with a push to get 
the country^ guerrilla groups 
to the negotiating table and by 
armramring a set of conserva- 
tive economic targets that pla- 
cated some of his critics. 

The administration has 
dropped the insistence of previ- 
ous governments that a cease- 
fire must be in place before 
starting negotiations with the 
guerrilla groups. Instead, it is 
demanding what it calls a 
“humanisation” of the war In 
order to protect civilians and 
wounded combatants. 

Since 1989, most of the M-19 
and the Popular Liberation 
Army movements have 
exchanged their weapons for 
electoral politics, but the two 
biggest guerrilla armies have 
been growing in numbers and 
military strength. The former 
Soviet-line Revolutionary 
Armed Forces of Colombia 
(FARC) and the once Castroite 
National Liberation Army 
(ELN) between them control 
extensive rural territory in the 
northeast, northwest, centre 
and south of Colombia. The 
FARC alone has over 50 fronts 
and guerrilla combatants may 
total 10.000 or more. 

According to police figures, 
there were more than 1,200 ter- 
rorist incidents and over 1,000 
kidnaps in the first 10 months 
of this year, most attributed to 
guerrilla groups, which use 
extortion, robbery and drug 
trafficking to finance their 
activities. Guerrilla actions 
during the last decade have led 
to the spilling of 1.2m barrels 
of oil as a result of pipeline 
bombings, the loss of consider- 
able foreign investment and 
the displacement of 150,000 
people from violence- ridden 
areas. 

By opening the door for 
peace negotiations and impos- 
ing neither deadlines nor 
obstacles, the government has 
made it difficult for the guerril- 
las to refuse to talk. Political 
business and church leaders 
have all given qualified 
approval to Mr Samper's pro- 
posals. and guerrillas have also 
commented in positive terms. 

(31ven their increasing 
regional power - evidenced in 
last month's local government 
elections - and their economic 
strength, it is not obvious why 

tne main guerrilla movements 
should want peace. 

Mr Samper also promised an 
ambitious human rights pro- 
gramme with watchdog offices 
in military installations, as 
well as the dismantling of 
paramilitary groups, often 
Imked with police or army 
During his first 100 days! Mr 
Samper announced a series of 
employment and social nro- 
grammes, which he tied 
together last week in a ££ 
year national development 
ganhecdiedthe-sodS^p 
forward. In the plan, the gov- 
ernment blames the tw»r«ic 
teace of “alarming povertv Ipw 
ds" aad 


gap between rarer and urban 
areas on continuing violence. 
It aims to raise, income per cap- 
ita by 35 per cent a year. 

Central bank and other econ- 
omists,' dismayed by the 
administration’s somewhat 
incoherent initial proposals to 
reduce inflation, speed up 
devaluation and substantially 
increase public spending all at 
the same time, have welcomed . 
Mr Samper’s commitment to 
generating a budget surplus of 
at least 0.7 per emit of GDP, or 
more if necessary. The infla- 
tion target for 1995 is 18 per 
cent, compared with this year’s 
22-23 per emit rate. 

“This is down to earth, 
they’re recognising that they 
need to cut back on planned 
spending and they’re also' 
going to improve tax collec- 
tion. It’s a big step in the right 
direction for macroeconomic 
stability,” said Mr Salomon 
Ealmanovitz, a director of Col- 
ombia’s central bank. “And 
yes, we will be able to keep 
devaluing the peso if the gov- 
ernment maintains a budget 
surplus.” This year so for there 
has been a slight revaluation 
in real terms. 


Bombings of 
oil pipelines 
have slowed 
foreign 
investment 


Colombia has been suf 
a surfeit of dollar inflows 
has foreign reserves to 
about nine months’ of im 
The development plan ini 
large investments in train 
oil and other infrastro 
with a strong import o 
nent, which will help u 
foreign exchange. 

The emphasis, howev 
on social welfare, no 
direct subsidies for the 
needy sectors of the pc 
tion. This is not only infi 
ary. say economic critic: 
the money would be t 
spent on remedying the : 
tural problems underlying 
fifty, rather than on. ham- 


On drug trafficking 
have been mrnhngj ^ 
and discouraging fcren 
area planted with coc? 
juana and opium popp 
doubled to over 50,000 1 
and Colombia’s cocaii 

auction is up to abac 
tonnes a year. 

Several major Medell 
““fire who surrenderee 
the last government are 
free next year, wfaj 
“came chiefs want eve 
generous terms if they 
band themselves in. A1 
President Samper has 
ised to keep fighting 
most Colombians cleart 
for greater importance 
ing violence and to aolvi 
nomic problems than cc 
mg drug barons. 








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10 


FINANCIAL TOMES 


WEDNESDAY NOVEMBER 23 .1994 


NEWS: UK 


Prime minister condemns ‘unjustifiable’ salary increase as pressure grows in row over executive pay 

Tensions on EU spark challenge to top Tory 


By Kevin Brown, David Owen 
and James Blitz 

Mr John Major, the British 
prime minis ter, yesterday con* 
demrifwi "un justifiable " salar y 

increases for executives of pri- 
vatised companies as Mr Ced- 
ric Brown, chief executive of 
British Gas, said he was con- 
sidering whether to forego part 
of a 75 per cent pay rise. 

‘Hie government's difficulties 
worsened as Tory tensions 
over Europe emerged into the 
open with an unexpected back- 
bench challenge to Sir Marcus 
Fox, a key supporter of the 
prime minister, for the leader* 
ship of the powerful 1922 com- 
mittee of backbench MFs. 

The challenge, horn the little 
known chairman of the cross- 


Sir Nicholas Cosmo Bonsor has 
challenged Sir Marcus Fox for 
the chairmanship of the influ- 
ential 1922 committee of back- 
bench Tory MPs - in effect the 
job of commander-in-chief of 

tiie Tory footsoldiers at West- 
minster. Although much of his 

s u p p o rt may come from MPs 

dissatisfied with Mr Major’s leadership. Sir 
Nicholas is for from an obvious standard-bearer 
for backbench dissidents. A former captain of 
boats at Eton, Sir Nicholas, 51. is married to the 



daughter of the second Lord Eillearn and is a 
descendant of Horatio Nelson, the victor at the 
Battle of Trafalgar. 

He is also a former member of the council of 
the Lloyd's of London insurance market. This 
year’s register of MPs' interests lists more than 
70 syndicates of whicb he is a member. 

As chairman of the House of Commons 
defence committee, he has waged a vocal cam- 
paign against cats in the armed forces. He is 
sufficiently Eurosceptic to have contributed to 
the government's first defeat on the bill imple- 
menting the Maastricht treaty. 


party Commons defence com- 
mittee, was widely seen by 
MPs as an attempt to punish 
Sir Marcus for his unswerving 
support for the prime minister. 

In robust Commons 
exchanges, Mr Major said that 
excessive executive pay rises 


should be curbed by sharehold- 
ers, but ruled out government 
interference, either directly or 
through the statutory regula- 
tors supervising privatised 
industries. 

Mr Brown's pay rise was con- 
demned as grotesque by Mr 


Tony Blair, the Labour leader. 
Mr Paddy Ashdown, leader of 
the Liberal Democrats, said it 
was "a metaphorical V-sign” to 
gas consumers. 

Mr Blair wrote to Mr Major 
urging the government to with- 
draw tax privileges for execu- 


tive share options and give reg- 
ulators power to limit price 
increases in industries subject 
to excessive pay rises. 

Mr Brown said he under- 
stood the widespread reaction 
to the company's announce- 
ment that his salary is to rise 
from £270,000 a year to 
£475,000. “I will consider my 
options and discuss it with my 
colleagues and executive direc- 
tors in the light of all that has 
been said." he told Sky News. 

Tory backbenchers said the 
battle for the leadership of the 
1922 committee could become a 
proxy contest between Sir Mar- 
cus and right-wing backbench- 
ers seeking to destabilise Mr 
Major's leadership. 

One backbencher blamed 
Euro-sceptics for the challenge. 


saying: “I think it's those peo- 
ple with very long memories 
and very long agendas who 
effectively want us to poll out 
of Europe despite the conse- 
quences to the government and 
the counriy." 

The feeling among Tory MPs 
was one of a widespread desire 
to rebuke Sr Marcus for his 
i»|npr wanting cm behalf of the 
prime minister that the defeat 
of legislation providing for 
higher UK payments to the 
European Union would prompt 
a general election. In a farther 
indication of the strength of 
feeling, around 25 members of 
the Eurosceptic Fresh Start 
group last night discussed the 
possibility of mass abstention 
on the bill, threatening the 
government’s majority of 14. 


Aerospace group steps up supply fight with Lockheed 


An offer by British Aerospace to 
maintain the Royal Air Force's exist- 
ing fleet of 60 Hercules transport air- 
craft at a fixed price, with a set num- 
ber of aircraft available at any one 
time, is to be discussed by a cabinet 
committee tomorrow, our Defence 
Correspondent writes. 

The proposal, sent to Mr Roger 
Freeman, the UK defence procure- 
ment minister, will be discussed along 


with recommendations by a Ministry 
of Defence procurement committee to 
buy a number of Lockheed C-130J air- 
craft as an alternative to refurbish- 
ment. 

BAe has offered to maintain a fleet 
of 50 Hercules aircraft, 70 per cent of 
which would be available at any time, 
at a fixed cost 20 per cent lower than 
the RAF's current main tain a nee 
exists. BAe has made the offer because 


it wants the UK government to buy 
the European Future Large Aircraft, 
for which BAe will build the wings. 
However, the FLA will not become 
available until 2002. while the RAF 
argues that its Hercules fleet will 
need replacement from 1996. 

The Treasury is thought to be inter- 
ested in BAe's proposals, which would 
not require the defence ministry to 
buy new aircraft or refurbish the 


existing Hercules fleet. Both depart- 
ments will be represented at the com- 
mittee meeting nn Thursday, as will 
the Department of Trade and Industry 
and the Scottish Office. 

The company is also undertaking to 
complete at no cost to the RAF any 
refurbishment work which is needed. 
BAe puts the cost of maintaining the 
Hercules fleet at £52m (.$85 -3m) a year. 

In a separate note BAe has also 


suggested that the government sells 
its Hercules fleet to BAe and leases it 
back to further improve the depart- 
ment's finances. 

The defence minis try confirmed 
that it had received an approach from 
BAe, but would not say how quickly a 
decision would be made. The ministry 
has said it intends to decide about the 
future of the Hercules fleet before 
Christmas. 


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DON’T DREAM IT. DRIVE IT. 

053 



UK NEWS DIGEST 

Oil exploration 
spreads across 
‘new 

m the “fast track". More than 60 JSf-XftyfiS 
offered for ofl and gas eaptorafana £Z**&J *& ^bore 
licensing round are in this regum to the north ofJeogfflriMr 
Charies Wa rite, junior energy minister, sam he Jfopeaj 
“last track" process would see further development TOst 
Shetland starting as eariy as next summer. _ 

He also called for nominations from oil conapamea for the 
17th lirowshig round which would “stretch out to new ho rizon s 
to the west of the UK”. Preliminary drilling results suggest 
that the west of Shetland region has the potential to produce 
up to a third of Britain's present North Sea output of 25m 
barrels a day. Earlier this month the government gave 
a p proval for Famaven, the first oilfield in the r egion . B riti sh 
Petroleum and {BwH will spend £550m on developing the field. 

The field to in 450 metres of water and in a region, known, as 
the A tlan tic Frontier, where weather can be harsher than in 
the North Sea and sub-surface currents more complex. Ana- 
lysts suggested yesterday that the key to opening up; the 
region would be an infrastructure shared by campapies'ppecat’: 
ing there. “B is an expensive area in which to operate and 
charing would cut costs,” owe explained. “Obviously the gov- 
ernment Is keen to encourage mare exploration so that we can 
know in w™ (fataii what the real potential is west of Shet- 
land.*' . ‘ - •* . •- 

Coal bidder looks to price but 

RJB Mining , the coal company chosen by the gove rn ment as 
preferred bidder for British Coal’s English regions, is seeking 
to shave at.kast £35m off its £914m bid after finding that coal 
stocks have fallen short of its expectations. It is idling; institu- 
tional investors that there are 13m tonnes o£ coal less in 
British Coal's Rn gfiah stockpiles titan when, it made its bid, 
and this should enable it to negotiate a £3Sm redaction in the 
final purchase price. i 

The coal stock change provides a fillip for the ccanpany's 
efforts to raise up to £L08bn through borrowing and selling 
shares. RJB was given further cheer when Mr Jhhn Jennine, 
executive chairman of NSM, another coal company which hid 
for British Coal assets, expressed support for the bid.' 

Other failed bidders have attacked RJB’s assumptions on 
future markets as unrealistic but Mr Jermtofe, whose company 
bid unsuccessfully for the south Wales region, said he thought 
RJB’s plans could work out “I hope they do," he- said. 

Details, Page 29 

Confusion over lottery winners 

A 25-year-old London chauffeur has been charged with trying 
to obtain one of the seven jackpot prizes m the National 
Lottery by deception. The first lottery draw was held an 
Saturday and yielded prizes ranging from £U) to the sevm 
jackpot prizes of £839,254 ($L3m). Mr James Made! is accused 
of trying to obtain money at the London office ofCamelot, the 
consortium that organises the lottery. 


Dtta^ployad British toenagwr «iu big la lottery 
LOUDON, Nov 21 (Beater) - An nnenf>loyed teenager 
joined a retired engineer and a former miner on 
Monday aa three of the seven winners sharing 
£5. 8m ($9.1m) jackpot in Britain's first national 
lottery. Mark, wright, 18, from Liverpool in 
northern England, said he almost- threw. away his 

Meanwhile, Mr Mark Wright, aged 18, was named as a 
jackpot winner by newspapers, radio stations and interna- 
tional news agencies after announcing detailed plans, for 
spending the prize and after hying to sell his life story to a 
newspaper. Be later admitted being a hoaxer. One of the seven 
genuine jackpot winners has so for foiled to claim the prize. 
Three have told Camelot they want no publicity while annOtgr 
told reporters he intended to spend the money on a new Skoda 
car and a visit to his brother in New Zealand. 

Church urges aid for homeless 

Dr George Carey, archbishop of Canterbury, 
call e d an the government to use Tmyt week’s 
national Budget setting out fiscal legislation 
for 1995-96 to combat the “great evil” of home- 
lessness. Dr Carey, head of the Protestant 
Church of En gland, said there was a need for 
more low-cost rented housing “to meet the 
desperate needs of the most vulnerable in our 
society". He added: “1 hope this priority will be 
reflected in the forthcoming Budget and in wider housing 
policies” 

Building society seeks reform 

Nationwide Bu ildin g Society, one of the UK’s largest savings- 
and-loans bodies, called yesterday for a single qualifying 
period before society members become eligible for the rights 
and benefits of membership. Giving evidence to a House of 
Commons i Treasury committee inquiry into financial regula- 
tion, Mr Brian Davis, Nationwide chief executive, sai d there 
was a case for a single statutory test of membership - having 
been an investor or a borrower for a set period of time such as 
twoyears - which would apply for voting and ownership. 

White such a change would reduce the number of members 
eflgibte to vote at a time when there is increased um pire on 
societies accountability, it would remove anomalies from the 
oirrem mranganarts. For example, in the case of the Lloyds 

pb? bld J!f Ch * ite ? ham & Gloucester. Building Society, only 
C&Gmvestdng members of more than two years’ standmgean 
receives cash share of the price,though a larger number of 

SX '"' IOmXS - CanTOte <“ ■««- to 

a submission to the committee called for 

**■ financial services with just 
one watchdog covering areas now handled bv a ranee of 

Societies ComaiLionTSfthl 
Securities and Investments Board, the chief City regulator 
MPs on the committee were dearly concerned that 
nnage of societies as traditional 
way societies saw themselves as in 
other financial services org^ons. Wmpetlti0n ^ 

Profits at Wimbledon up 70% 

SSSSSSfSSFr 5 ® 




Correction: truancy in s< 

sSsSswwaasr 

ing lessons had been "£*0. 

schools’ rates of imauthorised^tee^J^ 61 
msteke wasdue to an er^?by^E? ^ ™ 
the mformation provided by 




^NANciALTlMts 



UK 


Telecoms operators challenged over ‘superhighway 


^ A*an Cane and Raymond Snoddy 

5BSS33ST 

In ' af ^ matl °n superhighway 
entitled K h pu b £*shed yesterday, 
of the Futurf^rw*! 8 Superhighways 
ComxnuniStio^ *S‘ ng Bmad band 
enunent S^f the ^ gov- 
exr^ril,^ ■ the operators to gain 
experience m interactive technofo- 


a full 
coun- 


ties by applying for local franchises 
which would enable them to deliver 
a full range of services including 
broadcast entertainment to homes 
within the franchise area. 

The paper confirmed, however, 
that the government has no inten- 
tion of permitting FT to broadcast 
entertainment to homes nationally 
before 2001 at the earliest. 

The issue is a point of intense con- 
tention for 8T which has been ban 
ned from offering broadcast enter- 
tainment services over Us network 


to allow the cable television industry 
to establish itself in the UK. Cable 
television companies are, however, 
not debarred from offering telecom- 
munications services. 

Mr Richard Wool lam, director of 
trade body the Cable Communica- 
tions Association, said yesterday: 
“All the Government is saying to BT 
is 'Come and join the cable party.”’ 

The Independent Television Com- 
mission, regulatory body for com- 
mercial television, has advertised a 
total of nine new local delivery 


licences - as cable franchises are 
called - the latest in the past few 
days. They are for four separate 
franchises in the English Midlands 
covering 248,000 homes. 

The commission emphasised yes- 
terday that BT had always been able 
to apply for cable television fran- 
chises like any other company and 
since April BT has been able to do it 
in its own Dame rather than through 
a subsidiary. 

BT said yesterday the government 
decision meant "the great leap in 


broadband communication we were 
hoping to provide has been post- 
poned For several years". 

It is clear that BT does not intend 
to apply for large cable franchises, 
such as that currently on offer 
which covers all of Northern Ireland. 

Instead it wants the freedom to 
spend £15bn to create its own mod- 
ern network to compete against the 
cable companies. 

The government's paper is in part 
a response to the report of a parlia- 
mentary committee which urged 


that BT should be freed from the 
present restrictions. 

Mr Ian Taylor, trade and technol- 
ogy minister, said he bad appointed 
a group of senior industrialists to 
advise him. including Mr Don Cruik- 
shank, director-general of Oftel, the 
industry watchdog, and Mr Peter 
Job, chief executive of Reuters. Oftel 
said it was pleased there was no 
intention to change the existing 
supervisory regime. 

Demand for TeleWest, Page 23 


MPs demand reform of 
animal quarantine laws 


By Alison Maitland 

The House of Commoi 
agriculture committee «ri 
today recommend a wholesa 
change in. the British gover 
meat’s policy on quarantit 
for pets, saying it should t 
replaced immediately with 
cheaper system of vacclnatioi 
and blood-testing. 

The proposed change, undi 
which pets would requii 
health “passports". wouJ 
apply to dogs and cats enteric 
Britain from European Unio 
member states and country 
that are free of rabies. Th 
present system, under whic 
pets must be left in approve 
premises at the owner 
expense for six months, wouJ 
continue for pets arriving froi 
other destinations. 

The committee says scier 
tific advances show that th 
alternative system would offc 
protection at least equivaler 


to quarantine. “The introduc- 
tion of a suitable system of 
controls through vaccination is 
emphatically not a relaxation 
of Britain’s defences against 
rabies." it says. 

“We consider that a system 
such as we propose would 
effectively decrease the likeli- 
hood (of rabies entering the 
UK], not least because the 
costs of the new procedure, a 
small fraction of the expense of 
quarantine, would no longer 
provide an incentive for many 
to smuggle their animals into 
this country." 

But the British Veterinary 
Association yesterday opposed 
the immediate ending of quar- 
antine, saying the EU should 
first be free of rabies. 

MPs point out that the inci- 
dence of animal rabies in the 
EU has fallen sharply from 
8,506 cases in 1989 to 1.207 last 
year, and that the European 
Commission believes it will be 


eradicated within two or three 
years. They argue that the 
European virus, transmitted by 
foxes, poses far less of a threat 
to humans than the virus in 
the developing world, where 
rabies is commonly carried by 
dogs. 

Under their proposed 
changes, modelled on measures 
adopted by Sweden in May. 
dogs and cats due to be 
imported into the UK from 
approved countries would be 
identified by a unique number 
carried in an im planted micro- 
chip or tattoo. 

The a nimals would have to 
be vaccinated at the age of 
three months or above, 
undergo a blood-test four 
months later to establish they 
are immune, and spend at least 
six months in the approved 
country before entering 
Britain. 


Observer, Page 21 



A cat held in quarantine near London under anti-rabies laws 


Import data win 
new lease of life 


Data showing the level of 
import penetration in different 
sectors of the UK economy are 
to be published today for the 
first time for more than seven 
years. Gillian Tett writes. 

Publication of the figures 
comes as the UK Central Sta- 
tistical Office embarks on radi- 
cal changes in the way eco- 
nomic statistics are presented 
to businesses. 

The CSQ and Taylor Nelson 
AG, the market research 
group, will launch the new 
business series in London 
today. The data will include a 
range of new import, export 
and manufacturing figures in 
almost 5.000 categories ranging 
from steel to sawdust and truf- 
fles. 

Although information on 
most industrial sectors will be 
published on an annual basis, 
figures will be provided on a 
quarterly basis for industries 
which have been requesting 


this, such as the chemicals sec- 
tor and pump-making industry. 

The Department of Trade 
and Industry used to publish 
data showing approximate lev- 
els of import penetration. This 
was stopped in 1987. Many 
observers suspect this decision 
reflected official unease with 
the growth in the trade deficit. 

Government officials insist 
in public, however, that the 
decision was made to save 
resources and cut down on red 
tape. 

The new publication was 
yesterday welcomed by indus- 
try groups. 

The EU directive known as 
Prodcom requires all member 
states to collect data on a har- 
monised basis, which can be 
easily compared to official 
trade statistics. Although 
Britain expressed reluctance 
over the directive, it has 
become the first EU country to 
publish the data. 


State-owned company pursues more commercial freedom 


The government plans to privatise ted to be announced tomorrow by Mr tion issues. Tbe flotation is a crucial track "within the life or this pariia- 

Rail track, owner of Britain’s railway Brian Mawhinney, transport secretary, part of government plans to privatise ment". Mr Michael Meacber, Labour 

track, signalling and stations, with a According to one City estimate, pri- the entire national rail network. Mr transport spokesman, said: “Rail- 
stockmarket flotation early in 1996 vatisation of Rail track would raise Mawhinney suggests in a letter to Mr track’s privatisation will produce tbe 

according to leaked ministerial memos between £3.3bn ($5.4bn) and £4.3bn, John Major, the prime minister, that money for the tax-cat bribes in time for 

obtained by labour. The plan is expec- making it one of the biggest privatisa- he should announce flotation of Rail- the next general election." 


Scottish Nuclear, the 
state-owned company which 
generates nearly half of 
Scotland's electricity, said 
yesterday it would be seek 
greater commercial freedom 
regardless of whether 
ministers accepted its request 
for privatisation, Michael 
Smith writes. 

Mr Robin Jeffrey, chief 
executive, was optimistic about 
privatisation. But he added 
that, even without it. the 
company would press for 


freedom - for example to 
diversify into non-nuclear 
industries. “I hope our plans 
for tbe future win convince the 


diversify." The company also 
said it would have to write off 
about £20m of development 
costs if it was refused 
permission to open “dry store” 
facilities which it wants as an 


fuel, at greater expense, to 
BNFL, the state-owned 
reprocessing company. 

Mr Jeffrey issued the 
warning as he revealed details 
of the company's improved 
performance in the first half of 


the year. While declining to 
disclose the company’s 
profitability, Mp Jeffrey said 
output had risen by 16 per cent 
in the first half of last year to 
7.7 terawatt (million million 
watt) hours. Provided the 


company received the 
government’s permission to 
open dry stores at its two 
power stations, it was on 
course to meet its target of 
cutting costs from 3.2p per 
kilowatt hour three years ago 


to 2.5p this year. It has set a 
new target of 2p to be achieved 
by 1998. 

Mr Jeffrey said this could be 
achieved by increasing output 
from about 16.8 terawatt hours 
this year to 19TWh by 1998 
through improving efficiency 
and by reducing the regularity 
of inspections, in which plants 
have to be dosed, from every 
two years to every three. 

The company said staff 
numbers were below 1.900 
against 2J500 two years ago. 


government that they can 
unshackle us and give us the 
freedom to develop and alternative to sending spent 


11 


Shirayama 
abandons 
London 
hotel plan 

By Simon London 
and Michael Skapfnker 

The tortuous history of County 
Hail, the prominent building 
that faces Big Ben by the 
Thames in London, took 
another twist yesterday as 
plans to turn part of the site 
into a hotel were scrapped. 
County Hail was headquarters 
of the Greater London Council, 
the largest municipal author- 
ity in Europe, until the 
Thatcher government abol- 
ished it in 1986. 

Shirayama, the Japanese 
developer which paid £60m 
(898.4m) for County Hall last 
year, now pfans to build 
380,000 sq ft of offices and 
exhibition space. 

Mr Mac Toyota, Shirayama ’s 
representative in London, said: 
“We had a better idea. We are 
not saying that the hotel busi- 
ness is not profitable." Luxury 
hotels in London have recov- 
ered from the recession and 
are enjoying occupancies well 
above 90 per cent. 

Plans for the rest of the 1.5m 
sq ft site - including confer- 
ence facilities and Europe’s 
largest aquarium - remain 
unchanged. 

The hotel was expected to 
cost £25m out of a total con- 
struction budget of over 
£100m. Shirayama has spent 
£l0m on the site so far 
although work on the planned 
hotel had not started. 

Mr Richard Branson's Vir- 
gin Group, which had agreed 
to ran the 600-bedroom hotel 
and help operate the leisure 
centre, reacted angrily to Shi- 
rayama's announcement 

Virgin, which hopes to meet 
Shirayama officials today, 
said: “We came into the deal 
on the baas that together we 
were going to create one of the 
best hotels in London and the 
country’s most exciting leisure 
complex. We still believe in 
that project and are very keen 
to go ahead. We have a legally 
binding contract which we 
expect them to honour.” 

Cambridge Seven Associates, 
the US architects, have been 
appointed to design the new 
scheme. 


The key to the woHd. 





*■’ - to the Emperor Charfes V, 
the first sovereign who could 
■ : Justly daim that the sun never set 
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numerous branches and subsidiaries 
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12 


FINANCIAL TIMES wEDNwy^ * 


BUSINESS AND THE ENVIRONMENT 


W illiam Walker 

calls it “an inspir- 
ing thing". Free* 
tuoso Pontijo 
Concha is leas impressed. The 
issue is an environmental pro- 
gramme that has been 
launched by Du Pont, the US 
chemical giant, at Its new $lbn 
(£600m) site near Aviles in the 
province of Asturias, on 
Spain's northern Cantabrian 
coast 

Walker, a veteran of 10 Du 
Pont plants in tear countries, 
is the site manager. Pontijo, 
who campaigned against Du 
Font's arrival in Asturias, is a 
director of a local environmen- 
talist group called the Coordl- 
nadora Ecologists de Asturias. 

Asturias, which combines 
magnificent mountain areas 
with ecological disaster zones 
created by coal mining and 
heavy industry, is understand- 
ably sensitive about protecting 
its environment 
The debate centres on Walk- 
er’s attempt to demonstrate 
that the rbemipai industry is 
compatible with conservation 
and. in particular, on a 
50,000sqm lake and surround- 
ing wetland, called La Futra, 
that had silted up and which 
Du Font has reclaimed in the 
lush valley of its Asturian 
greenfield site. 

La Futra lies at one end of 
the valley and at the other, 
screened from the wetland by 
buffer hifflrehs that have been 
raised by Du Pant, lies a plant 
which last year began produc- 
ing Nomex, a heat-resistant, 
meta-aramid fibre. 

The contrast between the 


Tom Bums on a plant in Spain trying to show that chemicals and conservation are compatible 

Du Pont's ecological 



timeless tranquillity of the 
natur e reserve and the futuris- 
tic energy of the site's indus- 
trial zone is striking. 

The Nomex plant will be 
working at foil capacity in 
three years, and a second 
industrial unit is being built 
close by and is expected to 
come on line in 1996. it will 
make tetrahydrofuran (THF), a 
compound that forms the basis 
for “Terathene” polyether 
gycol which is used in the gar- 
ments industry. 

The Asturias Nomex unit is 
based on Du Pout's production 
centre in Richmond, Virginia, 
where the heat-resistant fibre 
was first produced in 1965. 
However, the company says it 
has improved the process at 
the Asturias unit incorporating 
20 per cent of new technology. 

One feature of the new tech- 
nology is the adoption of a bio- 
logical waste water treatment 
(called a sequential batch reac- 
tor) that the company says pro- 
vides more efficient separation 
and treatment and reduces the 
risk of groundwater contami- 
nation. 

Walker says some of the 
improvements in Asturias are 
being implemented in the Rich- 
mond plant and others are 
being considered. State-of-the- 



Wtiere industry meets nature: Du Pont has introduced endangered local farm animals on to its greenfield site 


art scrubbers and analysers 
installed at the Asturias unit 
have reduced the emissions of 
dimethylacetamide, a solvent 
used in the Nomex process, 
and the use of chloroform and 
carbon tetrachloride, two car- 
cinogens, has been eliminated. 

The future THF unit, along- 
side the Nomex plant at the 
Asturias greenfield site, will be 
the first of Du Pont's nine 


THF-producing centres to 
incorporate new butane-based 
systems that the company 
claims win deliver close to 
■■zero" emissions. 

The design of the THF unit, 
says Walker, is based on a new 
energy-saving system which 
provides “the most environ- 
mentally -friendly technology 
in the marketplace”. 

The company has also hired 


environmental experts from 
the University of Oviedo in 
Asturias to advise on the wet- 
land rec lamati on, and an orni- 
thologist, Enrique Pasqual, as 
a resident ecological adviser. 

Opinions on what has been 
achieved so far differ. Du Font 
distributes an inventory of 
birds observed by Pasqual at 
La Futra. Pontijo describes the 
list as nothing extraordinary. 


Walker insists the area now 
boasts more biological diver- 
sity than It did when Da Font 
started setting up the site 
three years ago. 

He says emissions are well 
below legislative requirements 
and that “water leaving the 
plant Is cleaner than when it 
entered”. 

Along with the wetland bird 
sanctuary. Walker’s environ- 
mental programme has 
involved restoring rustic build- 
ings along the vaDey, populat- 
ing its meadows with, endan- 
gered local strains of farzn 
animals, cows, sheep and a 
breed of pontes called Astur- 
ctmes. It has also replaced 
invasive eucalyptus forests 
that were ruining the soil on 
the valley's slopes with native 
trees and shrubs. Schoolchild- 
ren have built bird boxes with 
their names an them as part of 
the project. The Du Pont indus- 
trial complex at Asturias’ Valle 
de Tambn is an mLi Ig ning mfg 
With an area of 324 ha, half of 
which is zoned for industrial 
use (only 20 per cent of which 
is occupied), there is roam to 
spare for the chemical pro- 
ducer to erect altars to both 
fibre engineering and to hard- 
sell conservation. 

At one level the site repre- 


sents a bet by .Du Pont on the 
demand for Nomex and THF, 
the products which are leading 
Du Pout’s progress ,ia the 
world of synthetic fibres. 

Nomex is used in the manu- 
facture of- flame protective gar- 
ments, such as those worn by 
Grand Prix racing car drivers, 
and of electrical insulators, and 
filters for hot industrial gases; 
Terathene, produced by THF, 
is the principal ingredient that 
provides elasticity to the. fibres 
used in Lycra clothes. 

Two more units are due to be 
added to the complex -under 
the terms of. Du Font’s 1990 
mtnmttmwit with the' Spanish 
government to invest- $lbn in 
tiie site over 12 years and to 
create 1,000 jobs: In return, the 
Spanish authorities gave the 
greenfield site free to the US 
group, and provided subsidies 
for training, low-cost loans and 
tax incaitives. 


. Walker sayslhat M»|w; 
cent of 

mant has been spent,. aShwtfc> 
only 350 jobs bavesoMbeen 
created. "We are going to^are, 
to spend more In orde r tem eety 
our employment undertaktog;" 
he says. ■ J 
At another level. tjte gram* 
trial complex ta . th* - 

illustrates how- far Tbgffi fc 
f hpiTTTcal produces: & pn&red^ 
to go to present itseff as aNei^ 
serratkatist and an ecologteat ’ 
ly-frfendly Institution.’ - x'. v. 

- Walker says the sfce , s : .«rri- 1 
ronmental promotion^ -af 
unique venture of its 
the company and that’ It wjg : 
provide valuable lessons ^or 
whatever Du Pont doea ja tite 
future'.. 

Despite all: the 


tions of the chemical fadhstty, ' 
Z have watched the Industry* 
image deteriorate in inverse 
proportion, to' Its ' techt(i#£ 

progress and- material 1 contii- ' 
button to- modem life," Bd 
Woo lard, chairman, and: chief 
executive of Du Pant.^safcT 
recently. 

Environmentalists' respond 
that if Du Pout is now taking 
lessons on board. il Is because .’ 
they were around to teach the 
company. . . 





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NORTHWEST 

AIRLINES 


Alternative waste 
treatment 

Brazil is enthusiastic about 
plasma-based disposal, 
writes Patrick McCurry 


A pilot project to dispose 
of hazardous waste is 
planning to mart at a 
hospital in the 
densely-populated city of SSo 
Paolo, Brazil, using technology 
developed by Nasa scientists. 

Brazilian «nU 

use plasma - superheated 
gases -at the University of 
SSo Paulo hospital to provide 
cheaper ami safer disposal to 
traditional incinerators or. 
landfills. 

Hospitals in SSo Panto, 

South America’s largest dty 
with a population of 15m, 
produce 115 tonnes of waste a 
day which contains blood, 
syringes and body parts. 

Because of the risk of disease 
this waste must be incinerated, 
an expensive process as its 
humidify content is 4M50 per 
rent There are additional 
health risks from normal gas- 
or oil-fired incineration, hi 
particular the release of 
carcinogenic dioxins and toxic 
ashes. 

Roberto Szente, head of 
plasma research at the SSo 
Paulo state-funded Tech nology 
Research Institute (IPT), says: 
“Because gas is a relatively 
poor conductor the pbwma can 
heat up to KMXXPC.” 

The technology was 
developed by Nasa, the US 
space agency, to simulate the 
heating experienced by rockets 
re-entering the atmosphere. 
Plasma forms at extremely 
high temperatures, when 
atoms of gas split into a 
mixture of positive ions and 
electrons. It can be made by 
transferring energy from an 
electric arc to a gas such as air 
ornitrogen- 

Zt is only with the growth in 
environmental awareness that 
the IPT, along with other 
research centres around the 
world, started applying it to 
hazardous waste. 

“With plasma, the 
temperature is so high that 
everything, including metai^ 
melts and becomes a liquid 
pool" says Szente. 

This pool solidifies as a slab 
of residues, basically a block of 
glass and iron, that can be 
used in construction or 
disposed of In landfill Because 


the result to a molten state 
which later solidifies, there is 
less risk of dioxins being 
dispersed than with 


Brasmd Totosa, hospital . 
superintendent, says the <dfy 
council contracts oat collection ' 
and treatment of wasta "We ■ 
don’t have a great deal of 
confidence inthe current 
system and we know that in - 
some parts of Brazil the waste . 
is just dumped,^ he says, r 
referring to news reports of 

h u man Ihriha hgtn g fmmri nn - - 
rubbish dumps in the poor 
math-east of Brazil 
The IPT to applying idasma 
technology to another pitot 
project to deal with the 
galvanised waste produced by 
companies in the metal-coating 
industry, aspin-off from Sdo 
Paolo's booming car industry. 

- flnm paninn rnyH tn 4i«;har gp. 

the liquid residues from 
galvanisation straight into the 
Tiete River, one of the most 
polluted in the world: But with 
the introduction of pollution 
controls to dean the river, the 
companies are left witha mud 
- lie by-product of 
galvanisation - containing 
heavy mpfyte such as iron, 
sOica, calcium and zinc, as well 
as cyanide. 

IPT tests showed that when 
plasma was applied to the mud 
ft destroyed the cyanide and 
the end result was non-toxic 
slabs of metal 96 per cent iron, 
says Szente. 

Marco Antonio Barbieri, 
director of a chrome company 
and spokesman for around 100 
small galvanisation companies 
involved In the project, says 
plasma treatment is likely to 
cost $40-570 a tonne compared 
with about $200 for landfill 
$4005800 for cement kilns and 
$1500 for using private 
incinerators. 

Despite all Its apparent 
advantages, plasma's progress - 
so far in waste disposal has 
been piecemeal Szente says • 
this Is partly because it Is still 
a relatively unknown 
technology, and also because 
companies are unwilling to 
decommission expensive 
Incinerators to spend more 
money b uilding plasma units 


A 


Cities take 
the strain 


business-funded interna- 
tional congress on the 
— — .impact of cities on the 
environment held in Hong 
Kong earlier this month 
has highlighted the contri- 
bution that the private 
sector can make In Hading 
solutions to environmental 
problems, unites Peter Knight 
More than half the world's 
People are expected to live in 
towns and cities by the torn of 
the c en t ury . 

The population of Mexico 
City, for example, is already 
15m and growing, creating sig- 
mneant water and air pollu- 
tion problems. 

JThe congress brought 
together 47 speakers from dif- 
ferent parts of the world 
including a senior imwiaph u, 
ttnstar of MMsnbishiElSS 
the chief executive of the UK’s 
nuclear power stations and a 
Manila nun campaigning for 
squatters’ rights. The Prince 
of Wales gave the opening 
address. 6 

Fnnding for the week-long 
event came from 20 compa- 
nies. including the John Swire 

group and World-Wide Shln- 
pingtf Hong Kong, Mitsubishi 
Electric and Marubeni Corpo- 


ration of Japan, and Ai 
Water, friends Provides 
Office and Nuclear Eleci 
the UK. 

'^stness has a role to 
andfaideed a duty, to h 
to find solutions. Confe 
such as these help to 
uie mind on what needs 
done and how best to ai 
*1” says Bob Hawley, 
executive of Nuclear 
trie. 

. T . h * , congress, v 
kwforteda large conti 
tnnn China, discussed a 
of issues on the environn 
and human problems a 
by cities. 

a V*l closing state 
the sour 
s P? DSOT ship but called 0 
pnvate sector to be 
^^seekuig sohitio 
“ rrt step would be to t 
i^ter cl vic respc 

steictly private-! 
initiative we could adt 
more holistic approach, i 

gave equal considerate 
the human, scientific, te 
legislative as 
L™Il? ll,ll ® tal proted 





tive wasj 

itment 

lie aD0 ,:, 

.uivt-'i: disposal ’ 

>*rick Mc’Cunv 


FINANCIAL times 

See Pag^n merges: 


has BroffldSS term 18 U P- he 
tainabfe econ<^^ ellVer stPon & sus- 
a million inKB 0miC 8rowt k’ Provide 
JS It r «* reduce the 
inanie “qualities in 

SSSSWsb: 

modern democratic state 

isi? ? 6 ^ &nes - such prom- 

!ses would be hard to kepn Thu 
rh^n° S€d dem °cratic and political 
would undo a political cul- 

KtSl Q St Si ' aUthuritarian rale that 
i 10 ™ m muc b of the 
pddniry, and has kept the govern- 

Partd nS «f Ut * ona * Revolutionary 
Party - the PRI - in power for fis 
coMecutjve years. Even if Mr 
ZedOto is sincere in his caU for dem- 
oorafac change, he is bound to meet 
resistance. 

J5„™ ew k of the still formidable 
“hftecles to greater industrial com- 
petitiveness. the fulfilment of Mr 
Zedillos stated economic goals is 
jrolikely to be much easier. 
Mexico s poor educational system, 
inadequate infrastructure, lack of 
an entrepreneurial culture and low 
savings rate set it apart from many 
of the Asian tigers that have grown 
so rapidly over the past 20 years. 

To make matters tougher, Mr 
Zedillo assumes power in a highly 
volatile economic and political cli- 
mate. The peasant rebellion in Chia- 
pas over the New Year, the recent 
assassinations of leading political 
figures and the increasing assertive- 
ness of drug 1 cartels, have worried 
investors. 

Many wonder whether the old 
corporatist structure that kept 
Mexico stable for 65 years is break- 
ing down. In recent months, the 
exchange rate has come nmfay pres- 
sure, interest rates have been forced 
up to around 7 per rant m real 
terms, and many sectors of the 
economy have suffered from a 
credit crunch. 

Despite such worries, there are 
grounds for guarded optimism. Mr 
Zedillo's policy proposals appear to 
address the right issues. He and the 
Ivy-league trained technocrats that 
surround him seem convinced that 
the difficulties Mexico now faces 
are proof that economic and politi- 
cal reform of the past decade needs 
to be speeded up, not slowed down, 
and that the modernisation of the 
state must continue. 


'WEDNESDAY NOVEMBER 23 1994 


FINANCIAL TIMES SURVEY 

MEXICO 

Wednesday November 23 1994 



\ v . v* 



■ ■ :.«afiOErank' mmi — g— amaga— bb^i _____ U SffiSS-_ 

VICTORY SMILES - AND ANGRY PROTESTS: A tubkant Ernesto ZedMo, left, speaks to foumaMSts during the Mexican presidential e l e cti on. Pictured tight some of the tens of thousands of protesters - members of 
the opposition Revolutionary Democratic Party (PRD) - who later claimed there was electoral fraud in the nationad el ec ti ons. Pictures by Damian DoverganeslAP 

Zedillo faces formidable obstacles 

An economist wrth limited political experience, Mr Ernesto Zedillo, Mexico’s president-elect, will assume power 
next month amid a highly volatile economic and political climate, reports Damian Fraser 


For Mr Zedillo and his advisers 
such modernisation appears to 
mean reforming the country's politi- 
cal and social institutions, and 
streng thening the rule of the law. 

Whereas President Salinas used 
the PRI as a vehicle to exercise 
power, dismissed more than half 
the country’s state governors, and 
delayed judicial reform until it was 
too late, Mr Zedillo has promised to 
make the PRI independent of the 
government, devolve federal powers 
to state authority, and give indepen- 
dence to the judiciary. 

By opening new channels for 
political participation, these 
reforms - if they are carried out - 
may in the long run contribute to 
the stability of the country. But 
they will also deprive the president 
and his allies in the ruling party of 
many of the traditional mpphanisms 
of political control. They could pro- 
voke a power battle between differ- 
ent interests groups in the country, 
as they suoultaneously resist a nd 
seek to take advantage of the 
changes under way. 

Mr Zedillo has already begun one 
aspect of the reform of the PRI, so 
for complying with his promise not 


to insist on picking the party's can- 
didates for elective office and to 
promote a more democratic selec- 
tion-process. Such a reform - if 
stuck to - may strengthen the PRI 
at a local level, and malm govern- 
ment leaders more responsive to the 
party rank an d file than tn the past. 

Internal democracy is expected to 
curtail presidential power, however, 
and make party members less loyal 
to the sitting president and his poli- 
cies than in the past. Once he 


assumes office, Mr Zedillo is likely 
to announce a series of far-reaching 
constitutional changes to reform 
the legal and judicial system. 

While the details are still under 
wraps, Mr Zedillo is expected to 
change the make-up of the Supreme 
Court and give it more indepen- 
dence; create a civil service for the 
judiciary to promote efficiency and 
integrity; and perhaps enable judi- 
cial decisions to apply to laws in 
general, rather than just to individ- 


ual as is now case. Again, 
presidential power wonld be 
reduced. 

The president-elect has further 
promised an accord with the opposi- 
tion on political liberalisation. 
Given the PRFs convincing win in 
the August election, Mr Zedillo is 
expected to be willing to main* the 
Federal Electoral Institute fully 
independent of the executive. But in 
view of the extravagance of Mr 
Zedillo’s electoral camp ai g n, th ere 


MEXICO’S ECONOMIC PROGRESS IN FIGURES 



1987 

1968 

1989 

1990 

1991 

1092 

1983 

1904* 

Growth (GDP), parentage 

1.7 

14 

33 

44 

IS 

23 

0A 

13 

GOP in US Star 

141A 

1715 

an eg 

241.7 

29SS 

329L4 

356. 1 

3873 

Grow* ta net Investment, K 

U 

16 

62 

122 

103 

93 

-14 

33 

Pteflc actor fln. intanc*. % 

-1&1 

-115 

-as 

40 

13 0 

03CI 

0.7 

-13 

taperts, S<a fl 

1X306 

2U274 

21438 

31372 

38,184 

41193 

48324 

58408 

fapnrti.SaO 

2DA95 

20^46 

22*42 

26338 

28395 

27316 

39301 

33383 

Current eccorort balance 

3£20 

-7009 

-6386 

-8,106 

-153*0 

-2«3M 

-23433 

-27432 

Inflaftai, punbga 

1SL2 

51.7 

19.7 

293 

183 

113 

&D 

73 

Red mb. rote, MUS$ f) 

1JJ0 

0.79 

(L75 

0.71 

034 

0L5B 

036 

038 

Bat Homo of capfW, f) 

-576 

-1A« 

3337 

B,164 

23,100 

25300 

28300 

23300 

totaiaBooal imnee, Sa 

13,168 

1038 

6311 

1725 

17347 

18354 

2*338 

20306 


• R vee at T. ex&utee (rt^aeaCcn ton*-; Z exdUte* tnagidfertaw flrHxrt fraports and ©port*; S, stdanija rata at >ear-ond; SSwor 8atKO cfs U&dcn 


is much greater uncertainly 
whether he will push through laws 
that make competition between dif- 
ferent political parties more fair, 
and ensure the media play a more 
balanced, objective role in the polit- 
ical system. 

The president’s ability to marshal 
support for his reforms - and con- 
tain the political consequences - 
will depend in part on the perfor- 
mance of the economy. 

It is probably no accident that 
President Salinas’s control of the 
political situation began to slip 
when the economy was faring its 
greatest difficulties: gross domestic 
product shrank in the final two 
quarters of last year, and expanded 
by a modest 0.5 per cent in the first 
quarter this year. 

Fortunately for Mr Zedillo, a 
strong economic recovery already 
appears under way. with growth in 
the second half of this year pre- 
dicted at 4 per cent. 

At the same time, inflation is 
likely to fall below 6 per cent this 
year; the budget will probably be In 
balance; and net debt is a less than 
a quarter of GDP. More impor- 
tantly, productivity has grown rap- 


The economy shows 
remarkable resilience: 

See Page III 


idly in recent years, as companies 
have restructured and invested 
heavily in new machiner y. 

Nevertheless, the large current 
account deficit - expected to be 
about $28bn - makes continued eco- 
nomic recovery heavily dependent 
on capital Inflows, which partly 
depends on the International con- 
text 

Mr Zedillo will have to balance 
the rfpiwflnifa of foreign investors far 
an austere budget and orthodox eco- 
nomic policy and pressures within 
Mexico to tackle mounting social 
problems and improve infrastruc- 
ture through greater spending. If 
the political situation does not 
improve, he may have to choose 
between maintaining high real 
interest rates or adjusting exchange 
rate policy. 

With Mexican businesses expec- 
ted to come »Tndnr inc re a si n g com- 
petitive pressure as a result of the 
North American Free Trade Agree- 
ment, Mr Zedillo will certainly have 
to speed up the pace of micro eco- 
nomic reform. 

Deregulation is likely to be inten- 
sified at the state level and sectors 
such as railways wiD be opened up 
to greater private investment Mr 
Zedillo will increase spending on 
training and education and proba- 
bly introduce some fiscal incentives 
to encourage savings. 

Such reforms will help boost pro- 
ductivity and competitiveness - and 
raise real wages. But they are 
unlikely to do much in the short 
term to help the plight of the 14m 
Mexi cans under the official poverty 
line. Most of these live in the coun- 
tryside, have little education, and 
wifi find it hard to integrate into 
the modem economy Mexico hopes 
to attain. 

If economic reform continues to 
accentuate regional and social 
income disparities - between 1989 
and 1992 the share of income of the 
poorest 40 per cent of Mexicans foil 
from 123 per cent to 12.7 per cent, 
while the share of richest 30 per 
cent inrrpaspd from 65 per cent to 
65.6 per cent - political sustainabil- 
ity erf the reform programme could 
be hi doubt 

Mr Zedillo is a professional econo- 
mist with limited political experi- 
ence. There are some questions 
whether he will he able to manage 
tins complex economic and political 
environment. The success of his 
efforts will determine in large part 
whether Mexico can make the jump 
from the developing to developed 
world before the end of the decade. 


Grupo Mexicano de Desarrollo... 
experience and quality serving Mexico 


wmin 


es 


take 


Over the past 79 years Grupo Mexicano de 
Desarrollo, SLA. (GMD) has been involved in 
the construction of highways, toll roads, hy- 
droelectric dams, bridges, tunnels, housing 
complexes, office buildings, marina and port 
facilities, and industrial 
plants more than 350 
Finished projects in total. 

In 1975 Crescendo 
Ballesteros Ibarra, his 
sons Jorge and Jos6 Luis 
Ballesteros Franco, and 
a valuable group of co- 
llaborators founded 
Grupo Mexicano de De- 
sarrollo in order to par- 
ticipate actively in deve- 
loping the infrastructure 
needed for Mexico's 

modernization. 


~m-H ■ 
■ 


• Concessioned Toll Roods: 

GMD joined forces with the Mexican Federal 
Government when it began the "National Toll 
Road Program", making a commitment to par- 
ticipate in the finandng, construction and 

operation of high-speci- 
R cation modem loll 
roods induiding: 


• Construction 
and Commercial 
Development 
Division: 

GMD, with its speda- 
lized subsidiaries enga- 
ged in the construction 
of highways, vehicle ^ Drainage s, 

bridges, hydraulic and Mas* 

urbanization develop- 
ments, building and 
other areas, fully meets 
the needs of its clients and users. 

• Construction Division and 

Concession Operation: 

Once the construction of a concessional 
rood * complete, GMD is r=sfto«<Ue ^ a, «- 
rieiy of operating aspects, such as toll codec 
lion ondntotntenance. lW £™™«s 
companies, GMD has also developed o r«t- 

Stfer the supply of maf neb «k ! tnpuh tar 
construction, which mate it hrg^ self-suff.- 
SlTilTs now an international firm as well 

' .. Lgen commissioned to carry out the 
^TL^ctton e«ponsion and operation of the 
^cesses to rttoci^ of Buenos 

in a number of areos of 

■ssssa-*- 1 *"- 


• 1 

/ • J j 


- The 262 kilometer 
Cuemavaca-Acapulco 
Toll Rood. 

-The 310 kilometer 
Mexico Gty-Guada- 
lajoro Toll Road. 

- The 98 kilometer 
Cordoba- Veracruz 
Toll Rood. 

■ The La Tinaja-Coso- 
leacaque Toll Road, 
currently under 
construction. 

- The Atizapan-Venta 
de Carpio Toll Road, 
currently under 
construction. 


Deep Drainage System and Sewage. 
Mexico City. 


• Trans p ortation: 

GMD builds bridges 

«jand Sewage. Qnd accwdjng 

to the highest standards 
of quality- Among its 
most outstanding pro- 
jects, both for their beauty and their architec- 
tural strength, are the following: 

- The Popagayo Bridge 

on the Cuemavaco-Acopulco Toll Road. 

- The Barranca el Canon Bridge on the 
Cuemavaca-Acapulco Toll Road. 

- The Virgilio Bucio Naferas Bridge on the 
Mexico Gfy- Guadalajara Toll Road. 

- The Viadudo La Marquesa Bridge on the 
Mexico City-Toluco Toll Road. 

- The Elevated Electric Train in Mexico City, 
on which construction will begin shortly; the 
project will be built by a consortium of se- 
veral companies including GMD. 

• Tourist Resorts 
and Real Estate Developments: 

GMD is building tourist resort developments 


throughout the Mexican terri- 
tory, helping to stimulate the 
flow of foreign currency into 
the country. 

- Hotel Cancun Sunset Club 

- Puerto Marina Isla Mujeres 
...among others. 

• Hydraulic Works: 

The Huite5 Hydroelectric Dam 
is one of GMD's most impor- 
tant current projects. The dam 
is located in the state of 
Sonora, where one of its 
main benefits for the Sonora- 
Sinaloa region will be provi- 
ding irrigation to more than 
70,000 hectares, in addition 
to generating 875 gigawatts 
of electric power per year. 
Another important project 
is the construction of a tu- 
nnel more than five kilome- 
ters long for deep drainage 
system and sewage in Mexico 
City. Under the concession 
system, several water treat- 
ment plants are being built in 
the City of Puebla and con- 
struction of similar projects 
will soon begin in Toluca, 
Morelos and Leon. 

• Public Works: 

The welfare of fhe country's 
inhabitants is of vitol impor- 
tance for GMD. This is why 
special emphasis is given to 
the construction of works that 
will satisfy their needs. 

- Drainage and sewage sys- 
tems for the State of Mexico. 

- Master Plan for the 
overall development of 
Puerto Marques 

- Paving of thoroughfares. 

With these projects, GMD, 
a leader in its field, is taking 
an active role in Mexico's 
continued growth. 






■ ':v<vS * ips; . : : i a* •• ? 

TV rr.. v '$?* 


33*, 3** 


■ ..*• 



Hiiles Hydroelectric Dam. 
State of Sonora and SbvSoa. 

Panoramic view. 
Michoacan. State Prison. 

Popagayo Bridge. 
Cuemavaco-AcapiJca To# road 

Rio Pqpaloapon Bridge, 
under construction, 
la rJnqfo-CosoleacoQue To« rood. 


mm 



fed**': sis 




Grupo Mexicano de Desarrotto, SA. 
Carretera Mexico - Toluca 4000, 
Cuqjirncdpo. 05000. Mexico. D.F. 
Tel: (525) 813 - 1 100 - Fax: (525) 813 - 0500 









14 


FINANCIAL TIMES 


MEXICO 


Aftermath of the presidential elections 


New political landscape emerges 


Mexico’s foremost 
challenge is to build 
a workable 
democracy, writes 

Luis Rubio 


T he August presidential 
election created a radi- 
cally new political land- 
scape, one which should allow 
the country’s ills to be faced 
with the strength that only a 
legitimate government can pro- 
vide. 

Even more important, by 
voting in such huge numbers 
(almost 78 per cent of regis- 
tered voters), Mexicans dis- 
credited violent attempts to 
grab power, of which there 
have been many examples in 
the last few months. The 
impressive turnout of voters 
also indicated that Mexicans 
want to pursue the change that 
ha- taken place over the last 
decade, but that they want it 
to deliver benefits to all, right 
now. The question is whether 
the government can deliver. 
The old. authoritarian politi- 


cal system, established in the 
late 1920s, together with a 
closed, protected and subsi- 
dised economy, hindered Mexi- 
cans from attaining higher 
standards of living, while pre- 
venting them from building a 
political system that would 
have provided them with a 
proper system of justice as well 
as influence over the political 
decisions that affect their lives. 

The old ‘certainty’ was 
replaced, since the uprising in 
the southern state of Chiapas 
on January l, by extreme 
uncertainty. The traditional 
rules and structures had 
ceased to function ami Mexi- 
cans suddenly found them- 
selves lacking institutions that 
could help resolve the newly- 
found difficulties. 

While the electoral process 
was hastily restructured to 
make it possible to bold proper 
elections in August - which 
were much more successful 
than virtually anyone had 
anticipated - the environment 
in which these were held was 
conducive neither to clean 
electoral competition nor eco- 
nomic development. 

The task ahead is clear by 


the end of the next adminis- 
tration, Mexico should have in 
place a set of institutions - or 
at least strong foundations for 
them - which will secure con- 
tinuous peaceful transfers of 
power in government, which 
allow Mexicans to settle dis- 
putes in a non-violent way and 
with full regard for the law, 
and that, in conjunction with 
an economic policy that 
induces rapid economic growth 
with price stability, make it 
possible for Mexicans to get 
closer to the levels of per cap- 
ita incomes of their richer 
brethren in south-east Asia. 

There would.be many bench- 
marks for this process: 

□ First, there would have to 
be, once and for all, local and 
state elections that are undis- 
putable. This would mean not 
only that rules and realities 
are impeccable in terms of the 
‘level playing field' that they 
provide, but also that all politi- 
cal parties cease to make every 
election a contest, at best, of 
Qon-mstitutional strength and, 
at worst, of reckless self-inter- 
est 

□ Second, the government 
and all political parties would 


have to come to terms with the 
new realities of the economy as 
well as with the need to work 
together in the process of gov- 
erning. This would mean that 
the government, in practice, 
recognises that the opposition 
parties represent a significant 
portion of the population (after 
all, close to 50 per cent of the 
electorate voted for them) and 
that, as a result, they should 
have a say in the process of 
government. Up to now, for 
example, all agencies in the 
legislature that are supposed 
to keep watch on the govern- 
ment have been in the hands of 
the government party. Those 
should unequivocally be held 
by opposition parties. 


A s regards the economy, 
the struggle for power 
over the last few years 
bas been extended to this 
arena, even though the three 
leading political parties, at 
least formally, vow to pursue 
similar economic policies. 

The main case in point is the 
North American Free Trade 
Agreement (Nafta). The PRD, 
the left-of-centre political 
party, launched an extraordi- 


nary campaign in Mexico as 
well as in the US and Canada, 
aimed at defeating Nafta. This 
was not so much because it 
opposed the treaty, but 
because it wanted to oust FBI 
from government If a strong 
turnabout of the economy Is to 
be reached, all political group- 
ings would have to be party to 
efforts necessary to transform 
Mexico's productive base. 

By the same token, Mexico 
will probably not experience a 
long-lasting recovery - mea- 
sured In terms of decades as in 
south-east Asia unless it 
faces up to the dual problem of 
unequal income distribution 
and dramatically low levels of 
education in a manner fully 
compatible with a market 
economy. In other words, until 
Mexicans break away from 
their past, they will not reach 
the level of development they 
desire and deserve. 

□ Third, while the dramatic 
change in the elections was 
due to the one factor that 
nobody predicted - an extraor- 
dinary voter turnout - none of 
the parties cares that much 
about what happens to the 
average Mexican. 



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In caifler ej e ct ion s - aeo the report on ttrta papa: An uneven ptaytng flehl 


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The absence of re-election at 
all levels of government means 
that almost- no politician pays 
any attention to the people, 
except in other a general way 
or when targeting individual 
interests they want to tap. 

Yet, it is Mexicans at large 
that will main* the Hiffay flicp 
in the next several years and 
that will determine whether 
the economy can experience a 
strong surge of productivity 
and growth or not For most 
Mexicans, the hard reality of 
life is that there is no clean 


and fair judicial system, there 
are no means to fight corrup- 
tion, and the most basic rights 
are too limited to be properly 
called 'rights. 1 A drastic, 
change at the level of govern- 
ment a nd in the negotiations 
among the political parties 
shnmM introduce changes that 
wQl improve the people’s lot 
But that will only take place 
when incentives are in place to 
drive politicians, the govern- 
ment, and the political parties 
to cater to popular needs. 

Given the situation in 


Mexico, that would: 
require a new' consi 
framework^ one that is jj&fta 
andnon-contradfctory; toother 
words, something thatrinrhe 
turned into reaMfo as opposed 
to today’s legal framework, 
whidh is neither respected nor 
realistic. When that happen^ 
Mexico will have a- working 
democracy. ■ - - 

The miter istheTHrectorqf 
the Centro. _debmestigaci(m 
pom el DesarmBo, a 
ment think tank, in' Mexico 
city. ■ ' .. j 


■ SV; 

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I t came as a rude shock to 
the Mexican opposition that 
despite the cleanest elec- 
tions in the country’s history 
and record voter turnout, they 
were still ter from dislodging 
the PRI’s tenacious grip on 
power. 

(t is not surprising, there- 
fore, that the debate following 
the August 21 contest has 
focused on the uneven playing 
Held which gave the ruling 
party an unbeatable advan- 
tage. The PRI’s electoral 
machine ter outspent its rivals 
thanks to high campaign 
expenditure ceilings (§275m per 
p.irty) set by the government 
uiid the generous contributions 
w private businessmen to the 
Ml's war chest 
Television and radio cover- 
age or the elections was openly 
biased in favour of the ruling 
party-, to which private media 
companies owe their broadcast- 
ing licenses. And in the time- 
Ir-ss Mexican tradition, govern- 
ment officials, from state 
governors down to the cacujues 
(Local bosses) of the smallest 
village, continued to help PRI 


Elections were far from fair, claim angry opposition parties 


Ernesto Zedillo prepares to name his cabinet 




An uneven playing field 


Tricky balancing act 


%vi --l: 


candidates, albeit with more 
discretion than in the past 

As a result both the right-of- 
centre Partido de Accion 
Nacional (PAN) and the leftist 
Partido de la Revolution Demo- 
cratica (PRD) are refusing to 
endorse the victory of the PRI 
presidential candidate. Mr 
Ernesto Zedillo as folly legiti- 
mate. The PRD is challenging 
the results of 55 per cent of ail 
voting booths, claiming mas- 
sive fraud. 

While the PRD's complaints 
lack credibility - monitoring 
on election day was tight - the 
opposition has nevertheless 
learned to exploit its underdog 
image to maximum advantage. 
And the emerging consensus, 
from opposition parties to civic 
action groups to the indepen- 
dent councillors who sit on the 
Federal Electoral Institute, Is 


that elections in Mexico may 
now be free, but they remain 
far from fair. 

Armed with 15m votes, the 
opposition is pressing for 
deeper political reforms. The 
PRI, they say, must become a 
genuinely independent party 
rather than the state's elec- 
toral arm. Realistic limi ts must 
be placed on the expenditure of 
political parties during election 
campaigns, and these must be 
scrutinised by independent 
auditors. The media should be 
more closely monitored for 
political bias. 


I f Mr Zedillo's campaign 
pledges are to be believed, 
the government is willing to 
listen. The first political 
reform likely to be negotiated 
by the incoming administra- 
tion would give greater auton- 


omy to the Federal Electoral 
Institute, which organises and 
oversees elections. At present, 
the institute is headed by the 
interior minister. Six indepen- 
dent “citizen councillors" have 
a voting majority on the gov- 
erning board, but the interior 
minis ter is the only member of 
the council who can call board 
meetings, and he sets the 
agenda, and appoints all the 
executive officials. 

“If the government is serious 
about democracy," says Mr 
Santiago Creel one of the citi- 
zen councillors on the govern- 
ing board, “it should withdraw 
from the Federal Electoral 
Institute. The institute must 
become a truly independent 
fourth estate.” 

Mr Creel says the six citizen 
councillors will resign if their 
demands are not met. He has 



jpiilr 


•-JUMP" 


In Mexico, foreign investment, 

previously permitted, 

is now actively encouraged, 
welcomed and supported. 


Nacional rinanciera has been an instrument or the 
economic, oo'ikv in Vwxk.o. Our countrv obe:> you a 
dynamic economic: growth, political and social 
si ability, access to capita! markets, abundant raw 
materials and <k;itea labor and a solid infrastructure. 
These factors are combined with an environment 
where toroiyn in\ estment. previous! 1 .' permittee, :s now 
ac t i v e 1 y o n c o u rape d , v- e I c o n i e d and =■ u o p o rt ►. 1 d . 
through the foilowina, services: 


<© nacional financiers 


Identification of potential 
partners and business opportunities 


Financial Engineering Service 
and Fiduciary Services 


Advice on. 

» Matchmaking 

• Strategic Alliances. 

arrangements 

• |eir,t Ventures. 

• Technolofv Transfer. 


Iniormalion on 

• Economic, iinancial 
arri legal readers. 

• snerialized consultin 
ser.it t'-j. 

• Normv anC technical 
framework of NAFTA, 


Financial Resources: 

• Credit lines ior import and export 

• Equip resource?. 

• long-term financing. 

Treasury Services: 

• t-orelgr. l v change RiW Hedging. 

• Currency Operations. 


London Brandi. 

Tel 4471 • 4 i _ -00 I H 

fax' r 4 4 - 1 • 4 1 4 


U .tcliingtnn. I > C. 

I'i’i: Ji)4-0.T.»T Tel: .202 J-.ij-vOlO 
lit 234-0.0" Fjv NO’ 1 ,i 'iH-*l244 



received death threats for his 
outspoken views - once at gun- 
point outside his house - in an 
unpleasant reminder of the 
powerful vested interest 
aligned against further politi- 
cal reforms. 

The onslaught against gov- 
ernment however, has thus ter 
distracted opposition parties 
from taking a hard look at 
their own failing s. 

Despite tripling its votes in 
the 1994 elections, the PAN’s 
presidential nominee, Mr Diego 
Fernandez de Cevallos, has 
been widely criticised for foil- 
ing to capitalise on his surge in 
popularity' following Mexico’s 
first-ever televised debate 
between presidential candi- 
dates in June. 

After the debate, his cam- 
paign appeared to ftnfle out He 
was the runner-up on election 
night, polling about 27 per cent 
of the vote. 

“We have achieved respect- 
ability, but we are not yet 
regarded as a credible alterna- 
tive to the ruling party," 
admits Mr Felipe Calderon 
Hinojosa, the PAN secretary- 
general. 

More worrying still is the 
fact that the PAN lost heavily 
in the three states were it 
holds state governorships- The 
PAN’s greatest challenge is 
how to grow into a party com- 
mensurate with the 9.2m votes 
it won in August 
The PRD’s problems are 
more serious. The party’s inter- 
nal schisms - between those 
who favour a nationwide dia- 
logue to win incremental politi- 
cal reforms and those who 
advocate a complete break 
with the “system” - have 
become deeper and more bitter 
since being relegated to third 
place in dm 1994 presidential 
contest The PRD’s defeat came 
as a particularly heavy blow to 
Mr Cuauhtemoc Cardenas, the 
presidential candidate who 
many believe was robbed of 
victory during the much-dis- 
puted 1988 elections. 

Some PRD activists admit 
they foiled to read the cautious 
mood among the electorate in 
a year which saw a peasant 
rebellion in Chiapas and the 
assassination of the PRTs pres- 
idential wrrminpp 
Above all. they did not per- 
ceive the growing popular sup- 
port for results of President 
Salinas' economic reforms - 
“we were fighting yesterday's 
battles,” says Congressman 
Adolfo Aguilar, who was Mr 
Cardenas' campaign spokes- 
man during the elections. 


W hen asked if he ever 
thought about becom- 
ing president of 
Mexico as a young man, Mr 
Ernesto z«fino breaks into a 
spontaneous laughter and says 
only fools have such plans. 

Enormously hard-working 

and ambitious, Mr Zedillo 
always sought to avoid the 
impression that his sights 
were set on the presidential 
office. In Ins five years in the 
cabinet - first as budget min- 
ister and then as education 
minister - he avoided the 
limelight, built few 
inside the ruling party, and 
earned a re pu ta ti on for being 
a political loner. 

Hie won the ruling parly's 
no minati on largely by de&uB. 
After the a asaa s faiatinn of Ltzis 
Donaldo Colosio, the former 
presidential candidate whose 
electoral campaign he man- 
aged. he was practically the 
only member of President Sali- 
nas’s inner circle who was eli- 
gible for office - most of the 
others were disqualified by a 
constitutional article which 
prevents sitting cabinet minis- 
ters from running for presi- 
dential office six months 
before the election. 

Despite ids political inexpe- 
rience, Mr Ze dillo p roved an 
e ffec ti ve, if uninspiring, candi- 
date. He smoothed over divi- 
sions in the PHI that followed 
by his nomination by appoint- 
ing key figures from different 
sectors of the party to cam- 
paign positions. He won some 
public support by s t re ssin g his 
poor roots - he Is the son of an 
electrician and a nurse - and 
his administrative experience 
in government 
He also set out in detail the 
policies he would follow were 
he elected. He used to the foil 
advantage - and with no 
apparent shame - the PRTs 
huge electoral machinery, 
spending many times more 
money than opposition parties. 

Despite the extravagance of 
his campaign, Mr Zedillo's 
most striking electoral pledge 
was his promise for far-reach- 
ing democratic and legal 
reform. In a key-note speech, 
Mr Zedillo committed his gov- 
ernment to a fundamental 
reform of the PRI, of the coun- 
try’s judicial and legal system, 
of the relationship between 
federal and state gov er nment, 
of the role of Congress, and of 
the federal electoral institute. 

Mr Zedillo has already set in 
motion the reform of the PRI 
and he has agreed, in principle 
to give the Federal Electoral 
Institute fall independence of 
the government. Campaign 


Leslie Crawford 


officials are working on a com- 
prehensive overhaul of the 
judiciary and police, to make 
them more professional, and 
promo te h o n esty and indepen- 
dence from the executive. 

But the hard part has still to 
come. Many are sceptical that 
Mr ZediHo will he able to push 
through political and legal 
reforms on such a sweeping 
scale Others are worried that 
If he does, there could be 
fierce resistance from his own 
parly, and a loss of presiden- 
tial power and increase in 
political instability. 

The first test of Hr Zedillo’s 
political abilities will come 
with the naming of his cabi- 
net He will have the difficult 
task Of ha Tanging political 
interests in the ruling party, 
rewarding his closest and most 
loyal colleagues, and putting 
the most capable people in the 





Zedrlfo: committed to fundamental 
poflfcal and juddal reforms 


right slots. The toner circle of 
Mr Zedillo’s associates des- 
tined Dor senior positions are 
all trained economists, 
reflecting Mr Zedillo’s back- 
ground. 

Key figures are said to be Mr 
Jaime Serra Puche, 43, trade 
minister and a colleague from 
their days at Yale University; 
Mr GuIUerrao Ortiz, 46, deputy 
fin an ce minister, and another 
personal friend; Mr Esteban 
Moctezuma, a youthful 40- 
year-old who worked with the 
president-elect in the educa- 
tion and budget ministries and 

was his campaign strategist in 

the election; Hr Luis Tellez, 
36, former agriculture under- 
minister and now Hr Zedillo’s 
main adviser on government 
policy. 

Mr Serra or Mr Ortiz are 
expected to become finance 
minister, with the one losing 
out going to another senior 
cabinet position, such as com- 
munication. Mr Moctezuma 
has tittle political experience, 
but is viewed by some as a 
candidate for the development 


v-.. ; 

ministry, edncalton^orpesst-. .-% ; 
; Wy.for the. powerful 
ministry. Mr Telle* OtfffimV- 
become efflef of «dv ts cr g.argo v 

to trade or agric ulture min®: %. * 
tries. - •' .v.' 

• The big question merit. .HtnJy- 
over the political posjtim**,” -; : 
espedaDy the mtertor mh^t ^ r 
fry. There are few okWjbr"-'' •. 
pofitiefens: with dose ties to . 

Mr ZediHo, bid scone win have - V 
to be ^gxdntedL Apart from 
Hr Ignacio Pichardo, head of 
the PRI, Hr . Zedillo may con- 
skier giving potitical slots to . 
Mr Anemo Farrefl, the former . 
labour ndmsten and one (dlhe \ 
governors of the states of 
Mexico, AguascaHentes, and V 
Veracruz. -j- 

Mr Pedro Aspe, the flimnw 
ministry and one-time rival of - . 

Hr Zedillo, has made no secret 
of his desire to spend more 
tfape tyfth Us family. . But he is 
likely to be offered a port, ai»d 
may come under pressure to 
accept Pemex, the state oil - 
company,^ the ^labour ministry, 
or perhaps the foreign minis- 
try. 

Apart from Hr Pichardo, . 
other PRI officials expected to 
win cabinet-rank jobs are Mr 
Jose Angel Gurria, the nndti- 
lingual former debt negotiator 
who is considered a possibility 
for the foreign ministry or J 
transport ministry; Mr Oscar 
Espinosa, former head of the 
state development bank. Mr 
Humberto Mira Lora may be 
rewarded for doing a good job 
as PRTs electoral chief. 

Mr Zedillo Is also dose to - ; - 
some relatively unknown mid- 
level bureaucrats - Mr Rogefio 
Gasca Neri, deputy minister of 
transport; Mr Pascual Garcia, 
competition commissioner; Mr 
Juan Diaz Canedo, a former 
hanker; Antonio Meza , f or m er • 
private secretary. One or two 
may make it to the cabinrt, 
and others wDI become under- 
ministers or advisers in the 
office of tiie president 
At least two women are 
expected to be appointed. • 
Despite run-ins with Zedillo, 
the front-runner in this group 
is Maria de las Angeles Mm- m- 
eno, the new se cretar y-general 
of the PEL One opposition or " 
no-PRX figure is likely to he 
named to the cabinet - per- 
haps to the attorney-general’s 
office, but more probably to a ■ 
lesser position. The nomina- 
tion of a businessman might 
send a positive signal to the- 
Private sector - Mr Gflberto 
B«rja of ICA, Mexico’s largest 
private company, is mentioned 
as a leading c andi date. 



lasers * T. 

V-iirlca 4s- - 






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ter: 

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Damian Fraser 


Damian Fraser on radical reform plans for the PRI - the Institutional Revolntjonary Party 


i biHar*: 


A degree of scepticism 


“As president of all Mexicans. I am 
determined not to interfere, in any way at 
ail, in the process of selection of candidates 
of the Pm, of all types, from municipal 
presidents to presidents of the republic . " 


Sueno> A:rc> 

Tel: : T> 4 1 ; 41,1-092!? 
Fit: -.41: ?n-!)e99 


W ith these words, Mr Ernesto 
Zedillo proclaimed his intention 
to push for the most radical 
reform the Institutional Revolutionary 
Party since its foundation 65 years ago. 

The reform, in theory, would make the 
PRI independent of the president and the 
government of the day. It would remove 
the president’s power to pick PRI candi- 
dates for elective office (the so-called 
dedazo) and require the PRI to finance 
itself independently of the government 
The pressure for change comes from 
both within and outside the PRL Opposi- 
tion parties and many observers contest 
that the reform of the PRI is indispensable 
for democratic change in the country. 
Within the PRI, many officials grudgingly 


accept that reform is necessary for the 
legiti m i s a ti o n of the political system; oth- 
ers, frustrated by presidential control of 
their party, want a greater say in sha ping 
government policy and in picking candi- 
dates. 

Nevertheless, there is some scepticism 
that the internal reforms will be imple- 
mented as described. Stiff opposition to 
financial reform is likely to come from 
those who depend an the party for a liv- 
ing; and from those who fear that the PRI 
will find it more difficult to win elections 
when competing on a level playing field 
with the opposition. 

Mr Zedillo himself may reconsider his 
pledge not to interfere in the affairs of the 
party if the PRI picks candidates opposed 
to his policies, or if the party tears itself 
apart as different factions fight over the 
best posts. 

Many observers recall that President 
Salinas quickly dropped his commitment 
to have internal primaries after his 


for the governor of the 
was defeated in a primary 
^ ut whiIe a retreat Is 

Pessfole, the timetable for reform has been 

ST* won fo be -politically 
SSL?® ba TO agreed to hold a , 
national Assembly by the miiMio of nmtt 

books^v^IJ^i2! ende<i to P“t fofo statute 
otoks any reforms agreed on. 

^"5 ft Jesus Reyes Heroles, the pRi official 

heritatinri ?hS ternaI reform ’ without^ 

10081 °f tbe changes will be 

th? Ifriousness about reform, 

changed 'the 

date for cS? *** caH *dates. The candt 

chSe^n 8 ?^ of Jaiisco : 

delegates in ** around 8^)00 

we^, the pnj bi preceding 

elections in candidates for local 

^ 1x1 states of Tlaxcala. S a 


Continued on faring page 




: r-rr- 


J . 






FINANCIAL TIMES WEDNESDAY NOVEMBER 23 1994 


15 




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MEXICO III 


A decade of economic restructuring is bearing fruit, reports Leslie Crawford 

The economy is remarkably resilient 


Exchange rate 

New pesos per doBar (NS} 



Mexican economy has 
gj shown impressive resil- 
IB leuce during a jittery elec- 
tion year which began with a 
peasant rebellion in Chiapas. 
whs followed by the assassina- 
tion of Mr Luis Oonaldo Colo- 
siu, the PRI presidential candi- 
d.ite, in March, continued with 
two damaging banking scan- 
dals and a heightened percep- 
tion of the menace posed by 
Mexico's drug barons, who 
may have had a hand in the 
murder of the PRI secretary- 
general, Mr Jose Francisco 
Ruiz Massieu. in September. 

ft has taken considerable 
skill to neutralise such sus- 
tained blows to domestic and 
international confidence in 
Mexico's economic future. 

The most visible cost to the 
economy has been the deple- 
tion of the country’s interna- 
tional reserves, which dropped 
from i£3.02bn in October 1993 
to SiTJHbn last month. Much 
o: the fall took place during 
the Central Bank's attempts to 
defend the peso, following Mr 
Cnlosio's death. 

Despite political instability. 
Mexico has been able to gener- 
ate some positive economic 
results. Gross domestic prod- 
uct is expected to grow by 
almost three per cent this year, 
its best performance since 1991. 

For the third year in a row 
there will be no fiscal deficit 
Inflation in 1994 is expected bo 
be contained below seven per 
cent, while an economic pact 
signed between government 
labour and employers In Sep- 
tember has set an inflation tar- 
get of four per cent for 1995. 

The goal may be too ambi- 
tious. but the trend of lower 


inflation is expected to be 
maintained. 

By setting such a target the 
authorities have committed 
themselves to continued fiscal 
discipline and maintaining a 
strong peso. Furthermore, 
wage growth will be restricted 
to four per cent, plus produc- 
tivity bonuses. 

The economic restructuring 
that caused so much pain dur- 
ing the past decade appears to 
be finally bearing bruit. Pro- 
ductivity in the manufacturing 
sector is rising by about 10 per 
cent a year, according to gov- 
ernment figures, although the 
gains have not been uniform. 
The steel cement and capital 
goods sectors have adapted 
best to the competitive stress 
of a more open trading regime, 
while many companies in the 
pulp and paper, textile and 
footwear industries have gone 
under. 

“The liberalisation of the 
economy has attracted much 
new investment, but it has also 
destroyed a great deal of old 


capital stock," says Mr Miguel 
Mancera, governor of Mexico's 
newly-independent Central 
Bank. He believes the shake- 
out of inefficient manufactur- 
ers has run its course, and that 
the worst-affected sectors, such 
as textiles, are now back on 
their feet. 

A U this is contributing to a 
strong increase in manu- 
facturing exports, which 
in the first half of 1994 jumped 
by 20.9 per cent, and partly 
ex plains the modest recovery 
in economic growth. Mr 
Ernesto Zedillo, the president- 
elect, will inherit a balanced 
budget, single digit inflation 
and a largely deregulated econ- 
omy which many analysts 
believe is poised to return to a 
period of stable and sustained 
growth. 

As a former central banker 
and budget minister, Mr 
Zedillo Is unlikely to change 
the economic course set by the 
Salinas administration. But 
like all new presidents, he will 


want to put his personal mark 
on economic policy. Over the 
next six years, he has pledged 
to boost the country’s lacklus- 
tre economic growth, provide 
around im new jobs a year, 
improve the country’s highly 
unequal distribution of wealth, 
while maintaining low infla- 
tion and keeping public 
finances in order. 

Mr Zedillo has also pledged 
to increase public spending cm 
infrastructure projects by 25 
per cent during his first year in 
office, in a tacit admission that 
inefficiencies in the state- 
owned railways, electricity and 
oil sectors have become big 
impediments to faster eco- 
nomic growth. 

In an accelerating economy, 
however, many economists 
worry that imports could grow 
faster than exports, widening a 
current account deficit that is 
expected to reach i27bn in 
1994. about seven per cent of 
GDP. 

“The current account deficit 
is unsustainable,** says an Mr 


Rogelio Ramirez de la O at the 
economic consultancy, 

“It is being financed by largely 
speculative foreign capital 
inflows which are both volatile 
and sensitive to bad news. And 
it locks the government Into 
maintaining high real interest 
rates, which in turn puts a 
break on growth.'’ 

At present. Mexico's foreign 
reserves (hacked by a S6-7bn 
credit line from the US and 
Canada and additional support 
from the International Mone- 
tary Fund and World Bank), 
plus net capital inflows of 
some 823.5bn, are sufficient to 
cover Mexico’s external financ- 
ing gap and deter speculation 
against the peso. 

But some economists caution 
against Mexico’s over-depen- 
dence on foreign capital to 
finance the trade gap - 
“Mexico has little control over 
this kind of capital inflows," 
says Mr Jonathan Heath, a 
consultant with Macro Asseso- 
ria Economica. 

“It depends on exogenous 
factors, such as US interest 
rates and how other world 
stock markets are performing, 
rather than the yields on Mexi- 
can treasury bills and the per- 
formance of the Mexican 
bourse.” 

If political uncertainty or a 
widening trade gap led portfo- 
lio investors to bale out of 
Mexico, the resulting pressure 
on the peso and interest rates 
could disrupt Mr Zedillo’s best- 
laid economic plans. 

The overriding goal of the 
Salinas administration, which 
Mr Zedillo promises to follow, 
hag been to curb inflation to 
levels that approximate those 



TRADE BALANCE 

figuBsm USSm 

Jan-June 

Jan-Juns 

% change 


1993 

19£M 

1994793 

EXPORTS 

24,717 

28A30 

16.6 

Oi/o9 products 

3*38 

3,408 

-11.2 

Non-oil products 

21*879 

25,422 

21.8 

Agricffisherias 

1320 

1,682 

3A 

Minerals 

130 

170 

308 

Manufactured goods 

19,129 

23^*70 

23-2 

Maquffadoras* 

10072 

12,766 

208 

Others 

9JD57 

11,404 

25-9 

IMPORTS 

31,704 

37,689 

18-9 

Consumer goods 

3,678 

4,417 

20.1 

Intermediate goods 

22£S1 

26,948 

19l6 

Capital goods 

5495 

<L324 

15.1 

TRADE BALANCE 

-6.987 

-8359 

2&8 

•kt Dona asoorts an* kroons daa tou ism: Banco Om Utax. tor 1950 can; Eton* tar i!W aba 


in the industrialised world. 
That, and a commitment to a 
stable exchange rate, has 
severely restricted the govern- 
ment’s room for manoeuvre in 
macroeconomic policy. 

The Pacto (agreement) 
signed in September left the 
daily slippage of the peso fluc- 
tuation band unchanged, 
which will place an upper limit 
of about five per cent on the 
peso’s depreciation during 
1995. 

The incoming administration 
appears to have ruled out a 
devaluation of the currency - 
which some economists con- 
sider long overdue - to stimu- 
late exports. 

“The problem of exports will 
not be solved by devaluing the 
exchange rate,” said Mr 
Zedillo, in a recent interview 
with El Economista, a Mexican 

finanrial daily 

“A devaluation would not 
compensate for the lack of pro- 
ductivity. competitiveness and 
adequate strategies to pene- 
trate export markets." 

There is also the fear that a 


devaluation would rekindle 
inflation. But the commitment 
to a strong peso has also kept 
domestic interest rates high, 
leading businessmen to com- 
plain that the prohibitive cost 
of credit is choiring growth. 
They say they compete with 
US manufacturers when prime 
lending rates are at least eight 
percentage points higher than 


those in the US. 

Mr Mancera at the Central 
Bank appears unwilling to use 
interest rates as a policy 
instrument to stimulate 
growth. 

“Interest rates reflect the 
price of capital and the general 
perception that inflation in 
Mexico is not yet fully under 
control.' 1 he says. 


Customer service in domestic banks has improved significantly, reports Damian Fraser 

Foreign banking competition intensifies 


M exico's richest busi- 
nessmen may now be 
regretting the 812-4bn 
they paid for the country’s 18 
formerly state-owned banks. In 
the two to three years since 
the banks were privatised, the 
market value of most has 
fallen in real terms, with prof- 
its and asset quality affected 
by the lower than expected 
economic growth, and higher 
than expected interest rates. 

The economic climate 
appears to be Improving - 
growth is picking up and loan- 
default rates have stabilised - 
but the banks now face the 
challenge of increased ' foreign 
and domestic competition. 

In October, the government 
authorised foreigners to open 
up five financial groups. 18 
banks, 16 brokerages, and 12 
insurance companies, to com- 
pete alongside 54 domestic 
institutions, 38 of which have 
been set op since the privatisa- 
tions. 

The recent problems in the 
financial sector have been 
aused mainly by the generous 
lending in the early 199 Os and 
subsequent deterioration in 
Mexico's economy. 

Bank lending increased in 
the early 1990s by more than 20 
times the growth in GDF as 
the government deregulated 
the financial sector and inter- 
est rates fell; once the economy 
deteriorated, and interest rates 
rose, many companies which 
had over-borrowed were 
unable to meet their interest 
payments and defaulted on 
their loans. 

The ratio of past-due loans to 
total loans has grown from 4.12 
per cent in 1991 to 8.3 per cent 
at the end of September. Banks 
have been forced to put aside 
provisions tor the non perform- 
ing loans, reducing their prof- 
its. The poor quality of their 
credit has required them to 


maintain high margins on 
lending to cover for the chance 
of default, putting further pres- 
sure on Mexican companies. 

Moody’s, the rating agency, 
in a recent report, put most of 
the blame of the current situa- 
tion on the banks’ poor infor- 
mation systems weak man- 
agement . 

“The system’s ability to 


Mexican tanks have 
sought to improve 
efficiency and control 
credit risks fay investing 
in new computerised 
informat i on systems 


adjust to a liberalised banking 
environment has been hin- 
dered by a lack of experienced 
managers, poor borrower dis- 
closure. a lack of strong credit 
culture, the paucity of credit 
bureaux and dose links with 
concentrated industrial sec- 
tors," concluded the rating 
agency. 

The downturn in the sector 
has co-indded with two bank- 
ing scandals that have high- 
lighted the government's inad- 
equate financial regulation. 
This year the finance ministry 
took over Grupo Financiero 
Havre - an insurance, leasing 
and brokerage company - and 
Grupo Financiero Cremi- 
Union, one of Mexico’s largest 
banks. The top managers of 
Havre and Union are both 
accused of illegally channelling 
loans to their own business 
Interests. 

The finance ministry has 


subsequently prepared new 
regulations that will require 
auditors and external directors 
to play a more active role in 
scrutinising operations of their 
companies and encourage the 
formation of institutions to 
rate the credit worthiness of 
domestic banks. 

New rules forcing banks to 
assess their exposure to mar- 
ket-risks - such as interest 
rates or devaluation - have 
also been announced. At the 
same time, largely in response 
to increasing competition in 
the sector. Mexican banks have 
sought to improve efficiency 
and the ability to control credit 
risks by shedding workers, and 
investing in new computer 
systems. Client service in 
domestic banks has also 
improved significantly, with 
average waiting lines at most 
counters reduced significantly. 

GF Bancomer. Mexico’s sec- 
ond largest financial institu- 
tion, has. for example, 
employed UK consultants, 
Proudfoot. to re-engineer the 
way its commercial bank goes 
about its business. 

Mr Hector Rangel, deputy 
chief executive, says the total 


Continued from feeing page: 

Luis Potosi and Guanajuato 
through primaries or conven- 
tions. Party officials describe 
the results so far as a big suc- 
cess. The danger remains that 
conventions or primaries will 
be dominated by old-style local 
party bosses, who will (legiti- 
mately or not) be able to 
ensure the election of tbeir 
own supporters to important 
posts. 

Officials say they will seek to 
prevent the manipulation of 
the selection process by screen- 
ing out - at the national level 
- any undesirable candidates 
and by setting up a commis- 
sion to oversee internal elec- 
tions, but even they accept 
such precautions may not be 
enough. 

Instead, many PRI officials 
say the process will only work 
in the long run if the structure 
of the party is changed so that 


restructuring of operations has 
enabled it to cut personnel - 
mainly amo n g middle manage- 
ment - by 30 per cent without 
sacrificing customer services. 
Once redundancy payments 
have been made, GF Bancomer 
expects costs to fell sharply. 

Foreign institutions are 
meanwhile expected to put 
additional competitive pres- 
sure on domestic financial 
groups, although given the ini- 
tial limits cm their capitalisa- 
tion. the impact of their pres- 
ence in Mexico will only be felt 
over the long-term. Initially, 
foreigners will account for 625 
per cent of the banking sector’s 
market capitalisation - the 
legal ceiling for 1994 is 8 per 
cent - and 10 per cent of the 
brokerage's market capitalisa- 
tion. 

Under the opening, foreign 
brokerages will for the first 
time be able to execute orders 
in the stock market for foreign 
clients, and thus will no longer 
having to pay co mm issions to 
Mexican houses. This may 
eventually contribute to a low- 
ering of overall commissions, 
as Mexicans compete harder to 
keep foreign business. 


grass roots activists are given 
more power; and union, peas- 
ant and local political leaders, 
foss - “the way to solve the 
problem of (dominant local 
leaders] is to increase the pres- 
ence of the territorial sector of 
the party.” says one official. 
Such a process will likely be 
opposed by traditional corpo- 
ra tist sectors, creating condi- 
tions for a possible showdown. 

The reform of the finances of 
the party may meet even more 
resistance, with many faring 
that a radical reduction in the 
PRTs financial resources will 
threaten its long-term hold on 
power. Perhaps for this reason, 
Mr Zedillo has been much 
more vague on details of finan- 
rial reform than on the change 
in the way of selecting candi- 
dates. 

No-one knows for sure what 
the annual running expenses 
of the party are - but in all 32 
states there are scores of PRI 
offices, and hundreds if not 
thousands of PRI employers. 
Mr Reyes Heroles says the pay- 
roll has been cut by 70 per cent 
since the election; but he hints 
that such reductions only 
touch the surface of what 
needs to be done. The opposi- 
tion has small fraction of such 
resources at its disposal. 

Mr Santiago Creel, the most 
prominent citizen magistrate 
or the Federal Electoral Insti- 
tute. suggests that one way to 
separate the PRI and the gov- 
ernment would be to give the 
opposition control of the Con- 
gressional Committee that 
scrutinises public finances, of 
the office of the Comptroller- 
General. and to require contin- 
uous auditing of the finances 
of all political parties. The PRI 
has yp| to respond to such an 

initiative; but if it is serious 
about reform, these measures 
and others may be necessary. 


In the banking sector, for- 
eigners are expected to concen- 
trate on capital markets activi- 
ties. and on corporate finance 
for blue-chip corporate compa- 
nies, where competition is 
already intense. However, ana- 
lysts expect the foreign pres- 
ence in the blue-chip corporate 
segment of the banking market 


to have a trickle-down effect, 
as Mexican hanks respond by 
increasing lending to less 
well-known medium and small - 
sized companies, where mar- 
gins are higher, and their com- 
petitive advantages greater. 

“The broadening and deepen- 
ing of Mexico's domestic 
money and capital markets 


will, over time, lead to a more 
efficient allocation of credit 
across the board and reduction 
in the cost of capital,” says 
Roberto Mendoza, vice-chair- 
man of JP Morgan, one of five 
foreign institutions to have 
been granted approval to set 
Up a finanrial group. 

“As competition grows, par- 


ticipants in the market will be 
forced to play to their 
strengths ” he says. 

The large number of foreign 
institutions - and the tens of 
millions of dollars that each 
will be investing in Mexico - 
has raised questions about 
whether all of them will pros- 
per. Much wffi depend on the 
economic growth. But drawing 
lessons from the financial 
institutions that prospered 
after London's Big Bang, Mr 
Mendoza says that those which 
already do a lot of business 
with Mexico will be best-placed 
to succeed. 


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PRI reform plans 









FINANCIAL TIMES WEDNESDAY : 



investment sought for infrastructure and services 

Business needs new 
transport systems 


F ew challenges can 
match the need to mod- 
ernise Mexico’s Infra- 
structure in roads, ports, rail- 
ways, sanitation and 
telecommunications. The suc- 
cess of Mexican exports and 
the survival of local manufac- 
turers facing increased for- 
eign competition wQl depend 
in large measure on the 
improvement of these ser- 
vices, which businessmen 
regard as costly, inadequate 

and inefficient 

Over the next IS years, Mr 
Andres Conesa of Grupo ICA, 
Mexico's largest construction 
firm, estimates the country 
will need to: 

□ Build 60.000km of high- 
ways. 

□ Lay 6.600km of railway 
track and reinforce 5.000 
bridges. 

□ Modernise 263 ports and 
put into operation three 
industrial ports on the Pacific 
coast and three others on the 
Golf of Mexico. 

□ Establish an alternative 
airport system for Mexico 
City. 

□ Duplicate the number of 
telephone lines. 

□ Extend irrigation from 
6m to 8m hectares. 

□ Revamp 250 important 
dams and 2,100km of river- 
bed dikes. 

Z Increase water supply 
and sewerage networks for 
L3m people. 

“We estimate that SlOObn 
will need to be invested - just 
in the next six years," Mr 
Conesa says. 

Following the severe spend- 
ing cuts of the 1980s. the Sali- 
nas administration sought to 
revive investment in infra- 
structure in partnership with 
the private sector. In addition 
to the privatisation of Telc- 
fonos de Mexico (Tehnex) in 
1990, the government has 
extended private sector par- 
ticipation to road building, 
inter-modal transport termi- 
nals, railway maintenance, 
water treatment plants, ports 
and power generation pro- 
jects. 

Mr Ernesto Zedillo, the 


president-elect, promises to 
increase investment in public 
infrastructure by 25 per cent 
during bis first year of office, 
and to set up an investment 
fund for infrastructure, 
financed in part from the 
income of privatisations. The 
fund is expected to fraction 
as a guarantor for projects, 
enabling the private sector to 
gain access to cheaper, 
long-term project finance. 

The dearth of affordable 
credit to match the long 
recovery costs typical of 
infrastructure projects has 
proved a big disincentive to 
greater private sector partici- 
pation. At present, most Mex- 

An investment of 
SlOObn in in f rastr u cture 

will needed in the next 

six years, say planners 

ican banks draw the line at 
10-year loans, while access to 
the international financial 
markets has been restricted 
due to the lack of an invest- 
ment grade for Mexican debt 

The financial constraints 
has been felt most acutely by 
the private sector in the con- 
struction of toll roads, of 
which more than 5,800km 
have been built since 1989 at 
a cost of SiObn. Expensive 
credit, cost over-runs, and 
lower than expected traffic, 
caused in part by high tolls, 
has depressed internal rate of 
return, with many toll road 
trusts having to reschedule 
debt payments. 

Nevertheless, Grupo ICA, 
which has built 12 toll roads, 
remains optimistic about the 
future. The government has 
extended the life of conces- 
sions to make up for lower- 
than -expected traffic, while 
some loans have been restruc- 
tured. 

“We are also learning to 
cost projects more accurately 
and we are becoming more 
sophisticated in tapping the 
capital markets," Mr Guer- 
rero concedes. 

Mexican businessmen 


expect the Zedflto administra- 
tion will extend the system of 
private sector concessions to 
rail transport, even if the 
state retains ownership of 
track. US and Canadian com- 
panies are reported to be 
interested in joint-venture 
cargo operations if and when 
the liberalisation comes 
ahont 

At present, less than two 
per cent of the government’s 
investment budget is devoted 
to this neglected mode of 
transport, and as a result, 
and the state-owned network 
carries less than 13 per cent 
of overland cargo. 

The World Bank says pro- 
ductivity at FNM remains 
less than two-thirds of com- 
parable US railway compa- 
nies, despite the retrench- 
ment of 30,000 of its 80,000 
employees since 1992. Cur- 
rent terminal organisation, 
scheduling and dispatch 
operations are so inadequate 
that less than 20 per cent of 
shipment time is spent on 
route. 

The privatisation of munici- 
pal services, such as the pro- 
vision of drinking water and 
the disposal of solid waste, 
are also opening new busi- 
ness opportunities. Aguascal- 
ientes. Cancun, Ciudad 
Juarez, among other cities, 
have given the private sector 
concessions to manage their 
water supplies. GDM and 
Grupo ICA are also building 
Mexico’s first private-sector 
hydroelectric power plant on 
the River Fuerte, on the bor- 
der between the states of Sin- 
aloa and Sonora. The joint- 
venture raised $250m in 12- 
year Eurobonds to finance 
the project, backed by lease- 
hold guarantees issued by the 
Mexican Electricity Board. 

ICA, and its partners, are 
among those seeking to build 
a private electricity plant in 
the city of Merida. After sev- 
eral false-starts, the govern- 
ment is expected to give the 
go-ahead for construction 
early next year. 

Leslie Crawford 


O ver the past three years. Ceraen- 
tos Mexicanos has gone from 
being a local cement producer 
to becoming arguably Mexico's leading 
multinational company. In 1992, it was 
responsible for Mexico’s largest ever 
international acquisition - the Sl.85bn 
purchase- in 1992 of Spain's Sanson and 
Valeneiana - and since then has 
acquired other significant cement 
operations in South America and the 
US, and has raised more debt in the 
international markets than any other 
Mexican business. 

Earlier last month Cemex formally 
accepted its multinational status by 
reorganising its Mexican operations. In 
what may be the first move of its kind 
by a Mexican company, Cemex estab- 
lished a separate Mexico division with 
Us own chief executive and staff, which, 
like Cemex divisions in other parts of 
the world, will report to company chair- 
man Lorenzo Zambrano. 

“This is third stage in the develop- 
ment of the modem Cemex" said Hector 
Medina, who will manage Cemex 
Mexico. The first two stages of develop- 
ment acquiring dominant market 
share in Mexico and buying up cement 
companies worldwide - have given 
Cemex total worldwide cement capacity 
of over 40m tonnes, and a market value 
of about SSbn. 

The new organisation will lead to 
some cost-cutting as Cemex merges its 


Multinational profile: Cementos Mexicanos 

Reducing costs, 
boosting profits 


■ ' if Cemex can avoid R-pricaiwarer 
greater competition in Its hometoatiset. 
Sen ft wffl be in a strong position to 


three regional Mexican divisions into 
one headed by Mr Medina. With Mr 
Medina taking day-today responsibility 
for the Mexican operations, the reorgan- 
isation will free Mr Zambrano and Mr 
Gustavo Cabellero, the finance directin', 
to concentrate on the overall global 
strategy of the group. 

Mr Medina is confident that Cemex 
Mexico will remain the centre of the 
group's activities in coming years. 
Mexico suffers from an acute shortage 
of housing and roads, power stations 
and other cement-intensive projects, 
and demand for cement will grow by at 
least twice the annual increase in GDP 
over the next five years. 

Cemex already has about 63 per emit 
of Mexico's cement market, and plans 
to invest in new production mainly to 
maintain this share, than to increase it 
substantially. Such a strategy appears 
motivated partly by the company’s 
desire to avoid over-capacity and spark 


off a price war with Apasco. its rival 
which is majority owned by Holder- 
bank, the Swiss cement group. . 

Cemex’s plans of ma int a inin g its 
dominant market share in Mexico may 
be threatened by Grupo Carso, Mexico's 
larg A cong lomerate controlled by Mr. 
Carlos Slim. 

C arso bought a small regional 
cement company plant earlier 
this year. Leading to sp ec ul ati on. 
that it mig ht seek to take on C e m ex , - 
pithpr by building new cement plants or 
by acquiring existing ones. 

Ah* Medina riigmiacps ffie threat from 
Mr siftn- “The industry ' is in' a very 
competitive position," he says. "He 
would need a lot of money - of course, 
he has it But there are other invest- 
ments more profitable and less risky. 
Would a logical investor invest his 
money in such a well-positioned indus- 
try? I doubt it" 


expand- internationally. 

-Mexican operations geaerate -atrout 
$900m a year to. ca^ .of'WidH^abOTt 
9700m are taken op fay 4eW-service and 
Mexi can investment . obligations' 
according -to Mr Cafaallerft: 

. Mr Caballero says Genes 
.the spare cash to invest to 
: areas outside' Mexico,'. ' 

Latin America,' 1 hot not — 

As part of toal-sttategy : .tivkMmxgm 
this - year agreed ■ to’ ^vStocefiios, 

Venezuela's larg^teemratdampany, 
Cementos Bayano, JPan smh’s totjiist, 
cement company^ .and more cetofflit 
plans to Texa^ Confif pdid 
Sanson and Valaickata, 7 4iyin6 ft'about 
30 per cent of the Spanish «ananl®&aT- 

ket ‘ \ -V-.’ 

Cemex believes . that the world cement 
industry is consolidating arcana! a few 
global giants, and: that International 
expansion is the.onlywayjt am-ror- 
vive in the tong tom Bnttt also argues 
&at it has been, able to reduce substan- 
tially costs and increase: profits _pf the 
co mpanies it fads, taken ovmV 

With Cemex : executives having 


years, they axe aide to see tone costs 
can be cut, says Mr Caballero. ,- '■ 

Damian Fraser 


D eep in some of Mexico's most iso- 
lated and poorest regions a 
strange sight can often be 
observed: a handful of well-qualified 
government technicians, equipped with 
laptop computers, portable satellite 
dishes, plus prisms on a tripod, can be 
seen calculating the precise geographi- 
cal location of a small piece of land of 
no obvious economic value. Surround- 
ing them will be a group of destitute 
farmers, trying to work out what they 
are doing. 

The topographers - some 14.200 in 
total - are working on the world's most 
ambitious land-titling programme. 
Employed by the government statistics, 
information and geography institute, 
they hope to have calculated within the 
next few years the exact geographical 
co-ordinates of the boundaries of some 
4.6m individual plots of land - about 
102m hectares - and 4.3m houses, 
within the nation's 30,000 ejidos or com- 
munal farms. 

The programme, known as Procede, 
began after the government changed 
Article 27 of the constitution over two 
years ago. giving for the first time 
members of ejidos - known as ejidatar- 
ios - the legal right under certain con- 
ditions to sell their plots, rent them out, 
form associations with agro-businesses, 
or borrow money using their plots as 
collateral. The ejidos cover about half of 
Mexico's national territory, and the 15m 
ejidatarios and their famili es more than 
a sixth of toe population. 

The ejidatarios need land titles if the 
constitutional changes are to have the 


National land-titling programme 

Puzzle for farmers 


desired impact, since at present it Is 
often unclear who owns what land. 
Without legally recognised land titles, 
they are not able to sell or rent their 
land easily, or from associations, or bor- 
row money, as permitted by the law. 

Once Procede is fully implemented, 
ejidatarios should have for the first 
time secure and transferable property 
rights to their land and homes. While 
not enough to transform the ailing for- 
tunes of Mexico’s agricultural sector, 
the establishment of property rights is 
expected to encourage investment in 
the countryside - uncertainty over 
ownership rights has make farmers 
cautious about spending a lot of money- 
improving their land - and promote 
social peace, by reducing conflicts over 
land ownership. 

“Procede is the instrument to make 
the changes to Article 27 effective," 
says Mr Carlos Jerque, the head of the 
government statistics institute who is 
overseeing the technical implementa- 
tion of the programme. “Without the 
titling, the constitutional changes will 
not have the intended impact of 
improving the welfare of ejidatarios.’' 

Procede may. in addition, reduce the 
power of local political bosses by mak- 
ing it difficult for them to take away 


land from farmers with whom they are 
in conflict In the past, local leaders 
have used the lack of dear property 
rights, and the government's legal pow- 
ers to redistribute land, as a way of 
keeping control of farmers in the coun- 
tryside. 

The government technicians move 
into an qjido to measure land coordi- 
nates only when the members decide in 
a assembly to incorporate into Precede, 
and have agreed between themselves - 
in front of a special government magis- 
trate - on where rough boundaries 
between {dots lie. 

I f there is no such agreement, agrar- 
ian courts are called into to settle the 
disputes. Since the courts may take 
years to resolve a case, which delays 
the hand-out of titles for everyone, 
there is a powerful incentive fin* the 
ejidatarios to reach agreement - and, so 
far, most have. 

Under (me method of measurement, 
the topologists calculate the co-ordi- 
nates of the outer boundary of the ejido 
by standing on several points of it and 
sending signals to an overhead satellite, 
and taking from the satellite a reading 
of the boundary’s geographical co-ordi- 
nates. 


A less accurate but tester method . 
involves taking aerial photograph of gji- j 
dos, and then asking to 

mark the boundaries' between thetr own 
plots, homes, and commanal lands^ A 
scanner reads the markecQtoes between 
plots, and records co-ordinates on a - 
computer disk. ■ . : 

Data gathered from both- schemes 4s 
pot into a digital computerised national _ 
agrarian register wb&&LWflZ eventually 
include Iand bom^arifeff ^f idI 30,W 
ejidos, plus 44m i^^lu£d ;^ote 'aaiid 
4.3m homes withes iBhean. . Ipdivkhial - 
tides for plots «k£ booses are 'tended'' 

which has ) 

location of the ejidos ^wfcaf .ft & 
grown there. ; ; >■.*?■ : 

Mr Jerque says that the- progran&te ; 
is unprecedented in its scope and preci- 
sion, with ho other country having 
thing as big as thtootenputerised repa- 
tration project “ifsi a ; pioneering?, 
programme fra its size, complexity,' and 
for the use of- advanced techhofogy" tie 
says. ‘ •; : . 

Nevertheless, Prooedehas been crft&S 

feed . by some' fry bring unnecessarily 
complex and .long-winded, .and. for tak- 
ing too long to complete. So far, about 
30 per cent of ejidos have had the. 
boundaries of their plots measured, and - 
members of IS per cent of Crates have: 
received their titles - less thanthe gov- . 
e minen t had hoped for this stage. The • 
programme may not be completed until 
near the end. of the decade. 

- Dafiuan JFfaser 



Av. Roble 300 
Mezzanine Tocrealta 
Col. Valle del Carapcstre 
Garza Garcia, N. L. 
Mfixico 

Fax: (8) 356*7332 



Pulsar 

Pulsar lnternacional 1 S.A.de C.V. 


MONTERREY, MEXICO. 


Mazarik 29 2° piso 
Col. Chapultcpcc Morales 

Mdxico 

Fax: (5) 227-8259 


US/Mexican retailing alliances 

More glitz for 
shoppers 


T he North American Free 
Trade Agreement has 
spawned half a dozen 
cross-border alliances between 
Mexican and US retailers 
which are betting on the grow- 
ing purchasing power of 90m 
Mexicans. 

□ Cifra, Mexico's leading 
retailer, has formed a jointly 
owned company with Wal-Mart 
of the US to establish super- 
markets and discount stores. 

□ A second joint-venture 
has been signed between Cifra, 
Wal-Mart and Dillard Depart- 
ment Stores, which specialises 
in clothing and wearing-ap- 
pareL 

□ Comerclal Mexicans, the 
second-largest retailer, has 
teamed up with Price Club of 
the US to rival the Cifra-Wal- 
Mart alliance. 

□ Grupo Gigante, Mexico’s 
third-Iargest retailer, has 
joined up with Carrefour of 
France In one joint-venture 
and with Fleming Companies 
in another. 

□ El Puerto de Liverpool, 
the Mexican department 
stores, are developing a combi- 
nation store chain with KMart 
Corporation. 

The alliances have not only 
added more glitz to the Mexi- 
can shopping experience - 
they are injecting more compe- 
tition into the retailing sector 
and reducing margins, prompt- 


ing companies to pare down 
costs and look beyond the Gua- 
dalajara-Mexico City-Monter- 
rey axis for new business 
opportunities. 

Expansion of the new joint- 
ventures is taking place under 
less than perfect conditions, as 
the slow-down in economic 
growth and high interest rates 
have put a break on the con- 
sumer credit boom of the early 
1990s. As a result, growth in 
consumer demand has been 
lower than expected. Cifra says 
its sales, (excluding Wal-marf s 
share), which totalled $4£8bn 
in 1993, have risen by only 4 
per cent so far this year. 

Cifra executives say they 
began preparing for the 
tougher competitive environ- 
ment five years ago - “we 
knew the large US chains 
would come to Mexico once 
Nafta was signed, so we took a 
hard look at how they run 
their business. To survive, we 
had to become as competitive 
and efficient as the largest US 
retailers.” 

The first step was to cut 
operating and administrative 
costs. In his annual report. Mr 
Henry Davis. Clfra’s president, 
outlines same of the cutbacks: 
“We no longer supply our exec- 
utives with cars . . . subscrip- 
tions to tnagarmpg have been 

Continued on next page 





(.vy : -v ~ 


7 wV, T;-. • 

agjt Haod MIyaretf it* 

. , * = ^ ; ?£,'• ~ y. V. ^ "^-TTy «•; *• J.v^v 

Contact your local agent today: 

Revistas y Periddicos Internationales, SA de C.V. 
Rorencia 57-1004, Col. Juarez 
06600 Mexico D.F. 

Tels. 207 8100 207 7740 

Fax. 208 3979 



FINANCIAL TIMES 


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Assassination links are officially denied 

Drug problem grows 


A fter Jos6 Francisco Roiz 
Massieu, tbe number 
two official in the ral- 
ing party, was panned down 
six weeks ago, Mexicans 
began to talk about the “Col- 
ombianisation" of the politi- 
cal system, reports Damian 
Fraser. 

Drug barons and their 
allies in tbe ruling party, it 
was claimed, were seeking to 
block political change and 
police operations against 
! them by killing reform* 
minded public figures. Cardi- 
nal Joan Jesus Posadas of 
Guadalajara had been a vic- 
tim last year; presidential 
candidate Tjii« Donaldo Cdo- 
sio in March; and now Mr 
Rtdz Massieu, went tbe con- 
spiracy theory. 

“Who’s next?* asked Carlos 
FUentes, the novelist, in an 
article in La Jornada. Colum- 
nists pointed to the spate of 
political killing s in Colombia 
in the late 1980s - that pre- 
ceded moves by Colombia to 
accept extradition of traffick- 
ers to the US - and suggested 
that Mexico's co-operation 
with the US over drag 
enforcement was provoking a 
■similar reaction. 

“President Salinas broke 
the trace between drug bar- 
ons and the government. 


They are now fighting back," 
says Federico Reyes Henries, 
editor of Este Pais, a maga- 
zine dedicated to public opin- 
ion. Mr Eduardo Valle, a for- 
mer senior aide to the 
attorney-general, until earlier 
fids year, and now in exile in 
the US, publicly claimed that 
drug traffickers and senior 
members of the ruling party 
were in cahoots, and were 
behind the Colosio killing. 


al's office, which says that 
“no connection” has been 
found between the killings. 
The official line is that drag 
traffickers mistook Cardinal 
Posadas for the head of a 
rival gang and killed him fay 
accident; that Mr Colosio was 
assassinated by a lone, 
deranged gunman; and that 
drag traffickers at most 
played a secondary role in 
planning Mr Ruiz Massieu’ s 
murder. 

Backing up the official ver- 
sion is the lack of clear 
motive for recent killings: 
there is no evidence that drag 
traffiduxs have gained from 
tbe murders. Nor has any evi- 
dence emerged that contra- 
dicts the government expla- 




-r* " m 

k&(,. 

* «• »*- 



A youig bxfian girt and baby watch about 300 sokfas of the Zapatista 
Array for Notional Ubemtion (EZLN) paradbig in the Lacandon Jungle of 
the south-eastern Mexican state of Chiapas. The 7g ia liwtBt ai April 
co fi an amorated the TStfa amh/m na v of Bin muntar of Utalr romkOonary 
hero,' BnflafMKZapatar . piaun o, oeu^a btsubmp 




nation for the three 
or Uuks them In any direct 
way. Nevertheless, the con- 
spiracy theories thri ve. Many 
find It difficult to believe that 
a Soman Catholic Cardinal 
could be confused with a 28- 

year-old drag dealer, that it 
was by chance that Mr Colo- 
sio was murdered in Tijuana, 
home to the powerful cartel 
of that name; and that is a 
co-incidence that one of the 
alleged conspirators in the 
Ruiz Massieu killing, is 
thought to be related to a top 
lieutenant of tbe Gulf cartel. 

While the amateur execu- 
tion of the Ruiz Massieu 
assassination does not bear 
the hallmarks of a drug kill- 
ing, some have suggested the 
Gulf cartel killed Mr Ruiz 
Massieu to take revenge on 
his brother, Mario Ruiz Mas- 
sieu, the deputy attorney-gen- 
eral who has cracked down 
on the Gulf cartel 

Others believe that Ruiz 
Massieu had fallen out with 
members of the Gulf cartel 
when governor of Guerrero, 
who had him killed before Us 
expected appointment to tbe 
interior ministry. SfiU others 
claim that Mr Ruiz Massieu 
was killed by old-styled poli- 
ticians, who feared his sup- 
posed reformist instincts. 


N early a year after the North 
American Free Trade Agreemen t 
first came into effect, there is no 
giant sucking sound of jobs and facto- 
ries moving from the US to Mexico. 
Overall, trade Dows between US and 
Mexico have increased substantially, 
but not to any one country's benefit; 
the two way balance of trade has 
remained largely unchanged. 

Nor has integration of North Amer- 
ica’s economies moved as fast as many 
once predicted. Regulations governing 
trade and investment between Mexico 
and the US have, if anything, become 
more complex since the treaty came 
into effect US companies have com- 
plained this year about new Mexican 
Customs requirements, delays and red- 
tape at the border, plus stricter enforce- 
ment of sanitary and labeling stan- 
dards. 

At the same time, though Nafta was 
in tended to reduce uncertainty about 
Mexico's political and economic fixture 
by indefinitely committing it to pro- 
market economic policies, foreign inves- 
tors remain nervous about the coun- 
try's economic and political prospects. 

Partly as a result of the peasant rebel- 
lion in Chiapas over the New Year, and 
the March assassination of Luis Don- 
aldo Colosio, the then-leading presiden- 
tial candidate, Mexico's interest rates in 
real terms have risen since the treaty 
«m» into effect and the stockmarket 
has fallen, in dollar terms. 

Heralded by some of Its supporters as 
a mechanism that would transform 
Mexico’s economy, and attacked by crit- 
ics in the US as an agreement that 
would destroy US jobs, Nafta has so far 
bad a modest economic impact 
While growth of two-way trade and 
investment h a ? accelerated, and the US 
and Canada moved to support Mexico’s 
currency after Mr Colosio’s awaresina. 
tion, the treaty has played a much 
smaliw part in shflp m g economic and 


North American Free Trade Agreement 

Trade balance still 
largely unchanged 


political events cm both sides of the 
border this year, for <*Tampi^ the 
rise in US interest rates. 

“Trade agreements do not turn trade 
relationships upside down," says Mr 
Jeffrey Schott, a follow at the Institute 
for International Economics In Wash- 
ington, DC. “There are a lot of people 
whose analysis of the treaty was ‘oat of 
the ball park,’ on both tbe positive and 
negative side.” 


W hile Nafta’s supporters and 
opponents accept that Nafta 
has not yet lived up to some of 
the voider expectations held for it, they 
argue that fright month g is tOO shor t a 

time to judge its overall impact Tbe 
strangest — in terms of higher 

economic growth for Mexico, or argu- 
ably loss of US jobs - will, it is con- 
tended, be felt over the long-term as the 
bulk of tariff and non-tariff barriers 
between the two countries, and with 
Canada, are removed. 

in Mexico, the government has down- 
played Nafta throughout most of the 
year, wary perhaps that the agreement 
had been given too much attention in 
previous years, and partly on the defen- 
sive after Zapatista rebels in Chiapas 
attacked it as a “death sentence" for 

the Counfry's Indian pppnlaHnn , TwriAfffl , 
the view - never very widely held - 
that the treaty would rapidly usher in a 
period of stability and prosperity has 
been dropped. 


“ft was always a dubious notion that 
Nafta would make Mexico’s political 
institutions more solid and the country 
more stable,” said one leading ruling 
party figure earlier this year ea r lier. “It 
merely what are the bound- 

aries of feasible pcfraranfo policies." 

Asked to point to benefits of Nafta 
thi« year, officials and many business- 
man believe that the agreement has 
reduced the economic impact of the 
political shocks this year. They reckon 
Nafta gave investors confidence that 
economic policy will remain 
unchanged, irrespective of political 
developments. Mr Ernesto Zedillo, the 
president-elect, and fixe two main oppo- 
sition candidates in the August elec- 
tion, all broadly supported the accord. 

“Nome of the political events this year 
have changed the ftmiia^witah for ns," 
says Urlich Sander, head of corporate 
communication at Vitro, one of 
Mexico's largest industrial companies. 
“We are still on the border of the larg- 
est market in the world, and because of 
Nafta we are still having to prepare 
ourselves for frill competition." 

Such an argument appears partly 
supported by economic figures. Despite 
the political uncertainty, direct invest- 
ment into Mexico has increased rapidly 
this year. Mexico's non-off exports to 
the US have grown by over 20 per cent 

While Nafta contributed to such 
flows, most economists caution that it 
was of an influence than the raw fig- 


ures indicate. Trade and investment 
between Mexico and the US was grow- 
ing rapidly before Nafta was in place, 
reflecting a long-term trend towards 
economic integration, independent of 
the agreement. With Mexico's economy 
sluggish, and the US's expanding 
strongly, Mexico’s exports would have 
grown strongly even without an accord. 

In some cases, Nafta may have made 
trade more difficult Many companies 
based in Mexico and the US have found 
it difficult to work what out - if any - 
benefits they are due under tbe agree- 
ment and how to comply with new 
complex regional content rules set out 
by the treaty. Mexico’s decision to 
enforce trade regulations such as Span- 
ish- language labelling and sanitar y 
standards more tightly has led to delays 
at the US-Mexico border, and com- 
plaints from exporters and importers. 

Just as the business climate has been 
slow to change, critics contend that 
there has been no noticeable improve- 
ment in Mexico’s enforcement of labour 
and environmental laws since Nafta 
came into effect. Indeed, Mr Josd 
Antonio Ortega, head of Radian Corpo- 
ration, a large environmental consult- 
ing firm in Mexico City, says enforce- 
ment has relaxed this year, as the 
Mexican government no longer has had 
to worry about US public opinion. 

The three secretariats set up under 
Nafta to enforce the trade, labour and 
environment agreements are still not 
fully operational, with some key posi- 
tions to be filled. 

So far, US labour unions have filed 
two complaints alleging that Mexico is 
not enforcing labour laws, but as was 
clear when the ride agreements were 
made public, the process of reviewing 
these complaints has been long-winded 
and none, up to now. have been suc- 
cessful 

Damian Fraser 


KEY FACTS ON MEXICO 

Area and population * - 

Area: 1.97m sq kms (756,066 sq miles); cuttivatabte area. 19 per 
cent^area' eultabie for Itvestock 46 per cant 
Population, mkJ^ywr total population. 1992 estimate: 89.53m; den- 
sity per sq km; 41. Population census results, March 1990: 81.24m 
(mate, 38.89m; females, 41.35m). - 
LangUa^es/ethnic groups - 

Spanish is the pfft^.laofliB^ Some American Indian languages 
include Ndhuafl, Maya and Zhporteco, Hhnic groups, (percentage of 
total) are: Mestizo, 60 per cent; Iridtan, 30.- per cent; White, 9 per 
cent Relgious' groups; Roman Catholic, 89 per cent; Protestant, 6 
par certt 

Currency ; ■- 

On January 1, 1993, the peso was trimmed by three zeros, one new 
peso befog worth 1JXJ0 of old. Fxrfetafe on foflation trends, see 
page three of this survey. 

Business Hours 

Government and business, (Moo-Fri): Sam - 3pm, 5pm - 7pm, with 
considerable regional variations, accordng to local custom. 

Banking. (MorvFri): 9am - 1.30pm: certain banking servioces are 
available in large cities from Sam to 5pm. Shopping hours: (Mon, 
Tue, Thu, FrL) - 10am to 7pm; Wed., Sat 11am - 8pm. 

Cttmate 

The N*w* season for a business visit is from late January to May. but 
for pleasure between October and earfy April, when it seldom rains in 
most areas of the country. The cflmate varies with altitude: tropical 
southern region and coastlands are often hot and wet, white high- 
lands of the central plateau , are temperate. The temperature in 
Mexico City ranges from 5 to 25 degrees Celsius, with occasional 
sharp frosts 'm winter, (December-February). 

Tine zones . _ i 

Standard time is the same as US Central Standard Time; six hours 
behind GMT in Mexico City. In Baja Cafiforaia Sur, Nayartt, Sinaloa. 
Sonora, time is seven hows behind GMT. In Baja California Norte, 
GMT minus eight hours. Clocks are put forward an hour fn summer. 
National hotidays 

Sunday Is a statutory holiday. Saturday is also observed as a 
holiday, except by the shops. National holidays include New Year, 
Jan. 1; Constitution Day, Feb. 5; Birthday of Benito Jufrez, Marc* 
21* Maunday Thursday,- Good Friday and Easter Sunday, Labour 
Dmr, May 1; Battle of Puebla, May 5; President's Annual Message. 
SepLl; Independence Day, Sept 16; Discovery of America, Oct 12; 
Day of the Revolution, Nov-20; Christmas Day, Dea25. 

Benefits of US/Mexican 
partnerships in retailing 

from our joint venture with 

Continued from previous page: Wal-Mart, a company recog- 
nised worldwide as a leader m 
restricted, and the executive retail applications of informa- 
^l^havBbemcIosed. tfon technology." says Mr 

All breakfast, luncheon and Davis of Cifra. 
itimier meetings have been “The joint-venture has 
replaced with working sessions allowed os to install well- 
at our offices.” proven systems and pro- 

fit addition, Cifra i nves ted, grammes which Wal-Mart 
fas™ in computer equipment already has in operation. We 
and systems last year. The aTBi therefore, reducing our 
new, no-frflls company ethos costs and eliminating the risk 
allowed Cifra to cut operating of tenure.” 
and administrative costs from csfra executives say they are 
22 per rant also learning from Wal-Mart 

sate, a figure wM ch cpmpa ny j JQW to manage the growth of 
executives say fa. comparable operations. They have 

to the best-run US - . . plans to almost double the 

US companies have sought w1TTnh er ^ stores in some 90 
Mexican, partners tecause ox lgQ7 w ju require 

the latter’s greater knowfoflge Tparning about the wholesale 
of the local consumer marses ^0 of the business and the 
and suppliers. • . establishment of distribution 

In return, the IIS chains are ceakre8 equiped with compot- 
contrfbnttng their greater “just-in-time” technol- 

experience in computensea to inventories and 

inventory contort,' wholesale costs, 

distribution and their vast net- 

*^2? Leslie Crawford 


In Mexico, our commitment 
to our clients comes first. 
The results follow. 


MERGERS & ACQUISITIONS 


GLOBAL CUSTODY 


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18 


MANAGEMENT 


An efficiency that 
runs in the blood 

Alan Pike visits Europe’s biggest transfusion centre, 
where lives depend on a high-quality service 


M any people enjoy hir- 
ing incompetent 
underlings. After all, 
an incompetent subor- 
dinate can make a near-incompe- 
tent boss seem, by comparison, a 
near-genius. And. uncertain of ten- 
ure, the incompetent is likely to 
take special precautions to please 
the boss. 

He or she will want to do exactly 
as told in any circumstance. The 
incompetent will usually be more 
than delighted to follow foolish 
instructions and. when problems 
arise, to screen the boss from all 
fallout A good living is thus to be 
commanded by the canny incompe- 
tent's well-honed fawning and grov- 
elling skills. 

Given that an incompetent under- 
ling can offer many satisfactions to 
the boss, how should a recruiter go 
about finding one? The knack of 
appointing such individuals is a tal- 
ent shared by many senior execu- 
tives. But it is largely unconscious 
- although the would-be recruiter 
constantly hires incompetents, he is 
likely to be unaware of the precise 
techniques exploited. 

Indeed. unless properly 
instructed, the recruiter may actu- 
ally wind up accidentally recruiting 
a competent subordinate. This is 
likely to cause untold heartache, for 
such a subordinate is likely to 
prove a troublemaker for the boss, 
always querying instructions, refus- 
ing to carry out orders that do not 
seem to make sense, maybe even 
indulging in “whistle blowing". 

So how can the intelligent execu- 
tive assure himself that the person 
he hires will be a genuine incompe- 
tent. and not one of those emotion- 
ally mature, stable, savvy achievers 
who always turn out to be trouble- 
makers? The answer lies in heeding 
the following eight commandments. 
• Never conduct a real search for 
qualified candidates. Instead, 
restrict yourself to hiring other peo- 
ple's rejects and make ail your 
appointments from the unsolicited 
CVs that cross your desk. These, for 
the most part, are going to be 
directed to you by out placement 
firms that specialise in finding new 
employment for people whose 
present employers do not want 
them around anymore. This is a 
rich pool which, if carefully fished, 
can be relied upon to produce 
out-and-out incompetents over and 
over again. 

• Place great emphasis on appear- 
ance and presentation. Take to 
your bosom the advice of Oscar 
Wilde that “It is only shallow peo- 
ple who do not judge by first 
appearances.'' 

Favour the kind of candidate who 
most fits your own notion of what 
an executive ought to look like. Pay 
close attention to the candidate's 
clothes. Work upon the assumption 
that a Brooks Brothers suit denotes 
stability, and that silver hair 


For Belinda 
# ■■■ Phipps, the term 

lifeblood is more 
X JL than a familiar 
# | A 1 metaphor used 
/Vi * throughout busi- 
g g. 9 ness to describe 

ital and staff that 
management ^ essential to 

success. Lifeblood really has been 
her business for the last three 
years. 

As mana g in g director of South 
Thames Blood Transfusion Service 
- she is now a consultant to the 
London Ambulance Service - lives 
have depended on the quality of 
service she provides. 

Since Phipps and a new manage- 
ment team took over three years 
ago at the once poorly-regarded 
South Thames, efficiency has been 
lifted to levels that are widely 
admired elsewhere in the National 
Health Service. 

The reception area of the ser- 
vice's headquarters at Tooting, 
south London, gives visitors an 
accurate introduction to the organ- 
isation. Good lighting and plants 
make the best of an unexciting 
public-sector environment and gen- 
erate an impression of calm and 
efficiency; yet all is done on a mod- 
est scale, avoiding any suggestion 
of excess or waste of money. 

On the wall, visible to staff and 
visitors, is the service's purpose 
statement: “To help save and 
improve the lives of patients, with 
services and products provided 
through the generosity of donors." 
While this might appear self-evi- 
dent. it represents the outcome of 
a significant exercise in mind- 
clearing and is central to the 
recent efficiency improvements. 

When Phipps arrived from 
Glaxo, where she had worked for 
10 years, to take np her first pub- 
lic-sector post she discovered staff 
were confused over whether the 
service’s customers were the 
donors who provided the blood or 
the patients who received it The 
purpose statement puts the patient 
at the centre of the exercise - the 
service's core job is to ensure that 
hospitals can always be supplied 
with whatever blood products are 
required. 

Britain relies entirely on volun- ' 



Belinda Phipps: job is a combination 
teer blood donors, so it is essential 
for their confidence and co-opera- 
tion to be maintained. But the 
practice of regarding donors as 
customers had led to some transfu- 
sion services, including South 
Thames when Phipps arrived, 
allowing volunteers to choose 
when to donate blood regardless of 
whether it was needed - even 
though, as some blood products 
have a short shelf life, it was some- 
times never used. 

Phipps ordered a stop to this, 
setting out to ensure that amounts 
and types of blood collected at 
transfusion sessions were brought 
more closely into line with the 
requirements of hospitals. 

She tackled the potential prob- 
lem of offending donors by 
approaching them individually and 
offering more information than 
they had been given in the past. 
The exercise has resulted in a 
reduction in wastage from red cells 
outdating to around 1 per cent, 
compared with a national average 
of £6 per cent. 

Phipps discovered that late after- 
noon and early evening were the 
most popular times for donor ses- 
sions; yet nine to five tended to be 
the working hours in transfusion 
centres, m eaning much blood was 
not processed until a day after col- 
lection. Working arrangements of 
the South Thames staff were rene- 


of running a charity and a factory 
gotiated and blood is now pro- 
cessed at night as well as day. 

Phipps, the first head of an NHS 
blood transfusion service to come 
from a non-medical background, 
describes the job as a combination 
of r unning a charity and a factory. 
This is perhaps an understatement 
- in addition to handling volun- 
teers and processing their blood 
efficiently, the service must oper- 
ate a just-in-time delivery service 
36S days a year. 

Peter Garwood, the service's sci- 
entific director, admits that when 
Phipps arrived morale was low. 
“She tackled this by consulting, 
involving and empowering all the 
staff with a campaign entitled ‘560 
brains are better than one’. Now 
we have an organisation where 
change is accepted rather than 
feared." 

The future may, however, hold 
more change than the innovative 
managers at South Thames will 
welcome. Under a government 
restructuring of blood transfusion 
arrangements, a new National 
Blood Authority has been estab- 
lished and the number of transfu- 
sion centres around the country is 
to be reduced. There are concerns 
in the transfusion service that this 
may lead to less autonomy for 
local managements to introduce 
the sort of changes that have lifted 
efficiency at South Thames. 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 23 




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It's harder than you think. John Wareham offers tips 


bespeaks wisdom. 

Never hire an executive who 
wears unseemly hose, or who sports 
scuffed shoes. Hire the best-looking 
candidate, the individual who bears 
the strongest physical resemblance 
to your own attractive personage. 
By all means feel free to hire your 
own offspring and siblings. 

• Talk to candidates but never 
interview them. It is naturally very- 
important to impress upon those in 
your organisation that you are 
serious about hiring “good people". 
Thus, you will probably want to 
spend a lot of time talking to 
candidates about your job, sharing 
your values and philosophies. 

Tell them at length about your 
company and yourself, your 
upbringing, your . view on 
everything. If the would-be recruit's 
attention flags at any point then 
throw the ingrate out, for the 
candidate who cannot at least 
to be paying attention for hours on 
end to incoherent ramUings from a 
prospective boss is unlikely to be a 
proper incompetent 

• Don't bother to ask for too much 
material on the candidate. Simply 
assume that it is all on the CV. Or 
adopt an acant garde attitude and 
work to the assumption that you 
must not invade anyone’s privacy 
by inquiring about any possible 


“employment gaps". 

• Hire from your own social 
circle. Explain to your colleagues 
that “the cheimstiy hastate right” 
before you win hire. This way you . 
can restrict your hiring to people 
who not only look and dross like 
you, but who also share you 
opinions on pretty well everything. 
Put a great d**?! of emphasis on 
“name” reT7ftg*»c met clubs.. . 

By so doing; you will more or less 
exclude the kind of 
independent-minded person likely 
to prove a troublemaker. With any 
luck at all, you will wind up 
recruiting a first-rate, 
non-threatening incompetent with 
whom you can harmoniously 
coexist 

• Reject generalists in favour of 
technicians. A wonderful way to 
by-pass competent people is to 
make technical - as opposed to 
emotional - qualification your key 
selection criterion. This is a. 
much-favoured technique; because 
spotting and quantifying technical 
education and exposure is infinitely 
easier than spotting and hiring the 
emotional qualities that go to make 
a truly competent person. 

• Place great reliance on 
references from past employers. A 
good way tohire an incompetent is 
to solicit bland comments - about 


PEOPLE 


WHY SETTLE 
FOR SECOND, 
THIRD OR 
FOURTH BEST? 

1 THE ERICSSON EH237 


Morton and Foley aim 
to build up Baris 


Bob Morton and John Foley 
have emerged at the controls 
of Baris Holdings, the troubled 
loss-making building materials 
group which specialises in fire 
protection and dry lining. 

Morton, a Midlands financier 
with a taste for buying into 
sick companies and nursing 
them back to health, has 
become non-executive chair- 
man of the Nottinghamshire 
group and called in Foley to be 
chief executive. 

Foley had been biding his 
time for a new job since Sep- 
tember when he came to an 
amiable parting of the ways 
with Triplex Lloyd, the West 

Finance moves 






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Renata Riverso (above), former 
chairman and managing direc- 
tor of IBM Europe, is joining 
the board of Baring Investment 
Banking, the newly formed 
investment banking arm of 
London’s oldest merchant 
bank group. 

Riverso, 61, who will retain 
his role as chairman of Alit- 


Midlands engineer. 

Morton fireproofed Baris’s 
ailing finances by buying into 
a rights issue, persuading 
National Westminster Bank to 
convert debt into equity and, 
with Foley, trawling round the 
London institutions to per- 
suade than to support a share 
placing. 

Foley’s first job is to over- 
come the £3 dm pretax loss in 
the year to last February. EEs 
second is expansion. With 300 
employees, Baris is down to 
the core business after 
unhappy excursions in Ger- 
many, Spain and a lengthy dis- 
pute with Wimpey about a con- 


aHa, the Italian flag-carrier, is 
the first non-executive director 
to join the board of Baring 
Investment Banking, formed 
earlier this year when Barings 
combined the manag ement of 
its Baring Brothers & Co mer- 
chant banking business with 
Baring Securities. Riverso has 
also been appointed chairman 
of Baring Brothers (Italia). 

Riverso is the latest big 
name to be recruited by Bar- 
ings. Earlier this year Jean 
Peyrelevade, president of 
Credit Lyonnais, and Yoshih- 
iko Miyauchi, president of 
Japan’s largest Leasing com- 
pany Orix, joined the board of 
Barings pic, the parent of the 
group's activities. 

■ John Franklin, formerly 
corporate finance director of 
Morgan Grenfell, has been 
appo inted a director of 
FOX-PTIT, KELTON in its 




tract for the Little Britain 
development in the City of 
London. “It was quite a good 
business.” says Foley. 

Robert Smith, the former 
chairman and chief executive, 
remains on the board as an 
executive director. Paul 
Cheeserighl 


corporate finance division. 

■ Steve Baker has been 
appointed head of MIDLAND 
Bank Fund Managers (Jersey). 

■ Jhn Cantwell and David 
Cockburn have been appointed 
directors of investment 
banking in London for 
SALOMON BROTHERS; they 
move from Morgan Stanley’s 
investment b anking practice 
and from Le hman Brothers, 
respectively. 

■ William Black has been 
appointed a director of 
CAPITAL & COUNTIES. 

■ Michael Goggin has been 
appointed md of TULLETT & 
TOKYO Forex. 

■ Hike Cosgrave and Ian 
Forrest hav e bee n appointed 
directors of SWISS BANK 
CORPORATION in London. 

■ Peter Ledbetter, a director 

of IRISH PERMANENT, has 
been appointed md of its 
subsidiary Guinness & Mahon. 


the only comments offered these,.- 
days - from previous employers; It ’ 
is vital- ter take such comments-.at: . 
face value, and. to ignore or-.v 
overlook cagey endorsements. So, 
when someone says: “In my opintettt 
you'll be fortunate to get tfus ; r 
candidate to work for you,” tttte.- -f- 
out the ‘sub-text and delve 
.further. . .• _> ‘ 

• Never get a psychological 
evaluation on the tfandfdate. TWc - 
vital thing ia hiring inoompeteatsis.-l ; 
for everyone to believe, or pretend" * 
to believe that the incompetent S'a 
great, prize. Unfortunately, - _a r 
psychological evaluation may let ’ 
the cat out of the bag- 
So, when the company chairman 
- having suddenly noticed what can ■ 
no longer be hidden, that your staff . 
never seem to get anything done ... 
suggests that it might be smart, to; ... 
have your future candidates 
screened: by a professional before ; 
any wring , proclaim IdueLand. long 
" that you simply Sfnqt.beilieve Jn'aB - 
that mnmbo^dnbp;^ Arid^joever let . 
yourselfbe evaluafiSL'KcrtaRddbe 
the end of everything^ . . 

The. writer is founder and chief 
executive of Wareham Associates, a 
New York-based _management 
cmtkdtmg firm and the author of - 
Secrets of a Corporate Headh un ter/ 


Improved 
access at 
Simon 
Engineering 

Simon Engineering has 
brought in two outside execu- 
tives, John Mottram and Frank. 
Cunlifle, to run Simon Access 
(UK), a new company which 
integrates all its powered 
access activities in the UK. 

Mottram, most recently dep- 
uty md at Hughes Rediffusion 
Simulation, becomes manag in g 
director of Simon Access (UK). 
Cunliffe, previously the engi- 
neering director at Massey 
Ferguson Tractors, is 
appointed to the new post Of 
operations director. 

The new com pany combines 
the former Simon Gloster Saro, 
Simon-Dudley and Simon 
Access Sales and Service, and M 
will begin trading on January W L 
L It follows the restructuring * 
of the Simon Access UK manu- 
facturing operations into one- 
plant at Gloucester. 

The access business is one .of 
three on which Simon Engi- 
neering is concentrating, as 
part of its restructuring. .The 
managing director of Simon 
Access is Ron Wheeler, who 
took over from. John Barker 
early this year. Andrew. Baxter 



l 



\ ■ ‘ 
* 


Sts 


Metrotect: new finance director 


Metrotect Industries, the 
newly-floated company which 
makes protective coatings for 
pipelines, is changing its 
finance director less than a 
fortnight after it warned that 
its profits would be sharply 
lower in the current year. 

Guy Thomas, 31, a senior 
audit manager with Ernst & 
Young, the company's audi- 
tors, joins the company as 
finance director on January 1. 
He replaces Jim Ball who win 
remain on the board as com- 
pany secretary. 

Metrotect, which was floated 
on the stock market at 108p a 
share in the summer of 1993 , 


has failed to live up to expecta- 
tions. In the year before its flo- 
tation, it more than trebled its 
profits and doubled its turn- 
over to SSHAm. But in its first 
full year as a public company 
its profits rose by 35 per cent 
to £2.36m and turnover fell 
slightly. 

Earlier this month Metrotect 
reported a jump in interim pre- 
tax profits but warned that its 
fall year profits were likely to 
be below last year’s figure. 
Yesterday, Metrotect said it is 
now carrying out a review of 
all contracts being undertaken 
or anticipated and had 
instructed Ernst & Young to 


review the company’s budget- 
ing and management informa- 
tion system. This review will 
include the budget for the year 
ending March 31 1995. 

Metrotect, which was created 
from a 1990 management 
buy-out from BPB Industries, 
said that it is clear that the 
result for the second six 
months is likely to be no better 
than the result for the first six 
months. 

As a result of this statement 
analysts have downgraded 
their forecasts from £ 15 m to 
£l£m and the shares fen by 
9p to GOp yesterday. William 
Hall 


■ Allen Halli well, 58, the for- 
mer technical director of Por- 
vair, one of the world’s leading 
producers of microporous 
materials, is retiring after 25 
years with the group, 

Halliwell was one of the 
three directors who helped 
organise the management 
buy-out from United Technolo- 
gies In 1982. The other two are 
Doug Berwick, a former 
finance director, who retired 
nearly ten years ago, and John 
Morgan, 55, the c hairman 
Halliwell, who steps down at 
the end of November, is cur- 
rently managi n g director of the 
group's Middlesex-based Por- 
vair Ffltronics, a medical diag- 
nostics subsidiary and the 
smallest of Porvair's busi- 
nesses. Ken Symonds, Por- 
vair's finance director, said 
that the group was sad to lose 
Halliwell and wished him a 
tong and happy retirement. 
However, Symonds stressed 
that his departure would not 
damage Porvair's technological 
toad i n microporous materials. 
Porvair spends 5 per cent of its 
ternover on research and 
development and has 40 tech- 
nologists on its 370 staff, 


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Improved 
access at 
Simon 
Engineering 





FINANCIAL TIMES WEDNESDAY NOVEMBER 23 1994 ★ 


19 

ARTS 


Y on have formed an inde- 
pendent production com- 
pany with the intention 
of breaking into televi- 
sion. Should you go for 
costume drama? Serious investiga- 
tive Journalism? Opera? Certainly 
not, they are all expensive and dif- 
ficult- Wha t yon need is a new age 
inter-active programme, presented 
in studio, by someone from chil - 
dren ’ s pr ogrammes, preferably 
with very odd mannerisms, aided 
by a transvestite, backed by a te a m 
of researchers on telephones, con- 
centrating cm spiritual healing, lost 
relations, and money prizes. 

One of the biggest changes for 
years in British television is cur- 
rently proceeding almost unre- 
marked, largely because it is rather 
difficult to define. It has been men- 
tioned previously in this column as 
an increase in tabloid television, 
but that phrase Is really too glib, 
and consequently misleading, 
because very few of the pro- 
grammes in question are concerned 
with news in the way that the 
Daily Mirror is. The analo gy does 
hold up if by “tabloid" yon imply 
such obsolete publications as Reo- 
eOe, Weekend and Tit Bits which 
were devoted chiefly to providing 
entertainment via matters of fact 


Television/Christopher Dtmkley 

Nothing succeeds like excess 


One of the difficulties is that we 
are not simply seeing one easily 
defined type of programme replac- 
ing another; it is not like detective 
series taking over from Westerns. 
Rather it is a question of one com- 
pendium of attitudes, approaches 
and subjects declining while 
another set rapidly rises. Variety - 
in the sense of programmes which 
incorporate singing, dancing, con- 
juring and so on - is not dead, but 
its long term decline has acceler- 
ated. Urn chat show is not dead - 
The Danny Baker Show with its 
familiar rock stars, soccer person- 
alities and musical interludes may 
look like something from the 1970s, 
yet BBC1 has only just launched it 
- bnt it, too, is in long-term 
decline. “Tight entertainment”, in 
virtually all the forms originally 
borrowed by television from other 
places, is declining. 

Taking its place is material 
which in some cases would once 
have been regarded as journalism 


but which is beginning to evolve 
into something else: book or travel 
programmes are now presented by 
comedians (Griff Rhys Jones with 
The Bookworm on BBCl, Tony Rob- 
inson, best known as Baldrick from 
Blackadder, on tonight’s Great 
Journeys on BBC2). In other cases 
the process is further advanced and 
we an getting material which is 
neither b o r r o w e d nor adapted from 
elsewhere but is television enter- 
tainment sui generis. The Full Wax 
is a good example, incorpo ra ting 
some elements of the chat show 
and bits of stand up comedy but 
relying chiefly on the sort of flight 
of fantasy in which Ruby Wax man- 
aged to get Felicity Kendall, or all 
people, to appear on Sunday as a 
sado-masochist madam in full 
patent leather regalia complete 
with chains, whip, and stilettos, 
ostensibly in her own home. 

At 7.00 on BBC2 tonight is Lifes- 
waps, based on the interesting idea 
of getting people to change places 


(homes, jobs, everything) for a 
week but introduced by the drag 
artist Lily Savage, a choice which 
would have seemed startling only a 
couple of years ago hut which now 
passes virtually without comment. 
The result last week was that the 
“presenter" in theatrical bigh 
heels, stage frock and wig was 
required to totter around a Welsh 
cottage and, indeed. Welsh fields. 

O utrageousness in pre- 
senters is now so com- 
monplace that it is 
becoming unremarka- 
ble. From the absurd 
accents of Lloyd Grossman and 
Antoine de Cannes to the hyper-ac- 
tivity of Kriss Akabusi and Chris 
Evans (Don’t Forget Your Tooth’ 
brush returns on Saturday) it 
becomes increasingly dear that' in 
television presentation these days 
nothing succeeds like excess. 

If you are not a comedian, drag 
artist or hysteric (Noel Edmonds, 


towards the end of presenting the 
first National Lottery, with eyes 
bulging, screamed “And now for- 
the countdown to the activation of 
the balls!") it is best to be a former 
presenter of children's pro- 
grammes. Though it is the older 
section of society that is expanding, 
broadcasting chiefs are stiff 
obsessed with yoof, and anyone 
who has worked on Blue Peter or 
anything Ifr * it is in great demand. 
Anthea Turner, ex Blue Peter and 
now on the ITV breakfast show, 
was one of the outside rep orte rs on 
the first lottery programme and 
will be eo-presenting from this 
week, now that Edmonds has done 
his staff Audi Peters, former conti- 
nuity presenter far BBC chHdreu’s 
television, is co-presenting Good 
Fortune!, the new BBCl series 
which hunts down unclaimed 
prize s and bequests and presents 
than - and often long lost acquain- 
tances in file style of This Zs Your 
Life - in front of a studio audience. 


Phillip Schofield, another pre- 
senter from BBC children’s televi- 
sion, has just begun Schofield’s 
Quest on ETV on Sunday evenings. 
This describes itself as a "mys t ery 
solving show" though this week's 
edition had no solutions to the 
mystery of UFOs on Ilkley Moor, 
the mystery of a government secu- 
rity garage in Streatham, or the 
mystery of double-exposure nega- 
tives. Like Good Fortune! and so 
many of the tabloid shows going 
back to Crimewatch, this one is 
“inter-active” or, even more trendy, 
“proactive", meaning that rows of 
researchers sit at one end of the 
studio talking on telephones. While 
Schofield's Quest could not be 
described as a “new age” series, it 
is perfectly happy to deal with spir- 
itual healing, ghosts and the like, 
the very subjects on which TTVs 
new Friday evening series Strange 
But True? concentrates. 

The more of them you watch, the 
more these new television pro- 


grammes seem to have in common 
with those old weekly tabloids. 
Every item is designed to make the 
onlooker say either “Just fancy 
that!”, or “Ahhh", or possibly 
“Oo-er”. Everything is “people ori- 
ented”, tnwmipg that even when it 
could be called journalism there is 
a distinct lack of issues or Ideas 
and a perpetual concentration on 
the iwH w itiae of individual lives. At 
every turn the customer is urged to 
“interact" with the programmes by 
phone, as they once did with the 
papers by letter. Everything Is 
“personality” driven, meaning that 
a small group of people who are 
famous for being well known keep 
on turning up over and over again. 

The distressing thing Is that, 
although we are still getting Mar- 
tin Chuzzlewit , rugby internation- 
als, and (last night) the odd and 
rather frightening Clint Eastwood 
movie The Beguiled - in other 
words, material for which televi- 
sion acts as a “medium” in the 
sense that it originates elsewhere - 
there is a strong feeling that Good 
Fortune!, Lifeswaps and The Full 
Wax are "real” television. After all, 
these are the programmes that tele- 
vision invents and makes for itself. 
Be in no doubt, we shall be seeing a 
great many more like them. 



Joe Duttine and Anthony Calf in this wistful, gay comedy that switches from farce to pathos and back again throughout 

Theatre / Alastair Macaulay 


Iron man wins the Turner 


A 


ntony Gormley is this 
year’s winner of the 
Turner Prize. He received 
his £20,000 cheque at the 


austere from the outride but con- 


Tate last night, a safe, unexcep- 
tional choice from a rather lack-lus- 
tre vintage. Gormley was the 
favourite, an established artist 
whose work already sells for 
£30, 000-plus thanks to the astute 
handling of his dealer, the fashion- 
able Jay Joplmg. 

Gormley is fee subject and fee 
object of his own work, plastering 
bis body to make moulds which are 
then converted into lead, or iron, or 
concrete chapoc Tfis main contribu- 
tion to fee Tate's display of the 
short-listed artists was “Testing a 
World View”, four contorted figures 
of Gormley cast in iron left lying 
around a large empty space. As in 
most contemporary art the viewer 
was left to decide what ft was all 
about, but perhaps it evoked rem- 
nants of the body left like driftwood 
after a natural disaster, a Hiro- 
shima or a Pompeii. 

His most famous creation is 
"Field for file British Isles”, over 
40,000 hand-sized clay figurines 
made by fee people of St Helen’s 
and , in contrast to bis Tate exhibit, 
displayed in packed intensity to 
show how man crowds out the uni- 
verse. 

Among the other shortlisted art- 
ists was Iranian bom Sbirazeh 
Houshiary, who takes a suitably 
mystic view of art with “The Enclo- 
sure of Sanctity”: five lead cubes, 


taining a kaleidoscopic display of 
b rilliant colours inside - silver foil, 
gold leaf, and more. 

Representing another powerful 
contemporary tradition was Willie 
Doherty from Derry in Northern 
Ireland, whose exhibit consists of a 
darkened room in which two videos 
evoke the horrors of the Troubles, 
with fee iriiiw- the victim shar- 
ing a last car ride and commenting 
impartially on an unsure denoue- 
ment Doherty’s thesis that there is 
no such thing as an innocent victim 
may be specious, but the work con- 
veys fee unreality of the place. 

The fourth finalist, Peter Dolg, 
was a real outsider, bring a painter 
whose work is almost figurative. He 
paints buildings threatened by 
nature, postcard scenes attacked by 
disjointed colours, art that both 
reassures traditionalists but gives 
modernists enough speculative 
challenge to chew on. 

As is customary now, this annual 
award for the best British artist 
under SO became itself performance 
art, with hundreds of wannabe art- 
ists mobbing guests outside the 
Tate, many displaying their own 
creative ideas. Their efforts were 
not in vain. Stella Artois organised 
an alternative party for than in Pic- 
cadilly. 

The Tate is happy that the Prize 
generates controversy, for this 
brings visitors to the gallery to see 
fee work of the short-listed artists. 
It also gives contemporary art a 


Jazz/Garry Booth 



Winner Antony Gormley 


lively, combative, embattled feeling, 
despite the fact that the winners 
fond to belong to a gman i inward 
looking, coterie and the event is 
sponsored, by Channel Four. 

Although it did not produce the 
high jinks of 1993, when fee winner, 
Rachel Whiteread, was also forced 
to accept £40,000 from the E Foun- 
dation for being fee worst short- 
listed artist, the 1994 Turner was 
remarkable in its own way. The 
prize was handed over by Charles 
Saatehi the UK’s biggest buyer of 
contemporary art by far, bnt, until 
last night, a confirmed recluse. 
Only for the Turner would he mate- 
rialise. 

Antony Thomcroffc 


‘My Night with 


A las, poor Reg. I knew him, 
Horatio, a fellow of infinite 
bankability . . . knew him 
in the Biblical sense. 


Horatio, in this case, is Guy, . they tell to Guy, who is still lan- 
guishing, 15 years after Oxford 


a confirmed bachelor who is near- 
ing 40 and who does a lot of listen- 
ing. My Night with Reg - one of fee 
several success stories of 1994, 
now reaching the West End after 


its acclaimed opening in March at 
the Royal Court’s little Theatre 
Upstairs - is a wistful comedy by 
Kevin Elyot about six gay BngH sh - 


he says. I suspect he’s a florist, 
but what’s it matter?”) and listens 


Reg’ goes West 


John Surman’s Brass Project 


men during the last ten years. 
Reg, whom we never see and who 
dies before the second of the 
play’s three scenes, was a right 
little goer; but only Guy begins 
to discover how much so, as each of 
the other men start to confide in 
him. 

Not that Reg was unique. Daniel 
(his official lover) and John (his 
most smitten secret lover) used to 


get around no end until he entered 
their lives. Once he leaves their 
lives, they pick up the old promiscu- 
ity where they left off All of this 


days, wife a love for John that he 
never confesses. 

Guy knits (“a cover for my 
door-sausage, actually”) and has 
bestial 'phone sex wife Brad, whom 
he has never met (“a lorry driver. 


and frets. Yet cruel fate has it 
that It is poor, neurotic, 
spmsterish Guy who. to our sur- 
prise, departs, of Aids, before the 
third seme. 

My Night with Reg switches from 
farce to pathos and back again 
throughout; it is studded wife lines 
so Canny that the audience guffaws 
for the next half-minute; it rings so 
many bells for me that I wonder if 


Elyot and I have friends in com- 
mon; and it has brilliant effects of 
suspense. William Dudley has 
designed a gorgeous interior set 
that fills the large Criterion stage. 
And Roger Michell’s direction nego- 
tiates fee trickiest moments - men 
in tears or starting to make love 
with each other - with extraordi- 
nary persuasiveness. 

I wish, however, that fee play 
did not come garlanded with 
press quotations that speak in 
superlatives and about genius; 
and I wish, for its sake, that it did 
not reach fee West End towards the 
end of a year which has already 
brought a billion plays about homo- 
sexuality to British stages. (How 
many plays are there around to 
take one’s aunts to, for heaven’s 
sake?) 

Most of fee Reg characters are too 
close for me to caricature or for me 


to care much about them Sure, I 
experienced a succession of various 
tiny pangs on their behalf. John 
Sessions brings immense 
braggadocio panache to Daniel - 
but about half his role consists of 
comic set pieces, and he delivers 
them as such. David Bamber 
overdoes the knock-kneed neurosis 
of Guy, a role that surely could 
stand more dignity; I could not 
believe that the other characters 
could bear fee respect for him they 
claimed. 

Only the pathos of John - the 
most physically attractive and the 
most spiritually doomed - is 
seriously affecting, and unusual. 
And Anthony Calfs interpretation 
of this dear unhappy beauty, utterly 
absorbed in his own pointless and 
charming life, is astonishing - a 
study in golden hopelessness. 


At the Criterion Theatre, W1 


S axophonist John Surman 
tells a story about touring 
in Norway. Arriving at a 
dub in a town near the arc- 
tic circle he found his audience 
amounted to one solitary figure, sit- 
ting at a table in the corner. 
“Look.” said Surman, “There is 
really no point in me playing. Why 
don’t we just have drink together 
and a chat?”. “Suits me,” said the 
Norwegian, “I was meant to be your 
pianist tonight.” 

The story, typical of Surman’s 
self-deprecating humour, belies the 
huge following the multi-instrumen- 
talist has across Europe. At 50. 
Somerset bom Surman finds him- 
self one of a few great saxophonists 
who can run nimbly wife a bari- 
tone. A protean improvisor, he also 
moves gracefully between soprano 
sax and bass clarinet within a sin- 
gle composition and works as much 
magic in an arranged orchestral set- 
ting as he does unaccompanied. 


Described in the 1960s as one of 
the common market jazz musicians. 
Su rman ’s playing and writing owes 
as much to European choral music 
and Scottish jigs as it does Chicago 
blues. The young Surman reached 
his late teens without ever hearing 
a note of jazz and instead sung 
soprano in the choir for fun. It was 
not until his voice broke that he 
picked up a clarinet and subse- 
quently tuned into syncopation. 
Later he listened to folk music and 
made a conscious decision to be 
absorbed in what he describes as “a 
different kind of blues”. 

The result is a distinctively Euro- 
centric composer and improvisor 
whose playing has as much reso- 
nance for ferae of Vaughan W flHama 
as devotees of Trane. 

This 50th birthday concert tour 
captures Surman solo, in sublimely 
pastoral duet with pianist John 
Taylor and also in quartet wife the 
addition of old friends Chris Laur- 


ence (bass) and John Marshall 
(drums). But the real draw an this 
tour is Sunnan's ten piece labour of 
love. The Brass Project The con- 
spicuously piano-less brass choir is 
robustly arranged (and directed) by 
John Warren. Opening at the Nor- 
wich Arts Centre of Friday the 
ensemble surrounded Warren with 
a great rich panorama of sound. 
Surging trombones gave deep col- 
our background to sheets of sound 
from Sunnan's bass clarinet vivid 
trumpets pierced their chattering 
choruses. The momentum from 
Laurence’s bass was dizzying: 

Surman is an inveterate tourer 
but without funding it is hard to 
put a big band Uke this on the road 
often. Hear it while you can. 


John Surman and The Brass Proj- 
ect at Sheffield Crucible (Nov 26), 
London Queen Elizabeth Han (Nov 
2k) Nottingham Old Vic (Feb 1). 


1 llNTERNATI&NAL] \ 

Al 

Gl 

k 

ji 

IS 

pi 


■ PARIS 


EfWBAU-ET _ 

raps Bysdes Tet (1) 47 23 37 
720 08 24 
Stage: opera by 
sky-Korsakov. Dfrectw Valery 
jtev at 7.30 pro: Nov 23 
a Dame de Pique: opera by 
ilkovsky. Director Valery Gergiev 
BO pm; Nov 25, 28, 27; Dec 1,2 
a Khovantchlna: opera by 
sargsky fit 7.30 pm; Nov 29. 30; 
3. 4 • ■ ■ ■ ■ ■ 

■RA/BALLET 

tsche OperTefc (030) 3 41 92 

Helogues des GarmdUtes: by 

enc, in three parts. A new 
hiction directed by GGnter 
ner. Conductor JIB Kout at 7.30 
Nov 23. 25, 29; Dec 1 


ladt Tel: (228) 7281 
iyr by Antonio Gomes, in 
Berman sureties. - 
John NescWing, 
ayWemer 


Herzog at 8 pm; Nov 30 

• La Fanchila del West by Puccini, 
in Italian with German surtities. 
Conductor Eugene Kohn, production 
by GtarvCario del Monaco at 7 pm; 
Dec 2 (8 pm) 

• La Traviata; by Verdi. A new 
production conducted by Eugene 
Kohn, with production by J Organ 
Rose. In Italian with German surtities 
at 8 pm; Nov 26 (7 pm) ; Dec 4 (7 
pm) 

• The SJaepingBe^uty; a new 
production of Tchaikovsky’s baJtet 
Produced and Choreographed by 
Youri vdmos, conductor Michel 
Sasson at 7 pm; Nov 27;Dec 1 (B 
pm). 3 


■ BOLOGNA 

OPERA/BALLET 

Teatro Comumrfe Tel: (051)529999 
• n Turco in KaRa: by Rossini. A 
new production directed by Evelfno 
Pldo at 8.30 pm;Nov 26,29; Dec 
1.4,6 


■ ROME 

THEATRE 

Teatro Ded 1 Opera Teh (06) 481601 
• L’Ariesiana: by Bizet at 7 pm; 
Nov 25. 26, 27 


■ AMSTERDAM 

GALLERIES 

F&jksmuseun Tel: 020 673 21 21 
• Art of Devotion 1300-1500: major 
winter exhibition focusing on toe 
spiritual function of objects in the 
medieval period; from Nov 26 to Feb 
26 (Not Sun) 

OPERA/BALLET 

Het Muzfaktheater Teh (020)551 

8922 


• Rosa: new production of the 
opera by Andriessen. Directed by 
Peter Greenaway at 8 pm: Nov 25. 
28 


■ LONDON 

CONCERTS 

Barbican Tel: (071) 638 8891 

• Mozart Idomeneo: Sir Colin 
Davis conducts toe London 
Symphony Orchestra at 7 pm; Nov 
25,27 

Festival Han Tel: (071) 928 8800 

• Philharmonia Orchestra: with 
conductor Charles Dutoit and pianist 
Peter Jabtonsfa play Tchaikovsky 
(piano concerto No. 2) and 
Shostakovich (symphony No.5) at 
7.30 pm; Dec 6, 8 

• Royal Philharmonic Orchestra: 
with conductor Vladimir Ashkenazy 
and pianist Shura Cherkassy play 
Rubenstein’s piano concerto No. 4 
and Tchaikovsky's Manfred 
Symphony at 7.30 pm; Dec 7 

• Russia Old and New: Royal 
PhD harmonic Orchestra with the 
Brighton Festival Chorus, London 
Choral Society and conductor 
Vladimir Ashkenazy perform 
Schnittke, Prokofiev and 
Rachmaninov at 7.30 pm; Dec 5 

• Vienna Philharmonic Orchestra: 
Schubert symphony No. 8 and 
Brahms symphony No. 4 conducted 
by Carlo Maria Giulini. at 7.30 pm; 
Nov 23 

Queen Elizabeth Hail Teh (071) 928 
8800 

• The Fan of Icarus: Multi-media 
event inspired by Bruegel’s, 
’Landscape with Fail of loams’. 
Belgian director Fted&lc Flamand 
collaborates with Italian artist 
Fabrizio Ptessi and composer 
Michael Nyman at 7.45 pm; Dee 2,3 


GALLERIES 

Hayward Tel: (071) 261 0127 

• Romantic Spirit in German Art 
1790-1990: examines work of early 
Romantic painters. Includes section 
on German Expressionists; to Jan 8 
National Gallery Tel: (071)839 3321 

• Allegory; selection of paintings 
from the permanent collection on 
the theme of allegory; to Dec 4 (Not 
Sun) 

Royal Academy Tel: (071)439 7438 

• The Glory of Venice: a major 
survey of Venetian art In the 18th 
century; to Dec 14 
OPERA/BALLET 

Barbican Tel: (071) 636 6891 

• The Kirov Opera: director Valery 
Gergiev brings his entire company to 
the UK for just one night to give toe 
first complete British performance of 
Rimsky-Korsakov’s opera. The 
Legend of the Invisible City of Kitazh 
at 7 pm; Nov 28 

English National Opera Tel: (071) 
632 8300 

• Ariadne on Naxos; by Strauss. A 
Graham Vick production at 7.30 pm; 
Nov 25; Dec 1. 8 

• Khovansh china: new production 
of Mussorgsky's opera. Director 
Francesca Zambelto at 6.30 pm; 

Nov 24, 30; Dec 3, 6 

Royal Opera House Tel: 071 240 
1200 

• An Ashton Celebration: The Royal 
Ballet Company pays tribute to its 
founder choreographer with a short 
festival of his work, consisting of 12 
ballets and divertissements. 
Performance includes a new 
production of Daphnis and Chlo6 by 
Ravel at 7.30 pm; Nov 28, 30 

• La Traviata: by Verdi. A new 
production by Richard Eyre. Georg 
Solti conducts for the first five 
performances, then Phlllipe Auguin. 


In Kalian with English surtities at 
7.30 pm; Nov 25. 29; Dec 2, 5, 8 

• Mixed Programme: includes the 
World Premiere of Michael dark's 
New Clarke Ballet, Fearful 
Symmetries choreographed by 
Ashley Page, and Symphony in C by 
Bizet, choreographed by George 
Balanchine at 7.30 pm; Dec 1, 6, 7 

• The Sleeping Beauty: a new 
production of Tchaikovsky’s ballet 
Produced by Anthony Dowell, set 
designed by Maria Bjomson at 7.30 
pm; Nov 23, 26 (2 pm) ; Dec 3 (2 
pm) 

THEATRE 

Gielgud Tel: (071) 494 5065 

• Hamlet by Shakespeare. 

Directed by Peter Half, designed by 
Lucy HaB. With Stephan DiHane, 
Michael Pennington, Donald Sinden 
and Gina Bellman at 7.15 pm; to 
Feb 4 (Not Sun) 

National, OBvier Tel: (071) 928 2252 

• The Seagull: by Chekhov, in a 
new verson by Pam Gems. Sat mat 
at 2pm at 7.15 pm; Nov 23, 24. 25, 
26 


■ NEW YORK 

GALLERIES 

Musetan of Modem Art Tel: (212) 
708 9480 

9 A Century of Artists’ Books: 
Exhibition of 140 books from some 
of this century’s foremost artists; to 
Jan 24 

OPERA/BALLET 
Metropolitan Tel: (212) 362 6000 

• Don Giovanni: by Mozart, sung in 
Italian at 8 par, Nov 25, 28; Dec 2,6 

• Lady Macbeth of Mtsensk: by 
Shostakovich at 8 pm; Nov 26. 30; 
Dec 3,7 

• Madama Butterfly: by 
Puccmiat 8 pm; Dec 1. 5, 8 


• RigoJetto: Italian opera by Verdi 
at 8 pm; Nov 23, 26, 29; Dec 3 
New York State Theater Tet (212) 
870 5570 

• The Nutcracker: by Tchaikovsky, 
performed by the NY City BafleL 
Tue-Thu 6pm. Fri 8 pm. Ring for 
other times and matinees; from Nov 
30 to Dec 31 (Not Mon) 

THEATRE 

Walter Kerr Tel: (212)239 6200 

• Angela In America: Tony 
Kushneris Tony-award winning play. 
Sun mat at 3pm. Wed., Thurs., Sat 
at 8 pm; to Dec 4 


■ WASHINGTON 

CONCERTS 

Kennedy Centre Tel: (202) 467 
4600 

• Los Angeles Philharmonic: 
Conducted by Esa-Pekka Salonen, 
with pianist OUie Mustonen play 
Lutosiawsfd, Ravel and Slbafius at 5 
pm; Nov 26 

GALLERIES 

Phillips Coflection Tek(202) 387 
2151 

• Pictographs of Adolph Gottfieb: 
exhibition of one of the founding 
members of toe New York School; 
to Jan 2 

OPERA/BALLET 

Kennedy Centre Tet (202) 467 

4600 

• Le Nozze di Figaro: by Mozart 
sung In Italian with English sur-titles 
at 8 pm; Nov 25, 27 
Washington Opera Te!:{202) 416 
7800 

• Faust by Gounod- Director, EBen 
Douglas Schlaefer, conductor, 
Richard Bradshaw. Faust played by 
Jlanyi Zhang. In French with English 
surtities. at 7 pm; Nov 26 


WORLD SERVICE 
BBC for Europe can be 
received In western Europe 
on Medium Wave 648 kHZ 
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EUROPEAN CABLE 
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FRIDAY 

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SUNDAY 

NBC/Super Channel: FT 
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Sky News: FT Reports 
0430, 1730; 





20 


Edward Mortimer 




Just over a 
year ago, when 
the Clinton 
administration 
still hoped to 
discover a uni- 
fying theme for 
its foreign pol- 
icy, Anthony 
Lake, the president’s national 
security adviser, came up with 
“enlargement”. Soviet expan- 
sionism had been successfully 
contained. Now was the time 
to " enlar ge" the circle of free- 
market, liberal democracies. 

That sounds good, bat it gets 
trickier when applied to spe- 
cific institutions. The thought 
that Poles or Ukrainians are 
enjoying freedom of speech is 
heart-warming. What is not so 
easy is to sign a treaty giving 
them the right to export cheap 
steel to western Europe, or to 
expect au toma tic military sup- 
port in a war with Russia. 

The US is all in favour of 
enlarging the European Union, 
except that it is not a candi- 
date for membership. It is more 
ambivalent about enlarging 
Nato, which would require the 
US Congress to approve mili- 
tary guarantees to central and 
east European countries. As 
for the Western European 
Union, few people in the US 
have heard of it But then, few 
Europeans have heard of it 
either. 

WEU is a subject only for the 
cognoscenti because until now 
its function as a military alli- 
ance has been subsumed in 
Nato. All full members of WEU 
are also members of Nato. 
which includes the US and has 
a military organisation to 
implement its guarantees. The 
question of what WEU would 
do If one of its members were 
attacked has therefore been 
academic. The Nato guarantee 
would be invoked first. 

But since the Maastricht 
treaty came into force a year 
ago, WEU has had another role 
as a "defence component" of 
the European Union. Any 
member of the EU has. on 
paper, the right to full mem- 
bership of WEU. It is not speci- 
fied that the country in ques- 
tion must also be a member of 
Nato. So far that has not mat- 
tered because Ireland, the only 
present EU member not in 
Nato. has contented itself with 
observer status in WEU. But in 
six weeks three more non-Nato 
members - Austria. Finland 
and Sweden - will join the EU. 
They too will settle for 
observer status in WEU in the 
first instance, but are likely to 
take a keen interest in the 


Bigger 

and 

better? 

Nato should 
be enlarged 
in step with 
die EU 
and WEU 

Etfs security role in central 
Europe and the Baltics. If WEU 
becomes a “fourth pillar” of 
the EU in 1996, charged with 
impleme nting a common 
defence policy, some or all of 
these countries will want to be 
involved 

That will be even more true 
of the central European coun- 
tries in the next wave of EU 
enlargement, and of the Baltic 
states whose right to join that 
wave will be championed by 
Sweden and Finland. That 
means that, perhaps as soon as 
the end of this decade, west 
Europeans will be asked to 
guarantee the security of coun- 

As the EU expands 
eastwards, its 
security dimension 
will become 
more important 


T he lowest inflation in 
a generation, rising 
exports and productiv- 
ity. falling public bor- 
rowing - Mr Kenneth Clarke, 
the chancellor, must be feeling 
pleased at the UK economy's 
recent performance as he pre- 
pares his second Budget 
speech. 

Despite all the good news, 
however, there is a group that 
is being left behind: a hardcore 
of long-term unemployed indi- 
viduals and families without 
earners. Falls in headline 
unemployment have not been 
accompanied by similar falls in 
either long-term unemploy- 
ment or the number of families 
dependent on welfare. 

“Unemployment." said Mr 
Clarke earlier this year, "must 
be the main preoccupation of 
economic policymakers in the 
1990s. We must look more 
closely at how those on the 
fringes of mainstream society 
can be brought back in ... en- 
suring that they do not get 
trapped in a web of depen- 
dency and exclusion." 

With a tenth of the popula- 
tion dependent on state bene- 
fits, trade unions, employers 
and pressure groups are argu- 
ing that Mr Clarke's priority of 
I last year - improving public 
! finances - would best be 
served this year if he Intro- 
duced Budget reforms to bring 
greater numbers into work. 

As far as these groups are 
concerned, the challenge is 
clear. "Stable economic condi- 
tions may not be sufficient in 
themselves to tackle the struc- 
tural problem of long-term 
unemployment." says Mr 
Howard Davies, director gen- 
eral of the Confederation of 
British Industry. He argues 
that the government should 
take the lead in creating more 
jobs for more families. 

In 1993, nearly IS per cent of 
non-pensioner households in 
the UK were without a work- 
ing member, compared with 
less than 5 per cent in the 
1970s. Officially, unemploy- 
ment in the UK has fallen by 
455,100 since its peak of nearly 
3m at the end of 1992. But the 
□umber of people unemployed 
for over a year remains as high 
as it was two years ago. at a 
little under lm, while the num- 
ber out of work for over two 
years has risen sharply. 

In fact these figures under- 
state the problem because 
man y of the long-term unem- 
ployed have been so discour- 
aged , that they have left the 
workforce altogether. 
Researchers have found the 
main factor determining 
whether a man will be 
unemployed is not his 
education or previous job 


tries that were formerly War- 
saw Pact members; perhaps 
even countries that were 
within the Soviet Union. It is 
no secret that these countries' 
interest in such guarantees 
arises from their experience of 
Soviet rule, and their fear that 
a Russian Bn na t might reap- 
pear. In the case of the Baltics 
that fear is not far-fetched. 

Russian sensitivity about 
Nato enlargement is 
well-known. It was restated 
with vigour on Monday by Rus- 
sian speakers at a Paris sympo- 
sium on the proposed "stability 
pact” between the EU and its 
would-be members in central 
and east Europe, better known 
as the Raiiadnr plan. 

The idea of the plan is to use 
the central and east Euro- 
peans' eagerness for EU mem- 
bership as a lever to get them 
to resolve their bilateral prob- 
lems. That means recognising 


each others’ frontiers as per 
manent, and undertaking to 
treat national minorities prop- 
erly - something they are all 
prepared to do on paper, 
though getting some of them to 
implement their commitments 
may not be so easy. 

What is interesting is that 
the leverage appears to have 
worked in reverse. Edouard 
BaUadur. the plan’s author, 
declared in opening the sympo- 
sium that “everyone can see 
this IEU] enlargement is for us 
an imperative". Not everyone 
would have seen that as an 
imperative of French policy 
before the plan was launched. 
Such statements make the 
prospect of eastward EU 
enlargement much more real. 

At the same time Mr Baha- 
dur warned against being over- 
hasty in enlarging "security 
institutions, such as Nato or 
WEU”. The “brutal inclusion of 
new countries in these alli- 
ances." he suggested, “could 
provoke more instability than 
stability on our continent.” 
Music to the Russians' ears. 

Eventually, though, the prob- 
lem will have to be faced. The 
further east the EU expands, 
the more important Its security 
dimension will become. To 
deny its easternmost members 
the right to participate in com- 
mon security arrangements 
will prove an untenable posi- 
tion; and it would be danger- 
ously incoherent to have a 
European defence union with 
some members allied to the US 
and others not If Nato is to 
retain any credibility, it should 
be enlarged in step with the 
EU and WEU. 

One Russian speaker on 
Monday, Sergei Karaganov of 
Moscow’s Europe Institute, 
seemed fairly relaxed about 
this prospect. He argued 
against expanding Nato now. 
on the grounds that an 
excluded Russia would cut off 
cooperation with the west and 
adopt a wrecking attitude to 
European security arrange- 
ments. But he was happy to let 
EU expansion take its course, 
even if It brought WEU and 
Nato expansion In its wake. 
Why? Because it will take time. 
By the time the terms and 
extent of EU enlargement are 
worked out, he implied, the 
struggle between westernise rs 
and nationalists in Russia will 
have been derided one way or 
the other. 

I wonder. That straggle has 
been going on for three centu- 
ries at least. Can we really 
expect it to be derided within 
the next five years? 



Quite simply 
the Royal Oak. 


FINANCIAL TIMES WEDNESDAY NOVEMBER,^ 1994 


Welfare sent 
out to work 

Stephanie Flanders on how the UK chancellor 
might use the Budget to encourage employment 


and Income tax. Bat he is . sauT* 
to be considering; more , metest. 


There^migfri be -an & 
day" fbr the longterm jobless, 
and a lowering of the taxbmv 
den Sm all of the low-paid, 
through either an Increased 
personal tax allowance or * 
wider lowest income tax baud. 

. Tax measures would eacour- ; 


UK unemployment: the hard core 


>7 


Unemployment 

NfiSon 


V/., 


Households : 

% wrthnoadatfsinwofk 


— 15 _ 


. % of pot 
/’*•' tncomaJ 
i2~ ' 


.Total _ 


i.-'i r - s, v 


M 

iUDEMARS PlGUET 

Tbe master watchmaker. 

hir infomutlim ami catalogue, please write nr 
Amkutin. Piguel K Lie 5. A., l.+ifl Le Bras-ae*. Switzerland 
Tel. il 21 S-ri 19 31 Fax -11 21 Kri 12 1 1 








0 . . 0 —! I 1 — 1 — I „l, -.)■■■■ V, - . Q 

92 1988 1994 MTS 79 91 84 87 90 -93 

8ou«**Hn>an A. Tt»Fuh»a at WWhm, 1888 ; OMBBiMWIon^l'latf U te rf BBWioirtcwylaaaM I^W i ifl l MW . 



but whether he was unem- 
ployed the previous year. 

“When someone has been 
out of work for over a year, the 
r.hannafi of him or her finding 
work within three months are 
currently less than 5 per cent,” 
says Dr Madsen Pirie of the 
free- market Adam Smith insti- 
tute in London. 

There are two main reasons 
why the long-term unemployed 
find it diffi cult to get work. 
Being “out of the loop”, they 
are less likely to hear about 
openings, and lack of recent 
experience makes them unat- 
tractive to employers. 

The second is being in the 
benefit system. The structure 
of benefits can make it unat- 
tractive for a household mem- 
ber to be the only one to find a 
job, as benefits for the whole 
family will be withdrawn. 

“Jobless men are generally 
accompanied by jobless 
women." says Dr Jonathan 
Wadsworth, an economist at 
the National Institute of Eco- 
nomic and Social Research in 
London. He says only 20 per 
cent of unemployed men live 
with a working partner, 
against 50 per cent of employed 
men. 

Social security provision, by 
its nature, always implies a 
disincentive to work. When 
people are poor and unem- 


ployed, they qualify for sup- 
port The fact that benefits are 
withdrawn when they start 
earning means their new earn- 
ings are effectively taxed at a 
much higher rate than the rest! 
of tiie population. 

This problem has been exac- 
erbated. in recent years, by 
changes in the kind of jobs 
available. Only 20 per cent of 
jobs filled by tbe unemployed 
are full-time, permanent posi- 
tions. Half are part-time and 
many are low-paid. This means 
they have less chance of earn- 
ing enough to take them 
beyond the high mar ginal tax 
rates on the first pounds 
earned. 

I n tbe 1980s, reducing the 
relative value of benefits 
was expected to lessen the 
disincentive to work. But 
benefit cuts did little to stem 
the rise in the number of indi- 
viduals and familipg dependent 
on benefits. 

US-style “workfare” propos- 
als raise the stakes further, by 
forcing people to "work off" 
their benefits after a set period. 
But these are highly controver- 
sial, anti would imply large and 
costly public jobs programmes 
which a Conservative govern- 
ment might object to. 

Many in both the Conserva- 
tive and Labour parties believe 


that a better; and. cheaper, 
approach to the problem is to 
give private employers mote of 
an incentive to offer jobs to the 
long-term unemployed, and to 

upda te- the b enefi ts system SO 

that they have more incentive 
to take work. 

Dr Pirie argues that the gov- 
ernment should give all people 
out of work fix over a year' a' 
“green card" entitling them to 
two years’ exemption from 
national insurance and Income 
tax payments. In addition, 
cardholders' benefits would be 
phased out over the first two' 
years of employment, rather 
♦haw Withdr awn immediately. 

Such a scheme would create 
jobs as well as encourage 
employers to select , the 
long-term unemployed- over 
others, says Dr Pirie. “There 
are whole categories of work 
which are uneconomic at pres- 
ent, but which would become 
worthwhile if labour costs 
were significantly lowered" - 

The cost in lost tax and N1 
contributions and continued 
benefits would be considerable. 
But so, too, are the costs of 
supporting the more or less . 
permanently unemployed, says - 
Dr Pirie. ' 

Budgetary- worries are still 
likely to deter Mr Clarke from, 
entirely exempting the : 

long-term unemployed from NI 


era, but. critics . argue,. 

Clarfee needs to tackle tfasWsaU. 
efits system as well, ’ir.tia 
wishes to reduce disincentives . 
on the employee sida i 
. . :*Tt is. simply WtongJto sft*/ 
that a lower-rate. banfl"tf- 
i rynmK* tax. Qr lOWCT Nl O Wltri. 
buttons, help people escape 7 
• very high marginal withdraw 
; rates A; the towffl 1 . end thai ; 

. income distribution,” 

Mr- Paul’ Johnson -Gf the'-Jns^, 

. - tide for Fiscal Studies, ■ $0^ > 
are primarily a feature- df fbeV 
benefit system, nottfcetax-qs*. -'= 

- tem.” . .. . - 

Some people, espedaUy^hest - .; 
without children. cait stES^sSti , 

. pmnng fa to move out of means- ;" 
tested benefits, beheveg l^ 1 
Johnson. .“But lone parents - 
and many couples . with - chfl-Y 
dren can be. trapped on beneflfc ' . . 

because aL the way thafc Jim-c - 
ited jefe opportunities interact-. 
with the benefit .system^" : ;• 

Family credit ^ introduced ■ 
.by. the government-in 1 19j& 
was one. response , to - the - " 
expenses of raising a family • 
that made it hard to accept 
low-paid, jobs without t&tag 
made worse off. Another, .was 
1 the additional chfldcaxe qacRf> 
introduced m last year i s,hnd : 
get Both effectively -restore ' 
test: benefits once people 'are- 
working: . 16 haute a-i week,: * . 
although after that the credit ; : 
is withdrawn at a 70 percent, 
marginal rate. -■ >' • - 

At least fi)t the 60 per caqt cf . ’ ' 
eligible femflfes who receive ft, 
-family, credit has taken .the ‘ 
welfare system a step towards 
fitting the' new world of . work • 
to .the new world ofnan-watk. 
Bat more .'credits to ; take ' . 

- account of housing expenses,- 

. perhaps, 'or give a specific - 
incentive for a second member 
of the femfly to work - would 
-. further smooth the-:trahsltiflsr' - 
from welfare to wbrit. Improv-’ ; 
ing tiie take-up of finally, credit -V 
would snooth it further. » ' - 

If this Is the stuff of Mr 
Clarke's budget, he wilLnot he : 
able to declare: an end to 
long-term unemployment; 

■ Every country in Europe isfep-- . 
ing high structural liriemptoy- " . 
meat Budget changes alone 
will not eliminate the probtezh. 

His challenge next week will . 
be to find ways to stop the tax 
and benefit system from mak- . 
ing it worse. • "■ 



\*‘j * - 




0 pec dar 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

. 071 873 5938. Letters transmitted should be clearly typed and not hand written. Please set fox for finest resolution 


Elderly should not 
have to worry about 
financial decisions 


Well paid, well equipped 
and subject to market forces 


From Mr David Layton. 

Sir, It is suggested (Personal 
View: “Better deal for personal 
pensions". November 16) that 
in order to have dignity and 
independence in their old age. 
the elderly ought not to be 
required to buy annuities with 
their tax sheltered pension 
scheme moneys but to have 
continuing control over their 
capital 

Surely recent experience of 
encouraging greater freedom 
for employees, on the advice of 
independent financial advisers, 
to frame their own future pen- 
sions as they choose should be 
warning enough. 

We should be moving in the 
opposite direction. When we 
are elderly we do not wish to 
continue to take part in the 
financial decisions on which 
our welfare depends; in fact, 
we and our spouses are fre- 
quently not competent to do 


so. Far better would be a col- 
lectivist approach whereby all 
pension money or entitle- 
ments, at least up to some sub- 
stantial pension level, could 
easily be put into one pot an 
retirement - 70 at the latest. 

Already, more and more of 
our pension money comes in 
bits and pieces, which can be 
very confusing. So a simple 
indexed monthly payment 
from a single source would be 
an enormous improvement. 
This would indeed be a valu- 
able service, particularly to the 
very elderly and tbe very many 
who are afling . 

We do not retain our dignity 
by dithering over financial 
niceties or legal complexities. 
Only a financial adviser could 
believe that. 

David Layton, 

Income Data Sendees, 

193 St John Street, \ 

London EC IV 4LS 


From Mr Gerry Hinde. 

Sir, British Gas boss Cedric 
Brown must be understandably 
flattered that his shareholders 
deem him worthy of nearly 
£500.000 a year ("Air of mys- 
tery surrounds utility pay 
packages". November 22). 

One wonders how they 
would have valued him had he 
an understanding of the impor- 
tance of public relations. 

Gerry Hinde. 

2 Ward Road, 

Southsea, Hants P04 9PA 

From Mr D Miller. 

Sr. The Cadbury Committee 
must be very pleased with 
itself: remuneration commit- 
tees throughout the land have 
been unflinching in their quest 
to award executive directors 
the going rate for their job, 
however high it may be. 


Struggling employees and 
shareholders can sleep easily 
in their beds at night, in the 
knowledge that their execu- 
tives are now better equipped 
than ever to deal with the 
harsh commercial problems 
facing their companies. 

D Miller. 

16 Sfapfield, 

Norwich NR3 4DX 

From Mr Roland Davis. 

Sr, Since tbe market rate for 
a chief executive of multina- 
tional calibre is £475,000, 1 hope 
British Gas will go to the mar- 
ket and find such a person, 
instead of retaining its presort 
chief executive who, according 
to m arket forces, is worth only 
£270,000. 

Roland Davis, 

Wayside House, High Street, . 1 

Shoreham , Kent 




- * 


Lobbying taken seriously 


ein 


A dangerous vacuum 


From Mr Bohdan Skrobach. 

Sir, Your editorial, "Ukrai- 
nian virtue" (November 18), 
states that tbe Ukrainian par- 
liament made the world a safer 
place. But has it also made an 
"independent" Ukraine safer? 

Ukraine cannot survive as an 
independent state without 
creating economic prosperity. 
Poland has understood this 
very well. But Poland also 
knows that economics does not 
guarantee security. This is 
why it is strongly seeking Nato 
membership and integration 


with western Europe. 

Ukraine begins an attempt at 
radical reform with no offer to 
become part of Nato. The possi- 
bility of becoming part of Euro- 
pean Union is measured in 
decades. 

An independent Ukraine 
today exists in a vacuum. 
Because of its size and loca- 
tion, this Is a dangerous state 
to be in. Ukraine's history 
attests to this. 

Bohdan Skrobach. 

23 Rowland Street, 

Toronto, Canada M6P 1M2 


From Mr Phil Kelly. 

Sir, Kevin Brown made a 
number of valuable points 
about lobbying the Labour 
party ("A word in Tony’s ear”, 
November 18). 

He is wrong, though, to sug- 
gest that Labour does not take 
lobbying companies seriously. 
We in the profession were 
pleased that Labour's head 
office organised two briefings 
Cor lobbyists, before and after 
this year’s party conference. 
We had a fruitful dialogue 
about what our clients expec- 
ted from and got out of the 
conference, and how they 
should be approaching the 
Labour party on policy matters 
m future. 

Clients do not always know 


where they should go to get 
their message across. Charles 
Clarke, a political insider, 
should be aware just how - 
closed and forbidding the. 
world of politics looks to peo- 
ple who are very good at run-; 
Bing their own companies and 
o rganisat ions but don’t know 
an early day motion from -an 
oral question. 

Labour seems to appreciate 
that lobbyists help companies 
to sharpen their case tar- 
get it correctly. We help both 

clients and political parties to 
avoid a great deal of wa s t e d 
time and effort 
Phil Kelly, 

The Public Policy Unit, 

50 Rochester Boa, 

London $WtP 1JU 


ife:'.-- 

: 

Kc >■■■■!- 


Important support for small and medium-sized enterprises 

ftw i ii if. n » /» I ......... I t 




From Mr David R Grayson. 

Sir. As chairman of the inde- 
pendent Assessment Panel 
appointed by ministers to vet 
local applications to become a 
Business Link I welcome your 
editorial. "Small business man- 
agement" (November 9). 

Independent market research 
was a key element in the ratio- 
nale for supporting the estab- 
lishment of a national network 
of Business Links. 

All proposals for individual 
Business links must he backed 
up by separate market 


research into their target mar- 
ket companies, and they are 
required to undertake regular 
customer surveys which evalu- 
ate effectiveness of services 
provided. 

The target is that at least 85 
per cent of Business Link cus- 
tomers should be satisfied or 
very satisfied with the services 
they use. 

A key innovation of the Busi- 
ness Links is the personal busi- 
ness adviser who will develop 
a long-term relationship with a 
portfolio of small firms, analo- 


gous to the account manager 
in an advertising agency i 
believe that these personal 
business advisers are an impor- 
tant guard against your fear 
that Business Links "may be 
keener to meet their tar- 
gets... than they are to evalu- 
ate the benefits their custom- 
ers derive". 

Your overall message is 
however, well-taken. In an 
increasingly competitive and 
fast-changing global market- 
place, we need up-todate infor- 
mation on the most effective 


ways of supporting gig^n 
medium-sized enterprises. We 
could usefully start by ensur- 
mg government-funded 
research Into the small and 
Medium-sized enterprise sector 
focused to give the 
programme implications bade 
to policymakers and business 
support agencies. 

Da^id R Grayson, 
chairman, 

notional assessment panel ■ 
Business Links, 

8 Stratton Street, 

London WIX 5FD 


is 

# 5 - 

.iV 

jl Si • 


"St -vt-s.’- -c - s - 




11 u*' 




FINANCIAL TIMES WEDNESDAY NOVEMBER 23 1994 


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FINANCIAL TIMES 

Number One Southwark Bridge. London SE1 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Wednesday November 23 1994 


TV with 
frontiers 


The European Commission 
complains it Is often accused 
unjustly of unnecessary and Intru- 
sive meddling: However, proposals 
for EU audio-visual policy cur- 
rently being drafted in Brussels 
appear designed to prove its crit- 
ics right They also raise questions 
about the commitment of tbe 
Commission - and notably of Mr 
Jacques DeJors. its president - to 
putting EU interests above those 
of individual members. 

The proposals would modify the 
EU*s five-year-old broadcasting 
directive, which c alls on broad- 
casters to ensure that half their 
programming Is of European ori- 
gin. As well as toughening this 
rule by removing a provision that 
it be applied only “where practica- 
ble”, the draft modifications 
would narrow the definition of 
programmes which coaid be 
counted as part of the quotas and 
require half of independently-pro- 
duced programmes to be recent 
material. They would also set 
guidelines for investment in film 
channels and ban advertising on 
home shopping services. 

By any measure, these changes 
would traduce the Commission's 
purpose in drafting the original 
directive. This was to harmonise 
national rules just enough to 
remove obstacles to cross-frontier 
broadcasting. The provision for 
quotas was inserted at the insis- 
tence of France, which threatened 
otherwise to oppose the idea. 

How far the directive has pro- 
moted a single market in televi- 
sion is unknown. However, the 
aim of the proposed revisions 

Opec dangers 


seems dean it is to to protect pro- 
duction houses and broadcasters 
from non-European competition, 
notably from Hollywood. 

The implied restrictions on free 
choice are intrinsically objection- 
able. By seeking to impose a 
straitjacket on a sector which is 
exploding under tbe impact of 
rapid technological change, the 
proposals also defy logic. At best, 
they would be absurdly cumber- 
some to administer. At worst, they 
would lock Europe's entertain- 
ment industries into tbe structure 
of the past and deter innovation 
and commercial investment in 
emerging multi-media services. 

Most damaging of all, the pro- 
posals would do nothing to 
advance the single market On the 
contrary, they could further 
undermine it by legitimising con- 
tinued protection of national 
industries. This seems to have 
been the effect of the existing 
directive in France, its keenest 
proponent Local content quotas 
have been established by law and 
freely interpreted to favour 
French programming. 

It is disturbing that much of the 
drive behind the proposed revi- 
sions is from some of Mr Delon' 
closest advisers in Brussels. That 
inevitably raises doubts about 
how far they are intended to bene- 
fit the EU, and how far to serve 
French national interests. Mr 
Deiors’ fellow commissioners 
would do wbll to remove any such 
suspicions by voting the proposals 
down. That would also be tee best 
outcome for Europe's media indus- 
try and Its customers. 


As a tactic, it could work. The 
Organisation of Petroleum Export- 
ing Countries yesterday took tee 
unprecedented step of extending 
its production ceiling for a year in 
an attempt to coax oil prices 
upwards. The move, urged on the 
cartel by Saudi Arabia, its largest 
producer, shows that Opec retains 
much influence over the direction 
and stability of world tel prices, 
despite its Internal struggles. But 
longer-term questions remain 
about Opec’s own. stability and, 
still more, about the global impli- 
cations of Hie increasing domi- 
nance within it of Saudi Arabia. 

Whether prices rise in tee next 
six months, as Opec hopes, 
depends on whether world 
demand rises. Unfortunately for 
Opec, the weather in many north- 
ern countries has been warm so 
far. Nonetheless, it is important 
teat growth in demand from non- 
OECD countries is now large 
enough to compensate for reces- 
sions in industrialised countries, 
in sharp contrast to the pattern in 
1973 and 1982. 

As a result, world demand for 
oil, which hovered between 55m 
and 65m bands per day between 
1973 and 1990, has broken out of 
that Tange to same 6am b/d this 
year. Moreover, Opec’s share of 
the world's production, which is 
now about 25m b/d, may also 
creep upwards, since investment 
in production outside Opec is 
being restrained by the persis- 
tently low oil prices. 

On the evidence of this week’s 
meeting, Opec may be able to 
deliver tee broadly predictable oil 
prices oil importing countries 


desire, at least if the cartel contin- 
ues to operate against a back- 
ground of steadily rising world 
demand. But tbe result will also 
be a growing concentration of 
power within Opec. since only 
Saudi Arabia and Iraq look capa- 
ble of supplying much of the 
increase in rfpmnnH 

The markets have been rather 
more pie-occupied with the possi- 
bility that Iraq will, at some point, 
resume exporting oil, once it has 
complied with enough of tee con- 
ditions imposed by the United 
Nations after the Gulf war. But its 
return would probably add only 
about lm b/d to world production, 
a third of pre-war levels. 

The question about Iraq 
obscures tbe far greater impor- 
tance of Saudi Arabia, which now 
accounts for a third of Opec pro- 
duction and a seventh of the 
whole world’s. Provided that it 
has adequate resources to invest 
in more production, which should 
be feasible even in its current 
cash-strapped state, it is well 
placed to increase its share of 
Opec’s production as world 
demand grows. 

Saudi Arabia's ability to take on 
an increasingly important role in 
adjusting its ontput to demand 
should help ensure a degree of 
price stability. That is certainly 
what the world wants lor much 
the most important single com- 
modity in world trade. The king- 
dom has hitherto shown both the 
willingness and the ability to pro- 
vide what is needed. But the 
global economy is also becoming 
more highly exposed to tee risk of 
Saudi political instability. 


Hope in Angola 


Angola’s ceasefire calls to mind 
the axiom teat second marriages 
are a triumph of hope over experi- 
ence. But tins shotgun marriage 
could succeed. Much has c han ged 
since 1991, when President 
Eduardo dos Santos and Mr Janas 
Savimbi, tee Unite leader, agreed 
ceasefire, only for it to collapse 
, ,jp following year. For the first 
Hwp jn three decades, southern 
Africa is within reach of a compre- 
hensive peace, built on democratic 
governance, market economics 
and tee aim of co-operative 
regional development. 

Blame for tee collapse of the 
last peace pact, which followed Mr 
Savlmbi’s refusal to accept defeat 
the 1992 elections, rests primar- 
ily on his shoulders. But tee col- 
lapse might have been averted bad 
15 — settlement provided explicitly 
a government of national 
unity, and had the United Nations 
received more support for its role 
monitoring the disengagement 
dud subsequent creation of an 
integrated army. Instead, it was 
inadequately resourced. 

Both issues have been addressed 
the Lusaka ceasefire talks. 
Unite has an assured role in gov- 
ernment, and the UN force will 
number 6,000-7.000 - 10 times the 
ze of the 1991-92 contingent 
Among the mast heartening ele- 
ments has been the part played by 
African leaders, particularly of the 
“front-fine" states. Once preoccu- 
pied with the battle against white 

minority rule, the group is seeking 

act as a feciUtator of democracy 
aud promoter of regional eco- 
nomic cooperation. Mediation in 


Lesotho and Mozambique, where 
it helped persuade Mr Afonso 
Dhlafcama to end his election boy- 
cott, has already brought results. 
Zf tee frontline states can main- 
tain pressure on Unita and urge 
restraint on the MPLA, the settle- 
ment may yet succeed. 

At tbe same time, the world’s 
leading powers must help fund 
- and man Hip UN initiative. They 
should also be prepared to help 
Angola’s economic recovery. The 
country has lost more than lives 
since this futfle conflict resumed. 
Since then, South Africa has not 
only captured the world's atten- 
tion but probably drained much of 
the world's aid purse. Had Angola 
been able to appeal for interna- 
tional assistance in 1992, it would 
probably have received a better 
response than is likely today. 

Fortunately, the country has 
substantial resources. At least half 
the oil export earnings went 
towards the government's war 
effort, while the diamond fields 
helped sustain Mr Savimbi. Oil 
production, currently more than 
500,000 barrels per day, could 
exceed 700,000 barrels before the 
end of the decade. Given peace 
and good management, tha coun- 
try can also develop its hydro- 
electric potential and exploit 
its agricultural and marine 
resources 

Nevertheless, Angola needs 
help. Generous international assis- 
tance is more than a worthy 
humanitarian cause. It would also 
relaunch a region whose success 
is central to recovery lb Africa as 
a whole. 


★ 


Tony Walker and Kevin Done examine 
a market that western carmakers 
are eager to enter, in spite of the risks 

Chinese roads 
paved with gold 


I t was an invitation tee 
world's carmakers could 
hardly refuse. When China's 
Ministry for Machinery Build- 
ing asked for ideas for a “peo- 
ple's car" to be submitted in con- 
junction with a small-car exhibition 
in Beijing, most large international 
car manufacturers obliged. 

As a representative of General 
Motors, which was displaying its 
Qpel/Vauxhall Corea among other 
models in Beijing, said: “When they 
say jump - people jump." 

China, which last year produced 
234,000 cars from its own plants, 
currently has fewer than 2m cars in 
use, of which fewer than 5 per cent 
are privately owned. The ministry's 
“Strategic Development Research 
Team of China's Family Car” fore- 
casts a steep rise to 22m by 2010. It 
predicts that by tee year 2010, 
China will be producing 3.5m cars a 
year, two-thirds sold privately. 

It is this prospect of an ever-wid- 
ening circle of car owners in tee 
world's most populous country that 
is proving such a magnet China's 
urban population alone is 300m, 
which compares to continental 
Europe and exceeds that of the US. 

“Who can ignore an opportunity 
in a market that could be the 
world's largest in 20 years?” asked 
Mr Toshiaki Yasuda, Nissan's chief 
representative in China. 

Under a new car industry policy 
unveiled earlier this year, China 
plans to raise production by 2000 to 
between lm and 1.5m. based on out- 
put from “three or four” large con- 
glomerates that will be developed 
over the next few years. This pro- 
duction would account for 90 per 
cent of demand from the Chinese 
market by 2000-2003. 

The foreign participation being 
sought by the government will help 
to rationalise a motor industry that 
is highly fragmented. 

“Consolidation is badly needed, if 
the sector is to benefit from econo- 
mies of scale," according to a recent 
study by the Economist Intelligence 
Unit “The government's blueprint 
is to accelerate the natural process 
of rationalisation in the industry 
over the next few years, in raider to 
create a few large and strong pro- 
ducers." 

China has set Its sights on mass- 
producing a “people’s car” designed 
specifically for the Chinese market 
The question for Beijing - no less 
than for foreign carmakers - is 
whether existing models teat have 
been tried and tested would fit Chi- 
na’s requirements best, or whether 
a completely new car is required. 


At last week's motor sbow for 
small cars in Beijing, most of the 
world's leading producers displayed 
cars from their existing ranges: 
Ford showed its Fiesta. General 
Motors the Corsa, Nissan the Micra, 
Toyota the Tercel and PSA Peugeot 
Citroen the Citroen ZX, which 
is already being produced in 
China. 

But it was the concept cars, spe- 
cially designed for the Chinese mar- 
ket, that captured most attention 
(see below). These included 
Porsche's C88 prototype, a 1.1 litre 
five-sea ter that bogged the lime- 
light, the Mercedes-Benz FCC (Fam- 
ily Car China), and Mitsubishi's 
X-concept study derived from its 
Chariot/Space Wagon small multi- 
purpose vehicle. 

At stake is the right to build a 
low-cost, fuel-efficient car for the 
standard Chinese family, that could 
have sales running into the millions 
and would provide a solid platform 
for growth in a market with enor- 
mous growth potential. 


It is the prospect of 
a rising number of car 
owners in the world’s 
most populous nation 
that is proving 
such a magnet 


With market growth sluggish in 
Europe and North America, the 
world's leading carmakers are fight- 
ing to establish a presence in the 
world's emerging markets. 

According to Mr Alex Trotman, 
chairman and chief executive of 
Ford, the world’s second largest 
vehicle maker, about 80 per cent of 
the world's population live outside 
tbe traditional automotive markets 
of west Europe, North America and 
Japan, but the number of cars and 
trucks sold in these regions repre- 
sents only about 8 per cent of the 
world's total. 

The motor industry believes that 
the Asia/Pacific region holds tee 
brightest prospects, with sales 
in Asia (excluding Japan) expected 
to triple during the next 15 
years. 

Japanese carmakers already have 
a stranglehold an most of Asia with 
as much as 90 per cent of car mar- 
kets such as the Philippines, Indon- 
esia and Thailand. In China, how- 
ever. the Japanese producers have 
been held at bay, and it is the Euro- 
pean industry that has taken tbe 


early lead - its one success story in 
the region. 

Volkswagen. Europe’s largest car- 
maker, was a pioneer among west- 
ern carmakers in entering China, 
having signed its first joint venture 
in 1984. It claims that by 2000 it will 
have a capacity to produce 660,000 
cars and 830,000 engines a year - 
300,000 cars a year at Shanghai 
Volkswagen and 360.000 a year at 
FAW-Volkswagen. its joint venture 
with First Automobile Works is 
north-east China. 

VW claims that it has made 
"huge strides" in developing tee 
supplier industry in China. Local 
content at the Shanghai plant now 
exceeds 80 per cent, and it estimates 
that about 40 joint venture con- 
tracts and approximately 100 pro- 
duction and knowhow licences have 
been agreed between foreign - pre- 
dominantly German - suppliers and 
local Chinese partners. An addi- 
tional 30 joint ventures are under 
negotiation. 

“With our commitments in China, 
we are pursuing a strategic objec- 
tive of capturing a long-term lead- 
ing market position in the region,” 
said Mr Martin Paste, VW director 
for Asia/Pacific. “China is envis- 
aged as the main production site 
with smaller satellite operations 
elsewhere in Asia." 

Ford is setting up a series of com- 
ponents joint ventures in China in 
the hope that this will open the way 
for it to begin assembling vehicles 
in tee near future. “We are eager to 
establish vehicle assembly projects 
in China at the earliest opportu- 
nity." said Mr Frank Macher, Ford 
vice-president and general manager 
of its automotive components divi- 
sion. 

Chinese officials responsible for 
deciding which foreign manufac- 
turer will build the family car 
expect a decision by 1996, but are 
not committing themselves as to 
whether one or more carmakers 
will be chosen. Mr Zhang Xiaoyu, 
director of the Department of Auto- 
motive Industry in the Ministry of 
Machinery Building, said that 
China would he guided in its deci- 
sions by which of the companies 
“provided the best terms for 
us”. 

Mr Zhang said one issue that 
would influence the Chinese deci- 
sion would be whether tee appli- 
cants' proposals complied with 
automotive policy, including tech- 
nology transfer and the develop- 
ment of the local components indus- 
try. 

Foreign car producers say that 




1990 

1991 

1992 

1994* 

1896* 

1998* 

2000* 

Otowtti In BgaWraMano (%) 

212 

98.7 

325 

&S 

108 

‘ 109 ' 

114 

Cere in use f OOO) 

1.190 

1,225 

1,500 

1.850 

2500 

3.400 

4.450 

Growth rf rare to um (96) 

.as 

■ as 

2ZA 

10.4 

17.6 

15S 

12.7 

Care bi usb per 100 ot population 

0.10 

an 

0.13 

0.15 

020 

027 

034 

Production fOOO) 

SB 

■ ■ 07 

147 

315 

57S 

625 

1,100 


•font cast* 

Car production and as se mbly by manufacturer - 2000 
Figures In brackets represent 1994 loroeasts fOOD) 


Others 2D (IS) 
Tianjin Auto 



250(11(9 

Dong Feng (Cttrofin) ISO pS) 

Foreign carmahere’ Interests Include joint venoms end icensfng a^eemenis 


Fust Auto Works 
(Volkswagen) 230 (44) 

_ Guangzhou Peugeot 
ISO (30) 


Guizhou (Fuji Heavy 
Industries) 35 (10) 

Hainan (Mazda) 3Q (3) 
Toted 1.100 (315) 


Auto industry forecasts nx») 


Sales 

1994 

1996 

Passenger care 

380 

480 

Commercial vehicles 

880 

980 

Total 

. 1.00 

1,450 

Production 

1994 

1995 

Passenger care 

31S 

455 

Commercial vaWdaa 

850 

950 

Total 

1.U56 . 

1A06 

Scots; 9U 




1996 

1907 

1998 

1999 

2000 

■575 

680 

too 

900 

ijtxxi. 

1.100 

1.200 

1.280 

1.400 

1AM) 

1,876 . 

' IjtoO 

2080 

ZJKD 

2JB00 

1996 

1997 

1998 

1999 

2000 

S75 

• 705 

825 

945 

Lido 

1,100 

1.200 

1,275 

1.400 

1.500 

vos 

1,906 

8,100 

2*45- 

SSBOO 


even if a decision is made on tee 
family car proposal by 1996, produc- 
tion would not start before 1998-99 
at the earliest This timetable sug- 
gests that China will have difficulty 
meeting its production target of at 
least lm cars by 2000. 

The prospect of participating in 
the birth of a Chinese small car has 
appeared too daunting for some 
companies in the world motor 
industry. BMW. for example, consid- 
ered participation through Rover, 
the UK carmaker it acquired early 
this year, but held hack. 

“We have investigated it hut we 
think one would lose a lot of 
money," said Mr Bemd Pischets- 
rieder, chairman of the BMW man- 
agement board. “Whoever does this 
people's car project will not be suc- 
cessful financially." 

Mr Posth of VW acknowledges 
teat two contradictory arguments 
confront all industrial investors. 
The first says: “You will certainly 
lose at the start, if not in the long 
run as well. The initial phase will 
last much longer than you ever 
thought it would. 


“It will take for longer than you 
ever imagined to learn the rules in 
China. You will be constantly hin- 
dered by your Chinese partner Gram 
doing the right thing - they profess 
to know everything better, even 
though they had invited you 
because of your technical superior- 
ity and managerial know- 
how . . . And where are those bil- 
lions of consumers?" 

On the other hand, said Mr Posth, 
“by not being in China, you are 
perhaps missing out on the chance 
of a lifetime. If your competitors are 
investing in China and exporting 
from there, they will be able to heat 
yon wherever they like anywhere in 
the world. 

“It may or may not be the end of 
tee Deng Xiaoping era ... but then 
where can you invest without incur- 
ring some sort of risk? And don't 
forget what people said in the 
1950s about getting involved in 
Japan." 

The stampede by tee world's car- 
makers into Beijing last week sug- 
gests that few are prepared to be 
absent, however great the risks. 


Designers stress their proletarian credentials 


M usic blared, pretty 
girls provided decora- 
tion, and the covering 
was slowly removed 
from a vehicle on an derated stage. 
Porsche was unveiling Its prototype 
of the family car its designers hope 
will capture the hearts of Chinese 
bm-eaucrats and consumers, writes 
Tbny Walker. 

The German sports carmaker 
could not be accused of under-sell- 
ing its wares in the competition to 
participate in China's “people's 
car" project It has developed the 
prototype C88 (Concept 88 car) 
especially for the Chinese market 
with styling that embraces such 
features as headlights with oriental 
characteristics. 

Porsche - which makes fewer 


than 20,000 cars a year - was very 
much the outsider among the 
world's car giants exhibiting at last 
week's small-car sbow In Beijing. 
The company wants to supply basic 
design and engineering assistance 
to a Chinese manufacturer in 
retan) for a fee or royalty on mod- 
els produced. Its representatives 
emphasised that Ferdinand Porsche 
designed and built the first Volks- 
wagen in the mid-1930s - Ger- 
many’s “people’s car ” and tee pro- 
totype for 2lm “Beetles". 

Also trying to persuade the Chi- 
nese of the importance of a long 
track record was Ford Motor Com- 
pany. It invoked Henry’s name and 
that of the Model-T - the world’s 
first mass-produced vehicle. 

“All great endeavours begin with 


a vision," said Mr Wayne Booker, 
Ford’s executive vice-president for 
international operations. “Ninety- 
one years ago, Henry Ford had a 
vision of providing the greatest 
good for tee greatest number of 
people . . . fTom that beginning 
Ford bas adhered to the vision of 
serving working people." 

It was not clear wbether this 
appeal to the proletarian Instincts 
of Chinese officialdom made much 
impact Bnt tee announcement by 
Mercedes-Benz that it was prepared 
to invest up to DMSbn (£800m) tat a 
new plant producing 250,000 FCC 
(Family Car China) concept cars a 
year would have been welcome. 

Mercedes-Benz’s sqnat, snub- 
nosed prototype was not tbe most 
elegant vehicle on display. But it 


attracted attention from both Chi- 
nese consumers and international 
competitors, who were curious 
about the German luxury car pro- 
ducer’s ideas of what might sell in 
a mass market. 

Mercedes-Benz executives were 
proud of the FCC's innovative 
design, which incorporates alterna- 
tive propulsion options, such as 
electric or hydrogen drive. They 
also claimed outstanding fuel effi- 
ciency, with the 1.3 litre petrol 
engine capable of 800km on a sin- 
gle tank. 

Participants tn the show admired 
tee Chinese for enticing the world’s 
top carmakers to Beijing. But there 
was a hint of exasperation that, 
because of the huge potential of the 
China market, the Chinese clearly 


had tbe “upper hand", as one Japa- 
nese representative said. 

"They are very good merchants," 
he said. “They are taking full 
advantage of the situation to let os 
know they are tee masters, and 
that they are calling the shots." 

Chinese visitors to tee exhibition 
were mostly “window-shoppers". 
Economic reforms are bringing the 
possibility of purchasing cars 
within range of many Chinese, but 
tbe price tag on a “people’s car" at 
this stage would be beyond tee 
means of most 

“Yon have to be rich to buy a 
car," said Miss Shen, who was 
viewing the Mercedes prototype. 
“Pm dreaming of owning a car, but 
lH have to wait... till next cen- 
tury, perhaps." 


Venomous 

commentary 

■ Oh dear. Looks like someone 
may have been drinking something 
a little stronger than tap water at 
last week’s National Water Day 
conference in Paris. Whatever the 
tipple, Lyonnaise des Eaux, tee 
FTOnch conglomerate, seems to 
feeling a bit off-colour. 

The daily paper Liberation had 
been cross-examining Jerome 
Monod, the company’s chairman, on 
his company's efforts to win a 
contract for reconstruction in the 
Gaza Strip from Yassir Arafat. 

“I waited 15 hours, then was 
driven at 150km an hour through 
the streets of Tunis to be brought 
before a sick and drugged man who 
took me in his arms and kissed me 
cm the mouth,” Monod is reported 
to have said. 

Whether it was the reporter’s pen 
or tee executive's tongue teat 
slipped, Arafat did not find it very 
funny. Gabriel Banon, his economic 
adviser, told Agence France Pres se 
yesterday that six contracts 
negotiated with French companies 
would be cancelled as a result of the 
comments, including one for 
FFr30m with a Lyonnaise des Eaux 
subsidiary. 

Monod was clearly also not 
amused. His company issued a 
statement last Digit saying the 
report of his comments was “taken 
out of context", “erroneous" and did 
not reflect the nature of his 


meeting in Tunis. 

But more trouble may yet be in 
the pipeline. Monod also reportedly 
told Liberation: “In China, where 
we havp more than 14 water 
concessions, 1 bad to drink tbe 
blood of a serpent cut open in front 
of my eyes." 


Spot on 

■ Is it mere coincidence that tbe 
British Veterinary Association's 
president. C.P. DeVile, is tee 
namesake of Cruella, villain of the 
teaijerking tale of 101 Dalmatians ? 
Pet-owners bereft of their furry 
friends might not think so. 
Christopher Paul DeVile. giving 
evidence to the House of Commons 
agriculture committee, said that the 
distress pets can suffer in 
quarantine kennels was nothing 
compared with the welfare 
consequences of an outbreak of 
rabies in Britain. 

Predictably. DeVile sank his teeth 
into the committee's call for an 
immediate lifting of quarantine 
restrictions. 


Pearls of wisdom 

■ Must try harder. Japan has just 
released documents which show 

that there bad indeed been an 
inexplicable delay in the 
transmission of the declaration of 
war on the US before the bombing 
of Pearl Harbour in December 1941. 
Yesterday the Foreign M1n ip4 Ty 


Observer 



acknowledged that the delay in the 
delivery of the declaration to the US 
government was due to 
mishandling on the part of . . . the 
Foreign Ministry. It added that it 
"accepts this as an unforgettable 
lesson which should not be repeated 
again, and has been trying to 
improve its working system". 

Fifty-three years after the event, 
and it is still not fixed? 


Bright sparkle 

■ Nice touch. Harry Oppenheimer, 
the elder statesman of South 
African business, has handed in his 
notice and. plans to retire as a 
director of world diamond giant De 


Beers on December 27 - the 
diamond anniversary of his j oining 
the board - In 1934. 

Oppenheimer. 86, succeeded his 
father, Ernest, as chairman of De 
Beers Consolidated Mines Ltd in 
1957 and held the chair until a 
decade ago. Oppenheimer said 
yesterday that he realised that 
“many people will think - and not 
without reason - that I became a 
director when 1 was for too young 
and continued as a director until I 
was far too old". Maybe so. But it 
will be a long time before South 
Africa produces another industrial 
leader to match his contribution. 


Worldly move 

■ Lewis Preston is wasting little 
time filling tL.- large shoes of Ernie 
Stem, who announced last Friday 
teat he was leaving tee World Bank 
vice-presidency for J J*. Morgan. 

Hie hot tip in Washington is that 
his successor will be Richard Frank, 
another American and currently 
vice-president at the International 
Finance Corporation, generally 
known os the bank's private sector, 
hard money sister. 

Tbe Preston logic, which has the 
foil support of tee US 
administration. Is that the bank is 
going to have to be ever more 
inventive in raising capital, 
especially now that Senator Jesse 
Helms is threatening to take the 
axe to anything smelling of foreign 
assistance and “world 
governments" unaccountable 


personally to him. 

Frank, described as low-keyed 
and modest, certainly has the 
credentials. An old World Bank 
hand who moved to the IFC in the 
1980s when Sir William Ryrie ran it, 
his principal responsibility has been 
raising funds through innovative 
syndicated and co-financing 
schemes. Though not a novice in 
the capital markets, the bank, 
according to its critics,' and the 
countries which it helps, could use 
more imaginative approaches in the 
capital markets as official money 
becomes in shorter supply. 

He will also be seen very much as 
Preston's man, which could never 
entirely he said of Stem - the 
organisation’s institutional memory 
and the man not even World Bank 
presidents could circumvent with 
impunity. An announcement is 
expected within days when the 
bank board next meets. 


Never knowingly 

■ Dash, there goes another clever 
marketing gimmick. Sir Bryan 
Carsberg. Office of Fair Trading 
supremo, has just ticked off Connell 
Residential, Scottish Widows’s 
chain of estate agents in southern 
England, for erecting “SOLD" signs 
outside houses which had not been 
sold and indeed were not for sale. 

Sir Bryan said that he was 
concerned that the boards might 
mislead consumers. That seems to 
be one of the OFTs 
understatements of the year. 



22 


ANIXfEl 

Global Provider of 
Structured Networking Solutions 
Tel: 01753 686884 


FINANCIAL TIMES 

Wednesday November 23 1994 



A wprfd feactefc/h ' •> 
flexible cvnhectofs -..'j 

/tel: Q&3775S47L r- * 



Group agrees to extend production ceiling for a full year 

Opec moves to boost oil prices 


By Robert Corzme and 
ManueJa Saragosa in BaE 

The Organisation of Petroleum 
Exporting Countries yesterday 
took the unprecedented step of 
extending its present production 
ceiling for a full year in a bid to 
boost weak oil prices. 

Saudi Arabia. Opec’s largest 
producer, overcame objections 
from Kuwait, Libya and Gabon to 
persuade oil ministers to main- 
tain the 2152m barrel a day ceil- 
ing “without reservation’' for the 
whole of 1995. 

That means there will be no 
formal commitment to review the 
ceiling at Opec's next meeting in 
Vienna in June 1995. 

But Iran, Opec’s most persis- 
tent price hawk, said it would 
seek a lower celling if prices 
foiled to rise by June. 

Mr Hisham Nazer, Saudi oil 


minister, was optimistic that the 
plan would work "If you balance 
supply and demand, ultimately 
you get higher prices, r he said. 

Mr Gholemreza Agazadeh, 
Iran’s oil minis ter, said he would 
also demand a review if the pro- 
duction freeze pushed the Opec 
basket price, an index of seven 
international crude oils, above 


the same level as 1974. 

The price of the benchmark 
Brent blend (January) closed 
unchanged yesterday at 816.95 in 
spite of news of the agree- 
ment 

But there were sharply differ- 
ing opinions as to how high 
prices might go. Some observers 
believe an Opec production freeze 


Editorial Comment and Observer 


.Page 21 


the organisation's target of $21 a 
barrel. In October the basket 
price averaged $15.36. 

But a Gulf Arab delegate later 
said that "any changes would 
take place only as a result of spe- 
cial circumstances". 

Analysts and oil company exec- 
utives believe yesterday’s move 
will be a positive factor for oil 
prices, which in real terms are at 


at a time of rising oil demand 
will push prices above $25 a bar- 
rel towards the end of 1995. as 
long as United Nations sanctions, 
which prevent Iraq from export- 
ing oil, remain in place. 

Others are more cautious. Mr 
Joe Stanislaw of Paris-based 
Cambridge Energy Research 
Associates said it was "not a vic- 
tory for price hawks". The agree- 


ment might add only 50-75 cents 
to the average price of the Opec 
basket in 1995, he said. 

Gulf Arab officials were also 
cautious. The “price Improve- 
ment could take time", one said. 
He predicted that the bulk of any 
price increases might not be evi- 
dent until the fourth quarter of 
1995. The official also thought it 
unlikely that prices in 1995 would 
rise above $29325 a barrel. 

The cautious view was echoed 
by an Iranian delegate. He said: 
“It depends on [world] economic 
growth and how strongly that 
growth translates into oil con- 
sumption. And will any growth 
in demand go to non-Opec pro- 
ducers?" 

Most of the growth in world oil 
demand in the past year has been 
satisfied by a surge in production 
by non-Opec countries, most 
notably the UK and Norway. 


Debt fears deter investment in China 


By Tony Walker In Beijing 

China's rash of troubles with 
western creditors over unpaid 
debts is casting a pall over plans 
for heavy foreign investment in 
Chinese infrastructure, particu- 
larly in the power sector. 

Western bankers also report 
si g ns of nervousness in interna- 
tional debt markets over China 
exposure, while loan syndications 
for state-owned companies are 
meeting resistance, 

Mr Paul Schulte, China analyst 
at CS First Boston in Hong Kong, 
yesterday described the debt 
repayment issue as “critical" to 
perceptions of China as a safe 
destination for equity invest- 
ment. "Everyone wants to do 
business with China." he said 
“but from a macroeconomic point 
of view the central authorities 
must be seen to be managing 
debt prudently." 


International power companies 
have held difficult discussions 
with the ChTTn»a> authorities over 
returns on billions of dollars of 
proposed equity investment. 

Beijing's attempt to "cap” rates 
of return at 12 to 15 per cent did 
not please nervous investors wor- 
ried about repayment risks. But 
the Chinese now appear prepared 
to tolerate higher returns com- 
mensurate with the risks 
involved, although they have not 
yet indicated this publicly. 

Recent reports of Chinese insti- 
tutions foiling to honour commit- 
ments included an announce- 
ment by Lehman Brothers, the 
US investment h ank, that it was 
suing several big Chinese state 
companies for alleged non-pay- 
ment of debts a rising from for- 
eign pimhangp trading. 

Foreign banks, including 24 
Japanese institutions, last month 
petitioned Mr Zhu Rongji, senior 


vice-premier in charge of the 
economy, for the recovery oF 
5600m in loans that bad gone 
sour, mostly from leasing deals. 
European h anks are also among 
those pressing the Chinese 
authorities over the non-payment 
of debts by state enterprises from 
leasing arrangements that date 
back to the early 1980 k. 

China’s foreign debt reached 
$83.5bn at the end of 1993. It is 
expected to rise to $100bn this 
year. 

The Chinese agency responsi- 
ble for monitoring foreign debt 
has urged restraint among bor- 
rowers. An official of the state 
administration of foreign 
exchange control under the Peo- 
ple’s Bank recently said foreign 
debt had “expanded a bit too 
fast". 

The Beijing representative of a 
large European bank said it was 
“getting harder" for nhina to bor- 


row. There had been a “knock-on 
effect" from recent publicity, and 
be was advising clients to tighten 
up in their dealings with China. 
“If a corporate client asked 
whether to do business with 
China on a collection basis or by 
way of a letter of credit. I would 
advise a letter of credit." he said. 

China's reputation for meeting 
its commitments has not been 
helped by a dispute between 
China International Trust and 
Investment Corporation (Cltic) 
and the London Metals Exchange 
involving an alleged default over 
payments of $30m to $50m lost in 
futures trading. 

Citic initially said the losses 
resulted from unauthorised trad- 
ing by its Shanghai branch, but 
subsequently put the matter in 
the hands of Price Waterhouse, 
the international accountant 

China’s family car, Page 21 


Berlusconi 
faces bribery 
questions 

Continued from Page 1 


responsibility for giving the 
orders and was briefly arrested 
during the summer in an 
earlier phase of the same investi- 
gation. 

The prime minister said yester- 
day that the Finlnvest managers 
already interrogated were vic- 
tims of extortion, a line similar to 
that adopted by many Italian 
entrepreneurs caught up in the 
inquiry into systematic bribery of 
tax police. 

Speculation about the immi- 
nent investigation of the prime 
minister, either by Milan or 
Palermo magistrates, has swept 
financial markets recently, 
fuelled by comments last month 
by the head of the Milan 
magistrates that the inquiries 
were reaching “high political lev- 
els". 


Broadcasting quota plans 
open divisions in Brussels 


By Emma Tucker in Brussels 

Proposals to tighten European 
broadcasting quotas and sepa- 
rately to ban advertising on new 
electronic information services 
are threatening to divide the 
European Commission. 

The outgoing audiovisual com- 
missioner, Mr Joao de Deus Pin- 
heiro, believed to have strong 
backing from Mr Jacques Delors, 
Commission president, will next 
week present plans to force Euro- 
pean television channels to stick 
to European-made documenta- 
ries, cartoons and drama pro- 
grammes at least half of the time. 

Further, in a move that indus- 
try says will threaten the devel- 
opment of interactive c onsum er 
services to Europe, Mr Pinheiro 
is proposing to extend the scope 
of existing broadcasting rules to 
ban advertising on screen-based 
services such as “tele-shopping". 


Mr Pinheiro's proposals 
amount to revision of the EtTs 
1989 Television without Frontiers 
directive which sets time limits 
on advertising. The new effort is 
an attempt to protect existing 
advertising revenues of national 
radio and television broadcasters. 

Opponents of the plans the 
Commission and industry say the 
moves send a bad political mes- 
sage to the rest of the world, and 
make Brussels look confused 
about the information society. 

One official said yesterday: “On 
the one hand it is saying it wants 
to liberalise the communications 
sector as much as possible, and 
an the other it is cutting off the 
possibilities for these new ser- 
vices to come on stream." 

Much of the momentum behind 
Mr Pinheiro's changes comes 
from those within the Commis- 
sion who believe European cul- 
ture and language need to be pro- 


tected from Hollywood. Some 
observers believe Mr Delors may 
be trying to use more protection- 
ist media laws to boost a bid for 
the French presidency next year. 

"Mr Delors wants to get this 
through because it will enhance 
his status in France," said an 
industry source yesterday. “The 
move is highly political and it is 
being led by the Delors cabinet" 
The 1989 directive already 
requires EU channels to reserve 
at least 50 per cent of their out- 
put for European-made pro- 
grammes, “where practicable". 
This loophole has allowed some 
channels to ignore the quota. 

More worrying for industry, 
however, is the extension of the 
directive's scope to cover new 
services, a move which will pre- 
vent tele-shopping channels from 
carrying advertising. 

Editorial Comment, Page 21 


FT WEATHER GUIDE 


Europe today 

High pressure wifl continue to domrnata 
Much of north-west Europe wfll be cloudy 
and hazy. Light rain or drizzle may be 
frequent especially over the Benelux, 
Germany and France. Meanwhile, a series of 
frontal systems wfll sweep towards 
Scandinavia, giving Norway a lot of rain 
along the south-west coast. A strong south- 
westerly flow will send mfld air into Sweden 
and Finland. The eastern Mediterra n ean will 
be unsettled. Eastern Turkey will have rain 
and Israel win have frequent thunder 
showers. 

Five-day forecast 

Colder air wffl arrive In eastern Europe 
towards the weekend, renewing unsettled 
condKtats over Greece and Turkey. 
Meanwhile, high pressure systems will 
continue to influence western parts of the 
continent and temperatures wifl change little 
during the next several days. Disturbances 
with rain wfll move east over the British Isles, 
the North Sea and southern Scandinavia. 



I ■^■HIQH/ r ^ \ 15 

7 - v V U 0 W;* 



WfiMl Speed in KPH 



TOO AY’S TEMPERATURES 


Situation at IS OUT. Temperatures maximum lor day. Forecasts by Mete o Consult ol the Netherlands 



Maximum 

gegng 

cloudy 

7 

Caracas 

shower 

30 

Faro 

fair 

21 

Madrid 


Celsius 

Belfast 

drzzl 

12 

Cardiff 

cloudy 

12 

Frankfurt 

tag 

8 

Majorca 

Abu Dhabi 

sun 

31 

Belgrade 

fair 

10 

Casablanca 

sin 

21 

Geneva 

tar 

11 

Malta 

Accra 

fair 

33 

Botin 

cloudy 

7 

Chicago 

. sun 

2 

Gibraltar 

sun 

20 

Manchester 

M&n 

sun 

22 

Bormuda 

fa* 

25 

Cologne 

drzzl 

10 

Glasgow 

tan 

14 

Marta 

Amsterdam 

cloudy 

13 

Bogota 

shower 

22 

Dakar 

fair 

29 

Hamburg 

doudy 

10 

Melbourne 

Athens 

sun 

15 

Bombay 

fair 

33 

Galas 

fair 

13 

HeteMd 

shower 

7 

MouooCity 

Atlanta 

fair 

14 

Brussels 

doudy 

11 

DeH 

sin 

28 

Hong Kong 

fair 

25 

Miami 

B. Aires 

fair 

28 

Hurtapoct 

hazy 

9 

Dubai 

sun 

30 

Honoiuki 

fair 

28 

Mian 

BJwn 

cloudy 

13 

Ghagen 

drzzl 

9 

Outfit 

drzzl 

14 

Istanbul 

tar 

10 

Montreal 

Bangkok 

fair 

33 

Cabo 

fair 

22 

Dubrovnik 

fair 

19 

Jakarta 

fab 

31 

Moscow 

Barcelona 

tar 

17 

OqwTown 

tar 

23 

Edinburgh 

rafei 

15 

Jersey 

doudy 

14 

Munich 


More and more experienced travellers 
make us their first choice. 


Lufthansa 


Karachi 
Kuwait 
L Angeles 
Las Palmas 
Lima 

Lisbon 

London 

Luxbourq 

Lyon 

Madeira 


far 
lair 
sun 
sun 
doudy 
shower 

cloudy 

(tel 

cloudy 


32 Nairobi 
31 Naples 
21 Nassau 
25 New York 
23 Nice 
20 Nicosia 
14 Oslo 
10 Paris 
12 Perth 
23 Prague 


far 

sun 

sun 

cloudy 

cloudy 

lair 

tar 

four 

cloudy 

fax 

sleet 

fog 

cloudy 

sun 

fair 

far 

fair 

shower 

rain 

fog 

fair 

hazy 


17 Rangoon 
20 Reykjavik 
22 Rio 

14 Rome 
30 S. Free© 

22 Seoul 

23 Singapore 

27 SlocWxrin 
Strasbourg 
Sydney 
Tangar 

10 Tel Am 
25 Tokyo 
19 Toronto 

28 Vancouver 
13 Venice 

17 Vienna 

15 Warsaw 

7 Washington 
12 Wellington 

24 Winnipeg 
7 Zurich 


11 

5 

2 


fair 

sleet 

cloudy 

fair 

sin 

fair 

shower 

cloudy 

fog 

lair 

sun 

shower 

fair 

Shower 

rain 

cloudy 

hazy 

fair 

sun 

shower 

snow 

tog 


34 

3 

23 
19 

19 

9 
31 

10 
12 

24 
21 

20 
13 

5 

7 

13 

9 

S 

13 

15 

-3 

10 


THE LEX COLUMN 

Italian drama 


European bourses performed poorly 
yesterday, but none worse than Milan. 
Equities dropped 2J& per cent, the 10- 
year benchmark bond fell nearly a 
point and the lira plunged to a record 
low against the EFMark. That seems 
odd. Alter all, corruption allegations 
against Mr Silvio Berlusconi, Italy's 
prime minister, were hardly new. 

What upset the markets was the 
timing of the announcement that he 
was being investigated. The announce- 
ment came on the very eve of the 1995 
budget debate and its controversial 
proposals for spending cuts and tax 
increases. Without a majority, the gov- 
ernment was always going to have a 
hard time pu shing through the bud- 
get But the investigation has weak- 
ened Mr Berlusconi's political position 
further and may force him to accept 
compromises. It was fears of such 
back-peddling - with all the adverse 
im piiratinns for gove rn ment funding - 
that undermined the lira and bonds. 
Shares fell on concerns that interest 
rates would have to be raised to sup- 
port the currency. 

Hopes that a conservative Berlus- 
coni government would be good for 
equities have been Hashed. That is in 
spite of an economy expanding at an 
expected 22 per cent this year, an 
inflation rate naming at just 3.7 per 
cent, and a rapid recovery to corporate 
earnings. The Comit index is up just 
1.7 per cent since January. Budget 
uncertainty looks set to continue until 
the end of December, and political 
fractiousness is unlikely to diminish 
thereafter. Under the circumstances, 
prospects appear less than promising. 

Vodafone 

Heady growth in the UK mobile 
market is finally greeting a price from 
Vodafone. In the dash to sign on 
record numbers of customers in the 
six months to end-September, adminis- 
trative procedures became over- 
stretched with the result that fraud 
and bad debts shot up. The sums 
involved - roughly one per cent of 
turnover - are not huge. But the epi- 
sode rams home the point that the 
quality of Vodafone’s customer base is 
deteriorating as the market expands. 
This is also seen in the sharp increase 
in the company's annual “cham” rate 
- the proportion of customers who 
leave the network - from 21.5 per cent 
to 2&5 per cent Chum will now fall as 
procedures for si g nin g up new custom- 
ers are tightened but, in return, Voda- 
fone will have to sacrifice some mar- 
ket share. In future, much of group 


IfT-SE Index: 3078.7 {-42.3H 

Italian ntleRfMnte - 

Gorrit Index • ■ ... 

\ ♦ 
i'#. ■■ ■ ■ 

1 * ■ 

aop. ■ — 




1094', 


Souca: FT OrapMM 


growth will come from Investment in 
overseas operations. But, as yester- 
day’s PtaSSbn bid by Vodafone’s con- 
sortium for a Spanish cellular licence 
shows, such expansion will' not come 
cheap. Meanwhile, the UK business 
remains vulnerable in the medium, 
term to price cuffing. So for, Vodafone 
has managed to maintain, prices 
despite the arrival of new entrants 
offering large discounts. Bat once the 
new networks achieve nationwide cov- 
erage, Vodafone will be under pres- 
sure to match their offers. Even if a 
value of £ibn is put on the group’s 
international, operations and its over- 
seas losses are stripped out, Voda- 
fone’s shares still trade at a healthy 
premium to market. That looks unjus- 
tified. 

Thom EMI 

Yesterday’s 2 per cent drop in Thom 
EMTs share price yesterday was an 
exaggerated response to a solid set of 
interim figures. There were some mod- 
est disappointments - for example 
continuing problems at Rumbelows 
and evidence of intensifying competi- 
tion in the US rentals market - but 
these were slight to the context of the 
robust 15 per cent growth in core oper- 
ating profits and the 8.3 per cent 
Increase in the interim dividend. 

The higher than expected payout is 
an expression of the group's confi- 
dence in fiie future. Investors should 
share this. The management will soon 
be able to take the strategic tldying-up 
exercise a stage farther with Thorn 
EMTs expected withdrawal from its 
defence interests. Meanwhile the mar- 
gin tmhawfgfnent targets It has set for 
both music and rentals seem achiev- 


able. Even If return cm sales .to toe 
rm rei'c rinrifimn did nothriprovefathe 
fin* half, the fall-year figures shook! 
show progress towards the 
term aim of 16 percent As for rentals, 
the improvement to margins to the 
first six months was impressSrogwji 
difficult market conditions, r. 

Assuming pre-tax profits of more 
than £400m for the full yeari’fe 
shares are on a deserved* if he* gener- 
ous, premium to the marimtiTbe near 
5 per cent prospective yield provides 
support But sustained outperform-, 
ance Is Wcdy only when, and if . the 
manag eme nt revives the demerger 
plans, now shelved, which so delighted 
the market earlier this year. r ' 

UBS ••••"• ">■ . 

Union. Bank (^ Switzerland's board 
is still on probation. The. narrowness 
of its proxy battle victory suggests 
that arguments, put forward by Mr 
Martin. Elmer, UBS’s largest. share-' 
holder, struck a chord with some 
other investors.. Hr Elmer may afijt 
have produced a compelling blueprint 
for how the bank should be 1 run. But 
he wtm right to prod it to improve-hs 
returns. Now that ■ the distinction 
between registered and hearer shares 
is to be abolished, the effectiva pre- 
mium enjoyed by the former should 
shrink - tmlesa Mr Elmer's legal nh ai - 
lraigeproi^ 7 success£al,fi^t-Js._Tlffi 
bearer shares may also tumhle. By 
most yanfoticks, UBS is -expensive rel- 
ative fo other Swiss and Eu ropean 
banks. Unless tha board is provtfad 
by the narrowness of Ms victory to 
grot its capital harder , the premium 
rating will be unjustified.-- 

Cookson/JM y \ 

Merger talks between Cookson axil 
Johnson Matthey may. have broken 
down because the two.sfdes could hot 
agree on valuation. But the.foilure 
would seem to confirm that there was 
little todustriafl logic to a combination. 
Had there been,. : lt .would, have been 
easier for ane^or other to give a little 
ground on valuation. Instead, talks 
became bogged down as each side 
fought for slightly greater shares of 
the merged company than implied by 
their respective market capitalisa- 
tions. The main driving forces behind 
the merger talks were the ambitions of 
Mr Richard Os ter, Cookson’s chief 
executive, and Mr David Davies, JM’s 
chairman, to run larger companies. 
Just because this deal has foiled, those 
ambitions are unlikely to have faded. 








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Now we're restructured and refinanced, we can focus on 
what we do best - condoms and surgical gloves. 

With 22% of the world's branded condom market, we're 
No.i. Our Regent Biogel surgical gloves are recognised as 
amongst the finest there are and global markets for these 
products are growing. 


Our technical expertise combined with over 70 years 
experience will help us stay ahead of the competition.. - 
Our new management team is committed to maintaining 
this quality leadership. and to realising the value of these 
core brands. We are confident that the progress bang made 
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FINANCIAL TIMES 

COMPANIES & MARKETS 


rrccphono; O5C0-7^500Q for information 


©THE FINANCIAL TIMES LIMITED 1994 


Wednesday November 23 1994 


-f-telia 


Your Swedish Te le com Partner 

UK Tot 071 416 0006 . UK Rue 071 416 0306 . 


IN -BRIEF 


Investor lifted by 
Saab-Scania unit 

Investor, the central holding company of Sweden's 
powerful Wallenberg empire, saw pre-tax profits 
surge in the first nine months, after a strong perfor- 
mance from Saab-Scania, its wholly-owned vehicle 
and aerospace unit. Page 24 

La Gorporacldn revamps zinc unit 

La Corporacton Banesto, the Spanish industrial 
group, is planning to recapitalise Asturians de Zinc, 
the world's fonrth-largest producer of zinc metal. 
Page 24 

Scrutiny of Microsoft extended 

The US Justice Department anti-trust division has 
extended its review of Microsoft’s $L5ba acquisition 
of Intuit, a ig»H<ng publisher of personal fiimuH* 
software, potentially delaying the dpqi Page 27 

Price cuts hurt NTT 

NTT, Japan’s largest tpip rammimi nations company, 
suffered a 66 per cent fall in nonconsolidated recur- 
ring profits, largely because of price cuts In the 
long-distance call market, page 26 

Trygg-Hansa wants to leave Home alone 

Trygg-Hansa, the Swedish insurer, would like to be 
rid of Home Holdings, its loss-making US associate. 
Home’s share price more than halved between 
November 4 and November 17 and last week its 
sonar debt was downgraded by Moody’s. Page 27 

LCH point* to derivatives growth 

Growth of exchange-traded derivatives products in 
London is set to exceed last year's total by nearly 50 
per cent, according to figures released yesterday by 
the London Clearing House. Page 28 

Economist wary of commocfittes 

C ommo dities have seen huge price increases this 
year but a senior World Bank economist has dis- 
missed the idea that they could be a long-term 
investment an a par with equities. Page 32 

Abbey National’s ma r gin s widen 

A w idening of mar gins in its retail hanking busi- 
ness during the third quarter of this year was 
reported by Abbey National, the UK home loans 
and banking group. Page 29 

Music and rentals help Thorn Qfl up 27% 

Strang performances by its main music and rentals 
divisions helped the UK group, Thom EMI, to lift 
interim pretax profits by 27 per cent Page 29 

Northern Foods declines 16% 

Northern Foods warned that plant closures and job 
losses would force it to take a restructuring charge 
in the second-half as it reported a 26 per cent drop 
in interim pretax profits. Page 30 


Companies In this issue 


Abbey National 

29 

Accor Asia Pacific 

26 

Advance Agra 

26 

AiTouch 

28 

AJcatet Alsthom 

2 

Alcatel Kabei Norga 

4 

Anglo Wesh Bank 

31 

Applied Holographies 

31 

Atkins 

30 

BBV 

23 

erra 

29 

Banesto . 

24 

Bank of Montreal 

27 

Barings Secuitiea 

27 

Bads Holdings 

ia 

BUMS 

30 

British Aerospace 

30 

Bwflngton 

27 

CEZ 

27 

CML Microsystems 

30 

Cari-Zetes 

4 

Cathay IntamstJonal 

30 

China Investment 

31 

Chubu Electric 

28 

Cookson 

23 

Cosatt 

31 

Hogas 

31 

GEC 

30 

GPA 

29 

Hammer-son 

31 

Hortons 

29 

IngeraoO-Band 

«' 

Intuit 

27 

Investor 

24 

John Brown 

4 

Johnson Matthey 

23 

Kansai Bactric 

26 

Kawffl Systems 

30 

Laird 

31 

Lowndes Lambert 

30 

McDonald’s 

27 

McLeod Russel 

28 

Medical Research Int 

26 

Matrotect Industries 

18 

Microsoft 

27 

Mollns 

31 

Montgomery Asset Mflt 

27 


Moran 

30 

nsm; 

29 

NTT 

26 

North American Gas 

31 

Northern Foods 

30 

OMV 

24 

Osaka Gas 

26 

PacMcSBA 

26 

PalneWebber 

27 

Pariaide 

29 

pgMnqton 

30 

PflWngton's TBea 

29 

Porvak 

18 

Queensfaanju^i Hktgs 

31 

RJB Mining 

2B 

Readout 

31 

Reynolds Metal 

4 

Saab-Scania 

24 

Santa Fa 

27 

Scsndfrwvian Tobacco 

26 

Shires Investment 

30 

Simon Engineering 

18 

Sterling Industries 

30 

TDK 

26 

IDS Circuits 

31 

Tadpole Technology 

31 

Tarmac 

4 

TeleWest 

23 

Tex Holdings 

31 

Thamson-CSF 

4 

Thom EMI 

20 

Titad Wheal Int 

26 

Tohoku Bactric 

26 

Tokyo Electric 

26 

Tokyo Gas 

26 

Tokyo Seimftsu 

4 

Trygg-Hansa 

24 

UAP 

24 

UBS 

1 

UnBver 

6 

Union Pacific 

27 

United Breweries 

30 

VSEL 

30 

Vodafone 

24, 28 

Welt Disney 

23 

Wesfarmers 

28 

Whftecroft 

31 

Wbotworth 

26 


Market Statistics 


{Annual reports aerefes 34-35 

Bendmerit Goat bends 1 2S 

Bond turns and options 28 

Band prices and yields » 

Commodates prices 32 

DMdeods amatmesd. UK 28 

BUB currency rata W 

Eurobond priC88 28 

Rad Internet fncBces 28 

FT-A Wortd tndras Back Page 
FT Gtdd Hteea index 33 

FT/EMA hti bond wc 38 

FT-SE Actuaries Mem 33 


Foreion Brchanoe 

38 

Ste prices 

28 

tiffe aqtritr options 

33 

Unrion share sante 

34-35 

London trad options . 

» 

Managed ftmds sendee 

36-37 

Honey markets 

38 

Itew ted bond tames 

a 

Maw York stare sendee 

40-41 

Recant femes, UK 

33 

Stoort-tOTi W rates 

38 

US Interest rate 

28 

wodd Stack ttatate 

39 


Chief price changes yesterday 


HUMOFURT 

0*8 



PARTS PC*) 




Mm 

lbDrmjw 

A* 

BO 

+ 

12 

Dam 

Ecco 

783 

880 

+ 

11 

12 

Aako 

7M 

_ 

1* 

Ms 

601 


11 

BHFBa* 

388 


7 

tear 

“ 

exafiMPr 

780 


« 

OCF 

22BL5 

“ 

85 

Hrtri 

588 

- 

86 

Lsgte 

XI 

— 

85 

Steering 085 

mvontlD 

“ 

IS 

sue 

TOKYO [Tut 

880 


20 

MR Dfcnff 
Ms 

43* 

+ 

1H 

term ora 

Bargs Plan 

575 

878 

+ 

20 

24 

BiWar 

im 

— 

3H 

Ms 

738 

388 


88 

17 

Ctetqflar 

MW 

Sen Etc 

Mn# Wtetar 

s» 

S8H 

- 

1 

1H 

DatteoM 

BrateW 

- 

4754 


ft 

MareH FO 

73S 

— 

38 

13U 


1 

OHteMta 

831 

— 

2S 


Nm York priOM at ISSQpon. 


AaJnjw Sjtos 


107 

154 


HOC 019 
n . 


teMdnUHft 

m 


8 

Kesd Sjteema 

tttjodnmfl 

117 

+ 

10 
. a 
s 

4 . 

■ranted 

MonoHdo# 

RSM 

Mskta 

82 

103 

98 

+ 

+ 

Morttem Food* 

OM 

SHtatact 

131 

+ 

0 

RUC 

vnte 

201 

+ 

17 - 

ffesdeut 

Ms 



15 

13 

20 

17 

Rented 

AptaHdxgft 
Brortnwn* 
CHL Men 

Fannie cam 

S3 

110 

248 

IBB 

- 

. Sum Naan 

Tadpole 

TUxnBI 


722 

781 

sss 

244 

HI 

204 

41M 

ttB 

B7M 

474 

338 

402 

873 


33 

22 

9 

32 

9 

a 

3 

17 

4H 

11 

» 

11 

24 


Downturn in theme parks more than offset by 43% rise in film sales 

Films lift Disney to record 



Pride and joy; the animated feature The Lion King (above) is Disney’s most successful ever 


was still contemplating a new 


tng profits from fllms rose 38 per 
cent on sales up 30 per cent to 


BBV group 
leads in Spain’s 
telecoms battle 


By Tony Jackson in New York 

The success of Walt Disney's 
animated features, especially The 
Lion King, more than offset a 
downturn In theme parks to pro- 
duce record fourth-quarter earn- 
ings of $226m, against a loss of 
S78 hl Group operating profits, 
before losses in Euro Disney, 
were up,23 per emit at $439m. 

For the first time in more than 
a decade, films made more profit 
in the full year than theme parks 
(excluding Euro Disney), at 
$8S6m versus J684m. 

According to Disney, The Lion 
Kxng is now established as its 
most successful feature ever, and 
is on track to be one of the five 
most successful films in history. 
In the final quarter, operating 
Income from films almost dou- 
bled to $189ra on sales up 43 per 
cent to $L26bn. 

The executive most credited 
with this result, Mr Jeffrey Kaiz- 
en berg, made a highly public 
departure from Disney at the end 
of the finanmal year. His job as 
chairman of Walt Disney Studios 
has been divided among other 
Disney executives following a 
reorganisation. 

Operating profits from theme 
parks (excluding Euro Disney) 
foil 18 per cent to $155m an sales 
2 per cent higher. International 
tourist traffic was lower, the 
company said, and costs had 
been written off for the proposed 
Civil War theme park in Virginia, 
which Disney was forced to aban- 
don in the face of widespread 
opposition. 

The company said yesterday it 


theme park in Florida, but had 
yet to decide whether to go ahead 
or what the theme might be. 

Profits from the consumer divi- 
sion, covering the merchandise of 
characters and books from the 
films, rose 33 per cent to $95m on 
sales up 36 per cent at $49Qm. 
This was also due chiefly to the 
success of The Lion King , Disney 
said. 

For the year as a whole, operate 


$ 4 shn Disney the year had 
also been helped by the animated 
features Aladdin and The Return 
of Jafar, as well as by strong 
video sales of older features such 
as The Jungle Bade and Bambi. 

The share of losses in Euro Dis- 
ney foil to S58m, from $415m, for 
the quarto: and $U0m ($515m) 
for the year. Barwhig s per share 
for the quarter were 42 cents, 


against a loss of 15 cents, and for 
the frill year were $2.04, against 
55 cents. 

Full-year net income was 
$Llbn compared with $300m. 

Disney spent S920m on repur- 
chasing 23m of its shares 
May, with $512m of that earning 
in the final quarter. The board 
has now authorised the repur- 
chase of a further 90m shares, on. 
top of the 14m stm authorised 
under the existing programme. 


By Tom Bums fri Madrid 

Coraeta-SRM, a consortium led 
by Banco Bilbao Vizcaya (BBV) 
and by Vodafone, the UK tele- 
communications operator, has 
snatched the lead in a battle to 
obtain a GSM mobile service 
licence in Spain with a cash bid 
of Pta89bn ($688m). The rival 
group Alrtel-ASH, which has the 
US telecoms company AirTouch 
as its main foreign partner, bid 
Pta85bn- 

The two cash offers were well 
above the minimimi ptasobn 
established by rules of the tender 
and they were close enough to 
each other to keep the final 
result of the contest, which wfll 
be announced before the end of 
the year, still open. 

The competing consortia are 
required to make nnHuHwirinp! 
covering industrial investment, 
job creation and research and 
development, in addition to the 

r-ach offer. 

The full details of the bids, 
which were delivered yesterday, 
wifi be examined under six broad 
heading s and they will be 
awarded points under a adjudica- 
tion system drawn up by the gov- 
ernment and by its advisers, Leh- 
man Brothers, the US lank. 

The prize is a licence, as a sec- 
ond operator, to break Into a 
mobile telep hony market that is 
forecast to have a turnover of 


Pta210bn and 2m subscribers by 
1998. The other CSM licence has 
been reserved for Telefonica, the 
government-controlled group 
which, as a result of the tender, 
now faces the first significant 
incursion into its domestic tele- 
communications monopoly. 

BBV, a big Spanish retail bank, 
has a 30 per cent stake in Come- 
ta-SRM and Vodafone has 23 per 
cent. Both companies sharply 
increased their initial stakes in 
the consortium after some of the 
bidding group's original share- 
holders withdrew at the last 
moment fearing the high level of 
investment that was involved. 

DeTeMobil, a unit of Deutsche 
Bundespost Telekom, has 10 per 
cent of CometoSKM’s egtdty and 
«rmaiw shareholding s in Dm# con- 
sortium are held by the domestic 
utilities Endesa, Sevillana and 
Iberdrola and by La C&ixa, the 
Barcelona-based savings bank. 

AirTouch has 16 per cent of the 
rival AirteLASR group and Brit- 
ish Telecommunications, the sec- 
ond technological backer In the 
consortium, has a 7 per cent 
stake. The main finanmal part- 
ners in Airtel-ASR are the domes- 
tic banks Banco Santander and 
Banco Central Hlspano, which 
share 27 per cent of the consor- 
tium's equity, and five regional 
savings hanks which jointly own 
a stake of 16.7 per cent 
Vodafone results. Page 24 


Finance terms stump merger of 
Johnson Matthey and Cookson 


Strong demand for TeleWest 
places £1.8bn value on group 


By Kenneth Gooding, 

MWi ig Correspondent 

Johnson Matthey, the precious 
metals group, and Cookson, the 
specialist industrialist materials 
concern, called off their merger 
last night saying they had been 
unable to agree financial terms. 
If snccessfol the deal would have 
been the largest agreed merger 
in UK corporate history. 

The merged companies would 
have had a market value of 
about £2.5 bn ($4.1bn) and 
become part of the FT-SE 100 
Index. One banker involved in 
the discussions said: "Both com- 
panies had a clear idea of their 
own worth and the gap between 
them was simply too wide. When 
it was obvious no deal could be 
done, we all went out for a 
friendly drink." 


Following the surprise news, 
Johnson Matthey shares fell by 
9p to S65p - tiie price they held 
before the companies confirmed 
negotiations were bring held. 
Coohson’s shares ended 2p up at 
247p, from 251p before talks 
were announced. 

A joint statement stressed that 
relationships remained “excel- 
lent". Johnson Matthey and 
Cookson have a new joint ven- 
ture, Cookson Matthey Ceramics, 
the second-largest ceramics busi- 
nesses in the world and an 
important element in the 
operations of both groups. They 
said they would “co-operate fully 
in the development” of CMC. 

The statement from Mr Robert 
Malpas, Cookson's chairman, Mr 
Richard Oster, its chief execu- 
tive, and Mr David Davies, chair- 
man and chief executive of John- 


son Matthey, added: “We looked 
folly into the ways in which a 
merger might., fairly have 
rewarded shareholders on each 
side. Sadly, we were not able to 
agree a recommendation to our 
respective shareholders and so 
our discussions have now 
ceased.” 

Bankers insist that newspaper 
"leaks” about the talks played 
uo part in the eventual break- 
down in negotiations. 

Mr Richard Malthouse. Cook- 
son’s company secretary, said 
his company would probably 
send a note to its shareholders 
today which would include some 
indication about present trading 
conditions. Johnson Matthey is 
scheduled to announce its half- 
year results tomorrow. 

Lex, Page 22 


By Raymond Snoddy in London 

Shares in the . flotation — of 
TeleWest Communications, were 
six times subscribed and have 
been priced at 182p, valuing the 
UK cable television company at 
£Uftui ($2JJ5bn). 

During preliminary trading in 
London and New York yesterday, 
ahead of the issue of shares, 
there was strong institutional 
interest and deals were done at a 
modest premium with the price 
going up to 195p at me point 
before easing. 

Mr Alan Michels, TeleWest 
chief executive, said he was 
pleased at the price and “real 
pleased that demand was equal 
between the UK and the States”. 

TeleWest, a 5050 joint venture 
between TCI of Denver, the larg- 
est US cable operator and US 


West, the regional telephone 
company, will be the first UK 
cable company to join the Lon- 
don Stock Exchange. Dealing is 
expected to begin in London and 
the Nasdaq exchange in New 
York an November 30. 

Hie I82p pricing, or $2&50 per 
American Depositary Share, 
equals 10 ordinary shares. Of the 
£L8bn valuation on the Telew- 
est’s equity, £L5bn is ordinary 
share capitaL 

The pathfinder prospectus 
suggested a price range of 165p 
and I90p with a total value fin* 
the company of between £L61bn 
and £LS6bn. At the offer price 
the net proceeds are around 
ESSQm. 

Commenting on the response, 
Mr Michels said: “The institu- 
tions now have a much better 
unders tanding of the cable com- 


mercial model. They know they 
are not going to get any moame 
fhi«r year but X think we are 
building a very valuable busi- 
ness." 

It is not dear what impart the 
TeleWest float will have an the 
much Larger flotation of British 
Sky Broadcasting. The satellite 
venture, in winch Pearson, owner 
of the Financial Times, has a 17.5 
per cent stake, has many more 
subscribers than cable and a 
larger revenue stream but less 
scope for offering services other 
than entertainment 

TeleWest has to spend a far- 
ther 21hn to complete its UK net- 
works and is unlikely to be prof- 
itable before 199& 

The company owns and oper- 
ates 16 cable franchises while 
affiliated companies own a fur- 
ther seven. 


Barry Riley 

Waking up to the 


pension scheme 


Here is a warning 
to European 
finance directors: 
beware of repre- 
sentatives of AMP 
Asset Manage- 
ment offering you 
a computer disc to 
check the pros- 
pects far your company pension 
scheme. The results could upset 
you. The self-testing disc comes 
with a report called The Threats 
to Company Sponsored Pension 
Previsions in Europe* which is 
equally careless of its readers’ 
peace of mind. Probably the 
threats are overdone, but it is 
dear that many European com- 
panies have grown complacent 
about their pension costs. 

Only a few European countries 
- have large numbers of funded 
company schemes. The UK and 
the Netherlands feature separate 
corporate funds Invested mainly 
in securities, while German; 
maintains a book reserve system 
in which the liabilities are usu- 
ally ffnanRed through the balance 
sheet Schemes also exist in Swit- 
zerland and Ireland. 

Elsewhere in Europe unfunded 
state schemes predominate. 

These are coming under immense 
pressure from social and demo- 
graphic changes; the big French, 
industry-wide repartition 
schemes are in heavy deficit, and 
unaffordable pensions promises 
are at the centre of the Italian 
budget crisis. 

How will the pressures which 
are undermining state systems 
affect company schemes? The 
report focuses on 15 company 
schemes in the UK, the Nether- 
lands and Germany, plus a Dutch 
industry-wide fund. 

Raising the costs of company 
schemes are demographic factors, 


including longer life expectancy 
and fewer younger employees, 
together with pressures for early 
retirement. 

Second, there is the likelihood 
that governments will try to 
offload state pensions liabilities 
on to employers - for instance, 
through compulsory contribu- 
tions - while at the same time 
corporate taxes may be increased 
to help solve budget problems. 
The UK government has already 
made one raid on pension funds 
by modifying their dividend tax 
exemptions last year. 

Finally, there are the invest- 


Many European 
companies have 
grown complacent 
about their pension 
costs 


men! risks. Returns were unsus- 
tainabty high in the 1980s and 
have tailed off This might even 
be the start of an offsetting 
period of poor returns. If inflation 
stays low, pension funds can live 
with low nominal investment 
returns. But the great days of big 
surpluses and contribution holi- 
days will have to end. 

In the US companies have been 
distancing themselves from these 
threats by switching from 
defined benefit to defined contri- 
bution structures (which now 
account for almost 60 per cent of 
corporate pension plan assets). 
Not only is the investment risk 
transferred to employees but it is 
much harder for companies to be 
forced through retrospective leg- 
islation to pay for upgraded bene- 


threats 

fits (such as pensions for unmarr- 
ied partners). 

Why is AMP adopting scare 
tactics? It would like to break 
into the pension fund manage- 
ment business in Europe, and it 
no doubt has an interest in upset- 
ting the the status quo. But as a 
subsidiary of the antipodean 
insurance giant Australian 
Mutual Provident it also has an 
actuarial input on the impending 
pensions crisis. 

Australia has implemented a 
Superannuation Guarantee 
Charge, a compulsory employer 
pension fund contribution that 
will rise from 3 per cent to 9 per 
cent of pay (12 per cent including 
employee contributions) by 2002. 
In the UK, the Labour Party’s 
Social Justice Commission has 
just proposed compulsory pay- 
ments into second-tier funded 
schemes, and the National Asso- 
ciation of Pension Funds has 
warmed to the same theme. 

In these circumstances compa- 
nies running their own pension 
plans would face a progressive 
loss of control of the funding 
costs and benefit structures of 
the schemes. According to AMP, 
they should watch developments 
very closely and consider switch- 
ing to defined contribution fund- 
ing or to external providers. 

There is an element of special 
pleading in this report Insurance 
companies are, after all, keen to 
recapture some a£ the company 
pensions business they have lost 
over the past 40 years. Bat AMP 
is right to argue that now is the 
time for companies to stop being 
complacent about their pension 
costs and start to worry. 

* Published by AMP Asset Man- 
agement in conjunction with First 
Consulting . Price £200, from AIK - 
son Lobo on \4A) 171 454 9779. 



This announcement appears as a matter of reared only 

Management Buy-out 



£16^00, 000 


Led by: 

■J . 3i pic 

Equity funds provided fey: 

• 3i Gipupplc h- 

Debt facilities provided by: 
NatWest Maiice6;Acquisitieai Finance 

, Manag ement lead adviser: 
Coopers ^ Lybrand, Binninghara . ; 

Management legal adviser: 

Edge & Ellison, Birmingham 




iMrinbUh ttr/ 


3i pic, 91 Wanatoo Road. London SEI 8XP. Td: 071 928 3131. Fax: 071 92S005&. 
3i Oraop pie ami 3i pic at itgdond is it* Emhia of Invexana Moat bj 8D 




FINANCIAL TIMES WEDNESDAY NOVEMBER 23 *9*4 


t it'* 1 


INTERNATIONAL COMPANIES AND FINANCE 


Improved Saab-Scania 
boosts profits at Investor 


By Christopher Brown-Humes 
in Stockholm 

Investor, the central holding 
company of Sweden’s powerful 
Wallenberg empire, saw pre- 
tax profits surge to SKriL28ba 
($31lm) in the first nine 
months, after a strong perfor- 
mance from Saab-Scania, its 
wholly-owned vehicle and aero- 
space unit 

The result, which, compares 
with a SKrl56m profit in the 
same 1993 period, came after 
Saab-Scania rebounded to a 
profit of SErtlSbn after finan- 
cial Items, from a SKr362m 
loss. 

Saab-Scanla’s performance 
has been driven by higher 
sales and earnings from its 
■Scania track and bos division. 
These offset falling sales and 
increased losses at Saab 
Aircraft & Defence. 

Investor, which apart from 


SaahScania has strategic hold- 
ings in leading Swedish compa- 
nies such as Astra, Ericsson, 
Stora and Electrolux, said the 
value of its investment portfo- 
lio on September 30 was 
SKr28.9bn, down 1 per cent 
from the start of the year after 
adjusting for net changes. 

The group expanded its port- 
folio through file purchase of 
its Export-Invest stablemate 
earlier this year. 

The result included SKr 710 m 
in capital gains and SKr477m 
in dividend receipts. Shares 
were sold for a net SKr852tn. 

The group’s net worth 
amounted to SKr40.5bn, or 
SRr203 a share, on September 
30 against SKr37.5bn, or 
SKr206, at the start of the year. 
Net debt has fallen to 
SKr4.61bn from SKixL85bn. 

Saab-Scania saw sales climb 
to SKr22.2bn from SKrl7.6bn, 
while operating income after 


depreciation soared to 
SKr£32bn from SKrlOSm. 

The star performer was 
Scania, where sales jumped 34 
per cent to SKrl8.8bn and oper- 
ating income after depreciation 
rose to SKr3.45bn from 
SEiSllm. Sales of trucks and 
buses rose 28 per cent to 23.500 
nnftSj hel ping the division to 
lift its share of the west Euro- 
pean truck market to 12.9 per 
cent from 1L7 per cent. 

Orders rose 61 per cent in 
volume terms, to 29,100 trucks 
and buses. 

S«ah Aircraft & Defence was 
dragged to a deeper operating 
loss of SKr242m from SKr227m, 
mainly because of lower sales 
of commercial aircraft. Saab 
Aircraft, which manufactures 
Saab 340 and Saab 2000 
regional airliners, saw sales 
drop to SKr881m from 
SKrL35bn. while orders fell to 
SKr395m from SKr667m. 


La Corporacion revamps unit 


By Tom Bums bi Macfrid 

La Corporation Banesto, the 
Spanish industrial group, is 
planning to recapitalise Astu- 
rians de Zinc, the world's 
fourth-largest producer of zinc 
metaL 

Analysts believe this is a pre- 
liminary step towards La Cor- 
poraddn reducing Its majority 
sfoke in the company. 

La Corporation, owned by 
Banco Espafiol de Cr6dito 
(Banesto), has told the Madrid 
stock exchang e commission it 
intends to re-adjust Astu- 
riana's balance sheet, by first 
reducing the company’s capital 
by Ptal5.4bn ($ll9m). It will 


then, through a debt-to-equity 
conversion. Inject fresh funds 
of Ptal5bn in a rights issue 
which will be wholly- 
subscribed by La Corporation. 

La Corporation will pay 
above market price for Astu- 
riana's new shares: in any 
event, it will not pay less than 
Ptal.600, compared with the 
current trading price of just 
over Ptal.500. The deal will 
raise its holding in the 
company from 51 per cent to 
around 55 per cent. 

Analysts said the financial 
engineering would signifi- 
cantly strengthen the zinc 
company’s balance sheet by 
reducing its debt from PtaSltjn 


to PtalSbn. Also, an upturn in 
zinc prices indicates Asturian a 
is set to increase profitability. 
It is expected to turn forecast 
losses this year of Pta3.2bn 
into profits of Pta2.5bn next 
year, and of Pta7Jbn in 1996. 

La Corporation realised 
Ptal.6bn in September when it 
sold 23 per cent of its share- 
holding in Asturiana to some 
30 international and domestic 
institutions at Ptal.500 a 
share. 

Analysts believe it will begin 

making similar block tra ding 

disposals next year as the 
value of Asturiana rises, and 
could eventually withdraw 
altogether from the company. 


UAP in accord for younger staff 


By Anckew Jack hi Paris 

Union des Assurances de Paris, 
one of France’s largest insur- 
ance companies, yesterday 
announced a labour contract 
with the government so that it 
can take on younger people. 

The group said its workforce 
was too old - with an average 
age of between 35 and 45 - and 
it wanted to employ younger 
people. About 250 of the exist- 


ing staff will be going 
part-time and the remaining 
150 will take on more flexible 
hours. 

UAP, privatised earlier this 
year, will hire 400 new staff 
next year, including large 
numbers of long-term unem- 
ployed, while placing an equiv- 
alent number of staff on 
part-time and flexible con- 
tracts. 

The accord, signed by Mr 


Jacques Friedmann, UAP’s 
chairman, and Mr Michel 
Giraud, the French minister of 
labour, will require the state to 
pay up to 30 per cent of the 
salary of those working 
part-time for up to five years. 

In exchange, some 40 per 
cent of those hired by UAP 
daring 1995 will have been 
unemployed for more than one 
year, and aged over 50. Tbe 
rest will be younger than 30. 


Overseas 
costs erode 
growth at 
Vodafone 

By Alan Cane in London 

Vodafone, the UK market 
leader in cellular phones, 
returned better than expected 
interim profits in spite of the 
i impact of fraud and interaa- 
l tional losses. 

Pre-tax profits were £186. 4m 
I (3292.5m) against forecasts of 
between £175m and £18Sm and 
7 per cent ahead of last year’s 
£174.5m. Turnover rose 44 per 
cent to £560.7m from £389 An 
last year. Earnings per share 
were 3.92p against 3.90p in 
1993 after adjustment for the 
July 1994 capitalisation issue. 

The interim dividend was 
raised 20 per cent to l.64p, 
reflecting the underlying 
growth of the business, accord- 
ing to Mr Ken Hydon, finan- 
cial director. 

He said the company had 
continued to develop its 
operations overseas. Strong 
growth in the UK had been 
substantially offset by 
increased start-up costs over- 
seas. amounting to £40m In 
1993 against £19m last year. 

In the UK, the number of 
subscribers rose by 263,000, an 
increase of 140 per cent over 
growth in the same period last 
year. 

Vodafone has more than 
1.45m subscribers connected to 
the network, but the “churn” 
rate - a measure of the pro- 
portion of subscribers who 
leave the network - rose from 
21.5 per cent to 26.5 per cent. 
The company said much of the 
cborn was the result of fraud, 
which bad cost the company 
some 1 per cent of UK turn- 
over in addition to ordinary 
bad debts, also about 1 per 
cent of turnover. 

It blamed sub-dealers, acting 
between clients and retailers, 
who secured commissions on 
the connection of phantom 
customers to the network. 
Other causes included cloning 
or re-chipping of cellular - 
phones, still legal in the UK. 

Vodafone operates overseas 
through associates, subsid- , 
iaries and trade investments. 
So for. only the operations in 
Hong Kong and Malta are 
profitable. Start-up costs could 
be as large again in the second 
half. 

Lex, Page 22 


Sorting 

Trygg-Hansa has 

W hen Mr Lars Tinmen 
took over as chief 
executive of Trygg- 
Hansa, the Swedish insurer, 
three weeks ago, he knew his 
priority would be sorting out 
the group's troubled relation- 
ship with its loss-making US 
associate. Home Holdings. 

What he did not know was 
how quickly those problems 
were to intensify. Home’s 
share price more than halved 
between November 4 and 
November 17, and last week 
the group's senior debt was 
downgraded by Moody's. 
Trygg’s own share price fell 8 
per cent last week. 

Trygg-Hansa bought into 
Home, a company more than 
twice its size, in 1991 to help it 
become one of the world’s lead- 
ing industrial and commercial 
insurance groups. The Swedish 
group holds 64^ per cent of 
Home’s capital and 47.2 per 
cent of Its votes. 

Home is one of the largest 
US property and casualty 
insurers, with 1993 gross pre- 
miums of 32.42bn. Professional 
liability is a particular special- 
ity, and the group ranks as the 
market leader in insurance for 
lawyers. 

The US group has run into 
deep problems, the chief of 
which has been its exposure to 
long-tail environmental and 
professional liability claims. 
These have forced it to 
strengthen its reserves by 
$465m over the past two years. 
Its difficulties this year have 
been compounded by high 
leverage, rising US interest 
rates, intensifying competitive 
pressures, and earthquake and 
cold-weather losses. 

Nine-month figures from 
Home and Trygg reflect the 
impact Home suffered a S131m 
loss for the period, after 
reserve-strengthening of 


out problems at Home 

a thorn in its US side, writes Christopher Brown-Humes 


Home Holdings 


-v-l 

. t s 

IW.tr. ■■■ * I 





twsThuoeH . .-taas; • •- 
’ Chief executive of Trygg-Hansa ■ 

3175m, and Trygg was hit by 
SKrl.4bn ($190.9m) in Home- 
related losses, dragging it 
to an overall deficit of 
SKrl.76bn. 

Ideally. Trygg would like to 
be rid of Home, or at the very 
least, substantially reduce its 
ownership. Mr Thunell says 
Trygg should concentrate on 
what It does best - that is, its ■ 
successful life and non-life 
business in Sweden. This dif- 
fers from the fritemwtinrialigfc 
approach of his predecessor, 
Mr Bj&m SprSmgare, who was 
forced to quit the company 
during the summer, partly 
because of the problems at 
Ho me . 

However, untangling itself 
from Home is not prating easy. 
Last December, Home 
launched an initial public 
offering aimed at reducing its 
leverage and cutting Trygg’s 
ownership sharply. 

The offer, however, raised 
less than half the 3355m origi- 
nally sought and Trygg was 
left with a for higher stake in 
the company than it wanted. 
S ince then, it has tried to find 
a partner w ilting to taftp some 


r - 

•„ Vm -' - 

af Home off its hands, but the 
search has proved fruitless. 

The problems have been 
crystallised by Home’s need to 
strengthen its balance sheet 
following its latest reserve- 
strengthening. It wants to raise 
$25Qm in new capital through 
an equity or debt issue, or a 
bank credit. Trygg has also 
said it is willing to convert 
same or all of a 3170m loan to 
Home to equity. 

T he trouble is that the 
collapse ‘ in Home's 
share price - down to 
34.25 early yesterday from a 
listing price last December of 
317 - and the Moody’s down- 
grading have made the refinan- 
cing task more difficult. 

Moody’s said its decision to 
cut Home's senior debt rating 
to Ba2 from Baa3 reflected 
“continued adverse loss devel- 
opment in Home’s long-tail 
linns of business, 'such as pro- 
fessional liability, and from 
environmental, asbestos, and 
breast implant litigation”. It 
also warned that Home might 
have to strengthen its reserves 
still further. 


. This leaves Trygg with * 
dfianma. If Home cannot refin- 
ance itself any other way, does' 
it bail ont its US associate in 
. the hope that the group's per- 
fonnance picks and.it .can 
sen out at ah acceptable price, 
in the long term? Or doesit 
reduce its . commitment ; and 
leave the Home ip sort out its 
own affairs? There are other: 
possible solutions, in c luding a 
safe by Home of some of Its 
operations. 

Trygg executives say the 
worst-case scenario would be 
for Trygg to write off its entire 
investment in Home, a move 
which would reduce TryggV 
solvency ratio to around 80 per 
cent from 132 per cent 

“We have no more oblige 
tions. apart from some minor 
reins urance commitments’'* 
said Trygg. The current value 
of Home’s equity in Trygg’s - 
books Is SKrS.lSbn and the 
debt SKT1.33bn. 

.Analysts, however, warn 
that if Trygg does try to walk 
away, it could face lawsuits 
from disgruntled policyholders 
and shareholders. - 

The situation is going to 
require all of Mr ThunelTs 
expertise in crisis management 
expertise . gleaned while - he 
was president of Securmn, the 
asset management group set 
up last year to handle the 
-faffed loans of Nordbanken, the , 
biggest casualty of Sweden’s 

1992 hawking c risis. 

Mr Thunell knows Trygg can 
ill-afibrd another blow to its 
reputation after the hugs 
losses it suffered following the 
collapse of Goto AB and 
Svehsfca’Kredit in 1992. 

He also knows Trygg cannot 
afford the distraction of Home 
when it needs to concentrate 
■ on the Swedish domestic mar- 
ket, where competition is 

intensifying: 


Cost-cutting sustains recovery at OMV 


By Ian Rodger in Zurich 

OMV, the Austrian integrated 
petroleum and chemicals 
group, reported a S chi 23m 
(JlL2m) pre-tax profit in the 
third quarter, as its recovery 
from two years of losses con- 
tinued, driven mainly by cost- 
cutting. The company recorded 
losses of Sc hi 90m for the 


same period last year. 

Sales at the partially- 
privatised group rose 8.6 per 
cent to Sch2L07bn, reflecting 
"slightly improved” overall 
market conditions. However, 
the exploration and production 
sector remained in loss due to 
low crude oil prices and a weak 
dollar. 

The directors said they 


remained confident the group 
would achieve a profit in the 
Adi year. 

The gas division was once 
again the largest contributor to 
earnings, with third-quarter 
pre-tax profit almost 
unchanged at Schsaom. Turn- 
over was up 10 per cent to 
Schl.74bn. 

Ue refining division saw its 


lowest margins tines 1969, with 
sales down L5 per cent to 
SchlL7hn, mainly because of 
lower prices for ail products. 
The division posted profit of 
SchTOm profit, 12.5 per cent 
lower than in the third quarter 
of 199a 

Profit in the marketing divi- 
ston was down nearly 20 per 
cent to Schl30m. 


All of these Securities hove been sold. This announcement appears as a matter ofrecord only. 


TECHNIP 


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Rulel44A American Depository Shares 

Price FF 257 per Share 


These aentrilm have ru* been registered tmdtr the Seamtus Act qfl933cmd may vol be offered or sold loithm the United Stale s 
except as permitted under the Securities Act aflOSS and the applicable State seeurit iea laws. 


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£75,00*000 

HMC FINANCING 3 PLC 

Class A 

Mortg a ge Becked Floating Bale 
Notes due December 2018 
Notice 16 hereby given that there 
will be a principal payment of 
£2,117.00 per Note on the Interest 
payment date December 15, 1994. 
The principal amount outstantfng 
per Note will be £36,506.49. 

By: Tba Chase Manhattan Bask, N X 
lanSre, Agent tak 
November 23. 1994 


ffl Ba^kAmerica ' 
Corporation 

US *500,000.000 

Floating Rate Notes 
Due February 7997 

Fnr the pcrkxl Ikirti November 23. 
IW4 to Hebnwry 23. IWS the Nous 
will cjrry an interest rate of 6-375'* 
pci annum with nn interest amount 
of US WI4.5H per US $50000 
principal amount of Notes payable 
on February 23. 7W5. 

BwAolAmwteaNTaSA. (XX 
London -Agant Bank (II 


PAN - HOLDING 

SecMl* Aonayroc - Luxembourg 

As of November 15. 1994, the 
unconsaUdated net esoot vsAie 

was USD 350.5KL283.51 Le. 
USD 637 J7 perohareo! USD 200 
par value. 

The consolidated net asset value 
per shore amounted as of 
November 15, 1994 to USD 67&QS. 


MBE FINANCE N.V. 

TRANCHE A 
U.S. S30.W W .000 

GUARANTEED DUAL BASIS BONDS DUE 2004 

TRANCHE B 
. 00 0. 0 00 

GUARANTEED DUAL BASIS BONDS DUE 2004 

In accordance with the provisions of the above mentioned Notes, nodes is 
hereby given as Wbvw 

TRANCHE "A" 

* Interest penod; November 21. 1994 to May 19, 1935 (179 days) 

* Interest payment date: May 19, 1895 

* Intered rate: 6.73% per annum 

* Cotton amount payable per Bond of US $ 1 ,000.000: US $ 33.56? 5 0 
TRANCHE “B" 

* Interest period: November 21. 1994 to May 19, 1995 (179 days) 

* Interest payment date: May 19 , 1995 

* Intsest rate: 6.70% per annum 

* Coupon amount payable per Bond of US$ 1.000,000: U3 S33.313.88 

AGENT BANK 

BANQUE INTERNATIONALE BUjII 
A LUXEMBOURG mZ/ 


1 fcw* MMJ'imi IVnuwuii tor ta 


1 a w mm at w 


■ Wrt Ttw oaolaDon at potf maa 

*■ pnana preen c* •*** e 


i*acsJ «un puna pod km, dr, tan 
wre m W pod n w fe,. nv pod 


Hill Samuel Overseas Fund 

SICAV 

Luxembourg, 1 1, rae Aldringen 
R.C Luxembourg N® B8422 

Notice of Annual General Meeting 

Notice is hereby given that the Annual General Meeting of 
Shareholders wiU be held at the registered office of the Company 
on 9th December 1994 at 130 p-m. with the following agenda: 

Agenda 

1. Submission of the management report of the Board of the 
Directors and of the report of the Authorized 

Auditor. 

2. Approval of the animal accounts and appropriation of the 
results as at 30th September 1994. 

3. Discharge to be granted to the Directors for the proper per- 
formance oftheh duties for the period ended 30th September 

4. Receipt of and action 00 nomination for election of the Direc- 
tors for a new statutory term of one year. 

5. Any other business. 

The shareholders are advised that no quorum is required for 

the items of the agenda and that the decisions win be taken at the 

simple majority of the shares present or represented at the Meeting. 
Each share is entitled to one vote. A shareholder may act at any 
Meeting by proxy. 

By order of the Board of Directois 


JF Philippine Fund Inc. 

reminder of expiry of subscription rights for 
warrantholders 

final ret»crip,ion d«e for exerebe rf * e nmou it 30th December 

,he h .°“ er ,* he ri « ht *0 subscribe foe one ordinary stnre 
1 U .B“ rfJF Philippine Fund, Inc at 

USS 10.00 for each ordinary share, payable in foil on subscription. 

SST™ ^ S’” Dramb " 

Kc^iSkmf And Warrant uent together wirh a iienii n-i _ 

re *^STRAR AND WARRANT AGENT 

54 Beckenham Rood 

Beckenham. Kent RR3 4TI;, UahedK ^ „ 

TO_- O 8 I -663 3079 

U^«W» *78 7001 

VMerie Joffiflg (44 71 ) 633 5353 




Sovereign (Forex) Ltd. 
24hr Foreign Exchange 

Margm Trading FocSfy 
Compoftew Prices 
Fox Service 
U 071^31 9188 
fac a7T-93|7] T 4 


MbSWIWOE 


Union Bank of Switzerland 
Finance N. V. 

U>S. Si 50,000,000 
Guaranteed Floating State 
Notes due 1996 

if* with the provisions of 

grsas 

per annum. 

swsssssa ® 

jtih Noremiier, 1994 


o*' 








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For -the; : 'sixteenth;; -sttaressiyer Year^'^feihanJh^. 

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<8 1994 Qobank, N.A. Submit » 1 member of 5BV inJ IMHQ 








26 


FINANCIAL TIMES- WEDNESDAY NQVE^SER 23 l994 


INTERNATIONAL COMPANIES AND FINANCE 


Price cuts take their toll on NTT profits 


By MIcMyo Nakamoto 
In Tokyo 


NTT, Japan's largest 
telecommunications company, 
suffered a 66 per cent MI in 
non-consoli dated recurring 
profits - before extraordinary 
items and tax - in the first 
half, largely as a result of price 
cuts. 

NTT, which was listed in 
New York and London this 
year, said sales dropped 2 per 


cent to Y2£56.7bn from a previ- 
ous Y2.9il.6bn mainly because 
of significant price cuts on 
long-distance calls, where NTT 
faces growing competition 
from reoently established tele- 
coms companies. Recurring 
profits fell to Y30Jbn ($360m) 
from Yl0&9bn- 
A maximum price cut of 
10 per cent was introduced on 
the longest routes, depressing 
first-half revenues by Y95bn. 
This was an improvement. 


however, on the Y135bn impact 
the company had forecast. 

Sales of equipment, such as 
phones for business and home 
users, were also lower because 
of tough competition, although 
sales of facsimile machines 
increased. 

NTT saw its cost base rise in 
its telecommunications busi- 
ness as it spun off various 
businesses which had been 
conducted in-house, and depre- 
dated fixed assets such as digi- 


talised switches and fibre-optic 
cables being introduced in 
preparation for advanced com- 
munications services. 

NTT expects increased com- 
petition in the long-distance 
sector will continue to affect 
results in the second half. The 
company is planning to apply 
to the ministry of posts and 
telecommunications for a rise 
in basic telephone charges. 

Revenues for the full year 
are expected to rise to Y5^26bn 


from a previous Y5,809bn. 
belped by revenues from pre- 
paid telephone cards which are 
expected to total Y72.4bn. 

Costs, however, are forecast 
to rise by about Y5bn to the 
second half as a result of a 
voluntary retirement pro- 
gramme and higher depreda- 
tion costs, taking recurring 
profits down to YlDibn from a 
previous Y109.5bn. Net profits 
are forecast at Y45bn against 

Y41.4btL 


Slack fuel Heatwave warms electricity profits 

demand hits 
Japan’s gas 
companies 


By Emiko Terazono 
in Tokyo 


By Emiko Terazono 


Japan's gas utilities were hit 
by sluggish demand for fuel 
during the exceptionally hot 
summer and a cot in charges 
in order to pass on the benefits 
or the strong yen to 
consumers. 

The companies reported 
sharp falls In household 
demand as families refrained 
from cooking hot meals due to 
the record temperatures, and 
overall use of hot water fell. 

Tokyo Gas, Japan's largest 
erty gas supplier, fell into the 
red, posting a half-year 
recurring loss - before 
extraordinary items and tax - 
of Y4bn ($40m), on a 5.7 per 
cent decline in sales to 
Y347bn. The company reported 
after-tax losses of Y4bn. Gas 
sales to households plunged 

10.2 per cent while the rate cut 
hit sales by Y9.3bn. 

For the fall year to next 
March, the company, which 
has more than 7.5m customers 
mainly in Tokyo and five 
prefectures, expects a 25-9 per 
cent fall in recurring profits to 
Y27bn on a IB per cent decline 
in sales to Y802bn. 

Interim recurring profits at 
Osaka Gas dropped 88.5 per 
cent to Y1.3bn while sales fell 

4.2 per cent to Y274.3bn. 
After-tax profits plunged 83.6 
per cent to Y948m. Sales of gas 
to households fell 10.8 per 
cent, while industrial demand 
rose 8.7 per cent due to an 
increase in nsage of 
gas-fuelled air conditioning. 

For the foil year to next 
March the company expects an 
18.1 per cent decline in 
recurring profits to Y31bn on 
a 23 per cent fell In sales to 
Y621bn. 

Osaka Gas is Japan's second 
largest city gas supplier, 
servicing more than 5.5m 
customers mainly in Osaka, 
Kyoto and Kobe. 


Uta&es 


Interim profits 
at Japan's elec- 
tric power com- 
panies were 
supported by 
the surge in 
electricity 
demand due to the heatwave 
which hit the country in the 
summer, and the economic 
recovery. 

A rise in electricity demand 
for air conditioning helped the 
nine leading electric utilities, 
excluding Shikoku Electric 
Power, to post strong increases 
in recurring profits - before 
extraordinary items and tax. 
The companies were hft last 
year by an unus ually cold sum- 
mer and cuts in electricity 
charges. 

Lower fuel costs due to the 
yen's appreciation compen- 
sated for depreciation charges 
and lost income from farther 


Interim results to September 1994 (Ybn) 

Company 

Sales 

Change on 
year <%) 

Recurring 

profit* 

Change on 

year (%) 

Net 

prom 

Change on 
year (%) 

Tokyo 

2,5223 

+7.4 

98.9 

+68.9 

54.2 

+VUL2 

Kama! 

1,289-9 

+7.8 

81.3 

+25.0 

36 2 

+72.0 • 


1,033.4 

+4.9 

47.7 

+23.9 

24.7 

+39.6 

TobokU 

-MX aOraentroY Kma 

707.7 

mn 

+8.7 

38.6 

+29.3 

23.1 

+709 

Sourcnr ccapanr nptrtt 


electricity rate cuts. Lower 
interest rates helped cut debt 
service payments. 

Tokyo Electric Power said 
record temperatures led to a 
10.3 per cent rise in the compa- 
ny's total electricity sales 
volume. 

The further cut in charges 
squeezed the company's earn- 
ings by Y46.4bn ($471m). but an 
increased sales volume covered 
the loss. 

For the second half, the com- 
pany expects the cut in elec- 
tricity fees will affect its sales 
by Y44bn, but forecasts full- 
year sales to rise 4.8 per cent to 


Y4,950bn on a 15.7 per cent 
increase in recurring profits. 

Kansai Electric Power saw 
its first increase in industrial 
demand in three years. Total 
electricity sales voLume rose 
10.2 per cent, the first 
double-digit increase since 
1973. 

For the full year to March, 
the company forecasts a 173 
per cent increase in recurring 
profits to YL30bn on a 5.4 per 
cent rise in sales to Y2£00bn. 

Chubs Electric Power said 
household demand for electric- 
ity rose 14.2 per cent and 
industrial demand increased 


by 2.9 per cent 

The company revised 
upwards its initial full-year 
forecast It now sees recurring 
profits rising 11 per cent to 
Y90bn on a 3.3 per cent 
increase in sales to Y2^220bn. 

Electricity sales volume at 
Tohoku Electric Power grew 
9.1 per cent. The company 
posted a sales and profit rise 
for the first time in three 
years. 

For the full year, the com-' 
pany forecasts sales to rise 42 
per cent to Yl,400bn on a 
recurring profit increase of 8 
per cent to Y85bn. 


Jitters on the Japanese stock market 


Investors fear the 
Nikkei index may 
drop even further, 
writes Emiko 
Terazono 


Japan 


NJM(4225kxtex 
22.000 — - 


21.000 


w 


hen the Nikkei index 
slid below 19,000 to a 
nine-month low yes- 
terday. there were renewed 
fears that farther weakness in 
the Tokyo stock market would 
harm the fragile recovery in 
Japan's ecomony currently 
being revealed by companies' 
interim naming g 
The immediate cause of the 
decline has been the recent 
sharp fell in Wall Street and 
Sony's announcement last 
week that it was writing 
Y265bn ($2.7hn) off the value of 
its US movie subsidiary. The 
consumer electronics compa- 
ny’s share price has fallen by 
11.7 per cent in the past three 
days, dragging down the whole 
market 


20.000 r 


19.000 - 


181700 


17,000 



lead to a general rise in share 
prices. But, says Mr Alex Kin- 
mont, a strategist at Morgan 
Stanley in Tokyo, these rea- 
sons for owning stocks did not 
materialise”. 

Domestic institutional inves- 
tors have been constrained 
from sharply increasing their 
share holdings. Ranks , which 
need to offset their losses on 
bad loan write-offs, have been 
selling their long-term 
holdings. 


IBjOOQ 


R 


1904 


Sap 


Suunx FT QraptHa 


There have also been linger- 
ing fears over the health of the 
country’s banks. Worries about 
the stability of Japan's finan- 
cial system hit the stock mar- 
ket this time last year follow- 
ing the banks' poor half-year 
results, and some investors, 
expecting another set of poor 



BANK OF CREDIT AND COMMERCE INTERNATIONAL 
(IN LIQUIDATION) 


NOTICE TO CREDITORS 


Proposed Agreement with Majority Shareholders 
and Pooling Agreement with fCIC 


Trie Liquidators of Bank of Credit and Commerce International SA ("BCCI SA"), 
Bank of Credit and Commerce International (Overseas) Ltd (‘BCCI Overseas') 
and Credit and Finance Corporation Ltd ("CFC") are in the process of sending 
out letters (with attachments) to creditors relating to: 

■ a Proposed Agreement with the Government of Abu Dhabi on behalf of the 
Majority Shareholders of BCCI Holdings (Luxembourg) SA (“Holdings") 
under which US$1 ,800 million will be paid to trie Liquidators of BCCI SA. 
BCCI Overseas, CFC. Holdings and the principal ICIC Companies for 
distribution to unsecured creditors: 

* a Proposed Pooling Agreement whereby the assets of the principal BCCI 
companies and the principal ICIC Companies will be pooled 
distributed rateabty amongst creditors. 


and 


Trie court in Luxembourg will con side - whether to approve the 
Proposed Agreement with the Majority Shareholders and the Proposed ICIC 
Pooling Agreement at hearings to be held on 30 November and 
1 December 1994. 


The High Court in London will consider whether to give such approval at a 
hearing on 19 December 1994 at 9.30 am. 


Trie Cayman Islands Court will consider approval at hearings to be held on 

12 and 13 January 1995. 


If any creditor requires further information, or intends to appear or 
be represented at the court hearings, he or she should contact, for 
BCCI SA - England, Creditors Claims Department, Citadel House, 
5-11 Fetter Lane, London EC4A IBP; for BCCI SA and BCCI 
Holdings (Luxembourg) SA, Airport Centre, 5 Rue Hohenhof, L-1736 
Senningerberg, Luxembourg; for BCCI Overseas and CFC, the 
Creditors Group, PO Box 1359, One Capital Place, George Town, 


Grand Cayman, Cayman Islands, BWI. 

Submission of Claims 

If any creditor has not yet received a proof of debt form and would like to 


submit a claim, please write to the appropriate Liquidators at one of the 
addresses noted above. 


This notice ONLY applies to BCG SA and BCCf Overseas and their branches 
and to CFC. 


results, are taking profits 
ahead Of the h anks ’ framings 
announcements over the next 
two days. 

The market's current decline 
started back in June when the 
Nikkei index stood at around 
21,000 and when overseas fund 
managers, who had been 
aggressive buyers early in 
the year, called a 
halt 

Many of the overseas inves- 
tors had initially hoped that 
aggressive deregulation of 
many Japanese industries, rig- 
orous restructuring by some 
companies, and hopes of an 
easing of short-term interest 
rates by the Bank of Japan, 
would boost the economy and 


etail investors have 
been virtually absent 
from the stock market 
since the Nikkei average 
started its tumble in 1990. soon 
after r eaching an all-time high 
of nearly 39,000 in December 
1989. 

Although some analysts 
have hoped that a rally led by 
retail Investors similar to that 
of the UK and US a few years 
ago would pluck the stock mar- 
ket from its current slump, the 
small private investors have, 
in feet, looked for safety with 
bank deposits. 

Some analysts believe that 
share prices will not rebound 
without a “selling climax”, 
allowing prices to fall to a 
point where investors regard 
the shares as fair value; others, 
however, are worried that 
further selling could push 
the market into free-felL 
See World Stock Markets 


Thai group seeks to 
raise $80m in IPO 


By Victor Mallet 
in Bangkok 


Advance Agro, the pulp and 
paper subsidiary of the Soon 
Hua Shag group of Thailand, is 
seeking to raise more than 
SSOm through an initial public 
offering next month to help 
finance a 8650m pulp and paper 
mill on Thailand’s eastern sea- 
board. 

Executives from Advance 
Agro and Barclays de Zoete 
Wedd. the international lead 
manager for the offering, are 
currently on an international 
roadshow to publicise the 
IPO. 

SHS. a leading agro-indus- 
trial group which trades rice, 
tapioca and other products, is 
offering one-tenth of the 
enlarged capital of Advance 
Agro. or 36m shares, to the 
public at an estimated BtS5 to 
BtfiO a share, depending on the 
outcome of the book-building 
process. 

About 30 per cent of the new 
shares mil be allocated to for- 
eign investors. 

A further 19m shares have 
been sold to the project's main 
financial backers - Bangkok 
Bank, Thai Farmers' Bank, 
Krung Thai Bank, and the 
Commonwealth Development 


Corporation - at Bt40 a 
share. 

The new pulp and paper mill 
is expected to begin production 
in early 1996 and Is designed to 
meet the growing demand for 
paper in Thailand and the 
region. 

Advance Agro intends to 
focus on the domestic market 
but could export up to one-fifth 
of its output to C hina, Singa- 
pore and Hong -Kong. 

Mr Yothin Dumnemchan- 
vanit, managing director, said: 
“Demand for paper in Thailand 
and throughout the Asia 
Pacific region is increasing by 
more than 10 per cent a year. 

“Per capita consumption of 
paper in Thailand is only about 
30kg per year, compared to 
more than 200kg per year in 
Singapore, Japan and the US, 
indicating huge future growth 
potential for the market” 

The new plant will generate 
its own electricity and produce 
up to 175,000 tonnes a year of 
bleached eucalyptus kraft pulp. 
It will supply its own paper 
mill, with a capacity of 217,200 
tonnes of coated and uncoated 
printing and writing paper, 
and that of its existing wholly- 
owned subsidiary Hi-Tech 
Paper, which operates a 41,000- 
tonnes a year paper min. 


Wesfarmers, MRI in venture 


Wesfarmers, the Australian 
diversified rural services and 
resources group, said yester- 
day it had entered a joint ven- 
ture with Medical Research 
Internationa] to look at coal- 
related projects in China, 
writes Nikki Tait 
MRI is a vehicle for Mr Oei 
Hong Leong, the Hong Kong- 
based entrepreneur, ft recently 


announced that it would head 
a consortium to build a 
AOJSra (USS90m) coal slurry 
pipeline in China. 

Wesfarmers and MRI said 
they had last month met Mr 
Wang Shenghao, China’s min- 
ister for coal, to “explore 
opportunities for co-operative 
coal-mining ventures in 
China”. 


1# 



NEWS DIGEST 


TDK recovers in 
first half with 
39.8% increase 


TDK 


Sham price (V) 
ftOOO 


4,750 


4,500 


4^50“ 


4,000 2 


3,750 



1994 
Source: FT.<5rBpha». 


TDK of Japan, the 
world's largest maker 
' of magnetic tapes and 
a leading producer of 
floppy discs, yesterday 
• si gnalled that it was 
polling out of a three- 
year profits decline, 

: writes William Daw- 
kins In Tokyo. A 
revival in demand for 
electronic components 
from US and Asian 
nrmtputer industry cus- 
tomers more than off- 
set the continuing 
weakness in Japanese demand, to fuel a rise in 
current profits - before tax and extraordinary 
items - of 39.8 per cent to Yl2.19bn ($124m) in 
the six months to September. 

The computer products improvement has 
continued in the current six months, due to. 
stnrager-than-expected demand for magnetic 
heads for hard disk drives because of the 
expansion in personal computer sales. As a 
result, TDK forecast full-year profits would 
rise by 41.2 per cent to Y205n, above analysts' 

Overall sales, however, rose only a fraction 
in the first half, to Y172£5bn from Yl72hn a 
year earlier, hampered by cost reductions. 
TDK expects foil-year sales to rise to Y343bn 
from Y334J51bn last year. 

Turnover was also held back by weak 
d eman d for recording tapes, which represent 
more than a thir d of TDK's business. 

Sales of recording media fell by 4^ pea: cent 
to Y645bn in the first half, while turnover to 
electronic materia i« and parts rose by 31 per 
cent 

TDK's main cost-cutting technique, like- 
many other Japanese producers of low-margin 
goods, has been to shift production to cheaper 
locations in Asia and Europe. 


i her hai continued, to ensuing weeks. 

However, Mr Paul Simon, chairman, warned 

ait the company's annual 
Ha's current drought could por tly - flfl yjhe 
benefits of continuing economic growthybotfa 
in terms of the supply and price of pro® 1 ^ 
He stressed that toe company had no plans to. 
make a big acquisition or move Into Aaa.as 3- 
retail force- However, he said Wooiworth$. 
hoped to build links with Asian retailers raa 
ransnltflnrfy role, and as a -supplier of fossit 
food and vegetables^. . . . - 


Pacific BBA shares 
drop on Profits revision 


Shares to Pacific BBA, which was spun off 0a 
the Australian stockmarket by the UKVBBA 
group in 1993, fell 13 cents to A$&35 yesterday, 
after the company said that profits for the year 
to end-1993 and the half-year to. June 1994 bad 
been overstated because of accounting irregu- 
larities in one of. the plastics businesses, 
writes Nikki Tatt. 

' It the over s t a tement amounted to just 
under A$3m (US$2.’3m) in.after-tax profits, 
“resulting from a number of acco unting 
entries apparently designed to hide losses on 
cattip contracts in the Viscount tool room and 
inflate profits in the plastics operation”- ' ' r. 


Titan Wheel buys ihto 
three Italian companies 


TK»n Snj£h 



Accor Asia Pacific puts 
trust float plans on hold 


Accor Asia Pacific, in which the French Accor 
hotels group is a shareholder but which is 
quoted separately on the Australian stock 
market, yesterday put plans to float a “tour- 
ism trust” on hold, writes Nikki Tait in 
Sydney. 

Accor Asia Pacific, which operates more 
than 60 hotels In the Asia-Pacific region, 
blamed poor stock market conditions for the 
move. The Australian All-Ordinaries Index 
yesterday closed 3L8 points lower at L8T7.7, a 
15-month tow. 

The “tourism trust” plan was unveiled in 
September, when Accor said it would issue 
units to institutional investors, with a view to 
listing the trust - likely to be valued at 
around Ayannm (US$15L5m) - on the stock 
market shortly afterwards. 

The trust was to have held three- and four- 
star properties in Australia and New Zealand, 
and would have been managed by a group 
including AAPC. 

Initially , the trust was expected to include 
about 21 properties, mainly operating under 
the Ibis and Novotel brand names. 

Units in the trust were to be marketed to 
institutions in Europe, Australia and the US. 


Titan Wheel Interna- 
tional, the Illinois-:, 
based company which 
Is the world's largest 
producer of wheels for 
agricultural and con- 
struction equipment; 
ha« ann ounced its first 

significant acquisition 
in Europe, writes 
Andrew Baxter in Lou- 
don. Titan, which went 

M .. ..... public on Ihe New 

; York Stock Exchange 

last year, paid LISbn 
" ' “ • • “ v .*‘ ($9-4m> for SO per cent 

of the Italian wheel mmpanips Shfl a , Sr rmar 

and AGM. Titan -has an option to buy the 
remaining shares for at least another LX5bh. - 
Mr Maurice Taylor, Titan’s president and 
chief executive, said the . deal was fibdy to be 
followed by further strategic acquisitions, 
which ultimately would create a specialist 
European wheel and tyre group with sales of 
about $30Qm. 

The Milan-based Sirinac/Sima Group has 
been badly hit by the recession in European 
farm and construction equipment markets, 
and has been toeing money, but according to 
lltan has one of the best wheel factories in the 
. world. 

Mr Taylor says the deal would allow Titan to 
offer a better service to its international cus- 
tomers. The Raliancampanies -would probably 
be combined initially with Titan's UK manu- 
facturing and distribution centre, based in 
Merseyside. 

The deal comes four months alter Titan 
.bought thePirelfi Armstrong factory at Des 
Moines, Iowa, which riaimK 70 per cent of 
North American form tyre sales. • 
Together, the Italian and US takeovers will 
give Titan annualised sates of $70Qm. com- 
pared with 8150.4m last year. Titan expects, to 
establish a European business headquarters in 
the UK as its expansion proceeds. 


Woolworth says profits 
outlook ‘encouraging’ 


Tobacco company ahead 


Woolworth, Australia's second largest retailer, 
said yesterday that sales and profits in the 
current year were slightly ahead of budget, 
and that the outlook for the full year’s profits 
was “encouraging”, writes Nikki Tait 
It said that the 10.2 per cent same-store sales 
increase for the first quarter, to end-Septem- 


Scandinavian Tobacco Company, in which 
BAT of the UK, holds a 32.1 per cent stake, 
reported net profits of DKriBftn ($154m) for the 
year ending June 30 1994. up 5 per cent on the 
previous year’s DKr892m, writes Hilary 
Barnes in Copenhagen. Sales rose by L6 per 
cent to DKri3.76bn from DKrt3-54bn, of which 
about DKr&6bn arose from the Dagrofo gen- 
eral wholesale and retail group and the rest 
from tobacco products. 


OFFERING CIRCULAR 


I6tfa November. 1994 



Trans-Tokyo Bay Highway Corporation 


U.S.S 200 , 000,000 


8 % per cent Guaranteed Bonds Due 2004 

unconditionally and irrevocably guaranteed as 10 payment of principal and interest by 


Japan 


Issue Price 99.662 per cent. 


Bank of Tokyo Capital Markets limited 

CS First Boston 
IBJ International pic 
Merrill Lynch Intonations! Limited 

Swiss Bank Corporation 

^b^uSkm^^ncePLC Deotscfae Bank AG London 

Mo^gta^C* _ . Nippoo Credit 


LTCB International Limited 

Paribas Capital Markets 


SnmitotBO Finance International pic 


UBS Limited 


S.G.Warburg Securities 


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Review of Microsoft’s sharp fail in 
Intuit purchase extended CteZok 

By Louise Kehoe Microsoft said. “We remain ars, or 75 per cent of aU “active 

in San Francisco confident it will be approved." personal finance users". U1 iViOllIXCd*! 


By Louise Kehoe 
in San Francisco 

The US Justice Department 
anti-trust division has 
extended its review of Micro- 
soft's $1.5bn acquisition of 
Intuit, a leading publisher of 
personal finance software, 
potentially delaying the deaL 

The acquisition plan was 
submitted to the Justice 
Department last month for a 
routine 30-day review. Micro- 
soft acknowledged yesterday, 
however, that it had received a 
“second request" for informa- 
tion from the Justice Depart- 
ment, extending the review 
beyond the normal deadline. 

“We believe this is an indica- 
tion of the commitment of the 
Department to thoroughly 
review [the transaction!," 


Microsoft said. “We remain 
confident it will be approved." 

Microsoft declined to com- 
ment, however, on what 
aspects of its plan were being 
questioned. 

Competitors fear the deal 
could allow Microsoft, the 
world's largest software com- 
pany, to achieve a dominant 
position in the emerging mar- 
ket for on-line financial ser- 
vices. Microsoft already leads 
in several other PC software 
segments. It holds an esti- 
mated 80 per cent share of the 
market for operating system . 
programs that control the 
basic functions of a PC. 

Intuit is one of the few com- 
panies to have competed 
directly with Microsoft and 
won. Intuit's Quicken program 
is used by about 6m PC own- 


ers, or 75 per rent of all “active 
personal finance users”, 
according to Intuit. Microsoft's 
competing Money program has 
captured only a tiny share of 
the market since it was intro- 
duced two years ago. 

In an attempt to avoid anti- 
trust problems, Microsoft has 
agreed to divest its Money pro- 
gram to Novell, another soft- 
ware company, for undisclosed 
terms. 

A broad anti-trust investiga- 
tion this year of Microsoft's 
business practices was con- 
cluded when tbe company 
agreed to change the way it 
licenses software to PC manu- 
facturers. As part of that agree- 
ment, Microsoft was placed 
under the scrutiny of US and 
European competition authori- 
ties for six- and -a- half years. 


Nasdaq strengthens its defences 

Allegations of collusion have prompted action, says Patrick Harverson 

T he Nasdaq stock market except the allegations that ers had agreed to keep spreads Amid tbe various investigs 
has bees under fire this dealers broke anti-trust laws wide to maximise their profits lions, inquiries, lawsuits am 
year over allegations by fixing prices to maximise - even though it meant deny- select committees, the centre 


McDonald’s to spend $650m 
on expanding European chain 


By Vincent Boland in Vienna 

McDonald's, the US fast-food 
group, is planning a big expan- 
sion of its restaurant chain in 
central and eastern Europe by 
the end of the decade, in spite 
of what it says is a shortage of 
entrepreneurs in the region 
able to take on franchises. 

The company says it will 
spend up to S650m in increas- 
ing the number of outlets from 
60 to 500 by the year 3000. Most 
of the new restaurants will be 
in central Europe, with about 
20 per cent in the former 
Soviet republics. 

Mr Andreas Hacker, manag- 
ing director of McDonald's 
Central Europe, said yesterday 
the company was still rela- 


tively unknown in central and 
eastern Europe. He added it 
was having difficulty finding 
franchise partners because “we 
are looking for a type of entre- 
preneur that is basically non- 
existent in these countries”. 

He said potential franchisees 
must be familiar with prod- 
ucts, quality control, staff man- 
agement, and “how to give a 
TV interview". 

Only 25 per cent of the 60 
outlets in the region are owned 
by franchisees, compared with 
80 per cent worldwide. Mr 
Hacker said the ratio of fran- 
chised to company-owned out- 
lets in the region would fall as 
the brand name became more 
familiar and more suitable 
entrepreneurs emerged. 


McDonald’s yesterday 
announced an agreement, ini- 
tially worth $500,000, with ICL, 
the UR computer company, to 
supply computer services to 
link newly-opened outlets to its 
regional headquarters in 
Vienna. 

McDonald's has invested 
about SlOOm in central and 
eastern Europe to date. 

It has 23 outlets in Hungary, 
12 in the Czech Republic, 
18 in Poland and one in Slo- 
venia 

It also has three restaurants 
in Serbia, and another three 
that have been closed because 
of the UN embargo on the 
country will be re-opened when 
the blockade is lifted. Mr 
Hacker said. 


Czech utility to launch eurobond 


By Nicholas Denton 

CEZ, the Czech electric utility, 
win become the first east Euro- 
pean corporation to launch a 
eurobond next week, marking 
the region's growing access to 
international debt markets. 

J. P. Morgan, the lead man- 
ager, is ma rketing the $150m 
five-year issue on a roadshow 
and is expected to begin selling 
next Monday or Tuesday. 

A rating of BBS-minus from 
Standard & Poors and CEZ*s 
status as the only investment- 
grade east European borrower 
point to aggressive pricing at 
about 100 basis points above 
treasuries. 

CEZ is a special case in being 
the largest quoted company in 
central eastern Europe, with a 
market capitalisation of 
$255bn. 

While market commentators 


do not expect CEZ to start a 
rush of east European compa- 
nies to the bond markets, the 
issue does indicate a trend. 

Magyar Kulkereskedelmi 
Bank of Hungary, the first 
bank - rather than corporation 
- to tap the euromarkets, tills 
week launched its second euro- - 
bond. The DM15Gm seven-year 
issue was run by Bayerische 
Landesbank of Germany, the 
Hungarian bank's minority 
shareholder. 

On the syndicated loan mar- 
kets, Ceskoslovenska Obchodn 
Banka and Komercn Banka of 
the Czech Republic set new 
benchmarks tor east European 
borrowers by achieving pricing 
of 70 and 65 basis points 
respectively above Libor. 

A benchmark for both the 
CEZ issue and to some extent 
the landmark syndicated loans 
was the City of Prague's Euro- 


bond issued earlier this year, 
which trades at 85 basis points 
above treasuries. 

Investment bankers expect 
other utilities to follow CEZ's 
lead. The two h anks which 
have dipped into syndicated 
loans are also understood to be 
considering borrowing on the 
public market 

Poland’s recent agreement 
with its creditors clears the 
way for its companies to bor- 
row long-term and internation- 
ally. First however, the Repub- 
lic of Poland has to make its 
return to the debt markets 
with a planned five-year euro- 
bond deal 

CS First Boston, J. P. Mor- 
gan, Merrill Lynch, Goldman 
Sachs and Morgan Stanley, all 
US investment banks, are on 
the shortlist to manage the 
transaction and a decision is 
believed to be imminent. 


SEC investigation at Paine Webber 


By Patrick Hamraon 
In New York 

PameWebber, the US securities 
firm, is being investigated by 
tbe Securities and Exchange 
Commission as part of a 
broader inquiry into tbe sale of 
limited investment partner- 
ships on Wall Street 
The investigation is similar 
to inquiries at Prudential Secu- 
rities, which found that Pru- 
dential brokers had sold clients 
high-risk energy and property 


limited partnerships as low- 
risk, secure investments. Pru- 
dential ultimately agreed to 
pay more than $700m in fines 
and restitution, and the firm 
was put on probation for three 
years by federal prosecutors. 

Although the Paine Webber 
investigation is not as large as 
the Prudential case, it is 
believed to focus on at least 
$2bn of limited partnerships 
sold by the firm. Tbe SEC is 
reported to be seeking to deter- 
mine whether brokers system- 


atically misled clients about 
the risks involved in investing 
in energy and aircraft-leasing 
partnerships. 

PaineWebber denies that its 
brokers lured clients into buy- 
ing inappropriate investments, 
and noted that the SEC is 
investigating the sales of lim- 
ited partnerships at other 
firms. A spokesman for the 
SEC said the commission 
would neither confirm nor 
deny the existence of any 
investigation. 


By Bernard Simon In Toronto 

A sharp fall in loan-loss 
provisions helped Bank of 
Montreal post its fifth consecu- 
tive year of record earnings, 
with fourth-quarter income 
jumping by one- third. 

The bank, which is the first 
of Canada’s "Big Six" banks to 
report 1994 results, lifted earn- 
ings to C$825m (US$603 -8m), 
or CS3.0Z a share, for the year 
to October 31. from CS709m, or 
C$2.59, a year earlier. 

Return on equity climbed to 
14.9 per cent from 14.1 per 
cent, and return on assets to 
0.68 per cent from 0.63 per 
cent Assets have risen by 18 
per cent in the past year, to 
CSi38J2bn. 

Fourth-quarter earnings for 
exceeded analysts' estimates, 
jumping to C$268m, or 99 
cents a share, from C$201m, or 
74 cents, a year earlier. Return 
on equity for the latest period 
was 18.7 per cent 

The bank is widely expected 
to raise its dividend. 

Loan losses for the year fell 
to C$5 10m from C$675m. in 
spite of a doubling in general 
provisions to C$200m, which 
the bank said was a prudent 
move during tbe business 
upswing. 

The bulk of the drop in loan- 
loss provisions took place in 
the fourth quarter, when 
write-downs almost halved to 
C$99m from C$i75m. Tbe bank 
said the improvement took 
place across its entire portfolio 
of individual, commercial and 
corporate loans, bnt especially 
in tbe property sector. 

Non-performing loans 
dropped by 40 per cent to 
CS1.4bn. 

One of the few setbacks was 
a 12 per cent slide in earnings 
from foreign exchange 
operations. 

Communications 
investment fund 
to be launched 

By Richard Lappor 

Montgomery Asset Man- 
agement, tbe San Francisco- 
based investment manager, 
and Barings Securities, part of 
the UK investment banking 
group, yesterday announced a 
SlOOm investment fund which 
will focus on communications 
and services in the emerging 
markets. The Montgomery 
Emerging Communications I 
Fund will place up to 10m 
shares. 

Mr Oscar Castro, who cur- 
rently manages the Montgom- 
ery Global Communications 
Fund, will act as principal 
portfolio manager for the 
fund, which will be registered 
as a closed end investment 
company in Bermuda. 

Baring Brothers is sponsor 
to tbe issue and Baring Securi- 
ties is the placing agent The 
placing is not underwritten. 


Correction 


Mr Peter Godsoe 

An article in early editions 
yesterday referred to Mr Peter 
Godsoe as chairman of the 
Bank of Nova Scotia. Mr God- 
soe is in fact president and 
chief executive officer, and Mr 
Cedric Ritchie is chairman. 


Read the following publications from the Financial Times. 

East European Markets 

including ‘Moscow Bulletin' and ‘The Changing Union’ 

Finance East Europe 

m 

East European Business Law 

East European Insurance Report 

• 

East European Energy Report 
For a Free sample copy 

Please contact: Simi Bansal, 

Financial Times Newsletters. 

Marketing Department. Third Floor, 

Number One Southwark Bridge, 

London SEI 9HU England. 

Tel: (+ 44 7 1 ) 873 3795 Fax: t+ 44 7 1 ) 873 3935. 

T^ttrorni^y«^pn^w«btywby^ , !Ddmo»hc i ~ d hy , < , VT«-i , « 

tjosUy ctmW"* for mnUmg tm pup>»(\ 


FINANCIAL TIMES 
Newsletters 

.1 r,W IITliir- '- 1 f Ffbol 


THE LATIN AMERICA INCOME 
AND APPRECIATION FUND N.V. 

DIVIDEND NOTICE 

Consistent witb tbe auiborizatiaii granted by tbe Board of Supervisory Directors on 
November 15. IW4, notice b hereby given ibai the Fund i. Managing Director has 
declared a distribution (consisting of an interim dividend or profits expected to be 
earned daring tbe current fiscal year ending on August 31. 1995) of U.S. SD50 per 
Class A Stare and an equivalent a mo uni on a yield basts for Class B Shares, payable 
on January 3, 1995 to common shareholders at record ai the dose or business ou 
December 23, 19M, in tbe case of shores, held in registered fonts, or upon presentation 
of coupon number 10 attached to ihc common share certificate to the Fund's 
Administrator (pa or alter January 3. J v95h in tbe case of common shares held in 
bearer form. 

By order of the Managing Director 

A dmlnhiia inr. M naagfn g Director and Location of 
Principal Office 

MrcaPterson Tract iCnracaoi N.V. 

John B- Goesiwareg 6 
WBhsnsud, Cnrafno 
Netherlands AntiBes 
Investment Manager 
Sendder, Stevens & Dark, Inc. 


THE KINGDOM OF 
BELGIUM 

U.S. $190,000,000 
FLOATING RATE BONDS 
DUE NOVEMBER 1996 

In accordance with the provisions 
of the Bonds, notice is hereby 
given that the Rate of Interest for 
the seventeeth Interest Period 
from the 23rd November. 1994 to 
23 nd May. 1995 has been fixed at 
6.1875 per cent per annum. 


Bank of -South 
Australia Limited 

McraoxMsii 

US$300,000,000 
Floating rate notes due 1999 

The notes mil bear interest at 
6 35% per annum for ike interest 
period from 23 November 1994 
to 23 February 1995. Interest 
payable on 23 February 1995 will 
amount to US$162 28 per 
US$10.000 note. 

Agent: Morgan Guaranty 
Trust Company 

JPMorgan 


Interest payable on each US 
$250,000 on the relevant interest 
date, 23rd May, 1995 will be US 
$7,777. 34. 

SVENSKA 

INTERNATIONAL PLC, 
Agent 


T he Nasdaq stock market 
has bees under fire th j* 
year over allegations 
that its dealers colluded to fix 
their prices so they could profit 
at the expense of investors. 
Yet, until recently, the 
National Association of Securi- 
ties Dealers, which operates 
the market, was slow to defend 
itself and its members, much 
to the unhappiness of some 
Nasdaq dealers. 

Now, however, the NASD 
has brought out some big guns. 
Last week, the association 
named a seven-strong select 
committee, beaded by former 
US senator Mr Warren Rud- 
man, to conduct a review of 
the Nasdaq market, the second 
largest in tbe US after the New 
York Stock Exchange. 

The NASD hopes that the 
appointment of the blue-ribbon 
panel - which includes 
well-known figures from the 
world of investing and market 
regulation such as Mr Peter 
Lynch, the prominent fund 
manager, and Mr Irving Pol- 
lack, a former head of market 
regulation at the Securities 
and Exchange Commission — 
will appease those who say the 
association has not been tak- 
ing allegations of price fixing 
seriously enough. 

Some critics, however, are 
still unhappy. They say the 
committee is packed with too 
many industry insiders (one of 
tbe seven is a former NASD 
chairman and two are former 
NASD governors) and are sur- 
prised that the panel has been 
asked to review everything 
about the Nasdaq market 


except the allegations that 
dealers broke anti-trust laws 
by fixing prices to maximise 
profits. 

As one former top NASD offi- 
cial put it "Since they aren’t 
allowed to look at the trees, 
looking at the forest is going to 
be kind of hard.” 

The NASD, however, says it 
would have been improper to 
ask the committee to review 
matters which are the subject 
of more than two dozen class- 
action lawsuits, as well as sep- 
arate investigations by tbe Jus- 
tice Department and tbe SEC. 

However, Mr Richard Ket- 
chum, NASD chief operating 
officer, sal’s the committee will 
be free to examine the wider 
issue of how prices are deter- 
mined and how trades are exe- 
cuted on Nasdaq, and whether 
there is genuine competition 
among the dealers. 

Although Mr 'Rudman said 
this week that his committee 
did not want to get in the way 
of the Justice Department's 
investigation, he gave an 
assurance that they would 
“look where we have to look”, 
and that the panel would talk 
to the two finance professors 
whose study of Nasdaq spreads 
sparked the inquiries and law- 
suits in the first place. 

The study, by Mr William 
Christie of Vanderbilt Univer- 
sity and Mr Paul Schultz of 
Ohio State University, found 
that spreads between the buy 
and sell prices quoted by Nas- 
daq dealers on stocks of many 
big companies were unneces- 
sarily wide. It concluded the 
only explanation was that deal- 


ers had agreed to keep spreads 
wide to maximise their profits 
- even though it meant deny- 
ing investors the best possible 
price on each trade. 

The study, and a second 
report by the professors which 
later appeared to back up their 
initial findings, prompted 
scores of investors to file law- 
suits against Nasdaq dealers - 
including some of the biggest 
Wall Street firms - claiming 
they had violated anti-trust 
laws by Illegally fixing prices. 

E ver since the first 
study's findings were 
published, the NASD 
has consistently denied that its 
dealers colluded to fix prices 
(the dealers have remained 
quiet, pending the lawsuits). 
This week Mr Ketch urn reiter- 
ated the NASD’s view on the 
matter. “If there is anti- 
competitive activity going on 
in the market ... we would 
welcome anyone identifying 
it." But, he said, “we don't 
believe the economic data in 
the two studies give any clear 
evidence that there was anti- 
competitive activity going on 
in the marketplace.” 

Mr Ketchum points out that 
that the study focused only on 
price quotations, rather than 
actual trades. The NASD 
claims that many trades are 
executed at prices that are bet- 
ter than those advertised by 
dealers on the screens, and 
they also say that wide spreads 
are necessary in some stocks to 
ensure there is sufficient 
liquidity in the market to 
accommodate investor orders. 


US heads Europe M&A league 


By Nicholas Denton 

US investment banks dominate 
a new league table of advisers 
on mergers and acquisitions 
into Europe announced so far 
this year. CS First Boston leads 
the list, having been involved 
in $11.6bn worth of deals, dou- 
ble the activity of its nearest 
competitor. 

Altogether, six of the top 10 
advisers are of US origin com- 
pared with three last year. The 
highest placed UK-based house 
is S.G. Warburg, in eighth 
place. 

While some executives at US 
investment banks were quick 
to attribute their success to 
superior skills and resources, 
others saw it as a sign of the 
recent surge of US investment 
into Europe. 

“It's a reflection of high 
transatlantic activity,” said Mr 
Klaus Diedericbs, co-head of 


Top lO advisers on 
mergers into Europe 

Advisor 

Value CSm) 

CS First Boston/ 


Credit Suisse 

11,570.4 

J.P. Morgan 

5.241.1 

Lazed Houses 

4.641.4 

Morgan Stanley 

4,015£ 

Goldman Sachs 

2,689.9 

Salomon Bros 

2,346.1 

Lehman Bros 

1,987.7 

S.G. Warburg 

1.921.4 

Kieinwort Benson 

1,882.6 

WerthekiVScbroder 1,375.1 

Gowm: SmaatUea Data 


European M&A for J. P. Mor- 
gan, which came second in the 
table. 

Warburg said it too had 
enjoyed a series of transatlan- 
tic deals, but in tbe other direc- 
tion. Securities Data, which 
compiled the table, showed the 
it as a leading adviser to Euro- 
pean acquirers. 


Competitors were surprised 
by CS First Boston's strength, 
and the firm conceded that in 
any single period there was an 
element of luck and that the 
extent of its lead was artificial. 

The house has nevertheless, 
among other roles, advised 
Boots of tbe UK on the sale 
announced last week of its 
pharmaceutical business to 
BASF of Germany, and Swiss 
Re on the disposal of its non-in- 
surance businesses. 

CSFB has had a reputation 
as a bond house and it suffered 
a traumatic reorganisation 
after the departure of its long- 
time London head, Mr Hans- 
Jorg Rudloff. 

It credited its improved posi- 
tion to a doubling of resources 
in corporate finance between 
1989 and 1991, and the Euro- 
pean flavour given by its link 
with Credit Suisse of Switzer- 
land. 


Amid the various investiga- 
tions, inquiries, lawsuits and 
select committees, the contro- 
versy over Nasdaq prices has 
raised broader questions about 
US equity markets, and 
whether investors are best 
served by the current structure 
of competing marketplaces 
offering investors the opportu- 
nity to trade via different, and 
in most cases unconnected, 
trading systems. 

Mr Junius Peake, professor 
of finance at the University of 
Northern Colorado and an 
expert on tbe structure of US 
markets, says the problem of 
pricing on Nasdaq is just one 
of many faults within the mar- 
ket infrastructure. “The Ice- 
berg has stuck its peak above 
the surface of the water.” 

Mr Peake believes the con- 
troversy over price fixing high- 
lights the weaknesses inherent 
in a system that allows mar- 
kets (not just the NASD, 
but the NYSE and other 
exchanges) to regulate them- 
selves. “The incident demon- 
strates the folly of combining 
self-regulation with the opera- 
tion of a commercial enterprise 
like a market.” 

These are the sort of issues 
he believes will be addressed 
□ext year by Congress, which 
in the wake of the price-fixing 
charges is likely to want to 
take a close look not just at 
Nasdaq, but at all US markets. 
The central problem, says Mr 
Peake, is relatively straightfor- 
ward: “The market structures 
are not as protective of custom- 
ers' interests as they ought to 
be." 


Santa Fe urges 
rejection of 
Union Pacific bid 

By Fllchard Tomkins 
in New York 

Santa Fe Pacific, the US 
railway company at the centre 
of competing bids, yesterday 
advised its shareholders to 
turn down the latest Union 
Pacific offer in favour of an 
agreed merger with Burlington 
Northern. 

. Burlington's $3.1bn offer 
would not be payable until the 
deal had been approved by fed- 
eral rail regulators. Union 
Pacific is offering £L3bn and 
says it wQl acquire Santa Fe 
immediately, putting its shares 
into a voting trust pending reg- 
ulatory approval 
Santa Fe’s board said that 
Union Pacific's bid was “too 
uncertain” because it was not 
dear that the regulators would 
allow it. 


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fi>" 


FINANCIAL TIMES WEDNESDAY NOVEMBER 23 1994 


INTERNATIONAL CAPITAL MARKETS 


Italian sector tumbles on renewed political worries LCH points 


By Comer NBddafanann in 

London and Usa Bransten 
ta New York 


While activity in most 
European government bond 
markets was muted, Italian 
bonds and the lira tumbled 
sharply yesterday amid 
renewed political worries sur- 
rounding Mr Silvio Berlusconi, 
prime minister . 

Bonds fell by as much as a 
point on news tbat Mr Berlus- 
coni had received formal notice 
that he is under investigation 
for allegedly paying bribes to 
rtaifr m tax authorities in con- 
nection with his media empire 
Fininvest. 

Although the corruption 
probe has been rumoured for 
months, its confirmation threw 
the market into disarray, rais- 
ing fears that political 


upheaval would delay the pas- 
sage of the 1995 budget. Parlia- 
ment has to pass the package, 
which Includes measures to 
cut some L48,QQQbn from next 
year’s public sector deficit, 
before the aid of the year. 


government 

BONDS 


However, after dropping 
steeply on the initial news, 
prices soon stabilised as trad- 
ers decided the news merely 
confirmed market worries. 
“Considering the seriousness 
of the matter, the drop wasn't 
as bad as it could have been - 
a lot was already discounted,” 
said a dealer. 

“The key questions now are: 
will Berlusconi be forced to 
resign, and will it throw the 


budget process into disarray,” 
said Mr Graham McDevitt, 
bond strategist at Paribas Capi- 
tal Markets. Although he 
thinks the budget is likely to 
be passed by year-end, he said 
the market would remain ner- 
vous over prospects of political 
upheavals - possible coalition 
realignments or even new elec- 
trons - in the new year. 

The December BTP future on 
i-iffe foil as low as 99.75 but 
recovered slightly to end at 
100.11. down 0.78 point on the 
day. The Italian 10-year yield 
spread over German bonds 
widened to 476 basis points, 
from. 455 on Monday, and some 
traders said it could move 
towards 500 in coming days. 


the futures markets and a 
{inner tone in the US Treasury 
market. 

Participants are awaiting the 
release of October M3 data, 
expected some time this week. 
The December bund future on 
Liffe ended at 90.41, up 0.33 
point 


B German bunds ended a 
trendless day slightly higher, 
buoyed by short-covering in 


■ UK gilts continued their 
pre-Budget slumber, tracking 
bunds slightly higher in the 
absence of domestic Impulses. 

The Bank of England 
announced that a £ 200 m tap 
Issue of 7 per cent Treasury 
stock due 2001 had sold out, 
having been supplied at 9102. 
The issue was part of a total 
£750m package of tap stocks of 
existing gilts set on Monday. 


■ US Treasury prices bene- 
fited yesterday morning from a 


weakening stock market as 
investors switched assets into 
bonds and out of a declining 
stock market 

By midday the benchmark 
30-year government bond was 
up 'ft at 93% yielding 8.108 per 
cent At the short end of the 
market, the two-year note was 
unchanged at 99g, yielding 
7J284 per cent. 

Traders added to the morn- 
ing gains as they covered short 
positions before the afternoon 
auction of five-year notes. The 
early morning saw prices dip 
slightly as traders sold bonds 
to make way for the new 
issue. 

Prevailing sentiment in the 
market has been pessimism 
and uncertainty since the Fed- 
eral Reserve boosted its Fed- 
eral funds target interest rate 
last week without closing the 


door on a farther tightening in 
the near term. Although the 
Fed raised rates by a stronger 
than-expected 75 basis points 
to 5% per cent, the move was 
insufficient to calm the mar- 
ket’s fears of inflation. Almost 
immediately after the intern et 
rate increase traders began 
expecting rates to go up again 
soon. Such interest rate insta- 
bility causes investor unease 

and TmflftrmTnPS h rmH prices. 

Even yesterday’s boost in 
prices is not expected to last as 
most investment strategists 
are not advocating moving 
from stocks to bonds, but 
rather from stocks to cash. 
Also, the dollar ffe cflnpri from 
late Monday levels, which 
hurts the bond market by 
deterring foreign Investors 
from buying US Instruments 
such as bonds. 


exchange-traded 
derivatives grow! 


r 3 

I 


Jdft 




By Richard Laplper 


Growth of exchange-traded, 
derivatives products in London: 
is poised to exceed last year's 
total by nearly 50 > per cent, 
according to figures released 

1 3 1 IV. T nnjAM PloAK ' 


views of ISO fund managers' 
from the UK, Europe* Norfh 
America, and Asia- ft- found 
fh^t If jay cm t of respondents 
favoured exchange- traded 
. instruments, iwfiHe'auly 23 per 

j m - lni ii oW ' : 




V 


Bank of England may 
make novel gilt issues 


Activity slows in run-up to holidays 


By Graham Bowl ay 


By Peter Norman, 

Economics Editor 


The Bank of England is 
exploring the issue of zero- 
coupon UK government bonds 
and ways of aiding investors to 
separate the income stream 
from gilt-edged stock, as part 
of Its programme of making 
UK government bonds more 
attractive to international 
investors. 

Mr lan Plenderleith, the 
Bank’s executive director for 
monetary policy operations, 
said it was also considering 
new types of security to meet 
the needs of pension fnndfl. 

“We continue to seek views 
from market participants on 
the scale of possible interest in 
zero-coupon instruments and 
in coupon-stripping facilities,” 
Mr Plenderleith told the Third 
City of London Central Bank- 
ing Conference yesterday. 
“Changes in the pension 
industry may generate 


dema nd for new forms of gov- 
ernment security,” he added. 

Although Mr Plenderleith 
gave no further details, it is 
thought that the Bank could be 
considering the issue of gilts 
with very long maturities for 
pension funds. 

The issue of zero-coupon 
bonds, which reward investors 
through capital gains rather 
than Interest payments, will 
have to overcome Inland Reve- 
nue rules that have so for pre- 
vented their sale, and the sale 
of deep discount UK bonds. 

Mr Plenderleith said the UK 
gover n ment band and money 
markets were “in the midst of 
a significant process of con- 
tinuing change”. 

But officials said the ideas 
floated yesterday constituted a 
“wish list” rather than specific 


New issuance activity in the 
eurobond market slowed yes- 
terday ahead of holidays in 
Japan mid the US today and 
tomorrow. 


INTERNATIONAL 

BONDS 


However, the Bank is expec- 
ted to discuss possible rule 
changes with the Treasury and 
UK tax authorities. 


The short-dated dollar sector, 
which witnessed a flurry of 
activity after last week's rise 
in US short-term interest rates, 
nevertheless managed to 
attract three borrowers in the 
two and three-year area. 

Bayerlsche Landesbank 
launched a )300m offering of 
three-year bonds. Traders crit- 
icised the launch spread - 15 
basis paints aver US govern- 
ment bonds - as too expensive 
and described selling as 
“slow". The spread widened to 
around 19 basis points after the 
bonds were freed to trade. 

“A spread of 20 basis points 
would have been a fairer 


price,” said one trader. 

However, joint lead manager 
Lehman Brothers said the 
spread was In line with similar 
existing bonds trading in tin* 
secondary market and that vir- 
tually no bonds had been 
bought back through the bro- 
kers. 

The bonds were launched 
into Asia in the hope of attract- 
ing some interest there, traders 
said. But they suspected that 
most would be placed with 


European retail investors. 

In the sterling sector. 
National & Provincial Build- 
ing Society launched a £100m 
offering of bonds due Decem- 
ber 1997, priced to yield 45 
basis points over UK gilts. 

Traders cast doubt on the 
decision to launch a three-year 
offering. “This area of the ster- 
ling yield curve is only going 
to retail accounts and National 
& Provincial Is not a retail 
name,” said one dealer. “The 


spread is not going to attract 
institutional interest," ho said. 

Challenge Bank launched a 
3200 m offering of three-year 
floating rate notes, priced to 
yield 35 basis points over three- 
month Libor , wh ich joint lead 
manager CSFB said found 
strong European demand. 

Ireland is piarnmg to tap the 
euroyen market for around 
Y3Qbn within Che next few 
weeks, the Irish National Trea- 


NEW INTERNATIONAL BOND ISSUES 


US DOLLARS 
Bayarische Landesbank 
Ctafenge Bank* 

Urban Mortgage BtuV Sweden* 


Amount CotRxm 
m. % 


Book timer 


Dec. 1997 Q.1875R +l5(m%-87) Lehman Brothers ML 
DeC.1997 0L2QR - CSFEV SG Wfctbug Sacs. 

Sop-isee indtoeL Nanus InMna M onst 


STERLING 

National & ProvtncW B/S 


Dec. 1897 0225H +45(8*%-97) CS First Boston 


AUSTRALIAN, HOLLARS 
Cridt Local da -Franca 
Tasmanian PuNelFfrence Cap. 


Jan. 1999 
Dec.1097 


Barclays da Zbete Wedd 
Deutsche Bank London 


SWISS FRANCS 
Aegon 


Swiss Bank Cop. 


final terms and nen-caMto wleae stated. The yMd spread (over relevant government bond) at launch Is suppled by Via lead 
manager, j ftoeang rats note. R: fixed re-after price: tees am shewn at the ra-ofler leveL a) 3-mth Libor +35bp. b) 3-mth Ubor +6Mbp. 


mg House (LCH). 

The LCH said that so far this 
year it had cleared more than 
200 m contracts, compared with 
154.6m for all of 1993, and 
flvppflhi the final figure fix 1 1994' 
to be about aSOn l 

The popularity of exchange- 
traded products was also illus- 
trated yesterday by the results 
of a survey which shows fond 
managers are becoming more 
likely to buy exchange-traded 
rather than over-the-counter 
products, following a number 
of heavy losses in the last 18 
months. 

Mr David Hardy* LCH man-, 
agin g dire c tor, said the pace of 
growth “has continued beyond 
people’s expectations” and that 
volume had nearly doubled 
over the last two years. 

The LCH clears, contracts 
traded on Liffe (where volumes 
increased from 10L9m to more 
thaw 141.5m), as wen as the 
London Commodity Exchange 
(down to <U5m froxu3.7m), the 
Litre (op to 42.2m from 3613m) 
and the International Petro- 
leum Exchange (down to lfl-im 
from i3Am). 

Interest from US fixtures and 
commodities funds has 
increased and business haw 
also benefited as a result of 
volatile conditions in the 

Underlying nraali Tnartepfat, said 

Mr Hardy. Efforts by the 
grrhangea to educate corporate 

and fria Htn t km jiI mg aw» ajy i 

yielding dividends. 

The survey* - ter Coppers & 
Lybrand and Derivatives in 
F imd ManpgHmiait , the special- 
ist magazine - sought the * 


an fixe OTC market 
Xast year r-ybm. flie sainajte: . 
'was smaller -12 par cent uf 

UK fond managers and S7S.&& 
cent of European managers 
favoured exchange -trade^. 
products. ■ • - -r' : - 

Mr Michael Levy, director of , 
Antrim Associates who cent- 
ducted the - research, said: 
exchange- traded derivatives 
were perceived to be : “cheapo 
liquid and transparent, good 
for hedging purposes and : 
easier to justifsT. 

- The survey also shows that 
, knowledge iff derivative -prod- 
acts among fund managers 
remains llmtted although, lheir ’ 
popularity has grown.; ; .. . ~ 

More than half, of respon- 
dents said that less titan one- 
quarter of fund managers at-; 
their iuetitiiticHi were familiar .- 
with, derivatives: More than 
half the managers said their ' 
systems for managing expo- 
sures were either nonexistent 
or Inadequate. •/ 

Forty eight per cent of fimd 
managers used . derivatives . 
mainly ftffhedgbig.pmiKMe8_- 
Tha survey-, also found inves- - 
tors and trustees of 'pension 
foods wetis mrajposithte about . 
derivatives than a year. ago. 
■While most are now “neutral 
to positive” in their attitudes, a 
majority were either “neutral” 
or “negative” last year. 

**Tt tc app rising jrnA anra nn 

aging given the problems of 
the past 12 months,” said Mr 
Phil Bivett, of Coopers. 
*Derivatives m Fund Manage 1 
meat, TeL- 07i 827 5254 (Park 
EBouse, Park Terra ce, W orcester 
Park, Sony/ KT4 7SY) 






WORLD BOND PRICES 


BENCHMARK GOVERNMENT BONDS 

Rad Day's Week Month 

Ca#xjn Data Price change YMtf ago ago 


AmJrofia 9.000 09/04 

Belgium 7.760 1004 

Canada* 6500 06AM 

Denmark 7.000 12/04 

France BTAN 8.000 05/96 

OAT 8.760 10/04 

Gamwiy Bund 7X00 11/04 

Italy 8.600 08/04 

Japan No 118 8800 06/89 

Japan No 184 4100 12/03 

Neftart m dB 7.250 10/04 


6.500 08/04 

7.000 12/04 


7.250 10/04 

&000 05/04 


0.000 08/88 
8.750 11/04 


USTraaaury* 


9.000 10/08 

7 £76 11/04 


7.500 11«4 

6.000 04/04 


ECU (French Govfl 6X00 04/04 

London cfctav, Unm York nM-amr 
t Osa taing wOTri dm tuaiUpv 
Pitodtc ua UK in azrefc. retiree In iteu tawf 

US INTEREST RATES 


88.7500 +0.120 10.71 10.61 10L26 
90.0700 +0.170 434 IL23 565 

833500 -0200 9.18 8.04 9.12 

‘88.7500 +0380 8.72 876 885 

101X200 +0180 7X7 7X7 7JB3 

809600 +0270 011 8.11 834 

1001700 +0130 7X7 7 AO 7.70 

81X600 -0800 11.83t 11-58 11JB2 
102.8380 +0018 404 404 412 

962670 +0306 4.67 472 478 

98.0600 +0300 7X3 7.46 7.B8 

812600 +0080 11.18 11.18 1120 

90-31 +3/32 B3S 043 8.72 

88-10 +6/32 630 668 8JM 

103-30 +8/32 661 638 680 

99-06 *6/32 8X0 731 785 

93-05 +8/32 611 888 884 

841300 +6280 881 647 672 

YWdK Local mart* BtancM. 
car* payabta by nonraiMna 


Italy 

■ NOTIONAL ITALIAN QOVT. BOND (BTVJ FUTURES 
{UffET Lira 200 m lOOtha of 100% 

Open Sett price Charge Wjfi 
□•C 10041 10004 -085 100.72 

Mar 9660 8691 -084 98.70 I 


FT-ACVUAMES FIXED INTEREST INDICES 

Price traflcea Tua Day’s Mon Accrued xd ac& 

UKCBts Nor 2? change % Nov 21 b Swe a t ytd 


— Low bapoa yttfd Median coupon yfefd — — Hgfa cmponjftdd — 

Nov 22 Nov 21 Yr. i«o Nov 22 Nov 21 Yr. ago Nov 22 Nov 21 Yr. apo 


EaL vof Open Ira. 
66875 61338 
4885 12926 


1 Up to S yoas{23) 12031 +002 12028 


ITALIAN QOVT. BOW (BTq FUTURES OPTIONS (UFE) UnCOOn IQOttia of 100% 


2 5-15 yeas (23> 

3 Over 15 yeas (8) 

4 kradeemablea 

5 Al stocks {BO 


14038 +005 14031 

157X2 +008 15727 

177.66 +022 17727 

13783 +005 13786 


282 883 5yra 

188 11X8 15 yiS 

237 1037 20 yra 

080 13X7 bred.t 

215 1083 


8X8 8X8 


Strike 

Price 

DM 

■ CALLS - 

Mar 

Dec 

■ PUTS — — 
Mar 

10000 

CUM 

167 

O 

8.76 

10050 

0 

1.47 

0X8 

8X6 

10100 

0 

139 

068 

3X8 


— —MMfon B% — 
Nov 22 Nov 21 Yr. 


briMfon 10% - 

Nov 22 Nov21 Yr. 


8 Up to 5 yeam(2) 

7 Over S yeas (11) 

8 All stocks (13) 


+005 18638 
+008- 17486 
+007 17448 


071 587 Up to 5 yra 386 388 2.17- 

1.15 438 Over 5 yra 384 385. 3.13 

1.11 441 


284 284 130 
385 386 295 


Btt. VOL M* can 3614 Pub 3+S2. Previous d«y* opan k4 Cals 27006 Pula 3575Z 


Debentum and Loam 


5 year yWd— — IByaaryWd— — — 25*e«ryWd- 

Nov 22 Nov 21 Yr. ago Nov 22 Nov 21 Yr. ago Nov 22 Nov 21 Yr. 


9 Debs & loans (77) 12821 +008 128.10 


Nov 22 Nov 21 y>.ago Nov22 Nov21 Yr. ago Nov 22 Nov 21 Yr.ago 
988 988 789 . 982 983 883 648 650 8.18 


Avaapa grew redemption yWda an ah mi 4m Coupon Bands Low: 0K-7KM; Maftm 8%-imH: Htfc 11* aid am. t M yWcL ysi Yore to dare. 


Spain 

m NOTIONAL SP/U6SH BOND FUTURES QVffiFR 


Pitanrab 

ftt*or tool HSa 

Faitak 

FadJaads atwararttao- 


Ora moetti . 
Bfe IVn nmlb . 
3*2 UseemunBi 
S»j Etananth_ 
- ftniaar— 


sourore MMS MamtoMW 


Open 

Sett price 

Change 

Hrfi 

Lew 

EsL vaL 

Open Int 



Dec 

87X0 

87X9 

+0.16 

87J50 

87X6 

25.794 

82.108 

BBta and BtmdTlekte 

681 TMjere 

683 Tlwsw 

6X8 fiwirar 

608 10-jsar 

Hi 

13SS 

Mre 

UK 

B8.S0 

86X9 


88.73 

88X0 

1^13 

6,458 


FT FIXED MTEREST INDICES 

Nov 22 Nov 21 Nov 18 Nov 17 Nov 18 Yr i 


HflhT LoW 


OOLT EDGED ACTIVITY INDICES 

Nov 21 Nov 18 Nov 17 Nov 16 New 15 


GovL Secs. (UK) 9188 91.74 9189 9182 9189 103.43 10784 8884 G*t Edged tM 
Read Intere st 10633 10615 10615 10634 10822 12680 13387 10650 5-day average 

* tar ItKM. OoNnsnont SacwMn Nflli aferos oomplsttnr 137X0 prr/38), low 4618 (Sn/7*. Rwd Mareat Nflb teres oompS 
Z6 Bid FtaM tnUroat 1BZB. BE actMty kn9cao re d — li d 1OT+. 


a 1528 1468 1744 1063 83X 

1344 1169 1068 87X 83 8 

13337 (71/I/B4) , km £063 pfl/T* . Bmk 100: Goremrant BacuUaa ISTtO/ 


BOND FUTURES AND OPTIONS 


Franca 

■ NOTIONAL FRENCH BONO FUTURES (MATTF) 


■ NOTIONAL UK <MLT FUTUmS CLIFFS* ES0800 32nda of 100* 

Open Sett price Change Mgh Low EsL rat Open Int 
Dec 102-14 102-18 +0-05 102-20 102-10 27843 102830 

Mar 101-23 101-27 +086 101-27 101-21 4062 16133 


FT/ISMA INTERNATIONAL BOND SERVICE 


■ LOI4Q G6T FUTURES OPTIONS (UFF^ £50,000 8+tbs of 100% 


Listed are Ute West WaiwUonal bands kr eNch twre b an adagwaa aaconday marisat L s lata 
tend BM OBw Chg. Wald 


prtcaa at 7*00 pm on Noverataar 22 
hatred BM OB) r dig. YtakJ 



Open 

Salt price 

Change 

Wgh 

Low 

EsL voL 

Open frfl. 

Sown 

Pries 

Dm 

■ CALLS 

Mar 


■ PUTS 

Dec 

111X8 

111X6 

+028 

111X0 

111X2 

128X52 

136681 

Dec 

Mar 

Mar 

11028 

11054 

+028 

110X6 

11024 

13.182 

24X72 

102 

0-40 

1-42 

004 

1-52 


109X2 

109.66 

+024 

109.62 

10042 

193 

3X04 

103 

0-05 

1-10 

0-33 

2-20 








104 

OOl 

0-50 

1-29 

2-80 


Ear. wL tote. Cite 7127 FVs lOSi. Preotaus dkgra apon lot, Cate 7500 9 Puts 52757 


I FRENCH BOND OPTIOWS BIUVT1F) 


State 

Price 

Dm 

- CALLS ~ 
Mar 

Jun 

Nov 

- PUTS 
Dec 

110 

1X8 

1.78 

. 

008 

1X0 

111 

0.43 

12S 

1X3 

010 

1.78 

112 

0.0S 

083 

1.14 

070 

_ 

113 

0X1 

0.52 

- 

1.00 

_ 

114 

- 

030 

- 

- 

- 


Ecu 

■ ECU BOND FUTURES 

Open Sett price Change High Low EsL voL Open knL 
Dec BO 98 81.12 +0.14 81.18 8092 3X33 7895 


Cate mos Pure 21.44a , Prevtom dqra open m. Ora* 919X89 Pure 27731s. 


Germany 

■ MOTIONAL I 


I BUND FUTURES (UFF0' DM250800 lOOttnoMOOW 


US TREASURY BOND RITUIIES Q3BT)S100800 32ndaot 10054 


Open Sett price Change Hgh Low EsL vqi Open bit 
90.07 9645 +037 9083 9093 122058 189952 

89.19 8984 +041 8673 89.18 14468 40902 


Open 

Latest 

Change 

Htfi 

Low 

Est vaL 

Open bn 

96-26 

98-29 

+003 

9700 

96-26 

182.750 

408X31 

9606 

96-10 

+004 

98-12 

9606 

14X62 

63X57 

85-23 

95-23 

+002 

95-24 

95-21 

1.170 

11X27 


■ BUND FUTURgS OPTIONS jUFFq DM25Q.OOQ potntt rt 1QO% 


Strike 

Price 

Dec 

Jan 

CALLS - 
Feb 

Mar 

Dec 

Jen 

PUTS 

Feb 

Mar 

9000 

0X9 

0X3 

0X5 

1.02 

ao4 

0X9 

1X1 

1X8 

MSO 

aie 

0X4 

aw 

0.80 

0X1 

1J20 

1X0 

1X8 

9100 

0X4 

0X1 

0X8 

0.81 

0L58 

1X7 

1X2 

1X7 


Japan 

■ NOTIONAL LONG IBM JAPANESE QOVT. BOND FUTURES 
jjJTO YlOOm tooths of 100% 


Est ML SJtoL Cm 19*60 PUIS 12303- PiMoui <Ufn Opm It, C* 3033GB Puts 3*5501 


Opart Ckse Change Mgh Low EsL voZ Open hL 
Dec 10633 103.50 10S33 318 0 

Mar 107JI7 10794 10765 2S79 0 

* UFFE ax a aU a traoad an APT. Afl Open Mm Bgv are hr prevtas d ay. 


— Yield — 1994 _ 

HMM M Hal Prfrae+ir- Wp Low 


— vm — _ia»*_ 

Id ted PikaE+cr- Npi Uw 


— TDM— IBM.— 

Ill afncnl +re- Woa Lon 


Sbor&T (Ltaa npla ftre Yten) 

Tre»apel99+t* UB 

12pe1996 — 11 M 

East sic omaao-es - aw 

ioVpci99S nun 

Tira 12 Vpc 109S}4: 1285 

14pcl9S6 1299 

1AJK 1998ft 1174 

lam tstipc 1996ft 1«3 

Ctewnfcn tape 1998 — 958 

TtotQMTtc 1997ft — 7.13 

TtH)131«pC 1997ft 1157 

6ft Hftpc 1937 996 

Ttan B4gK 1997ft 850 

EaftlSpc 1997 12J& 

MtpelSSB — 957 

Haj 7VlK 1996ft 7.« 

Treat 65^® 1995-9Bft- 758 

14pc 1938-1 4250 

lHaal5*»C9ett 12» 

Bft12pc199B 1071 

Ttaasg>2DC 1999ft 9.16 

Bft121ipc19» HUB 

Traa laijoc lass 175 

HuesffeiBSS# 650 


-lotu^d 
5j64 361* 
591 BM, 

628 102[j 
658 iisy 

688 W7H 
7.15 11181 

7-20 10B>| 

736 104% 
7J4 88A 
7.77 IIDfi 
7.79 105% 
BJX3 101S 

aw mji 

6 Z3 IWi 
621 87A 
624 95A 

640 118% 

629 123% 

658 112 

654 103% 

641 113% 
640 107B 
635 90(| 


— 103J3 
W* 

— . 08H 

1«H 

— 113% 

— - 1«7* 
-i 1 * 12IH 

-* 117B 

M2£ 

— 100% 
»21H 

— 114A 

— 116', 
— Wig 
— U4fl 
— W8* 
-i 102 

■-A 131i 
-% 140i 

— 125b 

— 118ft 
-- 128ft 
♦ft 121ft 
♦ft IQlfi 


F«ft(|3lspe 1999-4— 
100* O ra restai 9%ceat04— 

101ft -nma%pc2004ft — 

8hresaa 

El 0*"®bFa»5 

S? Tiara l2%pt2HM— 

SS — 

108* 8pc2aa6ft— . 

TIS3A neaf11%(K 2003-7 

aa% 1teraB%pe 2007ft — 

itfs* U%ae 2004-0 

TnasgpcSOOflft 

mo* Tiraa tec 200a 

118& 

102 JJ 

0S% 


7GS 650 
651 650 

694 &5S 
1024 686 

621 649 

635 659 

1011 687 

653 852 
1tU9 688 
687 160 

636 6« 


4ft 88* 

— 125* 
+ft U»% 
+ft >00.9 
_ 125% 
•4 143ft 

♦ft 112B 
♦ft 111% 

— 138ft 
-ft UB* 
+ft Wlft 
♦ft *S4fl 
+ft 11SA 


Wax-Uofead M 

2KW 487.9) 250 400 200% 

«%9C9Bft (1359) 276 163 1D7ft 

:<apcin tnn us 177 uc% 


♦ft 808% 197JI 
♦ft 113* 106* 
■+% 176% 163% 


sue -to- — enm 6« iso ibja +% 173% 159ft 


4%pC04tt^41tia 3.48 181 108% 

20CD6 ns 3*4 381 166% 


+A 11B% 107% 
+% 1B4U 165ft 


2%psT18 (768) 181 163 15«| *ft 168,’, 149% 


f%ate RUnb has 
Omaolra )0%JK 19»- 657 

nunghBiSM 


"fa Over (Steen hm 
IIDft Trees 6 IWpc 2010 — — 
HUB OoraSpcloZOllft — 

Tllg Tre»9pc20l2ft 

18BA TteaiShpe 2008-4 2ft _ 

B8U Dws tec 201 3ft 

7%pc2D12-15ft 

ItaaStoc 2017ft 

Bdl I2pc 2013-17 


788 8J7 81 %d 
682 648 104% 
680 647 104% 

798 624 74« 

633 640 95ft 

629 841 93H 
640 637 105% 
616 MSiagW 


*% 98* 

♦ft 128a 

♦ft 127% 
** 93% 
+* liTfl 
-& H4% 
♦ft 128% 
-ft 1S9% 


Z%l*11 474.6} 663 384 158 ♦% 175% 154% 

2%DCT3 (894 365 384 130% *% 146% 129% 

2JsSCT8 (81-8 368 665 138* ♦% 157* 134% 

2%JJCT0_ asm 171 1H 12253 *ft lSZfl ia% 

2%9C24ft (97.7) 370 363 110% +ft 129ft 106% 

4%pc‘36ft — (135.1) 173 367 109% +ft IZBft 105% 

Aecpeetewnte radonydlcn rate <» prcfactsd Jn»kn of (1) 10% 

and (2) SM. 09 figtra bi preanthetes show rpi base tot 
•ndredng (te 8 months prior to Issuh) and haw been attested to 
redact rebasing of RPI to 100 m February 1967. Ccrnrenaan 
teeter 1945. m tar March 1994: 1426 and tor October 1994: 
1462. 


U& DOLLAR SIRNQHTS 
Abbey Nte Tteauy 6% 03 _ 

Abate nownoa 7% 96 

AuteteS%00 

Berk Nsd Gnmesacn 7 99 _ 

BoP cf Tckjo ft 96 

Bd0Un5%Q3 

BFC67%W 

atWiQas02l 

Canada 9 96 

Cheng Kong fin 5% 98 — 

Qte»6%04 

Cnj*va»ot»Bfl6 — _ 

CretB Fanoer 9% 99 

DenmmK5%ge , 

East Japan FteMay 6% 04 _ 

ECaCB%96 

SC 6V 96 

BB 7% 96 

HE 9% 97 . 

Brc da fiance 9 98 

Eut+miS^ 99 

E»-/m 8tek Jttpsn 8 02 

Export On Cap 9% BB 

Federal Ittl Mfcrt 7.40 04 __ 

finbndBli 97 

Fcrel Metre Qrete 6% 96 

Gtn Ebe Captef 9% 96 __ 

GMAC9%96 

tad 8k Japan Fn 7% 97 

htBrAnwrDav7%96 

fidy8%23 

Japan Ore BkB% 01 

Krcl Bee Itef 10 96 

Korea Bee Paw B% 03 — 

LTC8 fin 8 97 

Matadtea Bee 7% 02 

Ifaway7%97 

Onano 7% 03 

ester Kretttterefc 8% 01 _ 

MaCarath 7% BE 

Rrtori5%03 

aueriwcl^drartga 

Quebec ftov 9 98 

Sanstx*y9% 98 

SAS 10 99 

SNCF9%98 

Spain B% 99 

S3BBtNSW8>z98 

Sweden S% SB 

Swtth Export 8% 96 

Tokyo Bee firere 6% 10 

TUijo Uebopofa a<4 96 

Toyota Motor 5% flB 

Uiawd Ktagdom 7*+ 02 

Warid Bank 8%; 99 

Mtrtf&MSft 97 


WOO 87% 

,1000 86% 


- 400 101% 
.1000 95% 


87% +% 
98% +% 


- 100 100% 
.1000 81% 


101 % 

95% 

101 % 

81% 4% 


UNadHngttan7%97- 
865 1Mra^DntflFti703. 
BOB Woki Barit 0 15 

818 Wreld Bait 6% 03 

610 Warid Barit 8% M 


OSv Chg. YWd 


.5600 101 

. 1000 94% 

.2000 2D% 

.9000 88% 

. 1260 110 


101 +% 673 

96 +% 760 

21% t% 764 

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I 




FINANCIAL TIMES WEDNESDAY NOVEMBER 23 1994 A 

COMPANY NEWS: UK 


29 


Abbey National retail 
banking margins widen 


By Alison Smith 

A widening of margins in its 
retail banking business dining 
the third quarter of this year 
was reported by Abbey 
National, the home loans and 
banking group. 

In the three months to Sep- 
tember 30 Abbey said it bad 
increased its share of net lend- 
ing to the UK mortgage market 
to about 10 per cent Its share 
of the liquid savings market 
was, at more than 10 per cent 
higher than its more usual 8.5 
per cent 

Mr Ian Earley, finance direc- 
tor, said that the wider mar- 
gins partly reflected the fact 
that Abbey had eased its pric- 
ing of loans in the third quar- 
ter after a particularly success- 
ful first half of the year. 

The mix between fixed rate 
mortgages, which accounted 
for fewer than 5 per cent of 
loan applications, and variable 
rate lending had also had an 
effect, he said. 


Mr Harley said the changes 
were not unique to Abbey and 
would apply to others in the 
retail savings and mortgage 
business, "though ! like to 
think we've been ahead of the 
game". 

A further widening of mar- 
gins could be expected for 
mortgage lenders in general 
over the fourth quarter, which 
would take account of the 
opportunity provided by the 0.5 
percentage point interest rate 
rise in September. 

Competition for personal 
savings had also eased, since 
the lack of vigorous demand 
for home loans meant there 
was less pressure to attract 
large amounts of retail funds. 

Abbey's wider margins on 
the retail side have more than 
made up for the tightening of 
the spreads earned on its trea- 
sury investment portfolio, 
because of competition for high 
quality assets. 

It also said that as the con- 
tinuing downward trend of 


mortgage arrears and reposses- 
sions slowed, the level of provi- 
sions against bad and doubtful 
debts was approaching the bot- 
tom of the cycle. 

This suggests that mortgage 
lenders in general will find fall- 
ing provisions will decrease in 
importance on the headline 
increases in pre-tax profits. 
This is likely to intensify pres- 
sure to find income growth. 

Abbey said that new busi- 
ness premium income from 
Scottish Mutual, one of its life 
insurance subsidiaries, was 15 
per cent higher in the first 
nine months of this year, 
against the trend of the life 
sector. Within this increase 
there had been a small drop in 
regular premium b usiness . 

Over the same period Abbey 
National Life, the other life off- 
shoot , saw new business pre- 
mium income more than dou- 
ble, although this partly 
reflected the bet that the oper- 
ation was launched in Febru- 
ary last year. 


Music and rentals help 
Thorn EMI rise 27% 


By David Blackwell 

Strong performances by its 
main music and rentals divi- 
sions helped Thorn EMI to lift 
interim pre-tax profits by 27 
per cent from £99m to fi issAn. 

The popularity of the latest 
releases by the Rolling Stones 
and Pink Floyd helped push up 
operating profits at EMI Music 
from £S9.9m to £101.3m on 
sales of £877m (£778.3m) for the 
six months to the end of Sep- 
tember. Next week's release of 
a double album of recordings 
made by the' Beatles in the 
early 1960s for the BBC is 
expected to contribute to a 
strong second half. 

Thom Group lifted operating 
profits from ESg ftm to £57 5m 
on the back of increased cost 
efficiencies and new products. 
Turnover rose from £7lA5m to 
£760.Bm. In the UK, revenues 
from the rental base were 
ahead for the first time in 


recent years, mainly because of 
the Option-2-Qwn concept 

HMV, the music retailer, cut 
its interim losses to £2. 8m 
(£65m) after a 17 per cent sales 
rise to OS£3m (£l64Sml. 

Sir Colin Southgate, chair- 
man, described the results as 
“tremendously positive” and a 
pointer to a good outcome for 
the year as a whole. “We could 
not have asked for anything 
better,” he said, expressing 
surprise at the market reac- 
tion: the shares closed down 
24p at 97$). 

Total group sales fell to 
£1.94bn (£2.06bn), including 
sales from discontinued 
operations. Sales from continu- 
ing operations increased from 
£1.85bn to £153bn. 

The operating loss at TSE, 
the remaining technology busi- 
nesses including Thorn EMI 
Electronics, fell to £4m, against 
£I4.7!m when there were signifi- 
cant restructuring costs. 


| DIVIDENDS ANNOUNCED | 



Curort 

payment 

Date of 
payment 

Cones - 

ponding 

dividend 

Total 

tor 

year 

Total 

last 

yea- 

Anglo Mdi - 

fin 

2»t 

Jan 18 

2 

3.36 

3-36 

AUdna Group — ...Int 

3.85 

Jan 20 

3.85 

- 

8.1 

Cosalt 

fln 

. 5 

Jan 25 

3.25 

8 

5.375 


Int 

3.578 

Jan 3 

3^4 

- 

7-82 

Gartmore Shared —int 

4-8 

- 

2.4 

- 

9.6 

KewS Systems^ int 

2-5 

Mar 1 

- 

- 

5 

Lowndes Lambert — tot 

2.75T 

Feb 3 

2J>‘ 

- 

7-5' 

McLeod Russel fin 

3u45t 

Dec 15 

3 3P 


6.1 

Northern Foods — — Int 

3-5 

Mar 17 

3.5 

- 


Parkside - 

tot 

1 

Jan 9 

- 

- 

- 

PHMngton 

—int 

1.5 

Feb 17 

1.5 

- 

4 

ReatScut 

rnt 

0.63 

Feb 8 

0.83 

- 

3.44 

Shires Inv ...... — 

— —int 

4.2 ☆ 

Jan 31 

<L2 

- 

16.8 

Sterling tods 

Int 

2.5 

Feb 10 

1.8 

- 

6.3 

Thorm BW 

tot 

9.75 

Mar 3 

9 

- 

34 

Vodafone 

tot 

1.64 

- 

1.37* 

- 

2.78* 

WNtocrott 

Int 

1.5 

Jan 30 

nil 


2 


Dividends shown pence per share net except where otherwise stated. tOn 
Increased capital. §USM stock, flriah currency. * Second Interim making 8.3 
to data 'Adjusted for scrip issue. 


The group is in talks about 
the sale of its defence sensors 
business to Racal Electronics, 
and its other defence business 
to Thomson-CSF of France. 
The two divisions account for 
SO per cent of Thorn EMI Elec- 
tronics sales. 

It expects to complete the 
sale to Thomson by the end of 
the financial year in March. 
Yesterday Sir Colin said he 
hoped the sale to Racal would 
also be completed by then. 

Capita] spending rose by 
£50-2m to £308m. Sir Cohn said 
the group was expanding in 
Europe, America, Australia 
and the UK, and was investing 
in new rental products and 
new shops, as well as in infor- 
mation technology and manu- 
facturing in the music side. 

Earnings per share rose from 
I3.2p to 17.1p. After adjusting 
for exceptional charges of 
113.1m, niainly related to the 
sale of Thom Security in May, 
earnings were 21p, up from 
I6.4p when exceptional charges 
were £10m. 

The interim dividend is 9.75p 
<9P). 


Parkside at £1.35m 

Parkside International, the 
maker of flexible packaging 
and plastic labels which came 
to the market in February, 
reported pre-tax profits of 
£1.35m for the half year to 
August 31. Profits last time 
were £981,000. 

Turnover rose to £16.7m 
(£l5.4m including £971,000 from 
discontinued activities). Earn- 
ings were 3.4p (A6p) on inc- 
reased capital and as forecast, 
the interim dividend is lp. 



This announcement appears as a matter of record only. 



TAYI0R WOODROW 

Taylor Woodrow Investments, Inc. 


U.S.$50,000,000 

Revolving Credit Facility 


Arranged by 

Hambros Bank limited 

Provided by 

Den Danske Bank 
Hambros Bank limited 
Midland Bank pic 
The Sumitomo Bank, Limited 
Yhmaichi Bank (UJC) Pic 



Member of SFA 
November 1904 




BTR 

condemns 

offshoot’s 

window 

dressing 

By Paul Taylor 

BTR, the industrial 
conglomerate, yesterday 
condemned the year-end 
balance sheet 

“window-dressing" activities 
of Pilktagtira's Tiles, one of its 
subsidiaries. 

The move followed 
revelations that the financial 
controller at Ptikington's Tiles 
had sent suppliers letters 
asking them to wait for 
invoice payments due at the 
end of November until after 
the group's December 31 
| year-end. In return 
Ptikington's suggested it 
would be willing to 
reciprocate for suppliers. 

Such an arrangement would 
typically enable the 
participants to show stronger 
year-end balance sheets. 

Yesterday BTR said: “We 
neither authorise nor 
recommend letters of this sort 
Optimising cash flow and 
managing working capital are 
normal commercial practices 
for most efficient companies 
and BTR is no exception. 

“The BTR group as a whole 
is doing no more this year 
than it usually does. We are 
not concerned about our cash 
flow or gearing. The group has 
progressively reduced its 
gearing from 95 per cent at 
December 31, to 46 per cent at 
end of June this year." 

Asked what action, if any. 
BTR intended to take against 
its subsidiary, the company 
added: “We are currently 
examining the circumstances 
in which the letters were 
issued,” Analysts suggested 
yesterday that it was common 
practice for big companies to 
attempt to improve their cash 
flow and reduce their working 
capital. 

The Ptikington's Tiles' 
proposal, however, is 
embarrassing for BTR since it 
appears to go beyond the 
normal bounds of prudent 
balance sheet management. It 
also flies in die face of 
government and Confederation 
of British Industry's 
exhortations to big companies 
to reduce the length of time 
taken to settle bills from small 
and medium-sized businesses. 


Trimmed 
McLeod 
rises 23% 
to £6.4m 

By Peter Pearse 

Shares in McLeod Russel rose 
lOp to 117p yesterday as tbe 
group reported increases in 
operating and pre-tax profits 
of 57 per cent and 23 per cent 
respectively for thp year tn 
September 30. 

Profits for the group, which 
has Interests in surface 
coatings, air filtration, 
environmental engineering 
and property investment, grew 
to £6.36m (£5.16m> pre-tax and 
£8. 12m (£5.17m) at the 
operating level. Turnover 
expanded 24 per cent to 
£1 09.7m l£88.4m). 

The year was one of 
integrating and returning to 
profit the Wheway businesses, 
which it acquired in March 
1993. Mr Paul Humphreys, 
finance director, said: "We 
have done a reasonable job, 
though there is still some 
upside to come before we get a 
full return." 

While there had been no 
huge hidden problems within 
the lossmaking environmental 
engineering company, he said 
the aggregate problems had 
been greater than expected. He 
added that McLeod bad been 
accurate on the cash position, 
bnt that the profit side had 
been more difficult. 

With the aim of reducing tbe 
group's overdraft from last 
time's £17. 8m, McLeod sold 
most of tbe non-core 
businesses. Various “sundry 
businesses" had been retained 
because they took little 
management time and 
generated cash and a decent 
return on capital employed, 

Mr Humphreys said. However, 
make s Marine Paints had been 
sold because it was small, in a 
different market sector, and a 
trade buyer had made an 
approach. 

Losses on disposals were 
£490,000. but borrowings were 
reduced to £I0.5m for gearing 
of 31 per cent. Mr Humphreys 
said the pressure was now off 
that area. Interest payable, 
however, rose steeply to 
£1.3 Im (£490,000), reining in 
the pre-tax advance. 

Earnings grew by lp to 8.54p 
and the final dividend is lifted 
to 3.45P (3.35p) for a total of 

6.2p(6.1p). 


NSM backs Budge’s assumptions 


By Peggy Holtnger 

One of Britain’s largest Independent coal 
companies yesterday backed the assump- 
tions used by Mr Richard Budge, chief 
executive of RJB Mining, in Us controver- 
sial £9l 4m bid for British Coal’s English 
regions. 

Mr John Jermine, executive chairman 
of NSM, wUch failed in its own bid for 
the South Wales region, implied doubts 
behind RJB's bid could be exaggerated. “I 
do not think it is beyond reason that 
Budge’s assumptions will work out,” he 
said. 

Mr Jermine said he was optimistic 
about the outlook for coal in spite of two 
widely publicised threats to the UK indus- 
try - Imports and the potential shift from 
coal to gas-fired power stations. 

Hr Jermine said coal was the cheapest 
fuel for power stations. Tbe generators 
“still make more money from coal than 
from any other source of energy,” he said. 


Secondly, Mr Jermine main tains that 
imports are expected to become increas- 
ingly expensive as transportation 
costs rise. “Our prices is the UK are 
already broadly competitive with imports 
on a secured stream of coal,” he 
said. 

However, he attacked tbe delay by the 
Coal Authority to reduce the royalties it 
receives from independent coal miners. 
These have over the last 18 months fallen 
from £5 to £2 per tonne for open cast coal 
However, a rurther expected reduction to 
50p, which would make UK coal more 
competitive with imports, had not yet 
been implemented. 

Mr Jermine’s comments on the British 
Coal bidding process almost overshad- 
owed his own company’s buoyant perfor- 
mance In the first half and its promise to 
pay the first dividend since 1990. Pre-tax 
profits for the six months to September 30 
rose by £2m to £2. 7m, on sales 9 per cent 
ahead to £62m. 


NSM said it expected to pay a final 
dividend, in light of the continuing 
improvement in the trading performance. 

Profits in toe first half were helped by a 
record year in the plant hire business, 
and by lower interest charges of £34m 
(£3.94m) after the £40m rights issue in 
July. 

The US mining - division almost trebled 
pre-tax profits from £959,000 to £2.3m 
largely doe to reducing costs. Prices tn 
the US remained under pressure, and 
were not expected to improve until indus- 
trial activity picked up. 

In the UK, mining profits rose by 28 per 
cent to £4.4m. About three-quarters of 
NSM’s UK mining turnover comes from 
low margin contracts with British Coal. 
However the bulk of profit came from 
NSM’s own mines which supply UK utili- 
ties on fixed contracts which run to 
1998. 

Earnings per share almost doubled from 
3Ap to 6.9p. There was no interim payout 


Putting £lbn down the mines 

Michael Smith on RJB’s controversial bid for British Coal’s assets 


B ritish Coal may bave 
faced a serious decline 
in its markets for most 
of its 47 years of existence, but 
there is no chance of that hap- 
pening to RJB Mining, the 
company chosen as preferred 
bidder to take over its English 
mining assets. 

That at least is the view of 
RJB and Mr Richard Budge, its 
chief executive, and explains 
why it offered the government 
so much more than Its rivals. 

Even after 1998, when con- 
tracts inherited from British 
Coal run out, the company 
assumes ft will be able to keep 
sales steady at about 34m 
tonnes a year from the three 
regions it is buying, much the 
samp as the 35m tonnes next 
year. 

The problem is that RJB is 
thought by some analysts to 
have overestimated the size of 
the post-1998 market by about 
40 per cent and compounded 
tbe error by assuming prices 
will be 20 per cent higher than 
they are likely to be. 

Even some coal and electric- 
ity industry executives who 
regard themselves as optimists 
think the "conservative” esti- 
mates that underpin the bid 
are at the high end of the 
likely outcome. 

An assessm ent of the post- 
1998 market is central to RJB's 
efforts to raise up to £l.05bn to 
finance Its £914m bid (the price 
is subject to negotiation). 

RJB can with relative ease 
persuade banks to lend some 
£628m. 

The inherited coal contracts 
with electricity generators pro- 
vide a reasonable likelihood 
that the bulk of file debts can 
be paid back within three 
years. 

However. RJB’s success in 
raising up to £425m through a 
share issue depends to a large 
extent on expectations of the 
company's prospects after 1998. 

The company, worth less 
than £l60m at its suspended 
stock market price, says it can 
offer potential shareholders 
dividend yields of about 4.5 per 
cent in the early years. That is 
unlikely to draw in many 
investors, however, since it is 
only around the stock market 
average. 

An investment in coal is per- 
ceived as risky. 

RJB's big bait, therefore, is 
the policy, outlined to institu- 
tional investors in a series of 
presentations, of “rapid divi- 
dend growth after reduction of 
debt" - mainly after 1998. 

If the pessimists are right. 


the company will fail to pro- 
duce the £220m a year pre-tax 
profits it believes are achiev- 
able by the end of the decade. 
This would jeopardise dividend 
growth, with a consequent 
impact on the share price. 

It is not just investors who 
would suffer, however. Parts of 
Britain's coal base could be 
lost for ever, according to pes- 
simists, as RJB struggled to 
make enough money to invrat 
in pits. 

The government's reputation 
on privatisation, already under 
fire from opposition parties, 
would suffer a further knock. 

But isn't this all too apoca- 
lyptic? Surely RJB and its 
adviser Barclays de Zoete 
Wedd. not to mention the gov- 
ernment's adviser, NM Roths- 
child, cannot all have got it 
wrong? 

In the past, Rothschild has 
been viewed as pessimistic 


Financing Structure 
of the Bid 



£ 

Value of tender 

94* 

Total financaig ** 


- bank debt 

528 

- corporate bond 

100 

- equity 

425 


** Includes refinancing of RJB’s 
misting bank debt, working capital 
and costs * subject to negotiation 
with the gove rnm ent and l&eiy to tali 


about the coal market: Its pre- 
dictions three years ago on the 
size of the pre-privatisation 
market and the subsequent 
need for closures have proved 
to be accurate. 

Mr Keith Palmer, a Roths- 
child managing director, is 
thought to be in broad agree- 
ment with RJB’s view of the 
post-1998 mariiet 

In its City presentations, 
RJB uses figures supplied by 
Caminus, tbe consultancy 
which advised tbe government 
in the coal review, for the 
worst and best scenarios for 
the English electricity supply 
market after 1998. The favoura- 
ble case, for 54.6m tonnes 
including imports, will set 
shareholders' pulses racing 
since it could provide the base 
for pre-tax profits even higher 
than the £220m RJB is project- 
ing in 1999-2000. 

For sake of prudence they 
will also need to examine the 
“conservative" figure of 27.6m 
tonnes. According to some 
industry analysts, including 
McCIoskey Coal Information, 
which provides editorial for FT 
newsletters, even this is too 


English ESI Requirements for Coal 


Conservative 

Conservative 

Favourable 


Case 

Case 

Case 

Tear ended March 31 

1994/96 

1999/00 

1999/00 

M/tames of coal equivalent 

MAonnes 

M/tonnes 

. M/tonnes 

Electricity Generation 
(England and Wales) 

115.2 

122J3 

122.3 

Nuclear 

26.6 

29.7 

22.1 

Gas 

16.1 

S0.6 

40 n 

Scottish Link 

3.5 

4.7 

4.7 

French Link 

6.9 

1.4 

0.0 

Stock Withdrawal 

12.0 

0.0 

0l0 

Onmuisior 

1.4 

BJ3 

0.0 

Heavy Fuel Oil 

0.1 

0.0 

0.0 

Total Non-coal 

66.6 

94.7 

67.7 

Avalable for coal* 

4&6 

27j6 

54 JJ 

Available to English Suppliers* 

90L9 

27.1 

43.0 

ImpOiH OCOuuM Im Of tTffl arwKv hat * rut Okao 

Souok Cwmnur 


high. McCIoskey says RJB's 
“cautions" estimate for annual 
capacity available to English 
suppliers is about 6m tonnes 
too optimistic. 

It believes RJB has under-es- 
timated the market share of 
nuclear power and import 
links from Scotland and France 
In the late 1990s, as well as the 
penetration of imports in 
1999-2000. It also considers 
RJB’s estimates for the domes- 
tic and industrial markets to 
be high. 

Industry executives adopt 
varying attitudes. According to 
one power company executive 
the overall impression of RJB's 
conservative case is that it 
does not allow for the worst 
possibilities for coal. But nor 
does be see the projections as 
“way off beam". This is sup- 
ported by figures in the seven- 
year plan at the National Grid, 
power transmission company, 
which suggest coal bum in the 
year 2000 will be between 2Sm 
and 33m tonnes. 

Assuming RJB is right, the 
total market for coal in its con- 
servative case is 35.5m tonnes. 
To achieve its aim of making 
£220m in 2000, RJB believes it 
can sell 33.8m tonnes. That 
leaves little room for rival com- 
panies, such as Coal Invest- 
ments and Ryan Group, which 
will be fighting hard for mar- 
ket share and may drop their 
prices to get it Yet RJB’s pro- 
jections for prices are also at 
the high end of expectations. 

Mr Budge believes an aver- 
age selling price of £1.32 is rea- 
sonable and has been telling 
institutional investors that he 
believes the average price for 
power station coal will be 
about £1.25 at today's prices. 

Generator executives believe 
that is too optimistic, since 
coal can be imported at prices 
of less than £1 a gigqjoule. Coal 
Investments based its failed 


bid for the two central England 
regions on prices of £1.10 or 
less and British Coal execu- 
tives believe that is nearer the 

mar k 

Another rival bidder for 
some of the five regions, whose 
tender also failed, says RJB 
may be able to sell coal for an 
average of £1.32 a gigajoule in 
2000 and it may be able to sell 
33.8m tonnes. “Bnt I can’t see 
how he can do both. If he 
wants to sell high volumes 
then he must keep prices low. 

“The worst thing is that he 
will discover all of this around 
1997 and if he decides to go for 
high prices, he will have to cut 
volume. Coal mine closures 
will be expensive.” 

Mr Budge thinks otherwise. 
In his institutional presenta- 
tions, be points to rising prices 
on the international market 
and the expense of getting 
imported coal to the inland 
power stations - the bulk erf 
them. 

He adds that If the worst 
came to the worst and the com- 
pany did have to reduce capac- 
ity, it would not be a disaster. 
There would be little need for 
closures because opencast pro- 
duction, rather than that from 
deep mines, could be varied. 
Nor would redundancy costs 
be high since the industry 
employs several thousand con- 
tract workers. 

With so much adverse pub- 
licity, Mr Budge and his advis- 
ers still bave to do some per- 
suasive talking to be sure of 
raising the money they need. 
But Mr Budge is impressing 
investors and there are signs 
that institutions are believing 
his projections rather than 
those of his critics. Supportive 
comments, like those made 
yesterday by Mr John Jermine, 
executive chairman of NSM, 
another coal company, will add 
to the Budge bandwagon. 


Revival of US airline boosts GPA 


By Simon Dairies 

GPA, the Irish aircraft leasing company 
rescued from collapse last year, returned 
to profit forthe six months ended Septem- 
ber 30. The turnround was because of set- 
tlements received from the revived US air- 
line America West, which recently 
emerged from bankruptcy. 

Pre-tax profits amounted to $5.3m 
(£3 .23m). compared with a $39m loss, after 
the payment of $l7lm interest on its 
$5.13bn debt mountain. The figure was 
boosted by a $32m exceptional credit A 
$57m loan to America West has been 
repaid, and the $32m credit related to the 


settlement of additional claims against air- 
craft leases to the airline. 

GPA’s turnover rose from $8Q0m to 
$lD7bn and tbe company had $832m posi- 
tive cash flow from its operating activities. 
This included $S25m from the sale of air- 
craft partly through a previously agreed 
sales programme to GE Capital 

Borrowings fell by $358m to $5.13bn; 
however, this compares with shareholders’ 
funds of $192m. 

The company recently took on Morgan 
Stanley as adviser and is hoping to negoti- 
ate delayed repayment of $L8bn of debt 
due in September 1996. GPA is aiming for 
an ll-month extension. 


Mr John Tierney, finance director, said: 
“We believe the company has now stabi- 
lised in terms of trading. We are beginning 
to see improvements in the industry. We 
are now in a position to address the next 
major hurdle: the 1996 repayment’' 

He emphasised that with recent dispos- 
als GPA’s liquidity was the strongest it 
had been for more than two years, and 
therefore the company would be able to 
negotiate “without our backs to the wall”. 

Cash balances are $3l3m and available 
banking form ties are more than yionm 
However, GPA admitted that the aircraft 
leasing market has not yet reflected the 
generally improved demand for air travel. 


Hartons director agrees 
to resign and sell shares 


By Richard Wotffe 

A non -executive director of 
Hartons Group yesterday 
resigned from the board of the 
semi-finished plastics distribu- 
tor, one day after the board 
called an EGM to unseat her. 

Mrs Monica Maimann agreed 
to step down and! sell her fami- 
ly’s holding of 24.3m shares, 
representing 33 per cent of 
ordinary shares. 

Singer & Friedlander, the 

company's financial adviser, 
said ft would attempt to place 
the shares at no less than 8p 
before December 22, when Mrs 
Maimann would be free to sell 
her shares independently. 


Two weeks ago, Hartons said 
negotiations between two main 
shareholders and a third party 
could result in a full offer for 
the group. The deal was 
thought to involve a price of 8p 
per ordinary share. 

The ordinary shares closed 
unchanged at 7p yesterday. 

Hartons, which has incurred 
losses for the last four years, 
reported a £325.000 pre-tax defi- 
cit on £25.7m turnover in the 
six months to June 30. 

Two nonexecutive directors 
have been appointed: Mr 
Julian Bell, non-executive 
director of Ipeco Holdings, and 
Mr Barry Stepper, nonexecu- 
tive director of Warburtons. 



Appear in the 

Financial Times on Tuesdays, Fridays 
and Saturdays. 


For further information 
or to advertise 

in this section please contact 

Karl Loynton on +44 71 873 4780 
or 

Melanie Miles +44 71 873 3308 


FT 


FINANCIAL TIMES 


1 


l 





Vjv.. . 




FINA NC^«MES WEDNESDAY NOVEMBER* 199* 


COMPANY NEWS: UK 


Threat of second half restructuring charges to cover closures 


BAe 


Northern Foods declines 16% 


By Roderick Oram, 
Consumer hrxfastries Editor 


Northern Foods warned that 
plant closures and job losses 
would force it to take a 
restructuring charge in the 
second-half as it reported a 26 
per cent drop in interim pre- 
tax profits from £ 72.1m to 
£53. 7m. 

The dairy and foods manu- 
facturer blamed the setback on 
rising milk costs and intense 
pressure on Us selling prices 
from retailers. 

Milk costs were up 10 per 
cent or £50m after price 
increases by the Milk Market- 
ing Board and Milk Marque, its 
successor. Mr Christopher 
Haskins . Northern’s chairman, 
attacked Milk Marque for Its 
abuse of monopoly power". 

Northern's profits are expec- 
ted to fall by about £15m this 


year but longer term the group 
hoped to recover about half the 
Increased costs through, higher 
prices. The rest wiQ come from 
closures and other cost- 



attacks 

GEC’s 

export 

record 


Recovery reflects 
cutting at Pilking 


Sfpi 


,v> 


J?' 


Northern Poods 


Stare price (jwucs). 


300 *■ 


'240 :k-r^/L- — 


.■ . 4*1993 
.SoumscfTOravNM 


Analysts, who estimate the 
restructuring charge could be 
about £3Qm-£35m, were disap- 
pointed that it would also 
cover non-dairy areas such as 
cutting van distribution to 
small retailers and rationalisa- 
tion of meat production. The 
shares closed down 8p at 204p. 

Operating profits fell 11 per 
cent to £72.6m in the six 
months ending September 30. 
Interest charges were £7.4m 
(£9.3m) and there was a £li_5m 
loss on disposals. 

Dairy operating profits fell 14 
per cent to £34.5m on 
unchanged sales of £476. 4m. 
Doorstep milk sales fell by 12 
per cent while supermarket 
sales rose. Home milk sales 
were likely to fen from 45 per 
cent of Northern’s total milk 
sales to 30 per cent 

Convenience foods fell 18 per 
rent to EiKfrm on sales down 2 
per cent at £262.3m. Factors 
included lower bread sales, 
start op problems at a Man- 
chester plant and reduced sales 
from its delivery vans to small 
shops. However sales volumes 
to Marks & Spencer rose 5 per 
cent and sales to it and three 
other large chains, J Salis- 
bury, T esco and Asda, now 
accounted for 35 per cent of 
group sales. 

Meat products fell 16 per 


>1 • ' ® 1 


UtA/lJ 


By Bernard Gray, 

Defence Correspondent 


The glass maker has finally 
found favour with the City, 
writes David Wighton 


§’ Al'lMtikii. I 


k M - ii 







^ ■ *1 

>*> - « ; 9 


David Ben 

Christopher Haskins: Milk Marque abusing its monopoly power 


cent to £&2m on sales down 2.6 
per cent to £l25m. Progress 
with large c hains offset declin- 
ing sales to small shops and 
caterers. 

Grocery profits rose 25 per 
cent to £11.9m on sales up 
slightly to £l06£m. Fox’s bis- 
cuits. the bulk of the division, 
increased its market share by 
half a percentage point to 6.5 
per cent 

The interim dividend was 
unchanged at 3.5p from earn- 
ings per share of 6.37p (9-37p) 
or &37p before exoepttonals. 


• COMMENT 

These disappointing results 
show that Northern has a lot of 
remedial work to do across the 
group. Moreover, it is revisit- 
ing long standing problems 
such as doorstep milk delivery 
and van sales. Pre-tax profits 
this year of about £130m. 
before provisions, are possible 
for earnings of 17p and a sector 
typical prospective p/e of 12. 
With no prospect of earnings 
growth for 12-18 months, the 
shares will live on their 5 1 /. per 
cent yield. 


Lowndes Lambert lifted to 


£6m by rise in new business 


Cathay 
in profit 
at midway 


By Ralph AHdns, 
Insurance Correspondent 


Despite increased competition 
in Its sector, Lowndes Lam- 
bert, the London-based insur- 
ance broker, increased first 
half pre-tax profits by more 
than 15 per cent to £6m. 

The group attributed the rise 
to growth In new business. 
Profits were also boosted by a 
first contribution from White- 
ley Hens haw Hindle, a UK 
insurance broker, acquired for 
an initial £4.65m in June. 

Excluding acquisitions, pre- 
tax profits for tiie six months 
to end September increased 


from £5 .2m to £5 .8m- Total 
turnover rose from £372m to 
£43m. 

Mr Richard Shaw, chairman, 
said conditions in the group’s 
main m arkets remained diffi- 
cult, but he expected “further 
steady progress" in the second 
half. The group annmmwni a 
reor ganisation to remove over- 
laps between b usinesse s and to 
focus UK activity into three 
divisions: UK non-marine, 

marine and rntematin nal. 

Mr Shaw said Lowndes 
would be well placed to take 
advantage of any shake-out in 
the insurance broking sector 
resulting from increased com- 


petitive pressures and the 
trend by many large compa- 
nies towards buying fee-based, 
rather than commission based, 
services. 

Lowndes’ growth was largely 
based on “middle-tier" compa- 
nies which continued to bene- 
fit from the broking services 
the group offered, he said. 

The group announced a 10 
per cent increase in its interim 
dividend to 2.75p (5L5p). 

Earnings per share rose to 
&9p against 6.1p last time. 

The shares closed 9p higher 
at 168p, with analysts 
impressed at the group’s per- 
formance in tough conditions 


By Simon Davies 


Utd Breweries refinances 


and buys Inn Business 


Quiligotti back 
in the black 


By Joai Gray 


United Breweries, the 
financially troubled public 
house operator controlled by 
Mr Vljay Mallya which has had 
Its shares suspended since Sep- 
tember, has finally come to an 
agreement with its bankers 
about a refinancing. 

Following support by Mr 
Mallya’s UB Group of India 
and an unnamed institutional 
shareholder, a refinancing has 
been agreed which will be 
accompanied by a capital reor- 
ganisation, a placing and an 
open offer to shareholders. 

The USM-quoted company,' 


which had debts of £9m in Sep- 
tember, is not disclosing the 
sum it hopes to raise, but the 
shares will be offered at sub- 
stantially below the current 
suspended market price of 6%p. 

UB is also to acquire Inn 
Business, a privately-owned 
public house operator with 70 
houses. The deal - for an 
undisclosed consideration - 
will more than double the 
number of public houses oper- 
ated by the group. 

The group originally 
breached its banking cove- 
nants last April after a £7 2m 
writedown in the value of its 
public houses. 


Quiligotti, the terrazso floor 
tile manufacturer, returned to 
profit in the six months to 
September 80. The £230,000 
pre-tax result comp a red with a 
£I.27m loss last time and a 
JEL53m loss at the year-end. 

Mr Ken Hodgson, chairman, 
attributed the tumround to 
the new management team, 
saying that it had “paved the 
way for tile future". 

The purchase of R CristofbU 
in April resulted in goodwill of 
£204,000. 

Turnover was 8 per cent 
ahead at £7.55m (£7.01 m). 
Earnings per share came out 
at <k59p (I6.45p losses), with 
no interim dividend. 


Cathay International, the 
China-oriented investment 
group, yesterday announced a 
pre-tax profit of £l-57m In the 
six months ended September 
30. against a £515,000 loss. 

The company is involved in 
two substantial China invest- 
ment projects that have been 
held up by Beijing bureau- 
cracy. Operating profits how- 
ever. rose from £168,000 to 
£2.03m on revenues from its 
two hotels. 

The Landmark Hotel, tn the 
Southern Chinese city of Shen- 
zhen, contributed only 3 
months of revenues, following 
its official opening on June 21. 

Mr Stephen Hunt, deputy 
chairman, said the hotel expe- 
rienced 75 per cent occupancy 
in October, with room rates 
gradually being raised, and 
revenues starting to come 
through strongly from its food 
and beverage operations. 

The Xiyuan hotel remained 
profitable, but progress with 
the proposed 500,000 sq metre 
redevelopment on an adjoining 
site has been slow. 

The company has received 
formal approval for its $143m 
(£87. Lm) investment in a 60 per 
cent stake in a franchise to 
operate four toll bridges and a 
tunnel within the city of 
Guangzhou (Canton). 

Earnings per share 
amounted to 0.025p (0.267p 
loss), but there will be no divi- 
dend. 


British Aerospace, which is 
fighting GEC for control of 
VSEL, the submarine maker, 
yesterday attacked its 
competitor’s record as a 
military exporter. 

In a document sent to 
shareholders alongside its 
revised offer for VSEL, BAe 
points out that its export sales 
have grown from an annual 
£lbn to about £3bn over the 
past decade, while GEC’s 
military exports have only 
grown from £400 m to £700m. 

The document also 
highlights that GEC has only 
won one export order for two 
warships to Malaysia in the 
past 10 years while Vosper 
Thornycroft, a competitor in 
small warships, has increased 
its export business from £40m 
a year to £140m in the same 
period. 

The UK lags behind French 
and German warship yards for 
exports to countries such as 
Australia, Greece, New 
Zealand, Saadi Arabia, Taiwan 
and Turkey, according to the 
document. 

As well as attacking GEC’s 
export record, BAe continues 
to argue that GEC's bid for 
VSEL unnecessarily eliminates 
competition between warship 
maters, and runs counter to 
the Ministry of Defence’s 
competition policy. It qaotes 
the ministry as saying that 
“competition is the 
cornerstone of our 
procurement policy". 

The Office of Fair Trading is 
considering the competition 
merits of both bids. It is not 
thought that the MbD 
raised significant abjections to 
GEC’s bid with the OFT. GEC 
has argued that little real 
competition will exist in UK 
shipbuilding whoever owns 
VSEL. 

GEC declined to comment on 
the allegations made in the 
document However, the MoD 
is thought to be disturbed by 
the prospect of a full-scale war 
of words breaking out between 
Britain’s two largest defence 
contractors. 

BAe also claims rim* GEC’s 
abilities as a prime contractor 
are unproven while it has a 
strong track record, and 
attacks GEC’s record on the 
Nimrod radar contract 
However, GEC was not the 
prime contractor on this 
contract which was run by the 
MoD. 

The formal document also 
confirmed that BAe’s cash 
offer had been increased to 
match GEC's at £14, and Is 
offering IL3 BAe shares for one 
VSEL share, up from 2.747 
shares in its original offer. 

VSEL’s articles of 
association have been 
amended to allow BAe to buy 
the company provided it wins 
the support of a majority of 
shareholders. A similar 
meeting of VSEL shareholders 
to allow GEC’s bid to go 
through is scheduled for 
tomorrow. 


The City has found little good 
to say about PiUtington’s man- 
agement since it fought off 
BTR's £12bn bid way back in 
1987. However, the tune has 
finally changed. Yesterday 
analysts were full of praise, 
particularly for Mr Roger Lev- 
erton who was brought in as 
chief executive in July 1992. 

“They deserve a lot of 
applause for what they have 
done. For Pflkingtan, the reces- 
sion has been a good experi- 
ence," said Mr Robert Donald, 
of NatWest Securities. 

The recovery in half-year 
profits owed much to an 
improvement in PUkmgton’s 
main markets. But manage- 
ment action also deserves 
credit 

Criticised for being slow to 
cut costs at the onset of the 
recession, the company has 
since set about the task with, a 
wilL Almost £300m has been 
fcakan out of costs over the past 
four years with £42m,- or 4 per 
cent, going in the six months 
to September. About 600 jobs 
went in the first half and 
another 1,000 are set to go 
before the end of the year. 

The brisker than expected 
cuts and a strong performance 
in Brazil pushed Pflkmg ton’s 
profits comfortably above ana- 
lysts' estimates. As a result, 
NatWest increased its full-year 
forecast from £U9m to £ttfen, 
before disposal gains, and tom 
£200m to £220m in 199586. For 
the following year it predicts 
profits not Ear short of the 1989 
peak of £330m. 

That will require a continua- 
tion in the price recovery being 


shown in most of Pflkiiigton’s 
piain markets. 

The main weak spot is Got* 
many where prices for double 
glazing units are still sliding 
despite strong demand. 
Although the German float 
giaag price is still 40' per cent 
below its 1989 level, two price 
rises have pushed it . up by 
about 10 per cent this year. But 
this has not arrested the 
decline in downstream prices. 
“We have just put in another 5 
per cent increase in float to try 
to force manufacturers to 
increase their prices. There is a 
l imi t to how much cost 
increases they can. absorb,” 
said Mr Leverton- 

He points out that the capac- 
ity situation can change 
quickly, “hi the US there was a 
lot of surplus capacity 18 
months ago. Now we are run- 
ning at 100 per emit, with 
shortages in certain areas." 

This has followed rapid 
growth in demand' for val- 
ue-added products, such as 
Galaxsee, PilMngton’s “pri- 
vacy" glass for cars. Currently 
all the rage among fashion-con- 
scious US car buyers. Galaxsee 
takes up more capacity and 
commands a premium price. 

Despite recent disposals Pilk- 
ington’s balance sheet remains 
stretched. Gearing, which 
readied 86 per cent following 
tiie purchase of Heywood Wil- 
liams, was cot to 66 per cent at 
the end of the first halt But 
the company will feil to hit the 
year-end target of 60 per cent, 
partly because of the postpone- 
ment of the partial flotation in 
Australia. Pflkington has also 



/i . -■ ■ 


£5- ' 




* ->•- 

V . * 


r-vw 1 : 


' . I.- 


*>i.> 

(fc;! 






restated its balance sheet to 
take account ■- of - revised 
accounting standards relating 
to US retirement benefits^TTais 
has reduced shareholders' 
fUnds by aOQm, adding 1 per- 
centage points to gearing; y - 

However, interest covrar wid- : 
p u pri to more thantwo times in 
the the first half and PUkfog- 
ton remains determined - to 
work out its debts without 
resort to a rights issue.-. . 

Its capital expenditure is 
running well below depreda- 
tion following thehuge invest- 
ment in new capacity in; the 
late 1980s. Pilktogtan’s main 
current projects: are In South 
America, where.it .is bufldfoff a 
float glass plant hi ChUe and a : 
third line in Brazfi. But there 
are some slightly ominous 
moves by its-dyals elsewhere. 

At least twO new float plants 
are planned in the US, where 
car productiott. is" about to 
peak, and two laige European 
distributors are planning: to 
move upstream- with a float 
plant in Alsace. 

There is a long way to go 
yet, blit when PiHtington’s 
business peaks again, that wifi 
be the real . test of its manager 
ment. . 


•0? 

■ 

• y" 


3- fS* 3 * 


Hydraulics side lifts Sterling 


By Peter Poarse 


Boosted by “strong growth” in 
the hydraulics division, pre-tax 
profits at Sterling Industries, 
the engineering group, leaped 
from £1.69m to £3u3?m in the 
six months to September 30. 

Cayzer Trust Company and 
Caledonia Investments own 
43S per cent and 2L1 per cent 
holdings respectively in the 
group, while Sterling has a 
cross-holding of 9.7 per cent in 

HalpHnnia. 

Mr Peter Buckley, chairman, 
said the hydraulics side had 
experienced “good growth In 


sales”, which had led to imp- 
roved margins. The group had 
been developing a new range erf 
valves - soleno id , in particular 
- and same of the increase was 
attributable to new products 
coming on stream. 

The thermal process divi- 
sion. accounting for about two- 
thirds of group sales, also lifted 
profits substantially, thnng h 
w hile the increase . in the US 
was good news, the difficult 
trading in Germany and the 
UK was bad. 

However, Far Eastern con- 
tracts, derived from the Aus- 
tralian operation and achieved 


through “effective marketing 
of our fibreglass know-how”, 
gave a boast to the diviskm’s 
figures. 

Group turnover grew sharply 
to mam (£l8-3m) and operat- 
ing profits swelled to £&26m 
(£422^000). Inv estment income, 
including dividends from Cal- 
edonia, and minus interest 
payable was £LUm (ELOlm). 

Earnings rase to 8£lp (4.62p) 
and the interim dividend is 
lifted to 5L5p (IJ8p), though 
some 0.4p of the rise is to 
establish a better balance 
between the interim and final 
pay-outs. 


Royalty loss hits Kewill shares 


Shares in Kewill Systems fell 32p to 244p on the 
news that the USM-quoted software group 
stands to lose £500.000 in royalty income in the 
second halt following the collapse of Microway, 
its main distributor in Germany. 

The company, which distributed Kewill's 
CAD-CAM building services systems, was put 
into receivership last week. 

However, Mr Kevin Overstall, chairman, said 
he was confident that “any sales shortfall will 
only be short term”. 

Mr Overstall also admitted that the group's 
marketing link with IBM was not yet generating 
the big orders originally anticipated, with lead 


times longer “and maybe a year or so out”. 

Meanwhile, pre-tax profits at Kewill Systems 
advanced 23 per cent, from £1.76m to £2.17m, for 
the half year to September 30. Turnover edged 
ahead from £16m to £16.4m. 

UK operating profits improved 25 per cent to 
£L49m. Profits in the US were 60 per cent abaad 
at £720,000, assisted by the “strong performance 
of the US economy", said Mr OverstaU. 

Group operating profits rose 24 per cent to 
£2.44m (£L97m). 

Net cash stood at £600,000 at the period end. A 
maiden interim dividend of 2J>p is declared on 
earnings per share of 12J.6p (lOOSp). 


CONTRACTS & TENDERS 


NEWS DIGEST 





INVITATION TO TENDER 

THE GREEK PUBUC ESTATE CORPORATION, 

legally authorised by the Greek Telecommunications Authority Insurance Fund (TAP-OTEMnvites tenders to 
complete for the grant of a 20 year duration lease of MACEDONIA PALACE HOTEL, 
Class A-LUX (Five Star), property, of the above mentioned Fund. 


Turnround 
of £ 1.66m 
at Moran 


Atkins cots losses 


The Hotel building comprises 288 rooms (538 beds) and it is situated on 
a 14500m 2 parcel of land by M. Alexandra] Ave. (coastal promenade) in 
the City of Thessaloniki. 

Eligibility 

L The following categories of firms are eligible to compete. 

LI. Hotel firms which have been engaged in Hotel business 
(4 or 5 star Hotels) for at least three years. 

L2. Joint Venture Hotel Enterprises which have been exclusively 
involved in Hotel business. 

At least one of the associate firms must satisfy the conditions 
outlined in LL above. 

L3. Firms, individuals or associates, participating in joint venture 
firms, which are at the moment in legal battle procceedngs 
against the owners of the Hotel (TAP-OTE) are not eligible to 
take part in the competition. 

2. All competing parties must submit an application form and 
certified copy documents to the authorised Auction Committee. 

Ail docunents must be completed/translated in the Greek language. 

3. The auction will take place in the City of Thessaloniki inside 
MACEDONIA PALACE Hotel premises on 18 JANUARY 1995 
from 09,00. hours to 1400 hours. 

4. L First year rent: First year rent is fixed at the sum of one 

billion drachmas (GRD L000O00.000) and will be paid upon the 
signing of lease contract. 

M. Second year rent: 

Commencing rent for the second year of the lease period is fixed 
in the amount of GRD. 600.000.000. Each offer submitted in writing 
must be fixed at least 5% above this said commencing rent The 
amount to be determined at the conclusion of the written or oral 
auction procedure will be the second year’s rent 
43. The above mentioned second year rent will be reviewed annually on 
RPJ. basis, until the end of the lease period. 

5. L The highest bidder at his own expense must undertake the 

following works: 

(a) Renovate the hotel premises in full, internally as well as 


externally, within a period of 24 months from the date of the 
signing of the lease contract. 

(b) The lessee, following signing of the lease contract, must keep in 
good order and properly maintain the hotel premises throughout 
the lease period. 

5.2. The hotel will operate on a full calendar year basis as a five 
star establishment. 

6. The lease period will be for twenty (20) years. 

7. A bank guarantee letter in the amount of GRD. 250.000.000 
is required to enter the auction procedure. 

8. All relevant supporting documentation which includes floor plans, 
specification details, draft lease documents, etc, can be made 
available and be delivered to an authorised representative of the 
interested firm/enterprise upon payment of GRD 200.000. All 
relevant documentation may be obtained from GPEC'S offices 
158A. Alexandras Ave., 115 21 Athens, during working hours 
(Please contact Mr.C. Kourtis 00301 - 642.57.55 or 

Mr. G.Sakelariou 00301 - 644.03.14). 

Additional plans may be made available on request upon payment 
which is related to the category of the plan required. There is no 
charge for the Invitation to Tender full document. 

9. Additional information or clarifications in relation to the Auction 
Documents may be requested only in writing following regular 
application procedure. Application forms, may be submitted not 
later than 22 DECEMBER 1994. GPEC will reply to all applicants or 
their authorised representatives in Athens, by fax. GPEC' s written 
response will bound all parties participating in the auction 
procedure. Ail replies will be deemed as complementary documents 
attached to the Invitation to Tender document. 


I Moran Holdings, the 
USM-quoted prorider of man- 
agement, financial and tea 
agency sendees, reported pre- 
tax profits of £1.39m for tha 
year to June 30 against losses 
Of £274,000. 

The results reflected the 
group’s reorganisation, said Mr 
Peter Theobald, chair man 

Mr Theobald added that the 
directors were negotiating an 
acquisition that would main, a 
“significant contribution” to 
the surface forwarding divi- 
sion’s prospects. 

Turnover of continuing 
operations rose to £49m 
(£45. 9m). Earnings per share 
emerged at 6.74p (I6.64p loss) 
and steps were befog taken to 
eliminate the deficit on the 
profit and loss account. Mr 
Theobald said, so that dividend 
payments could be resumed. 

The shares closed 8p higher 
at 62p. 


A tkins Group, the Leicester 
shire hosiery manufacturer, 
cut losses from £96,000 to 
£49,000 in the six months to 
October l, on reduced turnover 
of £&23m, against fiunm. 

Last year’s result, however, 
included a £168,000 deficit on 
the closure of the fabric dyeing 
operation. Basic losses per 
share were LUp (2,ip) and the 
interim dividend has been held 
at 3J35p. 

Mr Charles Lenox-Conyn- 
gham, chairman, said the 
hosiery division performed, 
creditably in an increasingly 
volatile market 


Shires Investment 

Shires Investment's net asset 
value per share slipped to 
260.4p at September 30 against 
292-2p at the March 31 year- 
end. Fully diluted, the fen was 
from 28t4p to 256p. 

Net attributable revenue for 
the six months improved to 
£23m (£2JI4m) for earnings per 
f^eof J W2p (8-81P). A second 
interim dividend of 44p makes 
an unchanged 83p so for. 



THE CHAIRMAN OF THE BOARD 
OF DIRECTORS 


ATHENS 7 NOVEMBER 1994 


EVANGELOS CHRYSAFIS 


Birkdale in black 

With all its principal operating 
companies showing profits 
Birkdale Group, the advert^ 
ing and marketing consul- 
tancy, returned to the black 
with pre-tax profits of £142,000 
for the six months to Septem- 
ber 30, against losses of £U7m. 

Turnover was £7.47m, com- 
pared with £ll.6m which 
included £4.97m from discon- 
tinued activities. Underlying 
turnover growth was 12 per 
omt 

Earnings per share were 
O^p, compared with losses of 
19p. 


CML shares fall 

Shares in CML Microsy tems, 
the traffic control equipment 
manufacturer, dropped by 2Qp 
to 248p on the annfumff ^ient 

only a modest increase in 
nrst half profits and a warning 
from the chairman that any 
improvement in the overall 
result was unlikely in the cur- 
rent year. 

Pre-tax profits for the six 
months to end September rose 
cent Erom n.65m to 
*i.7m, on turnover up 13 per 
cent from £8.42m to £935m. 

Earnings per share came out 
afiead at 6J9p (5.74p). 






si r - 






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• FiiXinpt^ 
-■?-?.* is-aaiig 
'■••• r ••• 'si'.tiSlB* 


Sterling 


ate® 
- ; i cai ur 

'jOHi 

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ill shares 



FINANCIAL TIMES WEDNESDAY NOVEMBER 23 1994 * 


32 


COMPANY NEWS: UK 


Tadpole 
Technology 
falls £1.3m 
into red 


£80m programme of investment and acquisitions lined up for 1995 

Laird plans £68m rights issue 


By Simon Davies 

Laird Group, the manufacturer 
o£ automotive components and 
building products, has 
launched a surprise £68m 
rights issue to fund a heavy 
programme of capital expendi- 
ture and acquisitions amount- 
ing to some £80m by the end or 
1995. 

The move was unexpected, 
given that the group's gearing 
is estimated at around 24 per 
cent, and that Laird is not 
looking at any substantial pur- 
chases. 

However, Mr Ian Arnott. 
chief executive, said: “We’ve 
always had conservative 
long-term financing policies. 
We are setting up a strong 
financial framework for the 
future." 

The announcement was 
accompanied by a pre-tax prof- 
its forecast of at least £46m for 
1994, at the upper end of City 
forecasts. 

Mr Arnott said there were 
positive signs of a pick-up in 
automotive sales in Europe, 
after a bleak 1993. Further ben- 
efits were being reaped from 
acquisitions outside tbe auto- 
motive industry, he added. 

Laird’s l-for-5 rights issue is 
priced at 295p, representing a 



Ian A rnott: setting op a strong financial framework for the 
future 


17 per cent discount to Mon- 
day’s closing price of S56p. The 
shares fell 6p yesterday. 

The company bad rights 
issues in 1989 and 1992. both 
primarily to fund capital 
expenditure. One analyst said: 
“1 would like to see the com- 
pany demonstrating that it can 
fund internal expansion from 
its working capital." 

However, Laird is partly 


reacting to strong demand, 
leading it to invest in extra 
capacity at Fullartoo, its US 
subsidiary supplying tbe per- 
sonal computer industry, and 
its car body seals operation in 
Spain. 

In the past two years, Laird 
has pushed ahead with diversi- 
fication outside automotive 
products, making acquisitions 
in printing and packaging, 


window security and plastics. 

Mr Arnott said Laird would 
like to build up 50 per cent of 
its profits from non-automotive 
products, and this would 
absorb substantial capital 
expenditure. 

At the end of October, the 
group had net borrowings of 
£53. 8m, and these would have 
started to Increase sharply. 

Laird's forecast of a 20 per 
cent increase in pre-tax profits 
was accompanied by a forecast 
final dividend of 6.9p f6.5p), 
putting the shares - at yester- 
day's close - on a p/e of close 
to 14 and a yield of &2 per cent 
for 1994. 

• COMMENT 

Rights issues with no immedi- 
ate justification are always 
hard to sell, but Laird Group's 
offering is at least in keeping 
with the conservative charac- 
ter of the group. The offer will 
dilute earnings per share in 
1995, since Laird is investing in 
projects with a long-term pay 
back. Analysts pushed up 
profit forecasts to around £57m 
for 1995. giving a prospective 
p/e of 13.4. However, despite 
economic recovery in the US 
and UK profit mar gins remain 
under pressure and tbe shares 
look fully valued. 


Exceptional lifts Whitecroft to £8.7m 


By lan Hamilton Fazey, 
Northern Correspondent 

Whitecroft, the Cheshire-based 
lighting, textiles, building 
products and medical cotton 
fibres group, yesterday 
reported a sharp increase in 
pre-tax profits from £1.82m to 
£8.74m for the six months to 
September 30. 

However, £5.91m of this 
came from the disposal last 
April of Whitec raft's option to 
renew its lease an a Stockport 
office block. 

Stripping this oat gives a 

Cosalt 

maintains 

recovery 

An improvement from its four 
main divisions enabled Cosalt 
to maintain its recovery with a 
pre-tax profit of £?-5Bm for the 
year ended August 28, against 
a £232,000 loss previously. 

Profits from continuing 
activities nearly doubled to 
£3£9m (£L86m) and included 
fibres £845.000 (£426,000); safety 
and protection £769.000 
(£563.000); holiday homes 
£l.64m (£649,000) and workwear 
£684,000 (£295,000). 

Discontinued activities 
incurred losses of £10,000 
(£673,000) on turnover of 
£590,000 (£827m) included in a 
total figure of £68.4m (£69 Jim). 

Earnings per share were 
14.17p (2.72p losses) and tbe 
final dividend is 5p for a total 
of 8p (5-375p). 

The shares rose 19p to 154p 
yesterday. 

Tex back Id black 

Tex Holdings, the supplier of 
consumables to the plastic, 
steel and energy industries, 
returned to profits in the six 
months to September 30 with 
£283,000 pretax on turnover up 
3£ per cent at £12. 7m, against 

At ihe midway stage last 
time there were profits of 
£486,000 but the fuB-year figure 


fairer picture of Whitecroft 's 
success at restructuring, after 
its near-collapse in the reces- 
sion. Operating profits were 55 
per cent ahead at £2£3m, on 
turnover only 10 per cent up at 
£66.7m (£60am). 

Earnings per share were 
boosted to 16.7p (3.6p) as a 
result of the exceptional item, 
which accounted for 11.7p. The 
remaining 5p, however, has 
encouraged Whitecroft to pay 
its first interim dividend - L5p 
- since the recession caught 
the company badly exposed in 
property markets. 


fell to £273.000 after reduced 
project income and provisions 
for exceptional costs. 

The company said that it had 
recently been notified by a cus- 
tomer of the possibility of a 
substantial claim which it 
would defend. 

Earnings per share came out 
at 3p (5.1p). 

N American Gas 

North American Gas Invest- 
ment Trust had net asset value 
per share of 94.4p at October 
31, compared with 92£p at the 
July 31 year end and 100.4p 15 
months earlier. 

The trust, which invests in 
oil and gas production in Can- 
ada and the US, reduced its net 
deficit from £3.01m to £240.000 
in the year to the end of July. 
Losses per share were 0.68p 
(8.54p). 

The disposal last week of its 
holding in Atlantis Resources 
resulted in proceeds of C$23.4m 
(£10. 4m), realising 32 per cent 
of the company's net assets. 

In the three months to Octo- 
ber 31 the net deficit was 
£85,000, against revenue of 
£43,000 for losses per share of 
024p (earnings 0.12p). 

TDS raising £lm 

TDS Circuits, the USM-traded 
printed circuit board maker, is 
raising £lm, net of expenses, 
by the placing and open offer 
of 10.7m new ordinary shares 
at xop each. 

Funds raised will be used to 
maker certain capital invest- 


By stressing the exceptional 
nature of the results, White- 
croft is dampening expecta- 
tions that however successful 
it is in its normal markets, the 
company may not be able to 
match this finan cial perfor- 
mance nnvt year. 

It has given its investors a 
roller-coaster ride for the last 
four years, but is stressing that 
future profit fluctuations 
should be temporary or techni- 
cal. 

Mr Mike Derbyshire, chief 
executive, said disposals and 
sales from Whitec ro ft’s writ- 


ments in order to increase both 
capacity and technological 
capability. 

All the new shares have been 
mnriiHnnaily placed by Henry 
Cooke Lumsden with the com- 
pany's controlling shareholder, 
Zincocelere, and are subject to 
recall under the open offer. 
Terms are three new ordinary 
for every 10 ordinary or two 
new ordinary for every one 
convertible preferred share 
held. 

Shareholders’ funds had 
fallen to less than £L6m at the 
end of 1993, while borrowings 
were more than £3.5m, being 
wholly owed to or supported 
by other members of the Oli- 
vetti Group- 

Preference dividend arrears 
totalled £1.34m at June 30 1994, 
while there was a profit and 
loss deficit of more than £52m 
at December 31 1993. 

Appld Holographies 

The postponement of orders 
from some Japanese customers 
contributed to increased losses 
at Applied Holographies in the 
six months to September 30. In 
addition CFC AH, tbe US joint 
venture, failed to achieve its 
planned profits. 

The shares lost 15p to close 
at 83p. 

On turnover up 12 per cent 
from £3.04m to £3 .39m pre-tax 
losses were £310,000 (£60,000) 
after taking a share of £125,000 
(£71,000) of the joint venture 
loss. Losses per share came out 
at L4p (029p). 

The USM-quoted company. 


teD-down property portfolio 
have reduced borrowings to 
under £iOm and gearing to 29 
per cent A year ago, gearing 
was 119 per cent and borrow- 
ings £30m. 

All divisions made operating 
profits, with lighting the star 
performer at £2.32m (£i.89m). 
Medical cotton fibre - used in 
tampons and medical products 
- made only £567,000 (£1.06m) 
because of a 50 per cent rise in 
world cotton prices. Passing 
some of this on to customers 
saw sales volume drop by 7 per 
cent. 


which supplies holographic 
film , hoped the deferral busi- 
ness would benefit the second 
half. The joint venture 
arrangement had been reorgan- 
ised so the US partner would 
be fully responsible for funding 
and bear any losses after Octo- 
ber 1 1994. 

China Investment 

China Investment Trust raised 
net assets per share by 26 per 
cent to 139.9p at September 30, 
against lllp a year earlier. 

After-tax revenue for the six 
months was £191,243, compared 
with £47,259 for the shorter 
period from May 25 to Septem- 
ber 30 1993. Earnings per share 
quadrupled to l-2p (03p). 

Queens borough 

Queensborough Holdings, the 
leisure and hotels group, 
returned to the black with a 
pre-tax profit of £50.000 for the 
six months to July 31. This 
compared with an interim loss 
of £278.000 last time and a 
£424,000 loss at the year-end. 

The USM-traded company, 
which changed its name from 
Flagstone Holdings earlier this 
month, had turnover of £1.26m 
(£250,000). 

Mr Kevin Leech, who was 
appointed executive chairman 
in August, said the company 
was applying to return to a full 
listing, and that its “primary 
objective” was to declare a div- 
idend as soon as circumstances 
permitted. Earnings per share 
were 0.01p <0Jtp losses). 


By Alan Cane 

Tadpole Technology, the 
Cambridge-based 
manufacturer and market 
leader in high powered 
notebook computers, lost 
money last year as 
anticipated, as it continued to 
invest heavily in 
manufacturing infrastructure, 
research and development 

Revenues grew strongly, 
however, and there was an 
operating profit of £671,000 in 
the second half of the year. 
The share price, which has 
been climbing steadily over 
the past few months, slipped 
lip to 402p. 

The loss before tax 
amounted to £13m. compared 
with profits of £749,000. 
Revenues grew 42 per cent to 
£32. 5m (£22. 9m) while losses 
per share came out at 5.4p 
(3.5p earnings). No dividend is 
recommended. 

Tadpole’s principal products 
are high performance note- 
book computers, where it 
reckons to have a six to 12 
months lead over other manu- 
facturers - and electronic 
circuit boards which it designs 
and builds for other 
companies. 

Its growth in revenues this 
year. 79 per cent of which 
derive from the notebook 
workstation business, result 
from tbe success of its 
“Sparcbook" tine, designed 
around chips from Son 
Microsystems. It is also 
designing notebook computers 
for International Business 
Machines and Digital 
Equipment. 

This year it announced a 
$20m (£i2.Lm) order for 
Sparcbooks to be used by the 
US Air Force. It has also taken 
a $20m order for the 
development and manufacture 
over four years of customised 
printed circuit boards for an 
as yet unnamed customer. 

Tadpole’s principal 
development this year has 
been the launch of the world’s 
most powerful notebook 
personal comp ute - based on 
Intel’s Pentium chip. Tadpole 
claims that Its machine is at 
least twice as fast as 
competing products. Analysts 
believe it could sell between 
5,000 and 25,000 of the 
machines next year at prices 
in excess of £7,000 each. 

Mr George Grey, chief 
executive, said the company 
might have to raise new 
money for manufacturing 
infrastructure if the machines 
proved more successful than 
expected. There might be 
problems with a shortage of 
chips and colour monitor 
screens. He said the current 
year showed excellent 
prospects for revenue and 
earnings growth, biased 
towards the second half. 


Flogas doubled 
to I£l.lm 

Growth in its liquefied 
petroleum and natural gas 
markets helped Flogas. the 
Irish gas supplier, to more 
than double its first half 
pre-tax profits to I£1.06m 
(£1.05m). 

The figure for period to 
end-September compared with 
LE41 4,000, which was after 
exceptional costs of I£320,00Q. 

Turnover was up from 
l£19.7m to I£2l.5m. Earnings 
per share were 3.41p (1.31p). 
The interim dividend is 3-57p 
(3.24p). ' 


NEWS DIGEST 


Molms makes £28m buy 
and £12.2m placing 


By David Blackwell 

Molins. the tobacco and 
packag in g machiner y group, is 
acquiring a Nottingham-based 
maker of specialist packaging 
machinery for a mavimnm 
£28m and is placing 2.46m 
shares at 498p a share to help 
pay for it. 

Sandiacre is being acquired 
for an initial £27m plus a prof- 
it-related £im. The initial con- 
sideration is being met by the 
issue of 521.236 new shares and 
ci9 9m in cash plus *h«> £12L2m 
proceeds of the placing. 

Yesterday tbe shares closed 
at 5l5p, down 3p. 

Sandiacre, with net assets of 
£3.5m, makes machinery which 
forms hags from rolls of plastic 


material, fills them, and seals 
them. Typical goods packaged 
using the machinery are coffee, 
sugar, powder detergent, and 
crisps and snacks. 

Molins hqs long sought an 
acquisition outside cigarette 
making, which accounts for 
most of its profits. “We have 
been very picky,” said Mr 
Peter Greenwood, managing 
director. “We were looking for 
a specialist machinery maker 
with world potential” 

He believes Sandiacre. which 
made operating profits of £3.8m 
on sales of £9.7m in the year to 
the end of July, is “almost an 
ideal fit" with Molins' strategy 
of concentrating on machinery 
that handles delicate materials 
at high speed. 


Sandiacre would benefit 
from Molins’ engineering expe- 
rience, but more importantly 
Molins' worldwide sales net- 
work would take it into new 
markets. “We expect to provide 
service and support in markets 
where Sandiacre has barely 
scratched the surface,” said Mr 
Greenwood. 

Half of Sandiacre's sales are 
in the UK, with most of tbe 
rest going to Europe. Molins 
expects to sell the machinery 
in the US, South America and 
south-east Asia. 

The company is at present 
100 per cent owned by the 
founding Davison family and 
their interests. Mr Clive Davi- 
son will stay an as managing 
director. 


Readicut declines to £5.4m 
after contract problems 


By Richard Wottfe 

Pre-tax profits at Readicut 
International fell 20 per cent at 
the interim stage as the house- 
hold textiles, carpeting and 
yarn company suffered produc- 
tion difficulties on a militar y 
contract. 

The Yorkshire-based group 
lost £1.2m on a contract at its 
textile bonding division, which 
had to take over the manufac- 
ture of ballistic products from 
a subcontractor. 

Analysts cut full-year profit 
forecasts from about £18m to 
£14.5m. The shares closed 
down 4Vip at 67'/ip. 

The pre-tax profits decline, 
from £6.73m to £5.41m, in the 
six months to September 30, 
was on lower turnover of 
£100.7m (£113.4m). Last year’s 
figures included the discontin- 
ued operations of Firth Fur- 
nishings, the car carpets pro- 
ducer, and Readicut Wool the 
handicrafts distributor. 

Operating profits on continu- 
ing operations also declined, to 
£5.72m (£6.67m). as margins 


Readicut 

Share price relative to the 
FT-SE-A AS -Share Index 



Jun 1933 94 Nov 

Source: FT Graphite 

were squeezed by raw material 
price rises. Polymer prices rose 
by 80 per cent in the six 
months, with UK wool costs 
increasing by 2030 per cent 
Mr Clive Shaw, managing 
director, said: "Conditions in 
the UK are still not ideal and 
rvmtingntai Europe is still diffi- 
cult" 

The core carpet division 
reported operating profits of 
£2. 68m (£2J)7m) on turnover of 


£43.4m (£41m) as its US activi- 
ties enjoyed better trading con- 
ditions. The UK operation, 
Firth Carpets, replaced a 10 per 
cent drop in domestic sales 
with a similar rise in contracts. 

Yarns and fibres lifted oper- 
ating profit to £lB7m (£1.79m) 
on turnover of £24 -5m (£23£m) 
as the company succeeded in 
passing on the higher raw 
material costs. 

However, furnishings and 
household textiles dipped into 
the red with operating losses of 
£65,000 (£801,000 profits) on 
turnover up 11 per cent to 
£23.6m (£2L3m). 

Net interest costs fell to 
£308.000 (£665,000) and gearing 
fell from 18 to 5 percent 

Earning per Share HpplinaH 

to l.83p CL36p) and the interim 
dividend is held at 0.63p. 

On the revised profit fore- 
casts the prospective p/e is 14 
at yesterday’s closing price. 
Analysts said they were sur- 
prised by tbe textile bonding 
losses and the speed with 
which raw material costs had 
affected Readicut’ s profits. 


French buy for Hammerson 


By Simon London 

Hammerson has made its second French 
property acquisition inside a week, paying 
£32. 6m for the controlling interest in a property 
subsidiary of Axa, the French insurer. 

Hammerson is buying 66 per cent of Compag- 
nie des immeubles de la Plaine (CIPM), which 
owns 55 boulevard Haussmann in central Paris. 


The property comprises 114,000 sq ft of retail 
and office space. The annual rental income 
attributable to Hammerson under the deal is 
about FFrl9m, suggesting a yield of 6.8 per cent 
at the purchase price- 

Last week, Hammerson paid £55m for a shop- 
ping centre located just outside Paris. The com- 
pany raised £250m last month from the sale of 
its Australian property assets. 


Anglo Irish Bank turns in 
57% advance to I£14.5m 


By John Murray Brown 
In Dublin 

Anglo Irish Bank Corporation, 
which is listed on the Dublin 
stock exchange, reported a 57 
per cent increase in pre-tax 
profits to I£14.5m (£143m) for 
the year to September 30, 
despite sluggish loan demand 
in the first half. 

The bank's UK operation 
reported a return to profit with 
l£l-3m compared with a loss in 
1993 Of 1£333,000. 

The bank, with its core lend- 
ing to small and wMimn sized 
business, increased earnings 
per of share from the 1993 level 
of 4.98p, as adjusted for a 
rights issue, to 5-02p. 


The rise was achieved 
despite additional personnel 
costs as the company expanded 
its UK manag erial staff and a 
share capital increase follow- 
ing the rights issue in January. 

Net interest income was 
slightly ahead at I£27.9m 
(I£26An). 

Fee income more than dou- 
bled to I£5.38m (T£2.1m). 

Treasury profits were also 
substantially ahead at I£3.1m. 
However, overheads were also 

higher, at I£13£m (I£12.4m). 

.There were bad debt write- 
offs of I£6m. 

Non performing loans stood 
at I£30m. Tbe bank maintains 
a conservative policy, with 
86 per cent of non performing 


loans provisioned for. 

The deposit base improved, 
with deposits up 23 per cent to 
I£L18hn. 

The bulk of new deposits 
came from smaller retail cus- 
tomers. 

The bank reported slack loan 
demand in the first nine 
months, but a marked 
improvement in the last quar- 
ter, which has continued 
through the first six weeks of 
the new year. 

Leasing business has been 
virtually static, although 1994 
saw a strong advance in total 
assets, which grew 31 per cent 
to l£l.4bn. 

A final of 2p is recom- 
mended, for a 3-36p total 



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32 



World Bank man pours cold 

commodity hopes 


water on 

By AEson MaftlarKl 

A senior World Bank 
economist yesterday dismissed 
the view that commodities, 
which have seen huge price 
increases this year, could 
prove to be a long-term invest- 
ment on a par with equities. 

Mr Donald Mitchell, senior 
economist at the hank’s com- 
modities unit, told a confer- 
ence in London that the rally 
was a short-term reaction to a 
plunge in prices over the past 
decade and not the start of a 
"major uptrend". 

"Commodities are not a buy- 
and-hold type of investment," 
he said "You can make huge 
amounts of money by specula- 
ting; But you have to have a 
view and unders tand the mar- 
kets. 

"Commodities primarily 
belong to the hedgers and spec- 
ulators, not to the investors.” 

Commodities are strongly In 
favour this year as a way of 
diversifying investment portfo- 
lios out of poorly performing 
equities and bonds. Funds spe- 
cialising in commodities have 
been launched on the back of 
increases such as a tripling in 
coffee prices and a rise of more 
than so per cent in aluminium, 
copper anti cotton. 

But Mr Mitchell pointed out 
that if commodities turned out 
to be an asset class in their 
own right, worth holding for 


By AJtoon Maftfcznd 

Establishing a credible data 
base on world coffee output 
must be a priority for produc- 
ers, according to the secretary- 
general of the Association of 
Coffee Producing Countries. 

Mr Roberio Oliveira Silva 
told a meeting of the Interafri- 
can Coffee Organisation in 
Lom£ that uncertainty over the 
true levels of supply was con- 
tributing to the highly volatile 
behaviour bf the coffee market 

"No organisation exists 
which has the conditions to 
assess the world level of pro- 


file long-term, "it would defy 
100 years of history". 

A sustained Increase in 
prices over more than two or 
three years would require a 
shift in wealth to the develop- 
ing world, and a consequent 
surge in demand for commodi- 
ties, similar to the oil price 
boom of the 1970s, he argued. 

But circumstances had 
changed. The Soviet Union, a 
large importer of commodities 
in the 1970s, no longer existed; 
Opec countries had financial 
problems preventing them 
from expanding imports; and 
nhhiB bad shifted from being a 
major importer of grain to 
being a net exporter. Rapid 
growth in some developing 
countries was no longer accom- 
panied by an equivalent 
increase in Imports. 

He said, however, that com- 
modity price movements 
appeared to offer Investors a 
negative correlation with inter- 
est rates, which "may be use- 
ful". He also felt that metal 
and mineral prices had some 
way to rise, while agricultural 
commodities had "by and large 
had their boom." 

Other speakers were more 
upbeat about the potential for 
commodities at the conference, 
which was organised by 
Futures and Options World, a 
publishing company, and Ros- 
tron Ferry, a public relations 
company focusing on deriva- 


duction and the conditions in 
each producing country, 
including the difficult question 
of production costs," he said. 

"1 am convinced this is one 
of the most important tasks 
the ACPC has to undertake: to 
organise a data base on world 
coffee production with suffi- 
cient credibility to be able to 
make a difference to the situa- 
tion in the market today." 

The ACPC was established 
last year when producers intro- 
duced a successful export 
retention scheme. Mr Silva 
said the organisation also had 
to work with the International 


tives, and sponsored by Reu- 
ters. 

Mr Neil Bresolin, an execu- 
tive director of Goldman Sachs, 
the US investment bank, said 
commodity investors were at, 
or close to, the middle of a bull 
market Metals in particular 
should benefit from rapid 
growth in industrial produc- 
tion still to come in the US and 
Europe. 

"There’s a high positive cor- 
relation between commodity 
prices and industrial expan- 
sion," he said. "You can get 
direct exposure and participa- 
tion in global growth [by 
investing in commodities!. It's 
also an insurance against 
unexpected events." 

Mr Roy Leighton, chair m a n 
of Credit Lyonnais Rouse, the 
French banking group's com- 
modity derivatives arm. argued 
that over-the-counter instru- 
ments such as swaps and index 
warrants offered advantages to 
“fundamental” portfolio man- 
agers. 

They provided opportunities 
to invest in commodities such 
as jet fuel, which could be 
highly sensitive to events in 
the Gulf but was not yet 
quoted on a futures exchange. 
They were flexible and allowed 
trade to take place further for- 
ward than in futures markets. 

“Provided you have a reli- 
able counter-party, these mar- 
kets can be quite safe," he said. 


Coffee Organisation to achieve 
higher long-term consumption. 
• The International Sugar 
Organisation yesterday pre- 
dicted a bigger deficit for the 
coming year of 1.9m tonnes, 
compared with 1.3m tonnes 
forecast in September. 

Production in Europe alone, 
hit by poor weather in June 
and July, was expected to be 
1.63m tonnes lower in 1994-95. 

The ISO said a second year 
of deficit provided strong sup- 
port for prices at current lev- 
els, but warned that big buyers 
such as China, India or Russia 
were extremely price sensitive. 


Gold market 
‘could absorb’ 
IMF sales 

By Peter Norman, 

Economics Editor 

The international gold market 
could easily absorb sales from 
the International Monetary 
Fond of tbe order recently 
proposed by Mr Kenneth 
Clarke, the UK chancellor, a 
leading gold banker said yes- 
terday. 

Mr Robert Guy, a director of 
N M Rothschild & Sons, said 
Mr Clarke's plan for the IMF 
to sell up to 10 per cent of its 
gold stocks to create a fund to 
ease the debt burdens of poor 
developing countries was prac- 
tical. 

"The gold market could eas- 
ily absorb an additional sup- 
ply of 320 tonnes from the IMF 
provided the sales are spread 
over a reasonable period,” Mr 
Gay said. 

He told the third City of 
London Central Banking Con- 
ference, that the chancellor's 
proposed sales would he easier 
for the market to manage than 
the last IMF gold sales in the 
1970s. 

The last IMF gold sale pro- 
gramme was larger, totalling 
more than 700 tonnes, and the 
Fond was competing as a 
seller with the US Treasury 
and some other IMF members 
who had gold returned to them 
by the Fund. 

This time "there would be 
no parallel sales either by the 
IIS Treasury or as a conse- 
quence or restitution", Mr Gay 
said. 

Moreover, the gold market 
bas since become much larger, 
coping last year witb total 
supply of 3.257 tonnes, com- 
pared witb l,7B5 tonnes in 
1979. and more sophisticated, 
with a greater number of pro- 
fessional dealers able to han- 
dle an auction process, he 
added. 


UK WARBWUSe STOCKS 

(As at Monday’s ctase) 

MM 

Aturnnum 

-10.625 

taia88^50 

Atummhini oSoy 

<-40 

to 28.720 

Cooper 

-1.500 

to 321.725 

Load 

-1.750 

U, 363.875 

NUM 

+30 

K) 150.462 

Zinc 

-1.625 

It) 1^10^00 

Tin 

+50 

*0 29.0*5 


Credible coffee data base called for 


P resident Suharto of 
Indonesia may have been 
right when he told Mon- 
day’s meeting of the Organisa- 
tion of Petroleum Exporting 
Countries that the peaceful 
atmosphere of Bali would per- 
vade their usually troubled 
and acrimonious deliberations 
on oil prices. 

Or maybe it was just Bali’s 
energy-sapping heat, as dele- 
gates from even the hottest 
Middle Eastern countries 
struggled to cope with temper- 
atures in the high nineties 
fahrenheit and humidity to 
match. 

Whatever the reason, oil 
ministers yesterday succumbed 
easily when Saudi Arabia, 
Opec’s largest producer, made 
it clear that it wanted quick 
agreement on its surprise plan 
to roll over Opec's existing pro- 
duction ceiling for the whole of 
1995. 

Kuwait, Libya and Gabon 
expressed last minute reserva- 
tions. But all resistance 
crumbled before the united 
front presented b; the other 
eight members, including Iran, 
so often a dissenting voice 
within Opec. 

It was, however, “economic 
self-interest” which drove the 


meat, according to a Gulf Arab 
official. 

All the countries share a 
“common goal” of lifting oil 
prices higher then tbe present 
level of about $17 for the 
b enchmar k Brent B lend. The 
differences at tins week’s talks 
were only about how to 
achieve it 

The option of a three month 
roll-over was never seriously 
considered because delegates 
feared that it would merely set 
off renewed market specula- 
tion about Opec’s next move. 

A cut was also not a serious 
option. "I can’t see any country 
willing to go below the ceil- 
ing,” said one delegate last 
night 

Saudi Arabia dropped its 
widely-signalled support for 
the six-month roll-over option 
in the days leading op to the 
meeting. A Gulf Arab official 
said the six-month option 
could only have been justified 
“if you believed” forecasts for 
3995 which assumed that nan- 
Opec would not be able to cap- 
ture any of the 800,000-lm bar- 
rel a day increase in dema nd 
expected during the year. 

Saudi Arabia clearly did not, 
although the kingdom did not 


try would have to hold more 
stocks and compote more 
fiercely with each other for 
available crude oil supplies as 
a result of the agreement 

The one-year roll-over also 
reflects a Saudi preference for 
Opec to focus on longer term 
goals, rather than trying to set 
short-term prices. “Technical 
factors are more important 
than Opec" in the short term, 
said one delegate. 

But a Saudi official said tbe 


tion this year". 

There is also uncertainty 
about possible quota ' che ating , 
by Opec states should prices , 
rise. That was ' said, to be 
Kuwait's biggest reservation 
about the plan. - 

MrNazer declared yesterday: 
"Over production is aproblem. 
We’re very keen to have every- 
one abide by quotas”. 


Saudis take the heat out of Opec talks 

Robert Corzine on a meeting driven by ‘economic self-interest 

_ .. «uk.inMr mil-over did 


delegations to an early agree- 


inform any of its colleagues 
about Its change . in position 
unta Saturday, when Mr Bis- 
ham Nazer, its oil minister, 
arrived in Bah. . .. •’ 

The one year plan, meets . a 
numb er of Saudi aims, accord- 
ing to analysts. It sends a: sig- 
nal to the markets that the 
kingdom is prepared 1 to forego 
volume increases in fevour of 
firmer prices. It also largely 
eliminates market uncertainty 
associated with frequent Opec 
meetings. And, more impor- 
tantly, it confirms that the 

Saudis want to shift the bur 

den of maintaining stocks on 

to oil companies and refiners. 

Gulf Arab official said 
he expected that the 
international oil indns- 


one-yeai roll-over did not wc- 


A 


essofuj. — w ■ 

in an on policy -that has. tended 
to emphasise marbetshare. 

"We’re hot rigid is terms of 
- market shares,", he said .“We 
. like a good share and a good 
■price;" - - - . - - :• 1 . 

So/ will the Saudi plan, suc- 
ceed in achieving that aim? 
Opinions vary widdy. with few 
delegates forecasting any Ug 
" jump in' prices. Many expert 
Sue beneffteof theJwDiOver, to 
be relatively modest, wi&ffiia 
* Kirp»h/w i thahihe.tiartel- wlll- 
soon achleve its reference price 
of $21 a. barrel for the Qpec- 
basket, an Index of seven inter- 
national crude 63s,' : " " . 

A big uncertainty, remains 
the upward trend in noo-Opec 
production. One Arab deleg at e 


Funds sought for diamond projects 


By Kenneth Gooding, 

Mining Correspondent 

Ashton Mining of Australia 
has two exciting diamond pro- 
jects that, if all went well, 
might be mined in 1997, accord- 
ing to Mr John Robinson, the 
chief executive. 

The race is between Ashton's 
Merlin prospect in the Batten 
area of Australia's Northern 
Territory, where the company 
has been exploring for 15 
years, and its new diamond 
province in Finland. 

Ashton has been exploring in 
Finland for eight years but 
kept its operations there secret 
until September this year 
because Finnish laws do not 
provide for large and long-life 
exploration licences. The com- 
pany is still not revealing the 


precise locations of some of the 
prospective areas in Finland 
where it bas found "commer- 
cially significant concentra- 
tions” of diamonds. 

Mr Robinson, speaking to 
analysts in London this week, 
said that Ashton was looking 
at options for substantial fur- 
ther funding if the projects 
lived up to their present prom- 
ise. The least attractive option 
would be to bring in a partner 
for joint ventures. He preferred 
the idea of floating projects so 
as to bring in public money. 

Ashton is Australia's biggest 

ttiawwnri mining company Via 

its 40 per cent bolding in the 
Argyie mine in Western Aus- 
tralia, the world’s largest pro- 
ducer in volume terms. 
Argyie ’s present reserves guar- 
antee its open pit operations 


through to 2004 but Mr Robin- 
son said there was a good 
rfiarme that moving to under- 
ground mining could extend 
the mine’s fife considerably. 

He was "very optimistic" 
about diamond market pros- 
pects for the next ten years. 
Demand would grow strongly 
as new markets, such as 
China, India and Mexico, devel- 
oped from a small base. On the 
supply side, apart from Ash-, 
ton’s two projects, only the. dis- 
covery by another Australian 
group. Broken Hill Proprietary, 
in Canada's North West Terri- 
tories, seemed to offer much 
promise. He admitted, how- 
ever, that there were unan- 
swered questions about .the 
size of Russia’s diamond stock- 
piles and what it might do with 
those gems. 


MARKET REPORT 

Sugar prices 
bit fresh highs 

London white SUGAR futures 
rallied to fresh, contract highs . 
yesterday as buBiahfnndainm- . 
tals, including talk of fresh 
buying from China and esti- 
mates -for a higher 1S9&05 defi- 
cit prompted mixed buying, 
dealers said. 

COFFEE futures also 
bounced to close sharply 
firmer on mixed buying, short- 
covering and New York's bull- 
ish trend, after sliding to over 
four-week lows in early trad- 
ing. ..... 

A quieter day at the London 
Metal Exchange prompted 
holders of long positions, to 
lighten their, load a little; 
which put aome downward 
pressure on prices. 

Compiled from Reuters 



COMMODITIES PRICES 


BASE METALS 


Precious Metals continued 


LONDON METAL EXCHANGE 

(Prices from Amalgamated Metal Tracing] 


■ <UAa««uw.ea?iniim(lpwtonn^ 



Cash 

3 filths 

CtoBQ 

1967-8 

1992-3 

Previous 

1967-68 

1888-89 

High/tew 

2001/2000 

2015/1988 

AM Omdal 

20005-13 

1999-9-5 

Kerb dose 


1977-8 

Opart k tf. 

251,906 


Total ddy tumow 

69.544 


■ AUMNHM ALLOY ($ par tonno) 


CkMS 

1665-75 

1900-0S 

PlWriOUS 

1860-70 

1900-05 

HWVtow 


1612/1900 

AM Offldal 

iaao^ 

1012-6 

K*»b doee 


1900-06 

Opan M. 

8,040 


Total daty turnover 

485 


■ LEAD 9 par tome) 



Ctase 

671 .5-2-5 

688-90 

Prevtoua 

672.5-3.5 

680-5-91 

rtgMow 


692/686 

AM Otflclsl 

673-4 

0904X5 

Kerb ctaae 


685-90 

Open fat 

43.069 


Total daOy turnover 

5^41 


M reCKB. (Spar tome) 


Qom 

7650-60 

7775-80 

Previous 

7655-65 

77BO-9Q 

Hflhtow 


7840/7770 

AM Official 

7680-90 

7810-16 

Kerb dose 


7700-90 

Open W. 

66,500 


Tow daily turnover 

12.718 


■ TW (S par lonn^ 



Ctoea 

6215-20 

6305-10 

Previous 

624060 

6330-40 

IrBgMow 


B37Q/629Q 

AM Offidal 

6245-50 

6335-40 

Kerb dose 


6290-90 

Open in*. 

21^42 


Tow (tally tutowar 

4,835 


■ 2JNC, apodal Mgh Grade (S par toma) 

Ctaae 

1165-5^5 

1192-3 

Previous 

11755-U5 

1201-3 

Hgh/tow 

1170 

1202/1187 

AM Official 

1170-705 

1196-7 

Kerb dose 


1189-90 

Open taL 

111X137 


ToW da>y turnover 

22X145 


> COPPCH flratto A (S par toma) 


Ctasa 

2835-7 

2811*12 

PrevtaiB 

2675-7 

2631-2 

Hgwiow 

2657/2956 

2840/2780 

AM Official 

2856-7 

2823-4 

Kerb ctaae 


2797-6 

Open inL 

235^53 


Total do/y turnover 

54X190 


■ LME AM Offlctal t/t tmtK 1-5688 

LME dosing VS rata 1-5708 


Spot 1^89! 3 satis; 15696 6 mttel 5655 SwtlB: 15673 

■ HIGH GRADE COPPER (COMBO 


0#t 


apn 

Oera etwaga 

Bgb low 

tat VH 

■nr 133.10 -380 

13SJ0 13L00 

S7S 148 

DR T 32.25 -4.10 13535 13230 25.4X 4620 

Jm 128-1 & -335 13350 12830 

957 2 

Ml 128-30 -335 12970 128.70 

766 14 

Mir 126-96 -235 

129.10 126.79 188S6 5.156 

Apr 124.85 -130 

- 

677 26 

Tefal 

58(200 14(599 


PRECIOUS METALS 


■ LONDON BULLION MARKET 
(Pnoaa auppfed by N M RothacWd) 


GaUfTrayuJ 

Cto&a 

Oparina 

Morning ft* 

Afternoon be 
Daysman 
Day's Low 
Previous dose 


Sprtw 

SW.1lWB4.50 

383.40-383*0 

303.70 

383.00 

3&L20-38480 

383(20-38380 

38100-38380 


£ equtv. 


244.604 

244.303 


Loco Ldn Mean Odd Landing Rates (Vs USS) 

1 month — 4.97 6 months A47 

2 months 5.12 12 months 888 

3 months ,.._5.19 


■ QOLD COMEX (100 Tray cg^ SAroy oz.1 



Salt 

DBI^ 


Qpaa 



priba 

aframe 

M&ft 

low tat 

IU. 

Nov 

38X6 

+04 

- 

- 59.795 36807 

Dec 

3838 

+03 

384.4 

3811 

- 

Jaa 

385_6 

•+OJ 

- 

- 37.061 

13872 

M> 

387.6 

+08 

3802 

3888 13050 

415 

Apr 

391.4 

+04 

3918 

3918 13,595 

1834 

JM 

3955 

+0.4 

3958 

3948 8.598 

- 

ToM 




167884 B2JS7 

■ PLATINUM NYMEX (50 Hoy oz.; SAroy azj 

Jm 

4109 

-07 

4128 

4105 15,762 

1889 

Apr 

415L4 

-07 

4178 

♦150 7788 

181 

JtA 

41ft7 

-08 

- 

- 1877 

3 

Oct 

424J3 

-18 

- 

- 509 

- 

JM 

427-3 

-U 


12 

- 

Total 




7839 

1.180 

■ PALLADIUM NYMEX (100 Tray <K4 S/troy ozj 

Deo 

155.00 

1-25 19550 

15425 1806 

am 

Mm- 

156.10 

1-35 15050 

155.75 5062 

947 

Jm 

157.10 

18S 

15780 

15780 573 

28 

5«P 

157.60 

1-35 

- 

9B 

- 

Total 




2B8<8 

3888 

■ SILVER COMEX (100 Tray OZA Certa/troy oz.) 

Nh 

5138 

-18 

51X0 

5130 400 

4SD 

One 

3M.2 

-18 

5178 

5125 46801 13,638 

JM 

5168 

-18 

. 

89 

1 

Mar 

5228 

-15 

Kao 

6215 48050 

6.2D4 

■w 

5268 

-18 

5320 

SZ98 5827 

118 

JM 

535.1 

-18 

539.0 

5388 8,103 

192 

Total 




133854 20810 


ENERGY 

■ CRUDE CHL NYMEX {42JXX) US gaits. SAwreQ 


Lataat Dafa 


Opea 



prtoi ctarege 

M* 

LOW tat 

Ufa 

Jm 

1781 +085 

1784 

1781 2897 

14.101 

Fcfr 

1784 +008 

T7.m 

1784 111882 48.441 

Mar 

1785 +009 

17.75 

17.5B 52,175 16861 


1788 +014 

17.75 

1783 32.858 

8.180 

ffiW 

1788 +014 

17.70 

1782 iuai 

3867 

JM 

1788 +0.H 

17J4 

1788 1&1G3 

2816 

Total 



380(278101,109 

■ CRUDE OB. PEC&borrd] 




Lafata Dart 


Open 



price ebanga 

»» 

lira tat 

VH 

Jm 

1096 +O01 

17.13 

1605 92954 24,116 

Mi 

18.74 

1685 

1888 31870 

aieo 

Mar 

1689 +004 

1688 

1087 16.408 

1771 

Apr 

1054 +009 

1680 

16.47 6884 

UlO 

ffiw 

18.48 +0.10 

1683 

1042 4,189 

630 

Jm 

1048 +023 

1680 

1040 3831 

30 

Total 



«48« 38847 

■ HEATINQtaLHYMEX (42800 US Offi^CffiSOataJ 


Ufa* Bay's 


Opan 



prin change 

Mgh 

Low fat 

W 

Dm 

4005 +048 

49L35 

4880 28878 

11-953 

Jm 

4060 +046 

4980 

49.15 4*822 

7804 

Nb 

5030 +046 

9080 

4S8S 25.170 

4.477 

(Bar 

5030 +048 

5035 

<980 13881 

3802 

Apr 

4045 +026 

4980 

4150 9812 

1890 

Bay 

4095 +016 

4980 

49.00 5858 

136 

Total 



153,715 29(328 

■ Qas OU. FE (S/toenei 




saa Dart 


OMa 



prtcf ctenga 

Hgb 

LOW faN 

w 

Dae 

14025 +075 

15080 

14785 33830 

7.135 

Js 

151J5 +060 152J5 15000 73832 

4.499 

Fib 

15LS0 +180 

15480 

15180 14895 

3821 

Mar 

15400 +1J5 154.00 1S22S 8815 

1866 

Aor 

15250 +1.00 

15380 

15180 2883 

803 

HV 

15280 +475 15425 

15185 640 

157 

Total 



SUBS 17874 

■ NATURAL GAS NYMEX (KMHO nraBto; Sltnnflo) 


uairi Bart 


Qpm 



pHrw 

Rgh 

low fat 

VH 

Dac 

1.830 +0169 

1830 

1JS0 20868 158* 

Jm 

1857 +0058 

1879 

1810 25515 

9880 

Feb 

1855+0040 

1865 

1815 11,147 

V47 

Mr 

IMS +0030 

1850 

1815 6(275 

3S5 


1810 +0030 

1810 

1.775 5857 

765 

Hay 

1809 +0026 

1815 

1.778 2,194 

750 

TOM 



75(476 30877 

■ UNLEADED GASOLINE 



WNEX tajM UB ffrita,' filB 



Latest Dart 


Open 



ArtM dsajr 


Lew fat 

W 


SftwHJt 

Spot 

3 months 
S months 
1 year 
Sold Coins 
Krugerrand 
Maple Leaf 
New Sovereign 


p/tray to. 

US cts ecpiv. 

Dec 

5480 

+8.16 

5535 

54.30 20368 1«45 

328J2S 

51580 

Jan 

54.10 

+0.45 

S4U55 

5155 25,515 

MW 

333.20 

522.75 

Fefa 

5480 

♦036 

5445 

5160 11.147 

3*47 

33826 

53040 

mm 

5480 

+0.46 

54.60 

54.15 6^75 

685 

351-05 

549.65 

A/r 

57.40 

+0.40 

5744) 

5700 5857 

765 

$pri« 

E aqUv. 

Hay 

saso 

- 

- 

- 2,194 

780 

385-388 

245-248 

Trial 




njn 30377 

386.85-390.50 

- 







89-92 

57-60 








GRAINS AND OIL SEEDS 

■ WHEAT LCEte par tomo) 



Ml 

Bart 



Open 



priCO CfWHJI 

Mrii 

Lew 

tat 

M 

Dor 

lows 

+0.75 

10550 

10580 

135 

73 

Jm 

106-50 

+1.10 

10650 

10555 

1851 

214 

Mar 

10845 

+120 

10840 

10880 

1839 

87 

fey 

11046 

+1.16 

11040 11080 

1867 

80 

Jm 

11220 

+180 

- 

- 

129 

- 

s* 

9480 

- 

- 

- 

64 

• 

Total 





8^5 

434 

■ WHEAT CBT (S.OOObu mfn; canta/BDI) txn/wO 

Dec 

36616 

•7/4 

3738 

365/4 

. 


mm 

3800 

-00 

385/4 

380? 

- 


HW 

365/6 

+-2/B 

388/6 

385/2 

- 


Ad 

337/0 

+1/0 

339/0 

334/6 

- 


«• 

3*4/2 

+32 

344/2 

343/0 

- 


Dec 

353/0 

- 

355/0 

350A) 



Total 





WA 

K/A 


■ MAIZE CBT (5.000 bu min; centeffiab bMBhaQ 


SOFTS 


■ COCOA LCE fc/lome] 



Sett 

Dart 


OPM 



price dungs 

m 

Liar tat 

W 

Dee 

977 

-2 

987 

968 17505 1563 

Mar 

993 

-5 

1006 

987 44877 3563 

May 

996 

-8 

1010 

993 15585 

519 

JM 

IBM 

-5 

1019 

100* 6.828 

K 

Sap 

1014 

-6 

1027 

1014 12(964 

40 

DK 

1030 

-5 

1044 

1029 10,161 

30 

Total 




114JB53 5873 

■ COCOA CSCE (10 tonnea; SAonrwaJ 


Dee 

1302 

-3 

1310 

1292 1840 

448 

mm 

1340 

+3 

1343 

1331 44,106 4867 

«a» 

1365 

+5 

1365 

1355 9264 

200 

JM 

1388 

♦4 

1388 

1380 3,837 

109 

Sep 

1412 

+4 

1412 

1412 1578 


DM 

1442 

*4 

- 

- 5.132 

- 

TOW 




71502 5.774 


■ COCOA QCCQ) (SOfl'a/tonrw) 


MEAT AND LIVESTOCK 


■ LIVE CATTLE CMS <40.000B»; rarwylba) 



sen 

Day*! 

Opea 



prfea 

drugs Mp I tar 

M 

va 

Dec 

68.425 

-0200 69550 B9J050 24JJ84 

6850 

Feb 

69225 +0025 69850 58550 27,101 

4.7B3 

AW 

69500 

-0075 89.750 60325 17813 

2.448 

JM 

65-575 

- 65575 65275 

5.B21 

621 

am 

63.775 

-0825 63800 63625 

2864 

348 

Oct 

64.600 

- 84800 64.400 

5S6 

59 

TWO 



76857 14(801 


■ UVE HOGS (ME fWnOOBw: cwTtsriiw? 


DK 

31-800 

-0-450 31800 31800 13(350 

3.172 

Ml 

34.450 

4500 34875 34J00 

11JB6 

3.154 


35550 

-a 400 35850 35.400 

8,192 

1836 

Jan 

41.125 

-0225 41.150 40750 

6227 

459 

m 

41.075 

■0150 41.100 40050 

7B5 

221 

Oct 

38.600 +0850 39800 38.700 

577 

137 

Total 



38(779 

8287 


■ PORK BELLES CAC (40JXXAbg oama/tba) 


D« 2190 -1/2 21B/B 214/8 

Mar 225/4 -V0 22745 225/Z 

May 232/4 -2/2 234 » 202/2 

JM 238/8 -2/4 23M) 238/4 

Sen 241/2 -2(0 2 <32 2410 

Dec 246/2 -2/D 247/E 245/8 

Total N/A R/A 


■ BARLEY LCE (E per tonna) 


He* 

10120 

-030 

- 



_ 

Jm 

10X00 

+080 

0X00 

0285 

483 

17 

Star 

10580 

+0.75 

05.10 

0580 

139 

9 

May 

107 AO 

+0.15 

- 

- 

44 

- 

S«P 

94.00 

+280 

- 

- 

20 

- 

Nov 

95.00 

• 

- 

- 

66 


Total 





152 

28 


■ SOYABEANS CUT frOOQtai mm ccMriBOfa bitoeQ 


JM 

565.S 

+2/2 

566/2 

562/0 



Mar 

575A) 

+272 

575/8 

571 n 



May 

582/4 

+2/2 

562/6 

578/4 



JM 

587/6 

+1/8 

588/0 

584/4 



te 

590/0 

+1« 

590/0 

S88JD 



Sap 

581/0 

+2/0 

581/0 

589/2 



Total 





R/A 

N/A 

■ SOYABEAN OIL C8T (60,0008)3: cwiB/fa) 


Dec 

2821 

* 

28J5 

27.75 



Jm 

2722 

+020 

2725 

2870 



Star 

2E.17 

+020 

2620 

25.00 



M*y 

2522 

+009 

25 35 

25.00 



JM 

2483 

+033 

2487 

24.40 



*>m 

W 30 

-082 

24.40 

2420 



Total 





H/A 

IVA 

H SOYABEAN MEAL CBT (100 tons. S/loty 


Osc 

159.4 

+05 

1598 

158.7 



JM 

1612 

+05 

161.7 

1608 



Star 

164.7 

+03 

166.3 

1642 



■lay 

1688 

+0.4 

1694 

168-6 



JM 

17X8 

+08 

174.2 

17X3 



tefl 

1784 

+01 

176.0 

175.4 



Tetri 





R/A 

N/A 

■ POTATOES LCE (E/tome) 




Mar 

1068 


. 




•pr 

27X5 

AO 

2768 

2708 

1,170 

172 

May 

2860 

- 


. 

1 


Jan 

2508 

. 

. 


. 

. 

Total 





j.m 

172 

M FREIGHT (BIFFEX) LCE ISIOAMex paflltj 


■or 

1892 

+7 

1894 

188S 

242 

6 

Dec 

1890 

+9 

1899 

1090 

356 

9 

JtM 

1811 

+6 

1814 

1790 

1891 

45 

Apr 

1710 

♦5 

1710 

17W 

1813 

62 

84 

1498 

+3 

ia» 

isoo 

135 

ID 

Det 

1M0 


. 

. 



TOW 

dose 

Prr« 



2*58 

132 

6H 

1676 

in? 






Mkior Motols 

European free mortal from Metal Bufetin. S 
pv lb in warehouse, unless otherwise stated 
(test week’s in brockets, where changed). Antt- 
monys 99 UK. S per tome, 6.8S0-5.9S0 (5.950. 
6.050). Bismuth; mfrv 99.99%, tonne tats 360- 
3.90 (3.60-3-95). Cadmium; min. 99.5%, 
ISO-190 ff»-i96) cams a pound Cobalt MB 
free malun, 99.8%. 26-30-27 JO (26.0027 00); 
99.3%. 24.00- 25.75 (24.50-2530). Mercury: 
min. 99.9996. S p or 76 fb Sasic. 720-140 
(IIS-135). Molybdenum; drummed motybdte 
oxide, 7.50-8.00 (7.00-7J50). Selenium: min 
99.5%, £45-4.65. TUngttan ore standard mm 
65%. S per tonne unit (lOKg) WO* ctf. 50-60 
(45-55). Vanadren: mm. 98%, df, 1-55-1.70 
fl.45-1.55l Uranium; Nucxco exchange vatre. 
7.00. 


no* 21 Price Pm. dq 

OaBj I aw 28 99433 


■ COFFEE LCE S/tonne) 


Haa 

3093 

+60 

3080 

3031 

327 

29 

Jan 

3135 

+60 

3146 

3050 10,439 

1896 

Mar 

31 T7 

+74 

3119 

3035 

SAM 

1873 

■far 

3090 

+70 

3090 

3010 

3816 

524 

JM 

3075 

+57 

3070 

3000 

1856 

24 

Sep 

3063 

+50 



2882 

- 

Total 





27,380 4,446 

■ COTS ■C* CSCE 07.5OOta cents/tax# 


Dec 

160-35 

+1.70 

164.75 

15885 

662 

810 

Mar 

165.45 

♦1.75 

169 50 

16X25 

19,488 8888 

itay 

16980 

♦0.70 

17280 

166.40 

6895 

746 

JM 

17025 

-085 

17480 

16985 

2.173 

265 

Sep 

171.00 

■050 

17680 

171.00 

1813 

201 

Dec 

172.00 

8.50 

17580 

172.50 

698 

124 


TMel 31JDZ1 108B2 

■ COFFEE (ICQML/S ceraa/pouncO 

Dm 21 Price Prw. tq 

Comp. A#r 157.05 165.46 

15 day arenga 172.62 17420 

■ HoT PBEMWMi HAW SUGAR LC6 tcenMbs) 


JM 

1300 

. 

. 


Mar 

1480 +087 

- 

90 


K*r 

14 07 +060 


060 


JM 

1454 +0.75 


450 

- 

Tetri 



1,400 

- 

m WHITE SUGAR LCE (S/lonnoJ 



Mar 

405.40 +1X90 40780 

392.00 

11.186 

1879 

May 

39960 +1380 40X00 

3B7 50 

4.357 

1.030 

Aofl 

389.80 +11 60 392.00 

381.50 

2839 

1.175 

Od 

381.40 +10.20 36X00 

355.10 

1,464 

260 

Dec 

359 40 +mio 


100 


Kar 

35920 +10.30 


m 


Total 



20,195 3844 


■ SUGAR 11- CSCE |112.00fflt»; cwVfca? 


■tar 

14 59 

+061 

1488 

1480 10X634 19.772 

Hay 

1484 

+083 

1488 

1482 31.720 6,461 

JM 

I486 

+050 

1456 

14.00 19^99 3828 

Oct 

1163 

+047 

1386 

1382 16.859 1890 

•tar 

1307 

+041 

13.16 

1280 4832 965 

MW 

Total 

12 96 

+049 

1X97 

1285 423 128 

177.176 328*5 


■ COTTON NYCE (50,00CHtg,- cena/tos) 


Doe 

7X28 

-085 

7190 

72.40 

6897 8.175 

Mar 

7880 

-0.40 

75.95 

7581 

2&.41B 8,183 

Mar 

7096 

■0.38 

76 00 

7685 

A312 1841 

JM 

77.45 

■055 

77.65 

77 05 

5,115 446 

Od 

7100 

-085 

71 J5 

7100 

670 12 

Dec 

Tetri 

7080 

-0.33 

7010 

69.75 

3360 226 


■ ORANGE .MCE NYGE tlS.OOIHtt): OBM3/to3) 


Jm 

10585 

■ZJO 

108.00 

10080 

18.315 

5.417 

ttm 

1U20 

-5.00 

III 55 

mJO 

ejza 

321 

May 

11385 

-580 

11*80 113.95 

1802 

28 

-M 

11645 

■580 116.45 

116.45 

1839 

IB 

Sep 

11925 

-580 

12000 

11925 

1883 

14 

Rev 

Total 

11785 

-5.00 


- 

1817 20 

28,117 5818 


VOLU ME DA TA 

(Xwi merest and vofama rimn stolen tar 
coranws traded on COMEX, nymEX, CBT, 
NYCEL CME. CSCE and IPE Crude 01 are one 
day In arreara 


INDICES 


M RHJifctea (Base: ia^/ 31 =iQQ) 


No* 22 

21230 


No* 21 
2159.0 


month ago jnu ago 
20934 1621.3 


■ CBB Future* (Bose. 1967=100) 


NOV 21 

231.50 


Nov IB 

232.72 


month ago year ago 

233.CW 223.71 


M 

36425 

-0875 36750 36200 

7814 

280Z 

Mar 

36850 

-OM 37800 36400 

18 86 

409 

May 

37.73 

-0.725 36400 37.700 

448 

90 

JM 

38800 

-0325 39.400 38800 

397 

59 

am 

37800 

-0800 38300 37800 

05 

10 

M 

Total 

40800 

- 40800 36800 

10828 

3870 


LONDON TRADED OPTIONS 

Strike price $ tonne —Otta— — Put* — 


■ ALUMINIUM 


(99.7%) LME 

Feb 

May 

Feb 

May 

1900 

141 

181 

62 

102 

1950. ... „ 

113 

138 

83 

126 

2000 

89 

115 

109 

153 

H COPPER 





(Grade A) LME 

Feb 

May 

Feb 

May 

2750 -. 

137 

118 

64 

157 

2800— _... 

111 

87 

108 

186 

2850 . 

89 

BO 

136 

218 

■ COFFEE LCE 

Jan 

Mer 

Jan 

Mar 

3300 

90 

181 

281 

384 

3350 

83 

167 

298 

400 

3*00 - 

71 

154 

336 

437 

■ COCOA LCE 

Dec 

Mar 

dec 

Mer 

950 

70 

85 

27 

39 

B75 — 

56 

71 

38 

50 

1000 

43 

SO 

50 

63 

■ BRENT CRUDE B*E 

Jan 

Apr 

Jan 

Apr 

iet» 

115 

tio 

6 

55 

1660 

76 

as 

23 

81 

1700 

39 

80 

46 

110 


LONDON SPOT MARKETS 


■ CRUDE OIL FOB (per bami/Jan) 

♦or- 

Dubd 

SlS-flO-S.B5z 

•0,055 

Brent Blend (dared) 

S17.14-7.18 

♦0.07 

Brent Blend (Jan) 

S1689-781 

+0.07 

W.T.L (lpm est) 

S17.75-7.77z 

+0.09 

■ OH. PRODUCTS MAE prompt ddhwry OF (tarme) 

Pramtum Gosolne 

SI 75-1 77 


Cos OH 

8100-153 


Heavy Fuel 01 

Si 07-109 

-08 

Naphtha 

SI 78- 182 

+58 

Jet Aid 

*170-172 

♦3 

Dread 

*157-159 

+08 

terefawn Argus. r«* London prti aoo era? 



OTHER 


Gold (per tray ot£ 
Steer (per troy cuV£ 
Platinum (per Iroy oz.) 
PsmaHvm (per troy ce.) 
Copper (US prad.j 
Lead (US prod.) 

Tin (Kuala Lumpu) 

Tei (New Yort} 

Cattle (fare wdg/rtjf 

Steep (»ve wetghrJfA 

Plus (We wrighi) 

Lon. day sugar (raw) 
Un. day sugar (wte) 
Tate * Lyte export 
Bartey (Eng. feed) 

Maize (US No3 YoBow) 
Wheal (US Dark North) 
Rubber (Dee)¥ 

Rubber (JanfV 
Rubber (KL RSS Not JuQ 
Coconut CM (Ptty§ 

Palm CM (Maiay.j§ 

Copra (Ptfl§ 

Soyabeans (US) 

Cotton OuttooffA' index 
Wooltops (54s Super) 


*384.30 

+1.16 

5158c 

+0.5 

$41085 

+0.60 

*15480 

*OMS 

141.0c 

+18 

40.76c 


15.77r 


2918c 

-1.00 

11&S6p 

+o.ir 

108.36P 

+611* 

77.84p 

+UT2* 

$342.0 

+48 

$4038 

468 

E332.0 

+38 

Unci 


tl 32.0v 


Cl 65.0V 


8880p 

+080 

87.75P 

+080 

344.0m 

-18 

*896. Oq 

-28 

S8878U 

-308 

*43*8q 

■228 

El 860 


7620C 

40.10 

4600 



t par mnne union gtrm w te ■aad p pawlH- ° canam. 
> m MotaMtan wMo y Jan/Mor. v NovfOae- u 

D*t * Jan. q OuUan V London Phystai S OF Rotnr- 
itan f Bitfon marfoM doM. 4 Swop (Lire irdgM pto* * 
Change on *mk C Prion m proriou* Wy. f - 14/(1/ 
94 Corroded flaum far WT1 *17.90-73? 





'/ 


l 



CROSSWORD 


No. 8,618 Set by VIXEN 



ACROSS 

1 The staff intended to help the 
disabled (6) 

4 This drink is stocked in a bag. 
note (8) 

10 Turned and made off whan 
not needed (9) 

11 Funny business with main in 
charge (5) 

12 Separate for a bit ( 4 ) 

13 Firm with youngsters who 
care for horses (6-4) 

15 Figure the second will create 
a distur bance (7) 

16 Invested, and owed in conse- 
quence (6) 

19 A leader writer gets some 
credit ordinarily (G) 

21 With not a single boy having 
revised lessons (.7) 

23 Starry eyed forecaster (10) 

25 Indian place where silver is 
brought by serving men (4) 

27 The colours very good in the 
main (5) 

and then tears result 

29 Cutback transport in a naval 
establishment (8) 

30 Bead about a woman being 
shot (6) 

DOWN 

1 Hard-top vehicle - and a soft 
one (8) 

2 Sneaky junior employee? (9) 

3 Heel writing about social 
worker (4) 

•’» ■! i ,i._}| I io.iri*. 

ini'tWi''',' ‘“i 


6 Winning following (lfl) 

7 A representative taken in by 
a word of thanina in America 
<5) 

8 A tax cut (6) 

9 Stuff many a sober individual 

to the monarch © 

*4 atm. having a try is not a 

blunder (10) 

17 Possibly rue being perpetu- 
ally credulous (9) 

18 Criminal offering the dope 
doubly favoured (8) 

20 Duck in a roll — it would once 
have been chicken (7) 

21 Appears in control of beasts 
( 6 ) 

22 The right ideas maybe get one 
promoted (6) 

24 A Jerk without weak is tbs 
subject of discussion (5) 

26 Mother a couple of scholars 
(4) 

Solution 8,617 



1 r * - 

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I •; : 

' JT 7 " " 

5 " 

IS?. -iff «. . 


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'v ■■■•*" **2-. 


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i 


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'9 







FINANCIAL TIMES WEDNESDA Y NOVEMBER 23 1 994 


33 









nst. 


'US 

■■'■■ a he >*« 

V . K _. ^ a «* 




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the 


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urice. 


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• ’houli 




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?MBKET REPORT 

Sugar prices * 

h; t fresh highs " 


•f- - ^GAatttnj 
-•' eon^an^ 
• rc-iiiii fuojjii^ 

: y'f . :i,t * frp. 

•• — '- r.iiii auajj 
' : 

:r - 15 

: ; ;•*'*»: 
'7. r ' ,- f v, = %r. 

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. •:■:•?; -itiw 



LONDON STOCK EXCHANCE 


MARKET REPORT 


Footsie dips below 3,100 after Wall Street slide 


By Stave Thompson 

The UK equity market, like its 
European counterparts, could not 
ignore the impact or Monday night’s 
46-point retreat by Wall Street and 
once again dropped through the 
3.100 level on the FT-SE 100 scale. 

Sentiment across Europe took 
another hard knock in the after- 
noon, when the US stock market 
started under renewed pressure 
which saw the Dow Average slide 
more than 20 points shortly after 
the opening. The Dow later rallied 
to show a fall of only some 10 
points, before embarking on a fresh 
retreat an hour after London closed. 

There was no real respite for the 
FT-SE 100 Index which, in spite of 
numerous attempts to rally, fin- 
ished a net 4Jt3 off at 3.078.7. only a 
whisker above the day's low of 


3,078.6. Over the past two sessions 
the index has fallen 52.3 points, or 
1.7 per cent. 

There was evidence of some good 
support for the second-liners, but 
this was quickly overwhelmed, with 
the FT-SE Mid 250 Index ending the 
session 24.2 lower at 3.545.3. 

There were, however, some 
encouraging features in London. 
The gilt-edged sector was never 
anything but a firm market and 
closed at the day's best levels, mir- 
roring similarly strong perfor- 
mances by bonds and bunds across 
the globe. 

The market debut of TeleWest, 
the UK's first cable television flota- 
tion. was an unqualified success, 
with the shares, seen as tightly 
priced by telecoms specialists, open- 
ing at a 5 per cent premium and 
attracting sufficient international 


demand to close comfortably above 
the issue price. Turnover in Tele- 
West reached a short 58m shares, 
accounting for around 9 per cent of 
overall market turnover. 

This came out at 664.8m shares, 
compared with Monday's 487.4m. 
Non-Footsie stocks accounted for 65 
per cent uf the total. The Slock 
Exchange revealed that customer 
business transacted on Monday was 
worth £i.44bn. 

Dealers in London were surprised 
at the extent of Wall Street's fall on 
Monday evening, which was said to 
have occurred In the wake of a big 
shift by Morgan Stanley, the influ- 
ential US investment bank, in the 
cash allocation of its US-only port- 
folio from 3 per cent to 15 per cent. 

A dealer at one of the big interna- 
tional banks said much of the weak- 
ness in Wall Street could be attri- 


buted to a series of options and 
futures expiries last Friday which 
carried over into Monday. 

There were also stories circulat- 
ing in London of a substantial 
switch from UK equities to gilts, a 
move which was borne out by the 
performance of both markets but 
not by trading volumes. 

US markets were also said to 
have been weakened by rumours of 
imminen t resignations in the Clin- 
ton administration after the recent 
polling disaster in the mid-term 
elections. 

London opened sharply lower, 
with the FT-SE 100 down almost 30 
points, as marketmakers chopped 
their initial quotations to head off 
any large selling pressure. After a 
couple of half-hearted rallies, the 
market began to wilt and eventu- 
ally settled just above the day's low. 


Traders said the market was deli- 
cately poised at the close, with the 
FT-SE 100 future at a discount to 
the cash market and resting at a 
major chart point. 

Senior marketmakers. although 
nursing losses over the past couple 
of sessions, remained stoic, pointing 
to the continued strength of bond 
markets in the face of the weakness 
in equities, and quick to emphasise 
that it was the weakness in bonds 
that drove markets lower in the 
early part of the year. 

Laird, the engineering group, 
gave ground after announcing a 
£68m rights issue. ‘ awakening 
market worries about cash calls. 
Vodafone continued the recent 
flow of excellent dividend news, 
hoisting the interim payment by 
a much higher than expected 19 
per cent. 


FT-SE- A All-Share index Equity Stares Traded 



Turnover by vaMne fmBtan). Excluding: 
bta-imM business and overseas turnover 
1.000 — — 



1994 


■ Key Indicators 


Indices and ratios 


FT-SE 100 

3078.7 

-42-3 

FT-SE Md 250 

3545.3 

-24.2 

FT-SE- A 350 

1546.7 

-ias 

FT-SE-A AU-Share 

1532J52 

-17.89 

FT-SE -A Afl -Shane yield 

3^7 

P52) 


FT Ordinary index 

2389.1 

-30.7 

FT-SE-A Non Fins p/e 

18.59 

a 8.77) 

FT-SE 100 Fut Dec 

3079.0 

-49.0 

10 yr Gut yield 

B.58 

(8.80) 

Long gitt/equtty yld ratio: 

2.19 

(2-22) 


Best performing sectors 


1 

Properly — 

0.0 




4 



S 

Printing. Paper & Pekg... 

— -OJ2 


Worst performing sectors 


2 


,„-Z2 

3 


-1.7 

4 


>.-1.7 

5 

Diversified Inds - . 

>.-1.8 


Strong 
debut for 
TeleWest 

Cable television operator 
TeleWest made a storming 
stock market debut, closing 3'-= 
ahead of the 182p flotation 
price in levels of activity that 
came close to heart-stopping 
for an offering of just 216m 
shares. 

Turnover of 59m was nearly 
six times the level of volume in 
BTR, the most actively traded 
Footsie stock. Kleinwort Ben- 


son Securities, joint broker to 
the issue, was said to be 
responsible for around half of 
yesterday's trade. The driving 
force behind the bumper trad- 
ing was thought to be interac- 
tion between the London and 
New York tranches of the 
issue, plus a certain amount of 
switching with BT, which fell 
7*4 to 380'4p. 

Carlton confidence 

Television and video com- 
pany Carlton Communications 
maintained its strong market 
outperform an ce as some ana- 
lysts took a close look at the 
latest data for video sales. 

Statistics in the trade press 


EQUITY FUTURES AND OPTIONS TRADING > 


reveal tbat fourth-quarter sales 
of pre-recorded fllms and pro- 
grammes in the US rocketed 
from 8177m in 1988 to $520.5m 
last year. 

Carlton has the manufactur- 
ing and distribution rights for 
Dlsney and Warner which last 
year accounted for 40 per cent 
of s ales and will this year take 
in sales of Snow White. 

The forecast for this year’s 
pre-Christmas sales is S934m. 
almost double the 1993 figure. 
Carlton's slice of the cake 
might be reduced because of 
competition from Jurassic 
Park, distributed by Rank, but 
it is a larger cake. 

Carlton shares have outper- 
formed the broad market by 16 



Stock index futures ended 
sharply lower after another 
session of below average 
trading volume, writes Jeffrey 
Brawn. 


The FT-SE 100 December 
contract was at 3,079 when pit 
trading came to an end, down 
51 points. It ended broadly in 
line with the cash market and 


seven points under fair value. 

Activity was much higher 
than Monday's severely 
depressed level, but it was 
again below average and. at 
11,220 lots, only just into the 
area where traders reckon the 
futures market starts to 
become profitable. 

December has tumbled 61 
points in two days, falling into 
what traders describe as a 
major support area Wan Street 
continues to dictate immediate 
direction but some dealers 
were speculating on an early 
rebound for stock futures. 

Activity was said to be 
strictly anomoly business: 
mostly book hedging and 
marketmaker to marketmaker 
deals. Although premiums to 
cash equities were minimal 
throughout the session, there 
was no real weight of selling, 
with dealing lots small. 

Business in traded options 
rose to 35,402 lots from 
Monday's 21 ,653. There was 
heavy turnover in a number of 
individual stock options. FT-SE 
and Euro FT-SE trades 
accounted for Jess than 16,000 
contracts. Tesco was the 
busiest stock option at 4.135 
lots, followed by BTR and 
Shell Transport. 


■ FT-SE 100 wmex FUTURES {L1FFE) E25 per fuB index point {APT) 



Open 

Seri price 

Change 

Wgn 

Low 

EsL vtf 

Open trt 

Dec 

3102.0 

3079.0 

•49.0 

3108.0 

3077.0 

13411 

53393 

Mar 

3111.0 

3094.0 

-50.0 

3119.0 

3093.5 

1067 

8727 

Jun 


311&0 

-48.0 



0 

145 

■ FT-SE MD 250 INDEX FUTURES (UFFE) CIO per tuti index point 



Dec 

3550.0 

3550.0 

-30D 

3550D 

3549.0 

STOP, 

4165 

Mar 

358S0 

assao 

• 

35 88.0 

3588.0 

2320 

O 


■ FT-SE MOD 250 INDEX RJTURES (OMLXJ CIO per UI Index paint 


Doc 3555.0 O 

M opm Interna l Sgina am tar previous day. f Bag wAona shorarv 


■ FT-SE too B4DEX OPTION QJTFq r3Q7q CIO per fu» Index point 


2900 2950 3000 3050 3100 3150 3200 3290 

CPCPCPCPCPCPCPCP 

Dae IK 12 1 150 19 1T2 32 77 47 50 7H Z 3! 102 17 140% 9»j 105 

JOi 222 33 IK 47 M3 00 110 00 57^ 102*2 SS 1301; 45 161«* 30*2 1®2 

Feb 237 1 2 41 JHUz 55 165» Z BO 130>2 B9h IOP 2 111 84h 1 38l z 64 170 4B1 Z 206 

2t1h 51 207 KP| 178*2 05 MB*2l06«a 121 129*z TOO 158^ 79 100 St 222« Z 
Junf 285*2 78 222 111*1 15Vz 155 122 211 

OBa 4,125 Pub 6371 

■ EURO STYLE FT-SE 100 INDEX OPTION QJFFg CIO par fte Index point 


2925 2975 3023 3075 3123 3175 322S 3275 

Dee MB 15 IS 24*z K 30 84 GO 41 07 23 118*z 11*2 157 «? 201 

Jan 194*2 34 15** Z 47*2 129 B4*2 » OB 14 111*2 54 141*2 3B*z 175 2B* Z 212*2 

F® 215 43*2 149*2 75*2 97*2 123 59*2 103*2 

Mar 228 GO 191 93 187 137*2 57 195*2 

JUBf 270 83*2 207*2 118 154*2151*2 119*2 214 

cat 430 Pstj OB5 • Uadelitag Met ratio. ftomtam* atom an breed on raOemort bice*, 
t Long dated «n*y mobs. 

■ EURO STYLE FT-SE HP 230 9C6X OPTION {OMUQE1Q par M Index po*m 

3400 3450 3500 3550 3600 3650 3700 3750 

Dec 101 38 72 58k 49 95*2 

CM) 0 As 0 Srttarotc prices awl Mtanas »u Man M Oka. 


1 FT - SE Actuaries Share indices 

V V^: 

. r v T 

he U 

KM 

iiies | 


Nov 22 

Day’s Year 

chgeK Nov 21 Nov IB Nov 17 ago 

DN. 

yWdX 

Earn. 

yleUW 

P/E 

ratio 

Xd adj. 
ytd 

Total 

Return 

FT-SE 100 

3078.7 

-1.4 3121.0 313141 3127.5 3069.3 

4.16 

7.13 

16.58 11023 

P 

s 

FT-SE HM 250 

3545J 

-0.7 35805 3575.0 357B.6 3439.2 

052 

5.81 

20.75 12232 

IS28.79 

FT-SE Mid 250 ex Imr Trusts 

3648.0 

-OS 3570.5 3676J 3677 0 3437.B 

3.68 

6^9 

1932 12735 

1327.35 

FT-SE-A 350 

154a7 

-\2 1565.5 1570.0 1588.7 1532.6 

44)2 

633 

1738 

5735 

1202.82 

FT-SE SmaKap 

1782.19 

-0J 1788.16 1790.18 17B9J8 1741.40 

JL32 

54» 

2535 

52.08 

1388.92 


175050 

-02 1754-B3 1756.71 1755S5 1719.87 

153 

5.56 

23.01 

53.95 

138052 

FT-SE-A ALL-WARE 

1632^2 

-1.1 155a 01 156422 15534)2 1517.06 

3.97 

070 

17.77 

55.91 

1212.00 

■ FT-SE Actuaries All-Share 

Day's Year 

Nov 22 chee% Nov 21 Nov 18 Nov 17 ago 

Dlv. 

yWd% 

Earn 
yield % 

R/E 

ratio 

Xd adj. 
ytd 

Total 

Return 

10 MMERAL EXTRACTlONtia) 

2687.10 

-1J 2708.10 271 1.76 270920 2402.70 

334 

6.13 

24.65 

89.83 

1076.76 


382S-04 

-1.1 387062 3882^9 3830.70 3164.40 

335 

536 

23.08 

98.62 

1056.59 

15 OB, Integrated^ 

2BZ7S7 

-1.7 2073.72 2076.70 2680^5 2377 JO 

370 

5.72 

21.78 

9044 

10854)8 


1873.68 

-03 187092 1878.56 1873.10 1884.40 

252 

* 

t 

38.03 

1084.08 

20 GEN MAiaJFACTUReiSteBT) 

1878.88 

-1.1 1897.49 1839J7 1884A9 188020 

4.11 

534 

23.10 

7099 

961.69 


103341 

-07 10414)3 104126 104007 1128.00 

384 

5.43 

2437 

38.57 

814.79 


185562 

-1.3 188008 1879.83 1872.68 1887.00 

44B 

537 

22.99 

70.57 

880.66 


2277 M 

-1.1 230X78 2319^2 23124)8 2082.30 

4.13 

4.62 

27.01 

89.B7 

1015.32 

24 Dfoerstted InduatiWNIQ 

1777.06 

-1.6 1805^4 1802412 1793.58 1955^0 

5.16 

5.18 

2330 

82.92 

914.03 


1872.55 

-1.3 1898417 1903.00 1691.88 203320 

4.03 

6.70 

17.79 

6188 

017.94 


1620.19 

-0.7 183054 1B32439 183058 1664.70 

331 

SAS 

21.65 

57.89 

1047.42 


2324.61 

-12 2352.79 2372.89 237097 197450 

4JJ0 

ISO 

8Q00T 

82.54 

1 137.01 

28 Printing, Paper & Pckg(26) 

2864.15 

-02 287044 287044 2867.45 2447.40 

303 

5.41 

21.52 

B135 

1131.36 

29 TextUee & AopareK20| 

1673.09 

-0.1 157020 1572.08 1577^6 1867.10 

4^8 

684 

17.93 

6333 

898.86 


CONSUMER 00008(97} Z75&30 

BrwtatesfTT) 22M.S4 

Spirits, verm 4 CSttersflO] 2782.43 

Food Manutecturerapaj 2278JX1 

Housahdd GoodsfIS) 2353.70 

Health Care(21) 1583-33 

PharTnacouUcate(12} 309B68 

Tohaccofl) 360026 


-0.9 2781.00 2785.04 2777.01 2716^0 
-0.6 2221.01 222849 2214.99 202ZB0 
-08 2804.77 2833.14 2346.07 2639.00 
-1 A 2311.42 2325.92 230700 226040 
-07 2370.54 2375.35 2384.71 260060 
-04 159060 1567.21 158007 1689.70 
-OS 3114.35 3091.30 308090 3020.60 
-1.7 388707 388034 3863.17 410000 


4.38 

7.30 

15.88 112.89 

954.69 

4 JO 

7M7 

15-34 81.47 

988.77 

4.01 

624 

18.57 102-20 

93a85 

430 

7.71 

15.37 94.55 

965.12 

338 

7.71 

15X4 89 98 

852 37 

3.19 

3.40 

41.42 49.70 

923.66 

4.35 

6.96 

16.64 133.07 

994.02 

5.71 

9.05 

11.87 217.07 

866JJ7 


SERWCESfclO) < 

MtributorapO) 
jsbuTB & Howtaca 
itadM38) 

Main. Foodfia) 
fetaBm, GewaralHS 

Support Sarwfcas(4i) 

rransportflB) „ 

Xhar Swvtaw 3 Burinewfl) 


1922.78 

-0.7 193637 1934.70 193530 166950 

335 

6.54 

18.49 

56. BO 

94054 

255389 

-0,3 256134 2569.47 255838 2673.60 

3.71 

733 

1036 

89.19 

89087 

207-L33 

-1 A 2102.73 2092-22 208832 188630 

3.37 

4.76 

24.72 

57.69 

1025 57 

2878.69 

-0.4 289032 2884.83 2881 .47 255040 

2.42 

533 

2Z30 

7014 

1001.87 

1752.60 

-1.4 1777j47 17B434 1790,44 156330 

3.72 

9.14 

13.53 

58.44 

1063.44 

162932 

-02 163336 162833 1834,30 1703.00 

3-28 

701 

17.79 

52.76 

07721 

1523.83 

-02 1527.47 1525.16 1525.41 1583.30 

2.79 

8.46 

1023 

3843 

930.44 

2262.82 

-1.1 228830 2293.17 2274.19 2331.70 

3.78 

6.24 

1089 

67.01 

891.67 

128134 

-0.6 1268.51 1208.96 1263.76 118010 

4.02 

3.17 

47.38 

28 63 

1086.06 


munesoq 

Iectricfty(i7) 
lea DisWIMtontZ) 

etecommunfcattons(4) 

taterfia 


2394D3 

-1.4 2427.72 2439.10 244134 2454.40 

4.44 

720 

15.41 

91.17 

929.03 

2539.41 

-07 2557.17 2571.70 2582.68 2106.90 

368 

9.74 

12-29 105.79 

1065-ffl 

1B73J52 

-08 106093 1993.13 200533 2133.50 

607 

t 

t 119.82 

927.08 

1971^3 

-22 2015.32 2029^5 2034.76 2252- BO 

4.29 

7.95 

1530 

50.22 

84078 

1839-23 

-12 188150 18^57 1872.24 188000 

5-09 

13.28 

619 

8061 

925.04 


1665.10 -1J) 167056 1974.74 1673.79 1628.51 3.95 6 <7 1058 5074 1176.32 


ON-HNAWCIAUS(g37L 


INAKKXALS(1D4) 

ontaOW 
suraKsflT) 
to Asrm«m(E 8 
torchant Bantefc) 
ther Rnanc*aK24) 


217463 

-1.7 221162 223449 2229.42 2229.10 

4.45 

9.00 

12B8 

90 84 

865.95 

287054 

-26 294261 290053 2974.48 276300 

440 

9.B9 

11.57 11039 

663.06 

123031 

-14 1245.16 125331 1248.02 1381.70 

5.52 

952 

11.49 

61.95 

849 86 

236968 

-152390.03 240350 2391.09 257310 

5.42 

7.90 

15.44 12762 

91322 

2856.12 

-Ol 2858.02 287394 2869.27 297070 

364 

10.05 

1152 

97.76 

86559 

1876.93 

-04 188443 1891 53 1897.77 188330 

37D 

8.41 

1443 

8753 

100035 

141844 

1418.42 143073 1432.19 1691.50 

4.31 

457 

27.41 

4657 

81456 


79 PropertW^J 

273016 

-1.0 276297 278002 277048 265000 

245 

1.98 61.52 59.44 

922 21 

89 FT-SE-A ALL-SHA3E9S66J 

153252 

-1,1 156001 156442 156342 1 SI 756 

3.97 

6.70 17.77 55.91 

1212.00 

■ Hourly movements 

Open 940 

1000 

1150 

1250 

1350 

1450 

1550 

1610 Htgh/ttay Lovr/day 

FT-SE 100 

FT-SE MW 260 
FT-SE-A 350 

3091.7 30935 

3548.1 3548.1 

1562-0 1332.7 

30906 

35535 

15554 

30875 

35485 

15504 

3089.5 
35494 
155 14 

30904 

3549.7 

1551.7 

3082.8 

35454 

1548.3 

3082.4 
3544.7 
1540 1 

3079.7 3099.4 

35455 35538 

1547. 1 1555.3 

30706 

3544.6 

1546.7 


TMof FT-SE 100 FT-SE 100 IBM HfcpE 3S3CL31 2/2 I LO»r. 2B7BJ1 £4/13 

■ FT-SE Actuaries 350 Industry baskets 

BJO O IOlOO 11JO Iggo 13J0 14 


Open 


1500 16.10 Clma Pravioue Oreige 


BUO SO^ten 977.8 977-4 


Water 


16404 1843.8 


9707 

977.7 

9774 

9754 

9701 

9708 

9706 

964.6 

-60 

30645 

3073.7 

30805 

3073.1 

30703 

3072.3 

3071.0 

30865 

-155 

18345 

1834.7 

1834.8 

1833.7 

18335 

18309 

1838.B 

1859.5 

-22.6 

29100 

2919.7 

29195 

29009 

29001 

2908.1 

29008 

29805 

-732 


. _ J— : A-nMn Mom la pitabhad In SaBnfey tarns. U» of conerinmnts are ovoiafcto tan Ths Franco! Tra 

ntaT n *f tan .. TSs^^aetaneaStagteaaefianitaaoWicoiitaaianflftofaiBcwinicQnitpapar-hMad 

* ppm RNSTAT. FUooy Hsioe, 13-1 T EpMOrti E%eM. Unto EC2A 40L 

FTSeHtatS-aMte FT*E ICO B» FT-8E Md 2SO ^««nrta 3SO and ilia FT-SE Aata intany 

r * — ■ t>w l > - ,W ”- - - EMm t* lha IMtad Kta^tare nd Repute: ot feetad and 9ie FT-SE Acutaa AKhn Mu u 
1 O* 3 **** V.g.^sir^. fc, Bri l Kta e otal tee rnsttua ot Actumoi M tto FacUty Ol Actiwlos B snuvlanj eel ce ffwaid lUtai 


per cent over the past year and 
4 per cent over the past month. 
Yesterday the shares were rela- 
tively strong against the mar- 
ket. closing only 5 off at 891p. 
Rank shed 5 to 412p. 

Abbey tussle 

Bank Abbey National was 
buffeted by two-way trade fol- 
lowing an upbeat presentation 
un current trading. 

The one-time building soci- 
ety said its share of the 
national mortgage market was 
back up to in per cent and it 
bad widened its retail margins. 
Mr Mark Eady of Nat West 
Securities put the positive view 
that “the gain in market share 


iTRA DIN G^VOliU M 


■ Major Stocks Yesterday 

Vat. CKMJns DWs 

qOOi prted dunqa 

St OT IT -J 

ASDA Greupt 2 £00 6£><2 -x 

AUWy KUKralf 2.700 412 

MmA Ftenor IfifU a -1 

ABed Oomecqt IflW STB -7 

ArpAan Woo* 5B <» ■ 4 

Argos 1,600 051 

AfOyfl Ofoupt 1.100 -4*2 

Ano iMnafenT 3.900 777 -* 

Aasoc Bril. FoodaT 302 S62 -9 

Aeaoe. Bra. Pons 329 28 1 -1 

BAAt MOO 502'i -It 

BAT ktaf 3^00 <53 -b 

BET 3^00 lOSt J ? 

BKX 241 346 -4 

BOCt 101 70S -S 

B>t 9«0 413 -91j 

BPS feids. >15 307 -3 

Bit l MO 37» -9 

BIRt 10,000 296 -4 

Bar* ol Scnfereft 2.400 209 -6 

EtidavsT 1600 584 -« 

Burst 794 526 -6 

Bfers Ocivt 1JOO 304 -7 

Boota 2.000 416 .3 

Boctsf AM E13 -I 

BoMtsrt 2,000 470 ,7 

Bra. Aarapacst 1.700 *33 -9 

SraWiAtaMt 1,600 370*; -4<7 

Bnssh Graft 6JM0 297b -24 

Sun Uni 1.000 333 

etrei Start 6.100 153 -4 

Braid &44 165*2 -1*2 

BurmaJi Cctadt 307 839 


< Wlrat «siuu son 

ySdriMppMt 2.000 442 

SSI 2» -7 

521 891 -S 

1.900 205 *2 

356 526 -2 

214 24T *1 

1.700 44 0 -S 

406 420 -4 

4BS 1011 -2 

n» iso'.- ,2 

1.400 80S -1 

145 773 -4 

653 470 -2 

436 36C -2 

fed Oat 2-J00 377 -1 

ral Urns 649 252 -7 

288 165 H 

4.000 125 -1 

IS Col IT. 624 134*; -)U 

1.400 232 

ecktat 394 653 -11 

lEMclf 2,600 281 -5 

3.400 e?1 -5 

tS 225 3J5 -5 

lot 2.400 516 -10 

fetolt 3.000 403 -2 

654 563 -4 

2J00 190 -« 

443 624 .? 

Sit 3,400 459 -5 

I75p draft 6JXM 723 -32 

non 7.100 335 -4 

.t 4.100 231'; -5*} 

KOnMI 812 162 

5*6 289 -2 

an 1.300 172 -2 

lt» 327 -1 

1 600 781 -22 

set 1,400 443 -2 

nfeunhay 1 73 565 -8 

1.300 473 *4 

a »» CIO 560 -1 

ket 4.900 162 -3‘; 

criumwst 1-100 601 ,3 

l 302 722 A 

\ Oenaraft 1500 429 -1 

Abbey 8S6 »1 -* 

Bonfct iSOO 578 -10 

i 950 149 

i Elect. 250 702 -11 

B.OOO 157 -5*’ 

3.600 CM -2 

27)00 400 -1 

827 141*! «*! 

b im era -ii 

SSpencwt 1.790 4IC -2*; 

JsBed 220 772 -2 

n |Wm.l 104 139 -3 

3.700 172 -2 

B Bankf 3.700 509 -14 

aftwrert iOOO 504 -4 

697 253 -1 

Veer Wert 687 540 -13 

HE*** «J 804 -a 

n FtoitaT 4 JWi 204 -8 

i 99 790 -10 

itf 586 60S -2 

1.190 624 -11 

on 3.900 183 -2 

lent aOt! 557 

Baft 2JBU0 317 

181 989 

3 COO 845 

ess 228 

rn-T 645 412 

S Colorant 2J00 570 


Moo n«i ~h 

385 -12 


4,100 


nCaims.t 

Vlyte 

■.Unlont 


Bust 

o Beci-t 
) Beet 


er 

awndt 

rar»»t 


N»1 

o-Eleci 

mart 


2.800 480 


XfOO 452 
2.100 290 


367 508 


284 149 

102 420 

1 432 561 

otrT 2600 702 

1.300 570 

944 224 

574 4 70 

nrat 732 147 

umt 2. TOO 413 

*n Uts-T 1.500 386 

40? 455 

509 799 


eat 
a Box 
Wjwi 
B oa 


54 496 

18 779 


-3 


mtd t iOOO 28tl 

295 220 

it KO 377 

1.100 219 

963 372 

2JOO 219 

2.900 1?7 

2.300 439 

in.— 2.700 126 

4200 244lj 

lerl 890 4B8 

Z.BUB 973 

5250 225 

use 3.000 81*2 

332 350 

Co* 1100 

eat 82i 321 -7 

178 516 -3 

7.900 C04 

at j?6 875 -6 

6.9CO 68) Hi 

r 139 66C -o 

« 278 312 -3 

372 548 -3 

t 897 353 -4 

« 530 150 

74 1 34 

Iff 780 -1 

Nt 161 77/ 

net on £40 

848 854 

Ming mram lor J enlecijrai ol 
,di raraoijn Uie 'sCAO ■yfJem 
sl a Xlpm Trades o’ ano or 
Jirtud down t InoeittB on FT-SE 


has not been achieved at the 
expense of margins". 

However, bearish Credit 
Lyonnais Laing drew clients’ 
attention to the immin ent fig- 
ures from Royal Bank of Scot- 
land and its Direct Line insur- 
ance subsidiary'. The house 
said Direct Line had flagged its 
move into the mortgage arena, 
where it was offering loans of 
7.1 per cent against Abbey’s 8.1 
per cent, and into Lbe banking 
market. Abbey shares were 
steady at 412p. while RBoS’s 
were also firm, at 452p. 

Mobile communications 
group Vodafone lost 2 at 204p 
following interim results on 
the right side of brokers' esti- 
mates. But it was the near 20 
per cent jump to l.64p in the 
interim dividend that provided 
the shares with most underpin- 
ning. Most houses had been 
expecting a payout of l-5p. 

Interim results from glass- 
maker Pilkington were mod- 
estly better than expected but 
the company's message for the 
full year was mixed. The 
shares dipped 2 to 183p. 

Not all securities houses 
edged up their profit estimates 
for 1994-95. Some houses see 
Pilkington's premium p/e as a 
sell factor, others are more 
confident of the longer term. 

Concern over mar gins in the 
music division at Thom EMI 
hit the group’s shares as it 
reported favourable interim 
figures. The stock dropped 24 
to 973p. Sentiment was hit fur- 
ther by unconfirmed reports 
that UBS had downgraded but 
the general tone was positive. 
Hoare Govett raised its fiiU- 
year forecast by £4m to £41fin. 


NEW HIGHS ANO 
LOWS FOR 1994 

NEW MtQHS flfil 

OLTS (I) M li U WO 8 CMSTRN (1) An Orem 
Sfte. EMBMEBVNG (2) untat. VSEU 0*0. 
VEHICLES fl) AMtew St eamkws. EXTRACTIVE 
tMDS P} FOOD MAMJF (1) Moral. HEALTH 
CARE PI £tor Hmxjatt. HOUSEHOLD 
00008 ni fetaenandatt Pin. INVESTMENT 
TRUSTS 0) OB. EXPLORATION ( PROO 0 
CiusadP. Seafota Re*. SUPPORT EOIVS |1) 
Corapuer PaopM WATEF p) Sorah SaOO 

WKI. 

NEW LOWS (1279- 

CULTS (1) BANKS (1) BUSLOtNO A CN5IRN M 
AMEC. Da P-rp Pi.. Boot (HI. B' tareia. 
Ceuntr/LOa Prooi. Cnnt r*49iotton 6Hpc PL. 

Regan Carp. iVaSBra y. BLDG MATES A 
MCCTS (8) Angm Drton U & Ji A. Heywood 
W2L9TC. LSasbaa 9pc (Hen Cv. P» . Meya InTU 
Nwooa. CHEMICALS tH MCUUCI feta, 
DCSTRTBUTORS HI CarEral Motor Aucbono. 
CMrti SOn*/. Hert^e. Young fHL 
OfVERStHEO INDLS |B) ELECTRNC A ELECT 
LOUP tO CUL Mnasvcernv CSS Data fta. 
FanKEd Croup, Prance. mwEERMO |E) Aah 
& Lon. Baacoefe fcVL. Bony Wrlunta. Cocpar 
FA Meta. Rtaxdtcn Vtfresgolh. EXTRACTIVE 
INOS a cu Kdgoorfie. Mncnra. MteolB. 

POOD MAMUF 01 FWsy <JL HEALTH CARE 0) 
Botrace bm. HOUSEHOLD GOODS (1) 
Crwghan INSURANCE (It M. 

INVESTMENT TRUSTS P3 INVESTMENT 
COMPAMES p> LEISURE A HOTBD » Alpha 
ArpOfts. Eucpean LMWD. MEDIA (Sf Bwtwu 
InOex. i3aM Qraenlees Tran, (taond Inc® 

Nta, OtORO Orouo. WMGQ, OIL 
EXPLORATION S PROD (3) Ewpeen Reo., 

Hret Australian tta. Vratona Prarotan. OTHER 
HNANCML f9 Brawn DoteHn. Eraa Jradra 
Stnacgta. Johra w n Fiji Pacific A. OTHER 
SERV8 A BUSHS (1) Lb** fewras. PRTNO. 
PAPER 8 PACKS « Bra. Thorraon. Bnttcn 
Grarax Piwu. PROPBTTY ffi ChonarlWa 
Derraere VaOov. Gt Portland. MEPC. Prapot; 
TnnUPVT). Souitwnd Prop. Spc C*. 20201 
RETAILBTS, FOOD fl) Dofey Farm Wl. 
RETAILERS, GENERAL <SJ Fine Art Dov^A. 
Frying Ftaen. Games Wortohop, Roeebye. 
S«net. SUPPORT SERVS « Hogg Robferaoa 
VHK, TEXTILES A APPAREL (4) CM0W4* lnv»_ 
Raster ML Pratdand, ReatScra. TRANSPORT (4) 
AMBOCAM |B) CANADIANS » 

Granada relinquished 10 to 
516p after it emerged that its 
television subsidiary may face 
a fine for repeated violations of 
independent television rules on 
products in programmes. 

The unexpected break-down 


or merger talks between metals 

groups Johnson Matthey and 
Cookson Group left Johnson 9 
lower at 565p but added 2 to 
the Cookson share price at 
247p. 

Fears that Northern Foods 
will have make provisions of 
around £40m at the end of the 
second half for restructuring 
and disappointing interim fig- 
ures sent the shares down 8 to 
204p 

The meeting with analysts 
was also particularly gloomy. 
Brokers downgraded full-year 
expectations by about £15m to 
around £l20m. 

Nervous trading in Tate & 
Lyle which reports interim fig- 
ures today, left the shares 8 
lighter at 439p. 

Computer software group 
ACT shed a penny tu 102Vip 
following news of a heavy 
share buy-back programme. It 
purchased almost 5 per cent of 
its equity - 9m shares - at 103p. 
Turnover was 15m. 

Pharmaceuticals group Well- 
come gained as analysts 
became increasingly gnfhngia« . 
tic folllowing last weekend's 
positive Aids conference. 

Securities house Robert 
Fleming was said to have 
issued a buy recommendation 
and Japanese investment 
house Nikko Securities took 
investors to the company’s 
research centre. The shares 
moved forward 6 to 6Blp. 

Paper group Bowater rose 7 
to 4TOp as Hoare Govett held a 
meeting with the company. 

Tightly-traded merchant 
bank Schraders lifted 13 to 
1428p as one house crossed a 
block of shares at above the 


prevailing market price. 

Stockbroker Brewia Dolphin 
shed 13 to llOp. Interim figures 
from stock dealer ShareLink 
expected today are forecast to 
disappoint The latter fell 4 to 
283p. 

Chemicals leader Courtaulds 
shed 5 to 440p ahead of interim 
figures today. The forecast 
range is between £75m and 
£87m and analysts expect a 
squeeze on margins but hope 
for some rays of hope in cur- 
rent trading. 

Meanwhile McLeod Russell 
rose 10 to ll7p on well received 
final figures and an encourag- 
ing statement 

A clutch of recent broker’s 
recommendations continued to 
boost MF1 Furniture. The 
shares gained another 3V, to 
MiVip. Also In demand was 
high street retailing group 
Lloyds Chemists ahead of 
tomorrow's annual meeting. 
The shares put on 5 to 313p. 

The poor market trend 
halted the recent advance in 
Yorkshire Water which reports 
interim figures today. The 
shares finished 9 lower at 540p. 
NatWest Securities remains 
positive on the stock and rec- 
ommended investors “add" to 
current holdings as, "these 
results should underline how 
management is rrmtimiing to 
unravel the cost base.” But it 
also warned, "dividend policy 
is unlikely to be headline grab- 
bing." 

MARKET REPORTERS! 

Peter John, Joel Kbazo, 
Jeffrey Brown. 

■ Other statistics. Page 28 


LONDON EQUITIES 




RISES AND FALLS YESTERDAY 


mao* 


Falb 


Option 


CE*i Ms 

Jh Jri Jn Ap jra 


Cans Puts 

Option Na> M Itay Nov fob Itey 


Med Doom 550 32 43 51* 10 16 27 
(*575 J 600 S m 2SV» 37te 425* 54 
Argyll 260 1ZH 21 2B fl*> ISH 21 
1*264 | 280 5 12 17 22 27 33 

ASOA 60 m »1« Ih 3 4 

C«s ) 70 !•» 4*k 5 6* 6K R 

EW Mnrays 360 25 17 44 Vr 9 15 224 

rra \ 390 io» 22^ 2914 24 ao sb 

SfKfcfiaA 420 ISfe 30H M'S 14 23 2B* 
(*40) 460 5» 14 22 40 4Sto 51* 

Boots 500 Z7 4< 48T» 10 15V| 23 
C5J3I 550 6W 17 2*19 3914 43 SO 

BP 390 32 40 47 4»s 10h 15 

("414 I 420 13 22V, XV, 15 23* 28 

BWSi Steel 140 16 20V» 24 2 4S 6W 

1*153 ) 160 4*4 10 13 10S 13* 1$ 

Bass 500 32 39K 46 11 18 25 

1*526 ) 550 514 161* 2SV» 42 4614 524 

Cawttte 360 33 43504 6 14 174 

(*3B6 I 390 154 274 3*4 18 274 314 
CouUuKfc 470 274 384 464 94 15 234 
r*J9 I 460 8 20 Z74 314 36 454 

(tain Unon 490 424 494 - 54 17 

C5T6 J 543 134 22 - 27 44 - 

O 750 354 474 584 16 36 444 

[*761 ) 800 134 244 374 454 66 734 

KhgTUtt 460 29 404 474 104 18 3 
(-472 ) 500 10 22 284 32 40 51 

Land Sea* 600 15 29 354 174 23 36 
(-601 I 650 24 114194 574 584 694 
MW* 5 S J90 29 414 47 4 74 14 

("412 ) 420 104 234 29 15 19 364 

Ka(Wea 500 2B 374 484 124 30 354 
rSN ) 550 84 164 274 434 6» $54 

Sxtsbury 330 30 *3 484 6 124 184 

(-41 1 | 420 124 254 314 18 26 324 

She# Tram. 700 224 324 414 16 304 344 


Hmn 

220 11»4 1SH 

19 

- 

5* 

9* 

(*231 ) 

240 


6 

18 

8* 

18 

20 

Laarn 

134 

14 

— 

« 

- 

- 


n« 1 

154 


- 

- 

9* 

- 

- 

Lucas tells 

200 

4 1415 

18 

1 

a* 

13 

1-203) 

220 

- 

6 10% 16* 

20 24* 

P SO 

600 26H 40H 57H 

* 12*4 29*4 

re* ) 

850 

Vj 

20 32*24% 

36 

56 

PBungmn 

180 

3 

10 

15 

1 

7 

0 

(*182 1 

200 

— 

3 

6% 17*20*21* 

Pnuferttei 

300 

17 

28 

31 

* 

6 

13 

(*317 | 

330 

* 

12 

15 

14 

30 29* 

R7Z 

BOO 

45 881* 

78 

_ 

10* 

24 

r845 ) 

850 

3V1 

35 

48 

7 

29 

« 

ReHtend 

460 

14 3ZV» 411* 

* 

13 

28 

C*73 1 

500 

— 

14 22% 26* 34* 

52 

Bojal msete 

280 HMMYr 

30 

* 

11 

17 

(*290 ) 

300 

1* 1414 28* K»* 

21 27* 

Tesco 

240 

5 

15 

22 

* 

7 14* 

1*244 > 

260 

- 

6 12* 15* 

18 

28 

ttxaooe 

200 

5 14* 

20 

1* 

9 12* 

(*204 1 

217 

- 

7* 

ra- 

12* 18* 


wataro 

325 28H 

- 

- 

- 

- 

i- 

(*353 1 

354 

2 

- 

- 

3 

- 

- 


Brttfetfi Funds - 

Other Fixed Interest 

Mineral Extraction 

General Manufacturers . 
Consumer Goods — — 
Services 


Utilities . 


Investment Trusts . 
Other* 


35 

11 

25 

2 

0 

12 

29 

91 

76 

S2 

218 

359 

14 

73 

100 

49 

140 

297 

3 

32 

B 

38 

149 

177 

17 

248 

200 

16 

79 

24 


ToMa 


2SS 


1.047 


1278 


Data baaed on those companies feted on the London Share Servtae. 


TRADITIONAL OPTIONS 

First Oeodngs November 21 

Last Dealings December 2 


EXpiry 

Settlement 


Febrnay 23 
March 9 


Calls: Catfima. FMax. FMranie, Hunthift, Magnum Povver, MctXmneO Dougin Art 8 
Cat Magmen Power 

LONDON RECENT ISSUES: EQUITIES 


Option 


Mt Apr Jul Jan Apr JU 


BAA 500 18 304 374 114 174 234 

fS02 I 525 74 184 - 26 31 - 

Romes WV 460 374494574 54 114 20 

I 500 1*4 264 E4 21 28 40 

Option Dec Mar Jim Pec Iter Jun 


T70I I 


750 5 124 21 494 634 66 


-4 

-17 

-10 

-3 

-6 

-6 

-11 

-1 

♦1 

-3 

-3 

Storehouse 
P220 > 

Trafalgar 

rei i 

Urtiew 

moo) 

- Zenera 

raw j 
Outsort 

220 8* 14 18 9* 12 16* 

240 2 6* 10 23* 25 29 

SO 5* 8 10* 4 6 7* 

90 2 4 6* 10* 12 13* 

1100 35 54 87 24 45 55* 

>150 14*31* 45 56* 75* 85 
850 S3* 48* 61 22* 43 50* 
900 13 28* M* S3 73* 00 
Nov Feb May Nov Feb itej 

-2 

S'i 

Grand Ma 

390 

14 24* 33 

1 

14 19 

fij 

r«n 1 

420 

* 10 18* 17* 

32 38 

-5 

LadbraLe 

ieo 

2 11 16* 

1* 

8 13* 

-4 

riei i 

IN 

- 4* 8* 18* 20* 26 

-l’i 

Wd Bfctute 

300 

21 29* 38 

- 

4 12 


rci i 

s» 

* 12 19* 

9 16* Z7* 

-7 

Opttxt 


Dec Har Jm Dec Ha Jun 

-9 

Fisons 

12D 

9* 15* 19 

4W 

8* TO* 

-1 

1*124 | 

IX 

6 11 14* 

9* 

14 15* 

-2 

-L 

Opton 


Nov Feb Hay 

Nov 

Feb May 

-J 

Bra Aho 

420 

14* 37 47* 

1 

17*29* 

o 

C434 1 

460 

- IS* 30* 


39 52 

-l 

-\0 

-9 

BAT tv* 

420 

33 45 51* 

- 

#* 16* 

C453 ) 

480 

1 21*20* 

7 

22 36 

-4 

BIB 

200 

IS* 25* 29* 

'i 

8 12* 


1-295 I 

300 

1 14 IB 

7* 

14 22* 

-f. 

Brtl Tetem 

360 

19 24* 31* 

t» 

B 12* 

-4 

(-379 ( 

390 

» S* 17 

13 

23h 28 

-3 

CeauySdi 

42D 

22 33 38 

* 

6* 15* 

H0 

-1 

T441 | 

4N 

* 12 19 

19 

25 37 

-8 

-1 

Eita Bee 

800 

9* 43*51* 

4 

42 54* 

-5 

raos i 

B50 

-23* 41 

45 

71 82* 

•43 

Gufm«M 

420 

38* 40* 53* 

- 

3 9* 

-24 

-1 

r«s | 

460 

1 19 27* 

3 

14* 25 

-lfc 

GEC 

200 

2* 12 18* 

1* 

11 13* 

-19 

1-281 1 

WO 

- 5* 10 

19 

24* 26 


Atoey Nad 

390 

27 

37 

41 

4 

13H 

19* 

f412 ) 

42D 

7* 

19*25* 

14* 

29 

35 

ArnsHad 

30 

3 

4 

6 

1 

2* 

3* 

rat i 

35 

1 

2 

3 

4 

5* 

6* 

BteCbys 

550 

40 ! 

54* 

62 

3* 

16 

23 

rSB3 I 

COO 

to*: 

JS*3G* 

22* 

40* 

48 

Eta cade 

300 

12 

23 28* 

7* 

14* 

21* 

C3K) > 

330 

2 

10 16* 

27* 

32 

39* 

BrttBti SM 

■so 

20 

28 

34 

1* 

6 

12 

(-297 ) 

300 

6* 

16 22* 

8 

13 

21* 

Dunns 

IN 

13 

18 

24 

3* 

B 

13* 

(M88) 

200 

3* 

9 1 

14* 

14 

19 

24.* 


160 

14 

18 21* 

1 

4 

8 

C172 > 

180 

3 

7 

11 

9* 

13 

19 

LorrtX) 

140 

is*: 

21* 

28 

I 

4* 

TV, 

H57 1 

160 

5 

10 15* 

B 

12* 

16* 

Kail Ptraer 

500 

12*: 

30*42* 

13* 

24 

33* 

C504 ) 

550 

i 

12 

22 . 

51* 

56 

83* 

San Rota 

360 

13* 

23 

34 

11 

22* 

28 

n&> i 

390 

3* ■ 

11* 

72 : 

31* 

41 

46 

Sears 

ICC 

7* 

10* 12* 

1 

3* 

5* 

H05 > 

110 

2 

5* 

7 

S* 

8* 

11 

Forte 

220 

14* 

22 25* 

2* 

6* 

12 

(-231 ) 

240 

3* 

11 

15 

12 

16 

22 

Tarmac 

120 

9* 

16 

18 

2* 

6* 

9* 

rias i 

130 

4 

10 

13 

7 

II 

14* 

Thom BM 

950 

35 

51 

75 

13* 

3* 

35 

1-972 1 

1UW 

B 

27 48* 

42 

51 1 

BO* 

TS® 

200 

21* 

25 27* 

1 

5* 

8* 

(-719 I 

220 

7 ' 

12* 

16 

6* 

14* 

17* 

TotnWns 

220 

10* 

17 

23 

4 

9* 

13 

1*226 ) 

240 

2 

B* 

14 

15* 

21 

24 

Wefcome 

650 

43 65* 

80 

9* 

25 : 

38* 

rsso j 

700 

14 35* 54* 1 

32* 

<8 

S3 

Opart 


Jaa 

AW 

Jul 

Jan 

Aor 

Jd 

Sato 

600 

40* 

54 

69 

14* 

31 

38* 


issue Arm 
price paid 

P 

MkL 

cap 

(EmO 

1904 

rtgh Low Stock 

Ctose 

pnee 

P 


Net 

dhr. 

ON. Gn 
aw. yld 

P/E 

net 

_ 

FJ>. 

0.75 

6h 

4 APIA Wrrts. 

5h 

J 2 

_ 

- 

_ 

_ 

- 

KP. 

17.2 

88 

70 AWnnt Latin Am 

86 

-1 

- 

- 

- 

- 

- 

FJ>. 

ZOO 

S3 

50 Do Warrants 

50 

-2 

- 

- 

- 

- 

- 

PJ». 

113 

190 

180 ^lAdara Pmtg 

190 


026% 

8.1 

1 A 

il.i 

100 

FJ». 

680 

33 

65*2 BZW CommocfiSes 

87 

-1 

- 

- 

- 

- 

_ 

F.P. 

0.10 

47 

39 Da Wiw 

39 


- 

- 

ra 

re 

- 

FJP 

49-6 

104 

65 JCatorta 

92 

-4 

- 

- 

- 

- 

280 

F.P 

303 

287 

260 ChwchN China 

285 


RN9.BB 

22 

42 

120 

63 

FJ>. 

12.1 

88 

56 Ennamd 

66 


RN0.71 

58 

1.4 

0-2 

- 

F.P. 

491.0 

495 

491 RdoBty Spec Unts 

*91 


- 

- 

- 

- 

- 

FJ>. 

B5.5 

176 

108 Ftorortc tytefe 

156 

-17 

RN0.75 

2-6 

06 

525 

100 

F.P. 

11.0 

101 

100 Fhdxoy 3mfe C 

IDO 

-1 

- 

- 

- 

- 

100 

F.P. 

28.6 

102 

M 1 ! For 4 Col Emrg C 

991; . 

■ih 

- 

- 

- 

- 

- 

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191 

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279 

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290 

30 

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100 

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30-3 

102 

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101 


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29 A 

100 

flO INVESCO Korea C 

90 

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180 

FP. 

1675 

223 

205 Irish Permanent 

220 


UN9.0 

2-9 

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49.9 

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482 

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120 

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645 

131 

120 SeaBwfatt 

131 

16 

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135 

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625 

156 

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224.4 

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4.1 

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801 

82 

57 WMCftureti 

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125 

RIGHTS 

OFFERS 







issue 

Amount Latest 





Ooang +or- 

price 

paid Renun. 

1994 




pneo 


P 

up 

date 

Hlgti Low Stock 




p 




77 

Nil 

30/12 

3pm 

2pm 

Apollo Metals 

2pm 

310 

Ni 

20/12 

41pm 

18pm 

Kenwood Appl 

24pm -1 

27 

NI 

28/11 

3hpm 

2hsm 

Martin Inti 

3pm 

37 

Nil 

3/1 

5pm 

3pm 

OMI 

4* z pm 

85 

NI 

23/12 

15pm 

7pm 

Awsac 

7pm -a 

285 

NI 

6/1 

57 1 Z pm 

53pm 

Seton Heekh. 

53pm 


FINANCIAL TIMES EQUITY INDICES 

Nov 22 Nov 21 Nov 18 Nov 17 Nov 16 Wage 


■Wgh -Low 


(-HTD I 


650 18 30 «4 404 58 65 


l&CTSpfe 700 464 634 74 18 394 484 

(-723 1 750 21 39 61 43 $7 76 

Reuters 460 324 43 524 84 18K 234 

(-480 I 500 124 23 324 2S 39 44 

Option Hal Feb Way Wot Feb May 

Rdls-ftnw 180 3 124 184 i 9 13 

(MB2 I 200 - 44 84 18 204 244 

■ underhfeig a*cu>ry pnee- Piemlrara diown are 
used on smSetnve pdees. 

November 22 .Tatnl contracts: 34.043 Coils: 
SD.4S5 Put* K.45B 


Ordinary Sham 2369.1 23S9.8 2407.0 240G.7 2418.6 

CW. dhr. yield 4 J9 4JS3 4J2 402 • 4^8 

Earn, ykt % to* 6.44 8.35 6.33 6.33 6L20 

P/E ratio net 17^3 18. IB 18^4 1023 18.64 

P/E ratio ral 17.SS 17.80 1708 17.85 18.18 


232BJ3 Z7116 22406 
4.01 4J1 3.43 

4.62 6L51 382 

2720 3343 1094 

2522 3080 17.09 




Nor % dq Nov 
21 ae day 18 



•Far 1664. Ontaiy Share Mar etice oo mp tam: Ngh 2773.6 lam 464 Jiaeraa 

FT Odlnary Share Max brae data 1/7/3S. 

Ordinary Share hourly changes 

Open 9J0 IQUOO 11J0 1300 1300 14J» 15JB 16JX) High Low 
23798 23778 2382.1 23748 23758 2377.1 2370 j 4 2371.1 23S98 2382.5 2368.0 
Nov 22 Nov 21 Nov 18 Nov 17 May IS Yr aoo 

SEAQ tagakK 24284 24805 25.114 26218 31,158 27,609 

Eqiity turnover (Drift 14468 1280.8 14363 1586.7 1581 6 

Eqjty bargafesf - 27807 28540 30374 35^43 3 9,om 

Shares traded (mOt - 568.4 5488 852.0 6898 ^ 3 

lExdMng nra-invhra buanere rad owrnu unm. 


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1511.78 

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154496 157539 1733.00 

(LBS 

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Copyn a . il . Tt>» Ffeueael Tmes Limasd 1684. _ , _ „ _ ^ 

Fqiara n breoau diora iwnber or canptara. Ba=o US Man. Brae Vtas- IOCC.OO 3V12IB2. 
Ptroeceespr Sold Mme Max; WmSS: 3*7i ; doy t donga: -11 prtnK roe ago. 2419 1 P«WL 
Lam pnon woe unavailable tar mis eddm 


A Prime Site for your 
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FINANCIAL TIMES WEDNESDAY NOVEMBER 23 1994. 


CURRENCIES AND MONEY 


MARKETS REPORT 


Lira takes knock from Berlusconi investigation 


The Italian lira fell to a record 
kwr against the D-Marfc, after 
magistrates formally warned 
Ur Silvio Berlusconi, the prime 
minister, that he is under 
investigation, writes Philip 


The lira dropped to 11,083! 
DM at the London dose, from 
L1.025/DM on Monday. Accord- 
ing to Mr Robert Thomas, head 
of research at NatWest Capital 
Markets, “the weaker that Ber- 
lusconi becomes, the less likely 
it is that the budget deficit will 
be sorted oat in the near term. 
The lira is suffering from the 
lack of firm government” 

Mr David Cocker, currency 
analyst at Chemical Bank, 
thinks that while the latest 
political crisis may have been 
discounted by the market, the 
lira could still fell to LI ,045/ 
1,048 to the D-Mark. 

While Mr Berlusconi said be 
was “absolutely sure" he had 
not committed any offence and 
would not resign, the news 
also hit Italian bond and equity 
markets. The Mlbtel stock mar- 


ket index fell 2 B per cent cm 
the day. 

■ The US dollar weakened in 
London trading against both 
the DMark and the yen. Chem- 
ical Bank's Mr Cocker said 
profit-faking had made the dol- 
lar weaker. “Basically, it was a 
market which had got a little 
bit long of dollars" he added. 

Mr Thomas said the dollar 
had recently hit a technical 
resistance point around DML56 
and had back-tracked. On the 
fundamentals, he added that 
“people are also beginning to 
realise that December might he 
a bit early for the Fed to raise 
rates again.'* 

Mr Neil MacKinnon, chief 
economist at Citibank in Lon- 
don says the 75 basis points 
rise in US interest rates was 

■ PttQ B d m n*» Yorfc 

Sava — Iaha» — -ftw. dM- 

Eopot 


1 mb 
3n* 

1»r 


1.9690 

isen 

1JM 

1 -5657 


1.3673 

1.5672 

1.5671 


“not enough to convince the 
bond market that the Fed was 
ahpflri of the Inflation gajne.” 

He also pointed to the recent 
weakness on Wall Street - the 
Dow Jones Industrial Average 
is down 200 points since Octo- 
ber - as one factor behind the 
dollar’s difficulties. “The cur- 
rency market thinks the Fed 
will find it bard to raise inter- 
est rates with Wall Street 
going down,” he said. 

“The dilemma for the Fed is 
that if they don’t raise rates, 
long bonds will suffer and if 
they do raise rates Wall Street 
will come under pressure,” 
argues Mr MacKinnon. 

However, the Citibank econ- 
omist Is cautiously optimistic 
about the dollar’s prospects in 
1995. Citibank’s research shows 
there is increasing interest in 
the dollar amot> g martinm and 
long term fund managers and 
this, according to Mr MacKin- 
non, should give the currency 
some support 

The D-Mark also received 
support from Bundesbank pres- 


PoHor 

Against D-Mark (DM per $ 

1.8 — 



1.5 — 


1 .4 . 1 1 1 1 1 

Jan 1994 

SoLrc& Dataatraem 


Nov 


ident Mr Hans Tletmeyer. He 
was quoted as saying that Ger- 
man monetary policy will 
reflect the central bank's inter- 
est in a strong D-Mark. 

Mr Tietmeyer also appeared 
to rule out a move to a variable 
rate repo when the decision- 
making central council meets 
on Thursday. 

The dollar fell to DML5536 
by the London close, compared 


with DMl.5594 on Monday and 
against the yen, it dropped to 
Y98.075, from Y98.375. Trading 
continued to be fairly quiet, 
ahead of the Thanksgiving hol- 
iday on Thursday. 

■ Sterling had a fairly quiet 
day on the currency markets, 
with attention focused else- 
where. However, expectations 
of an early interest rate rise 
appeared to subside. 

The markets have apparently 
decided that Mr Kenneth 
Clarke, the Chancellor, will 
attempt to shift the focus in 
next week's Budget to the 
tightening of fiscal policy and 
away from monetary policy. 

The March short sterling 
futures contract recovered half 
of Monday's losses, climbing 
three basis points to 92.98. 
However, that still implies 
base rates of 7 per cent, com- 
pared with the current level of 
5.75 per cent. 

Against the D-Mark, the 
pound slipped to DM2.4402, 
from DM2.4452 on Monday's 


close. However, It gained 
slightly against the weaker dol- 
lar to finish at $L5707, from 
$1.5681. Trade-weighted, it 
slipped to 79.8, from Monday’s 
close of 794L 

■ The Australian dollar had 
another good day, edging up to 
76.3 emits against the US dol- 
lar, from just under 762 cents 
on Monday. The Australian 
currency continues to benefit 
from rising commodity prices 
and Mgh real Interest rates. 

■ In the UK money -markets, 
the Ran If of ffngfgntf gave hr»fp 
of £40Qm at established rates to 
alleviate a £500m forecast 
shortage. Overnight rates 
moved between 5.5 per cent 
and 4 per cent 


■ OTHER cuH Hmcm 


for 22 £ 5 

Htawy 171-586 - 171789 101250 - H&3S0 
fcsa 274203 - 374500 T74UD - 775003 
foe* 04894-04707 02989-02996 

Mud 37281 J - 373101 237409 - 23*556 

Rada 502103 - 502020 319700 - 320000 
UAL 07618 - 57735 38715 • 00735 


POUND SPOT fCRvVA^D AGAINST../ HE POUND 


spread 


DOLLAR SPOT FORWARD AGAINST THE DOLLAR 


Nov 22 


Closing 

mid-point 

emps 

Austria 

(Seri) 

17.1670 

Balgkim 

(BFi) 

50.1856 

Danrmalc 

(DKl) 

95549 

Hntanri 

(FM) 

7.4533 

Franc* 

(FFr) 

82789 

Germany 

(DM) 

2.4402 

Greece 

(») 

375476 

Ireland 

«Q 

1.0137 

Italy 

04 

S2097 

Luxembotag 

(LFr) 

551865 

NaOwtlteKls 

(FI) 

2.7347 

Norway 

(MO) 

156955 

Portugal 

(Ea ) 

245586 

Spain 

(Pta) 

M3JB 

Sweden 

(SKi) 

11.5051 

Switzerland 

(SFl) 

2.0710 

UK 

to 

- 

Ecu 

- 

1.2815 

SDRt 

- i 

0^32540 

Amarlcas 

ArganOna 

pwH 

12700 

Brazil 

m 

1J139 

Canada 

test 

21578 

Mexico (Now Peso) 

5.4040 

USA 

to 

1^707 

Radfie/Mlddte Enat/ Africa 

Australia 

(AS) 

2-0579 

Hong Kong 

(MCS) 

121441 

India 

Pa) 

492870 

Japan 

M 

154.047 

Malaysia 

(MS) 

4JW93 

New Zealand 

(NZS) 

25210 

PMtenaa 

(Paao) 

37.6969 

Baud Arabia 

(SB) 

5-8915 

Stegapore 

(SS) 

23002 

S Africa (ComJ 

P) 

&0B89 

S Africa (Ffri) 

(R) 

0.4792 

South Korea 

(Won) 

1249.10 

Taiwan 

(T5) 

4 Ml 94 

Thailand 

PV 

39-2675 


7.4533 -00220 434 - 632 

03789 -00144 749-829 

2.4402 -0006 303 - 410 

75.476 -0633 169 - 783 

1.013? +00007 130 - 143 


OwT Md 
high low 

Orta month Three months 
Rata %PA Rata <KPA 

One year Bank ol 

Rata KPA Eng. tedoc 

Now 22 










Eropa 


17J400 17.1349 

17.1827 

03 

17.1508 

04 

- 

- 

1153 

Austna 

(Seri 

503870 500800 

50.1506 

0.8 

50.0755 

09 

49.6305 

1.1 

117.0 

Belgium 

(Bfi) 

9-5586 8.5220 

95525 

03 

9-5672 

-05 

9.5488 

Ol 

11B.7 

Denmark 

(DKd 

7.4670 7.4260 

. 

- 

- 

- 

- 

- 

883 

Finland 

(FW) 

03838 03523 

53774 

0-2 

83091 

05 

83065 

09 

110.0 

Franc® 

(FFO 

24415 24339 

24389 

08 

2435 

09 

24035 

1^ 

1262 

Germany 

(D) 

370.689 373.658 

- 

- 

- 

- 

. 

- 

- 

Greece 

(DO 

1.0145 1.0087 

1.0135 

02 

1.0131 

02 

• 1315 

-0.1 

105.0 

Ireland 

liq 

2523.17 249631 

2526.97 

-2-9 

253732 

-28 

2583.47 

-25 

738 

Italy 

(U 

60.2870 50.0880 

50.1605 

0-8 

500755 

09 

49.6305 

1.1 

117.0 

Luxembourg 

(LFr) 

2.7300 27287 

27332 

0.8 

2.7282 

03 

28986 

M 

1208 

Netherlands 

to) 

ia7138 108437 

106355 

0.0 

106871 

-0.1 

108881 

OO 

86.6 

Norway 

(NK*) 

240506 248-278 

2S0.419 

-03 

253.593 

-7.9 

- 

- 

- 

Portugal 

(Es! 

203.464 202834 

203.7S2 

-22 

204357 

-13 

207.152 

-1.9 


Spain 

(Pta) 

115845 11.4815 

11-5841 

-20 

11.6266 

-21 

11.7711 

-13 

755 

Sweden 

(SKi) 

20727 2.0617 

20875 

20 

20601 

2.1 

23182 

23 

1202 

Swttzarfand 

(SFr) 

. 

. 

- 

- 

- 

. 

- 

7S.6 

UK 

to 

1.2823 1.2787 

1.2815 

0.0 

1.281 

02 

12745 

05 

- 

Ecu 


- 

• 

- 

■ 

- 

- 

- 

- 

SDRt 

- 


Closing 

mid-point 


Change Bki/offer 
on day spread 


Day's mW 
rtghtow 


One month Three months One 
Rate MPA Rate MPA Rate 


■or JP Morgan 
MPA Ms* 


123 896 - 704 1.5705 1 JO 80 

177 129 - 149 1-3152 1 JOTS 

(CS) 2.1578 *00152 568 - 584 2.1604 2.1495 2.1568 0.6 

07 006 -074 5.42Q0 6.4000 


24579 -0.0007 568 - 590 24595 2-0474 

(HKS) 12.1441 *04198 414 - 468 12.1553 131226 12.1351 09 

(Fta) 49.2670 *04796 556 - 793 494120 49.1910 

(V) 154447 -0215 978 - 115 154450 153.640 153492 34 

00169 077 - 106 44271 4.0067 
04017 195-225 24237 24124 
06433 111 - 626 374150 37.6060 
00099 899 - 930 64867 54818 

00009 989 - 014 24048 22982 

+041 576-621 54633 54433 

00311 622 - 981 04968 04684 

+144 878-942 126041 124745 
00478 857 - 430 414432 414273 
04415 521 - 829 302970 302050 
tSOR raue-tar Now 21. BidMfcr sores* in Om Pound Spot trite show ertfy tto la* Urea dacfcnd 
naM but an rented by cum IrteraSl tales. Storing Mwt criateM by tfn 8M of Eretend. Bom 
B ite and the Dolor Spot trites dohod bam THE WMfflBLrtERS CL08MQ SPOT RAIE8. Same ' 


21588 

0.6 

21SS3 

04 

21539 

02 

801 

12707 

OO 

1.5708 

02 

13672 

02 

1525 

208 

-12 

2-0827 

-09 

20786 

-09 

_ 

121361 

09 

121308 

04 

120856 

06 

- 

153392 

33 

152602 

33 

147 Al 7 

43 

191.3 

23256 

-22 

25349 

-22 

25548 

-13 

- 

- 


~ 

■ 

• 

- 

- 


Brad {RQ 

Cmta (Cfi 

Madco (New Peso) 

USA to 

PacMc/MUdte East/ Africa 


rotes mm not riraedy quoad to ha 
- lOOiBkL Ofo ord McLcatm tn txMh 
l by *» F.T. 


Indta 
Japan 
Malaysia 
New Zealand 
PhJppteaa C 
Saudi Arabia 
Singapore 

S Africa (Core) 

S Africa (Raj 
South Korea | 

Taiwan 
Thatond 
160R rata tar Now 21. BMW 
but are hated by cure* Maori 


109235 

-0.038 

270 ■ 320 

102726 10.9100 

10.922 

03 

102055 

02 

10208 

1.1 

1042 

31.9510 

-0.1115 

400 - 620 

32.0500 312890 

31231 

03 

31.8835 

03 

31388 

02 

1052 

6 0832 

-0 0123 

822 - 842 

8.0856 8.0675 

6 0825 

0.1 

62882 

-03 

6.1067 

-04 

105.1 

4.7452 

-0.0223 

398 - 508 

4.7587 4.7308 

4.7425 

0.7 

4.7402 

0.4 

4.7517 

-0.1 

829 

5.3345 

-0.018 

330 - 360 

5.3370 S3215 

63338 

03 

53266 

04 

639S5 

0.7 

108.1 

1.5536 

-0.0058 

533 • 538 

1.5557 1.5498 

1.5528 

0.8 

12504 

03 

12338 

13 

1062 

239.050 

-0.8 

900 - 200 

239.980 238.090 

241.75 

-13.8 

247.1 

-132 

2872 

-122 

682 

13496 

+03016 

489 - 502 

1.5587 1.5479 

1.5499 

-021 

12504 

-02 

12459 

02 

- 

1805.00 

♦62 

425 575 

1606.60 1590-50 

180835 

-23 

1815.7 

-2.7 

16482 

-2J 

742 

31.9510 

-0.1115 

400 - 820 

32.0500 31.8890 

31231 

03 

313836 

03 

31388 

as ■ 

1069 

1.7411 

-0.0065 

406 - 415 

1.7431 1.7369 

1.7402 

0.0 

1.7377 

03 

1.7208 

12 

1053 

68030 

-0.0185 

020 - 0*0 

62270 a 7807 

6.6112 

-12 

RRTO 

-12 

62555 

-02 

95.6 

158330 

-0.84 

280 - 360 

156 BOO 156.090 

15&905 

-4.4 

16023 

-43 

18328 

-32 

9S2 

129.485 

-037 

460 ■ 510 

129.590 129.180 

129.72 

-22 

130.12 

-23 

132.185 

-2.1 

802 

7.3830 

+0.0004 

586 - 874 

7.3768 73186 

73742 

-1.8 

7.401 

-2.T 

7218 

-2.1 

• 82.1 

1.3185 

-0.0028 

180 - 190 

1.3190 1.3137 

13183 

20 

13117 

2.1 

12878 

23 

106.1 

1. 5707 

+OOOS6 

704 - 710 

1.5722 1-5691 

12707 

0.0 

12708 

0.0 

72872 

02 

88 .1 

12257 

+00035 

252 - 262 

12280 1.2246 

13257 

02 

1328 

-0L1 

12297 

-03 

- 

148157 

- 


• 

- 

- 

- 

• 

" 

’ 

- 

0.9998 

-00002 

995 - 996 

0.9996 0.9995 

. 

. 

. 

- 

- 

- 

- 

0.8385 

+0.0035 

380 - 370 

08370 0.8360 

- 

- 

- 

- 

- 

- 

re 

13737 

+0.0074 

734 - 739 

13743 13702 

13734 

03 

13731 

02 

13782 

-03 

832 

3.4405 

-0.0125 

380 - 420 

3.4550 3.4390 

3.4415 

-03 

3.4433 

-03 

3ABU7 

-03 

- 

tfrica 


* 

" 

" 


" 

" 


" 

88.1 

1.3102 

-0.0028 

098 - 106 

1.3125 1.3050 

1.3109 

-0.7 

13127 

-03 

1.3255 

-12 

683 

7.7317 

-0.0001 

314 - 319 

7.7319 7.7314 

7.7296 

03 

7.7284 

02 

7.7362 

-0.1 

- 

313663 

-0.0012 

650 - 875 

31.3700 313650 

31.4383 

-27 

312813 

-2.7 

- 

- 

— 

80.0750 

-03 

500 - OOO 

963500 97.9000 

97.785 

32 

97.165 

3 J 

8438 

4.1 

1503 

23526 

-00151 

520 - 530 

2.5672 23520 

22495 

\A 

2245 

12 

2273 

-02 

- 

1.6061 

-00015 

044 - 057 

1.6057 1.6018 

1.60C1 

-0.7 

1.6085 

-03 

13175 

-03 

- 

24.0000 

-0.45 

500 - 500 

24.0500 23.9500 


- 

- 

- 

- 

- 

- 

3.7509 

♦0.0001 

506 - 511 

17511 17608 

3.7545 

-1.1 

17614 

-1.1 

3.7759 

-0.7 

- 

1.4844 

-00019 

639 - 649 

1.4670 1.4635 

1.4829 

13 

1.4604 

1.4 

1.4429 

12 

re 

33398 

+00005 

390 . 405 

3.5405 33325 

32553 

-53 

32874 

-5.4 

3.7523 

-OO 

- 

4.1250 

+0013 

190 - 350 

4.1350 4.1150 

4.153 

-6.1 

4.1975 

-73 

4.435 

-72 

- 

795250 

-0-4 

200 - 300 

795.600 795300 

79&2S 

-42 

801.75 

-33 

82025 

-3.1 

- 

283700 

-00133 

600 - 800 

283800 263600 

2639 

-02 

28.43 

-09 

• 

- 

- 

25.0000 

-0015 

960 - 050 

25.0050 24.9950 

25.0295 

-1 A 

25.1205 

-12 

25225 

-2.1 

— 


h tea DcQer Spot BUS mow arty Iha last Osao decimal pieces. Forward rtfas are not rflracUy (Salad to tee nwrtot 
IK, Intend 1 ECU an quoted h USeuwcy. JP. Morgwi norrinri tocfeas Now 21. Bn tentage 1990-100 


WORLD INTEREST RATES 


MONEY RATES 

a s a. 


TJMB Sh 

mtha rti* 


One 


Lome. 

War.’ 


Ote. 

«• 


•*K® 


Btegtant 

wekflgo 
ft te i c a 
wfcefc ago 


weak ago 


week 

Wy 

waafc ago 
Ha U ted te iea 
week ago 
SHteM 
wtefc ago 

us 

weak ago 
Japan 
wreak ego 


4W 

4* 

« 

Sfl 

445. 

443 

S i 
84 
84 
«4 

444 
444 

3 

S!4 
54 
2£ 
2 i 


43 

*8- 

8» 

54 

448 

446 

SU 

Stt 

«4 

524 

5.04 

3B 

33- 

54 

64 

2% 

2K 


-54 

5ft 

5* 

5* 

5.15 

5.16 
• 6 « 

5% 
8* 
. 84 

*23 


m 
5ft 
5ft 
SA 
52S 
525 
■ Si- 
64 
di 
83 
627 


*23 534 

sa « •Aft 


34 

64 

at 

24 

24 


436 

8* 

64 

2ft 

24 


6ft 

6ft- 

« 

6ft 

B.0O 

5.60 

Ti 

7'*. 

-64 

9ft 

5.78 

8.75. 

4tt 

4ft 

■'« 

eg 

24 

2 * 


7.40 

7A0 

500 

&00 

aoo- 

620 


oe» 


.400 


420' 

<50 


ISO 

ISO 

&2S’ 

S25 

.350 

880 

4J5 

4.00 

1.75' 

1J5 


.BJ5 

025 

■ 485 

♦85. 

.JUS 

526. 

• 540 ' 
820 


■ $ UBOR FT London 
MartrehklUtg: 
wsakago - 

US Dottar CDs 
week ago " 

SDR Lbiked Da 
weak ago 


Stt- 

8 

6* 

7 

5* 

S3 

8K- 

:«T 

521 

6.74 

009 

K77' 

521 

628 

533 

826 

m 

3* 

3K 


394 

3$ 

» 

4 


m* 




EURO currency inthrest rates 

Nov 22 Short 7 days Om Tina 

term note month . monina 


SCt - 
months' 


One 


Bdglai ftm 
OWWiMbru 
D-Mgfc 

Dutch GUhkr 
Be nch Banc 
ftatuguose Esa 
Spsteh Peeeta 
Staling 
Swiss Banc 
Can. Dobr 
US Dote 
Man Uta 
Van 

Arianttfrig 
Short bra Mss a 


413 -4» 
5ft-5ft 
:s-4% 
5-43 
Sft-5ft 
9-S? 
712 -7J« 
5h-SU 

3A-3A 
A-43 
5& ■ 5A- 
7>2 
2'* - Zh 
th -2ft 

o cte tor iha 


413-413 

5*-5>2 

5-4% 

5i-4a 

5&-S& 
- 8 % 
7l 2 -7h 

S&-34 
6**- Si 
S&-54 
8 4-jBi' 
2A-2A 
3i-2j| 
118 OoBar an 


5J* - 63* -5*.-SV- els 
BV-6 7V-7. 

5,V-Sfr S&- S& ' 

5M-5A 5h-5A.:513..^ 

SH -ft &t-s\ 

1(A( - 9 V 10*2-10 10ft y vfil 
73-70 9ft -8ft 9ft - 8ft. 
ei-8 6& « 7A-.7A 

3ft - 33 4ft-4 . 4ft - 4ft 

5ft -5ft «ft- 6ft. --7ft- 7ft 
B-Sft .Bft- W* 7 -6ft - 
- oy 

2i - 24 2ft - 2ft ’ 2ft - 2ft- ' 2ft - 2ft 
3ft -3ft 3ft - 3ft 3ft -3ft . /4ft -.4 
I 'too. ottrars two tfrqra f mOml ' • 


4U-413 
5ft -5ft 
54-4S 
5ft - 54 
54-64 
9ft -9 
7ft - 7ft 
5ft - 54 
3ft -3ft 

54-54 

5ft - 5ft - -- ... . . 



Open 

Sett price 

Change 

Htfl 

tow'. 

Eat voT 

Open ten. 

Dec 

9433 

9435 

*aoi 

9435 • 

9423 

17209 

45,158 

Mar 

9397 

94.02 

*036 

9402 

9326 . 

29346 

-38328 


9324 

3329 

*0.08 

9329 

9324 

8.419 

31285 

Bap • 

9320 

9323 

*023 

.9324 

83.19 

2340 

; . 21349' 

■ IMRES 

MONTH •unOOOUJIlt (JJFFq* *1m point* of 100* 





Open 

Sett plica 

Change 

Wgh 

User . ’ 

Eat voi. 

Open fra. 

Dec 


9821 

*023 


• .• - 

o- 

263?’ 



9323 

*034 



' 0 

1464 ‘ 



92.74 

*023 



- 0 

■ 388 ■ 

Sap 


9234 

*023 


. - 

0 

177 

m ngB 

MONTH 

■UMMUMI 

niTURn flJFF^- CMIm prints tri 10»6 ' 


Op«i 

Sett price 

Change 

J Hfetr 

■ Law . 

Bit. sol 

Open W. 

Dec 

9423 

9423 

• - 

.9424 

•9422. 

13295 

133503 

Me 

942S 

94.68 

*024 

9429 

9434 • 

24019 

180908 


9425 

9424 . 

*027 . 

9424 

9426 

25477 

"120723 

Sep 

9338 

9325 

*0.07 

9326 

-9328 

9838 

84647 


w ihrh teoifni eunouRA ■rrjumi Rmiw^t (m=g nooore pow» of ioom 



Open 

9att price 

Charge 

•teat i 

LOW 

Est. vri 

Open lot 

Dac 

91.12 

9127 • 

-0-12 

91.17 

9120 ■ 

. 7344 

30966 

Mar 

9050 

9028 

-0.19 

9025 

9022 

7782 

34S38 

Jun 

8923 

8921 

-aie 

8025 

-89-75 . 

3034 

15744 

Sep 

8920 

8929 

• -a 14 

8922 

8924 ' 

. 612 . 

21491 

■ THRU 

MONTH 

•noMn 

9 HtAHC W1IIWI (UfyQ Sfrlm pofrrteof 10016 


Open 

Sett price 

Change 


Low 

EsL voi 

Open frit 

Dec 

9820 

• 96.00 

. . 

90.00 

9628 

1411 

18460 

Mar 

95.70 

95.70 

- 

95.71 

9526 ■■ 

2370 

20868 

Jun 

9527 

ok rat 

*021 ; 

9629 

9527 • 

415 ’ 

6988 

Sep 

.9522 

9521 

- 

9523 - 

■ 9520 

71 

3040 

■ inn 

MONTH ECU rUTUHM QJFFQ Eculm pofrlta OM0096. 



Open 

Sett price 

Change 

High 

Low 

Eat uof 

Open tot 

Oac 

9408 

9429 

.*021 

9410 

9408 

■670 

7983 

Mar 

93.71 

93.73 

■HUM 

93.74 

93.70 

838 

7711 


9321 

9323 = 

+025 

na.9fl 

93.10 

402 

4175 

Sep 

8229 

92.73 

+0.05 

92.73 

9229 

94 

2603 


* IRFE tatwaa ndad on APT 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 















Now 22 

BFr 

DKr 

Fft r 

DM 

K 

L 

ft 

NKr 

Ea 

Pta 

SKr 

SFr 

£ 

C$ 

S 

V 

Ecu 

Befgtan 

(BFr) 

100 

1924 

1070 

4862 

2219 

5022 

5.446 

2128 

496.4 

4001 

2324 

4127 

1.993 

4299 

3.131 

3062 

2553 

Denmark 

(DKr) 

5222 

10 

0789 

2.564 

1.060 

2838 

2.862 

11.18 

2602 

2122 

1Z10 

2.168 

1.047 

9 Wfl 

1244 

1812 

1241 

France 

<m 

59.89 

11.40 

10 

221 2 

1-209 

3008 

3283 

1Z7S 

2907 

242.7 

13.80 

2.472 

1.194 

2275 

1275 

1808 

1529 

Germany 

(DM) 

2057 

3218 

3.434 

1 

0415 

1033 

1.120 

4377 

1012 

8322 

4738 

0849 

0410 

0884 

0.644 

63.11 

0625 

Ireland 

(to 

4924 

9.431 

0270 

2.409 

1 

2488 

2.6S9 

1054 

245.4 

2007 

11.41 

2244 

0987 

2.129 

1261 

152.0 

1285 

Italy 

to 

1291 

0370 

0332 

0097 

0040 

100. 

0108 

0424 

9265 

0087 

0469 

0.082 

0040 

0086 

0262 

Mil 

0051 


to) 

1826 

3.496 

0084 

0892 

0371 

821.7 

1 

0906 

9093 

7426 

4228 

0757 

0266 

0789 

0575 

56,39 

0489 

Norway 

(NKf) 

48.99 

3246 

7.846 

2285 

0249 

2360 

2260 

10 

2322 

190.4 

1082 

1239 

0236 

2220 

1.471 

1442 

1.199 

Portugal 

(Es) 

20.19 

3243 

3270 

0981 

0407 

1014 

1.100 

4298 

10O 

81.78 

4850 

0233 

0402 

0868 

0632 

61.95 

0515 

Spain 

(Pto) 

2466 

4669 

4121 

1200 

0.496 

1240 

1246 

5253 

1222 

100. 

5288 

1219 

0482 

1.081 

0773 

76.75 

0630 

Sweden 

mo 

43.41 

8265 

7247 

2.111 

0278 

■ 2180 

2265 

9239 

215.1 

175.9 

10 

1.792 

0865 

1268 

1269 

1332 

1.108 

■ft, ~a ,j U |- | 

uvviizonniiu 

(SR) 

2423 

4813 

4.046 

1.178 

0489 

1217 

1220 

6.157 

1200 

9017 

fi_582 

1 

0483 

1.042 

0799 

7428 

0219 

UK 

to 

6016 

0654 

8278 

2.440 

1.013 

2520 

2.734 

1068 

2482 

2032 

1128 

2271 

1 

2.157 

1571 

1540 

1281 

Canada 

P5) 

2328 

4.429 

3284 

1.131 

0470 

1168 

1288 

4961 

1162 

9426 

5259 

0260 

0^464 

1 

0728 

71.40 

0594 

US 

to 

3124 

0081 

5233 

1263 

0846 

1604 

1.740 

0798 

1582 

129 j4 

7268 

1218 

0637 

1273 

1 

98.03 

0816 

Japan 

fO 

3228 

6204 

0440 

1264 

0858 

1636 

1.776 

8235 

161 A 

1322 

7208 

1245 

0849 

1.401 

1.020 

100. 

0832 

Ecu 


3S.17 

7258 

0540 

1905 

0.791 

1967 

2.134 

8237 

194.1 

158.7 

91024 

1.817 

0781 

1284 

1228 

1202 

1 

Oateh Kronor, Ftandi Fkano, Narwete Xranw, and hwM Kranw per Ilk 8el0an Aanc. Yen. Eaeudo, Lira md Pate por 100. 








N 94MAK FVTURBS 0MMJ DM 12SJ300 per DM 





N St 

IMH! 

H YEN FVTIKSS (fMAfl Yen 122 par Yen 100 





Open 

Latest 

Change 

High 

LtJW EsL voi 

Open frit 



Open 

Latest 

Chsngo 

Wgh 

Low EsL voi 1 

Open W. 

Oac 

02432 

08454 

+00030 

08486 08432 

29.121 

90408 

Oac 


12190 

12238 

+00048 

1.0240 1.0188 10858 

75,859 

Mar 

0.8480 

08489 

*0.0032 

02409 06468 

1226 

3235 

Mar 


12313 

1.0329 

*00048 

12330 12303 

830 

9281 

Jun 

“ 

06480 

" 

- 


' 

10 

1230 

Jro 


* 

1.0394 


■ 

■ 


19 

838 

N SWISS HUHC FUTUHES (MM) SFr 125200 par SFr 




■ STteLMO FUTUSMS (MM) EE220Q par E 






Dec 

07585 

07820 

♦00037 

07822 

07885 

17282 

54897 

Dec 

15882 

12720 

*0.0080 

1.5786 

15682 

9291 

40.415 

Mar 

07844 

07856 

+22038 

07659 

07644 

287 

3253 

Mar 

1570Q 

15720 

*00082 

15730 

15898 

184 

1,475 

Jwi 

07700 

0.7700 

*22034 

07700 

07700 

a 

279 

Jun 

- 

12710 


15710 


4 

20 


UK INTEREST RATES 


LONDON MONEY RATES 

Now 22 Over- 7 tteya 

nigta notice 


One 


Throe 


Star 


0ns 

yeor 


S -7A 

-74 


Interim* Stating 5ft - 4 5ft - 6 5% - 5ft 64 - 5fi 6,'. - 64 

5*8*19 C0» - - SA.Sft 6-9(3 A4-6A 

Treasury ate 54 -5ft 612 -5ft 

Bank Bibs 5ft-6H5a-5ft6ft-6ft 

Local anhority deps. - 4ft 54 - 4ft 6ft - 54 6 - 5ft 6,1-64 7,\ - 74 

Cfecoun Mate deps 5 - 4ft 54-5 


UK clearing bonk ban tending rate eft per cart team September 12, 1994 
Up te 1 1-3 3-6 69 

months 


9-12 


Certs ol Tas'dep. (C10QJXXQ 1>l 4 3ft 3ft 3ft 

Cere ol Tex dap. under ClOOjOOO is iftpc. Papons wfofroan ter cash Vpc. 

Are tender nta of dboount &62360C. EO30 and rale Sag. Export Hnanea.ll*e up day 0« 31. 
IMAApsed rate tor period fow as. 139* to Dae 25. 189*. Sdmnm p a a fJOpe. i M wonca rate tor 
period Oct 1, ISO* to Oa 31. 199*. GPwma IV 4 V OeeSpa. Fwmce House Baa* Rate ape tram Now 
1 , ire* 

■ TtMHOimi SfimUteG FUTWS (UFFg 2SQQJ100 points oMOOM 



<**n 

Sen prtca 

Change 

Ugh 

low 

EsL vd 

Open tot 

Dec 

93.72 

93.74 

*002 

83.76 

93.70 

9373 

136105 

Mar 

9228 

9228 

+003 

9228 

8223 

15230 

88379 

Jim 

922* 

9229 

*004 

9229 

9222 

4373 

56413 

Sep 

9127 

9122 

*228 

9122 

9125 

2824 

638S3 


Trated on APT. Al open ctoeat Rgs. are lor pm to a day. 


■ sHtjrrr irrmo opnoees <uFFg rsoojxn ports or tocm 
Strike 
Price 


DBG 

— CALLS - 
Mar 

Jun 

Dec 

— PUTS - 
Mar 

Jun 

028 

006 

0.08 

0.04 

020 

1.19 

0.10 

003 

02S 

0.11 

020 

121 

022 

021 

023 

028 

123 

124 


S37S 
9400 

EsL voL tool, Cate 10977 Puts I26S3. Previous day's span ML, Cut 3*6*G7 Pin ZST7S6 


EMS EUROPEAN CURRENCY UNIT RATES 


Nov 22 

Ecu can. 
rates 

Rata 

BQatostEcu 

Change 
on day 

% */- trom 
cerv rate 

H spread 
v wenloeat 

Ov. 

frid. 

Netherfterda 

2.19872 

2.14440 

-020217 

-228 

526 

. 

Bolgkan 

402123 

392507 

-02916 

-2.12 

558 

15 

Germany 

124804 

121317 

-020197 

-127 

521 

- 

Ireland 

0208828 

0794794 

+0202334 

-1.71 

5.14 

12 

France 

653883 

658837 

-020369 

045 

227 

-4 

Denmerlr 

7.43879 

7^48664 

-+020014 

027 

225 

-6 

Portugal 

192254 

195241 

-0287 

1.13 

2.18 

-a 

Spain 

154250 

159.400 

-0291 

324 

OOO 

-23 

NON ERM MEMBERS 






Greece 

264513 

294568 

-0.156 

1126 

-720 

_ 

My 

1793.19 

19G923 

♦6.09 

9.81 

-5.89 

_ 

UK 

0786749 

C. 78567X3 

*0202731 

-0.14 

248 

- 


Ere earm Mtea a* by M Eurapaan Cratwnbntaa Cumractos are In dtecandng ratodva wengn. 
mroentage ctcragas ae tor Eoto a pondwe change danoees a mek cwnray. tereganoa mows On 
nki bteween two spreedK me parcrenja ddteranes batwere tee seturi nwlnt and Ere oare* raw 
far « currency, and tee mnrimum parnittori pwortapa datum of tee curacy* riwriwt rata bom te 
Ere earn rate. 

<17/009 Stwteg and UUrt tin suapanriad ten, ERM- **%abrKni orioirad by ttw Fwmtal Tlmeo. 


■ WMBnHtt««$OPItet3125Dteitepirpoiwt 


uDIM 

Price 

Dec 

Jan 

Fab 

Dec 

— ruts — 
Jan 

Feb 

1225 

4.67 

5.03 

5.46 

009 

047 

022 

1280 

257 

3.18 

3.74 

048 

1.11 

1.68 

127S 

1.10 

122 

2.43 

1.44 

2.17 

2.74 

1200 

024 

022 

1.47 

3.13 

3.70 

424 

1225 

005 

020 

082 

523 

568 

8.06 

USD 

- 

ttM 

0A2 

7.89 

722 

8.07 


Prewtous woL. C<a> 9,7«r Bn *337 . Piew. ds/e open n. Can 3S3J21 Pun 3*9.130 


MOKtH WUttOBOUM Bt4M) Sim points «9 1Q0K 


BASE LENDING RATES 


Adams Company — 5.75 

ASadThoiBs* A75 

AS Bank 5.75 

•Henry Anabacher S.7S 

Bank of Berate — 5,75 

Banco BBna \taaya~ 575 

Bank o< Cyprus 575 

Bank of Hand..... — 575 

Bank of hdt 575 

Bank ol Sated .575 

Baraga Bank 575 

Bit Sc at UdEaal..^ 575 
•Brawn Sffey& OoUd A75 
CLBfflfcNodartand... 57S 

CBbarfcNA™ .A75 

QftfasddaBank ,575 

HeCtKiMraitveBank.575 

CoUtaftCo -575 

CradlLyamals ........ 575 

Cyprus Pqpttor Bar* -575 


% 

Duncan Ltee &7S 

Exeter Bar* Lhtol-. &75 
Financial A Qen Bar*_ as 
•Rote Remlng & Qa - 575 

GMs* — . 575 

•Guinness Mahon 57S 

HabB>BankAG2brkte.575 

•Hantea Barit 575 

HeriaUv8GentiirSk.575 

■HOSamuaL... -.575 

CLHoavSCo 575 

Hongbng& Shanghai. 575 

JUtan Hodge flarfs 575 

•Looped Joseph 8 Sons 575 

Lloyds Barit 5.75 

Ma^ra) Barit Ud 575 

MdandSnnk 575 

•MouilBariteg 6 

IMtebrinaMr - 575 

■ties Brothers ............ 5.78 


•Rotjo^ioQuBam 
Copordon Umfcd Is no 
longer auteortsod as 
abaridngtesdkton 8 
RoyaiariSated- 575 
•Sndh 8 WBnai Sacs . 575 

TS8 — 575 

•Unfed BkQlKuw*.- 575 
LWy Trial Bar* PIC_ 575 

Western Trust — 575 

WMBamyLakfianr — 575 
YotaNto Barit 575 

•Momtarart item 
hveebnariBanUnfl 
Asaodadon 
* frradfnMsmkn 



Op«l 

lewgr 

Change 

Hgh 

Low 

Est voi 

Open fra. 

Dec 

9320 

93.90 

*001 

9320 

9329 

46254 

379,753 

Mar 

9030 

9X30 

*001 

9320 

9028 

84557 

*53,070 

Jte 

92.70 

92.71 

+0.01 

92.71 

9250 

52232 

314,407 

N US TMEASWlir BUi. MfYURKS (IMQ Sim par IflQH 



Dec 

9*50 

9451 

+0L02 

94.52 

9450 

3.923 

14213 

Mar 

9327 

9321 

+003 

9321 

9327 

1,688 

10432 

Jun 

9323 

3323 

’ 

3323 

8323 

23 

2.478 

M Opan Una ftp. sra tar (xenoue day 





N BMOMAHK OPTIONS (tJFF^ DMlm pdfrUsN 100% 



Stria 

Price 








Doc 

Jan 

Feb Mur 

Dec 

Jan 

Fob 

Mar 

9476 

an 

007 

009 012 

003 

014 

016 

019 

9S00 

a m 

nm 

003 004 

018 

034 

035 

026 

9595 

a 

0 

0.01 001 

042 

057 

058 

058 

EsL «*. U 4, CNs 2209 Put. 9 230 Ptntous dsV« eoas M. Clfo 21BZ55 PUia 200313 

■ EURO SWISS nUMC OPTIONS (UFFQ SFr Ira points at 100M 



Price Dee 

- CALLS - 

M* 

Jm 

Dac 

— PUTS - 
Mor 

Jun 

9600 006 

0.06 

025 

026 

026 

027 

9825 001 

0 OS 

002 

028 

057 

029 

9850 0 

001 

001 

050 

021 

1.13 

Eat. wt total, Cali 0 Puts a Aewaus fofs open ka. Cate zaia Puts tais 






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US$350,000,000 
Floating rate notes 1997 

Notice is hereby given that 
the notes toill bear interest 
at 6% per annum from 
23 Nonember IS94 to 23 
February 1995. Interest paybte 
on 23 February 1995 toS 
amount to USS 15.33 per 
US$1,000 note. US$15333 per 
U5$10,000 note and 
US$1,53333 per US$100,000 
note. 

Agent Morgan Guaranty 
Trust Company 

jnPMorgan 


INTERNATIONAL 
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HUB 38 MSS BF BRUT 
HHTSBBFTSIffaau 
usnRnnr 

To receive a c omp h amry copy of 
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US$200,000,000 

(wttb an initfai tranche cS 
[KS 150,000.000) 

Floating rate notes 1998 

The notes will bear interest 
at 6.75% per annum for the 
period 23 Nooember 1994 to 
23 February 1995 Interest 
payable on 23 February 1995 
per US$1,000,000 note mill 
amount to US$1 7,250. 

Agent; Morgan Guaranty 
Trust Company 

JPMorgan 



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1 • 

: III Technical Analysis Softv/are 

iJW * e o o \c Pll i nvitflikf 

H r 

m 


index; 

— ssas-sreXTSrrsr _ 






FINANCIAL TIMES WEDNESDAY NOVEMBER 23 1994 








ii 


m 


1 


5 a 



s 


5 £ 




KH 


isr is 




15 00 


14* 00 



86 90 



79 60 



2M 10 


326 10 

. . . . 

87 30 


B5 30 

_ 

800 00 


261 10 


a 00 20 



187 20 

__ 

176 20 


155 20 



ia 26 

— 

14 10 

“ 

TOO 10 

, ,, , 

ICO 20 

_ 

W 28 

__ 

122 _ 


124 30 

_ 

&50 10 

r. |0 

— 

1900 _ 

Z1 

(700 10 



5E 


TT 


mgffCTimiE 





£ 


US' INDICES’; l .» 












Do* ' Tn - 



PH 

21 

18 

Mtti 

LOW 

22 

21 

18 H(p 

Lon 


21 

18 

17 ( 


General P9/1 2/77) 

MOMa(in«l 
AB IMngtl/WHB 
AnMl 

cnaerwfeiomas^ 
Tratofl taHZ/UM) 
{frig*— 
aaajfl/i/W) 

m 

Bom* (2an&83) 

Mttfe IU4f1973t 
CBBposie+ rtarai 
Rnkaoann«» 
CMfl 

FEAQ0I01/I2W9 

Omsk 

Co«rtnQN«3/lAE» 

mBPd 

rex awripanaepi 

tan 

9F2S0(3in2«q 

CftG 40(31/12/87) 

Nntsi/imi 

DmBoHartfi/1263 

mxpo/iawtt 

Been 

MmSWIMO) 

Hoag Kang 

Kano SwaPI/l'/W) 

BSE Sena/1 979) 


n T736M4 1784553 2S47MD 1612 

18777 19015 1922/1 234080 3/2 

940.1 9B29 9702 113010 3/2 

38094 30054 385.17 4BOG8 2/2 

103197 103386 1824.13 122225 1/2 

1391.11 1397.TT 1391.46 K4Z« SK 

94 448300 471250 E51100B 13/9 

U 385074 382032 427002 20/10 
U 407430 411480 460080 23/3 
(4 187095 200187 BB209 1/2 

94 57514 57128 5J5140 21/11 

34525 34788 3*016 41078 2/2 

16828 1911.7 18208 187200 « 

127188 126082 126081 15806# 2/2 
181V41 192783 182050 23*68 20 

76059 79037 78057 8S8Z7 IBS 

222110 ?«76n 324780 2465* 2S 
207177 21 0526 210023 2271.11 16S 

00137 00783 4HO50 1194SB M/7 

094043 930124 9427.44 1220109 4/1 

«PM 413005 B 482057 1 M 

48006 50086 90104 81289 5/1 


GEO O wlM H / 1/BG 182230 1832.19 1HZ044 2BS.1B 20/1 

Bancs Conn M <1972) 61527 64064 6058 817.17 105 
MBGemOl (4/1fl4) 10200 10610 10416 13WOO 106 


1B9B29B 19121.72 19302* 2159281 13S 

Z7502 27765 27073 3/1J1 136 

150092 151238 152147 1712J3 13B 

210233 212094 2147J0 25665 6/7 


Wfe* 225 fW««a 
IttsiSOOO/IMa 
TopawnSB 
nndSKOoniWBQ 

KLSE EDm«4H/99 
-SKNwlft Takran 


1077* 22/11 

80460 56 


37094 25/10 
1011* 66 


32B908 2W 
386096 246 
188646 206 

3BK6D 4/4 

337* 8/11 

1*01.18 a/t 

122768 25/10 
1B244Z 25/10 

74264 5/10 
211630 S/10 
186099 7/10 

80437 Sail 

838644 46 

M6U0 VI 

44672 12/7 

«SU4 1/7 


173BBJ4 VI 
28622 4ft 
144097 4/1 
187333 VI 


PC|tt»197q M 242619 

CBSmSwCndSI) 433.1 4301 

CSS ft Shr ffhd 83} 271.7 2710 


242011 26B1.17 8/2 


4364 «190 31/1 

2710 ZM80 31/1 


CSp. 40 (1/7/86) 200681 201.22 205206 243964 V 

Kray 

09b SEfhlfpft A3| 104095 105737 1055* 121MD 2S/2 

NMQnptZfl/BS 285195 289079 291110 330637 VI 

BTA0ffi7i 29427 29379 28362 322680 IB/2 

Shgppnv 

SE5 M-BborOM/TS 54085 56201 5E68S 84161 4/1 


SS /*-S , pon<2M/ra 54055 58281 

So* ttfea 

JSE OH OBIVIQ SOSZ5V 2101/ 
JS ML (2B/V7S B9B4.1V B0429 

Mbn 

KmAn(fi8VT/BCr H0670 111700 


21368 23&00 7.9 
69410 896110 22/11 


towDnpeW/T/acr 110670 111700 111015 113075 8/11 

Mwttl SE 00/12/35) 30237 30137 30221 XB31 31/1 

SNB*n 

VtaMttan (10371 « 152000 150650 (60380 31/1 


Setts ft M(3V12/5Q 121179 122108 
SC Sanarp {1/4/871 91143 82117 


122163 14034 31/1 
9058 109329 31/1 


«MBMIV430«er 634527 640402 E35Q71 7131.13 309 

engfcfc SET pott/73 14OZ01 144059 1457.48 1753.73 4/T 

Wag 

k&rtU CJj*4M 19BQ 2B6M2 258*4 2723502888300 13/1 

— ■ 

US ClflBal U (l/inofi 8140* 5100 8224 84050 2/1 1 

CBB986MBB 

antes 1 00(28/10901 133103 1351.17 134408 154619 31/1 

Bra Tap-100 (264990) 117657 119136 118207 181101 2/2 

JOpeDgn (31/12/89 H 32048 33261 385.19 5/1 

BnbQS (BtetfHV&i 17108 17122 17704 W1J9 2619 


Opan Sett Price Change 
Now 1919.0 1922.0 -130 

Dec 1827.0 1031.0 -135 

Jan 19350 18390 -130 

Opoi Manat floras ta> preWas day. 


40030 21« 
25700 2VS 

194501 11/7 

98091 21S 

250733 an 

281200 OB 

52329 4/4 

174600 MO 

544600 ia/i 

85537 2/4 

S6S5 26/10 

133170 67 

113672 27/10 
87057 27/10 

519(63 193 

119658 Vf 

12980.70 24/3 

59100 4 14 

120048 no 
113648 SrtO 
29028 21/3 
14105 21M 


EsL voL Open Wt 
18.306 19,610 

3,901 25,471 

237 


Mstlt* 3769.51 381536 382605 337&3B 393135 397638 4122 

(31/1J (4/4) (31/1A4) (2/7/33 

Ham eons 9X75 9378 9308 7*51 9175 70677 Sl» 

{21/1) (217111 08/10931 II/10S11 

Iiwspn 1459.45 148854 14752} 188229 143830 186229 1232 

(2/2) STUB B/2/9 41 (8/7/32) 

UPHes 17447 17447 175.72 2270B 1H47 25*48 1000 

(3/1) fia/11) (31/B/9S H’4/33 

DJ W. Day's Ngh 384S0O {384407 I Lo» 3758.74 077321 ) (ThaWNC**) 

Day's htpi 3833.43 0826.70 1 Low 37*53.79 P784j» J (Actuttt+j 


45830 4*1 47 46156 48200 43802 

(272) (4/4) 

548.(6 55203 55303 58118 51005 

(20/10) (21//} 
4060 4131 41J7 4694 4000 

P4/8) (21/11) 

2KL5B 2S230 25349 287.71 W3.I4 

COT (4/4) 

V128 44404 44613 *8709 42207 

(2/2) PW 

757.74 76407 76504 80303 69329 

(78/31 (24/6) 


NYSE Corn- 
Una 1*2 VS 
NASON) Cmp 


1026TB 104538 1O480B «** 5/1 926B V4 

UMOttd Ms 04460* **•» COBB Ex 111708. Boa whose* OUndoSS an 100 * 
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L90 480 60 


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Toray Inds 

Sanyo Bectric 


Nov 18 Nov 11 Nov 4 Year ago 

Dow Jones Ind Drv. Yield 2.79 £.78 2.78 2.71 

Nov 18 Nov 9 Nov 2 Year ago 

S i P hd. Qv. yield 2.38 2J3S 2J39 £.38 

SAP Ind. P/E ratio 19.03 20.93 2a 95 2808 

■ STAWOAWP AMP POORS SOP DtPEX WTUBES SS00 ftnes Index 

Open Latest Change High Low EsLvoL Open a*. 
Dec 457.70 456L20 -1.40 45630 *55.70 64,958 208.734 

Mar 460.50 45930 -1.45 460.60 458.95 4,328 38023 

Jun - 463.10 - 463.10 132 4.586 

Opai mures ngme era lor prcvmue day- 


BK ACTIVE STOCKS ■ Tf lA PMC *CTlVnY 

Socks Oosa dange • Vofcime (miflan) 
radsd price on dey Nar 21 Nn 16 Nov 17 

5 720800 VM New YOU SE 232086 356095 321188 

4 410 300 24W -U 17.897 17064 16088 

IBS 37* ■*. H^AU Z81044 Z7997* 317215 

3,350.100 410 -1*% NYSE 

3.142500 23% +h Issues Traded 202fi 2.924 0932 

2.786.500 42% -8% (fees 797 795 743 

2.493.500 37 % FNk 1.481 1.408 1.462 

2,486.600 19(4 -% IkKtanged 648 721 727 

0414.500 8% -% New H#fl 12 21 23 

2300000 21H -H New laws 195 219 3H 

as. t latadrai. pus UBNtae. Financial and DaapnWai 

re u w aa g ns qf M ngheM and D— pen martmri 4 rag m day by eacti 
TOOaaal re tauum me Nghesi and bmi Mtaaa na me mda> has raectiM 
V Stems to offiod nalaMabon. 


NYSE 

bsues Traded 2026 2.924 a 932 

(Bees 797 795 743 

FsBe 1.481 1.408 1.462 

IkKtanged 648 771 727 

New H#a 12 21 23 

New lews 195 219 3H 


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r- : ‘ 


SMomHamberZ 


17ft 12ft «« 


12% ALU »A (LIB 1.1 38 94 17% 17 17 


n%si%«r i.ffl 24 
72V 48% AW 
5 3%/wx 

56% 38% ASA* 200 15 
33 25VA0ML 0.76 24 
19% 11% AMU FT 050 11 
23% 17% ABM tad 05Z 26 
ISIIftfephaAi 
31 22MELM 244 20 
12% B ACM firth IffBllff 
10% 6%ACMG*Opp 060110 
10% 6%ACMMSp O9B110 
12 7% ACMMSs 1 .09 135 
11% 7% ACM Mm UB13J 
9% BACMHmgd 272 27 


1.68 24 21 2329 70% 68% S®% 
100 5388 52% 50V 51% 
12 95 3% 3V 3V 
260 15 29 851 46% 44% 44% 
0.76 24 (7 9678 32% 31% 31% 
OJO 11 11 28 12% 12% 12% 
052 26 12 64 20% 20% 20% 
91497 13% 12% 13 


IgAqdna&i 91487 13% 12% 13 

SAGEltt 044 20 ZT 1088 23 821% 21% 

9 ACM firth 169116 9 501 9% 9% 3% 
VACHGMpp 090116 76 7% 7% 7% 


15% SVAoraOr 044 49 22 272 II 
13% Bft MxxeBtd 13 307 13% 

28% Z3AG0R&X 080 21 14 21 28% 
13V 5V«an 036 36 2 357 9% 
16% ftVACUNT 20 (374 16% 

18% iSVAdnBpri a«8 12 0 248 16% 
84 46% M WOT 360 54 22 55% 


Bft M®* Bed 
Btoadax 
S% Aetna 


12% 13 

26% 28% 
9 9% 
(5% (6% 
18 16 


360114 87738 25% 25% 


6% 5 Advert &y 019 10 15 178 5% 5% 5% 


20 ISAdiahC 0.10 06 17 23 


84 49% Aegon ADR 1.47 14 12 45 62% 62% 82% 


69V 44AM. 

38% 25% ASKX 
22% 16% Hun 
4 ift Atomic 
89% 38%A«*rC 


178 64 5 2888 44% 843 % 43% -1 

048 14 (2 742 34% 33% 33% -% 

068 56 9 4102 16% dl5% 15% -ft 

1 57 1% 1% 1% 

OSB 12 21 2317 45% 44% 44% -1% 


ISAMBoFflX 030 16 9 877 19% 19% 18% 4% 


29% 10% MW kK 32 471 26% 25% 

17 14VAMM0 164114 11 65 15% 15% 

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Armedi Cp 008 12 973 9% 8% 9% +A 

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AppUltH 221X62 51 48% 50 -1 

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AST Rath 9516799 14% 14% 14% +A 
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AixrWdo ID 63 2% 2% 2% -A 

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Baker J 006 81151 16% 15% 
BtdMLBk 024 4 40 15% *5% 

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BnkSoutti 052 92847 17% 16% 
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BKAEbpi 012181053 12% 12% 
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Bumd 18 3714 11% 11% 

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BMCSoilw 166228 43% 42% 
Bmtmpn S 156 84674 27%d28V 
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CadSchwps 099 14 73 
CUiKCbmdUa £0 143 
Caere Cp 51 3887 
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Canonto 40 227 
CarflonCm 053 21 2 

Cascade v 080 17 20 
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US Cars 19 518 
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Marom Cp in 55 


Mama Dr 
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Mtantoe 024 71 >12 
Mentor Cp 01613 138 
Mends 024 333140 
Mw c wd J am 10 1239 
Mammy 6 070 10 94 
Meridanx 13G 92828 
Merita 101588 

IMtodeA 012 15 2297 
WSCm 231125 
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Mycogen 4 218 


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‘ ‘ 2} 


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'• /' -* ’• 


WORLD STOCK MARKETS 


AMERICA 

Dow unsteady 
on interest 
rate worries 


Wall Street 

US share prices fluctuated 
strikingly within negative ter- 
ritory yesterday amid fears 
that recent interest rate 
increases might begin to slow 
the economy, writes Usa Bran- 
sten in New York. 

By 1pm the Dow Jones 
Industrial Average was down 
11.10 at 3,758.41. The more 
broadly traded Standard & 
Poor’s 500 fell 1.11 to 457.18, 
while the American Stock 
Exchange composite lost 3L39 
at 437.89. The Nasdaq compos- 
ite was down 6.38 at 751.36. 
Trading volume on the NYSE 
was 219m shares. 

In the first hour of trading 
the Dow fell more than 32 
points before pulling back 
about half that and settling 
near 3,755 around midday, the 
Index's lowest level since 
August 22. 

Volumes were heavy amid 
fears that rising interest rates 
would draw money from equi- 
ties and into interest-bearing 
instruments such as bonds. On 
Monday, Morgan Stanley 
reduced the stock portion of its 
equity model portfolio to 85 
from 97 per cent and increased 
the cash holdings to 15 per 
cent from 3 per cent 

For one of the first times tins 
year, equity prices did not fol- 
low bond prices, which rose 
modestly in advance of an 
afternoon auction. Some ana- 
lysts believe the uncoupling 
may be a signal that the mar- 
kets finally believe the econ- 
omy will weaken. 

Major components of the 
Dow fell with the market Cat- 
erpillar lost $1 to $53%, DuPont 
$1% to $53%, International 
Paper $% to $70%, General 
Electric $‘/i to $47%, Minnesota 
Mining and Manufacturing $% 
to $52% and Merck $% to $36%. 

One gainer in the Dow was 
Walt Disney which rose $1% at 


Brazil declines 3% 


Shares in Sao Paulo continued 
to move lower as the market 
was affected farther by worries 
over liquidity at some of the 
country’s smaller hanks. 

The Bovespa index was down 
3 per cent at midday at 43^74, 
having fallen nearly 5 per cent 
on Monday, its steepest decline 
since the currency was over- 
hauled in the summer. Turn- 
over was R$152m ($lBL6m). 

On Monday the central bank 
liquidated Banco Atlantis, the 
third bank to be shut down 
over the last 10 days, because 
the institution failed to com- 
ply with reserve requirements 
and to settle previously set 
positions. 


Analysts said that domestic 
investors feared other small 
banks could also be facing 

financial difficulties. 

Bear Steams’ Latin Ameri- 
can research team commented 
that it did not expect a large- 
scale crisis to develop. 

“Most banks mil adjust to 
the loss of their inflationary 
float' .income very quickly, 
due to the agility and high 
quality of the leading BrazSIan 
private banks; while they have 
also restructured their 
operations significantly in 
recent years, shedding labour 
and cutting costs.” it said. 

The market’s decline came 
amid low trading volume. 


South Africa resists fall 


Industrial shares led a 
recovery in early afternoon 
trade as baying interest con- 
tinued in spite or weaker 
world markets. A slight rise in 
the price of gold bullion was 
also a contributing factor. 

Analysts said the undertone 
in industrials was firm and 
prospects in coming weeks 
remained steady. 

The overall index was 7.4 
better at 5J909.2 after earlier 
touching 5,879, the industrial 
index gained 41.2 at 6,984.1 
and the gold shares index was 
Zi.2 lower at Z,09Z6. 

Absa eased from recent 


highs, shedding 15 cents to 
Rll.ZO, but Investec advanced 
El. 75 to R68 and Band Mer- 
chant Bank Holdings rose R2 
to R38 after lagging behind 
the major banks recently. 

De Beers was again under 
pressure, declining R1.25 to 
R95.75, while Anglos was 50 
cents off at R239.50. 

SAB slipped 25 cents to R100 
and Sasol receded 15 cents to 
R36. Sappi collected 50 cents 
at R73 and Bfiveld put on 50 
cents at E35.25. 

Kloof relinquished 50 cents 
at R62 and Vaal Reefs finished 
R5 down at R382. 


FINANCIAL TIMES 


Wednesday November 23 : |994 


EUROPE 


Milan tumbles as magistrates warn 


$43% after reporting fourth 
quarter earnings of 42 cents 
per share against analyst 
expectations of 39 cents per 
share. 

Shares of PaineWebber 
Group were off $1 at $12% after 
the SEC launched an investiga- 
tion info whether the broking 
house bad improperly sold 
shares in several limited part- 
nerships to Investors. 

Greyhound Lines was 
unchanged at $2£ after report- 
ing it would take a net loss of 
$3.5m over about four years 
because of three cancelled 
interest-rate swaps. 

Brinker International, the 
restaurant group, fell $3% at 
$17% after announcing that it 
expected second quarter earn- 
ings to come in below the ana- 
lysts' estimates. 

Canada 

Toronto stocks moved lower at 
midday, falling along with neg- 
ative overseas markets and 
continued interest rate con- 
cerns. 

Losses in energy, mining and 
transportation outpaced gains 
in tbft pipelines and conglomer- 
ates s ector s. 

The TSE 300 index was down 
21.80 at 4,05250 In volume of 
36L2m shares valued at C$43 lm. 
Declines led advances by 450 to 
136, with 284 issues fiat 

Of Toronto’s 14 sub-indices, 
11 groups weakened at noon, 
led by transportation, down 
81.47 at 4,431.65. 

Gold and precious metals 
extended Monday's slide, drop- 
ping 37.62 to 9,060.05, despite 
slightly firmer gold prices. 

Newbridge Networks fell 
C$1 % to C$45% ahead of second 
quarter results due later in the 
session. 

The Bank of Montreal was 
unchanged at C$24% on 519,000 
shares traded after earlier 
reporting stranger fourth quar- 
ter earnings. 


Weakness on Wall Street was 
the main driving force yester- 
day, but Italy had its own 
domestic troubles. 

MILAN tumbled 2.1 par cent 
after magistrates confirmed 
that Prime Minis ter Silvio 
Berlusconi had been issued 
an investigation warning in 
connection with corruption 
allegations. 

The Comit hide* fell 13-37 to 
635.27 as the day's develop- 
ments raised worries that the 
hast moving political situation 
could distract attention from 
the passage of the 1995 budget 
through the Senate by its year- 
end deadline. 

Losses were seen in all sec- 
tors, with the blue chips partic- 
ularly hard hit 

Fiat lost L167 or 2.7 per cent 
at L6,119 and Parmalat, the 
milk and food group, was L74 
or 4.4 per cent down at L1.605. 

Among the telecommunica- 
tions stocks, Stet fell L205 to 
14.768 and Telecom Italia was 
L155 or 3.5 per cent weaker at 
L4.224- 

ZURICH’s attention was 
firmly fixed on a live television 
broadcast of the UBS share- 
holders meeting. The SMI 
index dipped 35.2 or 1.4 per 

ASIA PACIFIC 


cent to 2,571.8. depressed by 
the weaker dollar and the mal- 
aise elsewhere in Europe. 

UBS bearers fell SFr26 to 
SFrl,15B, with the bank said to 
be a seller, and the registered 
stock shed SFrll to SFr268 as 
the market awaited the news 
that the shareholders had 
approved the creation of a sin- 
gle class of share, which came 
after the market had closed. 

Mr Martin Ebner's BK Vision 
fell SFr25 to SFrl.345 as it 
emerged that the investment 
trust had already lodged a pro- 
visional appeal at Zurich’s 
company registration office 
two week's ago. 

Mr Ian McEwan at Merrill 
Lynch commented that the 
shares now faced a confused 
passage in the short term, 
although in the longer term, he 
reiterated his view that they 
had been driven substantially 
over fundamental value. 

Chemical and pharmaceuti- 
cal blue chips were lower, with 
Ciba down another SFr3 at 
SFr766. 

Dealers said they expected 
only short-term weakness in 
Ciba following Monday's 
announcement that it was to 
acquire 49.9 per cent of Chiron, 


FT-SE Actuaries Share Indices. 


Nov 22 THE EUROPEAN SERES 

Hourti dttnpw Open 1030 11 JO 1200 13J0 1400 1100 Qmb 

FT-SE EUNttack 100 13057 133841 1336J1 1335JJG 133*77 133096 13ZUD 1331 S3 

FT-SFEurotracfcZOO 130632 130727 1394.82 139*17 139667 138095 139004 13BUB 


FT-SE Emma* 100 1351.17 134406 135068 135000 136*71 

FT-SE Eantack 200 1411S3 140551 141183 1421-32 14103 

Bw 1000 CBnOflOt HubfttSF 1D0 - tXfiJfi. 200 - 13SCU9 LoHUQ: 1* - 132S45 200 - OHMH t MM 


in finish at FF rtSO-20. •• .. 

FRANKFURT was pulled 
down by technical weakness.. 
The Day index was off 3051 at 
2,074.77,.recoyering some of file . 


the US biotechnology com- 
pany, for a price above market 
expectations. 

Gol dman Sachs. however, 
commented tha t the deal made 
excellent strategic sense. It 
raised its longer term rating on 
the stock, forecasting that the 
price could reach SFrSOO over 
the next year. 

Nestle, which is to report 10- 
month sales today, lost SFr25 
at SFt-1,206, with analysts fore- 
casting flat sales growth, 
depressed by negative cur- 
rency factors. 

The main industrial issues 
were also lower. Solzer 
declined SFr9 to SFr905 as 
James Capel downgraded the 
stock, noting that its order lev- 
els were rising, but not by 
enough to suggest that earn- 
ings from the cyclical busi- 


nesses were set to explode. 

PARIS regained the 1,900 
level by the close, with the 
CAC-40 index down 16.42 at 
l^lL4LTumover amounted to 
FFr3.6bn. 

Alcatel Alsthom remained 
under pressure, the shares 
down FFr7.90 to FFr415.00, on 
news that the chairman of a 
subsidiary bad been detained 
for questioning in connection 
with an investigation into 
alleg ed false billing ami over- 
charging of France Telecom. 

However, the stock came off 
a low for the year of FFr41010 
as the mam board of the group 
declined a resignation offer 
from the executive. 

There was no let-off in 
demand for Renault, with turn- 
over approaching FFr365m as 
the shares slipped 80 centimes 


2,072.49. Turnover totalled’ 
DM&jjtju. - 

Mr H ans Tietmeyer, presi- 
dent of the Bundesbank, yes- 
terday advised market watch-, 
ers not to expect a ch ange J in 
monetary policy at tomorrow’s 
regular meeting of the .council. 

The mar ket js.now awaiting' 
results from the cb tante a l and 
hank sectors, which are due to 
start later this week. On flue" 
banks, Merrill Lynch to a 

recent note suggested that the 

10-month results should be. 
broadly neutral and snrnmar- ' 
ised that the sector was likely 
to “outperform mildly aver the ; 
intermediate term in the can- 
text of an unspectacular mar- 7 
kef. 

Among chemicals, BASF, 
which launches toe results sea- 
son tomorrow, is widely expec- - 
ted to show a substantial 
improvement in nine-month, 
profits. The stock closed yes- 
terday at DM805.80, down 
DMBjOO. 

Volkswage n , off DM5.70 at 


DM4&L8Q, Tbas beeaafaactteg -- . 

reasonably bullish commepfa > 
fromanalyste/Mr Keith ayes 
at Merrill Lynch add toat:he . = 
bad raised his bphdm m ifo- 
basis rf toe recast share price.-, 
pullback, but over toe jtebg 
term he remained ‘'severe^ 


AMSTERDAM finished 


was pleasured ,hy 


AEX fell 4.7£to4Q&44^' 
:..ln the absence of coporate 
"news toe trend was "one way^ 
assisted also by; dollar- weak- 
ness - Philips dechn<&FTl8Q 
to Jlfii-70, Boyal DuMi;H2Ja 
to FI 187.80 art UtiterarFftffi . 
to El 19480. ' : V; •* ’ > 

Elsewhere; NedLtoyd dipped 
El 3:40 “to ^5120, ^Stated 
ran ini? by retail atiSBng.. •/. - ■ .. 

MADRID’S direction was dfo 
tated by falls velsewhere'ahd 
the General irtexfihishQd sap 
lower at 3G5L87. - 
. - Turnover d £ PtalBba was 
well bdtow. tho levels «f recent - 
days as : industrials suffered 
profit-taking after the sharp 
gains in previous sessions. 




Written, and «Sbd by .John PK 
arid Mc he l Morgan’: .. 


Nikkei falls below 19,000 as Hong Kong drops 3.8% 


Tokyo 

The sharp decline on Wall 
Street overnight and further 
weakness In consumer elec- 
tronics shares depressed inves- 
tor confidence, and toe Nikkei 
225 average fell below the 
19,000 level for the first time 
since February 18, unites 
Bntiko Terazono in Tokyo. 

The index lost 158.73 at 
18,962.99 on arbitrage unwind- 
ing prompted by lower futures 
prices, and profit-taking by for- 
eigners and individuals. It 
opened at the day's high of 
10,052.01 and hit a low of 
18,905.48 as selling over- 
whelmed small-lot buying by 
financial institutions and 
investment trusts. Individual 
investors who had bought 
shares on margin were also 
forced to unload their holdings. 

Volume rose to 315m shares 
from 176.6m. Traders said pub- 
lic funds bought around 20m 
shares in the afternoon ses- 
sion. The Topix index of all 
first section stocks dipped 9.46 
to L5Q192 art the Nikkei 300 
toed 183 to 27582. In London 
the ISE/Nlkkei 50 index eased 
L14 to 1,22886. 

Sony, the consumer electron- 
ics company, continued its 
decline an s elling by overseas 
investors and the issue ended 
Y120 lower at Y5.110. falling far 
the third consecutive day. 
Other high-technology shares 
were also weaker, with Matsus- 
hita Electric Industrial off Y10 
at Y1820 art TDK down Y120 
at Y4870. 

Brokerage issues declined on 
fears of lower earnings due to 
the prolonged weakness of the 
stock market Nomura Securi- 
ties was down Y20 to Y1810 
and Nikko Securities Y10 to 
Y1.020. Smaller brokers, which 
depend heavily on stock mar- 
ket commissions, were also hit 
- Sanyo Securities Tell Y12 to 
Y477 and New Japan Securities 
Y15 to Y645. 

Banks, which rely on unreal- 
ised share holdings as capital, 
lost ground, Industrial Bank of 
Japan slipped Y10 to Y2.72Q 
art Dai-Ichi Kangyo Bank Y10 
to Y1.680L 

Telecommunication stocks 
were lower. Nippon Telegraph 

art Telephone, which reported 
that its interim recurring prof- 
its plunged 66 per cent, receded 
Y13.00G to Y343.000 and Japan 
Telecom Y7.000 to Y983.000. 


In Osaka, the OSE average 
declined 22886 to 21,103.78 in 
volume of 24.7m shares. 

Roundup 

The reverberations from Wall 
Street’s overnight setback were 
felt throughout the region. 

HONG KONG dropped 38 per 
cent on heavy foreign selling, 
particularly by US investors 
clearing their books ahead of 
the Thanksgiving holiday 
weekend and, to a lesser 
extent, by Japanese investors 
ahead of today’s holiday in 
Tokyo. 

The Hang Seng index lost 
35481 at 8848-43, the biggest 
one-day faD since a 465-point 
drop on March 21, as local 
investors joined the sellers dur- 
ing the afternoon. Provisional 
turnover rose to HK$4.7bn 
after Monday’s HK$&4bn. 

An analyst said the market 
slide came amid rumours of 
changes in Morgan Stanley 
portfolio weightings. Mr Byron 
Wien, Morgan Stanley’s US 
strategist, confirmed yesterday 
that he had raised the cash ele- 
ment of his US equity only 
portfolio from 3 per cent to 15 
per cent on Monday. He added 
that his contribution to the 
volatility in Hong Kong was 
“another example of the law of 
unintended consequences". 

Property issues were sold as 
investors discounted the effect , 
of further interest rate rises on 
the proper ty market Sun Hung 
Kai fall HKS3.75 or 6.9 per cent 
to HK$51, Henderson Land 
HK$2.80 or 5.8 per cent to 
HK45.80 and Cheung Kong 
HK$1.60 to HK$34.40. 

The H-share index of main- 
land China stocks listed in 
Hong Kang retreated 79.46 or 
68 per cent to L20&23. 

SINGAPORE was bruised by 
relentless selling by institu- 
tional funds, in response to 
weak regional markets, the 
Dow’s overnight Gall art rises 
in prime rates by major local 
banks. The Straits Times 
Industrial index dropped 5134 
or 2J2 per cent to 2870.05. 

The index, which at one 
stage fall through the psycho- 
logical support level of 2*250, 
recovered on bargain hunting 
towards the close of trading. 

Large losses sustained by 
shipbuilders weighed on the 
broader market Keppel fell 70 
cents to SS12.00 and Semba- 
wang Corp 40 cents to S$10.70. 


FT -ACTUARIES WORLD INDICES 


Jointly con^nad by The Financial TV 
NATIONAL AND 

REGIONAL MARKETS 

Ffems ki parentheses US 
show timber of Bnes Doflar 

of sftx* ftidax 

Austiala (B8L 16056 

Austria ptsj 17139 

Belgium (35) 16044 

Brad (29) 172.46 

Canada (103) 12118 

Denmarit (33) 250.14 

Finland (24) 188.65 

France poa 106.72 

Germany (56) — 142.31 

Hong Kong (56) 37504 

nafy (50) — 77.87 

Japan (468) 15452 

Malaysia {97) 515.04 

M«dcof18) 1969.39 

Nettw&nd (19) 21259 

New Zealand (14) 744E 

Norway (23) 19638 

Singapore (44) 38087 

South Africa (59) 337.42 

Spain (38). 14258 

Sweden (36) 34231 

Swfoutand (47) 162.12 

Theland (48) 188.32 

Unttad Wngdan (204) 19830 

USA £15) 187.46 


Americ as (66 4) 17531 

Euopa (708) — 17038 

NortSc (115 22830 

Pacific Basin (783) 1B355 

Euro-Pacfflc (1501) 16657 

North Amencg (618) ™™183.78 

Europe Ex. UKpCW) 15234 

Pacific Ex Japan (325) -253.78 

Worid Ex US (1709) 16832 

World Ex UK (2020). 17130 

World Ex Japan (1750) 155.82 


The worid Index (2234) 17334 


Lrt. Goldman. Sachs & Ca and Natwa&t Securities Ltd. In con Mc Mra wUi the bstftuta of Actuaries arid trie Focutty of Actuaries 


- MOKMY NOVBCBER 21 1B04 — 
Pound Local 

Stating Yen DM Currency 

index Max Mex Index 


(TODAY NOVEMBER 181994 

LB Pound Local 


Max 

Index 

Max 

Index 

Hlgri 

157.37 

103.73 

13456 

146.08 

188.16 

167.55 

11044 

14026 

143JS 

196.89 

15726 

103.55 

134.45 

131.16 

17754 

16630 

11159 

144.75 

275.73 

_ 

12225 

S05B 

10452 

12&04 

145J1 


-DOLLAR INDEX — 
Year 


Low CnppreoO 

14936 155*2 

167.46 17434 

151.70 152.77 


ai 

20150 

13230 

17238 

16957 

05 

341 

21238 

20067 

13227 

17158 

16179 

22350 

187.01 

189.07 

-1.7 

6968 

4633 

60.01 

03.14 

-14 

*60 

7027 

71.12 

4656 

6051 

6*06 

7759 

6147 

6*04 

-C.1 

18S57 

122.12 

15931 

181.78 

OT 

152 

19658 

185.73 

12242 

15850 

18151 

211.74 

18552 

177.11 

-05 

388.70 

24250 

316.16 

26351 

-15 

150 

393.16 

371.48 

24*86 

31753 

26119 

40158 

284.68 

31148 

0.0 

31931 

20952 

27355 

303.26 

-05 

2.12 

33749 

81657 

21018 

27264 

30*08 

34200 

20555 

22138 

03 

13433 

8835 

115.18 

139.77 

U7 

*18 

14156 

133.77 

68.18 

11458 

13178 

165.78 

12858 

137.70 

0.4 

22957 

15089 

1965B 

26455 

08 

151 

24158 

228.55 

15084 

19541 

26250 

24281 

17553 

18855 

-03 

15337 

10081 

131.43 

13250 

ai 

153 

16257 

15370 

10151 

13141 

13267 

17656 

14104 

14651 

-13 

18039 

10539 

13738 

16*38 

-15 

2.12 

17152 

16215 

10G58 

13854 

16658 

. 



-04 

18613 

123.74 

16133 

18&13 

-03 

*08 

199.73 

188.71 

12*39 

16155 

18171 

21*96 

181.11 

185.48 

-0-7 

17733 

11657 

15137 

18748 

-07 

252 

168.73 

17852 

11754 

15248 

18173 

19654 

17855 

18847 

-07 

165A6 

10653 

14158 

14646 

-0.7 

255 

17659 

16057 

109.79 

14242 

14154 

_ 

_ 

_ 

-02 

18156 

10632 

13852 

15249 

00 

3.07 

17155 

16150 

106.72 

13843 

15245 

17156 

15*78 

156.88 

-01 

217.13 

14251 

16019 

21*70 

03 

158 

22977 

217.10 

14110 

16552 

21452 

23351 

173,19 

183.01 

-07 

15*83 

101.70 

132.60 

10650 

-OB 

1.15 

16452 

1555S 

10253 

13350 

107.16 

17188 

134.79 

15249 

-05 

157.48 

10356 

136.04 

12446 

-04 

168 

16755 

158.12 

10*22 

135.18 

12551 

175.14 

143.88 

15*20 

-07 

173.76 

11438 

14099 

18350 

-07 

26 1 

18555 

17*84 

11555 

14949 

18*57 

18273 

17557 

184.87 

-ai 

144.03 

94.73 

12050 

137-54 

02 

247 

15253 

14*12 

9459 

12342 

13145 

15112 

13594 

13141 

-09 

23963 

15751 

206.74 

223.74 

-16 

251 

256.10 

24156 

15950 

20650 

22856 

29641 

23254 

23644 

-05 

159.13 

10*66 

13645 

12854 

-05 

159 

16015 

15852 

10555 

13655 

12166 

17855 

14558 

15557 

-06 

18158 

106.46 

138.78 

14251 

-06 

212 

17219 

16270 

10754 

139.11 

14354 

17858 

15S56 

16356 

-05 

175.68 

11555 

15054 

17030 

-05 

282 

18853 

17652 

11856 

160-83 

177.13 

18540 

17654 

17183 

-OB 

16*17 

10768 

14077 

14651 

-06 

251 

17*62 

16459 

10176 

14157 

147.12 

18060 

15185 

16650 


Hoag Kong 

Hang Seng Index 
10600 ' ; 

10,000 — — ■ — J 

9,500 fiJ- 



8^oo y 


JiA 1994 Nov 
Source: FT Graphite 

BANGKOK just avoided dos- 
ing below the 1,400 support 
level, bouncing to 1,402^8 in 
the last minutes of trading, 
down a net 37.78 or 2.6 per 
cent. Turnover swelled to 
Bt9-5bn. The most active stock 
was Bangkok Bank, off Bt6 at 


BtZOO after foreign selling. 

KUALA LUMPUR extended 
its tomes, the composite index 
ffniching 19.20 or L8 per cent 
down at 1.02U8. Volume was 
n)9 Qra shares, with Amalgam- 
ated Industrial Steel account- 
ing for 15 per cent of them. 
AIS, which on Monday 
announ ced the acquisition of 
three integrated timber compa- 
nies for M$ULbn, fall 65 cents 
to M$5.05. 

TAIPEI saw early gains 
reversed by nzid-moming sell- 
ing. but paper art cement 
shar es posted slight rises. The 
weighted index lost 59.35 at 

6,345.27. off a low of 6£32j69. 
Turnover was a thin T$30 Jbn. 

Brokers said some indus- 
tries, induding paper, textile 
art steel, were expected to . 
recover in 1995 and had 
already been the focus recently 
of bargain hunting by trust 
funds and long-term investors. 

An easier cement Issue was 


Lucky Cement, whose T$5bn 
investment plans in Vietaam 
were made public yesterday ~ It 
topped 20 cents to T$30£0. ; ’ 

SEOUL finished lower for toe- 
fourth straight session after 
aggressive institutional selling 
of primary blue chips wiped 
out minor early gains^The 
composite index tost 10^5 at 
1406.70, having pulled bad: 
from a high of 1420.64. 

Brokers said toe market was 
pressured by concerns about 
tight liquidity and -they 
thought it unlikely that a 2 
percentage-point ex pansio n for 
foreign share ownership next' 
month would have much 
impact on prices. 

Korea Mobile Telecom went 
limit down for the sixth ses- 
sion in a row, declining 
Wbnl2,000 to WOD57L000. 

MANILA fan L5 per cent in 
line with the regional trend. 
The composite index saw a low 
of 2^50 before dosing 4AM. off 


at 2^54^.- Analysts remarked 
that foreign' ftmff managers 
had' divMted mmay^tb. other 
markets since' equities in 
Manila mn now ttwght to be 
toaespenslve. - *• ^ y*. 

The drop 'in PU/r to New 
York by almost $150 signalled 
a weak opentog, and caused fls 
domestic shares to. lose 45- 
pesos at L320 pesos 

The odnanarclal todus- 
trlal sector troubled 80JJ5 to 
4JQ2L35, thq property group 
shed 257 -to 10955 .art mining 
fall 155.73 to 5^1550. 

SYDNEY closed sharply" 
lower, ME by a firmer Austro 
Ban doflar . The Afl Ordinarijes 
index dipped 3L8 or 1.7 per 
cent to 1,877.7 and- turnover 
was A$49ittn.' Bridsers sad the 
hi gher currency halnml tq • 
underpin the band market . 

. Among the aetives, BHP 
shed 38 cents to A$1854, CRA 

16 cents to A$17.Q2 and WMC 

17 cents to A$7J8. 




•jmUSM 




Bright ideas have always been . 
the richest natural asset of. our home state. 


it':/- - - ' : ’ ‘ 1 

fcUydW *? ***** CMS 

S--* ■ • ■ ■ 

T.T!-. ±;. ’ 

fanpraM «*. 3* Susns) m 


fc-.~ 

r \- , ... . 





L-Bank is Uie development agency of Badcn-Wflrilemberg, 
one of Germany's mosi productive federal stales. 


Rich oil and natural gas deposits 
arc something that Nature neglected 
lo locate under the fertile soil of 
Baden-Wiirtiembcrg. As iTto compen- 
sate, the state has enjoyed more 
than its share or brilliant minds.Take 
Einstein - yes. he was born in Badcn- 
Wfimembcrg - or Daimler or Benz, 
for cxample.Thanks not least to the 
ingenuity of its residents, the state 


for which L-Bank is also development 
agency has long boasted one of the 
most powerful regional economies in 
Europe. L-Bank’s role is to help 
Baden-WO rltcmberg to deploy its public 
assistance programs. These center on 
infrastructural improvements, cor- 
porate subsidies, residential develop- 
ment programs and assistance for 
agriculture. Together, the siaLe and its 


bank are helping to bring new ideas 
to light - lighting the way to even 
brighter perspectives for the future. 
L-Bank, Schlossplalz 10/12, 

0-76113 Karlsruhe, Germany. 
Telephone I NT 721/150-0. 

SL-BANK