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FINANCIAL TIMES 


■• < , • * . ■ _ . ,? 


Europe's .''Business Mewsoaper 


TUESDAY OCTOBER 25 19D4 


D8523A 


thirt^quarter° ost Morgan Stanley in Chinese investment bank deal 

~ s at Exxon 


A cyclical rebound in earnings from their chemicals 
businesses helped Exxon and other big OS aO 
g roups to report solid gains in underlying operating 
profits for the third quarter. Exxon said its chemi- 
cals businesses earned $i98m in the latest period, 
up from $4fim a year before. The results come 
against the backdrop of a rise in oil prices from a 
year ago which has lifted upstream exploration and 
production earnings, despite a fall in natural gas 
prices. Page 17 

IIS budget deficit lowest for five years: The 

US budget deficit fell by $52bn to $203bn in the fis- 
cal year to the end of September, the lowest level 
for five years. Page 16 

Walker tried ends: Former Brent Walker 
chairman George Walker was cleared of orchestra- 
ting a £l9m ($3fen) fraud. The London trial, which 
cost £5m and lasted four and a half months, caiind 
into question Britain's system of criminal prosecu- 
tions in fraud cases. Page 16; Serious Fraud Office 
under threat, Page 9 

Russia forecasts basis for stabla economy: 

Russia may achieve the basis for economic stabilis- 
ation next year in spite of turbulence on the cur- 
rency markets and a further contraction of output, 
an economics ministry forecast says. Page 2 

Seven Picassos stolen from Zurich gallery 

■' *> Seven paintings by Pablo 
- < Picasso worth around 




SFrS2m ($4a3m), includ- 
ing “Vlelle Femme et 
Deux Nos, Barcelona 
1903” (left), were stolen 
from a Zurich gallery by 
thieves who broke in 

thrr mgfr the rrilar rrf a 

neighbouring house. Two 
of the paintings were 
taken from the same gal- 
lery three years ago. The 
pictures, from Picasso’s 


“blue” and “rose” periods, were among around 80 
works given to the gallery by the painter. 

Lufthansa share issue tecreassd: Strong 
interest in German aritnp Lufthansa led to frhp pla- 
cing of a further 1m shares by DresdnerBank to 
bring the total raised by the privatisation issue to 
nearly DMI.lbn ($730m). Page 22 

IfSAIr posts $180m third-quarter loss: . 

USAlr, struggflngUS carrier partly owned by Brit- 
ish Airways, suffered a third-quarter net Iok of 
5180.1m as two crashes and increased competition 
contributed to a fell in passenger traffic. Page 17 

Israel backs regional bank project: Israeli 
prime minister Yitzhak Rabin gave his backing in 
principle to the creation of a Middle East develop- 
ment bank to help finance protects in the region. 
Page 8 

Daewoo to build cars bi Romania: South 
Korean industrial group Daewoo took a 51 per cent 
stake in a $306m Joint venture with Romanian state- 
owned carmaker Automobile Craiova. Page 5 

Foreign investors turn to US real estate: 

Foreign investors' confidence in PS real estate has 
grown strongly with Atlanta arid Washington DC 
the most desirable cities for investment, a survey 
shows. Page 4 

Hh6ne>Poulene seeks Renault stake: 

French chemicals group Rhtae-Poulenc applied to 
become one of a group of stable shareholders in 
Renault, the vehicles group being partially priva- 
tised. It hopes to develop new engine emission tech- 
nologies with Renault Page 18 

Steel traders seek to buy Ite w® Two 

Italian steel traders are attempting to as s emble an 
international consortium to a c qu ir e the flat steels 
activities of Dva, Italy’s stateowned steel manufac- 
turer. Page 17 

Electricity company In £180m payout: East 
Midlands Electricity, privatised UK utility, is to 
give £l86m ($294m) back to its shareholders in a 
special dividend payment Page 1& Lex, Page 16; 
East Midlands warms shareholders, Page 25 

Record profits at Caterpillar: Caterpillar. US 
producer of construction machinery, reported 
record profits of £244m in the third quarter on sales 
ahead 19 per cent in spite of a strike by its United 
Autoworkers’ union employees. Page 19 

Scott Paper seSs energy facility: Scott Paper 
of the US announced the sale of its Alabama energy 
facility for $350m to the Southern Company, a hold- 
ing company for utilities based in the southern 
states, and gave details of its plan to sell off non- 
core assets. Page 17 

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By Tony Walker bi BeQIng 

Morgan Stanley of the US anil the 
People’s Construction Bank of China 
agreed yesterday to set up China’s first 
international investment bank. at 
maki n g it easier to raise capital abroad 
to satisfy the country's huge funding 
requirements for economic development. 

The bank, to be known as China Inter- 
national Capital Corporation Limited 
(.CICC), will also be used as a model to 
help to introduce new investment bank- 
ing techniques to an antiquated finan- 
cial sector undergoing reform. 

Mr John Marie, president of Morgan 


Australia 

raises 

official 

interest 

rate 


Stanley Group, the US Investment hawk 
said at a signing ceremony in Beijing 
that the CICC would be well positioned 
as a conduit for a country with a “tre- 
mendous appetite for international capi- 
tal to fund its economic expansion and 
the development of its in fra s tru c tu re". 

Partners in CICC, whose initial capital 
is 8100m, include the People's Construc- 
tion Bank with a 4Z5 per cent stake; 
Morgan Stanley with 35 per cent; and 
three other shareholders, each with 7.5 
per cent 

The minority shareholders are; the 
Government of Singapore Investment 
Corporation (GSICk the China National 


Investment and Guarantee Corporation, 
a Chinese investment guarantee institu- 
tion; and the Mlngly Corporation, a 
Hong Kong-based investment company. 

The investment bank, to be based in 
Beijing, will also advise Chinese state 
enterprises on restructuring, assist in 
project financing and corporatisation - 
turning state enterprises into western- 
style corporations - and help foreign 
investors to make direct investments in 
Chinese enterprises. CICC plans to make 
its own investments in China. 

Morgan Stanley representatives said 
the People's Construction Bank was an 
“obvious choice” as partner because it is 


China's biggest lender for infrastructure 
projects. The bank, for example, has 
been responsible for 80 per cent of the 
funding for power projects. 

The People's Construction Bank, one 
of China’s “big four” specialised banks, 
win Identify investment opportunities 
in infrastructure projects and industrial 
facilities, introduce potential restructur- 
ing. corporatisation and mergers and 
acquisitions candidates and (seek out] 
Chinese partners for joint ventures”, 
according to Morgan Stanley. 

Mr Edwin Lim. an adviser to Morgan 
Stanley and a former director of the 
World Bank, said the ultimate objective 


for CICC was to develop a “full service 
investment bank”. Mr Lim described 
CICCTs establishment as an “important 
step” in opening China's financial insti- 
tutions to external influence. 

“The People’s Bank of C hina [China’s 
central bank] obviously sees this as a 
way of financial Institutions learning 
new management techniques,” he said. 

Among the bank’s tasks, Mr Lim 
added, would be to “improve the effi- 
ciency” of China's capital inflow for 
infrastructure and basic industries. 
CICC would also serve as a “model” 
financial institution and bring invest- 
ment banking technology into China. 


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IV and tofe. 


By EmBa Tagaza m Mefeounw 
mid Peter Montego on in London 

The Reserve Bank of Australia 
yesterday raised its official 
money market interest rates by 1 
percentage point to 6L5 per cent 
It was the second rise in less 
than two months even though 
the annual inflati on rate is only 
1.7 per cent 

The move adds Australia to the 
list of countries, including the 
UK and the US, which have tried 
to tighten policy early in an 
effort to ward off rises in infla- 
tion. 

Financial markets had been 
expecting a move, hut were sur- 
prised at the size of the increase: 
The equity market responded 
with a rise of 2 A points in (he 
Sydney All Ordinaries Index to 
2,037, while the yield on 10-year 
government bonds eased 13 basis 
points to 10 per cent 

The Australian dollar gained 
half a US cent in European trad- 
ing to 73.66 cents, but it failed to 
break the 74 cent barrier. London 
dealers said there was concern 
that inflation data for the quarter 
to tiie end of September, due to 
be published tomorrow, 
might show price rises accelerat- 
ing. 

“The decision was taken to 
keep inflation low in the context 
of continuing evidence of strong 
economic growth and because 
buoyant conditions are likely to 
continue through the current 
year and 1995-96," said Mr Ralph 
Willis, the Australian treasurer. 

The move has echoes of the 
UK’s decision to raise base rates 
by a half point in September, and 
its size contrasts with the 
quarter-point moves adopted by 
the US Federal Reserve when it 
started raising rates in February 
tins year. 

Australia’s economy is growing 
at over 4 per cent Mr Willis said 
government forecasts of a growth 
rate of <L25 per cent in gross 
domestic product in the year to 
June 1995 now looked “a little bit 

ppwrimteHc ". 

There would be “real problems 
in terms of mnintgfnTng low infla- 
tion” if the growth rate moved 
over 5 per cent, he added. 

The increase was announced 
yesterday morning by Mr Benue 
Fraser, the Reserve Bank gover- 
nor, who said it was a response 
to a faster -than-expected increase 
in both retail spending and 
investment. 

Interest rates were last raised 
by three-quarters of a point on 
August 17, the first increase for 
five years. 

Australia seeks to teep th e Bd 
on inflation. Page 7; Currencies, 

Page 38; World stocks. Page 42 

AustnSa /*■ : . v 

-Intei^rBteand'lntorioq, 94. " 

i r- — — - 


08feWcaalir*t»; 





Producers resist 19m-tonne cuts 

Brussels set 
to scrap 
rescue plan 
for steel 




• ** ■* • 


Germany begins coalition talks 


Klaus Kinkel, the German 
foreign minister and leader of 
the liberal Free Democratic 
party, arrives for a meeting of 
Us party’s leadership yesterday 


to finalise dem ands for coalition 
talks with Chancellor Helmut 
KohL 

Negotiations to form Ger- 
many's next government seemed 


London and Dublin 
make progress 
on plans for talks 


Nkriy to be smoother than expeo- 
ted after members of the FDP. 
which has kept the coalition in 
power since 1982, emerged from 
almost 14 hours of talks much 
more united than before they 
began. 

Mr Kirill’s party, the Christian 
Democratic Union, has said it 
wants negotiations completed 
quickly so that parliament can 
reelect Mr Kohl as chancellor in 
the week beginning November 
14. 

Details, Page 2 pumc ■***? 


By Lionel Barber In Brussels, 
Andrew Baxter hi London and 
Judy Dempsey fat Berlin 

The European Commission is 
expected to abandon its rescue 
plan for the steel industry today. 

That would be belated recogni- 
tion that European Union steel- 
makers are unwilling to make 
the minim um lQm- tr wme capacity 
cuts to keep the plan alive. 

The move -■ backed by the 
plan's two chief architects* Mr 
Karel Van Miert. competition 
commissioner, and Mr Martin 
Bangemann, industry commis- 
sioner - would remove the loose 
framework for curbing state aid 
to the steel sector. 

But the impact of Brussels' 
withdrawal is likely to be soft- 
ened by the steady recovery in 
steel prices and the fact that 
most private and state-owned 
steelmakers have increasingly 
sought market solutions to the 
industry^ troubles. 

Commission officials last night 
defended the two-year effort to 
conclude the steel rescue plan, 
w hich involved financial incen- 
tives and import relief for 


Europe's steelmakers in return 
for cuts of between 19m and 26m 
tonnes in their steelmaking 
ca paci ty. Overall effective capac- 
ity is about 150m tnnnim 
The first stage of the plan was 
agreed last December when 


Brussels probes steel 

takeover plan .Page 3 

live sale move Page 17 


industry ministers approved sub- 
sidies for state-owned producers 
in Spain, Italy and Germany in 
return for capacity cuts. 

“Without the political frame- 
work of this plan, we risked hav- 
ing a free-for-all on state aid in a 
very fragile steel market," said 
one official. He estimated that 
the shortfall in capacity cuts 
might be at least 3.5m tonnes. 

If the rescue plan is abandoned 
today, the December subsidies 
agreement will remain in place, 
but the Commission would drop 
its quarterly guidelines for pro- 
duction and delivery volumes; 

Continued cm Page 16 


By David Owen in London 

London and Dublin yesterday 
acknowledged that they stOl bad 
differences over a proposed 
framework document for talks cm 
Northern Ireland’s future but 
said they had made progress on a 
coordinated approach to disman- 
tling terrorist arsenals. 

Mr John Major, thp uK prime 
minister, and his Irish counter- 
part Mr Albert Reynolds met yes- 
terday at Chequers, Mr Major's 
country residence. They were 
accompanied by Sir Patrick May- 
hew, Britain’s Northern Ireland 
seerkary, and Mr Dick Spring, 
the Irish foreign minister 

After the meeting, the two 
prime ministers said they had 
made “steady progress" in the 
joint framework document 
intended to promote talks involv- 
ing Ulster's main constitutional 
parties. 

But they acknowledged that 
sticking points remained and 
de cline d to set a date for the doc- 
ument’s completion. 

“There are still some very 
im portant issues that r emain to 
be resolved,” Mir Major said. 

Mr Reynolds said: “You can 
take it that t he gap [between the 
two sides] is narrower after 
today’s meeting than it was yes- 
terday.” 

Officials will continue talks 
today on what Mr Major 
described as the “logistics and 
mechanics” of arranging for 
weapons in the bands paramili- 
taries to be handed over. 

Acknowledging that there were 
“self-evident difficulties" in the 
process, partly because weapons 


were hidden both in Ulster and 
the Irish Republic, Mr Major said: 
“Clearly it is desirable to have a 
co-ordinated approach.” 

He declined to say whether the 
handing over of weapons was 
likely to begin in advance of 
talks between the government 
and Sinn F6tn to take place 
before the end of the year. 

The Irish Republican Army has 
not yet agreed to hand over any 
weapons. 

Questioned on his remarks last 
week, which appeared to irritate 
Dublin, that plans for an Ulster 
assembly were separate from the 
framework , document, Mr Major 
said it would be a “misreading” 
to suggest he was trying to 
Hpterh nrw from the other. 

The process is seen as falling 
into three “strands”. One covers 
the assembly; strand two con- 
cerns north and south relations ; 
and strand three covers relations 
between London and Dublin. 

Mr Major said on Friday that 
the framework document would 
cover strands two and three. 

Mr Reynolds declined to say 
whether he would push for 
chang es in the Irish constitution, 
which enshrines Dublin’s territo- 
rial claim to Ulster. 

Mr Major is thought to have 
told his Irish counterpart that 
hopes for an overall political set- 
tlement depended on a radical 
revtaon of this claim. 

Moderate unionists, whose sup- 
port is vital to the prospects for 
success of the two governments’ 
efforts to forge a durable settle- 
ment in Northern Ireland, are 
widely expected to insist on such 
a move. 


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gn Ttnr ginVAlMnAL TIMES LIMITED 1994 No 32,506 Week No 43_ 


LONDON - PARIS - FRANKFURT - NEW YORK - TOKYO 



4 





financial times 


TUOSIXW OCTOBL-R 25 19*1 


NEWS: EUROPE 


Kinkel seeks to smooth path to Bonn coalition 


By Mictiaef Lmdemann in Bonn 

Negotiations to form Germany's 
next government looked likely to be 
smoother than expected last night 
after the Free Democratic Party 
(FDP) emerged from almost 14 hours 
of talks much more united than 
before they began. 

Mr Klaus Kinkel. foreign minister 
and leader of the small liberal party 
which has kept the present coalition 
in power since 1982. emerged from a 
mee ting of the party's national exec- 
utive to present a negotiating team 
which is unlikely to wrangle over 
details in talks with Chancellor Hel- 
mut Kohl's Christian Democratic 
Union (CDlfi and its more conserva- 
tive sister part)*, the Christian Soda! 
Union (CSU). 

“We are not erecting barriers with 
demands that could not be fulfilled,” 
Mr Kink el said. 

The opening round of the coalition 


Germany’s speaker urges greater role for parliaments in EU integration policy 


Germany’s parliament speaker 
yesterday urged parliaments to play 
a stronger role in European Union 
integration policy, Reuter reports 
from Bonn. Ms Rita Sfissmuth told a 
meeting of MPs from the Twelve 
and from prospective EU members 


that legislatures, especially national 
ones but also the European 
parliament, had to join in debate 
ahead of a 1996 summit conference 
on strengthening the Union. "The 
negotiations by governments must 
never again take place out of view 


of the public, as happened with the 
Maastricht treaty,** she said 
according to an advance copy of her 
speech. "The best understanding of 
democracy is that public interest is 
best represented by the 
participation of parliaments, which 


are elected for this purpose.” The 
Maastricht accords on political and 
monetary union win be reviewed at 
the 1996 summit of EU leaders, who 
will have to decide on possible 
institutional reforms to bolster 
integration. 


negotiations between the three par- 
ties was due to begin last night The 
CDU has said it wants negotiations 
to be rounded off as quickly as possi- 
ble, clearing the way for parliament 
to re-elect Mr Kohl as chancellor in 
the week beginning November 14. 

Mr Kinkel yesterday also won an 
easy victory over Mr JQrgen Molle- 
mann, the former economics minis- 
ter who leads the party in North 
Rhine-Westpbalia, its most impor- 
tant state branch. 


Mr MGUemann had tried last week 
to form a faction against Mr Kinkel. 
whom he blames for leading the 
party into its second worst electoral 
result earlier this month, since 194 9. 

Some party members were 
also hoping that the FDP could 
use the coalition negotiations 
to extract a detailed catalogue of 
demands which would allow the 
party to present itself as the liberal 
force in German politics, a tag it 
may be in danger of losing to the 


Greens and other parties. 

One issue which is bound to cause 
problems in the negotiations is the 
question of dual nationality for for- 
eigners living in Germany. The CSU 
has said it will have nothing to do 
with such proposals. 

Officials in Bonn said the coalition 
negotiations were likely to be led by 
the central negotiating team which 
includes the three party leaders. 
Time pressures meant little would 
be handed down to the sort of ad hoc 


committees created during the last 
negotiations in 1990. 

CDU officials also suggested the 
negotiations would be broad brush 
and unlikely to go into great detail 
because every major legislative ini- 
tiative would have to be designed to 
account for the mood in the Buodes- 
rat, the upper chamber which repre- 
sents Germany's 16 Lander and is 
controlled by the opposition Social 
Democratic party (SPD). 

With negotiations about to begin it 


emerged that there may be legal 
challenges to the so-called "over- 
bang mandates" which hnd helped 
swell Mr Kohl's majority. 

Mr Hans Meyer, who teaches elec- 
toral law at Frankfurt university, 
said the 16 mandates, which were 
awarded to the CDU and the SPD in 
states where there were discrepan- 
cies between the parties' first and 
second votes, were unconstitutional. 
With the mandates Mr Kohl's major- 
ity jumped from two to ifl 
seats. 

Mr Meyer said he would appeal to 
a parliamentary committee which 
oversees the elections and. if neces- 
sary, take the matter to the constitu- 
tional court in Karlsruhe. The 
Greens also said they would chal- 
lenge the legality of the extra man- 
dates. but the chairman of the par- 
liamentary committee said last night 
that no such challenge had been 
made. 


Andrew Jack reports on moves to stem the flow of criminal cash through the principality 

Monaco acts 


to cut down 
dirty laundry 


W hile most towns have 
street signs that 
direct visitors to 
tourist attractions, in Monte 
Carlo they come with a differ- 
ence: the majority point to 
banks. 

Monaco's ability to attract 
capital makes itself quickly 
apparent to visitors. It is in 
evidence in the expensive 
hotels and restaurants, in the 
glamorous jewellery adorning 
those walking the streets, and 
above all in Its ornate, chande- 
liered casinos. 

But there is a less pleasant 
aspect to some of the cash that 
gushes through the peaceful 
city state. By virtue of its loca- 
tion, tight banking secrecy 
rules and pace of economic 
growth, Monaco has in the past 
attracted more than Its fair 
share of the ‘"dirty money” of 
drug dealers and other crimi- 
nals. 

The strength of the financial 
network In the principality Is 
dearly visible from the pres- 
ence of a vast network of 
French and international 


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banks - some 45 separate insti- 
tutions, and many more indi- 
vidual branches in an area less 
than two kilometres square. 

Mr Pierre Fond, deputy head 
of Tracfin, the French agency 
created three years ago to 
track clandestine financial 
movements, says that dirty 
money does not often arrive 
directly in the form of cash 
deposited into banks or other 
deposit-taking institutions 
such as bureaux de change. 
Instead, it may be used to buy 
property, or fed through “front 
companies" in sectors such as 
those in construction and tour- 
ism with high cash turnover. 

Equally, not all the money 
being laundered is drug-re- 
lated. Growing trends include 
the emergence of subsidies or 
kick-backs on public works 
contracts, and fraud related to 
the European Union's agricul- 
tural programmes. 

Investigators point to the 
east when seeking the origins 
of much of tite dirty money: 
just over the border along the 
southern coast of France lies 
Italy, and Mafia money. How- 
ever, money is now coming 
from criminal activity further 
afield, notably in eastern 
Europe. 

Mr Jean Pastorelli, financial 
and economic adviser Mona- 
co's government, denies that 
the principality has a money 



Safe haven: Monaco has in the past attracted more than its fair share of the “dirty money** of drug dealers and other criminals. Now 
it is taking steps, in co-operation with France, to choke off that flow 


There is growing pressure across the 
western world to clamp down on flows of 
"dirty money”, which some estimates put 
in France alone at about FFrl4bn (£L7bn) 
a year and around the world at up to 
FFrLOOObn. writes Andrew Jack. 

Mr Pierre Fond, deputy head of the 
French Tracfin agency which tracks 
clandestine financial movements, says his 
organisation has referred 55 cases 
involving more than FFribn in suspected 
money-laundering operations to the 
courts over the past two years. It still now 
receiving about 60 tip-offs each month 
from financial institutions of flows of 


dirty money. The figures from Tracfin, 
which has began full-scale operations in 
the past two years as a result of French 
money laundering laws passed in 1990, 
only records the most suspicions 
transactions. Mr Food says that is one 
reason why the monthly reports coming 
into the agency are still substantially less 
than those for its counterparts in 
countries such as Britain. 

Tracfin’s 25 agents work with about 
4,000 “correspondents", one in eat* of the 
financial institutions such as banks who 
monitor flows of money which might he 
linked to criminal activities. 


Mr Fond said one of the most difficult 
networks to monitor was bureaux de 
change, because many were very small 
with only a few staff and often less 
effective at keeping Tracfin informed. 

He said money laundering prosecutions 
were often frustrated because it was 
necessary to prove the original crime - 
often committed in another country - as 
well as all the subsequent flows of money 
following from it Also current legislation 
allowed the agency to act only against 
laundering activities from drug money 
and not other illegal activities such as 
fraud or public sector corruption. 


laundering problem of any 
great size or that the state is 
ignoring the issue. However, a 
senior banker admits that “of 
course, it goes on", adding that 


the authorities have clamped 
down in recent years in an 
effort to preserve Monaco's 
reputation. 

Mr Fond says the principal- 


ity presents no more of a prob- 
lem as a conduit for dirty 
money than do many parts of 
France or nearby states. But a 
report last year by a French 


government commission exam- 
ining ways to combat the 
advance of the mafia high- 
lighted the role of Monaco, 
along with that of Switzerland 


and the Channel Islands, as 
important centres through 
which money could be laun- 
dered en route to France. 

Certainly Monaco has seen 
the need to follow a trend 
emerging among other coun- 
tries, triggered by a Group of 
Seven group on money laun- 
dering. It introduced new legis- 
lation last year and has set up 
Siccfin. on agency akin to 
France's Tracfin designed to 
follow the movement of sus- 
pected dirty money. 

Last week, the French and 
Monegasque authorities also 
signed a co-operation agree- 
ment between Siccfin and 
Tracfin similar to those 
between France and Belgium. 
Australia, the US and Italy. Its 
precise wording is confidential, 
but it permits for the First time 
an official exchange of infor- 
mation, which can be used tD 
help track criminals and form 
the basis for prosecutions. 

Mr Fond would like equiva- 
lent accords with countries 
such as Switzerland and Lux- 
embourg. Bringing criminals to 
justice is very difficult since 
the law requires considerable 
evidence, including the need to 
prove the original criminal act 
which generated dirty money - 
an act which often took place 
in another country. 

While Monaco’s attempts to 
prevent money laundering may 
have been improved, one 
aspect of the accord should 
also help maintain its position 
as an important “offshore" cen- 
tre. The agreement explicitly 
forbids any financial informa- 
tion passed between the 
criminal investigators to be 
handed on to fiscal agencies. 
Tax evaders will continue to 
enjoy a high level of banking 
secrecy. 


Russia says economy will overcome instability 


By John Thornhill In Moscow 

Russia may achieve the basis 
for economic stabilisation in 
1995 despite the recent turbu- 
lence on the currency markets 
and a further contraction of 
output, according to an eco- 
nomics ministry forecast pres- 
ented to parliament yesterday. 

The ministry predicted that 
the fall in gross domestic prod- 
uct would slow to 66 per cent 
next year but that this would 
mask strong growth in Rus- 


sia's services sector, which 
some economists suggest is 
only inadequately recorded In 
official statistics. An accompa- 
nying finance ministry report 
forecast the year-on-year infla- 
tion rate would fall to 27-30 per 
cent by the end of 1995, com- 
pared with 180 per cent in 1994, 
&tQ per cent in 1993 and 2,000 
per cent in 1992. 

“This bears witness to the 
first signs of stabilisation, or at 
least the basis for stabilisa- 
tion," the economics ministry 


report said. Mrs Tatyana Para- 
man ova, the newly-appointed 
acting head of the central 
bank, vowed she would use 
Russia's foreign exchange 
reserves to defend the rouble, 
introducing greater exchange 
rate stability. In her first inter- 
view since being nominated 
last week by President Boris 
Yeltsin, she also promised to 
create a modern banking sys- 
tem in Russia, commensurate 
noth the size of the country, 
and to develop effective mone- 


tary policy instruments. 

However, the government’s 
relatively tough budgetary 
stance - symbolised by a fru- 
gal draft budget for 1995 - will 
be severely tested in the com- 
ing weeks as opposition inten- 
sifies. Parliament, which has 
been incensed by the rouble’s 
volatility, will hold a confi- 
dence vote on the government 
on Thursday and some depu- 
ties are likely vigorously to 
oppose the 1995 budget draft 

The trades union movement 


has also called for a national 
strike on the same day to high- 
light the plight of thousands of 
workers who have not been 
paid for months. It was 
reported yesterday that 73 
workers had gone on hunger 
strike in the Sverdlovsk region 
to protest about wage arrears 
at their military equipment 
plant 

Gen Pavel Grachev, the 
defence minister, has already 
turned up the political heat, 
claiming that the proposed 


1995 defence budget of 
Rbs44,000bn was insufficient 
for the armed forces. Pressure 
from the defence, heavy indus- 
try and agriculture lobbies has 
already resulted in a sizeable 
increase in credits this year. 

The economics ministry 
report forecast Russia's trade 
surplus would rise from 
$l&3bn in 1994 to $19.1bn next 
year - although this may 
reflect a sharp projected fall in 
imports following the rouble’s 
depreciation. 


UN fury 
at Serbs’ 
broken 
promise 

By Bruce Clark 

UN officials m Sarajevo, whose 
patience with all the Kusnian 
parties is wear in)! thin, reacted 
will) fury yesterday when Serb 
officials reneyeti »m a promise 
to allow free passage to 11 con- 
voys of vitally weeded fuel. 

Mr Vasushi Afcashi. the trip 
UN envoy in former Yugo- 
slavia. expressed his ■'outrage" 
to the Bosnian Serb leadership 
and won a pledge that one of 
the the convoys would be 
allowed to proceed, according 
to UN officials. 

The so-called safe havens for 
Moslems which the UN has 
established in eastern Bosnia 
are virtually out of fuel and 
other essentials because the 
Serbs have nod allowed any 
convovs through this month. 

Meanwhile the Bosnian gov- 
ernment army traded auto- 
matic fire with French peace- 
keepers as it began 
withdrawing from the posi- 
tions which it recently estab- 
lished in defiance of the UN on 
the slopes of Mount Igman 
overlooking Sarajevo. 

In principle, this withdrawal 
should marginally improve the 
atmosphere and clear the way 
for the convoys tn start mov- 
ing. But tension in the Sara- 
jevo area was stoked by nows 
that 11 Serb soldiers lud been 
killed by the Moslem-led gov- 
ernment army in a commando 
attack over the weekend. 

UN officials say the row over 
the convoys is the latest sign 
that their own room for man- 
oeuvre in Bosnia, which has 
never been large, is shrinking. 

"The behaviour or both par- 
ties is getting worse," one UN 
official said. "Peacekeeping 
requires consent, and at the 
moment that consent is 
begrudging at best.” 

UN commanders believe the 
Bosnian Serbs, militarily vul- 
nerable and isolated by their 
erstwhile protectors in Bel- 
grade. are taking out their 
frustration on the peace- 
keepers. 

UN officials have also been 
irritated by what they view as 
provocative behaviour by the 
Bosnian government, which 
has - in their view - taken 
advantage of the almost uncrit- 
ical support it enjoys in Wash- 
ington. 

Washington, frustrated by its 
allies' reluctance to authorise 
arms supplies to Bosnia, has 
been emphasising its strong 
political commitment to the 
leadership in Sarajevo, and 
keenness to see tougher use of 
air power against the Serbs. 

US officials are pointing to 
the hardship endured by Mos- 
lem civilians as an argument 
for stepping up support to their 
government But UN workers 
privately retort that the Sara- 
jevo leadership does not 
always co-operate with their 
efforts to relieve civilian suffer- 
ing. 

General Sir Michael Rose, 
the UN commander in Bosnia, 
threatened at one point last 
month to invoke Nato air 
strikes against the government 
army. But he later had to 
admit that this threat was not 
a plausible one. given that the 
US - Nato’s most powerful 
member - would never allow 
its aircraft to be used for that 
purpose 


Gae Aulenti 

Dcwcntr of the Miiku N acivn.il 
d’Art d l- Catalunya 



I. M. Pei 

Drsig ner of the 
1^ Caixa Headquarters 


Bruee G rah a m 
Designer of the Hotel Ari», 
Rita Carlton chain 


Barcelona 




The new 


IN THE FUTURE A LOT OF CITIES WILL BE BUILT LIKE BARCELONA. 





Urban Centre 


of Southern Europe. 


In rhe late eighties the Barcelona of the future 
was planned and (he largest real estate and 
urbanUrii- development in Europe got under way 
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around the world. 

Today Barcelona can offer the lushest quality 
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VCTar's mure Barcelona's prospeers for economic 
growth are the higboc in Europe. Thar's why 
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If you would like ro know more about current 
projects in Barcelona, please give us a toll ar the 
following Telephone number: 

34 3 402 72 36 


Alvaro Srza 

Designer of rhe Meteorological 
Centre. Olympic Village 


Federico Correa 
Designer of ibe Muntiui 
Olvmpii Stadium 


Ojrar Tusquets 
Designer of the Diagonal Mar 
waterfront residential complex 



BARCELONA 

More than Ever 


FOR TBE SUBMISSION OF DECLARATIONS OF 
INTEREST FOR THE PURCHASE OF THE ASSETS 
OF "ROKA INDUSTRIAL ENTERPRISES SA." 

OF ATHENS GREECE 

ETHNIKJ KEPHALEOU S.A., Administration nf Assets and Liabilities, of 1 
Skou lcoio u Sir. , Ath ens. Greece, in its capacity as Liquidator oi 'ROKA 
INDUSTRIAL ENTERPRISES SA.". a company wnh its tcgnucrcU office in Athens, 
Greece, (the Company), presently under special liquidation according to the pto*itieW 
ol Section 46a of Law ISSl'IWO, invites interested panics to .njhroir within urgruy 
f20) days from the publication of ihh notice. Non-binding written devlaraiwtw of 
interest for tbc purchase or any or both of the group* of assets mentioned below. 

BRIEF INFORMATION 

The Company was established in 1973 and was m operation until 1993. when it bemme 
bankrupt. It was placed under ‘special liquidation" according ro tht provisions »f article 
463 UW 2/1990 m September 1994. I is objective* raduded ibe establishment & 

a CMW1 P®- lhc PAhluciion of fibres, (synthetic A namralL the imitaniim 
of nmsbed garment*, the marketing of its products * any other product* /elated to 
natural A synthetic fibres, at home & abroad, the reprc^ntation of Greek A foreign 
^ntefprire and lhc participation in related enterprises. 

The Company, head office is .n Athens (3 Ikritiou Street), white .r* factory i* in 
“I. * ** r *S Wn of Koulouri. "I tin: Mh Km of the National Road of 

L “] SS ^ ■ V‘ aa ? lp " lta - ^ t “ 3 ° , y *“ lc3S « 1 fc* ‘INC© GMBH IM PORT- EXPORT 
a Mutuctebnsed limited liability company, on 23.12.19JW for a penial ol nine vows. It 
is currently in operation. 

GROUP OF ASSETS OFFERED FOR SALE 
The assent being ottered (or safe include: 

fa) A cotton Spinning and weaving mill. consist.,,* of several holding,. „C 
approiunat ely lb-000 m . standutg on a plot ol S 2 .Mi 4 .ij m i appmv , omu , nn , s 
machinery monacal equipment, etc. Th« i, located in L™ * mn , n J 

<b) a *T D t,* V: ***** Plnl - ,he «■ * •bk* aminint* appro*. 

IL_8nr'. This is located in tile same area a, rhe factor*. 

SALE PROCEDURE 

The sole of of the Company will rak c place b* wa* n , jMhJU. io 

•accordance with the pntvuions of Section 4oa i>f law is*J^-l>dOo ^ , ' _ , . 

•it. 14 of L.3J0W19MI and mtU of li'iJ 2 ? 

Invitation u, Tender for to. highest bfTfii W 'V * t 

published in the Greek and foreipn p,„, on a* Jai^pl^idcd Iw Uw 

SUBMISSION OP DECLARATIONS . 

OFFERING MEMORANDUM - INFORMATION 

Ft* the submission of Declarations of Interest os udi ■« . . 

Offering Memorandum for each of the above ^ 3“ “ ^ 
Liquidator. *ETHNIKJ KEPHALEOU SA, AdmhkrJu JT ***** cwnl,H ‘ l lhc 
Skoufoniou Sir. Athens .o/SfoRE 

JSSf - Lawya - 2 FnMu 4 »«= ™ 






FINANCIAL TIMES TUESDAY OCTOBER 25 1 994 


3 


NEWS; EUROPE 


EUROPEAN NEWS DIGEST 

Brussels probes 
plan for Italy 
steel takeover 

The European Commission has rased "serious doubts" about 
the competition implications of a Gennan-Italian Md far the 
special steels division of Dva, Italy’s state-owned steel pro- 
ducer. The Gennan-Italian consartiran won the hid for the 
division* Acciai Special! Temi (AST), in June, outb idding 
Franco-Italian competitors with an offer of almost LSOObn 
(£240-5 111); Yesterday, however, Brussels opened an in-depth 
investigation into the offer, on the grourals that the merged 
group could dominate the European stainless steel market. 

The inquiry, which follows a one-month preliminary exami- 
nation of the bid, could last up to four months. raqHnp farther 
doubt over the Italian state's attempts to privatise the steel 
sector. Usmor SacQor, the French steelmaker involved in the 
rival consortium, warned in June that it would «m piam to 
the European Commission if the Gennan-Italian offer was 
approved by Iri, the Italian state TinitWng company. The win- 
ning consortium is led by Erupp Hoesch, Germany’s wnnqfl 
biggest steelmaker, which would control 50 per ««n+ of AST. 
The rest would go to three Italian steelmakers, Riva, Agarini 
and Falck. After the acquisition of AST, Krupp Hoesch's share 
of the European stainless steel market would rise from 27 to 43 
per cent 

The German company's 50 per cent stake in AST was to 
have became part of a joint venture between Krupp Hoesch 
and Thyssen, Germany's largest steelmaker, which ramo tnto 
being on October L There are suggestions that Krupp’s offer of 
a joint venture to take over AST also encouraged Riva to 
withdraw its offer for Eko S tahl, the aflmg eastern O rman 
steel mill in which it bad an interest earlier this year. Andrew 
HOI, Milan and Michael Lmdemarm, Bonn 

Jail term for Cantabria chief 

Mr Juan Hormaechea, the conservative chief executive of 
Cantabria in northern Spain, yesterday became the first head 
of a Spanish regional govern m ent to face a jail term in 
connection with corruption charges. After a long r unning legal 
battle, Mr Hormaechea - a controversial local populist and 
former mayor of the port of Santander, the capital of the 
Cantabria region - was sentenced by a Santander court to six 
years on charges of embezzlement ifaitftrf to construction con- 
tracts he awarded in 199L His imprisonment was delayed, 
however, pending his appeal to the supreme court in Madrid. 
The sentence is an embarrassment for the opposition Partido 
Popular (PP). The party bad backed Mr Hormaechea when he 
was first elected chief minister in Cantabria’s 1388 regional 
elections as an independent on the PP ticket, and has since 
failed to persuade him to resign. In 1392 Mr Hormaechea, who 
was already facing judicial investigation, formed his own 
party to fight the regional elections and was re-elected chief 
minister with PP support Tom Bums, Madrid 

National strike halts Malta 

A one-day national strike orde red by Malta's 43,000-strong 
General Workers' Union (GWU) yesterday paralysed most of 
the island, bringing public transport, international flights, 
banks, dockyards, many municipality services and several 
hotels and factor ie s to a halt Most shops also remained closed. 
The strike was ordered in protest at the planned introduction 
of value added tax next January. Premier Fence h Adami 
pushed the measure through parliament in July and has 
shown no signs of wanting to modify the January deadline. 

Buoyed by yesterday’s successful stoppage, Mr Anglu 
Fenech, GWU secretary, said his union clearly enjoyed 
national backing In its opposition to VAT, which it claims will 
increase the island’s cost of living and erode wages. The strike 
was backed by the opposition Labour party and the general 
retailers' and traders’ union. The government viewed the 
stoppage as a political move aimed at i ncreasing polarisation 
between supporters of the ruling Nationalist party and Che 
Labour party. Godfrey Grima, Valletta 

Bulgarian economy warning 

Failure to privatise banks swiftly and halt massive loans to 
loss-making state enterprises threatens to wreck Bulgaria’s 
fragile financial system, Mr Todor Valchev, head of the 
national bask, warned yesterday. Mr Vachev, reported by the 
state news agency BTA, told a meeting of hankers that politi- 
cal infi g htin g and lack of a strong government "paved the way 
for uncontrolled plundering of the country’s financial 
resources". He added: "The clandestine privatisation that is 
under way is very dangerous." Continued big loans to techni- 
cally bankrupt state enterprises were a direct result of the 
failure to privatise the communist-era banking system. Among 
the biggest factors holding back privatisation in ba nkin g itself 
was the di lemma of how to deal with “the hu ge am ount of 
non-performing loans". Under government pressure, banks 
over the past four years had continued lending money to 
loss-making industrial concerns. AP, Sofia 

Red faces over Irish shares 

Ireland’s coalition government has been embarrassed by the 
revelation that a cabinet minister with responsibility for the 
mining industry was an investor until last week in a mining 
company seeking a licence for a I£50m (£49.4m) lead and sane 
mine in County Kilkenny. Mr Brian Cowen, the Fianna Fail 
minister for t rans port, energy and communications, has been 
forced to sell his shares in the company, Arcan, after ms 
interest was disclosed by Irish newspapers. He sold the shares 
for less than half the I£960 he paid for them four years ago. 
The government’s embarrassment comes at a tune when an 
ethics bill sponsored by Labour, the junior partner m the 
coalition government with Fia nn a Fail, is ma kin g its way 
through the Irish parliament The bill requires tosh members 
of parliament and government ministers to disefese their 
interests. Arcon’s largest shareholder is Mr Tony O’Reilly, the 
Heim chief executive and Irish newspaper owner, who owns 
22.6 per cent of the company. John McManus, Duoan 

ECONOMIC WATCH 

Orders rise in eastern Germany 


m Germany 

M orders 


A sharp rise in consumer 
spending during August 
helped boost orders for east 
German manufacturers, the 
federal economics ministry 
reported yesterday. At the 
qattw time, the Bundesbank’s 
September report showed that 
real gross domestic product 
in east Germany rose by 9 per 
cent in the first half of this 
year over the previous year. 
“On the basis of a very low 
level of economic activity, 
eastern Germany has devel- 
oped into a growth area,” it 
said. According to the eco- 
nomics minis try, on a month- 
to-montb basis manufactur- 
rs in August rose 45 per cent and increased on a 
ear basis by 25.5 per cent Judy Dempsey, Berlin 
ean Union industrial production 
compared to a year earlier. The Eurostat gatistte 
said this was the sixth consecutive monthly rise, 
lv adjusted production from May to July was 1-8 per 
tier than in the preceding three months, 
a’s inflation dropped from 3^ per cent m Augustto 
sat in September. The current account deficit contra- 
ZZ taSSst. reaching SchlOOm itSJta) tan a 
; Sch4.4bn in July. 



Poll shock puts Pasok in leadership dilemma 

Kerin Hope on the search for a successor to the ailing Papandreou 


The defeat of Mr Theodoras 
Pangalos, Greece’s former 
European affair s minister, in 
Sunday’s run-off poll for mayor 
of Athens amounts to more 
than a temporary embarrass- 
ment for the governing Social- 
ists. 

It complicates a succession 
struggle now gathering 
mommtnm in the PanheHenic 
Socialist Movement (Pasok) as 
Mr Andreas Papandreou. 76, 
the prime minister, prepares to 
hand over the leadership, prob- 
ably next spring. 

That is when Mr Papandreou 
is expected either to seek the 
presidency (a largely ceremo- 
nial post) through a vote in 
parliament, or, if his health 
worsens further, to retire from 
politics. 


Until Sunday, Mr Pangalos 
was the frontrunner to take 
over the helm of Pasok. His 
colourful personality, includ- 
ing a talent for putting down 
political opponents in a few 
words, appealed to the party's 
populist faction, offsetting the 
image of an intellectual more 
at home in Paris than Athens. 

It was always going to be a 
close race in Athens where vot- 
ers, as well as being wealthier 
and more conservative, have 
few inhibitions about showing 
their dissatisfaction with the 
government Mr Papandreou 
did his best to shorten the odds 
with a last-minute offer to 
inject an extra DrlObn (£107m) 


into the city budget for 1935. 

But Mr Pangalos's personal 
attacks on his conservative 
opponent, Mr Dimitris Avramo- 
poulos, an ex-diplomat who 
entered politics last year, 
clearly backfired. The leftwing 
voters whose support he 
needed in the ran-off deserted 
in droves, casting blank ballots 
or switching to Mr Avramopou- 
los, who won 54.4 per cent 

Such a heavy defeat marks a 
personal failure for Mr Panga- 
los. especially when the Pasok 
candidate managed to edge out 
a conservative in the run-off 
poll for governor of Attica, the 
district that includes Athens. 
Overall, too, the local govern- 


ment election results showed 
the Socialists maintaining a 
lead of around five percentage 
points over the conservative 
New Democracy party. 

Other candidates for the 
Pasok leadership are now back 
in the picture, though Mr 
Papandreou is not likely to 
give any immpdiate indications 
of his preference- 
potential contenders find it 
hard to jostle for favour in 

Pasok's byzantine atmosphere. 

with Mr Papandreou distanced 
from political associates by 
weak health and ids wife Dimi- 
tra, who restricts access to him 
in her role as head of the pre- 
mier's personal office. 


Few prominent Socialists 
seem capable of bridging the 
divisions between the party's 
populists - who are nationalist 
and insist on state participa- 
tion in the economy - and the 
younger pro-European techno- 
crats. 

Mr Gerasim os Arsenis, the 
jpfmrs minister, has tried to 
build support among the 
nationalists, while Mr Costas 
Simitis. the industry minister, 
is close to the pro-Europeans. 
In the year since the Socialists 
returned to power, both have 
been cultivating alliances in 
Pasok’s central co mmi ttee and 
in grassroots party organisa- 
tions. 


However, both men are 
tainted in the eyes of Pasok 
supporters by having quar- 
relled with Mr Papandreou in 
the post. 

Recently, Mr Papandreou has 
a given a free hand in policy- 
making to several younger cab- 
inet ministers, among them Mr 
Yannos Papantoniou, the econ- 
omy minister who is enthusias- 
tically re-launching privatisa- 
tion in Greece. 

The alternative to nominat- 
ing a successor would be for 
Mr Papandreou to hand over 
power to a collective leader- 
ship. It would probably have to 
be led by the hard-working Mr 
Aids Tsochatzopoulos, Pasok’s 
secretary general and Mr 
Papandreou's most loyal politi- 
cal colleague. 


Basque elections strike further blow at Gonzalez 


By Tom Bums and David White 
fn Madrid 

An attempt by Prime Minister Felipe 
GonriOez to regain the political ini- 
tiative has suffered a significant set- 
back in regional elections in the 
Basque country, where conserv a t i ves 
and communists made strong gams 
at the expense of Us Socialist party. 

The Basque elections on Sunday 
were won, as expected, by the main- 
stream nationalist p a r t y , the Partido 
Nacionalista Vasco (PNV), which 
regained the 22 seats it had held in 
the outgoing 75-member regional par- 


liament But despite an active cam- 
paign by Mr Gonz&lez, the Socialist 
party, which had been the junior 
coalition partner in the PNV-Ied 
Basque government, lost four of its 
16 seats in the local legislature, then- 
worst electoral result in the region. 

In a highly fragmented vote that 
will make the creation of a new gov- 
erning majority difficult the conser- 
vative Partido Popular (PP) pinwt ll 
seats, up from six, and the commu- 
nist-led Izquierda Uni da group (IU), 
which previously had no members in 
the Basque parliament returned six. 

Sunday’s poll underlined the sharp 


fall in support for the prime minister 
that emerged last June when the PP 
established a 10-point lead over the 
socialists to win the European parlia- 
ment elect] (His, and when both the PP 
and IU doubled their vote in Andaln- 
cia, Mr Gonzalez’s home region, caus- 
ing the Socialist party to lose its 
majority in local elections held on 
the gamp day. 

Mr Gonzfilez, who was returned to 
power for a fourth term in 1993 
although without an overall major- 
ity, Is blamed for a severe recession 
that has raised unemployment to a 
record level and for a series of cor- 


ruption scandals that rocked his gov- 
ernment earlier this year. 

June’s defeats propelled the often 
reclusive prime minister into a hectic 
schedule of parliamentary appear- 
ances, public meetings, television 
“fireside chats” and media inter- 
views. However, PP leader Mr Jos£ 
Marla Azxxar said yesterday the 
Basque poll had confirmed “the 
u ns toppable decline of the socialist 
vote". 

Analysts said the socialists had 
probably been penalised in the 
Basque elections for co-opting a local 
left-wing party, EuzkadSko Ezkezm, 


on to its ticket and campaigning for 
the “ethnic” Basque vote. Traditional 
socialist voters In the area are 
mainly immigrants from elsewhere in 
Spain or their descendants. 

Mr Gonzdlez’s popularity will next 
be tested in municipal elections in 
May. as well as in polls to elect new 
parliaments in 13 of Spain's 17 auton- 
omous regions; 

The responsibility for leading the 
Basque executive, meanwhile, falls 
once more to the PNV, which has 
governed the area, either on its own 
on in coalition with the socialists, 
since 1980. 


66 


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ED&F MAN INTERNATIONAL LTD 

A MEMBER OF THE ED&F MAN CROUP. ESTABLISHED IN 1783 




FINANCIAL TIMES TUESDAY OCTOBER SS .994 


4 * 

NEWS: THE AMERICAS 


Black votes seen as 
key to Virginia race 


By Jurek Martin in Washington 

The vitriolic race In Virginia 
between Democratic Senator 
Charles Robb and Mr Oliver 
North has finally focused on 
the constituency which could 
determine the outcome on 
November 8 - the black voters 
who comprise 18 per cent of 
the state's population. 

Both men campaigned at 
black churches in Richmond, 
the capital, on Sunday. Mr 
Robb was in the company of 
Mr Doug Wilder, the black for- 
mer Democratic governor who 
last week, after intervention by 
President Bill Clinton, finally 
endorsed his long time bitter 
rival. 

Mr Wilder said bis appear- 
ance with Mr Robb was “no 
idle gesture" and promised to 
stump for him constantly in 
the remaining two weeks. The 
church's pastor told the sena- 
tor. "we are receiving you with 
delight because we believe, 
Brother Robb, that your oppo- 
nent is bad news". 

Mr North, who enjoys the 
adulation of the predominantly 
white Christian Coalition, told 
his church audience that he 
believed in the power of prayer 


ap fl that Bible is "the only 
book I’ve ever read more than 
once," 

The latest polls cannot sepa- 
rate the two, with Mr Marshall 
Coleman, the independent can- 
didate and a former Republi- 
can lieutenant governor, 
trailing. Ibis means that nei- 
ther Mr Wilder’s withdrawal 
from the race in September nor 
the continued presence of Mr 
Coleman on the right has yet 
dented the North bubble, as 
bad been expected. 

Persuading black voters to 
turn out on November 8 may 
be crucial The assumption had 
been that they would stay 
away from the polls in Large 
numbers, which could only 
help Mr North. 

Each day in this ferociously 
negative and expensive cam- 
paign, whose cost, already over 
520m, has only been exceeded 
by the Senate race in Calif- 
ornia between Senator Dianne 
Feinstetn and Congressman 
Michael Huffington. brings 
new charges and accusations 
oflying. 

Mr North alleged last week 
that Mr Wilder’s endorsement 
was only obtained by the prom- 
ise of an ambassadorship from 


Mr Clinton. This produced a 
furious denial by the White 
House. 

The Republican candidate 
also had to fend off a story in 
the Washington Post that 
suggested he may have con- 
nived at t rafficking in narcot- 
ics while he was running the 
Iran-Contra operation from his 
position on President Reagan’s 
national security council 

But the former Marine lieu- 
tenant colonel has been 
unabashed in his onslaught on 
Mr Robb. Last week he said his 
opponent’s own military 
career, also in the Marines, 
was spent more on ceremonial 
duties than on active service. 
His commercials, featuring 
massage pari ours and cocaine 
dealers, repeatedly recall Mr 
Robb's confessions or marital 
infidelity and some dabbling in 
drugs. 

The dour Mr Robb, while 
never neglecting to recall Mr 
North's cr iminal conviction in 
the Iran-Contra scandal which 
was only overturned an a legal 
technicality, has often seemed 
almost passive. The charitable 
calculation is that he believes 
Mr North's extremism will 
turn more voters off than on. 


Foreign investors renew 
interest in US real estate 


By Nancy Dunne 
in Washington 

Foreign investor confidence in 
US real estate has rebounded, 
with Atlanta and Washington 
DC heading the list of most 
desirable cities for investment 
according to a survey. 

The findings, by the Associa- 
tion of Foreign Investors in US 
Real Estate (Afire), contrast 
sharply with reports that Jap- 
anese investors have been try- 
ing to off-load assets acquired 
in the 1980s buying spree. 

“There have been rumors 
that the Japanese are trying to 
sell but no evidence of it" said 
Mr James Fetgatter, chief exec- 
utive of Afire, an organisation 
which represent about half the 
foreign investment in US real 


estate. “Japanese investment 
has remained at the same level 
for the past four years." 

Most of the new Investment 
is coming Cram Europe. The 
Afire survey found 46 per cent 
of respondents planning to 
increase US holdings, a 14 per 
cent from 1993. An equal num- 
ber said they would maintain 
investment levels, while 8 per 
cent said they would reduce 

their holdings 

The survey also reveals a 
comeback among real estate 
investment trusts (REITS), 
which suffered widespread 
losses in the 1970s. 

The results of the survey 
seem in line with industry 
experts' reports. Mr Randall 
Rowe of Equity Financial Man- 
agement, a national office 


property company, said the 
overbuilt commercial property 
market was showing signs of 
recovery, particularly in Den- 
ver and Boston. “In many 
cities this may be the last 
opportunity to lock In cheap 
space.” he said at a recent 
Afire conference. Mr Raymond 
Torton of Torto/Wheaton 
Research said office vacancy 
rates, currently 16.3 per cent, 
would foil to no less than 12 
per cent in 1995 and could drop 
to 3.1 per cent by 1999 without 
a return to overbufiding 
Atlanta, which ran second in 
the Afire survey in 1993, was 
ranked as the most viable dty 
for foreign real estate invest- 
ment, followed by Washington. 
New York, Phoenix, and Char- 
lotte, North Carolina. 


Loose guns mar US effort in Haiti 

Aristide opponents hold up to 15,000 weapons. Ted Bardacke reports 


S ince the return of Pr esident Jean- 
Bertrand Aristide, a rash of new 
graffiti has appeared on walls 
around Port-au-Prince. “US Army stay 
for 50 years to change system," one red 
spraypaint slogan spells out 
The plea appears to be in vain. The 
US has no intention of keeping troops 
here for very long, and wants to turn 
the Haiti operation over to United 
Nations peace-keeping forces within six 
months. But while US forces are here, 
many, inrhidhig un military planners, 
complain that US soldiers are leaving 
too much of the old repressive system 
intact by faiifap to arrest a nd disarm 
many of Aristide’s most rabid oppo- 
nents. 

Since the US occupation of Haiti 
began five weeks ago, about 11,000 
weapons, some as powerful as anti-tank 
grenades, have been seized from Hai- 
tian civilians- Even the most conserva- 
tive estimates put the number of weap- 
ons still in the hands of Aristide 
opponents at around 15,000. . At night 
and in isolated areas not firmly under 
the control of US Races, these arms are 
being used by Aristide opponents to 
“perpetrate some of the little incidents 
of violence that are occurring every day 
in Haiti, 7 ’ according to US military 
spokesman Col Barry Willey. 

“We are supposed to take over a sta- 
ble environment but with all those 
weapons and bad guys still out there I 
would say it's more like enforcing a 
truce.” says a UN commander here on a 
reconnaissance trip. “We would like to 
see some more forceful disarmament 
before we arrive." 

Around the capital tipping off the US 
military about suspected weapons hide- 
outs is often an exercise in futility. 
Early last week, Berel Jeuestilc, an 
Aristide supporter who recently came 
out of hiding, flagged down a convoy of 
military police in the streets of Port-au- 
Prince to teQ them of a aims cache he 
had seen being hidden in the hills 



Haitians swam over a dump track at a 
landfill in search of food mending dis- 
carded US army rations ap 


around the hamlet of St Jude, located 
just outside the capital Staff Sergeant 
Innocenzo Schiavo dutifully filled out a 
report but was not optimistic anything 
would be done: “Its got to be cross-refer- 
enced. cross-checked, screened, pro- 
cessed and synthesised with other mili- 
tary intelligence before a search might 
be ordered.” 

US officials, still afraid of Somalia- 
like “mission-creep”, insist that policing 
and investigatory work is the job of the 
still largely non-existent Aristide gov- 
ernment. Arrests and raids are made 
roily when the security of US troops is 
threatened or a US soldier directly wit- 
nesses a heinous crime being commit- 
ted. 

“We have to get away from the per- 
ception that we have the capability to 
check out everything," says Col Willey, 


adding that 75 to SO per cent of the 
raids in the capital come up empty. 
Mist aken ynd awkward raids on a UN 
oh j i d- va c c i natio n clinic and a famous 
botanical garden have made the US mil- 
itary even more reluctant to act. 

But equally embarrassing has been a 
case in Miragoaoe, where a bus crashed 
into a pro-Aristide demonstration, kill- 
ing 12. US troops arrived on the scene, 
took pictures and statements from wit- 
nesses and obtained the licens e plate 
numbers of the bus. US forces say that 
information has not been followed up 
on. Civilians armed with automatic 
weapons can still be seen patrolling the 
reeds outride Mlragoane. 

“The US forces have the leads neces- 
sary to do normal investigative work,” 
says Mr Ira Kurzban, a lawyer for Presi- 
dent Aristide. “We are not saying that 
they should search every house in the 
country, but they should act on infor- 
mation.” 

Capt Mark Adams, head of military 
intelligence for the region encompass- 
ing Miragoane, counters by saying that 
“there is a line that has to be drawn 
between military and. civilian roles. Our 
information about the bus crash will be 
turned over to the Haitian police and 
judicial system, when there is one. 
We’ve got to force the judicial system to 
get on line, because eventually it will 
be Haitians who will have to deal with 
their own problems.” 

fix the capital less than 50 per cent of 
police officers show up for work each 
day and of those, only about half can be 
persuaded to go out on patrol fearing 
their own safety. One late afternoon at 
tiie Cafeteria police station, Mr Alexi 
Charles walked in to report that he had 
been robbed by a black market money 
changer. Mr Charles says he was told 
by the desk sergeant to come back the 
next day, because police were not mak- 
ing arrests after 6 pm. 

Some of those arrested by the US 
military, including Haitian military offi- 


Prestdent Jean- Bertrand Aristide was 
yesterday expected to name 
businessman Mr Smarck Michel as 
Haiti's prime minister. Ted Bardacke 
reports. The appointment would end 
speculation over who would assume 
the delicate task of forming a cabinet 
of national reconci Ration. Mr Michel 
was minister of commerce under 
President Aristide In 1991 before a 
military coup. Mr Michel remained in 
Haiti during military rule but did not 
participate in government. A 
spokesman said the president's choice 
of prime minister from the ranks of 
those who remained In Haiti was a sign 
that he wanted a cabinet to reflect 
Haiti’s diversity of political views. 

cers accused of human rights viola- 
tions. are eventually turned over to Hai- 
tian police, who often let them go for 
lack of a functioning judiciary. 

The Aristide government, recognising 
that the uncollected guns are not likely 
to be used while the US military is in 
place, has said American forces can 
stay as long as Washington wants, leav- 
ing the decision up to the US Congress 
and the UN. Yet some are beginning to 
worry that the honeymoon between the 
US military and the Haitian people can- 
not last forever. 

US commanders say that while nor- 
mal infantry men only patrol in Port-au- 
Prince to keep order, in the country- 
ride, where three-quarters of Haitians 
live, special forces troops are working 
to break old habits of violence and 
develop local government structures for 
the UN to oversee. 

“If we left: now, people would be very 
unhappy. We still have a lot of work to 
do," says Capt Jim Mis. operational offi- 
cer for special forces in Les Cayes. a 
city 250km south of Port-au-Prince. 
“But our goal is to make the situation 
stable enough so that we work our 
selves out of a job." 


US offers Cuba small hope for dialogue 


By Pascal Hatcher in Havana 

As Cuba and the US renewed 
talks on immigration issues in 
Havana yesterday there was 
little sign the meeting would 
satisfy initial Cuban hopes for 
a wider dialogue on the long- 
standing US- Cuban conflict 
The talks were scheduled to 
review progress of an immi- 
gration accord signed on Sep- 
tember 9 that will sharply 
increase the number of Cubans 
allowed to migrate legally to 


the US each year. The Septem- 
ber agreement halted an exo- 
dus by sea of thousands of 
Cubans trying to reach the US 
without entry visas. 

Both sides have have 
expressed a willingness to 
make the immigration deal 
work, but Washington has 
resisted Cuban pressure for 
full-scale negotiations on big- 
ger issues such as the US trade 
and fiMPdwi embargo against 
the island. 

Cuba’s foreign minister 


Roberto Robaina admitted to a 
parliamentary foreign affairs 
committee on Saturday there 
were “no new elements" to 
suggest the mere continuation 
of the immigration talks 
would lead to immediate 
significant improvements in 
relations. 

The US even appeared to 
have downgraded the impor- 
tance of its delegation to the 
Havana talks. Instead of Mr 
Michael SkoU deputy assistant 
secretary of state, who took 


part in the September negotia- 
tions, the US team in Havana 
was led by a lower-ranking 
official, the head of the State 
Department's Cuba desk. Cuba 
is keeping its same chief nego- 
tiator, Hr Ricardo Alarcon, 
president of Cuba's National 
Assembly and a member of the 
Communist party politburo. 
While the latest talks have 
no fixed agenda, Cuba was was 
thought likely to press for a 
quick start to the expanded US 
visa programme. The 


increased visa processing has 
been delayed because addi- 
tional consular staff had to be 
sent to the US Interests Sec- 
tion in Havana to help cope 
with the extra work. 

US officials say between 
26,000 and 27,000 Cubans are 
expected to be granted visas to 
migrate legally over the next 
year, through accelerated pro- 
cessing procedures, expanded 
criteria for refugee status and 
an immigration lottery to start 
on November 1. 


Some companies say they’re 
joining forces to make international 


network communications simple. 



V 



iai 


FINANCIAL TIMES TUESDAY OCTOBER. 25 1994 


NEWS: WORLD TRADE 


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Daewoo 
to build 
cars in 
Romania 

By Vlrginta Marsh in Budapest 

Daewoo, the South Korean 
industrial group, has taken a 
51 per cent state in a $306m 
joint Yen tare with state-owned 
Automobile Craiova (AC), 
Romania’s second car manu- 
facturer. 

The deal is by far the biggest 
direct foreign Investment in 
Romania since the end. of com- 
munism in 1989. Total invest- 
ment in the project, which 
aims to produce up to 200,000 
cars a year by the end of the 
century, could rise to $900m, 
according to AC officials. 

AC, which was set up with 
Citroen in 1976, will contrib- 
ute its assets and factory in 
Craiova, 250km west of Buc- 
harest, to the new venture, 
Rodae Automobile Daewoo. 
Korea’s third car manufac- 
turer win pay $156m for its 
stake. It win raise much of 
this from the sale of 20,000 
cars on the Romanian mar ket, 
Romanian privatisation offi- 
cials said. Additional financ- 
ing win come from the South 
Korean Esam bank. 

Daewoo wfll initially assem- 
ble a version of its 1500cc 
Cielo model, a small family 
car, at the plant From 1996, it 
also intends to produce a new 
small car presently under 
development. The Investment 
is part of a $5bn Daewoo plan 
to quadruple its worldwide 
production capacity to 2m by 
the year 2000. 

The company plans to build 
two lines to produce transmis- ; 
sions and engines at the 
Craiova plant Initially the , 
Cielo would be 35 per cent 
integrated in Romania, but 
local content would rise to 80 
per cent by 1999. Daewoo 
aimed to export more than 
half of its production to west- 
ern Europe. 

Romania is one of six former 
east bloc countries with an 
association agreement with 
the European Union, giving it 
preferential trading rights 
with the BU ahead of full 
membership. 

•Romania amended its for- 
eign investment law to offer 
the South Koreans generous 
investment incentives. 


Japan speaks up for Asia region 

William Dawkins reports on Tokyo’s backing for a South Korean to head the WTO 


J apan, increasingly torn 
between the US and Asia, 
has plunged into the cam- 
paign for dynamic Asia-Pacific 
economies to gain a bigger 
voice in the world trading sys- 
tem. 

The Tokyo government's 
recent decision to back Mr E3m 
Chui-su, South Korea's trade 
minister, as candidate to head 
tite new World Trade Or ganic 
tion, marks a BtartWn g break 
with past reticence. Japan 
never openly declared support 
for a particular candidate in 
the searches for previous direc- 
tor generals of the WTO's pre- 
decessor body, the General 
Agreement on Tariffs and 
Trade (Gatt). 

Its decision to come out in 
the open and support Mr Kim, 
rather than Call in with the 
consensus, is the latest exam- 
ple of Japan's tentative 
attempts to set its own agenda 
on international affairs. 

“The global trading system 
should not be run by just a 
handful of nations from 
Europe and North America,” 
explains a senior official of the 
Ministry of International Trade 
and Industry. Japan is not, he 
hastens to add, seeking a spe- 
cifically Asian regional voice 
for the WTO, which ft wants to 
be as global in its influence as 
the next man. Yet it is "wel- 
come for an Asian to raise his 
hand”. 






Japan’s candidate: South Korean trade minister Kim Chul-sn 


This marks another step in 
the shift of the country's for- 
merly US-centred trade and 
foreign policy towards Asia, its 
fastest growing export market 
and investment destination. 
Last year, Japan's trade sur- 
plus with the region surpassed 
its surplus with the US for the 
first time. Ten years ago, 
Japan exported a third more to 
the US than to Asia; now the 
balance is the other way. 

Fresh from defying Washings 


ton over bilateral trade, Japan, 
under its new Asian-oriented 
prime minis ter. Mr To miichi 
Mnrayama, is busy cultivating 
its nearest neighbours. 

Until the world's second larg- 
est economy offered its support 
to Mr Kim, the South Korean 
was an outsider in the race for 
the WTO, despite his formida- 
ble record as a negotiator in 
the Uruguay Round. Against 
him are ranked Mr Carlos Sali- 
nas, former president of 


Pakistan’s PM reaches 
out to Turkmenistan 


By Fartian Bokhari 
in Mamabad 

Pakistan tomorrow launches 
an effort to expand its trade 
with the former Soviet repub- 
lics in central Asia with 
the arrival of Ms Benazir 
Bhutto, the prune minister, in 
Ashkabad. the capital of Turk- 
menistan. 

The three-day visit, Ms Bhut- 
to’s first to the region, pre- 
cedes plans to take a first con- 
voy of trucks with Pakistani 
goods through Afghanistan to 
Turkmenistan, later this 
month. 

Pakistan has been trying to 


expand trade with the newly 
independent region for almost 
three years. But continued 

fi ghting in Af ghanistan has 

disrupted previous efforts. 
However, a visit last month to 
parts of Af ghanis tan by inte- 
rior minister Naseerullah 
Khan Rabar has enahip< i Islam- 
abad to arrange deals with 
local warlords, who have given 
assurances of safe passage in 
return for still undecided local 
taxes, senior officials said. 

Under the plan, the trucks 
will leave the border post at 
Chaman. in the Pakistani prov- 
ince of Baluchistan, before 
entering Afghanistan and then 


Turkmenistan via the western 
Afghan city of Herat "Vested 
interests can help to turn the 
situation to our favour. When 
some Afghans realise that 
there’s money in this affair , 
they’ll co-operate,” said a 
mninr g overnment official. 

Pakistan hopes to export 

small rnn o m w items such 8S 
soapr toothpaste, garments and 
leather products, which are 
apparently in short supply in 
ex-Soviet republics, hi return, 
Islamabad wants to explore 
opportunities for the import of 
gas and oil from Turkmenistan 
and neighbouring countries. 

Mr Ahmed Mukhtar, Pakis- 


Mexico, likely to receive US 
support as a big player In the 
North American Free Trade 
Agreement; and Mr Rena to 
Ruggiero, a former Italian 
trade minister backed by the 
European Union. 

Apart from Japan, Mr Kim 
has backing from Australia, 
keen to lift the prude of the 
budding Asia-Pacific Economic 
Co-operation (Apec) forum, and 
of course from the Association 
of South-East Asian Nations 
(Asean). They back Mr Kim for 
very similar reasons. 

An Australian trade ministry 
official says: "We are dealing 
with a different Gatt, with an 
enlarged membership, ap H in 
which a large share of the 
growth is coming from Apec. 
We don’t want ft to be too 
Euro-centred.” 

Yet privately, senior Japa- 
nese diplomats admit that even 
with support Japan and 
Australia. Mr Kim may ttiU be 
an outsider in the WTO race, 
due to be settled by consensus, 
probably by the aid of Novem- 
ber. Why, then, back him? 

One theory, held in Euro- 
pean diplomatic H TR i gg i is that 
Japan may be prepared to 
negotiate over Mr Kim in 
exchange for some other form 
of recognition, of Asia-Pacific 
economies' Importance in the 
WTO. 

The truth, py piatng a senior 
retired Japanese diplomat, is 


much simpler. Tokyo can 
hardly say No to a South Kor- 
ean candidate - who was after 
all put forward by his own gov- 
ernment - at a time when 
Japan is striving to purge its 
wartime record in Asia. This, 
phis the growing importance of 
Japan's Asian export markets, 
has led to a sharp rise in the 
political fofiiumcp of the For- 
eign Ministry's Asian affairs 
bureau. "It is almost taboo to 
say No to Korea.” be explains. 

Not that Japan's trade and 
foreign policy is as passive as 
it used to be. An independent 
line was clear when Mr Mori- 
hiro Hosokawa, former prime 
minister, refused in February 
to follow the time-honoured 
tradition of caving in at the 
last minute to US bilateral 
trade demands, in thin case for 
numerical targets for import 
penetration. 

To this must be added 
Japan's clearest statement yet, 
at the end of last month, of the 
conditions under which it 
wishes to become a permanent 
member of the United Nations 
Security Council. A smaller 
example is its willingness over 
the past week to deepen trade 
links with Taiwan, thereby 
risking China's anger. 

All in all, it adds up to a 
Japan that looks as if it wants 
to take a more vigorous role in 
shaping the WTO than it did in 
Gatt 


:tL TUWMENtSTAlTX^ . • s ■ Jf 


sHl - — 


tan's commerce minis ter, said 
that the prime minister’s visit 
would open the way for trade 
but that it was up to business 
men to seek opportunities. 
More than 200 businessmen 
were expected to accompany 


Ms Bhutto to participate in a 
Pakistani export exhibition. 

From Turkmenistan’s side, 
the government of Mr Sapar- 
murad Nayazhov baa already 
expressed an interest in dis- 
cussing the oil pipeline. 


WORLD TRADE NEWS DIGEST 

Minerals boost 
for W Australia 

The value of Western Australia's mineral and petroleum 
exports rase by &5 per cent to A$12.9bn (U5S9.4bn) in 1993-94 
and is set to accelerate in the coming year, the state's 
resources development department said. Mr David Kelly, the 
department’s chief executive, said the state accounted for 43 
per cent of the value of Australia's resource exports of 
A$29JJbn, 44 per cent of Australian mineral production, 29 per 1 
cent of petroleum production and 57 per cent of new' mining , 
investment. Mr Kelly said exports to Asia continued to grow j 
strongly. Resource exports to China and Korea rose 26 per cent I 
to A29Um and A£l.l6bn respectively. Exports to Taiwan grew 
13 per cent to A$36Sm. However, exports to Japan fell 0.4 per 
cent to A$3.6bu. reflecting Japanese economic conditions and 

lower iron ore and gas prices. Reuter. Perth 

Indian investments approved 

India's finan ce ministry yesterday cleared 46 proposals worth 
Rs7bn ($223m) for foreign direct investment, increasing the 
total of foreign investment approvals in 1994 to around 
Rs36bn. Among the projects cleared, Du. Pont, the US chemi- 
cals company, will establish a wholly owned subsidiary in 
India, as part of its ambitious expansion plans for the Indian 
market Ciba-Geigy, the Swiss pharmaceuticals company, will 
collaborate with Hindustan Ciba-Geigy, its Indian affiliate, and 
Chong Kun Dang Corporation of South Korea, to manufacture 
Rimfampirin, a bulk drug used for the treatment of tuberculo- 
sis and leprosy. Store Sidhva, New Delhi 

Singapore to lose TV plant 

Thomson Consumer Electronics (TCE), the French multina- 
tional, is closing down its colour television manufacturing 
plant in Singapore and moving operations to Bangkok and to 
Batam in Indonesia. Rising costs In Singapore are believed to 
be the main reason for the move. Mr Didier Trim, a general 
manager of Thomson in Asia, said the TV manufacturing 
industry operated under severe cost pressures. "Expanding 
our manufacturing operations in Thailand and Indonesia, 
while strengthening our support functions at the regional 
headquarters in Singapore, makes good economic sense.” said 
Mr Trutt. TCE first set up m Singapore in 1969 and has about 
5,000 workers. About 900 employees at the Singapore plant will 
lose their jobs, iHernn Cooke, Kuala Lumpur 

South Korea chip exports soar 

South Korea exported semiconductor chips worth S8.83bn in 
the first nine months of this year, up 70.8 per cent from 
$5.17bn a year earlier, the trade ministry said. Brisk exports 
w ere largely due to enhanced competitiveness abroad because 
of the strong Japanese yen. ministry officials said. The minis- 
try forecast semiconductor exports would reach $12bn for the 
year, up from $7.08bn in 1993. Reuter, Send 

CONTRACTS 

■ Trafalgar House, the British construction company, and 
Citra Lamtoro Gung Persada, an Indonesian construction com- 
pany, were awarded a 27-year concession yesterday to build 
and operate a 56km toll road in west Java. The contract is 
wdrth a total of 2600m. Citra Lamtoro Persada is owned by one 
of President Suharto’s daughters. 

■ Malaysia has awarded a MJ700m (5273m) contract to build a 
hydroelectric futility to a joint venture company which 
includes a consortium from China. The 160MW plant wfll be 
built in Sabah state. A Sabah-based company, Borman, along 
with the Chinese, will carry out the bulk of the work. 


We’d like to set the record straight 


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♦ 




FINANCIAL TIMES TUESDAY OCTOBER 25 1994 


7 




NEWS: INTERNATIONAL 






Asia ‘may need to rely on 


By Peter Montagnon, 

Asia Editor 

Asia's high savings rates may be 
insufficient to finance the region's 
ambitious infrastructure spending 
plans in the medium term, forcing 
governments gradually to increase 
their reliance on foreign capital, 
according to a study by American 
Express Bank. . 

“The share of population living in 
the cities will have doubled between 
1985 and 2010. This creates a huge 
demand for infrastructure.” says Mr 


Tapan Datta, the economist who com- 
piled the study. 

Though savings rates are likely to 
remain high In tine with economic 
growth, the region is unlikely to genr 
arate enough resources domestically 
to ffriflnre this development 

The need to import capital will 
weaken countries' current-account 
balance of payments, thoug h the defi- 
cits should be manageable, the report 
says. 

Some countries may also re- 
spond by policy moves to damp 
consumption in an effort to pro- 


mote still higher savings rates. 

The need to finance infrastructure 
will also stimulate further liberalisa- 
tion of financial markets so that 
savings can be deployed more effi- 
ciently, Mr Datta said. This would 
include the development of domestic 
bond markets. 

Singapore had the highest savings 
rate in the region last year at 48-3 per 
cent, the study adds. Bnt China. 
Indonesia, Malaysia, South Korea and 
Thailand all enjoyed rates of about 35 
per cent or more. The savings rate is 
personal, corporate and government 


foreign capital’ 


savings measured as a proportion of 
gross domestic product 

The greatest need for foreign capital 
will face those countries such as 
Pakistan and the Philippines where 
savings rates, at 133 and 143 per cent 
respectively, and living standards are 
low. Such countries may need to 
maintain high real interest rates that 
curb economic growth. 

Outside Japan, the Asian demo- 
graphic cycle will continue to support 
high savings rates as population 
growth slows and the proportion of 
people dependent on savings declines. 


The bank says that Japan's high 
savings rate, of 323 per cent last year, 
in part reflects the recent foil In land 
prices. The savings rate slowed when 
land prices rose sharply in the late 
1980s and may be expected to do so 
again when land prices stop falling - 
Saving rates may fall in Japan as 
the proportion of retired people in the 
population increases, though the 
effect is likely to remain small until 
the turn of the century. 

After that, the number of retired 
people in the population will rise 
sharply. 


Australia seeks to keep the lid on inflation 

Move by Willis decouples the country’s policy from that of the US, write Nikki Tait and Emilia Tagaza 


Y esterday’s f nil-point 
rise in Australian 
short-term interest 
rates was not only Larger thaw 
expected. It represents a signif- 
icant change of heart for Aus- 
tralia's official monetary pol- 
icy. 

Just four months ago, Mr 
Paul Keating, the country's 
prime minister, was berating 
bond market traders fear punt- 
ing on a rise in Australian 
rates. 

Both he and Mr Ralph Willis, 
the Australian treasurer, were 
insistent that with little sign of 
inflationary pressure in the 
economy, low rates were nec- 
essary to stimulate business 
confidence. 

However, Mr Wfllis, urged on 
by the Reserve Bank, now 
appears to have been swayed 
by the increasing fashion to hit 
inflation, currently only L7 per 
cent, before it has a chance to 
take off. 

The move also decouples 
Australian policy from that of 
the US. It was large enough to 
spare the Reserve Bank from 
immediate pressure to follow 
any tightening decided by the 
US in coming weeks. 

The decision was a “judi- 
cious use of monetary policy,” 
Mr Willis said yesterday. In the 
1980s, inflation was already 
running at 7 per cent before 
the government started to 
tighten monetary policy. 

“With continuing evidence of 
robust growth, any delay now 
in increasing cash rates would 
risk larger and more prolonged 
increases in interest rates later 
in the cycle," he said. 


The. Resow Bank tightens the screw 



Current account deficit 
AS bn 



Monetary policy was also a 
more fiprfhfo instrument than 
changes in fiscal policy, he 
added. 

Pressure on interest rates 
has come from a strong eco- 
nomic recovery compared with 
the rest of the industrialised 
world. The annual growth rate 
reached 43 per cent during the 
June quarter. Mr Willis said 
yesterday that the government 
had been ghadrng its official 
forecast for the current finan- 
cial year which began in July 
down to 435 per cent from 43 
per cent 

In the past three months, 
140,000 new jobs were created 
and analysts are predicting 
that the 3 per cent growth in 
employment forecast in the 
government's 1994-95 budget 
will be exceeded. New capital 
expenditure in the three 
quonfliB to June rose 7.7 per 
cent in constant prices, the 


best figure since the September 
quarter of 1990. Spending on 
plant and equipment in the 
period rose 14 per cent in real 
terms. 

One of the key assumptions 
underlying the 1994 federal 
budget was that business 


investment would rise by 
about 143 per cent in the cur- 
rent financial year. Until 
recently, however, this had 
remained sluggish, and manu- 
facturers and analysts alike 
were sceptical that the target 
could be reached. 

Australian economists still 
say t he strength and durability 
of the- investment recovery 


remains uncertain. 

Over Australia’s winter 
months, a number of develop- 
ments have occurred. First, the 
country’s drought, which is 
affecting important agricul- 
tural areas on the east coast, 
has worsened and persisted 


through key planting seasons. 
Economists point out that this 
has a mixed immediate impact 
an domestic prices, with grain 
and feedstock prices rising, bnt 
the slaughter of livestock push- 
ing down meat prices. 

Longer-term, however, the 
climatic will almost 

certainly depress exports 
(wheat, for example, is a signif- 


icant export category) and 
could have inflationary impli- 
cations if fiiture stocks are 
squeezed. Overall, the drought 
has been reckoned to knock 
about half a percentage point 
off Australia’s annual growth 
rate. 

Second, Australia's current- 
account situation has looked 
increasingly problematic, even 
before the drought consider- 
ations. The A$2.l4bn (£993m) 
deficit notched up in August 
was the worst monthly figure 
for almost four years. Analysts 
and government officials 
pointed out that “special 
items* on the import side 
explained some of the deterio- 
ration. Nevertheless, the date 
added support to the argument 
that Australia risks seeing 
business investment surge all 
at once, sucking in imported 
investment goods, machinery 
a-nfl the like. 


The Australian treasurer wants to hit 
inflation - currently only 1.7 per cent 
- before it has a chance to take off 


So with drought depressing 
some export categories and 
some tough bargaining from 
Japanese customers for coal 
and iron ore leading to lower 
orders this year, the need to 
act sooner rather than later 
may have become imperative. 

Most analysts are expecting 
more rises, with the next one 
coming around February. One 
forecast that short-term rates 
would peak at about 9 per cent, 
half the 18 per cent high in 
January 1990. 

While the markets welcomed 
the tightening of monetary pol- 
icy, they are also putting pres- 
sure on the government to 
accelerate the reduction of its 
budget deficit The govern- 
ment's budget deficit plan aims 
to reduce the shortfall to 1 per 
cent of gross domestic product 
by 1996-97. The 1994-95 deficit is 
forecast to reach A$LL7bn, rep- 
resenting 23 per cent of GDP. 

Mr Bernle Fraser, Reserve 
Bank governor, has also put 
pressure on the government 
saying it should do more to 
reduce the deficit Although 
Mr Willis does not rule out 
spending-cuts in next year's 
budget Mr Keating has been 
saying there is no need to cut 
expenditure while the economy 
is growing. 

“This doesn’t mean fiscal 
policy can’t be changed,” he 
told businessmen yesterday. 
“On the contrary, if economic 
circumstances change funda- 
mentally, sound economic 
management dictates that a fis- 
cal strategy may need to be 
modified. But this isn't the 
case now.” 


Promise to punish 'those responsible* 

S Korea leader 
apologises over 
bridge collapse 


By John Burton in Seoul 

South Korea's President Kim 
Young-sam yesterday apolo- 
gised to the public for last 
week's collapse of a Seoul 
motorway bridge that killed 32 
people. 

Mr Kim , in a nationally tele- 
vised speech, promised to pun- 
ish those responsible for the 
accident and vowed “to root 
out the corruption” prevalent 
in the construction industry. 

The bridge accident is per- 
ceived by South Koreans as an 
example of lax government 
administration, with Seoul 
authorities accused of ignoring 
warnings about the poor condi- 
tion of the 15-year-old bridge. 

The accident also focuses 
renewed public attention on 
widespread graft that has con- 
tributed to sub-standard con- 
struction work in Korea. 

Officials claim many contrac- 
tors divert funds from public 
infrastructure projects and use 
the money to bribe bureaucrats 
in charge of awarding lucrative 
government contracts. 

Many construction compa- 
nies are also accused of saving 
on costs by using inferior 
materials and rushing building 
schedules, while government 
supervisors are said to be 
bribed to grant approval that 
the structures meet design 
specifications. 

The issue has taken on 
increased importance recently 
as Korea plans to spend giOObn 
(£B6.6bn) on infrastructure pro- 
jects during the next eight 
years. 

The government is consider- 
ing jnrrpflgiwg the period that 
contractors would be responsi- 
ble for any b oil ding faults from 
five years at present, to 10 or 
20 years after completion. 

Mr Kim also criticised Kor- 
ean work practices in his 
speech. “We cannot deny that 
during 30-odd years of eco- 
nomic growth, we have tended 
to implement projects too 
quickly, with more emphasis 
on quantify and superficial 


appearances than on quality 
and substance.” 

Five Seoul city officials have 

already been arrested for alleg- 
edly failing to conduct ade- 
quate inspections and mainte- 
nance of the collapsed Songsu 
Bridge that spans the Han 
River in the centre of the dty. 



President Kim: criticised 
building work practices 


Officials of the construction 
company which built the 
bridge are also expected to be 
questioned by prosecutora. 

The company blames the col- 
lapse on traffic loads that 
exceeded the bridge's design 
specifications. 

Civil engineers are now con- 
ducting inspections of the 16 
other bridges across the Han 
River in SeouL 

Mr Cohn Snowdon, city engi- 
neer for the City of London, 
arrived in Seoul yesterday to 
help assess the structural con- 
dition of the bridges, following 
an offer of assistance by Sir 
Paul Newall, the Lord Mayor, 
who visited Korea in April. 



ft hadn’t been the easiest of 
assignments. But now i had the 
data and samples I wanted, 
and the weather was worsening, 
ft was time to make a move 
"Take me to the Hilton" 
Wherever my job took me the 
Hifton was always my first choice: 
no-one looked after me better. 

The prospect of a warm 
welcome and a hot bath was 
distinctly inviting. 

Now, the only ice I wanted to see 
would be in a tail glass. 

2 could feel myself relaxing 
already 



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s 


FINANCIAL times 


TUESDAY OCTOBER. 25 l*W 4 


i 



INTERNATIONAL ECONOMIC INDICATORS: MONEY AND FINANCE 


Down halL 

Country House Hotel 


i rate for the most wttefy Mowed meesves of narrow and broad money, a representative short- tod ftoru-Mm Merest rte senes end on average equity 
are psofintaots* 


■ UNITED STATES 


1885 

8.0 

8 a 

8-00 

10^9 

IML 

5.0 

1886 

1X5 

a.3 

6.49 

7.67 

343 

as 

1887 

11.6 

8 JS 

632 

8^8 

3.12 

105 

1988 

4.3 

52 

7£S 

634 

3-81 

8.4 

1968 

in 

39 

ess 

8.49 

3.43 

4.1 

1990 

3.7 

53 

846 

854 

3-60 

25 

1991 

5.3 

33 

5 JB7 

7JBS 

321 

52 

1992 

12.4 

ZA 

3.75 

7-00 

295 

45 

1889 

n .6 

1.1 

332 

5.86 

2.78 

3.0 


95 

6.82 

8.51 

tUL 

4.4 

5.1 

5.45 

6.94 

O*. 

85 

5.12 

555 

054 

9.9 

07 

4.84 

5.90 

1.79 

115 

4.15 

454 

055 

9.0 

75 

4.03 

6.14 

251 

10.4 

4.43 

4.77 

054 

95 

04 

454 

6.48 

2.61 

105 

551 

552 

0.48 

65 

5.7 

7.11 

6.94 

222 

85 

7.62 

651 

0.65 

45 

45 

049 

8.71 

2.11 

ZjO 

721 

037 

0.75 

5.1 

55 

955 

8.44 

258 

-0.4 

4.28 

555 

150 

7.0 

02 

9.52 

7.77 

2.45 

T.4 

253 

4.18 

057 

9.4 

7.9 

T28 

8.44 

2.11 


Grounds For 
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105 

95 

75 

55 

14 

25 

22 

t .7 

354 

3.52 

4.40 

457 

559 

006 

7.07 

751 

2.73 

2.75 

250 

247 

35 

4.7 

55 

Ol 

1.4 

1.9 

15 

25 

2.14 

205 

207 

2.13 

357 

348 

445 

4.46 

044 

042 

0.76 

074 

84 

11.1 

11.4 

75 

11.6 

105 

654 

548 

558 

541 

105 

15 

358 

552 

2.71 ~ 

3.7 

14 

250 

345 

040 

95 

04 

084 

104 

1.4 

3.40 

5.70 

2.74 

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1.5 

222 

3.64 

044 

04 

75 

6.31 

10.1 

1.7 

355 

074 

2.74 

3.4 

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150 

355 

048 

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84 

6.11 

9.7 

2.0 

350 

5.71 

2.72 

45 

14 

156 

354 

0.85 

114 

11.4 

5.90 

10.0 

25 

3.48 

557 

2.74 

4.8 

15 

245 

340 

040 

11.0 

11.9 

5.91 

95 

2.5 

354 

047 

240 

S 5 

1.8 

213 

448 

079 

105 

11.4 

544 

9.0 

2.7 

455 

094 

251 

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213 

443 

040 

11.8 

10.8 

5.61 

7.0 

2.1 

454 

7.17 

251 

54 

1.7 

248 

350 

078 

11.2 

10.7 

550 

65 

1.7 

457 

7.09 

249 

4.7 

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241 

454 

072 

115 

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Ol 

25 

4.75 

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2.65 

2.75 

3.69 

2.88 

3.19 

358 

355 

3-21 


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6.74 

629 

5.73 

5.62 


552 

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NEWS: INTERNATIONAL 


Rabin gives cautious backing to bank plan 


By Julian Ozattne in Jerusalem 

Mr Yitzhak Rabin, the Israeli 
prime minister, yesterday gave 
his backing in principle to the 
creation of a Middle East devel- 
opment bank which would help 
finance regional projects worth 
tens of billions of dollars. 

However, in a meeting with 
Mr Shimon Peres, foreign min- 
ister. and Mr Avraham Sho- 
chat, finance minister. Mr 
Rabin made clear that Israel 
would support the idea so long 
as it would not yet have to 
make any financial contribu- 
tion to the bank, which Mr 


Peres says would be capitalised 
initially at $l0bn (£ 6.1 bn). 

Mr Rabin also made his sup- 
port conditional on further 
study and government app- 
roval and an understanding 
with the US that any funds 
given by Washington to such, a 
bank would not be deducted 
from US aid to Israel - worth 
$3bn a year and a further $2bn 
in loan guarantees. 

Tbe commitment to create a 
regional development bank is 
expected to be enshrined in a 
declaration next Tuesday at 
the end of the Middle East/ 
North Africa Economic Sum- 


mit in Casablanca. The summit 
will establish an international 
working group to consider the 
feasibility of a regional bank 
and to report back at the 
regional economic conference 
expected to be held in Amman 
next spring. 

Mr Rabin's hesitant commit- 
ment to the bank reflects dif- 
ferences between the foreign 
ministry and treasury. Mr 
Peres has been an advocate of 
a regional bank to be a corner- 
stone of his vision of a Middle 
East Common Market modelled 
on tbe European Union. The 
foreign minister has built a 


consensus with Jordan, Egypt 
and the Palestinians in the 
past three months on the need 
for the bank as a symbol of 
commitment to economic inte- 
gration. 

They have campaigned for 
US backing, proposing a bank 
which would be capitalised 40 
per cent by countries in the 
region and 60 per cent by oth- 
ers, such as the US. the Euro- 
pean Union and Japan. Each 
country or bloc would have 
voting rights in proportion to 
its gross national product 

The bank, modelled on the 
European Bank for Reconstruc- 


tion and Development would 
principally make capital 
investments and long-term 
loans for regional infrastruc- 
ture projects, would provide 
technical assistance for pro- 
jects and would raise and lend 
money on i ntenwHnnai qa pftaT 
markets. Mr Peres has pro- 
posed Israel invest 5 per emit 
of the bank's capital, or 5500m. 

Tbe regional bank would 
overcome problems the World 
Bank has in lending for 
regional projects. The World 
Bank also cannot lend to Israel 
because its per capita income 
is too high and cannot lend to 


the Palestinians because they 
are not a state. 

But both the Israeli and US 
treasuries have been extremely 
cautious about creation of 
another regional development 
bank and are not impressed by 
the current level of regional 
economic cohesion. They also 
prefer future regional projects 
to be co-financed by other mul- 
tilateral institutions such as 
the World Bank and European 
Investment Bank and are anx- 
ious to avoid creation of a 
bank which would lend at con- 
cessional rather than market 
rates. 


Root out terror in your areas, US tells Arafat 


By Jurek Martin in Washington and 
Julian Ozanne in Jerusalem 

The US yesterday called on Mr Yassir Arafat, 
chairman of the Palestine Liberation 
Organisation, “to root out terror in the areas he 
controls”. 

On the eve of President Clinton’s departure 
for the region, Mr Warren Christopher, US 
secretary of state, said last week’s bus massacre 
in Tel Aviv was targeted not only at Israelis hot 
“aimed at destroying Palestinian aspirations”. 


"If peace brings nothing but more terror,” he 
said, "the process of reconciliation cannot be 
sustained. Palestinians more than anyone will 
suffer. It is imperative Chairman Arafat fulfil 
his responsibility to root out terror in toe areas 
he controls. The same courage he demonstrated 
in making peace must now be shown in fighting 
the enemies of peace.” 

The US appeal came as Palestinian officials 
said in Cairo that they rejected claims by 
Israel's foreign minister, Mr Shimon Peres, that 
the two sides had agreed on methods for 


combating Islamic attacks on Israelis. 

“We did not agree, as they said, on fighting 
anybody. We agreed the cycle of violence and 
counter-violence harms the peace process," said 
Mr Saeb Erekat, Palestinian negotiator. The 
PLO has said it will not crack down on the 
Hamas resistance movement and risk civil war. 

The PLO said yesterday toe two rides bad 
failed to make any progress in fedinc on 
releasing Israeli-held Palestinian prisoners or 
lifting the Israeli closure of the Gaza Strip and 
West Bank, steps Mr Erekat said were vital to 


show Pales tinians there was “genuine peace”. 

Israeli officials said their security forces ware 
continuing arresting Hamas activists across the 
still Israeli-occupied West Bank. In Gaza. Mr 
Mahmoud Zobar, a spokesman, called on 
Mr Arafat to protect his life and those of other 
leaders ft on Israeli attacks. 

Mr Clinton’s trip will take him to Syria, toe 
first visit by a US president in 20 years. Mr 
Christopher held out tbe hope that an 
Israefi-Syrian peace would leave “no place for 
terr or ist s on Israel's borders”. 


Sri Lanka counts cost of bombing 


By Stefan Wagstyi In New 
Delhi and Reuter in Colombo 

The assassination on Sunday 
of Mr Gamini Dissanayake, the 
Sri T.anir«n opposition leader, 
is a grim reminder of the vio- 
lence which permeates the 
island's politics. 

Mr Dissanayake 's death 
comes less than 18 months 
after assassins claimed the 
lives of two other prominent 
politicians - Mr Lalith Athu- 
lathmudali, a close colleague of 
Mr Dissanayake, and President 
Ranasinghe Premadasa, who 
like Mr Dissanayake was 
blown up in the middle of a 
crowd by a suicide bomber. 

In each case the security 
f orces suspect the hand of the 
LTTE, the Tamil Tiger separat- 
ist militants fighting for an 
independent homeland for eth- 
nic T amil s in the north. But 
the LTTE yesterday denied it 
was involved, and police have 
not in the past found enough 
evidence to prove their suspi- 
cions. 

Police in the capital Colombo 
said yesterday a Tamil woman 
suicide bomber whose severed 
head was found on top of a 
two-storey building was 
responsible for the blast which 
killed 52 people. 

The tradi tion of violence pre- 
dates the LTTE, going back at 


least as far as the assassina- 
tion of the late prime minister, 
Mr Solomon Bandaranaike, 
who was killed in 1969 by a 
disgruntled Buddhist monk. 

Mr Dissanayake's bloody 
death at the age of 52 brings 
shock, confusion and uncer- 
tainty to Sri Lankan politics. 
Its impact also seems likely to 
spread to the economy, partic- 
ularly the tourist industry. 

The immediate effect is to 
rob the opposition United 
National party of its presiden- 
tial candidate for the election 
which is due to be held next 
month in which Mr Dissanay- 
ake Was r unning a gains t Mrs 
Chandrika Kumarattmge, the 
prime minister. The govern- 
ment, while postponing indefi- 
nitely peace talks set for yes- 
terday with the T amil rebels, 
said the November 9 presiden- 
tial poll would go ahead 
despite the attack. 

Mr Dissanayake was an 
urbane, western-educated law- 
yer on the UNFs conservative 
wing. He had little chance or 
w inning against Mrs Kumara- 
tunge. who won a general elec- 
tion only in August when she 
took power from a UNP jaded 
after 17 years' rule. But Mr Dis- 
sanayake had gone some way 
to rebuilding party morale. 

His place could now be taken 
by Mr Rami Wickremasinghe. 


who was prime minister until 
August, or possibly by the 
incumbent president ami UNP 
elder statesman, Mr D B Wije- 
tunga. Either man might hope 
to capitalise on a possible wave 
of sympathy among the major- 
ity Sinhalese for Mr Dissanay- 
ake or for the tough pro- mili- 
tary policy he supported on the 
Tigers - a policy which may 
have cost him his life. 

Equally important, Mr Dis- 
sanayake’s death has called 
into question Mrs Kumara- 
tunge’s whole approach to toe 
Tamil question. She was 
elected on a promise t o try to 
make peace with the LTTE, a 
promise which she has bravely 
and rapidly attempted to put 
into effect by moves including 
lifting an economic embargo 
on the Tigers' northern strong- 
hold in the Jaffna peninsula. 
Government officials this 
month started talks with LTTE 
representatives. 

Despite continuing LTTE 
attacks on Sri Lankan targets, 
including ships. Mrs Kumara- 
tunge persisted with the peace 
effort Against the advice of 
army officers, she trusted 
ambiguous peace messages put 
o ut b y Mr V Prabakaran, the 
LTTE leader. Now her strategy 
has been thrown into jeopardy. 

Tbe Colombo stock market 
was dosed yesterday amid an 


island- wide curfew imposed 
after tbe attack. Mr Jayadeva 
Uyangoda, an economist 
attached to Colombo Univer- 
sity, said the economy would 
suffer in the short term due to 
the attack. “Long term stabil- 
ity will depend on any social 
unrest and the overall political 
situation,” he added. 

“In the past such dramatic 
assassinations have not 
impacted on society, which has 
come to terms with the deaths 
of major political figures. For- 
eign investors will react only if 
there is social unrest. Other- 
wise they will wait and see 
what happens before taking 
the next step.” 

Sri fjnVa has shown amaz- 
ing resilience to political 
deaths. Even last year's two 
assassinations did not throw 
the country's democratic insti- 
tutions into disarray: there 
was little street violence and 
this year's general election was 
peaceful and judged to be fair. 
The economy has continued to 
grow, with gross domestic 
product up 5.7 per cent last 
year: the tourists have kept 
coming. 

Yet it is hard to believe that 
Sri Lanka can forever enjoy its 
economic success and holiday 
paradise reputation while the 
streets of Colombo are regu- 
larly soaked in blood. 


Gamini Dissanayake, the latest to die... 

O Tbe 52-year-old opp o sition loader 
had long feared ter Ns Be but even aa 
recently as a few days ago was stfll 
saying T am confident of vrtnrtngr the 
presidential atecti on to be held In two 
wads' Ana. 

Tami guanftas SQhBnQ for an ^dependent 
homeland teamed hftn, along wflh other 
m in a ta t s who were si government In ttta 
(ate 1980s, far bringing fn Incflan troops to 
cfearm ten under an accord between 
Colombo and DaM. 

In one of his East interviews, in the Macfcas-besed Fronfine magazine, ha 
urged caution in negotiating vr*h the rebels. "NoWng shot*! be lushed 
through.* he said. There are deep wotnds in the psyche of ms people 
which have So properly imderstood* 

Nevertheless, ho added, he would wc*k fcx ’■ Just and fair soluttoa-A lot of 
fives haw been lest and blood has been incessantly and unecsssarty shea 
K takes two hands to dap and to have a driogue. A modus Vivendi Is 
necessary. Whether tf» LTTE fguareBasJ «v* look at It Chb way, I do not taww. 
t hope they do-.* 

...in the succession of assassinations 

1969 The Utaratron Tigers of Tamil Eelam (LITE) assume* responsihffity 
for the murder of aevem? pmminan t feeders of rival, more-moderate Tamil 
n tf o mPSt mgenis eti u nsL 

1990 LTTE execution squad kfe 13 leaders of a rival organisation Bving 
as refugees in India 

1901 Sri Lankan minister of state far defence Ranjan Vfieratne kffled In 
bomb blast; LTTE widely suspected 

Former Indian prime ministe r Raji v Gandhi leBad by autolde bomber near 
Madras; authorities accuse LTTE. 

1962 Ten senior Sri Lankan rrffltary officers Idled In mine explosion in 
LTTE-dominated region. 

Sri Lankan naval corranander-in-chief Clancy Fernando killed by suSdde 
bomber befieved to be LTTE member. 

1993 Sri Lankan opposition leader Ltfth Athutathmudafi toot dead by 
kme gunman; LTTE again denies invotvemert but widely suspected. 

Sri Lankan president Ranasinghe Premadasa fcfied by strfdde bomber 
authorities btameLTTE. 

199* Sri Lankan opposition leader Gamini Dissanayafca titled by suicide 
bomber; LTTE denies re ap on sfo Sty but again Is widely ac cu sed 
Sowcm FT.nnnnnciM 


INTERNATIONAL NEWSDIG6ST 


Accord on HK 
airport ‘soon 5 

Sino-British Joint Liaison Group ovcrsccUv the 1907 hnndow 
of the territory, said yesterday he hoped consensus could be 
reached by early November, when he ^tires. Negotiators came 
near clindnng the package in June, but fell at too last hurdle. 
This time, an agreed minute, detailing Oat the mrpwt srnd 
connected railway project be funded by Hk$60.3bn (to.Dfibiti o( 
equity and HKS23bn of debt, is expected to be signed before Mr 
Guo leaves Hong Kong. Signing of the Financial Support 
Agreements (PSAs), contracts proving to bankers tho project 
is viable, is expected to follow. Louise Lucas. Hona Kong 

Keidanren backs deregulation 

Japan’s Keidanren business lobby yesterday urged faster 
financial deregulation, as two more foreign companies 
announced their de-listing from the Tokyo stock exchange. 
Britain’s Standard Chartered Bank and Canadian imperial 
Rank- of Commer ce said they would delist by the end of the 
year. The exodus or 18 foreign companies so far this year is 
seen as a symptom of the declining competitiveness of Tokyo s . 
capital markets, losing business to financial centres in Asia. 
Standard Chartered said the move was part of a cost-cutting ; 
programme. Mr Shoichiro Toyoda. Keidanren chairman, 
warned Japan's financ ial industry would be weakened without 
farther deregulation. William Dawkins. Tokyo 

Algeria killings condemned 

Amnesty International has condemned the Algerian govern- 
ment inri its fundamentalist opponents for extra-judicial kill- 
ings, saying security forces and armed Islamist groups have 
acted in total disregard of international and humanitarian law. 
A report today, “Algeria, Repression and Violence Must End", 
says “hundreds are reported extra -judicially killed by the 
security forces, as an alternative to arrest or in retaliation for 
ltiHings by armed Islamis t groups”. These groups “have deli- 
brately and arbitrarily killed hundreds of civilians”, including 
those known for their stance against the Islamist groups’ 
political agendajfronos Chilis. North Africa Correspondent 

Oil tanker ‘had loaded in Iraq’ 

An oil tanker captain whose vessel was intercepted in the Gulf 
on suspicion of violating UN sanctions said yesterday he had 
loaded diesel fuel in Iraq for export in violation of the ban. 
Captain Izzat Abdulhadi Khalifa, master of the A1 Mahrousa, 
stated he had loaded 3,162 tonnes of diesel oil in the Iraqi port 
of Zubayr between October 16 and 19. then sailed south. The 
Saadi-owned. Honduran-flagged tanker was brought to Kuwait 
under escort after being stopped by a US warship in interna- 
tional waters on Saturday. Jteuftr, Kuwait 

Indian temple plea rejected 

India’s highest court yesterday rejected a presidential request 
for an opinion on whether an ancient temple had existed at 
the site of a mosque in Ayodhya demolished by militant 
Hindus in 1992, and upheld tbe central government's acquisi- 
tion of 67 surrounding acres or land. The Supreme Court 
decision will force the government to resolve the issue of the 
Ayodhya sate claimed by Hindus and Moslems. The govern- 
ment had been unable to decide whether a temple or a mosque 
will be built on toe site and had hoped the court would solve 
the problem. Shiraz Sidhoa, New Delhi 
■Taiwan's broadest M2 money supply measure grew 14.64 per 
cent in September from a year ago, after rising 15.16 per cent 
in August, the first time since lost April that M2 growth fell 
within the central bank’s 10-15 per cent target. Reuter, Taipei 
■The Philippines posted a budget surplus of &96bn pesos 
(£220m) in the nine months to September, against a 16.84bn 
pesos deficit in the year-earlier period, the result of higher 
revenue collection. Reuter. Manila 












Business Solutions 2000 

From Host to Client-Server: BS2000 Success Stories 



Mainframes are out? The many BS2000 
customers all over the world would have some- 


thing to say about that: Read the BS2000 
success stories from the Hamburg Savings 
Bank, the Belgian betting agency PMU, the 
British police, the Portuguese railways, the 
Start travel agency and the Scholler textile 
company. Find out why they made the right 
decision. Read the background stories and 
see why these organizations have been 
successful. See why BS2000 is the business 

solution for everyone 
from bank branches 
to railways. How 
BS2000 is the ideal 
open system. And see 
how the new open 
BS2000/OSD makes the right business 
server in today's client-server environment. 



mzji 

Li 


More than 12,900 travel agencies are 
hooked up to our bookings system 
in Europe. For this, we need a computer 
network that can handle thousands 
of reservations at a time. But most im- 
portant, we need one we can rely on 
100 percent." 

Wassilios Dedes , Managing Director of START informatik. 


admission tickets, had been issued. 

And yet the BS2000 computers still 
have room to spare. Wassilios Dedes 
points out that this spare capacity is 
needed to cope with the new START 
users being added each year. 

The START network grows 
bigger every day 

Every year, new countries join the 
START network. Since last year, Greece, 
Hungary and Poland have been 
making bookings via START Branches 
in Turkey and Russia were added 
recently. About 3,330 new connec- 
tions were put in place last year alone. _ 
BS2000 technology plays an impor- 
tant part in all of these. 




Europe's largest travel sales 
is synonymous with one 
test challenges faced by 
jre than 26,000 PCs and ter- 
jpver 12,900 travel agen- 
ci^^pemte together in the START 
network. Flights, package tours, hotels, 
rental cars, trains, ocean travel, bus 
tours, insurance and admission tickets 
-all can be booked using START, and 
all bookings flow together into the 
START computer center in Frankfurt. 
"That's why I need a mainframe 
system that can handle extremely data- 
intensive applications quickly and 
with 100% reliability," says Wassilios 
Dedes, Managing Director of START 
Informatik. 


Thousands of bookings 
simultaneously at peak times 

All START customers can access the 
BS2000 system, either from a PC 
in the travel office or from self-service 
terminals. According to Wassilios 
Dedes, there are several thousand book- 
ings coming through the system at 
peak times for the BS2000 to process 
simultaneously. And, thanks to the 
most advanced technology, it does so 
at incredible speed. This makes 
START the largest OLTP (Online Trans- 
action Processing) application for 
BS2000 systems in Germany. 

Even with 4.3 million book- 
ings each year, the BS2000 is 

never booked out. 

Tbe figures bear out the perfor- 
mance: by 1993, 78 million bookings 
had been made and about 116 
million receipts, from invoices to 




SIEMENS 

NIXDORF 





' . -r \ . 
■ . v 




. ;; ' 



^ 





*.<' IT* ' 


"TRAINS is not only the first large scale 
systems development project by 
Portuguese Railways. It is also our first 
truly strategic project. In the BS2000 
system, we have selected the right main- 
frame strategy, as it will allow us to 
keep our options open in the long term." 

Vasco Guimaraes da Silva , IT Manager for Portuguese Railways 


Tjp989, Portuguese Railways, "Camin- 
de Ferro Portugueses", switched 
i^r to TRAINS, an integrated in- 
carnation system for rail transport.The 
^tem has been expanded, unit by 
^rtitToday, TRAINS provides computer 

support for all jobs from ticket sales 

to administrative tasks and manage- 
ment of roiling stock, with two BS2000 
computers in the Lisbon computer 
processing center forming the corner- 
stone of all information flows. 

BS2000 - the right link for 
TRAINS 

"TRAINS was a real challenge for 
us, our first truly strategic IT project," 
says Vasco Guimaraes da Silva, 

IT Manager for Portuguese Railways 


(CP). It is understandable, therefore, 
how important it was to select the 
right mainframe system. After thorough 
consideration, those responsible for 
the project eventually decided on two 
BS2000 H-Series systems as the 
cornerstone of the information system 
to which all the computers would be 
connected: MX300-UNIX-work- 
stations and terminals in each individ- 
ual station. 


intercity service. On the basis of this 
information, the BS2000 then deter- 
mines the price of the ticket And super 
fast! Normally within 1.7 seconds. 

The BS2000 system also fast 

tracks your fright 

But there is another TRAINS module 
that customers are not even aware 
of. It is appreciated even more by CP 
employees: the "rolling stock" soft- 
ware module. With this module, around 
30,000 wagons can be despatched 
to the right place; at the right time every 
day. In this area too, the BS2000 
is the right computer system. All neces- 
sary data relating to rolling stock is 
stored on it - ready for instant 
retrieval for analysis of goods trains. 

With START into the world 
of open systems 

"We are totally satisfied with the work- 
ing of the system" says da Silva. 
i And to questions about Portuguese 
Railways' future IT planning, he 
replies: "In the near future, we want to 
switch over to client-server tech- 
nology, and by doing so build on the 
security and reliability of the BS2000 
system. With the Open System 
Direction, Siemens Nixdorf also offers 
the right open mainframe strategy. 
Then we can hook straight up to the 
START international travel reserva- 
tion system." And also to the BS2000 

computers working there. . 




RS2000 carries all important 
source data 

"All important source data, such as 
complete pricing schedules, will 
be managed on the central computer. 
Each terminal in each station con- 
nected to this computer can access the 
BS2000 data at anytime," explains 
da Silva. The terminals will also run 
software applications - among them 
the building blocks for ticket sales 
with an integrated reservation system, 
one of the principal components of 
TRAINS. CP employees at ticket sales 
counters can determine, at the touch 
of a key, the train and departure time 
that would best suit each passenger, 
whether in the smoking or non-smok- 
ing section, whether on the ordinary 
express service or on the super fast 







"We needed a system to support police 
work from Dover to Aberdeen, with 
constant ready access to data on millions 
of people, fingerprints and vehicles. 

And of course, the price had to be right 

as well." 

John Ladley, Data Center Manager 


The British police's digital best friend 
is its BS2000 system. A dual H120 
mainframe replaces the 20-year old 
PNCftPolice National Computer) 
system with the latest open technol- 
ogy:The new PNC2 is ready and wait- 
ing, around the clock, for data exchan- 
ges with all computers connected 
to the system. More than 4,000 terminals 
in local police stations are linked to 
the BS2000 system, via an X.25 
network. All of which makes this the 
largest BS2000 system in Britain to 
date. 

Answers in a fraction of a 
second 

The H120, which has been upgraded 
to a four processor system, has data 
on more than 40 million vehicles, 4.25 
million fingerprints and 5.5 million 
people. Every networked computer has 
access to this information, 24 hours a 
day. Important enquiries - ranging 
from checking personal details or list- 
ing stolen vehicles through to the re- 



trieval of complete "wanted persons" 
lists - are answered in a fraction of 
a second by the H120 systems. And 
for the user population of around 
20,000, the user-friendly nature of the 
PNC2 system brings enormous 
advantages. Even if the input data is 
incomplete - for example, when the 
user only knows part of the vehicle 
license number - the computer is 
able to focus the enquiry on a limited 
number of possible vehicles. 

The answer to all the cost 
questions 

One of the most significant factors 
in the selection of the HI 20 system was 
the excellent price-performance ratio 
-the old PNC! system had become 
too expensive to run. Ongoing mainten- 
ance was too costly, software up- 
dates were too expensive, and the 
system still didn't have enough power 
- there had to be a better option. 

The answer lay in the BS2000: 256 
megabytes of main memory, 210 giga- 
bytes of fixed disk storage, and 
160,000 transactions a day. "It seemed 


















to us that no-one coult match this 
price and provide thirievel of perfor- 
mance", says Ladley. 

The answer for fie next 
millenium 

For the British Hbrm Office, PNC2 
signals "a new charter in giving the 
police the informabn they need. 
This system will dtntinue to play a 
major role in polip work into the 




i .• 


* 

** I V • * , ' 



? * 



looks after the computer needs of the 
business. BS2000 has remained 
the operating system - along with the 
tried-and-tested software, SiUNE. 


V* 

A - i ■ 
, * \ Sj \ 
s> ' 

T* 


"Two Scholler items are sold in Germany 
every second. Production can't be allowed 
to lagbehind. Efficient job planning and 
contn! is the key, and we've found it with 
BS2QK) and SHINE." 

Georg Bitor, IT Director at Scholler 


aore to 
mpute 
iven m 
bi 


5 A 


atSdifilldrwbuld 


wasl|i m 50 km long. And 
no wc^Sr: ffery second sees the 
of tw^rticte made by the 
(rt$i|extile Manufacturer which 
pecraflls in thelroduction of wo- 
men's lingerie ant children's under- 
wear. This is an erermous produc- 
3 n challenge for a\tedium-scale i 
inning must 
uld immed 
far as de 

ies are concerned" sirs Georg 


Costs down, thanks to 


BS2000. 

The investment in SIUNE and BS2000 
has paid off rapidly: SIUNE supports 
Scholler in the office with personnel 
management finance and invest 
ment accounting and in sales. The in 


ting office and factory 


.performance up 

BS2000 has been worthwhile for 


tew 
eai 

change 
nt 

into BSZUUU tecnnoiuyy wim uiie ( 
computer, and has gradually up- 
graded from then on. Today, the erst 
while C Series No.1 model, the C70, 


' T' : Trr': - ^ 


V. 


kV > 








V .. • -- 

; v •; _ 



"Everything is linked up to our BS2000 
computers: PCs, automatic cash dis- 
pensers, statement printers, peripherals. 
Everything hinges on a secure and 
reliable operating system." 

Herbert Burmeister ; 

Head of IT organization at the Hamburg Savings Bank 


Atthe^mburg Savings Bank, BS2000 
is t^i8|{[t of the data processing 
s^m iffijjip H90-T2 systems in the 
^^^^integ rate thousands of 
branches, providing 
^inrast ancnlmcient data interface in 
which BS2000 is the key to secure and 
reliable operation. 

Because everything is linked 
up to BS2000, everything 
depends on BS2000 

“Without BS2000, everything would 
come to a standstill here. There is vir- 
tually no data which is not processed, 
saved or passed on by BS2000," ex- 
plains Herbert Burmeister, IT director 
at the Hamburg Savings Bank. This 
..shows the key importance of BS2000 
as a central server at the Savings 
Bank. A total of 239 UNIX® systems, 
about 3000 PCs, 150 money machines 
and 633 statement printers are sup- 
plied with comprehensive data by 
BS2000 - from account updates to cur- 
rency information. "The smallest 
BS2000 failure would have drastic con- 
sequences for our entire data pro- 
cessing operation" says Mr Burmeister. 



Mainframe safety 
emphasized 

BS2000 provides maximum safety in 
daily operation by more than just 
fully-automated, permanent back-up 
procedures. All data on the two di- 
rectly-linked BS2000 computers are 
backed up instantaneously. The 
principle is one of double data proces- 
sing for double data security. All .■ 
this brings the Hamburg Savings Bank 
the business security it needs in its 
day-to-day operations: whether deal- 
ing with money transfers or savings 
transactions, mortgage business or 
payments. Herbert Burmeister is full 
of praise for the mainframe computers: 
"BS2000 has lived right up to our 
expectations. The two H90 systems 
enable us to provide the services of 
the Savings Bank with speed and se- 
curity. And with BS2000 working 
seven days a week, we can offer the 
service even outside of our opening 
hours." 


UNOC’iM legtomd tndraifc of UNIX Spurn* Labonwfeilne. 
htto USA wd other caintriM. 

















SIEMENS 

NIXDORF 


t 


iizooo Success Wm 






"Every second counts in the betting game. 
IVlany people leave it until just before 
the race begins to place their bets. So, with 
our customers' interests in mind, we 
opted for a system that could guarantee 
speed and reliability down to the last 

detail." 

livin Impens, General Manager of PMU 


BS2000 - PMU's Betting 
System 2000 

Thanks to this new business solution, 
the latest information is available 
just moments before the start This re- 
presents an enormous improvement 
in customer service: punters have 
more time to pick their favorites and 
so can increase their chances of 
winning. Pressing a key is all it takes 
to send the information from the PC 
to the C50 computer, where it is 
quickly and reliably processed and 
stored. "With the Siemens Nixdorf 
solution, we have backed the right 
horse," says Impens. "Moreover, 
the BS2000 systems have proven to 
be highly cost-effective, with lower 
operational costs in the long run". As 
a bonus, the new solution has also 
provided the impetus for new ideas. 
PMU recently introduced "Bingoal" 
a new type of football betting game. 


Iri the race for customers, Pari 
Shituel Un'rfie (PMU - Belgian Total!- 
isitpr Board) is ahead with a new 
business solution. Two Siemens Nix- 
dorf BS2000 mainframes have 
been installed irrthe Belgian horse- 
race betting organization's system. 
In conjunction with more than 
1,900 PCs in betting shops nation- 


wide, these computers will get PMU 
customer service out of the starting 
gatefast 

BS2000 - a winner in data 
processing 

"Our objectives were: speed, accu- 
racy, security and cost-effectiveness^, 
says Livin Impens, General Man- 



ager at PMU. Today, the thousands of 
transactions dealt with by the PMU 
Processing Center in Brussels are pro- 
cessed by two BS200G C50 Series 
computers, linked to PCs in PMU bet- 
ting shops via the public telephone 
system and an X.25 network. Security 
is ensured by "mirror mode" opera- 
tion. if one system fails, the other takes 
over immediately. Another key fea- 
ture of the application is the openness 
of BS2000, which Simens Nixdorf has 
implemented with Open Systems . 
Direction (OSD): the interoperability 
achieved through the network and 
the availability of the advanced open 
programming language C were par- 

4.:»nl«rki annranintoH h\/ PMU. 





With th^Operi^stems Direction 
(OSDfeSiemens'Nixdorf has commit- 
tfectitsefftbi^nng all its products, 
sy^tpr^s am^otutions to operate 
ai^rtfmg #^pen standards. The 
re0fisth^%S2OOO has opened up 
to become BS2000/OSD. With this 
move, Siemens Nixdorf is linking the 
advantages of the classic universal 
mainframe with those of an open 
server in today's client-server environ- 
ment. security, data management 
and back-up service, plus flexibility 
and connectivity. 

The result is a flexible and 
efficient business server standing at 
the center of IT business operation, 
with standardized interfaces for 
working with other computer systems 
in the state-of-the-art client-server 
environment 

But this is not the only thing 
that makes BS2000/DSD the business 
strategy 2000 for your organization. 
More than that is the ongoing growth 
in system power and functionality in 
hardware and software. 


For instance, BS200/OSD in 
OLTP mode provides se/eral thousand 
workstations with imprtant data 
ranging from account pdates to book- 
ing confirmations. Art it supplies 
PCs and UNIX compters with cen- 
tral database, netwok, back-up, 
print, filing and arcfving services - 
rapidly and efficienty. Because the 
/390 standards of tb mainframe 
world are now linkd with the open 
standards of the opn systems world, 
the BS2000 user hs the benefit of a 
far greater softwac range. 

In the long-trm too, you are 
choosing the righ business strategy 
when you chooscBS2000/OSD. Every 
year, Siemens N<dorf invests al- 
most half a biilim DM in developing 
BS2000/OSD. Fir example, in the 
new CMOS tednology, with its guar- 
antee of g reate cost-effectiveness. 

Or in expandin the product range, 
from the offic computer to the high- 
performanceHIPLEX computer. 

The success tory of BS2000 goes on 
and on. 


For furthr information about the 
BusinesfServer 20Q0, please contact: 
Siemen Nixdorf Informations- 
system AG, BS2000 Marketing, 
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TUESDAY OCTOBER 1004 



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W alker verdict a heavy blow to fraud office 


By John Mason, 

Law Courts Correspondent 

The acquittal of Mr George 
Walker, the former head of the 
Brent Walker group, is a heavy 
blow for the Serious Fraud 
Office that has come at a par- 
ticularly sensitive time. 

Its entire future is under 
consideration. The attorney- 
general, Sir Nicholas Lyell, will 
soon decide whether to wrap 
up the office in its current 
guise and merge it into the 
Crown Prosecution Service - 
or to expand its size and 
operations. His decision is 
expected within two months. 

The perception of the nfn^ 
inside and outside the City win 
be crucial to the politics of Sir 
Nicholas’ decision. To expand 
the office would require an 
expression of ministerial confi- 
dence. To place it under CPS 
control would be seen by some 


Bloodied, bruised, but back In business - that 
tos how Mr George Walker described himself 
after his acquittal yesterday. At a hastily- 
arranged press conference oppos ite the court- 
room where he has spent the last 4% he was too 
exhausted to be to celebratory mood. 

The former head of Brent Walker said: *1 am 
relieved, but I don’t feel lifca celebrating: There 
has been too much tension, particularly for my 
family." 

He made clear, however, that he did not see a 
quiet retirement aha»H- Although 85 years old 
and with 18 months of a bankruptcy order to 
serve, be said that he still had friends in busl- 
ness prepared to make offers. “I haven’t 
thought a lot about it, but I have had a lot of 


support from friends to the business commu- 
nity,” he said. “I do think I have something to 
give. I know my business - the leisure sector.” 

Mr Walker still feels deeply angry about los- 
ing the company he built up from a modest 
chain of petrol stations in the 1950s. The his- 
tory of Brent Walker has been written many 

• Km mi. 

From managing the boxing career of his 
brother Billy, to opening “Billy's Baked Potato” 
shops in the 1960s, Mr George Walker moved 
into the leisure sector, running clubs and res- 
taurants. Property deals were to follow - nota- 
bly the development of the Brent Cross shop- 
ping centre in London from which Mr Walker’s 
company took its name. 


as an admission that the origi- 
nal thinking b ehind the Office 

was misconceived. 

Within the SFO there is com- 
mon. agreement that the forth- 
coming Maxwell trial w01 be 
the ultimate test of its credibil- 
ity. However, the failure of 
such a high-profile case as Mr 


Walker's will undoubtedly 
make it more difficult for Sir 
Nicholas to endorse the SFO’s 
operations. 

So what what went wrong 
for the SFO this time? Some 
defence lawyers complained 
the case was too large and, 
lasting 4% months, too long. 


However, at no stage in the 
trial did the prosecution suffer 
any disastrous collapse of parts 
of its case. No witness gave 
evidence which left Its case 
fatally flawed. 

The case wasvery dependen t 
upon the jury following comph- 
cated flow-charts which out- 


lined the transfers of money. 
However, lawyers involved felt 
the issues were put across 
clearly to the jury. 

The SFO’s allegations were 
that Mr Walker had orches- 
trated the fraudulent boosting 
of profits by some £l9m 
between 1984 and 1989. He had 
done this, it claimed, through 
bogus flhn rights t ransa ctions 
handled by the Brent Walker 

fflm division. 

The office alleged that in 
effect Brent Walker was fund- 
ing its own profits, and that to 
cover this up the money trans- 
fers were disguised through a 
complex laundering operation 
involving offshore companies 
and family trusts. 

The prosecution said this 
took place at a critical time - 
when the Brent Walker group 
was expanding: The fraud was 
necessary, the prosecution 
claimed, to attract the support 


of investors and banks which 
was necessary for the expan- 
sion. 

Mr Walker’s defence was 
robust. He denied that the 
prosecution was correct in its 
ingictonng that the profits had 
been inflated at alL Confronted 
with evidence of the money 
transfers, Mr Walker main- 
tained he had little or no per- 
sonal involvement 

Mr Walker stressed repeat- 
edly that he headed an 
extremely large and busy com- 
pany. The transactions com- 
plained of amounted to a mere 
fraction of his daily workload, 
he said. 

Although he was involved in 
the principles of decision- 
taking about deals, be left the 
detailed work to senior execu- 
tives he trusted. If they 
brought him documents to 
sign, he would do so without 
question, he said. 


Premier 
strives to 
defuse row 
on ‘sleaze’ 

By Our Political Staff 


Jtfr-Jolmlifaiar, fiutprime nrin- 
Istofe wab drawing up plans' 
last ^nigjit *to; defuse the 
charges of ^leaitJ” levelled 
against Magovernment as Mr. 
Mkb^-'HowaftL^ the home 
secrefc&y, distanced himself 
froay ltne m Otmtij^ig . political 
controversy;^' ./ 
h , Betjai ieft^ghtispHi opened 
■up kt^Croiiiet Jiver file Cate 
;6yerMr Nell- Hamilton, the 
’^nuoartodastay minister at the 
Centre.- jo£ Allegations levelled 
by Mr Mohammed Fayed, the 
ownerof Harrods; 

■ - Mri’ STaltir’s. attempts to 
develop a dear^strategy before 
the inevitable- challenges at 
today'fr prtate minister’s ques- 
tions tame as Mr Howard, the 
home secretary, was drawn 
.Into a war of words between 
the government and Mr Fayed. 

, Amid controversy over the 
‘processing of a citizenship 
application by submitted by 
Mr Fayed^s brother; - Mk T 
Howard issue# a detailed 
statement clarifying the pre- 
cise circumstances at bis role. 

Mr Howard said that he had 
deputed the consideration of 
the application of Mr All 
Fayed to Mr Charles Wardle, 
the Junior home office minis- 
ter responsible tor immigra- 
tion. His own role had been 
limited to suggesting further 
inquiries before any final deci- 
sion was taken. The applica- 
tion is still pending and Mr 
Jack Straw, the shadow home 
secretary, called for a toll 
Commons statement by Mr 
Howard. 

With the ministerial future 
of Mr Hamilton in severe 
doubt, Mr Major indicated he 
was ready to publish the out- 
come of an inquiry conducted 
by Sir Robin Butler, the cabi- 
net secretary, into the 
so-called “cash-for^qnestions” 
allegations levelled against 
two Junior ministers. One, Mr 
Tim Smith, resigned last week 
but Mr Hamilton insisted he 
had done nothing improper. 

The prime minister was said 
to be studying ways.pf broad- 
ening the present investiga- 
tions into the financial inter- 
ests of MPs and of securing an 
end to - Labour’s boycott of a 
inquiry by the House of Com- 
mons privileges committee. 

One possibility floated last 
night by Tory party managers 
was that Sir Major would sig- 
nal his willingness to include 
independent figures from out- 
side the House of Commons in 
a wide-ranging study of the 
potential conflicts of interest. 

Sir George Gardiner, a 
senior backbencher on the 
Tory right, backed c alls at tire 
weekend from leading Tory 
figures for a public inquiry 
into MPs' ethics. 


Method suspected of causing collapse at Heathrow 

Railway tunnelling halted 


financial Times 
London Staff 

Work on part of the £1.9bn 
($8.0bn) extension of the 
London Underground railway- 
network's Jubilee Line was 
baited yesterday to await the 
outcome of an investigation 
into serious subsidence at 
: Heathrow Airport 
- Tunnelling was halted on 
two sections of the line near 
misting above-ground stations 
:in south London because con- 
tractors are using the tunnel- 
ling method suspected of caus- 
ing the Heathrow cohapee. 

The problems at Heathrow 
started on Friday when earth 
began slipping into the railway 
tunnel near the Terminal 
Three car park during con- 
struction of a £30Qm rail link 
from the airport to London 
Paddington station. The Lon- 
don Underground station for 
Tentorial Four and the Termi- 
nal Three car park have been 
dosed. 

Heathrow said flight depar- 
tures were normal yesterday, 
and delays were no more fre- 
quent than usual. 

The car park at Te rminal 
Three is likely to remain 
dosed until Thursday at the 
earliest; although Heathrow 
officials hope that traffic 
to the airport will have 
returned to normal by 
then. 

At the airport, an inquiry 
was under way into the cause 
of the collapse. BAA, the air- 
port operator, said it would 
take at least 10 days to find out 
what caused the roofaf the 
tunnel to collapse. 

Balfour Beatty, the contract- 
ing arm of BICC, the quoted 
US company, is undertaking 
the construction work and was 
yesterday working to prevent 
further slippage. BICCs shares 
closed down 13p yesterday at 
333p. 



MHvMand 

Subsidence undermines an office building at Heathrow Airport 


Do not cut aid, 
pleads N Ireland 


By John Murray Brown 
in Dublin 

Public spending for Northern 
Ireland should be Tnamfeririorf 
at current levels in the short 
term if the peace process is to 
advance, the Northern Ireland 
Rirommiff rviiTnpii L aw indepen- 
dent body set up to advise the 
UK government, said yester- 
day. 

The council’s autumn review 
of the province's economy was 
published yesterday and pre- 
pared in the wake of the ERA 
ceasefire on August 31 but 
before the loyalist cessation of 
violence. It warns difficulties 
of short-term adjustment asso- 
ciated with the peace process 
and says they will have to be 
handled ‘‘carefully, sensitively 
and gradually". 

The report says: “It is impor- 
tant to stress that in the 
short-term transitional period 
ft is the composition of public 
expenditure that should 
change rather than its overall 
level." 

With some local economists 
concerned that the Treasury is 
keen to see cuts in the wake of 
tire ceasefire, the review pro- 
vides support to those opposed 
to cuts to public spending. 

The economic council 
stresses that government sub- 
sidies are “the most significant 
determinant of demand in the 
economy” because 35 per cent 
of the workforce are employed 
by the state. 

The report says government 
funding, which is planned at 
£7.4bn ($11.7bn) . in 1994-95, 
helped to ease the recession in 
an area with the UK’s highest 
proportion of long-term unem- 
ployed people. 

Citing the example of the 
police and prison services, 
where employment levels are 


Enron may open 
extra power station 


By Chris Tighe in 
Newcastle upon Tyne 

Enron, the US power gener- 
ation and gas supply company, 
announced yesterday that it 
had taken the first step 
towards opening a £40 0m 
($632m) power station in 
northeast E ngl and. 

. Enron, said its offshoot Flo- 
tilla Power had signed a con- 
nection agreement with 
National Grid of the UK for a 
7T9MW confofned-cyde gas tur- 
bine power station on 20 acres 
of disused land at ICTs North 
Tees works. 

Enron, the leading partner in 
the £850m Teesside Power Sta- 
tion which opened last year 
south of the River Tees, win 
now examine potential mar- 
kets for the proposed new sta- 


tion. It wffl also consult local 
organisations before deciding 
whether to seek planning con- 
sent from the Department of 
Trade and Industry. The proj- 
ect would, like the Teesside 
Power Station, use North Sea 
gas piped ashore at Teesside 
from the Everest. and Lomond 
fields. 

Enron said It was “reserving 
Its position" by consulting now 
with National Grid. It has 
asked National Grid to be pre- 
pared to make the connection 
available from 1996. An Enron 
official said it had not decided 
whether to go ahead or 
whether to seek partners if it 
did. 

Lex, Page 16 
East Midlands Electricity, 
Pages 18 and 25 


Firm challenges 
pension assumption 


By Jim Kelly in London 

A comprehensive review of UK 
accounting, published this 
week, challenges the view that 
surpluses in pension funds 
belong to employers. The 
report by the accountancy firm 
Ernst and Young is based on 
detailed examinations of the 
accounts of 500 companies. 

Generally Accepted Account- 
ing Principles (UK GAAP), 
which reviews in 1,600 pages 
company compliance with 
reporting standards, calls on 
the Accounting Standards 
Board to reform the present 
code on pension funds. It says 
reform is needed in the light of 
the Robert Maxwell affair and 
the review of the legal frame- 
work for pensions following 
the Goode Report. 


It Is not evident, as a matter 
of either law or economic real- 
ity, that employers can regard 
pension fund surpluses as their 
own unlettered property,” says 
the report 

Mr Ron Paterson, a technical 
partner with Ernst and Young, 
and one of the authors, said: 
"It is a difficult legal and moral 
question as to who owns the 
surplus on a pension fond." 

At present a company is enti- 
tled to show the surplus on a 
penman fund as an asset on the 
balance sheet but UK GAAP 
insists that in practice the 
srfimna members win generally 
exert a claim over the sur- 
pluses “to some degree". 

Mr Paterson suggested that 
the board might be “outrun- 
ning” the ability of accoun- 
tants to absorb new rules. 


Labour issues blueprint for welfare reform 

Andrew Adonis and Philip Stephens watch long-standing pledges being jettisoned 




The Social Justice Commission 
created by John Smith, the 
leader of the opposition Labour 
party who (tied this year, 
sought yesterday to distance 
the party from its "tax and 
spend” reputation in welfare 
policy by setting out a 
strategy for reforming the UK s 
welfare state. 

Mr Tony Blair, Labours 
leader, seized on the long- 
awaited report of the «»mfflLS- 
sion chaired by Sir Go rdo n 
Borrie to signalthe party* 
intention to ditch lon ® 

standing commitments to 

blanket increases m social uen- 

ef Badring many of the Pjanks 
of the report prepared hytbe 
commission - a semi-mdepen 

dent group set up two 
ago - Mr Blair flatly rejected 


the emphasis placed by the 
“old left" cm alleviating pov- 
erty by raising benefit levels 
across the board. 

Instead he Insisted that 
Labour would craft a manifesto 
far a second-generation welfare 
state designed to spur self-im- 
provement rather than to 
increase dependency on wel- 
ferB- 

Mr Blair's backing tor the 

idea of integrating tax and ben- 
efits tor the elderly to target 
resources on the poorest, and 
for the possibility of taxing jhe 
child benefit paid to toe afflu- 
ent undercut two of the most 
important pledges given by 
Labour at the 1992 

Those pledges - to re-estab- 
lish the fink between pensions 
and -child benefit and average 
Warnings - committed Labour 


atom’s 

• '■Qvre'pecpte a hao0^jp: re*wt - 
man- A. fnxfbuf,. using -Bentos 
eufh as chSctesB arid, ttefnfog » 
inaome support arxianero- 


jyj&t lb tt» cteiging patterns 
of larafy 8fe jribrftnfe'lM.fc' 
ttie eon*# of to 

# 'ttecrign(BS. that cftiwin3%i 
invafod itfspanstoHiee-jBe wni m 
■rigttts and .abaodwt; command* 
“from /government . on la. 
fevbur of qecttilbh* and 


to spending an additional 
£3.5bn a year on higher bene- 
fits, and played a large part in 
it$ proposals for higher taxes. 

The commission's report pro- 
poses to continue the govern- 
ment's policy of upratmg the 


hade state pension only in line 
with prices. A new “pension 
guarantee” will ensure higher 
payments to poorer pensioners 
on an income-related basis. 

Speaking at the launch of 
the report, Mr Blair signalled 
that it would not be 
a blueprint for the party’s 
manifesto at the next general 
election. 

But he Indicated that many 
of its main proposals - on 
nursery education and cm wel- 
fare to work benefits as well as 
pensions and child benefits - 
would form the basis of 
Labour's own proposals. 

.Sr Gordon Borrie, a former 
director- ge neral of fair trading, 
presented the commission’s 
report as a strategy of national 
renewal without serious tax 
implications for middle-income 


earners. “Ours is not a tax and 
spend strategy, squeezing a bit 
more money from the existing 
tax system to squeeze a bit 
more money into the existing 
benefits system.” 

The report proposes a “maxi- 
mum tax bill” to limit to “no 
more than 50 per cent” the pro- 
portion of any individual’s 
total income which could be 
paid in income tax and 
national insurance contribu- 
tions MwiMnp d. 

A range of measures to boost 
employment and protect 
employees are set out, 

mnTnrhn g a national minimum 

wage, and projects to help 
lone parents find childcare 
facilities and use to use wage 
subsidies to encourage employ- 
ers to hire tong-term unem- 
ployed people. 


Raids by police in the Republic 
of Ireland on terrorist targets 
at the weekend provide the 
first evidence of opposition in 
nationalist circles to the IRA 
ceasefire. The raids in four 
counties near the border with 
Northern Ireland resulted in 
the seizure of guns, ammuni- 
tion, hand grenades and deto- 
nators belonging to a previ- 
ously unknown group called 
tbe Irish National Republican 
Army. 

Police said the raids were 
directed against “breakaway 
factions such as Republican 
Sinn Ffin and the Irish 
National Republican Army^ 
which were involved in “crimi- 
nal and subversive activity”. 
Republican Sinn F6in is a 
splinter group. Neither it nor 
the Irish National Liberation 
Army, an extreme offshoot of 
the IRA, has endorsed the IRA 
ceasefire. 


three times higher than in 
other UK regions, the council 
says the peace process calls for 
redeployment of personnel and 
the reallocation of public, 
spending towards “more con- 
structive” eerainmin use. 

It says “Peace, as well as 
conflict, involves difficult eco- 
nomic adjustment problems. 
These, however, have to be 
handled with care and in a sen- 
sitive manner to ensure that 
the “peace process’ is moved 
forwards rather than back- 
wards." 

The council supports for the 
controversial issue erf greater 
links between Northern 
Ireland and the Irish Republic 
through increased cross-border 
trade, a more fully integrated 
isl and economy and improved 
policy co-ordination in sectors 
such as energy and transport. 


UK NEWS DIGEST 


Commercial 
radio stations 
overtake BBC 


Listening figures for commercial radio have overtaken those 
for the BBC for the first time in the 21-year history of the 
commmprcial sector. Little more than a year ago the BBC’s 
five national stations and regional and local radio output 
together commanded more than 61 per cent of listening. But in 
the third quarter of this year the share for commercial sta- 
tions reached 49 per cent compared with less than 47.5 per 
cent In the second quarter. 

Commercial radio Is also expected to increase its share of 
total UK advertising. A report by the Henley Centre to be 
published at the weekend suggests that the commercial sec- 
tor’s share will rise to 6 per cent by the end of the decade. Its 
share traditionally only has been only about 2 per cent. 
Commercial radio has expanded rapidly in recent years with 
the arrival of such stations as Classic FM and Mr Richard 
Branson's Virgin 1215 as well as Atlantic 252, which broad- 
casts to much of the UK from the Republic of Ireland. 

In the third quarter of thfa year commercial radio b ad 
revalues of £56. 7m, a rise of 23 per cent on the corresponding 
period last year. The increase means that the industry is on 
course for a 4 per cent share of advertising this year. Most of 
the growth to the end of the decade is expected to come from 
existing stations with only 6 per cent coming from new 
licences. 


Farmers cash in 


Farmers earn £650m (Jl.Q3m) a year from business sidelines 
such as bed-and-breakfast, horse-riding and birdsfaoots, says a 
survey to be published soon. That adds up to nearly 6 per cent 
erf the £llbn they receive from mainstream crop and livestock 
production, says Produce Studies, the international marketing 
and research organisation that carried out the survey. “For 
many forms, even if It's only £2,000 extra a year, it makes the 
difference between keeping afloat and going under,” said Mr 
Howard Biggs, head of surveys. 

Two out of three formers make less than £10.000' a year from 
di v e rs if y i n g, and a quarter earn less than £i,ooo. But 10 per 
cent earn mare than £300m between them, with some making 
more than £50,000 ($79,000) a year each. The latter tend to be 
well-heeled fanners who have the land and facilities to offer 
sophisticated accommodation or leisure activities, Mr Biggs 
explained. His organisation surveyed 1,000 of the 114.000 farms 
In Britain with 20 hectares or more, which account for 94 per 
cent of agricultural land. About 28 per cent earned money 
from businesses such as fishing rights, motorcycle sport on 
their land anri pick-your-own produce. 

Homes disappoint buyers 

A poll of home buyers has found widespread dissatisfaction 
with the design of new homes. About 180,000 are built in the 
UK each year. Tbe poll, conducted by Gallup for RIBA Jour- 
nal, a magazine for architects, found that 60 per cent of buyers 
were dissatisfied with the rfwrig n of new houses. A similar 
percentage doubted whether new homes offered value for 
money and more than 40 per cent questioned construction 
quality. 

Other criticisms centred on the degree of choice and flexibil- 
ity offered by mass housebuilders. Nine out of ten people 
questioned said housebuilders were not providing enough 
choice in terms of design and more than three-quarters 
wanted greater flexibility over the layout of rooms. 

Channel rail tickets on sale 

Tickets for the first Channel tunnel trains between London 
and Paris or Brussels went on sale yesterday. Starting on 
November 14 there will be two trains on each weekday 
between London Waterloo and Paris Nord and one on Sun- 
days . There will be no trains on Saturdays. The journey will 
last three hours. There mil also be two trains in each direc- 
tion on weekdays between Waterloo and Brussels Midi. There 
will be one Brussels train in each direction on Sundays and 
the journey will last three hours 15 minutes. 

There was a queue of passengers at Waterloo two hours 
before the booking office opened. The cheapest return fare on 
either Journey is £95 ($150), but tickets must be booked at least 
14 days before the Journey. A standard return will cost £155. 


MINISTRY OF SURFACE TRANSPORT 

(Government of -India) 

TENDER NOTICE 


The Gcwommort of Inda, Ministry ot 
Surface Transport invites proposals 
for Govt of National Capital Tentay 
ot Daihi (NCTD) far provision ol tegh 
. Spaed Trams (HST) from reputed 
ibKtianffbreign agendas on Build, 
Operate and Transfer (BOT) baste for 
the following corridors in Delhi 
(indte):- 



conaidered as an independent 
Project The parties selected wffl have 
the rttfrls to collect tee bra, develop 
properties on Tram Stations and 
advertise on tea tram Bystam. 

The interested parties should stfomff 
their proposals In two parts viz. a 
Tachnlcd Bid and a Comnena! Bid. 


Inner Ring Road 

BsBalXigaithFSiklalBtMstKHi Ctawfc 
Round about NH-B batman 
Sector 15 & 32 Gugaon-ftengpul- 
MrtpripurOhatea Kuan 
PragrtUaUmUByiirWw 
P w pa^ m -Piart VtearKdahna Nngar- 
Btshwas Nagar-Vtvak VBar- 

Dtottad Garden 
Khanpurftbcknglr- 
llaspd Moth 


MPtece- 
GXaSbsh- 
Mool Chsnd 
Mng 


OfcHn tnckEtrial Area- 

Tughtata Bad Eidn- 
Govind pud 
NgfatoltOmteUlMi Nogar- 

V8anputJarabpist-Hm Nsgar- 

TSak Nagar-ftaja Garden 

Wnzbpur Industrial Araa-Ashok VBmr- 
SMdi NaganShasd Nagan 
Serai RotftfrAnand Psbat- 
Rani Jhansi Road-Dash Bantu 
Gupta RoadGomaught Pfaca 
Raja Q&jriervttlrti Nagw-Pandav Nagar- 

wait P9M NatpteRtiendra Plaee- 

Sd NegwDesti Sandhu Gupta Road- 
LHc RoadUm* Itag- 
TsBotora RaadDemal Seen. 

Such Whar-V^oy \fihar-RohW- 
Piashart Warfitam PUra- 
Wttkpur Depot. 


42 Kras. 
17 Mbs. 


34 Kins. 


15 Kim. 


15 Kms. 


19 Kms. 


12 Kim 


14 Kms. 


9 Kms. 


llw High SpoedTramwfl tun on elevated tockcupportad 
on single row of columns erected In Central Verge 
(Marian) of4 tefitanawde mads (i5to 20 M. wfeia). 

Interested parties should submit detailed proposals 
Btfcatog the finance, design, plans for construction, 
operation and m atatenance erf the system. The Goutot 
India wffl provide tiie right of access on the land. The 
concerned parties have to plan their atfivitiw in such a 
way so as to causa minimum hindrance to the existing 
reads and traffic. The Mareated parties can tad far one 
or more ol the -above c or ri dor s . Each work wH be 


TECHNICAL BID 
The technical bid should Indude jhe 1 concept of tee 
system, detaflad design, technical and operational 
Inform a tion on which the soundness and technical 
capabBy of any party can be Judged. The system stated 
have the latast technical features as operating anywhere 
In the world. 

COMMERCIAL BID 

Tlu parties whore technical bids are found IsaaiUe will 
quaBy for getting their commercial bids opened. The 
commercial bid should Include the tenderer's concept d 
ticketing, concession period to operate the system and 
anyoteerrdsvamMnvrwtiaiafxJIfnartcialintomiatlon, 
The work is likely to be awarded to the parties whose 
financial position Is soundand oflar is most attractive and 
operationally fatttte. 

The tender forms (oral! tea corridors can be obtained 
from the Office ot the Consultants of the Mnistry o I 
Surface Transport 

THE INDIAN ROAD CONSTRUCTION 
CORPORATION LTD, 

Cora 6, floor 6. Scope Complex. Lad Road, 

New DeW-110 003 (JNDW), 

Telephone . 91-11- 4360437 & 4380441 
Fax No. 01-11 -060451 Telex Ne. 031- 61681 BCC IN 

Item 15.11.1W (10.00 mi) to 12.1.1995 {SM pm) a: 
the cost at fls IXOOf-Ot USD 500 per tender ban set 

The Tenders complete In ell respects canbe submitted 
upto 30.1.1995 (5.00 pjn.) in tiie Office of 1RCC, New 
DeteL The Technical BUS recalved in Dim wffl be opened 
on 31. 1.1 995 at 10.00am in the Conference HaH Ministry 
ot Surface Transport, Transport Bhawan, 1, Pwtianwt 
Street, New DeteL 

Any darifleation on ttw subject can be had 
from either the 
Joint Secretary (Transport) 

MINISTRY OF SURFACE TRANSPORT 
Transport Bhawan, No. 1- Paiflamem Street, 

New DeW-100 CM (INDIA) or tin Office dlhe 
MD1AN ROAD CONSTRUCTION 
CORPORATION, LTO, 

New Delhi. p 

(bs per address given above) 





10 




years later there were 1,388 
science park companies which 
between them employed nearly 
20,000 people. 

“Assessment of Firms located on 
and off Science Forks in the UK 

By P Westhead and D Storey 
(Warwick Business School). 

Price £40 from HUSO. 




ALL CL 

Nutshell 


High-tech firms 


GLE back in black 

should get support 


with £1.9m profit 

! The government is being urged to 

Greater London Enterprise, the 

formulate a policy that will 


development agency owned by 13 

encourage the start-up of 


London boroughs which has been 

high-technology and 


restructuring for two years, last 

knowledge-based companies. 


week reported profits of £1.9m in 

following research into the 


the year to 31 March, compared 

| fortunes of such businesses over a 

with a loss of £2m the previous 

I six-year period. 


year. 


Professor David Storey, director 

Nearly half the operating profit 

of the small- and medium-sized 


came from the investments made 

enterprise centre at Warwick 


by its mi tore capita] arm. GLE 

University, says there is dear 


Development Capital, using the 

evidence that high-tech 


group’s own funds. These 

companies grow more quickly 


investments are slowly being 

than other start-ups. 


liquidated. 


More surprisingly, says Storey, 

But GLE Development Capital 

their survival rate is significantly 

earlier this year raised £3 Am 

higher than that of typical small 

from the pension fund of the 

I businesses. 


London Borough of Newham to 


The findings emerge from a 


bring funds under management to 

study* of the performance of 



high-tech companies within and 


Mark Wignall, GLE 

outside the UK's science parks 


Development Capital managing 

between 2986 and 2992, 


director, says the fund will invest 

co-authored by Storey. It shows 


as little as £ 100 , 000 , although 

I that knowledge-based companies 

companies hacked at this level 

attached to science parks grew 


will have to accept that up to a 

slightly more quickly than 


quarter of the money raised could 

similar companies elsewhere. 


be swallowed up in fees. 


The on-park companies also 


The group remains one of the 

( grew more quickly in terms of the 

few sources of small amounts of 

number of people employed. 


equity for London-based 

However, being based on or off 


companies, according to 

( the park makes no difference to a 

Wignall. 

company's chances of survival. 



Storey says the study suggests 
the government must make a 


Ignorance of CVAs 

more robust effort to support 


risks businesses 

high-tech start-ups. “I am 



normally strongly opposed to 


The value of company voluntary 

supporting start-ups,” be says. 


arrangements as a rescue tool is 


But high-tech start-ups are very 

not fully understood by a large 

important for the longterm 


number of accountants, bankers 

development of the British 


and solicitors, according to 

economy.” 


accountants Levy Gee. 


According to the report, the 


Lade of familiarity with the 

government should also consider 

procedures means many 

how to encourage the 


businesses are failing that could 

development of more 


actually be saved, the firm 

science-based entrepreneurs. It 


says. 

shows that nearly half the 


Levy Gee draws these 

founders of high-tech companies 


conclusions from a survey of 700 

bad a higher degree in a 


bankers, solicitors and 

science-based subject 


accountants which was conducted 


“The single most important 


in the south of England. 

1 issue is that the supply of these 


CVAs are an arrangement 

potential entrepreneurs has to be , 

between a company and its 

supplemented,” the report says. 


creditors to rehabilitate a 

! 

The UK Science Park 


company and enabft it to attract 

Association estimates nearly 412 


new money. 

companies employed 5,300 staff 


How effective are Voluntary 

on UK science parks in 1986, 


Arrangements? Price £25, available 

when the study started. Seven 


from Levy Gee. Tel 071 467 4000. 


W hen the Miller family 
set up Prestwick Hold- 
ings in 1969. it had a 
simple strategy - to be 
among the leading mass producers 
of printed circuit boards for elec- 
tronics assemblers in Europe. 

The company prospered for most 
of the years leading up to flotation 
in 1985. But since then Prestwick 
has stumbled though management 
changes, a boardroom coup and a 
collapse in profits that has left its 
shares languishing at less than half 
the issue price. 

It might have been worse, how- 
ever. without the intervention of 
Postern, the UK's only specialist 
corporate rescue service that brings 
a number of company doctors 
together in one organisation. 

Headed by chairman Sir Lewis 
Robertson, a respected administra- 
tor and a chairman of several com- 
panies which have been rescued, 
Postern attempts to be fireman, 
resuscitation unit and convalescent 
home rolled into one. 

Its work at Prestwick bore fruit in 
July when, seven months after 
being appointed by the Millers and 
other shareholders, new manage- 
ment seconded from Postern orches- 
trated a £4. 5m rights issue that 
patched up a battered balance 
sheet 

But the bruising year spent 
appeasing mercurial banks and 
lurching from crisis to crisis vividly 
illustrates how company rescues 
rarely progress in a predictable 
fashion. 

“Most of our companies are abso- 
lutely at death's door and facing 
closure when we start," says Archie 
Coulson, the Postern director who 
heads the rescue team and is now 
chairman at Prestwick. “But recov- 
ery is not a straight line, it's a very* 
jagged path." 

Normally Postern is called in by 
banks trying to prevent a company 
they have backed from going down 
in flames. But in the case of Pres- 
twick - which is slightly smaller 
than the two largest UK indepen- 
dents. Exacta and 1SL, both 
unquoted companies with sales of 
about 240m each - it was the Miller 
family that appealed for help. 

The family’s action was prompted 
by disquiet about the diversification 
strategy adopted by the then man- 
agement in 1992, by which time no 
Millers were on the board despite 
their 25 per cent shareholding. 

The move that upset Eric Miller, 
brother of the co-founder and for- 
mer director, was Prestwick’s £2za 
investment is Electroconsect, a 
designer of PCB prototypes bought 
the previous year. 

“Prestwick had negligible profits 
and the balance sheet was very 
stretched with 100 per cent gear- 
ing," says Miller. “Debt was not 
being whittled down. It was 
suggested we talk to Lewis Robert- 
son at Postern " 


FINANCIAL TIMES TUESDAY OCTOBER 1*4 

THE GROWING BUSIN ESS 

Richard Gourlay looks at the rescue 
service provided by a large 
practice of company doctors 


Survival 

mission 


With the support of another 
shareholder bloc, Postern was 
appointed in early January this 
year and three Prestwick directors 
left the board. 

As always when Postern goes into 
a company, its first almost obses- 
sional interest is with cash. “We sit 
with the internal ran>i manager and 
produce a schedule that says line by 
line what the facility position is,” 
says Coulson. The focus is the cash 
book and how much “headroom’’ 
there is between this and the banks’ 
facility limi ts. 

Very soon after he got his feet 
under the table Coulson had his 
first shock. Understandably, one of 
Couison’s first calls was on the 
regional manager of the Royal Bank 
of Scotland, Prestwick's main lend- 
ers. Coulson says this manager was 
“pleased to see the cavalry coming 
over the hill" and welcomed Pos- 
tern an board. 

It was therefore a surprise to 
Coulson in early February when at 
a routine meeting with the Royal 
Rank he was met by three execu- 

When Postern goes 
into a company, 
its first almost 
obsessional interest 
is with cash 

tives from the special lending ser- 
vice - a euphemism for the loan 
recovery unit Concerned with the 
security on its £3.&n facility, the 
Royal Bank dropped the bombshell 
that it would be appointing investi- 
gating accountants, Ernst & Young, 
at Prestwick. Coulson was aware 
these reports often lead to accoun- 
tants recommending receivership. 

“We went in thinking they Ithe 
Royal Bank] would be happy to sup- 
port this restructuring," says Coul- 
son. Suddenly that support was in 
doubt It reinforces one of Coulson's 
rules of restructuring: “The trick is 
not to allow yourself, or more 
importantly the banks, to have any 
nasty surprises." 


In the event, Ernst & Young pro- 
duced a report that said the oper- 
ational manageme n t could build a 
future for Prestwick and that Pos- 
tern was addressing the issues. 

One of the next significant prob- 
lems was the rights issue. It was 
clear the company needed to be 
recapitalised and that Prestwick 
had a poor track record. To make 
matters worse, Coulson was bereft 
of advisers. Prestwick’s brokers, 
Glasgow- based Speirs and Jeffrey, 
decided it could not hade the rights 
issue; Prestwick was in arrears on 
dividend payments for a preference 
share issue the broker supported. 

At the same time, and quite coin- 
cidentally, Prestwick’s lawyer 
moved from his firm, McGrigor 
Donald, leaving the company decid- 
ing whether to follow him or bring 
a new partner quickly up to speed 
at the old firm. 

Finally. Noble Grossart, the 
investment bank which as Pres- 
twick's long-time adviser had been 
associated with the old manage- 
ment and failed strategy, was still 
evaluating the Postern manage- 
ment “How was I to do a rights 
issue?" asked Coulson. “In terms of 
advisers I was a bit thin on the 
ground." 

Meanwhile. Prestwick was facing 
ordinary operational problems. In 
particular, one large customer had 
started questioning the quality of 
PCBs it was receiving. 

What seemed like a “king-size" 
problem at a critical juncture of the 
restructuring, however, turned out 
to be a financial issue. After check- 
ing on the quality. Coulson realised 
the customer was as concerned 
about Prestwick's finances as its 
ability to deliver quality products. 

"The important thing in a recov- 
ery is you have to make sure you 
fire fight those issues on time 
before the customer says *we don't 
know what these people are doing, 
we will get another supplier'," Coul- 
son says. 

Postern finally persuaded brokers 
Allied Provincial Services to sup- 
port the rights issue. But in a cha- 
otic eight weeks Prestwick first had 



7 writ 

Archie Caution: ‘Most of our companies an at death's door whan we start 1 


to sell a subsidiary, appoint Paul 
Woodley as new finance director, 
develop a new business plan, pro- 
duce acceptable interim figures and 
appoint a new board. 

By the time Prestwick produced 
preliminary figures tn the year to 
August 1. which showed the com- 
pany had returned to operating 
profits in the second half. Postern 
had won the time to consider its 
future. 

Coulson believes there are a num- 
ber of options, including vertical 
integration through the forging of 
links with a raw material supplier 
or equipment manufacturer. With 
the renewed shareholder support, 
merger with or acquisition of 
another PCB manufacturer is also 
likely to be carefully studied. 

Routine operational problems 
nevertheless persist. The latest, 
alluded to in the interim results 
statement concerns a shortfall in 
capacity utilisation in the multi- 
layer PCB plant. “The underlying 
problem is the operational gearing 
ratio or these big plants," Coulson 
says. “It does not take a big swing 
in orders to go from profits to 


losses.” 

Postern meets similar problems at 
each of the companies It works with 
- about half of which are private. 
The lessons teamed in such situa- 
tions are discussed extensively at 
regular meetings of Postern's six- 
member executive committee. 

This committee not only includes 
Coulson and Sir Lewis, hut Ken Sen- 
bic. former chief executive of Brent 
Walker, Stan Cars lake, former head 
of Barclays Bank Intensive Care 
Unit, and Trevor Swete, former 
head of corporate finance at Hill 
Samuel. 

These meetings will rake over 
issues ranging from capacity utilis- 
ation problems, such as those at 
Prestwick, to pricing and brand 
strategy* and how to deal with 
banks. 

“We have gathered together a 
load of information on how we 
crack issues in the field." says Coul- 
son. “A lot is to do with good basic 
management. But by making Pos- 
tern a company, we systematically 
put together the cumulative experi- 
ence of all these guys. That is our 
real value" 


BUSINESS OPPORTUNITIES 

READERS AHE RECOMMENDS) TO SffiK APPROPIOATE PBOFESSKWAL ADVICE BEFORE ENTERING INTO COMMITMENTS 


BUSINESSES WANTED 


SERIOUS INVESTOR 
SOUGHT 

We are a growing (est. 1993), leveraged money management 
operation (Foreign Exchange & Fixed Income) based in 
London. We are SFA registered and have built an excellent 
reputation, performance record and blue chip client base. 
The Company is seeking an individual/institutional investor 
interested in either joint venture or long term equity stake. 

Replies in the strictest confidence to Box B3512, 
Financial Times, One Southwark Bridge, London SEl 9HL 


M9&M3. 


UEPLC 


Consistently profitable fully listed company in the clothing trade 
wishes to acquire private companies directly or indirectly involved 
with clothing. Must have good and stable management in place 
and be earning upwards of £300,000 net profit before tax. 

The purchase can bo for cash or in exchange Tor quoted shares or 
loan QotOB, as preferred by vendor whose existing management 
would be kept in place. 

Principals only. 

Box B06Q9, Financial Times. 

One Southwark Bridge, London SEl 9HL 


As a $200 million sales organisation we are a world 
leader in high volume manufacture of components with global 
distribution expertise. 

As part of our business we have built an advanced, Integrated 
Sales Order Processing Package incorporating Safes Order Entry, 
Warehousing, Invoicing, Accounts Receivable and Shipping. 

We would be keen to hear from any third parties interested in 
utilising any or all of these services for their product in the 
European arena. 

Write to; Box 83501. Rnanctef Timas, Om Soufftuarfi Bridga, London SEl 9HL 


We hsv* Mn Instructed try 
John Hansen AXLA. MSPX 
(Uqndator) of Purtadown 
Gw. UpM a SecMrity Co. U± 
(In Liquidation) 
to se8 Oiefc enttie 

UNDERGROUND PW€ NETWORK 

This system extends throughout the 
domestic and commercial centre at 



Contact Ian Wilson or Jim Burke. 
22 Uellusk Road. Newtown abbey, 
Co. Antrim, N. kWantS 
Tot: fOZ3T) 342636 Fare (0Z3Q 342S3S 


OVERSEAS INVESTOR 
OPPORTUNITY 

To ocquirc a rapidly growing 
advertising business established 
since 1910. 

Existing management team seek 
to remunerate a Director with 
organisational skills and funds 
for expansion. 

Write to: Box B3S02, Financial Times. 
Ooe Southwark Bridge, Londew SHI 9KL 



From US S250 

Various Jurisdictions 
lnformalion/immediate service: 


INTERNATIONAL COMPANY 


SERVICES (UK) LIMITED 

Sisndbroak House. 2 - 5 Old Bond 
Street. LONDON. W1X 3TB 

Tek 071 4934244 
Fax: 071 491 0605 


Singer & Friedhnuier Qx, 

Factor? Limited dK 

TtHTiWif uvrking capital facdUits. 
Irnmcdinlc Response pmrtdied. 
InJepmient from UK clmrirg buds. 
Costs jymparable tdth overdraft nuts. 

Singer & FriedUnder Factors 
Where Tradition Comes Of Age 

21 New Street 
London 
EC2M 4 HR 

Telephone 071 d 0006 
Facsimile: 071 tilt 1900 


INVESTOR & NON- 
EXEC. CHAIRMAN 

Required by Light Eng. Co. 

The company designs and 
manufactures a range of light 
machinery. Sales - '93 • £2m, W4 - 
expected £2. 7m. Assets Eo 6m. 

A Non -Executive Chairman is 
required to provide structure and 
guidance as the company 
develops and to Infect immediate 
working capital in exchange tor 
appropriate shareholding. 

Please reply with fuR details m 
Bat B3SOS. financial Times. One 
Southwark Bridge. London S£1 3HL 


Expatriate Financial 
Services Consultancy 
in Japan 

Two-man operation. U.K. proprietor 
odd Tokyo-fused representative willing 
id remain as consiliums if required for 
limited period. 

Annual corDprissiom exceed £200000, 
Method of payment outrigtu cosh sole 
or phased payment ns decreasing 
percentage of annual vales acceptable. 

Write to Bat B35I5. Financial Tunes, 
One Southwark Bridge, 

London SEl ‘WL 


By Order of the Liquidator 

"Established Ladies 
Clothing Label For Sale' 

All offers should be by post or 
fax to the liquidator. 

Mr M.S. Langley. Langley & 
fanners. Langley House. 

Park Road, East Finchley, 
London N2 SEX 
Fax No; 081 444 3400 


PATENT FOR LICENSE. 
Revolutionary product to reduce 
bitterness in tea & coffee. Big 
potential in the UK. US, 
contact Ed Levy 
PH: 404-448-2433, 

FAX: 404-448-7021 


TRAVEL AGENCY 

Specialising in Exclusive 
Tailor Made Holidays 

Established Business 
Investment Sought 
To Finance Growth. 

Please write ter. Martin State, FMCB 
Management Consuhants Ld. 
Hathaway House, Popes Drive. 
Finchley. London N3 1QF 
Tel: 081-546-6446 Fax: (St-3493990 


CHANNEL ISLANDS 

Offshore Company Formation 
and Administration. Also Libera. 
Panama A BVfi etc Total ofbfaote 
facilities and services. 

For der a il * and appowmaat wruc 
CtoyTnm Ld. Bdmom Hmu. 
2-6 BehnoM Rd Si Metier, fancy, CJ. 
Tel: 0S34 7*774, Fk 0534 35401 
TU 4192227 COFORM C 


Funding Required 

MBOfTwo Tears) manufacturing In iho 
Stationery Trade with established Blue 
Chip customer base, seels investment 
for working capital and future expanaoo. 
Participation considered. 

Write bo Boa B35I3. Financial Times, 
Ooe Seutbwaric Bridge. London SEl 9HL 


BUSINESS WANTED 

BUILDING MATERIALS 
AND RELATED SECTORS 

An excellent opportunity for shareholders to exit 
from a private company (perhaps an earlier MBO/MBI) 
or for a group to sell a non-core division/subsidiary. 

Our client, a quoted UK group, supplying goods and 
services to the construction industry, wishes to add a 
major new division by acquiring a business which: 

• is involved in similar and related activities 

• is preferably a manufacturer 

• has a turnover to £40 million (or possibly higher for 
the right opportunity) and is profitable 

• is UK based, but has an export capability 

• has a management team looking to continue. 
Vendors and their advisers should telephone either 
Patrick Groarka or Marcus Moir on 071 388 4242 in 
absolute confidence. Your identity will not be revealed 
to our client without your permission. 

Livingstone Guarantee pic 
Acre House, 11-15 William Road, London NW1 3ER 


LIVINGSTONE GUARANTEE 


ONE OF THE TOP 75 

U.S. Travel Management 
Companies seeks International 
Merger/ Acquisition. Strategically 
located. 

Umqoe proprietary 
automation. 

Write to; P£>. Box AC, 

470 Park Ave. Swith, 12th Floor 
New York, NY 10016 USA 


^ THE ACQUISITION ft DISPOSAL SPECIALISTS 

1 SFA Member 

TfT7TT»TTfTTm»TVT , rTm»VT»TTTTTVT»TTTTTt*' 



Businesses sought by 
expanding division 
of 

successful public company. 

Preferred size: PBT£250K - £750K. 
North West location, or within 
2% hours drtve frora Cheshire, 

Replies to: BaxNo.B3516 
. Financial Times, 

No. 1 Southwark Bridge, 
London, SEl 9HL. 


CASTINGS 

We can offer very competitively 
priced Non-Ferrous Castings 
from ©nr own Foundry it> INDIA. 

Tel & Fax: 081 949 1227 


International 
Trading Company 

active in oQ. coal anti cbenucsh seeks to 
develop new markets by cooperating 
wisfi other companies who may tie able 
rc utilize their knowledge and ex peri ence 
to enhance tbeir own activities. 
Write is Bn B2A3 1. Financial Thus, 
One Sraabwazk Bridge, London SEl 9HL 


PRECISION ENGINEERING CO. 

MERSEYSIDE BASED CO. WITH OWN PRODUCT SEEKS 
N. WEST PRECISION COMPONENT MANUFACTURER WITH AUTO 
LATHE/CNC MACHINING. EXISTING SALES c.£I>-£IM P/A. 
PURCHASE MERGER OR CAPITAL INJECTION CONSIDERED. 

PRINCIPALS PLEASE REPLY TO: 

BOX NO. R3474 FINANCIAL TIMES. ONE SOUTHWARK BRIDGE. 
LONDON. SEl 9HL 


Up to £1,000,000 TO BUY 

Software Development company 
Based in the South of England 

(Principals Only) 

Send details to Box B260S, Financial Tunes, 

One Southwark Bridge. London SEl 91 1L 


Doraynor bnlm need Mjuliy capital? 
r'VCR\Rkti Budaem Afl^ctabave rakopCaJ 
rxpeitn B>incB.Td OSH 579999 


COMMERCIAL FINANCE Verture Capital 
avateMe hom E2SJ00 upwarOs. Senate* 
Ritas. Senates Fees Broker snquirtets 
welcome. Anglo American Ventures Ltd. 
Tefc tOBSWl 201385, Fax (0924) 201377 


BUSINESS WANTED 

Private individual seeks a going concern in 
Sates/Distribuffon/Ught Assembly work. Reply in 
confidence to: Brand 75, Chefmerton Ave, 
Chelmsford, Essex CM2 9RE. Tef 0245 471669. 


WANTED 


OpncVOpus -Electronic* Company 
unil/or 

Environmental Sensing Company 
Minimum Tta mover iSliU^XM) 

Please reply 1««: 

Box BJ5Q3. Financial Times. One Southwark Bridge London Sh 1 *>HL 


OFFICE EQUIPMENT 


OFFICE FURNITURE 


We have - direct from the manufacturer - 
new high quality executive and system ranges - 
conference and receptions. Large choice of veneers, 
melamine and/or laminate finishes 


with discount of up to 40% from R.R.P. 


London Showroom for viewing: 

Ariel House, 76 Charlotte Street, London W1 
Tel: 0374 747439 
Full camcad and planning services. 


LINEABURO LTD Tel: 0992 503313 


PROTECTIVE 

EQUIPMENT 

DISTRIBUTOR 

Preferred company wffi be 
located In South East England 
with a broad established 
customer base. Complete set) 
or ma nagement retained 

option considered. 

Principals only, phase write to 
Box S3SI4, Financial TSnes. 
One Southwark Bridge. 
London S£1 9HL 


WANTED 


AH replies treated in the 
strictest confidence 
Replies to 

BDO Stoy Hayward 
PO Box LB 1 1 1 5 , 
London W 1 A 4 WT 


I BDO 

BOO Stoy Hayward 

Corporate Recovery 
and Insolvency 



HOME FURNISHINGS 
BUSINESS 

An established client seeks an acquisition 
that meets the following criteria:- 

• Turnover range £2m>£ 10m 

• Located in the Midlands or North England 

• Strong UK customer base 

• Not currently operating at capacity 


Authorised by the Insliluln >M C Untried ;V;c<»i»l.ini-. in 
Knnluiui -irtd W M c.iity on in\L-litnnl Ut-.ine 


£ 
















1 





financial times 


TUESDAY OCTOBER 25 1994 



TECHNOLOGY 



Deborah Har greaves looks at the role satellites can play in predicting crop yields 

Farmers from outer space 


J ohn Fenton, an arable fanner 
Humberside, can pin- 
P °™ which parts of his 400- 
hectare holding make him the 
post money. He could be accu- 
rate m tas predictions of crop yields 
down to a metre but mostly he me a- 
sures the amount of grain harvested 

every rsix metres- 
He can achieve this predskm by 
using US navigational satellites in 
otort 12,000 miles above the earth, 

which beam down to mark his exact 
location in a particular field. From 
the data collected on his fields, 
Fenton can build up a yield man of 
his entire farm. 

- **W e've all known there are 
variations in crop yields across the 
field to the past, but this allows you 
to be much more specific about 
what you're doing.” he says. 

The satellite technology used by 
Fenton is not new, bnt its 
application to agriculture is being 
pioneered by Massey Ferguson, the 
agriculture machinery makers. 

“It’s a massive breakthrough to 
apply this to fanning because it 
' means you can manage, different 
parts of the field differently and 
adapt your inputs of nimwipnifl 
seed and fertilisers accordingly,” 
says Chris Dawson, a consultant 
who has worked with farmers 
applying the technique. 

Massey Ferguson is combining its 
yield meter in a combine harvester, 
which measures the amount of 
grain harvested in each part of the 
field, with a Global Positioning 
System which uses satellites to tell 
the machine exactly where it is. 
Data collected in this way over 
several years can highlight vast 
differences in productivity between 
areas in the same field. 

Dawson says that yields may vary 
by 50 per cent above or below the 
average across a field. This means 
farmers could see a yield of 3% 
tnrnwm of grain per hectare in one 
section of the field and as much as 
10 tonnes in another part 
By pinpointing areas of the field 
with low yields, producers can take 
a closer look at them, for example 
analysing sail samples to see if the 
pH needs adjusting. They can also 
vary applications erf chemicals and 
fertilisers. 

“Some of the variability in yield 
will be attributable to factors such 
as acidity or poor drainage over 
which we have control," says 

Dawson. 

“But some of it might relate to 
depth of the soil or just toe nature 
of the soil itself.” 






: the navigational 


SMcHng system b put to the tact at 8hutttoworth agricultural co>ego in BadfordsNm 


At this point, the fa mw bate to 
take a management decision about 
whether the poorer parts of his 
will respond to increased use of 
fertilisers or chemicals or whether 
they just have intrinsically lower 
potential 

“There are parts of our fields that 
win never ever yield as much as 10 
tonnes per hectare - our target 
yield. If you cut back on 


applications to those parts of the 
field, yon can save a lot of money” 
Fenton ggplahm. Fenton is farming 
on extremely fertile soil which 
makes his target yield a lot higher 
than average. 

Using computer programs, a 
fanner can draw up a map for 
applying nhamiraiiH or seeds. That 
map can he fed on disk or smart 
card into a control unit on a 


conventional tractor or sprayer so 
that the machine automatically 
applies more or less seed or spray 
depending on where it is to the 
field. 

Brian Welti, farm manager at 
Shuttleworth College Farm in 
Bedfordshire, planted Britain’s first 
field of winter wheat earlier this 
month using a seed map developed 
from the yield mapping system. 'Die 


An eye on the crops 


S atellite technology is being 
harnessed to help farmers 
plant crops, but satellites are 
also being employed by govern- 
ments as their spy in the sky to 
check what producers have planted 
and whether they are rfmathig on 
their claims for European Union 
subsidies. 

AH EU governments, except Lux- 
embourg, are using satellite imag- 
ery to ensure that producers' claim 
forms for farm support match np 
with what is on the ground. With 
more than £2Shn in subsidies at 
stake, remote mnwring has become 
an integral, part . of the Common.. 
Agricultural Policy. 

Interpreting satellite imagery to 
distinguish which crops have been 


planted and the extent of farmers* 
holdings has improved rapidly over 
toe years. Four years ago, it was 
used on a purely experimental 
basis, but this year mo6t EU mem- 
bers have harnessed it as a vital 
tool in tracking fraud. 

Neil Pattie at the National 
Remote Sensing Centre in Farabor- 
ough, winch has the contract for 
ch ecking UK producers, says each 
crop has its own “fingerprint” on 
an infra-red image. A computer 
interprets these “fingerprints” to 
produce a map marked with differ- 
ent colours. Oilseed rape, for exam- 
ple, is. pink, in contr as t. to its bright 
yellow fane in toe field. 

“Our job is to flag up discrepan- 
cies between the information 


indnded on farmers’ claim forms 
and the crop on the ground,” he 
says. Producers will not be penal- 
ised an satellite imagery alone - 
the Ministry of Agriculture will 
send a local inspector to look at 
farms where anomalies appear. 

Pattie is not allowed to reveal 
how much fraud Us system uncov- 
ers but cites a “small but signifi- 
cant number of discrepancies”. 

An official from toe National 
Fanners’ Union in Brussels points 
out that some of the satellite 
images have been so good they 
have shown up farm management 
details.. For example, one farmer 
had not applied herbicide to rape 
crops and the images showed the 
spread of poppies in the Add. 


navigational satellites told the 
machine exactly where the more 
productive areas in the Held were 
and It automatically varied seed 
applications depending on its 
location. 

By applying fewer seeds, 

chemicals or fertilisers to poor parts 
of the land , the farmer ram make 

considerable savings as well as 
farm In a more environmentally 
friendly way. 

“Hie environmental benefits are 
very very substantial Before, we 
applied everything to a blanket 
fashion, and now wa can target 
applications,” says Fenton. 

He has reduced the amount of 
nitrogen applied to the soil by 30 
per cent and managed to cut toe 
amount of nitrogen leaching from 
the soil by 60 per cent without 
losing yield. He targets the 
positioning of phosphate and potash 
fertilisers in direct proportion to the 
higher-yielding parts of the land 

In some respects, this technology 
is enabling farmers to produce in 
the same way as they did 30 years 
ago when their land was divided 
into much smaller fields. AH of the 
figirij had different 
and were dealt with individually. 

But the drive for more efficient, 
large-scale far ming , led to many 
farmers ripping out hedges in the 
1970s and creating fields covering 
tens of hectares which would 
be treated as one unit 

Fenton and Welti are two of 30 
farmers currently using Massey 
Ferguson’s equipment in the UK, 
but trials are also under way in 
Germany and Denmark as well as 
the US. Fenton believes the 
technology could be suitable for any 
arable farmer who wants to manage 
his business in a mare precise way 
but, at toe moment, the cost of the 
equipment could put off some 
producers. 

The Global Positioning System, 
which can be moved into any piece 
Of machin ery, costs £11,500, but 
termers need to have yield meters 
in their combine harvesters and 
computers for producing the maps. 

Fatten believes that the savings 
offered by using the equipment ram 
quickly repay its cost For example, 
he has changed the way he 
cultivates oilseed rape as a result of 
tha yield map and hag subsequently 
reduced bis costs from £28 a tonne 
to £9 a tonne. 

“It has given me a wealth of 
information I wouldn’t otherwise 
have had and has totally changed 
my forming technique,” he says. 


Coming up with 
the write stuff 

Tom Foremski reports on a new 
product which reads handwriting 

A software package that handwriting.” 

dramatically improves the The software also allows users 
ability of computers to to enter large blocks of text suet 


A software package that 
dramatically improves the 
ability of computers to 
recognise handwritten characters 
has been devised by 
California-based Palm Computing. 

Called Graffiti, the package 
takes a different approach to 
earlier attempts at handwriting 
recognition by teaching users to 
write characters in a unique way. 
Tbe software recognises them and 
translates them into computer 
text 

Palm says Graffiti achieves 100 
per cent character recognition - a 
feat other systems cannot come 
close to matching - after a short 
time spent by the user learning 
the required characters. 

The software could boost sales 
of small, hand-held computers, 
called personal digital assistants. 
FDA sales have so ter failed to 
meet the levels predicted by 
market analysts a year ago. They 
have floundered partly because of 
their disappointing performance 
In recognising handwritten text, 
which users enter using a special 
stylus instead of a keyboard. 

Producing PDAs that can 
recognise handwritten characters 
has proved a punishing challenge. 
Apple Computer promised that its 
Newton MessagePad could 
recognise complete words. Bnt it 
took users considerable time and 
effort to teach the Newton to 
recognise their handwriting, and 
even then the device often 
misread the text 
Graffiti presents users with a 
box measuring 1 sq in on the 
computer display screen, into 
which they write single letters 
one after another; each new letter 
over w rite s the last and appears 
in computer text on the PDA 
screen. Most ch ar a cte rs are 
written in a way very similar to 
that in which most people write 
already, but seven characters. 
Including the letters “k” and “a” 
are wr it t en slightly differently to 
minimise confusion between 
letters and numbers. 

According to Kimball Brown, 
analyst at market research firm 
Dataquest : “It basically teaches 
people how to write so that tbe 
PD A will recognise toeir 
characte r s, instead of trying to 
teach the FDA how to recognise a 
wide variety of different 


handwriting.” 

The software also allows users 
to enter large blocks of text, such 
as commonly used phrases, by 
writing a two-character 
abbreviation. 

Ed CoUigan, vice-president of 
marketing at Palm Computing, 
says the time it takes to learn the 
system will be “more than 
compensated for by the increased 
capabilities Graffiti provides”. 

Palm is encouraged by the 
results of focus groups involving 
80 users, in which more than 90 
per cent of Newton and Tandy 
Zoomer PDA owners who tried 
Graffiti said they would buy it 

The company claims several 
leading computer manufacturers 
plan to include Graffiti with new 
PDAs and hand-held computers. 
But it says it will not sell an 
exclusive licence to any single 
manufacturer. “We see Graffiti as 
an enabling technology. If it helps 
boost sales of PDAs and 
hand-held devices everybody will 
benefit, and we can sell more of 
our other applications," explains 
Colli gan. 

Graffiti is also likely to be used 
in new types of pager. Since its 
screen requirement is so small, 
leading pager manufacturers such 
as Motorola plan to introduce 
products that will allow users to 
send short messages quickly by 
writing on a small screen with a 
special stylus. 

“Graffiti is a significant 
technology breakthrough which 
enables development of 
pocket-sized devices with robust 
data input capabilities," says 
Doug Brackbill, vice-president at 
US-based wireless 
communications firm Mobile 
Telecommunication Technologies. 

Graffiti recognises all 
Roman-alphabet characters and 
Greek mathematical symbols. 
Palm is working on a Japanese 
version, and hopes Graffiti will 
become an industry standard. 

In tbe US Graffiti costs $79 
(£50) and is available in versions 
for the Apple Newton, Tandy 
Zoomer and AST GridPad. A 
version for PDAs based on 
General Magic’s Magic Cap and 
Microsoft WinPad systems Is 
forthcoming. The product will be 
available from European 
suppliers to the next few weeks. 








T f<> 




BUSINESS FOR SALE 


Our client is a well established and highly 
profitable London-based search and selection 
company operating primarily in the fields of 
Information Technology and the associated 
markets. They have an impressive and durable 
corporate client base. 

The shareholders now wish to make a complete 
cfisposal of their business although the continuity 
of operational management can be maintained . 

This is an excellent opportunity for an 
organisation to develop or acquire a presence in 
this part of the UK recruitment marketplace. 

Principals only <no agencies) should write in 
confidence to Tony Sarin or Edward Ross- 
McNaim at- 


mORLEY ^ 
6 SCOTT w 


Men lev .-J, Su.j!! 

Chii! teied Account its 
Lvntcn House- 
7-V Trivistoc k Sc,u<5!f 
London '-VC I H 9LT 
Tel: 0 17 1 007 0866 
Fu\: 0171 "iS3 3978 


BUSINESS SERVICES 

■BESEEH CALL USA 

ONLY 17p/mizi 

USA only 24p per Iran AUSTRALIA 

Australia 40p per mui __ _ 

mo vat ONLY 29p/MIN 

Aak about oar low rates 

to other countries. First 30 miflS FREE 

® h ck Dial Int. Telecom 

M * Tel: 081 490 5014 

“ £1 Fax: 081 568 2830 

aigwondAvr-^Se ^^^” 119 ^ ______ _ __ _ 

“ liquidations & receiverships 
yfftt PAGE 1 REPORT 

IT* report of to Und. If yj* « *«« «b«t deltas 

^^dinxtwilh liqnidMoa aad nectnvora ooaiacc 

the PACE 1 report 
From Ixaa than £2 per w*** 

For subscription drtiflB 

iw.tM7a37UW 371458 B 


BENELUX Bl SINESSCKNTER N.Y 

t.mUOM'HM' M IONSERM' l^ 

:(> min. from BiU SM IN 

tWfcMI \NTWEK1*. 



CANARY ISLANDS 

Thriving & rapidly expanding car hire busincss- 
Snbstantial T/D (94 projected £300fi00) 

High GP. Excellent customer base. 

3 Offices Over 20 Sub A^ncies. Audited Accounts available. 

Contact 

NANDO S TeL 0183422 100880/tex: 101007 


FOR SALE 

Predsioa EagbMeriag 
Coaapaay with iridic market 
products with proven demand. 
Current T/D 

£2.7 Million PA. Strong order 
book su p ports imme d ia te 
potential growth to 
£Z6 Million PA. 
Currently Profitable. 
Sooth Coast Location. 
Principles Only. All e n q u i ri es to: 
Mr. Ian Thmgood 
Tel: 8850303382 


Retail Plant 
Centre/Nursexy 

Won established mixed wholesale 
and retail business in Wes 
Midlands with established business 
name. Turnover c. £420K from 
90^)00 sqJL glass on 24 aero site. 
Some leisure potential with river 
frontage. Excellent poterti*! 

Car growth. 

Farther details from 
Quinton Edwards (0635) 551441 
National Garden Centre Speaelau 

OPPORTUNITY TOACQUIRK 
MARKET LEADER IN 
SPECIALIST SECTOR 

• Operations in UK md Europe 
- COnem turnover of 

£75 tndli cn. 

• By em rf ii m eHl oarpamAm. 

Bet 12625 
fax: 01342 584363 

FOR SALE 

Northern Based 

Bati n f Y uT iTT Him rait tfm* Hrwt inww. 

CoQiihr, PALR, Saks, Service, 
Rental. Established 25yre. 

Blue dnp dienis % nriBirm 
plus tunttver reasonable profits, 
owner wishing to retire. 

Write ID Box ttMlO. Ftoaudal Times. 

One SMbwad: Bridge, 
London SHI 9HL 

YOUR SILICON VALLEY” 
CONNECTION 

ft p r * 1 * B ff i f I r fa r iif- tHi 
Mu&etacrtAcft. Office* in HMsas 

V*Hbj, CA- Salat, nwkrtfeg and HAaM 
pippgrt for yfH 1 |mi n CU . 
E a qmLkl. A K Eoadwiy A Araodms, 
TalhMi M f™ T Vrf—nlng y f>M«ina 
Pcnraal Times, Box B3361 
OncS oolli w aifc Bridge. ten d o n SB1 9HL. 


FIN AN CE 

COMPANY 

To be sold as going 
concern. Wed established 
but lack funds to succeed. 
Has substantial agreed 

I tax losses. 

Writs to Bax B3504, Roundel 
Times, One Southwark 
Bridge, London S£1 9HL 

Builders Merchant 
For Sale 

* 70 JVW profiUMo touring 
* prime coaunataal rite is South Wales 
• Stable customer bus 
•Hrif credit, half cash 

Write to Box B35QS, Knwdal Unara, 
Ok Southwadc Bridge, London SQ9HL 


LIVE BUSINESSES TOR SALE 
*id ram fanfeMy 071 2421164 
fee 071 70B3404. 


All Advertisement, bookings 

are accepted subject to cm 
™rr«nt Terms and Conditions, 
copies of which are available 
by writing to: 

Tbe Advertisement 
PrcxinctiooDiicetOE, 

The Financial Times, 

One Southwark Bodge, 
London SE1 9HL 

m- 444 71 873 3000 
Fast +44 71 873 3064 


FOR SALE 

Company seeks purchaser/amalgamarioa for subsidiary in 
imaging systems based South-East Turnover exceeds 
£1 million from customer base producing regular service income. 

Write to Bax B3517, Financial Tunes, 

One Southwark Bridge, London SE1 9HL 


AUTOMOTIVE PARTS 

Well established London company distributing wide range of original 
parts applicable to a leading vehicle manufacturer. Turnover £6m. 

JADE SECURITIES LTD 
Acre House, 11-15 WIBam Road, London NW1 3ER 


WEST GERMANY 

Customer forms - Stock forms - Software compatible 
forms - Self-adhesive EDP labels - Continuous mailings 
np to 9 colours. 

Two private companies, separately owned but operating In 
conjunction with each other, offered for sale as a complete 
package. Combined turnover circa DM35 million p.a. 
Nationwide market coverage in Germany. Innovative 
product lines and good market position. Good profitability 
and prospects. Personal reasons for sale. Ideal opportunity 
for continental market entry or expansion. 

Interested parties should apply in confidence to Roytbome 
& Co. (Ref: DRP) 10, Pinchbeck Road, Spalding, 
Lincolnshire, PE11 1PZ. Principals only - no agencies. 

Roythome & Co. is authorised by the Law Society 
in the conduct of investment business. 


Ge nera l 

ENGINEERING 
MACHINE SHOP - 

Northeast 

cst 20 yes, t/b £40Qk, 

10 too capadty, retirement rale, 
blue chip customer base 
ref: 01AEL 


Training 

Agency 

UK 

t/o £lm pins, quality clicmbase 
£10Gk np after dhectois, 

genuine sale, 
reCOlABT 


Principals only contact: Businesses For Sale pk: 8171 281 1270 
TIut x i ^/U en ti a l DKb aii mt ulM okasforfm^ji iinit imi d iia furi tom mm 
BUSINESSES FOR SAUH AND RBQUDUED: COfOTZWNTlAJJTY GUARANTEED 


PINK PAGES 


PAGES 100-sod 

1 ncMAki 


FUW Mswd •mNtraflds to co* to I 


i fl lUMhwnap. eo'» I 


i and far urio • 
Land, Offlc**. 


Tot: (0273) 626881 Free I 


FOR SALE 

OVERIOQKMG LOCH 6ESS 
Well uetabashad haul In 10 seres fa 
prime burnt area £106,132 prolltu 
(YIE men seta bedrooms. 

OFFERS AROUND £750.000 
ROBERT BARRY & CO. 
TEL: 0131 -22* 2944 


BUSINESS OPPORTUNEIY LOG 
un 


Following their decision to concentrate on the core activities of 
construction and development. Done! on Tyson PLC is offering 
for sale its long established and internationally renowned Joinery 
Manufacturing and shopfitting subsidiary 

TYSONS JOINERY LIMITED 

* 100,000 sq ft of production space 

* Wide range of specialist machinery 

• BS5750 

• Bine Chip customer base 

Responses should be from principals only and will be treated in 
the strictest confidence ter. 

BJCorfc 

Group Managing Director 
Donckm Tyson PLC 
Queens Gonrt, Wfimslow Road 
Alderley Edge 
Cheshire 

SK97QD 


For Sale Upon tbe Imtrnctions or 
Tbe Fixed Charge Receiver Hr N G Atkinson 

-SU RUSS HILL HOTEL 

fii near Gatwick, Surrey 

■ Close to Gatwick Airport 

■ 152 en suite mostly air-conditioned bedrooms 

■ Appro ximat ely 9 acre elevated rural location 

> 9 Conference Rooms (665) 

> Leisure Centre with pool 
' Bar and Restaurant 

' Parking (253) 

£2.5 million Freehold 

Ref. 20/209 

Best and final offers to be received by 5pm, 

Friday 4th November 1994 
Contact Gerard Nolan or Paul Newman 
on 0171 436 4231 


SURVEYORS, VALUERS & AGENTS 


BUSINESSES: PQR SAKE 


Appear In ita Financial flmw on Tuesdays, Fridays and SsfanJaya. 
For farther information or to advertise In INs section please contact 
Karl Loynton on +44 71873 47 80 or 
Lesley Sumner on +44718733308 


COMPANY 

NOTICES 


LEGAL 

NOTICES 



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financial times 


TUESDAY Od'OKi'K -> 


BUSINESS AND THE LAW 





T he application of American 
antitrust, or competition, 
laws outside the US has 
long been a source of fric- 
tion between the US and its trading 
partners. The international busi- 
ness community has suffered from 
not knowing how far US regulators 
will go in asserting jurisdiction over 
anti-competitive conduct outside US 
borders. 

In spite of guidelines issued by 
previous US a dminis trations, and 
several attempts to clarify the issue 
in the US Supreme Court, that 
uncertainty not only remains but 
appears to have increased. 

Ten days ago, the Clinton admin- 
istration at long last published its 
draft Antitrust Enforcement Guide- 
lines for International Operations. 
The new guidelines should be of 
interest to business executives, 
trade associations and their lawyers 
as an indication of the current 
administration's intentions to 
enforce US antitrust laws abroad. 

Since this raises the prospect of 
foreign nationals being prosecuted 
by US authorities for anti-competi- 
tive conduct that takes place out- 
side the US and that is legal in their 
home country, it involves delicate 
questions of law and public policy. 
Though the guidelines are only in 
draft form, they are important 
Although the guidelines address 
numerous issues, the extraterrito- 
rial application of US antitrust law 
is the centrepiece. 

Assertion of CJS antitrust laws 
abroad has had a tortuous and con- 
troversial history. In 1909. the US 
Supreme Court ruled that the legal- 
ity of conduct most be determined 
by the law of the place where It 
occurred. This “presumption of ter- 
ritoriality* was relied on by US 
courts to determine the teach of 
Federal legislation until 1945 when, 
In the Aluminum Co of America 
(Alcoa) case, the Supreme Court 
adopted what became known as the 
"effects test”. The justices ruled the 
US may impose liability on persons 
not within its allegiance for conduct 
that took place outside its borders if 


Long arm of 
US regulations 


Terry Calvani on draft guidelines for 
the application of antitrust laws abroad 


it has an effect within the US. 

This statement of the law was 
adopted by the US courts and ulti- 
mately refined into the principle 
that any conduct having a direct, 
substantial and reasonably foresee- 
able effect on US commerce is sub- 
ject to US jurisdiction. The “effects 
test” is now embraced by many gov- 
ernments and the European Union. 

The new guidelines assert US 
jurisdiction over foreign cartels 
(two or more companies which col- 
lude to fix prices or divide markets) 
that make substantial sales into the 
US. It does not matter if the cartel 
is wholly located outside the US, 
administered by foreign nationals 
and is legal in its home country. It 
does not matter if the cartel does 
not sell directly into the US, but 
through intermediaries, or if the 
price of its goods into the US is 
lower than the "competitive price", 
which would benefit US consumers. 
And it does not matter if it is a 
buyer cartel seeking lower prices. 

in keeping with recent cases 
against Japanese companies, the 
guidelines assert jurisdiction over 
wholly foreign cartels where there 
is not even a price effect within the 
US. but where the US government 
substantially funds the purchase of 
goods or services consumed abroad. 
Thus foreign cartel activity associ- 
ated , for example, with a US Agency 
for International Development proj- 
ect abroad may be subject to US 
antitrust jurisdiction. 

Embracing a change of policy 
made under the Bush administra- 
tion, the new guidelines also assert 


jurisdiction over cartels that 
restrict US export opportunities. 
This would capture combinations of 
foreign companies (including trade 
associations) that adopt standards 
that hinder the ability of US compa- 
nies to export their products. 

In the context of mergers, the 
guidelines assert jurisdiction over 
the merger of two foreign compa- 
nies, neither of which has a subsid- 
iary or productive assets in the US, 
but which make sales into the US. 
While the prospect of dealing with 
several merger authorities may 
warm the hearts of competition law- 
yers. business executives may be 
less enthusiastic. 

The guidelines are also important 
for what they do not say. 


P revious international guide- 
lines were an excellent 
repository of guidance on, 
for example, how the US 
government would assess the com- 
petitive consequences of joint ven- 
tures - domestic as well as foreign. 
Similarly, they contained the best 
analysis of the government's views 
on assessing concentration among 
competitor at auctions. 

While it is arguable that these 
provisions were not unique to trans- 
national issues and belonged else- 
where, their absence from the new 
international guidelines leaves busi- 
ness executives and their lawyers 
without guidance. Does the rescis- 
sion of the previous guidelines and 
the failure of the new ones to 
address these issues signal a change 
of policy on joint venture analysis? 


The curious thing about the 
guidelines is not their content. On 
the issue of the extraterritorial 
application of antitrust laws, the 
guidance is simply the “effects test” 
writ large. The puzzle is why the US 
wants to convey the message at all 

Under US law it is permissible to 
abduct foreign nationals from their 
own countries, take them back to 
the US and put them on trial for 
offences under US law which took 
place abroad. Assuming that such a 
law is appropriate and generally 
would not be found offensive, it 
would be curious to see the US gov- 
ernment trumpeting the virtues of 
such a policy. Such laws, it might 
be expected, would be employed 
sparingly and only where there was 
a strong national interest at stake 
that warranted the compromise of 
another nation's sovereignty. 

While there is nothing within the 
new guidelines that is at odds with 
an aggressive application of the 
“effects test", one might question 
whether the prominent proclama- 
tion of tire guidelines is consistent 
with a friction-free system or inter- 
national antitrust co-operation. 

The timing of the new guidelines 
is also curious. It is no secret that 
the Clinton administration would 
like to see more international agree- 
ments that facilitate US antitrust 
investigations abroad. The recently 
enacted International Antitrust 
Enforcement Assistance Act 1994 
would further that objective. These 
guidelines would seem to under- 
mine that effort It is unlikely that 
foreign trade departments will view 
them as an early Christmas present 

Indeed, many may wonder 
whether the new US guidelines sig- 
nal a renewed interest in the jingo- 
istic application of US antitrust 
abroad, and should be met with 
opposition rather than cooperation. 
The draft guidelines should provoke 
interesting responses. 


French monopolies in 
insemination approved 



EUROPEAN 

COURT 


The European 
Court has ruled 
that regulations 
governing bovine 
insemination cen- 
tres in France do 
not infringe Treaty 
of Some competi- 
tion or free move- 
ment of goods rules. 

The Court said that rules appli- 
cable to monopolies permit 
approved insemination centres to 
be granted certain exclusive rights 
within a defined geographical area. 
Charging customers for the addi- 
tional costs actually incurred 
when insemination centres were 
requested to supply semen from 
other member countries did not 
constitute abuse of their dominant 
position. Moreover, the free move- 
ment roles and stock-breeding 
directives did not preclude 
national rules requiring EC semen 
importers to deliver imports to an 
approved centre. 

The rulings were given in 
response to two questions referred 
by the French Court of Cassation 
in proceedings between the Cres- 
pelle insemination centre and the 

jUa ygnnp production and instmina - 

ticm co-operative. 

The CrespeUe centre bad oper- 
ated bovine semen storage units 
and carried out insemination in 
part of the Mayenne Department 
since 1961. The Mayenne co-opera- 
tive. which had exclusive rights 
under French rules since 1970 in 
the Mayenne Department, brought 
proceedings to enforce its exclu- 
sive rights against CrespeUe. 

Artificial insemination in France 
is regulated by a 1966 law on stock 
breeding which requires Snsemina- 
non centres to be authorised and 
to operate in a defined area with a 


local geographical monopoly. Any 
breeder within the area may 
request the local insemination cen- 
tre to supply semen from produc- 
tion centres of their choice, but 
must pay the additional costs 
thereby incurred. 

French rules require an importer 
from another EC country to deliver 
the semen to an approved centre, 
but he may build up a stock in a 
centre of his choice. EC directives 
cover insemination regulation but 
not yet the storage or use of semen 
in the country of import 

The ECJ first referred to the 
treaty rule which subjects busi- 
nesses granted exclusive rights by 
member countries to the Rome 
treaty rules, including the competi- 
tion rules. The Court said that the 
French rules granted exclusive 
rights to the insemination centres 
and created a dominant position 
by establishing a contiguous series 
of local monopolies covering 
France. 

However, the Court confirmed 
that such national rules are pro- 
hibited only if in merely exercis- 
ing the exclusive right granted, the 
In semina tion centre cannot avoid 
abusing its dominant position. 
Since the alleged abuse in the pres- 
ent case was the charging of exor- 
bitant prices by the centres, and 
that was not the direct conse- 
quence of national law, the law 
alone did not lead the centres to 
charge disproportionate costs and 
abuse their dominant position. 

Where a business has an admin- 
istrative monopoly, it will abuse 
its dominant position itself if it 
charges for its services fees which 
are disproportionate to the eco- 
nomic value of the service pro- 
vided. According to the ECJ. there 
was no abuse provided the addi- 


tional costs vtutnud by ib*' 
were actually incurred m inert nu: 
their customers' requests, to supph 
imported semen. . 

The ECJ went on to find tlia. the 
French storage rules for imported 
semen were a harrier to imports. 
The treaty, however, allows 
restrictions 'if justified on grounds 
of protection of the health and Ufc 
of humans and animals. 

Although EC directives cover 
certain aspects of insemination 
regulation. France argued that its 
rules were Justified *»u public 
health grounds relating to the 
need to improve bovine stock 
geneticity. The Court found th.it 
the storage or use of semen in the 
country of import was not covered 
by the directives. Member coun- 
tries. therefore, could rely on 
health grounds to restrict tin* fn*r 
movement of bovine semen, pro- 
vided the restrictive effects on 
intra-Cammunity trade did not 
exceed what was necessary in 
achieve the aim hi view. 

The obligation to stun* sotm-n in 
approved centres was found to 
apply without distinction to 
domestic and imported goods. 
However, the ECJ said it could not 
be ruled out that the restrictive 
effects on imports impeded the 
mar keting of imported semen more 
than national products. Since there 
were no provisions preventing the 
centres applying unreasonable con- 
ditions or prices for storage, it was 
a question of fact for the national 
court to decide whether the opera- 
tion of the approved centres 
amounted in practice to discrimi- 
nation against imports. 

Cose 0323(93. Lc Cnvpclle. KCJ 
FC October 5 1991. 

BRICK COURT CHAMBERS. 

BRUSSELS 


The author is a partner in US late 
firm PtUsbttry Madison & Sutro and 
former commissioner of the US Fed- 
eral Trade Commission, 1983-90 


LEGAL BRIEFS 


Chairman of 
the Bar elected 
for next year 


M r Peter Goldsmith QC has 
been elected unopposed as 
chairman of the Bar for 
1996. Mr Goldsmith, the current 
vice-chairman, is a commercial 
barrister. 

Mr David Pen ry-Davey QC, leader 
of the South-Eastern Circuit, has 
been elected vice-chairman, and Mr 



first "employed* 1 barrister to 
become an officer of the Bar 
Council. 


Return to City 


Michael Blair, head of policy and 
legal affairs at the Securities and 
Investments Board, has been 
elected treasurer. Mr Blair is the 


Ms Denise Kingsmill, the 
employment lawyer who counts Mr 
Peter Woods of Direct Line and Mr 
Cyril Stein of Ladbrokes among her 
clients, has returned to practise in 
tee City. Ms Kingsmill has joined 
City solicitors Denton Hall after a 
year working with Sir Patrick 
Sheehy, chairman of BAT 
Industries, as a member of bis 
Rainbow consortium’s bid for the 
National Lottery. 


BUSINESSES FOR SALE 


BY ORDER OF 

British Gas 

TransCo 



UNIQUE OPPORTUNITY 
TO ACQUIRE 
AN LNG IMPORTATION 
AND WITHDRAWAL 
FACILITY 


TOTAL SITE AREA APPROXIMATELY 
32 HECTARES INCLUIMNGs 


JETTY DESIGNED TO BERTH 26,000 DWT 
GAS CARRIERS 

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PEOPLE 


Bayfield takes a 
seat on British Bus 


Stephen Bayfield, 40, a partner 
In accountants Hobson Rhodes, 
has decided to jump aboard 
British Bus to help Britain's 
biggest privately-owned bus 
company acquire even more 
bus companies. 

Bayfield, who works in Rob- 
son Rhodes' corporate finance 
team, has been advising Brit- 
ish Bus on aspects of corporate 
strategy and finance since 
plans were mooted to separate 
British Bus from National 
Express in 1992. 

Gordon Watt, 41, British 
Bus’s deputy chief executive, is 
also a former partner in Rob- 
son Rhodes and was keen to 
recruit another finance man. 
British Bus, whose interests 
range from Derby City Trans- 
port to Midland Fox and Cros- 
vflle Wales, has more than dou- 
bled in size since its 
management buy-out in 


December 1992. It has 4,300 
buses, a staff of 9,000 and turn- 
over of £250m a year. It raised 
£35m of equity from Charter- 
house and CINVen in May and 
has also increased its bank bor- 
rowings substantially to 
finance a steady stream of 
acquisitions. 

Watt's formula for successful 
acquisitions is “to buy the rev- 
enue and cut costs". He 
believes that the combination 
of predictable cash flows, sub- 
stantial capital investment and 
small need for working capital 
means that bus companies can 
be much more highly geared 
and should start being 
regarded as akin to utilities. 
Although Watt says that the 
City does not “folly appreciate 
the cash-generative nature of 
the bus business ”, British Bus 
has been able to finance a hec- 
tic acquisition spree and its 



appetite shows no sign of abat- 
ing. 

Whether British Bus will 
turn into the modern-day 
equivalent of tbe old British 
Electric Traction company 
which once dominated 
Britain's bus industry, will 
depend partly on Bayfield, who 
will be responsible for group 
and acquisitions strategy. One 
of his first tasks will be to help 
decide when the time is ripe 
for British Bus to seek a stock 
market listing for its shares. 


■ Stephen Barraclough. chief 
financial officer at News Inter- 
national for the past three 
years, is leaving to take up a 
similar post with EMI Music 
worldwide. His new job takes 
him and his family back to 
New York, where he was work- 
ing as US finance and market- 
ing director for Marks & Spen- 
cer before joining News 
International. 

Barraclough, who is British, 
takes up his new job on 
December L He will report to 
the president and ceo, James 
Fifield, who says Barraclough 
"will play a significant part in 
the achievement of our 
long-term strategies". Accord- 
ing to News International, Bar- 
raclough, 42, has "done an out- 
standing job of restructuring 
our financial operations and 
introducing more sophisticated 
planning and control proce- 
dures throughout the busi- 
ness". 


CRH director, with the US 
operations; he worked as chief 
operating officer of OMcastle 
in the 1980s, when Don God- 
son, CRH’s new chief execu- 
tive, was running the US sub- 
sidiary. 

O’Mahony’s old job has been 
split, with Brian Griffin 
appointed managing director 
of the Irish operations, and 
Les Tench managing director 
of CRH Britain. 


■ CRH, the Irish building 
materials group, has 
appointed Liam O'Mahony as 
chief executive of Oldcastle 
Inc, the group’s US operations. 
The move is part of a number 
of top management changes 
forced on the company follow- 
ing the death of chairman Des 
Traynor in June. 

O’Mahony, 48, is currently 
managing director of CRH’s 
Irish and US operations. A 
civil engineer by background, 
he should be “well 
acquainted", according to a 


■ Kelvin Hide, formerly 
operations director, has been 
appointed commercial director 
of UNICHEM, following the 
earlier retirement of Bill Hart. 
Chris Etherington becomes 
director of operations for Uni- 
Chem Wholesaling Division. 

■ Gerry Cook, formerly mer- 
chandise director at Great Uni- 
versal Stores, has been 
appointed merchandising direc- 
tor of JJ3. Williams, part of N. 
BROWN. 

■ Anthony Sweeten (below). 



znd of the marhine tool divi- 
sion and 600 Lathes, has been 
appointed to the main board of 
600 Group. 

■ Peter Gee. formerly chief 
executive of Periquito Hotels, 
and Alister Wilson, formerly 
senior hotel and tourism 
adviser for the EBRD, have 
been appointed vice-presidents 
of corporate development at 
HILTON INTERNATIONAL, 
based in Watford. 

■ Philip Brown has been pro- 
moted to human resources 
director of CARADON Plastics. 

■ John Conyugham has been 
appointed director of fraud and 
forensic services at CONTROL 
RISKS GROUP and to the 
board of Control Risks Ltd. 

■ Nick Farrow, formerly md of 
Fluid Data in the UK, has been 
appointed md of ABB Process 
Analytics. 

■ Judith Hanratty has been 
appointed company secretary 
of BRITISH PETROLEUM on 
the retirement of Richard 
Grayson. 

■ Richard Arbuthnot, a direc- 
tor of four METALRAX subsid- 
iaries, has been appointed to 
the group board. 

■ Chris Vallance has been 
appointed an Id corporate 
treasurer; he is replaced as 
finance director of ICI India by 
David Carter. 

■ David Savfll, formerly dep- 
uty secretary of British Tele- 
communications, bas been 
appointed secretary to the 
POST OFFICE in succession to 
Morag Macdonald. 


Non-executive 

directors 


Edward Pickard, who was 
finance director of Invergorden 
Distillers until soon after it 
was taken over a year ago by 
Whyte & Mackny, has become 
a non-executive director of 
Macallan-Glenlivet. the quoted 
company which produces the 
Macallan, one of the better 
known single malt whiskies. 

Invergorden drew its success 
from own label brands for 
supermarkets. In April, Chris 
Greig, who was Invergordon’s 
chief executive, became a non- 
executive director of William 
Grant & Sons, the family- 
owned producer of Cfenfiddich, 
the UK's leading single malt. 

Pickard, 49. came to the 
whisky industry after spells as 
finance director of Wiggins 
Teape and as finance manager 
with John Menzies. At Inver- 
gorden he was involved in 
floating the company in 1990, 
and then in holding off Whyte 
& Mackay (part of American 
Brands) in 1991. before it suc- 
cumbed last year. 


■ Richard Gui guard has 
resigned from CHURCHBURY 
ESTATES. 

■ Michael Windsor, chairman 
of the Horstmann Group and 
Barry WehmiUer International, 
as c h ai r man of TGI on tbe 
retirement of Norman Crocker. 

■ John Parnaby. md of Lucas 
Electronic Systems Products, 
at SCOTT1SHPOWER. 

■ Colin Shannon, UK senior 
partner of KPMG Peat 
Marwick, at AEA 
TECHNOLOGY. 

■ Andy Marshall, an 
agricultural consultant. 
Jonathan Tippett of Coopers 
and Ly brand's agriculture and 
bloodstock group, and Alastair 
Walker, retired director of 
Harrods. at LOSELEY PARK 
FARMS. 

■ Frederick Bircher. a director 
of Powell DuITryn. at JONES & 
SHIPMAN. 

* Rhidian Bryn mo r Jones has 
resigned from SERCO GROUP. 

■ Duncan Ferguson (below 
left), senior partner of Bacon & 
Woodrow, at HALIFAX 
BUILDING SOCIETY. 

■ Giles Shepard (below right), 
former md or the Savoy Hotel, 
at GUINNESS MAHON & Co. 



i i 


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a) i 


■1 







i 


WNANCIAL TE VfF.c: 


TUESDAY OCTOBER 25 1994 


13 




•v i 






★ 


ARTS 


Celebration 
gives food 

for thought 

visits Paris for two exhibitions 
with very different views on British painting 


’outre-Manche, 
not quite 
'‘Across’*, as we 
have it, but 

, . “Beyond the 

Channel”, with its faint hint at 
a somewhat gre a t e r psycholog- 
ical barrier, is a fasrinaKrtfr 

and even ghnrtring fqrtiihttion 

Here is no fall and scholarly 
study of its subject and period 
- British art up to the thm» of 
Queen Victoria - drawn from 
the wealth of French public 
taste and. «BTnnigjfl»n rB>iip But, 
rather, a parade of historic 
French attitudes and assump- 
tions upon the art of our fog- 
shrouded and barbarous fend 
that amounts to a co nfession . 

ff that wealth is not drawn 
upon, it is because that wealth 
is not there. 

The French have never both- 
ered to acquire the art of the 
British school - the distinction 
between the En glish u the Irish 
and the Soots is seldom maA> 
and it ole Anglais usually 
stands for all - in any substan- 
tial or comprehensive fashion, 
for they have never taken our 
visual culture seriously. And 
what they do not take seri- 
ously, they do not choose to 
understand. 

The contrast between our 
own National Gallery and the 
Louvre in generosity of inter- 
est and critical even-handed- 
ness, amid hardly be greater. 

In Trafalgar Square we find 
an account of the post-Remds- 
sance European tradition that 
gives each rational school its 
due, the French along with the 
Italian, the Spanish the Dutch 
and, yes, the British. What 
gaps there are, as in the Ger- 
man and northern schools, 
they are and, as for 

as limited resources allow, 
addressed. 



‘Captain Hay of Spott* by Sir 
Henry Stadium (1756-1823) 


Never so, it would seem, 
along the qua! du Louvre. 
“How did I find the show?” 
asked my friend in the Lou- 
vre's service presse, a Httie anx- 
iously, and gave at race her 
own pre-emptive answer: y 
a beaucoup des trous." 

The show does wTntntw some 
lovely things, with the magnifi- 
cent Gainsborough full-length 
of Lady Alston, green sQk and 
grey shawl a gainst a darkly 
romantic setting, the best of 
an 

There are some good Reyn- 
olds, a decent Stubbs of Lord 
Curzon and his horse, the 
splendid “Captain Hay of 
Spott" by Raeburn and any 
strata: of Lawrences - Law- 
rence after all was the painter 
of Europe's grandees in the 
post-Napoleonic dispensation 
and was for a generation the 
best-known Engifah painter of 
them alL 


But we know, and at heart 
the French know, that there is 
more to the British School 
than the brief flourish of the 
lat&Georgiaii swagger portrait 

So where do we begin? Nei- 
ther with Holbein nor yet with 
Van Dyck, far they are foreign- 
ers, so a fine fall-length of 
Edward VI by wnbam Sards, a 
Dutchman, will do. 

What tbgH of the Elizabethan 
miniaturists. HQliard perhaps? 
But there is, it w»m<t i no H2- 
liand in France, and a gin g fo , 
exquisite portrait of the fated 
Earl of Essex by Isaac Oliver, a 
Frenchman, must da Into the 
17th ce ntury we go, and to the 
Cavaliers and the Restoration, 
so with no Van Dyck, what 
about Dobson? No Dobson, but 
a little later there is Lely. 
Wasn’t he a foreigner, too? 

Never nrhvi The 18th cen- 
tury will sort things out. Phil- 
ippe Mercier and Heinrich 
Fussli (Fuseli to us) are in, I 
see. Odd that But we shall 
really get going with Hogarth, 
shan't we, surely the first great 
painter erf the truly Rnjffeh 
school Shan't we? 

But the French, we find, 
have this funny idea that 
Hogarth wasn't really a painter 
at aB, but an engraver — and 
Indeed this show reveals the 
curious f™d idea that it was 
in the general commercial 
development of print-making 
that our peculiarly Fngifoh tal- 
ents were declared. 

So there Is not a single 
Hogarth pamting in the show, 
but only the engraved version 
of file “Marriage A la Mode”. 
Thomas Girtin is represented 
by a sing le acquatint of the 
“Forte Saint Denis”, Rowland- 
son by three satirical etchings 
among a group by GiRray and 
Gnrikshank- That group is at 




Tortralt of Madame Ducrest de VHlenenve’ by Sr Thomas Lawrence (1769-1830) 


Wexford Festival 

Youthful 

expertise 

discovered 


least included, bitterly anti- 
French as its satires are. 

What else? A few good water- 
colours by Bonington, Consta- 
ble, Boys and Cox, miscella- 
neous drawings, sane good oils 
including a Bonington “Doges’ 
Palace”, Constable's “Wey- 
mouth Bay” and “Belmingham 
Dell”, *«d a late nnflntahad 
Turner landscape, vaporous 

and ma gical 

And that, of any substance, 
is it This is, indeed, a show 
which gives us rather more to 
think about than actually to 
see. 

The smaller show at the 
Musee Carnavalet is a wonder- 
ful corrective, if only because 
the prejudice is openly cele- 


brated in terms that are often 
as hugely enjoyable as they are 
grotesque. 

A run of post-Napoleonic 
jokes about French girls find- 
ing any excuse to peer up the 
kOts of Scottish soldiers gets 
us off to a good start and time 
is no looking back, or 
down. 

Randy rost-btfs and their 
prim, boot-faced wives an the 
one land, seductive girls and 
effete “frqgs" on the other, the 
ancient wnimT stereotypes are 
funny stdL 

But jokes apart, the show 
does make the serious point 
tha t the En glish love affair 
with France had its cultural 
aspect, and bore real fruit in 


the work of our tourist paint- 
ers. Thus represented here are 
not only the better-known fig- 
ures of Turner, Cox, Boning- 
ton, Girtin and Boys, but also 
such comparatively minor, hut 
still accomplished, artists as 
Holland, Wyld, Callow, Chal- 
on ... and we think ra to Whis- 
tler, Sickert, Nicholson . . . 

France to ns, and Paris 
above all, has always been irre- 
sistible. 


D’outre-Manche - British art 
in French public collections: 
Musee du Louvre, Paris le, 
until December 19. Les 
Anglais a Paris au 19e stede: 
Musee Carnavalet, Paris 4e, 
until December U. 


M any leading com- 
posers have writ- 
ten journeyman 
operas which we 
never hear - youthful efforts, 
or tame, in effectual ones, or 
unstageable mistakes. The 
intrepid Wexford Festival has 
tried ra perhaps two or three 
of those, but it wisely prefers 
obscure operas with some dra- 
matic spark worth fanning. 

Young Wagner’s Das Liebes- 
verbot (“The ban on love”) is 
another case altogether a 
sparky, vital piece which 
happened to be composed 
before Wagner had learned to 
be Wagner. 

Had it been by, say, Goetz, it 
might have had a secure little 
niche in the repertoire these 
many years. Wagner wrote it 
at 21 ; it had a single, ruinous 
performance and no other in 
his lifetime. His successes with 
1 Henzf and The Plying Dutch- 
man were soon to come, and 
after that a revival of his juve- 
nile comedy would have been 
beside the point (He did later 
make a gift of the score to King 
Ludwig, deprecating it as a 
"Jugendstinde'", a youthful tin.) 

The fact is that hardly any- 
thing in Das Uebesverbot 
betrays the mature composer; 
and yet it has the expertise, 
the pace and even the artful 

/-hnrgrto rteaHnw: nf g thor ou g h 

professional. Lessons from 
Meyerbeer and Auber had been 
wen learned. 

The piece is drawn from 
Shakespeare's Measure from 
Measurer, b rashly, for every- 
thing problematic or disturb- 
ing in that “dark comedy” ha« 
been heedlessly jettisoned. Das 
Liebesoerbot simply waves a 
banner for youthful love and 
lust a gainst hypocritical moral- 
ising - especially Teutonic 
moralising, as Wagner stressed 
by transfer ring the action to a 
hedonistic Sicily, and turning 
Shakespeare's baneful Angelo 
into Friedrich, the German 
Regent. 

At Wexford the conductor 
Yves Abel strikes sparks from 


the start, with a crackling 
operetta-dash. In no time at all 
Luzio, Antonio and Angelo (a 
different one!) are embattled 
with the Bill, who want to tear 
down the carnival decorations. 
Soon we recognise Claudio and 
his pious sister Isabella (Pets- 
Svensson and Marie Plette - 
both excellent), the one threat- 
ened with death for the crime 
of falling In love (or something 
like that) and the other - 
secretly - with having to grant 
Friedrich her favours to save 
her brother. 

In due course Friedrich him- 
self appears, in the properly 
heavy, brooding person of Rob- 
ert Holzer. 

In his dark music lie almost 
the only hints of the Wagner to 
come - a touch of Tannhfiuser. 
to add to the simple pre-echoes 
of Lohengrin. But he has 
strong competition from the 
comics: an exuberant, stento- 
rian Police Chief (Gidra Saks), 
a pert maid DorelLa (Majella 
Cullagh), the eccentric Pontio 
Pilato (Valentin Jar). 

And the climax of the piece 
is the wild carnival, thriftily 
staged by Dieter Kaegi with 
everybody in their underwear 
and some exiguous masks, at 
the end of which they all - 
even Isabella, and a contrite 
Friedrich - find somebody to 
many at once. 

I must also mention the cool, 
attractive mezzo Marit Saur- 
amo as Friedrich's forsaken 
wife Mariana, who holds the 
key to the denouement. Even 
then, there are other singers 
who deserve warm notice; but 
it win have to suffice to insist 
that this bright fleet comedy 
Quditiously trimmed to make 
it swifter still) is another 
dear Wexford hit well-aimed 
and irresistibly carried 
through. 

Pexhaps after all. Das Liebes- 
verbot may now come to dip 
into the repertoire as a reward- 
ing Wagnerian sport with the 
hearty welcome it deserves. 

David Murray 


r 


Theatre /Karen Flicker 


Concert/Paul Driver 



Mixed-up Risen People 


Intimacy in Festival Hall 


J im Sheridan, the award-winning 
wrtter/director of such films as In The 
Name of the Father and My Left Foot, 
has returned to his theatrical roots 
with The Risen People, the story of the 
1913 Irish labour lockout which he has 
co-adapted and corrected with Us 
brother Peter at Dublin’s Gaiety 
Theatre. 

Sheridan has said that he took an the 
project his first play in nearty a decade, 
as an experiment to incorporate the grand 
gestures of opera into theatre. 

And Indeed there is much that is 
operatic about The Risen People: from the 
size of the cast - 15 principals, four 
singers and 21 supernumeraries — to the 
look and scale of the production. On a 
massive, elegant set of receding angled 
frames, a state-of-the-art li g h tin g system 
projects scenes - from Dublin H fe to sung 
scenes from Aida - that mingle with the 
action on stage. 

But the medium The Risen People most 
brings to mind is film, not opera, as it 
appears to bring cinematic storyteffing 
techniques to the stage. 

Scenes overlap in a sates of montages, 

plots and subplots mingle and 
accumulate, character is revealed less 
through dialogue or symbolic action 


titan through behaviour. 

The crucial dement the Sheridans fail 
to provide is the camera, or its stage 
equivalent. There is no dramatic foots to 
the action, no cues given to the viewer on 
where to look or how to absorb the 
goings-on, and no gradation between the 
intimate and grand-scale. 

The Risen People Mb the true stay of 
the first organised labour uprising in 
Ireland, in which 400 employers, led by 
-William Martin Murphy, banded together 
a g ainst a nascent union movement 
hunted liy flic Fii glinJmmii “Big” Jim 
Larkin. 

Starvation and violence plagued the 
striking workers and their families, and 
they were on the verge of admitting 
defeat when the conflict was 
overshadowed by the outbreak of the first 
world war. 

The Sheridan brothers first ffirected The 
Risen People, based on James Plunkett's 
1958 play of the same name on which he 
also based his best-selling novel Strumpet 
City, in 1977 during their stint as artistic 
directors of Dublin’s Project Arts 
Centre. 

This production features some of the 
leading talents in Irish theatre - Donal 
Donnelly and Johnny Murphy are in 


wizened good form, though Tran Hickey 
looks to be marking time- as well as less 
seasoned performers. 

David Hesiihy makes a strong showing 
as Fitz, the young laboor organiser, bnt 
Lorraine Plftington b out of her depth as 
his wife, Annie. It is her AidaJlke 
struggle between her love for Fitz 
and her allegiance to her privileged tether 
which is the ostensible reason fin 1 the 
distracting and faintly ridiculous 
incteskm of portions of that opera in the 
show. 

The Risen People is the most expensive 
production in Irish theatre history, with a 
budget estimated at ££300.000 
(£297,(K)0H£500,000. Jfan Sheridan is 
listed as producer as well as adaptor/ 
director, so we can assume that he has 
prov ied at least port of the foods from 
hfe fjhivu m l di ig p'nflfa- 

Sueh reinvestment of film money back 
into theatre is an enlightened idea tint 
has taken hold in the DSL It would be 

not to applaud the establishment 
of such a precedent in Ireland, hot lax to 
do anything but chide an artistic effort as 
sloppy as The Risen People. 


The Risen People is playing at the Gaiety 
Theatre, DubHn, through November. 


T he BBC Symphony Orchestra's con- 
cert ra Saturday night was given as 
part of the South Bank’s Deutsche 
Romantik festival and under that rubric 
was g einarkahle for turning the Festival 
Hall into a recording studio for radio 
drama, notably Byron’s Manfred as fitted 
out with, m usi c by Schumann. 

But the second half seemed to round off 
the BBC’s own “Reinventing the Orches- 
tra” Berlioz series, comprising the roman 
tisme of Berlioz’s Harold in Italy sym- 
phony in which the superb soloist was the 
Japanese viola player Nobuko Imal. Two 
Romanticisms for the price of one, and 
that price the very economical BBC tenner 
giving free access to the ball’s main floor. 

Thanks to this p ricing policy, the BBC 
Symphony winter concerts are at last 
gaining sensible audiences, and in more 
than one meaning of the word, for those 
who turned up on Saturday were rewarded 
with very fine playing; The Manfred over- 
ture and inridental music Op. 115 (1843) is 
a late work of Schumann’s seldom heard 
In its entirety, though, the overture Is 
familiar enough. Given that Byron did not 
intend his verse drama to be staged - it is 
typically Romantic theatre of the mind - 
and that Schumann’s recension of it is not 
obviously designed for performance 


whether as accompanied play, dramatic 
cantata or opera manque, it is hard to see 
how QpJ15 can he properly presented at 
all, stQi less establish itself. 

For this performance Jeremy Sams 
arranged Schumann's reduction of Byron’s 
text as a telling sequence of gobbets spo- 
ken by three actors (wham he directed) at 
the front of the platform, with the orches- 
tra behind, the BBC Symphony Chorus 
behind the players, and to stage-left a 
quartet of vocal soloists representing the 
Four Spirits whom Manfred with his 
occult powers invokes. 

Philip Flanks took the role of Manfred, 
the quari-Faustian, prato-Ntetzschean rest- 
less spiritual voyager, with a passion and 
aplomb - the versefine weighed with the 
most exacting care and given, where apt, a 
ringing vehemence that never once 
seemed hollow - which threatened to 
upstage the music. With bis fellow actors 
David Firth and Maria Friedman, he cre- 
ated a vivid dramatic immediacy remark- 
able in so large a haD. 

Schumann wrote no more music for the 
play than would probably have been com- 
missioned by a radio producer, but his 
score wwifeiniii Mmm delightful inventions. 
The overture holds a gentle air of mystery 
and foreboding and was skilfully balanced 


by conductor Andrew Davis, whose plac- 
ing of the double basses at the rear oppo- 
site him had a subtly beneficial effect here 
and throughout the concert 

The orchestral accompaniment to Man- 
fred’s speech hailing the Witch of the Alps 
has a quicksilver quality rare in Schu- 
mann, more common in Mendelssohn; 
while in the bleakly unwinding violin mel- 
ody for the invocation of Astarte's ghost 
was a distinct if unlikely pre-echo of 
Shostakovich. 

After such an enterprising event the 
Tokyo Philharmonic Orchestra’s Festival 
Hall concert under its colourfally gestural 
chief conductor Kazushi Ono the following 
night seemed a routine affair. 

Strauss's Don Juan and Ravel’s Daphms 
and Chtai second suite showed that this 
orchestra can do the big banging tutd with 
the best of them, and show off the feathery 
delicacy too; but the crucial middle range 
of textural and dynamic gradation was 
scamped. 

Prokofiev’s second violin concerto got 
an unenlivening performance from soloist 
Raphael Oleg; and Masataka Matsuo’s 
Phanasphere 1 for Kifu Mitsuhashi’s sha- 
kuhachi (bamboo flute) and orchestra 
(1993) was a highly accomplished exercise 
in cultural synthesis that left me cold. 



A 

Gi 

K 

Jl 

IS 

m 

• ■/ at 


■ AMSTERDAM 


t 


a 


a 


§ 

* I 



w Tonight Ken-lcWro 
ducts Netherlands 

Irchestra in works by 
eg and TehaBcovsky. 


ecital. Tomorrow, 
afternoon: Claus 
nets Royal 
> Orchestra In 
j Brahms, with 
tolsts Michael 
-nanuel Ax. Sat 
Metzmacher 
Chamber Orchestra 
den. MBhaud and 

nofin soloist Isabelle 

: evening: Phffippe 
lucts Netherlands 


I Haydn, with violin 
artier. Sun evening: 
juartei and friends 
sic by Brahms 
ton service 020-675 

nations 020-671 


onducts final 



production of Le nozze di Figaro, 
with cast headed by Joan Rodgers 
and Dean Peterson. Next Wed: 
world premiere of Louis 
Andriessen’s new opera Rosa, wHh 
scenario by Peter Greenaway 
{020-625 5455) 


BRUSSELS 

MCERTS 

light (Royal Conservator 
mus Quartet plays piano quartets 
Mozart, Schumann and Brahms, 
norrow (Royal Conservatory): 
jmas Zehetmair vioRn recitaL 
irs {Pahus dss Beaux Arts): John 
son conducts Orchestra of the 
mete in works by Mendelssohn 
I Brahms. Thors (Egfea des 
umeste PhiDppe Heneweghe 
, ducts Ensemble Vocal Europden 
works by Cardoso and 
rtteverdL Nov 3: Maria Joao Pirns 
no recital (02-507 8200) 


CAGO 

Symphony In tonight’s 
Bchlyoshi inouecontects 
as and Mahler’s Fourth 

t, with soprano Sylvia 
n Thurs, Fri and Sat, 
sseU Davies conducts 
Haydn, GUtastera, Mackey 

with vlofin soloist fhfoen 

i Gonzalez. On Sun 
AUda do Urrocha plays 
to by Granados (312-435 

ra Mirefla Freni and 
jmingo star in Giordanos 
narrow and Sat (continues 
l John Copley's 
i of II bartotere dl SivigHa Is 



Including Thomas AJten, Frederica 
von State, Rockwell Blake, Nicolai 
Ghiaurov and Claudio Deeded (till 
Nov 16). There la a final 
performance of The Rake's Progress 
on Fri, with a cast headed by Jerry 
Hadley, Ruth Ann Swenson and 
Samuel Ramey (312-332 2244) 
THEATRE 

• Angels in America: the national 
touring version of Tony Kushner’s 
two-part epic is directed by MRchaef 
Mayer, with Jonathan Hadary as Roy 
Kohn (Royal George 312-988 900 0) 

• The Sisters Rosensweig: Wendy 
W asserstein’s hit Broadway comedy 
1 about the mid-fife reunion of three 
Jewish sisters from Brooklyn 
(Shubert 312-902 1500) 

• The Winter's Tate: Shakespeare 
Repertory has the Chicago market 
cornered on productions of the 
Bard's works. Artistic director 
Barbara Garres has a go at his late 
romance (Shakespeare Repertory 
312-642 2273) 


■ GHENT 

de Viaamse Opera Tonight, Sun: 
Silvio verviso conducts final 
performances of Guy Joosten’s 
protection of Don Giovanni, with 
cast headed by Jeffrey Black, HHevi 
Matmpelto and Patricia Racette 
(09-225 2423) 


■ THE HAGUE 

'Dr Anton PhSpszaal Thus, Fri: 
Vassili SJnawki conducts Hague 
Phflharmonlc Orc hestra In works by 
Strauss and Mahler, with soprano 
Andrea CatzeL Sun afternoon: 
alternative programme inducing 


Mozart's Plano Concerto No 21, 
played by Nikolai Luganski (070-360 
9810) 


■ ROTTERDAM 

De Boe hm Tonight Roberto Benz! 
conducts National Youth Orchestra 
in works by Rakhmaninov and 
RJmsky- Korsakov, with piano soloist 
Enrico Pace. T om orr o w and Thurs: 
New London Chorale presents a 
programme entitled The Young 
Tchaikovsky and The Young 

Amadeus. Fri. Sun afternoon: Daniel 
Harding conducts Rotterdam 
PMtoarmonlc Orchestra in 
TehaBcovsky, Stravinsky and Ravel, 

with piano soloist Peter Donohoe 

010217 1717) 


■ VIENNA 
coNcsrrs 

• Rafael FrOhbeck de Burgos 
conducts Vienna Symphony 
Orchestra tonight at the Konzarthaus 
In works by Apostri, Krenek and 
Brahms. Leif Ovs Andsnes gives a 
piano recital tomorrow, followed by 
Oleg Maisenbeig on Sat (712 1211). 
Kenneth SHito directs the Academy 
of St Martin In the Reids at the 
Musikverein on Thurs and Fri, with 
plaio soloists Barbara Moser and 
PaiiGukla. Nevffle Maniner 
conducts BesthovwTa Mtssa 
Sotamnia next Tues {505 8190) 

• Vienna’s annual contemporary 
music festival, Wien Modem, runs tfll 
Nov 28, with daBy performances at a 
variety of venues around the city. 
This year’s featured co mp osers are 
Morton Fridman, George Crumb, 
Helmut Lachenmarm, Karl Schiske 

and GQnter Kahowaz. Thte week's 

concerts feature the Krone® Quartet. 


Ktengfonsn Wien under Arturo 
Tamayo, and the vioSnist Ernst 
Kovaric. Claudio Abbado, the 
festival's artistic director, will 
conduct a concert on Nov 6 (7124 
6860) 

OPERA 

• Riccardo Muti conducts seven 
performances of Roberto de 
Simone’s production of Cost fan 
tutte at Theater an der Wien, 
opening on Sun. The cast features 
Barbara Fritted!, Vesseflna Kasarova, 
Cedfia Barton. Michael Shade, Boje 
Skovhus and Alessandro CorbelB 
(58885) 

• The Staatsoper is dosed for 
technical alterations tffl Dec 14. 
Repertory at the Votksoper includes 

a new production of Otto Nicolafs 
comic opera Die Justigen Weber von 
Windsor (51444 2959/51444 2969/ 
513 1513) 


■ WASHINGTON 

MUSIC 

• Borodin String Quartet gives a 
recital on Thurs at Terrace Theatre. 
Marin AIsop conducts the National 
Symphony Orchestra on Thurs, Fri 
and Sat at Kennedy Canter Concert 
HaR, in a programme Including 
Schumann's Grilo Concerto (Gustav 
Rivnus) and Tchrikovsky^s Fifth 
Symphony- Shlomo Moritz directs the 
Israel Chamber Orchestra on Sun 
afternoon hi works by Schubert, 
Stravinsky and Mozart (202-467 
4600) 

• Jazz/pop vocalist Mel Torm6 
gives concerts on Thurs, Fri, Sat and 
Sun at Baltimore's Joseph 
Meyerhoff Symphony HaH (410-783 
8000) 

THEATRE 

• Old Timas: Washington Stage 


Guild presents Harold Pinter’s play 
about power within relationships, 
directed by John MacDonald. TUI 
Nov 20 (202-529 2084} 

• A Perfect Ganesh: Terrence 
McNally's play about two New 
England matrons on a personal 
quest Journeying through India. THI 
Sun at the Krueger (202-488 3300) 

• Henry IV: Michel Kritn directs 
this adaptation of Parts I and II of 
Shakespeare's history plays. A 
Shakespeare Theater production at 
the Lansburgh. TUI Sun (202-393 

2700) 

• Duet: Ottio Eskin's play 

explores what might have happened 
if Sarah Bernhardt and Eleonora 
Duse had met. Opens on Sat for a 
week of performances at the Fcrfger 
Shakespeare Library (703-549 0002) 


■ ZURICH 

Tonhale Tonight, tomorrow, Thurs: 
Marek Janowski conducts Tonhalle 
Orchestra In Strauss' 
Metamorphosen and Mahler's Das 
Lied von der Bde, with Jard van 
Nes and Keith Lewis. Next Tues: 
Wolfgang Holzmair song recital 
(01-261 1600) 

Opemhaus Tomorrow, Sab Ralf 
Weikert conducts Ruth Berghaus' 
new production of Katya Kabanova, 
with cast headed by Ana Pusar rad 
Peter Strata. Thurs: ll barbiere di 
SMglla. Fft Die ZauberflOta. Sun: 
first night of new ballet production, 
including choreographies by Hans 
van Mraen and Bemd Bienert 
(01-262 0909) 

Schau sp tot hau s Tonight, tomorrow: 
Chekhov's Three Sisters. Fri, Sat 
David Mamefs Ofeanne. Next More 
BOchner’s Dantons Tod (01-221 
2283) 


ARTS GUIDE 

Monday: Botin, New York and 
Paris. 

Tuesday: Austria, Belgium, 
Netherlands, Switzerland. Chi- 
cago. Washington. 
Wednesday: France, Ger- 
many, Scandinavia. 

Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

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

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euronaws: FT Reports 0745, 
1315, 1545, 1815. 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Reports 0430, 
1730; 







★ 

Gerstner 
bytes back 

The IBM chief has won some 
respite, says Louise Kehoe 



FINANCIAL TIMES TV ESP*' «UTUHI:K > 


Joe Rogaly 


A diluted Beveridge 



The overriding 
reason why 
capitalism is 
regarded with 
such moral dis- 
taste is, “quite 
simply, the 
inequality to 
winch it leads, 
which is widely felt to be 
unjust and intolerable”. The 
author of that observation is 
not some raving Leftie. It is 
not even yours truly. It is Lord 
Lawson, in a commentary on a 
recent pamphlet'. 7 remember 
visiting the former chancellor 
following some of his Budgets 
and being struck by his seem- 
ingly puzzled response to the 
simple question: “What do 
your measures do for the least 
well-off?” We know the answer: 
since 1979 successive Conserva- 
tive governments have engi- 
neered a huge redistribution of 
wealth and income horn the 
poor to the rich. 

Much of the familiar evi- 
dence to this effect is 
rehearsed in Soda/ Justice, the 
report 2 of a commission set up 
by the late Mr John Smith in 
1992, after he became leader of 
the Labour party. The Tories' 
principal engine for widening 
inequalities is the tax mecha- 
nism. Top rates of personal 
income tax were cut. most dra- 
matically by Lawson. N.. in 
1988. Takes on consumption 
have more than doubled. In 
consequence, tbe net dispos- 
able income of the least afflu- 
ent tenth of the population was 
squeezed, certainly in relative 
terms and in many instances 
absolutely. “Today.” says the 
social justice commission, 
whose chairman is Sir Gordon 
Borne, “the gap between the 
earnings of the highest-paid 
and those of the lowest-paid 
workers is greater than at any 
time since records were First 
kept in 1686.” 

So we can take it. can we 
not. that the advice given by 
Sir Gordon and his colleagues 
is that the evil work of the 


1980s must be undone the min- 
ute a Labour government takes 
office? Presumably the scaffold 
beckons, or the tumbrils; 
surelv at the very least the 
dungeons? WeiL actually, no. 
The suggestion is that there be 
a “maximum tax bill”, which 
would limit the proportion of 
any individual's total income 
which could be paid in income 
tax and national insurance 
contributions combined to SO 
per cent. Half. The multi est of 
millionaires can keep the other 
half. Whew! Admit it. You. I. 
Nigel Lawson and Ring Midas 
would settle for that. In case 
Labour's putative chancellor 
misses it, the page, Mr Gordon 
Brown, is 390. 

There are 

many such 
nuggets in this 


years. It implicitly regrets the 
errors of the 1970s. when 
Labour was last in charge. V l ’ c 
says of the 19S0s that "the 
neo-liberals' medicine has 
proved worse than the dis- 
ease". We'll leave that debat 
able judgment to the histori- 
ans. The question is. what 
about the present decade, and 
the one to follow? 

It would be nice to say that 
Sir Gordon and his happy band 
have provided us with a satis- 
factory answer. Alas, they 
haven’t. They have set out the 
pieces of a puzzle that some of 
us have been reading about 
and sometimes even writing 
about for years. The welfare 
state that evolved from Sir Wit 
_ liam Bever- 
idge's report of 
Beveridge saw November 1942 


m w 7 

i5fiS h j££ so** 31 insurances 

some of them a Safety net Ot Sion. Beveridge 

manageable 
proportions; we 
know it to be a 
money-guzzling 
leviathan 


similarly fla- 
voured. A mini- 
mum wage? 

Yes. but, er. 
cot too much. 

Say £3.50 an 
hour. Work- 
fare? No - but, 
instead. What mmmmmmmmm 
are called in the United States 
“w elfar e to work” schemes. “Of 
course, someone who unrea- 
sonably turns down a job or 
training offer cannot expect to 
continue claiming full benefit” 
says the commission. Means- 
tested benefits? No, never - 
well. yes. for the affluent. Top- 
rate taxpayers might be taxed 
on child benefit (within the 50 
per cent ceiling?), while pen- 
sioners of ample means would 
be ineligible for the proposed 
new higher-rate top-up state 
pensions. 

In short Social Justice is the 
very model of n modern 
moderniser’s manual. It might 
help the new Labour leader to 
capture his party. It castigates 
the unregulated free market, 
yet declines to return to the 
socialist nonsense of earlier 


could assume 
full employ- 
ment: we can 
at best aspire 
to it. He took it 
for granted 
that wives 
would return to 
mmhm stove and 
hearth after the war: we are 
blessed with 1990s womanhood. 
He saw social insurance as a 
safety net of manageable pro- 
portions; we know it to be an 
unstoppable, money-guzzling 
leviathan. Then Britain was 
the mother of an empire: now 
it is the unruly stepchild of the 
European Union. 

Sir Gordon's commission 
calls enticingly for a readjust- 
ment. a renewal of British eco- 
nomic and social policy. To 
that end, it provides a bran-tub 
full of ideas, many o( them 
Clintonesque, from which 
Labour may draw. These be.uls 
are drawn together »m a string 
labelled “investors' Britain”, a 
concept combining “tbe etliics 
or community with the dynam- 
ics of a market economy”. This 
turns out to mean goodies like 


universal nursery M-liooling. a 
■■learning bank” tn . the 
availability of editc-itnm and 
training during la 

cmplov-nem: an “intrHigrnt 
welfare slate" wIsum' purpose 
is to encourage p*t'plc i*ff the 
dole and into tubs. fair taxa- 
tion. and a great many other 
improvements to lift*. llw* uni- 

verse and evert thing 

Such promised delights are 
not to be sneezed at. hut cun 
we believe that Labour cuukl 
deliver them, even tn the 15 
years allowed fur? “We are 

iiot ... a commission t,r 

mists.” say Sir Gordon & Go. 
and thank heavens tor that U 
would help, though, if they 
confessed to just a little 
numeracy The Beveridge 
report is filled with sums. They 
all turned out wrong in tlu* 
end. hut precise columns giv- 
ing totals in and totals out do 
add verisimilitude to even the 
most alluring social blueprints. 
To say this is not the same as 
supporting the ine friable Con- 
servative sneer about what 
taxes go up or what service is 
cut to jki.v for this nr that it is 
just that the days when you 
could plausibly offer broad 
sweeps of history without the 
hacking of narrow r:iic illations 
are long gone 

Labour wilt doubtless 
address such n nibbles in its 
election manifesto, a document 
that may ho influenced by but 
is not likely to bn congruent 
with the social justice report. 
The party knows that it must 
support free trade, low. albeit 
“fair” personal taxation, mini- 
mal infintiun, and tlie market 
economy. What we will get is 
an undertaking by sensible pol- 
iticians of Moderate persuasion 
to iron out the rough edges of 
rapitutecai. to make it less red 
in tooth ami claw. Perhaps that 
will ease laird lawsuit's mind. 

1 A Murat Basis fur Liberty, 
IEA, £ Lord North Street SWlP 
3LG. * IPPR/Vititage paperback. 
4 IS pages. IK%i 


LETTERS TO THE EDITOR 


Number One Southwark Bridge, London SHI 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed and not hand written. Please set fax for finest resolution 

Choice for domestic gas consumers essential 


From Mr Stephen Locke. 

Sir, Michael Heseltine is 
right (Survey of the UK Gas 
Market “Support for liberalisa- 
tion gathers pace”. October 20). 
As the president of the board 
of trade points out, it is indeed 
high time that the 18m domes- 
tic consumers currently served 
by British Gas were offered a 
choice of supplier. 

Recent debate on the effects 
of competition, has focused on 
potential moves towards differ- 
ential pricing - both from 
region to region and between 
the high and low-volume gas 
users. 

The links which are being 
made between the introduction 
of competition and tariff reba- 
lancing are, however, mis- 


placed. It is true that re-balanc- 
ing may well take place in the 
near future. But adjustments 
would inevitably happen 
anyway, regardless of competi- 
tion. 

Under the Gas Act 1986, the 
regulator, Claire Spottiswoode. 
must ensure that British Gas 
does not discriminate in its pri- 
cing and, indeed, a review of 
tariffs to ensure that they more 
closely reflect true costs is 
sorely needed. 

What is clear is that, without 
competition, consumers faced 
with higher prices would have 
no choice but to pay them. 

With competition, they could 
up sticks and buy elsewhere. 

There must, of course, be 
vigorous public scrutiny of pro- 


posals to adiust tariffs, to reas- 
sure domestic consumers that 
British Gas is not trying to 
load the dice as competition 
looms. 

Some proposed adjustments 
may need to be challenged; 
British Gas may. for instance, 
have to be pressurised to 
reduce any inefficiencies 
rather than pass costs to con- 
sumers. 

As the Gas Consumers Coun- 
cil illustrated, in its evidence 
to the House of Commons 
trade and industry committee 
on October 19, there is an over- 
whelming consumer argument 
in favour of dismantling Brit- 
ish Gas’s monopoly. 

As long as basic ground 
rules for competition, particu- 


larly on obligation to supply, 
are established and guaran- 
teed, and costs to market 
entrants are set fairly, there is 
no reason why domestic con- 
sumers should not enjoy the 
significant benefits promised 
by competition. 

With the Queen's speech in 
the offing, the initiative lies 
with the government 

It must use its leg- 
islative clout to promote 
its competitive convictions. 
Gas competition is long over- 
due. 

Stephen Locke. 
director of policy. 

Consumers' Association, 

2 Marylebone Road. 

London. 

NW1 4DF 


Improve state aids controls 


Hefty tax increases on the way 


From Mr Andrew Smith. 

Sir, When is a tax increase 
not a tax increase? Many finan- 
cial commentators - your- 
selves included - give the 
impression that the forthcom- 
ing Budget will be neutral. “Mr 
Clarke has already ruled out 
significant tax cuts for this 
year, while the good perfor- 
mance of the economy this 
year rales out any further tax 
increases” (Editorial. "Mr 
Clarke's Budget task”, October 
21 ). 

It is not surprising that the 
chancellor has ruled out tax 
cuts, given that he plans 
exactly the opposite - a fur- 
ther £6.5bn increase, 
announced in tbe last Budget 


(The main measures are, of 
course, the imposition of VAT 
cm fuel at tbe full rate, sharp 
rises in excise duties and fur- 
ther restriction of Miras and 
the married couple’s allowance 
relief.) 

While the chancellor's desire 
to gloss over the fact that per- 
sonal taxes will rise sharply 
again in 1995-96 is understand- 
able, it is less clear why com- 
mentators should wish to do 
the same. When Mr Clarke con- 
firms the rise, will the Finan- 
cial Times report that the Bud- 
get contained no tax increases? 
Andrew Smith, 
chief economist 
Credit Lyonnais Laing. 

London EC2A 2DA 


14 


M r Lou Gerstner is 
becoming a Wall 
Street hero. Since 
taking over at the 
helm of International Business 
Machines 18 months ago. Mr 
Gerstner has engineered a 
remarkable turnaround in the 
financial performance of the 
world's largest computer com- 
pany, after three years of 
heavy losses. 

The upward trend was con- 
firmed last week when IBM 
reported net profits of S689m. 
or 81.18 a share, for the third 
quarter - well above expecta- 
tions. Revenues increased to 
315.4bn, up 8.6 per cent from 
the same period last year, after 
adjustments for the sale of a 
business unit and accounting 
changes. For the year to date, 
expenses are down by S2.8bn 
following 24,000 job cuts and 
other cost reductions. 

After four consecutive quar- 
ters of profit, it appears that 
IBM has turned a corner. The 
company's shares are trading 
at around S74, the highest level 
in two years, reflecting grow- 
ing investor confidence. 

Yet IBM’s new-found 
strength could be short-lived. 
Some important segments of 
IBM's business are still operat- 
ing at a loss and the company’s 
improved financial perfor- 
mance is at least in part the 
result of good luck, rather than 
good management or foresight. 

The paradox for IBM is that 
the restoration of its revenues 
and profits over the last three 
quarters has been on the back 
or unexpectedly strong demand 
for its mainframe computers, 
its flagship - and most profit- 
able - products. 

For years, IBM’s business 
strategy centred on its main- 
frames as the workhorses of 
corporate data processing. The 
company's recent difficulties 
have come from its failure to 
respond to mounting competi- 
tion from networks of personal 
computers and servers. 

Failing to respond to the 
technology shift was "the sin- 
gle most important mistake 
that IBM made.” Mr Gerstner 
said earlier this year. He 
ordered "a massive redeploy- 
ment of development money” 
away from mainframes into 
new products for networked 
computing. 

Mr Gerstner may be tempted 
to believe that the mainframe 
resurgence signals another sea- 
change in computer technology 
trends. IBM is currently renew- 
ing its mainframe marketing 
efforts and postponing consoli- 
dation of mainframe manufac- 
turing operations. 

“We have been listening to 
customers’ needs and meeting 
them,” says Linda Sanford, 


general manager for IBM’s Sys- 
tem 390 mainframe products. 
“Customers are adamant that 
they are not willing to aban- 
don their investments in main- 
frame software, which total 
over a trillion dollars world- 
wide,” she says. 

The mairtframp is also gain- 
ing new respect as corporate 
computer users become less 
enamoured with “alternative 
solutions” based on networks. 
Tor reliability and robustness 
you cannot beat a mainframe,” 
says Jerry York. IBM chief 
financial officer. “The alterna- 
tives are not yet bullet-proof 
enough.” 

Yet many industry observers 
believe that the role of central 
“host” mainfr ames will decline 
as distributed computing takes 
hold. The temporary comeback 
of the mainfram e may reflect 
nothing more than the eco- 
nomic recovery in the US and 
Europe which has created a 
surge in new orders after three 
years of depressed spending. 

If so. IBM’s mainframe "bub- 
ble” will not last, leaving the 
company vulnerable to the 
problems of some of its other 
businesses which are critical to 
future revenue growth. 


In the PC sector, for exam- 
ple, IBM is struggling to 
achieve profitability. “Our PC 
problem continues.” Mr York 
said last week. “(It) will proba- 
bly takp us until the mid of 
1995 to see progress that we 
will feel really good about” 
Over the last year, IBM has 
lost market share in PCs to 
competitors including Compaq 
Computer, which has over- 
taken IBM to become the mar- 
ket leader. Struggling to regain 
its momentum. IBM has 
restructured its PC operations, 
cut jobs and simplified overlap- 
ping product lines. 

B ut it seems that IBM 
keeps bungling oppor- 
tunities in the PC 
market. Last month it 
launched a new line of 
“Aptiva" consumer desktop 
multimedia PCs to very posi- 
tive reviews. But the IBM PC 
unit underestimated demand 
and already has orders for all 
of the Aptiva PCs it can build 
by the end of the year. 

Uncertainties surrounding 
the future of IBM’s PC busi- 
ness are increased by the com- 
pany’s efforts to establish the 
“PowerPC” microprocessor, the 


heart of a new generation of 
PCs. jointly developed with 
Motorola and Apple Computer. 
But in the absence of suitable 
software, tbe project could 
take years to bear fruit. 

Data storage products repre- 
sent another weak point for 
IBM. Revenues declined by a 
“double digit” percentage in 
the third quarter against the 
same period last year, said Mr 
York. Although sales of disk 
drives for PCs grew strongly. 
IBM has been losing ground in 
the market for high capacity 
data storage systems. 

Mr Gerstner said last week 
that he was encouraged by 
IBM’s progress in moving new 
technology “from lab to manu- 
facturing to market much fas- 
ter”. But data storage is an 
example of IBM’s failure to 
keep pace with competitors in 
exploiting new technology. 

IBM is also playing catch-up 
in the market for PC software, 
which is currently dominated 
by Microsoft. The recent 
launch of OSj2 Warp, a new PC 
operating system to rival 
Microsoft's Windows, could 
give IBM a boost. But its 
investments in software devel- 
opment currently outstrip rev- 
enues from this important 
growth sector. 

There are some bright spots 
for IBM. Sales of its AS/400 
mid-range computers increased 
by about 25 per cent in the 
third quarter, following the 
launch of models earlier this 
year. It is also making rapid 
progress in the sale of semicon- 
ductor chips to outside custom- 
ers, with sales of $2^bn to date 
this year, from next to nothing 
two years ago. 

Yet as IBM continues to pare 
back its spending on research 
and development - down by 23 
per cent in the third quarter to 
just over 31 bn - the company 
will face a crisis if revenues 
from older product lines, in 
particular its mainframe com- 
puters, decline more quickly 
than growth in other sectors. 

Financial analysts expect 
IBM’s performance to continue 
to improve through 1995. Mr 
Gerstner has also silenced the 
industry pundits who just two 
years ago said that the only 
way to "save" IBM was to 
break it up into smaller, more 
agile businesses. 

But the longer term outlook 
is far less certain. Even as he 
continues to cut costs, the 
more difficult challe nge facing 
Mr Gerstner is to generate rev- 
enue growth on a sustained 
bams. So far he has not demon- 
strated how IBM will achieve 
this goal, although as Mr York 
puts it, “a huge amount of our 
energies are focused on that 
issue”. 


From C M Purvis. 

Sir, Your leading article on 
state aids in Europe (“Control- 
ling state aids”, October 19) 
rightly highlights the distor- 
tion they cause to competition 
and the threat they pose to the 
single market 

In no case is the danger of 
inadequate regulation of state 
aids greater than in sectors 
which already have excess 
capacity, and where growth in 
demand is inadequate to 
restore equilibrium between 
demand and capacity. That is 
why the European synthetic 
fibres industry has consis- 
tently supported the European 
Union guidelines which pro- 

Not a blanket 
ban on banks’ 
double charges 

From Mr John F Mogg. 

Sir, While I much appreci- 
ated your support for our 
cross-border credit transfers 
initiative, a misunderstanding 
has crept into your editorial 
(“Paying the price", October 
20 ). 

You claim that “there may 
be cases where customers are 
happy to split charges" and 
suggest our proposed directive 
is “too prescriptive" by ban- 
ning double-charging alto- 
gether. 

Our proposal is that double- 
charging is banned only in 
those specific cases where the 
customer has instructed the 
banks not to levy a charge on 
the receiver. 

Customers would remain 
entirely free to split the 
charges if they wished. 

John F Mogg, 

director general 

internal market and financial 

services. 

European Commission. 

Brussels. 

Belgium 


bibit subsidies for creation of 
new capacity in our sector. 
Such guidelines may, as you 
point out, lead to inconsistency 
between sectors. However, the 
way to deal with such inconsis- 
tency must be to improve the 
standards of monitoring and 
control of state aids to the best 
possible level - not to reduce 
the level of safeguards, where 
they exist in a relatively effec- 
tive form, to a low common 
denominator. 

C M Purvis. 
director general 
International Rayon and 
Synthetic Fibres Committee. 
Avenue E Van Nieuwenhuyse 4. 
Brussels 


CSO concerned 

From Mr Martin Brand. 

Sir. Mr Boaxn (Letters, Octo- 
ber 21) suggests that the Cen- 
tral Statistical Office is too 
gloomy about consultants' 
overseas earnings. 

The CSO is concerned with 
facts, not feelings or beliefs. 
We go out to nearly 4.000 con- 
sultancy firms to establish 
those facts and we have no rea- 
son to doubt the accuracy of 
our survey. 


From Mr Waller Grey. 

Sir. Despite a tendency, out- 
side as well as within the Euro- 
pean exchange rate mecha- 
nism. for exchange rate 
fluctuations to lessen in recent 
years. Peter Norman (Econom- 
ics Notebook: "Problems with 
exchange rates”, October 17) 
noted a strong desire Tor 
greater exchange rate stability 
at the recent IMF annua) meet- 
ing - which, since few posi- 
tively desire the reverse, is 
hardly surprising. 

However, such stability, 
which requires two or more 


with facts only 

We could only speculate at 
present on why Mr Boam's fig- 
ures might be different, but we 
would be glad to look at what- 
ever information he is able to 
provide on the basis of his 
survey. 

Martin Brand, 

Central Statistical Office. 
Government Buildings, 

Cardiff Road. 

Newport. 

Gwent NP9 1XG 


countries to move in step with 
each other, has to grow from 
the grassroots up and cannot 
be imposed from above. So the 
IMF would be best employed 
using its unrivalled experience, 
as well as all available public- 
ity resources, in helping to 
frame and to monitor an 
agreed international code of 
economic (fiscal as well as 
monetary) conduct. Obser- 
vance of this would be a pass- 
port to sound economic man- 
agement. and hence stable 
exchange rates, across the 
globe. 


Bad name 

From Chris Cosset/. 

Sir. I have read with interest 
all your articles on re-engineer- 
ing and was struck particu- 
larly by Christopher Lorenz's 
observation ("Putting re-engi- 
neering in perspective", Octo- 
ber 21) that re-engineering may 
be “getting a bad name”. 

I wonder, rather, whether it 
is a bad name? 

Chris Cossey. 

London SEll 4LD 


Given this accent on the 
maintenance of economic law 
and order at national and later 
regional level, the rest, includ- 
ing the hitherto elusive goal of 
currency stability, will follow 
almost automatically. Mean- 
while, the IMF. though argu- 
ably the best world central 
bank we have yot liad with the 
possible exception of the Bank 
of England in Its heyday, still 
has some way to go before it 
grows fully into that role. 
Walter Grey, 

Finchley, 

London N3 SAN 



Amsterdam 

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Berlin 

Bruxelles 

Dusseldorf 

Frankfurt 

Geneve 

GSteharg 

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Hamburg 

Helsinki 

Kflbenhavn 

London 

Madrid 

Milano 

Muneben 

Paris 
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Stockholm 

Stuttgart 

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Venezia 

Zurich 


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a.-r J3 45 

Bucnresti 

3 r r 14 35 

Budapest 

50. *i« 4Q 

Kiev 

sr U 50 

Krakow 

arr. 1£ 55 

Ljubljana 

ZTt 15.40 

Minsk 

arr.14 35 

Moskwa 

uTI 16 10 


Odi 

jTt. 15.35 

Prate 

err IS 45 

SLPeterstwrg 

err 1615 

Sofia 

err. 14.40 

Timisoara 

arr. 14.35 

Brand 

err. 14 05 

Vilnius 

err. 14.55 

Warszawa 

.-.n. 12.45 

Zagreb 

:rr 12.45 


. . ue those via Vienna International Airport, ore of the most important hubs m Europe. Austrian 
Airlines, a Western airline with decades at experience in Eastern Europe, otter you If destinations in Eastern 
Europe in many cases we have the quickest or even the only connection to important Eastern European cities. 
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Welcome To 


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Vienna 

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IMF code of economic conduct required 


FINANCIAL TIMES TUESDAY OCTOBER 25 1994 





FINANCIAL TIMES 


One Southwark Bridge, London SE1 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Tuesday October 25 1994 


Canada’s debt 
dilemma 


Last week’s publication of the 
Canadian government's 
outlining a new framework for 
economic policy was accompanied 
by much plain talking from 
finance minister Mr Paul Martin. 

“We are,” he declared, “in hock up 
to our eyeballs.” Current policy, 
he added, was unsustainable; and 
further spending cuts or tax 
increases would be needed to put 
it back on course. 

The good news for Mr Martin 
was that the bond markets did not 
take fright at his diagnosis. But 
nor were they cheered by his pro- 
testations of fiscal austerity to 
come. Despite the modest 
improvement in market s e ntimen t 
since the narrow victory for the 
separatist Parti Qu&becois in the 
recent Quebec election, the yield 
on 10-year government bonds 
remains at over 9 per cent Even 
assuming an increase in Canada’s 
inflation rate to 2 per cent - the 
midpoint of the official inflation 
target - the real yield would still 
be a phenomenal 7 per cent That 
is more than 2Y* percentage points 
above the real yield on US Trea- 
sury bonds. 

Unflattering though the compar- 
ison may be, it does not point to 
market fears of a direct Canadian 
default Real yields on US doHar- 
denominated Canadian govern- 
ment bonds are closer to those on 
US government debt than Cana- 
dian. Nor is inflati on set to take 
off in the short to medium term. 

The question is how for other fac- 
tors can justify such a differential. 

Capital importer 

Part of the gap is attributable to 
Canada's role as a capital 
importer. Despite running a con- 
sistent trade surplus, the country 
has had a current account deficit 
in all but three of the past 20 
years, largely because of interest 
payments on a huge stock of 
external debt Much of that for- 
eign debt, amounting to 44 per 
cent of GDP, has been used to 
finance current consumption. The 
result is that the current account 
deficit this year will be equivalent 
to 2ft per cent of GDP at a point 
where Canada’s chief trading part- 
ner, the US, is dose to the peak of 
the economic cycle. 

Nor has the political worry 
entirely gone away, despite evi- 
dence in recent poQs that there is 
no great appetite in Quebec for 

Labour’s new 
social justice 


separation. Yet by far the most 
important factor in the bond mar- 
ket is the risk premium relating to 
a spiralling debt stock which 
stands at 100 per cent of GDP. 
Canada is in the vicious circle 
where deficits lead to highw inter- 
est rates, which in turn create fur- 
ther budgetary problems. Such is 
the compounding effect of interest 
on the outstanding debt that 
despite federal spending now 
being lower today as a proportion 
of GDP than in the mid-1970s, fis- 
cal deficits have become en demic. 

Faster growth 
With growth of 4% per cent the 
federal government calculates that 
it will need to run a primary bud- 
get surplus (which excludes inter- 
est) of more than 2.6 per cent 
before its debt to GDP ratio can 
begin to stabilise. Yet the primary 
surplus this year will fall well 
short of that level; and the federal 
government has always had diffi- 
culty in restraining provincial 
government spending. While fos- 
ter growth has offset the impact of 
the rise in interest rates this year, 
the increase will become more 
damaging over time as existing 
long-term debt matures. 

There are two obvious policy 
responses. The least desirable is to 
monetise the debt by borrowing 
from the banking system, a form 
of internal default by inflation 
which will lead to overvaluation 
of the real exchange rate and sub- 
sequent devaluation. That is what 
the bond markets fear. While 
superficially attractive, it is no 
real solution because It Increases 
the cost of servicing the mountain 
Of foreign riftnnmmateri debt 
The alternative, which the Lib- 
eral government rightly prefers, is 
fiscal adjustment But while the 
government talks of root and 
branch social security reform and 
proposes to reduce the deficit from 
5.4 pm- cent last year to 3 per cent 
by 1996-97, the markets are sus- 
pending judgment until they see 
real action. Mr Martin claims that 
the government can deliver pre- 
dominantly through spending 
cuts. That hope looks pious in the 
light of many previous failed 
attempts to cut the deficit With- 
out significant tax increases, Mr 
Martin’s next budget is unlikely to 
receive the endorsement that will 
pave the way for lower real inter- 
est rates. 


A plan for modernising the 
welfare state, or a plan for 
modernising the Labour party’s 
vision of the welfare state? The 
Co mmissi on on Social Justice may 
have thought it could deliver both 
of these things. But the missions 
are distinct. The commission’s 
final report has stre n gt h s on both 
counts, but ultimately delivers 
only on the second. 

Two years of preparation may 
have raised expectations unrealis- 
tically high, but they have not 
been in vain. At a minimum, the 
400-page document published yes- 
terday is a valuable compendium 
of suggestions for improving the 
functioning of the country’s out- 
dated system of tax and benefits. 

There is little in the report that 
is fundamentally surprising. It is 
well-known that social and eco- 
nomic change over the past 50 
years has for outpaced reform of 
the structure of the country’s wel- 
fare state, with lamentable conse- 
quences. Employment, for exam- 
ple, is now less likely to be full 
time or long term, and more likely 
to be female than it was In 1945. 
Yet the current benefit system 
does not take this sufficiently into 
account 

The commission’s report con- 
tains a variety of sensible propos- 
als - both short term and long 
term - for reforms which would 
improve things. Some could be 
adopted by the current govern- 
ment without much difficulty, and 
are even wwiflar in outline to gov- 
ernment pilot projects now under 
way. Many of the detailed trai ning 
proposals in the report, for exam- 
ple, foil under this head. 

Starting points 

Unsurprisingly, many more of 
the commission’s solutions 
require a political and fi n anci a l 
commitment which the current 
government, at least, would not be 
likely to contemplate. Yet in sug- 
gesting ways of regularising the 
treatment of the self-employed or 
the creation of a new part-time 

unemployment benefit, the report 
is helpful. It provides sensible 
starting points towards answering 
questions which any administra- 
tion must pose, in tight of recent 
labour market trends. 

The question winch the report 
resolutely refuses to answer is 
how much it will all cost Viewed 
as a Labour manifesto-in- waiting, 
it is perhaps Inevitable that the 


report shies away from explicit 
expenditure commitments which 
could be used as ammunition in 
t he lead-up to the electio n 

Welfare state 

Yet the commission has long 
claimed a somewhat higher, less 
partisan, mission: a fundamental 
re-formulation of both the purpose 
and structure of the welfare state. 
Judged in that light, the failure to 
cost any of its proposals is a seri- 
ous foiling. Vision is one thing; 
but Informing a truly cros&party 
debate on future reforms must 
involve putting a price tag on the 
wish-list 

In the past public debate on the 
subject has traded to travel along 
two separate paths: the desire for 
a better welfare system, on the 
one hand, and the difficulties of 
paying for tham , on the other. The 
commission might have distin- 
guished itself by bridging that 
divide. By and large, it chose not 
to. 

The Labour party has been the 
beneficiary of this caution. By 
implicitly accepting a narrower, 
more partisan, role for itself, the 
mmwissinn haw provided Mr Tony 
Blair with something few Labour 
leaders have had in the past: that 
is, a well-considered volume of 
ideas for left-leaning social and 
economic policies which spells out 
the interconnections between the 
two. 

It remains to be seen whether 
this will be enough. On the ques- 
tion of pensions, for example, the 
commission has provided the 
Labour party with a way to 
means-test the support given the 
elderly, in all but name. As with 
the taxation of child benefits for 
higher-rate taxpayers, the “princi- 
ple" of universal benefits has been 
retained, in such a way as to miti- 
gate their biggest financial short- 
comings. What has been missed is 
the opportunity for a more radical 
rethink of the benefits and taxes 
which a modern Labour party 
might embrace. 

These ami other examples of 
political fudge cloud the more 
visionary elements of the report, 
such as the proposals for commu- 
nity development trusts and for a 
Clinton-style "Citizen’s Service" 
for young people. The Labour 
party will doubtless embrace both 
the vision, and the fudge. The 
country will have to look else- 
where fir the cost 


F rom the boardrooms of 
New York to the shop- 
floors of Kuala Lumpur, a 
forgotten sound Is rip- 
pling around the world. It 
is the murmur of Japanese bankers 
striking deals with foreign, clients. 

Four years ago, the Japanese 
global lending explosion disinte- 
grated amid recession, bad debts 
and regulatory restraint. But 
Tokyo's banks are now returning to 
the world’s markets - awakening 
the fears of European and American 
bankers, who remember the bruis- 
ing experience of being undercut by 
the Japanese on lending rates. 

"After several years of declining 
lending overseas, we are at last 
starting to see signs of a sustained 
increase in most markets,” said 
Sanwa Bank’s Mr Masateru Naka- 
mura, deputy general manager of 
the international division. 

In Asia, foreign lending by the 
main Japanese commercial banks 
has jumped by 12 per cent, or 
Yl.OOObn, in the past year, with all 
the banks opening new offices in 
Thailand, China. Malaysia and even 
Vietnam. In the past six months, 
the banks have seen the first 
increase for four years in lending 
volumes in America. Only Euro- 
pean markets remain subdued, but 
even there most banks expect an 
Increase in the next, year. 

However, the motivation for this 
lending recovery is different from a 
decade ago. In the 1980s, Japanese 
banks, bloated by the country’s 
huge current account and savings 
surpluses, became the world's lead- 
ing lenders. Now, feeling the pinch 
at home, these same banks have 
been forced to look offshore for 
business to maintain growth in 
their halanro sheets. 

Domestic lending by Japan’s II 
leading city banks has fallen by 
Y3,000bn, or more than l per cent, 
in the last year, the first drop In 
decades, as corporations continue to 
adjust to the over-accumulation of 
capital in the 1980s, and banks 
remain wary of repeating the mis- 
takes that led to their bad debt 
problems. In the longer term, the 
domestic outlook is even worse, 
with companies turning away from 
hanlr tending to bond issuance as a 
source of finance, 

"The domestic market is so weak, 
we made a decision earlier this year 
to step up foreign lending to fill the 
gap,” said Mr Tomoyuki Shoji, of 
Sakura’s International Planning 
Division. "This is not a temporary 
shift,” adds Mr Kazuaki Kitabatake 
at Fpji Bank's international divi- 
sion. "We are seeing a long-term 
structural change in our operations 
towards more foreign lending.” 

This view is causing alar m a mong 
foreign bankers. The last surge in 
Japanese lending overseas brought 
claims of unfair competition. Euro- 
pean and US bankers argued Japa- 
nese banks could offer (heap loans 


A weak domestic market is forcing Japanese banks to 
increase their overseas lending, writes Gerard Baker 

The appeal of 
foreign climes 


because of the low cost of funds In 
Japan, held down by a system of 
regulated deposit interest rates. 

Even more troubling was the 
apparently easy availability of capi- 
tal which enabled hanka to expand 
their lending. Under Japanese rules, 
unrealis ed gains on equity holdings 
could be counted as capital, a bene- 
fit that mushroomed in significance 
as the Japanese stock market took 
off in the late 1980s. 

In 1988 the Bank for International 
Settlements (BIS) attempted to rein 
in the Japanese by Imposing stricter 
rules on the treatment of equities as 
capital Recession at home and a 
mountain of bad debts around the 
world also forced Japan's banks to 
cut their lending overseas, which 
peaked in 199L New lending has 
been stagnant until this year. 

Eager to defuse concerns over 
their return to the international 
market, the banks say there are 
important differences today. The 
new capital adequacy rules require 
thf»m to have much hi ghw capital 
ratios than before - so increases in 
lending will require larger Increases 
in capital than previously. 

This month, the final remaining 
regulations capping interest rates 
were removed by the Ministry of 
Finance, limiting the availability of 
cheap funds. And the bad debt cri- 
sis of the past four years has radi- 
cally altered the creditworthiness of 
Japanese banks - increasing the 
cost of raising funds. 

But the pressure on b anks to 
expand their overseas business in 
the absence of lending growth at 
home win put pressure on them to 
keep margins thin. More important, 
the apparent disappearance of some 
of the favourable conditions for Jap- 
anese hanks is largely illusory. 

Capital adequacy ratio require- 
ments may be tougher, but the ease 
with which banks managed to 
replenish their capital in the early 
1990s, despite falling stock markets, 
mean that ratios are now well 
above minimum BIS levels, even if 
they are below those of US and 
European banks. The average ratio 
of capital - including share capital 
convertible debt and discounted 
equity holdings - to assets, for the 
six largest Japanese banks is more 
than 9.5 per cent - comfortably 
above the minimum 8 per cent BIS 


Japan’s banks: a return to the fray 

Lending profile of 13 leacBng Japanese banks 

Domestic lending (DOOs Ybn) 



82 93 94 

Loan k»s provisions ss % of loam 

0.8 



1989 90 91 92 

Source: IBCA 

guidelines and leaving plenty of 
room for expansion. Those ratios 
have also been helped by the strong 
yen, which has cut the value of 
overseas loans, while leaving the 
value of capital (In yen) unchanged. 

Though interest rates have been 
deregulated, relatively relaxed mon- 
etary conditions mean they remain 
much lower than in other countries. 
The average deposit rate in Japan is 
about 3 per cent, against 5-6 per 
cent in Europe and the US. Japa- 
nese banks hold a higher share of 
their liabilities in the form of 
short-term demand deposits - 
which cany low interest rates - 


1990 81 92 93 94 

Racal year endng March 31 

than their US and European coun- 
terparts. 

Furthermore, Japanese banks 
have traditionally accepted a 
smaller return on assets than US 
and European banks. Average net 
interest as a proportion of total 
income at the leading Japanese 
banks is just over 1 per cent, 
against 2J> per cent in the UK and 
2JJ per cent in the US. According to 
Mr David Marshall at the bank 
credit rating agency, IBCA, this is 
largely due to the way the banks 
were set up by government fiat 
after the second world war. They 
were meant to rfumnBi funding at 


the cheapest rate from savers to 
industry, to finance Japan's indus- 
trial reconstruction. Shareholders' 
interests were not paramount, and 
the spreads the banks were pre- 
pared to take were much lower. 

For these reasons, the scope for 
cheap lending remains. According 
to Ms Alicia Ogawa, analyst at Salo- 
mon Brothers in Tokyo: "Japanese 
h anks continue to have a significant 
competitive advantage over their 
foreign rivals. It's just that nobody 
has noticed it for the past few years 
because they've been cutting back.” 

Now they are returning, the Japa- 
nese banks are pressing their 
advantage by paring lending rates. 

US and European bankers argue 
that loans to “investment grade” 
companies must have margins of at 
least 0.8 per cent over their cost of 
hinds to cover costs and make a 
return on capital. But Snnwa offi- 
cials say that they are prepared to 
see margins as low ns 0.541.75 per 
cent. According to Sakura's Mr 
Shoji. the bank will go "no lower” 
than 0.25 per cent. Most other Japa- 
nese banks are within this range. 

T he Japanese respond to 
criticism that these mar- 
gins arc suicidally 
unprofitable by saying 
they are simply respond- 
ing to competitive pressures in a 
market where demand for capital is 
still relatively weak. The Industrial 
Bank of Japan's senior interna- 
tional manager Mr Yasuharu 
Yoneda, says: "Other banks are cut- 
ting their margins, so we have to be 
prepared to go lower.” 

If, as seems probable, the Japa- 
nese banks start to recover their 
market share in overseas lending, 
US and European banks may yet 
persuade the regulators to take a 
closer look at one aspect of their 
business - their treatment of bad 
debts. Under Japanese rules, banks 
have to declare as non-performing 
only those loons to bankrupt com- 
panies or those on which no inter- 
est has been paid for six months or 
more. Typically, US and European 
bank regulators have stricter crite- 
ria, usually requiring banks to 
declare loans on which interest has 
been cut sharply. 

Since non-performing loans are 
offset against capital, this enables 
the Japanese to increase their lend- 
ing much more sharply than other 
banks. Mr Marshall estimates that 
under US rules, the capital ade- 
quacy ratios of many Japanese 
banks would be below BIS minima, 
prompting an even more serious 
retrenchment than four years ago. 

Seven years ago, there was pres- 
sure on the Japanese to adjust to 
the rules of that market-place. In 
the end, they were forced by other 
factors to pull in their horns. As 
they return to the fray, they can 
expect more hostility from their 
international competitors this time. 


High bond yields: too good to be true 



Hindsight gives 
commentators an- 
swers to yesterday's 
conundrums, but It 
has been remark- 
ably silent as to 
why bond markets 
PERSONAL have fallen this 
— — year. Do the result- 
ing high real yields foretell infla- 
tion? Do they reflect a shortage of 
capital? Or have the activities of 
hedge funds created a technical dis- 
tortion? 

A dip into the history books sug- 
gests that the markets demand a 
premium to lend to countries which 
they feel might default Such a pre- 
mium has not been widely required 
since the 19206 and 1930s. 

If it is needed today, it Is because 
western governments are running 
deficits that have built up unprece- 
dentedly high absolute levels of 
debt These levels continue to rise 
in most countries. 

The capital flows which will fund 
such debt levels are now interna- 
tional, seeking out the best return. 
Countries with unattractive credit 
credentials find it hard to attract 
money; they can no longer rely on 


the inertia of local investors who 
know no better, or who have been 
bribed by fiscal incentives. 

The real yields now on offer may, 
though, prove completely unsus- 
tainable to service. Yet even at cur- 
rent levels, they are still not high 
enough to protect investors from 
the adverse currency movements 
that can occur. Investing in some of 
these countries is unattractive on 
any yield basis. 

Japanese investors have been 
learning that for the last decade 
and are, late In the day, voting with 
their feet and refusing to buy those 
countries' brads. 

It is instructive to see from the 
precedent of the 1920s how danger- 
ous a situation is thus created. 

Then it was the dollar surplus 
that dominated the capital flows 
and , uniquely, the dollar’s freedom 
of movement around the world at 
that time compares with today's. 
Any US investor who had obligingly 
lent other nations’ gow a m manta his 
dollars in 1918 had by 1930 lost all 
his money in six leading currencies, 
including the D-Mark. He bad also 
lost 86 per cent of his currency 
investment in France, 93 per cent in 


Portugal, 70 per cent in Italy and 50 
per cent In Spain. 

The exchange rate had held its 
own only in the Nordic currencies, 
sterling, the Swiss franc, the Dutch 
guilder and - incredibly in the light 
of postwar experience - the Argen- 
tine peso. 

So it is hardly surprising that, by 
the early 1930s, real yields on brads 
were as high as they are today. 

As recently as 1976 In 
the UK, the IMF 
halted the spending 
programme of a 
Labour government 

The ingredients in today's high 
bond yields are slightly different - 
but only slightly. Deflationary pres- 
sures have not led to falling retail 
prices as they did then, thus guar- 
anteeing high real yields whatever 
the nominal rate. 

Against this, two factors are 
worse today. The first is the abso- 
lute burden of debt The other is 
that nominal yields are much 


higher. In the worst of the 1930s, 
UK government stocks never 
yielded man than U per cent If 
inflation were to disappear today, 
the cost of servicing bonds at pres- 
ent rates could destroy even sound 
finances. 

One consequence of the 1920s was 
that governments stopped spending. 
John Maynard Keynes, the econo- 
mist famously pointed out that 
when citizens are frightened 
to spend and corporations cannot 
spend, governments have a duty 
to spend. Today we gaze in wonder 
at the naivety of the governments 
of the time in struggling to haianee 
their books in the teeth of de- 
flation. Seen in context, though. 
It was arguably the only thing to 
da 

The 1920s taught a harsh lesson: 
take the single example of Portugal 
in 1919 and 192a Its government ran 
a deficit of about 15 per cent of 
gross national product in each of 
those years. The money supply 
went from Es273m to Es611m, and 
the exchange rate against the 
pound from 7 to 36.6. This was not 
inflation - exactly the opposite. In 
real terms, less money was circulat- 


ing, as Is always the case when a 
currency collapses. This can easily 
be seen in Russia today. 

When markets go on strike, gov- 
ernment spending stops. As 
recently as 1976 in the UK, the 
International Monetary Fund halted 
the spending programme of a social- 
ist Labour government. Between 
the wars, it took the destruction of 
most of the world’s currencies to 
persuade governments to stop 

sp ending . 

The moral is deeply deflationary. 
The bond markets will be as won- 
derful as they were in the 15 years 
from 1920 for countries whose cur- 
rency survives. For others, how- 
ever, the promise to deliver on real 

yields that have recently been as 
high as 9 per cent (the going rate In 
Sweden, Canada, Italy and Austra- 
lia) for decades to come will be like 
the cheque for £2m given by a 
drunken reveller to the carol sing- 
ers: too good to be true. 

Jonathan Ruffer 

The author is chief executive of 
Ruffer Investment Management 


Observer 


Unlocking 
the Key 

■ Why did Derek Keys resign as 
South Africa’s finance minister 
after such a short time? His 
departure was botched ami 
damaged investin' confidence in 
So uth Afr ica at a particularly 
sensitive time. 

Keys says he stood down for 
"personal reasons 0 , but beyond that 
the question has never been 
adequately answered. There was 
Speculation that he did it partly 
because he wanted to spend more 
time with a wife who did not Eke 
politics. Any suggestion that he 
quit because he was fed up with 
South Africa’s new political regime 
has been stoutly denied. 

Hence the news that Keys is to 
move to London as executive 
chairman of Billiton, a subsidiary erf 
the Souto African mining house he 
used to chair, only adds to the 
mystery over the real reasons for 
his departure. The sight of a 
respected former finance minis ter 
going back to work for one of his 
former employees and basing 
himself mainly overseas is not the 
most reassuring message for foreign 
investors in the new South Africa. 


Perfect fit 

■ Who is fift h' n 'Rmsn n, the man 
mentioned in yesterday’s FT who 
helped think up ingenious ways for 


Big Business to fond the 
Conservative party without having 
to declare political donations in 
their accounts? 

Old stagers in the City who can 
remember the good old days when 
the marginal rote at tax was 98 per 
cent and the Labour party wanted 
to squeeze the rich till the “pips 
squeaked”, also fondly remember 
the firm of Emson & Dudley, 
apparently named after King Henry 
VQTs tax collectors. Emson used to 
compete with the likes of Godfrey 
Bradman and Roy Tucker to think 
up clever schemes to minimise the 
tax bills of the rich and famous. 
Nice to see that Emson’s expertise 
was put to good use. 


Seeing red 

■ Fresh signs of unrest in Russia 
where the current regime has 
maintain ed many of the perks and 
privileges of former Kremlin leaders 
- much to tiie irritation of 
Moscow’s tong-suffering residents. 

In Soviet times, a special lane was 
reserved in the centre of major 
roads enabling Politburo members 
to speed to and from their dachas; 
even now underpasses are cordoned 
off when a ministerial cavalcade 


However, there are 
heart-wanning signs that the public 
is tiring of such practices. Drivers 
on Kutuzovsby Prospect yesterday 
grew increasingly frustrated at yet 
another ministerially-inspired 

tr affic jam atid Started honking 



their hooters in protest. And then - 
horror of horrors - the cars at the 
front of the queue pushed through 
the red traffic lights blocking the 
way for the ministerial motors. How 
Brezhnev's eyebrows would have 
curled at such, impudence. 


White mouse 

■ Galling all Internet freaks. Latest 
addition to the Internet is an 
interactive tour of the White House, 
dick on a computerised version of 
the Clintons’ cat Socks and hear a 
meow. Click on President Clinton 
and he says: "This is the very first 
on-line tour of the White House.” 


Vice president A1 Gore plays a 
starring role. Users can click to see 
the vice president’s favourite 
political cartoons or read about his 
accomplishments. Another click of 
the mouse and the computer 
announces that Gore is “a leader on 
science, space and technology”. A 
veritable Pied Piper, indeed. 


Betting man 

■ The political survival of UK 
miniatar Neil Hamilton was not 
exactly the safest bet yesterday. 
How appropriate then that he was 
scheduled to speak at a conference 
in London on the boundary between 
insurable and uninsurable risks. 

The topic? “Threats and 
opportunities”. Hamilton obviously 
saw more threats than 
opportunities. He cancelled. 


Snap 


■ Be sure to keep your eyes peeled 
next thne you visit the Lord Mayor 
of London’s residence. When 
property tycoon Lord (Harold) 
Samuel died in 1987, his widow 
offered the City of London his 
remarkable collection of Dutch 17th 
century masters, some 80 plus 
paintings which now hang together 
in the Mansion House. During the 
two-year refurbishment of the Lord 
Mayor's residence, however, they 
were returned to Lady Samuel who 
became so attached to four of them 
th a t became disinclined to 


return them on its completion. 

Which is why sharp-eyed guests 
of the Lord Mayor will find, in the 
less well-lit comers of the now 
avocado and lime green wails, four 
expertly-framed photographs in 
place of the originals. 


Big steel 


■ A candidate for pr disaster of the 
year? The ink had barely dried on 
British Steel's press release giving 
"ten key reasons why steel is the 
car makers' first choice” at last 
week's motor show, when IRC AM, 
the Institute of Vehicle Technology, 
announced that Audi had won an 
award for its aluminium-bodied 
luxury car, the Audi AS. 

“It just goes to show how 
completely unbiased toe awards 
are," commented a brittle steel 
man. Then again he could not 
confirm whether British Steel 
would sponsor toe award again now 
that the enemy has walked off with 
one of the trophies. 


Close shave 

■ Britain's banisters may not be in 
danger of losing their wigs, but 
their opposite numbers in toe 
Emerald Isle may have to dump 
their ancient head-gear if Willy 
ODea. Ireland's justice minister, 
gets his way. He is firmly of toe 
opinion that "a race meeting is 
where you'd expect to see horse 
hair - not a court of law”. 



16 



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Tel: 0923 775S47 
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FINANCIAL TIMES 

Tuesday October 25 1994 


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Juppe condemns ‘degredation of political climate’ 


French presidency battle 
prompts appeal for unity 


by David Buchan in Paris 

The increasingly aggressive edge 
to the rivalry between Prime 
Minister Edouard BaUadur and 
Mr Jacques Chirac for the French 
presidency yesterday brought 
another appeal for calm within 
the ruling RPR Gaoliist party. 

Mr Alain Juppe, foreign minis- 
ter and secretary general of the 
RPR. wrote in yesterday's Le 
Monde newspaper that he was 
'‘amazed at the degradation of 
the political climate" in France. 

He urged Mr Balladur and Mr 
Chirac to come to some under- 
standing about who will run as 
the main conservative stan- 
dard-bearer in nest May's elec- 
tions. 

But the past week has seen the 
presidential rivals reject each 
other’s overtures, and resort 
more to the dagger - and less to 
the cloak. 

A new threshold was crossed 
yesterday when, in an interview 
with Le Figaro , Mr Bahadur com- 
plained that Mr Chirac had not 


spoken out in support of the gov- 
ernment’s policy of a strong 
franc during the currency crisis 
of mid- 1993 for fear of offending 
the RPR, of which Mr Chirac is 
the president 

“For a long time, Jacques has 
taken refuge in his party as if it 
were a citadel Is this really the 
spirit of the Fifth Republic?" que- 
ried the prime minister. 

The two rivals have previously 
avoided naming each other in 
their public attacks. 

Although Mr Bahadur’s direct 
criticism of Mr Chirac concerned 
an incident more than a year old, 
it summed up what the Bahadur 
camp sees as Mr Chirac’s fatal 
weakness. 

Mr Bahadur's followers argue 
that the RPR president is too par- 
tisan to win the Elysfie, and that 
only Mr Balladur has enough 
crass-party appeal to thwart a 
possible socialist contender like 
Mr Jacques Delors. The opinion 
polls so far support this. 

Mr Chirac's supporters hit back 
yesterday. Mr Jean-Louis Debr6, 


a senior RPR politician, criticised 
the prime minister for his “use- 
less and irresponsible" words 
about Mr Chirac. 

Mr Debris reminded Mr Balla- 
dur that he had once put in writ- 
ing that a prime minister should 
concentrate on governing and 
stay out of campaigning for the 
Elys&e. 

The prospect of an increasingly 
bitter and politically destabilis- 
ing Gaullist party war is. accord- 
ing to many hank economists in 
Paris, one factor that has caused 
foreigners to puli their money 
out of French stocks and bonds 
at the rate of FFrlOObn (£lU9bn) 
in each of the first three quarters 
of this year. 

Mr Balladur and Mr Chirac dif- 
fer more in style than policy, 
although over the weekend Mr 
Chirac raised a further question- 
mark over his commitment to 
European monetary union when 
he said the final decision to move 
to Emu should be put to a refer- 
endum, just as the Maastricht 
treaty had been. 


Ex-chief of Brent Walker 
cleared of fraud charges 


By John Mason in London 

Mr George Walker, former 
chairman of UK property and lei- 
sure company Brent Walker, was 
cleared yesterday of orchestra- 
ting a £19m ($30 -02m) fraud. The 
a trial, which cost £5m and lasted 
4Y- months, has called into ques- 
tion Britain's system of criminal 
prosecutions in fraud cases. 

Mr Walker, a professional 
boxer turned entrepreneur, was 
cleared of charges of theft, con- 
spiracy and false accounting 
brought against him by the Seri- 
ous Fraud Office, which handles 
all aspects of such investigations. 

“Tim case ruined three years of 
my life," Mr Walker said after- 
wards. 

The jury gave its verdicts after 
deliberating for seven days. The 
result of the case was seen in the 
financial and legal community as 


a further blow to the credibility 
of the Serious Fraud Office, 
the future of which looks uncer- 
tain. 

Mr Wilfred Aquilina, a former 
Brent Walker finance director, 
was convicted by a 10-1 majority 
on one charge of false accounting 
relating to a $4m payment by 


Heavy blow for Serious Fraud 
Office.. ... — Page 9 

Brent Walker to an offshore com- 
pany. but cleared of four other 
charges of theft involving £9.5m 
and conspiracy to falsify 
accounts. 

Mr Aquilina was released on 
bail and will be sentenced at 
Southwark Crown Court in south 
London on November 10. His 
lawyers are considering an 


appeal against his conviction. 

Sir Nicholas Lyell, the 
attorney-general, is considering 
proposals to place the SFO under 
the control of the Crown Prosecu- 
tion Service. Such a move would 
a mo un t to an implicit admission 
that the original thinking behind 
the creation of the office in 1988 
was flawed. 

The result of Mr Walker’s case 
was not thought in legal circles 
to be critical to the attorney’s 
decision. 

Of the charges brought against 
him, Mr Walker said: “It was just 
a story backed up by ifs’." He 
said that a lot of the time in 
court it was "impossible to know 
what the SFO was on about”. 

Mr Walker said he was contem- 
plating rebuilding his business 
career in the leisure industry. “I 
do think I have something to 
give.” he said. 


Brussels set to scrap steel rescue 


Continued from Page Z 

withdraw approval of private 
companies using industry levies 
to finance closures; and claw 
back relief offered against cheap 
imports. However, some Ecu240m 
($295m) aid offered to redundant 
steel workers under the ElTs 
social plan is not expected to be 
affected. 

Also, the Commission intends 
to monitor each case where it has 
approved state aid in return for 
plant closures before judging 
whether to continue, a Brussels 


official said. That would apply to 
current restructuring packages 
such as the effort to eliminate 
steel mills in the northern Bresci- 
ani region in Italy. 

The Commission intends to dis- 
cuss the steel rescue plan with 
EU industry ministers on Novem- 
ber 8. 

British Steel said it was disap- 
pointed. “The outcome of the 
restructuring has provided mini- 
mal benefits, and these would 
have been more if it had been put 
into effect," it said. 

“Subsidies are still supporting 


capacity, and that nettle has to 
be grasped." 

Meanwhile, Germany’s eco- 
nomics ministry and the TTeu- 
hand privatisation agency said 
they would reduce their DML2bn 
($770m) rescue for Eko Stahl, east 
Germany’s hugest steel mEL 

Economics ministry officials 
said the expected level of subsidy 
would be reduced to DM890m. 
The move is aimed at winning 
backing from the Commission for 
the planned sale of Eko Stahl to 
Cockerill-Sambre. the Belgian 
steelmaker. 


US budget 
deficit 
drops to 
lowest for 
five years 

By George Graham 
in Washington 

The US budget deficit fell by 
$52bn to $203bn in the fiscal year 
to the end of September, the low- 
est level for five years, the White 
House said yesterday. 

Although another drop is 
expected in the current fiscal 
year - White House and congres- 
sional budget offices estimate a 
deficit of between $162bn and 
Sl67bo - a row has already bro- 
ken out over how to stop the 
deficit from climbing again in 
the following five years. 

President BQ1 Clinton said yes- 
terday that he wanted to keep 
“managing this thing in a very 
disciplined way". 

He said that for the first tune 
in 20 years the deficit has gone 
down for two years in a row. 

“The bottom line is getting 
stronger every day." he told a 
business gathering in Cleveland, 
Ohio. 

However, deficits are projected 
to start rising in the 1996 fiscal 
year and to be back above 
S2D0bn by 1999, prompting the 
administration to begin consider- 
ing budget options for coming 
years. 

This process has now become 
an issue in the campaign for the 
congressional elections two 
weeks away. 

In a memorandum obtained by 
the opposition Republican party 
and widely distributed to the 
media, Ms Alice Rivlin, director 
of the White House Office 
of Management and Budget, 
warned that holding the deficit 
at next year's projected level of 
S167bn would require S184bn of 
spending cuts or tax increases 
over the period 1996-2000. 

Eliminating the budget deficit 
entirely - a goal espoused in the- 
ory by most Republican congres- 
sional candidates - would 
require $684bn of spending cats 
or revenue increases. 

Among the possible 
approaches outlined in the memo 
are controversial measures such 
as cutting the benefits paid 
under the social security pension 
scheme, applying a means test to 
limit payments under the Medi- 
care programme, which provides 
health insurance for the elderly, 
or reducing the tax deductibility 
of mortgage payments. 

The inclusion of such policy 
options in a White House docu- 
ment has proved embarrassing 
so dose to the the congressional 
elections. 

Democrats had been seeking to 
warn voters that these measures 
await them if the Republicans 
win power and carry out their 
promise to balance the budget in 
five years. 

Ms Rivlin insisted yesterday 
that her memo “wasn’t any kind 
of decision memo”. 

“The Clinton administration 
isn’t actively considering any of 
these things at the moment," she 
said. 


FT WEATHER GUIDE 


Europe today 

North-western Europe is bang Influenced by 
a strong low pressure area north of the British 
Isles. 

A frontal zone, associated with the low, will 
bring rain over western Britain, the North Sea, 
the Benelux and northern France. There will 
be thunder in places. 

Showers win also linger over western France 
and western Spain, while thundery showers 
will break out over the western Balkan states. 
Another frontal zone wfH cause rainy periods 
in eastern Europe. 

It will be sunny around the Mediterranean, 
except fbr parts of Spain, Turkey and 
northern Africa. Bsewhere in Europe, cloud 
will be interspersed with sunshine and It will 
be dry. 

Five-day forecast 

A low ova- the North Sea will slowly move 
north-east with several disturbances 
developing ahead of it As a result, north- 
western Europe while remain unsettled. 

A series of fronts will affect most of the rest of 
Europe. 

South-western Europe will improve until 
Friday, when heavy rain is expected in Spain, 
Italy and the western Balkans. 

TODAY'S TEMPERATURES 



Situation at 12 QMT. Temperatures maximum lor day. Forecasts by Mete a Consult of Vis Netherlands 



Maximum 

Beijing 

fafr 

19 

Caracas 

shower 

31 


Celsius 

Belfast 

shower 

11 

Cardiff 

fair 

12 

Abu Dhabi 

fair 

33 

Belgrade 

shower 

13 

Casablanca 

fair 

23 

Accra 

fair 

31 

Bert n 

fair 

IS 

Chicago 

cloudy 

10 

Algiers 

lair 

24 

Bermuda 

fair 

26 

Cologne 

cloudy 

13 

Amsterdam 

shower 

12 

Bogota 

cloudy 

22 

Dakar 

far 

29 

Athens 

cloudy 

24 

Bombay 

fair 

34 

Pallnft 

fair 

24 

Atlanta 

fair 

21 

Brussels 

shower 

12 

Delhi 

sun 

32 

B. Aires 

fair 

18 

Budapest 

stuwver 

14 

Dubai 

sun 

33 

8. ram 

fair 

12 

C. hag on 

fair 

10 

Dublin 

tab 

12 

Bangkok 

fair 

31 

Cairo 

fair 

32 

Dubrovnik 

shower 

19 

Barcelona 

sun 

20 

Cape Town 

Mr 

21 

Edbibugh 

fair 

11 


No other airline flies to more cities 
around the world. 

Lufthansa 


Faro 

fair 

22 

Madrid 

e loudy 

17 

Rangoon 

fab- 

31 

Frankfurt 

fair 

13 

Majorca 

fair 

22 

Reykjavik 

sleet 

4 

Geneva 

far 

14 

Malta 

lair 

24 

Rio 

churid 

25 

GfcrafUr 

fa Ir 

22 

Manchester 

fair 

12 

Rome 

fair 

21 

Gkssgow 

shower 

11 

Martfia 

shower 

31 

S. Frsco 

fair 

19 

Hamburg 

fan- 

12 

Melbourne 

fair 

27 

Seed 

sun 

18 

Helsinki 

cloudy 

9 

Mexico dry 

fair 

24 

Singapore 

Shower 

29 

Hong Kong 

fair 

26 

Miami 

sun 

29 

Stockholm 

doudy 

10 

HonoMu 

fair 

32 

M3sn 

fair 

14 

Sbasboirg 

cknrdy 

IS 

Istanbul 

shower 

21 

Montreal 

rain 

11 

Sydney 

far 

24 

Jakarta 

fair 

32 

Moscow 

cloudy 

8 

Tangier 

fair 

21 

Jersey 

shower 

13 

Munich 

fair 

13 

Tel Aviv 

far 

33 

Karachi 

sun 

36 

Nairobi 

shower 

26 

Tokyo 

far 

20 

Kuwait 

fair 

32 

Naples 

sun 

21 

Toronto 

rain 

8 

L Angelas 

sun 

24 

Nassau 

tar 

29 

Vancouver 

ran 

13 

Las Palmas 

fair 

26 

New York 

fair 

17 

Venice 

far 

15 

Lima 

cloudy 

20 

Nice 

fair 

18 

Vienna 

(air 

14 

Lisbon 

shower 

20 

NrcosJa 

fair 

26 

Warsaw 

rain 

9 

London 

shower 

IS 

Oslo 

fair 

8 

Washington 

hk 

19 

LuxJbourg 

shower 

11 

Paris 

min 

13 

Wefllngton 

far 

IS 

Lyon 

Mr 

16 

Perth 

far 

22 

Winnipeg 

fair 

4 

Madeira 

shower 

24 

Prague 

fair 

11 

Zurich 

shower 

13 


THE LEX COLUMN 


Distribution surge 


As a mechanism for returning cash to 
shareholders, East Midlands Elcctrici- 
tv’s special dividend will attract maxi- 
mum political flak. The E186m pay-out 
is more visible than the share buy- 
backs espoused by other electricity 
companies and so more susceptible to 
attack by Labour politicians. But 
shareholders will be unworried by 
political sniping, provided that the 
mega -dividend is a fairer and more 
tax-efficient way of returning cash 
than share buy-backs - as East Mid- 
lands claims. 

There is little in the fairness argu- 
ment It is not true, as some suggest, 
that everybody benefits from divi- 
dends while only institutions which 
tender their shares gain from buy- 
backs. O rdinar y shareholders benefit 
too because a share buy-back gears up 
a company's balance sheet, boosting 
earnings per share - although the 
gain is not as obvious as with a mega- 
dividend. The tax benefit of the special 
dividend is the more powerful argu- 
ment Tax-exempt investors will defi- 
nitely receive a tax credit. The best 
that can be said of share-backs is that, 
in those which used a tender, there 
may be a tax credit. In those where 
the company merely bought shares 
from a market maker, there will cer- 
tainly be no tax credit. 

There is, of course, more to mega- 
dividends and buy-backs than tax The 
underlying aim is to leverage the bal- 
ance sheet Given the predictability of 
the electricity distribution business, 
gearing of 5Q per cent or more would 
seem appropriate. By that yardstick. 
East Midlands - with gearing after the 
dividend of 20 per cent - has much 
further to go. Once the uncertainty 
over the flotation of the National Grid 
is resolved, more special dividends are 
likely. Other electricity companies will 
come under pressure to follow suit. 

Tokyo stocks 

Standard Chartered's and Canadian 
Imperial Bank of Commerce’s decision 
to delist from the Tokyo Stock 
Exchange should come as little sur- 
prise. Their announcement yesterday 
brings the number of foreign groups 
abandoning the exchange this year to 
1R The exodus underlines the Tokyo 
Stock Exchange's lack of competitive- 
ness. The costs of a Tokyo listing are 
three to four times higher than those 
of other international markets. Yet 
trading volumes in foreign stocks are 
minuscule. That is partly because Jap- 
anese institutions currently have little 
interest in acquiring overseas assets 


FT-SE Index: 3029,1 (-3.7) 


East Midlands Electricity 

Shan pnoe ralawa to tna 
FT-SE-A Electricity Index 

110 - - - 



85’ 


1991 92 

Source. FT Graphm 


93 94 

-Ctraatpieaeua 
UacWltrtMod 


while the yen continues to appreciate. 
But it is also because transaction costs 
in Tokyo are up to eight times higher 
than in other markets. Japanese inves- 
tors can trade more cheaply in foreign 
companies’ domestic markets. They 
can also trade Japanese shares at less 
expense, which explains why 50 per 
cent of trading volumes in certain Jap- 
anese stocks is sometimes transacted 
on London’s Seaq. 

Yesterday's call for further deregu- 
lation by the Keidanren. the Japanese 
business federation, could not be more 
timely. Its proposals for liberalising 
brokerage commissions and revising 
the securities trading tax should be 
accepted by the ministry of finance. If 
not. Japan's financial industry risks 
ending up with as much of its core 
based overseas as its manufacturing 
counterpart 

Derivatives 

Given the level of concern about the 
huge growth in derivatives, it is 
hardly surprising that the Chicago 
futures exchanges have had a hard job 
persuading their regulator to relax 
some of their trading rules. With inter- 
national finan cial authorities still feel- 
ing their way through the fast-grow- 
ing jungle, the US Commodity Futures 
Trading Commission is right to tread 
carefully. 

The requirements from which the 
Chicago exchanges are asking for par- 
tial exemption would not protect users 
of derivatives from the sort of losses 
which have hit the headlines over the 
past few months. Most of these have 
anyway stemmed from deals con- 
ducted on the over-the-counter mar- 
kets where banks provide customers 


with tailor-made products. The banks 
then frequently use the standard prod- 
ucts traded on the exchanges to hedge 
their positions. 

The exchanges argue that such insti- 
tutions do not need some of the regu- 
lations originally designed to protect 
private investors. More to the pmnt, 
the associated costs pul the exchanges 
at a disadvantage to the lightly regu- 
lated OTC markets. Yet the exchanges 
hare failed to show that they arc los- 
ing significant business to the OTC 
markets, over which they provide 
many advantages, or to overseas 
exchanges. The worry for the rvguli- 
tors is that changes that threaten Hie 
integrity of the exchanges could have 
unforeseen consequences elsewhere. 
Until the dangers arc better under- 
stood, it would be advisable for 
playing fields to be levelled up rather 
than down. 

EVC 

This year's bottom lino at EVC, the 
PVC business being floated by Em- 
chem and Imperial Chemical Indus- 
tries. will not make pretty reading. On 
a pro-forma basis, losses of FI 22.6m 
will be exacerbated by a Fl*J77.5n» 
extraordinary' charge. But investors 
should not be dismayed. Profitability, 
at least in the short term, should be 
robust as n result of rationalisation 
and the cyclical upturn. The potential 
for cost-cutting is large: though EVC 
is Europe’s largest PVC maker, it has 
a long way to go before it is the most 
efficient. If the management can 
reduce costs, particularly in politically 
charged and unionised Italy, the bene- 
fits will fall quickly to earnings. 

It is hard to gauge where EVC's 
earnings will peak in this cyclp. That 
is not just because yesterday's pro- 
spectus failed to include earnings at 
the last peak. The main concern is 
that additional environmental legisla- 
tion may curb demand, while the 
return of East European imports could 
increase supply. Another concern Is 
that EVC has not spell out how buy- 
ing its raw materials from compnuie? 
which will no longer be its parents 
could affect its cost base. 

Investors also need to take account 
of the fact that EVC's tax charge will 
rise rapidly after 1997. as the tax bene- 
fit of recent losses conies to an end. 
All this means that earnings are likely 
to move ahead strongly in the short 
term but the long-term prospects are 
probably dull. For those who buy in 
the float, the timing of proGt taking 
will prove critical. 


THIS ANNOUNCEMENT APPEARS AS A MATTER OF RECORD ONLY 

AUGUST 1994 

THE 


/P R E 



GROUP 




I A 



Manufacturers of Ladies Underwear 


£20 million 
Management Buy-Out 


Transaction and equity funding arranged by 
Electra Kingsway Limited 


Senior debt facilities provided by 
NatWest Acquisition Finance 


ELECTRA 


ELECTRA KINGSWAY LIMITED 

65 KINGSWAY. LONDON WC2B 6QT TELEPHONE: 071 831 6-164 FAX: U?[ 404 53SS 
A MEMBER OF IMRO 












N 



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COMPANIES & MARKETS 

£)THE FINANCIAL TIMES LIMITED 1994 Tuesday October 25 1994 


17 


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and a healthier life 


plinritr l)dviJ h\ wsm mi (Wj* 1 2Q 






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i 


IN BRIEF 


Telecom Italia 
confirms demerger 

Telecom Italia, Italy’s state-controlled 
telec ommuni cations operating company, gave the 
go-ahead for the demerger of its mobile telephone 
operations next year. Some GO per cent of the new 
company, which will be quoted on the Milan stock 
exchange, will be owned by Stet, Telecom Italia’s 
state-controlled parent company, and the rest by 
Telecom Italia’s minority shareholders. 

Caterpillar moves Into eastern Europe 

Caterpillar, the world’s largest construction equip- 
ment producer, aims to become the industry's lead- 
ing player in eastern Europe. Page 19 

Samsung hopes for a tran sformati on 

Samsung's recant decision to build a large electron- 
ics complex in north-east En gland fc the latest 
move by South Korea’s largest conglomerate to 
transform Itself into one of the world's leading mul- 
tinational corporations. Page 21 

RMnePoutonc applies for Renault stake 

Rhdne-Poulenc, the French pharmaceuticals «nw 
chemicals group, yesterday said it had applied to 
become one of a group of stable shareholders in 
R e n a u lt, the vehicles group which is being partially 
privatised. Page 18 

Capital Cities/ABC surges 

Capital Cities/ABC, the OS entertainment and 
media group, yesterday reported a 71 per cent 
increase in third-quarter profits to 5133.7m. Page 20 

BoOord disposes of pfastfes imft 

Bollard Technologies, the diversified French indus- 
trial group, is selling a plastics company for 
FFtlJ&m (fSSSm) and plans a further FFriSm in 
asset sales over the next year to bolster the group’s 
financial position. Page 26 

EVC sees flotation value of up to PI 1.21m 

EVC, Europe's leading manufacturer of polyvinyl 
chloride (PVC), forecast its forthcoming flotation on 
the Amsterdam stock exchange would value the 
group at between FI lbn and FI lJttra ($S95m-$7l8m). 
Page 26 

Browers In v e s tment Trust's wi th dr a wn 

Lazard Brothers yesterday withdrew its Brewers 
Investment Trust, launched late last month to 
invest mainly in quoted regional brewers. The with- 
drawal puts paid to a conditional sale to the trust 
by Whitbread, the brewing and leisure group, which 
was to have received £27m ($42m) for its remaining 
shares in the regional companies. 

Moss Bros pleases City 

Moss Bros Group, the specialist menswear retailer, 
outstripped (Sty expectations for the second time 
this year by trebling pre-tax profits in the six 
months to July. Page 24 

Russian acquisition for Bula 

Bala Resources (Holdings), the Duhlin-based oil 
exploration, and production company, is proceeding 
with Us acquisition of an. option to purchase a 51 
per cent interest in AM-Otyr, a Ruskan oil joint 
stock company. Page 26 


Companies In this issue 


Abacus 

Abbey Panels Inws 

Adta 

AW-Otyr 

BS 

Bodcxt Technalop. 

Bonier TV 

British Bus 

Bub Resources 

COL Hotels 

CLT 

CRH 

Ceftach 

Century Inns 

Cullen's 

DSC Communications 
Daewoo 

Daewoo Securities 
DateWn Securities 
Dartmoor Inv Trust 
Daman 

□ongbu Securities 

Oongsuh Securities 

EFQ 

EMI 

EVC 

East Midlands 

Entahem 

Enron 

Eurotunnel 

Exxon 

Hanshin Securities 
Hanyang 

Hyundai Securities 
ISS Enterprise 
IBM 
IQ 

ICKKaiaer 

Itva 

Japan Tobacco 
Loades 


28 

Lucky Securities 

21 

24 

Lufthansa 

22 

18 

MacaBan-GlenBvat 

12 

28 

Ma&afc 

21 

25 

Man (ED&F) 

26 

18 

Maytag. 

20 

28 

Moss Bras 

24 

12 

NKTBattronfk 

18 

28 

Newman Tonka 

26 

20 

Noranda Forest 

21 

28 

Norsk Hydro 

20 

12 

Nova Hut 

18 

25 

Rentes 

24, 18 

28 

PoBards 

28 

28 

Pcwafl Duffryn 

26 

18 

Prime* 

21 

■ S 

Promax 

28 

21 

Rand Fabrikoma 

28 

21 

Ranautt 

18 

26 

RhOne-Poutenc 

18 

21 

SGA Pacific 

28 

21 

Salvesan (Christian) 

28 

21 

Samsung 

21 

28 

Sanderson Beet 

26 

12 

Sangup Securities 

21 

18 

Scott Paper 

17 

18,25 

Scotts HokSngs 

25 

18 

Seat (UK) 

24 

9 

Shin Young Seelies 

21 

9 

Stocam 

21 

17 

Southern Company 

17 

21 

Sphere Inv Trust 

28 

21 

Ssangyong Investment 

21 

21 

Swire (John) 

24 

28 

Thomson 

5 

14 

Tlpplns 

18 

18 

USAir 

17 

18 

VAG (UK) 

24 

17 

Volkswagen 

24 

20 

West Fraser Timber 

21 

24 

Whiteread 

17 


Market Statistics 

{Annual reports sendee 3 
Benchmark Gwt bonds 
Bond tutures and options 
Bond prices and ytehtt 
Commotfitieo prices 
DMdsnds announced, IK 
Bits currency rates 
Eurobond prices 
Rnd Merest Moss 
Fr-AWmtUlitfca Baofcl 
FT Odd Mnas index 
FT/tSMA inti band arc 
FT-SE Actuaries mtficSS 


-35 Foreign axdwnoe 
23 fitts prices 
23 Ulfe equlljf option# 

23 London share sendee 

32 London trad otSons 

24 Managed ft** sanies 
38 Money marteta 

23 New Ml bond Issues 
23 New York share sendee 
ige Recent Issues. UK 

33 Short- term W rates 
23 US totems* rates 

33 Worid Stock Martas 


38 

23 

33 

34-35 

33 

38-37 

38 

23 

40-41 

33 

38 

23 

38 


Chief price changes yesterday 


AMO 

Hgecret 

(fab 

Schartq 


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316+33 
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966 + 18-5 


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Emm Kodak 

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rh»m 

SaStenBoct 

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T83SBIW 

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221 + 

200 + 

375 + 

SIB + 

251 + 

159 + 

171 + 

723 + 110 


WUBSfFRJ 

nm 

Bsnc comp 

506 


103 

BJC 

624 

* 

13 

Unto* 

463 

+ 

23 

nas 

tec r 

509 

- 

21 

GTMBbpSB 

404 

- 

18 

Gal Lite 

2290 

— ■ 

03 

TOKYO (Ye«1 

Toshiba 

763 

* 

12 

vwrfattr 

949 

+ 

19 

Mo 

mq Cm 

682 

_ 

16 

DaBqnCnc 

705 

- 

47 

Kanaka 

785 

— 

24 

Mgreav 

441 


16 


YnrtflSra Elect 

Mb 

715 

* 

29 

MV 

61H 

- 

5 

see 

333 

- 

13 

Eng ditto Cays 

336 

- 

14 

Meyer kt 

380 

- 

11 

Mar Prop 

144K 

- 

714 

TotMtafli HBpf 

127 

- 

8 

VMoone 

6Z7 

- 

24 


733 

- 

19 


Chemicals boost profits at Exxon 

Amoco and Arco also benefit from cyclical rebound 
in underlying earnings as sales and margins improve 


By Richard Waters in New York 

A cyclical rebound in earnings 
from their chemicals businesses 
helped Exxon and other big US 
oil groups to report solid gains in 
underlying operating profits for 
the third quarter. 

The overall earnings picture 
was complicated by one-off foe- 
tors in both the latest and 1993 
periods, however. As a result, net 
income at both Exxon and 
Amoco fell, while Arco reported a 
strong rebound in profits. 

The US oil majors’ latest 
results come against the back- 
drop of a rise in oil prices from a 
year ago. This has lifted 
upstream exploration and pro- 
duction earnings, despite a foil in 
natural gas prices. Meanwhile, 


profit margins fo downstream 
refining and marketing 
operations were well below the 
levels hit in the buoyant 1993 
quarter, when the groups bene- 
fited from a sliding oil price. 

The improvements in riiftminai 
earnings at the three companies 
in the three month! to the end of 
September showed that the 
industry's cyclical recovery 
remained on track. 

Overall, the US petrochemicals 
industry has experienced volume 
growth of 7 per cent over the past 
year, said Mr Paul Raman, a 
chemicals analyst at S.G. War- 


burg in New York. European 
growth in the latest period, at 
some 3 per cent continued the 
recovery which had lifted earn- 
ings during the second quarter. 

Higher US prices in the petro- 
chemical products in which the 
energy groups specialise - princi- 
pally ethylene, polyethylene, 
polystyrene and polyvinyl chlo- 
ride - were supported by a fire at 
an Exxon plant in Texas during 
the summer. By limiting capac- 
ity, this helped to underpin price 
rises in the industry. 

Despite this, Exxon said its 
chemicals businesses earned 


$l98m in the latest period, up 
from $46m a year before (which 
was struck after a one-off tax 
charge of $26m.) “Chemical prod- 
uct sales were the highest in over 
two years, and margins also 
improved." said Mr Lee Ray- 
mond. the company’s chairman. 

Mr Laurence Puller, rhainnan 
and chief executive of Amoco, 
also pointed to "higher sales vol- 
umes and margins for most 
[chemicals] products." 

The Chicago-based company 
reported earnings in this sector 
of $154m, compared with $60m in 
the 1993 period. Analysts expect 


the bounce in petrochemical 
namings to continue in coming 
quarters. “We’re about halfway 
through the cycle," Mr Raman 
said. 

Exxon reported net income of 
Sl.lSbn, down from Si -36bn after 
$306m of one-off benefits a year 
ago. Bamtyi{TB per share were 92 
cents, some 10 cents ahead of 
expectations. 

Amoco ’s net income of 5445m 
after a S32m charge for environ- 
mental clean-up compared with 
S520m a year before, when it ben- 
efited from a $70m gain from 
asset disposals. It earned 89 cents 
a share, which was also ahead of 
market forecasts. 

Arco's after-tax profits were 
9435m. up from SSSm, while earn- 
ings per share were S2.67. 


Consortium may 
make offer for 
llva’s flat steels 


Two crashes and fare competition cut passenger traffic 


Still grounded 



Net Income £Sm) 



SouctcComparv report* 


By Andrew HN In MBan 

Two Italian steel traders have 
re-ignited interest in the sale of 
the flat steels activities of Hva, 
Italy's state-owned steel manufac- 
turer. with their attempt to 
assemble an international consor- 
tium to acquire the company. 

A spokesman for Mr Bruno 
Bolfo and Mr Vittorio Malnralra 

said yesterday that their consor- 
tium could make an offer for 100 
per cent of Hva Laminati Plant 
(ILP) in the next few days. 

HU. the Italian state holding 
company which owns Hva, is try- 
ing to meet a European Commis- 
sion deadline at the end of tills 
year for the break-up and sale of 
the company. In June it agreed 
the sale of Hva's special steels 
business, AST, to a Gennan-Ital- 
ian consortium for L600bn 
(5392m), but no firm offers have 
been made for the much larger 
flat steels operation. 

Industry analysts expressed 
doubt yesterday about the viabil- 
ity of a Bolfo-Malacalza offer, but 
the a new potential bidder could 
accelerate the sale process. Luc- 
chini, the private Italian steed 
manufacturer, is understood to 
be stepping up discussions with 
Usinor Sacflor of France about 
ILP. after Mr Bolfo approached 
Mr Francis Mer, Usinor’s chair- 
man, last week. 

Mr Bolfo, who used to work for 
the export arm of Hva’s predeces- 
sor Ftnsider, and Mr Malaca l za 
claim to have the support of CSN, 
the Brazilian steel producer, and 
the US securities house Smith 
Barney, which they say would 


put together funding for a minor- 
ity stake. They are also courting 
Bethlehem Steel of the US and 
Dofesco of Canada. Italian press 
reports suggest an offer could be 
worth about 5900m. 

Be thlehem has expressed cau- 
tion about its involvement with 
Mr Bolfo, who founded Duferco, 
an international steel trading 
company, in 1977. It said: “The 
privatisation activities have been 
a subject of discussion with 
Duferco, but these are part of the 
regular monitoring of interna- 
tional steel developments.” 

Lucchlnz has said it would be 
prepared to offer industrial back- 
ing to ILP. IRI has also received 
approaches from a consortium 
organised by the Washington- 
based merchant bank G William 
Miller, and including Italian 
entrepreneurs. IRI has reportedly 
tried to persuade Mr ftmifin Riva, 
the Italian Steel magnate, to add 
his weight to the Miner bid. 

The Italian government has 
been forced to cut production 
capacity at Hva's plants as part of 
a deal struck with the European 
Commission last year, in 
exchange for a final write-off of 
Hva’s debts. As a result of the 
writeoff, IRI said Hva stands to 
return to profit this year, but the 
Italian authorities are concerned 
that a buyer of ILP simply doses 
down the least efficient steel 
plant and sells off the more 
attractive parts. Mr Vito Gnntti, 
Italy’s industry minister, has said 
that strict conditions would be 
imposed an any buys: of ILP to 
prevent this happening. 

Brussels probes plan. Page 3 


USAir’s 
loss grows 
to $180m 
in quarter 

By Frank McGurty En Now YoHc 

US Air, the struggling US carrier 
partly owned by British Airways, 
suffered a net loss of 5180. Im in 
the third quarter, as two crashes 
and increased competition con- 
tributed a decline in passenger 
traffic. 

The loss compares with a 
$177 jd deficit in the correspond- 
ing three months of 1993. On a 
per share basis, it works through 
at $332, against 53.33. 

The results surprised most 
Wall Street analysts, who 
thought USAir would narrow its 
losses to $2.22 a share. 

The reported figure included an 
unexpected one-time charge of 
967.7m, mostly to cover the cost 
of realigning the airhne's west 
coast route structure. 

USAir, which is plagued with 
the highest costs in the industry, 
is struggling to bring efficiencies 
to its flight system. 

Despite the disappointing per- 
formance, the company's share 
price held folriy steady in early 
trading on the New York Stock 
Exchange. By midday, it was 
down 5% to $4VS. 

The stock had fallen sharply at 
the end of last month, when 
USAir hinted at its worsening 
financial position by deferring 
dividend payments on its pre- 
ferred shares. 

ADRs in British Airways, 
which holds a 24.7 per cent stake 
in USAir, were marked down 5% 
to $60% on the announcement. 
BA has already threatened to 


write off all or part of its $400.7m 
investment in the US carrier, the 
country's sixth largest 

Revenues for the period were 
slightly ahead at $lAbn, against 
$1.7bn, but yields - or revenue 
per passenger mile - slumped 
nearly 10 per cent from the 1993 
quarter to 14^3 cents. 

The decline reflected a fresh 
round of forecutting by carriers 
operating along USAir’s east 
coast routes. 

But the airline’s most pressing 
problem Is how to overcome the 
damage to its image caused by 
two accidents involving USAir 
airliners during the quarter. 

Two months after a crash in 
North Carolina killed 37 people, a 
USAir flight with 132 people 


aboard went down near Pitts- 
burgh. The incident was the car- 
rier’s fifth fatal crash in as many 
years. Earlier the company esti- 
mated that the crashes were 
responsible for a $40m in lost rev- 
enues. 

It is really difficult to get a 
handle an how that has affected 
the company”, said Mr Michael 
Derchin, an analyst with Nat- 
West Securities in New York. 
“Their bookings are not coming 
back as fast as if it were just an 
isolated accident.” 

For the first nine months of 
1994, the company posted a net 
loss of $362.9m on revenue of 
$5.3bn, against a net loss of 
5276.6m and revenues of $5.3bn a 
year ago. 


Scott sells 
Alabama 
unit to 
Southern 

By Patrick Harverson 
In New York 

Scott Paper yesterday announced 
the sale of Its Alabama energy 
facility for $35Gm to the 
Southern Company, a holding 
company for utilities based in 
the southern states, and pro- 
vided the first specific details of 
its plan to sell off non-core assets 
and focus on the paper tissue 
business. The announcement 
comes less than two weeks alter 
Scott agreed to sell Its SJ>. War- 
ren glossy paper null for $l.6bn 
to an investment group beaded 
by Sappl, the South African 
paper company. 

The Warren transaction, and 
the sale of the energy complex in 
Mobile, Alabama, are the first 
steps in a divestment programme 
launched by Scott Paper’s new 
chairman, Mr AI Dunlap. The 
plan shonld raise about S3bn 
before it is completed. 

Scott Paper said among the 
assets considered for sale arc the 
group’s US and UK food service 
business, its global pulp 
operations, another energy com- 
plex In Pennsylvania, about Ua 
acres of timber! and. and prop- 
erty. including the corporate 
headquarters in Philadelphia. 

The money from the divest- 
ments will be used to reduce its 
debt, which will stand at Slbn 
after the Warren deal is con- 
cluded but which should be 
reduced to zero once the 
restructuring Is finished. 

Mr Dunlap, the business turn- 
round specialist and former 
right-hand man to Anglo-French 
financier Sir James Goldsmith, 
who came out of retirement in 
April to run Scott, said “This 
marks the completion of another 
key phase of my plans for Scott 
The Mobile energy complex is 
one of a number of assets where 
we can free up capital to invest 
in our core business.” 

The ultimate aim, said Mr 
Dunlap, was to reposition Scott 
as a pure consumer products 
company. The asset sales are 
part of a wider restructuring 
instituted earlier this year by Mr 
Dunlap. In August, four months 
after joining the group, he 
announced that 10,500 jobs, or 
almost a third of Scott Paper’s 
workforce, would be eliminated 
by the end of the year. 

Scott’s restructuring has been 
generally well-received on Wall 
Street where the group’s share 
price has risen more than 60 per 
cent since Mr Dunlap took over 
as chairman. Yesterday, the 
stock rose $% to $62% in early 
trading. 


David Blackwell reports on the world petfood market 



Making a 
meal of 
a dog’s 
dinner 

P ampered pooches and pus- 
sies support large petfood 
industries on both sides of 
the Atlantic - but the markets in 
the US and Europe are as differ- 
ent as cats and dogs. The idea of 
making and selling food for pets 
was American, although English 
dogs can claim the inspiration. 
Mr James Spratt of Cincinnati, 
Ohio, created the dog biscuit 
industry a century ago after 
watching dogs scavenging for bis- 
cuits on an tfri gifah dock. 

Canned dog food quickly fol- 
lowed, and soon fortunes were 
being made. Fans of PG Wbde- 
house novels will remember how 
keen the Fngtfeh aristocracy was 
to marry its sons to US dog bis- 
cuit heiresses. 

In the mature US and UK mar- 
kets, where growth has stag- 
nated, consolidation and rational- 
isation appear to be the ways 
forward for petfood manufactur- 
ers, but there seems plenty of 
scope for growth in the rest of 
Europe. Spain, for example, spent 
just £200m (5316m) on petfood 
last year compared with £l-2bn in 
the UK. 

The contrast between the two 
mar kets reflects differences in 
living habits and retail structure. 
Many more Britons give their 
pets prepared food bought from 
supermarkets, while in southern 
Europe, pets are fed more on 
kitchen scraps. 

The differ ent outlooks for the 
Anglo-Saxon and continental 
markets were h ighlighted by two 
recent deals. Nestle, the world’s 
largest foods group, paid $510m 
to Grand Metropolitan, the UK 
food and drinks group, for Alpo, 
its US petfoods business. The 


purchase took Nestle to second 
place in the US, behind market 
leader Ralston Purina, which has 
about 19 per cent 
Dalgety, the UK food and agri- 
business group, bought two pri- 
vately owned Spanish petfood 
companies to expand its conti- 
nental business. 

Nestle believes its purchase 
could make it market leader in 
canned dog food in the US. A 
recent study by Goldman Sachs, 
the US investment bank, showed 
Nestle had 14 pm cent of this 
market and 4 per cent in the EU; 
It also has 39 per cent of the US 
canned cat food market and 10 
per cent in the EU. 

F igures from the Washing- 
ton-based Pet Food Insti- 
tute show that US pet 
owners spent S'LSSbn on dog food 
and $3.44bn on cat food last year. 

Nestfe competes with Mars and 
Quaker Oats on both sides of the 
Atlantic. Mars is clear market 
leader in Europe with a 47-3 per 
cant share in 1993 grocery store 
sales, while Nest]£ lan girighec in 
fourth place. 

Dalgety is thought to have paid 
about £l7m for the two Spanish 
companies - Nldo Industrial and 
Pet-Boa - which have combined 
assets of film. The move takes it 
into Spain for the first time. 

The deal follows Dalgety's 
£42m acquisition last November 


of Paragon Petcare from British 
Petroleum, which gave It access 
to the French, German, Dutch 
and Belgian markets. Dalgety 
now considers itself second to 
Mars in the European market In 
volume terns, although just 
below Quaker by value. 

It is difficult to get an overall 
picture of the market, as it can 
be divided by country; between 
cat and dog; “wet" (canned) and 
dry; and grocery and non-gro- 
cery. But Dalgety’s best esti- 
mates suggest plenty of scope for 
higher sales in France, Germany, 
Italy, Spain and Belgium. 

In Italy, for example, 83 per 
cent of the calorific value 
required to support the 7m cats 
comes from commercial petfood, 
with 89 per cent for a dog popula- 
tion of 6m. Italy's prepared pet- 
food market, comprising 102,000 
tonnes of cat food and 120,000 
tonnes of dog food, was worth 
only £479,000 last year. In the UK 
a comparable 7m cats put away 
549,000 tonnes, while 6fim dogs 
consumed 619,000 tonnes. 

While Europe remains a collec- 
tion of local markets. Mars has 
started to unify it through the 
strong brand presence of Pedi- 
gree Chum and Whiskas. 

Mr Richard Clothier, Dalgety's 
chief executive, argues that cats 
in Italy and Scotland should like 
the same food - unlike the 
human population. 


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Discover your winning hand at 
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seventh annual conference on 

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February 23 & 24, 1995 
at The London Marriott Hotel 


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Tel: 0171 823 8740 Fax: 0171 581 4331 


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Acquisitions 

Monthly 


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IS 


FINANCIAL. TIMES TUESDAY OCTOBER 25 1994 


INTERNATIONAL COMPANIES AND FINANCE 


Rhone-Poulenc seeks Renault stake 


By John Ridding 
hi Paris 

RhAoe-PouIenc, the French 
pharmaceuticals and chemicals 
group, yesterday said it had 
applied to become one of a 
group of stable shareholders in 
Renault, the vehicles group 
which is being partially priva- 
tised. 

According to Rhone-Poulenc, 
which was sold off last year, its 
decision to seek an investment 
in Renault reflects an agree- 
ment to develop new engine 
emission technologies with the 
motor group. 

Under the terms of the agree- 
ment, the two companies will 
work on ways to reduce emis- 


sions from diesel engines. The 
aim is to equip vehicles with 
new emission systems by 
2000. 

As part of Renault's partial 
privatisation, which will see 
the state’s shareholding 
reduced to just over 50 per cent 
from 80 per cent, the govern- 
ment is seeking to form a 
group of long-term stable 
shareholders which will hold 
about 5 per cent of Renault's 
shares between them. 

In addition to Rh6ne-Poul- 
enc, potential candidates 
include Elf-Aquitaine, the oil 
group; Axa, the insurance com- 
pany; Lagarddre group, the 
communications and defence 
company; and Banque Nat- 


ionals de Paris. The decision 
on the composition of the 
shareholding group Will be 
taken by the economy ministry 
in consultation with the priva- 
tisation commission, an inde- 
pendent body which advises 
the government on privatisa- 
tion issues. 

Those companies selected as 
so-called “partner sharehold- 
ers” will buy their shares 
through a private placement 
and will be required to hold 
their shares for a specified 
period of time, expected to be 
about 18 months. 

The formation of a group of 
stable shareholders is a com- 
mon element of French privati- 
sations and flotations involv- 


ing public-sector companies. It 
has resulted in a series of 
cross-shareholdings between 
some of France's largest indus- 
trial groups. 

Elf Aquitaine and Banque 
Nationale de Paris, for exam- 
ple. took stakes in each other 
at the time of their privatisa- 
tions. 

“It is a way of guaranteeing 
some stability in the share- 
holding structure following the 
reduced participation of the 
state,” said one industry 
observer in Paris. "There is 
sometimes an industrial logic 
to the investment, but it is 
often a case of mutual support 
between French business 
groups.” 


ICF Kaiser 
heads Czech 
consortium 

By Joe Cook in Prague 

ICF Kaiser, a US engineering 
group, is to head an interna- 
tional consortium to prepare 
project financing for the con- 
struction of a S250m mini-mill 
for Nova Hut, the Czech steel 
producer. 

The consortium, which 
includes Tippins, a US steel 
producer, and Samsung Heavy 
Industries of South Korea, may 
also take a 49 per cent stake in 
a joint venture with the state- 
owned Czech group. 

A consortium of interna- 
tional banks, possibly includ- 
ing the International Finance 
Corporation, a private affiliate 
of the World Bank, will provide 
$150m for the project. The 
remaining $100m is likely to 
come in paid-in capital from a 
joint venture between Nova 
Hut and the ICF-led consor- 
tium. with the Czech company 
contributing S51m and the for- 
eign group, $49m. 

Mr Adrian B as ora. the US 
ambassador in Prague, called 
the deal the biggest US green- 
field investment to date in the 
Czech Republic. The mini-mill 
will provide 200 jobs and pro- 
duce an annual Im tonnes of 
steel. Construction work is 
expected to start in early 1998. 

Nova Hut is 67 per cent state 
owned and employs 17,000. 
Last year it posted profits of 
Kcsl-Oobn ($37m) on turnover 
of Kcs2l.32bn, down 50.8 par 
cent and 5.4 per cent respec- 
tively on 1992. 


Danish buy for DSC Comms 


By Hilary Barnes 
in Copenhagen and 
Alan Cane in London 

DSC Communications Corp- 
oration, a fast-growing Dallas- 
based telecommunications 
equipment supplier, has agreed 
to acquire NKT Elektronik. a 
Danish manufacturer of 
fibre-optic transmission equip- 
ment. 

The consideration is $145m 
to be paid in cash. The deal, 
signed last week, is subject to 
due diligence on the part of 
DSC. 

Mr James Donald, DSC chair- 
man, said the purchase was 
evidence of DSCs commitment 
to being a leader in the world- 
wide telecommunications mar- 
ket “The acquired technology, 
products and employee know- 
ledge will be complementary to 
DSC's existing market position 
in areas of switching, access 


systems and transmission 
sys tems. " he said. 

NKTE's technological exper- 
tise is respected in the telecom- 
munications industry. It is a 
leader in a form of optical 
transmission called synchro- 
nous digits! hierarchy, which 
offers high gross profit mar- 
gins. 

Publicly quoted DSC is a 20- 
year-old company which speci- 
alises in high-growth, high 
added -value areas of the tele- 
communications systems mar- 
ket 

It turned over about $750m 
last year and is expected to 
have sales of just under Si bn 
this year. Last year it made 
profits before tax of $109m. 

It has 4JW0 employees in the 
US and curre ntly a bout 250 in 
Europe. The NKTE acquisition 
will bring DSC's European 
workforce up to just under 
1,000. It sells to all the leading 


telecommunications carriers. 

NKTE is a subsidiary of 
NKT, a manufacturer of elec- 
tro-technical equipment and 
industrial vacuum cleaners 
which is quoted on the Copen- 
hagen stock exchange. 

NKT Elektronik last year 
had sales of DKr700m i SI 19m) 
and made pre-tax profits of 
DKr37m- 

DCS said NKTE would 
become the centre for the com- 
pany’s European optical trans- 
mission business and a bridge- 
head for its expansion in other 
European markets. 

Foll owing the disposal of 
NKTE. the NET'S main activi- 
ties will be in cables and the 
Nilfisk industrial vacuum 
cleaning company, which ear- 
lier this year concluded a 
DKrtSOm deal to buy one of its 
main American US competi- 
tors, Advanced Machine Com- 
pany of Minnesota. 


Adia in black for nine months 


By Ian Rodger in Zurich 

Adia, the Swiss temporary 
employment group controlled 
by Mr Klaus Jacobs, has 
reported net income of 
SFWS.lm (S19.4m) in the first 
nine months of 1994 compared 
with a loss of SFrll2_2m in the 
same period of 1993. 

Mr John Bowmer, chief exec- 
utive, forecast that net income 
in the frill year would exceed 
SFr30m. a large increase on the 
SFr20m forecast he made in 
July. 


Revenues were up 113 per 
cent to SFr2.59bn, or 18 per 
cent in local currencies. Adia 
attributed almost all of the 
growth to a higher volume of 
temporary hours sold. 

Mr Bowmer said the gather- 
ing pace oF recovery in conti- 
nental Europe had fuelled “our 
excellent results”. The French 
operations had performed well 
in spite of extensive restructur- 
ing. 

Swiss business was running 
over 50 per cent ahead of last 
year in hours sold. Revenues in 


Germany and the Benelux 
countries were well ahead in 
the third quarter. 

Business growth was strong 
in the US. the UK and Austra- 
lia, but growth in these mar- 
kets was slowing as the eco- 
nomic recovery matured. 

Mr Bowmer said Adia had 
reached an agreement in prin- 
ciple for the settlement of liti- 
gation challenging the terms 
under which it has agreed to 
acquire the 19 per cent of Adia 
Services, its US subsidiary, 
that it does not own. 


EVC sees 
flotation 
value of up 
to FI 1.2bn 

By Tim Burt and Daniel Green 

EVC, Europe's leading 
manufacturer of polyvinyl 
chloride (PVO. yesterday fore- 
cast its forthcoming flotation 
on the Amsterdam stock 
exchange would value the 
group at between FI lbn and 
FI I.2bn (S595m -571 8m), 
although losses this year could 
reach FI 500.1m. 

The Dntch-based Aagio- 
I tali an joint venture, owned 
by ICI of the UK and Enicbem 
of Italy, blamed the likely 
losses on extraordinary items 
totalling FI 477.4m - mainly 
due to a FI 243.5m write-down 
on fixed assets and FI 76.3m of 
rationalisation costs. 

On a pro-forma basis the 
company said it expected to 
make operating profits of 
F7 88.3m, reversing three suc- 
cessive years of losses. 

Mr Peter Hollins, director of 
EVCs polymers division, said 
the improvement at the oper- 
ating level had been driven by 
increased demand for PVC and 
cost savings at Its manufactur- 
ing plants. 

While predicting farther 
rationalisation benefits, he 
warned that increasingly strict 
environmental regulations 
could slow growth in demand. 

The group's preliminary pro- 
spectus, published yesterday, 
shows that demand for PVC 
has been fiat or falling in the 
past four years, although it 
expects it to increase 13 per 
cent this year. 

Mr Hollins said there had 
been a positive response from 
institutional investors, which 
will be offered ~.2m of the 9m 
shares being issued. 

The company predicted the 
offer price would be between 
FI 70 and FI 80 a share. The 
offer Is expected to raise up to 
FI 720m, which will be used to 
reduce group borrowing to 
FI 296.2m - equivalent to gear- 
ing of 28 per cent 
ICI and Enichem will each 
retain 19.24 per cent of the 
newly floated group, and both 
have undertaken not to sell 
their stakes before 1996. 

EVC. meanwhile, will be 
locked into supply contracts 
with its parent companies for 
more than 80 per cent of its 
raw materials. 


Bollore to sell plastics 
operation for FFrl.2bn 


By David Buchan 
in Parts 

Bollore Technologies, the 
diversified French industrial 
group, is selling a plastics 
company for FFrl -2bn (S233ml 
and plans a further FFribn in 
asset sales over the next year 
to bolster the group's financial 
position. 

Mr Vincent BollorG. the 
group's head, said the sale of 
Frans-Bonhomme. France's 
leading supplier of plastic 
tubes and joints, and that of a 
stake in a Normandy energy 
distribution company, would 


together bring In FFrl.4bn. 

However, Mr Bollori said 
that the group's restructuring 
was not over. Debt bad been 
reduced to FFr5.8m by the end 
of September, from FFr&Sbn in 
raid-1993, but this was still 
FFri.ribn more than sharehold- 
er!;' capital, Mr Solicit com- 
plained. 

"Our debts must bp brought 
bock to the level of our own 
funds." he said. 

He indicated that the group's 
remaining energy and paper 
activities might be for sale, 
saying that the group planned 
to refocus on its three core 


areas of plastic film, cigarettes 
and shipping transport 
between Europe and Africa. 

Belfort is thought likely to 
be the main bidder for Seitu. 
the French state's tobacco- 
making monopoly, when the 
latter comes up fur privatisa- 
tion. But Mr Bollort made 
clear that, for the moment, 
retrenchment still took prece- 
dence over acquisitions and 
alliances. 

He predicted that pre-tax 
operating profits in the second 
half would be similar to the 
FFri33m recurded in the first 
half of this year. 


Microsoft in German alliance 


; By Alan Cane 

i 

< Deutsche Bundespost Telekom. 
( Germany's national telephone 
j operator, and Microsoft of the 
US, the world's largest supplier 
of computer software, have 
agreed to work together to 
develop multimedia products 
i and services. 

The memorandum of under- 
standing, signed last week 
between Mr Bill Gates, Micro- 
I soft chairman and Mr Horst 
Geflert, Telekom board mem- 
ber, provides for Microsoft's 
tTiizrfoira architecture to be 
used as the basis for Telekom's 
developments in multimedia. 

Mr Thomas Koll of Microsoft 
Germany said yesterday that 


Telekom would have access to 
Microsoft's unpublished Win- 
dows 95 software. He said it was 
significant that Europe's larg- 
est telecommunications opera- 
tor should have chosen Micro- 
soft's technology as the basis 
of their services. 

However, the partnership 
was at a very early stage and 
few firm decisions had been 
made. There were at this stage 
no financial implications, he 
said. Within six months, he 
expected that Telekom could 
say how it intended to use 
Windows software, which sub- 
stitutes pictures on the screen 
for textual instructions. 

Mr Koll said no decision had 
been made on whether Tele- 


kom would use Tiper Microsoft 
software, which is claimed to 
be able to use networks of 
inexpensive micro computers 
to provide services such as vid- $ 
eo-on-demand. Other compa- 
nies are using supercomputers 
to provide the processing 
power. 

Mr Gates has been talking to 
European telecommunications 
operators over the past few 
months to promote l Windows as 
the technology of choice for 
multimedia. It dominates the 
market for desktop computer 
operating systems although it 
is expected to lace fierce com- 
petition from new, high-perfor- 
mance operating systems such 
as IBM's OSI2 Warp. 


UK utility to pay out 
£ 186 m to shareholders 


By David LascoHes, 

Resources Editor 

East Midlands Electricity, the 
UK utility, is to give £i86m 
(S293m) back to its sharehold- 
ers in a special interim divi- 
dend payment. The pay-out. 
which brings to nearly £lbn 
the amounts returned to share- 
holders by privatised electric- 
ity companies this year, chew a 
call from the Labour Party for 
a government inquiry into 
“profiteering". 

Mr Jack Cunningham, 
shadow trade and industry sec- 
retary. said; “East Midlands 


consumers have been forced to 
pay 20 per cent more for their 
electricity since privatisation 
and the government and the 
regulator have done nothing 
about it." 

The regional distributor is to 
pay 86p net per share to share- 
holders who owned their 
shares before trading started 
yesterday morning. To offset 
the effects of this cash outlay 
the company will also consoli- 
date every 25 shares into 22 
new ones. The plan will be put 
to shareholders on November 
18. 

Lex, Page 16; Details. Page 25 


Pentos to focus 
on booksellers 

By Raymond Snoddy and 
Paul Taytor 

The new management of 
Pentos, the loss-making UK 
specialist retailer, is consider- 
ing selling off most of its busi- 
nesses and concentrating 
growth on Dillons, the book- 
sellers. 

Mr BUI McGrath, who took 
over as chief executive in Jan- 
uary, outlined his strategy in 
response to complaints from a 
group of former senior manag- 
ers of Pentos to the Financial 
Times after news of worse- O' 
than -expected first-half pre-tax 
losses of £3 6m ($56.88m). 

More details, Page 24 


Alt 




i3? 


NatWest Markets 

announces on behalf of NatWfest financial Products Pic the issue of a series of 

call warrants each relating to a 
constituent of the MIB-30 mdex 


a 

p- 

Underlying Share 

Warrant Price 

Wts/ share 

Strike 

Premium* 

Gearing* 

AJIeanza 

23 

100 

16.000 

19.4% 

6.7 


Banca di Roma 

22 

10 

1,700 

22.9% 

7.1 

.-j 

Benetton 

30 

100 

20,000 

17.0% 

6.6 

i 

CIR 

26 

10 

1,800 

222% 

6.5 

Comit 

22 

20 

3,700 

14.6% 

8.2 


Credito Italiano 

23 

10 

1,750 

18.6% 

7.3 

Edison 

22 

40 

6,500 

16.4% 

72 


Ferfin 

21 

10 

1,300 

19.9% 

6.0 

4* 

Rat 

25 

40 

6,100 

17.7% 

6.0 

d-i 

Fbndiaria 

27 

80 

11,000 

20.4% 

5.1 

Gemina 

17 

10 

1,300 

15.0% 

7.5 

r .-1 

L; j 

Generali 

23 

200 

38.000 

14.6% 

8.1 

/r- ■ 

Ifi priv 

22 

150 

25,000 

19.3% 

7.2 


Iffl 

20 

40 

5,400 

19.7% 

6.5 

r. J 

•LT. 

Imi 

26 

50 

10,300 

15.3% 

7.7 


Ina 

27 

10 

2,300 

17.2% 

8.1 


ttalcementi 

32 

50 

10,250 

18.0% 

63 

A 

1 taigas 

29 

20 

4,800 

17.6% 

7.9 

V? i 

Mediobanca 

26 

80 

13,000 

18.3% 

6.1 


Montedison 

19 

10 

1,300 

23.3% 

6.4 


Olivetti 

18 

15 

2,000 

25.9% 

6.7 

•••.•"j 

Parmalat 

24 

10 

1,600 

19.6% 

6.4 


Pirelli Spa 

20 

20 

2.300 

20.3% 

5.6 


Ras 

26 

125 

19,000 

17.1% 

5.8 


Rinascente 

27 

50 

8,100 

15.2% 

6.1 


S. Paulo 

26 

40 

9,000 

13.4% 

8.5 


Sai 

33 

100 

20,000 

17.7% 

6.0 


Sirti 

26 

50 

10,000 

14.6% 

7.6 


Stet 

21 

30 

4,500 

17.3% 

6.9 

l-.-i 

Telecom Ita 

28 

20 

4,100 

18.8% 

7.0 






I'? 

•. -i 




-Based mclosmg prices of onSnary shares as otOctob» 2 i. 1994 


Issues* 


NatWest Financial Products Pic 


Guaranteed by 

National Westminster Bank Pic 


NatWest Markets, Securities — London 

SALES; Tarek Saber Continuous secondary market! taw-way TRADING; Vincent Reay 

T I o-re pnces win be advertised on Reuters y 

Tel (44) 1 71 -375-681 8 pages cnwk to CNWO Tel (44) 1 71 -375-5805 


The warrants will expire on October 25, 1995 
Application has been made to list the warrants on tfie London Stock Exchange 



S3 


htoej by .VoUmm / Hbamlmur & ink Pie, a .Hcwtvr of IMHO. 


Abraxas Petroleum Corporation 
AFC Cable Systems, Inc. 
Alexander Energy Corporation 
Allied Waste Industries. Inc. 
American Oilfield Divers. Inc. 

Apparel Ventures. Lnc. 

Arethusa (Off-Shore i Limited 
Altotote Corporation 
Bally's Park Place. Inc. 

Central Rents. Inc. 

CHC Helicopter Corporation 
Coho Energy. Inc. 

Consumer Portfolio Services, Inc. 

Corporate Realty Capital 
Crescent/MACH I Partners. L.P. 
Hnvikosource, Lnc. 

Equity Marketing. Inc. 

Foodmaker, Inc. 

Foxmeyer Corporation 
General Media. Inc. 

Grasso Corporation 
Great American Cookie Company, Inc. 
Howell Corporation 
HMG Worldwide Cortokatton 
I co. Inc. 

International Mill Service. Inc. 
Investment Technology Group. Inc. 
Jefferies Group. Inc. 

Jordan Industries. Inc. 

LCl International. Inc. 

Leucadia National Corporation 
Liggett Grout Inc. 

Magma Copper Company 
MG Trade Rnance Corp. 

National Intergroup. Inc. 

Noble Drilling Corporation 
Nuevo Energy Company- 
Orchard Supply Hardware Corporation 
The Orleander Group, Inc. 

Parrish leasing corporation 
PetroCorp Incorporated 
Port Blakeley Tree Farms L. P. 
Reading & Bates Corporation 
Renaissance Cosmetics, Inc. 

Revco D. S. Inc. 

Ruadm aster Industries, Inc. 

The Scotsman Group. Inc. 

Sealy Corporation 
Terex Corporation 
Tesoro Petroleum Corporation 
Tom Brown - , In c. 

Transeastern Properties of South Florida. Inc. 
Trans- Resources. Inc. 

Tr.ansTex.ys Gas Corporation 
Taj Mahal Holding Corp. 
Weatherford International Ho-iriy>rated 
The Western Company of North America 
Wilrig AS 

Wright Medical Technology. Inc. 


There's More To Jefferies 
Than Meets The Ear. 

You may not hear much about us but we're 
bigger than you think. Recently, we advised and 
raised over $4 billion in equity, debt and 
convertibles for the companies you see listed 
here in transactions as small as S5 million and 
as large as $500 million. We also; 


Sold publicly 19% of our ITG subsidiary, 
which valued ITG at more than $225 million. 

Received an investment grade rating from SAP 
and issued $50 million of senior notes. 

Provided institutional liquidity by trading 
more than 3 billion shares of equity through 
our network of 125 salespeople covering 1700 
accounts worldwide. 

Expanded FTGs POSIT, the worlds premier 
intra-day trade matching system, to four daily 
crosses, increasing the average shares crossed 
each day to S.3 million. 

Formed a joint venture with lacocca Capital 
Group to create a new specialty merchant bunk. 


And ail our hard work is paying off — we've 
doubled our revenues in less chan tour years, 
and have been profitable for more tlian 30 years. 

If you'd like to hear more, please 
call Frank Baxter, our Chairman, 
m (310)914-11 17. 


JEFFERIES 


D»t« 1 (> K o t< i* , INC 

Bigger than you think 


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The investments and investment wires mentioned herein are tun available r.» "priivtc east, men . " at J,fmedhyihr Pules if the Set untie, i and Futures Audi, vin ( “SIA "I 
This advertisement has been apprm ed fn Jefferies international Limiuti. u member o/SFA. with . »gfcr » nr -M tine HroaJ Street. L imfi <n ECZU IJi> 



S' 











*Cs 

2b n 


FINANCIAL TIMES 


TUESDAY OCTOBER 25 1994 


Ilia. 


V'Hos lulu, 
!1 iHhlkstfe 


INTERNATIONAL COMPANIES AND FINANCE 


Record at Caterpillar despite strike 


By Laurie Morse 
hi Chicago 

tlie producer of 
construction machinery, reported record 
»Jes and profits in the third quarter, in 
SPite of a continuing strike by its United 
Autoworkers' union employees. 

The company said earnings jumped on a 
19 per cstt increase in sales of engines and 
machin ery, and that the strike had no 
significan t impact on its bottom line. 
Caterpillar earned 5344m, or 51.20 a 

Share , in the quarter, up from 5142m, or 72 

cents, in the corresponding 1993 quarter. 
Sales were $&5ibn, compared with S&8lbn 
in the third quarto' last year. 

News of the results drove Caterpillar’s 
share price up $ 2 ’/. in early trading on 
Wall Street, where analysts had expected 


the company to return 85 cents a share. 

For the first nine months the company 
earned 5676m, or 3&S2 a share, on sales of 
$l0.4bn. compared with last year’s 5533m, 
or (2.64 a share, on sales of $8,4bn. 

The strike, which began on June 21 and 
covers 14JJQ0 employees at eight Caterpil- 
lar plants in the Midwest, left nearly 6^00 
salaried and management employees to 
man the assembly lines during the quar- 
ter. The company sign brought in contract 
workers, called back retirees and hired 
new fufi-time employees to meet produc- 
tion schedules. 

The costs of alternative labour offset 
any savings garnered from not paying stri- 
king union employees, the company said 
yesterday. 

Mr James Owens, Caterpillar’s chief 
financial officer, said that the company 


was prepared to continue to operate in this 
mode Indefinitely. Mr Owens said the com- 
pany was not asking customers to delay 
deliveries, but that shipments of many 
products were being made based on the 
urgency of customer needs. 

In spite of the labour difficulties, Cater- 
pillar, which spiis nearly half its output 
outside the US, said that it expected a 
strong fourth quarter and forecast higher 
worldwide sales in 1995. 

“Worldwide, industry demand in 1994 is 
increasing in response to improving mar- 
ket conditions and is now likely to be 
bettor than previously forecast in nearly 
all regions. Exceptions are in Asia, where 
moderate growth is still expected, and 
Africa and the Middle East, where the 
decline will be greater than anticipated,** 
the company reported. 


Eastern Europe targeted 
for further expansion 


By Andrew Baxter 

Caterpillar, the world’s largest 
producer of construction equip- 
ment, aims to become the 
industry's leading force in east- 
ern Europe, said Mr Vito 
Baumgartner, chairman of 
Geneva-based Caterpillar 
Overseas. 

Speaking in London, Mr 
Baumg&rtner said: “We are 
very bullish long-term about 
eastern Europe. Short-term, 
these countries have very 
important challenges to over- 
come. But they will succeed, 
and that will bring opportuni- 
ties. n 

Caterpillar, based in Peoria, 
nitanfa, does not give turnover 
figures for eastern Europe, but 
$200m of its 5l.6bn European 
sales last year came from 
direct sales to the Common- 
wealth of Independent States. 

It h a ” no immediate plans to 


set up construction equipment 
plants in the region. Mr Baum- 
gartner said that would depend 
on how sales developed. How- 
ever, several of its independent 
dealers in western countries 
had already established, dealer- 
ships in the east, with the US 
company's encouragement. 

As a result. Caterpillar had 
dealerships in every eastern 
European country, except Lat- 
via, and that would be “taken 
care of”, he said. 

Along with other western 
suppliers, Caterpillar has bene- 
fltted from east European 
users’ rapid shift towards pre- 
ferring more productive 
imported machinery. 

“Business has been very 
good,” said Mr Baumgartner, 
“but the Czech Republic was 
out of the blocks the quickest 
Hungary has also done well 
and we have high hopes for 
Poland.'* 


Clean-up costs take 
toll on Asarco result 


By Laurie Morse 

Asarco, the US copper mining 
company, reported a 5l6.im 
net loss in the third quarter, in 
spite of rising metals prices. 
The loss, which amounted to 39 
cents a share, was the result of 
a previously announced charge 
of $45.5m to clean up a dosed 
smelter site in Tacoma, Wash- 
ington. 

Without the charge, Asarco 
would have earned 514.6m, or 
35 cents a share, on sales of 
$5 13m, compared with last 
year’s third-quarter loss of 
53m, or 6 cents, an sales of 
5425m. 

Nearly all of Asarco’s third- 
quarter operating income was 


attributable to equity warnings 
from the company’s share of 
Southern Peru Copper Corpora- 
tion. Results from Asarco's 
own Arizona mines continued 
to be plagued by operating 
problems. 

Boring' the third quarter. . 
Asarco's average realised price 
for copper increased 29 cants a I 
pound, to 5L15 a pound, while 
lead prices increased 11 cents 
to 80 oents a pound. 

For the first nine months of 
the year, Asarco reported net 
earnings of glSAm, or 38 cents 
a share, on sales of 
$1.4bn. 

This compares with last 
year’s loss of 558m, or 51.40 a 
share, an sales of Sl-Shn. 


Marsh & McLennan ahead 


Marsh & McLennan reported 
third-quarter revenue of 5827m, 
up 8 per cent from 5766m for 
the same period of 1993. agen- 
cies report 

The world’s largest insur- 
ance broking organisation 
announced a management 
shake-up. with. Mr David Hol- 
brook elected cha i rm an , Mr 
John Sinnott president and 
chif»f executive, and Mr Timo- 
thy Mahoney vice-chairman. 


Net income increased 10 per 
cent to $83m, compared with 
576m last year. Earnings per 
share grew to 51-14, en 
increase of 10 per cent from 
5L04 a year ago. 

For the nine months ended 
September 30, revenue 
increased 8 per cent to $2.6bn 
from $2.4bn last year. Net 
income totalled 5299m, an 
increase of 11 per cent from. 
5270m a year ago. 


PRICOA Worldwide Investors Portfolio 

Sodto (flnvesfissement & Capital Variable 
Registered Office: L-2449 Luxembourg 
47, Boulevard Royal 
R.C-S. Luxembourg B 39.040 

NOTICE TO THE SHAREHOLDERS 

By registered mafl October 4. 1994 

Vtfe hereby otva you notice to the Annual General Meeting of Shareholders oi 
patrjnAWbridwlde Investors Portfolio (th* “Companjr) to be [wJd In 
stared office, on November H.W94 at 11.00 a.m. In order 
to deliberate on the fo Sowing agenda: 

AGENDA 

■L Report of die Board of Directors. 

I statem ents lor 

4. Dfeseharge of Directors with respect io the performance ol their dut*a during 

the IfecaS year ended March 31, 1984. 

5. Election as Directors lor a term of one year or. 

Mr. Robon F. Gunla 
Me John A. Morrell 
Sr Michael Sanrfcerg 
Mr. fiogerto C. S. Martins 

6. Determination as to cflstritxjttons. 

of shares present or represented at die meeting. 

By order o? the Board QtOlreciore 


UpioCBOflOOjOOO 


us.sm/xojooo 


limi te d 

O.X.U ftd&ttKnO tiMlted 

boned » the Initial Tranche waadne toe 

CeptoNewtoelW 

U,Janaary23,»96tJ»Nctowai fetettxwmrttte2Sd.Oajbet.tW4 

omy an taierest rate of m 2S* towy. »W ibe N«* will 

annum with an intwot wmwnt or any m (man toe cf 5X per can. 

EMffi flue par ELtKXMMO Note. per aanem tnOj b Ceupoo wnoua of 

The relevant interest pnymenL dat* u.5. SU0J4 per UA S0DMJ hueres 

will be January S3, 1396- pjyme«d*tt35itiJJi*iary.tW5. 

AgtttBenk: HSBC Inwdwm BanUst limited 

hrrefl OgermliMiion Ajtat 

Bancue PaxjbaS 

THE REPUBLIC OF ARGENTINA 
NEW MONEY BOND DUE 1999 

Notice hs hereby given for the interest period beginning oa Ocfebe r 25th, 
eS <5 April 2Stfc 1995. The bond will cany an mtenstreteof 

&8125 pc. per annum. 

Banco Central tk la Republics Argentina 
nf A. uHj iti na Financial Afloat, 


Capital Notts ti»e IW9 

fete three mood* 25diOctobetlW4 
■a 2Sth tawny. »95 be Naas wifl 

any m toWM toe of 5K per eau. 

per annum wkb a Coupon aPMoni of 
0,5. SU0J4 pa UA SftOOO. buerca 

pgynMttrbBlSbtiouary.tWS. 

HSBC Imran Sanktae Lfotol 
hnnen Daenolnmion Agax _ 


He said Caterpillar's pur- 
chases of components, such as 
simple steel fabrications for its 
west European plants, were 
increasing. 

A St Petersburg joint ven- 
ture company is producing 
Hasp frames other compo- 
nents for Caterpillar's Euro- 
pean TWMn nfa i fl 'i'i'rin g facilities. 
In the long term, Mr Baum- 
gartner said, this could evolve 
into a manufacturing base for 
hydraulic excavators to serve 
the Russian market. 

Meanwhile, construction 
equipment sales in most west 
era. European countries, with 
the possible exceptions of Por- 
tugal and Greece, were recov- 
ering well from the recession, 
Mr Baumgartner said 

The downturn had left the 
European market down 34 per 
cent last year on 1989 levels. 
“We will be looking at 1995 and 
beyond for the real recovery 



Vfto Baumgartner ‘very 
bullish long-term* 

to take place," he added. 

Caterpillar's position had 
been bolstered by the $340m 

gpont gt HAamtiwing and upgrari- 

ing its European manufactur- 
ing facilities - part of Caterpil- 
lar's $l.8bn “Plant with a 
Future” programme completed 
last year. 


Amdahl 
continues 
recovery 
in term 


By Louise Keftoe 
In San Francisco 

Amdahl, one of International 
Business Machines' largest 
competitors in the mainframe 
computer market, continued 
its recovery in the third quar- 
ter, altera broad restructuring 
last year. 

Net income for the quarter 
was 514.3m, or 12 cents a 
share. This compares with a 
net loss of 5275.7m, or S2.41 a 
share, in the same period last 
year when the company took 
a S235m restructuring Charge- 
Revenues declined by about 
7 per cent to S364m from 
5393m. 

Demand for mainframe com- 
puters was ‘relatively strong" 
during the quarter, Amdahl 
said, with seasonal softness In 
Europe largely ofTset by 
strength in all other geo- 
graphic regions. Mainframe 
prices, which fell precipitously 
over the past two years, are 
now “reasonably stable”. 

Amdahl blamed its revenue 
decline on lower sales of data 
storage s ys t em s because of a 
product transition. The com- 
pany introduced new storage 
products late in the quarter. 

“We’ve accomplished many 
of the goals established during 
last year’s restructuring,” said 
Mr Joseph Zemke, president 
and chief executive. 

For the year to date, net 
earnings were 533,9m, or 29 
cents a share, on revenues of j 
51.l4bn. In the same period ; 
last year, the company lost , 
5539m, or 54.74 a share, on ; 
revenues of 5lJi4bn. The 1993 
losses included res t ru ct u ri ng 
charges of 5478m. I 


Higher metals prices help 
Inco to operating profit 


By Bernard Simon in Toronto 

Higher metal prices helped 
Inco, the western world’s big- 
gest nickel producer, to report 
a sharp improvement In third- 
quarter operating performance. 

But the Toronto-based com- 
pany’s bottom line was dented 
by an accident at one of its 
Manitoba mines, which forced 
it to cut production by 8m lbs 
during the quarter, and spend 
95m on repairs. 

The shortfall in deliveries 
was made up by purchases 
from other producers, on 
which there was little, if any, 
profit 

Net earnings were USS2.6m, 
or two cents a share, down 
from $91.2m. or 83 cents a 


share, a year earlier. Last 
year's figure included a 
5 127.9m, or 51.16 per share, 
gain from the sale of Inco's 
controlling stake in TVX 
Gold, a medium-sized gold pro- 
ducer. 

Third-quarter earnings were 
also hurt by a $7m payout 
resulting from the early 
redemption of a series of Swiss 
franc debentures. 

Sales climbed to $603.2m 
from $4 68m. Operating earn- 
ings were 547m, compared with 
a S13m loss. Total debt stood at 
51.01 bn an Sept 30. dawn from 
$ 1 . 06 bn last December. 

Finished nickel inventories 
fell to 46m lbs on Sept 30 from 
from 75m lbs three mouths ear- 
lier. The drop was largely 


attributable to summer holiday 
shutdowns at the Ontario and 
Manitoba Divisions during the 
third quarter. 

However, the recent recovery 
in the nickel market has led 
Inco to consider reducing next 
year's holidays. An official said 
yesterday that the company 
may shorten the summer shut- 
down from four to two weeks. 
Discussions with trade unions 
are due to be held in the first 
week of December. 

Total nickel deliveries rose 
to 125m lbs from lllm lbs. Cop- 
per shipments were 5lm lbs, up 
from 42m lbs. 

Inco also reported an 
improvement in its alloys busi- 
ness because of higher deliv- 
eries and reduced costs. 


Pfizer claims success for 
rheumatoid arthritis drug 


By Richard Waters 
In New York 

The first significant successes 
in slowing the progression of 
rheumatoid arthritis were 
claimed yesterday by Pfizer, 
the US drugs group. 

The company said that clini- 
cal tests of Enables, a drag 
currently awaiting approval 
from the US Food and Drug 
A dminis tration, showed it had 
achieved “a statistically signifi- 
cant decrease” in the rate of 
joint deterioration in patients. 

The results of the tests “pres- 
age a major therapeutic 
advance in the management of 
the crippling of arthri- 

tis." oioimpH Dr John Nib lack, 
the company’s head of 


research and development. 
Full results of the trial will be 
presented at the annual meet- 
ing of the American College of 
Rheumatology this week. 

Pfizer also yesterday said 
that it expected to have 14 dif- 
ferent drugs in late-stage trials 
by next year, setting the stage 
for a series of drag hunches 
that would stretch beyond the 
end of the decade. Dr Niblack 
warned that some products 
might prove disappointments, 
but added: “With this many 
shots, there are going to be a 
tew goals.” 

The up-beat news, made at 
an analysts' meeting in New 
York, lifted Pfizer’s share price 
by $ 1 % during morning trad- 
ing, to $74%. The company 


already trades at a higher 
price/earnings multiple than 
most competitors, reflecting its 
strong pipeline of potential 
new drags and a series of suc- 
cessful product launches in 
recent years. In the latest quar- 
ter, to the end of September, 
more than half Pfizer’s sales 
ramp from drugs launched ibis 
decade. 

Among other products with 
good potential singled out by 
Pfizer yesterday were Zithro- 
max, an antibiotic whose 
approval the company is seek- 
ing to extend for paediatric 
use. 

Clinical trials had shown 
“outstanding efficacy and 
safety data superior to compet- 
ing products,” Dr Niblack said. 


Bayerische Landesbank Bulletin 


MONEY AND CAPITAL MARKE' 


GERMAN BOND MARKET 

NO UPWARD PRESSURE FROM THE SHORT END 


The rise in fixed-rate yields has caused a striking change in 
the pattern of domestic monetary capital formation. Non- 
banks have stepped np their bond purchases and are 
running down their time deposits. 

With only a beiow-average rise in total savings, there was a striking 
change in the pattern of these savings in the past few years. The trend 
reversal came during the period of high interest rates in the early 

1990 s, which caused long-term ~~ ~ 

monetary capital formation by ' “a™ a™ 
households, for example through the .. 

purchase of bank bonds and public 190 ’ 

bonds, to come ahoost to a standstill from 

The rise in the feed-rale yield smre foreign countries 

the start of the year caused yet ioo 

another trend reversal in monetary 

capital formation: The volume of 

bank bonds outstanding in the first ^ 
halfofthe year rose by almost 80 per 
cent from the corresponding year- 
earlier period. All in all, monetary JttC r ,>■ CM 

capital formation in the first half of 0 
the year increased by more than r . _ r . 

IhreSstoOM^.Tbiilion.^ 

short-term rates declined, the year were up 38 per centfrom thee 
appeal of time deposits faded. Non- interest income rose by a scant l 
banks, which had paid DM 24.7 expected, therefore, that the capita 
billion into their time deposits in 10-15 bifflon for 1994. in 1993, 

January, increasingly lost interest in billion); the 1991 surplus was evei 
the ensuing months; in June 1994, 1993 c 

. ° trend reversal which has occum 

Iherewas a net outflow of atoost DM 

17 billion from these accounts. Tlie denominated fixed-interest seenrit 
switch out of time deposits has also bonds on the one hand and iniere 
affected the growth rate of M3. This rate securities by German investors 
growth rate, as high as 21.2% in ofnolessthanDM17.3biDion.Thi 
January, has Mien below 10 % in the a posh*™ dm 8.2 billion, 
meantime, and it is likely to move 

even closer to the upper end of the Bundesbank's target (4-6 per ant 
between the fourth quarter ofl993 and the fourth quarter of 1994). 

A comparison of monetary capital formation (at credit institutions) at 
a time when interest rates peifced (1990/91) and a time when they 
troughed (1993) reveals two distinct trends: 

1. In a period of high interest rates, banks and savings banks are 
swamped with long-term funds; as long as rates are up, short-term 
investments play only a minor role in monetary capital formation. 

2. Inaperiod of low interest rates, the opposite is true: When rates are 
low, savers tend to „park“ their funds in short-term assets. When 
rates go up, they switch into longer-term investments. 

While investors prefer liquid investments when interest rates are low 
and switch to longer-term investments when they move up, 
borrowers tend to raise short- and medium-term loans when interest 
rates are high and long-term loans when they are low. 

The distortions in monetary capital formation thus caused inevitably 


1984 1986 1986 1987 1988 1989 1990 1991 1992 1993 1994 M 

Interest payments to foreign countries in 1994 will probably exceed interest 
receipts for the first time dnee 1982. Interest payments in the first halfofthe 
year were up 3S per centfrotn the corresponding period of the previous year, 
interest income rose by a scant 11 per cent during this period. It is to be 
expected, therefore, that the capital-income account wifl show a deficit of DM 
10-15 billion for 1994. In 1993, it was still in surplus (by almost DM 15 
billion); the 1991 surplus was even bigger (DM 32.1 billion). The aggregate 
surplus between 1984 and 1993 came to no less than DM 167 million. The 
trend reversal which has occurred in the capital-income account in the 
meantime is a consequence of foreign Investors' massive buying of D-mark- 
denominated fixed-interest securities. In 1993, interest payments on D-mark 
bonds on the one hand and interest receipts from holdings of foreign fixed- 

rale securities by German investors onthe other resulted in a negative balance 

of no less than DM 1 7.3 billion. The interest balance in 1990, by comparison, 
was a positive DM 8.2 billion. 


have an impact on the bond market. As already observed in previous 
interest-rate cycles, two investor groups stand out in a period of low 
interest rates: domestic institutions (investment funds, insurance 
companies, banks), which buy mainly bank bonds, and foreigners, 
who focus on public bonds. Foreign investors contribute an dement 
of uncertainty, because their appetite for D-mark bonds depends on 
exchange rates and interest-rate expectations. This was brought 
1 1 1 | home when IS rates zoomed this 
year-the yield on the benchmark 30- 

a — year US Treasury bond has risen from 

6.35 per cent at the beginning of the 
year to 7.75 per cent, and the average 
— public bond yidd has dimed from 
5.41 per cent to 7 'A per cent 
Between January and July 1994, 
_ foreigners sold DM 20.6 billion net 
of German bonds, an amount equal 
to just under one-tenth of 1993 s 
total purchases. While a large 
zr proportion of the securities bought 
bv foreign investors in 1992 and 

1990 1991 1992 1993 1994 M ,993 355 Won) ^ 

1994 will probably exceed assumed to be in strong hands (for 

rest payments m the first halfofthe , rr y M , 

ondingperiod of the previous year, example thoseof foreignmonetaiy 
rent during this period, it is w be authorities) and will be kept until 
ne account wifl show a deficit of DM maturity, the uptrend in 
still in surplus (by almost DM 15 international interest rates has 
t (DM 32.1 billion). The aggregate probably made foreigners more 
> no less than DM 167 million. The inclined to sdl than to buy. 


GHUio uwaaiYCUUjuijiHLruuuB' . r . 

993, interest payments on Dmark A re-run of 1987? 
pis from holdings of foreign fixed- However, the uptick in yields until 
Mher resulted in a negative balance the end of September does not mean 
a balance in 1990, by comparison, that the 8 per cent coupon is just 

around the corner In previous 

— ; c\des, yields had also risen from 

their lows to levels above seven percent (for ten-year maturities), but 
the rise was then followed by a period of Ming rates, during which it 
was partly retraced. For example, the yield on ten-year public bonds 
was 5^9 at the tone of the 1987 low in May. In the middle of October 
it stood at 7.37 per cent, but little over a month later it was down to 
6.46 per cent again. 

Although the 1987 experience will not necessarily be repeated this 
year; bond- market yields have risen so rapidly that they can be 
assumed to have exhausted their upside potential The Bundesbank 
has also made it clear that it regards the latest run-upas exaggerated. 
The likelihood of an early correction or consolidation has therefore 
increased 

Bayerische Landesbank, Department of Economic Research L 

D-80277 Miinchen, Fox (089) 21 71-1329. I 


^ Bayerische Landesbank 


t 




FINANCIAL TIMES TUESDAY OCTOBER 25 1994 


Park - September 1994 


7 bis announcement appears us a 
matter of record only 


ECCO SECURSTE SA 

has acquired 

CHUBB SECURITE SA 

(a Trench sulisidiary of the CHUBB SECURITY groupl 


The undersigned acted as advisor to 
CHLIBB SECURITY Pic 


pew 

Dr Neuflise, Scblumbngcr, Mato 


-a french subsidiary of H ABN 'AMRO 


INTERNATIONAL COMPANIES AND FINANCE 

Capital Cities/ABC surges 1"^°^ 

71% in quarter to $133m 1 


By Patrick Harverson 
in New York 

Capital Cities/ABC. the US 
entertainment and media 
group, yesterday reported a 71 
per cent increase in third- 
quarter profits to $133.7m, or 87 
cents a share. 

The strong results were 
achieved in the wake of 
another impressive perfor- 
mance from its network and 
cable television businesses, 
and a still-favourable advertis- 
ing environment Net revenues 
in tha period totalled $L46tm, 
up from $i.3bn In 1993. 

The group's profits, however, 
failed to match the previous 
quarter, when Capital Cities 
earned 5189.5m on revenues of 
$l.54bn. Also, earnings per 
share in the latest period were 


boosted by a 1993-94 stock 
repurchase programme which 
reduced the number of shares 
outstanding by almost 11m, to 

151m. 

Capital Cities' television 
operations once again per- 
formed well in the quarter, 
with broadcasting revenues 
climbing 13 per cent to $L2bn 
and operating income soaring 
67 per cent to ¥212&n, the lat- 
ter figure aided by the group’s 
emphasis on keeping costs 
imrtpr control 

The flagship ABC network 
continued to benefit from 
improved ratings, and 
although, the network, lags its 
rival CBS in total viewersMp, 
hit programmes such as NYPD 
Blue and Home Improvement 
have been delivering the audi- 
ence - the 18- to 49-year-olds - 


that advertisers crave. Cap 
Cities' eight affiliate television 
stations, its ESPN sports cable 
channel, international 
operations and radio stations 
also all reported higher reve- 
nues as advertising demand 
remained strong throughout 
the broadcasting industry. 

Revenues from the group's 
publishing operations - which 
include a family of daily and 
weekly newspapers, shopping 
guides, books and various spe- 
cialised magazines - were 
buoyant, rising ll per cent to 
8277.4m. Operating income 
from the publishing business 
rose 37 per cent to $4L8m. 

Yesterday's results were 
broadly in line with Wall 
Street forecasts, and the shares 
rose by VA to *77% in early 
trading. 


Domtar chief executive ousted 


Christiania Bank og Kreditkasse 

(Intnpt'rMrJ at the Kingdom of Norton oritA Imnltd Hobday) 

U.5.S 100,000,000 

Floating Rale Subordinated Notes Due October 1 997 

Notice is hereby given that the Rate of Interest has been fixed at 
6.1875% and that the interest payable on me relevant Interest 
Pavnusnt Date April 25. 1995, against Coupon No. T9 in respect of 
U8S10.000 nominal of the Notes will be US$312.81 and in respect 
of USS250.000 nominal of ihe Notes will be USS7,820.3T. 

Agent Bank CUIBANKO 


DELAP 


By Robert Gfabens in Montreal 

Mr Pierre Desjardins, president 
and chief executive of Domtar, 
the Canadian paper, packaging 
and building materials group, 
has been ousted after a board- 
room dispute over policy and 
management style. 

Domtar’s part-time board 
chairman, Mr Paul Gobeil, has 
also been removed. Domtar 
confirmed the contracts of both 
executives were ended as of 
Sunday. 

Insiders estimate that tinder 
the terms of their contracts. 
Mr Desjardins stands to collect 
about C$1.7m (US*l.2m) and 
Mr Gobeil nearly C$500,000 as 
golden handshakes. 

Mr Desjardins became head 
of Domtar in 1990 when profits 


were tumbling with the north 
American recession. He had 
been head of John Labatfs 
Cana dian brewing operation. 
Mr Gobeil was a minister in 
the Liberal cabinet of former 
Quebec premier Mr Robert 
Bourassa in the 1980s and 
joined Domtar in 1993. 

Mr Stephen Larson, who 
joined Domtar as president in 
1991 from Boise Cascade, the 
US group, but who left last 
July following disagreements, 
has been named Domtar’s pres- 
ident and chief operating offi- 
cer. He Is also a director. 

Mr Larson is perhaps best 
known for overseeing a turn- 
round at Domtar's C*lJ2bn 
communications paper mill 
near Montreal 

The new chairman is Mr 


Gflles Blondeau, an insurance 
industry consultant. Mr Ray- 
mond Cyr, a former chairman 
of BCE, the telecommunica- 
tions group, and Mr John 
Thompson, president of Mon- 
treal Trust, become vice-chair- 
men. These three appoint- 
ments are interim. 

Domtar is 20 per cent held by 
Caisse de Depfc. Quebec's pub- 
lic pension fund manager, and 
22 per cent by the Quebec 
Industrial Development Carp, 
another provincial agency. 

Domtar has spun off its 
newsprint operations but with- 
drawn a US$4Q0m spin-off of its 
Canadian and US building 
materials operations. The com- 
pany returned to profitability 
on an operating basis in the 
first half. 


EMPRESA DISTRIBUIDORA LA PLATA S -A. 

(Innirpivutnl under the Unri of the Republic of Argentina) 

U.S .$30,000 ,000 
Floating Rate Notes due 1997 
Notice <s hereby given that the Rale of Interest for the Interest Period 
October 25, i 99 A to April 25, 1 995 has been fixed at 9.9875% 
and that the interest payable on the relevant Interest Payment Date 
April 25, 1995, against Coupon No. 1 will be U.S. 4504. 92 in 
respect of U.S. $1 0,000 nomind of the Notes. 

October 25, 1994 

By: Citibank, N A (Issuer Services], Agent Bank CfTlBAN\%+ 


U.S. $400,000,000 

A National Westminster Bank 

Floating Rate Capital Notes 2005 

In accordance with the provisions of the Notes, notice is hereby 
given that far the six months Interest Period from October 25, 
1994 to April 25. 1995 the Notes win carry an Interest Rate of 
6^0 per annum. The interest payable on the relevant Interest 
payment date, April 25, 1995 against Coupon No. 20 will be 
U.S. S303.33. 

By: The Chase Manhattan Bank, N JV. 

London, Agent Bank 
October 25. 1994 


Host Marriott spends 
$I49m on seven hotels 

Host Marriott has agreed to buy seven hotels 
from the Equitable LUe Assurance Society of 
the US. for a total of *149m, Reuter reports. 

Host Marriott said it will gain 2^87 rooms in 
the deaL The hotels are the Sheraton Denver 
Tech Centre, the Portland Marriott, the Wil- 
liamsburg; Virginia, Hilton, the San Francisco 
Marriott Fisherman's Wharf, the Singer Island 
Holiday Inn in Sunspree, Florida, the Spring- 
field, Missouri, Radissan and the Napa Valley 
Sheraton Inn. 

The hotels in Denver, Williamsburg and Napa 
Valley will be converted to the Marriott brand 
and managed by Marriott International Inc. The 
properties in Portland and San Francisco will 
continue to be operated under the Marriott 
brand name. Upon dosing, Host Marriott will 
spend about *12m far improvements and conver- 
sion costs. 

With these hotels, Host Marriott said it will 
have acquired 16 properties in 1994 for about 
*472m. 


Detroit Diesel acquires 
Italian group for $125m 

Detroit Diesel, the US manufacturer of 
heavy-duty diesel engines, is to acquire Italian 
motor group VM Mo tori for $125m, agencies 
report 

The transaction, expected to be completed in 
early 1995, is subject to various conditions, 
inrhiriing regulatory approval 

VM Mo tori designs and manufactures diesel 
engines for a variety applications. The compa- 
ny’s 1994 revenues are expected to exceed 
5200m. 

Mr Roger Penske, the former rating car driver 
who is chairman of Detroit Diesel said: “The 
purchase of VM Motor! gives us access to new 
growth markets which we do not currently 
serve and is an additional step in our strategy to 
expand worldwide product offerings. " 

Detroit Diesel, which employs more than 5^00 
worldwide, had 1993 revenues of $L6bn and net 
earnings of 520.7m, or $L17 a share. For the first 
six months of 1994, revenues were $S18m and 
net earnings were 517.3m or $0.74 a share. 


^ 

sappi limited 

FteflNa OS/OB9KM6 

INTERIM RESULTS 

far the six months to 31 August 1994 


SUMMARY OF RESULTS 

far the six months to 31 August (unaudited) 


TURNOVER BY DESTINATION - POST WARREN ACQUISITION 



1994 

1993 

Sales 

$878m 

$843m 

Operating income 

S58m 

$3 1m 

Net income 

$4 1m 

$20m 

Earnings per share 

25 cents 

13 cents 

Dividends per share 
(30 SA cents) 

Scents 

— 

Employees 

19 228 

20148 


Other Eu 
9.1% Far East 


24.5% I 
South Africa 


8,3% Germany 
9.3% 

K Kingdom 


■f-y 40,2% 


A maiat improvement In protti periormanca was j qu b v o cI In Ita sfat 
monlh trading psrtod. The outlook for (he putp and paper Industry has unproved 
Mitotan Italy wtth puces tnerearing by attteftno degrees lor mew of the products 
manufactured by the group at Its operations in Southern Africa and Europe. The 
most notable fkico inaoases have been m pulp (both paper amt dfersoh/fcig 
grades wteeh have increased by 79% and 37% respectively store November 
1993) The market is therefore In a strong recovery mode and producers are 
Kuety to enjoy a period o! stgntfcantty Improved pnafitabMy. 

in South Africa it has been possible tar the linn Dme in several years to 
mcroaso prices on certain products but in real letms m are stw nreH below the 
previous peak. Tho Unproved cfcsolvtng pulp prices are having a marked effect 
on piaitabtfly tut competitivo acUvtty in the Inertooard market In South Africa 
has tinted our ability to adjust paces In line with world trends. 

in Germany mg Hannover operation e running at M capacity and 
enjoys a strong order book. It has been posstte to fenprora both prices aid die 
product mi* and me company b now performing prostably so that the losses 
incurred in tne aarty months of Die year should be recouped by year end. 

in Ihe United Kingdom, where Dw operations are net purchasers ol 
pulp, me sharp pulp price Incre a s e s have negated much of the paper price 
increases so tor obtained. Sefitog prices of paper products usually lag pulp price 
increases but there should now be an improvement In margins. 

The Brussels sales office continues to perform wefl In the (SstrfttuSon of both our 
Gentian and British products. 

Our sains organisation bi Hong Kong has made an r rryo rta m contribution to 
profits and should benefit further from the gerterefiy im prov i ng price trends. 


Sappi. and an Investment group, have, subject to various regulatory 
approvals and condtlons precedent, contracted to acquire the whole of the 
Issued share capital ol the S D Warren Company ("Warren"). a us cortpany. 
from Scon Paper Company, ter a price of US SU tdkon. Sappi wtS have a 
minimum equity sake ol 70%. Warren is the market leader in the USA Jn coated 
woodfree papers with a capacity of l 250000 tons per amum of coated, 
uncoatod. specialty and technical papers, at its tour rolls, end holds 27% of the 
US coated woadfiea paper market. Warren also owns nearly 400 000 hectares 
of kmberiandsinthe north-eastern US 


- The need to harmonise the financial year ends of Sappi and its recently 
acquired subsidtertes has resulted in a review of Die dote currently applied by the 
group. TaMng account of the needs of afl tMsksna, the board has decided to 
change the financial year end to the end of September, effective from September 
1995. The period to September 1995 wfl cover seven months only. 


v Turnover tor the period was Sa79-mSon. 4% higher than a year ago, the 
result of a 6% Increase to volume pbs the steady improvement in seftng prices 
experienced. Operating Income was SSS-mfOon, an Increase at 97% compared wtth 
last year. 

Net income more than doubled from S20-mlBon to 541-mUon and earnings per 
share increased town 13 cants to a cents. 


' ' bt view of the improvement in both the results for the haff year and the 

outlook tor the future, your board has decided to resume dhrtdend payments and 
has declared an interim dividend of 30 SA cento per share. 


» Mas of toe mariiets to wteeh tha group operates are much Improved and 
iMk promising In toe short to medfcm term. In paticuter the profits for toe second 
half of tho year are rapeded ® significantly erased those of Die equivalent period 
test yereartotoose of toe first heH of tots year. The acquisition olWaren Is espaewd 
to have a passive rnpact on Sappfs earnings n the 1995 taandal period and, 4 tha 
cunwtt trend In the paper price cycle continuas as expected into 1997, ihe posifeva 
■fflpatSI w# be substantial. 


INTERIM DIVIDEND 

TherntBrirndhriflandtorthosix months to 3i August IBS* of 30 SA cents pv share 
8 payable on 2S November 1994 n shareholders of record on 4 November i»». 
(Attends f»yaWo from the London transfer office wil be pad in Unted States 
at the rate of exchange ruing on 18 November 1994. Non-resident 
sharehoUera' bx ol 15% wB be deducted from dividends payable to resklents 
oubkte the RapufaEc of South Afrfca. The Interim report w* be malted to 
shareholders an or stoout 24 October 1994. Copies may be obtained from me 
transfer agent - Barclays Registrars Urrtted. 34 Beckenham Road, Beekentran. 
Kent BR34TU- 


Saf^ Management Services (Pty) Ud. Secretaries, per DJOVonnor 
18 October 1394 


600 F 


1993 

Source: FT Graphite 


Terms of Arnault 
restructure win 
regulator approval 

French market regula- 
LVRSH tors yesterday 

approved the terms of 
Share price (FFn a revised offer for the 

900 restructuring of Mr 

. . M Bernard Arnault's 

aoo — JyJ- French luxury goods 

A f " and retailing empire, 

700 JXM writes Andrew Jack in 

■ fj T Paris. The Conseil des 

___ U Bourses de Valeurs 

600 r ' (CBV) said the offer to 

t i shareholders from 

500 1993 s4 Arnault & Associates, 

would be open from 

sores: ft Graphite today until November 

23 under improved terms made public on 
Wednesday last week. 

Arnault initially offered minority sharehold- 
ers of Financi&re Agache one share in LVMH 
and one share in Dior, the fashion group. It 
offered Au Bon Marche shareholders five Dior 
shares and two LVMH shares for each four 
shares they held. 

Both Agache and Au Bon Marche are part of 
the LVMH empire, which spans luggage. 
Cognac and champagne. Arnault & Associates, 
an LVMH subsidiary, is one company through 
which Mr Arnault controls the group. 

Its revised offer changed the terms for 
Agache shareholders, proposing nine Dior and 
nine LVMH shares for every eight shares they 
held. The Au Bon Marche offer is unchanged. 

Separately, LVMH confirmed it has paid 
FFrl20m (522m) for a 19.8 per cent stake in 
Ffninft i, a subsidiary of Altus Finance, the loss 
making financial group controlled by Credit 
Lyonnais, the state-owned bank. 

Matif in link-up talks 
with competitors 

Matif, the French international futures and 
options exchange, is discussing electronic trad- 
ing links with competitors in at least three 
additional European countries, its president 
said yesterday, writes Andrew Jack. 

The links would build on the system 
recently opened between Matif and Deutsche 
Termmb&rse (DTB), its Frankfurt-based equiv- 
alent, which allows French Matif members to 
trade two products offered by the DTB. 

Mr G4rard Pfauwadel, president of Matif, 
said he had already had expressions of interest 
in building similar connections between Matif 
and its counterparts in Spain, the Netherlands 
and Switzerland. 

The links are based on Mafifs strategy of 
focusing on developing domestic niches for 
products on its own system and electronic 
trading links with other European futures and 
options markets. 

Links with new European exchanges are 
unlikely to take place until the start of 1998. 
Next year. Matif is planning to offer two of its 
own products - as yet undecided - to DTB 
traders. If successful, it also hopes to introduce 
other products and a common, clearing system 
with Germany by the end of 1995. 

Sale of surplus Japan 
Tobacco stock delayed 

Japan’s ministry of finance has decided to watt 
until the next fiscal year, starting on April L 
before attempting to sell tire large number of 
Japan Tobacco shares left over after an initial 


offer that foiled to attract widespread investor 
demand, agencies report from Tokyo. 

The ministry said yesterday that 272,390 of 
the 666,566 shares offered in the partial privati- 
sation were left unsold. 

The public offering price had been set at 
YL438m for JT shares which have a face value 
of Y50.000 ($500). In the first round of the share 
offer lottery. 145,302 winners exercised their 
rights to buy JT shares out of a total of 429,339 
successful bidders. In the second round, 
278,000 applicants won the right to buy shares, 
but only 12,054 of these actually bought the 
shares, a ministry official said. 

The ministry was attempting to sell 436£66 
JT shares through offerings ahead of the com- 
pany’s listing on October 27. Of these, 7.000 
have already been sold to the JT employees 
shareholders’ group. Apart from this, the min- 
istry has already sold 230,000 shares to inves- 
tors in an auction in August 

CDL buys New York 
hotel for $96m 

CDL Hotels, a subsidiary of Singapore's listed 
City Developments group, is paying D5$96m 
for the 639-room Hotel Macklowe in Times 
Square, New York, writes Kieran Cooke in 
Kuala Lumpur. 

The purchase is the latest in a series of 
worldwide luxury hotel acquisitions by CDL, a 
company which is ultimately controlled by the 
Singapore branch of the Hong Leong conglom- 
erate. 

CDL Hotels has recently purchased the 
Regent in Kuala Lumpur, the Gloucester and 
Chelsea hotels in London and the Hotel Nikko 
in Hong Kong. CDL also owns the Hotel M3- 
lenium in New York. 

Best third-term result in 
five years for Maytag 

Maytag, the US home-appliance company that 
makes Hoover products, reported a surge in 
net income, to $61m from 523m, for the three 
months to September, on revenues up 10 per 
emit at 5848.9m, writes Richard Tomkins in 
New York. It said it was the company’s best 
third-quarter performance in five years. 

Part of the increase was attributable to a 
o ne -time tax benefit of $20m resulting from 
prior operating losses and reorganisation costs 
in Europe, but Maytag said that even setting 
this aside, net profits were up 78 per 
cent 

All parts of the business contributed to the 
strong performance, Maytag said. 

In North America, the home appliance | 
operations were having an “outstanding” year, 
and in floor care. Hoover was having its best 
year since joining the company in 1989. 

Higher prices help 
lift Norsk Hydro 

Norsk Hydro, Norway’s largest stock-listed 
company, yesterday reported a rise in nine- 
month pre-tax profit to NKr4.75bn (5730m) 
from NKrl62bn in the same period last year, 
writes Karen Fossil In Oslo. The result was 
helped by higher prices for most of its prod- 
ucts in spite of a weaker third-quarter perfor- 
mance by the oil and gas division. 

Group nine-month sales rose by NKiS.lbn to 
NKr51J4hn as operating profit rose by NKr2bn 
to NKrt^ara. Hydro said that it had virtually 
completed a far-reaching restructuring pro- 
gramme launched three years ago for 
its magnesium and agriculture 
business. 



£80.000,000 
Subordinated Floating Rate 
Notes due July 1998 

for the three months 2 Isi Octo- 
ber, 1994 to 23rd January, 1995 
the Notes will carry an interest 
rate of 6.59375% per annum 
with a coupon amount of GBP 
135.85 per GBP 8.000 Note, 
payable on 23rd January, 1995. 

Nationwide Building Society 

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notes will bear Interest at 6.15% 
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1994 to 25 January 1995. 
Interest payable on 25 January 

1995 will amount to ECU 157. 17 
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INTERNATIONAL COMPANIES AND FINANCE 


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Malbak benefits Samsung drives on towards globalisation 

from consumer The Korean group is in the throes of a management revolution, writes John Burton 

-M # r a ihe recent decision by a production defect and fix the capacity to as much as 6m 

VlTlOTIfliniT 111%T11W1 I Samsung to build a oamsuno v problem. vehicles a year. 

lllllly II 1 H 111 I I JL large electronics com- o*Hn nmntmm« nm- itnririr . Managers are also sent on “We need to develop car 

plex in the Cleveland region of etnpKqweg P* .... . . trips abroad, ranging from m^nnfa rtririn g if mu- e ng ineer- 

Corotimer products and : 
social servtew m! 


By Mark Suzman 
in Johannesburg 

Malbak, the South African 
industrial group, benefited 
from an improvement in con- 
sumer spending in the final 
-Quarter to increase after-tax 
earnings to R545ra ($83-8m) lor 
the year to August, up from 
R479m a year ago. 

Turnover rose 15 par cent to 
Rl2.6bn from Rlibn previ- 
ously. However, Malbak's oper- 
ating margin fell to 6^ per cent 
from 7.5 per cent, although the 
group attributed this to expan- 
sion in branded consumer 
products, which are subject to 
lower margins. 

Pharmaceuticals group SA 
Druggists boosted its contribu- 
tion to earnings to 17 per cent 
from 14 per cent on the h«r-> of 
improved productivity. 

Branded consumer products. 
Including furniture group 
EUertnes and electronics man- 
ufacturer Tedelex, also did 
well, raising combined earn- 
ings to R8Sm from R59m. 


Packaging group Holdains 
kept earnings steady at R65m 
in spite of having to restruc- 
ture its plastics division, but 
food processor Foodcorp was 
hurt by weak trading condi- 
tions and could managp only a 
5 per cent rise in inemng to 
R78m from R73m. 

Mr Grant Thomas, group 
executive chairman, said that 
although conditions had 
improved, the recovery in 
spending remained fragile. 

Most of the group's 
companies have elected to 
award capitalisation share 
issues in place of dividends to 
help fund new capital 
expenditure. 

Malbak will take up its 
shares in each case, but has 
increased its own final 
dividend to 2L5 cents from 225 
cents, raising the total fin- the 
year to 38.5 cents from 35 cents 
previously. 

• Malbak is to acquire Defy, a 
big domestic manufacturer of 
white goods, from TEE for 
Riaom. 


Strong first half for 
S Korean brokerages 


By John Burton in Seoul 

The combined pre-tax profits of 
South Korea’s 32 securities 
houses during the first half of 
fiscal 1994, to end-September, 
rose by 21 per cent to 
Won329.6bn ($413.2ra). accord- 
ing to the securities supervi- 
sory board. 

The increase reflected 
growth in commission fees 
resulting from the recovery of 
the Seoul bourse, with total 
securities transactions rising 
by 37 per cent 

Brokerage firms also bene- 
fited from increased income 
from stock investments and 
lower financial costs. 

Daewoo Securities, South 
Korea's largest brokerage firm, 
reported a 26.6 per cent rise in 
pre-tax profits to Won50.4bn, 
while net profits grew by 26.7 
per emit to Won3L2bn. Sales 
climbed by 23.5 per cent to 
Won2U.4bfc. 


Daewoo forecast that pre-tax 
profits would reach Wonl35ba 
for the full year. 

Among other houses report- 
ing pre-tax profits, Hanshin 
Securities rose by 105 per cent 
to Won47.3bn; Ssangyong 
Investment & Securities 
advanced 35 per cent to 
Won252bn; Lucky Securities's 
profits fell by 22 per cent to 
WonZL7bn; and Daishln Secu- 
rities declined 39.6 per cent to 
Won2hlbn. 

At Shin Young Securities, 
pre-tax profits grew by 30 per 
cent to Wonl7.6bn; Dongsuh : 
Securities reported a 34.8 per 
cent fell to Wonl4J2hn; Hyun- I 
dai Securities* profits rose by 
1L9 per cent to WanlS.lbn; and 
Sangup Securities had a 26.5 
per cent increase in profits to 
WanlLSbn. 

Two houses reported losses, 
Hanyang having a deficit of 
WoxdL8hn and Dongtm Securi- 
ties a loss of Wonl65m. 


T he recent decision by 
Samsung to build a 
large electronics com- 
plex in the Cleveland region of 
north-east England is the latest 
move by South Korea's largest 
chaebol (conglomerate) to 
transform itself into one of the 
world’s leading multinational 
corporations. 

In the past few weeks, Sam- 
sung hpfl fllsp qnnnnufyd the 
establishment of large manu- 
facturing facilities in China, 
Thailand and Mexico. 

The drive toward global isa- 
tion is also causing a manage- 
ment revolution at Samsung, 
which is the world’s largest 
manufacturer of semiconduc- 
tor memory chips and one of 
Korea’s leading producers of 
consumer electronics, ships, 
machinery a nd petrochemicals. 

Mr Lee Kun-hee, chairman , 
is deeply concerned that the 
group, which his father 
founded in 1938 as a rice-trad- 
ing and textile business, 
remains psychologically ill-pre- 
pared to compete in the global 
market. 

The 52-year-old Mr Lee, who 
was educated in Japan and the 
US, last year introduced man- 
agement reforms that empha- 
sise Individual initiative in a 
group that was known for its 
rigid hierarchical structure 
and was heavily influenced by 
Japanese corporate practices. 

Announcing the changes, the 
normally reclusive Mr Lee dis- 
tributed videotapes of lectures 
to senior management that 
engaged in masochistic corpo- 
rate self-criticism. He warned 
that Samsung was in danger of 
becoming a second-rate inter- 
national business unless the 
group rapidly shifted its focus 
from quantity to quality and 
overhauled its cumbersome 
bureaucracy. 

“Despite the enormous 


flnarcU and 
Wonnatton 
services 37% 


■ Ratio of sates. \ 

Consumer products and . 
social services S4% / 


r*l | — i— t .[mi 

. HTOncut ana 

'information' 
services 67.1% 


Net safes (Won *000 bn} 

60 — -T- 


Efectronfcq.37.5% 


BnaSrimraq) 


Ctvnrtcatal*, 


Electron tea 2£U% 


C ngi n ear ln g 

9lB% 

Chemicals 1.6% 


Not Income (Won bn) 

- : 6$p. : ". 


ml 


~ 1800 ■■ 81 92 OS 

changes in the world, Samsung 
has yet to comprehend how far 
behind we are in these rapidly 
changing and competitive 
times,” he wrote in a group 
pamphlet that has become 
mandatory reading for employ- 
ees. 

Mr Lee’s diatribe was 
sparked after a trip to the US, 
where retailers told him that 
Samsung consumer electronics 
suffered from a poor image 
because of high defect rates. 



As part of Its new approach, 
Samsung's 180,000 employees 
in Korea work a shorter and 
earlier schedule of 7am to 4pm 
to en coura ge them to be more 
productive. 

Senior executives must 
spend four days out of their 
six-day week at factories and 
meet customers and suppliers 
instead of remaining behind 
their desks. Workers are 
instructed to stop assembly 
line operations when they spot 


a production defect and fix the 
problem. 

Managers are also sent on 
trips abroad, ranging from 
three months to one year, to 
study local market conditions 
and improve their understand- 
ing of different cultures. 

It is too early to say whether 
these management practices 
are cosmetic or will have a sig- 
nificant effect on corporate 
performance. But there has 
been resistance among employ- 
ees to changes, which are con- 
sidered “too radical", accord- 
ing to one .Samsung executive. 
An Internal survey revealed 
that a majority of workers dis- 
liked the new working hours. 

Samsung bn* no plans to 
export these management prac- 
tices to its overseas facilities. 
“We respect local customs and 
labour laws,” explained one 
Samaing official. 

Moreover, the group seems 
tom between its traditional 
commitment to growth and Mr 
Lee’s goal of promoting quality 
at the expense of quantity, 
even if it means loss of market 
share. 

There Is a growing aware- 
ness at Samsung and the other 
chaebol that rampant diversifi- 
cation is hindering global com- 
petitiveness. 

The groups need to concen- 
trate on a few core industries 
to achieve success abroad, but 

Ram ciing jg sHlI finding - it diffi- 
cult to wean itself away from 
empire-building. 

TTie most controversial 
aspect of Samsung’s corporate 
strategy is Its plan to enter the 
passenger car business by 1997 
at a cost of at least $5bn. The 
government, and some ana- 
lysts, warn that the move is 
risky because Korea could face 
a production glut in the next 
few years, as the country's four 
existing carmakers expand 


capacity to as much as 6m 
vehicles a year. 

“We need to develop car 
manufacturing if our engineer- 
ing operations are to be com- 
petitive in the early 2 1st cen- 
tury, while remaining one of 
Samsung’s main business 
areas.” said Mr Kim Moo, 
vice-president of Samsung 
Heavy Industries, which is 
managing the car project 
Samsung does need to 
develop other industries that 
will match the success of its 
electronics business, which 
accounted for 55 per cent of the 
group’s net profits of 
Won418bn (S524m) in 1993, but 
only a quarter of its total sales 

of Won4i,365bn. Other Sam- 
sung businesses are much less 
profitable. 

B ut one problem with the 
car project is that it will 
divert financial 
resources from the electronics 
business, when the group 
needs to spend vast s ums on 
the development and produc- 
tion of a new-generation 256- 
megabit memory chip and 
other costly programmes to 
strengthen its position as one 
of the world’s leading electron- 
ics companies. 

Some analysts believe that 
Samsung’s car project is moti- 
vated by its fear that it will 
soon fell behind Hyundai - 
which already owns Korea's 
largest car company - in the 
fierce competition to be 
Korea's largest chaebol. The 
vehicle project also reflects the 
personal interest of Mr Lee, 
who is an enthusiastic collec- 
tor of racing cars. 

Whether Samsung can 
achieve balanced growth, with- 
out encouraging excessive 
diversification, may prove to 
be the true test of Mr Lee's 
management reforms. 


Canadian forest products groups advance 


By Robert Glbbens 
In Montreal 

Canadian forest products 
companies are reporting big 
gains In third-quarter profit 
with strong demand, higher 
prices and toe lower Canadian 
dollar. 

The price rises cover most 
paper mid packaging products. 


from newsprint to container- 
board. North American timber 
prices, however, moderated as 
the threat of strikes in British. 
Columbia waned. Japanese 
markets for specialised Cana- 
dian wood products turned 
higher. 

Noranda Forest, now solely 
an eastern producer, posted 
third-quarter net profit of 


C$28m (US$21m), or Ifi cents a 
share, against C$&n, or 2 cents 
a share, a year earlier. Sales 
were C$457m, against UfflRim. 

Nine-month profit was 
C$82m, or 55 cents, against a 
loss of C$42m, or 38 cents, 
(rnnlnrirng a C$66m loss on the 
sale of 49 per cent of Mac- 
Millan Bloedel). 

Donum, a western timber 


and pulp producer, reported 
third-quarter net profit of 
C$7.4m, or 17 cents, against 
C$U.lm, or 30 cents, on reve- 
nues of C$193m against 
C$155m. 

Prim ex, a big exporter to 
Japan, had third-quarter net of 
C$4 .8m, or 56 cents, against 
C$L47m, or 17 cents, on sales 
of C$63m against C$4toL 


Slocam, a western integrated 
group, earned C$25^m, or 67 
cents, against C$10.1m, or 30 
cents, on sales of C$201m 
against C$130m. 

West Fraser Timber, another 
western integrated producer, 
earned C$29.6m, or C$1.30 a 
share, up from C$10.1m, or 53 
cents, on sales of C$339m 
against fygRm 



Mr. Yvon ii. Masse, 
Executive Vice-President and 
Chief Financial Officer of 
Canadian National Railways 
Company (CN) is pleased to 
announce the appointment 
of Mr. lean- Paul Beaulieu to 
the position of Treasurer. 

Mr. Beaulieu joined CN in 
November of 199J as 
Assistant Treasurer. Effective 
as of October 1, 1994, he 
replaces Mr. Gerry Church, 
who will retire at the end of 
the year after a long and 
distinguished career with 
CN as Treasurer. Mr. 
Beaulieu's responsibilities 
include the tormulation ot 
timely and cost-effective 
financing programs that will 
further CN business 
ventures, as well as the 
enhancing of investor 
relations. In addition, he is 
responsible for risk 
management and insurance 
matters. He is based at CN 
Headquarters in Montreal. 

Mr. Beaulieu possesses 
extensive experience in 
corporate finance, treasury, 
financial planning, risk 
management, investor 
relations and merger and 
acquisition activities. Before 
coming to CN, he held 
various senior financial 
officer positions, the last of 
which was Treasurer at a 
major natural gas utility 
company. Mr. Beaulieu 
holds a Bachelor of 
Commerce from Concordia 
University and an MBA from 
L'Ecole des Hautes Etudes 
Commerciales de Montreal 
(HEQ. He is also a member 
of the Board of Directors of 
the Montreal chapter of the 
Financial Executives Institute 
of Canada. 


This announcement is neither tm offer to sell nor a solicitation of offers to buy these securities. 

The ojjforis made onfy by the Prospectus. 

October 18, 1994 


4,750,000 Shares 

C7ME 

Central European Media Enterprises Ltd 

Class A Common Stock 

($.01 par value) 


Price $1 4 Per Share 


Copies of the Prospectus may be obtained in any State onfy from such of 
the several Underwriters as my lawfully offer these securitiesm such State. 


Wertheim Schroder & Co. 

Incorporated 


PRUDENTIAL SECURITIES INCORPORATED 


Bear, Stearns* CO. Inc CSFmsr Boston Alex. Brown & Sons Dillon, Read & Co. Inc. 
■'Donaldson, Lufkin &Jenreite A.G. Edwards & Sons, Inc. Goldman, Sachs & Co. 

Securities Cb c portriOrt 

Kemper Securities, Inc. Lazard FrEres & Co. Merrill Lynch & Co. Iflaypcrated 

Oppenheimer&Co,Inc PaineWebber Incorporated Smith Barney Inc S.G.Warburg & Co. Inc 
Advest, Inc. Arnhold and S- BmCHROEDER, Inc Cowen & Company Gabelli & Company, Inc 
IWITRSKTO jOHNSONlANE LADENBURG, THALMANN & CO. INC C J. LAWffiMa/DrajTKHE BANK 
MGDONA^Ta.MPANY MORGAN KEHGAN& COMPANY, INC NEUBERGER & BERMAN 

THe Robhsbon-Humphrby company, Inc Wheat Foct Butcher S.nger 

BREANMURRAY.foTIWSECURrriESlNC GERARDKlAUERMATnSON&CO.lNC NORDBERGCAPTCALINC 

Pennsylvania Merchant Group Ltd ^ SetcjhiGompan.es Van Kasper & Company 


Banke, 



$ 


For the second year in a row, the members of the 
Chicago Board of Trade, the world's leading futures exchange, 
set a new world record for contracts traded. 

It happened on October 1 7, 1994. And it couldn't have happened without the 
continued support of the financial and agricultural communities around 
the world. Without you, 178,773,105 contracts traded would have been 
an impossible record to break. But together we did it. And thanks to our 
customers, the Chicago Board of Trade will continue to provide the premier 
financial and agricultural markets for the world to trade. 


Q 1994 Chicago Bomd of Thrfc 


% CNcago Board of&ade 

The world's leading futures, exchange 


1 



jEpgpasssaggs 




m 

■3W « 5J * *.) TinraTSw (»)ci 


MORTGAGE SECURITIES (NO.3) PLC 
£117,000,000 Multi-Class Mortgage Backed 
Floating Rate Notes due 2035 

Notice ifl hereby given that, pun nut to Condition 5(c) of the 
Notes, the lasuer shall redeem: 

£7.248.08 per Class A.1 Note 
£0.00 perCfasa A2 Note 
£0.00 per Class A3 Note 

on the next Interest Payment Dale, being October 31. 1994- 

MORTGAGE SECURITIES (NO.3) PLC 
Dated: October 25, 1994 


RAND MINES LIMITED 


? i . - I n a S EE H l Z \ ZSE 




OVERSEAS UNION 
BANK LIMITED 

US$100,000,000 
Subordinated Roating 
Rate Notes due 2011 
(Redeemable at the option of toe 

Noteholder in T996 and 2006) 

In accordance with the 
provisions of the Notes, 
notice Is hereby given 
that the rate of interest 
for the six months 25th 
October, 1994 to 25th 
April, 1995 has been 
fixed at 6.0525%. The 
interest payable on the 
relevant interest payment 
date, 25th April 1995, will 
be US87.662.33 per 
USS2 50,000 Note. 

Agent Bank 

West Merchant Bank Limited 


Amex aims to win back market share 

The US exchange’s new chairman is seeking a tumround, reports Norma Cohen 

T he American Stock with each other using screen- _ ... , y , itn fjLtimmiL 

Exchange, once the US’s based quotes to set prices. Also Alfl©X S66K5 tO Ctl3H5J0 Iw TOnUncS 
second stock exchange, like the NYSE, it uses “special- ' 




B The directors hare declared dividend No. 110 ■* ■ flail dMdend in 

1 respect of QwyMx ended 30 September 1884 WQowr 

Amount fliilww 

40 oanta par ahans 

lost day to xegtatm fa* dividend (and dtaagaa 
ofaddreea at dividend instcuetiotta) 

ZBBfovwnbar 

Regtaaraotmembera closed flam 
to (indneive) 

19 Kon>mb«r 

37 Nbvombar 

Shaimtraifosa-dhrldmd in Johannesburg 

and London 

21Nomabar 

Cmnmcjr conversion date tat atmOiug payroenta 
to ahszebolclem paid from London 

1 Dacamber 

Dividend warrants posted 

lBDacombar 

Payment date of dividend 

13 Dacamber 


18 pee cant 

Bolder* at ahum wtama to beamr am not iflad that tba dMdand Ja 
payable an or ate Tuesday. 13 December IBM upon pi ■—station of 
coupon No. 114. 

The flit! conditions of payment of this dividend may 1* impeded at or 
obtaln—1 Cram tba otflcoa of tba abaca truallar aaaeelatiaa in 
Jojuumednng oar (ha offlcea of (he United Kingdom aagtatrm. transfer 
tod paying agents in Bacterium. East. 

By oxter of the board 

»J»d4«d 

Saoamtea 
par/. W. COXTCBER 

34 October 1M4 

REGISTERED OFFICE: HWTED KINGDOM SBCHEBUflEti: 

Randcoal Honaa Vtedact Corporate Sarvicaa limited 

21 Chaplin Road IS GhmMtboBM Straot 

mom 21 96 London EC IN 8QP 

(V. O. Bax 0881, Sandtaa 2148) 

UNUED UNQDGM BEQSUUB8: 

Barclays Ragtatzaza 

Bonnm Honaa. 34 Bacfcaaham Hoad, 

B4ckaahain, Kant BBS 41U 

On ccaporatadlate fHte 

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i ALLIANCES LEICESTER 
Affiance & Leicester BuUdtaj Society 
£13,000,000 
Subordinated Floating Rate 
Notes due 1996 
For the six months 2lst October, 
1994 to 2lst April. 1995 the 
Notes will carry on interest rare 
of 7.2% per annum wirh an 
Inrerest amount of £35,901.37 
per £1,000.000 Note, payable on 
2 Isr April, 1995. 

LotrJ vn Luurotan! S*uci EtHuncr. , 


T he American Stock 
Exchange, once the US's 
second stock exchange, 
Is seeking to reverse its flag- 
ging fortunes, according to its 
new nbairman and phief execu- 
tive, Mr Richard Syron, “We 
are chang in g the direction of 
the exchange," be says. 

The evidence suggests that 
the Amex badly needs such a 
change. It has slipped in the 
past 10 to 15 years and now 
seriously lags Nasdaq, which 
has become the world's second 
largest stock market 
In 19S0, both. Nasdaq and the 
Amex had average daily turn- 
over of just under $5Qm. By 
1993, the value of the Ames's 
turnover was unchanged but 
Nasdaq was turning over more 
than $1.2bn each day. 

The slide in listings has 
forced the Amex to turn to 
non-equity products, such as 
stock and currency options and 
other derivative products. 

These now account for about 
half of all products listed on 
the exchange, w yiri while trades 
in these are less profitable for 
the Amex itself, they are more 
profitable for the exchange's 
member firnns who trade them. 

Mr Syron hopes to promote 
the Amex first through the vir- 
tues of its trading system, 
which is more transparent and 
less expensive for investors 
than Nasdaq - a decentralised 
system of dealers trading via 
computers. 

The US Justice Department’s 
investigation into alleged price 
fixing on Nasdaq should help 
to underscore the merits of 
alternative trading systems, he 
says. 

The Amex, like its much 
larger competitor the New 
York Stock Exchange, operates 
an auction market in which 
public investors trade directly 


with each other using screen- 
based quotes to set prices. Also 
like the NYSE, it uses “special- 
ists" who will make firm prices 
to brokers to buy and sell 
s ha res through all market con- 
ditions. 

The exchange says the effect 
of its system is to narrow the 
spreads between the best price 
bid and offered for a given 
stock to an average of 22 cents 
per bargain. It says the aver- 
age quoted spread for a Nasdaq 
stock is 56 cents per bargain. 
Mr Syron claims that had Nas- 
daq stocks traded at the same 
spreads available to investors 
trading in Am ex-listed stocks, 
it would have saved investors 
some $4bn last year. 

The Amex argues that its 
trading system is also advanta- 
geous for companies because it 
reduces the volatility in stock 
prices. 

T he Amex, is also trying 
to revamp its image by 
flexing its regulatory 
muscles - an exercise it has 
practised infrequently over the 
past decade. 

Just two weeks ago, it 
delisted two companies for reg- 
ulatory reasons, the first time 
it has done so since 297L 
The two companies, Beta 
Wells Inc and Conversion 
Industries, had allegedly faded 
to comply with the Amex's dis- 
closure rules, which require 
companies to make timely and 
accurate statements about 
trading conditions. 

For the Amex to voluntarily 
surrender two companies when 
it is fighting desperately to 
attract new business from its 
far more successful competi- 
tors may seem counter-produc- 
tive. But Mr Syron, a former 
president of the Federal 
Reserve Bank of Boston, says 


Volumes {Rw at coraterrt t963 dofiats) 
40QO- 




Amex** 


- ' ■' • ■ ' 1 1 ■ » — » ■ l~— i «— — » 

1978 79 BO 8 fS 383 B 488 B 887 B 88 B 90&1 8293 * 

Sovdqc Forte* neraA1flraA)oMdftn0EUiAi«.wamina.AiWMi . .'MnwMnd — nmM— 



that the move is a sign of the 
direction the exchange must 
take If it is to preserve its 
future. 

“We are and we want to be 
perceived more as a quality 
exchange which is fair to 
investors," Mr Syron said, 
adding “That is completely 
compatible with our commer- 
cial interests.” 

Mr Syron says he believes 
that increasingly, investors 
will expect exchanges to pro- 
tect them and their assets from 
abuse. 

The fact that individuals will 
have to make greater provision 
for their own retirement means 
that US investors will want to 
achieve higher returns for 
their savings, he says. That 
will require shifting out of the 
low-yielding fixed income secu- 
rities they have been selecting 
for pension investment into 
higher-yielding, but potentially 
riskier, equities. 

“The whole issue of investor 
protection is going to be very 


important from a political per- 
spective,” Mr Syron says. 

An exchange which is per- 
ceived as a tough regulator 
will have a competitive edge 
over one that is not, he argues. 

To that end, the Amex has 
appointed a co mmi ttee of its 
non-executive board members 
to examine the rigour with 
which the exchange applies its 
own listing standards. 

“There are pressures for us 
to obtain listings” he con- 
cedes. Also, the exchange is 
reviewing its listing require- 
ments to consider whether 
they should be made more, or 
less, tough. 

Other measures aimed at 
encouraging companies to list 
their shares on the Amex 
incLude the creation of an 
investor relations department 
which helps develop communi- 
cation strategies - seen as a 
particularly important service 
for non-US companies listing 
their American Depositary 
Shares. 


In seeking niche businesses 
for itself, the Amex has tar 
geted the ADS market of for- 
eign companies. The UK con- 
glomerate BAT, for instance, 
has listed its American Deposi- 
tary Shares on the Amex. 


M eanwhile. the 
exchange Is also 
planning its first 
print media advertising cam- 
paign and has hired its first 
marketing professional to put 
in place a formal strategy. 

The Amex is also examining 
the potential for new products, 
including one aimed at retail 
investors who wish to buy odd- 
lots of older US government 
bonds. 

Mr Syron concedes that the 
Amex, whose slogan Is “Fair 
trade, fair practice, fair play”, 
has some way to go to win 
back some of the market share 
it lost to Nasdaq since 1980, but 
he believes it is making a start. 
“You have to deal with image 
from the inside out,” he says. 


Lufthansa share issue increased to meet demand 


By Andrew Fisher in Frankfurt 

Strong demand by investors 
for shares In Lufthansa, the 
German airline, has led to the 
placing of a further lm shares 
by Dresdner Bank to bring the 
total raised by the privatisa- 
tion issue up to nearly 
DMLlbn (8730m). 

Dresdner, which co-ordinated 
the issue, said it bad placed 


these extra shares, initially 
held back under the so-called 
“green-shoe” option, to meet 
excess demand and stabilise 
the share price. 

This was the first German 
privatisation to use the book- 
building method of collecting 
investors’ bids: this is designed 
to help set the most appropri- 
ate selling price and pinpoint 
long-term investors. 


The Lufthansa issue, which 
the “green-shoe” allocation 
brings up to 6m shares, was 
heavily oversubscribed and 
seen in the market as a precur- 
sor to the much bigger Deut- 
sche Telekom issue, expected 
early in 1996. 

The Lufthansa shares - 
priced at DM182, a small dis- 
count to the market level at 
end-September - were made 


available by the Bonn govern- 
ment, which waived its alloca- 
tion under the recent rights 
issue. This brought the state's 
share in the airline down to 
around 40 per cent from just 
over 50 per cent Yesterday, the 
shares closed at DM186. 

The partial sell-off of govern- 
ment shares in Deutsche Tele- 
kom, the German telephone 
monopoly, is likely to raise 


more than DMlObn when the 
first tranche is issued. Details 
still have to be worked out 
including the choice of hanks 
to manage the issue. 

More than 20 foreign banks 
have recently been putting 
their case in Bonn to try to win 
the mandate of global coordin- 
ator. The German placing is 
expected to be shared between 
Dresdner and Deutsche Rank. 


mg-mssmsmim rand mines limited mmetmm 

Audited results of Rand Mines Limited 
for the year ended 30 September 1994 


FT 



30 September 

30 September 



1994 

1993 



Rm 

Rm 

Change 

% 

Turnover 



0 

Profit before taxation 

48.3 

77.4 

(37.6) 

Attributable to shareholders in 




Rand Mines Limited 

37.6 

69.7 

(46.1) 

Earnings per share (cents) 

63.0 

116.9 

(46.1) 

Ordinary dividends per share (cents) 

63.0 

57.5 

9.6 

Interim (cents) 

23.0 

25.0 

(8-D 

Final (cents) 

40.0 

32.5 

23.2 

Dividend cover (times) 

1.0 

2.0 

(50.0) 


FINANCIAL I I MLS 

Co (it era u c> 


MERGER OF RANDCOAL LIMITED (“RANDCOAL") AND TRANS-NATAL COAL 
CORPORATION LIMITED (“TNCC") 

In terms of an agreement reached between the company, Randcoal, Gencoi Limited and TNCC, Randcoal is 
to be merged with TNCC with effect from 1 October 1994. The terms of this agreement are such that Rand 
Mines' investment in Randcoal win be diluted from 76.8% to between 36.1% and 46.1%. 

The directors have decided, in terms of the relevant sections of the Companies Act, not to consolidate the 
Randcoal group of companies in the 1994 financial statements. The directors believe that the presentation 
of the financial statements in this format provides more meaningful information for shareholders. The 1993 
comparatives have been restated accordingly. Randcoal's annual report will be appended to the Rand 
Mines annual report. 

Information in respect of the Randcoal group as required by paragraph 54 of the Fourth schedule of the 
Companies Act:- 


WORLD ELECTRICITY 


London - 7 & 8 November 1994 

This annual meeting - the eighth in a successful series arranged jointly with Power in 
Europe - will examine how electricity utilities around the world are responding to a 
more competitive environment. 

ISSUES INCLUDE: 

• California’s Plans for Deregulation 

• Stimulating Greater Competition in Europe’s Electricity Markets 

• Cross-Border Purchasing of Electricity 

• The Nuclear Dilemma in Eastern Europe 

• New Fuels, New Technologies in Power Generation 


30 September 
1994 


Outside shareholders' interest 196.9 

Group’s share of: 

Retained income beginning of the year 300.1 
Retained surplus for the year 45.8 

Retained income end of the year 345.9 


30 September 
1993 
Rxn 

183.1 


270.9 

29,2 

300.1 


SPEAKERS INCLUDE: 

• Commissioner Norman D Shumway 
California Public Utilities Commission 

• Mr Hans Lundgren 
Adviser 
Vattenfall AB 

• Mr Ian Brown 

Senior Adviser 

Hungary-EC Energy Centre 


Mr Richard Coldwell 

Head of Government & Overseas Relations 

The National Grid Company pic 

Mr Michael Brown 
Secretary 
Cogen Europe 

Dr Gregory J Yurek 

President & Chief Executive Officer 

American Superconductor Corporation 


Expenses associated with long term leases were the mam items giving rise to the 
operating loss. 

Dividends received horn Randcoal increased from R44.6 million to R49.5 mfiiinn. pj 

fe* 

Randcoal's earnings per share have increased by 10% to 96 cents per share mainly as a j||f 

result of the containment of costs. 


Tim Dividend Dodamdon 
Is adnrtxad today 
tnthhrwwpapar 


fJm 


Financial Times Conferences in association with FT Newsletter Power in Europe 

L_ _ ® pIeasc coniacl Lynette Nonhey on 071 814 9770. 

WORLD ELECTRICITY 

Please lick relevant boxes. p M: Qgj ^35 **' Tc *‘ 673 

O Conference information only. World Electricity £685 + Vat 

□ Information on the FT Newsletter “Power in Europe". Name Mr/Mrs/M iss/Ms/Olher 

□Cheque enclosed for £S04.S8. made payable to FT Conferences. Job Tit,e Dept 

□ Please charge my Mastercard/VUa/AMEX with £804X8 . Company 

Cart no □□□□□□□□□□□□□□□□ I. 


Job Title . 


Company 


AddreM ... 


Name of card holder . 


{taccrpOtawHn the 
Republic <* South Africa) 
Raptsnaikm No. QU00BSMH 


Exp. date - Signature 


•Postcode. 


« m , *- f 




RAND MINES 


Tl* ■aJnreouon jmm pmk mil hr held bjn “I t* “•"t “ >"*# J*" almd of FT palm u>c4 

BreutKr’ytcOTl^iMUitT uj i y M to far - 


















c > <* 


^ FINANCIAL TIMES TUESDAY OCTOBER 25 1994 


irn. , 
”'** ^ ll* 



& 



I v^i-5 


INTERNATIONAL CAPITAL MARKETS 


US Treasury long bond yield climbs above 8% 


By Frank McGurty h New York 
and Conner Mckfetmonn 
Jn London 


The yield on, the ben chmar k 
30-year US Treasury bond 
climbed above an important 
psychological mark yesterday 
morning, as traders looked 
anxiously ahead to this week’s 
supply auction. 

By midday, the benchmark 
30-year government bond was 
£ loner at 94&, with the yield 
rising to 8.019 per cent, just 
above a technical point of sup- 
port at 8 jOO per cent At the 
short end, the two-year note 
was down A at 99g, to yield 
6.777 per cooL 

There was no fresh economic 
news to influence sentiment. 
As a result, the decidedly bear- 
ish tone which had been estab- 
lished last week carried over 
into yesterday's opening. 

The market was convinced 


the Federal Reserve would lift 
short-term interest rates at its 
November 15 policy-making 
session, and they were busy 
calculating how such a move 
would affect their current com- 
mitments. 

That was having a negative 
impact on trading cm the day 
before the Treasury was to 
auction $i7.2fibn in new two- 
year notes. Today's auction 
will be followed by tomorrow's 
sale of Sllbn in five-year notes. 

Same analysts were betting 
that the Fed would rtprario to 
lift rates by more than a per- 
centage point, which would 
undercut the attractiveness of 
this week's issues. 

The selling yesterday 
across the board, not just at 
the short end. As th« long 
bond's prices fell, the yield 
cKmbed back over the 8D0 per 
cent mark, where it has 
attracted buying interest in the 


past Last Friday, the return 
on the long bond receded a lib 
tie after crossing the line. 


■ Shrugging off encouraging 
Inflation data in Germany, 
European government bonds 
were depressed by continued 

weakness in US Treasuries a qj 
ended a listless session weaker 
across the board. 


GOVERNMENT 

BONDS 


In addition to the bearish 
sentiment spreading from 
across the Atlantic, the pros- 
pect of fresh supply this week 
in the German, UK, Japanese, 
Italian, Ecu and US bond mar- 
kets. accompanied by contin- 
ued investor abstinence, put a 
damper on prices. Technical 
factors in many markets are 
also bearish, analysts said. 


■ German government bonds 
ended the day about % point 
weaker, unimpressed by 
reports that consumer prices in 
North Rhine- Westphalia and 
Baden- WUrttemberg rose by 
only 0.1 per cent in the month 
to mid-October. Although the 
news gave bunds a brief lift, 
the gains were not sustainable. 

“When you get good news 
and prices don’t rise, that usu- 
ally indicates that a market 
wants to go down,” said a 
Frankfort bund dealer. 

In after-hours trading, the 
December bund future on Llffe 
breached key topical support 
at 89.50, which also does not 
bode well for the near term, a 
dealer said. It ended at 89.45, 
down (X36 points on the day. 

Despite their unimpressive 
performance, bunds are still 
the best bet in current bond 
market conditions, said Ur 
Adrian James, bond strategist 


at NatWest Markets. “Bunds 
may not necessarily do wen in 
absolute terms, but they still 
tend to outperform in this 
environment. M he said. 


■ Sweden was one of the few 
markets which managed to 
out-shine bunds, boosted by 
the unexpected success of the 
government’s latest bond auc- 
tion, where all the paper In 
both tranches offered was 
snapped up by a single buyer. 

This sparked another sharp 
rise in prices, pushing the yield 
on the benchmark nine-year 
bond down by 16 basis points 
to 10.71 per cent. 

The yield gap over bunds 
narrowed by 22 basis points to 
316 basis points. It was as wide 
as 360 basis points In the mid- 
dle of last week, but has been 
sharply eroded by the Swedish 
market's stunning perfor- 
mance in recent days. 


After its sp eed y contraction, 
the spread looks “dangerous." 
warned Mr Graham McDevitt, 
bond strategist at Paribas Capi- 
tal Markets. 

“We have entered the red 
zone," he said, pointing to the 
risks faring the Swedish mar- 
ket: the European Union refer- 
endum on November 13, 
another increase in interest 
rates, and continued uncer- 
tainty on the fiscal front 


Warrants issued 
on Italian index 


By Richard Lappor 


■ UK gilts fell by more than Yx 
point, dragged lower by the US 
market and weighed down fur- 
ther by the prospect of £23bn 
of new supply at tomorrow’s 
gilt auction. However, dealers 
said they expected the issue to 
meet solid demand since it is 
next year’s new five-year 
benchmark. 

The December long gilt 
futures contract slipped by JJ 
points to lOlfi. 


Short-dated dollar deals 
aimed at retail investors 


NEW INTERNATIONAL BOND ISSUES 


By Martin Brice 


The eurobond market was 
yesterday dominated by short- 
dated dollar deals aimed at 
retail investors. 

The World Bank announced 
it was planning a Y200bn 
global deal. Co-leads were 
named as Merrill Lynch, NIkko 
and Nomura. 

Sources in the market not 
connected with the deal said 
the World Bank bond would 
probably be in the 10-year 
maturity, and be priced at 8 
bans points over the No 174 
Japanese government bond. 

One syndicate manager said 
that although the bond would 
be a global offering, much of 
the demand would be in Japan. 
‘There is no demand for yen 
bonds in the US and Europe 
now," he said. 


A long-dated Spanish peseta 
deal is also rumoured to be in 
the nffmg - 

In the dollar sector, Pere- 
grine Capital created an 
unusual structure for a 3250m 
bond with a 7 per cent coupon 
due 2001 for Hutchison Delta 
Finance. 


INTERNATIONAL 

BONDS 


The bonds will be wrahang n*. 
able into ordinary shares of 
Hutchison Delta Ports, which 
has said it will seek a listing 
within seven years, Peregrine 
said. V no initial public offer- 
ing has taken place by the 
rede m ption date the issuer is 
required to redeem the bonds 
at 124.078 per cent of the prin- 
cipal plus accrued interest 


Peregrine said that demand 
had come from the US and 
Europe for the bonds, which 
are guaranteed by Hutchison 
Whampoa, the Hoag Kong con- 
glomerate. 

Also in the dollar sector, 
SBC brought Its third issue 
this year for Rabobank Neder- 
land, a four-year 3250m offer- 
ing with a 7.5 per cent coupon. 
This deal saw good demand 
from its target of Swiss retail 
and small institutions. SBC 
said spreads an the two other 
deals for Rabobank this year 
have tightened «<*»«* immn 

IBJ's 3150m offering from 
Swedish Export Credit was 
aimed at European retail cus- 
tomers, mostly in the Benelux 
region and Switzerland, and as 
is usual with Issues of this 
type was expected to take a 
few days to clear. 


Borrow 
US DOLLARS 
Rabobank Nederland 
Hutchtson Delta FtaanooWS 
Swedtah Export Credit 
dO( eft 

Morgan Oumnty Trestle) 
Sophom Comoictofrf 
tochpa UodgnQ 


Anoint Coupon Prtco 
m. % 


Maturity Foes 
% 


Spread Book runar 
»P 


7jS loojoea 

7 M 100.00R 
7.0 klbir 

W 100 

7.0 98.950 

W W 

124750 S9430R 


Nov. 1938 0225ft +10(4 Swiss Bank Carp 

NavJZOOl Peregrine Capital 

Nov. 1998 0.15R +18(M 2y0 wuaato Bk of Jew 

Augaooi 025 - Sanaa M. 

Nov. 1936 0125H +14 (Btttt-M) JP Morgan 
Nov. 1998 0.875 (h) Barton Trust in a 

No* .2002 1.D0R +500QM Byi) JP Morgan 


International investors should 
enjoy easier access to the Ital- 
ian equities market following 
the launch of two new deriva- 
tives products. NatWest Mar- 
kets will today launch a series 
of call warrants related to each 
constituent share of Italy's 
MIB-30 index, while Morgan 
Stanley, the US investment 
bank, yesterday issued war- 
rants on the MIB Index itself. 

Both developments come 
ahead, of the expected launch 
in November of stock index 
futures on the Milan exchange. 
They should help further 
improve market liquidity. 

NatWest has Launched war- 
rants exercisable into several 
Italian stocks, including Fiat 
and Olivetti, over the past 18 
months. It will create a liquid 
secondary market in the war- 
rants by publishing "live’’ 
two-way prices on Reuters. 
This will give investors flexi- 
bility, choice and guaranteed 
liquidity," said Mr Nick Con- 
ington, a director of deriva- 
tives at NatWest Securities. 


The new warrants will be 
offered with a one-year matu- 
rity to fill a “perceived gap" In 
the market, explained Mr Cou- 
ington. “Options quoted on the 
Milan bourse, known as premi. 
typically have a life of just one 
or two months," he said. 

Morgan Stanley’s warrants 
are on the MIB-30 index, which 
has been chosen as the official 
index of the Italian stock 
exchange, The bank said the 
issues are "intended to provide 
investors with similar expo- 
sures to those that would be 
obtained on a traditional 
traded option market." 

Maturities coincide with 
anticipated futures expiry 
dates. Morgan Stanley is issu- 
ing calls and puts at each 
strike and maturity to allow 
investors to choose the war- 
rant most suited to their needs. 

The bank launched warrants 
cm Italy's BCI-30 index in July- 
last year and remains an active 
player in that market 

Trading is expected to start 
in the stock index future on 
November 28 on Milan's “teie- 
matlco" screen-based system. 


YEN 

J-Cara Cocp.? 

O-MARKS 

RMnsctw HypoAaher Bk-f 
Export OevUoprnent Cap 
CANADIAN DOLLARS 
GEC Canada 


Guinea in telecoms sale 


Nov. 1998 CL40R 


Ottoman Sachs ML 


By Martin Brice 


Nov.2004 020 

NOV. 1938 1.75 


DO Bo* 
Menfl Lyrjcfl 


125 8.75 9SL977R Dac.1988 (L25R +8 (THK-99) ScoUatWood 


ITALIAN LRE 
RapUiOc of Austria 


2O0bn 11.0 101015 Deo. 1397 1075 


Deutsche Bank 


Final terms and non-caflaUa urriras stated. The yWd spread (over relevant gover nm ent bond) at launch la supffled by the bed 
manager, AUnlstecL fiCorrvarttote. $Wtti equKy ua rents, treating rale note. (Semi-annual coupon. Ft 8xad rs-ofter price; haa are 
shown at tha re-oflar towri. a) Over Interpolated yield, b) Mandatory exchangeable bond, c) Ful noma of borrows: Cfe Ftaandera da 
OC at de (Union Eurapeenm. Fungible wflh lettering SI 50m Issue 41 days after payment date. Coupon pays 3-mth Ubor + 1075bp. d) 
1-mth Yen Ubor + 20bp. a) Fungible with oxlsting SZOOrrr deaL f) Put option at per on 8.11.99. g) 3-mth Ubor flat. Ifl To be pfced 
today. 


Goldman Sachs brought a 
Y15bn floating-rate note issue 
for J-Cars and reported good 
demand for the first securitisa- 
tion of car loan receivables 
from Japan. When freed to 
trade the spread tightened by 2 


basis points, Gol dman said. 

Deutsche Rank took advan- 
tage of unsatisfied demand far 
the recent World Bank offering 
and brought a L200bn deal for 
the Republic of Austria. Sales 
were mainly outside Italy. 


A four-year DM200m deal for 
Export Development Corp of 
Canada, brought by Merrill 
Lynch Frankfurt, was targeted 
at European retell and Cana- 
dian institutional investors 
and met good dpmimd. 


Advisers to the African 
republic of Guinea are this 
week studying proposals sub- 
mitted by foreign investors to 
privatise the national telecom- 
munications company. 

Foreign companies had until 
last week to submit proposals 
for the state-run international 
and domestic tei*c nnimnn|B| - 
tions company (Sotelgui). The 
privatisation is part of the Gui- 
nean government's sell-off pro- 
gramme, which also involves 
the energy sector and hotels. 

Mr Amaud Casalis, of 
Arthur Andersen Paris, the 
international accounting and 


consulting group brought in to 
advise the government, said: 
"We have convinced the gov- 
ernment that it would be bet- 
ter to use the tends to develop 
the company rather than bring 
in money for the government.” 

The deal involves the sale of 
a minority stake of up to 49 per 
cent Mr GaeaHs said a later 
tranche oT up to 51 per cent 
would be aimed at Guinean 
nationals. A decision on the 
foreign proposals would be 
made in late December. 

Belgium granted a BFrlOOm 
loan to Guinea in 1993 to 
enable the country to set up a 
300-line digital telephone 
exchange. 


WORLD BOND PRICES 


BENCHMARK GOVERNMENT BONDS 

Bad Day's 

Coupon Date Prica change 


Weak Month 


■ NOTIONAL ITALIAN OOVT. BOND (BTP) FUTURES 
(UFFHT Lb* 200m 100th* o> 10QM 


FT-ACTU ARIES FDCED UTERES T INDICES 

PrfoelndQM Mon Oftli Fri Accrued xd ad}. 

UK ggfa Oct 24 change % Pel 21 tatoaat yW 


— Low coupon yield*— — Medksn coupon yield — — Wflh coupon yield — 
Oct 24 Oct 21 Yt. ago Oct 24 Oct 21 Yr. ago Oct 24 Oct 21 Yr. iqo 


Austrteta 
Belgium 
Canada * 

Denmark 

Franco BTAN 
OAT 

OermanyTreu 

m, 

Japan • No 119 
Japan No 164 


aooo 0004 
7.250 04A>4 


&500 06/04 

7.000 12/04 


8.000 0508 

0500 04/04 


82.7800 

822000 

805500 

882200 

101.3750 

823100 


- 10.17 10.10 1020 
-0200 &47 824 636 

+0.150 8.11 833 835 

+3320 830 838 837 

+0.120 733 7.48 7.48 

-0.180 825 a<J2 &14 


Open Seri price Change 
9925 9824 +039 

08.60 S&47 +0.10 


Low 

Etet vol 

Opan tat 

1 

Up to 5 yearn {24) 

11092 

-0.07 

11930 

1.14 

933 

S yra 

834 

838 

832 

838 

833 

036 

834 

8.78 

041 

997)7 

17024 

59055 

2 

5-15 yaan (22] 

13026 

-QOS 

130.71 

131 

11.00 

15 yra 

839 

834 

635 

072 

aes 

7.11 

834 

089 

731 

9a 00 

518 

4666 

3 

Over 15 years (B) 

154j80 

-0.44 

15538 

2.13 

1037 

20 yre 

834 

830 

737 

&72 

838 

7.17 

333 

079 

734 

4 

Imadeemafataa (0) 

17035 

-0.47 

17930 

409 

833 

lr»ad.t 

830 

836 

731 








ITALIAN OOVT. BOND (RIP) FUTURES OPTIONS flJFFE) UfflfiOOm lOOttW Of 100* 


5 Al stocks (SO) 


7300 

8300 

08AM 

08AD4 

883700 

603400 

-0390 736 

-aOTO 1134t 

734 

1138 

739 

1131 

State 

Don 

■ CALLS 

Doc 

- PUTS 

4300 

mm 

1023970 

-0270 

4.14 

4.01 

335 

Mce 



4.100 

12AJ3 

063680 

+0.160 

4.71 

4.70 

433 

9900 

1-48 

2.44 

122 

237 

7-250 

1QAM 

073200 

-0j400 

73S 

728 

735 

9950 

1.18 

222 

1.45 

325 

8300 

06/04 

813000 

+0.150 1121 

1Q32 

11.18 

10000 

0.96 

231 

1.71 

334 


Inflation 5* 

Oct 24 Oct 21 Yr. ago 


6 Up to 5 years (2) 
1 Over 5 years (11) 
8 Ail stocks (13) 


030 537 UptoSyre 

0-74 438 Over 5 y re 

038 441 


a 88 337 2.17 
338 335 3.12 


Inflation 10* 

Oct 24 Oct 21 Yr. ago 

239 237 123 
336 335 234 


UK QBtt . 

0,000 

08/99 

88-29 

-1002 

060 

832 

072 


8.750 

11/04 

88-28 

-1802 

8.73 

047 

090 


9300 

10/08 

102-11 

-2202 

071 

046 

068 

USTwtnuy* 

7250 

00/04 

98-03 

-W32 

733 

732 

734 

7300 

11/24 

94-04 

-302 

002 

735 

7.78 

ECU (FcenchQovT) 

0000 

04/04 

833200 

-0370 

OEO 

041 

070 


E*L »CL total. CM* 27S IVH 583. AwIodb d<qr* Open W, Cato 23707 Put* 28207 


Debentures and Loans 


9 Data & Loons (77) 12836 

kenpj umh redenprion ylofcte ate Bhaei 


-036 12737 

atom Coupon Baxter I 


5 year yield IS year yield ■ ....... . 25 year yield 

Oct 24 Oct 21 Yr. ago Oct 24 Oct 21 Yr. ago Od 24 Oct 21 Yr, ago 

2.19 924 ‘ 373 937 7.65 939 382 632 835 358 8.16 

: Ott-7**; Median: Bffr-lOKMj Htfc TIM end cm. t Rat yMd. ytd Year to date. 


London cfcatag, "Now Yorii 


Rriooe: U9. UK in fthxte, 

US INTEREST 


RW-dW 

tog tax at 1 U pari 
Milan hi dackiMI 


Yfakte: Local matat rented. 
1 by nurautadunlu) 

Saucer MUSMvmakntf 


RATES 


Ttanqnr BBi wd Bond Yteftta 


Spain 

■ NOTIONAL BPANBH BOND FUTURES flrgFF) 
Open Sett price Change High 
Dec 8830 8635 +0.01 8830 

Mar - 8535 


Est voL Open taL 
33,106 75370 

60 


FT FIXED INTEREST INDICES 

Oct 24 Oct 21 Oct 20 Oct 19 Oct 16 Yr ago Mgh* LowT 


CULT EDGED ACTIVITY INDICES 

Oct 21 Oct 20 Oct 19 Oct 18 Oct 17 


a 

& 

flranona 

TWee motto 

478 

8.48 

5.13 

nw liar 

itaeaftr 

flwyar 

6.78 

728 

747 

731 


OH year 

aia 

30-yeer 

am 


Govt Sm*. (LHQ 9034 9129 9120 9130 91.78 10324 10734 8934 GBt Edged Inn 

Hied Internet 10734 10835 10921 10625 10306 12434 13337 10630 5-day nonage 

* far 1904. Gowmment tecuta Mgh ifcioa w a n ptei H cn 127 AO (art/ast low +8.18 (WTS Arad tn aawal Ngh since eanptoi 
20 and Fixed Manet 1828. 8E ectMy Men ratoaed 1974 


n 913 883 894 893 914 

893 913 94j4 97.6 992 

: 13337 (31714M) . low BOSS {P177R . Bwda 100c Q awtnmant Sacuteaa 1 SriDT 


BOND FUTURES AND OPTIONS 


■ NOTIONAL UK 03.T FUTURES pjfFQ* £50,000 32nd3 Of 100% 

Open Sett price Change ttgh Low EaL vd Open kit. 
Dec 101-<S 100-18 -0-19 101-09 100-15 22823 100340 

Mar - 99-19 -0-19 0 48 


FT/ ISM A INTERNATIONAL BOND SERVICE 


Franca 

■ NOTIONAL FTWWCH BOND FUTURES (MAT1F) 



Open 

Sett price 

Change 

wgh 

Low 

Ett. VOL 

Open InL 

State 

Price 

Dec 

110.82 

11032 

-aoe 

11034 

11020 

73398 

130,468 

Mar 

109.78 

10934 

-aio 

109.78 

1083B 

1219 

11,422 

100 

Jun 

10930 

10078 

-a io 

10930 

109.00 

2 

761 

101 

102 


■ LONG G3J FUTURES OPTIONS (LB=FE) E60300 6 4ttM of 100N, 
Strha CALLS PI 


LHad oa Dta taleat MonMcnte bonds lor uNch then to an adeqwta ncondtey madnL Latest prices at W» pm on October 24 

toned BU Otter Cbg. YMH toned BU Oder Cbg. YWd 


tennd BU Oflar Chg. Yield 


S&ta CALLS PUT8 - 

Price Dec Mar Dec 

10 Q 1-38 2-16 1-00 

101 1-02 1-60 1-80 

102 0-40 1-24 2-04 

Eat. ML Bate, Crib 3a7 Pote 203. Redeua day’s open M. Cato 7D00S Ptaa 42338 


■ LONG TERM FRENCH BONO OPTIONS (MAUF) 


Strike 

— 

- CALLS - 

_____ 

— — — 

— PUTS — 



Price 

NOV 

Doc 

Mar 

Nov 

Dec 

Mar 

110 

Off) 

127 

- 

018 

03? 

2.19 

111 

038 

0.76 

132 

077 

1.41 

- 

112 

032 

0-41 

035 

1.68 

2.05 

- 

113 


019 

- 

- 

234 

■ 

114 

- 

038 

- 

- 

- 

- 


Ecu 

■ ECU BOND FUTURES (MATtF) 

Open Stetprics Charge Ugh Low Eat ml Open M. 
Dec 80.48 8348 -0.06 8088 8044 881 8287 


Bk. wjL UHL Cato 17280 PUto 30324 . Ptetoui d v* opan ht. Cato 289914 Pub 330232. 


Germany _ 

■ NOTIONAL GSttlAN BUND PUTUH ES (UFF^* DM250,000 lOOUtt Of 10054 

^ Sett price ctwrea High L^ Eat vd Open toL Dec 
Dec 8834 B0A7 -035 89.90 8342 73977 185202 

MM 8837 8088 -035 89.01 8&88 185 4433 •*« 


US TREASURY BOND FUTURES (COT) SI 00.000 32nds cd 100% 



Open 

Latest 

Change 

Hft, 

Low 

EaL vol 

Open taL 

Dec 

97-29 

97-23 

-0-00 

98-03 

97-20 

330.060 

400271 

Mar 

97-08 

97-03 

-0-05 

97-13 

97-00 

1257 

27381 

Jun 

- 

06-20 

- 

- 

- 

9 

11235 


■ BUND FUTURES OPTIONS (UFflB OkgSOJXW pt*«te 0* 100* 


SMta CALLS ” 

price Nov Dec Jan Mar Now Oeo Jon 

8900 047 1.15 132 128 0 088 124 1 

esso 0 087 079 1.13 003 030 1.81 1 

HHO 0 034 03Q 0.92 033 1.17 132 S 

EaL vet toed. CUB 1+631 Pun WSfil. Ptetou* dtf* epan M. Cato Sdaaos Puts 278BB2 


Japan 

■ NOTIONAL LONG TERM JAPAM3SE GOVT. BOND FUTWES 

HH=g YIQOm lOOtha of 100% 

Open Ooae Change High Lew Eat vol Opan M. 
Dec 10725 - - 10733 10722 1367 0 

- UFFE contracts traded on APT. Al Opan Hem flgs. we tor ptettaa day. 


US. DOLLAR OTtoKWIS 
Abbey NM Twwjr 03 _ 

/Uberta ProAica 7\ S8 

Austria Blj DO 

BankafTdgD^BS 

Bs^un 512 03 

BFCE7l| 97 

RHriiGesOZI 

Omeda BBS 

Chang Kong fin 5^ 98 — 

CNnatfaM 

Ooutiranpesfla 

C«B Fancier 9>2e9 

OMItofc 51(98 

Eeet Jepan Heteray BH04 _ 
BCSCtf«S8 

metfess 

BB7^96 

BSBVB7 

Sec da France 9 SB 

Breton 9>a 96 

Ex4n Bate Jepwi 8 02 — 

export De* CUP 91* 96 

FUkrel Mdl Mott 7.40 04_ 
FHand 61, 97 

FtodMoferOsaftSB — 
Gen BocCaptoO 5 , BS — 

GMACB^QB 

tad Bt Japan Fin 7% 97 — 

J^ret Der R 8% 01 


1000 88% 
. tan 9ft 


.400 102*2 

.■no fmh 


, 1000 B#1 

-150 U0l« 


.1500 9*1 

.1000 I® 5 ! 


-SCO 88% 
.1000 84*4 


.wo wii< 

.300 108 


. 1000 98 

-800 88*| 


.IBS HIT* 
WO 101% 


-250 101 

WOO Wf9g 


.200 -HJtf, 
.100 102^ 


.600 98 \ 
. 150 105*2 


. 1500 95% 

.3000 96 


-200 t02S| 
.1500 6 S’* 


.300 W3 , + 

.200 wm 


885, J, 
B9J, J, 
1021 , 

1011 , 

82*2 -*l 

Mil, 

« 

HSft 

88*1 -*l 

84* -*, 
101* -* 

95* -* 
B8* -*j 

102 * 

102 -*| 
101* -* 
US -* 
104* 

W3* 

99* -* 
105* 

95* -* 
98* -* 

U2* +* 
8«* -* 
US* 


Uatad Ktaodm 7* 97 _ 
846 VUaeegen tad Fin 7 03 . 

731 MxM Bette 015 

739 WkddBtok5*a 

738 Wbrid Bnrte 8* 00 


.5800 loft 
.WOO 94 
.2000 20 * 
.3000 88* 

.1250 109* 


101 -* 
94* -* 
21 

88* -* 
109* 


739 SM88 FRANC STRAIGHTS 


.200 WO* 
.200 WO* 


.3600 77* 

-500 101* 


101 * 

77% -* 


UK GILTS PRICES 


„HeM_ _ 1994 „ 

Heew tat Bad Price E+w- Up Lae 


_ YWd— — 1994 — 

H Rad Price £+ or- ngh tor 


_YM6— _ 1994 — 

Unto P) H Price £ +er- WW Ln 


Storto- (Lhm op to Rh Taas) 

Traasepc 1994ft 837 

I2W1B85 1132 

EteO SBC toe 1900-96— 334 

10*pc1995 998 

Tteseiairt* 1996ft — 1234 

T4pc ISOS U36 

16*pct99flft 1172 

EK913*JKT996ft 1232 

CoonniMUpelBW— 

TtBH OK 79C 1997ft— . 7.18 

Trens 13*pc1997ft 1139 

Bate 10*jpc 1997 9.99 

TteB8*pC 1997ft 834 

Bell ISpc 1997 T2.78 

9bpc1B8 9.42 

Dt9i7*Kl9S8ft 751 

Trees fl*pc1995-98ft_ 7.11 

14pc 1998-1 1238 

fleas is*pc aft 1232 

BiSISPC 1996 1077 

flreaftscISflSft 922 


-W0.W 
530 101A 
171 9B»N 
8J65 1020 
B34105UN 
7.17 108 

7.41 maw 
7471080^ 
734 1041,1) 
738 97* 
832 110A 
80S 105* 
825 101 A 
837U7*N 
8.49 

M7 80* 

13,5SS 

856 van 

sm 


— 10% 

— 107A 

— 9BU 
107fl 

US* 

— I17A 

-4 WU 
-A «]T 3 

nrS 

-A wS 

— 12lfl 

— IMA 
-A 110,1 
-A 131B 
-A H4fl 

Jg 10** 

-A 102 

-2 W*A 


FMhg3*ge 19BM — 
lOOfi QtoHSkn 9*2^ 2004 — 

101* fleas S*pc 2004ft 

8*pe2005 

^ Cw. 0*1* 2006 

Trt*A 12*1*2003-6 — 

r*pc 2006 ft 

apca»2«ft 

£a flwiUueaOftW — 
flare 8*pc 2007 ft — 

1T0A i3*peaow- 

104* Trwspe 2008 ft 

100A 

n« 


757 73* 

882 10+fi 
873 «aw 
871 98* 

830 I04C 
9.11 120VN 

871 93 

877 MQ 
811 115 

872 88* 
811 l£7U 
870 102* 


4 8W 
-A 125A 

-a it»* 

-* iooa 
125* 
-si 14*1 

-a 11SB 
-A in* 

-U 136A 
-,’a HBA 

-JJ 151 A 

124B 


SlrteW f7&3 

2*pcib paw 


(97 J> 

— pa.i> 


in 

408 

200 

2BJ* 

2.70 

3551072ft 

173* 

358 

048 

3.78 

351 


349 

352 

10814 

lift 

ose 

352 

188* 

-a 18+J5 

162 

aw 152, w 

324 

354 

157* 

166 

355 

129* 

3:a 

370 

357 

137H 

373 

358 

132* 

-* 13234 

172 

355 

iora 

-* 129A 

175 

359 

10813 

-* I28B 


Ken* a* Purer 8* 03. 
LTC8 Rn 8 97 

Noway 7* 97 Z 

Crtario 7* 03 

Orte KoNkatoarte 8* 01 . 

Ftto-Cenada 7* 96 

ftru^<5*ro 

Oaebee Hpto B* 98 

QjebecFtoBSB 

Snnsboy9*96 


-3S0 «S* 
.1350 0#I 


-200 WO* 
. 1000 94* 


101 * 

104* 

as* -* 


. 1000 99* 

.3000 94* 


»1* -* 
94* -* 


.200 102* 
.200 WO* 


wo* -* 

94*--* 


.1000 84 

- 150 105* 
-200 102* 
-ISO 103 


102 * 

108* +* 


84* -* 
105* -* 


-A '*V. 
~A vsn 
-A 118A 


RMtoRflareTren 

Eas 12*pc 1999 

Tm IO*pe1909 

flare ape 1999 ft 

Dnenke I0*pe 1999- 
DresHglbtei999— 
Cm 9pc 3300ft— — 
fleas i3pc2000 — — 
1 Opt 2001 - 


1030 872 11® 
933 83O106IW 

837 880 90 

335 8.7810SU 


-i 1»A 
-A mi 


^3 

-A 116A 
-A 


,«E OrerFMareVrere 

I22A flewOpeSDOO— — 

,ioa flatoS Wpe20W 

10TB Cm 9pc In 201 1ft — 

Trees Dpt 2012ft 

flare 5*pe200B-12ft- 
flresSpe 2013ft 

7*pc 2012-1 Eft 

Tires 8*pc 201 7ft— 

mg todtT2pc 2013-17 

105* 


847 889 94B 

730 855 804ri 

873 838 10U 
871 884 103A 

738 859 7?B 

845 859 94* 

841 858 924 

838 858 10TB 
977 830 129* 


-* H8A 
-B S8& 
T2BS 
-* 127* 
-3 93* 
-3 1173 
-4 n«i 
-* 128* 
-a 159 * 


andegs*. M Figure In pn enftas o a show RR bare ft 
tattering (to 8 months prior to tone) and haw bean adftsred to 
naflect retaekig at FW to 100 In Febnrey 1987. Conwnftt 
teeter 3548. FP1 ter FMsuary ISM 142.1 and ft September 

91B 1994:1455. 

7711 

inu Other Fbcsd Interest 

wo* 

71* Add ire 

^ tore M Bed Pifcee+ar- Hph Uw 


SNCF9*SB 

SHB 8k NSW 8*96 — 

Sw£^Hrt8*96- 
Tokyo Bsc IW 8*03 
Tctejo Ueccptes 8* 86 - 

Untead NtagdDR, 

WWd Bateft* 99 — 
VWrld Bank 8* 97 


.200 104* 
. 150 105* 


.1500 M* 
- 200 101 * 


108* 

103* 

105* 

MS* -* 


.2800 98* 
- 700 Ml* 


94* -* 

KB* 


WOO 88* 
-200 101* 


.1500 94* 

.8000 96 


.1600 3)3 

,1500 103* 


102 

98* 

102 * 

M* 

95* -* 


Aatoi Dm Barit 8 10 

WO 

98* 

80* 


007 

Austria 4* DO 

_ 1000 

08 

90* 

■% 

558 

Could Baope 4* SB 

— 250 

88* 

98 


5.18 

Denote* 4* 99 

— 1000 

95*. 

95* 

-% 

551 

38 8*04 

— 300 

105 

105* 


657 

Bee de Ranee 7* 06 

— 100 

107 

107* 

-* 

035 

FHand 7* 69 

300 

108* 

107 

-* 

570 

Hyundai Mater Fin 8* 97 — 

— 100 

106* 

108* 


034 

brand 7* 00 

WO 

107 

TOT* 


aw 

Kobe 5* 01 

— m 

108* 

104 

-* 

5J3 

(Mario 6* 03 

— 400 

100 

100* 


854 

Quebec Hyde 5 00 

— wo 

03* 

05 


652 

SNCF704 

450 

W7 

107* 


604 

VMorid Utah S 03 

— 150 

as* 

96 


570 

Wo ld Bank 7 01 

600 

wo* 

107 

+* 

570 

Yafsmmma 






Btttn599 

. 79000 

W1% 

102* 

■* 

45B 

SB* 00 

. 100000 

109* 

109* 

-* 

4JM 

FHand B*B6 

_HH00 

W* 

Wt* 

-* 

334 

Her Ante Dar 7* 00 30000 

112* 

112% 

J 4 

402 

ft 3* 01 


91* 

91* 

-* 

50 

Jqpan Dm Bk599 

. 100000 

W2* 

ns* 

-* 

442 

Japan Dar 0k 6* 01 

T2DOCO 

1U9* 

109* 

■* 

403 

HppooTtlTel6%6B 

- 50000 

104* 

W4* 


340 

Ite«w5*87 

. 150000 

103* 

103* 

-* 

370 

SpataS*Qe 

:S5 

W5* 

10ft 

-* 

490 

Sweden 4* na 

. 150000 

101* 

101* 

•* 

454 

Wtafcl Barit 5* 02 

. 250000 

102* 

102% 

-* 

408 

OIHBI SIRNGH15 






QaiBnance tot 9* 98 Ifr _ 

_ WOO 

104* 

105* 


700 

KB DoUtadlrtttO* 03 Lft 

3000 

100* 

101* 


045 

VftdOSairitBflBLfr .... 

-1000 

100 

W1 


T* 

ABN Amo 8* 00 R 

_ woo 





Barii Nad Gemeetaan 7 03 R 

-1600 

95* 

as* 

-* 

700 

AfartArafta10*9BC$_ 

500 

Hfl* 

102* 


7.84 

Bel CwedelO* 99Ct 

nm 

104* 

KB* 

♦* 

854 

Bdfch Ccknriria 10 96 CS — 

— 500 

103* 

103* 

«* 

700 

SB 10* 06 C3 

130 

M5* 

10B* 

+* 

016 

Breda Fores 9* 99 CS__ 

_ 275 

102* 

W3% 

1* 

arc 

Gen Sac CapttaW SBCS — 

300 

102% 

103* 


708 

NW let Fta lOOiCS' 

— 400 

102* 

103* 

4* 

841 

Iftcn Td Id W* SO CS 2D0 

104* 

105* 

+* 

606 

0Usrie803C$ 

_ 1500 

91* 

91% 


872 


Abbey tod Traesuy 8 03 £ . 
Atonca Left 11* 97 C — 

BrtH, Land B* 23 E 

OetnakB*98C 

BB10 97C 

Hren 10* 97 E 

Hanson 10* 97E 

HSBC Hrtdngs 1139 02 E . 

My 10* WC 

Japan Dre Bk 7 00 £ 

toid Secs 9* 07E 

CtaM>1l*0t C 

Ptwogm B* 03 C 

Seueai Ttent 11* 99 C 

Tokyo Bee Power 11 01 C - 
AbbeyNMondOOSNa — 

TCNZRnS* 02NZS 

Cndt local 8 01 FTr 

Bsc de Franco 8*22 FFr_ 
SNCF9*97FFr 


1000 91* 

- WO 105* 

-ISO 87* 
.800 93* 

.837 103* 
. in ko* 
. 500 US* 
_ 153 W9* 

.no 106 * 

. 200 91* 
.200 97* 
. 100 107* 

- 250 98* 

. 150 100 

.WO 107* 
. WO 64* 


-* 93* 

-* 870 


-* 1049 
-* 838 


-* 839 

831 


-* 963 

+* 939 


-* 974 

-* 968 


-* 969 

-* 949 


-* 935 

-* 930 


- 75 98* 

7000 88* 


->4 936 

-* 421 


. 3000 97* 

.4000 103* 


-* 939 

-* 829 


-* 960 

-* 734 


FLOAmQ RATE NOTES 


fittxff Nsd Treasury -A 99 1000 

Banco Ftenu 0 89 200 

Batten ,*97 DM 500 

BFCE-062 96 360 

Bdtenda 0.10 98 C ISO 

Cnda-*99 2000 

CCCEOOSEou 200 

Creteftomeli AOO 300 

Denarek-** WOO 

Omcher Ftaanoa & 96 DM 1000 

Ftoo dd State 0.10 97 430 

Finland 097 1000 

htandDDB 300 

My *99 2000 

LKB BadetHMot Rn -* 98 — 1000 

Uoyds Bate Rerp SOW 600 

UdaydeAOS 950 

New Zetland -* 99 1000 

0rttto0 69 2000 

Ranted 96 500 

SaBCteanaafeOBO — — — . 300 
Sfttotre* Brin -005 96 DM _ 6000 

Stoa BkVUoda OD5 99 125 

Sweden 096 1600 

Sweden-* 01 2000 

UMadiOngdom-*98 4000 


coHVEnnsui bows 


M3* -* 
103* -* 


DEUTSCHE MARK SniUGHIS 

Attta8*24 2000 8t* 

CtodtFbnttr7* 03 2000 98* 

Danmate6*S8 2000 97* 

Dfpte Rnreu 6* 03 1600 00* 

DeUtieekRn7*03 2000 97* 


81% -* 
98* -* 


97* -* 
00* -* 


738 Create Hyde Kf% 99 CS — 
8.11 Q*rtoWcKte*10*6BC$ 

778 Quebec Ftaw 10* 90CS 

733 Bett»i 9* 98 Ecu 

CauidBMpa90TEcu — 
Qadtlymdli9g6&n — 

aw BBWWEM 

730 Fern del SUM* 98 Ecu _ 


500 WO* 

— ISO 104* 

— 200 104* 
_ 1250 102* 
-1100 101* 

— 125 101* 


108* ♦* 
105 +* 


Core 

toned Prica BU Oflar 


104% I* 
WO* 


IBS 104* 
.500 104* 


101% -* 
102* 


1804 — 

Mite fare 


K MOift- 

cMK ■ 

8ft 2093ft 

(Oft 2003 

flare 11 *|*!00l-4 — 


838 8ft 101H 
1039 890 11M 
148 835 108* 

7.71 8.77 WW 

031 639 104% 

Ml 832 96* 

936 839 10n 

1028 SUN HIM 


m 

CDQSOfs4pC 

un War Ueoai^Ui H . ■. ■ 

0nw3*pe-fliAft — 

wffi flare 8pc ■8830 

(Mi! CBMcb2* jr 


-A SB* 
-A S4B 

— r 

44* 

*A 38* 
-A 37* 


Aden Dw10*pc 2009— 9» 

9lKi)11*ft20T2 970 

ta9ndCre8*peiO 8.78 

ft: Cap 1898 898 

lJpeW7-2 1231 

Hp»o0BeBecl5pc2011_ 1058 

Leads 13*pc2D08 Wl59 

Unrpeeia*fttaBd. 148 

LK ft -20 Aft. 923 

ltoidawto < 1l*pc2Q07. 10.04 

IMLMr.ftT— 441 

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432 132 . 

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109* 39* 
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145* 123* 
159* 134* 


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24 


FINANCIAL TIMES TUESDAY" OCTOBER 2S 1994 


NEWS: UK 


The mother of kitchen sink dramas 


A group of former senior 
managers at Fentos, 
the specialist retailer, 
have accused Mr Bill McGrath, 
the new chief executive, of 
making things worse at the 

lossmaking company with mis- 
taken strategies and trading 
policies. 

The managers were stung 
into comment by the worse 
than expected half-year results, 
announced earlier this month, 
which showed pre-tax lasses of 
£36m, including a further 
£10.5m of charges. 

None of the managers would 
speak attributably. but they 
expressed concern that the 
future of Pentos might be in 
doubt unless current policies 
were changed. 

One of the factors worrying 
them most was that there 
should be further charges. Last 
year's losses of £70m had 
included large provisions. 

In his recent book "Against 
My Better Judgment”, Mr 
Terry Maher, the ousted chair- 
man of Bentos, claimed that a 
small profit envisaged at the 
September board meeting had 
been turned into the £70m loss 
by "the mother and father of 
‘kitchen sink' jobs" in terms of 
taking provisions. 

One former manager said the 
total provisions had been so 
large that “my grandchild 
could now run Pentos at a 
profit". 

The complaints included that 


Raymond Snoddy and Paul Taylor report on the 
row brewing over continuing losses at Pentos 



Bill McGrath: irritated by 
anonymous criticisms 


destocking at Dillons, the 
booksellers, had been too 
extreme; price-cutting at 
Rymans, the stationers, had 
been too vigorous; the group 
was pl annin g to Spend tOO 
much on a new centralised 
computer system; and it was 
not listening to staff who knew 
how to run the business. 

“It’s got far worse because of 
what's been done, not what 
Terry (Maher) did." said one. 
However, another dismissed 
manager said he thought the 
former management team at 
Pentos bore much greater 
responsibility for the compa- 
ny’s problems than anything 


Mr McGrath was responsible 
for. 

Mr McGrath, who once ran 
Wlckes, the DIY chain, made it 
clear he was irritated at having 
to defend himself against anon- 
ymous former “disaffected 
management". But he then 
went through the state of Pan- 
tos. which he believes would 
not have survived without the 
£45m rights issue which 
became available in May. 

"The business had bank 
debts of over £90m and owed 
.suppliers nearly £5sm. and this 
‘is a company with a turnover 
of £245 m. I think that might 
put into perspective how the 
business had been managed up 
until then," said Mr McGrath. 

The new provisions, he said, 
ranged from rent so far behind 
that it was paid at the end of 
the year rather than the begin- 
ning, uncertainty over how 
many gift vouchers had been 
issued or redeemed, 
unmatched invoices and over- 
due personal debts on books. 

“The first writeoffs were not 
the kitchen sink. This was 
cleaning up what had been a 
badly run administrative pro- 
cess. We are now improving 
our market share," Mr 
McGrath said. 

At Dillons, he found that for 



Share price (ponce) 



1981 82 93 8* 

Source: FT »aFMte. 

40 per cent of the stock, not a 
single title had been sold in six 
months. The company still 
stocks 200,000 titles - but these 
were books people wanted to 
buy, he added. 

“We have sales parity with 
last year, with stocks a third 
lower." be added. Efforts have 
also been made to improve 
relationships with suppliers. 
Some small publishers had in 
the past not been paid for op to 
nine months. 

Mr McGrath said that when 
he looked into the direct man 
order book business he found 
teenage staff an the first floor 
of the company’s Kensington 


store sorting out cheques lined 
up on the carpet 

The company has now pro- 
duced separate catalogues for 
Dillons and Hatchards. and tire 
b usiness Is handled by a third 
party supplier. 

Mr McGrath believes that 
Rymans was "way out of line 
on price", a perception backed 
up by market research. 
Rymans was now selling at a 5 
to 7 per cent premium to out- 
of-town operators, a fair differ- 
ence for convenience, he said. 

Athena was trying to sen pic- 
ture frames at prices 40 per 
cent above anything compara- 
ble. “We are now selling pic- 
ture frames 60 per cent cheaper 
ih qn a year ago with a margin 
that is better." 

Mr McGrath said Pentos was 
trading within its bank bor- 
rowing limit of £69m_ The com- 
pany had reached its annual 
peak at £63m to £64m, and Mr 
McGrath was feeling positive 
about the Christmas period. 

“We are through the worst 
We have addressed the funda- 
mentals, cleared out the sta- 
bles." said Mr McGrath, who 
accepts that the previous man- 
agement had never acted with 
anything other than the best of 
intentions. 

The centralised computer 
system is also going ahead, 
under the eye of an internal 
committee - chaired by Mr 
Tony Maher, son of the former 

rh^h-man. 


VW absorbs Seat UK to 
complete British revamp 


All-round growth takes 
John Swire to £299m 


By Kevin Done, 

Motor industry Correspondent 

Volkswagen, the leading 
European vehicle maker, is to 
consolidate all its vehicle 
importer/distributor operations 
in the UK through the take- 
over of Seat UK by VAG (UK), 
which already controls the 
VW, Audi and Skoda brands. 

Seat UK, a subsidiary of the 
VW group’s Spanish subsid- 
iary. is to become a fourth 
franchise division of VAG 
(UK). It will continue to oper- 
ate as a separate franchise 
with an independent dealer 
network, and a distinct prod- 
uct range and marketing and 
pricing structure. 

The aim was to achieve 
"operating efficiencies in all 


the central support functions" 
of the different franchises, Seat 
UK said. 

Mr Stan Cholaj, managing 
director, said it was expected 
that the Seat operations would 
be transferred “within a year" 
from Crawley to Milton 
Keynes, where VAG UK has its 
headquarters. 

The takeover of Seat UK by 
VAG (UK) will be the final step 
in the consolidation of the VW 
group’s UK operations, which 
have undergone a Ear-reaching 
restructuring in the past two 
years. 

Volkswagen acquired VAG 
UK, the British importer of VW 
and Audi vehicles, from Lon- 
rho, the international trading 
group, early last year. VAG 
(UK) took over the manage- 


ment of Skoda Automobile UK 
which imports cars from VW’s 
Czech subsidiary, in January. 

Financial services for the 
four franchises have been 
merged under the management 
of Volkswagen Financial Ser- 
vices (UK), and parts distribu- 
tion has also been brought 
under central management 

VAG (UK) has also set about 
separating dealer franchises, 
with sales and marketing 
groups for each brand. 

Mr Richard Ide, m anag in g 
director of VAG UK, said this 
process would be completed by 
early 1997, by which time there 
would be some 170 Audi dealer- 
ships with separate showroom 
facilities from the VW brand. 
The VW dealer network will 
total about 300. 


John Swire, owner of Cathay 
Pacific, the Hong Kong-based 
airline, reported pre-tax profits 
of £299m on turnover of 
£2.11bn for the six mouths to 
June 30. The outcome com- 
pared with profits of £234m on 
turnover of £lJftm last time. 

The bulk of the group's prof- 
its came from Swire Pacific, its 
listed, partly-owned subsidiary 
undertaking in Hong Kong. 

Trading pro fi ts of the wholly- 
owned businesses were slightly 
lower but there was a surplus 
on the 1994 disposal of an office 
property in Japan. 

Cathay Pacific experienced 
modest growth in profits, 
despite pressure on margins 
and higher net charges follow- 
ing a fall in returns from funds 
under management-. The Hong 
Kong Aircraft Engineering 


Company turned in only a mar- 
ginal increase. 

The property and industries 
divisions showed good growth 
and the insurance arm showed 
a slight improvement 

Business at the Taiwan 
motor vehicle distribution arm 
was buoyant Marine services 
had good results from con- 
tainer ter minal and dockyard 
operations in Hong Kong. 

John Swire has requested 
that the London Stock 
Exchange cancel the listing of 
its 6.3 per cent cumulative 
preference shares as from 
December 30. It also intends to 
seek shareholder approval to 
amend its articles of associa- 
tion and for authority to pur- 
chase its preference shares. 
The company's ordinary shares 
are unlisted. 


Moss Bros pleases City 



Tr»rcir HiaipMaa 

Rowland Gee: expansion will be careful, with no Idiotic’ leases 


By Richard Woffle 

Moss Bros Group, the specialist 

men’s wear retailer, outstrip- 
ped City expectations for the 
second this year by trebl- 
ing pre-tax profits in the six 
months to July 30. 

The shares jumped 37p to 
375p yesterday after the com- 
pany reported pre-tax profits of 
£L92m (£625.000) on turnover 
up 18 per cent to £30.1m 
(£25.5m). Analysts had forecast 
profits of between Elm and 

CT ftm 

Operating profits increased 
fivefold to £1.6m (£304,000) as 
the group maintained gross 
ma rgins of about 50 per cent. 

Mr Rowland Gee, managing 
director, said the group would 
expand organically, adding six 
new shops to its current total 
of 100. 

“We are not in the business 
of running off to buy other peo- 
ple’s foiled brands," he said. 
“Our expansion will be carefuL 
We wifi not be signing idiotic 
leases." 

Moss Bros claims to have 
increased its share of the suit 
market from &5 per cent to 7 
per cent as competitors have 
withdrawn from suit sales to 
concentrate on casual clothes. 

The group's stores include 
Savoy Taylors Guild, serving 
the classic suit market; The 
Suit Company, serving the 
mainstream marke t; and Cecil 
Gee, the fashion chain its tar- 
get customers are aged 
between 25 and 64. 

The group remains cautious 
but “confident" about the 
Christmas period, which domi- 
nates its earnings. It also 
expects the second half to be 
affected by the cost of opening 
two new shops in January. 

Although capital expenditure 
increased by 43 per cent 
to £1.7m, net cash also 


grew, from £10.2m. to £13. 6m. 

The interim dividend is dou- 
bled to 3p (1.5p) to reduce dis- 
parity. Earnings per share tre- 
bled from 2£p to 7.6p. 

• COMMENT 

Moss Bros prides itself on a 
cautious strategy, waiting for 
the right shop lease to come 
along in the right location, 
keeping cash in the bank and 
targeting a mature customer, 
who can give the business a 
decent margin. Predicting 
Christmas trading is notori- 
ously difficult, but the group is 


expected to show a 12 per cent 
Increase in like-for-like sales in 
the second half. According to 
the company, this is comfort- 
ably outstripping growth in the 
men’s wear market of 4 to 5 
per cent this year. Analysts 
yesterday raised forecasts for 
full-year pre-tax profits from 
roughly £5 .3m to £6m, giving a 
p/e of 16 on yesterday's closing 
price. This is on a par with the 
sector, while Moss Bros 
deserves a premium. Optimists 
about consumer spending may 
see an additional reason to buy 
the shares. 


Name change for Abbey Panels 


By James Whittington 

Abbey Panels Investments, the 
Coventry-based engineering 
company, has changed its 
name to Loades following an 
extraordinary meeting yester- 
day. 

The company designs and 
manufactures components for 
the motor, aerospace, and 


defence industries and has 
reported losses fbr the past 
three years. 

The name change comes 
after cuts in orders from large 
customers in the aerospace and 
defence sectors and a round of 
redundancies as the company 
has moved to cut costs. 

In a letter to shareholders, 
Mr Tony Loades. chairman. 


said that the new name would 
be used to help promote the 
company. He said the original 
name "implies a limited range 
of activities and can give an 
understated impression of our 
capabilities". 

In the year to September 
1993, the group incurred pre- 
tax losses of £L38m on turn- 
over of £12.3m. 


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^ ■“» <■» J r «••»» * C*- bx-v— J — i j. _ — _ 
— Ihp, Cim Tim G»*u, m J rin ■fan (--.ri, Wron ul naM 


THE GAN GROUP 

Results for the six months 
ending 30 June 1994 


For the six months ended 30 |me 1994, the GAN Group 
announced a consolidated loss (Group share) of FFr 
M6J ndHon, at t ri bu ta ble to the exists In the property sector, 
and further measures taken to ensure a recovery in the non- 
Ufa sector. 

At the Board of Directors meeting of SocMtt Centraie du GAN 
on 18 October 1994. chaired by Mr. Jean-jaoques BONN A UO. 
the Group's consolidated accounts for the first half of 1994 were 
reviewed. 

During the first six months, three areas of activity (life assurance 
and capitalisation In France, insurance abroad and the QC 
Group) were profitable while two areas were loss-making 
(GAN Incendle Accidents and UIC due to the restructuring plan). 

Contributions to the consolidated result (Group share) 


(in millions of French francs) 

30 June 1993 

30 June 1994 

Ufe assurance and 
capitalisation In France 

355 

344 

GAN Incendle Accidents 

(403) 

(736) 

insurance abroad 

34 

42 

The QC Group 

257 

328 

UIC and restructuring 
costs (GAN SA.) 

(30) 

(925) 

Other companies 
(UIS. CFJPE etc) 

159 

101 

Total 

372 

<846) 


Life assurance end caphaBsatioa In France 
Premium Income of French life assurance and capitalisation com- 
panies advanced 0.7%. following a decline In the first half of 
1993. when there was a sharp fall In the sale of unit-linked pro- 
perty poOdes. 

GAN Vie s premium Income started to recover (2.4%). as sales* 
of life assurance policies rose by 13.7%. However, sales of 
group po tides were unchanged during the first half of 1994. 
because erf the slow growth In company payrolls, and the mea- 
sures taken to turn around the results in this branch. Premiums 
written by SOCAPI Increased by 10.7 %. while GAN 
Capitalisation's premiums feU by 202. %. following to the strong 
growth of the first half of 1993- 

Profits of the Ufa and Capitalisation companies remained at a 
satisfactory level of Ffr 344 million. 

GAN fneendre Accidents 

GAN Incendle Accidents posted a moderate 2.2% rise in pre- 
mium Income due to selective rate Increases, and measures 
taken to strengthen the portfolio. 

Qaims have fallen significantly durfrig the current year. However, 
tirfs Improvement Is not yet reflected In GAN Incendie Accidents' 
net result, which b a lass due to a low level of realised capital 
gains and claims relatbig to earlier years, which resulted In the 
decision to substantially Increase the level of provi- 
sions try FTt 1 _Z bflUon In the first half year. 


Insurance abroad 

Premium Income from the International network rose 
27.8 % (17.1% on a comparable basts and at eonstanr 
exchange rates) to FFr 7.6 billion and premium Inco- 


CRO 


me generated abroad now represents 30% of consolidated total 
Insurance premiums. 

Despite the adverse trends in the financial markets, the foreign 
insurance subsidiaries confirmed thdr recoveries, and the parent 
company's result rose substantially to FFr 1 48 A million, compa- 
red with FFr 107.3 million In the first half of 1993. 

International activity contributed 42.3 million FFr to GAN's 
consolidated result. 

The GIC Group 

Net banking Income at the QC Group declined slightly by 1.6% 
due to a narrowing of margins and less favourable bends In the 
markets. 

The rise In operating costs (Including depredation) Mas limited 
to 1.7% due to the stability of administrative and personnel 
costs. 

The charge to 'provision for general banking risks' foil 30.2%; 
at the same time coverage of doubtful debts rose to 58.4% 

The CIC Group contributed FFr 328 million to the Group's conso- 
lidated result, confirming its Improved profitability. 

UIC and the restructuring plan 

UlCs net banking Income of FFr 1.2 billion for the six months 
ending June 30 was unchanged, in difficult economic conditions. 
UlCs provisions were maintained at a High level of FFr 13 bil- 
lion. producing a negative contribution of Ffr 321 million to the 
Group's consolidated result. 

The restructuring P^n at UIC Is aimed at deaflng with a property 
portfolio of FFr 18.9 Milton, held by UiC-Sofai: the plan received 
the necessary regulatory approval In October. It wfll consist of 
transferring the property assets arising from the transformation 
of SOFAL's claims, while corresponding to the quality criteria of 
GAN. to a property company. Fonctere PAR1XEL. which wfl] first 
of all receive aU of GAN SA's property assets. In addition, all 
the debts relating to SOFAL's medium quality assets will be 
transferred to a defeasance company. B ATlCREDfT. 

The future costs of the restructuring plan at UIC led to a charge 
a®ilnst unrealised property capital gains of FFr 2.6 billion and a 
provision of FFr 3 billion In GAN S.A.'s accounts for the year 
ended 31 December 1993. topped up at the consolidated level 
by a provision of FFr 300 million. As a precautionary measure, 
GAN SA. also charged the accounts during the first six months 
of 1994 with a further provision of FFr 350 million, to guard 
against any further negative developments in the property mar- 
ket Consequently. GAN S.A.. the parent company of UIC made 7 
a negative contribution to GAN's consolidated result 

Business activity and the consolidated net result 

Consolidated operating income for the first half of 1994 amoun- 
ted to FFr 63.0 Wilton compared with FFr 62.3 billion in the same 
period of 1993. In total, consolidated premiums written were FFr 
24.9 billion. 

At the Group level, there was a toss of FFr846 million compared 
with a profit of FFr 372 million In June 1993. 

During the second half. GAN will complete UlCs 
U p £ restructuring plan and will then Implement the next 
step of Its recovery and expansion plan. In the fight of 
present Information, and In the absence of exceptio- 
nal events, results In the second half of 1994 should 
be an improvement on those In the first half. 








^ 11 ) 


FINANCIAL TIMES TUESDAY OCTOBER 25 1994 


COMPANY NEWS: UK 


Panels 


East Midlands warms shareholders 

David LasceUes on why the rec announced a special dividend and share consolidation 

O nly six months ago 
East Midlands Electric- 
ity was in a state nf 


O nly six months ago 
East Midlands Electric- 
ity was in a state of 
shock. Its chairman had left, it 
had Written off £130m of losses, 
and it was forced to adopt less 
ambitious strategies. But yes- 
terday, the Nottingham -based 
company was able to regale its 
250,000 shareholders with an 



There could be no clearer 
sign of the basic strength of 
the UK electricity distribution 
business now that the uncer- 
tainties of the recent price 
review are ont of the way. But 
rather than follow other 
regional electricity companies 
and pass surplus cash hark to 
shareholders through a share 
buy-back. East Midlands yes- 
terday broke new ground by 
paying a special interim divi- 
dend. 

This opens up a new front,” 
said Mr Nigel Hawkins, utih- 
ties analyst at Hoare Govett 
According to Mr Nigel Rudd, 
chairman, the dividend is 
fairer than a buy-back because 
it enables smart shareholders 
to benefit through a general 
distribution of cash 
In a buy-back, only a limited 
number of shares are acquired, 
and these usually belong to the 
big institutions who can mus- 
cle their way to the front of the 
queue. 

In East Midlands ' case, many 
of its 250,000 shareholders have 



Norman Askew (left) with Nigel Rudd: a pay-out is fairer to small shareholders than a tray-back 


small numbers of shares 
bought at the time of privatisa- 
tion. The average holding is 
200 shares, which wiang that 
the typical investor will 
receive a cheque for £170. 
Many small shareholders are 
also employees, who may 
become more motivated if they 
can shar e directly in the com- 
pany's fortunes. 

The pay-out, however, is 
only half the equation. East 


Midlands also a mw nnryri yes- 
terday that it was consolidat- 
ing its shares on a 22-for-25 
basis, which will reduce the 
numbers of shares outstanding 
by about an eighth. This is to 
afiket the impact of the 85p div- 
idend on the share price. Tech- 
nically, the shares should 
remain unchanged as a result 
of the exercise. 

However, East Midlands win 
become more highly geared 


through the pay-out because it 
will treat the £186m as if it 
were borrowed money. The 
gearing of the balance sheet 
will rise from about zero to 
about 20 per cent, and in the 
long run, thin uteiiw enhance 
the company's earnings by a 
few pence per share because 
the assets are made to work 
harder. 

The consolidation will also 
hmwfit East Midlands employ- 


ees who are saving up to buy 
shares in a Sharesave scheme. 
Although they are not yet own- 
ers of these shares, they have 
options to buy them at a pre- 
set price, and the consolidation 
win ensure that they share in 
the upside of yesterday's pro- 
posed transactions, 

East Midlands * move also 
has to be seen in a wider con- 
text If there was a surprise 
about yesterday's announce- 
ment it was that it came while 
there is stiQ uncertainty about 
the regional electricity compa- 
nies' plans to sell off the 
jointly owned National Grid 
company, which could be 
worth up to £5bu. 

Mr Norman Askew, East 
Midlands' chief executive, 
declined to comment on sell-off 
plans yesterday, but he said 
the special dividend indicated 
that his company, which owns 
8.4 per cent of the Grid, was 
keen to pass benefits on to 
shareholders rather thaw git on 
them or use them for acquisi- 
tion purposes. 

The regional companies may 
also be worried that the contro- 
versy over soaring electricity 
profits and bonuses will trigger 

■wm» IrinH of w indfall profit s 

tax in next month’s Budget By 
acting now, they can cushion 
any blow. Also, the less cash 
they have on their balance 
sheets, the less att rac tive they 
are as takeover candidates. 


Rheumatoid 
arthritis 
drug from 
Celltech 


By Tim Burt 

Shares in Celltech rose 5p to 
2l4p yesterday after the bio- 
technology company claimed 
it had made a breakthrough in 
the treatment of rheumatoid 
arthritis. 

The group, which floated 
last year, y»id ph ase two clini- 
cal studies using its new anti- 
arthritis drag - CDP571 - had 
shown “considerable improve- 
ments” in the symptoms suf- 
fered fay patients. 

“Hie drag has all the anti- 
inflammatory benefits of ste- 
roid treatment with none of 
tiie side-effects,” said Mr Peter 
Feflner, chief executive. 

If farther trials prove suc- 
cessful, the company aims to 
sell the drag for use in the 
treatment of up to lm rheuma- 
toid arthritis sufferers in the 
UK and US. The treatment 
would cost “several thousand 
dollars a year for each 
patient”, Mr Fellner added. 

Although a steiilm - drag is 
bring developed by Centocor, 
the US biotechnology com- 
pany, Celltech said it could 
rely on strong patents to pro- 
tect its product The patents 
are held jointly with Bayer, its 
German marketing and R&D 
partner. 


Singaporeans 
buy BS stake 


By Roland Adburgham, Wales 
and West Correspondent 

Scotts Holdings, the 
Singapore-based property 
group, has bought the Kerman 
family’s stake in BS Group, the 
property and leisure company 
formerly known as Bristol 
Scotts. 

Its acquisition of 26.97 per 
cent of the share capital is the 
culmination of a long and acri- 
monious attempt by non-family 
shareholders to oust the Ker- 
mans from BS. In August, Mr 
Anthony Kerman was deposed 
as chairman and replaced by 
Sir Ian Rankin. 

Mr Kerman, his brother 
Nicholas and their father Isi- 
dore, who h: S had a large 
stake in the company since 
before the second world war, 
remain directors. But Mr 
Bryan Burletson, representing 
Scotts Holdings, said yesterday 
an agreement of the acquisi- 
tion was that the Kerin ans 
would stand down. He said 
Scotts would seek board repre- 
sentation. 

Sir Ian was not involved in 
Scotts' negotiations with the 
Kermans. He previously made 
it clear he would not welcome 
a transfer of the entire Kerman 
stake to Scotts because he 
sought a wider and institu- 
tional shnrpbnMing 

Scotts is quoted on the Sing- 


NEWS IN BRIEF 


ATI .Tim RADIO now m s 

per cent of voting rights of For- 
tune 1458 following ampliatio n 
of rights issue. Allied, an 
underwriter of the issue, 
increased its holding by 229420 
ordinary. 

BLP GROUP: Following a 
review by company and its 
auditors, appropriation for pre- 
mium cm redemption of con- 
vertible preference shares 
under FRS 4 deemed to be 
unnecessary and will not be 
included in foil year accounts. 
BULLOUGH has acquired 
Kent-based Direct Refrigera- 
tion Services for £950,000 cash. 
CAIRN ENERGY Onshore, the 
wholly owned subsidiary of 
Cairn Energy, is acquiring 
Monument Petroleum Mitre’s 


25 per cent interests in UK 
onshore production licence 
PU82 and onshore exploration 
licence EXL287 for £l.lm, 
bringing Cairn's interest in 
them to 100 pe r cent 
COATS VIYKLLA, Britain's 
largest clntbtng and textiles 
company, claimed that its 
Indian subsidiary had enjoyed 
a 29 per cent increase in first 
half profits. The Bombay-based 
group - Coats ViyeDa India - 
reported pre-tax profits of 
£5Rm on sales ahead 17 per 
cent at £75m in the six months 

to September 30. 

DONELON TYSON is salting 
the Manchester-based NWBM 
Group Of builders' wn»nrthant«i 
to CLearfigure for £608,011 cash. 
Proceeds will help cut gearing. 


DIVIDENDS ANNOUNCED 


EantMrianda 
Maas Bros 


Current 

payment 

□ate of 
payment 

Conan - 
pouring 
efividend 

Total 
. for 
ynar 

Total 

test 

year 

85* 

3 

Nov 24 
Deo 2 

13 

. 

22.7 

7 


Dividends shown pence per shore net except where otherwise stated. lOn 
Increased capital. §USM stock *Spedal payment condtfonal on sharehold- 
ers’ approval. 


nb ncticr is issued in comn fim cc with the i«juii*u«iul» of The International Sock 
Exchange of the- United Kingdom and the BepttWc of Irebod Limited (the 'London Stock 
Exchange*) and appeal* as a matter of muni only. It doe» not mralibue an invitation to 
the pubfic no subscribe for, or rud», any «Curili*s of The China investment & 
Du w u pme nt ftmd Lindtnd fthe *Coiiy ^ *). App toU on h ax been made to the London 
Stock Bdanp far aB of the new redeemaHe p atttop a th w; piefaenoe ahareg of IW Mi 
cadi <*New Share* 1 and wnrmta to w haoi b e far one New Share ("Warrantor) to be 


8 November KM. 


The China Investment & 
Development Fund Limited 

te*an*y)lm190ttamwi*nt U atda m *rr2S86V 

Placing of up to 2,7504)00 New Shares 
and up to 550,000 Warrants 
comprised of Units of 
five New Shares and one Warrant* 

at US$ 55 per Unft fully paid 

to raise up to US$ 30,250,000 

and proposed Bonus Issue of 3 ^ 143 , 000 Warrants 

Kleinwort Benson Securities 
HG Asia Securities . 

The pitiiapal objective ofThe China Investment & 

Development Fond Limited is to make unlisted and listed 
equity and equity related investments in The People's Republic 
of China with a view to earning a return on a long term basis 
from a combination of capital appreciation and income. 

Th, Ptwrte. be (novated up » a maximum of WSDOnOCI New Shan* and U0O00D 

cornu Italian with the Company. 

a*fc» Nf obtained during wudbu*wa 
sST f^D^cnh-. torn thcC^Z 
AnTranvoMiH Otikv. UndtM Stock Exchange Tower. Capd Court entrance, off 
1HP and daring mmI brnfaesa hguniy Ip mJ 

The Property Finance Sourcebook 1994 

Avoid expensive fees - go straight » the sowce. Wife feta book yon are fee 
expert. The Property Fhaace Directory, hwfispeasable tor anyone 

^ == 
The eweorial ujo! tat *he rttieat ttrrertnt 

Market-Eye |fj[f 

tendon stock exchange g"^sgl 


In a class 

of their own 


apore stock exchange but is 
controlled by the Jumabhoy 
family. Mr Burletson, former 
chairman and chief executive 
of Clayform Properties, said he 
was a friend and business part- 
ner of the Jumabhoys. For the 
past two years they had been 
looking for a UK company in 
which to invest. "We alighted 
on BS as an Interesting com- 
pany. It had a very good base 
from which it could expand 
rapidly.” 

Scotts is buying 24.88 per 
cent of the voting shares and 
all of the non-votmg shares in 
BS. The consideration is L88p a 
share or £3.lm. In addition, Mr 
Burletson said a legal dispute 
over the ownership of a further 
11 per cent of the shares had 
been settled. Part or these 
would go to Scotts which, 
together with other shares it 
had agreed to buy, would bring 
its holding to 29A per cent. 

"We are not interested in 
making a full bid,” Mr Burlet- 
son said. “We will bring exper- 
tise and funding which can 
only be of enormous benefit to 
BS, bearing in mind there has 
been an internal dispute which 
has completely stultified the 
company." 

BS returned to the black this 
year for the first time since 
1988, with a pre-tax profit or 
£429,000 for the six months to 
June 30. 



To optimise efficient use of the System, last year alone Participant 
organisations sent over 6,000 staff to Euroclear training seminars . They were held in 8 languages and 
tailored to the specific needs of the 20 countries in which they took place. 

Euroclear 

transactions speak louder than words. 





FINANCIAL TIMES TUESDAY OCTOBER 25 1 994 


COMPANY NEWS: UK AND IRELAND 




GBIIPBEBERSIK IJVTHUfiEIKE SR TRE flWB | 
OK GAS I8BBSTBY, EVERY TVS ffEKS 

UK Gas Report, published every two weeks by the 
Financial Times, is the premier source of information and 
analysis far the UK gas market 

UK Gas Report will update you thoroughly on the news 
in such areas as: 

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■ import and export 

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■ domestic, industrial and commercial fuel consumption 

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■ research and development 

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■ regulation and government policy 

UK Gas Report’s news reporting is backed up by expert 
analysis of the market and the latest developments 
assessing how the present situation may change and the 
market trends over the coming year. Supported with 
interviews with the main players in the industry. 

UK Gas Report's often exclusive reporting has already 
earned it high praise. 

To receive a complimentary copy of UK Gas Report 
please fill in your details below, or attach your business 
card, and send it to: Tony Ashcroft, Financial Times 


NOTICE OF REDEMPTION 
To the Holders of 
Ralston Purina Company 

12 % Notes doe November 28, 1996 

NOTICE IS HBtEBY OVEN Dim. puouM » Seoion 4 ol Ilw T«nm and CoodWom oi Hie abow Notes 

S i* T*oter;.R#lsioDPiirioiCbra|MOT bn dcdedlo redeem aO of iftcouo>widk«KmonNimnber 
. ISWWieHedejmuonDaiOai L«K of inejprtndpal ximm Uieuot logeitur nub aeaued Moot 
10 the ncuanpilm Due (ihe "RMeapdon Price"). 

Pijmeni 01 uie Redemption Price wffl be nude 10 tbe bokkis upon proerfatton and soircndef <4 ihe 
Nona. tognber. la On cue al Beam N«e* wWi aH appufleum coupons nuturtne rataojoem to ibe 
Redgnpuoa Dale emched ibcreto. ai Hie mp e c B sc ottos ot Blc Paying AgaM. u Mww; 

ClitkB*. NA. CM Bank. NA. OWonklLm o nlU M al.SA. CmtMnic.UA. 

CteperaaelTM Scrfce, CkltankHmnc. 336 Stand KAmnlUcItow KeurtUniti Stone 7S 

III WiO»ml.SiS>Fkw London WC3UHB LunmtMus 6031 1 FcnUuniailUa I 

NewYottNewYariilDOC Gmn 

(■•MIMMn 

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Menoe d* Tenuien. 248 CUceaec. BLrPknb Hoagoordta« 54B S e« j n im. g 

B-IISO Smart, PUHUOptooeT IIOI BEAmnenln CHSUBZuddi 

M*otn ranee TTwftataAwh 5-tartn* 1 

Panscn ol Beam Notes at me European offices ot itie Fmfog Again Indkaled iboce will be made by 
Untied Sam MUr cbcck dnm an s bank in New Yort Cny or By iranrfer to e Untied Sues i ^if 
MM br (ire wee mm a tan* Mated outride the untied Saw. On and ala KtatemOa 

3. 1954, Mnu on me Notes vui erase to ocaw The coraJBlons pceadau 10 tha ledenptkm ruse 
occuxred and RaWon Purina 'impony has eleaed w iwJeem 0>e Now. 

BA1SION FURHA COMPANY 

Dated: Octobers. ISM Br. Oahu*. HA, focal anf/bymgA^tnt 


*t ul Juwuv 1, ISO. MriikuUca U JU ri sew oJiapnn pnend and ol air Mom no e mu node wttHH M 
irpnd Mb my Be K^and Hr Uw Woa Iwn* Cod, gj IMS. a nnded b» iko Znogr Putky Aa ol 1493. 
uaks B* Pmos Asm ki, ut» inrao wim Mamacmoa iwnbcf inoeitl xam or ripkytr tdcanflcskw 
xurxBei 1 « rmrwmexcikScwe iA me (Vo, Ml g pmpfitr cuapfcM Form W4L newpuon cvtfOM, dr 
eouMhnt. »•» pnw* eng pm Nm, tar wwe nuNo it, uuM Sans. 


Russian acquisition for Bula 


By Jean Marshall 

Bula Resources (Holdings), the 
Dublin-based oil exploration 
and production company, is 
proceeding with its acquisition 
of an option to purchase a 51 
per cent interest In Akl-Otyr, a 
Russian oil joint stock com- 
pany, from the Russian Corpo- 
ration, as announced in May. 

Bula has undertaken over 
the past few months an exten- 
sive due diligence on Aki-Otyr. 
The directors said it was the 
first time a fully listed com- 
pany had acquired for paper a 
controlling interest in a Rus- 


sian joint stock company in the 
oil sector. 

Bula proposes initially to 
acquire an option over tha 51 
per cent interest in AM-Otyr 
a nd at the same time to enter 
into a management agreement 
to establish western financial 
controls. It said it would exer- 
cise the option once the con- 
trols were operating; satisfacto- 
rily. 

The consideration for the 
option is $5.57ni (£3J5m) and 
the Issue of fully paid new 
ordinary shares representing 8 
per cent of Bula's enlarged 
share capital 


Bula believes a -minimum 
I£6m (£5-9m) win be required 
to fund the acquisition and 
provide working capital. 
Accordingly a placing of not 
less than leg™ and an offer to 
shareholders to raise about 
I£12m is being made. 

Following exercise of the 
option, the Russian Corpora- 
tion wiU control 26 per cent of 
Bula’s enlarged capital. 

It is proposed that Mr Alex- 
ander Marichev and Ms 
Tatyana Kirillova, president 
and finance director respec- 
tively of tha Russian Corpora- 
tion, and Mr Vladimir Krasi- 


lya, president of Aki-Otyr, will 
join Bula's board. 

Bula also announced reduced 
losses of l£l.95m (I£2.57m), 
after tax of £3,000 <3£3,Q00). for 
1993. The result includes an 
exceptional loss of I£iA4m on 
disposal of its UK operations, 
including I£L19m goodwill pre- 
viously written off. 

Turnover was l£l.29m 
(I£l. 58m) including I£99,000 
(I£438,000) from discontinued 
operations. 

Losses per share were cut to 

!).29p (0.48P). 

Bula’s shares resumed trad- 
ing yesterday at 3V»p. 


Border and CLT in radio licence link 



By Raymond Snocfdy 

Border Television, one of the 
smallest of the ITV companies, 
has teamed up with CLT, the 
Luxembourg-based Interna- 
tional broadcasting group, to 
acquire radio licences in the 
UK. 

CLT is the main shareholde r 
in Atlantic 252, the pop music 
station that broadcasts into the 
UK from Ireland. It recently 


EFG dips 
but seeks 
acquisitions 

EFG, the Oxford-based garden 
centre and horticultural prod- 
ucts group, saw pre-tax profits 
decline to £615,000 in the six 
months to July 31, against 
£904,000. 

The fall, struck despite a 
turnround to interest receiv- 
able of £56,000 (payable 
£148,000), came on turnover of 
£6.49m (£l0m). Stripping out 
discontinued activities, turn- 
over showed an increase, the 
company said. 

Mr Robin Garland, chief 
executive, said that the main 
operations had remained prof- 
itable in difficult market condi- 
tions. “Strong cash flow and 
proceeds from our rationalisa- 
tion programme have consider- 
ably improved the cash posi- 
tion and further strengthened 
the balance sheet” 

Earnings per share, on capi- 
tal increased by last year's 
rights issue, dropped from 
a02p to L31p. 

Christian Salvesen 

Christian Salvesen, the inter- 
national business services 
group, has expanded its Euro- 
pean distribution network with 
the £3.7m purchase of a tem- 


BZW COMMODITIES Trust 
annnnnrAd that applications in 
its placing and offer for sub- 
scription had been received for 
78.2m ordinary shares at loop 
apiece, with warrants attached 
on a l-for-5 basis. Dealings are 
expe cted to b egin on Thursday. 
CLAYHITHE: Offer for minor- 
ity of Horstmann accepted in 
respect of 669,315 shares, repre- 
senting 96.32 per emit of minor- 
ity interests. Offer declared 
unconditional i n all respects. 
EMBASSY PROPERTY Group 
said talks resulting from the 
approach on September 16 by 


bought a stake in Country 1035 
and also operates 12 radio sta- 
tions throughout mainland 
Europe. 

The two companies have set 
up a 50-50 joint venture. Mr 
Peter Brownlow, finance direc- 
tor of Border, said It was excit- 
ing that “a tiny minnow Hire 
Border has managed to reach 
this agreement with CLT". 

Over the past four years Bor- 
der, which is too small to play 


perature controlled distribu- 
tion centre at Nijkerk, near 
Utrecht in the Netherlands. 

The facility, which employs 
15 people and currently has 
Unilever as Hs main customer, 
will form part of Salvesen’s 
network of 26 multi-user 
depots throughout France, Bel- 
gium, Germany and the 
Netherlands. 

ED&F Man 

ED&F Man Group, the agricul- 
tural products and financial 
services company which came 
to the market earlier this 
month, has redeemed all its 
1.6m cumulative convertible 
restricted voting preference 
shares of 81 and aH its 

90,000 non-voting cumulative 
non-convertible preference 
shares of 81 each. 

The aggregate amount paid 
on redemption was 857.3m 
(£36.2m), including $1.4m 
accrued preference dividends. 

Cullen’s 

Cost controls and sales growth 
at its Neighbourhood Food 
Stores were behind a farther 
recovery at Cullen's Holdings, 
the convenience retailer. 

On turnover of £3.74m 
(£237 m). profits before tax for 
the six months to August 28 
improved to £114,000 (£18J)00). 

Mr Robert Rayne, chairman, 
said a changed product range 
and increased promotional 


John 1 Jacobs regarding a pos- 
sible offer were continuing. 
Further announcement will be 
made as soon as possible. 
ENVIRONMENTAL INVEST- 
MENT Company had a net 
asset value per share of $1024 
(640p) at June 30 against $10-65 
at December 3L Net losses for 
the half year were $12m 
(|22lm profits), equivalent to 
lasses per share of 30.12 cento 
(5523 cento earn ings). 
GARTMORE BRITISH Income 
& Growth Trust: Net asset 
value per geared income share 
was 78p at September 30, 


in the ITV takeover battles, 
has been gradually building up 
radio expertise with small 
stakes in local stations. How- 
ever, it was recently involved 
in two of five new large 
regional stations which went 
on the air las t montb- 
Border, whose chairman is 
Mr Melvyn Bragg, the writer 
and broadcaster, owns Century 
Radio, the new commercial 
broadcaster in north-east 


NEWS DIGEST 


activities helped sales in the 
Neighbourhood stores rise by 
some 5 per cent more than off- 
setting a small reduction in 
gross ma^ns. Future growth 
would be concentrated on 
opening new outlets, he added. 

Net cash inflow from operat- 
ing activities amounted to 
£613,000; gearing had dropped 
to just under 16 per cent at the 
period-end. 

Earnings per share emerged 
at 023p (0.07p). 

I&S Enterprise 

Ivory & Sirne Enterprise Capi- 
tal had a fully diluted net asset 
value per share of I16.7p at 
September 30, an increase of 15 
per cent over 12 months. 

The NatWest Venture Capi- 
tal Trust NAV Index rose by 
an estimated 11 per cent dur- 
ing the period and the FT-SE-A 
All-Share Index was up by less 
than 1 per cent 

The trust, which aims to pro- 
vide capital growth through 
venture capital opportunities, 
reported a net loss of £145200. 
Losses per share came out at 
L32p. 

Abacus 

Abacus, the electronic compo- 
nents distributor, has acquired 
a 75 per cent stake in Promax, 
which distributes Philips' prodr 
ucts in Denmark and Sweden. 

The purchase price is 
DKr23.6m (£22m), satisfied by 


COMPANY NEWS IN BRIEF 


against 94.9p at March 17 when 
the shares were listed. Earn- 
ings per share for period 4J59p; 
second Interim dividend of 
L82p makes 3.64p to date 
IRISH PERMANENT: placing 
and offer of 30.8m ordinary 
shares at 180p attracted a total 
of 24,483 valid applications for 
39.7m shares, representing 
£7L5m. The offer to qualifying 
persons was subscribed 22 
times. 

JERMYN INVESTMENT: 
Rights issue accepted in 
respect of 2.4m new shares 
(30.01 per cent of issue). Bal- 


ance taken up by sub-under- 
writers. 

LABYRINTH GROUP has 
raised Elm by way of convert- 
ible secured loan stock to 
finance existing business and 
the working capital component 
of acquisitions. The loan stock 
is eligible for conversion into 
ordinary shares at a premium 
to the current share price. 
NEXUS MEDIA Communica- 
tions has acquired the various 
publications of Making Music 
for an undisclosed sum. 
PLANTSBROOK GROUP: SCI 
UK has acquired or received 






EUROPEAN INVESTMENT BANK 

Luxembourg 


EBB BONDS ESCUDOS/88 due 1997 

(the “Bonds”) 

PTE 5,000,000,000 

Newly applicable interest rate 

Notice is hereby given that pursuant to the conditions of the Bonds, tor the three years 
13th December, 1994 to 13th December. 1997 the Bonds will cany an interest rate of 
11.0625% per annum. 

Interest payable on the coupons 13 to 18 , on the relevant interest payment dates 13th 
June, 1995 through 13th December, 1997 will amount to PTE 55.3125 per Bond of 
FIB 1 -000 nominal amount. 


EBB BONDS ESCUDOS/89 - 1 due 1997 

(the “Bonds”) 

PTE 10,000,000,000 

Newly applicable interest rate 

Notice is hereby given that pursuant to the conditions or the Bonds, for the three years 
1 3th December. 1994 to 1 3th December, J997 the Bonds will cany an interest rate of 
11.0625% per annum. 

Interest payable on the coupons 12 to 17, on the relevant interest payment dates 13th 
June, 1995 through I3lh December, 1997 will amount to PTE 55.3125 per Bond of 
PTE 1,000 nominal amount 


Tourists lose their 
taste for Pollards 
Cornish ice cream 


England. It Is also a partner 
with Grampian Television in 
Scot FM, the new regional 
broadcaster for central Scot- 
land. 

A new company, called 
Investors in Radio, will be 
■ headed by Mr Ron Coles, for- 
mer managing director of Mid- 
land Radio. 

The plan is to apply for new 
radio licences and possibly 
even acquire existing ones. 


the proceeds of a placing of 
L58m new ordinary shares at 
158p. In the event that not all 
the shares are placed, the 
shortfall will be paid in cash. 

In addition, a further 1.39m 
new shares have been condi- 
tionally placed at 158p to raise 
about £2.lm net of expenses to 
provide additional working 
capital for Promax. 

Of the extra money raised, 
some £700,000 will be used to 
acquire the freehold premises 
in Jutland which the company 
occupies. 

Promax made pre-tax profits 
of DKr5.5m on turnover of 
DKrl51m in 1993, and in the six 
months to June 30 achieved a 
profit of DKr3J9m on turnover 
of DKr86£m. Net assets at that 
date amounted to some 
DKrfl.6m. 

Sanderson Elect 

Sanderson Electronics, the 
computer software and hard- 
ware company, is set to double 
its sales with the acquisition of 
a controlling interest in SGA 
Pacific from General Automa- 
tion. 

It is paying £3.42m for a 51 
per cent stake which will take 
its total holding to 78 per cent, 
or 72 per cent fully diluted. The 
deal will result in Sanderson’s 
turnover rising to £55m. In the 
six months to March 31 turn- 
over was £14 .2m. 

The consideration is being 
satisfied by $lm (£600,000) 


By Tim But 

One of Britain’s last 
independent manufacturers of 
Cornish ice cream, the tradi- 
tional seaside treat, has gone 
into receivership, blaming 
tourists’ lack of appetite. 

Pollards Cornish Ice Cream 
has been churning out the high 
fat product - estimated calo- 
ries 100 per cone - for more 
than 50 years, but it called in 
KPMG Feat Marwick after see- 
ing demand melt away. 

“It's not been a good ice 
cream year despite the hot 
summer weather,” according to 
one of the directors at the St 
Blazey plant in Cornwall. 
“Tourist numbers In the 
south-west have fallen and 
they’re spending less.” 

The failure of the company, 
which produced 150,000 litres 
of ice cream a week in the peak 
summer season, follows a 
shakeout across die industry. 

Mr Geoffrey Molloy, chair- 
man of the Ice Cream Federa- 
tion. said: “It’s a very difficult 


cash, $lm loan notes and the 
transfer of 4.1m of GAI’s 
shares. 

SGA supplies computer soft- 
ware and hardware in Austra- 
lia, New Zealand, Sinj^pore 
and Hong Kong. 

Powell Daffryn 

Powell Dufflyn has expanded 
its fuel distribution interests 
with the purchase of MB Gas, 
foe UK downstream LPG dis- 
tribution arm erf Elf Antargaz 
of France. 

The price was not disclosed, 
but Powell said there had been 
no payment in respect of good- 
will. Net assets at completion 
were £5m. MB Gas has annual 
sales of £4.5m. 

Sphere/Dartmoor 

Dartmoor Investment Trust’s 
share offer for Sphere Invest- 
ment Trust has been declared 
unconditional as to accep- 
tances and remains open. 

Dartmoor has received valid 
acceptances in respect of 55.5m 
Sphere shares, representing 
approximately 45 A per cent erf 
the issued capitaL Dartmoor's 
already controls 8.5m shares, a 
stake of 7.01 per cent 

Newman Tonks 

Newman Tonks Group, the 
architectural hardware manu- 
facturer, has made two acquisi- 
tions fix- up to about £t5m. 


acceptances for 98m Plants- 
brook ordinary shares, repre- 
senting about 97.9 per cent of 
the issued ordinary capitaL It 
has also acquired or received 
acceptances for 15.4m convert- 
ible shares, re p resent in g about 
99.2 per cent of Plantsbrook's 
convertible share capitaL 
SECOND CONSOLIDATED 
Trust is making a capital 
repayment of £&8m, equivalent 
to 20p a share, to take 
place on October 31. So far 
this year the trust has 
repaid £33 An, or 99p a share. 
Further distributions will be 


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moddfaji prc<mXaiiosi and loo more— 

J5 YEARS OF HETTORICAL PRICES FOR 
CASH, FUTURES, OPTIONS AND 


ST YEARS OFRMDAUEMAL NKWMAIKJN 



Sovereign (Forex) Ud. 
24Hr Foreign Exchange 
Maigh fading FocSty 
CompiWw* Prim 

Do3y Fax Sarvicn 

fct 07 ] -93 JVIBfl 
Fax 071-931 7114 
43b Bnddaghen Polaet Deed 
lowkmSWIWOa 


Luxembourg, 25th October. 1994 


UPto 15% 

off electricity 


021 423 3018 

Powerline 


business. Manufacturers with 
limited resources will find it 
diffic ult to survive because It 
is so weather-dependent, and 
the best of the summer came 
before the school holidays.” 

The federation, representing 
companies supplying so per 
cent of the market, warned 
that unless Pollards can be 
sold as a going concern, there 
would be only one large Ice 
cream manufacturer left in 
Cornwall - Jeffrey's, the Allied 
Foods subsidiary. 

The St Blazey company Is no 
stranger to financial upset Pol- 
lards Confections, its former 
parent went into liquidation 
last year with borrowings of 
£L6m. Mr Trevor Pollard, a for- 
mer director of the family busi- 
ness, blamed its collapse on 
lenders who encouraged it to 
overexpand ahead of a possi- 
ble stock market dotation. 

“We sold the ice cream busi- 
ness to a management buy-out 
team, but they have obviously 
had a difficult time, its a very 
sorry state of affairs,” he said. 


It has paid an initial 
DKr29^m (£3.1m) for Randii 
Fabrikeme, a Denmark-based 
producer of mainly stainless 
steel hardware sold under the 
Randi-Line brand name. A fur- 
ther sum not exceeding 
DKr4.2m may be payable based 
on net asset value. 

For the year to June 30, 
Randi, owned by HSH Hold- 
ings, made profits of DKr4m 
before interest 

The second acquisition is of 
Yannedis, a specialist architec- 
tural hardware distributor, for 
about net asset value of Elm. It 
will trade as a separate com- 
pany within Newman's specifi- 
cation and distribution sub 


Century Inns 

Century Inns, the independent 
pub operator, is to buy the 15 
outlets of Legendary Yorkshire 
Heroes, a Tyneside pub chain, 
in a deal worth more than £2m. 

The deal, to be finalised 
within the next month, will 
increase Century’s estate to 316 
houses in north-east England. 
Yorkshire, Humberside and 
Lincolnshire. LYH bought the 
pubs It is now selling from 
Scottish & Newcastle following 
the governments beer orders. 

The management of Century, 
founded in 1991 by former 
Camerons executives, has a 
strategy of building up to 
between 400 and 500 outlets. It 
also has flotation ambitions. 


dependent on future realisa- 
tions. 

SHIRES HIGH-YIELDING 
Smaller Companies Trust 
Fully diluted net asset value 
143.4p per share at September 
30, down from 155.6p at end-De- 
cember. Earnings per share, 
folly diluted, for nine months 
to end-September were 4.3lp 
(4-05p) and third interim divi- 
dend L2p (Lip) making 3.6p to 
date; 

UNICH KM: Recent rights issue 
received acceptances for 20.8m 
shares, representing 8527 per 
cent of Issue. 



hr P*r 4<v 



pyH3 








27 


fj 

‘ ill . g 





FINANCIAL TIMES TUESDAY OCTOBER 25 1994 


;?°'n 
11 ic ° % 


FINANCIAL TIMES SURVEY 



c tfffssr; Inn* 


ITALIAN INDUSTRY AND TECHNOLOGY 


There is a remarkable contradiction between the 
strength of the ‘real’ economy and the difficulties 
caused by political instability, writes Robert Graham 

Dynamism versus 
deadweight 


Italian cartoonists invariably 
have the sharpest eye for sum- 
ming up what is going on. 

A recent newspaper cartoon 
depicted a businessman 
scratching his head. Behind 
him a smoking factory, human- 
ised with face, arms and legs, 
is running at full speed. The 
man comments: “I f everything 
Is going so well, why is every- 
thing going so badly?” 

This pin points a remarkable 
apparent contradiction 
between the strength of the 
“real” economy and the con- 
tinuing difficulties caused by 
political instability and the 
weakness of Italy's public 
finances: the dynamism, on the 
one hand, of private initiative 
and the resilience of the thou- 
sands Of small compani es that 
are the lifeblood of Italian 
industry - and, on the other, 
the continued deadweight of 
the public sector and the bur- 
den of debt that has reached 
125 per cent of gross domestic 
product 

The industrial recovery is 
now well under way after three 
bleak years. Order books are 
swelling, utilisation of capacity 
is increasing, energy consump- 
tion is up and profits are 
returning. The big private 
industrial groups such as Fiat 
and Pirelli, which have gone 
through painful and costly 
restructuring programmes, are 
signalling that the worst is 
over. 

“The recovery is very strong 
and everywhere one goes there 
is a tremendous sense of confi- 
dence among industrialists,” 
says Mr Stefan© Mtecossi, head 
of research at Confindustrla, 
the industrialists' association. 
He is shortly to take over the 
directorate of industry in the 
Brussels Commission. 


Industrial order book 

Average monthly trend erf wttere 
'to*. - 


1096 


| Fwalgn ‘ 



'■ Juf- - Aug Sap. Oct- Hen Dae 
SMti«Wai-5fli»:i*-OM- 1090. 


The converse of this picture 
is the serious weakness of the 
Berlusconi government and 
the high interest rates which 
are needed to attract buyers of 
Italian debt Industrialists thus 
lack a stable political and 
financial environment In 
which to plan investments. 

Despite these negative con- 
siderations, Confindustria is 
convinced that official GDP 
growth projections of 2.7 per 
cent in 1995 are too conserva- 
tive. Figures released earlier 
this month showed that the 
economy had grown 2.3 per 
cent during the second quarter 
compared with the same period 
last year. 

Industrial activity in the 
period to the end of July had 
registered 12 consecutive 
months of growth. It is up BA 
per cent on July 1933. Order 
books initially lagged behind 
the growth in production but 
have begun to pick up more 
quickly. Industrial orders 
increased almost 16 per cent in 
the 12 months ending July this 
year. 

Export orders have provided 
the drive behind the growth in 
production. The export ele- 


Tuesday October 25 1994 


.fen Feb «br Apr Man Jun JU 

. , «94 


ment In industrial turnover 
was up 12 per cent In the year 
to the end of July, compared 
with 43 per cent in the case of 
the domestic market. And 
although exports were 
undoubtedly given a big boost 
lor the September 1992 devalua- 
tion of the lira, the exchange 
rate is by no means the sole 
explanation, for the extraordi- 
nary success of Italian exports 
over the past two years. 

In this context, it is signifi- 
cant that Italian exports have 
Increased at more than twice 
the rate of Britain’s even 
though both countries deval- 
ued at the same time and by a 

similar amnimt 

Those who gained rust from 
the devaluation have been 
large-scale industries such as 
chemicals and steel, as weD as 
the vehicle industry. But in 
general, the commerce minis- 
try claims that Italian compa- 
nies are winning orders 
because they have pruned 
their production costs and 
raised productivity through 
shedding labour and by Invest- 
ment in new plant 

Since 1992, wages have been 
rising more slowly than Infla- 



Rat, the flagship of Hfribn Industry, to emerging Own the recession. A key factor has been the introduction of this greenfield site at MeM 


tion and last year in large 
industrial groups the rise was 
less than 2 per cent -half the 
rate of inflation. 

Just as importantly in ensur- 
ing costs are competitive, Ital- 
ian companies are providing 
quality products with good cus- 
tomer service. This has been 
especially true In the highly 
competitive emerging market 
of China where Italian 
marhinp tools and engineering 
products have done well 
against tough competition. 
More generally, Italian compa- 
nies have benefited from the 
strength of emerging econo- 
mies in Asia and Lathi Amer- 
ica. Here too, traditional indus- 
tries such as shoe-making, 
textiles, clothing and leather 
goods have done well. 

Without their exports, the 


clothing and leather goods 
industries would have Eared Ear 
more badly in the domestic 
recession. Indeed, there have 
been cases of factories switch- 
ing their export orientation 
from 40 per cent to 80 per cent 
of total production. However, 
the halancp is b eginning to be 

redressed. 

In the 12 months to July, 
domestic orders increased by 
17.6 per cent and stronger 
domestic demand is clearly in 
evidence both for capital goods 
and consumer items. 

There are still considerable 
variations within individual 
sectors. The vehicle industry 
has picked up strongly, thanks 
in good measure to an enthusi- 
astic response to Fiat's new 
Punto saloon produced at the 
greenfield Melfi plant in 


southern Italy. At the weaker 
pnri is the foodstuffs industry 
which remains stagnant, 
reflecting a combination of 
intense competition and cut- 
backs in domestic household 
spending. 

The construction sector is in 
worst shape. As a result of the 
recession and the effects of cor- 
ruption scandals, the construc- 
tion business and the market 
for construction equipment 
and materials has been deeply 
depressed- Construction activ- 
ity fell by almost one third in 
1993. 

The Berlusconi government 
revoked a freeze on public 
works contracts, imposed in 
late 1992 to prevent bribes, 
pending the framing of new 
tendering rules. The affects of 
the new government's move 


should begin to be felt in the 
final quarter. 

The problem areas of indus- 
try now tend to be those where 
the state still continues to play 
an important role - chemicals, 
defence industries, mining, 
steel and ship-building. ENL 
the state oil concern, has being 
carrying out a costly restruct- 
uring of its chemicals and fer- 
tiliser operations. The main 
financial cost is over but 
rationalisation of some plant in 
the south still has to be carried 
oat. 

Defence industries, badly 
affected by three years of 
reduced sates and high costs, 
look likely to be a big casualty 
of cats in the 1995 budget As 
much as Ll.OOObn has been 
taken out of planned spending 
and 1995 investments wxD be 


L3,100bn against L3,340bn this 
year. This cutback could affect 
the merger between the 
defence Interests of Efim, the 
state holding in liquidation, 
and Finmeccanica, the state- 
run defence and high-technol- 
ogy group. 

Finmeccanica agreed to take 
on the defence side of Efim, 
provided the government guar- 
anteed orders from the armed 
services to sustain production 
lines. At the same time Fincan- 
tierl, the ship-building subsid- 
iary of UU, the state holding 
company, could lose one of its 
two remaining naval shipyards 
as a result of the cuts. 

In the caso of steel, the saga 
of the break-up of Ilva. the 
state steel company, is not 
fully resolved. Although the 
government is committed to 
complete privatisation of fiva 
by the end of the year, the fate 
of the huge flat products fac- 
tory in Taranto Is not dear. 
Nor is it certain that Italy will 
comply with European Union 
agreements on cuts in overall 
steel production capacity, espe- 
cially as demand is picking up. 

The Berlusconi government 
is committed to continue the 
retreat of the state from its 
dominant economic role. But 
the process is extremely com- 
plex and politically sensitive 
since the state apparatus has 
long been a source of patron- 
age and jobs, especially in the 
south. 

The termination of state sub- 
sidies to industry has forced 
the pace of the privatisation 
process but IRI, the giant state 
holding company which still 
controls more than 3 per cent 
of GDP. has yet to define its 
future role. It could wind itself 
up as its assets are divested. 
Alternatively, it could become 
the Instrument of continued 
state influence through minor- 
ity ownership and “golden 
share" control. 

Some members of the gov- 
ernment want to see the state 
retain a strong presence in 
areas of high technology and 
strategic interest The majority 
are wary of foreign penetration 
tn such sectors as telecoms and 
energy. These considerations 
will play an important part in 
the forthcoming privatisation 
of Stet (telecoms), ENI and 
Enel, the electricity authority. 









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FINANCIAL TIMES TUESDAY 


OCTOBER 25 IW 


ITALIAN INDUSTRY AND TECHNOLOGY II 


LESSONS FROM THE RECESSION 


Restructuring and innovation 


Half-year results from Italy’s' industrial giants 
provided the first clear signals of a recovery, 
writes Andrew Hill 



Olivetti expects to have cut its workforce to 33J300 by the 


.. 

sSMl I 

of next year pkxm Tnm Hun^Ma 


T he first six months of 1984 certainly 
marked a political turning point for 
Italy, but they were also significant 
for Italy's big industrial companies. After 
two to three years struggling against a 
global recession, a costly and inflexible 
labour market, an overvalued currency 
and. in certain cases, endemic corruption. 
Italian industry is returning to profit 
The recent crop of half-year results from 
Italy's industrial giants provided the first 
clear signals of a recovery, as already 
hinted by official statistics and trumpeted 
by the new. ostensibly pro-business gov- 
ernment of Mr SUvio Berlusconi. 

Montedison, the energy, chemical and 
agro-industrial company which perhaps 
more than any other enterprise has sym- 
bolised the recent trend in Italian indus- 
try, was the first of the large quoted com- 
panies to report half-year results. The 
group, brought to its knees last year by 
alleged mismanagement and corruption, 
returned to pre-tax profits for the first 
time since 1991. Its parent, Ferruzzi Finan- 
ziarta (Ferfin), also reported a return to 
the black. 

Another symbol. Fiat, the Industrial and 
automotive group, revealed a profit before 
tax of L727ba for the first six months, 
compared with interim losses in the equiv- 
alent period of LS82hn before tax; the first 
sign of the scale of the convulsion which 
the automotive market was suffering. Mr 
Gianni Agnelli forecast that the group's 
record losses of 1993 could be converted 
into a gross consolidated profit for 1994 of 
as much as $lbn. 

Pirelli, the cables and tyres group, also 
returned to the black in the first half, and 
although Olivetti, the computer manufac- 
turer. disappointed Investors with extraor- 
dinary losses os its investment portfolio, it 
cut its first-half operating loss to only 
L6.2bn and said it was still on course to 
break even at operating level for the full 
year, after three years in the red. 

The large industrial companies have 
finally begun to benefit from the momen- 


tous changes in their operating environ- 
ment instituted over the past two years. 

ha particular, the September 1992 devalu- 
ation of the lira and the loosening of a 
rigid labour market have begun to have an 
impact on group results. Protected by a 
weak currency. Flat, for example, man- 
aged to increase its exports and push up 
its share of the depressed Italian market 
by 1.3 percentage points to 46 per cent in 
the first hail Marzotto, Italy’s largest tex- 
tile manufacturer which makes 62 per cent 
of its sales outside Its home market, fore- 
cast a "considerable increase” in full-year 
profits as it finally began to benefit from 
the devaluation. 

Most entrepreneurs believe the lira is 
now slightly undervalued, but they dis- 
miss accusations that tor the past two 
years they have been operating at an 
unfair advantage compared with European 
and international competitors. 

M r Gian Carlo Vaccarf, chief execu- 
tive of Sasib, the railway equip- 
ment and machinery manufac- 
turer which is part of Mr Carlo De 
Benedetti’s Cir group, says: "In the 1980s 
we had to operate with a loss of competi- 
tivity- fixed exchange rates and an 
increasing cost of labour. Now the lira has 
returned to its true value.” 

But it would be wrong to assume that 
Italian industry has waited passively for a 


change in the economic environment. 
Analysts agree that most large Italian 
companies have worked hard to cut costs 
and restructure. 

Olivetti, for example, which has had to 
cope with the special pressures on the 
world computer market, had some 59,000 
employees in 1989, and expects to have 
reduced this number to 33.000 by the 
middle of next year. That is a net decrease, 
hut the company has also taken on staff 
from outside to introduce new blood into 
the group as it seeks to manoeuvre itself 
into the related areas of multimedia and 
telecommunications. 

Fiat has cut staff from 300,000 in 1990, to 
260,000 in 1993; Pirelli from 50.000 to 40,000 
in the past two years. 

All three companies have also attacked 
costs, and pursued innovation. Analysts 
were impressed by Olivetti’s claim at the 
half-year stage to have reduced sales, 
general and administrative costs from 28 
per cent in 1992. to 20.5 per cent The 
target is to reach 18 per cent in 1995. 

Fiat meanwhile, is “outsourcing" some 
of its automotive business and has just 
decided to merge Magneti Marelli and 
Gfiardini, its two automotive components 
subsidiaries, as rationalisation continues. 

Fiat Auto, the main subsidiary, is half 
way through the programme of renewing 
its range, beginning last year with the 
successful Fiat Pun to. 


Pirelli is laying the emphasis on new 
cables, using high technology fibre optics, 
for the multimedia market, and has 
increased the pace of new product 
development in both the cable and tyre 
divisions. 

Ferruzzl-Montedison's restructuring has 
been more hectic, as H has picked itself up 
following last year’s near-collapse. In Ids 
letter to shareholders earlier this year. Mr 
Guido Rossi, rfrairman of both Ferfin and 
Montedison, described the rescue plan 


instituted with the co-operation of the 
h anks as "the largest out-of-court financial 
restructuring in history, in terms of the 
scale of the indebtedness rescheduled, its 
geographic rHmpnslnns and the number of 
parties involved". 

But even under pressure. Montedison 
has managed to raise LLlOObn since last 
year by selling off non-core businesses 
while Ferfin has cut Its debt in the first 
half by nearly 30 per cent 

It has not been an easy task: the 


. structure contains 

•erruKlj^ntedison com ^ & mnny 

ome 1 .S 00 difl .^vehicles up by the 

previous management 
LO w discreow v _ ^ wount t up. 

rtiicb must be dit however, to 

It would he jt a ii an industry, 

SjSfiSMFSSf tcompnni*. at this 

arly stage public sector, 

nm ‘only a * 

? to improved climate to make 

aternational alliances. ff 

a nnre thev ha\ e shaken on 
out the bad taste left by 
and completed the prows ot 
estructuring, international compel Won « 

Si intense for Italian companies .dread) 
a the private sector. They arc not the 
niy industrial companies to have 
mdergone substantial restructuring 
uring the downturn. In addition, they are 
till underweight compared with 
ompanies from other similar sized and 
ven smaller economies. 

Generali, the Italian insurer, is the only 
talian group to make it into the list of the 
world’s 100 largest public companies. 

This need not matter for the overall 
talian economy, • which draws strength 
rom the performance of its small and 
ledium-sized enterprises. often 
Eunily-owned, but it must worry the 
igger Italian players. 

It would be better to conclude, then, 
rith a note of caution struck by the 
irector-general of Fiat. Mr Giorgio 
ranxzzo. Asked if there was a risk of 

. _ ■ _ a. r: tVin 


Robert Graham examines labour relations 


Pragmatism may prevail 


The Italian trades union 
movement finds Itself increas- 
ingly in the role of chief oppo- 
nent of the Berlusconi govern- 
ment’s economic and financial 
policy. 

The general strike called on 
October 14 to protest against 
cuts in pensions and the gen- 
eral content of the 1995 budget, 
could mark a turning point in 
relations between the govern- 
ment and the unions. Unless 
the trades union leadership 
sees the government willing to 
make some concessions on 
pensions and health service 
cuts, street protest is likely to 
continue. 

There could be a spill-over 
effect on relations between the 
unions and the employers. This 
then risks undermining one of 
the most remarkable achieve- 
ments of recent years - the 
July 1993 tripartite agreement 
between the government, 
unions and employers that 
ended wage indexation (the 
pernicious scala mobile ) and 
linked wage rises to productiv- 
ity. 

Pragmatism may well pre- 
vail; but such a scenario is dis- 
turbing industrialists who had 
hoped to be able to rely on 
stable industrial relations as a 


central building block of the 
economic recovery. 

Since 1992, the level of indus- 
trial unrest has been decreas- 
ing. The three main trades 
union confederations have pre- 
ferred negotiation to confronta- 
tion. The number of hours lost 
through strikes in the first half 
of this year was a 25-year low. 

In part this reflects a decline 
in the influence of the unions 
and lower membership. Per- 
haps more 
Importantly 
the traditional 
bastions of 
trades union 
power - the 
workforce in 
the big engi- 
neering-mamdacturing groups 
- have been weakened by job 
losses in the industrial 
restructuring of the past five 
years. 

As a consequence, job secu- 
rity has been put before pay 
rises, or even work conditions, 
as the unions recognise that 
some of the privileges they 
have acquired over the years 
will have to go. It was signifi- 
cant that the engineering 
workers broke with their con- 
frontational tradition and 
agreed to renew their national 


contract in July without even a 
token protest strike. 

The wage element has been 
the simplest aspect of negotia- 
tions in the past two years. 
Since 1992, wages have 
declined in real terms. Last 
year, wages on average rose 3 
per cent, a good percentage 
point below inflation (with 
public sector pay rising mar- 
ginally behind the private sec- 
tor). This year, there has been 
no suggestion 
that wage lev- 
els will be able 
to recover lost 
earning power. 
Indeed, with 
inflation 
slightly higher 
than projected in the official 
figures, the decline in real 
earnings will continue. 

The huge improvement in 
the climate of industrial rela- 
tions. at least until this 
autumn, has undoubtedly been 
helped by the 1993 tripartite 
agreement The agreement 
ended the old system whereby 
wages in the private sector 
were based upon three ele- 
ments - an agreed industry- 
wide rate, specific company 
related payments and an index- 
ation payment. Now. nominal 


The government is 
committed to stimulate 
spending on research 
and development 



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Feasibility studies, conceptual design, pro- 
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wages are renegotiated every 
two years within a four-year 
nationwide framework. The 
increases in pay cannot exceed 
projected inflation, while com- 
pany payments above the 
norm must be linked to pro- 
ductivity. 

Beyond this, the government 
is committed to stimulate 
spending on research and 
development, improve job 
training and address the prob- 
lems of industry in depressed 
areas. In conjunction, the 
unions accepted that further 
reforms were necessary in the 
labour market, including the 
need to tackle the issue of tem- 
porary employment 

The unions feel they have 
played their part in terms of 
job sacrifices and wage 
restraint They are now await- 
ing the government to deliver 
on its part of the bargain. How- 
ever, they suspect the govern- 
ment is far more interested in 
first securing a greater liberal- 
isation of the labour market 
-as are the employers. 

The Berlusconi government 
made the first, albeit timid, 
steps to liberalise the labour 
market in July. The measures 
introduce the principle of tem- 
porary employment but then 
circumscribe it with a series of 
rules. For example, employers 
can only resort to temporary 
wori contracts where jobs are 
being added to the company 
payroll - but not in substitu- 
tion of existing jobs or where 
jobs have already been shed. 

Companies are also limited 
in the number of temporary 
employees. At the same time, 
temporary employment cannot 
last longer than 12 months. As 
a corollary, companies were 
also given tax breaks for hiring 
either long-time unemployed or 
new job-seekers. 

This falls short of an easy 
hire-and-fire policy, and does 
not address many of the 
employers' complaints of the 
high non-wage cost of employ- 
ment. Nevertheless, an envi- 
ronment is emerging in which 
more flexible rules can be 
applied to employment As a 
result, there should be a grad- 
ual change in the structure of 
employment, reducing the 
unacceptably high levels of 
youth unemployment and the 
high degree of exclusion of 
women from formal Jobs. 
Female unemployment at 17 
per cent is almost double the 
average for males and the gap 
is even wider in the south. 

Another anomaly being 
eroded is the national mini- 
mum wage applied regardless 
of the differing conditions in 
the north and south. This has 
been a big disincentive to 
investors, reluctant to pay the 
same wages in the south where 
productivity has been histori- 
cally lower and the cost of ele- 
ments such as housing are well 
below those in the north- 

The north-south wage differ- 
ential is now being encouraged 
indirectly by the European 
Union. Brussels is forcing Italy 
to stop fiscal rebates on the 
wage and social security bills 
of companies operating in the 
south - breaks which allowed 
wages to be roughly the same 
nationwide. 

Against this back- 
ground - with reform of the 
labour market half complete 
and wage agreements based on 
a finely-balanced sense of give- 
and-take between the govern- 
ment, employers and the 
unions - it suits neither side to 
provoke a “hot autumn". 


S itting round the table 
with the leading repre- 
sentatives of the Prato 
textile industry, one can feel a 
palpable sense of relief. The 
worst of the recession is 
behind. 

Prato has come through a 
long, lean patch, beginning 
with a brutally enforced struc- 
tural adjustment of the indus- 
try in the mid-1980s, which 
was then capped by recession 
- first in the main markets 
abroad and then at home. The 
experience has proved the 
remarkable resilience and 
adaptability of the 8.500 com- 
panies in tiie Prato area near 
Florence. 

This is the single biggest 
agglomeration of textile manu- 
facturing facilities in Europe 
with a turnover close to 
L6,500bn (including textile 
machinery). Tbe health of 
Prato is an important symbol 
of the way Italy's myriad 
small and medium-sized com- 
panies can cope with fast- 
changing industrial condi- 
tions. 

“The secret of our survival 
and success is above all owed 
to our enormous flexibility," 
says Mr Lamberto Cecchi, 
chairman of the Prato Indus- 
trialists Union, the co-ordinat- 
ing body for the local textile 
business. “We also rely on the 
speed of our responses: our 
closeness to clients; the high 
degree of specialisation among 
our own companies, plus our 
permanent search for innova- 
tion," he adds. 

Mr Cecchi and bis colleagues 
speak with infectious self-con- 
fidence about their ability to 
face challenges. The business 
is in their blood with a tradi- 
tion of cloth production that 
dates back to the 12th century. 
But all this does not conceal 
the traumatic upheavals 
caused by a combination of 
increased third country com- 
petition and recession in the 
main markets. 

Over tbe past 15 years 
employment has fallen by one 
third, tbe worst casualties 
befog in the “artisan" sector 
-very small companies with 
limited technology and where 
the workforce is non-onion- 
ised. On average, some 550 
companies disappeared every 
year daring the 1980s. The sec- 
tor now employs 42,000 people 
of whom 33,000 are directly 
linked to textile production 
that covers wool, cloth, linen, 
silks and knitwear. 

P erhaps tbe most encour- 
aging sign is precisely 
on tbe employment 
front “We think at last that 
employment bas stabilised, 
and there coaid even be a 
slight upswing ahead," says 
Mr Cecchi. 

According to the Industrial 
Union's research department 
the recovery can be traced 
back to latter part of 1992. In 
1993. the value of production 
grew 11 per cent, while 
exports increased 20 per cent 
to L4,100bn. However, only in 
tbe past six months bas tbe 
recovery extended across the 
board. Exports are np 24 per 
cent on the same period in 
1993. 

Prato caters essentially to 
the fashion bnsiness. and 
mainly at the-ready-to-wear 
end. This involves ephemeral 
tastes in fabrics and the con- 
stant search for something 
new, the latest being washed 
silk. In any one year, Prato 
companies torn out 70,000 dif- 
ferent materials. These are 
usually small runs in speci- , 
alised market niches. , 

“We cannot now compete | 
with countries like Chi- i 
na - nor do we try- in produc- | 
ing large quantities of doth. I 
Our competitive edge comes in i 


Prato textile industry 


Remarkable 

resilience 


oar being able to find new 
combinations of materials, of 
understanding and anticipat- 
ing what the fashion designers 
might want" says Mr Cecchi. 

But the real strength of 
what is often called “the Prato 
system" is more complex. 
Within a relatively compact 
geographical area, a complete 
integrated industry has grown 
up in a dynamic bat organic 
way. Thousands of mostly 
small fondly companies exist 
side-by-side, each specialising 
in one particular activi- 
ty - whether it be special dye- 
ing facilities, techniques of 
blending artificial fibres or 
packaging machinery. Facili- 
ties such as industrial water 
recycling are shared and 
backed by a sympathetic local 
council 

Though competing, these 
companies also exchange ideas 
and freqnen tly tarn to each 
other to help with orders. 

During the difficult years, a 
few of the medium-sized 
groups bought up rivals or 
sought to establish more inte- 
grated operations. But inte- 
grated operations covering 
several aspects of textile pro- 
duction are still rare. Take- 
overs are complicated and the 
tax legislation remains puni- 
tive on mergers. 

In Prato, tbe companies are 
people; their energy and their 
ideas. Yon risk getting a fac- 
tory shell if you bay a com- 
pany. . . and it wouldn't be 
easy for an outsider to buy in. 


Tbe Japanese tried and with- 
drew perplexed several years 
ago," observed Mr Roberto 
Cenni who runs Gomtex, one 
of the bigger companies in 
Prato. 

Another tendency has been 
for companies to reduce their 
operational size. This was 
motivated both by the need to 
cat costs and to reduce the 
hold of the onions over work 
practices. 

A - company employing 
fewer than 15 people, for 
example, manages to 
avoid nearly all the tough 
norms imposed by tbe Minis- 
try of Labour. Once a company 
employs more than 25 people, 
it has to begin recruiting 10 
per cent from the handi- 
capped. 

According to the latest fig- 
ures. 47 per cent of all compa- 
nies employ fewer than 10 peo- 
ple, while a further 40 per cent 
employ fewer than 50 people. 
Less than 4 per cent of the 
textile workforce is employed 
in companies with more than 
100 people on the payroll. And 
two thirds of Prato companies 
are still classified as “artisan". 

The businesses that have 
survived have investing 
be&vQy in new machinery and 
R&D. Many factories have 
been completely re-equipped 
daring the past five years. 
Roughly 5 per cent of Prato's 
turnover is devoted to 
research and development 
Coupled with this upgrad- 


ing, the Prato producers estab- 
lished closer ties with their 
markets, ensuring they offered 
tbe right kind of product In 
tbe fast-moving ready-to-wear 
business, product lines are 
short This accounts for Pra- 
to’s enormous flexibility - but 
it also means that the compa- 
nies face extra costs in fre- 
quently setting op new pro- 
duction lines. 

To narrow the gap with cus- 
tomers, Prato has began to 
move away from a rigid two- 
season production for winter 
and summer - with conse- 
quent irregularities in the 
rhythm of production. Instead, 
Prato now offers two mid-sea- 
son ranges which are a refin- 
ing or a “second edition" of 
what has already been pro- 
duced for the start of the win- 
ter-summer range. 

The manufacturers are con- 
cerned that the recovery will 
push np raw material costs. 
Already this year, cotton, wool 
and linen prices have risen 
almost 15 per cent In tbe first 
six months of the year, a com- 
bination of greater demand 
and higher prices saw the cost 
of imported raw materials and 
semi-finished goods increase 
from L338bn to L653bn. 

As companies come to terms 
with the recovery, they will 
have to focus more on the 
problems created by their 
undercapitalisation. The capi- 
tal structure of the majority of 
companies is weak, companies 
are underfunded and account- 
ing procedures are particu- 
larly poor among the smaller 
businesses. 

The other problem worrying 
the managers is that of labour. 
Skilled workers with a price- 
less knowledge stretching 
back over three decades are 
beginning to retire and it is 
hard to find replacements. 

Robert Graham 



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Andrew Hill says the telecoms industry has a difficult task ahead 

Structure has been simplified 



(ntamaSonaf cafe from Italy «b among the mast expensive in Europe pauwr Tim NwiyMn 


still more work to be dime. For example. 



Italy’s state-controlled 
telec ommun ications companies have one 
advantage over their counterparts in other 
European countries, it is that their cus- 
tomers love tb talk 

That does not just mean Italians make a 

lot of phone calls from home. They are 
also Europe’s most flamboyant users of 
mobfle telephones - telefanini - flaunted 
everywhere from the tables of the local 
trattoria to the pillion-seat of scooters. 

Tins phenomenon has brought a smile 
to the face of executives at Telecom Italia, 
the state-controlled telephone operator, 
and its parent Stet in particular, because 
they are preparing Telecom Italia's mobile 
telephone operations for a. potentially 
lucrative demerger and flotation before 
the end of the year. 

But despite successful attempts at mod- 
ernisation over the past decade, Italy's 

Italy will have to meet a deadline 
of 1998 for the introduction of 
competition In voice telephony 

telecoms industry still has a difficult task 
ahead over the next five years if it is to 
compete internationally in a fast-changing 
sector. 

At least the structure of the Italian tele- 
coms sector has been simplified in the past 
six months. Until recently, separate state- 
owned companies, each with, a different 


corporate Identity, worked in parallel, 
sometimes on tasks which overlapped. 
Earlier this year, however, it was agreed 
that Italy's five telecoms operating compa- 
nies, headed by Sip, the domes tic tele- 
phone operator, should be merged to form 
Telecom Italia. 

Stet now owns some 60 per cent of Tele- 
com Italia together with other holding s in 
areas such as manufacturing and software, 
and international joint ventures such as 
Stream, the multimedia company jointly 
owned with Bell Atlantic of the US. Stet is 
itself 65 per cant owned by 181, the state 
holding company, and the outstanding 
shares in Stet and Telecom Italia are 
traded on the Milan stock exchange. 

“We took a great step forward when we 
agreed on this merger between the five 
companies,” says Mr Umberto Silvestri, 
chairman of Telecom Italia and former 
chief executive at Stet, who identifies the 
change of management culture at the 60- 
year-old monopoly as one of his ma m chal- 
lenges. But there are at least four other 
important areas in which Stet and Tele- 
com ifcaha must act quickly: 

• Liberalisation. like rivals in other 
European Union countries, Italy will have 
to meet a deadline of 1998 for the intro- 
duction of competition in voice telephony. 
This may prove to be more of a challenge 
in Italy than elsewhere, because its tariffs 
are further out of line with the interna- 
tional average than those in other Euro- 


pean countries. In particular, international 
calls from Italy are among the most expen- 
sive in Europe and business users are 
already taking advantage of private call- 
back services which capitalise on cheaper 
US rates, for example. 

Further rebalancing of tariffs in April 
hag reduced the discrepancies but there is 


according to Telecom I talia it now costs 
more to call Italy from the US than vice 
versa, but Mr Silvestri still estimates that 
the price of international calls will have to 
come down by about a quarter and local 
tariffs increase by about the same amount. 

The role of an independent regulatory 
authority -yet to be established in Italy 
- will also be crucial in making sure that 
Telecom Italia does not abuse its do minan t 
position an the market after liberalisation, 
particularly as Italy is proving slow to 
implement ran sting- directives opening up 
specialised telecoms services to competi- 
tion. Earlier this month, a Milan court 
ruled that Sip-Telecom Italia, in imp with 
European Union rules, would have to offer 
leased lines to Telsystem, a small teleco ms 
services company, a move widely inter- 
preted as opening a crack in the domestic 
operator’s monopoly. 

• Investment Stet and Telecom Italia 
have both been investing heavily to mod- 
ernise the much-criticised Italian tele- 
phone sy ste m. Telecom Italia for example, 
invested LS^OObn in 1992 and more than 
LlO.OOObn last year. In 1991. that figure 
will drop to about LO^OOhn, and again in 
the years leading up to 1998, but the over- 
all amount invested over the six years 
between 1992 and 1998 is still likely to be 
more than L50,000bn. 

Much of that has been spent on bringing 
the Italian network up to scratch, and 
adapting it to the likely demand for high 
technology multimedia services. Telecom 
Italia is set to spend some L2,000bn in the 
next three years specifically to ea se the 
growth of a market for. say, video on 
demand or sophisticated tele-shopping. 

At the moment, some 60 per cent of 


Telecom Italia’s investment is financed by 
debt and 40 per cent from internal bind- 
ing. Mr Silvestri hopes that by the end of 
1997 that ratio will be reversed. 

• Privatisation. “The sale of KTs r emain , 
mg shares in Stet is now unlikely to lakp 
place before the middle of 1995, probably 
after the flotation of the cellular phnnn 
business. Both events are keenly awaited 
by international investors, and by the tele- 
coms rampanieg themselves, which have 
been constrained by their inability to raise 
finance through share issues because of 
ISTs unwillingness to stump up ««h for 
its rights. 

A merger between Stet and Telecom Ital- 
ia - which would give the Italian telecoms 
sector an even simpler structure - now 
aeons unlikely for practical reasons, but 
the sell-off should be eased by the fact that 
Mr Michele Tedeschi, chairman of HU 
since the summer, used to be chief execu- 
tive of Stet 

As this survey went to press, HU was 
preparing to choose advisers for the Stet 
sell-off They will have to decide what sort 
of mechanism to install to prevent Stefs 
“strategic importance” being compro- 


mised. A “golden share” is likely to be one 
possibility, or the formation of a hard core 
of large investors, dominated by Italian 
companies and institutions. 

• International weight. In terms of mar- 
ket value, Telecom Italia and Stet are 
already the biggest industrial companies 
listed on the Italian stock market. Follow- 
ing the merger, Telecom Italia can count 
on a total annual turnover of L2.700bn, 
and a net profit of at least L1.02Sbn. It is 
the sixth-largest telecoms operator in the 
world, after NTT of Japan. AT&T of the 
US and the German. French and British 
national operators. But Italian telecoms 
executives concede that this is not 
weighty enough, particularly as most 
rivals are rapidly forming international 

alliances . 

Telecom Italia is in discussion with 
“three or four” medium-sized companies in 
the hope of finding a partner. Without 
such a deal, Telecom Italia and Stet risk 
being left behind in the race to be one of 
the five or six big operators which most 
analysts believe will do mina te the world 
telecoms market at the b eginning of the 
next century. 



frrthw Job loom in the feidustry would only add to the suffering of the part few yean of 1 


Plaua: RoumOga 


Andrew Hill reports on the steel industry 


Years of painful negotiation 




When European Union 
industry ministers agreed last 
December on a package of aid 
and capacity cuts for Europe’s 
subsidised steel companies it 
looked like years of painful 
negotiation, in which the Ital- 
ian authorities had played a 
leading role, had come to an 
aid. 

In Brussels, Italy -and in 
particular the heavily subsi- 
dised state-owned producer. 
Ova - had been painted as the 
villain of the piece, accused of 
prevarication, stubborn refusal 
to reduce capacity and, at one 
point, of having deliberately 
concealed a blast furnace from 
European Commission Inspec- 
tors. 

Rival producers warned they 
would be unable to subscribe 
to the EU plan to reduce capac- 
ity and rescue the whole Euro- 
pean industry from a slump in 
demand, if the Italians did not 
fon into line. 

But Mr Paolo Savona, then 
Italy’s industry minister, man- 
aged to win what looked at the 
time like a surprisingly good 
d«il from his European coun- 
terparts . This envisaged a 
reduction of 2m tonnes in over- 
all steel production in Italy- 


Under the original calcula- 
tions, some l-2m tonnes of 
capacity would be lost at ttva’s 
Taranto plant in southern 
Italy; 500,000 tonnes at plants 
owned by the eventual buyer 
of the Tkranto flat products 
division; and a further 300,000 
was accounted for by the dis- 
mantling of Ilva’s Bagnoli 
plant, a hot rolled steel mill 
which was already lying dor- 
mant 

Strict Com- 

mission sur- 
veillance was 
supposed to 
ensure that the 
terms of the 
package were 
observed. The 
Commission 
was partlcu- 

larty pleased with Rome's com- 
mitment to privatise Dva by 
the end of 1994, meaning that 
the Ecu2.6bn subsidy allowed 
under the December agreement 
would be the last state aid for 
Ilva. Mr Savona estimated that 
the break-up and sale of Ova 
could raise some L4^00bn for 
the state. 

Part erf the privatisation pro- 
cess has already been com- 
pleted, most notably with the 


G William Mfiler, the US 
merchant bank, Is 
supposed to be finking 
up with a consortium of 
steelmakers and local 
enterprises in one offer 


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sale of the more attractive spe- 
cial steels divisian of Dva - Ac- 
ciai Special! Temi (AST) - at 
the end erf June, bought by a 
German-Kalian consortium for 
L600hn. 

But with the December dead- 
line fast approaching the most 
important part of the Uva pri- 
vatisation - the sale of the flat 
products division, Ilva Lami- 
nati Piani (ILP), centred on 
Taranto - has yet to be carried 

out 

Mr Vito 
Gnatti, who 
hag been indus- 
try minister 
since Mr Silvio 
Berlusconi’s 
government 
took office in 
May, is still 
confident that a sale will be 
maria, but he admits that the 
pressure is increasing. “It’s 
clear that if there is only one 
buyer, and he knows we have 
to sell before December 31, this 
buyer will hold on until 
December hoping to put pres- 
sure on the seller," he says. 

Other observers are even 
more pessimistic about the 
prospects for ILP. Mr Hayao 
Nakamura is the former repre- 
sentative of Nippon Steel in 
Italy, who took over as chief 
executive of Ilva in February 
last year. He inherited an 
extraordinary range of prob- 
lems - debt was at the same 
level as turnover, for example, 
with interest rates at 13.5 per 
cent -and believes that the 
Italian state-owned steel indus- 
try was badly treated by Brus- 
sels. 

“We’re closing the Bagnoli 
hot steed mill -the latest hot 
steel mill constructed in 
Europe. From the point of view 
erf rationalisation in Europe we 
should be closing the older 
ones, but Italy is closing the 
newest, which was built at a 
cost of LLOOOhn," points out 
Mr Nakamura, now an adviser 
to what remains of Ilva. He 
adds that Italy is having to 
import more than 50 per cent 
of its flat products from Ger- 
many and France, two of the 
countries which pressed hard 
for Italy to dose down capac- 
ity. 

Mr Nakamura is also scepti- 
cal about the feasibility of 
offers made so for for the ILF 
division. G w illiam Miller , the 
US merchant bank, is supposed 
to be linking up with a consor- 
tium of steelmakers and local 
enterprises in one offer, while 
Lucchlni, the private Italian 
steel producer, is also said to 
be interested. Recent reports 
suggest that Riva, another pri- 
vate producer which was also 
part of the victorious consor- 
tium to buy AST, has come 
under pressure to join the bid- 
ding- 

But Mr Nakamura believes 


there is a risk that these offers 
will be too low, or based on the 
future sale of attractive parts 
of the business, and closure of 
the rest -an option which 
would lead to further job losses 
in some of Italy's most 
depressed regions. Mr Gnutti 
says, however, that strict con- 
ditions will be imposed on any 
buyers, preventing them from 
simply stripping the best ILP 
assets. 

Further job losses in the 
industry would only add to the 
suffering of the past few years 
of restructuring. In 1987, for 
example, Finsider, the state 
steelmaker which was Ova's 
predecessor, produced a job 
reduction plan which would 
cut the workforce from 79,000 
to about 55,000 in three years. 
Subsequently, some jobs have 
been transferred to the private 
sector, but Mr Nakamura 
believes that ILP will have to 
cut its workforce by a further 

10.000 or more to 18,000 before 
1996 

There is perhaps even 
greater concern in Italy’s mi- 
vale steel industry, which is 
also the subject of EU plans for 
capacity reduction. 

In June, the Commission 
agreed to allow capacity cuts 
of fen and 6m tonnes in the 
so-called “Bresciani" mills in 
northern Italy, backed by state 
aid. even though some of the 
cuts will be achieved through 
partial closure of plants rather 
than a complete shutdown as 
required under a strict inter- 
pretation of EU rules. The cuts 
are considered vital to the suc- 
cess of the ETTs plan for over- 
all capacity reductions in the 
European industry. 

The Industry federation. Fed: 
eraedai, has estimated that 
more than a quarter of the 

25.000 jobs in the private sector 
would be lost as a result of the 
capacity cuts. More than 80 
separate plans for closure have 
been submitted, and a formal 
decree has been passed by the 
Italian government, but the 
process of capacity reduction 
has not yet got under way. Mr 
Gnutti, himself a native of 
Brescia, is likely to discuss the 
detail of the plan with fellow 
EU industry ministers in Brus- 
sels next month. 

Unfortunately for these frag- 
mented Italian companies, 
there is no sign of the improve* 
ment in demand which has 
made forger competitors - lor 
example, hi Germany - wander 
aloud whether there is any lon- 
ger a need for an EU-wide steel 
industry rescue plan. Mr 
Enrico Badiall. director of Fed- 
eraedai, says demand, particu- 
larly among clients in the Ital- 
ian h nflriing sector, has yet to 
pick up. “There are still prob- 
lems for those private compa- 
nies which are committed to 
closure,” he says. 


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ITALIAN INDUSTRY AND TECHNOLOGY IV 


P rivatisation will contrib- 
ute to creating an eco- 
nomic democracy that is 
more solid and, above all, free 
from political abuse,” Mr Carlo 
Azegto Ciampi wrote at the end 
of last year in a pamphlet 
explaining tbe benefits of sell- 
ing state assets. 

Mr Ciampi, who headed the 
government between April 1993 
and May this year, had been a 
firm privatisation supporter 
when governor of the Bank of 
Italy. “Tbe nature and size of 
the public sector’s presence in 
the economy need to be 
changed drastically,” he told 
the central bank's annual 
meeting in May 1991. 

Mr Ciampi noted that the 
sale of public assets is not sim- 
ply a means of resolving the 
problem of debt and debt servi- 
cing. He said: “Disposals must 
relieve the state of the burden 
of activities that are not its 
proper concern." 

When Mr Ciampi became 
prime minister, the process of 
shedding this burden had 
already been started by Mr 
Giuliano Amato, his predeces- 
sor. A decree issued by Mr 
Amato's government in July 
1992 was tbe first serious step 
in rolling back the boundaries 
of the state, which in Italy bad 
encroached deeply into many 
areas of the economy. 

The highly diversified busi- 
ness empire that Mr Amato's 
government Inherited included 
ice cream and confectionery 
making , hotels, bars and super- 
markets, as well as machinery 
manufacture, chemicals, steel- 
making, banking and insur- 

Transformation brought 
the state corporations 
into line with the form of 
private sector companies 

ance. 

The decree transformed the 
large bolding corporations, IRI 
and ENI, the electricity corpo- 
ration Enel, and the state 
insurer INA into joint stock 
corporations, with share capi- 
tal owned by the Treasury. 
Transformation brought the 
state corporations into line 
with the form of private sector 
companies. 

Under pressure to demon- 
strate privatising credentials, 
from financial markets that 
had watched tbe lira's enforced 
exit from the European 
exchange rate mechanism, Mr 
Amato did not wait long. Two 
months after the decree, in 
mid-September 1992, he 
announced that tbe controlling 
interests oflRI in Credito Itali- 
ano and ENI in turbine and 
pump maker Nuovo Pignone 
would be sold. Italian privati- 
sation was under way. 

Since then there have been 


David Lane reports on privatisations 


Rolling back the boundaries of the state 


Carlo Axeglo Ciampi: firm 
supporter ol p ri v a ti sa tion 

numerous plans, programmes, 
administrative and legislative 
steps, formal opinions and 
directives dealing with privati- 
sation. Conference organisers 
have been kept busy. Volumes 
have been written and spoken. 

What results have been 
achieved since September 1992? 
On the financial side, the fig- 
ures show that IRI has 
received a little over L6.000bn 
from disposals of sharehold- 
ings and ENI about IA2Q0bn. 
In addition, the Treasury has 
received about L7,000bn from 
sales of shareholdings owned 
directly. 

Although he got privatisa- 
tion underway, Mr Amato was 
no longer prime minister when 
the first important operation 
was completed. Mr Ciampi's 
government oversaw the trans- 
fer of Credito Italiano from IRI 
to wider ownership last Decem- 
ber. Investor enthusiasm was 
such that the operation, in 
which IRI sold its 64 per cent 
stake of ordinary stock, was 
more than eight times over- 
subscribed. 

The public offering in Cre- 
dito Italiano, a bank already 
enjoying stock market quota- 
tion, was quickly followed by 
the initial public offer of 
shares in 1MI, the Rome bank- 
ing and financial services 
group. In this operation, also 
heavily over-subscribed, tbe 
Treasury halved its direct and 
indirect stake of 59 per cent. 
IRTs Banca Commerdale Ital* 
Lana completed last winter's 
trio of banking privatisations 
when the state holding corpo- 
ration sold its 54 per cent inter- 
est at the end of February. 

This spring brought a pause 
in privatisation operations of 


interest to the general public. 
It was broken by the first pri- 
vatisation under Silvio Berlus- 
coni’s right-wing government, 
which also made Its mark as 
Italy’s biggest privatisation so 
Ear. At the end of June, the 
Treasury sold 53 per cent of 
wholly-owned INA, thereby 
raising I/UJOObn. 

Italian privatisations that 
have created, or broadened, 
wide share ownership amount 
to just four. All are financial 
institutions and the shares oE 
two were already well-known 
and traded on the stock market 
before the share offerings were 
made. Progress might be 
described as modest 
Mr Pietro Ciucci. nil's 
finance manager, says, how- 
ever. that the achievement of 
disposing of large sharehold- 
ings in two leading banks in a 
period of only three months 
should not be underestimated. 
“The timetable was tight. 
There was a lot of scepticism. 
Only with the benefit of hind- 
sight can we say it was easy,” 
commented Mr Ciucd. 

He rejects suggestions that 
IRI has been slow in privatis- 
ing its industrial activities. 
Three trade sale operations 
have been completed over tbe 
past two years. Break-up of the 
SME food and retailing group 

Trade sales have 
predominated so far in 
privatisations at the ENI 
hydrocarbons holding 

has allowed fill to dispose of 
two divisions. The Italgel Ice 
cream, frozen food and confec- 
tionery business was bought 
by Nestld in August 1993 for 
U37tm and the Cirio BertoIIi 
De Rica canned vegetables and 
olive oil business was sold two 
months later for L3llbn. 

Mr Ciucci is pleased- at the 
out-turn of SMB's break-up. He 
expects that revenues from the 
sale of the final division, GS- 
Autogrili food retailing and 
motorway catering, will be 
banked by the end of the year. 
“The break-up will have 
allowed IRI to obtain a higher 
price per share than SME’a 
shares ever reached.” 

IRI's finance manager also 
hopes that the sale of the Uva 
Lamina ti Piani steel company 
will be completed before year- 
end, thereby registering a sec- 
ond successful withdrawal 
from steel in six months. The 
corporation's third industrial 


trade sale in the past two years 
was the disposal of Acctai Spe- 
ciali Tend special steels for 
L600bn in July. 

Trade sales have predomi- 
nated so far in privatisations at 
the ENI hydrocarbons holding. 
The principal operation was 
the disposal of Nuovo Pignone 
to the US General Electric for 
LlAOObn, finalised last Decem- 
ber. 

ENI has completed about 60 
sales In the past two years. Its 
Eniiisorse sub-holding has 
shed coal activities in the US 
and South Africa, as well as 
copper alloy tubes and second- 
ary aluminium businesses in 
Italy. The Agip oil subsidiary 
has sold minority stakes in 
fields in the US and rights in 
the North Sea, while the down- 
stream Agip Petrol! subsidiary 
has sold liquefied gas distribu- 
tion activities in Italy and its 
Argentinian operations. 

The Agip hotel-motel chain 
was an early operation in a 
deal with the UK's Forte 
group, In concentrating on its 
core businesses, ENI has also 
sold textile machinery makers 
Matec and Cognetex and a 
manufacturer of domestic gas 
heating systems, Caldale Mur- 
all a Gas. 

Many of Enichem’s chemi- 
cals activities have been identi- 
fied as oomcore and sold or put 
up for sale as a result of corpo- 
rate restructuring. Businesses 
malting rubber and latex syn- 
thetics, additives for plastics 
and auxiliaries for rubber have 
been sold. So also has the Isa- 
gro agricultural pharmaceuti- 
cals and seeds subsidiary, in a 
management buy-out 

Trade sales do not contribute 
to stimulating the stock mar- 
ket or broadening the share- 
holder base, however. Some 2*4 
years ago Mr Ciampi said: “Pri- 
vatisation of public sector com- 
panies will strengthen the mar- 
ket and spread share 
ownership among savers and 
Institutional investors.” So far, 
ENTs privatisation operations 
have done nothing to encour- 
age wider shareholdings. 

ENI does, however, control a 
group of companies that are 
among Italy's most attractive 
privatisation candidates: Agip 
(upstream oil and gas), Agip 
Petroli refining and distribu- 
tion, and Snam gas trading, 
transport and distribution. 
While it is planned that these 
will be offered to the public, 
there is disagreement over how 
they should be offered. 

Should they be presented as 


ACtato, ttte quoted state abfine in which IRI has a 90 per cent stake, to struggling 


an energy conglomerate, the 
Super Agip solution, in a pack- 
age that would also include the 
Saipem drilling and pipeline 
laying business and the Snam- 
progetti engineering company? 
Or should they be quoted and 
sold separately? 

A plan prepared two years 
ago proposed that ENI itself 
should be quoted -and sold, 
after disposal of nortcore activ- 
ities such as Nuovo Pignone. 
coal, media interests and 
chemicals. Subsequently the 


ou there Italians were 
reminded of their depen- 
dence on electricity one 
morning at the end of August 
The grid in central Italy had 
tripped, blacking out the south 
for several hours. Trains were 
stuck between stations, passen- 
gers trapped in lifts and. in the 
middle of a heat wave, refriger- 
ators ceased functioning. It is 
easy to understand why angry 
users demanded that privatisa- 
tion of the state electricity cor- 
poration, Enel, should be 
speeded up. 

At the same time, however, 
opponents of privatisation 
were quick to use the black-out 
for justifying their position. 
They claimed that the absence 
of state control over the elec- 
tricity industry would lead to 
poorer service, with higher 
risk of more and longer power 
cuts. While the black-out seri- 
ously inconvenienced about 
18m users, it did provide 
ammunition in the privatisa- 
tion debate. 

Enel’s reaction to the black- 
out and the relatively prompt 
return of the grid has also been 
exploited by those prepared to 
accept privatisation provided 
Enel is retained as a unified, 
vertically integrated electricity 
corporation. They My that 
restoring supplies in southern 
Italy would have been much 
harder with a fragmented 
industry. 

Whether Enel should be split 
Into separate production, 
transmission and distribution 
companies, or left alone, has 
been an issue dividing privatis- 
ere and partners of the govern- 
ing coalition. AUeanza Nazion- 
ale (AN) is firmly against 
break-up, partly because of its 
centralist and corporatist fas- 
cist roots and partly because 
its electoral base is concen- 
trated in the south. If Enel 
were spilt, southern users 
might suffer in terms of poorer 
service and higher tariffs. 

Lega Nord has different 
ideas to its AN coalition part- 
ner. Favouring a federal politi- 
cal structure, it is not surpris- 
ing that it leads calls for 
splitting Enel. Mr Vito Gnuttz, 
Lega Nord industry minister, 
says that selling Enel as a uni- 
fied. vertically integrated util- 
ity would only create a private 
sector monopoly. 

Support for splitting Enel 
came in a document from the 
anti-trust authority at the end 
of June. The authority consid- 
ers that promotion of competi- 
tion in the electricity sector 
requires that Enel's privatisa- 
tion should be directed 
towards market liberalisation. 

British experience should 
provide the guide, suggests the 
anti-trust authority. It pro- 
poses: • separating ownership 
and management of the pro- 
duction , transmission and dis- 
tribution phases: • selling off 
production plant; • maintain- 
ing the single and centralised 
management of the transmis- 
sion system; and • reorganis- 
ing distribution on a regional 
basis with the creation of sepa- 
rate companies. 

Such proposals have met vig- 
orous opposition from Enel’s 
senior management. They 
argue that a unified and verti- 
cally integrated structure 
offers advantages of better 
plant coordination and secu- 
rity and service guarantees, 
economies of scale in produc- 
tion, distribution economies, 
negotiating muscle with inter- 
national fuel suppliers and 
homogeneous tariff structures. 

End says that there is also 
financial advantage in privatis- 
ing the corporation as it 
stands. In a brief prepared for 
a hearing by a Senate commis- 
sion in September, the corpora- 
tion’s board noted that split- 
ting Enel would damage the 
image and credit rating that it 


Amato government instructed 
ENI to present plans for the 
stock market quotation of 
Snam, Agip and other candi- 
dates for listing, with March 31 
1993 as the deadline for com- 
pleting the task. 

With the foil of the Amato 
government, the problem was 
faced by Mr Ciampi's adminis- 
tration. A directive issued at 
the beginning of July 1993 
required that procedures for 
selling Agip should be got 
underway within 30 days. 


Mr Franco Bernabe', manag- 
ing director, says that the cor- 
poration awaits instructions 
from the government. Stock- 
brokers and merchant bankers 
are not unanimous about how 
to maximise revenues. Politi- 
cians are divided. But what- 
ever the decision, the initial 
public offering of. shares in 
ENTs energy companies will be 
an important event for inves- 
tors, in Italy and outside. 

So also will be IRTs offering 
of shares in its quoted telecom- 


End became a jokit stock corporation in July 1992 


Case study: Enel 

Black-out fuels 
the debate 

BIEL KEY FIGURES (In billlona of ling 



1991 

1692 

1993 

Safes revenues 

25.903 

28,536 

30,104 

Added value 

17,422 

19,114 

19,304 

Grass operating margin 

9.052 

1QJ241 

10618 

Depreciation 

4,310 

4,103 

4£9S 

Profit before tax" 

1,300 

2,110 

1,089 

Accelerated depredation 

1 ,209 

2JJ26 

1,853 

Not post-tax profit 

229 

234 

344 

Net finsnctaJ Indebtedness 

32.170 

34.291 

38,507 

Payroll (OOOs) 

109-7 

107.4 

105.8 

Nat production (TWh) 

1600 

168.8 

163.7 

Sales (TWh) 

194.1 

197.5 

1902 

Note: -snrf axBaortinaiy bms 



5oroac End 


) 

presently enjoys in interna- 
tional financial markets. 

The sale of shares in a large 
corporation like Enel, that is 
well known and has good 
standing in national and inter- 
national markets, would cer- 
tainly be more successful than 
stock market quotation of sev- 
eral smaller, and unknown, 
companies derived from 
break-up.” 




reak-up would need 
time, and would proba- 
bly necessitate the 
appointment of new manage- 
ment given the opposition 
expressed by Mr Franco Vlez- 
zoli, chairman, and Mr Alfonso 
Limbruno, managing director. 
So if the government’s sched- 
ule for privatisation in the first 
half of next year is to be met 
Enel will have to be sold as It 
stands. 

Enel became a joint stock 
corporation in July 1992 and 
Loudon merchant bank Mein- 
wort Benson was appointed the 
Treasury’s advisers on privati- 
sation in August last year. 
There has since been continu- 
ous cooperation aimed at pre- 
paring Enel for stock market 
quotation, the corporation's 
officers told the Senate com- 
mission. Indeed, Enel is ready 
for the market. 

“Preparatory measures for 
share quotation that are Enel’s 
responsibility have been com- 
pleted. Kleinwort Benson's 
work is finished. Other mea- 
sures that need to be taken are 
those connected with the quo- 
tation which can only be com- 
menced when the quotation 
itself is decided," the commis- 


sion was informed. 

Two crucial political deci- 
sions have been under discus- 
sion for some time. These are 
the stipulation or an operating 
concession and the establish- 
ment of a regulatory authority 
for the electricity industry. 

The operating concession 
has been a controversial issue 
since reports that it would give 
Enel a 99-year deal. Free 
marketeers, municipal utilities 
and vehicle producers reacted 
Immediately. So did the anti- 
trust authority, which 
suggested that the concession’s 


munications sub-holding. Stct. 
As with ENTs energy business, 
the St et offering is contentious, 
with politicians, bankers and 
industrialists elbowing for 
advantage. There is more than 
IRI's L12.000bn interest at 
st&k£- 

Although there are further 
INA and IMI tranches to come, 
and Mr Mario SarcincUi. the 
new chairman of Treasury-con- 
trolled Banca Naslonal* del 
Lavoro, hopes for privatisation 
within two years, attention is 
now focused on Italy's infra- 
structure and industrial priva- 
tisations. • 

HU expects to make an otter- 
ing of shares in quoted Autos- 
trade, the motorway operator, 
next year, as well as an initial 
public offering of shares in 
Aeroporti di Roma, the Rome 
airport company. Much more 
time will be needed to sort out 
struggling Alitalia, the quoted 
state airline in which IRI has a 
SO per cent stake. “On Alitalia 
we will need a convincing 
story for the market." 
remarked Mr Ciucci. 

Privatisation has been slow. 
Restrictive conditions on sales, 
aimed at job preservation, and 
a deeply ingrained anti-market 
mentality among many staff 
whose companies are threat- 
ened by privatisation have not 
helped. 

On a political level, continu- 
ity and unity of purpose have 
been lacking. Disagreements in 
the Berlusconi government do 
little to encourage expectations 
that a coherent, determined 
and all-embracing programme 
will be Implemented rapidly. 


duration should be 20 years. 
The anti-trust authority recom- 
mended: “The concession 
should indicate clearly and 
unequivocally that there 
should be no guarantee of eco- 
nomic indemnification in the 
event that exclusive rights 
should be removed as a result 
of changes in national or Com- 
munity law.” 

The concession is a critical 
piece in the privatisation puz- 
zle, shaping the structure of 
[taly’s electricity industry 
through the conditions it estab- 
lishes and the roles that it 
defines for a privatised Enel 
and other operators. 

With enactment of legisla- 
tion at the end of July, estab- 
lishment of the regulatory 
authority became critical. The 
law requires that sale of state 
shareholdings in energy com- 
panies must be subordinate to 
the creation of an independent 
body for regulating tariffs and 
overseeing service quality. 
Enel cannot be privatised until 
there is a regulatory authority. 

With the coalition parties 
haggling over the number of 
ite members, and with uncer- 
tainty about its role and that of 
the industry ministry in tariff 
setting, establishing the regu- 
latory authority has not been 
straightforward. 

At least Enel's financial 
Indebtedness, often described 
as needing attention before pri- 
vatisation, is no longer consid- 
ered an obstacle. Medium and 
long-term debt was L34,504bn 
at the end of last year and tbe 
net short-term bank position 
showed borrowings of L2,009bn 
on net equity of L20,000bn. 
However, net indebtedness fell 
by Ll,448bn in the first half 
this year, with internally gen- 
erated finance increasing to 
L5,235bn from L4,005bn in first- 
half im 

Profits have also improved. 
The post-tax result was L344bn 
last year, 47 per cent up on 
1992. Enel's board considers 
that tbe operating margin in 
tbe first half, 29 per cent 
h i gh e r than last year, and con- 
tinuing rationalisation allow 
expectations of a full-year out- 
turn better than 1993. 

Potential investors will be 
looking closely at profits and 
will want to see further sub- 
stantial increases. Despite the 
improvement, last year's result 
would have been insufficient 
for satisfactory shareholder 
remuneration. 

Says Mr Paolo Azzoni of 
Milan securities house Gamba 
& Azzoni, the Paribas Capital 
Markets subsidiary: “As an 
electricity utility, investors 
will be looking for dividends 
from Enel Profit is crucial " 


David Lane 


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FINANCIAL TIMES 


TUESDAY OCTOBER 25 1994 



ADVERTISEMENT 


ITALIAN PACKAGING MACHINERY INDUSTRY 

The Italian packaging machinery industry: a world leader with growing shares in the 
market, thanks to its traditional success in satisfying market demands, while 
— — — providing personalised solutions 


THE REASONS OF A LEADERSHIP 


I tal i a n packaging marhinoc 
are in use in over ISO coun- 
tries, mostly in European 
markets, the U.S. and Japan, 
as well as in the newly indus- 
trialised countries of Asia. 
Also of special importance is 
the use of Italian machines in 
countries striving to improve 
their living standards, from 
the CIS to the other nations of 
East and Central Europe, as 
well as China, Latin America 
and the more developed in- 
dustrial regions of Africa. 
Today one out of four packag- 
ing machines on the interna- 
tional market is made in Italy. 


A successful tradition. 
The reasons for this success 
can be traced whhin its histor- 
ical and geographical roots. 
The first businesses were 
formed in Bologna at the be- 
ginning of the 19th century. 
As true pioneers, the first in- 
dustries were well ahead of 
their time in identifying two 
fundamental demands of the 
market" the strategic import- 
ance of packaging in the mar- 
ket of products of large con- 
sumption; and the need to 
adapt packaging machines to 
& the particular requirements 
of each customer. 


Customisation. On the 
basis of this tradition, the Ita- 
lian-packaging machinery 
firms offer a complete range 
of products on the world mar- 
ket. The systems and the 
machines they plan are tailor- 
made to fit specific customer 
needs, using innovative tech- 
nology and new materials at 
every level of the production 
process. Furthermore, the 
highest levels of service are 
guaranteed by a continuous 
and stable contact between 
producers and customers. 


Non-stop research. The 
major part of the people 
working in the Italian pack- 
aging machinery sector is em- 
ployed in research, develop- 
ment and maintenance. 


They work on two fronts. On 
one side they develop an in- 
creasing number of complete 
and automatised fines. On the 
other side they create user- 
friendly machinery which re- 
quires less maintenance and 
can be integrated into the us- 
ers already-existing produc- 
tion and inspection systems. 
According to a survey carried 
out by the Harvard Busi ness 
School, Italian packaging 
machinery is an "happy com- 
bination of artistry and tech- 
nology”. 


Competition and com- 
petitiveness. The Italian 

packaging m»rhfn Ary ov-tnr 

mainly composed of small 
and medium sized com- 
panies. So competition is very 


strong and represents a con- 
tinuous stimulation for the 
improvement and innovation 
in products and services, cus- 
tomer orientation, flexibility 
and good quality-price ratio. 
This is the bads for the com- 
petitiveness of the sector on 
the worldwide market 
Such a simple and, at the 
same time, sophisticated 
structure quickly became a 
strong success factor when Ita- 
lian entrepreneurs begun to 
cross over the frontiers. 
Export has become so impor- 
tant that Italian packaging 
machinery industry is going to 
achieve a position of leader- 
ship on worldwide market 


The trend of the Italian industry of packaging machinery (value in 
million U.S. dollars) 



1992 

1993 

A % 93/92 

Turnover 

1.621 

1.824 

+ 12.5 

Export 

1,123 

1.494 

+ 33.0 

Deliveries on the 
Internal market 

498 

330 

-33.6 

Import 

178 

203 

+ 14.3 

Domestic 

consumption 

676 

534 

-21.0 

Trade balance 

945 

1,290 

+ 36.5 

Import / Domestic 
consumption 

26.3 

38.1 


Export / Turnover 

69.3 

61.9 


Source: UCIMA-The Italian Packaging Machinery Manufacturer^ Association - 
Economic Studies Bureau 


ITALIAN PACKAGING MACHINERY: 
NON STOP GROWTH. 


“We can look at the future 
very optimistically", said Mr. 
Giancarlo De Martis, presi- 
dent of UCIMA (the associa- 
tion representing Italian pac- 
kaging machinery manufac- 
turers). 

In 1993 over 300 companies 

producing packaging marhin- 
ery in Italy registered a 
growth in export of 33% com- 
pared to the previous year, 
and the impact of sales on 
turnover increased from 
69.3% to 81%. 

“While other countries such as 
Germany, France and Swit- 
zerland reported a decrease in 
terms of turnover - said Mr. 
De Martis - the Italian pack- 
aging machinery industry 
seems to be launched towards 
a continuous growth. With no 
doubt the readjustment of 
Lira has been helpful, but the 
most important role in such a 
success has certainly been 
played by the pursuit of a poli- 
cy of high technology andcus- 
tomer satisfaction". 


An in-deptfa look. Export 
in 1993 represented 81.9% of 
the total production of Italian 
packaging machinery and in 
the same year balance of trade 
registered over 1.3 billion dol- 
lars (about 70.7% of the total 
turnover). 

Obviously the EC is the prim- 
ary market for Italian packag- 
ing machinery export with a 
share of 39.2% and with a 
growth rate in 1993 of 20.4% 
compared to 1992. 

The German market remains 
the most important 
(+13.1%), followed by the 
U.S., France, UK, and 
Spain. 

Export also increased in the 
Eastern European- market 
(particularly in Poland and 
CIS) in Latin America (par- 
ticularly Mexico, Argentina, 
Chile and Brazil), China and 
South East Asia. 


A “memorable overtaking” of 
the competitors was then 
achieved in Japan where Ita- 
lian machineries represent 
35% of the total of foreign 
machineries sold there. 


A strategic develop- 
ment. The strong position of 

fhp Italian p arkagmg Tnarhiri - 
eiy industry is now going to be 
consolidated with an outreach 
visibility plan that UCIMA 
(the association- representing 
Italian packaging m a chin ery 
manufacturers) is imple- 
menting. 

The core of this plan is. the 
creation of the Italian Packag- 
ing Points in Hong Kong and 
Mexico City (and so, at the ' 
gateways to the most strategic 
markets: the Far East and La- 
tin America). 

These “IPPs” wiD support aD 
the initiatives of Italian pack- 
aging industry (Le. the "Ita- 
lian Packaging and Process 
Machinery Exhibition” that 
will be held in Beijing in 
March 1995), and, most of all, 
will manage all the communi- 
cation to the Far East and 
Central-Southern America. 
“The Far East and Latin 
America, - declared Mr. De 
Martis - thanks to the de- 
velopment they achieved in 
the last years will be the big 
“chances” for Italian packag- 
ing machinery industry". 

The Italian manufacturers of 
packaging machinery have al- 
ready achieved good results, 
much more valuable consid- 
ering the fact that, in many 
cases, there was no advantage 
coming from the devaluation 
of the Lira. 

“So, - declared Mr. De Mar- 
tis, the consolidation of the 
Italian packaging ma chin e r y 
industry in these “relatively” 
emerging markets, represents 
the last frontier to worldwide 
leadership”. 


Trade balance with major partners 
(value in million U.S. dollars) 


Italian Export 

to: % Balance *93 

Germany 

172 

10.30% 

97 

U.SA 

160 

9.59% 

139 

France 

153 

9.17% 

136 

United Kingdom 

127 

7.61% 

116 

Spain 

72 

4.31% 

67 

Japan 

65 

3.89% 

59 

Switzerland 

50 

3.00% 

20 

Nethertand 

23 

1.38% 

10 

Austria 

18 

1.08% 

10 

Sweden 

14 

0.84% 

2 

Other countries 

815 

48.83% 

797 

Total 

1669 

100.00% 

1449 


Source: UcimaThe Italian Packaging 

Machinery Manufacturers* Association 

- Economic Studiee Bureau 




PACKAGING J PROBLEMS 



CALL ITALY FIRST 

Whenever packaging becomes a problem, calling Italian industries 
and experts becomes a must! Italian manufacturers are indeed at the 
top in terms of technology, quality, efficiency and ability to offer a 
personalized solution. One fourth of packaging machinery in the world 
is Italian made because its industry stands out internationally for its 
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Faxf+39/2} 3450647 


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COMMODITIES AND AGRICULTURE 


Landowners urge environmental farm policy 


By Alison Maitland 

Price support to European 
farmers is bound to fall further 
but it must be replaced by 
environmental and social fund- 
ing if rural areas are to survive 
and prosper, according to a 
report by one of Britain's lead- 
ing farm organise tions- 

The Country Landowners 
Association, with 50,000 mem- 
bers from small farmers to 
large estate owners, calls for 
the Common Agricultural Pol- 
icy to be transformed into a 
European Rural Policy. 

The CLA proposals, which 
will be discussed by its council 
next week, will fuel the debate 
on the need for further CAP 
reform in the light of the Gatt 


meat to encompass the farm- 
intensive countries of eastern 
Europe. 

Its contribution draws simi- 
lar conclusions to a study by a 
group of independent agricul- 
tural experts for the European 
Commission last month, which 
recommended scrapping pro- 
duction quotas and payments 
to arable fanners for set-aside. 

But Mr George Dunn, CLA 
economist, said the organisa- 
tion did not agree with that 
report’s conclusion that mem- 
ber states, not the EU, should 
be responsible for future sup- 
port for rural areas. 

“We don't believe our Trea- 
sury would wear any such pol- 
icy if they were allowed discre- 
tion over whether to 
implement it." be said. 


The CLA report says agricul- 
ture remains significant to title 
economy aori of 

rural areas and vital to envi- 
ronmental conservation, even 
if its contribution to GDP in 
some member states is falling. 

“The context of any future 
CAP debate must therefore be 
the countryside as a whole." 

Public pressure is mounting 
for cuts in support to agricul- 
ture, “the last core industry to 
receive such a large amount of 
state support". Continued sup- 
port fa increasingly being justi- 
fied by - but confused with - 
other objectives such as the 
environment, which are tar- 
geted indirectly through agri- 
cultural payments. 

Yet current levels of funding 
for agri-environment pro- 


grammes “represent a missed 
opportunity.” hi the UK, spend- 
ing on these fa only about l per 
cent of total farm support 

The CLA calls for support 
payments to be based on the 
size of a farm, decoupling them 
from production. It says the 
existing system of production 
controls reduces farmers' flexi- 
bility to respond to changing 
circumstances, holds back new 
entrants and protects ineffi- 
cient producers. It cites a 
recent study of the EU cereals 
sector by two commission offi- 
cials showing that the CAP has 
lost Ecu£2bn (£L73bn) a year 
by keeping inefficient farmers 
in production. 

Hectarage payments should 
be reduced gradually, it 
argues, in step with the growth 


in voluntary countryside man- 
agement schemes and in non- 
government sources of income. 

Further funding for fo res t r y 
and non-food crops and for 
start-up for small businesses 
would be needed to help diver- 
sify the rural economy. 
Regional social aid would also 
have to be maintained in areas 

where an exodus from the land 
would create social and mvi- 
11 m mental problems. 

The CLA acknowledges the 
difficulty of selling such a pol- 
icy shift. 

“But it fa dear that the EU fa 
set on a coarse of reducing 
support prices. The debate has 
moved from If” there fa to be 
a move to market prices to 
“how” this will be achieved,” it 
says. 


agreement and Eu enlarge- 

A season of mists and mellow fruitfulness 


Autumn conditions across Europe have been ideal for ploughing and planting 


W hat a difference a 
month makes' Four 
weeks ago the plant- 
ing of autumn wheat and bar- 
ley on our Norfolk farm had 
only just begun. Activity was 
somewhat feverish because we 
had no way of knowing when 
wet weather would force us off 
the land. Delays would be 
costly and erode prospects for 
useful yields next harvest 
During the previous three 
weeks there had been close to 
eight inches of rain. The land 
was saturated and the season 
had all the makings of another 
1993, when autumn sowings 
were not completed until near 
Chris tmas in almost impossible 
conditions. 

But it did not rain. Fine 
weather continued day after 
day. Those foggy mornings 
that disrupted road travel were 
just what farmers needed and 
very soon we settled into a reg- 
ular routine of ploughing and 
planting every day into soil 
that had dried to an ideal mois- 
ture content for making good 
seed beds. Even very heavy 
clay land pulled down into a 
tilth better than it had for 
years. 

Wild mushrooms could be 
cut by the capful from the 


FARMER'S VIEWPOINT 





By David Richardson 


farms’ horse meadows - a sure 
sign of a benign autumn. 
Green shoots sprang from the 
brown earth as the newly 
planted seeds germinated and 
emerged. The leaves on the 
trees and in the hedgerows 
turned variously to yellow and 
gold, brown and red: a profu- 
sion of pastel shades to delight 
the eye of even the most unap- 
preciative countryman. 

By the time the clocks 
changed the planting on most 
of the winter cereals scheduled 
for this autumn had been com- 
pleted. Only a few Gelds 
remain to be done, mainly 
after growing crops of sugar 
beet and potatoes have been 
lifted and cleared - work 
which has also progressed well 


in the fine weather. 

It has not been an entirely 
trouble-free season, of course. 
In fa rming that is not expec- 
ted. 

Emergence of some cereal 
crops has been slower than 
usual, probably because of the 
long absence of rain. Slug dam- 
age has been severe enough in 
some areas to cause a few 
fields, or parts of fields, to be 
replanted. There have been 
several reports of sightings of 
cereal aphids on newly-planted 
crops, vectors of a debilitating 
disease called barley yellow 
dwarf virus, which may cause 
loss of yield and quality next 
harvest In some areas in the 
south-east of England that did 
not get the September storms 
farmers were last week com- 
plaining their land was so hard 
and dry that they were having 
to delay the completion of their 
plantings. The weekend rain 
will have pleased them greatly. 
Indeed it pleased me too; for it 
will ensure the germination of 
seeds in the fields we planted 
last week. 

So, in dramatic contrast to 
last year at this time, a feel- 
good factor is abroad in the 
British countryside. It is being 
enhanced by the memory of a 


harvest that was better than 
expected in many parts of the 
UK; and it is bring reinforced 
by prices for grain that are sev- 
eral pounds a tonne higher 
than most fanners budgeted. 

Moreover a substantial por- 
tion of the grain harvested fust 
a few weeks ago has already 
been sold - although not nec- 
essarily moved from farms. 
Mach is the subject of forward 
contracts for movement some 
time during the winter or 
spring at locked-in prices that 
also reflect the cost of storage. 

Furthermore, the most for- 
ward-looking farmers are now 
considering the possibility of 
locking in some sales during 
autumn and winter of 1995-9$ 
for the crops they have just 
planted. Forward prices, which 
are currently riding on the 
back of the brisk current 
demand, are significantly 
above anticipated nominal sup- 
port levels for that time. 

Given the ideal soil condi- 
tions into which most of this 
year’s autumn cereals have 
been planted - which, inciden- 
tally, have been repeated 
across northern Europe - same 
farmers and traders are begin- 
ning to think yields and the 
area sown in the EU may both 


rise p ud that fins combination 

will lead to a fall in values. 
Added to that fa speculation 
that, because of the present 
shortening in supplies, the 
European Commission may cut 
Set-Aside for harvest 1995 by 2 
to 3 per cent - again increas- 
ing potential production. It is 
probable, therefore, that a 
small proportion, at least, of 
the 1935 harvest has already 
been sold at fixed prices. 

It would be misleadiTig if I 
did not mention the fact that 
the prosperity and good times I 
have described as affecting ara- 
ble farmers is far from univer- 
sal The growers of apples and 
some vegetables and the pro- 
ducers of pigs, in particular, 
are experiencing severe and in 
some cases possibly terminal 
problems. Returns in those sec- 
tors are well below costs and 
none of them benefit from area 
payments and the like from 
Brussels. Indeed it may be sal- 
utary that the produce of such 
holdings receives little or no 
aid from Brussels. Further, it 
is intended that market forces 
shall rule for all commodities 
in due connsa 

Arable fanners Should, per- 
haps, enjoy their unexpected 
good fortune while they may. 


Aluminium price rise too fast 
for comfort, say analysts 


By Kenneth Gooding, 

Stirring Correspondent 

Sharply rising aluminium 
prices are putting intense pres- 
sure on companies to re-start 
production capacity that was 
shut, down following the inter- 
national trade agreement 
reached In February, analysts 


Some trade delegates at their 
next meeting to monitor the 
trade deal - in November - 
will be arguing that capacity 
should be re-started, suggests 
Mr Ted Arnold, analyst at the 
Merrill Lynch financial ser- 
vices group. He adds, however, 
“this does not mean that the 
[arrangement] is about to col- 
lapse. But it does suggest to us 
that it fa starting to crumble 
well before its end-1995 dead- 
line". 

Mr Tony Bird, of the 
Anthony Bird Associates con- 
sultancy organisation, also 
warns: “If [aluminium] prices 


continue to rise inexorably in 
the short term the [trade agree- 
ment] would collapse quickly 
and chaotically; there would be 
no easing at all of the flow of 
Russian metal [to the west]; 
consumers would be deterred 
from using aluminium; London 
Mgtni Exchange stocks would 
begin to rise again. Put 
another way, the higher prices 
go, the harder they will fall". 

Both analysts suggest that 
aluminium companies are 
unhappy about the recent 
surge, which has taken prices 
to levels they did not expect 
rrntn the mid dle or end of 1395. 
Mr Arnold says, in Merrill’s 
latest monthly metals report: 
“Although most consumers, 
merchants and dealers are that 
we speak to are looking for 
$L8Q0 a tonne in early 1995, 
some producers will tell you, 
strictly off the record, that 
they don’t want to see prices 
go that High The higher prices 
go above the $1,800 a tonne 


level, the more uncompetitive 
the aluminium can becomes 
against plastic in the US and 

steel in Europe”. . 

to his latest “Aluminium 
Analysis" publication, Mr Bird 
suggests that aluminium com- 
paries "are not showing any 
great confidence in current 
price levels". Prices will have 
to fall, he adds. In the 1984-87 
met als boom aluminium prices 
rose too quickly in the early 
days and then fell by 30 per 
cent over three years, he 
points out. 

"The correction this tune is 
most likely to take the form of 
a decline to about 67 cents a 
pound (51,477 a tonne) by the 
fourth quarter of 1995, followed 
by a steadier and more sustain- 
able price rally in 1996 and 
1997." Mr Bird suggests that 
the “cost justified" price today 
is 64 to 66 cents a pound (51,410 
to $1,455), rising to 74 cents 
($1,631) in today’s money in the 
medium term. 


Cereals deficit ‘could be 
700m tonnes in 2025’ 


By ADson Maitland 

The world could be 700m 
tonnes short of its annual 
cereal requirement by the year 
2025, according to a report pub- 
lished today. 

Demand for cereals in devel- 
oping countries is expected to 
double to 3m tonnes by that 
year, with another 403m tonnes 
required for the “hidden" poor 
who are priced out of the mar- 
ket, says Prof Gordon Conway, 
an agricultural ecologist and 
vice-chancellor of Britain's 
Sussex University. 

But growth in cereal yields 
in some regions is slowing and 
total production In developing 
countries could reach only 
1.7bn tonnes, he says in a 
paper to be discussed in Wash- 
ington this week by the Con- 
sultative Group on Interna- 
tional Agricultural Research. 

“The shortfall could be even 
greats' if the agricultural envi- 
ronment further deteriorates" 


he says. About 17 per cent of 
the vegetated area is degraded, 
forests are being lost at an 
annual rate of about 16m hect- 
ares and the global fisheries 
catch is stagnant or declining. 

Prof Conway says western 
donors have cut their funding 
of the CGIAR - which pays for 
agricultural research to help 
developing countries - in the 
belief that population and envi- 
ronment are higher priorities. 

Arguing that substantial 
investment in research is 
needed. Prof Conway mTIs for a 
“super-green revolution" to 
create food security and 
sustainable livelihoods for the 
poor. “It will not be enough to 
rely on the simple transfer of 
technologies.” he says. “The 
research institutions of indus- 
trialised and developing coun- 
tries wlU need to be linked in 
new partnerships that reflect 
the opportunities created by 
the revolution to modem 
biology." 


MARKET REPORT 

Coffee tumbles 

London Commodity Exchange 
COFFEE futures tumbled yes- 
terday following reports of rain 
in Brazilian growing areas. 

The January contract ended 
$133 down at $3,530 a tonne 
after dipping below $3,500. 

As speculative selling 
pushed the market lower the 
Brazilian weather reports “had 
buyers holding off until the 
full effect . . on the [1995-96] 
crop is known", one trader 
explained. 

Buyers were also on the side- 
lines during a sluggish session 
at the London Metal Exchange. 
Dealers said nearly all metals 
opted to consolidate, absorbing 
speculative profit-taking and 
selling. They added that the 
underlying trend remained 
upwards in most cases. 

The three months COPPER 
price closed just 50 cents down 
at 52,556 a tonne, but ALUMIN- 
IUM added $12.75 to Friday's 
$21.25 setback to close at 
$1.74050 a tonne. 

Compiled from Renters 


COMMODITIES PRICES 


BASE METALS 

LONDON METAL EXCHANGE 

(Prices from Amalgamated Metal Tradbig) 
ALUMINIUM, 99.7 PURITY {$ par tonne) 


Cash 

Close 1718-9 

Previous 1734-5 

Wg Mow 1723 

AM Official 1723-3.5 

Kerb dose 

Open lnt_ N/A 

Total dally turnover N/A 

■ ALUMINIUM ALLOY (S per tonne) 

3 mthe 

1740-1 

1753-3.5 

1757/1730 

17438-4.0 

1742-3 

Close 

1705-10 

1740-5 

Previous 

1710-20 

1745-50 

rtgfVkxu 


1749/1745 

AM Official 

1710-5 

1745-50 

Kerb dose 


1740-5 

Open Int. 

N/A 


Total dally turnover 
■ LEAD (S per tonne) 

N/A 


Close 

64E 5-7.5 

859-60 

Previous 

6505-18 

B62-3 

Higit/low 

647.5 

663/659 

AM Official 

6478-6.0 

660.5-1.0 

Kerb dose 


659-60 

Open toL 

N/A 


Total dariy turnover 

N/A 


■ NICKEL R per tonne) 


Close 

6655-65 

6965-70 

Fnjrttna 

0875-80 

6985-90 

Higlvtow 

6825/6824 

7000/6890 

AM Official • 

6023-4 

692D-1 

Kerb dose 


6965-70 

Open inL 

N/A 


Total daHy turnover 
■ TIN IS per icmnol 

N/A 


Close 

5460-70 

5545-50 

Previous 

5515-25 

5005-10 

Htfllvlow 


5825/5510 

AM Official 

5445-55 

5525-35 

Kerb doso 


5545-50 

Open int 

N/A 


Total daily turnover 

N/A 


■ ZINC, epedd high grade IS per tonne) 

a oao 

1061-2 

1083-4 

Previous 

1*7-8 

T 068-0 

WghAow 


lOSa/1078 

AM Official 

1059-60 

1081-2 

Kerb dose 


1079-60 

Open tot. 

N/A 


Total dafty turnover 

N/A 


■ COPPER, grade A IS per tonne) 


Ckran 

2560-2 

2555-7 

Pwvbus 

255 2-3 

2555-7 

1-BgtvTov* 

2548 

2563/2542 

AM Official 

2548-9 

2546-6 

Kero dose 


2549-51 

Open W. 

N/A 


Total daily turnover 

N/A 



■ LME AM Official C/S rate: 1.8277 

IMS Ctarins PS rate; 1,0888 

Spot t. K77 Jratftrt. 6364 6 Wort. SMI gfrrffttl.6317 

■ HIGH GRADE COPPER [COM EX) 


Day"* 


OPM 



Dose ctmg* 

W* 

tow 

hit 

Vd 

Oct 

11935 

+050 

119.40 

11850 

1.285 

318 

Ufa* 

11425 

+U» 



1,481 

26 

Deo 

11750 

*0.95 

118.25 

11890 

41.215 

8458 

■tea 

11745 

+0.95 

- 

- 

818 

92 

Feb 

116.75 

+0SS 

. 

• 

570 

- 

Mir 

11B.15 

+085 

116.40 

115.40 

8803 

81,633 

1,415 

9£24 


PRECIOUS METALS 

■ LONDON BULLION MARKET 
(Prices s vpqlied tty N M RotfwcrtHq} 


Gold fTrov cll) 
Close 
Opening 
Morning fi* 
Afternoon fbc 
Day’s Htgh 
Day’s Lew 
Previous close 


5 price 

399 JO -389.70 
38S .20-389.60 
38920 
38920 

3M 90-39030 
389 etJ- 389.40 
39020-390.90 


C aqutv. 


239213 

239231 


Loco Ldn Mean Gold Londlng Rats* (Vs USS) 


Precious Metals continued 

GOLD COM EX (100 Troy at; Srtroy oz) 


GRAINS AND OIL SEEDS 

WHEAT LCE (E per tonne) 


SOFTS 

COCOA LCE totervM} 


MEAT AND LIVESTOCK 

LIVE CATTLE CME (4Q.000R*; cenM/Ite) 


Dec 15645 -0.70 15030 19600 4268 101 

Her 157.65 -UTS 157 JO 157.00 101* 11 

Jua 15855 -005 - - 262 

Total 6442 112 

SILVER COMEX (100 Troy oil; CentaAroy az.) 


Oct 5313 +1.8 - 100 

Rev 531.8 +U 

Deo 534 _Z +1.7 537J 5300 75631 ZL581 

Jen 5388 +1.7 • - 74 4 

M*r 542.7 *1.7 5485 5380 18507 8534 

Key 5487 +1.7 M90 5485 *.678 41 

T*M 111,278 25,779 

ENERGY 

■ CRUDE Oft. NYMEX {42.000 US grita. S/barreQ 


Sett 

Day* 



Open 



Price 


Mgfa 

taw 

W 

Vd 

Dec 

17.45 

+807 

1758 

17.30 

8923 

9373 

Jan 

17.52 

+0.06 

17.64 

17.44113073 48057 

M 

1751 

+0-08 

17.80 

17.42 81,702 19J74 

Mtf 

1750 

+805 

17.80 

17.44 28632 

5,684 

Apr 

17-50 

+808 

1757 

17.48 24,035 

2.440 

Mn 

1751 

+808 

17.53 

17.51 

17,750 

1.589 

Trial 




387,741 93822 

■ CRUDE OIL 1PE {STOarreO 





Uteri 

o*r» 



Owe 



price cteng* 

w> 

LOW 

1st 

Vd 

Dec 

1838 

+81Z 

1841 

1529 

8*^15 

21.7B6 

4an 

1830 

+812 

1834 

1824 38818 

7.0*8 

Frii 

1825 

+810 

1828 

1622 

11-619 

1.758 

Mir 

1819 

+809 

1821 

16.18 

8513 

325 

Apr 

1815 

+808 

1817 

1813 

3,626 

11 

Hp, 

- 

- 



2373 

- 

Total 




188718 31,138 

■ HEATING OH. MfMEX (42,1)00 US jpBL; (/US gala) 


Sett 

baft 



Open 



price 

dtenge 

(igft 

law 

M 

W 

No* 

49.18 

+867 

49.80 

4820 17,755 

13,094 

Dec 

<953 

+859 

5815 

<825 <4.189 25.156 

Jan 

50.03 

+842 

5855 

4890 33.644 

7J74 

Feb 

90.40 

+838 

5895 

50-20 

18434 

4.132 

Bar 

50.10 

+83* 

5855 

5815 

11342 

1.551 

Apr 

49-35 

+834 

49JS5 

49.40 

6,949 

537 

Tetri 




183,102 58019 

■ CMS OIL WE (Stood 





Sett . 

Dcj>l 



Open 



price 

eftma 

Wgh 

IN 

w 

Vd 

NOV 

151.25 

+825 

151.75 

15875 31.477 

3.822 

Doc 

152.76 

+82S 

15325 

15850 

24,192 

3,721 

ton 

15L50 

- 

154.75 

15*25 10,471 

1.720 

Feb 

15540 

+825 

T 55-50 

15525 

7.823 

333 

Bar 

15850 

+825 

15850 

1S52S 

8.940 

79 

Apr 

154.00 

+850 

15425 

15+00 

ZJ7* 

31 

Trial 




WL808 18210 

■ NATURAL DAS mex (10.000 meiSBL; S/tntnS&L) 


Sen 

Darto 



Open 



price 

donga 

Mgb 

Lew 

M 

m 

Nor 

1-683 +0068 

UOO 

1X0 

18104 27,335 

Dee 

1.934 +0065 

1-960 

1.630 32.128 

9-639 

Jw 

2041 +0.038 

2067 

2025 

19,450 

7 

Feb 

1.991 +0021 

2020 

1990 

T2J04 

2778 

Mar 

fJ94J +0031 

5-97D 


12JJ75 

573 

Apr 

1.851 +4JJJ01 

1915 

1505 

W57 

582 

Tetri 




iSljm 51.588 


■ UNLEADED GASOLINE 
OTICT <41000 USgjfiL; oW gafc) 


2 months ...... 

,_4.04 12 months _5.4Q 


Sett 

Burs 



Open 

3 months 

..4.B7 



Price 

stooge 

Hgh 

Lev 

tot 

SOwer Rx 

pAray oz. 

US as equtv. 

No* 

52.45 

+259 

52.75 

50.40 

13968 

Spot 

3Z6-30 

531 JO 

Dec 

5137 

+1.12 

5U0 

S750 

31,584 

3 months 

330.95 

538.70 

Jan 

5597 

+807 

56.10 

55,30 

14J32 

8 months 

33805 

546.15 

Ms 

54.80 

+860 

5500 

5430 

5399 

1 year 

340 .35 

58355 

Mv 

54,95 

+055 

5*80 

5435 

3,410 

QoUCotn* 

S pdeo 

fi equtv. 

Apr 

5839 

+859 

58.10 

5790 

4953 

Krugerrand 

391-394 

240342 

Total 





70,470 

Maple Leal 

400,00-402-55 

- 







Nm* Sovereign 

91-94 

56-59 








1M 


392 

183 


21712 +®4 217IB 213/4121419 24452 

228/2 *02 228/6 224® 57,080 6203 

23616 +2/2 237/2 233/2 25,169 1J827 

242/2 +2® 242* 238/6 2W7D 2045 

247/2 +1/6 247/2 244/0 2060 1B1 

251)6 +06 252/0 249/8 12052 1,314 

248448 38.767 


M 

S«P 

Dec 


■ BARLEY LCE [fi pertonntfr 


ten 

10150 

-805 101.56 10190 

382 

23 

Jto 

nafio 

-0.45 

- 

468 

- 

to 

10825 

• 

• 

180 

- 

Hay 

10835 

- 

- 

SB 

- 

9* 

83.75 

- 

- 

9 

- 

Tetri 




1966 

23 


■ SOYABEANS CBT (50001X1 CeflAU txttri) 


NW 553ft) +4/4 553/4 543A 52,119 21,221 

Jin 584/2 +4/2 584/B 554/5 38.492 5.151 

U*r 57-MS *4M 5750 IBM 2TJJ75 2J73 

May 582/4 +4/B 583/0 573/4 1 0976 901 

JM SOW +40 509*4 5900 1ffa2S 1,340 

Aog 5912/0 +4/D 502/4 583M 1,134 150 

Trial 148213 32975 

■ SOYABEAN OIL CBT (60,000tbs: cantarts) 

Dm 

20.13 

+817 

25.13 

25J8 33.483 10461 

Jm 

25.17 

+804 

2S.19 

2480 13.881 

2215 

Mar 

24.82 

+005 

Z+.08 

Z43D 13,170 

1012 

Kay 

2433 

+801 

2425 

2355 11322 

1J57 

JM 

2397 

+801 

2405 

23.70 

7m 

1A88 

A«9 

2895 

+003 

2303 

23.73 

2,140 

158 

Tetri 





86,417 17^48 

■ SOYABEAN MEAL CBT (100 tone; S/fan) 


Dec 

184.7 

+10 

165.4 

1624 43580 

7,109 

Jan 

1658 

+88 

166-5 

1838 

17,039 

2202 

Mr 

1<S3 

+15 

169.7 

167.1 14238 


toy 

172-3 

+85 

173.0 

1WS 

7318 

910 

JM 

17EJS 

+15 

179S 

1744 

77*1 

789 

Am/ 

T7&0 

+1.4 

1782 

1705 

1,113 

40 

Total 





88,174 13^48 

■ POTATOES LCE (fi/tonne) 




Mev 

ISM 

. 

- 

. 

. 

- 

Mar 

105.0 

- 

. 

- 

- 

- 

AW 

2105 

+88 

279.0 

2100 

I.3S9 

7fi 

Hey 

240-0 

- 

- 

- 

- 

- 

Juo 

1075 

- 

- 

- 

- 

- 

Total 






75 

■ FREIGHT (BJJTEX) LCE (SnMrKkw pdn*} 


Oct 

1875 

+2S 

_ 

_ 

485 

_ 

tea 

1834 

+28 

1835 

1815 

267 

61 

Dee 

1780 

+35 

1780 

1780 

287 

1 

Jan 

1722 

+30 

1720 

1705 

1.075 

5 

AW 

1610 

+B 

I860 

I860 

910 

4 

JM 

1481 

+31 

. 

- 

152 

r 

Tetri 





3,191 

78 


Bcea 

PlM 





8R 

18B6 

1885 






Tee 

Hie Tea Broker** Aas o cian o n reports Improved 
general demand. Good Squaring Assarns sold 
wen at hiiy fern rates, wtile plainer sorts lost 
several pence. Bright East Africans were strong 
au often advanced 3 (0 Bp. Cofeuy medums 
were My frm but pttner sorts tented tower. 
Cayfans Inst 3 to Sp. Oftatna eH/toD Ur 
demand. Kenya ware lower but Ugandas and 
Assam were steady- OwtaHorec beet awri- 
able 200p/kg. nom. good I40p/Vg„ good 
medium I2dp/kg.. m odium 112#/%-, low 
medum 84p/kg.. The highest price redhed He 
week was 206p tor an Assam pf 


Oct 21 

fe*- 


m corrm LCE {VtameQ 


Me* 

.88128 


Ptev. Say 

98983 


Him 

3543 

-130 35B0 3500 

0220 M17 

Jen 

3533 

-130 3600 3490 11.666 2^25 

liar 

3488 

-135 3505 3440 

0235 8*1 

toy 

3455 

-131 3485 3*28 

3021 30 

Jri 

3430 

-140 

1^30 - 

top 

3420 

-140 3430 3«S 

1A03 110 

Tot* 



31007 1,4» 

■ COFFEE *C- CSCE (37^oaa»: centilfaaj 

Dec 

196J5 

+1.20 1flOJ» 18110 13000 3^35 

tor 

201 -85 

+1J0 20300 19020 12003 1038 

toy 

203J5 

-0.10 20450 13705 

4094 74 

Jul 

20000 

+1O0 20455 19095 

1061 42 

Sep 

20000 

+135 20500 19095 

880 26 

Dec 

asm 

-080 

844 5 

Total 



33/67 

■ CXJFFEE (KX3) (US conts/pound) 


Oct S3 


Price 

Pim. Cay 

Corap. dMy 

10BJ2 

191-48 

15 toyererege — 

WAS 

mis 


■ No7 PREMIUM RAW SUGAR LCE (centa/iba) 


Jm 

ia.ee 

. 

. 

n 

_ 

_ 

Mm 

1292 

- 

• 

1 

90 

- 


1297 

- 

- 

- 

290 

- 

JM 

1291 

■ 

- 

- 

450 

- 

Tetri 





830 

- 

■ WHITE SUGAR LCE ffrtonn*} 



Ok 

34700 

+020 

34800 

34560 

3.130 

5* 

KM 

34000 

+0.1 D 34050 338.40 

8623 

478 

tor 

338.70 

- 

309M 33730 

2HH 

62 

MW 

33500 

• 

33550 

335.00 

2558 

18 

Oct 

31 5J0 

+060 31450 314.50 

886 

10 

Dbb 

31420 

+000 

- 


4 


Total 





T7J81 

830 

■ SUQAR IT CSCE C112000be; ceraaAM) 


nr 

12<T 

*oxn 

1279 

126S 95.492 56H 

»y 

1270 

■am 

1277 

1262 22,778 1,790 

JM 

1250 

-002 

1262 

1253 

14758 1670 

OCt 

1220 

-002 

1220 

1214 126Z7 

675 

Mm- 

1190 

-004 

1163 

1160 

1,78* 

27 

toy 

1120 

-004 

- 

- 

43 

- 

Total 




W738 9633 

■ COTTON NYCE (SUOOOfae: centa/Km) 


Dec 

7060 

+1-50 

7070 

68.70 2X280 4.778 

Mm 

7203 

+1.40 

7210 

7020 12341 

1542 

toy 

7200 

+7-20 

7375 

71 JO 

0811 

39* 

Jri 

7410 

+1.60 

7410 

7210 

4,109 

158 

Oct 

7000 

+OHJ 

71100 

7000 

5E3 

1 

Daa 

69.3S 

+4L50 

8960 

68.50 

2J2S 

70 

Tetri 





58602 BJH3 

■ ORANGE jmee NYCE (15J»0fos; cents/fari 

Nn 

1<E4S 

-3M 107-25 10300 

4J00 

459 

J» 

10035 

-290 

11140 10725 11023 

Her 

11275 

-235 

11400 

imio 

0270 

771 

May 

11800 

-200 

116l75 

11300 

1J97 

89 

Jul 

11875 

*1.73 

11975 

110.75 

040 

86 

Sas> 

12100 

-260 

- 

- 

543 

59 


Total 


2 *487 


VOLUME DATA 

Open interest and Volume data tfwwn far 
corffiac te traded on COMEX, NYMEX, C8T, 
NYCE. CME. C SCE and M CrudB CM are one 
day In armre. 


INDICES 

■ REUTERS (Beae: 1W31«°UM) 


Oct 24 Octal moBtftauo year ago 
2071.7 20850 21202 1597 £ 

■ CRB Future* {Base 1967^00) 


Oct 21 
231.63 


Oct 20 month ago year ego 
233-91 232.74 21 9. ID 


Feb 


MS 

Total 


40575 +0525 41.100 30300 
40700 +0775 41.150 30600 
41.073 +0725 42.400 40500 
424500 +0100 42700 41.750 
41850 +0800 41850 41800 


6,757 1873 
1.002 22 1 
323 121 

200 20 
55 4 

10437 2JJ35 


LONDON TRADED OPTIONS 

Strike price 3 tonne — CaBa Pure — 

■ ALUM0HUW 


(90.7 M) LME 

Deo 

Mar 

Dec 

Mar 

1725- 

62 

98 

43 

71 

1780 

49 

86 

65 

83 

1775 

39 

74 

70 

96 

■ COPPER 





(Grade A) LME 

Dec 

Mar 

Dec 

Mar 

2550 

68 

98 

69 

118 

2600 

47 

73 

88 

148 

2660 

31 

57 

131 

180 

■ COFFEE LCE 

Nov 

Jon 

Nov 

Jen 

■ COCOA LCE 

Dec 

Ste- 

Dec 

Mar 

825 

30 

al 

18 

38 

950 

18 

67 

31 

47 

876 

10 

55 

48 

GO 

■ BRENT CRUDE IFE 

Nov 

Dec 

Nov 

Dec 

1AIY1 

68 

85 

22 

85 

1650 

41 

62 

48 

62 

1700 

17 

46 

83 

45 


LONDON SPOT MARKETS 

■ CRUDE 00. FOB floor barrel'Dec} for 


Dubai 

STS.OQ-6.1ZZ 

+CU» 

Brent Blend (dated) 

Si 6-40-0.42 

+0.10 

Brent Blend (Dec) 

Si 6.31 -6.33a 

+0.07 

W.T1 (1pm cot) 

Sl7.45-7.47z 

+009 

■ Oft. PRODUCTS NWS prompt deBvwy OF (tonne) 

Premium Grwcine 

#1 83-168 

+3 

Gas OB 

S153-155 

+08 

Heavy Fuel 01 

S90-B2 


Naphtha 

S168-171 


Jet fuM 

SI 77-179 

+28 

Dteeri 

SI 68-160 

+0-5 

Pwmleum /opus. TN Loneton mu 3S9 070s 


9 OTHER 



Gold fe>er trey 

$389.50 

-1J20 

Silver (par troy oj)4 

533Je 

-IS 

Ptettraen (per troy ml) 

S420J0 

■6 JO 

PatoAau (par troy az.) 

ST 55.60 

-a 75 

Copper (US prod.) 

123.0C 


Lead (US prod.} 

39.15c 


Tin (Kuala Lunflur) 

1355c 

-0X6 

7 fa (New Ylorid 

2585c 

-2S 

Catfle (8ve raefahtlt 

117.74p 

•1J34- 

Sheep pro welghtn* 

flOJOp 

-O.B2* 

Rs» Sve we«gW) 

73-04P 

-0.31* 

Um. day sugar (raw) 

S317.1 

-02 

Lorv day supr HW 

S303.0 

-2D 

Tate & Lyfe export 

£3075 

- 

Bariay (Enst lead} 

Unq. 


Main (US No3 YeOow} 

Sl32Xly 


Wheat (US Oartt. North) 

C165.0U 


Rubber ffM¥ 

aa.7Sp 

-0.2S 

(Dec)f 

8R55p 

-0L25 

Rubber (KLRSSNol 

346 An 

-1.0 


Coconut OB (PhB)§ 

Palm oi (Malayji 
Co l*8jPM5§ 

Soyabom (MS) 

Cotton Oufloofc’A’ We* 
Wooftops (84a Super) 


S832.5U 

563081 

sioaou 

emov 

73.90C 

440p 


-2.3 

-100 


-4 

- 0.10 


E per am into** riMMte Sand- p prnafeo- e eetoriL 
r rtnanAfr m Uateyasn cana/kg. y Oct/Dvc- vNw/Dee. u 
OcfNmr. z o*i t Nov. f London Wiyderi § OF Hotter- 
dam. 4 Britan mirtet dew- A Stax* <U» •*** pries* * 
Change on weak O Pnom ore tar prariM day- 


CROSSWORD 



Sett 

Daft 


OP** 



Sett 

toy* 



Open 



Salt 

Deyte 


Opm 



Sett Daft ■ 0p*n 



price 

dtenge 

»* 

ton M 

Yd. 


price 

•torije 

H* 

UW 

hit 

Yd 


price i 

rorage 

ffiBb 

Low let 

val 


price dnege Hgfe Lew U 

Vul 

Od 

389.8 

-12 

3902 

3802 42 

2 

■M 

104-50 

-085 10550 

10450 

1,453 

104 

DM 

937 

-10 

944 

834 21J0S 

485 

OCt 

88^25 +0.100 69.400 68J00 606 

438 

Not 

3920 

-1.4 

> 

- 

- 

Jm 

10255 

-070 

107 JO 10290 

2453 

68 

Mar 

970 

-11 

978 

967 42762 

646 

Dec 

70.150 -0025 70875 70025 30973 

6087 

Dea 

391.4 

•1.4 

397.0 

3906 83203 1/260 

Mar 

10830 

-045 

10050 ioaoo 

1559 

20 

■fay 

sen 

-10 

967 

984 14,429 

78 

Hb 

89.125 +0150 69.400 60825 1S78S 

3069 

fte 

394.9 

-L4 

395.4 

394-5 19203 

144 

May 

11275 

-260 

111J5 111JM 

1,672 

41 

Jri 

993 

-9 

- 

- 6709 

• 

Apr 

60125 +0150 60300 68.925 12^51 

1700 

Apr 

ms 

■1.4 

398.8 

396-0 8,199 

923 

Jri 

11ZB3 

- 

- 

- 

200 

- 

top 

1007 

-8 

1008 

1008 12.403 

33 

Jtta 

85-523 *0.100 85825 65225 3X5 

523 

Jm 

401.7 

-1.0 

4022 

4017 9285 

382 

»P 

9225 

+225 

- 

- 

40 

- 

Dec 

1024 

-7 

1028 

1024 0,511 

75 

Aug 

64350 +0.100 64700 64300 1J73 

48 

Tumi 




157282 19247 

Tetri 





7,134 

318 

Tetri 




111,114 1A2S 

Trial 

8tfa77 12,753 

■ PLATINUM NYMEX (50 Trey at; S/troy ozj 

■ WHEAT CBT (5.0001x1 min; cents/BOlb bueheQ 

■ COCOA CSCE (10 tome*; Sftonnes) 


■ UVE HOGS CME (4OAO0lt»; centaftM) 


Oct 

424.7 

-02 

4250 

4340 110 

4 

Dec 

404/0 


406ft) 

392/2 3823S 

2222 

Dec 

1330 

+12 

1837 

1305 27,339 7,496 

Oct 

30800 -0025 31075 30250 Z13 

340 

Jm 

425.7 

-27 

428JS 

<24-0 20296 

2J7I3 

Mm 

415ft) 

■*» 

417/0 

403/4 2X423 

1233 

Mar 

1375 

+9 

1382 

1353 22324 3^75 

Dec 

31575 +0560 31675 32.950 10738 

4734 

Ari 

oao 

-27 

4320 

4320 £050 

13 

Hey 

391/2 

+7/2 

392ft) 

381ft) 

4,152 

420 

May 

1403 

+9 

1397 

1380 7.873 

430 

F* 

36.600 +0300 36-700 36750 7.307 

1019 

M 

*34.2 

-27 

- 

- 627 

2 

Jri 

3564) 

+3ffl 

350/4 

35010 

9J51 

878 

Jri 

1429 

+0 

- 

- &032 

10 

Apr 

30600 +0-275 38725 36725 4,117 

508 

Oct 

4322 

-27 

- 

- 358 

• 

top 

338/0 

+2ftJ 

358/0 

35610 

231 

2 

top 

1456 

+9 

1443 

1435 1^46 

- 

Jon 

42200 +0200 42250 41-860 1740 

109 

Jan 

4412 

-27 

- 

2 

- 

Deo 

387/4 

+3M 

367/4 

363/4 

132 

4 

Dec 

1489 

+9 

1465 

1465 4^80 

44 

*ng 

41.825 +0200 41050 41.425 324 

13 

Total 




TAflKS 

2832 

Trial 





75)731 10,757 

Tdd 




71^8112737 

Tetri 

31288 

8088 

■ PALLADIUM NYMEX (TOO Troy 02; S/troy az.) 

■ MAIZE C8T (6,000 bu min; cents/58fa bushel) 

■ COCOA 0CCO) (SORVfannd 


■ PORK RHJJE3 CME (40,000to3; cents/bs) 


N o.8,593 Set by CTNEPHILE 



ACROSS 

l Good example derided ver- 
bally (6) 

4 Man marrying women in the 
teles (8) 

10 Be undecided about article 
depicting royal booses (7) 

11 Cast a spell over part of the 
seventh rally (7) 

12 Audible lament for having 
been cut (4) 

13 Great lake formed asap in 
case (7,3) 

15 Scared of a feminine attack 


16 Pyrenean town, one with a 
shortage (7) 

20 Companion to queen left in 
path, maybe English (7) 

21 Footballer without work, like 
aD of us? (6) 

24 Golfer gets little change from 
a litre (Italian wine) (3,7) 

28 Holey ball with venerable 
sound (4) 

28 In these (conventional) areas 
a twitch may be caused by 
him (7) 

29 British queen, originally Scot- 
tish - Polish with it? (7) 

31 Crotchety behaviour by devo- 
tee on his own? (6) 


DOWN 

1 Czech book, half missing, ] 
fix far half article (8) 

2 Strafford was sold at a pi 
0 ) 

3 Royal welcome to party 14) 

5 Model for Marx and Feel, r 
sibly (0) 

6 Amendment to charter 
should deal with vermin {! 

7, 8 Ventures a greeting in E 
Africa (3-2-6) 

9 Interrupt one’s holiday? (5) 
14 Indication to author who t 
depict characters (4,6) 

17 Does no one know where i 
summit is (3,6) 

18, 19 Cathedra] choir’s peri 
mances should be paid 

ras; 

22 What used to be over or 

head fa now m mm nnpl; 

0,3) 

23 Great northern tree to gri 
(5) 

25 Weird eastern fake (5) 

27 Trouble’s raised, causing 
splash (4) 





JOTTER PAD 







fast 


* F ' NANCtAL TIMES TUESDAY OCTOBER 25 1994 



market report 


Currency factors reverse early gains in shares 


By Tarry Byfand, 

UK Stock Markets Editor 

Once again, weakness in the US 
dollar undermined a firm start on 
the UK stock market yesterday and 
although trading volumes were low 
snare prices were turning easier at 
the end of the session. Traders com- 
mented that it was uncertainty over 
official US policy towards the dollar 
that was upsetting London stocks 
rather than any precise analysis of 
the implications for profits at the 
bine chip companies. 

The market opened firmly as Lon- 
don responded to the dollar’s rally 
late on Friday, which followed sug- 
gestions from Washington that the 
XJS authorities would intervene to 
support the currency. Helped also 
by a rebound in stock nutey futures 
the FT-SE 100 Share Index jumped 


by 20 points to 3JJ5JL9 in early deals. 

Trading volume was painfully 
thin, however, and gains melted as 
the dollar failed to live up to its 
early promise and UK government 
bonds shaded lower. Confidence 
also cooled when bonds soften ed fid- 
lowing regional consumer price 
data from Germany. 

But the market held the line 
when Wall Street opened higher, 
and it was not until dollar weak- 
ness had turned the Dow Average 
downwards and bond markets had 
extended their fails that the Footsie 
slipped into negative territory. The 
Dow was 6 points off in UK hours. 

At the close, the FT-SE 100 twripr 
showed a net fall of 3.7 at 3^29.1 
and dealers looked with arwin con- 
cern at the approach of the 3,000 
level The FT-SE Mid 250 indw ghpd 
2.2 to 3£00.2 as buyers continued to 


back away across the broad range 
of the market. 

A more revealing picture of the 
day's trading ra me from the nffi rfai 
business volume figures. Turnover 
through Seaq, the market's elec- 
tronic trading network, fell by 
nearly 12 per cent from Friday’s fig- 
ure, returning a total of only 4563m 
shares. This is well below what are 
generally agreed to be profitable 
levels from the point of view of the 
London-based securities Industry. 
About 60 per cent of the day’s trade 
was in non-Footsie stocks. 

The fan in market indices would 
have been greater but for sharp rise 
in shares in the regional electricity 
companies yfar East Midlands Elec- 
tricity had announced a £l86.5m 
special dividend payment to share- 
holders. Other electricity companies 
have returned to shareholders 


by way of share buy-backs but this 
policy has become frustrated by the 
strong share prices in the sector. 
The market now looks for other 
electricity companies to follow the 
Kast Midla prig lead, althnng h there 

were signs yesterday of political 


Although the focus was on the 
dollar-orientated stocks, losses 
among these issues were not large. 
Wellcome was a weak spot but this 
was ascribed to negative comments 
from a US investment bank known 
to be bearish on the stock rather 
than to currency factors. Other 
pharmaceutical Issues also gave 

ground, but Glaxo managed to hold 
steady in spite of currency influ- 
ences. 

Currency nerves benefited stocks 
seen as domestically-focused and 
therefore likely to attract investors 


FT-SE-A All-Share index 


1,650 


seeking to avoid dollar risk. Some 
store and retail issues gained 
ground, although buyers were very 
selective and backed away when the 
market turned sour. 

The uncertainty In the London 
stock market is likely to focus on 
the next round of data on the US 
economy, due at the end of the 
week. On Friday, US gross domestic 
product statistics for the third quar- 
ter will be accompanied by the 
deflator figure which has been Iden- 
tified as a key factor in the inflation 
watch maintained by the US Fed- 
eral Reserve Board. 

The economic schedule in the UK 
is quiet this week, and dealers 
doubt if the latest survey of indus- 
trial trends by the Confederation of 
British Industry will bring any 
strong response from the stock mar- 
ket 



■ Key bKtteators 
Indices end ratios 
FT-SE 100 3029.1 

FT-SE Md 250 35002 

FT-SE-A 350 1523.0 

FT-SE-A AB-Share 151076 
FT-SE-A Afl-Shara yWd 3 M 

Bern t performing sectors 

1 Electricity 


2 Other Sendees & Bus 

3 Tobacco 


Equity Shares Traded 

Twrwrer Uy voUne (mancre). ExO*#®: 

wm-nwwa busmen aid oveaen twnw 

1,000 



4 Insurance 

5 Printing, paper & Pckg. 


■3.7 

<L2 

«i.e 

-1^3 

P^7) 

FT Ort&nary Index 
FT-SE-A Non Fins p/e 
FT-SE 10G Fut Doc 

10 yrGBt yield 

Long gnt/equRy yM ratio: 

2325.2 

1&57 

3030.0 

8.82 

2.22 

•8J 

(18.60) 

-12 

(8-73) 

(2X21) 


Worst porformlng sectors 

-1.1 




- -0.8 


3 Divaraffied inch. 


...-.-0.7 

.+031 



-0^ 

.+0.3 

5 Merchant Banks 


OA 


"-■v 


T REPORT 

’ lumbbs 


■ • Tnfeil 

• :.i> 


IV " 


■\r+i 


•• • -Jr 


■ V+ 


■ - .■*. 

.:v\ 


RD 


1 I I 
I ■* 

\Tt 

% 

«** 










Rees on 
dividend 
alert 

Last Friday’s rumours of a 
one-off special dividend of 85p 
from East Midlands Electricity 
were confirmed at (he outset of 
trading yesterday and pro- 
duced a flurry of heavy buying 
across the sector as analysts 
told their institutional clients 
to expect more of the &am* 
from other regional electricity 
companies, or Rees. And East 
Midlands is also expected to 


offer another special dividend 
to shareholders in the event of 
a successful sell-off of the 
National Grid, in which the 
Rees hold substantial «*»!««- 

Dealers said the market 
focused Us attention on those 
Rees that have authority to 
buy in their own shares but 
have not not yet done so. The 
faVOUlite to larmnh a similar 
move to that undertaken by 
East Midlands was Southern, 
closely followed by Yorkshire 
and Eastern. 

East Midlands shares were 
adjusted at the outset and 
quoted ex the special payment, 
eventually closing at 666p. 

Yorkshire gave the best per- 
formance in the sector, doting 


EQUITY FUTURES AND OPTIONS TRADING 


Stock Index futures moved 
lower with turnover slumping 
to one of its lowest levels of 
the year, write s Jeffery Brown. 

At times the market traded 


at a discount to cash equities 
but with volume tafflng away to 
little more than a third of 
Friday's level there was never 
any real weight of sailing. 


■ FT-SE 100 MDBC FUTURES (LBFFE) B2S par M Indu point 




Ocm San price Chorea High Low Eat vot Open W. 
Dee 3050.0 3030.0 -120 3065.0 3021.0 6311 53733 

Mar 30S2XI -1Z0 - 0 3778 

■ FT-SE IBP 280 MDBC FUTURES (LffT^ 210 fior M tide* point 


Doc 


3SOSJO 


4218 


■ FT-SE 250 BfflEX FUTURES (OMLX) E10 par mndac point . 
Dec I 3515.0 I - - ” 

M open tamM flguraa an hr jnvtoua day. f Bud wfem ihOMl 


■ FT-SE 100 SBEXOPIIOM flJFFQ C3033} CIO par Ml hritpotra 

2800 2900 2930 2000 3060 3100 3160 3200 

CPCPCPCPCPCPOPCP 
NW 187*2 12 1402 M wr>2 90 7S*i 47 48 72 28 103% 14i 2 143*2 7h 188*2 

OK ZBPj 27 170 39*2 135 54 fSS*;75»a 78*2 87% 64*2 127 38*2 180 21 188 

Jan 231 41 185*2 54*2 180b 70^ 132 91*2 182*2112*276*21 41 58 171 43*2 207*2 

no 243*2 50*2 288*2 B5 178 82*2147*2 103*2 tit 128 87% 155 7B*| IBS 58*2 219 

Jaif 258 85 198 134% Mi 184*2 186*2243*2 

CaK 2S78 Ml 4,171 

■ BUBO STYLE FT-3E 100 MDEXOFTIOH QJFFQ CIO par M Meat point 

2876 2828 2078 3029 3078 3125 3178 3228 

Hat 168 15*2 04*2 24 88 * 23866 * 258 * 23788*221 118*2 18*2 158 4*2 203 
Ok 188*2 33 150 45 *zH 8>2 62 88*2 108 44 138 28 17l*a«b 210 

J» 172*2 58 115 87 72 152*i 42 221*2 

Mar 285*281*2 148 120 88 189*2 82 251 

Junt 347*2 *05 UB 143 138*2168*2 87*2 243*2 

Clfe 654 Pub US' 
t * n*m ctatKi m i y 

■ EURO STYLE FT-SE TOP 250 PNOC OPTION (OMUQ CIO par M Index point 


3400 


3460 3500 3680 3600 3BBS 

Oct 118 78% 804(101*1 08*2 12ft 

CTO 0 Alb 0 SailSMant prices and wtmai m Wan at OOpco. 


Indices 


8700 


3790 


29 higher at 715p followed by 
Southern, 25 higher at 751p and 
Eastern, up 19 at 756p. Norweb 
put on IS at 780p and South 
West 15 at 743p. 

Specialists said the the odds 
were that the Treasury would 
move in nn*t month's budget 
to close what is viewed as a 
loophole regarding share buy 
backs. 

Eurotunnel rally 

Channel tunnel group Euro- 
tunnel had anothe r active day 
with 2.6rn shares rTrang in g 
hands and (he shares recover- 
ing 16 to 225p as rumours of 
institutional muscle-flexing 
buzzed through the market. 


The FT-SE 100 December 
contract was 3,030 at the 
offlcfaJ 4:10 dose, down 12 
points. At this level there was 
a one point premium to the 
cash market while the fair 
value premium was around 15 
points. 

Traders said the low level of 
activity - there were 5,523 
contracts, against 13,340 on 
Friday - was a dear reflection 
of the absence of directional 
leads. 

They pointed to the low 
status of the economic data 
due this week, and said that a 
number of the largo’ traders 
had decided to stay away for 
the schools half-term holiday. 

One trader described both 
stock index and option volume 
as “wickedly low". 

Activity in traded options 
was just 13,951 lofts, down 
from 48,235 lots on Friday. Of 
this, FT-SE and Euro FT-SE 
trading accounted for just 
under 8,000 lots. 

The most active incflviduaJ 
stock option was toe 
Prudential with 757 lots 
followed by HSBC with 642 
lots. 


Day* 

Oct 24 crigeSt Oct 21 Oct 20 Oct 18 


Year 

ago 


□tv. Earn. 
yfafcHi >Md18 


PJE Xd adj. Total 
redo ytd Return 


FT-SE 100 

FT-SE RHd 250 

FT-SE Md 250 ex Id* Trust* 

FT-SE-A 360 

FT-SE SmaBCap 

FT-SE SmaBCap ax hw Trust* 

FT-SE-A ALL-SHARE 


3020.1 

-0.1 

30323 30682 30603 

31843 

4.17 

7.17 

1847 11030 114830 

35002 

-0.1 

3502j« 36243 3521.2 

35473 

337 

5.82 

2873 10830 130632 

34885 

-ai 

35003 35213 3516.7 

35486 

874 

630 

1931 11337 

130334 

15200 

-ai 

15243 15387 15373 

15881 

433 

636 

1739 53.77 

1181.74 

176830 


178636 1762 .77 176237 1604-23 

831 

437 

2534 4835 

138931 

175834 

• 

175848 176231 1782^46178732 

331 

532 

23XK 50.71 

1372.10 

isiare 

-ftl 151829 152858 152439 157800 

838 

872 

1736 5230 

118230 

live 

DW* 


Year 

Off. 

Earn 

P/E Xd ad). 

Total 

Oct 24 chge% Oct 21 Oct 20 Oct 19 

ago 

yUd% 

yfekf% 

ratio ytd 

fWum 


10 MINERAL EXTRACTlONfiat 2686S7 

12 Extractlva Industrial 3885.08 

16 OB, IntipatedR 2618X71 

16 08 Ba*y«"" * Pmdfin *978.13 


+03 2881.81 266228 2883X19 2437.40 AM 5.13 2<L83 82^3 1073X1 

+0.1 3880398904.78 383837 316030 030 028 23.41 9062 107266 

+02 261232 260039 2829.73 340030 080 5J74 2138 8838 107735 

„ 187733 180018 1888X16 199430 221 t t 38X0 108666 


20 QH4 |iANUFACTTJRERSGW7) 184081 

21 BuBeflno * Constjucttonp® 106139 

22 BuUdlng Mads & Mflrcria(32) 181236 

23 Ch*mlc*»*(23) 2317-88 

24 Dtvwaffled MusWatafie) 173083 

25 BoctJtmlo & Boot Equtp«54) 185074 

26 Enclneertrifl(71) 179a “ 

27 EnoInMxIre. V»Wm(12) 2M026 

28 Printing. Pap«r A PckoPQ 2*8337 

29 Texttos Bl AwmtXZq 157080, 


-02 185338 188072 187037 182050 

105138 105532 105234 117730 

-03 161737 1832.70 162930 188SXM 
-0.1 231837 234234 2342.11 2235J0 
-07 174836 176000 177430 200050 
+0.1 1857.44 188834 187832 211020 
+0.1 178042 180638 180034 170030 
-03 2288.01 227832 226011 190040 
+03 2748.12 276639 278234 246030 
-03 1681.63 1605.38 160064 1980-40 


4.12 

5.17 

23AS 6837 

045.73 

3.76 

537 

ax>1 3806 

62849 

4X77 

821 

2336 6830 

86852 

4.00 

4^6 

280B 7938 

102836 

827 

534 

22.48 82.75 

80830 

4X36 

878 

1737 6065 

91037 

3.18 

801 

2868 4847 

102644 

4.43 

1j46 

8030f 8234 

1105X14 

813 

843 

2134 78.03 

1085.18 

438 

837 

1735 4068 

86234 


30 CONSUMER 00008(87) 2699-?? 

31 Bnnveries(17) 2 21^ 

32 SpMtS, WkM 0 CMecaflO) 27B343 

33 Food ManufacturaraBS) SHB2XB 

34 Household QoocMiaj 2^94 

38 Health Cartel) 

37 Pharrnacouflcetefiq 

38 Tobacootll gP?:.U- 


-0.4 271131 2737^8 2732.73 2385.10 
+0.1 221024 223041 2207.48 206730 
-03 Z7S233 283636 2644.12 2753.10 
-03 226836 228637 228084 2379X70 
-04 240051 243431 240081 267SX» 
*0.1 160538 1617.74 1621.02 174030 
-1.1 298433 298937 268011 338730 


448 

743 

1837 10733 

03338 

427 

7.74 

1537 61.10 

93878 

401 

896 

1848 10133 

93637 

429 

7.71 

1513 6439 

95439 

331 

737 

1631 8936 

86875 

814 

338 

4133 4824 

93805 

435 

733 

1632 12528 

84813 

802 

634 

1136 217X37 

82130 


40 senvtcEstwBi 

41 DbnribtitaraOa) 

42 Letsuni & Hauta(25) 

43 M«fla<39J 

44 notaOcm. Foodpfl) 

46 RetaBora. Gananq4Q 

48 S***»r1 Servlcaa(41} 

49 Tramtportflfi) . . 

\ & ButrinaaaCT 


51 OmarSandoe 
so unumESpq 
62 Bactrfoify(17) 

64 Qaa DbtribuHonP) 

60 T«acomnvtoeona(q 

66 WMertia 


188339 

248033 

2053.17 

277932 

189537 

184738 

148332 

221932 

12S2.19 


-01 169538190079190736191630 331 046 1068 5138 931- 

-03 2485.47 ffl02.65 2S2139 267730 078 730 1538 8625 

-03 205057 207936 206239 191040 337 436 2432 5739 1015.11 

-03 2784XJ8 2804.72 2791.48 2819.10 230 040 2130 6042 06732 

-03 1705.61 171133 1712.07 174330 332 934 1339 5230 101539 

+03 164014 165233 169042 171010 020 630 1830 4435 882.77 

-01 1465.06 148238 149730 1641.70 234 652 16.11 3532 904.15 

+0.1 221632 223135 2236XJ8 229070 034 6.71 2032 5938 87133 

+04 124737 1?4fi.H3 1244X15 1242.70 4X71 3.12 4047 2532 107S73 


237238 

2465.73 

187849 

198933 

1659.19 


+0.1 236938 23B8XK 238533 251S40 
+09 244238 2448.74 2426.75 220070 
-04 1866.14 190752 1B9448 2288.70 
-Ol 200132203736 203130 229130 
-08 1971* ns 1604.44 190438 136930 


444 732 

072 930 

638 t 
4.13 7.87 

533 12.73 


1536 8137 91637 
1134 8346 102540 
1 11736 88146 
15.47 0022 
057 6936 


m wsgeaBHawa. 


163058 


70 FMANCINJB(104) 

71 BmkadQ 

73 lnauranca(17> 

74 LRo Atauranca® 

76 Merehan* BaritefB) 

77 Other RnanciaK24) 

79 Piooanwil 


213536 +01 213331 21B131 2152.53 2338 . 20 

279058 +01 2791X75 262051 280738 287630 

1227 46 +03 1224.18 T244.12 124739 149030 

2318.77 231838 235844 235137 283530 

271138 -03 2724*38 Z74530 2741 30 31 9630 

1800.11 40.1 1797.72 1801^7 180546 179930 

-Ol 1456.44 146847 1468.13 172130 


80 wS^nurngt sp^ 2717.70 1 

151078 -Ol 151239 1JB538 158439 157200 


89 FT-SE-A ALL-SHAR£f9«9 

■ Hourly m ow ownta 

Open 9XJ0 


433 

819 

1232 8936 

848.70 

432 

1020 

1132 11839 

B39^0 

531 

9X9 

1133 61.61 

84737 

531 

804 

1516 12732 

60739 

333 

12.16 

858 87.78 

81808 

433 

838 

1578 6331 

96642 

4.17 

437 

2834 4336 

332.78. 

226 


S1XB 54.16 

91434 

336 

872 

1739 8230 



KUO 


15XJ0 16.10 MohAlwUwMv 


^ 11X» 1200 iaOQ 14tt> 

weg 30523 90443 30493 30433 30443 30923 30623 30K.1 

FT-SE IX Sfflj 36104 3510.1 3500.8 35083 35014 38133 3600,0 

SJUflT ^ Sj w •« ™ law 

■ FT-SE Actuarial 3 SO Mofty tadat, 

Opan 


OuOO KUO 


11 JB 1230 13j00 1430 1SII0 16.10 


’ Me ,. « 990X1 9903 9902 9901 988-8 9873 9873 9673 +0.1 

*£7 2S1 29534 29513 29604 2858.7 29433 2M43 28606 -323 

TsTA5 « W3 18743 18705 18714 18693 1860.7 18673 18712 -142 

2S5 JSI SS m wj »*'■« •“ 


Qido 0 Onatrcn 

R iam nu a uridn 
Water 

Bonks 

ataknl l uftA iil W " a "J t ! B L 1 

b “* 1 and MW and «■ 

liMfcria a™ jAlaiUMM by 1*» * wm rfnni i 3^ -f 1 ** M i n a and lha FaC3+iw of AOWtos untkr a s tit n rbu l sat 

ttfflpM by Kia I^oncta i RuatoriMM LMtsd 1BB4 C Tha fti a iir b tTw a U*6k l»t ” 


• trom TbaftaaEbltom 


MaUafedHtr 
IndBKia 
of gram! mlM. 


There was a strong sugges- 
tion that a number of institu- 
tions were seeking compensa- 
tion for losses suffered on 
shares fafcgn up at the 265p 
rights issue last May. 

Sentiment was also helped as 
tickets for the service from 
London to the Continent went 
on sale for the first time and 
sales agents were swamped 

With, ripwawri 

Low for APV 

APV fall 6% to to a new low 
for the year of 6lV4p after the 
food processing equipment spe- 
cialist denied a weekend report 
that it was in danger of breach- 
ing banking covenants. Turn- 


TRADING VOLUME 


■ Matfor Stock* Yesterday 

UoL da** Omfs 
ooo» erta ana* 


^ Oc«+>t 

AbbayNtfmlt 
Atari FWar 

MMOgneit 


Argn 


-BAPbna 

BAAt 

BATlncH-t 

BET 

BKC 

“ft 

apt 

BPBhA. 

BanK afSoodmdt 

Basest 

Bta£h&t 



ifiaa 

3tr 

S 

BAOO 

e**a 

+1 

2700 

M.AM 

*3 



+1 

- 1 '1 


-a 

■prl 

Ei 

-ii 




1,100 

265*1 


1300 

248 

«i 

143 

E27 

-a 

033 

279 

-i 

1200 

303 

<2 

1200 

430 

re 

307 

100 

♦1 

8700 

333 

~J3 

181 

672 

+1 

8500 

410*2 

r2 ' t 

220 

H IT ■ 

*2 

4300 

5300 


+1 

1300 

198 

8100 

572 


me 

330 

-A 

SOI 

283 

-1 

ESI 

406 

-2 

1300 

532 


788 

443 


815 

470 



Brtah 

Bffldl stnrt 
fluid 

BumahOaaMIt 

Buton 

CMbllMvt 
Cutary Se ta ap p—t 
Ouadont 
Cariton Comte-t 
Com* Wyola 
Oomn. UntaT 
Oeotan 

Couta*J*t 

aru 

□ham 

EtaemBeat 
emtMUand ao. 



1300 

Ml m 

MlOTCQptfT 

JBMon Mmtwy 

are? 

UKtatait i,u» 

Land SocuBtat 1200 

t*P«na ^ iaoo 

Lagataomtat 

uSdaBM^f axsoo 

LASMO 348 

London Bad. SK 

LoofM 1.000 

ilKM 1.100 

MH’Ct ixno 

— IBS 

ysr t ^ 

33 IX 

2.7D0 Id +4 

jlsoo «r -a 

043 484 +8 

3,100 241 1, Jh 

118 8+1 -6 

980 780 +8 

333 200 +1 

481 780 +U 

334 904 -8 

1350 SBS 

rim 



North WMVWMt 
Northrm Bact 
Norinam Foadat 


PTSf* 

PKhgun 

^ r * 


1800 

432 

1,700 

028 

463 

23» 

497 

904 

223 

zteo 

t&oa 

488 

WOO 

wo 


TO 

9sr 


-0.1 1634.76 1847.70 164738 16833S 335 646 1857 6652 115738 


HT" 

swyi iwu j 

SnflfaSliytadt 

sas&t 


84737 

80738 



4 A , --- 

IB M M a t n6Ra 


Wb mn afrt 

WUtCoanai 

Wntay 

■ 4 - 4 - » ■ BtafW 

TQTKMMO bed 

YhkeMsV 


ear +s 

281 +s 

41S ffl 

978 -1 

4*1 -3 

746 +1 

2E0 -1 

421 


-*a 

+1 

+6 

-7 

-10 

+8 

+1 


32 1363 

m 

326 

347 -2 

410 +10 

540 +11 

222 -1 

-1 


1200 
458 
887 
1,700 
Z72 
955 
aoa 

1.100 
1.10a 

Z103 

410 455 

374 142*2 

3JOO 411 -«*l 

2.100 374 -8 

148 435 « 

048 731 +2S 

884 780 *14 

138 627 -2 

782 748 +15 

207 988 48 

4JBM 270 

804 217 +1 

SunMhncat 1X00 ‘MS 

T4N 821 215 -0*2 

TlOnupt- 438 380 +1 

TBSf 4J00 224'j 40*2 

Tbibbc 1,800 ISO 

Tfla&Lyb ZM 418 -1 

TehfUw 890 124 46 

Ttoicat . MOO 233*2 -h 
IhamaWMeit 913 618 -2 

Tlwm aif 880 878 -11 

Tonddkat 207 -*2 

‘naMgarHouu 1X00 87 « 

UnlMa 150 338 -1 

UiSSt ^ 1164 

UtadEbnUt 880 

UtL Nmtpepm 8M 


301 


1JOO 201*2 -1*2 

» «n 4 

laoo 887 
948 835 

826 

075 

unn 

27 
EG 
781 
ST7 
87 


-24 

« 

48 

tl 


m 

339 

184 
145 
733 
715 

S2S 

Zanat WOO B» 

Band an (mine netaw tor a adaenoa aJ imlar 
wcurtOa dadi Baeqb A* 8EKI egnean 
yMtadff uid 440pm 1M» of on« mlfert <>r 
mu* am nudd dtad. f h*M*» an FT-SE 
loot ' - ■ 


-19 

429 

■a 

-a 


over was heavy at 2.6m shares. 

The group, which last month 
cut the Interim dividend and 
said profits margins were 
unde r increasing pressure, last 
week ousted its chief executive 
and warned of an unspecified 
charge to cover further 
re s tructuring at its liquid foods 
division. 

APV said that on current 
projections, it expected to stay 
within its covenants, but 
declined to detail what they 
were. Analysts’ estimates of 
the restructuring charge range 
from £10m to £40m. 

Market talk suggested that a 
number of potential industry 
bidders were beginning to run 
their eye over the shares which 
were 138p earlier this year. 

Airways lower 

British Airways tumbled 8 to 
369p following news that 
USAir, in which BA has a 26 
per cent stake, had run up 
another big loss for its third 
quarter and was downbeat 
about tr ading tn the final three 
months of 1994. 

BA paid 9400m for its stake 
in USAir. Yesterday's losses - 
$3 a share, or possibly a full 
dollar above analysts' projec- 
tions - led the market to specu- 
late on the possibility of BA 
writing off all, or part a£ its 
investment 

The' combination of a weak 
US dollar and bearish com- 
ments from one US investment 
bank ensured that Wellcome, 
the pharmaceuticals group, 
was one of the FT-SE loo’s 
principal casualties yesterday. 

The shares were down 18 in 


NEW HIGHS AND 
LOWS FOR 1994 

new mm n<q. 

nuaja wa Act*3TW4 a Aon—a. 

Starco, IHSIHHMJTOfB £0 Mam & Hmigr. 
REA. wmw, EXTRACT1VH WOS <3) aencor. 
VtaMm Anas, WMMm Malta. FOOD MANIIF 
cn CR. Amn Ofl. EXPLORATION 8 PfUO 
m Bta. OTHER FMtaCUL ffl Jwtfar TynJM. 
PflTNO. WflH A PACXn (Q Jrivto Rw. 
MTAUR8, QBKRAL. (1) Maas Bm 
NEW LOWS M. 

BANKS PI ftrtono, MMLOMQ A CNSTRN m 
B HItaf , Boot 8 % P »4hui i, BUM MAILS 8 
MCKT8 M DWOn (JUL Do A. QiM. TtaL 
CHBOeALS m Ktan. DIBIHaUTORS » 
Aimom. Oxoo Molotm. taota. PHE MI W EB 

Bioca n btr wm*. laasm, nwai DiAvn 

B£CTBNC 8 BJCT EQUP H BCC. DriU. 
Foriaad, IndHMN Comal Sni. 
nanmwia n apv. Concentric. Kunpaan 
9 Hoc M 01AJ3. Hantne SHpc PW, 

Optotmufci, Pnapocl. Rtana. Nttatam 
Wh«M«L BIMOIM MOB M Dmgon. 
Monmn, RacKmood. fit bran HEALTH 
CARE M »4L LAbontoriw. Rotmctnta. 
Pramigr, Topnd LfaBctmoaa, HOUSEHOLD 
OOOOS (2} Fine Decar. vymn. INVESTMENT 
TRUSTS (1* WWSIWir COWAMEB P) 
LB8UR6 8 HOTaS H Aktan BVpc WL 
LatlMta Mantain Orianbri ML, MDU P) 
BBB Dtagn, OwnyODmm*H PartaaauOi 6 
Sustatad, MERCHANT BAMCS « KarabRM. 
00 TKpe m, OR. BXPLGWATIONE moo n 
PtartOritft S tWun taTO f . OTHER HWAWC 1 AL 
Cl) Bbtt. Bktfi 8 NotaK OTWR MM A 
BU8NB U) wn Mnomml MU 
PHAnMACeunCALS fl) Qnmpta. PRTNO, 
PAPOI R PACHQ (1) Bwmn, PdOBBUY (B) 
DnM VMoy, hk Una Londoa bmsrM. 
mv. Soottah IMKpaHwwltaM Pta. 
RETA&ER9L OBERAL n NngWw, MnW 
(JL 8om<ta> A SUtaORT SERVE (D Nava 
Pavow. TEXHLEB 8 APPARB. ce Ateandn 
Wo rioww. Rfetata, UKStaty. TRANSPORT 
0) London 8 OnMri RUohuni. NorioO. 
AIHMCANS (2) Dim 8 BnMraaL Geta 
SacMa 


early trading and against the 
trend. Goldman Sachs pub* 
fished a research overview rei- 
terating its negative stance on 
the stock and voicing concern 
over file long-term prospects 
for Wellcome’s herpes fran- 
chise. Then, as it was noted 
that the dollar was continuing 
its weak trend, the shares slid 


fiirther with the market to 
close 24 lower at 627p on desul- 
tory turnover. 

Elsewhere in the sector 
SmithKllne Beecham was 
affected by a Sunday newspa- 
per report that the US Food 
and Drug Administration was 
launching an inquiry into its 
acquisition of pharmacy bene- 
fit manager DPS. The shares 
fell 8'A to 4ilp. 

The share buy-back story, 
including talk of special one-off 
dividend payments, spilled 
over into the banks arena, 
driving stocks such as Bar- 
clays and TSB sharply higher. 

Barclays raced up to 585p 
early in the session, as the sto- 
ries took hold, but later fall 
sharply to dose unchanged on 
balance at 572p after the bank 
poured cold water on the sug- 
gestions. The bank said it 
would require shareholder 
authority for such a move. 
Turnover in Barclays reached 
a hefty 8.1m shares. 

TSB, which already has 
shareholder authority to buy 
in its own shares, edged up 3% 
to 224Vip. 

Life assurance stocks 
marked time ahead of an 
announcement from the Secu- 
rities and Investment Board, 
expected this afternoon, 
regarding compensation for the 
victims of misspelling of poli- 
cies by life assurance sales- 
men. 

Scottish and Newcastle and 
Whitbread stood out in a dull 
market, although the failure of 
the Lazard Brewers Invest- 
ment Trust new issue came too 
late to affect sentiment in the 
sector. The merchant bank 


said applications for less than 
icon units had been received - 
out of 215m on offer - and the 
issue, aimed at investment in 
UK regional brewers, will not 
go ahead. 

Bass ended 4 lower at 530p. 
In low activity, S&N and Whit- 
bread, the two brewers felt to 
be at the forefront of any 
industry rationalisation, rose 6 
to 521p and 5 to 552p. 

Stores group Marks & Spen- 
cer added 4% at 425V <p after 
Hoare Govett underlined Us 
enthusiastic stance at Its mom- 
lag meeting. It believes interim 
profits in early November will 
show an increase of around 9 
per cent from last year's 
£812.7m and pointed out the 
bottom line benefits of M&S 
trading on the four Sundays 
before Christmas. 

Rank Organisation edged up 
2 to 415p ahead of expected 
good third quarter results from 
Xerox Corporation on Thurs- 
day and market confidence in a 
favourable trading statement 
from the UK’s leading leisure 
group on Friday. 

Filtronic Comtek, which 
designs and manufactures 
components for mobile tele- 
phones, put up a good perfor- 
mance on its stockmarket 
debut, the shares, offered for 
sale at 105p, opened at 108p 
and progressed to 119p before 
settling at 113p. 

MARKET REPORTERS: 

Stave Thompson, 

Peter John, 

Jeffrey Brown. 

■ Other statistics. Papa 31 


LONDON EQUITIES 


LIFFE EQUITY OPTIONS 


QpSon 


— CTO pro — 

Oct JM Ajr Oct JBi Apr 


Option 


CTO Pllfc 

Hm Ftt Hqr No* Ftt Mar 


JtMDoaKq 540 38M - - 1 - - 

PS7S ] 589 2 - - 1614 - - 

Aiwa 380 EH 19 am 1H 14 I7H 

C268 ) 280 1 BH 17 15H 25 29 

ASM 80 SH 7H 9H 1 3 5 

P84 ] 70 1 3 5 7 8H tOM 

BitAfaMts 380 14 27 3BK 2M 15 21 


ran ) 


380 1 13H a 20H 32 37 


MOMMA 390 2M34H4IH 1 11H 17 


P12) 

420 

2 

18 

28 

9ft: 

25ft 

am 

Boots 

500 

33ft 

42 55ft 

1 

8% 

18 

PS31 ) 

550 

1 

15ft 28ft: 

20ft 35% 

10* 

BP 

390 

22ft 

33 

41 

1 

9* 

15ft 

pio) 

420 

2ft 

15ft 

S 

12 

24 

30 

acre SMd 

140 

28: 

23ft 27ft 

1 

3 

6 

P58) 

IN 

2 

18 16ft 

3ft 

ID 

13 

Ban 

500 

33 

43 

48 

1 

16* 

a 

rsM) 

650 

1 

HK23M 

23 

45M 

40 

auk&TO 

300 

13 

39 42ft 

2 

191 

Bft 

(*398) 

420 

1 

17 28ft 

a 

38ft 

43 

Caunadds 

420 

8 

32 

43 

i 

M 

10 

C«7) 

480 

1 

13» 

M: 

24ft 

30 

40 

OaonUataa 

4W 

38ft ! 

51ft 

57 

1 

7ft 

17ft 

rszs ) 

543 

1 

21 29ft 

18 

a 

44 

a 

800 

latsott 

M 

2 

24 

m 

r«5) 

830 

i : 

25ft 

38 

38 

52 ; 

T7ft 

Hngflsbar 

460 

MH 

30 

62 

1 

14M: 

23K 

C4») 

500 

1 

17 

33: 

25ft 35ft 

44 

Lead Seccr 

600 

Bft 

23ft 

38 

3 

21 

24 

f6») 

650 

1 

7 17% 

48H 

55 ! 

50ft 

Marts & S 

«so 

7 

23 

33 

2 

13 

19ft 

r«5j 

400 

1 

Oft 

15 

36 

40ft ' 

44H 

NtaM a 

AGO 

31ft 

43ft 54ft 

1 

lift 

24 

(*489 ) 

500 

S' 

23ft 

32 

14 

28ft 

49 

SMnsdrey 

360 

32 

4DH50H 

1 

9 

W 

(**9 ) 

300 

4»: 

22K33H 

5 

22 

a 

sm Tree. 

TOO 

8, 

38%: 

KM 

SH 

21 : 

MH 

(*7N ) 

TOO 

1 

BH 18ft 

52 

541 

97ft 

Stature 

an 

18ft 23ft 27H 

1 

4ft 

fl 

t*21B) 

220 

1ft 

n 

18 

5ft 

13ft 

10 

TMHgar 

N 

9 

lift 

14 

1 

4 

SH 

rs7 ) 

100 

1 

3 

8 

15 

18ft 

17ft 

IMcmr 

1100 

38 

83: 

ISM 

1 

73 

38 

P131) 

1150 

2 

36 

82: 

23ft 

47ft 

64 

taa 

800 

43 

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77% 

1 

15 

31 

f838 ) 

850 

3ft 

38 

SO 

14ft 

36ft 

ss 

Ofllen 


SM 

ran 

MW 

NO* 

Ml 1 

S3L 

Grand Mat 

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21 

32 

39 

7 

19ft: 

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1*401 ) 

420 

8 

17ft 25ft 

24 

36ft : 

BH 

ifldbnta . 

140 

16 

22 

29 

2 

5 

3 

P51 ) 

IN 

4 

lift 

18 

13 

14 ' 

18ft 

IMBaadta 

300 

12 

23 

Z7 

8 

13% 

93 

ram] 

330 

2» 

10ft 

I4H 

31% 

33ft 

43 

OpOan 


Deo 

Mm 

Jrei 

Dac 

thr 

■hai 

Raocn 

110 

lift 

16 ' 

18ft 

6 

8ft 

10H 

PIS) 

120 

7 

lift 

15 

12 

14 

18 

OpBon 


Sw 

Mil 

Mg 

MW 

FBI 


Bttt Aero 

460 

29ft 

48 

58 

17 

29ft: 

Bft 

PM) 

500 

12 

31 

a 

41 

S3 

62 

BAT tom 

420 

2tftM»42H 

7ft 

15ft 

27 

TOO] 

460 

3 

18 22ft 

34 : 

38ft 

51 

BIB 

300 

13 

23ft 

28 

7 

12ft 

19ft 

raw) 

330 

2ft 

9H 

18 

a 

31H : 

38% 

ttTHecan 

360 

28ft 

33 39% 

2 

an 

12% 

r»<) 

390 

6 

15 

a 

12M 

23*26% 

CaOreySCb 

420 

23 

38 

41 

5 

11H 

a 

f438) 

480 

4ft 

18 21ft 

29* 33ft 

43 

EstaaQK 

750 

38ft 

53 71ft 23ft 38* 

51 

pa) 

BOO 

lift 

32 

48 

a 

a 

79 

Mann 

460 

12ft 

27 

34 

9 

17 3W 

r*i ) 

EDO 

2 

lift: 

IBM 

41 H 44% 

G2 

DEC 

280 

BH 

16 

22 

B 

13 

IB 

P83) 

300 

22 

7ft 

13 

20 

a: 

m 


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ns>» 
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nos) 

P&O 

rses) 

radngkn 
P® ) 
ftudanM 
(-302 ) 
RTZ 
(-886) 


220 9 14H 17 5» 11H OH 

240 2 8 BH 19 » Z7H 

134 18 - - 2 - - 

154 SH - - 9 - - 

IN 18 23HZ7H ZH BH 10 

an 6 12WH11K iB a 


("482 ) 
Hagai Inata 
POO) 
Teuco 
C233 ) 


550 BS67H 
NO T7H3BH 
180 1G» 19 
200 4H 8H 
300 11H 22 
330 2 9 

850 33H G9 
NO 10H33H 
460 17H34H 
5» 4 17 

290 12»22H 
300 5 14 


75H 3H 9H 24 
46H19H2BH 47 
» 2h BH 9» 
14 ft 12 17ft 20ft 
25 6M 14 22 
12ft 30H 33 41H 
89 12ft 26K 45 
44ft 41ft 53H 71ft 
42 lift 21ft 38 
a 41 48 82 
29 10ft 17ft 24 
20% 24ft 29ft 38 


ra* 2 ) 


(-33S) 

OpDon 


220 19 25ft 30 3 8 12 

240 6ft Oft Wllft 15 21ft 
200 9ft 10 22 5ft 13 1BH 

217 3 8ft - IB 23 - 

325 17 - - 5 - - 

354 3ft - - Z2ft - - 

Oct Jaa Aar Oct Jan Apr 


BAA 500 8ft 22ft 33ft 3ft 18 23 

rS02 ) 525 1 11H 22 2fl» 33H 37 

Danes Wr 500 18 31 44 1H 19 24 

(-S1B ) 550 1 10 22ft 36ft 49ft 53 

OpOan Dec Mar Jm Dec Mr Jm 


Mbay Na8 
P411 ) 


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CS73 | 
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Brasil GW 

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nans 

P9B) 


390 34 «M 
420 19 28ft 
25 4 8 

30 2 3 

550 41ft 55ft 

GOO 18 28 

2SD 1SH 24 
300 8ft 18 
2N 14ft 23 
300 6 14 

180 23ft Z7ft 

an rift ten 


48 Bft 
30ft 19H 
BH 1ft 
4 4 

83 12 
38ft 38 
29ft 11 

21 23 
27 B 
18 30ft 

3ZU 4ft 

22 12ft 


1BH22H 
32ft 37ft 
2ft 3 
5 8 

24 31H 
51 58ft 
15ft 33ft 
27ft 35ft 
14 20 
24ft 30ft 
9ft 12ft 
19 23 


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P32) 

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t-348) 
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P07) 

Fan 

me > 

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P261 

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fOT) 

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[*2061 

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CG28) 

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IN IS 78 21 5 8 12 

IN 4 BH 11H 17 19 25 
IN IDft MH 17ft Oft lift I Bft 
140 8 19 13 12ft 17ft 18ft 

480 38 47 59 ID 18 27ft 
SN 14ft 28ft 37ft 31 38 47ft 
330 30 38ft 48ft 9M 10ft 22ft 
360 14 24 32ft 25 34ft 38 
IN 12 14 18 2 4ft 8 

110 5ft *ft 18ft 6 9 12 

220 17 24 28 7 3ft 15ft 

240 7 13ft 17ft 18 20ft 26ft 

120 13 18 22 5H BH 12 
130 7 73 18ft 10ft 14 17 

BSD 83 86ft 82ft 16ft 33 41ft 
1000 23 40ft 83 40 5BH 66 
80 IS M a 8 14 17 
240 Bft 11H 1B20H 2fl 29 


200 1Sft21ft 21 Eft 11 14 
220 8 12 17ft 17ft 22ft 25 

GOO E2 7DK 82 IBM a 41H 

660 E 45 58ft 41 ft 64 68 

Del Jan Apr Dtt Jtn Apr 

too 550 « 83 74ft 1 13 2»T 

(•891) 600 3 32ft 48ft 12 33ft 30 

tGBGTSpn 700 12 N 03 5ft 33ft 67ft 

rn») 7so i a 41 46ftBj»s7» 
ftaMns 4S0WH - - Z - - 

r4N) 4824ft — - 8- - 

Oplon Hw ft* May War Fit Mar 

Rofc-flqn IN 17 22H25H 2H 5ft 9 

P73 ) IN 5 lift 18 II 14ft 19 

' Underlying eeorty price. P re nd re ae mown are 
band on cta*)D Otar priori. 

October 34, Tool t onnauni 13XH7 Cab; BAM 
Pita 7557 


FT GOLD MINES INDEX 



Oct % dig 
21 so Mgr 

Oct Det YBV 

29 » aga 

amadhr 

1*4 % 

a weak 

Wgb baa 

Geid Mats tods (si) 
m MaglBdl kalcac 

22SUS -06 

230U3 2*7964 1963J7 

ISO 

2387A0 17B2XJ2 

AftfcatlQ 

Au III Bills (7) 

Mott AMsrica pi; 

3700X0 -03 
2307X39 +02 
17735* -1.4 

3711X17 3G8&94 27GDG6 
200164 2801.14 232038 

T 730.81 177030 1683.13 

3.78 

1 JR 
0.76 

371 1J7 230445 

amass 2161.17 
203886 1463,11 


Prebcam OoM Mtaaa mK (M 24: ar<8 ; <^a dangre -S3 peMNK v«re iqk 230.1 1 FWM. 

Lbhh pricos wore unreMb tar ffb edaton. 


RISES AND FALLS YESTERDAY 


Ml 


Saira 





13 







100 







116 














67 

342 

Ottwrs — — 

31 

48 

37 

Totals 

424 

544 

1620 


Data based an than eo m erias bad on Sw London Staa Sendee 


Eta*y 

Sattamem 


January 28 
February 0 


TRADITIONAL OPTIONS 

Fbat Dealings October 24 

Loot Deafngs November 4 

CaiK BB*y (J). Ewottimei, FHtmnlc, Henson Wta, Titan* OB. VMaoLoglo, WTO 
Qrem a. Pula & CaiK Hanaan Wta. 

LONDON RECENT ISSUES: EQUITIES 


laaua Amt fcftL 


Ooee 


rice 

D 

paid 

UP 

cap 

ffmj 

IflM 

High Low Stock 

price 

P 

*/- 

Nat 

dr*. 

Utf. Ora 
CO*, ytd 

PfB 

net 

_ 

FJ>. 

QjBB 

6*7 

4 APTA Wrote. 

5 


_ 

- 

- 

- 

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FP. 

9X12 

73 

83 Arteslrei Eats. 

67 

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- 

- 

- 

- 


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130 

If? 

1 Conti Food* WWa 

1^1 


- 

- 

- 

- 

B3 

FP. 

122 

08 

£5 Ematnlx 

67 


RN0.71 

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8.4 


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47A 

117 

106 Rtaw* CK* 

113 


RN0.73 

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115 

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39.1 

128 

116 Qsrim Workshop 

12B 


HN4.B 

22 

4.6 

IIP 


FP. 

233 

35 

28 Group Dv Cap Wta 

28 


- 

- 

- 

- 

- 

FP. 

293 

SZ 

89 Hreitoras 3m Ajten 

S3 


“ 

- 

- 

- 

_ 

FP. 

230 

30 

28 Do Wrerreds 

28 


- 

- 

- 

- 

180 

FP. 

17JB 

IBS 

176 Macro kid 

183 


maxi 

22 

4.1 

75 

160 

FP. 

4183 

161 

163 Atan EDAF 

163 

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1X1 

6.6 

9X1 


F.P. 


488 

475 ProflOo Inc. 

460 


- 

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- 

- 

135 

FP. 

59.1 

149 

136 Scrvtalr 

147 

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13 

32 

233 


F.P. 

1123 

379 

380 Templeton E Hum 

363 

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165 

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8.14 

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203 

380 

340 Wrextwn Water 

340 


- 

- 

- 

- 

- 

FP. 

4.74 

330 

320 Oa TN 

320 


- 

- 

- 

- 


RIGHTS OFFERS 

Issue Amawt Latest 
price paid Renm. 1864 

p l+ 3 data mpri Low Stock 


Ctosmg +«r- 
price 
P 


17 

M 

2712 

2 pm 

*4 pm APTA HaeJOi 


** pm 


118 

m 

20711 

20 pm 

9 * 2 Pm Catdec 


11pm 


Ir 4 p 

N* 

25711 

**pm 

qpm ftagon Ol 


*4 pm 


500 

HI 

18710 

BQpm 

24 pm FtocMa & Caiman 


60 pm 


100 

Mi 

9712 

I 5 *jpcn 

9 pm £Maw 


9 pm 


b 330 p 

M 

29711 

50 pm 

42 pm SmufiU 


42 pm 

-3 

75 

rs 

14/11 

5 pm 

i*2pm Worid ol Leather 


1*2pm 


FINANCIAL TIRRES EQUITY INDICES 






Od 24 

Oct 21 

Oct 20 Od 19 Od 18 

Yrage 

•Mah 

■Low 

Onflnary Star* 

232 SJ 2 

2333.7 

2356.2 2357.0 237&0 

23053 

2713 X 5 

22403 

Ora (tv. yWd 

4.41 

4.41 

4.37 4^8 443 

167 

4 X 51 

143 

Earn, ykl % W 

sxn 

& 2 B 

&22 622 6.18 

4.43 

6 X 51 

832 

WE ratio net 

1824 

1630 

16 S 0 1051 18.84 

28.06 

3343 

1634 

HE redo nfl 

17.78 

1734 

ia 03 1 BXJ 4 18.17 

2538 

3030 

17.09 


•For 1904. Onurey Share Mas <M» eamp M aie Ngn 2713.8 2 ajzah: tow 48A 28«Ma 
FT OnOrwry Stare ndn bees dale V705. 

Ordbary Shara hourly changes 

Open 9u00 IQuOO 11JB0 13X10 13X» 14XW 15CQ 16X» Mflh Ltar 

Z388J8 2335.7 2336.1 2343.1 2337j 6 2338J5 2338.4 2337.7 23286 23485 2324J) 
Oct 24 Od 21 Oct 20 Oct 19 Pet 16 Yr ago 

22J064 22XJ25 23,005 28146 21.758 32,442 

B42JB 1407.3 11S4.7 10181 11783 

- 24354 25388 22,838 24^70 35,668 

437.0 5681 602.4 4786 4853 

tEadbdHg kom+MMt buameea i 


S£AQ 
Eguty tumtrear (Cm)t 
Equity 


tiddm Options Trail i ui; Service 

Save to 


51 % 

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commission 




(44) 757 m&o 


t nlpaaftlrStejMr l»H remy efS a|W ** *• 1 SHtatahai 

TO rireMMUWwd ft BdHto«itairetftntm total B ee w 


[CUHORIL tan* XTMUI, mtaolTW Lenta todi Uirinap red Iksfi 








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2577 

1.3 

17.1 

333 

1,176 

72 

21.0 

116 

20*9 

*1 

_ 

239 

2*3 

44 

$ 

7 

58* 

- 


8 

133 

- 

307 

411 

BM 

3.1 

1*7 

289 

88*7 

29 

17.4 

14*2 

488 

1.7 

105 

S3 

408 

25 

177 

45 

1*8 

29 

148 

2* 

6X8 

- 

749 

362 

1405 

2.7 

229 

61 

122 

45 

113 

151 

4249 

!5 

,51 

412 

819 

23 

3* 

12.1 

103 

*1 

54 

106 

17 

_ 

269 

54*8 

05 

247 

445 

8615 

4.1 

190 

26 

482 

07 

225 

61 

043 

11 

119 

400 

1379 

29 

224 

6a 

9U 

56 

234 

1320 

934 

09 

27 3 

ieov 

487 


- , 

£23 

El 

© 

17 

04 

54.7 ; 

on 

7507 

19 

324 

56 

306 

36 

1*6 1 

343 

3419 

18 

225 

33*1; 

2615 

21 

199 


25 
230 
152 

205 W* U 
18 2.10 12 
IS 425 12 

a 803 28 
40 134 84 

120 838 34 

418 <Wl U 

Ta 


I 44 
284 ZB 
187.1 37 

8842 31 

388 72 

243 16 

881 43 

148 80 


1803 28 

2807 81 

2M 74 
672 22 

818 12 
128 
341 

489 127 
383 13 

1477 28 
1188 12 
427 IS 
28S 42 

2.127 16 

1481 U 
m2 - 
192 U 

mi 11 

2M 31 
2248 28 
198S 

2312 14 

438 23 

7383 - 

1581 32 

nu 28 

684 32 

348 15 

1284 40 


1379 

«*S 

193.7 

ID 

195 

1/5 

W2 

65 

2618 

*2 

3215 

201 

90S 

48 

7*1- 

- 1*5 

30*6 

111 

54*5 

14 

479 

19 

235.7 

147 

17*2 

Idfl 

12*6 

7.4 

































































ECEfige , gsee^esciesSa sbk , tsssseesgBssKSK 






































































































































































































38 


FINANCIAL TIMES TUESDAY OCTOBER 25 1994 


CURRENCIES AND MONEY 


MARKETS REPORT 


Rate rise lends support to Australian dollar 


The Australian dollar was 
yesterday firmer after the cen- 
tral batik's decision to raise 
short term interest rates by 100 
basis points, writes Philip 
GauritiL 

Although higher rates had 
been expected, the decision to 
lift cash rates to 6.5 per cent 
came earlier, and was larger, 
than the market had expected. 

The Australian dollar closed 
in London at S0.7366 from 
$0.7318 on Friday. Traders said 
Its inability to break through 
the $0.74 barrier left tbe Aus- 
tralian dollar vulnerable to a 
correction. 

Elsewhere, the US dollar 
traded in a narrow range. It 
gained some support from good 
German inflation data which 
renewed market speculation 
that the Bundesbank council 
might lower German interest 
rates when it meets this week. 
The dollar closed at DML497, 
from DM1.4964, and at Y97.215 
from Y96l995, 

The sterling Index was 
unchanged at 80.4, After a 
firmer start, with the pound 


rising above DM2.44, it later 
lost ground to close at 
DM2.437, from DM 2.4345. 
Against the dollar it was 
unchanged at SL623. 

in Europe, the Swedish 
krona was the star performer 
on the back of a successful 
bond auction. The krona fin- 
ished at SKr4.748 against the 
D-Mark, from SKr4.758. 

■ The Australian dollar has 
risen from around $0.65 at the 
end of last year to its present 
level, buoyed by rising com- 
modity prices and the prospect 
of higher interest rates. Some 
observers see this trend con- 
tinuing. but others believe a 
correction may be in order. 

Mr Joe Prendergast, analyst 
at Paribas Capital Markets, 
commented: "From here, given 
that commodity prices may 

■ Pound In Hm York 


Oct 24 
£S|M 
I mm 
3 mm 
Mr 


1-6290 

1.6293 

1,0279 

1.B18S 


- Prey, ctoa - 
1-6269 
1.6276 
1.6272 
1.6173 


weaken, with the increasing 
focus on the balance of pay- 
ments. and tbe CPI out this 
week, I would not be surprised 
if we saw the “Ozzie’ fall to 
$0.73 this week. It is not going 
through the technical levels, so 
the market is looking to the 
downside In the short term." 

The focus Is on the release 
tomorrow of the second quar- 
ter CPI figures. There is some 
concern that these figures will 
show why the RBA tig h ten ed 
policy as much as it did. If 
these suggest that the RBA is 
playing "catch-up" in combat- 
ting inflation, there is a risk of 
the “Ozzle" going the same 
way as the US dollar. 

■ The broad market consensus 
is that the US dollar will 
remain weak until at least 
some further tightening of 
monetary policy is seen. In the 
absence or this, it remains vul- 
nerable to a sell-off on the pub- 
lication of strong economic 
data. In this regard, both the 
employment cost index today, 
and the durable goods orders 


Germany 

Repo rate, 96 

6.0 



4.5 1 — 1 — 1 
Source DatasJraon 


1394 


tomorrow, will be closely 
watched. 

Although the dollar remains 
very weak, it appears that the 
absence of central bank inter- 
vention may actually have 
helped. Commenting on the 
dollar's very narrow trading 
range. Mr Jeremy Hawkins, 
chief economist at the Bank of 
America in London, said: "It 


may be more effective letting 
the market worry about poten- 
tial intervention than actually 
buying dollars publicly.” 

Mr Hawkins said he believed 
the market was also "pretty 
short” of dollars now, and this 
accounted for the slow trade, 
in the absence of new informa- 
tion to trade on. 

Mr Tony Norfield, UK trea- 
sury economist at Abn-Amro, 
said the loss of liquidity in 
financial markets this year 
was another factor explaining 
the subdued trading volumes. 
"There are not that many big 
investors prepared to take a 
bet and go with it,” he raid. 

■ The catalyst for the firmer 
krona was a successful bond 
auction which was more than 
two times oversubscribed. 
Weakness in the bond market 
has occasionally undermined 
the currency in recent months. 

The Finnish markka ended 
at FM3.046 to the D-Mark, from 
FM3.0525. Dealers reported the 
Bank of Finland had earlier 
bought small amounts of 


D-Mark for markkas. Mr Pren- 
dergast commented: "The 
Bank of Finland has in the 
past month been on both sides 
of the market. The bank is not 
protesting against particular 
levels of the markka; it is just 
seeking to calm some sharp 
market moves." 

He said he was sceptical of 
whether the trend that has 
seen the markka rise by 21 jS 
per cent against the dollar this 
year, could continue. 

■ The overnight rate traded 
between 554 and 7 per cent as 
the Bank of England provided 
UK money markets with £25 Im 
assistance - £X75m in the form 
of late assistance - after fore- 
casting a £450 m shortage. 
Three month LIBOR was 
unchanged at 5$ per cent. 

■ OTHgBCUBHWC WS 

0d» £ 3 

ttenjary 171JB20 - 172036 105560 - 105.68) 
Iran 2351 JM ■ 2354.00 174400 - 176000 
KM* 0038 - 0.484} 012973 • 02979 

RfeOd 374045 - 374649 229800 - 230100 
nusSa 4982.14 - 497029 304000 • 305350 
UM £9747 - £9666 35715 - 35735 


POUND SPOT: FORWARD AGAINST THE POUND 


DOLLAR SPOT FORWARD AGAINST THE DOLLAR 


Oct 24 


Ctaalng Chengs BUtofter 
mid-para on day spread 


Day's Md 
high low 


One month Three months Ona y*sr Bank of 
Rata KPA Bale ftPA Raw ftPA Eng. Index 


Oct 24 


Closing Change Bid/off or 
mid-point on day spread 


Day's mM 
high low 


Orel month Three months Ona year J.P Morgan 
Rate ftPA Rate %PA Rate MPA Index 


Europe 
Austria 
Botgkjrn 
Denmark 
Finland 
France 
Germany 
Greece 
keloid 
Italy 

Luxembourg 
Netherlands 
Norway 
Portugal 
Span 
Sweden 
Switzerland 
UK 
Ecu 
SDRt 
Americas 
Argentina 
Brad 
Canada 

Mexico (New Peso) 55635 
USA (S) 1.5280 

PoeMe/MIddle Baal/ Africa 


Europe 



17.1521 

*00174 

454 - 588 

174089 17.1450 

17.1478 

03 

17.1369 

0.4 

. 

- 

1104 

Austria 

tSchl 

105360 

40011 

335 - 385 

105795 104330 

10436 

00 

104358 

0.0 

10481 

07 

104.6 

fflFf) 

50.1897 

*00635 

657- 737 

5 04450 501600 

5015*7 

as 

500847 

as 

49.6947 

1.0 

1174 

Betaken 

W 

308300 

♦044 

200 - 400 

309350 304200 

3044 

-0.4 

3079 

0.5 

3074 

04' 

1062 


9.5251 

+04061 

212 - 290 

9-5587 9-5207 

94204 

06 

9.5391 

-0.6 

9.5685 

-04 

1174 

Dowaric 

8*0 

54510 

+0004 

495 . sas 

64799 

54480 

54554 

-04 

54615 

-09 

5421 

-12 

1007 

(FM1 

7.4207 

-00377 

174 - 360 

75280 7.4170 

. 

- 

- 

. 

- 

- 

894 

Rntarxf 

(Bfl 

4.5620 

-0023 

670 - 670 

4.8256 

4.5520 

44627 

-02 

4.6593 

02 

44895 

-02 

834 

(FFf) 

03517 

+04065 

480 - 554 

03830 a 3470 

03519 

0.0 

0344 

0.4 

84842 

04 

110.7 

France 

(FFi) 

6.1303 

+04042 

287 - 317 

5.1510 

5.1275 

01322 

-04 

6.1307 

00 

01242 

01 

1064 

(DM1 

2.4370 

+04025 

362 - 377 

2.4464 2.4361 

2.4358 

06 

2.4323 

04 

2+4007 

1.5 

126.8 

Gennany 

roi 

1.4970 

400016 

967 - 972 

1.6030 

1.4960 

1.4971 

-at 

1.4953 

0.4 

1.4843 

08 

1074 

(Dr) 

374.998 

+0313 

859 - 137 

376.987 374453 

- 

- 

• 

• 

- 

- 

- 

Greece 

8*1 

230450 

+04 

300 - ■«» 

230.930 230300 

230445 

-14 

231,225 

-14 

230426 

-14 

607 

(IQ 

1.0136 

-04013 

129 - 142 

1.0154 1.0125 

1.0134 

02 

1.013 

04 

1.0149 

-01 

105.6 

Ireland 

OEJ 

1.6062 

400021 

054 - 069 

1.6C80 

1.6038 

14061 

0.0 

14063 

00 

14S32 

04 

- 

(L) 

2491.58 

-0.08 

038 - 277 

250347 249010 

2497.58 

-2.9 

2509.38 

-2.9 

256083 

-2.6 

744 

IWy 

(U 

153050 

- 

000 - 100 

1537.50 153000 

1534.85 

-04 

1542.7 

-32 

1584 

-34 

74.9 

0ft) 

50.1897 

400635 

657 - 137 

503450 50.1600 

501647 

08 

50.0847 

04 

494947 

1.0 

1174 

Luxembourg 

Oft) 

304300 

40.04 

200 - 400 

309350 308200 

30.84 

-0.4 

3079 

04 

3074 

04 

1062 

(fl) 

2. 7316 

40003 

308 - 324 

2.7403 2.7300 

2.7302 

06 

2.7263 

04 

2.6833 

\A 

1214 

Netfieriande 


74780 

♦00019 

777 - 782 

>4840 

14773 

7.6752 

-01 

T478I 

04 

1486 

07 

106.0 

(NKi) 

106012 

+00046 

971 - 053 

106456 105966 

104007 

0.1 

10604 

-01 

106046 

00 

806 

Norway 

(NKi) 

64120 

♦0403 

105 - 135 

64422 

64100 

05157 

-0.7 

0.5335 

-14 

6487 

-12 

90S 

(E3) 

249.288 

40204 

168 - 408 

250138 249.163 

261418 

-64 

254.196 

-7.9 

- 

- 

- 

Portugal 

(Ee) 

153.130 

+013 

080- 180 

150660 153470 

163405 

-64 

15543 

-64 

15948 

-4.1 

901 

(PtaJ 

203.258 

+0238 

186 - 330 

203.800 203.180 

200603 

-24 

251.713 

-2.0 

207.033 

-1.9 

864 

Spain 

mo) 

124455 

4015 

630 - 850 

125.190 124.820 

125.12 

-24 

12088 

02 

120055 

-24 

802 

fSK/J 

11.5695 

-0.0109 

001 - 788 

11.8495 11-5600 

114905 

-24 

114375 

-2.4 

11.8255 

-24 

76.7 

Sweden 

ISK,) 

7.1068 

-00065 

021 ■ 114 

7.1532 

7.1018 

7.1216 

-24 

7.1643 

-2.7 

74193 

-00 

82.0 

(SFr) 

2.0293 

+0.0016 

281 - 304 

2.0385 24275 

24265 

1.6 

24197 

1.9 

14804 

2.4 

1234 

Switzerland 

(SFr) 

14465 

+0.001 

460 • 470 

1.2520 

1.2454 

12454 

1.1 

1.2417 

14 

1225 

1.7 

1007 

(q 


. 

. 

. 

- 

- 


- 

- 

- 

804 

UK 

» 

14280 

• 

277 - 282 

1.6293 

14256 

1.5272 

as 

14267 

04 

14168 

07 

884 


1-2805 

+04015 

798 - 812 

14847 14795 

14804 

01 

1480* 

0.0 

14748 

04 

- 

Ecu 


14713 

-00017 

708 - 718 

15723 

15671 

1.2706 

07 

1.2702 

04 

12682 

02 

- 


Peso) 

(Hi) 

(CSI 


1.6279 - 275 - 282 

1.3854 -0.0001 835 • 872 
26013 -0.0042 005 - 020 
40.003 002 - 038 
- 277 - 282 


1.5291 1.6256 
1.3896 1.3820 
2-2035 2.1970 
55678 5.5555 
1.6293 1.0256 


Australia 

(AS) 

22102 

Hong Kong 

(WKS 

124797 

India 

(Re) 

51 .0568 

Japan 

PD 

158261 

Malaysia 

(MS) 

4.1567 

New Zealand 

(N28 

24588 

Philippines 

(Peso) 

40.6174 

Saudi Arabia 

(SR) 

6.1058 

Singapore 

(S$) 

2.3885 

S Africa (Can.) 

(H) 

07068 

S Africa (Ra) 

(R) 

04711 

South Korea 

(Won) 

1297.96 

Taiwan 

(TS) 

42.4126 

Thailand 

PO 

404685 


-0.0153 091 - 113 2-2215 2-2034 

-0.001 759 - 824 125896 12.5625 12.5756 


40.353 198 - 326 158440 158.130 157431 
-0.0008 552 - 581 4.1698 4.1511 

-04031 553 - 583 2.0601 24547 


- 045 - 071 
-04012 973 - 996 


0.1107 fi.0978 
2.4006 24959 
5.7172 5-7028 
84120 6.4530 
-0.62 685 - 896 129940 1296.40 


-0.0328 538 - 884 


22002 

0.6 

2.199 

04 

2.1956 

03 

86.8 

14272 

a6 

1.6267 

03 

14168 

07 

804 

22102 

00 

22115 

-02 

22296 

-0.9 

_ 

124758 

04 

124747 

02 

124818 

ao 

- 

157431 

03 

156426 

3.6 

151471 

42 

189.1 

2.0607 

-14 

2.6685 

-14 

2.6907 

-14 

_ 

- 

j 

- 

- 

” 

. 

- 


14000 

04510 

1.3522 

&417S 


- 999-000 

- 500 - 520 
-0.0028 519 - 524 

40.002 160 - >90 


1.0000 04999 
a 0530 0-0500 
14526 14509 
3.42 00 3.4150 


(AS) 

14577 

-04093 

<HK» 

7.7273 

-0.0004 

(Rs) 

314888 

- 

W 

97.2150 

+022 

(MS) 

24533 

-0.0005 

(N23) 

1.8320 

-0.0019 

(Peso) 

244500 

-0.25 

PH) 

3.7506 

+00001 

PS) 

14733 

-00007 

1 P) 

34068 

+0001 

P 

34750 

-002 

(Won) 

797235 

-0455 

(TS) 

20O52B 

+04265 

PO 

244200 

+002 


581 


tSOfl rates lor Oct 21. BUfenv iprwxfci in the Pound Spot tabta show arty Hie toil Base dneknel pieces, forward reus are not dkeedy quoted w the mvfaei 
But are hnpBdC by cuiwn ntanM rates. Starting (Max catenated by Ota Bonk of Enpsnd. Base snrsga 1986 - 100.BH, otter and Md-tteas In ban Hs end 
die Dofar Spat tables dehrad (ram THE WMffiEUTBlS CLOSING SPOT RATES. Some vetoes are reuided by die F.T. 


CROSS RATES AND DERIVATIVES 


Americas 

Argentine (Peed) 

BrazH (RD 

Canada (CS) 

Mexico (New Peso) 

USA ($) 

Padflc/MkMe East/AMca 
Australia 
Hong Kang 
IncEa 
Japen 
Matayala 
New Zealand 
PhBpphn 
Said Arabia 
Singapore 
S Africa pom) 

S Africa (Fh.) 

South Korea 
Taiwan 
Thailand 

tSOft rate far Oct 81. Bktfoftor spreads In dwDolw Spat leUs show only die ten thee deefaxr ptacee. Asmara akn am not tfteefly quoted Biho merM 
But are I mp end by current Interest ruses. UK. Ireland & ECU are quoted In us twrency. J P. Morgan nominal hxflces Oct 21. Baaa average 1B90-10Q 


075 


545 


1.36S5 14541 
7.7280 7.7260 
31.3700 314850 
974200 97.1800 
24545 24520 
1.6327 1.6313 
25.0000 244000 
3.7510 3.7500 
1.4745 1.472S 
34103 34040 
4.0000 34600 


14521 

00 

1.3525 

-0.1 

14602 

-04 

806 

04165 

-04 

04203 

-03 

04277 

-03 

- 

- 

- 

- 

* 

* 

- 

94.1 

1458 

-02 

14587 

-03 

1466 

-08 

84.4 

7.7271 

04 

7.7278 

00 

7.7428 

-02 

- 

31.4538 

-03 

31.5988 

-24 

- ' 

• 

- 

90995 

2.7 

96.415 

03 

9078 

08 

1502 

24441 

44 

24328 

32 

06063 

-2.1 

- 

1.8329 

-0.7 

14348 

-07 

1.6401 

-04 

- 

07519 

-04 

3.756 

-0.6 

07746 

-08 

_ 

1.472 

1.1 

1.4701 

09 

1.4633 

07 

- 

3.ICT93 

-03 

05506 

-00 

08273 

-04 

- 

4.0087 

-102 

44675 

-9.3 

• 

- 

- 

600295 

-44 

800795 

-03 

822295 

-01 

- 

264728 

-04 

26.1128 

-09 

. 

- 

- 

244925 

-05 

2012 

-02 

254 

-2.7 

- 


WORLD INTEREST RATES 


HOMEY RATES 

October 24 Over 

night 


One Thee 
month mths 


Sbt 


One 


Lome. 

Inter. 


Dts. 

raw 


Repo 

rate 


Belgium 

week ago 
France 
week ago 
Germany 
week age 
Mend 
week aga 
Italy 

week ago 
Nethertende 
week ago 
Switzerland 
week ago 
us 

week ago 
Japan 
week ago 


43 

5 

5 Vi 

54 

HV4 

4 7* 

5 

5M 

55 

04 

5J 

53 

5% 

S-Ti 


Sj 

Si 

5K 

65i 

«« 

445 

4.9S 

015 

525 

5.58 

448 

495 

015 

520 

5.62 

Si 

556 

5i 

6» 

7'6 

4« 

SM 

5V> 

ei 

74 

8 Vi 

8% 

8* 

9'A 

104 

8J 

8% 

W* 

AM 

10K 

4.84 

4.95 

5.19 

033 

5.70 

444 

445 

017 

031 

5.71 

33 

33 

4V6 

4M 

466 

ZB 

33 

416 

4i 

43 

43 

•>3 

54 

57, 

54 

43 

43 

5K> 

64* 

6!i 

256 


34 

24 

2ii 

216 

216 

2H 

2'h 

23 


7.40 

7.40 

5.00 

5.00 

040 

640 


6425 

6425 


450 

440 


4.50 

4.50 


7. SO 

7.50 
54S 
5.25 

3.50 
3.50 
4.00 
4.00 

1.75 

1.75 


0.75 

6.75 

4.85 

4.85 

865 

645 

840 

800 


M ft LlSOA FT London 


Interbank: Fixing 

S 

566 

53 

BK, 

- 

- 

- 

week ago 

S 

54 

53 

54 

“ 



US DoBer COa 

- 4.86 

529 

072 

821 

“ 

- 

” 

week ego 

- 4.86 

023 

054 

6.10 

“ 

- 

” 

SOR Linked Ds 

3»6 

34 

3 Vi 

4 


■■ 


week ago 

366 

34 

3# 

4 

" 




ECU LMced Os wM relate l mdK 8J; 3 mere: e-.. a mere, a ^iyar: *4-5 
ntoe are altered rsw tor Siam Quoted to the mretat by tow tofa rey * .l 1 .”? "“**"9 

day. The banter <n Benton hum. Bank at Tokyo. JS51 K L. . ™ 

Wiaamdmn tor the domosde fckw Ratos, US 5 COa ond SOfl United Drew** <D»>- 


EURO CURRENCY INTEREST RATES 


Oct 24 

Short 

twin 

7 days 
notice 

One 

month 

Three 

months 

Belgian Franc 

4{| 

<4!J 

4H 

-4» 

5 - 

<h 

A - 

5*s 

Qanbh Krone 

8 - 

& 

8 - 

5^4 

6 - 

A 

Mi - 

6 U 

O-Mak 

4% 

<4% 

4% 

-4% 

4J2 

-all 

SA ■ 

Si» 

Outcfi Qufcfcr 

5 - 

4% 

5 - 


5 - 

4% 

« ■ 

5>l 

French Franc 

Sh 

'5U 

5,1 

■5,*4 

Si 1 * 

BA 

S5,- 

5>2 

Portuguese Esc. 

9% 

-9 


-9 

5 s # 

SA 

10 U 

- 10 

Spanish Paean 

7h 

-73, 

7*a 

- T*a 

7J, 

7»j 


712 

Starling 

5H 

■5*s 

5A 

■54 

sja 

s, 7 . 

sii- 

SH 

Swiss Franc 

3^ 


3* 


3U 

3}J 

4 A - 

31) 

Can. Odor 

5 • 

411 

5 - 

412 

4U 

«» 

SA - 

3,1 

USDcBsr 


■45, 

4U 

-4a 

5 - 

4% 

55s- 

5*2 

Italarr L*a 

9 - 

71 2 

8 % 

-8 1 * 

8 * 

fl>S 

81i - 

8 % 

Yen 

2 \* 

-2A 

24 

-2£ 

*fc 

2 ti 

ai,- 

2A 

Asian SSing 

1 % 

-Tti 

tU 

- I 1 ! 

2\ 

at* 

3A - 

3i‘« 


Six 

months 


One 

year 


5A - Sit 

034-6*8 


5% -SM 
to* - io*4 
8% - S>* 
6>| -6* 
4<a -4l| 
6 - 5 ^ 
sl3 • SM 
su - ah 
2 >2 - 2,1 


6'4 - Btf 
7»2 - 73 b 

511 - s;. 
5U -5S 
63, -6>4 
10*1 - 103» 
9*i-0 
T& - 7,1 
41,. 4*2 
611 • 6U 
6*2 -Mi 
life - 10*B 

211 - Z* 

4 - 3% 


Short term was ere cal lor the U6 CMBer and Van. obi+r* two data 1 nrtce. 

■ THittn MONTH MBOR FUTURES (MAT1F) Ports Interbank off ered rate 


Open Sen price Change Hgli Low 

Dec 9420 94.19 - 9421 94.18 

Mar 33.75 9073 -001 3075 9071 

dun 8324 9322 -0.01 9035 9320 

Sep 92.85 92.33 -021 9226 92.92 

■ THROB MONTH SUROOOLLAR (UFFQ- Sim pohta Of 100% 

Est vol. 
6,131 
0856 
3.874 
1.369 

Open int 
57238 
38.444 
27,450 
20.031 


Open 

Sen price 

Change 

rtgh 

Low 

Eel vol 

Open W. 

Dec 

94.01 

8098 

-0.02 

9421 

94.01 

53 

2529 

Mar 

- 

9055 

-022 

- 

- 

0 

1386 

Jun 

te 

9327 

-004 

• 

- 

0 

300 

Sep 

- 

82.71 

226 

- 

- 

0 

56 

■ THROB MONTH EUROMARK FUTURES 

(UFFE)' DMIm points of 100ft 



Open 

Sett price 

Change 

High 

Low 

ESL vd 

Open toL 

Dec 

9420 

94.61 

+0.02 

94.82 

94.76 

15847 

158054 

Mar 

94.47 

94.47 

- 

04.49 

94.44 

23892 

141279 

Jun 

94.08 

94.06 

-002 

9429 

9424 

12945 

104094 

Sap 

9069 

9066 

-002 

8009 

93.64 

4659 

78093 

■ THUS MONTH MJROfJRA INT jRATK FUTURSS (UFFE] LlOOOm points of 100ft 


Open 

Sett price 

Change 

High 

Low 

Est- vd 

Open Im. 

Dec 

9069 

90.68 

-001 

90.73 

90.67 

2889 

32878 

Mar 

69.99 

B926 

•002 

9001 

89.95 

1486 

24483 

Jun 

89.44 

8042 

-0.02 

89.46 

.89.41 

652 

16499 

Sep 

8928 

89.03 

-003 

8929 

8925 

237 

18082 

■ THUMB MONTH EURO SWISS RIANC TOUIR89 (UFRQ SFrlm points at 10OH 


Open 

Sett pride 

Change 

High 

Law 

Est. wr 

Open (nr. 

Dec 

9082 

95.78 

-022 

9082 

95.77 

1901 

10007 

Mar 

9047 

9045 

-002 

9047 

95.44 

1037 

16368 

Jun 

9005 

9005 

- 

95.07 

95.04 

288 

5216 

Sep 

94.71 

94.71 

-021 

94.71 

94.71 

20 

1843 

■ THRU MONTH OCU nmiRES (UFF^ Eculm pdnts of 10096 



Open 

Sett price 

Change 

High 

Law 

Est vol 

Open int 

Dee 

9321 

9322 

+001 

9083 

9081 

141 

7360 

Mar 

9037 

93.34 

-002 

9037 

9032 

639 

6630 

Jun 

92.84 

92.83 

-001 

92.84 

92.80 

465 

3694 

Sep 

* UFFE tontrm 

92.37 92.34 

traded on APT 

-024 

9229 

92.31 

87 

2216 


EXCHANGE CROSS RATES 

Oct 24 BFr DKr FFr 

DM 

K 

L 

H 

MKr 

Ea 

Pta 

SKr 

SFr 

£ 

CS 

S 

Y 

Ecu 

Belgium 

(BFr) 

100 

1828 

16.84 

4256 

2.020 

4965 

5.443 

21.12 

4907 

4001 

2005 

4643 

1692 

4286 

3244 

3104 

2.552 

Denmark 

PKr) 

52.69 

10 

0769 

2559 

1.065 

2816 

2.888 

11.13 

281.7 

2104 

12.15 

2.130 

1.050 

3211 

1.709 

1662 

1246 

France 

(FR) 

60 .08 

11.40 

10 

2218 

1214 

2984 

3271 

12.69 

2982 

2404 

1365 

2.429 

1.197 

2635 

1.949 

1896 

1634 

Sernwny 

(DM) 

2029 

3208 

0427 

. 1 

0-416 

1023- 

1.121 

4350 

102.3 

8042 

4.748 

0833 

0.410 

0903 

0688 

5426 

0626 

InHond 

(E) 

4920 

9283 

8237 

2.403 

1 

2458 

2.684 

10.45 

2452 

2002 

11.41 

2.001 

0685 

2.171 

1606 

1501 

1263 

Italy 

w 

2.014 

0282 

0235 

0098 1 

1 0041 

100 

0.110 

0426 

1000 

0158 

0.464 

0081 

0640 

0088 

0665 

0352 

0651 

Neinerianaa 

ffl) 

1037 

0480 

0057 

0.892 

0371 

9122 

1 

0880 

9125 

74.41 

4235 

0.743 

0.366 

0806 

0596 

5764 

0.469 

Norway 

(NKr) 

4725 

8286 

7.879 

2299 

0957 

2351 

2277 

10 

2352 

1916 

1092 

1.914 

0943 

2.076 

1238 

I486 

1208 

Portugal 

(Es) 

2013 

3.821 

0350 

0278 

0407 

999.6 

1096 

4252 

100 

81.55 

4641 

0614 

0.401 

0683 

0653 

6050 

0514 

Spain 

(Pta) 

24.89 

4.685 

4.108 

1.199 

0.499 

1226 

1244 

0214 

1226 

100 

0691 

0998 

0492 

1683 

0801 

7767 

0630 

Sweden 

(SKr) 

4038 

8232 

7219 

2-106 

0B76 

2154 

2.381 

9-162 

2152 

1707 

10 

1.754 

0854 

1602 

1.407 

136.8 

1.107 

Switzerland 

(SFr) 

24.74 

4.684 

4.116 

1201 

0200 

1228 

1246 

0224 

1226 

1002 

6.702 

1 

0493 

1685 

0602 

7002 

0631 

UK 

ra 

50.19 

9225 

8252 

2.437 

1.014 

2492 

2.732 

1060 

2482 

2032 

11.57 

2629 

1 

2.201 

1628 

1582 

1261 

Canada 

PS) 

2220 

4228 

3.795 

1.107 

0461 

1132 

1241 

4.818 

1132 

9227 

5257 

0622 

0454 

1 

0.740 

7162 

0682 

US 

ra 

3083 

0851 

5.130 

1^497 

0623 

1531 

1278 

0511 

153.1 

1246 

7.107 

1248 

0614 

1252 

1 

9724 

0787 

Japan 


31.71 

6.017 

5276 

1239 

0.641 

1674 

1.728 

0696 

1572 

1204 

7.309 

1282 

0.632 

1.390 

1.028 

100 

0809 

Ecu 


39.18 

7.438 

6220 

1202 

0.792 

1945 

0133 

0275 

1942 

1507 

9.032 

1284 

0.781 

1.718 

1271 

1206 

1 


Danish Kroner. French Franc. Notwretfon Krtnar, end Sweden Kronor par 10; Belgian Franc, Yen, Escudo. Ura and Peseta par 100. 


MW* FUTURES (IMM) DM 125,000 per DM 


■ JAPANESE YEN FUTURES (IMM) Yan 124 per Yen 100 



Open 

Latest 

Change 

High 

Low 

Eat vol 

Open M. 


Open 

Latest 

Change 

High 

Low 

Est vd 

Open im. 

Dec 

0.6664 

0.6671 

- 

0.8873 

0.685B 

28017 

89.870 

Dec 

1.0321 

16326 

-06016 

1.0338 

16300 

27553 

59.065 

Mar 

0.6680 

0.6678 

0.0007 

06683 

0.6874 

256 

4.416 

Mar 

16418 

1.0407 

-0.0019 

16410 

16303 

278 

0790 

Jun 

’ 

06698 

- 

- 

- 

53 

613 

Jun 

1.0505 

16505 

■00023 

1.0505 

1.0505 

2 

443 

■ SWISS FRANC FUTURES (MM) SFr 125600 per SFr 



■ STSRUNQ FUTURES (IMM) £62000 per C 




Dec 

0.8021 

0.BQ38 

-00003 

08028 

0.8004 

19,651 

42.083 

Dec 

1.6254 

16260- 

+00006 

1.6280 

1.6246 

13640 

44699 

Mw 

0.BO5O 

0 8058 

0.001 B 

O.BOS6 

08040 

161 

1.197 

Mar 

10226 

1.6220 

+00038 

1.6274 

1.6220 

83 

467 

Jun 

- 

06102 

- 

- 

- 

9 

129 

Jun 

- 

1.6200 

- 

16210 

16200 

1 

a 


LONDON MONEY RATES 


Oct 24 

Oyer- 

7 days 

One 

Three 

Six 

One ' 

Netherlands 

2.19672 

2.14843 

+060136 

-029 

5.84 

_ 


night 

node® 

month 

months 

months 

year 

Betaken 

40.2123 

39.4353 

+0.0298 

-163 

505 

15 

Interbank Sterling 
Storting CDs 

Treasury BSs 

Sank Bate 

Local *4 honiy daps. 
Oscount Make* Oops 

7-51+ 

siz-sa 

5»! -5* 
513-5% 
5* • 5A 
5H - SA 
s.’+ • 5A 

8 • 6* 
5^ - 51+ 

s> • >A 

s:I - 5J+ 
A- A 

8> # -6l, 
«A ■ 6A 

7,», - 7,V 

7A - 7A 

Qennany 

Ireland 

France 

1.94984 

0.808628 

663883 

161648 

0794845 

668308 

+060149 

<0.002158 

+0.00181 

-1.75 

-1.73 

067 

568 

563 

3.13 

9 

-4 

5'+ • 5*8 
fl*+ - A 

5'+ . S*« 
s 3 * ■ 51+ 

«>« -6A 
6.V - 0 1 . 

74 - all 

Denmark 

Portugal 

Spain 

7.43679 

192.854 

154650 

7.48444 

130872 

159.688 

-000205 

+0035 

-0007 

064 

160 

061 

266 

1.92 

0.00 

-5 

-11 

-23 

Uh clearing bank tusa fancKivj re» SA per cent from September 10 1994 


NON ERM MEMBERS 
Greece 264613 

294.579 

+0.111 

1107 

-76S 




up to 1 

1-3 

3-6 

6-9 

9-12 

Italy 

1793.19 

195047 

-167 

022 

-502 

_ 



month 

month 

months 

months 

months 

UK 

0.786749 

0784484 

-0.002546 

-028 

361 

- 


Ccrto <M To* dop. (CIOO.OOCQ 1«2 4 31+ 3*2 

Cart] at Tret Onp. urunr CtOO.OOO a 1‘jpc. DeposUo wtttdravm for Cash tape. 

Aw> renter rate « dtowunt 5,+ZHJpC. ECGO tend rata Sb£. Export Franco. MAamdn Sop 30. 
1B94. Agreed rote tor petted Oc 24, 1994 to Nov 26. 1994, Schomoe fl S IB T.OSpc. Retorance rate Mr 
ported Gep i. taw to Sew 30, iw. Sciwnm tv a V a.rrao- Rnanca Htxaa Bam Rwi epc tremOa 
i. T9W 

■ Tuna Korrm sterlmo futures (UFpg csoo.ooa pants «t ioo% 



Open 

San price 

Change 

High 

Low 

Set uol 

Open Irtt. 

Dec 

9362 

93,50 

- 

93.52 

93.48 

10442 

145669 

Mar 

92 69 

92.66 

-062 

92.70 

92.63 

10285 

74087 

Jun 

92.09 

9265 

003 

92.11 

92.03 

2522 

56097 

Sep 

91.68 

91.83 

0.03 

91.68 

91.62 

1269 

61408 


Trodod on APT. AJ Opo" rttreat eps. ore tor premia day. 


■ SHORT STERLING OPTMH9 iUFFE) CSOQ.OOO pofeiU Of 100% 


Strike 

Price Doc 

- CALLS - 

Mar 

Jun 

DOC 

— PUTS 

Mar 

Jun 

9350 0.18 

0.07 

0.09 

0.18 

0.91 

1.54 

9375 0 07 

0.03 

0.06 

062 

1.12 

1.76 

9400 0.02 

001 

004 

O.S2 

1.35 

1.99 

C*. Mil. tout. Cate 4788 Pus 63U. Proutous day's open Hit. Cob XI7454 Pus iSHtS 



EMS EUROPEAN CURRENCY UNIT RATES 

Oct 24 Ecu cen. Rata Change K +7- Iron % spread Dhr. 

rates agolrwt Ecu on day con, rale v weakest Ind. 


Ecu ctnoa rates set by dw Ewopftto Com niU teoa Currencies are in daaoentSng retezhre auenybi. 
Rtroanc^o chanpter oa tor Ecu; s postore changs denotes a ««sak cunancy. OtrenrerUe s h ows the 
ratio batwsm tan rereads, dw percentage cSItaenco bstereai Dw Bdual niarhot and Ecu Canute rates 
tor a aarency, and the manlmum pat u ds od patcantega deutoPon a dta cursney 1 * mate, rate tram 'a 
Ecu central rats. 

11719192} StteUnp std son Lira luapanded ham EPML Adlustnient edeutand by tha Hiui i da l Times. 


m PHILADELPHIA SB E/S OPTIONS £31,350 (cents per pountfl 


Strike 


CALLS 


BASE LENDING RATES 


Actam 8 Company 5.75 

Aj&od Trust Sank -5 75 

AIBBank 5.75 

•Henry Ansbocher 5.75 

Bank of Banna.. .. - 5.75 
Banco Hbo vtxaya. . 5.75 

Bank at Cyprus 5.75 

Bonk of Ireland sts 

Bonk of India 575 

BankolSseUand 475 

Bardoya Bark - 5.75 

aeakofMdEast. . 5.75 
•Brewi Stpicy & Co LM 4.7S 
CLBonkNadartanf ... 5.75 

CrtbankNA S.75 

CJyttetUflBank £75 

The toopetnlvu Btrk. 5.75 

Corns 4 Co .575 

CrotHLyomaB 5.75 

Cyprus Popular Bank ..4.75 


% 

Duncan Lawite S.75 

Eroater Bank Unad .... 8.75 
FenncU&GaiBank... 64 
•ftotofl flaring & Co -5.75 

Gkrtank 575 

■Gukyiesa Mehm £75 

Hottb Bank AG Zkrth . 575 

• Hants o a Bank 5.75 

Horttaee & Gan erw Bk. 475 

•MiSatnufll -STS 

C. HoureSCo 5.75 

Hasghang&Shenc^ia. 575 
JLlenHodEpBariv...- 5.75 
•Laapdt) Joseph & Sara 075 

LtoydsBaret 5.7H 

Meghrai Bank Ud 175 

MWandBank 075 

‘Mount Barking 5 

NaJWeaminster — £75 

•Ron Brttftera £75 


* Radsugne Guerentoo 
Corporsaon United to no 
longer authorised m 
aboiUnginaffUBon. 8 

Royal Bk of Scctend... 075 
•Srmdi 0 VWmsn Secs . 5.75 

TS8 075 

•Unted Bk of KuwaS.. 075 
UYtyTYust Bark Pic _ 075 

*Vastare7>usf £75 

Whtoeway LakSaw .... 075 
Yorhstwo Bank 075 

* Msmosrs of London 
Investment Banking 
AasedeUan 

* in adnd nt atr a k m 


Price 

Now 

Dee 


Jen 

Nov 

Dec 

Jan 

1680 

7.71 

7.81 


766 

001 

015 

043 

1678 

560 

5.60 


099 

004 

0.46 

068 

1.600 

108 

180 


423 

028 

1.03 

169 

1.623 

1.40 

263 


2.79 

104 

169 

2.57 

1060 

0.S5 

169 


1.79 

2.53 

368 

366 

1.675 

007 

064 


1.05 

4.64 

662 

5.72 

Previous dj/s vol. Cato, 7. 

153 Pua rjOOQ . Prow. Iter's open H.. CWs 435,638 Pure 380600 

■ THTUIC MONTH EURODOLUUt (IMM) Sim paints of 100ft 


Open 

Latest Change Wgh 

Low 

Est. w oi 

Open bo. 

Dec 

94.02 

93.99 

-001 

94.02 

9368 

104.441 

446 657 

Mar 

93.58 

9360 

-0.01 

9369 

9364 

132628 

3SS610 

Jvn 

93.13 

93.10 

-0.02 

93.13 

93.08 

78.466 

299671 

■ US TRSA3URY B0L RHURES (IMM) 5lm per 1009b 



Dec 

94.59 

84.58 

4L01 

94.58 

9467 

666 

17,805 

Mar 

94.12 

34.1 Q 

-0.02 

94.13 

94.00 

342 

9687 

Jun 

- 

93.8S 

- 

- 

0364 

28 

3689 


Afl Opei Interest figs, ere tor previous (try 
■ EURO MARK OPTH3K0 (UFFE) DMIm points of 100% 


Strftfl 

Price 

— UN— | 

Nov 

Dec 

CALLS - 
Jan 

Mar 

NOtf 

Dec 

PUTS 

Jan 

Mar 

9475 

aio 

0.14 

007 

011 

004 

0.08 

03S 

039 

9500 

002 

0.04 

003 

006 

0.21 

023 

068 

068 

9525 

001 

0.01 

001 

002 

045 

045 

are 

080 


ESL vcl tomL Cana 11273 Pula 7053. Premia days open W_ COa 203M1 Puto 1MS22 
■ EURO SWISS RRAHC QPnOHB (UFFE} SFr 1m potnts Of 100% 


Strike 

Plica 

Dec 

- CALLS - 
Mar 

Jun 

Dec 

PUTS ~ 
Mar 

Jun 

9575 

0.12 

012 

008 

0.09 

042 

078 

9600 

0.03 

008 

004 

025 

081 

068 

9625 

001 

004 


048 

004 


EeL vol 

(DM. Cato a Puts a Previous day's 

open ml CTOs 1870 Puls 645 



FT 


FINANCIAL TIM FS 

Conferences 


CORPORATE RISK MANAGEMENT 
AND THE INTERNATIONAL 
INSURANCE INDUSTRY 


London - 3 November 1994 

As the risk management function within corporations expands and evolves in response 
to an ever increasing array of risks, the ability of commercial risk insurers to meet their 
clients requirement could become a matter of their very survival. This conference will 
examine the implications of the changing balance of the role of brokers, insurers and 
risk managers and explore how the international insurance industry is responding to the 
new challenge. 


SPEAKERS INCLUDE; 

• Mr H Felix Kloman 

Editor, Risk Management Reports 
Former Principal, 

Towers Perrin 

• Mr Walter Kielholz 
Member of the Executive Board 

Swiss Reinsurance Company, Zurich 

• Mr Clive Pracy 

Head of Risk Management, 

London Transport 
Council Member, AIRMIC 

• Mr Stewart H Steffey Jr 
President 

Liberty International Holdings Inc 


Dr Herbert M Harrell 

Chairman, Harrell Associates Incorporated 

Founder, M200 Forum 

Mr John P Ryan 
International Practice Leader 
Tillinghast 

Mr Rodney Meere 
Chairman 

Willis Corroon Hinton 

Mr Wolf-Dieter Baumgartl 
Chairman of the Board 
HDI VaG 


FINANCIAL TIMES CONFERENCES In association with AIRMIC and FT Newsletter 
World Insurance Report 

There are some excellent marketing opportunities attached to this conference, please contact 
Lynettc Northcy on 071 814 9770 for further details. 


CORPORATE RISK MANAGEMENT AND THE 
INTERNATIONAL INSURANCE INDUSTRY 

Please tick relevant boxes. 

D Conference information only. 

□Cheque enclosed for £440.63. made payable to FT Conferences. 
□ Please charge my Maweieard/Visa/Amex with £440.63. 


Card no 


Name of card holder , 


Eap-dafc Signature 

TV .ifonroBoa y*. . A h. fcU b, it, uj mtf be <*<x| u keep Momiol of IT naktet aid wo] 

Djf MtKrvLrt^l^alu, vmfm,*, fo, pwpwo , 


Please return to: Financial Times Conference Organisation, 

PO BOX 3651, London SWI2 8PH. Td: 081 673 9000 
Fax: 081 673 1335. 

Corporate Risk Management and the International Insurance 
Industry £375 + Vat 

Name MrfMrs/Miss/Ms/Other 

Job Title Dept 

Company 

Address 

- — .PostCodc 

Td Fax M 


t. 




























FINANCIAL TZMES TUESDAY OCTOBER 25 1994 ★ 


WORLD STOCK MARKETS 



Tf 




ES 



tr-*| 


I- 



'TT 




A'l 



1 OB 

.. 

1 0 L 3 



1 IX 


' 36 


1 U 


; ii 


2.1 

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2.1 

...S 

>17 20 
5 31B27 
43B 13 
418 OB 
337 OLB 
780 13 
. »1J 


_ 

1 

187 

1 

1 1J 

mmm 

1 29 

| 

1 10 

— , 

1 28 


it&l 

■aaa ■ 

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1 67 

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— ' 



• f .'.v^r - t i 


£ 







L^i,] 











I. 






i lx - 



if. 

rr 

r.; 










jJi 







430 251 13 
88 3830 23 
811 137 M 
312 178 3j0 
660 135 23 
213 IB 23 
372 17 22 

US 1« U 
IK 108 1J 
165 102 20 
156 88 8il 

164 
168 
143 
142 

78 

£3 
22 
1J 
13 
22 
32 
23 
S3 
S3 
83 



646 
1.350 
1.150 _ 

834 _ 

465 *3 

1.100 *50 

681 --S 

BOO *-13 
2420 -40 


INDICES 


708 *-1 

882 -10 
1330 -10 

754 -10 

9 SS -12 


4710 +60 

1380 4-10 

813 -3 

3390 *40 

413 *2 

600 -a 

2320 _ 

481 *1 

478 -8 

848 *8 

4,170 _ 

1300 _ 

K -18 

-21 


-3 

*101.700 1280 _ 
410 2370 1760 03 



US INDICES 









20 

H* 

lam 


w 

21 

20 OH 


GHBtfC mUTl) 1972553 1996636 19EB2J6 254H14Q 16/2 170*90 5HK KJtmW* 


W OiMaft/UBQ 

9iiUf*ig(ift«ft 


20373 20346 20163 23*90 3 B 
1Q83J0 10772 10609 RKU 3 H 


CMK **0(9071204 36039 37332 39003 4BO* VI 

ItaM MbOTUMI KB404 102120 105420 WITS 1/2 


165726 Z7* 
60496 50 

37832 3VH 

*11* 60 


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SS»y*»4ng7S 416294 425427 427892 421882 2090 

Cubdd6*4 (1979 42B80Q 4285.10 431880 4*8*7 230 

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KAfim 01/1200 5BH7 S5719f S5B03 *78* *W 

Bp HW*8W N 34792 34798 34803 415* 212 

ScftLoi panan mi 19*45 issu mi* 4a 


SBF2S0pVia«| 
CMC 40(31/12787) 


12*73 123796 125191 «** SB 
184199 184208 168797 23SS93 2ffi 


323798 21/10 

in* ano 

7B79B 7B5J5 780* 86827 1M VBM 5fW 

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W S3H/12WI 83895 83855 8*12 119498 1871 888*7 256 

8*499 833859 B3W* *2*99 49 8MM4 46 

BSES«(W79) 432897 431068 4BU8 4*857 1219 3 CUM Sfl 

SSi CWf [W«T 51248 SR97 5*78 9*2* 5ft 4483* 1W 

WO* 182192 1835* 2692.18 20ft WU* 1/7 

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2f s££inM 2S0395 222639 225294 2SB0 V? 1*031 4ft 


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0BSM9r(EM83) 2689 2684 2701 29U0 31/1 

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SC GnaH (1/4/67) 00887 804* 902* W6829 31ft 

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496* 21* 

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Doc 46595 462.15 -3.60 487.70 48190 76^91 234,118 

Mar 46890 46590 -995 470.60 464.70 19* 11923 

Jun 471.70 46890 -990 47495 468X5 138 2938 

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Open SottPrtc* CMige »0h Low £*. voC Open H. 

Oct 18669 18389 -139 18659 18379 20374 27*1 Cttop 

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D90 16719 1555.0 -139 18809 18549 1373 25351 THUMB S 

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(Mm ftjc 2*84* SH *» mm Mpa 28 2 48 

CHnBV 2*1.7* 6846 ■WIN 162 124 98 


Change your Future 


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for FREF now and you'it ,onn ... w,iy. 

v-o;: PuKe With more ‘oaturo*. and in-d.-pth 
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Cal! 0S00 28 28 26 Ext. 135 today. 



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40 


FINANCIAL TIMES TUESDAY OCTOBER 25 1994 


4 pm etos QOOtefZI 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


W84 TO. W Bi don Rnl 

ImSM 8* « £ HA H0 iMMCtaf 

t7*i2*aar a« 39 so sw 12% 012% 12% 

t?* 12* A LUOS A A 016 I 1 38 104 16* 15* 16* ** 

1.68 Z2Z7I016 77* 77% 77*2 

90 2826 53* 51% 51% .1% 

12 15 3% 3* 3* 

2.00 4.0 33 426 49% 49* 49* -% 

are zs is 5448 31$ M% -* 
050 38 ID n 13% 13 13% 

052 26 5 

32 381 
0.44 1.9 28 35 

1.09 11.5 691 


M 20 

17* 17* 


11 

67 

7% 


79* 57* AMP 
72* 48* AMR 
5 3* AHX 
96* 38* AM 
32 25*8000. 

15* Tl* ADMOlPr 
23* 17* ABMhd 
18 11% Acpoiceki 
31 Z2*ACEU0 
12* 9* ACM CM ta 

10* 7 ACU GvOpp 0.30 IIJ 149 

10* 7 ACM GrtSp a* 1X2 244 

12 8* ACM Qn Si 1.09 12.9 238 

II* 7*ACMMx> 1(M 13.8 185 

9* 8 ACM MaragS 0.72 8 9 573 

15* 8* AonsCh 0.4J 3.2 18 55 13* 13* 13* -% 

12 G%AaMBeCi 10 1224U13* 11* 12 *% 

23* 23Aosnfea 0.60 UN 9 27* 27* 27* +% 

13* 6* Aetna 036 3.8 2 408 3* 9* 0* -* 

17 II* Acmon 120 253 16 15* 15* -% 

18* 16%MJl#E*1 0.48 2X 0 111 17* 17 17* *% 

64 46* Ad Men 300 5.6 91 S3* S3* 53* *1* 

31* 16*AdiMC 3310 1U 1012961 25* 24* 24* *4* 

ai6 2.9 8 96 5* 5* 5* + % 

010 06120 247 10* 17* 18 

1.47 Z4 13 25u62* 62 62* t* 

2.76 6 1 6 1202 45* 45 46**1* 

0 46 1.4 13 866 32* 31* 32 -* 

0 88 4 8 13 2273 10* 19* 19* * 


5 J 

at 
8 * 

?* 

7* . 

8 * 08 * 
8 * 8 * 
a* a* 


23 

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6-8 SAdnstGrp 
20 15 Mm he 

62* 49* Aegon AOR 
65 * 44* MnaL * 

36* 25* Aflac 
22* 16* Anmn*n 
4 I* Alestiinc 
SO* 38* AbPlC 
39* 22* Akira Art 
29* 19* Mgasbc 
17 M*AkK» 

30* 21* Air Hen 
IB* 13% Alaska Ak 
21* 16* Many H 
17* 13* AbM 
25* 19*AhCuB 
23 17* ACUhr A 
30* 25* AJM5I1 
28* 19* AlaiAl 
65* 49* Alcoa 
30* 23* Atodkown i 
22* NAtaAJ 
24* 17 ADdgh Lu) 

26* 19* AflegP 
22* f3* Alan Can 
28 20 AtoCJn 

4* fj Aim 
27* 17* ABACS Cap 
18* OAWeeS 
27* 21*AMM3H 
40* 33*AkSm 
11* 9*AUW 
29 * 24 Artel Cip 

7* 4*Mmsu 
35 21*ttoiux 
90* 84* Alcoa 
30* iflAlzaCpA 
II* 7Are6»kc 
8* 6* Am Prsch 
8* 6*Ajrenfin 
25* 19* Amast kid 
52* 44 Ambits 

9* 6* AsiAdjR 
31 20* An Bank* 

37* 29*Ara8md 
ZS* 18* AmBusPid 0.80 16 14 
8 6* Am Cap Inc 0.65 9.4 


1 152 


0.38 U S 1603 45* 45* 45* 

19 % 


1*8 -* 


030 1.6 1127195 19* 019 19* 4* 

50 508 29 26* a* -* 

134 115 12 33 18* IS* 16 

5009 a a* a* 

020 1 2 a 1142 17 16* 17 

035 1.9 31 267 IB* 16* 18* 

0 20 1 3 194 IS* 15 IS* 

oa i.2 i6 7i a* a* a* 

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0.44 i.5 a 2935 a* a* a* 

030 1 1136 1857 27* 27 27* 

1.00 1.7 «l 593 69* SB* 58* 

0.70 2 7 4 349 a* a* 26* 

0.10 85119 575 21 30 20* 

048 12 a 1651 21* a* Ji* ♦* 

1 64 80 10 941 20* 20* -* 

ais 07 18 753 21* 21* 21* «* 

0.44 1.7 16 470 37 s 25* a* -* 

1 72 * i! l! 

1 64 7.9 21 167 21 a* 2 Qt 

0.18 19 240 9* 9* 9* 

0.90 3 8 14 14 24* 24 24 

0.67 1.9 7 5996 35* 34* 34* -* 

084 9 3 93 9* da 9 -* 

068 13 IS 4640 26* 26 26* •* 

35 534 7 6* 6* * 

15 3685 31* 30* 30* -1* 

1.80 1.9507 5728 88* 88* 88* -2* 

32 8649 ia*d!7* 17* 
0.9613 0 383 7* 7* 7* 

005 3 4 25 43 7* 7* 

008 1.1 13 1833 7* 7* 

052 16 13 66 a 20 X 

060 1 3 48 1078 48* 47* 47* 

024 26 2964 9* 9* 9* 

010 04 JJ JB30 25* 25* 25* 

ZOO 5.7 10 2614 35* 34* 35 

a 22* a a* 

66 7 6* 6* 


$ 


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4 * 

3 

% 

■* 

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■* 


20* 16* Am Cap Bd 154 0( 29 41 (7* 17 17 , 

a* ia*AmCwCV< 1J» 5.7 0 G 19 19 19 

99* 42*AmCyan T85 1.9 57 4415 99* 98* 08* .* 

37 * 27* AmBPw Z4Q 76 16 1746 31* 31* 31* 

33* 25* AnEnir 090 31 1214230 30* 3* 29* ■* 

30* 247* AmQrt 1.16 4.5 32 1603 a* 3* a* -* 

9* 5* An Oort ki 077118 227 8* 8 6 -* 

27* 21*AmH8hPrt 130 11.0 7 660 21 <120* a* *1.68 

" > Am Hortge 066 17 11 23 18 17* 17* -* 

192 4 0 12 3470 62* 60 * 80* -1* 

2* 2* Am Honda 075206 9 21 2* 2* 2* 

%-S S1%Xrina Q46 05 75 4404 82* 99% »* 

II* 7 Am Opp he 
30 23%AmPiem 
34 19 Am Piesdi 

0* 7* Am Real Es 044 5.7 


a* 16* 
65* 55* 


27* 

22 * 


32* aAmVMrk 
43* 36* Amu 



21 AmSkr 048 1.9 7 2652 26* 
IBAmWarM 1 25 6.7 


dlfl 18* 


1 a 4.0 11 164 27* 25% 26* + jn 


43* 32Areermhcx 198 17 5 ”» 35* M% 24% 


192 4.8 14 3993 39* 


♦* 


IS* 11% Arnett 
61* 50* Amoco 
9* B* AnveaPK 
4 * 3 * wire me 
34* a*Amsou9i 
4* 2* Anacomp 
58% 42* Anadarka 
33* 33* Analog 
a* 24%Angdiea 
55* 47%AnBech 
34 19*AMwm 
18* 14*Airtwnytn 
35* 30 Am Cp 


024 19183 817 uia* 18* 18* -* 

220 17 162682 60 59* 60 .* 

018 1.4 5 6 7* 7* 7* 

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1.40 4.7 9 309 23% 29% 23% 

10 514 2* 2* 2* 

0.30 0.7 63 1778 44% 44* 44* 

31 543 33 37 32* 

aw is 24 38 27* a* a* 

1X0 II 23 2H70 52 51 51 _ 

21 1528 31* 30* 31* ♦% 

044 Z6 17 33 17* 17* 17* -!« 

139 19 7 950 


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10* 8*AmMwPk 071 B.4 510 ft* 

24* 14* APH 
7* 4 Act* MAO 

25* lB*ApplPhA 


32* 32* 
25* 25*; 
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40 301 23* 23* 23* 

0 1345 4* 64 4 

012 05 38 115 24* 24 24 

015 06 19 3163 17* 27* Z7* 

Si 43% Area Oieml ISO 5.1 !2 147 49* 49 49* 

51* 45* Araco4 5P 4.50 9.8 8 46* 45* 46* 

6* 4* Araea 3 4337 6* 8* 6* 

29 23 Anneal IP Z10 9.1 15 23* <123 23* 

57* 41* AmsOV 1^8 11 31 4313 42*640* 41 

" “ 14 1952 35^2 35* 35* 

2 22 5* 4* 4* 

076 32 13 360 24 23* =3* 

040 1-2100 848 33* 32 32* 

040 U 12 42 29* 29* 29 7 j 

14)0 2.7 13 1224 38* 37* 37* 

027 1.5 89 IB* 18 18* 

029 10.7 B 41 2* 2* 2* 

012 03 25 231 lfJ7* 37* 37* 

1 32 2 4 12080 54»a 54 54 

Z80 1.1 2 244 244 244 

108 65 13 120 32* W* 32 

028 4 2 7 7100 8* 8* 6* 

95 9 198 18* 16* 16* 

5J0 54175 2492 102* 101* 101* 
2 27 4* 04 4* 

31* 16* Atmos Engy 088 53 7 72 18* 16* 16* 

12* 6* ADmtaAOR 034 37 10 217 9* 9* 9* 

24* 17* Aueat 016 0 8 22 225 19* 18* 18* 

010 1.2 287 8* OB* B* 

0.60 1.0 26 1817 57* 57 57* 

0.44 10 11 S3 14* 14* 14* 

0.04 0.4 4 149 10* 10 10* 

060 1.7 19 999 35* 25* 36* 

ZOO 14 17 1108 80* 59* 59* 

9 385 10* 10* 10* 

21 798 6* 6 6 


28* 21* AfrtlDl 


45* 33* AmmBec 
7* 4*ArtiaGcp 
33* 23 Ann wd 
34* 21* Asvco 
31* 22* ArtiU Cart 
44* 33* AahOa 
25* 18* Ada Pae F 
3* 1* Asset hw 
37* ZB* Asa HI Gas 
57* 49lz AT&T 
20*228* AflHtf 2 
38* 29*ABd3Bas 
9* 5* AOnoSw 
21* iGUMeEgy 
112* 92* ABto 
10 4 Albs 


M'B 17* Aupid 
12 * 8 *ASM 3 F 4 
58* 47*Au0aa 
20* 13* Avemco 
19 7* Awl 
45 30* Annul 
62* 4G*AwnPr 
14* 10* Aydln tap 
7* 5* I 


i Anar 


38* 31 * Bd 
9* 6* 6£T ADR 
5* 3 Bolntca 

17* 15 7 a BJ»rFant 
22* 17 Bakem 

27* 21*Ba»irEk 
30* 24* BaKP 
15* S* BtMid 
9* 6* 8aly 

25* 20* BrtDX 
20* 13* Bad Enhq) 
38 27* BncOm 
28* 20* Bancoeuv 
12* 9* BanenCentt 
34* 27BcmHanA 
1 * 7 ( Bancretaj 

63* 49* Bandng 
SO* 38*Ba*Am 
9G 81 * flarti Bart 
3* 22* BkEstn 
49 * 44BA8asnP 
33* rSBanMW s 
50* 43* BanUm A 
95 74 BankAmB 

84* 82* BnkTd 
33* 30 Bcun 

30* 22* BaraiCH)* 
39* 29* Bangs Grp 
48 * 39* BjitOi 
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S3* J2* Baocn 
28* 2i*Bamr 
2B* 23* Boy St Ob 
22* 19* 8dTrl838 
23* lSBaarSmo 
50* 45* BoarSlPiA 
37* ?r* Geamps 
32* 33 Becknun ki 


268 

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020 

040 

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104 

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7.7231 1962 
10 28 94 

5.0 6 112 
15 3» 
14 44 2946 

18 74 114 
Z1 37 2183 
05 id 285 

12 1088 
6.7 |2 1236 
10 30 ^ 

4.5 9 9304 

37 9 68 

61 5 69 

37 6 222 

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12 70 785 
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19 12 4978 

68 53 

4 3 5 3275 
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5.5 5 1212 

28111 30 

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3B 52 l> 
4 0 10 2133 
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4.0 40 2633 

60 14 
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23 S3 285 
1.4 25 167 


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16* 16 16 
19* IB* 19 
25* 3* 25* 
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10* 9* 10 

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32* 81* 82* 
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45* 44* 45 

30* S* 29* 
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66* «* 65* 
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-* 


BE 

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GEEST. 



When you sUy » iih us 

in ISTANBUL 

slay in much - 

wiUi your aimplimenlars copy of the 




FINANCIALTIMES 

I ^im *.r» , s i J»»»M , 


xm 

fflgta ten Shah 
48* 34*BocnD 
7* SBodFr 
S3* 43BeU6 

22* 14* Bd ki 
83* 62* BeflStfi 
55 43* Beta A 
25* 20* Bsab 
« 54* tend «P 
44 34* BMrt 
30* 34* Bmm A 
1 * * BsnyjuCB 

197a 13* BergBr 
1995015100 BrtkH 
10* 8 Bony Par 

41* 19 BesI Buy 

28* 26* BehStZ 
55* 51*BsHBan 
24* 16* BonSr 
53* 42* 88111.* 
16* 11* SesErt 
21* H* BtocnAr 
32* 23*B»nka|FSx 
23 * i 6 *anheK 
22* 18 Hack H PI 

10* 7* etckrocAdv 
8* B* Machine 
10* S* BktnUTa 
48* 37*8101* 

8* 55gBHaCto 
16* 9* BMC ha 
50* 42* Bosk® 

30* ISSafcaC 
21* 10 Bah BAN 

28* 9?a Bonn dm t 
10 * 11 Bontoi 

24* 18* 8am Cat 
20* 20* Bank 
36* IB* Brnfi Fro 
34* 29* BREPmp 
90* 86* Bnga 
13* i9*BrbkBH 
59* SO*Brkty64 
74* S47 s BrAk 
54* 39BntGaa 
BI* SS*BP 
37 19* bp PrahM t 
27* iSBSnei 
71* 53* BT 
28* 22* BUynU 
33* 32% BnmEp 
8 5* Bnm5tl 
30* 26* 8ntfm8 
32* 24* 8rfbrr 
4* 3* BT 
25* 17* Bmsnk 
18* 13* Basil KM 
XI 35* BuaayaPt 
38* 12* Bui Cart 
66* 47* BuflH 
49* 36* Bwmnuc 
19* IS* Bairarn Pc 


4**1 47^1 

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600 9.4 24 53* S3* S3* 

148 21 8 1639 IS* 19* 19* 

1.44 10 23 327 47* 47* 47* 

33 1864 14* 14* 14* 

0.10 0 6 26 454 18 17* 17* 

140 1.5 SB 350 26* 28* 26* 
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772 8* 6* 6* 


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1.73 06 10 47 

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46* 47* 47* 
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10 * 10 * 10 * 
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44% 33* Xngwa 
21% 14*Kmui 

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19* 8% taege Cup 
9* 6* Mmarjen 


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0.40 1.7 678 

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0X2 1.7453 1555 
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0X4 03 178 

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1.70 03 5 

1X2 13 27 1871 
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1J6 3X 15 9373 
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1.48 10 18 1098 
0.10 0X108 117 
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20 * 20 * 20 * 
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29* 24% KUBwrgy 1X4 6.1 12 86 27% 28% 26% -* 

19* 14% Kddmen Ce 0X0 40 St 34 19 14% 14% ■% 

1ST* 104 Kroon CP X8& 06 65 38 H7 W 147 -2* 

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40% I5I2ISLB 
36* 19* LaiMda 
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25* 20*ladub6i 
27* 17* Utage 
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27* 16% Lamb End 
13* ID* lamer ke 
19* I4*teerand)i 
38* 31%UeEnbrp 
25* 1B%UogMa«n 
49% 33* Leapt 
18* 13%Umu> 
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11* 9*lX«rtyAS 
29% 23% Ubarty Cp 
61% <7% LVy 
22 * 16 % Lima 
44* 35% Ureter 
20* 15% Lhcn MFd 
70 57ungh.PS 
74* 28% lidon 
26% 19* LB® 

5% 4% UMBOS' 
79% S3* Lotted 
45% 35 Locate Co 

102* 84 1; Loews 
33% 25% Uteeen 
8* 3* LunasfinCp 
24* 15% LgtsLt 
39% 31* LnesOr 
23* l6*LongrtewF 
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48 29* Ladd 1 
40% 28* Umax 
21* 14 LTV 

6* 3% LTVWB 
38* 29%loba1 
24* 21* Uteri Crte 
39* 28* Udrtnshc 
36* 27* LomUca 
37* 20* lydai toe 
22% :s*iyende»P 


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28* 26* 28* 
80* 59% BO* 
IB* 17* 17* 
35*d3S% 35% 
16* 16% 16* 
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38* 37* 38% 
24 22* 23* 
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89* 69% 69 
44 43* 43' 
88* 88% 

30% 30% 30* 
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17% 17% 17* 
34* 33* 33% 
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40 39* 40 

29 29 29 

44* 43* 43% 
317, 30* 30* 
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19* >9* 1ft* 
5* 5% 5* 
32* 31* 31* 
23* 22% 22% 
31* 31* 31* 
38* 33% 33% 
37 35* 35* 
29% 28* 29 



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65* 52*MBUInc 
40% 33* MCN 
7% 4* MOCHOftl 
32% ZS% MOD Ras 
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13% MCI Prop 
39* 22% MM Con) 
21% 13%tocFr8 
18* 12% ttegmaC 

15* 12* 

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38% 28* 

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25% 22% MnnaePI 
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27* 15*MnMer 
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23% 1S*lluklV 
32% 24%Martt 
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29^2 20* MatevB 
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45% 36% MeyOSI 
20% 14% Mzybg 
27* 19* MBNA Cup 
27* 21*KtOKrtiy 
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on next page 



FINANCIAL TIMES TUESDAY OCTOBER 25 1994 


41 


4 p&>cto$ 9 Qaober 24 


NYSE COMPOSITE PRICES 


NASDAQ NATIONAL MARKET 


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HBk Im IM OW( 

ABSInda 

030 19 <100 

14% 14% 14% 

**2 

ACC Cup 

012154 IK 

17% 16ft 17 

tfti 

AcctaanE 

238251 

17% 17% 17A 

+»• 

AcnalMt 

17 789 

20ft Z0»% 


Luton Cp 

40 764 

28ft 28 28 

-ft 

Adapucii 

201 3690 

22% Zlft 21% 

-A 

AOCTde 

381574 

46ft 44% 46% 

42 

AdrapD) 

6 498 

10% 09% 9% 

-% 

AJaSav 

(MB 21 23 

35% 35ft 35*2 

-% 

AdcbrSys 

020 28 2677 

36% 34% 35ft 

-% 

AdrencaC 

7 403 

10% ID 10% 

•ft 

Ada Logic 

8 135 

4ft 4*a 4ft 


AdvPrtym 

6 248 

4ft 4ft 4ft 

(ft 

AduTchLrti 

13 181 

16% 15% 15% 


Adrarta 

020 14 1370 

29% 38% 26% 


Affymax 

10 295 

15*4 14ft 14% 

4% 

AgntooEa 

010151 815 

13% 13% 13% 

-ft 

AkExpr 

024 IS 388 

27% 27 27ft 

% 

Aka ADR 

2D4 21 472 

60ft 59% 59% 

-% 

AtxBU 

088 161087 

24%(C3% 23% 

•ft 

AOcghUT 

20 315 

10% 10ft 10ft 

-u 

ABenOrg 

052 14 7100 

36 36 36 


Alton Hi 

4 465 

8 07ft 7ft 

-ft 

ASdCapl 

IX 13 38 

14% 14ft 14ft 


Aflacap 

OX 11 71 

13% 13% 13ft 

■A 

AbettaG 

082 9 23 

3% 2% 3*4 

+ft 

waGtu 

0X 16 587 

m ift iii 


ARereCo 

36 4910 

37% 38% 37ft 

-ii 

An Bariev 072 7 606 

20%d1D% 19ft 

-% 

AmOVuy 

016 438 

17ft 17% 17% 


AmCfyBu 

15 132 

16ft 15% 15% 

-ft 

AniManag 

24 732 

25% 25 25% 

-ft 

Am Hed El 

10 232 

7 0% 7 

4% 

AmSallna 

032 10 358 

4% 4% 4% 

4% 

AmFrtwya 

30 80S 

21% 21ft 21ft 

-% 

AK0MA 

OK 1531 747 

27% 26% 27% 

-% 

AmkitP 

2 289 

1% 1*8 1% 

-ft 

Amtadn 

220 7 21B 

47%d*B% 47 

*ft 

AmPwCon 

336655 

17% 17% 17% .X 

Am Tm 

13 IK 

17ft 17% 17% 

♦ft 

Amgen ha 

swum 

59% 50 50 

*ii 

tented) Cp 0D6 15 685 

10% 10% 10ft 

4ft 

AimAi 

4 28 

Oft 9% 9% 

-A 

Analogic 

17 253 

18ft 18 18 


Analyst! 

052 77 40u2Oft 19% 19% 

-% 

AnangdAm IX 13 14 15ft 15ft 15ft 

-ft 

AndrewCp 

29 7602 46% 45% 45% 

-% 

Andros An 

9 760 17ft 17% 17ft 

-ft 


ApoohEii 032 33 351 10% 16% 16ft -% 
APPBO 81639 5% 5% 5ft -ft 

ApptdMal 32 0062 48% 47 47ft +% 

AppieC 048 3717927043ft 41ft 42% -ft 
AnMbeea OM 42 661 17 16% 1ft -ft 

Arbor Dr 024 46 ZED 21ft 20% 20% -% 

ArttCO 019 14 460 10% 10 19 -1 

Argonaut 1.16 B 478 29 28% 28% ♦% 

Annr M 084 23 *100 23% 23% 23% 

AmddTit 040 19 183 21% 21% 21% «.% 

AapedTd 281174 32% 31% 31% -ft 
AttocOMM 310 21 28 25% 25% 

AST Rartk 74978 12ft 11% 11% -i 

AOteOR 13 77 (ill 10% 10% -% 
U SENT 032 14 5057 23%d19% 16% -4 

AuUM 040 263250 67% 66% 67 -ft 

Artak* 9 143 2ft 2ft 2ft +ft 

Amndate 092 18 587 7ft 7 7,1 +& 


- B - 

BEIB 008 27 6 5% 05 8 -% 

MMtagec ii 400 i3ft 13 13ft 
BakarHM 140 A A 

Baker Jx 006 101198 18% 17ft 17,1 ->1 

BfchBd.6 024 3 202 15% 14ji 14ft 

Bandac 14 783 20 19% 19ft -% 

BafeSaiH 052 11 893 17ft 17% 17% 

BMoaaCp 040 7 315 15 14ft 14ft 

Bartnorifa ODO 14 38 23ft 23ft 23% -ft 

Basta Gao 052 151638 3lfj 030 36% -ft 
Basel F 080 14 96 27* 2B% 2B% 

Bay Mm 060 12 84 22ft 22 22 -ft 

BayOanka IDO 133437 GO 59^ 69ft +% 
BB&T Ha 1.16 9 239 30 29% 29ft +ft 

BEAM 20 135 9 8ft 8ft -ft 

BaudCas 042 34 17 15 14ft 15 

Ben&Jaiy 13 124 13% 13 13ft +% 

BsUeyVm 044 13 BS 3B% 35ft 35ft -ft 

BHAOp 012 18 525 13 12% 12ft 4% 

aide 107 390 5ft 5% 5ft 4% 

BfcB 016 17 110 12 11ft 12 4% 

Barter W 008 14 082 13*1 12% 12% -% 

Btogsn 47 4478 44% 44 44% 

Buna 201148 lift 11% lift -ft 

BtaCk (kg 104 12 38 33 32% 32ft -ft 

BMC Soft* 144072 44ft 43ft 44% 4& 

BaebnenS 130 9 817 30 29ft 29ft -% 

Bohemia 029 191271 20% 19% 19ft 4ft 

Boofe&B 16 28 31% 30% 31 -% 

Bortaod 10G5S2 10ft 9% 10ft +ft 

Boston Bk 076 5 157 31% 30% 31 -% 

Boaton Tc 691694 15ft 15% 15ft -ft 

BndyWA ODO 18 ZlOO 47 47 47 

Branco 024 28 19 12% 12ft 12ft -ft 

BrunS x 026 202711 9ft 9ft 9ft +ft 

BSBBncp 076 8 125 28 27% 27% -1 

BTSMpng 048 5 20 2% 2% 2% 

Brttaa 232678 1B% 15ft 15ft -% 

BHiml SO 32 J1% 011 11% 

Bur Bran 47 210 n14 13% 13% 4% 

BustaaoH 87 7 36% 34% »% *1 

BdOerllg 040 8 459034% 33% 34 4% 


- c - 

CTac 247 77 24%. 24% 24% 4% 

Cabal Mad 7 IW 5ft 5% 8% -31 

CadSctMP* 099 10 78 28% 28% 20ft -ft 

CadmaaCoraOH) 22 019 18% IS 18% 4% 

Caere Cp 7372540 15ft 14% 14% 4% 
Crtgana 205 51775 9 8% Si! -A 

Cal Mem 271570(123% 20 28% 4% 

CendetaL 1 39 3ft 2% 2ft 

Goto 3 587 2& 2 2 -A 

canon toe 053)25 12 01 90ft 90ft -% 

Caonrta 47 112 7% 7 7ft -ft 

CartanQn 033 22 68 27% 27% 27% -ft 

Cascade 060 23 37 25 25 25 41 

CareyS aw 301002 >3% 13% 138 +A 
Crtuane 5 165 0% B% 6% 

caicp 20 19 13% 12% 12ft 

Cartocor 0 600) 17% 15ft 17% +1 

Cauifkl 1.12 10 513 29% 29 29 -% 

Odr1$r 22 2 11% 11% 11% 

Ctaarter 9 49 5ft 5ft 5ft 

Cldptarl OG8 7 130 20ft 20ft 20% -ft 

amSl (US 10 1037 7% 7A 7ft 

CtaredU 18 26 13 12 12% 4% 

Qwqxnrer. 13x100 3% 3% 3% 

CNpa&Te 105950 6% Bft Sli 

O*on Cp 81 2022 64 B2% 63 4% 

Ctmfln 126 12 80- 53% 52% 53 -ft 

Ontts Cp 017 33 500 35% 34ft 35 4% 

DIMM 32TZ7T7 31ft 30,'c -t4 

□S Tcdl 134 M6 2% z{i 2H I 1 , 

QseoSyj 1626476 27(3 27 27ft +ft 

Cb Bara 1DB 16 204 29ft 28ft 26% 

OnuiHbr 22 295 0ft 6% 6*4 -% 

CtlfaDr 37 148 lift 10% 10% -% 

OttMU 62340 3ft (Bft 3» *u 

CacaCdU IDO 17 42 27ft Z7% 27% 

DutaSior IK 580 6ft 6% 0 % +ft 

CodcAtana W 63 lift 11 lift 

C0(P»Cp 33 064 22 21% 21ft +ft 

cogms 143 475 15% 15ft 15% 4% 

Coherent 17 74 14% 14 14 -ft 

Ocflagm 040 re 100 22 21 ft 21ft 

COHGBS 126 12 35 20 19% 10% 

OnkdQp 060 13 214 35% 34ft 34ft -ft 

CODBlr 024 IS 1388 23% 22% 22% -ft 

Cnxk 009 19 5964 16ft 15ft 16% -ft 

CkndASp 009 417330 1B% 10% 16ft -% 

CoonffllateflEO II 389 30% 30% 30ft 

GnaunQ 070 BS 98 18ft 17% 16ft 4ft 

CommC 172367u27ft 28% 26 i 4 -ft 

QaBkkUbS 2B3 705 Oft S% 8ft 

Cuiuhsa 60 090 13ft 12% 13% 4lft 

ewnstackfl 34 768 3,*« Z’J 3i« +, l « 

CoGrtun 4 37 5ft 5% 9ft -At 

CanWCrt » 1ZB 24% 23ft 23ft -ft 

CWOata 162 $13 6% 6% 6ft 4ft 

CousA 09 19 442 18 17% 17ft -ft 

Gcpyhde 341770 5 4ft 4ft 

CMtaCp 26 504 59% 99 9 -ft 

Cup Of A 45 002 17 18% 10ft -ft 

Cradko-B 002 25 2170 22ft 21% 22% *ft 


CrtyCorap 

1 

303 

*A 

Ii 

1% 


Crown Res 

33 

184 

5% 

Sft 

Sft 

-ft 

Cyiagai 

2 

440 

4 

3% 

3% 

-ft 




- D - 


DSC Cm 

1613306 29ft ZBft 28ft 

-ft 

Dirt tote 

arsss 

7 83 82 83 

■a 

DatoSMah 

11 

10 2ft Sft 2ft 


Datum 

39 978 10ft Sft 9ft 

-ft 

Daterwym 

17 683 18% 17% 17ft 

■ft 

OaaphtoDp 092 10 

743 24ft 23% Z3ft 

-ft 

DrtiSbapt 020 14 

14 4iJ04% 4% 

•% 

OrtrtOEn 

032 24 

4 16 10 16 


DekrtDGi 

0D0 45 

6 30ft 29% 30ft 

-ft 

DctotHope 044 9 

2 IB IB 18 4% 


■tad. 

H ta 

Ota. 6 lata Mpk im im 

Cta>g 

OcfCuap 

41 6225 4|% 40ft 40% 

-1 

Mrtr 

030 ZT 3335 31% 30% 31 

-ft 

nap ay 

1.12 8 200 30% 30 30ft 

-ft 

Oeucon 

020 4 SO Bft Bft Bft 


OH Tech 

17 20 22% 22 22 


OtanlB 

ODO 31 673 22% 20% Zlft 

A 

DUM 

15 720 IBft IB 16 


IBg ucro 

9 GSB 15ft 14ft 14ft 

-ft 

Dig San] 

75 2580 Wft 2ft 3 


DiflSyjt 

34 3308 a9ft Bft 9*i +lft 

IttjnexCp 

18 872 DOB 37 38 

*1 

DUdYht 

(U0 44 95 8 07ft 8 


DMA Rant 

1 694 3& 3 3ft 

A 

Dab (to 

020 286737 i£9 28% 28 

r1% 

DmffHU 

OS 14 172 13 12ft 13 


DreccEngy 

10 2 9>a Sft 9ft 

A 

DreasOam 

10 638 10ft 9% 9% 

A 

Drey GO 

024 22 404 20% ZS% 25% 


DragEmpd one 42 90 4ft 4% 4% 


BSBaocar 

IX IS 25 27*4 20ft 27*4 

+ft 

Dnriron 

042 12 157 10% ISft IB£ 

A 

Dyartach 

10 236 H» a 29ft 

+% 


EajpaFd 

- E - 

1 30 2ft 2ft 2ft 

-*2 

Easel Cp 

1 307 3A 3% 3X 

-X 

EaaEmmi 

5 114 1 ^2 1 


£0 Tel 

032 25 5815 20% 19% IBft 

-ft 

Eoohead 

272 045 8% Bft 8,1 

A 

BPseaB 

01683 1% di 1 

-A 

BacbSd 

15 501 15% 14% 15ft 

A 

Badbfl 

OX 52 10 52% 52% 52% 

♦ft 

MM 1 

255800 23*2 2*% ?*% 

-ft 

EocanAre 

15 04 5*4 5ft 5ft 


finlpi 

1212011ft 1lA lift 


Engyvmm 

47 5 13*4 13% 13% 


EnrirSn 

68 30 2 2 2 


Enron toe 

2 1009 2% 2ft 2% 

-% 

EquJtyOS 

010 18 174 5% 5ft 5ft 

-% 

EraW 

0481684743 81% GOft 60% 

-% 

EWd 

115 7ft 7ft 7ft 


Evans S8> 

31 4 12% 12% 12% 

♦ft 

Eatgrta 

2719W 22ft 21 21 

■% 

Erarttar 

10 22 Bft 8 8 


rnkwriw 

12 194 17ft 16% 17 

-ft 

Expert) 1 

010 24 133 20% 20ft 2Dft 

-ft 

EroupAn* 

16 442 11010% 10 

•% 


- F - 

FelGrp 10 10 4ft 4ft 4ft 

FarCp 024 32 48 8% B% 0% -ft 

FMaaal 004 6G 797 42ft 41 42 +ft 

FWH IB 4522 29 20% aft -ft 

FrtbTTrd 124 151198 52 51% 51ft -ft 
HOy Off 12 975 4ft 4^ 4% -ft 

HggtoA 024 01156 0% 07% 7ft -ft 
Hmet 34 1061 K% 24% 24% -% 

Fkst Aid 084 7 SZ9 31ft 30% 31 -ft 

FHBcQhto IDO 11 444 20ft a SB -% 

MCaBk ODO 19 231 22ft 22 22% +% 

FKScetr 1D4 10 1 393 25% 25% 25ft +ft 

MTaon 1DB 10 770 48 45% 45ft -% 

FstWcstn ODO 7 46 9ft 9% 9ft -ft 

Frttadle 055 0 921 21ft02Oft 20ft -12 
HnSar 1JM 8 200 32ft 32 32 

Ftatnda 54 389 9ft 8% 1% -ft 

Hsarv a 271 » 22ft 22ft *ft 

How Irt 10 457 9ft 6ft 6ft 

FuxflA 009 152876 5ft (Bft 5ft +ft 
FtxxU 0D9582 925 Sft 5ft 5ft 

Foreaoal )D8 10 9 32% 32% 32% +ft 

Hncbnar 11 284 11% lift lift -ft 

Foster A 38 312 3ft 3% 3ft 

Mini 1D4 12 247 31% 30% 30ft -ft 

FatHnl 040 7 300 15% 14% 15 *% 

FttHanl 11810 23 a 27% 27% -ft 
HrierHB ODO a 175 33ft 32% 32ft -1% 

Rflanm 008 10 90 19% 19 19ft +ft 

Haul 024 » 48 20ft SB 20 -% 

RdmcdAOR 13 23 2% 2ft 2% 


- Q - 

GrtApp 6 44 3ft d3% 3% -ft 
GBKSanr 007 231121 16 15ft 15% -ft 

Wrtna 0 39 2% 2ft 2% -% 

Garnet Rs 8 14 3% d3 3 
GddCo 0102002378 U0ft 7% 8 +% 

Cert Bind 040 »X100 19ft 19ft 19ft -1ft 
Satifla 17 75 4ft 4ft 4% 

GansWH 13011 4ft 4ft 4ft 
fertaxCp 400 38 239 a 22ft 23 f% 
Genus he 212 sa 6% 0ft Bft -ft 

Ofcnqme S7 312 31ft 31 31 

anona 040 19 603 15 14ft 14% «ft 

GUSnotL 012 11 2410 15% 15ft 15ft +ft 
(Start A 000 15 2 14 14 14 -ft 

GkhBkra 12 68 Sft 5ft 5ft 

GaodGuya 15 419 12% lift 12 

ORdrtPrtp 060 10 420 22% 21% 21% -ft 
GmdcflGya 362 51 3% 3ft 3ft 
Grant* 020 70 60 21% 21% 21% 

Graen AC 02411 10 1908 1005 IftOS +.05 
GmwchPh 0 42S ft H B 

Grossmani 1 1381 3 2ft 3 

GmdMr 025 177 13% 12ft 12ft J v 

cm cup 12 321 17% 16% 16% -% 

GkWGvg 5 1642 9% 8% Sl2 -A 


- H- 

HudhgA 65 MOO 7% 7% 7% -% 

Hutavyrt OBI 2 23% 23% 23% -% 

Harper Gp ODD 12 206 13% 13% 13% 

ttmtaCm 1142 16 1« 14ft -ft 

HOO&Ca 016 M 7827 30ft 28% 29% -% 

HBrtSKar 23 79B4 26% 2Sft 25% +ft 

HartBcre OD0 20 259 13 12ft 12ft -ft 

HaUMf} 12 780 Bft Bft Bft -ft 

HtddnoBrxOIS 19 6510 lift 11% 1iA 

Hettg] 138 10ft 9% 9% 

HUeaTrey 10 91 17% 17% 17ft -% 

ttarirtx 088 11 796 IBft 17ft 17ft -ft 

HoonSys 015101238 6ft 5ft 6% ♦% 
MOBlC 74 321 17ft 10ft 16ft -1ft 

Hans Bert ODO S 52 20ft 20% 20ft -ft 

Hob kult 044 19 0 27ft 27ft 27ft 

Honfteck IS 370 14ft 14ft MU +A 

HareaMHS 044550 38 Oft Sft 5ft 

Hunt JB ODD 17 237 17 16ft 17 +ft 

Hartum 000 7 2216 16ft 17% 18 +ft 

Hareo Co 003 1 036 04% 3ft 4ft +ft 

HukbTach 166 61 2B% 28% 28ft 

HyorBta 18 306 5^ 4ft 4ft 


- I - 

FRSa 50 73 0% 7% Bft +ft 

DSCanuot 2S3011 9 Sft 0H +A 

Kkrtri 3 318 Sft 3ft Sft •% 

iH a w car 35 27 0 0 0 

h am n u gan 1 472 Sft 2ft Si +A 

uapntBc 040 29 50 16% 15ft 15ft -ft 

Mina 024178 42 1Z%d12ft 12ft -ft 
WRbs 10 944 13*4 13 13% +% 

HbnW 320333 27ft 2Bft 25)1 tft 

tartuMct 006 15 33S 11 10ft 11 +ft 

kaagrOev 31105*9 a% 25% aft -ft 

MgttSSH 33 119 !«% 13% 13% -% 

mam $ 714 3A 2ft 2ft -it 

total 0» 1121146 00ft 59ft Sft -1 
Hart 7 2 1ft 1ft ift 

InBgnlS 040 28)524 16 15ft 15ft -ft 

kttrTrt 19 395 0ft 8 8ft +A 

MnrfcaA 024 17 30< 13 12ft 12ft -ft 

Marti 2 26a 8% 8 a -ft 

htbtert 2 638 4ft Sft Sft -% 

htarttae B44S2 10% 15% «% +ft 
htanolc 241911 13U 13ft 13% 

kdDrtjQA 13 80 10ft 10% 16% 

MRaa 0D2 17 14 2ft 2ft 2ft -ft 

IS Total 275 19 5% 5ft Sft 

toman 005 10 7» 25ft 27ft 27ft -ft 

kmesa OP 21683 4 Sft 3ft 

iMMrtx 17 12 16 19 19 ‘ft 

torttodo 1.12 39 10 215 216 215 -3 


- J- 

JU Snack 13 160 12ft 12 13 -ft 

Jaaontac Q2B13 140 9% 8% 8% -ft 

JLGbd 0.10 34 1S2 40% 38% 39ft raV 

JohraonW 62 2 ZS 25 25 

jooeam io M u 13% u •% 

maned 4iO 13 651 9 5ft 8A -A 

JoetynCp IDO 12 13 27% 26% 27 +% 

JSBFh 005 15 105 34ft 23ft »ft +ft 

JunUo 026 10 741 19% 10% 18% -% 

Jnatti 018 10 431 13 12% T3 +ft 


n 9 a 

tad, hMthlHIlWlidGhi 

-K- 

KSwsa 008 12 11 23% 23% 23% 
Karan Cp 044 $ 429 0ft 9ft 9% 
Jtefty® 32411 5ft «% 5% -ft 
KrtySr 072 23 423 20 27% 27ft +ft 

Kertucky 011 10 31 GDI 6 GDI +D1 

Umtufl 004 13 57 24% 24 24% -ft 

NrtChdtf 22 34 1D,ft 10ft ID/. +,% 

KLAtrcsr 82 2925 40ft 47 47 -% 

Knortedga 2 247 3ft 3% 3(2 *i* 

Krt A 1 249 ft A 036 +D5 

Ksaug he 234 674 77 25% 25% -1% 

KrtrtkeS 11 2077 u!8 17 17ft .ft 


- L - 

Labona 072 22 40 16% 17ft 17ft -ft 

LaddFwn 012 354077 0% 6 B 

LanfOrti <73633 43 41ft C -% 

Uncastei 048 15 1460 35ft 34ft 34ft *% 

Lencehc 096 18 363 18ft 17% 18 

LwtnkEPi 23 1181 17% 17% 17% -»ft 

LDUpOCS 10 9 7ft 7% 7% -% 

Laiancpe 25 439 4% 4% 4% -% 

Lattices 13 <665 16ft 15% 15ft -ft 

luma* Rr 048 19 446 27 26 26ft -ft 

LDDS 312 5130 22ft 21.71 21ft 

UXCp 016 1 56 5*4 5% 5% -% 

LecBKra 221727 18% 17ft 17ft -ft 

LegentCp 171188 28% 27% »ft +ft 

uie Tetn oa) ir ig is 19 19 *% 

Utatou 25 67 5 4% 4ft 4ft 

LltytaM 028 12 212 13% 13% 13% -% 

Lin Br na <22135% 134 im -% 

LbatnT 052 16 116 16% 16% 16ft ♦% 

UxMjMI 13 6 30% 29*2 30% 4% 

UnewTec x 023 38 829 47% <0% 47 * A 

UqnSax (UO 17 9 Mft 34ft 34ft -% 

Loewcn Op 006 20 712 24 30 23ft 2430 *D5 

LaneStor 81153 6ft 05ft 5ft -ft 

UftaD 360BS40 38% 3fi 36 -ill 

UXCp 34768 114% 4ft 4ft +A 

LUMI 040 4 24 32 31ft 31ft -ft 




- M - 


were 

005 2025206 23 22% 22ft 

■li 

MS cars 

21 

S24 24*2 23% 23% 

-ft 

Mac id 

0X42 

88 13% 13% 13% 

♦ft 

UadburtE 

IX 14 

15 33*2 23 33 


Magna Par 

10 3343 37% 38 ft 36ft 

•ft 

Manna Op 

078 13 2<3 21% 20% 21ft 

♦ft 

Ml Bax 

15 

208 10ft 9ft 9% 

-ft 

MueangQ) 

Z1 

IX 10% 9*2 6% 

A 

Marinate 

10 

883 4 3% 4 


Marlul Cp 

9 

12 41% <1% 41% 


Margots! 

2 

X ift ift ift 


ttsiMia 

18 ZlOO 8% 6% 8% 

A 

Mrt£kiMia44 11 

3 11% 11% 11*4 

-ft 

IteM 

OX 10 1272 20ft 20 20ft 

-A 


uartec 0 23 7ft 7ft 7ft 

Maxkntat 49 K1 05 64% 64ft +ft 

Maxtor Cp 04675 3% 3ft 3ft +A 
McGMhBxO<4 12 58 15ft 15% 15ft +ft 
McOonrtc 046 16 1403 20 19ft 19ft +ft 

Uedexhc 016 16 113 13 12*2 12% ♦% 

MedtoknS 048 14 335 23% 23% 23ft -ft 
Mrtaretaa 024 60 393 10 9*4 9% ♦% 

Mentor Cp 016 60 200 18% 17% 16% +% 
MenhG 024 251162 11*2 II lift -% 
MnantD 080 11 283 20ft 20 20ft +ft 
MareuyG 070 7 245 a 27% 28 +ft 

MctMen IDO 11 1235 28ft 28*2 28% 
Merisel 9 958 Oft 9ft 9ft 

MrthXMA 012 191281 20% 18*2 19 -% 

men 30 514 37% 38 38% -% 

MkdnelF 020 23 527 lift lift lift 
MdiNrtB 2003461036 78ft 76% 76% -1% 
MknKUl 15 457 5% 5% Sft -% 

Ucnnga 84402 lift 10ft 10% -% 
Mfemcom 8 442 7% 7ft 7ft -ft 
Wogreh fl 385 5ft Sft 5% ♦% 
Mfapola 21777 Bft 7% 8 -ft 

Wert 1735061 56% 58% 58% -ft 

IMAOM 24 8 a 27% 28 

MMtanoc on 11 iB9i a% 27% a -ft 

MduiCndn xODO 21 381 27(06% 26*4 -A 

MtorH 052 18 665 2Sft 24,»» 26% +% 
Haem 1250 26% 27% 27% -% 

Hnotech 20 20 1 5ft 15 15 -ft 
MoMaTGl 491888 20ft 18% 18% -ft 
ModamCD 020 21 73 8% 7% 0% +% 
Mutate Id 05221 849 30 29ft 30 +ft 

IM8X 004 573042% 41 ft 41ft 4% 

Mntoxhc 00(33 68ftt44ft 43,'j 44 4ft 
Macon 00415 472 Sft Bft Sft -ft 

HnfcteeP 036 20 15 29% 028 23 

UTSSys 056 9 99 23% 23 23% 4% 

Mhnad 131402 29% 29 29% 

Mycogan 4 175 10*2 9% 10 4% 


- N - 

MAC He aie *1 1197 28ft 27 27 -ft 

NaehFhdi 072 10 6 16%015% 15% -% 

ttatCBmid 036118 3 14% 14% 14% 

NbaSU) 020 M 250 13ft 12% 13% 

Nartguv BOO 6 52 16% 15% 15% -% 

ICC 043107 265 62% 82 62% -ift 

tartar 162442 29% 29% 29ft 4ft 

NeMkGen 27 2065 IBft 18% IS}} -A 

NahafcS 97 377 7ft 6% 6ji -A 

ttoutipen 10 2100 6% 6% 6% 4% 

Newt Bin OBO 21 302 10 15ft 19 

Nawkaaga 33 744 oft 5% B -% 

Kxdgtftet 22 1414 30ft 29ft 30 

KewpRCp 004 19 33 7% 7% Ift 

Nslie Dri 21 9144 7ft 6ft 0% -ft 

Hudson ODO 23 87 56}1 55% 55% -ft 

MOAi 040 » 3311 45ft 44% 45*4 

Noisbpl H 23 W IBft 19ft -ft 

NStorito 3 11 5 4% 5 

NartteTS 088 12 313 38% 38 38% 

mm a ms 20ft 19% ro% -ft 

MOWS 79327579 10ft 15% 15% 

Horetau 460113 052 50*4 51% 4% 

HPCA 900 Bft 06 6 -% 

NSC Cup 7 10 2% 2% 2% 


- o - 

OQurtey* 17 338 11 10ft 11 

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Tuesday October 25 1994* 


42 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


AMERICA 

Dow slips as 
long bond 
yield climbs 


Wall Street 


Most US share prices slipped 
yesterday morning as the yield 
on the 30-year Treasury bond 
climbed above 8.00 per cent 
again, writes Frank McGurty in 
New York. 

By 1 pm. the Dow Jones 
Industrial Average was 8.75 
lower at 3,883.22, while the 
more broadly based Standard & 
Poor's 500 was down 1.06 at 
464.03. 

On the NYSE, declining 
issues led advances by a four- 
to- three margin by early after- 
noon. on moderate volume of 
155m shares. 

Other leading indices were 
also weaker the Nasdaq com- 
posite was off 1.38 at 764.00 and 
the American $E composite 
was down 1.36 at 454.99. 

No fresh economic news was 
released during the morning. 
Stocks opened on firmer 
ground, with sentiment bol- 
stered by news of a better- 
than- expected third quarter 
performance by Caterpillar, a 
bellwether cyclical issue. 

By early afternoon, the stock 
was up $2Vs at $58%, but the 
early' optimism inspired by the 
company* bad petered out by 
mid-morning as investors 
turned their attention to devel- 
opments in the bond market 

Before midday, the yield on 
the benchmark long bond was 
bid up to above 8.00 per cent a 
level at which, many analysts 
believe, equities can lose some 
of their relative appeal as 
investments. 

The action in both markets 
reflected heightened expecta- 
tions of an early boost in 
short-term interest rates by the 
Federal Reserve. 

Among the Dow components. 
Alcoa dropped $1% to $87%, 
IBM lost $T/i at $73'/i and East- 
man Kodak shed $1 to $48%. 

Offsetting the announcement 
of Caterpillar’s results, Air- 


borne Freight said that its 
earnings had fallen to 38 cents 
a share, from 53 cents a year 
earlier. The stock plunged 24 
per cent to $19%. 

Exxon was one of four oil 
groups reporting third-quarter 
results. The company exceeded 
analysts’ forecasts by posting 
net income of 92 cents a share, 
but the stock made little head- 
way, appreciating i% to $62%. 
Amoco was down $% at $58%, 
Arco added $V4 to $102% and 
Amerada Hess was unchanged 
at $48%. with each coming in 
close to expectations. 

Canada 


Toronto was subdued, softness 
in commodity stocks carrying 
the greatest weight as base 
metals shares corrected from a 
strong run last week, and golds 
staggered under falling hi ill ion 
prices. 

The TSE 300 composite index 
dipped 3.00 to 4^82.13 in 22.12m 
shares valued at C$278.62m. 
The base metals group eased 
33.62 to <1220.65. Alcan Alumin- 
ium Ltd took a knock, down 
C$% at C$36% after newspaper 
articles suggested that alumin- 
ium prices may be topped out 
after hitting four-year highs. 

The precious metals group 
shed 50.92 at 10,557.87 as 
Comex December gold lost 
$1.40 to $391.40 per ounce. 

Brazil 


Shares in S3o Paulo dipped 3.6 
per cent in light midday trade 
as investors continued to off- 
load stock amid worries 
regarding the effects of last 
week's government announce- 
ment of economic measures 
aimed at lowering inflation. 

The Bovespa index was 1.627 
lower at 43392 at 1 pm. Turn- 
over was R$125m ($1463m). 

Analysts said that the 
absence of foreign investors 
weighed on stock prices. 


MARKETS IN PERSPECTIVE 


% chenge in local oanaer f 

% clungc 

et-fcgt 

Hctange 

taUBSt 


1 Week 

* Weefct 

1 Yew 

Sac at 
IBB* 

tatoT 

UM 

Startel 

19M 

Austria - 

-2.83 

-8.51 

-a 87 

-14.96 

-10.47 

-1.49 

Belgium 

-0.86 

-1.27 

-3.68 

-10.54 

-4.53 

+5.04 

Denmark 

40.77 

-o.ai 

-4.12 

-9.35 

-4.25 

+5-36 

Finland .. ..... 

+0.40 

+5J51 

+31.06 

+27.69 

+46.59 

+61.27 

France — 

-4.15 

-4.11 

-13.40 

-17.46 

-13J51 

-4.94 

Germany — 

-3.41 

-3.17 

-3.24 

-11.82 

-6.93 

+2.40 

Ireland ... 

-3.42 

-2.72 

+5.34 

-134 

+2.07 

+12.31 

Italy 

-3.01 

-8.20 

+3.79 

+0.91 

+2.59 

+12.87 

Netherlands 

-2.16 

-0.45 

+0.01 

-6.18 

-1.18 

+6.72 

Norway 

-Z24 

+2.56 

+1.63 

+0.15 

+5.17 

+15.71 

Spain 

-2.83 

-1.74 

-7.51 

-11.38 

-7.69 

+1-57 

Sweden 

-0.03 

+2.09 

+430 

+4.79 

+11.60 

+22.79 

Switzerland 

-3.10 

-3.60 

-4.04 

-13.35 

-6.10 

+3.32 

UK 

-2.31 

-0.04 

-4.51 

-10.96 

-ione 

•2J8 

EUROPE .. 

-2J54 

-1-84 

-433 

-10j4® 

-7.44 

+1-85 

Australia 

+1.82 

+0.94 

+0.40 

-5.31 

-7.25 

+2.05 

Hong Kong - 

-2.35 

-4.63 

+6.83 

-22.62 

-29.67 

-22.62 

Japan 

-0.86 

-0.20 

-3.72 

+9.02 

+14.01 

+25.44 

Malaysia 

-2.0Q 

-5.29 

+20.10 

-11.33 

-14.98 

-6.46 

New Zealand — 

+0.22 

+0.22 

+236 

-0-59 

-1.15 

+8.76 

Singapore 

+006 

+6.13 

+12.63 

-1.37 

-2.15 

+766 

Canada 

-0.61 

-1.1 2 

+7.53 

+2.79 

-6.70 

+0.45 

USA 

-0.82 

+1.21 

+0.04 

-0.04 

-9.15 

-064 

Monica — 

-0.90 

-3.32 

+36.54 

+4.41 

-13.71 

-5.06 

South Africa 

+2.91 

+0.45 

+50.53 

+18.34 

+15.50 

+2768 

WORLD INDEX 

-1.25 

-0^6 

-1.12 

-1.12 

-2.98 

+6.7S 


t MMd on OctoOor St at WM. CopynbftC, The fteicM TBnM UnKatf, Goldman, Sects A 

Cojnd m Ww i Secwtaea Lkrtted 


The weakness of the dollar exerted its influence over the 
world's equity markets last week, with heavy falls seen 
among senior bourses. The two high spots were Australia 
and South Africa which, measured by the FT-Actuaries 
World index series, managed respective rises of nearly 2 per 
cent and 3 per cent in local currency terms. 

South Africa has been attracting investment interest follow- 
ing the election of the country's first ever multi-racial demo- 
cratic government earlier this year. Lehman Brothers notes 
that the future direction of the country's financial markets 
jwili depend on whether the government can carry out neces- 
sary economic and social reforms. However, the broker con- 
cludes. “barring any adverse political or external factors, the 
downside for the market remains limited, as valuations are 
supported by the stronger earnings momentum coming from 
the global recovery and strengthening commodity prices." 


EUROPE # # 

Late-closing bourses lose their early inspiration 


The dollar's inability to hold 
on to hard-won gains in 
Europe yesterday afternoon, 
and Wall Street's weak midses- 
sion after an encouraging start 
left late-closing bourses bereft 
of inspiration, writes Our Mar- 
kets Staff. 

Most indications were that 
bourse turnover was low, or 
very low. It was described as 
"pathetic" in some quarters. 

PARIS started the new 
account firmer but by the close 
had lost all the early gains as 
Wall Street and the dollar 
weakened. The CAC-40 index 
closed down 0.50 at 1,841.59, 
after a session high of LS65.00. 
Turnover was about FFr2bn. 

Bollore Technologies rose 
FFr25.80 to FFr452.80 after a 
year’s high, during the session, 
of FFr457.90. The diversified 
industrial group registered one 
of the day's best performances 
following news that it was to 
make a further round of asset 
sales worth FFrSbn, while 
some brokers moved to raise 
their rartfiTTnrrig nrihtinnfi on Hw 
stock. 

Hoare Govett noted that the 
group had been a beneficiary 
of a strong exposure to the eco- 
nomic recovery, while other 
brokers expected further out- 
performance as the company 
took firm restructuring mea- 
sures in an effort to reduce Its 


Bollard Technologies 


Share price and Index /abased 



debt burden to some FFr4hn by 
the end of the year. 

Docks de France, the retail 
group, moved up FFr13 to 
FFr709 after announcing a gain 
in nine month sales to the wnri 
of September while, on the 
opposite tack, Accor (lipped 
FFr21 to FFr509 ahead of 
today’s first half figures which 
are expected to show a sharp 
fall. Axa. which is doe to 
release its six month results 
tomorrow, slipped 50 centimes 
to FFr2 39. 

FRANKFURT steadied after 
last week's 4 per cent decline, 
the Dax index easing 3.16 
higher to 2,025.38 in turnover 
down from DMTbn to DM4.7bn. 


FT-SE Actuaries Share Indices 


Oct 24 THE EUROPEAN SERIES 

Vasil danga Open 1030 11JB 1Z-0D 110Q HJQ l&OO Own 

FT-SE Eurotra* 100 131324 131166 1314& 131192 131106 131132 131201 131222 

FT-SE EmCac* 200 137X28 137-188 137631 137130 1 37X11 137125 137307 1372J6 

Oct 21 Ori 20 Oct H Oct 16 Oct 17 

FT-SE EwBOCfc 100 13WJ5 132442 132121 133152 134100 

FT-SE Ewofeac* 200 13*1.64 13*148 1379*0 138114 1400*7 

BM KUO (JWlWQfc HgMtaf: B# - 12MJG; SOD - 133UZ UmHOf. HO - 1311 JB ZOO - 130 «1 1 MM 


The recovery was minimal 
compared with the session fan 
of 47.73. or Z3 per cent last 
Friday, and it almost disap- 
peared after hoars; the Ibis-in- 
dicated Dax closed the after- 
noon at 2,022.64. 

Mr Jens Wrecking at Merck 
Finck in DGsseidbrf noted that 
the dollar was relatively stable, 
that the bond market had 
traded in a narrow range an d 
that inflation statistics from 
Baden Wurtemnberg and 
North Rhine Westphalia were 
regarded as good news. 

However, there was nothing 
ready to enliven the market, 
and the main feature in blue 
chips was a selection including 
the big three chemicals . Deut- 
sche and Bayernhypo in banks, 
and Linde and Preussag in 
engineers recovering some of 
last week's sector rotation 
losses with gains of i per cent 
and upwards. 

There was a bigger recovery 


in Wem, the window frame 
manufacturer, which rose 
DM45 to DM870; this followed a 
slide on broker downgrades 
from DM11 3Q last Tuesday. 

AMSTERDAM maintained its 
composure and the Aex index 
finished with a rise of 1.43 at 
401.33. 

There was interest in DSM. 
up FI £20 at Fi 14400, ahead of 
third quarter results due next 
Monday. Reviewing the group’s 
prospects, Goldman Sadis said 
that it had raised its nine 
month forecast for the com- 
pany to FI 290m, compared 
with a loss of FI 24m in the 
same 1993 period. 

Another chemical group. 
Akzo Nobel, due to report on 
November 2, added 10 cents to 
FI 202.70. Goldman commented 
that the shares had been 
underperforming the market 
recently on worries that a 
major shareholder might sell 
stock after November 7 when a 


“standstill agreement” expires. 

Nedlloyd remained unsettled 
following Friday’s 4 per cent 
fall with the shares rising to 
FI 49.80 before closing off 40 
cents at FI 48.50. 

ZURICH, closing earlier than 
Paris, or Frankfurt’s Ibis sys- 
tem. was lifted by renewed 
interest in dollar-sensitive 
shares and the SMI index 
closed 16.6 higher at 2,625.2. 

Among chemical shares, 
Ciba-Geigy rose SFrl7 to 
SFr737; brokers called this a 
tw-hnirai rebound and pointed, 
too. to support from SBC’s 
la unch of a new series of cov- 
ered warrants on Ciba regis- 
tered stock. 

Union Bank led active stocks 
with a rise of SFrll to SFrl,250 
while, in insurers, Winterthur 
rose SFrl7 to SFr644 and Swiss 
Re by SFrl3 to SFr748. 

MILAN made modest for- 
ward progress, but traders 
suggested that the gains were 
mainly due to technical trad- 
ing and volume remained low. 
The Comit index closed up <130 
at 621.79. 

Fiat, depressed by specula- 
tive selling last Friday, recov- 
ered L105 to L6.135. 

Brokers saw buying among 
telecommunications stocks, 
with Telecom Italia rising L155 
to L 4,070 and Stet L115 to 
L4.495. 


RAS, the insurance group, 
lost LlSfl to L18.910 ahead of a 
press conference today. 

MADRID’S heavy weighting 
in banks and utility stocks 
stood it in good stead for once, 
the general index closing 0A0 
higher at 29324; but turnover 
was only Ptall.9bn. one of the 
lowest figures this year, and 
brokers said that the day’s per- 
formance was no measure of 
sentiment in a market which is 
still generally bearish. 

Santander led banks with a 
rise of Pta60 to Pta4£80 while 
the obviously weak links were 
in construction where Cubier- 
tas fell Pta320 to Pta7,900 and 
Uralita Pta25 to Ptai.285. 

ISTANBUL fell 3.6 per cent, 
the composite index losing 
898.38 at 23505.07 as expecta- 
tions for a rate rise in today’s 
three-month T-bill auction, and 
fears of higher foreign cur- 
rency prices ahead of Wednes- 
day's L29,OOQbn bond maturity 
discouraged buyers. 

WARSAW'S recent pessi- 
mism was strengthened by Fri- 
day’s decision by the lower 
bouse of parliament to intro- 
duce a 0.3 per cent stock trans- 
action tax from January. The 
Wig index feD 341.2, or 3.8 per 
cent to 8,637 A 


Written and edited by WHJtem 
Cochrane and John Pttt 


ASIA PACIFIC 

Chinese fund project boosts Shanghai A shares 


Tokyo 

Activity eased on continued 
worries over the movement of 
the yen. and the Nikkei aver- 
age closed ma rginally lower On 
selling by dealers, writes 
Emiko Terazono in Tokyo. 

The Nikkei 225 index lost 
46.71 to 19.852J7 after a high of 
19352B9 in the morning and a 
low of 19,830.57 in the after- 
noon. Some foreigners were 
seen selling export linked 
stocks and buying domestic 
demand related stocks. 

Volume was 180m shares 
against 238m. The Topix index 
of all first section stocks 
declined 3.75 to 1,575.19 and the 
Nikkei 300 fell 0.93 to 288.00. 
Lasers led gainers by 538 to 400 
with 235 issues remaining 
unchanged. 

In London, the ISE/Nzkkei 50 
index rose 0.53 to 1.295.28- 

Investors were awaiting the 
listing of Japan Tobacco on 
Thursday. Although worries 
have receded about a wave of 
selling similar to that seen 
when East Japan Railway was 
listed last year traders said 
that price fluctuations in the 
stock would still affect investor 
confidence. 

Nikko Securities reported 
that the market was approach- 
ing a “high risk zone” because 
of the high number of new 
equity issues which have been 
made amid the current low 
trading volumes. 

Japan Telecom, the bench- 
mark for former state owned 
companies, fell Y50.000 to 
Y3.75bn. Nippon Telegraph and 
Telephone fell Y5.000 to 


Y890.000, while East Japan 
Railway was unchanged at 

Y483.000. 

Electricals were mixed - 
Hitachi rose Y7 to Y997 and 
Toshiba added Y12 to Y763, but 
Sony fell Y40 to Y5.770. Car 
maker s were lower with Nis- 
san Motor down Y6 to Y846 
and Toyota Motor losing Y30 to 
Y2.Q80. 

Steels were actively traded 
but closed lower on profit-tak- 
ing: Nippon Steel down Y2 to 
Y388, and Kawasaki Steel off 
Y6 to Y442. 

Tsumura, a Chinese herb 
medicine maker, failed to trade 
following last week’s reports 
alleging that the company bad 
been involved in fictitious 
deals to boost revenue. 
Although the company denied 
the reports, the stock closed at 
an offered price of Yl.120, 
down by its daily limit of Y2Q0. 

In Osaka, the OSE average 
fell 45.03 to 22,09621 in volume 
of 33m shares. Nintendo, the 
video game maker, fell Y120 to 
Y5.180. 


Roundup 


Chinese initiatives moved equi- 
ties in Hong Kong and, more 
obviously, on the mainland. 

The Shanghai Securities 
News quoted an official in the 
Securities Commission of the 
State Council as saying that 
urgent measures must be 
taken to stabilise share prices, 
and that one avenue would be 
to explore and establish stock 
investment funds “as soon as 
possible” 

In Hong Kong, meanwhile, 
sentiment was boosted by the 


South Africa weaker 


South African equities were 
generally weaker, although 
the underlying sentiment 
remained steady. 

Gold stocks were marked 
down on the softer bullion 
price and amid a lack of dear 
direction in local currencies. 

The overall index lost 24 to 
5,751, the industrial Index 
slipped 21 to 6,603 after 
reversing earlier gains and the 
gold index shed 31 to 2J119. 

De Beers lost RI to R100.50, 
and JCI slipped R3 to R107. 


Remgro shed 60 cents to 
R26225, Barlows lost 50 cents 
to R31225, SAB was 50 cents 
softer at R92.75. 

Vaal Reefs was R5 softer at 
R430 and Dries shed 25 cents 
to R68.75. 

Gencor lost 10 cents after 
Friday’s 60 cent gain, closing 
at R15.00, on news that its for- 
mer chairman and tbe former 
government finance minister, 
Mr David Keys, was to become 
chairman of its new acquisi- 
tion Billiton International. 


Chinese negotiator, Guo Feng- 
rnin, who hoped that a financ- 
ing arrangement could be 
worked out for the airport by 
early November. 

Wellington and Bangkok 
were closed for holidays, as 
well as Colombo on account of 
an island-wide curfew imposed 
after the assassination of Sri 
Lanka’s opposition leader. Mr 
Gamini Dissanayake. 

HONG KONG’s renewal of 
airport fi mi Tiring hopes took 
the Hang Seng index up from 
an intraday drop of 128 paints 
to close 25.70 higher at 9.364J5. 

Guo told reporters that dif- 
ferences between the Chinese 
and British sides were now 
very small China-incorporated 
shares led the general rebound, 
with buyers active throughout 
the day, and the H-share index 
rising 16.50. or about 1.25 per 


cent to L353.78. 

Champion Technology 
gained 20 cents to HKS2.575 on 
hopes it can benefit from a pos- 
sible op ening of China's tele- 
communications market 

SHANGHAI'S A share index 
closed 78.56, or 10.75 per cent 
higher at 809.34 as turnover 
climbed to 5.70 billion yuan. 

The fund project was first 
proposed by China’s securities 
authorities at the end of July 
but was not mentioned again, 
triggering fears that Beijing 
mi ght have nhanguri its irrinri. 

The A share index lost 
around 40 per cent of its value 
in the three weeks starting at 
th e en d of September. 

SYDNEY closed slightly 
higher after the Reserve Ban- 
kof Australia raised its official 
cash rate by a percentage point 
to 650 per cent, the All Ordi- 


naries index rising 2£ to 2,037.4 
In turnover of A$34S.4m. 

Resource issues finished 
slightly higher but industrials, 
particularly lwnica and finan- 
cials, were steady. Golds had a 
stronger session after bullion 
gold added to gains in New 
York on Friday. 

MANILA featured a Petron 
rise of 7.2 per cent to 26 pesos 
after stock dividend rumours, 
and the composite index rose 
2835 to 3,1X3.15. 

Property issues remained 
upbeat - Ellin vest Land rose 
2.5 per cent to 1025 pesos while 
Ayala Land B rose 13 per cent 
to 40 pesos. 

SEOUL saw active institu- 
tional selling take the compos- 
ite index down 7.75 to 1.081.55. 
Tbe Seoul bridge collapse, 
which killed 32 people last 
week, continued to depress 


construction stocks and the 
sub-index lost 1138 at 567.43. 

Kepco fell Won300 to 
Won32,300 ahead of a sched- 
uled listing on Friday of its 
ADRs on the New York stock 
exchange. 

TAIPETs weighted index fell 
28.57 to 6.74239 after late prof- 
it-taking emerged to reverse 
earlier gains. Profits were 
taken on papers and foods, 
with Yuen Foong Yu Paper 
down T$L1 to T$39.4 and Presi- 
dent Enterprises down T$13 to 
T$59.5. 

KOALA LUMPUR continued 
last week's downturn ahead of 
the Friday’s 1995 budget, the 
KLSE composite index falling 
5.35 to 1,109.07. JAKARTA 
eased with a number of big 
stoc ks coi ning under pressure, 
the JKSE composite index los- 
ing 2.49 at 512.48. 


. This announcement appess as a matter of recortfonly. 



Barclays de Zoete Wedd led an . . . 
equity bought deal of 35,657,902 .. 
shares in Avesta Sheffield purchasing 
- and placing the stake, held by y : . ■ " 
NCC Aktiebolag for SEK2 2 billion: 


FT-ACTUARIES WORLDIND ICES 


JwrtJj- compiled try TTw Financial Timm Lid., Goldman. Sjcfrs A Co. and N+fWest Securities Ltd. hi cory m coon wftfr the Institute at Actuaries arid the Faculty of Actuaries 
NATIONAL AND 

REGIONAL MARKETS FRIDAY OCTOBER 21 1994 THURSDAY OCTOBER 20 1994 DOLLAR INDEX 


Fflures in poromheaes 

US 

Day's 

PoukS 



Local 

Local 

Gross 

US 

Pound 



Local 



Yanr 

show nuruxsr of Snss 

Oodor 

Change 

Sterfng 

Yen 

DM 

Currency 

■H. eng 

U*v. 

Doter 

Storting 

Yen 

DM Currency 52 week 52 week 


o< Stock 

Indei 

% 

Index 

Index 

Index 

Index 

on day 

Yield 

Index 

Index 

Index 

Index 

Index 

high 

Low 

(approx) 

Australia (681 

17029 

03 

155.10 

104.41 

132.40 

154.82 

14) 

056 

16950 

155.41 

104.46 

13256 

15356 

189.15 

14936 

15051 

Austria (1*9 

182.23 

-1£ 

165.96 

111.73 

141.67 

141.62 

-Z 2 

1.14 

18557 

16954 

114.17 

14457 

144.81 

198.83 

167.46 

180.10 

Belgium (37) 

170.SS 

-06 

155.61 

104.75 

132.83 

129 73 

-0.9 

42S 

17151 

15754 

105.70 

134.12 

13068 

177.04 

149JS3 

151.50 


- 136.40 

-0.8 

124.23 

83.63 

106.05 

133.82 

-08 

253 

137.46 

125.80 

8456 

10751 

13458 

145J1 

12054 

13050 

Denmark (33)-.- 

260.44 

-as 

237.20 

159 68 

20248 

207.11 

-05 

1.43 

261.74 

23955 

181.03 

204 33 

20906 

275.79 

23027 

237.31 

Rntand 

19869 

aa 

18096 

121.82 

154.47 

191.19 

-03 

074 

198.17 

18157 

121.32 

154.71 

191.85 

198.69 

116.85 

12069 

France (101) 

167.27 

-0.0 

15Z34 

102.55 

13004 

134.49 

-12. 

323 

16859 

154.30 

103.72 

131.61 

13612 

18537 

15034 

109.53 

Gerniaiy (58) 

143.61 

-1.5 

130.80 

88.05 

111.65 

111.65 

-1.9 

1.85 

145.84 

133.48 

89.73 

11358 

113.80 

150.40 

13037 

133.42 

Hang Kang (S61— 

376.63 

-0.6 

344.84 

232.15 

284.37 

375£5 

-0.0 

351 

38098 

34065 

23456 

297.43 

37755 

50066 

341^9 

354.09 

Ireland (14) 

..zoom 

-aa 

189.45 

127 54 

161.72 

182.71 

-1.1 

3.46 

20955 

19158 

12098 

163.37 

184.66 

216.60 

171.68 

173.75 

Italy (59) 

77.42 

-1.0 

7051 

47.47 

6019 

88.49 

-1.1 

1.77 

78^1 

71.58 

48.11 

61.08 

89.45 

07.78 

67.88 

71.17 

Japan 1+68) 

183.23 

-02 

140.67 

100.06 

12091 

10008 

-0.8 

077 

16351 

149.73 

100.65 

127.72 

100.65 

170.10 

124^4 

151^2 

Malaysia 071 

553.34 

-i.i 

503.96 

32937 

43020 

544^4 

-09 

1.54 

55952 

512.07 

34452 

43650 

549.06 

621.63 

43071 

462.49 

Mexico 116) - 

... .. 2267.00 

-05 

2064.67 

1369.94 

1762.45 

8465.73 

-0.3 

121 

227754 

208459 

1401.15 

177726 

8495.11 

2047,08 

169028 

1823.45 

Nemertona (19) 

—216.48 

-02 

197.18 

132.73 

168.30 

165.60 

-0.7 

3.49 

217.18 

198.77 

133.61 

169.55 

168.78 

219.75 

187.01 

194.05 

New Zealand (141 

73.88 

-06 

67.27 

45 J9 

57.42 

64.08 

-aa 

3.78 

7429 

6750 

45.70 

5759 

6455 

77.69 

59 22 

SS2* 

Norway (23). 

207.67 

-02 

189.32 

127 46 

161.81 

183.65 

-0.6 

150 

20030 

19054 

128.15 

16252 

184 71 

211.74 

15622 

18204 

Singapore (Ml 

-395.68 

05 

36037 

242.60 

307.63 

268.77 

a 2 

157 

395.01 

361,52 

243.02 

30858 

Z0O23 

3^92 

294.66 

329, BZ 

South Africa (59} 

339.49 

-0.7 

309.19 

208.15 

263.94 

296 44 

0.7 

017 

342.00 

313.00 

210.40 

26659 

29452 

342.00 

202.72 

21059 

Spam (38) 

141.54 

-0.9 

128.90 

86.78 

110.04 

133.71 

-i.i 

4.75 

142.78 

13067 

87.84 

111.48 

13550 

155.79 

128.88 

14138 

Sweden (36) 

241.13 

at 

218.61 

14704 

187.47 

253.92 

-0.7 

156 

24083 

220.41 

148.16 

188.01 

255.70 

241.13 

176.83 

205^2 

Switzerland (47) 

165 46 

-0.6 

150 69 

101.44 

t 28.63 

12770 

-0.9 

1.90 

166.77 

15252 

102.50 

13019 

128.96 

176.56 

143.64 

14029 

United Kingdom E04).._ 

200.B9 

-05 

182.96 

123.17 

156.10 

10SL96 

-0.9 

4.16 

201.83 

184.71 

124.17 

157 57 

184.71 

214.96 

181.11 

1^.16 

USA (519 


-0.4 

172.99 

116.39 

147.58 

189 83 

-aa 

2.87 

19003 

174.46 

11727 

148.81 

19063 

196.04 

178.95 

189.75 

EUROPE FD9) 

172.70 

-07 

157.29 

105 88 

134.26 

147.75 

-i.i 

3.14 

173.91 

1K.17 

10859 

135.77 

149 23 

173.58 

154.79 

161.88 

Ncrtita (1161 

233.73 

ao 

212.87 

143.30 

101.71 

21046 

-a? 

1.41 

233.74 

21352 

14350 

18247 

211.90 

233.74 

173.19 

192.67 

Pacific Basin (747) 

17329 

-0.2 

156.91 

105.63 

133.95 

110 86 

-05 

1.09 

172.72 

15008 

10628 

13454 

111.41 

176.86 

134.79 

1S.41 

Euro-Pacific (1456) ...... 

172.34 

-0.4 

156.95 

105.68 

133.98 

12S.7S 

-a.e 

1.96 

173.10 

158A2 

10048 

135.13 

126.71 

17S.14 

143.88 

160.38 

North America i6ifi) — 

186.51 

-04 

189.86 

114.35 

145.00 

18595 

-04 

2.35 

187 32 

171.44 

11524 

14023 

186.77 

192,73 

175.67 

18608 

EnopO Ex. UK (505) — 

153.91 

-OB 

140.18 

94.37 

119.68 

127.16 

-12 

2.53 

15551 

142.05 

95.49 

121.17 

12069 

16013 

13094 

1*050 

Pacific E*. Japan 157$.. 

J6079 

-04 

237.52 

159.90 

20275 

232J3 

-0.1 

2.B2 

26151 

2%S1 

161M7 

20428 

232.64 

ZS621 

230.10 

232.04 

WttkJ Ejl US (1636) — 

174J9 

-0.5 

1S8.&3 

106.32 

135.58 

12965 

-0.7 

157 

175.19 

160J4 

107.78 

138.77 

130.59 

176.65 

14058 

161.01 

World Ex. UK (1947) — 


-04 

160.57 

108.10 

137.07 

144.85 

-0.6 

2-C8 

177.09 

162.07 

looes 

13025 

145.49 

17059 

15558 

107.40 

World Ex. So. AT. (2092) 

177.43 

-04 

161.60 

106.79 

137.94 

147.07 

-0.6 

028 

17022 

183.10 

109.64 

139.13 

14000 

18003 

158.54 

18817 

World Ex. Japan (1663) ., 

......... 138. TO 

-05 

tries 

116.09 

148.70 

176.33 

-06 

2.92 

189.71 

17353 

116.71 

148.10 

177.40 

195.20 

17034 

18083 

The World Index (2151). 

178.48 

-04 

162.55 

10943 

138.76 

148.17 

-0.6 


178J8 

164.07 

11029 

13855 

149.08 

18080 

158.85 

16050 


GepwWd, n» Rmncui TUrao UwetL Gcfchnn. Sachs and Co »x) NaNVoa Socwkfeg Laimtd. 1987 

CqmlBie* it CMW* wWi effect 3SMOJW: Masons GBL A 8 act C. Qamata Banque A tA Brfgum Name dongas: GBL id (V V P re eod Gmrala Btn9« *o Oewrata BsncxJe (V v p R) (bath 
Be^hant LaWGJ cnccs uTOmWot*; let ns edtttn. 


v . Lead Manager 
Barclays de Zoete Wedd 



September 1994 


INVESTMENT BANKING. FROM A 






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