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ArcMtectore 


Colin Aniery: The ; 
danger of competitions 

P*9*S 



Praich wine-making 

Janas Robinson: a really 
rotten year for Burgundy 


Page 16 



INANCIAL TIMES 


Arts and the lottery 

Antony Thomcroft: will 
it end in tears ? 

Page 13 


-Europe's Business ttewsDaoen 


MONDAY SEPTEMBER 26 1 994: 




I ^ erarans defend EU against the Polish gnome 


after gun deaths 

Haiti's military leadership met US officers after the 
first deadly conflict since US troops landed a week 
ago left a reported 10 Haitians dead and a US sailor 
slightly wounded in the northern city of Cap 
Haitien. President Bill Clinton, who will address the 
United Nations General Assembly today, said he 
regretted any loss of life but warned that US troops 
would continue to respond to hostile action against 
them. Page 16 

Fashion houses In corruption probes The 

name of Giorgio Ar mani has now been added to a 
growing list of fashion designers who have fallen 
foul of an inquiry by Milan anti-corruption magis- 
trates into pay-offs to the Guardia di Finanza, 

Italy's financial police. Page 16 

Lufthansa, German national airline , plans to 
reduce the the group's long-term net debt by nearly 
DM3bn ($i.9bn) by 1997 as part of its overall 
restructuring and financial recovery. Page 17 

NatWest set to bid for Irish TSB: National 
Westminster Bank is likely to be allowed to make 
an I£110m ($173.8m) bid fbr TSB R ank in the 
Republic of Ireland as part of an effort by the Irish 
government to create a “third force" in the hanking ' 
sector to rival Allied Irish Banks and Rank of 
Ireland. Page 17 

Hlscox Group, Lloyd's agency, is to seek a stock 
market listing for its “Dedicated" investment fund, 
which provides corporate capital exclusively to its 
four syndicates. Page 17 

Adams begins two- week tour of USs 

Sinn F6in leader Gerry 
Adams Oeft) began a tour 
of the US aimed at build- 
ing support for a peace 
settlement in Northern 
Ireland. Speaking in Bos- 
ton. Mr Adams said Sinn 
F&n, the Irish Republi- 
can Army's political 
wing, would consider a 
coalition government 
with Britain. His two- 
week tour will also take 
him to Hartford, Detroit, Cleveland, New York, 
Philadelphia, Washington, San Francisco and Los 
Angeles. 

Euro-funds sought for ran link: Britain bas 
launched a belated attempt to obtain priority status 
for the E500m (6790m) West Coast mainline rail link 
so that it can receive funding from the European 
Union. Page 7 

Ukraine needs $1bn fbr ref o rms: Ukraine 
will need nearly $lbn in foreign assistance this year 
to implement radical economic reforms, according 
to senior Ukrainian officials. Page 3 

N Korean talks make little headway: US 

negotiators admitted that talks with North Korea 
on its nuclear facilities were making little headway, 
as Pyongyang repeated that it would not accept 
international inspection of two suspect nuclear 
sites and warned that US military exercises were 
“provocations". Page 6 

Major and Yeltsin discuss peace-keeping: 

John Mqjor, UK prime minister, and President Boris 
Yeltsin of Russia reviewed a broad range of peace- 
keeping operations, with particular emphasis on 
Bosnia, during the final day of the president's visit 
to Britain. Page 7 



Cheap manufacturers say free trade stops at bottom of the garden 


By Judy Dempsey fn Berlin 

Mr Stanislaw Sawicki says he no 
longer understands the meaning 
of free trade. 

"AH I want to do is to sell my 
garden gnomes. But the Germans 
will not allow them into the 
country," he said outside his 
small factory. “If the European 
Union means anything at all, it 
should be about free trade. Our 
gnomes represent many of the 
things that are wrong with the 
EU." 

Two years ago, Mr Sawicki, 


like other budding entrepreneurs 
in Nowa SCI, a small Polish town 
80km from the border, decided to 
start manufacturing garden 
gnomes fbr the German market. 

“The Germans loved our 
gnomes. They were Just like the 
German ones, and they were 
much, much, cheaper. Here was a 
real chance for competition," he 
explained. 

Business was brisk. Mr Sawicki 
and his staff of six were making 


4,800 plaster and 2,000 plastic 
gnomes a month. “We would just 
go across the border and sell 
them ... We were selling the 
big gypsum gnomes, which are 
75cm high, for about DM13 ($8.40) 
and the plastic ones for about 
DM24. Normally, the German- 
made gnomes cost over DM100." 

Then things started to go 
wrong. “One day, the German 
customs officials would not let 
my gnomes cross the border. 


They said we were, well, I sup- 
pose pirating the German 
design." said Mr Sawicki. “But 
what is it all about? Business is 
business. The German gnome 
manufacturers are just afraid of 
competition." 

German customs officials, who 
since unification are spending a 
great deal of time trying to pre- 
vent counterfeit goods entering 
the country from eastern Europe, 
say they are simply applying the 


law to tbe Polish gnomes. 

Mr Gerd Grau, a senior federal 
customs official responsible for 
the eastern German state of 
Brandenburg which adjoins 
Poland, said his staff were trying 
to stem tbe smuggling of pirated 
goods into Germany. 

“German designs, and other 
labels, whether they relate to 
clotbes. sportwear, perfume, or 
tape cassettes, are being copied 
and produced very' cheaply in 


eastern Europe and making their 
way into Germany - garden 
gnomes included. I'll show you 
what I mean," he said. 

Mr Grau took out a large file 
containing photographs of garden 
gnomes. “You see these gnomes. 
These are authentic German 
gnomes. If any Pole tries to bring 
an exact replica of any of these 
designs across tbe border, we 
cannot allow them into the coun- 
try." 

Polish gnome manufacturers 


Continued on Page 16 


UK suggests 
IMF sells 
gold to aid 
poor nations 


Coalition partner heads for clear majority ■ FDP suffers setback 



Victory tune: Bavaria’s premier Edmund Stoiber of the ruling Christian Social Union party listens to a 
traditional brass band after voting yesterday in his home town of Wolfratshausen near Munich feu*? 


By Phfltp Coggan, 

Economics Correspondent 

The International Monetary Fond 
should sell some of its gold 
reserves to help poor countries. 
Mr Kenneth Clarke, tbe UK chan- 
cellor of the exchequer, will pro- 
pose tomorrow. 

Mr Clarke will tell the finance 
ministers of the Commonwealth 
countries at their meeting in 
Malta that his plan would benefit 
heavfly-indebted countries trying 
to reform their economies. 

His plan goes further than the 
socalled Trinidad terms, which 
were intended to reduce the bur- 
den of debts owed by poor coun- 
tries to other governments. The 
new proposals would help those 
countries that owe large sums to 
international Institutions such as 
the International Monetary Fund 
and World Bank. Such debt is not 
covered by the Trinidad terms. 

Mr Clarke's suggestion that the 
IMF should sell part of its gold 
reserves to finance the scheme is 
likely to prove controversial 

His plan would benefit 
indebted countries which are 
complying with IMF programmes 
for the “structural adjustment" 
of their economies. The countries 
which Mr Clarke thinks are most 


UK debt relief plan goes 
for gold Page 4 

Editorial Comment Page 15 

likely to benefit include Guyana. 
Honduras, Kenya, Laos, Mozam- 
bique, Sierra Leone and Uganda. 

Mr Clarke will call for the IMF 
to increase its enhanced struc- 
tural adjustment facility, whicb 
provides concessional loans to 
poor countries, and improve the 
terms on which such conces- 
sional loans are made. The World 
Bank would also extend its con- 
cessional lending programme. 
The aim would be to reduce 
interest payments on debt to a 
low level and extend the period 
required for repayment 

The UK believes the IMF would 
need to sell less than 10 per cent 
of its gold reserves, currently 
worth shout S40bn, to finance the 
scheme. Sales would be spread 
out over several years and could 
be managed so as not to disrupt 
tbe gold market. 

Persuading the IMF to sell part 
of its gold might prove difficult 
but the UK feels that too much of 
the fund’s reserves are held as 


Continued on Page 16 


Boost for 
Kohl as 
CSU nears 
Bavaria 
poll win 

By Andrew Fisher in Munich and 
Michael Undemann In Bonn 

Bavaria's ruling Christian Social 
Unions which is Chancellor Hel- 
mut Kohl's closest ally in the 
German coalition government, 
was last night heading for an 
absolute majority in tbe last state 
election before the federal poll on 
October 16. 

The better-than-expected CSU 
result will give a boost to Mr 
Kohl's reelection chances. How- 
ever, the Free Democratic party, 
the junior partner in Mr Kohl's 
government, suffered another set- 
back; exit polls reported on Ger- 
man television predicted that - 
as in other elections this year - it 
would not gain the 5 per cent 
needed for a place in the state 
parliament. 

The CSU. the more conserva- 
tive sister party of Chancellor 
Kohl’s Christian Democratic 
Union (CDU). was expected to 
score between 52.8 and 54 per 
cent according to the polls. 

Mr Theo Waigel. the CSU party 
leader and finance minister in 
Bonn, said: "I am very satisfied. 
We can be very pleased with this 
result." Mr Edmund Stoiber, the 
Bavarian premier, said: “This is 
good support for Kohl and Wai- 
gel.” 

The opposition Social Demo- 
cratic party fSPD). appeared to 
have failed to make the break- 


through it hoped for. with fore- 
casts uf between 30 and 315 per 
cent. The expected result for the 
party was, however, a substantial 
recovery from the 26 per cent it 
polled at the last state elections 
four years ago. 

According to the exit polls, the 
left wing Green party was expec- 
ted to return to the state legisla- 
ture with around 5.5 per cent, but 
the far-right Republican party 
looked unlikely to get more than 
3 per cent, down from 4.9 per cent 
four years ago. 

The result is an endorsement of 
Mr Stoiber, who has had to work 
hard to breathe life into a party 
which has been battered by a 


series of corruption scandals in 
the last 18 months. It means his 
party has won an absolute major- 
ity in the state legislature for the 
ninth time running. 

The SPD is likely to argue that 
it has substantially improved its 
position, but will nevertheless be 
disappointed at foiling to deny 
the CSU its absolute majority. 
The SPD has never won more 
than 36 per cent in Bavaria, the 
most conservative of Germany’s 
16 Lender. 

Although the party begau the 
year with promising results in 
opinion polls and Mrs Renate 
Schmidt, the SPD leader in Bav- 
aria. fought a spirited campaign. 


voters returned to their tradi- 
tional allegiances in a relatively 
high turnout. 

Polls indicated that around 70 
per cent of the 8.7m eligible 
Bavarians had voted, about 4 per 
cent more than four years ago, 
contradicting suggestions that 
voters had become apathetic. 

The outcome for the far-right 
Republicans in the German state 
in which tbeir support has tradi- 
tionally been strongest is a 
severe reverse, and confirms that 
they are unlikely to get into the 
German Bundestag at the forth- 
coming general election. 


Kohl beams from on high. Page 3 


Asean in disarray over free trade: The six 

members of tbe Association of South-east Asian 
Nations are in unusual disarray over a proposal to 
turn the Asia-Pacific Economic Cooperation group 
into a free-trade zone by 2020. Page 6 

US-Japan trade: US and Japanese officials are 
heading into the final week of trade talks with at 
least partial agreement in sight after 15 months of 
fruitless negotiations. Page 6 

European Monetary System: 

Currencies, Page 29 

EMS: Grid September 23, 1994 

Guilder 
B. Franc 
D-Mark 
Irish Punt 
FJFranc 
D .Krone 
Escudo 
Peseta 


The chart shows the member currencies of the 
exchange rate mechanism measured against t he 
weakest currency in the system. Most of the curren- 
cies are permitted to fluctuate within 15 per cent of 
agreed central rates against the other members of the 
mechanism. The exceptions are the D-Mark and the 
guilder which move hi a 125 per cent band. 

Sixteen Injured In lifeboat accident: Sixteen 
crew were injured when a ferry lifeboat plunged 20 
feet into the water during a safety drill. The British 
crew of the P&O European Ferries’ Pride of Hamp- 
shire had been carrying out a routine lifeboat dnii 
in the French port of Cherbourg. 

HUI doses on Schumacher: UK racing driver 
Damon Hill moved to within one point of Formula 
One championship leader Michael Schumacher by 
winning the Portuguese Grand Prix in a Wvlliams- 
Renault. Scotland’s David Coulthard. also m a 
Williams-Ronauit. was second. Germany's Schu- 
maclu-r has now completed a two-race ban and will 
be available for the Last three events of the season. 



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Salinas sets out 
claim to lead WTO 


PepsiCo 
sees $100m 
purchasing 
savings 

By Diane Summers, 

Marketing Correspondent 

PepsiCo, the US beverage, snacks 
and restaurant business, hopes 
to save $100m a year in its 
rapidly-expanding European 
operations by centralising the 
purchase of services and materi- 
als, including TV advertising, 
sugar, flour and packaging 
materials. 

Heads of Pepsi-Cola, Pizza Hut, 
KFC (formerly Kentucky Fried 
Chicken) and tbe company’s 
snack food division have been 
meeting over the last year to 
identify which items they pur- 
chase in common. The company 
is hoping the savings, which 
would carve about 5 per cent off 
PepsiCo’s S2bn costs in Europe, 
will be in place in a year. 

As part of the same exercise, 
the company has launched a 
drive to persuade its trade cus- 
tomers, including leisure park 
operators and cinema chains, to 
bay the full range of PepsiCo 
products and services. It recently 
flew 600 trade customers from 
eastern and western Europe to 

Ibiza for a weekend of presenta- 
tions and entertainment 

The company wants the differ- 


Continued on Page 16 


By Stephen FtcBer, Latin America 
Editor, In London 

President Carlos Salinas of 
Mexico today launches his public 
campaign to become head of the 
proposed World Trade Organisa- 
tion with a call for governments 
to intensify efforts to ratify the 
Uruguay Round trade agreement. 

The agreement, which took 
seven years of negotiations to 
achieve, risks becoming a foot- 
note to history if it is not ratified 
by the year-end, he writes in 
today's Financial Times. 

Of the 123 countries that signed 
the accord, nearly 100 have yet to 
complete the internal processes 
necessary for ratification. 
“Although the deadline is three 
months away, it is disturbing 
that the pace appears slow In a 
number of capitals. Efforts to 
solve any outstanding problems 
they are experiencing should be 
intensified." 

Mr Salinas is one of two lead- 
ing candidates to bead the WTO, 
which is expected to succeed the 
General Agreement on Tariffs 
and Trade early next year. 

The new body will have a more 
formal structure, stronger disci- 
plinary powers and probably a 
more widely ranging role than its 
47-year-old predecessor. 

The appointee will be chosen 
by consensus later in the 
autumn. The other main candi- 
date Is Mr Renato Ruggiero, a 


Trade winds that bode only 
good Page 14 


former Italian trade minister, 
who is being backed by the EU. 

Mr Salinas, who is expected to 
receive the support of the US, 
says the new organisation must 
meet three conditions. It has to 
be: 

• Representative of world trade. 
The 20 countries, including Rus- 
sia and the Ukraine, seeking 
admission to the world trading 
system should be admitted 
promptly; 

• A reliable institution for its 
members, which requires that all 
governments be committed to its 
rules and be engaged in tbe WTO 
at the highest level: 

• Responsive to the evolving 
needs of the international 
economy. 

Mr Salinas argues that as trad- 
ing relationships became more 
complex It is essential that the 
WTO be technically effective. 

“It should dedicate itself not 
to offering solutions - for this is 
up to member governments - but 
to identifying options, to support- 
ing bridge-building efforts,” he 
says. 

The statement appears 
designed, among other things, to 
underline the Importance of a 
high-level individual to head the 
organisation. 



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INANCIAL TIMES LIMITED 1994 No 32,481 Week No 39 


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Berlusconi set for showdown 
talks with unions on pensions 


By Robert Graham 
in Rome 

The Italian government will 
today make a third and possi- 
bly final attempt to convince 
the sceptical trade union move- 
ment to accept proposals for 
pension reform. 

The proposals, already 
watered down last week to 
meet union objections, are cen- 
tral in the preparation of the 
1995 budget, which has to be 
presented to parliament by Fri- 
day. 

The centre-right coalition 
government's credibility with 
financial markets hangs on the 
final form of the budget. 

The lira has been under pres- 
sure since early August 
because of fears that Mr Silvio 
Berlusconi, the prime minister, 
will lack the leadership to push 
through a convincing austerity 
package. 

Before meeting trade union 
leaders, Mr Berlusconi has 
scheduled a summit of his 
coalition partners. 


This is intended to co-ordi- 
nate the government’s final 
position: but Mr Berlusconi 
must also resolve the increas- 
ingly thorny problem of the 
future of the RAI, the state 
broadcasting organisation. 

Mr Umberto Boss!, the leader 
of the populist Northern 
League, is committed to introd- 
ucing legislation to overturn 
recent government appoint- 
ments to the new management 
and editorial control of the 
RAL 

The League has forged an 
alliance with the opposition, 
which is worried that the gov- 
ernment now controls both 
public and commercial televi- 
sion. 

A League-opposition alliance 
would have a parliamentary 
majority and the government 
could be completely humili- 
ated. 

Over the weekend Pres- 
ident Oscar Luigi S calf arc 
gave implicit backing to the 
League and opposition pro- 
tests, and warned that televi- 


sion must ba run with an even 
band in the interest of all Ital- 
ians. 

This continued guerr- 
illa activity a gains t Mr Berlus- 
coni from among his own coali- 
tion partners risks im p in g in g 
on the preparation of the bud- 
get 

Matters are further 
complicated by a report, 
which is due out this week, by 
three legal experts whom Mr 
Berlusconi has asked to draw 
up proposals to avoid a conflict 
of interest between his owner- 
ship of his Fininvest media 
empire and his role as prime 
minister. 

For the 1995 budget, 
the government is seeking 
to find up to L50,000bn 
(£20.3bn) in extra revenues and 
spending cuts to hold the pub- 
lic sector deficit in 1995 to 
below 9 per cent of gross 
domestic product 

Under pressure from 
the trade unions, the govern- 
ment has reduced its emphasis 
on spending cuts and placed 


more importance on revenues. 

But the precise amount to be 
found from cuts in pension 
benefits still has to be negoti- 
ated. 

The treasury originally 
sought L8,000bn but last week 
this figure appeared increas- 
ingly nnnuaHstir.. 

The unions are threatening a 
general strike if the govern- 
ment is unable to bridge the 
gap In their positions. 

On Saturday, Mr Giovanni 
Agnelli, the head of Fiat and 
recognised spokesman for Ital- 
ian business opinion, hosted an 
informal dinner for Mr Berlus- 
coni and industrialists. 

Though the occasion was 
reportedly amicable, it was 
nevertheless a clear indication 
of the industrialists’ growing 
Impatience at the series of 
own-goals committed by the 
five month-old Berlusconi gov- 
ernment. 

Mr Agnelli is understood to 
have conveyed the industrial- 
ists' fears if the budget falls to 
convince finanriai markets. 


CONTRACTS & TENDERS 



INTRODUCTION OF SYNCHRONOUS DIGITAL 
HIERARCHY EQUIPMENT IN HUNGARY 

Prequaiificadon Notice to Prospective Suppliers 

The Hungarian Telecommunications Co. Ltd. (HTC) is to introduce Synchronous Digital Hierarchy (SDH) equipment families in 
the Hungarian telecommunications network. Suppliers will be selected from among qualified bidders invited by HTC to 
participate in 2 tenders planned to be issued in the near future. 

The lenders will cover two projects, to be implemented in 1995 and 1996: 

• SDH Development of the Budapest Trank Network (with approximately 30 nodes), and 

• SDH Development of the Hungarian Backbone Network (with approximately 50 nodes, and all major international links) 
Both projects will cover complete, Integrated SDH networks, consisting of 

cross-con/uxt equipment 

- point-to-point transmission links, and 

- self-healing optical rings. 

Suppliers' responsibilities will include the 

implementation design, manufacture, supply, delivery, installation, commissioning, and system integration of the equipment of 
the SDH network, 

and will exclude the existing infrastructure, such as installation of optical cables, microwave towers, power supplies, etc. 

At network nodes the following equipment shall be installed for the individual projects: 


SDH Development of the Budapest Trank Network 


- STM-1, and STM-4 add/drop and terminal multiplexers 


- STM- 16 optical tine systems (line multiplexers). 


-STM-l microwave systems 


- DXC 4/1 cross-connects 


- NE management software 


SDH Development of die H 


Backbone Network 


me. 


- DXC 4/1 cross-connects 


- DXC 4/4 cross-connects 


- NE management software 


Original equipment manufacturers who wish to be considered for prequalification for any of the above explained tenders are 
invited to submit a capability statement, addressing the questions below. In case of 

- a main contractor with sub-oontractore, or 

- a consortium 

all companies (including sub-contractors or consortium members) shall submit the applicable statements and evidences 
according to their planned responsibilities in the frame of the project targeted. 

Applicants shall acknowledge that in case of successful qualification they are supposed to participate in the render with the same 
sub-contractors or consortium members qualified by HTC for the relevant project Although at the time of tendering bidders will 
be allowed to make minor changes concerning their actual partners and their responsibilities, HTC shall have the right to refuse 
any sub-supplier, sub-contractor or consortium member not approved in the course of the prequalification. 


Documentary Evidences 


Company profile including type and size of the 
company, and consolidated financial statements 
(balance sheets and statements of income) for the 
last 3 yeans 


Details of at least 3 similar SDH projects completed 
or currently being implemented 


List of telecommunications authorities which have 
already approved the offered SDH equipment 


List of other vendors, if any. whose devices the 
bidder (as a main contractor or the leading party of a 
consortium) intends to integrate with his own 
equipment for the relevant tender 


Description of the project management methods and 
tools 



Description of the current network management 
system applied for the SDH equipment 


Development history and planned future 
developments of the SDH equipment 


Minimum Criteria 


minimum annual turnover: 

- in case of a single supplier, main contractor or 
consortium leader: an equivalent of 50 million USD 

- in case of equipment sub-suppliers or consortium 
members: an equivalent of 15 million USD 

- in case of sub-contractors (for installation, etc): an 
equivalent of 5 million USD 


- each project shall be described, and reference letters 
signed by the customers shall be attached (with a 
certified English translation, if necessary) 

- each project value shall be at least 3 million USD, 

- the value of the bidder's own SDH equipment shall 
represent at least 1.0 million USD for each project (in case 
of other companies participating under the bidder’s control) 

- all companies invoked shall submit a statement that 
they are capable of arranging a visit by HTC to any 
site of the documented reference projects 


approval certificates from at least 2 (two) authorities 
for each equipment category shall be submitted, with 
certified English translation, if necessary 


- authorisation by the vendors 

- attachment of the vendors' capability statement in response 
to all the applicable requirements stipulated in this table 

a realistic allocation of responsibilities among the partners 


demonstrated ability to efficiently and reasonably manage, 
monitor and administer all activities, including the 
control of sub-contractors or consortium members 


- compliance with the relevant European standards and 
recommendations 

- approval by the Hungarian Telecommunications 
Inspectorate, or willingness to obtain the same in case 
of contract award 


a declaration suiting that as soon as the relevant 
international standards are set up, the company will develop 
a centralised network management system, capable 
of interworking with other SDH equipment 


a well thought out development strategy, targeting 
totally own manufacture of all equipment in the near future 


Only those companies and/or groups of companies will be qualified to participate in the coming tender who have met the above 
minimum criteria. Separate prequalification materials shall be submitted for the two tenders. 

Prequalification materials shall be received before 4.00 pm on ISth October 1994, at the following address: 

InteUrade Co. LtcL, 

MrZoUdn Kecskes 

Deputy Head of Procurement DepL, 

Budapest, Medve u. 25-29, 1027 Hungary 

Tel: +361-201-0045, -0054 Fax: +361-201-0017, -0008 

Prequalification materials shall be submitted in 5 (five) copies in English for each of the targeted projects. In case of reference 
letters or other attachments written in other languages a certified English translation shall also be enclosed loo. 



Mr Jacques Chirac (left) leader of France’s ruling RPR Gaulllst 
party, has invited Prime Minister Edouard BaDadur to run as 
number two on his pr esidential ticket next year, in an attempt to 
avoid fratricide between the two Ganllists, writes David Buchan 
in Paris. With no vice-presidential slot in France, Mr Balladur. 
would he designated as prime minister again if Mr Chirac won. 
Bat Mr Balladur appears to have no intention of playing second 
fiddle to Us party leader. According to an IFOP poll in yester- 
day’s Journal dn Dimanche, Mr Balladnr’s popularity has 
dropped sharply, but he still has 52 per cent support - a high 
rating for a French prime minister, and he continues to win 
higher ratings than Mr Chirac. 


Germany passes 
law to compensate 
property owners 


By Judy Dempsey in Berlin 

The Bundesrat. upper house of 
Germany’s parliament, has 
passed a law to compensate 
former property owners In 
eastern Germany. The law: 
which will speed up invest- 
ment decisions in the east, fol- 
lows three years of wran g lin g 
over terms and funding. 

Under the unification treaty, 
which laid out the settlement 
of property rights in eastern 
Germany, owners are entitled 
to full compensation or restitu- 
tion for property confiscated 
between 1933 and 1945 by the 
Nazis, or by communists 
between 1949 and 1990. 

However, the unification 
treaty did not say how claim- 
ants should be compensated, at 
what level, or how this com- 


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pensation should be financed, 
issues which have been the 
subject of lengthy disputes in 
the German parliament. 

The law provides compensa- 
tion based on the valuation of 
land dating back to 1935. How- 
ever, assessment will depend 
on tiie type of property and 
whether it was owned or 
leased, and a different system 
will apply for land. For exam- 
ple, these who had owned fam- 
ily houses and small busi- 
nesses will receive 
compensation, but the 1935 
land valuation will be multi- 
plied by seven, the valuation 
for those who had rented prop- 
erty will be multipled by 4.8, 
while the valuation for those 
who owned land will be multi- 
plied 20-fold. 

The former owners will 
receive bonds redeemable in 
2004. 

In addition to those whose 
land was confiscated by the 
Nazis and the communists, the 
Bundesrat also agreed to grant 
concessions to those property 
owners whose land was expro- 
priated by the Soviet Union 
which administered eastern 
Germany between 1945 and 
1949. but who have no right to 
either compensation or restitu- 
tion. These former owners, 
who owned large estates In 
eastern Germany, will now be 
entitled to buy back a percent- 
age of their property below the 
market price, and they will be 
able to rent their property, 
again at a discount 

A further DM3-4bn has been 
put aside for the 110,000 “set- 
tlers’’, those Germans who 
were expelled, or forced to flee 
eastern Europe but who settled 
permanently in eastern Ger- 
many after the second world 
war. In addition, DM2bn has 
been allocated to victims of the 
Nazis In eastern Germany. 


EUROPEAN NEWS DIGEST 


Germans press 
for wider EU 

A weekend meeting between Europe^ 


presidency of the union. While mini sters from tvtimria 
^aSaS^tiie Czech Republic. Ronmnia and Bidga^ 
remained enthusiastic about preparations for , hidusion _ 

single market, they also outlined the difficulties of bringing 
their Mwwimto! into line with richer neighbours. 

The challenge facing the six countries 
bership is to set up appropriate legal and 
works and to harmonise legislation on state 

aid. The commission plans to produce a White fhpernert _year 
establishing a programme for the assorted eountaes ■ 

low fw adjusting their economies to the obligations of ffie 
internal nSrireLThe east European ministers said ithe greatest 
lay in competition policy. Harmonisation of rules 
on intellectual property rights was also singled out along with 
the introduction of technical standards on lnltb pro& 
nets and the environment. A German official said the eastern 
European countries were unlikely to be ready for membership 
of the EU before the end of the century. The process 1 of 
harmonising legal frameworks would probably take 10*15 
years, he added, with Hungary expected to lead the way. 
Emma Tucker. Frankfurt an.der Oder 

Fast train project approved 

The Bundesrat, upper house of the German parliame nt, has 
approved the Transrapid magnetic levitation tram between 
Berlin and Hamburg after a long dispute which threatened to 
scupper the project The Bundestag, or lower house, passed 
the legislation earlier this year, only to have it thrown out 
during the first reading In the Bundesrat Although several 
Taviriw controlled by the opposition Social Democratic Party 
(SPD) voted against the bill, the majority backed the amended 
legislation which provides them with more extensive rights 
during the planning process. However, the SPD may set back 
the project if the party wins the federal elections on October 
16. 

With a mariTTnmi speed of 450kph (280mph), the Transrapid 
will race between the two city centres, providing an alterna- 
tive to air travel, according to Thyssen Industrie, the compa n y 
which hag developed the system The federal gove rnm e nt will 
spend around DM5.6bn (£3 L3tm) to build the track cities and a 
private consortium will operate the service. Total costs are 
expected to reach DMIObn and the service is expected to open 
by 2005. Michael Ltndemarm. Bonn 

Russia attracts investors 

Russia is enjoying an upturn in foreign investment attracted 
by shares in Russian companies, according to Mr Anatoly 
Chubais, Russia’s deputy prime minister for privatisation. He 
said share prices were soaring following the end of the 
voucher auctions in June. The second phase of privatisation - 
the selling of company stock for cash, with fewer privileges for 
the workers - is now under way. 

Mr Chubais forecast that foreign investment would be run- 
ning at $lbn a month by the end of this year and would 
continue to grow in 1995. It had totalled over $2bn in the first 
six months of the year, and was growing by around 40 per cent 
a month. Brokers have also reported a growth in portfolio 
investments in Russia this year. Stocks in sectors like energy, 
telecommunications and other utilities have commanded high 
prices as especially US hedge funds and wealthy individuals 
scramble for holdings in the Russian market John Lloyd, 
Moscow. 

Repsoi offering postponed 

Mr Pedro Solbes, Spain's economy ministar, said he was not 
expecting any additional revenue from privatisations before 
the end of the year, due to market conditions. However, the 
minister has budgeted for income totalling Pta300bn (£L5bn) 
in 1995 through the disposal of government-held equity. Mr 
Solbes’ disclosures suggests that Repsoi, the government-con- 
trolled oil, gas and chemicals group, is now likely to postpone 
for several months an International share offering which it 
had planned for the last quarter of this year. 

Repsoi, which is 41 per cent government-owned and has a 
broad international investor base, said it would consult its 
advisers, Goldman Sachs of the US, and Spain’s Banco Bilbao 
Vizcaya. The two banks co-ordinated an offer of 13 per cent of 
the government's equity In the energy group last year which 
realised $866m. Repsoi said in May that it hoped to raise 
between $L4bn and S2J2bn in a further offering before the end 
of this year. Tom Bums, Madrid 

Slovaks warm to privatisation 

More than half a million people have registered to buy shares 
through Slovakia’s voucher privatisation programme since its 
launch three weeks ago by a government which hopes privati- 
sation will prove a vote winner at next weekend's general 
elections. The Slovak coalition parties hope that (his privatisa- 
tion will take votes away from Mr Vladimir Medar. the popu- 
list leader of the opposition, who has threatened to scrap the 
programme If his Movement for a Democratic Slovakia wins 
the election. 

Fifty thousand books of vouchers, each valued at KcsLOOO 
(£20.50). are being sold every day, the privatisation minister, 
Mr Milan Janifina, said recently. Three quarters of Slovakia’s 
5-3m people are eligible to take part in the programme which 
involves the sale of stakes in 136 state-owned companies with 
a total value of Kcs44_8bn. More are expected to be included 
before the elections. However, the government's original tar- 
get of approving Kcs80bn of assets for voucher privatisation 
before the election will not be met 

Vincent Boland, Bratislava 












Easier than 
ever to get to. 

Osaka has just gotten closer to 
international cities with the opening of 
the Kansai International Airport (KfX). 
That means The Westin Osaka is also 
a lot easier to get to. 

In a city justly proud of its world-class 
. hospitality. The Westin Osaka's 
* excellence stands out. 

* Easy uccttis with an ultantuguous location 
right by Osaka SUt ion. 

• Spacious guvsirooms 

1 ^ JlHl the inimitable We*iin service i 0 relu\ (ravelin* 
i * Direct transport 10 the new KJX airport. 


The Westin Osaka 


Th« Mfestin Osaka a CMvnantiv taated new JR ikat. 

* . _ i ^ 00y8 * , * A * M.MQim F*t0e44ajioa 


The Westin Tokyo opens October 14 




































FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 


3 


★ 

NEWS: EUROPE 



CENTRE STAGE: Kohl campaigns before an election poster aw 


Kohl beams from on high 

‘Feelgood’ chancellor radiates poll confidence, writes Quentin Peel 


“The Chancellor’s coming.” the 

posters proc laim , and the faith- 
ful are gathered in eager expec- 
tation in their spanking mod- 
ern tennis stadium in Halle, 
Westphalia, modelled on the 
Centre Court at Wimbledon. 
Three brass bands take it in 
turns to warn up the crowd. 

Suddenly he's there, surging 
up the aisle surrounded by a 
phalanx of sober-suited young 
men. to the. thoroughly inap- 
propriate martial strains of 
“Prussia's Glory". Mr Helmut 
Kohl, the beefy provincial poli- 
tician from the west German 
Rhineland-PalatLnate Is a 
decidedly un-Prussian figure. 

Here is the man who is both 
messenger and message of the 
ruling German coalition and 
his own Christian Democratic 
Union (CDU1. His very bulk 
and reputation are the issues 
at stake in the forthcoming 
general election on October 16. 

AH his party posters have his 
beaming picture, radiating 
security and stability, with the 
slogan: "Germany is the issue.” 
blatantly exploiting his image 
as the personification of mate- 


rial well-being, solid citizen- 
ship and German unification. 

Mr Kohl is the ultimate expo- 
nent of the “feelgood factor”, 
displaying confidence in the 
future, with a good dose of 
stem statesmanship to temper 
it Only nine months after the 
polls wrote him off in public 
popularity, the Chancellor is 
back on a roll which looks 
likely to carry hbn to a fourth 
term in government 

He no longer really needs to 
attack his opponents in the 
Social Democratic party (SPD;, 
Mr Rudolf Scharping and his 
lieutenants, Mr Oskar Lafon- 
taine and Mr Gerhard Schra- 
der. Yet his political instincts 
are too acute to resist it 

In thiq heartland of west Ger- 
man prosperity, where the ten- 
nis stadium itself has been 
built merely to satisfy the 
whim of a local industrialist 
who wanted a Wimbledon in 
his home town, his top theme 
goes down welL He is deter- 
mined to tar the SPD with the 
brush of being soft on Commu- 
nism. in spite of the end of the 
Cold War. His target Is the 


Party of Democratic Socialism 
i.PDS.1, reformed rump of the 
former East German commu- 
nist party, which he denounces 
as "red-painted fascists”. And 
the message is that the SPD 
can only hope to unseat him in 
Bonn with the tacit support of 
those communists. 

As for Social Democrats, 
they are a “joyless bunch”, he 
declares. “You don’t have to 
sneak off to the cellar to have 
a good laugh.” This is the man 
of the people who made it, the 
international statesman from 
Oggersheim who strides the 
world stage with the likes of 
Bill Clinton and Boris Yeltsin 
and yet whose homely rhetoric 
still belongs to the provinces. 

But the real message is 
about the broad sweep of his- 
tory, not the minor details of 
party politics, it is about Ger- 
man unifi cation, and his lead- 
ing part in achieving it, about 
the need today to unite the 
country economically and psy- 
chologically, rather than sim- 
ply geographically. 

It is also about Germany's 
role in the interna t ion al com- 


munity and his passionate 

commitment to an integrated. 

united Europe as the essential 
counterpart to German unifica- 
tion. It is a theme which might 
not prove too popular to Ger- 
mans who worry about the 
future loss of the D-Mark in a 
single European currency, but 
this is Chancellor Kohl the 
statesman: he puts the Euro- 
pean Union right up front in 
bis vision of the world. 

And it is about German com- 
petitiveness. and the need to 
carry on belt-tightening in the 
German economy to face up to 
the new competitors, not just 
in Asia, but just over the bor- 
der in Czechoslovakia. 

It Is a speech that runs to 90 
minutes, without a note, and 
he’s delivered it three times 
since noon, but electioneering 
is what Helmut Kohl does best 
he thrives on the buzz of the 
auditorium and glad-handing 
in the crowd. He knows there 
are still a tough three weeks 
ahead, but he senses the tide is 
with him. He can afford to play 
the world statesman and leave 
party politicking to the rest. 


Ukraine 'needs $lbn in 
aid to implement reforms’ 


Jubilation in Serbia as 


some sanctions 


By Chrystia Freeland in Kiev 

Ukraine will need nearly $ibn 
in foreign assistance this year 
to implement radical economic 
reforms, according to senior 
Ukrainian officials. A 
high-level Ukrainian delega- 
tion, including possibly Presi- 
dent Leonid Kuchma, is expec- 
ted to attend the International 
Monetary Fund and World 
Bank meeting in Madrid this 
week to plead Ukraine’s case. 

On Friday, Ukrainian offi- 
cials reached a preliminary 
agreement with the IMF on an 
economic reform programme 
which they say is the first step 
in a comprehensive package of 
reforms to be announced early 
next month. The agreement, 
the first since Ukraine 
announced its independence 
three years ago, and the eco- 
nomic programme being pre- 
pared by the government have 
helped convince western 
observers that Ukraine is on 


the verge of attempting its 
first serious leap into market 
reforms. 

But Mr Roman Shpek. minis- 
ter for the economy and leader 
of the Ukrainian side in nego- 
tiations with tire IMF, said at 
the weekend that Ukraine will 
require 9960m aid before the 
end of the year if it is to meet 
the IMF target of a budget def- 
icit no higher than 10 per cent 
of GDP. 

"Of coarse, the Ukrainian 
side must take the first step in 
market reforms, but we are 
ready to do so, and we hope 
that the west will respond.” 
Mr Shpek said. “Now that we 
are ready to launch our reform 
programme, we are looking for 
a Don-inflationary way to 
cover oar budget deficit and 
this is where we hope that the 
west will help us.” 

Mr Shpek said Ukrainian 
leaders would ask the US to 
convert 9200m earmarked for 
technical assistance projects in 


Ukraine into direct financial 
aid. He said another source of 
immgdiflte fiiwwriiii assistance 
could be the DCF, which, if tire 
Ukrainian deal is signed as 
expected this week, could pro- 
vide a first tranche of $365m 
to Kiev soon. 

Mr Shpek said Ukraine 
would turn to the Group of 
Seven industrial nations and 
Russia for an additional 
9400m. 

He said the reform pro- 
gramme included radical price 
liberalisation, although some 
controls wonld remain on 
bread, prices. The state-con- 
trolled exchange rate was to 
be unified with tire free mar- 
ket rate, trade policy would be 
liberalised, the confiscatory 
tax regime overhauled and pri- 
vatisation accelerated. 

Mr Shpek predicted that the 
programme wonld cause infla- 
tion to jump to about SO per 
cent a month, hot it wonld 
then fall to 5 per emit a month. 


UN lifts 

By Laura Sflber in Belgrade 

Serbia’s President Slobodan 
Milosevic is a happy man. 

The UN decision to suspend 
some sanctions against his 
country has absolved him from 
the status of international 
pariah, and it may also have 
cleared the way for a final 
showdown with his erstwhile 
proteges, the Bosnian Serbs. 

The 100-day moratorium on 
some of the UN’s punitive mea- 
sures does not mean that life 
will improve quickly for the 
ordinary Serbs, yet the jubila- 
tion in official circles is unmis- 
takable. 

Belgrade's closely guided 
press proclaimed yesterday 
that “the world has changed 
its mind about Yugoslavia.” 
"The blockade has broken,” 
read a headline in Vecernje 
Novosti, the biggest circulation 
daily. 

The immediate effect of the 
UN decision is to suspend the 


Bosnian Serbs have promised 
to end a 10-day utilities block- 
ade that has forced thousands 
to queue for water and scav- 
enge for firewood in Sarajevo, 
a Bosnian government minis- 
ter said. Renter reports. 

bans on direct flights, sporting 
and cultural exchanges with 
Serbia and Montenegro, the 
two remaining constituents of 
the Yugoslav federation. 

The UN move was approved 
as part of a twin strategy of 
tightening pressure on the Bos- 
nian Serbs and rewarding 
Serbia for its apparent sever- 
ance of links with its Bosnian 
cousins. In practice, few Serbs 
can afford air tickets, and for- 
mal culture virtually collapsed 
with the old Yugoslav state. As 
for sport, Yugoslavia is proba- 
bly too late for the European 
football championship. 

The most draconian sanc- 
tions - including the freezing 


of foreign b ank accounts - 
remain in force, and the entire 
set of punitive measures could 
be re imposed if Yugoslavia 
openly resumes supplies to the 
Bosnian Serbs. 

But the optimism in Bel- 
grade reflects a feeling that in 
practice, the sanctions regime 
will be very difficult to recon- 
struct once the international 
community has started to dis- 
mantle it. 

Russia is impatient for com- 
mercial links with Yugoslavia, 
as soon as the opportunity 
arises. 

The Yugoslav national car- 
rier JAT expects the first 
direct flights to link Belgrade 
to Russia and then Greece - 
both staunch friends of Serbia. 
Wi thin weeks, there could be 
air links with a host of Euro- 
pean cities. The lifting of sanc- 
tions was bitterly opposed by 
the Bosnian government, 
which insists that Serbia is 
still supplying Bosnian Serbs. 


Liberation tries 
to break free of 
revenue decline 

John Ridding examines the spate 
of relaunches in the French press 


F rench newspaper ven- 
dors will have to dear 
some extra space and 
strengthen their stalls this 
morning. Liberation, the left- 
leaning daily, is launching a 
radical redesign, with a new 
typeface, a separate metro sec- 
tion. colour illustrations, and 
approximately double its usual 
40 or so pages. 

Libe III. as it has been 
dubbed in reference to the 
newspaper’s third redesign 
since its first edition in 1973. 
has ambitious objectives. “It is 
a sort of a revolution as far as 
the French press is con- 
cerned.” claims a spokesman 
for the paper. “The aim is to 
broaden the appeal of the 
newspaper and increase the 
number of readers.” 

Liberation is not alone. Its 
redesign is part of a broader 
upheaval in the French news- 
paper industry. The staid Le 
Monde is preparing an ambi- 
tious redesign, to be unveiled 
at the beginning of next year, 
as is Infomatin. die jazzy tab- 
loid which heralded the 
upheaval with its cut-price, col- 
ourful format when launched 
in January- Regional newspa- 
pers. such as Ouest-France 
have also been back to the 
drawing board this year to 
sharpen their presentation. 

In some cases, such as Le 
Monde, the redesigns coincide 
with the 50th anniversaries of 
their formation, which often 
followed the liberation of Paris 
in the second world war. Fbr 
all, however, the motivation 
lies in a need to respond to the 
increased competition in the 
industry, depressed sales and 
reduced advertising revenue. 

Sales of national dailies have 
contracted by more than 15 per 
cent over the past three years, 
while advertising income has 
suffered an even sharper 
decline. As a result, many 
newspapers have gone into the 
red. Le Monde suffered a loss 
of FFr44m (£5.3m) last year, 
compared with a profit of 
FFr6m in 1992. while Infomatin 
expects a deficit of about 


FFWtfra this year. Others have 
fared still worse. Le Quotidien. 
for example, went into receiv- 
ership this year. Liberation has 
remained in profit, but admits 
its sales have stagnated over 
the past few years at about 
170.000 copies a day. 

Economic recovery' promises 
some improvement in reve- 
nues. but the industry remains 
beset by deeper problems. A 
reform of the advertising laws 
under the previous Socialist 
government prompted a shift 
towards television. As a 
spokesman for Liberation 
points out. daily newspapers 
must also contend with a raft 
of weekly news magazines. “In 
France, these magazines are 
much more widely read than ui 
other countries. It limits the 
readership Tor dailies." He said 
sales of Le Figaro. Le Monde 
and Liberation, the principal 
national newspapers, were less 
than lm copies. 

H ence the relaunches. 
"What Liberation and 
the others are trying 
to do is to create a new reader- 
ship. to expand their market 
and break a vicious circle of 
declining readership and 
advertising expenditure" says 
a media analyst at a French 
merchant bank. He sees a 
trend towards more accessible 
presentation, broader coverage 
and the introduction of sepa- 
rate sections, as in the British 
press. At Le Monde, for exam- 
ple. Mr Jean Marie Colombani, 
the editor, promises a new for- 
mat with easier access, and 
more contemporary and inter- 
national coverage. 

Such overhauls, however, 
are not cheap, liberation plans 
to invest more than FFrdoOm. 
of which it has so far raised 
about FFr75m. Although the 
national dailies have largely 
escaped a price war. the new 
formats amount to something 
s imilar . Lib£ HI will COSt the 
same FFr6 for twice as many 
pages. It is a gamble which 
raises the survival stakes 
across the industry. 


E R T S E 


The Shining Stars 
Of the Multimedia Era 


The Laser Disc Makes Rapid Gains as the Ideal Audio-Visual Medium 



Pioneer developed SHC> iScc-wd Harmonic Generation/ Uue laser pickup to’ 
hignei •.wsifi recording on cpt'cat dries 


These days, it's hard to open a 
magazine or newspaper without finding 
the word ■‘Multimedia’* in the head- 
lines. and stories about how this new 
wave of the Future, through the mar- 
riage of audio/video with computers 
and telecommunications, is going to 
transform our lives. But this technology 
is already firmly established in home 
entertainment systems: in educational 
hardware and software: and in commer- 
cial/indusiriai applications. 

We're talking, of course, about the 
Pioneer Laser Disc: One of the earliest 
varieties of the so-called New Media, 
and. whether measured in terms of the 
number* in use — or in terms of the 
sheer variety of applications — also one 
of the most successful. It‘s certainly the 
one with the brightest future. 

What gives the Laser Disc, a play- 
buck-only medium, its strong appeal? 
Although it does lack the capability to 
make recordings — the main appeal ol 
VCRs — the Laser Disc is unsurpassed 
in all other areas. Tuke its superb pic- 
ture quality: Laser Disc technology 
makes possible a high-resolution TV 
image of 4-10 horizontal lines — as op- 
posed to only 250 for conventional 
VHS videotape. Naturally the larger the 
TV screen, the bigger the difference in 
quality of viewing between LDs and 
VHS — as owners of projection TVs 
will attest. And Laser Discs provide dy- 
namic sound accompaniment as well, 
thanks to lo-hil digitally recorded 
sound using ihe same 44.1kHz sam- 
pling frequency used by CDs. 

But speedy programme location is 
where the Laser Disc really comes into 
its own. Unlike VCRs, which might 
take several minutes to locate the de- 
sired point on a videotape via fast for- 
warding or rewinding, at the most it 
takes only a few seconds lor a Laser 



Pioneer supplies Ptaneu S A ol Spacn tvkti Laser 
Oise payers and 'edutainment' software 


Disc to find the same point. This quick 
and random accessibility is a distinct 
advantage for commercial, educational 
and industrial applications, where huge 
amounts of information — moving and 
still pictures, text, and data can be 
quickly searched out by simply entering 
a few coded numbers or scanning in bar 
codes. 


A Continuous Stream of 
Improvements 

As good as the technology and ease 
of operation, the key factor to the 
growth of the Laser Disc has been the 


growing availability of LD software, 
which now includes a wide selection of 
cinematic hits, musical performances 
and educational programmes. Pioneer 
is in the forefront of Laser Disc soft- 
ware development as well. 

The Laser Disc has also proved 
ideal for “karaoke” or sing-along. offer- 
ing quick programme access, superb 
picture quality and dynamic sound. 
This Japan-born way of letting off 
steam has become one of the world’s 
hottest forms of entertain mem . Laser 
Karaoke software is now available in 
numerous languages, and includes huge 
numbers of international hit songs, 
"oldies.” and even local folk ballads. 
Bars and other establishments featuring 
Laser Karaoke now number in the tens 
of thousands worldwide, and among 
them are Pioneer's own “Star Facto- 
ries." 

Laser Disc players do more than just 
play Laser Discs. All Pioneer consumer 
models also feature the capability to 
play music CDs. This LD/CD compat- 
ibility is especially appealing to audio- 
philes, because it lets them merge high- 
performance video and audio capabili- 
ties into a single unit saving rack space 


and money as well. And Pioneer has 
been continuously refining the design 
of its player units, so that they now of- 
fer even better picture quality and more 
convenient features. Some examples in- 
clude HQ (High-Quality) video cir- 
cuitry. a feature enabling more vivid 
imagery, that is incorporated into 
Pioneer's newest models. Another 
popular new feature in our “both-side 
play" model is the quick and silent 
y (Ga/nmaj-Tum mechanism, which 
enables playback of both sides of the 
disc without the need to flip it over 
manually. The ingenious design trans- 
pons the laser pickup from side A to 
side B in less than 10 seconds while the 
disc remains stationary. 

We've already explained how the 
Laser Disc is ideal for education or 
“edutainment" ta new word coined 
from the merging of “education” and 
“entertainment'’). Pioneer and Spain's 
top publishing group, Planeta S.A., last 
year concluded an agreement to market 
Pioneer's Laser Disc players and 
edutainment LD software, such as 
programmes on wildlife, through 
Planeta's sales channels in Spain. Since 
then, a huge number of LD players and 


far larger number of LD software selec- 
tions have been delivered to home users 
in Spain. This strong consumer interest 
in the Laser Disc underscores the ar- 
rival of a dynamic new entity: audio- 
video publishing. 


A Future with Unlimited 
Potential 

Now in the second decade of its ex- 
istence, the Laser Disc has only just be- 
gun to take advantage of its enormous 
potential. The Laser Disc's superb pic- 
ture and sound quality and its quick, 
random-access capabilities are now be- 
ing merged to create interactive soft- 
ware. Let’s call this software LD-ROM. 
The vast memory capacity of LD-ROM 
offers far more potential than the popu- 
lar CD-ROM or CD-I formats, making 
interactive programmes more dynamic, 
livelier and far more substantial in 
terms of the volume of information. 

Laser Disc is already meeting the 
challenge from newcomers, such as 
Video-CD in 12-cm CD size. While the 
appeal of the smaller disc is undeniable, 
this size reduction can only be obtained 
through compression of the digitised 


images — a process that seriously com- 
promises the picture quality to the level 
of VHS. 

What is in store for the future of 
multimedia? Pioneer believes that only 
a format that provides users with un- 
compromising picture and sound qual- 
ity will prevail. To achieve this. Pioneer 
is devoting major efforts into research 
and development of laser optics and 
high-density digital recording/playback 
technology, as exemplified by its recent 
announcement of the world's first SHG 
(Second Harmonic Generation) Blue 
Laser pickup, a breakthrough that in the 
not too distant future will make it pos- 
sible to put a two-hour LD-qunlity 
movie on a single CD. In the meantime, 
the Laser Disc format will continue to 
display amazing staying power as the 
industry standard, offering better per- 
formance and a growing range of fasci- 
nating new applications. 


Or) PIONEER 

The Art of Entertainment 







•••• • ' ._:j' 


FINANCIAL TIMES MONDAY SEPTEM BER -6 1 994 


NEWS: INTERNATIONAL 


World Bank to boost new lending 


World Bank Operations ($*n) 


1993 1994 


By Peter Norman, 

Economics Editor 

The World Bank expects to 
boost its new lending commit- 
merits to between £3bn and 
$25bn in its current financial 
year to the end of June 1995 
after reporting a drop in its 
loans last year. 

The drop in the combined 
commitments of the bank's two 
main divisions to $20-&4bn in 
1993/94 from $23.7bn the previ- 
ous financial year reflected a 
shiTt in priorities, according to 
the bank's annual report pub- 
lished yesterday. 


The bank provided fewer 
large scale “adjustment" loans 
in support of economic policy 
reform, instead switching 
efforts to lending for specific 
Investments and sectors and 
raising the quality of its portfo- 
lio. 

The bank disclosed that its 
main operating arm. the Inter- 
national Bank for Reconstruc- 
tion and Development (IBRD) 
which finances (ending to 
developing countries from bor- 
rowings on the world capital 
markets, experienced a net 
inflow of funds from borrowers 
last year. 


The switch from net dis- 
bursements of $2J33bn in 1992/ 
S3 to a net inflow of 3731m in 
1993/94 reflected repayments of 
hank loans by several middle 
income developing countries. 

The International Develop- 
ment Association, the bank's 
soft loan agency which grants 
loans on concessional terms to 
poor developing countries, 
raised net disbursements to 
$5.11bn from $4.58 bn in 1992/93. 
Its commitments fell slightly, 

however, to 56.59bn from 

$6.75bn. 

The World Bank's net 
income dropped to SL05bn in 


the year to June 1994 from 
Sl.lSbn the previous year. 

The news that IBRD net dis- 
bursements were negative last 
year is unlikely to please the 
hank's many critics. But Mr 
Geoffrey Lamb, the bank’s 
London representative, said it 
was a consequence of the long 
term financial flows in the 
bank's business. 

Presenting the report, he 
said the bank was putting 
greater em phasis on the imple- 
mentation of programmes and 
the quality of its projects. “The 
pressure to lend in the bank 
has gone." he said. 


China was the bank’s biggest 
client in 1993/94 with approved 
borrowings of SS.OTbn. It 
headed the list of borrowers 
from the IBRD and IDA. 
Mexico and Russia were the 
next biggest borrowers from 
the IBRD, while India and Ban- 
gladesh were the second and 
third biggest IDA borrowers. 

The agricultural sector 
accounted for 18.8 per cent 
of new commitments by 
the Bank in the past fiscal 
year, followed by trans- 
portation infrastructure with 
15.8 per cent. Lending for 
human resources development. 


Commitments 15,180 16,392 

Disbursements 13£59 11.431 

Net dbbusemenb# 6,726 2,109 

Net income 1,046 1.200 


Commttmente 

Disbursement* 

Net disbursements 


5549 6493 

3531 4549 

3,713 4474 


‘fiscal jmq enttog June 30. 1 snow todbttt abbummr**, 
at martan. Mfcsfev WnJpany npqmera. 


13,156 16.945 14544 

11.666 12,943 10.447 

1,833 2531 -*31 

1,645 1.130 1.051 


6550 6.751 6,582 

4,765 4,947 5.532 

4/441 4^81 5,110 

(■pqawnes and pmpvimnu Mfto* 
SounxWoMBm* 


which covers education, 
health, population, nutrition 
and . social programmes, 
jif-ratnifpd for 15 per cent of 
loans and credits approved in 
the year, down from about 16 


per cent the previous year. 

The approval of fast disburs- 
ing loam In support of policy 
reform, dropped to 12 per cent 
of lending in fiscal 1994 from. 17 
per cent the previous year. 


UK relief plan goes for gold 


By Peter Norman 

B ritish chancellors of the 
exchequer have become 
infrequent participants 
in the yearly conferences of 
Commonwealth finance minis- 
ters that precede the annual 
meetings of the International 
Monetary Fund and World 
Bank. But when they do make 
the effort, they usually have an 
initiative tucked away in their 
briefcases. 

That was the case when Mr 
John Major, as chancellor, 
launched the “Trinidad Terms" 
for easing the burden of gov- 
ernment-to-govemment debt 
owed by the poorest developing 
countries at the 1990 Common- 
wealth conference in Port of 
Spain. Trinidad. 

It will be the case when Mr 
Kenneth Clarke, who flies 
today to this year's Common- 
wealth meeting in Malta, dis- 
closes plans to help a small 
group of heavily indebted 
countries unable to benefit 
from the Trinidad Terms 
because their debts are owed to 
institutions such as the IMF 
and World Bank. 

The UK initiative is carefully 
structured in an attempt to 
gain the necessary 85 per cent 
support Of the IMF member- 


ship. It owes a great deal to 
ideas put forward by Qxfam. 
the UK-based charity, of which 
his wife, Gillian, is an enthusi- 
astic supporter. 

Mr Clarke will propose that 
the IMF sell part of its holding 
of 103.4m fine ounces of gold 
and invest the proceeds. The 
income from the investment 
(which would be retained by 
the IMF in its reserves) would 
be used to subsidise the inter- 
est payments and ease the 
repayment schedules of the 
developing countries that are 
burdened with excessive bor- 
rowings from the Fund. 

The countries named by Mr 
Clarke are Uganda, Honduras, 
Mozambique, Burundi, Kenya, 
Sierra Leone. Guyana and 
Laos. Other possible beneficia- 
ries include Cote d'Ivoire. 
Ghana. Mali, Nicaragua and 
Tanzania. 

The British plan envisages 
that the debts owed by these 
countries to the IMF should be 
serviced and paid on terms 
similar to those granted to 
developing countries through 
the IMF's enhanced structural 
adjustment facility (ESAF), a 
soft loan facility that has 
extended finance on conces- 
sional terms to 22 countries 
reforming their economies in 


line with IMF programmes. 

With ESAF, debtor countries 
pay only 0.5 per cent interest 
on their borrowings, with 
repayment in 10 years with a 
5% year grace period. The 
chancellor will propose a lon- 
ger term concessional window 
of perhaps 20 years for the 
countries in difficulty with 
their multilateral debts. 

This would ease their burden 
greatly. A recent Oxfam report 
calculated that debt repay- 
ments to multilateral creditors 
such as the IMF by 19 severely 
indebted, low income countries 
account for 30 per cent of their 
debt service payments. Pay- 
ments to the IMF, the report 
said, had outstripped the provi- 
sion of new finance by some 
S2bn since the mid-1980s. 

T he UK proposal is 
designed to overcome 
many taboos that have 
so far prevented the provision 
of debt relief to borrowers from 
the IMF. The chancellor will 
not be calling for the write-off 
or rescheduling of multilateral 
debt. He will also stress his 
proposals should only apply to 
countries that have followed a 
sustained programme of eco- 
nomic reform under the IMF. 
Because the scheme would be 


financed by IMF gold sales, it 
would not be a harden an IMF 
member countries' budgets. 

Nonetheless, the idea of the 
IMF selling some of its gold is 
controversial. The UK does not 
expect immediate acceptance 
of the scheme, believing it 
could take about two years to 
win the necessary support. 

Gold sales, if they adversely 
affected the price on world 
markets, would hurt two lead- 
ing producers - Russia and 
South Africa - which Britain is 
also very keen to help. But the 
Treasury believes that the IMF 
would need to sell less than 10 
per cent of its gold to finance 
the plan. Such sales, worth 
about S4bn at current market 
prices, would be spread over 
several years. 

It is unclear how much sup- 
port the UK plan will com- 
mand. The Group of Seven 
leading industrial nations 
hagan to disc uss such matters 
at their July summit in Naples. 
In their communique, they 
issued a call “to explore ways 
to mobilise more effectively 
the existing resources of the 
international financial institu- 
tions to respond to the special 
needs of the. . . poorest most 
indebted countries." 

However, Mr Norman Lam- 



SDR initiative 
to help poor 


Clarke: seeks help on debt 

ont, the chancellor's predeces- 
sor. and US administrations at 
various times in recent years 
have drafted plans for IMF 
gold sales only to see them go 
nowhere. The IMF sold some of 
its gold in 1976 when the pro- 
ceeds were used to set up a 
trust fund for developing coun- 
tries that was the precursor of 
ESAF. 

But the present IMF manage- 
ment has been hostile to .far- 
ther gold sales for fear that 
they would weaken the Fund's 
creditworthiness. Mr Michel 
Camdessus, IMF m anag in g 
director, once described the 
IMF's gold as “the jewel of the 
famil y" Earlier this month , an 
IMF official, on a visit to Lon- 
don to prepare for next week's 
IMF annual meeting in Madrid, 
said that IMF gold sales “were 
not an issue”. 


By Peter Norman 

Joint UK-US plans to end a 
long dispute baiting issue of 
new reserve assets by the 
International Monetary Fund 
will be designed to help poor 
developing nations as well as 
Russia and other former com- 
munist countries, Mr Kenneth 
Clarke, UK chancellor, said. 

Mr Clarke, giving the first 
official confirmation of last 
Monday's Financial Times 
report of a UK-US initiative to 
allow the IMF to boost the offi- 
cial reserves of its . member 
countries, said London and 
Washington would put forward 
plans for an “equity” alloca- 
tion of special drawing rights 
(SDRs) at next week's IMF 
annual meeting in Madrid. 
This proposal, designed to 
strengthen the finances of 37 
IMF members which have 
joined the fund since the last 
SDR issue in 1981, would be of 
particular benefit to Russia 
and many other former eastern 
bloc states. 

The chancellor said Britain 
also wanted the poorest devel- 
oping countries to benefit from 


the package. He said the US 
and UK did not agree with pro- 
posals from Mr Michel Cam- 
dessus, IMF managing director, 
for a general allocation of 
SDRs to all IMF members but 
they were prepared to suggest 
a “pro rata” allocation along- 
side an equity issue of SDRs. 

This, it is hoped, would help 
secure the necessary 85 per 
cent support of the IMF mem- 
bership for a change in the 
fund articles that would allow 
an equity allocation. 

The pro rata allocation 
would give “reasonable alloca- 
tions to some of the poorest 
countries", Mr Clarke said. It 
would lift IMF members’ SDR 
holdings to “an agreed bench- 
mark level, subject to every 
IMF member receiving a pre- 
scribed minimum allocation” 
as a percentage of the individ- 
ual country’s quota or share- 
holding in the fund. 

The plans will be discussed 
by Group of Seven finance 
ministers on Saturday, where 
Germany, long an opponent of 
new SDRs, can be expected to 
give them an especially critical 
scrutiny. 


IMF confident of accord to raise financial resources 


By Georoe Graham in Washington 

International Monetary Fund 
officials are confident that they will 
he able to finalise an agreement at 
their annual meeting in Madrid next 
week on a package of measures 
intended to boost the financial 
resources of the former communist 
economies and other less prosperous 
countries. 

A senior IMF official said negotia- 
tions were still continuing, but 


some form of deal would be reached, 
including an allocation of special 
drawing ri gilts, the IMF's own 
reserve asset, an increase in the 
amounts member governments can 
borrow, and an extension of the Sys- 
temic Transformation Facility, 
which lends money to countries 
making the shift from C pmmnTils m 
to the market economy with fewer 
of the IMF's traditional conditions. 

“On all of that there are still 
brackets in our documents and a lot 


of uncertainties, except for one 
thing: there is a very strong wish to 
come to a constructive agreement in 
Madrid,” the official said. 

But there Is still a wide gulf 
between the proposal of Mr Michel 
Camdessus, the IMF's managing 
director, for a general distribution 
of SDR36bn to all members, and a 
plan by the UK and the US for a 
more limited allocation of between 
SDR12bn and SDRlSbn targeted at 
countries from eastern Europe and 


the former Soviet Union who have 
no SDRs because they joined the 
IMF since its last allocation in 1981. 
IMF officials said a SDR36bn alloca- 
tion would mean Slbn more for Rus- 
sia than the smaller allocation pro- 
posed by the UK and the US. 

Mr Camdessus argues that the 
larger distribution is needed to 
finance the rapid expansion of the 
world trading system and make the 
SDR a significant reserve currency. 
But some of the industrialised coun- 


tries, especially Germany, have 
argued that there is no shortage of 
liquidity and that a large injection 
of SDRs into the world monetary 
system could fuel inflation. 

A senior IMF official said the 
US-UK proposal “goes a great dis- 
tance in the right direction" but 
said that a SDR16bn allocation 
would still leave the SDK's role 
among the world's reserve assets In 
decline, fa addition, a targeted allo- 
cation would need a change in the 


IMF’s articles. This would require 
ratification by national parliaments, 
and could hold up the dlstribntion 
for two or three years. 

IMF officials said they expected 
the Interim Committee, a grouping 
of finance ministers that sets the 
IMF’s policy direction, to direct a 
rethink of the way costs are divided. 
Because the administrative budget 
comes ont of Income from loans, the 
cost is entirely borne by borrower 
countries. 




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Neirsleuers. essential to 
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international credit 
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Investors taut 
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Fa a FREE sonpfe bookfel artotf 
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Lada SHU, **4 
T* 1+44 71) 173 3U5 
Fee {* 41 71 } V 3 3135 


Sunshine journalism: 
all news is good news 


FINANCIAL TIMES 
thml rim 


CONTRACTS & TENDERS 

NOTICE FOR INVITATION OF TENDERS UNDER 
INTERNATIONAL COMPETITIVE BIDDING 


HENLEY . 

^'infill C 0 

As a decision maker in your organisation, you 
should know how Important your individual skills 
and experience are to Its success. 

Kc.ih-.ing vour full potential, a Henley Executive 
iX-wlcpmeni Programme thnmgh learning, discussion 
.rad practice I exercises n ill expose you to the latest 
jdoh.il management techniques and practices. 

'S ab top managers from across the world .u one of the 
prcmcer bu-tness scfrrxjls, you'll gain a precious insight 
l«> rlie way Others work to succeed. 

Fti'tn middle managers through to board directors. 
Henley lias a cImkt* of fc'xeeumv Development 
Programme- to brine out the very best in you. 

For more information call Hazel Camnher*> on 
Oi 9 l 57145 *. International Code + t > •t 9 l. 

I k'tilei Management College, Greenland's 
l (vnhn -i Ht-Thamo. Ovlnrdshta? RC? JAU. England 
Telephone Ui*U Fax tMOl 


ONGC unites sealed lenders in die prescribed tender form for hiring of the 
services as below: 


Docripun ApfmrinMe Tender 
rfSovices quiotiN la ■ 

USS 


Ckaag f AwUi&jr Rice of 

Opening gf leader nwfinj! 

ddeof ifcvitnwm ^ sotrotokua 

leader lorislc A opmriug 

TUOh/ and t fr o wn rfTeodn 

I50fc ton 

I4JA' 

lUX* 


Office of 
AddLDbr. 
iMMT 
Etplondijo 


I. MATTUF- Hiring uf Munis USSHWOf- lYIt/W I VWH Office of 

E-L/5CTJN: dcoro .or AddLDIr. 

au-IM-eiS logpoe it Rs30J*tt- (MM* 

PEifarttM Eiptoahoo 

Semen (a Bullies 

Ombre Gems. 

Opcntmc Shed Nn. -X 

ONGC 

TdBlavan 

748003 

I. Nwt-traasf enable tender docmnenls in addition to place mentioned in column 
8 above, can be purchased on any working day on payment of requisite fee 
through crossed IPO Bank draft drawn in favour of ONGC from ibe foU owing 
pbctx. The hank draft from the foreign parties should be payable in India: - 

(D AddL Director (MM) ONGC, 50 Cbowringbee Road, Catania - 700 071. 

I ill Qfficer-in-Cbwge tT&S), ONGC, Asia Publishing House, Calicut Street 
Ballard Estate. Bombay 400038. 

(iii) Dj. Director (MMk ONGC, 7th Floor, MMDA Building, S-Gaadhi Irwin Rd 
Egnuxc Madras ■ 600 008. 

(iv] Dy. Director (MMJ. ONGC 7th Floor, Jccvaa BJurti Building, Connaught 
ClrcusJfcw Delhi 110 001. 

NOTE: 

3- The Agents/RcpiCKma lives of the foreign principals in India are permitted ip 
purchase tender documents on behalf of their principals on payment of lender 
fee in Indian currency at the conversion rate slate at para 4 below, which will 
be refunded if the offer from their principal b received along with pr es c ribed 
lender fee in USS However bid made by AgenVReptesenutive will not be 
considered. 

4. Domestic bidders may submit tender fee in Indian Currency 
kff l USS = RsSfMffl 


SOUTH AFRICA 


By Mark Suzman 

Since President Mandela's 
inauguration, most of South 
Africa's mainstream newspa- 
pers have become skilled prac- 
tioners of “sunshine journal- 
ism." This is a resolute 
determination, to focus on good 
news - the ongoing spirit of 
reconciliation between blacks 
and whites and South Africa's 
new international respectabil- 
ity coming top of the list - 
while ignoring or playing down 
political and economic prob- 
lems. 

Last week, the local press 
was girding itself for just such 
a bout of self-congratulation as 
UK prime minister John Major 
arrived for a short visit, the 
first such trip by a British 
leader since Harold Macmillan 
clashed with his Afrikaner 
hosts in 1960. Journalists and 
editors were quite unprepared 
for the announcement by Zulu 
King Goodwill Zwellthini that 
he was cancelling Shaba Day, 
the most important Zulu 
national holiday, and breaking 
off relations with Chief Mango- 

suthu Buthelezi. who as wen 

as being home affairs minister 
and leader of the Inkatha Free- 
dom party, is the king's uncle. 

Caught between the obliga- 
tion to report on the monarch's 
apparent political swing 
towards the ruling African 
National Congress and the 
desire to highlight Mr Major’s 
message of fraternal fellow- 
ship, newspapers seemed to 
weight their stories according 
to geographic distance from 
the Zulu heartland. 

Thus, in relatively insulated 
Cape Town the Cope Times, a 
slender but respectable publi- 
cation. noted the onset of the 
Zulu rift, hut restricted its edi- 
torial comment to praising Mr 
Major's parliamentary address 
and examining its implications 
for South Africa. 

Similarly, in Johannesburg 
both Business Day and the 



' -j J' 

r^Si. * v * 

■■ ■ ■■&* 







Prince Buthelezi gestures during Shaka day celebrations ap 


Star, the country’s two most 
influential dailies, provided 
detailed analyses of the origins 
of the Buthel ezi-Goodwill feud 
but offered little serious com- 
ment other than to express 
hope that a resolution could be 
reached without bloodshed. 
“South Africa has not yet suffi- 
ciently recovered from the con- 
flict of the past 10 years to 
make light of the politics of 
ethnicity,” warned the former. 

The KwaZulu/Natal newspa- 
pers by contrast reported liber- 
ally on the affair, but diplomat- 
ically refused to take sides. 
Instead both the Natal Witness 
and Natal Mercury called for 
speedy negotiations to resolve 
the monarch’s constitutional 
position once and for alL 

Even following Saturday's 
Shaka Day celebrations, which 
Chief Buthelezi went ahead 
with despite the king’s non- 
participation, the Sunday 

Times, the country’s biggest 
newspaper, chose to focus on 
Prince Edward's flying meeting 
with Mr Mandela and the gov- 
ernment’s planned reconstruc- 
tion and development plans 
rather than wading too deeply 
Into the Zulu morass. 

Meanwhile, Rapport, the 
most prominent Afrikaans-lan- 
gu age paper, seemed of the 
opinion that the election of the 
second consecutive black Miss 
South Africa was of far more 
Import than the labyrinthine 


world of Zulu royal politics. 

But while the establishment 
press has been slow to tackle 
the Zulu issue, the small but 
rapidly growing group of black 
newspapers, whose readership 
has been more affected by the 
violence that IFP-ANC faction 
fighting has caused, showed no 
such restraint Reflecting its 
relatively mainstream politics, 
The Sowetan. the country’s big- 
gest daily, set the tone, lam- 
basting Chief Buthelezi as an 
irascible, thin-skinned man 
who sees slights to his charac- 
ter where none exist 

Indeed, the only voice raised 
in the minister's defence was 
that of the bi-weekly Umafrika, 
which accused the ANC of 
“degrading the monarchy." 

Meanwhile the previously 
anti-royalist City Press, the big- 
gest black Sunday paper, was 
even more vituperative, charg- 
ing: “When we now stone our 
kings and force them to flee 
their homes, we are not only 
ble mishi n g our history, rotten 
as it is already, we advance the 
process of dehumanising our- 
selves.’’ 

Having rediscovered a com- 
mon humanity so recently 
however, most South African^ 
could be forgiven for hoping 
that the current crisis wS 
soon be resolved. After so 
many years of misery, more 
sunshine Journalism would not 
go seriously amiss. 


Lebanon 
counts 
cost of 
civil war 

By Mark Nfchofeon fn Beirut 

As many as lm Lebanese 
nationals emigrated during 
the civil war years of 
1975-1990, while 450,006 peo- 
ple fled fighting to become 
internal migrants during the 
period, according to the coon- 
try's first official study into 
the demographic consequences 
of the war, published by the 
ministry of social affairs. 

By the ministry's estimate, 
however, some 25 per cent of 
those who left Lebanon daring 
the war, as many as 250,000 
Lebanese, are expected to seek 
a return to their homeland by 
1998. The study says 40,000 
came home in 1992 and 1993 
after the war and these num- 
bers are likely to rise this year 
and next. 

The figures were prepared 
for the recent international 
conference on population and 
development In Cairo, which 
Lebanon decided to boycott 
only days before its opening. 
However, many of the study’s 
finding s have been released in 
Beirut in the past week. 

The Lebanese government 
says it considers attracting 
back tiie expatriates to be a 
priority. “We have lost the 
greatest part of the middle 
class fa this country,’' Mr Riad 
Salame, the central bank gov- 
ernor, said in an interview 
this week. “Restoring this 
class is essential - the only 
resource Lebanon has Is the 
skill and education of its peo- 
ple.” While allowing that 
there are no precise figures for 
the war years, the research 
suggests that frilly 7 per cent 
of the Lebanese population, 
which it estimated at between 
JL2m and 2.6m excluding Pal- 
estinian refugees in the coun- 
try, died daring the conflict 
and 10 per cent were injured. 

China 

rebukes 

Japan 

China stepped up its efforts to 
Isolate Taiwan yesterday when 
it Issued a stern rebuke to 
Japan for its invitation to a 
senior Taiwanese official to 
attend the forthcoming Asian 
games in Hiroshima, writes 
Simon Holberton in Beijing. 

A prominent commentary in 
the People’s Daily, the mouth- 
piece of China's ruling Com- 
munist party, warned Tokyo 
that if it persisted in inviting 
Mr Hsu Li-Teh, vice-president 
of Taiwan's executive yuan 
(cabinet), then it would be 
solely responsibly for unspecif- 
ied “serious consequences” in 
Sino-Japanese relations. 

The commentary, which 
amounts to a demand that 
Japan immediately withdraw 
Its invitation to Mr Hsu, repre- 
sents an escalation in Beijing's 
determination to isolate the 
government in Taipei. 

South Africa to 
raise rates 

The South African Reserve 
Bank will raise its bank rate 
by a fall percentage point 
today to 13 per cent, the first 
rise in South African interest 
rates since 1991, writes Mark 
Suzman in Johannesburg. 

The decision Has been critic- 
ised by several prominent 
businessmen who claim that 
the bank has acted prema- 
turely and may damage the 
current economic upturn. The 
South African Chamber of 
Business has also warned that 
the move could damage the 
government’s reconstruction 
and development programme. 

However Mr Chris Stals, 
Reserve Bank governor, who 
has been wanting for several 
weeks that a rise in rates was 
: imminent, said the move was 
necessary to stave off rising 
inflation. 

Israeli interest 
rates up 

Israel’s Central Rank yester- 
day raised interest rates hy 1.5 
percentage points to 15.5 per 
cent in a renewed effort to 
curb inflation, writes David 
norovitz in Jerusalem. The 
governor of the Bank of Israel, 
Professor Jacob Frenkel, said 
me sharp rise was designed to 
7em in a boom in personal 
consumption, which is driving 
up imports and contributing to 
a worsening balance of pay- 
ments deficit Combined with 
a package of anti-inflationary 
measures agreed by the cabi- 
net this month. Prof Frenkel 
said the rise should help the 
government meet its 8-11 per 
for inflation in 
1995. Inflation for 1994 is cur- 
rently running at 14.5 per 
»nt, double the government's ■ 
original target 


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FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 ★ 

P 


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6 


MONDAY SEPTEMBER 26 1994 


X 


X 


FIN ANCLAX. TIMES 


NEWS: INTERNATIONAL 


Pyongyang raises new demands and 
protests at US military ‘provocations’ 

North Korea digs in 
heels over N-talks 


By Frances Williams In Geneva 

US negotiators admitted at the 
weekend that talks with North 
Korea on its nuclear facilities 
were m aking little headway, as 
Pyongyang repeated that it 
would not accept international 
inspection of two suspect 
nuclear sites and warned that 
US military exercises were 
“provocations". 

The atmosphere at the talks 
has been further clouded by 
remarks by the US Pacific 
Fleet Commander. Admiral 
Ronald Ziatoper, that US naval 
manoeuvres off the Korean 
coast sent “a very strong mes- 
sage" to North Korea compara- 
ble with the pressure on 
Haiti's military leaders to step 
aside. 

In a predictably angry reac- 
tion, North Korea's foreign 
ministry said the US naval 
presence amounted to “undis- 
guised military provocations” 
that could wreck the Geneva 
negotiations and end the freeze 
of the country's nuclear power 
programme. 

Nevertheless, despite the 
bluster, the two sides met 


twice over the weekend at 
working level and were due to 
meet again last night or today. 
The current negotiating ses- 
sion, which began on Friday, is 
expected to last about a week. 

The US team had hoped this 
time to reach a final settlement 
of the dispute with North 
Korea, based on the prelimi- 
nary accord reached on August 
12. 

But Pyongyang has since 
raised new demands and seem- 
ingly gone back on aspects of 
the earlier agreement 

The two sides agreed in 
August that as part of a final 
settlement, Pyongyang would 
freeze its current nuclear pro- 
gramme and accept full inspec- 
tions of its nuclear facilities by 
the International Atomic 
Energy Authority (IAEA). In 
return, it would be given two 
light- water atomic reactors, 
help with its interim energy 
needs ami the coveted diplo- 
matic links with Washington. 

However, Mr Kang Sok-ju, 
North Korea's chief negotiator 
at the Geneva talks, reaffirmed 
that Pyongyang would not 
accept special Inspections of 


two undeclared sites where the 
taea believes diverted pluto- 
nium may he stored. 

North Korea is also demand- 
ing “several billion” dollars In 
compensation for giving up its 
graphite-moderated nuclear 
reactor programme. This is in 
addition to the $4bn (£SL5bn) 
estimated cost of providing the 
more "proliferation-proof" 
light-water reactors, which pro- 
duce less weapons-grade pluto- 
nium. 

In addition, Pyongyang is 
refusing to accept South Kor- 
ean nuclear technology, saying 
it wants German or Russian 
reactors. The US, which is try- 
ing to put together a multina- 
tional consortium to meet 
North Korea's energy needs, 
inp.inrfiwg South Korea, Japan, 
China and Russia, says this 
demand is not practical. 

There is also the vexed ques- 
tion of the 8,000 spent fuel rods 
corroding in a holding pond at 
the Yongbyon nuclear com- 
plex. North Korea says it is 
willing to encase them in con- 
crete but the US wants the fuel 
rods shipped to a third country 
such as China. 


US court reverses ban 
on nuclear waste ship 


By George Graham 
in Washington 

A potentially embarrassing 
setback for US nuclear non- 
proliferation policy was 
averted late on Friday when a 
federal appeals court reversed 
a lower court's injunction 
blocking the arrival in South 
Carolina of a shipment of spent 
nuclear fuel from European 
research reactors. 

The earlier injunction, issued 
after a Danish freighter had set 
sail carrying casks of highly 
enriched uranium from 
research reactors in Denmark 
and Sweden, had prompted 
some nuclear proliferation 
experts to raise the spectre of a 
radioactive Flying Dutchman, 
barred from docking at its 
intended destination but for- 


bidden also to return to its 
home port. 

The injunction had also jeop- 
ardised the US's credibility in 
the Geneva negotiations over 
the extension of the Nuclear 
Non-Proliferation Treaty, 
because it was seen by some 
countries as further evidence 
of the US’s inability to live up 
to its side of the bargain 
implicit in the treaty. 

The spent fuel, which is 
much closer to bomb-grade 
uranium than the less enriched 
fuel used in power generation 
reactors, and therefore much 
more of a proliferation threat, 
is the product of the US's 30- 
year-old off-site fuel pro- 
gramme. 

Under this programme, the 
US agreed to accept spent fuel 
from participating foreign reac- 


tor plants. In return, they com- 
mitted themselves to switch to 
less dangerous low enriched 
fuel 

This shipment is part of an 
emergency programme to 
relieve the urgent storage 
problems experienced by some 
research reactors as a result of 
the US’s five-year suspension 
of the programme. 

The US is now working on 
an environmental impact state- 
ment to allow the programme 
to be fully restored. 

However, the Department of 
Energy is still a long way from 
settling on a long-term solution 
to the problem of storing spent 
nuclear fuel, including the 
much larger quantities of less 
enriched but still highly radio- 
active waste from US commer- 
cial reactors. 


Hopes for a deal amid the rhetoric 

Nancy Dunne reports on the US-Japan trade talks as Washington’s deadline looms 


US and Japanese officials are 
Hairiinf into the final week of 
trade talks with at least partial 
agreement in sight after IS 
months of fruitless negotia- 
tions. 

With a September 30 dead- 
line for agreement looming, 
the rhetoric on both sides has 
been tough- President Bin Clin- 
ton last week warned Mr Yohei 
Kona, Japan's foreign minister, 
of sanctions. Japanese officials 
have advised the US not to 
count on last-minute climb- 
downs. 

But an important obstacle to 
agreement was cleared oft the 
table last week when Tokyo 
anno unced a stimulative tax 
cut package. The US has been 
pushing far such a move since 
the signing of a broad trade 
framework agreement in July 
1993 by Mr Clinton and Prime 
Minister Bichi Miyazawa. 

Ag reem ent is likely on other 
fronts. In disputes over pro- 
curement of telecommunica- 
tions and medical equipment 
and on Japan's insurance mar- 
ket, agreement has been dose 
since last February’s Washing- 


Legislation intended, to increase the pressure on 
foreign governments to open their financial 
markets to US hanks is expected to come to a 
vote in the US House of Representatives tomor- 
row, George Graham writes from Washington. 

But the bill, now called the National Treat- 
ment In Banking bill, is a pale shadow of an 
earlier measure which drew fierce opposition 
from free traders and foreign gov ernm ents. 


The new bHl has been much more narrowly 
drawn to cover only banks, and not other areas 
of the financial' services industry. It also aban- 
dons measures that would have given the US 
Treasury the power to Impose sanctions, on 
countries which do not treat US busi- 

nesses equally. Instead, it simply requires the 
Treasury to publish a list of countries which 
deny national treatment to US banks. 


ton summit, when Mr Clinton 
and Prime Minister Morihiro 
Hosokawa foiled to reach a 
compromise and the markets 
reacted violently. 

There is also hope for agree- 
ment on flat glass, a dispute 
added to the agenda along the 
way. Japan flew a special nego- 
tiator in to work on glass last 
week, and US officials on Fri- 
day gave the Japanese negotia- 
tors a proposed draft text to be 
studied over the weekend. 

A stumbling block remains 
in teiics covering vehicles and 
parts. Even though the sector 
comprises scone 60 per cent of 
the $60bn (£3Sbn) US trade defi- 
cit with Japan, the urgency for 
its resolution has abated. All 
US car companies are enjoying 


healthy sales and profits. 
Exports to Japan are rising 
rapidly, thoug h starting from a 

itiwihotiIp htm p 

The concern now is vehicle 
parts, which involves more 
companies, many of them hit 
hard by competition from Japar 
nese transplants. US car mak- 
ers have been lobbying for a 
tough line, in anticipation of 
pressure from Wall Street for a 
deal at any cost 

Although these "results-ori- 
ented" trade talks were sup- 
posed to show a sharp depar- 
ture from past efforts to open 
the Japanese market and 
sound a tougher note, the simi- 
larities are more apparent than 
the differences, said Mr Fred 
Bergsten, head of the Institute 


for International Economics 
and raie of the trade specialists 
the punton administra tion is 
consulting as the talks prog- 


. The talks, moving product- 
by-product, represent “a hard 
slog to unearth and deal with, 
specific Japanese practices” 
which discourage imports, Mr 
Bergsten said. 

Although the US has sought 
benchmarks - "objective indi- 
cators” - to measure progress, 
it has from the first insisted 
that failing to meet those tar- 
gets would not subject Japan 
to trade retaliation. 

In the flat glass talks, for 
example, foreign glass manu- 
facturers have for years sought 
to break into a market domi- 



A picture of Chinese leader Deng Xiaoping looms over passershy 
in Beijing ahead of National Day celebrations on October 1 m> 


Asean members in dispute 
over free trade zone plan 


By WOtam Barnes 
in Ctdang Mai, Thailand 

The six members of the 
Association of South-east 
Asian Nations are in unusual 
disarray over a proposal to 
turn the Asia-Pacific Economic 
Co-operation group into a free 
trade zone by the year 2020. 

The Asean members had 
hoped to form a united core 
within Apec, but that received 
a setback at the weekend when 
their trade ministers admitted 
they might not be able to agree 
cm a common response to the 
free trade proposal, which 
could figure prominently in 
next month’s Apec summit in 
Jakarta. 

Mr Ryutaro Hashimoto, 
Japan’s minister for interna- 
tional trade and Industry, 
undercut Asean reservations 
when he told Asean economic 
ministers meeting in flhfang 
Mai that “basically we are able 
to accept” the free trade pro- 
posal by the so-called Eminent 
Persons Group of business peo- 
ple an d academics 

Asean ministers were forced 
to try to smooth over their dif- 
ferences at a late-night press 


conference on Friday. The ref- 
erence in' the original draft of 
press s tatemen t that the 
ministers discussed the free 
trade report “at length” was 
deleted in the final press 
release. 

Thailand - many Asian 
countries that have enjoyed 
relatively easy access to the 
important US market. - now 
ferns that Washington will use 
the proposal to open up Thai- 
land's own increasingly impor- 
tant domestic market 

A senior Thai government 
official said Asean would need 
to ramrina “the hidden agenda 
inside the conditions tied to 
2020”. Malaysia, which has 
long railed against western 
domination of international 
trade, led calls for the report to 
be shelved. 

“The report is a good refer- 
ence. . . but we cannot sub- 
scribe to very long-term 
visions,” said Malaysia’s trade 
and industry minister Rafidah 
Aziz. However, Mr Yeo Cheow 
Tong, Singapore's trade and 
industry minister, swid “It is 
important for every organisa- 
tion to have a vision of where 
you want to go and where you 


New Mexican regime to follow old economic programme 


T he incoming Mexican government 
headed by Mr Ernesto Zedillo plans 
to follow a conservative economic 
programme next year, to reduce inflation 
to 4 per cent by maintaining the present 
exchange rate policy and running a bal- 
anced budget. 

The economic strategy was announced 
over the weekend as the current govern- 
ment renewed the annual pact with busi- 
ness and labour unions that sets economic 
policy for the next calender year. The pact 
was drawn up after long consultations 
with Mr Zedillo's campaign team, who say 
they are in full agreement with the accord, 
and intend to comply with it. 

Uncertainty over renewal of the pact 
had led to recent volatility in Mexico's 


Zedillo will honour pact with business and labour, writes Damian Fraser 


money and foreign exchange markets, 
with speculation that Mr Zedillo's adminis- 
tration would push for a more expansive 
fiscal policy and faster depreciation of the 
currency against the dollar from the cur- 
rent rate of 5 per cent a year, to boost 
economic growth. Until rumours of the 
pact renewal readied the market on Fri- 
day, the peso was trading at 3.40 to the US 
dollar, the top of its permitted band. 

“The signal of all this is that stability 
won.” said a senior government official 
involved in negotiations over the pact. Mr 
Zedillo, a former central banker known for 


his aversion to fiscal deficits, formally 
tabes office on December 1, when he will 
have the opportunity to put some fishing 
touches to the plan. 

T he agreement was signed by the 
newly independent central bank, 
whose credit operations will he 
directed to achieving the inflation target 
of 4 per cent next year. An official said the 
central bank’s pledge, which could lead to 
higher interest rates if Inflation did not 
fall from current level of about 7 per cent, 
was the “anchor” of the programme. 


The Finance Ministry predicted that eco- 
nomic growth would rise to 3.6 per cent to 
the second half of this year, industrial 
sector growth to 4A per cent, and fixed 
gross investment by about 8 per cent The 
unexpectedly strong economic recovery 
iTifinenfffld the decision to push for stabil- 
ity rather than economic growth, accord- 
ing to officials. The pact aims for eco- 
nomic growth of about 4 per cent for next 
year. 

The pact allows for an increase in the 
minimum wage of 4 per cent plus the 
average productivity growth hi the econ- 


omy. The lowest-paid workers will have 
their take-home pay boosted by another 3 
per cent About 7 per cent of Mexican 
workers earn the minimum wage, 
although the salary is used to set juices 
and wages for other better-paid workers. 

Untons agreed under some pressure - 
to limit contractual wage increases to 4 
per cent plus bonuses based on produc- 
tivity Increases achieved at the plant level 
With inflation this year expected to be 
dose to 7 per cent, and many sceptical 
that the government will meet its 4 per 
cent inflation target, some union represen- 


tatives complained their workers would be 
taking real wage cuts. 

The plan also provides for some modest 
measures to stimulate Investment, as Mr 
Zedillo had promised on the campaign 
trail The measures include: a reduction in 
the tax on assets for unprofitable compa- 
nies from 2 to 1.8 per cent; a four-year 
exemption from the tax for new invest- 
ments; a faster depredation allowance for 
investment in training and anti-pollution 
equipment; and an increase in the number 
of companies that can pay taxes on a quar- 
terly basis. In addition, the gov- 

ernment promised to put money raised 
from future privatisations into a spe cial 
fund to stimulate private infrastructure 
spending. 



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nated by three Japanese pro- 
ducers, whose market share 
rarely varies and whose whole- 
salers are discouraged from 
buying Imports by strong- 
armed pressure tactics . 
according to the US industry. 

Mr Steve Farrar, director of 
international business for 
Guardian Glass, said the US 
companies were looking for 
assurances that the links 
between suppliers and whole- 
salers would be broken, "We 
are working to get public state- 
ments from the wholesalers 
and manufacturers and a com- 
mitment from the ministry of 
trade and industry that they 
will monitor the implementa- 
tion of these statements,” he 
said. 

By September 30, the US 
administration must also 
decide whether to cite Japan 
and others for trade practices 
which raise barriers to exports. 
Mr Bergsten is counselling 
against such a move now that 
strong multilateral trade rules, 
agreed in the Uruguay Round, 
offer a viable alternative to 
unilate ral action. 


want to be ultimately.” 

And the Indonesian govern- 
ment argued that "Asean is 
now strong enough to face any 
liberalisation in this region. 
The problem is simply how do 
you join this [free trade} band- 
wagon.” 

• Economic growth in That 
fond is expected to accelerate 
this year and next, but the gov- 
ernment needs to tackle prob- 
lems such as inadequate infra- 
structure and shortages of 
skilled labour to ensure sus- 
tainable growth in the future, 
the Thai planning agency said 
at the weekend, Victor Mallet 
reports from Bangkok. 

The state-run National Eco- 
nomic and Social Development 
Board (NESDB) predicted that 
real gross domestic product 
would grow 8.4 per cent this 
year arid 8.5 per cent in 1995, 
compared with. 7.6 per cent in 
1992 and 8J per cent in 1993. 

Infla tion is expected to rise 
to 5 per emit this year from 3.3 
per cent In 1993, but will proba- 
bly drop slightly in 1995. 
Exports should rise 16.1 per 
cent this year to Btl,070bn 
(£29bn) and imports increase 
by 15 per cent to BtL3l5hn. 




t 


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■ in di' 

/ "IK 1 p| 


FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 



Leftwing threat to Blair’s taxation plans 


By Kevin Brown 

Labour leftwingers yesterday 
threatened to disrupt Mr Tony 

Blair's leadership honeymoon 
at next week’s annual confer- 
ence unless he drops plans to 
rule out higher taxes. 

As taxation emerged as a key 
conference issue for both main 
parties, rightwing Tories also 
signalled plans to demand tax 
cuts at the Conservative con- 
ference in the following week. 
Conservative strategists also 


expect a rigfatwing revolt over 
law and order, although Mr 
Michael Howard, home secre- 
tary. is expected to survive 
calls for his resignation. 

Labour officials say that Mr 
Blair and Mr Gordon Brown, 
the opposition chancellor, win 
“flesh out" a fresh approach to 
taxation at an economic con- 
ference in London tomorrow. 

Mr Blair will confirm that 
Labour has no plans for higher 
taxation, except for the very 
rich, who are believed to have 


benefited unfairly under the 
Conservatives. 

Labour strategists believe 
the party's "tax and spend” 
image must be scrapped if it is 
to establish credibility among 
middle class voters. 

However, leftwingers said 
taxation would be at the top of 
a list of issues on which the 
leadership will be challenged, 
including minimum wages and 
the rale of trade unions. 

“I think there will be a row 
about what Blair has been say- 


ing on taxation.” said a promi- 
nent member of the Campaign 
group of Labour MPs. 

"There is widespread con* 
cern that if he is going down 
that road, there will be contin- 
ued underfunding of health 
and welfare, and that is unac- 
ceptable." 

Opposition ministers say the 
revolt will be contained by 
stressing Labour's plans to 
reduce taxation of the lower 
paid and cut out "wasteful" 
spending on unemployment. 


“1 don’t think there will be 
much trouble.” one opposition 
minister said. “People were 
critical about Tony Blair's deci- 
sion to attack the Tories on 
law and order because it was 
seen as their natural territory, 
but there is now almost com- 
plete agreement that he was 
right." 

Labour leaders believe that 
the party has been adequately 
prepared for a shift to low tax- 
ation since the last election, 
which many believe turned on 


Labour's plans to raise taxes. 

Mr Kenneth Clarke, the 
chancellor of the exchequer, 
sought to head oft rightwing 
Tory demands for early tax 
cuts by insisting that the gov- 
ernment could win the next 
general election only through 
fiscal prudence. 

He said on BBC Television; 
“When we cut taxes is going to 
be determined by when public 
spending is so controlled and 
public borrowing is so reduced 
that we can afford it.” 


Peacekeeping top 
of agenda for 
Yeltsin and Major 


By Dimitry Volkov 
and Anthony Robinson 

Mr John Major, the prime 
minister, and President Boris 
Yeltsin of Russia yesterday 
reviewed a range of peace- 
keeping operations, with par- 
ticular emphasis on Bosnia, 
during the final day of the 
president's visit. 

Russia has alligned with the 
UK and other European coun- 
tries in trying to dissuade the 
US from seeking to lift the UN 
arms embargo and increase the 
flow of arms to the Bosnian 
Moslems. 

Mr Yeltsin described the 
visit as a weekend of “useful 
and enjoyable” talks at the 


prime mini ster's country 
retreat. The leaders also dis- 
cussed the Queen’s state visit 
to Russia next month. 

Mr Douglas Hurd. Britain’s 
foreign secretary, held discus- 
sions with Mr Andrei Kozyrev, 
the Russian foreign minister, 
who is accompanying the presi- 
dent on his visit to the UN 
today. 

Today Mr Michael Heseltine, 
trade and industry secretary, 
will discuss prospects for 
greater trade and investment 
in the oil industry and other 
areas when be meets his Rus- 
sian counterpart, Mr Alexan- 
der Shokin, the deputy prime 
minis ter in charge of interna- 
tional economic affairs. 


Komatsu makes it to a milestone 


By Chris Tighe 

Komatsu UK, the hydraulic 
excavator manufacturer, 
passes a milestone today when 
it hands over the 10.000th 
machine from its factory at 
Birtley in north-east K n gfand. 

The years since 1985 when 
the plant was taken over by 
Komatsu of Japan, the world's 
second biggest producer of con- 
struction equipment, have not 
been easy. After Initial rapid 
growth, Komatsu UK's produc- 
tion fell from a 1989 peak of 
1.900 units to 1,200 In 1992, 
because of a big slump in the 
UK construction industry. 

In spite of two rounds of job 
losses, which cut employee 
numbers from 430 to 350, the 
Japanese parent remained 
committed to Birtley and con- 
tinued an £3m investment pro- 
gramme. 

Nearly three years later. 
Komatsu UK is benefiting from 
a sharp rise in the UK and US 


markets - counterbalanced by 
a downturn in Germany, its 
main export market 

It is also fighting incr eased 
competition from imported and 
UK-made equipment, but is 
maintaining a 20 per cent 
share of the UK market, where 
it sells a fifth of its output The 
rest is exported to continental 
Europe and Scandinavia. 

“It seems like we're running 
very hard to stand still,” says 
Mr Keith Tipping, Komatsu's 
managing director. “We think 
it's going In the right direc- 
tion,” he adds. 

This year has seen Important 
advances which could help 
iron out future troughs. For 
the first time, Birtley has 
exported to the US, with sales 
of tracked excavators and 
machine arms worth £4m. 

A new wheeled excavator, 
the second model designed 
entirely at Birtley, will be 
launched soon. Until now the 
site’s ripcigng have been solely 



Crxf ftnlMrtanS 

Managing director Keith Upping at Komatsu's Birtley plant 


for Europe, but an excavator it 
is designing now is for the 
world market. It hopes also to 
manufacture the modeL 
The plant's turnover this 
year should be about £78m and 
it is likely to produce about 
1,300 excavators. 


This is less than 60 per cent 
of its 2,400 unit capacity but 
the likely target for 1995 is 
1,500. It has also begun manu- 
facturing bodies for Japanese- 
made Komatsu dump trucks 
and a range of excavator 
attachments. 


Britain in brief 



hf* 

Swans starts 
shipbuilding 
asset disposal 

The first shipbuilding-related 
asset of Swan Hunter, the 
Tyneside shipbuilder facing 
closure, to be sold by receivers 
Price Waterhouse has been 
bought by a German ship- 
builder. The intellectual prop- 
erty rights of Swan Hunter 
Singapore have been acquired 
by Lurssen for S$200,0QQ. 
around USS158.000. 

Joint receiver Mr Gordon 
Horsfield said the Singapore 
fPR package was the result of 
a “tidying up", to split the 
intellectual property assets of 
Swan Hunter from its Singa- 
pore subsidiary. Swan Hunt- 
er's main IPR package has 
already attracted bidders, 
believed to include Lnrssen’s 
UK-based rival Vosper Thorny- 
croft 


Late attempt for EU 
backing on rail link 

The British government has 
launched a belated attempt to 

obtain priority status for a 
flagship rail project from the 
European Union. Its initial fail- 
ure to seek a priority listing for 
the £50Om West Coast rail link 
on the EU's programme of 
trans-European networks could 


cost it European funding, sup- 
porters of the project said, it 
could also make it more diffi- 
cult to raise private sector 
finance. 

Priority status for the 559- 
mile West Coast route between 
London and Glasgow would 
make It eligible for help with 
feasibility studies and other 
EU f unding . 


Defence workers 
to lobby Tories 

A three-month campaign by 
unions over the latest round of 
defence cuts will culminate 
next month when dockyard 
and naval-base workers lobby 
tl le Conservative party confer- 
ence. This will be followed on 
October 17 by lobbying of the 
House of Commons, when it is 
due to debate the cuts. 

The campaign started in 
July after Mr Malcolm Rif- 
kind, defence secretary, 
announced savings of E750m a 
year with the loss of 18,000 
jobs, including 7,000 civilian 
posts. 


BR closes European 
freight service 

British Rail has closed a sub- 
sidiary set up to provide a con- 
tainer service to continental 
Europe because it failed to find 
a buyer in the private sector. 

Haulmark European Trans- 
port was established two years 
ago to provide a door-to-door 
service between European des- 
tinations. Containers were 
shipped by road to a rail termi- 
nal or port and continued by 
ferry or through the Channel 
tunnel. The company was put 
up for sale in March. 


CONFERENCES & EXHIBITIONS 


- J 

* . ; 


, v - i 11 ‘ 




W- * * 




SEPTEMBER 29 
South Africa 

a Cifyferaui conference featuring Chris 
Slab. Sir Evelyn ife Rothschild. Mr Abe 
Erwin. Robert Guy, Basil Ikraov. Gary 
Maude. M 1 Leved. Sponsors: South 
Africa foundation. Rochschilds/Smitfi New 
Court, Clifford Chance, Coopers & 
Lyfarand. Old Mutual. 

Information Irani; Cilyforum 

Tel: 0225 466744 Fax: 0225 442903 

LONDON 

OCTOBER 3-4 

Global Emerging Markets *94 

is a mining investment conference which 
features The top developing countries for 
mine ml investment and the companies 
operating -in those countries. Sponsors 
include Mining Journal. BMP. Cara hi or. 
Minorca, llomcsfxkc Mining. Melall 
Mining. Niugral Mining, plus more. 

For itgiMraiiun phone 
305-670- 1963 M fax 13051 6700071 

LONDON 

OCTOBER 4 

Managing a Growing Business 

If not managed effectively, growth can 
lead, lu difficulties in such areas as 
cashflow hxecrating. pricing policy, asset 
management, appropriate financial 
structure and systems, and tax planning. 
Hi is uuc-duy conference, in association 
with TSU Commercial Finance, will help 
entrepreneurs examine some of the 
techniques in managing these key area* as 
their busine» grows. 

Director Conferences 
IVLfm TJjnld 

LONDON 

OCTOBER 4-5 

Exhibition of Indian Industry 
Confederation of Indian Industry and 
Indian High Coumhsskmi, London, present 
first ever catalogue exhibition of Indian 
Industry. Sectors; elect tunics; cured ruction; 
electrical: automotive; paper; chemical: 
software; consumer durables. Venue: 
London Chamber of Commerce. 33 Queen 
Sneer. London UC4R IAP. Entry free. 

Visit between UIXIIik- IStM hi* 

TeL- 071 8364121 

LONDON 

OCTOBERS 

Commonwealth Asia: Regional 
& International Relations 

Commonwealth Institute. Kensington High 
Street. I on dun WH hNQ. 

This symposium will examine the 
economic and diplomatic tics between the 
Common wealth Asian countries with the 
aim of identifying areas of munnJ concern 
and encouraging further collaboration. 

For farther details please call u7l 603 4535 

LONDON 

OCTOBER 6 
BRAZIL 96: Business 
Opportunities 
in an Environment of 
Economic Stabilisation 

The CAZETA MLRCANTU/BANCO DO 
BRASIL seminar. will analyse Brazilian 
economic prospects following (be 
stfltHlmTmn program - Plano KcaL Chaired 
hr the Brazilian Ambassador, featuring 
high-level speaker-. I'bc event will he 
(ulkiwed by LXCtluk in celebration of (he 
open mg of HH Securities Ltd. 

Cow «rf M% Clonic do Silva. 

Tel: 07] 210 4200 Fax: (171 2I0 42U6 

LONDON 

OCTOBER 11 

Measuring the value of LT. 

Investments 

This conference JnciMex hew to asses tte 
value of l.r. piojccls and prioritise IT. 
invesrmciii succes»lullj. II present* 
guidance Irion leading academics and 
oMMiltams as well os insights from the 
experience of major wpanisaiions. in Kelt 
the private ami public sector. 

Contact. Business Intelligence 

fcl: Ml 543 nSfiS fox: OKI 544 «M2Q 

LONDON 

OCTOBER 11 

Winning with Your Customers - 
How to Evaluate Your 
Customers' Business Potential 

Tlii* conference will provide “ in-depth 
appreciate ol the strategic imiraitanec of 
customer carv and « lhc & 

veil! add revs key isum as (hey relate to 
busiik-vS'ln-hiU Hirst. lusfaHiKn as well as the 
cnd-im-f id ontMimei setVKi-* products. 

studies from Marks and Spencer. 
Cranbi Kitchen* and to* Taverns. 

Uircctoi Conference Tel.l)7l 730U022 

LONDON 


OCTOBER 11 & 12 
Money Laundering - The Way 
Forward Through International 
Co-operation 

Arfdreues the implications for 
international finance, the impact of the 
FATF regulations and the possible threat 
from Eastern Europe. Practical examples 
and case studies from an international 
panel- Additional ■/» day workshop - 
Fraud A Asset Recovery. 

Contact; Maty Shaw. International 
Conference Group. 

Tel: +44 (0)81743 8787 
Fax: +44 (0)81 740 1717 

LONDON 

OCTOBER 13 

China Investment, Patent & 
Trade Mark Conference 

HcM within f ra me wra t of buhrarial Property 
Programme far China financed by EC Topic; 
include Economic Ttade Relations between 
China and Europe. Patent A Trade Mark 
Protection, Industrial Property Law 
Enforcement. High level Chinese Delegation. 
Crxdcrmoc fac £140 + VAT. 

INTER FORUM Tel: +44 (0) 71 3S6 9322 
Fax: +44 (0)71 381 8914 

LONDON 

OCTOBER 13 *"l4 

The Management of Product 

Safety & Quality 

Product Safely & Quality are the 
responsibility of evcryooc concerned in the 
production of goods. This seminar will 
provide opportunities to hear elear and 
practical explanations by leading experts. 
Further details from International 
Professional Conferences Ltd 
Tel: 061 445 8623 

LONDON 

OCTOBER 14 

Law on Insider Dealing 

Seminar examining the impact of ihe new 
law and its likely interaction with other 
law. Developed jointly with Travers Smith 
Bralihwailc with key Input Cram the Stock 
Exchange and cumptuuux professionals. 
Contact: Ben Gob at Quintessence 
Business Training. 

Tel: 10*18} 323)50 Fox: 10908] 220213 
LONDON 

OCTOBER 18 

Strategic Alliances & Joint 

Ventures 

This conference is one of the Corporate 
Strategy Series organised by IBC Legal 
Studies and Servicer Limited. 

Key areas of discussion indude: why joint 
venture*; pre -alliance sages; law, ms and 
accounting considerations. 

Contact: Vicki Goffin. IBC Legal Studies 

and Services Limited 

Tet 071 6374383 F*>c 071 631 3214 

LONDON 

OCTOBER 19 

Small Business Bureau: 

Skill Will Win 

Featuring a structured programme of 
speakers and advisors drawn from the 
financial, political and business secrets, 
this 18th national conference ahns to offer 
practical advice and guidance for all areas 
nf small business. Speakers include: 
Michael Huffman. John Redwood, on 
advisory panel from the Midland Bank. 
Milu SwstlwcN and Lord Archer. 

Contact: Abu Cleverly QBE 
Td: 0276 453010 Fax:' 0276 45 1 «12 

FRIMLEY GREEN, SURREY 

OCTOBER 19 
Acquisitions 

This conference examines die principles 
involved fat making successful acquisitions. 
Topics include: Wby acquire?: Pre-dent 
sages; Conducting an effective due diligence; 
Anti-trust femes; Public bids; Private sales; 
Compiling watertight legal documentation; 
Minimising tax liability and; New 
Arrmimpg SfcuxferdS. 

Contact: Julia Dopbekic. IBC Legal Studies 

and Services LhnilaL 

Tel: 071 6374353 Fax: 071 631 32(4 

LONDON 

OCTOBER 20 
Company Investor Show 

The annual investment event for quoted 
‘smaller* companies and the fund 
m n nager-.. analysts, brokers and other 
professional investors who follow this 
scaur. Further informal ton: 
iiupcraloc Financial 
Tel: 071 250 5364 Fax:tf7l 6383365 
Red Ha EL Barbican. LONDON 


OCTOBER 24 

Social Justice Commission Report 

The final report of the Gontmferiun on Social 
Justice. Housing, employment, personal 
finance and government policy examined. 
Sir Gordon Bo me. Tony Blair MP. Bea 
Campbell, Christopher Haskins, Patricia 
licwiu, Shccna McDonald. John Monks. 
Contact: Neil Stewart Associates 
071 9760682 

LONDON 

OCTOBER 24 

The Information Superhighway 
A conference Co examine and highlight the 
challenges and applications In commrrrc 
and' the public sector of the new 
telecommunications technology, and to 
examine Government policies to bee thuac 
challenges. Government Minister and 
Larry Irvine. USA Socretary of Co m m e rce 
Contact: Neil Stewart Associates 
0719760682 

LONDON 

OCTOBER 24-25 
International Polypropylene 
Conference 

The Institute of Materials has organised 
this important conference to bring the best 
speakers in Ihe polypropylene industry 
together to help catalyse the recovery in 
the business. 

Conran The Institute of Materials 
Tel: 071 8394071 Fax: 071 823 1638 

LONDON 

OCTOBER 25 & 28 
The Third Age of Media 

The changing face of media - the media 
opportunities in die 50+ markets. A joist 
conference organised by Age Concern 
England and The Henley Centre, this two 
day event is a comprehensive introduction 
to the exciting world of mature marketing 
and media. Cosh £730 + VAT 
Contact; Ansa Harman at 
The I ten ley Centre Tel: 071 3539961 

LONDON 

OCTOBER 26-27 
BPR 94: Re-engineering, 

Process Management and 
Performance improvement 
Europe’s leading conference and exhibition 
devoted to exploring bow to apply business 
re-engineering strategics to achieve 
quantum leaps in corporate performance. 
Designed to meet the needs of your whole 
re-engineering team, from executive 
sponsor to those involved in planning and 
implementing projects. 

Contact: Business Intelligence 
Td: 081 S43 6565 Fax: 081 5449020 

LONDON 

OCTOBER 26 & 27 

How to Grow your Business 

using Market Research 

Information is becoming fundamental in 
the running of a business through the use 
of technology. This two day seminar will 
show yon how 10 gel the best out of 
research and the red reasons for using iL 
Contact • International Professional 
Conferences Lid Tel: 061 445 8623 

LONDON 

OCTOBER 27 
Optimum Tax Structure for 
Property Transactions and 
Tax Planning for Development 
Agreements and Commercial 
Leases 

Specials! conference developed by Patrick 
Soares, Barrister, to bring practitioner* 
fully up to dote with the taxation clauses 
which are found in property development 
agreements and co mmerci al leases. 

Contact: Evk Kinanc. IBC Legal Studies 
nod Services limited 
Tel: 0716374383 

LONDON 

OCTOBER 27 

International Tax Conference - 
Managing Global Expansion 
Conference on the tax issues facing 
multinationals in the changing global 
scene. 

Price: £200.00 plus VAT 

Contact; Michelle Beard, fima & Young 

Td: 071 931 22-77 Fax: 071 242 5862 

LONDON 


OCTOBER 28 
Marketing Expenditure - 
Cost or Investment? 

As boardrooms everywhere question the 
value of marketing, this conference brings 
together experienced, senior speakers 
including Ashridgc Management College. 
McKtnseys, BC, Credit Suisse. luetbrand, 
Whitbread etc: to focus on marketing as a 
driver of financial petformaiue. 

Call for more details. 

Tel: 07! 4343711 

LONDON 

OCTOBER 30 - NOVEMBER 1 
Living with Technology 
Road Transport & Road 
Transport Engineering 

An important opportunity for all 
profesionals involved in design, operation 
and maintenance of cats, macks and Pit's 
to asiess existing challenges and 
developments. This twin track conference 
with 30 imerauiona! speakers will provide 
an important siimolns for strategic and 
practical fleet deefeion making. 

Contact Peter Edmonds, 

Institute of Road Transpan En gin ee r s. 

Tel: (071)630 HU Fax: (071)630 6677 
LONDON 

OCTOBER 31 
Manufacturing Matters 

The National Pre Budget Conference on 
manufacturing. A working conference on 
manufacturing industrial strategy and fiscal 
policy. Pre Budget outlook from leading 
nunm unkaaora. 

Contact: Neil Stewart Associates 
071 9760682 

QE11 CENTRE, LONDON 
NOVEMBER 1 

VAT for Property Transactions 

Tax expert, Patrick Soares. Barrister and 
special guest. Peter Treverti from HM 
Customs and Excise will update 
practitioners on the essential aspects of 
law, VAT Tribunal decisions and 
regulations and rhe important issue of 
Customs practice. 

Contact: Evie Kinanc, IBC Legal Studies 
and Services Limited 

Tel: 0716374383 

LONDON 

3 NOVEMBER 1994 

The 1st Annual Review of ff Law 

This prestigious one day conference will 
have the leading speakers, cover the 
critical issues, the essential developments, 
taw, litigation, regulation and policy. U 
will have a practical approach for 
practitioners by practitioners. 

Farther details from International 
Professional Conferences Ltd 
Tel: 061 445 8623 

LONDON 


NOVEMBER 7 

Beyond 'What If - Management 
Science in Spreadsheets 
Management science techniques to aid 
planning. Forecasting - ro predict future 
bosiness conditions. Decision Analysis • to 
improve expected results. Simulation - to 
assess the impact of uncertainly. Markov 
Ch i n a - to analyse changing market share. 
Optimisation - to maximise profit or 
minimise cost. 

Comet: Unicom Seminars 

Teh 0895 256484 Fax: 0S9S 8 1 3095 

LONDON 

NOVEMBER 8-3 
DRf/McGraw-HlU s World Care 
and Tracks conferences 

bring together DRfs latesr authoritative 
forecasts with key outside speakers to 
address tit issues of the current cycle in 
the automotive industry and to anticipate 
the critical quest tool to be faced in the nest 
five yean. 

Contact: Corinnc Redound 
Tel: 0181 545 6212 FasOlftl $456248 
LONDON 

NOVEMBER 8-9 

Quantitative and Computational 

Finance 

Two day seminar hosted by the US 
Embassy. US and UK experts and 
practitioners review a range of novel 
quantitative modefe applied to the finance 
and securities industries. Derivatives; 
options; yield curves- successes, failures 
and experience » ill be discussed. 

Contact: Union Seminars 
Tel- 0895 256484 Fax: US95 S13095 

LONDON 


NOVEMBER 9 

Presentations for Professionals 
by Professionals 
At the Mermaid Theatre, a seminar on 
creating effective presentations. From 
presentation techniques and use or 
languagr, 10 AV design, slide production, 
etc. Businessmen, stand-up contcdhro and 
actors demonstrate bow to make lasting 
impressions. Instructional, utterly 
enjoyable - a must for all presenters. 
Keynote speaker: Alan Dibbo. Chartered 
Institute of Marketing 
Cdmacc E Williams, Executive Presentations 
Tel 071 837 8199 fac 071 837 8190 

LONDON 

NOVEMBER 9 
’ Visions of Gold* 

Conference celebrating the Modern 
Apprenticeship programme and the pan 
NVQs and skill competitions have to play in 
them. Speakers include Daocan Goodhew, 
Mike Heron. Bill Jordan. Prue Leith. 
Sponsored by Employment Department. 
Contact: Hilary Jennings, UK Skills 
TeL- 07 1 -753 5222 Fax: 07 1 436 7630 
01 Claire Armstrong. National Council of 
fndusuy Training Or gan i sa tions 
Tet 0763 247285 Fax: 0763 247302 

ALDCATE. LONDON 

NOVEMBER 14 
Taxation of Financial 
Instruments for Managing 
Interest Rates & Currency Risks 

Key topics at this conference include: 
historical development; overview of new 
rales; group junctures and reorganising for 
ihe new regime; transitional ntles/eacess 
loss rales; ami-avoidauce/associated party 
rules; and matching elections. 

Contact: Vicki Goffin, IBC Legal Studies 

and Services Limited 

TbU 071637 4383 Fax: 07 1 631 3214 

LONDON 

NOVEMBER 15 
WinrdngwftfaYcMCUstonwrs- 
HowtoGfrowYotr Customer Base 

Speakers will stress the importance aad 
inter-relationship of key elements of the 
customer service 'package*. Why people 
are the key to good service. How to access 
information to serve all the customers' 
needs. How to match costomct 
expectations with reality. Case studies 
from DHL International, National A 
Provincial Building Society. American 
Express and Marriott Hotels. 

Director Conferences Tel: 071 730 0022 
LONDON 

NOVEMBER 15-16 
Business Performance 
Measurement: 

Transforming corporate performance by 
measuring and managing the driven of 
fntnre profitability. This two-day 
conference explores the relevance and 
practicability of developing new "corporate 
dashboards*, which include non-financial 
indicator*, such as customer satisfaction, 
duality and benchmarking. 

Cootacc Butinf i * Lmditgcocc 
Tet Ml -543 6565 Fax: 081-544 9030 

LONDON 

NOVEMBER 17 & 18 
Advanced Gann and El Holt 
Technical Analysis Seminar 

Sponsored by Trading Techniques lot, the 
developers of CLE.T. (Gang EOkM TraJer). The 
find md only company 10 provide completely 
annotated and otyrnve EDkXt Wave. 

For brochure telephone Graeme Byers - 
0732368S66 

LONDON HILTON 


NOVEMBER 21-22 
Business Process 
Re-engineering (BPR) 

Confirming series of seminars for managers 
charged with designing and implementing 
BPR initiatives. Presented by leading US 
practitioner and BPR author. Proven taw-to- 
ilo-h* unpicmenmiion guide il lus trat e d with 
ease sanies and workshops. Course book abo 
available. Over 30 organisatians in die private 
& public sectors have already attended 
Contact: Richard Parris. Vertical Systems 
Intercede Ltd 

Tel: +44-455-250266(24 boms; 
Fax:+44-455-890821 

■ LONDON AREA 

NOVEMBER 24/25 
Differentiating Customer 

Proposition 

CBI/Dcvcfin & formers conference, chaired 
by John Humphry*, shows how to transform 
Key business processes to deliver cast 
efficiencies and market differentiation. 
(Optional workshop on second day). 

Cxsacr Belinda Rogecoo. CBI Gtafercifocs 
TeL 071 379 7400 Fax; 071 4973646 
lulls Robins, Devdin A Partners 
Tel 071 917 9988 

LONDON 


NOVEMBER 28-29 

Annual Company Secretaries 

Conference 

The conference wifi discuss developments 
in the Corpor a te Governance, Benefits A 
Remuneration strategies. Pension Scheme 
Legislation and Company Law and bow 
this would impact on the increasingly 
challenging and demanding role of the 
Company Secretary. 

OxttrtJonthinGbate^AICCafatnit 
TetCnl 3294445 foe 071 3294442 

LANGUAM-HILTON 

NOVEMBER 28-30 

’How to Effectively Enter the 

Chinese Markets* 

Two-day seminar at the Sino-Briiish 
Business and Trade Fair. Sino-Brilisb 
Trading prospects. Investment 
environment. Development of Chinese 
economy. Other topics include 
lechnological links, fl natter, (be textile 
industry and speeches by British 
Aerospace and Pitktngton. 

Contact: Yu- Xian Jin 
Tel: 0044 532302768 Fan 0044 532307863 
HARROGATE 

NOVEMBER 28 -DECEMBER 2 
Kaizen Workshop 

At J tolar ti on FT MaaagtmetU Page 
on 4 January. Five dayjf intensive hands- 
on experience for senior managers in 
world-beating productivity improvement 
techniques, in a real factory. Free video 
and copy of FT article also available. 
Contact Sarah K*y. Kaizot ksnaac of Eurcpe 
Tel: 071 713 (M07 Fax: 071 713 0403 

COVENTRY 

NOVEMBER 29-30 
Managing Corporate 
Tran s formation: 

The UK's premier event on planning, 
implementing aad sustaining organisational 
and cultural change. This two-day 
conference includes frank discussion of 
why so many initiatives foil and explores 
proven methods for achieving critical buy- 
in and support for new organisation 
structures and working practices. 

Contact: Business Intelligence 
Tel: 08 1 -543 6565 Fax: 08 1 -544 9020 

LONDON 

NOVEMBER 29-30 
Accounting & Taxation for 
Derivatives 

Strategies and actions for improving 
Building Society business performance 
and market share. Includes presentations 
on i n su r an c e, mortgages, customer loyalty 
and database segmentation. Speakers from 
all major building societies including 
Halifax, Woolwich. Nationwide and Leeds 
Permanent. 

Call Ambrose at AIC Conferences on 
(0171) 827 5988 of fax your details 
on (0171) 2422320. 

LONDON 

NOVEMBER 29 & 30 
Data Warehousing: Practical 
Experience and Lessons for 
the Future 

Building the smart corporation, driving 
effective business process reengineering 
projects, unlocking the most valuable of 
corporate assets. Learn bow many of the 
tvmkfs most competitive corporate players 
have used the daa warehouse concept to 
achieve a strategic corporate advantage. 
Contact: Unicorn Seminars 
TeL 0895 256484 Fax: 0895 813095 

LONDON 

DECEMBER 7-8 
Succeeding with Trams: 
pradio! for d e y g n m g, imptenffling 

and driving the team-based OTgaafeaiicn. An 
inmotionel rwo-diy conference specifically 
designed to help rwiv executives undamnd 
the fundamental issues involved in d e rig naig 
and uqfej ue nrit g a tearohusedor g a n fe n o fl ei 
Contact: Business Intelligence 
Tel: 081-543 6565 Fax: 081-544 9030 
LONDON 

DECEMBER 8-9 
Opportunities and Competition 
for Building Societies 
Park Lane Hold. Strategies and actions for 
improving Building Society business 
performance nod market share, ftwctnatfam 
on general insurance, mortgages, value 
management, customer loyalty, database 
vegmenlalion, distribution, channels usd 
intermediaries. Speakers are drawn from 
senior matagemcre of the Halifax, Alliance 
and Lctctacr, the Woolwich. Bradford and 
BuigJcy, Nationwide. Chelsea. Pe nm an and 
Leeds PentiMcni. Contact. Simone Wills 
Tel: 071 242 1548, AIC Conferences 

LONDON 


DECEMBER 14 -15 
Occupational Pensions 

Examination of foe practical Implications of 
changes In government policy. Each 
presentation will deal with what pensions 
fends actually need la do, when they need 
10 do it and how 10 minimise any cost. 
Whether a pensions fund manager, trustee 
or professional adviser it is practical 
information that can be used from day one. 
Contact; Simooe Willis 
TeL 071 242 1548 AIC Conferences 
SELFR1DCE HOTEL, LONDON 


EXHIBITION 


OCTOBER 7-9 
Enterprise Business & 
Computing Show 1994 

The UK's only rational exhibition fur smaFV- 
mediurn business. Enterprise represents the 
Comm foe the fastest growing rector in the 
UK-SEMs. The exhibition is sponsored by 
Parce Lforct and has over 150 companies 
represented from industries including, 
computing, finance, training, banking, 
franchising, commercial property, cuering 
transportation and tdcoommunkaiioas. 
Advance tickets: 08 1 992 6600 
Coo lad: Julian Fritter. Enterprise Exhibition 
Lid. Tet (0932) 859900829930 fox: (09321 
855741 

LONDON 


INTERNATIONAL 


SEPTEMBER 28-30 
Information Technologies: 
Impact on Business and Society 

Mexico's leading conference and exhfoitiun far 
companies fcsenated in Mcxkxtt mptfy gmwtr^ 
m formation butines market. Key pfayes fam 
Mexico, and the US will attend Unique auA- 
indusry opportunity to join insight and meet 
significant individuals, practical and interactive 
Sponsored by Fubar International, one or 
M coco's must dyntraiccapoMions. 

Tel: (01 1 52 S) 3630449/378-4127 
Fax: (01 1 52 8) 363-35-93 
MONTERREY, MEXICO 

SEPTEMBER 29 & 30 
FT International Banking 
This major forum, preceding the annual IMF 
and World Bank meeting, will debate the 
outkx* far tanking and provide m opprattaiiiy 
lo debate a wide range of Issues of current 
ccocere to foe roKmutional backing communky. 
Tel: 081 673 9000 Fax; OSH 673 13 33 

MADRID 

OCTOBER 10/11 

The Private Banking Challenge: 

Survival or Success 

Designed for senior bankers responsible far 
private client business and chaired by 
Russell Taylor, author of Private Banking 
Renaissance, ibis international conference 
considers ways 1o meet client service 
requirements while maintaining 
profitability. 

Enquiries: The Event Organisation Compony 
Tel: +44 71 2288034 Fax: +44 7] 924 1790 
LUXEMBOURG 

OCTOBER 11-12 
Btecfc Sea RegtonCenlral Asian 
Repubfca: Economic De v elopment 
& Business OpporiunHes - BSCA 
Conference W 

Hustcd by The llarrimnn Institute and 
Dogan & Associates at Columbia 
University. Repsescniatives from Ministries 
of Privatisation, Trade. Foreign Affairs. US 
Department of Commerce, Fortune 500. 
A&O Seminars lac. 375 Park Avenue. 29th 
Floor. New Yoik. NY 10152. 

TeL 1212) 755-1550 Fax: (21 2) 755-1575 

NEW YORK 

OCTOBER 19 & 20 
Dealing with Rights 
Intellectual Properly Rights must be 
properly deoil with if they are to confer 
hoped for benefits upon their rightful 
owner*. An international panel of 
intellectual properly managers and lawyers 
examine ibe problem* owners face in 
handling right* and in portfolio 
management. Further details from 
Internal ional Professional Conferences Ltd. 

Tet 061 445 8623 

FRANKFURT 

OCTOBER 25 & 26 
EC Business Regulation 
Everyone concerned with international 
bamucss transactions imtsi be aware of the 
EC Bosiness Regulation and in increasing 
mn&HKc on the way we transact business. 
This Conference will ptovide an insighi and 
a summary of current regulations and 
practice, also future EU policy. 

Further details from International 
Professional Conferences Lid. 

Tel: 061 445 8623 

BRUSSELS 


OCTOBER 26 

Advanced Software Applications In 
Banking, Finance and tostvance 

Seminar for business aad technical managers 
showing use of practical applications of 
logic programming software in finance, 
banking, insurance. Leading international 
and Italian financial institutions present 
stale -of-lbc-art systems. Includes panel 
discuss ion and vendor displays. Contact; 
(Italy! Cristina Ruggieri. Tel: 051 321 2S5 
tloenmionan A! Roth. Tel: +44 253 358081 
MILAN 

NOVEMBER 8-9 
European Union Aid for 
Development Conferences 

Business Opportunities in EC external aid 
projects ro the value of 5 billion ECU 
annually outlined. including 
PHARE/JOPP, TACIS. MED. A/LA, and 
ACP. Networking with EU and new 
member stale companies. Procurement 
opportunities for raanu fact urera/ 
suppliers. 20 0 page EUROAID GUIDE on 
EU aid programmes included. 

Contact: Socfeid Gtatnlc de 
Otvcksppemcoi SA. 

Tel: +3225124636 Fax: +322512 4653 

BRUSSELS 

NOVEMBER 9-10 
Dynamic Asia 

The fast-growing markets of the Asian 
region prompted foe International Chamber 
of Commerce (ICO to choose New Delhi 
for its 1994 business opportunities 
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& 




FINANCIAL TIMES 


MONDAY SEPTEMBER 26 19*4 


MANAGEMENT 


Taming the beast 


of H Street 


L ast week Lewis Preston - 
president of the World Bank 
Group since 1991 - dropped 
a little bombshell into the 
laps of his stall. Over the next three 
years, he proposed, the budget 
should be cut at an annual rate of 
some 6 per cent in real terms. Strin- 
gency has come to what its critics 
argue is a bloated and over-bureau- 
cratic leviathan. First-class air 
travel has already gone. What 
might come next? 

Preston’s stringency is the latest 
element in a programme of internal 
management reform progressively 
introduced since his arrival three 
years ago. it goes well, for example, 
with dollar (or cash) budgeting, 
under which senior managers are 
being given s ums with which to 
achieve agreed objectives. 

The financial squeeze partly 
reflects Preston's appreciation of 
the chilly Hi ma te. Some sharehold- 
ers, notably the US. believe the 
Bank should share the pain felt by 
public sectors everywhere. They 
note that between the financial 
years 1990 (July 1989 to June 1990) 
and 1995, staff costs of the Bank 
Group are expected to rise by 56 per 
cent to $878 .8m (£556m), and overall 
costs to grow by 60 per cent to 
$1.420.3m. Total a dmini strative 
costs this year are larger than the 
gross domestic products of several 
of the Bank Group’s clients, Mozam- 
bique being an example. 

So large an increase in expenses 
seems surprising, since lending 
activities have stagnated for many 
years (see chart). Shahid Husain, 
the Bank's recently-appointed 
vice-president for management and 
personnel services, explains the ris- 
ing costs by reference to three 
developments: 

• hugely expanded work on east- 
ern Europe and the former Soviet 
Union, little of which has as yet 
borne fruit in lending; 

• expanded lending for the envi- 
ronment, which is relatively labour- 
intensive; and 

• improved project implementa- 
tion, following the Wapenhans 
report on that topic. 

These explanations provide a 
valuable reminder that the Bank’s 
mission is not to transfer money at 
minimum cost But the president 
obviously feels that things have 
gone too far, all the same. The ques- 
tion is how the proposed squeeze on 
costs fits into his attempt to remedy 
the failures of what he once judged 
among the most under-managed 
institutions he had encountered. 

The Bank's problem is not finan- 
cial. The equity (paid In capital, 
plus reserves) of the International 
Bank for Reconstruction and Devel- 
opment, the Bank’s commercial 
lending arm, is $26.6bn, on which 
shareholder governments demand 
no dividends. If the Bank were 
merely to earn a 5 per cent real 
return on its capital, it would be 
able to support the current level of 
administrative costs in perpetuity. 

This huge subsidy must, however, 
be justified by performance. Here 


Costs are being cut at a 
World Bank critics claim 
is bloated and bureaucratic. 
Martin Wolf reports 


Gross disbursements ($bn) 




1980 81 82 83 04 6S 


90 91 «' 08 84 


Administrative costs ($tm) 


1.00 




1980 81 82 BS 94 OS 88 97 

Souoc Worid Bank 


88 80 St 82 « 84 


Lewis' Preston: President 


lies the Bank's chaTlwi gn. “There 
has been a broad recognition, led by 
Preston, that an institution like the 
Bank cannot keep on expanding," 
says Husain. There is also a con- 
sciousness that the Bank has to be 
mana ged. You don't simply manage 
loans and you don't simply manage 
economic and sector work, but you 
have to manage resources and peo- 
ple. Improvement in efficiency and 
reduction of costs have to become 
an integral part of the work of the 
Bank.” 

The task is made urgent by the 
criticism of the institution and by 
the rapidity with which the world 
continues to change. The Bank’s 
main long-term mission is deemed 
to be the alleviation of poverty, 
above all in Africa and South Asia, 
along with environmentally sustain- 
able development But around this 
core the Bank must be "tremen- 
dously mobile”, in Husain's words. 
Leviathan must learn to waltz. 

Before Preston's arrival, the Bank 
had suffered two traumatic reor- 
ganisations: one in 1972, the other 
in 1987. These focused on the 
Bank’s structure, rather than on its 
processes and procedures. 

Husain says: “We believe that 
large traumatic changes of the sort 
that took place in 1987 leave behind 


so much debris that in the long run 
they are self-defeating. One disad- 
vantage of such infrequent large 
changes is that people do not take 
change as a normal way of life. 
What we are trying to inculcate, 
however, Is the idea that since the 
world around us is chang in g all the 
time, so must we.” 


T he other disadvantage, 
alluded to by Husain, is the 
effect on staff morale. Hie 
World Bank employs highly quali- 
fied staff who believe in what the 
Rank does, but rHaiika the institu- 
tion itself. This problem of poor 
morale was greatly exacerbated by 
the 1987 upheaval in which staff 
were simply told to scramble for 
new Jobs, as in a giant game of 
musical chairs. 

When Preston came to the Bank 
he found an organisation still shat- 
tered by that event This had 
reduced staff numbers by about 500 
and created four large, self-con- 
tained regional offices. The cuts 
proved to be temporary. The num- 
ber of regular staff, at 6,406 last 
June, can be compared with the 
6.095 in June 1986, before reorgani- 
sation, and the 5,665 shortly after- 
wards. 

The new structure coped quite 


well with narrowly regional chal- 
lenges, such as structural adjust- 
ment in Latin America and the 
growing involvement with China. 
But Husain argues that this decen- 
tralised Rank “could not serve us 
well in providing a centrally-driven 
response to changes in the interna- 
tional environment For example, 
our work on the environment was 
slow to take off. Our work on Rus- 
sia and eastern Europe also took 
time to take off. And above all we 
took a long time to recognise that 
the wind had changed and that our 
constituents both in the developed 
and developing countries expected 
much greater rigour in manage- 
ment and efficiency”. 

Preston's initial effort was to 
strengthen the centre, by creating a 
presidential office with three man- 
aging directors. He also established 
three new central units in the areas 
of sustainable development, human 
resources and promotion of the pri- 
vate sector. 

A next stage was to strengthen 
the Bank's personnel and manage- 
ment function. Husain says that “in 
the course of the 1987 reorganisa- 
tion there was an almost total 
demolition of the central manage- 
ment and personnel capacity. There 
was no unit that was concerned 


the next two years." , 

1 H usa fa gives a telling example ot 
what is involved by pointing to the 
Bank's core function, lending tor 
projects. “In our old procedure, proj- 
ect officers would first have prelimi- 
nary ideas. They would write up 
these preliminary ideas, which 
would be reviewed within the divi- 
sion, with people in support depart- 
ments, with the director and with 
the regional vice-president 

The second step would be a final 
project summary, which would go 
through the same review process. In 
the mwantiwift , much project prepa- 
ration would take place- After this 
last review, a mission would be sent 
to appraise the project. The mission 
would come back and would pre- 
pare an issues memorandum. Again 
people would collect from around 
the Bank to look at those issues. 

Then the vice-president would 
give the go-ahead to write the 
appraisal report Thereupon, there 
would be negotiations with the bor- 
rower. When the negotiations were 
completed, someone in the vice- 
president’s office would look at the 
final negotiated project which 
would be sent to the Board for 
approval 

“What we are doing in the case of 
East Asia is to have one simulta- 
neous review at a very early stage. 
We are going to do pilot projects on 
that hasis. The fundamental thesis 
is this: review things once: do 
things simultaneously, do them fes- 
ter” 


H usain admits that “this may 
all seem minor, but every 
year we approve 250 pro- 
jects. At any time, the World Bank 
is working on 1,000 projects. It also 
spends massive amounts on eco- 
nomic and sector work. We believe 
it is through this detailed reengi- 
neering that we will get to the issue 
of cost and efficiency. This will 
require delegation. It will involve a 
tremendous amount of effort in 
selection of people and in training. 
It will also require rationalisation of 
internal information and technol- 
ogy." 

The Bank is, in short trying to 
get things right first time. For what 
has effectively been a governmental 
bureaucracy, these are huge 
Hiang ps , with radical Implications 
for delegation and training, and for 
the quality of the people doing the 
jobs, as opposed to those who man- 
age the people who do the jobs. 

These efforts at improved internal 
management do appear significant 
But questions remain: over the 
effectiveness of the board, for exam- 
ple, particularly in supervising the 
Bank 's management; and over the 
effects on the shaky morale and 
hunger for security of a staff whose 
opportunities elsewhere are limited 
both by their experience at the 
Bank and by the G4 visa for foreign 
members, which prevents them 
from staying in the US. Husain 
insists that forced redundancies 
should be unnecessary. Will that 
prove correct? 

Yet there remains a bigger ques- 
tion. How does an organisation 
whose alms have included “institu- 
tion-building” justify the delay in 
attending to itself? If the questions 
being asked now are the right ones, 
why were they never asked before? 
Senior managers seem convinced 
that they have to he answered deci- 
sively and effectively if the Bank is 
to enjoy a secure future. They may 
well be right They must hope that 
they are not already too late. 


with business processes . . . [there 
was] very poor capacity on organi- 
sation Issues, poor capacity for 
recruitment for an institution 
which basically has only one asset 
its people, and inadequate manage- 
ment of training and skills.” 

The main emphasis has been on 
chang in g processes, but changes in 
processes are expected to affect 
structure as well This sequence - 
from process to structure, rather 
than the other way around - is 
novel for the Bank. 

It is now looking at specific parts 
of its organisation, one after the 
other, asking first whether what is 
being done should be done, and sec- 
ond whether things should be done 
in the way they are being done. 

So Ear, the spotlight has shone on 
the East Asian regional office and 
on the international economics 
department Simultaneously, atten- 
tion is being paid to the administra- 
tive apparatus and information 
management. Market-testing and 
contracting-out are among the buzz- 
words here. 

The work has already been com- 
pleted in one department of the 
East Asia region. Attention will 
soon be turned to South Asia and 
Latin America. Husain says: “We 
hope to complete all this work in 


Dress codes and how to wear them 


L ord Hanson does not like to 
see a speck of dandruff on 
the shoulders of his col- 
leagues. At the first sign of 
a receding hairline or bulging mid- 
riff he sends them off to the 
in-housc trichologist, or to the doc- 
tor to have their cholesterol levels 
assessed. 

This is one or the more interest- 
ing revelations in a new book about 
him by journalists Alex Brummer 
and Roger Cone. On the face of It, 
Lord Hanson's feelings about dan- 
druff do not matter one way or 
another. But what is shocking in 
these post-paternalist times is a 
boss who involves himself person- 
ally in the appearance of his staff. 

On closer inspection, however, 
Hanson may just be doing what 
other companies do less explicitly. 
Most employers do not have such 
meticulous standards, yet they do 
have a dress code that communi- 
cates itself informally. Last week 
Linklaters & Paines made the head- 
lines for withdrawing its ban on 
trousers for its women solicitors. 


This was only remarkable In that 
the rules are laid down; in other 
firms women - and men for that 
matter - learn what to wear by 
looking at their colleagues. 

I remember being outraged when 
a superior at my first employer, 
Morgan Guaranty, took me aside for 
a word about my appearance. I 
should blow-dry my hair, wear 
some make-up and buy one of those 
nice Brooks Brothers navy blue 
suits, she advised. At the time Z 
took this pep-talk as evidence that [ 
was working for an uptight Ameri- 
can company set on crushing the 
individuality of its employees. What 
I foiled to see was that to disregard 
a company's uniform is on a par 
with not getting to work on time. 

There is nothing wrong with com 
panies taking an interest in their 
workers' wardrobes. After all then- 
staff are an important part of the 
corporate image they are trying so 
desperately to project However, it 
is better for companies to take a 
lesson from Hanson and Linklaters 
and be as clear about the uniform 


LUCY 

K E L LA WAY 


as possible. A visit to the tricholo- 
gist or to Brooks Brothers today Is 
better than a missed promotion 
tomorrow. 


Still on the subject of clothes, did 
you know that 90 per cent of British 
blue-collar workers say there is 
nothing worse than having to wear 
a pair of dirty overalls? I know this 
because I have just received a press 
release from the Liverpool Business 
School telling me so. Yet I am puz- 
zled, Why are MBAs researching 
this sort of thing? On second glance 
it all becomes clean the sponsor for 


this “research” was Johnson Group 
Cleaners. 

This sort of pseudo-scientific sur- 
vey is little more than a (poorly) 
disguised means of advertising. 
Every week a fresh bundle lands in 
my in-tray, each with an arresting 
“foot” written across the top and a 
giveaway sponsor's name across the 
bottom. Among the latest batch is 
one from a firm of caterers claiming 
that 90 per cent of office workers 
think morale would be transformed 
by a good staff canteen. Another 
shows that 83 per cent of secretaries 
are bored rigid at work - this from 
a company that runs secretarial 
training courses. My favourite is a 


survey that shows headhunters are 
more widely used and give more 
satisfaction to their clients than 
management consultants, accoun- 
tants and most other advisers you 
can think of. No prizes for guessing 
which profession conducted that 
survey. 

Opinion polls are suspect at the 
best of times. But those that set out 
to prove an often tenuous point are 
so obviously partial, it is surprising 
that companies are optimistic 
enough to embark on them and that 
recipients are naive enough to 
believe them. 


tors are also given bottom marks 
for inspiration. When CEOs want 
ideas it seems they depend on man- 
agers in their own company, peers 
and even junior staff. 

I was just getting excited about 
these findings, and the accompany- 
ing warning that British bosses are 
urgently in need of external advice, 
when I saw that the survey had 
been sponsored by Mitchell Phoe- 
nix, a consultant specialising in 
developing chief executives. 


Since I wrote about the tedious 
management books that sit unread 
on shelves. I have received a copy of 
an Institute of Management survey 
that puts managers' disregard of 
books in context Less than 5 per 
cent of CEOs think management 
books are a valuable source of 
ideas, although consultants, the 
media, their customers or competi 


In response to that article, I have 
also received annug h management 
books to fill a library from authors 
and publishers protesting that 
theirs are anything but dull Having 
flipped through some of these I do 
not feel repentant although I have 
learnt that the verb “to manage" 
comes from a French root referring 
to dressage exercises for horses. 
The dictionary says that this use is 
obsolete, though I wonder if traces 
of it still remain at Hanson. 


V 


a 


Ma 



DESERT ISLAND 
MANAGER 


Elizabeth 

Esteve-Coll 


Elizabeth Esteve-Coll has been 
director of the Victoria and 
Albert the UK’s national arts 
and design museum, since 1988. 
where she has instituted wide 
management change. Before 
starting a career in librarianship 
and the arts, she sailed the world 
with her Spanish-born naval 
husband. 


You're allowed one item of 
office equipment besides 
telephone and fox. 

I can't ftmrtion without my 
FQofox - its popper keeps 
busting because it's so full 


How would you cope? Would 
you still try to run the V&A, or 
would you leave the 
answerphone on? 

Tin quite self-sufficient and 
practical. I would try to keep in 
touch, but I would probably 
settle down to wallowing in 
peace and quiet. I do ring in to 
the V&A nearly every day if Vm 
away, but I also realise that no 
one is indispensable. 


. You find a footprint in the sand: 
whose would you hope it was? 
Francois Mitterrand has an . 
amazing record of achievement 
both in the arts and politics. As 
French president, he has focused 
on cultural monuments and 
services, for which he will he 
remembered. He is also a very 
charming man. 


If you couldn’t return., what 
would you regret? 

The V&A has 20 ‘a acres of root 
Each year we get a bit done, and 
I would like to have got that 
finished. 


If you could retrieve one item 
from the V&A collections as 
your ship went down, tvfaat 
wouldltbe? . . 

Although it is not the most . 
transcendental or beautiful thing 
in the museum. I'd like to lave 
the Great Bed of Ware. Said to 
have held 28 people, it could be 
bed, shelter, life raft and even 
wildlife sanctuary. 


What would you miss most? 

I would miss staff and colleagues 
enormously - for their 
enthusiasm, passion and 
commitment They are world 
experts and you learn something 
new every day. 


You can take a film, a book and 
some music. 

Td take one of those wonderful 
multi-episode films. 1 love Marcel 
Pagnol's work - his early Marius 
and Fanny are favourites - or 1 - 
would take Jewel In The Omen, 
as- 1 love India. At last 1 would 
have time to finish leading A • 
Statable Boy by Vikram Seth, * 
and I would want to listen, to a 
Gregorian chant - the Santo • 
Domingo De SOos recording. 


What food would you like? 

Vast quantities of salad and very ; 
good oiL Spanish or Italian. 


How would you get about? 

On a fot, slow Dales pony. We 
could amble about the island, 
and I would get a good view as 
well as having a companion. 


What scheme would you spend 
your enforced leisure on? 

T could spend the time having ■ 
great thoughts about French 
Romanesque sculpture, 
hypothesising on how the 
sculptures came to be where' 
they are and who made than. I 
would sneak along my many 
photographs of sculptures, and 
papers on the subject 


Harriet Arnold. 



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FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 



The tyranny of the few 

Colin Amery attacks the fashion for architectural contests 


F orget any idea you 
might have had that 
architecture is some- 
thing that concerns 
people other than just archi- 
tects. Just as you thought that 
the tyranny of the few was 
being seriously challenged by 
the thinking majority, some- 
thing happens that forces you 
to think again. Any hope that 
the commonsense views of the 
users of buildings were begin- 
ning to have an effect on deci- 
sion-makers is once again seen 
as an illusion. 

The recently-announced 
result of the competition to 
find an architect for a new 
Welsh Opera House in Cardiff 


is a temporary victory for a 
minority of once-fashionable 
arbiters of taste- The selection 
of the architect Zaha Ha did by, 
in my opinion, a misguided 
jury shows that the relentless 
promotion of once-fashionable 
ideas continues apace. 

Ha did is an archetypal mem- 
ber of that small group of 
international architects who 
perform, largely for each other, 
as a kind of travell in g circus. 
The values they represent have 
little to do with local contest, 
or practicality. 

For a long time they have 
been playing the part of a 
faded avant garde with an atti- 
tude that is supposed to make 


anyone who has different 
views look reactionary. The 
truth is that Ha did and her 
friends are now the reaction- 
aries. representing the kind of 
absurd architectural arrogance 
that the public has long 
learned to distrust. 

Her work - it goes without 
saying that there are practi- 
cally no built examples - is a 
late derivative of early 20th 
century Russian Constructiv- 
ism. Her design for the Opera 
House in Cardiff might have 
been impressive as a student 
copy of a Constructivist paint- 
ing. but as a building it has no 
reality. 

Her sources appear to be 


i>‘: : ' 





Inevitable that Sir Richard Rogers would win the chance to plan revamping of South Bank 


two- dimens ional, and one can 

only hope that this Cardiff 
Opera House remains that 
way. There is only a slim 
chance that it win be built. It 
is only one among countless 
bidders for cash hand-outs 
from Britain’s soon-to-be- 
launched national lottery. As a 
result, it is highly probable 
that Hadid's “winning” entry 
will join the body of her 
unbuilt work. 

Her passing victory is itself a 
warning of the dangers of the 
fashion for architectural com- 
petitions. As it happens, the 
public architectural competi- 
tion is probably here to stay. 
Already our masters in Brus- 
sels have decreed that any pub- 
lic project with European fund- 
ing has to be the subject of a 
competition. 

There is also talk in the fetid 
corridors of Britain's own arts 
bureaucracy that lottery pro- 
jects, including those to mark 
the millennium, will have to 
undergo the scrutiny of politi- 
cally correct architectural 
juries. It will be jobs for the 
boys: fashionable friends of 
fashionable friends will dictate 
architectural taste and the 
man in the street, or the user 
of the building, is unlikely to 
get a look in. 

There is real danger in this 
fashion for architectural com- 
petitions, because the winner 
is inevitably determined by the 
composition of the jury. The 
chance of a disinterested jury 
with adequate representation 
from people who are not archi- 
tects is very slim. It is clear 
that architect-led juries 



The risk attached to the Bankside adventure is that it will become a great unapproachable catafalque for contemporary art 


attempt to baffle the layman 
with jargon and pseudo-sci- 
ence. 

Juries are also much influ- 
enced by fam ous names and 
smooth talkers, and often do 
not spend much time looking 
at plans. 

There is a tendency for juries 
to be beguiled by the profes- 
sional's conceptual approach 
which they hope will somehow 
evolve into a good building. 

It was inevitable that Sir 
Richard Rogers would win the 
chance to plan the revamping 
of the terrible South Bank: 
London's ugly arts centre on 
the Thames. It was equally 
inevitable that he would 
attempt to seduce the jury 
with a lot of talk about creat- 


ing a “people's palace”. We 
have already seen his ideas for 
the Thames in an exhibition at 
the Royal Academy when a 
series of what looked like oil 
refineries appeared to have 
sprouted along the river's 
banks. His proposal to dress up 
the monsters on the South 
Bank in a limi ted high-tech 
wardrobe looks superficial and 
unlikely to win that desert 
many more friends. 

One competition that partic- 
ularly worries me is the one 
for the new Tate Gallery of 
contemporary art to be housed 
inside the shell of the old 
Bankside power station near 
London’s Southwark Bridge. 
The names on the short-list are 
due to be announced today, but 


the Tate's director. Nicholas 
Serota, has almost certainly 
chosen his favourite. 

Serota is known Tor his 
severe taste and his penchant 
for what is internationally 
fashionable. He would like to 
see the austere Japanese archi- 
tect Tadeo Ando bring his 
abstract concrete vision to 
London. The risk attached to 
the Bankside adventure is that 
the power station will become 
a great unapproachable cata- 
falque for contemporary art 

Unless the planning brief for 
the architectural competition 
insists upon a friendly mix of 
uses for Bankside power sta- 
tion, it will become an isolated 
monument full of arcane and 
unapproachable art in a part of 


London that is miles from its 
friends upstream at the Tate. 

T have no idea how the inevi- 
table co mmi ttees that will dole 
out the money to be generated 
by Britain's national lottery 
are to be advised about archi- 
tecture. Are they happy to 
leave crucial decisions to the 
some old architectural mafia 
which largely promotes its 
close Friends? Will the users be 
listened to? Or the man in the 
street? 

Judging from recent competi- 
tion results, I believe that the 
time has come to realise that 
many winning schemes - 
which are often extremely 
expensive - are the architec- 
tural equivalent of the emper- 
or's new clothes. 



Heart of the next consumer electronics thrust 


Louise Kehoe reports on C-Cube, developer of the core technology for CD video players 


W hen Japan's lead- 
ing electronics 
companies launch 
their consumer 
video CD players in Tokyo next 
week, a small Silicon Valley 
semiconductor company will 
be cheering them on. 

JVC. Matsushita, Sony, 
Sharp and Denon are all cus- 
tomers of C-Cube Microsys- 
tems, developer of the core dig- 
ital compression technology for 
this new generation of home 
video players, winch promises 
to make the video cassette 
ttape) as old hat as LP records. 

C-Cube will supply a semi- 
conductor chip that performs 
the critical task of decoding or 
decompressing the digital 
video data stored on a compact 
disc. Until now. such technol- 
ogy has been far more expen- 
sive or of lower performance 
than that of tapes. 

The C-Cube chip "is the only 
extra logic device required to 


transform an audio CD player 
into a video CD player,” says 
Alexandre Balkanskl, 34, who 
founded C-Cube six years ago. 
The incremental cost is only 
about $50, he adds. 

For the consumer electronics 
industry, the “PlayCD” chip 
presents an opportunity to 
revive sagging profits. It is 11 
years since the introduction of 
the audio CD, the last product 
to create a consumer electron- 
ics "boom". Now the audio CD 
player market is heavily satu- 
rated and prices have declined 
to the point where profit mar- 
gins are wafer thin. 

“With just a small increment 
in technology, they have a 
whole new product,” says Bal- 
kanski. The Japanese compa- 
nies are determined to make 
Video CD a success, be says, 


predicting sales of at least lm 
units in the first 12 months 
"This is a red-hot product that 
will transform the home stereo 
into a multimedia entertain- 
ment system. This is the begin- 
ning of a whole new market.” 

Video CD players are 
designed to be hooked up to a 
television set, like a VCR, to 
play films, music videos or 
karaoke. The first Video CD 
players are expected to sell for 
about $250-$400. 

H owever, these prod- 
ucts, which will 
make their debut in 
Japan next week, 
are aimed primarily at karaoke 
fans and devotees of music 
videos. They can be used to 
play full-length films, but the 
discs will each hold only about 


70 minutes of video, so two 
discs are needed for a 
full-length feature film. The 
picture quality will be about 
the same as a video tape. 

It is the second wave of 
Video CD players, expected in 
about six months, that is creat- 
ing high excitement among 
multimedia experts. With 
improved picture quality and 
the ability to cram a full-length 
film on to a single CD these 
“movie players" could seri- 
ously challenge video tape 
players. 

Video CD players will not, 
however, be able to record TV 
programmes. Tapes and CDs 
will probably therefore co-exist 
for many years, just as today's 
audio systems typically include 
a CD player and cassette tape 
deck for recording. Few doubt. 


however, that the CD will soon 
become the medium of choice 
for pre-recorded video. 

“The X-generation will love 
them,” says Rick Sizemore of 
Total Research in Multimedia, 
an Arizona market research 
firm. He projects sales of up to 
lm Video CD players next year 
and 5m in 1996. The launch of 
the first consumer oriented 
Video CD players could rocket 
C-Cube's sales (*23.7m last 
year, and $18. 6m in the first 
half of 1994) into a much 
higher orbit. The company, 
which raised $37.4m from an 
initial public offering in April, 
is beginning to attract Wall 
Street attention. 

Analysts are projecting net 
earnings per share of about 70 
cents for 1995, on sales 
approaching $100m. "We view 


C-Cube Microsystems as the 
purest and best near-term play 
on deployment of digital multi- 
media into many existing and 
yet-to-develop end markets,” 
analyst Alex Brown said in a 
recent report on the company. 

C urrently, C-Cube has 
little competition in 
the emerging multi- 
media chip market, 
although the company expects 
that the “big boys" of the semi- 
conductor industry, including 
Motorola and the in-house chip 
operations of Japan's con- 
sumer electronics leaders, will 
soon be nipping at its heels. 

C-Cube subcontracts the fab- 
rication of its products to other 
chip makers, including Texas 
Instruments, one of the largest 
in the US. The company says 


that it has no plans to invest in 
its own chip manufacturing 
facility, preferring to concen- 
trate its resources on chip 
design. 

Even if Video CD does not 
take off as quickly as expected, 
C-Cube has other irons in the 
multimedia fire. The company 
has developed a video 
“encoder” chip, used to com- 
press video signals for digital 
satellite TV and cable TV 
transmission. It also provides 
chips for multimedia personal 
computer add-on circuit 
boards. 

C-Cube chips are also used in 
the Panasonic 3DO home video 
game machine, widely 
acclaimed for its superior 
graphics. The 3DO machines 
have been slow to catch on in 
the US, largely because they 


are more than twice as expen- 
sive as competing video game 
players from market leaders 
Nintendo and Sega. 

however, C-Cube's latest chip 
will significantly reduce the 
price difference, says Balkan- 
ski, giving manufacturers of 
3DO machines an opportunity 
to become real challengers in 
the video game market 
In the longer term, C-Cube 
hopes to supply chips for use 
in television “set top boxes", 
the units that will link TVs to 
future interactive services. In 
this potentially very high vol- 
ume market, C-Cube expects to 
face severe competition. 

But the company is not 
waiting for interactive TV to 
take off. The multimedia trend 
has already created big oppor- 
tunities, Balkanslri believes. 
“While others are talking 
about the future potential, we 
will be printing money,” he 
says 


Business lead for 
caller identification 


By Andrew Adonis 

Despite the hype about 
video-on-demand and home 
shopping, on past form it was 
always likely that business, 
rather than residential 
applications, would lead the 
march towards commercial 
multimedia services. So it is 
proving, with the progressive 
integration of office personal 
computers with 
telecommunications networks. 

The video phone is a case in 
point. Most of those currently 
on offer are windows-based 
systems which convert the PC 
into a video phone by means of 
an appropriate "card" and 
camera placed on top of the PC 
screen. 

Another line of development 
is the rise of "computer 
telephony integration" (CTD 
systems, which enable PCs to 
be used to process telephone 
calls. CTI is advancing fast in 


the sales, marketing and 
customer support fields, where 
there is strong and immediate 
corporate demand for 
enhanced methods of dealing 
with phone-based business. 

The introduction into the UK 
this autumn of “calling line 
identification” - a new phone 
facility which passes the 
number of the calling party to 
the person being called before 
the call is answered - is set to 
give a significant boost to 
computer telephony 
integration. 

For businesses dealing 
with customers by phone, it 
will make it possible to 
set up systems enabling 
telephone staff to summon 
customer records on the PC 
screen before answering 
calls. 

The race is on to provide 
low-cost CTI systems which 
can take advantage of calling 
line identification, and to make 


them available to small and 
medium-sized businesses 
which have as much to gain 
from them as those in 
the large corporate 
sector. 

AT&T, the US telecoms 
company, claims to have made 
a low-cost breakthrough this 
month with its “Passageway" 
products, developed jointly 
with Novell, the US computer 
networking software 
supplier. 

AT&T's “Passageway Direct 
Connection” and “Passageway 
Telephony Services” systems 
link the PC to the telephone 
line, making available a range 
of windows-based functions. 
These include the provision of 
screen “cards" on customers, 
which can be displayed within 
seconds through calling-line 
identification, and the ability 
to dial directly from the PC 
using a stored data base. 

The PC keeps a record of 


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AT&T’s card file application can maintain names, addresses, 
telephone numbers and other information 


incoming and outgoing calls 
and all functions are 
available at the click of a 
mouse. 

The “PassageWay” software 
Is retailing at £475 per line. 

However, users may also 
need new hardware to 


integrate their phone and PC 
systems. This is available for 
less than £1,000 for a small 
business that has less than 16 
telephone lines. 

A 50-workstation user licence 
is available for around 
£7,000. 


France launches faster 
version of minitel 


By John Ridding in Paris 

The minitel , France’s teletext 
system, is getting faster as it 
grts older. Tomorrow, France 
Telecom will unveil its minitel 
Vitesse Rapide, a system which 
is eight times quicker than the 
6.5m terminals already 
installed in the country's 
households and businesses. 

For the French state-owned 
telecoms operator it is an 
important step. “We regard it 
as one of the first moves 
towards multimedia and an 
information superhighway,” 
says one official at the group. 

The new terminals, which 
will cost less than FFr100 ($19) 
per month to rent, will allow a 
significant increase in the 
capabilities of the minitel 
network. For the first time, for 
example, service providers will 
be able to send photographs to 
potential customers. 

"If you are looking to buy a 


car or a house then you can 
have a photograph sent 
immediately,” says a 
spokesman for France 
Telecom. Existing services 
available on minitel will also 
be cheaper. By raising the 
system’s speed from 1200 bytes 
per second to 9,600, the time 
needed for connection will be 
sharply reduced. 

Initially, the new service is 
expected to be aimed at 
business customers. In time, it 
should find its place in French 
households as consumers 
demand a broader range of 
multimedia services. 

"There has been a long wait 
for a faster system,” says one 
analyst in Paris. “There should 
be quite strong interest from 
corporate clients. But the rate 
of penetration will depend on 
the quality of the system, 
particularly the images and the 
number of new services it 
attracts." 


The high-speed minitel is not 
the only element in France 
Telecom's push towards 
multimedia services. Earlier 
this year the company 
established a new multimedia 
subsidiary, which has 
subsequently launched a range 
of services, including a 
pay-per-view movie channel 
An electronics games channel 
and an home shopping channel 
have also been developed by 
the new subsidiary. 

For minitel. the upgrade 
represents a new source of 
growth after 15 years of 
sendee. There are now more 
than 23,000 services available 
on the minitel system, from 
the basic telephone directory 
service to reservation facilities 
for trains and airlines. But it 
faces increased competition 
noth communications and 
information networks, such as 
Internet, which operate on 
personal computers. 



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British Airwa ys 

The worlds favourite airline 
















FINANCIAL TIMES 


MONDAY SEPTEMBER 


26 1994 


BUSINESS TRAVEL 


Virgin name change 

Virgin 
Atlantic fa 
rarundnaits 
WHn 

economy 

NMCftcsa 

cabin Premium Economy. ■ 
An fncmmdng nmnber of 


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passengers facfing they 
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“By giving It an 
economy tag, we-nm 

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A ir mileage schemes 
have become some- 
thing of a headache 
for the world’s air- 
lines. Most leading airlines 
now offer a bonus or incentive 
scheme based on the number 
of miles a passenger flies with 
it even some of the old com- 
munist bloc carriers have 
become involved, with Czecho- 
slovak Airlines running a fre- 
quent-flyer scheme, called OK 
Plus, for the last two years. 

However, free tickets are an 
expensive way to keep the cus- 
tomers happy. People still refer 
to a s ummer when Pan Am, 
the defunct US airline, discov- 
ered that all its flights to 
Hawaii were filled by passen- 
gers claiming free mileage 
awards. As a consequence, air- 
lines are becoming increas- 
ingly careful about the rewards 
they offer and the ways in 
which they a dminis ter such 
schemes. 

Swissair, for instance, which 
r uns the Qualiflyer mileage 
scheme along with Austrian 
Airlines and Crossair (and has 
reciprocal deals with Delta, 
SAS, Cathay Pacific and Singa- 
pore Airlines), makes it clear 
that members claiming free 
tickets may not be able to get 
on heavily booked flights. As a 


Airlines want to change the 
emphasis of air mileage^ 
schemes, says Charles Jennings 


Price of free 
tickets 


further dampener, it warns: 
“Your point of entry in a coun- 
try need not be identical with 
the airport at which you board 
your return flight.” 

It is also keen to tempt you 
away from claiming an aircraft 
ticket of any description. 
Instead of a free flight to New 
York, for example, your 75,000 
mileage credits could be spent 
cm an hour in a Swissair flight 
simulator, two nights at the 
Lucknam Park hotel near 
Bath, or deep-sea diving in 
Lake Geneva. 

Japan Airlines, with its JAL 
Mileage Bank scheme, is simi- 
larly quick to suggest that 
mileage credits can be spent on 
hotel accommodation, a “Euro- 
pean break", or a seating 


upgrade, rather than a ticket 

Even American Airlines, 
which was the first to intro- 
duce mileage credits in 1981. is 
dear that- however many cred- 
its you accrue on its AAdvan- 
tage frequent-flyer programme, 
you cannot insist on any par- 
ticular free flight in return. 

As the airline puts it “We 
have a sophisticated system to 
make sure that flights don’t 
get swamped with AAdvantags 
flyers.” 

British Airways also evi- 
dently has thic fa mind w ith 
its Air Mites nch«mR In order 

to qualify for Air Miles on BA, 
you must be a member of the 
Executive Club - a privilege 
earned by collecting Travel 
Points on BA flights You can 


then accrue Air Mil e s points 
only on fully flexible fares: 
non-disco unted, unrestricted, 
non-Apex tickets, which 
account for a minority of tick- 
ets sold. The allowances, more- 
over, are not especially gener- 
ous - a one-way flight from 
London to Borne can net you 80 
Air Miles, but it will cost you 
1,900 Air Miles for a free return 
ticket to the «mto riegtinfltio n, 
And you may not be able to fly 
when you want to. 

Travel Points, however - 
which entitle you to Executive 
Club membership, access to 
the executive lounges and 
other benefits - are relatively 
easy to pick up. A handful of 
flights to the US and you could 
at once become a Silver Her 
Executive Club member. BA 
wants to take the amphoric off 
free fli ghts and turn Air Miles 

from a f^ mafching -fnr. Tinthing 

promotional device into part of 
a larger strategy to keep cus- 
tomers loyal As BA puts it 
“It’s more a thank you for trav- 
elling with us.” 

This is clearly the trend. As 
an industry spokesman 
observed: “hi a perfect world, 
many airlines wish they wer- 
en’t fa tiie system. The prob- 
lem is. it's here and you have 
to ffads ways to live with it” 









/ 


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cany 300-400 passengers depending an cabin configuration. The that 777 ie due to enter sendee wHh United Airlines of the US neat year 


l 


T he Belgians make more business 
trips than anyone else fa Europe. 
The Greeks make the fewest and, 
when they do travel, they work the 
shortest hours when they arrive at then- 
destination. These are some of the 
finding s of a survey conducted by Visa 
International, the payments organisation. 

Visa surveyed more than 2,000 
travelling readers of Executive Travel and 
International Manag e m ent magazines fa 
10 countries. The Belgians who responded 


Europe's most frequent and hardest-working trippers 


had made an average of 19.6 husfaess 
trips in the past 12 months. 

The second most active travellers were 
the Dutch, who had made 16.7. Hie 
British were in third place, with 15.1 
trips. At the other end of the scale, the 
Greeks had made only 7.4 trips over the 
past 12 months. The Norwegians were the 


second least active, with 10 trips. 

The majority of travellers fa the 10 
countries - 54 per cent - said they were 
now making Hip same number of business 
trips as in the previous 12 months. About 
27 per cent said they were making more 
trips, while 19 per cent said they were 
fairing fewer. Most of the travellers who 


were making more trips said the main 
reason was that their companies’ 
performance had improved. 

While the Germans were not the most 
frequ en t travellers, making 15 trips in 12 
months, they claimed to work the longest 
hours when they readied then- 
destination. On average, German business 


travellers said they worked 1L6 hours a 
day. The second most industrious 
business travellers were the Batch and 
the British, who both said they worked an 
average of 11 A hours a day. Hie French 
worked 1L2 hours a day. 

Many travellers from the four 
hardest-working countries said they put 


in even longer hours. Twenty pear cent of 
tiie British, 24 per cent of the Dutch and 
French and 25 per cant of the Germans 
worked mote than 14 hours a day. 

The most relaxed business travellers 
were the Greeks, who worked an average 
of 9.9 hours a day when they were on 
business trips. They were followed by the 
Spanish, who worked 10.3 hours. 


Michael Skapinker 








fSj ■rtPji.v.j;' 



$ 









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FINANCIAL TIMES MONDAY SEPTEMBER -6 1994 


Homing in on 
the vulnerable 

In moving from Shelter to the Consumers’ 
Association, Sheila McKedmie tells Diane 
Summers, she will still fight for the underdog 

S heila McKechnie is with which the association Now she co mman ds gre; 
characteristically deals. respect among p rofes sionals i 

blunt about the mis- Lack of technical knowledge the charity industry and eno 
half os she made when will not hold her back far long, mops affection within Shelte 
she took over nearly and any CA boffins hoping to which she has taken fro; 


S heila McKechnie is 
characteristically 
blunt about the mis- 
takes she made when 
she took over nearly 
10 years ago as director of 
Shelter, the British housing 
charity. 

A warm, noisy and energetic 
person, the 46-year-old Scot 
admits that the restructuring 
sbe was forced to carry out 
might have been less painfUl IT 
she had been more experienced 
and better attuned to other 
people's frailties. 

"1 completely underesti- 
mated people's insecurity. I'm 
a person who sees change as 
the essence of life; dealing with 
people who got defensive in the 
fa r e of change was something I 
just didn't understand," she 
says. Tm very strong on stra- 
tegic management . . . people 
management is not so strong." 

Her words may cause some 
hearts to sink at the Consum- 
ers' Association, the organisa- 
tion which, it has just been 
announced, McKechnie will 
take over in January. More 
change and conflict will be the 
last things many of the staff 
there will want. 

The CA, best known as pub- 
lisher of the TOG.OOOcircuk tion 
consumer magazine Which?. 
has had a rough ride recently, 
with open conflict between 
staff and its abrasive current 
director. John Beishou, as well 
as public debate about its role 
in the age of the increasingly 
sophisticated consumer. 

But McKechnie will tread 
extremely carefully, especially 
at first. “When you're dealing 
with a very established organi- 
sation, the worst thing you can 
do is go in and say everything 
that's been done in the past is 
wrong and you want to change 
it." She is respectful of the 
association's professionalism 
and expertise - a sensible 
stance, since at present she 
cannot have much more than 
an informed outsiders know- 
ledge of many of the issues 


with which the association 
deals. 

Lack of technical knowledge 
will not hold her back far long, 
and any CA boffins hoping to 
blind her with science should 
beware. McKechnie's confi- 
dence is breathtaking. If she 
fails to grasp something you 
have just said - well, it is 
likely to be your fault and you 
had better try again. 

A regular on Question Time 
or Any Questions, she is bound 
to pop up again within weeks 
of starting her new job and to 
sound utterly convincing in 
her new role. 

This confidence does not 
stem from a privileged back- 
ground. She describes her fam- 
ily as “very ordinary Scottish 
working class”. She was bom 
in F alkir k (the local newspaper 
rails her The Battling Bairn) 
and was head girl at the high 
school. . 

She was the first member of 
her family to go to university 
(Edinburgh) and, after a degree 
in politics and history, did 
what many bright, sodally- 
co ns clous, vaguely left-wing 
people did at the time: she 
went to work for a trade union. 
On the way she stopped off for 
an MA in industrial relations 
at Warwick University and a 
year at Oxford on a research 
contract 

The union she joined was the 
tiny Wallpaper Workers’ Union 
(wallpaper printers, rather 
than painters and decorators). 
After a brief spell as a Work- 
ers' Educational Association 
lecturer, she joined the 
white-collar union, ASTMS. 
with which her smaller union 
had been in competition. The 
next nine years were spent as 
national health and safety offi- 
cer there before she became 
director of Shelter. 

At Shelter she initially 
earned, a bit of a reputation as 
someone who occasionally 
shouted first and asked ques- 
tions later; there were some 
sackings and resignations. 


Now she commands great 
respect among professionals in 
the charity industry and enor- 
mous affection within Shelter, 
which she has taken from 
fewer than SO staff and a turn- 
over of cim to around 250 staff 
and a turnover of about £10nn. 

Lingering criticism of her 
style does not bother her 
unduly. "Anybody in my posi- 
tion is going to have people 
who criticise them and say 
they're far too directive and 
they've got too strong views. 
But then that’s part of the 
leadership role," she says. 

And Shelter needed leader- 
ship when she took over. "I 
very quickly realised that it 
was an organisation that had 
turned in on itself. Employees 
were directing a lot of their 
attention to the inside of the 
organisation and not en g agin g 
with the issues," she says. 
“There was a very 1960s men- 
tality." 

T his held that everyone in 
the organisation should 
be highly principled and 
compete to be on the left of 
everyone else. “You made a 
statement, then got into your 
bunker and pulled down the 
shutters.” 

McKechnie has turned Shel- 
ter into a fast-response organi- 
sation offering practical advice 
and services to homeless peo- 
ple, as well as camp ai g nin g on 
topics such as repossessions 
forced on people who get 
behind with mortgage pay- 
ments. 

It has also, she says, had to 
conduct the “campaign of its 
life” to dgfanri misting legisla- 
tion, which offers at least some 
protection to the most vulnera- 
ble. The charity is probably 
more in the public eye than at 
any time since the days of 
founder Des Wilson and the 
early TV film, Cathy Come 
Home. 

Her successor, she says, will 
face a tough time. “Nothing is 
going to change substantially 



in this government's policies. 
There’s also the possibility of 
an attack on housing benefit, 
which could lead to much 
higher levels of homelessness. 
None of the political parties 
hac given housing the priority 
I think it should have.” 

She particularly objects to 
what she sees as the govern- 
ment's obsession with owner- 
occupation. “The British level 
of owner-occupation is incom- 
patible with a modem, well- 
functioning economy," she 
reckons. 

How does all this serious 
stuff fit in with best-buy 
pop-up toasters and the other 
middle-class preoccupations of 
the average Which? reader? 

McKechnie warms to her 
new theme. "We are all con- 
sumers. People are having to 
make big financial decisions 
about their future and their 
children's future in a context 
where a lot of people are trying 
to tell thpm to do thing s which 
are not in their interest. I feel 
very shocked about what’s 
happened in the financial ser- 
vices industry.” Anyway, she 
says, “if you're poor and your 
kettle breaks down after six 
months and you need another 
one, it could be a financial 
disaster”. 


Some weeks ago, John 
Beishou, the outgoing CA 
director, who feels he has come 
under attack unfairly for try- 
ing to modernise the associa- 
tion, said in a newspaper Inter- 
view: “1 have a feeling there 
will be a terrible pressure to go 
back to the way things were 
and to regard this (my tenure) 
as a horrible nightmare.” 

With the announcement of 
McKechnie's appointment, he 
says them* fears have vanished. 
CA’s ruling council “clearly 
resisted that pressure and has 
made a very inwghia HTB anr! 
bold appointment The council 
asked me to give CA a higher 
campaigning profile and to put 
it more in front of people as the 
consumer champion - which I 
think l did. Now she’s going to 
take it further still and I think 
that’s excellent.” There are 
those who find the association 
already too strident, says 
Beishan. “They’re living in the 
past In the old days, influenc- 
ing our society was done by 
phoning up a minister because 
you’d been at school with him 
- and it always was a him. You 
had a quiet lunch at the club 
and a few words were said. 
That world has gone." 

The Rattling Balm is the 
woman for the new one. 


C/3 

W 


1 


Llewellyn gives 
up Paris for * 
Lehman Bros 

Lehman Brothers clearly has a 
liking for talent grown in the 
Paris-based Organisation for 
Economic Co-operation and 
Developmeit, writes Peter 
Norman. 

It is appointing John 
Llewellyn, currently head of 
the private office of OECD 
secretary general Jean-daude 
Pays, to be its London-based 
head of European economic 
research. 

Llewellyn (below) will take 
up the post of managing 
director and chief economist, 
Europe in January. He will 
step into shoes vacated by 
Gerry Holtham, a former close 
colleague at the OECD, who 
moved this summer to head 
the Institute of PahKc Policy 
Research, a left-of-centre 
think-tank in t onrtnm. 

Llewellyn, 50, will manage a 
team of five economists in 
London and will report to 
Allen ftfmii, global chief 
economist of Lehman Brothers 
In New York, and to senior 
manag ement in London. He 
will have overall responsibility 
for Lehman Brothers’ 
pan-European research and for 



experience acquired during 17 
years at the OECD should 
prove Invaluable. While 
Llewellyn has acted as Paye’s 
endnence grist for the past five 
years, implementing the 
secretary general’s policy 


that the company may 
consider joint **$?**<* 
otter alliances with other 


liaising with member and 
non-member countries, the 
bulk ofhls career In Paris has 
been more directly concerned 
with economic policy and 
analysis. 

He was deputy director of 

the social affairs directorate 
from 1986 to 1989 and head of 
the economics prospects 
division, editing the twice 

yearly Economic Outlook, from 

1978 to 1986. 

Llewellyn, who has UK and 
New Zealand nationality and 
was a Cambridge economics 
don before going to Paris, said 
he was drawn to Lehman 
because “it is the most global 
in outlook of the investment 
banks”. 

Sweet move for 


Schapiro 


economic message to its clients 
in Europe. 

There, the contacts and 


the stock market greeted news 
of his promotion with an 

immediate 5 per cent rise in 
Monsanto’s share price ~ 


Over the years, Robert 
Schapiro has won a reputation 
for boldness at Monsanto, 
writes Richard Waters. 

The man behind NutraSweet 
for most erf the 1980s, Schapiro 
embarked on an ambitious 
marketing plan for the 
artificial sweetner. he 
persuaded the makers of food 
products that contained 
NutraSweet to carry Ms 
product’s logo on their 

packaging, creating a direct 
band with consumers. Sales of 
the sweetner soared. 

Now 56, Schapiro has just 

been nampil the next eharrmMn 
and chid' executive of the 
chemicals and drags group, a 
job be takes on at the start of 
next year. He follows Richard 
Mahoney who, at the age of 60 
and after 12 years at the top, 
has decided the time has come 
to step aside. 

Wall Street will be looking 
for some more boldness from 
Schapiro in fttture. In 
particular, a growing band of 
analysts and investors is 
looking for Monsanto to sell 
tiie Searle drags business, 
bought by Monsanto for £L5bn 
in 1985. Without the range of 
drugs or the economies of 
scale of its bigger competitors, 
Searle is seen as a weak 
co m pet i tor in a market which 
is becoming increasingly 
dominated by big, 
institutional buyers. 

Schapiro, himself a former 
boss of Searie, has yet to show 
bis hand - though he has said 


Sat Mahoney believes tills 

year the company wonlo reach 
his target return on equity of 
20 percent 

Problems at 
home and away 

Lare Thunen became one of 
Sweden’s best travelled 
businessmen last year as he 
scuttled round the world 
sorting out the problems left 
by the crisis at Nordba n ke n , 
writes Christopher 
Brown-Homes. 

His new job as chief 
executive of Trygg-Hansa, one 
of the country’s two main 
insurers, will also give him 
opportunities for international 
troubleshooting - starting in 
the US where Trygg has ran 
into deep problems witn its 
Home insurance affiliate. 

Trygg has suffered big losses 
through its 64^ per cent stake 
in Home, a much bigger 
company, and it is anxious to 
reduce the burden by bringing 
in a partner as soon as 
possible. Resolving this 
difficulty is probably ThuneH’s 
top priority, although his 
wider task will be to restore 
Trygg’s tarnished reputation 
after the crisis in the Swedish 
financial sector. 

Thunell, 46, is widely 

nritniwri for hfa WOfk at 

Securum. the “bad bank” 
loaded with Nordbanken’s 
problem loans. He made it 
more than a pure liquidating 
company by giving it an active 
role in maximising value. His 
finest hour came last year 
when he played a vital part in 
an gtoftAring the SKrI6.6tm 
merger between Nobel 
Industries - in which Securum 
held 72J3 per cent - and the 
Dutch chemicals group Akxo. 

Not surprisingly, then, his 
new appointment was 
welcomed by the market, 
which marked Trygg’s shares 
higher. Whether It goes down 
as well with Trygg’s employees 
is another matter. 

T am good at changes, both 
at building up and cutting 
down.” said Thunell with a 
slight hint of menace when he 
met the press last week. He 
also suggested that the group 
should stick to what It does 
best - keeping tts domestic 
insurance customers satisfied 


lie 


THE WEEK AHEAD 


DIVIDEND & INTEREST PAYMENTS 


■ TODAY 

Abbey Natl First Cap. Sb. CM FRN 
‘04 CS32.31 

Ab trust Scotland fnv. 0.7p 
Asahi Chem. 6% Bd. '97 Y800000.0 
Soots 10Vi% Bd. 2017 £2531.25 
Boustead 0.65p 
Britannia as. FRN 97 £137.48 
British Land 8%% Bd. 2023 £443.75 
Do. 121694 Bd. 2016 £025.0 
Da 6% Sb. Irrd Bd. £30.50 
DaWppan Screen 6.196 Bd. 97 
Y6 10000.0 

Daiwa InL Fin. Fxd/Fltg. Sb. Nts. 

Sep. '02 $6250.0 
Exchequer 121494 *99 £6.125 
Field -l.75p 

Finnish Ex. Credit 3.596 Eq. Yield 

Enh Sec. *95 SI 7.50 

Fun Bank InL Fin. Perp- Sb. Gtd. 

FRN Y2 17945.0 

Do. Und. Sb. Gtd. Var. Rate Nts. 
YrOJ62.0 

HIH Cap. 71.-% Cv. Cap. Bd. '06 
£187.50 

Hifi 4 Smith 2. Ip 

honrca 7’.% Nts. ‘98 Y72SOOO.O 

NEC 7.1594 Bd. VT Y7150000.0 

NT S T S".% Nts. -96 Y587SG.0 

NKK 5.9% Bd. 97 Y590000.0 

RCO Hldgs. 4.95p 

Sjbte tnt Scr.P Var. Soc. Nts. D8 

Y 5035 1.0 

Sjchan Merchant Bk. FRN ’95 
S077.20 

Sumitomo 694 Bd. -97 Y600000.0 
Sumitomo Metal 5.994 Bd. ‘96 
Y59CC00.0 

Sweden 5 & i9ii Bd. *95 Y56250.0 
Tokyo Land 8.5% Bd. '95 Y42S000.0 
Trafalgar Hwj. 10VK Bd. *06 
£106.25 

Treasury lav.-W 04/08 EG.75 
Vaux Grp 9'.«9a Ob. M5 E4A375 
Do. 10>i% Db. 2019 £5.375 
Do. 11 '4% Db. 2010 £5.875 
1TB Fin. Gtd. Fxd/Fttg. Nts. 02 
S&30D.0 

■ TOMORROW 
Bradslock 1.6p 

Fits Private Fin. Mezz. Asset-Bckd. 

FRN '21 £1722.18 

Do. Snr. Aaset-Bckd FRN *21 

£1376.97 

Mersey Docks 69i% Rd. Db. 96799 
£3.375 

Royal Dutch Petroleum FL3.80 
Scoaisn Lire As. 71%% Un. Ln. 97/ 

Stars 1 A Rig Rate Mtg Bckd. '29 
£127.99 

Treasury BK 2013 £4.0 

■ WEDNESDAY SEPTEMBER 28 
Aegon FL1.30 

Barings Gtd. FRN *01 512.94 
Cheshire B.S. FNg. Perm. kit. Big. 
£38.9922 

On flame InL (Reg) B.7p 

Do. t&n B.7p 


UK COMPANIES 


■ TODAY COMPANY MEETINGS: 
Monydown. Horam VBago Hid. Hamm. 
East Sussex. 12 00 

BOARD MEETINGS: Final* 

■ It . fS I — — ^ — — Pn .. . ■Hu ■ 

Amoa London rraponm 

Ataevs 

Banrtp EnWgfcrtg Eurepa Tet. 

Ctoe Brother* 

Community HoopHafa 
Cornwell Parker 
Enterprise Computer 
Northern Lefeuro 

nCCTyw 

IhIchuol 

Abbott Mead Vickers 
BttanfJ) 

Brant Waflur 

Clarks NtdioCs A Coombs 


Royal Bk. Can. Nth. Am. Fd Ptg. Pt 
$0-04 

■ THURSDAY SEPTEMBER 29 
Chartwood Alliance 71696 Un. Ln. 
1.875p 

Daiwa O'aeas Fin. Gtd. Fltg/Fxd 

Nts. '02 $2421.39 

Formlnster I1.35p 

Fujlta FRN *97 Y686805T) 

Guaranteed Etc. Fin. 125696 Gtd. Ln. 

■02 0.12875p 

Impaia Platinum RG.95 

Italy (Rep. of) FRN *98 $63.89 

Manchester 396 Rd Cons. 75p 

Met Water Chelsea Water. 29496 Db. 

1897 £1.375 

NotTham Water Anns. (£3 SO) £1.75 
Do. (£1.35) £0.675 
Residential Prop. NoS A1 Mtg. 

Bckxt FRN *25 £983.16 
Da Class A2 £1374.80 
Da Class B £1634.42 
Tendring Kindred Water 41696 Rd. 
Db. £225 

Trafalgar Hse. B96 Un. Ln. 94/98 
£4.0 

Do. 91496 Un. lb. 2000/05 £4.75 
Vektra R0.08 

■ FRIDAY SEPTEMBER 30 
Abbey NatL First Cap. Sb. FRN ‘02 
$26.19 

Abbey Natl. Treas. Gtd. Cap. FRN 

•96 £143.75 

Alex & Alex. SO. 025 

Do. Class C 0.02p 

Alexon Cv. PL 3.12Sp 

Allied Textile 4.8p 

AH runt Lon. Props. 9V696 1st Mtg. 

Db. 96/2001 £4.625 
American Cyanarrdd SO. 4625 
Angersteln Underwriting Trust 1.2p 
Anglo Fin. No.1 Mezz. FRN U1 
£1713.57 

Do. Senior FRN 2001 £1387.48 
Da No .2 Mezz. FRN '04 £1515.58 
Do. Senior FRN W £1450.10 
API 3.55% Cm. Pf. 1.925p 
Assoc. Br. Eng. 4.9% Pf. 245p 
Da 8% Cv. Rd. Pt. 4p 
Atlantic Metrop. (UK) 1296 Cv. La 
91/1997 £6 

Audax Props. 11% 1st Mtg. Db.*21 

£5.50 

Automotive Prods. 996 Pt. 4.5p 

Do. 3fc% Pt. 1.75p 

Do. 4.5596 2nd Pt. 2J275p 

Bank fuf Arbeit AG Sub. FRN 2000 

$268.33 

Barrow Hepburn 7.7596 PT. 3.675p 
Bass Invs. 7%% Un Ln 92/97 
£3.6875 

Bass 10%% Db 2018 £5.1875 
Da 10.6596 Db 1996/99 £0325 
Do. 4 YM Un. Ln 1992/97 S225 
Da 794% Un. La 1992/97 £3.875 
Bemrose 7<4% Pf. 2.625p 
Blade & Decker $0,10 
Blue Clrde 516% 2nd Db. 84/09 
£2.875 


Cu/var ttidga. 

Hammerson 
Herald hnr.nL 
Hodder Headbw 
tneheapa 
Jack (WM) 

Lyles (S) 

Matirim 

Refuse 

Schroder Spilt FcL 
T&SStem 
United Indm. 

Untvoraal Cm anriu 

■ TOMORROW COMPANY MEETINGS: 
Assoc. British Cnflk i ee r tn g. Chamber oJ 
Shipping. Carthusian Court. 12. 

Carthusian Street. E.C~ 11.30 
P eve ri e y Qip^ Woodland aange. 
wooaiand Ln. Aimondsbuiy, Bristol, 11 
Farapak, Butchers Ha*. 87. Bartholomew 
Close. EC- 12 
BOARD MEETINGS: 


Boddingtan 496 Perp Db £2 
Boot (H) 5^596 Cm. Pt. Z625p 
Bosoombe Prop 5% 1st Pt 1„75p 
Bowatsr 79696 Cv. Pf. 3.875p 
Bridon 796 Non-Cm. Pf. 1.225p 
Brit Air. Cap- 91696 Cv. Cap. Bds. 
4.888356p 

Brit Amer. Tobacco 596 Pf. l-75p 
Brit Finds 151496 Treas. '98 £7.75 
Do. 71696 Treas. 1998 £3.625 
Da United Kingdom FRN *96 $115 
Brit. Inv. TsL 111696 Sea Db. *12 
£5.5625 

Brit Land 1014% DfcL 1st Mtg. Db. 
19/2024 £625 

Do. 1194% 1st Mtg. Db. 2019/24 
£5.6875 

Da 94496 1st Mtg. Db. -28 £4.6875 
Brixton EsL 1196% 1st Mtg. Db. '18 
£5.875 

Brockhampton 994% Rd. Pf. *96 
4.75p 

Brown (J) 494% Sea Ln. *03 £2.4375 
Da 594% Sea Ln. 2003 £2.8125 
Cable Wireless 7% Cv. Ln. '08 £3.50 
Cap. Counties 696% 1st Mtg. Db. 
93/1998 £3.125 

Da 695% 1st Mtg. Db. 94/99 £3.375 
Churchbiffy Ests 9% Un. Ln. 2000 
£4.50 

City Site Ests 10V4% 1st Mtg Db '17 
£625 

Cl'land Place 5% Rd. Db 2000 £250 
Da 1214% Rd. Ob 2008 £6.0625 
Coats Yryella 4.9% Pf. 2^l5p 
Collateralised Mart. Secs. (8) Mtg. 
Bckd. FRN •ZB £108.02 
C.U. 8%% Cm. Irrd. Pf. 4.1875p 
Cooper (F) 6J«p (net) Pf. 3^5p 
Courtatrids Clothing Brands 714% 
Cm. Pf. ZG25p 

Courtaulds 7%% Un. Ln 2000/05 
£3.875 

Courts (Fum) 5.9% Pf. 2.95p 
Cowie (T) 1014% Cv. Pf. 525p 
Credit Fonder 1496% Gtd. Ln. *07 
£368.75 

DAKS Simpson 5% Cm. Pf. 1.75p 
De Been Centenary Fin. 816% *09 
£5.1308 

Debenhans 616% 2nd Db. 90/95 
£3.125 

Oe La Rue 245% Pf. 1225p 
Drayton Eng. Inti. 894% Pf. £4.4375p 
Do. 514% Pf. 1.925p 
Do. 10%% Ob. '14 £5.3125 
Drummond 8% Pf. 26p 
EFT 0 525p 

Stott (8) 7%% Db. 90/35 £3.625 
Emhart 6% Pf. 21p 
Empire Stories 896% Db. 91/96 
£4.375 

English Scot. Imre. 394% Pf. £1.875 
Ewart 814% Un. La 1990/35 £4.25 
F&C Euro. 596% Cv. Un. La "96 
£28/5 

F&C Inv. TsL 5% PL 1.75p 
Rdettty DtsL Money Fd. AusL Dollar 
AS0JZ94 

Da Austrian Schllfing Sch353d 
Da Caracfan DoBar C$ 0274 
Do. Deutschmark DM0.848 
Da Dutch Gulkter HFL050 


Ftnats: 

Bum Stewart Dbitaara 
China ft Eastern Inv. 
Daring Kbideraley 


MuckJow (A ft J] 

My Kind* Town 

Thornton bw. MngmL 
Menrea: 

Ahum 

Bottle 

Britton 

FotmaOfl 

Henderson Kghlmd Tat 
House ot Fraser 
Hvntlotgti Te ch. 

JBA 

Sears 

Tarmac 


Da Euo Curency Unit Ecu0251 
Do. French Franc FFr1.177 
Da Hong Kong Dollar HK$1. 651 
Da Irish Punt IRBL228 
Da Itatan Lira L520.539 
Da Japanese Yen Y11JJ19 
Da New Zealand Dollar NZ$0,579 
Do. Spanish Peseta Pta63.Q24 
Da Start ng ia2p 
Da Swiss Franc SFtQ.348 
Da Doiar $£L258 
Flrabuy Growth TsL 5% Cm. Pf. 
25p 

Finsbury TsL 5M% Pf. 2B25p 
Firrabury Growth 5% Pf 2.5p 
Fteons 5%% Un. La (MAW £28375 
Forminater T1% Pf. 5J5p 
Fulcrum Inv. TsL 1.4p 
GT Chfle Growth Fd. $0^0 
GWR5^p 

Gartmore Shared Eq. Trust 24p 
Gartmore Value Invs. (L9525p 
GATX $0,375 

Glynwed InB. 1096% Un. La 94/99 

25^375 

Govett Strategic Inv. 11%% Db. *14 
£5.75 

Gracechurch Mort Fm. FRN '19 
£795.13 

Grainger TsL 1196% 1st Mtg. Db. -24 
ESJ75 

Da 10.5% 1st Mtg. Db. 2024 
£26466 

Gt Part Ests 9)4% 1st Mtg. Db. *16 
£4.75 

Do. 1096% 1st Mtg. Db. 2021 £5.375 
GreenaRs 8% Pf. 4p 
Greenhaven Sec 714% Ua Ln. 91/98 
£3.75 

Greon haven Secs. 714% Un. La 91/ 
96 £3.75 

Greycoat Stppd. 1st Mtg. Nts. Apr. 
•02 £15.625 

Haco 10%% Sevl Db. 2017 £5.3125 

Halma 11% Pf. S.5p 

Hampton TsL 1014% 1st Mtg;. Db. 

*25 £525 

Hasdemera Ests 1014% 1st Mtg. Db. 
98/D3 £5.125 

m & Smith 14% 1st Mtg. Db. 2000/ 
03 £7 

IBsco x SecJect Ins. Fund 1 JSp 
Homer Ffa. 3 A1 Mtg. FRN *36 
£149.16 

Da Class A2 FRN 2036 £150.55 
Da Class A3 FRN 2036 £154.05 
Housing Fin Crp 5% Db. 2027 £250 
Do. 7% Db. 2009 C3J50 
Da 7% Db. 2009 (Scr. 2) £250 
Hoyle (Joseph 5% PL l.75p 
Inco Eng. Prods. 11% Db. 96/2001 
E5J50 

Investors Cep. 714% Db. 92^7 
£3.625 

Ivory ft Stme Era. Cep. Stppd Cv. 

Ua Ln. 2000 £2 

Johnson Firth Brown 11.05% Pf. 
5.525p 

Johnston 10% Pf. 5p 
Jones Stroud 10% PL 5p 
Jupiter IrttL Green Inv. TsL 1.7p 
Da UNITS 1.7p 
Kokud KSh.0.75 


Trnrratec 

WensumGa 

tetaCHto 

■ WEDNESDAY COMPANY MEETMGS: 
Bertce (SMnay C). Bedford Mast Kauss 
Hotel, Bedford. 12J30 
Manvter-Swate. Southam Rood. Banbury. 
Oma3.00 
BOARD MEETINGS: 

FmkK 
Ariweet 
P le x or Homee 
DCS 

Frefloiore Eetetae 
Gnqrstono 

Henderson Euretrust 
Ml Date MngmL 
Quayte Uunro 
Regent tens 
Thorpe (FW) 

interims 
Dev. Securities 


Kelsey fads. 11%% Pf. 5£25p 
Kingsley & Forester 3^5% Cm. Pf. 
1.925P 

Kunick 7p Cv. Rd. PL 3^p 
Da 225p Cv. Rd. Pf. 4.125p 
Land Sea 10% 1st Mtg Db 2025 £5 
Da 10% 1st Mtg Db 2027 £5 
Da 6V4% 1st Mtg Db 1893/98 
£3.125 

Do. 9% 1st Mtg Db 1996/01 £4.5 
Da 8% Cv. Bd 2008 £1739 
Da 694% Ua Ln 1992/97 £3.4375 
Da 7% Cv. Bd. 2008 £3J5 
Leigh fats 6% Cv.PfSp 
Lombard Insurance 1.58p 
Lon Cremation 10% Pf. 3£p 
Lon Merchant Secs 10% 1st Mtg Db 
*18 £5 

Lonrho 1014% let Mtg Db 97/2002 
£5.125 
Lookers 2.4p 
Da 8% CV. Rd PL 4p 
Lydenbug Platinum R0.84 
Malaya Grp. 0^5p 
MffC 3.65% Pf. 1325p 
Da 994% 1st Mtg Db 97/02 &4.8TC 
Da 12% 1st Mtg Db 2017 £6 
Da 8% Ua La 200CTO5 £4 
Msrston Thompson 7% Ua Ln 93 1 
98 £35 

McCarthy Stone 7% Cv. Ua Ln 99/ 
04 £3Ji 

Mercuy Keystone Inv. TsL 5% 1.75p 
Moriand 5% Pt 1.75p 
Muddow (A&J)13W% 1st Mtg. Db. 
2000/05 £8.625 

NatWest SmaOer Cos. Inv. TsL 23p 
NEC Carp 59i% Cv. Bd*96 £28.75 
NEC Finance 10%% Db.'16 £5^125 
Do. 13%% Db. 2018 £6.8125 
Nftfl) Dfd InL Mtg. Bckd FRN *28 
£114.40 

NHL(3) A1 DfcL fat Mtg. Bckd FRN 
“36 £150.55 

Da A2 FRN 2038 £154.05 
NK Properties Linked UNITS R0 l 338 
New Throgmorton TsLf83) 12.6% 

Dawfiaso 

N ewcastle-upon-T yne 1114% Rd 
2017 £5.625 

North Devon Water Board 4% Rd 
1996 £2 

Northern Telecan $0-09 

Oldham Met Boro. Cowdl 12.4% 

Rd.^ £020 

Oliver 5V.% Pf. 2-625p 

Orient Fh. 8% £/S Payable Cv. Bd 

■95 £40 

P A O Prop. 8% Ua La 97/69 £4 
Peel S-E 8%% Ua La 87/97 £4.125 
Petrdeos Mex. 14%% La *06 E7J2S 
Plantation & Gen. Inv. 12% Cv. 

Ua*01 £8 

Portsmouth Water 10%% Rd Db. 

"96 £5.3125 

Da 3% Perp. Db. £1 J33 
Da 3%% Peep. Db. £1.75 
PUBCO 11%% Sev. Db. 2006 
£5.625 

Ramsdans (Hony) Ip 

RTT Cap. Part. 2%% Cv. Ua La 

2000 £1^5 

Readout fad 6% Pf. 1.05p 


Erth 

Global Grp. 

Graanacra 

McOtmei Mo Systems 
Now Throgaiorten TsL (198 St 
OurfBySoftwear 
Rubarotd 

Unkdwm 

■ THURSDAY COMPANY MEETMGS: 
Bteek Arrow, 748. London Road, 
HemeSo*. MUdJanx. 12 
CRT Grp, Eosttws Hsl. ETsm. Wftnl 12 
Govatt Emwgfafl MMa Inv. Tet, 4, 

Battle Bridge Lww. ELE.. 1230 
HadMgh Indn. NoroW Hotel. Iprrmch. 1 
jKwioa Vert, 23, PuMbere Row. E. 10 
ou ML, 1-11. Hay Hi, Berkeley Square, 
W.. 10 

Plfca Hdgs, Snmoyiands HotdL 
Stanrwytands Hoad. Wlmrfow, Cheahira. 
030 

Ptedgnun, 20. GmanMd. Roystoa 


Da 594% 2nd Pf. 2-0125p 
Reddtt Cofawn Cap Ffa. 9V4% Cv. 
Bd. *05 4.75p 

RenoU 694% 1st Db. 90/95 £3 J37S 
Rights Issues Inv. TsL Z5p 
Rhrer Mere. TsL 8%% Db. 89/94 
£4.25 

Boyd Bk Can. Fftg. Rate Db. "05 
$27.08 

Royal Bk Scotland Ser. A Pf. 
$0.703125 
Da Ser. B PL $0.70 
Da Ser. C Pf. S 058375 
SL David's Inv. TsL 3p 
Sc an l r o ni c 594% Cv. Rd Pf. 2J75p 
Scholl 5%% Cv. Rd Pf. 06/11 
3JB2Bp 

Do. 894% Sea PL 2001/05 4w4375p 
Schroder Spit Fd l^p 
Scot Mod & TsL 8-14% Stppd InL 
Db. *20 £7 

Scot N^. TsL Stppd. Pf. 3£50238p 

Da 10% Db. 2011 £5 

Seagram $0.15 

Secuncor CL805p 

Do. A Non-vtg. Q.0G5p 

Da 455% Cm. Ptg. PL 21.175p 

Sea TsL of STand 4W% Pf. £1^75 

Da 12% Db. 2013 £6 

Security Services 1-686p 

Soreo 1^5p 

Shaftesbury 8^% 1st Mtg. Db. 'TA 

£4.8904 

She# Trans. 554% Cm. 1st Pf. 

1J25p 

Sriirea High Yielding Smaller Co's 
TsLI^p 

Shires Inv. 11% Cv. Da La 03/04 
£5Jj 

Shoprite 0.6p 

600 Groiv 3.15% Pf. 1^75p 
Da 4^5% 2nd Pt. 2^75p 
Da 11% Ua Ln. 1992/97 £5.5 
Smith New Court 12% Sub. Un. La 
*01 £6 

Smith SL Aubyn 6% Pf. 2.1p 
Da 9%% 2nd Pt. 4.75p 
Smith (WH) 5%% Pf. 2£75p 
Da 394% Pf. 1^75p 
SA Breweries 6L2% PL R0TK2 
Stag Furniture 11% Pf. 55p 
Standard Chart 12 54% Sb. Ua La 
02/07 £04375 

Staveley fads 594% Pf. 1.8375p 
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Wbread 4%% Rd Db. 99/2004 £Z25 
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1 





ARTS 

LONDON WEST END 


Chicago's Hove! Georgs: Tii&^rs. v.lrr :ho second 
'naif. ■'rerestrciVj", ;o:ninn •: -r r-.-n^rtcry 1 r c rr. - 

Tnyrsday. Ar.ulhsr product'-on o? .'/i^T-nniuir -ecen'l/ j 
opened at A'.isna s Ai;.ance Theatre; San Frar Cisco’s Eir.r.irpi'S!- r July as "rreciiC 
Arrsncan Conservatory 7r>= onens ::s version of 
So: 5 - ivav.cs cn October 12 , v.ivlt Houston’s Ai'ey : 

Theatre ieunches its Angels next spri.nc. 


BARBICAN LONDON 

' seascn -it the Pithrg high on ire tU'Daient seas of London's crcnes;n:l 
Vcr.K Ufa, t he London Symphony Crsh-esfrr. ceicbratts its *Sth 

no”, greeted :n b-rrhcae :n Tats fettle inis v.*oc>- A cp!?. concert on Thursday 

at its to raise money for its Endcwr.sr.: Furd brines together 

don at the 'stand Theatre ffc-morty three cc-a-t :c-c v.to are especially close to the orchestra, 
ynlty' cn Wednesday. An cINoieck Michael Tiiscn Tiverras ite’o-A). Cohn Dc-.v.s .and tvftsisiav 
•.fic-Ga'ib'osah music, a Centscsan Rostrcpovdah. its Lvj Mahler festival under Tiiscn Thomas’ 


cent. nuc'S vhth the Second Semohcnv on Tier.: 


and lyrics; S'ecl yr: Flahe.-ty ;h = r:-.:c..o. 

NEW YORK 

Dc-mingc m -uc-cir.i's T tabarro" end 
Asa. aoci” Don'.'iiny ;;’sc- stars in .‘.’orartH- 






v 


vt 



GOTHENBURG 

Sweden’s second ai-sge-st city celebrates the opening of a 
new opera house cn ,-r:c'=.y. Bu.lt to reoi.se? the small, 
anticuavad Grand Theatre, the r.aw SCDrn herocursice theatre 
•o the 'eS'jlt of decodes of political wrar.giir.g ever she and 
cost. The first three ri ghts are gala performances feaiurirg 
ir-gvar W.xe: ! and other extinguished Swedish sirgere. The 
firs: rc.v production is Siomqahl'o 1955 epera Arusrci, 
peering on October to. 

PARIS 

The mar. autumn exhibit-on is devotee to Pcjssir. marking 
;he AOOtn anniverscry of his b rth. It Snr-.gs tegetr-.er 140 
drawings end ICO pcrtrcc. including the two sets cf Seven 
Sacraments and some of Pc-ussm's ires: paintings cn 
classical arid b cl, cal rhemes. The shew opens at the Grand 
Palais c-n Saturday, one tv.il move to the Royal Acacc-my in 
London early next year. 


& 


will 


Concert/David Murray 


Brindisi, ten years on 


N ext year cash from 
Britain's national lottery 
will start to feed through 
to help the arts and 
usher in a new cultural golden age. 
That is the scenario. The reality 
could be that the arrival of the lot- 
tery will signal the closure of many 
arts organisations in the UK, in par- 
ticular those whose survival 
depends upon getting lottery 
money. If their bids are unsuccess- 
ful, they will see little point in 
struggling on. 

Almost daily, redevelopment 
plans are announced that are 
totally dependent on the lottery. 
This month alone in London the 
Riverside Studios launched a £&3m 
appeal; the ENO a £40m-plus refur- 
bishment programme; and the ICA 
a £25m drive next year. 

These are on top of the Royal 
Opera House and the British 
Museum, both of which are think- 
ing big: £lOOm or so; the South 
Bank, with £65m; Albertopolis at 
£15Qm - and on and on. Some of 
these started out as millennium pro- 
jects but they are already hedging 
their bets and winking at the Arts 
Council's lottery department, which 
is bracing itself to receive up to 
30,000 applications when the flood- 
gate opens on January 1. 

In theory, with predictions of 
£15Gm a year for the arts from the 
lottery at the start, rising to £320m, 
there will be plenty of money to 
spread around- In practice, too 


To some it could mean a golden age, to others extinction. Antony Thomcroft reports r j^ 


many aits companies will seek help 
immediately, and some wOl have 
their plans rejected. It might be bet- 
ter to delay an application for aid 

One reason why the Arts Council 
lottery satraps will turn down a 
supplicant is that they do not 
believe in the feasibility of its devel- 
opment plan. In theory arts compa- 
nies must find some matching 
money through their own efforts: 
from local authorities, business, and 
private philanthropists. At one time 
the government hoped for 50:50 
deals but the likelihood of conjuring 
up £150m a year from friends of the 
arts is obviously nonsense. 

The Arts Council is already lower- 
ing its targets, to 35 per cent self- 
generated funds for large organisa- 
tions, even less for smaller, but it 
would still be be remarkable if 
many arts companies could raise 
such sums. Many will fall at this 
hurdle. 

Where will the self-generated 
money come from ? Business is the 
obvious answer, but companies will 
not want to scatter their funds 
around. Boards might choose to 
support just Covent Garden or the 
National Theatre's modest £4m 
appeal, or that of a local theatre or 
arts centre. There is also the real 
danger that if they do rally round 
the arts on these capital projects 
they will cut back on their sponsor- 
ship of p e r fo r m ances, on harking a 
new opera production or concert 
tour. 


Rather belatedly, other companies 
are starting to realise that there 
must be money to be made from 
these vast new lottery expenditures. 
Accountants Moore Stephens has 
been quick off the mark in forming 
an arts and heritage group under 
Stephen Clarke which will advise 
arts companies on how they can 
best organise themselves to take 
advantage of lottery revenues. The 
Almeida, the Young Vic and Strat- 
ford East have been advised on 
their management and financial 
practices, and Moore Stephens is 
also helping the Lowry project in 
Lancashire come up with a business 
plan. 

The feeling is that the private sec- 
tor will only help arts companies 
with substantially more money if 
there is some commercial advan- 
tage for them. The government is 
unlikely to offer tax breaks, so per- 
haps arts organisations themselves 
could come up with some profit- 
sharing fyh emp fl 

The obvious example is brewers 
weighing in with cash for redevel- 
opment in return for bar and cater- 
ing concessions in refurbished 
buildings. Computer companies 
might also help if rewarded with 
the task of modernising the box 
office system. Foreign touring by an 
arts organisation could interest a 
corporate supporter keen to open up 
contacts in export markets. 

Alternatively, companies might 
be attracted by the idea of deben- 


tures (which famously got the 
Albert Hah built), or guarantees of 
free tickets for their workforces, or 
having the new building cany a 
company name (like the Toshiba 
link with the ICA announced this 
week), or space in the theatre or 
opera bouse set aside for corporate 
use. The new £42m Royal Armories 
In Leeds has attracted money from 
companies like 3i and Yorkshire 
Electricity which feel tbat the 
museum, and the surrounding com- 
mercial developments, could be 
profitable. 


N o one imagines that the 
financial return from 
f undin g arts regenera- 
tion will be anywhere 
near usual business targets. But if 
directors and shareholders nan con- 
vince themselves that they are get- 
ting something In return for their 
cash they might accept their wider 
responsibilities to the community 
and to the cultural life of the 
nation. 

One of Stephen Dorrell’s first 
tasks as heritage minister will be to 
devise ways in which the private 
sector can be encouraged to invest 
in this great arts building boom. 
The alternative is for the guidelines 
to be ignored and the lottery cash 
go to the worthy and the unworthy 
in the form of almo st 100 per cent 
re-building grants, plus the essen- 
tial endowment fluids. For when the 
splendid new buildings do emerge. 


the cost of staffing them, and filling 
them with plays, music, and art 
worthy of the setting, will have to 
come from somewhere. 

One thing already seems obvious: 
Uie larger organisations will have a 
head start over the smaller, not 
only because they are more com- 
mercially sophisticated but because 
they can call on more influential 
names to bead their appeals. One of 
the incidental joys of the whole pro- 
cess will be to see how them* gran- 
dees perform as fund-raisers. 

Will that scion of the great and 
the good. Sir Claus Moser, who 
heads the British Museum’s ambi- 
tious £l00m redevelopment plan 
(Princess Margaret is patron) steal a 
march over ex-Tory party money 
man Shaun Woodward, who is mas- 
terminding the ENO capital p reject 
and is married to a Sainsbury. Now 
is the time to nab your mover and 
shaker. 

It could all end in tears. There are 
some who do not believe that these 
vast new sums will emerge from 
thin air. What if the lottery is a 
disappointment and the British pub- 
lic sticks to gambling on the horses 
and the football pools. Last week, 
John Major nailed his colours to the 
lottery mast. If the lottery does not 
provide the anticipated cash, opti- 
mists expect the government to 
make it work with tax breaks or 
lavish endowment funding. Pessi- 
mists, however, fear that it might 
all end it tears. 


T hough it has reached its 
10th anniversary, the mem- 
bers of the Brindisi String 
Quartet are still quite 
young. Without making any great 
splash along the way. it has become 
known among aficionados of the 
medium as one of Britain's best 
quartets. It played at the Wigmore 
Hall on Thursday. 

Expert, judicious, selflessly intent 
upon the music and respectful of 
the great performing tradition: thus 
for, one might suspect that the play- 
ers listen to other people’s record- 
ings more than is good for them. 
But they also make a point of 
playing 20th-century music, often 
new works, and in the classics - 
like Schubert's C major Quintet this 
time, with Anthony Pleeth as sec- 
ond cello - their “standard" read- 
ings are lit by the imm ediate grace 
ami conviction of their playing, and 
tike lively balance of their collective 
sound. 

In the Schubert masterpiece, 
every major point in living, breath- 
ing sound was registered; radical 
new insights would have been 
superfluous. Alban Berg’s op. 3 
Quartet, however, demands commit- 
ted individual imagination from 


each player, and it got that in Lull 
measure, reinforcing my conviction 
that this early-ish Berg work is one 
of the se mina l - and most com- 
pletely realised - quartets of our 
century. Even its most consciously 
outre effects have an exact expres- 
sive sense, which the Brindisi team 
regularly sought and found. 

It also revived the 1931 Quartet by 
the American Ruth Crawford See- 
ger (wife of Charles, mother of Pete) 
to bracing effect. Ms Seeger, who 
died in 1953. was a rigorous but 
highly inventive composer before 
she sacrificed her career to her hus- 
band's musical interests. Her Quar- 
tet tingles with spiky ideas, sharply 
carried through. In a feminist 
canon, it deserves a place alongside 
Elizabeth MacConchy's and Sofia 
Gubaidulina's quartets. 

The Brindisi's first violin is a 
woman, as It happens: Jacqueline 
Shave, almost the only female 
leader of any established quartet. 
She is the Ideal prima inter perns - 
a democratic part-player among the 
other three (another woman and 
two men), yet she wields quiet 
musical authority whenever the 
score needs a do minan t voice. We 
could do with more like her. 



Pie in the sky or a viable proposition? The Riverside Studios £3.3m redevelopment plan* one of a flood of arts bids for National Lottery cash 


Opera in Zurich/Andrew Clark 


Mascagni’s ‘L’amico Fritz’ 

T here are no prizes for nam- his tenants. The vineyard is 
ing the composer of Caved- returned as a wedding present, and 
leria Rusticana. But what all live happily ever after, 
other operas did Pietro The gentle colours and Idyllic set- 
Eascagni write? He completed Cav ting of L amico Fritz have more in 
i 1889 at the age of 26, and spent common with La Sarmambida than 
is remaining 55 years trying to verismo and, like the Bellini, it 
rnulate its success. The compare- depends on a first-rate cast, a sensi- 
ve failure of his other works has five stage director and supportive 
tven him the reputation of a one- conductor. 

?era composer. The Zurich Opera duly obliged. 

Now comes a production of L'a- The production was staged in 
ico Fritz which suggests that Mas- nearby Winterthur, as part of a 
igni’s talents went further. The campaign to make the canton of 
urich Opera has brought together Zurich (rather than the city) respon- 
i internationally-established tenor sibie for funding the Zurich Opera 
id soprano from Italy, Vincenzo House. There was no drop in stan- 
a Scola and Daniela Dessi, and dard for the out-of-town venue, 
amed their performances in a As Fritz, La Scola hit every note 
aging which is pretty but never confidently and stylishly, without a 
sntimentaL The result is an even- trace of false emotion. The Italian 
ig of pure charm. tenor's performance was poetic, cap- 

Mascagni was aware that some hiring the shift in character from 
ides ascribed the runaway sue- misogyny to self-doubt and open- 
ss or Cav to the stark realism of hearted emotion. 

J libretto. For his next opera, be He found a radiant partner in 
‘liberately chose a weak subject - Dessi's Suzel. She may not be the 
rustic comedy set in Alsace - in bambino of Fritz's description, but 
der to hi ghli g h t his gifts as a com- she was comely and demure, and 
ser. The big surprise of L’amico her classic iirico spinto soprano 
ritz is how familiar the tunes are. sounded in peak condition. There 
There is an abundance of pastoral was strong support from the rest of 
mosphere, enriched by folk mel- the small cast, particularly Stefania 
ty. an off-stage chorus and instru- Kaluza in the trouser role of Beppe. 
ental lines or disarming grace. Grischa Asagaroff’s staging, 
ie whole opera - only 90 minutes designed by Marouan Dib and Jan 
has a consistency of Inspiration Skalicky, was admirably clear, but 
buch more than compensates for too brightly lit 
e flimsy plot. The Winterthur orchestra thrived 

Fritz is a wealthy, middle-aged on Manfred Hbneck’s direction. And 
ichelor who offers his vineyard to despite its modern, concrete appear- 
e local rabbi as a wager that he ance, the Theater am Stadtgarten 
111 not marry. He promptly falls in contributed a pleasantly warm 
ve with Suzel, daughter of one of acoustic. 


T here are no prizes for nam- 
ing the composer of Caved 
leria Rusticana. But what 
other operas did Pietro 
Mascagni write? He completed Cav 
in 1889 at the age of 26. and spent 
his remaining 55 years trying to 
emulate its success. The compara- 
tive failure of his other works has 
given him the reputation of a one- 
opera composer. 

Now comes a production of L’a- 
mico Fritz which suggests that Mas- 
cagni’s talents went further. The 
Zurich Opera has brought together 
an internationally-established tenor 
and soprano from Italy, Vincenzo 
La Scola and Daniela Dessi, and 
framed their performances in a 
staging which is pretty but never 
sentimental The result is an even- 
ing of pure charm. 

Mascagni was aware that some 
critics ascribed the runaway suc- 
cess of Cav to the stark realism of 
Its libretto. For his next opera, be 
deliberately chose a weak subject - 
a rustic comedy set in Alsace - in 
order to highlight his gifts as a com- 
poser. The big surprise of L’amico 
Fritz is bow familiar the tunes are. 

There is an abundance of pastoral 
atmosphere, enriched by folk mel- 
ody, an off-stage chorus and instru- 
mental lines or disarming grace. 
The whole opera - only 90 minutes 
- has a consistency of inspiration 
which more than compensates for 
Hip flimsy plot. 

Fritz is a wealthy, middle-aged 
bachelor who offers his vineyard to 
the local rabbi as a wager that he 
will not marry. He promptly falls in 
love with Suzel daughter of one of 


International 

Arts 

Guide 


■ BERLIN 

OPERA/DANCE 

Deutsche Oper The main event this 
week is the first night on Wed of 
John Dew's new production of 
Andrea Chenier, conducted by 
Rafael Fruhbeck de Burgos, with a 
cast headed by Lisa Gasteen, 
Richard Margison and Alexandru 
Agache. Repertory also Includes Un 
ballo in maschera, Der 
Rosen kavaller. Fldelio and a 
Balanchine programme (341 0245) 
Stoats oper unter den Linden A 
new production of Rossini's 1813 
Ferrara version of Tancredl can be 
seen on Wed. Sat and next Tues. 
conducted by FaDio Luisi and 
staged by Fred Berodt. with a cast 
headed by Jochen Kowalski and 
Lynne Dawson. The Venice version 
of the same opera follows on Oct 6, 
with a different cast Repertoy also 
includes the Nureyev production of 
Glazunov's ballet Raymonds (2 DO 
4762/2035 4494) 

CONCERTS 

PhUharmonle Tomorrow: Plenre 
Boulez conducts Ensemble 
InterContemporain in works by 


Webern, Boulez and Ligeti. Wed, 
Thurs: Boulez conducts Berlin 
Philharmonic Orche s tra and BBC 
Singers rn Webern and Stravinsky 
(the BPO goes on tour to Japan with 
Claudio Abbado Oct 6-15. Its next 
Berlin concerts are Oct 21. 22 and 
23). Sat: Berlin Oratorio Choir In 
Dvorak's Mass in D. Sun morning: 
Michael Schoenwandt conducts 
Berlin Symphony Orchestra and 
Philharmonic Chorus in Beethoven's 
Ninth Symphony. Oct 4: Anne 
Sophie Mutter. Oct 5: Jessye 
Norman. Oct 6: Alfred Brandel (2548 
8132) 

Schauspielhaus Thurs, Fri, Sat, next 
Mon afternoon: Michael 
Schoenwandt conducts Berlin 
Symphony Orchestra and 
Philharmonic Chorus in Beethoven’s 
Ninth Symphony (2090 2156) 

■ NEW YORK 

OPERA/DANCE 

MetropoGtan Opera The 1994-95 
season opens tonight with a gala 
performance starring Placido 
Domingo in Puccini's n Tabarro 
and Luciano Pavarotti m 
Leoncavallo's 1 Pagiiacci. Teresa 
Stratas and Juan Pons sing in both 
operas, which are conducted by 
James Levine. Tomorrow, Sat 
afternoon: La boheme. Wed: 
Rigoletto. Fri: II tabarro and I 
pagiiacci with Luis Lima and 
Pavarotti. Sat evening: tdomeneo 
with Domingo (repeated Oct 4, 7. 

10). Next week's performances 
include Tosca with Pavarotti. The 
first new production Is 
Shostakovich's Lady Macbeth of 
Mtsensk. opening Nov 10 (362 6000) 
State Theater New York City 
Opera’s autumn season runs till Nov 


20. This week's performances are 
daily except tonight and Thurs, and 
feature Delibes’ Lakmd, Borodin’s 
Prince Igor, II barbiere di Sivfglra, 
Carmen and Tosca Prince Igor Is a 
new production conducted by Guido 
Ajmone-Marsan and choreographed 
by Damian Woetzel of New York 
City Ballet (870 5570) 

CONCERTS 

Carnegie HaH The new season 
begins on Thurs with a gala concert 
featuring the Academy of St Martin 
in the Reids in a Mozart, Rossini 
and Berfloz programme, conducted 
by Neville Marriner, with mezzo 
soloist Cecilia Bartoii. Marriner also 
conducts Elgar and Tchaikovsky on 
Fri, with violin soloist Lefla 
Josefowicz. Sanford Sylvan gives a 
song recital on Fri in Weill Recital 
Hall. Valery Gergiev conducts the 
Kirov Opera Orchestra on Sat 
evening and Sun afternoon, in two 
programmes Including 

Shostakovich's Eighth Symphony 
and Rakhmaninov’s Second (247 
7800) 

Awry Fisher HaH Kurt Masur 
conducts the New York 
Philharmonic’s concerts this week 
and next Tomorrow: Weber, 
Schubert and Bartfrk. Thurs, Fri 
afternoon. Sat, next Tues: DvoMk 
and Prokofiev (875 5030) 

THEATRE 

• Philadelphia, Here I Come!: 
Roundabout Theatre Company's 
revival of Brian F riel's 1966 Irish 
drama, with Milo O'Shea, Robert 
Sean Leonard. Jim True and Pauline 
Flanagan. Directed by Joe Dowling 
(Roundabout, Broadway at 45th St, 
869 8400) 

• Three Tall Women: a moving, 
poetic play by Edward Albee, 
dominated by the huge, heroic 


performance of Myra Carter. She, 
Jordan Baker and the droll and 
delightful Marian Seldes represent 
three generations of women trying to 
sort out their pasts (Promenade, 
2162 Broadway at 76th St 239 
62°°) 

• Angels In America: Tony 
Kushnerts two-part epic conjures a 
vision of America at the edge of 
disaster. Part one is Millennium 
Approaches, part two Perestroika, 
played on separate evenings. The 
cast includes F. Murray Abraham 
(Waiter Kerr, 219 West 48th St, 239 
6200) 

• King Ubu: Paul Todaro directed 
and stars In this production of 
George Rand's deft new translation 
of Alfred Jarry's firKfe-siede satire. 
The Independent Theatre Company 
gives a diverting and campy spin to 
the nasty, low-down goings-on. Till 
Oct 8 (House of Candles, 99 Stanton 
St. 353 3088) 

• An Inspector Calls: JJ3. 

Priestley’s 1945 mystery In a 
stunning re- interpretation by 
Stephen Dal dry, first seen at 
Britain's National Theatre 
(RoyaJe. 242 West 45th St, 

239 6200) 

• Guys and Dolls: a top-notch 
revival of the 1950s musical 
about the gangsters, gamblers and 
good-time girls around Times 
Square (Martin Beck. 302 West 45th 
St, 239 6200) 

• Kiss of the Spider Woman: pop 
star and ex-Miss America Vanessa 
Williams has taken over the title role 
in the long-running Kander and Ebb 
musical directed by Harold Prince 
(Broadhurat, 235 West 44th St, 239 
6200) 

• Crazy For You: Gershwin's tunes 
and Susan Stroman's choreography 


are the central pleasures of this light 
and frothy entertainment, now In its 
third year on Broadway (Shubert, 
225 West 44th St, 239 6200) 

■ PARIS 

CONCERTS 

Myung-Whun Chung conducts the 
world premiere of Messiaen's 
Concerto for four solo instruments 
and orchestra tonight at the SastiBe, 
with soloists including Mstislav 
Rostropovich, Heinz Holliger and 
Yvonne Loriod (4473 1300). Zoitan 
Pesko conducts the Orche s tra 
Phflharmomque de Radio France on 
Sat at Maison de Radio France in 
works by Ligeti, Kurtag and 
Jandfiek, with soprano Phyllis 

Bryn-Julson (4230 1516). The next 
Orchestra de Paris concerts at Salle 
Pleyel are on Oct 5 and 6, when 
Semyon Bychkov conducts Mahler’s 
Fifth Symphony (4563 0796) 

OPERA 

• The opening production of the 
season at the Opera BastDIe is 
Simon Boccanegra, conducted by 
Myung-Whun Chung and staged by 
Nicolas Brieger. with a cast headed 
by Vladimir Chernov, Kalian Esperian 
and Roberto Scandiuzzi (next 
performances Fri evening and Sun 
afternoon, continuing tiH Oct 14). 

Bob Wilson's version of Madama 
Butterfly is revived on Thurs with 
Miriam Gaud in the title role, with 
nine further performances tiH Oct 22 
(4473 1300) 

• The new Ring production at the 
Chatelet continues with Siegfried on 
Oct 14 and GfltterdSmmerung on 
Oct 16- There wifi be two complete 
Ring cycles between Oct 31 and 
Nov 13 (4028 2840) 

DANCE 


• One of France’s leading young 
choreographers. Philippe Decouftt, 
is in residence with his troupe daily 
till Thurs at Theatre de la Ville (4274 
2277) 

• The Paris Opera Ballet’s 1994-95 
season takes place mainly at the 
Op6ra Bastille. It opens on Oct 25 
with the traditional Grand D6fH6, 
followed by Balanchine’s Le Palais 
de cristal (Symphony in C) to Bizet, 
The Four Temperaments to 
Hindemith and Jerome Robbins' 
Glass Pieces to Philip Glass (12 
performances till Nov 17). The 
season also Includes a young 
dancers programme, Nureyev’s 
Swan Lake, a mixed bill including 
works by Balanchine and Martha 
Graham, John Neumeier's 
Magnificat and a NIJinska-Nijinsky 
programme. (4742 5371) 
JAZZ/CABARET 

American vocalist Artie “Blues Boy” 
White and his band are In residence 
this week at Lionel Hampton Jazz 
Club. Oct 3-15: blues singer/guitarist 
David Dee. Music daily from 
10.30pm to 2.00am (Hotel Meridian 
Paris Etoile, 81 Boulevard Go avion 
St Cyr, (4068 3042) 

FESTIVAL D’AUTOMNE 
The programme includes Peter 
Stein's Moscow staging of the 
Oesteia (Oct 9-15), a Bob Wilson 
adaptation of Dostoyevsky (Oct 
11-23). Robert Lepage’s Seven 
Streams of the River Ota (Nov 
18-26) and The Merchant of Venice 
directed by Peter Sellars (Dec 6-17). 
The dance programme Is headed by 
Trisha Brown Dance Company (Nov 
3-12), and there is a special focus 
on the music of Gyorgy Kurtag 
(Festival d'Autorrme d Paris, 156 rue 
de Rhroli, 75001 Paris. Tel 4296 
1227 Fax 4015 9288) 


ARTS GUIDE 

Monday: Berlin, New York and 
Paris. 

Tuesday: Austria, Belgium, 
Netherlands, Switzerland, Chi- 
cago, Washington. 
Wednesday: France, Ger- 
many- Scandinavia. 

Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Central European Time) 
MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Euronews: FT Reports 0745, 
1315, 1545, 1815, 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Repots 1230 

Sky News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Reports 0430, 
1730; 


X 








FINANCIAL TIMES MONDAY SEPTEMBER JO 


Samuel Brittan 


Economics without 
crystal gazing 



The most 

r '-’V hard-nosed 
financial com- 
mentators 
should have sat 
up and taken 
notice when 
Prof David Cur- 
rie, head of the 
London Business School fore- 
casting unit, recently 
suggested a policy objective for 
nominal GDP as an improve- 
ment on the present CJK policy 
framework, which supposedly 
targets inflation and nothing 
else. 

Prof Currie has, in the past, 
been a Labour adviser whose 
name has been mentioned in 
relation to top official advisory 
jobs. Of course be is not the 
only influence on Labour pol- 
icy; and the new Labour 
leader. Tony Blair, is far from 
a sure shot for the next elec- 
tion. But it is still surely 
worthwhile to take note of Cur- 
rie's suggestion, as well as of 
what the bond market is sup- 
posed to “think”. In fact, the 
arguments for a nominal GDP 
framework speak for them- 
selves. irrespective of politics; 
and the governor of the 
Banque de France, Jean-Claude 
Trichet. recently used the con- 
cept in discussing economic 
developments in his own coun- 
try. 

Prof Currie argues that a 
nominal GDP objective would 
be a good compromise between 
an output objective and one for 
inflation alone. There are 
many other arguments and 
nuances {some of which were 
given in my Economic View- 
point of September 8). The one 
that is most relevant now is 
that it makes policy a little less 
dependent on being able to 
project the course of the econ- 
omy for several years ahead 
than the present Treasury and 
Bank of England framework 
does. 

It will be a sign that nominal 
GDP is taken seriously when 
analysts go beyond debating 
the concept and start looking 
at the numbers. 

The Central Statistical Office 
gives two versions or nominal 
GDP - at market prices and at 
factor costs. (The latter 
excludes indirect taxes and 
subsidies.) The market price 


UK GDP in recession 
and recovery* 

1990=100 



94U 


1980 91 

- Ai factor coot 

SouearCSO 


az 83 
- Saoood quattr 


measure shows an increase of 
5.8 per cent over a year ago: 
the factor cost one of 5.7 per 
cent - identical for practical 
purposes. The more fundamen- 
tal factor cost estimate breaks 
down into a 33 per cent real 
rise in output and a 13 per 
cent increase in prices, as mea- 
sured by the GDP deflator. 

Is a 5% to 6 per cent annual 
rate of increase of GDP in cash 
terms too fast or too slow? If 
the policy were starting with 
output on its trend line and 
with minimum inflation, a 5 
per cent objective would be 
appropriate. There would be 
room for 2'/* per cent output 
growth and 2 Vi per cent mea- 
sured inflation. (The latter 
would reflect hidden quality 
adjustments as well as 
acknowledging the difficulty of 
achieving literally zero infla- 
tion at short notice). But when 
an economy is still emerging 
from a severe recession an 
annual nominal growth of up 

to 6 per cent per annum is 
surely not too fast 

Unfortunately analysis can- 
not end here. For the growth of 
GDP - both nominal and real - 
has been swollen by a bulge in 
the erratically moving output 
of the North Sea sector. Indeed, 
when it suited its book, the 
Treasury was very keen to 
emphasise non-oil GDP. We 
know from the CSO estimates 
that real GDP. mting oil, 
rose in real terms not by 33 
per cent but by 3 2 per cent in 
the year to the second quarter 
of 1994. The CSO does not pub- 
lish estimates for nominal GDP 


excluding oil; do-it-yourself 
arithmetic suggests that it rose 
by just over 5 per cent - 
which surely will be slow 
enough to satisfy the cautious 
sciuul- 

Even now we are not yet in 
clear water. The true best 
objective for a nominal policy 
framework is not nominal GDP 
itself, but a related measure 
called domestic expenditure. 
This is only available at mar- 
ket prices and includes aiL It 
has risen less than the GDP 
measure because it excludes 
net exports (that is exports 
minus imports) which have 
been on an improving trend. 
Indeed, the main reason for 
focusing on domestic expendi- 
ture is that it leaves room for a 
balance of payments improve- 
ment without making that 
improvement an objective of 
policy. 

Thus the more national 
income figures are examined 
the more the economy seems 
to be on a steady-as-she-goes- 
path. But it would be far too 
mechanical an application of a 
way of thinking , intended for 
broad policy guidelines, to go 
from here to denounce the 
recent half per cent rise in 
base rates. Looking at the 
whole world economy, includ- 
ing commodity prices and 
exchange rates, the balance of 
risks favoured a modest 
increase. If we look at the CBI 
monthly trends survey, this 
ShOWS tha t, despite tha small 
temporary blip in September, 
the rise in output is expected 
to accelerate and that the 
efforts of firms to increase 
prices are also slightly stron- 
ger. Both forces make a modest 
acceleration in aggregate 
spending seem more likely 
than a deceleration. In addi- 
tion. future revisions of 
GDP growth rates are more 
likely to be upwards than 
downwards. 

If the Rank of England wants 
to avoid excessive reliance on 
futurology, it will pause before 
pressing for further base rate 
increasses. Instead, it might 
try its hand at producing 
rough trend lines for no minal 
GDP and related variables in 
more timely fashion than the 
omdal national income fig- 
ures. 



It was with a 
sense of relief 
and achieve- 
ment that min , 
isters and trade 
officials from 
Dpn . m „. around the 
worl( * signed 

— the agreements 

of the Uruguay Bound in Mar- 
rakech five months ago. Seven 
years of difficult and often 
tense negotiations were 
rewarded by a global commit- 
ment to protect and continue 
nearly 50 years of successful 
multilateral trade policy. 

The stakes were, and remain, 
huge. Trade has been the most 
powerful engine of economic 
growth since the second world 
war, driving a global increase 
in output and incomes. The 
resulting unprecedented pros- 
perity - although it still eludes 
many in developing countries 

- frag been Crucial tO maintain. 

ing the longest period of peace 
known to much of the world. 

Trade is a central force in 
boosting economic activity, 
employment and welfare. It is 
the cornerstone in the increas- 
ingly complex economic inter- 
actions among the industrial 
countries and between these 
countries and others. 

The states of eastern Europe 
and the former Soviet Union 
have shown courage in enter- 
ing upon economic transition. 
To support their commitment 
to market principles, these 
countries need secure and 
expanding outlets for their 
products. They also need for- 
eign investment which will 
only materialise if - and to the 
extent that - export opportuni- 
ties are available. 

In Latin America, Africa and 
parts of Asia and the Pacific, 
countries which have bravely 
worked to open their econo- 
mies know that further prog- 
ress. and their potential as 
thriving markets, depends on 
further development of an 
open, ruies-based trading sys- 
tem. The poorest states, the 
sub-Saharan countries, also 
urgently need opportunities to 
expand trade. Development in 
this region is a priority for the 
world c ommunit y. 

All countries need the open, 
ruies-based trading system 
that the Gatt has represented 
in its half-century of existence. 
Failing to complete the Uru- 
guay Round would not merely 
have meant failure to move 
ahead on certain trade issues; 
it would have shattered confi- 
dence in the entire system. 

With the successful conclu- 
sion of the Uruguay talks , two 
important tasks lie ahead. 
First, the participants who 
invested so much effort in 
reaching agreement must 


X , * 

Portugal's most experienced international bank 


■-* si- 7 & 


' r < A..-^9SBST' 

bit XT ^ U 












Banco Toita c& Azores is the result of mergers and acquisitions 
of sr.crai banks and finance houses over the sears, dating back to J8J3. 

Proud of its past. Banco To: to S Azores is non- one of the leading hanks in Portugal. 
Bui more than just a bank. Toita became the true expression of a powerful financial group. 

Toita, probably the most experienced Portuguese hank in international business. 


t.ONOOX BRANCH 

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Trade winds that 
bode only good 

Mexico's President Carlos Salmas, vying to lead 
the World Trade Organisation, outlines its tasks 



ToojrMraat 

President Salinas: 'Ratification is not a sufficient condition for die new organisation’s success.’ 


ensure the accord becomes 
reality by ratifying it before 
the end of the year. Otherwise, 
the Uruguay agreement risks 
becoming little more than an 
historical footnote. 

The process of ratification 
must be treated with the same 
determination as the negotia- 
tions. To date, most partici- 
pants - nearly 100 - have not 
completed the internal pro- 
cesses necessary for ratifica- 
tion. Although th e deadline is 
three months away, it is dis- 
turbing that the pace appears 
slow in a number of capitals. 
Efforts to solve any outstand- 
ing problems they are exper- 
iencing should be intensified. 

Second. Uruguay round sig- 
natories should start looking 
carefully at the needs of the 
new system to ensure the 
World Trade Organisation 
(WTO) functions effectively 
from the outset Past experi- 
ence has shown that the effec- 
tiveness of the international 
trading system cannot be 
taken for granted. 

In this respect, the WTO 
must meet three basic condi- 
tions: it must be representa- 
tive, reliable and responsive. 

First, membership of the new 
organisation must be represen- 
tative of world trade. Creating 


Gatt in 1948 with only 23 par- 
ticipants was appropriate, 
given the relatively restricted 
trade flows of that time. But 
today, the guiding principle 
should be universality - long 
the ideal of Gatt in which 123 
countries, in all regions and at 
all stages of development, now 
participate. 

More than 20 countries, 
including Russia and the 

‘The World Trade 
Organisation must 
be representative, 
r eliab le and 
responsive’ 

Ukraine, are currently seeking 
admission into the multilateral 
trading system. Their produc- 
ers, traders and trading part- 
ners need the clarity, predict- 
ability and protection that Gatt 
provides. We must all cooper- 
ate to ensure these countries 
are admitted promptly and sat- 
isfactorily. 

Second, a solid and success- 
ful World Trade Organisation 
must be a reliable instrument 
and forum. In recent years, 
serious trade tensions have 
threatened to erode the reli- 


ability - and thus the credibil- 
ity - of Gatt Major improve- 
ments in the clarity of Gatt 
rules, the broadening of its 
mandate and reform of its dis- 
pute settlement procedures 
will increase the reliability of 
the multilateral trading system 
and help create a firm founda- 
tion for the WTO. 

National governments may 
sometimes see advantages in 
not meeting their international 
obligations, and be tempted to 
act accordingly. This tempta- 
tion can be overcome only if 
countries are committed to the 
system and realise that they 
share an interest in maintain- 
ing a ruies-based regime. 

Third, the trading system 
must be responsive to the 
evolving needs and challenges 

that the inte rnational eCOUOmy 

will always pose if it is to 
retain political support 

This is nothing new; it is pre- 
cisely through its adaptability 
that Gatt has demonstrated its 
resilience. I refer to the impor- 
tant reinforcement of its rules 
(on issues such as control of 
subsidies) through the Tokyo 
Round codes; to the special 
provisions for developing coun- 
tries introduced in the 1960s 
and 1970s; and to agreements 
reached in the area of agricul- 


ture and textiles which became 
make-or-break issues in the 
integrated world economy ot 
the 1980s and 1990s, but which 
did not seem remotely possible ^ 
only a few years earlier- 
Looking ahead, it is impossi- 
ble to predict future challenges 
to world trade, but some issifes 
are clear. Certainly, the rela- 
tionship between the environ- 
ment and trade Is a priority 
Governments, individually and 
collectively, must work to 
increase environmental protec- 
tion without jeopardising the 
open and ruies-based character 
of the future World Trade 
Organisation. Moreover, the 
increased exposure of our econ- 
omies to the full force of inter- 
national trade winds requires 
the gradual formulation of 
rules and cooperative arrange- 
ments between nations on reg- 
ulation and competition. 

S olutions in these and 
other politically deli- 
cate areas will depend 
on technical expertise 
and political engagement Con- 
sensus-building will be a key 
element in this process. 

The relationships between 
members of the new World 
Trade Organisation will 
become increasingly complex, 
as new countries join and 
pT-i sting members develop into 
full participants. It is. there- 
fore, imperative that the WTO 
itself be effective, both techni- 
cally and in its relations with 
members. It should dedicate 
itself not to offering solutions ft 
- for this is up to member gov- 
ernments - hut to identifying 
options, to supporting bridge- 
building efforts, and In this 
way facilitating consensus. For 
this we depend on the highly 
qualified and dedicated Gatt 
staff and on the legacy that 
Peter Sutherland will leave 
behind. 

Only three months remain 
before the birth of the World 
Trade Organisation. Ratifica- 
tion of the Uruguay Round is a 
complex and delicate political 
process that will demand skill 
and commitment from all par- 
ticipants. Yet ratification - 
and I call for ratification now - 
is a necessary but not suffi- 
cient condition for the success 
of the new organisation. All 
countries must devote the 
highest possible level of 
engagement and support to 
ensuring the World Trade 
Organisation functions effec- 
tively and successfully from 
the outset 

Speaking for my country. 
Mexico, we are ready to con- 
tribute all our efforts to the 
successful launch of the next 
59 years of the international 
trading system. 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be dearly typed and not band written. Please set fax for finest resolution 


Setting a 
sensible 
nuclear 
agenda 

From Ms Janet Bloomfield. 

Sir, Following your excellent 
coverage of the nuclear Non- 
Proliferation Treaty Prep- 
Comjn in Geneva (“Opposition 
to nuclear treaty grows”, Sep- 
tember 16), I was surprised 
that the FT felled to highlight 
the significance of the Liberal 
Democrats’ conference decision 
to support a limited extension 
of the NPT. 

By calling for the NPT to be 
extended initially for a limited 
period, and for further exten- 
sions of the treaty to be linked 
to progress on a worldwide 
convention to eliminate all 
nuclear weapons, the Liberal 
Democrats have taken on a 
commonsense agenda for prac- 
tical measures to break the 
□□dear deadlock. 

Menzies Campbell. Liberal 
Democrat foreign affairs 
spokesperson, made dear that 
the reasoning behind the pol- 
icy is “to maintain the pres- 
sure on the nuclear weapon 
holding powers to meet their 
oblig ation s under Article VI of 
the NPT”. 

The NPT has been accused of 
discrimination and Israel, 
Pakistan, India and Ukraine 
will not sign. Extending it 
indefinitely, as the government 
and Labour Party advocate, 
may mean that the present 
creeping proliferation becomes 
irreversible. 

A new global treaty could be 
universally respected and rati- 
fied. CND looks forward to the 
Labour and Conservative par- 
ties supporting such a positive 
move. 

Janet Bloomfield, 
chairwoman. 

Campaign for Nuclear 
Disarmament, 

162 Holloway Road. 

London NT SDQ 


Industry must highlight abuses 


From Mr Peter R Willis. 

Sir. Andrew Baxter’s article 
(“UK alleges EC procurement 
malpractice”, September 23) 
identifies a number of the 
obstacles to the application of 
the EC public procurement 
rules. However, it also under- 
lines the general lade of aware- 
ness of this area of the internal 
market rules. 

There are now half a dozen 
public procurement directives 
(rather than a single one), the 
earliest of which, covering the 
award of public works con- 


tracts, has applied to UK 
authorities since July 1973, 
some 20 years before the date 
indicated in the article. The 
latest directive, covering the 
award of contracts for services 
by both public and private util- 
ities, was to have been Imple- 
mented by July 1 this year. 
The UK has not yet done so 
and is therefore itself not 
entirely above criticism. 

The rules allow those 
unfairly excluded from a public 
tendering procedure to apply 
to the national courts for an 


injunction suspending the pro- 
cedure and also provide for an 
award of damages. At the same 
•time, the Department of Trade 
and Industry and the European 
C ommi ssion are usually recep- 
tive to complaints about fail- 
ure to comply with the rules. It 
is largely up to industry to 
highlight the abuses so that 
the institutions ran act 
Peter R Willis, 
solicitor. 

Turner Kenneth Brown. 

19 avenue des Arts, 

1040 Brussels, Belgium 


Meaning of ‘undertaking’ must be clear 


From Mr Peter Cooke. 

Sir. Your leader, •'Workers’ 
rights” (September 21), refers 
to the real problem with the 
operation of the Acquired 
Rights Directive, namely the 
judgments of the European 
Court of Justice, including 
what you call the famous 
(some would say “infamous”) 
Schmidt case. However, it 
reaches the wrong conclusion. 

There is no fundamental rea- 
son to scrap the directive - 


after all. it merely places 
employees who are involved in 
the transfer of an undertaking 
in which they work in a simi- 
lar position to those who are 
employed by a company, the 
ownership of which changes 
h an d s. The urgent need is to 
draw a clear, unambiguous 
and. most importantly, Euro- 
pean judge-proof boundary to 
the meaning of “undertaking” 
for these purposes. 

The paragraph you have 


referred to in the revised direc- 
tive seems unlikely to achieve 
this. It is, in my view, neces- 
sary to import the concept of 
the transfer of a business as a 
going concern, a concept which 
should be relatively easy to 
translate into all legal systems 
of European Union countries. 
Peter Cooke, 

partner, Theodore Goddard, 
business and finance lawyers. 
ISO Aldersgale Street, 

London EC1A 4BJ 


Record shows mutuality no handicap 


From Mr R H Ranson. 

Sir, Perhaps as the chief 
executive of the oldest mutual 
life assurance society in the 
world - The Equitable, 
founded 1762 - I might be per- 
mitted to join the debate on 
mutuality. 

Mr tnstone's comments 
(Letters. September 19) are 
unsubstantiated. An inspection 
of the published tables of the 
results of with-profits policies 
will show a do min ation by 
mutual offices. It is ironic that 
he comments on the difficulty 
of devising a voting structure 
for policyholders of a mutual. 
That may be true but at least 
they do have a voice and are 


not subordinated to the inter- 
ests of proprietors. 

The Equitable can offer more 
than 230 years of living proof 
of the successful application of 
the mutual concept. Our sole 
aim is, and always has been, to 
deliver services and benefits at 
cost to our policyholders. The 

advantages of that dedication 
are evident from our record. 
We have the lowest costs in 
the industry, we have the most 
advanced systems, we attract 
the highest amounts of annua) 
premium new business, we 
have the lowest lapse rate, our 
“maturities" are consistently 
in the top few across all prod- 
ucts and durations, surrender 


values are “competitive’’, etc. 
All of that has been achieved 
without raising a penny from 
outside sources. 

It is fashionable to knock the 
concept, but a society ran on 
mutual grounds concentrating 
wholly on benefits to members 
and not answerable to outside 
interests and influences can be 
one of the most effective forms 
of incorporation, it is far from 
being the handicap envisaged 
by Mr instone. 

R H Ranson, 

managing director and actuary. 
Equitable Life Assurance 
nSociety, 

Walton Street, Aylsbury, 
Buckinghamshire HP21 7QW 


Company finances could be hit by pensions solvency standard 


From Mr Trevor Crowter. 

Sir. Barry Riley is quite right 
to point out that the proposed 
introduction of a minimum sol- 
vency standard for UK pension 
funds raises some very far 
reaching investment issues 
("New benchmark worries UK 
pension funds”, September 21). 

More than that, it has poten- 


tially enormous financial 
implications for employers. If 
pension funds switch invest- 
ment away from equities 
towards bonds, based on 
long-term historical invest- 
ment returns, the cost of pen- 
sion provision will increase 
substantially. On the other 
hand, if pension funds retain 


their strong equity bias to 
maximise investment return 
there is a risk that large 
amounts of additional cash will 
need to be found in the future, 
due to their failing the sol- 
vency test 

fr is encouraging that some 
of the implications or the pro- 
posed standard are now begin- 


ning to be recognised. Ho 
ever. 1 do not believe that t 
potentially highly daxnagi 
impact on the finances of Bi 
ish business has been cons 
ered sufficiently. 

Trevor Crowter, 

KPMG Actuarial Services, 

1-2 Dorset Rise, 

London EC4Y&AE 


9 


; 




I 


[ 


FINANCIAL times MONDAY SEPTEM BER 26 1 994 





t V 




FINANCIAL TIMES 

Number One Southwark Bridge, London SE1 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Monday September 26 1994 


World Bank 
Group at bay 


In the financial year ending June 
1994, the International Rank for 
Reconstruction and Development, 
the commercial lending arm of the 
World Bank Group, made net dis- 
bursements to developing coun- 
tries of minus US$73 Lm. Such fig- 
ures will be meat and drink to its 
critics. So too will the fact that 
administrative expenses have 
risen 60 per cent over the past six 
years, while gross disbursements 
have stagnated. Inevitably, the 
Bank is finding it difficult to con- 
vince the public that it knows 
what it is doing and is doing it 
efficiently and effectively. 

What makes the task particu- 
larly difficult is the changed inter- 
national climate. Historically, the 
Bank had two groups of support- 
ers in industrial countries; cold- 
warriors and do-gooders. The first 
group has now disappeared, while 
those who claim to have the inter- 
ests of developing countries at 
heart now condemn the Bank for 
its stinginess, its heavy-handed- 
ness, its encouragement of envi- 
ronmental despoliation and its 
neglect of the cause of the poor. 

For all its might, the Barite lacks 
friends and, lacking Mends, is 
politically vulnerable. But it will 
achieve nothing by pretending to 
be what it is not It is a Large, 
international public organisation 
that must work with, and 
through, governments. Its brief is, 
in essence, to assist developing 
countries achieve rapid, poverty- 
alleviating growth. Again, there is 
no huge mystery about how this is 
to be achieved. East Asian devel- 
oping countries have shown the 
way. The trick - difficult in most 
places and hitherto Impossible in 
some, notably in Africa - is to 
help others follow the same path. 

Economic returns 

The Bank must confront its crit- 
ics. If it is to be blamed for its 
failures. It must point to such suc- 
cesses as East Arian development 
and the green revolution. It must 
also reject the notion that its brief 
is to transfer resources, something 
that could be done better by a 
check-writing mnnhirwy Tbe waste- 
ful use of oil revenues by so many 
oil-exporting developing countries 
demonstrates that the mere avail- 
ability of money does not ensure 
economic development The ques- 
tion, instead, is whether lending 
brings satisfactory economic 
returns to borrowers. 

Mr Howard’s 
mistakes 


True, the Bank has made big 
mistakes: over rural development 
lending, for example, the sustaina- 
bility of the commercial bank 
lending of the 1970s and the dura- 
bility of the “energy crisis". It is 
as important for the Bank to 
admit - and learn from - such 
mistakes as it is to stand up for 
itself. But the development record 
taken as a whole is not so bad. It 
can. and must, be defended. 

Less bureaucratic 

Yet if the Bank is to defand both 
itself and its core mission, tt most 
also change. First, it must become 
leaner and mucb less bureau- 
cratic. A start has been made on 
this. The recent proposal by Mr 
Lewis Preston, the Bank’s presi- 
dent, to reduce the administrative 
budget by 6 per cant a year in real 
terms, will increase the pressure. 
Second, it must be more flexible. 
The one certainty in its environ- 
ment is uncertainty. How many, 
just five years ago, foresaw the 
collapse of the former Soviet 
Union or the torrent of private 
capital pouring into middle-in- 
come developing countries? Third, 
it must be more aggressive with 
its critics, more aggressive with 
its clients, and also more aggres- 
sive, when appropriate, on behalf 
of its clients. The Bank cannot be 
all things to all people. If, for 
example, it believes there ought to 
be more generous official debt-re- 
lief for Africa, it should say so, 
loudly and clearly. 

There is much debate inside and 
outside the Bank about what sort 
of future it might have. Some 
believe the prospect is one of gen- 
teel decline, as its activities are 
progressively limited to Africa and 
South Asia. Others believe it could 
become an integrator of ideas and 
money world-wide, even in coun- 
tries that do not need its direction 
financial assistance. 

Such choices do not yet have to 
be marie. The challenges of elimi- 
nating extreme poverty and help- 
ing to integrate most of humanity 
within the global market wmnmy 
remain huge. Notwithstanding its 
faults, the Bank represents a 
unique -- -and- irreplaceable 
repository of experience, skill and 
financial resources, dedicated to 
these tasks. Those assets must be 
used effectively. Their appropriate 
use must also be vigorously 
defended. These are the twin chal- 
lenges confronting Mr Preston. 


He - it has not yet been a she - 
who lives by headlines may perish 
by headlines. That is the danger 
facing Mr Michael Howard. It is 
partly of the home secretary's own 
making. He is aware, or should be, 


that the rise in crime that has 
aroused so much public anxiety is 
the product of complex causes, yet 
he bias sought acclaim as tbe stem 
enforcer of criminal justice. He 
has presented himself as the 
scourge of criminals, while events 
have conspired to enable the 
media to picture his ministry as 
soft on prisoners and careless in 
its custody of terrorists. 

A year ago, at the Conservative 
conference, Mr Howard presented 
a “27-point plan" to tackle crime. 
He then made every administra- 
tive and political mistake in the 
book. He distressed his officials, 
by curtly rejecting their advice. 
One by one the client groups 
under his ministry - police, mag- 
istrates. judges and all - were 
alienated. Then, under pressure, 
this “tough” minister retreated, as 
in the case of a recently recom- 
mended package for the reform of 
police pay and conditions. 

The most spectacular defeats 
came In the House of Lords, where 
Mr Howard disdained to reach an 
understanding with Lord White- 
law, and thus had to redraft key 
clauses of an important bill. This 
particular home secretary is not, 
however, solely to blame for the 
contents of the criminal justice 
bill or indeed the police and mag- 
istrate's courts bill. They were in 
draft form when his predecessor, 
now chancellor, left office. 

The first bill was designed to 
correct previous, poorly-drafted. 
Conservative legislation, the sec- 
ond to extend central control over 
the constabulary and the magis- 
tracy. Both had some merit and 
many infelicities. Mr Howard’s 
fault lay in his exuberant pursuit 
of partisan victories in an area of 
governance in which consensus is 
usually preferable. 

Political clumsiness 

The political clumsiness he thus 
displayed may have the serious 
consequence of clouding the 
debate over the merits of the gov- 
ernments' attempts to reform the 
management of the country’s jails. 
In theory the Prison Service, the 
new agency brought in to do so, 
should be more than a match for 


the Prison Officers’ Association, 
one of Britain’s few remaining 
obstructive trade unions. Mr 
Derek Lewis, the director-general 
of the service, has made an ener- 
getic start. He has Introduced 
clear administrative structures, 
and advanced plans for transfer- 
ring the management of specified 
prisons to private contractors. 

Lax security 

On paper, this should enable the 
public to see who is to blame 
when things go wrong, fit practice 
it does not always work that way, 
as tire POA loses no opportunity 
to point out Was tbe decision to 
move convicted IRA terrorists 
back to Ulster “operational" and 
therefore Mr Lewis's to make or 
“policy” and therefore Mr 
Howard’s responsibility? Who is to 
blame for the lax security at Whi- 
temoor prison, whore IRA prison- 
ers have received guns. Semtex, 
and detonators? Is it the new gov- 
ernor, for inattention to detail, Mr 
Lewis for his regulations, or the 
Home Office for its rules? 

The inquiry being conducted by 
Sir John Woodcock may provide a 
managerial answer to these ques- 
tions, but it is the political reality 
that counts. The days when minis- 
ters might be expected to resign 
over any lapse in any corner of 
their departments are gone. Yet 
the creation of arm's-length agen- 
cies does not absolve the politician 
in charge from a duty of oversight. 
A good chairman leaves 
day-to-day control in the hands of 
a chief executive, but keeps anten- 
nae out at all times. If the agency 
system is to work with the requi- 
site degree of transparency, this 
principle should be clarified. 

It is not axiomatic that tbe 
above history requires the sacri- 
fice of Mr Howard. His presence in 
the cabinet is partly accounted for 
by his association with the Con- 
servative right, and partly by his 
representation of Euroscepticism 
in one of tbe three high offices of 
state - the other two, the treasury 
and the foreign office, being filled 
by known pro-Europeans. Against 
that, he has presided over the loss 
of the Tories’ advantage over 
Labour as the party of law and 
order. It is the prime minister’s 
task to decide whether, on bal- 
ance, Mr Howard's continuation in 
is an asset to the govern- 
ment or a liability to his party. 


★ 


15 


Irish banks: the good old days 



Bank of Ireland 

Em Pre-tax profits 
300 — Vear to M®e#i at 



Allied Irish Banks 
12m Pre-tax profits 
300 — 


250 — 



Assets in 

Republic of Ireland (1993) 

ffibn 

Bank of Ireland 

7.58 * 

Allied Irish Banks 

A42 

TSB Bank 

1.23 

National Irish Bank 

0.60 

Woodc tester Investments 

1.50 

Ulster Bank 

3.70 


- 199<l 


Challengers jostle 
in the queue 

Competition from a ‘third force’ could soon disrupt the 
comfortable ways of Irish banking says John Gapper 


A fter years of unchal- 
lenged domination in 
their home market. 
Allied Irish Banks and 
Bank of Ireland are 
entering a stressful era. Foreign 
banks are queueing up to challenge 
them; customers are protesting 
about charges and the level of fin- 
ancing for small businesses; and 
rivals such as building societies are 
forcing them to lower margins. 

There is more to come for the two 
banks, which between them 
account for 70 per cent of hanking 
in the Republic of Ireland, and 
nearly half of finnnriai services. 
Next month, advisers are likely to 
set out how the government could 
auction TSB Bank, with assets of 
HL2bn. This may create the “third 
force" in Irish banking, called for by 
the ruling coalition of Labour and 
Fianna Fail when it was elected in 
1992. 

The government originally 
planned to merge TSB with two 
small government-owned finance 
houses for agriculture and industry. 
But instead of this unwieldy state- 
controlled group, a large and vigor- 
ous bank could emerge. The pro- 
posal prompted an approach to TSB 
earlier this year by National Aus- 
tralia Bank. It agreed with the 
TSB’s trustees a I£102m offer to 
merge it with NAB’s National Irish 

Bank, 

This led to a counter-offer from 
National Westminster Bank's sub- 
sidiary, Ulster Bank. If NatWest 
wins an auction, it might try to buy 
National Irish as well, creating a 
bank with I£5-5bn of assets. This 
would be big enough to challeng e 
AIB and Rank of Ireland. “If the 
government wants a real third 
force, then we are the right part- 
ner.” says Mr Ronnie Kells, Ulster 
Bank’s chief executive. 

Yet even without a third force, 
Irish hanking is enteri n g a period Of 

stiffer competition and consolida- 
tion. The Lfl83m notation of the 
Irish Permanent Buff ding Society 
next month will give the society 
access to capital markets so that it 

can make acq uisitions. The two big 
hanks are building up capital after 
a troubled period. Smaller players. 


such as the TSB, are seeking back- 
ing from sympathetic acquirers. 

Meanwhile, barriers which 
stopped competition among banks, 
building societies and life insurers 
have broken down, leaving the big 
banks to protest that their oligopoly 
is more apparent than real. “There 
is a falsehood out there that we 
have got a grip on the market," 
says Mr Tom Mulcahy, chief execu- 
tive of AIB. “On the street, we 
chase each other for customers," 
says Mr Pat Mblloy, chief executive 
of Bank of Ireland. 

But there are good reasons for 
foreign banks’ interest in Ireland. 
Retail banking remains relatively 
profitable, with interest margins 
hi gher than in Britain and other 
European countries. Lehman 
Brothers, the US investment Hank 
estimates that return on equity in 
the domestic retail mar ket is about 
40 per cent This is double the 20 
per cent overall return achieved by 
the most profitable European 
banks. 

Furthermore, the Irish Republi- 
can Army’s ceasefire has stimulated 
tbe interest of Investors in what 
Morgan Stanley, the US investment 
bank, has called the “Celtic Tiger" 
of European economies. The econ- 
omy is expected to grow by at least 
5 per rant this year and next year. 
Inflation is low, and growt h in loan 
demand has re-emerged after the 
shock of the European exchange 
rate mechanism crisis of 1992. 

Ireland remains a tiny economy 
by European standards - its I£32bn 
gross domestic product last year 
was equivalent to just 5 per cent of 


the UK’s GDP. Yet the prospect of 
steady, low-inflation growth, is very 
attractive for banks. It lessens the 
risk that had debts wfll compress 
interest margins, as they have done 
in other countries. “I cannot 
remember a time when we have had 
such a high quality of loans," says 
Mr Mulcahy. 

These factors have given the two 
banks a solid, profitable base. They 
have needed it in the past few years 
as they have struggled to clean up 
costly errors abroad. Both expanded 
in Britain in the 1980s too aggres- 
sively. Both have had to work out 
bad debts on corporate lending, and 
have now refocused their busi- 
nesses on hanking for Irish expatri- 
ates. and forms of secured lending 
such as residential mortgages. 

B ank of Ireland’s experience 
in the US (where AIB man- 
aged to avoid trouble) was 
even worse. It lost a total 
of I£I80m over four years as a result 
of the New England real estate cri- 
sis, after buying First New Hamp- 
shire in 1988. “Our tuning there was 
especially unfortunate. We bought 
just before the bubble burst” says 
Mr Molloy. The US subsidiary has 
now turned the comer, making a 
igis m profit in the year to March. 

Irish profits, and recovery over- 
seas, have now prompted the hanks 
to talk of renewed expansion 
abroad. AIB has made the loudest 
noises, talking of both US acquisi- 
tions to reinforce its Baltimore- 
based subsidiary First Maryland 
Bancorp, and perhaps buying a Brit- 
ish building society. The banks rea- 


son that they cannot simply remain 
in Ireland if they are to compete 
alongside the emerging pan-Euro- 
pean hanka 

Yet even with the cash to spend, 
overseas expansion is not a simple 
matter. Both in Britain and the US, 
banks are bidding around twice the 
book value of smaller banks and 
societies to take them over. This 
makes it hard to achieve their 
required return on investments, 
even if they avoid pitfalls. “We will 
keep our money in our pockets if 
we have to. We are not going to 
make a purchase at any price,” says 
Mr Mulcahy. 

They may need to husband 
resources for the battle at home. 
Signs of this have emerged in the 
savings market, where the banks 
have narrowed margins by offering 
depositors higher rates. Mr Roy 
Douglas, chief executive of Irish 
Permanent says that lending mar- 
gins are also muter pressure. “The 
banks are finding the mortgage 
market very attractive, and there is 
a lot more competition than a year 
ago,” he says. 

The big hanks accept that compe- 
tition will inevitably erode interest 
margins. In response, they are try- 
ing to boost tbeir earnings from 
other sources. An obvious source of 
added income is fees and charges. 
These are state-controlled, although 
the hanks can negotiate increases. 
Irish hanks gain a lower share of 
their income from fees than those 
in countries such as Britain, 
despite widespread criticism by 
consumers. 

The other possibility of added 


income is to sell more to their cus- 
tomers. The competition in the 
mortgage market is one sign of this: 
banks have also developed life 
insurance arms. "We have a very 
strong base that we have not 
always used. If we can market prod- 
ucts better to our existing custom- 
ers, it will have a powerful effect.” 
says Mr Brian Wilson, director of 
AIB’s Ireland division. 

Yet banks are unlikely to be able 
to sustain their returns solely 
through adding to income. This will 
put pressure on them to cut costs, 
either by reducing staff and 
branches, or by taking- over others 
and removing duplication. Such a 
process has been taking place in the 
US and other European countries. It 
will be harder to achieve in Ireland, 
where there is 15 per cent unem- 
ployment, and strong resistance to 
job cuts. 

The possibility of cuts has already 
dogged part of the government's 
original proposal for a third force. 
The staff of Agricultural Credit Cor- 
poration - one of the two finance 
houses involved - protested at the 
potential cost of being merged with 
the Industrial Credit Corporation. It 
will also affect the TSB sale; 
bidders are likely to have to make 
pledges on jobs as part of their 
offers. 

Mr Craig McKinney, chairman of 
the biggest Irish finance house. 
Wood Chester Investments, says that 
a bid for TSB is only attractive if it 
can be rationalised. “To buy it with 
your hands tied behind your back 
does not make sense," he says. 
Without such cuts, its new owner 
may be unable to undercut the big 
banks’ charges, which would under- 
mine the original rationale for sell- 
ing the state banks. 

Such considerations are unlikely 
to hold outsiders back. Lord Alexan- 
der. NatWest's chairman, has 
stressed his bank's intention to pre- 
serve jobs if it wins an auction. Yet 
such pledges will not hold indefi- 
nitely. By the time the Irish bank- 
ing mar ket has consolidated, more 
than a few politicians and former 
bank clerks could be talking with 
nostalgia about the days before 
banks started to compete. 


Jancis Robinson visits Burgundy where heavy rains have badly affected the wine harvest 


T he vineyards are a mire 
around Meursault in Bur- 
gundy. At lunchtime, low- 
paid pickers stomp into the 
village, dad in mud-spattered oil- 
skins and rubber gloves. The village 
streets throb with tractors pulling 
loads of sodden grapes, all too often 
tinged brown with rot and covered 
with tarpaulins in an attempt to 
keep at least the last hour’s drisle 
from diluting the juice, and there- 
fore the wine. 

On backstreets, medieval court- 
yards are filled with the sound of a 
heavy duty hoses, desperately try- 
ing to keep the wine presses, trail- 
ers and hods clean. The mood is 
sombre. 

The French wine industry badly 
needs a top quality wine harvest 
Wine consumption In France has 
been plummeting, and French wine 
exports have fallen nearly 20 per 
cent in the last 5 years. 

International rivals have been 
increasing their market share a n d 
undercutting French vineyards on 
prices - Chile, Argentina and South 
Africa are proving particularly 
fierce competitors, according to a 
recent report on the wine industry 
by Insee, the French national statis- 
tical office. 


Wet, wet, wet 


Together with the recession, 
these problems have pushed French 
winegrowers’ prices steadily down 
since 1991, says the institute, with 
high quality rms d'appellation and 
champagnes the worst affected. 
There has been some improvement 
this year, says a researcher at Insee: 
“There is a strengthening of 
demand from French consumers, 
and a more marked improvement in 
some international markets,” he 
says. “But there is still a long way 
to go to get back to the levels of a 
few years ago.” Above all, France 
does not need another year of 
declining production. Total produc- 
tion fell by 19 per cent in 1993, 
thanks, largely, to bad weather. 
“The harvest was greatly affected 
by rain,” says Insee. 

This year. Burgundy, like the rest 
of France, enjoyed an unusually hot 
summer. At the end of August the 
grapes were riper and healthier 
than usual. It seemed as though 
this could be just the vintage 
France needed, but fanners such as 
these know better than to bank on 
the weather. 



In the first week of September the 
rain set in, and continued almost 
daily to make this the most misera- 
ble vintage since 1984 according to 
optimists - and since 1947 accord- 
ing to pessimists. 

At present, the quality of the 
eventual wines can only be guessed 
at. 


There will probably be some good 
white wines, for rot is by no means 
disastrous for white grapes and the 
acidity levels will please those who 
like their white wines sharp. The 
best sites and best kept vineyards, 
such as Dominique tofon’s Meur- 
sault-Perrieres, can boast tiny rela- 
tively healthy grapes which should 
yield modest amounts of concen- 
trated wine. 

It is the red grapes which will 
take the strain of all this rain, par- 
ticularly where yields are high. Rot 
destroys pigment; and the skins - 
so necessary to red wine making - 
can tain t the final wine. This will 
be one of those (many) vintages 
about which the wine trade will be 
able to boast “the strictest selection 
is necessa r y; buy only from a repu- 
table merchant such as ourselves”. 

Those who are already practising 
“organic" and even “biodynamic” 
chemical-free vine-growing tech- 
niques are boasting of markedly 
healthier grapes than their neigh- 
bours in such damp conditions. 

One prominent example is Lalou 
Biz-Leroy, "the queen of Bur- 


gundy". whose vineyards this year 
were treated not only to ground net- 
tles applied according to phases of 
the moon but also to various tisanes 
applied from a helicopter. 

Her traditional wooden open- 
topped (computer-controlled) fer- 
mentation vats are full of healthy, 
small bunches of Pinot Noir grapes 
which will doubtless become yet 
another vintage of Domaine Leroy 
bottles for the world's collectors to 
argue over. 

This is little comfort to a bedrag- 
gled stream of tourists, cycling 
through the vineyards on pre- 
arranged routes from one three-star 
hotel to another. Small groups were 
last week wheeling disconsolately 
around the village of Meursault, 
mystified that in the frenzy, and 
gloom, of the picking season, no one 
could find the time to sell them a 
bottle or two of world famous Bur- 
gundy. 

But while the tourists trudging 
around France's wine region in the 
rain, or loitering longer than they 
would choose in their hotel rooms, 
may have been miserable, this has 
only been a damp holiday. For the 
vignerons the loss will be in their 
income, and. in some cases, their 
reputations. 


Observer 


Learning by 
doing 

Hardly a vote of confidence, one 
would think, when OECD secretary 
general Jean-Claude Faye’s chef de 
cabinet quits just when Paye 
himself is struggling to hold on to 
his own job. 

Not a bit of it, apparently. It is 
with Paye’s express blessing that 
John Llewellyn leaves the 
government-owned think - tank in 
Paris’s elegant 16th ammdisement 
to become top economic guru in 
tollman Brothers’ London office. 

Tim embattled boss, it seems, has 
long felt that the OECD could 
improve its analysis of financial 
flows. The hope is that Llewellyn, 
now 50. may one day return to build 
up the expertise in that area. 

It seems pretty unlikely, though, 
that Paye will be around to witness 
any such return himself. With his 
contract expiring this Friday, he is 
now supported for a third term by a 
slim majority of the OECD's 25 
member countries. But that is of 
little use when the US shows no 
sign of changing Its mind over the 
intention to veto the incumbent’s 
reappointment 


Stars and swipes 

■ John Major has been accused of 
many things. But it seems a bit rich 
that the UK prime minister should 


be expected to carry the can over 
the OECD impasse. 

Some frustrated member states 
claim that America would never be 
holding out against a third term for 
Paye had not Major set a precedent 
by vetoing Jean-Luc Dehaene, the 
Belgian prime minister, for 
presidency of the European 
Commission. 

But, as tiie Japanese can surely 
testify after suffering months of 
battery at the hands of US trade 
negotiators, the Clinton 
administration hardly needs lessons 
from other countries on how to go 
into battle to defend its own 
economic interests. 


Docks in the dock 

■ John Lenanlon, a family-owned 
timber processor and one of 
London’s oldest industrial 
companies, is on the point of 
abandoning its home of the past 157 
years. A few well-chosen winds 
from the chairman will be in order, 
no doubt? 

Not a bit of it John Lenanlon. 
great grandson of the founder, 
cannot wait to exchange the Isle of 
Dogs in Docklands for a new base in 
leafy suburban Berkhamsted. After 
44 years with the company, he will 
“walk away from the area and 
never look back”. . 

No longer using the Thames to 
transport its timber, the company is 
poorly located as regards the bulk 
of its customers In the Construction 
industry. The principal effect of 



‘He’s a missing link’s missing link’ 


fronting on to tbe river these days 
is that the masonry is in constant 
need of attention. 

Fair enough, but Lenantcn adds 
that he has experienced almost no 
advantage from the wave of 
investment in Docklands, while the 
locals are dismissed as a “load of 
whingers". 

A lack of sentimentality not 
presumably applauded by the 
London Docklands Development 
Corporation. 


Canary silenced 

■ The Corporation of London, 
meanwhile, is cock-a-hoop that BZW 
and its 4,000 employees have been 


dissuaded from setting up shop In 
Canary Wharf. Currently scattered 
around the City in numerous 
buildings, the investment hank had 
been poised to combine its 
operations under one roof on the 
Isle of Dogs. But a memo was 
circulated to staff at the end of last 
week to the effect that “tbe overall 
economics" of the move would not 
prove “sufficiently attractive”. 

The Corporation, meanwhile, has 
worked out that, if an organisation 
has to pay its people incentives 
worth, say. £2,000 to move to this 
less than fashionable part of town, 
it is effectively spending £10 more 
par square foot in rent A nifty little 
calculation that has apparently 
been drawn to the attention of 
BZW”s chairman Sir Peter 
Middleton fairly recently. 


Pigeon spy 

■ As any self-respecting pigeon 
knows, Switzerland is not a bad 
place to fall sick or get hit. Any bird 
found injured while overflying the 
country is dispatched to the army’s 
pigeon base in Bern, where it is 
revived, fed and sent on its way. 

But not for long. 

The Swiss army has derided to 
send its 30.000 carrier pigeons 
packing - and with it the 
international rescue service. 

For 77 years, the birds have 
rendered solid service In field 
communications. They take a mere 
10 days to train; they have proved 
highly reliable in all weathers and 


over varied terrain; and they cannot 
be tapped or jammed. 

They are even well camouflaged. 
Civilians are indistinguishable from 
soldiers, the only clue being that 
the former are sent on mission in 
pairs. There has never been a case 
when at least one has not made its 
destination. 

While the feathered fowl normally 
made flights between just two 
command posts, they had been 
working up to tackling tbe greater 
challenge of three-way journeys. 

Disbanding the troop, meanwhile, 
saves SFrSOO.OOO a year - which is 
hardly a fortune. But technology 
wins the day. The 286 pigeon 
trainers will be immediately 
redeployed, while the pigeons have 
a year’s respite. 

Thereafter a lucky few may just 
be adopted by the federal civil 
service. 


Inglish as spoke 

■ Look out for a hot new journal 
called Financial Engineering and 
the Japanese Markets, soon to 
produce its first number. 

The official publication of the 
Japanese Association of Financial 
Econometrics and Engineering, it 
promises two unmissable research 
papers. 

One treats Asset Price Prediction 
Using Seas o nal Decomposition’, 
while the other is all about 
’Estimating Unknown Join Points: 
Deter mina tion of the Yen-Dollar 
Exchange Bate’. 



16 


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Specified 
Worldwide 


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Tel: 0773 38231 1 


FINANCIAL TIMES 

Monday September 26 1994 


52 Shepherd 

SIS Desigti & Build £ 

Frederick House, Fultofd Hoad. York YOI 4EA. 
Telephone 0904 632401. Fax: 0904 610256. 


US officers meet Haitian 
leaders after gun deaths 


By Janies Harding 
in Port-au-Prince and 
George Graham in Washington 

Haiti’s military leaders met US 
officers yesterday after the first 
deadly conflict since US troops 
landed a week ago left a reported 
10 Haitians dead and a US sailor 
slightly wounded in the northern 
city of Cap Haitian. 

President Bill Clinton, who will 
address the UN General Assem- 
bly today, regretted any loss of 
life, but warned that US troops 
would continue to respond to 
hostile action against them. 

The conflict on Saturday even- 
ing around police offices in Cap 
Haitien has highlighted difficul- 
ties surrounding the interven- 
tion, which has been carried out 
like a combat operation in hostile 
territory, in spite of an agree- 
ment to work with Haitian mili- 
tary authorities. 

The incident may also prompt 


Continued from Page 1 


can apply fbr the licence to copy 
and produce a German garden 
gnome. Mr Franz Sikora. an offi- 
cial at the patent office, said: 
“The Poles could pay a symbolic 
price for the. licence by seeking 
permission from those German 
firms who hold the copyright. 
And then they would be free to 
sell their gnomes here in Ger- 
many.” 

German gnome manufacturers, 
however, are not keen on s elling 
their copyright. Heissner, one of 
Germany’s oldest companies spe- 
cialising in garden gnomes, 
believes it is a question of pres- 
erving quality. 

“We have been making and 
painting our gnomes by hand 
ever since we started back in 
1880," said Ms Helga Naueckert, 
fbr Heissner. “We sell about 


UK suggests 
gold sale 

Continued from Page 1 

gold, which pays no income. The 
UK argues the proceeds could be 
reinvested in income-earning 
assets, with the income devoted 
to the debt plan. 

Mr Clarke's acknowledges his 
plan could only be accepted only 
after negotiations. The Trinidad 
terms, first proposed in 1990 by 
Mr John Major, now UK prime 
minister but then chancellor, are 
not fully accepted, but nearly 
S3bn of debts have been written 
off under the terms. 

The scheme would require 
approval by 85 per cent of IMF 
members. 

After the meeting. Mr Clarke 
will go to the IMF annual meet- 
ing in Madrid, where the UK and 
the US will press for a special 
allocation of Special Drawing 
Rights {the IMF’s reserve cur- 
rency) to help poorer nations. 


international criticism of the US 
over what some might see as an 
excessive use of force. 

However, in the US, Senator 

Sum M iinn, the n hairman of the 
Senate armed services committee 
and a member of the former Pres- 
ident Jimmy Carter's team which 
negotiated the Haitian generals' 
agreement to leave power, said 
there might be more such inci- 
dents. “This is the first bad inci- 
dent we’ve had involving, 
directly, American troops, but it 
won't be the last . . . It’s regret- 
table, but remarkable we haven't 
had more,” he said. 

Under an agreement reached 
Last week, the military govern- 
ment, which seized power in a 
bloody coup in September 1991. 
promised to cooperate with US 
forces to restore elected president 
Jean-Bertrand Aristide. 

General Raoul Cgdras, Haiti's 
military leader who has agreed to 
step down by October 15, was 


760,000 garden gnomes each year. 
Our gnomes are expensive. The 
70cm-higii ceramic gnomes cost 
DM269 and the plastic ones cost 
between DM100-DM140. But peo- 
ple pay for quality. I am not so 
sure this quality can be sold to 
the Poles” 

Ms Heissner admitted, how- 
ever, that the Poles were attempt- 
ing to introduce some competi- 
tion into the market “Of course 
it is a question about protecting 
our copyright. But it is also 
about tiie market being exposed 
to more competition.” 

Some Polish gnome manufac- 
turers have tried to get around 
the obstacle by selling their 
gnomes on the Polish side of the 
border crossing. “I cannot get my 
gnomes into Germany any more. 
So 1 sell them on the roadside," 
said Mr Roman Olba, a gnome 
exporter who buys his gnomes 


Continued from Page 1 


ent PepsiCo businesses, particu- 
larly in newly-developing east- 
ern European markets, to share 
distribution costs, office over- 
heads and staff training. It 
ought even pat differently- 
branded restaurants on adjoin- 
ing sites. 

Mr Peter Heart, the European 
head or KFC. said that if 
PepsiCo's efforts in Europe were 
successful then “other parts of 
the PepsiCo world", including 
businesses in north and south 
America, and Asia Pacific, could 
follow suit 

Europe is becoming an increas- 
ingly Important market for 
PepsiCo. About 80 per cent of 
the company's profits are gener- 
ated, in the US at preseat bat 
it hopes to reduce this to about 
50 per cent over the next six 
years. 

Arch-rival Coca-Cola is depen- 
dent on the US for just 20 per 
cent of its profits - a fact which 


flown to Cap Haitien yesterday 
with Mr w illiam Swing, the US 
ambassador, and General Henry 
Hugh Shelton, the US com- 
mander of the Joint Task Force 
in Haiti. 

The trio were understood to be 
meeting Haitian military and 
police officials to ensure their 
co-operation with US forces in 
tbe area” and to reduce tension 
after Saturday night's killings. 

A US marine patrol is under- 
stood to have opened fire when 
Haitians at the police headquar- 
ters apparently fired on their 
unit, injuring one naval transla- 
tor in the leg. The marines then 
“entered the first floor of the 
building and cleared that up", 
according to US embassy officials 
in Port-au-Prince. 

Ten Haitians were reported 
killed and five others detained 
US nffirfais added that they hail 
recovered two .38 revolvers and 
one Ml rifle from the dead 


from the Nowa gnome enterprise 
in Nowa S6L These German day- 
trippers are considered crucial in 
helping to correct Poland’s trade 
gap - $2bn in 1992. 

“If we can't sell the gnomes in 
Germany, the Ge rmans will come 
to Poland to buy them,” said Mr 
Jacek Szlachta, deputy director 
Of Poland’s central planning 
office. “Over 40m Germans 
crossed into Poland last year. I 
reckon they each spend an aver- 
age of DM50. This has already 
helped reduce our negative trade 
balance to $ 100 m last year," he 
explained 

That Is little comfort to Mr 
Olba. “I can’t live off selling the 
gnomes on the Polish road- 
side ... I now have to drive to 
the Czech Republic and make my 
way over to Austria and Switzer- 
land where I can earn hard cur- 
rency. But that's a long drive". 


has helped to shield it from the 
effects of stiff competition In the 
home market. 

Mr Paul Steel, who heads 
Pepsi-Cola’s sales and marketing 
in Europe, said: “It's potential 
that we’re only just beginning to 
expand. We’ve Identified some 
massive opportunities there.” 

The company’s different busi- 
nesses have had a history of sep- 
arate development, said Hr 
Wayne Mailloux, president of 
Pepsl-Cola Europe: “We tend to 
operate with very autonomous, 
decentralised divisions, so much 
so that our customers do not 
really know us for afi of the vari- 
ous dimensions that we repre- 
sent" 

He dismissed the idea that 
increased centralisation might 
dampen the commercial zeal of 
individual divisional beads. 
“We’re never going to allow 
ourselves to become a govern- 
ment bureaucracy. We will 
always put entrepreneurial drive 
first” 


Italian 
fashion 
moves from 
catwalk to 
courtroom 

By Robert Graham In Rome 

As the Italian press has rubbed 
home this weekend, the famous 
names of fashion are having to 
get used to a new style - the 
style of Justice. 

The name of Giorgio Armani 
has now been added to a growing 
list of fashion designers who 
have fallen foul of an inquiry by 
Milan anti-corruption magis- 
trates into pay-offs to the Guar- 
dia di Finanza. the financial 
police. 

A total of 14 designers are 
believed to be under investiga- 
tion for paying Llbn (8643,000) in 
order to ensure “friendly” tax 
inspections of their accounts. 
Those involved include the Ver- 
sace group, Krizia (designer Mar- 
iuccia Mandelli) and Gianfranco 
Ferre. 

The probe comes at an embar- 
rassing moment fbr Italy’s fash- 
ion business, With the annual 
autumn shows due to start in 
Milan at the beginning of Octo- 
ber. 

On Saturday Mr A rmani, who 
has just celebrated his 60th birth- 
day, was briefly interrogated by 
Mr Antonio Di Pietro, the best 
known anti-corruption magis- 
trate. Mr Oreste Do mini oni, his 
lawyer, subsequently told jour- 
nalists Mr Armani had paid 
LlOOrn during a tax inspection in 
1990 to members of the financial 
police. 

The payment was made under 
duress. Mr Daminiani said. This 
is the same defence employed by 
every businessman caught up In 
this investigation - from steel 
magnate Alberto Falck to Mr 
Paolo Berlusconi, the prime min- 
ister’s brother. 

Mr Armani's appearance before 
Mr Di Pietro was quickly fol- 
lowed by Gianfranco Ferrt, the 
architect turned designer. He 
declined to comment on his inter- 
rogation; but judicial sources 
said he admitted paying over 
L300m, also in 1990, at the time of 
a tax inspection. 

Mr Armani and Mr Ferrt are 
among the most successful Ital- 
ian designers. Armani’s 1993 
worldwide turnover was L856bn, 
while that of Gianfranco Ferrt, 
who designed the Italian World 
Cup football team's outfit, was 
close to L900bn. 

The question is less the dam- 
age to the image of Italy's profit- 
able and dynamic fashion busi- 
ness and much more where the 
magistrates will turn their atten- 
tion next More than 50 members 
of the Guardia di finanza have 
been arrested, inpimtiwg a gen- 
eral and an official working with 
Mr Di Pietro. Three have commit- 
ted suicide over the past three 
months. Most of these nffiriaig 
are now co-operating under plea- 
bargaining deals. 

It would seem that the magis- 
trates want to remind the public 
with these easily identifiable fig- 
ures that anti-corruption investi- 
gations have restarted with vig- 
our alter the summer break. 


Germans fend off Polish gnomes 


PepsiCo ‘to save $100m’ 


FT WEATHER GUIDE 


Europe today 


A frontal zone, separating warm and sunny 
conditions over Italy and Greece from rather 
cool and changeable weather in France and 
northern Spain. wiH again cause heavy 
downpours and thunder storms In northern Italy 
and the southern Alps. A deep low pressure 
area win develop over the southern Norwegian 
Sea. The cold front associated with this low will 
bring showery rain to western Norway and the 
eastern UK. Behind the front, cool and gusty 
showers will cross the Scottish Highlands. An 
old frontal zone will finger over western France 
and the Low Countries and as a result, it win be 
cloudy with rain in places. Scandinavia will have 
rain in the south, but bright sunshine in the 
north. 

Five-day forecast 

High pressure west of the Bay of Biscay and a 

deep low near the Norwegian coast will cause 

north-westerly winds to bring much cooler 
conditions into north-western Europe. There wfli 
be plenty of showers In coastal areas. The 
north-facing slopes of the Alps win have rain at 
times. Heavy rain and thunder will spread east 

from northern Italy into Croatia. Heavy thunder 
storms will also affect the east coast of Spain. 
Portugal and south-eastern Europe will stay 
sunny and quite warm. 

TODAY’S TEMPERATURES 



Situation af 12 GMT. Tempemtures matimmi tor day. Forecasts by Afeteo Consuff at (tie Atetowfara* 



Maximum 

Beifmg 

shower 

as 

Caracas 

fair 

31 


Celsius 

Belfast 

shows' 

13 

Cardiff 

cloudy 

IS 

Abu Dhab 

cun 

ar 

Behyade 

sun 

« 

Casablanca 

rafr 

22 

Accra 

lab 

27 

Benin 

lair 

22 

Chicago 

rain 

16 

Algiers 

shower 

27 

Bermuda 

Mr 

30 

Cologne 

shower 

20 

Amsterdam 

ram 

15 

Bogota 

dowdy 

16 

Dakar 

Mr 

29 

Alhem 

sun 

30 

Bombay 

Wr 

31 

Dsflas 

sun 

30 

Atlanta 

tv 

25 

Brussels 

shower 

18 

Delhi 

sun 

31 

a Aiwa 

rain 

15 

Budapest 

sun 

26 

Dubai 

sun 

37 

B.harr 

cloudy 

14 

CJhaoan 

cloudy 

15 

Dubfln 

fair 

15 

Baigkok 

rain 

32 

Catre 

(air 

32 

Dubrovnik 

sun 

26 

Barcelona 

Hunt! 

23 

Capa Town 

talr 

17 

Edtoburgh 

fair 

14 


Faro 


More ond more experienced travellers 
make us their first choice. 


Lufthansa 


Karadi 

Kuwait 

L Angeles 

Las Palmas 

Ums 

Lisbon 

London 

UKJbourg 

Lyon 

Madeira 


sun 

2d 

Madrid 

sun 

22 

Rangoon 

cloudy 

31 

fair 

21 

Majorca 

tiund 

25 

Reykjavik 

Sin 

S 

shower 

22 

Malta 

sun 

29 

Rto 

fair 

27 

sun 

24 

Manchester 

shower 

13 

Rome 

fair 

29 

shower 

13 

Manila 

ram 

31 

S.Frsco 

fair 

25 

shower 

17 

Melbourne 

shower 

13 

Seoul 

ctoudy 

24 

cloudy 

11 

Mexico City 

fair 

24 

Singapore 

ram 

31 

far 

31 

Miami 

fair 

32 

Stockholm 

cloudy 

13 

fair 

31 

Milan 

thund 

23 

Strasbourg 

fair 

22 

sun 

27 

Montreal 

rain 

17 

Sydney 

sun 

20 

fair 

33 

Moscow 

cloudy 

15 

Tangier 

sun 

22 

Shower 

15 

Mmlch 

fab- 

£3 

Tel Aviv 

faff 

31 

sin 

33 

Nairobi 

fair 

28 

Tokyo 

shower 

27 

sun 

35 

Naples 

far 

32 

Toronto 

ram 

18 

sun 

26 

Nassau 

shower 

32 

Vancouver 

fair 

19 

sun 

2 a 

Now York 

shower 

22 

Venice 

shower 

24 

fair 

24 

face 

thund 

23 

Vienna 

sun 

24 

fair 

22 

Nicosia 

sun 

28 

Warsaw 

fair 

20 

rain 

16 

Oslo 

ram 

13 

Washington 

Shower 

22 

fair 

19 

Pods 

fair 

20 

WaBngton 

Shower 

12 

shower 

23 

Perth 

shower 

23 

Winnipeg 

far 

21 

fair 

24 

Prague 

fair 

23 

Zurich 

fair 

20 


THE LEX COLUMN 

Waiting for the Fed 


The need for a rise In US interest rates 
is becoming increasingly apparent. 
The bond market’s continuing anxiety 
about Inflation appears justified by tbe 
most recent data on capacity utilisa- 
tion and industrial production. While 
inventory adjustments may slow the 
economy during the current quarter, 
growth is likely to rebound to above 4 
per cent in the fourth quarter. That is 
well above the Fed’s 2J5 per cent tar- 
get The only factor that might delay 
an interest rate rise immediately after 
the Federal open market committee’s 
meeting this week is November’s Con- 
gressional elections. An increase soon 
after these would then be inevitable. 

The more important questions are 
how high interest rates need to go to 
slow the economy down to the 2L5 per 
cent growth rate favoured by the Fed 
and how much damage such an 
increase will wreak on the corporate 
earnings and the equity market Econ- 
omists are divided. Some argue for no 
Increase. Others believe rates will 
need to go as high as 7 per cent This 
lack of consensus has been a primary 
factor in the markets' instability. 

The bond market would be more 
likely to calm down if the Fed decided 
on a full percentage point rise. A half 
point rise would simply leave the mar- 
ket waiting for more during the 
spring. As for equities, this year's 
earning s would not be affected, but 
the high levels of corporate and pri- 
vate debt in the US would -undoubt- 
edly lead next year's profits to under- 
shoot expectations. The price of 

lmnriring infla tion rm the head could 
be a sharp correction on Wall Street 

Biotechnology 

The US biotechnology business has 
hit a cash crunch. The median quoted 
biotech group has insufficient capital 
to survive beyond the next 25 months, 
compared with 34 months a year ago. 
The industry is used to waves of 
investment interest and disenchant- 
ment, hut this time the sector seems 
to be suffering a more si gnificant mal- 
aise. Between 20 and 30 per cent of the 
quoted sector is in serious financial 
difficulties. 

Tbe reasons fbr the cash shortage 
are various. Investors were over-en- 
thusiastic during the 1980s; although 
biotech groups were supposed to 
reduce the risks of developing new 
medicines through their greater 
understanding of science, many inves- 
tors did not realise the risk of failure 
nevertheless remained high. The n the 
Clintons* proposals for healthcare 


BAA 

Share price relative to the 
FT-SfrAAS-Shae Index 
350 



reform and the separate deceleration 
in growth of the world drugs market 
have cast a general pall over the 
industry. Since 1991, biotech stocks 
have underperformed the Standard & 
Poor’s 500 by nearly 50 per cent. 

This does not mean the death of the 
US biotech industry, but it heralds 
rationalisa tion. Costs can be cut and 
ambitions reined in. For those making 
good scientific progress, alternative 
sources of funds are available, particu- 
larly from the drugs Industry. Those 
incapable of raising additional money 
must merge. The sector's long-term 
future remains bright. Healthcare pro- 
viders remain willing to prescribe 
expensive novel treatments If they 
reduce overall costs. The rewards for 
those successfully developing innova- 
tive drugs have never been greater. 

BAA 

The temptation for BAA to try to 
replicate its winning UK formula in 
overseas markets seems, at first 
glance, irresistible. BAA’s expertise in 
the low-cost construction, retail man- 
agement and controlling of airports is 
clearly in demand. Australia’s airport 
privatisation, fbr which approval at 
the Labor party conference this week 
would dear the way, is unlikely to be 
the last programme initiated by a 
cash-strapped government turning to 
the private sector to fund airport 
in f r a s tru cture. 

But so far the benefits of BAA's 
internationalisation have proved elu- 
sive. Its management contract at Pitts- 
burgh has, in just one year, lifted 
spending from less than 84 per passen- 
ger to more than $8, but the operation 
adds little to BAA’s bottom line. The 
danger is that by offering such consul- 
tancy services BAA sells off its blue- 
prints for success. To make a good 


return the company needs to take 
equity stakes. But there are few coun- 
tries willing to cede control of their 
airports to foreigners. 

In any case, BAA does not need to 
internationalise. The group expects 
passenger volumes at its UK airports 
to increase 4 per cent a year, lifting 
passenger numbers at Heathrow alone 
from 48m presently to 80m by 2016. 
Passenger spending can also be raised. 
In spite of BAA's undoubted skill, 
most of its terminals still yield less 
than Singapore's Changi or Amster- 
dam's Schiphol. The group is busy 
expanding retail space by 80 per cent. 
Tbe first stage, at Heathrow's terminal 
four, raised spending per passenger by 
30 per cent Given such opportunities 
at home, the rewards overseas will 
have to be alluring to make them 
worth the distraction. 

Indian telecoms 

A whiff of controversy overhangs 
telecoms offerings from the Indian 
subcontinent. Pakistan Telecom 
vouchers were offered to international 
investors earlier this month despite 
there being no proper prospectus and 
with Jardine Fleming, the global coor- 
dinator, unable to go through the nor- 
mal due diligence process. Even so. 
8900m of vouchers were snapped up. 

Now India is wandering whether to 
revive the sale of shares in VSNL, the 
international operator whose 81bn 
offering was pulled in May when 
investors refused to pay the price the 
government demanded. Ministers, who 
held out for a price set before global 
equity markets dived in February, 
were condemned for failing to under- 
stand that prices must be fixed in the 
light of market conditions. Salomon 
Brothers and Kleinwort Benson, their 
h anker s, were also criticised for foiling 
to educate their client adequately. 

Such neglect certainly carries a 
price. Investors, who have once wit- 
nessed unpredictable behaviour will 
worry about further political surprises 
if they buy VSNL stock. Set against 
this is the group's undoubted appeal 
as an investment Not only does India 
- with only eight lines per thousand 
people compared with a global average 
of 100 lines - have peat scope to 
develop its market international traf- 
fic. over which VSNL has a 10 -year 
monopoly, is the fastest-growing and 
most profitable part of the market 
Provided ministers do not try again to 
over-price the issue, such attractions 
should persuade investors that buying 
shares is worth the risk. 


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THIS WEEK 


MARTIN WOLF: 

ECONOMIC EYE 
The growth of single-parent 
households and second families 
was only made feasible by the 
welfare state, Martin Wolf argues. 
The Child Support Agency was an 
attempt to shift this burden back 
on to fathers. But there is not 
enough money to go round. Page 20 



BRONWEN MADDOX; 

GLOBAL INVESTOR 
European markets appear 
fiffirap'jHifl determined to salvage some 
cyclical stocks from the 
implications of rising interest rates. 

JB In P erfods - 35 the present 

one. where rates are pushed up by 
* f * c ***™^® higher than expected growth in 
output, cydicaJ stocks can continue to generate 
earnings surprises, so the case goes. The attempts 
are valiant, but remain vulnerable to anything but a 
limited rise in rates. Page 20 


BONDS: 

Encouraging fundamentals, Including lower than 
expected inflation data and another fall in M3 
money supply growth, lent support to the long end 
of the German yield curve last week. The recovery 
remains vulnerable to possible setbacks in the US 
Treasury market, the German federal elections and 
the forthcoming wage round. Page 22 

EQUITIES: 

This is the last week of the third quarter. On Wall 
Street, sentiment will hinge on the outcome of 
tomorrow’s Federal Reserve policy session. In 
London, a three-month gain In the FT-SE 100 has 
been whittled down to not much more than 100 
points. The index has to move quickly In the final 
quarter to meet many year-end forecasts. 

Page 23 

EMERGING MARKETS: 

If Brazil elects Fernando Henrique Cardoso as 
president next week, privatisation may be speeded 
up and fiscal reforms could lead to strong growth 
for the equity market and a big increase in 
capital-raising by Brazilian companies. Page 21 

CURRENCIES: 

Passible Interest rate rises and trade negotiations 
will be the key factors motivating the markets this 
week as the doHar comes under scrutiny. Page 21 

COMMODITIES: 

Analysts wHI be anxious to see whether leading 
contracts on the London Metal Exchange are coiled 
to resume last week’s run-up or enter a shake-out 
Page 20 

UK COMPANIES: 

Housebuilder Charles Church is to have a further 
£50.7m of debt written off to aid Its recuperation 
and eventually allow it to be floated. Page IB 

INTERNATIONAL COMPANIES: 

Standard & Poor's has downgraded its long-term 
debt ratings on Daimler Benz and related entities to 
AA- from AA. Page 19 


STATISTICS 


Base lending rates 29 

Company meetings ... — 12 

Dfvfckmd payments 12 

FT-A Worid Indices 20 

FT Guide to currencies ... 21 
Foreign exchanges 29 


London recent Issues ...... 29 

London share service 29*31 
Managed finds — ..... 25*29 

Money markets 29 

New kit bond issues 22 

Worid stock mkt Indices . 24 


Lufthansa 


to cut debt 
by DM3bn 


By Paul Betts in London 

Lufthansa, the German national 
airline, plans to reduce the 
group’s long-term net debt by 
nearly DM3bn f$I.9bn) by 1997 as 
part of its overall restructuring 
and financial recovery. 

The reduction In net debt will 
lead to annual interest payment 
savings of about DM200m a year 
by 1997 in addition to the 
DM500m-DM700m in annual 
savings the company is seeking 
to achieve from its restructuring 
and cost-cutting strategy, accord- 
ing to Mr Klaus Schiede, Luft- 
hansa's deputy chairman and 
chief financial officer. 

Mr Schiede said Lufthansa 
would use all the proceeds of the 
DMl.2bn it is raising from its cur- 
rent rights issue to repay ahead 
of schedule a DMl.Zbn Euroloan 
maturing in 2000. 

During a roadshow to promote 
the issue, which is an integral 
part of the airline's privatisation 
programme, Mr Schiede also dis- 
closed the airline would retire 


ahead of schedule another 
DMoOOm floating rate bond In the 
current quarter. 

The airline has already repaid 
DM2S0m of the floating rate bond 
in July and intends to retire the 
other DM250m next month. 

“By the end of this year we will 
have reduced our net debt from 
DM5.9bn to DM4.2bn," Mr 
Schiede said. This DM1.7bn 
reduction in long-term debt 
would lead to annual interest 
payment savings of DMIOQm b; 
next year. 

In the next two years, two fur- 
ther bond issues will come to 
maturity including DM300m next 
year and DM750m in 1996. "We 
will repay these loans out of 
cashflow as we see no need for 
new indebtedness,** he said. 

With the repayment of these 
further Eurobond issues, the 
group's long-term debt will be cut 
to DM3.15bn by the end* of 1996, 
close to its three-year target of 
DM3bn. This will lead to the 
annual DM200m interest payment 
savings the group Is seeking. 


NatWest may bid 
for Irish bank 


By John Gap per In London 

National Westminster Bank is 
likely to be allowed to mak e an 
iniOm (Sl70m) bid for TSB Bank 
in the Republic of Ireland as part 
of an effort by the Irish govern- 
ment to create a "third force" in 
the banking sector to rival Allied 
Irish Banks and Bank of Ireland. 

The government is expected to 
allow NatWest to bid against 
National Australia Bank for TSB. 
Although the trustees of TSB 
have agreed to be acquired by 
NAB, the government is likely to 
intervene to ensure that It 
receives the highest price for the 
state-owned bank. 

The government is due to 
receive a report next month pre- 
pared jointly by SKC Corporate 
Finance, N.M. Rothschild and 
William Fry outlining a frame- 
work for a TSB auction. The suc- 
cessful bidder may also be 
required to buy Industrial Credit 
Corporation, the statecontrolled 
finance house. 


NatWest has been given the 
financial data to allow it to make 
a financial assessment of TSB, 
which had I£L23bn in assets, and 
capital reserves of I£57.5m. at the 
end of 1993. NatWest has said it 
is willing to make a higher bid 
than NAB. which is thought to 
have offered I£102m. 

Lord Alexander. NatWest's 
chairman, said he believes that 
NatWest was now more likely to 
be allowed to bid for TSB. “The 
door is rather more open than it 
was because, although NAB had 
a head start, the position is being 
looked at and other options eval- 
uated," he said. 

Lord Alexander said that by 
combining TSB with Ulster Bank, 
NatWest would be able to achieve 
"considerable further develop- 
ment” of its Irish, banking 
operations. "It would be an even 
more serious presence, and what 
might be described as a true 
third force," he said. 

Challengers jostle in 
the queue, Page 15 


Money market funds are catching on in Germany, writes Andrew Fisher 


Novelty of the short-term 



W hen German inves- 
tors are offered 
champagne and 
caviar to tempt 
them to bring in new customers, 
something new must be up in a 
country where financial innova- 
tion proceeds cautiously rather 
than swiftly. In Germany, inves- 
tors tend to be very much In the 
safety-first mould. 

The novelty is money market 
funds, now coming steadily on to 
the German financial scene since 
legal barriers to their rale were 
dropped last month. About 20 
such funds have either been 
approved or are in the pipeline. 
With increased familiarity. 

I investors will become blas£ about 
; this new - for Germany - invest- 
j ment medium, offering immedi- 
ate access to their money at 
Interest rates higher than on 
fixed-rate deposits. 

To steal a march on its rivals, 
one big German bank set up two 
funds in Luxembourg while 
awaiting regulatory approval to 
base them in Germany. 

Commerzbank's funds - with 
minimum deposits of DM20,000 
and DM100,000 for private and 
professional or corporate inves- 
tors - have attracted nearly 
DM8bn (£3.2bn). Competitors 
tend to be disdainful about Com- 
merzbank's marketing methods, 
including television advertising 
as well as its free champagne and 
caviar offer for clients introduc- 
ing new business. But the bank, 
whose funds yield just more than 
4 per cent against 3.5 per cent for 
term deposits, sees them as a 
way of raising new customers. 

Clearly, much of the money 
going into the funds comes from 
the bank’s own fixed-rate deposit 
accounts, but Commerzbank 
reckons at least a quarter of the 
inflows represent new money. 

Other countries have had 
money market funds, which 
invest in short-term government, 
commercial and other paper, for 
same time. In the US, their vol- 
ume totals nearly S600bn, while 
French funds have reached 
S250bn. In Germany, however, 


their significance goes beyond 
their likely attraction to inves- 
tors. Their introduction repre- 
sents an enhancement to the 
evolving status of Germany as a 
financial centre. 

"This is more than a small step 
In the right direction." says Mr 
Christian Stranger, chief execu- 
tive of DWS, the Deutsche Bank 
fund management concern, ’“nils 
was one of the few elements still 
missing. It is important to have 
money market funds in the range 


of offerings. AQ mature financial 
markets have them." 

If the Bundesbank had had its 
way, money market funds would 
never have seen the light of day. 
The central bank was concerned 
about their potential for under- 
mining control of the money sup- 
ply. 

To press home its point, the 
Bundesbank last month with- 
drew Its short-dated paper 
(Bulis). raying it did not want to 
encourage short-termism in 


financial markets. This was re- 
emphasised last week by Mr 
Hans Tietraeyer. president of the 
central bank, who said the fed- 
eral and state governments 
should not turn to short-term 
issues. 

While the removal of Bulis 
takes some DM25bn of paper out 
of the market, fund managers do 
not see this as a great handicap. 
"It's a pity that such a top qual- 
ity investment is not available," 
says Mr stranger, but he and oth- 
ers see plenty of other invest- 
ment opportunities. 

The German funds will obvi- 
ously encourage more companies 
to issue commercial paper. There 
are about 60 CP programmes in 
D-Marks, including blue chips 
such as Daimler-Ben2. Volkswa- 
gen and BMW. But the winding 
down of the Treuhand privatisa- 
tion agency will remove the big- 
gest programme, worth DMIObn. 

Mr Rudolf Siebel. Frankfurt- 
based Investment fund analyst at 
the Moody's rating agency, says 
fund managers could have to 
accept more lower-grade paper 
from new issuers to offset the 
lack of government and Treu- 
hand paper. 

However, the Bonn govern- 
ment's new 10-year floating rate 
bond, based on the three-month 
Frankfurt interbank rate - the 
Bundesbank is not too enthusias- 
tic about this, either - will pro- 
vide an additional investment. 

Mr Rolf Passow, head of DIT, 
the Dresdner Bank investment 
offshoot, hopes the funds will 
help popularise investment in 
funds generally as an alternative 
to fixed-interest savings. 

The next step would be to 
interest more people in share- 
based unit trusts. At present 68 
per cent of the DM325bn invested 
in German unit trusts is in bond 
funds. The potential prize is a big 
one. Germans have some 
DM4.000bn in private financial 
assets, 44 per cent of these in 
bank deposits, if more went into 
shares and ftmds, the effect on 
German financial markets could 
be considerable. 


Lloyd’s agency seeks listing for dedicated fund 


By Richard Lapper in London 

Hiscox Group, the Lloyd’s 
agency, is to seek a stock market 
listing for its “Dedicated” invest- 
ment fund, which provides corpo- 
rate capital exclusively to its four 
syndicates. 

The move is designed to pave 
the way for the eventual creation 
of an insurance company which 
would operate within the Lloyd's 


regulatory framework, signalling 
a further shift in the character of 
the insurance market which has 
traditionally relied on individual 
Names trading with unlimited 
liability for their losses. 

Lloyd’s raised corporate capital 
for the first time last year. More 
than a dozen listed investment 
funds now supply some £800m 
(51.2m) to syndicates and account 
for more than 14 per cent of the 


market's capacity - the amount 
of premiums it can accept. 

So far, all listed funds have 
been investment trusts support- 
ing a range of agencies - and the 
syndicates they manage - across 
the insurance market, because 
stock exchange rules have pre- 
vented the listing of single 
agency or “dedicated” vehicles on 
the grounds that they do not 
have a three-year trading record. 


Mr Robert Hiscox, chairman of 
Hiscox and deputy chairman of 
the market as a whole, indicated 
a relaxation was in prospect. Mr 
Hiscox, who helped orchestrate 
the drive to attract corporate cap- 
ital last year, raid his group will 
need to provide audited accounts 
for syndicate years of account 
which still have to be closed, in 
line with the market's three-year 
accounting system. 


This week; Company news 


FIAT 

Profitability in 
sight after 
last year’s 
huge losses 

On Thursday. Fiat Italy's biggest 
private-sector industrial group, will 
publish its half-year results, providing 
the first concrete indications of how it 
is working towards the objective of 
full-year profits outlined by Mr 
G ianni Agnelli, group chairman, 
at the shareholder meeting in 
June. 

Last year, the group revealed a 
L966bn (5620.8tn) loss for the first half - 
which became a record Ll,7S3bn 
(SI. 146b a) loss in the frill year - and a 
complex cash-raising plan worth a total 
of L5.000bu. 

The group's shares fell sharply 
afterwards. 

This year’s half-year announcement 
should be less dramatic. Analysts ore 
more or less in agreement that the 
group will show a small pre-tax profit 
for the first half. 

Italian buyers of Fiat cars - which 
include the Alfa Romeo and Lancia 
brands - have held back during the 
first nine months of the year, first 
because of political uncertainty and 
then because of expectations, now all 
hut eliminated, that the Italian 
government might push through 

incentives for car purchases. 

However, Fiat has still managed to 
increase its market share in Italy, with 
the help of a competitive exchange rate 
which has deterred buyers of rival 
foreign marques, in particular 
Japanese. 

Exports should also show strong 
growth, for the same reasons, with the 
Fiat Punto, launched last year, leading 
the recovery. . 

The prospect of good results is 
already in the Fiat share price, 
according to analysts, and investors 
may be more concerned next week by 
the Italian government’s efforts to push 
through a 1995 budget 


Inchcape 


Share price relative to the 
FT-SE-A AH-Share Index 
140 



INCHCAPE 

Analysts have a yen 
for reassurance 

So far, 1994 has not been a happy year 
for Inch cape, the international motors, 
marketing and business services group. 
Its share price has fallen by a third 
since January, and analysts will be 
anxious for reassurance today when the 
UK-based group reports results for the 
six months to June 30. 

Currency has been the main bugbear. 
Inchcape does a lot of its business in 
and from the Far Bast and the strength 
of the yen against both the dollar and 
sterling will adversely depress its 
results. The Japanese recession bit the 
group’s marketing activities, which also 
suffered when the Chinese authorities 
last year imposed austerity measures to 
slow the pace of development in their 
southern provinces. 

Inchcape has also been rueing an 
FT-SE Actuaries re-classification which 
led to its being moved from business 
services sector to vehicle distributors. 

It was concerned over being put in a 
sector which mainly comprises UK 
distributors, when only about 15 per 
cent of the group’s total profits come 
from motors in the UK Sure enough, 
when news of the disappointing level of 
new car registrations in the UK during 
August hit its new sector this month. 
Inchcape was clobbered along with 
companies which trade only in the UK 

Analysts now expect pre-tax profits of 
about £U5m-£i2Qm against 2130m 
<$205.4m) but will be more interested in 
the outlook for the second half. 


OTHER COMPANIES 

Cyclical subsidiaries 
make for sunnier SGB 

Sori&g G£n6rale de Belgique is likely 
to post better first-half 1994 earnings 
today following a recent improvement 
in its rating by many analysts. 

The earnings gain is likely to be due 
mainly to better results at the flagship 
holding company’s more cyclical 
subsidiaries, analysts said. 

An estimate by Banque Bruxelles 
Lambert, sees SGB’s first-half group net 
rising nearly 50 per cent to BFr6.4bn 
($201m) from BFr4.4bn in the first half 
of 1993. 

First-half current profit is expected to 
rise rise 26 per cent to BFT4.6bn, from 
BFi3.7bn in the first half of 1993. 

SGB will consolidate about BFrlbn of 
extraordinary gains at non-ferrous 
metals unit Union Mini ere. 

■ Stena Line: The world’s biggest ferry 
operator, will present figures for the 
first eight months on Wednesday, 
showing it is firmly on track to exceed 
1993’s profit of SKr273m (537m) for the 
full year. Higher volumes and the 
delayed start to the Channel Tunnel 
have enabled the group's UK operations 
to make progress despite a 
cross-channel price war. In 
Scandinavia, cost-cutting has helped to 
offset the impact of lingering recession 
and the weak Swedish krona. 

■ Banca Commerciale Italians: The 

Italian bank is due to report on 
Wednesday half-year figures covering 
the first months of operations 


Companies In this issue 


BHP 

19 

Deutsche Sank 

Banca Comm HaHana 

17 

Ennemix 

BenfleW Group 

18 

Fiat 

Brunner Mend 

IB 

Forte 

Church (Charles) 

18 

Hay (Norman) 

Chuchffl China 

18 

Hiscox 

Coca-Cola 

19 

Inchcape 

Commerzbank 

17 

Lufthansa 

Daimler Benz 

19 

Meridian 


SocMt* Generate de Belgique 

Share price (BFi) 



post -privatisation. The 1993 group profit 
was 37 percent up at L3012bn (5193.6m). 
but the boost came mainly from a 
strong performance among subsidiaries. 
Attention will now focus on whether 
the parent company can turn in higher 
earnings. 

■ Forte: The London-based group 
announces half-year results on 
Thursday, with pre-tax profits of 
between £50m and £55m (587m) 
expected, compared with £37m last 
time. The results come at the end of one 
of the most momentous months in the 
hotel and restaurant group's history. It 
has been given a formal say in the 
management of the Savoy Hotel group, 
although it has not won overall control. 
More significant from a commercial 
point of view, it won control of 
Meridien hotels, the French chain 
controlled by Air France. Attention is 
likely to focus on Forte’s success in 
holding on to contracts to manage 
Meridien properties. 


19 

NatWest 

17 

IB 

New Look 

18 

17 

News Corporation 

18 

17 

Pantheon Investment 

18 


Pearaon 

18 


5GB 

17 

17 

Schrader Wagg 

18 

17 

Stena Line 

17 

17 

TS8 Bank 

17 

17 

Time Warner 

10 


This announcement appears as a matter of record only. 


LouisDreyfus 



Private Placement of 

Louis Dreyfus Corporation 

$235,000,000 

Senior Notes due 1999 
Senior Notes due 2001 


The above Private Placement was arranged by 

Chemical Securities Inc. 


%% Chemical 




\ 

\ 








18 


FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 


COMPANIES AND FINANCE 


CMHes Church refinanced 


ByAndraw Taylor, 

Construction Correspondent 

Banks which led the financial 
rescue of housebuilder Charles 
Church three years ago have 
agreed to write off a further 
£S0.7m of debt to aid the coni' 
pany's recuperation and even- 
tually allow it to be floated. 

They have also provided 
£10m of new loans to enable 
the company to buy land in the 
home counties and increase its 
building programme as the 
housing market recovers. 

In a letter to shareholders Dr 
John Roberts, chairman, said 
the independent directors had 
been advised by NatWest Mar- 
kets that "a future flotation of 
Charles Church Group is most 
likely to maximise returns to 
shareholders and subject to 
favourable economic and mar- 
ket conditions is a realistic 
prospect”. 


The latest refinancing 
involves a complex share 
restructure. Banks which pro- 
vided the original rescue pack- 
age and have agreed the fur- 
ther debt reduction have 
increased their stake in the 
group from 42 to 80 per cent. 

Preference shareholders and 
other banks which provided 
memnine finance in 1989 have 
had their stake reduced from 
about 40 per cent to 10 per 
cent Charles Church manage- 
ment have retained their 10 per 
cent holding. 

The continuing high level of 
Charles Church borrowings 
meant that the group recorded 
a pre-tax loss of £5 .5m last year 
even though it moved back 
into the black at operating 
level. Trading profit was 
£332,000 compared with a loss 
of £17.67m the previous year. 

Mr Stewart Baseley, Charles 
Church chief executive, said: 



Stewart Baseley: fortunes have 
improved significantly 

“The company’s fortunes have 
improved significantly and the 
business is now performing 
welL As a consequence our 
banks did not need to do any- 
thing, but based on our recent 
track record have demon- 
strated their confidence and 


support in the management by 
investing further into our prof- 
itable growth and expansion." 

Dr Roberts said that the com- 
pany had been due to repay 
hanks about £14_2m of debt and 
accrued interest in August 
□ext year, with similar 
amounts due in 1996 and 1997. 
The independent directors 
believed it would not be able to 
meet these obligations an d sup- 
ported the restructuring as 
"the only way by which share- 
holders as a whole may 
achieve any meaningful future 
value for their shareholdings". 

Borrowings following the 
restructuring have been 
reduced from £90. 7m to £50-5m, 
including the new £10m loan 
for land purchases. Sharehold- 
ers' funds, which previously 
were in deficit, are now back in 
the black, enabling the com- 
pany to pay dividends in the 
future. 


Churchill China plans to raise £15m 


By Peggy Holfinger 

Churchill China is coming to 
the market next month. It is 
the third oldest Staffordshire- 
based china company to float 
in the last year, after Royal 
Doulton and Denby. 

Churchill, founded under the 
Sampson Bridgwood name 200 
years ago. wants to raise £15m 
via a placing. 

About £5m of the proceeds 
will be used to carry out an 
investment programme to 
improve capacity and quality. 
The balance will go to the 
three brothers whose family 
have run the company since 
1922. After the float, the Roper 
family will have about 55 per 


cent of the enlarged equity. 

Mr Stephen Roper, chief 
executive, says a flotation 
would also give the group the 
flexibility to attract and keep 
management expertise with 
Incentives such as share 
options. 

Churchill has three divisions 
- tableware, hotelware and 
fine china. Tableware produces 
the cheaper earthenware prod- 
uct in traditional floral or bine 
willow patterns. Churchill 
intends to invest about £800,000 
in this division. 

In 1993 hotelware contrib- 
uted £i.7m to group profits of 
£2 .9m. Churchill would invest 
about £5J5m in the division to 
expand capacity. 


The flotation will include a 
profits forecast Mr Roper said 
Churchill would show an 
improvement on last year’s 
£2.9m profit and £36m in sales. 
Hoare Govett Is sponsor. 

• Other companies revealing 
plans to come to market 
include Brunner Mond, the 
UK's biggest soda ash group. 
New Look, a womens wear 
retailer, and Ennemlx, an 
aggregates company. 

Sold by Imperial Chemical 
Industries in 1991 to Penrice, a 
management buy-in company 
since renamed, Brunner could 
be valued at about £250m when 
it floats early in 1995. 

New Look is to launch a pla- 
cing and open offer by the end 


of the year, valuing the com- 
pany at £150m-£180m and 
involving some S5 per cent of 
the equity. 

Founded by deputy chair- 
man, Mr Tom Sin g h, the com- 
pany has 221 retail outlets in 
the UK and ID in France. In the 
year to March 26 last, sales 
were £88 .4m and profits was 
SlQj9m. 

Ennemlx 's previous flotation 
proposal to raise almost £9m 
from a rights Issue offered to 
shareholders of Anglesey Min- 
ing for a 15 per cent stake in 
the quoted mining group, 
received insufficient institu- 
tional support. Instead it is 
planning a placing to raise 
about £4.45m. 


Benfield proves exception to the rule 


By Richard tapper 

London’s insurance and reinsurance 
brokers have not performed well over the 
last couple of years, but Benfield Group, 
the reinsurance broker which has 
announced its full year results, is a nota- 
ble and striking exception. 

Benfield, which is not listed on the stock 
market, continues to make annual profits 
equal to nearly three quarters of its oper- 
ating income, and its senior executives are 
among the best paid in the insurance 
industry. 


The marginal foil in pre-tax profits in 
the year to June 30 from £3L2m to rat-gm , 
was principally due to foils in Interest 
rates and currency losses. 

Mr Matthew Harding, the chairman, 
already a multi-millionaire with substan- 
tial interests in Chelsea Football Club, saw 
his remuneration package - excluding pen- 
sion contribution - foil only slightly to 
£2.39m (£2.45m). One other director also 
earned more than P-tm in the year. 

Yet Benfield has si gnificant ly increased 
its financial strength, boosting sharehold- 
ers' funds to £50.7m (£302mj. An extra 


£12 ,5m in equity was raised earlier this 
year to capitalise a new reinsurance com- 
pany, Benfield Re. 

Mr Harding is also well known as a 
fierce critic of the price-driven approach to 
broking favoured by many in the market 
in the 1980s. which helped depress reinsur- 
ance rates to unsustainably low levels. 

He has introduced a number of innova- 
tive elements into reinsurance contracts, 
mainly designed to prevent underwriters 
being able to underwrite business while 
retaining Uttle or no risk on their own 
accounts. 


Institutions 
take a 
longer 
term view 


By Norma Cohen, 

Investments Correspondent 

Large institutional 
shareholders may fake a much 
longer term view of the 
prospects of the companies 
they Invest in than is 
currently believed, according 
to a new survey. 

The Investor Relations 
Society, a professional 
association, studied the share 
registers of 10 leading UK 
companies over a 12 -month 
period. 

It concluded, based on 
analysis of the largest 
shareholders, that the average 
holding in any single company 
was 8 years and 4 months, far 
longer than a holding of 
between 3.5 and 5 years 
hi g hli g hted in an earlier study 
by the London Stock 
Exchange. 

However, at the margin, 
there is considerable trading 
in the shares of each 
individual company over the 
course of a year, with the 
average monthly turnover at 
7.1 per cent. 

But for the 10 largest 
institutions, the average was 
6.4 per cent, while for the 10 
smallest, monthly turnover 
was 74} per cent, suggesting 
that smaller shareholders may 
be more volatile holders of 
stock. 

Significantly, the study also 
found that life and pensions 
funds - which tend to be the 
largest institutional 
shareholders - are more likely 
to be longer term holders 
of stock than are unit 
and investment trust mana- 
gers. 

Of tiie 45 life and pensions 
shareholders in the study, 
only one totally divested itself 
of a large stake in a single 
company during the 12-month 
period. 

The 45 unit and investment 
trusts in the stndy included 
three cases of total divestment 
over the same period. 

The Dynamics of 
Institutional Share Ownership 
in Major UK Quoted 
Companies, Jeremy Monk, 
Investor Relations Society, 2nd 
floor executive suite. One 
Bedford Street, London WC2E 
9HD, 071*379-1763 


News Corp rejects panel 
as way to settle dispute 


By Conner Mtddefanmw 

News Corporation, the publish- 
ing group owned by Mr Rupert 
Murdoch, has rejected an 
attempt by investors to use the 
City Disputes Panel to resolve 
a long-running dispute over its 
exchangeable preference 
shares and convertible bonds. 

Instead, it is taking legal 
action against merchant bank 
J Henry Schroder Wagg, one of 
the investors who incurred 
losses in the confusion sur- 
rounding the preference share 
and convertible bond issues 
the media group launched in 
1989, which were convertible 
into shares owned by News 
Corp in Pearson, the owner of 
the Financial Times. 

When Pearson demerged its 
Royal Doulton china subsid- 
iary last year, investors 
thought that anyone convert- 
ing the News Corp bonds and 


shares would receive Doulton 
shares. In addition to Pearson 
shares. A notice published in 
the FT in December on behalf 
of a News Corp subsidiary 
advised holders that they were 
entitled to the Doulton shares 
as part of the exchange. 

However, in January, News 
Corp published another notice 
saying it was seeking legal 
advice and in February said 
that investors would not 
receive the Doulton shares. 

Without the Royal Doulton 
shares, the value of the conver- 
sion package was worth less 
than the redemption value of 
the bonds. In the confusion 
surrounding the terms of the 
exchange, several investors. 
Including Schroder, incurred, 
significant losses. 

Representing aggrieved 
investors, including Schroder, 
City lawyers Slaughter & May 
wrote to News Corp recom- 


mending the matter be brought 
before the disputes panel. 

News Corp, however, 
rejected arbitration "because it 
didn't think it was the most 
appropriate procedure,” Mr 
Robert Hunter, a litigation 
partner at Allen & Overy, 
News Corp’s lawyers, said yes- 
terday. Instead, the group has 
started legal action against 
Schroder, asking the High 
Court to rule that the bank has 
no grounds for compensation. 

Schroder disagrees. "We felt 
this was an appropriate dis- 
pute for the panel to hear, and 
believe it Is the right body to 
consider the dispute," Mr 
David Caruth, Schroder’s legal 
adviser said yesterday. "We 
don’t think the courts are the 
appropriate forum for this dis- 
pute,” he added. 

News Corp was unavailable 
for comment, but is expected 
to make a statement today. 


Norman Hay reduces 
losses to £368,000 


Norman Hay, the engineering 
group, reduced losses from 
£677,000 to £368,000 in the first 
half of 1994. 

The result came on the back 
of a lower turnover of £3 -24m, 
against £3. 9m. 

Mr Peter Hay, chairman, 
warned, however, that the 
company's performance would 


be held back by financing costs 
until the sale of the Heathrow 
site was concluded. 

Further progress was expec- 
ted in the second half and pros- 
pects "appear better than for 
several years,” he added 

Losses per share for the 
period amounted to 2.5p, com- 
pared with 4_5p. 


Pantheon Investment 
doubles net assets 

Pantheon international 
Participations reported an 
increased diluted net asset 
value per share of 239.6p at 
the end of 12 months to June 
30, up from 195.5p. 

Net revenue foil 17 per cent 
from £169,000 to £140,000. 
Earning s per share were down 
from 1 . 1 6p to 0 J 8 p and the 
single final dividend is main- 
tained at 0.5p. 


The Zambia Privatisation Agency is offering for sale 


3^ 




PREMIUM OIL 
INDUSTRIES 
LIMITED 


' 4 • 1 


O ffers are 

invited for the 
acquisition of up to 
seventy percent 
(70%) of the 
shareholding of 
the company; 
thirty percent 
(30%) of the 
shareholding will 
be offered to 
Zambians through 
a public flotation. 

The Enterprise 

The company is 
located in the capital 
city Lusaka, which is 
serviced by a network 
of national and 
international road, 
rail and air links. 
Premium Oil 
Industries Limited 
(POD, is one of the 
two state owned 
en terp rises producing 
edible oils, fats, soaps 
and stock feeds. POI 
has a well 
maintained 
equipment and 
factory premises. 

The equipment 

comprises oil 
expellers, solvent 
extractors, 
deodorisers, bottling 


The Market 

The range of j 


iroducts 


of POI are well 
established in the 
various segments of 
the market. The 
strong brand names 
and an established 
network of 
wholesalers and 
retailers give the 
company's products a 
competitive edge. 

Workforce 

Well trained 
management and 
technical personnel 
with many years of 
experience. There are 
presently 400 
employees on 
permanent contracts 
supplemented from 
time to time by 
temporary and casual 
labour. 


and labelling lines. 
The company also 
produces crude 
glycerine. 

Potential exists for 
expansion and 
further 

modernisation of the 
plant. 


IV Solatia PrimtiHdbn Apacj (ZRU is as autonomous Agrwy if St 
Gaoemixt Hi of Zambia. TTvcImctKmaf the Agency is ta plan, implenat,taid 
eoaftol iheptmtaatian of State monel mtapriia in Zambia. 



CROSS BORDER DMA DEALS 

BH3DER/INVESTOR 

TARGET 

SECTOR 

VALUE 

COMMENT 

Union des Assurances de 
Paris (Franee) 

Colonia (Germany) 

Insurance 

£493m 

Dad for 100K. 
control 

Browning & Farris 
Industries (US) 

Attwoods (UK) 

Waste 

management 

£364m 

LakHaw wants 
out 

Nesttt (Switzerland) 

Unit of Grand Met (UK) 

Pet food 

£323m 

More GrandMet 
restructuring 

Wang (US) 

Unit of Groups BuB 
(France) 

Computer 

services 

El 02m 

Part of strateg 
alliance 

CRH (Ireland) 

Rotondo (US) 

Bulkflng 

materials 

£Tt4^m 

Reinforcing US 
presence 

Peason (UK) 

Recoletos (Spain) 

Pub Bailing 

£12.4m 

Raising stake 

10 47% 

Daewoo (S Korea) 

DCM-Tayota (India) 

Car manufacture 

£9.6m 

Majority stake 
planned 

Nobo Group (UK) 

Oe Visu (France) 

Business 

equipment 

EBm 

Profit -related 
element 

Cockerfll Sambre 
(Belgium) 

Boo Stahl (Germany) 

Steel 

n/a 

fad confirmed 

British Steel (UKy 

ZeOeoo (Malaysia) 

European Proffles 
(Mataysi^JV) 

Steel 

n/a 

Steel rofl move 


CONTRACTS & TENDERS 


TAIWAN SUPPLY BUREAU TENDER ANNOUNCEMENT 

Buyer: TAIWAN RAILWAY ADMINISTRATION (TRA) 

Purchasing Agent: TAIWAN SUPPLY BUREAU (TSB) 

3, Kai Feng Street, 1st Sec, Taipei, Taiwan R.O.C. 

Tel: (02) 3110814 Fax: (02) 3610995 


INVITATION NO. 


TSB-9432- 130(1) 


TENDER OPENING DATE 


9:30am Nov 8 1994 


DESCRIPTION OF SUPPLIES 


L Diesel Multiple Unit (DMU) 
ii. Diesel Railcar (DRC) 


Q’TY/UNT/CAR 


10 Units (30 Cars) 
36 cars 


For further details, please refer to the Tender Invitation. The Tender Invitation is waiting 
to be taken back (fee US$340) and welcome to participate. 


INVEST IN ZAMBIA. Afrim'smodd country, one of the first to 
experience transition to plural politics and democrncy and a 
leader in the impkmentationofapnvaUscdmpn^rnmmwh^ 
will establish a market economy led by the private sector. 
Apart from privatisation, Zambia has put in place sound policies 
which have, in a short period of time, reduced inflation and 
stabilised exchange rates. The abolition of exchange controls in 
January, 1994 made the local currency, 
the Kwacha, fully convertible. 

Bidders will be required to sign a confidentiality 
agreement and pay US$100 tor receipt of a 
tender package. For further information about 
bid submission contact: 

The Director 

ZAMBIA PRIVATISATION AGENCY 
P O Box 30819, Lusaka, Zambia 
Telefax: 280-1-225270 

Telephone: 260-1-222858, 280-1-222859 


LEGAL NOTICES 


In die aulta of Qa fa fcfMion Treasmy 
Service, (U-K.) pic 
and 

ta die aaflrr at die iDotvcncj Act 1986 

Notiee U hereby given ih« Anthony June* 
McMahan and Peter Jowph Be true of KPMG 
weu 
with 


Be true 

Jwudilul lolffi tiqnutnan af the aui^uny 
effect from 2 Septemb er 1994 fallowing 


tag, nf (he comp 
kngma IW-indT 


23 August 


Se p te mb e r 1994. 


The creditor* af the above-named con ip eay lie 
rapdred. 40 a before 30 Qcufect 199a. to send 
in their full forenames and surname, their 
tddrenem and deaerfpriona, full pnientas of 
their debt, oi claim*, and the name* anil 
■ddreue, of their solicitor! (if un), to the 
undeadjgned Peter Jams* Boirae of KPMG Pea 
Marwick. PO Box 730, 20 FarrUcdOB Street, 
Loodon EC4A 4PP, joist liquidator of the mid 
compnj. and. if » nqured by notice in writing 
Emm the mid jota hqnntetat*. nx penuoaD, or 
by their scJiarcus, la come in ana prove their 
debts or diina it such tone and place ■* don be 
Specified In ndi aodee, or in denaB (hereof they 
will be cxcleded from the benefit of any 
«tistrihnioa made before ooch debts ore proved. 
Dan 21 September I95M 
PJ Beane 
John LiquUoto, 


PERSONAL 


PUBLIC SPEAKING 

Training and speech-writing 
by award winning speaker. 
First lesson free. 

Tel: (0727) 861133 


GOVERN O 
h DA BAHIA 

EDTDU. DE OQNCORRENCIA WTERNAOONAl N» OLW 
REPUBUCA FEDERATTVA DO BRASIL 
GOVERNED DO ESTADO DA BAHIA 

SECRETARIA DE ENERGtA, TRANSPOHTES E COMUMCAC£j£S - SETC 
□ERWWMENTO DE ESTRADAS DE RODAGEM DA BAHIA ■ DERBA 
PROGRAMA CORREDORE5 ROOOVIARIOS DO ESTADO DA BAHIA 

aviso OEucrmc&o 

O OEBURWMBVTO OE ESTRADAS DE RODAGEM DA BAHIA. atrawfc da ComtesSo Permanents da Licttactes. 
dBwdanwnta.amoriaa da pata Omtor Gand, conforms Ponaria N" 5S9B1. taz saber aos buoraes a dos qua tanTrsattzar 
*CONCOhR£NCIA INTERNACtONAL* para contrategio do empreses espedaftzadas am conservacSo pwtfcfica e 
IS?®**?. *3 J?? J 1 * 31 *! E- 0 * 00 da rodovias compo ne nts do PROGRAMA fcORREDOHES 

ROOOVIARIOS DO ESTADO DA BAHIA. LQTE l - BA-120, sutxracho Patio Alonso - itaparica - Rodetas. com 62 tan da 
SP 1 ®* 0, BA- 14 * aaumcfto BR-242 - BonbtaJ, com 38JX) ten de extens&o e BA-152 - SuWrocho BR-242 - 

IttOara mm -16.00 ten de tadoneflo. ° txettWqo daa proposes Oar-ae-6. £8 15:00 H, do dla 17 do novem&to do 1994, 
J®®? 18 DE* 0 * "P Mentor de sua saris, sfluaria no Centra AdmWstratta da Bahia - 

CAB, mtrtdpta Safyador - BA. Os aervegas. objato dasw EdBat. sarflo pardalmante fetandados coin recursos do Banco 
Wotamerfcano da DesonvoMmarso - BID, para o PROGRAMA CORREDORES ROOOVIARIOS DO ESTADO DA 
BAHIA P odwao partdpar, doata Rcitac&o. omprasaa bratdeiras ou estrangeins quo s<*am ori^nArlaa dos poises 
mendxos do Banco mtBtaingticano da DasermMmanto - BID Os interassadoa ooderao otter o EdtaL acds a 
atettacSo do rraEWmarno da quanta da RS 20000 (duzenos teak) a sofidtar ssotarecimentos krto A Condssfio da 
Udtuflq, na soda do DERBA nos dtas titeto a no horario das 13 te is boras, apmeniando prwa de sua habittacSo 
legal para reprasentar a ampiasa oonconsnte. 


PaAo Porto Made! 
Prasitfents da ComtssSa 


DEMAiS MEMBROS; 
Gfl Ruy Lemos Ceuta 
GuHwrmeJosd Barcnguer 
Roberto Barreto Perm 


□emrraueuTO de esttuoas de bodaoem da bama - derba. 

CCMISSAO PERMANENTE 

CEHTHO ADMftJKTRATTVO OA BAHIA - SAiVAOOA ■ BAMA - BRASIL 
CEP 41 .746400 - fiUC (DM) 370-2256 


At 


SECRETARtA DE ENERGIA. TRANSPORTES E COMUN1CA$6 eS 





The closing date for bids is 

November 25th, 1994 . 


VoiBiga Subkaun UiMki 959I> 



> .v. 


•« • 'T *« * ,.v*vw’ 

\* /! T S. ..** • £» •• • * v •\*»**’***^** ..k\/ . ,* * . 

=• «»Ti 

* ; .Av: 

R«l prevention and detection b ■ grown Industry but Just Haw much 
tbno and money should eocnpsnfiM ipmd7 

This Surrey will toe us on Issuas snail as the fifbt against money 
laundering. tadasMal asphuiags and computer haddng. 

For more information on a tutorial content and dataAS of adra rtt f lBg 
opport an Wea awflaMa In this mu ssy , p lsa c a contact; 

BRIAN POWELL 
Tat +44 71 873 3223 


FT Surveys 


BRAZILIAN NAVAL COMMISSION 
IN EUROPE 

NOTICE OF PUBLIC TENDER NR. 013/94 

Notice is hereby given that the BNCE with offices at: 
170 Upper Richmond Road, London SW15 2SH, is 
accepting tenders to choose the supplier of 
A UXILI ARY WATERTUBE BOILERS FOR THE 
"NITEROI CLASS FRIGATES* The details of this 
Public Tender are available, at the request, at the above 
address or contact: 

Contracts Department: 

Tel. 081 788 8111 Fax. 081 788 4190 






FINANCIAL TIMES MONDAY SEPTEMBER 26 1 994 


19 


COMPANIES AND FINANCE 


Jardine 
prompts 
Hang Seng 
shake-up 

By Louise Lucas In Hong Kong 

The Hang Seng Index will 
receive one of the biggest 
shake-outs in its recent history 
in November with the replace- 
ment of four constituent 
stocks. This will be followed in 
February with another round 
of switching, this Hm» affect- 
ing three shares. 

The changes were sparked 
by the de-listing of the five 
companies in the Jardine 
camp. From March 31, only 
Jardine International Motors 
will remain listed. 

The Jardine group is with- 
drawing its secondary listing 
over regulatory concerns 
which analysts believe mask a 
deeper fear about the post-1397 
administration. 

The group is currently the 
focus of an attach from Beijing, 
which wants to see the Jardine 
consortium ejected from a key 
container terminal project 
On November 30, Jardine 
Matheson Holdings and Jar- 
dine Strategic Holdings will be 
withdrawn from the Hang 
Seng Index, one month before 
they quit the exchange. 

At the same time, Lai Sun 
Garment and Winsor Industrial 
Corporation will be withdrawn 
following their under-perfor- 
mance of the market 
The four will be replaced 
with Amoy Properties, Guang- 
dong Investments, whose inter- 
ests span securities, travel and 
transport, hotels and property, 
Johnson Electric Holdings and 
Oriental Press Group, the 
newspaper and publishing 
group. 

On February 28. the remain- 
der of the decamping Jardine 
companies - Dairy Farm Inter- 
national Holdings. Hongkong 
Land Holdings and Mandarin 
Oriental International - will be 
replaced by Shangri-La Asia, 
the hotel group controlled by 
Malaysian businessman Robert 
Kuok; Sino Land, the property 
company chaired by Singapo- 
rean Robert Ng; and South 
China Morning Post (Hold- 
ings), Hong Kong's leading 
English language newspaper 
now also under the control of 
Mr Kuok. 

According to the latest stock 
exchange figures, the depart- 
ing stocks are worth a total 
HK$161.4hn (US$21m) while the 
newcomers represent 
HK*l43bn. 

Coca-Cola in 
South African 
bottling deal 

Coca-Cola is to buy control of a 
bottling venture in South 
Africa in partnership with a 
group of black South African 
Investors, writes Mark Suzman 
in Johannesburg. 

Under the deal, the value of 
which has not been disclosed. 
Coca-Cola has established a 
joint venture with the Kunene 
family, long-time Coke distrib- 
utors in the black townships 
east of Johannesburg, to pur- 
chase control of Vinto Miner- 
als, one of seven major Coca- 
Cola bottling plants country- 
wide. it has annual turnover of 
about R50m ($14m). 

Coca-Cola and the Kunenes 
will each take 50 per cent of a 
new investment company. For- 
tune Investment Holdings, 
which will purchase Vinto. The 
Kunenes will take over man- 
agement of Vinto. 

Coca-Cola withdrew from 
investment in South Africa in 
1986 and announced its formal 
return to the country last June 
when it repurchased Natbev, 
the country's biggest Coke bot- 
tler and distributor. The com- 
pany's products dominate the 
South African soft drink busi- 
ness, with over 77 per cent of 
the domestic market. 


S&P downgrades Daimler Benz 


By Conner Middetmann 

Standard & Poor's, t frp 
international rating agency, 
has downgraded its long-term 
debt ratings on Daimler Benz 
and related entities to Aa- 
from AA, and has changed the 
outlook to stable from nega- 
tive. Some $5J2bn of debt is 
affected. 

According to S&P, “the rat- 
ing action reflects increasingly 
difficult industry fundamentals 
within fire European automo- 
tive industry and the contin- 
ued weakness within devel- 
oped world aerospace 
markets”. 

Daimler’s two main units are 
Mercedes-Benz, the motor 
vehicle manufacturer, and 
Dasa, the aerospace group. 


Daimler Benz did not seem 
overly worried by the move. A 
spokesman told Reuters news 
agency that “debt rated AA- 
has a very strong capacity to 
pay interest and repay princi- 
pal. and differs from the high- 
est rated debt only to a small 
degree”. 

Despite a 6.8 per cent 
increase in European new car 
registrations during the first 
six months of 1994. S&P said it 
expects long-term demand to 
slow as European markets 
approach saturation. 

At the same time, increasing 
economic unification suggests 
that automotive market condi- 
tions will be subject to more 
cyclical fluctuations while 
competition among players is 
intensifying as a result of the 


elimination of trade barriers, 
the agency stated. 

Conditions within global 
aerospace markets also remain 
weak, S&P said. 

However, while long-range 
conditions in Daimler Benz's 
core automotive and aerospace 
markets will remain challeng- 
ing, S&P said, it assumes 
group operating profitability 
will improve oyer the next two 
to three years in line with 
European economic recovery 
and as a result of recent prod- 
uct launches and the group's 
rationalisation and restructur- 
ing programmes. 

Some analysts felt the rating 
came at an odd time. 

“It seems rather late in the 
day to be downgrading Daim- 
ler, seeing as it appears to have 


weathered the storm and is on 
the mend," said Mr Roderick 
Hinkel, German strategist at 
Paribas Capital Markets. 

Daimler Benz reported oper- 
ating profits of DM926m 
( 5800 m) for the first half of this 
year compared with a loss of 
DM2.4bn in the same period a 
year ago. 

The company’s chairman _ Mr 
Edzard Reuter, recently pre- 
dicted that “almost all” 
operations should have 
returned to profit by 1995. 

S&P also noted that Daimler 
Benz Is to wnhflTirg its 

competitiveness through the 
renewal and expansion of prod- 
uct offerings at Mercedes-Benz 
and Im p rov ements in operating 
efficiency across the entire 
group. 


Multimedia strategist 
takes on Time Warner 


T he press release 10 days 
ago announcing Mr Nor- 
man Pearlstine’s 
appointment as editor-in-chief 
of the US media giant Time 
Warner contained one curious 
and revealing sentence. The 
challenge for Mr Pearlstine, it 
said, was “to preside over the 
explosion of our journalistic 
creativity . . . into multimedia 
forms". 

In more innocent days, the 
job of presiding over a group of 
magazines ranging from Time 


and Fortune to Sports Illus- 
trated might have been enough 
to get on with. It is also one for 
which Mr Pearlstine, a former 
editor of the Wall Street Jour- 
nal, is eminently qualified. But 
the clincher, it seems, is what 
he F»>g been drm»g - for the past 
two years: setting up and run- 
ning his own multimedia 
investment company. 

His appointment is a clue not 
only to developments in the 
ma gazine world, but to Time 


Warner's wider strategy. The 
company has been in the news 
lately for its rumoured interest 
in buying all or part of the 
NBC television network. The 
link between broadcasting and 
programme production is at 
the currently fashionable end 
of the multimedia spectrum. 

Such a deal would also be 
very expensive. Since the mag- 
azines are less fashionable but 
gtfn highl y valuable, there had 
been speculation that they 
might be sold. The terms of Mr 
Pearlstine's appointment 


plainly suggest otherwise. 

Mr Pearlstine's two years in 
the investment game do not 
seem to have been particularly 
productive, a fact which he 
proposes as a lesson in itself. 

“1 think the most valuable 
thing ' I may bring is some cau- 
tion and scepticism on where 
the true opportunities are,” he 
says. *T must have looked at 


Tony Jackson on 
the appointment of 
Norman Pearlstine 
as editor-in-chief 


400 opportunities in the past 
two years, and I didn’t see that 
much to excite me.” 

This caution may partly be a 
matter of policy. Mr Pearlstine 
is the first outsider ever to be 
appointed as Time's editor-in- 
chief. Besides, though his 
name is already on the door of 
his new office, he does not take 
over officially until January 1. 
Til never know more about 
this company than 1 do now." 
he says. The more you learn, 
the more complicated it gets." 

He has discovered, he says, 
that each of the magazines in 
his stable is well advanced 
with its own multimedia plans: 
whether on-line services allow- 
ing Time readers to quarrel 
with the editor by E-mail, or 
one-off CD-ROM publications 
by Sports Illustrated. 

“One thmg l have found is 


that Time Warner is as far 
along this road as anyone in 
America,” he says. 

What if Time Warner’s 
rumoured interest in a broad- 
casting network were to bear 
fruit? Tn that case, 1 can see 
more readily how [editorial] 
content would move back and 
forward. I can also see how 
instant polls through TV or 
on-line [personal computers] 
could play into the publica- 
tions. But I don't think giving 
Fortune and Time reporters 
camcorders and sending them 
out to get material for TV 
would be very usefuL" 

Beyond that lies a wider 
problem. The essence of print 
journalism is getting the right 
words and the right stories 
into a scarce amount of space. 
The point about personal com- 
puters and the Internet, by 
contrast, is that it is theoreti- 
cally possible to call up every- 
thing that is known on any 
conceivable topic. 

"I haven't seen a good work- 
ing business model for that 
yet,” he says. “How you work 
out a model that handles an 
infinite capacity for informa- 
tion rather than scarcity hasn’t 
been addressed yet" 

Traditional journalistic skills 
may prove his main qualifica- 
tion after alL “As much as I'm 
fascinated by new media, and 
as much as it's a plus for an 
editor-in-chief to know about 
it the bulk of the job is looking 
after the print magazines for 
the foreseeable future.” 


Deutsche Bank mulls UK move 


By Nicholas Denton, Norma 
Cohen and Christo p her Partes 

Deutsche Bank, Germany's 
largest bank, is on the verge of 
a decisive build-up of its equity 
business in the City of London. 

Executives at Deutsche Bank 
and Morgan Grenfell, Its UK 
merchant banking subsidiary, 
dismissed reports that a deci- 
sion on the expansion would be 
made as early as this week. 

Deutsche Bank said, never- 
theless, that it was in regular 
discussions on the issue and 
said: “Our base for European 
equities would be London." 

Mr Hilmar Kopper, spokes- 


man for the bank's supervisory 
board, said- “It would have to 
be expanded, and I do not 
think it can be expanded out of 
FrankfUrt.” 

The main issue to be 
resolved is the role that Mor- 
gan Grenfell, which Deutsche 
Bank purchased in 1990 for 
£950m, will play in the German 
bank's broader strategy in 
investment banking. 

Morgan Grenfell said it 
would play a major role in 
helping to build up Deutsche’s 
equity business. “We can assist 
in the process,” said Mr Mich- 
ael Dobson, chief executive of 
the UK merchant bank. The 


link would also allow the two 
entities to use each other's 
relationships. 

Nevertheless, senior officials 
at the UK merchant bank are 
believed to be jealous of their 
independence of action and 
identity. “Morgan Grenfell is a 
fantastic name,” said one exec- 
utive at the firm. “What would 
Deutsche Grenfell sound like?" 

Morgan Grenfell said the 
success of the existing relation- 
ship was attested to by the 
merchant bank's financial 
results. The company made 
pre-tax profits of £235.8m In 
1993, an increase of 194 per 
cent on the previous year. 


Management 
changes at 
Bollore 
Technologies 

By David Buchan In Parts 

A management shake-up at 
Bollor6 Technologies, the 
diversified French industrial 
group, is due to be confirmed 
at the group board’s meeting 
later today, following the news 
on Friday of a rbang p in chief 
executive. 

Bollorg Technologies clari- 
fied a leaked report on Friday 
that Mr Jean-Paul Parayre 
would be replaced by Mr Bern- 
ard Esambert as Its president. 
However, the company indi- 
cated that the change - likely 
to be the result of the former’s 
differences of opinion with Mr 
Vincent Bollord, chief share- 
holder in the group - was rela- 
tively amicable. 

An industrialist with long 
experience at Peugeot and 
Lyonnaise des Eaux-Dumez, Mr 
Parayre was rally made head of 
Bollor6 Technologies in Janu- 
ary. 

However, the group state- 
ment said that Mr Parayre had 
been able to carry out “earlier 
than foreseen” the necessary 
restructuring required, among 
other things, by January’s 
devaluation of the CFA franc 
in French Africa, where the 
group does much of its busi- 
ness. 

Mr Bollorg and Mr Parayre 
therefore agreed the time had 
come to “put a new structure 
in place". 

Giving credence to this is the 
fact that Mr Parayre is not 
quitting the group, but swap- 
ping places with Mr Esambert 
as manager of Albatros, the 
holding company which con- 
trols the industrial group. 

Mr Parayre is also said to 
have turned around the 
group’s performance, putting it 
Into profit in the first half of 
this year after its EFr357m loss 
in 1993 as a whole, and selling 
assets to reduce its debt to 
FFr5Jhn. 

However, one of Bollort’s 
main bankers is the hard- 
pressed Credit Lyonnais, which 
may be pressing its client in 
turn for further debt reduc- 
tions. 

it may be thought that Mr 
Esambert. a banker by trade, 
will give more weight to finan- 
cial considerations that his 
predecessor. 


Minerals side lifts BHP in first quarter 


By Nikki Taft m Sydney 

Broken Hill Proprietary, the 
large Australian resources 
group, yesterday announced a 
first-quarter profit after tax of 
A$372£m (US$275xn), compared 
frith AS3i6.1m in the same 
period last year. The result 
was lifted by a near£0 per cent 
improvement in profits from 
its minerals division. 

Total revenues during the 
period increased by 7.9 per 


cent to A$4.48bn, while basic 
earnings per share rose by 12.7 
per cent to 26.7 cents. 

Although the figures were in 
the middle of the range of orig- 
inal market forecasts, some 
analysts had upgraded their 
estimates after BHP released a 
strong August production 
report earlier in the week. 

After-tax profits on the min- 
erals side rose to A 5327.4m 
from AS 152m. BHP said the 
improvement reflected the con- 


solidation of the Ok Tedi mine 
in Papua New Guinea, where it 
recently raised its stake by 
buying out the Amoco interest, 
together with higher ship- 
ments from the Escondida 
mine and higher copper prices. 
Partly offsetting these benefits 
were lower US dollar prices for 
coal, iron ore and manganese. 

Profits from the steel divi- 
sion were little changed at 
ASl39£m. BHP said that Aus- 
tralian operations improved 


their performance but there 
was a lower result from BHP 
New Zealand Steel, due to ren- 
ovation work. 

Petroleum profits rose by 
A$9.7m to A51433, due to bet> 
ter results for the Hawaiian 
operations and higher sales 
volumes, which offset lower 
realised oil prices and unfa- 
vourable exchange rate move- 
ments. Profits from the service 
companies fell to A$10.9m from 
Agl&Tm. 


FINANCIAL TIMES 

FINANCIAL 

REGULATION 

REPORT 


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I "hiiii HKnir Number One Southwark Bridge l j uukin SEl VHL. England. 
Tel. ,+JJ 7 1 1 S73 3745 Fax: [+44 7 1 1 873 3935 


i Mill be XH Iig.nl *u. Iv nwl bj Ahi 
» l>* miltB) 1W napMv 


II.- iBimuim »w |W* 
vfc \1 ifmO". 


FINANCIAL TIMES 

XfmOnmn 

iu 'wA’ibf I*** !*■»*- » 

W* VATlfctM.A-. *■«« f»«IIIII 






ottWed nesday, 

With over tan years of econondc and pofltical reform to Its credit and the recent 
Inauguration of Its third successive democratic government, Bolivia is an 
increasing strength in Latin America. The survey will report on the country's 
economy, political scene, financial markets, privatisation policy and move. 

For more Information on editorial content and details of advertising 
opportunities ava&able hi this survey, please contact 

Pamy Scott hi New Yocfc Tel: (212) 688 6900 Fac (212) 688 8229 
Samantha Borg in London Tel: 1+44 71) 873 4816 Fax: (+44 71) 873 3595 

FT Surveys 


Compensation Scheme for Creditors of 
Banco Latino N.V. (“BLNV”) ^ - 

OnAttffSt 19. T8S4 BLNV has soU some of fes assets to Banco ftovfnctol international N.V. (“SPD. a credit Institu- 
tion established and licensed m the Netherlands Antltes. 

According to the catc ul ati o na based on the vetue ol the assets sold to BPi. balances receivable from Banco Latino 
SAC A CBLCA") and the securities hetd by BLNV. the institution expects to pay out 10 its creators 75% of (heir 
claims on the institution. 

The compe nsa tion of the claims to deputes and other creditors of BLNV war consist of three parts and wffl taka 
place as tokws: 

1) Centfic aie a of Deposit will be issued by BPI to all creditors amourtlrg to a compensation ratio of approxi- 
mately 40% of the original claim. The Certificates of Deposit wiS be issued aatoidtog to the currency of the 
claims In the tofiowing manner 

Bolivar claims. 

With regard to claims of cradttas in BoBvars. five (S) Centtlcates ol Deposit will be Issued by BPI in Bolivars 
maturing In a period of two (2) to twenty-four /24> months after August IB, 1994. The value of these certifi- 
cates wfll amount to 40% of the original dam. 

Claims in other currencies. 

Claims to other cunanoes wit be compensated by means of five (5) Certificates of Deposit in BoUvars. rep- 
resenting to the a g greg at e 20% ol the original claim, and ona (1) Certiticaie of Depose in USS. also repre- 
senting 20% of the original claim. This USS certificate will mature in twenty-four (24) months and the 
BoOvar certificates win mature In a period of tun (2) to tweray-four (24) months. 

2) A special purpose investment fund, named “Hie Venezuela Recovery Fund N.V.", will issue share cartih- 
catas in USS to aK creditors of BLNV representing a compensation ratio of approximately 28% of the origi- 
nal dalm. 

3) Upon receipt of the amoiatts owed by BLCA to BLNV. BPI win Issue additional Certificates ol Deposu to the 
depositors and other credit or s of BLNV representing approximately 7% of the original dalm of the creddore. 

Re 1) Certificates of Deposit issued by BPL 

The procedure to ofcftain the Certificates of Deposit to be issued by Banco Provincial international N.V. is as inflows. 
Procedure: 

A! creditors of BLNV with last names Or company name beginning wtm the letters to column (1) below wifl have to 
claim their Cart Beales of Deposfl al the office of Banco Latino N.V. on the 24th floor of the budding of Banco Latino 
SACA tat Caracas on the dates mentioned wider column (2)-. 

Natural I 


Natural Persons 


0 ) 

A to B 
CtoD 
EtoG 
H to L 


( 2 ) 

October 7, 1994 
October 10. 1994 
October it. 1994 
October 13. 1994 


(2) (t) 

October 3. 1994 M tn O 

October 4, 1894 PtoR 

Octobers. 1994 StoV 

Octobers. 1994 WtoZ 

Corporate Persons 

Can me titer claims on October 14th and 17th. 

Hotter* of Euro Certificates of Deposit and commercial papers guaranteed by BLNV should present their claim on or 
after October 18. 1994 to BLNV. 

In addtoon to the Certificates of Deposits mentioned above, oil creditors wdl receive a check, at the same time they 
receive their Certificates of Deposit, containing the first payment of Interest on their Boflvar Certificates of Deposit 

In order to obtain the Certificates of Deposit mentioned above, ail creditors being natural persons are advised to 
bring wNh than: 

a) a photo-identification (Passport or "Cedtia") and a copy thereof to be retained by BLNV; 

b) proof of their dalm on BLNV. 

Those persons representing creditors of BLNV should carry a proxy from the creditor they represent In addition to 
tt x» ff ocumerttHbon mentioned under a and b above. 

Creators being corporate persons (Institutions or corporations) should submit: 

i) an extract (rent the Chamber of Commerce of tha place of thslr registration; 

fi) the proof of their claim on BLNV; 

ii) a proxy to case someone other than the Orectors come to claim a now Certiticaie of Deposit 

Iv) aphoto-Mentification (Passport or "CedulaT of the proxy hotter and a copy thereof to be retained by BLNV. 
in mm the doaanentailon to be subrmttsd la not comple te , the Certificates ol Deposit wfU not be issued to the crea- 
tor or his/her representative. The next opportunity w* than be 7 days after the applicable date mentioned above for 
each creator. 

BLNV retains the rips not to issue tha title document if doubts exist as to the authenticity or completeness of the 
documents presented. In these cases, copies of the sitomitied documentation wifi be retained and the creator will 
hear wttiiln 6 weeks whet action, including adtflfonal evidence, should be taken to receive the tUe-document and the 
Certificates of Deposit. 

Depositors and other credltore who cannot cofiect their Certificates ol Deposit at the office of BLNV in Caracas as 
mentioned above, can cofiect their certificates at tha office of BPI in Curscao after making an appointment at the fol- 
lowing telephone number (5999) 61 2-987. 

Re Z) Share C e r tif i cates to be Issued by the Venezuela Recovery Fund. 

BPI wfl act as Paying Agent tar the Fund and Banco Provincial SACA as Custodan tor the securities maintained 
in subject Fund. These securities concern negotiable long term USS denominated kistmmems. 

During the month of October next, BLNV wfl issue a separate communication in which tha crecHois win be informed 
of the dates when the Certificates of the Fwid wifi be issued 10 them. 

Re 3) Certificates of Deposit to be issued after receipt of the amounts owed by BLCA to BLNV. 

Presently dtsta Batons are going on with BLCA to determine the manner m which pa y ment to BLNV wfl be done by 
BLCA BLNV expects to totalize these cSscusstons soon, so that all credtoni can be compensated as soon as possi- 
ble. M/hen the discussions with BLCA are finalized BLNV will announce to Its creditors how and when they may 
expect their final compensation. 

The totiowing is the address of Banco Latino N.V. end Banco Provincial international N.V.: 

De Ruyterfcede 61 
Wniilud, Curaceo 
WHJematBrf, September 20, 1884 
Banco Latino N.V. 


New [sue 


This announcement appears as a matter of record unit. 


September. 1994 


4> 

Ji 


NIHON DORO KODAN 

- Japan Highway Public Corporation - 

1 Incorporated in Japan pmsnam to the Nituw Dor, 1 Kudan Ltinl 

LLS.$500,000,000 

7 % per cent Guaranteed Bonds Due 2004 


unconditionally and irrevocably guaranteed 
as to payment of principal and i merest 
by 


Japan 


Issue Price 99.564 per cent. 


LTCB International Limited 

Bank of Tokyo Capita] Markets Limited 
Goldman Sachs International 
Merrill Lynch International Limited 
Sakura Finance International Limited 

Barclays de Zoete Wedd Limited 
Hambros Bank Limited 
Nippon Credit International Limited 
Sanwa International pfe 
Wood Gundy Inc. 


Nomura International 

Deutsche Bank AG London 
1BJ international pic 
Paribas Capital Markets 
Swiss Bank Corporation 

CS First Boston 
Lehman Brothers 
Salomon Brothers International Limited 
UBS Limited 

Yamaicbi International (Europe) Limited 


ANSETT AIRCRAFT 
FINANCE LTD 
USD 185,810.689 
Floating Rate Motes dot 2M1 
Notice is hereby given that the rate ol 
imresi tor the period from September 
26th, 1894 to December 2B(h, 1994 has 
been fixed at 5.425 percent. The coupon 
amount due tor this period to US0 140.15 
per USD 10,000 denomination and 
USD 700.73 per USD 50.000 and is 
payable on me iraaasT payment daw 
December 28th. 1994. 

TheFiuslAgert 

Banque Nationals de Paris 
(Luxembourg) SA. 


EDO YOU WANT TO KNOW A SECRET? - 

The LD-S- Gar Seminar wf show you how the motets REMIT work. The a ma z ing I 
tradng tadriqun otto legendary WX>. Gam con hcrease your proilB and corsain your 
losses. How? Thafs the secret rang 061 474 OD80 to bex* your FREE place. 


Currency or Bond Fax - FREE 2 week trial 

also daily gold and silver faxes Anno v/hitby 

Iicm Ch.!!i Analysis Ud r«>! 071-/34 7.174 • 

7 Sw.il'f.v L-ndcn W1R 7 HD. UK - Fcx C7 I -43V <966 

exchange rjte- sceci:i!i«is lo- ever 20 yivsry c V<!rrb v i 







20 


FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 


Melfior Banco Para 
Morcados Emeraentes 


FINANCIAL TIMLS 


Best. Emerging 


gJI»)bank 


MARKETS 


Market s dumk 


til- j».n fax ti ii. :**«.»*' 


THIS WEEK 


INGJtf)BANK 


TEL: U.11.Vli$a0lM F4 




The risk that 
the US econ- 
omy Is not 
slowing suffi- 
ciently in 
response to 
eight months of 
monetary tight- 
ening is the 
greatest threat to current lev- 
els of US bonds and equities. 
The markets' anxiety that Fed- 
eral Reserve open market com- 
mittee, meeting tomorrow in 
Washington, will choose to put 
up interest rateB again, 
brought the Dow Jones indus- 
trials index down by 100 points 
last week. 

Whatever the outcome of 
tomorrow's meeting, however, 
it is hard to see equities prog- 
ressing much In the short or 
medium term. If rates do rise 
tomorrow, it Is possible that 
bond yields, already at 3 per 
cent, would not rise much fur- 
ther. But it is unlikely that 
bond yields would decline 
steadily and stay down until 
domestic demand has slowed 
for several quarters. Even 
then, the risk remains that the 
strength of recovery in other 
countries will boost US exports 
and drive commodity prices 
higher, producing inflationary 
pressures in 1995 and 1996 
despite the slowing of domestic 
consumption. 

There are, certainly, reasons 
why the Fed might want to 
wait rather than raise rates 


Global Investor / Bronwen Maddox 


No hiding place 


again so soon. Recent indica- 
tions of an upturn in consumer 
spending have owed a good 
part to car purchases; mean- 
while, the build up of invento- 
ries has raised fears that 
demand in some sectors is 
slowing. But even if the Fed 
does not move tomorrow, it Is 
too early for markets to yet 
assume that its tightening has 
finished. Some brokers, such 
as flnMiwm Sachs, have been 
arguing that fears about the 
strength of the US economy 
have been overstated, and that 
markets are now set for a 
“relief rally”. It is hard, 
though, to find grounds yet to 
think that any such rally will 
be prolonged. 


Ait easy cycle ride? 


Total ratwn ta local cmroncy to 22/9/94 


Indices nebeaed 
140 


UKCMWtoflHUwMa 


UK Banks’ base rale, %" 
- — • — : — : !~ ftO 


. % cfatefl* M wir part nri , 


Cash - 
Week 
Month 


FT-3BA AB-Stwre ' 


Sep 1993 
Source: CMBStraam 


P Bonds. 341 year. 

1 Week -Off! * 028 -027 

5,8 Month. -028' 048 • 062 

| Year- ■ -1.9* .-1st • ijB» 

ill Bonds 7-10 year . " ■ . ' - 

-T — u- -- Week . -1.12 QM -062 - 

Jl . (Worth -1.11 . 153 -1.40 

■» Year -6,15 1.33 -3,17- 

as -JSqufttoft 

•*.; Week' -08 . : 02 --U 

• Month- • -.-at , .-55 ; 

rear- 8 A ■ SO 

Sen:'- -SaaaeCadTaBoncto-iatitnauhWL 

“• Tte FY-Acauadro WvM Mcm are ioinfiy ctHMd (ylb 

ttoMmao Surfs a Co. and MMttiaeiaMw UMML 


004 

009 

■ olio 

0.16 

• 0.70 

0.18 

047 

0.46 

069 . 

042 

Z47 

5.88 

■ 8.19 

836 

5*2 

o*a 

■027 

' -031 . . 

049 

-0*4 

048 

■ -062 

-0*3 \ 

1*3 

■024 

■ ISt 

1*4 

-006-.. 

2*4 

- 013 

0.47 

^062 

-0*6. 

068 

: -066 

1*3 

-1.40 

-1*». 

1-68 

■089 


-8.40 -3.11 


-4,0 ' *0.5 -2.8 . 

-04 -08 -46 

-85 12^4 4.5 ’ 

EqdBMB ffUWast floouttaa. 


Da PP#eaa4a»\MaMMcM»uoyd«Md byTl» HariaTMiaiM 
Bokfcnan Sorfa a Co- and fbaWMSeoaMse UrtML 


European cyclical 
stocks 


US nervousness has spread 
to European markets, already 
jittery on expectations that the 
European interest rate cycle 
has turned flr| d that earnings 
expectations are too high. 
Nonetheless, ahead of this 
week's batch of half-year 


results, which, includes figures 
from benchmark European 
rmwpanffls, the markets appear 
determined to salvage some 
cyclical stocks from the impli- 
cations of rising interest rates. 

In periods, such as the pres- 
ent one, where rate rises are 
triggered by higher than expec- 
ted growth in output cyclical 
stocks can continue to gener- 
ate earnings surprises, so the 
case goes. The attempts are 


valiant, but remain vulnerable 
to anything but a limited rise 
in rates. 


Fiat which declares half-year 
figures on Thursday, is a case 
in point Advocates of the Ital- 
ian automotive and industrial 
group have caused the price to 
outperform the Comtt index by 
2JS per cent In the past month. 


COMMODITIES 


Richard Mooney 


Base metals under scrutiny 


Base metals analysts wiD be 
watching early trading at the 
London Metal Exchange with 
particular Interest today. 

After a week of wiimd rises, 
followed by consolidation, fur- 
ther strong advances on Friday 
and, in late trading, wide- 
spread though moderate trim- 
ming of gatns , they will be anx- 
ious to ascertain whether 
leading contracts are coiled for 
a resumption of the runup or 
due for a shake-out 

Just before business ended 
on Friday, figures were 
released showing that Russian 


exports of copper, aluminium 
and ntrirei were running well 
above 1993 levels in the 
January-August period. It was 
those data that prompted the 
paring back of the week's 
advance, together with an 
inevitable element of profit- 
taking. 

But today’s performance 
should show whether the spec- 
ulators who returned late last 
week to push copper prices to 
g&month highs and al ummhiwi 
prices to 3%-year highs are 
ready to take their profits. 

By common consent funda- 


mental supply/demand factors 
suggest that LME metals are 
set for Anther, in same cases 
quite substantial, gains. But 
the question is: when? 

Dining the present extended 
uptrend the LME copper price 
first ventured above &500 a 
tonne, for the three-months 
delivery position, in July. That 
was in response to a sudden 
rush of US investment fund 
buying, however, and many 
analysts were dubious that the 
Una coaid be held through the 
northern hemisphere summer 
shutdown period. Their doubts 


IknMUtaMMLrM 
am tt m rtMfcUr paten ml 


Mm far Mam*)' OtemMWI l0rfl» 
g up— ■ af — Hi t l nJii poteg and 


■ Mato MtokMi 


MtoariMato MtotkMf 
MtaWK o<tUU> 


CANAL+ REPORTS INTERIM 1994 RESULTS 


{Pore. September 20, 1994) CANAL+, Europe's larged payT/ net- 
work, said that its Board of Directors had dosed the consolidated 
accounts for the first six months of 1994. 


(FF mf/SonsJ 


Subscription revenues 
Advertising and 
sponsoring revenues 
QtW goods ond services 

Total revenues 


Operating income 
Net interest income 
(expense) 

Income from continuing 
operations, after lax 
Equity in losses af 
associated companies 
Net income after minority 
interests and before 
e x ceptional items 
Exceptional items, net of tax 
Net income after minority 


RnMndf 

1994 

FmMolF 

1993 

% change 

3,715 

3,477 

+ 6B 

258 

267 

- 33 

609 

539 

+ 13 S3 

j. •wn 

888 

864 

+ 2* 

(62) 

31 

- 

586 

627 

- 6* 

037) 

(105) 

+ 30.1 

438 

523 

-16.2 

65 

153 

-57 5 , 

503 

676 

-25.6 1 


PM 


Port Port 1 


Port 

PM 

AM 

pnMa 

pm 

Xm 

* «mb 1 

1* ter 

FriM 

Bl tel l 

teg 

P*» 


P*» .MPP 

pMU 

PM 

P"c» 

rt« 

OUMl 

miz-Si nw< 

“*S 

OMMl 

BMM, 

0MMH 

AM 


0*7 0*7 

0030 

9*4 

9*8 

9*8 

U4 


OS 

0*3 

0100 

0*4 

8*3 

9*3 

U4 


9* 

0*0 

0180 

9*4 

0*8 

0*3 

955 


9* 

9*0 

raro 

9*3 

9*3 

0*3 

8B7 


0* 

9*0 

0230 

9*5 

0*3 

0*3 

BJ7 


0* 

0*0 

(BOO 

0*5 

0*3 

0*3 

944 


01* 

9*0 

0330 

9*4 

9*3 

9*3 

AS4 


0* 

9*0 

0400 

0*4 

9*3 

0*3 

044 


0* 

0*0 

043Q 

0*4 

9*3 

9*3 

a*4 


0* 

o 0*0 

0800 

0*4 

0*3 

0*3 

042 


0* 

0 0*0 

0530 

8*4 

9*7 

0*7 

SJS2 


0* 

0 8*0 

0800 

9*4 

9*7 

9*7 

048 


0* 

0*0 

0830 

1020 

9*7 

9*7 

(L04 


0* 

9*0 

0700 

10*8 

9*7 

0*7 

834 


0* 

0*3 

0780 

1941 

9*0 

9*0 

OLM 


0* 

9*0 

0800 

17.18 

1141 

1433 

ItJQ 


1.T 

1417 

0030 

1748 

14.18 

17*4 

11*0 


1* 

1498 

0000 

18J3 

1443 

17*3 

112* 


1* 

1 

0980 

19*4 

15*9 

1901 

15JU 


4* 

1 

1000 

1982 

17*0 

20.12 

17*1 


7* 


1030 

1990 

33*9 

2902 

17*1 


7* 

20*8 

1100 

2090 

nno 

2902 

17*1 


22 


1130 

2841 

17*3 

2D*4 

21*1 


a* 


1200 

2946 

PI OP 

OP BO 

21*1 


9* 

28*7 

1230 

2938 

23*9 

29*2 

»t*1 


3* 

2987 

1300 

7^*5 

23*0 

2902 

17*1 


ft* 

2997 

1380 

19*0 

17*2 

20*4 

13*8 

■ 


1721 

1400 

17*1 

15JJB 

1901 

14*4 

K 

m 


1433 

1740 

15*8 

18*1 

12.13 

i 

1*3 1498 1 

1300 

1748 

15.08 

18*1 

aa 

i 

09 

1088 1 

1830 

1747 

10*0 

1090 

o*s 

i 

OS 

10*8 

1600 

17*0 

10*0 

10*0 

9*9 

i 

1*3 1498 1 

1030 

2440 

18*8 

19*1 

11*0 

K 

r T. 

17.71 

1700 

27*3 

15*8 

18*1 

12*8 

K 


17.71 

1730 

3848 

17*0 

20.72 

1132 

E. 

re* 

17.71 

1000 

27*0 

17*0 

2022 

14*4 

n 

T- 

17.71 

usn 

17.17 

17*0 

2072 

18*8 

R 

T 

17.71 

1000 

17*3 

18*9 

18*1 

18*1 

21J 


1030 

31*3 

15*0 

1901 

20*0 

14*8 17J1 1 

2000 

31*2 

11*0 

T1*0 

20*0 

21.7 

-.VI ■ 

2030 

31*4 

17*0 

20.72 

38*4 

23*0 28*3 1 

. 2100 

1745 

31.18 

34*8 

18.18 

25*0 29*5 I 

2130 

1966 

31.13 

34*3 

18*1 

23* 


2200 

1093 

31.13 

34*5 

1841 

21.7 


2230 

1920 

23*2 

2924 

13*0 

17* 

21*2 

2300 

10*0 

1972 

21*4 

12.13 

14*8 17*3 1 

2330 

1448 

1972 

21*4 

0l&6 

1098 1088 1 

2400 

10.10 

11.41 

14*3 


CoraaSdated revenues increased by 7 percent in the first half of 1994, 
due in part la the strong growth in Cbnafsatelfite's subscriber portfolio 
sines the beginning of the yean Canofaafeflite's interim sales rose to 
17 106 miSon, compared with FF 21 mflfion in the prior haffyeat Sales 
of other goods and services increased by 13 percent over the period, 
primarily on contributions from the production subsidiaries Slips* 
Programme (up 9.8 percent to FF 134 mSfion) and Le Studio CANAL+ 
(up 34.9 percent to FF 193 miBion). 

Depressed financial markets caused interim interest income to swing to a 
net expense of FF 62 million for the period. However, efficient control aver 
the parent channel's operating oasts ond a reduction in ConabatdHte's 
lasses helped Emit the deefine in income from continuing operations to 
6 j 6 percent. 

Despde improved resufes from some of the CANAL+-type channels out- 
side France and from the thematic channels, losses of associated 
companis increased from first -half 1993 levels, primarily due to a wider 
scope af ranwfeldwn. In qfl, net income after minority interests and 
before exceptional (lean retracted by 16.2 percent to FF 438 miBion. 
After taking into account exceptional income (comprised manly af dilu- 
tion gains on CandsotelSte recorded in 1993 and 1994], GANAL-Kj 
consolidated net income after minority interests declined by 25.6 per- 
cent in the first six months of 1994. 



Notice to die Wamm didders of 


RraWmtf trends m revenues, operating income and net income are 
Dooly to remain operative in the second Half af the year. Net income 
will continue to be affected by the cost of new projects, notably in Ger- 
many, where a major promotional campaign, which was unforeseen at 
the beginning of the year, is currently underway. Net income wffl also 
be affected if finandd markets maintam their current efiredtan. Further- 
more, the French payJV charnel's operating maigin b expected to see 
fen favorable development in the second half, despite the recovery in 
advertising demand ond renewed growth in the subscriber base. 
Meed) based on the erceUsri resufe recorded in August andSeptem- 
fc*r f i}he- number of individual subscribers should end the year above 
'fiwDecembertlVWS level 


BEST DENKI CO., LTD. 

(the "Company") 

Warrants to Subscribe up to ¥17.952.000,000 
for shares of common stock of the Company issued in 
conjunction with U.S. $160,000,000 1% per cent. 
Notea due 1997 (fee “Warranto") 




Th* cacmlsl uwT for rhesertoua i 


Pursuant lo danse 7M of Fiscal and Warrant Agency Agreement of 
26(h May. 1993 relating la the Warrants, it is notified to yon that: 

1 The Board of Directors of the Company, at its meetings held on 9th and 
Mth September, 1994. resolved io issue and alter ¥10.000.000.000 UperrenL 
Convertible Bonds due 3002 and ¥15.000.000.000 L2 per cent. Convertible 
Bonds due 2004 with the initial Conversion Price of ¥1,630 per share. 

The current market price at Shares as calculated pursuant, to the relevant 
provisions of the aforesaid Fiscal and Warrant Agency Agreement during 
the 30 trading days period from and Including 14th Jute, 1994 to Mid in cl u ding 
24th August. 1994 was ¥US34 .00. 

2. The aforesaid issues resulted in adjustment to the Subscription Price of 
the Warrants as follows: 

Subscription Price before adjustment: ¥1,517,00 

Subscription Price after adjosimcn t: y L498.70 

The aforesaid adjustment has been effective as from 26th September. 1994, 
Japan time. 


Market-Eye 


Dated: 26th September, 1994 


BEST DENKI CO., LTD. 

By- THE SANWA BANK, LIMITED 
aa Fiscal Agent 


London stock hxchakok I 


by ft per wmt in the last quar- 
ter and by 52 per cent in the 
last 12 months. 

They are right to point oat 
that in the group's recovery 
from last year’s worst-ever 
losses, it has restructured and 
cot costs rapidly. Its balance 
sheet is also less vulnerable 

than that of many Italian com- 
panies to a sharp rise In inter- 
est rates. Its capital spending 
has peaked, while the pickup 


in cash generation and its 
rights issue have brought debt 
down to some 30 per cent of 
shareholder s* funds. 

However predictions of a 
rapid and sustained upturn in 
profits are based on assump- 
tions about strong growth in 
sales, particularly of the new 
Flat Panto. Those hopes rest 
heavily on Fiat’s performance 
in markets outside Italy which 
make up 40 per cent of its auto- 


motive division. 

In Its drive for market share, 
Fiat has benefited from the 
lira's weakness, which has 
helped It fight off domestic 
competition as well as pene- 
trate foreign markets. But ana- 
lysts suspect that this sales 
drive has squeezed profit mar- 
gins. If that is right, Fiat may 
find It hard to push up prices 
while European consumers 
fear higher interest rates. 
Moreover, with high opera- 
tional gearing, the group 
remains vulnerable to a sud- 
den slackening of demand. 

Given those factors, the spe- 
cial circumstances of Its recov- 
ery seem inadequate to detach 
it from the fortunes of a vola- 
tile aviri precarious Italian mar- 
ket 


UK building 
materials 


Similar questions can be posed 
about the argument that some 
UK building materials compa- 
nies are worth buying because 
their wide spread of businesses 
will prolong their earnings 


were quickly justified - the 
price held above $2£00 for just 
a few days. A second attempt a 
few weeks ago was equally 
short-lived. 

But the price has now been 
in the $2jj00-plus area for 10 
out of the last II trading days, 
and with the shutdown season 
over there is less obvious cause 
for caution. 

Aluminium's position is sim- 
ilar. After a week of $1 ,600-plus 
trading, and with LME stocks 
falling at an increasing pace, 
further gains could well be on 
the cards, traders say. 




1 In 1991 there 

were some 
l-Sm one-par- 
ent famfHpfl in 
the UK, con- 
taining 2.2m 
dependent 
children. In 
that same 
year, according to the Depart- 
ment of Social Security, 
around a millio n of these par- 
ents (overwhelmingly women} 
were in receipt of income sup- 
port Thus, more than three- 
quarters of single-parent 
households depend on bene- 
fits, which supports the propo- 
sition advanced two weeks 
ago (“Marital economics”, Sep- 
tember 12 1994), that “most 
women cannot bring up their 
children unaided”. In the 
absence of a specific man , the 
main body of citizens must 
take up the burden. 

By partially socialising the 
costs of child-rearing, the wel- 
fare state has made the rapid 
growth of single-parent fami- 
lies and unstable couples fea- 
sible. This does not mean, as 
crude conservatives are prone 
to argue, that women have 
children just to obtain bene- 
fits, such as housing. 

Nevertheless, where once 
economic realities would have 
forced an unmarried girl to 
give up a child for adoption, 
now she can try to raise her 
child on her own. Strikingly, 
the rate of teenage conception 
in England and Wales has 
increased, from 57 J pm- thou- 
sand girls In 1981 to 65.3 per 
thousand in 1991, notwith- 
standing provision of contra- 
ception and sex education. 
This is an example of incen- 
tives at work. 

Similarly, where once a man 
who abandoned his family 
knew they would starve, now 
he knows they will survive, if 
miserably. Insurance rihangwy 
behaviour. That is what the 
phrase “moral hazard” means. 

Men with relatively poor 
earnings opportunities (of 
whom there are more now 
than 20 years ago) are compet- 
ing with the state as providers 
of resources to the mothers of 
fhnir rhflrirpn Many of fham 
come out a poor second. 
Equally, the welfare state sub- 


Economic Eye / Martin Wolf 


Welfare and 
the family 


Ba t w fft expemfltwe on Qw femfly. 


£ tjn, 19B2A prices 
14 




mam aewn as m aws se/ar - 

Souca: Da px nmaitf of Social Socotfly 


8888 aMpr asm 


sidises serial polygyny. Well- 
earning men have been able to 
leave much of the burden of 
supporting their first famiiias 
to the state, while women also 
find it easie r to dump men 
who fall short of their desires. 

These developments are not 
without drawbacks. One is the 
effect on children, particularly 
boys deprived of any model af 
masculine responsibility. The 
feminist view that women can 
bring children up better on 
their own seems peculiarly 
self-defeating. For what role in 
life are these mothers prepar- 
ing their sons? 

Another drawback is the 
effects on the public budget. 
In 199&93 support for lone par- 
ents HTTKilinfpri to an 

increase of 170 per cent in real 
terms since 1978-79. At 1 per 
cent of gross domestic prod- 
uct, this is not a budget-break- 
ing 1 sum. But it is increasing 
rapidly. It Is also far from triv- 
ial, being as much as the 
Department for Education 
spends on higher and farther 
education in TCn gland 

There is also substantial 
pressure to spend more, 


largely because the lot of wel- 
fare-supported single-parent 
households is a decidedly poor 
one. One such demand is for 
“affordable child-care". But 
the provision of subsidised 
childcare merely changes the 
form* of the subsidy to lone 
parents. By tying the subsidy 
to work outside the heme, it 
also skews the mother's 
choice In that direction. The 
state would then provide the 
childcare, which is what 
women offered within tradi- 
tional families, while the 
working mother would play 
the traditional male role. 

Greater state support for 
single-parent families can be 
encapsulated as a move 
towards socialising traditional 
male roles. But there Is an 
alternative, embodied in the 
1991 Child Support Act This 
is to reprivatise that role, but 
without the father’s presence 
in the family. 

“The assumption that, in 
broken marriages or partner- 
ships, taxpayers should 
assume the financial responsi- 
bility for the family is, at long 
last, challenged,” wrote the 


House of Commons Social 
Security Committee in a 
report on the Child Support 
Agency published at the end 
of last year. 

“In malting thi« change a 
second fundamental reform is 
brought about The essence of 
the change was to move from 
a legal system dealing with 

child maintenance On a case 

by case, discretionary basis to 
an administrative system 
which assesses all mainte- 
nance according to the same 
criteria, with the aim of 
achieving higher levels of 
maintenance.” 

It all sounds very sensible. I 
But, in practice, the Child 1 
Support Agency has tripped 
over., three, main obstacles: 
first, men have found to their 
horror that the basis on which 
they bad planned their lives 
has been. overturned; second, 
subsequent families have 
found themselves deprived in 
the interests of first ones; 
third, first families benefit 
only if the increased support 
does not substitute for the 
Treasury’s funds, whereupon 
the latter loses out 

The underlying problem, 
however, is that there is sim- 
ply insufficient money to go 
around. The novel patterns of 
child-rearing would be impos- 
sible without substantial sup- 
port from taxpayers. Further- 
more, since more state 
support is the only demand on 
which those directly affected 
are bound to agree, that is 
also what is likely to happen. 

The CSA will probably 
prove a blip on a curve show- 
ing a progressive rise in the 
socialisation of the costs of 
child-rearing. There will also 
be a corresponding increase in 
the net burden on those who 
stick to traditional mono- 
gamy, as the fiscal benefits of 
marriage decline and the scale 
of support for lone parenthood 
Increases. Even if the CSA 
were to succeed, it would 
merely make second famiiiag 
less .viable, so increasing the 
number of mothers forced to 
look to the state for their 
main support 

The long-term social conse- 
quences of all this I leave to 
the reader’s imagination. 


Jobifiy compfled by Tha flrandal flmw Ud, Goldman. Sachs & Oo. and NalWaat SmurWoa Ltd. m cortunett o n with the Institute Of Actuaries ml the Faculty of Actuaries 
NATIONAL AND 

REGIONAL MARKETS FWOAY SEP TFMRFH 23 1WK — THURSDAY SePTEMBCR 22 1094 — DOLLAR INDEX 


REGIONAL MARKETS ■■■ — — FSMWr 3UIHMBEH 23 1— T 

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show number of Inea Do*ar she* Staring Ywi DM Currency ohg Irani Dfv. Doflar 

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AuetraSaffW 
Austria (IQ - 
Belgium (37) . 
Canada (103) . 

Denmark (33) . 
FMfrtdpQ _ 
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US Pound Local y w 

Dojtar Sterling Van DM Currency 52 weak 02 wade ago 

index index index Index metex High Low tooiwi 


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EUROPE (717) 17QJ21 

Nordte piB) 217-SS 

Pacific Baatn (MS) — .172.10 

Euro-PadAc {1405} -171.32 

North America (Big) 164.53 

Europe Bl UK (513) — 1 — 1 S 8 *» 

Pacific Ex. Japan (Z7W 280.48 

World Ex. US fleas) —.17832 

World Ex, UK (1857) — 17 W ? 

World Ex. 3a Af. (2102) — 17B.16 
World Ex. P 63 ^ — — isase 

The World Index glVQ 177J1 


2.1 15SUJ5 105.19 136.75 15338 -12 3.B2 17026 180.13 105*6 137-09 153.78 IBB IS 141.54 149 ™. 

2-0 17724 11087 181 JM 161.48 - 8 J> 1.08 1B725 175*3 115JBB 150*2 150*5 108*9 iB4*4 167 82 

3.0 16729 10U1 13456 181.40 -&4 421 166JS 15827 1CTL46 13428 131.10 177114 143 S iSjfe 

ZA 130^0 8587 111.63 185.34 40 JL50 138*1 130.40 85.95 11124 134.68 14521 20*4 Sis 

22 23728 158.12 20225 20820 -82 122 25120 23622 166.16 20883 208.79 27SJ9 22324 ilkm 

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-82 169.00 10457 13524 14023 -182 3.14 16626 16824 103*1 13426 13860 18527 1SLS4 

2.4 13427 6870 11521 11521 -82 1.7B 14228 13322 8821 11426 114.58 16040 2429 ISS 

-162 37221 245.19 31874 38327 -189 3.12 39813 37447 24882 32069 39522 xStS 4^2 

122 19520 12844 16897 18721 12 329 20927 19883 129.74 10821 18921 21820 16134 imll 

207 77.75 51.13 6847 96.40 92 121 8222 77J5 S02S 8805 S 9778 SS 

242 152.47 10028 13028 10028 82 0.78 181.75 1S014 10028 13025 10028 17010 12424 

-12 54811 38048 48821 57423 -84 126 SS&82 55124 38320 47228 57727 82163 3902? 

-12 2213-71 145891 1U222 8758.74 80 1.17 233123 21SSLB4 144823 1677.10 808725 284708 184892 iS 

52 197.77 13007 109*9 10835 -52 20037 19629 129.18 167.79 18813 S3 S3 

62 68.12 44*0 6824 8324 -08 3.74 71.01 0735 4429 57.68 «L38 TTTO 

U 18223 12021 15629 1TMC -2.4 12S 1K22 164.18 121 AO 157*7 18040 21174 iSro ,23 

1* 34857 22025 29002 25324 -7.1 126 36929 34743 229*0 297.44 35128 

17.1 29323 193*4 25 121 295.10 17* 2.17 304.78 28888 18894 S4IL41 296.10 

0 * 131*5 8858 11226 13008 -08 424 137*0 129.42 8030 11079 133 , 75 l ‘ iSME 

14* 211.18 13000 10058 248.71 2.6 1*0 22092 20887 13020 179*0 246.16 SS SHS 

4.0 16041 102*8 133.72 13SL53 -IOI 1*8 16860 155*4 102.78 133*0 S! 178*6 S 

-5* 183*3 120*8 13849 103.03 -109 4.15 194.18 182.64 12039 166*8 182*4 214*9 iftiTr ^ 

-1* 176.13 11883 150*6 187*6 -1* .090 188*1 177*2 11068 151.54 1B 8*1 196*4 178*6 Iwi® 


.170*2 2.1 15895 105.19 13H.75 -02 3.B2 

.18075 2* 177*4 116*7 181*4 161.49 -8* 1*6 

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-252.78 2* 237*8 158.12 202*5 208*0 -06 142 

-17648 42 A 164.77 108*6 140*7 180*9 207 0.7B 

-169*2 -08 168*0 104*7 135*4 14025 -188 3.14 

-143*2 . 2.4 134*7 68.70 11831 115*1 -86 1.78 

-398*9 -18* 372*1 24818 31874 383*7 -18* 3.12 

-207*7 12* 195*0 128.44 16097 187*1 1* 3*9 

— 82.79 207 77.75 51.13 68*7 96.40 9* 1*1 

-162*6 24* 162*7 10028 130*8 10028 82 0.78 

CMOS 1 1. EH11 Will ABB Ki CTiM _C _ X 1M 


CepytlaM. tih RracM Dm 
Bess tews: Dec 81. iSW “ 
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14* 211.18 138*0 10066 248.71 2.6 1*0 

4.0 16041 103*8 133.72 132*3 -IOI 1*3 

-5* 183*3 12038 158*9 103.03 -109 4.15 

-1* 176.13 11883 15050 10766 -1* .2-90 

1* 16016 10833 138*3 15052 - 8 * 009 

15* 204*8 134*5 174*0 20008 2.1 1*4 

18* 181*2 10829 13818 111.40 83 1*8 

105 160*8 105*1 137*5 127.10 -1.1 1*3 

-1.0 173*9 113*7 14016 18092 -1.0 2*S 

4.1 144*4 94*8 123*2 13098 -TA .047 

-7.1 26028 184*9 213*6 237.11 -112 074 

102 162.76 107*4 139.16 131.04 -08 . 1*4 

7* 104*8 106*5 14072 14807 03 A07 

5* 105-41 10079 14142 14740 -1.0 S27 

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6 * 108*3 109*2 142.12 148*8 -09 2*7 


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’ P l i 


growth beyond the sector’s 
normal cyclical slowdown. 

Half-year results from Tar- 
mac tomorrow and R e Ala n d on 
Thursday are expected to show 
that the collapse in demand for 
building ■ materials between 
1988 and 1892 in the US and UK 
has sharply reversed. But by 
now. that improvement is well 
in the price. If they can do no 
more confirm , that pat- 
tern, their attractions are lim- 
ited, and in Redland's case, 
rest principally on its 6 per 
cent yield. 

However Redland, more than 
many In the sector, derives its' 
earnings from a wide spread of 
countries. These results will 
help show whether it can keep 
its German profits rising fast, 
and can also drag its French 
profits back towards the level 
it expected when it bought 
Steetley. • 

Within those two factors is a 
plausible story that the com- 
pany should be distinguished 
from the sector. But it is not a 
robust one if European interest 
rates continue to rise for an 
extended period. The case in 
favour of Redland depends - 
like the arguments in favour of 
Fiat - on a sustained upturn in 
many countries, but one that 
does not prompt renewed infla- 
tionary pressures. That is a 
narrow window through which 
to try to thread an argument in 
favour of even the most resfl- . 
lent cyclical stocks. 


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EMERGING MARKETS: This Week 


The Emerging Investor / Patrick McCurry 

Brazilian markets nut faith in Ca 


When Latin America’s biggest 
economy goes to the polls ner* 
Monday its finanriai markets, 
and especially S&o Paulo’s 
roller coaster stock market, 
hope to be toasting Mr Fern- 
ando Henri q ue Cardoso as Bra- 
zil's next president 

The market is betting that 
Mr Cardoso will speed up pri- 
vatisation and introduce 
reforms to underpin Brazil's 
current stabilisation plan, 
which has brought monthly 
inflation down from 50 per cent 
in June to below 5 per cent at 
present 

Such reforms are likely to 
lead to strong, perhaps explo- 
sive, growth for the equity 
market and a big increase in 
capital raising by B razili an 
companies as economic stabi- 
lisation triggers pent-up con- 
sumer demand. 

If, as polls suggest, Mr Car- 
doso wins more votes than the 
other candidates combined an 
Monday, a run-off ballot in 
mid-November will he avoided 
and Mr Cardoso would enjoy a 


strong mandate for change. 

But Sfio Paulo's volatile 
stock market, the fastest grow- 
ing Latin American market 

this year, is likely to fall in the 
short term if the election goes 
to a run-off ballot, which 
would probably pit Mr Cardoso 
against the left-wing Mr Luis 
Indcio Lula da Silva. 

Mr Cardoso is leading Mr da 
Silva by more than 20 points in 
the polls, largely due to the 
SUCceSS in tackling tnnarinn of 
Brazil's new currency, the real, 
which Mr Cardoso steered 
through Congress while 
flnanra minister. 

Market optimism about the 
real, which is linked to Brazil's 
foreign exchange reserves of 
around $40bn, led S&o Paulo’s 
m ain index to climb by 65 per 
cent in dollar terms in July 
and August, although it has 
since stabilised as investors 
take profits. Over the year the 
index is up by about 90 per 
cent 

One of the spurs to the 
growth has been growing for- 


Ten beat performhtfl stocks 


Tetefonos (A) 

Guoco Holdings Ph&pplnes 
Telefonos (B) 

Kordosa 
Banco Wiese 
La Ftfcrt 

Aksa Akrflik Va Kfmya Sanayil 

Aiarico Holdings 
Brtsa 

Peru-Pedflco 


CURRENCIES 


Peru 

PMOpplnes 

Peru 

Turkey 

Peru 

Peru 

Turkey 

Turkey 

Turkey 

Peru 


Week oo week cfianga 

S * 

02998 27.42 

00577 27.17 

0.2904 24£6 

00924 24,16 

1.0576 22JST 

03700 21.38 

01130 19.70 

01412 19£0 

00310 17.54 

01562 17.39 

Some Bring Secures* 


eign investment, which has 
boosted trading volumes and is 
expected to increase if Mr Car- 
doso wins the election. 

Net foreign investment in 
the stock market this year 
reached $5bn by the end of 
August compared to $5J>bn. for 
the whole of 1993 and $L3bn in 
1992. Market capitalisation 
was Si63bn at the end of 
August 

Although foreigners account 
for only about 20-25 per cent of 
trading compared to more than 
half in Mexico, a taste of what 
may occur under a Cardoso 
presidency came last month 
when there was a record net 
Inflow of Sl-Sbn to the stock 
market from overseas and vol- 
ume averaged gSOOm a day as a 
Cardoso victory seemed 
increasingly likely. 

Despite shares' recent appre- 
ciation and the fact that many 
are now trading at above their 
book value, the potential for 
growth is still huge and could 
reach 300 per cent under the 
four years of a Cardoso presi- 
dency, f Myor dfog to a ' m ° bull- 
ish brokers. 

They point to Brazil’s inter- 
nal market of 150m consumers, 
a strong and competitive pri- 
vate sector and an economy 
that is operating at well below 
capacity. 

To tap this potential, say 
reformers, there needs to be 
more privatisation combined 
with an overhaul of Brazil's 
precarious public finances, its 
unwieldy tax system and a 
social security programme 


IFCIndces in S terms* (rthased) 

2oo /■ — 


160 



Vi J compogte j 

Sep SO 1984 Sep 

Source; FT QopWe to 16m Sept 84 

under serious funding pres- 
sures. 

Analysts believe that even 
though Mr Cardoso’s left-of- 
centre Social Democrats will 
not have a majority in Con- 
gress, they are expected to pick 
up seats there and in state 
elections. This, combined with 
Mr Cardoso’s electoral allies in 
the right- wing Liberal Front 
party could provide a platform 
for chang e 

Mr Sergio Goldman, an asso- 
ciate director at financial 
house Bear Stearns’ S3o Paulo 
office, highlights government- 
controlled giants ilka the tele- 
com comp an y Telebrts which 
could be privatised. 

“A privatised Telebr&s would 
be expected to make a return 
on equity of at least 10 per cent 
instead of the 3 per cent it will 
probably show this year. That 
would mean an increase in 
profits from $5 00 m to over 


S1.5bn,” says Ur Goldman. 

However, given Brazil's frag- 
mented political system and 
opposition to radical change in 
some areas, such as govern- 
ment-controlled companies, 
analysts are unsure about 
how quickly reforms will 
occur. Some bankers are also 
cautious about equities 
growth, even if reforms are 
adopted. 

Mr Wayne Perkins, a 
vice-president at Brazil’s Banco 
Nor ch em. expects shares to be 
bullish but says many of the 
expected reforms have already 
been anticipated by the mar- 
ket. that equities are now 
at a record high mid overval- 
ued on several measures 
including expected return an 
equity. 

Among the sectors expected 
to outperform the market, he 
says, are those in areas like 
food, clothing, retail and elec- 
trical goods aimed at poorer 
consumers who are likely to 
benefit from increased pur- 
chasing power with lower 
inflation. Previously these con- 
sumers, who did not have 
savings accounts, saw their 
salaries eroded daily by infla- 
tion. 

But Mr Perkins stresses that 
stock picking will be the key as 
many shares in these sectors 
have already shot up in value 
this year in expectation of sta- 
bilisation. 

The retail chains Lojas 
America nax and Casa Anglo, 
for example, are now trading 
at four times their book value 


s' Rhiiii^Gawrth; 


Markets watch for dollar moves 


Possible interest rate rises and trade 
negotiations will be the key factors 
motivating the markets this week as 
the dollar comes under scrutiny. 

Currency traders will focus on tomor- 
row's meeting of the Federal Open Mar- 
kets Committee, the policy-making arm 
of the US Federal Reserve Board, as 
speculation mounts that growing fears 
of inflation could prompt farther mone- 
tary tightening. 

Although some analysts believe the 
Fed may hold its firs at tomorrow's 
meeting, an earlier rather than later 
rate rise seems on the cards. Such a 
move might lend some support to the 
dollar, though the US currency could 


also follow bond markets, which would 
not respond well to a rate Increase. 

The markets will also be increasingly 
vexed by the trade negotiations 
between the US and Japan as the Sep- 
tember 30 riftfldlinp for cmntinna Inruns 
close on the horizon. If the govern- 
ments can avoid sanctions, it should be 
positive for the dollar. Analysts are 
sceptical, however, that a fall settle- 
ment will be reached. 

inflation, unemployment, retail galaa 
and industrial production figures from 
Japan could also prejudice market 
views on the strength of the yen 
against the dollar, but traders should 
focus primarily on trade rather than 


rinmpgtir. issues. 

In Germany, the markets will turn 
their attention to the Bundesbank meet- 
ing on Thursday, githnmg h expectations 
of interest rate movements are subdued 
In advance of the October 16 general 
elections. 

Following yesterday's state poll in 
Bavaria, the markets will be concerned 
about the performance of the liberal 
Free Democratic party, Chancellor Hel- 
mut Kohl’s junior alliance partner. 

The markets will want to gauge the 
possibility of a coalition between. Chan- 
cellor Kohl's Christian Democrats and 
tire Social Democratic party. 

Following last week’s relatively 


strong performance by sterling after a 
raft of positive statistics, the markets 
may lend a softer tone to the pound in 
the absence of any notable data 
releases. 

The markets will also be watching 
Monday's meeting between the UK 
Chancellor of the Exchequer, Mr Ken- 
neth Clarke, and Mr Eddie George, the 
Bank of En gland governor, for signs of 
policy changes. 

Investors may also watch for com- 
ments from world officials In the run-up 
to Saturday's Group of Seven meeting 
and next week's annual meeting of the 
International Monetary Fund and 
World Bank. 


per share, he notes. 

Analysts also predict a big 
increase in share issues by 
companies looking for invest- 
ment capital Because of Bra- 
zil’s economic problems and 
low equity prices companies 
have not been increasing share 
capital. There has actually 
been a reduction in the num- 
ber of listed companies in 
recent years. But that scenario 
should chang e if the economy 
is stabilised. 

A rising stock market is 
expected to prove more attrac- 
tive than the small local bond 
market or the international 
debt markets for companies 
seeking capital. 

To exploit the promise of 
underwriting fees for equity 
issues arwi initial public offer- 
ings as well as opportunities in 
the growing American deposi- 
tary receipts (ADR) and merg- 
ers nnd acquisitions markets 
many foreign Investment 
banks have been opening 
offices in Sdo Paulo. 

Those companies are confi- 
dent that even if Brazil’s stabi- 
lisation attempt foils this time 
round the country will sooner 
or later tackle its economic 
problems. 

According to a New York- 
based banker, the question is 
not whether reforms will hap- 
pen but when they will hap- 
pen: “There’s a lot of pressure 
for change in Brazil If the real 
currency falls there will be a 
crisis and that will make 
the need for reforms even 
clearer." 


News round-up 



■ Cairo 

The Egyptian government has 
again extended the deadline for 
offers to buy the state-owned 
Beni Suef Cement Company, 
one of the largest companies to 
be sold in in the government’s 
privatisation programme, from 
October 5 to November 5. 

■ Bombay 

Turnover on India’s 23 bourses 
is forecast to triple over the 
next three years, with 
capitalisation doubling to 
$300bn, says Barclays de Zoete 
Wedd (Asia!, Reuter reports. 

India has been one of this 
year’s best performing 
emerging markets, up 24 per 
cent in dollar terms so far. 


■ Russia 

The Fleming Russia Securities 
Fund has raised over 655m. 
The closed-ended fund aims to 
achieve capital growth by 
investing in newly privatised 
Russian companies. 

■ Mexico 

Foreign investment in Mexico 
amounted to $8£8bn in the 
first eight months of the year, 


a 29 per cent increase over 
corresponding 1993 levels. 

Foreign investment since the 
beginning of 1939 totals 
$50.72bn. more than double the 
original target of S24bn. 

■ Poland 

The Polish agriculture 
ministry plans to create five 
regional commodity exchanges 
as a part of a broad programme 
to adjust the country’s 
agriculture to western 
standards. The exchanges, 
trading in agricultural 
products, would be located 
near Warsaw, Gdansk, Elblag. 
Katowice and Lublin and be a 
part of a nationwide farming 
products’ wholesale system, 
compatible with those existing 
in tiie European Union. 

■ Shanghai 

Funds from other parts of 
China have been flowing into 
the Shanghai stock market 
since a rally began in August 
after the banning of new 
listings of A shares this year, 
according to the Shanghai 
Securities News. 

• Emerging markets coverage 
appears daily on the World 
Stock Markets page 


Baring Securities emerging markets Indices 


Index 

zuom 

Week on weak movement 
Actual Percent 

Month on month movement 
Actual Percent 

Veer to data movement 
Actual Percent 

World (288) 

Latin America 

-.19051 

+OJ29 

+0.15 

+4.00 

+2.15 

+22.10 

+13.12 

Argentina (20) 

113.90 

-1.08 

-0.94 

+1.50 

+1.33 

-1.48 

-129 

Brazil (22) 

251^3 

+4.55 

+1.84 

+4.70 

+1.91 

+111.68 

+79.97 

Chile {12) 

202.90 

+3.08 

+1.54 

+620 

+421 

+55.36 

+37.52 

Mexico (26) 

159^9 

+0.78 

+0.49 

-0.64 

-0.40 

-1.08 

-1.04 

PermB) 

896.90 

+112.17 

+1429 

+119.46 

+28.60 

+320.81 

+55.69 

Latin America (96) 

....182.74 

+2.10 

+1.19 

+2.93 

+1.63 

+33.49 

+22.44 

Europe 

Greece (13) 

83.15 

-2.72 

-3.16 

-428 

-4.89 

+0.06 

+0.07 

Portugal (16) 

118.44 

-3.07 

-2.53 

-3.84 

-3.14 

+6.32 

+5.63 

Turkey (20) 

81.65 

+5.78 

+7.61 

-1.77 

-2.13 

-80.06 

-40.51 

Europe (49) — 

Asa 

98.55 

-1.18 

-1.18 

-3.57 

-3.49 

-13.69 

-12.20 

Indonesia (22) 

156^9 

-426 

-2.65 

+5.33 

+3.52 

-14.45 

-6.45 

Korea (23) 

163.85 

+6J1 

+4.01 

+24.67 

+17.73 

+54.15 

+4926 

Malaysia (23) 

246.32 

-5.48 

-2.18 

+2.91 

+1.19 

-6.73 

-2.60 

Pakistan (10) 

117.49 

+OA4 

+0^5 

+620 

+5.57 

+5.80 

+5.19 

Philippines (11) 

291.81 

+152 

+0.52 

-15.92 

-5.17 

-30.67 

-0.51 

Thailand (24) 

268.24 

-B.55 

-3.11 

+725 

+2.84 

+2.69 

+1.02 

Taiwan (30) 

179.82 

-1.11 

-0.61 

+10.78 

+6.38 

+26.12 

+18.99 

Asia (143) ... .230.75 

-2J92 

-1.25 

+8.17 

+3.67 

+9.34 

+422 


nkn In 0 tana. Jnmy 7Bi 1982-100 Sauna: Baring Sacurtttos 


FT GUIDE TO WORLD CURRENCIES 


The cat*) Mow gives the Mast Mfabie of exchange l/oundod) against far Kay asrandea an Friday. September 23. 1994 . In aonrn caaaa the rate J» 
except where they am shown to be otherwise. In some cans martcet rates hove been calc i Mntl ton ihoee of foreign eu 


L Marital rotas tn i he average of buying and setting atm 
to which they are tied. 


Angola (NtetownM 

Arttgua (ECairS) 


M— 9*m8 

Bahrain (D*»i 

BWMitcl* (SpPmdd 

Bnguwh (Taka) 

Saftadu parti Ij 

Mpkan ©ataFri 

Baba 

Banin (CFAFi) 

Bermuda pwfftoanO 

GtuiBi fftgrtburt 


BiumIS 

*«>? 

(CFAR) 

W* 

(BmunrtFfl 


W0to 

BirttnoFaao 

Burma 


Conwy fa (So Pooottj 
Cp. Varda (CV Erode* 
CrqnMAii (CIO 

CenLMr.fep 

Cnad (CFAft) 

0*9 {CMaanftart 

c»ia rfu*") 

CotamtM (Col Praoj 
05 f iRouM 

Comoros M 

Congo (Pncz) (CFA FrJ 
Cornu Rica Mtert 

CAM (tfvafca (CFA Ft] 

Create *UM» 

Cum (Crttei firael 

Cypma (Cwxi*£J 

CMafittaO. (Karate 
Danmartt partMKnvte 
DHDourt Hap 53*» Fit 

Ootenca eCwitoO 
OomWcanRap plte 
Ecuador (Sucre) 

Egypt- ffWpeanQ 
B Mwa or (Cotort 

Equari Qrtnea (CFA Fi) 
Eaton* *nxte 

QHoota (Erttepton fin) 


FoSdond to (Fafc Q 

Faroe* fffcntei Kroner) 

must 

Rrtond (Mart** 

France W 

Ft Ciy/AMeo (CFAftJ 

Fr.Ouana (Locrt Frl 

Ft. PwaAolS CCFPF4 

Oaten (CFA Fi) 


tna 

US 8 

IX4ARK 

408740 

298548 

168072 

167400 

804328 

8*4*31 

B24S12 

384284 

254337 

uaa 

64809 

84104 

20SL27T 

128121 

824684 

21 7448 J 

137731 

681814 

446S2 

24852 

1.7453 

147B4 

80887 

06*74 

24210 

1.7888 

1.167 

2.1377 

148* 

08788 

17.1603 

10.6682 

74386 

2*8470 

197.765 

>00183 

14788 

1 

06475 

04852 

03708 

024*1 

208277 

128.121 

82488* 

624807 

304867 

254788 

3.1688 

24077 

12001 

681885 

31.780 

204899 

3.1320 

14864 

12028 

833460 

628454 

341444 

14788 

1 

08475 

484236 

314678 

202131 

74728 

4480B 

34241 

+4408 

24016 

1.74*1 

14508 

04564 

09538 

24374 

1-4804 

04567 

082303 

004847 

30473 

833480 

028034 

3414*4 

8.1312 

5.7838 

37493 

38140 

241413 

16O3B0 

9S1640 

833460 

B403JB 

220241 

628434 

3*1.844 

2.1223 

1-34*2 

04709 

mm 

12*1*7 

02498* 

t30424 

14823 

82.736E 

932783 

04185 

OSS 

833460 

633.660 

651.706 

13.4680 

132346 

1.02630 

363646m 

024.620 

833460 

261A67 

teiqyi 

S4162 

928434 

526434 

412.767 

84317 

838473 

046 

34314 

305433 

628434 

150477 

928834 

87107 

0766 

341444 

3*1444 

267213 

54248 

543426 

0420B 

1674.98 

290205 

341444 

103.145 

341444 

34081 

04808 

1.1837 

0.7486 

04728 

03082 

434800 

84661 

£74823 

8473 

1400 

32027 

280487 

177.409 

114404 

44552 

2.6052 

1.7468 

21.1657 

13.4061 

34019 

3506410 

225849 

W4841 

3003 JMl 

225648 

146148 

54387 

34814 

2.1807 

13.0068 

87444 

54827 


528434 

3*1444 

185072 

124557 

64013 

6410* 

84004 

3.4807 

1.00 

04335 

0*101 

84681 

8073 

34327 

24761 

1.4*1 

OB331 

:.7w 

*4087 

3.17T* 

04306 

02803 

34184 

033600 

908034 

3*14*4 

043M 

54003 

34104 

151 425 

094114 

82.1103 

833460 

928 034 

341444 


Qreaco Mochmrt 

Oraartwm parteh Krona) 
Grenada (E CarrS) 


HalB (Qouda) 

Hondira P-wnpro} 
Hong Kong pKS 
Mmgaty ForWJ 

Uand (carenrtc Krone) 
MM ptOmRupsa) 

ar* 

Iraq <»**Olner) 

bMiRop fuel) 


tWy Mm 

Jamaica (Jamaican 9) 

Japan AW 

Jordon (Marten Otter) 

Konya (KanyaShBrte 

KMwH (ArantewiS} 

Korea Nann (Won} 

XomeSouft Word 

Kuwait (Kuwrtd Okte) 
Uma (New KM 


Liberia MBertanS} 

Uthuafe (Ute» 

Uetetemurg R] 

Macao P»ac« 

MatMgreoar MGR) 

Mattel fPort-Eocudcj 


Mrtrtwh Ru* 

Mai tap (CFA 

U*a pteJtaes U 
Martinique Me* 


144720 

04831 

8.141 

9.7063 

Prttetei 

CPek-firtteJ 

04380 

14*42 

1 

14BCS 

Poaim* 

(Balboa) 

156024 

088244 

639407 

10114 

Pteua Now Qiinoa OOno) 

140 

QJB33 

0*101 

04*82 

Pwaeuay 

PoaranO 

37040* 

238.782 

155205 

2*5X55 

Pwu 

(NawSoO 

82861 

8473 

34327 

62190 

Pnapqtrwi 

(Poart 

4255! 

24082 

1.7453 

2.7689 

Pteasn la 

teswrtngl 

82360 

52S03 

3+1 *1 

440*0 



14780 

1 

08473 

12Z3S 

Poland 

04707 

5.7*01 

3723 

646*4 

Ponuflil 

Meufot 

153028 

07*468 

831282 

8974 

poww race 

(U8S) 

180304 

73*304 

00534 

127200 



223.782 


91.7032 

149204 







2044*0 

189883 

122821 




1*4284 

048*2 

5.7532 

82932 


fri 

122001 

170.158 

7.727* 

107.777 

620*1 

80.79* 

110319 

Sk CMmphcr 

(E CarrS) 
S3 

C CarrS) 

10B4B4 

874001 

43.7308 

9015 

a Lud* 

494235 

31J87B 

203)31 

32.1050 

Sl Berm 

fmtJtF. r) 

3*3447 

2175.43 

1*06.77 

222843 

Si Vkicoot 

(E CarrS 

779740 

174840 

113126 

178748 

San Marino 

ItatentX 

04800 

03103 

02000 

03170 

Sao Tana 

(Dobrt) 


08*06 

0416 

04569 

SteMk 

(cSfo 

4.7829 

34107 

14638 

82877 

Senegal 

2*8127 

19SO0G 

10004* 

16064* 

S teetteaa 

HMtet 

52.7080 

30*405 

21.8554 

3*2276 

8Mn>lteM 

smgrcore 

Slovakia 

30v#rte 

Monrt 

5S 

(Kmte 

(tarn 

184292 

1.1004 

07.782 

04860 

63280B 

04310 

100201 

07133 



324156 

5)4924 

6cten»nt* 

» 



04788 




34604 

2.1461 

12608 

2.1060 


(fian 4 


Spa* paaao« 

SpwIWi Porta In 
N Africa BpPoaao* 

Sri Lanka {Fto*j 

Sudwi Rap smart 

Stroom (Cute) 

SwazJand [UaDgenJ] 

Cu ouwi (Krano) 

Swttaarand ft) 

Syria 0 

Taiwan _ IB 


Mratk* Morlfopa* 

Maide n pimtean Poart 

Mqurton Mc*n) 

Mataeo (Front* Fri 

Mmgote 

Montaarm c CarrS 
Morocco mwiri 


H strata (BARteta 
Mnh (AuantenS 
Nop* pup alaa e Rtpoot 
NadmrtM Pute) 
Wnd AntPaa (AXMdar) 
Now Zealand «S 

Meoragua (aaid Cordob* 
Mgerftp (CFAfi} 




Spited Otefeig Rlghhi Stetwhar ®t. 1W* Ur**d Bngdont 0CL7B8879 Ufted 9atn S1Z39CB Qonnany DMISUB# Japan VUI^St Curopaan Cuntmcy Uno fi* 
Japan YM3.PB7 

... ■ — MOMtetenteia CteKtetMtea:*} C o ro oted row; W e—nii* impart* MFtend* rom; WBgfMI won ou t nm wd* rmmg E 
SterMJ.M 8 »ro ea» dwwad from THE VWRBJTEHS OXlSNG SKTT RATES a Bor* * Amarte. Centro. Enroll 


Togo flop (CFA Ft) 

Tonga* (Paangai 
Tmood/Tobago (B 

Tunas* pm*) 

Tiatey MM 

Tiate & Cocoa (USB 
Ttaalu PusnteiB 
Uganda plawSnan0 
Ukrolna Kttoaala) 
UAE (Dthamt 

Uniad Kingdom 0 

UnaadBMta (US S 

Lkuguey (Paaoun^uayrt 
VaruBi (VMM 

Vatican M* 

vamurta (Bote*) 
Vtatnsm (penal 

Vtrdn i»-flrBish (US S 

Vkgm b-US (USB 

Waa w n 8amoa (T** 
Taman (fitp*) PW) 
Yenwn pep *} OSnsil 
Yugoste* Mm ora) (i) 
ZairaHeg (Z*rol 


r 23. 1984 Udtad Kingdom C0JO0777 UrBed 1 


Boteata tmteU Buymg n«ft (5 Uonay gootte W Marital rata; « PuBte I 
a » awaa m «* Route Zona, (t) VUgoaiw On* r*a n*. a Rwandan i 

«t on 034 08 U 5 . 


E0IQ 

uss 

D-MARK 

YBN 

ptioq 

40240* 

30418* 

104278 

314360 

14786 

1 

06475 

14238 

1A5B5 

-092 

04057 

04*18 

101843 

1012.1 

12384* 

1857.1 

34*75 

2240S 

1466 

22998 

404371 

■teem 

164*61 

20.1604 

120 

00333 

04101 

04*82 

2.6206 

14699 

14746 

I486 

38*374 

230784 

149487 

238224 

248270 

157.789 

102.165 

161477 

14788 

1 

06475 

14235 

3.7388 

34335 

24920 

1710 

14388 

52803 

84194 

640*8 

278*20 

174*48 

112041 

178641 

21820(2) 

138430 

884782 

140 IB 

44692 

jbw9 

1.7453 

2.7588 

120 

043X1 

04101 

04*82 

*4662 

24062 

12463 

17666 

84306 

52603 

84194 

540*0 

42592 

24062 

1.74S3 

17566 

2*8127 

168846 

100844 

160644 

127720 

600460 

524.106 

621410 

04212 

8760* 

04287 

18307 

633480 

S2B43* 

3*1444 

6*048 

7.7600 

4.9087 

81780 

64343 

821400 

■83.734 

378416 

887472 

24974 

14804 

04587 

14153 

40.1700 

91.1406 

20.1718 

314826 

19a 776 

120435 

782506 

123470 

6.1436 

32579 

2.1007 

54345 

4120.12 

201036 

166346 

26710 

348200 

34361 

22886 

18183 

&8124g 

42140 

2.78*2 

4418* 

202277 

120.121 

024864 

181.138 

202277 

128121 

824684 

1S1.138 

7721*0 

49223* 

314761 

502018 

402136 

914443 

20104 

81.775* 

288407 

1B2.79S 

118374 

187487 

54828 

85361 

22886 

16103 

11.7838 

7X701 

44374 

74*56 

2.0263 

12834 

04911 

14138 

31.1200 

10.7140 

12.787 

201730 

414367 

26.1617 

180647 

20.7878 

6374*4 

530557 

3*8578 

5434*3 

384983 

244282 

181436 

254199 

633480 

528404 

341444 

5*046 

2.1377 

1454 

04786 

14656 

6.7884 

54871 

34061 

10B81 

14384 

0978 

04314 

04078 

6*032.7 

342234 

22182.7 

880204 

14788 

1 

04475 

14239 

21377 

1454 

04789 

14BSS 

1*2628 

803496 

585421 

024455 

408784 

29053.0 

168072 

2SS64.7 

54063 

34776 

22619 

320*2 

140 

04333 

04101 

04482 

14788 

1 

04*75 

14236 

47862 

64891 

84038 

5466 

178.166 

111*96 

704070 

111167 

2*61 xr 

155645 

100854 

190644 

2684*8 

16878 

1004*6 

171776 

174354 

110*8* 

715148 

113034 

14788 

1 

08475 

14236 

14788 

1 

04475 

14236 

08060 

24304 

14386 

24080 

anar^f*) 


362182 

574447 

00884(0 

0*36 

(laaari 

04482 

316000 

2014.18 

13006 

206140 

104844 

683421 

429477 

678442 

13.1044 

84002 

6475 

1*859 


I lot 31 Ai* a Y«n*d 


JAL now fly direct 
to Osaka. 

JAL’S new direct service to Osaka starts 4th September 1994 with 
daily flights from Europe. Cali your local JAL office for details. 



Japan Airlines 




SRF Mortgage 
Notes 1 PLC 
£150,000,000 Class A 
SI 1,500.000 Class B 
Mortgage backed floating 
rate notes due March 2021 

For the interest period 22 
September 1994 to 22 
December 1994 the Class A 
notes will bear Interest at 
6. 1375% per annum. Interest 
amount payable on 
22 December 1994 will amount 
to 51,530.17 perS100,000 note. 
The Class B notes will bear 
Interest at &837SX per annum. 
Interest payable on 22 
December 1994 will amount to 
SI96.039.55 peril 1,500,000 
principal amount outstanding. 

Agent Morgan Guaranty 
Trust Company 

JPMorgan 


Compagnie Flnanclfere 
de CIC et de L’Unlon 
Europdene 

US$150, 000,000 
Boating rate notes 1998 

Notice is hereby given that 
for the interest period 36 
September 1994 to 28 
December 1994 the notes will 
carry an Interest rate of 5.50% 
per annum. Interest payable 
on 28 December 1994 will 
amount ro USS 14208 per 
USSi 0,000 note and 
US$3.55208 per USS250.000 
note. 

Agent; Morgan Guaranty 
Trust Company 

JPMorgan 


ti. Nationwide 


575,000,000 

Subordinated Floating rate 
notes due 2004 

Notice Is hereby given that 
the notes will bear interest 
at 6.3125% per annum from 
22 September 1994 to 22 
December 1994. interest 
payable on 22 December 1994 
will amount to Sl57.38per 
510,000 note. 

Nationwide BuSding Society 

Agent: Morgan Guaranty 
Trust Company 

JPMorgan 


*a * s « s a z< n s s va >J % a « 

A Subsidiary of ?§ 

NORWEB | 


Generation 




has acquired from Mission Energy Company t,] 

a 50% ownership interest in the & 

Gordonsville Energy, L.E % 

240 MW gas-fired 

cogeneration facility located h 

in Gordonsville, Virginia -. 

Tt* unbrvffwJ octet & ftaaaca3l aJnaJrro KmtbGenateian 



% ij r< 2? .'4 X '■•f .v: Cj L 


WOOLWICH 

— ~ e u i l o i n c soc»erv — 

£200,000,000 

Floating Rate Notes due 1999 

In accordance with the provisions of the Notes, notice is hereby 
given that the Rate ofl merest for the three month period ending 
21st December. IW has been fixed at 6.0625% per annum. The 
interest accruing for such three month period will be £151. 15 per 
£10. nOb Bearer Note, and £1.511.47 per £100.000 Bearer Note, 
on 21si December. 1994 against presentation of Coupon No. 3. 



21st September. 1994 


Londoo Bemurfa i J 

..^Agcni Bank : !| 


Signal 


C 130+ scftv^are applications o 
O RT DATA FROM S10 A DAY O 
O Signal SOFTWARE GUIDE O 

Co)) London 'Cl 44 + (C) 71 231 355 1 
lor your guide and Signal price iis!. 








22 




FINANCIAL TIMES 


MONDAY SEPTEMBER 


26 1994 


WORLD BOND MARKETS: This Week 


NEW YORK 


To try Jackson || LONDON 




Philip Cocjgan VI FRANKFURT 


Christopher Parke-s H TOKYO 


Emtko Terazono 


The main event for the bond 
mark^lhis week is Tuesday's 
Federal Open Market 
Committee Meeting. The 
market has convinced itself 
that the Fed will raise rates by 
another half point by the 
year-end. A minority view says 
it will happen tomorrow. 

There is still no real 
evidence of inflation at the 
consumer level The worry is 
rather that the Fed will react 
to recent rises in producer 
prices and capacity utilisation, 
besides the continuing surge in 
gold and commodity prices. 
The dollar also remains weak, 
not helped by last week's bad 
trade figures. 

Since a half point rise in the 
funds and discount rates is 
already in the price, a Fed 
move this week might even be 
seen as positive. But the 
market has to weather a 
further set of statistics this 
week: homes sales today, 
consumer confidence on 
Tuesday, durable goods orders 
on Wednesday and personal 
income figures on Friday. 


Benchmark ytaM curve 
2a»W— Month ago e= 

8-25 



4J251 -J t 

0 10 yo®TS 20 

■AB ytttda m maker eanventtan 
SouseeMwril Lynch 


For close observers of Mr 
Alan Greenspan’s testimony to 
the Senate Banking Committee 
last week, the danger si gnal s 
may not be confined to the US. 
The Fed chairman talked about 
the strength of global 
expansion, implying that 
inflation pressures may be 
worldwide in character. 

For those in the band market 
who cannot quite believe 
infla tion's 25-year reign is 
really over, there will always 
be something to worry about 


The key event of the week will 
he Wednesday's auction 
of stock yielding 8'A per cent 
and maturing in 2005. 

Both Mr Nigel Richardson of 
YamaicM International 
(Europe) and Mr Simon Briscoe 
of S.G. Warburg Securities 
expect the auction to go well 
since the stock is likely to 
become a benchmark issue. 

Furthermore, Mr Briscoe 
thinks the Bank of England 
will be able to launch a Anther 
tranche of the stock at (me of 
the later auctions this year. 

A successful auction would 
come as a great boost to a 
market battered by the recent 
rise in US Treasury bond 
yields and some poorish UK 
inflation statistics. Ten-year 
yields have been trading 
around 9 per cent but Mr 
Briscoe flunks gilts could now 
be due for a rebound. 

The monthly meeting 
between Mr Eddie George, 
governor of the Bank and Mr 
Kenneth Clarke, the 
chancellor, has been brought 
forward to today because of the 


Bsnchfnsrfc yMd euv» (Kr 

23&S4-— Mona ago «= 



7 . 00 - 1 “ 


5.00 ‘ 1 ' » L 1 

9 5 years: 20 25 

■At jMtta nnitt conMntftat 
Sojro* M*rS Lynch ■ . 


latter's commitments to the 
IMF meeting in Madrid later 
this week. Few expect a 
further base rate rise so soon 
after September 12's half point 
increase. 

hi tile ah«Arn»e of trmrh fn 
the way of UK economic 

statistics, tnformttlnnal 

markets will have a 
substantial influence, with 
traders watching closely for 
the outcomes Of meetings of 
the Federal Reserve and the 
Bundesbank this week. 


The revival in the German 
economy’s status - it is once 
again, in the Bundesbank's 
words, an important motor of 
European growth - appears 
still to be proceeding free of 
inflationary pressures. 

September’s preliminary cost 
of living data published on 
Friday was inline with modest 
expectations. Longer-term 
price prospects also seem 
favourable in the light of the 
moderate trade union 
statements in advance of the 
new year wages round. The 
chmricalK i mfo n , for example, 
let it be known last week that 
its main aim will be to promote 

job creation rather than claw 
back losses in real incomes 
when it comes to negotiate. 

There was also good news on 
te chnical factors: above all a 
further marked decline in 
money supply growth. 

All of this appears to 
consolidate the Bundesbank's 
relatively comfortable position, 
in which it has the scope but 

HO Tmmpriint** need to t^nf 

rates, least of all at this 


Germany 


Ben ch m ark yield akve pQ*-- 
23/BW— Month <= 

-&5 — -r 


Capital & Credit / Conner Middelmann 


Further decline in bund yields in prospect 


Funding concerns, inflation 
fears and weak US Treasuries 
recently propelled German 
bond yields to new highs for 
the year. But last week’s com- 
forting news on supply and 
inflation helped them recoup 
some of their losses, and ana- 
lysts say more gains are in 
store. 

“We had some good funda- 
mental data thin week which 
challenged some of the more 
sceptical prognoses," says 
Annin Kayser, German econo- 
mist at Swiss Bank Corpora- 
tion in Frankfort "In view of 
these fundamentals, 7% per 
cent yields began to make little 
sense," he says. SBC expects 
bund yields to decline to 7 per 
cent in the next three months 
and to fall to 6’/* per cent by 
September 1995. 

Among the good news last 
week were monetary data con- 
firming continued deceleration 
of Germany’s M3 money supply 
growth and regional inflati on 
numbers below the 3 per cent 
forecast for September. 

The supply spectre, too, 
began to appear less daunting 
after the publication of the 
Bundesbank's issuance calen- 


dar for the final quarter. While 
another DM35bn-DM45bn in 
government and Treuhandan- 
stalt debt is expected this year, 
only two long-dated govern- 
ment bonds are slated, with 
the rest likely to be Issued in 
medium maturities through 
tap sales. 

All this has lent support to 
the long end of the German 
yield curve, causing the yield 
on the 10-year ben chmar k 
bund to foil to 7.58 per cent on 
Friday, from 7.70 per cent at 
Wednesday's dose. 

"With the better than feared 
fending calendar, the first cor- 
nerstone of the expected ‘post 
election/easing supply pressure 
rally' . . . has fallen into place." 
says Mr Stefan Schneider, chief 
economist at S.G. Warhurg in 
Frankfurt He expects 10-year 
yields to fall bade to TV* per 
cent in the near term, before 
returning to 7VS per cent by the 
first quarter of 1995. 

Bunds also gained support 
from the Bundesbank’s 
announcement that tomor- 
row's new bund would take the 
form of a 10-year floating-rate 
note pegged to the three-month 
Fr ankf urt Interbank Rate. 


The market’s reaction to this 
announcement was mixed. 
Sane argued it reflected the 
B undesbank ’s problems of pla- 
cing more supply at the long 
end after recent difficult auc- 
tions. “After the it 

had in placing IV, per cent 
Treuhand honds in August, the 
Bundesbank may have wanted 
to avoid the risk of offering a 
bund with an even higher cou- 
pon and still finding no 
demand," says Mr Schneider. 

But others said floater 

would ease the supply burden 
at the long end, allowing the 
yield carve to flatten. More- 
over, the issue is expected to 
see strong demand from the 
recently established money 
market funds, which have an 
enormous appetite for liquid, 
highly-rated money market 
paper. A further advantage of 
issuing a floating-rate bond 
amid still-fragile market senti- 
ment is that it will prevent the 
futures selling that has pre- 
ceded previous fixed-rate 
Issues. 

"A floater entails lower price 
risk than a fixed-rate bond, ami 
traders don't need to sell 
futures ahead of the issue. 


which ba« undermined the 
market in the past," says one 
trader. 

Some observers also say the 
decision to issue a floater may 
reflect the Bundesbank's 
expectation that long yields 
have peaked. 

“The Bundesbank has an 
uncanny knack of pinpointing 
the turning points in the bund 
cycle, for example laming 30- 
year paper when yields bot- 
tomed in late 1993 and in 1986, 
and issuing FRNs in 1990 when 
nominal yields peaked,” says 
Mr Troy Bowler, strategist at 
PaineWebber in London. 

However, although the 
improving inflation outlook 
and floating-rate issuance may 
lend support to bunds near- 
term, several risks remain: pos- 
sible setbacks in the US Trea- 
sury market amid continued 
monetary tightening by the 
Federal Reserve; the forthcom- 
ing German wage round; and 
the German federal elections 
on October 16. 

The latter especially could 
spring a nasty surprise on a 
h nnd market firmly expecting 
a victory for Chancellor Hel- 
mut Kohl’s CDU-FDP coalition. 



'O' 10 yre 20 

‘AM yWds are market convention 

: SotscelAn* Lynch 


Thursday’s routine central 

council meeting. 

Against this background. 
German bonds reoovered 
quietly near the end of last 
week. Further i mpro ve m ent is 
expected, but the tendency 
among foreign investors to 
reduce their involvement in 
the run-up to federal elections, 
and nervousness about farther 
monetary ti gfrtepiwg in the US 
are still preventing any 
build-up of momentum in the 
local market 


Many market participants 
seem unaware that the compli- 
cated German electoral sy s tem 
could enable the PDS, the for- 
mer East German communist 
party, to enter the lower house 
of parliament, even if ft doesn’t 
dear the 5 per cent hurdle nor- 
mally needed to win parlia- 
mentary seats. 

Although the leader of the 
opposition social democrats 
has said he does not intend to 
gain office through the support 
of the PDS, some feel he could 
be swayed by the lure of chan- 
cellorship after e l e cti ons to 
establish some sort of SPD- 
Green-PDS ali gnment 

Given these imponderables, 
those looking for farther rate 
cuts from the Bundesbank will 
probably have to waft a little 
longer. Even the rate for its 
weekly securities repurchase 
agreements is expected to be 
held fixed at 485 per cent until 
after the elections. 

“The Bundesbank is unlikely 
to cut rates over the next 
weeks with the election, fur- 
ther Fed bikps and the upcom- 
ing wage round being poten- 
tially destabilising factors," 
says Mr Schneider. 



JapanwM government bonds 
were supported last week by 
the weakness in the stock 
market and were little affected 
by the turmoil on the US bond 
market 

Bond prices also failed to 
react to the government’s tax 
P*Aagp innMwwi later in the 
week, bwicb m u c h of the detail 
was floated in the press before 
band. 

But while last week’s 
second-quarter GDP figures 
confirmed the expected slack 
recovery process, investors 

have yet to start their trading 
for the second half and are 
expected to remain sidelined 
this weds. 

Money market rates also 

reflect caution over a possible 
rise in interest rates. Euroyen 
futures markets currently 
indicate that short-term, money 
market rates will rise from the 
current level erf Z3 per cent to 
28 pea: cent by the year-end 
and over 3 per cent by the 
middle of next year. 

Meanwhile, band market 
participants will focus an the 


Japan . 

Benchmark ytetd cum* (%T 
?3&e4-— Mourn apo ws 

4.75 


1.75 ' — 1 — -* — rr 

0 5 yaare 16 

VU y«*& art marfeet convention 
SnuCttMwtt lynch 


spate of economic indicators 
released this week. August 
industrial output figures to be 
announced tins Thursday are 
expected to rise due to the hot 
summer and high electricity 
demand, hence being negative 
for the bond market 
Barclays de Zoete Wedd in 
Tokyo expects production to 
have risen by 2 per cent in 

August from a month earlier 
and a L8 per cent year-on-year 
rise, the strongest since July 
1991. 


Dtaoxsit 

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rftTTth 

SAINT-GOBAIN 


NET INCOME OF L26 BILLION FRENCH FRANCS 
FOR THE FIRST HALF YEAR 1994 

Coxualldeled net Income for the first half year 1994 amounts to FF1^56 million against FF452 million fortbe Bnt half 1993. This increase b due both to 
the Improvement of the economic environment In the Group’s various business sectors and to the Impact of the restructuradoa measures taken during 
the last two years. 

The Group's key consolidated figures are as follows in millions of French Francs : 


FIRST HALF YEAR 

1994 

1993 

• Soles 

38.041 

35,739 

• Operating Income 

3.503 

2343 

Financial charges, net 

(735) 

(930) 

(786) 

Reorganisation and other coats 
■ Income before tax and before results of sales 

(442) 

of non-current assets 

2.673 

966 

Results of sales of non-current assets 

(15) 

(8) 

Income ux 

(800) 

(263) 

• Net income before minority Interests 

1,613 

462 

• Net Income 

1,256 

452 

• Resources from operations (cash flow) 

4,348 

3,383 

• Capital expenditure on plant and equipment 

1.412 

1,784 

• Acquisition of investments 

1.214 

1,001 

• Net indebtedness 

10,208 

18,069 


The Group's oelea Increased by 6.4 H on a real structure basis and by 7.7 % on a comparable structure basis aftertrasslahon into French Francs. Sales 
are split as follows: France, domestic market 2-4*6, exports from France 12%, other European countries 36%, countries outside Europe 28%. 

The recovery In sales volumes was very strong on the American Continent and also started to show In Europe. 

Operating Income, up 50%, Is stated after stable general expenses and depreciation charges and provisions down 76% following the decrease in 
capital expenditure. II represents 9.2% of sales, against 6.6% at June 30. 1993. 

Income before tax and before results of sales of non-current assets shows an increase of FF L7 billion, after dividend Income from non-consolidated 
subsidiaries that remained the same, net financial charges down 21% due to the reduction of Indebtedness, and reorganisation costs down 44%. 

The capital gain on the disposal of the Paper. Wood business Is to be registered during Sic second half of 1994. 

The analysis of results by Industrial activity confirms that all the Division's results improved considerably, except for the Pipe Division which 
remained stable and which continues lo suffer from the drop In same of Its European water supply markets. 

The results of the three geographical areas all show an Improvement: those of France and the other European countries benefited from a recovery 
in their sales volumes and from the effects of the restructurations that had been made, while those in the Americas continued to Improve with the 
favorable economic environment In that area. 

Cash flow amounts to FF 4,348 million and Increased by 29%. It represents 11.4% of sales- It largely coven the total of capital expenditure and 
investment acquisitions. 

Net Indebtedness amounts to FF 10.2 billion, down FF S billion compared that of June 30, 1993 and down nearly FF 5 billion on that 
of December 31, 1993. it benefited from the capital increase In cash ot FT 3.6 billion in March 1994. 

Compagnic de Soint-Gobain. the parent company, recorded a trading profit of FF 887 million, compared to FF 697 million for the first halt of 1993, 


COMPAGNIE DE SAINT-GOBAIN 
INVESTOR RELATIONS DEPARTMENT 
T6L: (33) (1)47.62.43.14 



Technical Analysis Software 


INDEXIA 


To! . (0-342) S/3015 • Fa* (0-5-42) *74334 


International / Graham Bowley and Martin Brice 

Volatility puts fundraising on hold 


Abbey National the UK home 
loans and banking group, fast 
week became the latest casu- 
alty of this year's sharp fall in 
world band markets when It 
was forced to postpone its pro- 
posed global bond offering due 
to “terrible market condi- 
tions". 

The postponement raises an 
obvious question: How badly 
hag the extrema volatility in 
the bond markets this year 
affected borrowers’ funding 
programmes? 

Many borrowers have simply 
bad to swallow bard and pay 
the high price of borrowing in 
a bear market Ever since the 
first rise in US short-term 
interest rates in February, 
investors have been jittery 
about the prospects of rising 
inflation and higher interest 
rates worldwide. Long bond 
yields in the UK, for example, 
have risen from 6.3 per cent in 
January to around 9 per cent 

Other borrowers, however, 
managed to complete most of 
their fimdraising In the first 
part of this year before yields 
reached their current dizzy 
heights. Abbey National, for 
example, has already raised 
SSbn so far this year. 

“A lot of funding was done 
in the first few months of the 
year. With interest rates at his- 
torically low levels, many bor- 
rowers were eager to get as 
much under their belt as possi- 
ble,” said one syndicate man- 
ager. 

Other examples jarinda the 
Province of Ontario, one of the 


world’s biggest non-sovereign 
b o rrow e r s , which is now 88 per 
cent of the way through its 
C$11.4bn borrowing pro- 
gramme for. this year. Simi- 
larly, the European Bank for 
Reconstruction and Develop- 
ment already managed to 
raise 80 per emit of its Ecuibn 
borrowing programme for 1994. 

These borrowers can now 
perhaps afford to wait until 
cond iti ons improve before they 
have to tap the bond markets 
for any substantial amount 
again. “We now have the abil- 
ity to wait out the bad times. 
This year we were lucky 
enough to anticipate some of 
the volatility," Mr Lords 
de Montpellier, the EBRD’s 
director of funding. 

Other borrowers, particu- 
larly in the corporate sector, 
have simply not needed to tap 
the bond markets tins year, for 
two main reasons. 

First, many companies have 
been keen to cut back on the 
amount of debt they hold, in 
part to reduce their exposure 
to rising Interest rates. As a 
result, they have borrowed 
less. 

Second, they have been able 
to find relatively cheap alter- 
native sources of finance Put 
off by the high yields on 
tong-term fixed-rate debt, they 
have turned to short-term, pri- 
vate, highly structured means 
of borrowing, such as the float- 
ing-rate note and syndicated 
loans market, both of which 
have seen an explosion of 
activity this year. 


“There is no doubt that most 
borrowing has been hampered 
this year, but what has been 
bearish for one market has 
been bullish for another,” said 
one dealer. 

Floating-rate notes are a type 
of shortterm debt offering a 
relatively low variable rate of 
interest which moves to reflect 
changes in money market 
Interest rates. They therefore 
represent an obvious refuge for 
investors in a rising interest 
rate environment 

As a result as US Interest 
rates headed upwards in the 
first few Tnrmtb g of flifa year, 
and as the fixed-rate bond mar , 
ket began to slow, there was a 
flood of new FRN issues. Bor- 
rowers launched an equivalent 
of |84.1bn in FRNs in the first 
three months of 1994, com- 
pared with a total of gl7.1bn fn 
the first quarter of 1993. 

The syndicated loans market 
has provided companies with 
an extremely cheap source of 
finance in the second half of 
tills year. Having repaired the 
damage done to their balance 
sheets by the bad debts of the 
late 1980s, and with loans 
granted at the end of the last 
decade now dose to maturity, 
many banks have become vary 
eager to begin lending again - 
and have turned aggressively 
to syndicated loans. 

“Banks are awash with capi- 
tal and are hungry for new 
assets,” said one syndicate 
manager in London. 

Competition among banks 
for new business has driven 


the cost of loans down to 
remarkably low levels. Over 
the last year, the spread over 
Libor on a syndicated loan to a 
typical European corporate 
borrower, with a Single A 
credit rating, has dropped from 
about 45 basis points to around 
20 to 22 basis points. Last 
month, Spain borrowed Ecufibn 
over five years at a spread of 
just 4% basis points over Libor. 

“Spain would not have been 
able to borrow such a large 
a moun t and at such a low cost 
in the bond market, “ said one 
syndicate manager. 

This does not moan, how- 
ever, that volatile conditions in 
bond markets have become 
irrelevant. Many countries!, 
particularly high yielding 
European nations which were 
badly affected by this year's • 
turbulence, still have large 
funding progr amme to com- 
plete. They will be returning to 
the bond markets before the 
end of the year whether condi- 
tions have improved or not 

Other borrowers may wait 
for better conditions to prevail 
but this may prove to be a very 
dangerous game to play. 

“There Is ltttis rthannfl that 

bond market conditions are 
going to improve with a lot of 
supply still to come into the 
market and with' European 
interest rates heading 
upwards," said one trader. 

High yields may hurt but if 
the prospect is for them to 
move higher still it may be 
better to brave current condi- 
tions sooner rather than later. 


NEW INTERNATIONAL BOND ISSUES 


CITY I 


The Malta Laki to tpreal benfag - RaaaaaJ and Sports. Far t 
teodmra md «a team ■ppTrmaa toroteaa 071 2X3 1667 
Acedosi m DonaaBy opoad «ilHn 72 tan 
Sm ow 0 (msm 1 ue prim Sun. la 9p m. on Ttiera P9 60S 



















FINANCIAL TIMES MONDAY SEPTEMBER 26 1 994 


ni! !i ; 


EQUITY MARKETS: This Week 


NEW YORK 


All eyes on 
the Federal 
Reserve 

It is abundantly clear this morning that 
sentiment on Wall Street in the fimfi 
week of the third quarter will hinge on 
the outcome of tomorrow's Federal 
Reserve policy session. It is much more 
difficult to divine how investors will 
react to any decision forthcoming from 
Washington. 

But analysts are not expecting stocks 
to make much progress in the short 
term, whether or not Mr Greenspan »nH 
company come down in favour of an 
immed iate move to tighter money. 

"The market is faring a lot of 
head-winds these days,” says James 
Solloway, an analyst at Argus Research 
in New York and one of Wall Street’s 
more bullish pundits. 

“It all comes down to the realisation 
that whether the Fed raises rates or 
not, it’s certainly going to raise them 
sooner or later, and the next time won’t 
be the last" 

The best hope of most strategists is 
that share prices can regain their 
balance this week after hitting the 
skids since September IS, when the 
Dow Jones Industrial Average came 
within striking distance of its record 
high of 3578. 

“The strength of the rally was an 
illusion, and there is now risk on the 
downside," says Robin Griffiths, 
technical analyst at James Capel 
Strategy in New York. 

What if the Fed opts to hold off on 
the cycle’s rate increase, as a somewhat 
shaken consensus of economists 
foresees? Mr Solloway says equity 
investors will probably feel a mature of 
relief and anxiety, with the latter 
do minating 


Frank McGurh 


LONDON 


Terrv Hyland 


International offerings 


Dow Jones Industrial Average . COFlfidGIICS j|*| FT-SE-A AB-Shara index 


'3950 


3900 -1 


IS ' September 1894 23 

Source: FTGraptdta 

If there is no action, bonds are likely 
to tumble. Traders are already worried 
that the central bank ba« fall en behind 
the inflationary curve. 

Though stocks have not moved in 
step with the Treasury markets in 
recent weeks, a downturn in bond 
prices, and a concurrent increase in 
long-term returns, will tip the balance 
more in the favour of bond investments. 

"We are now reaching a point where 
the increase in bond yields is having a 
negative effect on stocks." says Mr 
Solloway. 

What if the Fed decides to act 
immediately, as predicted last week by 
Mr Wayne Angell, a former Fed 
governor who now serves as chief 
economist for Bear Stearns. 

Mr Angell, known for its hawkish 
stance an moving aggressively against 
inflation, says there was a 60 per cent 
chance that his old colleagues will vote 
to lift short-term rates by 50 basis 
points. 

When the Fed acted in a like manner 
in mid-August, stocks surged, as Wall 
Street pot the best possible spin on an 
accompanying statement which snid 
the rate increase should “be sufficient, 
at least for a time”. 

A month later, pundits will not be as 
generous in their interpretations. 


earnings 
less secure 

This week will not be an easy one ter 
fUnd managers. It brings the end of the 
year’s third quarter with the 
three-month gain already whittled away 
to not much more than 100 points; and 
100 points is no gain at all in a stock 
market which has suffered losses of 40 
pdnts-plus on more than one session in 
the past fortnight Also hanging over 
all fund trustees’ meetings will be 
awareness that the FT-SE 100 Index has 
to move quickly in the final quarter to 
meet many year-aid forecasts. 

Chartists see support around 2£60 to 
2^70, with some moving the line to 
about 3,020. Such worries are tempered 
by the assurance from Derivative 
Securities, the futures market 
specialist, that "we now have an 
extremely oversold situation”. 

Deeper concerns over Interest rates 
and the pace of economic recovery lie 
beneath these fa*rimire^ ransirier a tio n s - 
Interest rate anxiety will be tested early 
this week at the meeting of the US 
Federal Open Markets Committee, 
while the Bundesbank stands by to 
provide further drama on Thursday. 

Interest rate worries are reflected in 
the role of bonds in iinHwminhtg 1 
equities. European fond managers have 
been switching out of UK stocks and 
into British government bonds, even 
though the outlook for gilts remains 
questionable as long as further rises in 
base rates seem likely. 

BZW points out that the gQt/equity 
yield ratio is at 22 times, underlining 
the cheapness of gats; but Strauss 
Turnbull notes that this ratio is close to 
its 10-year average. Given that UK 
bonds hold the key to genuine recovery 


1.550 — 


1.540 


Richter Gedeon response 
bodes well for Budapest 


1330 \— 


1320 


16 September 1994 23 

Some: FT Graphite 

in equities, and that many analysts 
believe that impending over-supply of 
bonds is the problem, markets will 
watch Wednesday's auction of cam 
10-year gilts with care. 

If the interest rate side of the market 
argument is in doubt, the bull side - 
based on growth in company profits 
and dividends - >mr also become less 
secure. “Faith in strong earnings 
growth runs at least some risk of being 
misplaced," says BZW. And Kleinwort 
Benson Securities has become the first 
UK house to bite the bullet and describe 
the market's median estimate of 
earnings growth of around 14 per cent 
next year as “grossly overblown". 
Cutting its 1995 earnings forecasts from 
10 to 8 per cent, it says some analysts 
are suffering from “money illusion” and 
need spectacles tinted a deep rosy pink. 

This week can probably be set aside 
for window dressing ahead of the wid of 
the quarter and worrying about the 
FOMC. But the response to statements 
from British Aerospace and Guinness, 
not to mention hints of downgradings 
of Hanson, suggests confidence in 
earnings growth has been shaken. 

If both the interest and the earnings 
growth side of the UK market equation 
are under scrutiny, the year’s final 
quarter could prove difficult 


OTHER MARKETS 


INTEREST RATES 

The outlook for higher interest 
rates in the US and Germany 
will dominate activity this 
week. James Capel reckons 
that the strength of the real 
economy data over the last 
month points to a rise in rates 
at Tuesday’s US Federal Open 
Market Committee and it 
reiterates, ahead of Thursday's 
Bundesbank meeting, that the 
underlying strength of German 
M3 over recent months has 
indicated an inflationary risk 
from 1996 “and we therefore 
still think German rates have 
bottomed". 

Kleinwort Benson rates the 
chances of a US rates rise after 
the FOMC as very high, and it 


expects the strength erf the 
economy will force the Fed to 
raise rates to 5% per cent by 
the end of this year, and 6>A 
per cent by the middle of 1995. 

UBS. however, is sceptical 
about the need for a rise in US 
rates, saying that the markets 
are exagg er a ti ng the extent of 
the US inflation threat, not 
least because the ti ghtening of 
policy semi so far this year has 
already put in place influenc es 
that will limit the cyclical rise 
in prices in 1995. 

It also expects the 
Bundesbank to leave official 
rates unchanged, saying that 
policy is on hold until after the 
Federal election. Thereafter, 
further disinflation may yet 
facilitate one final round of 
monetary easing. 


BANCO BILBAO VIZCAYA 


SECOND QUARTERLY DIVIDEND 1994 

The Board of Directors of Banco Bilbao Vizcaya S-A. 
has approved the payment of the second quarterly 
dividend for the Fina n c i a l Year 1994 an all shares 
issued, numbered 1 to 231,000,000 as follows: 


Gross Dividend 
38 ptas 


Tax N et Dividend 
9.50 ptas 2Sw50 ptas 


Date of payment: on or after 10th October 1994 


Payment: 


As the Bank shares are represented by 
entries in the official register 
maintained by the Servicio de 
Compensacidn y UquidaciAn, SA. (the 
"SCL”), the payment of the dividend 
will take place through the members 
of the SCL. 


I jyNaBank 

Australia and New Zealand 
Banking Group Limited 

Aiurrjtum CumfwnT Number 005 357 52 2 
(Intinpuuiied uidi /inured biihiir? in the Suae of Viatnia. .41011(111(1) 

U.S. $125,000,000 
Floating Rate Notes due 1995 
Notice hereby Riven that fur the interest Period 23rd September. 
•1994 to 23rd Match, 1995 the Notes will carry a Rate of Interest 
,il 5.8125 per cent, per annum with an Amount of Interest of 
U.S. 5292.24 peT U.S. $10.i\JO Note anJ U.S. $2,922.40 per U.S. 
$100.CW Note. The relevant Interest Payment Date will be 23rd 
March. IW5. __ 


Q Bankers Trust 

Company, London 


Agent Bank 


UNOCAL# 

U.S. $200,000,000 
Union Oil Company of California 
Guaranteed Floating Rate Notes due 1996 
Guaranteed by 
Unocal Corporation 

In .tuMrdancc with the provisions of the Notes, notice is hereby given 
ihai the Rate .of Interest far the six month period ending oa 23rd March. 
|. MS has been fixed ai 6.0625% per annum. The interest accruing for such 
Sis month period will be U S. $304. tU per U S. $10,000 bearer Note, and 
U.S. 53.O4b.0S j*r U.S. $100,000 bearer Note, on 23rd March. 1995 
against pretemaiion of Coupon No. W. 

For holder* of fully reghtcred Notes the Rate of Intenesi Tor the six 
numib period ending on 23rd March. 1995 has been fixed at 6.0625% per 
annum The interest accruing for such six month period will be U.S. 
$.VU SI per U.S. 510.000 fully regnlered Notes, and integral multiples 
thereof; payable 23nl March. 1 W. 



AMSTERDAM 

The stock exchange will shrug 
off nearly 400 years of tradition 
when it opens for business on 
Friday with a FI 8m ($4_3m) 
computerised equity trading 
system designed to Increase 
Amsterdam's share of the 
market in Dutch stocks, writes 
Martin Brice. 

Currently, between 40 and 60 
per cent of trades in Dutch 
stocks are made in London. 

Central to the development 
of the new Systran Is a decision 
to change the role of 
Amsterdam's time-honoured 
system of jobbers or hoekmen 
In future, they will concentrate 
on retail trades, and new 
electronic screens will handle 
wholesale dealing. 


PARIS 

With last week’s austerity 
budget providing no surprises 
for the market, attention has 
switched back to the corporate 
reporting season, writes John 
Pitt. Alcatel Alsthom, due to 
release interim figures on 
Wednesday, has seen its share 
price lose ground steadily this 
month. From around FFr600 at 
the start of September the 
shares were trading by the 
close of trade on Friday at 
FFr554. a Ml of 7.6 per cent 
Most of the selling has come 
from international investors, 
while the telecommunications 
company has also been dogged 
by allegations of corruption 
mane in certain elements of 
the French media. 


THE VENEZUELA HIGH INCOME 
FUND N.V. 

DIVIDEND NOTICE 

Consistent with the authorization granted by the Board of 
Supervisory Directors on September 8, 1994, notice is hereby 
given that the Fund will pay a distribution of U.S. S0.25 per 
share on October 17, 1994 to common shareholders of record al 
the close of business on September 30, 1994, in the case of 
shares held in registered form, or upon presentation of coupon 
number 13 attached to the common share certificate to the 
Fund's Paying Agent (on or after October 17. 1994), in the case 
of common shares held in bearer form. 

By order of the Managing Director 

Managing Director and Location of 
Principal Office 

Curacao Corporation Company N.V. 

De Ruyterkade 62, P.O. Box 812 
Willemstad, Curacao 
Netherlands Antilles 

Administrator, Registrar, Transfer and 
Paying Agent 
Cititrust (Bahamas) Limited 
Thompson Boulevard 
P.O. Box N1576 
Oakes Field 
Nassau, Bahamas 

Investment Manager 

Scodder, Stevens & Clark , Inc. 


Notice of Redemption at 
the option of the Bondholders 

TORKTYE CXTMHURrYETI 

(The Republic ort Turkey) 

US. $150,000,000 
1114 per cent. Bonds due 1998 

NOTICE IS HEREBY GIVEN to the holders rf the Bonds, ihar in 
accordance with Clause 6(b) of the Terms and Conditions ut the Bonds, 
the Republic will, ar the option of the holder of any Bond, redeem such 
Bond on 22nd December, 1994 at its principal amount, when inreresr on 

the Bonds mil cease w accrue. 

7b exercise such opuon the holder must deposit such Bond, tugreher with 
all coupons relating ro ir which mature alter the date fixed for redemption, 
, with any Ihying Agent, together with a duly completed redemption nonce 
in the form obtainable horn any or the Ravins Agents, not more than 60 
nur less than 30 Jays prior ta the Redemption Date. 

Paying Agents 
Bankets Trust Company 
1 Appold Street 
Bnudsue 
London EC2A2HE 

Bonkers Trust Luxemhoury 5 -A- Swiss Bank Gtrpuanon 

PG. Box SOT 1 Aeschenvoretodt 

14 Boulevard F.D. Roosevelt CH-40K Basle 

L-2450 Luxembourg Swieeriand 

Accrued inrerest due on 22nd December, 1994 will he paid in the 
normal manner against presencman of Coupon No. 6 on or after 
22nd December. 1*94. 


2lsi September, 1994 


London Branch 
Agent Bonk 


0 Bankers Trust 
Company, London 
26th September, 1994 


Agent Bank 


HELSINKI 

Although the market is 
bracing itself for the imminen t 
onset of the corporate 
eight-month reporting season, 
investors are becoming 
increasingly cautions ahead of 
Finland's October 16 
referendum on European 
Union membership. Support 
for membership has fallen over 
Brussels' reluctance to accept 
the fa rming support package. 

However. Helsinki remains 
the best performing stock 
market in Europe this year 
with the Hex index up 17.8 per 
cent In dollar terms, the FT-A 
Finland index has risen by 
40.54 per cent this year 
compared with a 0.18 per cent 
fall tn the FT-A Europe index. 


Hungary last week kicked off 
what is set to be a busy fourth 
quarter ta Us equity offerings 
with the privatisation of 33.4 
per cent of Richter Gedeon. the 
country's biggest pharmaceuti- 
cals manufacturer and one of 
its largest exporters. 

The sale, which is being com- 
bined with a capital increase, 
will net the company 552.4m. it 
is expected to be one of this 
year’s biggest privatisations. 
Investment banks in Budapest 
said the strong foreign interest 
in the offering underlined 
western investors’ confidence 
in Hungary, despite the victory 
of the Hungarian Socialist 
Party, the former communists, 
in May’s general elections. 

The international offering, to 
be followed by a domestic pub- 
lic offer of a further 3.5 per 
cent of the company next 
week, involved the sale of 
4.41m ordinary shares priced at 
812J0. Schroder, the UK mer- 
chant hank which joint lead- 
managed the private place- 
ment with Creditanstalt Secu- 
rities, Budapest, said it had 
placed around 75 per cent with 
UK institutions. Shares 
changed hands at $13 .25 -$13.75 
on Friday, the first day of trad- 
ing, the hank said. 

The successful offering is 
good news for the Budapest 
Stock Exchange, on which 
Richter Gedeon plans to 
become listed in the coming 


Helsink i rn tatns its 

supporters, including Peter 
Lawrence at Kleinwort Benson, 
who believes that the previous 
all-tune high for the Hex of 
2,009.5 is now W ithin reach 
after five long years. 

He says that international 
factors over the next few 
mo nths could have a negative 
impact on Finland, but thinks 
that the prudent 1995 budget 
and stronger currency should 
limit the need to raise interest 
rates in Hne with Sweden, for 
example. 

“Our belief in the shorter 
term is supported by the inflow 
of fonds into domestic trusts, 
as well as evidence that 
foreigners are strong net 
buyers of the market,” Mr 
Lawrence says. 








& wmm. 
















F NOTICE GPfiKDKMPTKJN yt 

U.S4l50,000,000 

Retractable Notes Doe October SO, 1996 

cmcoRPO 

NOTICE S HEREBY GIVEN THAT CScorp hm doctor/ to redaom on Odobar 31, 1994 
(ih* "(todmaiian Data") aO of ib auUandkig RobadcUa Naim Duo Octobw 30, 1 99A 
(fa “Noto!^ al a radwnplion prion equal B iho prina pol amount dmaf pi** i nte i n X 
occruad to toe Redemption Dob. On raid cdtar me Redemption Date, interest on Ao 

The Note* are to be redeemed at (he main oKcm of Cttbonb, MA in London, Etnmeb, 
Peril, Franldurt am Main, Amsterdam, ra to main alb of Gtibanli {Luxembourg] SA 
■i Luxorabaua, or at lha main office raQtcnk (Swfeeriraidl in Zisich, raid ako allha 
main office ofthriaficnio Bra* ag Kmda Kasse in Olio. 

rS ayme nh on (he Notes «nt be mode upon presanto&on and s ur ren d er of die Note 


afion end s ur ren d er of die Nate 
to said dme at die offices sol lorth 

and presented for pajmrt in dw 

CmBAN < © 


U.S. $30,000,000 


4k 


CREDIT D’EQUIPEMENT 

DES PETITES ET MOYENNES ENTREP RISES 

Undated Subordinated Floating Rats Notes 
For the Interest Period from Septe mber 26,1994 to March 27, 1995 
Big rate has been determined ai 6.9375% per annum. The amount 
payable on March 27, 1995 per US. $1 .000.000 principal amount 
of Notes wifi be US. S3S.072.92. 


weeks. The company, which 
made a gross profit of more 
than Ft2bn on turnover of 
Ftll.Zbn (Si 14m) in the first 
half of 1994. is also seeking list- 
ings id Vienna and on the 
developing markets sector of 
Seaq. 

Local brokers hope Richter 
Gedeon, which is set to become 
the BSE’s largest stock by mar- 
ket capitalisation, will inject 
more liquidity into the market. 
Liquidity remains a problem 
for the exchange although it is 
improving. 

The BSE which also trades 
government bonds and other 
securities, averaged 286 deals a 
day in the first eight months, 
well up on last year's daily 
average of 94. Boosted by sev- 
eral new offerings earlier this 
year, shares accounted for 29 
per cent of total turnover by 
the end of August, up from 10 
per cent last year. 

Exchange officials hope the 
new issues and those planned 
for the aut umn will help dou- 
ble the BSE's market capitalis- 
ation to around $2.2bn from 
Sl.lbn at the start or the year. 

Few companies have 
announced public offerings or 
capital increases but local ana- 
lysts say several are under 
preparation. 

Janos Bartha, head of CS 
First Boston's local operation, 
says that he expects a number 
of private Hungarian com pa 


TOKYO 

The Nikkei index is likely to 
continue to fluctuate around 
the 20,000 level in the week 
ahead, writes Emiho Teratoma. 

However, trading volume is 
expected to rise sharply as a 
last-minute rush to realise 
profits on holdings boosts cross 
trading, or the selling and 
buying back of stocks, ahead of 
the September book closing. 
The volume of cross trades on 
the Tokyo, Osaka, and Nagoya 
stock exchanges during the 
April-September period is 
expected to total around 7.5bn 
shares, the highest since 1991, 
with about BO to 90 per cent of 
the trading during the latter 
half of last week being 
attributed to cross trading. 


nies to come to the market in 
the next six months. 

However, state companies 
undergoing privatisation are 
still expected to provide the 
majority of new offerings. 
Until now, trade sales have 
generally been Hungary's pre- 
ferred privatisation method. 

Nevertheless, Mr Bartha says 
there are also state companies 
which have restructured 
enough and which do not nec- 
essarily need strategic partners 
which are likely to privatise 
via flotation. 

Much will depend on the new 
government's privatisation pol- 
icy which is presently under 
discussion. The government 
has promised it will speed up 
privatisation and its privatisa- 
tion agencies say one way of 
doing this could be more 
equity offerings. 

In the meantime, the govern- 
ment is moving ahead with pri- 
vatisation of the state gas and 
electricity monopolies, on 
which it is being advised 
respectively by Rothschild and 
Schroder. 

In the first phase, AV RL the 
privatisation body, is planning 
to hold tenders for minority 
stakes in the five regional 
household gas distribution 
companies this autumn. MVM. 
the electricity company, would 
follow next year. 

Virginia Marsh 


HONG KONG 

Investors will be keeping a 
wary eye on tomorrow's FOMC 
meeting, while Japan could 
also be an influence, with a 
possible sell-down of Asian 
equities accompanying its 
half-year end. writes Louise 
Lucas. Domestically, property 
stocks will be in the spotlight 
as the developers announce 
their final results, wrapping up 
the current reporting season. 
There is also likely to be a 
spate of switching among Hang 
Seng index constituent stocks 
as investors welcome 
newcomers, announced on 
Friday, to replace the five 
Jardine stocks that are 
delisting. 

Compiled by Michael Morgan 






aFKFM/LL/ON 06 30 199 

Consolidated sales 10,328 
Operating result 360 

Cunent result 290 

Net result 

of consolidated co. 162.5 
Net result 

(share of the group) 130.4 


„ . (us half 93 
<jonSC pro bnm 94 

+ 52.5 9.881 

+ 45.6 329 

+ 77.2 191 

+ 69.3 113.5 

+ 45.8 86 


The operating margin went down from 3.7 % to 3.5 due to 
the consolidation of WILLCOX & GIBBS and the 
specific mix of activities of this subsidiary. On the same 
basis, it improved from 3.3 % to 3.5 %, a result of gross 
margin improvements greater than increases in distribution 
costs. 

Further reductions of working capital needs as well as the 
decrease in interest rates, have allowed net financial charges 
to reduce from 1.2 % to 0.7 % of sates, in spite of the 
consolidation of WILLCOX ft GIBBS. The ratio of net 
financial indebtedness to shareholders' equity has reduced 
from 1. 4 1 to 1.25. 

The net result shows a significant improvement of 45.8 % 
despite an increase in the effective tax rate, in particular in the 
United States. 

The level of activity was particularly low and interest rates 
were particularly high during the first half of 1993. Therefore 
the trends of the first half of 1994 cannot be extrapolated for 
the whole year. However, levels of activity in July and 
August show a favourable trend. 

PINAULT-PRJNTEMPS-REDOUTE GROUP 


❖ 


The Export-Import Bank of Korea 

US$100,000,000 

Floating Rate Notes Due 1997 


In accordance with the provisions of the Floating Rate Notes. 

notice Is hereby given as follows: 

Interest Period : September 23. 1994 to 

March 23, 1995 (181 days) 

Rais of Interest : 5*/» % per annum 

Cotton Amount : US$ 2.828.13 

(per note of US$100,000) 

USS 7.070.31 

(per note of US$250,000) 


LTCB Asia Untitecf 


By: The Chase Manhattan Bank, HA. 
London, Agent Bank 

September 26, 1994 


CHASE 


REUTERS lOOO 

U 24 hours s day - only $100 a month! 

UtfB nNANCUU. (MX* DtnaCT TO VOI1R PC 

■ UK 071 BIO 


X 








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Raperti M MM * 1 M MM aaOMe Mr, Itoict ■ 


■ TOKYO - MOST ACTIVa STOCK* Tlrntraday. Soptembor 22, 1994 



Stocks 

Closing 

Ctango 


Stocks 

Closing 

ctioniio 


Traded 

Prions 

on (tag/ 


Traded 

Prion 

on (fay 

Nippon Stool - 

lfl-5m 

391 

+3 


4.2m 

333 

+e 

NKK Corp 

9.4m 

289 

+4 

Sagami RoBway - 

3Jm 

491 

-1 

Sumitomo Mtt Snd 

8.0m 

346 

+3 

Toahlbo . 

3-2m 

751 

-4 

Kawasaki Stool 

7.7m 

438 


Sumitomo MU Mng — 

3.1m . 

9SS 

- +10 

Gen SoWyu 

4.7m 

1.290 

+30 

OW Bectric - - 

2.7m 

780 

-8 


How do you keep up with 
an expanding Europe? 


♦.If 7X0 323 IX — 
-92 10X0 393 V 77 


1.48 
554 
696 
.. 177 

SmWtw 515H 
SonGwa 11x0 
smrp urn 
SfcMd 296 


+98 6 X 6 394 14 — 
+97 270 190 24 — 
-90 4.13 395 10 344 

- 192 397 54 — 
+96 213 1 X 5 — — 

- 243 1 X 3 - - 
+92 3 X 6 280 49 111 
+.15 4.10 248 10 _ 

0 L 2 B 6 X 0 19 — 
4 X 0 283 29 — 
896 * 00 4.4 _ 

— 1.74 T.IS 11 — 
-.02 12 G «.ZB OX _ 

— 120 4 X 2 — — 

- 4 J 2 398 7 X 09 
„ 7.10 595 49 — 

+98 11 X 0 110 4 X — 
“ 390 2 G 3 _. _ 

570 2 X 0 BA 20.4 


I INDICES 


US INDICES 


Sue Sep Sep 

S3 22 31 


Stp Sep Sep 

23 22 21 


top top 
23 22 


Derari <2902.771 

20SK18 2060095 2083572 2547840 IW2 

1775090 204 

PC (Nov TP5| 

M 

282891 

279493 

200LT7 80 

1957.33 ai/4 

AD (Mmafi/i.'SO) 

20277 

MM? 

am 

ZMOXQ 3/2 

1957X0 Z7/8 

GBSIMAneUBSi 

429.4 

4398 

ma 

«490 31/1 

40690 21 M 

ai MMnan.i.wi) 

10852 

10312 

1078.4 

113811 K 

904X0 5/5 

CBS AI Sir (End 83) 

2097 

2091 


mSO 31/1 

25790 21/8 

Awn 






Naw Zealand 






Omu AWonCm2941 

40252 

33954 

39981 

40068 2/2 

38097 229 

00.40(1/705) 

200053 

2800X3 

207493 

2439X4 3/2 

194981 11/7 

laded wwn.911 

108393 

1077 JO 

107799 

ima i /2 

1011X1 6/8 

Nanay 






agghni 

BO20 [1.1911 

1397 G2 

1338X0 

1397.47 

15*205 80 

139398 137 

ore>sqta«2n/83) 

104594 

105091 

105792 

1X11.10 28/2 

08091 Z1/8 

Bad 






MnM camp C/IAS 

295935 

2934-38 

282048 

330937 4/1 

20733 » 

Berean C9ri2 l BJ) 

545320 

539520 

530590 (5811890 13/9 

380090 3/1 

tartato 






Canada 






BTA (1977) 

29970 

2S0U 

WMI 

3225X0 18/J 

281280 2M 

ueon »Ws4(i97a 

417270 

413999 

4153.55 

42S0LS9 193 

3799X0 2£W 

toon 






Caww/B* 11975J 

4307 SO 

*36270 

4Mw<a 

480090 JOT 

3B59B0 24ffi 

SES A84rpare(2/*/73) 

571.70 

56593 

58594 

8*191 VI 

523X9 4/4 


2001 12 

208191 

207157 

718280 l/J 

1888X8 28/8 

soon mu 





CM* 






JSE Gold (2BW7Q 

24690V 

34559 

2*719 

2534X0 779 

774090 14/2 

VGA God (S1F12/m 


43*55 

*94*9 

404970 2319 

380130 V* 

JSE tKL (28/978) 

5357.0V 

03429 

Bmn 

818790 15/8 

5448X0 19/1 

Pain* 






South Karan 






CuuoewoenStOl'TO 

351 18 

351 75 

35101 

415.79 2/2 

381.18 23/9 

KansaOnp&Hn/Bar 

102958 

103491 

M 

189491 22/9 

85937 2/4 

FMtod 






sm 






m Genoaaaisas 

1064.1 

13425 

1802.0 

197200 ATI 

1801.19 3 n 

Madrid SE Ooazffls 

23892 

29448 

29470 

38931 31/1 

291X1 6/7 

Frans* 

SBF 2S0 ai/lZ/TO 

1231.75 

127947 

120023 

158920 2/2 

126338 4/7 

mswAGen (1/207) 

1*293 

1410J 

1420X 

wasa 31/1 

133470 8/7 

CAC 40011 +'87) 

197795 

189937 

I837.IB 

235593 2/2 

188918 4/7 

3v» inland 




Gareaqr 

73032 





sum 8k mu (31/iasq 

T23201 

1230.18 

122473 

142134 51/1 

H57J7 18/7 

FAZAtt8i(3U12Hi 

r»75 

785.18 

85927 IB/5 

757.51 m 

58C General (1/4/87) 

S974 

927 

82178 

189328 31/1 

88918 13/7 

Canner3xa«i112ft3l 

Z247J 

22353 

3309 

2NB80 2/5 

214330 27/0 

Ualreai 





OAXOOniWt 

208912 

207303 

207950 

Z271.11 16/5 

10892 aoie 

WBigtSadPtoOlWBer 

093(L2S 

088990 

000944 

79*824 1778 

5194X3 19/3 

Greece 

anna Ston 7/8Q 

65256 

854X9 

BWil 

1194X6 15fl 

88887 29/5 

Thatoat 

Bmgfak SET (3QH/79 

150696 

1S31.43 

1531 98 

115373 4/1 

T1983B 4/4 

HengMOD 

HjnqSwoOITW 

9632.4/ 

9EG9I4 

« 1220199 41 

B3G8X4 VS 

Tutor 

ttrtU CmfUfai 19BB 





Ml 

449853 






2577000 2517197 3*34251 3888980 137 

12B607D 24/3 

BSE Sero/1079 

4451 7B 

4507.il 

482857 12/9 

3484X0 5/1 

WORLD 






22 

21 

»»o 

LM 

"W 

LM 

3037.13 

385190 

397938 

359335 

38»3B 

4172 



(31/1) 

14/4) 

PVWfl 

07/39 

9779 

9774 

HU1 

90X3 

18977 

5499 



(21/1) 

(ism 

(1B/HW3J 

(1/10/81) 

150954 

150098 

108279 

1439X1 

186278 

1272 



pa 

ram 


om 

17897 

17984 

22795 

17595 

258X8 

1050 



(3/1) 

ram 

01/893 

(8W32) 

B6256 | Low 3B08X1 (3810X8 I (IbamdcdA) 


1 Law 3830X1 P833J9 ) {Actual#) 



48177 

451/18 

48290 

43992 

48200 

4X0 



m 

n/fl 

(2/2/94) 

[1/B3a 

54091 

54930 

560X3 

51099 

586X3 

3X2 



05/91 

pl/4) 

(15/9/94) 

CKJWBZ) 

4424 

4392 

4991 

41 JB 

48X0 

8X4 



(IMS 

(4/4) 

(28/9/93) 

(1/10/74) 

25452 

25471 

2B771 

243.14 

25771 

4.48 



B V) 

(4« 

PWBfl 

ra/ 4/43 

45491 

484.77 

487X0 

42287 

487X8 

2931 



m 

(20Q 

vnm 

<8/12/73 

70044 

mn 

80393 

68370 

KL83 

54X7 



--;y*a 


: ■■ TT 


‘.TSS. 




Europe’s essential online business 
information service from the Financial Times. 


(1B/3) (24ffi (ia®M) (31/1V72) 


Dow jenee fntl Kv. Yield 


S 5 P M Dlv. yWd 
S & P M. P/E isua 


Sep 16 

Sep9 

Sep 2 

Year ago 

2.69 

Z71 

2-63 

2-82 

Sop 91 

Sep 14 

Sep 7 

Yeer ago 

2.41 

277 

237 

2X1 

2064 

2091 

2000 

27X2 


Now that the single market is a reality, the need for 
business information ... on markets, on your competitors, on 
European legislation... has become more urgent. 

So how do you keep up with all of the changes? And how 
do you separate the useful information from the time-wasting 
trivia? 

Ail you need is an ordinary desktop PC, a phone line and 
access to FT PROFILE. 

To learn more about how FT PROFILE can enhance your 
perspective on business in Europe and the world, call us 
now, or simply complete and return the coupon to ... 


FT PROFILE. 


Fitzroy House. 13-17 Ep worth Street, London EC 2 4 DL. 
Tel: +44 ( 0 ) 7 1 825 8000 , 


jtat&OomptlOSSC) 51157 51116 51795 81296 VI 


MS topM tat ( 1 /VRQ 5 630 . 4 - ms 6314 M 440 m 


■ STAim/mc urn poobs goo mpgx futures ssoo tmm kxtex 

Open Sett price Change Hgii Low EttvoL Openin'. 

Dec 46260 46196 -090 464 X 0 46090 67980 204.183 

Mer 466.76 465.15 -090 46790 46390 146 6983 

JUn 489 X 0 48895 - 0.86 470 X 0 487.70 20 2940 

Opal (WM Iguraa era tor pmakxn day. 


Financial Times Information Services, 
Nibelungcnplatz 3 , 60318 Frankfurt Main, Germany. 

Tel: 069/15 685 - M3. 

Financial Times Information Services, 

Bureau De Vente Paris, 168 Rue De Rivoli. 75001 Paris, France. 

Teh (1)42 97 06 10. 


GEOOrtMtaUi rat 185557 IB8550 188514 20CL18 3V1 


BmO Coran BI 719773 668.19 671.1] 67534 817.17 1M 
m Genera IXISM* 1DS10 10870 1099.0 131890 105 


Euradack l(B(2SnM0» 13437] 133492 134034 1MUB 31/1 
Em Tcp-100 (2B«gq 118398 117395 11780* 1311X1 2/2 
XtoriOVH (31/12/80 M 33629 341.79 39519 VI 
8mvEaeo(7na2) 19051 189J9 189X8 19079 1M 
■ CXC-40 STOCK WPPt WJTWS (MATff) 


iaoia 219 
114300 21/8 
29021 21/3 
141 JK 21/1 


■ NUT YORK ACTIVE STOCKS 


NM8I 2+3 IWStot 

nmw sod aiom 

Tood(* 1 flEl 

aHStdnmn.wi 


to 1963397 1088538 Z133ZX1 1M 1738974 4/1 

Id 39 B5 28994 31171 IM Z8&22 AH 

« 156*72 158598 171273 136 144597 *n 

« 2245*6 22*894 2842X5 8/7 197133 4/1 



Open 

San Price Ctunga 

HO* 

Low 

EsL ni Open inL 

Sep 

19 HA 

1938.0 

+27.0 

1941.0 

1909.0 

34X83 

30.651 

Oct 

1923.0 

1947.0 

+27 JO 

1949.0 

1019.0 

6/059 

10.100 

Dec 

1941.5 

186SX 

+27.0 

1967.0 

1941.5 

2X72 

19.061 


Ford Meter 
Diydar 
Gen Mokn 
AnwBaricfc 
Telettanos 


Op* Mam Bguraa tor previous dsy. 


KStCimnM'BK 117532 117388 1191.14 13M96 5/1 


4 W 5*P 17 law WmifflmS Png, 70*8X4; KaiaiGVTV E* 1023X1. 60OB w lun of el mil a* an 100 emnSiAl , * f* - _ — — — , 

and Mrtog‘+900;A«»TIMMJ. Bam. HEX Qan, U8 On, 56FS50. CAC40. Em, Top-100. BED Oi^nmanaMm 

— - -- mt _ mi 1 rm- ex 1 _ vx. i no* uub, *. ..vl. rr™- * me ai ro. naex ranfta rears noi 


Og Equip 
Oectoudar 

Q^upgq 

Sim lode 


dose (tans* 
price on dey 

2BH -Si 

43W -1H 

48 RY -m 

2 W +U 

G5H +11* 

3BM -4 

26 -» 

S6W +tt 

3* Hr -ft 

1414 -Xe 


■ THAPBM ACTWYIY 

• ttoknapStal 

top 23 top 22 top 31 
KM York SE 237980 302982 K 1938 
Ann 10.854 14.139 17974 


-.a 


Wm Traded 2980 2983 2977 


Unctanged 
New Hghs 


883 1907 631 

1967 1.155 1958 

730 701 887 

33 21 IB 


1S4 113 162 


— — v bum. rm w, mvu, Die iap- 1 DU. oto Ovamfi: Tamm c mlllM & A The 0.1 m uwMn, * .I.i u- I. u— « ■ ~ . , 

Mhrt sMM-» 1 ^JSEC«- 2557 ; JSEMtadreWMk- » 4 J:NV 9 E to ComnMn- Wand 3 md»M«dSqrtTia« ^ 

MMiwat ♦ Twrea 1 LiC 4 Mean 4 UMvtoma.tnscAXa«^w Moor 3 M»M-;wffxa + 24 X 2 ^^^^^^ mTaw. r m nli ^ " 


«B bonreL t hduttMt pfea unii 
i are me avmow el dm Mtow 1 

S5TS^T3Si"J3 


bad durtna Dm day by aadi 
1 M Ha ndn haa raodMd 


SEE AMER CA 


Pulse. Keeping an eye out for the IBxd markets. 



►PULSE 


Hutchison 
1 'ole com 


FANCY A FREE TRIAL? Caj.: 


Job Title 


Nature of business 
Address 


Postcode 


No. of employees D under 50 gw { 

D 50 to 100 □ over 100 B USMESslwORmTlON I 

I already me online □ Yes Q.No a*!,-, „r rai mMltML ^ CR J 



























































































































































































































































































ssaaassiaasaasnaawa 













































































29 


CURRENCIES AND MONEY 


MONEY MARKET FUNDS 


POUND SPOT FORWARD AGAfisST THE POU,\ 


DOLLAR SPOT FORWARD' AGAINST THE DOLLAR 


Austria 

EMgum 

Denmark 

FWand 

Franca 

Germany 

Greece 

Ireland 

Italy 


Peh) 17.1603 
(BFi) 50.1883 
(OKi) 9.5881 
(FM) 7.7467 
FFi) 8.3388 
(DM) 2-4380 
(OH 376586 
PE) 1.0118 
(U 248157 


Luxambowy (LFf) 50.1885 

Nettvertao ds (R) 2.7322 

(NKr) 10.6818 
***** (&) 249.080 

Spain (Pta) 202-278 

Sweden (SKrt 11.7938 

Swtaattend fSR) 2.0263 


UK 

Ecu 

SORT 

America* 

Argentine 

BraH 

Canada 


W 

15777 
- 0.930777 


-05198 538 
-0.0434 480 
-00174 837 
-0005 381 
-00094 313 
-0.0031 372 
+8.897 387 
-O0001 111 
-854 009 
-0.0434 480 
-05044 310 
-00081 885 
+0043 981 
+0034 206 
+0037 680 
-00016 262 


889 17.1878 
280 505360 
824 8.8015 

SG3 7.7640 
419 03426 

388 2.4435 

*tt 378523: 
184 1.1035 

045 247251 : 
260 505350 I 
334 17378 

960 107134 
198 240371 : 
349 200536 : 
018 115029 ' 
274 00295 


One month Three months One year Bank of 
Rate 54PA Rate MPA Rate MPA Ena. Index 


03 17.1441 04 

-04 501485 03 485835 08 

-08 9.8122 -1.0 95548 -07 

0.1 85378 -0.1 85919 05 

08 2.4338 07 25868 1.6 


aoslng Change Bfd/ofler Day's mid One month Three months One year JJ» Morgan 
mid-point on day spread Ngh tow Rate MPA Rate MPA Rale MPA Index 


-04 1.0175 -08 
-25 253042 -2.9 

05 408636 08 

06 25915 15 

-Ol 108962 0.0 
-75 

-25 208548 -2.0 
-25 12.0738 -2-4 
15 7 5825 25 


Brope 

Austrta 

Belgium 

Denmarif 

Finland 

France 

Germany 

Greece 

Mend 


(Sen) 106699 
(Bft) 31.7900 
(DKf) 8.0732 
(FM) 45069 
(FFf) 55805 
{□) 13443 

{Or) 239300 

na 15604 


-05014 770 - 784 15788 15780 15781 -04 15782 -05 15734 03 


Argentina (Peso) 15784 
Bran (FO) 1.3506 

Canada (CS) 2.1223 

Mexico (New Peso) 55838 
USA (S) 1,5785 

fiactBc/MkMto Eart/Afttea 
Australia (AS) 2.1377 

Hang Kona (HKS) 125001 
India (Rs) 495235 

Japan (Y) 154552 

Malaysia (MS) 4.0358 
Now Zeeland (NZS) 2.6208 
Phappmee [Peso) 403371 
SautflAratola (30) 55212 

SUSBpcre {S$} 23374 

S AMca (Com.) (R) 5.5829 

S Africa (FinJ (R) 85124 

South Korea (Woo) 128758 
Taiwan (TS) 415357 

Thailand (BQ 395583 

160R IBM to tap 22. BkVolw w* 
wM but ore bnpiad by curort ton 
a*» and tee Data Sort sue dutw 


+05029 780 - 787 15789 15732 - - - 

+0.003 498-516 15517 1J4S6 - - - 

+0.0051 215 - 231 2.1227 2.1156 2L121B 05 2.1212 05 2.12 Ol 

+0.0041 590-888 65777 65685 - - - - - - 

+00028 785-790 15790 15738 15784 05 15768 05 15611 1.1 

-05027 368 - 387 2.1391 2.1313 01370 0.0 2.139 -05 2.1572 -09 

+00197 974 - 028 125035 12.1631 12.1962 a4 12.1951 05 125021 05 

+05796 097 - 372 495420 485740 - - - - 

-0329 168 - 347 154580 163.790 153882 25 152527 3.4 147/182 4.4 

+00058 343 - 372 4.0384 4.0225 - - - - - 

-05058 182 - 234 28255 28138 28247 -18 28325 -15 28547 -15 

-1.1948 728-014 408520 4ai675 ■ - - - - 

+05087 200-224 55235 65030 - - - - - 

+08101 362 - 385 23413 . - . 

+00124 808 ■ 848 s_gawi 55501 . . . 

-0.17 878 ■ 371 85502 8.7B75 - - - 

+351 890 - 782 1267.73 1283.06 - - - - 

+0.0803 283 - 430 415448 415013 - - - 

+0.0491 362 - 803 395850 395550 - - - - 

edi ki Ow Pound Spot nfain Mm n *t the last tree deem) plans. toward ms n ret draedy q 
“■» Stefca h dnx Mta jtoted to Sw Sank of Enrfand Bess maos ura ■ 10Q8U. OBer and Mh 
i ton THE WWEU1BB CUSMS SPOT MIES. Sums tow on ratnMd By to P.T. 


:■ i.y .i’. . . j, 4 

'ji • »*'• ■ » 

CROSS RATES AND DERIVATIVES 


Holy 

0) 

1569.00 

Luxentoourg 

(LFr) 

31.7900 

Netherlands 

OR) 

1.7306 

Norway 

(NKi) 

6.7723 

Portugal 

&> 

167.770 

Spam 

(Pta) 

126.125 

Store dan 

(SKr) 

7.4704 

SntaMrftnd 

(Sfi) 

1-2635 

UK 

n 

18788 

Ecu 


18356 

SORT 

- 

1.46830 

Americas 



Argentine 

IPW^ 

08996 

Brad 

(HO 

08956 

Canada 

633 

18443 

Mexico (New Rmo) 

13875 

USA 

(9 

- 

PacMoMddta East/HMca 

Auatrade 

(AS) 

18540 

Hong Kong 

IHKS) 

7.7277 

Imfa 

(Fto) 

318888 

Japan 

(Y) 

97.7050 

M*oysto 

V*S) 

28663 

New Zealand 

(MZSJ 

18800 

PMppkws 

(Pow) 

258500 

Seud Arable 

(SR) 

17606 

Singapore 

(SS) 

1.4306 

S Africa (Com) 

(P) 

38363 

SAMceCFta) 

PI 

48160 

South Korea 

(Woo) 

802.700 

Taiwan 

(1S) 

26.1826 

Thailand 

w 

24.9300 

r. .m- 

psieu 

talter •tma 



-0.0305 670 
-008 700 
-00211 714 
-05112 022 
-00147 780 
-00048 440 
+138 700 
+00027 098 
-7.8 850 
-058 700 
-05057 301 
-0015 713 
-023 720 
-019 100 
+00112 888 
-0503 830 
+00028 785 
+00033 351 


720 109020 
100 315730: 
750 6.0312 

115 45279 

830 5.2930 

445 15494 

900 239L90D : 
811 1.5619 

950 156080 
100 315730 : 
311 1.7383 

733 85000 

820 150200 
150 128550 
741 75898 

840 15891 

790 15790 

381 1.2961 


+05002 997 - 998 09996 05885 

+05006 550 - 560 0.8560 0.8545 


-0504 535 
-00003 272 
-0.0012 850 
-057 600 
-00008 558 
-05065 666 
-05 500 
- 504 
+00039 800 
+0502 355 
-0.115 000 
+1.1 800 
-0505 820 
-051 200 


614 15628 1.6588 

500 285500 25.4500 


- 800 802500 802500 


Hate 

MPA 

R*» 1 

MPA 

Rate 

MPA 

Index 

106895 

0.0 

108893 

0.0 

10.7945 

07 

1044 

31.7972 

-03 

31J81 

-04 

31.045 

-05 

105.8 

6.0787 

-13 

60997 

-1.7 

6.1768 

-1.7 

104.6 

4.9089 

OO 

4.9139 

-08 

44619 

-1.1 

BOO 

5,2823 

-04 

50856 

-04 

5.2835 

-04 

1014 

18441 

12 

10437 

Ol 

14368 

OS 

1017 

240.1 

-IJi 

240725 

-1.5 

243.475 

-14 

09.0 

18698 

05 

1J568 

0.9 

1J5384 

1.4 

_ 

1563 IS 

-13 

1572 

-13 

16205 

-19 

75.4 

31.7978 

-03 

31.31 

-03 

31445 

-05 

1054 

1.7306 

-02 

1.7308 

-at 

1.7250 

03 

1054 

6.7773 

-09 

17073 

-1.5 

16898 

-1.4 

95.0 

15152 

-5.7 

162.165 

-11 2 

166.77 

-5.7 

85.1 

12144 

-10 

129.06 

-ZB 

132405 

-10 

80.0 

7.4689 

-2.7 

7JS2S4 

-24 

7.7178 

-13 

600 

1-2834 

1.0 

12 803 

1.0 

14685 

14 

7(8.3 

18784 

03 

1JS7B8 

05 

14611 

1.1 

884 

1.2347 

0.9 

12320 

06. 

14055 

14 

“ 

18446 

-03 

1^468 

-04 

14536 

-07 

84.5 

38885 

-04 

14003 

-03 

14077 

-03 

_ 

- 

- 

- 

- 

- 

- 

854 

18542 

-02 

1J1549 

-03 

14623 

-06 

810 

7.7275 

OO 

7.7282 

OO 

7.7432 

-02 

- 

31.4638 

-13 

31.5988 

-2.0 

- 

- 

- 

87.485 

ZB 

96J85 

2.9 

94.47 

13 

151.0 

28471 

4J 

16308 

32 

16083 

-11 

- 

18808 

-0.7 

14628 

-07 

14881 

-OS 

- 

17519 

-0.4 

3.766 

-04 

17746 

-04 

_ 

1^782 

1.1 

1.4773 

04 

T.47DS 

07 

_ 

16618 

-13 

15601 

-54 

34568 

-14 

_ 

4JJ487 

-04 

4.4075 

-64 

- 

- 

_ 

805.7 

-4.5 

009.2 

-34 

827.7 

-11 

- 

202025 

-09 

264425 

-08 

- 

- 

_ 

25.0025 

-15 

25.13 

-32 

2541 

-17 

- 






. -f-r-UgJ; 


jrr“ Tir^r^w 

wr'rrf 






rr^ 


seal on 
sail on 
sjs or 
+»l dv 

443 1 to 
+ M to 
43 to 
a 3=1 to 




town mm arty the last am aecfcml plan*. toward ton are t 

am quotod n U9 cumnejL JJ>. Uorgei nominal indkm 9 m 22- ■ 


1 <0mc0y toM no aw nun 
00 swage imtMoo 



EXCHANGE CROSS RATES 

Sep 23 BPr DKr FPr 


FIXED INTEREST RATES 


MONEY RATES 


Belgium 

Denmark 

Renee 

Germany 


Portugal 

Spefci 


Ecu 

DeiWi Kronar. I 


(BFi) 100 19111 

(DIO) 5254 10 

(Fft) 60.20 1150 

(DM) 2058 3533 

(IQ 49.83 9.484 

04 2539 0.390 

(R) 1857 3510 

(NKr) 4854 8509 

(Ea) 2G15 3551 

(Pta) 2452 4.742 

(SKr) 4258 8.132 

(SB) 24.77 4.732 

(Q 50.18 8588 

CCS) 2356 4518 

{$) 31.78 8572 

(Y) 32.54 6518 

3950 7508 

Ol Rone, Norwsgtm Kroner, 


1851 4559 

8.694 2543 


8545 2411 

0539 0599 

2051 0592 

7.798 2581 

3548 0578 

4.123 1508 

7570 2588 

4.115 1503 

8538 2438 

3528 1.149 

6579 1.544 

5.406 1581 

8528 1.909 

ml Swedish Kronor 


2515 4804 6.444 2150 

1564 2S67 2549 11.15 

1513 2952 3577 1282 

2415 1008 1.121 4586 

1 2434 2702 1057 

2041 102 2111 2434 

2370 9028 1 3513 

0548 2302 2558 10 

2408 9684 1.097 4583 

2600 1217 1581 6587 

2858 2087 2517 2087 

2489 1215 1548 5578 

1.011 2481 2732 1289 

2478 1180 1587 2038 

2840 1559 1.730 2770 

2658 1596 1.772 2833 

2702 1827 2139 8571 

par 12 Bdgtai Franc, Yan. Eacudo, Lira 1 



Open 

Sett price 

Change 

Hgh 

Low 

EaLvol 

Open tot 

Sep 

0446S 

0.6485 

-04001 

04480 

04468 

16484 

70,783 

Deo 

- 

06475 

re 

04482 

06474 

521 

4464 

Mas 

“ 

06485 

+04002 

" 

" 

1 

476 

■ smn FRANC PVTUV8 OMNI SFr 125400 per 3FT 



Sep 

0.7816 

07802 

-0001 1 

0.7828 

0.7788 

12,721 

35494 

Doc 

0.7850 

0.7830 

-04009 

07850 

07819 

23 

829 

Mar 

- 

0.7057 

-0.0008 

- 

- 

40 

60 


UK INTEREST RATES 


LONDON MONEY RATES 


■ JAPAMM YBH FUTURES (1MM) Yen 125 pgr Yen 100 




Open 

Sett price 

Change 

Mgh 

Low 

EaLvol 

Open W. 

-r* i. 

Sep 

14272 

14300 

+04023 

14310 

14263 

12489 

45.464 


Dec 

1,0388 

14382 

+04024 

14388 

14369 

33 

1305 

r 

Mar 

- 

14481 

+0.0025 

1.0475 

14475 

4 

450 


8ep 23 

Over- 

night 

7 days 
notice 

One 

month 

Three 

months 

Sbc 

months 

One 

yarn 

totatbank Staritog 

6 -3ft 

4ft- 4ft 

Bft - Oft 

5ft- 5ft 

6ft- 8ft 

7»i - 7* 

Slating COa 

- 

- 

5A-5A 

5ft -5» 

8ft - Bft 

7A-7A 

Traeaury 83* 

- 

- 

fift-5d 

Bft - 5ft 

- 


Bank BBS 

• 

- 

sft-5A 

5ft- 5ft 

6ft - 6ft 

- 

Local authority daps. 

4S-4H 

SA-5A 

5,’, -5& 

53-5H 


7ft - 7ft 

Discount Mrafcat daps 

4ft -3ft 

5-4/J 

- 

- 

- 

- 

UK denting bonk ban landhg ran 5ft per cant Irani Septamtar 11 1994 

Up to 1 1-3 3-6 6-9 

month month months months 

9-12 

months 

Carts of Tax dsp. (El 00,000) 

Tft , 

4 

3ft 

3ft 

3ft 


Saptentoer 29 

Over 

night 

One 

month 

Throe 

fnths 

Six 

mths 

One 

year 

Lamb. 

inter. 

□to. 

rate 

Repo 

rate 

Batgknn 

45k 

53 

5M 

5% 

63 

7.40 

440 

_ 

week ago 

4M 

63 

63 

6a 

8M 

740 

440 

- 

France 

5W 

53 

5M 

SB 

63 

640 

— 

175 

week ago 

53 

64 

5M 

53 

6M 

5.00 

- 

175 

Germany 

442 

445 

5.05 

643 

543 

100 

440 

445 

week ago 

447 

445 

542 

5.128 

543 

640 

440 

445 

Ireland 

43 

Sib 

83 

63 

7H 

- 

- 

125 

week ago 

43 

5M 

63 

63 

7M 

- 

- 

646 

Italy 

83 

SM 

Bft 

9V. 

103 

— 

740 

845 

week ago 

83 

a is 

8M 

9M 

1DM 

- 

740 

145 

NeUVHlaprte 

444 

102 

6,12 

545 

5.74 

- 

525 

_ 

mok ago 

641 

542 

6.07 

544 

543 

- 

545 

- 

Swfiaartand 

3M 

3# 

43 

4M 


1625 

160 

- 

week ego 

SM 

3a 

4 

«3 

4M 

1625 

340 

- 

US 

43 

S 

S3 

SM 

63 

- 

440 

- 

week ago 

4M 

5 

5 

6M 

5| 

- 

440 

- 

Japan 

2H 

2M 

2ti 

23 

2M 

- 

1.75 

- 

week ago 

2Vk 

2tt 

2M 

23 

2Q 

- 

1.75 

- 

■ S LIBOR FT London 








Interbank Rxtag 

- 

S3 

S% 

5fl 

63 

- 

- 

- 

week ago 

- 

63 

53 

63 

53 

- 

- 

- 

US Dorter CDs 

- 

4.79 

542 

543 

541 

- 

- 

- 

week ago 

- 

4.79 

442 

5.12 

548 

- 

- 

- 

SDR Unhad Da 

- 

SM 

33 

SM 

4 

- 

- 

- 

week ago 

- 

3M 

33 

3M 

4 

- 

- 

- 


ECU linked Da mid nMe 1 nto: 54%; 3 rafts: 6ft; 1 
ram an offered ram lor 810m quoted 10 ttw nrata 
day. Tho barks m: O antora That Bank at TOKyo. I 
MM im m toeen far ft* dunaeMo Morey Ratal. 


fl mow 8H; 1 year 88- 8 UBOR bitofetok bung 
* by tour reference banka at ii«n each wortdng 
Barttoye and Ntoonal Waatnanatnr. 

, US • COa and 80R LHcad Oapoafta M. 


EURO CURRENCY INTEREST RATES 

Sop 23 Short 7 days One Three 


■ HVraJBM HITURSS 0MM) C62500 per £ 


Cwta af Tax dm- widir tia>500 h 1 ■ana Dapmta mdxtaMn lor mh %pc. 

Am, tender rata of dtacouK BJSOTOpc. ROD toad no sag. Export finance. Mato 141 day Aug 3i, 
1884. Aarawl rate tor parted Sap SO. 1964 to Oca as. IBB*. fiBtaraaa 1 4 • dfiape. natorenes mm lor 
parfodJdy 80, 1904 Id Aug 31. 1984, Schwrwa IV & V &578po. Fkwnea Horae Saw Rm 5ftpe tan 
Sap 1. 1894 

BANK OF ENGLAND TREASURY BILL TENDER 


14758 

+0.0020 

14816 

14722 

5411 

31416 


Sen 23 

Sep 16 


Sep 23 

Sep 19 

14726 

14670 

+04024 

+04028 

1.6780 

14710 

14680 

14630 

1 

1 

288 

6 

Bttan oner 

Total at aprfruone 
Tot* sDocaftl 

ESOOre 

£148201 

EEOOffl 

ESOOre 

dawn 

ESOOre 

Top accepted nea 

Are. rate at otscoam 
Arrange yUM 

55151% 

54070% 

54037% 

54151% 

24879% 

54743% 

£* OPIUM* G31.2SQ (cants par oownf 



Mh. accepted bid 
ABokns* at min. level 

85% 

£92825 

31% 

OB* * next trader 

Ittv accept tw 102 <ms 

esoobi 

ESOOre 


Belgian Franc 
Danish Krona 
D-Mark 
Dutch GuMer 
French Franc 
Poriuguaae Eao. 
Spanish Peseta 
Storikrg 
Swiss Franc 
Con Dolor 
US Odor 
Italian Ura 
Yen 

Allan SSbig 
Short tom rami 


4y-4y 

3 -sh 

-4ft 
Sft - 4« 
5% - Bft 
12k - 111) 
7ft - 7ft 
5-4ft 
3ft -3ft 
4ft-4ft 
4% - 4*to 
9 -Ik 

2 ft -2 ft 
U-ll 

eoaltorM 


«B-4S 
5%-6ft 
4ft -4ft 
5ft-4B 
5ft- 5ft 
»ft -9 
7ft-7ft 
5ft -4» 
3B-3B 
«U-4% 
4%-4l» 
»«-7* 
2\-2*, 
iH-i'* 

US Dolor and 


5ft -4U 
8ft - 5ft 
Sft-4» 
Sft-4B 
5ft - 5ft 
10 -8ft 
7ft -7ft 
5ft - 5ft 
311-311 
5 -4ft 
5ft - 4H 
8ft -8ft 
2ft -2ft 
2ft -2ft 

Van; attars: 


Three Six 
nnontha monOte 

Bft - 5ft 513 - & 
Bft - eft 7ft ■ 7ft 
5ft - 4» 5ft - 5ft 
5ft - 5ft Bft - 5ft 
5ft - 6ft S3 - 511 
50% - 8ft lift - 10 
8-7% 8ft - 8ft 
512 -5ft eft -eft 
4ft -311 4ft - 4ft 
5ft - 5ft 5% - 5ft 
5ft - 5ft 5ft - 5ft 
6ft - Oft 9ft - 8ft 
2ft - 2ft 2ft - 2ft 
3ft - 3ft 4 - 3ft 
too day*' noOoa. 


One 

year 

6ft - Bft 
7% - 7ft 
SU-Sft 
5ft - Bft 
Bft - 6ft 
10% - 10ft 
Oft-Bg 
7ft -7ft 
411 -411 
eft-Bft 
Bft - 6 

10ft - 10ft 
2ft -aft 
«ft - «ft 


Suite 

Price 

Oct 

“ CALLS — 
Nov 

Dec 

Oct 

- PUTS — 
Nov 

Dec 

1400 

744 

742 

7.62 

■ 

006 

034 

1428 

5.11 

549 

542 

003 

040 

076 

1450 

189 

134 

345 

030 

084 

148 

1476 

124 

147 

148 

1.08 

1.80 

1S2 

1400 

037 

091 

147 

167 

127 

193 

1.825 

(LOS 

048 

081 

444 

540 

174 


■ TIWTO — OMTH MtODOUAH [CUM) 51m point* o« 100M 


FT QUBIC to WORUI cuRRatctes 

The FT Glide to World Cwraixdea 
table oon be found on tho Emerging 
Markets page hi today’s addon. 


Pravtaui dto 1 * Cato 8.748 Am S5W . tow. daifa opan M., Odt 478078 Ana 345AB 


■ Pound hi Raw York 

Sap 23 

* — area — 

-Prw. don 

Erect 

1.5765 

1-5755 

Iran 

1-57BD 

14751 

ana 

14744 

14734 

ip 

14585 

14581 



Open 

Sett price Change 

High 

Low 

Est. vd 

Open tot 

Doc 

84.11 

94.10 

94.14 

9447 

201.990 

638438 

Mar 

8174 

9173 

9177 

9171 

157424 

405456 

Jun 

9141 

0347 

9141 

9344 

77489 

286409 


UK GILTS PRICES 


- FUTURES (IMM) Sim per 100M 

84.84 -201 9457 94.85 2732 13^78 

8A2B - 94.28 94JJS 603 7,400 

9282 +202 93.92 9322 3 2^30 


Wk« Am um teat CRr 

ms Meal +7- Cm m M ta> 


WV% Ann ktonat laat 0% 

ttotaa Price £ *h Em dua *1 Ina 


Wk% Amt intoad Last Oqr 

Mom Meal +7- Em dua xd Hna 


aorta” (Um an to HtoTetori , ftadngSftpe 1M8-4— 71ft IJt 543 JM4*M 

iraalpcl asm 1*3 -.1 C**etaCRB*»c2004 — 1B3|lid 1J 3.41Z ft£250c2S 

-- 1« -gj® 2+12} bmMtfcJBIW 85ft M 2500 MyaiMB 

BdrapcaajPSMS.^ « — JJJJUI52, S3SH QmBftdCZOW ItaiW 09 4MM1BOC18 

Tnto^ftpc 1B9STT It® -2 W0MH5W1B 'b!’’*! 1 ”” u JSStSSS 1 

I4nc 1988 108ft -2 770 Jo22*Z2 1061305 7 %Pe200B)S 81B 09 SAD WW 


7.81274 tadto-U 

10HH 1J 3,412 *25025 1881245 — '’S SS5SJS l^ 1313 

103IU 09 S SSSS 128 W 2>SIC'm^ZlSSlB4ftal _ 1500 H24Se24 1881318 

22521! !"!“ 2ft#ew gas ieoft — 1^00 iMama 1141J17 

118ft 27 2200 MfZl IM1 14.41285 4J We g4H; (1326) WTtW -.1 17WM210C21 VL9 - 

Big 09 moo tease* zj - 2nco6 (tao i66ft ,1 iao juajyiB iieisii 

BSfttf 28 2jD00 *50CS 121334 2ftj)cU0 (728 180U IjBSO UyZONriO 1241318 

114ft 27 3.1S0 Ja» J»22 1521293 2ftpc11 (7421 155ft — 2,190 Ffe23Aa23 1271318 

B7A 28 7.187 JalBJylQ 281339 iftpcIS (882) 12H 0.1 2J0Q FelBAOlB 11 J 1320 

,awS 07 T2ffl»20Sn2B 2281391 2%8e*l« (31.19 USB -.1 2700 JaZ8A» 2231321 

rr? ri M «3 »*>■«■ soonm* -.1 2750 AplBOclB 291322 

101ft* 27 5221 *13 Ota 3 081343 pry, HJ711 -2 2.100 Jal7Jy17 1281323 

4ftnc'30St (135.1) I OSH -2 1200 JalBJy22 132 - 

M Rgurea In pein tn o iaa ohm RP1 baae tor indwtog (to B 
mertta prior to Isaue) raid how bean aduated to raBect raboalng 
ol RPl to 100 to January 1987. Corwmion (actor 3245. RPI tar 
Janwvy 1994! 1412 end tor Aogust 189*: 1447. 

83ft* 02 1100 »k25SaH 1921338 

78ft a? 4,750 - 124 - 

1010 22 2273 J8l2Jyi2 182 1245 

101U 02 MSI R 6*6 3281701 

72U 28 1200 UrtOBalO 421330 

soft* 24 2260 1827*27 am - Other Fixed Into rest 

1( JT “ WrfctoOw lift 2010™ 114ft -2 50 Ja4JH 1.12 - 

“ I'JSSzSJS! allsS MaaD«Wftpc2009— 107JJ -.4 100 1*24 Se24 3^3 - 

12711 24 1200 JH2DB12 851280 Blaaa 11ftpe20 I 2 118ft __ 45Uy15Nv15 4W1837 

wwcapBftpenn — n ns an npioei -i«n 

8pc Cap 1998 99ft -.1 725 J«30Jy30 - - 

13pca7-a — 108 -2 319 Apt on 3931428 

Hutto) Qoe&eclSpc 2011- 138ft -2 <0 MyJI taSO 27.10 - 

Lam taftpc 2008. 128ft — 40 Ap1Sa9 3-933146 

6ft 28 351 NlAul 2721239 UWtod Sftpclrttd. 38ft — 8 IjaX^toOc M3 - 

r? ! srm LCCSpcTOTO 33 — 39 iJaJtaSaOa M3 - 

J5S Ki ra Hunchaalnr nftpc 2087 - 113ft 8 AfiaOczs 3933273 

1+ 1! "*WtSpcT 67ft „ 25 MrlSal 8933361 

34ftto 2J2 58 ApStXS 121324 KtobtaAcObSftpcaOTI. Ulft 80 to30Jy30 1 S3 3465 

26ftM 24 27S BMpJyOe 121238 4ftpcL2024 12Bft 50 793 - 

2Bftld 02 475 itolOcl 252 1315 IMItaiaetn18ftpe20H 138 50 MrlSal VBS - 


iSdKIOOBTL— Ulft 1.180 IWPW 2231308 Bpc200Z-<tT BSftd 28 2jD00 ftfiOcS 

E«ni3ftpeiBB6» waft -2 WW 5 tort 5 M1» itoaall ftpc2HB-7 — . 11<ft 27 3.150 Jn22Jy22 

aSMSSB- 'S5 ny H2T.M 5 W ™ 7tmaftpc 3007 ft 97ft 28 7.187 JalBJyl8 

IZZtt&mtt— ifod " ijSdjSoSb SSiaa 1 »A* ^ 

STifSiW^Z: ioS -A ISJ125S Dm 1*62008 » 101 AM 27 5221 AP130C13 

Tim8ftpclB97Tt 100ft -.1 MM.toria* 

EKh l(pc 1987 1l7ftM -.1 830 Ap270t27 2281260 

flftpc 1938 103ft -2 3250 JalBJyl# 1321273 

Trees Tftpc 1»efct 051W — J 180 “S5* 

Tibbs Bftpc 1£‘S-B8tt- 94ft 21 1200 Ryitort 252 1331 

14pc 1988-1 — — . 115ft — B70Mj22Mfi2 15.41308 T M ,n rr gnnn OS 3.100 1*25 SaH 

TriM ISftpe wt IHVjd -I S25S5 nmSiNoeZOlO — 79ft a7 4.750 


ISU -.1 330 HWHW " 4 ™ A.mita.'nm 

110ft — 3209 000*20 1241259 

102ft 1200 JH5J715 82 1547 OtofflpoUiaOII fl 


Trm0ftPC ,,, 8 tt — «% - 1200 tolBJylO tt- 1JB •« JJ» 

Turn Bftpc S008-1Z}*- 72U 28 1200 UrtOBalO 

Tim Bpc 2013R: BJftto 24 82» I*276a27 

7ftpe2012-15t* 81 25 800 Ja2fi«2B 

The toRtasnYem Hm8ftix:»«7» 100ft 02 7,150 N25M2S 

Each 12ftK 1989 112ftal 21 3250 MdSSaZB M2I2W etcbISpc 2018-17 127JJ 24 1200 JilZDal! 

Tim loftpe 1993 108 -.1 UB2Myl9l*rt9 12.41288 

Trexs tac ) WJ it B9A 21 5200 FPIOAtffO 47 - 

Man lOftniM- io5ft ai i.7MJjWag£ ’«'» 

Tim FOB Bala 1898 BOB — 2500 OMUaSBM 32 - 

SpcSStW-G-— ■ 10MS 22 5258 IMS«3 2271244 

TtmltoMOO 1178 23 2in JB14J714 7S1M BndBtod 

iSrjmi 1 ... 104& as V06 FaZStoCO 2271290 Cmobdpo Cft 08 351 MAul 

7fec2001 N 89H 23 4S80 IRM 303 - abrlranSftfx# 40,1 25 1200 Jn Del 

7]K 2001 A 8W 23 2OT ~ Cera SftflC W AH. SBftat 12 119 All Del 

bCkKBI 1WA M T*m3pc^0«. Slftd 22 58 ApSOd 

5S552S? 3 27 aS^wSa 8J1291 ODtoCtolftpc 28ft* 24 27S 5WpJ|0e 

rrm^5Sa0Hr~- iiw oa wiBSaia 1521200 nm2ftpe 28ft* os <75 ton on 

• Tm 1 stock, t* TrcfM » raawBBldim on cppicaBon. E Auetm *d & dhklwd Ctotou iMd^tom 

STOCK INDICES _ ibm _ 

Sm 23 Sap 22 San 21 See 20 Sap 19 Hgh Um Htfi Lwr 

FT-SfTm ypna ansu antA8 30372 30721 35223 28782 36223 9828 FT-SE Buratndt 100 

FT^ MW 233 35629 3562.1 35721 35842 38082 415Z2 33B3A 41822 13724 FT-SE EuoMck 2D0 

FT« Md »0 •> ITS 3581.0 35842 35722 3S824 38062 41627 33824 41S27 13782 FT Ordnay 

FT«-A^50 «27 18221 1S24.4 15342 15511 17783 14S1J 17723 0646 FT 6M 5m«B 

SS SmK*J 184AM 1846.45 1866.13 1883S7 1B7223 209298 1777 Jl 28B4M 138179 FT R*ad Manat 

Frf&mK»«<T4 irsS 181285 182231 1B3242 183281 2DB272 17S2JS8 200272 138179 FT fl fltfl Mto 
FT^AMFaera 151256 1517.35 151233 162222 154164176211 144265 1784.11 6182 PretaCearnrSaaMtaBB 


114ft 

-4 

50 Jb4JH 

1WI4 

-.4 

100 10240*24 

116ft 


45 Uyl5Mrt5 

94 

25 

an fenoci 

aw, 

-.1 

725 jesojyao 

108 

-2 

319 Apt Ore 


AI Open fataraat (ga. an tor pravkxw day 


BANK RETURN 


BANKING DEPARTMENT 


Capital 

RiMo da u o alta 

Bankera depaarta 

Raaanra end other accounts 


Government aecwttlaa 
Advance and other accounts 
Pramtoe, equlpmant and other i 
Notes 

Coin 

ISSUE DEPARTMENT 

r hHM «| 

Notes In eftndattan 
Notes In Banking Deportment 


Other Government securities 
Other Securities 


Wednesday bicraeae or 

September 21, 1864 
decrease for week 

e e 

14 r 553 l D00 

1.082.875,662 +22878^22 

1 .662JS00.120 +142050832 

3303,461 fflB -91,764,861 

3.8W.190388 +82.865,173 


(5ft D 9 351 fftlAul 

40,1 25 l«oe JtlOal 

5Bft* 12 119 AplOd 


fato) Quebec !$>c 2011- 138ft -3 « My31 W30 27.10 - 

Lasdal3ftpc2D02 12Bft — 40 Apt Sa9 3933146 

J7J1239 LtarpooOftpctotd 38ft 5 UttpJaOc M3 - 

55.( 3® LCCSpc70«l 32 — 29 iJaJcSeOa 993 - 

Manaa*erl1ftpc20a7. 113ft 8 M90C25 3983273 

ItotWcSpCir 67ft — 25 MrlSal 8933361 

121324 ppatdai«h3ftpc2021. 131ft 80 Ja30J}30 1933465 

1J 1238 4ftpcL2024 12Bft 50 - 793 - 

2581315 Udktol8*n18ftpe200B 13& BO MrlSal 893 - 

punk Wedfe paroanuga rtrangaa am adc u to lad on a fMaf to Friday bam. 

— 1994“ Staea oobvi 
SB p23Sap228apglSap2nSap19Hflti Uwr Wph Uj* 
134173 1334J2 134238 134Z3S 1356B8 154219 130148 154219 90245 
138286 1377 JK 138192 138274 1404^5 1607.10 134195 1807.10 83862 
23475 23422 23378 23S23 23825 Z7132 22555 27126 424 

9223 9208 89.71 8254 9222 107JD4 8254 127 AO 4118 

10789 10287 10250 10273 10285 13367 10250 13187 5253 

2331.42 227883 226051 224758 220488 2387 A 176282 2387.40 822.18 

2848 2725 2748 2728 2706 2848 1958 7317 415 


1867.712617 

2351848^478 

1822423820 

4848824 

1588SQ 

5.665.192388 


12162051.778 

1942224 

18.190800.000 

15896874,160 

3864826840 

12160800800 


+62 530800 
-67.062712 
+87.823.417 
-260856 
-27.27B 


-29.712744 

-280856 


-645,452994 

+615,453,994 

-30800.000 


LONDON RECENT ISSUES: EQUITIES 

Issue Ant MM. Ctasa 

price paid cap 1964 price Net Div, Gra P/E 

p up (Qrv) High Low Stock p ♦/- dhr. COV. yM net 


100 

FJ». 

Ill 

102 

95 Beacon toy Tat 

85 


- 

FJ». 

142 

48 

38 Do. Warrants 

40 


§126 

FP. 

184 

130 

123 Cancel 

123 

-1 

- 

FJ*. 

140 

1ft 

1 Conti Foods Wrta 

1ft 


- 

FJ». 

24.4 

82 

81 Emerging Meta C 

81 


12D 

FJ*. 

214 

120 

118 hdapandent Paris 

118 

+1 

ao 

FJ*. 

24.1 

as 

78 Ryland 

86 


- 

F.P. 

139 

44 

27 Sutra Wrta MAX 

29 

+1 

- 

FJ*. 

1184 

379 

374 Templeton E Now 

375 

+1 

- 

FJ*. 

124 

212 

192 Do. Wrta. 2004 

204 



118 +1 LN48 21 4 2 14L* 
85 LN2S 1J 21 148 


BASE LENDING RATES 


FT GOLD MINES INDEX 


Actom 6 Company 5. 75 

ABed Trust Bar* —225 

AJBBank 27S 

UHorvy Anabechar 275 

BenkOtBaretfo ^ 

Banco Btaaci Vtacnva- 5.75 

Bar* ol Cyprus ..- 275 

Bonkoflratoiid 575 

Bankeitatia -575 

art Of SHOP* -.276 

Barclays Bank 276 

BA BkoIMa Edit — 525 
•Brawn Sftptoy A Oo U227S 
CL Brt Nodedond — 575 

OfcenkNA — 573 

CftdesddtoSw* 5.75 

TMOoflperailve Dank, its 

CouaaiCo — .....— 275 

Crane Ljcmab ...275 

Cyprus FtopUbr Bank —27S 


OuncacUwh — 57S 

Exeter Bar* Ltodtod ... 275 
RnanHlAGanBank-85 
•Robert Randng 5 Oo - 5JS 
Gkobar* ................ 275 

•Guinness Mahon 578 

Hb«j Bark AG Zurich. 575 

•Htanfanos Bank —575 

Hertette & Gan toy ac 275 
•HP aamueL. ....... ..M.. 275 

C Hcraro SCo — 275 

Hongkong IShangn*. 528 
Jutan Hodge Bank —278 
toLecw*! Joseph & Sana 275 
Lloyds Bonk 275 
MaGval Bark LU ...... 275 

Midland Brt 275 

•MoMBanMng 8 

N3MB*nhakr 273 

•RoaBraMra 273 


Oorporadon Lkrdtod torn 
longer authcaiaed si 
■ banking tosHUtan. 8 
Royal BkdSeoiand- 575 
•SRddi&Wtomn Sacs . 278 

TSB - 575 

•UrfledBkafKumB— 575 
UnBy Triad Bor* Pie — 275 

Woatom Trust 575 

IMraoBucyLaMw* — 275 
Yorkshire Bar* 575 

• Member* of London 
Investment Bonking 
/YynrfcdlfT 

* feartnMtfMfen 


%ehg 

Sap store 3m HUCdp BeU fires* ita 
23 3I/Q/B3 22 Mi lam ylaki % 

2331 AZ +44 227203 55B4 10200 180 


RIGHTS OFFERS 

issue Amount Latest 


agb im 
2367-40 187383 


M DAfidnaMl 

AkkaDQ 354116 +78 343788 1222 32JS 190 348788 2209.16 

nil Ibldaidl (8) 292128 +58 263589 783 1488 I J8 301189 1B285S 

Norib Axnrica DD 1887.76 +1.4 185121 2558 5117 270 203985 145245 

OepyrigM. Ihe Ftandd Ttom Ltntad 1994. 

nun to toackKt dw numtar * cenyrariaa. Baato U&Dofcw. Bam IMua* 100200 31/12/92. 
Pradac saa or Bold Ifirm Max Sap. 21 2848: weak"! change; +118 point* vsar agv 1788. 
Cnamt dwnoe M/W94: tModorc LAC Mtoaato P*xth Mieno*. 

Supporting (H> tor toe FT Gold Mbwa Indn la prorttod by mang Journal LW- 


price 

P 

paid 

up 

Renun. 

data 

1 

«9h 

475 

Nl 

4710 

59pm 

350 

l« 

21/10 

48pm 

160 

M 

17/10 

9pm 

2S2 

M 

11/11 

34pm 


15pm Commons* Union 
13pm BMP 
6pm Jannyn toy. 
12*2pm Weir 


Ctaslng tar- 
prtaa 

P 

24pm +3 
13pm -2 
7pm 

12ftpm -ft 


Petroleum Argus Daily Oil Price Reports 

•AH the xpet pn.ee '.-on for G!o!>.it Crude 

md Product?:, murkuts ' p e trolcum A rgUS 



FUTURF5 4 OPTIONS SflOKEAS 

ROUND 
TRiP 

CKf CtiTiON CULT 


Residential - 
Property 
PRIVATE 
ADVERTISERS 

please contact 
Sonya MacGregor 
+44 71 873 4935 


Can. $125,000,000 



Credit Local de Franca 

SuborcSnatMi Collarod 
Floating Rats NotBS due 2002 
For thstotsrostpariod tram September 
28. 1984 to March 27. 1996 the rate 
hoe been determined at 5125% pm 
annum. The amount payable an Match 
27. 1995 per Can. SI 0,000 and Can. 
5100,000 principal amount o> Notes 
wffl be Can. 8305.41 and Can 
*3,064.11 raapectmiy 

ey-.TMQuMUtartttaBak.HJL 

LmftMpitBrak Q 

September 26, 1994 chase 


Kiriii Inlcnufiiunul Fiiuiucc 
(Nctlicriands) B.V. 

Yen 7,000.000,000 

Rxod/Iin'crsc RootinjJ Rate 
Notes Due 1995 
Notluu to hereby fihvn thtd for 
the next hmre* Period from 
26di September. BW LU 27th 
.March. 1995 the Notes will bcur 
Intunrat ot u rate of 1156 295 per 
annum. 

Inciut pmubtc OB 27th March. 
1995 will amount to Yen 584.5-49 
per Yen 10.000 .000 Note. 

The MitKibMd Hank. limited 
Lamlun Branch 
As Agent Bank 



Sovereign (Forex) lid. 

24hr Fomign Exchange 
Margin TraEng Fddby 
ConuratMve Prices 
DaSy Fax Service 
tot 071-931 9186 
Rdc 071-931 7114 
(Bafor to nghi — Mew* Bead 
londonSWIWOSE 


llllllllllllllllllllllllll 

S.G.W. Finance pic 

£250,000,000 
Guaranteed Floaring 
Rate Notes 1998 

unconditionally and irrevocably 
guaranteed by 

S.G. War burg Group pic 

In accordance with the 
provisions af the Notes, notice is 
hereby given that, for the three 
month period, 22nd September, 
1994 to 22nd December, 1994, 
the Notre will bear interest at 
the rate of 6.1375 per cent per 
annum. Coupon No. 3 will 
therefore be payable on 
22nd December, 1994 at £15.30 
in respect of each i\ ,000 
principal amount of the Notes. 

S.G. Warburg 8c Co. Led. 
Agent Bank 


LWJiamoutuHa 


The FT can help you reach additional 
business readers in France. Our link with 
the French business newspaper, Les Echos, 
gives you a unique recruitment advertising 
opportunity to capitalise on the FTs 
European readership and to further target 
the French business workLFor information 

u \ .. . 

on rates and further details please ^ 


telephone: 


i ■ 


Philip Wrigley on +44 71 873^3351' 

















































































rs SSSSSSSHSS5, .§ilii;s 

























































3: 


FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 


4 pm doa September 23 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


ii#i 1 v 
mpimsda.- >t 

aw I OSiHtc: 

Sa ttfeftLUtaA 


-- m w a 

ISi K f Ml 
a« 17 21 321 


CtfB« 
Osh Am. 


13 12$ 12 




52 MR 
S 3% A™ 

S6‘b 38% ASA 
31%W$/«M8. 

15% lUaMmsPr 
2J*g 17 V «MM 
\S% 11% AqBneto 
31 22% ACEUd 
12% 9% ACMGvlh 1.09 MJ 
iov 7V AOMGtopp an nil 
10V 7'j ACMEWSp 096118 
BV ACM MSB 159 119 
8% ACM ton 1-01 125 
8MMKMB0Q.72 89 
BVAmcn 
8% font Bad 


018 1J2 35 M 15% 15% 1ft ^ 


1JB £2Z77482u77% XV 77% - 

93 A4M 55 53 53V -1% 

12 214 3V 3V 3V 

OW 10 341350 52% 51$ HV +$ 

0.78 05 18 7083 31% 3ft M% •% 

050 14 11 24 14V 14V 14% 

052 14 IB 22 HV 21% 

27 343 U?i 14% 1«V 

044 15 31 217 25 24% 24% 


312 

105 

526 

S17 

IS 

a 


0% . 
3 £!; 

a % 

9 % 


18V MV 


044 U IB 1095 13% 13% 

7 32 SV 0% 

<rn M 13 54 27V V 

035 15 2 643 10% 10 

114 ZOO 15V >4% 


8V 

27 

10 

14% 


1ft 16% Mraslapf 0.48 10 0 88 17V 17V 17^ 


19%UCUB 
17V ACldH A 


04 46*2 Ad Mem 
31 V 16VA*Uc 
6% SMintGm 
2fl lSMnkK 
59% *9$ *9® MU 
S5V 4*%A«iraL 

sovssvast 
22V I6%#ni9i 
4 iV WHikc 
soV »$AkPiC 
39% 2ft flktnoFfl 
28% 18V teW he 

16% UVATOMB 
29% 21% AUTco 
18% lft AOAaAir 
21 V 16% Many « 
17% 13% Atom 
23 

30% 25V AJBttn 
27% 19V PknM 
65V 49V AhaSI 
30% 23V AlnSnMi 
22V HAlexAl 
24% iTMagnua 
28% lOVAKfiPi 
22 V 13V AHbi CM x 
28 20M«®n 
4V V Anon 
27% l7VMraC* 
ItMj !)4I»0 
27% 21 V AM Km 

40V 33VAUS0 

2812 24 MM Ctrl 

7 4% MH33H 
34 21 V Afcmm 
85V 64% Mm 
30% 20% ACaCp A 
ii% 7% Amfata 


6i% as is 

100 100 13 5SS 30% a % 30 
aiG 10 B 140 5% 5V 5% 
aia 08115 5B 17V 17% 17% 

1.47 25 13 108 59% 57% 58% +2% 
2.78 01 6 2578 45% 45% 46% *% 
046 1.4 14 1610 33% 33 33% 

088 43 14 4474 21% 20% 2ft 
1 43 2% 2% 2% 

an 2.1 a 1341 46% 46% 4&V 
OX 12 13 1608 2S% d25V 25% 

44 570 26 % 25% 25% 

184 IOlB 12 98 nl7 18% 16% 

6379 28 27% 27% 

020 12 23 490 18% 15V 18 

OS 20 a 572 17% 17% 17% 

0.20 1.4 408 14% 14% 1 

020 12 18 54 24 23% 

028 1 J 16 1B2 21% 21' 

044 1.6 22 2385 28% 27 

030 1.1 71 5728 26% 26 

100 12 43 546 62% 62 

070 25 4 185 28% 



010 05113 292 2tftp 19% 19% 


048 12 20 835 21% 21% 21% 
1.64 01 10 506 20% 20% 20% 
016 08 17 170 28% 20% X% 
044 17 16 58S 2S% 2B% 28% 
1 618 % tfV 

154 02 21 31? 20% a 
OIB 19 21 9% 6% 

0W *D U 2100 22% 22% 

007 10 7 3500 34% 33% 

088 12 IB 1373 27% 20% 27% 
231102 8% 8 6 

13 2006 U35 32% 34 

TW 1.9132 8450 05% B4% 

38 3420 21% 20$ 

OW 110 213 7% 87% 

6% AmPrechx 025 13 25 57 7% 7% 

6%/UmGd 008 1.1 13 3304 7% 7% 


V 

20 

A 


ISAIKMM 
44 AAXtMx 
. BVAfllABR 
31 20% Am Ban** 
37% 29%M8lrol 


a 


052 2.3 15 58 22% 22% 22% 

OW 13 47 1525 48% 45% 45% 
024 17 82 8% 8% 8% 

010 04 3537170 26$ 2S% 28$ 
37% 29% MSM 2W 18 10 957 34% 34% 34% 

25% 18% AW BUPIB 080 IB 14 366 22% 22 22 

I 8% AW Cm Ac X 085 09 111 7% 7% 7% 

20% 16% AW Caw Bd 15* 9.1 29 99 17 018% 17 

Id U 0 44 10% 819% 19% 

155 15 B7 7653 89% 09% 99% 


3% U . 

98% 42$ AlflCyan 
37% 27% AOEPO 
33% 25% ArfXBf 
30% 24% AnOxX 
9% 6 An tart ki 

27% 22Arn wnPr 
20% 16% AW Hanoi 
65V 55% AflMXM 
2% ;% Am Harm 
98% 81$ And® 

11% 7Ant0ppltc 
W 23% And*® 

34 19AmPra8Bt 
8% r% Am Rad Ex 
27% 21 AmS&r 

22% ISAaWtom 125 08 
32% 2BAflfM» 

*3% 38%AmrMr 
43% 34% Amam he 
17% 11% AMUfcx 
81% 5S-jj Amoco 
BV 8%AmpadW 


140 7.9 16 1444 30% 30% 30% 

090 19 1310887 31% 30% 30% 

1.16 45 24 1 580 27% 27% 27% 

077 115 1» 8% 06 6% 

130 9L9 B 170 23% 23 23% 

OK 39 11 60 18% 18% 18% 

182 59 12 3842 58% 57% 5B% 

075 28.8 9 85 2% ' 

048 05 15 50^ 90% W*l. 

1.00 HE 353 7% 7% 7% 

088 35 500 Z7% 28% 27% 

040 1.0 0 148 24% 24% 24% 

044 58 5 8* 7% 7% 7% 

042 16 7 4838 24% 23% 23% 
7100 18% 18% 18% 
1W 4.1 11 133 26% 26% 26% 
192 4.7 14 1817 41% 40% 40% 
1.28 35 5 10 38V 36% 36V 
024 1.4387 1252 1117% 38% 18% 
120 U 155130 58% 57% 57V 
OIO U 8 18 8% 8% 8% 
012 19303 148 4% 4 4% 

140 4.5 10 529 31% 30% 3i 
10 203 2% 2% 2% 
030 07 BS 1154 46% 45% 45% 
301785 31% 30% 30% 
094 15 24 148 Z7% 27 27 

1W 10 14 2880 54 53% 53% 

167106 3 25% 1125% 25% 

221108 32% 32 32% 

044 16 17 37 17% 16% 18% 
136 11 7 7B3 33% 32% 32V 
028 1.1 361820 25% 25% 25% 


4% 3%Aanhc 
34% 29% Aaaxfli 
4% 2%1 

xiz3%An*0 

29% 24%4noafcax 
55% 47% AnBaeh 
25% 35% ANRI** 

34 19% Aidham 
18% !4%AdUnyh 
XV SOAoiCp 
29% 22% ApmMOp 

10% 6%ApaxMnF 0 73 8.4 399 8% dB% 

23% 14% AM 41 2032 U23% 23% 

7% 4 AppMMnn 1 900 4% d4 4% 

24% 16% A«1 P» A 012 05 37 380 23% 23% 23% 

X 21% AichOa 010 04 18 7258 25% 25 25% 

51 43% ArtoOwrt ISO 5.1 22 208 48% 49% 49% 

51% 45% tnmBSf 4.50 9.7 10 48% 40% 48% 


4% Anneo 
23 (Vow IIP 
57% 43% ArwMT 
45% 33% Anon fee 
7V 4%ArnDp 
33V 23%Anhhdx 
33% 21% Asm 
31% 22%AdddCod 
44% 33% Am® 

25% 18” 


25% TftAfePKF 
3% 1% And tor 
37 28% AaaMGaa 
57% 49% AW 
2Q%22E%A8RUI2 
X% 30% AMI On 
9% 5% AWaSoi 
21 V 16% AweE®* 

112% 92% mm 
10 4% AU 

m% iB%*tt«>Enn ums i a 
12% 8%AaH«A0n 034 17 10 1B10 
24% 17% AiQS 


789 8% 0% „ 

110 01 2 23 023 a 

1JB 19 X 745 45% 44% 44% 

15 2282 37% 37% 37% 

2 47 5% 5% 5% -% 

070 12 13 1789 24% 24 S4% -% 

040 1.2106 31B3 1134% 32% 34 +1% 

0« 1.4 II 112 29% 29% 29% ■% 

1.00 18 12 741 35% 34% 35% 

027 1.5 167 18% 18% 11* 

028 17 7 49 2% 2% i 

012 04 22 a 32% 

122 14 15754 54% SIV 54 

180 U 2100 241 241 241 

108 08 13 132 30% 030% 30% 

028 4.2 7 4 6% 8% 6% 

1.54 05 9 388 18% 18% 10% 

050 05172 3239 101% 09% 99% 

0 38* " ' " 





’7*Jl . 

12% 8%AuWt*H 
56% 47% AoOatax 
MV 13V Awn 
19 7%AM8> 

45 30% Am* 

62% 48% amPr 
14% 10% Afdn Cog 
7% 5% A3* 


018 07 26 6» 

0.10 1.0 103 

080 1.1 24 1092 

044 18 11 94 

004 04 4 1880 

on 1.8 20 580 98 37*» 37*2 

100 13 17 1508 60% 99% 59% 

0 18 10% 10% 10% 

24 240 7 8% 7 


23 22% 22% 

9% 9% 9% 
55 54% 54% 
18 15V 15V 
9% 8% 9% 
38 37% 37% 


3 

3 


38% 31% BCE i 140 

9% 6% BET «0n 021 

5% 3 Borneo 020 

17 I 16%8aM>F«n 040 
3% 17 Baton* 046 

27% 21% HM Be 0*0 

30% 24% MCp 060 

i$% 0% BBdMa DOS 

8 % 6%K*r 

25% 20% BlflX 1 52 

20% 13% BaflflnttO i DM 

38 33% Bncflntx 12* 
25% TOVftmccWV 1 14 
n% 9% B3nceCam 072 
3*V 27 8ataaMl iM 

i% VeancToca 
83% «% 83100 * 070 

50% 38%GanMa 1.60 
98 84 BlBk BDSf 556 

23% 22%BABsn 088 

49% 45% fik S0S81 P JIM 

33% 26B»urr l.io 

»% 46V BMAm A 3iS 
95 7E EonfcAm 0 EDO 
84% 63% BnkTU 160 
38% 30 Detayx 1 08 

30% 22% tad (C W 060 
3?29%tanmGlD l« 
*8% 3SV Bamfix 164 
17% B-i BOM OOS 
53 ' 8 34% Bud) 098 
28V 21 % Ban? 1.05 
28% 23% Bat Si 6a 1*6 
22% l^i BO Tf 1838 1 73 
23% 15$ Bear Saw 060 
50% 46% BnoSOW 183 
JT% 27V Bonngx 064 
32% 23BBdananln 040 
46% »%BkbD 074 


- B - 

74240 1430 36% 38% 36% 
31 28 159 8% 6% GV 

47 8 133 4% 4% 4% 

14 109 18% 18% 16% 

15 43 4172 18% 10% 18% 

1 J 21 90 MV 22% 22% 

21 M 208 27% 27% 27% 
0 5 15 229 10% 10% 10% 

12 579 7% 7% 7% 

6.9 II 1104 22% 21% 22% 
IB 30 78 20% 20% 20% 

40 10 6203 31% 31 31% 

48 9 189 25% 24% 25 

88 5 5 11 10, 10% 

14 7 351 30% 30% 30% 

37 221 1% 1 1% 

13 IB 229 53% 53% 53% 

35 9 5901 46% 48 46 

66 J 84 084 84 

12 II 3*97 7% 26% 37% 
66 5 48% 46% 46% 

16 5 2565 31% 30% 30% 

69 25 47 048 % 47 

78 17 77% 77 77 

5 4 5 2820 66% 66% 66% 
301® 10 35% 35% 35% 

14 M 5J6 25% 34% 24% 

IT 50 15 37% 37% 37% 

3 7 10 3095 45 43V 44 

041*9240 1112% 12% 12% 
25 14 722 38% 38% 38V 
18 42 3378 27V 27% 27V 
58 15 48 25 24% 25 

85 17 M% 20% 39% 

38 4 IQ61 IdVfllSV 16 
60 2D 47 846V 46V 
11 ?1 108 30% 30% 

14 23 11® 28% 27% 2H% 
1.B1815B3 46 45% 46 


BE 

OUR 

GUEST. 



'uToTfeM 

When you >ui) wiih ir« 

in LIMASSOL (Cyprus) 

- - May in touch - 

w ilh your compli memory eupy of the 


FIN.ANCIAL TIMES 

iuwh i >uUNt'.i«i w»ifti 


7% SBedFr 
59% «BeflM 
19V 14% Salta 
63% 53Baefli 
55 43%Sth A 
25% M% Band* 

89 99% BW4M5P 
44 34% BODflf 
36% 27%Bto*wA 
1% VaanoMB 
19% mVBamar 

19S91 15100 BaWH 

10V BBanyPslrx 
39% 19 Bed Bur 

28% 25% Mi a 1 
55% 51%BBMmPf 
24% 16% M3 
S3*a *2% ML 
16% llVBnEnt 
21% it" 


. .«% 

32%23%»fflhBWS 
23% 18% Bltodtx 
22% 18 Stack HU. 

s as 

&AST" 

a abt 

30% IE 

IBoRB&M 


21% 10 

S 9 S 


22 18% Bosh QbB 


34% 29% are Prop 
80% e^v ansa 

33% 19% OMaH 
59V 50%MI|Sg 
74% S5%BrAlr 
54% 39HGa 
78% 55% BP 
27 19% BP Prawn 
25% 1BBSM 
71 V 53% BT 
28% 22% BUpU 
38% 32$ BranSpa 
8 SVBmnSh 
30V 28%BmFmB 
32% 24% Brferrx 
4% 3% BHT 
25% 17% Bmmk 
18% 13% Brash HM x 
41 35% Boctoja PI 
28% 13% Bun Coal 
66% 47% BurH 
49% 37% Boh Mae 
19% lOBunAnPex 


in n 8h CIsn 

■» % E 1901 IM u* IM 

036 &t 3 39 5% 5% 5% 
178 SJ! 152148 53% 63 53% 

040 11 17 14fl 19% 19% 19% 
17B 5J 28 3221 58% 38% 55% 
OW 12 a 129 51% 50$ 50$ 

054 11 23 245026V 34$ 25% 

4-30 7.0 6 5BV 5BV 5BV 

1.72 43 12 217 40% 39% 40% 

0.47 1.7 18 B 28 28 28 

004 U 17 284 H % % 

148 10 21 187 15% 15% 15V 

51 24Q 18755 18755 18755 
a« 4.2 33 24 8V 8% 9% 

24 8748 36% 38% 3S% 
150 9.4 18 28V 28% 20% 

5.00 OG 28 52 52 52 

a« 1J 8 2375 21% 21% 21% 
1.44 10 23 432 47% 46V 47% 
31 8480 14% 13% 14% 

0. 1Q 07 U 187 * * 

040 1J 58 518 „ . __ 

040 14 S! 2032 22% 21 

1J2 fl.7 11 43 19% 19% 

073 &7 46 8% dB% 

175 11.5 810 6% dB% 

070 OO SCO 8% 8% 

125 18 28 4218 45% 44% 

aia a4 23285ffi 20% zs% 

012 1-fl 128 8% 6V 
OW 08 8 58 14% 14 14 

100 ZJ 1111091 43% 42% 42% 
OBO 10 7 22281130% 29% 30% 
OW 04 33 1188 17% 15% 18 

T.1B 4.7015 3885- 24% * 

030 22 17 7718 14% 

125 U t II 21 
060 20 15 1262 1129% 

027 08 787 35 

2.40 7.A 7 47 30% 30% 30% 

1. B4 18 12 288 72 71 71% 

20 1845 24% 24 HV 

191 51 15 2828 57% 58% 67 

1.77 10 14 2® 99 58% 58% 

3JJ7 ELS 25 46 47% 47% 47% 

1.76 2 3 25 3634 75% 75 75% 

Ija 7.4 7 IBS 21% 21% 21% 
032 1.3 26 3307 u26 25 % 25% 
177 04 15 1282 58% 58% SB' 
IX 5.7 13 1® 23% 

1.60 4£440 84 35% 

032 4.8 4 19 8% 

ass 15 4 122 27% 

068 13 ® 3091 29% 

39 13 4% 

044 11 38 1958 20% 

032 10 « 653 16% 15% 16 

2.80 7.7 10 31 36% 35% 36% 

914663 14% d12% 13% 
120 14 10 4871 50% 48% SO 

055 1.6 IS 1404 38 37% 37% 

1.42 09 20 1119 16% 018 16 


15% 15% 

m 


If* 


ET 

(to 

-% 

*b 



23% 23% 
35% 36% 

27% 27% 




3 

jS 


- C - 


35% 25%CBI 
381253% CBS 
X 19% CMS En 
82% 59$CNAFa 
54% 44% CPC 
18% 14 CPI Coro 

92% ncsx 

29 19% CIS CUp 
24% 18% CetaeUM 

53 33 CMWnxi 
28% 24%C4fiaC 
23% ISVCaMOSG 
17% 10% CxdneeOrei 
SB 35% dm W 
2% 1% CIME 
15% 11% ColQai C2xi 
19% 15% Cjtngr 
lSl* 9% CUFbU 
25% 17% Cabmen 
42% 34% Crows 
j] VCUXpURi 

18% 14% Canex 

85% 80%CMpa 
14% 12% QgtU lWx I_26 10 0 
37% 2(^MBta1JA >W 7.0 
42% 22%D|MIMBI4 3J2113 
28% 1&%Cenmarii 
35% 39% CuICa 
23 1B% Camera Cl 
H AOnlnn 
13 BVCanlnfr 

30 22% canwt 


048 1.7 33 531 28 27% 27% 

2® 06 10 182 340 334*2 338% -1% 

OB4 4.0 II 490 21% 21 21 -% 

63% 


16 2*4 .. . 

IX 18 18 7561 XV 49% 
050 12 m 117 18 17V 

1.78 18 19 3247 B8% 67% 
040 1.4 22 M 28% 28% 
084 14 17 478 19% IB 

11 1223 45% 44% 
086 It 13 312 27$ 27 

0.15 08191 282 10% 18% 
831 603 16$ 1B% 
II 367 44% 44% 
020100 2 16 2 
am 1.4 M 685 

17 179 
0 783 

040 10 55 IM 20% 

1.12 28 IB 1515 38% 37? 

82 2488 H 5 
OX 1 J 86 2599 17% 17L 
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Co^inued on ant page 




FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 ★ 


33 


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wamtach 65 250 s% 5ft 5% +A 

IttKbUjfiB 072 717B9 21 21 *% 

WaabFedSL 084 8 836 ®%d20% 20% 
WrtBttH 022 9 274 25% 24% 24% -% 
WusauPMri24 14 1 430 23% ffl% 23% *% 
WHO Z40 18 Z7 43% 42% 42% -% 
Weltak 61199 3% 3*4 3% +A 

WestOno 072 11 1474 29% 29% ®% -% 

WSPri II 559 t3% 12% 13!^ +% 

WtotoA 1 1666 14A 16% 14A +A 

WetSealA 10 1® Mg 3% 3%; *A 

Matte OX 25 2519 50% 50% S0%{ *% 

MnaSoruna K 1256 43% 42% 42%i -% 
WelaMnL 028 15 18 17 18% 17* *% 

WBvot 040 27>7B0 21% 21% 21%| 

W1 1 Group 00337 619 3ft 3% 3%< 
Wymen-CdnCUO - 27 6% 8 6ft *A 


- X - Y- Z - ! 

Xdnx 3D2Z72 1 *' 48 'fe/ 46%l -% 

tomsflap 2 X4 3% 3% 3%f -% 
Tetri 094 89.2956 , JB 18% 18%r 
VortRscn 145 i fe‘-4% 4% 4%< +A 
TriBUtei IX 6 BO '40% 39% M%- 




34 


FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 


FT GUIDE TO THE WEEK 


26 


MONDAY 


Yeltsin addresses the UN 

US president Bill 
Clinton and Russia's 
president Boris Yeltsin 
are both due to address 
the 49th session of the 
United Nations General 
Assembly in New York. 
Mr Yeltsin is expected to talk on 
nuclear arms reductions and the role of 
Russia in the world - especially its own 
part of the world, the former Soviet 
Union. He will then meet US business 
leaders before flying to Washington. 

The European Parliament begins 
an all-week plenary session, its first 
since the Euro-elections In June. Atten- 
tion will centre on internal reforms to 
make the Strasbourg assembly more 
efficient, now that It has enhanced 
powers under the Maastricht treaty. 

The main debates will be on: multi- 
speed Europe: whether the Parliament 
should sit in Strasbourg, as France 
insists, or in Brussels alongside the 
Commission and Council of Ministers; 
and on the confirmation hearings Euro- 
MPs plan to bold in November for 
members of the new Commission, 
whose nominations they can veto. 

UK-Russian trade: Russia's deputy 
prime minister for the economy, Alex- 
ander Shokhin, visits London for talks 
with the Russlan-British Committee for 
Trade and Investment, of which he Is 
co-chair with Michael Heseltine, the UK 
trade and industry secretary. Mr 
Shokhin will press for more access to 
the British market for Russian goods 
and for work to start on such projects 
as the Moscow telephone system, which 
was agreed with the UK two years ago. 

UK telecoms: Energis, the UK's 
third long-distance telecommunications 
company, is launched. Energis, a sub- 
sidiary of the National Grid, has 
erected its network across the Grid's 
pylons. Its marketing pitch includes 
significant discounts on BT tariffs for 
long-distance calls. i 

Consumer congress: The 

International Organisation of Consum- 
ers Unions, representing consumers’ 
groups from 72 countries, begins its 
14th world congress in Montpellier, 
France (to Sep 30). 

Saleroom: Sotheby’s opens the art 
market season with two house sales. 
Today, the Corsini family of Florence 
starts to dispose of some 2,000 objects 
culled from the guest suites, library 
and store-rooms of its 18th century 
baroque palazxo, where the auction is 
being held. The family hopes to raise 
£lm ($i.58m) for restoration work. 

On Wednesday, at Stokesay Court in 
rural Shropshire in the west of 
England. Victorian treasures which had 
been lost for more than 50 years come 
under the hammer in Sotheby’s biggest 
house sale for a decade. 

FT Survey: Using Computers in 
Business. 

Holidays: Israel 





TUESDAY 


US interest rates in focus 

The US Federal Reserve's Open 
Markets Committee, its policy-making 
body, meets in Washington amid signs 
that demand is still growing steadily, 
despite five interest rate increases this 
year. Most economists expect the Fed 
will have to raise rates again before the 
year is out, although few believe it will 
do so at this meeting. 

Boris Yeltsin, Russia’s president, 
holds talks with US president Bill Clin- 
ton in Washington. Bosnia, nuclear 
arms reductions, trade and investment 
figure on the agenda, with the US 
pressing for speedier economic reforms. 

Japan pitches lor UN seat: 

Foreign minis ter Yokel 
Kano, addressing the 
N. United Nations General 


to Assembly in New York, 
5 is expected to make 
Japan's clearest bid yet 
for permanent member- 
ship of the security council He will say 
Japan is willing to assume the duties of 
membership, but cannot take part in 
military operations involving force 
because of its pacifist constitution. 

AM Initiative: Kenneth Clarke, the 
UK chancellor, will launch an initiative 
to help ease the debt burden of some of 
the poorest developing countries when 
he meets fellow Commonwealth finance 
minis ters in Malta on the first day of 
their two-day annual conference. 

The Bank of Italy’s governing 
council holds it first monthly meeting 
after the summer recess with the issue 
pending of nominating a director-gen- 
eral to succeed Lamberto Dini, who 
became treasury minis ter in May. It 
has become a sensitive issue in rela- 
tions between the central bank and the 
Berlusconi government, with the Bank 
of Italy seeking to preserve its auton- 
omy over the appointment 

Romania’s president, Ion Iliescu, 
on his first state visit to the US, holds 
talks with International Monetary Fund 
and World Bank officials in Washing- 
ton. The visit, which includes a meet- 
ing with President Bill Clinton, is being 
seen as a sign of improved relations, 
strained by the Iliescu administration's 
handling of anti-government demon- 
strations in 1990 and 1991. 

Cleanlier than thou: The Tidy 
Britain Group will spread anger and 
delight by publishing its first cleanli- 
ness ranking of British cities. 





FT Surveys: Mauritius and Business 
Locations In Europe. 

Holidays: Israel- 


28 


WEDNESDAY 


IMF gives its world outlook 

The International Monetary Fund wifi 
publish updated forecasts for the world 
economy ahead of next week's annual 
meetings of the IMF and World Bank in 
Madrid. Its latest -World Economic Out- 
look will upgrade the near-term growth 
forecast for the Group of Seven, leading 
industrial countries from the annual 
rate of 2.5 per cent predicted by the 
Fund in ApriL 

OECD headship: Ambassadors of 
the 25 member countries of the Organi- 
sation lor Economic Cooperation and 
Development meet in Paris with little 
hope of ending the impasse over who 
should be the next OECD secretary- 
general. 

There is little sign that the OECD's 
decision-making council can achieve 
the consensus needed to choose either 
present incumbent Jean-Claude Paye or 
Canadian challenger Donald Johnston 
when it meets on Thursday. That 
would leave the OECD top job in limbo 
once Paye's contract expires on Friday. 

European Union industry ministers 
convene in Brussels to discuss the 
European Commission's action plan to 
prepare for the new “information soci- 
ety” covering multi-media, telecoms lib- 
eralisation and electronic banking. 

The German presidency will also con- 
sider latest progress in restructuring 
the European steel industry, amid clear 
evidence of an economic upturn. 

Pensions ruling: The European 
Court of Justice will deliver its opinion 
in six separate cases which wifi deter- 
mine how European employers equalise 
pension benefits for men and women. 
Pension benefits for part-timers and 
single-sex annuity rates are also key 
issues. 

House sale at Stokesay Court: 

Sotheby's four- 
day sale of 
antiques and 
treasures at 
Stokesay Court, 
near Ludlow, 
Shropshire, is 
expected to 
raise £2^m 
($3 55m) from 
5,000 items. 

They were 
locked away for 
security in 1941 
and are wonder- 
fully preserved. 
The highlight is 
a Louis XIV 
boulle commode 
of 1710, estimate £100,000. Among the 
oddities are suits of 18th century Japa- 
nese armour (one illustrated above), 
and some Fortnum and Mason dried 
turtle - together with Instructions for 
making turtle soup. 

Straw] limping: The Horse of the Year 
Show begins at Olympia, London (to 
Oct 2). 

Holidays: Taiwan. 




Knn f^n leader Geny Adams Is touring the US for two weeks. There is controversy over the backgrounds of some of hte aides and advteere 


29 


THURSDAY 

Report due on Berlusconi 

Three legal experts, appointed by 
Italian premier Silvio Berlusconi on 
taking office in May to examine if there 
is a conflict of interest between his 
roles of prime minister and owner of 
the Finmvest media empire, are due to 
present their proposals. 

The unresolved issue remains a hand- 
icap for Mr Berlusconi and is becoming 
enmeshed in a controversy over recent 
appointments at the RAL the state-run 
broadcasting organisation. 

Mato defence ministers meet 
informally in Seville, against a back- 
ground of mounting tension in Bosnia 
and transatlantic strains over military 
tactics in former Yugoslavia. France, a 
rare participant in high-level Nato 
discussions, will attend. Germany and 
the US have signalled they want to dis- 
cuss admitting former communist 
states in central and eastern Europe. 

US trad* policy: The US 

International Trade Commission holds 
a hearing in Washington on a contro- 
versial report to assess the economic 
effects of US anti-dumping policies and 
countervailing duty orders. 

Amsterdam's bourse closes at 
10am GMT ahead of the introduction of 
a new trading system on Friday. 

World Maritime Day, declared by 
the United Nations' International Mari- 
time Organisation, is devoted to the 
training and standards of merchant 
navy crews. 


30 


FRIDAY 


Slovakia holds election 

Two days of voting start in Slovakia in 
the first general election since indepen- 
dence last year. The pro-reformers of 
the outgoing government of Jbzef 
MoravKk are pitted against the 
strongly nationalist opposition, led by 
former prime minister Vladimir Mefeiar. 

US-Japanese trade: A 60-day 
consultation period expires. It was 
designed to settle disputes over cars 
and car parts, Japanese government 
procurement in medical and telecom- 
munications equipment, fiat glass and 
insurance. Washington has threatened 
sanctions failing agreement At least a 
partial deal aeons to be in the making, 
with partial sanctions likely for unre- 
solved issues. 

United Nations peace-keeping troops’ 
mandate in former Yugoslavia expires, 
but Is expected to be renewed for 
another six months. 

UK nuclear power: Deadline for 
submissions to the government's 
review of the industry. The main issue 
is whether to build more nuclear power 
stations, and if so, whether construc- 
tion can. be financed try the private 
sector. 

IRC financial regulation: The last 
day for life insurers and financial aforis- 
ers to apply to be regulated by the Per- 
sonal Investment Authority, the new 
watchdog to protect private investors. 

FT Survey: World Economy and 
Finance. 


1-2 


WEEKEND 

IMF meetings In Madrid 

Finance ministers and central bankers 
of the Group of Seven countries meet in 
Madrid on Saturday ahead of the 
annual meetings of the International 
Monetary Fund and World Bank to dis- 
cuss strengthening world output, 
recent turbulence on financial markets, 
and how best to help Russia and 
Ukraine. 

On Sunday, the IMF’s policy-making 
Interim Committee tries to hreak the 
deadlock on issuing new special draw- 
ing rights or SDRs, the IMF’s reserve 
asset, aided by joint proposals from the 
British and US treasuries. 

Palau ends its status as the last 
United Nations trust territory in the 
Pacific on-Saturday and becomes for- 
mally linked to .the US. 

Nelson Mandela, South African 
president, begins the first state visit by ; 
a South African leader to the US cm 
Saturday (to Oct 6). 

Mian’s spring and summer j 

ready-to-wear fashion shows start on • 
Sunday (to Oct 6). 

The Aslan Games open on Sunday 
in Hiroshima, western Japan, bringing 
together more than 7,200 athletes from 
42 countries (to Oct 16). The possible 
attendance of Taiwanese government 
officials is annoying China, which has 
spoken of boycotting the event 


Compiled by Patrick Stiles. 
Fax: (+44) (0)71 873 3194. 



Other economic news 

Monday: UK chancellor 

Kenneth Clarke and Eddie 
George, Bank of England gov- 
ernor, hold their monthly mon- 
etary meeting. No action Ls 
expected after this month’s 
base rate rise, but today's 
monthly monetary report from 
the Treasury will provide the 
background to the discussions. 

Tuesday: The US Conference 
Board publishes its September 
consumer confidence index, 
with analysts on average 
expecting a slight rebound to 
90, from 89 in August. 

Wednesday: US durable 
goods orders for August aro 
expected to rise if the volatile 
transport component recovers. 

Thursday: Today’s Bundes- 
bank council meeting is expec- 
ted to leave key German Inter- 
est rates unchanged ahead of 
next week’s IMF meetings in 
Madrid. 

Friday; UK Chartered Insti- 
tute of Purchasing & Supply 
publishes its purchasing man- 
agers’ index. This, the first UK 
economic indicator for Septem- 
ber. will be scrutinised for 
signs of a slowing economy 
after last week's CBI survey. 

In the US, some analysts 
expect the Chicago purchasing 
managers' index for September 
to fall again after declining in 
each of the past four months. 


ECONOMIC DIARY 





Statistics to be released this week 



Dwy 

nstssssd 

Country 

eoonomio 

Madm 

Pnroreaf 

Piwtoua- 

Aotute 

■ter 

(Meetad Country - 

Economic 

• - DUUIBDQ 

Forecast 

Prewtoua 
'Actual . . . 

Mon 

US 

Aug existing home sdes 

- 

3.95m 

• Fd ’ us • 

' Aug personal Income . - 

(M% ' 

0,696 . • 

Sept 28 

Japan 

Aug supermarket sales 

- 

2.8% 

• Septra- US 

Aug perednal consumer expend 

0.7% 

■ a. 0% 


Denmark 

Aug wholesale pries Indsr* 

- 

1.1% 

US".. 

Sep Chicago put* managers inctxt 

- 

■ fil.6% ' 

Tue 

US 

Sep consumer confidence 

90 

89 

' US 

Sep Michigan sentiment, final 

- 

92J2 

Sept 27 

US 

Johnson Redbook, w/e Sept 24 

- 

3% 

US 

Sep .agricultural prices ■ 


1J5% ' 


Japan 

Jul coincident Indx 

4096 

50% 

■. Japan 

Sep consumer prices Wx (Tokyo) , 

.0.0% ; 



Japan 

Jul leading Indx 

60% 

64.6% 

Japan • 

Sept CPI, ex periahabtea 

0.7% 

■; .0.7%- • 

Wed 

US 

Aug durable orders 

3.6% 

-45% 

.Japan 

Aug CPI (nation). 

4X196 

-02% - 

Sept 29 

US 

Aug durable shipments 

- 

-3% 

Japan 

. Aug CPI, ex perishables ; 

0.7% ■■ 

' 08% 


Japan 

Aug retail sales 

1.496 

1.2% 

Japan 

Aug construction orders 

- ' . 

77.8% ' 


Canada 

Aug Indust production PJ." 

- 

196 

France 

Aug unemployment rate 

,J2JS% • 

12*96 . 

Thu 

US 

Gross dam'stfo prod final, 2nd qtr 

3-896 

3.896 

France 

Aug job seekers 

- ■ 

03m 

Sept 29 

US 

GDP deflator final. 2nd qtr 

2.9% 

2j9% 

. . Canada 

Jul cad gross dam prod, fac cost* 

04% 

. 05% 


US 

After tax corp profit 2nd qtr 

7.496 

7.496 

• # . 





US 

Initial dolma, w/a Sept 24 

325,000 

320.000 

During the- week... 





US 

Slate benefits, w/e Sept 17 

- 

2.64m 

Germany 

Sep preflm cost of Bvfrtg* 

0.196 

0.196 


US 

Aug new home sales 

650,000 

884,000 

. Germany 

Sep praflm cost of fivtag** 

3% ' ' 

- 3% 


US 

Aug export price tndx 

- 

0.3% 

Germany 

•Aug import prices* 

-ai% 

. 0.1% 


US 

Aug Import price Indx 

- 

1.196 

Germany 

Aug Impart prices** 

0.6% 

oo% 


US 

M2, w/a Sept 19 

S4.5bn 

$1J2bn 

Germany 

Jut capital «fc 

- 

- DMOTbri 


Japan 

Aug industrial productionf 

1.696 

-1.7% 

Germany 

Jul long term capital a/e 

- 

-OMIl.Ibn 


Japan 

Aug shipments 

- 

-1.2% 

Germany 

Aug Ho business ubrnatu 

- 

1001 


Japan 

Sep wh’sale price indx {2nd 1 0 days 

- 

0.1% 

.Italy 

Aug betance of payments 

urn- 

• • L029Ur 


Canada 

Jul Ax-weighted emp eamfnga" 

2.2% 

11% 

Denmark 

Wholesale price index- . 

-■ 

1.1% 


h Kong Aug provisional trade balance - -Sojsbn ■ month on month, **ywron year, tseasonafly adjusted Statistic^ eour*^ 


ACROSS 

1 Head back ahead of time to 
get some soup (6) 

4 Fought and rushed round 
about wrecked car parking (8) 

10 Upright, but not well-behaved 
(7) 

H All-round men - a bit 
unusual (71 

12 Some trite magazine article 
H) 

13 They provide simple remedies 

tun 

IS The pupil relaxed when let 
out (6) 

IS The clue here ls “A sports- 
man’s dog" (71 

20 Tell soldiers to number (7) 

21 Offer to bo treated with a cer- 
tain circumspection (6) 

21 He’s considered a gambling 
man dO) 

26 Many end getting hurt (•!) 

28 Possibly ter. will take a drink 
.mil wind up together (7) 

29 Individual with a pragmatic 
attitude where a catalogue's 
concerned t7) 

30 Team-leader coming down for 
. . instruction (S) 

31 Bdnk and gradually move in 
Wv.and right (61 


DOWN 

1 Parcel It oat, though there's 

very little (Sj 

2 Restrained irritation over a 
note (9) 

3 Leave a pound, but object (4) 

5 Reading matter at one time 
available to males only? (8) 

6 Cubs' meal - an awful mish- 
mash - transport provided 
for those who are sick < 10 > 

7 Sue reporters (5) 

8 Dislike of French examination 
( 6 ) 

9 To back up a woman, just to 
be different (5) 

14 Grit, that’s the answer* (10) 

17 Winning over the listener in 
the finish (9) 

18 Occupy oneself with reading 
German article about an egg 
distributor flsjj) 

19 A pusher - or pro tem any- 
way (8) 

22 The appearance of a page In 
school (61 

23 Get on to a governing body (5) 

25 Out of picture mounts - addi- 

- tkraal supplies wanted (5) 

27 Sound animal given no pro- 
tection (4) 



MONDAY PRIZE CROSSWORD 

No.8,568 Set by VIXEN 

A prize of a Pellkan New Classic 39Q fountain pen. Car the first correct 
solution opened and five runner-up prizes of £36 PeUfcan vouchers will be 
awarded. Solutions by Thursday October 6, marked Monday Cros sw ord 
M68 on the envelope, to the financial Times, 1 Southwark Bridge, London 
SEl 9KL Solution on Monday October 10. 

Name — .... — .... - 

Addr ess. — 


Winners 8*556 

Chris Vye, Cars hal ton, Surrey 
Mrs S.A. Bell, West HaUam, 
Derby 

HJ. Bond, Shirley, Southamp- 
ton 

ZJ. Hctsking, Brq mham, Bed- 
ford 

A Russell, Comberton, Cam- 
bridgeshire 
J. Styles, London SE6 


Solution 8,556 


LJQUOQQDBCIQaH 
□ 0 
QBQ 

a a 
□□a 

a □ 

aaa 

0 

0S 

a 

BHB 

□ a 

SOB 
0 13 

□no 



Mezzanine Capital Corporation 

Limited 

Notlcoto KM fioklere of the Bearer Depositary Receipts (“BDRO 
evidencing Participating Rodaemablo Preference Shares at US 1 
cent each ("Shares") of Mezzanine capital Corporation Limited 
(the “Company") 

Notice of Annual General Meeting 

NOTICE IS HEREBY QIVOl lo the hoklera of the BORs that Chemical 
Bank (Guernsey) Untied ("Vie Depositary") has received notice from the 
Company that the Annual General Meeting of the members of the 
Company wtl be held al Capital House BuBtfng, Bath Street, St. Helen 
Jersey, Channel Islands on Wednesday. 18th October; 1994 at 1100a.m. for 
the purpose or considering and voting an the Mowing matters: - 

1. lb receive and consider the Accounts and Balance Sheet end Reports 
of tfw Directors and Auction tar the year ended 31st May 1994. 

2. Tb reoppolnt Messrs. Price Waterhouse as Auditors of the Company 
and to authorise the Directors to P* their remuneration. 

a, Tb transact any «hor ordinary business wWch may property be 
transacted at an Annual General Meeting. 

BOR holders have the right to attend and speak at the Annual General 
Masting but not themselves to vote thereat. BOR holders may however 
Instruct the Depoetary as to the «erctea on their behaHd the voting rights 
attributable to the shares evidenced by the BORs which they hold. 

inabuctions as to voting must be 0van either to the Depositary or to a 
Paying Agent, Cadet or Eurocfear (a "Paying Agent'') In writing not later 
than Friday. 14th October, 1994 and must he accompanied by the BOR In 
respect of the Oharas tor which such Instructions are given. The Dapoettary 
or relevant Paying Agent must be sstistied that such BDfi Is held in a 
blocked account to its order until after Wednesday, 19th October, 1994. 
toting instruction torn may be obtained from any Paging Agent. 

On deposit of a BOR with or to the order of a Raying Agant the holder 
thereof may obtain a receipt wttioh wffl entitle him to attend and mask at the 
Annual General Mealing. 

BORs deposited with or to the order of e Paying Agent wffl not be 
released until the first to occur of (A) tea conclusion of the above-mentioned 
meeting or any adjournment thereof or (B) tire surrender to the Paying 
Agent, not lees than 48 hours before the time for which such rrreetteg or any 


in respect of each such deposited BDR wttiah Is to bo released dr the BOR 
or BORs ceasing wtth as agreement to bs held to Its ordat The Paying 
Agent shall promptly give notice to the Depositary of such surrender or 


Copies of the Oampany’s Annual Report may be obtained from any of 
the Raying Agents Bated befcnr and Eurodaar and CedsL 

Depositary end Principal Raying Agent 
Chemical Sank (Guernsey) Limited, 

Albert House, PO Ban 92. South Esplanade, 

Sl Peter Rut. Guernsey, 

Channel Mends GY1 4BU 

Paying Agents 

Bantam That Luxembourg SA, 

PO Box 607, 14 Boulevard FD Roosevelt 
Liusmbourg, Grand Duchy of Luxembourg 
Morgan Guaranty That Company of New to*, 

14 Place Vsndflmo, 7B001 Paris, Francs 

by: Chemical Bank (Guernsey) LfrnKed 
Depositary 


St, Peter Port, Guernsey 
Dated 28th September; 1994 


Of broking and jobbing the Peiikan's fond, 

See hour sweetly lie puts your word onto bond. 

0N2fum© 


JOTTER PAD 










FINANCIAL TIMES SURVEY 


USING COMPUTERS IN BUSINESS 


Monday September 26 1994 


T he confusion and uncer- 
tainty which has charac- 
terised the computer 
industry over the past five 
years is mirrored among its 
customers. There has never 
been a greater need for sound 
consultancy and advice as 
techno logical advances provide 
a bewildering variety of 
options for companies looking 
for greater economies and bet- 
ter information. 

At the same time, a new and 
technologicaDy-aware cadre of 
managers is beginning to make 
its presence felt in many com- 
panies. 

According to the Price 
Waterhouse Information Tech- 
nology Review, which moni- 
tors change in the data pro- 
cessing- business: “The good 
news is that the days when IT 
directors joined the board for a 
title and little else may be 
gone. They are now in the 
inner sanctum of policy mak- 
ers. . . It is the rumoured con- 
vergence of the IT director and 
the chief executive officer that 
is the really exciting idea". 

Well, perhaps. The fact 
remains that corporate data 
processing is going through 
some of the most radical 
changes since electronic com- 
puters were first used in busi- 
ness in the 1950s. 

To some extent this is the 
result of developments in com- 
puter technology which are 
making possible new ways of 
doing business. But it is also a 
consequence of a disaffection 
among customers with the 
high-handed attitude during 
the 1980s iff computer manufac- 
turers who attempted to dic- 
tate data processing strategies 
to their customers. 

As a consequence, data pro- 
cessing was one of the first 
capital spending areas to be 
cut back when recession hit 
both in the US and Europe. 
International Data Corpora- 
tion, the business consultancy 
says: “Both corporate results 
and market trends confirm 
that 1998 was the worst year in 
the history of information tech- 
nology in Europe, with a 
growth of only 2 per cent fol- 
lowing five consecutive years 
of decline.” 

It adds: “The information 
technology business is starting 
to bottom out from this nega- 



Racical ch anges ; (lefty tha IBM 701 mainframe, feat introduced in 1952 and (right) a state-of-the-art power team - Computer-vision's CAPOS 5 Rev 4A running on Hewlett-Packard's HP 9000 Series 700 workstation 

A bewildering variety of options 


tive cycle with signs that 
recovery is finally on Its way.” 
£DC estimates that growth 
across Europe is likely to be 
about 4 per cent this year. 

What sort of data processing 
business is likely to emerge, 
however? The apparent recov- 
ery begs a number of impor- 
tant questions. First, are sup- 
pliers of data processing 
equipment truly listening to 
their customers’ requirements 
or are they still intent merely 
on selling the latest technol- 
ogy. relevant or not? 

The shift from mainframes 
to networks of personal com- 
puters and mid-range comput- 
ers (client-server systems) is a 
case in point The basic propo- 
sition is simple: because micro- 
processor-based, distributed 
systems cost less than central 

mainframes it makes economic 

sense to move from main- 
frames to client server net- 
woxkSu 

A result has been a steady 
decline in mainframe revenues 
which has hurt all the large 
computer manufacturers while 
generating business for PC and 
workstation makers. 


Corporate data processing is going through some of the most radical 
changes since electronic computers were first used in business in the 

1 950s, writes Alan Cane 


According to an Economist 
research report “An extraordi- 
nary feature of the recession of 
the earl y 1990s has been the 
propensity for European cus- 
tomers to keep buying (per- 
sonal) computers. There have 
been cut-backs, budget freezes 
and huge numbers of bank- 
ruptcies and redundancies yet 
the PC market has grown by 
12.5 per cent in units terms in 
1992 and by around 14 per cent 
in 1993. Projections for 1994 are 
tha t rigmawl will continued to 
rise and that unit growth could 
increase by more than 20 per 
cent on 1993.” 

But purchase of machinery 
does not automatically trans- 
late into savings. An important 
point is that client-server com- 
puting is different in kind to 
traditional data processing. It 
seeks to spread computing 
power throughout the organi- 
sation, giving a broader range 


of personnel access to informa- 
tion and processing power. 

One Indication of this is the 
way the expression "executive 
information system” - a way of 
extracting and consolidating 
essential information from a 
company's database - has 
fallen into disuse. Today, the 
aim is to provide the appropri- 
ate information to people at all 
levels in a company. 

There is a cost associated 
with an this. According to the 
Gartner Group, which assesses 
business data processing strat- 
egies, client server systems are 
expensive and labour consum- 
ing. For a hypothetical large 
organisation it estimated a 
total cost of ownership over 
five years at $24L8m of which 
less than 20 per cent was the 
cost of hardware. 

An analysis published by 
International Business 
Machines, which has a vested 


interest in mainframe sales, 
suggests that the cost per user 
per year of a PC network is 
$6,44$ while the comparable 
cost for a mainframe user is 
only $2,282. It goes on to sug- 
gest the average cost per trans- 
action for a PC network is 43 
cents but only three cents for a 
mainframe-based system. 

W hat cannot yet be fac- 
tored into the equa- 
tion is the business 
benefits of either approach. In 
general, client-server comput- 
ing would seem to offer greater 
flexibility and applicability 
than mainframe systems bnt it 
is still in an early state in its 
development. The pros and 
cons of moving to client-server 
computing need to be weighed 
carefully. 

A second question concerns 
business process re-engineer- 
ing (BPR), an essentially sim- 


ple idea which has established 
itself quickly in the canon of 
management jargon. BPR 
involves changing the way a 
company carries out its busi- 
ness operations to mak e them 
more effective rather than 
automating what already 
exists. It is a little like rede- 
signing an aircraft in flight. 
Great skill is required to pre- 
vent a crash before the process 
is complete. 

Nevertheless, a majority of 
the world's largest companies 
claim to be reengineering ail 
or part of their business as 
they move from the huge, cen- 
tralised operations with hierar- 
chical chains of command 
focused on products which 
were typical of the 1980s to dis- 
persed partnerships conferring 
local autonomy on their man- 
agers with a sensitivity to con- 
sumer requirements. The Price 
Waterhouse review notes that 


there are now two distinct 
types of BPR. first, where a 
business process is trans- 
formed. but the business 
remains the same. It gives as 
an example a chemicals com- 
pany which eliminated 42 
kinds of invoice and its order 
office by switching to elec- 
tronic data interchange. 

Second, where the business 
itself is transformed with new 
objectives and a new organisa- 
tional structure. A building 
society, for example, reconsti- 
tuted its branches as customer 
service centres staffed by sales- 
people with automated cash 
machines for deposit and dis- 
pensing. The key is that tech- 
nology is used to implement 
change rather than the other 
way about Mr Thomas Daven- 
port of Ernst & Young in his 
book Process innovation makes 
the need for continuous devel- 
opment plain: “A company 
that does not institute continu- 
ous improvement after imple- 
menting process innovation is 
likely to revert to old ways of 
doing business”. 

A third question about the 
new data processing environ- 


1N THIS SURVEY 

□ Outsourcing: Advan 

tages and disadvantages 
reviewed Page 2 

□ Security breaches can be 

costly as well as embarrass- 
ing Page 3 

□ Multimedia still has to 

win a widespread accep- 
tance Page 4 

□ Client servers: their intro- 

duction has been remarkably 
slow Page 6 

□ Health and safety is rap- 

idly becoming an urgent 
issue Page 7 

□ Project management 

aims to keep surprises to the 
minimum Page 8 

□ Portable computers; one 

ol the fastest- growing mar- 
ket segments Page 8 

□ Editorial production: 
Philip Sanders 


ment concerns outsourcing. 
Many large cotnpnmes are 
beginning to treat data pro- 
cessing as if it were a commod- 
ity such as gas or electricity, 
contracting with a third party 
for its supply at an agreed ser- 
vice level for an agreed price. 

The UK government’s “mar- 
ket testing" programme for 
services including tax and 
vehicle registration has high- 
lighted what is for many com- 
panies a controversial area. 
Outsourcing can be seen alter- 
natively as giving away the 
company’s crown jewels or giv- 
ing up a non-core activity. The 
key is the quality* of the deal. 

Business Intelligence, a mar- 
keting consultancy, noted ear- 
lier this year that many com- 
panies have been tempted by 
substantial apparent cost 
savings into poorly thought 
out contracts that may cost 
them more than maintaining 
their data processing in-house. 

This survey deals in depth 
with these and other issues 
vital to companies as they 
move into the new era of busi- 
ness data processing. The indi- 
cations are that they must 
remain on their guard. Suppli- 
ers may pay lip service to cus- 
tomer power but may have lit- 
tle intention of letting them 
exercise it. 




THE IT 

Specifically the Ei»e?it offers: 


Pre-scheduled Meetings With Suppliers 

Via a unique computerised appointment system delegates are able to pre-arrange meetings with 
the senior executives from the supplier companies on board. These meetings are scheduled during 
business hours and over mealtimes, and each participant works to their own individual itinerary. 

Conference Options 

A tailor-made programme of conference sessions and spin-off workshops will be presented 
to delegates in advance of the Event. They may pre-select sessions of particular interest and 
these will be integrated into their personal itineraries. 

Delegate Networking 

The senior dedsion-makers involved in the research leading to the launch of The IT Directors 
Forum consistently emphasised the value they place on being able to network with their peer 
group. Delegate led think-tank and workshop groups combined with informal meetings will 
provide you with unprecedented opportunities to compare experiences and generate new ideas. 


"It will he the largest and most important gathering 

of IT Directors in 1995 CtanUf vmtu ■ 


Richmond Events, the organisers of The IT Directors Forum, specialises m organising 
senior-level, ship- based conferences. These include: 


CITY IT; The annual forum for IT decision- makers from the UK's Financial Services Industry. 
;* launched in 1990. 


c ' 

r V 

’•Jjri 


, . , COMDEF, The annual forum for leading computer value added resellers, system integrators 
OOIKX4&£^ ^ and distributors, launched in 1991. 


to review and develop your future FT strategy. 


From the 27 - 30 April 1995 some 300 leading IT decision-makers from 
the UK’s Corporate, Government and Public Sectors will be attending 
The IT Directors Forum on board the P&O ship Sea Princess. 


Over two days and three nights they will participate in an intensive 
programme of business meetings with leading suppliers, strategic 
conference and workshop sessions and invaluable networking with 
their peers. 

"Delegate attendance at Tire IT Directors Forum is free of charge but strictly 
by inritation only . " 


The IT Directors Forum, 27-30 Aprin 99s. sea Princess 


IF you would like further details jbuui The IT Directors Forum, please (deplume Ahwyii I )awkiiu 
on OBI JjJ 2422, l/ax 081 3?- 0113) or altemanvdy complete and remm this form - 
Richmond Events ltd London House ?«S - Z3S Lower Mori lake Ro*o Richmond Sumbi »w* ns. 
Hour tend me! 

| J Delegate ^formation j | ExhorTOR/SumtER information 

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Company. ...... ■— , ...... — . .. - — ■ — n — » ■ — : 

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FINANCIAL TIMES MONDAY SEPTEMBER 26 19$4 


OUTSOURCING: ADVANTAGES 


USING COMPUTERS IN BUSINESS 2 

■ t is easy to view outsonro- OUTSOURCING: DISADVANTAGES 


In the hands of the experts 


The concept of outsourcing is 
not an invention of the com- 
puter age. Any company that 
hires external cleaners, or 
relies on a local caterer to sup- 
ply board meetings with sand- 
wiches is in the business of 
outsourcing. 

The established practice of 
contracting out necessary ser- 
vices and the complex world of 
managing IT systems collided 
with a vengeance when compa- 
nies began to evaluate comput- 
ing costs. By the late 1980s it 
was all too evident that IT pro- 
jects were prone to run over 
budget and suck in extra staff 

In the financial world some 
institutions found that a dis- 
turbing proportion of their 
workforce was employed in the 
IT function. This triggered 
political frictions and 
prompted a movement aimed 
at putting IT firmly back in its 
place, as a critical but subordi- 
nate function of the core busi- 
ness. 

Here lies the real attraction 
of outsourcing. Pick a supplier 
and hand over the entire 
responsibility for running IT 
within an organisation. Bud- 
gets are fixed in advance, and 


Budgets are fixed in advance, and 
the supplier has to worry about 
any unforeseen expense, writes 

Michael Dempsey 


the supplier has to worry 
about any unforeseen expense. 
Recruiting specialist staff is 
left to the outside contractor, 
who may take over the custom- 
er's own IT department 
The key to any outsourcing 

H«il is the Ser- 

vice Level Con- 


Some law firms have fas- 
tened on the world of outsourc- 
ing as a lucrative new field. 
Legal specialists in the out- 
sourcing area are not common, 
but hiring a lawyer with fixe 
right experience Is essential in 

order to get the 

■ . most out of the 


M WlZ 7hW Pa** Maintenance 

long as the law- (TPM) can involve hiving The IT sector 

yers have done off parts of the loves jargon, so 

i°*. the technology mandate to f T^ riet ? of 

SLC should be J ...... terms have 

natprhoht a qualified contractors been adonted 


yers have done off par 
thrir ioh the technology 
SLC s h o uld be , m rr^w 
watertight. A t * uaBfiod 
well-drafted 

SLC embraces the question of 
tum ding over the contract to 
another contractor or return- 
ing it to the customer. 

In practice, the business of 
outsourcing cannot afford dis- 
gruntled users. Any leading 
outsourcer will co-operate in 
handing over business to a 
rival with a smile, however 
forced. 


of the loves jargon, so 

nandate to a variet l of 

terms have 
intractors been adopted 

to describe 
aspects of outsourcing. 
Systems Integration is a proj- 
ect-based approach, aimed at 
getting one defined system up 
and running. Facilities Man- 
agement is a common term to 
cover outsourced computer 
operations, while Third Party 
Maintenance (TPM) can 
involve hiving off parts of the 
technology mandate to quali- 


fied contractors. 

Whatever the terminology, 
outsourcing Is big business. 
When Computer Sciences Cor 
poration clinched a compre- 
hensive outsourcing deal with 
British Aerospace (BAe) last 
year, the contract was valued 
at £3bn over a 20-year period. 
CSC is taking 1,450 BAe 
employees under its corporate 
wing, and will develop and 
maintain critical computer 
resources right across BAe’s 
civil and military business 
units. Computer maker Boll 
has won £35m worth of con- 
tracts since it set up Afbesa, a 
separate outsourcing division, 
in January. 

AIL of these contracts allow 
the user to benefit from the 
supplier’s accumulated experi- 
ence. As (he outsourcing sup- 
plier wins more business it 
acquires greater technical wis- 
dom. 

It should not concern the 
user that bis outsourcing com- 
pany also works for a commer- 
cial rivaL The point is that the 
daunting but vital function of 
IT is in the hands of the 
experts. And the computer 
budget has been tamed at last 


CASE STUDY 


Olivetti wins 
five-year 
£1 1 m deal 


Huw Medcraft is head of 
technical services at Maiden- 
head-based airline reserva- 
tions giant Galileo. Galileo is 
a leading player in the highly 
competitive world of Comput- 
erised Reservations Systems 
(CRS), servicing UK travel 
agencies. 

IT is at (he heart of Galileo’s 
operations. Including periph- 
eral derices such as printers, 
Medcraft is responsible for 
24,000 high-technology items 
attached to Galileo’s UK net- 
work. 

He has just assigned the role 
of keeping those machines up 
and naming to a third party, 
Olivetti, in a five-year film 
deal 

Medcraft explains that his 
organisation already out- 


sourced a number of services. 
But IT was different 

“Outsourcing only becomes 
a big issue when your own 
staff are performing the task 
that is going to be contracted 
out” With an annual IT spend 
in the region of 220m, the IT 
operation is certainly a signifi- 
cant item on Galileo's balance 
sheet But It doesn’t make 
sense to take care of every 
detail on an in-house basis. 

“In an organisation of our 
size, it’s not cost-effective to 
support all those workstat- 
ions." Olivetti’s outsourcing 
task is restricted to engineer- 
ing support, including soft- 
ware maintenance. 

Galileo has decided to retain 
control of the network that 
binds some 2,400 travel agents 
to Galileo. 

If Medcraft is committed to 
the idea of outsourcing, why 
not go the whole way? “We 
have always seen the network 
as a source of competitive 
advantage. It is the ability to 
deliver airline tickets that is 
core to our business." 

Specifically, Medcraft 



Mode i aft outsourcing contract 
shotfd produce a saving of £2m 


believes there is nothing to 
gain and everything to lose by 
outsourcing this function. “We 
wouldn’t save money and we 
could lose control of the stra- 
tegic elements of our busi- 
ness." 

G alile o expects to male* real 
savings on those aspects of its 
work that have been out- 
sourced. Despite initial 
charges, such as the termina- 
tion of property leases, Med- 
craft reckons the outsourcing 
contract will produce a saving 


of over the five yean. 

The handover date was 
August 1 this year. But the 52 
engineers were told that they 
were going to a new employer 
at the beginning of May. “We 
want to keep those skills on 
our side even though the peo- 
ple wifi be working for Oli- 
vetti. We provided a clear 
opportunity for the staff to 
talk the deal through with 
their new employer." 

Medcraft believes that keep- 
ing staff happy is an integral 
part of successful outsourcing. 
And Galileo has kept its grip 
on its business objectives. 

“Outsourcing has not 
allowed us to relieve ourselves 
of any obligations. We still 
deliver the same services, hut 
now our managers can focus 
on improving the product for 
the aid customer." 

And the attraction of outr 
sourcing is mutual. Galileo 
has just lost Graham Harrison, 
its commercial director, to out- 
sourcing gian t EDS . Harrison 
has been a ppoi n ted managing 
director of the EDS 
services division. 


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i t is easy to view outsourc- 
ing as a panacea, the means 
to shrug off the tiresome 
responsibility of running an IT 
operation parallel to the core 
business. But hiving off a criti- 
cal business function can have 
serious drawbacks, writes 
Michael Dempsey. 

Data is an important asset 
and the value of this asset 
often depends on contidential- 
ity. Virgin Airways discovered 
to its cost that a third party 
cannot always be trusted to 
play by the book. British Air- 
ways rein fn fain pH Virgin's com- 
puter booking system and BA 
staff accessed the Virgin data 
to poach customers mid ana- 
lyse sensitive information an 
route profitability. 

Then there Is the risk of 
over-reliance. It is absolutely 
vital to ensure that any out- 
sourcing or facilities manage- 
ment (EM ) contract contains a 
clear exit route. This should be 
one that suits the customer, 
not the supplier. Lawyers prac- 
tising in the area recommend 
regular review periods and 
caution against contracts that 
lock the customer in for five or 
10 years. 

Jane Rawlings is a solicitor 
specialising in computer law at 
City law firm Charles RnsseH 


A clear exit 
route is vital 


She wrote the FM contract that 
retail giant Next used to 
employ IBM. She is a dam a nt 
that outsourcing contracts 
only make sense if the cus- 
tomer enters into the deal with 
his eyes open. 

“You must set up exit plans; 
describe the responsibilities of 
the outsourcing provider.” 

Employees are a potential 
pitfall If foe IT operation, is 
tak*«n back in-house, the cus- 
tomer can wind up gaining 
staff it never wanted in the 
first place. “If you can’t use 
Hi pm, then you’ve got to make 
them redundant, and that 
involves more costs." 

Rawlings notes that some 
outsourcing companies insist 
on the transfer of software 
licences. Getting toe legal 
Tirtmrta to use commercial soft- 
ware reassigned when the out- 
sourcing contract ends can be 



John UttiK ’Si^plaia are faBrtg to 
defivar on tha partnership’ 


a nightmare. “You should be 
reluctant to assign software 
licences to a third party. 

“Most software licences pro- 


hibit sub-licencing” 

PA Consulting has ques- 
tioned a large number of busi- 
nesses on their views about 
outsourcing. The companies 
responding to the IT Sourcing 
Survey, due to be published in ; 
October, represent £60flm of 
outsourcing contracts.' It 
emerges that worries about the 
impact on personnel who are 
transferred from the customer 
to the outsourcing client 
abound. Of foe respondents, 43 
per cent are very concerned 
about posable damage to staff 
morale. This dilemma has 
eclipsed the question of over* 
dependence on the supplier. _ 

Maintaining the quality of 
the service came next, with 38 
per cent of respondents citing 
th(a as a negative factor In the - 
outsourcing equation.. Then 
there is lack of flexibility. 

John little, an IT partner at 
PA who compiled the survey, 
notes that among the 25 per 
cent of companies who are 

dptqrmfaTPri to reject OUtSOQTC- 

ingand bring IT back in-house, 
one lesson was dear. 

“The message coming out is 
that companies are willing to 
consider abandoning outsourc- 
ing because suppliers are fail- 
ing to deliver on the partner- 
ship." 


' phil iP 

The 1 " 




’.-j* 


CASE STUDY 


Pragmatic 
approach 
to defeat 


Norwich Union Is a financial 
services group that decided to 
move into private healthcare 
in 1990. Norwich Union 
Healthcare (NUH) started life 
with 25 staff and a business 
plan aimed at creating the 
third-largest private health- 
care company in the UK. 

With an urgent need to get 
r elev ant systems functioning, 
NUH decided to torn to an out- 
side supplier. The existing 
Norwich Union organisation 
possessed formidable comput- 
ing dolls, but NUH wanted to 
buy in expertise in the specific 
area of private healthcare. It 
turned to Electronic Data 
Systems (EDS) to recruit key 
knowledge. 


EDS is the US company that 
tirndw its name in outsourcing 
before the term had been 
invented. Across the Atlantic, 
healthcare had bee n a staple of 
its business. NUH called in 
EDS to simply a bag of health- 
care programs. 

Mike North joined NUH as 
rr manager in April 1992. ffis 
Twwmdinte task was to oversee 
the transfer of the IT function 
back to the organisation, 
while the FM provider refis- 
qtdahed responsibility. 

Why did the contract enjoy 
such a brief life? “We 
employed EDS to get the busi- 
ness off the ground," says 
North. “Bat we always said 
we'd renew the contract each 
year." 

This r ig or o u s scrutiny may 
have made lift insecure for the 
external supplier, but it 
allowed the company’s own IT 
experts to sell their skills. 
“EDS had to compete against 
the in-house resources. The 
internal competition proved 


EDS bad given NUH a vital 
kick-start It bad provided the 
security and knowledge to get 
the business working, accord- 
ing to North. But NUH was 
smart enough not to become 
reliant on one outside contrac- 
tor. When the internal man- 
agement services divirion won 

a review In December 1991, 
toe third party had to hand 
over toe reins of power. 

North admits that toe ret ur n 
of IT operations to the core 
company was not totally trou- 
ble-free. “We use a job-schedu- 
ling language, a program 
whose purpose is to ten toe 
computer when to run other 
programs. EDS don’t ran tins 
language. So all of that system 
had to be rewritten and 
tested." 

Nevertheless, North praises 
IDS for their pragmatic 
approach to defeat at the 
hands of the customer’s IT 
experts. “They recognised that 
their job was essentially a 
short-term one.” 

What really drove NUH to 


abandon reliance on an out- 
side source? Money is the key. 

“We could do it cheaper 
in-house, and It was a better 
long-term i n vestment in terms 
of the commitment of the It 
staff." 

North discloses an Important 
drawback to outsourcing: “We 
get a better commitment from - 
people to the company when 
they’re with the company." 

He is not hostile to ontoouro- 
ing but he believes that it is 
best used under particular chs : 
cumstat! ces. “If you’ve got' a 
skills shortage, then this b a 
good opportunity to get' toe 
expense of running IT out of 
your hair." 

As things stand, NUH now 
employs more than 500 staff, 
with an annual IT budget of 
£L8m. It can lay daim to 7 per - 
cent of the total private medi- 
cal insurance market, with 
528,000 customers. 

North adds; “I wouldn’t rule 
out going back to EDS, Ifttay 
came up with a good business 
solution." 



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Michael Wiltshire highlights advances in desktop publishing 


NATIONAL 


Buzzing with prospects 


Advancing technology is 
; rapidly changing the definition 
of basic desktop publish- 
ing- or DTP, as it Is called 
— since almost all media mate- 
rial can now be processed on 
today's powerful desktop com- 
puters. 

While many users in the past 
decade have thought of DTP 
merely as a way of producing 
printed documents, the indus- 
try is buzzing with prospects of 
the new electronic infrastruc- 
ture that goes far beyond put- 
ting ink on paper. 

Today’s powerful desktop 
computer systems can also 
help turn a brochure or book 
into a compact disc (CD-ROM), 
or bring its contents on-hue, 
delivered through a computer. 

Publishing on electronic 
media, particularly Internet 
which links 5L2m computers 
and 25m users in 137 countries, 
was a key topic at this month’s 
Seybold publishing conference 
in San Francisco. 

“In no way is publishing just 
getting ’ink on paper,’ 
although that will surely 
remain at the core for many 
years to come," comments 
David Heath of Apple Comput- 
er -the largest single com- 
puter vendor to the publishing 
industry. 

There are several key DTP 
markets. At the the lower-end, 
there is the personal or “office 


DTP" sector, which includes 
in-house publishing for the 
promotion of products or sea- 
vices. 

Then, at the higher end, 
there is professional DTP, 
described by Apple as “Pub- 
lishing for profit.” This 
includes graphic art services 
and pre-press work for adver- 
tising and publishing of news- 
papers, books and magazines. 

In the past four years, the 
complex DTP market has fur- 
ther fragmented. 

Apart from increasing appli- 
cations for electronic lay-out 
tools by designers and adver- 
tising agencies, corporate pub- 
lishers are producing long, 
“content-driven’* technical doc- 
uments and reports which may 
range from, say, 100 to 3,000 


rTI 



Horn O’CmL ’A lot Of Birarfea 
are using tttis system 1 


In this sector, personal com- 
puters with Windows packages 
are increasingly evident 
In a third development, fea- 
ture-rich word processing pack- 
ages are infringing on the tra- 
ditional DTP market 
Increasingly, businesses, 
educators, governments and 
individual computer users 
need systems to author, access 
and work with the emerging 
electronic base of information. 
This aggressive focus on 
emerging technologies for 
what is called “information 
authoring,” is also leading to 


mergers in the DTP software 
industry. 

Speed of use, cost-cutting, 
advanced software and colour- 
management for paper docu- 
ments are among the hot 
issues at the higher end of 
DTP. Another important topic 
is tiie ability to view informa- 
tion on-line, using electronic 
distribution of documents. 
Publishing is seldom the prod- 
uct of just one or two people. 

While increasingly powerful 
PCs are coming to toe market, 
the Apple Mac is still dominant 
in the pre-press process, both 
for graphics, advertising and 
design agencies. 

Apple has now introduced 
the Power Macintosh, a new 
“platform” based on the Pow- 
erPC, developed jointly by 


IBM, Apple and Motorola. The 
Power Mac is dalxned to otter 
from two to 10 times the per- 
formance of currant Mac and 
Windows-based computers. 
This speed permits faster use 
of graphics packages, allowing 
designers more time to explore 
varying approaches. 

For example, the intricate 
process of picture colour- 
matching can now be achieved 
in a fraction of toe time it took 
in the past Publishers can 
therefore cut costs while han- 
dling more complex docu- 
ments, while also expanding 
into new media beyond ink on 
paper, eventually integrating 
sound, video, animation, ***** 
and still images. 

For users of DTP systems, 
toe information explosion via 
the desktop computer is also 
leading to Increasing demands 
for document data man- 
agement, allowing rapid levels 
of access before the final docu- 
ment is assembled. 

“There’s no need to send 
reams of printed information 
around companies now," sug- 
gests Fiona O’Carroli Euro- 
pean marketing manager of 
Frame Technology, the US doc- 
ument publishing group. 
“Users can rapidly view well- 
laid-out documents on-line or 
via CD-Rom disc. A lot of 
libraries, for example, are 
using this system.” 


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INTO THE FUTURE 


Systems 
for the 
digital age 


Two pioneering companies in 
the DTP world - Aldas and 
Adobe - announced their 
merger in March this year 
with the aim of providing 
systems to meet the new 
demands for distributing 
information in the digital age. 

Both companies have for 
long set world DTP standards. 

Adobe, founded in 1982, 
developed its high-level Post- 
Script page description which 
allows users to output text to 
printers such as toe Apple Las- 
erWriter. 

Last year, Adobe launched 
the Acrobat family of software 
products to capture type, 
images, colour and lay-outs 
and make them transmissible 
between computers that have 
nothing in common - except 
Adobe Acrobat 

Aldas, founded in 1984, 
developed Aldus PageMaker, 
which allows people to design, 
edit and produce printed com- 
munications electronically. 

More than 2.5m copies of 


PageMaker have beat sold. 

For Macintosh and Windows 
users, PageMaker is the pio- 
neering program for turning 
the compute- screen into an 
Integrated paste-up board, 
complete with, professional 
design rids. 

Both companies are innova- 
tors In creating what they can 
“the desktop broadcasting rev- 
olution’* with non-linear digi- 
tal video editing and digital 
post-production production. 

F urth er m ore, a number of 
repro houses are moving 
towards the Power Macintosh 
-“by having this extra speed, 
it gives me another week’s 
work in year,” argues one pub- 
lisher. 

Speed and compatibility 
between desktop computers 
are important to users 
- “there is also a clear move 
toward cross-compatibility, 
enabling, for example, Macs to 
’talk’ to Compaq machines," 
says Martin Hollis, an analyst 
with the Ashdown research 
group. 

Among the innovative pre- 
press products coming to tine 
market is Kodak’s CD portfo- 
lio software. 

This Is toe latest addition to 
the company's range of soft- 
ware that afiows desktop com- 
puter users to create their own 
Photo CD discs for developing 


Interactive sound and picture 
presentations. 

Meanwhile, basic DTP sys- 
tem prices have fallen dramat- 
ically, particularly at the 
lower end. “At £50 to £100, 
almost anyone can afford a 
DTP software package for 
home or small business use.” 
comments Peter Foster, a con- 
sultant for International Data 
Corporation. Training was 
once a bottleneck for new DTP 
entrants, but basic packages 
are now far more “intuitive” 
and user-friendly. 

Thus, for toe novice, learn- 
ing the basics of DTP has 
never been easier. Microsoft’s 
“Publisher" has proved to be 
one of the most popular pro- 
grams for beginners. 

New software allows uon- 
professlonri users to easily 
drop graphics and images into 
business documents, creating 
stunning forms, flow-charts 
and reports. 

As prices of equipment fail, 
especially at the lower end of 
DTP, users are spoiled for 
choice. A typical system 
includes a personal computer, 
a high resolution monitor, a 
“mouse” or hand-controlled 
digitiser for positioning text 
and graphics, plus software for 
wont-processing, graphics and 
page . composition, and a laser 
printer. 


Colour is increasingly signif- 
icant at all levels of DTP. QMS 
have recently launched toe 
Magicolour desktop laser 
printer, priced at about 
£10.000, offering colour output 
sig n ifi c antly higher thaw col- 
our thermal transfer and high- 
end colour laser copiers or 
printers. 

The financial sector leads 
toe way in b usiness applica- 
tions for DTP with the produc- 
tion of rapid and attractive 
overnight reports for inves- 
tors. For example, Smith New- 
conrt, the international stock 
brokers, have used DTP for 
years; the firm Is now develop- 
ing its DTP system as an inte- 
gral part of an internal com- 
munications system. At the 
heart Is the software paring p 
Adobe PageMaker 5.0 which 
toe company runs worldwide 
on both PC and Macintosh 
platforms. 

Mike Frost, publishing . 
systems analyst at Smith New- 
conrt in London, says toe aim 
i$~ to make the system even 
faster to include' 
up-to-the-minute information- 
sharing on a worldwide basis. 

Linked to the company’s 
electronic mall system, , its 
reports can be published 
simultaneously in London, 
New Tork, Tokyo and Hong 
Kong. 





ACRES' 




FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 


111 


★ 

USING COMPUTERS IN BUSINESS 3 






Philip Manchester on security 

The walls have 


come 

Breaches of security in 
computer networks are not 
only embarrassing - they are 
also costly. A survey of UK 
companies conducted by the 
National Computing Centre 
(NCC) this year put the aver- 
age cost of a security breach at 
more than £9.000. The survey 
also revealed that four out of 
five companies had reported 
security breaches in the past 
two years. 

The NCC survey describes a 



Eubanks: “WUi today's networks, 
security is an architectural issue* 


wide range of security prob- 
lems and highlights how 
important the issue has 
become - especially since the 
spread of computer networks 
and powerful desktop comput- 
ers. 

Malicious network hackers, 
‘Virus'* software, criminals and 
even staff with a grudge are 
just some of the possible secu- 
rity threats which are the inev- 
itable result of opening up 
computer networks and 
distributing computer power. 

“With today's networks, 
security is an architectural 
issue. As we move to distrib- 
uted computing by replacing 
the central mainframe with 
networks of PCs. it makes 
systems more vulnerable,” 
says Mr Gordon Eubanks, chief 
executive of US security soft- 
ware specialist Symantec. 

Tt is a bit like the change 


down 

from guarding a house with 
one entrance to guarding a 
house with 10 - it is not an 
insoluble problem but it needs 
companies to take action," Mr 
Eubanks continues. 

Mr Chris Hook, a managing 
consultant at the NCC who 
specialises in security, says: 
"The walls around the system 
have come down and control 
has shifted to end users. They 
do not know how dangerous it 
is not to take precautions 
because they have not been 
trained." 

He says staff tr ainin g is one 
of the keys to making com- 
puter network more secure and 
that there is room for improve- 
ment In the NCC survey, com- 
panies were asked if they 
trained their staff to follow 
security procedures and most 
said that they did. But when 
asked if the procedures were 
actually followed, the picture 
was very different "Only 27 
per cent were following the 
procedures in practice. This 
shows that companies think 
they have trained their staff 
when in fact they need to 
explain why the procedures are 
needed." Mr Hook observes. 

In addition to proper train- 
ing, Mr Hook also recommends 
that companies must plan both 
for preventative security and 
for coping with breaches. 

"You have to think through 
the implications of a security 
breach on the business and 
identify the important 
threats,” says Mr Keith Dunni- 
cliffe. a security consultant at 
Group Bull in the CJK. 

“There is a danger that peo- 
ple get carried away with tech- 
nology and pour a lot of money 
into anti-virus programs, log-in 
systems and the like. But you 
must step back and look at the 
simple things - the company 
procedures; who has access to 
the system; and so on. Then j 
you can see the risks and the j 
costs of coping with them in a j 
business context” 


Joia Shillingford takes a look at groupware 

For collaborators 


“The personal computer 
caused people to go off and 
work on their own. What com- 
panies now want are products 
which will enable groups of 
workers to collaborate more 
effectively." So says Michael 
Skok, chairman and chief exec- 
utive of European Software 
Publishing (ESP). 

A growing number of these 
products - often referred to as 
groupware - are becoming 
available. The research consul- 
tancy Ovum divides groupware 
into four categories: 

• Workflow products, which 
control the How of work 
between users. These include 
Staffware, from the UK-based 
company of the same name 
and the Action Workflow Man- 
agement System from US com- 
pany Action Technologies. 

• Intelligent messaging prod- 
ucts, such as BeyondMail, dis- 

CASE STUDY 

Tool will 
aid team 
working 

Accountants Ernst & Young 
are using Lotos Notes to sup- 
port a move to a (latter organi- 
sational structure. They 
wanted a tool which would aid 
team working and provide bet- 
ter information on which to 
base decisions. 

Notes software serves three 
functions: 


tributed by UK -based ESP. 
BeyondMail can filter mes- 
sages and distribute informa- 
tion according to certain rules 
— for example, all mail from 
the boss goes to the top of the 
queue. It also provides some 
workflow-like features. 

• Niche groupware applica- 
tions, such as group schedu- 
ling and meeting support. 
Videoconferencing is some- 
times regarded as a form of 
groupware - especially if video 
images can be displayed in a 
window on the user’s PC. 

• Groupware suites (for exam- 
ple. Lotus Nates) which inte- 


• It makes it easier for teams 
of workers to share Informa- 
tion even if they are not at the 
same site. 

• It simplifies the task of 
extracting information from 
the company's central 
systems, or adding it 

• It is being used to build a 
number of new databases. 

The system Is partly imple- 
mented and Ernst & Young is 
in the process of rolling it out 
to 2.000 of its partner-manag- 
ers. Within tiie UK, people in 
Glasgow can see the same 
information as people in Lon- 
don. 

The firm is also be ginning to 
use Notes internationally - for 


grate a variety of groupware 
functions, such as information- 
sharing and conferencing. 
Ovum believes that groupware 
suites will become the domi- 
nant area of the groupware 
m arket, replacing office auto- 
mation systems. 

Notes dominates the group- 
ware market, with Lotus claim- 
ing sales of about lm copies. 
Microsoft is planning to intro- 
duce a rival product next year 
called Exchange Server, which 
will run under its Windows NT 
operating system. This will 
give users on PC networks 
access to scheduling, document 


example, in the US. 

“There is a lot of opportu- 
nity to share information on 
clients across offices,” accord- 
ing to Mark Bushel], Lotus 
Notes Project Manager at 
Ernst & Young. For example, 
staff must add meeting min - 
utes to Notes, and these can be 
looked at by others hi their 
team. Action points can be 
included in the meeting notes 
bnt these can only be seen by 
the people who are meant to 
cany them out 

When any team members 
who have not attended a par- 
ticular meeting next go into 
Notes, they will see a small 
meetings symbol (or icon). 


management, electronic mail, 
electronic forms, directories, 
voice mail and faxes. 

Lotus and Novell, which has 
acquired WordPerfect, also 
plans to introduce new messag- 
ing-based groupware products 
next year. Other players in this 
market include office automa- 
tion suppliers, such as AT&T 
G1S, ICL, Digital Equipment 
and Uniplex, who are adding 
collaborative features to their 
products. 

Ovum says the total market 
for all types of local-area net- 
work-based groupware is 
already about 5700m in the US 


This will have a number on it 
to show them bow many new 
documents there are in the 
database that they have not 
read. But if they are pressed 
for time, they can ask just to 
see the action points relating 
to themselves. “The whole sys- 
tem is geared towards telling 
you what's new and telling 
you how to find it,” says Bush- 
el!. 

He believes the key to suc- 
cess is to make Notes part of 
users' daily routine. However, 
Notes can fail if a central 
department simply asks people 
to add information that is of 
no benefit to them. 

Notes can also be used to 



Mchael Skok: European Software 
Publishing's chief executive 


and. Europe and it expects this 
to grow to S22bn by 1998. It 
predicts that growth rates will 
be high until 1995. after which 
more moderate rates of 15 per 
cent a year can be expected. 

The benefits of groupware 
can include reduced meeting 


disguise the difficulty of other 
systems. Ernst & Young has a 
big Oracle database containing 
client and contact information. 
“It’s not very easy to get data 
out of it, so we're providing 
access via Notes.” says Bush- 
elL 

Users can update the data- 
base through Notes or even 
add additional comments 
directly into Notes. The new 
Oracle data and the comments 
in Notes can then be viewed 
together as if they were stored 
in one place. 

Lotus Notes can cost as little 
as 9230 per person for volume 
purchases in the US. according 
to Bushell. But he says it usu- 


times. improved information 
sharing, and the speeding up of 
routine processes. But it is all 
too easy to waste money on it. 

One problem is that users 
are not always willing to share 
information. Senior managers, 
in particular, like to hoard 
information, according to a 
Reuters survey on Information 
Misers. 

This means that it is very 
important to monitor the level 
or usage new systems are get- 
ting after they have been intro- 
duced. If usage is low, then 
something can be done about 
it 

Roger Whitehead, consultant 
and editor of the Groupware 
News newsletter, warns that: 
“Groupware is no more able to 
influence group behaviour 
than a keyboard unless it is 
implemented as part of a will- 
ingness to change.” 


ally costs a bit more in 
Britain. In addition. Ernst & 
Young is using Infopump soft- 
ware from US-based Trinzic to 
link Notes to its existing data- 
bases. This costs about $20,000 
a pump and a large organisa- 
tion will probably need sev- 
eral. 

Achieving a return on this 
investment can take some 
time. Bushell says: “It can 
take anything from two to six 
months before people get used 
to Notes. Once they do, they 
come to depend on it and bene- 
fits can include fewer meet- 
ings and better management 
of projects that involve several 
sites." 


nfc re helping our clients 
write the book on customer service. 


NATIONAL SURVEY 

Sabotage 
incidents 
most costly 

Not surprisingly, companies 
are reluctant to talk about 
their security problems. It is 
acutely embarrassing and 
makes them vulnerable to fur- 
ther breaches. 

This reluctance Is reflected 
in tbe National Computing 
Centre (NCO survey published 
in July. Of the 850 UK compa- 
nies who replied to the survey, 
only 74 were prepared to talk 
further about specific security 
breaches. The NCC inter- 
viewed 25 companies which 
generated 31 case studies. 
These studies, together with 
seven farther NCC studies are 
published in the survey. 

The NCC notes that tbe 
majority or the incidents dealt 
with viruses (16), theft of 
equipment (11) and unauthor- 
ised access (8). A few sabotage 
incidents were also reported. 

Hie incidents of virus infec- 
tion' range from the relatively 
trivial to the very serious. One 
small company encountered 
problems from someone acci- 
dentally introducing the 
so-called “Michelangelo” virus 
via a golf program. It cost 
about £2.000 to put right and 
caused no real problems. 

A large food and drink com- 
pany qpoted in the survey was 
faced with a more serious 
vims problem following 34 
redundancies in its informa- 
tion systems department A 
vims called Form, which 
destroys data, was acciden- 
tally introduced into a local 
area network of 40 personal 
computers: 

“A PC user took a blank 
disk from a box and formatted 
it on her PC. She then copied a 


file to the disk and took it to 
another PC to malm use of the 
laser printing facilities. 
Unknown to the user, the 
“blank” disk had bean infected 
with a version of Form then 
replaced in the box.” 

The incident cost tbe com- 
pany £50,000 in time and effort 
to put right and it has since 
introduced vetting procedures 
on all incoming disks. 

Sabotage incidents of this 
type - although rare -are the 
most costly. It cost a large 
company in the information 
technology sector an estimated 
£33,000 to recover from dam- 
age done by a disgruntled stu- 
dent The student managed to 
“hack” into the company net- 
work using a dial-up modem 
and an unauthorised account 
number. Files were deleted 
and derogatory messages were 
sent through tbe electronic 
mail system. 

The student was later 
charged and convicted under 
the Computer Misuse Act, 
receiving a six-month 
suspended sentence. 

Even relatively trivial inci- 
dents can mean significant 
costs in the long term. A gov- 
ernment department notes 
that, although it cost only 
£500 to get rid of a virus in its 
network of 250 PCs. there is 
an overhead associated with 
monitoring for further inci- 
dents: 

“There is a continuous back- 
ground cost of perhaps £6,000 
a .year to provide basic facili- 
ties to enable detection of this 
type of event.” 

The British Standards Insti- 
tute has published a Code of 
Practice for Information Secu- 
rity Management based on the 
best practice and experiences 
of a wide range of companies. 
Tbe NCC includes an analysis 
of this in the 1994 survey 
together with recommenda- 
tions as to how it can be 
improved. The NCC can be 
contacted on 061 228 6333. 


RETURN TO SENDER, 



ADDRESS UNKNOWN 


And here’s the last word: 
customerize. 


from banking to airlines, from telecommuni- 
cations to government, Unisys has built a reputa- 
tion for helping our clients help their customers. 

So it's not surprising that the most powerful 
customer service concept in years should come 
from Unisys. A concept embodied in a single, 
thought-provoking word: CUSTOMERIZE. 

A CUSTOM ER1ZED organisation is customer- 
focused at every level. The full capabilities 
of its information strategy are extended all 
the way out to the points of customer contact, 
where customer satisfaction is ultimately 
decided. The bottom line? For the private sector: 
enhanced revenue generation and competitive- 
ness. Fbr the public sector: enhanced delivery 
of government services. 

Of course, every line of business has its 
unique requirements. And Unisys is a leader 

cus-tom-er-ize Align information Y 
strategy with your customer service \ 
goals — the Unisys Customerize/ 
phil osophy . 

at applying industry-by-industry expertise 
to real-world customer environments. Our 
pioneering efforts to help CUSTOMERISE 
business and government, are a logical extension 
of our strengths - strengths such as point-of- 
customer-contact solutions; a proven commitment 
to open systems and interoperability; and 
above all, services that apply technology 
not for its own sake but For the sake of an 
organisation's goals. 



Experienced Unisys consultants can help 
assess the flow of information between you 


and your customer. And our CUSTOMERIZE™ 
services protect your existing investment as 


UNISYS 

We make it happen. 


they help your organisation. 

Fbr more information, fax Graham Roberts on 
(44) 895 862807. And discover how we can help 
your organisation begin a rewarding new chapter 
in customer service. 


UM CTSHWUPL r a -w nurt * I n— L'«i«al«i 









FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 


USING COMPUTERS IN BUSINESS 


John Kavanagh examines developments in right-sizing 


Belated switch of emphasis 


Computer right-sizing used to 
be simple. 

You looked at the central 
mainframe computer costing 
possibly millions of pounds, 
the end-users' display termi- 
nals with their fixed-format 
inquiry screens in black and 
white, and the army of expen- 
sive specialists taking months 
to write the simplest programs, 
and compared it with cheap, 
friendly, colour PCs apparently 
allowing business people to do 
anything they wanted, when- 
ever they wanted. 

No contest Indeed, a survey 
by computer supplier Sequent 
shows that almost two-thirds 
of completed right-sizing pro- 
jects were carried out to cut 
costs. The second main reason, 
mentioned by 30 per cent of 
companies, was the related 
issue of replacing an obsolete 
computer, typically a central 

mainfra me. 

But since the early 1990s this 
“simplistic downsizing", as 
Computer Technology 
Research Group calls it, has 


been severely questioned by 
analyses of costs and by a per- 
haps surprisingly belated 
switch of emphasis to business 
issues. 

Several studies by indepen- 
dent research groups now 
question whether cost savings 
are possible from moving to PC 
networks or client-server 
systems, which typically cam- 
bine PCs and more powerful 
local computers. One survey 
by Xephon has found that 
mainframe systems are the 
cheapest, per end-user, with 
minicomputer systems SO per 
cent more expensive and PC 
networks more than twice the 
cost 

These studies highlight the 
fact that mainframe costs are 
quite well defined: equipment 
software, maintenance and 
central staff. But PC networks 
and distributed minicomputers 
have hidden costs of duplicated 
work, security, maintenance, 
hardware and software failures 
and, most of all. support - not 
only by central specialists but 


also by local office staff who 
spend their time running PCs 
instead of doing their proper 
jobs. 

In addition, there are short- 
ages of the skills needed to 
move from TPPiwfrainRs to PC 
or Unix minicomputer systems. 
The Sequent survey found this 
to be a problem among three- 
quarters of companies ques- 
tioned - including system sup- 
pliers themselves. 

“Cost reductions must not be 
the key incentive for moving to 
client-server,” says Mr Per 
Andersen, a director of 
research firm IDC. “The cost 
structure of using information 
technology changes dramatic- 
ally. instead of hardware and 
software making up most of 
the costs, staffing and support 
constitute more than half the 
costs in most cases." 

Cost savings are possible, 
but only if companies look 
beyond “simplistic down- 
suing” and match their com- 
puting to business needs. 
Indeed, our case study shows a 


company moving back towards 
a central set-up as the need for 
certain corporate systems ami 
databases emerged. This is not 
uncommon. Research firm 
Gartner Group says: “We 
believe the central function 
will have a resurgence as end- 
users realise the true costs and 
complexity of mission-critical 
computing." 

So the starting point for 
rightsizing must be bu s in ess 
needs, not comparing costs. 
Computers and networks can 
now match company struc- 
tures, and reviews of comput- 
ing set-ups should be led by 
reviews of business organisa- 
tion. 

Steve Wanless, product man- 
ager at Sequent, says: "Right- 
sizing Is all about selecting 
hardware which will provide 
the computing infrastructure 
and systems flexibility to 
ma t c h the business,” he says. 
“This does not necessarily 
mean ditching all existing 
systems and proprietary hard- 
ware." 


CASE STUDY 


Running 
costs cut by 
two thirds 


Provident Personal Credit 
knows all about right-sizing: 
this financial services com- 
pany has done It twice In the 
past six years. In that time It 
has cut costs while confirming 
that simply moving from big 
computers to small ones is 
only part of the job. 

In the late 1980s, Provident 
Personal Credit started run- 
ning down its Unisys central 
mainframe computer and 
installing Digital Equipment 
Vax machines in business 
departments. The computing 
staff, too, were moved out to 
work alongside their end-us- 
ers. 

“We had the traditional 


problem of a central main- 
frame department, semi-de- 
tached from the rest of the 
organisation and never really 
meeting business needs,” says 
Mr David Chan, Information 
technology director “The costs 
of the operation were not 
reflected In business benefits.” 

Installing local computers 
gave business departments 
control of their own comput- 
ing, helped by their own com- 
puting specialists. However, 
by 1992 the company saw the 
need for a compromise 
between central and depart- 
mental s y s te m s. 

“We found there was a need 
for certain centralised systems 
and information, for example 
a corporate customer data- 
base,” says Mr Chan. “So we 
have functionality in the 
departments bat control and 
strategic systems back at the 
Centre a gain. 

“In addition, having central 
computing staff is more effi- 
cient than giving each depart- 


ment its own team." The com- 
pany has switched to Unix 
computers from Hewlett-Pack- 
ard and to database and sys- 
tem development products 
from Sybase. 

R unning costs have been cut 
by two thirds and the number 
of system development staff 
has been halved. Meanwhile 
business departments have the 
systems, the information and 
the service they need. 

Such changes have not been 
simple. Indeed, Chan puts 
modi of the success down to 
the fact that he called in 
Iranian consultants early on. 

“We were a mainframe shop 
with a traditional command 
hierarchy, like an old-fash- 
ioned army," he says. “We 
needed a new culture, where 
the emphasis was on deliver- 
ing service, generating ideas 
and woridng together.” 

Work was done not only on 
setting up appraisal schemes 
and training but also an per- 
sonal motivation: “opening the 


possibility of individual fulfil- 
ment through work”, as David 
Chan puts it 

Team skills were also built 
up to fit a new department 
structure. This led to greater 
trust between staff. 

“In a traditional hierarchy 
yon refer decisions upwards 
and watch your back,” Mr 
Chan says. “But our people 
now trust each other and are 
open to suggestions. They’re 
not constantly worrying about 
failure. 

Three people were identified 
as potential opponents to the 
changes: they have all left the 
company. 

“Technical training was 
important but we could not 
have succeeded without the 
human development work,” 
says Chan. “We went from a 
low-delivery, inefficient, clas- 
sic programming shop to an 
open, high-delivery, successful 
and Innovative departme n t in 
a year- and all with the same 
people.” 


Joia Shillingford on enterprise networking and databases 


New dimensions favoured 


As PC users are increasingly 
linked into enterprise net- 
works, they are starting to 
become more demanding. They 
know that information vital to 
their work sits in other com- 
puters on the network. And 
they ask, not unreasonably, 
why they cannot get it out in 
the form they want 

The answer is that a lot of 
this Information is probably 
stored in relational databases. 
According to David Carew- 
Jones, international marketing 
manager of US-based Pilot Soft- 
ware: “Relational databases 
are really good at presenting 
the same type of information 
in the same form each month. 
But they aren’t so good in 
areas like sales and marketing 
where what’s needed Is a quick 
response to ad hoc queries 
requiring complex analysis." 

He and many other executive 
information system (E1S) sup- 
pliers believe that multidimen- 
sional databases are much bet- 


ter for on-line analytical pro- 
cessing (Olap) by users. 

This Is because relational 
databases are best for transac- 
tions which require access to 
parts of the database that are 
closely related. By contrast, 
detailed marketing analysis 
may require loo tong for con- 
nections and patterns in parts 
of the database which are not 
closely related. 

hi a multidimensional data- 
base designed for Olap, data is 
organised into dimensions. For 
example, a four-dimensional 
entry might include a geogra- 
phy dimension (eg sales 
regions), a price dimension, a 
time dimension (eg when sold) 
and a product dimension. 
Users can interrogate the data- 
base quickly using any combi- 
nation of dimensions. 

Olap’s cause prospered when 
Ted Codd, the father of the 
relational database, wrote a 
paper on the subject (commis- 
sioned by US Olap company 


Arbor). He agreed that multidi- 
mensional databases were bet- 
ter for some types of analysis 
and defined 12 Olap rules to 
which they should conform. 

Nevertheless Codd says that 
Olap databases are “not a sub- 
stitute for relational databases 
and should be used in conjunc- 
tion with them, or with files 
from legacy [old] systems.” 

Olap databases usually take 
a copy of the information on 
the company's main database 
at regular intervals - every 24 
hours, for example - and re-in- 
dex it by dimensions. 

Codd has evaluated two Olap 
databases which conform to 
most of his rules. They are 
Arbor’s Essbase, on which 
Coins hare’s Commander Olap 
is based, and TM1 from US- 
based Sinper. 

However, he has not evalu- 
ated all the Olap products an 
the market and there are many 
other products which claim to 
conform. 


Other suppliers include Pilot, 
HU and Kenan. 

Hie says that when selecting 
an Olap database, users 
should: 

• Decide how much concur- 
rent working is needed 
between the analysis activity 
and the company’s main opera- 
tional database. 

• Make sure that the analysis 
activity doesn't interfere with 
the day-to-day r unning of the 
operational database. For this 
reason an Olap product which 
can operate In a client-server 
environment with operational 
and Olap databases on differ - 
ent server computers may be 
best 

• Try out different systems to 
see which provide the level of 
performance required both in 
terms of computer power and 
in terms of usability. 

However, Codd warns that 
once an Olap database is in 
place, the pressure to make use 
of it can become Intense. 


CASE STUDY 


PC Express 
provides 
analysis tool 


When Bulmors decided to 
change Hs focus from being a 
volume-driven business to a 
profit-oriented company, it 
realised that it would need 
new analysis tools. 

It wanted its 40 national 
account managers to be able to 
get up-to-date Information on 
profitability by customer (for 


example, Tesco, As da, Sains- 
bnry) and by brand. And it 
wanted its 12 brand managers- 
planners to be able to look at 
the make-up of a brand and all 
its associated costs including 
marketing, packaging and dis- 
tribution. 

Two years ago, the company 
began to look for a suitable 
product 

Today it is using PC 
Express, a multi-dimensional 
Olap database from US-based 
Information Resources (IRQ. 
The database - used in con- 
junction wtth XRTs Financial 
Management System (financial 
planning software) - helps the 
company analyse its data from 


many different perspectives 
(or dimensions). 

Dr Martin Wynn, head of 
information technology at Bol- 
mers, says "previously we 
could get data on safes volume 
and value, bat not profitabil- 
ity." 

The PC Express database 
sits on a pentinm server (a 
powerful PC) and is updated 
every 24- hours with the latest 
information from the compa- 
ny’s existing Oracle database. 
PC Express indexes the data it 
receives by all conceivable 
dimensions, such as by cus- 
tomer, by product and by date. 
Because the data is already 
indexed, PC users can get fast 



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replies to any ad hoc queries 
that occur to them. 

The project to introduce a 
new system began two years 
ago. At present the system has 
three B aimers users. But, In 
the next six to nine months, it 
will be given to its nattanal-ao- 
connt and brand managers, 
and to a handful of its finan- 
cial controllers and directors. 

Including hardware, soft- 
ware and staff time, the proj- 
ect has cost almost film. It is 
expected to yield hard benefits 
of £450,000 a year and another 
£200,000-£250,000 In soft bene- 
fits. 

Tim Purse, the company's 
commercial director, believes 
the hard benefits will include 
cost savings. “We will be able 
to track the effectiveness of 
our spend whether It be on dis- 
tribution, packaging:, promo- 
tion or producing our prod- 
nets.* he says. “We can then 
take out cost where necessary, 
for example, in packaging.” 

The system is also expected 
to improve profitability. The 
plan is that Buhner’s account 
managers will be able to take 
into account the fan costs of 
dealing with a particular cus- 
tomer. They wfll also be able 
to look at the mix of brands 
sold to each account, noting 
those which are most profit- 
able for the company. 

Using the financial manage- 
ment software, account man- 
agers will be able to produce 
monthly forecasts of the profit 
contributions of their , 
accounts - and brand manag- 1 
ers win be able to predict the 
likely progress of their brands. 

Joia Sh&ingford is associate 
editor of the Financial Times 
newsletter Business Computing 

Brief 


T he "killer application’' 
that will turn multime- 
dia from a gimmic k info 
a business necessity hasn’t 
happened yet, writes Claire 
Gooding. 

It was Visicalc spreadsheet 
software that turned micro- 
computers into business 
machines, and its successor 
Lotus 1-2-3 that sold 80 per cent 
of IBM PCs. But the average 
PC buyer, both commercial 
and home consumer, is still 
waiting for the Irresistible mul- 
timedia application: the 
clincher that convinces them 
to spend the extra on CD-ROM 
drive and supporting technol- 
ogy- 

some point to long-distance 
videoconferencing - and the 
price of air tickets -as the 
incentive, others to the games 
and home market for selective 
film viewing known as video- 
on-demand- As for applica- 
tions, there are an increasing 
number of samples outside the 
traditional areas of training 
and education. These are being 
promoted as “real live commer- 
cial applications” for multime- 
dia, but they are still pioneers. 

In feet, the market can not 
take off before three factors are 


CASE STUDY 


Customer is 


in the 


driving seat 


The second-hand car aatepnan 
as characterised in street 
mythology is a man not to be 
trusted. “The retail trade is 
not held in Ugh esteem,” says 
John Bacon, an executive 
director of Camden Motors. 

Research has made Bacon 
painfully aware of how the 
public views the process of 
baying a car. He Is determined 
to change things in his indus- 
try, with the help of a multi- 
media project part-funded by 
the European software devel- 
opment programme Esprit 

Bacon’s research established 
that until the actual hand-over 
of a new car “the buyers are 
often unsure that they're get- 
ting what they want* 


E verybody is doing ft... 
well, almost everybody. 
In the two years since 
Mr Michael Hammer popular- 
ised the notion of business pro- 
cess re-engineering in the Har- 
vard Business Review, it has 
been embraced by many of the 
world’s largest organisations, 
writes Alan Cane. 

Separate studies carried out 
earlier this year by the Cran- 
field School of Management 
and Price Waterhouse suggest 
that up to 70 per cent of large 
companies in the UK have 
undertaken or are about to 
undertake BPR. It would be a 
surprisingly high figure for 
any management technique, 
even one currently as fashion- 
able- But BPR can be risky, 
involves comprehensive plan- 


CASE STUDY 


Building 

society 

conundrum 


The National & Provincial 
Building Society, the UK's 
12 th largest, has been under- 
going a radical transformation 
since 1990 when Mr David 
O’Brien, formerly managing 
director of Rank Xerox in the 
UK, joined as chief executive. 

Mr O'Brien describes what 
he has been doing at N&P as 
process design rather than 
process re-engineering. His 
starting point was the build- 
ing society conundrum: where 
should the balance be struck 
between a profit and meeting 
the needs of the customers? 

The decision was taken to 
focus on becoming a true hanfc 
assurer: the kind of organisa- 
tion a customer can approach 
easily for advice and guidance 
about his or her unique finan- 
cial circumstances. 

Mr O’Brien, drawing on his 
experience with Rank Xerox 
and in particular with its Jap- 
anese ally FnjKXerox, decided 
to start from scratch. The busi- 
ness of process design 
involved new ways of think- 
ing. Souk 18 processes within 
the bank were reduced to 10. 
New names reflect new 
approaches. There is no longer 
a marketing department; 
instead, there is a customer 
requirement process. There is 
no sales department It has 
been replaced by a customer 
engagement process. 

“Our staff no longer have 
jobs, they have roles. They do i 
not have job descriptions, they 
have responsibilities”, says Mr 
O'Brien . 

Mr O'Brien believes that 
that process design encom- 
passes a whole range of activi- 
ties which are often described 
as discrete activities. So 
empowerment, de-layering and 
total quality management are 
all elements in his design pro- 
cess rather than aids in them- 
selves. 

Note that the systems are 
the final part of the operation. 


MULTIMEDIA 


Waiting for 
the clincher 


settled: reliability, ease of use, 
and the "critical mass" factor. 
Previous waves of technology 
have proved this pattern in 
everything from cars to cam- 
eras, faxes and video tape 
recorders. There’s not much 
point being the first user of the 
telephone or fax if your peer 
group isn't similarly equipped. 

In the US, says multimedia 
consultant Jeffrey Goldberg of 
Dataquest, things are more 
advanced. “For the average US 
home buyer, buying patterns 
prove that the CD-ROM is 
more important than having 
the fastest possible speed of 
processor" he says. “Even 
though the software itself is 
still in short supply, they want 
the capability there." 

He notes that in the IT 
industry, software suppliers 


are seizing on the technology 
as .an alternative to using 
unwieldy bundles of discs for 
the distribution of products 

and upgrades. ‘There haste be 

a return on investment and a 
commercial incentive, because 
the technology isn’t cheap”. 

Reliability is another delimi- 
ter, according to Anne Perl- 
man, vice-president of the mul- 
timedia division of Tandem 
Computers of Cupertino, which 
specialises in “non-stop" 
fail-safe computers. 

“The focus has to be on busi- 
ness applications for multime- 
dia, because it will be three to 
five years before networks are 
sufficiently upgraded to serve 
home consumers,” she says. 

“Reliability is critical if a 
business is on line 24 hours a 
day across different time 


There are, in bis opinion, too 
many variables for the aver- 
age car-buying customer, who 
feels that the sales person is in 
charge of the process. The cus- 
toms's ignorance of the many 
different variables - 
value of part-exchange, cata- 
logue data and so on - pats 
them at a disadvantage. 

“Add to those variables the 
process of trading used cars, 
finance and loans, and it 
becomes bewildering for the 
buyer," he says. He argues 
that the sales role has concen- 
trated on dealing skills - the 
much-caricatured hard-sell 
patter -and not enough on 
really helping the customer 
through the maze of choices. 

The multimedia system is 
designed to put the customer 
in tiie driving seat, both meta- 
phorically and literally. It is 
already working in a test envi- 
ronment at Camden Motors' 
headquarters in Leighton Buz- 
zard. 

The system uses information 
from a variety of sources, pres- 


ented in text and video. By 
picking a route through a 
maze of options on such issues 
as finance (probably the most 
daunting topic for the average 
buyer), users can arm them- 
selves with very specific infor- 
mation. This typically includes 
valuation of the present car 
for trade-in, options for 
finance, and new models in 
which they are interested, 
which users can ascertain 
before coming face-to-face 
with anyone on the safes floor. 

Improving the process of 
buying a car is a critical Issue 
for Camden Motors, which 
buys and sells countless 
vehicles every year for large 
commercial clients. Estab- 
lished in 1932, Camden Motors 
ranks as the fifth-largest sup- 
plier of new cars and the third- 
largest seller of used cars in 
the UK in 1994. 

Corporate clients include its 
parent, Barclays Bank, and 
Alamo Bent A Car. to whom it 
is supplying 65,000 cars up to 
tiie end of December 2000. 


Business process re-engineering 


No guarantee 
of success 


ningand carries no guarantee 
of success. 

On the other hand, the eco- 
nomic climate of the past few 
years has favoured measures 
which promote efficiency, 
effectiveness and cost-cutting. 
Most of the companies ques- 
tioned by Cranfield said they 
were primarily interested in 
potential savings. 


They are mapped onto the new 
structure rather than being 
used to automate existing pro- 
cesses. The society is working 
with Unisys, the US computer 
manufacturer, on hardware 
and software as it moves from 
mainframe -based systems to a 
modern client-server 
approach. 

The aim is to design the 
entire operation around object- 
orientated systems, the rapidly 
evolving software technique 
where real life objects are 
modelled in software. Such 
designs can be adapted more 
rapidly to changes in the busi- 
ness environment than con- 
ventional main fra mp or mini 
computer systems. Mr O’Brien 
describes the organisation as 


BPR, as defined by Mr Ham- 
mer, involves a fundamental 
reassessment of the way a com- 
pany does its business, identi- 
fying and simpHfyfng the basic 
processes to achieve maximum 
operational efficiencies. BPR 
cuts across traditional func- 
tions; layers of management 
are frequently found to be 
redundant during the analysis. 

This reassessment is driven 
by the needs of the business, 
not information technology. 
But once the basic processes 
have been defined, IT can be 
used to find greater efficiencies 
through automation. 

It is not an entirely new con- 
cept Mr Geoff Elliott and Mr 
Robin Holland, senior consul- 
tants at Computer Manage- 
ment Group, note: “BPR is 
clearly an attention-grabbing 
headline hut we believe, at the 
fundamental level, that there 
is no difference between BPR, 
total quality management, 
change management and 
organisational development. 
The real difference Is the 
extent and speed of the change 
that firms are being forced to 


Barclays’ own heavy 
involvement with multimedia 
gave Bacon the chance to 
rim prove upon a touch-screen 
pre-sales “car shopping” sys- 
tem which had already proved 
successful. In 1991, Camden 
Motors won funding of £3m 
from Esprit, in a consortium 
wiwitiTig Barclays and multi- 
media developer Olivetti. 

From the 174 applications 
for funding, the Camden 
Motors project became (me of 
the 17 endorsed applications: 
it has matched the investment 
with £312,000 of Its own, spent 
on setting up the IT infrastruc- 
ture, including a 486-based 
computer and ISDN network, 
and extensive staff training. 

"People have asked me if 
this is IT looking for a func- 
tion. In fact there’s a real 
need,” says Bacon. “The chal- 
lenge of multimedia is to 
address the business problems 
of motor retail. Pm no techie, I 
wouldn't be interested if it 
wasn't a solid commercial 
problem being solved.” 


address by the markets”. 

Elliott and Holland’s conclu- 
sion has the benefit of render- 


ing redundant sematic argu- 
ments about BPR. The 
technique itself has a reputa- 
tion for a high failure rate, 
prompting one executive to 
sniff: “For my taste, BPR is too 
dramatic a technique". 

This attitude is attacked by 
Mr Hammer and his colleague 
Steven Stanton in a recent 
paper. “Re-engineering failure 
is not caused by bad luck, cos- 
mic rays or other factors 
beyond a company's control. 
On the contrary, success or 
failure at re-engineering is 
determined by a company’s 
understanding of reengineer- 
ing, its ability at executing it 
and the commitment of Its 
executives to do it” 

Hammer and Stanton sug- 
gest there are two reasons 
companies .fell at reengineer- 
ing. First because they do not 
know what they are doing and 
therefore commit classic errors 
such as wasting time on the 
analysis of existing processes. 
(“Virtually, everything learned 
in such an exercise is destined 
for the rubbish heap," they 
warn.) 

Second, there is inadequate 
commitment and leadership 
from the top. “No one need fail 
at reengineering” they write. 
“Indeed, we are hard pressed to 
cite a re-engineering failure 
among organisations who have 
gone about it in a sound fash- 
ion." 


consisting of three kinds of 
objects: process objects, sys- 
tem objects and people objects. 

Now four years into the pro- 
gramme, Mr O’Brien believes 
he Is about two-thirds of the 
way through the transforma- 
tion. 

He measures several param- 
eters to test bow successfully 
the new structure is working. 
A key measure is the strength 
of the society’s relationship 
with its customers. Put sim- 
ply. the society draws up a 
profile of the financial services 
each customer could benefit 
from, and compares it with the 
services they actually use. 

Mr O’Brien says there are 
now no obsolete, low-interest 
accounts where neither society 
nor customer benefits. 


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gones: users have to be able to 
taim ft for granted that the se^ 
vice will be working when they 
need it, much as we do for TV 
or electricity supply." 

Multimedia is simply a con- 
solidation of many technolo- 
gies we have come to take for 
granted, including computing, 
telecommunications, computer 

graphics and text, fox, 
and photography. The so-called 
“information superhighway" 
allows the computer user to 
tap into online databases and 
other remote sources. This is 
already possible with current 
electronic mail and messaging 
systems, hut much enhanced 
by the used of graphics and 
live pictures as used in video- 
conferencing. 

This accessibility still 
depends on a cha i n of s kills 
and commodities, and the 
development of multimedia is 
characterised by partnerships 
and consortia. 

Large suppliers such as Sony 
are already providing the hard- 
ware, but smaller suppliers 
provide for specialist areas: 
Micropolis' new video-on-de- 
mand server, for example, or 
VldeoLogic’s Vesa Media Chan- 
nel for PC/video integration. - 




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■ ’-'t 







FINANCIAL TIMES MONDAY SEPTEMBER 26 1 994 


V 


In the past 

year, we’ve 
seen our storage 
business grow 
30%, our PC 

business grow 100%, and our 

Alpha AXP sales increase 164%. 


Some people think those figures 
already represent a comeback. 

To us, it’s just a beginning. Digital 
is changing from a company famous 
for complicated decision-making, 
to one famous for decisiveness. 

At our new Computer Systems 
Division, we’re applying the 
lessons learned in our PC opera- 
tion to our core business. The 
result: a division with its own 
manufacturing, engineering, sales 
and marketing-one that lets us 
pay more attention to your needs, 
with systems unequaled in their 
openness and range of choice. 

THE BEST OF CISC, 

THE BEST OF RISC 

That choice begins with two 
equally supported platforms — Intel™ 
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servers, and our 64-bit Alpha AXP 
RISC for absolutely blinding 
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products you can convert from 

CISC to RISC. 

Now the industry is finally 
beginning work on 64-bit RISC, 
and we’re happy to see this 
endorsement ot Alpha AXP. But 
HP and Intel say it’ll take a few 
years. We have 64-bit RISC now. 
With 6,000 applications. 


OUR SYSTEM: MANY SYSTEMS 

Fact is. Digital is a multiple 
operating system company because 
that’s what most of you are. 

In DEC OSF/1? we have the most 
standards-compliant, highest quality 
UNIX* in die industry. It gives 
you outstanding high availability 
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We offer OpenVMS™ because 
millions need it. as it provides 
the best clustering capabilities on 


the market for high-security, 
high-throughput, business-critical 
work. We plan to support it, 
invest in it, keep customers fully 
operational with it, and introduce 
it to new customers as well. 

What’s more. Digital has part- 
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and Server. 

All these system options give 
you one very important thing. 
Choice without compromise. 

OUR SOFTWARE: TRULY OPEN 

Our openness even extends to 
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FINANCIAL TIMES 


MONDAY SEPTEMBER 26 


USING COMPUTERS IN BUSINESS 6 


George Black reviews developments in interoperability 


Invented to meet a need 


Interoperability is among the 
ugliest words coined by the 
computer industry, but like 
many of its kind it was 
invented to meet a need. 

It means something more 
than either compatibility or 
portability. Systems can be 
compatible with each other 
without working together 
smoothly. Software can be 
ported from one machine to 
another without allowing 
applications to communicate 
effectively. 

UNIX systems, for instance, 
have gained popularity partly 
because they are more portable 
than the older proprietary 
systems, but this does not pro- 
duce instant interoperability. 

XjOpen, the international 
promoter of open systems, is 
about to produce a single speci- 
fication for UNIX (known as 
Spec 1170) replacing existing 
incompatible versions. This 
will improve portability, but 
will leave the interoperability 
Issue not solved. 

The current X/Open brand, 
displayed by products which 
incorporate its XPG4 specifica- 
tions. is a certificate of porta- 
bility, not or interoperability. 
X/Open plans to launch an 
interoperability brand during 
1995, working more closely 
than before with the Open Soft- 
ware Foundation consortium, 
previously a competitor. The 

CASE STUDY 

Obstacles 
along the 
ISO route 

Even large users run into 
difficulties in trying to follow 
what they are told are interna- 
tional standards. An example 
is Trafalgar House Engineer- 
ing Division, which Includes 
John Brown Engineering. 

It has won a dutch of 
awards for technological excel- 
lence and has been committed 
to an open systems strategy 
for several years, yet it was 
perplexed by a string of obsta- 
cles along the route prescribed 
by the ISO. 

It set up an international 
network connecting all the 



Mike Lambert, chief technical officer of X/Open 


brand Is likely to draw heavily 
on OSF’s DCE (Distributed 
Computing Environment) soft- 
ware. 

For the past few years intero- 
perability has been one of the 
main goals of users, vendors 
and standards bodies alike. At 
its technical briefing' this sum- 
mer X/Open stated that it 
would continue to be one of its 
main goals for at least the next 
three years. 

Some industry observers 
have the impression that inter- 
operability is a continually 
receding goal, but XjOpen 
insists that it is now in sight 
and attainable. 

Progress is slow because it 
depends on getting consensus 
among both vendors and users. 
It can take 18 months from 


company's 37 offices in 12 
countries, as well as a number 
of its suppliers and contrac- 
tors. The network supports a 
global database, which can be 
accessed by its engineers and 
designers wherever they may 
be. 

It disposed of 12 Unisys 
mainframes and substituted 
some 200 UNIX workstations. 
To procure these machines it 
issued to UNIX vendors a list 
of criteria for openness. From 
the replies it discovered that it 
could not be sure of Interoper- 
ability even though all the 
vendors claimed to offer open 
systems. In the end it standar- 
dised on machines from Hew- 
lett Packard and Sun Micro- 
systems. 

To make such a complex net- 
work possible it stuck to what 
it considered to be industry 
standards, among them TCP/ 
IP, X.400, the SQL database 


agreeing a requirement to pub- 
lishing a specification and a lot 
Longer for vendors to market 
compliant products. The com- 
plexity of testing new products 
creates a bottleneck and there 
is a serious shortage of money 
to do all the work. 

Mr Mike Lambert, chief tech- 
nical officer of X/Open, defines 
interoperability in non- techni- 
cal terms as “the ability of two 
different applications to do 
something useful together." 

He says the main problem is 
not a technical one but con- 
cerns the way in which com- 
puter systems are delivered, 
integrated and supported. 

“Banks and government 
departments have the systems 
integration skills in-house to 
cope with this, but many 


standard and Microsoft's DOS 
operating system. 

It preferred OSI standards 
where they existed but was 
willing to adopt de facto ones 
where they did not, or make 
up its own where neither 
existed. 

“OSI standards are neces- 
sary but not sufficient” con- 
cludes Mr Jim Noble, the divi- 
sion's information technology 
director. 

“We adopted the official 
standards for ISDN (Integrated 
Service Digital Network), 
X.400 and XJU but we still 
found that A did not talk to B 
because the suppliers had 
interpreted the standards dif- 
ferently. So we had to knock 
heads together.” 

In some cases this proved 
possible - Trafalgar House 
succeeded in persuading BT 
and its Dutch counterpart to 
interpret standards in the 


smaller users do not,” he says. 

Interoperability depends on 
products complying with de 
jure and de facto standards. 
That, however, begs a number 
of questions, most importantly 
what constitutes a standard. 

A couple of years ago X/ 
Open intended the Open 
Systems interconnection (OSI) 
model of the International 
Standards Organisation (ISO) 
to be the basis of its b rand. 

It encouraged migration 
from unofficial protocols such 
as TCP/IP (Transmission Con- 
trol protocol/Internet Protocol) 
to official OSI standards. 

But Mr Lambert acknowl- 
edges that the whole industry's 
emphasis has moved away 
from de jure to de facto stan- 
dards, such as TCP/IP. 

Earlier this year, the Brus- 
sels-based standards Promotion 
and Applications Group 
(SPAG) was forced to abandon 
its OSI interoperability t estin g 
programme because demand 
for OSI products was not 
enough to finance the venture. 
Its work may be taken over by 
X/Open. 

Mr Lambert concedes that at 
the lower levels of communica- 
tion OSI has failed in the mar- 
ket, but argues that at the 
higher levels affecting intero- 
perability it has been success- 
ful. He cites the X.400 messag- 
ing standard as an example. 


same way - but now It is 
struggling to do the same in 
countries where achieving 
compatibility is much harder, 
such as Vietnam, Puerto Rico 

and TTasakhgfnn 

Mr Noble says his company, 
like others, is getting to inter- 
operability by pragmatic steps. 
“OSI was seen as the holy 
gran but it no longer Is. TCP/ 
IP will do for os tor the fore- 
seeable future. We’re prepared 
to set aside principles in order 
to get effective solutions. We 
will look at X/Open specifica- 
tions for guidance, but we are 
not concerned to buy products 
that have the X/Open brand.” 

The X/Open interoperability 
brand will therefore be an 
important milestone, but is 
not expected by users to 
resolve all their problems at 
once. Interoperability is likely 
to preoccupy the industry for 
at least another decade. 


C lient-server has been a 
buzzword In the com- 
puter industry for sev- 
eral years, yet progress 
towards introducing such 
systems has been remarkably 
slow, writes George Black. 
Meanwhile, a backlash against 
the client-server theory has 
already taken hold. 

There are as many plausible 
definitions of the term as there 
are suppliers claiming to be 
experts. Consultancy Butler 
Bioor’s definition seems as 
good as any: “The splitting of 
applications between two or 
more computers, one of which, 
the server, serves the others 
with information interac- 
tively." 

Many people use the term 
“client-server" Interchangeably 
with the older “distributed 
systems", even though the lat- 
ter would seem to be broader 
in scope. “Co-operative pro- 
cessing", which enjoyed a 
vogue for a while. Is also very 
close in meaning. “Client- 
server” can be interpreted in 
many different ways in prac- 
tice: technologists use “fat cli- 
ent, thin server” or “thin cli- 
ent, fat server” to describe 
different ways ol dividing the 
code between machines. 

The client-server structure 
was intended to deliver a much 
more economical use of com- 
puting power than the old 
mainframes and large mini- 
computers linked to dumb ter- 
minals. These Tnachiwwg were 

CASE STUDY 

User-friendly 
system for 
care workers 

One organisation which has 
been installing a mission-criti- 
cal client-server system far its 
superior aser-friendliness Is 
Hampshire County Council’s 
Social Services Department 
It faced a statutory obliga- 
tion to monnt a new pro- 
gramme of care for people in 
need and the council was 
required to identify all those 
who should be covered by the 
scheme, assess their individual 
needs, prioritise those needs 
and devise plans for services. 

It decided to design a client- 
server s yste m to ensure that 
all those involved in providing 
care would be users of the sys- 
tem. 

Its mainframes were mainly 
used by arfmrnicfmtnrK but not 


CLIENT-SERVERS 


Progress has been 
remarkably slow 


very expensive and often 
severely overloaded, while per- 
sonal computers were cheap 
and not used for much of the 
time Mainframes could either 
be converted to database serv- 
ers or replaced by smaller 
machines acting as servers, 
with PCs taking over much of 
the application's processing 

Stories of failed 
client-server projects 
and reports that the 
cost-savings may prove 
illusory have been 
deterring users from big 
Envestments 

function. 

For more than a decade now, 
software houses have been 
developing tools to enable 
users to build client-server 
applications of the same com- 
plexity as those which were 
running on mainframes. But 
according to Spikes CaveH, a 
market research company 


by the professional social 
workers themselves. The new 
system was based on client- 
server principles so that it 
would be much easier for 
social workers to use. 

The council’s servers are 

IBM and Amdahl matnframec 
at the Winchester and 
Andover head offices, with 
IBM and Dellpersonal comput- 
ers acting as local database 
servers at 19 area offices. 

The client machines are 
local area networks of PCs, 
which may be installed at 
some 200 other sites around 
the county. 

The m ainfra mes run a single 
centralised Oracle database, 
from which data is down- 
loaded to the area servers run- 
ning Gupta's SQLBase data- 
base The Oracle database is 
updated each night in batch 
mode. 

Applications software was 
written by the Rasa™* consul- 
tancy. The system started to 
go live in April and by next 
spring will hie supporting 460 
users. 


which tracks activities at UK 
user sites, although many 
users are now experimenting 
in this area few are entrusting 
their mission-critical applica- 
tions to client-server systems. 

"Right now. vendors would 
have you believe the trend is 
further advanced than it is,” 
commen ts Mr Luke Spikes, 
managing director. “These are 
gmflii and important develop- 
ments, but not mainstream 
ones. If one of these goes 
wrong, it will not be a major 
business issue.” 

Many systems managers are 
still studying the issue and 
waiting for the evaluation of 
pilot projects. They are gener- 
ally concerned to determine 
what type of network structure 
offers the greatest cost-saving 
without jeopardising technical 
efficiency. Meanwhile, stories 
of foiled client-server projects 
and reports that the cost- 
savings may prove illusory 
have been deterring users from 
major investments. 

In some cases, users have 


Dr Angela Oakley, the coun- 
cil's senior consultant who 
was responsible for setting it 
up, says the early indications 
are that it is helping to 
improve the efficiency of the 
service. 

“Many social workers have a 
fear of computers, but within 
an hour or two of using this 
system they are saying that 

Dr Oakley says the 
viability of client-server 
solutions depends 
very much on the 
type of application 
involved 

they really like it," she says. 

“They will now spend mnch 
less of their time on bureau- 
cracy and more on the caring 
part of their work.” 

She says that client-server is 
“not a cheap, but a cost-effec- 
tive solution." At worst, the 
new system will prove no 
more expensive than the cen- 
tralised alternative and it is 


found that much more mid- 
range hardware was required 
than they had anticipated; in 
other cases they could not get 
the performance required for 
lack of adequate software 
tools. Many managers feel it is 
still too risky to embark on a 

mission-critical client-server 

system. 

Mr Mike Evans, UK manag- 
ing director of client-server 
tools developer Gupta, says 
that many of the failures have 
been due to lack of experience 
in building large systems, 
weakness of project manage- 
ment or confusion over user 
requirements. 

However, he argues that the 
case for choosing a client- 
server approach has strength- 
ened in the past couple of 
years because of the introduc- 
tion of much more powerful 
server hardware at lower 
prices. For some, it is the supe- 
rior user-friendliness of client- 
server systems which has per- 
suaded them that the risk is 
worth taking. 


far more powerful and flexi- 
ble, she says. 

She believes there is no 
other client-server system 
available for the same applica- 
tion. 

Several other local authori- 
ties have expressed an interest 
in buying the software from 
Hampshire. 

Dr Oakley says the viability 
of client-server solutions 
depends very much on the 
type of application involved. 
“Client-server is not a panacea 
for all circumstances. There 
are all sorts of pitfalls. Too 
need to understand whether 
the application lends itself to 
this approach. If you need to 
support several hundred con- 
current users on one local 
database it probably won't 
work." 

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factor, she says, is the range of 
skills available to the system's 
developer. 

Mr Spikes confirms this and 
notes: “the shortage of skills is 
one of the main things which 
is holding people bad: now.” 


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HEWLETT® 

PACKARD 






FINANCIAL TIMES MONDAY SEPTEMBER 26 1994 


VII 


USING COMPUTERS IN BUSINESS 7 


ELECTRONIC DATA INTERCHANGE 


Benefits fuel 
growth 


The Integration of the office 
personal computer with tele- 
communications systems over 
the past decade has begun to 
make paper-free electronic 
trading, or “electronic com- 
merce," a real possibility, 
writes Paul Taylor. 

Electronic data interchange 
(EDI) and electronic mail both 
value-added network services 
(Vans), provide the basis for 
electronic commerce. EDI 
enables two organisations, usu- 
ally customer and supplier, to 
exchange business documents 
such as orders and invoices 
using standard electronic 
forms and their own computers 
linked via a telecommunica- 
tions service provider. 

The service provider acts 
like a centra) post office, rout- 
ing the documents and mes- 
sages to their destination and 
handling any “data transla- 
tion" needed between different 
computers or message stan- 
dards. 

“EDI improves the speed and 
accuracy of the business pro- 
cess," says Mr John Thorpe, 
manag in g director of Interna- 
tional Network Services (INS) 
which claims about 65 per cent 
of the UK market for EDL Typ- 
ically he says a company intro- 
duces EDI because it saves 
money on stock and adminis- 
tration. 

These benefits have fuelled 
growth in the use of EDI In the 
US, where it originated, and 
more recently Europe. Ovum, 
the technology consultancy, 
estimated last year that the 
EDI market in Europe, includ- 
ing customer software and sup- 
port, will triple in size from 
just under Ecu200m in 1993 to 
about Ecu600m in 1997. 

The UK. Prance and the 
Netherlands are the most 
mature EDI markets in Europe 
although other nations includ- 
ing Austria, Italy and Spain 
are begining to catch up. Ger- 
many lags behind in EDI 
implementation, arguably 
because of its highly restrictive 
tplpcrnnmmifcfltinns regime. 

Among the service providers 
in Europe the market leaders 
are IBM and General Electric 
Information Services (Gels) 
which both have pan-European 
networks. Geis, which recently 
acquired the 50 per cent of INS 
which it did not already own. 


CASE STUDY 

A pioneer in 
the DIY 
community 

In the highly competitive 
market for do-it-yourself in 
the UK, retailers are continu- 
ally looking to improve cus- 
tomer services while maintain- 
ing tight margins and 
reducing operational costs. 

Wickes, the timber, building 
materials and home improve- 
ment products group, turned 
to International Network Ser- 
vices in 1986 for a system 
which would enhance its busi- 
ness processes and practices. 
Since then Wickes has become 
a pioneer of EDI in the DIY 
community. 

“EDI was a natural progres- 
sion for Wickes, complement- 
ing sophisticated sales and 
order processing applications 
already in use across the com- 
pany,” says Mr Andrew Hen- 
nell, financial accounts con- 
troller. 

“Using INS-Tradernet, trad- 
ing electronically has now 
become an essential element of 
the company’s IT processes.” 

He says the benefits of elec- 
tronic trading were immedi- 
ate. “Not only is it far quicker 
than traditional paper-based 
ordering methods, it is also 
more accurate. Reduced order 
lead times mean we can ensure 
that shelves are neither empty 
of popular brands nor over- 
stocked with lines that sell 
slowly." 

Working alongside INS, 
Wickes initially approached 
several of its larger volume 
suppliers to pilot the recefpt of 

electronic orders. This was fol- 
lowed by a progressive roll-out 
across the supplier base. 

Wickes presently sends more 
than 10,000 electronic orders a 
month via the INS EDI service 
to more than three-quarters of 
its snppliers. Order informa- 
tion from the retail outlets is 
collected daily and consoli- 
dated centrally on a PC system 
at Wickes’ computer centre. 
Using INS’ PC-based software, 
Intercept-Plus, orders are 
transmitted overnight to sup- 
pliers via INS-Tradcrnet, ready 
for collection and processing 
the next morning. 

Using EDI, suppliers can 
process orders much more 
quickly and efficiently, espe- 
cially if the order data is 
passed directly Into the suppli- 
er’s sales order processing sys- 
By fully integrating EDI 
with in-house systems, the 


has about 35 per cent of the 
fragmented European market 

In the UK, standards are not 
a big issue, but outside Britain 
most domestic EDI traffic has 
been based on industry-specific 
or proprietary application pro- 
tocols. According to one esti- 
mate, there are 26 different 
versions of standards in the 
world, including 15 in Japa- 
nese. However, most new user- 
communities are basing their 
services on an international 
standard called Edifact - and 
many existing co mmunities 
using proprietary application 
protocols are moving towards 
Edifact 

By 1997, Ovum predicts that 
90 per cent of EDI traffic in 
Europe will be based on the 
Edifact standard, compared 
with less than SO per cent last 
year. 

In the UK where there are an 
estimated 10,000 EDI users, the 
market is dominated by INS 
which was jointly owned by 
Gels and TCL until recently 
when Gels bought out its part- 
ner - a move which industry 
analysts suggest signals the 
start of consolidation and 
inte ma ti nnaliiaitinn of the EDI 
market “We are experiencing 
very rapid growth in toms of 
documents," says Mr Thorpe. 

INS provides three main EDI 
“communities," INS-Tradanet, 
the main service for retailers 
and their suppliers. Brokemet 
for the insurance sector and 
Fleetnet for the fleet leasing- 
management sector. The big- 
gest. INS-Tradanet, handles 
more than 6m documents a 
month for customers which 
include most of the large high 
street retailers and their sup- 
pliers. 

Mr Thorpe says that compa- 
nies which have implemented 
an electronic trading strategy 
are moving forward in two dis- 
tinct ways. First, they are 
adding additional document 
types, second they are reach- 
ing further and further down 
the supply-customer chain. 

Nevertheless, there is still . 
plenty of room for growth 
since research suggests that 
even among those companies 
which have signed up for EDI 
only a small percentage are 
trading with more than 100 
companies and many are trad- 
ing with fewer than 10. 


paper flow is dramatically 
reduced and the need to re-key 
information is eliminated. 

Keen to extend its electronic 
trading. Wickes has also devel- 
oped an in-honse invoice 
matching system. Invoice data 
is received and processed on 
an IBM AS-400 system using 
INS’ Intercept-400 software. It 
is then passed into Wickes’ 
in-honse invoice processing 
application w here it is 
matched for errors and finally 
checked against the original 
order. 

Wickes receives about 60 per 
cent of its invoices electroni- 
cally. Mr Hennell believes elec- 
tronic trading speeds up the 
invoice cycle by as much as 
seven days emu pared to tradi- 
tional methods. Early receipt 
of invoices means problems 
and mismatches can be 
addressed, saving time and 
resources and enabling prompt 
payment for snppliers. 

Recognising that not all snp- 
pliers have the resources to 
integrate EDI with their 
in-house systems Wickes com- 
missioned INS to produce a 
PC-based application system 
which enables users to gener- 
ate invoices simply and accu- 
rately from order data 
received* 

“The hardest part, always, is 
convincing suppliers that elec- 
tronic commerce is a worth- 
while investment,” says Mr 
Hennell. “On the whole, oar 
suppliers have been very co- 
operative. . . however there ore 
still a handful of our smaller 
suppliers who remain con- 
cerned by the initial commit- 
ment.” 

In order to make EDI more 
accessible to the smaller vol- 
ume and expense account sup- 
pliers - those who provide ser- 
vices as opposed to resaleable 
stock - INS provided Wickes 
with a unique trading commu- 
nity called WiekesNet last 
year which is based on INS- 
Tradernet but offers suppliers 

a low-cost tailored EDI solu- 
tion for invoicing and elec- 
tronic mail. 

Wickes has recently linked 
its internal financial network 
to the INS-Mai! service, 
enabling store and bead office 
employees to exchange textual 
information, such as order-in- 
voice queries and general 
memos on a person-to-person 
level with customers and sup- 
pliers. 

"E-Mail brings numerous 
benefits over traditional com- 
munications methods such as 
facsimile, post and telephone," 
says Mr Hennell. "It is instan- 
taneous. cost-effective and 
since it eliminates the need for 
paper, is environmentally 
friendlier, too ” 


Michael Dempsey reports on health and safety issues 

Raft of EC regulations 


T he closest most people come to 
practical ergonomics is a disem- 
bodied voice telling airline pas- 
sengers to adjust their seat back to 
the upright position. But adapting 
office equipment to suit employees' 
health is fast becoming an urgent 
issue. 

The proliferation of computer work- 
stations. demanding visual contact 
with a flickering screen and myriad 
keystrokes, has provoked a raft of EC 
health and safety regulations. Roger 
Wesson is a partner in City of London 
law firm Allison & Humphreys. Wes- 
son, specialising in employment law. 
forsees serious problems arising from 
the complacency of UK companies 
about ergonomics. 

“Health and safety is no longer an 
issue you can leave to the office 
administrator. It requires consider- 
ation at the board leveL The EC dis- 


play screen equipment regulations are 
just as important as the hard hat 
rules on a building site. The conse- 
quences of non-compliance can be 
very serious." 

The EC regulations recommend 
that employers fill out a detailed 
questionnaire addressing such areas 
as screen glare, keyboard height, 
adjustable seating and availability of 
footrests. The form even extends to 
the suitability of software in attempt- 
ing to assess screen displays. 

While EC recommendations may 
seem remote, they are tied to very 


real problems. Wesson reels off the 
successful actions against employers 
involving computer-related ailments. 
Work-related upper limb disorders, 
more commonly known as Repetitive 
Strain Injury (RSI), harm both suf- 
ferer and employer. The Inland Reve- 
nue has paid £79,000 in an out-of-court 
settlement to a female employee. It 
accepted that sbe was under pressure 
to input data at an hourly rate with 
insufficient breaks while her desk and 
chair were incorrectly positioned. The 
resulting injury to her arms forced 
her to retire. 


EC Directive 90/270 sets out mini- 
mum safety requirements for display 
screen work. For example, screens 
should be flicker-free and easily 
adjustable. These standards must 
apply to equipment installed after 
January 1993. For workstations in use 
before that date employers have until 
December 1996 to implement changes. 
Sanctions against non-compliance 
include fines of up to £20,000 or 
imprisonment. 

Successful prosecution can mean an 
individual disqualified from being a 
director. One such case in the UK has 


already seen a director disqualified 
for two years and fined £5.000. There 
are 6.5m workstations in the UK. 
Surely bringing them all up to scratch 
will be an enormous undertaking? 

The Health and Safety Executive 
claims that meeting these standards 
will cost about £42 per workstation. 
This price should be offset against a 
reduction in sick leave provoked by 
poor ergonomics. 

Mike Lloyd, managing director of 
Sit Smart, a Guildford-based ergonom- 
ics consultancy, points out that back 
pain, occasioned by poor seating, is 
eating away at productivity. The 
number of man days lost through 
back pain leapt from 62m in 1992 to 
83m in 1993, “The microcomputer is 
causing massive back problems", says 
Lloyd. “If I can stop a guy being off 
sick for two weeks, that will cover the 
price of new seating." 



Derek Otiver w a tching er go nomi c 
and enviro nm e n tal factors 


CASE STUDY 

Maintaining 
a Victorian 
tradition 

The village of Saltaire in 
Yorkshire was created by 
THus Salt - a Victorian philan- 
thropic entrepreneur wbo 
believed that profit could be 
attained without sacrificing 
good working conditions. 

Derek Oliver, design man- 
ager at Pace Micro Communi- 
cations, lit** to think his com- 
pany maintains the pursuit of 
success in the tradition of Salt 

Pace is a £130m turnover 


company designing and manu- 
facturing satellite TV signal 
decoders and computer com- 
munications modems. Its head- 
quarters are in a textile mill 
built for Saifs empire in 1852. 
Pace's 150-strong design team 
are located here, and a lot of 
thought has gone into their 
immediate surroundings. 

Most of these staff are 
engaged in Computer Aided 
Design (Cad), and spend hours 
working at a terminal. Oliver 
hopes to get the most ont of 
this time by eliminating any 
cause for stress. 

"Wherever possible we have 
installed anti-glare screens. 
The cheaper variety oily stop 
reflection, bat we've gone for a 
high specification that shield 
the user from radiation.” 


Wrist supports may sound 
flippant, bat Oliver is a con- 
vert “The angle of the wrist 
when working on a standard 
keyboard can be quite steep. 
That tends to pot the wrist in 
quite a stressful position. 
Wrist supports mean it’s just a 
step up, a gradual run bon 
the desk surface to the key- 
board. They are very very sim- 
ple, but they have a significant 
effect" 

All fixed seating has been 
replaced by adjustable chairs. 
But according to Oliver it is an 
original Victorian feature that 
does the most to promote a 
productive working environ- 
ment 

“The biggest pins point is 
the room we work in. It's 
large, open plan and has lots 


of natural daylight Everybody 
feels the benefit.” Pace bas 
turned its back on contempo- 
rary office design. "We could 
put a lot of screening in place 
and lower the ceiling. But 
we’ve kept the original dimen- 
sions.” 

On a superficial basis, this is 
not an economical policy. 
“From a heating point of view 
it’s not the most efficient way 
to do things. A purpose-built 
office would be cheaper to run. 
But our workforce are happy 
with it and that cuts away at 
indirect stress.” 

Hie benefits are difficult to 
quantify, but Pace has sera a 
difference. “We don't have a 
great deal of absenteeism on 
grounds of Illness. People do 
take less time off.” 


Oliver is convinced that 
watching ergonomic and envi- 
ronmental factors has kept his 
company ahead. “It takes very 
little cost and effort to 
improve the working environ- 
ment tenfold. For a very small 
investment you can reap a lot 
in terms of attitude to work. 
That in turn goes into getting 
a better prod net. because 
everyone is pulling the same 
way.” 

One measure of Pace's suc- 
cess is the fact that U manu- 
factures electronic goods in 
the UK for export to the Far 
East. Exports to Asia contrib- 
uted to 1.2m satellite decoding 
systems sold last year. So a 
well-planned workplace can 
contribute to survival in the 
most competitive of markets. 





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FINANCIAL TIMES MONDAY SEPTEMBER 26 1 994 


USING COMPUTERS IN BUSINESS 8 



B uilding software appli- 
cations is a little like 
carpentry, writes Philip 
Manchester. Although the 
principles of shaping wood are 
universal, every piece of wood 
is unique and the craft is in 
learning how to cope with the 
unexpected. 

Software development fol- 
lows the same process and no 
matter how concise the devel- 
opment method is, there are 
bound to be surprises. Modern 
project management tech- 
niques aim to keep surprises to 
the minimum and be ready 
with contingency plans if 
something goes wrong. 

Over the past 30 years, soft- 

CASE STUDY 

Large-scale 

development 

project 

Large-scale software 
development projects need 
especially rigorous project 
management- When N. V. Ned- 
erlandse Gasonie, the Dutch 
gas distribution utility, 
decided to update its opera- 
tional control systems in the 
mid-1980s, it recognised that it 
would need expert help. 

“The project was about 170 
man years and had over 100 
people working together to 
build the new system,'* says 
Mr Theo Bakfcer. a principal 
consultant at Gasunie- 
“ Although it is not the most 
complex system it was a very 
big project and needed tight 
management" 

Gasonie boys and distrib- 
utes gas throughout the 
Netherlands and exports it to 
other European countries such 
as Germany and Italy. It oses 
automated equipment to moni- 
tor and control operations on 
the national distribution net- 
work. 

The monitoring equipment 
records the temperature, pres- 


Good project management still relies on tried and tested principles 

Surprises are inevitable 


ware developers have found a 
variety of ways to manage the 
construction of software. From 
the rigorous “methodologies’' 
and computer-aided design 
tools to management and proj- 
ect reporting systems, there is 
no shortage of tools for the job. 
But despite the availability of 
the tools, good project manage- 
ment still relies on tried and 
tested principles: 


“There are plenty of tools 
around but it Is loud to stop 
people being a slave to them 
We use the tools to gather 
information and see what 
works and what doesn't But 
there is no substitute for expe- 
rience and skills," says Mr 
John Millar, technical director 
of Logics UK. 

“The key to successful proj- 
ect engineering is to improve 


the literacy of our staff and 
instil discipline” 

Logica’s approach to manag- 
ing large-scale projects aims to 
take the best management 
practice and combine it with 
good automated tools: 

“We focus on what we call 
micro methods. We have a 
framework winch covers the 
life-cycle of the project and 
make use of tools where neces- 








The movement of pas in Hie pipelines b lo ubu i cd and monitored from Gaswae’s central command post 


sure and flow of gas through 
the pipelines and passes it to a 
computer network, controlled 

from a central computer in 
Groningen. The data is passed 
to a Supervisory Control and 
Data Acquisition (SCAD A) sys- 
tem which keeps track of the 
gas network and issues com- 
mands to alter its state. 

The new system had to 
replace both of these systems 
and bring them together with 
two others: a system to moni- 
tor and administrate export 


contracts and one to simulate 
the gas network for modelling 
purposes. 

Gasonie turned to software 
company Logica to help con- 
struct the new system and to 
use its experience of managing 
large-scale projects. 

“Logica has a good record in 
project management and this 
was one of the main reasons 
for taking them on. We split 
the responsibility for the proj- 
ect with Logica taking about 
70 per cent of the load," says 


Mr Bakker. 

He praises Logica’s skills 
highly: 

“They have a very struc- 
tured approach with good 
quality assurance procedures 
and controls. They have very 
good reporting mechanisms 
and always kept us up to date 
and showed they know how to 
manage complex projects with 
a technically-high standard. 
But most of all they have good 
discipline. I have worked with 
many software companies that 


sary." Mr Mfliar explains. 

However, he is. like many 
others, sceptical about an 
overly formal approach to 
managing software develop- 
ment projects: 

“At the end of the 1980s 
there was a lot of talk about 
methodologies solving develop- 
ment problems. I think Of thorn 
as the 'Lose fat while sleeping’ 
approach and 1 don't believe 


have the methods and the 
tools but they don’t have the 
discipline." 

The new system took over 
three years to buDd and was 
finally commissioned in 
December 1992 to the satisfac- 
tion of the user. Mr Bakitw 
says the system is easy to 
waiirttin aim! very BclMk 

“We decided to take on the 
maintenance ourselves. We 
had four people on the devel- 
opment project team specifi- 
cally to build up knowledge of 
the system and do mainte- 
nance. Logica did it for the 
first year and now we do it all 
ourselves." 

Despite the undoubted suc- 
cess of the Gasonie project, it 
was not perfect, however. Mr 
Bakker notes: “Logica failed to 
deliver it in the specified time 
- there was a delay of seven or 
eight months’*. 

Hr Martin Ashton, the proj- 
ect leader from Logica, paints 
out that the delay was at the 
beginning of the project and 
that it was known about well 
in advance: 

“It is such a big system and, 
although we new the design 
integration would require a lot 
of work, we underestimated 
how tong it would take. We 
managed to compensate by 
delivering some parts of the 
system earlier than sched- 
uled,'' he says. 


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that It works. Some parts o £ 
the methodology can be useful 
-but I think it naive to see a 
simple way to solve the prob- 
lem," Mr Millar says. 

He goes on to say that Struc- 
tured Systems Analysis and 
Design Method (SSADM), one 
of the more successful method- 
ologies, at least brought the 
users of the system into the 
design approach. 

“SSADM showed how impor- 
tant it was to get users 
involved and it has turned out 
to be a useful way to describe 
systems.” 

Other software developers 
are also finding user input dur- 
ing the project design phase to 


be a significant step forward. 
Mr Keith Turner, a divisional 
director software developer for 
Hoskyns Group, sees this as an 
inevitable result of a change in 
the way software is buflt 

“Software development is 
more iterative now. Users have 
to be involved because you 
need some form of open rela- 
tionship with the customer. 
The more you can work as a 
team, the more likely you are 
to be successful," says Mr 
Turner. 

“Tools and methods can help 
but they cannot compensate 
for incompetence. You must 
get toe people right and the 
balance of team skills.” 


mi'- 1 



Software deuotoper Katth Turner 
'Users have to Do knohrad* 


Paul Taylor on portable computers 

Fast-growing sector 


Sales of portable computers 
have been one of the fastest 
growing segments of the per- 
sonal computer market over 
the past four years. The “note- 
book" computer, in particular, 
has become an imp or tant busi- 
ness tool and the de facto stan- 
dard for portable computing in 
the 1990s. 

Advances in technology have 
enabled PC manufacturers to 
pack most if not all of the func- 
tionality of a desktop PC into 
an A4-sized notebook package 
priced at £LSOO or less. Today's 
notebook PCs weigh about 61b. 
are mostly powered by fast 
Intel 486 processors and have 
large hard disks, colour 
screens and credit-card sized 
PCMICA expansion slots. 

The main advances in recent 
years have included “dual- 
scan" COlOUr displays making 

colour notebook PCs more 
affordable and easier to use 
with programmes such as 
Microsoft's Windows. 

In addition, battery life has 
hp»n ex tended through the 
of low-power chips, power-sav- 
ing features and improved bat- 
tery technology. For example, 
Dell Computer’s new Latitude 
range fnHmtoc an innovative 
dual Nickel Metal Hydride 
(NiMH) battery option which 
effectively doubles battery life 
to a maximum 13 hours. 

However, as Jeffrey Gold- 
berg, a Dataquest consultant, 
points out, relatively few porta- 
ble PC users actually use their 
manhmpg while on the move 
and can. therefore usually plug 
their portables into a wall 
power outlet making battery 
life Iras of an issue. 

There is little doubt that 
business usage of portable 
computers is increasing. When. 
Dataquest asked corporate 
computer purchasing manag- 
ers across Europe whether any 
of their employees used porta- 
ble PCs, 70 per cent replied 
“yes” with the UK and Ger- 
many showing the highest 
uptake. The three largest 
groups of users were top execu- 
tives jmd ftnannp s taff; sales 
and marketing: fl ™i engineer- 
ing and maintenance. 

When respondents were 
asked whether employees were 
able to use their portable PCs 
or data terminals for communi- 
cating with the office while 
travelling, 32.5 per cent 
claimed at least some of their 
employees made use of such a 
facility. 

Most of these employees 
made their connection over the 
public switched telephone net- 
work although a quarter said 

CASE STUDY 

Innovative 
solution 
for couriers 

When toe so-called “ring of 
steel" was thrown around the 
City of London in 1993 to pre- 
vent terrorist attacks it made 
it increasingly difficult for 
courier companies to use 
vehicles far delivery and col- 
lection. 

Federal Express, a market 
on the bnsy transatlan- 
tic route, came up with an 
innovative solution - it set op 
a team of 1 5 City Foot Couri- 
ers ami equipped then with 
the latest data communica- 
tions hand-held computers 
from Prion, operating over the 
Bam packet-switched mobile 
data network. 

Hie Psion HC R406 hand- 
held radio data terminals com- 
bine a MS-dos compatible com- 
puter and a radio packet 
modem in a single rugged bat- 
tery-powered package weigh- 
ing less than 1kg and small 
enough to fit in a pocket. 

The process of delivering 
and collecting parkag wt is con- 
trolled by a dispatch centre 
which sends messages to indi- 
vidual couriers. By scrolling 
through a series of menus on 
the hand-held devide. couriers 
select an ap p ro p ri ate response, 
informing tire centre that the 
message has been received and 
will be acted upon. 

Federal Express has its own 


I i W W • ■ T‘J ') I f-E r- T| * 1 


for its fleet-based operations, 
but this did not offer tire same 
facility for date transmission 
and has limited coverage. 

Mr Graham Bichie. manager 


they used cellular telephone 
connections, 18.5 per cent used 
private or public mobile radio 
and a similar proportion said 
they used mobile packet data 
services. 

In the study, the most impor- 
tant uses listed for mobile data 
communications were tending 
and receiving electronic mail, 
sending and receiving facsimi- 
les, transfering files, accessing 
purchase and inventory data- 
bases and accessing customer 
and invoicing databases. 

According to Dataquest, por- 
table computer sales in Europe 


1991, the top four vendors rep- 
resented 52.4 per cent of total 
sales, but by 1993 this had 
risen to just under 60 per cent. 

Shipments of sub-notebook 
portable PCs - typically weigh- 
ing less than 41b -are also -. 
growing quickly according to - 
Dataquest, although, with con- 
tinued miniaturi sation the dis- 
tinction between notebook and. 
sub-notebook PCs is likely to 
blur over time. At the other f 
mid of the scale, older style lap- 
top PCs -the second genera- . 
tion of portable PCs after 
“transportables” - are all but 


European notebook market share 1993 


By vendor 
Compaq- 20% 


Others 20 % 


X T>‘Sn I - -** *— — - • 

j Toiar sntpmmna: 
By country 


Germany 25% 


Rest of Europe 16% 


SkREMqM 


. - Toafrfba-iStt- 

• : ’■••AST' -4% 

“Ip Kffactean 4»_ £. 

' r . 

. : Esbom. 

' Toirw Thgtiurnarite 2% ^ 

* ’ ” ’ v * / 

utciwr ■ 

. -• ■ Franc® T7% '' 


NWhertands 0% 
, Sweden 9% 
Spain 4% 


were worth $3.6bn last year 
and represented 17.4 per cent 
of the total European PC mar- 
ket. In terms of unit ship- 
ments. portables represented 
145 per cent of the lOSm PCs 

shipped in 1993. 

Growth of the portable PC 
market has flattened since the 
“boom” years between 1990 
and 1992. Nevertheless, Date- 
quest predicts that between 
1993 and 1998 portable com- 
puter sales will grow by a com- 
pound annual rate of 23.4 per 
cent, compared with 8.4 per 
cent for desktop PCs. 

Within the portable PC seg- 
ment, notebook PC sales repre- 
sent the lion’s share of the 
market and sales grew by just 
over 18 per cent between 1992 
and 1993. 

Slower growth in tire note- 
book PC market in Europe has 
led to intensified competition 
between manufacturers and to 
considerable consolidation. In 


dri j ^nri. Perhaps the most dis- 
appointing segment of tire por- 
table PC market, after an ini- 
tial flurry, has been the market 
fin* organisers, personal digital 
assistants (PDAs) and other 
band-held computing devices. 

Although some expandable 
organisers, such as Psion's 
Series 3, have been well 
received, Mr Golbezg argues 
that wider acceptance of hand- 
held PCs is dependent on the 
widespread availability of rea- 
sonably-priced communica- 
tions, in particular wireless 
networking, and on rationalisa- 
tion among the many compet- 
ing platforms. 

In the m ean ti me, however, 
some hand-held computing 
devices, particularly those with 
wireless communication fear 
tures built in, have found 
niches in vertical markets - for 
example, for meter readers, 
traffic wardens a nd the emer- 
gency services. 









Federal Express couriers cany 
computers from Psion, operating 
over the Ram packet-switched 
mobfia data network 

for systems development, 
explained: “The dispatch and 
delivery system (Dads) we use 
for vehicle operations is PMR- 
based and requires a licence to 
operate. It is also expensive to 
maintain. 

“A large number of the 
banks, broking houses and 
blue drip companies in the 
area enclosed by tire ‘ring of 
steel* are oa r cus tomers. To 
maintain and improve our ser- 
vice to them we needed a foot 
courier service with a more 
flexible communications oper- 
ation. 

“The expense involved hi 

extending- the PH& system 
the Ram 


Mobile Data solution was the 
most cost-effective, reliable 
option and an important 
enhancement to our interconti- 
nental service." 


Federal Express tested the 
mobile data solution over sev- 
eral months using separate 
hand-held computers and 
modems. As soon as the Psion 
HC E400 integrated unit was 
available in August, tire deci- 
sion to roll-oxri: was taken. 

Because the operations man- 
ager can keep tabs on all cou- 
riers, be can monitor work- 
loads and change schedules to 
maximise the number of deliv- 
eries each in dividual can 
make. Federal Express expects 
to increase productivity with 
some couriers malting 50-60 
drops before midday. 

Customers benefit from fas- 
ter, mare accurate information 
on the status of their consign- 
ments - once a parcel has been 
delivered the courier can key 
proof of delivery into the 
Psion which then Irnkc to the 
central system to update the 
sender. 

Psion and Federal Express 
worked closely together to 
integrate the mobile terminals 
with the host application 
using Psion’s generic applica- 
tion programming interface 
(APR, Universal Radio inter 
face (tJRJ), which handles the 
communications over the Bam 
network. - 

DBI “talks” to tire Dads host 
from a PC gateway and to the 
mobile applications running 
on tire Psion devices. It mao- 

aps toe -life" 0 f a message. 

farting the dispatcher if cus- 
tomer service is going to fall 
outside promised response 
times. 

The success of the City 
™plementatkra has prompted 
federal Express to investigate 




Jng the same system in its 
ktodmi West End operations, 
. *** experiencing 
traffic flow probl