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Weekend FT 

Residential property: 
Special 12-page section 


FINANCIAL TIMES 




FRIDAY SEPTEMBER 23 1994 


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taiTd'atTM 05 ™ 6 Unilever concedes detergent can damage clothes 

breakout prison 


British police discovered three detonators and half 
a kilogram of Semtex explosive at a prison in 
England at which five IRA terrorists staged an 
armed breakout earlier this month. The discovery - 
on the eve of the first Anglo-Irish intergovernmen- 
tal conference since last month's ERA' ceasefire - 
looked set to put both UK home secretary Michael 
Howard and the Northern Ireland peace process 
under new pressure. Mr Howard described the find 
as a "very very grave" matter indeed. Washington 
procession. Page 9 

Wdras says he wfll not leave Haiti; General 
Raoul Cfidras. Haiti’s military leader, repeated that 
he would not leave the country after he steps down 
from power next month. He told CBS TV late on 
Wednesday night that the Haitian constitution “for- 
bids exile". Page 4 

Volkswagen’s finance director, Werner Schmidt 
is expected to be ousted shortly as a consequence of 
last year’s near collapse of the group’s Spanish sub- 
sidiary, Seat Page 17 

UK vetoes EU plan for paternity leave 



The UK vetoed European Union attempts to 
extend statutory parental leave to fathers, and for- 
malised its divorce from its 11 partners on EU social 
policy. UK employment secretary Michael Portillo, 
(above) said plans to give new fathers the right to 
three months' unpaid leave would be “immensely 
disruptive and destructive”. Page 16; EU launches 
IT debate. Page 2: Editorial Comment Page 15 

Wheat stocks fad: World stocks of wheat are set 
to drop to their lowest level in 14 years after a fall 
in international output and a rise in consumption, 
the International Wheat Council said. Prices have 
risen about 30 per cent since early July. Page 32 

Guinness, spirits and brewing group, 
disappointed the City of London with its interim 
results - then surprised it by choosing Finn Johns- 
son. hesd.ef a Swedish buiidjng company, to lead 
UmfedlHsmlers. Page 17; Lex, Page 16 

S Africa rated BB: South Africa was rated BB by 
European credit rating agency. Ibca, in its first for- 
mal assessment since April's elections, placing it 
alongside countries such as Mexico, Hungary and 
Argentina. Page 16; Thatcher row. Page 9 

Chinese encouraged to boy cars: China will 
soon begin providing incentives to individual car 
buyers to help boost its fledgling automotive sector 
as part of a policy aimed at encouraging widespread 
car ownership. Page 6 

UK la soak procurement clampdawn: The 

UK plans to urge the European Commission to step 
up its monitoring of the ESOObn a year European 
public procurement market in an attempt to reduce 
alleged malpractices by member states. Page 9 

French minister accused of corruption: 

France’s sports and youth minister, Michele Alliot- 
Marie. was reported to be under investigation for 
receiving payment from pharmaceutical companies 
while a member of the health ministry's drug 
approval committee in the ISSOs. Page 2 

Gatt chief warns on pact: Peter Sutherland, 
director-general of Live General Agreement on Tar- 
iffs and Trade, said ratification of the Uruguay 
Round trade accords was "moving in the right 
direction” but warned that stated intentions had 
yet to be reflected in results. Page 5 

Danish coalition talks begin: Poul Nyrup 
Rasmussen, Denmark's Social Democratic party 
leader, prepared to form his second administration, 
despite the beating his centre-left coalition suffered 
in Wednesday's general election. Page 3 

hnrvol to attend Morocco talks: Israel, Jordan. 
Tunisia. Egypt. Saudi Arabia and the Palestinian 
self-rule areas bad accepted invitations to an 
unprecedented Middle East economic conference in 
Casablanca in October, said Israel’s foreign minis- 
ter Shimon Peres. Page 6 

Pope delays US visit: Pope John Paul, 74, beset 
hv health problems for the iwest two years, post- 
poned a visit to the US until late 1995 so he can 
fully recover from surgery for a broken leg. 


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By Roderick Oram In Beijing 

UNILEVER yesterday admitted that its 
revolutionary detergent launched this 
spring under the names Persfl Power 
and Omo Power was “defective”. 

The detergent has been at the centre 
or an acrimonious row between Unilever 
and Procter & Gamble, its US arch rival 
in the £6bn a year European detergent 
market, following claims that it dam- 
aged some types of clothing in repeated 
high temperature washing. 

Its formula was revised and a new 
version launched in June. 


“We made a mistake. We launched a 
product which had a defect which we 
had not detected,” Mr Morris Tabaks- 
blat, co-chairman of the Anglo-Dutch 
consumer products group, said yester- 
day. The relaunched product had reme- 
died the problem. 

The original launch had followed two 
years of consumer tests. 

In the first explanation by a senior 
executive of the problems, he said: “I 
think we were very enthusiastic about 
an exciting new product . . , and did not 
look closely enough at the negatives. 

“Somewhere between research and 


marketing, something went 
wrong . . . under the normal presure to 
be first to the market.” 

The detergent, sold under the Persil 
name in Britain but as Omo on the Con- 
tinent, con tains manganese catalyst 
“accelerator". This was found to react 
badly to certain dyes in extreme condi- 
tions. The reformulated version uses 
less of the accelerator. 

Speaking in Beijing on the eve of the 
opening of Unilever's Walls Ice-cream 
plant in the city and the announcement 
of the company’s eighth joint venture, 
its second detergent business in China. 


Mr Tabaksblat said one key issue 
appeared to be a lack of “appropriate 
safeguards” in tests before the launch. 
At high temperature and with repeated 
use, the manganese catalyst reacted 
badly with certain new textile dyes, 
which “were not in our test battery." 

He expressed, however, full confidence 
in Unilever's researchers, who bring an 
average of about one new product a day 
to markets around tbe world. 

The new formulation should prevent a 
recurrence of the problem. Mr Tabaks- 
blat said. Any adverse effect on clothes 
would happen more slowly and well out- 


side garments' normal life-span. All 
detergents caused some minor damage 
to clothes after repeated washings. 

The Dutch consumers' association 
said last week its own tests on the new 
formula still caused unacceptable dam- 
age to clothes and was no more effective 
at washing clothes than other cheaper 
detergents. 

Mr David Veitch, Procter & Gamble's 
European vice-president of public 
affairs, said the consumer association's 
tests showed there continued to be a 
problem even with the reformulated 
product 


World Bank 
plans $165m 
operating 
budget cut 


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By George Graham 
in Washington 

The World Bank plans to slash 
its operating budget by about 
5165m over the next two years to 
respond to calls for a leaner 
organisation. 

Mr Lewis Preston, the bank's 
president, has asked vice-presi- 
dents with responsibility for 
operational areas to cut their 
administrative budgets by 5 per 
cent in the fiscal year starting 
next July 1. and by as much 
again the following year. 

Support divisions have been 
asked fur an even sharper 6.5 per 
cent cut in administrative 
expenses. 

The proposal is already fuelling 
a row between some industria- 
lised countries - especially the 
US. Canada, Australia and the 
UK - which have long argued 
that there is plenty of fat to trim 
from the bank's comfortable 
operating budgets and well-pad- 
ded salary structure, and bor- 
rower countries who fear cuts 
could jeopardise the quality of 
services. 

The World Bank's administra- 
tive budget has climbed by 32 per 
cent over the past three years to 
about $1.4bn for the fiscal year 
which began in July. Mr Pres- 


ton’s proposed cuts would roll 
spending back to just above tbe 
fiscal 1993 level. 

World Bank offi cials said the 
proposal was Mr Preston's own, 
and had not been sought by the 
board of executive directors who 
represent the shareholding coun- 
tries. 

“I don’t believe the president 
would propose this if he believed 
it would cut tbe bank's services 
to poverty reduction and develop- 
ment. 1 think be just thinks he 
con do tbe job better with a , 
leaner institution." one official ! 
said. { 

Each vice-president receives a 
cash budget, and could choose to 
meet the target by measures such 
os cutting the number of staff, 
curbing travel costs or putting off ! 
equipment purchases. 

“The majority of the board 
feels we really have to be very 
careful about this because the 
Bank does a lot," said Mrs Evel- 
ine Hertkens, a World Bank exec- j 
utive director from the Nether- 
lands. who represents a 
constituency of borrowing coun- 
tries from eastern Europe and 
the former Soviet Union. 

“If we want to continue to do 

Continued on Page 16 


British and US air strike signals a firmer stance in former Yugoslavia 

Nato jets 
retaliate 
for attack 
by Bosnian 
Serbs 


By Bruce dark in Brussels and 
Bernard Gray in London 

Nato aircraft yesterday attacked 
Serb positions near Sarajevo, 
knocking oat at least one tank, 
in apparent retaliation for two 
incidents earlier in the day in 
which French soldiers serving 
with the United Nations came 
under fire. 

In the more serious attack on 
UN troops, a French armoured 
personnel carrier was hit by a 
rocket-propelled grenade as it 
monitored a fire-fight between 
Bosnian Serb and Moslem-led 
Bosnian army forces. One soldier 
was injured in the attack. 

Major Herve Gourmeloa, a UN 
spokesman in Sarajevo, con- 
firmed that an air strike had 
taken place, bat refused to pro- 
vide details of the target or to 
confirm whether the attack had 
been successful. 

The strike, in which British 
and US aircraft took part, is the 
latest sign that the allies are tak- 
ing a firmer stance towards the 
former Yugoslavia. The Atlantic 
alliance, urged on by United 
States, has been pressing hard in 
recent days for a more vigorous 
effort to counter the Bosnian 
Serbs, who have rejected an 
internationally 
sponsored peace plan and been 
isolated by their kinsmen in 
Serbia. 

The US administration has 


French state 
bank holds 
back results 

By Andrew Jack in Paris 

Credit Lyonnais, the troubled 
French state-controlled banking 
group, surprised tbe markets by 
postponing publication of its 
results for the first half of 1994 
yesterday. The move aroused 
fears about additional provisions 
still required to cover its heavy 
losses. 

The bank said the results were 
unlikely to be released for sev- 
eral days because of a board deci- 
sion pending completion of “cer- 
tain analyses" in progress. 

Sources close to tbe bank said 
the delay was caused by a failure 
to complete discussions with the 
government about the way in 
which extra financial support 
should be provided. 

News of the postponement 
helped to prompt a sharp fell in 
price of the group's non- voting 
shares and reinforced speculation 
about substantial additional pro- 
visions that may be required as 
part of its restructuring. 

Credit Lyonnais lost FFrfi5bn 
fsi.30bn) last year, one of the big- 
gest losses in French corporate 
history. 

In July, the bank was the sub- 
ject of a highly critical report 
from the government. 

Tbe bonk admitted that the 

Continued on Page 16 
World stocks. Page 39 


Japanese coalition 
agrees tax package 


By William Dawkins m Tokyo 

Japan's ruling coalition of 
conservatives and socialists last 
night agreed a package of income 
tax cuts worth Yl6,50Qbn (Sl68bn) 
over the next three years, to be 
followed by a rise in sales tax, 
bolstering the fragile economic 
recovery and giving the govern- 
ment added stability. 

The unpopular sales tax - simi- 
lar to Europe's value added tax - 
will rise in April 1997 from 3 per 
cent to 5 per cent It is needed to 
compensate for an expected 
decline in the income tax base 
caused by the tax cots and an 
ageing population. 

Agreement between the three 
parties in the coalition paves the 
way for the end of a divisive 
year-long argument over fiscal 
reform. It marks new stability in 
the coalition, which had looked 
shakier than its short-lived pre- 
decessors on taking office at the 
end oT June. 

Until a few days ago. Lhe Social 
Democratic party of Mr Tomiichi 
Murayama, the prime minister, 
opposed an increase in sales tax. 
But Mr Murayama changed bis 
mind in return for a promise 
from the Liberal Democratic 
party - his enemies until the 
SDP joined forces with them 
three months ago - to spend the 
extra revenue on welfare. 

Washington has been pressing 
for tax cuts to stimulate domestic 


demand in the hope of reducing 
the trade surplus, but wanted 
Japan to defer the rise in sales 
tax for as long as possible. 
Accordingly, the deal drew a cau- 
tious welcome from the US. Mr 
Walter Mondale, US ambassador 
to Japan, said the package was 
positive but not perfect 

The income tax cut consists of 
a Y3.500bn per year permanent 
reduction, plus Y2,000bn annu- 
ally of temporary cuts, to last 
until March 1997. The govern- 
ment will decide six months 
before then whether the tempo- 
rary cuts should continue, bear- 
ing in mind the scope of eco- 
nomic recovery. 

At the same time, it will review 
whether to change the size of the 
increase in sales tax. That will 
depend on the amount of ravings 
in administrative spending 
achieved by then, in response to 
a demand by the New Harbinger 
party, the coalition's smallest 
member, which is led by Mr 
Masayoshi Takemura, finance 
minister. 

The government will submit 
the tax reform package to the 
next session of parliament, 
starting at the end of this month, 
and hopes to pass it into law by 
the end of the year, in line with a 
promise to Japan's Group of 

Continued on Page 16 
Background, Page 7 
Lex, Page 16 


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A damaged French United Nations light tank returns to base after being hit by a rocket-propelled grenade 
fired from Bosnian Serb army positions. A French UN soldier was wounded in the attack. 


promised the powerful pro-Bos- 
nian lobby in Congress that it 
wiH start moves to lift the UN 
arms embargo against Bosnia 
unless tbe Serbs accept the peace 
plan by October 15. European 
governments have warned the 
US government that this move 
could lead to a disastrous escala- 
tion of fighting in Bosnia and 
sour transatlantic relations. 

Tbe White House, which dis- 
closed news of yesterday’s air 
raid, has been pressing for 
tougher enforcement of existing 
policies in Bosnia in the appar- 
ent hope of assuaging pressure 
for a unilateral US decision to 
supply arms to the Bosnian gov- 


ernment 

General Bertrand de Lapresle, 
commander of UN forces to for- 
mer Yugoslavia, described the 
air strike as a “proportionate, 
adequate. " reaction to tbe 
attacks on UN forces in Sarajevo. 

The air strike is the first since 
August 5 and comes at a time of 
increasing tension in Bosnia. 
General Sir Michael Rose, the 
UN commander to Bosnia, this 
week demanded the removal of 
six confirmed and 12 suspected 
Serb artillery pieces from the 
20km exclusion zone around 
Sarajevo. This followed artillery 
fire on Sunday which ltiDed two 
people and injured 18 in the 


worst fighting near the city since 
the zone was established to Feb- 
ruary. 

Senior Nato officials have also 
been in touch with the UN to 
press for a stricter interpretation 
of the rules under which heavy 
weapons in Sarajevo and the 
enclave of Gorazde - and any 
forces which attack the UN any- 
where to Bosnia - are subject to 
air strikes. 

UN commanders have insisted 
that they are better judges than 
Nato of when air strikes are 
appropriate. However, yester- 
day’s air action seemed to have 
the full support of both interna- 
tional organisations. 


rtir n 'is! ant LA L TIMES LIMITED 1994 No 32,479 Week No 38 LONDON ■ PARIS - FBAHKFURT ■ MEW YORK - TOKYO 



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2 


★ 


FINANCIAL TIMES 


FRIDAY SEPTEMBER 23 1W4 


NEWS: EUROPE 


Talks open today on how the single market will cope with the surge in information technology 

EU launches debate on new rules for IT 


By Emma Tucker in Brussels 

A crucial debate on the future 
of the European single market 
opens in Germany today as 

minis ters launch talks on how 
to handle the expected explo- 
sion in information technology. 

The outcome will shape the 
development of Information 
services such as interactive 
television, computer-learning 
and electronic hanking across 
the European Union, areas still 
seen as the missing link in the 
single market. 

The argument today revolves 
around whether existing rules 
on the free movement of goods 
and services and mutual recog- 


nition of other countries’ rules 
can provide the right frame- 
work for investment in infor- 
mation technology or whether 
there is a need for supra-na- 
tional regulation. 

Mr Raniero Vanni d'Archir- 
afl. the European Commis- 
sioner responsible for the sin- 
gle market, is expected to 
argue that present legislation 
is adequate in most areas and 
that there is no need for a cen- 
tralised European regulatory 
authority. 

Four areas - the protection 
of intellectual property rights, 
data protection, encryption 
and media concentration - 
have been pinpointed as need- 


ing special attention and legis- 
lation is being prepared. 

However, this week the 
European Commission backed 
away from proposals to har- 
monise laws on media owner- 
ship, worried that European- 
wide action could trigger a 
backlash among member 
states. 

Tlie debate on the future of 
the service sector has also 
revealed an ideological faul- 
tline inside the commission. 

Officials responsible for the 
single market believe that too 
much regulation risks frag- 
menting the market and creat- 
ing an Inflexible environment 
for investment 


However, an action plan 
ste mm i n g from a report by Mr 

Martin Rangw mann the Indus- 
try commissioner, on the infor- 
mation society, talks of the 
need to establish an authority 
at a European level. 

"Whilst fully respecting the 
subsidiarity principle, the com- 
mission will launch in-depth 
studies to examine institu- 
tional aspects and to see which 
activities at present exercised 
by the member states and the 
commission might be 
entrusted to such an author- 
ity," says the report. 

Those responsible for indus- 
try and telecommunications in 
the commission are said to be 


uneasy about seeing the infor- 
mation society' develop in a rel- 
atively unregulated fashion. 
However, they deny there is 
any difference within the com- 
mission about how best to pro- 
ceed. arguing that the way 
ahead is laid out clearly in Mr 
Bangemann’s action plan, and 
that the most pressing need is 
to present industry with a con- 
sistent approach. 

Another argument is over 
how much emphasis should be 
put on protecting consumers of 
the new services offered by the 
information superhighways 
against the providers. 

"We want to achieve an 
internal market in information 


services,” said an official from 
the directorate responsible for 
the single market. "To do that, 
you need to have a balanced 
approach that takes into 
account all groups involved - 
industry, users, rights holders 
and consumers - and not just 
industry." 

The debate comes as officials 
and ministers, generally satis- 
fied that goods are moving 
freely around the community, 
have realised the need to focus 
on the potential economic ben- 
efits from the free movement 
of services, particularly infor- 
mation services, across the 
borders of the 12 member 
states. 


German 

optimism 

prompts 

concern 

By Quentin Peel in Bonn 

The growing mood of optimism 
about Germany’s economic 
recovery, fueled by senior min - 
isters campaigning for re-elec- 
tion next month, is causing 
great concern in the country’s 
business community. 

Industry fears that, in con- 
trast to the gloomy British, 
Germans are falling for the 
“feelgood factor” too fast And 
that could mean that they ease 
up too soon on the process of 
drastic cost-cutting and 
restructuring needed to make 
German industry competitive 
once again. 

On the one hand, leaders of 
the main business lobbies are 
delighted at the turnaround in 
economic fortunes, which has 
raised the latest growth fore- 
casts of the economics minis- 
try to 2.5 per cent for this year, 
and 3 per cent in 1995. 

On tile other, they fear the 
recovery will revive wage 
demands from trade unions 
forced to accept real income 
losses over the past two years, 
and ease the pressure on the 
government to cut spending 
and curb its borrowing require- 
ment, and on industry to 
reduce plant-level costs. 

“It is still not 12 months 
since Germany was gripped in 
a mood of deep foreboding 
about the future,” the German 
Industry Federation (BDI) said 
this week. The severe recession 
had exposed more than ever 
the symptoms of competitive 
weakness in the German econ- 
omy, and unleashed a national 
debate on how to revive the 
country’s competitive advan- 
tage. 

Yet this autumn, the mood 
has already been transformed 
to one of optimism, with all the 
economic statistics confirming 
the recovery process, including 
increased industrial orders, a 
recovery of manufacturing pro- 
duction, and a strong growth 
in exports, the traditional 
motor of the German economy. 

"The optimism is certainly 
exaggerated, if it means that 
sections of industry which 
were classified only a few 
months ago as the sickest parts 
of the economy are today being 
seen as the standard-bearers of 
a new upswing." the BDI thun- 
dered. “The structural crisis of 
German industry is not and 
was not simply a figment of 
the imagination, but a very 
real challenge." 

The message from the BDI, 
reflecting similar Tears at the 
German employers’ federation 
(BDA). is clearly to cool it, 
election or not But the other 
big national lobby for the busi- 
ness community, the German 
chambers of commerce and 
industry (DIHT), is altogether 
more sanguine. 

"I have been accused of 
talking the economy up," Mr 
Hans-Peter Stihl, the president 
of the DIHT. said yesterday. 
“But the results of our surveys 
confirmed it. 


THE VLWNCIAL TIMES 
Published b\ The Financial Times 
I Europe I GmbH. NiN.-lungL-npl.iL: 3. 
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CSU leaves Strauss scandals behind it 
and reasserts its Bavarian dominance 

Michael Lindemann previews state elections that promise little cheer for the SPD 



T he Social Democrats in Bavaria, 
condemned for decades to thank- 
less opposition in Germany's 
most conservative state, call it the 
“black country”. 

They mean Wolfratshausen, a pros- 
perous little town nestling on the river 
Loisach just south of Munich, and an 
area which boasts the second highest 
per capita income in the country. 

It is also the home town of Mr 
Edmund Stoiber, the Bavarian state 
premier, and an undisputed stronghold 
of his ruling Christian Social Union, the 
sister party of Chancellor Helmut 
Kohl's Christian Democratic Union. 

Four years ago 55 per cent of the 
constituency backed the conservative 
and Roman Catholic CSU, the party 
which has ruled the staunchly-indepen- 
dent Free State of Bavaria with an abso- 
lute majority since 1962. 

Last week Mrs Renate Schmidt, the 
Bavarian SPD leader, took the battle to 
the heart of enemy territory, for a 
full-scale rally, complete with beer and 
brass band, in the Wolfratshausen town 
haU. 

She is the liveliest candidate the 
party has fielded in the state for years. 
Yet Mrs Schmidt looks unlikely sub- 
stantially to improve her party’s for- 
tunes. Just as the SPD has slipped 
behind the CDU in polls for the general 
election on October 16. so the party In 
Bavaria has seen its hopes of unseating 
the mighty CSU fading. 

Earlier this year there seemed to be 
some chance that the SPD might dis- 
lodge a CSU reeling from a series of 
corruption scandals. Mr Stolber's prede- 
cessor, Mr Max Streibl, was forced to 
resign after accepting holidays from a 
wealthy business friend. 

Since then, the reign of the late Mr 
Franz Josef Strauss, father figure of the 
CSU and the strongman of Bavarian 
politics since the war. has been 
tarnished with further accusations of 
shady deals. For example Mr Eduard 
Zwick, a multi-millionaire spa resort 
operator, who fled to Switzerland to 
escape prosecution for income tax eva- 
sion, claimed that he had been prom- 
ised protection by Mr Strauss. 

But the SPD's attempts to tar Mr 


Stoiber with the brush of scandal have 
singularly failed. In the European par- 
liament elections in June the opposition 
managed only 23.7 per cent of the vote, 
its worst -ever European result in the 
state. 

"That (tactic) doesn't work any 
more,” says Mr Julian Gyger, an SPD 
spokesman. Instead, Mrs Schmidt 
focuses on the need for more jobs and 
less nuclear energy. 


Mr Stoiber became state premier last 
May and admits he took over a party 
which was “insecure". Once Mr 
Strauss's closest personal adviser, and 
then a tough interior minister, he 
immediately demonstrated his political 
touch, axing an array of official privi- 
leges, such as free seats at the opera. 

The Bavarian premier is also an 
unashamed conservative who has taken 
a hard line against asylum seekers. 


s tealing fire from the right-wing Repub- 
licans, once seen as a serious threat. 
The party, which was founded in Bav- 
aria where it still has its strangest sup- 
port, is. according to the polls, hovering 
around the 5 per cent mark needed to 
secure seats in the Landtag, or state 
parliament. 

Observers are wary of predictions 
because many Republicans do not 
admit their voting intentions in polls. 
The party is, however, under consider- 
able pressure, given that it failed to 
make the 5 per cent four years ago. In 
addition. Mr Franz SchQnhuber, the 
charismatic 75-year-old party leader, 
has said he will step down after the 
elections. 

The CSU could secure an absolute 
majority with 46 per cent of the vote if. 
as many observers expect, several 
smaller parties do not make it into par- 
liament 

Not all of Bavaria votes like Wolfrat- 
shausen. But even if Mrs Schmidt picks 
up votes where she comes from in 
Lower Bavaria and Franconia, in towns 
such as Hof and Schweinfurt - where 
the textile and ball-bearings industry is 
on its knees because of the recession 
and competition from the neighbouring 
Czech Republic - she would need at 
least another two parties to ensure a 
parliamentary majority. 

The SPD's chances are further dimin- 
ished because historically the party has 
been much weaker in Bavaria and there 
are parts of the state where it does not 
even exist 

Mr Stoiber meanwhile says the 
Bavarians have stood rock-solid behind 
the CSU for three decades because they 
have their own way of doing things, 
different from the rest of Germany. “We 
don't always follow the fashion here,” 
he says. 

As for suggestions that leading CSU 
politicians have been lining their pock- 
ets in recent years - they Impress very 
few Bavarians. 

“Everyone is always talking about 
connections that leading CSU politi- 
cians have,” a customs officer said at a 
Stoiber rally. “Well what’s wrong with 
connections - at least you get things 
done." 


French battle to win third telecom licence 


by John Rkkflng in Paris 

The French industry ministry 
is finalising its recommenda- 
tions concerning a fiercely con- 
tested battle for the country’s 
third mobile telecommunica- 
tions licence and is awaiting a 
decision from Mr Edouard Bal- 
ladur, the prime minister. 

Officials said that a decision 
could chine this weekend. But 
they indicated that the sensi- 
tivity of the licence award, 
which pits three of France's 
largest industrial groups in 
competition, may prompt a 
delay. 

Alcatel Alsthom, the tele- 
coms and engineering group, 
Lyonnaise des Eaux, the utili- 
ties and communications 
group, and Bouygues, the con- 
struction and comm uni cations 


company, are all bidding for 
the right to operate the third 
digital network. They are seek- 
ing either to diversify into a 
new business sector or, in the 
case of Alcatel, to extend tele- 
communications equipment 
activities into the provision of 
mobile services. 

Bouygues, considered by 
many industry observers to 
have edged ahead in the con- 
test, estimates that an invest- 
ment of between FFr3bn 
(£360m) and FFr4 bn is neces- 
sary to establish the new net- 
work. The winner of the 
licence will compete with exist- 
ing networks operated by sub- 
sidiaries of France Telecom, 
the state telecoms group, and 
Generate des Eaux, the utilities 
and communications company. 

The cost of the investment 


will be shared by partners in 
the various consortia. Alcatel 
Alsthom has linked up with 
Stet of Italy in preparing its 
offer. Bouygues' partners 
include Cable & Wireless of the 
UK and US West, while Lyon- 
naise des Eaux counts Thyssen 
of Germany and Bell South of 
the US amongst its consor- 
tium. 

The sensitivity of the award 
steins from the influence of the 
companies involved and the 
method employed to decide the 
winner. Bouygues operates 
TF1, France's television chan- 
nel, while Mr Jdrome Monod. 
chairman of Lyonnaise des 
Eaux, Is a former senior official 
in Mr BaDadur’s Gaullist RPR 
party. With the unofficial con- 
test for next year's presidential 
elections gathering intensity. 


Mr Balladur is anxious to 
avoid controversy over the 
award or to alienate the 
contenders. 

Rather than selecting the 
winner through an auction 
process, as in recent US tele- 
coms licence awards, the 
French government is to 
decide on technical proposals 
and investment plans. “The 
project which is the most via- 
ble on these criteria will be the 
one selected,” said one official.. 

Despite the sensitivity of the 
award, the industry ministry is 
seeking a rapid decision to pre- 
vent the French mobile tele- 
phone sector lagging further 
b ehin d its neighbours. Accord- 
ing to [date, the ntimniiiniga - 
tions research institute, France 
had only 725,000 mobile tele- 
phone subscribers at the end of 


August, compared with more 
than 2.2m in Germany and 
about 2.7m in the UK 

Part of the explanation lies 
in the lack of competition. 
"The two incumbents have 
tended to behave like a cosy 
duopoly, keeping prices high 
and limiting demand,” says 
one industry analyst He adds, 
however, that competition has 
intensified since 1992 with the 
introduction or rival GSM digi- 
tal networks by France Tele- 
com and SFR, the mobile tele- 
coms subsidiary of Lyonnaise 
des Eaux. 

The new licence will be to 
operate the digital system, DCS 
1800. “It is a cheaper system to 
develop than the traditional 
GSM network, because the 
infrastructure is lighter.” says 
Mr Didier Pouillot at Idate. 


Gaullist denies consultancy payments were for fictitious services as French allegations grow 


Third minister accused of corruption 


By David Buchan in Paris 

France's sports and youth 
minister, Mrs Mich&le Alliot- 
Marie, was yesterday reported 
to be under investigation for 
receiving payment from phar- 
maceutical companies while a 
member of the health minis- 
try's drug approval committee 
in the 1980s. 

Le Parisien newspaper cited 
judicial sources claiming that 
pharmaceutical companies had 
paid money to a consultancy 
called MGdiconseil which in 
turn paid Mrs Alliot-Marle for 
“fletious services". The minis- 
ter responded that she had 
been paid by Mediconseil for 
genuine work under a contract 
declared to the tax authorities, 
that she had ended this work 
on becoming a Euro-MP In 
1989, and that she knew of no 
judicial investigation. 

Mrs AlUot-Marie is none the 


less the third French minister 
to attract allegations of corrup- 
tion. The trade and industry 
minister. Mr Gerard Longuet, 
is awaiting the justice minis - 
try’s decision on whether to 
pursue allegations it received 
this week from a judge sug- 
gesting that he may have 
allowed a contractor to subsid- 
ise the building or his Riviera 
villa, and that he used money 
from other corporate sources 
to settle his construction bill 
Mr Longuet said yesterday 
that he had no intention of 
resigning his powerful govern- 
ment post, even if he was put 
under formal judicial investiga- 
tion, as is now the late of Mr 
AJain Carignon. The latter 
asked in July to be 
“suspended” from his job of 
communications minister in 
order to contest a case in Gren- 
oble of which he is mayor. A 
judge is seeking to establish 


whether there is any link 
between a deeds ion by Lyon- 
naise des Eaux, the French 
utility company, to bail out a 
pro-Carignon newspaper and 
the company’s subsequent win- 
ning of the contract to manage 
Grenoble's water supply. 

Mr Longuet said he had 
asked for a formal “judicial 
estimate" on the cost of his St 
Tropez villa. He said the affair 
had not put into question any 
of his roles as president of the 
Lorraine region, head of the 
Republican party, or as trade 
and industry minister , and he 
had no intention of resigning. 

As in the case of Mr Lon- 
guet, the allegations surround- 
ing Mrs Alliot-Marie arise out 
of a separate investigation. A 
Nanterre judge had been Inves- 
tigating suspicions that a fel- 
low RPR gaullist of Mrs Alliot- 
Marie had been receiving pay- 
ments from pharmaceutical 


drug companies when he sat 
on the same drug approval 
committee. The report on Mr 
Longuet came from a judge 
trying to trace a commission 
paid by a St Gobain subsidiary 
to a Republican party official 
in Nantes, in pursuit of a water 
pipe contract in the western 
French city. 

Yesterday Prime Minister 
Edouard Balladur, who on tak- 
ing office last year suggested 
that be would encourage min- 
isters under a cloud to resign, 
held his first meeting with the 
three men he has appointed to 
look into ethical links between 
business and politics in 
France, and current legal prac- 
tice in corruption investiga- 
tions. The meeting was 
described as a first discussion 
of the precise remit of the com- 
mission, on which an eminent 
businessman, trade unionist 
and lawyer are to sit 



Longuet: not resigning 


EUROPEAN NEWS DIGEST 

Showdown fear 
in pension row 

union movement over pension reforms lmkwj • 
budget An agreement on changes in Italy s costly sta^jm 
and deficit-ridden pensions system is central to the prepara- 
tion of the budget which must be submitted to parliament by 
September 30. 

The ijra yesterday weakened as dealers awaited nervously 
for the outcome of the government-union negotiations. The 
currency was traded at L1.011 against the D-Mark. L8 down on 
the previous day, while share prices on the Milan bourse tell 
by nearly 2 per cent. The first session of folks between thetwo 
sides yesterday morning broke inconclusively with the OGiL. 
the largest of the three main trade union confederations, 
threatening a general strike. 

The government is seeking to raise close to LSO.OOObn 
(£20-3bn) through fresh revenues and spending cuts to hold the 
budget deficit to below 9 per cent of GDP. Of this, the govern- 
ment originally sought to find some L8.000bn in pension aits. 
Yesterday, ministers were hinting the figure would be closer 
to L5.000bn - placing greater emphasis on more fiscal revenue. 
Robert Graham, Rome 

Bossi challenge over state TV 

The populist Northern League plans a move that could oust 
the new government appointees brought in to run the RAI, 
Italy's state broadcasting organisation. The League yesterday' 
unveiled a plan to introduce a legislative amendment that 
would oblige the two-month-old board to resign and allow the 
appointment of fresh management by parliament. The 
Leagues's move was prompted by its anger over the way in 
which the board of directors, headed by Mrs Letizia Moratti, a 
former leading stockbroker, changed the entire editorial man- 
agement of the three television channels over the weekend 
with any reference to the existing editorial teams. 

Other members of the government dismissed the League's 
protests as pique over having failed to get any of its own 
editorial nominees appointed at RAI. Although this may be 
close to the truth, Mr Umberto Bossi, the leader of the League, 
pas co nsis tently expressed concern over prime m i ni ster Mr 
Silvio Berlusconi's ability to control both commercial and 
public broadcasting. Mr Berlusconi's Fininvest empire 
includes three channels controlling over 80 per cent of com- 
mercial television. 

The League has some leverage because next month the 
government will need to endorse a decree providing ongoing 
funding for the RAL The League is attaching its amendment 
to this decree. The amendment could pass tf the opposition 
decides to make common cause with the League. Staff at the 
RAI are threatening further industrial action in the wake of 
Tuesday's 24-hour strike in protest against the new appoint- 
ments. Robert Graham, Rome 

Russian rouble at new low 

The rouble tumbled by 5 per 
cent in Moscow yesterday to a 
new low of 2,460 to the US 
dollar, as the Central Bank 
refrained from intervention 
and interest rates were 
pushed up sharply. Finance 
Ministry officials explained 
the fall by reference to a call 
over the weekend by Mr 
Konstantin Kagalovsky, the 
International Monetary 
Fund's executive director for 
Russia, for stabilisation of the 
rouble early next year - not- 
ing that currencies generally 
fell on the expectation of a 
** currency stabilisation. At tire 
same time the bank is seek- 
ing to build up its reserves of 
hard currency and has been reluctant to intervene hi a major 
way In the market The steady fall in the rouble is not greatly 
worrying the government in spite of its possible effect on 
inflation, largely because it believes that a low rate will assist 
in a stabilisation effort which may be attempted next year. At 
the same time, its Call effectively reduces the government's 
commitments to unpaid salaries and to cover the budget 
deficit John Lloyd in Moscow 

‘Hidden jobless’ in Ukraine 

Ukraine has more hidden jobless than any other country in 
central and eastern Europe and open unemployment is likely 
to soar next year as economic reforms gather pace, according 
to a survey by the International Labour Organisation. Mr Guy 
St an di n g, head of the ELO's east European team, said yester- 
day the true unemployment rate in Ukraine was already in 
double figures, compared with an official rate of less t h m 1 
per cent In addition, some 12 per cent of workers are on 
long-term unpaid leave. 

The survey, covering 348 manufacturing enterprises employ- 
ing over 372,000 workers, contradicts suggestions that Ukrai- 
nian factories are clinging on to workers regardless of collaps- 
ing output. The survey by the ILO shows widespread 
job-shedding over the past year, especially in state-owned 
factories, as well as extensive short- time working and resort to 
unpaid leave. With enterprises still holding on to more work- 
ers than they need, Mr Standing predicts a “massive” increase 
in unemployment next year as industrial restructuring in the 
country accelerates. Over a quarter of factory managements in 
the survey expected their films to go bankrupt within a year. 
Frances Williams, Geneva 

Hurd rejects EU ‘hard core’ 

Mr Douglas Hurd, UK foreign secretary, has thrown his weigh! 
behind calls for a streamlined European Commission and z 
“flexible” European Union, while rejecting the idea of a “hard 
core” of the most committed member states. In an interview 
with Handelsblatt, the German business newspaper, he wel- 
comed a fundamental debate on the future shape of the EU, 
which is supposed to culminate in a new constitutional confer- 
ence in 1996, and insisted that Britain wanted more than a 
“free trade zone" in Europe. “I believe very strongly In a 
common foreign and security policy," he said, which should be 
expanded step by step to include the countries of central and 
eastern Europe. But flexibility meant that “not everyone will 
do everything at the same time, or in the same way". Quentin 
Peel Bonn 

ECONOMIC WATCH 


Gis Rouble 

Against the $ (market rata) 
2,400 

2.200 ■— 

2,000 - 


1,800 

1.600 -j 

1,400 

1,200 • 

1,000 

Sap S3 

Source: Datostnwm 



1994 


Dutch retail sales slip 4% 

Dutch retail sales fen 4 per cent in the year to July, th 
Central Bureau of Statistics reported yesterday. July ratal 
sales in the non-food sector were 8 per cent lower than a yea 
earlier, while sales of outer garments in speciality shops wer 
14 per cent down. The fail reflects last year’s boom, as well a 
unusually hot weather this year. While food sales rose ; 
no min al 1-3 per cent in the year to July, after adjusting ft) 
price nses sales foil by 15 per cent Total retail sales, adjust® 
for inflation, were 5.2 per cent down. In contrast to the retai 
performance, seasonally adjusted industrial output for Juh 
was 3f,Per cent up a year earlier. AP and Reuter , Amsterdam 

■ Sweden s current account showed a surplus of SKriLSbn ii 
July, but a deficit of SKrO.ebn in the 12 months to July, centra 
bankngures showed, outperforming mostexpectations. 

■ French household spending on manufactured goods rase 1 
per cent in July, due to a strong rise in car sales, and rose bj 

Aneast despite a decline in the car sector 
national statistics institute Insee said. 

■ Italy's industrial output rose an unadjusted 3.8 per cent ii 
July from a year earlier, following the rise in June of 8.3 pe 
cent. 



i 



FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


NEWS: EUROPE 


Danes begin talks to 
form a new coalition 



Danish 

Erections 



Partin* 


By Hugh Camugy and Hilary 
Barnes in Copenhagen 

Mr Pool Nyrnp Rasmussen, 
Denmark’s Social Democratic 
party leader, prepared to form 
his second administration yes- 
terday. despite the beating 
which his four-party centre- 
left coalition suffered in 
Wednesday's general election 
to the Folketing (parliament). 

He handed his resignation to 
Queen Margrethe yesterday, 
but immediately began negoti- 
ations for the formation of a 
new government, saying he 
was confident that he could 
pot together a new minority 
coalition. 

He is expected to try form a 
government with the Centre 
Democrats and the Radical 
Liberals, both members of his 
previous government, but his 
task was made more difficult 
by the elimination from the 
Folketing of the fourth mem- 
ber of the oatgoing govern- 


ment, the Christian People’s 
party. The proposed new coali- 
tion would only have 75 seats 
In the 179-seat Folketing and 
would require the parliamen- 
tary backing of the left-wing 
Socialist People’s party (SPP) 
and the Unity List 

The SPP signalled yesterday 
that it will set tough condi- 
tions for its support. One 
report suggested that the SPP 
might try to force Mr Nyrnp 
Rasmussen to form a govern- 
ment of the Social Democratic 
party alone which the SPP 
would seek to influence 
towards more left-wing poli- 
cies. The SPP leader. Mr Hol- 
der E Nielsen, declined to com- 
ment. 

Mr Uffe Ellemann-Jensen, 
thwarted in his ambition to 
become the country’s prime 
minister, although his own 
Liberal party went ahead by 
13 seats to 42, predicted that 
the coming government would 
be weak and would not sur- 


vive the foil four-year parlia- 
mentary term. “It won’t be 
long before there’s a new elec- 
tion,” he declared on election 
night 

But as long as the Radical 
Liberals and the Centre Demo- 
crats remain loyal to Mr 
Nyrup Rasmussen, the Liberal 
party and its right-wing allies 
cannot force a change of gov- 
ernment 

The first task facing the new 
government wffl he to cany 
the 1996 budget bin. The out- 
going government planned to 
tighten fiscal policy next year 
in order to reduce toe budget 
deficit now running at 5-1 per 
cent of the gross domestic 
product Mr Nyrnp Rasmussen 
has said the the budget frame- 
work presented in the draft 
budget published in August 
is not negotiable, but the 
left-wing parties may try to 
exert pressure for higher gov- 
ernment spending on welfare 
and the environment. 


Population: 
Elec to rate: 4.0mfflicn 

. . Number of seats 
1904 1990 


■ THE RUUNQ COAUHON 


Social Democrats . 

62 

09 

Radical Uwrafa 

■8 

7 

Cortre Democrats 

5 

• 9 

Christian People’s 

0 

4 

Total 

75 

80 

■ THE CENTRE-RIGHT 

Liberal party , 

42 

29 

' Conservative party 

27 

30 

Progress party 

11 

12 

Total 

80 

71 

■ THELBFT 


• 

Soc People's party 

13 , 

' 15 

Unity list 

' 6 

0 

Total « f 

19 

15 

■ (NOB>ENDBVrS 

OraenlWKi/Faroes 

4 

4 


1 

0 

Total 

5 

4 


■ D anis h co median Jacob 
Hougaard was elected as an 
UP on a campaign ticket of 
shorter supermarket queues, 
better weather in Denmark, 
and a tail wind for cyclists. 



Mr Pool Nyrup Rasmussen, Denmark’s Social Democratic party 
leader, is confident he can put together a new coalition ap 


Welfare dilemma for Nordic social democrats 

Can the Scandinavian countries sustain high state benefits and reinvigorate the private sector? 


By Hugh Camegy and 
Hilary Barnes 

S candinavia, the heart of 
western European wel- 
fare politics, is set once 
again for a period of social 
democratic domination follow- 
ing elections this week in Swe- 
den and Denmark. 

The return to power in Swe- 
den of Mr Ingvar Carlsson’s 
Social Democratic Party ended 
three years in which the wel- 
fare state, built up during the 
party's years in power since 
the war, was under challenge 
by conservative prime minister 
Mr Carl BildL 

In Denmark. Wednesday's 
election confirmed the Social 
Democrats of prime minister 
Mr Poui Nyrup Rasmussen as 
the country’s biggest single 
party and the leading force in 
the new government. Although 
he lost ground to the right- 
wing Liberal party, Mr Nyrup 
Rasmussen will be able to stay 
in power with the support of 
centre and left-wing parties. 


The Swedish and Danish 
elections followed the victory 
last September of Mrs Gro Har- 
lem Brundtland’s Labour party 
in Norway which, like its sister 
social democratic parties to the 
east and sooth, has a profound 

commitment to t pHtarianimn 

achieved through the universal 
provision of welfare. 

To complete the picture, 
opinion polls in Finland sug- 
gest that the Social Democratic 
party there, led fay Mr Paavo 
Lipponen, will unseat the pres- 
ent centre-right coalition of 

prime mtntetpr Mr Balm A ho in 

the general election next 
March. 

But this swing to the left is 
hardly a vote for state social- 
ism. 

In all four countries, private 
industry has been unchal- 
lenged for most of the past 40 
years as the engine of eco- 
nomic growth. 

What the social democratic 
trend does seem to reflect is a 
deep-seated determination to 
maintain the welfare state 


even at the cost of tax rates 
which would be unsustainable 
in other western countries. 

Over the years, Nordic citi- 
zens have grown accustomed 
to the state provision of “womb 
to tomb" welfare services cov- 
ering health, education, social 
services and generous safety 
nets such as high unemploy- 
ment benefits. 

In all four countries, for 
example, not only do mothers 
have state-subsidised mater- 
nity leave rights much greater 
than those in most European 
countries, but tethers have the 
right to paternity leave. 

The big question, however, is 
whether the Nordic countries 
can sustain their welfare states 
at current levels. 

Norway, with the benefit of 
North Sea oil and gas reve- 
nues, has least cause for con- 
cern. at least in the short to 
medium term. 

But in Sweden, even the 
Social Democrats recognise 
that there is now a damaging 
imbalance between the public 


and the private sector. 

Last year, government 
spending as a proportion of 
gross domestic product 
exceeded 70 per cent, well 
above the European average of 
around 50 per cent 

This imbalance, caused in 
large part by the huge cost of 
financing 14 per cent unem- 
ployment. has left the country 
with the most serious crisis it 
has experienced in its public 
finances. 

The budget deficit is expec- 
ted to be around 11 per cent of 
GDP this year and government 
debt will shortly exceed 100 per 
cent of GDP. 

M r Carlsson is now 
preparing the coun- 
try for a period of 
tough fiscal medicine in which 
he has made no secret of the 
need for some severe cuts in 
welfare benefits. 

He may well have in mind 
the Danish example. 

Denmark experienced a simi- 
lar crisis in the early 1330s, but 


now has a relatively strong 
economy after a decade of bud- 
get stringency. 

The public finances were 
brought under control and, 
despite a long recession, tbe 
budget deficit is now around 5 
per cent of GDP. 

Meanwhile, the welfare sys- 
tem continues to flourish. 
Indeed, Mr Nyrup Rasmussen 
has this year introduced a pop- 
ular new welfare programme. 

As many as 100,000 Danes 
will take advantage of a “leave 
from work" scheme under 
which parents of young chil- 
dren and people undergoing 
job-related training can take 
six months off work while 
receiving generous compensa- 
tion. 

But the Danish experience 
may not be as reassuring to Mr 
Carlsson as it appears at first 
sight 

Denmark still ranks second 
to Sweden among industria- 
lised countries in the propor- 
tion of GDP accounted for by 
state spending (more than 60 


per cent), while unemployment 
continues to run at 12J> per 
cent of tbe workforce. 

But both Mr Nyrup Rasmus- 
sen and Mr Carlsson recognise 
that to tackle unemployment, 
they must not only keep the 
public finances in order, but 
also reverse a 40-year trend in 
the Nordic area of net job cre- 
ation coming from the public 
sector. 

They are committed (as are 
Mrs Brundtland in Norway and 
Mr Lipponen in Finland) to 
promoting private sector 
growth. 

But many Nordic economists 
fear that toe high unemploy- 
ment benefits encouraged by 
the welfare states have led also 
to high minim um wages that 
hamper the private sector job 
creation needed to underpin 
tbe welfare structure. 

This is the awkward 
dile mma which Nordic social 
democrats must come to grips 
with as they lead the region 
towards the end of the century. 


Spain to reap 
benefits of 
strict budget 


By Tom Bums in Madrid 

Mr Pedro Solbes, Spain’s 
economy minister, will today 
tell his cabinet colleagues that 
this year's public deficit is on 
target at 6.7 per cent of GDP. 
This is not what toe Madrid 
government, accustomed to 
budget overruns, normally 
hears from its economic team, 
and it augurs well for market 
perceptions of Mr Solbes' prior- 
ities as he puts the finishing 
touches to Ids second budget. 

Promoted from the agricul- 
ture ministry after last year's 
general election, Mr Solbes 
inherited a 7 J per cent deficit, 
an overshoot double that 
planned by bis predecessor, Mr 
Carlos Solcbaga. Already he 
can claim two achievements: 
he has restored toe credibility 
of domestic finances and, in a 
low growth year, be has suc- 
ceeded in reducing the deficit 

Determined that this year's 
hard-won credibility will 
remain in place, Mr Solbes 
intends to reduce the deficit to 
5.9 per cent of GDP in his 1995 
budget and to 3.4 per cent in 
1996. But analysts say he has 
taken only a first step towards 
righting the structural imbal- 
ances which lie at the root of 
domestic deficits. 

Mindful of such pressures, 
Mr Solbes has responded 
quickly to an August price 
rebound and to an accompany- 
ing promise by the prime min- 
ister. Mr Felipe Gonzdlez, that 
Spain’s 7m pensioners will be 
frilly compensated for a year- 
end inflation that will now be 
above the forecast figure of 3.5 
per cent 

In a last-minute revision of 
his budget, Mr Solbes has cut 
the government's 1995 spend- 
ing by 1 per cent. The govern- 
ment will use the savings to 
fund a pensions bill that is 
expected to rise by Ptal50bn 
(£742m) because of the infla- 
tion increase. 

The minority Catalan nation- 
alist coalition. CiU. which was 
last night meeting Mr Solbes* 
team, is expected to ensure the 
budget's safe passage through 


parliament. Politically centre 
right, CiU backed Mr Solbes’ 
first budget last year after the 
general election left the ruling 
Socialist party short of a par- 
liamentary majority. 

As before, Catalan support 
has been obtained at a price. 
The government has agreed to 
regional demands, spearheaded 
by the Catalans, that they 
share in the distribution of the 
EU's cohesion funds. It has 
also promised to increase fund- 
ing for regional health ser- 
vices. Reflecting the interests 
of CiU’s middle class elector- 
ate, the 1995 budget will reduce 
the social security contribu- 
tions made by employers and 
make up for the lost revenue 
with a 1 per cent increase in 
value added tax. 

With a forecast growth in 
GDP of 2A per cent next year 
-the economy grew by 1.6 per 
cent in the first half of this 
year - the chief market criti- 
cism is that Mr Solbes should 
use such expansion to cut back 
the structural deficit more 
severely. "A 5.9 per cent deficit 
next year is way too high and 
nothing to be proud about.” 
said Mr Jaime de Pinies, a 
senior economist at toe Banco 
Santander group. 

Mr Solbes' department 
argues that several initiatives 
next year will meet such criti- 
cisms. These include the liber- 
alisation of telecommunica- 
tions, an overhaul of 
restrictive legislation on land 
use and reform of a state pen- 
sion scheme. 

The problem is that such reg- 
ulatory changes, together with 
deficit control, coukl run foul 
of the left wing of the ruling 
party which favours a dash for 
growth led by the public sec- 
tor. Mr Solbes, however, needs 
to give quick signals on liberal- 
isation. 

His budgets are necessarily 
market sensitive because the 
stock of government debt as a 
result of the ballooning deficits 
he inherited, is forecast to rise 
from 55.8 per cent of GDP last 
year to more than 65 per cent 
in 1996. 



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US officials make contact with military junta’s missing police chief Francois 


Cedras says 
he will not 
leave Haiti 


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By James Harding in 
Port-au-Prince and Jurek 
Matin in Washington 


General Raoul Cedras, Haiti's 
military leader, has repeated 
that he will not leave the coun- 
try after he steps down from 
power next month. 

He told CBS TV in a inter- 
view late on Wednesday night 
that the Haitian constitution 
"forbids exile" and that, in an)' 
case, the agreement reached 
with the US delegation headed 
by former President Jimmy 
Carter did not require it. 

However. US officials in 
Washington were able to 
report that contact had been, 
established with the third 
member of the military junta - 
Col Michel Francois, the police 
chief, who was not a party to 
the Sunday agreement and 
whose whereabouts had been 
unknown. 

He was to meet senior US 
military officers later. The 
agenda was likely to include 
the issue of controlling the 
Haitian police, following vio- 
lent incidents on Tuesday, and 
the coordination of activities 
with the 1.000 US militap' 
policemen who arrived in Haiti 
on Wednesday. 

Although the US, and UN 
Resolution 940, which author^ 
ised a military operation to 
restore elected President Jean- 
Bertrand Aristide, called on 


the ruling army elite to resign 
and go into exile, few expected 
Gen Cedras would flee unless 
explicitly required to do so. 

Last Thursday President Bill 
Clinton had demanded in his 
TV address that Gen C€dras 
leave the country or face an 
invasion. But Mr Clinton has 
subsequently said that it was 
sufficient that Gen CMras and 
other military officers leave 
power - though adding that he 
expected them also to leave the 
country. 

Gen Cedras's decision to stay 
has bitterly disappointed Aris- 
tide supporters who hoped that 
the army generals and police 
chief who usurped power in a 
1991 coup and had ruled the 
country ruthlessly since would 
be eliminated with the arrival 
of US forces. 

But President Aristide him- 
self late on Wednesday finally 
accepted the logic of the Sun- 
day agreement, having with- 
held approval for nearly three 
days. 

The prospect of the contin- 
ued presence of the junta in 
Haiti also increases the pres- 
sure on Haiti's parliament to 
pass an amnesty law in the 
next three weeks as required 
by the agreement. Such legisla- 
tion would help secure the rec- 
onciliation necessary if Presi- 
dent Aristide’s government is 
to be stable. 

Meanwhile, as more and 



A US soldier from the loth Mountain Division 
Port-au-Prince harbour area 


a heavy machine gun on a military vehicle as it moves through the 


more US troops arrived and 
took to the streets of Haiti, mil- 
itary commanders in Port-au- 
Prince sought to clarify the 
rules of engagement for per- 
sonnel on the ground. 

After several incidents of 
political violence in which US 
troops were ordered not to 
intervene. Mr Clinton declared 
that a repeat of Tuesday's vio- 
lence “cannot and will not be 
tolerated". Defence Depart- 
ment officials said that the 


safety of US servicemen would, 
however, remain paramount. 

As of yesterday morning the 
exact circumstances of such 
intervention were still being 
worked. Ultimately, the deci- 
sion was being left in the 
hands of individual US service- 
men. 

“People on the street must 
use his or her best judgment 
In the end it is up to that indi- 
vidual soldier or sailor [to 
decide whether or not to] inter- 


vene," a US army spokesman 
in Port-au-Prince said yester- 
day. 

The news that US soldiers 
were now ordered to protect 
people seemed to have been 
welcomed. In the streets by the 
docks, where business was 
brisk yesterday, Pierre, a for- 
mer businessman now working 
as a driver, said things had 
already changed. “1 worked all 
night last night - I would not 
have done that before. I 


Clinton not to seek 
more nuclear arms cuts 


Doubts cast on Quebec 
independence referendum 


By George Graham 


President Bill Clinton has 
decided not to look for deeper 
cuts in the US's strategic 
nuclear arsenal until reduc- 
tions already agreed with Rus- 
sia have been carried out. 

After a year-long review of 
US nuclear strategy, the 
administration decided against 
trying to move beyond the lim- 
its on nuclear warheads 
already agreed with Russia in 
the Start 2 strategic arms 
reduction treaty, which would 
cut the US arsenal from 
around 6,000 warheads to 
around 3,500. 

Mr Clinton overruled some 
senior administration officials 
who bad argued that the US 
should pursue an agreement 
on still deeper cuts in the Rus- 
sian and US nuclear forces. 

Mr William Perry, the 
defence secretary, was due to 
give details of the new nuclear 


policy yesterday evening. Ear- 
lier this week, however, he 
warned that Russia had fallen 
behind schedule in its pro- 
gramme for dismantling 
nuclear weapons. 


Clinton is expected 
to offer more 
money to dismantle 
missiles when he 
meets Yeltsin 


Military officials argued that 
the US needed to maintain an 
adequate security hedge 
against the risk of a reversal in 
Russia's progress towards 
democracy and its possible fail- 
ure to complete its promised 
cuts. 

Mr Clinton is expected to 
offer more money for dismantl- 
ing nuclear missiles when he 
meets President Boris Yeltsin 


in Washington next week. 

The US has decided, how- 
ever, to trim its stockpile of 
short range tactical nuclear 
weapons, which will leave 
approximately 480 weapons in 
Europe. 

In addition, the US is expec- 
ted to cut its fleet of nuclear 
missile submarines from 18 to 
14, and reduce the number of 
B-52 bombers from 94 to 66, 
instead of complying with the 
Start 2 limits by having each 
submarine or bomber carry 
fewer warheads. 

The US is now concentrating 
its efforts on talks aimed at 
extending the nuclear non-pro- 
liferation treaty. 

The White House yesterday 
also called on China to join the 
moratorium on nuclear test 
explosions declared by the 
other nuclear powers, and 
urged an acceleration of nego- 
tiations on a comprehensive 
nuclear test ban. 


By Bernard Simon in Toronto 
and Robert Gibbens in 
Montreal 


Quebec separatists have begun 
to raise doubts about their 
commitment to hold an early 
referendum on independence 
from Canada, barely a week 
after winning elections in the 
French-speaking province by 
an unexpectedly narrow mar- 
gin. 

Mr Lucien Bouchard, leader 
of the Bloc Qu6becois, whose 
53 MPs promote the separatist 
cause in the federal House of 
Commons in Ottawa, said the 
referendum would not be held 
until the pro-independence 
forces were likely to win. 
“There is no way the sovereig- 
nists will engage in a losing 
referendum,” Mr Bouchard 
said. 

Mr Bouchard’s remarks con- 
tradict pledges during the elec- 
tion campaign by Mr Jacques 


Parizeau, leader of the Parti 
Qndbecois, the party which 
will form the next government 
in the French-speaking prov- 
ince. 

Mr Parizeau said at one time 
the referendum would be held 
within 8-10 months of the elec- 
tion. But be gave himself more 
latitude in the closing stages 
of the campaign by promising 
a vote “sometime in 1995”. 

Although the PQ won 77 of 
the 125 seats In Quebec’s 
National Assembly, it gar- 
nered only fractionally more 
of the popular vote than the 
defeated Liberals. 

Many voters who supported 
the PQ in the election do not 
necessarily favour outright 
independence. 

A poll of Quebec voters in by 
the Globe and Mail newspaper 
yesterday showed that 48.8 per 
emit of respondents would vote 
against independence in a ref- 
erendum, compared to only 


Brazil’s bankers lament victory over inflation 


The introduction of the Real has meant an end to banks’ big 
overnight profits on short-term lending, writes Angus Foster 


Brazilian banks 


Number Costs per 

of employees employee 


Bad loan 
ratio (96) 


B razil's new currency, 
the Real, has sent infla- 
tion tumbling and pub- 
lic support soaring. But the 
country's bankers are not yet 
celebrating. For them, low 
inflation means lower profits, 
at least until the banks have 
been thoroughly restructured. 

Banks were the main benefi- 
ciaries of Brazil's years of high 
inflation. They profited from 
lending to the government at 
very high short-term interest 
rates. They gained from hold- 
ing customers' money in 


cheque accounts because funds 
lost value daily. In June, just 
before the Real's introduction, 
daily inflation reached 2 per 
cent, a windfall for the banks. 

Many banks earned more 
than 30 per cent of their 
income from such inflation-re- 
lated revenue. When inflation 
fell with the Real to less than 2 
per cent a month, this income 
disappeared. The first serious 
signs of strain appeared last 
week when Banespa. the big- 
gest state owned bank, faced a 
liquidity squeeze, and the cen- 


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USINESS IS MOVING 


tral bank closed down a small 
private bank, Brasbanco. 

Most analysts agree that pri- 
vate-sector banks, except for a 
handful of very small ones, can 
quickly adjust to low inflation. 
Larger banks like Bradesco 
and I tail have strong balance 
sheets and should be able to 
find alternative income 
sources, especially from an 
increasing demand for con- 
sumer credit if economic 
growth continues. 

The transition will be more 
painful for the much less effi- 
cient 23 banks owned by the 
Br azilian government or indi- 
vidual Brazilian states. Banes- 
pa’s costs per employee 
reached $26,240 (£16,600) in the 
first half of this year, com- 
pared to $8,820 for the similar- 
sized ItaU. State-owned h anks 
are also limited by law in dis- 
missing workers, which pre- 
vents them from cutting costs 
as rapidly as their private sec- 
tor counterparts. 

Then there is political pres- 
sure. State banks are subject to 
interference by politicians, and 
hare been used to channel jobs 
and loans to supporters, espe- 
cially before elections. As a 
result, small towns often have 
three or four bank branches 
owned by the central or state 
government The central bank 
failed in an attempt earlier this 
year to close down loss-making 
branches after local politicians 
complained their campaigns 
would be undermined. 

"Governments have regu- 
larly used their state banks to 
finance elections and other 
non-banking activities,” says 
Mr Erivelto Rodrigues of finan- 
cial analysts Austin Asis. “The 
problem is, the banks lend the 
money without getting paid 
back.” 


It 1s difficult to assess how 
much damage these policies 
have caused. Public accounting 
disclosure is poor and, until 
the introduction of the Real, 
high inflation •made the com- 
parison of accounting periods 
misleading. Analysts also sus- 
pect state banks conceal non- 
performing loans to their 
respective state governments 
by granting a new loan near 
the end of the bank's fiscal 
year so they can be paid inter- 
est on the old loan. 

Analysts estimate it could 
cost several billion dollars to 
restore the state b anks ' bal- 
ance sheets. As an indication 
of the sums involved, last week 
the central bank provided 
R$1.65bn (£L2bn) in short-term 
assistance, in the form of swap- 
ping central government for 
state government securities, to 
the three large state h anks 
thought to be most in need of 
reform. Banespa of Sao Paulo 
received R$Ubn, Banerj of Rio 
de Janeiro R$340m, and Banri- 
sul of Rio Grande do Sul state 
R$2l0m. 


| Banwpa . ,S 


A. 


^ 11,380 7' “.J&Sra'V.:; -'.V‘ 


r Bradesco KL580 
Private 

nab; ■ . • 




Source; Austin ASIS, FT 


Payment transactions per employee (US=100%) 


Private banks 


44% (47.200) | 


Public banhs 


28% (30,600) I 


Source McWroay analysis 


A t least over the next 
three months, the cen- 
tral hank is likely to 
continue backing banks that 
face liquidity problems. Brazil 
bolds presidential elections on 
October 3 and the government 
is keen to avoid any financial 
instability, especially If it 
undermines the Real 
Even in the long term, the 
central bank is not expected to 
let larger banks encounter seri- 
ous problems, which would 
highlight the entire state- 
owned sector's weakness. The 
banks are likely to be urged to 
cut costs and merge branches. 
Some smaller state-owned 
banks may be threatened with 


closure or told to merge. 

“Sorting out the state banks 
will be a long and very careful 
process which won't be solved 
overnight and which cannot be 
done in an irresponsible way 
because of the risks," says Mr 
Carlos Langoni, a former cen- 
tral bank president. 

According to private bank- 
ers, the hope for long-term 
reform lies with Brazil's new 
president, likely to be Mr Fern- 
ando Henrique Cardoso. The 
bankers say the new president 
must make a number of moves, 
starting with measures to insu- 
late banks from political inter- 
ference. For example, a law 
which prevents private banks 
from lending to their main 
shareholders could be applied 
to state-owned banks to stop 
them funding their state's defi- 
cit. 

“We need new regulations to 
restrict the banks’ freedom. If 
they want to be called a bank 
they should act like one,” says 
one S3o Paulo banker. 

Other bankers argue that 
privatisation Is the only way to 
guarantee independence for 
the state banks, and to 


improve their efficiency. But 
this would first require the 
states, some of which are 
already in deficit, to repay 
their debts. 

According to one model, a 
bank such as Banespa - which 
is owed about $7bn by the S3o 
Paulo state government - 
could be repaid with shares In 
the state-owned electricity and 
water companies. 

Mr Cardoso is thought to 
favour such schemes. But he 
will encounter stiff opposition 
from state governors and the 
banks themselves, which argue 
that in a country like Brazil, 
state banks also serve as devel- 
opment agencies and should 
not aim to emulate the private 
sector. 

Whether the banks are 
allowed to remain In the state 
sector will probably depend on 
their own performance. The 
central government cannot 
afford to lend financial support 
for long. Unless they quickly 
move to reduce their losses, 
the government may start pay- 
ing more attention to private 
sector calls for the banks to be 
merged or privatised. 



Fed warnings to 
banks on easier 
credit standards 


By George Graham 
In Washington 


wouldn't have even gone out of 
my house. . . people are not 
afraid today.” 

At the US embassy, the 
mood was generally buoyant 
and file beginning of the US 
peace-keeping operation was 
viewed as a great success. 
"Haiti today is better off than 
it was yesterday and better off 
yesterday than it was the day 
before.” Mr Stanley Schrager, 
US embassy spokesman, said 
yesterday. 


Top US Federal Reserve 
officials have issued a warning 
that h anks may be unduly 
relaxing their credit standards 
and making risky loans that 
could turn sour. 

Mr Alan Greenspan, chair- 
man of the Federal Reserve 
Board, yesterday told the Sen- 
ate hanking committee he had 
received reports from Fed bank 
examiners that some banks 
under their supervision were 
“competing more aggressively 
for loans, and ... are relaxing 
their credit standards”. 

And Mr William McDonough, 
president of the New York Fed- 
eral Reserve Bank, warned in a 
recent speech against the 
temptation for banks to “let 
the pendulum swing too far” 
by cutting their rates or easing 
loan restrictions as they try to 
rebuild lending operations 
after a very tight period. 

"Pressure on pricing and 
other credit terms, such as 
loan covenants, must not be 
permitted to sow the seeds of a 
new round of asset quality 
problems down the road,” Mr 
McDonough told a symposium 
hosted by the New Jersey state 
banking department 

Fed officials began to detect 
some cause for concern a while 
ago, but their suspicions have 
been fuelled by a recent survey 
of senior loan officers. 

Nevertheless, Mr Greenspan 


insisted: “The condition of the 
banking system is sound and 
much Improved." 

Other Fed officials said they 
wanted to “look beyond the sil- 
ver lining" of the current good 
health of the banking industry. 

And Mr Eugene Ludwig. 
Comptroller of the Currency, 
whose office supervises nation- 
ally chartered banks while the 
Fed oversees state chartered 
hanks , said better bank profit- 
ability stemmed largely from 
improved credit quality. 

“Banks have substantially 
recovered from their credit 
quality problems from the late 
1980s and early 1990s due, 
among other factors, to the 
improvement in the economy," 
Mr Ludwig told the Senate 
banking committee yesterday. 

The Federal Deposit Insur- 
ance Corporation's latest quar- 
terly survey, published yester- 
day, showed that the nearly 
11,000 banks in the US made 
profits totalling Sll-2bn (£7bn) 
in the second quarter of this 
year, level with their perfor- 
mance in the first quarter and 
nearly 9 per cent higher than 
in the second quarter of 1991 

Mr Greenspan also renewed 
his call for Congress to tear 
down more of the barriers 
which restrict banks from 
entering other sectors of the 
financial services industry, 
such as insurance and securi- 
ties. and warned against exces- 
sively tight control of activities 
such as derivatives. 


AMERICAN NEWS REVIEW 


Mexican city won 
by opposition 


35.8 per cent in favour of inde- 
pendence. 

Political observers have also 
interpreted the signals put oat 
by Mr Bouchard and Mr Pari- 
zeau as evidence of divisions 
which have long been sus- 
pected within the separatist 
ranks. Mr Bouchard, who is in 
his early 50s, is widely seen as 
Mr Parizean’s most likely suc- 
cessor should the PQ leader, 
aged 64, stumble over the 
independence issue. 

Business leaders both in and 
outside Quebec have urged the 
new PQ government to hold 
the referendum as quickly as 
passible to lift uncertainty 
over Canada's political future. 
Mr Ghislain Dufour, president 
of the Patronat, Quebec’s main 
employer group, said: “Our 
members want the political 
uncertainty now weighing 
down on Quebec lifted as soon 
as possible. The sooner the 
debate is over the better." 


Mexico’s centre-right opposition, is set to govern the industrial 
city of Monterrey after an electoral court annulled votes from 
over 40 of the city's polling stations in last August's election. 
The reversal of the Institutional Revolutionary party's initial 
victory in Monterrey follows the opposition's claims that the 
ruling party’s vote in parts of the city had been boosted by 
ballot-rigging. The capital of the northern state of Nuevo Leon 
and home to many of the country's best known companies, 
Monterrey will become the largest city ever in Mexico to be 
run by the National Action party {PAN) opposition. 

Federal electoral tribunals also annulled votes in a few 
polling stations in other parts of the country, but the move.ls 
not expected to affect the result of last August's election, in 
which the ruling party won a comfortable victory in the 
presidential and congressional races. The tribunal's move 
should improve relations between the government and the 
centre-right opposition, and may Increase the chances of a 
successful outcome to imminent talks between the main politi- , 
cal parties on political reform. 

The centre-right PAN had made the election in Monterrey a : 
test case of the PRTs commitment to run free elections. 
Although the decision to annul results in PRI strongholds was 
formally taken by an electoral tribunal, some suspect that the 
tribunal had been influenced by the government 
Damian Fraser, Mexico City 


Cardoso’s poll lead slips 


Mr Fernando Henrique Cardoso, front-runner in Brazil's presi- 
dential election, has seen bis lead slip slightly in opinion polls, 
increasing the chances of a second-round run-off with his 
nearest rival Under Brazil's election rules, a candidate only 
wins in the first round if he polls more votes than all his 
competitors combined. According to a Gallup poll published 
yesterday In the Estado de S&o Paulo newspaper, Mr Cardoso's 
support has slipped 2 points to 41.1 per cent He is still well 
ahead of his main rival, the left-winger Mr Linz Inario Lula da 
Silva, who polled 20.6 per cent Mr Cardoso's fall means his 
margin of victory over all the candidates has fallen from 6.3 
points earlier this month to 33 points. This is within the poll's 
4-point margin ctf error, suggesting Mr Cardoso's first-round 
victory on October 3 Is no longer assured. He still remains 
clear favourite to win in a second round set for mid-November. 
His fall appears to be a result of combined criticism by the 
other candidates, which has led to an increase in the number 
of undecided voters. Angus Foster, Salvador 


New White House spokesman 


Mr Mike McCurry, chief State Department spokesman, is being 
moved to the same position in the White House to try to 
improve relations with the media and to get over President 
Bill Clinton's policy messages more effectively. The move is 
one of the personnel shifts being orchestrated by Mr Leon 
Panetta, the chief of staff Ms Dee Dee Myers, the present 
spokeswoman, is being given what is described as “broader 
responsibilities” but will be replaced as the regular daily 
briefer fay Mr McCurry. Mr Mark Gearan, the overall commu- 
nications director, is also to be given a new job, as yet 
unspecified, on Mr Panetta’s staff Press relations have been a 
thorn in the White House flesh ever since Mr Clinton took 
office. Initially they were handled by Mr George Stephanopou- 
los, but only with much friction with the press corps. He was 
shifted to a for more influential position as counsellor to the 
president in the summer of last year, but even his activities 
are now to be subject to greater control by Mr Panetta. Ms 
Myers is personally well liked by the press, but she ha« never 
been a member of the inner policy- making team, thus reducing 
her effectiveness. Mr McCurry, on the other hand, has estab- 
lished a close working relationship with all the senior eche- 
lons of the state department, including Mr Warren Christf^ 
pher, secretary of state, in the year he has been on the job. His 
light touch has also made him popular with diplomatic corre- 
spondents. Jurek Martin, Washington 


Hearings on baseball strike 


The current baseball strike reached the halls of Congress 
yesterday when a House judiciary subcommittee began bear- 
ings on whether the sport's team owners should continue to 
enjoy immunity from the nation's anti-trust laws. Mr Bud 
Selig, the acting commissioner of baseball, testified in favour 
or retaining the exemption and Mr Donald Fehr, chief of the 
players' union, against. Congressman Jack Brooks, the com- 
mittee chairman, showed his colours by warning in advance 
that though the owners could hide from the fang they could 
not avoid Congress on matters of anti-trust. But Congress is 
unlikely to vote until next year, at the earliest, with much 
possibly depending on whether next year's baseball season 
also remains in doubt At issue is the 1922 Supreme Court 
ruling, written by the legendary Justice Oliver Wendell 
Holmes. He wrote then, at a time when the sport was in 
difficulty, that although baseball was certainly a business it 
did not engage in "commerce" in the normally accepted under- 
standing of the word”. Jurek Martin, Washington 




Clint'* rc 








FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


NEWS: WORLD TRADE 


Gatt chief warns on ratification 


By Frances WHUams in Geneva 

Mr Peter Sutherland, 
director-genera] of the General 
Agreement on Tariffs and 
Trade, said yesterday that the 
process of ratifying the Uru- 
piay Round trade accords was 
"definitely moving in the right 
direction" but warned that 
stated intentions had yet to be 
reflected in concrete results. 

Just 26 of the 125 countries 
taking part in the Uruguay 
Round have ratified or con- 
cluded “domestic processes". 
Most have been waiting on the 
"Quad” group of leading trad- 


ers. the US, the European 
Union, Japan and Canada, 
□one of which has yet ratified. 
The accords, including estab- 
lishment of Gatt's successor, 
the World Trade Organisation, 
are due to take effect on Janu- 
ary l next year. 

Speaking to a meeting of the 
WTO preparatory committee. 
Mr Sutherland said the meet- 
ing on October 25 would be a 
“watershed”. That is when be 
hopes to fix the date and 
agenda for the implementing 
conference, planned for Decem- 
ber. which will formally decide 
when the WTO is established. 


Asked to report on how rati- 
fication procedures were going, 
all four Quad members 
expressed confidence ratifica- 
tion would be completed by the 
January 1 deadline. 

Mr Booth Gardner. US 
ambassador to Gatt, said the 
administration would submit 
legislation soon and expected a 
vote before Congress recesses 
on October 15. 

The EU, struggling to sur- 
mount a complex legal dispute 
over respective responsibilities 
of the executive Commission 
and member states on trade 
issues, said it was still commit- 


ted to the January deadline. 
Mr Jean- Pierre Leng, EU Gatt 
ambassador, expressed confi- 
dence the process would be 
completed in good time. This is 
despite the fact that no accord 
has yet been reached on an EU 
code of trade conduct, which 
would obviate the wait for a 
ruling by the European Court. 

The Japanese government 
expects approval of implement- 
ing legislation during the spe- 
cial two-month Diet session 
due to start on September 30. 
Canada plans to introduce leg- 
islation next month. 

Also yesterday. Mr Andrds 


Szepesi of Hungary, chairman 
of Gatt's contracting parties, 
said he would begin consulta- 
tions early next month on the 
future head of the WTO. The 
decision, for which a consen- 
sus is needed, must be 
endorsed at Gatt's annual 
meeting in December. 

Mr Szepesi confirmed that 
the Brazilian candidate. Mr 
Rubens Ricupero, was standing 
down. The three declared con- 
testants are outgoing President 
Carlos Salinas de Gortari of 
Mexico, Mr Rena to Ruggiero of 
Italy and Mr Kim Chul-su of 
South Korea. 


Round opponents make their mark 


By Nancy Dunne In Washington 

US Toes of the Uruguay Round world 
trade pact have been flooding the 
Senate with telephone calls as the 
focus of opposition has moved to the 
$40bn cost in the form of lost tariff 
revenues over the next decade. 

Urged on by groups on the right and 
left, opponents have been demanding 
that senators commit themselves to a 
vote against a waiver of budget rules, 
which could raise the deficit. 

The tactic is the latest in a lengthy 
battle against the new world trade 
pact'. The Clinton Administration 
made passage a pri o rity, but time and 
election year pressures have become a 


serious obstacle In the effort. 
Opponents have turned the debate into 
an issue of fiscal responsibility six 
weeks before many Democrats are 
[being extraordinarily tight races. 

“Gatt’s complicated,” said Miss Lori 
Wallach, one of the anti -Gatt leaders, 
she said. “But there’s nothing 
complicated about busting the US 
budget to pay for foreign tax cuts. The 
Gatt package asks for increased taxes 
and budget busting. It makes this a 
nightmare for many Democrats.” 

Labour leaders, rigfatwing Christian 
groups, conservative talk show 
commentators and Mr Ross Perot, the 
erstwhile presidential candidate, have 
stepped up their opposition. Mr Perot's 


citizen brigades have targeted key 
Democratic senators who are up for 
re-election. These include Tennessee 
Senator Jim Sasser, the heir 
presumptive to Majority Leader George 
Mitchell, who is retiring this year. 

Senator Bob Kerry, a Nebraska 
Democrat, Is also coming under strong 
pressure. Like most Democrats, both 
are already suffering from the political 
weakness of the president wad could be 
helped by a delay in the vote until next 
year. 

With Congress due to adjourn in 
October for campaigning, the 
administration will next week be 
forced to submit the implementing 
legislation which has left key issues 


unresolved in Congress. 

Mr Mickey Kan tor, the US trade 
representative, must decide the timing 
of a controversial role of origin for 
textile and apparel imports for one 
year - for one year as the Bouse Ways 
and Means Committee wants it- or five 
years as the senate wants it. The 
opposition is targeted at the Senate, 
where 60 votes will be needed to waive 
budget rules before a vote can be held. 

The year-long struggle to pass the 
Gatt has lowered the stock of Mr 
Kan tor, who was considered one of the 
most successful members of the cabinet 
in the wake of the Uruguay Round deal 
last December. Business lobbyists talk 
openly of wanting a new trade team. 


Kozyrev adds to doubts 
over Azerbaijan oil deal 


By John Lloyd in Moscow 

Mr Andrei Kozyrev, the 
Russian foreign minis ter, yes- 
terday added his voice to 
doubts surrounding the the 
$8bn Caspian oil contract 
signed earlier this week 
between the government of 
Azerbaijan and a consortium of 
foreign oil companies. 

Mr Kozyrev said that Rus- 
sian interests bad to be taken 
into account in any agreement 
to exploit the reserves in the 
Caspian sea. 

Agreements signed by the 
Soviet Union limiting exploita- 
tion were still in force - “no 
one has annulled tbem," he 
said. “The former Soviet repub- 
lics are the Soviet Union's 
legal heirs, while Russia is its 
main successor. Obligations 
have to do with all the former 
Soviet republics- Azerbaijan is 
well aware of this.” 

Mr Kozyrev's statements 
were greeted yesterday with 
muted anger by other Russian 
institutions concerned with the 
contract. These include the 
energy ministry, which sent a 
deputy minister to applaud the 
signing of the deal and Lukoil, 
the partly state-owned oil com- 
pany which is a partner in the 
consortium with 10 per cent of 
the contract. 


GEORGIA 



An oil ministry spokesman 
said the minis try had “no spe- 
cial comment” on Mr Kozyr- 
ev's statement, adding that 
various interests were involved 
including those of the minis- 
tries and oil companies - “each 
of which could have a different 
position". 

For Lukoil, Mr Alexander 
Vasilenko said that “we signed 
a statement of intent with the 
state oil company of Azerbai- 
jan last September. There was 
an inter-government agree- 
ment between Russia and Azer- 
baijan signed last October, 
which Mr Yuri Shafrannik (the 
Russian Energy Minister) 
signed, permitting an agree- 
ment between Lukoil and Azer- 


baijan. Lukoil works always 
within the bounds of the law, 
and that is how we intend to 
work now.” Mr Vasilenko said. 

The issue has nn importance 
beyond that of the Azeri con- 
tract - signed by BP, Amoco, 
Statoil. PennzoU, McDermott 
and other western oil compa- 
nies. Russia could effectively 
block the flow of oil by refus- 
ing to allow a pipeline through 
its territory. It could also apply 
pressure to Azerbaijan against 
running a pipeline through 
Turkey to the Mediterranean. 

If so. it would send a mes- 
sage to other oil companies 
that deals with former Soviet 
republics cannot be made with- 
out Russian approval. 


Clinton renews 
sanctions threat 


US President Bill Clinton 
yesterday renewed his threat 
to impose trade sanctions on 
Japan after a meeting with 
Japanese Foreign Minister 
Yohei Kono that focused on 
deadlocked trade negotiations, 
writes Our Foreign Staff. 

Further talks are due today 
to tackle the contentious 
vehicle manufacturing sector. 

Mr Kono also held talks with 
Secretary of State Warren 
Christopher and US Trade Rep- 
resentative Mickey Kantor. 

In addition to cars. Washing- 
ton is pressing Tokyo to 
improve foreign access to gov- 
ernment contracts telecommu- 
nications and medical technol- 
ogy. 

"The president emphasised 
that unless agreements are 
reached under the framework 
agreement by the Sept 30 dcad- 



t * 

Foreign Minister Yohei Kono: 
also pressed over access to 
telecoms and medical sector 

line, he will have to consider 
remedies under US trade 
laws," the White House said. 


WORLD TRADE NEWS DIGEST 

GEC-Alsthom 
to supply 
diesels to SNCF 

SNCF. the French state-owned railway system, yesterday said 
it will buy 100 diesel locomotives worth FFr2 i^bn ($470m) from 
GEC-Alsthom. the Anglo-French engineering group, writes 
John Ridding in Paris. Under the deal, which could rise to 250 
diesel units. France's regional councils are to assure the finan- 
cing of the construction of the locomotives. The French state 
is to give a subsidy of FFrtGra for the first 100 units. SNCF will 
finance part of the research and launch costs for an amount of 
FFr21 ini. The order will come as a relief to GEC-Alsthom. 
which is jointly owned by Alcatel Aisthom of France and GEC 
of the UK. SNCF has long delayed the order for new diesel 
locomotives, contributing to a decision to restructure and cut 
jobs at the joint venture's transport division earlier this year. 

The units, each comprising one motor wagon and one 
trailer, are likely to be built at GEC-Alsthom's plant in La 
Rochelle in western France. The order is not expected to result 
in increased employment in the company's transport division 

UK-Greek group in tunnel deal 

A British-Greek joint venture. Christiani & Nielsen-TEGK, has 
signed an Ecu-iOJhn ($50m) contract to build a 1 km undersea 
tunnel linking two ports in western Greece, writes Kerin Hope 
m Athens. The tunnel project, which is still to be ratified by 
parliament, is the first infrastructure project to be launched 
under the European Union's Ecul6.8tra funding package for 
Greece. Christiani & Nielsen-TEGK was the lowest bidder 
among 10 consortia shortlisted for the project The choice erf a 
tumid, between Aktion and Prcveza at the entrance to the 
Ambracian Gulf, rather than a bridge was made on environ- 
mental grounds to protect the gulf and the site of a famous 
ancient naval bottle in 31 BO. 

$130m GM contract for Saab 

Sweden's Saab Automobile said yesterday it had received a 
SKrlbn <S135m) order from General Motors, one of its joint 
owners, for the supply of -W.0QQ manual gearboxes a year over 
live years, writes Christopher Brown-Humes in Stockholm. 

It is the second large ondcr which Saab has received from 
C.M since the US group took a 50 per cent stake in the 
company five years ago. It will increase Saab’s production by 
around ;«0 per ‘cent to 115,000 manual gearboxes a year while 
deliveries to GM will rise six-fold to 48.000 gearboxes a year. 
The order was planed by GM*s US Powertrain Division. GM's 
main US development centre. The gearboxes, used in Saab> 
aoo ind »WH0 models, will be fitted to a new GM model which is 
due* to he manufactured in the US later this decade. In 1390 
Saab received an order for up to 65,000 gearboxes a year for 
GM cars produced in Europe. Deliveries are currently ru nnin g 
at only 5.00U a year because of the recession in the German car 
market 

■ Bouygues Offshore, a unit of Bouygues of France, has 
snrocil a FKrW«m (SUWttnl contract to rebuild Nigeria's Forca- 
doTml terminal for the Nigerian unit of the Royal DutcfirShell 

STinan's four steel pipe makers - Sumitomo Metal, Nippon 
Suvl Kawasaki Steel, and NKK - are set to export steels pipes 
i u Russia between October and the end of this year. 

■ Electrolux or Sweden is considering a joint venture with 
Polish washing machine producer Swiatowit Myszkow to 
develop appliance soles in central Europe. Electrolux has 
, w d a letter of intent with Myszkow to start assembling 
Electrolux products in January next year. 



V m 






6 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 l 1 *** 


NEWS: INTERNATIONAL 


Chinese will 
be encouraged 
to buy cars 


By Tony Walker in Beijing 

China will soon begin 
providing incentives to individ- 
ual car buyers to help boost its 
QedgLing automotive sector as 
part of a policy aimed at 
encouraging widespread car 
ownership. 

Speaking after a two-day 
conference in Beijing. Mr He 
Guangyuan, China's minister 
of machinery, said that individ- 
uals would become the main 
purchasers of cars and the 
incentives were designed to 
encourage this trend. 

Mr He did not provide details 
but it seemed he was proposing 
that bank loans or other forms 
of finance be made available to 
facilitate car purchases. 

The official China Daily 
newspaper reported officials 
responsible for the automotive 
sector as saying that to 
“increase sales the state will 
introduce incentives to car 
buyers to boost market 
demand”. 

Individuals, as opposed to 
companies and work units, 
make up only a fraction of car 
owners. Of the estimated 1.2m 
cars on China's roads 5 per 
cent are owned privately, 
according to C hina Dally. 

Mr He also announced the 
government would increase its 
support over the next two 
years for four existing car 
makers in an effort to boost 
production. 

China's new automotive pol- 
icy sets as its goal the develop- 
ment of a mass production 
automotive sector by early 
next century to meet an expec- 
ted booming demand for cars. 

China's production goal for 
the year 2000 is some i.35m 
cars, with 90 per cent of the 
market to be supplied from 
local production. Output would 
rise to 4m by the year 2010. 

In 1993. China produced 

234,000 passenger cars out of 


total production nationwide of 
l.3m vehicles. More than 

300.000 vehicles including 
trucks, commercial vehicles 
and cars were imported. 

Among manufacturers sin- 
gled out for government sup- 
port were those in which 
Volkswagen of Germany and 
Daihatsu or Japan are 
involved. Mr He did not pro- 
vide details of assistance, but 
Beijing recently announced it 
would provide additional binds 
for the automotive sector. 

The authorities are also mak- 
ing clear they will play an 
active role in the rationalisa- 
tion of an industry whose pro- 
duction has hitherto been scat- 
tered among dozens of small 
inefficient plants, some of 
which produce a few vehicles 
each month. 

Thousands of components 
manufacturers are also being 
warned that unless they 
achieve economies of scale 
through mergers or joint ven- 
tures with foreign partners 
they will be forced out of busi- 
ness. 

Mr He announced that some 
350 components businesses out 
of an estimated 4£00 through- 
out China would get govern- 
ment assistance. Again, no 
detail was provided of the form 
this assistance mi ght take. 

China has placed a freeze on 
new automotive manufacturers 
entering the market until 1996, 
but international companies 
are being urged to participate 
in upgrading the components 
sector. 

Such companies as Ford, 
GM, Toyota and Nissan, have 
been told that to participate in 
the components sector is virtu- 
ally a prerequisite for permis- 
sion to become involved in 
manufacturing. This has 
prompted a scramble for Chi- 
nese partners among compo- 
nent suppliers. 


NEWS IN BRIEF 


Weather men 
‘worth $20bn’ 

Weather forecasts save the world economy some $2flbn-40bn a 
year, the World Meteorological Organisation claimed today. Bene- 
fits from meteorological and hydrological services are typically 
five to 10 times the amount spent of around $4bn a year, the 
WMO says, Frances Williams writes from Geneva. 

Examples presented to an international conference in Geneva, 
which ends today, include rockets used to combat potentially 
catastrophic hail in Hungary, typhoon warnings in Vietnam and 
extensive benefits to forming and aviation. 

The British Met Office said earlier this week that for Britain 
alone, weather forecasts save almost £lbn nationwide. 

Red Cross search agreed 

Kuwait and Iraq are ready to accept a proposal by the Interna- 
tional Committee of the Red Cross to form a technical team to 
investigate the fotc of all people missing from the 1991 Gulf War, 
the ICRC said, Reuter reports from Kuwait 

Mr Arnold Luethold, ICRC delegate for the Arabian peninsula, 
said formation of a technical team, the details of which had yet to 
be settled, would speed the search for the missing. 

Most of those missing are the 600 Kuwaitis alleged by the 
emirate to be held in Iraq, which occupied Kuwait for seven 
months in 1990-91. 

“Kuwait and Iraq have informed the ICRC that they are ready 
to accept the proposal,” Mr Luethold, who is based in Kuwait, 
said in a telephone interview. 

The return of captives held in Iraq was a condition of the 
ceasefire imposed on Baghdad after a US-led multinational force 
ejected its troops from Kuwait In 1991. 

Vietnamese arrive home 

A first group of Vietnamese boat people forcibly sent home by 
Hong Kong for six months arrived quietly in Hanoi yesterday 
despite a turbulent start to the deportation In the British colony 
earlier this week, Reuter reports from Hong Kong. 

The 33 boat people, most deported against their will, filed off 
the aircraft at Noi Bai airport without apparent resistance. 

The flight marked the resumption of Hong Kong's repatriation 
programme after a six-month gap. 

The Inst forced repatriation was in March. The programme was 
suspended after a controversial April police raid. 


Keating airport plan takes off despite left 

Lease clause a concession to Labor party opponents, writes Nikki Tait 


A 


ustralia’s Labor gov- 
ernment yesterday 
approved plans to sell 
the 22 airports owned by the 
Federal Airports Corporation 
to the private sector, a deal 
which could net A$2bn (£900m) 
for the Treasury. 

But the decision was taken 
only after an important conces- 
sion to the left wing of the 
party, which is opposed to pri- 
vatisation. The airports will be 
sold on a “long lease", rather 
than a freehold basis, and the 
state will continue to own the 
co mmo nwealth land on which 
they are sited. 

Even so. it still has to steer 
the proposal through its 
annual party conference in 
Hobart next week. What shape 
the airports sale takes, and 
what markers are set down for 
future privatisation policy, will 
be keenly debated. 

The government of prime 
minister Mr Paul Keating is 
also hoping to sell off a 75 per 
cent stake in Qantas, the 


national airline, an 80.6 per 
cent stake in the Australian 
Industry Development Corpo- 
ration (AlDC). an investment 
and project finance group, and 
a handful of smaller assets. 

The plans were outlined in 
the budget in May, and expen- 
diture plans depend on pro- 
ceeds of AS2.45bn during 
1994-95. They are intended to 
follow privatisation receipts of 
more than AJSbnsince the late 

1980s. 

Labor party policy justifies 
public ownership because it 
makes “essential ser- 
vices . . . available at affordable 
prices to all Australians". It 
also requires that any privati- 
sation proposal be scrutinised 
to ensure that it does not 
“weaken the sense of national 
identity" associated with the 
business in question, or “con- 
centrate power in the hands of 


MAIN AIRPORTS 


Sydney 

Melbourne 

Brisbane 

Adelaide 

Darwin 

Perth 

Profitless) Before Interest fSAOQOs) 
Passengers 

71,056 

15.633.288 

41.366 

10,417,481 

34.126 

7,026.180 

7,154 (2.135) 

3.051.695 608.013 

10.188 

3,061,929 


narrow private interests”. 

A new policy is being pro- 
posed for the conference, ft 
refers to “improving the provi- 
sion of community services 
through the public sector, non- 
government community organ- 
isations and the private sector 
as appropriate" and ensuring 
that any sale has a net benefit 
to the community. 

Already, opponents have 
organised anti-privatisation 
rallies in cities across Austra- 
lia in recent weeks. 

The Qantas sale has been 
accepted as a Tait accompli, 
and is planned to go ahead In 
the first half of 1995. A 25 per 
cent stake in the airline has 


already been sold to British 
Airways and the company has 
been gearing up for a stock- 
market share sale. 

Earlier this week, it reported 
improved earnings results for 
1993-91 The only rumblings on 
the Qantas front centre on the 
scale of the employee share 
ownership scheme required as 
part of the sale. 

But the nation's airports are 
much more contentious. There 
are 22 separate properties, 
ranging from Sydney's Kings- 
ton! Smith, which handles 16m 
passengers a year, to Bank- 
stown, with 7.500. 

The FAC was formed in 1938, 
to make national airport strat- 


egy more coherent and less 
susceptible to political whim. It 
is profitable and. given the 
potential growth in Australia’s 
tourism industry with the 
Olympics Gaines in Sydney in 
2000. there is thought to be a 
lot of buyer interest Britain's 
BAA has already been men- 
tioned. 

While the larger airports, 
such as Sydney, Melbourne 
and Brisbane, are profitable, 
many of the smaller ones are 
not. Independent studies are 
thought to advise that the 
maximum proceeds would be 
raised by selling the assets as a 
single block. 

From a political perspective. 


however, clustering the proper- 
ties might bo a more viable 
proposition, since this would 
offer more opportunities for 
local or state-based investors 
to be involved. This approach 
might also have the advantage 
of appearing “pro-competitive", 
the argument being that 
different groups of regional air- 
ports might then vie for busi- 
ness. 

While wrangling continues 
over the particulars of the air- 
port sale, the bigger question is 
how much further a Labor gov- 
ernment will be able to push 
Australia's privatisation pro- 
gramme. 

The biggest potential candi- 
date is Telstra, the govern- 
ment-owned telecommunica- 
tions group. However, 
ministers have indicated that 
it will not be sold la the cur- 
rent term of office. 


Mugabe 
pledges to 
retain 
socialism 


Zimbabwe’s president, Mr 
Robert Mugabe, brushing aside 
the demise of communism, 
pledged his party’s commit- 
ment to socialism yesterday 
and also said he would speed 
up control of the economy by 
the black majority, Reuter 
reports from Harare. 

“Socialism remains our 
sworn ideology." Mr Mugabe 
told a congress of bis r uling 
Zanu-PF party. 

Amid applause from nearly 

8.000 delegates assembled at 
the futuristic Harare Confer- 
ence Centre, he said: “The 
challenge is to continue to 
redefine it (socialism) in a 
manner consistent with our 
culture and historical experi- 
ence. the changing times and 
the aspirations of our people. 

“Naturally, such an ideologi- 
cal synthesis calls for a com- 
mitted and conscious cadres hip 
which agitates for the realisa- 
tion of our objectives." 

Mr Mugabe, in power in Zim- 
babwe since independence 
from Britain in 1980, said Zan- 
u-PF found it unacceptable 
that the majority 10m blacks, 
who outnumber whites by 10- 
to-one, were still marginalised 
in the control of the country's 
economy. 

“Our people still suffer eco- 
nomic disablement as a result 
of myriad old laws, business 
practices and prejudices, them- 
selves a legacy of a colonial 
past that sought a wh o l e sale 
disempowerment of the blacks. 
Needless to say, this situation 
is unacceptable and cannot be 
allowed to continue.” he said. 

Mr Mugabe said his govern- 
ment was setting up an invest- 
ment fund which, together 
with an improved business cli- 
mate in Zimbabwe brought 
about by western-backed eco- 
nomic reforms, should quicken 
the pace of transfer of eco- 
nomic power. 

He also pledged to accelerate 
a controversial plan that 
allows the state virtually to 
seize mostly white-owned 
forms to resettle thousands of 
blacks thrown out of their orig- 
inal homes by previous white 
governments. 

"Currently five million hect- 
ares of land is being purchased 
from the large-scale commer- 
cial area to bring total land 
acquired for resettlement pur- 
poses to &3 million hectares,” 
Mr Mugabe said. The plan, 
introduced in 1992, is opposed 
by Zimbabwe's 4,500 commer- 
cial fanners - producers of 
most export crops and food. 

The five-yearly congress will 
also elect new leaders for the 
party that has ruled alone for 
tbe past 14 years. 



. .-.-A- 




HK group plans 
$12.7bn power 
plants in India 


Work in progress on Kap Shoi Man viaduct and the 2.2km Tsing Ma suspension bridge 
(background) which win link Hong Kong to its new airport, doe to open in 1997 


By Stefan Wagstyl 
in New Delhi 

India said yesterday that 
Hopewell Holdings, the Hong 
Kong based group run by Mr 
Gordon Wu. is planning to 
build two power stations worth 
Sl2.7bn in what would be 
India's largest foreign invest- 
ment Although the scheme is 
at an early stage, the news will 
boost India'a efforts to promote 
confidence in the economic re- 
forms started three years ago. 

The announcement, made 
yesterday by Mr N.K.P. Salve, 
power minister, comes a few 
days before the annual meet- 
ing in Madrid of the Interna- 
tional Monetary Fund and 
World Bank, where India's 
economy will come under scru- 
tiny. 

Mr Salve said Hopewell's 
scheme would be the largest 
power project planned in India. 
Hopewell has yet to decide the 
sites for its power stations 
which would each consist of 
eight units of 660 MW. 

They would come on stream 
in stages between 1999 and 
2003 if Hopewell secures the 
necessary clearances by early 
next year. The stations would 
be coal-fired using Indian coaL 

Under a memorandum of 
understanding to be signed by 
Hopewell and Powergrid, a 
state owned power transmis- 
sion undertaking, the output is 
to be sold to Powergrid which 
would sell the electricity to 
state electricity boards (SEBs). 
Hopewell would therefore 
avoid dealing directly with the 
loss making SEBs, which are 
subject political interference, 
notably over pricing. 

India has received about 100 
offers from private groups to 


build power stations since it 
invited investment in the sec- 
tor two years ago as part of its 
economic liberalisation pro- 
gramme. Seven schemes are in 
the final stages of preparation 
though none has yet received a 
final go-ahead from Investors 
and bankers. In order to 
encourage investment the gov- 
ernment Is backing these seven 
schemes by offering guaran- 
tees that the SEBs will pay 
their bills. 

• Turnover on India's bourses 
will more than triple over the 
next three years with their 
capitalisation doubling to 
$300bn, according to a study by 
Barclays dc Zoete Wedd (Asia), 
Reuter reports from Bombay. 

“Never since the East India 
Company landed 300 years ago 
has India been the object of as 
much foreign commercial 
interest as today,” said the 
study. 

BZW said India was at an 
early stage of the current busi- 
-ness cycle. “We see this driv- 
ing strong earnings growth for 
at least the next three years,” 
according to the study made 1 
available to Reuters yesterday. 

It forecast that the Sfrshare 
index of the Bombay Stock 
Exchange, the largest of 23 
India's bourses, would reach 
the 5,000 level by March. It was 
trading around 4,500 this week, 
down slightly from its Septem- 
ber 12 record dose of 4,62857. 
India has been one of Asia's 
most attractive emerging mar- 
kets this year, rising some 34 
per cent since January. 

But BZW cautioned that 
state elections in December 
and early 1995 would create 
some uncertainty in the mar- 
ket, but would not be a 
long-term factor. 


Israel to attend talks in Morocco 


By David Horovitz 
in Jerusalem 

Officials from Israel, Jordan, 
Tunisia, Egypt, Saudi Arabia 
and tbe Palestinian self-rule 
areas have all accepted invita- 
tions to an unprecedented Mid- 
dle East economic conference, 
to be held in Casablanca at the 
end of October, Mr Shimon 
Peres, Israel’s foreign minis- 
ter, announced yesterday. 

The three-day conference, to 
be hosted by King Hassan of 
Morocco, is designed to bring 
representatives from compa- 
nies around the world into 
contact with the region’s gov- 
ernments, to hammer out sub- 
stantive projects for Middle 


East development About 1,000 
international companies are 
understood to have accepted 
Invttations. 

High on the conference 
agenda, said Mr Peres, are 
plans for a regional develop- 
ment bank to fund Middle East 
reconstruction, initially capi- 
talised at SlObn (£6-3bn), with 
40 per cent coming from the 
Middle East and 60 per cent 
from outside the region. 

The meeting would also 
focus on projects to make the 
most of the region’s scarce 
water resources. He said a 
$13bn investment was 
required over the next decade, 
and that a joint German-Japa- 
nese proposal for the construc- 


tion of a canal from the Medi- 
terranean to the Dead Sea was 
already under serious consid- 
eration. 

Other areas crying ont for 
investment, he said, were tour- 
ism and infrastructure. There 
were new hotels to be built to 
take advantage of a boom he 
expected in package tours tak- 
ing in Egypt, Israel and Jor- 
dan, and new ports, airports, 
railroads and telecommunica- 
tions networks to be devel- 
oped. 

Mr Peres said the conference 
could be “a turning point" for 
the Middle East, If it helped 
give international investors 
the confidence to commit 
themselves to big projects in 


the region. He noted that the 
Arab world bad made Invest- 
ments of more than $600bn in 
Europe over the past decade, 
while Europe had invested just 
320bn in the Middle East It 
was time, he said, to change 
that balance. 

Estimating that living stan- 
dards in the west were an 
average of 20 times higher 
than in the Middle East he 
stated that economic improve- 
ments represented the most 
effective means of reducing 
extremism and instability. 
“Fundamentalism cannot be 
countered with guns and 
rifles,” the Israeli foreign min- 
ister said. “There has to be an 
economic solution.” 


Jungle rebels may fall victim to gas pipeline 

William Barnes in Bangkok reports on the controversy surrounding a Total-Unocal deal 


A Slbn gas pipeline to be 
constructed by the 
French Total company 
and Unocal of the US could 
force ethnic minority guerrillas 
opposed to Burma's military 
regime into accepting a dubi- 
ous ceasefire and political com- 
promise. 

The deal to build a 260-mile- 
long pipeline carrying gas from 
the Yadnna field in the Gulf of 
Martaban into Thailand was 
signed earlier this month after 
two years of negotiations. 

The gas supply will begin in 
mid-1998 and will fuel a new 
2,100-megawatt gas and oil 
fired power station in Rateha- 
buri province, near Bangkok, 
as port of efforts to boost elec- 
tricity supplies. 

The project has been critic- 
ised by human rights groups 
who argue that the pipeline 
must run through jungle con- 
tested by Mon and Karen 
minority insurgents which. 


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they say. will encourage the 
military regime to use brutal 
methods to suppress the rebels. 
Refugees fleeing into Thailand 
have reported that the Bur- 
mese army has press-ganged 


villagers into helping extend a 
railway line from Ye to Tavoy 
which might ferry troops to 
protect the pipeline. 

The Mon guerrillas, allies of 
the govemmen t- in-exile , have 
said they will attempt to 
destroy the pipeline “by any 
means possible” In protest 
against the human rights 
abuses. 

The Burmese army is likely 
to rigorously protect such a 
valuable source of hard -cur- 
rency exports. 

The pipe would have closely 
followed the route of the Japa- 
nese army’s notorious Death 
Railway on which 16,000 Allied 
and 100.000 Aslan prisoners 
died during the second world 
war until security concerns 
forced the route further south. 

Unocal has strongly denied 
that the pipeline’s construction 
will result in any human rights 
abuses or damage to the envi- 
ronment. "These allegations 


troubled us deeply. 

“We Investigated and found 
them to be false," said Unocal's 
chief executive Mr Roger 
Beach in July. 

Total holds 52.5 per cent of 
joint venture with Unocal to 
exploit the Yadana field 43 
miles offshore, which may hold 
more than 5.000bn cubic feet of 
gas reserves. 

This is roughly twice tbe size 
of Thailand’s Bongkot field, 
which is also operated by 
Total. Roughly half the ven- 
ture's investment will be spent 
on the pipeline. 

The Myanmar Oil & Gas 
Enterprise has an option to 
purchase 30 per cent of the 
venture. Thailand’s petroleum 
Authority has an option on a 
15 per cent stake. 

The New Mon State Party 
recently suspended peace talks 
with the State Law and Order 
Restoration Council because 
they say Rangoon negotiators 


wanted the Mon rebels con- 
fined to a small area and 
offered no political conces- 
sions. 

But the Thai army has been 
putting pressure on the Mon 
insurgents to enter into a 
ceasefire with the Burmese 
regime and has forcibly 
removed refugees from the 
path of the pipeline at Ban 
I-Tong where it enters Thai- 
land, according to Burmese 
opposition groups. 

The Mon insurgents say the 
Thai authorities are using the 
thousands of vulnerable refu- 
gees in Thailand as a weapon 
to persuade the guerrillas to 
enter a ceasefire arrangement 
Thailand's National Security 
Council, which takes the lead 
in co-ordinating border policy, 
argues that it merely returns 
illegal economic refugees. 

in July the Burmese regime 
achieved another step in its 
quest for respectability when 


its foreign minister attended 
the annual Association of 
Southeast Aslan Nations min- 
isterial meeting as a guest of 
the host Thailand. 

That same week 6,000 refu- 
gees at Halcockhani camp - 
who had been forced back 
across the border by the Thai 
army earlier in the year - were 
attacked by Burmese soldiers. 

The Petroleum Authority of 
Thailand said recently that the 
development of another gas 
field nearer the southern tip of 
Burma, the Yedagun field, 
could supply a further 200- 
250m cubic feet of gas a day “in 
the npgr future". 

Gas from the Yedagun field 
would probably be used to fuel 
a power station in southern 
Thailand which faces a poten- 
tial shortage of electricity fol- 
lowing slow progress of negoti- 
ations to import gas from 
Malaysia. 


Nigeria’s oil 
union loses 
sacking case 

The sacked leaders of Nigeria's 
white-collar oil union lost a 
court battle yesterday against 
their dismissals, Reuter 
reports from Lagos. 

Tbe country’s military ruler, 
General Sani Abac ha, sacked 
the union leaders and those of 
another oil uhion last month to 
try to end a strike. The stop- 
page was aimed at forcing Gen 
Abacba to hand power to Mr 
Moshood Abiola, the unde- 
clared winner of last year's 
annulled presidential election. 

Judge Roscline Ukeje dis- 
missed their application for the 
sackings to be declared uncon- 
stitutional. She said the court 
lacked jurisdiction to hear the 
case following recent decrees 
making government actions 
unchallengeable In any court. 

Mr Abiola is on trial for trea- 
son for proclaiming himself 
president in defiance of the 
army rulers. 


Court halts 
Manila’s 
VAT plans 

By Jose Galang In Manila 

The Philippine government has 
suffered a new hitch in its bid 
to launch an expanded val- 
ue-added tax (VAT) system, a 
significant component of its 
economic programme. 

The Supreme Court told the 
government yesterday to 
refrain from implementing the 
tax scheme, because a 
restraining order issued last 
June still applied. 

The court injunction was 
Issued after the filing of sev- 
eral cases separately by groups 
opposing the expanded VAT 
because they argued it was 
"unconstitutional" and would 
lead to sharp price increases. 

VAT, originally introduced 
in the Philippines in 1988, is 
being expanded under a new 
law to cover more economic 
sectors in order to bolster the 
government's revenue base. 

The government won a 
favourable ruling on the peti- 
tions, but the court said this 
did not lift the injunction, 
which was separately issued. 

After that ruling, the govern- 
ment announced it would start 
collecting the new tax from 
October 1. 

The opposing groups have 
appealed for a reconsideration 
of the August court ruling, and 
the court said that since the 
case “remained pending", the 
temporary injunction would 
continue to be in force. 

The government had hoped 
that the expanded VAT system 
would increase revenue collec- 
tions by about 8bn pesos 
(£l95m) a year, helping keep its 
budget deficit to 2.2 per cent of 
GNP this year under its eco- 
nomic programme that gained 
International Monetary Fund 
support only last June. 





financial, times Friday September 23 1994 



f L 



'ii. 


Hl 'l' plat 
H1 pm\ tt 

in India 




NEWS: INTERNATIONAL 


^L onger term outloo k sees a shift from direct to indirect taxation - but that could threaten the outcome 

Tokyo’s aim remains the same: to boost demand 


By Gerard Sakor in Tokyo 

TjV; .*** changes announced 
yesterday started life a year ago as 
an uncomplicated fiscal stimulus 
intended to breathe life into the ail- 
ing Japanese economy. 

Through a tortuous series of politi- 
co and administrative twists in the 
last year they came, for a while to 
represent rather more. Some propo- 
nents even claimed that tax reform 
was part of a broader strategy of 
social and economic reform that 
would help Japan's economy to open 
up to the consumer and to the world. 
But the final formula suggests that 


the overriding aim in the end was 
the same as ever - to boost demand. 

The key element remains the fiscal 
stimulus. The economy is benefiting 
from income tax cuts of about 
Y6,Q00bn (£38bn). The average family 
tins year will be more than Y100.000 
better off as a result The main - effect 
of the package is to maintain that 
injection of demand for the next 
three years at least Fiscal retribu- 
tion, if and when it comes, in the 
form of higher consumption tax. is 
deferred. 

That could normally be expected 
to boost consumption. But in the 
past. Japanese taxpayers have 


tended to save a very high propor- 
tion of their extra revenue from tax 
cuts - up to half by some estimates. 
That limits the benefits to the econ- 
omy of any fiscal stimulus. Worse 
still, some economists fear that if 
consumers believes the benefits of 
the tax cut will be removed in three 
years' time by an indirect tax 
increase, they may choose to set 
aside even more of the extra money 
in savings. 

But the inclusion of a clause In the 
tax, proposals to allow the govern- 
ment to reconsider the co nsum ption 
tax increase in the light of prevail- 
ing economic conditions is crudaL 


It is likely to make consumers feel 
a little less uneasy about the delayed 
tax rise. Mr Hirohiko Okumura, 
chief economist at the Nomura 
Research Institute, argued that the 
opt-out clause was crucial. 

“The income tax cut will only 
raise consumption significantly if 
the taxpayer does not think he will 
have to pay higher consumption tax 
in the future, regardless of the eco- 
nomic conditions,'' he said. 

Higher consumer demand should 
also translate into good news for the 
world's trade imbalances. There 
have been signs In the last few 
months that the high yen has 


Premier’s fast fiscal footwork likely 
to be welcomed by Japan and US 

William Dawkins reports on the reforms that follow a year of wrangling 

M 


started to stimulate imports; tha t 
process has been assisted by the cur- 
rent year’s tax cuts and is likely to 
be accelerated by the new fiscal 
s tim ulu s . 

But in the longer run, Japan's 
trading partners may be less opti- 
mistic that the chang es will radi- 
cally alter the structure of Japan's 
economy. 

If the consumption tax increase 
goes ahead as planned, it wnH repre- 
sent a significant shift in the burden 
of taxation from direct to indirect 
tax. 

It is unlikely that will encourage 
Japanese consumers to spend more 


and save less. In fact the shift from 
direct to indirect taxation normally 
has the opposite effect, since U 
raises the real cost to the taxpayer of 
spending relative to saving. 

However, the scope of fiscal policy, 
and of this particular fiscal package, 
was not intended to be so wide. 

As Ms Mrneko Sasaki Smith econ- 
omist at Morgan Stanley in Tokyo, 
pointed out: “This was never 
intended to do more than give an 
immediate stimulus, while remain- 
ing revenue-neutral in the long run. 
Real economic reform still awaits 
the opening-up and thorough deregu- 
lation of Japan's economy.** 


r Tomiichi Muray- 
ama, Japan's Social- 
ist prime minister, 
yesterday showed hims elf to be 
just as unencumbered by ide- 
ology as his new partners in 
the Liberal Democratic party. 

The fiscal reform package 
his cabinet approved includes 
a rise in consumption tax, 
opposed by Mr Morayama’s 
own Social Democratic party 
until he ditched its fiscal 
dogma yesterday, in the inter- 
ests of keeping the government 
together and staying in power. 

Needless to say, the other 
part of the scheme, cuts in 
income tares, will bolster the 
coalition’s recently rising pop. 
ularity. It will also win some 
applause from the US govern- 
ment, eager for Japanese con- 
sumers to spend more on 
imports and reduce the politi- 
cally troublesome trade sur- 
plus. The DS, never sympa- 
thetic to the Japanese finance 
ministry's attempts to increase 
the tax base, will be less happy 
about the rise in the sales levy. 

Japan's Socialists have 
thrown out their old policies at 
high speed, since talcing office 
at the end of June in a three 
party coalition dominated by 
their former enemies, the con- 
servative LDP. Opposition to 
the military and to Japan’s 


security treaty with the US 
were the first to go; consump- 
tion tax is the latest 

As a result, what started out 
only three months ago as one 
of the oddest political mar- 
riages in the world, has grown 
into an effective working alli- 
ance. Yesterday’s decision 
opens the way to ending more 
than a year of wrangling on 
tax policy, assuming the SDP 
can maintain unity on the tax 
change. It suggests Japan may 
be less of a political mess than 
it looks. 

Mr Murayama’s fast fiscal 
footwork is equalled only by 
the LDP itself, which took 10 
years of painful internal wran- 
gling to get consumption tax 
introduced in 1969. under pres- 
sure from the finance minis try 
Late the same year, the LDP 
nearly scrapped sales tax after 
losing its majority in the upper 
house of parliament because of 
popular resentment of the new 
levy. 

Ever since, the finance min- 
istry has been patiently work- 
ing to bring a rise in Japan's 
internationally low 3 per cent 
sales tax. It argues that the 
government needs to raise 
more revenue from indirect 
taxes to make up for an ero- 
sion of the income tax base 
caused by a the rising propor- 


tion of pensioners and failing 
number of wage earners. 

But the ministry’s strategy 
of adjusting Japan's lop-sided 
tax base last year became mud- 
dled up with the need to cut 
income taxes to stimulate pri- 
vate spending. Soon after tak- 
ing office in August 1993, the 
coalition government of Mr 

Mr Murayama, a 
Japanese cabinet 
novice, had little 
choice but to 
take the cue from 
his finance 
ministry advisers 

Morihiro Hosokawa, former 
prime minister, started to plan 
an income tax cut, under pres- 
sure from the US. 

The finance ministry saw its 
chance to capitalise on the con- 
fusion and achieve that 
increase in consumption tax, 
by malting it a condition of Mr 
Hosokawa's income tax cut 
The aim was for the tax 
change to be revenue neutral; 
that is to say the rise in pri- 
vate income was to be wiped 


out by the rise in consumption 
tax, due to-take effect in three 
years' time. 

Yesterday’s package sug- 
gests a rise in consumption tax 
from 3 per cent to 5 per cent 
rather than Mr Hosokawa's 
original scheme for a 7 per 
cent sales tax, but the broad 
economic Impact will be about 
the same because the income 
tax cut is smaller than that 
proposed by the former leader. 

Mr Hosokawa went for the 
ministry’s tradeoff, but made 
the mistake of announcing a 
combined income tax cut and 
consumption tax rise - last 
February - without consultin g 
the SDP. the largest partner in 
his coalition. The ensuing row 
contributed to the downfall of 
Mr Hosokawa’s government 
last April and made it impossi- 
ble for the SDP to trust his 
main adviser, Mr Ichiro Ozawa. 

Tbe ensuing government of 
Mr Tsutomu Hata, also based 
on Mr Ozawa’s influence, man- 
aged to struggle on for only 
two months until the end of 
June, when a disgruntled SDP 
threw in its lot with the main 
opposition party of the time, 
the LDP. 

Mr Murayama, a novice in 
the Japanese cabinet, had little 
choice but to take the cue from 
his finance ministry advisers 


and promised a sceptical 
Group of Seven meeting, in 
early July, just days after tak- 
ing office, that he would pro- 
duce a tax reform by the end of 
the year. 

Ironically, a cut in Japan's 
official interest rates would 
have been a faster way to stim- 
ulate demand, believes Mr 
Geoffrey Barker, chief econo- 
mist at Baring Securities. Japa- 
nese direct and indirect tax 
rates are already low by inter- 
national standards, while cor- 
poration tax rates are higher 
than average. 

But an interest rate cut 
would have weakened the yen, 
harming US hopes for a 
smaller trade surplus. That is 
why the spotlight has been 
kept on fiscal, rather than 
monetary policy in US-Japan 
economic discussions. 

Washington’s fiscal message 
was driven home again earlier 
this week in a discreet meeting 
between Mr Laurence Sum- 
mers, US treasury under- 
secretary for international 
affairs and Mr Noboru Take- 
shita. the former LDP prime 
minis ter who is now the gov- 
ernment's behind-the-scenes 
dealmaker. It has left Japanese 
bureaucrats with an uncom- 
fortable feeling that the US 
had succumbed to the tempta- 


Main points of Japan's tax 

reform proposals 

! Income tax cuts and consumption tax increase to be proposed 
In a single package of bitts tor legislation by the end of the 
year 

Income tax to be cut by Y5j500bn annually In 1995 and 1996, 
continuing an existing Y5,50Gbn cut in the current year. Of 
that Y3,500bn is to be permanent and Y2,000bn temporary. 
Sates tax to be increased from 3 per cent to 5 per cent from 
April 1997, subject to review six months before Implementa- 
tion 

Alter tax brackets, to reduce the burden on mkkSe income 
earners and smooth out the rise In marginal rates for higher 
earners. 

Base rate threshold, for married man with two chSdren, to rise 
from Y3.27m per year to Y3.59m. 


Tax and non-tax burden 

Percent 


ioo -H 


H Pwiw*iiiJ tax end mcU secutty aa % of paraonal Income 
LH Corporate tax aa % of pronto 
Indirect tax as % of cSrect tax 


80 


60 — 



40 -H 


20 - 


Japan US UK 

Souck Bank of Japan 

tion to intervene in domestic 
politics. 

But for better or worse, that 
political decision clears the 
way for a tax package to be 
presented to parliament at the 
next session, opening on Sep- 


Gormany France Canada 

tember 30. If Mr Murayama ’s 
Socialist followers prove as 
fast on their feet as he, Japan’s 
surprising new government 
will surprise its critics and 
deliver on tax, where two pre- 
vious administrations failed. 


Telecom 
laggards 
to demand 
more help 

World telecommunications 
ministers ended a meeting of 
the International Telecommu- 
nication Union yesterday domi- 
nated by developing countries 
complaints that they were 
being left behind on the infor- 
mation superhighway, Renter 
reports from Kyoto. 

The meeting of 49 ministers 
issued a vague communique 
that said they were committed 
to developing global telecom- 
munications but it left unre- 
solved how to cope with com- 
petition and how to bridge the 
gap between nations such os 
the US and developing coun- 
tries. 

The meeting Japanese city 
appeared to signal that devel- 
oping nations believed the time 
bad come to raise their voices 
and demand more help to 
improve just their basic domes- 
tic services. 

It was in stark contrast to a 
satellite speech many delegates 
heard only hours earlier from 
US Vice President AJ Gore who 
called for governments to rede- 
fine their role in telecommuni- 
cations. 

“We believe that sound mar , 
ket principles can foster the 
efficient and free flow of com- 
munications worldwide,’’ Mr 
Gore said in his speech from 
Washington to the meeting in 
Kyoto. The so-called Kyoto 
Declaration said “We will com- 
mit ourselves to work toward 
advancing the world’s tele- 
communications structure, 
enabling all our citizens to 
share its benefits as we prog- 
ress towards the 2lst century” 
But speaker after speaker 
from the Third World said they 
were struggling just to provide 
a telephone call to a village, let 
alone drive on the Global Infor- 
mation Superhighway. 

“In view of the severe imbal- 
ance of global telecommunica- 
tions development, we believe 
that the construction of the 
telecommunications networks 
for the 21st century should 
start from the actual situations 
of various countries and prog- 
ress in a planned and step-by- 
step way," Mr Wu Jichuan, 
China's minister of telecommu- 
nications. said. 


♦ 












8 



FINANCIAL times FRIDAY SEPTEMBER 23 1994 







17 & 18 October 1994 - London 


Mobile communications is taking centre stage in the worldwide expansion of 
telecommunications and this conference brings together an international panel 
of speakers to share their views on the current state of play and the trends that will 
shape the industry in the future. 


ISSUES INCLUDE: 

• EC Green Paper on mobile communications 

• US cellular industry 

• Cellular telephones in a consumer market 

• New operator strategies 

• Role of independent service providers 


SPEAKERS INCLUDE: 


Dr Herbert Ungerer 

Head of the Regulatory Department 

European Commission 

Mr Paul Franklin 

Group Director 

Hutchison Telecommunications (UK) Ltd 


Mr Barry A Kaplan 
Vice President 
Goldman Sachs & Co 


Mr W- Rudiger Struck 
Managing Director 
E-Plus Mobilfunk GmbH 


Mr Charles Wigoder 

Managing Director 

The Peoples Phone Company Pic 


Dr Joachim Dreyer 
Chairman of the Board 
Debitel Kommimikationstechnik 


FINANCIAL TIMES CONFERENCES 

in association with FT NEWSLETTER MOBILE COMMUNICATIONS 

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UD catches Finn Johnsson in its gin trap 


Guinness has ended the almost 
year-long search for a succes- 
sor to Crispin Davis, former 
managing director of United 
Distillers, with the surprise 
choice of Finn Johnsson, chief 
executive of Euroc, Sweden's 
largest building products 

group. 

The decision to plump for a 
second MD for Guinness’ 
spirits division who has no 
experience of the drinks mar- 
ket came as a surprise to City 
analysts. The departure of 
Davis - famous for the deci- 
sion to reduce the strength of 
Gordon’s gin - after little more 
than a year was widely attri- 
buted to bis experience in mar- 
keting consumer goods with 
Procter & Gamble. 

It is widely believed that 
Davis wanted UD to compete 
more strongly on price - as 
competitors are doing - while 


Guinness chairman Tony 
Greener, with his background 
in Dunhfll retained bis faith in 
building premium brands. 

Greener says there is no rea- 
son why the head of UD should 
be a drinks man, as the com- 
pany has "plenty of people 
with drinks and marketing 
experience. I was not specifi- 
cally looking for somebody 
who understands the drinks 
industry. 1 was looking for 
somebody with substantial 
international experience, run- 
ning businesses around the 
world in highly competitive 
markets and who knew his 
way around the world. 

"Finn Johnsson fulfils that 
specification. He is someone 
who is a good leader and gen- 
eral manager of a highly com- 
petitive international busi- 
ness.” Greener adds that after 
a Europe-wide search, Johns- 



son was “clearly the best can- 
didate". 

Analysts suspect Johnsson’s 
lack of drinks experience 
means Greener will continue, 
initially at least, to have a 
dominant influence on UD’s 
strategy. 

But Johnsson's achieve- 
ments at Euroc, which he 


joined as chief executive in 
1990. suggest he is not asofl 
touch. He has gained respect in 
Sweden for turning the com- 
pany round and restoring it to 
profit, in spite of 3 recession m 
building products and cement 

Before Euroc. he spent 14 
years running international 
consumer products companies 
with Swedish Match, subse- 
quently Store. He run compa- 
nies whose business interests 
were mainly outside Scandina- 
via, and gained management 
experience in the US, Western 
Europe and the Asia-Pacific 
region. . , „ . 

Johnsson says he is excited 
at returning to branded con- 
sumer goods where he spent so 
much of his career. But he has 
to wait a few months yet The 
agreement with Euroc is that 
he will not take up his new 
post until February. 


Finance director 
for Cadbury 
Schweppes 


David Happier, 47, was 
appointed group finance direc- 
tor designate of Cadbury 
Schweppes yesterday, replac- 
ing David Jink who retires in 
March next year after 32 
years' service. 

Happier joined Cadbury in 
1965 as a trainee accountant 
After qualifying in 1969. he 
completed various assign- 
ments before becoming factory 
accountant at the Bourn viDe 
plant. Promoted for bis 
accountancy acumen, he was 
also known for his rugby 
playing talents and captained 
the Bonrnville rugby team. 

In 1977 he left to become 
financial director for the 
cleaning products group Jeyes, 
which was then owned by Cad- 
bury Schweppes, leaving seven 
years late to join Trebor, the 
sugar confectionery company, 
where he be cam e finance 
director. 

In 1989 Happier was one of 
the driving forces behind the 
negotiations leading to Cad- 
bury’s purchase of Trebor and 
was appointed finance director 
of the Cadbury Group after the 
acquisition. He joins the Cad- 
bury Schweppes’ board in Jan- 
uary 1995. (See Observer). 


■ Keith Douglas-Jones has 
been appointed operations 
director of 8 UP A Membership; 
he moves from American 
Express in New York. 


Finance moves 


■ Robert Dix, formerly finance 
director of CHARTERHOUSE 
Bank, has been appointed 
group finance director of the 
parent company. Pauline 
Emburey has been appointed 
corporate finance director of 
operations and to the braid of 
Charterhouse Bank. 

■ Robin Lacey has been 
promoted to director and head 
of UK institutional marketing 
at FLEMING Investment 
Management following Patrick 
Johns' departure. 

■ Louis d’Aleneon, formerly 
director of debt origination and 
derivative marketing at Merrill 
Lynch, has been appointed md 

of UBS* financial institutions 
group for financing and risk 
management Mark Howdle, 


formerly head of global 
strategy at JJ?. Morgan, has 
been appointed director and 
head of European equity 
strategy at UBS. Daniel 
Smaller has been appointed 
director and head of equity 
emerging market sales for UBS 
in London; he moves from 
Le hman Brothers. 

■ Martin Dunnett (below left), 
formerly marketing director of 
Hill Samuel Financial Services 
Group, has been appointed UK 
marketing director of 



SCHRODER VENTURES. 

■ Tom Boardman (below 

right), formerly strategic 
change director of Prudential 
Financial Services, has been 
appointed md of NATIONWIDE 
Life and Nationwide Unit Trust 
Managers. . ^ 

■ Bjfim Ramell, formerly head 
of the London branch of 
ASLK-CGBR Bank, has been 
appointed head of institutional 
banking, northern Europe, for 
CREDIT SUISSE. 

■ Roy Keenan has been 
promoted to md of BANK OF 
IRELAND Mortgages, based in 
Reading. 

■ Debra Schinasi, formerly a 
director of Baring Securities, 
has been appointed a director 
of Global Emerging Markets 
Equities at SALOMON 
BROTHERS. 


Head of Private Finance Unit 


The Treasury has a new 
mastermind for Its efforts to 
attract private capital into the 
provision of public services. 
Richard Saunders has taken 
over as head of the private 
finance unit from Kingsley 
Jones who joins the team 
working on the department's 
fundamental expenditure 
review. 

Saunders, 42, has spent the 
past two years in Washington, 
where he was economic coun- 
sellor at the British embassy. 
His work there has included 
liais on with the administration 
and Congress on economic 


issues, banking and tax. 

Befbre that, he was Treasury 
press secretary between 19% 
and 1992, seeing Norman Lam- 
ont through the deepening 
recession and tire negotiations 
over European Monetary 
Union leading up to the Maas- 
tricht treaty. 

' A graduate of Trinity Col- 
lege, * Cambridge, Saunders 
joined the civil service in 1974, 
initially with the old Civil Ser- 
vice Department When it was 
abolished in 1981, he moved to 
the Treasury, where his posts 
have included a spell as pri- 
vate secretary to the perma- 


nent secretary. Sir Peter 
Middleton. He worked on the 
1986 building societies reform 
and covered health in the pub- 
lic expenditure division during 
the government’s national 
health service reforms. 

Saunders’ new role involves 
liaising with Sir Alistair Mor- 
ton’s Private Finance Panel 
and its full-time team in identi- 
fying projects where private 
finance could play a part His 
job will be to lift any obstacles 
blocking such projects, either 
in the Treasury or elsewhere in 
Whitehall. 

(See Leader) 


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FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


9 


★ 


NEWS: UK 


'UK alleges EC procurement malpractice 


By Andrew Baxter 

Tlie UK plans to press the 
European Commission to play 
an Increased role in monitor- 
ing the £ 500 bn a year European 
public procurement market in 
an attempt to reduce alleged 
malpractices by other member 
states. 

The move is intended to 
address concerns that British 
companies may be losing out 
in Europe because or abuses of 
tbe European Union's public 


procurement directive, which 
is intended to open all but the 
smallest public contracts to 
European-wide competition. 

The directive, introduced at 
the be ginning of last year, is a 
central element in the EU’s 
single market programme. The 
public procurement market 
accounts for about 15 per cent 
of the EU's gross domestic 
product. 

Mr Neil Hamilton, the 
Department of Trade -and 
Industry minister with respon- 


sibility for internal market 

jgsnps said many UK compa- 
nies were making the most of 
opportunities which the single 

market had brought and were 
winning new business in 
Europe. 

But. he said, “it is important 
that where the single market is 
not delivering those opportuni- 
ties. we should take action to 
put things right" 

He was unveiling the final 
report of the DTTs year-long 
public procurement review. 


conducted with the help of 
members of the Confederation 
of British Industry and trade 
organisations. 

It showed there had been no 
significant change In cross- 
border purchasing patterns. 
And it found systematic abuses 
of the system by purchasers in 
other member states which 
were likely to put British com- 
panies at a disadvantage. 

These include abuse of the 
so-called “accelerated proce- 
dure” for fast-track contracts, 


and the use of procedures for 
selecting bidders in a way that 
disadvantages foreign or non- 
traditional suppliers. 

DTI officials said individual 
complaints were few. Of about 
220 replies to the department's 
questionnaire only eight cases 
of substance remained after 
excluding companies which did 
not want to pursue the matter. 

The study said this could be 
because the legislation is 
recent and companies had little 
experience of ft, or because of 


their lack of confidence in, or 
knowledge of, available 
enforcement mechanisms. 

A 19-point action plan 
includes recommendations that 
alleged malpractice be taken 
up Immediately at a political or 
senior official level within the 
European Commission, which 
is urged to monitor the market 
more closely. UK officials said 
more needed to be done to 
advertise public contracts and 
awards properly in the ED Offi- 
cial Journal. 


Major ends row 
with Thatcher 


David Owen interprets the niceties of a peace procession to the US 

Ulster lines up for Washington 


By Kevin Brown in Pretoria 

A long-distance row between 
Mr John Major and Baroness 
Thatcher over South Africa's 
economic prospects is over, the 
prime minister said yesterday. 

The row blew up after Lady 
Thatcher told businessmen in 
Bombay that foreign capital 
was unlikely to flow to South 
Africa because of concerns 
about violence. 

Her comments - which cast 
a shadow over Mr Major’s 
three-day official visit to South 
Africa - irritated Mr Major’s 
party because they contra- 
dicted the prime minister's 
repeated declarations of confi- 
dence in the ability' of the gov- 
ernment of national unity to 
achieve prosperity. 

Mr Major welcomed a clarifi- 
cation of Lady Thatcher’s 
remarks, issued by her office in 
London after worried British 
officials pointed out the poten- 
tial diplomatic damage. 

The statement, which 
expressed support for the 
South African government and 


confidence in the country's 
economic future, “answers the 
point thoroughly**, Mr Major 
said before leaving for 
London. 

He said Lady Thatcher had 
encouraged investment in 
South Africa and assistance for 
the impoverished blade town- 
ships throughout her 11 years 
as prime minister, which ended 
in 1990. 

“That she wishes South 
Africa well, and has done so 
continuously, I don't think 
there is a shred of doubt," be 
said. 

Mr Major’s successful South 
African trip, which also 
included short visits to Saudi 
Arabia and Abu Dhabi, has 
reinforced the growing confi- 
dence among his advisers that 
the government’s worst prob- 
lems are over. 

Asked at a press conference 
in Pretoria whether the gov- 
ernment’s fortunes had 
reached a turning point, the 
prime minister responded cau- 
tiously: “No wise politician 
ever says that." 


I t has been choreographed 
more carefully than a pro- 
vincial wedding. 

Tbe post-ceasefire procession 
to Washington by Northern 
Ireland’s leading politicians is 
being accompanied by an 
attention to detail that would 
do the most assiduous matron 
of honour proud. 

These diplomatic niceties 
allow observers to assess 
where the main participants in 
the Northern Ireland peace 
process stand in the Adminis- 
tration’s eyes. This is particu- 
larly welcome since it is not 
clear what tangible rewards 
the politicians will achieve. 

The most important guest is 
Mr John Hume, i warier of t he 
mainly Catholic Social Demo- 
cratic and Labour party. His 
unmatched status is his reward 
for painstakingly building con- 
tacts on Capitol Hill over 20 
years and for his strenuous 
efforts to keep Northern 
Ireland high on the political 
agenda. 

It is significant that he was 
the first of the Ulster retinue 
to arrive. He was also granted 
an audience with President Bill 


Clinton during his meeting 
with Mr A1 Gore, the vice-pres- 
ident, on Tuesday. 

Whether his request for 
duty-free entry to the DS for 
some goods made in Northern 
Ireland and the border coun- 
ties of the Irish Republic will 
bear fruit remains to be seen. 
But his more general point, 
that US aid to the province 
should be channeled towards 
developing long-term opportu- 
nities rather than what one 
Hume aide described as “a gift- 
cheque peace dividend", will 
have received a sympathetic 
hearing. 

Other guests are the Ulster 
Unionist party delegation 
which arrived in Mr Hume's 
slipstream. They too were 
granted a meeting with Mr 
Gore as well as senior Admin- 
istration officials such as Mr 
Anthony Lake, Mr Clinton’s 
national security adviser. 

Earlier this week. Mr David 
Trimble, the UUP MP for 
Upper Bann, offered an insight 
into the delegation’s agenda, 
saying: "Our concern is to 
ensure that the pressures of 
domestic American politics do 



Hume: audience with Clinton 


not intrude into our affairs.” 

Mr Adams, due to arrive in 
the US shortly, is the black 
sheep who is likely to be kept 
away from the top table. 

The Sinn Fein president, 
who is expected to meet mem- 
bers of both the House of Rep- 
resentatives and the Senate 
Foreign Relations Committee, 
will attempt to build on the 
propaganda success of his trip 
to New York earlier this year, 
visiting at least 10 US cities. 


His visit is set partially to 
coincide with the presence in 
the US of Mr Douglas Hurd, 
the UK foreign secretary. 
According to the Foreign 
Office. Mr Hurd will make sure 
he gets the opportunity to "put 
on the record" the govern- 
ment's views on the way ahead 
for the province. There is said 
to be no question of the two 
men appearing ou the same 
programme. 

At the moment. Rev fan Pais- 
ley. leader of the hardline Dem- 
ocratic Unionist party, is the 
aggrieved relative who could 
not bring himself to attend the 
ceremony. 

This may change, however. 
There are definite signs of a 
thaw in the party's chilly rela- 
tions with London in the wake 
of Mr John Major’s promise of 
a referendum within Ulster cm 
the outcome of political talks 
on the province’s future. 

DUP officials acknowledged 
yesterday that Mr Paisley - 
currently in Canada - had 
received invitations to visit the 
US later this year and empha- 
sised that he travels there fre- 
quently on private business. 


Britain in brief 



Output 
growth may 
be slowing 

One of tbe first hints that the 
recent strong growth in UK 
manufacturing output might 
be levelling off emerged yes- 
terday in a Confederation of 
British Industry survey. 

The snrvey, which covers 
about half of UK manufactur- 
ing employment and exports, 
showed that the proportion of 
companies which expect out- 
put to increase in the next 
four months fell back in Sep- 
tember. 

Thirty four per cent of com- 
panies questioned said they 
expected output to rise, while 
II per cent said they expected 
it to decline. The positive bal- 
ance of 23 per cent was lower 
than In August’s snrvey, when 
ft had been 30 per cent 

mots that the recent surge 
in activity might be levelling 
off are unlikely to surprise the 
City, where many economists 
have been predicting that out- 
put growth would ease 
towards the end of this year. 


Ashdown hints at 
link with Labour 

Mr Ashdown, leader of 
Britain's third party, yesterday 
wound up the most fractious 
Liberal Democrat conference 
since 1989 by signalling his 
hopes that party would provide 
the reforming edge in a post- 
election partnership with Mr 
Tony Blair’s Labour party. 

In a coded message to Mr 
Blair, Mr Ashdown said the 


Liberal Democrats had 
"enough confidence in our own 
strength to make common 
cause with others to achieve 
the best for the future”. 

Senior party figures, how- 
ever. said that this week's 
gathering has been the worst 
since the conference following 
the break-up of the old Liberal- 
SDP Alliance five years ago. 


Post Office sell-off 

backed by ministers 

Kpnneth Clarke, the chancel- 
lor of the exchequer, and Mr 
Michael Heseltine, trade and 
industry secretary, yesterday 
underlined their determina- 
tion to press ahead with par- 
tial privatisation of the Post 
Office. 

At an informal meeting of 
the cabinet’s committee on 
industrial, commercial and 
consumer affairs, the minis- 
ters voiced their support for a 
majority sale of the Royal 
Mail 

Although they are under- 
stood to have the support of 
Mr Douglas Hurd, the home 
secretary, Mr John Major is 
still wary about the potential 
political cost of a decision 
Labour says will damage rural 
post offices. 


Insurers issue fire 
risk warning 

The risk of fire in larger super- 
markets is causing increasing 
concern among insurers and 
safety experts following a spate 
of losses in recent months. 

The lack of compartment 
walls, which would halt the 
spread of fire, and the absence 
of sprinkler systems and roof 
venting in many stores have 
been singled out as potential 
hazards. 

The risks were highlighted 
at a conference this week 
organised by the Fire Protec- 
tion Association, a body linked 
to the insurance Industry. 


Car output grows by 6% 


By Kevin Done 

UK car production rose by 6 
per cent last month to 7IL633 
from 86,853 in the same period 
a year ago. confirming the ris- 
ing trend of output during the 
last three months. 

During the first eight 
months, car production has 
risen by 2.3 per cent to SlB.-laO 
helped by higher output for 
export markets. 

UK car production was 


“becalmed” at around 1.375m a 
year between September 1993 
and May 1994, according to the 
Society of Motor Manufactur- 
ers and Traders, with lower 
output for export offset by 
higher production for the 
domestic market 
In recent months output for 
export has grown consistently, 
however - by 4.3 per cent y car- 
on- year in the first eight 
months to 362^09 and by 7 per 
cent in August to 28^24. 


Export growth has come 
from Rover - in particular its 
Land Rover four-wheel-drive 
vehicle division - Jaguar, 
Honda and Toyota, helping to 
offset declines at Ford, Vaux- 
hall and Peugeot and a sharp 
fall in production at Nissan. 

The SMMT lias forecast sig- 
nificant growth in production 
in the second half of the year 
in particular in response to a 
demand recovery in continen- 
tal European new car markets. 


Peugeot invests £30m in new line 


By John Griffiths 

Peugeot Talbot is investing 
around E30m at its Ryton 
plant near Coventry to start 
production of a saloon version 
of the Peugeot 306 hatchback 
early next year. 

The plant's output is to be 
increased from 1.820 cars a 
week to 2,000 a week from 
January and the extra model 


will create “several hundred" 
new jobs among Peugeot Tal- 
bot’s 70 component suppliers, 
Mr Geoffrey Whalen, deputy 
chairman, said yesterday. 

Peugeot Talbot, UK produc- 
tion and distribution subsid- 
iary of the French vehicles 
group, expects Ryton’s total 
output to rise from 73.000 tills 
year to approaching 90.000 in 
1995 and return the company 


to profitability. Last year 
Peugeot Talbot made its first 
loss - £8.7m before tax - since 
the late 1980s. 

Ryton is unlikely to be util- 
ising its full capacity of 
120,000 cars a year unless 
export demand for both 306 
models expands considerably. 
Last year some 26.000 of 
Ryton’s total output was made 
up of exports. 








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Join an art movement in Madrid. 

Recognize” an faces in the crowd? A stroll around Madrid’s galleries is always 
a social occasion. We call it the tt Paseo del Arte”. Start with the 
old masters at the Prado. JSbSlT Clinch nearby. 

Then the Reina Sofia, home to 

Picasso’s “Guernica”. Time for a little shop- 

ping^eimmte'to the Thyssen Bornemisza, one of the world’s largest 
private cbiTe^tabns. Finally, stop at a local bar to discuss life, and art. 



Passion 
for life 










10 


FIN ANCIAL TIMES 


FRIDAY SEPTEMBER 23 « tW4 


MANAGEMENT 


CHRISTOPHER LORENZ 

Learning from 
inner experience 


f it is a truism, but 
one which manag- 
ers forget all too 
easily, that compa- 
nies have a lot in 
common with most 
species in the natu- 
ral world. In order 
to survive, they 
must adapt to changes in the envi- 
ronment around them. 

The analogy is limited in that 
companies have an ability, denied 
to all but a few spedes, to change 
their environment. Witness the 
impact of Apple, Intel and Micro- 
soft on the computer industry, or 
Marks & Spencer, lkea and Wal- 
Mart on retailing. 

In order to adapt, a company 
needs to know what to change, 
and how. Hence the concept of 
"learning organisations 1 ' - a man- 
tra whose popularity is Tnah»h*d 
only by the confusion that besets 
most companies over how to pot it 
into practice. 

Since most companies tend to be 
inward-looking, they are forever - 
and rightly - being advised to 
improve their learning from out- 
side. Hence the current emphasis 
on ben chmarking , on closer con- 
tact with customers and suppliers, 
and on more effective ways to con- 
nect technology with emerging 
consumer patterns and behaviour. 

But the drive for better external 
learning is blinding companies to 
one of the most valuable sources 
of insight and added knowledge: 
their own experience. Few organi- 
sations make a serious attempt to 
analyse the lessons of their own 
recent successes and failures. 

Powerful and detailed evidence 
of how this sort of learning can 
best be achieved, from toe projects 
by which a company develops new 
products and processes, has been 
amassed in a study carried out by 
a team of US academics. 

Drawn from Harvard, Stanford, 
Massachusetts Institute of Tech- 
nology and Purdue University, the 
researchers worked closely with 
top executives in five leading US 
companies: Chaparral Steel, Digi- 
tal Equipment, Eastman Kodak. 
Hewlett-Packard and the Ford 
Motor Company, examining 20 
development projects. The compa- 
nies succeeded in learning exten- 
sively from some of them, but 


failed dismally in others. 

In a lengthy, three-article report 
on the project in the latest Har- 
vard Business Review* toe aca- 
demics argue that managers sel- 
dom realise that toe learning to be 
gained from a development project 
is often more important to toe 
company than the new product or 
process itself. By selecting pro- 
jects carefully, a company can use 
them to develop new skills, know- 
ledge and systems. 

The reason why development 
projects are such a good source of 
learning is that they are, in a 
sense, a microcosm of toe whole 
organisation, the academics argue. 
Since project teams are usually 
made up of people from many 
parts of the company, develop- 
ment projects test the stre n gths 
and weaknesses of its systems, 
structures and values. 

The academics exemplify this by 
using contrasting examples from 

Few organisations 
seriously attempt to 
analyse the lessons 
of their successes 
and failures 


Ford in toe late 1980s: toe develop- 
ment of toe compressor for an air 
conditioner from which all sorts of 
organisational lessons were 
learned and applied on other pro- 
jects; and the almost simultaneous 
development in a different part of 
the company of the 1989 Thunder- 
bird, where potential lessons were 
□either planned for nor learned. 

Probably the most successful 
learner in the study was Chapar- 
ral SteeL A mini mill specialist 
founded 20 years ago which has 
become one of toe largest US steel- 
makers, it is best known for its 
1980s innovations in horizontal 
casting techniques. 

At Chaparral, virtually everyone 
is involved continually in develop- 
ment or improvement projects. 
People work in a variety of func- 
tions. They may lead one team and 
then be members of another. But 
where Chaparral stands out from 
the other companies in the study 
is in toe systematic way it selects 
projects and then applies learning 


from one project to another. 

Chaparral does several things 
that serve as a model for every 
company, say the academics. It 
requires every project to advance 
the company's capabilities, and 
plans combinations of them in a 
logical flow to ensure that they do 
so. After each project has been 
completed. Chaparral analyses it 
to find out what it achieved or 

failed to, and why. 

Auditing of this kind is surpris- 
ingly rare, as toe academics point 
oat Only a handful of companies 
have any kind oT auditing system. 
Moreover, audits tend to be done 
merely to ensure that a project 
complies with formal procedures, 
rather than to analyse its positive 
and negative aspects so that the 
company can learn. 

Of the 20 projects in toe study, 
few were audited systematically. 
The work was sometimes done by 
reviewers reluctant to highlight 
problems for fear of embarrassing 
people and seeming unfair. As a 
result, a string of projects in toe 
same company tended to suffer 
from the same mistakes. 

In their keenness to transform 
the way managers think of devel- 
opment projects, the academics do 
not tackle in sufficient detail toe 
equally challenging question of 
how to transfer learning not just 
from project to project, but also 
from individual business units to 
toe whole organisation. 

They also fail to warn against 
one of the pitfalls of their mes- 
sage; that, in a belated rash to 
understand toe factors that deter- 
mine the gmwa or failure of indi- 
vidual projects, managers may for- 
get that wider organisational | 
Influences - including strategic 
vision, shared values and reward 
systems - have an equally impor- 
tant impact on learning. 

But the vast majority of compa- 
nies have no need to worry about 
this problem as yet They have not 
even started delving into the gold- 
mine of their project experience. 

'Regaining the laid in manufactur- 
ing. Three articles by H. Kent 
Baum. Kim Clark, Charles Hollo- 
way, Dorothy Leonard- Barton and 
Steven Wheelwright Reprint nos. 
94501-3. From HBR. Fax (US) 
617-495-6985. 


O ne issue which might 
have been on toe table at 
this week’s intensive bar- 
gaining between Bail- 
track and toe RMT transport union 
- but isn't - is the introduction of 
annualised hours for signal work- 
ers. 

After considerable debate. Rail- 
track management decided that 
such a proposal - which would 
define toe amount of working time 
on the basis of work over 12 
months, not each working week - is 
a step too far for toe moment 
"There is a lack of understanding, 
many staff have difficulty grasping 
the concept" admits Paul Radley. 
Rail track's employee relations man- 
ager. 

The long-term aim of toe state- 
owned company which runs the 
UK’s rail infrastructure is neverthe- 
less clear: Tt would give us enor- 
mous flexibility In matching 
employees’ hours to service needs, 
eliminate excessive premium pay- 
ments for overtime working and 
give us greater freedom in changing 
daily working time patterns,” 
Radley. 

His wish reflects a growing con- 
viction among managers across 
British manufacturing and services 
rtiat- annualised hours are a more 
effective and profl table way of 
organising an employee’s scheduled 
working Hwu» than the traditional 
weekly approach. 

As Gregor Gall from Stirling Uni- 
versity’s management school 
explains: “in its simplest form ann- 
ualised hours is based on the num- 
ber of working weeks in the year 
multiplied by the number of work- 
ing hours per week minus holi- 
days.” In most schemes, he points 
out, there are a number of rostered 
hours and unrostered hours that 
are hanked to allow maTimnm flexi- 
bility. 

The Department of Employment 
recently estimated that around 2m 
employees, 9 per cent of the UK 
workforce, are now covered by ann- 
ualised hours. Tlie largest propor- 
tion (15.8 per cent) are to be found 
in professional occupations with a 
high number in teaching. They are 
followed by plant and machine 
operatives (10.3 per cent) and craft 
and related occupations (9.0 per 
cent). The lowest incidence of ann- 
ualised hours is among managers 
and administrators (6.6 per cent). 

Companies which have intro- 
duced annualised hours to cover at 
least some of their employees in 
recent years include BP Chemicals 
(at its Grangemouth plant in 1933); 
British Airways; Findus Foods in 
Newcastle; Fisons Pharmaceuticals; 
Tesco Distribution; Valor Heating; 
Matsushita Electric, Hotpoint, Whit- 
bread Beer, Scottish Power, Thames 
Water, Blue Circle Industries; Man- 
chester Airport; and a number of 
national health trusts. 



Alfa Hmpn 

Annuafisad hours for signal workers remain an option for the future although 9 per cent of the UK workforce Is already covered 

Matter of years, 
not weeks 


Employers have welcomed annualised hours because 
of the flexibility they allow, writes Robert Taylor 


Companies operating anmialfepd 
hours seem well satisfied by its 
results. Half the companies sur- 
veyed by the independent group 
Incomes Data Services last year, for 
example, welcomed the “flexibility” 
such schemes provide. Matching 
work to seasonal patterns or 
demand, reduced labour costs 
through e limina tion of overtime 
and lower absenteeism are afnong 
the advantages cited. 

Earlier this year British Coal 
introduced annualised hours to 
cover just over 9.000 of its employ- 
ees as part of a package designed to 
increase flexible working in the 
pits. Under its plan there is no 
actual change in the number of 
hours worked every year. Colliery 
managers decide the length and 
starting time of shifts "in accor- 
dance with the business needs” of 
each pH while attendance patterns 
are settled after consultation with 
the unions. 

Kevan Hunt, British Coal’s 
employee relations director, argues 
the new system allows managers 
and workers "the opportunity of 
working fewer shifts and to make 
more use of leisure time”. 


Imperial Chemical Industries 
brought in annualised hours as part 
of Its 1991 staff agreement with the 
trade unin ns and an estimated 80 
per cent of Its 9,000 manual workers 
now have their working time struc- 
tured in that way. "We have found 
it an efflctent and cost-effective way 
of organising our workers,” says 
Malcolm James, ICrs industrial 
relations manager. "Absenteeism 
has been halved since the arrival of 
annualised hours, while the savings 
made from abolishing overtime 
have been used to finance other 
changes in the company.” 

T he trend, meanwhile, is not 
confined to manufacturing. 
Annualised hours contracts 
have been introduced at television 
companies such as FIN, Yorkshire 
and HTV. The Bristol and West 
Building Society has had a scheme 
for toe past three years for its staff. 
A growing number of companies 
are using annualised hours as part 
of a wider restructuring exercise. 
Its introduction is often combined 
with team-working, performance-re- 
lated pay and the harmonising of 
terms and conditions of employ- 


ment between manual workers and 
white-collar staff. 

So Ear toe arrival of annualised 
hours has not aroused much resis- 
tance from employees, many of 
whom can see advantages. As Rail- 
track’s Radley points out it ensures 
"much greater predictability of 
earnings” as it removes the uncer- 
tain fluctuations suffered by those 
paid on a weekly hours basis. 

The use of annualised hours is 
more common in mainland Europe, 
particularly in Germany and France 
where it began to grow in the late 
1970s. The concept developed in the 
UK in the mid-1980s. 

Gall argues that schemes aimed 
at smoothing peaks and troughs in 
demand carry drawbacks for 
employees. "Annualised hours can 
lead to loss in earnings, restrictions 
on the choice of when to take holi- 
days, reduced manning levels and 
inflexible shift rotas,” he claims. 
Annualised hours, however, are 
here to stay. The development, 
which reflects toe wider social revo- 
lution at work, is arguably the most 
significant in working time since 
the arrival of the five-day working 
week after toe second world war. 


# 


0 


0 


“HF PCs: It’s like having totally 

Everyone who worics for Britannia Airways is I'd like to say I'm a big man with a big job. y J W 

completely committed, of course. You have to be Well alriehL I'm nnlv five font eleven, hut m 


completely committed, of course. You have to be 
when you work for the world’s largest charter 
airline. But our Hewlett-Packard PCs never 
switch off. 


Well alright. Tin only five foot eleven, but my 
Jobh big enough. Tm responsible for developing 
my company’s corporate PC strategy. And in 
a company with 3,000 employees, that's no 
mean feat 



Basically it means I have to deckle who we buy our 
PCs from and why. The whys are reliability, 
standardisation and price. 

who, I tested ten different PC brands on 
performance for a networked Windows 
environment And HP won outright 


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12 


FINANCIAL TIMES 


FRIDAY SEPTEMBER 23 1994 


TECHNOLOGY 


X X 

The oceans may contain the ingredients to treat a variety of diseases, including cancer and arthritis, reports Victoria Griffith 

Drugged by the deep blue sea 


F rom the coral reefs of 
the Pacific ocean to 
the Antarctic, scuba 
divers are scraping 
barnacl es from, rocks, di g gin g 
deposits from the sea bottom, 
ha g giw g fish and al gaa and fill- 
ing vials with seawater in the 
hope that their findings will 
one day yield an important 
drug. 

Marine biotechnology is 
attracting the attention of com- 
panies in the US, Europe and 
Japan, many of which are 
searching the ocean for poten- 
tial drugs. They include Led- 
erle, a division of American 
Cyan amid; the biotechnology 
groups FMC and Martek; phar- 
maceutical groups Merck and 
Smithfiline Beecham; and Jap- 
anese companies Nippon Steel 
and Mitsui. 

The US government has set 
up a $45m (£29m) programme 
for marine biotechnology 
research, and the Japanese 
government is also investing 
heavily. 

Many scientists are con- 
vinced that remote regions 
may hold the secrets to treat- 
ing dozens of diseases. 
Research in the world's rain- 
forests in recent years, for 
example, has produced drugs 
such as the anti-t umor agents 
Vinblastine and Vinvristine, 
both developed from the Mada- 
gascar periwinkle. 

However, marine biotechnol- 
ogists say the potential of the 
rain forests pales in compari- 
son with that of the ocean. “It 
comes down to the numbers 
game, to accessing the greatest 
biodiversity possible.” says 
Brad Carte, senior investigator 
in bio-molecular discovery for 
SmithKline Beecham. The 
oceans cover 71 per cent of the 
earth's surface and much of 



Attracted by the sea's potential: Brad Carte of SmHhK&ne Beecham co B octo invertebrates in the Bahamas 


the life within them is still a 
mystery. To many scientists 
this offers the possibility of dis- 
covering more potentially life- 
saving drugs. 

“The ocean is an untapped 
resource.” says Henry Linsert 
chief executive officer of Mar- 
tek. “It is a rich source of 
organisms. Algae alone makes 
up a tremendous amount of the 
plant biomass on Earth.” 

Results from marine biotech- 


nology efforts have so far been 
mixed. Some of the most prom- 
ising compounds, such as the 
anti-cancer agent didemnen b, 

and flO Tne anti - inflammat ory 
agents have been dropped from 
research over the last few 
years. Yet marine biotechnolo- 
gists say failures in marine 
compound screening, just as in 
terrestrial compound, screen- 
ing, are inevitable. In the long 
run, they believe, they are 


bound to make some hits. 

This autumn, Martek hopes 
to launch a fatty acid. DHA, 
which it discovered in marine 
algae, on the European market 
The product will be added to 
infan t formula to make it more 
similar to human milk 

With pollution and misuse 
threatening a number of ocean 
species, scientists say they are 
concerned about losing marine 
biodiversity, and with it, valu- 


able compounds. This concern 
has lent their work a sense of 
urgency. 

“The ocean has been used as 
a dumping ground for a long 
time,” says Debra Steinberg, 
group leader for the Maine 
marine biotechnology effort at 
American CyanamkL “Concern 
about pollution makes scien- 
tists feel that we should try to 
find out what is there before it 
is destroyed." 

Marine biotechnology is still 
in its infancy. No leading drug 
has yet been launched. A hand- 
ful are in riiTiiral trials in the 
US, mainly cancer treatment 
hopefuls being studied by the 
National Cancer Institute, 
which in the 1970s became one 
of the first organisations to 
engage in marine biotechnol- 
ogy research. 

Sci entis ts say the sman num- 
ber of products in Htnicai tri- 
als merely reflects past lade of 
interest in the sea. With more 
companies now involved, 
marine biotechnologists 
believe the noxt two 
will see a number of products 
moving on to the market and 
many more entering clinical 
trials. Three likely disease tar- 
gets are cancer, arthritis and 
other inflammatory illnesses, 
and diseases affecting the cen- 
tral nervous system. 

It Has taken this long for 
companies to gain an interest 
in the sea, marine biotechnolo- 
gists say, because the modem 
pharmarpnHral industry grew 
out of a long-term human 
interest in the curative quali- 
ties of plants. 

“We live on land, and we’ve 
traditionally looked at terres- 
trial plants for cures,” says 
Gerald Weissmann, a professor 
of medicine at the New York 
University Medical Centre. 



t 

62nd ANNIVERSARY OF THE UNIFICATION OF THE KINGDOM OF SAUDI ARABIA 

r 

* 

a 

4 

s 

GLOBAL STRENGTH 


t- 


J 



J 






Land of 
tradition 


NATIONAL STABILITY 


4- 

Land of 
progress 


NATIONAL DAY 23rd September 1994 


On this day, as we the people of the Kingdom of Saudi Arabia celebrate our National Day, 
we greet the people of Britain and honour a friendship that has withstood the test of time. 

We have been partners in peace, partners in prosperity - may the bond grow stronger. 

KINGDOM OF SAUDI ARABIA 


“Most pharmaceutical compa- 
nies don’t have any direct 
contact with the sea. They are 
based inland; they don't own 
boats, and they don’t usually 
have a lot of divers or marine 
scientists on their staff. 
That’s why it has taken them 
so long to get interested In the 
ocean.” 

P harmaceuticals also 
faced practical barriers - 
it is only in recent 
decades that long-term, 
deep-sea exploration has 
become possible. 

Scientists also had difficulty 
replicating marine compounds 
in the lab. “It is not that 
marine compounds are more 
difficult to synthesise,” says 
W illiam Fenical. professor of 
oceanography of Scripps Insti- 
tute of Oceanography. “It is 
just that we haven't had as 
much practice in that area, and 
so we are not as good at it as 


we are at synthesising terres- 
trial compounds.” 

Scientists are excited by the 
potential of marine life. Barna- 
cles c ling in g to ocean rocks 
may yield a special glue that 
would resist salt and tempera- 
ture changes and could play a 
role in surgical procedures 
such as joint replacement. 
Sponges, which fall apart so 
easily, could provide a cine to 
the prevention of cell binding 
and in turn lead to a treatment 
for inflammatory such 

as arthritis. 

Marine life can be used not 
only as a source of compounds, 
but also as a way of testing 
drugs. The male contraceptive 
gossypoL for instance, relied 
partly on studies in sea 
urchins for its development 

Yet just as scientists turned 
from macro-organisms, such as 
plants, to microbes, many 
believe the emphasis in marine 
biotechnology will eventually 


be in microbes. “The state of 
the art is in microbes." says 
Fenical. , . 

Ultimately, one of the main 
challenges facing the industry 
may be political, rather than 
technological. The legalities of 
m arin e drug discovery are still 
nebulous. If a company devel- 
ops a cure for cancer based on 
a compound found only on cer- 
tain coral reefs, for instance, 
the government concerned 
might demand royalties. 

On the other hand, many 
companies see . the ocean as a 
far less regulated source of 
compounds than terrestrial 
areas. “As sovereign issues 
become more important in 
land research, such as in rain 
forests, companies may turn 
more to the ocean.” says Susan 
Clymer, managing director of 
the marine biotechnology . 
group NichiBei Bio. “In inter- . 
national waters, it’s still kind 
of a free-for-all." 


Worth Watching • Vanessa Houlder 



Caught in an 
ion trap 

A new detection system to 
catch drug « mn gg i w « and 
terrorists is undergoing trials 
in the UK and US. 

The ion trap mobility 
spectrometer works by 
heating samples to a high 
temperature. Once the 
relevant molecules are 
ionised, they are detected 
using a sensitive electronic 
collection and signal 
processing system. 

The detector, which has 
been developed by Ai 
Cambridge of the UK and Ion 
Track Instruments of 
Massachusetts detects 
explosives and narcotics 
between 10 and 100 time? 
more sensitively than 
existing machines. The 
system is capable of getting a 
strong signal from one 
picogram (10“ gram) of 
explosives or narcotics. 

Field trials are expected to 
be completed in airports by 
the end of this year. 

Ai Cambridge: UK. tel 0223 
834420: fax 0223 835050 


Pest control lor 
antiques 

Pest-infested antiques and 
textiles are usually fumigated 
using poisonous solvents or 
gases. A less toxic treatment, 
which does not leave the item 


in need of restoration, is 
being introduced into the UK 
by Thermo Lignum, a 
London-based company. 

The process involves slowly 
heating the article up to a 
mavimnm of 55°C, which 
destroys the pests. The 
procedure takes a few hours 
for fabrics and eight to 20 
hours for wooden objects. 

Although the principle 
underlying the technique is 
simple, it needs sophisticated 
computerised controls of 
temperature and humidity to 
prevent the articles suffering 
structural damage. . 

Thermo Lignum: UK tel 081 
964 3964; fax 081 964 2S0 

Brain damage 
breakthrough 

A drug that suppresses the 
immune system has been 
found to reduce brain damage 
associated with strokes. 
Researchers wcoking at the 
Fujisawa Institute of 
Neuroscience at the 
University of Edinburgh 
found that the 
immunosnppressgnt drug 
FK506 substantially reduced 
brain damage if it was 

ariminid fTPii up to an hOUT 

after the stroke. 

Hie research, which was 
reported in this week’s 
Nature, may shed light on the 
role in brain cells of 

immniwiphiHns , substances 

known to bind to FK506. 

University of Edinburgh : 

UK, tel 031 650 1000; fax 031 
6509381 

Driving off car 
thieves 

Car theft has become a 
European epidemic, writes 
Andrew Fisher. In Germany, 


one is stolen every four 
minutes. The theft of items 
from vehicles - particularly 
telephones and CD players - . 
is also a curse of moduli 
driving. Now, VDO Klenzle 
has produced a device to 
ward off both types of thief. 
Its VDO Combi Alarm 2000 
security system Incorporates 
contact-controlled monitoring 
of all doors and also monitors 
the interior with switchable 
ultrasonic sensors. . 

The system, which 
immobilises the car’s foe! 
pump and ignition, is 
switched on and off by radio .■ 
remote control. Its alarm can 
also be integrated with a 
central locking system. The 
Frankfurt company says the 
device activates Itself 
automatically it nbato ' 
after the ignition Is switched 
off or, via a door contact, 30 
seconds aftm* the driver 
leaves the vehicle, ft costs. 
DM920 (£380). 

VDO ^erak: Germany, 6 196 
872922 Fax 6196 873444 - 


Computer aid in : 
drugsereeruna ... 

Researchers working in the 
last-growing field of . 
combinatori al chemistry atm 
to make a wide variety erf 
compounds simultaneously,. ... 
which are then screened to 
find useful characteristics. 

The fifst set of computer 
took to assist in this process 
have been devised by Tripos, 
a US scientific software . 
company. Tripos’s Mass 
Screen software win assist . 
researchers to generate vast 
“libraries” of compounds and 
manipulate the data as they ' 
search for new leads in drug 
development 
Tripos: US. tel 314 647 1099; 
fax 314 647 9241 


THE 


DAVID 

T HOMA S 

PRIZE 

David Thomas was a Financial Times journalist killed on assignment in 
Kuwait in April 1991. Before joining the FT he had worked for, among 
others, the Trades Union Congress. 

His life was characterised by original and radical thinking coupled with a 
search for new subjects and orthodoxies to challenge. 

In his memory a prize has been established to provide an annual study/ 
travel grant to enable the recipient to take a career break to explore a theme 
in the fields of industrial policy, third world development or the environment. 

The theme for the 1995 prize, worth not less than £3,000, is: 

DOES FREE TRADE THREATEN THE ENVIRONMENT? 


Applicants, aged under 35, of any nationality, should submit up to 1000 
words in English on this subject, together with a brief c.v. and a proposal 
outlining how the award would be used to explore this theme further. 

The award winner wiU be required to write a 1500 to 2000 word essay at the 
end of the study period. The essay will be considered for publication in the FT. 


CLOSING DATE JANUARY 6 1995 


Applications to: 

Robin Pauley, Managing Editor 
The Financial Times (L) 
Number One Southwark Bridge 
London SE1 9HL 


( 






FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


13 


★ 

ARTS 


1 


Berlin tunes in to Goldschmidt 

The 91 -year-old composer’s work is being recognised at last, reports Andrew Clark 


G ermany has finally made 
its peace with Berthold 
Goldschmidt. Forced to 
nee the Nazis in 1935 for 
London, where he has 
lived ever since, the 91-year old com- 
poser has beeD the toast of this year’s 
Berlin Festival. 

Both Ills operas have been performed 
- Der gcnaltiye Uaknrei in a slick 
hyper-active Harry Kupfer staging at 
the Komische Oper (which put on a 
special Goldschmidt exhibition), and 
Beatrice Cenci in a concert version 
linked to a commercial recording. The 
nearby city of Magdeburg organised a 
parallel set of events, including the 
stage premiere of Beatrice Cenci. Gold- 
schmidt's three concertos and other 
symphonic works have also been 
played. 

The response from the German press, 
public and music establishment has 
been ecstatic. There have been full 
houses, standing ovations and a touch- 
ing ceremony at which Goldschmidt 
was presented with some early manu- 
scripts, previously thought to be lost 
The warmth of his reception can be put 
down partly to genuine delight at such 
perfonnable music, and to the sight of a 
nonagenarian enjoying every minute. 

Goldschmidt's time has come, and he 
deserves a medal for surviving to wit- 
ness it. For many Germans, he is a 
living link with a golden age in their 
country’s musical history, a symbol oF 
what might have been if Nazism had 
not intervened so decisively. But the 
Goldschmidt revival ts also a mark of 
collective guilt - a chance to atone for 
all Jewish artists whose creative spark 
was extinguished in the gas chambers. 
Would Goldschmidt's music have sur- 
vived if he too had died? Would there be 
the same interest today if it had been 
played 60 times in the 1930s? 

But that is playing with history To 
hear staged performances of his two 
operas in quick succession last week- 


end was to be confronted by a composer 
who takes care over word-settings and 
chooses juicy topics for the theatre. The 
music itself may not blaze with origi- 
nality or natural drama, but it is well- 
made and easily assimilated. The two 
operas deserved to be heard, and the 
evidence suggests they would repay far- 
ther Investigation. 

Der gewaltigc Hahrtrei (The Mighty 
Cuckold), first staged in Mannheim in 
1932. was the last opera by a Jewish 
composer to be premiered before the 
Nazis came to power. Along with hun- 
dreds of others, Goldschmidt’s music 
was quickly categorised as "degener- 
ate”. By the end of the war, the trends 

For many Germans, he 
golden age of music, a 
have been if Nazism 


of the 1920s and early 1930s had sunk 
without trace, buried In the rubble of 
the Third Reich. It was time for a fresh 
start Serialism was the new orthodoxy, 
and anyone who did not subscribe to it 
was old bat Like thousands of other 
German Jews who escaped, Gold- 
schmidt had to pick up the pieces of his 
career elsewhere - becoming a British 
citizen in 1947 and, as a conductor, 
playing an important role in the British 
Mahler vogue. Hahrtrei had to wait 62 
years until this month's revival, borne 
along on the recent surge of interest in 
Germany's “lost” interwar era. 

It Is a precocious work for a 28-year 
old. Based on a play by the contempo- 
rary Belgian dramatist Fernand Crom- 
melynck, and subtitled a "musical tragi- 
comedy”, it tells of the man who 
believes in his wife's love but cannot 
trust her. Bruno is so convinced that 
Stella is unfaithful that he forces her to 
do what he Gears most - to take other 
men to bed. She believes she is demon- 


strating her love for him by obeying. He 
ends up disguising himself and seduc- 
ing her. 

Here is a kinky story - but psycho- 
logically fascinating, fall of sexual neu- 
rosis and very much a product of its 
time. Goldschmidt's score is equally a 
period piece. He comes across as a Ger- 
man Poulenc or Ibert - a master of 
pastiche and a brilliant orchestra tor, 
with lots of expert doodling. There are 
echoes of his teacher Schreker, of Weill, 
Krenek, Shostakovich. Mahl er, jazz, 
cabaret Over a 100-minute span, you 
just sit back and watch the styles 
change. The drama itself goes nowhere. 

The Komische Oper’s production did 

is a living link with a 
symbol of what might 
had not intervened 


nothing to counter that Impression. 
Kupfer, with his designers Hans Schav- 
ernoch and Reinhard Heinrich, under- 
lined the work's surrealist fantasy, 
keeping the visual framework as 
abstract as possible. The set - an undu- 
lating pink cat-walk looped round a 
stylised see-saw and climbing rack - 
fell somewhere between wedding-cake 
and playground. Costumes and make-up 
were pure pantomime. The air was 
thick with irony, but anyone ignorant 
of the plot would have been lost The 
more Kupfer spun the stage turntable, 
the more tedious the performance 
became. An earthier, less artful 
approach would have done the work 
greater service - so it is good to hear 
another staging is planned for Bern. 

In every other respect this was a 
strong ensemble performance. Under 
Yakov Kreizberg, the Komische Oper’s 
new music director, the orchestra nego- 
tiated the different styles and rhythms 
with commanding verve. The cast was 


beaded by Yvonne Wiedstruck. who 
captured Stella’s Innocent beauty, and 
GUnter Neumann’s tormented Bruno. 

Hearing Beatrice Cenci 24 hours later 
in Magdeburg was to discover a com- 
poser who had found his own style - an 
amalgam of incisive themes and Buson- 
i-like counterpoint Commissioned for 
the 1951 Festival of Britain, but unper- 
formed for various unsavoury reasons 
until a 1988 concert in London, Cenci 
gives compact operatic form to Shel- 
ley’s sordid tale of the Italian Renais- 
sance. As in Hahrtrei, the theme is sex- 
ual violence and the exploitation of 
women, but in more sinister vein. 
Unlike Hahrtrei, it benefited immeasur- 
ably from the stage setting. 

The Magdeburg production was given 
at the Theater am Jerichowerplatz, a 
converted cinema at the former Russian 
barracks. Despite an unhelpful acoustic 
and crude lighting. Max Hoffmann's 
staging told foe story clearly and hon- 
estly, leaving plenty of room for the 
imagination. Eberhard Matthies's real- 
istic set combined simplicity and gran- 
deur, while Reoate Schmitzer’s cos- 
tumes had a 20th century flavour, 
without being too specific. 

The cast, singing in the original 
English, was headed by the Canadian 
soprano Heather Thomson as Beatrice. 
She acted sensitively and brought char- 
acter to Goldschmidt’s unvarying vocal 
moderate - not least in the beautiful 
Act 3 lullaby. Irena Sylya was the sym- 
pathetic Lucresda, and David Cumber- 
land made a properly tyrannical Count 
Cenci. Under Mathias Husmann, the 
rest of the cast, chorus and orchestra 
gave fulsome support 

The concert performance of Cenci in 
Berlin (which I heard on the radio), 
featuring Roberta Alexander, Delia 
Jones and a coarse-sounding Simon 
Estes, may have had greater musical 
polish, but Magdeburg gave the opera 
theatrical life. It is now time for a Brit- 
ish company to follow suit 




Paul Copley as the father, Tom AinsuurMuir 


Theatre/Paul Driver 

The Mortal Ash 


R ichard Cameron's new 
play at the Bush Theatre - 
his third to be premiered 
there - is a dialect drama 
about life on a council estate in 
South Yorkshire and hence, by all 
too ready extension, about the state 
of Britain, the demoralising effects 
of unemployment Actually the pri- 
vate and public themes of The Mor- 
tal Ash tend to pull apart, just as 
its tragic and comic impulses often 
seem at odds. Billed as a comedy, 
the play impresses first as a melo- 
drama m which a working-class 
family confront calamity from 
every corner but keep cracking 
jokes in the best down-to-earth, 
hard-bitten, North of England man- 
ner. 

Feuds, vendettas, hooliganism, 
estrangement of father (Tom) and 
eldest son (Chris), imprisonment of 
another son for GBH. unruliness of 
a third (Duane), cynical disaffec- 
tion of daughter (Rainy) - these are 
just some of the Wheatley family 
problems. The aviary in their back- 
yard has been smashed up as the 
play begins, and a brick been 
hurled through the window while 


Rainy (Jane Hazlegrove) was 
watching telly. Throughout the 
evening one expects farther hurled 
bricks and calamities; bat aD we 
actually see of trouble are the bare 
legs and torso of Duane (James 
Hooton) covered with nettle stings 
and Calamine after a gang-fight on 
Mortal Ash. 

Mortal Ash is an area of ponds 
that has been nn popularly filled in 
by a tough local businessman, and 
by hard-up Tom Wheatley as one of 
his labourers. A young girl died 
during a protest there, which 
leaves Tom conscience-stricken in 
ways he can barely express and 
which baffle and alienate the prin- 
cipled Chris, who has left home to 
live Impecuniously with his now 
pregnant girlfriend, Linda (Colleen 
Prendergast), scion of an enemy 
family. Much, therefore, has to be 
sorted out during the play, but 
there is always someone on hand to 
make tea when things get too diffi- 
cult, in the best Northern tradition. 

Screaming fits - Mrs Wheatley is 
particularly prone to them - and 
one-liners jostle each other in a 
way that is truer to the theatre 


than life. Each act devolves into a 
long set-piece in which mother and 
father respectively disburden them- 
selves, conceding with wry humour 
in the one case, and bitter anguish 
in the other, that parents do not 
know much more than their chil- 
dren about the way things are. One 
realises that the intended thrust of 
the play is not so much comical, 
tragical or political as lyrfcal-pasto- 
raL There is much talk of fishing 
and birds. At the end, Tom sets out 
to reconstruct his garden, building 
a pond and planting an ash. 

Director Simon Usher finds a lei- 
surely pace for the action which 
seems mostly right and at times 
even poetical. Pan! Copley is 
crisply convincing as the neo-La- 
wrentian mock-stained father home 
from work and delivering apoph- 
thegms like “Thiy either will or 
thiy won’t" when asked if Chris 
and Linda will cope with their 
child. Richard Standing makes a 
sympathetic Chris and Jane Cox is 
robustly entertaining as his soft- 
hard, wise-cracking mother. 


Bush Theatre, W12 (081 743 3388) 


Poor Superman - a Play with Captions 


S uccessful artist David (Ian 
Geldcr) is suffering from 
painter's block. His friends. 
Shannon (Jude Akuwudike), 
desperate for a sex change opera- 
tion before he dies of Aids, and 
Kryla (Elaine Collins, excellent), a 
sardonic hackette equally desper- 
ately seeking The Man. know 
exactly what ho needs: a new boy- 
friend. They are less than encluui- 
ii*ri when he picks up Matt (Christo- 
pher Simun), the naive young 
resin urnteur who just happens to be 
happily married to the devoted Vio- 
let (Kathryn Hnwden). 


Super hot Canadian playwright 
Brad Fraser takes the well worn 
theme of tainted love in POor Super- 
man - a Play with Captions, but 
embroiders it into a compelling 
insight into the power of sex over 
the lives of gay men. In director fan 
Brown's sharp and discrete produc- 
tion, which started life at the Tra- 
verse, Edinburgh (where it was well 
received on this page by Martin 
Hoyle), Fraser surely has another 
award to add to his mantelpiece. 


The only question marks hang 
over the title. The Superman leitmo- 
tif never justifies itself, and the cap- 
tions, which light up in neon at the 
back of the stage to beam the real 
thoughts of the characters behind 
their polite, and not so polite, con- 
versation, are hardly needed in 
such punchy dialogue. 

The lives of gays and young 
entrepreneurs in Calgary, Canada, 
are not the traditional stuff of 
drama but from the first you care 


desperately about Matt, with his fet- 
tering cry or "I’m not queer” as he 
falls into the arms of David; and 
Violet, whose horizons are happily 
confined to stove and nappies; 
indeed all the credulous victims 
hanging round David, who may be 
an ageing charmer but proves an ill 
equipped Superman. ■ 

Fraser’s great achievement is that 
be does not take sides: David is 
quite prepared to exploit people in 
the cause of art it is up to the 


audience to decide who are the win- 
ners and who the losers. Fraser has 
also dusted down some sharp WH- 
dean aphorisms to set alongside the 
easy lies of normal talk. 

Almost incidentally Poor Super- 
man contains some of the most 
explicit sexual acts seen on the Lon- 
don stage. The fact that they per- 
fectly underpin the action and 
develop the characters is a triumph 
for cast and director. 

Antony Thomcroft 

Hampstead Theatre (071 722 9301) 


Music in London/David Murray 

Mahler and Henze 


O n Wednesday the London 
Symphony not only 
began its cycle of Mahler 
symphonies with Michael 
Tilson Thomas - half this autumn, 
the rest in the new year - but 
showed off the newly improved 
acoustics of the Barbican Hall Mah- 
ler’s First made a very good test On 
all counts, the performance was 
resoundingly impressive. 

After the hall opened in 1982, 
there was some anxious tinkering 
with things that affected the acous- 
tic, and since then it has been 
pretty good: forward and full, 
though in orchestral tuttis there 
was sometimes a hard glare of 
upper partials. Last month new 
absorbent surfaces were attached at 
strategic places along the walls of 
the circle and stalls, and the balco- 
nies got handsome wooden fronts. 
The result is an inconspicuous but 
decisive improvement in the sound: 
no glare, but no muffling either, 
and - with the LSO. at least! - 
lovely clarity and balance. 

The most striking virtue of Ulson 
Thomas’s Mahler 1, which is a work 
studded with hazardous turns and 
abrupt switches, was that it 
sounded seamless. One w as lost in 
admiration; that effect is not to be 
achieved by mere suavity or steadi- 
ness , but only by thinking the 
music all the way through. That 
was manifestly what Ulson Thomas 
was doing, and transmitting his 
intentions completely to the orches- 
tra. There were dozens of gor- 
geously realised passages (without 
Indulgence, though the Knaben 
Wunderham tunes were illuminated 
with the utmost tenderness), and an 
overriding arc of clean purpose, 
with a grandly built triumph at the 
end. 


Perhaps a little of the First's 
sheer wildness was tamed away. 
For Mahler, this was a defiantly 
fractured symphony; to Tilson 
Thomas it seems a finished monu- 
ment, and its irruptions of village- 
band dances were tamped smoothly 
into place - there was no snarl from 
the elegant woodwinds. But it was a 
hugely musicianly reading, and 
superbly played; it promised great 
things in the symphonies to come. 

It was prefaced by James Mac- 
Millan’s new ten-minute fantasy 
Britannia, characteristically inge- 
nious and funny fit caught the audi- 
ence slightly off guard, I thought), 
and Tilson Thomas’s own From the 
Diary of Anne Frank - honest, 
effective film-music, with narration 
gently delivered by Debra Winger. 

O n the previous night, the 
Nash Ensemble hon- 
oured the composer Hans 
Werner Henze with a 
Wigmore programme of his recent 
chamber music. It is always nice to 
know what he has been up to, but 
there were no substantial surprises. 
A tiny "Adagio adagio” for piano 
trio was exquisite salon pastiche; 
five Nocturnes for violin were frag- 
ile, pretty and suggestive; three 
short songs about snow boasted a 
delectable accompanying ensemble. 

Much of the new Piano Quintet is 
interestingly angry, and the rest of 
it haunted and inward. I fancy it 
wants a bolder performance than 
the Nash players gave it this time, 
though they were scrupulous. The 
songs and dances from Henze’s 
operetta La Cubana, newly 
arranged, still sound too close to 
Weill to bear the comparison, 
despite an appealing, Zerbinetta-ish 
final number. 


International 

Arts 

Guide 


Poussin in Paris 

The main autumn exhibition in 
Paris is devoted to Poussin, 
marking the 400th anniversary of 
his birth. It can be seen at the 
Grand Palais from October 1 to 
January 2. and wHI then move to 
the Royal Academy of Arts in 
London. 

This is the first Poussin 
retrospective In Paris for 30 ^ 
years. Comprising 140 drawings 
and 100 paintings, it foBows a 
chronological pattern - starting 
with a group of youthful drawings 
and hrs apprenticeship In Rome, 
where the lucid composition and 
coo! colour of his patron 
Domcniehlno affected him 
strongly. Apart from a brief and 
unhappy interlude in Paris in the 
early 1640s, Poussin spent most 
of the rest of hi9 life In Rome, 
dying there In 1665, 

The two sets of Sown 
Sacraments ore the exhibition's 
centropicCQ- Tho first was 
completed in 1642. Today it 
comprises only six paintings: 
Baptism has been tent by the 


National Gallery In Washington, 
and the other five come from the 
Duke of Rutland's Collection. The 
exMbition will include a copy of 
Confession, the original of which 
no longer exists. The second set, 
which Poussin painted between 
1644 and 1648 for his Parisian 
patron Chantelou, comes from 
the National Gallery of Scotland, 
which has it on loan from the 
Duke of Sutherland. 

The show brings together some 
of Poussin's finest paintings on 
classical and tribflca! themes, 
including The Judgement of 
Solomon and The Triumph of 
Flora from the Louvre, and The 

Annunciation and The Adoration 
of the Shepherds from the 
National Gallery in London. 

Others come from public 
collections in New York, Chicago, 
St Petersburg and Berlin. 
Museums in ChantfHy and 
Bayonne were unable to lend 
their pictures for legal reasons, 
so they are hokflng concurrent 
Poussin exhibitions of their own. 


■ EXHIBITIONS 
AMSTERDAM 

Rtyksmuseum The Renaissance 
Print 1470-1500. Ends Oct 3a 
Closed Mon 

Van Gogh Museum Van Gogh's 
Self-Portraits. Ends Oct 9. Daily 
BASLE 

Kunstmuseum Fernand Ldger 
(1881-1955): more titan 100 exhibits 
focusing on the key creative period 
from 1911 to 1924. Ends Nov 27. 
Closed Mon 
BERLIN 

BrQcke Museum Early Kandinsky: 
a survey of a little-known period In 


the German Expressionist’s 
development, before he made his 
first abstract painting in 1910 at the 
age of 44. Kandinsky's early work is 
revealed as fuU of diverse 
influences, from Biedermeyer to the 
Fauves. Ends Nov 27. Closed Tues 
Kunstgewerfoemuseum Gianni 
Versace: retrospective of the Italian 
fashion designer, including sketches 
and theatre costumes. Ends Nov 
25. Closed Mon 
FLORENCE 

Museo Peed The Last Dreams of 
Joan Mir6: some lesser-known late 
works lent by the Pilar Foundation, 
which was set up by Mini in 1981, 
two years before his death. Ends 
Oct 30. Daily 
FRANKFURT 

Sctum KunsthaUe Nicholas de 
Stael (1914-55): retrospective of the 
Russian-born artist, documenting 
his intense but brief career. Ends 
Nov 27. Daily 
HAMBURG 

DdchtorhaBen The Century of the 
Multiple: a history of multiple art 
editions In three-dimensional form, 
ranging from early replicas of 
objects by Duchamp and Man Ray, 
to present-day mass reproductions. 
Ends Oct 30. Keith Haring 
(1958-90): 100 large-scale paintings 
and ceramics by the 
politically- motivated American artist 
Ends Nov 13. Closed Mon 
KunsthaDb David Hockney: 
drawings from 1954 till the present. 
Ends Oct 10. Closed Mon 
LONDON 

Royal Academy of Arts The Glory 
of Venice: an important exhibition 
including work by Tiepolo, 

Piazzstta, Canaletto, Betiottn, 
Guardi, Canova and Piranesi Bids 
Dec 14. The Belgian Avant-Garde 


1880-1900. Ends Oct 2. Daily 
(advance booking 071-240 7200) 
British Museum Greek Gold - 
Jewellery of the Classical World. 
Ends Oct 23. Daily 
Courtauld Institute Conrad 
Fetixmuller (1897-1977 y. the first 
exhibition in the UK to explore the 
graphic work of the leading 
second-generation German 
Expressionist. Ends Oct 30. Daily 
Tate Gallery Turner’s Ho Band Ends 
Oct 9. William Blake - Art and 
Revolution: an exhibition focusing 
on the English artist's output in the 
1790s. Ends Oct 16. Dally 
Heinz Gallery Charles Rennie 
Mackintosh - The Chelsea Years 
1915-23. Bids Oct 29 (Royal 
Institute of British Architects) 
MADRID 

Fundacld la Caixa Kandinsky and 
Mondrian - Two Roads Toward 
Abstraction: this exhibition, covering 
the years 1911-20, alms to illustrate 
foe parallels and differences in the 
stylistic evolution of two great 
pioneers of modem art Bids Nov 
13 (after which it will transfer to 
Barcelona). Closed Mon 
Fundacion Juan March Treasures 
of Japanese Art 110 works from 
the 17th to 19th century, on loan 
from Tokyo’s Fuji Art Museum. 

Ends Jan 22. Daily 
MUNICH 
KunsthaUe der 

Hypo-Kultons Hftung Edvard Munch 
and Germany: 100 paintings by 
Munch, mainly from Norwegian 
museums, phis a selection of wok 
by late 19th-century German artists 
who influenced him. Members of 
the Brfieke are also represented. 
Opens today, tiH Nov 27. Daily 
Lenbachhaus Jon Groom (b.1953): 
25 paintings by the avant-garde 


Welsh artist Ends Oct 16. Closed 
Mon 

ViSa Stuck Dream Time - 
TJukurrpa: more than 40 works by 
contemporary Aboriginal artists 
from the Australian desert Ends 
Oct 16. Closed Mon 
NEW YORK 

Museum of Modem Art Cy 
TwomWy (b1929): 45 paintings, the 
same number of works on paper 
and a representative range of 
sculpture, documenting the career 
of the American artist who moved 
to Italy In 1957. The exhibition 
includes little-known early works 
and several key pieces from 
European private collections, never 
previously seen in the US. Ends Jan 
10. The Prints of Louise Bourgeois: 
140 works by one of America's 
most distinguished contemporary 
artists, who has donated her entire 
printed oeuvre to this museum. 

Ends Jan 3. Closed Wed 
Metropofitan Museum of Art The 

Ann en berg Collection of 
Impressionist and 
Post-Impressionist Masterpieces. 
Ends Nov 27. Pharaoh's Gifts - 
Stone Vessels from Ancient Egypt. 
Ends Jan 29. Closed Mon 
Guggenheim Museum Japanese 
Art After 1945 (at the SoHo site). 
Ends Jan 8. The main museum is 
closed on Thurs, the SoHo site on 
Tues 

Whitney Museum of American Art 
Joseph Stella (1877-1946): more 
than 200 works by the American 
modernist. Ends Oct 9. Jess - A 
Grand Collage 1951-93: first 
important retrospective of the 
reclusive Gafifomian artist (b1923), 
whose diverse body of fantastic, 
dream-like paintings and collages 
has received little public exposure. 


Dec 4. American Landscapes by 
Neil Jenney. Ends Dec 11. Closed 
Mon 
PARIS 

Grand Palais Gustave Caillebotte 
(1848-1894): a retrospective of 89 
oils and 28 drawings marking the 
100th anniversary of the death of 
the painter and patron of art, who 
belonged to the circle of 
Impressionists more by the 
modernity of his subjects tfiai by 
the actual impressionist technique 
of painting. The show includes his 
masterpiece, Paris Street (1 877). on 
loan from Chicago. Ends Jan 9. 
Closed Tues, late opening Wed 
Louvre Rom Across The Channel - 
British Art in French Public 
Collections: paintings by 
Gainsborough, Reynolds, 

Constable, Lawrence and Tuner, 
plus other drawings, watercolours 
and engravings. Together they add 
up to a panorama of British art 
Ends Dec 19, Closed Tues (Hall 

Napoleon) 

Mus6e Camavalet The English in 
Paris in the 19th Century. Ends Dec 
5. Closed Mon (23 rue de Sevigne) 
Centre Georges Pompidou Joseph 
Beuys: retrospective of one of 
Germany's leading avant-garde 
artists of the postwar period. Ends 
Oct 3. Closed Tues 
ROME 

Palazzo defle Espostdoni Louisa 
Nevetson: 77 “large originals" by 
the American sculptress who died 
in 1988. Ends Oct 31. Philipp 
Hacked (1737-1807): Italian 
landscapes. Ends Sep 30. Closed 
Mon 

Villa Medici Paintings, sculpture 
and photographs by four of last 
year’s artists in residence at the 
French Academy in Roms. Ends 


Oct 2. Dally 

ROTTERDAM 

Museum Boymans-van Beuningen 
Alexej Jawlensky (1864-1941): 
retrospective of the Russian- bom 
artist who was a member of 
Kandinsky's circle in Munich. The 
exhibition features privately-owned 
works, as wed as pieces from the 
substantial public collection at 
Wiesbaden where the artist spent 
foe last 20 years of hrs life. Ends 
Nov 27. Closed Mon 
TURIN 

QaUerie Civica cf Arte Modems A 

Celebration of Art Nouveau: the 
show takes the form of a 
re-evocation of an exhibition held in 
Turin in 1902, entitled International 
Decorative Arts of the New Century. 
Included is a section on 
photography and contributions from 
museums of decorative art from 
most of Europe (especially the 
east), as well as from the 
Metropolitan in New York and the 
Getty Museum in Malibu. Ends Jan 
22. Closed Mon 
VEVEY 

Musda Jenisch Oskar Kokoschka: 
paintings, watercolours and 
drawings from the Austrian 
Expressionist’s house in Villeneuve. 
Ends Oct 16 
VIENNA 

Kunsthistorisehes Museum 
Tintoretto portraits. Ends Oct 30. 
Albrecht Dtiren a selection from the 
museum's collection of work by the 
early 16th-century German master. 
Ends Oct 30. Closed Mon 
Kunstforum Herbert BoeckI: 
centenary retrospective of the 
Austrian Expressionist, with a 
representative selection of 
landscapes, figures and religious 
subjects. Ends Dec 4. Daily 



I 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 I9W 


THE FT INTERVIEW: Giorgio Armani 


Giorgio Armani 
the fashion 
designer re- 
mains calm; 
but Giorgio 
Armani the 
entrepreneur is 
shaken. Admittedly it has been 
a bad week for Italian fashion. 
On Monday, the close-knit 
Milan community learned that 
bad*boy desig ner Franco Mos- 
chino had died at the weekend, 
aged only 44 Then it emerged 
that an inquiry into bribes 
paid to Italy's tax police had 
spread to the fashion world. 
Big names, such as Santo Ver- 
sace, brother of designer 
Gianni and c hair man of the 
Versace group, and Krizia 
(designer Mariuccia Mandelii), 
have already been questioned 
by Mr Antonio Di Pietro, 
Italy's best-known investiga- 
ting magistrate - although the 
interviews were described as 
routine. 

Mr Armani is more worried, 
however, about the problems 
of Simint, a Modena-based 
clothing company in which he 
holds a 22.5 per cent stake. 

On Saturday, the company 
reported a loss of L222bn 
(£90m) for the year to 
April 30 on turnover of 
just L266bn. A boardroom row 
about how to restate 
previous accounts to reflect 
previously hidden losses ended 
in the resignation of 
Mr Massimo Varazzani, 
Simint's chairman since 
March. 

For Mr Armani, the man 
who pioneered loose suits, it 
has come as an unpleasant sur- 
prise to find his name 
associated, albeit indirectly, 
with allegations of loose 
accounting. 

His business reputation and 
his carefully tended image 
have both been dented, and the 
Simint affair has cast a shadow 
over celebrations or his 60th 
birthday and 20 years in busi- 
ness. But it could also repre- 
sent the next phase in the 
maturing of A rmani the entre- 
preneur, which began when bis 
partner and best friend, Mr 
Sergio Galeotti, died 10 years 
ago. 

“I’ve lived through some 
pretty critical moments 
recently," says Mr Armani. “I 
found myself faced with prob- 
lems rd never come across - 
problems with lawyers, news- 
paper articles which say things 
about you which aren't true. 
That shocked me.” 

S im hit 's problems began in 
late 1992, a year after its US 
subsidiary launched a new con- 
cept called A/X Armani 





Giorgio Armani: Tve lived through some critical moments' 

Deals fall 
out of fashion 


Exchange. The stores were 
aimed at the mass market. 
unlik e the existing Giorgio 
Armani boutiques and second- 
line Emporio Armani stores, 
and were supposed to sell 
Armani jeans and other casual 
clothes, manufactured by Sim- 
int, from top locations across 
the US. 

Simint was not the first 
example of Mr Armani putting 
his money where his designs 
were. He also has a stake 
in Lnxottica, the successful 
Italian spectacle manufacturer 
quoted in the US. But in 
the case of Simint. Mr 
Armani appeared to relax his 
famously strict control over 
any venture connected with 
his name. 

“A/X was bom with a very 
precise concept of salespoints 
for A/X products and Armani 
jeans, but locations were very 
badly evaluated," the designer 
now says. 

“The personnel structure 
was also very heavy, with too 
many people - exaggerated for 
the type of work we were try- 
ing to do.” 

Simint's investment costs in 
the US bore down on the 
group’s profits, and last Febru- 
ary Mr Francesco MIcheli, the 
Milan ffnanriar who took con- 
trol of Simint in the late 1980s. 
sold his 22 per cent stake, 
claiming that the US venture 
had became too risky. 


Mr Armani now says he 
regrets the investment, and 
points to Simint as an object 
lesson in what can go wrong if 
you foil to keep control of a 
-concept. “It's the first time this 
has happened to me. I dele- 
gated a lot because I heard peo- 
ple talking with great fluency 
and competence about the 
problem mid I said, well, OK, 
they know what's what. I'll 
use them." 


H e is cagey about 
allocating blame for 
the Simint debacle, 
but feels a responsi- 
bility to do as much as possible 
to keep the company afloat 
Armani business now anmnnts 
for 90 per cent of Simint’s turn- 
over, following the loss of 
other licences. The designer 
has allowed Simint to defer 
L50bn worth of payments due 
to Armani and committed 
many of his own staff to help 
rescue the company. 

Simint's survival also lunges 
on the outcome of negotiations 
to sell the US subsidiary to Mr 
Ong Brag Seng, another share- 
holder. for L20bn, which Mr 
Armani says should be con- 
cluded shortly. 

None of this means the 
designer is hims elf short of 
cash. Giorgio Armani SpA, 
founded with Mr Galeotti in 
1975. is in the best of health in 
spite of the international races- 




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Joe Rogaly 


sioxu Armani clothing and 
accessories, from scant to suit- 
cases. turned over Ll,130bn 
last year, up 31 per cent on 
1992. Armani style (“fashion 
which helps people live better, 
not fashion which is done for 

the mass madia, for thp petitS 

bourgeois, to shock"} seems to 
have become a staple part 
of the wardrobes of the well- 
off: 

That said, it seans unlikely 
that he would now be 
described - as Forbes maga- 
zine did in 1991 on the eve 
of the A/X launch - as “one 
of the sharpest businessmen 
you are ever likely to meet", 
without at least some qualifica- 
tion. 

The S imin t affair has 
instilled a once-bitten-twice- 
shy caution into the designer. 
For example, he is cooperating 
with CVC Capital Partners - 
the European venture capital 
arm of Citicorp - an undefined 
plans to rescue GET, another 
troubled Italian supplier of 
Armani clothes, and prop up 
Simint. But Mr A rmani insists 
that his group would be an 
industrial partner and not a 
shareholder in GFT. 

“If you asked me now 
whether I wanted to take a 
shareholding in any type of 
company, I would say no." Mr 
Armani says. 

The episode has also 
reinforced Mr Armani's wish to 
exert absolute control over a 
fashion empire. “Its obviously 
been illuminating for me,” he 
says. “In our business, you 
absolutely cannot delegate to 
anyone, unless you decide sim- 
ply to exploit your name, take 
a lot of money and forget about 
it that means, however, not 
lasting long, not having a 
future and deciding to wrap 
things up. I’m still very 
young to want to wrap things 
up." 

Such an attitude raises the 
inevitable question about what 
will happen to the designer's 
business creation “after” Mr 
Ar mani, an issue which he 
admits he is only just begin- 
ning to consider in any detail. 
“I'm not so egotistical to 
think we have to close the 
bumness down just because I 
close my eyes,” he raid this 
week. 

But the lesson of Simint, his 
“first professional problem”, 
seems to he that there will 
have to be some very careful 
planning if Giorgio Armani 
SpA is successfully to outlive 
its founder. 

Andrew Hill 




Breakaway Britain 


The question 
will not go 
away. If Ulster 
is to be granted 
self-determina- 
tion, why not 
Scotland? Why 
not Wales? 
Even the most 
recalcitrant Conservative, 
afraid of rationality, fearful of 
any dilution of the mythical 
powers of a long-dissolved 
empire, must gr ant that there 
is some anomaly hoe. There is 
an explanation, of course. 
Northern Ireland has been the 
subject of terrorist violence for 
25 years, while Scotland has 
not As an excuse, that awful 
observation is insufficient It 
does not answer to the Scottish 
nationalists, whose 60th birth- 
day is being celebrated at their 
annual convention this week. 
The secessionist party is riding 
hi gh in the polls, its faith in 
the democratic process not to 
be doubted. The inference is 
unavoidable. A settlement in 
Ulster may be a long way off 
but pulling at the Irish thread 
could unravel the British pol- 
ity. 

Wait Flash back. There on 
the videotape is Mr John 
Major, standing on his soap- 
box. It is April 5 1992, the Sun- 
day before election day. The 
p rimp minister , fi ghting a cam- 
paign most people reckon he is 
about to lose, warns against 
proposals for a Scottish parlia- 
ment, or. worse in his eyes, 
Scottish independence. “If I 
could summon up all the 
authority of the office I now 
hold, through the ages, I would 
put it into this single warn- 
ing,” he declaims. “The United 
Kingdom is in danger. Wake 
up now before it is too late." 

We will never know how 
many minds were chang ed by 
that uncharacteristically pas- 
sionate moment of oratory. 
Perhaps millions, perhaps 
none. Mr Major himself is in 
little doubt that his Sunday 
speech, regarded at the time as 


quixotic, helped the Conserva- 
tives win their fourth consecu- 
tive spell of office. His views 
will certainly not have been 
unpopular in mirfitip England. 
“Consider the outcome - the 
walls of this United Kingdom 
that appear so strong, under- 
mined from within." he said. 
He urged voters to shy away 
from proportional representa- 
tion, at that time proffered by 
the Liberal Democrats alone. 
In European affairs Conserva- 
tives would "speak for Britain" 
while Labour and the Lib- 
Dems would “act for Brussels". 

Now flash forwards on your 
virtual reality screen. It Is 
spring 1996 or 1997. There is Mr 

Major again, in 

mid-campaign, 

looking more Ulster, 

and Wa 

filled-out than . 

previously. The tnel] 


Ulster, Scotland 
and Wales boast 
their own 


Serbia. Croatia, unspellable 
p i»>rp« of old Russia and what 
about Spain?" He speaks of the 
historic glories of the United 
Kingdom, the distinctiveness 
of the inland nation, the endur- 
ing values enshrined in the 
most ancient of parliaments, 
the true freedom of those fortu- 
nate eno u g h to be bora British. 
He dresses from head to toe in 
the Union Jack. That, as they 
say in New York, could go 
down like chopped liver. 

Or perhaps not. The debate 
has yet to begin. The main- 
stream opposition parties both 
promise systemic reform. 
Labour and the Lib-Dems 

would give Scotland its parti 3- 

ment, bar 

hereditary 
Gotland peers from the 

us linnet- House of Lords, 

* D03SI create regional 

OWn authorities in 


central Issue is, traditions. Europe a “* 

as always, . . . , perhaps an 

whether the IS being resliapea. assembly in 
existing set of It is time tO Wales, exact a 

rascals is to be . ■ i _ bill of rights, 

trusted with modernise the way and introduce 
management of Bri tain Is governed proportional 


the economy, 
or whether the 
rival gang is to be given a 
chance. Yet there is chatter on 
the periphery. Senior politi- 
cians are arguing about the 
fixture shape of the European 
Union, and Britain’s role in 
continental politics. Ulster has 
its own parliament, in session 
or on the way. We can imagine 
what the Scottish nationalists 
say about that Labour and the 
Lib-Dems, their campaign liter- 
ature stuffed with talk of 
national renewal, have under- 
taken to renovate the constitu- 
tion. High-flown talk of a 21st 
century settlement between 
the peoples and governments 
of these islands has become 
commonplace. 

Up springs Mr Major, onto 
the box. The prime minister 
recalls his words of four or five 
years previously. “Quebec," he 
says, “Slovakia", he adds, “and 


3 representation 

for elections to 
bodies other than the House of 
Commons. The latter is to be 
decided by referendum. No one 
is surprised that Mr Paddy 
Ashdown, the Lib-Dem leader 
who has had an unfortunate 
week at his party's conference, 
favours such a programme. 
What now needs to be estab- 
lished is the strength of com- 
mitment of Labour’s new 
leader, Mr Tony Blair. 

He must either campaign 
strongly on the reform theme, 
or quietly bury it Hie latter 
would be difficult One argu- 
ment for devolution was set 
out by Mr George Robertson. 
Labour’s shadow Scottish sec- 
retary. in a speech in Frank- 
fort earlier this month. It is 
that some give, some flexibil- 
ity. and a great deal of decen- 
tralisation of power would pre- 
vent a break-up of the United 


Kingdom. “Today’s British gov- 
ernment plays into the notion- 
alist h and by a staggering lack 
of vision In adopting constitu- 
tionally as it has done over 150 
years," he said. 

Thera is, however, another 
cose to put. Britain has not 
been well-served by the con- 
centration of power at the cen- 
tre. Since 1979 the Conserva- 
tives have behaved with the 
arrogance of the single party in 
a one-party state. They have 
weakened or overturned one 
democratic institution after 
another. They have neutered 
local government. They have 
appointed friends and cronies 
to sit on school boards, hospi- 
tal managements, and at every 
station on the network of 
quangos. The Treasury con- 
trols these unelected bodies by 
exercising authority over their 
expenditure. Meanwhile Ulster, 
Scotland and Wales, not to 
mention Lib-Dem Cornwall and 
Devon, boast th eir o wn tradi- 
tions, separate from those of 
England. Across the water, 
Europe is being reshaped. It is 
time to modernise the way 
Britain is governed. 

Mr Blair has shown himself 
to be aware of the strength of 
this argument, and conscious t 
of the appeal it has In some 
quarters, not confined to Char- 
ter 88, the energetic pressure 
group. Reform was consis- 
tently cheered by the Lib-Dems 
this week. The Labour leader 
will be spared the embarrass- 
ment of negotiating a post- 
election arrangement with Mr 
Ashdown if he can steal 
enough of the latter's voters 
away. It is hi g hl y unlikely that 
an election will be won on the 
issue of constitutional reform. 
Against that, there Is little else 
to enthuse opposition support- 
ers. Labour’s pronouncements 
on the economy too closely 
resemble the Conservatives’ to 
cause the blood to rush round 
activist veins. If there is 
to he a Left vision, it has to be 
reform. 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed and not hand written. Please set fox for finest resolution 


Package in 
need of 
reshaping 

From Mr Michael Anderson. 

Sir, Last year, John Glim- 
mer, the environment secre- 
tary. called together a group of 
manufacturers of packaged 
goods and retailers, and chal- 
lenged it to develop and 
implement a plan to recover 
value from used packaging 
(“Packaging industry given 
deadline for recycling waste", 
July 28). 

Since then, there have bera 
reports in the media of how 
this unrepresentative group of 
companies - known as the pro- 
ducer responsibility group - 
has addressed the challenge. 

Unfortunately, the group has 
foiled to broaden, its member- 
ship to reflect the importance 
of packag in g manufacturers in 
properly developing such a 
plan. 

However, it has suggested 
that these same unrepresented 
packaging manufacturers 
should pay any additional 
costs of increasing recovery 
and recycling rates. 

In addition, the group's esti- 
mates of the amount of these 
costs may well prove to be 
wildly inaccurate, 
i And now it is reported that 
the group is developing a plan 
to implement its ideas through 
a top-heavy bureaucratic 
organisation to be called Val- 
pack, whose structure will fur- 
ther disadvantage packaging 
manufacturers. 

Surely the time has come for 
Mr Gummer to call a halt to 
this process which he, himself, 
initiated. He should insist that 
the group reconstitutes itself to 
be more broadly representative 
of the entire packaging chain 
before finalising proposals 
which are of such long-term, 
strategic significance to this 
leading industry. 

Michael Anderson, 
managing director, 

Unpac Plastics International, 

Al Business Park, 

Knoltingley, 

West Yorkshire, WFll OBS 


UK economic trend 
argues against 
monetary union 


From Dr J6rg 
Schmtmeipfenmg. 

Sir, As the new set of trade 
figures released on Wednesday 
reveals, the UK economy is 
finally cashing in on Britain’s 
forced exit from the European 
exchange rate mechanism two 
years ago (“Non-EU exports 
rise to record highs”, Septem- 
ber 22). This outcome had not 
really been too difficult to pre- 
dict (Letters. September 28 
1992). 

While fears of any repercus- 
sions on the inflation front 
have proved unfounded as 
well, the opportunity costs of 
an ar tificially high exchange 
rate have become all too dear. 
“Black Wednesday", even 
though it should be considered 


a humiliation of the govern- 
ment’s economic policy at that 
time, was a real blessing 
for Britain's economic pros- 
pects. 

Moreover, it offers some food 
for thought regarding fixture 
EU economic policy- As there 
Is no way to prevent economies 
from diverging at' some point, 
any fixed exchange rate will 
eventually prove wrong as 
welL Consequently, the recent 
British experience is the best 
argument available against the 
planned European monetary 
union! 

JSig Schimmel pfennig. 
Department of Economics, 
University of OsnabrUck, 
D-49069, OsnabrUck, 

Germany 


Right way to 
tackle drugs 

From Mr I N Geoffrey Sebeyn. 

Sir, Your leader ("The role of £ 
a third party". September 21) 
only takes the argument half 
way. There are two evils asso- 
ciated with drugs. The first is 
the harm resulting from their 
use and the second is the incal- 
culable damage to society 
inflicted by the crime resulting 
from their prohibition. In my 
opinion, the second is by for 
the greater and its continuance 
is a greater moral evil since it 
could be so easily removed by 
a stroke of the parliamentary 
pen. 

We would then be free to 
tackle drug use as we do 
tobacco or alcohol abuse. The 
distinction between soft drugs 
and hard is irrelevant. 

I N G Selwyn, 

32 St Mary's Avenue, 

Nortkwood, 

Middlesex HA6 3AZ 


Model for international Sceptical 

total quality award From Mr Nigel Wilkins. 

r « Cw T nmir Is-rl. 


From Dr Rowan Astbury. 

Sir, The message in Alan 
Mitchell’s article (Manage- 
ment The Growing Business, 
September 20) is absolutely 
right — the quality assurance 
system BS EN ISO 9000 is a 
small component of total qual- 
ity and not the whole answer. 
He reports on various ways of 
trying to add total quality to 
quality assurance . . . but how 
cumbersome and confusing 
these ways sound! What is 
needed is an internationally 
endorsed, systematic approach 
to total quality, and this now 
exists. It is the model used in 
the new UK Quality Award. 
Strongly supported by the Brit- 
ish Quality Foundation and the 
European Quality Foundation, 
the model is endorsed by the 
Department of Trade and 
Industry and government gen- 
erally. The prime minister. 
John Major, will be presenting 
the first awards to UK compa- 


nies using the model in 
November. 

What is more, the model is 
designed to be used by organi- 
sations of all types, sectors and 
sizes, and can be adopted on a 
self-help basis, without the 
need for expensive advice. 

We work with voluntary sec- 
tor organisations and often rec- 
ommend that they use this 
model 

Interestingly, some large pri- 
vate sector organisations are 
now wandering how they can 
offer help to voluntary organi- 
sations working on quality. 
The principles can be the same 
regardless of sector and size, 
and such help can show the 
private sector organisation's 
commitment and expertise to 
good advantaga 
Rowan Astbury, 

Charities Evaluation Services, 
Number One Motley Avenue, 
Christina Street, 

London EC2A 4SU 


From Mr Nigel Wilkins 

Sir, I fear your leader, “Well 
done. Mr Clarke" (September 
17). gives too much credence to 
the harsh judgment of the 
financial markets over the 
UK’s inflation prospects. 

You omit any acknowledge- 
ment that the reduction in 
inflation since sterling's abrupt 
departure from the ERM was 
achieved despite highly unfa- 
vourable circumstances. Dur- 
ing that two-year period ster- 
ling has declined by 15 per emit 
on a trade- weighted basis, 
while commodity prices have 
risen by more than a third. 

In view of the scale of these 
external inflationary shocks 
that have been successfully 
absorbed by UK industry, I am 
sceptical of your comment that 
the recent mild upturn in infla- 
tion indicates an absence of 
excess capacity. 

Nigel W ilkins , 

8 Petersham Souse, 

Harrington Road, 

London SW73HD 


caflGDoaoteraflowscaflojarcaflHjformaflon tobemonitofed, Argument that company cars are tax-efficient is a fallacy 


organised and analysed. Detailing individual cans, making It easy 
to spot phone use and abuse. 

if you’d r3<e to And Out more about saving money on mobfle 
oarrvmnications. call us now. free, on 0500 30f 401 . 

IWess of eouse, you hwe money to pour down the 




, coU n o t 


secuncor cellular services 


"OS«r h »*jJbcS io stnus. 


From Mr Brian Friedman. 

Sir. Mr Michael Landon 
(Letters, September 17) seeks 
to resurrect the old - and ulti- 
mately self-defeating - chest- 
nut that company cars are still 
“a very cost-effective way of 
providing a benefit to employ- 
ees". 

The truth of the matter is 
that the government has 
finally achieved its long-stand- 
ing aim of establishing a level 
playing field in company car 
taxation. That is not to say 
that all cars are tax neutral - 
indeed there are many winners 
and losers. Rather, the playing 
field is now undulating, 


but, on average, is level. 

One common fallacy commit- 
ted by those who argue that 
company cars are still very tax 
efficient is to forget that a pro- 
portion of any cash alternative 
can also be paid tax free either 
under the fixed profit car 
scheme or on the strict statu- 
tory basis. Hence It is not cor- 
rect to state that a private car 
most be financed out of after- 
tax earnings - only the private 
use proportion of the cost need 
be so funded. 

In practice, the main factor 
in determining whether a com- 
pany car is now tax efficient is 
the relative purchasing power 


of employer and employee. As 
with other benefits in kind (for 
example, private medical care), 
the ability of the employer to 
negotiate a discounted rate is 
the true perk. However, even 
here the playing field is begin- 
ning to level out as manufac- 
turers and leasing companies 
develop ever more sophisti- 
cated personal lease arrange- 
ments and as phantom fleet 
insurance becomes more com- 
monplace. 

Notwi thstan ding the above, 
most employees will choose to 
retain their company cars for a 
variety of n on-monetary rea- 
sons: for example, there is no 


hassle Involved and they have 
no responsibility for the car. 

My belief is that the status 
car culture is slowly but surely 
being eroded as companies 
turn to flexible benefit pack- 
ages and employees begin real- 
ising the attractions of non- 
conventional pay practices. 
Those looking for an overnight 
diang p fo mmpany rar prac- 
tice will, however, be sorely 
disappointed. . 

Brian Friedman, 

head of compensation & 

benefits, 

Arthur Andersen & Co, 
l Surrey Street. 

London WC2R2PS 


,\ \ 
|1 N 


r 1 ,;. 

i 




(Kim. 





financial times Friday September 23 1994 


15 


★ 


FINANCIAL TIMES 

Number One Southwark Bridge, London SE1 9HL 
Tel: 071-873 3000 Telex: 9221 86 Fax: 071-407 5700 

Friday September 23 1994 


Deficient 

targeting 


Politicians established the rules, 
now politicians must play by 
them. In a little over two weeks, 
European finance ministers must 
establish the Qscal q ualifica tions 
for entry to Europe’s fast-track to 
economic and monetary union. 
The Maastricht Treaty provides 
them with two reference numbers, 
and a good deal of scope to fudge 
both. Given the EU’s current state 
of fiscal disarray, one of the tar- 
gets may well be dropped. The 
signs, however, are that it will be 
the wrong one. 

From an economic standpoint, 
the arguments Cor imposing fiscal 
rules for entry to European Mone- 
tary Union were always quite 
weak. Once individual govern- 
ments have handed over indepen- 
dent control of monetary policy, 
so the fear goes, they will have an 
Incentive to overcompensate on 
the fiscal side, running up unsus- 
tainable public budget deficits. 
Investors might not believe that 
the EU would allow a member to 
suffer a default In that case, 
Europe as a whole would bear the 
cost in the form of higher Euro- 
pean interest rates. 

In principle, the “no-bail-out" 
condition written into the Maas- 
tricht Treaty solves this problem. 
In truth, however, the threat 
might never be credible. The best 
reason for additional, numerical, 
fiscal constraints was that, by 
only admitting countries with a 
proven record of sound fiscal pol- 
icy, there would be less chance 
that this commitment would be 
tested, particularly in the early, 
politically sensitive stages of 
EMU's history. 

Two arbitrary indicators were 
chosen: a public budget deficit of 
no more than 3 per cent and 
national debt not exceeding 60 per 
cent of GDP. Neither is a particu- 
larly cogent indicator of a coun- 


try's ability to pursue sensible fis- 
cal policies. Certainly, few EU 
member states are likely to satisfy 
both by 1997. 

The European Commission 
appears to have decided to apply 
the deficit criterion rigorously, 
while casting a benevolent eye 
over the level of a country’s debt 
This is not surprising, since the 
Commission wants as many coun- 
tries as possible to qualify and 
knows that it is easier to meet a 
target for a deficit (which is an 
annual flow) than for the debt 
stock. In addition to Luxembourg, 
the only country already meeting 
both targets, it decided not to rec- 
ommend Ireland as a potentially 
divergent country, a decision 
which the EU finance ministers, 
rather more surprisingly, accepted 
on Monday. 

Both can justify their decision 
by pointing to the impressive 
reduction of the Irish debt ratio, 
from nearly 120 per cent in 1987 to 
the current 90 per cent Of GDP. 
But it sets a dangerous precedent 


Regardless of the current stance of 
its fiscal policy, a country with a 
high debt ratio has a greater risk 
of encountering debt service prob- 
lems than a country with a rela- 
tively low level of debt The Maas- 
tricht Treaty's chosen “safe” ratio 
may be arbitrary, but debt is tbe 
more justifiable and the more 
important of the two criteria. 

Some room for manoeuvre 
around the 60 per cent figure is 
required, but effectively deciding 
to ignore ft, by exempting coun- 
tries with ratios of 80-90 per cent, 
could prove damaging. Such a 
decision may have been necessi- 
tated by the need to offer hope to 
Belgium, whose debt ratio is far 
higher stilL But the end result will 
be the effective obliteration of the 
rally fiscal criterion that made an 
iota of sense. 


Private finance 


It is almost two years since Mr 
Norman Lament launched the pri- 
vate finance initiative. The then 
UK chancellor’s aim was to mobi- 
lise the private sector- to meet 
needs that had traditionally been 
met by the public services. A 
vision of new privately-built 
roads, railways, schools and hospi- 
tals was conjured up. 

As tbe initiative approaches its 
second birthday, that vision has 
yet to be achieved. Some modest 
projects have taken off in the 
health service, and several road 
and rail projects have been put 
out to tender. The Treasury has 
lifted its objections to financing 
new roads through shadow tolling 
- payments to the operators 
according to the number of 
vehicles using them. But there 
remains an absence of holes in the 
ground, as Mr Howard Davies, 
director general of the Confedera- 
tion of British Industry, put it last 
year. 

There is continuing scepticism 
about the initiative in Whitehall, 
and among the investment com- 
munity which might provide the 
capital. Civil servants seem to 
have unrealistic views about the 
degree of risk that the private sec- 
tor is prepared to assume in infra- 
structure projects. It is not clear 
that they or ministers are yet pre- 
pared to countenance the rates of 
return required to attract private 
capital. On the other side, the 
absence of progress cm the initia- 
tive is leading many potential 
partners in the private sector to 
conclude that involvement is 
unlikely to produce early returns. 

If the initiative is to achieve its 
promise, renewed efforts are 
needed to remove obstacles. One 
would be to provide some incen- 
tive for civil servants who succeed 


in bringing private finance into 
government services. At present, 
they can see only tbe downside of 
failure. If a project foils, or tbe 
private sector partner makes a 
large profit, there is likely to be 
criticism from the National Audit 
Office and excoriation by the Com- 
mons Public Accounts Committee. 

A positive incentive might 
encourage clearer analysis about 
the appropriate share of risk 
between the public and private 
sector. Sir Alastair Morton, chair- 
man of the panel advising the 
chancellor on the initiative, last 
night urged the government to 
“loosen up" its approach to risk- 
sharing. In a speech at the London 
Business School, he said that it 
makes sense for the public sector 
to bear the political risks of large 
infrastructure projects such as the 
channel tunnel rail link. By put- 
ting the link out to tender before 
tbe planning process is complete, 
private operators have been asked 
to bear risks they cannot control. 

Lessons should also be learnt 
from public services where private 
finance is already playing a part 
Housing associations were trans- 
ferred to the private sector in 1988 
and have « rince raised more than 
£5.5bn of private capital to supple- 
ment government grants for build- 
ing low-cost homes. A similar 
transfer for NHS trusts and grant- 
maintained schools would allow 
them to raise capital against the 
value of their assets without 
adding to public borrowing. 

Finally, some projects need to 
be started soon if private finance 
is to be attracted into public ser- 
vices. Without the prospect of lots 
of holes in the ground, the cost of 
bidding for the occasional large 
project will do little to encourage 
private sector enthusiasm. 


Opposing within 


he strengths and weaknesses of 
le British government’s often 
teatrical battle against the Euro- 
!>an Union's social dimension 
ere fully displayed in Brussels 
esterday. Mr Michael Portillo, the 
jgressivc new employment secre- 
iry, denounced a proposal to 
Ter unpaid leave to fathers upon 
ie birth of their children. But he 
ad nothing to say about the 
Kentially much more si gn i fi c a nt 
uropean works council directive 
s employee consultation, finally 
assert after nearly 15 years of 
fbate. . . 

His silence on works councils is 
consequence of Britain's dem- 
on to "upt out" from that direc- 
vc, which means that it has 
[eluded itself from tbe final dis- 
Bsfon. All the same, mans' of the 
10-plus UK companies which will 
? affected by tbe directive 
irough their European subsid- 
rtes are likely to include their 
ritish employees in its require^ 
eats. And several employers' 
rganisations have privately 
lotted that Britain was not on 
ie inside, fighting to amend the 
■oposn!. 

Whereas the UK’s opt-out has 
•nerallv been unproductive for 


Europe's employers, its persistent 
ni g glin g from within on dubious 
legislation has been more helpful 
than critics acknowledge. The new 
balance between social protection 
and job creation that is now evi- 
dent in Brussels is the result of 
several factors including high 
unemployment and the changing 
political balance in several capi- 
tals, but it also owes something to 
British truculence. 

Mr Portillo acknowledges those 
positive new signals about the 
social dimension and accepts that 
most of the directives now under 
discussion are the last gasps of an 
earlier era. 

He would probably even accept 
that in the areas of UK labour 
market legislation where Europe 
does play an important role - 
such as health and safety, and 
gender equality - it has produced 
acceptable results. But in his 
determination to wield the opt-ont 
again on relatively minor mea- 
sures, such as paternity leave, he 
is making a faulty analysis of Brit- 
ish interests. As Britain’s limited 
success in revising the Acquired 
Rights directive has shown, fight- 
ing from within can work. 



Balladur’s big 
balancing act 

The French premier is aiming for fiscal 
discipline without choking off incipient 
economic recovery, writes David Buchan 


F or someone usually so 
cautious. French Prime 
Minister Edouard Baha- 
dur bps just tafrpn a gam- 
ble. 

Tins week, less than eight months 
before the presidential election he 
hopes to win next May, he unveiled 
a deficit-slashing budget for 1995. 
He and his budget minister, Mr Nic- 
olas Sarkozy, described their plans 
to forgo income tax cuts, to freeze 
overall public spending and to 
prune another FFr25 bn (£3bn) off 
the deficit as “courageous". 

It is rather that or foolhardy, to 
place before a country recovering 
from recession and still suffering 
from record unemployment a pre- 
election budget which merely chips 
away at the heavy welfare charges 
that so deter job creation In France. 

Mr Bahadur is trying to pull off a 
delicate, multiple balancing act He 
is aiming for fiscal rigour without 
riininng off France’s incipient eco- 
nomic recovery. He wants to bolster 
his government's pro-European and 
anti-inflationary credentials while 
putting enough people back to work 
to win what is likely to be a fiercely 
contested presidential election. 

Whether courageous or foolhardy, 
the Balladur government has 
promptly set about selling its new 
budget to the French and foreign- 
ers. Mr Edmond Alphandfiry. the 
economics minister, flew to New 
York yesterday to by to convince 
Wall Street investors that France is 
still a good bet 

Foreigners shed more than 
FFrioObn of their investments in 
French government paper in the 
first half of this year. As well as 
being deterred by the general fall in 
bond prices, they were bothered by 
the prospect of a protracted cam- 
paign for next May's election and 
by an aura of corruption gathering 
round some of its leading compa- 
nies. 

Pressure is also coming from 
Europe. Early next month. Mr 
Alphand&y will be grilled by fellow 
European Union finance ministers 
on France's plans to reduce its bud- 
get deficit in order to conform with 
the Maastricht treaty convergence 
targets. By that time, the budget 
debate in the French National 
Assembly will be also under way. 

For French politicians, EU part- 
ners and foreign investors alike, the 
central question is the same: can 
the Balladur government meet the 
demands of Maastricht and of the 
markets for fiscal discipline, while 
also curing France's chronic unem- 
ployment problem? 

The government believes this is 
possible, largely thanks to the 
upswing in the economy. Shaking 
off m onths of caution. Mr Alphan- 
d6ry predicted this week that the 
economy would grow by at least 3.1 
per cent in real terms next year, 
after 2 per cent this year. 

Such growth would be kick- 
started by extra spending on public 
works and housing as well as gov- 
ernment incentives for car pur- 
chases, and led by internal demand, 
Mr Alphand&ry predicted. Increased 
purchasing power would sustain the 
rise In household consumption, 
while rising order books encour- 
aged companies to make new cap- 
ital investments. 


Internal demand would therefore 
probably rise foster in France next 
year (3J2 per cent) than elsewhere in 
Eurqpe (an average of 2.7 per cent). 
The economy minister said the 
recovery looked like being “healthy 
and durable”, unconstrained by 
worries over inflation or trade 
imbalances. Tbe rate of price rises, 
now running at 1.7 per cent a year, 
would stay below 2 per cent next 
year, while this year’s expected 
FFriJObn trade surplus would only 
slip to FFrfiOhn, he claimed. 

However these predictions turn 
out for next year, the upturn has 
already had an effect on the job 
market, with an extra 117,000 find- 
ing employment in the first half of 
this year. 

The last time such a surge took 
place was in the expansionary years 
of 1987-89. No one in the French 
government expects a repetition of 


Whether courageous 
or foolhardy, the 
government has set 
about selling its 
budget to the French 
and foreigners 


that expansion, unfettered as it was 
by Maastricht treaty fiscal disci- 
plines. 

But the Balladur administration 
says it is determined not to “waste" 
the new upturn in the way its 
Socialist predecessors failed to use 
the late 1980s boom to rein in 
France's public deficit and reform 
its labour market Even Socialists 
now privately admit that if they 
bad done more in this regard, they 
would not have Left the country in 
such a mess in 1993. 

Luckily, the Socialists left some- 
thing behind to help Mr Balladur’s 
conservatives clean up the mess: 
the expensive nationalisation pro- 
gramme of the early 1980s, in which 
they bought holdings of well over 50 
per cent in a number of big compa- 
nies. Receipts from privatisation - 
FFr94bn in the past 18 months - 
have been crucial to Mr Balladur’s 
redressing of public finances so far, 
and the government is planning a 
further FFr55bn in asset sales next 
year. 

Doubts centre on the magnitude 
and use of these receipts. Most of 
the easy, big sales have been made. 


Renault is next on the block, but its 
privatisation will only be partial 
and unlikely to bring more than 
FPrl2hn into state coffers. 

Assurances Generates de France 
is due to follow, but there is 
short-term weakness in the insur- 
ance sector. Groupe Bull - possibly 
third in line for sale - faces longer- 
term difficulties in the computer 
sector. 

At any event, the government 
made no bones this week about its 
intention to use FFr20bn of the 
FFr55bn in capital receipts to help 
plug the gap in its budget next year. 

As a result Mr Sarkozy's reduc- 
tion in the budget deficit from 
FFr30 lbn this year to FFt275bn next 
looks for the most part like an hon- 
est cut It needs to be. For the Maas- 
tricht timetable clock is ticking 
louder than ever for France. 

Mr Balladur is not exactly pas- 
sionate about eventual monetary 
union, but he likes to see himself 
and be seen as a man who likes to 
take a long-term view. Right at the 
start of his government in April 
1993 - before be could begin to hope 
the opinion polls would lift him to 
his current position of “prisidentia - 
ble“ - he laid out a five-year pro- 
gramme for France to scrape in 
under the Maastricht wire by 1997. 

Now that he has a reasonable 
hope or being in the Elysee at that 
time, he at least wants France to be 
in a position of strength to bargain 
with Germany on the terms of any 
currency union. He also thinks he 
knows with whom, and over what, 
he might be bargaining. Germany’s 
Christian Democrats, favourites to 
win next month's election, have 
come out in favour of a “hard core" 
with France within the European 
Union. 

Paris is haunted by fears of fall- 
ing behind in the long Maastricht 
march. As Mr Sarkozy said this 
week, “all our partners are commit- 
ted to a policy or deficit reduc- 
tion . . . and to think that France 
alone could dispense with such an 
effort would be a grave error”. 

The government is particularly 
impressed with the current signs 
that Germany is finally getting a 
grip on its deficits. Maastricht 
requires that the total of all public 
sector deficits - on the budgets of 
regional governments and quasi- 
state bodies as well central govern- 
ment - should equal 3 per cent of 
gross domestic product or less. 

On this week’s plans, France's 


central budget deficit should fall 
from 4.1 per cent of GDP this year 
to 3.6 per cent next, but its overall 
public sector deficit will next year 
be no lower than 4.6 per cent of 
GDP. Most EU countries have a 
problem here. 

But France has two particular dif- 
ficulties in closing the sp ending gap 
outside its central budget. The first 
is that, in contrast to other EU 
countries except Belgium, it is still 
in the process of devolving more 
power and money to its regions. 
Paris is thus ill-placed to lay the 
heavy hand of Maastricht on its 
regions - though an indirect start 
was made this week with the gov- 
ernment's decision to reduce the 
subsidy tt pays mmpwnfaf on their 
local tax bills. 

The second, and far more impor- 
tant, difficulty is the expansion of 
off-budget welfare deficits. The 


Balladur wants 
France to be strong 
enough to bargain 
with Germany on the 
terms of any 
currency union 


French state is now increasingly 
assuming responsibility for these 
deficits, for two reasons. 

First, the deficits are now beyond 
the means of employers and unions 
whose payroll contributions have 
traditionally funded much of the 
French welfare system; the govern- 
ment took over FFrlQObn worth of 
the welfare debt accumulated in 
1991-93, and may have to do the 
same with this year’s estimated def- 
icit of nearly FFrGObn. 

Second, virtually everyone agrees 
in France that levying welfare 
charges on the workforce simply 
discourages employment, and that 
welfare costs should be progres- 
sively shifted more to the central 
budget and tbe general taxpayer. 

But views vary on the desirable 
pace of this shift Those who think 
it particularly Important that the 
deficit be reduced or contained are 
keen that it take place rapidly; 
those who see the former as less 
important would be content with a 
slower shift 

This is where France’s European 
policy and its impending presiden- 
tial election come in. The European 


Parliament elections in June 
showed that France remains 
divided over Maastricht. To tbe 
alarm of the centre-right coalition 
government, 14 per cent of the vote 
went to the list led by Mr Philippe 
de Vilhers. an anti-Maastricht con- 
servative. 

That foot could further fuel the 
undeclared but now overt rivalry 
between Mr Balladur and Mr Jac- 
ques Chirac, leader of the RPR 
gaullist party, for the presidency. 
Mr Chirac is not anti-Maastricht, 
but equivocal about it In his quest 
to squash Mr Balladur's presiden- 
tial pretentions, he may well cast 
about for the de Villiers vote. 

That would mean adopting a less 
rigorous approach to the Maastricht 
convergence criteria. The question 
is how he is to start marking out 
his policy differences on the issue 
with fellow-gaullist Mr Balladur, 
and when. 

He could start to do so in next 
month's budget debate. Mr Bernard 
de Froment, the RPR deputy who 
advises Mr Chirac on budgetary 
matters, rejects “fetishism on balan- 
cing tbe budget” and the i dea that 
“employment levels can be by 
the play of the market alone". Many 
in the Chirac camp in riiq g to the 
‘don’t-just-stand-there-intervene’ 
school of economics. However, for 
tbe moment, Mr Chirac is produc- 
ing silence, not ideas. 

H is muteness is in 
sharp contrast to Mr 
Valery Giscard d’Es- 
taing, president of the 
government’s other 
coalition party, the centrist UDF. 
The ex-president has thrust his oar 
into the debate with a series of 
detailed articles in Le Figaro, show- 
ing how welfare charges of up to 40 
per cent levied even on tbe mini- 
mum wage of FFr6,010 a month 
negate any incentive by employers 
to hire low-skilled workers. He 
urged the government to make deep 
cuts in these welfare charges, to be 
offset by a temporary hike in value 
added tax. 

It is hard to read the plan as Mr 
Giscard d’Estaing’s launch -pad to 
regain the Elysfie next year. The 
Figaro articles are more like some- 
thing penned by a young finance 
minister, as Mr Giscard d’Estaing 
was back in the early 1960s, than 
the vague generalities beloved of 
senior French politicians like the 
68-year-old UDF leader now is. 

But the ex-president’s interven- 
tion will give yet a further twist to 
the budget debate that will set the 
shape of the coming presidential 
contest Mr Giscard d'Estaing is 
basically in the same camp as Mr 
Balladur, but he leads a different 
party, the UDF, and wants the 
prime minister to be more radical in 
allying job creation to budget rig- 
our. Mr Chirac, by contrast is of 
the same RPR party as Mr Balladur 
but sees a more fundamental con- 
tradiction in the prime minister’s 
“budget rigour plus jobs" approach. 

It Is small wonder, therefore, that 
despite the impression Mr Balladur 
was seeking to give this week of 
courageous constancy, the Interna- 
tional markets believe French eco- 
nomic policy will take a political 
buffeting in the next eight months. 


Observer 


Party time for 
unemployed 

■ Jacob Haugaard, a 42-year -old 

comic satirist is laughing all tbe 
way to the Danish parliament. 

Calling for uncontroversial social 
goods such as a following wind on 
cycle tracks, he is only the second 
Independent candidate to secure 
election in nearly 80 years. 

It’s a case of seventh time lucky 
for Haugaard and his Party of 
Consciously Work-shy Elements 
who look forward to the day when 
unemployment is not a mere UL5 
per cent as now. but 73 per craft. 

A familiar figure in television, 
cinema advertising and through his 
one-man shows, Haugaard grabbed 
23£ll votes in ins Jutland 
constituency of Aarhus, Denmark's 
second-largest city. He had hoped to 
pull in 25,000 votes; the shortfall he 

ascribes to one of his least popular 
proposals - less sex in school staff 
rooms. 

While Haugaard promises to treat 
his FOlketing membership as a 
practical joke, establishment i 

politicians fret as to what his 
election says about their profession 
- as well they might. 


Global village 

■ Gin drinkers and others who 
have been hanging on thirstily to 
see who would replace Crispin 
Davis as bead of Guinness's spirits 


division. United Distillers, were 
yesterday left uncertain as to 
whether to raise their glasses in a 
toast. An almost 12-month search 
has c ulmina ted in the hiring of the 
boss of a Swedish cement company. 

Sadly, Finn Johnsson, chief 
executive of Euroc. may well not 
bring immediate cheer by reversing 
the dastardly act committed by his 
predecessor, who reduced the proof 
of Gordon’s gin to 37.5 per cent from 
40 per cent But he will certainly be 
able to put to use those 
international marketing skills about 
which his prospective employer was 
yesterday enthusing. While 
followers of the drinks business 
were enquiring as to what Euroc 
did for a living, Guinness was 
inundated by calls from curious 
Swedish journalists who cheerfully 
admitted that they had never heard 
of the British company. 


Buoyancy test 

■ Limping hack under tow to the 
Hamble River, near Southampton, 
last night was a dismasted 41-foot 
Beneteau sailing vessel named 
fn gotism . Its doughty crew, who 
had dispatched a Mayday rail in the 
early hours as they struggled 
against the elements off Barfleur in 
the Bay of the Seine, hailed from 
the registrar's department of tbe 
Bank of England in Gloucester. And 
yes. lngotism is the pride of the 
fleet at the 20-year-oid Bank of 
England Sailing Club. 

Open to all staffers working for 



the Old Lady, the Club boasts 
nearly 200 members, and the 
Commodore is none other than 
Eddie George, who inhabits that 
rank not by virtue of his 
governorship but because he enjoys 
messing about in boats. While the 
good ship will, at best, be in dry 
dock for some time, all hands were 
safe. The governor was on terra 
firma all day, and the gilt-edged 
market for once, was not taking on 
water rather yesterday. 


Hungry for news 

■ There have not been many 
laughs in the White House recently. 


but at least the place is now 
acquiring a public face with a 
well-developed sense of humour. 

Mike McCurry. a cheerful 
Californian veteran of the Clinton 
campaign who has been an effective 
mouthpiece for the state 
department is about to take on 
some of Dee Dee Myers's functions. 
The president’s press secretary 
herself is being given “broader 
responsibilities” - whatever that 
may mean 

One of McCurry’s better moments 
came last Saturday. Bored with 
wailing for news from Carter's Haiti 
team, he and his boss, Tom Donilon, 
ambled over to the White House to 
share a pizza. Wolf Blitzer. the 
hyperactive White House 
correspondent for CNN, spotted 
them and immedia tely went on air, 
speculating that something big was 
about to break. 

McCurry watched it all on TV. At 
a later briefing he revealed: “It was 
pepperoni, Wolf." 


Unappetising 

■ John Major ended his epic trip to 
South Africa with a private visit to 
a safari park yesterday, predictably 
insisting that any resemblance 
between him and a dodo was a 
ghastly mistake: “I am not an 
endangered species he piped, a 
remark surely destined to find its 
home in the quote books alongside 
“never had it so good" and “there is 
no alternative". 

Nonna Major did her bit for 


wildlife, too, courtesy of knife and 
folk. Sim lunched at a well-known 
Johannesburg restaurant which 
specialises in traditional dishes 
such as crocodile, worms and boiled 
ox-tripe - not that she tucked into 
that sort of stuff “She was really 
nice but we didn't think she'd like 
them," the proprietor remarked 
realistically. 


Blue-eyed boy 

■ What a relief. When China finally 
gets its hands on Hong Kong in 
1997, nothing will change except “a 
yellow-faced Chinese, not a 
blue-eyed British" will be in charge. 
And that's reasonably official, 
coming as it does from China's 
ambassador in Singapore, Yang 
Wenchang. “Even driving will be on 
the left side of the road. In China 
we drive on the right side," he 
added. Large ones all round at the 
Jockey Club please. 


Toothless 

■ More whispers that Kenneth 
Baker, former UK cabinet minister, 
is poised to return to government 
The Beast of Bodmin, a large 
cat-like creature, is still supposedly 
roaming the west of England. So 
the reasoning is that Baker, as 
home secretary at the time of the 
Dangerous Dogs Act 1991, is just the 
man to deal with dangerous beasts 
- particularly a sheep in wolfs 
clothing. 


N 




f SENIOR 
\ FLEXON/CS 


A world leader in 
flexible connectors 

Tel: 0923 775547 
A Division of Senior Engineering Group pie 


FINANCIAL TIMES 

Friday September 23 1994 




\ A FINANCIAL TIME ^ 
( for change ^ 
| WcwjS 


Britain opts out of works council ruling for trans-European companies 


UK vetoes EU parental leave plan 


By David Gardner in Brussels 
and David Goodhart in London 

The UK yesterday vetoed 
European Union attempts to 
extend statutory parental leave 
to fathers. It also formalised its 
divorce from its 11 partners on 
EU social policy by staying out or 
new rules for elected works coun- 
cils in up to 1,500 trans-European 
companies. 

The European Commission will 
now recast the parental leave 
proposal for the U to go ahead 
for the second time without the 
UK, under the social chapter of 
the Maastricht treaty, from 
which Britain has an opt-out. 

Mr Michael Portillo, UK 
employment secretary, on his 
debut at a meeting of EU employ- 
ment ministers in Brussels, said 
plans to give fathers of new-born 
or adopted children the right to 


three months' unpaid leave 
would be “immensely disruptive 
and destructive”. 

“As Ear as the UK is concerned, 
this is not a right I think we 
should extend at a time of very 
high unemployment." he told 
journalists. 

Mr Portillo, a leader of the 
right-wing Euro-sceptics in the 
Conservative party, denied that 
the UK’s veto was evidence of the 
emergence of a multi-speed 
Europe. “We are just going in 
different directions." 

Asked whether he would per- 
sonally want to spend time with 
a new-born child if he became a 
father, Mr Portillo sai± “Yes, and 
my employer could give me paid 
holiday and I would arrange that 
with my employer.” 

On parental leave and the 
works councils directive, UK 
companies, and “foreign compa- 


nies operating in Britain", would 
have a choice denied to the 11 
other EU member states, Mr Por- 
tillo added. 

Offered a four-year exemption 
from the paternal leave provi- 
sions. with a review in 1999. Mr 
Portillo said: “The best favour I 
can do the Council [of Ministers] 
is to say that these compromises 
will not work, because it is a 
matter of principle." 

All EU member states except 
the UK and Ireland already have 
some provision for paternity 
leave, and in all but Belgium's 
case, it is more generous than the 
EU proposal. 

On works councils, companies 
inside the UK are legally exempt 
from the directive, which is 
intended to ensure .that workers' 
representatives in companies 
employing more than 1,000 peo- 
ple, and more than 150 in at least 


South Africa disappointed 
at European credit rating 


By Mark Suzman and Kevin 
Brown in Johannesburg aid 
Graham Bowley hi London 

South Africa has been given a 
disappointing rating by Ibca, the 
European credit rating agency, in 
the first formal investment risk 
assessment since April's first all- 
race elections. 

The rating or BB fails short of 
government hopes for a BBB rat- 
ing, which would qualify as 
investment grade. The decision 
puts it in the same category as 
countries such as Mexico, Hun- 
gary and Argentina. 

In Johannesburg, Mr John 
Major, the British prime minis- 
ter, nevertheless struck an 
upbeat note at the end of a three- 
day stay, saying that he had been 
impressed by the ability ana 
determination of the coalition 
government which took power in 
May. 

“The South African govern- 
ment is well aware of the need to 
create the right climate for the 


private sector and private enter- 
prise," he said. 

South Africa has been seeking 
an international credit rating 
since its April elections and has 
appointed Goldman Sachs, the 
US investment bank, to represent 
it to the main agencies. 

South African government 
bonds fell on disappointment 
among domestic investors that 
the country had been assigned a 
sub-investment grade rating. As 
prices fell, yields rose by 28 basis 
points to 16.49 per cent 

“There is little surprise outside 
of South Africa about the deci- 
sion," said Mr Graham BeQ, of 
Baring Securities in London. 

He added: “However, this reac- 
tion is likely to be short-lived. 
Ibca is not as widely recognised 
as Moody’s and Standard & 
Poor’s, the two major American 
agencies. 

“Their ratings, expected next 
month, win provide more of a 
benchmark." 

Although the country has bor- 


rowed money in the European 
markets without an official rat- 
ing, the government is known to 
be particularly keen to get access 
to the US market 
If Moody’s and S&Ps give the 
same rating, this would preclude 
some big funds from buying 
South African bonds and force 
the country to pay a p remium on 
any international issues it might 
make. In its June budget, the 
government announced its inten- 
tion to raise RLSbn ($500m) from 
international capital markets in 
the current financial year. 

In its report, Ibca acknowl- 
edged that South Africa benefited 
from good physical infrastruc- 
ture, an advanced financial sys- 
tem, strong managerial talent 
and relatively low foreign debt 
It warned, however, that the 
level of imports remained high 
and said that exports remain too 
dependent an primary commodi- 
ties. 

Major in S Africa, Page 6 


Japanese tax I French bank delays results 


Continued from Page 1 

Seven industrialised country 
partners at their summit in July. 
Frefh legislation will be needed if 
the review results in a change to 
the agreed rise in sales tax. 

Yesterday's accord is a blow to 
the finance ministry’s austere fis- 
cal policies because it will have 
to issue bridging bonds to fund 
the loss of revenue, said officials. 

In theory, the impact on gov- 
ernment revenues over time will 
be neutraL But as the proceeds of 
the rise in consumption tax have 
already been earmarked for extra 
welfare spending, the ministry 
will have to depend on increased 
economic activity to generate the 
rise in tax income need to pay for 
its extra borrowing. “We regard 
this as a major problem,” said a 
finance ministry official. 


Continued from Page 1 

delay in producing its results was 
“embarrassing". However, it 
emphasised that it still had the 
full support of the government 

Mr Jean Sassure, a hanking 
analyst with Soctetg G&terale in 
Paris, said Credit Lyonnais could 
not cover its bad debts without 
additional government support, 
and estimated that special addi- 
tional restructuring provisions 
for the first half of the year 
would exceed FFrlQbn. 

The delay is understood to 
have been caused less by the gov- 
ernment’s refusing to accept the 
inclusion of extra provisions than 
by difficulties in finalising the 
way in which additional support 
should be provided - through 
cash, guarantees or other meth- 
ods. 


Mr Jean Peyrelevade, the chair- 
man appointed by the govern- 
ment, has been holding a soles 
of discussions with nrinlsto s in 
preparation for the announce- 
ment of the bank's restructuring. 
The announcement is expected 
before the end of the year. 

As for back as June, the direc- 
tors bad scheduled a board meet- 
ing and publication of the results 
for yesterday. A decision was 
finally taken to postpone only on 
Wednesday, when it became clear 
that not all details had been 
agreed. The delay may be for at 
least two weeks. 

Credit Lyonnais’s eertificots 
dHnoestissemmt - the only ones 
traded - closed 5.6 per cent down 
at FFrtOL After the company’s 
announcement, they reached a 
low for the year at one point of 
FFr390, down 7.05 per cent 


two member states, are consulted 
on cross-border decisions that 
affect them, such as redundan- 
cies and investment relocation. 

However, about round 100 UK 
companies operating in mainland 
Europe wil be covered, against 
some 300 if the rules had applied 
oh British territory. Among the 
most affected, according to a Ger- 
man study, will be 450 German 
companies. 250 US corporations 
in Europe, and 220 cross-border 
French concerns. 

Senior EU officials said Britain 
could not stand apart for ever. 
“The rights of workers cannot 
end at borders” in a frontier-free 
single market, argued Mr Horst 
Gunther, deputy labour minister 
of Germany, which chaired yes- 
terday's meeting. 

EU single market talks. Page 2 
Editorial Comment Page 15 


World Bank 
set for 5% 
budget cut 

Continued from Page 1 


what our shareholders want us to 
do there is very little room to 
cut" she said. 

Junior bank project managers 
also expressed concern that the 
budget cuts could make it more 
difficult for them to fulfil Mr 
Preston's requirement that they 
should spend more Hwip supervi- 
sing the implementation of their 
projects. 

But other present and former 
bank officials say the organisa- 
tion is Still only minimally con- 
scious of costs. 

Mr Frank Potter, a former 
Canadian executive director of 
the bank, says continued 
increases in the bank's benefits 
package have “led to a structure 
in which no single benefit is out- 
rageous but which in the aggre- 
gate amounts to a cost burden 
which no private institution 1 
know of could afford.” 

Other bank officials say the 
steady increases in its operating 
budgets, although fuelled in part 
by rising demand for its services 
in new member countries in east- 
ern Europe and the former Soviet 
Union, were causing “donor 
fatigue". 

This comes at a time when vir- 
tually every government is forced 
to trim its own aid budget to cut 
its budget deficit 

Although the bank finances 
most of its lending from its inter- 
nal resources, it periodically asks 
member countries for donations 
to the International Development 
Association, an affiliate which 
lends money at subsidised inter- 
est rates to the very poorest 
countries. 

Both the bank, in its last collec- 
tion for the association, and the 
International Monetary Fund, in 
a collection completed earlier 
thin year for its similar Enhanc ed 
Structural Adjustment Facility, 
have found traditional donors 
increasingly reluctant to offer 
money. 


FT WEATHER GUIDE 


Europe today 


Low pressure over northern Spain will bring 
heavy rain to north-eastern regions and south- 
east Franca, where thunder is also possible. 
Rainy conditions will affect northern Spain and 
western France: Italy and Malta will be partly 
cloudy, but there w3l be plenty of sunshine 
further easL Cyprus and southern Turkey will be 
cloudy. 

Poland and parts of (he UK will be sunny. In the 
northern and southern UK, the Benelux and 
Germany, clouds win be interspersed with sun. 
Thundery showers will occur around Moscow, 
while western Russia will see a mixture of sun 
and cloud. South-east Scandinavia will 
experience sunny periods but rain will dampen 
north-western regions. 

Five-day forecast 

Rain win cover much of the UK on Saturday. 
Rainy conditions wdl prevail in north-west 
Spain, western France and north-west 
Scandinavia. Western Russia will be very sunny. 
Showers will occur in southern Scotland on 
Sunday, while the rest of the UK will be cloudy 
with sunny periods. 


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TODAY’S T O U tTPl ATUHES 

Maximum Beffng 
Celsius Belfast 

AbuDhatt sun 39 Belgrade 

Accra fan- 31 Bed in 

Algiers thund 27 Bermuda 

Amsterd a m fair 21 Bogota 

Athens sun 30 Bombay 

Atlanta cloudy 25 BnE&eic 

B. Abes tar 23 Budapest 

B-hom fair 20 CJmgen 

Bangkok shower 34 Cairo 

Barcelona thwd 23 Capa Town 


SltuaHonaf 12GMT. Tornperatums tnodmum far &y. Foretaste by Metso GonsoJt of dw Nstfiarfends 

2-j £=“«»* 31 P" 0 shower 21 Madrid shower 18 Rangoon 

17 Cartfiff fair 2fl Frankfurt fair 24 Majorca fluid 24 RoyWav* 

27 Ca sa blanca cloudy 22 Geneva fair 24 Mtata fair 30 Rio 

20 Chicago cloudy 22 Gibraltar shower 21 Manchester Mr 20 Rome 

20 Cologne fair 24 Glasgow Mr 19 Mania shower 33 S. Fraco 

19 Dakar thund 27 Hamtug hazy 19 Melbourne shower 12 Seoul 

3? Bates Fair 2S HeteWd fair 18 Mexico City fair 19 Singapore 

?! ** 34 HongKong shower 30 Manfl shower 32 Stockholm 

S?? • un 38 Honolulu shower 32 Mian fair 26 Strasbourg 

1L 2“?" - sun 17 Istanbul sun 27 Montreal fair 21 Sydney 

32 Dubrovnik sun 28 Jakarta cloudy 32 Moscow shower 18 Tangier 

21 Edinburgh cloudy 18 Jersey cloudy 17 Munich Mir 24 Tel Aviv 


No global airline has a younger fleet. 

Lufthansa 


31 

Faro 

shower 

21 

Madrid 

Stl 

lower 

18 

Rangoon 

tor 

30 

20 

Frankfurt 

fair 

24 

Majorca 


hnd 

24 

ReyfdHvfc 

rain 

9 

22 

Geneva 

lair 

24 

Malta 


fair 

30 

Rto 

fair 

25 

22 

Gibraltar 

shower 

21 

Manchester 


fair 

20 

Rowe 

fair 

29 

24 

Glasgow 

fair 

19 

Mania 

Stl 

lower 

33 

S. Fraco 

fair 

22 

27 

Harnbug 

hazy 

19 

Melbourne 

sh 

ownr 

12 

Seoul 

shower 

23 

2S 

Helsinki 

lair 

18 

Mexico City 


Hr 

19 

Singapore 

cloudy 

33 

34 

HongKong 

shower 

30 

Warn! 

sh 

ower 

32 

Stockholm 

far 

19 

38 

Honolulu 

shower 

32 

Mian 


Mr 

26 

Strasbourg 

Mr 

25 

17 

Istanbul 

sun 

27 

Montreal 


fair 

21 

Sydney 

fair 

20 

28 

Jakarta 

cloudy 

32 

Moscow 

Stl 

lower 

18 

Tangier 

cloudy 

20 

18 

Jersey 

cloudy 

17 

Munich 


fair 

24 

Tel Aviv 

fair 

31 


Karachi 

SU1 

30 

Nairobi 

d 


28 

Tokyo 

shower 

25 

■ 

Kuwait 

fair 

38 

Naples 


fan- 

30 

Toronto 

fair 

21 


LArgeto 

lair 

23 

Nassau 

ah 

cover 

32 

Vancouver 

cloudy 

20 


Las Palmas 

fair 

26 

New York 

d 

oudy 

21 

Venice 

Hr 

25 


Lima 

cloudy 

20 

Nice 

1 

bund 

24 

Vienna 

Mr 

24 


Lisbon 

Ur 

21 

Nicosia 


sun 

33 

Warsaw 

cloudy 

17 


London 

fair 

22 

Oslo 


Mr 

19 

Washington 

fair 

28 


Luxbaug 

(Nr 

24 

Paris 


fair 

24 

Wetangton 

ahowar 

9 


Lyon 

shower 

24 

Perth 

1 

fair 

22 

Winnipeg 

cloudy 

23 


Madeira 

loir 

24 

Prague 

1 

i fair 

22 

Zixldh 

1M- 

24 


THE LEX COLUMN 

Flagging spirits 


Guinness's first-half results were 
another case of pleasure deferred The 
Spanish beer market has at least stabi- 
lised fit the s piri ts market, the prod- 
uct mix has improved, with single 
malt anrl rip luxe brands whpari of last 
year. Overall, though, volume sales of 
spirits MI 5 per c ent in the first half 
and profits from this division were 
down 9 per cent after adjustment for 
exchange rate changes. Guinness 
again alluded to special factors Uke 
the bad weather in the US and de- 
stocking in the UK during the first 
quarter, but there is still no evidence 
of demand strong rmnn gh for thn com- 
pany to make much headway with pre- 
mium prices. Tndawri , relaunch of 
Bell’s whisky in the UK seems simply 
to have prompted rivals to cat their 
own prices. 

Like BTR after its margin disap- 
pointment, Guinness now stresses that 
it is a late cycle business. The new 
head of its spirits division will not be 
asked for a new strategy because the 
company remains convinced that only 
patience is required till Guinness can 
again exploit its undoubted brand 
strength. Yet with interest rates now 
on the way back up in both the US 
and the UK, one wonders whether the 
“feel-good" factor which encourages 
consumers to move upmarket will 
ever show through strongly in this 
cycle. If not, much time has been 
wasted. Profits are unlikely to be 
much Hi ghar this year than they were 
in 199L 

Obviously, a company as wedded to 
brand values as Guinness cannot eas- 
ily switch to a tactic of sacrificing 
price for volume. But it makes little 
sense for Guinness to sit on its hands 
while gearing wmftnnpg to felL If its 
business really has matured. It would 
be better to buy back shares sooner 
rather than later. Eararng s would be 
enhanrad with the share price below 
450p. The recovery would then simply 
be all the more sweet if by contrast, 
mark At conditions did eventually turn 
decisively in the company’s favour. 

RMC 

For the past 2% years, RMC has suc- 
cessfully inmilatari shareholders from 
the fun brunt of the savage downturn 
in the UK construction industry, 
chiefly by virtue of its engagement in 
Germany where the construction 
industry has defied recession. Yester- 
day’s results show that the group has 
reached a turning point, with the 
impetus coming from the UK Profits 
at home more than doubted on turn- 


FT-SE Index: 3021.2 (+6,4} 


Guinness 

Share prioa wteflva to Ihe 
FT-S&A Afl-Sbare index 
120 — 



1902 93 9* 

Souear. FTQnpNt* 

over up 16 per cent, reflecting a 
favourable mi* of higher volumes and 
prices as well as lower costs. 

This leaves RMC in a strong posi- 
tion. There is scope for further recov- 
ery in the UK and other continental 
European countries such as France, 
Spain and Austria. As lor Germany, 
house building in the west may tail off 
modestly in the current year, but RMC 
is confident that this will be offset by 
a revival in commercial and Industrial 
market In the east of Germany, the 
construction industry is set to be the 
motor of recovery for years to come. 
RMC's low cost cement production 
facilities allow it to compete with 
cheap Imports from Poland. RMC’s 
decades-long engagement in Germany 
seems to have rubbed off on the com- 
pany's culture. The group invests for 
the long term and is prudent in the 
way it husbands its cash. The only 
surprises are positive ones, such as 
yesterday's better than expected fig- 
ures. The group's qualities have not 
gone unrecognised and the shares 
have outperformed the marks* by 12 
per cent in the past year. The group 
has won, and deserves to keep, a pre- 
mium rating to the sector. 

Japan 

Japan’s new tax package was 
broadly welcomed by the US but it 
s eems uniikniy to do much to stimu- 
late the economy and suck In imports. 
While the cut in income tax will be 
implemented before tire increase in 
consumption tax, the impact on con- 
sumer confidence may be limited by 
the Finance Ministry’s emphasis on 
the need for fiscal revenue to care for 
an ageing population. Nor is the 


equity market likely to be particularly 
happy while t be dollar is trading at 
less than Y100. So there Is unlikely to 
be much of a boost to confidence from 
rising share prices either. 

Efforts to stimulate the economy 
mi ght have more impact If they were 
accompanied by a Anther aggressive 
cut in official interest rates. The Bank 
of Japan seems reluctant to undertake 
this course because it fears another 
asset bubble Some in the US might 
worry that a consequence of lower 
interest rates would be a weaker yen 
which would make Japanese goods 
cheaper internationally. But Japan is 
one industrial country where the infla- 
tionary threat remains minimal. 
Lower interest rates and an easier cur- 
rency might also encourage an out- 
flow of capital which would bring 
relief to international bond mar ket s 
generally. 

ED&F Man 

Man’s flotation price announced yes- 
terday was lower, and its yield higher. 
than expected. The group's managers 
and advisers may console themselves 
that riwaippninrtng ’ ratings were partly 
the inevitable consequence of a 200- 
point tall in the FT-SE 100 share index 
since the pathfinder prospectus was 
published. But there is more to it than 
that 

The City dearly has a problem with 
commodities traders. That is not sur- 
prising given its unhappy experiences 
during the 1980s with the old Berisford 
group and Gill & Duffus. Added to that 
legacy Is the difficulty for analysts in 
following such a curious beast as Man 1 
with its businesses ranging from pea- 
nut shelling to shipping, and money 
broking to commodity trading. The 
visibility and predictability of earn- 
ings is a further concern. The growth 
of two of Man’s three divisions has 
been erratic, and earnings at the his- 
torically most stable wing, fund man- 
agement, collapsed during the first 
half of this year. 

Tarring Man with the same brush as 
Berisford and Gill & Duffus may. not 
be lair. The group dearly has a more 
mature attitude to risk. It has also 
successfully diversified, in contrast to 
the earlier groups. And the fact that 
tiie management is retaining a strong 
stake in the business should provide 
considerable comfort. If the manage- 
ment can deliver earnings growth and 
commensurate dividend growth, the 
group will build up a following. But it 
will struggle to overcome City preju- 
dices about commodity traders. 


This announcement appeals as a matter of record only. 


nt 


northern 

telecom 


strengthened its alliance 
with 

Lagardere Group 

in 

Matra Communication 


Flemings advised Northern Telecom on the further 
development of this strategic alliance including 
additional investment of US $140 million 


FLEMINGS 

INTERNATIONAL INVESTMENT BANKING 


LONDON. NEW YORK. HONG KONG -TOKYO. PARIS- FRANKFURT. MAD RID. ZURICH .GENEVA . MILAN 
SYDNEY . BANGKOK . TAIPEI . MANILA . JAKARTA . SEOUL . BELUNG . SHANGHAI . SHENZHEN 
BOMB AY. KUALA LUMPUR. SINGAPORE. LAHORE. COLOMBO. JOHANNESBURG. BAHRAIN 

September 1994 

Issued by Robert Fleming & Co. Limbed, a member of the Seaairies and Funnzx A uthoruy Lamed and ihe London Stock 



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An improvement in margins in aU divisions of 
Jw PizzaExpress restaurant chain helped lift full- 
year pre-tax profits by 75 per cent. Page 24 

Uranium debate surfaces 

Intense lobbying has been under way for Australia 
to relax its constraint on uranium mining:, which 
cumaitly limits production to three mine sites. 
Pape 32 


Companies in this issue 


ANZ&mfc 20 

Accor 18 

AhiHVKC 23 

American AMinoa 18 

Anylcvaa' 20 

Bteion Enamnhi 24 

Ebocurc 23 

Bombardier 18 

Boictoi 18 

CC d® Franc® 18 

CRH 24 

Cadbury Scwcppos 8 

Cap GOfrtni Sdjeli 19 

Cassell 24 

Ctufl Resources 24 

Cocki’ntD Sample 19 

DG Bank 18 

Do e^oo 20 

Da.jonnam Motors 25 

EW Foci 23 

Eadh? Holdings 24 

Edmond HoUtos 24 

Goasl 23 

Generali 18 

GJ encore IT 

Green fEmeolt 24 

Guinness 8 IT 

Hampden 25 

Harmac Pacihc 19 

Haatewood Foods 23 

Hemoga 24 

Highcroh Invoslmont 24 

Hoochsl 18 

tndustnal Control 24 

In 19 

Jerome IS) 24 

Market S tatistics 

^Annual reports wroco 34-35 
Bendunart Govt bnrats 21 
Bom Sutures and optoni. 21 
Both! prices amt ptttfc 21 
norrmoiJiftr- pnrw 32 

Ohndends anremraiM. UK 22 
9IS eunonev rates 40 

Eurobond pnma 21 

Fixed SlMitS iitiBtfS 21 

n-A World Wior s Back Pape 
FT Gdd Mmos mdrx Back Pape 
FT/3H tnfl Iwd sve 21 

FT-3E ftrtinius Usurps 33 


Jeyvs 

KKR 

Kendall Squaro 

KredWbonk 

LVMH 

Lloyd Thompson 
MVM Rt 

MacMiHan Bleed ei 
Mannesmonn 
Marc Rich 
McAlpine (Alfred) 
McDonnell Into 
Middlesex Holdings 
Midland Assets 
Mon? O'FcaTall 
Multipart 
Murray Ventures 
Node Group 
Nokia 
Norcor 

Northrop Grumman 

Olivetti 

PicraExpross 

RMC 

Ricardo 

SME 

Spandex 

Stillhalier Vision 

Suer 

TT 

ThmKing Machines 
To wry Law 

Trygg-Hanoa 
United Disinters 
Viffbund 
Volkswagen 
VoJTtKuhdemve 


Fernnn exchange 
GUtu prices 
Lille equity options 
London snare sendee 
London iraS options 
Managed funds sonnee 
Moiwv markets 
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FINANCIAL TIMES 


COMPANIES & MARKETS 


iftTHE FINANCIAL TIMES LIMITED 1994 


Friday September 23 1994 


i Available from only 
| £64 per day at your 
nearest dealer 



IN BRIEF 


Accor talks with 
Suez stumble 

Tha relationship between Accor, the French hotels 
group, and Suez, its biggest shareholder, has been 
called into question after an apparent breakdown in 
negotiations concerning an increase in the stake 
held by Suez in its long-term partner. Page 18 

Generali rises at interim 

Parent company profits at Generali, the Italian 
insurer, rose to L422.3bn (S271mj before tax in the 
first half of 1994, from L410.2bn. Page 18 

Sogeti losses lessen 

Cap Cemini Sogeti (CGS>. the French-based comput- 
ing services company, improved its first-half results 
with net losses of FFrliSm tS21.78m) against a defi- 
cit of FFrl97m last year. Page 19 

Focused Nokia goes global 

Two years after being appointed Nokia chief execu- 
tive, Mr Jorma OUila has focused the Finnish group 
very firmly on telecommunications, and the devel- 
opment of an increasingly global profile. Page 20 

Daewoo buys Indian truekmaker 

t Daewoo, South Korea's third-largest carmaker, is to 
buy a majority stake in DCM-Toyota, an Indian 
truekmaker. Page 20 

Wm Morrison beats prices squeeze 

Wm Morrison Supermarkets, the UK regional super- 
store group, shrugged off price competition with a 
24 per cent rise at the interim. Page 22 

Daily Express shuns war 

Lord Stevens, chairman of United Newspapers, has 
formally undertaken to keep the Daily Express out 
of the UK national newspaper price wars. Page 22 

Bruised bananas damage Geest 

The tropical storm that severely damaged banana 
production in the Windward Islands will push 
Geest, the UK fresh and chilled food group, into the 
red in the second half. Page 23 

Ptea Express’s thicker slices 

flHAREHCLEERS MEETING] 


n ^ 

A 


Piech set to oust VW finance director 


By Christopher Parkes 
in Frankfurt 

Volkswagen's finance director. 
Mr Werner Schmidt, is expected 
to be ousted shortly as a conse- 
quence of last year’s near col- 
lapse of the group's Spanish sub- 
sidiary, Seat 

Mr Ferdinand Piech, VW chair- 
man, is understood to be seeking 
backing for his removal from key 
members of the company’s non- 
executive supervisory board 


which will be asked to decide on 
the issue on November 25. 

While he can expect to gamer a 
simple majority in favour of 

replacing Mr Schmidt from 
among his political and work- 
force allies on the board, he is 
believed to be t aking pains to 
persuade members representing 
the Deutsche and Dresdner hanks 
that Mr Schmidt 62, should go at 
the end or this year. 

Relations between the two men 
have been poor since Mr Pitch's 


appointment in January 1993. 
However, the chairman 's deter- 
mination to unseat Mr S chmid t 
has hardened recently following 
completion of a secret auditor’s 
report on the circumstances sur- 
rounding last year's unexpected 
DML4bn (?803m) loss at Seat 
Mr -T uan Antonio Diaz Alvarez, 
C hairman, was fired last aut umn, 
and the rest of the top manage- 
ment has since been replaced. Mr 
Schmidt was chairman of the 
Spanish company's supervisory 


board at the time, although there 
has not been any suggestion so 
far that he was any more aware 
of Seat's straits than Mr Piech. 

Shortly after details of the 
debacle emerged, Mr Pi£ch 
remarked that earlier, much- 
lower estimates of the deficit 
from Seat's management board 
amounted to "misinformation', 
which, in his view, was "a crime 
with penal consequences". 

It is believed, however, that 
further action is unlikely, espe- 


cially as the situation at Seat is 
still not resolved, and labour 
unrest and other pressing prob- 
lems are building up elsewbeie 
within the group. 

A controversial Spanish gov- 
ernment subsidy of $308m. offi- 
cially earmarked for Seat's 
research and development bud- 
get, remains unpaid while the 
European Commission competi- 
tion authorities examine its legal- 
ity. Labour unrest is fermenting 
at the Czech subsidiary, Skoda, 


where the group wants to cut 800 
jobs. VW has responded to a 
strike in its Brussels factory by 
transferring some tbe plant's pro- 
duction to Germany. 

At home. VW wants to reduce 
the workforce at its Emden fac- 
tory. main source of the Passat 
range, by 30 per cent. Meanwhile, 
the plant has been given the job 
of repairing or replacing 9.000 
faulty gearboxes discovered in 
the new generation VW Polo, due 
to go on sale next month. 


Guinness fills gap 
at Utd Distillers 
after flat results 


* 

• \Z t tl'lS • 1 :c; 


By David Blackwell In London 

Guinness, the UK spirits and 
brewing group, disappointed the 
London stock market with its 
interim results yesterday - then 
surprised it by choosing the head 
of a Swedish building company to 
lead United Distillers, its spirits 
division. 

The shares closed down I3p at 
448p after the group reported pre- 
tax profits of £320m ($505m) for 
the six months to June 30, up 
from £305m, reflecting sharply 
lower interest payments. Profits 
from continuing operations eased 
from £369m to £3 66m on sales 
slightly lower at £l-96bn. 

Mr Tony Greener, chairman, 
described the results as "sound 
in the difficult circumstances". 


The new managing director at 
United Distillers is Mr Finn 
Johnsson, chief executive of 
Euroc. Sweden's largest building 
products group. He replaces Mr 
Crispin Davis who resigned a 
year ago. 

Mr Greener said that after an 
extensive search Mr Johnsson 
was “dearly the best candidate", 
with substantial experience run- 
ning international businesses in 
competitive industries. 

Operating profits at United Dis- 
tillers. accounting for more than 
two thirds of the total, fell by 
£12m to £25Sm, while sales were 
slightly down, from fil.lbn to 
£1.05bn. The first quarter was 
particularly tough in two impor- 
tant markets - the UK and the 
US. The UK suffered from des- 







Still at the heart of G uinn ess: United Distiller’s Cardhu distillery in Morayshire, Scotland, home of Johnnie Walker whisky 


AsNovAxhwaod 


tocking after Christmas, while 
bad weather adversely affected 
trade in the US. 

The group said it had per- 
formed well in emerging mar- 
kets, with the exception of Japan 
in Asia and Venezuela in South 
America. Guinness Worldwide 
Brewing profits rose by 9 per 


cent from £99m to £108m on sales 
ahead from £S67m to £916m. The 
group Is increasing marketing of 
Guinness stout, which benefited 
from "a publicity bonanza” after 
sponsoring tbe Irish football 
team in the World Cup. 

Induded in the latest result is 
a £23m contribution from the 


investment in Moet Hennessy fol- 
lowing the reorganisation last 
April of the relationship with 
LVMH Mo6t Hennessy Louis 
Vuitton. The transaction reduced 
borrowings by £400m to £1.5bn; 
an interest credit from the deal 
helped to cut interest payable 
from £98m to £69m. 


The deal also diluted earnings 
per share, which were ll.lp (lip). 
The interim dividend was 
increased from 3.62p to 3.90p. 
After payment of dividends, the 
free cash flow was £23m - down 
from a previous £ 116 ul 
People, Page 8; Lex, Page 16; 
LVMH net up 36%, Page 19 


Trading group’s new head talks to Kenneth Gooding I Investment lOSSCS Mt Olivetti 


T he tremendous upheaval 
at the world's biggest 
diversified trading com- 
pany culminates this month with 
a change of name - from Marc 
Rich & Co to Glencore Interna- 
tional. In the past three years the 
company has been convulsed by 
a succession struggle at the very 
top, staff defections and accusa- 
tions about wrong-doing, particu- 
larly in the former Soviet Union. 

Mr Willy Strothotte, who 
emerged as chairman and chief 
executive, dismisses suggestions 
that all this weakened G1 encore's 
position in commodity markets. 
These suggestions come from 
rivals, he says, and were some- 
times taken seriously by the 
media because of the personal 
difficulties of Mr Marc Rich, the 
Belgian-born founder of the 
group. He was charged with tax 
evasion and other offences by the 
US authorities in 1984 and has 
refused to return to the US to 
answer the charges. 

Mr Strothotte said it would be 
a tragedy if Mr Rich was remem- 
bered more for being a fugitive 
than for building from scratch a 
world-class business and, in turn- 
over terms. Switzerland's second- 
biggest corporation after Nestifi. 
As a private company, Glencore 
does not give financial details but 
Mr Strothotte does not argue 
with analysts' estimates of an 
anuual turnover of $25bn to 
$30bu and net profits or SI 25 m to 
$160m. Mr Rich recently revealed 
the group's capital base to be 
about $7 50m. 

Glencore is one of the biggest 
operators in global oil and oil 
products markets, trading about 
1.5m barrels a day. It is the big- 
gest player in the international 
aluminium and alumina markets, 
trading 2.5m tonnes of alumin- 
ium and 3m tonnes of alumina a 
year, and it owns a handful of 
industrial companies. Some of 
these are held by Sfidelektra, 


Marc Rich gives 
way to Glencore 
in name only 


once a sleepy investment fund, 
and now the best-performing 
Swiss stock. Its shares have 
soared from around SFr350 when 
Glencore took control in 1990 to 
SFrt.920. Mr Strothotte describes 
Stldelektra. in which Glencore 
has a 53 per cent stake, as “our 
window to the capital markets". 


M r Strothotte, 50. started 
his trading career in 
1961 as an apprentice 
with Frank & Schulte. In 1966 he 
joined C. Tennant and moved to 
ICC Metals in 1972. He was hired 
to Marc Rich in 197S, four years 
after it was founded, by Mr Alex 
Hackel and groomed as his suc- 
cessor to head metals and miner- 
als trading operations. 

The retirements in 1992 of Mr 
Hackel and two other senior Rich 
executives sparked a dispute 
about how quickly Mr Rich him- 
self should follow them and sell 
his shares - more than 50 per 
cent of the capital - to the new 
management team. In the event. 
Mr Rich stayed on but Mr Stroth- 
otte and two other senior execu- 
tives resigned. 

By March last year. Mr Rich 
had decided to call back Mr 
Strothotte as chief executive. Mr 
Rich's holding has been reduced 
to 25 per cent and Mr Strothotte 
is confident tha t his remaining 
shares will be transferred to man- 
agement and employees. 

There are now about 360 Glen- 
core shareholders, compared with 
150 when Mr Rich was chairman. 
The company pays no dividends 


and all net profit goes into 
retained earnings to inflate the 
shares' value. When shareholders 
leave the group they must sell 
their equity which is passed on to 
ocher employees at the manage- 
ment’s discretion. Mr Strothotte 
says the group does not pay big 
bonuses as management and 
senior employees benefit from 
share ownership instead. 

Mr Strothotte says the change 
of name is simply to prevent con- 
fusion between Glencore and Mr 
Rich’s own finance and property 
group, Marc Rich Holding. “You 
don't change an image by chang- 
ing a name. You change your 
image by changing your conduct 
- and that 1 don't want to 
change." 

Neither does the change of name 
signal a change of direction, he 
insists. Glencore will continue to 
trade base metals, non-ferrous 
and ferrous metals and ores, coal 
and grains - it is now the biggest 
exporter of European Union 
grain to eastern Europe. 

“Our business is physical. We 
use t erminal markets as a means 
of protecting that business but 
we don't trade paper or deriva- 
tives. We have no seat on the 
London Metal Exchange or other 
markets. We are happy to use 
brokers rather than to act as bro- 
kers ourselves." 

Before Mr Strothotte leaves 
Glencore he says he “would want 
to see the restructuring com- 
pleted and to complete a number 
of exciting things I know are 
ahead". 


By Andrew Hill in Milan 

Investment losses and restruc- 
turing costs drove Olivetti, 
the Italian computer group, into 
a loss of L280.7bn (SISOm) before 
tax in the first half of 1994, more 
than LlOObn higher than in the 
equivalent period last year. 

But the group, headed by Mr 
Carlo De Benedetti, yesterday 
tried to rally jaded investors by 
confirming its earlier forecasts 
that it was on target to break 
even at operating level for the 
full year, after three years of 
losses.Olivetti recorded an oper- 
ating loss of only IA2bn in the 
six months to June 30, against a 
loss of Lll9.4bn in the first half 
of last year. 

Olivetti shares have come 
under intense pressure recently 
because of concerns about invest- 
ment losses and global personal 
computer price wars. 


As expected, Olivetti had to 
take a Ll03bn extraordinary loss 
in the first half on Its investment 
portfolio, which the group main- 
tains in reserve for unexpected 
restructuring and acquisitions. It 
will also have to record a L30bn 
extraordinary loss in the second 
half to cover hedging operations 
carried out to prevent further 
investment losses. “We have 
been unfortunate, like 95 per cent 
of the money managers in the 
world," Olivetti said yesterday. 

Total extraordinary charges 
amounted to L232bn against L5bn 
in the first half of 1993, when the 
pre-tax loss was L 168.1 bn. 

Restructuring at Olivetti, 
which has cut its workforce from 
59,000 to 35,000 in the past five 
years, cost a further LlOObn or so 
in the first half of 1994, and is 
likely to continue into the first 
half of next year. But sales, gen- 
eral and administrative costs are 


now equivalent to only 20.6 per 
cent of first-half turnover, 
against 28 per cent in 1992. Oli- 
vetti expects costs to come down 
to as little as 18 per cent of sales 
by the middle of 1995. 

Consolidated turnover in the 
first half rose to L4,146bn, up 7.8 
per cent on the equivalent period 
if adjusted for divestments. The 
group said it had anticipated 
about 90 per cent of the recent 
price cuts in the International 
personal computer market and 
pointed out that its products divi- 
sion had increased turnover by 
9.7 per cent, helped by a 34 j per 
cent increase in PC sales. 

Sales of tbe systems and ser- 
vices division - which account 
for about 60 per cent of annual 
turnover - grew by 6.3 per cent 
and 7.8 per cent respectively. 

The shares closed yesterday at 
L2.006, before the results were 
released, down L30 on the day. 


The whole world irra briefcase. 




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FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


★ 

INTERNATIONAL COMPANIES AND FINANCE 


Generali profits climb to L422bn 


Accor talks stumble over - 
Suez bid for more control 


By Andrew HH1 In Milan 

Parent company profits at 
Generali, the Italian insurer 
which is the country’s biggest 
quoted company, rose to 
L422-3bn iS27lmj before tax in 
the first half of 1994. compared 
with LAlQ^bn in the equivalent 
period last year. 

The company said ordinary 
operations had performed well, 
but like all financial compa- 
nies. Generali’s investment 
portfolio has been punished by 
difficult markets and rising 
interest rates. 

On June 30, the end of the 


UK recovery 
lifts RMC’s 
results 60% 

By Christopher Price 
m London 

The continued strength of the 
German construction market 
and recovery in the UK helped 
RMC Group to a 60 per cent 
rise in first half pre-tax profits 
born £61.6m ($97 .3m) to £98. 8m. 

Turnover rose 14 per cent to 
£L92bn from £l.69bn, with Ger- 
many contributing £782. 2m, an 
increase of £55. 4m on the previ- 
ous year. 

Profits from German 
operations - where RMC has a 
do minating 16 per cent share 
of the ready mixed cement 
market - grew 8 per cent from 
£52. 9m to £57 -2m. 

UK profits more than dou- 
bled from £14. Lm to £3&3m on 
turnover 16 per cent ahead at 
£527m. Mr Derek Jenkins, 
finance director, said price 
increases of around 8 per cent 
in the UK concrete business 
were being passed on to cus- 
tomers. 

RMC confirmed recent evi- 
dence of a strong recovery in 
the UK’s new house market, 
with the south-east in particu- 
lar seeing good demand. Mar- 
gins in eastern Germany 
remained firm and Mr Jenkins 
forecast double-digit growth in 
volume terms for the foresee- 
able future. 

Turnover from RMC's other 
European operations rose 19 
per cent to £421.6m with profits 
33 per cent higher at £16.4m. 

Earnings per share almost 
doubled from 13.4p to 24.6p. 
The interim dividend rises 
from 6.6p to 7p. 

Lex, Page 16 


first half, the group’s unreal- 
ised gains on its share portfolio 
stood at L7.050bn, but since 
then some L350bn has been 
wiped off the value of 
its holdings. By mid-Septem- 
ber, the company said its 
unrealised gains stood at 
L6.700tm. 

At the halfway stage, Gener- 
ali does not give full consoli- 
dated group figures, but it said 
aggregate group premiums had 
increased by 15.3 per cent to 
L15.696bn in the first half, of 
which Lii.l83bn came from 
outside Italy. 

Gross parent company pre- 


By Andrew Jack in Paris 

Credit Commercial de France, 
the French banking group, yes- 
terday reported net profits up 
8.6 per cent to FFr5S5.6m 
($11 0.9m) for the first half of 
1994 compared to the same 
period last year. 

Mr Charles de Ooisset, who 
took over as c hair man last 
year, said the bank had fol- 
lowed a prudent policy and the 
profits and quality' of its loan 
risks were good. "Difficult is 
not the word," he said. 

He said the results marked 


Hungarian 

By Virginia Marsh in Budapest 

MVM Rt, the main operating 
subsidiary of Hungary's state 
electricity monopoly, has 
reported pre-tax profit of 
Ft2.379bn ($22. 03m) on turn- 
over of Ft52.78bn for the first 
half of 1994. 

The company, which is due 
to be partly privatised by the 
middle of next year, is expect- 
ing pre-tax profit of Ftl.4bn on 
turnover of Ftl07.81bn for the 
year, up from Ft329m on turn- 


By Robert GIbbens In Montreal 

American Airlines is consid- 
ering buying up to 50 Canadair 
Regional Jets from Bombar- 
dier, the Canadian aerospace 
and transit equipment group, 
to re-equip three of its four ful- 
ly-owned feeder lines, say US 
aircraft industry sources. 


mining In the first half 
increased to L4,891bn, a rise of 
4J2 per cent if exchange rate 
differences are evened out Life 
premiums rose to L2.Q28bn and 
non-life to L2,863bn. 

Generali's investments in the 
first half increased by 5 per 
cent to L32,123bn, but the 
increase in income was com- 
paratively sluggish. Net of 
financial charges, the 
income rose 3 per cent to 
LIJSIbn. 

"Activities In Italy have 
shown a satisfactory develop- 
ment in the life operations," 
the company said in a state- 


the return to the “more clas- 
sic" performance of the bank 
after an "exceptional" period 
last year in the markets and 
from sharply higher provisions 
related to regional banking. 

Net banking income was 
unchanged at FFr4.6bn, but 
operating costs rose 4J per 
cent to FFr3.12bn, which 
reduced operating profits after 
depreciation by 7.8 per 
cent to FFrl48bn for the six 
months to the end of June 
1994. 

Net new provisions declined 
by 37 per cent to FFr4S4m, 


over of Ftl0L4bn in 1993. 

However, this year’s turn- 
over could rise by Ft22.7bn if, 
as expected, electricity prices, 
presently 40-60 per cent of 
western European levels, are 
increased by 30 per cent in 
October. 

The rises are designed to 
make the company more 
attractive ahead of privatisa- 
tion. The government and AV 
Rt. the privatisation body, 
which is being advised on the 
sale by Schroders, the UK mer- 


The 50-seater RJ sells for 
about US$20m. RJs are flying 
with Delta Airline's feeders 
Comair and SkywesL The RJ 
launch customer was Luft- 
hansa’s regional unit and sev- 
eral European airlines use the 
aircraft. 

American Airlines would not 
comment on the reports. In 


ment yesterday. "However, the 
progress of the non-life 
operations has been modest, 
although a recovery 
ts expected in the second 
half." 

Insurance companies are 
expected to be among the main 
beneficiaries of the Italian gov- 
ernment's efforts to reform the 
Italian pensions sector, which 
should lead to more private 
pension schemes. 

Generali's shares closed 
before the release of the 
half-year results at L39.519. 
against an opening price of 


compared with FFi769m in the 
first half last year and from 
FFr662£m in the first half of 
1992. 

Balance sheet assets were up 
to FFr337bn from FFr318.7hn. 
Deposits during the first half 
rose 15.1 per cent to FFr742bn 
compared with FFr&L5bn last 
time. Credits in the same 
period rose 2.6 per cent to 
FFr905biL 

Mr de Crolsset also said that 
he believed the prospects for 
the French economy were 
healthy, with all the indicators 
suggesting a recovery. 


chant bank, are due to make a 
decision on the sell-off wi thin 
the next month. 

Under the plan being consid- 
ered, the state would sell 
stakes in MVBTs power genera- 
tion and distribution subsid- 
iaries. MVM’s nuclear plant 
and the national grid would 
remain 100 per cent state- 
owned. The state is expected to 
announce tenders this autumn 
for minority stakes in five of 
the country's six household 
gas distribution companies 


Montreal, Bombardier said it 
has had discussions with 
American Airlines but “no 
active negotiations are on the 
way at present". 

Avmark, the US aviation 
marketing and management 
group, said an American Air- 
lines deal for the RJ has been 
rumoured for two months. 


Mobilfunk 
partners to 
increase 
holdings 

By Christopher Parkas 
in Frankfurt 

The commercial partners in 

Mannesman!! Mobilfunk, the 

mobile telephone concern, are 
to increase their holdings with 
the purchase of a 10.35 per 
cent stake currently held by 
the Deutsche Genossenscbafts- 

hank, DG Rank. 

No information was avail- 
able yesterday on the terms of 
the deal, although the Mannes- 
Tpann group, which owns 51 
per cent of the business, said 
the stake was expected to be 
shared among the partners in 
proportion to their existing 
holdings. 

This would give the German 
consortium leader a further 
6.45 per cent AirTouch of San 
Francisco would take 3^ per 
cent with the balance of about 
0.6 pm cent going to Cable & 
Wireless. 

Mobil funk is the leading pri- 
vate mobile phone company in 
Germany. 

After making its first profits 
in the first half of this year, it 
now has well over 700,000 sub- 
scribers, and according to 
some estimates could have lm 
customers by Christmas. 

The agreement coincided 
with confirmation that the 
German government will press 
European Union partners to 
fix a date for free 
competition on European net- 
works at a joint meeting of 
industry and telecommunica- 
tions ministers in Brussels on 
Sept e mber 28. 

If there was still no agree- 
ment at a meeting of post and 
telecoms ministers booked for 
November 11, the German 
group would consider going it 
alone, according to a joint 
statement from Bonn's 
research, post and economics 
ministries. 

Mr Wolfgang Botsch, post 
minister, has said Germany 
might liberalise its network on 
January 1, 1998, the date 
set for deregulating EU 
services. 

The government has been 
convinced by private sector 
lobbyists that open competi- 
tion in data and telephone 
communications networks will 
provide thousands of urgently- 
needed jobs. 


By John Ridding in Parte 

The relationship between 
Accor, the French hotels 
group, and Suez. Its biggest 
shareholder, has been called 
into question following an 
apparent breakdown in negoti- 
ations concerning an increase 
in the stake held by Suez in its 
long-term partner. 

The two companies had been 
discussing an Increase in 
Suez's participation aimed at 
providing a solid core share- 
holder for Accor. 

But the negotiations ran into 
trouble concerning the extent 
to which Suez would play a 
management role, and Accor 
said that it had become clear to 
both parties that they could 


By Christopher Parkes 
in Frankfwt 

Germany's Hoechst group 
plans to increase profitability 
in its healthcare division by 
reducing research spending 
and squeezing more synergies 
from its domestic businesses 
and its French subsidiary, 
Roussel Uclaf. 

Mr Jean-Pierre Godard, head 
of the pharmaceuticals divi- 
sion, said he planned to 
increase gross operating mar- 
gins, currently around 10 per 
cent of sales, to 14 per cent 
within three years. 

The research and develop- 
ment budget would be trimmed 
by up to 4 per cent this year. 
Rises on the scale of last year's 
16 per cent, taking the total to 
DM1.6bn ($lbn). were no longer 
affordable in the current busi- 
ness environment, he told a 
press conference. He aimed to 
reduce the annual total to 
about DMLSbn. 

Research would be more 


Kredietbank, Belgium's third 
largest bank, boosted consoli- 
dated net profits by 8.7 per 
cent to BFr5.4bn ($l70m) for 
the first half of 1994, writes 
Lionel Barber in Brussels. 

The earnings growth was 
largely due to a strong perfor- 


not move ahead. "They wanted 
powers of decision which we 
could not accept,” Accor said. 

Suez declined to comment on 
the state of the talks, but said 
it would make an announce- 
ment on Monday concerning 
the future of its 12.4 per cent 
stake in Suez, held through 
Soci§t6 Generate de Belgique, 
its Belgian subsidiary. 

Industry observers in Paris 
said that the rupture of negoti- 
ations could prompt Suez to 
reduce its stake in Accor- "if 
they haven't reached agree- 
ment, then a sale of some of its 
stake seems likely, although it 
may not be immediate," said 
Mr Jean-Jaques V iron da, lei- 
sure analyst at Societe Gyr- 
ate in Paris. 


sharply focused an a specific, 
limited range of projects to 
avoid overlaps and duplication, 
he added. The French group 
would in future process all 
work on anti-infective prepara- 
tions while Hoechst would be 
responsible for cardiovascular 
agents. 

Discussions were not yet 
complete on which companies 
would take charge or immunol- 
ogy, inflammation, osteopo- 
rosis and rheumatology work. 

Mr Godard claimed Euro- 
pean plant running costs could 
be reduced by up to 20 per cent 
by better coordination of pro- 
duction between Hoechst, and 
its Behring and Roussel Uclaf 
subsidiaries. 

The Hoechst and Roussel 
drugs operations are already 
being merged into joint ven- 
tures in the UK and Italy. 
Starting next year, the Belgian. 
Greek, Dutch, Portuguese and 
Spanish businesses would be 
merged under a single manage- 
ment team. 


mance in customer services, as 
well as tight control of costs 
and a cut in writedowns and 
provisions. Second-half profit 
is expected to match the first 
The bank's performance was 
held back by disappointing 
results on "certain financial 


According to Mr VTronda. the 
disagreement between the two 
companies revealed the fragil- 
ity of Accor's shareholding 
structure. 

The Caisse des Depots et 
Consignations, the state finan- 
cial institution which is 
Accor's second biggest share- 
holder. is widely thought to 
want to sell its stoke. 

Suez was regarded as a sta- 
ble core shareholder, but Mr 
Gerard Worms, chairman, 
demanded a significant man- 
agement role in Accor and a 
strong influence in designating 
the eventual successor to Mr 
Paul Dubrule and GOraid Pelis- 
son. the co-chairmen who have 
built the company into one of 
France's leading hotel c hains . 


Including a reduction of 800 
in the workforce, the rational- 
isation measures were 
expected to save the group 
DM200m a year. Mr Godard 
said. / 

On future strategy, he said V 
the group had to improve its 
position in the US, where it 
generated only 6 per cent of 
sales and had a l per cent mar- 
ket share. 

Mr Karl-Gerhard Seifert, the 
Hoechst main board director 
responsible for drugs, said that 
in spite of moves by German 
competitors, the group had no 
plans to establish a generic 
drugs business In the domestic 
market. It was first and 
foremost a producer of innova- 
tive pharmaceuticals, he 
said. 

However, a new stake in 
Copley of the US and Britain's 
Arthur Cox company meant 
the group was strtegically well- 
placed in the world market for 
out-of-patent drugs, Mr Seifert 
claimed. 


operations for own account," 
with current gross income foil- 
ing 0.6 per cent. Kredietbank 
blamed uncertainty in the 
financial markets ami the rise 
in long-term interest rates. 

Customer deposits rose 6.9 
per cent to BFrL365bn. 


L39.976. 

Credit Commercial advances 8% 


power unit sees rise 


US airline may buy Bombardier jets 


Hoechst plans to lift margins 


Belgian bank up 8% at BFr5.4bn 


FIDELITY AMERICAN ASSETS N.V. 

incorporated under the laws or the Netherlands Antilles 

Notice is hereby given char the Extraordinary Meeting of the shareholders of Fidelity American 
Assets N.V. ("the Corporation") will be held at 130 Schottegatweg Oost, Salinja, Curasao, 
Netherlands Antilles on 14th October, 1994 at 10 JO a_m. for the following purpose: 

AGENDA 

1. To APPROVE and agree a Scheme of Amalgamation of the Corporation and Fidelity Funds 
(sub-fund America Fund), a societe anonyme qualifying as a “sociiltd d'inveslissement a 
capital variable" constituted under the laws of the Grand-Duchy of Luxembourg f“ihe 
Scheme"), which is recommended by die Board of Directors and 

Further to resolve: that the Booid of Directors be and hereby is authorised and empowered, 
without further action by the shareholders, to convert all the property and assets of this 
Corporation (less a provision sufficient to meet all its liabilities) into Shares in the sub-fund 
America Fund of Fidelity Funds and to effect this to take any and oil actions, and do any and 
all acts which may, in its opinion, be necessary or proper. 

2. To RESOLVE to dissolve the Corporation in accordance with the Scheme and that the Board of 
Directors of the Corporation lake all necessary steps to consummate its dissolution, and 
Further to resolve: that the Board of Directors be and hereby is authorised and empowered, 
without further action by the shareholders, to take any and all actions, and do any and all acts 
which may. in its opinion, be necessary or proper to wind up the affairs of the Corporation. 
Further to resolve: that the property and assets of this Corporation being Shares in the sub- 
fund America Fund of Fidelity Funds be distributed in specie, proportionately among the 
shareholders. 

Further to resolve: that the Board of Directors be appointed as liquidators of the Corporation. 
Further to resolve: that Amacn Holdings & Trust Company N.V. be appointed as custodian of the 
books and records of the Corporation in confirmity with Article 154 of the Communal Code of 
the Netherlands Antilles. 

NOTES 

The Shareholder, of the Corporation may obtain a copy of the Proposal setting out details of the 
Scheme ut the offices of the Corporation ( and at Kredietbank S.A. Luxembourgeoise) free of 
charge. 

In accepting the proposal, the shareholders agree lo the investment by the Corporation in a single 
Nhiuuholding in Fidelity Funds - America Fund, which has similar objectives and investments 
policies to FAA NV. as set out in its Offering Circular dated March 1992. 

Approval of the above items of the agenda will require the affirmative vote of the voting shares 
present or represented at the meeting. 

Each share is entitled to one vote. 

Holders of registered shares may vote by proxy by mailing a Form of Proxy to the following 
address: 

Fidelity American Assets N.V. 

e/o Fidelity Investments Luxembourg S.A. 

Kitnsallis House 
Place de VEioilc 
B.P. 2174 

L-I02I LUXEMBOURG 

Holders of bearer shares may vote by proxy by obtaining from Kredietbank 5-A. Luxem- 
bourgeoise. 43. Bd. Royal. L-2955 LUXEMBOURG, a form of bearer shareholders proxy, 
certificate of deposit and receipt for bearer share certificates, against deposit of their bearer share 
certificates, and mailing the proxy and certificate of deposit to the Corporation at the address set 
forth in the preceding paragraph. Alternatively, holders of bearer shares wishing to exercise their 
rights personally at the meeting may deposit their share certificates, or a certificate of deposit 
therefore, with Kredietbank S.A. Luxembourgeoise at the address set forth above, or at the office 
of the Corporation in Curasao, against receipt therefore, which receipt will entitle said bearer 
shareholders to exercise such rights. 

AH proxies land certificate* of deposits issued to bearer shareholders) must be received by the 
Corporation at the address set forth above not later than noon (Luxembourg lime) on Tuesday. 

I llh October. 1994 in order to be used at the meeting. 

Dated: 2nd September. 1994 
B\ Order of the Board ol Directors 


Fidelity 



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SAMANTHA 
INVESTMENTS PLC 

£20 miflion Subordinated 
Floating Rate Notes 
Due 2000 

In accordance with the 
provisions of the Notes, 
notice is hereby gtven that 
for the interest period from 
21st September. 1994 to 
21st March, 1995 the Notes 
will carry interest at the 
rate of 8.0625 per cent per 
annum. 

interest payable on 21st 
March, 1995 will amount 
to £3,998.12 on each 
£100,000 Note. 

West Merchant Bank Limited 
Agent Bank 


Shimuzu International 
Finance (USA), Inc 
Yen 5,000,000,000 

Tranche B Floating Rate Notes 
Due 1996 

la accordance with the provisions of 
the Notes. notice is hereby given 
that the Rate or Interest for the 
six month period ending 22nd 
March. 1995 has been fried at 
2.7875% per annum. The interest 
accruing lor such six month period 
will be Yen 14.014. 931 per one 
Billion Note on 22nd March. 
1995 against presentation of 
Coupon No. 5. 

Union Bank of .Switzerland 
London Branch Agent Bank w 

Ztkb September. 1994 


Shimuzu International 
Finance (USA), Inc 
Yen 5,000,000,000 

Xranehe A Floating Rate Nous 
Due 1996 

In aceorda nee with the provisions of 
the Notes, notice is hereby given 
that the Rate of Interest 'for the 
three month period ending 22nd 
December. 1994 has been fixed at 
2.725T„ per annum. The interest 
accruing for such three month 
period will be Yen 6.888.194 per 
one Billion Note on 22nd Decem- 
ber, W94 against presentation of 
Coupon No. 9. 

Union Bask of Switzerland 
Loudon Branch Agent Bank 

20th September. 1994 


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U.S. $125,000,000 


American Express Tfovel Related 
Services Company, tec. 

I inearptHMad In Nrer VWi) 
Routing Rate Notea Due 1998 
lew -Nous'] 

Noon to hereby given that tar ttwffvM 
months Interest period from Sep- 
tember 23. iBSW to December 23. 1984 
the Notes wUJ cany an Merest rale 
ol 5.5% per annum. The Interest 
payable an Pie interest payment data. 
December 23. 1894 wH be U.S. 
Si 39.03 and U.S. 51,390.28 respect- 
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A/S Eksportfinans 

(ttKotporateit Ht the lOngdom of Norway with limiutf Gebiinyl 
USS1 00,000,000 Senior/Subordinated Notes due 2002 
Notice is hereby flrveti that the Rate of Interest has been fixed at 
5.4375% and that the interest payable on the relevant Intereet 
Payment Data March 23, 19SS against Coupon No. 5 in respect of 
SI, OOO Nominal a! the Nates will be SZ7.34 in respect of 210,000 
Nominal of tha Notes will be S273.39 and In respect of $100,000 
Nominal of the Notes will be $2,73X85. 

September 23. 199*. London ....... 

By: Citibank. NA (Issuer Services), Agent Bank Cl HBA mO 


To Advertise in the Business 
Opportunities Section 
Please Cali 
Melaine Miles 
on +44 71 873 4780 


U.S. $150,000,000 
Financier CSFB N.V. 

Junior Guaranteed 
Undated Floating Rate Notes 

Guaranteed on a subordinated basis 
as to payment of principal and interest by 

Financiere 

Credit Suisse-First Boston 


HNANCTBtE 

CSFB 


Interest: Rate 
Interest Period 

Interest Amount due 
23rd December 1994 
per U.S. $ 5,000 Note 
per US. $100,000 Note 


5%% per annum 
23rd September 1994 
23rd December 1994 


U.S. $ 6535 
U.S. $1,327.08 


CS First Boston 

Agent 


FINANCI AL TIMES 

FINANCE 
EAST EUROPE 


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on investment. Finance and banking in the 
emerging market economies of Central and 
Eastern Europe and the European republics of 
the former Soviet Union. 

To receive a FREE sample copy contact: 

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Mmlmvf 

Rrtrmdniia, fcumaABrlte LmkaUlWLhiW 

RoMnJU. WWi VVTRrjwisww Xn. *J U II 


AIRCRAFT LEASE PORTFOLIO 
SECURITISATION 92-1 LIMITED 

fa co nxvaedwteilnlKeaaadKyeJenayi 
u&sra/uxwn Secured Cfane A3 Floating Rate Notes duo Juno 1W7 
Notice is hereby given that (he Rate of interest has been fixed at 
5.825% and that the Interest payable on the relevant interest 
Payment Date December 23, 1994, In respect of U.S.$51.900 
nominal of the Nolea will be U.S.S764.19 and In respect of 
U.S.S25.950 nominal of the Moles wfil b e U.S $382.10. 

. September 23, 1994. London . 

L By; Cabanh. NA (Issuer Services), Agent Bank CHIBANOB)} 


Traded Options Software 


INDEXIA 


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FINANCI AL TIMES FRIDAY SEPTEMBER 23 199*1 ★ 

- INTERNATIONAL COMPANIES AND FINANCE 


, Northrop 
Grumman 
to shed 

9.000 jobs 

By Richard Tomkins 
in New York 

Northrop Granunan, the US 
defence group formed earlier 
this year through the $2JJbu 
merger of the Northrop and 
Grumman defence companies, 
yesterday announced that it 
would redace its workforce of 
47,500 employees by 9,000 aver 
the next 15 months. 

Mr Kent Kxesa, chairman 
and chief executive, called the 
move a “painful but necessary 
step** in the increasingly com- 
petitive defence contracting 
environment. 

Last month Lockheed and 
Martin Marietta, two of the 
three biggest US defence con- 
tractors, announced plans for 
a SlObn merger. 

Northrop Grumman said 
about 1,000 of its planned job 
cuts resulted directly from the 
merger of Northrop and Grum- 
man, mainly through the clo- 
sure of Grumman ’s corporate 
office and the dissolution of 
the former Grumman aero- 
space and electronics group 
announced earlier in the 
year. 

Jobs at Grumman's Long 
Island operations in New York 
will be cut by 3,500, of which 
IL500 w01 go by the end of this 
year. Northrop Grumman said 
abont two-thirds of the cuts 
resulted from a restructuring 
announced by Grumman 
before the merger with North- 
rop. 

In California, job cuts are i 
expected to total about 4.500, , 
of which 700 will take place 
before the year end. The figure 
includes the previously 
reported reduction of 2,400 
employees assigned to the R-2 
stealth bomber programme, 
1,600 job cuts in the military 
aircraft division in Hawthorn, 
and 500 job cuts in the Haw- 
thorn electronics unit 
Northrop Grumman also 
announced that changes to its 
early retirement plan and the 
offer of early retirement to 

5.000 employees would result 
in a one-time charge of 9300m 
in its fourth quarter if 60 per 
cent of employees accepted the 
offer. The precise amount 
would not he known nntil 
after the acceptance deadline 
of November 15. 

MacMillan 
Bloedel sells 
Harmac stake 

By Bernard Simon in Toronto 

MacMillan Bloedel, the 
western Canadian forest prod- 
ucts group, has agreed to sell 
its remaining 51 per cent stake 
in Harmac Pacific, the Vancou- 
ver-based pulp producer, for 
C5192m (US$1 43.2m). 

Mac bio and Harmac will 
together sell 76,500 warrants 
to a syndicate of Canadian 
securities dealers. 

Each warrant is exercisable 
into a unit consisting of 100 
Harmac common shares and 
a C$1,000 convertible deben- 
ture. 

Macblo will sell its Harmac 
shares for CS15.125 per share, 
payable in three instalments. 

Each $1,000 principal 
amount of the debentures is 
convertible at any time after 
the exercise of the special war- 
rants into 60-061 shares. Of 
the total proceeds, Macblo will 
receive C$1 15.7m, and Harmac 
C$76. 5m. 

Harmac was formed earlier 
this year as a vehicle for Mac- 
blo to spin off the bulk of its 
pulp operations, Mncblo sold 
49 per emit of Harmac to the 
public last May. 

Mr Bob Findlay, Macblo’s 
president said the divestiture 
of the pulp operations would 
enable (he company to concen- 
trate an its building materials, 
packaging and ground wood 
paper businesses. 


Sogeti trims losses at halfway stage 


By John Rkfcflng hi Paris 

Cap Gemini Sogeti (CGS), the 
French-based computing ser- 
vices company, yesterday 
announced an improvement in 
first-half results, cutting net 
losses to FFrllSm (821.78m) 
compared with a deficit of 
FFrl97m in the first six 
months of 1993. 

Mr Geoff Unwin, chief oper- 
ating officer, said that the com- 
pany had gained momentum 
towards recovery after losses 
of FFr430m last year. He said 
that the group, in which 
Daimler-Benz of Germany has 
a 34 per cent stake, should 


return to profit in 1995. 

The first-half Improvement 
reflected a radical reorganisa- 
tion of the group’s operations. 
Revenues were also helped by 
an improved economic environ- 
ment in some of its principal 
markets. 

Total revenues slipped to 
FFr5.05bn in the first six 
months of 1994 from FFr5£3bn 
in the first half of 1993. Operat- 
ing income climbed to FFrl94m 
from FFr12 1m. 

According to Mr Unwin, the 
decline in revenues was 
reversed in the second quarter 
of the year and that improve- 
ment continued through July 


and August. He cited several 
positive factors, including the 
successful introduction of new 
service offerings such as infor- 
mation systems management. 

Profitability was Improved 
through the merger of its loss- 
making German subsidiary. 
Cap Debis, with Debis System- 
baus, the software arm of 
Daimler-Benz. As a result, the 
49 per cent stake of CGS in Cap 
Debis was reduced to 19.6 per 
cent in the merged company. 

Mr Unwin said the group's 
Genesis restructuring pro- 
gramme, launched in mid- 1992, 
was beginning to yield results. 
The programme, which 


involved the creation of geo- 
graphical business centres and 
the absorption of ambitious 
acquisitions made at the end of 
the 1980s and early 1990s, has 
allowed the company to trans- 
fer expertise more rapidly to 
its various markets. 

CGS said its order book had 
strengthened significantly 
since the begi nning of the year 
and that its financial position 
had been reinforced following 
a FFrl^bn capital increase in 
May. But price competition 
remained fierce, partly 
reflecting the entry of com- 
puter hardware manufacturers 
into the sector. 


Private bids invited as Italian lvmh posts 

. . . 36% rise in 

catering group rejects offers net income 


| By Andrew HE in MSan 

The sale of Italy's 
state-controlled supermarket 
and catering businesses - part 
of the dismembered SME group 

- has been opened to private 
offers after two consortia bids 
were rejected. 

tri. the state holding com- 
pany, did not specify why the 
offers were unacceptable. But 
in a statement issued late on 
Wednesday night after a board 
meeting, the company said any 
of the ori ginal potential buyers 

- including those which did 
not lodge a formal offer - 
could renew their interest by 
Monday. 

Irl said it hoped to conclude 
negotiations for the purchase 
of the GS supermarkets and 


Autogrill catering business by 
October 20. 

Both consortia interested in 
the sale had already suffered 
setbacks. Pam, the privately- 
owned Italian retailer, decided 
to pull out of Its agreement 
with Edizione Holding, the 
Benetton family’s holding com- 
pany, and MOvenpick, the 
Swiss hotel and restaurant 
group, at the last moment 

Pam, which could now put in 
an offer for part of GS-Auto- 
griH, was replaced in the con- 
sortium by Crediop, the invest- 
ment finance subsidiary of the 
banking group San Paolo di 
Torino. 

The other consortium con- 
sisted of La Rinascente, the 
quoted Italian retailer, Ferrero, 
the Italian confectionery 


group, and FinComit, the mer- 
chant banking operation of 
Banca Commerdale Italians. 
In an earlier form it also 
included Centromeres, an alli- 
ance of Italian consumer 
brands. 

Financial advisers have 
already criticised the I talian 
authorities for the structure of 
the GS-AutagriH sale, the final 
part of the tortuous break-up 
and privatisation of SME. 

Last year, Iri had to abandon 
a first attempt to sell GS-Auto- 
grtll - valued at more than 
L2,000bn - because it received 
inadequate offers. 

Irl has successfully used the 
tactic of private negotiations 
before in selling off specialised 
parts of the state-owned steel , 
industry. 


Trygg-Hansa names new chief 


By Christopher Brown-Humes 

n Stockholm 

Trygg-Hansa’s search for a new 
chief executive ended yester- 
day when the Swedish insurer 
said it had appointed Mr Lars 
ThunelL president of the asset 
management group Securum. 

The appointment, which will 
take effect on November l, 
came a month after Mr Bj6m 
Sprangare resigned from the 
post after strong criticism of 
his performance and uncer- 
tainty over group strategy. 


Trygg-Hansa has been 
through a difficult phase due 
to heavy losses from its invest- 
ment in Home, the US insur- 
ance group, its failure to gain a 
banking licence, and the col- 
lapse of its alliance with the 
mutual pension group, SPP. Its 
problems were highlighted this 
week when Standard & Poor's, 
the US rating agency, down- 
graded the company’s senior 
debt and claims-paying ability. 

Mr Thonell, 46, is widely 
admired in the Swedish finan- 
cial community for his stew- 


ardship of Securum. which was 
formed in early 1993 as a home 
for the failed loans within 
stateowned Nordbanken. 

Mr Thun ell said yesterday 
that Trygg’s domestic insur- 
ance business was “sound.” 
but he was reticent on hie 
plans for the group. 

One of his main priorities 
will be to find a strategic 
co-operation partner, allowing 
Trygg to reduce its 64.5 per 
cent stake in Home. Mr Thu- 
nefl did not rule out a disposal 
of the entire stake. 


Borden sceptical over Kazarian 


By Richard Tomkins 

Mr Paul Kazarian, the US 
investor trying to launch a 
last-minute bid for Borden, the 
troubled food group, has told 
the company he is prepared to 
offer between $16 and $18 for 
each Borden share. 

The offer is considerably 
more than the $14.25 a share 
bid launched by Kohlberg Kra- 
vis Roberts, the Wall Street 
leveraged buy-out specialist, 
last week. 

Presenting himself as a 
potential white knight, Mr 
Kazarian said that he and his 
Rhode Island investment firm. 


Japonica Partners, wanted to 
take a stake of between 20 and 
90 per cent. 

Mr Kazarian, a former chain 
man and chief executive of the 
Sunbeam-0 st er consumer prod- 
ucts group, said he had a plan 
for rebuilding Borden that 
should increase the value of its 
equity to between $22 and $25 a 
share in 1995. 

Borden’s management, how- 
ever, remains sceptical It says 
that Mr Kazarian has yet to 
make any firm proposal and 
that he has given no indica- 
tions of how an offer would be 
financed. 

The company's meeting with 


Mr Kazarian comes at a time 
when some of Borden's share- 
holders have become increas- 
ingly vocal in their complaints 
against the terms of KKR's 
offer. 

Some institutional investors 
have given notice that they 
will refuse to tender their 
shares to KKR when the offer 
formally opens. 

Borden's board was due to 
meet late yesterday evening to 
approve a definite merger 
agreement with KKR ahead of 
today's deadline. 

The company’s shares were 
ahead SVi at S14Y* in early trad- 
ing. 


net income 

By John Ridding 

LVMH, one of the world's 
largest luxury goods compa- 
nies, yesterday confirmed a 
sharp increase in first-half 
profits, recording a 36 per cent 
rise in net income to FFrl27bn 
($240m). 

Including an exceptional 
gain from January's acquisi- 
tion by Guinness of the UK of 
a 34 per cent stake in Mo£t 
Hennessy, net income was 
FFr4.75bn. Sales rose from 
FFrl0.04bn to FFrlSbn. 

The French company, which 
forecast the rise in profits ear- 
lier this month, said the result 
reflected unproved sales and 
profits across its divisions. 

The Champagne and wines 
division increased Income from 
FFrBfcm to FFrllBm and the 
cognac and spirits division 
raised eamrng s from FFr781m 
to FFrtHZm. Income from lug- 
gage and leather goods rose 
from FFr968m to FFrl.39bn, 
while perfumes and beauty 
products increased earnings 
from FFr32fim to FFr352m. i 

LVMH said the latter 
increase reflected the success 
of recent product launches. 
The rise in champagne and 
wine earnings was attributable 
to the impact of lower grape 
prices and production costs 
and stronger demand, while a 
rebound In Japanese sales was 
cited as the principal reason 
for improvement in the cognac 
and spirits operations. 

Stillhalter opens 
with deficit 

By Ian Rodger in Zurich 

Stillhalter Vision, the 
option-based investment com- 
pany set up by Mr Martin 
Ebner's BZ banking group on 
April a has got off to a poor 
start, reporting a SFr228.6m 
($178 50m) loss for the period 
ended August 3L 

The loss arose entirely from 
unrealised losses on the mar- 
ket value of its investments. 
The company raised SFr3bn in 
April, mainly from institu- 
tional investors transferring 
their holdings in Swiss blue 
chip shares to it 


Kendall Square may seek 
protection from creditors 


Cockerill Sambre enjoys 
tumround at six months 


By Louisa Kehoe 
hi San Francisco 

Kendall Square Research, a 
struggling US supercomputer 
manufacturer, has closed its 
computer business and said 
that it may be forced to 
seek protection from its credi- 
tors under US bankruptcy 
laws. 

It is the second US super- 
computer company to face a 
financial crisis. Last month 
T hinking Machines, a pioneer 
of massively parallel super- 
computer technology, filed for 
bankruptcy protection. 

Kendall Square said that its 
chief executive had resigned 
and the company yesterday 
laid off most of its workers, 
leaving a staff of 50. 


Standard ^ Chartered 

Standard Chartered PLC 

incorporated with UmM&t bairflty in England) 

£300,000,000 

Undated Primary Capital Floating Rate Notes 
of which £1 50,000,000 
comprises the Initial Tranche 

Ntrtes. robes is hwaby gh/gn 
ttuM t « uw llvea months period (9t days) from 22nd September 1994 to 22nd 
Ducembei 1 994 the Notes win cany an interest Hale of 6 1J8 per cert per annum. 

1IW mtorosi payment date wffl be 22nd December 1994. Coupon No. 36 wfll 
ttWnAjro bo payable on 22nd Docombor 1994 a £763 53 pw coupon bum Notes 
of £50.000 nominal and £76.35 per coupon tnm Notes of £5,000 nominal. 


p j.Henry Schroder Wagg & Co. Limited 

Agent Bank 



The company said that the 
decision to cease manufactur- 
ing and sales operations was 
reached “in light of the failure 
to receive expected orders and 
the inability of the company to 
raise additional capital". 

The supercomputer maker, 
once seen as a promising com- 
pany in the emerging MPP 
supercomputer market, 
became embroiled in an 
accounting debacle last year 
when it disclosed that 
prior sales had been over- 
stated. 

Kendall said that it would 
continue to service and sup- 
port its customers and that it 
would continue efforts to 
license its core technologies to 
other computer and network- 
ing companies. 


SOCIETE GENERATE 
USD 300.000.000 
FLOATING RATE 
NOTES DUE 1996 

For the period 
September 22, 1994 
to March 22, 1995 
the new rate has been 
fixed at 5.375 % PA 
Next payment date: 
March 22, 1995 
Coupon nr. 17 
Amount: 

USD 270,24 for the 
denomination of 
USD 10 000 
USD 2702,43 for the 
denomination of 
USD 100 000 

THE PRINCIPAL 
PAYING AGENT 
SOGENAL 
SOCKETS GENERALE 
GROUP 

15, Avenue Emile Reuter 
LUXEMBOURG 


By Lionel Barber In Brussels 

Cockerill Sambre, Belgium's 
biggest steelmaker, took 
advantage of the steady eco- 
nomic recovery in Europe with 
a profits turnround in the first 
half of this year. 

The company announced 
yesterday a BFr277m (33.68m) 
net profit for the first half of 
1994 after registering a loss of 
BFr3bn in the same period in 
1993. Consolidated turnover 
rose by 13 per cent, to 
BFr84.7bn from BFr74.9bn. 

The tumround underlines an 
upturn in the automotive sec- 
tor and a gradual improvement 
in steel prices in Europe. The 
company said its cash flow had 
risen to BFrSBm in the first 
half of 1994 compared with 


BFrl.7m over the same period 
in 1993. 

Cockerill said it had carried 
out its planned BPr22bn invest- 
ment programme. Group debts 
rose to BFr9.6bn, compared 
with BFriUbn to the end of 
December 1993. Shareholders’ 
funds stood at BFrtSUJbn. 

This week, Cockerill pnt in a 
bid for Eko Stahl eastern Ger- 
many’s loss-making steel min. 
The bid price was not dis- 
closed, nor is it clear if the 
Belgian steelmaker is the only 
party interested in acquiring 
Eko Stahl. 

CockerlU’s parent company 
also increased turnover to 
BFr34.4bn in the first half com- 
pared with BFr28.8bn. It posted 
a net profit of BFrSm compared 
with a loss of BFrr2.7m. 


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RMC 


INTE 

RESl 




S£t» 




Half Year to 30th 


Highlights of Unaudited Group Results 



1994 

1993 

Turnover £l,9l9«1m 

£1,685.3171 

Profit before Interest 

£11 6.9m 

£84. 8m 

Profit before Taxation 

£98.8m 

£61 .6m 

Earnings per Share 

24.6p 

13.4p 

Dividend per Share 

7 . Op 

6.6p 




RMC Group p.l.c. 

RMC House, Coldharbour Lane, 
Thorpe, Egham, Surrey 7W20 8TD 


Operating internationally in Austria, Belgium, Czech Republic, 
Denmark, France, Germany. Hungary, Israel. Nctherhnds, 
Portugal, Republic of Ireland, Spain. United Kingdom and the USA. 


All these securities having been sold, this announcement appears as a matter of record only. 
New Issue 20th September. 1994 



The City of Yokohama 
U.S.$250,000,000 

7% per cent. Guaranteed Bonds due 2004 

unconditionally and irrevocably guaranteed as to payment of principal and interest by 

Japan 


Issue Price 101.089 per cent 


Bank of Tokyo Capital Markets Limited 

Bank of Yokohama (Europe; S.A. CS First Boston 

Goldman Sachs International Paribas Capital Markets 

UBS Limited 

ABN AMRO Bank N.V. Basque Bruxelles Lambert S-A. 

Barclays de Zoete Wedd Limited Deutsche Bank AG London 

Lehman Brothers Merrill Lynch International Limited 

Mitsubishi Finance International pic Morgan Stanl ey & Co. 

Nikko Europe Pic Nomura International 

Sanwa International pic Swiss Bank Corporation 

S.G .Warburg Securities 


RIGGS NATIONAL CORPORATION 

DS 5100,000,000 

FLOATING RATE SUBORDINATED NOTES DUE 1996 


badtebtonipaHcaUB 
Im. ifer Franco! TVm. 

East European Markets 


nuance East Europe 

• 

East European 
Botinas Lav 


In accordance with tbe pro*fcriana or Ute Nows, notice la hereby given that lor 
Hie period 22 September lgM to 22 December 1994 the Notes vtu carry a rate 
oTfauere^of SKK per annum wtth a coupon amount of USS 13129 

IEQbbgu. 

AaAfCHi 


Insurance Report 

• 

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Energy Report 

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FINANCIAL TIMES FRIDAY SEPTEMBER 23 W4 



Daewoo buys 
stake in Indian 
truckmaker 


Daewoo, the South Korean 
conglomerate and the coun- 
try's third-largest carmaker, is 
to buy a majority stake in 
DCM-Toyota, an In dian truck- 
maker. Reuter reports from 
New Delhi. It is planning to 
transform the ailing company 
into a profitable car manufac- 
turer. 

Mr Shiv Awasthi. managing 
director of DCM-Toyota. said 
that a shareholders' meeting 
next Thursday was expected to 
approve a capital restructuring 
and a cliange in the company's 
name to DCM-Daewoo Motors. 

"There was a need for a 
strategy to broaden the prod- 
uct range for [sales] volume 
and sustainable growth," he 
said. 

Several leading carmakers 
are gaining a foothold in the 
Indian auto industry in compe- 
tition with Suzuki, the most 
established producer in India. 
They include General Motors, 
Mercedes-Etenz, and Volkswa- 
gen. 

DCM-Toyota incurred sus- 
tained losses as the market for 
its lightweight trucks was hit 
by a rising yen that increased 
manufacturing costs, and by 
competition in India from rival 
Japanese -vehicle makers 
Mazda, Nissan and Mitsubishi 

Daewoo is planning to start 


with an Investment of ?i5m to 
S18m but will inject $200m by 
1997 and 5800m to $lbn by 2000, 
initially to make the latest of 
its Racer range of lSOOcc cars 
for the Indian market, said Mr 
Awasthi 

"Korea is now enjoying the 
price competitiveness which 
Japan enjoyed IS years ago," 
be said. 

Daewoo plans to start pro- 
duction by September 1995, and 
its first car is expected to roll 
off the assembly by the follow- 
ing December. “We are plan- 
ning 25,000 cars in the Grst 
year and possibly 100,000 by 
the year 2000,” said Mr Awas- 

thi. 

Toyota has brokered a 
revival package under which 
Daewoo will buy 51 per cent of 
the company, while Toyota's 
holding will be reduced to half 
of its current 17 per cent. 
India's DCM, whose current 
holding is 56 per cent, will hold 
at least 28 per cent, he said 

The equity base of the new 
company will be increased 
from Rs450m to more than 
Rs910m ($29m). 

DCM and Daewoo are both 
optimistic about the prospects 
for India's car market, which 
they expect to grow from 
220,000 to 230,000 cars per year 
at present to 600,000 by 2000. 


ANZ plans buy-back 
deal for shareholders 


By Nikki Tail In Sydney 

Australia and New Zealand 
Banking group, one of the four 
big Australian banks, yester- 
day announced plans to offer a 
buy-back facility for the new 
ordinary shares which will 
result from the conversion of 
its A$600m (US$441i») convert- 
ible preference share (CPS) 
issue in July next year. 

The move, which will require 
shareholder approval, will pro- 
vide a "convenient facility for 
CPS holders", the bank said 
Mr John Gough, chairman. 


said it would have “a positive 
impact on earnings per share 
and improve the return on 
equity for ordinary sharehold- 
ers". 

The 6m CPS were issued in 
1991 at A$100 each. Each will 
convert at a 10 per cent dis- 
count to the weighted average 
sale price of ANZ ordinary 
shares during the preceding 
five trading days. The boy- 
hack price will be that used in 
the conversion calculation, 
guaranteeing holders the con- 
version discount and giving 
them A$lll for each CPS. 


Anglovaal 


Nokia rides the worldwide airwaves boom 


pays more 
as profits 
rise 13% 

By Mark Suzman 
to Johannesburg 

South Africa's Anglovaal 
group, the mining and indus- 
trial conglomerate, has 
announced a 13 per cent rise 
in operating profit to R81&9m 
($229.9m) for the year to June 
from R719-5m last time. 

Turnover rose 17 per cent to 
R9J97bn from R8.51bn, while 
attributable earnings rose 17 
per cent to R342.2m from 
R293.lm a year ago. The divi- 
dend was also raised 17 per 
cent to 123 cents from 105 
cents. 

Once again Anglovaal’s 
industrial interests provided 
the greatest part of the 
group’s earnings. At R241 Jim, 
up from R2Q3.1m last year, 
they contributed 71 per cent to 
the total. 

The improved results were 
due largely to higher relative 
earnings from cement group 
Anglo- Alpha and electronics 
and construction arm Gri- 
naker Holdings, as well as a 
satisfactory performance from 
food processor Irvin and John- 
son. 

Income from the group’s 
direct mining interests in gold, 
copper and manganese bene- 
fited from the weaker rand 
and rose to R45.8m from 
R37.9m, with their share of 
total earnings static at 13 per 
cent 

The Increase in mining earn- 
ings was also helped by higher 
royalties accruing to subsid- 
iary group subsidiary Saturn 
Mining, Prospecting and 
Development from the Yenetia 
diamond mine. 

However, earnings from 
indirect mining holdings, held 
through Middle Witwaters- 
rand, rose only slightly to 
R35.8m from R34.2u, and 
their overall contribution to 
group earnings dipped from 13 
per cent to 12 per cent 

The group expressed opti- 
mism about the South African 
outlook for the coming year, 
citing the continuing interna- 
tional recovery and rising 
domestic fixed investment It 
expected to increase earnings 
further over the current year. 


The Finnish company is taking on Japan, reports Christopher 


I n August 1992, shortly 
after being appointed 
Nokia chief executive, Mr 
Jorma OUila returned home 
from a management brain- 
storming session and wrote 
down the four phrases which 
he saw as the key to the com- 
pany's future. They were “tele- 
com-oriented". “global”, 
“focus", and “valuesadded". 

Two years on, nobody can 
accuse Mr Ollila of not sticking 
to his own brief. The 44-year- 
old former Citibank executive 
has focused the group very 
Grmly on telecommunications, 
and Nokia has developed an 
increasingly global profile. 

It is also difficult to argue 
with the results. As sales have 
soared, the group has surged 
back to profit. Even more spec- 
tacularly, the group's share 
price has risen more than 12- 
fold and, with a market capital- 
isation of more than FM40bn 
($8.15bn), it accounts for 
almost 23 per cent of the value 
of the Helsinki stock exchange. 

Its star position in the Finn- 
ish corporate landscape is 
highlighted by the cluster of 
mature slow-growth forestry 
and engineering industries sur- 
rounding it. 

Is the success down to luck 
or judgment? Like a surf-rider 
catching a rolling wave, Nokia 
happens to have caught the 
mobile telecommunications 
boom at just the right time. As 
the world's second-biggest sup- 
plier of. mobile phones after 
Motorola of the US, it has bene- 
fited from a surge in global 
handset sales from 3m in 1982 
to 14m last year and to an esti- 
mated 25m in 1994. It is also 


Nokia 

Net sales, FM (br) 
10 - 



Operating profit. FM (m) 

1,000 



the world's second-largest sup- 
plier of digital cellular equip- 
ment after Sweden's Ericsson. 

When explaining the group's 
rebound, Mr Ollila says exter- 
nal market conditions and the 
group's focus on certain mar- 
ket segments have been as 
Important as technical innova- 
tion. 

“The two things which have 
helped us most have been the 
entry of new operators into the 
cellular market and the shift 
from analogue to digital" he 
says. 

One measure of the group's 
success is that it has a near-20 
per cent share of the world 



Jorma Olfla 
CWeJ executive 


mobile phones market. Tins 
means it will supply around 
5m phones in 1994, double last 
year’s figure. 

Another indication of its con- 
fidence is its early move into 
the Japanese market, where it 
is aiming to capture a 25 per 
cent share of the digital phone 
business by 1996. 

Nokia became the first Euro- 
pean manufacturer to enter the 
Japanese market earlier this 
year, and it claims to be offer- 
ing the smallest and lightest 
handset on the market as well 
as the only one that carries 
both English and Japanese 
characters. 


Indeed, Nolda’s increase in 
world market share has been 
to a large extent at the expense 
of Japanese rather than west- 
ern rivals. The group's 20 per 
cent share of the mobile phone 
market is now not far short of 
the 26 per cent held by all of 
Japan's mobile phone manufac- 
turers together. 

Telecommunications today 
accounts for more than 60 per 
cent of group sales, compared 
with as little as 14 per cent 10 
years ago. This dominance is 
increasing all the time because 
the group's core telecom busi- 
nesses are growing at 50 per 
cent a year, while growth in its 
other activities - consumer 
electronics, cable and machin- 
ery, tyres and power - is virtu- 
ally fiat 

The consumer electronics 
operations, in particular, have 
brought Nokia considerable 
pain in the last two years, cul- 
minating in a divisional loss of 
FM747m last year. Consider- 
able restructuring. Including 
the closure of the group's pic- 
ture tubes operations, has 
helped to turn the business 
round and it is on course to 
return to the black In the final 
four months of the year. 

Despite the prospect of low 
growth, it is likely that the 
consumer electronics 
operations will be retained, 
assisting the group's ambitions 
to build a presence in multi- 
media. 

But even here, Mr Ollila docs 
not over-stress the synergies 
between the telecom and con- 
sumer electronics side of the 
business, noting that U is an 
“interesting link but not a cru- 


Brown-Humes 

dal one". As for the rest of the 
group’s non-telecom activities, 
Mr Ollila sal’s bluntly that he 
is prepared, to devote no more 
than an hour of his attention a 
month to them. He emphasises 
that Nokia lias no intention of 
investing heavily in any of Its 
businesses which do not have a 
clear telecom link. They will 
either be sold or retained and 
r un on a cash-flow basis. 

C au the group's out-per- 
formance continue? Mr 
Ollila is optimistic 
about the short term, saying 
“our order book, our market 
position and our products vis- 
a-vis our competitors give us a 
tremendous confidence about 
the next 18 months". 

He is comfortable with ana- 
lysts' predictions suggesting 
earnings per share of FM30 
this year against FML2.3 in 
1993. 

Further ahead, the worry is 
not just about competitors' 
technological innovation. The 
company fears that u spurt of 
undisciplined growth could 
make it more bureaucratic and 
less able to respond with speed 
and flexibility to market 
demands. “We must be able to 
manage our growth,” says Mr 
Ollila. 

He predicts that “the 1990s 
and early 21st century will be 
the era of the medium-sized 
company. It Is the big compa- 
nies which will be slower to 
move". 

If this proves correct, one of 
his main tasks wilt be to 
ensure that Nokia itself does 
not become a sluggish jugger- 
naut in the slow tone. 


News Corp pins its colours to television’s mast 


News Corporation's invest- 
ments in television will be a 
major source of growth for the 
global media group, Mr Rupert 
Murdoch, chief executive and 
chairman, said in the compa- 
ny's annual report, Reuter 
reports from Sydney. 

“The investments we have 
made demonstrate our contin- 
ued belief in the growth poten- 
tial of television around the 
world," Mr Murdoch said. “We 
believe that the television 


industry, whether it be free to 
air, satellite or pay, will be a 
major area of growth for this 
company for the rest of the 
decade." 

Mr Murdoch said News Corp 
was confident that its Asian 
satellite broadcaster. Star TV, 
would achieve greater market 
penetration in the next 18 
months, reaching 90m homes 
from 42m at present. News 
Corp has a 64 per cent stake in 
Star TV. 


News Corp also expects 
higher household penetration 
for its 50 per cent-owned UK 
satellite broadcasting com- 
pany, BSkyB - in whidi Pear- 
son, owner of the Financial 
Times, has a stake - aided in 
part by the continued growth 
in cable television. 

News Corp said more than 
700,000 cable households in the 
UK saw Sky. os did 2£m homes 
with satellite dishes. 

“With dish subscribers grow- 


ing around 700,000 annually 
versus 250,000 for cable house- 
holds, we believe that satellite 
will be the primary form of dis- 
tribution in the medium term,” 
Mr Murdoch said. 

He said News Corp contin- 
ued to invest in its base busi- 
nesses in 1993-94 to keep them 
competitive. “While we have 
made significant Investments 
throughout the corporation 
over the past 12 months, we 
have also simultaneously con- 


tinued to strengthen our finan- 
cial condition." Debt was 
reduced by ASl.8bn 
(US$L32bn). 

“We have continued to 
access the long-term public 
markets, providing us with 
long-term financing which 
more appropriately matches 
the long-term nature of our 
Investments," he said. 

Earlier this month News 
Corp announced record net 
profits Of A$L34bn for 1993-94 


jramenstaBB 











Rog. No. 05^04580/06 

Incorporated in the RapuMc of South Africa 


Results and dividend announcement for the year ended 30 June 1994 

Financial results 

The consolidated audited results are as follows: 


Group Income statement 



1994 

1993 

Increase/ 


Rm 

Rm (Decrease) 




% 

Turnover 

9 969,1 

8 509,5 

17 

Operating profit 

813,9 

719,5 

• 13 

Income from investments 

68,8 

66,9 

7 

Profit before taxation 

874,7 

776,4 

13 

Taxation 

252,5 

261,3 

(3) 

Profit after taxation 

62SL2 

515,1 

21 

Equity accounted earnings 

83,6 

96,6 

(13) 

Profit after taxation 
including equity 
accounted earnings 
Attributable to outside 
shareholders of 

705,8 

611,7 

15 

subsidiaries 

363,6 

318,6 

14 

Earnings attributable to 
equity shareholders 

342£ 

293,1 

17 

Earnings per share (cents) 

567 

486 

17 

Dividend per share (cents) 

123 

105 

17 

Number of shares on 




which earnings per share 
is based (000) 

60397 

60292 



Source of earnings 






1994 

1993 


Rm 

% 

Rm 

% 

Industrial 

246,1 

72 

203,1 

69 

Anglovaal Industries 






Limited 

241,2 

71 


203,1 

69 

Anglovaal direct 






investment 


1 


— 

— 

Mining 

81,6 

24 

72,1 

25 

Anglovaal direct 






investments 

45,8 

13 


37,9 

13 

Middle Witwatersrand 






(Western Areas) Limited 

35# 

11 


34,2 

12 

Finance 





Net interest and other 

145 

4 

17,9 

6 


342^2 

100 

293,1 

100 





<< 


Group balance sheet 



1994 

1993 


Rm 

Rm 

Capital employed 



Shareholders' interest 

3 168,2 

2 570,6 

Outside shareholders' interest 

2 563,0 

2 274,5 

Total shareholders’ interest 

5 731,2 

4 845,1 

Debt capital 

200fi 

200,6 

Deferred taxation 

93,5 

110.3 

Long-term borrowings 

370,2 

234,7 


6 403,5 

5 390,7 

Employment of capital 



Fixed assets 

2 513,7 

1 673,4 

Investments 

1 655,6 

1 533,2 




not consolidated 

1 409^ 

1 221,6 

-listed 

123,7 

130,1 

-unlisted 

122,6 

181,5 


Loans and long-term debtors 
Net current assets 

Current assets 

- stock and debtors 

- deposits and cash 
Current liabilities 

- interest bearing 
-other 


Market value of Ksted investments, 
associates and subsidiaries not 
consolidated 

Carrying value of listed 
investments, associates and 
subskfiaries not consolidated 

Net worth per share (rand) 


47,2 

2187,0 


Earnings 

(cents per share) 

600 


47,4 
2 136.7 


4 814,6 

4 197,1 

3 216,8 

1 597,8 

2 690,2 
1 506.9 

2 627,6 

2 060,4 

320,7 

2 306,9 

160,2 
1 900,2 


6 403,5 

5 390,7 

3 070,2 

1 837,0 

1 089,4 

903,1 

137 

105 



91 92 93 94 


Comment 

Operating profit improved by I3per cent from R719.5 million 
to R813.9 million. This translated into a 17 per cent rise in 
earnings attributable to equity shareholders from 466 cents 
per share to 567 cents per share, and toe total dividend 
declared was increased by 17 per cent to 123 cents per 
share. 

The percentage contribution to Anglovaal consolidated 
attrfoutable earnings from Anglovaal Industries Limited (AVI) 
was marginally higher than in 1993. At R241.2 million, toe 
contrfoutton was nevertheless 19 per cent higher than the 
comparative of R203.1 rnDHon toe previous year. This was 
achieved by an increase in AVI's turnover of 16 per cent and 
a reduced effective tax rate, partially offset by pressure on 
margins. Within AVI. significantly higher relative contributions 
emanated from AVI Diversified Holdings Limited, Grinaker 
Holdings Limited and Anglo- Alpha Limited. 

The Increase in earnings from mining was substantially the 
result of the higher royalties received from the Venetta 
diamond mine by-subsidiary, Saturn Mining, Prospecting and 
Development Company (Pty) Limited and increased dividends 
from gold mining Investments held directly and via subskfiary, 
Middle Witwatersrand (Western Areas) Limited (Midwits). 
Despite expensing R27,9 million relating to the Slaaihoek 
exploration project, the contribution to Group earnings from 
Midwits increased to R36.8 million. 

Prospects for the current year 
With toe prospect of a continuing international economic 
recovery favourably affecting export volumes and prices, 
good summer crops, and continued fixed Investment outlays 
in the private and public sectors, foe cyclical upswing should 
continue and gather further momentum in 1995. 

There Is some concern with the balance of payments position, 
which remains fragile and susceptible to adverse domestic 
political developments, and on-going labour problems which 
may affect investment decisions by domestic and foreign 
investors. 

Within toe framework of exciting challenges- Internationally, 
to attract investment to be able to compete with imports and 
to enhance our exports, and locally, to remain a responsible 
profit-oriented corporate eftteen of South Africa - Anglovaal 
has budgeted for an increase in earnings tor the current year. 



92 93 94 


Final dividend declaration 
Notice is hereby given that final ordinary dividend No. 97 
of 86 cents (1993: 72 cents) per share, making a total for 
toe year of 123 cents (105 cents) per share and final 
N ordinary dividend No. 9 of 88 cents (72 cents) per 
share, making a total fbrtoe yearof 123 cents (105 cents) 
per share, have today been declared payable to holders 
of ordinary and N ordinary shares! salient dates rotated to 
the declaration being as follows: 

1994 

Last day to register for dividends and 
for change of address or dividend 
instructions 


Period during which transfer books 
and registers of members win be 
dosed (both days inclusive) to 
determine which members qualify 
for toe dividends 


Friday, 21 October 


Saturday, 22 to 
Friday. 28 October 


Monday, 31 October 


Currency conversion date for 
Sterling payments to shareholders 
paid from London 

Dividend warrants postsdfdivldends 

electronically transferred Friday, 11 November 

The dividends are paid subject to 
conditions which can be inspected at 
the registered office or the office of the 
London secretaries of the Company. 


Annual report circularised 
(not later than) 


Thursday, 20 October 


Annual general meeting to be held at 

09:00 at toe registered office of 

the Company Friday, 11 November 

Period during which transfer books and 

registers of members will be closed 

(both days Inclusive) to determine 

which members may attend the 

annual general meeting Saturday, 5 to 

Friday, 11 November 


For and on behalf of the board 

B E Hersov Chairman 

Clive S Meneii Deputy Chairman 

22 September 1994 


Registered office 
Anglovaai House 
56 Main Street 
2001 Johannesburg 


London secretaries 
Angtovaaf Trustees Limited 
33 Davies Street 
London, W1Y1FN 


Directors: B EHwscv DUS. Hon. LL.D (Cfiaimvn). Cflve S MonoB (Doputy 
Chairman), B L Bernstein Hon. LLD. Or O O Dhtomo. E H Fox, 
J J OoktontuyB, J fl Heraw, Or E J Mabuza, R P Menetf, j c Robbertze, 
R T Swemmar, RAD WBson 


1 






!'•-! 








sst- {rw., t 







n Cs i 


if ?r , U 


'V,, 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 




w a mast 


INTERNATIONAL CAPITAL MARKETS 


Heavy futures trade magnifies erratic price movements 


By Conner Mkktetmann and 
Martin Brice in London and 
Frank McGurty in New York 

Europe's government bond 
markets saw another day of 
erratic price action, with price 
swings magnified by heavy 
trading in the futures pits and 
low turnover in the cash mar- 
ket. 

After a directionless morn- 
ing, most markets closed 
higher on the day. lifted by 
stronger US Treasuries and 
rumours of much lower-than- 
expected preliminary inflation 
numbers in Germany's four 
largest states. 

■ German government bonds 
rose sharply in the afternoon 
after the December bund 
futures breached important 
chart-technical resistance at 
88.50, triggering a flurry of 
short-covering. Tn late trading, 
the contract was up 0.70 point 
at 88.82. 

Rumours that the federal 


state of North Rhine-West- 
phalia would release favoura- 
ble inflation numbers today 
also lifted bunds. While gen- 
eral market expectations have 
been for a year-on-year western 
German inflation rate of 
around 3.0 per cent for the 
month to mid-September, some 




BONDS 

traders yesterday were talking 
of a rate as low as 2^ per cent 

Bunds derived some relief 
from the publication of the 
Bundesbank's bond Issuance 
calendar for the remainder of 
the year, which indicated the 
government plans to issue only 
two more long-dated bonds In 
the final quarter. 

“There isn’t that much long- 
dated supply left in the pipe- 
line - the funding situation 
looks better than a lot of peo- 
ple have feared," said a London 
bund dealer. 


■ UK gilt prices staged a late 
rally, rising nearly a point as 
the market digested a rumour 
that today's CBT monthly 
trends survey, not due to be 
published until after midnight, 
contained good news on infla- 
tion. 

Gilts’ increase was helped by 
a rise In bunds and on Llffe, 
the December long gilt future 
reached 99£ in late trading, a 
rise of IS points on the day. 
The yield spread over bunds 
was around 146 in lam trading. 

Mr John Shepperd of Yam- 
aichi said traders believed the 
CB1 survey, which is one of the 
factors taken into account by 
Mr Kenneth Clarice, the chan- 
cellor, and Mr Eddie George, 
governor of the Bank of 
En gland at their monthly mon- 
etary meetings, would show 
that the proportion, of compa- 
nies reporting higher prices 
had fallen. 

■ After outperforming most of 
Europe this week, Italy's bond 


market lagged gains elsewhere 
amid growing worries that the 
budget package under discus- 
sion may not be finalised 
before its end-September dead- 
line. 

All eyes are on meetings 
between government and trade 
union leaders over the govern- 
ment's pension reform plans, 
and traders said the market 
would remain nervous until 
some hard facts emerge. 

The Italian December bond 
future on Liffe fell 0.08 point to 
S&32. 

■ US Treasury bond traders 
took a measure of encourage- 
ment yesterday from com- 
ments by a former Federal 
Reserve policy-maker. 

By midday, the benchmark 
30-year government bond was 
^ better at 96£, with the yield 
slipping to 7.782 per cent At 
the short end, the two-year 
note was unchanged at 99g, to 
yield 6.491 per cent 

In the absence of any atten- 


tion-grabbing economic data, 
the morning brought some sub- 
dued buying on the bedraggled 
long end of the maturity range. 
There was no fundamental 
shift in the sentiment, which 
remained negative in view of 
recent evidence of accelerating 
infla tion 

With yields on the 30-year 
issue at their highest level in 
two years, the market made a 
slight downward correction in 
long-term rates. 

Speculation over the timing 
of the next increase in 
short-term interest rates con- 
tinued to dominate activity. 

A day earlier, comments by 
Mr Wayne Angell. a former 
Fed governor who serves as 
chief economist for Bear 
S teams, had helped posh bond 
prices lower. Mr Angell pre- 
dicted the central bank would 
decide to lift short-term rates 
by an aggressive 50 basis 
points at next week’s meeting 
of its policy-making arm. 

However, yesterday’s com- 


ments by Mr David Mullins, a 
former Fed vice-chairman, 
served to ease tensions over 
the rate outlook. The Washing- 
ton Post quoted Mr Mullins as 

saying the economy would 
achieve equilibrium with a 
rate increase of just a quarter 
point. 

Still, all the talk over policy 
kept up the pressure at the 
short end, which would feel 
the modest direct impact of 
any rate adjustment The two- 
year issue held steady in the 
cross-current 

Congressional testimony by 
Mr Alan Greenspan provided 
to be a non-event for bonds. 
With traders listening for any 
hints about policy, the Fed 
chairm an confined his remarks 
to banking issues. 

The market ignored news 
that initial claims for unem- 
ployment benefit had fallen by 
7,000 last week - anecdotal evi- 
dence that wage pressures 
were building in the labour 
market 


Kuwaiti public 
offering draws 
strong demand 


Abbey National delays launch 
of first global eurobond issue 


By Richard Lapper 

The first public offering of 
shares listed in Kuwait for 
over a decade was heavily 
oversubscribed yesterday. It 
provided a strong lift to the 
local capital market and the 
government’s privatisation 
programme. 

Investors from Kuwait and 
other Gulf Co-operation Coun- 
cil countries put in bids esti- 
mated to total £3 50m to buy 
30m shares in Commercial 
Facilities Company, a con- 
sumer finance company which 
specialises in car loans. 

Commercial Facilities shares 
were priced at KD0.70. an 11.4 
per cent discount on their last 
closing price of KD0.79 on 
August 28 when the stock was 


suspended from trading on the 
Kuwait Stock Exchange in 
preparation for the sale. 

Kuwait Investment Author- 
ity - a division of the ministry 
of finance - will reduce its 
stake to less than 37 per cent 
from 54 per cent, as a result of 
the deal which was managed 
by the National Bank of 
Kuwait. 

After the Gulf war in 1991 
Kuwait announced a pro- 
gramme to sell some of its 
stakes in about 60 domestic 
firms. 

Sales of state electricity, 
water and communications sec- 
tors have been mooted. Com- 
mercial Facilities has assets of 
more than $420m, supported by 
shareholders' equity of 
$U5m. 


NEW INTERNATIONAL BOND ISSUES 


By Graham Bowiey 

Volatile bond market 
conditions have forced the 
Abbey National B uilding Soci- 
ety to delay the proposed 
bunch of its first global euro- 
bond offering. 

It had planned to launch a 
$lbn-$2bn global offering of 
bonds with a five to 10-year 
maturity in the last two weeks 
of October but it will wait until 
conditions improve, officials 
said yesterday. 

"These are not the right con- 
ditions to launch an issue of 
this size, especially when it is 
your first global offering," said 
Mr Gareth Jones, the Abbey 
National's treasurer. “We are 
going to wait for a substantial 


WORLD BOND PRICES 


improvement in market tone 
before we revive the offering." 

However, he raid this did not 
represent a threat to the build- 
ing society's funding pro- 
gramme. Abbey National has 

INTERNATIONAL 

BONDS 

raised a total of $8bn this year. 

Mr Jones said: “Our borrow- 
ing is in pretty good shape and 
we do not need extra money. 
We have no {dans to raise sig- 
nificantly more this year." 

Abbey National is still seek- 
ing SEC registration to enable 
it to sell bonds into the US. 

The volatile state of govern- 
ment bond markets last week 


forced the World Bank to delay 
its $1.5bn global offering of 
five-year bonds, which finally 
came to the market earli er this 
week. 

Lebanon is likely to launch 
its long-awaited offering of 
three-year fixed rate eurobonds 
late next week, lead manager 
Merrill Lynch said yesterday. 

Interest in the country’s first 
eurobond offering, which wffl 
be at least $150m, has been sig- 
nificant, Merrill Lynch said. 
Demand has been seen from a 
broad range of investors, 
including emerging market 
funds, Swiss hawirg ami Japa- 
nese investors, officials said. 

In the Ecu sector, the Euro- 
pean Investment Bank 
launched a Ecu300m offering of 


IIS DOLLARS 

Toyota Motor Cracft Corp. 

RepubSc at Trinidad & Tobago 

Nonfcatoi(4t 

Banco da Cradto Arpertteofl) 

ECUS 

Empoan [nvesfanont Baade) 

AUSTRALIAN DOLLARS 
Commanfaank pteae Finance 

ESCUDOS 
Banco Santanderidtt 

SWISS FRANCS 
Wold Bert* 

Merck* Co. 

LUXEMBOURG FRANCS 
BMW Finance 


Amount Coupon Price 

m. % 

300 6.75 9&85R 

ISO 11.759 9&734R 

100 (al] 99.58R 

as MR 


Maturity Fees 
% 


Spread Book runner 
bp 


OcL1998 0.125R +12{W1 2yri CS Fret Boston 

Oct2004 1.00R +425(7ttH-04J CWba* Intametianrt 

Oct-2004 0_2ST - Chemical investment Bank 

Sap-1985 (b) R +27S(T-bM) Mem» Lynch International 

00.1969 0l 2SR +2(594-69) Swiss Bank Cap. 


Moody’s lowers debt 
rating of IBJ to Al 


126 10.00 101.90 Nov.1999 2X0 

16bn (01) 100-00 QCL2004 urrtacL 

200 550 102^0 Oct. 1999 1.75 

200 Sl 375 102X0 Nov. 1887 1JO 

3bn 8.25 102.35 NM.2000 1.675 


Hanbros Bank 


BSN Portugal 


UBS 

Credit StsSEO 


Fma4 Wmo and nraveaflabie urtees stated. The yield spread fcrw ralavan gcrwmmera bendy al larch la stpptad by the lead 
manager. ^Floating rata rata. 9Senri-amual coupon, ft fixed re-offer price: lees are shown at the re-otfer inwL a) eatable In OcL98 at 
par. al) 3-rrrth Ljpor +45bp to Oct88 and +185bp Hwraa fta t. fa) Meed today, c) Spread ratafee to French Govt Ecu STAN'S, d) Calabfa 
aimurify star 5 yra M par. dl) B-mh Usbor +I5bp. I) Long 1st coupon. 


five-year bonds priced to yield 
two basis points above French 
government bonds. 

At least half of the bonds 
were sold to institutional 
investors, with a strong UK 
bias, lead manager Swiss Bank 
Corporation said. 


BENCHMARK GOVERNMENT BONDS 

Red Day's Weak Month 

Coupon Data Price change Yield ago ago 


Auanda 9.000 09AM 

Belgium 7250 04AM 

Cannon ' 6.600 O&ttM 

Denmark 7.000 12AM 

France BTAN 8000 OSffiS 
OAT 5.500 (MAM 
Germany Bund 6 750 07AM 

tiriy 8.600 06AM 

.tjpan No 119 4.600 06/99 

4.100 IZAS 
Neitwrlonds 5 7SO 01AM 


Nmtwrionds 
Scan 3.000 05AM 

UK Ots 6-000 08/99 

6.750 11AM 
9.000 KVD8 
US Treasury * 7.250 08AM 

7.500 11/24 

ECU (French Govt) 6.000 04AM 

London dosnp. Ufa* Volk mta-dajr 
t Grass (wdurtna wam*Sng not a 125 pa 
tar US. UK n 33Kb. tftas « aecerrt 

US INTEREST RATES 


83.1600 - 10.10 10.10 8.31 

91.1500 -0.030 8.63 &58 8.40 

83X5D0 -0.100 9.04 8.77 8.70 

85.9000 +0.150 9.18 9.13 &X8 

101.3750 +0.120 7.56 7.48 7.22 

82.7000 +0.300 8.17 &Q3 7.61 

94.0400 +0530 7.63 750 7.24 

61.4800 -0.160 11.71f 1158 11.62 

1037280 - 3.67 3.90 3.97 

075890 - 4.50 454 4.66 

875800 +0560 759 7.44 758 

815500 +0.400 1156 11.18 10.96 

89-07 +13/32 675 856 858 

85-22 +24/32 891 8.76 853 

100-30 +24/32 888 674 855 

97- 29 - 755 756 752 

98- 23 +13/32 7.78 755 7,47 

822000 -0570 852 854 839 

YMdK Locri marker Mandrel. 
com pxyatia by ncncooKJonal 

Source: MMSM*rri*n« 


Italy 

■ NOTIONAL ITALIAN GOVT. BOND (BTP) FUTURES 
(UFffr Ura 200 m lOOths ot 100% 

Open Sen price Change High Low 
Dec 98.46 9856 -054 98.64 9782 

Mar - 97.75 -0.04 


Esl vol Open ire. 
40682 61823 

0 660 


■ ITALIAN GOVT. BOND (SHF) FUTURES OPTIONS (UFFE) Lrra200m 100013 of 100% 


Strike 

Price 

Oec 

■ CALLS — 

Mar 

Dec 

- PUTS 

MX 

9600 

2^8 

3.14 

1.92 

338 

BBSD 

159 

2-91 

Zt3 

3.65 

0900 

1.73 

2.69 

Z3Z 

393 


EsL voL total Crib 662 Pula 468 Previous day's open CL Cats 11716 ftas 16743 


Spain 

■ NOTIONAL SPANISH BOND FUTURES (HEFT) 
Opon Seri price Change Mgti 
Dec 8555 855S +057 65.60 


Low Esl vqL Open irrt. 
65.08 32.496 68561 


UmcMkne Tnrasiy Bffls and Bond mens 

One Damn 463 tap yaw MB 

Pi men® 76 Iwnrett 4 75 TJnejw 678 

Rntartrenrah 6 h Ttao worth™ — . — 492 flwicra — 7.19 

mabnos — Show* 5* I99*w 7^ 

FaUBKhal WnwmtaL. - taejev — - 590 30 -yMi 1 J 9 


BOND FUTURES AND OPTIONS 
France 

■ NOTIONAL FRENCH BOW FUTURES (MATTF1 

Open Sen price Change High Low EsL wL Open tat 
Dec 110.16 110.10 -0 04 11030 109.98 117543 133570 

My 109.44 109.38 -0.04 109.44 109.40 3 7.160 

Jun 10874 10868 -004 108.74 10874 2 3S0 


■ LONG TERM FRENCH BOND OPTIONS (MATTF) 


■ MOTIONAL UK GW.T FUTURES (UFFET £50500 32nds ol 100% 

Open SeKprice Change «gh Low EsL vol Open tm. 

I Sep 99-04 99-22 +0-24 99-08 99-04 45 18408 

+0-26 99-05 98C5 

♦0-26 


45 18408 

56807 95541 

0 0 


Dec 98-09 98-30 +0-26 99-05 984)5 58807 » 

Mar - 98-10 +0-26 - • 0 

■ LONG GILT FUTURES OPTIONS (LffFE) CS0.000 friths oM 00% 

Strike CALLS PUTB 

Price Dec Mw Dec War 

98 2-30 3-04 1-34 2-*8 

gg 1-S7 2-38 i-«i 3-18 

100 1-26 2-11 2-30 3-65 

Esl «*- row. CteU 3111 Puts 600. PrevlBia tray's open InL. Cate 45829 Pus 326D3 


Price Oct Doc Mar Oct Dec Mar EcU 

110 059 160 - 0.46 *-56 235 ■ ECU BOND FUTURES {MATTF} 

”1 JJ! y2a ’f° J£ - Open Sett price Change High Law Esl vd Open hit 

113 0.03 0.4S - - Dec 79.00 7892 79.16 7884 943 7,735 

114 - 0.27 - - 4.12 

Cat vol total. C* 16233 Puo Sr, no . Pumoub day's opon CsSs 230049 /tans 332J82. 

US 

U US TREASURY BONO FUTURES (CgT) S10QJ00 32ndB ol 100% 

■ NOTIONAL GERMAN BUND FUTURES (UFFET OW25QJOQ 100th* c* 100% Open UOB&t Change High Low EsL voL Open InL 

^ 6^ price Change High Lt*v Eet vol Open wT Dec 994» 99-12 +007 99-15 »Ol 464^72 3B&.4 BS 

s K £ 3S ss ’IT *=■ = SS SS SS K ™ ’r 


87.40 87 95 


+061 87.62 87.40 


96- 21 +0-05 BS-24 

97 - 31 + 0-04 88-00 


6.169 10.545 

70 773 


■ BUND FUTURES OPTIONS (UFFE) PM2S0.00Q pohita o > 10094 

SWl0 CALLS — PUTS 

Pnco Oa Nov Doc Mar Oct Now Oec Mar 

BSSO 0.30 1.00 130 1.45 0.15 035 1.15 ZOO 

8900 0.08 0 74 102 1^2 G43 109 137 Z27 

6SS0 0.02 0.53 0.80 1.02 887 138 1^ 237 

ESI vri total can KWO Puts 14317. Prenou* Oey'a open Ire. Cans 216193 F\*» 207339 


UK GltTS PRICES 


. TMt -1994 ... 

turn M Red PntoC + re- WQh low 


Japan 

■ NOTIONAL LONG IBM JAPANESE GOVT. BOND FUTURES 

&JFFS) VI 00m lOOths of 100% 

Open Ctosa Change Hgh Low Est. vol Open irtt. 
Oec 10845 - - 10850 10844 763 0 

Mar 107.66 - - 107.66 107.66 25 0 

- UFFE contracts traded on APT. Ah Oran rawest fies. are tar premous day. 


_199*_ 
niceC+K- tan Lew 


BtraW (Lhwi W ■ 

TtfM9pc1W» 496 

trpe IPTi 11 78 

fjcn rj; vwo x 5.® 

lO'eRlS* 5*93 

Iran t?(.pc HTSitt - . 

M* IMS . - 1+5® 

ty,peis#eM . - 

tan t3Lee TW&tJ — tZfS 
Caav+iriuo tOB. 1196 98< 

T,«ra rat, ,i r t<M7faf. _ 72? 

TbusULk I 397 W UJJ 
fltn tflljoc HS7 .... 1803 

liras hLbc T99771 flffl 

155C 1997 • »ZS2 

■JlraeipB 947 

|CT7«4|>C1WB« 7.56 

Tiwvf’Vpr IWKJJ- 7.1 r 
lkK imS 5-» .- ,. *2 HI 

Tims IV, pe use*. 12® 

(4jfita*iWS 10“ 

riccy’.UC I90«I - - »» 


RHnimiMtTcart 

tKfl iJ'+peUW) - - 
frm inijh lew .. 
r.nwi<K ie® p — 
Conwt non uMatK I9M.. 
1 rras f«a tar 1 9M • — - 



Tirjs rtSHJ.- 

tftkSMI 

"gc root tl - - - - 

,va»i* 

iLpc-WC 
Ppc TKCIfl 
tOOCMB 


844 100«J 
574 102 

533 98,1 

6.74 10CSS 
713 105H 
7.41 IO81V 
TW UUa 
7h» »08.i. 

aw 19311 
317 WE 

B32 nor. 
ZB ID4fl 

B42 IOOB 
B.601I6U4 
865 HUE 
S.63 95W 
8X5 MA 
883 ItSii 
872 l?2Unl 

aw nos 
an ior,', 


891 «:W 
889 105% 
875 V3H 
894 105*1 

- m 
aeo ioo,; 
aw i i7jj 

910 104& 
8*8 69.'. 
an 69.; 
8 13 110.'+ 
801 93U 

90S 105U 


urn! 

107* 

B8A 

I07fl 

in>« 

ii7,; 

+A 121U 
*A H7B 
♦A H2A 

♦fi 100H 
+4 121U 
+A 1HA 
+* lW. 
-«s «IH 
+i 1141J 
+.; 

♦A 1(C 

♦A ,3, A 

-i 140A 
+•+ IZ5U 
+,'- H8A 


+.; iJ8* 
♦W 171 A 
+1, iwfl 
♦* 121JS 
— 10OA 
+ % MBA 
13W3 
+» 1 721. 
•■< 1WA 
+.1 MU A 
i3A 
+% USB 
+0 157A 


rtsatiUhpc 2001-4 — 
100*7 FmktPtk 7999-4 — 
MB Qwwrsbn9t2pc2004 — 

.si nwWraeJOWtt 

£8 cwsijpcaiffi 

Trera 1?*afc 2003-6 — 

fnss 1 1^x2003-7 

g&t taraaijDcawtt — 
ITOi 13*2pc 7004-8 

i04i.- Tiwjsfaczooatt — 

itor, 

*160 

,+■■ iitaaspeTi*® 

,, D V Trent S1«pc 7010 

lot B 0 » ape In I 0 H tt — 

Tires She 2012ft 

Trea5*iflc 2000+1 2ft_ 

Tires SK 2813ft 

7 Tuscan 2-i5tf 

Tran Wpc 20i7ff 

1113 Bc&i^e 2013-17 

105,* 

HH 

104(2 

990 

lieu 

IDJIj Ort«*4|*— 

SKI W*lisn3»«*t* 

jjji OwrJ^peVl ML 

1020 T«B3PCW* 

STi crews*!!* 

104*7 iWreg’N*. - - - 


83i non 

7X5 7B»| 

9X2 1 

880 85il 
899 103BN 
9-3i nn. 
890 91B 
887 8 ZW 
831 113B 
8X9 86% 

93112SA« 
8X710033! 


8S1 UB 
733 8X7 

8B6 880 

as 879 
7X1 854 

BAD 875 
855 872 

873 871 

841 836 


+0 1«SU 

+^» »8A 

+C 125A 
+B 1®*i 

♦B ias*i 
+g i43A 
+0 1*20 
+T, 111H 
136A 
+4» H« 
+B 151A 
*\ 13« 


♦A USA 
«A 

+12 1 26“ 
♦12 1275. 
♦B 93% 

+B 

+0 114% 
+12 128*. 
+1 l58*s 


•A S9*, 

+*» 54U 
-A 71 
_ 44^ 
+A 38*i 
-A 37*4 


— TUd_ 



_ 1994 — 

111 

G) Wee E 

-a- 

*9 » 

Ura 

W 

L21 

198% 

ft 203% 

I97Q 

US* 

377106%x! 

ft 

H3& 

ICfci 

1<6 

188164%d 

+A 

176% 

163% 

357 

as 

180% 

♦i 173% 

159A 

157 

890107US) 

+>’, 

118% 

IDift 

865 

891 

1B6i 

+:t 

1WJ 

lesa 

870 

893 

150% 

155,; 

ft 

ibb,; 

149% 

372 

353 

♦A 

175% 

154% 

3.75 

894 

127S 


l*% 

126% 

3J8 

896 

135% 

ft 

t57& 

134% 

1S2 

897129UC 

»ii 

157tt 

129*2 

MI 

895 

107% 

+ % 

iC5% 

385 

899 

106% 

♦% 

>28il 

105% 


Other Fixed Interest 


Mica Der 11% 3710 

A5taiDrelO*«K3XS_ 

Btarti1*!#e20i2 

HOTjCwB*2Pe '10 

9reC®T896 

13PC-97-2 

lywnutart^eSOil. 

Uata I3*£!r 203E 

L k w p tri 3*}oe Wtl 

ICC3DC2BA9. 

Mmaearii>3pe2007- 

hbl wtr-apCB* 

IMdB«l^3%pca21. 

4*<pc 82024 

ltataoS6«aiS»ot200S 


_ Udfl — 

W ted PpeeE+a- 

872 931 154-! - 

853 829 107!i — 

9X7 953 116*! _ 
907 - 93*1 — 

S* - 99% _ 
12-6 - 106 - 
1887 1(2.19 13Si — 
1057 - 126*! - 

859 - 36*2 — 

9X8 - 32 _ 

1813 9.73 113*! _ 

tie 830 67*! — 

- 452 131*! — 

- 4X0 139% — 

1813 - 138 — 


The pricing spread widened 
to six basis points when the 
bonds were freed to trade. 
However, the relative scarcity 
of such an issue and the attrac- 
tion of the current coupon of 
ay. per cent means that the 
bonds will soon trade below 


French government bonds, the 
lead manager said. 

The offer in g marks the EIB’s 
return to the Ecu sector for the 
first time since March 1993. 
and the first time it has 
tapped the five-year area since 
1989. 


By Emiko Terazono in Tokyo 

Moody's Investors Service, the 
US credit ratings agency, yes- 
terday lowered the long-term 
debt rating of Industrial Bank 
of Japan, a leading Japanese 
long-term credit bank, to Al 
from Aa3. 

The agency said the bank 
faced continued weak profit- 
ability due to larger-than-ex- 
pected asset quality problems 
and the bank’s weak retail 
base. 

Moody’s said it expected the 
bank’s profit margins to 
remain low, constraining its 
ability to solve its bad loan 
problems. 

IBJ is regarded as one of 
Japan’s leading wholesale 
banks, and retains a strong 


influence on companies. 
Moody's decision is likely to 
hurt an already weakening 
investor confidence toward 
Japanese banks, which have 
been severely hit by mounting 
bad loans. 

Moody’s said although the 
bank held large unrealised 
gains on securities holdings, 
which could be used to offset 
the low profit margins, the vol- 
atile Japanese stock and bond 
markets could hamper 
attempts to realise profits on 
its portfolio. 

However, the agency added 
that IBJ still held a wide range 
of clientele, and would benefit 
from deregulation in the finan- 
cial sector, which would allow 
banks to move further into the 
securities business. 


FT-ACTU ARIES FIXED INTEREST INDICES 

Moe Mm 71w Day's Wed Accrued xd ag. 

UK rats Sep 22 ch an ge % Sep 21 Merest ytd 




— Low eonjon yield Metflum coupon yield- — Mgh coupon ylefcl — 

Sep 22 Sep 21 Vi- age Sep 22 Sep 21 Yr. ago Sep 22 Sep 21 Yr. ago 


1 

Up to 5 years (24} 

IIBjOT 

+ 0.18 

118^5 

1X7 

8.13 

5 yrs 

8.88 

B35 

833 

850 

9.00 

660 

9.06 

815 

6.80 

2 

5-15 yen (21» 

136.41 

+0.66 

13531 

1.85 

9.83 

15 yre 

8.76 

£87 

718 

893 

9.03 

734 

9.14 

924 

737 

3 

Over IS years (9} 

151J3 

+0.82 

150.60 

i.ei 

9-81 

20 yre 

8.69 

877 

7J0 

8.93 

903 

739 

899 

958 

739 

4 

trroriecmablea (B) 

174J3 

+0.84 

172.77 

810 

8.83 

IxretLT 

8.73 

881 

7.45 







5 

AS stocks (60) 

134.41 

+U53 

13871 

1.78 

9.32 



















— 

— Inflation 5%—- 

— 

— 

Inflation 10% — 

— 



Sep 22 Sep 21 Vr. ago 


5.07 Up to 5 yrs 
3.65 Over 5 yrs 
4.04 


4.06 4.09 2.59 

3.95 3.97 3.22 


6 Up to 5 years [2) 184.15 +0.09 163.99 -0.15 5.07 Up to 5 yrs 4.06 4.09 2.59 

7 Over 5 years (11) 170.50 +0.30 170.00 0 67 3.95 Over 5 yrs 3.95 197 3.22 

6 Aa stocks (13) 171.04 +0.26 170.57 058 4.04 

5 year yield — — 15 yet 

Debanturae end Loane Sep 22 Sep 21 Yr. ago Sep 22 Set 

9 Debs & Loans (76| 12550 +0.78 12452 257 758 9.93 10.02 7 92 9.86 9.! 

Average (yen redvmpcon yields are rtmn Cm Coupon Bands Imr 0fe-7*fc; Medkarc OT+-tO'»H; Mg* and over. T R«i yirid. vtd rear to aau. 


Sap 22 Sep 21 Yr. ago 


2.50 2-93 1.75 

3.75 3.77 354 


+0.78 12452 


5 year yfekl 15 year yield 25 year yield 

Sep 22 Sep 21 Vr. ago Sep 22 Sep 21 Vr. ago Sep 22 Sep 21 Yr. ago 

9.93 10.02 7 92 9.86 9.95 Bl 24 9.79 958 A 37 


FT FIXED INTEREST INDICES GILT EDGED ACTIVITY INDICES 

Sep 22 Sep 21 Sep 20 Sap 19 Sep 16 Yr ago Ugh' Low* Sep 21 Sep 20 Sep 19 Sep 16 Sep 15 

Qovl Secs. (UKJ 90.03 89.71 8954 9022 89.98 10150 107.04 8954 Gift Edged bargains 915 1375 1035 108 7 80.4 

Fixed In ternet 10857 10650 106.73 10655 10750 122^45 13357 108.50 S-riay average 104.4 1028 975 94.4 95.1 

* tar 1984. O mmw Saeuttras hiyh ence cnap taw : 177.40 (Bri/39. taw 4818 (3/1/7S). Rued hMwc N*i Since compeeion: 133.07 (71/1/90 . tow 5053 (3/1/75) . Beak IOO Oomrenant SecuiUra 15/10/ 
28 aid Food hrereat 19CO SE aaMty mere retrasae i97A 


FT/ISMA INTERNATIONAL BOND SERVICE 


Liaiad ae Irtart Warnflcrol bends *» *48rt» than a an ada^rata sacondrey market. Latest prkraa at TOO pm on Saptranber 22 

batted Bd Offer Cbg. Yield tamed HM QBar Chg. VMd 




U5. DOLLAR STRAIGHTS 
Attaay Ntf Traasuy 6 *! 03 - 

Aben Rodnee 7^ 96 

Autre 6*2 00 

Bark of 7±yc 8 % 98 

BrtBkmS*] 03 — 

ERZ7\ 97 

BteftGas021 

CmadaSOe 

CheuigKonfl 7x15*2 98 — 

Owe 6*2 0 » 

Cand Biope 8 66 _____ 
credl Foncrar 9*2 99 _____ 

Dhvtb*5^93 

EastJapeiR*w 6 % 0 l> 
ECSC 8 *« 86 

EEC Sit 98 

BB 73(96 

B5A97 

Etac ds Francs 9 98 

BnAna^i 96 

Ex-*n Bank .Wen SCB 

Eiporl Dw Cap 9 1 ! 98 __ 
federal fM Atari 740 04 __ 

RrtandfrV97 

Fimsfi Etpcri 9% 95 

Ford Moor Credt 6*4 68 — 

Gai Bee Captrt 9 *b 98 

GLVC9*8 98 

tad 6 k Japan fin 7^ 87 — 

bar AmerOre 7% SB 

Uy6%23 

Jwre Dev Bt 8 *b 0 * 

Korea Bsc (Air 10 98 

tore Sec ffeera 6 *j 03 

LTC 8 Fin 8 97 

MaracMa Bee 7^« 02 

Ncmay7*.a7 

Ocaw 7*i 03 

Qsnr KorMtoank 8*2 01 — 

RtapCsnataTVW 

Porugas^CQ 

Quebec Hpfed 9*i SB 

Quebec Rc*998 

Sarefcuy B*a 98 

SA5 1099 

SfCF 9*2 98 

$3*16*2 99 

&ea Bk NSW 8 *z 96 

Swdm5*2 95 

Svetah Eapori 8 % 9B 

Tokyo Sec Row 6 *i 03 

TotydUdrepobft(96 


IMad Kogdan 7*s 97 

90 90*4 **a 8.15 VefcraagmWFinJOB 

100 *s 101 7.43 WaM 8 a* 015 

103% «M J* 753 VfcridBak5%03 

101% UB\ -*# 757 Worid Bank DO 

83*2 83V 8,13 

101% 101^ -*t 759 SWISS FRANC STRAIGHTS 

10 10 % - 1 * am Arisi D m Bo *8 *0 

i03*i 103*2 -*8 am Ae»ta4*200 

89*2 90 870 Covd Eaope 4^ 98 

ffi*. 8rt ->5 SJ5 DenmsL4*«Sa 

101% 102^ -h 858 SB 6^04 

107*5 +** 7.48 Sec da Franca 7*a 08 

B5% 96*« 7.13 Rrtbnd 7 * 4 « 

90*s -*l 821 Hymril Moax fil 8*2 97 — 

I02*j ICZ^ -*a 752 Intend 7^00 

102*4 10ft - 1 * &B1 KobeftOI 

*0lk 10ft 856 Qntar»a 6*4 CD 

W5ti 108 7.T3 Qrabac t+pto 5 08 


.5600 100*2 TDD 5 * -*8 693 

. 1000 93*. flft -*■ a« 

. 2000 1ft 1ft 4*a B5B 

. 3000 87V. B7*8 -*2 758 

.1250 108 10ft +% £95 


-ICO 09*2 1CD -*4 6X6 

1000 flft flft 523 

- SO 9 ft 8 ft 499 

1000 aft 86*2 ft 552 


Abbey Nal TnHEwyB 03 r. 
MareatacsnHWE — 

Hrltafi Lad ft 23 E 

Dartnekft 98E 

BB 10 97£ 

Htata 1ft 97 C 

Harecn 1ft 9T £ 

HSBC HoUtags 1156 02 £ . 

kafy 1ft 14 £ 

Japan Dev Bk 7 00 £ 

Lad Secs ft 07 £ 


1000 8ft 
_ 1 C 0 106 ** 
.150 85*4 
.800 02*2 
-637 Itlft 

.ioo na *4 

.500 102*4 
_ 153 107*3 
.400 10 ft 
.200 9 ft 
.200 9 ft 


QBar Chg. Yield 

8 ft ft 954 
ioft am 

8ft ft 1055 

Oft +*4 a.10 

103 888 

10ft +*i 879 

10 ft ft 829 
10ft ft 1024 
104*4 ft 996 
Oft ft 816 


Ktft 10ft 856 Qntartaft CD 

10ft 106 7.13 O*t»cHydo508 _ 

10ft 105*i ft 752 SNCF7 W 

10ft 10ft ft 871 Worid 804(503 

10ft 10ft 752 ritartt Bar* 7 01 

10B»» 107 742 

97 9ft 850 YBI STRAIGHTS 

9ft 99 752 Bel0bm59B 

VB 103*4 8A2 SB ft 00 

98*2 97 758 Fntand ft 98 

-Klft »ft ft 686 taaerAmai Dav 7*4 00 . 

102*2 103 ft 792 Mr 3*2 01 

10ft lift *2 7A6 Japan Dev Bt59B — 

101*2 raft 878 Japan Dw Bk ft 01 _ 

79*2 79% ft 954 MppmTdTd 5% B6 . 

10ft 103 792 Nom^iftW 

104*2 104% £73 SNCFftOO 

8ft 8ft ft 896 Span ft 02 

101 101% ft 7.48 taedBi4%98 

9ft 6ft 815 Watt Bar* ft 02 — 

100% 10ft 896 

9ft 95 ft 827 OTHB* SimiGHlS 


.300 

105 

105% 

ft 

807 

Crono 11% 01 £ 

- 100 

106 

■»6% 

ft 

876 

. 100 

107*2 

108 


6J0 

ftawnen 8% 03 E 

- 250 

Bft 


ft 

084 

.300 

106 

106% 


£84 

SraemTrenMftMC 150 

107 

107% 

ft 

969 

IOO 

106 

106*2 

ft 

£22 

Tokyc Bee Rraer 11 01 C 

_ 150 

106 

106% 

ft 

972 

.100 

107 

108 


816 

AltaeyNrtcralOS6NZS 

_ 100 

S3 

64 


980 

.240 

102% 

103% 

ft 

587 

TOC Fn 9% CC KZS 

-75 

95 

9B 

ft 

1020 

.400 

99% 

100 


£3 

Cracfe Local GDI Hi 

7000 

88% 

88% 


823 

.100 

8ft 

85% 


£78 

SecdBFiarce8%!2Fft 

3000 

97*2 

SS 


£99 

.450 

103% 

107 

ft 

£06 

SNCF 9*4 97 FFr 

4000 

103% 

10ft 


7.49 

150 

95% 

96 

ft 

586 







GOD 

106% 

106*2 


580 

FLOATING RATE NOTES 







9ft Oft 
100% 100% 


_ 75000 103 10ft ft 434 

. 100000 110% 111 ft 457 

- 50000 10ft raft 320 

-30000 113% 114% ft 441 

. 300000 92% 92% ft 455 

. 100000 103% 103% ft 424 

.120000 111% 111*2 ft 456 

-60000 104% 10ft 233 

. 150000 104% 104*2 343 

- 30000 111 lift ft 4 AS 

125000 107 107% ft 4£P 

. 150000 101% 101% ft 4JB 

.250000 104% 104% ft 451 


103% 103% ft 7J7 Gerfinanee Lut B% 99 IFr _ — 1000 105% 106% 756 

tOD% 101 ft £88 KBDeittadtritfaL8*2 Q3LFr — 3000 100 101 &49 

85*4 85*2 821 Watt Bo* 8 » Ur 1000 100% 101% 750 

106*2 *07 7JC ABN Ann 6% 00 FI 1000 95% Sft ft 787 

103% 104% ft 7JB Bar* Ned Geatowran 7 03 R _ 1500 94% 9ft ft 758 

103*2 W4 ft 720 AtraWfeMnce 10% 96 CS 500 103% 103% 7.71 

105% 106 843 Bel Canada 10% 99 CJ 150 104%' 105% 834 

106% 107% 7A0 M* Court* 10 B6CS 500 ICQ 100% 7£B 

95% 9ft ft 755 BB 1ft SB CS 130 10ft 106 833 


95% 9ft ft 755 BBIftttCS 

102% M>3 £92 tac da Fiance A 99 CS . 

99 99% 637 Gen Sec CbpM 1096 CS 

102% 102% ft 875 KWW Fte 10 01 CS 

87% 88% 809 NpponTdTd TO*«99 CS 

102% 102% 893 OnmBISCi 

9ft 95*2 ft 754 Otato Hydro 10% 99 CS 


- 275 102% 103% ft 953 

.300 102% 109% 817 

.400 102% 103% ft £35 

_3» 104*2 105% a«> 

1500 91% 91% ft 959 

.500 105% 106% ft 030 


Aooey NaHTeasuy i 1 . 99 — 
Bara Roma 099 

Brigun^WDM 

BFCE -002 96 

Bntana£109B£ 

Canada ft ® 

CCCEOOBEeu 

CteiMUnrnasiOO 

Denmari-ft 96 

Cbesttaer finance i 98 DM — 

Ferro dd Sta 010 97 

Finland 0 97 

ldanaQ83 

tab 1 4* 

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FINANCIAL TIME S FRIDAY SEPTEMBER 23 1994 

COMPANY NEWSsUK 


New supermarkets help 
Morrison advance 24% 


By Neil Buckley 

Wm Morrison Supermarkets, 
the regional superstore group, 
shrugged off Intense price com- 
petition in the grocery market 
and beat expectations with a 24 
per cent increase in interim 
pre-tax profits Cram. E382m to 
£47.4m. 

The improvement was driven 
by a 15.2 per cent Increase in 
takings, in spite of what Mr 
Ken Morrison, chairman, 
called the “growing tendency 
for the consumer to seek 
improved value and lower 
prices In all purchases", and 
deflation in many product 
areas. 

Like-for-like sales, which 
exclude new store openings, 
increased 4.4 per cent, 
although the rate of increase 
had slowed in the second half. 

"Trading at the moment 
remains keenly competitive 
with ever present pressure on 
profit margins,” Mr Morrison 
said. 

He added that sales had been 


boosted by the legalisation of 
Sunday opening, but "the prof- 
itability of this development 
has not yet been confirmed”. 

Five new stores opened dur- 
ing the first half, with a fur- 
ther two so Ear in the second 
hal f, and one more opening 
due this year. Morrison is plan- 
ning to open 10 stores next 
year, and has begun a refur- 
bishment programme of older 
stores. 

It has secured a £150m 
revolving credit facility to 
finance future expansion plans. 

Total turnover in the half 
year to July 31 increased 15.4 
per cent from £746.5m to 
£86L8m. The increase in sales 
was backed by an improve- 
ment in gross mar gins through 
better buying, and a fall in 
wage costs. That enabled the 
group to report a 24 per cent 
increase in operating profit, 
from £39.1m to £4fL5m, repre- 
senting an Increase in operat- 
ing margin from &2 per cent to 
5.6 per cent 

Interest receivable was 


higher than expected at £L3m 
(£lm). 

The interim dividend is 
0.24p, a 20 per cent increase on 
last year's 0-2p, with earnings 
per share increasing 19.8 per 
cent from 3-33p to 4.05p. 

• COMMENT 

It is tempting to ask how Mor- 
rison does it. In what the chair- 
man describes as "undoubtedly 
a buyer's market” It has 
increased its gross margin 0.4 
points, reduced costs, and 
achieved a 15 per cent sales 
increase. Like-for-like sales 
growth has slowed in the sec- 
ond half , but new store open- 
ings are likely to keep total 
gaipg growth healthy, and the 
gross margin is expected to be 
held or improve slightly. With 
full-year forecasts upgraded 
yesterday to about £H7m, the 
shares are on a prospective 
multiple of 14.4, almost on the 
market rating. Some might 
think earnings prospects could 
justify a small premium to the 
market 


Graystone turns in £4. 13m 


By Peter Pearee 

Graystone, the engineering 
company, reported pre-tax 
profits of £4l3m on turnover of 
£36 2m for the first half. In the 
comparative period, the group 
was known as Ptarmigan Hold- 
ings and was a mini-conglom- 
erate with interests which 
included flowers, hotels and 
sausage skins. Profits then 
were £200.000 pre-tax on turn- 
over of £9.9m. 

Mr Dick Richardson, the 
chairman and chief executive 
who has overseen the meta- 
morphosis - in operation, man- 
agement an d financial control 
- since his arrival in June 
1992, said the results were the 


first with all the acquisitions 
in place. 

These included three engi- 
neering companies from Pros- 
pect Industries - which Mr 
Richardson originally floated 
out of Tace - Cableform and 
British Syphon Industries. 

He said that there were still 
non-core activities - two hotels 
and a publishing business - 
within Graystone, but that 
there were profitable and 
accounted for less than 2 per 
cent of group turnover. They 
would be sold when the right 
price was offered, he said. 

Borrowings of £4.1m at 
December 31 had been reduced 
to £1.2m at June 30 through 
the sale of non-core businesses. 


Mr Richardson expected that, 
thanks to the cash generative 
nature of the equipment and 
electrical distribution divi- 
sions, the group would he cash 
positive by the end of the year. 

The acquisitions contributed 
operating profits of £2J4m on 
turnover of £l7.3m, while con- 
tinuing operations made 
£L98m (£714,000) on turnover 
of £l&9m (£8.98m). 

Exports were "miniscule a 
year ago”: now direct exports 
accounted for 12 to 14 per cent 
of turnover and indirect 
exports for about 25 per cent 

Earnings per share were 
L45p (057p) and a final divi- 
dend of 0.14p is recommended 
for a total of Q.24p (nil). 


Irish Permanent plans 
October flotation 


CLS makes 
£8.37m at 
six months 

By Simon London, Property 
Correspondent 

CLS Holdings, the property 
investment company majority- 
owned by Sweden's Mortstedt 
family, yesterday reported pre- 
tax profits of £8.37m in the 
first half of 1994, compared 
with a loss of £1.49m last 
time. 

Excluding exceptional items, 
though, the company's first set 
of figures since making its 
stock exchange debut in May 
showed a profit before tax 
from continuing operations of 
£1.95m, against £575,000 
before. 

Alter adjusting for transac- 
tions completed since flota- 
tion, net assets per share were 
129p. 

The first Interim dividend is 
0.4p, although the Mortstedt 
family, who own 53 per cent of 
the shares, have agreed to take 
a scrip alternative. 


By Alison Smith 

Irish Permanent, Ireland’s 
largest building society before 
It converted to pic status, is 
coming to the market late next 
mnnth- 

The company is planning to 
raise I£50m (£49.4m) capital 
and is expected to be capital- 
ised at I£182.9m. Just under 
half the shares are being made 
available to people who were 
members of Irish Permanent 
when it was a mutual organi- 
sation, while the remainder 
have been placed with institu- 
tions in Dublin and London. 

Mr Roy Douglas, chief execu- 
tive, has made it clear that the 
society's decision to become a 
public company was based pri- 
marily on the desire to be able 
to raise equity capital, in order 
to compete more effectively 
with banks. 

He has emphasised, however, 
that Irish Permanent would 


not actively be seeking acquisi- 
tions after conversion. Instead 
it would be looking for a period 
of consolidation, after its 
recent purchases of Prudential 
Life of Ireland, the life insur- 
ance company, and Guinness & 
Mahon, where the main activ- 
ity is private banking. 

Its strategy is to continue to 
expand its retail fi na nc i al ser- 
vices business, broadening its 
range of services and making 
more use of its extensive 
branch network. 

With some 79,000 mortgage 
accounts and 590,000 savings 
accounts, Irish Permanent has 
a strong position In the Irish 
retail financial market, but Its 
cost/income ratio is the highest 
in the industry in Ireland. 

Some 30.8m shares are being 
offered at 180p each. A forecast 
final dividend for the year to 
December is 6p, giving an ann- 
ualised gross dividend at the 
offer price of 6.67 per cent 


Express 
not joining 
national 
price wars 

By Raymond Snoddy 

Lord Stevens, chai rman of 
United Newspapers yesterday 
undertook to keep the Daily 
Express out of the national 
newspaper price wars. 

As he announced a 36 per 
cent rise In pre-tax profits to 
£69 .9m for the six months to 
June, against £51.3m, Lord 
Stevens said: “Our policy is to 
maintain cover prices and 
enhance the value of our titles 
to readers.” 

Associated Newspapers, pub- 
lishers of the Daily Man, fc 
also extremely reluctant to cut 
prices. This means that it is 
likely the national newspapers 
middle market will continue to 
avoid the uncertainty now fac- 
ing both national broadsheets 
and the popular tabloids. 

United’s profits benefited by 
about £6m from acquisitions 
such as Hong Kong Interna- 
tional Trade Fair and Harmon 
Homes, the US real estate mag- 
azines. There was also a sav- 
ing of almost £64>m in reduced 
interest charges of £2L95m fol- 
lowing last year's rights issue. 

Operating profit increased 
by 17 per cent from £61.7m to 
£72. lm with growth In all 
business areas apart from 
national newspapers. Overall 
operating margins rose from 
13.3 per cent to 142 per cent 
On a llke-for-Uke basis, exclu- 
ding the effect of acquisitions, 
operating profit increased by 
6.5 per cent 

Lord Stevens warned yester- 
day that the recovery was still 
uneven and that the first quar- 
ter’s rapid growth in revenues 
had steadied to a more mea- 
sured pace. "Consumer pur- 
chasing remains uncertain and 
we still await a sustained 
increase in advertising voL 
ante.” 

Turnover rose from £447.6m 
to £508. lm. The pre-tax figure 
included exceptional profits of 
£390,000, against charges of 
£1.27m. Earnings per share 
were 19.1p (16.4p). The interim 
dividend has been increased 
by 3.3 per cent from 7.5p to 
7.75p. 

The national newspaper 
titles - the Daily Express, 
Daily Star and Sunday Express 
- had a turnover similar to 
last year with a 6 per cent 
increase in advertising reve- 
nues counteracting lower cir- 
culation revenues. 

All three titles lost circula- 
tion with the Daily Express 
down 9 per cent, although 
United said it had now stead- 
ied at 1.34m and started to rise 
in September, and the Daily 
Star down 3 per cent 

United is at the moment 
looking at possible exhibition 
and business magazine acqui- 
sitions hi the US and the east 
Asia. 

Mr Derek Terrtngton, media 
analyst at stockbrokers Kleln- 
wort Benson said the profits 
were £4m higher than expecta- 
tions but be was sticking with 
his full year forecast of £139m, 
compared with £ll8m. 

The shares moved from 498p 
to 500p on the day. 


Unquantified charges dash investors’ hopes of increased dividend 

Laura Ashley plans restructuring 


By Peggy HolOnger 

Laura Ashley, the clothing and 
furnishings retailer, yesterday 
dashed hopes of an increased 
dividend with its second profits 
warning in a year. 

The group said unquantified 
restructuring charges expected 
in the second half would hit 
full-year profits. This meant it 
would be unlikely to pay any- 
thing more a nominal div- 
idend this year, similar to the 
payment of (Up in 1993. 

The scale of charges would 
be determined by an extensive 
costs review, expected to be 
completed in January. 

The warning accompanied 
the announcement of interim 
pre-tax profits up from £L3m 
to £5.1m, after net gains of 
£2-2m covering disposals and 
exceptional charges. 

Gross profit rose 3 per cent 
to £80. lm (£77.4m). on sales 


also of £i48m (£l44m). 

Shareholders, who have 
remained loyal through several 
years of restructuring, are 
likely to be sharply disap- 
pointed with the company's 
comments. Earlier this year, 
hopes were raised of at least a 
marginal increase in the pay- 
out after the final results. 

"Investors have been holding 
out for a while now In the hope 
that these results would show 
they had managed to turn 
round the US and get to grips 
with stock problems,” said one 
analyst. “None of these thfagg 
has occurred.” 

The company also 
announced that it would not 
look for a chief executive until 
the cost review had been com- 
pleted. A new management 
team had been put in place fol- 
lowing the departure of Mr Jim 
Maxmin, as chisf executive, 
and Mr Andy Higginson, as 


finance director. 

Mr Geoff Haslehurst, com- 
mercial director, has become 
finance director and Mr Gra- 
ham Sear Is, former managing 
director of DunhDL is to con- 
tinue as managing director for 
the Hm* being. 

Mr Haslehurst admitted that 
the prospects of further 
restructuring had been disap- 
pointing to the group and 
shareholders alike. However, 
costs were too high. 

Laura Ashley would also 
have to tackle further stock 
problems, although these were 
not expected to have a substan- 
tial adverse Impact 

The retail business returned 
fiat sales in the first half on a 
like for like basis, hit by diffi- 
culties in the garment busi- 
ness. These had been 
addressed and current sales 
were up by 5 per cent on a like 
for like basis in the UK, 13 per 


• COMMENT 

just when shareholders 
thought they had truly earned 
a respite from the bad news tft 
Laura Ashley, the group comes 
up with this. Based on its own 
calculations of what returns 
should be. the second-half 
charges could be as much as 
£20m-plus. Even more worry- 
ing is the thought that it will 
not look for a chief executive 
In the short-term. If anything, 
Laura Ashley needs a strong 
figure to balance what appears 
to be resurgent family inter- 
ests. However, it tried that 
once without success. Exclu- 
ding the uncertain charges, 
forecasts have been pulled 
back from £lOm to £7.5m. this 
is not one for the faint-hearted. 


ED&F Man offer price cut to 180p 


By David Wighton 

The flotation price for shares 
in ED&F Man has been cut by 
more than 15 per cent from the 
level indicated three weeks 
ago, since when the market 
has fallen by about 6 per cent 

The offer price of I80p 
announced yesterday gives a 
notional yield of 6 per cent and 
a multiple of actual historic 
earnings of 9iL It values the 
commodity trader and finan- 
cial services group at £4£2£m. 

The prospectus warns that a 
disappointing Investment per- 
formance from the group's 
fund management arm will 
lead to a “substantially 
reduced contribution” from the 
division year. In the year 
to March 31 1994 it made 
£25^m out of a group £67m. 

Analysts believe fond man- 
agement profits may fall by up 
to 50 per cent but that strong 
growth from agricultural prod- 



FqHlKM 

Stanley Fink (left), group finance director, with Harvey 
McGrath, group managing director: flotation price cut 


nets and futures broking side Though very low by the stan- 
will more than make up the dards of recent new issues 
shortfall Group warning s per Man’s share rating is in line 
share are expected to increase with that of Exco, the money 
by around 16 per emit looker, for its successful flota- 


tion in June. Both companies 
operate In markets with a his- 
tory of corporate upsets and 
had to work hard to explain 
their businesses to institutions. 

"In the end Man had a good 
response from institutions but 
some thought it was just too 
much effort to get to know it," 
said one of the company's 
advisers. 

A total of £L10m of shares 
are being sold, of which £27.5m 
are the subject of a public 
offer, with the remainder 
plaited with investors at the 
offer price. The offer Is spon- 
sored by Schraders with bro- 
kers James Capel. 

The company is currently 
owned by 100 of its top manag- 
ers. Board members are selling 
less than 8 per cent of their 
holding and have undertaken 
not to dispose of any more 
before the announcement of 
next year’s interim figures. 

See Lex 


Acquisitions help lift 
Headlam to £2. 15m 


-By Richard Wolffe 

Headlam, the fabric and 
floorcoverings distributor, 
almost doubled pre-tax profits 
for the six months to June 30, 
after contributions from two 
recent acquisitions. 

On turnover up 46 per cent 
to £62.7m (£423m) pre-tax prof- 
its rase from £l.L3m to £2. 15m. 

However, the core Boorcover- 
ing division experienced what 
was referred to as “turbulent 
demand”, with a poor second 
quarter reflecting the 
depressed UK housing market 

Floorcovering sales 
increased by 26 per cent to 
£36.7zn, but the return on sales 
stood at 29 per cant, compared 
to 8^ per cent for its newly-cre- 
ated soft furnishings division. 

Mr Ian Kirkham, chief execu- 
tive, said the group expected 
sustained progress In the sec- 
ond half, which includes the 


high demand traditionally 
experienced in the autumn. 

. In May. the company 
launched its second rights 
issue within a year to help 
finance two purchases worth 
g?-98m. Gordon John Textiles 
distri butes Curtain lining and 
Wiltrex Readymades ready- 
made curtain. They contrib- 
uted to sales of £lL3m by the 
soft furnishings operations. 

The following month, Head- 
lam spent £550,000 to acquire 
William O’Hanlon, the window 
ftamishtng s distributor, which 
is expected to make a modest 
contribution to this year’s 
results. 

Interest charges for the half- 
year rose from £249,000 to 
£455,000. 

Earnings par share rose by 
lp 3JSp and the interim divi- 
dend was up from 0A5p to lp. 

The shares closed down lip 
at 200p. 


1 DIVIDENDS ANNOUNCED | 



Currant 

payment 

Date of 
payment 

Cones - 
ponding 
dividend 

Total 

far 

year 

Total 

last 

year 


fin 

4.45 

. 

4.025* 

6.5 

5.875* 

CLS 

Int 

0.4 

Nov 24 


- 

- 

Dagenham Motors _Jrrt 

2t 

Nov 16 

1.75 

- 

6l2S 

Eadle 

int 

03 

Dae 1 

as 

• 

1 

Edmond Hokfings — Int 

015 

Dec 2 

ais 

• 

0.3 . 

Fact (EW) 

Int 

1.94T 

Nov 14 

1.76 

• 

.4.74 

Geest 

int 

3.7 

Dec 30 

3.7 

8.1 

8.1 

Graystone — 

.. — ,ftn 

0.14 

Dec 14 

rd 

024 

ni 

Green (Ernest) §. 

fin 

3.25 

Dec 7 

425 

6 

7 

Guinness 

Int 

3.9 

Nov 10 

3.62 

- • 

12.8 

Hampden § 

■ ■■ Int 

02 

Nov 25 

nil 

- 

rtl 


Int 

It 

Nov 11 

0.85 

- 

32 

Hlghcrofttnv — 

Int 

2 

Nov 3 

1.9 

- 

52 

tnd Control Sent. fin 

3.5 

Oct 28 

3JJ7 

5 

4.4 

Jerome (S) 

fat 

05 

Nov 9 

02 

- 

0£ 


Hit 

3.3 

Dec 30 

3.3 

- 

8-1 

Lloyd Thompson 

fin 

5.4f 

Nov 18 

4.7 

7.8 

6.7 

McAlpine(A) 

Int 

3t 

Nov 30 

3 

- 

6-5 

McDonnell Inf 

Int 

2-3 

Oct 28 

- 

- 

- 

More CFemrii — . 

■ ■■ .Int 

3 -2 

Nov 11 

3.2 

- 

132 

Morrison (Wm) ........Int 

024 

Nov 7 

02 

- 

1 

Murray Ventwes 

fin 

8 

Nov 30 

7.5 

11.5 

102 

Pantheon Intnl — 

fin 

05 

Dec 1 

05 

05 

05 


fin 

1 

Nov 18 

- 

2 

- 

Premium Trust _ 

fin 

1.75 

Aug 31 

- 

2 

- 

Ricardo 

Jfl 

4f 

Nov 30 

3.8 

6 

5.7 

RMC 

Int 

7 

Dec 1 

6.6 

- 

21 

Spandex — 

int 

075 

Jan 12 

07* 

- 

223* 

Tawny Law 

fin 

3 

Nov 17 

- 

4.5 

- 

TT 

[nt 

3-2 

Oct 26 

2.6 

- 

08 

United Newt 

int 

7.75 

Dec 2 

7.5 

- 

22 


DMdands shown pence per share net axoept where otherwise stated. tOn 
increased capital. §USM stock. * Adjusted for sub-dWtakm. ‘Adjusted far 
scrip issue. 



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OF BUSINESS IN ASIA. 


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You're invited to a special 
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please contact any 
of our offices listed bdoir. 

llOXi hOMS: 

K«v +8« AW OOOO 
Tel: t-HW&fO 1177 
Til til. Wl): 

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KflX: tUflJOII {Hal 
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Fax: +67 £*5 7577 
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Fax: +60 1238 303! 

Tel: +00 1 23S 6077 


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International Property Consultants 


/a LLOYD 

THOMPSON 

Lloyd Thompson Group pic 

Insurance and 
Reinsurance Brokers 


Preliminary Results 

FOR THE YEAR ENDED WTH JUNE 19« 


TURNOVER 

£-000 

42^409 

+3% 

OPERATING PROFIT 

13,999 

+22% 

PROFIT BEFORE TAXATION 

18.233 

+5% 

DILUTED EARNINGS 

PER SHARE 

14L36p 

-3% 

DIVIDEND 

7-8p 

+16% 


For a copy of the 1994 Annual Report 
please contact: 

The Secretary, Beaufort House 
15 Sl Botolph Street, London EC3A 7LT 

Telephone 07 1 247 2345 Fax 071 247 4488 


ABTRTJST ATLAS FUND 

Registered Offices 

M Hoc Goethe, RC I mrai l wun 827 229 

DIVIDEND NOTICE 

Ala mooting of Uk Board of Directors held on 15th September 1 994, Urns resolved 
to pay dw foitowing dividends: 

Sterling Portfolio £00382 per share 

Dollar Portfolio USS0JM86 per share 

to shareboUes on record oa 15 th September 1994 with so ex-dividend date of 
16 S ep t em b er 1994 and a payment dale of 23 Sepiemher 1994. 

PafingAgtm: 

Bank of Bennada [Luxembourg} &A. 
t3 Roe Goethe 
L- 1637 Luxembourg 



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FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


h 


23 


COMPANY NEWS: UK 


Shares fall as damage to banana production takes toll 

Geest warns of second half loss 


Improved AB Electron 
behind TT’s 58% rise 


By DavW Backwsfl 

The aftermath of the tropical 
storm that severely damaged 
banana production In the 
Windward Islands will push 
Geest, the fresh and chilled 
rood group, into the red to the 
second hglf 

Shares fell SOp to 190p yester- 
day following the warning 
from Mr David Sugden, chief 
executive, who presented a 
strong set of interim results. 
Pre-tax profits rose from cam 
tO £17An Jbr the Six mntirtiw to 
July 2 on turnover ahead at 

£3S£8m (£332.7m). 

“The business ha s been per- 
forming well, but is overshad- 
owed by considerable uncer- 
tainty," said Mr Sugden, 
referring to the European Com- 
mission's laxity in responding 
to the company’s plea for per- 
mission to purchase replace- 


Towry Law 
advances 
to £ 2 . 82 m 

\ By Bethan Hutton 

Towry Law, the independent 
financial advice ehnin which 
floated last November, 
reported pre-tax profits up 16 
per cent from £2.43m to 
£2412111, after fisting costs of 
£237,000. 

Mr Cecil Law, chairman, 
said: “this has not been an 
easy year. Both our UK finan- 
cial planning and general 
insurance broking divisions 
are operating in what are cur- 
rently difficult markets, cre- 
ated by such factors as an 
unsettled investment climate 
and rate softening hi general 
insurance. 1 * 

The company has plans for a 
“major cost management pro- 
gramme", which will hit prof- 
itability in the first half of the 
year, and could involve some 
job losses. It also plans to 
invest more in information 
technology, training and com- 
pliance. 

However, Mr Law said 
encouraging signs for the com- 
pany included a 13 per cent 
increase in new business, a 16 
per cent rise to £6.2m for 
renewal income and fees, and 
34 per cent growth in income 
from international financial 
planning. 

Mr Aten Wesley, chief execu- 
tive, said that although Towry 
Law did not expect to have to 
pay any compensation as a 
remit of the SIB enquiry Into 
pension transfers, it bad made 
a “substantial provision” for 
the extra cost of temporary 
staff who might be needed to 
re-examine old files to comply 
with SIB rulings. 

Trading profits rose 26 per 
cent to £3.06m. Earnings per 
share grew 14 per cent to ll.6p 
(io.2p). A final dividend of 3p 
<l.Sp) makes a total of 4^p I 
(3.6p) - a 25 per cent gain. I 


meat bananas is i-afln Amer- 
ica. 

The EC banana management 
committee tolled to agree on 
Wednesday on measures that 
would allow Geest to purchase 
alternative bananas from Tatin 
America under the EC quota 
system. The committee does 
not meet again until October 5. 

Tropical Storm Debbie hit 
the Windward islands earlier 
this mouth, causing extensive 
Hooding around St Lucia and 
damage to roads and bridges. 
Geest, which is under contract 
to ship all the islands’ 
bananas, estimates that on tout 
will be 40 per amt down. 

Last week the first ship to 
arrive since the storm was half 
fUlL The company is expecting 
to load only 2,400 tonnes a 
week, compared with a normal 
load of 4,000 tonnes. 

The first half, however, 


By Poggy HoJUngor 

Shares in Jeyes Group plunged 
to their lowest levels in almost 
six years, as the dimming prod- 
ucts company fell into the red 
for the first half and 
announced the resignation of 
the chief executive who led the 
£5m buy-out from Cadbury 
Schweppes in 1886. 

Mr Jimmy Moir, the Scottish 
entrepreneur credited with 
turning round Jeyes after the 
buy-out, is to be replaced by 
MT David Callear, former dep- 
uty chief executive and finance 
director. Mr Moir will remain 
deputy chairman. 

Mr Callear was brought in to 
Jeyes after the May profits 
warning which took 11 per 
cent of the group's share 
price. 

Yesterday, the market 
knocked a further 25 per cent 
off the shares which closed at 
xxx. This is the lowest since 
January 1889, and compares 
with a high over the last 18 
months of 47lp. 

Mr Callear said the first half 
results had been disappointing. 
Jeyes announced pre-tax losses 


showed tiie company recover- 
ing from the uncertainties sur- 
rounding the EC banana 
regime, introduced last July, as 
well as an attack of disease on 
its Costa Rican plantations, 
which left it £5.4m in the red at 
the end of last year. Operating 
profits in the fresh produce 
division improved from £2m to 
£15m on sales of £285. 6m 
(£276J>m). 

The food preparation divi- 
sion. which supplies chilled 
salads and other products, 
lifted operating profits from 
£3. 3m to £4.2m on sales of 
£66£m (£54.4m). 

The result thin time included 
an exceptional gain of 
from a disposal. Net interest 
payable rose from £500,000 to 
£3.2m. 

Earnings per share were 
I8.9p (2.7p). The interim divi- 
dend is unchanged at 3.7p. 





Source: FT QtspNift 

of £ 1.27m, against profits of 
£374,000, after exceptional 
charges of £L7m for marketing 
expenses and stock. Sales were 
2 per cent higher at £59m for 
the 28 weeks to July 16. 

He warned that the long- 
awaited recovery was still 
some way away. “Trading 
remains difficult,” he said. “We 


• COMMENT 

While the problems of disease 
in Costa Rica appear to have 
gone away. Geest's troubles 
with the European Commis- 
sion and the banana regime 
are not over yet, thanks to 
Tropical Storm Debbie. In spite 
of its successful efforts to boost 
its food preparation division, 
the group remains vulnerable 
to the banana industry, which 
is highly political and subject 
to natural disaster. It has also 
only two main, areas of supply, 
leaving it looking inflexible 
beside companies that source 
more widely. Adding to Its 
problems is gearing of more 
than 100 per cent Best guesses 
at this year's final outcome 
seem to be around £9m of prof- 
its - better than last year but a 
tor cry from I99l’s £28.2 ul 
S ee Commodities 


are still under pressure.” 

Jeyes has suffered from 
intense competition from 
supermarkets and discounters 
selling cheaper own label and 
generic products. The group 
undertook a restructuring 18 
months ago, which was now 
largely complete. 

In the first half, the group 
had realised savings of about 
£L75m, Mr Callear said. How- 
ever, increasing costs of 
operations such as logistics 
meant savings for the full year 
might not be much greater. 

Mr Callear said Jeyes was 
confident that in spite of the 
tough trading environment it 
would be able to make prog- 
ress. “We are able to see the 
light at the end of the tunnel,” 
he said. There might have 
been a time when it was 
difficult to locate the tun- 
nel." 

Margins, which foil by about 
2.5 percentage points in the 
first half; had begun to stabi- 
lise, but at lower levels. 

The interim dividend was 
held at 3 L3p. Losses per share 
were 4Jip against earning s of 
lip last time. 


Alumasc 
rises 18% 
and makes 
£7m buy 

By Paid Chceserlght, 

Midlands Correspondent 

Alumasc Group, the 
Kettering-based company, 
capped a year of 18 per cent 
profits growth with the acqui- 
sition of Pendock Profiles for a 
mavimnm of £7m. 

Pre-tax profits for this com- 
pany with interests in building 
products, beer kegs and preci- 
sion components were £8. 89m 
(£7.55m) for the year to June 
30. Turnover rose 21 per cent 
I to £54.5m (£44. 9m) with MR 
Holdings, acquired In Septem- 
ber 1993, contributing Efi.lm. 

A final dividend of 4.45p is 
proposed making a total of 
6.5p (5.875p) paid from earn- 
ings per share of 19p (I6.9p). 

Alumasc is paying an initial 
£4m in cash for Pendock, a 
casing and trunking systems 
maker. There is a Anther prof- 
it-related payment to a maxi- 
mum of £3m In loan notes. 

During the year to last 
December, Pendock, a pri- 
vately owned company formed 
in 1986, made operating prof- 
its of £600,000 on sales of 
£3.4m. Net assets at December 
31 were £230,000. Based in Tel- 
ford, Shropshire, It employs 34 
people. 

Ahmmsc’s operating profits 
rose to £8. 66m (£7Jt8m) includ- 
ing £1.1 7m from MR. The 
sharpest rise came from the 
building products side to 
£4.6m from £3.1m, on the back 
of Increased activity In the 
construction industry. Alu- 
masc managed to hold Its mar , 
gins firm helped by bringing 
on stream new products. 

Precision components profits 
were held bade by investment 
in new plant and equipment, 
the benefits of which should 
be seen this year. Profits from 
the traditional beer keg busi- 
ness ruse 3 per cent 

At tile end Of the financial 
year, net cash balances of 
£7.6m and shareholders’ funds 
of £23 -3m, a rise of 8.4 per cent 
over the year. 

Mr John McCall, chairman, 
said: “Alumasc will now bene- 
fit from any growth in the UK 
economy” but warned of “the 
challenge of handling rising 
raw material costs”. 


By David Wlghton 

Profits at TT Group jumped by 
58 per cent from £9 ,42m to 
£l4Jftn in the six months to 
July 2, reflecting the continued 
tumround at AB Electronics, 
acquired for £38. Gm, including 
debt, in January 1993. 

Earnings per share rose by 
81 per cent to 10.2p (7-8p) and 
the dividend is up 23 per cent 
at &2p (2.6p). 

The main Improvement came 
from the electronics and indus- 
trial division, which includes 
AB and Magnetic Materials, 
acquired in August 1992. Prof 
its jumped from £7.17m to 
£10.8m. On increased sales of 
£l69m (£149m) margins 

improved from 4J8 per cent to 
63 per cent 

Mr John Newman, joint chief 
executive, said he expected fitr- 


By Kevin Dona, 

Motor Industry Correspondent 

Multipart, the UK vehicle parts 
distribution company rescued 
from the collapse test year of 
Daf, the Dutch commercial 
vehicle maker, achieved a net 
profit of £L5m on a turnover of 
£48m in its first trading period, 
the five months to the end of 
December, 1993. 

It has long-term supply con- 


EW Fact 
shares fall 
on warning 

Shares in EW Fact foil 31p to 
103p yesterday after the profes- 
sional tuition company 
reported lower than antici- 
pated interim results and 
warned that the second half 
would also be below expecta- 
tions. 

The company said that stu- 
dent enrolments had been dis- 
appointing as a result of 
changes in an accountancy syl- 
labus and the recession caus- 
ing low recruitment of trainees 
and restricted training bud- 
gets. 

The first half had also 
included foil provision far liti- 
gation relating to Vatax Advi- 
sory Services, a dormant sub- 
sidiary. 

Turnover for the first half of 
1994 advanced to £5. 04m 
(£2.44m) including EL66m from 
acquisitions. The figures 
included almost a full contribu- 
tion from Accountancy Tutors, 
acquired in January. 

Pre-tax profits doubled to 
£L2lm (£602,000) but the plac- 


ther improvements in margins, 
though AB has some long-term 
contracts at low margins and a 
large board assembly business. 

AB's automotive business 
was back in profit and had won 
climate control contracts with 
Saab and Opel. 

Mr Newman said there were 
significant opportunities for 
AB in export markets. A new 
sales office was opened in Sing- 
apore at the beginning of the 
year to boost sales in east Asia. 

The resistor business, which 
joined the group with Crystal- 
ate, the electronic components 
company acquired in 1990, is 
doing very well in North Amer- 
ica, but France remains weak. 

The division was expanded 
last month via the £16m acqui- 
sition of Dale Electric. 

TT said the improvement in 
its companies reflected the 


tracts with the three manufac- 
turing businesses salvaged 
from the former Daf group, 
namely LDV, the Birmingham- 
based van producer, Leyland 
Trucks, the Lancashire truck 
assembler, and Daf Trucks, the 
Dutch heavy truck maker. 

Multipart said that it was 
seeking to expand by winning 
additional logistics contracts 
both Inside and outside the 
motor industry. The company 


ing and open offer to fund the 
purchase left; earnings per 
share lower at 4.37p against 
&3Qp. 

However, the group remains 
confident of prospects and the 
Interim dividend Is raised to 
1.94P (l.76p). 

Biocure reduces 
deficit to £0.7m 

Biocure Holdings, the 
USM-quoted healthcare prod- 
ucts group, reduced pre-tax 
losses from £1 to £715,000 in 
the year to June 20. Turnover 
nearly doubled from £L92m to 
£3.77m. 

For the three months to 
June, Hypoguard, the main 
trading subsidiary, achieved 
pre-tax profits of £69.000 on 
turnover of £l.27m and the 
company said profitability con- 
tinued to be satisfactory in the 
current year. 

Losses per share were cut to 
2.12p (4.16p). 

Hazlewood Foods 
sells caterer to MBO 

Hazlewood Foods has sold its 
Saint Martin Food Products 
catering subsidiary to its man- 


benefits of capital expenditure 
against a background of "some 
hesitancy in the improvement 
of world economies.” 

Profits from packaging and 
building services edged ahead 
to &L22m (£4. 2m) and £406,000 
(£381.000) respectively. 

Group operating profit rose 
to £ 15.4m (£llJ3m), while the 
interest bill dropped to £461,000 
(£2 .33m) following last year's 
£51.4m rights issue. 

TT still has net cash of 
nearly £4m after the Dale deal 
and Mr Newman said there 
were a large number of acquisi- 
tion opportunities with prices 
"much better" than earlier in 
the year. “But we will get Dale 
bedded down before we do our 
□ext major acquisition." 

The shares rose 5p to 377p. 

A one for two capitalisation 
issue Is proposed. 


is investing £5m in computer 
systems. 

Multipart was rescued by a 
management buy-in team led 
by Mr Alan Simpson, former 
managing director of Land 
Rover Parts, with the backing 
of £17.3m in equity capital pro- 
vided by Phildrew Ventures, 
the UK venture capital arm of 
Union B ank of Switzerland, 
and a £20m long-term loan 
from National Westminster. 


agers for £6m. The business, 
based in Acton, west London, 
provides catering services to 
airlines and airport caterers. 

The buy-out is led by Mr Tre- 
vor Stephens. Prudential Ven- 
ture Managers arranged the 
equity capital, with senior 
debt provided by Bank of Scot- 
land. 

Additional funding of £2.4m 
has been secured to be used for 
working capital and also for a 
p lanne d move to new premises 
in the new year. 

Russian bank lifts 
Middlesex stake 

The Russian joint stock com- 
mercial bank, Vozrozhdeniye, 
is to buy another 50.7m shares 
at 5p each in Middlesex Hold- 
ings, the metal mining, recycl- 
ing and trading company. 

The bank currently holds 47 
per cent of share capital in the 
USM-traded company. 

Purchase of the second 
tranche of shares, for £2£4m, 
would, bring its holding to 12.3 
per cent 

Middlesex also intends to 
enter into a joint venture with 
the bank to provide trade 
finance for companies world- 
wide. 


Strong sales help Spandex score £3.3m 


By David Wlghton 

Spandex, the distributor of computerised 
sign-making equipment increased pre-tax 
profits by a third to £3 .3m in the first half 
on the back of strong sales in most of its 
main markets. 

Turnover rose 17 per cent to £333m, 
with an underlying rise of 11 per cent 
boosted by the acquisition in March of 
what is now Spandex France 

Earnings per share increased by 37 per 
cent to &3p (46p) and the interim dividend 
edged up to 0.75p (0.7p). 


Mr Charles Dobson, chairman and chief 
executive, said: “Performance in all terri- 
tories continues to advance and as the 
economic climate improves Spandex will 
benefit further " 

In the UK sales overall were up by 21 
per cent Sign-making computers surged 
by 58 per cent, which the company attri- 
buted partly to the release of pent-up 
demand previously stifled by economic 
uncertainty. 

The increase also reflected the introduc- 
tion of the Gerber Edge product 

Sales in Germany rose by 6 per cent in 


local currency terms and Spandex is to 
spend £2.lm on a warehouse which should 
be completed in the first quarter of next 
year. 

The net interest bill fell from £293,000 to 
£67,000. 

Increased capital expenditure win push 
up gearing in the short term, but the com- 
pany stressed that: “The expected rise in 
net debt is foreseen as being well within 
historic highs.” 

The shares, which have trebled in the 
last two years, added 5p to an all-time high 
of 280p. 


Jeyes falls £1.3m into red 
and chief executive replaced 


Multipart turns in £1.5m in 
maiden results since rescue 


NEWS DIGEST 


The BIEE memorial award for 
Andrew Holmes 

A fund has been established in memory of the distinguished 
Financial Times journalist and editor of Power in Europe, 
Andy Holmes. The British Institute of Energy Economics 
(BIEE) is to give an annual research award of £1,000, subject to 
finding a suitable candidate. The arrangements are being 
administered by BIEE. The award is open to men and women 
between the ages of 21 and 35, resident in the United Kingdom, and 
who are interested in energy issues. 

Applicants should submit a two-page original and non-technicai 
research proposal related to energy or to energy and the 
environment, and likely to lead to a 5,000-10,000 word paper. This 
proposal should reach the address below by October 31, 1994 with a 
cover note giving details of address, phone and fax numbers plus 
university or company affiliation, if any. A shortlist of applicants will 
then be drawn up and interviewed in London in December. The 
winner will receive half the money on winning the award and the 
remainder on completion of the paper. The results will be announced 
in early 1995. 

The aim of the award is to encourage young managers, 
postgraduates and others to think about the wider issues of energy 
policy. Topics could include the European Energy Charter, global 
warming, the impact of China's economic growth on energy 
demand, policy on the the development of alternative transport 
fuels, the future of nuclear power, third party access to transmission 
grids etc. These are purely illustrative. The judges do not wish to 
specify a precise topic, but the subject matter and final essay should 
be fully comprehensible to a non-sdentific or non-technicai audience. 
The winner may be asked to present his or her findings at a BIEE 
meeting, and the resulting paper may be published in shortened 
form in the FT Energy Economist 

Applications should be sent to: Lucy Plaskett, FT Newspapers, 
126 Jermyn St., London SW1Y 4UJ. Fax: 071-411-4415. 


Win MORRISON 
SUPERMARKETS plc. 


INTERIM RESULTS 
AT A GLANCE 



26 weeks 
ended 


26 weeks 
ended 


32 weeks 
ended 


31 July 1994 31 July 1993 30 Jan 1994 



£m 

£m 

£m 

Tbmover 

361.8 

748.5 

1538.4 

Operating profit 

48.5 

39.1 

100.9 

Profit before tax 

47.4 

38.8 

37.8 

> Earnings per share 

4.05p 

338p 

8.53p 

1 Dividend per share 

0.24p 

0.2 

l.Op 


• Tli mover increase - 15.4% 

• Operating profit increase - 24.0% 
Profit before taxation increase - 24.1% 


Interim report and statement may be obtained. The Secretary, 

Wm Morrison Supermarkets plc, Hflmore House, Thornton Road, Bradford BD8 9AX 


... 

Li is.: Midi 


r-. 

- * . " " * m j m ■ f • ■/, ,’! 

plans- to publish aSurveyjon 







on 


. :J .... • ' ' ’ 

; ' mm.-' 

, November 3. 

fr ■■ ■ % „ *• •. ' ■ |. 






Hut survey wfll to pubftfwd from our print centra In Tokyo, New Yortc, Ftmldurt, Roubatx 

and London, ft wtH to mm by CW*f Exocuttvoa and Government Officials In 1 60 c oun t ri es 

wor l d wi d e.* 

TMs survey often you an Ideal opportunity to oonvoy yottr marketing mantle to yonr target 

audience and to sharpen awaranaaa about your acti v U lee in boanfroom* wound the world. 

ffrafuOetu^tywmmdoeQMcreHUdfeMMrttwnMoasmons. 

PBt Looker or Briar Keren on 

TtlitM 81 8J4 S3U. few *44 U MS SMS Akuamfca toMfap, QnMfl »•«. KaoctMatar M2 Kr 


FT Surveys 


:BMCi<nbEB«»n. 
cur »u 


NORTEL INVERSORA &A. 

USD 78.200.000,- Series A Senior Notes dne 2001 
USD 124.200.000,* Series B Senior Notes dne 2001 

Nortel Inversora S.A. has called meetings of holders 
of its Series A Notes and Series B Notes, to be held on 
October I4th,l994 at 10:30 AJS4. at San Martin 638, 2nd 
Floor, Buenos Aires, Argentina, to consider the following 
agenda : 

1. To elect the chairman and the secretary of each meeting. 

2. To appoint two Noteholders to inspect the votes and sign 
the minutes of each meeting. 

3. To waive the restriction on incurrence of indebtedness 
contained in paragraph 6(b) of the terms and conditions of 
the Notes to permit die issuance of certain securities 

in the future. 

The Fiscal and Paying Agent 

Ej] CREDIT LYONNAIS 


Explorer 

Securities Limited 

I InnrjnTdinl mill (natal boMin 
in l he CUTtiwa liiands) 

U.S. $50,000,000 

Secured Floating Rate 
Note* due 1993-1996 
For the lnrerc« Period 22nd 
September, 199-i to 2Znd Dec- 
ember, 1994 the Nores will 
carry an Inrerwt Rate of 6.2?% 
per annum with Interest 
Amounrs of U.S. $668.67 and 
U.S. $2,221.66 for Notes with 
original jprinvip.il simounu 
of U.S. 5100,000 and U.S. 
$250,000 respectively pavnbte 
on22nJ December. 1994. 


Q 


Banker* TruM 

Company , London tow Bank 





Sovereign (Fbraxl lid, 

24hr Foreign Exchange 
Margin Tracing Fad&y 
Compeftiv* Pncas 
Daily Fax Service 
1st 071-931 9188 
Fox 071-913 7114 
43a Badm^tan Pafan Road 
Ionian $WTW ORE 


COMPACN1E BANCAIRE 
£300,000,000 
Floating rate notes due 
1995 Initial Tranche 
£200,000,000 

For the interest period 21 
September I9S4 to 21 
December 1904 the notes wlU 
bear interest a 5.9375% per 
annum, interest payable on 21 
December 1994 per 5 100.000 
note will amount to 51,480.31, 

Agent: Morgan Guaranty 
Trust Company 

JPMorgas 


Residential 

Property 

PRIVATE 

ADVERTISERS 

please contact 
Sonya MacGregor 
+44 71 873 4935 










FINANCIAL TIMES FRIDAY SEPTEMBER -J 1994 


COMPANY NEWS: UK AND IRELAND 


Alfred McAlpine at 
£3.1m for eight months 


CRH 


Growth in controls offset increased losses in specialist engineering # 


Industrial Control rises 16% 


£14m US 


By Christopher Price 


Alfred McAlpine, the 
housebuilding and construc- 
tion group, yesterday reported 
a rise in pre-tax profits of 
£3.1m for the eight months to 
June 30. The company has 
changed its year-end to Decem- 
ber and for the six months to 
April 30 1994 there were pre-tax 
profits of £394,000 against 
losses of £2.74m. 

Turnover for the eight 
months was £449. ?m, against 
£316.6m for the six months to 
April 1994. The dividend Is held 
at 3p, payable from earnings 
per share of 3.1p. 

The company raised £25m 
from shareholders in June in 
order to fund its land purchas- 
ing programme. 

Net debt at June 30 stood at 
£49 .5m, representing gearing of 
27 per cent. 

Sir John Milne, the chairman 
said that the contracting and 
construction division contin- 
ued to endure tough trading 
conditions, resulting in operat- 
ing losses for the eight months 
of £l.95m on turnover of 
£291 .6m. 

For the corresponding six 
months of the previous year 
there were operating losses of 
£121,000 on turnover of 

£148 3m. 

Mr Ken Lever, finance direc- 
tor. said it would be some time 
before the division returned to 
the black. “There are a lot of 
contracts being undertaken on 
low margins. It may be 1996 
before we see any return to 

profitability." 

He added that the company 



purchase 


Arfitey Afl'W'OOd 

Sir John Milne: tough trading conditions remained in contracting 


was keeping under review all 
areas of its contracting busi- 
ness and those unable to show 
a potential to return to profits 
faced possible closure. He 
refused to elaborate on which 
areas of the business were 
most susceptible. 

The strong recovery in the 
housing market in the early 
part of the year bad weakened 
daring June and July, Mr 
Milne said, but higher sales 
reservations in August boded 
well for the traditionally stron- 
ger market in the autumn. 

Operating profits in the 
housing division were £732m 
on turnover of £82.7m. For the 


first six months last year, the 
figures were £2. 04m and 
£43.04m respectively. Mr Lever 
said the division would remain 
the engine of growth for the 
group while the rest of the 
business stabilised. 

hi the US. an operating loss 
of £545,000 was reported on 
turnover of £508m. 

Mr Lever said improvements 
in the contracting business 
would enable the US business 
to return to profitability in the 
second half, airtinugh it would 
not improve on 1993’s contribu- 
tion. Then pre-tax profits came 
in at £l.68m and operating 
profits were £133m. 


Lloyd Thompson hemmed in to £18.2m 


By Christopher Price 


Difficult trading conditions in the London 
insurance market hemmed in profit 
growth at Lloyd Thompson Group last 
year, pre-tax profits rising 5 per cent to 
£l&2m for the 12 months ended 30 June. 
1994. 

The result was in line with market 
expectations following a profits warning 
in June and the shares slipped lp 
to 169p. 

The company also announced it Is to 
purchase the remaining 80 per cent it does 
not own in MIU. an associated company, 
for about £138m. which will be satisfied 


by the issue of some 7.6m shares or 9.75 
per cent of the issued share capital. Lloyd 
Thompson has had 80 per cent manage- 
ment control of MIU, which handles the 
insurance group’s non-marine and non-US 
business, since 1989. 

Group turnover edged up 3 per cent to 
£42_41m (£4L14m) in the year, while invest- 
ment income declined 29 per cent to 
£483m (£5 .96m). 

Earnings per share fell from I48p to 
14.36p, but the dividend was increased 
by 16 per cent to 78p (6.7p), with a 5.4p 
fin aL 

Mr Ken Carter, chief executive, said that 
while trading conditions remained tough, 


the group had achieved operating profits 
growth of 22 per cent to £14m (£lL5m). 

He added that the company would be 
attempting to widen its geographic spread, 
looking to win more business in 
Latin America, Australia and South 
Africa. 

“We have reduced expenditure as much 
as we can and have got to expand through 
our brokerage business." he said. 

Turnover from the marine insurance 
business increased 5 per cent to £1887m 
(£1735m), while the marine side grew 7 
per cent to £1286m (£11.75m). However, 
reinsurance turnover slipped 4 per cent to 
£11 .57m <£12.04m). 



On Friday, September 30 
all will be revealed. 


On Friday, September 30 the FT IMF/Worid Economy Survey will be published with the Financial 
Times. Its publication Is on the eve of the most Important date In the financial calendar the IMF/Worid 
Bank Conference, which this year will be held in Madrid. 

The survey will Include extensive coverage of both macro and micro economic issues, analysis of 
financial and business trends in selected countries and regions, plus an authoritative assessment of the 
world's financial markets. 

There win also be profiles of some of the world’s most Influential financial decision makers. It win 
In fact, be an essential document as background to the proceedings In Madrid as well as an invaluable 
update on financial developments throughout the world. 


By Peter Pearse 


CRH, the Dublin-based 
construction and building 
materials group, has bought 
Rotondo for $2&5m (£14JJm) in 
cash including assumed debt 

Rotondo Is the leafing sup- 
I plier of precast concrete enclo- 
sures to telephone and utility 
companies in the north east of 
the US. It is also a major 
: national supplier of precast 
concrete prison cells. 

In the US, CRH’s operations 
are organised under Its hold- 
ing company Oldcastle, into 
four core business groups: 
architectural products, materi- 
als, glass and precast. The Pre- 
cast Group is a major supplier 
of precast telecommunication, 
utility and environmental 
products in the Western and 
south-eastern US. 

Mr Myles Lee, general man- 
ager-finance, said the acquisi- 
tion would extend the geo- 
graphical coverage or CRH’s 
precast operations in the US. 
CRH already had substantial 
precast activities in the west 
and south of the US, but wants 
to Increase its presence in the 
north, be said. 

Mr Jim Schacfe, president of 
the CRH’S precast group, said 
that the synergies of bringing 
Rotondo and the Precast 
Group together involved not 
only products and terri tori es, 
but also the sharing of Roton- 
do’s engineering and produc- 
tion know-how with the 
group’s other facilities in the 
US and internationally. 

CRH’s shares dosed up 3p at 
361p- 


Financial Times. Europe’s Business Newspaper. 


Strong growth in the controls 
division enabled Industrial 
Control Services, the safety 
systems, controls and special- 
ist engineering company, to 
report a 16 per cent increase in 
pre-tax profits from £623m to 
£7.2gm in the year to May 3L 
The share price dipped 4p to 
close at I41p. 

Mr Peter HaH, nhainw^ and 
chief executive, said the rises 
m both profits and group turn- 
over - which expanded to 
£85 -5 m (£72.9m) - were 

achieved on the back of strong 
growth in the controls division. 


which offset increased losses in 
specialist engineering and a 
small decline in safety systems 
profits. 

However, he stressed that 
although the controls and 
safety systems markets had 
not, in general, shown growth, 
the group had adopted a “one- 
stop " policy towards its prodr 
nets and markets. For example, 
an offshore oil or gas rig could 
use the Bailey ICS joint ven- 
ture to supply the process con- 
trol, ICS for the safety system. 
Brisco for the wellhead and 
SUbsea Control, and Tr ansmi t- 
ton for the “inteffigent” com- 
puters to oversee all this plant 


Most of the growth, Mr Hall 
said, came from retrofitting 
awfl upgrading rather th an new 
projects. Again, the Shel l 
ply contract for the updating of 
platforms in the North Sea had 
performed strongly. „ 

Although the Middle and Far 
East were showing the most 
growth in the world and con- 
tributed about 40 per cent of 
group sales, the North Sea still 
(dripped in a i ri w iilar percent- 
age. 

Profits in controls increased 
to £4.97m (£2.6m), which 
included a full-year contribu- 
tion of £316,000 from Brisco, 
acquired at the beginning of 


1SSS. Divisional turnover was 
up at £338m <£33m). 

Safety systems made £5.44m 
(£5 .55m) on turnover of £38m 
(£39.5m), while specialist engi- 
neering Incurred losses of 
£l_3Sm (£80.000) on turnover of 
£l3.6m (£l0-3m). 

These losses, Mr Hall said, 
were mostly the result of 
heavy R&D expenses at Sava, 
which makes security devices 
for computer instal l a tion s and 
which is now seeing 5250,000 of 
trading per month. 

gamings per share rose to 
10.64p (9.76p) and a final divi- 
dend of 35p (3.07p) makes a 
total of 5p (4.4pL 


Higher margins lift PizzaExpress 


By Caroline Southey 


An improvement in margins in 
all divisions of the PizzaEx- 
press restaurant chain helped 
lift pre-tax pr o fit s at the year 
end by 75 per cent and turn- 
over by 41 per cent 
Pre-tax profits rose from 

VI 41m to EB-Sftm, inr-lnriTng ’ a 

£858,000 contribution from dis- 
continued operations. Turn- 
over rose from £15.7m to 
with sales at company 
restaurants, which numbered 
36 at the year end, rising by 
14.5 per cent 

PizzaExpress came to the 
market in February last year 


in a reverse takeover by Star 
Computer Group. In February 
this year Star Computer was 
sold for Bg-gftrn 

Mr David Page, managing 
director, said the Covent Gar- 
den Salisbury restaurants 
had got off to a “spectacular” 
start. Mar gins in all operating 
divisions had improved in tile 
last year, aithmi gh the com- 
pany was mindful of the “value 
versus profit” equation, he 

«iM 

Mr Glen Tomlinson, finance 
director, said restaurant mar- 
gins hart improved fr om 12 per 
cent to 20 pm- cent and from 16 
per cent to 19 per cent in the 


wholesale division. The 
improvement in restaurant 

margins was mainly due to 
increased sales combined With 
cuts in labour costs, be 
said. 

Eight new restaurants were 
opened and five were acquired 
from franchises. Capital expen- 
diture stood at £48m and the 
average build cost of new res- 
taurants stood at £278,000. 

Franchise fee income from 
the 37 franchised restaurants 
was 10.5 per cent higher than 
last year. A further two fran- 
chises opened in Leicester and 
Southampton in July. 

Spend per customer rose 


from £8.40 to £883. 

Mr Page said a target of 86 
restaurants had been set for 
1995, more than half of which 
would be company owned. Mew 
sites had been identified in six 
cities for company restaurants. 

He said the company was 
aware that restaurants within 
greater London showed a 
“more immediate profit” than 
those outside. But PizzaEx- 
press was commited to 
“spreading the gospel of good 
pizza throughout Great 
Britain". 

Rnming s pa* share rose from 
3.6p to 6£p. A final dividend of 
lp (nil) was proposed. 


More O’Ferrall 35% ahead at £2.8m 


By Simon Davies 


More O’Ferrall, the UK’s 
biggest poster advertising 
group, increased profits from 
its UK. and Irish operations by 
78 per cent, but interim profits 
were held back by the impact 
of the recession in Europe. 

Pre-tax profits for the six 
months to June 30 rose 35 per 
rapt to warm (£2HJ8m), on an 
increase of only 7 per cent in 
group turnover to £33.8m 
(£3L6m). 

The UK division was the 
driving force. The Advertising 
Association forecasts a 7 per 


cent increase in the poster 

rnaricrtr this year, fop high pint 
since 1988, but More O’Ferrall 
lifted its UK and Irish revenues 
by 15 per cent, and profits rose 
to £L7m (£958800). 

Mr Russel Go re- Andrews, 
chair man, the group had 
succeeded in pushing through 
meaningful price increases for 
poster space. It also benefited 
from a programme of convert- 
ing bus shelter sites to the 
higher value added Adshel 
SuperUte format 

The group is broadening its 
coverage of Ireland, having 
previously focused on Dublin. 


The Belgian market its most 
profitable a year earlier, 
achieved flat revenues and a 
marginal increase in operating 
profit in Belgian franc terms. 
Devaluation of the franc left its 
contribution virtually 
iiTH-hang ari at £l.l3m. 

France was worse affected, 
with operating profit well 
down at £256,000 (£603,000). Mr 
Gore-Andrews said cost-rating 
measures had been put In 
place that would reduce over- 
heads by £500,000 per annum, 
and this shp olfl benefit the per- 
formance in the second half of 
the year. 


Taiwan continued to perform 
strongly, with operating profit 
rising from £148,000 to £177,000. 
and More O’Ferrall is currently 
looking to expand further into 
South East Asia. 

Interest costs fell from 
£744,000 to £464,000, reflecting 
lower interest rates and debt 
redaction. However, capital 
investment is on the increase, 
with about £10m of expendi- 
ture expected this year, ft 
sprat £3.44m in the first halt 

The interim dividend is 
maintaine d at 32p, while earth 
mgs per share rose to 5.7p 
(4.4p). 


Nobo expands into Europe with £6m deal 


Nobo Group, the office and 
business products supplier, is 
expanding into continental 
Europe with the acquisition of 
the De Visu Companies, four 
private companies based in 
France under common control, 
for an aggregate £6m. 

An initial consideration of 
£5 2m will be satisfied as to 
£3 2m in cash and £L3m by the 
issue of 544,746 new ordinary 


shares to the vendors. The bal- 
ance is profit-related. 

Nobo also announced an 
open offer of 489m new ordi- 
nary shares on a 2-for-5 basis 
to raise about £102m net The 
proceeds will finance the cash 
element of the acquisition and 
a deferred film consideration 
for the Elite Optics purchase, 
completed on September 13. 
The balance will be used to 


reduce the enlarged group's 
debt 

The placing and open offer 
are frilly underwritten by 
Granville Davies. 

The De Vlsu Companies com- 
prise De Vlsu, Lara Audtovi- 
suel, Comevi and Artois. They 
make visual display and train- 
ing products and drawing 
office equipment. For 1993 
losses amounted to about £2m 


on turnover of about £18m. 
Sales are principally to trade 
distributors within France, 
with about 10 per emit relating 
to exports. 

Nobo is also proposing that 
following the acquisition, its 
share premium account be 
reduced by £16m to £500,000 to 
be transferred to a special capi- 
tal reserve against which any 
goodwill may be written oft 


NEWS DIGEST 


Eadie 
shares 
dive 20% 


Shares in Eadie FfoWng g fell 
by 20 per cent or 5p to 20p 
yesterday after the general 
engineering group reported 
pre-tax profits down from 
£850800 to £262800 for the first 
half of 1994. 

Mr Peter Bromwich, chair- 
man, attributed the setback to 
the downturn suffered on the 
roll cages and wheelchairs 
business, ami interest charges 
up from £129,000 to £167,000. 

However, he was confident 
that acti ons taken in improv- 
ing product and manufacturing 
facilities, coupled with an 
increased order book in most 
of the group, would lead to a 
second half improvement 

Turnover was little changed 
at £13j4Sm (£1385m). Earnings 
per share declined to 082p 
(1.09p) but an unchanged 
Interim dividend of 08p has 
been declared. 


The turnover was achieved 
on 116 completed sales at an 
average price of £54400 (103 at 
an average £55800). 

Earnings per share were 
086p (086p losses) and the 
interim dividend remains at 
045p. 


Losses per share were 
reduced from 17.7p to 72p. 


Heritage setback 
in second half 


Earnings per share were 
248p (lO.Gp). The maiden divi- 
dend will be recommended 
with the final results. 


Ernest Green falls 
to £419,000 


Ernest Green and Partners 
Holdings, the USM-quoted con- 
sulting engineer, reported pre- 
tax profits down from £773800 
to £419,000 in the year to June 
30. Mr David Legg, chairman, 
said it had been another tough 
year for the construction 
industry. 

Turnover was lower at 
£7 87m (£786m). Earnings per 
share came out at 3.6p (68p) 
and a final dividend of 325p Is 
proposed, cutting the total 
from 7p to 6p. 


BOston Enamels 
in profit midway 


A setback to trading in the sec- 
ond half resulted In a loss for 
the period at Heritage, the 
USM-quoted housewares dis- 
tributor. 

On sales up from gii-Bm to 
£12. 7m, the company reported 
a pre-tax profit of £105,000 for 
the year to April 30. This com- 
pared with £115,000 at the mid- 
way stage, which was also the 
same sum as for the whole of 
the previous year. 

The company said trading 
bad been affected by a kiln 
explosion at its main ceramic 
supplier and poor sales and 
lower margins at the discount 
end of the market 

Ea rn ings pea: share worked 
through at 185p, compared 
with 2.14p. 


S Jerome shows 
sharp improvement 


S Jerome & Sims, the textiles 
concern, saw pre-tax profits 
increase from £25,000 to 
£321,000 in the first half of 1994. 
Turnover was up 15 per cent at 
£l4m, against fig-gm 

Earnings per share climbed 
from 0.2p to 2.9p and the 
interim dividend has been 
raised to 08p (08p). 

Mr Alan Jerome, chairman, 
said machinery activity was at 
encouraging levels and he was 
cautiously optimistic that this 
improvement would be main- 
tained for the rest of the 
year. 


Midland Assets 
reverse takeover 


Midland Assets, which was cre- 
ated in May to acquire four 
nursing homes from Northern 
Leisure, is expected to 
announce today a reverse take- 
over by a bigger healthcare 
company in the Midlands. 

The deal is likely to leave 
Midland, whose shares closed 
last night unchanged at 19p, 
with approaching 20 healthcare 
premises. 

Midland initially raised 
£2 .4m via an intermediaries 
offer of ordinary shares and 
paid £L9m cash for RealCare 
nursing homes. 


A return to more normal trad- 
ing enabled Bilston & Batter- 
sea Enamels, the USM-quoted 
maker of enamel boxes, to 
turnround from a £186,000 loss 
to a pre-tax profit of £33,000 for 
the first half of 1994. 

Turnover grew 40 per cent to 
£2.48m and earning s per share 
came to 0.1p (2.7p losses). 

Mr Roger Foster, chairman, 
pointed out that because of the 
importance of pre-Christmas 
trading, the company's profits 
wore primarily obtained in the 
second halt “Sales and orders 
in the third quarter indica te 
that the full year should end 
satisfactorily," he added. 


Highcroft slightly 
lower at £597,000 


Clufif Resources 
losses at £0.58m 


Highcroft Investment Trust, a 
financial trust, reported 
slightly lower pre-tax profits of 
£597800 for the six months to 
June 30, against £611800 last 
time. 

Rar n tng s per share were 7.4p 
(78p) including gains on assets 
disposa l s or 68p (same) exclu- 
ding these. The interim divi- 
dend has been stepped up to 2p 

(18p). 


Cluff Resources, the minerals 
and oil and gas exploration 
group, reported increased pre- 
tax losses of £583800 for the 
first half of 1994. Losses last 
time were £343,000. 

Increased turnover of £12.2m 
(£6.67m) reflected the higher 
gold production and gold price 
together with the acquisition 
of Aberfoyle group in the sec- 
ond half of 1993. 

Losses pa- share amounted 
to 091p (lp). 


Exceptional gain 
doubles Norcor 


Murray Vent lifts 
asset value to 372p 


Cassell halves 
losses to £179,000 


Edmond returns 
to the black 


Edmond Holdings, the house- 
builder, returned to profit in 
the six months to June 30. Pre- 
tax profits were £130,000, com- 
pared with losses of £187800, 
on turnover up 10 per cent 
from £5.7m to £6.28m. 


Cassell, the book publisher, 
almost halved its pre-tax losses 
in the six months to 30 June, 
from £345,000 to £179,000. on 
the back of turnover up 9 per 
cent from £892m to £9.69m. 

The company, which came to 
the market in June, reported 
an interim operating profit of 
£51,000 against a loss of 
£43800. 


Pre-tax profits at Norcor Hold- 
ings, the corrugated board 
manufacturer, more than dou- 
bled for the half year ended 
Juna 30. from £L37m to £4 8la 

The rise was due to an excep- 
tional gain of £3.lm, represent- 
ing interest waived by venture 
capital loan note holders at the 
time of the company's flotation 
In May. The gain itself was 
partly offset by an exceptional 
interest charge of £500,000. 

Operating profits were down 
41 per cent from £283m to 
gJSlm. mi reduced turnover of 
£198m (£208m). 


A significant increase in activ- 
ity at Murray Ventures helped 
the investment trust to raise 
net asset value per share to 
372p at the end of the year to 
Jhly 3 l This marked a 7 per 
cent rise from 346.6p at the 
same stage in 1993. 

The company said it had 
been a record year for unlisted 
investments, which came to 
£8l.4m. 

The increased final dividend 
makes a total for the year 
« lL5p (10.9p). Earnings per 
share were l385p (l2-79p 
restated to reflect a change in 
accounting pohey). 


IP'- 




M.t 




ft 


* . 


*■*’.*■ ; 


\ -t - » . 






i 


1 6 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


25 


i i 


' h 


\ 




“I at m- 


\ih I’Miiidt 


COMPANY NEWS: UK 


Disappointed market knocks 49% off share price 

MDIS misses target with £5m 


By Aten Cane 

The share price of McDonnell 
Information Systems, the 
Hemel Hempstead-based com- 
puting services group, halved 
in value yesterday after 
interim results which were 
substantially below market 
expectations. 

Tile shares fell by 49 per cent 
from 2l6p to U2p. 

On Wednesday, Aerostruc- 
tures H amble, the former Brit- 
ish Aerospace aircraft compo- 
nents subsidiary, floated in 
May, suffered a 50p drop in its 
share price to 73p, alter it 
warned of difficulties with sev- 
eral contracts. 

Pre-tax profits at MDIS for 
the six mouths to June 30 were 
£5.1m - 33 per cent down on 
the £7. 53m achieved in the 
comparable period, and up to 
£4m short of analysts' fore- 
casts. 

Mr Jerry Causley, chairm an , 
pointed to delays in decision 
making in the public sector, 
which had pushed a number of 
orders into the second half 
of the year, and a failure 


to sell more copies of its 
flagship banking software 
package. There would be some 
improvement in the second 
half, but full-year results 
would inevitably be below 
those of 1993. 

MDIS is the latest in a series 
of computing services compa- 
nies which have produced dis- 
appointing and unexpected 
results after floating. 

Turnover fell to £68.6m 
(£7D.4m). Earnings were 28 per 
cent down at 3J8p (4^6p). An 
interim dividend of 2 Jp will be 
paid. 

MDLS came to the market in 
March at 280p a share through 
a placing and public offering 
which valued the group at 
£260m. 

The placing and offer was 
the biggest in the information 
technology sector this year. 
The company had previously 
been the subject of a manage- 
ment buy-out from McDonnell 
Douglas of the US. 

Mr Causley said the underly- 
ing performance had been 
strong, with tr ading margins 
maintained in the public sec- 


MDK 

Share pftae (pence? 
•'280 



tor, ryimmorc ial and industrial 
business areas. 

Some of its current difficul- 
ties are expected to be resolved 
in the second half, when a 
number of public sector orders, 
including four large police con- 
tracts, are expected to come 
through. Research and devel- 


opment, on which an extra 

£750,000 was spent in the first 

half, is expected to return to 
budget 

Mr Causley warned, how- 
ever “Local government busi- 
ness has been impacted by 
increasing uncer tainty follow- 
ing the Ran ham Commissi ons's 
recommendations and the 
health business, following a 
good first half is also seeing 
slippage in order confirma- 
tions.” 

The performance of the 
banking package PRO-IV is 
critical. MDIS made its first 
sals to the Austrian Kontral 
Ranlf last year, but has failed 
to find other buyers. 

The complete package costs 
up to £5m, so a small number 
of orders could malcp a signifi- 
cant difference to the year’s 
outcome. 

MDIS’s broker, NatWest Mar- 
kets, has cut its estimate of 
pre-tax profit for the year to 
£17m - 11.4p of earnings - 
from £25. 7m, and anticipates 
only £l9m in 1995. 

It predicts a dividend of 7p a 
share for both years. 


US demand lifts Ricardo 


By Richard Wotffa 

Strong demand from US car 
producers helped to lift turn- 
over and pre-tax profits at 
Ricardo, tbe consulting engi- 
neer, for the year to June 30. 

The group reported pre-tax 
profits of £4.46m, up from 
£2.66m last year, which 
included losses on discontin- 
ued operations and property 
provisions. Before exceptional 
items, pre-tax profits last year 
stood at £4.llm. 

Turnover was £62.9m against 
£65.6m including £5.59m from 
discontinued operations. Sales 
were 82 per cent ahead in 
North America and 48 per cent 
in the Pacific Basin. 

However, a good perfor- 
mance by the group’s consult- 
ing engineers was offset by a 
26 per cent drop in turnover 
from its aerospace division, 
which now aims to refocus on 
the industrial gas turbine mar 
ket 

Sir Philip Foreman, chair 
man, said: "We are pleased 
with these results which have 
been achieved despite difficult 


trading conditions, but reflect 
the strong organic growth 
potential of the business.” 

In June the company 
announced a rights issue of 
lfXSm shares to help fund the 
£13.6m acquisition, of FF Devel- 
opments, tbe transmission and 
chassis engineer. Receipts from 
the issue helped to reduce 
gearing from 15 per cent to nil. 

FF Developments is now 
charged with marketing the 
Ricardo Differential, which 
was hailed last year as a “revo- 


lutionary” limited slip differen- 
tial gear for family cars. 

In March, Ricardo spent 
£L26m (£1.43m) acquiring Air- 
flow Sciences Corporation. The 
Detroit-based company; which 
looks at fluid flow and heat 
transfer problems, is expecting 
strong demand from power sta- 
tions which need to reduce 

emissinTM- 

Earnings per share 
amounted to 8.4p (4p). The pro- 
posed final dividend is 4p (3fip) 
giving a total of 6p (5.7p). 


Hampden back in black 


A tumround from pre-tax 
losses of £198,000 to profits of 
£207,000 was announced by 
Hampden Group for the 24 
weeks to June 18. 

The Belfast-based retailer, 
which operates Texas Home- 
care stores. Allied Carpets 
franchises and runs a joint 
venture with Fwik-Fit Hold- 
ings. lifted turnover from 
£13.9m to to £16-5m for the 
period. 


Mr Stratton Mills, the chair- 
man, said he was cautiously 
optimistic that the profit prog- 
ress could be maintained to the 
end of the year and beyond. 

Earnings per share 
amounted to 0.93p compared 
with 0.89p losses while an 
interim dividend of 0.2p (nil) is 
declared. 

Hampden’s shares, which 
trade on the USM. closed 2p 
higher at 30p. 


Dagenham 
Motors 
up 39% 

Dagenham Motors Group has 
continued its recovery with 
pre-tax profits up 39 per cent 
from £l-3m to £1 .Sim for the 
six months to June 30. Turn- 
over rose 20 per cent from 
£84Jftn to £101.7m. 

Sales of both new and used 
cars were up 17 per cent, with 
August figures substantially 
ahead of last year, said Mr 
David Philip, chairman. The 
order book indicated that sales 
in the second half would be 
“at least as strong”. 

Finance and insurance 
income from vehicle sales saw 
a 36 per cent increase, partly 
doe to “more realistic under- 
writing policies". 

Following the rights issue in 
March. Dagenham acquired 
the Ford franchise for Woking 
and Weybridge, fulfilling its 
aim to encircle London with a 
ring of Ford and Iveco dealer- 
ships on the M25. 

The interim dividend rises to 
2p (l.75p) and earnings per 
share were 5.7p (5p). 




CONTRACTS & TENDERS 

BUSINESSES FOR SALE 


COfcPANWAPARAHAENSE 

DEENERGfA 


COPEL 


SALTO CAXtAS HYDROELECTRIC PROJECT 
K3UA£U RIVER 

INTERNATIONAL BIDDING 0202 
PENSTOCKS 
CALL FOR BIDS 

COMPANHIAPARANAERSEDEENERGIA-COPEI, Moons that an 
international bkkfing is open tor design. supply, shipment Held erection and 
operation start-up ot tour (4), 1 1 .0 m dtameter Penstocks tor the Sato 
Caxias Powetptant, located at CapMo LeOnfdas Maiques and Nova Praia 
do iguocu county border, m the State of Paranfi - Brazil. 

The total vroigWol me supply b approximately 3.400 metric tons o« steel 
This lowest price type international bidding Is open soWy to indh/ktoal 
companies or Joint ventures. 

The Bid Documents, wiR be avaBabte to bidden from September 9. 1994 to 
September 30, 1994, against payment in brazfian currency equivalent to 
USS 150.00 (one hundred fifty American DoRats), at die Mowing 
addressee: 

Superintand&nciadeObfasdeGeracio 
Rw VoluntirfcM da Petrie, 233- 5* andar- sale 504 
600204)00 - Curitiba - PR 
TeJefone (55-41 ) 322-121 2 - Ram* 541 
Tetofax (55-41) 331-3265 
or 

Escritdrio COPEL /SAoPaufo 
Alameda Samoa, 1A00- 14" andw- coid- 14B 
01418-200 -Sto Paulo -SP 
Teietane (55-1 1)289-1431 

At the time of Bid Documents purchase. aB companies shall present a letter 
containing their complete noKng address. 

The rocefH of Pre-quaflfication and B«d Documents « echeASed tor 
November 9. 1994. at 300 PM. at COPEL's office meeting room, in 
Curitiba. 233 Vdunterios da Pdtria Street, Sth Boor. 

The Bidding wW bo ruled by. Law rf 8^66. dated Jime 21 i 1993: with 

aBorattons introduced by Lawn 0 8353, dated Junes. 1994 and by other 
conditions stated herein and injthe Contract Documents. 

GINO AZZ0UKI NETQ 
Dire tor Admintetratwo 
no Eaerckdoda Prestddncia 


GOVERNO DO ESTADO DO PARANA 


The JOINT 

ADMINISTRATIVE RECEIVERS 
of 

ASHWELL LEISURE 
DEVELOPMENTS LIMITED 

Offer For Sale 

The Business, Goodwill and Assets of the Company 
being a Health and Fitness Chib based in 
South East London including gymnasium, 
sauna, swimming pool and spa bath. 
Approximately 750 members 
Contact : Nicholas R. Hood or Frances E. Watson 

BEGBIES 

Chartered Accountants 
6 Raymond Buildings, 
Gray’s Inn, London, 'WCIR 5BP 
Tel: 071 242 6939 Fax: 071 405 0350 



CONCEPT FILLINGS LIMITED 


The Administrative Receiver 
Robert J Orme offers for sale, the 
business and assets of this specialised 
foam manufacturer. 

Comprising of: 

■ Leasehold premises at Kingswinford, 
West Midlands, wfth office and factory 
accommodation. 

* Reputable contract customers 

■ Turnover £1 £ mffion (approx) 

■ Textile machines 


For further details contact 
the Administrative Receiver at 
Knights Chartered Accountants 
17 HigfifieJd Road 
Edgbaston 

Bfrmlngham, B15 3DU 
Tet 021 625 0399 
Foe 021 6253301 


%h ights 



Appear in the 

Financial Times on Tuesdays, Fridays 
and Saturdays. 

For further information 
or to advertise 
in this section please contact 

Karl Loynton on +44 71 873 4780 or 
Lesley Sumner on +44 71 873 3308 


M 

VINANCIALTIMES 

fUKOPtfi BUSINESS NEWSPAPER 


23 PUBS 
FOR SALE 

South of M4 centred 
in Somerset & Wiltshire. 
Currently under tenancy 
but 17 offered with 
vacant possession 
(if required). 
Anticipated 2^49 
budget barrels for 1994/5. 
Projected rent roll 
1994/95 i.r.o. £165,625. 

OFFERS LR.O £235M 


Apply for fall derails » 

Box No: B3442. Financial Times. 
One Smnhwcrt Bridge. 
UataiSEl 9HL 


COMPANY 

NOTICES 


COMPANIES ACT 1985 
Notice Is bcicbj pna (bat PLOYLONC 
LOOTED ha ipond a p aymen t Ml • i C i pM 
tot Or pojpcMS of anpiinng m om tbares b) 
Hint— u. The anoom of the pomiaMc espial 
p>«nc— (dr ihc ihun is £155,000 iad (be 

RMfqtrOB aedcf |7j u dated 19H> 

Sep tember 19«4. the us may i Vriirrf oo o! Ihe 
dfecaon made tuater season 173(3) tsd (be 
tuxluiu*s repon irqnixed by Ihsl weitoo are 
a tillable for inspccliaa si ifac ConpaDy't 
(e gam ed office. The lepocicd dike of Ac 
Cospasy a ASMS Hfiiifrraiil IVseL Pnna of 
Wlia Tarxx, StJfftwrragb YOl 1 ZAS. Any 
Oedtar of ihc n o w* * at an, tkw is the 

fin —fa tAHpJ *T due of Ihc nofadiaa, 
rpply lo ihc Cuao codci tosuQ 176 As — aria 


pvhftfaiqgtbefayt 
23d Sq*oio I9« 


EDUCATION 


PRESTON UNIVERSITY, 
USA 

B8A£S, MBA, MS. PhD. sc. Home 
Study or On-Cainpus Lie. by tha 
DepL of EdUC. 2727 O'Neil Ave., 
Cheyenne. WY82Q01 

Fk 1-307-632-2750 


BUSINESSES FOR SALE 


PLACKETTS EXPRESS PARCELS LTD 
IMPACT LOGISTICS LTD 

(In Administrative Receivership) 

PH FINN and KA MURPHY, the joint administrative receivers, offer for sale the 
business and assets of the above national parcel delivery companies. 


• Established 1932. 

• 50,000 sq ft central hub in 3.3 acres located at Telford. 

• 65,000 sq ft freehold administration headquarters/depot 
in 5.2 acres located at Nottingham (potential hub). 

>12 secured additional strategic distribution centres 
covering England, Scotland and Wales Including 

- freehofd depots at Normanton and Enfield; and 

— long leasehold depots at Andover, Strathclyde 
ana Stockport 


• Full parcel tracking facility with bar-code 
technology. 

■ All depots fully equiped with dedicated parcel - 
handling facilities. 

• Fleet vehicle maintenance facility in selected 
depots. 

• Trained workforce of up to 650 employees 
available. 

> Annual turnover approx. £15 million. 

n fty further information piease contact Kevin Murphy or Stephen Penn at the following address: 
IMPACT LOGISTICS LTD, Palmer Drive, Stapleford, Nottingham NG9 7BW. Teh 0602 390022 Fax: 0602 490734 


Temple Chambers, Temple Avenue, London EC4Y 0DT. 
Telephone 01 71 353 2082 Fax 01 71 353 2083 


Finn 

ASSOCIATES 


NW WIRE 
COMPANY 

BsL over 10 years, 
exc. sales record. 

T/O approx £600,000. 
Present operation Includes 
direct sale and 
fabrication of wire 
products. Reason for sale 
imminent retirement 

further details apply Bax Mo: B34S9 
financial Tiroes. One Southwark 
Bridge. London SEI 8HL 



SEASIDE HOTEL 
IN TURKEY 

Attractive architecture. 

38 en -suite rooms, 
four self-caming dais, garden, 
swimming pool, two restaurants, 
two bus, shop, puisserie. 

For sale bom the owners. 

Tet (44) 071-625 4240 


PLANT & 
MACHINERY 


HAJOR SALE BY AUCTION on Tuesday 
lift October (Viewing toft), at Lincoln 
Road. Peterborough. Over 500 lots ot 
Toolroom end Production Machine Tools 
and EqupmanL For further information 
piease contact HENRY BUTCHER A CO 
on Tel: 071-405 5501 or Fmc 071 4059772. 


Robinson & White Limited 

(In Administrative Receivership) 

Building Contractors, Dunstable 

The Joint Administrative Receivers, Myles Halley and Paul Jellery. otter 
(or sale, as a going concern, the business and assets of Robinson & While 
Limited 

Principal features comprise: 

■ Established business. 

■ Turnover £16 million. 

■ Contracts in Bedfordshire. Buckinghamshire. Hertfordshire. 

■ 18 contracts in progress. 

■ Customers include Housing Associations and Local Authorities. 
a 47 direct employees. 

■ Freehold land and property. 

For further information, please contact the Joint Administrative Receiver, 
Myles Hatley, KPMG Peat Marwick. Spencer House, Cliftonville Road. 
Northampton NN1 5BU. Tel: 0604 34480. Fax: 0604 32297. 


WH 


Corporate Recovery 


STATE PROPERTY AGENCY 


INVITATION FOR TENDERS 

1- The State Property Agency (hereinafter: SPA) announces an open, one-round tender for the 
purchase of the state-owned shares held in Club Tlhany Rt 
The issued capital of the Rfc HUF 657,000,000 

Bids can be submitted for the block of shares representing 76% of the issued capital, in the 
nominal value of HUF 499,100,000. 

When buying the shares bidders shall pay the purchase price as follows: 

- a minimum of 30% is payable in cash. 

- a maximum of 10% can be paid in compensation notes. 

- a maximum of 60% can be paid in instalments. 

2. Bidders shall agree to maintain their bid firm for 90 days. 

3. Closing date for submitting bids; November 8th, 1994 12-14.00hrs 

Bids to be submitted at the official premises of the State Property Agency, at Budapest, 1133 
Pozsonyi ut 56. 8th Floor, Room No 804. 

4. Bids shall be submitted at the address indicated, in a sealed envelope not showing the sender, in 6 
copies, in Hungarian. Foreign bidders may also submit their bids in English or German language, 
beside the Hungarian copy. In this case, however, the Hungarian version shall govern. 

Bids shall be submitted during the open hours of the deadline, in the presence of a notary public. 
The following text shall be written on the envelope: "PALYAZAT, Club Tlhany Rt" 

5. Bidders shall mark the original copy, with the text "EREDETT ("ORIGINAL"). Should the 
bidder fail to do so, the Opening Committee shall pick one of the copies received to fill in the 
function of original from then on. In case of any discrepancy among the copies, the contents 
of the copy so marked shall govern. 

In case of personal delivery, the receipt of the bids shall be proved by the voucher made out 
by the person taking delivery of them. 

The State Property Agency maintains the right to declare the tender failed, or to invite a 
second round of tenders, or to call on the bidders to make additions to their bids. 

6. A precondition of submitting the bids is the purchase of the tender document, which also 
contains the detailed invitation for tender for HUF 30,000 + AFA (for non-residents USD 300 
+ AFA) at the Client Service Office of the State Property Agency (1133 Budapest, Pozsonyi ut 
56). Upon the purchase of the tender document a statement of confidentiality shall be signed. 
The invoice proving the purchase of the tender document shall be attached to the bid submitted. 

Further information can be obtained at the Industry Privatization I Directorate of the State 
Property Agency from Mrs Bana Karolyne, Deputy Director: 

Phone: (+361) 118 5365 
Fax; (+361) 266 8508 

or from Mr Bama Istvan, the chairman of the Board of Directors of Club Tlhany Rt: 

Phone: (+361) 118 5284 
Fax; (+361) 117 1485 


INVEST IN HUNGARY • A SAFE EXPANSION 


AB Advenisanea booking are accepted subject to out current^ Terms and Conditions, cupfcs. of which are available by writing vs 
Tbe Advertisement Productkm Director, Tbe Financial Times, One Souihwait Bridge, London SEI 9HL Tet 444 71 87? 3000 JFas 444 71 873 3064 


s 


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FT Worldwide 
Residential Property. 


Every Saturday the Weekend FT’s Residential Property section 
enables you to promote your property for sale or rent to approximately 
1 million potential home buyers or tenants in 150 countries. 


For further details 

Call 071 873 4186 or Fax 071 873 3098 


Financial Times. Europe’s Business Newspaper 


COMMERCIAL PROPERTY 



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C0MH41C1AI Fi art ITT ADVtlEKl 


0171 436 6656 


it Uv- Ai- -A, J-v 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 

PROPERTY 



I f a market should be 
judged by the quality of 
its analysis, property is 
still In the darts ages. This 
complaint is most often, heard 
from fund managers, especially 
those who cot their teeth in 
equities or bonds. But the 
paint is not lost on property 
professional themselves. 

Mr Peter Evans, head of 
research at surveyors DTZ 
Debenham Thorpe, said: “In 
terms of available data, the 
property market is like a third 
world country.” 

The culture of the industry 
is partly to blame. Agents have 
traditionally sold themselves 
on the basis of what they 
know, rather than how they 
interpret commonly-held infor- 
mation about transactions and 
market conditions. The culture 
of transparency which governs 
the equity and band Tnarv««t^ 
has simply passed by. 

The consequences could be 
profound. The long-term 
decline in institutional hold- 
ings of property is due, in part, 
to the paucity of credible mar- 
ket statistics and analysis. 

“We certainly have not felt 
as comfortable with property 
as with other financial assets,” 
said one fond manager at a life 
insurance company. “Defend- 
ing investment decisions on 
the basis of gut fed is no lon- 
ger enough." 

It is ai.cn possible that the 
information gap has contrib- 
uted to the extreme cyclical 
nature of the property market 
This is a view shared by the 
Royal Institution of Chartered 
Surveyors. 

Earlier this year RICS pub- 
lished research on the links 
between the economy and the 
property cycle. Mr Clive Lewis, 
then president hailed the work 
as “the best hope yet of finding 
a way to lamp damaging ho nm 
and bust cycles”. 

Sceptics point out that 
research, did no thing to pre- 
vent the 19S7 UK stock market 
crash. Either way, though, 
investors’ thirst for quality 
information and analysis is a 
commercial opportunity. 

The Investment Property 
Databank, set up 10 years ago, 
was the first to spot the 
requirement for raw data. Its 
work laid the foundations on 
which the first brave atte mpts 
at forecasting were buiU. Most 
of the big surveying practices 
now offer forecasting services, 
while independent forecasters 
have flourished over the past 
five years. 

The property establishment 
sees the Introduction of fore- 
casting techniques as step for- 


Facts and 
forecasts 


Simon London on the paucity 
of credible market analysis 


The I nfo r ma tion gap 



Per cant 
11 — ■ 


*»ortfi to a tarig tan-n prapwiy tnvoBWf Vnting to bast 


-IPO martcat ytefd 


Market \ 
.underpri ce d 


Rational yW 


tB68 • 1088 1990 1081 

Same BarfaarWfttoPmperty Eoonortcs . 


1993 94 


ward rather than a threat to 
the valuers’ art 

The MaHinson report on val- 
uation. published earlier ibis 
year, came out broadly in 
favour of forecasting: 
“We... see it as an area in 
which surveyors, with the aid 
of other sunn, <-«n offer valu- 
able insig ht- to rltontq Bat we 
see [forecasting services] as 
distinct and believe they 
should be kept very careftilly 
distinct from the practice of 
valuation.” 

This attitude is broadly 
shared by investors. “We are 
inclined to use forecasts more 
and more, »Mmng k the jury is 
still out on their performance," 
said Mr David Hunter, head of 
property investment at Scot- 
tish Amicable. 

Forecasters see themselves 
as giving investors the tools to 
make better decisions - dosing 
the credibility gap between 
property and other financial 
assets. 

“Our job is to help property 
fimd managers approach their 
asset allocation committees on 
equal terms,” said Mr Colin 
Barber of forecasting consul- 
tancy Barber White. 

Yet the limits of forecasting 
are a matter for hot deba te 


Some are doubtful about fore- 
casters’ ability to predict the 
market at all. 

“All property market projec- 
tions are basal on macroeco- 
nomic forecasts which them- 
selves have a poor record," 
said Mr Chris Brown of Man- 
chester consultancy Kenrick 
Brown. “It is also possible that 
the factors which drive the 
property market change over 
time, but not in a linear way.” 

Investors are sceptical about 
using forecasts to guide any- 
thing other than broad deci- 
sions on asset allocation. 


L ocal markets react to 
local factors which can 
not be predicted,” said 
Mr Hunter. “We would 
never buy a shop we did not 
like simply because the fore- 
casts told us to.” 

Even zealots admit that fore- 
casting down to regional or 
local level is tricky. “As the 
scale becomes smaller, the task 
of forecasting becomes progres- 
sively more difficult,” said Mr 
Bryan MacGregor, professor of 
land economy at tire University 
of Aberdeen. 

Factors such as new develop- 
ments, which are especially dif- 
ficult to predict, are much 


Bidwells 


CHARTERED SURVEYORS 


CAMBRIDGESHIRE 


MINERAL INVESTMENT 


15.6 acres 


Working Chalk Pit 
with planning permission for filling 

Paying rental and royalty 

Gross return for year end 31 March 
in excess of .£17,000 

Freehold For Sale by Formal Tender 

0223 841841 


TRUMPINGTON ROAD ■ CAMBRIDGE • CB2 2LD 
CAMBRIDGE - IPSWICH • NORWICH . BURY ST EDMUNDS - LONDON . PERTH 


5 EMPTY 

BUILDINGS NEEDED 


We ist&iaij setk 5 empty ta&tfing&fc* tempcraiy cccveteoD and oco^aion as 
stakes fbrsngle bomefcm people over the wiser moods lo (be fbOowng Cfintol 
London areas: Wl, WQ & WC2, SWL SEI , NW 1 , El & EC & EC1. 


Big savings forewarn in rales, beating, maintenance and secarity. 
Qnoa CRASH Hr Gssmrtion fndusny Oonijr fa- Ac Relief 
of Single Hamdcmncs. 

Wrtm»B<xB244a,Finane&Tm^ChxSauA»*rkBritl8e. 
London S^I 9HL 


MADRID EXECUTIVE 
OFFICES 


in the real financial and 
commercial centre of Madrid. 
Elegantly furnished offices 
avaflabte tor rent Days, weeks or 
months. FuH secretarial support 
by nuritillngual staff. Telephone, , 
Fax. computer and meeting room 
facilities. 


Professional Offices in Prestige Location: 
Holland Park Gardens 
950 and 1300 SQ. FT. 

Suit professional practice. 

Roomy and tight, reasonable rent tow UBR. 2, 9 or 20 year lease available. 
Class to buses and Tube. 

CbuveskM to live-and- work fteflity possible. 

RING (071) 603 9070 DAYS OR EVENINGS 


CENTRO EMPftESARlAL 
SERRANO, S.L 
Cafe Serrano n“ 41-3* 
28001 Madrid 
Phone 34 1 5770533 
FAX 341 578 0975 


LEISURE PROJECT IN FRANCE 

Investors sought for leisure project in popular holiday area, 
90 mins from the Med. 12.5 acres site in attractive, restful 
location with river and forest. Planning consent for: go 
bungalows, camping s he, swimming pool and other amenities. 

A SPOT OF FRANCE 
TH: 971 340 1285 Pec 071 24* 121$ 


SOHO 

restaurant 

LEASE 
FOR SALE 

5,000 Sq Ft on ground floor 
Apply: 

CARTER WASSELL 
MURDOCH 


38 Albemarle Street 
London WIX 3FB 


more Important at local level. 
Moreover, economic data for 
particular towns is simply not 
available. IT these problems 
can be overcome, though, fore- 
casters see the biggest gains to 
be made at local level because 
these markets ore least effi- 
cient. 

“The market gets less effi- 
cient the lower down you go. 
We should be able to add more, 
value at the level of a town or 
an individual building," com- 
mented Mr Andrew Baum of 
Real Estate Strategies, the fore- 
casting company now linked to 
fund managers Henderson, 
Administration. 

So what of attempts to use 
rental forecasts and discounted 
cash-flow techniques to value 
individual buildings? Property 
companies increasingly use 
such methods when deciding 
whether to make strategic 
investments. Retailers such as 
Boots model underlying cash 
flows before deciding whether 
to buy or lease individual 
shops. 

Again, the Mallinson report 
came down in favour of greater 
use of discounted cash-flow 
techniques by the property pro- 
fession. But it envisaged such 
methods being used in combi- 
nation with - not in place of - 
traditional valuations based os 
market evidence. 

Some would like to go fur- 
ther. The collapse last year of 
hotels group Queens Moat 
Houses caused many Investors 
to question property valuations 
in company accounts. Two 
firms of surveyors - WetheraJQ 
Green & Smith and Jones Lang 
Wootton - came up with 
widely divergent valuations of 
the company's assets. 

The British Association of 
Hotel Accountants has since 
proposed a method for valuing 
hotels for accounting purposes 
based on discounted rash flow 
analysis. 

This was rejected by RICS 
last month, on the grounds 
that the worth of a pr opert y to 
an investin' need not be the 
same as its open market value. 

Tim distinction is critical. It . 
is the difference between 
underlying worth and open 
market value that forecasters 
and their clients are trying to 
identify and exploit 

Whether they can do so suc- 
cessfully over the long term 
remains an open question. But 
if the growth of forecasting 
increases understanding of 
what drives the market - and 
helps investors feel more com- 
fortable about holding property 
in their portfolios - it will 
have proved its worth. 



THEN 


M 

K j.w*’ 


5$ 


071493 5655 














FINANCIAL times FRIDAY SEPTEMBER 23 1994 


PROPERTY 


27 


FINANCIAL TIMES SURVEY 


IN LONDON’S WEST END 


Friday September 23 1994 







•few down Oxford Street: the pace of retailing picks up 


Redevelopment prospect view from Bishop's Bridge Rd, Padtfington 


The Trocadero shopping and leisure complex m PicadWy 


T ower cranes and concrete lorries, 
symbols of a virile commercial prop- 
erty market, could soon be starting 
to re-emerge in London’s West End where 
rents for top quality new buildings are 
rising for the first time in five years. 

Development plans are being tentatively 
dusted off as land owners and develop- 
ment groups consider whether the time is 
now right to begin construction a gain. 

At first glance, prospects for London 
motorists finding their passage blocked by 
fleets of building material lorries and con- 
tractors plant would seem unlikely. 

According to City University Business 
School, there remains a “chronic oversup- 
ply of sub-standard second hand office 
space in the West End” leaving too many 
landlords chasing too few prospective ten- 
ants. The university has drawn its con- 
duskms after studying the finding s of id 
of the largest commercial agents in the 
capital. 

Jones Lang Wootton and St Qvuniin, two 
of the agents, estimate that there are still 
about 8m sq ft of empty office space in the 
area compared with the 3.25m sq ft esti- 
mated by Joses Lang Wootton to have 
been been occupied last year by West End 
tenants. On the basis of last year's take-up 
the area would appear to have at least two 
years supply of ready built accommoda- 
tion. 

However, says City University, new 
development is still needed because the 
general oversupply of offices is masking a 
shortage of new large buildings - particu- 
larly in the core area of Mayfair and St 
James, one of Britain's richest property 


Call of the wide open spaces 


markets and favoured for prestige corpo- 
rate headquarters. 

Prof Piers Venmore-Rowknd, of the uni- 
versity’s business school, says: “Hie situa- 
tion has become acute. There remains sig- 
nificantly teas than one year’s supply of 
new accommodation available and, for 
large occupiers seeking in excess of 100,000 
sq ft, there are no new buildings currently 
available. 

“They [the figures] should make alarm- 
ing reading for those businesses seeking 
large new offices in the West End. Many 
people have become used to the Idea that 
there is far more office space available in 
central London than there are tenants to 
fill it 

“In general terms they are right but ... 
for those high profile, internationally ori- 
entated businesses looking for top quality 
space there is very little to choose from.” 

Rents, according to Jones Lang Wooton, 
have started to rise for quality buildings 
in prestige locations. More important, 
landlords have been able to reduce some of 
the rent free periods and other sales incen- 
tives they have been offering tenants. 

A recent landmark letting was achieved 
at the 95-000 sq ft Almack House in Ring 
Street which is to be occupied by interna- 
tional bankers J.P. Morgan at an initial 
rent thought to be £42.50 a sq ft 

This is well short of the £60 plus 
achieved in Mayfair and St James at the 


Despite the abundance of empty offices, rents 
are rising and developers are dusting off some 
long deferred projects, writes Andrew Taylor 


end of the 1980s but nonetheless repre- 
sents an important breakthrough, breach- 
ing the psychological £40 a sq ft barrier. 

Jones ljitig Wootton experts headline 
rents will reach £50 a sq ft next year. It 
says average rents of £65 a sq ft in 1989 in 
Mayfair /St James had fallen to a low of 
£35.50 in the second quarter of last year 
but have since risen to about £37. Rent 
free periods of 2Vi years offered as a sales 
incentive to reluctant tenants at the 


24.000 sq ft at 29/31 Hill Street 

The agents say the supply of available 
offices in the postal districts of Wi, SWi, 
WCl and WC2 peaked at 11m sq ft during 
1992 as tenants' needs reduced due to busi- 
ness rationalisations and a sharp rise in 

mrnpnny liqiririatinng 

At the same time, the n umb er of new 
buildings coming on to the West End mar- 
ket rose sharply reflecting the fruits of the 
late 1980s building boom. By the third 


IN THIS SURVEY 

PoBBcfen a and planners. Development options PAGE. H. Pad d ing ton ' s muddy waters H> 
Shops gloom eaaas.UK funds return IV. District by dstrfct. Who the users are V. 
Photos by Dan Burgan (except where credited otherwise} 


height of the recession have fallen to 
about 18 mnnthg, says the agency. 

Other important West End lettings this 
year, according St Quintin, include: Saudi 
International Bank which took 46,000 sq ft 
at No 1, Knightsbridge; Allied Dunbar 
Insurance, 31,000 sq ft at 120 New Caven- 
dish Street; Cable London. 30,000 sq ft at 
Central Cross, 2 Stephen Street; and Hong- 
kong and Shanghai Bank Corporation 


quarter of 1992 empty buildings repre- 
sented 13& per cent of the areas stock of 
offices. St Quintin says the vacancy has 
dipped below 10 per cent although still 
well in excess of the 3 to 4 per cent 
required for a healthy market “It is worth 
remembering.” it says, “that in the late 
1980s, when the market tightened consid- 
erably, the vacancy rate dropped to 1 to 2 
per rent, which was equally unhealthy.” 


Jones Lang Wootton says that the avail- 
ability of new properties has almost gone 
from feast to famine with vacancy rates 
for new buildings now just under 2 per 
cent compared with a vacancy rate of 8 per 
cent for all West End properties. 

Rents also have begun to recover for 
better quality space in one or two other 
West End districts beyond Mayfair and St 
James. Top rents In Soho and Covent Gar- 
den, says the agency, are averaging £22.50 
a sq ft to £25 compared with £15 to £20 two 
years ago and a peak of about £40 to £45 in 
the late 1980s. 

The recent improvement reflects 
increased dpmnnd from mpdia and adver- 
tising companies, benefiting from the 
growth in cable and satellite television, 
which provide the backbone of tenant 
demand in the area. It has aim benefited 
from a spill-over of interest from compa- 
nies unwilling to pay higher rents or 
unable to find the right Knd of quality 
space in Mayfair and St James. 

Some agents, however, report that more 
recently there has been a slight slowdown 
in the rate of improvement in West End 
lettings. Similarly, property investment 
purchases which rose sharply In 1993, 
partly triggered by demand from overseas 
investors, have slipped back as bond yields 
have become more competitive. 

Institutions are likely to want to see 
further evidence that tenant demand wifi 


prompt further rent rises before they 
embark on high risk new developments 
which will only proceed if substantial pre- 
lets can be achieved. 

Many companies which might have been 
considering a move within the West And 
remained trapped by high rent leases, 
negotiated many years ago and which they 
are unable to reassign - the commercial 
property equivalent of negative equity. 

New tenants are reluctant to commit 
themselves to traditional long leases with 
upward only rent reviews. “It is quite diffi- 
cult to secure a tenant for longer than 15 
years," according to St Quintin which says 
“break clauses" at the 10th or even the 
fifth year “are not unknown”. 

New inves tmen t aTsn is unlikely to take 
place while substantial rent free periods 
are still available. Older, poor quality 
buildings will remain very difficult to Let 
while tenant demand in the absence of 
new construction is likely to be concen- 
trated on refurbished second hand build- 
ings Of high q uali ty 

This points to the development of a two 
tier market with rents rising modestly for 
quality space as shortages emerge. Poorer 
quality buildings where there is still a 
huge over-supply will remain very difficult 
to let rents will remain static and sales 
incentives will he slow to disappear. 

Tenants have become more cost con- 
scious during the recession and the gen- 
eral oversupply of accommodation will 
continue to act as a brake an the market 
preventing a rapid escalation in rents even 
for the best quality offices. 


BISHOPSBRIDGE 

PADDINGTON 

THE NEW COMMERCIAI CENTRE FOR LONDON - IN THE WEST END 



Demand for major office buildings in Central London has spcctacularly 
nxovered while supply of new buildings has declined. The result? An 
imminent shortage of Grade A space with no new buildings in the West 
End able to offer the size and quality of space required to meet the 
needs of a major international corporate headquarters. 

Bishopsbridgc, Paddington will not only offer buildings of the scale and 
specification demanded for business for the next century, but also a 
communication structure that is, quite simply, unsurpassed: 

• Pedestrian access to Paddington station with main line routes to the 
Thames Valiev, Swindon, Bristol, West of England and Wales. 

• A new Hammersmith and City Line Underground Station with 
direct access to the Circle, District and Bakcrioo lines. 

• prom 1997 - a 17 minute Paddington-Hcathrow Express rail link. 

• Direct access to the A40M and thereby to the M25 and national 
imitonvay network. 



BISHOPSBRIDGE 

PADDINGTON 

THE NEW CENTRE FOR LONDON - IN THE WEST END 
A development by Regal tan Properties pic and NFC pic 


\PEPPER ANGUSS 
ygtoRWOOD 

\. \ 071 -439 6066 


Weatherail 

Green & Smith 

UOnKoy Lwe Lankin V. C2A B.T 

0171-4056944 


A photographic montage of the finished scheme. 

• Easy access to a wide range of buses and taxis. 

* Close to West End shopping. 

Bisbop&bridgc occupies a 13.5 acre site stretching from Little Venice to 
Paddington Sration. When completed, it will house a total of 1.4m 
sq.ft, of new. quality office accommodation plus 210 apartments and 
40,000 sq.ft, of retail space with extensive onsite car parking, in 
designing Bishopsbridgc great emphasis has been attached to creating 
an outstanding new working environment and much has been made of 
its waterfront and public squares linked by tree lined boulevards. 

Bishopsbridgc will be built solely in response to identified demand and 
tailored precisely to meet tenant needs. 

The scale, quality and specification of Bishopsbridge creates a 
fundamental change to the London office market. 

For more information contact: Charles Spencer, Project Director on 
0171-493 9618/9 or the Development Consultants. 







28 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


PROPERTY IN LONDON’S WEST END II 


L ady Porter now spends 
a lot of time abroad 
and the notorious Des- 
ignated Romes sales 
programme may have abruptly 
halted. But the scandal of how 
the Tory Westminster Council 
strove to buy votes by turning 
the disaffected into home own- 
ers on the cheap still rumbles 
on. 

The Unitary Development 
Flan for the city has now been 
re-examined by the District 
Auditor and by Mike Laws, a 
retired County Planning Offi- 
cer for Shropshire, to see if the 
entire housing policy has been 
flawed by what are described 
as “contaminated motives” Le. 
gerrymandering. Their reports 
are expected shortly. 

Meanwhile, it has recently 
emerged that Porter's adminis- 
tration may have had a fine 
sense of self preservation in 
trying to buy votes. Boundary 
changes may soon threaten the 
Tories' age-old hegemony over 
Westminster, turning the dis- 
trict into a potential marginal. 

But it would he wrong to dis- 
miss Westminster's housing 
policy out of hand. Long before 
Porter all Westminster's local 
governors laid special empha- 
sis on maintaining a strong 
residential element in every 
part of the city. The most 
recent requirement - that 
developments involving 
increased office space must 
provide matching amounts of 
self-contained residential units 
- is compatible with the post- 
war history of planning in 
Westminster. 

Westminster's approach to 
p lanning has always been very 
different from the City's. The 
latter welcomes offices so long 
as they meet design criteria. 
Some retail provision is the 
only extra the developer need 
consider. 

Westminster has never seen 
Itself primarily as an office 
location. Its planning priority 
is urban renewal and it 
believes that this means mixed 
uses even in its core area, the 
so-called Central Activity Zone. 

The concept goes back to the 
late 1950s when the then coun- 
cil insisted that Temporary 
Office Use permits were just 
that - temporary. Companies 
had been permitted to take 
over houses in Mayfair as war- 
time headquarters, but the 


Christine Moir reflects on where politics ends and planning begins 

Westminster lifts the lid 



PoBtictans' Critics auditor John MaglB, who accused West m ins te r of unlawful housing sales Retire: Reuter 


council insisted that they 
revert back to housing when 
the TOUs expired, mostly by 
the late 19S0s. 

In Covent Garden and Soho, 
the local authority became 
even more insistent that hous- 
ing should be an integral part 
of the mix. The concept has 
won international praise as a 
benchmark for urban regenera- 
tion. 

For close on 50 years, there- 
fore, the presumption has 
always been that all new devel- 
opments would be a mix of 
housing, shops, offices and 
even workshops. Moreover, 
this applies in every sub-dis- 
trict, including one. like Pad- 
dington. designated a Special 
Policy Area and a preferred 
location for large-scale 
offices. What is new in the cur- 
rent Unitary Development Plan 
is the explicit co mmi tment to 

owner-occupation and the 
resistance to converting 
houses into Oats in desirable 
areas such as Belgravia, Pim- 
lico, Knights bridge and Bays- 
water. 

According to Mike Straw of 
Richard Ellis's planning 


department, one question the 
examiners will be asking is 
whether this council is as fully 
committed to affordable hous- 
ing as to residences for Conser- 
vative voters. 

Developers have a separate 
objection to the current formu- 
lation of the housing policy: its 
inflexibility. Not all office 
developments are suitable for 
incorporating self-contained 
flats with a separate entrance; 
the site, the location, the 
immediate outlook may not 
recommend themselves to resi- 
dential occupation. They 
believe the council should lay 


down the residential require- 
ment for a neighbourhood and 
leave them to parcel that In 
the most convenient way. 

History suggests they may 
eventually be heard. In the 
1960s, Camden Council had a 
similar plan which forced 
Harry Hyams to provide a 
handful of Oats in the pent- 
house of Centrepoint, his con- 
troversial office tower at the 
junction of Charing Cross Road 
and Oxford Street The require- 
ment made a mockery of Cam- 
den's housing policy, which 
was quietly modified. 

Controversy - but without 


the overtones of impropriety - 
also surrounds another aspect 
of planning for the West End: 
transport policy. It is a fraught 
issue everywhere, as central 
and local government are each 
responsible for different 
aspects of it 

In central London, matters 
were made worse by the aboli- 
tion of the GLC which Left no 
one body with an overview of 
the region's needs. One exam- 
ple suffices: the Heathrow 
Express Railway, a joint ven- 
ture between British Rail and 
the British Airports Authority, 
went back and forth to central 
government during Its plan- 
ning phase with no one to 
judge whether it was good for 
London. 

Instead, different local 
authorities bickered among 
themselves: while districts 
near the airport wanted traffic 
taken off their roads, Westmin- 
ster opposed it on the grounds 
that it would suck in traffic to 
the proposed terminal at Pad- 
dington. 

Westminster lost. HER is 
going ahead. Westminster is 
reduced to trying to limit the 
inevitable increase in traffic in 
Paddington by forcing the two 
giant commercial develop- 
ments which will feed on the 
express to reduce the car park- 
ing they provide. The transport 
programme which would have 
had a really positive effect in 
driving West End traffic off the 
roads - CrossRail - was in cen- 
tral government’s gift and now 
lies gathering dust 



I /A 

fMAYFAlft /^ T JAMES*S 

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Hyde Park Com** , r ; : j i ffrf ‘ 


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HOUSM.QT. 

Pariumont ' 


RIVER THAMES 



9 


Vduxfta* 


Source Henug Ookw Hants 



T OTTEKHAM COUR T R O A D 
ION DON W1 


Air-Conditioned Office Spa ce 
Available as a whole or in port 
S u bsta n t i a I o ri -■'s.ite^G.p.r Parkin 9 
Competitive terms available 



■ NEW DEVELOPMENT OPTIONS 

Confidence stirs 


Development proposals are 
being dusted off as land own- 
ers and investors consider 
whether the time is right to 
resurrect plans for some of the 
biggest office projects under- 
taken in the capital, writes 
ANDREW TAYLOR. 

Two of the biggest projects 
are in Paddington, designated 
by Westminster City Council 
in 1962 for large scale office 
development and where rival 
development groups are pro- 
posing to develop up to 3m sq 
ft of new office space. 

Funding institutions, how- 
ever, remain very nervous 
after their experiences during 
the early 1990s when rents and 
capital values fell sharply. 
Major schemes, therefore, are 
unlikely to proceed unless they 
are pre-let. 


Richard EH is AO Buildings Rental Index (% change) 


1990 (year) 


1993 (year] 1994(Jan-June) 


Mayfair 

-5.9 

-4 6 

* 2.7 

St James’s 

-5.1 

-7.8 

+4.8 

Soho 

4L2 

-ids 

*1.9 

Cement GdiVStrend 

-10.9 

-&2 

+65 

Vectoria/Belgravia 

-4.0 

-11.0 

+6.6 

Northern 

-9.9 

-16.0 

♦1.7 

TOTAL WEST END 

- 7-2 

-9.6 

+A3 


Sourc* KcHanl E6a Preperry CaSjtmo, August ’994 


14/15 GROSVENOR 
CRESCENT, 
BELGRAVIA SW1 

Modem offices 
behind period facade 

4000/5660 sq ft 

♦ Air Conditioned 

♦ Car Space 

♦ Computer suite 

SHORT OR 
LONG LEASES 


EDWARD CHARLES 
& PARTNERS W1 


CHARTERS) SURVEYORS 


071-935 2811 


Planning hurdles also may 
have still to be overcome as 
developers seek to turn outline 
planning approval into detailed 
consents for their proposals. 
Some of these construction 
projects have been around for 
many years and it could be 
some time before concrete 
starts to be poured. 

Nonetheless the outlook for 
development has begun to 
brighten. The balance between 
supply and demand, at least for 
new properties, is again 
favouring the developer. 

This week, for example, Mr 
Elliott Bernerd’s Chelsfleld 
group a n nounced plans to start 
work on 120,000 sq ft of office 
space at Wool House, St 
James's after selling a 50 per 
cent stake in the project to 
AMP Asset management for 
£20 5m. 

City University Business 
School, which has studied the 
findings of 10 of the largest 
commercial agents and char- 
tered surveyors in the capital 
says: “There remains signifi- 
cantly less than one year’s sup- 
ply of new accommodation 
available and, for large occupi- 
ers seeking in excess of 100,000 
sq ft, there are no new build- 
ings currently available.” 

As a result, rents for modern 
high quality accommodation 
are beginning to rise as the 
property market comes out of 
recession. 


A SELECTION OF WEST END OFFICES 


NEWMAN STREET 

12,000 sq.ft. 

S/C Building with 
Car Parking 

FREEHOLD FOR SALE 
GROSVENOR GARDENS 

23,500 sq.ft. 

A/C and Car Parking 
TO LET 


MARBLE ARCH (OFF) 
10,000 sq.ft. 
Single A/C Floor 
with Car Parking 
TO LET 

PARK LANE 
1,600/2,200 sq.ft, 
with Car Parking 
TO LET 



EPPERANGIISS 

YAKWOOD 

6 Carlo# Place. London WIY 6LL 

071-4996066 


The shortage of new space, 
described by City University as 
“acute”, compares with a gen- 
eral oversupply of empty sec- 
ondary space, much of it poor 
quality, of 8m sq ft. The 
take-up by tenants is expected 
to be about about 3.5m sq ft 
this year, according to agents 
Jones Lang Wootton, Indicat- 
ing that there is at least two 
years supply of ready built 
accommodation. The extent of 
this over supply will prevent 
rent from rising too quickly. 

Westminster council’s long 
Standing policy of maintaining 
a Strang residential community 
alongside office and retail 
schemes traditionally has 
restricted the pace of commer- 
cial development. More 
recently it has required devel- 
opments involving Increased 
office space to provide equiva- 
lent residential space. 

The council’s housing poli- 
cies are now being investigated 
by the District Auditor and a 
retired former County Plan- 
ning Officer for Shropshire fol- 
lowing the votes for homes 
scandal operated under West- 
minster’s right to buy scheme. 

The inquiry, however, is not 
expected to undermine the gen- 
eral thrust of the council’s 
housing policy or threaten out- 
line planning permissions 
granted for some of the large 
proposed schemes in Padding- 
ton where Westminster is seek- 
ing to direct commercial devel- 
opment under its urban 
renewal policies. 

ft has been aided by the start 
of construction of die £300m 
Heathrow to Paddington rail 

Offiqsstock 

MBUcrt square feet 

70 -- 


link designed to provide fast 
direct rail access to the airport 
as well as coping with 
increased passenger numbers if 
the proposed fifth terminal at 
Heathrow goes ahead. 

Beneficiaries could be two of 
the largest schemes to be 
undertaken in central London 
since the massive Broadgate 
and Ludgate office develop 
meets undertaken by the Stan- 
hope/Rosehaugh joint venture 
Rosehaugh subsequently went 
into receivership while Stan- 
hope is still wrestling with its 
large borrowings. 

The main Paddington 
schemes are: 

# Bishopsbridge: a 1.4m sq ft 
office development with retail 
anil residential gtompntg pro- 
posed by Grainhurst, a consor- 
tium representing Regalian 
property development group 
and the National Freight Con- 
sortium. The site is the the for- 
mer Bishops Bridge railway 
goods yard. 

• Paddington Basin: a joint 
development proposed by 
Trafalgar House, the UK con- 
struction. property, shippings 
and hotels group, and British 
Waterways. The scheme is to 
provide up to 1.5m sq ft of 
offices as well as retail and res- 
idential accommodation. 

Both schemes seem likely to 
require a significant amount of 
pre-lets before financing insti- 
tutions will agree to fund con- 
struction. Funds will also need 
to be convinced that there is 
the prospect for sufficient 
rental growth to justify such 
large investments. 

Prospective tenants, given 
the oversupply in the West 
End may be prepared to look 
elsewhere rather than bid up 
rents, notwithstanding the 
shortage of new space. This 
initially may lead to a growth 
in refurbishment rather than 
new development 

Companies are not so long 
out of recession that they will 
be prepared to accept a sharp 
rise in property costs. There is 
plenty of choice of empty 
buildings if prospective tenants 
look further afield. 

The City of London and the 
capital’s former docklands 
areas may not have the glam- 
our of a Mayfair or St James’s 
address but might be regarded 
as preferable to a Paddington 


address if rents start to appear 
uncompetitive. 

The Paddington/Heathrow 
link promising a 1? minute 
journey from central London 
to Europe's biggest airport is 
an important attraction but 


may not be enough on its own. 
The construction of CrossRail. 
a £2bn roil project link east 
and west London, blocked ear- 
lier this year by MPa, would 
have been an even bigger 
attraction. 



. V.J 

40 

• ft- 

. ' 1988 .1987 1988 1989 1990 1991 . 1992 1993 

3ouor Hermg Baker Hina ' ■' 


RENT REVIEW/ LEASE RENEWALS 

Arc you paying too much rent? Is Your lease too long? 
is your lease soon to expire? Do you need expert advice? 
Would you like (o reduce your rent? If the answer is yes 
to any of these questions 
Contact 

GREENBLATT & PARTNERS 
Tel 071-403-8558 


McKENNA & Co 

Commercial Property Lawyers 


Advisers to 

Grainhurst Properties Limited 
on their Bishopsbridge Project 


Contact: N M Hadley 

Mitre House, 160 Aldersgate Street 

London EC1A 4DD 

Tel: 071 606 9000 Fax: 071 606 9100 






MELLERSH 
& HARDING 

071-499 0866 



FOR SALE 

Prestigious Motor Showroom 

14 Berkeley Street, London WI 

Ground Floor - Sales: 

2,190 ft* (203m*) 

Lower Ground Floor - Antill Office: 
2,484 ft? (223m 2 ) 

ALL ENQUIRIES 
Ref CDP/TJR 



steer Davies glea 

Principal Transport Planning Conau 
Paddington Special Policy Are; 
Developments 


t Ground London SE1 9PD 

Tel. 0171 919 8500 Fax: 0171 827 9fi 










Paddington is still jus 
print Delays, controversy and 
changes in ideology have 
dogged the project ever since 
Westminster City Council first 
designated Paddington in 1982 
as a preferred location for 
large scale office development. 
And there is still more to 
come. 

In the past 12 months two 
giant commercial schemes 
intended to provide 3m sq ft of 
offices phis shops, cafes, 
craft units and some 450 flats 
have become entrapped in the 
backlash of Westminster City 
Council's “homes for votes" 
scandal. 

Paddington Station, a Grade 
I listed building, has been put 
on the market as one of the 
dozen or so stations for which 
Railtrack is required to find 
new owners under rail privati- 
sation. Crossrail, the new 
Underground link between 
West and East London through 
Paddington, has either been 
scrapped or sent back to the 
drawing board. St Mary’s Hos- 
pital’s rebuilding plans are on 
ice while it waits to learn its 
fate in the reorganisation of 
central London hospital ser- 
vices. 

Only one of the private sec- 
tor schemes - the entirely 
self-contained and independent 
extension of the Metropole 
Hotel on Edgware Road - is 
actually under way. Mean- 
while, the public sector must 
content itself with progress on 
the London Heathrow Express; 
the rather more important 
Crossrail project was on, then 
off and, if it may be on again, 
it won’t be just yet 
Whatever their cause, the 
delays are acutely frustrating 
to planners, property develop- 
ers and local residents who are 
united - if only in the general 
principle - in the need to elim- 
inate the present tattiness. 
However, as 1994 moves into 
its final quarter, there is rea- 
son to hope that not all the 
Paddington plans may be irrep- 
arably stalled. 

Imperceptibly, perhaps, the 
two commercial schemes are 
starting to move ahead. Bish- 
opsbridge, the joint venture 
. between NFC and Regalian to 


Padcington Basin with St Mary's Hosprtaf on the right residents and developers agree on the need to get rid of the tattiness 


Artist's impression of part of the Bishopsfcridge complex: Imperceptibly, the logjam may be starting to break 


develop the 135-acre Padding- 
ton Goods Yard north of the 
station, claims to be more 
advanced than its nearby rival, 
the Trafalgar House/ British 
Waterways redevelopment 
round Paddington Rasm at the 
head of the Grand Union 
Canal. That is debatable. 

Bishopsbridge was 
“launched" at the end of 
August four months after it 
received outline planning con- 
sent from Westminster Coun- 
cil. But the "launch” amounted 

The schemes' biggest 
gamble is the extent of 
future demand for office 
space in Paddington 

to no more than inviting a few 
more interested parties to visit 
the showroom in Mayfair 
which had been open for the 
past two years. 

Moreover, as NFC and Regal- 
um already know to their cost, 
the gulf between outline and 
detailed permission can be dif- 
ficult to bridge. A public 
inquiry 1 after an earlier outline 


had been approved in 1989 
meant a major rethink of the 
original scheme. The current 
artist’s perspective and per- 
spex model cannot be relied on 
as an accurate guide to the 
final appearance of the build- 
ings. 

In that respect Trafalgar 
House may be slightly further 
ahead. In early September, it 
was in the final two weeks of 
negotiations with Westminster 
planners which would under- 
pin its detailed planning appli- 
cation. The pretty pictures 
which Trafalgar is touting 
may. therefore, be closer to the 
future reality. 

But both have a long way to 
go before being set in stone. 
Trafalgar has not yet assem- 
bled its entire site; some own- 
ers remain to be bought out. 
Grainburst (the vehicle for the 
Bishopsbridge scheme) has a 
vacant, but difficult, gully of a 
site to tie in with Paddington 
Station and the proposed new 
Underground station it must 
pay for as a condition of its 
planning permission. 

Meanwhile, both developers 
must bite their knuckles while 


BISHOPSBRIDGE 

9H Office buffitlngs 

Resfclertiai bufdngs 

— - Retal (tt giand toot) 

• • • Site boundary 




■J&i \V 








I 

! • (oraod Square) | The Arcade) } Central Sguaa [ jcarttrai 3&e<<| | Pe rform a nce Squtre [ # * t - ^‘yi 


they await the verdict of two 
independent investigations 
into whether the consents they 
have received had "contami- 
nated motives". The District 
Auditor and a retired former 
County Planning Officer for 
Shropshire are both searching 
to see whether the council’s 
bousing policy has been based 
on sound planning principles 


or "contaminated”, like the 
designated house sale pro- 
gramme, by gerrymandering. 

Property professionals with 
no axe to grind are confident 
that the plans will win a clean 
bill of health- They point out 
that Westminster's insistence 
on mixed use developments in 
the Paddington area has a con- 
sistent history which relates to 


a transport policy of minimis- 
ing traffic increases. 

Even if that is so, the two 
schemes then lace their biggest 
gamble: the extent of future 
demand for nffice space in Pad- 
dington. With Bishopsbridge 
designed to provide 1.4m sq ft 
of offices and Paddington 
Basin more than 15m. the two 
schemes combined will amount 


to the largest West End devel- 
opment since the Second World 
War. And they are in an area 
which has always rebuffed 
developers’ ambitions to push 
the West End westwards. 

Some think that St Mary’s 
plans for a 950,000 sq ft terrace 
of offices on its western bound- 
ary (which would pay for new 
hospital buildings to the east) 
were ambitious enough for 
such a fringe area. 

Grainhurst cites the example 
of Broadgate which sceptics 
were adamant could not 
breach the City's northern 
boundary. Its executives also 
draw encouragement from 
research the company commis- 
sioned from the City Univer- 
sity Business School. That 
shows that the top 10 agents in 
the West End agree that a 
shortage of top specification 
space is imminent, however 
long the hangover of substan- 
dard Space r emains. 

According to the consensus, 
less than one year’s supply of 
prime space remains available 
and no new building over 
100,000 sq fL Given that West 
End stock has traditionally 


been in small buildings and the 
council wants to push large 
space users to the Paddington 
Special Policy Area, this must 
be cause for optimism. How- 
ever, it has yet to translate 
into firm good news. Neither 
Trafalgar nor Grainhurst are 
close to a pre-letting which 
would persuade them to push 
ahead to the construction 
stage. 

No one doubts the area's 
main commercial attraction; 
its already excellent westwards 
connections will be further 
enhanced by the Heathrow 
Express Railway. With con- 
struction well under way the 
railway looks likely to meet its 
most recent completion target 
- December 1997. 

A journey time of just 17 
minutes to Heathrow should 
impress international compa- 
nies which do not need a prime 
Mayfair location but seek a rel- 
atively central position. But 
wifi enough of them want to 
locate in a deep dip beneath 
the Westway (Bishopsbridge) 
or in Trafalgar's community- 
oriented enclave on the edge of 
the Edgware Road? 


ANNOUNCING A FUNDAMENTAL 
CHANGE TO THE LONDON 

OFFICE MARKET 


When it comes to assessing market performance any 
City .analyst worth his salt knows that conclusions 
derived from a cursory glance of headline figures 
are often misleading. An accurate understanding of 
events only emerges after some deeper digging and a 
careful dissection of the numbers. 

Nowhere is this lesson more applicable than when it 
comes to analysis of the West End Commercial 
propat y market. Recent times have seen an 
unfortunate fashion of common cacors quoting the 
office supply figure with the greatest number of 
zeros on the end. The perception being thar Central 
London is awash wirh empty offices - a view chat 
Financial Directors must be warned is dangerously 
incorrect. 

Tire problem is that the massive stock of vacant 
unusable second-hand accommodation has been 
bloating the supply statistics. 

Leading property academic. Professor Piers 
Yemnore-Rowland of City University Business 
School undertook a study to look into the state of 
the West fcnd Commercial property market. 

In The West End Office Market - An Assessment of 
Market Data 1 , published today, the author himself 
N.i> n the findings "make alarming reading for those 
businesses which are. or which will be, seeking large 
new office buildings in the West End". 


His message is clean "For those high profile, 
inremarionaily-oricmed businesses looking for top 
quality space there is very little to choose from. It is 
plain that those businesses arc now going to have to 
look very carefully at new locations". 

Indeed, when it comes to the large quality 
headquaners buildings - assets that the Capital 
badly needs, to maintain its pre-eminent position as 
Europe's top location - the West End faces 
something of a chronic shortage. 

To call it a crisis is perhaps an overstatement. But 
with demand for new office space growing at an 
ever-increasing rare, property experts are warning 
that the supply of quality accommodation in the 
core West End will dry up in twelve month's rime. 
This paucity will further exacerbate the frustration 
of UK institutions eager to promote well let 
property investments. 

The problem has reached such a point that property 
analysts arc saying that if nothing is done “’bout it, 
companies wanting to locate their new headquarters 
in the West End within the next three to four years 
arc likely to be disappointed. 

The area topping Professor Venmore- Rowland’s list 
is Paddington, in particular the region stretching 
from Paddington Station north and west to the 
A40M, This is a view shared bv Westminster Citv 



A model of the office buildings. 

Council. The authority has designated an area of 
Paddington around the station as a Special Policy 
Area and will be actively directing any company 
looking for large new accommodation to the SPA. 

Most in the property world agree it makes sense. 
Where else in Centra! London is there a 40 acre 
parcel of vacant and unemployed land in a prime 
location? But the availability of development sites is 
not the only factor that makes Paddington an 
attractive base - a good location needs more than 
just land. 


Undoubtedly, it will also be a hub of development 
activity. One of the most exciting proposals primed 
to spring from its starring block is the 
Bishopsbridge scheme launched today by 
developers Regalian Properties pic and NFC pic. 

Bishopsbridge will total 1.4m sq.ft, of offices in ten 
buildings on a 13.5 acre site. It will have the 
capacity ro house 14,000 employees. The scheme, 
which will be built around three major public 
squares linked by tree lined boulevards, is likely to 
attract attention from all the major international 
office occupiers. Bishopsbridge has been master- 
planned by the renowned architect John Seifert. 

Bishopsbridge wiU also provide 40,000 sq.ft, of 
retailing to service the Commercial buildings and 
210 apartments. An additional plus for occupiers 
will be the generous car parking provision, rare in 
the rest of the Capital. 

The developers plan ro start building as soon as the 
first tenants arc signed up. And with these in place 
the UK funds so hungry for first class property 
investments will at last have something to satiare 
their appetite. 










FINANCIAL TIMES FRIDAY SEPTEMBER 23 




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Financial Times 
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London SE1 9HL 


Complex factors refresh the retail sector, writes David Lawson 


Bugs Bunny and the IRA 


An unlikely alliance between a 
lunatic rabbit, several designer 
labels. Northern Ireland's 
peacemakers and a gang of 
roadworkers is dragging 
Britain's largest shopping cen- 
tre oat of deep gloom. 

In the furore aboat the 
Impact of out-of-town shopping 
on city centres, problems faced 
by London's West End have 
been pushed to the sidelines. 

That, perhaps, is just as well, 
as the crisis is now fading. 
Rents have bounced back to 
near-boom levels and empty 
spaces tilled as retailers no lon- 
ger scramble to escape crip- 
pling overheads. 

The problems - as in much 
of the property market - arose 
from the Age of Excess. Retail- 
ers measure occupation costs 
according to the front 30ft of 
their premises. Rents during 
the 1980s for this “zone A” 
space soared to £350 a sq ft in 
Oxford Street and £175 in 
Regent Street 

Then came the crash and a 
flurry of liquidations. Land- 
lords were forced to repossess 
and try reletting at market lev- 
els, says Chris Austin of Hillier 
Parker. By 1992, rents were 
down to £250 and £150 respec- 
tively. 

Knightsbridge saw an even 
more spectacular boom and 
crash, with Sloane Street rac- 
ing from £55 in 1981 to a £400 
by 1989 as it assumed the man- 
tle of a fashion centre. “This 
was never sustainable,” says 


John Buckingham of Jones 
Lang Wootton. Values almost 
halved in the slump! although 
Brompton Road is probably 
still the most expensive West 
End location. 

Then the strange alliance 
raced to the rescue. Bugs 
Bunny is setting up shop in the 
new Warner Bros store on 
Regent Street, part of a stream 
of flagship lettings to speciality 
retailers. One site is being let 
for more than £175 - breaking 
the 1989 rent record, says Mr 

Austin. This is 

partly due to a 
recovering 
economy bat 
also because of 
aggressive 
management 
by the Crown Estate, which 
owns the street. 

Several million pounds have 
gone into improving the pave- 
ments and lighting. A careful 
policy of tenant selection has 
also begun to dispel the bore- 
dom of “dead” frontages from 
airline and similar p remises ■ 

Only a handful of units 
remain empty and the transfor- 
mation has impacted on invest- 
ment Hamleys is understood 
to have sold its lease for 
around £185m to a Dutch fond, 
showing a yield of less than 5-5 
per cent Meanwhile, Good has 
helped turn Bond Street back 
into an international attraction 
after moving to new premises, 
says Mr Buckingham. 

Versace confirmed the 


Rents are returning to 
high levels and empty 
spaces are being filled 


revival by taking the old Mid- 
land Bank premises and Fahey 
has slotted between Asprey 
and Hermes, paying Meteor 
Properties around £600,000 a 
year for the former Air France 
space. Donna Karen New York 
is tiie latest fashion name to 
move in, taking the old Gucci 
store, now transformed by the 
new Japanese owner. Develop- 
ment is also happening, despite 
the fact that rents are static at 
around £200 a sq ft 

CIS is renovating its section 

of the street 

after years of 
inaction and 
London & 
Regional has 
paid £8.75m for 
possible rede- 
velopment of the fanner Ref- 
uge Assurance holding. Scot- 
tish Widows also has a scheme 
for the Oxford Street end, all of 
which will enliven an image 
blighted by empty windows. 

Another long-awaited trans- 
formation is happening in 
Oxford Street, where Westmin- 
ster Council road gangs are 
widening pavements and gen- 
erally giving one of the world’s 
most famous shopping streets 
an appearance it deserves. If 
the Ulster ceasefire holds, this 
could coincide with a revival in 
trade from tourists put off by 
bomb fears. 

Rent growth normally lags a 
year or two behind tourism fig- 
ures. bat this time any 


increase would be icing on a 


cake already baked by rising 
domestic demand. Tesco has 
seen its new Metro store turn 
Into a roaring success and 
probably wishes it could have 
also taken the neighbouring 
unit. This is said to be the only 
vacant prime pitch west of 
Oxford Circus but is already 
reserved. 

The likely rent of more than 
£270 a sq ft shows how Oxford 
Street shopping has climbed 
back off the floor. There are 
still businesses who would like 
to escape rent levels set at the 
peak of the boom but they, too, 
face some relief. Next April 
new business rates come into 
force, and bills could drop 15 
per cent in Oxford Street and 
as much as 40 per cent in 
Sloane Street. Investors age 
also betting on growth. Despite 
Burford’s highly conservative 
spending strategy, it beat off 
several other potential buyers 
by paying £94m for the Troca- 
dero on Piccadilly Circus, per- 
haps the most popular tourist 
shopping and entertainment 
pitch in London. 

With long-term finance now 
in place, chairman Nigel Wray 
might be forgiven for sitting 
back and enjoying the 9 per 
cent return. But he has bold 
plans to increase the current 
estimate of 14m visitors a year, 
with bold plans for the 120.000 
sq ft of remaining space. 'Hie 
impact should ripple out to 
boost values in the surround- 
ing shopping. 



[ gradually and painfufly from the Age of Excess 


T oday’s West End invest- 
ment market is very dif- 
ferent from that of the 
early 1990s, leading West End 
agents agree. 

Foreign investors have 
ceased to be the driving force; 
pension funds are a declining 
influence; bank financing 
through mortgages has given 
way to cash purchases; but, 
paradoxically, some long term 
institutional funders are 
happy for developers to blow 
the dost off long-stalled 
schemes. 

Most important of all, UK 
institutions are back, keen not 
to miss the rental growth they 
now believe is coming. 

Foreign investment peaked 
in 1990. “The light went on 
when the UK left the EttM,” 
says Stephen Hubbard of Rich- 
ard Ellis. In that year foreign- 
ers were the market, account- 
ing for 90 per cent of all 
activity. High yields, which 
moved in line with interest 
rates, created a bond-style 
market in property with which 
foreigners were familiar. UK 
institutions, by contrast, were 
dismayed at the absence of 
growth potentiaL 
Foreign buyers could not 
continue to dominate snch a 
big market for long, of course. 
By 1992, their influence bad 
dropped back to 80 per cent. 
Last year, as the market began 
to recover its nerve, the for- 
eign figure was down to 64 per 
cent and in the first half of 
this year had fallen back to 
perhaps 40 per cent 


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Middle Eastern investors 
continue to remain interested; 
they have been a permanent 
feature of the market for many 
years, as have the Dutch pen- 
sion funds. The Ger mans, how- 
ever, appear to be digesting 
the West End properties they 
snapped up so enthusiastically 
at the start of the decade. As 
for the promised influx of US 
money, it remains a case of 
“Will they, won’t they?" 

Far Eastern Investors are 
more reliable; Jones Lang 
Wootton expects them to 
account for as much as £2 00m 
of the £ibn likely to be spent 
In the West End this year. Far 
Eastern investors, for 
instance, are thought to have 
paid around £30m for Treve- 
lyan House, though that was 
perhaps atypically large. 

The investment market as a 
whole went very quiet over 
the summer. “Not a lot hap- 
pened in August” Mr Hubbard 
noted, while JLW was predict- 
ing little more than £100m of 
new deals would be sewn up in 
the third quarter. 

In early September fourth 
quarter prospects were begin- 
ning to look more active, espe- 
cially for deals around or 
under £lOm. But win the pic- 
ture change again if investors 
perceive interest rates to be on 
the rise once more? 

Before the Chancellor raised 
interest rates in mid mouth, 
Richard Ellis's Mr Hubbard 
was confident that “the ingre- 
dients are there for rental 
growth”. His counterpart at 
rival JLW, John Stephen, was 
even prepared to go public 
with a prediction that “rents 
will go well over £50 per 
square foot during 1995". (The 
current peak is thought to be 


the £42.50 paid by J.P. Morgan 
for the headlease on Almack 
House In St James’s.) 

But both agree that the 
recovery so far is only patchy 
and investors' confidence mil 
only be sustained if that rental 
growth starts showing 
through. They have had 
enough of promises. 


P romise, however, is 
spurring on a number of 
developments. Pruden- 
tial, for Instance, is showing 
signs of activity over Its four- 
acre Portcullis project in 
Knigtatsbridge which has Iain 
fallow for some years; and 
Norwich Union has woken up 
in Golden Square in Soho. 

They and other developers 
are encouraged as much by the 
shortage of investment grade 
properties In an area domi- 
nated by small, listed build- 
ings, as by hard evidence that 
rents have begun to rise. 

Yields have been hardening 
on office property but the 
trend has been sharper and 
hascome earlier on prime 
retail space. Agents Healey & 
Baker report yields of between 
4J> and 5 per cent in Oxford 
Street west of Oxford Circus 
and as low as 6 per cent even 
east of Marks & Spencer’s Pan- 
theon site beyond which ten- 
ant quality falls off dramatic- 
ally. 

H & B's lira Sketehley even 
predicts that the north side of 
Oxford Street East will show 
the greatest improvement in 
both yields and rents. 

Part of the reason lies in the 
historic concentration of prop- 
erties in this stretch into just 
a tew long-term hands such as 
Grand Metropolitan, Loudon & 
Manchester and Standard Life. 


But a new factor is the immi- 
nent redevelopment of the Vir- 
gin Megastore for £90m. 

Once Virgin and Grand Met 
agreed the details, Grand Met 
put the property on the map 
ket as a completed and frilly 
let development Contracts 
should be exchanged very 
shortly at a price expected to 
reflect the rejuvenation the 
rebuilding will create. 

Longer term, the quality of 
the far east end of Oxford 
Street win also improve when 
London Underground com- 
pletes the upgrading of the 
Charing Cross Road entrance 
to Tottenham Court Road sta- 
tion. Oxford Street has always 
been a cyclical market, depen- 
dent on tourism as well as 
domestic consumer cycles. 

’ Today’s top rents - £240 per 
square foot Zone A, west of the 
Circus - are just the same as 
they were in 1979 and a long 
way from the early 1980s peak 
Of £350. 

But Mr Sketehley confirms 
that they are in a steep 
upward phase at present On 
those grounds - and with the 
boost from the Megastore and 
Underground improvement - 
he is confident that rents of 
£100 to £140 in the eastern 
stretch will soon be historic 
and deals will produce bench- 
mark yields. 

The buyers prepared to pay 
such prices will most likely be 
British (no offence to Irish Life 
which recently acquired a site 
just west of the Pantheon at a 
price reflecting a 5 pa* cent 
yield). As with offices, foreign 
investors are now taking more 
of a back seat in the retail 
investment market. 


Christine Moir 



f 




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t 











financial times Friday September 23 1994 


31 


PROPERTY IN LONDON’S WEST END 


the West End is a fiction. 
It vs accepted as one of 
the world's largest busi- 


ness centres but no-one can 
agree exactly where it begins 
and ends. It exists only asan 
indeterminate swathe Ivine 
west of Whitehall and north* 
the Thames. 

Borders change according to 
the state of the market - or the 
views or whoever is drawing 
the map. Tenants widened 
their search for space during 
Je boom, so King's Cross and 
Paddington were drawn into 
this amorphous mass in the 
tidal wave of surveys produced 
by agents. Jones Lang Wootton 
has even crossed the river into 
Lambeth - a sort of 
South-West End - since the 
heightening or interest around 
Waterloo Station. 

Demand and supply figures 
therefore need to be treated 
carefully. Knight Frank & Rut- 
ley, for instance, says take-up 
fell from lm sqft to 646,000 sq ft 
in the three months to June, 
while supply fell is per cent 
from just under 8m to 6.7m sq 
ft JLW, on the other hand, 
puts take-up at 685.000 sq it 
with supply down 2 per cent at 
8.76m sq ft. 

Overall figures are relatively 
meaningless anyway. “It is fir 


The West End is as much an idea as a clearly defined area, writes David Lawson 

The property market draws the map 


more useful to look at what is 
happening in specific areas," 
says Philip Dawe of Herring 
Baker Harris. The West End 
ts not one single entity but a 
collection of markets.” 

• MAYFAIR/ST JAMES’S, the 
core area, is in greatest 
demand from high-profile ten- 
ants. It sets the tone for the 

The West End is not a 
single market but a 
collection of entities 

West End: “What happens here 
today affects the rest of area 
tomorrow,’' says Mr Dawe. 

One key happening was the 
letting of Almack House to J P 
Morgan, according to James 
Birkett of Richard Ellis. This 
was one of only a handful of 
100,000 sq ft-plus buildings left 
in the whole West and 
must make other tenants 
looking for headquarters feel 


distinctly nervous about what 
they will have to pay in future. 

The 40 a sq ft headline rent, 
while well below the 70 peak 
achieved in the boom, sets a 
benchmark for valuing other 
space. "It also reveals proven 
demand in a market where 
there is very little space,” adds 
Blrkett’s colleague John Olney. 

That is one more factor 
which could get development 
moving again after a long hia- 
tus. So is the creeping erosion 
of a vast rump of second-hand 
space. Rents have crept up 

from £30 to as much as £35 a sq 
ft in buildings such as Lans- 
downe House and Berkeley 
Square House over the last six 
months. 

The Prudential was encour- 
aged enough to started work 
on 55,000 sq ft of speculative 
development at 30 Berkeley 
Square, which it considered 
selling 18 months ago. That 
might be thought a key move, 
as institutions hold a near-mo- 


nopoly of prime sites and 
buildings, leaving developers 
with little chance of muscling 
in. Any big surge of develop- 
ment is likely to be in 1995 
rather than this year, however. 

“There are not enough deals 
at good headline rents to con- 
vince investors,” says Paul 
Yearley of JLW. But pressure 
is rising as landlords notice 
that rent-free periods have 
dropped from more than two 
years to around 18 months. 

With a few more lettings, 
they will have enough evi- 
dent* to move - and they could 
be already in train. Pearson, 
for Instance, which owns the 
Financial Times, is understood 
to have offered Scottish Wid- 
ows around. £35 a sq ft to put 
Lazards into the 40.000 refur- 
bishment in Burlington Gar- 
dens. 

• SOHO and COVENT GAR- 
DEN stand next in the queue 
for reassessment, with rents 
rising for the first time in five 


years, says Mr Birkett. The 
main thrust comes from media 
companies which shed space 
early in the recession. “They 
are now lean, mean and hiring 
again - but have no space,” 
says Mr Yearley. 

CD & P had to fight off three 
other advertising agencies to 
take a sub-let of 40,000 sq ft in 
Aquila House. Soho Square, 
from the Pm. There are 
doubts, however, whether 
media groups will pay the new 
going rate for space. While 
rents rose to £50 in the peak, 
real levels are now half this 
amount, says Philip Dawe. 
“The Industry is notoriously 
cost-conscious," be says. “It is 
difficult to see groups like pub- 
lishers going above the £35 
level needed to justify new 
space." 

Dormeil House, an 80,000 sq 
ft block going up In Golden 
Square, could test the indus- 
try's confidence and courage, 
as this is likely to be priced at 


David Lawson looks at some of the principal occupants and their requirements 

Government offices head the list 


Ambitious plans in the 1980s 
for decentralising ministries 
to high-unemployment areas 
sent shivers through the prop- 
erty market. Government bod- 
ies occupy around a third of 
all West End offices. They also 
tend to have the biggest build- 
ings - which can be the hard- 
est to re-let 

Further threats came from 
the Next Steps programme, 
aimed at forcing semi-priva- 
ttsed departments to cut costs 
- particularly rents. But 
Armageddon has failed to 
arrive. In fact, government 
take-up is running at similar 
levels to a decade ago. 

The private sector appears 
just as reluctant to decamp. 
When Herring Baker Harris 
(HBH) polled six major sectors 
forming around a quarter of 
tenants, all but one insisted 
that a West End address was 
essential. They all had differ- 
ent reasons; retailers and for- 
eign banks cited need to be 
close to clients, while oil and 
advertising companies voted 
mainly for ease of communica- 
tions. Management consul- 
tants put both these factors on 
a par with access to skilled 
labour. 

Having a presence is less 
important than how much 
space each will take in the 
future, however. And that 
rests on even more complex 
factors affecting each sector. 

Government is obviously the 
most crucial player, particu- 
larly in Victoria where it 
accounted for more than 40 
per cent of take-up in the last 
decade, says HBH. A single 
decision helped give the local 
market an edge of respectabil- 
ity in the last 12 months. The 
Cabinet decided not to relocate 
two major departments to 
Canary Wharf when their 



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If 


Number 33, Cavendish Square: a decfinlng fear of decentraflsatloR 


Mars ham Street headquarters 
are demolished. 

Instead, the DoE will have 
its own environmentally- 
friendly, 250,000 sq ft home 
built by Land Securities on the 
site of Elland House, while the 
DoT has taken 220,000 sq ft in 
Horseferry Road. Along with 
the letting of Portland House 
to the Crown Prosecution Ser- 
vice, that almost used up Vic- 
toria’s current stock of prime 
big buildings. 

The Defence Ministry, a 


Bloomsbury occupier, could 
have the opposite effect by 
halving its workforce, but the 
government will continue to 
be a major overall force in 
future, says HBH. “There is 
unlikely to be a significant 
reduction as new agencies, 
departments and quangos con- 
tinue to be established and 
take up space released through 
rationalisation, says the firm 
in its report Thriving in the 
Midst of Plenty. 

Oil is the next largest sector. 





> / 


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Carlton House 

ST J A M E S'S. S W I 

In the lace spring of 1995, 
Carlton House will be the 
only newly-completed 
headquarters office building 

available in the St James’s 
area of London. 


The 32,000 sq ft building on 
the west side of Regent 
Street will provide high 
specification air-conditioned 
offices in entirely new 
accommodation behind a 
listed Portland stone facade. 

Contact: John Coventry at 
Hillicr Parker or Andrew 
Hogge at Cyril Leonard. - 


>*v H iIlier 
YT Parker 


071-629 7666 


r (mm Sam laadsn VIA OT 


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LEONARD 


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with 56 companies occupying 
2 An sq ft - around 6 per cent 
of the West End stock. While 
most companies want to keep 
a presence, this appears likely 
to be much smaller. Mobil, 
Total, Chevron and Conoco are 
among big names either mov- 
ing oat of London or reassess- 
ing space demands. Victoria, 
which is still home to more 
than a quarter of the sector, 
will feel the draught most 
keenly. 

Telecommunications is also 
set for decline. It is the only 
sector which does not believe a 
West End location is impor- 
tant and, with 5 per cent of the 
office stock, this could have 
important repercussions. 

BT is the driving force, with 
the lion’s share of both the 
Industry and office space. The 
company is determined to cut 
its workforce by more than 
100,000 by 1997, but an even 
bigger knife will slash the 
national property estate from 
almost 50m to 7m sq ft 

That casts a shadow over 25 


West End centres comprising 
around lm sq ft. Even if they 
survive, it is likely that most 
will shift out of central Lon- 
don. 

Some 80 advertising agen- 
cies occupy around 4 per cent 
of the area's office space. The 
large majority are in Soho, 
Covent Garden or north of 
Oxford Street, mainly in build- 
ings of less than 50,000 sq ft. 
This sector is among the most 
dedicated to the West Eud, 
despite one or two important 
moves to places such as Dock- 
lands. While recovery is bring- 
ing demand for more space, 
HBH forecasts further ration- 
alisation through mergers and 
takeovers, with any expansion 
limited to small setups. 

Retailers are also set for fun- 
damental changes. They, too, 
occupy around l-5m sq ft of 
offices as an administrative 
back-up to the country's larg- 
est shopping centre. But this 
will decline as new technology 
reduces staff required for 
tasks such as sales forecasting 
mid analysis. 

Headquarters will shrink 
and computing services relo- 
cate out of central London. 
That will leave many compa- 
nies with the difficulty of get- 
ting rid of space tied into long 
leases. 

More than 90 foreign banks 
occupy a similar total space as 
retailers, and mainly In the 
same areas of St James’s and 
Mayfair. New ones are expec- 
ted to emerge, but just like 
most existing setups they are 
likely to be small operations. 

This is another sector com- 
mitted to the West End, but 
any return to rent increases 
could see back-office space 
decamping to cheaper loca- 
tions. Management consultan- 
cies are the final piece in the 
jigsaw, covering a wide vari- 
ety of services. But despite 
rapid growth in the 1 980s, 
they make up only around 1 
per cent of West End space. 
While demand will grow from 
both larger agencies and bou- 
tique offices, the scale is 
unlikely to be significant 

Government therefore 
appears to have a key role in 
the future of the West End. 
While other sectors are set to 
remaiu stable or decline, 
Whitehall's appetite for space 
should keep growing. 


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July 1992 - July 1994 


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more than £30 a sq ft. 

One alternative is to move 
out of their traditional 
stamping ground. 

• VICTORIA has already laid 
claim as the new media centre, 
says Mr Yearley. Channel 4 
built its own HQ in Horseferry 


terfield Properties has an 
80.000 sq ft refurb ishme nt in 
Vauxhall Bridge Road. 

The vacancy level in Victoria 
of 8 per cent is the lowest in 
the West End. says Herring 
Baker Harris, but with rents 
static at around £27.50 a sq ft 


TOP RENTAL NORMS (£/sq ft per annum) 


1990 (Dec) 

1993 (Deo) 

1994 (June) 

Mayfair 

70.00 

40.00 

40.00 

St James's 

70.00 

40.00 

40.00 

Soho 

50.00 

20.00 

22.50 

Covent Gdn/Strarid 

57.50 

25.00 

27.50 

Victoria/Belgravia 

55.00 

25.00 

27.50 

Northern (west) 

55.00 

22.50 

22.50 

Northern (east) 

47.50 

20.00 

20.00 


SaPCtt Richard Qb, August 1994 


Road, which is bound to gather 
like-minded production and 
publishing companies. Adver- 
tising agency DMB&B is 
thought to be paying around 
£25 a sq ft for the 80,000 sq ft 
released by Tiphook in 123 
Buckingham Palace Road and 
the Press Association is under- 
stood to be buying Bank Pari- 
bas’ 40,000 sq ft Denison House 
in Vauxhall Bridge Road for 
more than £iom. 

Some developers are well set 
to tap the spillover from May- 
fair and Covent Garden 
because they have started con- 
struction early in the cycle. 
Land Securities has 50,000 sq ft 
underway at 25 Victoria Street, 
CIS is preparing to start 60,000 
sq ft in Wilton Street and Ches- 


there Is little Incentive for 
more new development. Victo- 
ria may have broken out of its 
traditional second-tier role, 
however. Salomon Brothers 
has voted to stay in the area by 
paying £80m for its lease on 
Victoria Place, showing that 
this is a viable location for a 
leading financial group. 

Ian Noble of Cluttons points 
out that there is still more 
than lm sq ft of space - much 
of it second-hand - on the mar- 
ket. That is bound to muffle 
the impact of demand on rents. 
Prime new space is hard to 
find, however, which means 
Victoria is back at the top of 
its traditional two-tier market. 
• NORTH of OXFORD ST, the 
opposite fringe of the West 


End, there is more strong com- 
petition for tenants, particu- 
larly the half dozen or so 
advertising agencies in the 
market for between 20,000 and 
80,000 sq ft. according to Brien 
Martin of Imry. 

There is plenty of piecemeal, 
substandard accommodation, 
but few quality blocks with 
strong identities, he says, 
which is the rationale behind 
his company's 23,000 sq ft 
refurbishment of 54 Baker 
Street. But hefty competition 
will come from schemes such 
as CIN's 130,000 sq ft renova- 
tion of 33 Cavendish Square 
and the glossy new 40,000 sq ft 
being built by AXA Equity and 
Law at Wigraore Street. 

These are exceptions to the 
rule, however. Rents of around 
£22.50 a sq ft are again too low 
to stimulate much develop- 
ment. But Jonathon Evans of 
KFR says the ever-tightening 
market in the core will spin off 
demand to the fringes, just as 
it did in the boom. 

If, as is likely, development 
lags the revival of demand for 
large buildings, tenants may 
even spin as far as: 

• EDSTON ROAD, where 
Hammerson hopes to catch 
them with open arms in Mara- 
thon House - providing the 
tenant does not take on a 
short-term renewal of the lease 
as rumoured. 

Perhaps the best sign of bet- 
ter things to come, however, is 
the £35 a sq ft being asked by 
British Land for 60,000 sq ft of 
renovated space In Regent’s 
Place, the new name for the 
E us ton Centre. Its chairman, 
John Ritblat, rarely calls the 
market wrongly. If he thinks 
that will pull in the tenants, 
perhaps the West End is on the 
verge of recovery after alL 



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34 

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LONDON W1 


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’ providing '’>•7 54 ft of traditional 

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• ' ' Lease fur sale. 



5 • 

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i am 

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J * 

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w: 


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32 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


COMMODITIES AND AGRICULTURE 


Wheat stocks set 
for 14-year low 


By De b orah Hargreaves 


World wheat stocks are set to 
tall to their lowest level for 14 
years after a drop in interna- 
tional output this year 
together with a continued rise 
in consumption, according to 
the latest report by the Inter- 
national Wheat Council. 

The IWC has cut its estimate 
of world stocks at the end of 
the 1994-1995 season from 114m 
tonnes to 107m tonnes - the 
smallest carry-over since 1980. 
This compares with a carry- 
over of 129m tonnes from 
1993-1994. 

“The international supply 
position for wheat continues to 
tighten," the report says. The 
wheat council’s latest estimate 
for world production in 


1994-1995 is 2m tonnes lower 
than a month ago at 534m 
tonnes, which compares with 
558m tonnes in 1993-1994. 

Falling production and stock 
levels have pushed world 
wheat prices higher in the past 
few months by at least $20 to 
$130-$ 135 a tonne. This was 
against a background of 
improved prospects for trade, 
especially with China, and a 
further trimming of estimated 
supplies in drought-affected 
Australia, as well as in Can- 
ada, where stocks are also low. 

But the IWC says that the 
fall in stock levels will not nec- 
essarily mean serious wheat 
shortages in future. The north- 
ern hemisphere is now making 
planting decisions on the basis 
of current high wheat prices. 


Controversy continues to dog EU banana regime 

Alison Maitland reports on a problem highlighted by storm damage to the Windward Islands’ crops 


T he storms that devas- 
tated banana crops in 

the Windward Islands 
earlier this month have 
focused fresh attention on the 
controversy surrounding the 
European Union's new banana 
import regime. 

The tropical storm is esti- 
mated to have cut output from 
tho eastern Caribbean 
by about 40 percent They nor- 
mally produce about 290,000 
tonnes of bananas a year, 
which go mainly to the UK 
Geest, the main importer 
from the islands, wants the 
European Commission to allow 
it to import alternative sup- 
plies from Latin America to 
matfo up the shortfall, tr eating 
them as if they were Windward 
Is lands * produce and therefore 
entitled to duty-free entry to 


the EU. 

So-called dollar bananas 
from Latin America, where 
production costs are much 
lower, are subject to strict quo- 
tas and tariffs under the 
import regime introduced by 
the EU in July last year. 

Ms Clare Wenner, Geest 
PYtpmai affairs director, says 
the apparent Inability to make 
such transfers between produc- 
tion areas in the event of a 
natural disaster is a “major 
deficiency” in the new regime. 

Geest, which imports half its 
bananas from the islands and 
half from Latin America, is 
concerned that the Windwards 
may lose market share perma- 
nently, she says. “We want 
them to be allowed to have 
some mechanism whereby 
replacement bananas can be 


sourced as if they were Wind- 

ward Islands bananas." 

The US group is hoping for 
backing from the French, 
because the storms caused seri- 
ous damage in Martinique, one 
of their main Caribbean suppli- 
ers. Output there is expected to 
be down by at least 40 per cent, 
and possibly much more. 

However, the European Com- 
mission is believed to be reluc- 
tant to consider changes 
because this could be used by 
Germany, a fierce opponent of 
the regime, as an opportunity 
to renegotiate the whole basis 
of the regime 

“The commission is terrified 
of bringing forward amend- 
ments," said one national offi- 
cial close to the negotiations. 

Germany, which argues that 
the regime discriminates 


against its traditional suppliers 
in T-aHn America, is taking a 
second case to the European 
Court challenging the quotas. 
Final judgment in its first case 
is due on October 6, but the 
court’s advocate general has 
recommended its rejection. 

The commission has 
increased the quota for Latin 
American banana imports by 
118,000 tonnes this year to 
2.U8m tonnes, but this is to 
take account of an »nrrpas» in 
consumption. The situation in 
the Windward Isles is still 
under consideration and is 
expected to be discussed by the 
commission’s hanana commit- 
tee on October 5. 

"We have to assess the dam- 
age and see what would be the 
best way to help them econom- 
ically,” an official <tairi. 


Meanwhile, the regime feces 
another threat from the US. 
where banana exporters have 
filed for Mr Mickey Kantor. the 
trade representative, to launch 
a formal investigation into the 
new regime. The exporters, 
Chiquita Brands International 
and the Hawaii Banana Indus- 
try Association, claim it Is 
damag in g their interests by 
rfigcriminating against US com- 
panies in favour of European 
ones in its allocation of eligibil- 
ity for import licences. 

They are also unhappy about 
an agreement between the EU 
and four key Latin American 
producers - Costa Rica, Colom- 
bia, Nicaragua and Venezuela 

- which is due to be imple- 
mented on October 1. It grants 
these countries specific quotas 
based on their past share of the 


MARKET REPORT 

Coffee rally halted 


London COFFEE futures ended 
a see-saw session in the minus 
column yesterday. Having 
reached a near-9-year high of 
$4,140 a tonne in the morning 
the November position closed 
at $4,055, down $36 on balance. 

One dealer explained that 
early expectations that prices 
would move higher, continuing 
the rally of recent weeks, had 
given way to a “sense of disap- 
pointment” and light liquida- 
tion. 

At the London Metal 
Exchange a sligh t retracement 
in both COPPER and ALUMIN- 
IUM took most of the other 
base metals off the boil by the 
close of business. 

Dealers said copper was now 
looking to overcome its recent 
high of $2,550 a tonne, for three 
months delivery, to spark fur- 
ther gains and confirm its per- 
ceived upside potential. 

Three months aluminium 
edged up to a fresh 3%-year 
high of $1,626 a tonne on bouts 
of speculative buying and 
short-covering before slipping 
under light producer selling 
and profit-taking to close at 
$1,623.50, down 50 cents on 
balance. 

Compiled from Renters 


Lobbyists bring Australian uranium debate back to the surface 

The issue could be raised from the floor at the r ulin g Labor Party’s conference in Hobart next week, writes Nikki Tait 


C ould Australia be about to 
relax its constraint on ura- 
nium mining, which limi ts 
production to three mine sites? 

The question has arisen with the 
approach of the ruling Australian 
Labor Party's impending national 
conference in Hobart, Tasmania, 
next week. Uranium policy is not on 
the formal agenda but there is a real 
possibility that uranium supporters 
will raise the issue from the floor, to 
urge modifications. 

Over recent weeks, intense back- 
ground lobbying has been under 
way. On the mining side, the Ura- 
nium Producers Group has commis- 
sioned Access Economics, a forecast- 
ing and consultancy organisation, to 
assess the implications of expanding 
the industry. Enviro nmentalist s, by 
contrast, have taken to the streets, 
demonstrating outside state ALP 
headquarters and warning of voter 
defections to mino r parties if the 
rules do shift Aboriginal representa- 
tives have also been voicing their 
case, both in the Northern Territory 
and in Canberra. 

Australia's current uranium policy 
dates back to the early 1980s, when 
the ALP moved away from its stated 

aim of b anning ur anium miring 


altogether and endorsed a new mine 
at Roxby Downs, in South Australia, 
where uranium was to be produced 
alongside copper and other metals. 
The party came to power the follow- 
ing year. 

After some internal battles, the 
“three minas policy” evolved. Essen- 
tially, this limits ur anium produc- 
tion to the Ranger mine in the 
Northern Territory, operated by 
Energy Resources of Australia 
(which, in turn, is controlled by 
North Broken Hill Peko); Roxby 
Downs/Olympic Dam, which is now 
wholly-owned by Western Minin g 
Corporation; and at Nabarlek, in 
Queensland. 

However, Nabarlek has been 
worked out, and finished the pro- 
cessing mid exporting of stockpiled 
ore in 1990. This, advocates of a 
more permissive approach argue, 
means that the “three mines” policy 
has become a nonsense. 

Australia, they point out, has 
about 80 per cent of the western 
world’s low-cost uranium reserves, 
yet produces only about 10 per cent 
of western output This contrasts 
sharply with Canada’s share of 40 
per cent derived from only about 18 
per cent of reserves. 


In its study, Access Economics 
estimates that output from known 
deposits could almost double the 
country’s production over the next 
10 years if the “three mines policy” 
was abandoned. Australia, it pre- 
dicts, could come to account for 30 
per cent of western output by 2004. 

Such expansion would have two 
favourable consequences. Firstly, 
export gamings would rise signifi- 
cantly. from A$120J2m (56m) - exclu- 
ding government stockpile sales - in 
1994, to A$752.6m - in 1994 price 
terms - in a decade's time. Secondly, 
the economic benefits would accrue 
mainly to Western Australia and the 
Northern Territory. (The deposits 
most likely to assessed in the event 
of a change in ALP policy are North 
Ranger/Jabiluka in the NT; WMC’s 
Yeelirrie in WA; Kintyre, also in WA 
and owned by CRA; and Koongarra 
in the NT). 

“The value of NT uranium exports 
in 1994 prices would be over A3450m 
in 2004, or equal to more than 10 per 
emit of the current total output of 
the NT,” the Access report suggests. 

Anti-nuclear campaigners see 
things very differently. Greenpeace, 
the environmental group, has count- 
ered with its own report, which 


argues that Australia’s bilateral 
trade agreements give “advance 
generic consent” for plutonium to be 
separated from Australian-sourced 
u ranium and used OT stockpiled hi 
preapproved facilities, and that gov- 
ernment assurances that Australian- 
sourced ur anium and plutonium will 
be used for peaceful purposes cannot 
be guaranteed. 


A ccident risks, it adds, may 
not be so for away. The 
report raises the possibility 
that Australian u ranium may even- 
tually be sold to Indonesia, which 
despite its considerable coal 
reserves, seems anxious to build a 
number of nuclear power reactors. 
Expanding trade and diplomatic 
relations with Indonesia is a key ele- 
ment in the Keating government’s 
effort forge a meaningful role in the 
Asia-Pacific region. But, Greenpeace 
argues: "The site of the first of these 
proposed reactors is in an area of 
high «dnmc act i v it y, increasing the 
risk of an accident that could spread 
radioactive contamination over 
much of South-east Asia, including 
Australia". 

Meanwhile, Aust ralia 's indigenous 
community appears to be divided on 


the issue. Any development of large 
Koongarra deposit In the Northern 
Territory - jointly owned by Cana- 
da’s Denison and Cogema, tbc 
French nuclear fuels agency - would 
allow the “traditional owners” of the 
mine site to earn a significant eco- 
nomic Interest in the project 

Accordingly, some members of the 
Northern Land Council, which repre- 
sents aboriginal interests in the 
region, have urged a relaxation of 
the current three mines policy. But 
it is unclear whether this stance is 
representative of opinion within the 
broader indigenous community: 
“The majority of people have not 
been given the opportunity or the 
information to make an informed 
opinion on whether we do or do not 
want uranium mining," Mr John 
Christopherson, an executive mem- 
ber of the NLC from West Amham 
Land, said in Canberra this week. 

In the midst of the ideological 
debate, the commercial consider- 
ations are sometimes overlooked. 
There Is currently an oversupply sit- 
uation in the uranium market, and 
spot prices, which stood at over 
US$40 a pound in the late 1970s, have 
falipn to quarter of that level. The 
Access report suggests that excess 


commercial inventories will disap- 
pear by the end of this decade, 
although It admits that estimates of 
when this might happen differ, and 
that western governments will be 
loathe to become too dependant on 
non-western supplies. 

Other analysts tend to agree - 
although they also warn that the 
riming is hard to predict “If you're 
asking will it be economic to expand 
production, the answer is probably 
yes,” comments one analyst at Syd- 
ney-based AME Mineral Economics, 
for example, “if the three-mines pol- 
icy was removed, it wouldn't be 
‘open-go’, but there are two or three 
ore bodies which would be reviewed, 
with companies looking to long-term 
contracts." 

Finally, there is the question of 
whether the issue will be raised at 
alL Any debate would come towards 
the end of next week’s conference, 
and in the factional wheeling and 
dealing that goes on, uranium policy 
could yet fell by the wayside. Public 
opinion polls suggest that Austral- 
ians tend to support the retention of 
a “three mines" policy - although 
not by a vast margin - so the domes- 
tic political advantage in unleashing 
the issue may not be high. 


COMMODITIES PRICES 


CROSSWORD 


BASE METALS 


LONDON METAL EXCHANGE 

(Prion from Amalgamated Metal Trading) 

■ ALUMNJUM, 99l 7 PURITY (S par torn)} 


Precious Metals continued 

■ QOLP COMEX (IPO Troy az.; Srtnjy azj 


GRAINS AND OIL SEEDS 

■ WHEAT EjCE P per tome) 


SOFTS 

■ COCOA LC£ (Crtonrat 


MEAT AND LIVESTOCK 

■ UVEC^Tn*CMEt*axroK>a;c»rti»4ba) 


No.8,566 Set by ADAMANT 


San oar* 
irt* (ton 


Ogi] ini 


M. 


Salt Day* 


Loaf fat M 


San Day's Opao 

*rica tonga Mgb Lto kit 



Cash 

3 mOn 

Sen 

385A 


- 

- 331 

332 


10050 

-0.0S 

10475 

10450 

56 

34 

Sap 

939 


960 

935 20 

107 

Od 


Oct 

39X8 

+1J 

3968 

3916 5851 

1891 

•to 

10X95 

+415 

10780 

10780 

2333 

54 

Dec 

987 

+2 

987 

982 27,417 

727 

Dm 

Chase 

1801-2 

1623-4 

Him 

397.4 

+1 2 

• 

• 

- 


10985 

4445 

10985 

10980 

1882 

9 

Bar 

1020 

+3 

1019 

1014 34,041 

408 

F«ii 

Previous 

1600-01 

1623 ,5-4_5 

OK 

38X0 

+1 2 

3998 

3968108814 32824 

tar 

11180 

4450 

- 

• 

1,231 

• 

toy 

1031 

+3 

1030 

102S 12.490 

47 

tar 

Kgri/tow 


162471619 

Fab 

4623 

+18 

40X3 

4005 17853 

1879 

•to 

11110 

4480 

11380 

11X00 

1XM 

25 

to 

1043 

+2 

1W2 

1041 5,725 

11 

Jon 

AM Official 

1598-9 

1620-1 

Apr 

4058' 

+18 

406.0 

404.1 7821 

586 

to 

11580 

4445 

- 

- 

237 

- 

Sep 

1056 

. 

1055 

1054 9884 

36 

tag 

Kert dose 


1620-2 

Toto 




179804 38,123 

TOW 





7,291 

122 

Tat* 




104773 1357 

Tote 


Open bit 251,013 

Total (toy tumovnr 38,197 

■ AUlWtoUM ALLOY (5 par town) 


PLATINUM NYMEX (50 Troy or.; Vtroy ozQ 


Oct 


Ooca 
Previous 
rtghriow 
AM OffxAb 
Kart dose 
Open bit 


1050-00 1870-5 

1833-8 1653-8 

167071645 

1820-5 1640-5 

16705 

2X77 


421.4 *1-9 4215 417.7 10015 2681 

■to 425l8 *20 4205 4225 9X39 1,170 

Apr 4202 *10 4200 4255 2,486 12 

to 4327 +15 - 488 1 

Od 4314 +1.8 ■ 328 SO 

THU 23714 3jm 

W PALLADIUM NYMEX (100 Ttaty cn tArqy cgj 


■ WHEAT C8T (SXOObumtn; cantaffiOb bushaQ 
Sep 


■ COCOA CSCE (10 tonnes; S/tomasJ 


Sad Day* Opao 

pto itoga tt* lam to VM 

70775 *0550 70000 8SL9Q0 27094 9.469 

69000 *0225 69.850 60350 21,126 4,839 

60200 -0075 66250 67.850 13,084 1077 

66.425 +0775 60450 60050 0468 619 

80350 *0100 66.400 60100 2,048 179 

60000 *0050 60000 85.700 1,041 <1 

74,888 17,344 
■ UVE HOPS CMC (40X0Cfce: cants/lb* 


Total rtaty turnover 588 
■ LEAD (S par tonne) 


Ctaw 610-1 624-4.5 

Previous 811-2 62541 

hfgMow 609.5/609 628/824 

AM Official 609-05 624-45 

Kart close 623-4 

Open InL 40630 

Total (toy turnover 2X38 

■ NICKEL ffi per tonne! 


Close 
Previous 
hfgh/krw 
AM Official 
Kcrt dose 
Open bit 

Total daOy turnover 
■ TIN {6 per tonne) 


6405-10 8505-10 

6435-45 5535-40 

6410/0400 8540/0470 

6395-400 6500-5 

6475-80 

06X04 

9.995 


Ctoso 
Previous 
wgtviow 
AM Official 
Kart dose 
Open InL 


5325-30 5400-05 

5310-20 5390-5 

5325 5420/5380 

5325-30 5395-400 

5390-400 

16,572 


Total daily tumours 3.006 

ZINC. aped* Wgb grade (9 per tonna) 


Ctoso 

999-1000 

1022-3 

Previous 

1001.5-ZO 

1025-6 

Wgh/knv 


1027/1020 

AM Official 

1000-45 

1023-3.5 

Kert ctoso 


1021-2 

Open mL 

97.914 


Told daily turnover 

11.634 


■ COPPHV. grado A (Spur tome) 


Ctaw 

25145-20.5 

2637-8 

Previous 

2S18-9 

2537-8 

ttgWtow 

2520 

2541/2535 

AM Official 

2520-1 

2539.5-9-0 

Kent) dose 


2537-7.5 

Open InL 

210831 


ToUl «Jo*y turnover 

37,312 



■ LME AM Official C/S rate: 1.8785 
LME Closing £/S rat* 1.8740 


SpoM 5765 3 nte157<3 6 mao: 1.571 2 9 rnerel J663 
■ HIGH GRADE COPPER (COMEX) 



Oeaa 

DW9 

cfcragi 

Mgb 

km 

aim 

M 

M 

Sep 

124.95 

+280 

12580 

121.80 

3828 

455 

Od 

11985 

+1.10 

12080 

11480 

1874 

62 

no* 

11430 

+470 

• 

« 

718 

1 

Dec 

11780 

+450 

117.70 

11470 4XS01 

6899 

Jan 

11490 

+445 

- 


595 

22 

fed 

11430 

+440 

- 

- 

458 

13 

Total 





60,194 

7,230 


PRECIOUS METALS 


■ LONDON BULLION MARKET 
(Prices suppted by N M RrihKWd) 


Gold (Troy az.) 

Ctoa 

Operang 

fix 

Afternoon fix 
Day's High 
Day's Low 
Previous don 
Loco Ldn Mean 


t otjulv. 


248.651 

248586 


2 months 

3 months 
Elver Flu 
Spot 

3 months 
6 months 
1 year 

Gold Cobra ■ 
Krugerrand 
Maple Leaf 
New Sovereign 


S price 

303.60- 394.ro 

393.60- 394.00 
393,95 

393.70 
394-30-394.70 
393.00-38X40 

394.40-394.80 

Gold Landing Rata (Vs USS) 

—4.49 6 months .,..4.74 

,4.53 12 months ,5.11 

.—4.59 


Sep 15685 -080 - - 30 - 

0« 15785 +490 157.75 15410 1341 470 

tor 15785 +485 15450 15780 1805 22 

Jra 15485 +485 -152 

4928 482 

■ S8.VER COMEX (100 Truy ot; Cem/troy ot) 

Sep 

5640 

+7j4 

5608 

5540 

258 

60 

Oct 

5B9L3 

+7.4 

- 

- 

0 

- 

Ro* 

5718 

♦73 

- 

- 

8X732 

17,184 

Oao 

5715 

+73 

5748 

5625 

59 

2 

Jra 

5788 

+73 

5738 

5845 

9.708 

705 

tor 

581,9 

+73 

5828 

571.0 

4,338 

24 

Tote 




1149M 1MM 

ENERGY 






* CRUDE OIL NVMGC (42*00 US gaBs. S/barraQ 


Latest 

Day's 



tera 



price 

ctange 

Mgb 

Ini 

tat 

VM 

NO* 

1788 

+400 

1733 

17.10 9X455 3X583 

Dec 

17.42 

+084 

17.40 

1787 62731 

1*897 

JM 

1754 

+404 

1787 

17.45 39.721 

7864 

Fab 

1789 

+40Q 

17.82 

1750 

2X880 

1M7 

tor 

1785 

+402 

1780 

1750 

1X7*4 

1809 

Apr 

1788 

+401 

17.70 

1758 

11899 

791 

Tote 




37X300 7X7*4 

■ CRUDE on. IPE (XrtorreQ 





latest 

iters 



Opn 



Wfca 

change 

tft* 

Iras 

tat 

Uri 

tie* 

1416 

+415 

16.16 

1588 82896 

1X109 

Dec 

1422 

+408 

1688 

1882 

3*821 

7,671 

Jra 

1430 

+404 

1433 

1415 

12825 

1,750 

ftb 

1430 

+400 

1034 

1620 

7879 

810 

Mar 

1431 

-402 

1638 

1883 

7,034 

890 

AW 

1432 

■401 

1632 

1880 

2840 

10 

TeW 




190*41 

2X814 

■ HEATING OR. NYMEX (42800 US gtaL; aUS gate] 


Uteri 

Day* 



Opae 



prtca 

ctaega 

Wfl* 

LOW 

tat 

Vd 

Od 

4780 

+425 

4435 

4735 27,411 

1660 

No* 

<495 

+421 

4985 

4X45 27,401 

5825 

Dae 

60 15 

+411 

5035 

4980 40801 

X94S 

Jra 

5185 

-407 

5185 

5475 27838 

X397 

Fab 

51 .GO 

+400 

51.70 

81.46 

1X172 

864 

Mar 

51.40 

+428 

51.40 

61.10 

11,910 

1,815 

Tote 




17X4H 25*51 

■ GAS OM. PE (Iterate 





SeB 

OBITS 



tan 



erica 

change 

N* 

Low 

to 

W 

Oct 

19085 

+475 

15450 

14085 33889 

X475 

Ho* 

15100 

+425 

15380 

15180 

17,169 

2810 

Dae 

15580 

■ 

15585 15X50 2X414 

2TOT 

JM 

1E475 

-425 

15780 

15425 

14,400 

1824 

Feb 

157.75 


157.75 

15450 

5851 

510 

Mar 

15780 

-425 

15730 

15880 

5800 

681 

TOW 




104£17 1X431 

■ NATURAL GAS HYlEX (10800 natebi: Staratti) 


l+fy+ 

D>n 



QPM 



price i 

StaSQB 

Utfl 

law 

W 

Yd 

Del 

1.432 

-0861 

1.495 

1.425 17882 23319 

NOV 

1.7S 

-4036 

1.770 

1321 ; 

31,158 13322 

Ooc 

2-005 

4013 

■> mp 

MBS 2X143 

X704 

Jra 

2880 

4003 

2.100 

2870 15323 

1,913 

Fob 

2815 

4003 

2830 

2010 1X579 

1,021 

tor 

1875 

- 

1895 

1870 1X648 

774 


384/0 +1/2 38514 3824) 87 119 

383/2 +3S 393/4 387* 48,839 13*75 

RW 401* *3/2. 401/4 390/2 19,104 2X04 

toy 388* +3/2 389*4 385* 2X96 418 

to 361* +2/2 382* 357/4 4,174 1.330 

Sap 362/4 -1* 382/4 362* 99 38 

Total 19*S2 17.800 

■ MAIZE COT (5,000 bu min; canta/58S> buahaQ 


Dra 

1337 

-2 

1350 

1331 4XS22 4899 

Od 

37-050 +0800 37825 3X050 

X710 

2835 

■*r 

1396 

-3 

1390 

1383 1X212 1.025 

Dae 

37800 +4050 3X300 37800 12875 

2854 

toy 

1415 

■2 

1422 

1415 4,574 9 

tab 

3X029 +0X60 3X300 3X750 

4,166 

801 

to 

1443 

-2 

1443 

1443 ZB8Z 4 

/to 

3X175 +0X25 3X350 3X100 

2*14 

443 

tap 

14M 

0 

- 

- 1802 3 

Job 

44,400 +0.150 44475 44.150 

780 

63 

Doe 

Total 

1490 

0 

1408 

1498 4881 151 

7X7S3 5AB1 

tog 

ToW 

41150 +0.125 43800 43X00 

106 

2X052 

16 

0X28 


■ COCOA OCCQ) (SOHVtonne) 


■ PORK BEUJE3CME (40*008*; ctostoa) 


Sap 210/4 -712 219/4 210* 92 1X35 

Dec 2T7/2 -0/4 218* 216*136,462 1X595 

tor 227/2 -0/4 228/2 227* 40,875 2X56 

toy 234/4 -0/2 236* 234* 1X322 1,068 

to 239/2 - 239/4 238/4 17.173 1,311 

Sap 243* +0/4 243* 242* 1,161 152 

Total 217,852 2X483 

■ BARLEY LCE (E par towel 


Sap 21 

0 * 1 - 


1011X71 


to day 

101 7 JQ 


Feb 


■ COFFEE LCE (Vtoroa) 


tap 

10285 

+0.10 

. 

• 

6 

. 

to* 

10176 

•OLIO 

- 

- 

482 

- 

Jra 

10X30 

-0X5 

- 

- 

40* 

- 

tor- 

10X25 

- 

- 

- 

100 

- 

toy 

10X90 

- 

- 

- 

46 

- 

TbOl 





1X38 


■ SOYABEANS C8T (XOOObu tea; centMOOb butM0 

to* 

552/4 

-3/4 

558/4 

550/4 

78 

562 

to i 

562* 

-a* 

568* 

5608 77X40 20X78 

tor 

573* 

-3* 

678/4 

571/2 

18X36 

3,701 

May 

580/4 

-3/4 

585* 

578/4 

10X01 

3X96 

to 

506/2 

•3/4 

582* 

564/4 

X*82 

612 

tag 

58772 

-HI 

591* 

S96/4 

11X26 

1,195 

Tate 




126*50 30X96 

■ SOYABEAN (ML CST (60.0001a: certs/Ba) 

Od 

2X12 

+0.10 

2X35 

24X9 

284 

456 

Oao 

24X1 

+004 

2450 

2484 

16X54 

■4.782 

Jra 

2440 

+0XZ 

24.60 

24.15 37X37 

7X51 

tor 

24.14 

•0.10 

24.40 

23X8 

7X72 

973 

toy 

Mao 

-004 

34.15 

23X3 

6X64 

1X89 

to 

23X3 

-0X7 

24X0 

23X8 

X016 

799 

Total 





00841 

16X09 

■ SOYABEAN HEAL CST (100 tons; S/ton} 


Od 

16X8 

-1.1 

167X 

16X7 

251 

1X15 

toe 

18X4 

-10 

16X3 

16X2 

13X01 

4X97 

Jra 

16X2 

•ox 

1700 

16X0 42,436 

A451 

tor 

1T1X 

-08 

17X8 

1718 

1X496 

1881 

»y 

1715 

-03 

17X3 

1715 10871 

780 

to 

17X0 

-03 

1773 

17&0 

5892 

381 

Tcisl 





97,788 15X66 

■ POTATOES LCE <E/tame) 




to* 

1500 

. 

. 

. 



tor 

10X0 

- 

• 

- 

. 

. 


21X0 

-38 

21&S 

218.1 

1X2B 

122 

tor 

2400 

- 

- 

. 


« 

Jra 

1075 

- 

- 

. 

. 

. 

Tetri 





1828 

122 

■ FREIGHT (BiFFEX) LCE (SlOfrxtex pobiQ 


tap 

1821 

+21 

1625 

1610 

263 

41 

Od 

1600 

+25 

1080 

1635 

777 

136 

to* 

1661 

+28 

1060 

1635 

148 

21 

Jra 

1605 

+12 

1600 

1800 

630 

a 

Apr 

1807 

+9 

1605 

1596 

387 

52 

to 

1465 

+12 


. 

107 

. 

Tdal 

Oeae 

Fra* 



2X03 

319 


tap 

4183 

-72 

4287 

4199 

1X76 96 

to* 

4045 

-46 

4140 

4040 

10X24 1X42 

Jra 

4000 

•42 

4065 

3965 

14X91 1.171 

■w 

3817 

-41 

3905 

3905 

7X18 369 

tor 

3693 

-22 

3930 

3850 

2X77 145 

to 

TOW 

3620 

-20 

3890 

3845 

1.199 140 

37,155 


May 

to 

tag 

Total 


39050 -0900 40250 30.700 7,054 1,314 

38.175 -0825 40100 3X900 560 97 

40050 -0350 40900 39000 144 2 

40850 -1.250 42050 40800 171 15 

40350 -0750 40350 40350 38 8 

VST 1,428 


LONDON TRADED OPTIONS 

Strtto price $ tonne — Cots Puts — 


■ COFFEE ‘C CSCE {37,500838; centa/toaj 


■ ALUMINIUM 


Bee 22755 -a® 23070 225.50 2X129 51742 

tor 23090 -055 23X90 xnan « ct 885 

May 232-30 -295 23000 23100 1225 341 

to 233 2D -2_35 23440 23X40 1,098 131 

Sop 23X70 -296 - • 391 22 

Dae 23420 -100 - - 53 12 

IfcW 30M4 7,113 

M COFFffi DCO) (US cents/pound) 


Sap 21 
Comp, (toy 
15 1 


.21031 
. 20028 


208.06 

19922 


■ No7 PREMIUM RAW SUGAR LCE (cants/lbs) 


BH 


1364 1508 


Od 

12X9 


1272 

1270 

1X06 

140 

Jra 

11X2 

. 

. 


« 

. 

tor 

12.68 

- 



90 

- 

Toed 





1X98 

140 

■ WHITE SUGAR LCE (S/torm* 



Dae . 

3M3D 

-1X0 33X40 

329X0 

3X95 

477 

tor 

33X50 

-1X0 

33230 

330X0 

7X?1 

204 

Mar 

33X50 

-1X0 



1,177 

11 

tag 

33000 

-a 40 33X20 32525 

068 

237 

Od 

31X60 

•X6Q 

313X0 

313X0 

382 

10 

Ok 

312.40 

-X50 


- 

4 

- 

Tetri 





1V«7 

836 

■ SUGAR 11- CSC6 (llZXOCtos; contatos) 


Od 

12X8 

+xm 

1264 

1249 3X999 8X63 

tor 

1251 

+0X2 

12X8 

1242 96X7912529 

toy 

1248 

+ao5 

1253 

1239 1X275 2X48 

to 

1238 

+X08 

1239 

1226 

91970 2204 

Od 

1213 

+X01 

1216 

12X6 

<332 

1,102 

UK 

11.75 

+0.01 

11X0 

11-79 

1X27 

88 

Total 




14B.15Z 21*11 

■ COTTON NYCE (50.000BK; centstoe) 


Od 

68.45 

-0X3 

68X0 

6775 

1X20 

70S 

Dec 

8X94 

+0X2 

00X9 

68X7 27X43 5X63 

Mar 

7X60 

+060 

7X65 

6X60 

10X78 

080 

toy 

71.77 

+0X0 

71X5 

70.65 

5X65 

390 

to 

72X0 

+0X8 

73X0 

71X1 

3,795 

322 

Od 

69X0 

+X50 

69X0 

69X5 

440 

18 

toa 





WA 

WA 

■ ORANGE JUICE NYCE (ISJXXtor. cenle/fca} 

to* 

86.10 

+4X0 

MM 

9X06 

12178 

759 

JBI 

97.75 

+0X0 

96X5 

34X0 

X227 

636 

tor 

101X5 

♦4.15 102X0 

98X0 

4#Z 

92 

toy 

10X40 

+4X0 

105.40 

101X0 

918 

27 

to 

107X5 

+4X5 

10X00 

103X0 

522 

60 

Sop 

11X40 

+4X0 

- 

- 

20 

■ 

Tara 





24X00 

1XM 


099.794) LME 

Od 

Jan 

Od 

Jan 

1575 

40 

S3 

4 

46 

1800 

25 

79 

26 

58 

1825 

14 

68 

33 

88 

■ copper 





(Grade A) LME 

Od 

Jan 

Od 

Jan 

2500 

49 

106 

21 

75 

9RH1 

23 

83 

45 

100 

2800 

10 

63 

81 

128 

■ COFFBELCE 

Nov 

Jan 

Nov 

Jan 

3800 

474 

648 

29 

148 

3860 

432 

615 

37 

185 

3700 

392 

484 

47 

184 

■ COCOA LCE 

Dec 

Mar 

Oec 

Mar 

975 

48 

87 

36 

52 

1000 

37 

84 

60 

64 

1050 

20 

82 

83 

92 

■ BRBTT CRUDE IPE 

No* 

Dec 

Nov 

Oec 

1600 

32 

64 . 

29 

_ 

1650 

22 

51 

. 

. 

1700 

10 

33 

- 

- 



LONDON SPOT MARKETS 

■ CRUDE OIL FOB fererberraVNov) +or 


TOW 

■ UNLEADED GASOLINE 
KYMB (4X000 U3 fffls;OU5gMte) 


16X995 51.797 


p/troy Ci 
354.95 
359.05 
36X35 
37S.4S 
S price 
383-396 
404.60-407*0 
90-93 


US da oqL»v. 
53025 
56725 
57455 
69X05 
£ equhr. 

252-255 



Latest 

DByte 



Opffi 



Wto 

etenaa 


Law 

lot 

W 

Od 

45X9 

4X52 

46X0 

45.10 10X89 1X477 

MV 

4X85 

+0X2 

4X00 

4&2D «i Ml 

6,208 

Dn 

52X0 

+0X7 

52.70 

52X0 

11.107 

2X53 

Jra 

SL55 

+XQ7 

52X0 

5125 

6 X88 

834 

Fra 

53XD 

+0.17 

5119 

52.65 

3X58 

217 

tor 

53X0 

-008 

5190 

53-00 

1,158 

258 


TMI 


67,694 2X084 


58-61 


Prices at the Australian wool sales have 
dectosd to the Rret rime this season. At Syd- 
ney and Adelaide ester Me «reek it beewne 
dev that the market had at last turned. The 
eastern market bxfcato actually fell by 11 
cents on Wednesday, Marking a change of 
direction which is generally wsteemed after the 
long rise fai merino prices. A braaittng-apaoe 
rated certainty be apfndated, although It ia 
iBCo gn faad that the gfrsngfli in the Intern ati onal 
wool marheta Ea stB tarty based, and could 
reveal teed In higher prices again before long. 
One important factor bi sudi a devrioprnert 
would be a iotowb! of Chinese buying In 
vofcrna when a lower ptica-tavsl is aetabBshed . 


VOLUME DATA 

Open bitnra a and Volume data shown to 
c o nt idutu traded on COUEX. NYMEX. CST. 
NYCE. CUE, CSCE and IPE Crude 01 we one 
day In 


□rite 

S1&2S-6X3U 

+0.135 

Brant Band (dated) 

SI 5.68-3X1 

♦0.095 

Brent Blend (Nov) 

S18X7-8X9U 

+0.0 35 

W.T.I. (1pm eat) 

S17.40-7.42U 

+0X45 

■ OIL PRODUCTS NWE prompt deSv+sy CIF (tonrwj 

Premium Gesotae 

$172-178 

+1 

Gas OI 

$151-152 

+2 

Heavy Fuel 00 

$74-75 

•1 

Naphtha 

$158-159 


Jet Ate 

*1 99-170 

+<L5 


r 


■ OTHER 



Gold (per tray tuft 

3333.80 

-oao 

Stvor (ter tray oz & 

561 Xc 

-05 

Pla&xvn (per tray azj 

$41828 


Petadum (par bay azj 

SI 55X0 

-0.75 

Capper (US prod) 

1ZSXC 


Lead (US pradj 

38.25c 


Tin (Kuala Lumpur) 

13.42m 

+aii 

Tin (New YoriO 

24X5c 

+4X 

Cattle (Bve 

in 'Tap 

+ao9- 

Sheep (Bve weigfrOT*© 

eorop 

♦0X5* 

Pigs pve weljta)© 

73X5p 

+1.14- 

LOIL day sugar (rtw) 

S314^ 


Lon. day sugar (wts) 

$3400 


Tats A Lyle export 

£31 OX 

-2X 

Bariey (Eng. feed) 

Unq. 


Maze (US No3 Yeiow) 

$1300 


Wheat (LB Dark North} 

£180.0 


Rubber (0o)V 

89-TBp 

*0.75 

Rubber (Ncv)V 

B7.50p 

+050 

tatbber KLRSSNal Od 

32SL5 m 

+1X0 


ACROSS 

1 Road with ninety degree bend 
might prevent circulation (8) 
5 Cuts the number of patients, 
being hard-hearted (6) 

10 Song to put back into opera 
company (5) 

11 The judge In time should put 
a finish to group decisions (9) 

12 They have no Immediate 
Interest in bread deliveries 
<«) 

13 Finance English 
down-and-out (5) 

14 Stars girl with a couple of 
unknown factors (6) 

15 Nominal time for a ritual 
change (7) 

18 Point to member, one who 
works with style (7) 

20 Without cover, foe agent is 
likely to drop off (6) 

22 Mean to get drunk (5) 

24 He is in plenty of trouble, 
despite hiding nothing mate- 
rial (9) 

25 Standard English? European 
lot want a change of pulse (9) 

23 A small number overdose but 
a thousand revert to drink (5) 

27 Said to produce a smile (6) 

28 Issue for which the rich lend 
freely (8) 

DOWN 

1 Dark sunhal is not right, love 

( 6 ) 

2 Getting up later, I had break- 
fast to get my own haoir (9) 

3 Songs that bring everyone to 
their feet (8,7) 


4 Taking initial credit note in 
early settlement (7) 

6 Taking nothing from five star 
hotel, Virginia's organised 
thanksgiving service (7,8) 

7 Meeting of retired dons 
around Yarmouth (5) 

8 Showing strong support for 
lawbreaker In the beginning 
<S> 

9 Compensate for not being on 
TV (8) 

16 One who looks at someone 
else 's speech (3-6) 

17 Happy to overcome one cif 
reversal 0) 

19 Fall over when some people 
stop pleading poverty (6) 

20 Second conspiracy at church, 
according to Marie (7) 

21 Keep the volunteers in check 

( 6 ) 

23 Impress with one’s accent (5) 
Solution 8,565 


□aaaQOQQQ 
a 
□ 

□ 

□ 
a 

□ 




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gfflo Hofo 

[pmiEfslsM 



INDICES 

■ REUTERS (Base: 18/8/31-100) 


Sep 22 Sep 21 month ago year ago 
2125* 212X2 2089.8 1606* 


Coconut Oi (pHQ§ 

Palm OI (Matay.)§ 

Copra (PNI)§ 

Soyabeans (US) 

Colon Outlook ’A’ Index 
Wo otaps {949 Sips) 


S047.3Z 

SG22A 

$404.0 

£158*2 

74,40c 

485P 


+1X0 

*3£ 

-6.0 


-o.ro 


i CRB ftnmwe (Base: 1967al00) 


Sen 21 Sep 20 month ago yw ego 
230.40 23087 23022 216.18 


Cpartgnnew4aMoamneeeHd.pl 

i mggk/ho. m Mdwrira cantaAg. u (to. t On. z SafKUot 
m 6cp . V Linden ftiyafcri, 5 OF Rnraidam. 4 Bcdton 
marine doe* * Swop SJwo wtf* pdeonL ■ Qwgt on 
week. O Prices on lor p t wCnu e ray. 


JOTTER PAD 



market, within an overall cell- 
ing of 2.1m tonnes uf bananas 
from Latin America this year - 
up from 2m tonnes. 

The US exporters say It gives 
the four signatories preferen- 
tial access to the KU market. 

However, the regime is spe- 
cifically designed to ensure 
that bananas from farmer colo- 
nies in Africa, the Caribbean 
and the Pacific (AGP) continue 
to find a market in the EU as 
part of member states' obliga- 
tions under the Lomfi trade 
and aid convention. 

It allocates 30 per cent of 
import licences to traders on 
the basis of past trade in AGP 
bananas, 60 per cent on the 
basis of past trade la I+atin 
American bananas, and 10 per 
cent to newcomers and traders 
in EU bananas. 


£ 


Q eS 


:;fld 

filers 


'•unt. 


. , •■*« v- . 


55 . 









g 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


MARKET REPORT 


LONDON STOCK EXCHANGE 


* Shares close firmer after an uncertain 


* 


21 


«• 




1 > 



By T«rry Byland, 

UK Stock Market Editor 

rnrasy session on the 
UK stock market yesterday saw 
shares close firmly in subdued trad- 
ing volume. With global markets 
uncertain In their response to com- 
ments from the president or the 
Bundesbank and from the chairman 
of the US Federal Reserve, the UK 
market turned its attention to 
domestic market factors. 

Rumours originated in the foreign 
exchange markets that overseas cli- 
ents of one of the premier London 
discount houses had taken substan- 
tial positions at FT-SE 3.000 in stock 
index futures. These were said to be 
covered by stop-loss orders which 
would trigger instant selling or the 
December future if the Index 
touched that level 


At mid-afteraooQ, a sudden dip in 
the German bond market sent the 
Footsie down to 3.008.6 and, with 
the December contract on the Foot- 
sie just below this level nerves 
were stretched to the uttermost 
But the market turned higher as 
Wall Street came in with a Dow 
gain of 6 points, and the moment of 
danger passed. 

But the market remained very 
nervous, not least because one of 
the big London names was said to 
have turned bearish on domestic 
interest rates and was predicting 
base rates of 10 per cent by end 
1995. 

At the close, the FT-SE 100 Share 
Index stood at 3.Q2L2 for a net 
of 6.4. There was little sign of any 
change of view although a good per- 
formance in late trading in the 
stock index futures market raised 


spirits ahead of the opening of the 
markets this morning. 

Earlier, the stock market moved 
erratically, gaining more than 13 
points on the Footsie as bond mar- 
kets steadied behind favourable 
comments on German inflation 
prospects from Mr Tietmeyer, presi- 
dent of the Bundesbank. 

Trading volumes were unimpres- 
sive, however, and firmness in UK 
government bonds bore out sugges- 
tions from some analysts that 
investment hinds, especially those 
from continental Europe, are 
switching from UK equities to gilts. 

The market remained prey to 
company results and a generally 
more cautious reading of board- 
room trading statements underlined 
belief that City analysts are begin- 
ning to moderate their highly posi- 
tive views on the outlook for corpo- 


rate earnings. This could threaten 
the outlook for UK quities in the 
final quarter of this year. 

Higher first half profits and a 
higher dividend payout from Guin- 
ness did not save the shares from 
analysts’ concern over references to 
price competition, which has 
become the touchstone for the food 
ami consumer sector. 

However, British Aerospace ral- 
lied well from the setback of the 
previous day as some analysts took 
a more favourable view of the half 
time trading report, counter-balanc- 
ing downgrades by two leading UK 
securities houses on the previous 
day. And there was a strong 
response to a highly successful first- 
half performance from RMC, which 
drew attention to the strength of 
recovery in the UK and in Ger- 
many. 


session 


Much of the afternoon was passed 
waiting for reports from the appear- 
ance before the US Senate Banking 
Committee of Mr Alan Greenspan, 
the chairman of the Federal 
Reserve. But the firm opening on 
the New York stock market left 
London to wait for news overnight 
The second line issues were some- 
what neglected and the FT-SE Mid 
250 Index drifted off by a further 8 
points to close at 3,562.1 as the 
smaller investors stayed away, 
waiting for the clouds over the bine 
chip market to clear. Seaq volume 
of 546.3m shares compared with 
594.8m in the previous session. On 
Wednesday, retail or genuine cus- 
tomer business in UK equities, 
remained satisfactorily high, from 
the viewpoint of the London securi- 
ties industry, and returned a value 
total of £1.36bn. 


FT-SE-A All-Share index 


1,875 


Equity Shares Traded 

Turnover Of volume (fnaicmj. Excluding: 
mua-martvel busvwsa and overseas tiflrtowr 
1.000 - • • - 



3w"c* FTOfapWw 


■ Key Indicators 

Indie as and ratios 

FT-SE 100 3021-2 +6.4 

FT-SE Md 250 3562.1 -6.0 

FT-SE-A 350 1526.1 +1.7 

FT-SE-A AB*Shara 1517.35 +1.02 

FT-SE-A Aft-Share yield 3.96 {3.96) 

Best per for ming socto r s 


FT Ordinary index 2340.2 +2.6 

FT-SE-A Non Fins p/e 1066 08.63) 

FT-SE 100 Ful Dec 3031.0 +13.0 

10 yr Gift yield 9.01 (9.12) 

Long gffl/equfty yW rabo: 2.27 KL29) 

Worst performing sectors 


1 


+1.9 

1 



2 


.... +1.3 

2 



3 


+1.0 

3 



A 






S 

Uto Assurance -... 

+0.9 

5 

Other Services 8> Bus 

-O.B 


Food 

retailers 

tumble 

Fears of a renewed price war 
among food retailers sparked a 
slide in some of the leading 
shares in the sector. 

The retreat came early in the 
session when a rumour went 
round the market that J Salns- 
bory was about to embark on a 
round of price promotions, a 
move dealers would interpret 
as the trigger for another 
round in the price war between 


leading food retailers. The tall 
was particularly surprising to 
market watchers given that 
north, of England supermarket 
chain William Morrison had 
just posted a sparkling set of 
interim figures. 

However, analysts put the 
slide down to "some confusion 
about Tesco’s recent comments 
on lower regional pricing in 
parts of the north or England," 
This appeared to steady some 
nerves but was not enough to 
bring about a recovery in the 
shares. Sains bury closed 9 
Lower at 416p, after trade of 
4.4m and Tesco surrendered 4 
to 239p, in hefty trade of 7.9m. 

Argyll Group fell 10 to 277p, 
with volume reaching 5.1m. 


Late profit-taking In Morrison, 
which revealed a £9-2m profits 
increase to £47.4m, saw the 
shares retreat from the day's 
peak to finish a penny off at 
18%). 

RMC sparkle 

Having underperformed the 
market as a whole by some 
three percentage points this 
month, building materials 
sprang to life yesterday follow- 
ing goad interim results from 
RMC Group which pushed the 
shares up IS to 92Tp. 

The shares are a notoriously 
tight market and only 243,000 
changed bands but the stock 
was heavily in demand, tuck ed 


EQUITY FUTURES AND OPTIONS TRADING 


Stock index futures passed 
another volatile day with the 
market moving skittishly In thin 
and nervous trading 
conditions. 


Volume was the lowest for 
some weeks at 10,030 - down 
from 13,799 on Wednesday - 
leaving traders with time on 
their hands and at the mercy 


■ FT-SE WO WDEX FUTURES (UFFE) £25 par IU) Index paint 


(APT) 


Open Sea price Change Ugh Low Eat vd Open int 
Dec 3027.0 3031.0 *13.0 30*2.0 3007.0 10723 53174 

Mar 3050.0 3055.5 +115 30624) 3060.0 2S6 750 

■ FT-SE MID 260 INDEX FUTURES (UFFE) CIO per Ml Max point 


Dec 


3560.0 


3331 


■ FT-SE MID 250 INDEX FUTURES {OMLX) CIO per tuft I ndex part 

Dee - 3S6S.D - - - - 0 

Ml open kltarau flgma ora lor prevkxn Oaf. t Euct trim shown. 

■ FT-SE 100 INDEX OPTION (UFF^ f3436) CIO per tut index prim 

2850 2BOO 2850 3000 SON SIN 31 SO 3200 

CPCPCPCPCPCPCPCP 

Oct m 14 146*221*2 um as nh sih « rr ira u w 719 i» 

Nw 203 27b 185*2 39 12B*z S?*j 100 72h 73 K*j 52 12S 35 159 21*2 196*2 

Dec 221*2 41 155 5S ISO 71 121'.- 92*2 94 115*2 72*2143*2 S2 173*2 37*2 299*2 

Jan 241*2 53*2 797*2 70*2 176*2 98*2 MS*; 107 ftS 127*2 * 155*2 72 194 SB 216*2 

JUftf 268*3 102 209 139*2 19*2189*2 IIS 247*2 

can MJ7 no 5.XI 

■ EURO STYLE FT-tg WO INDEX OPTION {UFFE) £10 pgr fuB Index point 

2825 2075 2825 2976 S02S 3075 3125 3175 

Oct 20* 10*1 181 18 121 27*j 85*2 42 57 63 3S*2 91 20*2 126 10*2 165*2 

MOV 223 21*2183*2 32 147 45 114*2 62*2 96*2 83*2 82*2 *06 43 139*2 28*2 174 

Dec 236 33 198 44*2163*2 50 132*2 77>; US >2 99*2 ** 124*2 60*2 153 43*2195*2 
Mac 282*158*1 214 87 IS 1 * 12S UB 175*2 

Jinf 322*2 79*2 287*2 HO 1» *47*2 148 192 

Cab l£B2 Mt 1.885 ’ iMoteng Mr nba Protean atom an feoetf oi scUtencd pita, 
t Ung dated npfcy mate. 

■ EURO SXV1E FT-SE UNO 9BO INDEX OPTION fOMlX)£10 per tuft Index point 


Dee 


3500 


35G0 3600 3650 

183 68 138*2 110*2112*2138*2 


3700 


3750 


3000 


38SO 


of the rumour mid. 

The major buzz was the 
existence of a stock-loss trade 
on the FT-SE December 
contract ft was said to beset 
by a big US house and to be 
triggered at 3,000. 

At one stage the contract 
moved down to 3,007 only to 
be reversed by modest 
support. 

It reached a 3,042 best of 
the day around 3:30pm before 
dosing at 3,031. 

At this level the premium to 
the cash market Is around 10 
points with the fair value 
premium running to some 15 
points. 

Traders described business 
levels as “very bitty 1 ’, reflecting 
the "almost complete absence” 
of views on the direction of 
equities at present Many took 
the sensible course and went 
home early. 

Activity in traded options 
also fell, easing back to 31.858 
lots from 37.003 the previous 
day. FT-SE and Euro FT-SE 
volume accounted for Just over 
half of the total. 

The most actively traded 
Individual stock options were 
British Airways at 2,228 lots 


by an upgrading of profit pro- 
jections from a broad range of 
securities houses. 

BZW Is now pitching for 
£252m pre-tax for this year, up 
from £220m previously. But the 
stockmarket consensus is prob- 
ably closer to £240m. 

The excitement In RMC 
washed over on to Redland 
which gained 18 to 508p and 
Tarmac, 6ft higher at I46p. 
Both companies unveil interim 
statements not week. 

Guinness upset 

Distiller Guinness tumbled 
13 to 448p, in trade of 7.2m 
after the group reported fig- 
ures at the bottom end of mar- 


TRADING VOLUME 


■ Major Stocks Yesterday 

VOL Ooteig Day's 
000 b price change 

aSdaqoupT 

■ «-«- - SI llin.nl I 

nOOW IWMlWT 

Aon fisMr 

NMDomoit 

AngEan Water 

Arjo V* 

Assoc. Sn Foacfcit 
Assoc. Brtt tan 
BAAt 

BATMLt 
BET 
BCC 
BOCJ 
BPt 

BPBinda 

art 

BT (WPaO 
BIRt 

Bonk at Scodandt 
Bardsyxf 


Bust 
Boeha 

Boots} 

D oww a it 

Bnt Asrnpocat 
Brjan Ahnaysf 
Brens hGast 
firean Land 
BmanS»e«t 

0HJS2J 

ftmnan Cwttft 

Oman 

Cadet WmT 
Caatwy Cctweppest 
Content 
Canton Commit 
CaXsWpej 
Coons. Ua»nT 
Cadkson 
GourtOdUst 

MO** . 

Os La Boet 

Dunns 

Eastern Elacl 

EaiilUMEIta 

EngOrnCm 

Enron*™* CWt 

’EnatmeteUm 

m 

F too 

ItCdLT. 


1,300 

335 


B.7D0 

63 

-2*1 

S LOUD 

3BB 

♦3*2 

193 

49 


lflDO 

566 

♦9 

703 

531 

♦1 

814 

328 

♦3 

MOO 

277 

-10 

uoo 

263 


201 

539 

-B 

1.100 

1.800 

264 

-6 

475 

<6 

1.900 

<16 


5.600 

105 

•3 

887 

361 

-3 

e«e 

710 


9.100 

402 

-4 

3£00 

296 

►11 

5J00 

368 

-1 

X300 

248*1 

J. 

ajax, 

30B 


1600 

202 

8.500 

554 

-««7 

1.400 

539 

♦1 

4300 

279 

*6 

304 

426 

-2 

997 

521 

►6 

1.100 

476 

♦3 

3.100 

483 

►IB 

3,100 

386 


»J»» 

3)7 

+3 

197 

363 


&COO 

157*2 

♦3*1 

90? 

188 

871 

•4 

143 


2.600 


+*4 

3.600 

«' 

*u 

rst 

■155 

-2 

1.400 

270 


1.100 

S03 

-11 

SOM 

195 


1200 

<95 

1200 

«32 

-7 

512 

469 

-2 

152 

■139 

-8 

649 

917 


i-Ma 

195 

►3 

1.100 

777 

-10 

658 

752 

-2 

1.100 

377 

+4 

400 

369 

-4 

STB 

270 


331 

169*2 

-1 

£>W 

119 


828 

135 



Cate 0 Pun 0 Sstasnmt mens and vdmn m Wm w 430ms. 


lots). 




I FT - SE Actuaries Sh 

are indices 



The UK Senes I 



Day's 

Year 

DN. 

Earn. 

PTE Xd aifi. 

Total 


Sop 22 chflO% Sep 21 Sop 20 Sep 19 

ago 

yttedK 

yWd% 

ratio ytd 

ReUm 

FT-SE 100 

8021.2 

♦02 3014.6 3037.3 3079.1 

3001 a 

4.18 

722 

1037 99.B3 

1142.15 

FT-SE Md 250 

3562.t 

-02 3570.1 3584.6 3603-0 

34303 

3J0 

5.74 

20.99 95.61 

1325.02 

FT-SE MM 250 ax hw Triad* 

3564.0 

-02 3572.8 35884 3806-5 

34405 

3.66 

620 

1957 9097 

1322.60 

FT-SE-A 330 

issai 

+0.1 1624.4 1534.6 1553-1 

1505.4 

4.02 

BJ17 

1726 48.10 

717085 

FT-SE SmaftCap 

1846.45 

-05 1855.13 1863.97 187023 1762.45 

3.19 

4.70 

28.73 42.10 

1431-D3 

FT-SE SmoflCnp aa bw Trusts 

1818.65 

-05 182031 183042 1839.91 1764.45 

3.38 

5-21 

24.48 4320 

1413.17 

FT-SE-A ALL-SHARE 

1517 35 

+0-1 151633 152022 1543X4 1492X8 

3S8 

8.71 

17.73 46.93 

1183.12 

■ FT-SE Actuaries All-Share 









OaV« 


ow. 

Earn 

WE Xd arfl. 

Tottt 


Sap 22 chgott Sep 21 Sep 20 Sep 19 

ago 

yWdK 

yWdM 

ratio ytd 

Return 

10 MINERAL EXTRACT! ONflO) 

2668.42 

-OX 2882.69 2699.71 2732X2 2245X0 

3.45 

5.13 

24.67 56.87 

1064 29 

13 Eximcmm Industnesfl) 

4008J81 

+07 3960.60 4007.74 3898.75 3189.10 

3^0 

5.11 

2420 55.32 

109423 

15 OL Weqmirtdp) 

2697.83 

-07 2617.08 2831.80 2874.62 2177.70 

3.63 

5.79 

21.61 59.99 

105723 

18 CM Eaptumtian & ProddO 

1916.89 

-0.8 1932 74 1956.78 1967J8 1836.00 

2.17 

t 

t 3003 

noaoa 


20 GEN MANUFACTURERSpMft 

189326 

+04 1886.14 1998.42 1919J83 1978.40 

4.02 

5.07 

23^2 

8071 

9B434 

21 BuMiog A GonawictiooCrii 

107723 

♦02 1Q74.41 1076-63 1084.87 1166.70 

3.63 

4-98 

2046 

25-85 

84062 

22 BuSdsig M.itts A Merchs(32) 

184027 

+1.9 1813.06 1805.34 1832.52 1821.40 

3.99 

4.84 

2039 

54.12 

88062 

73 Cfwmicalst23) 

2402.40 

-Ol 2405.74 2426-38 2444.63 2186^0 

3-85 

4.26 

29.46 

7083 

106438 

24 Dhreradled tnduatiL*ll6) 

1789.54 

+02 1785.21 1812.18 1844.78 1035.30 

5.12 

5^0 

23.11 

8046 

01018 


1899.34 

-0.7 190032 iaaa.40 193081 2140.00 

3.98 

6-64 

17S4 

57-28 

920-79 


181305 

+06 1803.88 1817.30 1831^5 1635.40 

3.15 

4.83 

2X03 

44.65 

103015 

27 Engmoonng. Vu«ch!S(12) 

227828 

-02 2282-93 2299.12 229Z47 1BS9.0O 

4J9 

2.70 

5075 

7237 

1104.78 

28 PiJntmp. P.ipor A PdiflCO 

2833.39 

+02 2827.89 2804.48 2832.57 2422.70 

3.02 

6.29 

22.11 

70.24 

1114496 

29 TexUn & AooarolCca 

i«n.M 

-1.3 1624^3 164-L35 1658.05 186080 

4.19 

8.85 

17JI7 

44.09 

905.15 



30 CONSUMER 00005(97) 

31 Biowwtewiirj 

32 Spans. Wm» a CHJOT5(10) 

33 Food ManuiocturorsCS) 

34 Household Goods(13) 

36 I team Contfl) 

37 PharmnCteitierfaflSI 

38 Tctuc COQ) 


2688.49 +03 369025 2704.11 2729.40 2751.00 

2199.68 +0.3 21 9201 2197.68 2223.06 2036.10 

2743,08 -0.7 2761.07 2770.05 2801.88 268&30 

2284.70 -0 8 2299.23 231885 2342.60 23O4J90 

2447.51 -ftS 2458.96 2443. 18 3447.49 2561.50 
1664.00 +0.3 165938 1859-65 1654.67 171200 

3987.CC +12 295a 14 2982.12 296742 3079.10 

3489.88 +10 34 56.30 3422.75 3531 01 400B90 


4.41 

7^3 

15-35 10101 

93002 

4.30 

7.78 

15.81 

6103 

98507 

4.06 

701 

1053 

8902 

91905 

4.2S 

B23 

14.05 

75.77 

98006 

3^8 

7^41 

16.15 

55.79 

873.74 

3.00 

X24 

43.32 

3018 

982.13 

4.41 

7.17 

16.15 12018 

955.73 

022 

9-85 

1000 21707 

79607 


Utefe A Sbwuxrt 
MxSandi Beet 
MorocnJWnv) 
l*C 

tatWsffl Bankt 
Moooro Powert 
NM 

Hcnh West VWert 
Northern Sect 
Northern Foodsf 


40 SERVICE S(221) 1691.89 

41 DdlnbuWrsv31» 2482 28 

42 Leisure 8 Huwtef35) 2028.77 

43 Mte*M39) 2757 87 

44 Retailors. Fol\J| 16) 178tt73 

45 Bowlers. Gei>emH-«5) 101887 

48 Support Swv*cosi(41) 151784 

49 Ir.Trux»rt(16) 2217.B4 

51 Other SjWjCW * BuMnmstai 1 281 .87 


-02 1895.99 1911.18 1932.42 1871.00 

306 

039 

18.87 

46.03 

928.01 

-08 250301 2521.64 255809 2687,50 

3.66 

700 

1607 

6504 

85709 

+09 201 106 2027.79 2055.38 189900 

345 

4.79 

24.64 

53.44 

100005 

-00 276400 2784.29 2813.06 251070 

2-51 

507 

21.72 

5S05 

958.09 

-2 2 1800.84 182300 184073 1704.00 

307 

8.04 

1307 

45.77 

105007 

*07 1607.93 161307 1824.71 1653.00 

305 

067 

1601 

3700 

88309 

-10 153507 1552.43 156204 181000 

2.78 

607 

1055 

30-20 

921.47 

2216.79 2243.76 2284.86 224040 

3.T9 

5.70 

2004 

57.46 

97024 

-00 1292.14 1309.64 1287.30 129200 

3 66 

206 

77.17 

2300 

1093.76 


PtOt 
NWuoa 
PteBGMf 

PttaonEajf 

mzt 

Rsal 
HrtOo-t 
ftecttt A Ctansnt 
Rstesrwt 
Raedtas-f 


tab 
RyiBk 


60 UnUTJES(36J 
62 EteClnCIhrf! 71 
64 Goa Ctennbutttnf?) 

66 TteoranmurtCiitiOftsW 
68 Wah«n31 


238436 *00 237011337067 239802 234300 
253484 -03 2541.22 2519.61 2524.19 203280 
2037. 19 +1.0 201881 1996.69 201235 2160.70 

1939.62 *09 1921.76 1948.62 196936 211030 

1819.39 -OS 182677 183734 1BSOS7 189280 


402 

70S 

1504 7302 

91805 

302 

9.70 

1200 8306 

1054.02 

508 

* 

t B8.7B 

931.01 

408 

8.11 

13.00 5002 

827.13 

504 

1304 

808 6905 

90900 


Scotteht Nen-t 


69 NON-FlWAHCULS< ra8)_ 

70 nNANOALSt104i 

71 amksIHI 
74 te-juron+mlil 

74 Life AuauuocofW 

75 Mdtvhunl BonhstO) 

7/ Ouwr t rv*xj.»H2 J) 

79. Frapwiytil*-. 

INVESTME NT TRUSTStli 
88 FT-SE-A ALL-SHAREiBM 

■ Howdy movements 

Open 9.00 


Ttenrt 

SJwITnmpont 
SlsMt 


1643.19 *QI 1641.27 165021 1667^5 1608.48 3.83 6^3 1666 4938 116084 SteoahEss 


*19 

•6 


•18 

*8 


-a 

-3 

+12 


2113.08 
2727 62 
116820 
234377 
2983.02 
1870 47 
1453.75 


-03 211*49 2143.11 
-0 7 2747.78 2779.43 
+0.9 1177 J9 1202.76 
♦09 2331 -T4 236S51 
-0.5 2999-46 3062^4 
-0.8 1861.10 1901.20 
♦0.7 144331 1449.44 


2178.08 2189.70 
2829.62 2636.60 
1232.86 144930 
240338 2603.60 
3082^4 2881.00 
191005 17S3JO 
1454.12 157530 


-0.12772.05 2785^7 281839252630 » » 14» 5134 6130 83087 

15*7.35 +01 151633 152022 154064 149238 3.96 6.71 17.73 4093 1193.12 


404 

a ■« 

12.43 

81.14 

83704 

SnsOiCWHI 

Smili & Naphawt 

BID 

sum 

no 

148*5 

-10 

♦*5 

4.42 

1050 

1000 11404 

919.68 

SmTOEteDctanit . 

2000 

«8 


546 

546 

903 

6.17 

1101 

1402 

4809 

9800 

81108 

88108 

SnM B+fCttira UBut 
SnSM tods. 

688 

ESO 

435 

7*9»j 

*3 

-13*1 

308 

11.07 

1002 8405 

RRQ Qfi 

State W WteQstt. 

697 

BOB 

-3 

307 

4.15 

809 

401 

1402 

29.35 

53.72 

■ 3S ^t 

998.01 

83045 

Scute Wfea Wat* 
State WtaL OacL 

2S7 

ass 

w 

527 

789 

565 

-5*3 

-5 

-10 


asmted Ctartri-t 


iaoo moo 


1230 


13.00 


144J0 16X0 16.10 MahMay Low/dMr 


FT SE 100 
FT-SF Mid 250 
FT-St-A 3M 


3023. 9 3027 0 30213 30223 30125 3014.7 3017.8 3021.0 3019.7 30Q73 30006 

iSfiaO »703 3567.9 3569.7 3564.4 35653 3S6S.9 3568 0 3582.4 36704 35613 

1^9 15202 1526.6 15273 15233 16246 15252 15204 1525.6 1529.4 15212 


r-rtw <4 »T-5r. W Boy's Htffc oars io«: JMpm FT-BE 100 199* to*. 35HUKM ) tor 26706 (2vq. 


Opon 9.00 


Bug A Cinmrn 
RmaumiiiLb 
Water 

BsnVa 


1015.1 


1015.6 

7H41.9 29402 
1817.2 1619.8 

2767 8 2791.7 


1000 

1100 

1200 

1300 

1400 

1600 

1810 

CIOM 

Prwriow Chang* 

10150 

1017.7 

1018.8 

1017.0 

1017.0 

10188 

1017.1 

10170 

1014.0 

+03 

2828 5 

29308 

29386 

2936.7 

29420 

2959.9 

29560 

2959.3 

29220 

+360 

1829 2 

1837.5 

18250 

18250 

1824.7 

18240 

18170 

18105 

1826.0 

•80 

2776 0 

27780 

2764.0 

27640 

27B8.6 

27681 

27800 

27S1.1 

27810 

-204 


AteM** BH-mste« .v, im 

Lonlr-j. Cm- S*-!"-** (W 1 HjSn W toTl3-*7 EtWCrth 

TMiL- ^ 

Mtm an uSUt BV 1*" 9** l -'* T V Q rt* r -AKKX -* 

Fu-Il ChuB 1*-1 


Utte oi cenWuteiOi m awtebte Sara The Fktsnctel Tsnss 
ca. oteieh mra \ inn of oto ter ctSc end pspte-bsei id 
State. USMtoB QSA «OL 

taa 2SO FT-SE Actuates 360 amt fte FT-SE AausMH tatetety 
wfalc «( tateid and tea FT^E Acapdas AB-Snsra taxsi ■■ 
md ns Faculty te Actusrio* iPdor a atsndarel am ol gmaxl rteca 
i mat. 0 Ttis BnwMte TVne* Umted 168*. *8 rtghte ro snnd . 
and Tho Rimtete Tunas Uteted.Ths FT-SE AetuartM SA+re 
tv*ta ar» iwgteNeJIAMECKAHQE: Owner* AMeadtsiM 



749 1097 

1,-KC 

2JODO son 
UJKO ifta'i 
37i 711 

l.OCC 630 
S2» ®ai 
51 60) 

1JOO 531 

■xoo 3a 

1JW 143 

136 144 

6W 7S7 
-as as 
M9 522 
1.300 623 

Baaod on tateng eeftsna *x a stesetan te "Mr* 
■«Cte1taadM0 tanicn me SEAQ snteni 
yesterday urel Odpn. Trades c# gn* mffian » 
mm am nuajed team, t Wcxh sn FT-fiE 
TOO* 


bet expectations. 

Interim profits improved by 
£15m to £320m against market 
expectations of between £320m 
and £330m. Several brokers 
moved to downgrade full year 
profit expectations. They 
included Smith New Court, a 
bear of the stock over the last 
six months. The broker 
reduced its year end forecast 
by £24m to £894m and cut the 
following year’s prediction by 
£30m to £960m. Mr John Beau- 
mont at Smith believes the 
“current rating of the shares is 
too high." 

Reports predicting UK inter- 
est rates would be around the 
10 per cent mark by the end of 
next year hit banking stocks. 
National Westminster fell 6 to 
470p, while Barclays tumbled 
13ft to 564p, In busy trading of 
6.5m. Lloyds gave up 9 to 530p. 

Industrial conglomerate BTR 
hardened 2 to 306p. on volume 
of 4.6m after BZW came out 
with a strong buy recommen- 
dation on the stock. 

Housebuilder Barra tt Devel- 
opment gained a further 3 to 
181p as analysts digested 
Wednesday’s strong interim 
results. William Sindall put on 
5 to 93p on rumours of acquisi- 
tion news in the offing. 

Glaxo took a turn for the 
better, improving 15 to 574p 
with 5.8m shares traded. 
SmithKline Beecham too 
enjoyed positive territory and 
added 6 to 428p. 

Against a weak electricity 
sector Scottish Power mus- 
tered a rise of 6 to 392p with 
2m shares traded. 

The increase came as Pan- 
in are Gordon launched a push 


NEW HIGHS AND 
LOWS FOR 1994 

NBM HUMS fMO- 

DtSnUBUIQRS 0} Ftewtast, Spondox. 
aecTRMC a afer equ> a Dnad Tech 

kids.. Thorps F.wrj. EXTRACTIVE H» (7) 
FOOO MANW (1) CH. Marias. LBSURE & 
HOTB43 0 Briswl anods. Zoom, 
PIIAHMA Co mOA U R| BrWsh aotetev On. 
(MIS. RETAILERS, GENERAL CQ Rnd Earth , 
Slyta. 

NEW LOWS (inft. 

BtMXmaa CN8TRN (4) Costala. Courteyaids 


Props, Crast Nkiite 6Kpc PA. tarn. 
DtSTWEttirORS <1» BHUgmeL Cowls. Optoma. 
EW Fact, Bscttomps. Fomsi Etoctranlcs. 
HsMagMiKhcaps. tor Ssntes, Uriro aiteplsa. 
tavtagon. Pony. OTVERSnto INDLS (1) 
Hanson Y/mnta. B-ECTtaG A ELECT EQUP 

n BCC, BMMrorpa. VUeteJWX. 
EncMaRnun Eteta, Oynuod. Mtepan 
Cructela. Haten Matte. 11. ENG. VSKLU (3) 
BBA. Ooiled cm. Pit. Md-SUMa, 
EXTRACTIVE WDS (Q Antanai tak Spa Has. 
TOOO MANUF M Btes Wmstsim. Donom. 
Northern Footer, HEALTH CARE (3 Btocuro. 
CreteteSsiA. SchoB, HOUSatPLO GOODS (2) 
CltegMon KMuraly. Jsyn. INSURANCE (3) 

Mia alt & McLennan. New London Capital, 
Sedgarfdk. tHVESIUENT THUOTB flS) 
INVESTMENT COM>AI883 LEISURE A 

HOTELS (1) Kunlck Pit. LIFE ASBUttANCE |1| 
UnhM8.IBMHIMte.HMM 
iterate. Psteaan. Ote exploration a moo 
n Conxnand Pettn, Ewops Efleapy. HanJy OS 3 
Goa. OIL. INTEGRATED (I) Orman, OTHER 
reUHOAL n Betty atah A Mabks, Mnsn 
JusMIs, Johnson By. St JaneVe piece CapU. 
Towy Law. OlMIt 8BW8 6 BUIN8 (1) 
Gonand Mouse Uhs PNARIMCEIIT1CAIS CO 
Hunargdui ktL PRTNO, RAP® 4 PACXQ R 
API, Bsntsg, Hunme Ann ley, SUaw Gap, 
WSonouahs. PROPERTY {JJ Duntoe House. 
Ragban Props Wrte. RETAILERS, POOD (1) 
Gnat RETAUH& OMBIAL « A^oa, 
Benanitea. CouiBy Casuals. Beaia. Upton ft 
SouOmv SUPPORT SERVS 0 B8M. HS-M 
Serv Sys B. Mm «. MeCamte Mo, Pegesoe, 
TEXTILES A APPABQ. (a) Coats IfiyoAa. 
tonont. tiwwnl TRANSPORT ft Brttah 
Atowiys. Da Om 9«pB Cmr. CSX. Ttrbatt A 
Bitten. AMERICANS tiq 


on the stock, urging investors 
to buy before the regulatory 
reviews - which are due in a 
few weeks. 

Panmure utilities analyst Mr 
Angelos Anastasiou said that 
the Scots power company faces 


its supply and distribution 
review in a relatively strong 
position as it, along with Scots 
Hydro Electric, was floated 
with already tight regulation. 

Scots Hydro also improved 
yesterday, a rise of 3 to 383p. 

With the exception of North- 
ern Ireland Electricity, which 
moved ahead 14 to 385p after a 
period of lagging the sector, 
most electricity stocks lost 
ground. Among them were 
Eastern which feD 10 to 777p; 
Midlands which gave up 18 to 
799p and London which lost 9 
to 717p. 

Confirmation by Sooth West 
Water that it was challenging 
the Ofwat price limit saw the 
shares slip 5 to 527p although 
volume was thin. 

Shares in Granada Group 
advanced 7 to 491p. after sev- 
eral brokers recommended the 
stock. 

Kleinwort Benson favours 
the stock as does BZW which 
said: “This is a well managed 
group with good prospects 
whose shares were recently left 
behind." 

Airports group BAA stood 
out in a mostly lacklustre 
trauport sector, rising 7 to 
475p. 

Reports suggesting that Mr 
Rupert Murdoch, Chairman of 
media group News Interna- 
tional is an the verge of setting 
up his own wholesale distribu- 
tion network continued to 
exact a toll on several stocks. 
WH Smith gave up another 10 
to 45Gp, while John Menzies 
fell 18 to 564p. 

Talk of a share buy-back 
plan at GUS following North- 
ern Electricity’s move on 


Wednesday saw the retailers 
shares appreciate 18 to 555p. 
Northern closed 31 down at 7&J 
on profit taking. 

British Aerospace was a 
clear feature for the second 
day running, bouncing bock 
strongly to recoup almost the 
whole of the previous day’s 
results-hit losses. Nat West 
Securities and Hoare Govctt 
both put out positive reports 
on the company and the 
upswing in .sentiment was 
enough to push the shares 18 
higher to 463p in 3.1m trades. 

Rolls-Royce, up 2 to 17Sp. 
came in for modest buying 
while controls and compressed 
air specialist Siebe jumped 12 
to 549p on talk of an imminent 
upgrading of profits forecast by 
a top securities house. 

Following interim results the 
previous day, shares in 
Laporte slipped back 9 to 740p. 
Most brokers maintained their 
forecasts although NatWest 
upgraded its estimate for this 
year from £I22m to £t25m. 

Shares in United Newspapers 
finned 2 to 500p after touching 
a day’s high or 513p on com- 
pany results that were a little 
above analysts’ expectations. 

A cross by Goldman Sachs of 
3.9m shares in Saatchi & Saat- 
chi at 195p. from one fond cli- 
ent to another, was behind the 
large volume of 7.1m in the 
stock, or IS per cent of the 
company. 

MARKET REPORTERS: 

Jeffrey Brown, 

Christine Buckley 
Joel Kfbazo 

■ Other statistics. Page 21 


LONDON EQUITIES 


UFFE EQUITY OPTIONS 


RISES AND FALLS YESTERDAY 


Cate 


-Puis. 


OpBon 


Oct Jan Apr Del Jan Apr Option 


fcta&utq 540 36% - - 5 - - 

r*» I 589 8 - - 2714 - - 

280 23 29V, 35 Vi 2V, 11 15 

280 OTl 1714 25 12 1954 25 

€0 SW 6 10 2!A 4 5% 

70 15* 3V» 5V, 814 10 11 


Cate — Pub — 

SDf Fab Iby Hot Fsb Ibr 


Aroyf 
1*377 I 
ASM 

raj 


BrttAlnwp 360 17 28 38 Mi 19 24 

CTOS I 390 5 16 25 2814 3654 4054 

Saflittn A 430 2DM 32 4154 10* Z1 27H 

r«7 ) 480 5 14J4 23» 3654 4554 51)4 

Boats 500 29 30h 51 5^ 16 23 

TOO I 550 5 16 28H34H 44 50 

B* 390 21 31)4 39 7 14S4 20 

r«t ) 420 544 17 25 23)4 31 36 

Brian Steel 140 IBM 2*44 Z7 H4 4H 0 

HS7 ) 160 544 1D14 1514 8 1254 14)4 

Bass 500 47 99 « 4 16 20)4 

f*538 ) 550 13 23 31K 22 4054 46 

Hfe&lte 390 23 3614 40 354 21 2714 

[-399 ) 420 614 33 34 Zft> 37)4 43)4 

CounaUds 460 2314 am 47 8J4 205) 25)) 

1*470 ) 500 654 1714 2744 35 44)4 49 

Cams Union 493 1644 3344 39 lUt 21 3254 

1*494 ) 543 4 13 1914 Silt 54 66 

U 800 43 66 79 11 27 40 

1*827 1 850 1 9» 38 5214 35 92 BO 

Nngflster 466 S» 48 60 7M 16)4 2314 

r«2 ) 500 1244 26»» 39 20 36 4244 

laid Scot 600 1854 2944 44 11 21 V) 26 

1*604 ) 650 314 1114 22 48)4 55 58 

Unless 300 2154 30V) 39V) 5 12 16 

r«4 ) 420 6V4 16V> 2454 20)4 27K 31 

Names! 460 24 38V) 47 10)4 19 30)4 

T471 ) 500 6V, 16 26 35 404 W 

SattteSST 390 334) 43 9214 4» 14 1845 

P4I6 J 420 (314 25K 30 16 27» 32)4 

SMI Ton. 700 14 31 4614 1954 28M 4Q 

r702 ) 750 214 12V4 20 61 H 6344 73 

Smetana 200 914 16 2654 5 9H 14 

(*204 ) 220 214 7 11*4 19 2214 26 

rrattgte 80 10 12 1414 2 5 5)4 

(*87 ) 90 3 OH 9 8 9)4 11 

IMtowr 1050 0214 7714 98 7 21M 35 

(-1096) 1100 26 47 87 24 43H 58 

Zeneca 800 40 9314 »W 914 25 38 

rH2S ) 8» 14 36 49 35 46 64V) 

Option Dm Feb May Nn FeO May 


feran 220 21 24 27 3 7 9 

(*236 } 2(0 8125419)4 11 16 10 

Laano 134 24V* _ _ 3 _ - 

1*153 J 154 11H - - 10 - - 

Una tab 190 1BV4 21 25V. fl* 10 14 

(192 ) 200 7 UK 16«4 IBM 22 2SM 

P&O 600 51 Mr 88 77 I0H IBM 32 

(*633 ) 650 21)4 38 50 31 K 42 57*4 

PStegton 180 IBM 18V4 21 5H 9 12 

(IBB ) 200 0 M I4K IBM 21 23M 

ftixmu 300 15 ZTH 28 12 16 23 

(•306 ) 330 4 814 14 33 35 42 

BIZ 850 53 7414 87 17 28 44V4 

n»5 ) BOO 2454 4714 61 4ZH 54 69 

Redand 500 22 3BH 48 21V4 29 42V) 

(-M6 ) 560 8 17 28 58*4 611)7554 

FtejeJ hsce 260 2IK 30M 36 OH 14H IBM 
(-269 ) 280 11K20H29K19K 24)4 30H 

Toco 220 22 2SK 3SH 4 8V) 12 

1-239 ) 240 9)4 18K ZZ 12V4 17 21 

mafane 183 1814 23 - 414 814 - 



Rises 

FaRs 

Same 








15 

83 

389 



41 

156 

43 








manias 





74 

81 

103 

59 

211 

315 . 
16 



Others _ 

_.... 27 


Totals 


473 


641 


1477 


Date bawd da tana oonpanhs karod on ta» Lonoan tan S owe. 


TRADITIONAL OPTIONS 


Ffcat Dealings 
Last Dosings 


September 12 
September 23 


Espky 

Settlement 


Decembers 
December 22 


Cafis: BTR ms -asm. Blackwood Hodge Prf. Eurotunnel, Oreenwicb Res, Haono- 
ce*. Hanson Wts, Lucas Wts, Minor Grp. Morrison (Wm), Noran Res, Scot Nat Cap, 
Signet Prof. Ho Reck, WHshow. Puts Com Murch. Puts A Cate; Royal Bk Scot. 

LONDON RECENT ISSUES: EQUITIES 


H94) 

nwam 

(-324 ) 

200 9K 14% IBM 13 17V) 20 
300 31 H 38 « M SH lift 
325 X3H - - 12 - — 

issue Amt 
pitea paid 

P UP 

MM. 

cap 

(Eng 

1004 

High Lour Stock 

Close 

pnee 

P 

+!- 


Dhr. 

cov. 

Grs 

y« 

P*E 

net 

Option 

Oct Jaa Apr M Jao Aor 

100 

F0. 

18.1 

102 

95 Beacon tar Ta 

95 


_ 

- 

_ 

- 

BAA 

<50 32)) 40 60 3H 10 I3M 

- 

FP. 

102 

48 

39 Cto- Warrants 

40 


- 

- 

- 

- 

1*465 ) 

475 15 24M 34 12 20 24 

§125 

FP. 

IBS 

130 

124 Compel 

124 


WN4.0 

2.1 

4.0 

12.0 

Owns WH 

460 45K 51 ft SB 3 13 15)4 

- 

FP. 

1-30 

1*1 

1 Conti Foods Wrtj 

1*4 


- 

- 

- 

- 

T499 ) 

500 18 271) 35W 14V) 29 32W 

120 

FP. 

FP. 

24.4 

21.1 

62 

120 

61 Enraging Mtts C 

118 Independent Pets 

91 

118 

-1 

LAM-0 

2.1 

40 

14.3 

Option 

Sep Dec Mar Sap Dec Iter 


FP. 

204 

99 

35 ^Magnum Power 

76 Rytand 

66 

+4 


- 



MtetrNfl 

380 30K 41 40V) 1 8 15 

80 

FP. 

24.1 

85 

95 


LN3.5 

1.7 

5.1 

14.0 

(•M7) 

Amatrad 

380 8 22 31 8 17)4 2914 

- 

FP. 

307 

44 

27 Suter Wrts 99/04 

28 


- 

- 

- 

- 

25 514 0 7 1 IK ZH 

- 

FP. 

115.7 

379 

374 Terrpielon E New 

374 


- 

- 

- 

- 

1*29) 

Barctap 

30 1 3 3 2 4 5 

550 11 32H 48» 5*4 22 33 


FP. 

120 

212 

192 Da Wrts. 2004 

204 

-3 






Gr aid Mat 

390 

24W 

33 40b 

12 

22» 26b 

r399 ) 

420 

11 

18V) 28b 

58b 

39b 43b 

Leboke 

140 

23 

Z7 30b 

2b 

5 8b 

H57) 

160 

9W 

15b IB 

3b 

13b 17b 

UUBboib 

300 

14to 

23 26b 

14 

18 29b 

nroi 

330 

4 

11 14b 

37 

38»«b 

Option 


Step 

Dm Rbr 

Sep 

Ok tea 

Rsons 

110 

M 

14b 17b 

1 

5b 7 

niB) 

120 

2 » 

Bb IZH 

4 

10b 12b 

Optton 


BW 

Fob Hay 

NW 

Feb May 

Aero 

460 

28 

44 51 . 

25b 

34 44 

T462 l 

500 

13 

27 MW 

52 

59 B7H 

BAT bd3 

390 

37 

49W 56 

7 

12 ?1 

("416 ) 

420 

18D 

31b 38W 

15 : 

24b 35b 

BtH 

300 

17* 

27 32W 

«i 

Mb 20b 

race) 

330 

6 

13W 19b 

20 

32b 38b 

Bdfdaeni 

360 

19b: 

24H 32 

8b 

17 2D 

DS7 ) 

390 

Bb 

12 17W 

27 

36 38 

CsluySd 

420 

44b 

54 59b 

3b 

8 14b 

T456 ) 

490 

17: 

29b 34b 

1 7b 23b 32 

Fasten EMC 

750 

67 

77 aw: 

21» 

34 43b 

r77B) 

800 

Ml 

50b MW 

45 1 

ED) 68b 

Ossnssi 

420 

35b- 

ttb&zb 

6 

12 tab 

rwi 

460 

13: 

23b 30 

25 : 

Mb 38b 

GEC 

280 

i«b 

IS 26 

8 

13 16 

risaj 

300 

8 

16 16! 

mi 

Mb 27 


CS54) 
8hsi Circle 
rCTJ 

Brtlbli Gas 

f-307) 

tJUtni 

nssj 

WsdOM 
H79J 
Lonroo 
H33I 
na Poser 
F463 ) 
Sou taw 
(*391 ) 
Sen 

n« j 

Forte 
r2i5 1 
Tamac 
n«6 j 
mom aa 

r979 ) 

isa 
(*213) 
ToroMns 
r?i6) 
Wetauna 
(-688 ) 
opaui 


600 1 12 M» 48 5314 64 

280 21 30 37)4 1 BV) 1Z» 

280 6 1714 26H 6 15)4 21)4 

300 9H 1714 29 3 13 1754 

330 1 7 12 24*4 33 36 

190 1714 28 29 1 65* 11 

200 2)4 14H 18 7)» 16 21 

180 21 2314 28 1 3 5)4 

180 2)4 1014 16 2 10)4 12)4 

130 8)4 13 18)4 2 7H 11 

140 1% S 12 8)4 13 18*4 
460 ID 2714 39 514 32)4 29 

500 1 1114 22 3B 47 52 

300 7 28)4 3814 8 19)4 24M 

420 1 1814 2414 31 36* 41 » 

100 9 11)4 1314 1 4 5)4 

110 1)4 8 7ft W 9 II 

200 i7V) n m 1VI «H 10H 

220 214 12 1814 10 17M2IV4 


RIGHTS OFFERS 

Issue Amount Latest 
price paid Renun. 


dosing tet- 
prtae 


P 

up 

data 

High 

Low 

Stock 



P 


476 

m 

4/10 

59pm 

15pm 

Commercial Union 


21pm 

*« 

380 

ta 

21/10 

48pm 

13tvn 

EMAP 



15pm 

+1 

252 

m 

11/11 

34pm 

13pm 

Weir 



13pm 

-4 

FINANCIAL TIMES EQUITY INDICES 






Sep 22 

Sep 21 

Sep 20 Sep 19 Sep 16 

Yr ago 

•High 

■Low 

Ordinary Share 

23400 

23370 

23560 

2389.5 

2388.1 

3312.4 

27130 

3240.6 

Old. tew. yield 

409 

4.40 

4.36 

400 

4.30 

4.03 

408 

3.43 

Earn. y«. % riA 

804 

900 

505 

013 

6.13 

4.74 

604 

382 

P/E mUo net 

1700 

1094 

17.67 

17.41 

17.41 

2603 

3043 

16.94 

P/E ratio nil 

1707 

1701 

17.09 

iaoo 

18.00 

24.85 

3000 

17.09 


140 8 

100 114 
950 37 
TOOO 414 
2001614 
220 Z14 
200 1814 
220 314 
650 43 
700 714 
Oet 


15 21 
0D 12 
6614 79H 
3714 S3 
33 2714 

12 1BH 

26 2914 

13 18 
70 89 
41 81 

J» Apr 


IU 914 1IM 

18 22)4 24 

2)4 21 36 
28)4 45 81 
1 8 11 
8 15ZH4 

1 5 8)4 

8 (314 1714 

2 20H32V4 

19 43 56 
Oet Jm Apr 


“Fot teas. Ordtooy Sham todm men complobon Ngh 3713JS 2/am*, low A4 2HW+0 
FT Ordkwy Start Httm best dale 1/TOS. 

Ordinary Shard hewty changes 

Open m» iaao IIJO 12J0 1300 14J0 1000 16L00 High Low 
2348.7 2347.0 2342 3. 2341.1 2332J2 2333.9 2336.7 2339.0 233U5 2347.3 2331.4 
Sep 22 Sep 21 Sep 20 Sep 19 Sep 18 Yrago 


Q3» 550 37 57D 6814 11 23 34 

1*573 ) 600 12 32 44 3614 49 60h 

VGBCnUo 650 50 B3V4 99% 10V) 20% 45 

r69S ) 700 2814 65 72)4 30 48V) 70 

Reuters <62 ta - - 16 - - 

p463 ) <75 11V) - - 23W - - 

Option Bw Feb Bay War Bed May 

_ 160 23*4 28 31 2)4 SIk BK 

190 11 18 IBM 9)4 14 17H 


SEAQ bargains 23^63 

Equity turnover (&n)f 
Equity btegainst 
Shares traded (mQT 

tfuVidins tota-mertm buteioss and ta 


24,511 24,355 

1355. B 1333.0 

27.107 27.071 

4755 406.4 

seas usnovar. 


24.512 

950.9 

28.641 

827.0 


24,749 27324 

1193.7 16332 

27,771 31.274 

460.4 618.5 


ri78 1 

* UMMpng sscwfty prtete Prantan* shcasn an 

t ao d QA rtf wtif w nfty xviC9i 

Sepuunbtr 22, Tom commas; 31.034 Cole 
16,238 Puds 14,798 


FT GOLD MINES INDEX 


Sep % cfeg Sep 
21 on tby 28 


S«P 

19 


Yaer Gnsa «2r 

•a# 


SStrok 

hh Low 


Gdd Uses Index (359 
a Anginal toAcet 

228051 

+06 

224708 220409 1720.13 

105 

238700187193 

MfcJllB) 

3W0B 

+1.4 

3440.14 333838 2241.73 

195 

3487J9B 2209.18 

AbMpmB 

277907 

+07 

275041 2654.63 1883.78 

1.57 

301309 182905 

Hotel America flf| 

182206 

+O0 

1821.92 1605.78 1H107 

072 

203905 1459.45 

Ccpyngts. The financial Times UmSM ’HU. 




In brudiea mom nunttar rt c o mpa— a . Bone US OMm. Base VUkies: 100000 91/1242. 
Gate Mbm iixta; see 2£ zm . eayTi ctunoe: +4.7 petaK VssreoK 17U t PmrU. 
i umiaalaUa lor Baa odiUon. 


FT/LES ECHOS 

The FT can help you reach additional 
business readers in France. Our link with the 
French business newspaper, Les Echos, gives 
you a unique recruitment advertising 
opportunity to capitaiise on the FTs European 
readership and to further target the French 
business world.For information on rates and 
further details please telephone: 

Philip Wrigley on +44 71 873 3351 


I 







34 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 



LONDON SHARE SERVICE 


rWJSTS- 


OH 

YU 


CtfEra 

Grt 

RE 

6592 

12 

♦ 

M75 

5J> 

214 

WHO 

SB 

110 

s 

53 

75 

12 

1114 

H5B4 

OJ 

» 

1994 

54 

19 

3,948 

15 

9.1 

un 

42 

60 

NS 

11 

105 

166 

1165 

105 

-» 

85» 

38 

106 

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X 


CURRENCIES AND MONEY 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 lW 

MOMEY MARKET FUNDS 


MARKETS REPORT 


POUND SPOT FORWARD AGAINST THE FOUND 


<M CM Wft 


Markets wait for news 


"Wait and see" was the 
operative theme of the foreign 
e xchang e markets yesterday as 
a dearth of economic data or 
news left the dollar, D-Mark 
and pound treading water, 
writes Motoko Rich. 

The dollar was relatively 
undisturbed as continuing 
trade talks between the US and 
Japan circumscribed any sig- 
nificant movement. 

In London, the dollar closed 
against the D-Mark at 
DM1.548S from DM1.5449. 
Against the yen, it finished 
slightly higher at 98.0750 from 
97.7000. 

Anticipation of German 
inflation figures, due this 
week, prevented the D-Mark 
from leaping out of its trading 
ranges against most European 
currencies, although it was 
slightly firmer than it has been 
recently. It pushed up against 
the lira as the markets frowned 
at the squabble over pension 
reform between Prime Minister 
Silvio Berlusconi’s government 
and Italy's trade unions. 
A gains t the lira, the D-Mark 
finis hed in London at L1011 
from L1Q07. 

Sterling turned in a steady 
performance, consolidating 
recent gains. Against the dol- 
lar, the pound finish ed in Lon- 
don at $1.5762 from .$1.5781. 
Against the D-Mark, if closed 
at DM2.4411 from DM2.43S. 

■ As President Bill Clinton 
and Japanese foreign minister 
Mr Yohei Kano opened talks 
on the status of trade negotia- 
tions between the two coun- 
tries and Mr Clinton renewed 
the threat of sanctions, the 
markets left the dollar lan- 
guishingly in narrow trading 
ranges. 

Mr Steve Hannah, head of 
research at IBJ International 
said he believed the markets 
were being unrealistic about 
the “scope for meaningful com- 
promise" between the two 
nations. “I feel the markets are 
making too much of these 
talks," he said. "They are 
almost bound to be disap- 
pointed." 

Remarks made by Mr Alan 
Greenspan, Federal Reserve 
Board chairman, before the US 
Senate Banking Committee 
about the condition of the 
country's banking and thrift 
industry were shrugged off by 


Aoamst tho D-Mark (Lire par OM) 



1.020 


Jul 1394 Sep 

Source; FT GbsphKe 

■ Pound in Maw Vert _ 

Sap 22 —Latest — -Vm. de*- 
£ Spot 1.5752 15785 

1 ratal 15748 15778 

3 mffl 15731 15759 

1 yr 15578 15588 

investors. 

The markets are clearly 
waiting for the upcoming meet- 
ing of the Federal Open Mar- 
kets Committee, the policy- 
making arm of the Fed, on Sep- 
tember 27. Analysts are now 
largely expecting officials to 
raise interest rates at that 
meeting or shortly after it "If 
there is a rate hike that will 
keep a check on the dollar 
because rate rises tend to pull 
the bond markets down and 
the dollar has been linked to 
bonds lately," said Mr Avinash 
Persaud, currency strategist at 
JP Morgan. 

B While the dollar's perfor- 
mance is generally thought to 
track the US bond markets, 
last week’s collapse in US 
Treasuries on the back of fears 
of inffrpipnt inflatio n did not 
prompt an equivalent drop in 
the dollar a gains t the D-Mark. 

Mr Hannah said he believed 
this was because the markets 
are also imnartain about infla- 
tion prospects in Germany, and 
were therefore reluctant to 
replace the dollar with 
D-Marks. 

The markets were unfazed 
by comments from Mr Hans 
Tietmeyer, Bundesbank presi- 
dent, in which he said inflation 
was expected to ease in the 
next few months, but was not 
yet at a satisfactory level Mr 
Hannah said that if inflation 
figures rise above the 3J3 per 
cent level, other European cur- 
rencies will make modest 


advances against the D-Mark. 

Against the French franc, 
the D-Mark closed in London 
at FFr3.419 from FFr3.418. 
Against the Swiss franc, it fin- 
ished at 0.830 from 0.838. 

The D-Mark was also helped 
against the lira by unresolved 
problems with Italy’s pension 
reform programme. Two Ital- 
ian trade unions have rejected 
Mr Berlusconi's draft plan, 
fuelling market uncertainty 
about the passage of a budget 

Analysts downplayed the 
scale of the lira's movement 
however. Ms Phyllis Reed, 
European bond strategist at 
BZW. said: “The pension 
reform is a key issue in the 
1995 budget and the unions' 
reaction to it has caused some 
sensitivity in the market But 
before we see any significant 
movement we need to see the 
budget get through the parlia- 
ment and see if it represents a 
tangible tightening of fiscal 
policy." 

■ The South African financial 
rand, which is freely traded on 
the markets, was jolted when 
the UK credit rating agency 
IBCA announced it had given 
the country a “BB” rating on 
its senior, unsecured, 
long-term foreign currency 
debt. Against the dollar, the 
financial rand fell as low as 
R4.44 from an opening of 1&37. 

The rating, which is equiva- 
lent to that given to countries 
like Argentina. Mexico and 
Hungary disappointed the gov- 
ernment as it had hoped for a 
higher grade to attract foreign 
investors. South African rat- 
ings from larger firms like 
Mooody’s and Standard and 
Poor's are expected shortly. 

■ hi the UK money markets, 
the Hank of England forecast a 
shortage of £l.lbn and pro- 
vided liquidity of £469m. It pro- 
vided late assistance of £520m. 

The December short sterling 
contract traded 43,000 lots to 
close at 93.18 from 93.07, dis- 
counting a three-month inter- 
est rate of 6.82. 

■ OTHER CgWjWg 

Set) 22 £ S 

Hingay 10729 - 169563 107.713 - 107510 
tan 275650 - 27350 174850 - 175050 
KWBtf 04670 - 04093 029GB - 02977 

MM 38267.0 - 363304 230155 ■ 230455 
RusM 378750 - 379255 248100 - 240650 
UAE 57839 - 57955 35715 - 35735 


Sep 22 


Oosfrn 

ChBig* 

Britt** 

Day's Md 

One month ' 

Three maria 

One war 

Bank of 


mid-potm 

an day 

spread 

fcgh 

low 

Rate 

%PA 

Rata 1 

KPA 

Rate 

KPA Big. Max 

Europe 














Austria 

(Sch) 

17.1801 

+0023 

733 - 878 

17.1973 17.1431 

17.1757 

03 

17.1638 

04 

- 

- 

1155 

Bejgkm 

<&*) 

5023 19 

+00167 

892 - 746 

502750 500933 

502469 

-04 

501819 

03 

4950OT 

06 

116.8 

Denmark 

CDKr) 

9^065 

+00127 018-092 

9.6099 

95S64 

95102 

-08 

95296 

-15 

96721 

-07 

1104 

Finland 

P=M) 

7.7517 

+00074 

421 - 813 

7.7615 

7.7410 

- 

- 

- 

- 

« 

. 

855 

France 

(FFr) 

63460 

+00126 

418 • 502 

63547 

8.3223 

03456 

OI 

03472 

-OI 

03013 

OS 

IIOI 

Germany 

(DM) 

2.4411 

+00031 

401 - 420 

2.4448 

2^4338 

2-4401 

OS 

2.4374 

06 

2.4079 

1 A 

1255 

Greece 

?» 

371.683 

♦0381 

528 - 849 

372342 370587 

- 

- 

- 

- 

- 

- 

Wi 

Ireland 

ra 

1.0119 

+0X023 

1 12- 126 

10137 

1.0078 

15119 

01 

1513 

-04 

15175 

-08 

im.i 

Italy 

« 

2469^1 

+1*77 

857 - 045 

247075 2*57.47 

2*75.11 

-2.7 

2487-38 

-23 

2S4158 

-25 

75.1 

Luranteuu 

(LFr) 

502319 

+00167 692 - 746 

502750 500330 

502469 

-04 

SQ.1B19 

03 

409069 

08 

1165 

Netherlands 

W 

2.7368 

+0.0013 

3SS - 376 

2.73S8 

2.7280 

2.7358 

04 

2.7326 

08 

O7D01 

13 

1205 

Norway 

(NKI) 

1 [LOT 73 

+00149 

939 - 018 

10.7T5SS 10-6778 

106977 

oo 

+WIWQQ 

-OI 

107023 

05 

855 

Portugal 

(Es) 

249.032 

*1407 

89 8 - 168 

249.171 247.747 

250762 

-03 

253-342 

-73 



- 

Spain 

(PtaJ 

202^44 

+0.523 

159 - 32S 

203 £53 201.757 

202549 

-2.4 

203379 

-ZZ 

208314 

-2.0 

865 

Sweden 

(SKO 

11.7568 

+00148 

462 - 653 

118131 11.7313 

11.7156 

-15 

115233 

-23 

125368 

-2.4 

75.4 

Switzerland 

(SFr) 

2.0278 

+00088 

285 • 290 

00301 

2-0220 

25252 

15 

25185 

15 

1.984 

23 

12Z7 

UK 

(E) 

- 

• 

_ 

- 

- 

- 

. 

_ 


. 

. 

795 

Ecu 


1.2791 

+00024 

7BS-79B 

1.2738 

127BS 

1J2795 

-03 

15799 

-02 

13608 

1.4 

_ 

SDRt 

- 

0331348 


- 

- 

- 

- 

- 

- 




_ 

Amertcw 














Argentsia 

(Peso) 

15755 

-00025 

750 • 7S9 

15784 

1.5745 

- 

- 

- 

. 

- 

. 

_ 

Brazfl 

(W) 

13478 

-00033 

457 - 495 

15498 

15454 

- 

. 

. 


• 

- 

- 

Canada 

(CS 

2.1172 

-00403 

163- 180 

Z1200 

2.1143 

Z11B7 

03 

2.116 

02 

2.1148 

0.1 

885 

Mexico (Nrm Peso) 

53597 

-04)082 

546 - 648 

55668 

5-3542 

- 

- 

. 



. 


USA 

A 

13762 

-00019 

7S8 - 765 

15757 

15747 

15757 

O* 

1-574 

05 

1.5584 

1.1 

625 


Money Market 
Trust Funds 




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2.1404 

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3S3 - 414 

2.1491 2.1188 

2.1403 

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2.1417 

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Hang Kong 

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12.1804 

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12.1785 

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Now Zealand (DCS) 25287 -00009 250 - 284 2.6324 25245 25306 -15 25384 -15 25606 -15 

Phfflpplnea peso) 415317 -00514 2S4 - 349 41 .9363 <1.1275 - - - 

Saudi Arabia (SR) 55115 -00074 099 - 131 65209 SS064 - - - 

Singapore (SS) 25273 -05026 264 - 232 03303 25263 - - - 

S Africa (Com) (RJ 55705 -05203 681 - 729 55902 55680 - - - 

S Africa (Hjv) (R) 65824 +05545 650 - 997 65997 65981 - - - 

South Korea (Won) 1263.45 +05 285 - 404 1254.61 126158 - - - 

Taiwan (T5) 415754 -01293 623 - 885 41.4172 415564 - - - 

ThaSand (Bt) 395092 -05408 926 - 258 395570 395780 - - - 

TSOfl rates Mr Sap 21. BMtoSm veeps to the Pouto Spot tafeto Plow «y ihe tost 2vM doctoral ptacrn. towratt retre we net dbecsy tri «o tM 

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DOLLAR SPOT FORWARD AGAINST THE DOLLAR 



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Sep 22 

Closing 

mid-point 

Ewrape 



Austria 

(Sch) 

109000 

Belgian 

IBFd 

315700 

Danmark 

(DKr) 

83943 

Finland 

(FM) 

*9181 

France 

(FFr) 

53952 

Germany 

W 

15488 

Greece 

(Or) 

235.820 

Mend 

(E) 

15577 

Italy 

(U 

156650 

Luxembourg 

(U+) 

315700 

Netherlands 

(H) 

1.7363 

Norway 

(NKi) 

B.7873 

Portugal 

(Es) 

150500 

Spain 

(Pta) 

128315 

Sweden 

(SKr) 

7.4592 

Switzerland 

(SFr) 

13965 

UK 

B 

15762 

Ecu 


13323 

SORT 

- 

1.46811 

Americas 



Argartxa 

P«o) 

05996 

Brad 

mo 

05550 

Canada 

(CS) 

15433 

Mexico (New Pe so) 

3.4005 

USA 

ttl 

- 

PadOc/Mddfe EaeUAMce 

AustraSa 

(AS) 

15580 

Hong Kong 

(HKS) 

7.7280 

fndta 

(R3) 

31J700 

Japan 

CO 

985750 

Malaysia 

(MS) 

255 89 

New Zeeland 

(NZS) 

1.6885 

PMfcpmes 

(Peso) 

285500 

Saudi Arabia 

(SR) 

3.7506 

Singapore 

<SS) 

15766 

S Africa (Camj 

(RJ 

35343 

S Africa (Hn.) 

(R) 

4.4300 

South Korea 

(Won) 

801.600 

Taiwan 

OS) 

26.1875 

Thailand 

(SO 

2*9400 


+0028 975 
+005 500 
+00156 933 
+00107 131 
+00145 937 
+00039 *85 ■ 
+052 770 
-00055 569 
+115 655 
+006 500 
+0003 380 
+00178 883 
+056 950 
+049 290 
+0.0166 554 
+0.0071 660 
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900 315800: 
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340 129.150 

629 7.4890 

870 12885 

765 15787 

325 12341 


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n.78S0 31.8772 -03 3159 -02 »rPS -05 105.7 

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52820 52976 -05 52019 -05 527S2 04 1062 

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8880 2B210I 
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BJO Ml 
100 Mil 


onaiMno 
ssnl n 
i ml an 


. JP. I MpM o orm na i t 


-2.7 

uoted to tee imM 
1 1090-100 


□ytertita Bask 
SO 3 MaoMl tteco. G 
00000-08.880 — 
cstooMWjni- 


Ftmtblo Soiritan Act 

artltec* Ban 01 Bt EMI— 7*8 

r«M9B I X7D 37B1 ATS 

EMU — MO MS 3 as 
axiom 1 *50 MS I *66 > 


Oritad OonMaaB Treat lid 

ra Bm 91 Harts. BMtkrr an-wsos 

C l B teUteaBireMi W iM 

0500-.. __lM5 33* I Sjsl 00 


x ?S5SSSS2?SKI 

SI eiojBO-floamid** I ore mb I 

* zioaeo-iaorerew- 7So sta 7 m]b- 

“ tajn-iter I U 5+4 I -In 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 


Sep 22 


BFr 

DKr 

FFr 

DM 

IE 

L 

R 

NKr 

Es 

Pta 

SKr 

SFr 

£ 

CS 

$ 

r 

Ecu 

Bet glum 

(BFr) 

100 

19.12 

16.82 

4560 

2015 

4915 

5447 

2138 

485.7 

4025 

2359 

4.035 

1591 

*315 

2138 

3075 

25*6 

Demtark 

(DKr) 

5250 

10 

8589 

2541 

1.054 

2571 

2846 

11.13 

2593 

2105 

1233 

2110 

1541 

2204 

1541 

180-0 

1532 

France 

P=Fi) 

6018 

1151 

ID 

IBM 

1313 

2958 

3378 

1281 

2903 

2425 

1*08 

2429 

1.188 

2.537 

1588 

185.1 

1532 

Germany 

(DM) 

2058 

3535 

3419 

1 

0-415 

1011 

1.121 

4578 

1020 

6253 

4514 

0530 

0410 

0567 

0.846 

6339 

0624 

Ireland 

(K3 

48.83 

9481 

8347 

2412 

1 

2440 

2704 

1056 

246.0 

199.8 

11.81 

2009 

0968 

2092 

1.557 

1527 

1364 

Italy 

W 

2034 

0589 

0538 

0599 

0041 

100. 

0.111 

0433 

1009 

0190 

0476 

0082 

0541 

0088 

0564 

6358 

0052 

Netherlands 

0=0 

1856 

3511 

3550 

0592 

0570 

9024 

1 

3.907 

9151 

7350 

4385 

0741 

0566 

0774 

0578 

5647 

0467 

Nonray 

(NIO) 

46.99 

8585 

7507 

J9M 

0547 

2310 

2.559 

10 

2329 

189.1 

1059 

1596 

0935 

1580 

1.474 

1445 

1.108 

Portugal 

(Es» 

20.17 

3-857 

3552 

0580 

0408 

9915 

1.099 

*293 

100 

8130 

4.719 

0814 

0.402 

0860 

0633 

8205 

0514 

Spain 

(Pta) 

2*B4 

*750 

*128 

1207 

0500 

1221 

1553 

6387 

123.1 

100. 

5511 

1.002 

0.495 

15*7 

0779 

7841 

0633 

Sweden 

(SKr) 

4275 

8.1T4 

7.103 

2077 

0.861 

2101 

2329 

9.096 

2115 

1721 

10 

1.725 

0351 

1502 

1341 

1315 

1589 

Switzerland 

(SFr) 

2*78 

*739 

*117 

1304 

0499 

1218 

1550 

5374 

1225 

99.75 

6.787 

1 

0493 

1544 

0778 

7832 

0631 

UK 

(E) 

5033 

9505 

6548 

2441 

1.012 

2469 

2736 

1089 

2495 

2023 

11-75 

2027 

1 

2117 

1578 

15*5 

1379 

Canada 

fCS) 

23.73 

4537 

3542 

1.153 

0478 

1168 

1392 

5.050 

1178 

9581 

5550 

0857 

0472 

1 

0744 

7258 

0604 

US 

IS) 

3157 

6.095 

5396 

1548 

0642 

1567 

1.736 

0783 

1500 

1203 

7458 

1388 

0536 

1543 

1 

88.03 

0812 

Japan 

(V) 

3251 

8317 

5402 

1580 

0655 

1598 

1.771 

8519 

1813 

130.0 

7.605 

1312 

0647 

1370 

1520 

100 

0.828 

Ecu 


3937 

7510 

8525 

1509 

0791 

1930 

2139 

0358 

19*7 

1601 

8-187 

1585 

0.782 

1555 

1332 

1205 

1 


EMS EUROPEAN CURRENCY UNIT RATES 

Sop 22 Ecu con. Rata Change 96 +/- from M spread Dhr. 


Iba Co-oparefim Bank 
ntenoOLSaanreisa 

TESS*— — 1 5.73 -I 



rates 

against Ecu 

an day 

cen. rma 

v rmaka 

■■-»* ■ *»- 

neznorranas 

2T9672 

+ 215023 

-000185 

-212 

530 

Belgium 

403123 

394746 

-0033 

-153 

450 

Ireland 

0808828 

0795206 

+0000723 

ri.ee 

*71 

Germany 

154964 

151861 

-050171 

-158 

*64 

France 

653883 

855845 

-000221 

030 

287 

Porbigat 

192854 

185540 

♦0399 

139 

156 

Denmark 

743879 

754128 

-000783 

141 

155 

Spain 

154350 

158540 

+0.153 

258 

O00 

NON ERM MEWBERS 





Greece 

264513 

282283 

+0009 

1048 

-850 

itaty 

1793.18 

1938.79 

♦1213 

8.18 

-451 

UK 

0788749 

0785573 

-0500091 

-015 

3.13 



*17 I U* 
Ul *87 
Ml *58 
Z48 I 394 

233 | AS3l 
235 3X0 

150 I 201 1 


*37 UOI **2 

231 2A8 I 234 

308 230 208 

IB 107 1 28*1 

Ptef "te n d a mn leBHS HOT 


x HBorsaroder MnAGfl ud 

ROOMBteBLUmeeSsOS ,071 -SC 6000 

Spree Act — [ *500 1S8 4 57| u» 

tWJOWteOteM .1*730 Mil *501 M*i 

WBBlira Trail Wgh frtftmt Owguo tac 
ikmorecaarerimAPUTSE epwjwmi 

1 12000* j 123 394 53flj 08 ^ 

®MOO-C1*W9. Mn 373 508 Qtr ■ 

EU*»-C*998 1*75 388 I *8*1 08 



, and Swedish Kronor par 10; 8el0bn Franc. Yen. Es cudo. Urn i 


■ D-MARK FUTURES (U4M) DM 125.000 per DM 


1QMM) Yan 125 par Yon 100 



Open 

Latest 

Change 

High 

Low 

Est val 

Open tot 


Open 

Latest 

Change 

High 

U»» 

Eat vol 

Open toL 

Dec 

06462 

05461 

-OOOlO 

0.6468 

OB451 

25,191 

71.783 

Dec 

15300 

1.0268 

-0.0042 

15304 

15253 

18563 

46,273 

Mar 

- 

06470 

- 

- 

05467 

53 

4.100 

Mar 

15345 

1.0348 

-00042 

15358 

1.0345 

74 

2373 

JOT 

- 

06489 

• 

■ 

- 

3 

476 

Jun 

- 

15489 

- 

- 

- 

4 

450 


Ecuoreen retea sac by tee European Ctnrtadon. Cu wa n d w rao te d a tee nrtt i B rabrtra aoregte. 
F*nanteg» chengaa — hr Ecu; ■ poraone ebenga iten o m a «— efc aiency. n as g raeju B a re tee 
ratio barvaean tre M — r* 1 tee pewentegi aitet rao e bi te 4 d i tee ncere wret red Ecu cum ite»» 
lor go— re. red tee mtednwi yram nted praoetregk d « d Bion ar tee eunregra nretot rate bam «» 
Bweareriiate. 

C17/WBZ) Sterfog and Mai Un auapended from BB* Aduoanat radriteted ter Ba Rnaic W IlBie* 
■ PMLADBLPtHA SC C/S omOMS £31250 (cants par pomB 


■ SWISS FBAHC Rmms (IMM) SFr 125200 per SFr 


I Wm—B 0322 ES2500 per g 


tec 

07810 

0.7794 

-00023 

07816 

07779 

16570 

35551 

Dec 

15754 

15752 -00018 

1.5780 15726 

7AT7 

31567 

Mar 

07810 

07825 

-05031 

07826 

0.7810 

69 

648 

Mar 

_ 

1.5730 

15710 

1 

288 

Jun 

- 

0.TB45 

- 

- 

0.7840 

40 

60 

Jm 

- 

15860 

15850 

1 

a 


State 

Price 

Oct 

- CALLS - 
Nov 

Dec 

Oct 

— POTS — 
Nov 

Dec 

1500 

753 

756 

7.70 

- 

007 

058 

1525 

5.18 

536 

5.71 

003 

032 

051 

1550 

255 

3.41 

335 

031 

058 

152 

1575 

130 

134 

253 

1.10 

152 

252 

1500 

040 

096 

156 

255 

337 

337 

1525 

007 

039 

057 

450 

5.19 

5.78 


[utures Ltd 


EQUITY AND INDEX OPTIONS 

COMPETITIVELY PRICED EXECUTION SERVICE 

■ For further information please contact ■ 
Philip O'Neill || 

Tel: 071 329 3333 Fax: 071 329 3919 


' WORU^'WITEREST: RATESr- r 


MONEY RATES 


■ THREE MOUTH I 


: FUTURES CUFFQ* DM 1m potnta o 1 10086 


September 22 

Over 

One 

Three 

3x 

One 


right 

month 

mths 

mths 

yetr 

Belgium 

4% 

5* 

Si 

Stt 

e« 

week ago 

4* 

5i 

5Kr 

SB 

St, 

Franco 

SK 

Si 

544 

S3 

6)4 

week ego 

Si 

Si 

5h 

59 

64 

Germany 

4.72 

5.00 

5.05 

5.23 

6.63 

week ago 

*33 

S.00 

5.03 

5.18 

5.53 

Ireland 

4; 

5 V. 

64 

66 

7H 

week ogo 


Ste 

64 

66 

7H 

Italy 

Si 

8V« 

84 

B'4 

106 

week ago 


a% 

ay 

9to 

106 

Natherianda 

*84 

5.04 

5.13 

5.38 

S.7B 

week ago 

4.84 

5.04 

5.07 

534 

552 

SurtteMtend 

a:> 

4 

41* 

46 

«H 

week ago 

34 

4 

44 

46 

4te 

US 

4* 

4fi 

5 

SM 

SB 

week ago 

« 

4B 

5 

SH 

SB 

Japan 

2U 

2H 

2V 

2fi 

2* 

week ego 

2H 

24* 

24t 

24 

28 

■ S LIBOR FT London 





tntertoanfc Fixing 

- 

Si 

5M 

53 

64 

week ago 

- 

Si 

54 

64 

SB 

US DoOar CDs 

- 

*79 

632 

5.37 

5l96 

week ago 

- 

4.79 

*82 

5.12 

5.69 

SOR Linked Os 

- 

3H 

34 

3N 

4 

week ago 

- 

3te 

36 

3* 

4 


Lomb. 

Ka. 

Rapa 


Open 

Sett price 

Change 

wgh 

Low 

EeL vri 

Open Int 

Inter. 

rate 

rate 

Dec 

9*67 

8*70 

+054 

9*71 

8*68 

33410 

188854 

7.40 

450 


Mar 

9*23 

9428 

+aoe 

9*29 

9*23 

24196 

179814 

7.40 

*50 


Jun 

93.78 

8385 

+0.08 

8358 

93.78 

16686 

104473 

550 


6.75 

Sep 

83.44 

9350 

+058 

9353 

93/44 

4772 

06295 

550 

- 

675 

N THRU MONTH KUROURA HfrJtATR FUTURES (UFFC) LI 000m prints of 100% 

GLOO 

8.00 

450 

*50 

*85 

*85 


Open 

Sett price 

Change 

High 

Lew 

Est vri 

Open Int 



65S 

Dec 

9038 

9029 

-an 

B0A1 

9025 

8842 

31897 

_ 

_ 

025 

Mar 

8080 

8951 

-an 

sa si 

89.46 

3014 

13618 

_ 

750 

855 

Jot 

88.13 

89.04 

-aio 

89.13 

8858 

966 

15643 

_ 

7.50 

8.45 

Sep 

8883 

88.71 

-a 12 

8853 

88.69 

812 

14633 

- 

555 


N THREE MONTH EURO SMBS fWUM FUTURES (LIFT© SRIm potots oMOON 

8.625 

555 

3.50 

— 


Open 

Sen price 

Chtoiga 

High 

Low 

EaL vri 

Open bit 

8525 

350 

_ 

Dec 

96.43 

9355 

♦aoo 

S55S 

9048 

5282 

23361 


4.00 


Mar 

95.12 

95.15 

+0.07 

95.15 

95.12 

630 

10932 

_ 

*oo 


Jot 

9*76 

9*80 

+058 

94.80 

9*78 

400 

8172 

_ 

1.75 

_ 

Sep 

94.46 

9450 

+0.08 

9450 

9*46 

43 

724 

- 

1.75 

- 

■ THREE MONTH KU FUTURES (UFFE) Eculm prints Of 100% 







Open 

Sett price 

Change 

Hgh 

Low 

Est vri 

Open bit 

- 

~ 

- 

Dec 

3X42 

93.47 

+057 

83.48 

93*2 

963 

7373 

“ 

- 

“ 

Mar 

pans 

9258 

+0.04 

9258 

9253 

192 

5432 

- 

- 

- 

An 

9259 

92.42 

+004 

92.42 

9237 

48 

2306 

“ 

- 

- 

Sep 

9155 

9200 

+ao5 

9201 

9155 

194 

1078 


ECU Ikiked O* mid nteK 1 n+K 3"fa a rrahx sv i 
ruses are oMcted rates lor SlOm quoted to die main 
dar The botes are. Bankas hire. Bate of Token. I 
kW Mies an shewn for te* domestic Money Bate* 


8 rnnra: W< 1 yea; «J. 3 UBOT ImerC 
at by tour rearancs tanks at lion eac 
Boretays and P M te nrt Waatnteiater. 

. US S Cfia and SDR Unked Dapoeka I 


* UFFE futeree Bated on QPT 


■ THREE MOWTH —lOPOHAB (EMM) Sim potms Ot 100% 


EURO CURRENCY INTEREST RATES 

Sdp22 Short 7 days One Three 

term notice monft mantha 

Bdgan Franc 4g - 4f| 4[J ■ 4,'i 5, 1 , - 4S W* - S,\ 

Danish Krona 5^-5% 51 - B,i - 5% 6^-6^ 

4*8 ■ 3“g *H - *K S - A\ 5lg - 5 
Qurcn GiAtsr S,‘.-J!2 5^ - 513 5,*. - *B oA-«Jk 

French tone Sfi - 5 l * V. - 5A Va - S,\ SSg - 5^ 

ftjrtuguese Esc. 12*8 ■ 11% 9^-0 ID - 9^ 10^-91, 

Spamh Peseta 7« 2 - 7*, 7ij - 7^ 7% - 7 8 ■ 7^ 

Swrieig 5>i - * 7 a 5^ -5 5»a - 6* 5U - SH 

Saras Franc 3* - 3>j J}j - 3{J 4*3^ 0% - 4 

Can Data 4»» - 41, 4^ - Ah 5i - 4>J 5 Jb ■ 5** 

USDctbr AH- All 4}£-4l l A\- A\ 5,‘ t - 

Italian Lira 9 - 74 8>e - 7^ 8^ - SI, aft-U 

Yen 2*4 ■ 2i J * Ih - 2^8 2T| - 2 1 * 2% - 3<* 

Asan SSmg £ - 12 1% - ll» 2* - 2% 3% - 34 

arac Mrm rxes « eJB far tee 03 Oobr red Yen. odrarx WO days- rx 


® 'SiJ 

7^-71, 

BA-6A 

5V-S>* 

5B-5a 

loti - 10 

Bl 2 -8% 
6h-638 
4^- 4^1 

■II -* 

Sia - Sf, 
-91, 
2 , r . - 2 , 
4-3>j 


On® 

Y«r 

74-7^ 
s^» -5^ 
5H-5H 
6 1 2-6% 
10% - 10^ 
9i'« - an 
7»2 - 7h 
411-414. 
0!i - 6ti 
6-5% 
10A - 10,1 

»t tf2 
4\ - 41| 



Open 

1 meet 

(tenge 

FSgh 

LOW 

EsL vri 

Open toL 

Dec 

9*09 

9*08 

-0.01 

9*09 

9*06 

213502 

535.126 

Mar 

9272 

9272 

- 

9274 

8270 

150583 

399.984 

Jun 

9334 

9234 

-051 

9230 

9233 

99.006 

285.421 


■ |» THEASUHV BE* FUTURES QMM)tlm per 100H 


Doc 

9451 

9*01 

-a02 

9*62 

9451 

4522 

1*444 

Mar 

- 

8454 

-0.06 

9*24 

- 

560 

6598 

Jot 

- 

33.87 

-0.06 

- 

- 

49 

2530 


Previous day's voU Cate *422 Pie* IOWA . Pier, teqrir open hu Cote *8*3*8 Puts 331 JOB 


INTEREST 


LONDON MONEY RATES 

Sep 22 Over- 7 day* One Three Six One 

rigtv notice month roonttn months year 

Utah** Storing 10-43* 5^.5 5^-6* 5S - 5H - 6,i T*a - 7% 

Staring CDs - - 5£-5£S*-S4,fci-8A7^.7V 

Treasury Bfe - - S& - SU S» - Sft 

Bar* SB* - - « - 5^ 58 - 5ft tf* - ^ 

Local authority daps. 4ft - *H 54 - bh 5i - S& 8ft - 5ft 6& - 6, r . 7ft - 7* 

Oscaunt Iteket dope 7*2-43* 5& - 4ft .... 

UK dea l ng bank besa tandng rale 5ft per can frvn Sept e mber 12, 1994 

Up tel 1-3 3-6 6-9 9-12 

WBta ■gri i months 1 northe tn ade 

Cette ot Tex dap. pi 00,00(5 i*J 4 3^ 34» 33, 

Cana at T«c dtp. rede* CIOOOOO <§ 1 4pe. Oaparitemhdread tar cah Vpc. 

Are tender rea el riaeoum 6J 0B *ttec BCOPteradree S8o- E^mri Rnenoo. Iteke 143 day «aQ 81. 
199* 4preed late tor period Sep 20v ISM to Oct 21 1BM,Ectanai B*B OAZptt Rateranee rate lor 
period July 3b 190* to Aug 31. iBB* Bchaona IV 8 V *S7Bpc- Fteence Houee Boon Rn s'spc from 
Sap 1.190* 


■ THREE MOKTH STgRURO FUTURES (jJFFg £500000 potnta ot 100% 


42963 166543 
10126 89663 
7314 56167 
4243 02881 


■ short snsaj»q ovnons [UH=g ES00.000 poens of iook 

Strive CALLS PUTS 

Price Oas Mar Jw Dec Mar J 

9300 040 0.14 0.16 022 a88 1: 

0325 025 OJOB 0.11 032 14» 1. 

8360 013 004 008 045 1.28 2j 

Eat veL HteL Cate 10067 Puts 1074S. Pieterxe oar's open re, Cdte 371722 (AM 17730* 


INVESTO RS -T RAPHtS- CORPORATE TREASURERS 
SATQUOTE™ - Your single service for real time quotes. 
Futures * Options * Stocks ♦Forex* News * Via Satellite 

LONDON +71 329 3377 

LONDON +71 3293377 NEW VORK+2XZ20K4M VRANKTORT +4M9 44B07I 


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TRADING 

ROOM 

PfiTVSTE CliENTS 
WELCOME 


S8 DOVES STREET, LONDON WE£ NtB 
TEL 071 629 USS FAX: 071 495 0022 


PRESS FOR GOLD - 0839 800 411 

£tt?J!2SSXS2SB£i 

*■1 Futures Call ■■■ 




Open 

Sett price 

Change 

High 

Low 

Dec 

8111 

8218 

+0.11 

9350 

9210 

Mar 

9214 

8228 

+0-10 

9228 

9213 

Jot 

91+48 

9158 

+0.14 

9151 

9158 

Sep 

9157 

91.13 

+210 

91.16 

91.05 

Traded an APT. M Open totorera age. 

an tar punejuii day. 



TAX-FREE SPECULATION 
IN FUTURES 


Toatateyire-be Ctedr la hoar year naaodd Boafantecr can Ix4> 
yre. ol Kted Many <rlraUeaUnsaall714KiB7233 rrwtkc 
wax 1C Index He. »n Gwretnorftritto, tendon SlITWOBP 


FullerMoney - the Global Strategy Newsletter 

>_ovcPPg stocso. cus'encic-s 5 ccrrrnod:!.c-5 Vihc-ro Is 

nvr.i: FjUoK.lprov I? by Cc/id ?u!.c-r ter .ntcrncfcr.ci 1* 


. • - 

cl»ovm<.-rc i.i5o or uSS250. chr 
• Jcnc- fcrocr.ctsor, c! Chert Arotycir. He 
7 HD. L K r,:.;- i.sndsn 7 1 -Ji 1 ? J<76!;07 ! 

1 


A8 Open hitaror Dp are hr preteja (toy 

■ EUROMMEt CPIWH8 {UFFg DMIm pofrifa of 10QH 


BASE LENDING RATES 


State 

Price 

Get 

Nov 

CALLS ~ 
Dec 

Mar 

Oct 

Nov 

PUIS 

Dec 

MV | 

Adam&Cxtpany 

% 

27S 

9450 

024 

056 

059 

aie 

054 

008 

0.09 



525 

0475 

008 

an 

0.14 

009 

013 

016 

019 

056 

AS Bank 

— 5J5 

9500 

0.02 

0.03 

0.05 

005 

0.32 

033 

055 

0.77 

•HnyArebachar. 

5.78 


■ THME fOHTH PIBOB FimgffiS (MATff) Paria Intertank glfered rate 


Ebl vot teeri, Cria 18527 Pun 5243. Pmtais (toy's open re Cote iSSwO fra 162079 
■ WIRO SHBSa FRftHC WTIOMS (UFFg SFr 1m pofrita oil 00% 


Dec 

9359 

94.00 

+0.01 

Mar 

93.49 

9249 

-051 

Jot 

9209 

93.08 

- 

Sep 

92.77 

92.74 

-003 

m THREE MONTH EURODOLLAR (UFFE] 
Open Sett price Change 

Dec 

94 07 

9*07 

-053 

Mar 

9270 

9270 

-0.02 

Jun 

93 33 

S233 

-0 02 

Sop 

- 

9204 

5.01 


Open Int 
44,958 

Strike 

Mcs 

Dec 

- CALLS - 
Mar 

Jun 

Dec 

— PUTS - 
Mar 

Jot 

32510 

9950 

0.14 

013 

007 

059 

048 

077 

20,954 

9575 

0.04 

056 

003 

024 

0.66 

058 

19.505 

9600 

052 

053 


0.47 

058 



frg rei ntaL Crib 0 Rato a Pterlaus teqTa open re Cals 1900 fro OW 


M.07 52 2061 

83.70 41 1455 

9353 2 278 

0 52 


BankriBareda 5J5 

Ban BBteo VtoeayB- 5^6 

Banket Cyprus 5.75 

Barit of Irahntf .......... 5.75 

Bankofinda -STS 

BankoTScoltond 575 

S^daysBank 575 

BriBbriUdEflat — 525 
•Briun Sfrfrtey & Co lid 575 
CLBertertekrM- 576 

CBsritNA... *75 

C^tteadriB Bar* 575 

the Cooperates Baric. 575 

CcUBsaCo..- 575 

CredBLytnrab 573 

Cyprus PopL» Bar* -575 


Duncan Laurie 576 

Eater Bate Unried 675 
Ffrndal& Gen Bank - 65 
•Robert Raring 6 Co 575 

Oribank 575 

•Guknae IWni 575 
HstitaDarteASZbririi .575 

• Ha n L i o a Barit STS 

HBrtsbto & Gen bar Bk. 575 

•fri Samuel. 675 

C.Hoare*CO 575 

Hongkong &ShanghaL 525 
Jrinn Hodge Bark 573 
•Leopold >k»ph S Sons 575 

LbyctoBonk 575 

Mo0nfBar*LKl 575 

MriandBank 578 

•MnrtBartdng 6 

NsWt&tntebia 575 

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Wfrt of ji 1 ririoar 676 
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• Members- ot London 
Inve stmen t Banking 
Mmcrijn 

* inacMntonlan 


NEW! from FOREXIA FAX $ £ Dm ¥ 

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Lraxkn EC3X SDU 
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011-972 0970 




•FOREX -METAIS ‘BONDS -SOFTS 

Objective analysis for profcjsionaf investors 

0962 879764 

1 k, ' ND 









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financial, times Friday September 23 1994 




WORLD STOCK MARKETS 


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370 1,7 
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B-sdpr 1*70 +6 1.105 816 1* 

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H-dW 332*0 -3300*028420 2.1 

Mm™ BIB -4 1*88 830 14 
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HWk 330 _ 433 353 2* 

MBS 147-50 „ 169 131 _ 

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BltlOj 507 +0 GE8 451 2* 

KHD 125.40 +JM) 16140 11610 — 
HottW 140*0 +*0 179 10276 Ji! 
Lahmn 967 ... 800 630 1* 

Lfitflii 720 -6 em em 1* 

Lkxto asm _ BBS B30 1* 

UnoH 372 -3 410 329 2* 

U«n 197 -12184015740 _ 

LMW IBS -1 209 151 1.4 

MAH 408 -2*0 *70 378 1.7 
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Mmm 403*0 -4.70 49B40 387 1* 
Mamnv 700 -5 822 700 _ 

UUb 155.50 -240 268 15540 5.1 
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PWA 237 -140 262 710 _ 
PNiomm 505*0 +*0 530 504 34 
090 -40 959 680 04 

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461 +40 5299 309 24 

36540 +3 424 329 3* 

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238 -3 2D7 204 34 

RnM 25740 +240 313 248 24 
Sdima 330 +7 UK50 888 16 

ScNj* 383 -SJHS 438 350 14 

G5S10 -7j+0 7B950 633 2* 

547 -1 580 480 1.1 

Tliysen 205*0 +3*0 32B23840 2* 
VMM 314 -240 380 388 12 
Veto 529 *256940 458 24 

VEW 355 +5 400 317 21 

HIM 340 — 413 340 2* 

Vtao 500 -1*0 528 430 14 

VW 45840 *440 654 418 04 
VWPf 35940 +240 443 338 0* 
W083P 1*03 -2 1*73 780 16 

2WPW 244 -1 27021880 1* 


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+160 57*0 4360 3.1 
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+.10 80 65*5 — 

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— 84*0 71 1.0 

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-40 « 51 8.1 

-1*0135.40 11440 2.7 
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1460 — 1.738 1*29 44 

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+45 7670 5.190 04 — KmSUl 

+5 26001*00 2.4 Kinbo 

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+7 870 642 — — Keen 

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1.160 


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+14 573 425 1.7 
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+36 3*00 2*20 .. 

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♦S 1.0» 006 _. 

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+8 78E 638 ... 

+201630 788 ... 

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+6 936 512 — 

-10 26201*80 ... 

♦ 1 SBO 428 _ 

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— SunBM 715 

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SunMyy 416 

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340 
955 

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2470 

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Z spam (Sap 22 ! Pta.) 



— 9680 5,130 Z.1 
-40 6,700 4.920 4* 

_ 8*36 2.780 5.4 
+13 3.400 2*16 74 
_ 4,475 3*73 4* 
+90 17J00 14*00 56 
_ 6*21 4.400 9J 
-8 1.435 700 206 
-5 3*00 2.410 3.1 
-220 6,110 X400 2* 
+4011*80 9*08 2* 
+25 2.715 1*10 4* 
-10 1678 1610 2* 
-30 3680 2*00 3* 
-20 8,100 3,100 2.7 
-4 1.100 733 5.4 
+18 024 418146 
+10 5.140 3,810 38 
+9 1*10 BOG 74 
+20 7,490 4*00 2* 
+60 7*30 4*00 2* 
+10 6,400 4600 2* 
+80 12300 9J10 1* 
+25 2.1701*00 _ 
-80 4*00 3*03 S.1 
+11 3HS 102 _ 
-17 880 351 

+2 816 BIO ffi.0 
-3 4.430 2*05 34 
+10 2.105 1*96 3.7 

— 1,435 950 1* 
+1 730 333 B.1 

— 2*001*26182 
— 1 J10 1,160 3.1 

+43 3,120 2*80 24 
+10 3*80 2650 1.1 




— DNpTor 

— Datum 1 

— BTokfM 


zgss, 1 ! 

— DcwaMn 570 

— Brora 1.730 

— Beal 1.710 

— ErtdG 1*90 

— Ftnuc 4,5® 

— FuooCn 620 

- _ 2,110 



— SKDa(Sep22/Knmr) 


ssss. 


BID 1* — 


- ITALY (Sep 22 / Ufa) 


B Comm 3.325 
WK*G 2.710 
BRffini 1690 
150 
61*50 
BtaW) 9,435 

cm UBs 

MTSp 1,720 
CnarBr 1*95 
CWln 1.140 
a- in 2.1:0 
DterU 10600 
f+rf+n 1*10 
Hot 6.605 
FMPI 5*25 
Fete 4*as 
FwSoe 11.300 
fiarnwa 1.417 
GraAn 39.600W 
wm 4*65 
mpr 26*50 
«L 5*40 
M 10500 
MB 2.330 
lUcb 9.780 
Won 11,510 
Ita 5.406 
iSw 13.980 
Malta: 13*25 
MOdM 1.380 
oum 2*15 
Prae 4*70 
ASH 2*90 
RMS 25.100 

mm 9.495 

5A3BB 8.450 
S»B 880 

sin 4,540 
SUM 5.000 


-80 5*82 3*80 5.1 
-60 3*05 2*41 — 
-69 2.450 1650 1* 
... 211 re _ 
-4503*5020.400 1* 
+612.4SD 8,110 _ 
-75 3,100 1,564 2* 
-20 2*121*02 — 
-25 2*95 1685 4.1 
-1 2*10 1*72 _ 
-65 2*20 1*50 4* 
+10013674 9*56 — 
-35 2*84 16GB — 
-100 7*30 4*71 1* 
-85 4*20 2,119 2* 
-115 7*30 3*79 3.7 
-455 U9«\ 0.430 5* 
-3 U83 1*30 2.1 
—300 44.72333*33 0.9 
+5 4*30 2*75 
-300 30600 15200 1* 
-150 B.580 3656 1.B 
-380 14*00 9.170 ... 
-50 2*30 2*00 
— 12.1008*00 2 A 
-CTO 15*48 8JJS2 0* 
-135 6.440 4JBTI 2.0 
-210 HUGO 12*00 2* 
-435197001X125 1.5 
-291*49 870 — 
-» 3.140 1*15 — 
-SO 8.100 X610 1.1 
-30 3*85 1*70 ._ 
-80034*S0Kara 1* 
+125 12.160 6688 2.1 
-5010.154 7650 2.4 
-201*88 480 ... 
-120 8*50 4,005 26 
-150 7600 4.145 — 



38145 
57149 
540 1* 
438 1* 

IS 09 
144 09 
85 94 

79 04 

282 1.7 
200 1.1 
92 3* 
92 3* 
110 78*0 7.0 
430 251 1.7 
90 38*0 2* 
311 137 3.1 

178 3.1 
155 3.1 
152 3.1 
17 2.1 
14 1.7 
1(8 1.7 
102 3L0 
99 2* 
175 

127 3* 

143 09*0 2* 
142 030 2* 

7330*0 _ 
*1 10530 87.50 1 J 
-1 233 IS 2.1 

-5 <75 SI 1* 
-6 480 350 1* 

144 85 26 

110 88 XI 

IS 92*0 3* 
IS 75 G.G 
159 1U 5LB 
175 105 59 


— G(Q9B 

— BafiC 

— Gum 

”KSB 

~ 

Hr u rana 450 
HdwflE 807 
HMM BB5 
H*ds8 6650 
QTD 
967 
630 

FKred 1*90 
WHOM 1*10 
MMmI 1*40 
HUM 1600 
HSale 655 
HUran S78 


1 2*30 

♦101*80 1*10 — 

-2 984 801 1* 

-1 888 7B1 _ 

-13 625 410 _ 

+3 588 387 _ 

„ 1*70 1*20 _ 

+20 1.490 1.050 0* 

-10 2*60 1,780 _ 

-401*101,400 _ 

1*20 680 _ _ NGKM 

-1B1620 000 _ _ NGKSp 
+1 910 531 _ _ MWSp 

+18 570 415 _ — NKK 

1670 993 _ __ HOK 

_ 2*20 1*60 ... „ NSK 

+3 527 345 _ NTN 
_ 1*80 805 _ NcMFti 

-20 986 697 1* _ NnVI* 

-101.1S 961 „ 

-20 1.710 1*20 — 686 
-20 1*70 1.230 0* 

-20 4*50 1720 OjS 
_ 705 546 U 
+8 938 489 _ 
+201*101650 _ 
-201*801*90 _ 

-301.180 993 _ 

+S 4*40 3*00 _ 

_ 708 S21 0* 

+S 2.450 1*20 _ _ UTISM 
_ 603 446 _ _ MpCrB* 

—40 2.660 2*00 — _ l4mrn 

-13 738 385 1J) _ &f£kma 

513 275 ... 

-1 585 360 _ 

-4 1*40 719 ~ 

+S1670 900 _ 

-50 2*001*80 _ 

-10 1.1 BO 841 _ 

-6 788 614 _ 

+7 933 785 

+30 1*00 1.110 _ _ NpOl 
_ TOO 4S 09 _ MiPnt 

-TO 1650 938 _ _ Hem* 
+5 630 440 _ Hptori 

-7 734 602 1.1 _ MpSnso 

+1 B40 577 _ _ 


+20 3*40 2.720 _ 

_ 960 711 _ 

— 648 397 — 

-7 082 685 _ 

-17 732 557 — 

—33 702 582 17 

-20 1.840 1*00 09 

-4 963 480 — 

-S 503 388 _ 

+81638 780 a7 

-30 3*10 2*00 — 

_ 1670 1*20 _ — Tehten 
_ 724 £20 — — ToaBaa 
+101*00 906 _ 

_ 550 335 _ 

-1 SB 603 — 

+6 668 +25 .... 

+1 584 394 — 

-6 1*10 709 _ 

+101630 842 _ 

+11 792 487 __ 

— . 774 590 — 

-2 580 407 _ 

-8 484 316 _ 

■4 96 38 - 

— 1*601.140 — 
-101*101.450 _ 

-4 BSO 455 — 

+5 885 672 — 

-B 400 301 — 

-101.420 1.100 as 
+4 880 752 OJ 
-2 499 378 ... 

-6 461 337 — 

+29 930 578 .... 

-2 040 770 0.7 

-8 448 310—78* Tanon 

— 1.400 B46 _ 

-6 1.110 7» — 

-30 26901*00 0* — 

-5 782 60S ... — 

+201610 050 ._ ... 

-40 2*00 1*83 0* ... TsMai 

— MmeaM 558 +1 G2J 496 0* — Tow* 

— Moris 2.620 +40 2.700 2*00 — — Tuto 

MwMen 4690 +120 4*40 3*20 — — IbmCta 

— 1*10 869 — — TdaAuL 

— 1.170 86S — Trrydn 

+301*ai*20 — — Tayom 
-10 630 395 


1610 

4*00 

858 

1*00 

591 

785 

1*20 

1610 

BB2 

668 

740 

8H 

743 

460 

841 

850 

729 


-2 512 391 1* 
-508*50 7*30 — 
+301*101*20 — 
„ 2*60100 _ 
-10 1.110 775 — 
+10 2*201.610 — 
-91.040 840 — 
-10 1660 1,130 — 

— 1*80 1.1S — 
... 836 475 1* 

-10 810 411 — 
+2 385 258 _ 
-14 700 500 — 
— B23 481 _ 

_1.5S0T.no — 

-30 2*20 2.180 — 
_ B29 700 0* 
—2® 6*80 6.490 - 
+18 852 BIB — 
-7 747 425 ... 
-10 26301*30 — 
-4 573 <32 - 
-8 587 404 _ 
-81.100 837 _ 

— 1,880 1690 — 
-1 475 380 ... 
-* 485 sea _ 

+20 1*30 851 H8 
+3 349 2B2 _. 
+101*10 Bf-4 — 

— 734 an 1* 
-4 1,120 816 — 

—20 1.BS 1*80 — 

— 816 B74 — 

-101*201*50 — 
-30 5*50 3.780 ... 
-12 749 610 — 

+10 26101*:;?) 11 

-9 722 570 

+1 B82 S70 0* 

— 1*50 1.070 

—10 1*40 1*90 — 
-15 1,840 656 — 

-6 605 400 — 
-1 828 816 0* 
-4 1.100 70S 0.9 
-4 HI 568 0.7 
-8 655 357 1.7 
-4720602— 

— 993 870 — 

-15 807 633 — 


TUT 2*5 — *0 2.74 1*1 _ 

TolCpH 465 — 4*9 369 4.1 

WUI1S 9*5 -JJ3 998 8.10 45 

WUriq 864 +97 8*0 660 1* 

UMW 7*6 — 9*2 7*0 2* 

WnTTr 253 +*2 2*5 221 4* 

flHta 463 - 5J5 4.15 1* 

WDoflPt 4*4 -*2 4*8 X70 1.7 

«TMh 2*1 - 332 274 4* 


MMSHMG(S9p22/HJC£) 


10*0 


112500 EkoenA 
8023 BTCVI 
1X81 rn CAEs 
148900 CrnpbRa 



AmayPr 

teAelB 9UD 
■ 1200HJ 
3880 
39*0 
70 

CMfl 6.18 
cm> 24*5 
GrtferO lUWad 
DFBRK 10*0 

Gfj&e 4*7 

Buow 38.10 


— Tone is*oo +800 21*00 njao 

— 9 ^ n 


1*00 

— MMNtne 1*30 
588 
845 

340 

— Mtfud 1.130 


402 

38S 

900 

820 

417 

i.trro 

970 

1AOO 

825 

1.110 

a'rwn 


_ Tme* 
— Tttrti 
IkDome 


— MBMnS 

_ MKOsk 

— MBPM 


— MiToa 

— HIM 

— Mttksh 


— TkBcn 

— TVBar. 

— Mm 

— Tksa 

— ThSM 

— Data 

— TkuCrp 
naite 


2*10 

1600 

448 

530 

1620 

553 

1*T0 

1*10 

1.700 

2.m 

xioo 

478 


TateEC 

TetibMa 


— Mete 

— NcMra 

— Wncm 

— MhnMo 




1.168 

1*30 

1*50 

500 

289 

814 
758 
719 
388 
883 
926 
527 

1*90 

1*90 

728 

756 

4S1 

750 

484 

1.000 

931 

5*60 

815 
381 

2*00 

2*60 

1*50 

750 

S3B 

ijao 

778 


. .... TlttyoSa 

+4 297 231 .... — TjnbM 

+0 825 565 _ — TcrjmTH 

-2 791 528 1.1 — TayoTB 

-11 774 493 ._ Tonte 

-8 484 315 — — TsCrWl 

-20 910 645 _ _ Tnaenrl 

-1 1*40 761 0* — UK 

+2 689 500 — — Urn* 


-3630 

— 1.4201,110 — 

-1 536 326 — 

+2 587 415 _ 

+30 1*90 1.12S 07 
+3 592 421 — 

-10 1.720 1.460 ... 

— 2*201*10 — 
^202*00 1 *70 — 

-10 3.640 2*30 — 

—40 3,460 2.740 

+2 570 <70 _ 

-fl 70S 520 — 

+50 2.750 2600 — 

.. . -30 2.140 1,020 a? 

806 -7 790 450 _ 

-6 929 967 — 

16 730 540 — 

-10 1*50 1.480 — 

— 1*801.190 — 

-8 788 575 — 

—4 678 970 

-30 16601*00 — 

+2 754 433 — 

-IS 905 771 _ 

+« 414 285 - 
-30 2*90 1*50 _ 

+5 596 421 1* _. 

+10 2*00 1.430 ....59.4 
+18 764 515 — 

-12 733 524 
-50 3.480 2.680 — 

+30 2*5111.750 — 

+11 527 330 — 

-20 1*60 066 — 

+2 505 330 — 

+15 6B0 432 — 

-3 BM M5 
-4 432 285 — 

-3 41E 272 - 


2*20 

1*10 


573 

1*30 

1*80 

756 

751 

771 

364 

1*50 

525 

2*00 


3,190 

2*50 

441 

1*80 

435 

578 

586 

412 

367 


-2-T5C0 BJS 3^ ft* 
-JO 50 2B*0 26 22* 
-6015.701040 3J — 
-JBO 62 3050 2* — 

-JO 57 37 3* 37* 

— 81 59 2.7 57* 

-JO 14 015 — - 
-*0376015*0 1.5 

— 19.10 15*0 3* IB* 
-*6 ISJt 10 06 — 

xn 8*5 4.12 z* _ 
-JO 45 29*0 14 _. 
88*5 -165 131 80 1* _ 

1465 —.15 21*01160 4*41* 
-1 80 JO 47.75 3* 201 

— 13*0 10 3* 28 

-U2 OflO 5*5 3* 

-.70 60 JO 32.80 4* 

-.15 2466 13 24 21.4 

+.40 16*0 1080 1.7 7.7 

— 64 33.70 2* 14* 

«*0 35J0 2030 13 — 

-30 31.76 17 JO 03 _ 

-30 3065 1040 33 22* 

-.15 17.70 12 3* _ 

- .10 19*0 580 56 _ 

-M 4230 27*0 13 __ 

-1 3165 19.25 4.0 — 

-.10 13.10 7. DO as — 

BS.75 -365 9430 4075 0* — 

3130 -1 30*0 24*0 04 — 

-*0 25 12*0214 243 

-35 12*0 060 0.5 _ 

-*5 4250 2020 3* _ 
-JO » 30 2* B76 

-.75 7741*0 2* 69* 

—65 16*0 11 3* 45.7 

-09 0.15 3.76 36146 
-.40 15.40 OB5 93 37.5 
-.18 045 3*0 83 _ 
-.06 7*0 3*6 7.7 — 
50 1*20* 

9 2*16.7 

TOW 34*0 +.10 S7*0 23 2* 

Wharf 32*0 -.40 41 2530 2* 

WHocX 1760*3 —.36 23*0 14.75 21 _ 

WftnOn 11J0 +*5 18*0 1040 2* — 

Wkanr 11*6M - 15 1740 1070 76 „ 


- MALAVS1A Pep 22 / MYTQ 


Cankopn 

3050ffi CenPecx 
175 Conn 
MH CanirA 
8108 DaeUM 
15 1 


KLUIQD 

- 54.75 

10*M 

736 

HenLrrd 4040 
HNQlG 14.55H1 
HKSMh 11JU 
HKAk 35.10*1 
HK Be 2S3SM 

smand is 

HKRKA 201 Dm 
HKTtl 1535 
HopwH 7.10 
HuldMI 3730 
2270 
1030 



KM BUS 1S.70 
■ttndO- 10*5 
NeWUM 28.75 
UM 36L30M 
EHKPT 58*0 
StawBr 123am 

SOME 4.70 

SfeneD 12 
SChMP 4*0 
SHCCD 4*0 
SwfeoA 5165)0 -130 71 

-60 11*0 


Bemad 


565 
2460 
17*0 
1730 
442 
MiiPup 515 
PBB 436 

SkneO 7.45 

TeWcm 21*0 
Tonga 14*0 


~ 080 332 1.7 
-60 26.76 1073 1.1 
_ 10.10 12*0 05 
-*0 1930 13*0 1.1 
-.10 BJO 3.10 1.6 
-60 B*5 2*9 03 
-.10 B*5 332 1.1 
-66 8-40 5*0 27 
-60 24.10 1080 0.7 
...20*01230 _ 


3746 DOW 
7599 DtnflBA 
27000 Empfea 
19460 few 0 
5000 Emco 
3W30S EuNnr 
21660 FPI 
1961 Rrarkr 
240)570 FKMA 
1330 Fort* 
9210 Fr Nav 
1200 r+teV 
FeAA 
19470 4Saaan 
54000 Gran* 
BBOO GmoM 
10300 r; - Ah . 
669420 GrwcC 
2200 GndMa 
74226 Gran 
2300 atdSTT 

10239 GuR C 
3500 HaSHa 
1007 KankSd 
8200 Hmn 
172040 HumtoG 
992CT HOw 
202363 ktoiM 
3600 Horafrn 
23020 Huaaay 
5BS39 in. En 
34B7D0 Imnaco 
B0034 InvOi 
150606 tnco 
143 
500 


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160 -6 ISO 105 

31*7 Mi *2 31 h 

MU -U CM*< 24k, 
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460 450 450 

20 -u *28*i 19% 
8*2 +U SB). b4 

12 ll dll 
300 S 395 300 

OJj HU 01, 


213638 Sonoma 
1850 SmC 


920 19U 
16U 181, 
pH 13*6 
P( ; 4 11 

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15U +U 51M. 151) 
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10's POfe 10H 

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31U -usn£ 31U 
25U +U HH. 

5U 05U 






17U +U*17%17U 


13U - 

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snl 21U 
537'. 37>* 


MONTREAL {5ep22/CanS) 
4 pm dose 


15 


1 7*2 

‘SSisu 

-usnunu 

+*bS3B1i 2B>* 
+U SS2BU 


5U 


_ 5DKAPaREEep22/S9 


DBS 

FiWv 


-10 2*90 1*50 



cz-a 


+10 1*00 033 


-401*50 1*90 



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1.150 

-201*301.130 1-2 


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VtaSw 

760 

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1*90 

+20 2*301*40 


+0 520 

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-20 1,440 1*60 08 



VmKoo 

1*40 

+10 1 *40 500 


-1 1.140 

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YmTrra 

1*40 

+10 1*50 1.110 



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+10 2*90 1.050 0* 



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1.140 

-10 1*50 1,120 




IOJOM 
10 
245 
360 
5*5 
11 JO 
.... I4JDX1 
OUB O50m 
SAKF 1460 
SPran 18 
STMT 3*4 
samt 3*8 
Tata 4*9 
U09 1070 


_ 12.70 10*0 1* 
-40 10*0 15 OJ 

- 349 2*5 3* 
— *4 3*0 245 34 
+.10 8*5 4*2 5.1 
_ 12*0 ft 1.7 

mIO 18.70 11 1.4 
-*6 7 JO 5.75 09 
+60 14*01040 1* 
+60 17.10 13.10 1* 
+*4 3*B 3.14 O* 
+*6 466 110 3* 
-*2 5*0 3*0 1* 
+.10 116S 046 2* 


482 Sib 

+30 2,130 1*10 _ 
*20 2*00 1630 — 


_ Vatflr 
_ TBsTrB 


816 

758 

820 


+1 


+10 1.110 037 _ Vims 989 

+ 10 002 702 1* _ VknmBk 897 


-6 620 450 _ 
+10 2,190 1 J50 07 
S 950 626 _ 


72S 



1*50 


1*60 1*50 1* 

710 

-P 

794 6S3 __ 


+14 


750 

+23 

772 484 _ 

1.130 

+201*90 1*40 1* 


977 

932 

990 

640 

690 


504 360 1.1 _ 

889 727 Oft 516 
734 _ _ 
. . 780 _ _ 

989 835 _ _ 
745 SZ8 _ „ 

960 _ ... 


NORTH AMERICA 


16075 bwatt 
2000 IvacoA 

0260 Jnrack 

320 Karma 
200 line 
20 LMrth 
199030 uram 
1105 I 

1SRB20 I 

3540 LOHnia 
69950 MadOt 
180841 lOMa 
ZEIOO MOSS 
206650 Meooch 
200426 MacmBI 
204572 MaonaA 
33300 MpUH 
mm taint x 
216309 Uotal 
42538 Mkfta 
32700 MM 
04070 MelsnA 
92443 Mem 

-loon 

25140 
140795 Mewtxb 
54500 Mosaafi 
391038 MnaaF 
173042 mrnim 
5584 NDrcnE 
182500 NfliTel 


20*» 

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15 £15 

43 +1 441, 43 

18 +-U £18 17>) 
5U -U*6U 6U 
11 +4, £11 1DU 
17U -U SI 8 175 

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1BU 

21U 

564. 5U 
14 +U £14 13U 
1BU +U Site 10% 
GU -USCU BU 

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1^ m iiju 

9% -USP) 0% 
8% sac, o’* 
14U -USHV MU 
32 +2 33 30 
20U +urauis% 
4BU -IS S51U«{ 
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— -S 324 23% 
12% -U £13 1T(* 
B\ 50 BV 
405 +5 496 405 


1750 Cntac 
BOO GTTC B 

5500 JOnutu 
15345 utnen 
143552 mBkCx 
300 OtJCorA 
6250 UM 
1000 VfeKm 


*/- Men Low 

21% sn\ 21') 
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30% -S SJ) 194. 
BS SSS BU 
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VTi 54, 
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11 s 

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AFRICA 

SOUTH AHBCA (Sep 22 1 Randl 


AngAm 

AmpeU 


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CNAGol 

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23 



-201*30 
+B 1.120 
+7 “■ 

+1 . ._ 

-4 1,160 

-10 1,180 921 — 

-14 783 442 _ _ 
-8 745 406 _ _ 


TORONTO (Sep 22 /Can 0 
4 pro dose 


AUSTRALIA (Sep 22 /AustS) 


SMTZEBLAN0(Sep22/FnJ 


+2 



51.® mzz 

_ 550 3S7 1* _ 

-3 950 679 — _ 

-1 1*40 620 _ _ 

*- 5 S 6 ^ 5 -^ z z 

*21.120 sir _ 

+2 940 712 — - 

+702*40 1*90 ._ ... 

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+2 BSD 509 _ - NOTH 

—50 2*40 1*60 09 _ MOTFO 
*20 7650 1.653 _ .. MsAo 
-1 520 Z93 _ _ Hofl 
+15 1*30 525 08 _ *cnrw 
+21.070 
..1.140 

_ 3*70 2.790 _ - 


578 

1 . 1 » 

1® 

1,100 

498 

391 

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— Anvoix 

— Amna 


933 
527 
1.140 
563 
799 
1*70 
1,120 
836 
469 
1.110 
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BIB 
2.480 
1.440 
310 
1.553 
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754 

7!6 

-4 525 251 — — COmw 712 

+10 2*10 1.370 .. OuFao 1*30 

♦4 457 292 _ — Ox, 3 730 

-6 565 346 _ __ Ctea 976 

-3 758 £22 ... _ OtamGa 351 

•1 910 770 1* _ OOynp 1*00 

+706.150 5*40 _ - Croon 1.660 

♦6 744 <20 — _ ItaoaC 6=9 

—50 2.0*0 1.730 _ „ OnoPh 4.650 
-5 984 5=8 - _ (tow*® 1*60 


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■ TOKYO- MOST ACTIVE aTOCKMe Hwnsday. SopMTlfaBr 22. 1994 



Stocks 

Closing 

Change 


Stocks 

Closing 

Change 


Traded 

Prices 

on day 


Traded 

Prices 

on day 

Nippon Steel .. 

16.5m 

391 

+3 

Kobe Steel 

4.2m 

333 

+6 

NKK Carp — 

9.4m 

289 

+4 

Sagaml Railway 

3.5m 

491 

-1 

Sumitomo Mt Ind 

BuOm 

346 

+3 

Toshiba 

3An 

751 

-1 

Kawasaki Steel 

7.7m 

43S 


Sumitomo Mt Mng 

3.1m 

955 

+10 

Gen Saldyu 

4.7m 

1.290 

+30 

Oki Electric 

2.7m 

780 

-a 


- MaraeN 740 +08 10.04 7*4 4.4 210 


— NAB 

— Nncna 


3.1918 

10*2 

6*6 


-02 421 115 4.4 _ 
+.14 13*6 9.97 4.8 110 
+.13 7*0 525 1* _ 


Nawscp 0*7m +*a 10*0 e.05 a4 7.7 

— 8 Mad, 4.09 '■ 

— MndPoa 145M _ 

— NBWeF 170 +.02 4.15 305 3* 24* 

— PacOun 4 14 -m s*r 3*7 5)« ._ 

— Pancon 1.7B -M 115 1*0 _ 

— Franco 115 + 143 1*3 _ .... 

— Pbnfn 113 -.02 146 160 48 110 

— PUP* 190 +.10 4.05 149 92 _ 

— Phdnc 6JJ3m +.09 925 880 1* _ 

— PosGH 18£m +.09 4*0 183 2* _ 

873 +81 696 4 60 4.4 _ 

148 -.02 1.74 1.15 81 _. 

5*6 +*6 625 428 04 — 

1 05 «L20 4*2 _ 

178 - 4*2 168 7.1 88 

815m +*7 7.10 6.93 4* _ 
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3 -.11 3*0 186 ~ — 
183 +22 170 180 85 202 


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■ RATIOS 



Opon 

Sea Price Change 

High 

Low 

Est voL Open mL 

Sop 

1918* 

1911* 

+7.0 

1920.0 

1898.0 

22y4S1 

32A32 

Oct 

1925X1 

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Sep 16 

Sep 9 

Sep 2 

Year boo 

Dow Jones fnd Ov. Yield 

Z.B9 

2.71 

2.63 

2.82 




Sep 21 

Sep 14 

Sep 7 

Yaarago 

S 3 p Ind. Onr. yield 


2.41 

2*7 

2.37 

2.51 

5 & P Ind. P/E ratio 


20*4 

2091 

20.96 

27*2 

■ STANDARD AND POORS BOO MDEX FUTURES 5500 ferns ten 


Open Latest 

Change 

ugh 

Low Eat. voL Open int 

Dec 

463.75 465.00 

♦1^5 

465.10 463*0 104.498 205*64 

Mar 

46790 46820 

+1*S 

46820 467*0 

555 6*01 

Jun 

- 471*0 

- 

471.50 

- 

14 2.041 

Open nine figures we (ar paentoua are. 




■ NEW YORK ACTIVE STOCKS 

■ nUDHG ACTIVITY 

YKcnesasY 

Sexto 

CUES 

Qotqb 

• Vokra 



traded 

ptet 

an day 


Sap 21 

Sep 20 Sep 19 


5.566.000 

28* 

+i 

New Tort. St 

351*38 

325201 Z72.797 

Fori Motor 

5*80*00 

271* 

-M 

A see 

17*74 

18*53 16573 

LTV Cam 

1518*00 

IBM) 


<**P*Q 

787^78 277^17 Bt.W 

Wd-UBI 

4.113.700 

23U 

+M 

NYSE 



RJH Ntefea 4*16^00 

61* 

+H 

hsues Traded 

2*76 

1876 

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3.7^900 

S4«4 

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nseB 

631 

488 9S3 

BM 

1437.100 

B9H 

-4* 

Frifi 

1*57 

1*10 1*13 

Heron 

3J04£00 

39H 

+114 

Unctanpd 

688 

595 7D9 

ueak 

3225*00 

34H 

+to 

New Htfs 

IB 

31 67 

Chrysler 

1172*00 

4SH 

-1 

New Loom 

1G2 

130 80 


How do you keep up with 
an expanding Europe? 



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Job Title 

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FINANCIAL TIMES FRIDAY SEPTEMBER 1«4 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 



UO £4 11 BO 
152 2.4 42 

27 321 
0.44 IX 31 1387 


52 AM 
iJW 
)ASA 

31$2S$AM*U. 

1S% 11$AMMP7 
23% 17$MMH 
16% 11%Mpmtl 
31 22$ACEltd 
U% S% ACM EM In 1X911.4 
10% 7%AOIGl0pp 180 11JD 
10% 7% A13I GrtSp 196118 
8% ACM Sit 3a 1X9127 
8% ACM Man 1X8 115 
8ACM Itaagd (L72 19 
B$AanaC* 144 14 16 
5%AanaB ta 7 

22 forth ISO 12 13 
. 5$AOM 136 34 2 
16% uptown 117 

18% 16% tenter 146 16 0 
64 4$% AdMkn 100 10 
31% 16% Adrift 

6% 6«fl*Ml0rp 

20 15 AOnhc 

50% 4B% AaganADfl 
65%44%Adret 

3fil_ 25V Mv 
22% 16$Mnm*t 
4 IVAfleenfaC 

50% 39% MAC 
38% ZBVAMmRI 
28% 19$ Afegnine 
16% 14$ AMeme 
29% 21$ AkTdl 
18% 13% Alula All 
21% 16% Atanrka 
17% i3%«nmru 
25% lS$AfaQd 
22% 17$NMwA 
30% 25% AUM 
27% 19% AfcnAt 
65% 49% AMOS 


MR a 

W % E WOl HW 

148 17 21 21b 13% 72 
115 U 34 IS <5% 14 
166 £3 261501 73%) 

657096 54% . _ 

12 123 3% 3$ 3% 
100 32 34 972 9% 51% K% 

17G 14 1813125101% 30% 31% 

‘ 14% 14% 



14% 

22 22 22 
14% 14% 14% 
25% 25 25 

»% «% 8% 
7% 7% 7V 



27% 27% 27% 
567 10% W 10% 
227 15% 14% 15% 


36 17% 


17% 


22% 14AWU 
24% 17 ABogM Led 

28% 19$ ABaQPz 
22% 13% Alrtl CM X 
28 2D Atergm 
4% % AHon 

27% 17V AftcaM* 

10% 9AhcaQ 
27% 21% AM HD 
40% 33% MSB 
29% 24 ABM Op 

34 21% Akinor 
06% 64% Akaa 
30% 20% AbaCpA 
11% 7% Amfoite 
6% 6% Am Pretax 125 14 25 1 1B 
8% B%Ansdd 101 1.1 132730 
2S% 70 Aacart fad 


52% 44Anrta1sx 
9% 8% As Mi ft 
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37% 2S$ AtnBmd 
25% 18% Am BibM 180 36 14 
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23% 19% An Cap CV 
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11% 7Am Opplnc 
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6% 7% AmMlEa 

27% 21 AbSWt 

22 % 

32% ZBAmNrtr 
43% 36% Amrtdr 


68 60% . . 

100110 12 3858 30% 29% 

119 1? 6 12 5% 5% 5% 

110 16116 43 17% 17% 17% 

1/47 26 12 SB 56% 56% 96% 
176 11 6 3955 45% 044% 45% 
046 1/4 14 1063 33% 33% 33% 
068 42 15 4807 21$ 21 21 

1 25 2% 2% 2% 

098 21 25 1382 47% 46% 46% 

130 16 18 3039 27% d2S% 25% 

46 156 25% 25% 

1.8411.0 12 601116% 16% 18% 

4947 28$ Z7$ Z7$ 

120 1J 23 500 16% 15% 16 

135 10 29 475 17% 17% 17% 
020 1.4 55m 15 14% 14% 

12B 12 18 274 24% 23% 24% 
128 12 IS 178 22% 21% 21% 
144 1.8 226846 28% 27% 27% 
030 1.1 71 3918 26% 26% 25% 
1JH 1.6 43 742 62% 61% 62% 
170 £6 4 284 Z7% Z7% 27% 
110 151131056 19% 19% 19% 
148 13 20 1388 22% 2T% 21% 
1.84 11 101Z7B8 20% 20 20% 

116 15 17 459 20% 20 20% 

144 1.7 161556 27% Z6% 26% 

1-64 11 21 269 20% 20V 20% 
118 TX 29 9% 9% 9% 

ISO 4014 MOO 22% 2% 22% 
067 ID 7 4893 34% 33% 34 

OXB £2 19 721 27$ 26% Z7% 

24 213 6% 9% 8% 

121101 33% 32% 33% 
1O0 1.9131 4285 85% 84% 

38 2738 21% 21% 

195 116 162 7% 7% 

7% 7% 7% 

7% 7 7% 

1S2 20 15 263 22% 22% 22% 

160 IJ 47 1517 48% 46% 45% 
004 17 218 0 8% 8% 

110 14 3515029 26% Z% 26% 
100 50 10 2838 35% 34% 34% 
131 22% 22 22% 

232 7% 7% 7. 



140 1.7 
144 50 
148 10 
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106 40 11 TIB 
102 47 14 4345 



104 11 29 
106 15 0 9 

TOS TO 5714737 

140 70 15 2111 30% 

193 19 131Z12A 31 30% 
t16 42 24 5696 
077115 310 

2J0 19 8 180 
006 30 11 11 
292 11 12 2863 
175300 8 44 
146 05 15 2781 
tO0 130 
008 13 


9 783 

5 405 8 ... 

7 2006 24% 24% 24% 

10 IS 19 10 

Z7 2B$ 26$ 


43% 34% Amanxihc 
16% 11% Austen 
61% 50% Amoco 
9% 8% AwmPtt 
4% 3% Aram he 
34% 29% AbbouBi 
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S 5B% 42% Amtatox 
33% 23% AM* 

29% 24% AngnQca x 
47% Arifcdi 
25% ANRRpaPI 
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a i4%An9xaijrh 
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108 30 5 
124 1.4177 2832017% 15% 
22D 18 15 5855 58% 57% 
110 10 B 44 8% 8% 
0.12 29103 226 4% 

100 45 10 416 31 1 
10 292 

130 17 653835 . .. 

30 820 31% 30% 
194 34 24 67 Z7% 26% 
IOO 30 24 5985 54 53% 

207100 3 25% 925% 

210121 32% 31% 
044 ZO 17 32 17% 17 

108 19 7 433 34 33 


17^ +2% 


4 


29% 22% ApadleOp 128 1.1 381070 25% 
10% 8% ApaklfenF 173 15 389 8% 

23% 14% APH 

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51 43%An»Ciaml 

51% 45$Amn4S> 

6% 4%Ameo 

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67% 43$Atn*W 
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25% 16% Aite Pec F 


38 2Z3b 23% 22% 23% 
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112 15 37 7 23% 23% 23% 

110 04 18 9635 E% 24% 25% 
250 50 22 19B 49% 40% 4B% 
400 18 ZI00 46% 48% 46% 
31086 6% 8 6% 

110 11 2 23 923 23 

1-28 29 33 1427 45% 44% 44% 
15 5038 39% 37% 37% 



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9*4 5% AtttaSOB 
21% 10% AamcEgyx 104 13 
112% 92% AORPl 
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2 75 
178 11 13 450 
040 101021854 
140 IJ 12 78 
100 20 12 1028 
027 10 157 

028112 7 178 
112 14 22 29 
1J2 24 27477 

£80 IJ Z100 
208 18 13 95 
128 4J 7 4 

9 400 


5% 5% 

24% 24% A 
32% 32$ +V 
30 30% -* 
34% 35 4 

18% 18% -* 
2 % 2 % -* 
32% 32% 

54% 84% A 
241 241 241 -2* 
30% 630% 30% A 
6% 8% 8% ‘ 


18% If1B% 16% +$ 
500 5,4174 1838 101% 101% 101% +% 


8% Altnda AOn 134 30 11 1138 


61 g* 5% 5% 
27 16% 18% 18% 


24% 17% Amu 
12% 8$ AnrtVH 
56% 47% AuOatax 
20% 13% Amoco 
19 7%MMx 
45 30% Ann 
62% 48% AmtfY 
14% 10%ApSnCani 
7% 5$AHw 


38% 31% BOEx 
9% 8% BET AOH 
5% 3 Batmen 

17% 16% Briar Fan 
22 % 

37% 21%BaMorBc 


116 17 Z7 489 
110 IO 133 
OLBO 1.1 25 1722 
144 26 12 25 
104 14 4 889 
160 10 20 S20 

200 14 17 2882 . 

9 72 10% 

24 278 7% 


- B - 



208 7.4241 1833 36% 28% 38% 
021 3J2? 13 8% 6% 0% 
0J0 46 7 129 4% 4% 4% 
140 25 122 18% 18% 18% 

140 25 4335GB 18% H' 


140 IO Z1 84 
000 22 26 164 
005 05 15 189 10 _ 
121407 7% 

IO! 70 11 7023 22 

jt 120 10 30 63 20% 

38 30% BncQnax 1J4 40 10 3878 32% 

25% 20% BanoBO V 1.14 4.7 8 344 24% 

11% 9% aamcmti 172 bo 5 25 n 

34% Z7BcrpHBMi 
1% % Bandera 

63% 49% Bandagx 
1 BankAm 



96 84% MBM 

28% 22%etatn 

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33% 2SBMNT 
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84% 63%BMTa 
33% SOBdaya 
30*2 22%BM(C19 
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48% 39%BaraBk 
12% 8% BanM 
53% 34% Bum 
28% 21% Bute 
28% 23V Bay Sites 

22% 19% Ba 7r 1838 
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37% 27% 1 
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104 14 7 74 30% 30% 30% 
33 6 1% 1 T 

170 1 J 10 97 53% 53% 53% 
IOO 35 9 6752 47 48% 46% 


158 80 3 64 tUW 84 

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104 U Z100 48 46 48 

1.10 15 5 2751 31% 30% 31 

125 19 39 47% H4&V 47 

BOO 7.7 24 77% 78% 77% 

160 55 5 5141 67% 0S?* 65% 

108 10105 120 35% 35% 35% 

160 24 21 447 25% 25% 25% 

1.40 17 S3 10 37% 37% 37% 

104 36 10 1311 <5% 45 45 

105 14127 313 12% 11% >2% 

1® 25 14 906 38% 38% 3B% 

1.05 18 42 3952 28 27% 27% 

1.4B SO 14 38 25% 24% 24% 

1.72 80 95 20% 20 2D 

060 17 41112 18% 10% 18V 

203 10 20 47646% 46% 

064 21 21 40 30% 30% 30% 

140 1.4 24 418 29% ZS% 28% 

174 IO 16 787U46V 45% 45% 


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8W86SX/25 MHz 
Removable HDD 
Inter Key Mouse 




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7% 5B*6» 

59% 49 BMW 

19% 14%Balh 
83% 336atiti 
55 43%B*A 
25% 20% Bart 
89 £6% BbmT 4JP 
44 34% Baorf 
36% Z7% Baxter A 

1% iBawMB 

19% 13% Bmp' 


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0J6 19 3 29 6% 6% 6% 

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23% 16%BIMfcx 040 10 21 1208 22V 21% 21% 

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59% 50%MySq 

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n Si 

Stack BIX. E 100. H%t low lari Ctaf 
ABS IfldS * 020 19 25 14% 13% 14% 

ACC CO* x 012163 453 18% 17% 18 *% 
AcdalfnE 2320032 18% 17% 17% -% 

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Roosevelt 044 31669 17 16% 16% -% 
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seated IX 45 6 37 % 38% 37% +% 

S' gate 11 4915 24% 23ft 23% -% 

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Setwta B 038 6 250 3% 2ft 3% 

Setecins 1.12 15 57 X 25% 25% -% 

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SHL Systm 2 1 532 5ft 5% 5,'t *it 

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SnuwUzP 7 134 8 7% 7ft 

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StaraTix: 4 X A 3% 3% -% 

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snemmc 006 63 214 12% 12% 12% +% 

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Software? 1 252 4% 4% 4% +ft 

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SDuttta 068 10 5X9 20% 19% 19% -ft 

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Stories 45 7509 31% 29% 30 

SOB Sir OX 15 2144 37% 36>2 36% -% 

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SURage 068 132057 20%d20% X% -% 
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SUdyUSA 0X 36 682 9% 8% 9% +% 

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SutevanO X 25 13% 13 13% +% 

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Summit Be 084 141G80 22% 22% 22ft -ft 
Summit Te X 570 34 33 33% 

Sun Scon 11 256 4ft 4% 4% +% 
SunUc 1832635 30 s , X% X +1% 

SwrtTra 41 61 40% 40 40% 

Sybase Inc 5815765 5012 48% 50 +1 

Symareec 392394 15 14% 14% -% 

Synffloy 040 18 656 18% 18% 18% -% 

Synereom 9i 213 u4% 4 A *ft 

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Synoptics 132313 15% 14% 15% +% 
SyttnSoft 012 161957 14% 13% 14% +% 
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Swtenwd X 382 8% 7% 8% +% 


- T - 

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Trows Pr 052 X 1487 33% 32% 33 -% 

TBCCp 13 415 10% 9% 10ft -ft 

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Tata Sys 8 856 12% 12 12% 

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TeBabs X 2541 43 s ; 42% 42% •% 

Trixon Cp 001 82 301 15 14% 14% +% 

Trim Tec 67 2154 8% 7% 8% -% 

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TOMB MM 513018 u7% 6 7% +1% 

Tokyo Mar 034 37 285 62%BlX6Z%+2% 
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Trenswld 10 25 11% II 11% -% 

TiWWk* IX 10 567 37% 36% 37% +% 

Tricare 21 156 2% 2% 2% +% 

Trtmue 70^3 13 s : 13% 13% +% 

TruckoBhC 1.1D 11 131 21% 21% 21% 


Tseng Lab 

OX 12 517 6% 6% 6% 

+1(1 

TysfOA 

0081 87 1375 24% 24% 24% 



- u - 


USHtticr 

084 1510477 44% 43% 44 

♦% 

Ihtab 

2102* 5% 5% 5ft 

ft 

UOHesGs 

IX 14 27 17% 16% 17ft 

*& 

USTst 

£00 12 228 53 52 52% 


United St 

040 8 1,30 9% 9% 9% 

*b 

Uritug 

013 X 153 27% 26% 26% 

+% 

IMrin 

IX X 359 47% 47% 47f{ 

♦ft 

US Bancp 

IX 101454 26% 26% 26% 

♦% 

US Energy 

11 101 4 17* 4 


UST fap 

1.12 9 242 12% 12% 12% 

-% 

Utah Med 

15 527 9% 0% 9% 

-% 

UtdTrin 

11 MOO .51 51 51 


UUb 

12 199 4% 4 4% 

-% 


- V - 


IMrautl 

OX 35 61 16 16 16 


VnoffCsl 

I0712S3 28 % 28 28 

♦% 

Vertaw 

X 1233 22% 22% 22% 

♦% 

Yicor 

39 480 35 s ; 24% X 

+% 

wctfpfM 

10 32 16% 16% 16% 

♦% 

vwnogc 

X 937 X 19% 19% 


VLSI Tecfl 

X 8566 12% 11% 11% 

-% 

VriwB 

017 3 31B 18% IS 18% 

-% 


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Warner En 

0.10 X 788 26 s , X X 

+% 

WtemtECJl 

94 565 5}i 5ft SU 

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VtotriMSB 072 7 909 21% 20% 20% -ft 
WattftdSL 084 8 597 2072020% 20% 
WxUandA 002 10 1474 25% 24% 24% -% 

Vtousau PM 1024 14 783 23% 23 23 +% 
W-40 7.40 16 41 43% 42% <3 +% 

Went* 5 290 3% 3 3ft +ft 

Wes One 072 11 2285 30% 29% 29% -% 
WstPub 10 137 13% 12% 12% -% 

WSHStA 1 92 14 13% 14 t% 

WMSflriA 10 135 3% 3% 3ft -ft 
IMntte 096 242009 51 50 s , 50% +% 

WmsSonuma 98 790 *3% 42% 43 s , +1 
WriuhanL OX M 156 17 16% 16% 

WUtogl 040 273108 u22 20% 21% +1 
WPP Group 003 21 85 3% 3% 3% 
Wymgri-GdflDdQ 1 G1 6% 6 6%-% 


- X - Y- Z - 

XUai X 52*0 *8% 47 47% ■% 

Xumafap 21138 3% 3% 3% +% 
Yttcw 094 89 3760 19% 18% 18% -% 
YOdi fed! 1*3 142 *% 4 4ft +ft 
2oraUte> IX 9 699 *0% 39% 39% J 4 


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44 

WORLD STOCK MARKETS 


* FINANCIAL TIMES 


Friday September 23 1994 : 


AMERICA 


Dow left struggling 
by uncertain outlook 


Wall Street 


US stocks limped through the 
morning yesterday with an 
uncertain outlook on monetary 
policy as the sole guide post, 

writes Frank McCarty in New 

York. 

By 1 pm, the Dow Jones 
Industrial Average was 2.36 
better at 3,353.96. while the 
more broadly based Standard 
& Poor's 500 was up 1.41 at 
462.87. 

After two days of heated 
trading, activity on the Big 
Board slowed to a moderate 
pace. Some 175m shares were 
traded by early afternoon. 

In the secondary markets, 
the American SE composite 
was off 0.76 at 454.01 and the 
Nasdaq composite added 0.65 to 
761.36. 

Investors spent the morning 
licking their wounds after the 
battering inflicted on Tuesday 
and Wednesday. The Dow 
industrial index, which had 
plummeted 86 points over the 
two days, crawled within a few 
points of its starting level for 
most of the session. 

The focus was still monetary 
policy, with Investors still try- 
ing to guess whether the Fed- 
eral Reserve would lift interest 
rates next week or wait until 
after the November elections. 

News of a modest decline in 
Initial claims for unemploy- 
ment benefit was not very 
helpful in this regard, nor was 
congressional testimony by Mr 
Alan Greenspan, the Fed chair- 


man. The central banker shed 
no further light on the policy 
outlook. 

Bonds were not much help 
either, thoug h the benchmark 
30-year Issue was managing to 
hold on to a modest gain at 
lpm. Left to their own devices, 
most stocks meandered with- 
out direction. 

Among individual issues, 

NYSE voktme 

Dafly(rmTBon) 

450 


400 


360 


300 


250 


votambi9B5 
260.1 OO.OOC 


i T 


\r 


V 


200 


9 12 13 W 15 16 IS 20 2f 22 
September 189* ' '■ 


NovaCare topped the NYSE's 
most active list, plunging 33 Y* 
to 311 % in heavy volume of 
3.4m shares. JP Morgan down- 
graded the issue as the com- 
pany, a provider of rehabilita- 
tive medical and social 
services, issued a profits warn- 
ing. 

Borden appreciated to 
$1414 as its board considered an 
offer to buy up to 90 per cent of 
the company's shares for 316 to 
$18 each. The plan was pres- 
ented by Mr Paul Kagarian, a 


S Africa sees quieter session 


The lack of fellow through in 
the bullion price after it tested 
the $396 level left gold shares 
quieter with no major selling. 

Industrials regained some 
stability after Wednesday’s fell 
as buying crept back in at the 
new lower levels. 

The overall index shed 28 to 


5,754 and the industrial index 
also lost 28 to 6,340 while the 
gold index dipped 18 to 
2,454- 

Bo th De Beers and Anglos 
shed R1 to R105 and R242 
respectively. Among gold 
stocks, Vaal Reefs shed R5 to 
R483, Oryx added 25 cents to 


R6.75 and Western Areas was 
down R1 at R70. 

Genoar was 10 ggnta lower at 
R14J50 and Iscor lost 6 cents to 
R4.42. 

Among the day’s other mov- 
ers SAB lost Rl to RE&50, Bar- 
lows fell Rl to R2&50 and Pick 
n Fay fell 35 cents to R11.25. 


EMERGING MARKETS: IFC WEEKLY INVESTABLE PRICE INDICES 


Market 


DoBar terms 

No. of September 16 % Change % Change 
stocks 1094 aver week on Dec *93 


Local currency terms 
September 16 % Charge % Change 
1994 onr week on Dec 93 


Latin America 

(209) 

769.79 

+1.7 

+18-3 




Argentina 

(25) 

977.50 

+1.6 

-1.7 

59952056 

+1.6 

-1.7 

Brazil 

(57) 

428J89 

+1.7 

+845 

15755*1,009 

-0.0 

- +1553.4 

Chfe 

(25) 

73727 

+2.4 

+33.6 

152353 

+2.0 

+28.4 

Cotomtaa 1 

tri) 

921.55 

+2J2 

+425 

1551.12 

+35 

+45.7 

Mexico 

m 

991.71 

+1^ 

-15 

1.461.49 

+1.7 

+85 

Pem* 

oil 

157.45 

+3.2 

+30.2 

216.83 

+55 

+385 

Venezuela 3 

(12) 

565.56 

+0.3 

-4.4 

251055 

+05 

+555 

Asia 

(557) 

28720 

+0.6 

-15 




China* 

(18) 

107.56 

-4J 

-27.9 

12057 

-1.0 

-26.6 

South Korea 11 

(156) 

142.43 

+2-5 

+205 

149.76 

+2.4 

+195 

Philippines 

(18) 

304.15 

+0.2 

-10.7 

38059 

-0.1 

-145 

Taiwan. China” 

00) 

161.11 

+0.9 

+195 

15853 

+15 

+185 

India 7 

(76) 

144.27 

+0.7 

+23.9 

15954 

+0.7 

+235 

Indonesia'’ 

(37) 

114.67 

-1 J 

-8.0 

13551 

-1A 

■48 

Malaysia 

(105) 

325.69 

+0J3 

-35 

307.15 

+1.0 

-85 

Pakistan* 

(15) 

403.60 

+3.4 

+40 

56050 

+3.4 

+6.1 

Sri Lanka" 

<5} 

208.18 

+2.0 

+175 


+Z0 

+175 

Thailand 

(55) 

432.87 

-13 

-9.4 

446.02 

+2.7 

-7.7 

Euro/MJd East 

(125) 

115^1 

-3.1 

-325 




Greece 

(25) 


+05 

-15 

355.42 

+05 

-7.6 

Hungary” 

(5) 

178.58 

-5.9 

+7.1 

23257 

-65 

+155 

Jordan 

(13) 

153.43 

-15 

-7.3 

21959 

-15 

-8.1 

Potend" 

(12) 

600.42 

-65 

-26-6 

871.85 

-65 

-215 

Portugal 

(25) 

127.50 

-15 

+12.0 

137.79 

-1.4 

-05 

Turkey" 

m 

107.80 

-55 

-495 

1,711.46 

-5.4 

+17.6 

Zimbabwe” 

(5) 

263.07 

-1.1 

+305 

320.81 

+a4 

+505 

Composite 

(89D 

373.69 

+0.9 

+5-0 





trienM abSMa end-maa k. and mMy ctmngm era penxnc m/ H mom *nc tan 0M p«n < a m fflehy. Boa due Ok TOSSalOO napl Maw noted 
«fdcn mwe PIFtb > l»T; PJOsc 31 I9SES otj»t 3 MBft MOac 3f 1932: ffldM 3 7882; fiWan 4 7897; (TJNor 8 1992: 03ap 28 1900; ftfMr 1 1991; f7(J 
Ok 31 1902: (WOec 31 W9Z flaOac 31 1993; <13tAug 4 1903; ff 4fJUf 2 1093. 

In spite of a setback in the performance of the world’s emerging markets earlier this 
year there has been a pick-up during the last three months, which has left the IFC 
composite price index up some 5 per cent from the start of the year in dollar terms, 
writes John Pitt . Latin America has been the star region, by for o ut perf or ming Asia 
which has fallen into negative territory. 

Kuala Lumpur set a new eight-month high on Wednesday and It looks set to continue to 
pull ahead. Kleinwort Benson in London has recently picked the market as one to 
watch, suggesting that a gain of some 20 per cent by the end of the year cannot be ruled 
out Kleinwort’s favours Malaysia as one of its “most favoured markets”, although 
cnrrently it is 4 per cent down in dollar terms from the start of the year. 

Sri Lanka, is picked by Lehman Brothers, following the parliamentary elections there 
last month and ahead of November’s presidential election. Lehman's forecasts economic 
growth of 6.3 per cent this year, reinforced mainly by a 20 per cent gain in total 
investment, and funded by “sustained expansion in national savings and capital flows”. 
In spite of the likelihood of short-term instability post-elections, Lehman’s expects the 
economic fundamentals to attract investors “and compel the new government to hew 
fairly closely to the reform path, in spite of its polulist electioneering”. 


EUROPE v) 

Paris edges up but fails to regain 1,900 


former Sunbeam-0 ster chair- 
man, as an alternative to a 
takeover proposal from Kohl- 
berg Kravis Roberts. 

On the Nasdaq, shares in 
Lotus Development were trad- 
ing briskly a day after con- 
cerns emerged over the soft- 
ware developer’s European 
sales. The issue skidded a fur- 
ther $2 to 337%. 

Amgen, the biotechnology 
concern, lost 3lft to 354% after 
the stock was struck off SG 
Warburg's buy list 

Canada 

Toronto was marginally softer 
at midday with investors still 
nervous about the outlook for 
interest rates and many expect- 
ing a 50 basis point rise in the 
US fe deral funds rate. 

The TSE 300 composite eased 
388 to 4^54.73 at noon in vol- 
ume of 30.7m shares. Of the 14 
sub-indices, six were lower, led 
by precious metals which fell 1 
per cent and base metals which 
lost 05 pm- cent 

Brazil 

Equities were flat in volatile 
trading in Sdo Paulo after a 
new opinion poll showed that 
presidential candidate, Mr 
Fernando Heurique Cardoso, 
had lost ground, suggesting 
that the contest could go into a 
second round after the vote on 
October 2. 

The Bovespa index was off 6 
at 53,429 by 11.55am in turn- 
over of R$153m ($178fen). 


Activity on the continent was 
generally patchy yesterday. 

PARIS failed to regain the 
1,900 level, lost on Wednesday, 
with the CAC-40 index finish- 
ing at 1,899.37, up 2.19, and a 
gain on the session low of 
1,891. Turnover was FFriLSbn. 

In spite of the modest recov- 
ery brokers remained unsettled 
and did not rule out a decline 
today, with chart analysts sug- 
gesting that the Index could 
strike L850. 

Pina ult-Prin temps, down 
FFr33 at FFr906, was left 
trailing on news that it 
intended to sell a 6 per cent 
shar e stake to part-finance its 
purchase of a stake in FNAC, 
the book and record group. The 
price will be set on September 
26. with the sale taking place 
between September 27 and Sep- 
tember 29. 

Credit Lyonnais CPs, which 
are thinly traded, dipped FFr24 
to FFr401 as the state con- 
trolled bank postponed the 
publication of first half results. 
Some reports suggested that 
the postponment was due to a 
disagreement with the govern- 
ment over details. 

Air Liquide went in the 
other direction with a gain of 

ASIA PACIFIC 


FT-SE Actuaries Share Indices 


Sep 22 
Hnufy 


Opan 


THE EUROPEAN SERIES 

1030 11-00 1250 I3A1 14,00 1590 Odd 


FT-SE finback 100 1338.40 T33836 1337-5* 1333.70 133322 1337.56 1336X1 133132 

FT-SE finfcadl 200 138199 138117 138199 137142 137113 1390.10 1391.96 1377S4 


Sap 21 


Sap 2D 


Sap IS 


Sap 16 


Sep is 


FT-SE EiranCk 100 134034 1343X3 135096 139091 136034 . 

FT-SE EuoaaA 200 138192 1386-74 M045S 140026 141SJJ4 

Um ran awwut mtar wo - bosom - nano leass* n» - nsus 200 - sm « t nan 


FFr6 to FFr718 as investors 
took positions ahead of the 
release of first half results 
which came after the close and 
showed a gain in profits of 8 
per cent 

FRANKFORT was generally 
quieter with turnover also fell- 
ing back. In the official session 
the Dax index slipped 6.47 to 
2.07&03. In Ibis afternoon trade 
the index settled at 2,072^L 
Turnover was DMBbn. 

Merrill Lynch, in a technical 
analysis of the market, 
reported that the index now 
had “more than a normal risk 
of a downside correction”. A 
preliminary decline to retest 
support at L96Q was possible, it 
added, with implications for a 
further fell to the 1,750 level 

MILAN was unnerved by the 
failure of the government and 


trades unions to reach an 
accord of pension reform at 
their first meeting yesterday, 
ami the Comit index fell 131 or 
LI per cent to 67LI3. 

Mr Nlcolo Braentfll at Akros 
Sim in that the mar- 

ket had been expecting an 
agreement from the meeting. 
However, the government’s 
failure to secure one raised 
worries that any subsequent 
accommodation would not lead 
to the necessary structural 
reform of public finances. 

Fiat fell L51 to L6.643 and 
Olivetti was Ll4 lower at 
L2.013 ahead of first-half 
results after the market dosed. 

Generali fell 1221 to L39.663 
and Toro was L499 lower at 
L27.Q2L ahead of six month fig- 
ures late in the day. SAL was 
down L165 at 121,425 following 


news of improved interim fig- 
ures. 

Mediobanca was 1225 lower 
at U3.759, white BO, which is 
expected to report lower first 
half figures next week, fell LSI 
to L3.969. 

Benetton dropped L999 or 45 
per cent to 121,414 after the 
c h airman was quoted as saying 
that while sales volumes had 
grown over 1993, turnover was 
li ttle ch anged by value. 

ZURICH edged higher, sup- 
ported by firmer bond futures 
and gains in selected blue 
chips. The SMI index rose 8J9 
to 2,602.9, but was unable to 
hold up at the day's peak of 
2,614.1. 

Gains in Roche's certificates, 
up SFr45 to SFr6,W5, and UBS, 
SFr7 ahead at SFrl.197, helped 
to {Mill the market higher. Nes- 
tle gained SFr4 to SFTL200. 

Swiss Re registered shares, 
strong gainers earlier this 
week, feU SFr3 to SFrS63 on 
profit-taking as some investors 
switched into Winterthur, 
SFrll higher at SFT645. 

AMSTERDAM held the 400 
support level in a quiet ses- 
sion. The AEX index closed the 
day down 0.73 at 40028. 

Unilever, off 20 cents at 


FI 293.SQ, announced that It 
was to expand Its operations in 
China. 

COPENHAGEN was in a. 
holding pattern as Investors - 
took stock of the outcome of 
the general election. 

The KFX index was off 0.19 
at 9628. 

Turnover' was concentrated . 
in banks, which slid back from 
early highs to close mixed. - 
Danske Bank put on DKrl to 
DKi32S. 

MADRID finished mix ed 
with losses seen In high vol- 
ume shares and the general 
index eased 0-33 to 294.46 In 
turnover of Pta235 b n. 

Repsol lost 2.4 per cent to 
Pta3,740 with the losses attri- 
buted to speculation about the- . 
next public share offering in 
the state-owned oil company, - 

ISTANBUL rose another 25 \- 
per cent after some late buy- 
ing, triggered by portfolio - 
switching towards companies 
with good nine month profit 
expectations. The comp o si t e 
index rose 853.69 to 25J9&2Q, 
for a three day rise of 105 per 
cent. 

Written a nd etiftvd by Jctoft PtU 
and Michael Morgan (flj 


Seoul at record high as Hong Kong weakens 


Tokyo 


Arbitrage unwinding and prof- 
it-taking ahead of the thre&day 
weekend depressed prices, and 
the Nikkei erased the gains of 
the past two days, writes 
Errtiko Terazono m Tokyo. 

The Nikkei 225 index lost 
5L71 to 19,833.67 after a high of 
19,907.58 and a low of 19.760.05. 

Volume was 355m shares 
a gainst Wednesday's 394m. The 
Toplx Index of all first section 
stocks feQ L74to 158422 while 
toe Nikkei 300 edged up 0.01 to 
289.85. Losers led gainers by 
575 to 425, with 189 issues 
unchanged. 

In London, the ISE/Nikkei 50 
index lost L93 tol.297.61- 

Analysts said brokers, 
looking to boost profits ahead 
of the September book dosing, 
were unwinding their posi- 
tions. On Thursday, the coun- 
try's leading securities compa- 
nies announced downward 
revisions for interim and 
annual earnings projections 
due to the Iower-than-expected 
trading volumes during the 
first half. 

Daiwa Securities fell Y20 to 
YL.430 and Nikko Securities 
Y20 to Y1.090. Sanyo Securi- 
ties, which announced on 
Wednesday that its capital 
ratio had dropped below the 
200 per cent “safety” line, lost 
Y4 to Y556. 

Profit-taking depressed high- 
technology stocks. Oki Elec- 
tric, which had gained on 
Wednesday on expectations of 
higher earnings because of 
firm semiconductor demand, 
lost Y8 to Y780 while Toshiba 
declined Y4 to Y75L 

Sumitomo Metal Mining rose 
Y10 to Y955 on rising gold 
prices. 

Meanwhile, the Nihon Keizai 
shimh im, the business dally 
which publishes the Nikkei 
300, yesterday said that four 
component stocks are to be 
replaced. Japan Airlines, 
Maruha, Dai to Trust Construc- 
tion, and Sumitomo Warehouse 
win replace Mitsubishi Petro- 
chemical, Hanwa, Nagasakiya, 
and Fujita Kanko. Mitsubishi 
Petrochemical, will be delisted 
next month due to Its merger 
with. Mitsubishi Kaset. while 
the other three stocks are to be 
replaced due to tower trading 
volumes and market capitalisa- 
tion. 

Tn Osaka, the OSE average 
fell 1623 to 22,07325 in volume 


| FT -ACTUARIES WORLD INDICES i 

JaMty compiled by The Rmndal Times Ud.. Goldman, Sachs & Co. and NatWost Securities Ltd. ki conjunction with the Institute of Actuaries and the Faculty of Actuaries 

NATIONAL AND 

















Figuas In perantheses 

US 

Days 

Pound 



Local 

Local 

Aon 

US 

Pound 



Local 



Year 

show number of Inca 

DoQv 

Change 

Starting 

Yen 

DM 

Cumency 

% chg 

DN. 

Doter 

Starting 

Yen 

DM Curenrar 52 week 52 week 

ago 

of stock 

index 

% 

Index 

Index 

Index 

Index 

on day 

Yield 

Index 

index 

Index 

tadex 

index 

Hah 

Low 

Cappmx) 

Australia {68} 

17U29 

-2.0 

15959 

105.17 

19078 

153.78 

-1.0 

351 

173.80 

16347 

10759 

140.13 

15620 

189.15 

14124 

14128 

Austria fl 01 

— 187^7 

0.6 

17654 

iiara 

100.41 

1S0.3+ 

Ol 

1-07 

16021 

175.14 

115-06 

15013 

16011 

19859 

184.04 

173.47 

BetoNm 07) 

16740 

-0.4 

15757 

loose 

13445 

13156 

-05 

421 

16840 

16842 

10351 

13545 

132.19 

17T.04 

14352 

14019 

Canada (103). — 

13833 

-05 

129.96 

8543 

111.10 

13459 

-05 

252 

13851 

13055 

85.77 

11151 

13657 

14521 

12054 

12150 

DanmotK (33) 

— 26255 

-06 

237.65 

15621 

203.16 

209.12 

-05 

142 

26459 

239.26 

167.18 

205.10 

21152 

275.78 

223.94 

22855 

Finland pq.. — .. 

17S.15 

-05 

16450 

108.17 

14058 

18059 

-1.1 

078 

17659 

16082 

10650 

14157 

16044 

181.70 

10428 

10048 

Prance (97) 

167.40 

-oa 

15758 

103.38 

134.45 

138.67 

-15 

3.17 

168.78 

158.73 

10428 

13006 

14035 

18557 

16954 

18755 

Germany (58V- — 

— 143.04 

04 

13459 

08-34 

114.89 

11459 

0.0 

1.78 

142^8 

13349 

6853 

11456 

11456 

16040 

12428 

128,13 

Hong Kong (56) 

406.07 

0.0 

38057 

250.16 

32035 

40156 

0.0 

345 

40558 

38151 

25030 

32060 

40156 

00056 

29656 

297.10 

betond (14) 

21021 

-0.9 

19750 

12952 

16064 

18948 

-14 

356 

21246 

199.45 

131-03 

17057 

192.10 

21650 

16154 

16035 


84.09 

1.0 

79.01 

51.93 

0754 

97.69 

0.7 

150 

8324 

7829 

5143 

67.11 

9659 

97.78 

67.88 

7424 

J^an (469} 

162.45 

04 

152.63 

10032 

13048 

10032 

05 

0.78 

18153 

152.21 

100.00 

130.48 

10050 

17010 

12454 

15458 

Malaysta (97) 

— 594.78 

0.3 

65873 

387.31 

477.71 

58S53 

04 

142 

S92.8S 

55751 

36822 

47759 

58353 

621.83 

39253 

39017 

Mexico 08} - 

-_zwa.il 

0.5 

220044 

144042 

1881.12 

871058 

04 

1.18 

232SA4 

2191.42 

143854 

187849 

887753 

2847.08 

1816,11 

184255 

Natheriond E7). 

— 20981 

0.0 

197.12 

12957 

16852 

165-88 

-05 

347 

20079 

19752 

12953 

169.16 

18051 

mig 

10025 

182.87 

New Zealand (l4) 

72.05 

-1.1 

67.70 

4450 

5757 

83.71 

-05 

3.75 

7853 

6850 

4550 

56.72 

64 M 

7729 

5822 

5059 

Non way (2^ — 

— 197.42 

15 

1&5.48 

12152 

iss.se 

181.40 

0-6 

152 

195.45 

18353 

12077 

18758 

18033 

211.74 

16552 

17350 

Singapore (44) — 

37051 

-0.4 

347.B2 

22063 

297.35 

25159 

-05 

157 

37150 

34951 

22951 

29950 

252.79 

378.92 

28551 

28924 

South Africa (59) 

309.41 

-02 

29059 

191.08 

24051 

29659 

-05 

2.1E 

30940 

29147 

19148 

24055 

29726 

31424 

18429 

18048 

SfWkifr tt) 

13842 

-0.1 

13005 

85.48 

111.17 

13454 

-05 

450 

138.61 

13057 

8555 

111.75 

1342* 

155.70 

12088 

18927 

Sweden (36) 

— 224.08 

-05 

21053 

13859 

17958 

24653 

-09 

1.61 

226.16 

211.77 

138.12 

181-53 

249.01 

23125 

17553 

18064 


— 166.02 

05 

15557 

102.53 

13354 

13158 

-0.1 

154 

16044 

15550 

10222 

13358 

13155 

17826 

13859 

13066 

UiWed Kingdom (204) 

194.09 

-O.fl 

18036 

11957 

15559 

18255 

-07 

4.19 

19650 

18359 

12057 

16748 

183.69 

21456 

181.11 

18024 

USA{516) 

— 18832 

-0.4 

17093 

11650 

15156 

18852 

-04 

358 

199.10 

17756 

11654 

15246 

189.10 

19654 

17825 

18521 

EUROPE (717) 

16940 

-02 

159.62 

104.93 

13646 

14491 

-05 

3.10 

17029 

18016 

10622 

13729 

19068 

17828 

16358 

15071 

Nortic |1 IS) „ 

— 21758 

-04 

204.42 

13457 

174.78 

20542 

-0.8 

144 

21648 

205.49 

13650 

178.15 

207.14 

222.18 

17010 

17066 

Paeffle Begun (74^ 

172.48 

02 

162.08 

10053 

13054 

111.65 

02 

148 

172.09 

161.98 

10654 

138.75 

11129 

17656 

134.78 

15050 

&4p-Padfic flafiS} 

— 17157 

05 

18001 

10S.77 

13756 

12755 

-Ol 

142 

17120 

161.03 

105.79 

13853 

127.15 

175.14 

14328 

157.68 

North America (619) 

185-21 

-04 

174.01 

11458 

148.78 

184.60 

-0.4 

257 

16657 

17442 

11441 

14854 

18556 

192.73 

17557 

18128 

Bmpo Ex. uk (513) 

— 153.05 

an 

143.79 

9452 

12252 

13040 

-04 

248 

153.04 

14344 

9456 

12329 

13090 

15012 

13427 

137.70 

Raotta Ex. Japan (Z7B).^ 

~—28950 

-05 

25350 

166.44 

21046 

23950 

-02 

271 

27096 

254.86 

167.42 

21846 

24044 

29021 

201.05 

30226 

WMd Ex. US (1645) 

__.173.19 

ao 

102.72 

10096 

139.10 

13098 

-Ol 

143 

173.14 

16254 

10098 

139-59 

13158 

17065 

14056 

15722 

World Ex. UK (1957)., 

17553 

-0.1 

16452 

108.40 

14088 

14651 

-Ol 

207 

17^.66 

16522 

10854 

141.62 

14521 

17068 

15526 

18326 

WW4Ex.Sa.Af .(21®)... 

— 17855 

-0.1 

165.68 

108.91 

141.64 

14754 

-02 

227 

17656 

IfiflJS 

109.10 

14228 

14723 

18053 

15054 

16081 

'WrtdE*. Jeffissn (ifi»q 

— 187.13 

-05 

175*1 

11057 

15030 

177.13 

-04 

240 

187.77 

17650 

11652 

15128 

17757 

19620 

174.04 

174.04 

22._Woiid index C2V011 

177.18 

-0.1 

168.47 

10942 

142.31 

14073 

-02 

226 

17740 

16656 

10952 

14353 

14652 

18000 

1682S 

16523 


of 268.4m shares. Nintendo, the 
video game maker, fell Y90 to 
Y5580 on profit-taking. 

Roundup 

The region was mixed yester- 
day. 

SEOUL finished at an all 
time higher after a third 
straight trading day of 
advances as investors sought 
large-capitalised blue chips and 
hank stocks. 

The composite index dosed 
10 AQ or 15 per cent higher at 
1,034.01, taking the cumulative 
three day rise to 42 per cent 

Brokers said the strong 
advance prompted steady sell- 
ing in anticipation of a consoli- 
dation, although it was more 
than offset by strong demand, 
especially of medium-priced 
blue chips like Goldstar and 
Daewoo Heavy In d n st ries. Both 
went daily limit-up to record 
closes of Won31,800 and 
Wonl7J00 respectively. 


HONG KONG tumbled 1.6 
per cent on worries about the 
outlook for US interest rates as 
investors returned after 
Wednesday’s holiday, bnt 
prices closed off tows on light 
bargain hunting by retail 
investors. 

The Hang Seng index tost 
156.61 to 9,668.14, having been 
down 240 points at one stage. 

Turnover Improved to 
HK$454bn from HK$32Zhn. 

HSBC Holdings eased 
HK|125 to HE28825. Hong- 
kong Land recovered from, a 
low of HK$1855, finishing at 
HKI19, down 50 cents. 

Shipping companies' shares 
continued to advance as funds 
bought in anticipation of a 
recovery in the global shipping 
industry. Wah Kwong Shipping 
Holdings rose HKS2.10 or 142 
pa- cent to HKJ1&30, after a 
IQjB per cent advance on Tues- 
day, and IMC Holdings rose 
42.5 cents or 92 per cent at 
HK35.Q25. 


The H share index lost 43.16 
or 3.0 per cent to 1,399.14 in a 
delayed reaction to China’s 
higher inflation rate. 

TAIPEI saw late selling send 
prices tower and the weighted 
index closed down 1.6 per cent 
amid profit-taking on finan- 
cials. The index fell 10926 to 
6.889.88 in turnover of 
T$542bn. 

Among financials Cathay 
Life fell T$7 to T$215 and 
Chang Hwa Bank T$6 to T$199. 
Elite Group rose by the daily 7 
per cent limit to T$545Q for the 
second consecutive session 
since its debut on Wednesday. 

SYDNEY rose modestly 
boosted in light turnover by a 
stronger gold price. The All 
Ordinaries index rose 1.6 to 
24282. 

Turnover was A$S865m. 

Gold shares were actively 
bought on the firmer gold 
price, with Newcrest rising 13 
cents to AJ6.68. 

SINGAPORE edged lower as 


attention focused on Malaysian 
OTC stocks. The Straits Times 
Industrials index lost 3.60 to 
2,286.09, while the UOB-OTC 
index, which tracks mainly 
Malaysian stocks, dropped . 
15.01 to 1,28127 an heavy prof- 
it-taking in the afternoon. 

KUALA LUMPUR gave way 
to . heavy afternoon profit-tak- 
ing by retail and institutional 
investors and the composite 
rndmr lost 1126 to 1,179.88. 

Some Singapore and Japa- 
nese funds were said to be 
booking profits after the recent 
run-up while Investors were 
also unnerved by rumours, 
subsequently denied, that 
Bank Negara had Issued 
tighter guidelines cm financin g 
of share purchases. 

BOMBAY fell sharply on the 
last day of the account The 
BSE 30 share index lost 5523 to 
4,451.78, although the broader 
100-share national index gained 
1428 to 2,116.49 reflecting sane 
scattered buying. 


i-nroei inw urmtod. c 


M NatWhnt So cvriHw UmfcxL 1007 


We Let Our Achievements 



Speak For Themselves 


We haven’t been boasting about our leadership in 
trade finance and corporate banking. 

Nor have we been bragging about introducing 
PhocoCard - the thermal imaging technology that 
provides our clients with the ultimate in credit card 
security. 

We haven’t even been going on about Hexagon - our 
on-line cash management system that keeps our 
clients in constant touch with their accounts. 

Bui the word does seem to have got around. 

Maybe that's why our recent share offer was more 
than twenty six times oversubscribed. 

Maybe that's why more and more people see us as 
front runners not only In the Kingdom but around the 
world. 

Maybe that’s why more and more clients and 
correspondent banks are looking to the Saudi British 
Bank as their partner in Saudi Arabia. 




The Saudi British Bank 

With Ybu In Thk Kingdom And Around Thf. World 


P.0 Rirt MOHJ. Ruadh I M 11. S«*JI At J hj. Ti-k-ptHm-inti Jil.MXill FjmIIIi li« [MM I |.whIihi OlHvi Ttfl ili7l t -KN JW7 FjX (071) MS 2.129 











VENTURE 


* I 

"FINANCIAL TIMES SURVEY 

AND DEVELOPMENT CAPITAL 

Friday September 23 1994 





t. 


Entrepreneurs who are trying to launch businesses face increasing 

difficulties in finding early finance, reports Richard Gourlay 

Competition for new 
deals is intensifying 



Stephan Hoar the re la tion al tfp between an entrepreneur and venture c ap ita B a ta a "fraught with potential problems,' he says mam rcny 

VENTURER OF THE YEAR 


Winning smile reflects Denplan’s success 


O n the face of it the UK 
venture capital indus- 
try is having a rip-roar- 
ing year. Contrary to the 
expectations of many in the 
industry this time last year, 
more than £1.4bn has been 
raised in the UK and the US for 
new funds during 1994. accord- 
ing to estimates by the British 
Venture Capital Association. 

This fluid raising has been 
encouraged by a burst of pri- 
vate equity-backed flotations 
in the last 18 months which 
have transformed the returns 
of some otherwise poor hind 
performances. 

But this promising replenish- 
ment of funds wiaakc however, 
a continuing decline in avail- 
ability of true venture capital. 
Less than 10 per cent of the 
new funds raised will be 
directed towards early stage 
investments or towards compa- 
nies pioneering new products 
in new markets. And there are 
few signs that this long-term 
decline will be reversed. 

“It's a real issue, no question 
about it." says Doug Brown, 
chairman of Advent Interna- 
tional Europe, an investor In 
growing technology-based com- 
panies. “Entrepreneurs who 
are trying to get businesses 
started will find it difficult to 
find early finance and will 
have to seek alternative 
sources - individuals, family, 
strategic interests." 

Among the small number of 
funds which have raised capi- 
tal for early stage Investments 
is Schroder Ventures, which 
raised a $100m life science 
fund. This fund-raising fol- 
lowed a rush to the London 
stock exchange by bio-technol- 
ogy companies in 1993, and will 
be invested internationally. 
Otherwise, the funds have 


been raised by venture capital 
groups which focus on late 
stage development capital, pro- 
viding acquisition finance for 
private companies ahead of flo- 
tation or management buy- 
outs. 

Lamentable as supporters of 
unfinanced British ideas might 
find this, it is not surprising. 
As the private equity invest- 
ment Industry matures in the 
UK, better comparative perfor- 
mance records have become 
available. 


longer to provide their backers 
with the opportunity to realise 
their investment. Moreover, 
funds focused on this area 
have simply not performed as 
well as those which have 
backed more established busi- 
nesses. As a result, fewer 
development capital companies 
are laying out their stall as 
providers of capital to early 
stage companies. To criticise 
them for ignoring start-ups is 
like criticising butchers for not 
selling fish. 

In fact, the UK may be 
returning to a more normal 
level of investment in early 
stage companies after an aber- 
rant surge. In the early 1980s, 
many relative newcomers to 
venture capital piled into early 
stage companies and start-ups, 
tempted by US successes, such 
as Apple and Compaq. The UK 
has proved very different to 
the US, however. 


In the first place, there are 
not enough viable deals to jus- 
tify the hiring of in-house 
expertise by more thaw a amall 
number of venture capital 
funds . There are exceptions, 
such as the managers of the 
Schroder life science fond. But 
it is not surprising venture 
capitalists larking that exper- 
tise are wary. 

Furthermore, the UK is a 
much smaller market As if 
developing a new product or 
service was not risky enough. 
j n t tftU&r companies in the UK 


need to attack international 
markets much earlier in their 
lives than their US counter- 
parts. 

There are also more interest- 
ing questions than whether the 
UK venture capital industry is 
somehow failing early stage 
businesses. Why, for example, 
are more early stage compa- 
nies not seeking corporate 
partners to help them develop 
products and bring them to 
market? And equally, why are 
large corporations not consid- 
ering backing more start-ups 
in their field? 

Irrespective of the amount 
which early stage venture capi- 
talists have raised in this latest 
fund raising round, they have 
more than a passing interest in 
the health of later stage devel- 
opment capital and the buy-out 
funds. A repeat of the poor 
investments of the late 1980s 
would hurt the cause of private 


equity investors generally. 

An even more crucial ques- 
tion is whether the UK indus- 
try has matured enough to 
resist going out and spending 
the wall of new money too 
quickly. One prominent ven- 
ture capitalist says there wiD 
inevitably be a return of bad 
deals - such as Isosceles’ pur- 
chase of Gateway and the Mag- 
net management buy-out - on 
which many people burned fin- 
gers. 

“There will be significant 
competition for some time for- 
ward,” he says. “It will follow 
the same cycle. Funds are 
going to try to compete by 
going multinational, or by 
being user-friendly and cheap, 
doing turnarounds and focus- 
ing on specific sectors." 

Prices might already be 
creeping up - “there is evi- 
dence that financial buyers are 
outbidding trade buyers in 
businesses where there are 
trade synergies to be had,” 
says David Shaw, managing 
director of NatWest Ventures. 

Underpinning these optimis- 
tic valuations is a faith that 
the economy is strong, that 
interest rates are going to 
remain relatively low and that 
the stock market will continue 
to look healthy long enough 
for there to be a profitable exit 

Some others incl uding Can- 
dover, which recently raised a 
fund, disagree: “There has 
been a tendency to try to get 
an auction going among finan- 
cial buyers,” says Candover’s 
chief executive, Stephen Cur- 
ran. “But the competition has 
not increased. The amount of 
money has not changed over 
last few years - it replaces 
gristing funds.” 


Continued on page 3 


By Vanessa Houlder 

W hen Stephen Noer, a 
38-year-old dentist, 
decided to set up a 
new company in 1986, the 
prognosis was not entirely 
promising. Market research 
found no perceived need for 
the business. At its marketing 
launch in the G uildhall, Win- 
chester, only 29 people turned 
up. 

But Noar's dogged belief in 
his idea paid off. From a 
standing start he built up 
Denplan, the Henfart healthcare 
company sold for £42m last 
November. 

This achievement, together 
with qualities such as “clear 
vision”, “determination” and 
“insight", has just earned 
Noar the accolade of Venturer 
of the Year, an award spon- 
sored by the Financial Times, 
Cartier the jewellers, and the 
, British Venture Capital Asso- 
| nation. 

I Much of Denplan’s success 
I can be attributed to Noar’s 


prescience about the impend- 
ing crisis within his profes- 
sion. This dates back to his 
work in the mid-1980s at the 
Medical Defence Union, a pro- 
vider of professional indem- 
nity, where he saw countless 
examples of the way in which 
the National Health Service 
was failing dentists and their 
patients. 

The problems, he reasoned, 
were exacerbated by the way 
dentists were paid. As dentists 
were paid purely for each item 
of treatment, they had no 
incentive to do preventative 
work. The piece-work basis of 
their pay, together with the 
pressures of seeing 30 to 50 
patients a day, affected the 
quality of their work. At the 
same time, dentists’ commit- 
ment to the health service was 
eroding as their incomes fen 
behind those of their peers. 

With a colleague, Marilyn 
Orcharton, be saw an opportu- 
nity to form a company offer- 
ing a private dental health 
care programme. Patients 


would pay a monthly fee to 
cover any work they might 
need, a system which would 
avoid the problems associated 
with piece-work pay. Dentists 
would set their own charges 
while delegating their admin- 
istration to Denplan, which 
would take a fee for every reg- 
istered patient 

Backers’ reward 

By last November, when the 
business was sold to Private 
Patients Plan for a total of 
£42m, the company had regis- 
tered 20 per cent of UK den- 
tists and 400,000 patients. Pre- 
tax profits in the year to end- 
April 1993 were Elm. 

The company's success was 
shared by its backers. Advent 
the venture capitalists, 
invested £850,000 in Denplan 
in early 1988 and achieved an 
internal rate of return of 52.7 
per cent over five and a half 
years. F&C Ventures, the ven- 
ture capitalists which bought 
out Orcharton's stake for Elm 


in 1991. made an internal rate 
of return of 132.1 par cent over 
30 months. Both companies 
hope to benefit from farther 
earn-out considerations. 

Noar epjoyed a good rela- 
tionship with his backers, 
although he reserves his 
warmest gratitude for the Mid- 
land bank manag er who sup- 
ported the business in its early 
days. However, he notes that 
the relationship between an 
entrepreneur and venture cap- 
italists is “fraught with poten- 
tial problems.” 

“If yon are taking on board 
venture capitalists, you have 
to do ft as an adult,” he says. 
“You have to realise it will not 
be your company.” This pro- 
cess is good for the business, 
he believes. “Owner-managers 
are are too possessive. They 
think they have all the 
answers." 

Noar was not always pre- 
pared to admit he did not have 
the answers, however. One of 


Turn to back page of survey 


Early stage companies take 

- «f TUBS SURVtY^ - : 

Lending venfae ftaria In Europe Page 2 j 

The pfo^r^ bwsli iela graph Is (maty. Rag« 2 

Record^red^DgVearbi «h® US S ■ 

venture funds ln the UK JPage 6 j 

VflntHrerof.llw.ye^catiytya^^ j 





i 


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I 





II 


FINANCIAL TIMES FRIDAY SEPTEMBER 23 L9W 




■m- 
•f . 




VENTURE AND DEVELOPMENT CAPITAL 2 


LEADING VENTURE FUNDS IN CONTINENTAL EUROPE 


6. 


»_■ 
ii. ' 


'•h. 

•T. 



TMpboss 

Cntof 

RMaora 

tant 

EGOpOQI 

r JT m 

■mpirinj 

Start 

tea 

Date*- 

eporat 

Bteteo- 

•amt 

MKV 

m 

Saeter praferanea 
(Ml«Ma4 

3J France 

33 1 47 15 11 00 

Franca 

1,000 

20000 

N 

Y 

Y 

Y 

T 

3 Germany 

49 69 7100 000 

Gamany 

1,000 

20,000 

N 

Y 

Y 

Y 

T 

3 Italy 

39 2 72 00 32 10 

Italy 

1.000 

lOflOO 

N 

Y 

Y 

Y 

T 

3 Span 

34 1 521 4419 

Spell 

1,000 

ID. 000 

N 

Y 

Y 

Y 

T 

ABN-AMRO Corporate Investments 

31 20 629 55 68 

Netherlands 

200 

5rao 

N 

Y 

Y 

Y 

T 

ACT Verture Capital 

353 1 260 0966 

Rap. of Ireland 

250 

4,000 

N 

Y 

Y 

Y 


AlpimeW HokBng NV 

31 2159 52600 

Netherlands 

000 

8,000 

N 

Y 

Y 

Y 

Tfl 

Apax Partners 8 Co 

49 8S 9969090 

Germany 

500 

5400 

Y 

Y 

Y 

Y 

GAK.0.C.BJ3 

Argos Sodtie SA 

41 22 786 94 IT 

Swftzafefld 

1500 

10.000 

N 

Y 

Y 

Y 

DAKAM 

Afea Ventira 

33 1 42 60 00 56 

France 

250 

2^00 

Y 

N 

N 

N 

DiHAO 

Alias Venture Groep 

31 20 697 3131 

Netheriands 

400 

Opan 

Y 

Y 

Y 

Y 

TABfl 

BeneVent Management NV 

32 2 725 14 40 

Befglun 

250 

1500 

N 

Y 

N 

Y 

T 

Bateaoungsges^sxhtffil fQr Ob deuteche Wirtschaft mbH 

49 69 27 30 09-0 

Germany 

EDO 

Open 

P 

Y 

Y 

Y 

T 

BUB Bayaisdta IJrtEmehrnenstwtaBgunga AG 

48 89 28 86 51 

Germany 

500 

6(000 

N 

Y 

Y 

Y 

T®,M 


Capital Priv6 

Catalans D’Mtiativea CJL SA 
CD Techricom SA 
ChartatxHBe SA 
Chase Gemina ItaBa Sit 

Co mp are Fhandere CEparane de Da Placements 

CVC Capita! Baratungs QnbH 

CVC Capital Partners BV 

CVC Capital Partners SA 

CWB Capital Patnere QoraUtbig GmbH 


33 1 42 33 51 56 

Prance 

1000 

10^00 

N 

Y 

Y 

Y 

T 

34 3 317 81 61 

Spain 

357 

1000 

N 

Y 

Y 

N 

T ’ 

32 41 21 98 11 

Belgium 

124 

1250 

Y 

Y 

Y 

Y 

0.E Jrf 

33 1 47 23 52 33 

France 

rVd 

rvd 

N 

Y 

Y 

Y 

U$ 

39 2 6590351 

Italy 

500 

i3rao 

N 

Y 

N 

Y 

GAMARD.H 

33 1 41 25 40 00 

France 

200 

5.000 

Y 

Y 

Y 

Y 

AMLsjpuan 

49 69 74 01 74 

Gonviy 

rVd 

n/d 

N 

N 

N 

Y 

T 

31 30 6514311 

Netherlands 

0 

Open 

N 

N 

Y 

Y 

T 

33 1 45 02 23 00 

Franca 

ntt 

n« 

N 

N 

Y 

Y 

T 

49 89 79 5400-20 

Germany 

30,000 

150,000 

N 

N 

N 

Y 

M.GAH 



45 39 66 04 00 

Denmark 

30 

4,000 

Y 

Y 

N 

N 

EMOl- 

Demachy Warms & Cte 

331 44 13 35 01 

France 

500 

2£00 

N 

Y 

Y 

Y 

&H 

Edeteon Technology Partner 

331 46 53 89 8* 

Frame 

80 

irao 

N 

Y 

Y 

N 


Epar^te Partenares SA 

33 1 43 08 87 55 

Franca 

500 

3,000 

N 

Y 

N 

Y 

GJ4JC 


33 1 40 07 05 18 

Franca 

3000 

20.000 

N 

Y 

Y 

Y 

G 

EuroverAies GVST (Suisse} Mgmt SA 

41 22 343 50 00 

Smtzertand 

500 

1,500 

N 

Y 

Y 

N 

T 

Eurorantures Management AB 

46824 77 90 

Sweden 

600 

5J00 

Y 

Y 

N 

Y 

D.HJ3AMJ. 

Fmssicfere Saint Dominique 

33 1 49 55 70 00 

Franca 

500 

15,000 

Y 

Y 

Y 

Y 

T 

FMambanda SpA 

39 2 76 04 41 

Italy 

280 

Open 

Y 

Y 

N 

N 

sjmfl 

Hnovetec 

33 1 474 789 00 

Franca 

1000 

10400 

Y 

N 

N 

N 

BJEJilJri.0 

Fundi weal 

33 1 44 18 62 00 

France 

n/d 

n/d 

Y 

Y 

N 

Y 

T 

Genes GmbH Ventrn Services 

49 2234 590 78-79 

Germany 

100 

IjDOO 

N 

Y 

N 

Y 

LAM 

Geneves! Consulting Group SA 

41 22 312 33 33 

Switzerland 

100 

1,500 

Y 

Y 

Y 

N 

wytrwwp) 

Gesdon De Cap Riesg Dei Pais Vasco 

34 4 4790192 

Spain 

75 

1,805 

Y 

Y 

N 

Y 

T 

GSde (mestment Funds 

31 30 51 05 34 

Netherlands 

too 

4,000 

Y 

Y 

N 

Y 

D£H.(m(PMQ) 

Global Finance SA 

30 1 382 20 96 

Greece 

200 

1200 

Y 

Y 

Y 

Y 

G&nKo 

Haider Betd9guigsberatung GmbH 

49 69 24 25 33-0 

Germany 

1200 

6JX» 

N 

Y 

Y 

Y 

T.&FJ 

Horizonte Vontiie Management GmbH 

43 1 533 56 01 

Austria 

150 

1,000 

Y 

Y 

Y 

Y 

DJEAO.M 

ICC Venture Capital 

353 1 672 0055 

Hop. of Ireland 

300 

4,000 

Y 

Y 

Y 

Y 

GAM&RAK 

1CVEN SA (IBM Europe) 

33 1 47 67 63 53 

France 

0 

Open 

Y 

Y 

Y 

Y 

DXE.GJ1 

Induatri Kapttal 

44 71 304 4300 

European 

5,000 

46£0O 

N 

Y 

Y 

Y 

T 

IntewRfsco-SocHdade da Capftd de RbcoSA 

351 2 600 11 68 

Portugal 

500 

1,300 

N 

Y 

Y 

Y 

T 

FE Capita* - Socfcxtode de Capital de Ksco SA 

351 1 795 00 22 

Portugal 

71 

2474 

Y 

Y 

N 

Y 

TAILS 

IritechSpA 

39 6 324 2341 2 

Italy 

100 

3,000 

Y 

Y 

Y 

N 

DJHUJM.0 

KEP 

32 2 213 82 66 

Belgium 

200 

1,000 

Y 

Y 

Y 

Y 

TJP) 

KBL Fouider SA 

352 47 97 22 80 

Luxembourg 

50 

500 

Y 

Y 

N 

N 

D£H 4,0 

tOebiwort Benson Deutschland QnbH 

49 69 27 40 21 22 

Germany 

3,000 

Open 

N 

Y 

Y 

Y 

T 

UM - Umtxjrg Investment Company 

32 11 22 21 77 

Belgium 

250 

1,500 

Y 

Y 

N 

Y 

T 

Nederiandse PartScsjatie MU NV 

31 20 570 5555 

Netheriands 

400 

15^00 

N 

Y 

Y 

Y 

T 

NeSKC Graep BV 

31 30 41 0202 

Netheriands 

100 

10400 

Y 

N 

N 

N 

T 

Norpecte 

351 2 610 24 78 

Portugal 

52 

3059 

Y 

Y 

N 

Y 

LMXJAW5 

f^E Investment Advisers A/S 

45 45 87 04 87 

Denmark 

1,000 

Open 

N 

Y 

Y 

Y 

T 

PaBas Finance 

33 1 40 74 22 30 

France 

4500 

7500 

N 

Y 

N 

Y 

D£H£M.M,n 

Pareom Ventures BV 

31 30 563 100 

Netherlands 

200 

20j000 

N 

Y 

Y 

Y 

G.M 

SJURSA 

32 2 548 22 11 

Belgium 

125 

2500 

Y 

Y 

N 

Y 

mlgar 

Stra (Bnrtsh Nat Raid For R & 0) 

358 0 61 89 91 

Bnland 

100 

2£00 

Y 

Y 

N 

Y 

D4JLBAL 

Soci6t& GAntnta (SO Cap Dev/Soginnoue) 

33 1 44 63 78 83 

France 

1.000 

Opan 

N 

Y 

Y 

Y 

T 

Soflnnova SA 

33 1 44 53 53 00 

Franca 

500 

3400 

Y 

Y 

N 

N 

Dfmo.N 

SP1 Promadom E SvAuppo knprandBorfate SpA 

39 6 85 45 41 

ta/y 

100 

3.000 

Y 

Y 

N 

N 

EALK 

Start Find of Kera OY 

358 0 2285 3260 

Finland 

100 

2400 

Y 

Y 

N 

Y 

D&KLM.0 

SVM STAR Ventures Management GmbH 

49 30 88 44 15 28 

Germany 

262 

2625 

Y 

Y 

N 

N 

OEHO.L 

TecftnokjgfetoMng VC GmbH 

49 89 15 50 74 

Germany 

250 

1300 

Y 

Y 

N 

Y 

DAH.L 

Teknotnvast Managemoit A/S 

47 33 046700 

Norway 

100 

2400 

Y 

Y 

N 

N 

D£HAO 

Thomaon-CSF Ventures 

33 1 53 77 84 20 

France 

143 

1430 

Y 

Y 

P 

P 

D^HQ 

UntemehmansfaeteiSguigsgeseOsctiaft Baden-WCrttemberg AG 49 711 122 2802 

Germany 

2100 

3300 

N 

Y 

Y 

Y 

miOMR) 

Vlaamae kwesteringsmnnoatsetap NV 

329221 33 64 

Belgium 

2S0 

3750 

Y 

Y 

Y 

Y 

T.(P} 


KEY: YaYes, N=No, P=PosaWa Sector preferences.' A, arjiaiture; B. biotechnology; C. chemicals: D, connmunicatkxts, E, computer-rotated; F, construction; G, consumer related, H, 
eiectionio-relatiKt L energy, natural resources; K, financial services, L, Industrial automation; M, industrial products and services; N. media, entertainment, leisure; 0, medfcd, 
heeUi-rdated; P, property; Q, space, aviation; R, tr a ns put t a ti un ; S, wholesale, trade dfefflbuttan; T, anything; Bated by preference; 

Any letiera In brackets Mcale a preference not to Invest in that sector. 


Leading venture funds in the UK appear on page 6 of this survey 


Source; KPMG Corporate Finance 


THE INGREDIENTS 

OF A 

SUCCESSFUL MBO 


Strong management 
Positive cash flow 
Candover 


Candover is the expert in MBO's; since 
1980, the team at Candover has led and 
invested £750 million in over 60 buyouts. 

During that period we have developed 
thorough expertise in structuring deals and 
in working effecrively with vendors and 
management. 


We are now seeking investment opportu- 
nities for our 1994 fund, which has already 
raised over £200m from investors through- 
out the world. If you are looking for an 
established, expert financial purchaser for 
deals in the £5m to £3 00m range - Candover 
is where you should look first. 


k CANDOVER 


Contact Stephen Curran or Doug Fairservice on 071 489 984$ 

Issued by Candover Partners Limited, 20 Old Bailey, London EC4M 7LN 
A member of I MRO 



PERSONALITIES 


c» 


Bush telegraph is busy 


any service compa- 
nies claim they are 
only as good as their 
people. It is no different in the 
venture capital Industry. *1116 
success of fund raising, in par- 
ticular. but also of investing is 
often dependent on the person- 
alities involved. 

The bush telegraph conse- 
quently hummed in February 
when Jon Moulton, founder 
and managing partner of 
Schroder Ventures, left the 
group after a row with parent 
Schraders over strategy. 

Moulton is one of the most 
respected deal-makers in UK 
venture capital, known for 
dominating boards anit invest- 
ing in large management buy- 
outs but also doing tricky deals 
requiring real industrial know- 
ledge. His interpersonal skills 
are also legendary. Frequently 
described as aggressive and 
abrasive, he admits “my vigour 
of action outweighs my sub- 
tlety of approach.'’ 

So there was general sur- 
prise when it was announced 
in April that Moulton would 
join Apax Partners. How would 
two large personalities like 
Moulton and Ronald Cohen, 
Apax chairman, coexist in one 
organisation? 

“The two personalities are 
thinking the same, too," jokes 



Moulton Grom his private office 
where he was whiting away his 
“gardening leave" with a bit of 
freelance corporate finance 
work. 

Cohen, who tried to hire 
Moulton in the early 1980s, 
knows exactly where his new 
partner fits - “Jon has joined 
at the same level as my most 
senior partners to do the large 
leveraged buy-outs for which 
he is well known.” Cohen says. 
"Prior to Jan’s arrival I had 
headhunters out looking for 
someone in the buy-out area. It 
is good strategy to cover the 
whole spectrum of deals." 

And does it mean, as 
rumours would have it, that 
Cohen means to step back to 
focus on his business interests 
in Israel? Cohen emphatically 
denies this. Apax is raising a 
£75m fund in a joint venture 
with Bank Letuni . to be In 
vested in the country's high- 
technology companies. 

"It will be another Apax 
fund, I am certainly not pulling 
back," Cohen says. 

Moulton's departure caused 
a hiccup in Schroder Venture’s 
£140m fund-raising. Some 
investors pulled wit on news of 
his departure but others took 
their place. 

For all Moulton’s presence, 
Schroder Ventures is far from 
a one-man team: It has more 


Brian Larcombe, above, chairman of the British Venture CspitaJ 
Association, and finance drector ot the 3i Group, says: “More than 
£10bn has bean invested by members of the SVGA In more than 11,000 
companies since 1983." 

On current developments in the industry, he comments: It has been a 
very good year for many venture capital co mpa nies with more than 
£1J5bn raised so far thb year tar investment in UK and overaeas 
businesses - more than three times the amounts raised last year.” 


ex-industrialists and former 
chief executives as partners 
than most other venture capi- 
tal funds and a greater ability 
than many to consider invest- 
ing in complicated situations 
like loss-making companies 
that need to be turned around. 

"We put a third of our 
money into loss making busi- 
nesses which is something you 
cannot do if you have not got 
the expertise in the industry,” 
says Carl Parker, principal at 
Schroder Ventures. 

A nother big move of the 
year was Charles Gon- 
szor. who helped build 
Phlldrew Ventures into a pow- 
erful force but left after 
another bust up between part- 
ners. Neither side will talk 
about the underlying reasons 
but again there appear to have 
been differences in opinion 
about the types of investments 
Phlldrew was making. 

Gonszor, whom Moulton 
hired at Citicorp Venture Capi- 
tal in the early 1980s before he 
left for Phlldrew, has been 
sharing an office with his for- 
mer boss and is understood to 


be trying to raise a fund. Phil- 
drew says Gonszor's departure 
will not affect the remaining 
palters’ ability to do deals. 

Robert Drummond, former 
chairman of Grosvenor Ven- 
ture Partners, an earlier depar- 
ture as a result of a Ming out, 
has yet to resurface. In Febru- 
ary Grosvenor, where Drum- 
mond had a 49 per cent stake, 
was bought by Mercury Asset 
Management for £4.5m, after 
the company failed to raise a 
new fund. 

It was the first outright pur- 
chase of one venture capital 
fond manager by another, giv- 
ing MAM an opening into 
smaller deals and greater deal 
flow out of London, MAM says. 

Earlier this month Trinity 
Capital founded 10 years ago 
to focus on technology com- 
pany investments, also lost its 
Independence when it was 
taken over by Advent Interna- 
tional John Walker, the co- 
founder who becomes Advent’s 
European managing director, 
had not tried to raise a new 
fund at Trinity. But he realised 
Trinity would not be able to 
raise the size of fund he would 


need to invest in later stage 
investments, the logical next 
move for the group. 

Linking with Advent, which 
has just raised $3i5m for Euro- 
pean investment, brought 
together large fund muscle and 
specialist investing abilities. 
Walker also said that those 
smaller fund mangers that 
sorted their future out sooner 
rather than later would have 
bettor options as the industry 
consolidated. 

That consolidation among 
institution has been going on 
slowly all year and is likely to 
continue. First, Postcl, the 
investment manager of the BT 
and Post Office pension 
schemes, formed a joint ven- 
ture with Granville Private 
Equity, the private Investment 
banking group in which it- 
already had an 18 per cent . 
stake. 

The new venture, GranvfUe 
Private Equity Managers, wiQ 
manage Posters £l95m private 
equity fund as well as Gran- 
ville Development Capital's 
funds plus £5Qm of new numey^ 
which Post el will invest over'’ 
three years. 

"An increasing number of 
institutional investors are rec- 
ognising the benefits of special- 
ist management of unquoted 
portfolios." says Granville’s 
chief executive, Michael Pea- 
cock. 

And then there is Cloven, 
the venture capital fund that 
focuses on larger buy-outs and 
has as investors the pension 
finds of British Coal. British 
Rail and Barclays Bank. In 
March, CINVen announced it is 
taking over the private equity 
portfolio of Royal Insurance 
Asset Management 

But CINVen's future is 
uncertain because of the priva- 
tisation of British Goal .CIN : 
Management which owns CIN- 
Ven, is one of British Coal’s. ■ 
non-mining assets included in 
a programme of sales that will 
probably be concluded by next 
March. 

The company might be inter- 
esting for institutional inves- 
tors but equally its own man- 
agement might consider 
buying out the management 
company . All things are being 
considered including the possi- 
ble management buy-out -."ft 
is up to British Coal and Sam- 
uel Montagu, [its advisers! to 
decide,” says Charles Nichol - 
son. a CINVen director. 

If there were a management 
buy-out, venture capital com- 
panies would be queueing 
around the block - at least to 
look at CINVen’s books. 

Richard Gourlay 


1st ■ • 

Gtoupfiwited 



.1 • ' 

. I 



.v/- 


"... : . -.V' 1 

Scree® pria&a- of graph*; ■ MiBuilSiAli** dfewd; ' . . ; t 'i *; 

Watento and flmfrtfflf'"- 


Committed 
to MBOs. 

A few 


Management Bu^-ont 




'Lead. . . 


xi , 200,000 -; ' •• * 994 deals . 

■ Marag?:o«^rt 8ujr-(tyt \ 1 . 

Safe- Investor'. .. : -'0& {fttosstw*'' ”• 'l'-’ 

Barclays . 

Capita) linked . JV# - . Capital •' 


t^..Matr5tee , 1 %• 

: TSAjte^'rfatSidn'.-' .Li 

. ,,4^' 

. pt&hoiie-' large owb*t . 

; aftd opedsor • !' 

• ■■ 


Bw^ja'DevAipnnt 
. OpltaF tiratted 


BlackliaA Lecwe ' 

(Carou^eiy iimrited * 

ArtHt-wienr arcade ' " 

Op e r ato r. *. ' ./'*> • 

£5,000,000 . “ 

Management Buy-out * 

Syndicate Mrrivtier " ... • Syrnttcrfe fctwbcr • ; !*&•*' 

Barclays DcvtKopoienl Barclays Pev&ojM sent 

Capital Limited • Capital Limited 


Eoro jaw** pucj 


• Maotdaetmv. oblpbovd 

■and ' ■ ! - lr 

■■ .*•••.*. • H ‘ 

£i,400,rioo :. 
Ntanagtrownt Buy-out ; 


Co wrings Mobility Sheffield Steel : 

limited Produas Umifed 


Cumcrvun of W’hklo*. to . 
jecommotU te vrfcrcictuirt. 


XS00,(X» ; • •• 

Management .Buy-otit 

Sale In>c»iar 

'Bardap iDewHopment 
.'Capital. Limited 


Mamdaiwur of 
wheclhran* 


Managcmeftt' Buy-out 

Sole. Enwstur 

Barctejf* Devetopment 
Capital Umtiod 


If you are considering 
a management 
buy-out and require 
further information 
contact; 

Graeme White 
Pickfords Wharf 
Clink Street 
London SEl 9DG 

Tel: 071 407 2389 
Fax: 071 407 3362 



Barclays Development 
Capital Limited 





FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


III 


VENTURE AND DEVELOPMENT CAPITAL 3 


R obert Smith, chief exec- 
utive of Morgan Gren- 
fell Development Capi- 
tal, tells an amusing story 
about fund raising in the US. 
Arriving at Madison, the capi- 
tal of Wisconsin State, Smith 
and colleagues are searching 
in their bags for the address of 
the fund managers they are 
due to see that day, when the 
tax! driver interjects: "I know 
where you are heading. This is 
Madison, Wisconsin. 

“The only thing in town is 
the pension fund. If you are in 
there for less than an hour, 
you’ve had it, more than an 
hour and yon are in with a 
chance.” 

Over the last 18 months, UK 
venture capital fund managers 
have been tripping over each 
other in some of the farthest 
flung corners of the US. 

From Wisconsin’s pension 
fund in the north to the giant 
California Public Employees 
Retirement System (Calpers), 
corridors have echoed to the 
honeyed tones of salesmen try- 
ing to convince investors their 
track record is better than the 
next fund manager who will 
walk in through the door. 

Mostly, their efforts have 
been successful. In spite of 
clocking up many more air 
miles than they had wanted. 
Charterhouse Capital Part- 
ners, Candover, Schroder, 
Legal & General and Morgan 
Grenfell have successfully 
raised more than £lbn of new 
capital this year, much of it 
from US investors. 

As Roger Brooke, chairman 
of Candover says, raising capi- 
tal has taken a lot longer than 
for previous funds. Some 
smaller outlets may also have 
also been pleasantly surprised 
that, notwithstanding the 
additional effort, they have 
raised new fluids. 

Eighteen months ago few in 


FUND RAISING 

A big trek 
to the US 


the industry would have bet 
on some of these funds raising 
much fresh capital. Their life 
raft has been toe strong burst 
of flotations in the UK that 
began last year and trans- 
formed the performance of 
some funds that would other- 
wise have looked deeidedly 
worse for wear. 

Unfortunately for venture 
capitalists who had hoped to 
spend less time travelling to 
raise funds, UK institutions' 
appetite has been dulled by 
the roller-coaster performance 
over the last five years. 

“The underlying appetite Is 
still there,” says one active UK 
investor in private equity 
funds. “But there is a greater 
degree of cynicism about the 
claims of fund managers. I 
think that the proliferation of 
professional venture capital 
managers which we saw until 
four years ago won’t recur for 
some time." 

But the pilgrimage to the US 
is not driven only by the scar- 
city of capital elsewhere. Bob 
Johnston, president of Beacon 
Hill Financial, a Boston-based 
agency that specialises in rais- 
ing funds, says there has been 
a steady growth in the number 
of investors interested in what 
used to be known as "alterna- 
tive investments.” 

These institutions - some of 
them big hitters such as Cal- 
pers with S80bn under man- 


agement - are allocating fixed 
percentages of an increasing 
asset base to unquoted invest- 
ments* 

"What is attrac ti ng the US 
investors is the good news 
coming from the UK econ- 
omy,” says Johnston. "But 
there is a surprising amount 
being raised for MBOs.” 

T he real newcomers are 
the state pension funds 
and increased activity by 
institutions Hfce Harvard, Yale 
and the Andrew Mellon Foun- 
dation. Corporate pension 
funds first moved into over- 
seas quoted investments in toe 
mid-1980s, followed five years 
ago by the state pension funds. 

"Now public pension funds 
are following corporate funds 
again," says Johnston. “That 
is why there is an increase in 
the amount of dollars avail- 
able for unquoted invest- 
ment” 

This has led to another 
development Many of these 
investors will only put large 
sums in venture capital funds. 
Investing In small amounts 
makes little sense for a group 
such as Calpers. As a result, 
more funds are being raised by 
fewer fund managers. 

The same phenomenon, is 
apparent in the US market 
Some observers say this con- 
centration could increase com- 
petition for larger buy-out and 


More competition for deals 


Continued from page 1: 

If prices are rising, there will 
be a tendency for the amount 
of debt in deals to rise in order 
to maintain target ted real rates 


British Steel 

industry 


Finance 

for 

growing businesses 
in 

Steel Areas. 

£10,000-£150,M0 

British Steal (htfcsfey) Ud, 
Contufoy Ham, W Sptodwn Rood, 
Croydon, at? 2U. 

Telephone: Ml 686 2311 


British Steel 

industry 


of return. What has also 
changed in the last six months 
is that the banks have 
returned in force. As Robert 
Smith, chief executive of Mor- 
gan Grenfell Development Cap- 
ital says: "The banks’ market- 
ing departments have locked 
the credit department in the 
cupboard.” 

In recent years, most deals 
have been structured with as 
much debt as equity, but most 
venture capitalists say the 
ratio of debt to equity has now 
risen to two to one. As the 
banks, notably Midland Bank, 
have poured back into the mar- 
ket, fees and interest spreads 
on debt have both come down 
from more than two per cent to 
under two per cent. 

What is more, there are signs 
that the mezzanine finance 
suppliers, such as Intermediate 
Capital Group, which floated 
this year, are trying to provide 
more expansion capital and 
acquisition finance for private 
companies. Few observers 
believe debt to equity ratios of 
10:1 will quickly return but 
there is concern - “the cross- 
over point into lunacy is when 
people have to deal their way 
out of debt, through asset 
sales, rather than trade their 


way out of debt.” says Shaw. 
On a more positive note, there 
is little doubt that a larger pro- 
portion of funds raised is now 
concentrated in more experi- 
enced hands as institutional 
backers become more selective. 

Undoubtedly, competition 
will get tougher for deals. Ven- 
dors of companies are more 
demanding and venture capital 
houses which wait to he intro- 
duced to deals, rather than 
rooting them out themselves, 
will only get the more 
thumbed-over transactions. 

There is also no doubt that 
the industry could do with an 
increase in deal flow. What 
venture fund managers would 
dearly like to see is a resump- 
tion of large corporate acquisi- 
tion activity which has always 
led to disposals in the past 

“The real question is 
whether we’re right in believ- 
ing there’s going to be an 
increased flow of opportunities 
resulting from the unwinding 
of acquisitions and deals that 
were made in the late 1980s,” 
says (handover's chairman, 
Roger Brooke. “The ability of 
ourselves and everyone else in 
the industry to invest will 
depend on whether we are 
right.” 


This announcement appeais as a matter of record only 

£750,000 equity financing 
to support the development of 



PISCES AQUACULTURE LTD 
the UK's only producer of 
St Peter's Fish 


Transaction led and arranged by 

CINVen 

Equity finance provided by 

CINVen Funds 


Having the capital to back a big idea is only half the secret. 
Having the vision to spot one is the other half. 


CINVen 


CMVanUSsaiMnAwnI HD 


late stage development capital 
deals, forcing down targeted 
returns, pushing np the 
amount of debt in each deal or 
both. 

Howard Cox, general part- 
ner at Greylock, the long 
es tablishe d Boston-based ven- 
ture capital firm, disagrees: 
"If there Is more money avail- 
able, it can encourage opportu- 
nities, he says. "The question 
is the quality of the deal 
flow.” 

Another dissenter is Alan 
Patricof, chairman of Patrlcof 
and Co, the US member of 
Apax Partners. He says there 
is no shortage of quality deals. 

"The level of disbursements 
of venture capital fimds has 
consistently run under or dose 
to the amount of money 
raised,” Patricof says. 

For the fund raiser, how- 
ever, one thing is certain. 
Fund managers will increas- 
ingly have to prove their track 
record or they will not get past 
the gatekeepers, the interme- 
diaries who screen and rank 
flip fluids their mangers 
for investing institutions. 

“Yon really have to have a 
track record and it really has 
to check out,” says Robert 
Smith. 

“Five years ago we were sell- 
ing dreams and there was 
absolutely no track record* 
Now these gatekeepers really 
do know who we are and have 
comparative Industry statis- 
tics for dosed end funds.” 

Inevitably, the arrival of 
gatekeepers has increased the 
length of time - and therefore 
toe cost - of raising a. fund. 
Johnston says it now takes up 
to a year, double what it took 
five years ago. 

"They investigated investee 
companies, they looked at our 
performance numbers, our ref- 
erence checks with banks and 
accountants,” says Stephen 
Curran, chief executive of Can- 
dover. 

For those funds who can 
show their quality, the US is 
likely to remain an attractive 
source of capital, as long as 
deal structures remain conser- 
vative. 

As the industry matures, 
however, managers with 
poorer performances will no 
longer be able to rely on a 
silver tongue and a winning 
sniih*- 

More visitors to Madison, 
Wisconsin, might consider 
keeping the taxi meter run- 
ning - they could be out in 20 
nrinntgg and able to catch toe 
same aeroplane out 

Richard Gourlay 


CORPORATE MOVES 


The spotlight falls on 3i 


T he most aignifirant COT- 

porate move of the year 
was the flotation of 31, 
valuing Europe’s largest inves- 
tor in private companies at 
about £L6bn. The big question 
the flotation raises is whether 
3i will change the way it does 
business. 

It already dnmi pares smaller 
deals through a national net- 
work of profitable offices near 
the source of deals. And there 
are few signs it will move 
quickly back into the more 
competitive larger deals, fol- 
lowing its unhappy investment 
in the Isosceles buy-in of Gate- 
way supermarkets which led to 
a £72m write-off in I960. 

But there is some question 
as to whether key deal makers 
in regional offices might be 
tempted away now that they 
can cas h in share options. 

Ewen Macpherson, 3i‘s chief 
executive, is adamant that 
nothing has changed - "the 
flotation is not affecting the 
way we do business,” he says. 
"We took the steps we thought 
were necessary to make it a 
manageable investment trust 
two to three years ago.” 

For other venture capitalists, 
3i’s move into the limelig ht on 
the fringes of the FT-SE 10 
index will raise the profile of 
the industry to a level it has 
rarely enjoyed before. 

The flotation did not go alto- 
gether smoothly. On toe day 
before the issue was priced in 
June, the FT-SE 100 index fell 
40 points. While institutions 
over-subscribed, the public 
only wanted LI times the 
shares they were offered. 

But from the first day, trad- 
ing in the shares has been 
buoyant Stockmaiket analysts 
say there is steady institu- 
tional demand for what is s till 
a relatively illiquid stock that 
is likely to join the FT-SE 100 
index and that many of who 
bought in the float have tucked 
their allocation away for the 
long term. 

l%e 13 per cent discount at 
which Si was launched has 
steadily narrowed. Now the 
debate is whether the shares 
are trading at a discount or a 
premium to a net asset value 
which was last assessed in 
March. For some institutions, 
3i will be their first investment 
in venture capital. Unquoted 


investments are interesting at 
the moment because smaller 
companies tend to recover fast- 
est during the early stages of b 
economic recovery. 

Institutional investors who 
want an exposure to private 
equity investment have had to 
choose between relatively illiq- 
uid investment in venture capi- 
tal funds or the quoted venture 
capital trusts. 

Si, on other hand, offers both 
liquidity from publicly quoted 
shares and a portfolio which 
spreads risk across 3500 compa- 
nies. What is more, when 3Ts 
last asset valuation was struck 
in March, the group was using 
the published 
audited earn- 
ings figures up ;;v 
to June 1993 for i~ 
more than half 
its invest- 
ments. This 
leaves a full 
year of com- 
pany recovery 
for many com- 
panies which 
has been less 
than full; 
reflected in 3i‘s 
net asset val- 
ues, analysts 
say. A 3i 
investment 
may not yield 
as much as the 
best perform- 
ing venture 
funds over 
time. But it 
represents a 
punt on the recovery of the 
UK's Mittelstand companies, 
without the illiquidity of 
investing in large funds. 

This could be good news, not 
just for 31 's founding share- 
holders. The high street b anks 
and the Bank of En gland are 
likely to contemplate placing 
some of their remaining 55 per 
cent stoke in 3i after June next 
year. 

Other venture capitalists 
could also benefit If institu- 
tions became more accustomed 
to private equity investment, 
they might consider making 
venture capital a recognised 
asset class as it is in the US. 
Institutions might then for- 
mally allocate a percentage of 
funds to the class, securing a 
more certain flow of capital to 
the industry. 



Ewen Macpherson, 3Fs chief 
executive, says: The flotation is 
not affecting the way we do 
business” 


The 3i flotation could also 
.iing greater transparency to 
the valuation of unquoted com- 
panies, for long something of 
mysterious art rather than a 
science. There have been cases 
where venture capitalists 
which were on-investing have 
reported different values for 
the same investment, each 
describing their approach as 
“conservative". 

Such anomalies are unlikely 
to engender confidence in 
wider institutional interest in 
toe asset class. But with 3i giv- 
ing a detailed description of its 
valuation policy in its offer 
document, and other quoted 
venture capital 
trusts becom- 
ing more forth- 
right about 
their basis of 
valuation , 
potential inves- 
tors are hope- 
ful a standard 
approach will 
evolve. 

What about 
the way 3i does 
business? Some 
competitors 
question 
whether the 
group will 
change its 
approach to 
customers 
under pressure 
from new 
shareholders. 
In particular, 
they question 
whether 3i will break with its 
tradition of not interfering 
with management’s preroga- 
tive to decide if and when they 
should sell their company, 
thus providing 3i with an exit 

3i vigorously denies there 
will be a change. The company 
says it gains a competitive 
advantage from the approach 
that leaves management in 
control of the tuning of any 
sale. In any case, the portfolio 
turns over at its own pace, it 
argues, providing the neces- 
sary realisation of capital 
gains. 

Quite apart from the damage 
that such a shift would do to a 
unique selling point. 3i argues 
it is under much less pressure 
to realise capital gains than a 
venture capitalist that raises 
fixed life funds. In other 


respects, 3i was already chang- 
ing ahead of the flotation, cast- 
ing off a fusty, avuncular 
image that had developed since 
its formation as the Industrial 
and Commercial Finance Cor- 
poration after the war. 

It has pulled out of markets 
where it has no particular 
advantage - the US, property 
investment and consultancy. 
In doing so. it has cut staff 
from 940 to 570, with a much 
smaller reduction in the num- 
ber of people focused on its 
core business - "it didn't make 
sense to have a large manage- 
ment consultancy nor targe 
dealing profits from property 
or to try to have a business in 
the US,” Macpherson says. 

But there are signs 3i is 
leveraging up its market posi- 
tion more aggressively. For the 
first time. 3i this year raised 
two funds from external inves- 
tors, breaking with a tradition 
of only investing off the 
strength of its own balance 
sheet. 

The first Is a Ecu 300m fund 
for co-investment in continen- 
tal European management buy- 
outs and buy-ins. This was 
designed to allow 3i to expand 
fester internationally through 
its remaining foreign offices 
without putting pressure on its 
balance sheet. 

The second - a fund for co- 
investment in UK buy-outs 
larger than £i0m - will poten- 
tially have a greater impact on 
3i’s competition. In the past 3i 
has tended to syndicate chunks 
of its larger deals - £250m 
worth over the last 10 years - 
because it does not take major- 
ity positions on boards. 

The new fund will allow & to 
retain a greater amount of 
deals for its own benefit. The 
group was aiming to raise 
£100m from up to five institu- 
tions but, with the flotation 
looming, it closed the fund 
after raising only £75m from 
the Norwich Union and Austra- 
lian Mutual Provident 

But these two funds are only 
a toe in the water. Given a 
favourable investment perfor- 
mance, 3i is likely to raise 
more fimds, reducing the sup- 
ply of deals it syndicates to the 
market and increasing compe- 
tition for new funds. 

Richard Gourlay 



^ S S S S3 jgj 


“Our rivals 
also had 
the resources 
to fund a 
£65 million 
deal. 

But Nat West 
Ventures 
had the 
determination 
to close it.” 


"It was late, 1.30am in Leeds, when the 

exchange of sealed envelopes took place. 

Then at long last, a lawyer came in and 
said ‘Sign here.' 

Against all the odds, we had won. 

The Principal Hotels deal had been a 
complicated management buy-in/buy-out. 
We were late getting into it. And wc were 
competing against a team which included the 
incumbent MD. 

In any deal, financial resources arc important. 
But in a closely run race, it’s the people who 
make the difference. From the very first day, 
NatWcst Ventures worked phenomenally 


hard, actively forging good relations with 
both the vendor and management. 

When they needed to see the hotels for 
themselves, they tea veiled across Europe in a 
punishing three-day schedule. 

And when an eleventh-hour price increase 
became necessary, they didn’t bat an eyelid. 
That's what the resources of NatWest can 
do for you. 

Even when the situation looked bleakest, 
they supported us folly and never considered 
throwing in the towel. 

It was a once -in -a- lifetime opportunity. 
NatWest Ventures made it possible for us 



thanks to their incredible resources, integrity - 
and above all their determination to win.” 

For more information about management 
buy-ins, buy-outs and turnarounds with 

NatWest Ventures, call David Shaw on 
0171 375 5100. 



NatWest Ventures 


•Veil Hc.r Marins 


Going the extra mile. And then some. 

iNdltac T'asucs Luaacd. a of £HRO o pa *4 

dad i/UiWUii 


\ 







IV 


X 


X 



FINANCIAL TIMES 


FRIDAY SEPTEMBER 23 1994 


VENTURE AND DEVELOPMENT CAPITAL 4 


In contrast to the US, 
earfy-stage funding for 
younger, high 
technology companies 
in the UK is in relative 
decline, reports 
CUVE COOKSON, 
Science Editor 


Disillusion grows among Britain’s new technology companies 

Gloom among UK’s high tech entrepreneurs 


A t first sight, the British 
Venture Capital Associ- 
ation’s 1993 Report on 
Investment Activity is the best 
possible riposte to critics who 
accuse the industry of ignoring 
high technology in flavour of 
safer fields such as services, 
retailing and low-tech manu- 
facturing. 

Investment in technology 
and life sciences businesses - 
crnnprtirtng the computer, elec- 
tronics, medical and biotech- 
nology sectors - leaped from 
£9Lm in 1992 to £268m last 
year. That represented an 
increase from 7.4 per cent to 
2L4 per cent of all venture cap- 
ital investment in the UK. 

And the inflow of funds is 
indeed welcomed by estab- 


lished high-tech companies 
wanting to expand as the 
recession rads. 

But most or all of the new 
money is going into later-stage 
expansion and management 
buy-ins and buy-outs. There is 
no sign of improvement in the 
area where ftmds are most des- 
perately needed; investment in 
innovative new companies. 
The BVCA figures show that 
total start-up and early-stage 
investment fell from £82m in 
1992 to £69m in 1993. 

“Early-stage funding is in 
relative ew-Hno as VC compa- 
nies Hurigt on larger deals to 
help cover their costs.” says 
Charles DesForges, UK-based 
president of TO, the European 
technology transfer network. 
“If you lock on this as a river, 
everyone is going down to the 
estuary to look'for the fish that 
are already fat, and opportuni- 


ties further upstream are being 
ignored.” 

The merger of Trinity Capi- 
tal with Advent International, 
announced this month . has far- 
ther reduced the ranks of those 
specialising in young high-tech 
companies. John Walker, co- 
founder of Trinity and now 
manag in g dir ector of Advent 
International’s European 
operations, says retains on his 
early-stage funds have been 
“on the borderline" - “our 
experience was telling us we 
needed larger deals.” 

It is easy to find high-tech 
entrepreneurs who are bitterly 
disillusioned with UK venture 
ca pitalis ts. One is Mike Fowler, 
a biology professor at Sheffield 
University, who wasted 18 
months slogging round the UK- 
based venture capital funds, on 
behalf of his small university- 
based biotechnology company. 


Plant Sciences Ltd. 

“fa thfi UK, SO much manage. 

meat time is spent trying to 
raise money that the business 
itself can disappear,” he says. 
“The people we dealt with 
showed a total lade of vision 
and no understanding of risk, 
as applied to a start-up ven- 


rt took him just three months 
to raise 5 13m through Com- 
monwealth BioVentures of 
Massachusetts. 

“The American attitude 
couldn’t have been more differ- 
ent,” he says. “We were deal- 
ing with people who had actu- 
ally been through the process 


In the US, a significant amount of venture 
capital comes from individual investors 


ture. They took so long to 

maVa rip their Tpmris that; ttiq 
company could have died in 
the process." 

Fortunately. Plant Sciences 
survived the ordeal and is now 
flourishing - with US venture 
capital fanding and a new 
name, Phytera. Fowler says 
that, after he got fed up with 
the search for British backers. 


of starting companies them- 
selves and who understood 
what we were trying to do." 

So Fowler is still in Sheffield, 
running a research programme 
to develop plant-based pharma- 
ceuticals. But he is now 
vice-president of scientific 
affairs for a fast-growing US- 
owned company - Tm very 
happy with the outcome from 


my personal point of view and 
that of my staff The university 
came out of it well, too,” he 
says. “I’m very unhappy from 
the point of view of UK Ltd 
that ail our technology, the 
patents and know-how, are 
now American owned." 

Carolyn Hayrnan, joint man- 
aging director of Korda & Co, 
one of the handful of UK com- 
panies specialising in technolo- 
gy-based start-ups. sees little' 
prospect of much more money 
flowing into early-stage ven- 
ture funds. “We’re finding it 
incredibly difficult to raise 
money for our new fund {the 
£20m Korda European Technol- 
ogy Fund] - and if we’re find- 
ing it hard, it must be 
wdl-nigh impossible for new 
entrants " she says. 

A fundamental problem in 
the UK, die says, is that “the 
playing field is so uneven. The 


tax regime is so favourable to 
pension funds - and you can- 
not expect pension funds, by 
their very nature, to invest in 
start-ups.” 

Faced with a shortage of 
institutional support, Hayman 
and others are paying more 
attention to wealthy individu- 
als as a potential source of 
high-tech venture capital. 

“hi the US, a significant pro- 
portion of venture capital 
comes from individual inves- 
tors - in complete contrast to 
Europe," DesForges says. 
“These ’business angels* are a 
relatively untapped source of 
capital here.” 

The trouble, according to 
DesForges, is that there is no 
mechanism for channelling 
investments from individuals 
to high-tech entrepreneurs, 
while providing the investors 
with an expert assessment of 


the would-be companies and 
the entrepreneurs with the 

managerial advice they need to 
run a business. 

DesForges has a solution ra 
mind for the latter problem. 
“The real issue is that the ear- 
I y- stage company needs Man- 
agement skills that it does not 
usually possess. We’re think- 
ing of a fund that would put 
interim managers into the 
business, to train and guido 
the owner during the early 
stages of growth. It would be a 
short-term mission and they 
would move on when the busi- 
ness was established." 

That would not solve the 
funding problem, however. Per- 
haps the way to draw more 
individual investors into early- 
stage ventures would be to 
level the tax playing-field 
between pension funds and 
everyone else. The government 
could allow people to set up 
tax-free Individual Retirement 
Accounts, on the US model, 
which they could use to invest 
in start-up companies; at the 
■amp time, it might even help 
to make the initials IRA 
respectable. 


E CONOMIC recovery may 
be whetting the appetite 
of risk capital investors 
In many industrial sectors, but 
not yet in biotechnology. 

“What we have now is a 
protracted and difficult bear 
market with a shortage of capi- 
tal and low prices for compa- 
nies,” says Mr Brook Byers, a 
partner at California specialist 
biotechnology venture capital 
firm Perkins. 

The bear run began in 1992 
when the whole healthcare sec- 
tor, including some large capi- 
talisation Anig ffnmpawy 

that had been stars in the 
1980s, was threatened by the 
prospect of healthcare reform 
impnccH by the fflmtnn Admin- 
istration In Washington. 

Biotechnology was especially 
vulnerable since the proposed 
reform was designed, among 
other things, to control prices 
that could be charged for 
drugs. Biotech companies rely 
on the prospect of being able to 
charge high prices for new 
treatments to pay off their sub- 
stantial investments. 

At the same time, confidence 
in the sector was undermined 
by the failure of some of the 
most promising quoted compa- 
nies. These included Centocor, 
Xoma and Synargen, whose 
mul tihiTTirm rinTIar marine capi- 
talisations all but vanished 
when their drugs faflpd inefin- 


Fall in share prices has worried investors 


A dilemma for new 
biotech companies 


ical trials. As a result, share 
prices of quoted companies fell 
rapidly almost across the 
board. With no prospect of a 
profitable exit, venture capital- 
ists sought other investment 
vehicles. This was a reversal of 
fortune for the sector. As one 
biotech company chief execu- 
tive says: “Early 1992 was a 
waterfall of money. You held 
out your cup and it was falL” 

Now investors are asking 
themselves whether they have 
created too many companies. 

"People are beginning to 
realise that 1«300 to 1,400 bio- 
tech companies Tnanw that the 
demand for capital to keep 
them going is too high. Biotech 
is rapidly r unning out of 
money," says Mr Alan Carr of 
San Francisco investment 
bankers Hambrecbt and Quist. 

The sector’s appetite for cap- 
ital can be measured by com- 
paring cash reserves with the 
rate at which they are being 


consumed. “In a ggre gate, there 
is less than two years’ money 
left,” says Mr Carr. 

US stock broker Lehman 
Brothers follows 100 biotech 
companies, of which 45 have 
less than two years cash left 
and 17 a year or less. 

The prospect of a heavy 
round of rights issues or sec- 
ondary pnhHr offerings has wit 
only depressed the values of 
quoted companies but also 
those awaiting their initial 
public offerings. Risk capital 
investors have had to switch 
part of their funds fr om seeds 
and eariy-stage ventures to the 
mezzanine to ke ep their earlier 
investment vehicles alive, 
according to Mr Stephen Bur- 
rill of San Francisco finance 
house Buirfll and Craves. 

Mr Jeremy Curnock-Cook. 
director responsible far biosci- 
ence investment at Rothschild 
Asset Management, echoes 
this, saying that early stage 


venture in ve s tors “are begin- 
ning to ask themselves 
whether to limit investment. 
Are we not better off maMng 
the ones we have already more 
successful?" 

Amid the gloom, investors 
are looking beyond the US, the 
original home of both venture 
capital and biotechnology, to 
Europe. There are several 
incentives to cross to the Old 
World for both US and Euro- 
pean investors: 

• Europe has yet to see the 
failure of any of its larger bio- 
tech companies. Rather the 
reverse; the rapid progress 
being made by British Biotech, 
now the world's 12th largest 
biotech company by market 
capitalisation, has maintained 
confldmcft fa the UK and, to a 
lesser extent, the rest of 
Europe while the US lan- 
guishes, says Curnock-Cook. 

• European scientists are 
increasingly prepared to con- 



Approvd for a cfintcai trials b won far more speedRy in Europe than in the US 


sider bec oming entrepreneurs. 
Research this year by Mr Dan- 
iel Schoch of the Hautes Ecole 
Commercial University of Lau- 
sanne suggests that while 28 
per cent of Swiss scientists had 
considered starting a company, 
only four per cent had. None 
had been started with local 
venture capital because there 
is virtually no Swiss venture 
capital industry. 

• It is easier to conduct 
research and development in 
Europe - “it is only a slight 
exaggeration to say that the 
Food and Drug Administration 
is driving some companies to 
Europe,” says Mr Carr. 


“Approval for a clinical trial in 
Europe can take one month, in 
US it can can take 13-14 
months.” The gap is likely to 
grow with the establishment in 
1996 of the pan-European Medi- 
cines Evaluation Agency. 

• There is a “reverse brain 
drain”, according to Mr BurrilL 
of experienced biotechnology 
entrepreneurs from the US to 
Europe. Examples includes Mr 
Nowell Stebbing, formerly of 
Amgen and Genentech, the two 
highest capitalisation US bio- 
tech stocks, who is now chair- 
man of the UK’s Chiroscience. 

• Changes in stock market 
regulations to ease the initial 


public offerings of companies 
with no profits record. The 
London Stock Exchang e imple- 
mented one round of reforms 
last year and is close to enact- 
ing another. 

Privately, some of venture 
capitalists fear that the new- 
found European confidence in 
biotechnology will be 
short-lived. They suggest that 
European investors and entre- 
preneurs are unsophisticated 
and may become victims of the 
sector’s appetite for "a new 
generation of suckers”. 

Others argue strongly 
against this view. Several say 
that European biotech compa- 


Danief Green 


OUR FIRST YEAR ... 


Benfield Group limited 
Development Capital 

Total Funding: £50 million 

Equity led by RBDC 

RBDC Investment: £7 million 

Date: June 1994 

Direct Holidays pic 

Development Capital 

Total Funding: £1 million 

Led by RBDC 

RBDC Investment: £1 million 

Date: September 1994 

DoOond & Aitdrison Group 

MBO 

Total Funding: £117 million 
Syndicate Partner 

RBDC Investment: £4.2 million 
Date: July 1994 



Dynamic Leisure Limited 

MBO 

Total Funding: £10 million 

Led by RBDC 

RBDC Investment: £2.7 million 

Date: October 1993 

Grampian Country Food Group Lid 
Development Capital 

Total Funding: £19 million 
Syndicate Partner 

RBDC Investment: £2.2 million 

Date: August 1993 

Macdonald Hotels Limited 

Equity led by RBDC 1 

Total Funding: £32.5 million 
Syndicate Partner 

RBDC Investment: £3 million 

Date: August 1993 




Melville Dundas Limited 
Development Capital 

Total Funding: £1 million 

Syndicate Partner 

RBDC Investment: £500,000 

Date: March 1994 

Melville Exhibition Sendees 

MBO 

Total Funding: £14 million 
Syndicate Partner 

RBDC Investment: £750,000 

Date: July 1994 

Paramount Chibs Limited 
Development Capital 

Total Funding: £16 million 

Led by RBDC 

RBDC Investment £4.2 million 
Date: July 1994 

Principal Hotels (Europe) Limited 
MBO 

Total Funding: £71,8. million 
Syndicate Parmer 

RBDC Investment: £3 million 

Date: March 1994 

Robison & Davidson Limited 

MBO 

Total Funding: £10.5 million 

Co-led by RBDC 

RBDC Investment: £1 million 

Date: February 1993 

Saville & Holdsworth limited 
Capital Re-organisation 

Total Funding: £53 million 

Led by RBDC 

RBDC Investment £55 million 

Date: September 1993 


... AND DEVELOPING VERY SUCCESSFULLY 


CONTACT: 

Joe McGrane 
26 St Andrew Square 
Edinburgh EH2 1AF 
TEL: 031-556 2555 


Douglas Kearney 
21 West George Street 
Glasgow G2 1EW 
TEL: 041-248 8228 


Tun Farazmand 
49 Charing Cross 
London SW1A 2DX 
TEL: 071-747 1339 


W Royal Bank 

Development Capital 


Royal Bank Development Capital Limited 

Registered Office: 42 St Andrew Square, Edinburgh EH2 2 YE. Registered in Scotland Number 139616 

A Member of IMRO. A Royal Bank of Scodmd Company. 



FINANCIAL Tl MI S 

(. ••//'/ i '/ '<.'// I "iV» 


EUROPE 


December 1 & 2, 1994 


Venture Forum Europe *94, the fifth In a well received European series arranged by the 
F in a nci al Times and Venture Economics, brings together authoritative speakers from 
Europe and North America to review current developments in the venture capital industry 
and to examine future trends. 


SPEAKERS INCLUDE: 

Dr Luciano Baibo 
Chairman 
B&S Ventures Sri 
Mr Cotta Blosley 

Partner in charge of Corporate Finance 
(Spain) 

Coopers & Lybraod 
Mr Christopher M Bowo 
Partner 

Baker & McKenzie (London) 

Mr Peter A Brooke 

Chairman & Chief Executive Officer 

Advent International Corporation 

Mr Roger Brooke 

Chairman 

Candover Investments pic 

Mr Douglas R Brown 

Chairman Sc Chief Executive Officer 

Advent Internationa] pic 

Mr Tbomas F Cntfigan 

Assistant Treasurer & Managing Director 

IBM Retirement Funds 

Mr Roderick Crawford 

Director & Head of Investment Trust Research 

BZW Securities Limited 

Mr Alec D’Janoeff 

Director of European Corporate Finance 

Coopers & Ly brand 


MrMkfud AdeKsan 

Partner 

Adas Venture 

Dr Walter R Henle 
Partner 

Baker & McKenzie (Frankfurt) 

Mr Brian Larcombe 

Executive Director. Finance Sc. Planning 

3i Group pic 

Chairman. British Venture Capital As so cia tion 

Mr Jonny Maxwell 

Senior Investment Analyst 

Standard Life Assurance Company 

Mr Denis Mortier 

Chief Executive Officer 

Financiers Saint Dominique 

Mr Jon Moulton 

Director 

Apax Partners & Co Ltd 
Dr Daniel F Mnzjka 
IAF Professor of Entrepreneurship 
INSEAD 


Co-sponsored by: 


Dr Jos Peeters 
Managing Director 
Capricorn Venture Partners nv 
Mr Elserino PM 
Vice Chairman 
Olivetti SpA 
Dr Fabio Satlin 

Managing Director. Chase Gemina 

Italia 

Chairman 

European Venture Capital Association 

Mr John B Singer 

Director 

Advent International pic 
Mr Michael Skok . 

Chairman & Chief Executive 
European Software Publishing Limited 

Mr Leendert J van Diiel 

Managing Director 

Gikle Investment Funds 

Miss Theresa Wallis 

Team Leader. Smaller Companies Group 

London Stock Exchange 

Mr Michael Walton 
Managing Director 
Gartmore Venture Capital Limited 
Mr Brian Winterilood 
Managing Director 

Winterilood Securities Limited 


Advent International 


■IVATI lOQITV 


BdBAMjteia 


Coopers 

&Lybrand 


VENTURE JAi 
FORUM 74 

m 


POPE - ' 


Please complete and return to: Financial TimesConfe^iicw" 
PO 80X3651, London SW128PH, 

Tel: 081 673 9000 Fax: 081 673 1335. 


Please tick relevant boxes: 

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Name Mr/Mra/MissjMs/Othcr 

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nies are better businesses than 
those in the US, which before 
the current difficulties found it 
too easy to raise capital 

Some believe that the bio- 
tech sector generally will 
recover, partly because it 
“always does” and partly 
because of a wave of mergers 
and acquisitions in the wider 
healthcare industry. 

They also note that the share 
price falls so far - an average 
of 25 per cent this year alone in 
Lehman’s 100-stocks - has cre- 
ated bargains. In the absence 
of commercial funds, many 
large healthcare companies are 
scouring the sector for the 
good buys. A number of deals 
have already been struck. 

Venture capitalists welcome 
the arrival of the pharmaceuti- 
cal rompnniAS which bold OUt 

the promise of higher prices 
for quoted companies and 
hence an easier exit eventually 
from unquoted investments. 

At least as important, they 
should bring a higher profile to 
the sector and encourage the 
view that the principle of bio- 
technology, rather than the 
performance of individual com- 
panies, is valid. 

“The jigsaw most be put 
together. It's time to see the 
forest not the trees,” says Mr 
Curnock-Cook. 


















FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


V 


★ 

VENTURE AND DEVELOPMENT CAPITAL 5 


Richard Gourlay reports on a record-breaking year 

Fresh US capital in 
fewer, larger funds 



Houston’s business centre: the states of Texas and CW a honw are considering starting seed funds 


US venture capital 

■ industry, which was 

■ becalmed for lack of 
funds in the early 1990s, is 
once again racing away on a 
following wind. 

In the first half of 1994, US 
venture capital funds raised 
Sl.SSbn. a 45 per cent increase 
over the same period last year 
according to Venture Econom- 
ics, the New Jersey-based 

information service. This is 
more than was raised In the 
record-breaking 1994 fund-rais- 
ing round and only $660m 
short of the total raised in 1993. 

What is more, this year's 
hmd raising was achieved by 
35 venture capitalists, nearly 
half the number who raised 
the capital in 1984, confirming 
the industry's move towards 
raising larger funds. 

With more funds available, 
the question facing venture 
capitalists is where the capital 
will he invested and how 
quickly, implicit in this ques- 
tion is whether the US venture 
capital industry has matured 
since the 1980s and will better 
manage the new funds 

Looming over the industry is 
the fact that the market for 
initial public offerings is not as 
encouraging as even six 
months ago. During the first 
half of 1994, 79 venture backed 
companies went public with a 
value of $2.12bn, up on the 


same period last year, accord- 
ing to VentureOne, a San Fran- 
cisco-based research organisa- 
tion. But venture capitalists 
say the figures are deceptive 
and that the market is sa gging 
According to VentureOne, it 
is also becoming for expensive 
for venture backed companies 
to raise capital through an 
IPO. While in 1992, companies 
needed to sell on average 1.6 
per cent of their equity for 
every million dollars raised, 
that figure has jumped to 2 per 
cent in the first half of 1994. 
This effectively means the cost 
of raising capital through an 
IPO has risen by 25 per cent 
making it less attractive to 
float at the moment 
What is more, the recently 
floated venture-backed compa- 
nies are not performing as well 
as they have done in the past 
year in the after-market barely 
posting gains over their issue 
price on average, compared 


with an 18 per cent increase 
last year. Venture capitalists 
are therefore accepting they 
will need to bund more compa- 
nies rather than seek a more 
Immediate IPO. 

The concentration of fresh 
capital in fewer, larger funds, 
threatens to increase competi- 
tion in the larger deals. Some 
observers say more cash will 
be cbairtng a similar n umber of 
deals, with the effect that rates 
of return will fell and more 
debt will begin to creep back 
into deal structures. 

T he fear is that venture 
capitalists will feel they 
have to put money to 
work, irrespective of the prices 
they pay and the quality of the 
deals they are currently seeing. 

Alan Patricof, chairman of 
Patricof and Company, the US 
member of Apax Partners, 
t hink s these fears are over 
done. “There is a much more 


mature attitude to pricing, 
more disciplined pricing,’' he 
says. “I see very little sign of 
wuLr winp valuations.” 

He believes the industry has 
matured since the 1980s - 
“there is no question that there 
is a maturing tn the industry," 
he says. 

“There are a lot more experi- 
enced people who have been 
around since the early ’80s, 
there are bigger firms that are 
better staffed.” 

The competition means there 
will be more need for venture 
capitalists to differentiate their 
product. More funds will be 
backing tur nar o und! and dis- 
tressed private and public com- 
panies, says Bob Johnston, 
president of Beacon HID Finan- 
cial, a Boston-based agency 
that specialises in raising 
funds. 

But while specialists and 
well-known individuals will 
always be able to raise early 


stage seed funds, there is a 
move towards investing in 
later stage companies, says 
Jesse Reyes, manag in g director 

Of Venture Rmnnmiw 

Whereas in the early 1980s 
many funds became interested 
in early stage investments and 
start-ups, they are doing more 
later stage growth capital for 
companies already making 
profits. 

This could become a problem 
for early stage funds even 
though the large state pension 


funds, which are increasingly 
allocating funds to the asset 
class, frequently say they want 
to support early stage develop- 
ment capital 

"They say they are firmly 
committed to early stage devel- 
opment capital - but there are 
not a lot of SlOQm early stage 
seed funds around." says 
Reyes. 

To get around the problem, 
Reyes says he is hearing that 
some states, including Texas 
and Oklahoma, are considering 


starting seed funds. 

As far as the areas that have 
received venture backing and 
have provided their investors 
with an exit, there has been a 
large swing in the first half of 
the year. 

No fewer than 18 communi- 
cations and networking compa- 
nies raised $636m in the first 
half of the year, up from 10 
flotations raising $504bn the 
previous year. 

As concern about President 
Clinton’s healthcare reform 


eased, so the number of flota- 
tions more than doubled to five 
and the amount raised rose by 
a factor of four to $2l7m. 

Biotechnology and pharma- 
ceuticals companies raised 
only $152m from 11 TPO’s, 
down from S278m in the first 
half of 1993. 

Venture Economics says its 
most recent figures on overall 
returns explain why more 
institutions like state pension 
funds are allocating more 
funds to private equity invest- 
ment 

In 1993, the overall internal 
rate of return - the annual 
compound rate of return to the 
investor - rose to 18J per cent 
up from 13.5 per cent in 1992 
according to the study of over 
460 ftmds. 

This improvement will have 
something to do with the state 
of the US economy. But there 
are also fundamental changes 
in the way growth companies 
are being financed. 

“Venture capitalists have 
moved much more towards 
growth capital for companies 
growing fast but already into 
revenues and profits,” says 
Patricof. "The banks still are 
not providers of capital to 
younger companies - they are 
asset not cash flow lenders. If 
you are looking for capital - 
venture capital is the only 
place to go.” 


Apprehension over the UK’s new-style venture capital trusts 

Plans face heavy criticism 


W hen the the UK’s 
chancellor announced 
a new type of venture 
capital trust with tax-free 
returns for investors in his 
last Budget, the venture capi- 
tal and investment industry 
was delighted. 

The new trusts seemed to be 
offering a solution to the 
long-standing problem of the 
“equity gap”, first identified 
more than half a century ago 
- the gulf between the small 
amounts of short-term loan 
finance offered to small busi- 
nesses by banks, and the sub- 
stantial amounts of long-term 
capital available to larger, 
more established companies. 

But since details of the pro- 
posed trusts’ likely structure 
were published in a consulta- 
tive document fills spring, the 
chancellor's plans have come 
in for heavy criticism. 

The industry’s clamour for 
changes in the draft rules has 
centred on two issues: the tax 
incentives offered to investors, 
and the restrictions on the size 
of target companies and the 
maximum investment allowed 
in each company. 

The Inland Revenue discus- 


sion document proposes that 
dividends and capital gains 
from venture capital trusts 
should be tax-free, hot there 
should be no up-front relief, 
and losses should not be allow- 
able against tax. This would 
put VCTs on a level with per- 
sonal equity plans, except that 
the maximum investment by 
each in dividual would proba- 
bly be about £100,000 a year, 
rather than the £9,000 annual 
Pep limit 

So far, fiie venture capital 
section of file investment trust 


Ministers are reviewing 
responses to the 
consultative document 


industry has not benefited 
from the massive popularity of 
using personal equity plans to 
invest in collective funds. Ven- 
ture capital trusts are usually 
excluded from Pep investment 
by rules stipulating that at 
least half the fund most be 
invested In ordinary shares in 
listed companies. Venture cap- 
ital funds by their very nature 
invest largely in unquoted 


companies, and often provide 
debt rather than equity 
finance. 

As Peps are aimed mainly at 
small-scale investors, this haa 
not been too big a problem - 
anyone Investing In venture 
capital should have a broad 
enough portfolio that they can 
use up their annual Pep allow- 
ance in other ways. 

However. VCTs want to 
attract a larger, wealthier type 
of investor, and the industry 
believes that more sweeteners 
are needed to make investors 
stomach the extra risk. 

One favoured solution would 
be for venture capital trusts to 
be classified as unquoted com- 
panies for the purpose iff qual- 
ifying for rein v estment relief 
from capital gains tax - the 
last Budget introduced a 
scheme whereby Individuals 
disposing or other invest- 
ments, from shares to second 


homes, can postpone the capi- 
tal gains tax bill by reinvest- 
ing the proceeds in unquoted 
trading companie s. 

Another popular option 
would be to give VCTs the 
same tax breaks as the enter- 
prise investment scheme, 
which offers 20 per cent up- 
front tax relief, and allows 
losses to be offset against 
income or capital gains tax. 

The industry is united in its 
demand for better tax breaks, 
but there is less agreement on 
whether the limi ts on size of 
investment and size of com- 
pany should be changed. The 
inland Revenue’s consultative 
document suggests that (here 
should be a limit on invest- 
ment in any one company of 
Elm a year, and target compa- 
nies should have assets of less 
than £10m to qualify - “the 
scheme's aims would not be 
served if funds were diverted 


into very large unlisted com- 
panies.” the document says. 

But venture capitalists and 
Investment trust managers 
have been bombarding the 
Inland Revenue with submis- 
sions on how the limits on the 
size of investment will mean it 
will not be worth fund manag- 
ers’ while to run such trusts, 
because researching small 
companies thoroughly for the 
sake of an Investment of less 
than Elm would cost far too 
much. 

The Association of Invest- 
ment Trust Companies, for 
example, has submitted a 
demand that the limit for each 
investment should be raised 
from £lm to £3m (with a 
requirement that at least 20 
per cent should be of less than 
Elm), and the size of potential 
target companies should be 
increased to between £20m 
and £30m. 


“The lower limits proposed 
in the consultative document 
would generate uncommercial 
administrative and manage- 
ment 00618,” the ATTC said. 

The opposite view is put by 
Mr Ian Tulloch, a director of 
Glasgow-based fund managers 
Murray Johnstone. He believes 
that allowing larger invest- 
ments would make managers 
concentrate on the more 
cost-effective upper end of the 
scale, and would work against 
the principal objective of the 
trusts, which is to help bridge 
the equity gap - “VCTs should 
be used to support small and 
medium-sized companies, not 
medium sized companies 
only," he says, as small com- 
panies seeking Injections of 
more than Elm are already 
well-served by current sources 
of venture capital. 

Mr Gilbert Chalk, chairman 
of the British Venture Capital 


Association's taxation commit- 
tee, proposes that as an alter- 
native to giving investors 20 
per cent tax relief, the trusts 
themselves could be given a 20 
per cent incentive on invest- 
ments of less than £500,000, to 
encourage trusts to focus on 
companies at the smaller end 
of the scale. 

The research involved in 
wiairing small investments in 
very small companies might 
be too expensive for London 
firms with high overheads, 
says Mr Tulloch, but he 


There is a strong belief 
that the inland Revenue 
will make concessions 


believes that regional venture 
capita] managers with lower 
costs and better links to local 
businesses would have no 
problem with operating ven- 
ture capital trusts using the 
tower limi ts. 

“Provided that the tax 
incentives are snch that we 
believe we can attract money, 
we would be very interested in 
running a venture capital 


trust.” He also suggests the 
development of partnerships 
and co-investment arrange- 
ments between venture capi- 
talists and business angels, 
which would help spread the 
burden of costs. 

Responses to the consulta- 
tive document are now under 
consideration by ministers. 
The final form for the new 
trusts will not be announced 
until later this autumn, possi- 
bly in the next Budget 

There is a strong belief 
within the industry that the 
Inland Revenue will make 
some concessions in line with 
submissions - the most likely 
is thought to be allowing the 
trusts to qualify for roll-over 
capital gains tax relief - but 
there is still apprehension in 
some quarters over whether 
the concessions will go far 
enough. 

The extent of the revenue’s 
generosity will determine 
whether VCTs develop into a 
sturdy bridge across the 
equity gap, or just another 
lifeline to a lucky few busi- 
nesses. 

Bethan Hutton 



— . 

— — — — 

Enterprise Inns Limited 




Tarkett Group 

— 

refinancing and further 


management buy-out 

— 

pub acquisitions 



— ' 

£40,000,000 


DM 360,000,000 

~ 1 

Syndicated Facilities 


Senior Debt Facilities 

— — 

arranged by 


co-arranged by 


Samuel Montagu 


Samuel Montagu 

= 

M.mh fu'U 


March 1994 

EE 



• v "‘ }.>:;/:■ ■ 

— — 

BSK Holdings Limited 


Rizla Group 

— 

management buy-in 




from 

‘*~ 7 ’ 

management buy-out 

ss 

Bromsgrove Industries PLC 




£2,000,000 


Term Loan and 

kMM 

Mezzanine Loan 


Working Capital Facilities 

n 

provided by 


ro underwritten by 


Samuel Montagu 

V” 

Samuel Montagu 

= 

Apnl l’W4 


May 1994 



Samud Montagu is one of .the most: icjiw providers -of debt; to the 
manugerattii buy-out V 

jlwider of uiezzamnc. finance as piS in second * \ : ;; 

sun® financing* and in ’ T £ 

Tb icam more abowour*^ V . -V • SAMm.MONTAGU - 

HSBC InvestWitBankm^ ■£ 



# . . . . 

10 1 jcntcr TteflWS ME. Aaewfcefof TJ* Socurtfes tad Brtrte^Aadiority 



Baring 

Capital 

Investors 

THE EUROPEAN PARTNERSHIP 

LONDON 

PARIS 

MILAN 

HAMBURG 



BARINGS 



Management Buy-out of 

Thierschmidt Group 

Mulheim an der Ruhr, Germany 

Revenues in excess of DM 100,000,000 

Led and organised by: 

Baring Capital Investors 


Institutional equity provided by: 

Baring European Capital Partners 


Senior debt provided by: 

Bayerische Landesbank, Frankfurt Branch 
Westfalenbank AG Bochum 


Since 1987, Baring Capital Investors has fed 
22 management buy-outs with a combined 
value of more than £2.2 billion. 


Baring Capital Investors is a member of 1MRO 













VI 


He 


FINANCIAL TIMES FRIDAY SEPTEMBER 3J IW4 


VENTURE AND DEVELOPMENT CAPITAL 6 


BUZZWORDS IN BRIEF 


A language all its own 


The venture capital 
industry, like any other 
has its own jargon, 
some of it unprintable. 
Here, however, is 
Richard Gouriay’s 
selection of expressions 
to help companies 
seeking capital through 
the linguistic maze. 


Imbo : Buy-in manage- 
, ment buy-out A hybrid 
between buy-in and 
buy-out where the venture cap- 
italist will inject their own 
management team alongside 
existing managers. 

Bum rate: the rate at which 
a business uses up the funds it 
raises. Many bio-technology 
companies bum rash particu- 
larly East 

Business angel: private 
investor who finances small 


companies and sometimes 
gives them the benefit of Ms or 
her expertise. Hie best angels 
are those who have been in 
business and have advice 
worth hearing. 

Business plan: the document 
put together by managers to 
justify their application to 
financiers for backing. 

A good plan should contain 
summaries of past and proj- 
ected profit and loss accounts, 
balance sheets and cash flows. 
Also details of products and 
services, markets, future strat- 
egy and profiles of the manag- 
ers. A simple rule: rarely will 
life turn out as forecast in the 
business plan. 

Captive funds: venture capi- 
tal organisations which form 
part of larger financial services 
groups. Usually they do not 
raise their own discrete funds 
but draw on the resources of 
their parents. 

Carried interest: the share in 
the proceeds of sale of an 
investee company that is kept 


by the venture capitalist 

Corporate venturing: the 
practice of a large company 
taking an equity stake or 
establishing a joint venture 
with a smaller business to ben- 
efit from the smaller firm's 
specialist expertise. The large 
firm ca n provide finance, man- 
agement back-up and distribu- 
tion outlets which would not 
be available to the smaller 
partner. 

Deal flow: the number of 
investment propositions which 
come to the venture capitalist. 
What matters is quality not 
quantity. 

Development capital: later 
stage venture capital invested 
when the business has become 
established and needs extra 
funds for expansion. 

Enterprise investment 
scheme: the replacement for 
the government’s discredited 
Business Expansion Scheme, 
the EIS gives front-end tax 
relief of 20 per cent for certain 
investments in certain compa- 


THIS ANNOUNCEMENT APPEARS AS A MATTER OF RECORD ONLY 

MAY 1994 



FOOD 

BRANDS 

GROUP 


Sale of 20 per cent stake 
to Electra Private Equity Partners 


The transaction was arranged by 
Electra Kingsway Limited 


ELECTRA 


ELECTRA KINGSWAY LIMITED 

65 KINGSWAY, LONDON WC2B 6QT TELEPHONE: 071 831 6464 FAX: 071 404 5388 
A MEMBER OF1MRO 




INVESTORS IN BRITISH BUSINESS 


MUOT UraM, 7 M Sow. ClufW. Rl VX An w*** 1 "P 

iHfefl. Ptin UntnjiF -OH-MuMo" 



Dies as well as exemption from 
any ra pitai gains. Unlike under 
the BES. investors can take an 
active part in EIS companies. 

Exit: the way a venture capi- 
talist realises all or part of an 
investment by either arranging 
a flotation of the company or 
selling it to another company 
or trade buyer. A growing 
range of exits is becoming 
available and the list also 
includes a refinancing of the 
company by another group of 
venture capitalists or the pur- 
chase of all the shares by the 
company’s own management. 

Hands on/hands off: some 
venture capitalists take a very 
close interest in their investee 
companies and will provide 
management expertise. Others, 
like 3i, monitor, but let the 
management get own with it 
Hurdle rates: Institutional 
investors have grown restive 
at the fees venture ca pitalis ts 
earn and have started to insist 
that funds achieve a basic 
return before managers can 
claim their carried interest. 
They often set hurdles based 
on a return on gilts or one of 
the leading stock market 
indexes and are beginning to 
look at more demanding hur- 
dle measures like the FT-SE 
All share performance. 

Independent funds: these do 
not form part of larger finan- 
cial groups. They raise their 
money from institutional and 
other investors. 

Internal rate of ret ur n (IRR): 
different people calculate this 
in different ways but it basi- 
cally m eans the compound 
annual rate of return to the 
investor. It includes dividend 
distributions and profits from 
disposals or the profits shown 
on a fair valuation of an inves- 
tee company. Inevitably, ven 
ture capitalists differ over 
when investments should be 
written down, up or off, so the 
figures are rarely strictly com- 
parable. 

Lemons and plums: bad 
investments invariably go 
wrong before the good ones 
produce profits. The lemons 
usually ripen before the plums. 

living dead: a portfolio com- 
pany which is just about trad- 
ing profitably but which shows 
little sign of ever meeting the 
venture capitalist's early high 
expectations. 

Management buy-in: the pur- 
chase of a business by an out- 
side manager or team of man- 
agers with the help of a group 
of financial backers. 

Management buy-out: the 
purchase of a business by its 
existing management with the 
help of a group of financial 
backers. Most of the equity 
comes from the venture capi- 
talist or other financial backer. 
The management pats up a 
small amount of finance for a 
disproportionately large per- 
centage of the equity. 

Recovery or turnaround fin- 
ancing: supplied to companies 
in difficulties where the ven- 
ture capitalist sees an opportu- 
nity to beef up or change the 
management and return the 
company to profits. Some ven- 
ture capitalists have employed 
insolvency specialists to iden- 
tify such investments. 

Refinancing: can be a sign of 
either failure or success. If a 
company performs poorly it 
may need an extra injection of 
funds. Equally, if it does very 
well, the management may be 
able to refinance the business 
on terms more favourable to 
themselves with their original 
venture capital backers. 

Replacement capital: funds 
provided to allow an eristfng 
shareholder to sell some or all 
of his shares. 

Second-round financing: ven- 
ture capitalists rarely expect 
the first injection of funds to 
meet a business's needs. A sec- 
ond or even a third round of 
funding will almost certainly 
be needed later as the business 
grows or unforeseen problems 
arise. At this stage the original 
venture capital investor may 
reduce his holding and bring in 
others to spread the risk. 

Seed capital: usually quite 
small amounts of capital pro- 
vided to turn a good idea into a 
marketable product or service. 
This can be the riskiest farm of 
venture capital since the con- 
cept, the technology, the entre- 
preneur and the market are all 
unproven. 

Spin-out: a new company set 
up by a larger established 
group to exploit new devdop- 
ments or fresh market opportu- 
nities and in which the man- 
agement team and a venture 
capital backer also take equity 
stakes. 

Stan a company which is so 
successful that It pays for all 
the failures and humdrum per- 
formers in the venture capital- 
ist’s portfolio. 

Sweet equity: the extra per- 
centage of a company's equity 


LEADING VENTURE FUNDS IN THE UK 




MMnn 

Mntawm 





V Sector 

Preference 




Tefeptnne 

tom. 

cm 

towL, 

CfWOJ 

Stert 

Up* 

IM- *(*»- UK 
opmeflC MB 

Equ tor Rfee tat 

3f0C 

07T SSS 3131 

0 

Open 

Y 

Y 

Y 

Y 

T 

Y 



am Ventwv Mangas Ltd 

0372 470373 

100 

500 

N 

Y 

Y 

Y 

KHE 

Y 

Y 

N 

N 

Abingworth Management Ltd 

071 839 6745 

500 

2J00 

Y 

Y 

Y 

Y 




Abtnrst Fund Maragws Ud 

0224 631999 

SO 

2,000 

P 

Y 

Y 

Y 

■now 




Acumen hwestmerta Lid 

071 409 0234 

500 

SJXM 

N 

Y 

Y 

Y 



N 

« 

N 


Advent International pic 

071 333 0800 

2,000 

30.030 

P 

Y 

Y 

Y 

TNCOEGOW 


N 

Advert Ltd 

071 630 9811 

250 

2500 

P 

Y 

Y 

Y 

OEHBCOMfGXP} 


Aaa-Berfcaley Assodate3 

071 734 4884 

250 

1500 

Y 

Y 

Y 

Y 

D08EN 


N 

N 

Apax Partners « Co Ltd 

071 872 6300 

500 

50.000 

Y 

Y 

Y 

Y 

wcetwesMtuLUTM 1 

N 

Arab International Trust Co Limited 

071 434 4141 

100 

2,000 

N 

N 

Y 

Y 



BancBgston Capital 

Bankere Tiust Company 

071 932 BOSS 
071 982 2500 

500 

500 

7,000 

Opai 

N 

N 

Y 

P 

Y 

Y 

Y 

Y 

T 

T 

Y 

Y 

Y 

Y 

N 

Y 

N 

Barclays Dewjtopmettl Capital Ltd 

071 407 2389 

500 

Open 

N 

Y 

Y 

Y 

TGGMQSfKXP? 



Barclays Venture Capital Urn 

071 242 4900 

100 

750 

N 

Y 

Y 

Y 

T 


N 

N 

N 

N 

N 

N 

Baring Capital Investors Ltd 

071 406 1282 

,\pnn 

Open 

N 

Y 

Y 

Y 

T 


Baring Ventura Partners Ltd 

071 290 5000 

0 

1.500 

Y 

Y 

P 

P 

TNDG(P) 


Barnes Thomson Management Services Ltd 

071 487 3870 

250 

SjOOQ 

P 

Y 

Y 

Y 

B) 



Baronsmead pfc 

071 242 4900 

150 

2000 

N 

Y 

Y 

Y 

T|P} 



Birmingham Technology (Ventue Capital) Ltd 

021 359 0981 

20 

250 

n/tf 

n/d 

n/d 

n/d 

n/d 


N 

N 

British Linen Bank Ltd 

031 243 8323 

250 

1.000 

N 

Y 

Y 

Y 

TfBxa 


British Steel (Industry) Ud 

0742 731612 

10 

150 

Y 

Y 

N 

Y 

MOBCHE 




Brown Sfrpfey Venture Manages Ltd 

071 606 6555 

1.000 

5.000 

N 

Y 

Y 

Y 

T 




Business Link Doncaster 

0302 340320 

20 

100 

Y 

Y 

Y 

Y 

T(NXP) 




Cainsfard Associates Ltd 

071 431 0681 

200 

1000 

Y 

Y 

Y 

Y 

HMO|P} 

Y 

Y 

Y 

Cambridge Capital Management Ud 

0223 312856 

200 

500 

Y 

N 

N 

N 

TM 

Y 

N 


Candbver fenwsteants pic 

071 489 9848 

■ 2JOOO 

S" 

N 

Y 

P 

Y 

T 




Capital ter Companies Ltd 

OS32 438043 

200 

N 

Y 

Y 

Y 

MLBCHEPWq 

V 

N 


Causeway Capital Ltd 

071 485 2525 

2.000 

6.000 

Y 

Y 

Y 

Y 

T 

Y 



Chanerttouso Development Capfcal Ltd 

071 248 4,000 

1.000 

50.000 

P 

Y 

Y 

Y 

HR 




Chase Investment Bank limaed 

071 962 5653 

500 

10.000 

N 

Y 

Y 

Y 

GOKCLM 

Y 



Chemical Vaiture Partners 

071 777 3365 

ZJXO 

20,000 

N 

Y 

Y 

Y 

DOOMS 

Y 

Y 


ONVenUd 

071 245 6911 

500 

Open 

Y 

Y 

Y 

Y 

T 

Y 

N 

N 

Closa Investment Management Ud 

Clydesdale Bank Equity Limited 

071 426 4.000 
041 248 7070 

1.000 

250 

5.000 

3.000 

N 

P 

Y 

Y 

Y 

Y 

Y 

Y 

T 

TlKJjNXP} 

Y 

Y 

N 

N 

CVC Capital Partners Ud 

071 4381489 

ihoo 

Open 

N 

Y 

Y 

Y 

Wi 

Y 

N 


Cygrus Vterture Partners 

0895 272601 

200 

Open 

Y 

Y 

Y 

Y 

DEHBOGK 

Y 

N 

N 

Derbyshire Erttgprtse Board Ud 

0246 207390 

50 

Open 

Y 

Y 

Y 

Y 

ML|P) 

Y 

N 

N 

Dunedin Ventures Ltd 

031 315 2S00 

750 

1.500 

N 

Y 

Y 

Y 

T 

Y 

Y 


E M Wferburg Pjncus & Co tot Ltd 

071 321 0129 

n/d 

n/d 

Y 

Y 

Y 

Y 

T 

Y 

N 

N 

ECI Ventures 

071 606 1000 

1.000 

5.000 

N 

Y 

Y 

Y 

twokpi 

Y 

N 

N 

Bectra Imwotec Ltd 

071 831 9901 

250 

1,500 

Y 

Y 

P 

N 

DHECMLBOK) 

Y 

N 

N 

Bedra Kingsway Ud 

071 831 6464 

5.000 

30.000 

Y 

Y 

Y 

Y 

CHGCMLSNK 

Y 

N 

N 

N J 

Enterprise Equity (hfl) Ltd 

0232 242500 

so 

750 

Y 

Y 

N 

Y 

T 

Y 

N 

Equity Ventures Limfled 

0272 311318 

5 

150 

Y 

Y 

Y 

Y 

DBSMEOG 

Y 

N 

N 

Euracontmerfial (AdwsersJ Ltd 

071 600 1689 

350 

SJ00 

P 

Y 

P 

Y 

Y 

N 

N 

European Accusation Capital Ltd 

071 246 4050 

3.000 

12,000 

N 

Y 

N 

Y 

WK0) 

Y 

N 

N 

Finlay Ventures 

0412041321 

100 

500 

P 

Y 

Y 

Y 

TiSiiWP 

Y 

N 

N 

Fleming Ventures Ltd 

071 480 6211 

500 

1.000 

N 

Y 

Y 

Y 

06H 

Y 

N 

N 

Foreign ft Ccfcnial Ventures Ltd 

071 782 9829 

1.000 

7,500 

N 

Y 

Y 

Y 

T® 

Y 

Y 

N 

Gartmore Venture Capital 

071 782 2000 

300 

5.000 

N 

Y 

Y 

Y 

T 

Y 

N 

N 

GLE Development Capital 

071 403 0300 

75 

750 

N 

Y 

Y 

Y 

T 

Y 

N 

N 

Goldman Sachs International 

071 774 1000 

10.000 

Open 

N 

Y 

Y 

Y 

n/d 

Y 

N 

N 

Granville Prorate Equity Managers Ltd 

071 488 1212 

500 

25,000 

N 

Y 

Y 

Y 

T 

Y 

N 

N 

Great Winchester Capea) Fond Managers 

071 584 4277 

250 

1.000 

Y 

Y 

Y 

Y 

GEDOHIMNSLCQAPB Y 

Y 

Y 

Gresham Trust pic 

071 606 6474 

300 

2^00 

N 

Y 

Y 

Y 

T|PJ 

Y 

N 

N 

Grosvenor Venture Managers Ltd 

0753 811812 

750 

2.500 

N 

Y 

Y 

Y 

TIP} 

Y 

N 

N 

Guinness Mahcn Development Capital Ltd 

071 623 8333 

250 

1.000 

N 

Y 

Y 

Y 

NO 

Y 

N 

N 

Hanbro Europeai Ventures Ud 

071 702 3593 

1,000 

12,000 

P 

Y 

Y 

Y 

TJBHE) 

Y 

N 

N 

Henderson Ventura Managers Ud 

071 410 4415 

1.000 

.Trim 

N 

Y 

Y 

Y 

m 

Y 

N 

N 

Highlands and Idartds Enterprise 

0463 234171 

0 

500 

Y 

Y 

N 

Y 

Y 

N 

Y 

Hodgson Martin Ltd 

031 226 7844 

250 

2400 

Y 

Y 

Y 

Y 

K 

Y 

N 

Y 

Industrial Development Board tor Northern Ireland 

01232 233233 

0 

Open 

Y 

P 

N 

P 

MLH 

Y 

N 

N 

Industrial Technology Securities Ltd 

0753 885524 

150 

500 

Y 

Y 

N 

N 

DOHQ8 

Y 

N 

N 

boty A Sme DeveJoprrant Capital 

031 225 1357 

500 

2JXH 

N 

Y 

Y 

Y 

TIB)© 

Y 

Y 

N 

We inwort Benson Development Capftal Ltd 

071 956 6600 

250 

20jQQQ 

P 

Y 

Y 

Y 

T 

Y 

N 

N 

Kfeimsort Benson Ltd 

071 623 8000 

2,500 

Open 

N 

Y 

Y 

Y 

TONfiXP) 

Y 

Y 

Y 

Korda & Compaq LM 

071 253 5882 

50 

700 

Y 

N 

N 

N 

EBCOHL 

Y 

N 

N 

Lancashire Enterprises pic 

0772 203020 

0 

500 

Y 

Y 

Y 

Y 

TJP) 

Y 

N 

N 

Laipent ffewton S Co Ud 

071 SI 9111 

50 

500 

Y 

Y 

Y 

N 

DSEHlH 

Y 

N 

N 

lazard Ventures 

071 588 2721 

300 

Open 

N 

Y 

Y 

Y 

TG 

Y 

N 

N 

Legal and General Ventures Ltd 

UCA Development Capital Ltd 

071 489 1888 

1.000 

60,000 

N 

Y 

Y 

Y 

T 

Y 

Y 

N 

071 839 7707 

100 

Open 

Y 

Y 

Y 

Y 

MIKXP) 

Y 

N 

N 

Lloyds Development Capital Ltd 

071 600 3226 

400 

Open 

N 

Y 

Y 

Y 

RP) 

Y 

N 

N 

London Wa3 Industrial Consultants Ltd 

0923 285199 

50 

100 

P 

Y 

P 

Y 

GSM 

Y 

N 

N 

Lothian Enterprise Ud 

031 220 2100 

10 

250 

Y 

Y 

N 

Y 

W) 

Y 

N 

N 

March Investment Fund Ltd 

061 872 3676 

100 

1.000 

N 

Y 

Y 

Y 

T 

Y 

N 

N 

Mercury Development Captol 

071 280 2508 

2500 

3QjOOO 

P 

Y 

Y 

Y 

TOGMN 

Y 

N 

N 

MMrogroup Capita} PLC 

071 435 8281 

30 

250 

N 

Y 

Y 

Y 

NOG 

Y 

N 

Y 

Midland Growth Capital 

071 260 7935 

100 

750 

N 

Y 

Y 

Y 

TCKJflP) 

Y 

N 

N 

Midlands Ventura Fund Managers Ltd 

0602 678400 

5 

IS 

Y 

Y 

Y 

Y 

T 

Y 

N 

N 

Montagu Private Equity Ltd 

071 260 0232 

750 

Open 

P 

Y 

Y 

Y 

T 

Y 

Y 

N 

Morgan Grenfell Development Capital Ud 

071 588 4545 

2J0O0 

20.000 

N 

Y 

Y 

Y 

Ca4LS(AGDON(E)(H)(g^ 

N 

N 

N 

N 

MT1 Managers Ltd 

0923 250244 

250 

1JOOO 

Y 

Y 

N 

Y 

oeeoMo. 

Y 

Murray Johnstone Private Eqtity Ltd 

0412263131 

500 

10.000 

N 

Y 

Y 

Y 

T 

Y 

N 

N 

NatWesi Ventures Ltd 

071 375 5000 

500 

Open 

N 

Y 

Y 

Y 

TWCBJCP) 

Y 

Y 

N m 

Noble a Co Ud 

031 225 9677 

50 

Open 

Y 

Y 

Y 

Y 


Y 

N 

Noble Grossot 

031 226 7011 

400 

2.000 

Y 

Y 

Y 

Y 

T 

Y 

Y 

Y 

North of England Ventures ud 

061 236 6600 

200 

2,000 

Y 

Y 

Y 

Y 

MGSHEKCFOLRDW1Y 

N 

Y 

Northern Ventue Managers Ud 

091232 7068 

200 

Open 

Y 

Y 

Y 

Y 

T 

Y 

N 

N 

RatataeFund 

061 834 2332 

250 

1500 

P 

Y 

Y 

Y 

W) 

Y 

N 

N 

Pantheon Venturas Ltd 

071 493 5685 

200 

Open 

N 

Y 

Y 

Y 

T 

Y 

Y 

N 

Ptfldrew Vertices 

071628 6366 

1,000 

15400 

Y 

Y 

Y 

Y 

T0XP1 

Y 

N 

N 

Phoenix Fund Managers Lid 

071 638 3818 

1.000 

10.000 

N 

Y 

Y 

Y 

CMLSGOHDNQAIPBE Y 

N 

N 

Pper Investment Management Ltd 

071 727 3866 

250 

1.000 

P 

Y 

P 

Y 

GN 

Y 

N 

N 

Prelude Technology Investments Ltd 

0223 423132 

20 

1.000 

Y 

Y 

N 

N 

HBOOSftH(FKkXP) 

Y 

N 

N 

Priory Investments Limited 

Prudential Venture Managers Ltd 

071 409 7339 

250 

1.000 

N 

Y 

N 

Y 

QNKD 

Y 

N 

N 

071 831 7747 

1.000 

40.000 

N 

Y 

Y 

Y 

T 

Y 

N 

N 

Quayfe Munro Ltd 

031 226 4421 

250 

2.000 

N 

Y 

Y 

Y 

GMSPF 

Y 

N 

N 

Quester Capital Management Ud 

071 222 5472 

100 

1,000 

Y 

Y 

Y 

Y 

DGNBEHCOKMUAQBFPS 

Y 

N 

N 

Rothschild Asset Management Ud 

071280 5000 

100 

5,000 

Y 

Y 

N 

N 

BOA 

Y 

Y 

Y 

Sdvoder Ventures 

071 632 1000 

500 

ShOO 

Y 

Y 

Y 

Y 

DSBOHEGCMQLPNAY 

N 

N 

Scottish Development Finance Ltd 

041 248 2700 

50 

1.000 

Y 

Y 

N 

Y 

B«OfM 

Y 

N 

N 

Seed Capita) Lid 

0491 578999 

5 

50 

Y 

N 

N 

N 

HM 

Y 

N 

N 

Singer & Friedfander Development Capital Ltd 

0532 438073 

500 

1500 

N 

Y 

Y 

Y 

RF) 

Y 

N 

N 

South Yatehiro Pensions Authority 

0226 770770 

100 

1,000 

Y 

Y 

Y 

Y 

RAMQHP) 

Y 

N 

N 

SUWT EquBy Ventures Ltd 

021 236 1222 

250 

Open 

Y 

Y 

Y 

Y 


Y 

N 

Y 

Thompson C#ve & Partnera Ud 

071401 4809 

2S0 

5.000 

P 

Y 

Y 

Y 

DEHOM 

Y 

N 


TTroadnwcfle kwa3&nent Managers Ltd 

071 621 9100 

1.000 

SS" 

N 

Y 

Y 

Y 

W) 

Y 



rianguis Limited 

0806 892313 

n/d 

Y 

N 

N 

Y 

Cl 

Y 

N 

N 

Top Technology Ud 

Transatlantic Capital Ud 

071 242 9900 

071 2241193 

200 

50 

750 

500 

Y 

Y 

Y 

Y 

P 

N 

N 

N 

DHOBE 

BO 

Y 

Y 

N 

N 

Tufton Capitol Ltd 

071 222 8151 

500 

C*»n 

N 

Y 

Y 

Y 

w^o^u^MSCKHPKCSIPKPHfl 

Y N 

N 

Ulster Development Capital Ltd 

0232 246765 

50 

500 

N 

Y 

Y 

Y 

T 

Y 

N 

N 

Venture Founders Ltd 

01865 370510 

100 

600 

N 

P 

N 

P 

DBBOP1 

Y 

N 

N 

Welsh Devatopment Agency 

West Midlands Enterprise Board Ltd 

0222 222666 
021236 8855 

5 

100 

500 

750 

Y 

P 

Y 

Y 

P 

P 

Y 

Y 

TW3HN) 

M 

Y 

Y 

N 

N 

Y 

N 

Yorkshire Enterprise Limited 

0532 374774 

S 

500 

Y 

Y 

Y 

Y 

MLGHEGDNQSBO 

Y 



Yorkshire Verdure Capital Ltd 

0742 722272 

200 

Open 

N 

Y 

Y 

Y 

m 

Y 

N 

N 


electrorife-rateiacS i. energy, natural rawxrces; K. (tarn 
heafth-rafataS P, property; Q, space, aviators R. Oa m p u rt a ton; S, > 
Any team in brackets indicate a preference not to Invest in that sector. 


B. biotechnology; C, chemicals; O, conrnnfcatfons, E, computer-related; F. construction: G. consumer related. H_ 
, L Mtetetel automaton; M, IndusUMi preducts and wvta^lTrrtecfa. 
wholesale, trade dstributkm: T, anytltog; feted by preference. 


Source: KPMQ Corporate Finance 


which is allocated to the man- 
agers over and above the 
Bharphniriftig which their own. 
relatively modest financial 
investment would qualify them 
for. The extra shares are seen 
as an additional motivation 
and reflect the fact that it is 
the managers’ hard work 
which will ultimately r nakn the 

venture succeed. (Sometimes 
also referred to as sweat equity 
to reflect the hard work the 
managers put in). 

Trade sale: the sale of a com- 
pany to a corporate buyer. This 
is the most common exit route 
for venture capital backed 
companies. 

Venture capital: equity 
finance provided usually to 
young, unquoted businesses to 
enable them to start or expand. 
Equity funds provide a basis 
for the company to raise fur- 
ther bank finance and provide 
a cheap source of funds in the 
early stages of the business 
because dividends can be 
delayed until the company 
starts making profits. 

Virgin angel: a business 
angel who has not invested in 
private companies before. 


New 7th edition VCR Guide fvSj) 
"the most comprehensive coverage of the industry " 

Financial Times 

Full directory of venture capital companies, inch 
CVs of executives and list of current investments. 

Price £106 (1,344 pa§es) Tel: 0491 579999 


■ 

«.w-. 

C' 




“I have chosen the SIPAREX Group, 

in particular for 
their capacity to help us 
in our international 
expansion ...” 


Jean-Onude YAGUE 

President and General Manager of SPRING GROUPE 

hi Nantorra fHmta^aHetne). France. 

Distribution and overhaul of computer systems. 

Turnover 1993: 192 MFF- Turnover 1992: ISO MFF. 



No other Investment capital company has ever applied such a 
determined "network" and synergy concept strategy between its 
French and international partners, shareholders and companies 
as the SIPAREX Group. ' 


SIPAREX 1 

A SPECIFIC APPROACH TO EQUITY INVESTMENT 

Contact: JemvJacques CHABAN-DEUv\AS 
114, me Lo Boetie - 75008 PARIS - Tot. 49 53 94 74 - Fax 49 53 94 73 

SIPAREX, the leader among independent French capital development companies. 


$ 



FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


VII 


★ 

VENTURE AND DEVELOPMENT CAPITAL 7 


FRANCE: the second biggest venture capital base in Europe, after the UK 

Key structural changes ahead 



Lyon's co mm ercial cfistrtate in the forground, Sanque Poputeire de Lyon; towering behind is the state-owned 
Credit Lyormaise which suffered tosses of more than FFrffbn last year Pvauie by Tony Andboun 


The French venture 
capita! industry is 
emerging in relatively 
buoyant shape from one 
of the country's most 
acute recessions since 
the Second World War, 
reports JOHN RIDING 
in Paris 


T he total value of venture 
capital raised last year 
amounted to FFr5 .54bn, 
a drop of just six per cent on 
1992. Venture capital invest- 
ments slipped by 10 per cent to 
FFriJbn, while exits - or divest- 
ments of venture capital 
investments - rose sharply, 
from FFriL26bn to FFr3. 63bn. 

For Mr Denis Mortier, chair- 
man of the French venture cap- 
ital association, this was a 
solid performance - “on the 
whole, and given the broader 
economic environment, 1 think 
the industry did better than 
expected," he says. 

Despite the resilience of 1993, 
however, the French venture 
capital industry has been 


experiencing significant 
changes and is confronted by 
important structural chal- 
lenges. 

Developments over the next 
few years, notably in mecha- 
nisms for exits and the evolu- 
tion of fund raising, will deter- 
mine whether France can 
consolidate its position as the 
second biggest venture capital 
base in Europe, after the UK. 

The principal shifts in the 
industry relate partly to the 
broader economic picture. 
Start-up investments, notably 
in high-technology activities, 
were affected by the economic 
environment - “seed invest- 
ments accounted for only one- 
tenth of one per cent and 
start-up investments for less 
than two per cent of the total 
amount invested,” say the 
accountants KPMG, in a report 
on the industry. 

Many of the larger players, 
in particular banks and insur- 
ance companies, have also 
curbed their venture capital 
activities as they seek to 
redress their financial posi- 
tions. 

“Insurance companies have 
suffered from losses in their 


damage businesses and have 
shifted the emphasis of their 
investments to liquid 
long-term assets such as 
bonds.” says one sector analyst 
in Paris. Many of the leading 
banka - seeking to offset losses 
from the property sector and 
from other bad loans - have 
reduced their involvement in 
private equity investment, he 
adds. 

The shift in strategy is most 
clearly indicated by Credit 
Lyonnais, the state-owned 
bank which suffered losses of 
more than FFr6bn last year. 
The bank, traditionally a big 
player in the venture capital 
industry, has reduced its 
investments in industry to 
raise capital and to concen- 
trate on its core activities. 

According to a report by 
KPMG, the accountancy group, 
and the European Venture 
Capital Association, the 
decline in venture capital 
funds raised last year was 
mainly due to the reduced con- 
tribution of the banks. 

“The total amount raised 
from banks fell by almost 
FFr500nm in 1993,” says the 
report, “although with 31 per 


cent of the total venture capi- 
tal raised, they remain the 
most important source of funds 
for the Trench industry. ” 

At the same time, many 
industrial groups are shedding 
non-core businesses and ven- 
ture capital investments as 
they focus on their principal 
activities. The most recent 
example is July’s decision by 
Elf Aquitaine, the oil group, to 
sell FFrl.lbn worth of indus- 
trial investments, principally 
venture capital, to Banque Nat- 
lonale de Paris. 

F or some players in the 
venture capital industry, 
in particular the smaller, 
independent funds, these vari- 
ous changes have a positive 
effect “There has been less 
competition from the captive 
structures,” Bays Mr Mortier, 
re f erring to banks and insur- 
ance companies. “At the same 
time, the pattern of divest- 
ments means that they have 
become providers of invest- 
ments." 

Competition is, however, 
unlikely to remain itirniwighwi 
International venture capital 
funds, notably from the UK, 


are eyeing the French market 
with a view to increasing their 
presence - “they are all raising 
funds for continental Europe,” 
says Mr Mortier. “France is the 
second biggest market and the 
natural target to start with.” 

The domestic industry will 
be more eagerly awaiting the 
imposition of structural 
reforms which could improve 
the exit mechanisms in the 
French industry and increase 
the amount of investment 
finance available. 

On the first count, many in 
the French industry have 
pushed for the creation of a 
“European Nasdaq” - a com- 
puterised off-market trading 
system. They argue that this 
would resolve the weaknesses 
of Europe's secondary stock 
markets, raise liquidity and 
tempt international investors, 
particularly from the US. 

Mr Mortier believes that the 
creation of such an exchange is 
just a question of time: “We 
have created the awareness of 
a need and have won support 
for the idea from the European 
Commission. We have put 
together a study group to 
examine the conditions neces- 


sary, and hope to have a blue- 
print ready by November," he 
says. "By 1996, we hope to that 
the market can be launched.” 

By then, many in the French 
venture capital industry also 
hope that private, capitalised, 
pension funds will be in exis- 
tence. According to most play- 
ers in the domestic industry, 
the relative paucity of venture 
capital resources in France, 
compared with the UK. is 
partly a reflection of the lack 
of powerful pension funds. 


That lack seems unlikely to 
endure. The French govern- 
ment is moving, albeit cau- 
tiously. to the creation of pri- 
vate pension funds to ease the 
demographic pressures on its 
creaking pay-as-you-go state 
retirement scheme. 

Mr Edmond Alphandery. the 
economy minister, is expected 
to introduce a bill to the 
national assembly this 
autumn, and a law, providing 
tax incentives for private pen- 
sion contributions, could take 


effect after next spring's presi- 
dential elections. 

It is still unclear what the 
legal restrictions on such pen- 
sion funds would be. and what 
proportion could be invested in 
equities or venture capital But 
the impact would be signifi- 
cant. Mr Mortier forecasts that 
pension funds could provide 
one-quarter to one-third of 
external venture capital funds . 
within ten years, compared 
with tbe 45 per cent ratio 
which now exists in the UK. 


GERMANY: opportunity knocks but not every company is answering the call, reports Michael Lin demann 

Mittelstand need persuading 


hen you ask Mr Hol- 
ger Fro mmann why 
the German venture 
capital market is so small, he 
winces audibly. 

Mr Frommann runs the Ger- 
man Venture Capital Associa- 
tion (BVK) and he says there 
are countless reasons why the 
volume of business done in 
Germany is minimal compared, 
first, to the size of the German 
economy and. second, to activ- 
ity in neighbouring France and 
the UK. 

Venture capital risk is still 
something many German busi- 
nessmen shy from. The medi- 
um-sized companies that would 
be ideal candidates for buy- 
outs or buy-ins are often run 
by the people who founded 
them and who are wary of 
financial buyers. Stock mar- 
kets function differently and 
banks are much more promi- 
nent - ''ultimately, the entire 
economic development of Ger- 
many is different," Mr From- 
mann says. 

The recession has not belped 
either. A report by the Euro- 
pean Venture Capital Associa- 


tion (EVCA) concludes that in 
1993 the market ground to a 
halt because of falling com- 
pany prices and a declining 
economy: DMl.21bn was 
invested in 1933 - 5 per cent 
less than a year earlier - repre- 
senting about 40 per cent of 
what was invested in the UK. 

However, a series of big 
Hpaig this year - including the 
recent sale of Kassbohrer’s Pis- 
ton Bully to a group of inves- 
tors advised by Schroders & 
Partner Beteiligungsberatung 
- suggest that while the mar- 
ket may not mushroom there 
is evidence of relatively strong 
growth. 

The Kfissbohrer sale is the 
sort of deal which venture cap- 
italists promised in in spades 
when the German market first 
found its feet around 1989: to 
help old, family-owned compa- 
nies suffocating under a moun- 
tain of debt and in need of out- 
side capital. 

The BVK says there are per- 


haps 5,000 companies of this 
sort and a percentage of them 
would be ripe for venture capi- 
tal. But financial buyers are 
still regarded as wheeler-deal- 
ers. whose philosophy is 
largely anathema to the 
long-term corporate strategy 
practised in Germany where 
emphasis has always been 
more on organic growth than 
on acquisitions. 

“Owners often still want to 
know what happens to their 
business even if they've sold 
it,” says one industry source in 
Frankfurt, illustrating barriers 
the venture capital business 
has to overcome. 

Another phenomenon cited 
to justify the rosy prospects for 
venture capital in Germany is 
the question of succession at 
many Miitelsumd. or medium- 
sized companies, started in the 


1950s or '60s by people now 
looking to hand them on. 

However, in some instances 
it is not just a question of find- 
ing a new chief executive and 
outside capital, but more a 
need to find an entirely new 
management team 

“In a situation like that the 
pure financial buyer is chal- 
lenged," says Mr Martin String- 
fellow who works for Klein- 
wort Benson in Frankfurt. 
“Whether he comes in depends 
on how able he is to provide a 
management team for the com- 
pany and often that is a prob- 
lem." 

Industry observers say there 
are interesting prospects in 
eastern Germany as restructur- 
ing continues and it becomes 
clear which elements of the 
DDR's former command econ- 
omy have survived the shock 


therapy administered over the 
past four years. 

But Mr Frommann and oth- 
ers admit that business in the 
five eastern Lander remains 
largely prospective for a num- 
ber of reasons. 

R isks in the eastern 
LSnder are greater 
because there are no bal- 
ance sheets from which to 
extract reliable figures, while 
the business environment 
remains precarious - in part 
because many companies are 
only just finding new markets 
following the collapse of the 
former Soviet-run Comecom 
trading bloc. And while the 
BVK estimates that venture 
capital companies in western 
Germany spend on average 
seven years shepherding their 
investments, they will have to 


commit themselves for longer 
periods in former eastern Ger- 
many. 

An under-developed stock 
exchange is another factor 
which has stunted the growth 
or the market. 

Many US and UK companies 
which have been helped to find 
their feet with venture capital, 
progress naturally to a stock 
exchange listing, an exit which 
is still unusual in Germany 
where stock exchanges deal in 
heavy-weight shares. 

Deutsche Beteiligungsge- 
sellschaft. the venture capita] 
arm of Deutsche Bank and an 
example of several similar 
companies which are linked to 
the country's big banks, 
recently floated the MHM 
Mode Holding. But such an 
outcome is the exception 
rather than the rule. The vast 


majority of investments end in 
trade sale, buy-back or second- 
ary purchase, according to the 
EVCA report. 

Despite the idiosyncrasies of 
the German market, venture 
capital is becoming more 
respectable in deals involving 
DM30m or more, a threshold 
beneath which most interna- 
tional financial buyers do not 
operate. 

Even so, money for start-ups 
and smaller deals is still bard 
to come by, especially Tor 
smaller businesses which only 
have access to the regional 
finanrial centres in Germany. 

TO combat this, the econom- 
ics ministry in the state of 
Baden-WQrttemberg, often at 
the leading edge of innovation 
in German business practices, 
is developing a new venture 
capita] fund in conjunction 
with private industry designed 
to finance start-ups with up to 
DM2m. For years the state has 
been running a successful sub- 


sidies programme, similar to 
those available in Germany's 
other Lander, but the state-run 
funds have not been able to 
cater for all the applicants. "It 
suggests very clearly to us that 
people are not prepared to take 
enough risks,” says an official 
at the Baden-Wiirttemberg eco 
noraics ministry. 

Several of the larger interna- 
tional venture capital compa- 
nies have been encouraged by 
the volume of business so far 
this year. The Kassbohrer deal, 
the Tarkett buy-out and the 
restructuring at LVW, the for- 
mer food cooperative group, 
all augur well for the future, 
they argue. 

However, few will commit 
themselves to predictions 
about the possible future size 
of the market, and most sug- 
gest that it will continue to be 
small relative to others - “1 
don't think we will ever have a 
development in Germany as we 
have seen in the US or the 
UK," says Mr Thomas Krenz 
from Schroders & Partner 
Beteiligungsberatung in Frank- 
furt. 



WHEN WE INVEST IN 
A COMPANY 

WE’RE NOT INTERESTED 
IN ITS WORTH. 

ONLY YOURS. 

For more than thirty years Gresham Trust has been 
investing in management rather than just figures on a 
balance sheet. 

' If we ’re convinced that you have the ability, com- 

mitment and track record, we’ll back our judgement 
whether you're raising £1m or j£10m. 

And because you’re the customer we think you 
should decide if and when it’s time to sell - an approach 
that ensures you remain in control ot your own destiny 
at all times. 

Whether you require equity capital for a manage- 
ment buy-out or for your company’s expansion, call 
Trevor Jones or a member of his team on 071-606 6474. 

You’ll find they’re well worth talking to. 


GRESHAM % TRUST 


EQUITY CAPITAL FOR MANAGEMENT 

Gresham Trust p.l.c., Barrington House, Gresham Street, 
London EC2V 7 HE. 

Member uf The Securities ami Future* Authority. 


Tb/s jjioiMiDctaral ipptjn a- a bjtici ot irrwil on). 



ALLDERS PLC 

Management Buyout 
May I9S9 

Stock Exchange U cling 
November 1993 

MARKET CAPITALISATION 
£174.9 million 



APPLIED DISTRIBUTION 
GROUP PLC 

Miinagemenl Buy-out 
February I9.XU 

Stock Exchange Listing 
March 

MARKET CAPITALISATION 
£40.9 million 


HAMLEYS PLC 

Management Buy-in 
July 1989 

Slock Exchange Listing 
May 1994 

MARKET CAPITALISATION 
£423 million 







Three more 
LDC 

investee companies 

are planning 

10 final 
this year. 

Watch this space... 


Congratulations to ten successful companies, 
backed by LLOYDS DEVELOPMENT CAPITAL LIMITED 



Lloyds Development Capital Limited 
JH Cliiuwll Street, Liuidi.n EC I V 4XX 
Tel- Ol? 1-600 M26 Kav UI7I-522 5K#i 


Lloyds Development Capital Limited is a member of The Securities and Futures Authority 

















FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


VENTURE AND DEVELOPMENT CAPITAL 8 


B ritish business angels 
have long been assumed 
to be poor cousins of 
the richer, more entrepreneur- 
ial and better-served American 
variety, but a new report chal- 
lenges this assumption. 

Patrick Coveney, a PhD stu- 
dent at Oxford collected data 
from about 500 angels or 
would-be angels, in a survey 
conducted with the help of 
Venture Capital Report, a busi- 
ness angel agency which pub- 
lishes a monthly report on pro- 
jects seeking finance. Angels in 
the sample were all users of or 
people who had expressed 
interest in using introduction 
agencies. 

The researchers concluded 
that British angels were richer, 
invested more and were more 
like their American counter- 
parts than previously depleted. 

The survey found that while 
In some ways the angels did fit 
the long-standing stereotype - 
they were overwhelmingly 
male, middle-aged, university 
educated and had run their 
own businesses - their charac- 
teristics and investment behav- 
iour differed quite considerably 
from the image given by ear- 
ner research on the subject 
More than half had a net 
worth of more than £500,000, 
and 30 per cent were worth 


Rich angels to 
the rescue 


more than £Lm - but two ear- 
lier surveys had found that 
only a third or fewer had 
assets of more than £500,000. 

Three-quarters of the partici- 
pants in the new survey had a 
income of more than £100,000 a 
year. The average angel had 
made 2L34 investments total- 
ling £286,000 in the past three 
years, with an average single 
investment of £140,000, and a 
median of £40,000. This com- 
pares with the average invest- 
ment of £10,000 given by an 
earlier survey. 

Previous surveys strongly 
indicated that location was one 
of the most important factors 
in angels’ choice of investment 
- very few were thought will- 
ing to invest in companies 
more than 100 miles away. 
Coveney's survey, in contrast, 
found that only 5 per cent of 
angels cited location as the 
most vital criterion, while 58 
per cent did not think it was 
very important. Almost half 
would invest in businesses 
more than 200 miles away. 


The most Important factor in 
angels' decision on whether or 
not to invest was their impres- 
sion of the founder or manage- 
ment 59 per cent said this was 
the principal criterion. Next 
most important was their own 
understanding of the sector, 
with such areas as the content 
and presentation of business 
plans and projected profitabil- 
ity ranking much lower. 


R espond e nts* main moti- 
vation for choosing 
angel-style investment 
was to get a better return on 
their mnwy than they could 
from the stock market - they 
expected a return of at least 21 
per cent a year. About a third 
were interested In generating a 
job or an Income for them- 
geU ves, an d a third were also 
motivated by the fun and satis- 
faction of being an angeL 
Investors said that the main 
barrier to greater activity was 
a lack of suitable business pro- 
posals, rather than a lack of 
money to invest: 70 per cent of 


them would have liked to make 
more investments if they had 
found suitable opportunities. A 
high proportion said they had 
more than £100,000 of funds 
still available to invest, and 76 
per cent expected to increase 
their investments over the 
next five years. 

So there may be hundreds of 
potential angels waiting for Urn 
right opportunity to come up, 
bat are there as many busi- 
nesses interested in dealing 
with angels? The Enterprise 
Support Group coirnnissloned a 
Mori survey of of small and 
TrmriTp m businesses earlier 
year, to coincide with the 
launch of VentureList, its 
national computer riatahaw of 
investors and business proposi- 
tions. 

The survey found that only 8 

per rent at email flnd Tnati nm 

sigpd businesses had seriously 
considered neing as a 

source of finance, even though 
many were worried about the 
level of debt in their busi- 
nesses. However. 40 per cent 
would consider raising finance 
from an Individual investor if 
there was an easy way of find- 
ing an angel willing to invest 
on agreed terms. 


Confidence in UK regions 


Bethan Hutton 


Venturer of the Year Awards 


This year’s category 
winners were as 
follows: 


■ SMALL START-UP, 
RESEARCH-BASED: 

Ethical Hhirfhigs 
The company was formed in 
1985 by Dr. Geoffrey Guy to 
develop and market advanced 
drug delivery systems. The 
company specialises in slow/ 
con t rolled-release drug deliv- 
ery systems, including trans- 
dermal patches. 

The company was listed on 
Nasdaq at a capitalisation of 
$70m in April 1993. 

For the year to August 1993, 
the company had revenue of 
£9.6m and pre-tax profits of 
£970,000. 

Entrepr en eur: Geoffrey Guy. 
Sponsor:# 


range of specialised products 
to control the transmission and 
reception of video, audio and 
data si gnals through fibre optic 
cables. Estimated turnover for 
the year ending June 1994 was 
£2 .878m, with the exports pro- 
portion exceeding 30 per cent 
Profits before tax are estimated 
at £800,000. 

Entrepreneur: Andrew Smith 
Sponsor: Yorkshire Enterprise 


m SHALL START-UP: 

Coe: 

The company was formed in 
Jane 1989 by a group of former 
employees of STC, the cables 
and communications group to 
develop and manufacture a 


■ LARGE START-UP: 

Denplan Care: 

Founded in 1987 to provide an 
alternative system to fund the 
provision of dental healthcare 
in the UK, Denplan Care offers 
a direct contract between 
patient and dentist The com- 
pany was s old to Private 
Patients Plan (PPP) in Novem- 
ber 1993 for £42 hl by which 
time it bad more than 4,000 
dentist members, and a total of 
400,000 registered patients. (See 
report, page one of this survey). 
Entrepreneur: Stephen Noar 
Sponsor Advent, F&C Ventures 


MacLaren bad been the subject 
of various take-overs before 
eventually being bought by its 
executive directors in Septem- 
ber 1990. 

Since then, improvements 
have been made in the range 
and quality of products, a new 
marketing strategy has been 
adopted and stocks and over- 
heads have been pruned. 

From pre-tax losses of nearly 
£8m in 1990 the company has 
returned to profits of more 
than gfrn 

Entrepreneur: Demil Lee 
Sponsor: Nat West Ventures 


■ LARGE MBO: 

Litho Supplies: 

Litho Supplies, the biggest 
independent distribution and 
service group for printing and 
graphic arts products in 
Britain, servicing a total of 
10,000 customers, was a 
buy-out from Pembridge, pur- 
chaser in 1989 of paper group, 
DRG. Since the buy-out turn- 
over has increased, to a total of 
£80 .2m in 1993 and profit before 
tax last year totalled £4.63m 
Entre pre ne ur : John Byford 
Sponsor: Si 


T he vesture capital sector in Britain’s 
regions has a self-confidence bred by 
its close connections with toe areas 
in which it operates. 

There is no substitute, argue those with 

nffir-Pg in the Country's foadfrlg 

cities, for being part of the business com- 
munity in which they are sep-king invest- 
ment opportunities. 

Unsurprisingly, this view is not sup- 
ported by firms like Charterhouse Devel- 
opment Capital, which has opted to target 
Yorkshire, the Midlands and south-west 
England by setting up dedicated teams 
based in London, but commuting con- 
stantly to the regions - “we're only two 
hours from London to Leeds by train," 
says the firm. 

In contrast, Barclays Development Capi- 
tal which in 1987 had only a London office 
has since opened in Leeds, Manchester, 
Birmingham and Reading; 70 per cent of 
its new investments are made by these 
regional offices. 

“In our view, key intermediaries such as 
accountants have built up significant cor- 
porate finance expertise in the regions and 
by being in the sam** centres as they are 
we feel we offer a faster, more responsive 
service," says Mrs Catherine Wall, the 
Leeds-based regional director for eastern 
England ft™ Lincolnshire to the Tweed, 
plus Cumbria. 

In illustration of how regional expertise 
has developed, she cites last year’s MBO of 
Ley land Tracks, the wffhn armiwfl turn- 
over Lancashire truck assembly plant The 
deal was advised and funded foam Leeds. 

“A few years ago, a deal of this size and 
complexity would have been handled in 
London," says Mrs WaH 
Some regionally-based venture capital- 
ists feel their forte remains dank nnriw 
£l0m, but Mr Charles Richardson, corpo- 
rate affairs manager of 31, which has 17 
offices outside London, says there has 
been a continuing trend towards medium 
sized and larger deals gravitating to 
regional offices - “over the last five years 
we've moved a lot of t<vhnirai expertise 
into regional offices; the net has widened.” 
Stoy Hayward Manchester now pub- 


lishes an annual Guide to Venture and 
Buy-out Capital In the north west; the 1994 
edition is due out imminently. 

Mr Ian Templeton, Manchester-based 
senior partner in charge of corporate 
finance, has noticed an increase in the 
number of accountancy firms claiming 
expertise in venture and development cap- 
ital “possibly because there is very little 
growth in the core activities of audit and 
tax which is forcing them to look else- 
where fin: business." 

Mr Mike Davis, corporate finance part- 
ner for Ernst & Young in Manchester, says 
clients are very interested in what kind of 
relationship they will have with venture 
capital investors. This does not necessarily 
mean choosing a firm with a regional 
office but it has made London firms anx- 
ious to rebut any suggestion they might 
not be as responsive. 


T he competition between London and 
the regions “has hotted up a lot," 
says Mr Davis, who adds that 
accountants are helping venture capital- 
ists by providing better researched and 
presented proposals for consideration. But 
he adds: “We know there's a degree of 
flexibili ty, we know they are keen to do 
deals, we make sure our clients get the 
best deal" 

Thin wider dissemination of skills in 
venture capital has contributed to the 
rather more competitive climate, says Mr 
Peter Folkman, managing director of 
North of England Ventures, the Manches- 
ter and Middlesbrough based fund which 
is associated with Schroder Ventures. The 
industry, he points out, is now maturing. 

“It's a whole lot less cosy, it’s more like 
a proper badness," be says. “To earn our 
living we are going to have to be a Utile 
bit sharper." 

The past year has seen funds winning 
good returns on earlier investments; NEV, 
for example, is collecting about £9m from 
the £850,000 equity stake it made in 1990 in 
Cumbrian miniature modal -make r LiHiput 
Lane. But, says Mr Folkman, venture capi- 
talists have dime fewer new deals than 
they would have liked. In this more com- 


petitive market, he sees a developing 
trend, in which be is participating, of ven- 
ture capitalists going out much more pro- 
actively to bid as principals for companies. 

Competition is likely to be stiffened by 
the sharp increase recorded by the BVCA 
in new money raised this year for venture 
capital investment. 

The BVCA says the UK regions 
accounted in 1993 for 64 per cent of the 
number of companies receiving venture 
capital funding. So for tins year it has 
recorded an upturn in England and Wales, 
whilst toe Scottish market is reported to 
be “relatively flat," although with some 
signs of improvement 

Same venture capitalists say toe number 
of deals regionally so far this year has 
been relatively stable, or even increasing. 
Mr Alistair Conn, manag in g director of 
Newcastle-based Northern Venture Manag- 
ers, says 1994 has been busier than 1993. 
although nnd-1994 dipped a little. In north- 
ern En gland and Scotland, he says, the 
peaks and the troughs are flatter than in 
London and the south east 

Mrs Wall at Barclays Development Capi- 
tal says its investments are running at 
around double last year’s level, and 31 
notes its local offices are much busier than 
they were - “my impression is that toe 
regions have picked up fester than London 
and toe south-east” says Mr Richardson. 

Despite this bullish t one, there is some 
surprise that the presumed uplift from 
recession has not brought a stronger 
demand for capital for investment in 
organic growth rather than acquisitions. 
Confidence, it seems, is still fragile. 

“A lot of companies are contemplating 
deals, for more are contemplating rather 
than doing them because people are still 
being cautious," says Mr Davis of Ernst & 
Young. 

For one new regional venture capital 
initiative, the Midland Enterprise Funds, 
1994 is a milestone; by the year end, all Its 
U funds in En gland and Wales will have 
begun operating. 


Chris Tighe 


B TURNAROUND/MB L‘ 
MacLaren Group: 

Baby buggy manufacturer 


B SMALL MBO: 

Azlan Group: 

The company, a leading val- 
ue-added distributor to the net- 
work computing market selling 
products from mainstream and 
specialist vendors through re- 
sellers, was a 1991 manage- 
ment buy-out from Logitek. 
Since then, Azlan has 
embarked on a programme of 
expansion in Europe and in its 
product range. 


Entrepreneur: David Randall 
Sponsor ONVen 


E EXPANSION: 

JBA Holdings: 

The company was founded in 
1981 to develop business appli- 
cation packages for IBM mid- 
range computer systems. Since 
1989 it has moved into overseas 
markets and now has subsid- 
iaries in 11 countries and 
derives some 53 per cent of 
group turnover from outside 
the UK. Profit before tax last 
year totalled £4.736m on turn- 
over of £74.487m 
Entrepreneur Alan Vickery 
Sponsor Lloyds Development 
Capital. 


Denplan’s winning venture 


Continued from page 1 : 
Advent’s nominees left the 
board after a few months 
because of a disagreement 
about whether Denplan should 
offer dental insurance 
schemes. 

Stephen Noar feels strongly 
that dental insurance schemes 
are not in the best interests of 
patients - or their insurance 
companies - because they are 
open to abase and lead to 
unnecessary treatment 


It is clear that Noar believes 
strongly in the ethics of his 
business. He rejects charges of 
opportunism associated with 
malting money fay exploiting 
the tailings of the health ser- 
vice. He recognises, nonethe- 
less, the mixed feelings and 
tom loyalties experienced by 
both dentists and patients 
leaving the health service. 

Noar believes that toe exo- 
dus from the health service 
would be likely to continue 
under a Labour government - 


“there is now a general per- 
ception across political parties 
that the whole of the popula- 
tion’s primary care aspirations 
cannot be met out of taxa- 
tion,” he says. 

The logical corollary of this 
argument Is that, at some 
stage, the principles behind 
Denplan could be extended 
into general practice medicine. 
The idea appears to Intrigue 
Noar - “there is a debate now 
about the health service which 
is less emotive, ” he says. “It is 


not sacrilege, heresy or trea- 
son to talk about priorities.” 

It is not dear what Noar will 
do when his two-year contract 
with PPP comes to an end. 
One ambition is to become 
involved in backing small 
companies himself. However, 
it is evident that his Interest 
in developing Deuplan’s poten- 
tial did not evaporate when he 
sold the company. 

*T have no financial reason 
to work but X have a lot of 
unfinished business with this 
company," he says. “Every- 
thing we have done to date is 
to put us In a position to do 
redly important things.” 


91 Waterloo Road 
London SEI 8XP 
071 928 3131 


051 236 2944 


Small Start-up 


Large Start-up 


Expansion 


Venturer of the Year Award Winner 


Venturer of the Year Award Winner 


Venturer of the Year Award Winner 


Aberdeen 
0224 638666 


1990 

Advent Communications 


1992 

Breger Gibson 


Maidstone 
0622 685680 


Birmingham 
021 200 3131 


1993 

Tillery Valley Foods 


1993 

Safeline 


1992 

Industrial Control Services 


Manchester 
061 839 313! 


Backed by 3i Group pic 


Backed by 3i Group pic 


Backed by 3i Group pic 


Bristol 
0272 277412 


Newcastle 
091222 1966 


Cambridge 
0223 420031 


Cardiff 
0222 39454] 


Management Buy-in 

Venturer of the Year Award Winner 


Small Management Buy-out 


Venturer of the Year Award Winner 


Large Management Buy-out 

Venturer of the Year Award Winner 


Nottingham 
0602 412766 


Edinbur gh 

031 459 3131 


1990 

Dundare Dispensers 

1992 

Country Casuals 


1991 

Swallowfield pic 


1993 

Metro tect Industries 


Backed by 3i Group pic 


1990 

Compass Group 

1992 

Euro camp 

1993 

Holliday Chemical Holdings 


Reading 
0734 584344 


Backed by 3i Group pic 


Southampton 
0703 632044 


Glasgow r -a 

041 248 4456 |-‘j 

m 


Backed by 3i Group pic 


Waited 
0923 233232 


Leeds 

0532 430511 


Lekatcr 
0533 555110 


WE'VE AN<z>F0R A WINNER 



3i Gimp pk 
ud3ipk 
ore regulated In 
the conduct 
of investment 
btuiott* by SIB 






10* AT *4 


V.. 


***** 

1 


«■ 

* 




I 



FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


RECRUITMENT 


JOBS: Formulas for equitable expatriate employment packages need to address broader issues 

Counting the cost of out-of-sight employees 


T he expatriate employee from 
the UK can cost a company 
nearly three and a half 
that of his home-based counterpart, 
according to findings published by 
the Economist Intelligence Unit 
The EfU, the business inte lligence 
arm of the Economist Group, has 
launched a new service designed to 
help human resources 
in multinational companies reduce 
the costs of cross-border staff relo- 
cation and pay. The service, which 
is regularly updated, draws on com- 
puter-based systems collating tax 
and pricing information a nd living 
costs in 100 cities worldwide. 

The service wOl place the EIU in 
competition with other specialist 
information services covering the 
expatriate field. These include P-E 
Centre For Management Research. 
Organization Resources Counselors, 
Employment Conditions Abroad 
and AIR Inc, of Boston in the US. 

All these information services 
have identified a growing need 
among companies and individual 
employees to find suitable compari- 
sons and data for creating overseas 
employment packages. 

The multiple of three and a half 
times UK assignment costs is for 
employees working in Tokyo, m id 
the EIU. Other multiples it has pub- 
lished include Paris (a multiple of 
three). New York (22) and Frank- 
furt (2.1). 

“Given the increasing globalisa- 
tion of business, these costs are a 


real and growing issue," said John 
Nichols, the EIU*s human resources 
development manager. 

“For example, a London based 
employee on an annual salary of 
some £50,000 a year could cost his 
company up to $500,000 over a two- 
year period when relocated to New 
York, assuming a traditional expa- 
triate package," he said. 

What does that typical package 
look like? The EIU, using an exam- 
ple of a two-year assignment in 
Ftance, gives the percentage split of 
costs as: 31 per cent employee’s tax 
and social security. 22 per cent 
employer’s social security, 23 per 
cent expatriate benefits. 17 per cent 
net to the employee, 3 per cent in 
other benefits, and 4 per cent in 
one-off assignment costs. 

Nichols says that traditionally, 
companies have been prepared to 
“build up" pay for an assignment 
using the premise that the 
employee should be no worse off 
than had the; stayed at home. The 
use of incentives to move and the 
addition of housing allowances, 
plus the rents employees can often 
get to cover their UK mortgage pay- 
ments, means that the expatriates 


are often considerably better off. 

Today, however, companies are 
becoming more cost conscious on 
expatriate deals. "These days they 
are requiring that the cost of living 
measurements truly reflect thg high 
cost of living and not the cost of 
high living, " said Nichols. 

Before human resource managers 
nod too vigorously in agreement, 
they should note that employees 
with families in particular, are 
sometimes in danger of losing out 
financially tf they go abroad. 

Organization Resources Counse- 
lors found that three-quarters of the 
512 European, North American and 
Japanese multinational companies 
that replied to a survey of h uman 
resource practices said they had no 
policy that accounted for the loss of 
spousal incomes when paying expa- 
triate employees, nor did they 
intend to develop one. 

On average, is per cent of compa- 
nies rend they were remgi /Wring a 
policy and 10 per cent already had 
one. Breaking the survey down fur- 
ther. the greatest enthusiasm for 
such policies appeared to be in the 
UK, said ORC. 

Geoffrey Latta, vice-president of 


CHIC'S compensation services said: 

“Companies recognise that this is a 
growing problem and are very con- 
cerned about the potential costs of 
replacing lost income. 

"If an expatriate's spouse is a law- 
yer or an investment banker, does 
the company want to compensate 
for lost earnings? Doing so would 
make an already costly process 
exorbitantly expensive. Professional 
couples may increasingly opt out of 
international assignments, or we 
may begin to see more long-distance 
commuter relationships." 

Rent-a-boss 

Evidence that the market for tempo- 
rary executives and the pool of 
available experience is continuing 
to grow has emerged in a survey of 
2,000 temporary executives regis- 
tered with Executives on Assign- 
ment a Slough-based company. Of 
the 1200 who responded, nearly half 
of them had worked at director 
level in their last permanent job. 
fi ome 12 per cent of the respondents 
were former chief executives. 

Executives on Assignment esti- 
mates the market has grown by 20 


per cent in the last year, although 
Bob Snell, managing director, 
admitted this was a guess based on 
increased activity reported in his 
and other companies. 

There is also evidence that com- 
panies are beginning to ny interim 
management more imaginatively. 
Richard McKeown, a company sec- 
retary featured in this column a few 
months hack, has so far success- 
fully planned his career in interim 
management with no intention of 
taking ' full-time work. 

His latest posting appears to 
reflect a new trend among users of 
interim managers, instead of filling 
a gap between appointments which 
has been the normal type of 
short-term post, he has been taken 
on to allow the full-time company 
secretary time out to take part in a 
specific project. Snell said that 
another trend among some chief 
executives was to use interim man- 
agers as a means of employing a 
senior manager without the 

risk of appointing the wrong person 
and the attendant cost of removal 

Martin Wood, director of interim 
management at PA Consulting, a 
London-based consultancy, has 


found that companies are beginning 
to ngp interim management as a 
strategic tool. He quoted a large 
company in the food retailing sector 
which was taking on an interim 
manager to run a division which 
needed a rationalisation pro- 
gramme. When he leaves, the new 
full-time appointment will be a 
much less important and therefore 
lower paid job. “The interim man- 
ager will be more objective about 
what needs to be done," said Wood. 

He adds that small private compa- 
nies with turnovers of between £5ra 
and £10m are also starting to use 
interim managers where there Is a 
management succession problem or 
where an experienced manager has 
left to set up in competition. 

Earn as you learn 

What sounds like the closest any 
employer has yet come to utilising a 
degree course for an immediate 
gain has been developed by Coca- 
Cola Schweppes Beverages (CCSB), 
the joint venture bottling company. 

The company has recruited 100 
university aspirants aged between 
18 and 22 as soft drinks merchandi- 


sers. At the same time they will be 
carrying out a four-year study 
course for a BSc degree in Manage- 
ment from London University. 

Students In the "earn as you 
learn" scheme have been recruited 

on a starting salary of £7,500 a year 
plus a company car. While all 
needed to fulfil the A-level criteria 
for the university course, they were 
selected in a company assessment 
programme from 5,000 applicants. 

The students will be working in 
12 merchandising teams across the 
UK. Keith Dennis, CCSB's person- 
nel director who designed the pro- 
gramme at the instigation of Derek 
Williams, CCSB manag in g director, 
says the company plans to recruit a 
further 50 students next year. 

All are on four-year contracts and 
their job specifications entail a 
weekly input of about 35 hours on 
the job plus about 20 hours in study 
time for the degree. They will study 
from home, under a distance learn- 
ing arrangement administered by 
the National Extension College. 

Dennis said: "Beyond tbe four 
years I clearly hope that a number 
of them will continue with the com- 
pany. At the end of that time, they 
should have a degree from a good 
university and four years experi- 
ence with a blue chip organisation 
under their belt and no negative 
equity." 

Richard Donkin 


FUND MANAGEMENT 
EMERGING MARKETS FIXED INCOME 

Our client is one of the most successful Merchant Banks in London and has a well established Emerging Markets 
Group, which includes the management of a large proprietary hook and Hurd-party funds . As a result of 
continuing growth, a requirement has arisen for one Or more Fund Managers to assist in these separate portfolios. 

Both portfolios invest in a wide variety of corporate and sovereign assets in both US$ and 
local currencies. Applicants must have a good understanding of currency and interest rate 
protection, derivatives, settlement procedures and software. A knowledge of Spanish/ 
Portuguese and credit analysis would also be an advantage. 

Candidates should be graduates with 3/4 years experience in fixed income fund management, 
probably U.S. government bonds. Prior Latin American experience would be an advantage, 
but is not necessary. Candidates must prove a willingness to adapt and learn quickly so as 
to be able to participate in the asset allocation process. 

An excellent salary, generous bonus scheme and benefits package will be available for the 
right candidates. 

Please apply in writing, with your cv. to Martin Symon or Ron Bradley at the address below 

Jonathan Wren & Co. limited. Financial Recruitment Consultants 
No. 1 New Street, London EC2M 4TP Telephone 071-623 1266 Facsimile 071-626 5259 


JONATHAN WREN EXECUTIVE 


Banking and Capital Markets 

Raring Brothers & Co.. Limited is seeking to recruit executives for its Banking and Capital Markets 
department. The department is involved in arranging finance for a wide range of clients in the banking 
markets and through private placement and structured debt issues. Successful candidates will gain a broad 
exposure to tite activities of an international investment bank. 

With at least one year’s directly relevant experience, candidates should be able to demonstrate 
enthusiasm, imagination and impressive communication skills. They are likely to be aged 23-26, graduates 
and - or professionally qualified and should also possess a high degree of numeracy, combined with good 
analytical anti computer skills. 

Salary will be negotiable according to experience and the package indudes a performance-relaxed bonus. 

Applicants should write, enclosing a curriculum vitae and details of current remuneration package to: 

Ruth Nnmvan. Deputy Manager. Personnel. Baring Brothers & Co., Limited, 8 Bishopsgate, London 
KC2N -lAE. 

BARINGS 




ABN*AMR0 Bank 


Credit Officer ♦ 


B anking Package 


First Rate Salary 
+ Car Allowance 

ABN AMRO Bank is seeking to recruit a highly experienced credit professional to join their small 
Credit Risk team! working closely with the Senior Credit Officer. 

Dealing with a wide variety of large corporate clients, you will need a minimum of 5 years 
experience gained in the credit environment of a sophisticated financial institution with exacting 
credit standards. 

Sound credit training and voting membership of a credit committee are desirable qualifications for 
this position, along with effective communication skills. 

The role will involve the vetting of credit applications prior to their submission to the UK Credit 
Committee, attending and participating in Credit Committee meetings, as well as guiding and 
directing marketing groups on credit issues. 

You arc likely to be at least in your early 30’s, ACIB qualified and educated to a good 'A' level 
standard, or better. 

Applications in writing please, with details of current package to:- Steve Mills. 

Steve Mills Associates Recruitment Consultants 
7 Copthali Avenue, London EC2R 7NJ 
071 588 8800 fax. 071 588 7458 


| AITOBNTMENTS 
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appears in tbe UK 
edition every. . 
Wednesday & Thursday, 
and in the International 
edition every Friday. 

For further information, 
please call: 

Gareth Joses os 
+4471873 3779 

Andrew Skarzynski on 
+44 718734854 


Phffip Wrigky on 
+44 71 873 3351 


Brian O'Neill mi 
+44 718734027 






Financial 

Analyst 


Multinational 

Investment 

Group 


Plnae contact -Zot Me 
W Qu htophrf Squire, 
16- IS New Bodge Street, 
London EC4V 6AU. 

Tefe 071 5S3 0073 (day) 
or 071 652 5*29 
(evening! & mekemfa} 
Fes 071 353 3908 


Oar diem is ■ subsidiary of a major multinational 
commensal, industrial and financial enterprise. Based 
ns London, Ibis key ream services the Group's 
activities, through monitoring and administering ihc 
Group’s investments in (be UK and throughout 
Europe, Australasia and Far East. It is now looking to 
recruit a resourceful finnnriai analyst who can offer 
excellent analytical abilities together with strong 
interpersonal skills 

The ™ candidate must be able to satisfy the 
following criteria: - 

• At least one year's experience in inv e stm ent 
analysis. 

• Good degree and/or relevant qualification. 

• Literacy in Lotos and wordprocesaing packages. 

• Ability to quickly assmnlate retain 
information. 

• Flexible and diplomatic approach u> work - there 
will be regular contact with senior esec u r iv es at all 
levels. 

• Good p r es en tational and report writing skills. 

Tbe role will involve tbe analysis of both quoted and 
imquonrd companies, as well as prop e rty and other 
taveatmeina. In retain, the company offers an attract- 
ive salary, together with a multicultural, meritocratic 
and stable ^ winking environment. The successful candi- 
date most be capable of developing skills in equity and 
d eriv ative trading. 


BADENOCH 8^ CLARK 

recruitment specialists 







i.'!r 

• •> 
s* : 


* .. 
K .7 
•• . 




m J+l 

'sV # ' 

fifty 


Bond Sales 


London 

Our client is a major US banking institution with an 
enviable reputation in the fixed income markets and a 
dynamic, aggressive approach to developing its business 
on a global basis. Recent expansion has created an 
opening for a GILTS SALES PERSON to cover the 
continental European market- 

idea I ly candidates should have at least 2 years exposure 
to the fixed income markets and possess proven sales 
experience. There is a particular emphasis on 
identifying client requirements and a thorough 
undemanding of their investment strategies and risk 
management techniques is essential. The successful 
candidate will also be responsible for providing an 
overall view of the market to interna! counterparties 
Lind should therefore possess good analytical skills. 

Candidates of interest will satisfy all of the following 
criteria: 

* A sound knowledge of the fixed income markets. 

• 2 years markecing/sales experience to 
Continental Europe. 



£ Excellent Package 

• Significant exposure to the offshore leveraged 
product market. 

• Good analytical/technical ski 11s- 

• A thorough knowledge of risk management 
techniques. 

• An excellent understanding of investor/client 
requirements. 

• A working knowledge of at least one Continental 
European language. 

Candidates from rhe ‘buy* side of the business would 
also be of interest. This is an excellent opportunity for 
high calibre candidates to develop their career with 
one of the world’s premier investment banks. 

Interested candidates should contact Gavin Starling at 
Michael Page City, 39-41 Parker Street, London, 
WC2B 5LH, quoting reference 204187, or fax 
071 405 9649. All applications will be 
treated in the strictest confidence. 


fei 




f£«*V 


Michael Page City 

Inrcnutlonal Recruitment Cmujlnmu 
London Paris Frankfort Hoag Koag Sydney 






Japanese Equities 
Fund Manager 


City 


Our client is one of the world’s largest equity fund 
managers. Following the introduction of a new global 
institutional pooled product, a number of Luxembourg 
registered individual country funds have been 
established. A Japanese Equity Fund Manager is now 
required to run rhe Japan Fund. With an initial $100m of 
funds, this fund is expected to be a $mulu-biHion fond 
within a couple of years. The outstanding performance of 
this firm's London based fonds over the last three years 
has seen their assets grow by over 40% in the first six 
months of 1994. 

It is essential that candidates for chis role are experienced 
Japanese fund managers with performance driven by a 
sectorial approach to asset allocation, rather than pure 
stockpicking. Whilst the individual will have complete 
discretion over the japan Fund and will provide a 
key input to the overall global asset allocation 


£ Exceptional Package 

policy, they must be able to harmonise their views with a 
(hematic approach. 

A rigorous, disciplined and quantiative approach to asset 
allocation decision making should be tempered with 
pragmatism and an in-depth understanding of the 
fundamentals of the Japanese markec. 

Reporting directly to the Managing Director in London, 
chis is an exceptional opportunity for an experienced 
Fund Manager. Remuneration will not be a limiting 
factor for the right candidate. 

Interested candidates should telephone Paul Wilson for 
an initial discussion on 071 831 2000 or alternatively 
write to him enclosing a detailed CV at Michael Page 
City, Page House, 39-41 Parket Street, London 
WC2B 5LH. quoting reference 196475. (Fax 071 405 
9649). All applications will be treated in the 
strictest confidence. 



Michael Page City 

Inrcmaibmal Reouionmi GmuJianu 
London Paris Frankfort Hong Kong Sydney 
























If 



FINANCIAL TIMES FRIDAY SEPTEMBER 23 1994 


TOP OPPORTUNITIES 


SENIOR POSITIONS IN GENERAL MANAGEMENT 


Norwich & Peterborough Building Society 


Managing Director - Waters Lunniss 

Substantial package Norwich-based 


Waters Lunniss is an eight-branch stockbroking business offering share dealing, PEPS, unit trust and other investment 
services to private investors. It also has a strong third-parly settlements business. The task is to deliver profits growth 
from these and other services working within a forceful growth strategy. 


The Job 

■ Grow market share and reputation 

■ Develop new services 

■ Expand settlements business 

■ Grow branch network 

■ Actively promote the business . 


The Person 

■ Visionary/leader, 30-40 years 

■ From private investment sector 

■ Strong business growth record 

■ Skilled resource manager 

■ Awareness/appreciarion of IT 


The position will be well rewarded, with a sizeable bonus, pension, car, mortgage assistance and insurances. 
To apply, please send full cv to John Murray, Ref: 6215/JM/FT, PA Consulting Group, 

123 Buckingham Palace Road, London SW1W 9SR. 

¥» Consulting 
M 2 TL Group 

Creating Business Advantage 



NEWBURY, BERKS SUBSTANTIAL PACKAGE 

A rare opportunity to lead a profitable and successful company with exciting plans for growth. 

MANAGING DIRECTOR 

CAR CONTRACT HERE AND FLEET MANAGEMENT 

Fleetlease (UK) Limited is a member of the world-wide Hitachi Group and an established contract hire company with a fleet 
of around 6000 vehicles. Fleetlease has a reputation for innovation, reliability and quality of service, and is expanding 
rapidly. 

The M ana ging Director will be responsible for all aspects of the company's operation and development and will be expected, 
with the support of a capable management team and strong commitment from the parent company, to achieve substantial 
business growth in the coming years. 

The successful candi date will be aged up to 50 and will have extensive senior level experience in the contract hire business. 
A graduate or pro fess ionally qualified, he or she will be an analytical decision-maker with strong leadership qualities, high 
personal integrity and the capacity to grow with the company: 

The basic salar y is substantial and will not be a barrier for the right candidate. In addition we offer a performance related 
bonus and a quality company can also contributory pension, free life assurance, family health scheme and assistance with 
removal expenses if necessary. 

Please write or telephone for an application form to: 

Ms Pat O'DonneDU Hitachi Credit (UK) PLC, Stables Courtyard, Church Road, Hayes, Middlesex UB3 2UH, 
telephone number 081 561 8486, quoting reference:- FT 2524 




BANKING FINANCE & GENERAL APPOINTMENTS 


Merrill Lynch 

SENIOR FINANCE APPOINTMENTS 

IN FRANKFURT 

DM Competitive Packages + Bank Benefits 

Merrill Lynch is one of the leading and most diversified global investment banks with 500 offices worldwide and 
representation in every major financial market. Its expanding Frankfurt o