Full text of "Financial Times , 1995, UK, English" - Internet Archive
Aug. 18, 2025
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FINANCIAL TIMES
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Worid Bus-ness Newspaper
5,800 jobs to go
as Kmart closes
another 72 stores
DS dfsctHint store group, Kmart announced it plans
in close another 12, stores and shed 5,800 jobs,
beiweeaAiignstand the tad of the year. The latest
taltaodaifieni .otaoesrih tap of the cuts announced
last S^tember wh^a Kmart said it was closing 110
discount stares' with the loss of 6.000 jobs. It also
plans to cut its management workforce by 10 per
ctatPagels
Toyotato itagnlctartsjntakw Toyota,
Japan's leading carmaker, is to cut recruitment of
amyersity graduates next spring by about SO per
cent The decision reflects mounting pressures on
the domestic car industry in the face of the yen’s
sharp rise and the risk tariffs on luxury cars
exported to the US. Page 14
Protntm ttiriiliv eggs at Prim* Charies:
Republican protesters threw eggs at the Prince of
Wales during a royal walkabout in the centre of
Dublin (above). Urn eggs missed the prince, who
continued his tour of Dublin’s Trinity College
H3ree yonng mat, wearing republican ribbons,
werearrested.
SWbe MwimcM $432m profit: Siebe. the
UK controls group, announced, a 27 per cent
increased profits to £275 Jin ($432m) in the year to
April 1, airnd reccod demand for industrial controls
and temperature appliances and an improved per-
farmano t by Fbiimrb, its US subsidiary. Page 15:
Lex, Page 14 ; • .
Japanwewiiafing requestrefused: Japan's
request to resume small-scale «irnmercial whaling
has been refused, incite at signs thartbe mterna-
tional comnmmty is softening its attitude to the
Japanese demand. Page 7 ' /
ftanoe to cutlMrior stake: the French
government is 'expected- to reduce its stake in steel-
maker Ustaor Sadlor .to below 10 per cent as part of
to privatisa tion, white a groiq) of core investors
wiU hold about 15 pta cent of its shares. Page 15
SjOl W artwff i ftJBba sate a pp w wrads The
sale of S-G. WartnirB^s investment banking busi-
nesses to Swiss Bahk.Carporation for £860to
(3L35bn) was agreed at a shareholders meeting in
spite of strong criticism of the UK bank’s manage-
ment pxm a former board director. Page '20
Oryx adlsoUstake for $270ms Dallas-based
ail explorer. Oryx Energy, has concluded the largest
assetsale this year in the UK sector of the North
Sea. 1&5 per cent stake in the ° a
field to Urdoa Texas PtaoJeiim for .$27teL Page 16
TMni fafl In US factory orders Orders to US
factories fellby LS per cent in April, the biggest
drep for nine months and. the first tune in nearly
two years that orders have fallen for three consecu-
hvemanths.Page 8
Row ovor Russian quake aid: Distrust
tetween Japan jaiid Russia intensified with a row
mta: Japan's t^er of aidfor victims of the earth-
quato in the far tastern island of Sakhalin. Psage 5
China trade dominance pracfictod: By
Hhina will be the world's second largest economy,
in tire top half-dozen trading economies and the
largest trading partner of each of its neighbours,
according to a study by the Australian National
University, Page.5 ". .
Royri Bank of C an ada eamiwgs up 11%:
Royal Bank of Canada lifted second-quarter earn-
ings by 11 per cent to C$304m {OS$223m), aided by a
sharp drop in Ibah-loseprovisfoto and higher
inoome from smne fbeJxised services: Page 18 .
Honda executive* guOty of brlboty: Two
franner executives of American Honda were found
guilty of accepting more than jlSm in kickbacks
from Honda dralersin a naiSimwide bribery
sdmnm. Pagjed ' ± f: - • : : ‘ ‘ .
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catting affroads,covermg farmland and isolating
a fat a Rtg fa south-eastern Norway north' of Oslo.
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i
By Jurek Martin to Washington,
Laura Sflber in Belgrade and
Bruce Clark in London
Prospects of closer US
involvement in Bosnia dimmed
last night as President Bill Clin-
ton faced a mounting challenge
from Congress to the idea of
sending troops to help the United
Nations peacekeeping force
redeploy.
Britain and France also reacted
cautiously to Mr Clinton’s initia-
tive, presented in Washington as
a gesture of solidarity with two
European allies following the
capture of nearly 400 hostages by
the Bosnian Serbs. However.
Britain welcomed signs of greater
involvement in the crisis by
Russia.
Several prominent US legisla-
tors said they would agree to the
US providing help in the event of
a total withdrawal of the UN
from Bosnia, but not in any other
circumstances.
Senator Jesse Helms, chairman
of the foreign relations commit-
tee, criticised Mr Clinton for set-
ting the stage for the involve-
ment of US ground forces.
“The UN mission is Bosnia has
failed.’ 1 he said. “It most be with-
drawn and the US should not
refuse to assist in its withdrawal
But in no way should American
soldiers be sent to Bosnia for any
reason other than assisting in
such a withdrawal"
The US administration has
refused to contribute ground
troops to the UN peacekeeping
effort in Bosnia, but ft has
recently stressed it is keen to see
the UN presence maintained.
European governments have
consistently argued that with-
drawal, as advocated by US
Republican leaders, would lead
to a significant es calat ion in the
conflict
Mr Hervfe de Charette, French
foreign minister, said Mr din-
ton's offer of military assistance
“deserves serious attention", and
added that Paris was refining its
own proposals for putting the UN
force in Bosnia “in a military
posture" with greater firepower.
Senior British officials said the
US offer, while appreciated, had
not come in response to any over-
tures from Europe, and it was
unlikely to be taken up in the
immediate future.
The US administration said on
Wednesday that it was willing to
come to the aid of Britain and
France if they got into difficulty
Is the course of reorganising
their forces in Bosnia.
Russia yesterday praised Mr
Boutros Boutros Ghali, UN
secretary-general for raising the
possibility that the UN force in
Bosnia could switch to a purely
humanitarian operation which
avoided the use of military force.
Moscow has urged Naio to
limit armed intervention against
the Serbs, its traditional
allies.
“We agree with the secretary-
general that Unprofor [the UN
Protection Force] is not prepared
to, and must not wage war in
Bosnia.” said Mr Grigory Kara-
sin, a Russian foreign ministry
spokesman. “They are not an
army sent to fight one side in the
Bosnian conflict"
Mr Douglas Hurd. UK foreign
secretary, welcomed the prospect
of closer involvement in the hos-
tage crisis by Russia, whose gov-
ernment has warned against the
draconian use of force in Bosnia
by the Western powers.
“It is important on this and
other matters to re-engage the
Russians." Mr Hurd said, adding
that a visit to London next week
by Mr Andrei Kozyrev, foreign
minister, would “help to keep the
Russians dose" in efforts to
resolve the crisis.
Fighting yesterday erupted
round Gorazde. the Moslem
enclave in eastern Bosnia, where
33 British peacekeepers have
been taken captive and more
than 300 others are in danger of
being stranded.
A UN spokesman said the fight-
ing started early in the morning
on the east bank of the River
Drina, which runs through Gor-
azde. “There’s been quite intense
fighting . . . and the town itself is
being shelled,” the UN official
said.
■ .
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Lord Owen (above), who has just announced his retirement as EC
mediator in former Yugoslavia, called yesterday for reform of the UN
Security Council Interview, Page 12 petumiTavAnumwa
VW rejects legal action against former chief
By Christopher Parlces
to Frankfurt
Volkswagen has backed away
from taking legal action against a
former top executive, saying the
group's reputation might be
severely damaged if it were to
lose the case.
Mr Klaus Liesen, VW supervi-
sory board chairman, told share-
holders yesterday that Mr Juan
Antonio Diaz Alvarez, former
bead of Seat, had foiled to man-
age VW’s Spanish subsidiary
properly. An investigation of a
large loss at Seat in by audi-
tors from Arthur Andersen con-
cluded Mr Diaz Alvarez had not
fulfilled his reporting responsibil-
ities to the whole VW board. Mr
Liesen told the annual meeting.
However, the company decided
not to seek damages because Mr
Volkswagen wants to sen to 50
per cent stake to the Europcar
rental business, Mr Bruno Adelt,
chief financial officer, told the
annual meeting y e st er d a y.
- Europcar, which last year lost a
net DM34m (524.1m) following an
after-tax deficit of DM29m in
, efid not belong among the
group's core interests, he said.
The disposal might go ahead
quickly but there was at present
no relevant bidder to whom a
sale would make economic
sense, he added.
Diaz Alvarez’s loyalty was not at
issue, and the chances of success
in the courts could not be pre-
dicted, he said.
The possibility of winning
financial redress had to be
weighed against the risk of a
“considerable loss of reputation"
for VW. if the judgment went
against it, Mr Liesen said.
Instead of legal action, the
supervisory board - which is
responsible for the appointment
and behaviour of t he top manage-
ment - recommended that the
annual meeting should register
its feelings by withholding fop
mal approval of Mr Diaz Alvar-
ez’s conduct The annual Entlas -
tung of top managers is a
traditional part of proceedings at
German company meetings
is usually nodded through.
Mr Liesen 's statement marked
a formal retreat from the aggres-
sive position taken by Mr Ferd-
inand Piech, the group’s chair-
man. Mr Piech said early last
year, after the removal of Mr
Diaz Alvarez and most of his
Spanish colleagues, that in his
view the VW board had been
deliberately misinformed. He
believed “penal consequences”
could follow.
Mr Liesen' s remarks appeared
designed to draw a line under
events at Seat which devastated
Mr PiSeh’s early attempts to
restore VW’s fortunes, and put
an end to at least one of the con-
troversies dogging the group.
The last head to roll in the
wake of the affair was that of Mr
Werner Schmidt, group finance
director, who left last September,
shortly after Mr Pi&ch received
the auditors’ report
Referring to the two-year-old
criminal investigation of indus-
trial espionage allegations
against production director, Mr
Continued on Page 14
TOMORROW’S
Weekend FT
Schliemann’s
fantastic adventures
; DA
Poland
awarded
credit
rating by
agencies
By Graham Bouriey in London
and Christopher Bobinski in
Warsaw
Poland was yesterday awarded
its first investment grade credit
rating by Moody's, the interna-
tional rating agency. The rating,
the first assigned to a country
that has negotiated a debt for-
giveness package with bank
lenders, will pave the way for
the country’s debnt eurobond
offering this month.
However, Standard & Poor’s,
the other large US rating agency,
and IBCA, the European agency,
yesterday chose to assign only
sub-investment grade ratings to
Poland. The country won a debt
reduction deal from banks last
year under the so-called Brady
plan, which cleared a 13-year
default.
The Czech Republic remains
tbe only former communist
country to enjoy investment
grade rating from all three rat-
ing agencies, although Slovakia
was last mouth awarded the low-
est investment grade rate by
Moody's alone.
Moody's awarded Poland a
Baa3 rating for its foreign cur-
rency denominated debt, tbe
agency's lowest investment
grade rating. This puts Poland
ahead of Hungary, on par with
Greece and South Africa, but
below tbe Czech Republic.
IBCA gave Poland a BB+ rat-
ing, while S&P assigned a BB
rating with a positive outlook.
S&P stressed the country's "com-
plex and uncertain political situ-
ation" in its decision. “We need
to have a longer track record,"
the company said. However. S&P
said that continued progress in
economic reforms could result in
an upgrade as early as next year.
Financial markets reacted
favourably to the announcement
with Polish debt traded interna-
tionally rallying strongly.
In London trading. Poland’s
Past Due Interest Rate (PDI)
bonds jumped 2.5 points after
the announcement to 54'A.
“Initially traders were stunned
by tbe difference iu views
between the agencies but then
the reaction has been positive,"
said Mr Dirk Damrau, director of
Continued on Page 14
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From th» Financial Tfrnes May 31
Forward toward political inte-
gration.
To suggest a new showdown
over the ElTs future Is prema-
ture. The present posture of
member states, and of the
European Commission, is to
lower expectations and the
political temperature. The task
of preparing the agenda
falls to an innocuous- sounding
body called the Reflection
Group which convenes with
EU foreign ministers today to
celebrate the 40th anniversary
of the Messina conference. The
group's inaugural meeting
takes place tomorrow in
nearby Taonnina.
The group comprises repre-
sentatives of the 15-member
states, several of whom
(including Mr Fagiolo) are vet-
erans of Maastricht The Euro-
pean parliament will be repre-
sented by Mr Elmar BroK a
Christian Democrat close to
Chancellor Helmut Krihi,
Mrs Elisabeth Guigou, a Social-
ist veteran of the Maastricht
negotiations. Mr Marcelino
Oreja will speak for the Euro-
pean Commission.
The first question is how
long the group intends to
remain in operation. The Span-
ish. who take over the rotating
EU presidency from France on
July L want a report delivered
to the Madrid summit in
December. The tight timetable
virtually guarantees that the
document wlD contain options
and riigja»nHng op inions ; this
may require the group to con-
tinue work next year.
The snag is that Italy covets
the prestige of la unching the
IGC during its presidency
which begins on January L
The prize may be difficult to
deny to a founder member
whose recent political and eco-
nomic troubles have left it
somewhat marginalised in EU
diplomacy: but other member
states, notably Germany, are
reluctant to start the IGC too
soon.
Their calculation is that it
will hard, maybe impossible, to
strike a deal with Britain
because Tory Euro-sceptics
continue to exert dispropor-
tionate Influence over UK for-
eign policy toward Europe. The
consensus in Brussels is that
the conference will stretch
beyond the next UK general
election, which must take
place before April . The
hope is that the next govern-
ment will be more amenable to
compromise, though no one is
betting the farm on the Labour
party.
The second question con-
cerns enlargement, and it
implies a judgment on bow
many of fh<» central east-
ern European countries are
likely to be in the first wave of
accession, possibly around
. “We don’t know whether
we should be designing a
Union for 18 members or 25
members," says a senior Com-
mission official. Tt makes a
big difference."
With a Europe of 18 mem-
bers. it might be possible to get
away with tinkering with the
institutions. But a Union of 25
requires reducing the number
of commissioners (presently an
unwieldy 20) and of MEPs
(626). More important, it guar-
antees the dilution of the
national veto.
The third question concerns
policy. Without some agree-
ment cm reform of the regional
Foreign policy mid defence co-operation
By David Buchan h Paris
Open decision-making
The use of the veto
European parliament's powers
Justice and immigration
Preparation for EU enlargement
AS major attest cards and Ecus accepted
aid budget and the common
agricultural policy, enlarge-
ment to eastern Europe cannot
take place because the costs
would be prohibitive. Vet. to
change the present system
requires a new bargain
between the rich north and
poor agricultural south.
This is a reminder that
Britain will not be alone in fac-
ing difficulties in the Reflec-
tion Group and later at the
IGC. The neutrally minded EU
newcomers - Austria, Finland
and Sweden - will also be in
for a tough baptism, particu-
larly on defence.
Mr Paavo Lipponen, the
Finnish prime minister, gave a
hint recently when he com-
plained about the lack of politi-
cal control over the Western
European Union, the fledgling
EU defence arm which France
and Germany want to
strengthen into an operational
European pillar of the Nato
affian ce. Like the Swedes, the
Finns are wary of being drawn
into a blo c against neighbour-
ing Russia.
But these are early days. The
trade-oils and bargains in the
IGC have barely been identi-
fied. let alone struck.
Mpsstna will be part political
theatre, but the muflfcing s and
speeches may also offer scene
clues about the long road
ahead.
Editorial comment, Page 17
Ministers hard pressed to keep up on defence front
By Snice Clark
Whatever new ideas emerge
from today's meeting of Euro-
pean Union foreign ministers
at Messina, there is one area
where their discussions will
hardly be able to keep op with
reality, and that is defence.
Advocates of closer Euro-
pean integration will be press-
ing bard for an upgrading of
the Western European Union -
a defence organisation that
comprises 10 of the ED'S 15
members - and some want a
gradual mer ger b etween the
EU and the WKG. But while
ministers bold theoretical
debates about whether it is
possi ble or desirable for the
WEU to organise itself with US
help r many of their govern-
ments are concentrating on
something more immediate: an
imminent US role in Bosnia.
The OS has presented its
new-found willin gness to help
reconfigure the European-led
peacekeeping force in Bosnia
as an act of unconditional soli-
darity with its allies.
Yet, despite this warm rheto-
ric, US and West European
approaches to the Balkans are
far from identical. And the
scope exists for huge misun-
derstandings to arise in the
course of a joint US-European
intervention in Bosnia.
The US, for example, has
generally supported the use of
air power in Bosnia while
France now m aintains that
last week’s air raids on the
Serbs were a bad mistake.
Some EU states, especially
France, have argued that
uncertainty over the US role in
the B alkans pas driven home
the need for the WEU to
acquire its own military
assets, including satellite
intelligence and air transport.
Others, led by Britain, believe
the Bosnian crisis illustrates
that Europe will be dependent,
for the foreseeable future, on
US strategic assets to deal
with any real emergency.
Efforts to skirt round this
argum ent and build up the
WEU in a pragmatic, brick-by-
brick way were threatened by
a row that was simmering
behind the scenes at this
week’s Nato meeting in the
Netherlands.
The Nato ministers' commu-
nique uses ice-cold diplomatic
formulas to describe the recent
establishment by France.
Spain, Italy and Portugal of a
joint land force, known as
Enrofor, and a naval force
called Euromarfor. 1 ™***°^ of
welcoming the initiative, the
ministers could only agree to
“take note or the new units -
an infan try and light artillery
force based in Florence, and a
naval force led by a French
aircraft carrier.
Diplomats commented that
this frosty language reflected
US concern that over-hasty
European moves towards
self-reliance in defence - an
idea Washington approves in
principle - could undermine
transatlantic relations.
A meeting of European min-
isters in Lisbon earlier this
month decided that the new
forces would be employe d “as
a priority” within the WEU
framework, though at UK
insistence a statement was
added that they would equally
well be used by Nato.
While the Bosnian conflict
may yet reduce this question
to irrelevance, the outbreak of
a small tr ansatlanti c war of
words over defence theology is
a somewhat gloomy omen for
US-European co-operation in a
real war.
European, corporate treasurers
yesterday broadly welcomed
Brussels’ plan for the transi-
tion to monetary union, but
expressed concern at the pros-
pect of having to deal with par-
allel sets of accounts or curren-
cies.
At a Paris conference of cor-
porate treasurers, held - in
advance of today's Messina
meeting to start preparations
for next year’s intergovern-
mental conference, Mr Wes-
Tblbaolt de Silguy, the mone-
tary affairs commissioner,
found a mixed reaction to his
green paper on preparations
for a single currency from
many of those who will have to
deal with the practical ramifi-
cations.
Mr Francois Schlumberger,
president of the French corpo-
rate treasurers’ association,
favoured a rapid and complete
switch by all banks, and there-
fore most companies, to Sen
accounting following the lock-
ing of currency parities.
But his German counterpart,
Mr Johannes Puhl, said ‘the i
later the change-over takes |
place the better, because you'
can’t have two currencies at
the gamp time”. Mr Puhl was
particularly sceptical of gov-
ernments’ ability to pick “the
right rate” at which to lock
their currencies, citing Ger-
many's TnistakB in giving the
old East German Mark a
one-to-one parity with the
D-Mark.
Mr George Grennan and Mr
Jimmy Doyle, of the Irish cor-
porate treas ur ers’ association,
stressed that their country’s
main problem in subsuming
the Irish punt into the Ecu
would be the latter’s rate
against sterling in the UK,
Ireland's biggest trading part-
ner.
Mr Mike Northeast, repre-
senting British corporate trea-
surers, said Ms members'
riflmunn in preparing for a sin-
gle currency was essentially
whether the UK would join it.
“There is a huge amount of
De Sflguy: mixed reaction.
THE FINANCIAL TIMES
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F
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WE LIKE CHALLENGES
IN FACT WE THRIVE ON THEM
OUR THANKS TO EMIR KUSTURICA
UNDERGROUND
Winner of the Palme d'Or at the Cannes Film Festival
tf'iin*'
noisy n
monetary union
, a '
Ssr r..-* .
uncertainty in. the process pro-
posed by the Commission, but
at least its tiinetable-ls prag-
matically short," he said.
Spanish corporate treasures
said their main fear in the
transition to a single curren cy
was that, in a country .with
many subsidiaries of multina-
tional groups, most decisions
about accounting switches
would be made outside Spain.
;•£ sag
W K W
jr T- —
~ . - :•
Kuchma’
*. ;• js.-ag.
• -.
ix'
. .-4
don Ire Dsvid CM. BriL and
Abm C. M2kr. Deputy Chairman. Share-
holders of the Finanaai Tima (Europe)
GmbH are The FmanciaJ Tlnaa
Sflor. Sr ? e»»» -.'7'" ^ "■»
r*£. isY^Ss*
3? -Subsi de— &; "j‘ >
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ffRssoir times —
ap^Mts. w-i- ^ -. v- ~
SfcttcFi-. iS'rPr
9 aa v.\.->...i.".
V*- »■*
U^- -“-it
3*$- ascfc-ir; . -
muz: -
it fc-_->- .
fc* after par liament a gain fflfj p d to
ratify mngtit ntinnfli amendment giving the president broad
powers to end the obstruction of economic reforms. By a
. resounding 25S-9, MPst decreed unconstitutional the proposed
plebiscite and prohibited the government from using tax
revenues to pay for it Mr Kuchma’s frustration with the
legislature centres on its reluctance to adopt laws stipulated to
an QlfFhadced economic reform p r ogramm e.
tog Ukrainians gathered to
hear Mr Clinton’s speech last
month, giving him the sort of
rousing reception generally
reserved for rock stars and
royalty. Ukrainian leaders
were equally forthcoming,
publicly endorsing an east-
ward expansion of the Nato
alliance for the first time.
- Ar similar contrast was
apptoent yesterday to Brus-
sels, where Mr Kuchma signed
the interim trade agreement
with tiie EU, Just three days
earlier the EU again decided to
.delay an identical deal with
Russia, as an expression of its
objections to the bloody and
ongoing war in Chechnya.
- Western leaders appear to
have decided that backing
Kiev is a way to build up a
counterweight to Moscow;
without directly undermining
existing relations with Russia.
-Raining to Russia's increas-
ingly aggressive nationalism
via Kiev Is particularly attrac-
tive because Ukraine’s current
leaders are more alive to the
.need to appease the Kremlin
than the most pro-Russian
western policy-maker.
to contrast with the vocifer-
ously .nationalist Baltic repub-
lics, Ukraine, which depends
on Russia for its fuel and has a
large ethnic Russian popnla-
tionr-has been careful to couch
its" efforts to bolster its inde-
pendence in terms which do
hett unduly antagonise
Moscow. ■
One example is Mr Kuch-
ma’s delicate handling of Cri-
mea, whose separatist move-
ment poses the greatest threat
to Ukraine's territorial integ-
rity. Mr Knchma tolerated
extensive autonomy in Crimea
until the outbreak of the Che-
chen war. Then, at a moment
when Russia found it politi-
cally impossible to protest,
Kiev unilaterally abolished
Crimea’s special status. Rus-
sian leaders, embroiled to a
bloody war against breakaway
Chechnya at home, found
themselves publicly support-
ing Ukraine’s peaceful moves
to thwart Crimea's ethmc-Rns-
sian separatists.
'—And wrhile Mr Kuchma’s
government has been a deter-
mined defender of Ukraine's
national interests in its
actions, it has taken great
pains to offer Russia effusive
rhetorical support Thus, the
Ukrainian president commem-
orated the 50th anniversary of
the second world war by warn-
ing that “he who tries to cre-
ate a quarrel between the
Ukrainian and Russian people
will be damned by every
generation".
Mr Clinton expressed his
appreciation of Ukraine's mea-
sured policy towards Russia
by describing it as "just
right”. He approvingly cited
Mr Kuchina’s desire to estab-
lish a relationship with Russia
similar to the links between
Canada and toe United States.
Spanish
PM faces
rift with
Catalans
By David White (n Madrid
Relations between Mr Felipe
Gonzdlez’s Socialist govern-
ment and the Catalan national -
ists. whose support he needs to
remain in power, have entered
a difficult phas e in toe wake of
the disappointing performance
of the Catalan party in last
Sunday’s local elections.
Mr Jordi Pujol, the leader of
the centre-right Convergence i
Unto (CiU) and the Catalan
regional president, has reaf-
firmed his pledge to keep sup-
porting the government at
least until the end of this year.
But his statements to the
past two days on the govern-
ment's pnftnnrriiff an d regional
policies, and his opposition to
its plans to liberalise the abor-
tion law, appear to he prepar-
ing toe ground for an eventual
parting of ways between the
two parties.
The CiU is now expected to
move towards a closer relation-
ship with toe opposition Popu-
lar party, which made big
gains in last Sunday's elec-
tions.
Mr Pujol has come under
pressure to his own party to
distance hirngpif from Mr Gonz-
alez after a fall to Convergen-
ce’s vote in Catalonia in the
municipal elections from 33 per
cent to 30 per cent, partly
because of its support for the
unpopular prime minister.
On abortion, Mr Pujol
warned the government after it
announced it would pursue lib-
eralisation: They are going to
create a problem for us with
this."
He has also called into ques-
; tion the government’s “will
| mid capacity" to move forward
with trmg h budgetary policies
1 and devolution which it agreed
with toe Catalan party, since
the Socialists will be reluctant
to lose further support ahead
of the general elections due
next year.
He warned yesterday that
the debate on the budget
would be “very difficult" If
regional policy problems were
not resolved in advance. "The
problem is knowing whether
the Socialist party is capable of
carrying out the budget it
needs in ," he said.
The Spanish cabinet is
expected today to agree on a
further transfer of powers to
Catalonia. The. two parties
have also resumed discussions
in parliament to resolve differ-
ences over outstanding legisla-
tion, including coastal building
restrictions and cable
television.
The government’s announce-
ment that it would press ahead
with liberalisation of the abor-
tion law, to make it effectively
permissible on demand, came
after pressure from the Com-
munist-led United Left and toe
Socialists' left-wing.
However, toe proposal faces
difficulties in the senate, where
the Popular party, which is
opposed to the reform, is now
the largest party.
Strikes test Romanian reform
Virginia Marsh reports on a government’s economic balancing act
"by 37,000 77 with mass privatisation anc
electricity Workers, to •- T*'. y- v*; ^- ■ \ - - • •• ■/ • - - •••" restructuring. Analysts saj
walk out today if toefr - - *&&&& • Mwdmfa * •xporia CSbn? . strikes are not only more fre
TT : 12
»i»agHcaiMb. .-**■*
A threat by. 37,900 state •: ' ^TW H iU Hi r ft T til
electricity workers, to - ;JT7 r ^-T '4 -. 11 -,:. '• •
walk oat today if. tfaefrv - loesfSon /.
pay demands are not.- met wffl . . : r _ 7 ■.
test the Romanian govern- ^
mentis commitment to- reform . -"i*: '* ■■
' and. restrtictyriiy - of-'' - - thtf-' v
the staled : .■ Y . 't
comes aL a time of^erowtog - **•
labour imrestv^liertorM larg- ~ • * - - ~
est trade imion'co&fedjeratioris, ,V
representing, mbrev.thaa ^.^r- : 7'r
workers, yesterday; "resumed ; ' , .
talks wtto toe goyej^nent bid ' .. "
have not' rided 'dot a .general. - 1 i ; '
strike U a- i^opronSse' vnfel '^hteier. ^
pay. demands is not iirached. " u V
'. Tie shbwdcr»m;; w^ Tthe /
unions -'catiBK-^ 2 --^he^ gN9i^ : • »7v>V .. •.-/ : ' Vr . : '
.ment, .. ei^weak' n^nprityj of-, last year, whfle; exports rose
left-win g ., and ^gffnrialifl t ipar : '- ' ~^3S pg- cent according' to ofB-
ties, is underittreasing pire^^c^' statistics, 7-'
sure from the InlernattonaT^ : - ^ch companies, many of
Monetary jind and World them private, were aided by a
Bank to spgeiLi^ privatisation; . more ^ stable, macroeconomic
Five'- years^affcgrr tlto .end; of;; enyironiheia:- ^and improved
communist sec- accessto foreign 'exchange and
tor stiil aaxmnt^f or ;90^ per ; tCBBdits.^ \ :
cent of indhstriakpJpdnctitHL ' 1. . Consumer price inflation fell
Ail IMF mission ^ef^Budiai^ ' is^expected’to faUbelowSO per . '
est last week. wjtiHitoa^eetog ^ , Vceajt. l^-' to% end -of-' this year
to release;?2Rtoi;fe TnTani^^ Decemba -
Joans, » Domestic .. household
hi ra&rmtog-st^£^coifip^es. 7sav£pgs -mbre t&an doubted in
The dda^ are ftl Rn hnldteg^ re^ terms in . ,
a s^ar^$2S0m^regfructuring ^ companies ' ai^ue
Inan frr^^ B a^k. v that growth of toeir sector.
a* ger.9&
The. delays are- fiiRo • h oldtay np
loanfHHu_1h£5^ffi4Baak.
The IMP harik ' say-' "‘which aftetA xapid rise to the
rapid feforin x>f s^e-^entor^" ' pOst^coirHminist years slowed
prises is -ess^dSal to uiWterpin . last yrar.fr) ju^; 3 per emit, is
promising: •macro^ecoubmic depfendemt' *on : restructuring
reforms ^d thfi export4^ ; and privatisation. Last year,
recovtay^toop^-iSmantos- ; toe private-=seqtor accounted
At the ro^bcaft c^toerecevay 7 . Rtf 35 pegegnt- of GDP. .
have been sectors sriciL.aa toe
light industry;. ffiianfial ser^
vices, cmisfrE£tiQuaM^grkut
tore, which together, ctmtrib-
uted to .an inbrease of: a.4 per
. . Memy ^Tvate comjanies are
therefore sympathetic to the
government's aim of closing
down, large stat&owned compa-
nies with the resultant loss of
in gross douMEtte iproduct - thoussmds of jobs. Romany's
jobless ratetoas averaged S-1I
per cent over the last three
years, less than in most other
former eastern bloc countries.
. The Present labour unrest
has been sparked off by the
socalled “Ordinance NoJ.” —a
rn^sh. hated government deci-
sion issued to January whidi
caps state sector pay at last
November's levels tord links
future wage increases to pro-
ductivity. Until then the gov-
ernment had preferred
across-the-board pay awards
linked to inflation.
The labour unrest is oik of
many 'signals that after five
years of difficult and panful
economic reform toe patterns
of the people is wearing thin.
For many, living standards
have fallen below those during
the communist era, while aver-
age real wages, now at about
$100 a month, are a third less
than in .
Job Insecurity is also
increasing, with unions warn-
ing of largMcale job losses if
the government presses a h ead
with mass privatisation and
restructuring. Analysts say
strikes are not only more fre-
quent: they are becoming less
manageable. “Before the gov-
ernment had to deal with a few
large national union confedera-
tions from time to time. Now it
has to deal with very many
less organised disputes at the
local level This is much more
difficult - it’s like watching 10
rabbits all round the country
simultaneously," says Mr Dorel
Sandor, head of the Centre for
Political Studies and Compara-
tive Analysis, an independen t
think-tank in Bucharest.
Strikes normally tail off in
Romania as summer
approaches. -
Food and energy bills fall
and many people are busy
tending plots of land returned
undo - a law which gave
hark nationalis ed farmland to
some 5m former owners, more
than a quarter of the adult pop-
ulation.
But, with one eye on next
year's general elections, the
country’s leaders are balancing
the requirements of multilat-
eral lenders and the need for
reforms against how much,
they think the population will
be able to brer next winter.
“We have to navigate care-
fully” says Mr Mugur Isarescu,
central hank governor. “We
cannot reform without the pop-
ulation's support We have to
be careful not to create a new
social explosion which would
discredit what we have
achieved so for."
But he also says the country
must deal with “the black
holes" in the economy - the
big las making companies -
“so as not to contaminate the
healthy part of the economy”.
EUROPEAN NEWS DIGEST
Brussels starts
R&D offensive
1 The European Commission
launched an offensive yesterday
to fight competition from the US
and Japan in key future markets
such as pollution-free cars, a
new generation of aircraft and
educational software. “We are
very much lagging behind the
United States and Japan in
research and development," said
Mrs Edith Cresson (left), toe
European research
commissioner. Together with
her Industry and transport
counterparts. Mr Martin
£ ; . Bangemann and Mr Neil
Kinnock, Mrs Cresson
announced the creation of
special task forces to pool
European research efforts. The different groups will organise
hearings soon and produce firm proposals by the autumn.
The Commission win co-ordinate existing policies and
projects between its different departments, national
governments and industry, but it is up to industry to decide
which ideas to pick up. The ElTs common research budget will
absorb Ecul2^bn (£10bn) in the four years to - its third
largest money-spending policy after agriculture and structural
funds. Reuter, Brussels.
Sweden seeks £4bn Emu fond
Sweden's Social Democratic government said yesterday it
wanted to raise SKrSObn (£4bn) from privatisation issues by
the year as part of its plan to meet toe convergence
criteria for joining the final phase of European Monetary
Union (Emu).
The government said it also planned a further SKrlGbn
package of spending cuts and tax increases in addition to
tough measures already taken to ensure elimination of the
budget deficit - currently running above 10 per cent of gross
national product - in . The additional package will come
on top of SKrH5bn in budget strengthening measures enacted
since the Social Democrats took power late last year - a figure
equivalent to 1L per cent of GDP.
The ambitious privatisation programme is more than double
toe amount raised by the former conservative administration.
Officials said the main sources would be Nordbanken. taken
overby the state during a loan lore crisis in but since
returned to profit and two companies set up to administer
“bad” assets taken over by the state during the bank crisis
called Securum and Retriva. Hugh Ccnmegy, Stockholm.
Russia calls general’s bluff
The conflict between toe Kremlin and Russia’s most
outspoken general took a new twist yesterday, when the
Ministry of Defence accepted the general’s proffered
resignation.
General Alexander Lebed, an officer whose hard-hitting
criticism of the Kremlin has helped to make him popular
among the army's rank and file, offered to resign from his post
as commander of Russia's 14th army to Moldova earlier this
week to protest government plans-to downgrade and
eventually withdraw the army.
But yesterday Gen Pavel Grachev, the Russian defence
minister, called Gen Lebed’s bluff, accepting the general's
resignation and downplaying the importance of the affair. Last
year Gen Lebed, who harbours political ambitions, retained
his post after a similar showdown. Chryslin Freeland, Moscow.
Romania rejects minority clause
Romania yesterday refused to include a dear commitment to
minority rights in a planned treaty with Hungary, damping
chances of an agreement to settle a long-standing dispute.
The Romanian foreign minister. Mr Teodor Melescanu, said
his government could not agree to the wholesale adoption of
Council of Europe norms on the treatment of national
minorities in a so-called “basic treaty” with Hungary.
The Hungarian government has frequently said full
1 adoption of the Council’s recommendation , which
provides guidelines on the treatment of national minorities,
was essential if a basic treaty with Romania was to be agreed.
The treaty is a precondition for membership of the European
Union and Nato. Reuter, Budapest
, US signs new Azores base deal
1 Portugal and toe US yesterday agreed a five-year extension of
US use of the military air base on the mid-Atlantic Azores
islands under a renegotiated accord that emphasises bilateral
1 cooperation over fin a ncial remuneration.
Mr Warren Christopher, the US secretary of state, travelled
to Lisbon to sign the agreement on the Lajes base, which has
been used for refuelling a nd maritime reconnaissance since
the second world war. Lajes can provide strategic support for
US operations to toe Middle East, Africa and Europe,
including the former Yugoslavia. Peter Wise, Lisbon.
Spanish doctors’ strike setback
A three- week-old hospital doctors strike to Spain took a new
twist yesterday when an agreement for a return to work
signed between the medical profession and the Health
Ministry was declared void by the government after the
doctors claimed they had negotiated big salary increases.
Officials said the doctors had misinterpreted the deal and
exaggerated the pay award. The doctors accused the ministry
of reneging on the deal after pressure from other government
departments fearing similar claims. Tom Bums, Madrid.
ECONOMIC WATCH
French unemployment falls
The number of people out of
France work In France fell sharply in
. .. . April, declining by just under
Unemployment rate ^(54] • 23,000 to 3^6nu according to
12J --—--Jj — — r figures released yesterday by
g. ■ the Labour Ministry. But
A. despite the size of the decline
/ - the biggest monthly fall
I 2 j} . since ~ the
/ . unemployment rate remained
/ at 123 per cent of the
• ~ f workforce, the highest among
- 11,5 ~g . ' : J~. toe G7 group of industrialised
/• countries. TTie new
1* .conservative government of
■ J ~ ■ r’' , 1 i Mr Alain Juppe, toe prime
11 ■ ires 94 96 minister, has said it will give
_ • _ _ _ • priority to the fight against
sotra: Datastream unemployment and has set a
target of creating lm jobs over the next three years. French
unemployment has Men by just under 82,000 since its May
peak and there has been a marked fall - 2.1 per cent - in
toe number of young out of work.
However, the number of long-term unemployed, those out of
work for more than a year, rose by 0.3 per cent to more than
L2m. Job creation schemes due to be included in a
mini-budget later this month are expected to include a
monthly subsidy of FFr2,000 (£251) and reduced payroll taxes
for companies to hire the long-term unemployed. The cut to
payroll taxes is aimed at easing the structural rigidities of toe
French labour market John Bidding, Paris.
■ Norwegian unemployment fell to 4.4 per cent to May. from
•L6 per cent to April and 45 per cent in May last year.
■ Danish unemployment feD to 10.0 per cent to April from 10J
per cent in March and 12.6 per cent last ApriL
Sours QulustHtiuii
• r* V >\
J -VI ^ _ ' •
, > ^ yj%'
■ j ..-I ... r B m
NEWS: WORLD TRADE
EU warned over Israel trade pact
By Julian Qzanne in Jerusalem
Israel's trade and industry
minister yesterday attacked
the European Union's “petty
bureaucrats" negotiating a
new trade association agree-
ment with IsraeL
He would vote against the
draft agreement if it came to
cabinet unchanged, he said.
In an interview, Mr Micha
Haris h warned that European
companies would lose hun-
dreds of millions of dollars'
business in Israel as the gov-
ernment took measures to
divert trade from Europe to
other trading partners.
The warning camp after Mr
Manuel Marin. European com-
missioner responsible for the
Mediterranean, said in Brus-
sels yesterday that EU minis-
ters would initial the agree-
ment as it stands when they
meet in Luxembourg on June
IS-
Mr Marin bad told Israel that
the package on the table,
which gives it a special rela-
tionship with the EU. with
unprecedented access to EU
markets and its decision-mak-
ing machinery, was all it was
going to get.
Mr Hari5h said any new
agreement with the EU should
be based on cutting Israel's
trade gap with Europe. Israel's
trade deficit with the
Union's 12 members soared to
S7.8bn-
This year's was expected to
worsen, because of Israel los-
ing the trade advantages it bad
with the three former members
of the European Free Trade
Association, now formally in
the Union.
“Israeli exports grew last
year to everywhere in the
world except the EU because
we are facing non-tariff barri-
ers," Mr Harish said. *1 will
not support this agreement
because it will not change our
trade deficit"
The EU would have to agree
to two fundamental changes
before he, and several other
cabinet colleagues, could sup-
port the agreement First it
would have to grant Israel's
demand to observer status on
the committee which decides
the priorities of the EU Fourth
Research and Development
programme.
Second, the EU would have
to include Israel in the Out-
ward Processing Traffic
accords allowing European
countries to use Israeli fabric
and yarns in textiles finished
in Eastern Europe- He hoped
the EU would make changes to
boost Israeli agricultural prod-
ucts and hold further talks on
other outstanding issues such
as access of Israeli companies
to public procurement in tele-
communications.
Israel bad received firm sup-
port from Mr John Major, UK
prime minister; French prime
minister Alain Jupp6 and Ger-
man Chancellor Helmut Kohl,
but Brussels bureaucrats “had
refused" to translate this into
concrete agreements. The EU
pact would be number one on
file agenda when Chancellor
Kohl visits Israel next week.
Mr Harish warned that EU
companies, which exported
$12.lbn (£7-5bn>worth of goods
and services to Israel last year,
would be losers if the trade
agreement was not signed. Efis
ministry was already making
efforts in both public procure-
ment and the private sector to
divert trade from Europe to
North America and Asia, with
which Israel has positive trade
balances. How to lower cus-
toms duties to allow Japanese
and Korean companies to com-
pete in the electricity sector
was also bang studied.
He hoped soon to sign a
trade agreement with Jordan,
allowing it immediate preferen-
tial treatment and mmyn rHing
both states to free trade within
12 years. The agreement could
become the basis of a regional
free trade bloc. Work was well
advanced on free trade accords
with Canada, the Czech Repub-
lic, Slovakia and Hungary.
T alks with Turkey would
speed up once problems over
textiles had been resolved
Harish: special relationship
US group to build French fibre optic network
By Alan Cane in London
Uid John Ridding In Paris
The European telecommunications
market took a further tentative step
towards liberalisation yesterday when
MFS Communications, a US-based
telecommunications operator, was
awarded the first licence in France to
construct a fibre optic network for
business customers in competition
with France Telecom.
The 20km loop of optical fibre, rep-
resenting an investment of some $20m
for the US company, will be laid In
Paris where it will provide services
including corporate voice and data
transmission, as well as the delivery
to the desktop of financial informa-
tion in video form.
MFS has already built metropolitan
optical fibre systems in London and
Stockholm. Earlier this year it
announced it had been granted a
licence to contract a fibre network in
Frankfurt, opening a significant
inroad into the monopoly operated by
Deutsche Telekom.
The French telecoms regulator, the
Direction Gbnerale des Postes et Tele-
communications (DGPT). said the
move marked the first time a private
company had been granted permis-
sion to operate services for several
companies. Under existing rules, oper-
ators other than France Telecom, the
state-owned operator, are only
allowed to offer voice and data ser-
vices on private networks owned by
individual companies.
An official said that other French
and international communications
groups were in contact with the
DGPT concerning similar licences.
There are already more than 400
independent internal corporate net-
works in France, ranging from SNCF,
the national railway system, to Elec-
:*iSS
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T JT otd an. {.'«,* r r ? in politically correct dO'st tunc irhcn ever/ a co/nfurting •rrm nraund the shoulder amid Si
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h t? /ire, hi ease \ott haven't seen the A.*.-,--
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eaclL Reuter. Tokyo
TAT, Air France pact extended
Japan Air Lines and Air France have extended their
JSJS^^tionship with a agreement to share
S^n t n?^ p, ^® rammes 304 eack other in airport
two carriers, which began their link 35 years
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Au f* 5rt 35 Air France. The Frendiranier
wll have the option to do the same at Narita at a later
Michiyo Nakamoto, Tokyo
if U
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Milaiid
focus oil
laving debt
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NEWS: ASIA-PACIFIC
K s ® China ‘will dominate markets’ by
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By Tony Walker in Bering
China hy the year will be
the world's second largest
economy, in the top half-dozen
trading economies and the
largest trading partner of each
of its neighbours, according to
a study by China experts at the
Australian National Univer-
sity.
It forecasts China win also
dominate world markets for
labour-intensive commodities,
with production shifting gradu-
ally to inland areas. Its south-
eastern coastal provinces will
become centres of high-value
production, and deeply inte-
grated into the wider East
Asian economy. Foreign trade
win grow more rapidly than
production, at an average of
about 12 per cent for both
exports and imports.
The authors are confident
about continued rapid eco-
nomic growth in the region.
“Structural changes in China’s
economy are strengthening the
base for sustained rapid
growth. The dynamic non-state
New Zealand to
keep focus on
repaying debt
By Tony Hall in Wellington
The New Zealand government
will continue to focus on
repaying debt, despite growing
fiscal surpluses which are
creating demands for increased
social sp ending . Mr Bill Birch,
finance minister, said in his
budget speech yesterday.
He estimated that the coun-
try would show a fiscal surplus
of NZ$2.6bn (£l.Q8bnl in the
year to June 30. of which
NZ&L3bn would go to reducing
debt. “This will be a major step
in saving our children from a
huge debt burden.”
The projected surplus fol-
lows a NZ$800m surplus last
year, the first for many years.
Mr Birch forecast that the sur-
plus next year would be
NZ$3.3bn, rising to NZ$S.4bn in
and NZ$7.8bn in .
Most of this would go towards
reducing debt which now
stands at NZS31bn_
Mr Birch said the target was
to reduce debt to per cent
of gross domestic product.
Debt was reducing quickly. It
had been 51 per cent of GDP in
. and would be 37.5 per
cent at the end of this year,
falling to 33.6 per cent in the
next 12 months before reaching
the target level in. .
The budget ignored growing
demands from opposition par-
ties that a “social dividend-
should be awarded to the low-
er-paid and under-privileged
who statistically have fared
badly in the government's eco-
nomic-reforms. Mr Birch said
the government was investiga-
ting making tax. cuts for lower
and middle-income earners.
Details would be announced
Bill Birch beads for the
debating chamber yesterday
with his budget speech Reum
next year, provided the debt
reduction programme was on
course.
“By holding the current
course, we can anticipate a
number of reductions in tax
rates over the next few years.
New Zealanders pay too much
tax." The budget announced
increased spending in a num-
ber of areas, including educa-
tion. hospitals, roads and
research and development, to
cost NZ$900m this financial
year.
Mr Birch reaffirmed the gov-
ernment would stick by its
controversial programme to
give NZ$1 bn over the next
decade to Maori people for land
grievances dating track to last
century, committing NZS54Qm
for this purpose over the next
five years.
| ASl^PACITO
Landmine ban
urged on UK
Britain will come under pressure today at an international
conference on the impact of l andmin es to impose a blanket
ban on the manufacture, export and use of anti-personnel
mines. The conference, attended by delegates from 41
countries, is in Phnom Penh, capital of Cambodia, one of the
countries worst affected by landmines. Mr Rae McGrath, the
director of the Mines Advisory Group, a British demining
charity, said that by refusing to take alead in imposing a ban
on landmines, the UK was tacitly condoning their use.
Britain last July bowed to international pressure by
ann o uncing an indefini te moratorium on the export of mines -
recently extended to other “non-detectable” devices. In
February, the UK also ratified the United Nations
convention restricting the use of such, weapons. Britain has
not exported landmines for several years, but has held out
against a total ban. The Foreign Office has instructed the
British embassy to brief participants on Britain’s position, that
landmines constitute a portable, useful and legitimate means
of defence. Jonathan Miner, Phnom Penh
OECD backs Australian stance
In a broadly encouraging report on Australia, the
Organisation for Economic Cooperation and Development
concluded yesterday that the country had reached “the point
in the economic cycle where the authorities’ resolve to achieve
sustainable growth and lock in low inflation will be tested”.
While economic growth appeared to be slowing from
rates, it was “likely to need to slow further if a build-up of
inflationary pressure is to be avoided”.
Over the longer term, faster non-inflationary growth could
be achieved, provided the economy's “productive potential”
was fostered. The report noted Australia's efforts to reform its
labour market structures and introduce a nati o nal
“competition policy”. This is aimed at increasing efficiencies
among utilities, in the transport sector, and the professions.
-But healthcare was another area where “micro-reform
promises large returns”. The report suggests that attempts to
contain expenditures through budgetary caps for public
hospitals have undermined efficiency. Nikki Tail Sydney
Tamil rebels killed in offensive
More than ®) Tamil rebels were killed in a Sri Lankan army
o ffensiv e against abig guerrilla jungle base yesterday,
according to Brigadier Sarath Munasinghe, military
spokesman. He said the army lost two officers, including a
battalion commander, and five soldiers when the Tigers
pounced on them during the jtmgie operation at Thiriyaya.
about IS miles north of the eastern port of Trincomalee. Ten
soldiers were missing. It was the biggest army operation since
the rebels broke a trues and resumed fighting in April, taking
' teat least 77 the death toll in efagfag between the rebels and
security forces since Wednesday night Last week, the Tigers
shot or hacked to death 42 civilians at the fishing village of
Kailarawa, about 10 miles from Thiriyaya. Reuter, Colombo
■ The Bank of Japan increased its foreign reserves by $604m
1x377.5m) last month to a record $bn, in an attempt to
restrain the relentless rise of the yen. The increase, while
smaller than in previous months, marks the 19th month in a
ri)W in which the central bank has accumulated extra
reserves, by selling yen for dollars. William Dawkins. Tokyo
■ South Korea's customs-cleared trade deficit widened to
$L09hnin May frwn m a year earlier and S993m in April
trade ministry provisional figures showed. Reuter. Seoul
sectors are rapidly increasing
their share of total activity.
Savings rates are now second
only to Singapore in East Asia,
and still rising.”
They also note that Asia's
economic transformation is
consolidating and China is
integral to this process. “It
became clear in that the
frontier of East Asian-style
growth had shifted to incorpo-
rate some inland provinces of
China, and Vietnam; and was
stretching towards the Philip-
pines and into South Asia."
But the report also forecast a
bumpy road ahead for China,
where growth at an average of
about 9 per cent will “continue
to be uneven, marked by
expansionary excesses and dis-
ruptive corrections. It is
unlikely China will have devel-
oped effective market-based
mechanisms for monetary con-
trols within a decade.
“Average inflation rates will
remain high, perhaps 8-10 per
cent and higher at times. This
will require depreciation of the
renminbi after the adjustment
to the current period of exter-
nal strength.” Amid a strong
export performance, China has
built up its foreign-exchange
reserves to about $60bn
(£37^bn) over the past year.
The report expects growth to
slow to io per cent this year
and 8 per cent in . Inflation
will decline to 15 per cent in
and “towards 10 per cent
in ”. It describes a “virtu-
ous circle” for future economic
growth based on the expansion
of inter-provincial and inter-
regional trade.
Problems of state enterprise
deficits fuelling monetary
growth and inflation present
China with its biggest chal-
lenges. however. Other chal-
lenges include relations
between the centre and the
provinces and the introduction
of a modem corporate system
into the state sector.
Asia Pacific Profiles ; Asia-Pa-
cific Economics Group,
Research School of Pacific and
Asian Studies, Australian
National Unwersity. Canberra,
ACT Australia
Yeltsin gaffe on
earthquake aid
angers Japan
Hopes rise on end to HK court row
By Simon Holberton in Hong Kong
Hopes remained alive last night for a
settlement to the Sino-British dispute
over the future of Hong Kong’s legal sys-
tem after a marathon negotiating session
ended with both sides agreeing to meet
nest week for further talks.
The continuation of talks was seen in
Hong Kong as encouraging. A successful
outcome would boost business confidence,
shaken by the row over the establishment
of Hong Kong's court of final appeal.
The court will replace tbe judicial com-
mittee of Britain’s Privy Council as Hong
Kong’s highest appellate jurisdiction after
China resumes sovereignty over the
colony in mid-. Britain has main-
tained that early establishment of the
court is vital to preserving tbe rule of law
in Hong Kong.
China took British negotiators by sur-
prise this week when it offered a compro-
mise “package deal” over the court. Part
of this is believed to be a retreat by Bei-
jing from its initial insistence that its
judgments be subject to some form of
extra-legal administrative oversight.
Mr Richard Hoare, a senior Hong Kong
government official leading the British
side, said last night the UK had given a
“positive response” to the package of pro-
posals which China had put forward. He
declined to elaborate.
Doubts remain within the British camp
that China is serious about reaching con-
sensus. Tbe Hong Kong government bad
planned to publish its proposed legisla-
tion for tbe court next week as a prelude
to initiating tbe legislative process; some
believe China's last-minute intervention
is an attempt to forestall that move.
The main sticking point between the
two has been over the extent of the
court’s jurisdiction.
China has been concerned that Hong
Kong’s highest court should not be able
to judge matters pertaining to China’s
sovereignty over Bong Kong. Britain
believes past accords between the two
about “acts of state”, such as foreign
affairs and defence, should allay China's
concerns.
Governor Chris Patten told the Legisla-
tive Council, Hong Kong’s law-making
body, yesterday that he would prefer to
bring legislation to the council which had
the blessing of both countries, bnt that
time was running out.
Legislation to enable creation of the
court would be put to LegCo before the
end of the present session which finishes
at the end of July, he added.
By WBIiam Dawkins in Tokyo
Mutual distrust between Japan
and Russia intensified yester-
day. with a row over Japan's
offer of aid for victims of the
earthquake in the far eastern
Russian island of Sakhalin.
Mr Tomiichi Murayama,
Japan’s prime minister,
described as “regrettable" a
reported remark by Russia’s
President Boris Yeltsin that
Japan might use assistance to
Sakhalin to apply pressure
for the return of four Russian-
held islands off northern
Japan.
The Russian government
hastily tried to undo the dam-
age by sending Mr Oleg Sos-
kovets. first deputy prime min-
ister. to tell Japan's
ambassador to Russia. Mr Koji
Watanabe, that it was thankful
for Japan's offer of doctors and
medical supplies.
More than 550 dead have so
far been counted and an esti-
mated 2.000 are still buried
under the ruins of their homes.
Tbe disaster, last Sunday, was
poi gnan t for the many Japa-
nese still grieving for the 5,500
who died in January's Kobe
quake.
The echoes of Mr Yeltsin's
gaffe continued to reverberate
in Tokyo, where Japanese poli-
ticians and media depicted the
episode as another example of
Russian distrust of Japan.
“1 cannot imagine the presi-
dent of a country making a
remark at a time when a neigh-
bouring country is trying to
offer co-operation." said Mr
Kozo Igarashi, chief cabinet
secretary.
The islands at stake. Etorofu.
Kuna shirt Shikotan and Habo-
mai. were occupied by Russia
in the closing days of the sec-
ond world war.
Because of this unresolved
territorial dispute, Japan and
Russia have yet to sign a peace
treaty.
In the past, Japan has made
increases in official aid to Rus-
sia conditional on progress on
the islands, seen as a matter of
national pride.
Russia is equally reluctant to
swallow its national pride,
intensified by the islands' stra-
tegic value. They are part of
the Kurile chain, which
includes rich fishing grounds
and covers access to the
Russian Pacific fleet's
bases.
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FINANCIAL TIMES FRIDAY JUNE 2
NEWS; THE AMERICAS
US factory
orders in
heavy fall
American
Orders to US factories fell by
1.9 per cent in April, the big-
gest drop for nine months and
the first time in nearly two
years that such orders have
fallen for three consecutive
months, AP reports from
Washington.
Elaborating on this latest
sign of softness in the US econ-
omy, the commerce depart-
ment said yesterday that the
decline in orders had been led
by a 4 per cent drop in inter-
est-sensitive durable goods -
the biggest decrease in more
than three years.
Analysts had expected orders
to fall in April, after having
slipped 0.4 per cent in March
and 0.3 per cent in February.
The last decline over three
months in a row was during
March-May .
Earlier yesterday, the US
government had reported that
personal income and spending
both rose a moderate 03 per
cent in April
That followed the announce-
ment on Wednesday that US
gross domestic product, the
government's broadest gauge
of economic strength had risen
2.7 per cent in the first quarter
of this year - down sharply
from the 5.1 per cent growth
recorded in the last three
months of .
Giving yet another sign of
slowdown, the labour depart-
ment said new claims for state
unemployment insurance bad
risen by 9,000 to a seasonally
adjusted 389.000 last week, the
highest in four months. New
c laims for jobless benefits went
up by 13,000 from the level of
the previous week.
The closely watched survey
by the National Association of
Purchasing Management
showed that US manufacturing
bad stopped growing in May.
after 20 months of expansion.
The NAPM index fell to 46.1
in May from 52 in April. It was
the first time in 21 months that
the index had retreated below
a 50 per cent reading, indicat-
ing that manufacturing is con-
tracting.
Analysts said the accumula-
tion of data points to much
slower US growth, although
they said the odds were stiU
against a recession.
"The economy is taking a
bigger hit than was expected.
The soft landing is giving evi-
dence of being a bumpy land-
ing as of now," said Mr Robert
Dederick, economist of North-
ern Trust in Chicago.
The April decline in factory
orders was the largest since a 2
per cent fall last July.
Two former executives of American
Honda were found guilty yesterday of
accepting over $15m in bribes from
Honda dealers in a nationwide
scheme. Renter reports from Con-
cord. New Hampshire.
A federal jury in Concord took
seven days to reach a verdict to con-
vict the former executives.
Mr Dennis Josleyn, 48, Honda's for-
mer West Coast sales manager, was
found guilty of mail fraud, racketeer-
ing and conspiracy to commit mail
fraud.
He faces up to 30 years in prison.
Mr John Bfllmyer, 65. a former
senior vice-president, was convicted
of conspiracy.
He faces a jail term of up to five
years.
Under the scheme, said to have
spanned at least 30 states and to have
continued throughout the s, the
pair were said to have accepted bribes
in the form of cash, expensive
jewellery, luxury cars, swimming
pools and other gifts from car
dealers.
In return, Mr Josleyn and Mr Bill-
myer awarded lucrative Honda fran-
chises to dealers, as well as alloca-
tions of certain sought-after Honda
and Acura models.
Prosecutors argued successfully
that the two were part of a conspiracy
to defraud American Honda, a subsid-
iary of Japan's Honda Motor Com-
pany.
No Japanese executives were
Involved in the scheme.
Prosecutors said Honda was not
only defrauded, but also faced poten-
tial lawsuits from Honda dealers who
did not receive the p ref e re nt ial treat-
ment given by Mr Josleyn and Mr
Billmyer.
Defence lawyers argued that Hon-
da’s top maYiagPTnp'rrl turned, a blind
eye to the bribes and that the bribe-
taking was implicit, though unofficial,
company policy and therefore did not
constitute a crime.
“These verdicts dose the book on a
painful and difficult period in our his-
tory,” American Honda said.
“The jury has found that the indi-
viduals convicted in this scheme
betrayed the trust of their faDow-ttn-
ployees, deceived our company and
abused our reputation."
The scheme was one of the biggest
scandals in American, car industry
history.
A total of 20 former Honda execu-
tives and employees pleaded guilty to
participating in the scheme.
One of the executives who pleaded
guilty. Mr James Cardiges, had hw«n
an important witness in the prosecu-
tion’s case.
NY abandons plans for
rail link with airport
Benefits
for felled
dictator
By Richard Tomkins
in New York
Long-delayed plans to build an
express rail link between New
York City and its main airport.
John F. Kennedy International,
have been cancelled for lack of
funds, it was announced yes-
terday.
The Port Authority of New
York and New Jersey, the pub-
lic sector body that had
planned to build the line, said
it was abandoning the multi-
billion dollar project in favour
of a less ambitious improve-
ment Of mrisBng links .
The line would have been
the biggest public sector trans-
port project in New York since
the s. Cancellation means
that JFK will remain one of
the world's largest airports
without a direct rail link to the
nearest city centre, or plans to
build
At present, airport users
without their own transport
between Manhattan and JFK
have to choose between a taxi
ride that can cost up to $50
one-way or a bus journey that
costs $23. Both are prone to
delays from traffic congestion
and bad weather.
It is also possible to travel to
the airport by a combination of
subway and shuttle bus at a
cost of just $135. but both are
slow and infrequent and are
used only by a small propor-
tion of low-budget travellers.
The port authority, which
runs New York’s airports, had
planned to build a 22-mile
rapid transit railway linking
JFK and La Goardia airports to
Minister says bank chiefs resignation leaves policy on course
‘No change’ on Brazil economy
By Angus Foster In Sao Pauto
Mr Pedro Malan, Brazil's finance minis ter,
yesterday pledged there would be no
change in national economic policy,
despite the resignation on Wednesday of
the country’s influential president of the
central bank.
The minister said: “I have a very clear
message. There will be no change whatso-
ever in the characteristics of the anti-
inflation plan.”
The resignation of Mr Pdrsio Arida, a
leading architect of the anti-inflation Real
currency, has surprised many observers
and led to worries that tough policies
which had produced high interest rates
and an overvalued currency might be
changed.
But Mr Malan said that interest rates
would only come down when the bank
president had clear signals that consumer
spending was slowing and that Brazil's
trade balance had recovered.
Mr Arida insisted be was leaving for
personal reasons, rather than because of
policy disagreements. He is thought to
have been unhappy in the post since he
was blamed for a mishandled devaluation
of the Real in March.
However, analysts said personal differ-
ences with other government officials and
family problems had contributed to his
decision to leave office.
Mr Roberto SettibaL president of Banco
Itau, said the resignation would not signif-
icantly affect the Real plan.
He said that Mr Gustavo Loyola, Mr
Arida's replacement, was an experienced
central banker who had good links with
Mr Malan
Mr Loyola has been president of the the
Brazilian central bank bank before, in
-93. and is seen as a technician who
lacks Mr Arida's creative flair. According
to one banker, the new president will thus
be better suited to the day-to-day manage-
ment of the bank.
Brazil's financial markets reacted cau-
tiously to the resignation and the Sao
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East 59th Street in Manhattan,
mainl y following the lines of
the Long Island Rail Road.
The original plan was to
fund It through a S3 levy that
has been imposed on passen-
gers at JFK since October .
But yesterday, Mr George Mar-
lin, the port authority's
recently appointed executive
director, said the maximum
sum that could be raised,
through the levy was SI bn,
while estimates for the project
had ranged from $3bn to STbn.
1 have to deal with the hand
I am dealt, and I am looking at
an airport access programme
based on Slbn,” Mr Marlin
said. Fresh studies would con-
sider the idea of building the
line In segments, possibly
including a fink between Man-
hattan and La Guardia.
Deposed Panamanian dictator
Manuel Antonio Noriega will
receive retroactive retirement
benefits of about $100,000 and
a pension of $L500 a month
for his 27 years of military ser-
vice, AP reports from Panama
City.
Panamanian social security
officials announced the deci-
sion last night. Noriega,
deposed dnring a US invasion
of Panama in . Is serving
40 years in a US federal prison
in Miami for drug trafficking.
He joined the now-defunct
Panamanian National Guard
in at a salary of $80 a
month. Government records
show he was making $3,000 a
month as head of the country's
armed forces when be was
deposed.
Move to ease capital's financial crisis
Three named to
Washington board
President Bill Clinton has
appointed a farmer governor of
the US Federal Reserve and
two other people to a fivem em-
ber control board to help near-
bankrupt Washington out of its
financial mess, AP reports
from Washington.
Mr Andrew Brimmer, a
member of the US central
bank’s board in the late s
and early s, will chair the
District of Columbia Financial
Responsibility and Manage-
ment Assistance Authority.
The district is the federal
enclave that incorporates
Washington.
Others appointed to the
board yesterday were Joyce
Ladner, a sociologist and
former interim president
Worries amid strong growth
Sally Bowen assesses new fears over the Peruvian economy
Paulo stock market was down by less than
1 per cent at lunchtime yesterday. The
Real currency was also stable, despite
some early selling.
Mr Arida was committed to clean up
Brazil's loss-making state banks, espe-
cially Banespa in Sao Paulo state, and bis
resignation may strengthen the hand of
those politicians who are determined to
keep control of the bank and to slow down
privatisation.
Mr M alan denied that the government
would soften its stance towards Banespa,
and he said a solution to its problems was
coming closer. “Things are moving there."
he said.
Mr Loyola resigned from MCM Consul-
tants to take up the post According to a
circular from the consultancy yesterday,
lower interest rates will depend on clearer
signs of an economic slowdown.
“As for the exchange rate policy, we
continue to discard major changes over
the next few months,'' it said.
L ike many other Latin
American countries,
Peru has been at pains
in recent months to emphasise
the differences between its
own apparently booming econ-
omy and that of Mexico. Even
so. some uncomfortable simi-
larities have arisen.
Concerns surfaced during
recent negotiations with an
International Monetary Fund
mission, on a periodic trip to
Tima to monitor progress and
agree monetary and fiscal tar-
gets, in accordance with the
three-year “extended fund
facility’’ signed in .
Peru has notched up the
most impressive growth statis-
tics in Latin America for the
past two years: GDP expanded
6.4 per cent in and 123 per
cent in . Now. the IMF tem-
perature detects signs of over-
heating in the economy.
Most worrying is the outlook
for Peru's balance of payments.
The deficit on current account
hit a record high or $2.77bn
(£1.74bn) last year, exacerbated
by a trade gap which topped
$1.1 bn. The trend continues:
expansion of imports for the
first two months of (up 51
per cent! vastly outstripped
growth in export revenue (up
36 per cent).
Consumer credit is also
expanding rapidly. Two new
Chilean-owned banks are pro-
moting personal loans while
the Peruvian middle classes,
long starved of opportunities to
acquire cars and domestic
appliances, wallow in unfamil-
iar easy indebtedness.
Mr German Sulrez, president
of Peru’s central bank for the
past three years, believes the
IMF fears are “bordering on
psychosis" and are an “over-
reaction in our case, which
doesn't mean we shouldn't be
careful. Mexico served to
remind us that the fundamen-
tals must be in order.”
He argues that investment
pew considerably more rap-
idly than consumption last
year and that two-thirds of cur-
rent imports are raw materials
and capital goods, essential for
a badly decapitalised local
industry tooling op.
Mr Su£rez puts the current
account deficit at “around 5
per cent” of a GDP of $50bn_
The Economic Commission for
Latin America (ECLAO. bow-
bulk on deposit abroad. Of the
remainder, the deposits local
commercial banks are required
to rnalfp with the Central hank
account for a large portion.
The central bank’s own
reserves stand at only $L2bn.
Many economists fear a dete-
rioration In Peru’s balance of
payments position.
First: even though several
large state-owned companies
are due for sell-off this year,
the pace of privatisation will
PBtth D o m es ti c e co nomy and external trade
19B4e
Rea? GDP
-2.4
(Per cent change)
65 ■ 12J9
60
Consumer prices, end-period
56.7
3 as
164
161
Trade balance
-0-6
(S bn)
-0.6 -1.1
-1.4
Exports
35
35
45
62
Imports
-4.1
-UJ
-66
-6 jB
Sonce MOUfe of MBnaOora) FUtncti
ever, is not alone in calc ulating
Peruvian output at $39hn. (Dol-
lar equivalents are distorted by
hyper-inflation in the late-
s.) Using the latter figure,
the deficit works out at 7.1 per
cent, the highest in Latin
America and perilously dose
to that of pre-disaster Mexico.
It can be argued that Peru’s
current account deficit is
of no great concern, since it
was more than compensated
for by a $3.6bn surplus on the
capital account Some $2.lbn of
this, however, was due to pri-
vatisation revenue, largely the
windfall from Telefonica’s gen-
erous bid for the telecommuni-
cations duo CPT/EnteL
The foreign reserves posi-
tion, positive by $5.6bn, looks
healthy, but mainly for the
same reason: unable to spend
privatisation cash on domestic
poverty alleviation without
causing inflation, Peru has the
slow. Second: debt service pay-
ments will increase if and
when a Brady plan is negoti-
ated. Peruvian economists pre-
dict additional payouts of
$200m-$500m a year. Third:
Peru's export earnings look
unlikely to increase substan-
tially in the next year or two.
President Alberto Fujimori's
government pays lip service to
the need to export but the
beleaguered sector sees no
prospect of relief
The currency, the sol contin-
ues over-valued, infrastructure
is still inadequate, and port
and transport costs remain
high despite some improve-
ments. Raw or semi-processed
materials (based on mining, oil
and fishing) earn the lion's
share of export revenue.
Such revenue, therefore, is
very vulnerable to interna-
tional price fluctuations or cli-
matic conditions (March GDP
FINANCE
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in the emerging market economies
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. _ :&
of Washington’s Howard Uni-
versity, and Constance New-
man, undersecretary of the
Smithsonian Institution and
a former federal personnel
director. All three live in the
district.
The White House said Mr
Clinton planned to m™ the
remaining two board members
soon. The five would serve
unpaid three-year terms.
The president signed legisla-
tion establishing the control
board after auditors predicted
the district government would
fall into insolvency by
summer.
The city, which has a J3-2Sbn
budget, is expected to ran a
deficit up to S722m minio n this
year.
-.-in
t&‘ di
:vn
, - - • Vc
growth plunged to 6 per cent,
from 11.8 per cent in January
and February, because of a
fishing han )
The absence of tax conces-
sions, especially on Peru’s high
energy tax, mean exports of
more processed, value-added
goods are not profitable.
The other potential Achilles
heel of the government's eco-
nomic programme is poverty
and unemployment. Most
recent official statistics put
11.5m Peruvians, just under
half the population, below the
poverty line, unable to cover
basic food, clothing, housing
and transport requirements. Of
these, 4.7m, or 20 per cent of all
Peruvians, cannot meet basic
nutritional needs.
About 11 per cent are classi-
fied as fully unemployed Cup
from 8^ per cent in ) and
77 pa cent “underemployed" -
most of them in the informal
economy and paying no taxes.
Peru has reasons to believe it
will escape the Mexico experi-
ence. The exchange rate is free
and market-driven (although
the central bank has been
intervening to support the cur-
rency in recent weeks). Privati-
sations and the illegal drugs
trade ensure a continuing large
net inflow of dollars. The inter-
nal rate of savings, though stiU
inadequate, is up to about 16
per cent of GDP. and long-term
investment commitments
greatly outstrip speculative
capita] coming into the small
but active Lima stock
exchange.
Negotiations with the IMF
ended in compromise. The gov-
ernment agreed to conditions
meant to keep GDP growth in
the range of 6 to 7 per cent this
year, and inflation in the range
of 9 to 11 per cent. But econo-
mists will be keeping an espe-
cially watchful eye on the evo-
lution of Peru's Indicators.
Unfort
ar^ rrjrlft .
f|| -J
:Vl ,
mm
7
FXNA&CiAi. TIMES FRIDAY JUNE 2
NEWS: INTERNATIONAL
*. •••
this s^j.
K«C ihelr foSJt
feftufrfr Hoa^ *.
SSj**WbS»
etb& scheme. ^* ; *
in the
pojttlan Instlru-;,. ' 5'
aes -federal
£ % AB three uvi'^f
t-Hous* , 8i4fc
i r j)laxmed to nanu <’
**-«■» board ^
3gJ lve w oaid
bftroe-year tenru.
P^sWeni signal L*
Bfrhttshing the dfe
ter . auditors
‘^governn^*-’^
>' insoIvescT ^
s6ft which has a fcv-.
£ftfc expected « r .•
*to«22m ciiilnoV
jCj*SQ gee :t s ;e: :c
per cent _- h--.-
^a^ruary. heci^i
ice r: :.v.\ ;;-&■
Hy t.-ii rrr.ih;
aT'^x; a^:
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gref.
£flfiw per- 1 ---—
jpKW-M'i
c. programme .-
vimtaipJoyic::.:
If . Official st::-.r::? ;
». Peruvians. . — :■:
®e popster. ' ' --
ty '•Hne,' icsbl? 1 -?
■ fotxr. clothing,
nmsport require--:-:
•;4.7S3.or*J0»r;?r:i.
rioas., canned
jaooal neeci-
Otd 11 pw wr*. -r; ^
is ftifty uw- ■/■:•■- .
.,&3 per e*st --. If-. ;
scent "ss&r<-z\:\i'
:.
?.
iWRBienf
gSgtoutstrt? ir :: -
y- *• —
^i'attive -
gsg^ the food that's .
delivered .dally to your local -supermarket -
atong ihe; roads of Europe sets- a price for all
of us to pay.
At Mercedear-Benz. we're . putting massive
resources' behind reducing the environmental
costs of/rpad transport In. Germany, we've ■'
put the; gesbriven- bus, which is virtually
. pollution-free, on the road. We were the first
to include ahtMock braking as standard on
bur heavy truck range. We've increased the
recyclable content of our vehicles, in some
cases up to 95%. Our oxidation catalysts
dramatically reduce particulate emissions.
And long-term, we’re working with
. governments and regional authorities to
develop more efficient ways of trunking
goods, with the aim of keeping trucks away
’ from crowded city centres.
■ Creating transport solutions for the 2lst
..Century won’t be an easy task. But the first
step is to recognise that new answers will
have to be found. So that when Tom grows up,
he can bring his own son up in a world where
the disadvantages of trucks are far out-
weighed by the benefits.
For more information free
on 33 66 44 or write;
Mercedes-Benz Trucks end Vans,
Dept FT//M1, FREEPOST,
RM803, Ilford, Essex 4G2 6BR
Mercedes-Benz
Trucks and Vans
A meiMba of a» Da*nfcf-Beiu Croup
s
FINANCIAL TIMES FRIDAY JUNBjZ »9s
NEWS: UK
£100m
complex
hope for
Bristol
House builders and mortgage lenders are angered by ‘direct attack on homeowners’
UK NEWS DIGEST
PM sparks row over housing slump
By Andrew Taytor and
Kevin Brown
By Roland Adburgham
in Bristol
A £100m f$157m) property
scheme incorporating a world
trade centre, linked to an inter-
national network of 170 exist-
ing centres, is planned for Bris-
tol, south-west England.
Wimpey Construction and
Lucarae International, a prop-
erty development group, said
yesterday that the project
could eventually create up to
2,000 jobs, in addition to con-
struction workers employed
over a phased six-year pro-
gramme.
They intend the world trade
centre to be the hub of a com-
plex which would include
about 30,000 sq ft of exhibition
space, conference rooms, office
suites, a hotel and serviced
apartments.
Although the site has yet to
be chosen and planning con-
sent will be required, if the
project is successful it will pro-
vide Bristol with a consider-
able boost Mr Alan Gunter, a
Wimpey director, said the city
was “lacking an international
identity".
The World Trade Center
Association, based in New
York, granted a Bristol licence
in April to Wimpey and
Lucame, a company set up for
the purpose of the project The
trade centres have a network
database which links 400,000
subscriber businesses, and j
facilities include meeting
rooms, secretarial services and
24-hour video conferencing. !
The only existing centre in
the UK opened last year in Car-
diff, Wales, at the international
arena developed by Brent
Walker.
Mr Michael Langridge, man-
aging director of Lucame. said
he was confident funding
would be in place from a Ger-
man bank and a Singapore
property company.
“We felt Bristol was in need
of a trading platform," he said.
"Bristol does not have a recog-
nised conference centre of
national significance and has
far more potential for business
tourism. Our aim is to provide
Bristol with a significant busi- 1
ness centre of world ranking.”
The government yesterday
came under fire from house
builders and mortgage lenders
after Mr John Major, the prime
minister, appeared to blame
homeowners for over-borrow-
ing in the late s and caus-
ing the housing recession.
Mr Major's remarks coin-
cided with reports of further
house price halls last month.
Nationwide building society
said average prices fell 0,7 per
cent last month, compared
with April providing "further
evidence of the weakness of
the housing market".
Halifax. Britain's biggest
mortgage lender is expected to
report today that the average
price of a UK home has fallen
by about JVs per cent since
April last year.
Speaking in Lincoln, Mr
Major said that the UK was
heading for classic economic
recovery based on rising
employment and increased
competitiveness. He blamed
the lack of a feelgood factor in
the economy on the housing
market which had moved from
boom to bust in a short num-
ber of years.
“An awful lot of people had
committed themselves to mort-
gages [in the late s] that
were a good deal bigger than
ideally they should have had.
“Suddenly inflation began to
take off, interest rates began to
rise, mortgage rates began to
rise and house prices stopped
rising and fell The negative
equity trap that has done so
much to damage confidence
began to hit us."
Mr Roger Humber, director
of the Housebuilders Federa-
tion said: “The prime minister
should not he blaming home
owners, he should apologising
to them.
“He has totally ignored the
role of his own government’s
policies in exacerbating the
length and depth of the hous-
ing market recession by the
inappropriate timing of mort-
gage interest tax relief reduc-
tions, plans to reduce mortgage
interest support to the unem-
ployed and by vacillating poli-
cies on interest rates since last
autumn."
The Council of Mortgage
Lenders, involved recently in
sharp exchanges with Mr Peter
Lilley, social security secre-
tary, over income support
plans, said the government
should take responsibility for
its actions.
Mr Peter Williams the coun-
cil’s head of external affairs
said: “The government was
central to both the boom in the
housing market and its subse-
quent recession.
“It is in the government’s
own hands to improve this e
situation.”
Shelter the charity for the
homeless said Mr Major’s com-
ments were 'ill-informed” and
“thoroughly disingenuous".
Mr Gordon Brown, the oppo-
sition chancellor, said the
prime minis ter’s comments
amounted to “a direct attack"
on home owners.
The Council of Mortgage
Lenders said the housing mar-
ket could “remain flat for
another five years" unless gov-
ernment improved prospects
for home owners.
The council wants ministers
to scrap plans to restrict
income support for unem-
ployed mortgage holders which
it says would cause a sharp
rise in repossessions.
Mr Ian Sbepberdscm, a Mid-
land Bank economist,
described the latest price falls
as “the calm before the storm".
He warned that prices were
likely to fall further over the
summer before some stability
returned to the housing mar-
ket during the autumn.
Penal c tag|
trials delaj
for second
Technical difficulties in adapting US equipment for
electronically “tagging” convicted criminals have ftreed the'
Home Office to postpone trials, of the System, it was
announced yesterday. The system, fiercely opposed by liberal
pony] reform groups, was due to be tried out in Reading
Manchester at the begtoning of this month. Trials have now
been postponed for at least a' month. _ :
Mr Michael Howard: file home secretary, wanted to offer
“tagging" as a sentencing option ftar judges and magistrates. It
could be used to enforce curfews or to check that offenders -.da
not leave their homes at specific times. This is the second
postponement of the system.
- John Aethers
Decline in worker organisation
Cornish fishermen
accuse Spaniards of
cutting through nets
Big players join in the
latest waste paperchase
By James Hartfing
Representatives of Cornish
fishermen are to protest to the
government after a trawler
skipper claimed that a Spanish
vessel had deliberately cut
through his nets, raising fears
of renewed tension as the tuna
season gets under way.
The European Commission
confirmed yesterday that a
Spanish trawler had damaged
the nets of a British trawler in
what appeared to have been an
accident 100 miles off Land's
End.
Mr Mike Townsend, chief
executive of the Cornish Fish
Producers Association, said he
woold raise the incident with
the Ministry of Agriculture,
fisheries and Food. He said: “I
see this as a very serious inci-
dent which happened in
UK territorial waters."
Mr Marco Zatterin. the com-
mission fisheries spokesman,
said: “According to the infor-
mation we have, it was an
accident There was no inten-
tion of harming the British
vessel."
He said the Spanish vessel
was fishing in an authorised
area and warned captains to
be cartful now that the tuna
season had started.
Mr Mike Faulkner, captain
of The Golden Bells n, said the
Spanish trawler Ignored
repeated warnings to back off.
then dragged through a 1, 000-
yard section of fine mesh net-
ting worth £1,000.
He said the 54ft Cornish
fishing boat had steered along-
side the larger Spanish vessel
trying to force it dear of its
eight miles of gill netting,
which were anchored to the
seabed.
“I was speaking to the Span-
ish skipper on toe radio and
the crew were shouting across
to him. But he was ignoring
ail of os," said Mr Faulkner.
He added that confrontation
on the high seas appeared
again to be on the rise.
Another Newlyn boat, the
Holly Jane, had its nets cut by
two Spanish vessels while fish-
ing 150 miles south-west of
Land's End last week.
British fishermen have often
accused Spanish crews of
breaking international fishing
laws.
In April Mr William Walde-
grave, toe agriculture minis-
ter, warned Spanish fishermen
toe navy would act to protect
fish stocks in British waters.
Westminster City Council's
rubbish is in hot demand. In
recent months, waste manage-
ment companies from the UK,
US and even China have
approached the local authority
about handling the refuse,
most of which is paper.
“The way waste paper
demand bna taken off in toe
last six months, it has become
a very aggressive market
where everyone is looking for
where they can get hold of
used paper," says Mr Mark
Banks, the council's recycling
officer.
With waste paper now com-
manding record prices and new
recycling plants coming on-
stream this month set to
expand dpmand. a trade that
was once "run by people in
baggy sweaters and sandals",
according to one observer, is
set for a new era of competi-
tion and consolidation.
According to PPI, the
Brussels-based monitor of
European paper prices,
increased demand has more
than doubled UK waste paper
prices. One tonne of once-read
newspapers, for example, was
worth £100 () in April, up
from £70 in March.
19 & 20 June - Lugano
Authoritative speakers from North America, Europe, Africa and the Asia-Pacific Region will
address this year’s meeting, sharing their views on driving forces in the market; supply and
demand trends; global opportunities and new initiatives in gold.
ISSUES INCLUDE:-
• The Impact of Derivatives
• The Inter-Relationship between Gold and Silver
• The Interface between the Physical and Paper Markets
■ Risk Management Techniques for Gold Producers
■ The Global Jewellery Market
• Gold and Silver Demand in India;
Post Liberalisation
• New Middle East Perspectives on Gold
SPEAKERS INCLUDE:-
Mr Jean Zwahlen
Member of the Governing Board
Swiss National Bank
Mr Urs W Seiler
Senior Vice President
Commodity Risk Management
Union Bank of Switzerland
Mr Frank Arisman
Managing Director
Precious Metals
JP Morgan & Co, Inc
Mr Neil Newitt
Managing Director
J Aron & Company (UK)/
Goldman Sachs
Mr Ronald Cambre
Chairman. President & CEO
Newmont Mining Corporation
Mr Guy Manuel]
Treasurer
Normandy Poseidon Limited
Dr Jessica Cross
Director
Crosswords Research
and Consulting
Mr Marwan Shakarchi
Chairman
MKS Finance SA
Mr Jeff Toshima
Area Manager
World Gold Council, Japan
FINANCIAL TIMES CONFERENCES in association with FT MAGAZINE THE BANKER
Official Carrier: SWissair^T CFOSSair
jr
FT Conferences have u variety ol excellent marketing, opportunities for companies wishing to bring their products or services io the aitenooii of our
international audiences. For further details please contact Lynetie Nonhey on : <-*44j 17 1 8 14 or Fax: t +44) 17 1 873 /
To Financial Timm CpnlCTcmrcv PO Bern 3*51. Lotniuo S»TJ RPH.
: 1*041 I S I 67? OQ00 Ftn. i*«i IKI ft?3
World Gold Conference
Lugano. 19 & 20 June 199S
Mr/Mrs/Ms/DWOiher
i PLEASE T\ PE)
Cl Ptei&e send me conference dmiis
Cl Plea&c send me deuiL* about The Banker
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CANCELLATION POLICY
Cancellations muss he received In writing b\ Wednesday 12 Jane
and »»Il tw subjeci to a ZO'i cancellation fee unless a substitute delegate is
offered. After Uns date, the full registrarion fee will apply. hov,eser.
substitutions will still be accepted-
Type ol' Business
O* 1 Pttttilxs As! Th;iglinr»,« •■ni|a n »4rwis is confident that
DCMF will lead to still larger
savings because of tbe transfer
of risk to the private sector.
The contractors will assume
responsibility for building the
prisons to prearranged costs
and timescale; for gaining nec-
essary detailed planning con-
sents; and for satisfying
required standards of prison
regime, ff they default, penalty
payments are payable.
Mr Lewis claims the detailed
contractual requirements have
led to significant improve-
ments for prisoners, notably in
toe number of hours they are
allowed out of their cells.
There is some nervousness
in the prison service at lauding
such improvements, following
a call from Mr Michael
Howard, the home secretary,
for an "austere" prison regime.
Instead, officials point to the
greater opportunities for work
and education, which will be
given a high priority in the
new prisons.
The future of prison privati-
sation is in the balance. Mr
Jack Straw, the home secre-
tary for toe opposition Labour
party, has pledged to halt toe
policy if Labour is elected. Mr
Lewis and toe private prison
companies believe they have
two years to demonstrate that
the cost of doing so is too hitdi
- for taxpayers and prisoners
alike.
L>C \'^L&
'wer s
" J
.if-
i'.U ..
. s' , •'
■> . ■
* :-c
. : 7/>,’ •.
v >££
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FINANCIAL TIMES FRIDAY JUNE 2 -*
THE PROPERTY MARKET
ng’ | A longer shopping centre list
‘d !■ Simon London looks at big regional developments taking
'• j shape despite government planning curbs
WJXata* avj:^
:&eat & lag :i :
yi e hts' icxrar.-.- £■: ”
Wtfe/?wr«nTr::a:
^'inumiihic:.::: _*. :uil
WKistem >:
M-t? 5 per cat::. Vu
mcd ,
nsortia to
fiction.
Irew Adonis
I t?via , ironic that tie
ftnn P TV ? ra *-' m *ht that UK
retail sates had shown. a.
seasonally adjusted fall
fliritoig -April was drowned out
by^e socmdTrf iierw shopping ■
taking I shap p
: .Tie notiarrthat the gqyera-
ment bas pnt ah effective
brake cm ctat-of-town stopping
developmeniwas looking ques-
tionable liefare the latest Tlmxy
af annonncements. Now it
appears .feat- planning restric- .
totodesigned to protect town
cwatres-Jh.,the-tiE may have
Atoned developers' into action.
A rongh calculation of big
retail schemes in the pipeline -
those fiver about 500,000 sq ft -
suggests that at least 7m sq ft
of .new .shopping space rs on
the. way. Many of these -
schemes have moved from
being vague possibilities to
strong probabilities. . .
. For example, John Lewis
Partnership and House of
Fraser, the Trailers, have com-
mitted themselves to space at
Btuewater Park, the planned
Lfim at ft regional shopping
centre in. Kent. Capturing two
of the UK’s leading retail
groups should help Lend
Lease, the Australian company
which owns the site, in fend-
ing negotiations with financial
institutions.
Following last week’s. House
of Lords decision to uphold its
planning permission, .Peel
Holdings, -the property com-
pany, is dear to bufld a 1m sq
ft centre at Dumplington,
Greater Manchester. Peel is
now refinmgthe scheme before -
starting funding negotiations
with banks, which it hopes will
lease, finance the project
In addition to these two mas-
sive regional shopping centres,
several large sub-regional
schemes are creeping closer to -
fruition:. .
• John ^Lewis. has. decided to -
take space : in the planned
sq ft stoppmg^ centre in
Buchanan Street central Glas-
gow. Slough Estates and AMP
Asset Management, the joint
devdpperg,; are pressing ahead
with the project
• Despite Strathclyde
Regional Cbundl's refusal to
grant a revised planning per-
mission, the developers of the
proposed 500JJ00 sq ftcentre at
Braehead, : outside Glasgow,
have, vowed .to build, in .line .
Mff the retail limes •
•' V-- :*pr'- ■_ - raw
abuiwt^p/ . '.„■* . ■
with -their existing consent
• Plans for 600,000 sq ft of
shopping at Shepherd’s Bush,
west London, moved closer fol-
lowing a decision by Mr John
Grimmer, the environment sec-
retary, not to block -the
scheme. The White City Con-
sortium led by Mr Godfrey
Bradman, former rbatrman of
Rosehaugh, the collapsed prop-
erty developer, is now trying to
consolidate its ownership of
the site.
• Southampton City Council
is supporting plans for 750,000
sq ft of shopping in the city
centre proposed by Imry, the
property developer owned by
Barclays Bank.
• . Dudley Metropolitan Bor-
ough Is supporting proposals
for a 600,000 sq ft extension to
the existing Merry H01 centre
in the west Midlands put for-
ward by Chelsfielfl , the com-
pany which owns the scheme.
Two other big out-of-town
schemes of more than half a
million square feet - the White
Rose Centre near Leeds and
Cribbs Causeway, Bristol - are
also quietly taking shape.
Whether the developers and
investors will earn' an accept-
able rate of return on capital
sunk .into .large., centres
remains an open question. No
other part of the UK retail
trade is brimming with confi-
dence. The recent profits warn-
ing from WJ1. Smith, which
prompted a 15 per cent fall in
its shares, underlines that
many retailers are suffering.
The picture is not univer-
sally weak. Some sectors, such
as clothing, appear to be doing
well, although warm weather
during the early spring may
bave played a part
The big retailers on which
shopping centres depend are
generally doing better than
small ones which are more
likely to trade out of high
streets.
C entral Statistical
Office figures show
that the cash value of
sales by large retail-
ers - those with turnover
exceeding £3ra ($4Am) in
- was 4 per cent higher in the
first quarter of the year than
in the same period of .
Small retailers suffered a 2 per
cent fall
Even so, large retailers are
experiencing the lowest anmial
rate of sales growth since .
While these figures are gen-
erally disheartening for the
COMMERCIAL PROPERTY
retail property sector, inves-
tors in very big shopping cen-
tres are doubtless taking a
long-term view.
Besides, even if retail sales
overall do not live up to expec-
tations over the next few
years, big shopping centres
continue to take trade from
high streets. So long as retail-
ers are clamouring for space in
regional and sub-regional
schemes, rents will rise and
investors will make an accept-
able return on capital
Whether by luck or judg-
ment, the regional distribution
of big shopping schemes has
worked out well. The only
obviously competitive situa-
tions are between Blue water
Park and Lakeside Thurrock,
an existing regional centre just
north of the River Thames in
Essex, and between Buchanan
Street and Braehead.
Even so, weight of invest-
ment going into regional shop-
ping schemes suggests an
uncommon degree of consen-
sus that the future is bright
The bidding battle for the
MetroCentre in Gateshead, one
of the most successful of the
existing regional stopping cen-
tres, will provide an interest-
ing litmus test of optimism.
At least five bidders are
known to have submitted
sealed bids by last Friday's
deadline. Of the known con-
tenders, Prudential Portfolio
Managers probably has the
lowest COSt Of Capital thanks to
its status as an institutional
investor rather than a public
company. All other things
being equal, this should allow
it to make a hi ghm- bid than
the competition.
However, shopping centres
are more like complex busi-
nesses than conventional prop-
erty investments. Forecasts of
the income which can be
squeezed out of the Metro-
Centre are likely to vary enor-
mously between the bidders,
depending on the management
strategy they have in mind.
Still, a final price of over
£300m looks certain, which
means that the winner is likely
to accept an Initial yield of less
than 6 per cent Such a low
yield only makes sense if the
buyer can be sure of achieving
strong rental growth in spite of
the current fragility of con-
sumer confidence.
Investment
Performance
in the UK
Year to 30th April
FT
FINANCIAL TIMES
Conferences
LEBANON
TOWARDS
- Opportunities for Finance &
Investment in a Re-Emerqinq Market
8 & 9 June — Hotel A1 Bustan, Beirut
The Languages of the Conference will be English-Arabic-F reach
This Financial Times conference offers a timely opportunity for an appraisal of the
economic prospects of the Lebanon as it embarks upon a multi-billion dollar
programme of infrastructure rehabilitation and renewal.
SPEAKERS INCLUDE:-
Mr Rafic Hariri Mr Mark Nichols Dr Freddie C. Baz
Prime Minister of the Republic Director. Business Development. Advisor to the Chairman
of Lebanon Middle East Banque Audi Sal
Cable & Wireless PLC
Mr Fuad Siniora
Minister of State for Financial Affairs
Republic of Lebanon
Dr Nasser Chammaa
Chairman & General Manager
Solidere
Mr Paul M. Raphael
Managing Director & Head of
Emerging Markets
Merril Lynch Europe- Middle East
and Africa
Dr Freddie C. Baz
Advisor to the Chairman
Banque Audi Sal
Dr Mark Mobins
President, Templeton Emerging
Markets Fund. Inc.
Mr Paul Hodge
Operations Director.
Trafalgar House International
Trafalgar House Construction Ltd.
Supported by:
in association with
FT NEWSLETTER INTERNATIONAL TRADE FINANCE
THE BANKER
Enquiries in the Lebanon regarding the conference should be directed to: Shaheer J, Hosny. General Manager, Media Line
Sal. ; (OO) 961-1-492 J90 Fax: (OOj 961-1-500 814
! ' 1 1
l@
sail
To: Rnaneud Tune* Canfemwei. PO Box . London SWI2 8PH. UK
: l~Mi 673 Fax: l,44> Q1BI 673
Lebanon Towards 200B
Beirut. 8 A 9 June IP LEASE TYPE:
Mr/Mr^/My'Dr/Othcr idctac as aooropnaici
Fhfci Name '
Surname
FOainen
nv/Oreanisatiun
POMfiode Country
Fix
Type of Buvine&i
Ena Pnxcciicn Act; The nfcreumi you provide »iD be ferld by «u dJ wamy be imetl bo keep vow mtatmnl of
pTjfhJPeareoa Professional jwufcxts ft»d ped by other wlrcin] quality cmyanln for msihng puponev.
Cl Pfcnse oatd me cvmicrcnce iJd&iis
□ Please reserve one place ai £850
□ Please reserve one place ai S 1 .275
O Cheque enclosed made payable lo Financial Tunes Conference*
□ Bank transfer to: Fmandal Times Conferences. Midland Bank, pic
City of London Corporate Office Account Number ^
Son Code: 404)2-50 International SWIFT Code: M1DLGB22
(Please quale delegate nw at raftnnee)
D Please charge my AMEX/Masiercaid/V isauiih£A.lS S
Expiry dale: -
. Signature ul' cardholder: ■
CANCELLATION POLICY
Cancellations tnusi he received In writing bj Thursday 1 June and mil be
subject to a 3V* cancellation Tee unless a nibfbuite dclegmc is offered Afier ihu.
date, ibe full repslration tee will apply, however, substitutions will :.ull be accepted.
A] Harithy Company for Exhibitions will be organising a high profile exhibition from 64h - tilth oT June
on reconstruction and development of the Lebanon which will run parallel to the conference.
For details please contact AJ Harithv Company fur Exhibitions. The Glavsmiil. I Banersea Bridge Road.
London SW1 1 3BC. : (+44) 171 223 Fax: f+44» 171 228
Official Carrier:
COMMERCIAL PROPERTY
FOR SALE
Stanley Dock Liverpool
Circa 12.5 Acre Site, including a 3
acre Dock and approximately
2 million sqft of buildings.
Partly let and currently producing
circa £500,000pa from a Sunday
market, warehouse,
nightclub and offices.
Guide Price £2.5m Subject to Contract
Daubney Commercial Properties
663
Tt5S LTrevor
& Webster
s-nsjor-deveioonant- opportunity -lo* addles;
G2 i AA. The Head Post Office, George Square, Glasgow .
: i
ts A CHANCE TO ACQUIRE. AN ENTIRE BLOCK OF TmE CTTf CENTRE
WTTH POTENTIAL FOR UP* TO I &.500 M f GROSS ,000 FT J 1
FOR OFFICE. CULTURAL. OR OTHER COMMERCIAL USE.
A CALL TO TMH SOLE LETTTNG AGENT WILL
OEMOHSTRATB WHY THIS- J« A WX1QH DEVELORMEMT OPPORTUNITY
70 ADDRESS . A BROCHURE AMD FACT PACK ARE AVAILABLE FROM
Campbell Hart. 01^1 20-4 077 i
Investment Sales for Clients
£,000
£ 1 , 258 , 000,000
Total Investment Turnover £1,815,000,000
OFFICES
92
Transactions
for Clients
totalling
RETAIL/
LEISURE
150
Transactions
for Clients
.... totalling
INDUSTRIAL
58
Transactions
for Clients
totalling
£#, 000,000 I £ 559 , 000,000 j £ 216 , 000,000
•Ttjiit.
MVil i l'r' u i ll ‘l
ROTTERDAM, THE NETHERLANDS
Centrally located, directly opposite
Rotterdam Airport and only 5 km from the
centre of Rotterdam, 2D km from The Hague
and 70 km from Amsterdam. Luxury country
estate set in 4.5 hectare of tranquil parkland
gardens, suitable for restaurant or conference
centre. Accommodation includes villa, swim-
ming pool and sauna, two tennis courts and
manager's residence. All buildings of sturdy
construction and excellently maintained.
For more information, contact Ooms
Makelaais b.v„ Maaskade 113, Rotterdam,
The Netherlands, Tele- |Q]QQ[\/|Q
+31-10-113 22 60. [s^Jmakelaars
INVESTMENT PROPERTY
mUNrVERSJTYTOWNOF
BUCKINGHAM FOR SALE
Amkipatrd return over 12% Gron
Oppanuaty «o jmeta* oNmudHock
of Bus coaprisog- four z one bedma ud
t*o* two bedrMa win, tolly fined, copeied
udtnnlaewqHlky fanntare. tud^ idrpI
finn dw *w tan in Mid ini*. (Foar lain JOHJ
Renal how xmkipatd at over £33^4)0 PA,
devdoper wffl Gmtantc 10* rerani oc
iovaaaeat (*roa) tot fist 12 BoHhl
Nremal occupancy roc ever 95%
Freehold 070,068
F* funhcrdcuil* eoarect Codec*
SagtaroaFadtai gP ropeiiy
Rceab 00(
NEW YORK OFFICE
Extraordinary Opportunity to
Establish Professi o nal Office in
New York at No Capital Cost
Part Lruflirious sq. ft Suite
Available. Established English
Law Finn. Incredible Views.
Class AAA Building. Conference
Rooms. Very Substantial Sums
Invested in Computers and
Fittings. 24 hour Access. High
Security, Air Conditioning/ Heat.
USA : (212)956
or Fax:(212)956-
IFOR SALEI
SUBSTANTIAL
RESIDENTIAL
INVESTMENT
PORTFOLIO
584 UNITS IN T6
DEVHOPMENTS
(9 RETIREMENT;
7 GENERAL PURPOSE]
Ccmpmmg Ground Rant, Shored
Eqthfies, Prefnphon Bghfc, heme
Pwpefcjating «des moimisiioja.
THE MAJORITY SITUATED IN
SURREY/KENT AVAIlABlf AS
A WHOlf OR IN 3 LOTS
£375,000 -
£ 1.75 m
SUBJECT TO CONTRACT
AH Enquires
| |AlderKin^ |
COHSOLTANT SURVIVORS
929
Momum house - msstm - hi eux
This survey will focus on the Issue of planning consent the difficulties
developers experience in obtaining out-of-town sites and how some of
these problems may be overcome.
Other topics to be covered are: regional shopping centres, investment,
town centre schemes aid a look at shopping centres in
Europe and the US.
Sophie Caitinon on
: -873 Fax:-873
FT Surveys
1
U T I I
%
Working hours are changing, writes
The long good
Victoria Griffith
Friday
T he s have seen big
companies struggling with
the twin demons of achiev-
ing global presence and
being locally responsive. The man-
agement development world has
farad a parallel paradox - how to
deliver general management educa-
tion, as well as courses and pro-
grammes tailored to the specific
requirements of companies and
individuals.
The situation is further compli-
cated by the fact that managers,
under pressure from constant
chang e have little time to develop
the new shills needed to “reinvent”
themselves.
“Workloads are substantial and if
you axe sent away on a course, you
do think of the work piling up on
your desk," says Sheila Dawson,
head of business services at the
international banking arm of the
Rank of Ireland. “We are going
through radical business re-design
and process improvement, so train-
ing must put things in context and
help our managers to deliver core
objectives," she adds.
Changed times demand new
approaches to development, says
Roger Shaw of the consultancy
Strategic Training. “People now
have to manage multiple strategies.
They are deal in g with great com-
plexity. Bringing in a consultant
who stays for a brief period, offers
insight on a small number of issues
to a small number of people and
thf»n disappears is not useful."
According to Eddie Obeng of Pen-
tacle The Virtual Business School,
the paradoxes can be bridged using
the latest technology. “If managers
can't be sitting in the same class-
room. the traditional response has
teen to use some form of distance
learning," he says. "While class-
room-based and distance learning
are clearly valuable, they cannot
avoid being formulaic or relying on
a ‘one test way* approach.
"There is a growing need for local
learning - ipaming which is contin-
uously adapted and fitted around
the immediate needs of managers. If
access to Ipaming is immedia te it
becomes a far more valuable mana-
gerial currency."
Pentacle, which was set up in the
south of England last aut umn, is
using technology to give managers
constant access to learning. It is, for
example, using technology for men-
toring. "The constant interaction
allowed by networking on the infor-
mation superhighway turns mentor-
ing into a Ear more dynamic, cus-
tomer-focused and practical
exercise," says Obeng, a former
Shell manager and ex-faculty mem-
ber of Ashridge Management Col-
lege. Senior executives without typ-
ing skills are spared - they can use
voice mail and relatively inexpen-
sive desktop video phones.
Enthusiasm for such approaches
appears to be growing. "Demand for
F or the young, summer has a
special meaning: freedom
from classes and
examinations, and the liberty to
spend lazy afternoons whiling
away the hours. When students
graduate to the workplace,
however, summer more often
means spending sunny days cooped
up in an office and roasting in
traffic jams In a humid city.
A growing number of US
companies are attempting to
recapture a little youthful free
spirit by creating special work
schedules for the warm-weather
months.
Pfizer, Bristol Myers Squibb,
American Express, Viacom and
Colgate-Palmolive are some of the
companies that have adopted the
practice. Most programmes allow
workers to leave at Friday lunch
time. American Express is more
flexible, giving employees the
choice of departing early on
Fridays or arriving late on
Mondays.
Some companies, such as
advertising groups Ogilvy &
Mather and Grey Advertising, look
on early release as a gift to
hard-working employees. Others
require that the time be made up
earlier in the week. Pfizer, for
instance, asks workers to come m a
half hour earlier, or leave a half
hour later between Monday and
Thursday. Bristol-Myers cuts the
usual lunch hour to 45 minutes.
“We had such an overwhelmingly
positive response to this front our
employees, and we haven’t suffered
any decline in productivity," says
Ronald Martin, director of global
employee relations for
Colgate-Palmolive. “It allows
people to beat the rush hour on
Fridays and get away for the
weekend."
Some corporations offer summer
hours between die end of May and
the beginning of September, while
others limit the long weekends to
July and August.
The cosmetics group Revlon
found the new work hours were so
popular that it decided to turn the
summer weekends into a
year-round practice. “This did
wonders for morale, so we decided
to make it for the whole year," says
Ronald Dunbar, head of human
resources for the group. “We have
a lot of single-parent employees
and other workers who have a hard
time balancing work and family,
and the long weekends are really
appreciated."
Revlon's hoars are now 8.30am to
5.15pm Monday to Thursday, with
release at 12J10pm on Fridays.
Many companies see early release
as part of the trend that led them
to institute casual dress on Fridays.
The new dress code began as a
sizmmer-only privilege at most
corp or ations, and was then
extended to the rest of the year.
Corporations say the policy can
give them a hiring edge over
competitors. This means the
practice can become widespread in
a specific industry, as employers
vie for staff.
Long weekends are common in
the New York City cosmetics and
advertising sectors, for instance.
“Employees can appreciate more
flexible hoars more than a pay
raise.” says Harry Levinson, a
management consultant. “It can
give them a hiring edge."
Whatever the corporate reasons
for instituting the policy,
employees taking advantage of the
long weekends say summer has
acquired a special meaning again.
“It’s wonderful, because I can take
off for the beach with my husband,
or just spend a quiet afternoon in
die city," said Sara RoselS, a
human resources associate at
Colgate-Palmolive. “It’s what
summer should be."
Finding the ‘ideal’ company
Tim Dickson on a survey of graduates’ preferences
N orth American
multinationals appear to be
more popular with
European business students than
“local" firms, according to a survey
of graduate opinion to be published
next month.
Asked which company they
would “ideally” like to work for,
7,000 Europe-based respondents to
a questionnaire ranked
Hewlett-Packard, McKfnsey & Co,
Boston Consulting Group. IBM and
Microsoft in the top five positions.
BMW was the leading European
company in sixth place, with
Nestle. ABB and Unilever also
featured in the top 10.
On the whole European
multinationals scored well in one
or two European countries -
notably where they had a strong
presence - but they were seldom
above average in others.
The European Graduate Survey is
the brain child of Oniversmn, a
small Swedish publishing company.
Altogether, final year graduate and
undergraduate students at 36
business schools and technical
institutions in 13 western Europe
countries were asked for their
views. The resalts were
unweighted.
Some of the findings were
predictable bat they may
nevertheless interest the growing
number of companies looking
beyond their national borders for
internationally minded managers.
The majority of the most favoured
employers were in computers,
telecommunications, management
consulting, automobiles and
consumer goods. Heavy
engineering, pharmaceutical and
insurance businesses were not
represented in the top slots.
The survey identifies four
distinct graduate “profiles”. These
are the high -achiever (profit
oriented, particularly interested in
working for a multinational and
likely to have a career plan), the
traditionalist (for whom interesting
tasks and working with inspiring
people are significant and who
prefers not to leave his or her home
country for extended periods), the
entrepreneur (who sees a career as
a pa ns to build a sound financial
base), and the “post-materialist”.
Post-materialists focus on personal
development and growth, spending
tim e with friends, and developing
their creative talents. They like
working in a multinational, being
open to foreign cultures and
business practices.
Among issues seen as important
by today’s business graduates, the
survey lists a corporate
environment perceived as “truly
multi-cultural” - and not overly
dominated by one nationality; a
progressive and dynamic style
where managers are specific in goal
setting and delegation, and are
receptive to subordinates: and the
possibility to make a positive
contribution to society.
Competitive salary and the chance
to reach managerial levels were not
highly rated features of an
"attractive" employer.
More information from
Untversum : Sweden 46 8 6
The attraction of virtual reafity is that the manager has to understand the interactions, says Pentade's Eddie Obeng-
Local learning in
a global market
Stuart Crainer says the latest technology can give
managers access to information tailored to their needs
computer-based simulations and
needs analysis software for manage-
ment development has rocketed in
the last two years " says Peter Ross,
managing director of tr aining and
multimedia company. Peak Interac-
tive. “Multimedia has finally
become a practical reality for many
businesses." Ross says.
Sceptics might suggest that while
the world is full of talk of virtual
reality, virtuality is far from reality.
The virtual organisation conjures
up the image of Californian man-
agement t hink ers anxiously scan-
ning the dictionary for new buzz-
words.
“In the past people had to be
brought together because they
couldn’t do thing s for themselves,"
says Laurence Lyons, co-author of
Creating Tomorrow’s Organisation
and co-founder of Henley Manage-
ment College's Future Work Forum.
“Now technology is giving more
power to individuals. The implica-
tions for management development
are phenomenal. Managers will
have to organise, manage, motivate
and develop themselves in a world
where organisations and individu-
als become atomised. But they will
not do so in isolation. They need to
be linkpri to the organisation and
to Interact with the other people in
ft.”
Obeng believes the “V” word is
misunderstood. “There is nothing
grandiose about the concept. Man-
agers are adept at using networks
and. increasingly, at working in
teams. It should never be forgotten
that technology enables managers
to work more effectively and to
learn, new s kills cost-effectively.
The virtual concept is a label, what
matters is making it work."
One means of making virtuality
work is the idea of "virtual teams",
championed by Mercury, the tele-
communications company. The
term is used to describe groups of
people who are accountable for the
achievement of transient or
short-term objectives. The idea is
that virtual teams enable a flexible
and continuously evolving fit
between skills, resources and imme-
diate needs.
One of the attractions of such a
pragmatic approach is that execu-
tives do not have to travel the
world. Sitting from one jet-lagged
meeting to another, instead, tech-
nology provides constant links,
through or computer notice-
boards.
Pentacle is using virtual teams in
BUSINESSES FOR SALE
LEGAL
NOTICES
gr
Promoters of incentive
schemes for food retailers
STRAND MARKETING LIMITED
STRAND MANUFACTURING
LIMITED
IN THE MATTER OP
LANCASTER BESSES LIMITED
For sale, the business and assets of the following
companies involved in the retail and distribution of PCs
and Games Consoles.
M
The loint Administrative Receivers offer for sale the business and assets
of Wallace International Group Limited.
m Operator of incentive programmes and promotions for major
food retailers.
m Excellent worldwide customer base served through European
subsidiaries and branches in Hong Kong. Australia and South Africa,
a Inventories include ceramics, glassware, kitchenware and plush toys.
n Unaudited turnover for year to lanuarv of £29 million,
m Based in Rickmansworlh. Hertfordshire.
For further information please contact lason Elies. Ernst A Voung.
Becket House I Lambeth Palace Road. London SE1 ~EU. : Pin 931 .
Facsimile . Pin 928 .
The Joint Administrative Receivers offer for sale the business
and assets as a going concern of this major manufoctixer
and distributor of conservatories and greenhouses
Specialists In production for the DIY enthusiast.
Expertise in design and assembly.
Turnover : £13.9 million and current order book In
excess of £1 .5 million.
Presflgeous customer base with European Export
Market
Leasehold factory premises at Stockton-on-Tees, and
leasehold office accomodation at Barton under
Needwood.
■AT?!*
=!l Ernst&Young
For further information please contact the Joint
Administrative Receivers. Andrew Mercies or Neil Tombs
Centre City Tower. 7 Hill Street. Birmingham B5 4UU
: -697 Fac -607 6U 1/2
■ ZCL Flc, a distribution business located in a 20,000sq ft
warehouse in Lichfield, trading as Taurus Distribution,
T/O £10m.
■ Calculus Stores Limited; a chain of 18 town-centre
retail stores located accross the country trading as
Calculus, T/O £9m.
■ Right Venture Limited, a mail-order business
trading from Lichfield, T/O £4m.
For further information, please contact I. Best or DDyball
at Arthur Andersen, 1 Victoria Square,
Birmingham Bl IBD. 012! 233 .
Fax: -
IN THE MATTER Or
THE WSOLYOfCY ACT AND ROLES Utt
In accattmcr wxt Rule +. 100 . we. Mo wafan
POwefl mJ Mictad fimotby Bawcll of levy Gee.
4ib Flooi, Sonihflold Howe. 1 1 Liverpool
Gardens. Atarthta, Wn< Sracx. BN U IBXpn
naxx dal on Mth May »e were appointed
Joint Liquidators bp rcsolonon of aenben.
Nofact fa bercbj (ten dm dr total LJqrridaMB
of far above nsaed company taicnd 10 make a
first sad final dfaofimiiou K> ctedbnre. QoStoa
are required, on at be Bare 36* tone 1W5, being
tbc last dm tor proving, to scad in ibeir toll
tbc last date tor proving. u> scad in ibclr toll
Cbratnn and surnames and addresses of tbeir
solicitors (if any J. in ibo undersigned John
WiHjaai Powefi and MJcfcad Timoiby Bowed] of
Levy Gee. +lb Floor, Sunthiirld Hooac. II
Liverpool Gardens. Ytaddn&Vfcst Same*. BNU
LRY. the total Liquidators at tbc add company.
and. if ao required by notice in wrung tow tbc
said Joint Uqtddaim, are, pcnomUy or by Ibeir
•oUciion. to ooaae la and prove tbdr debts and
cfadas at sodt liar aod place tb Mall be qwcilied
In nd> nonce, or fa derail thereof they will be
Bzctadcd ton the benefit of any dtarthanen. A
fim aod final dividend fa mtendod to he declared
and paid on labinJv .
Dated 3Ceb Mn IW
JWPDwrfl MTBowafl
ROBSON RHODES RSM
Arthur
Andersen
IN THE MATTER OF
HIGH WYCOMBE BESSES LIMITED
lufbtrKitf In I tv bnulnrfr- uf f toirTrvrd 4i i urmfrfnf s to logLml .rod loijrrv on ktve^mpm iu>Jn*v>.
Chadded Accountant,
AKTHLE AOTUUEN&Cb SC
Rcocon Rt*>3*s e aumotofcO by Institute of CJxjneted
Acccejnfonn si England and Wales to carry c*» tovestmoni business
DU THE MATTER OF
THE INSOLVENCY ACT AND RULES Ifafa
In accordance vrnfa Rule +.106. we. Mo WDUam
Powell and Michael TbnoOiy BdwcH of Levy Gee.
4rh Floor. Sontbflcld House. II Liverpool
Cardens. Ubnfctag, Mst Sobol BNU IRXfrre
nofaue that on Ma May we were ap p n fa l cd
Arthur Andcoen b authorised by the Institute of Chartered Accountants in
England and Water id cany on investment business.
Joint Liquidators hy resolution of aoeoben
Nader is hereby pw e that Ibe total 1 fadam
of tbc above ubkJ cuoqmny mt i mri to make a
Iasi and final dtaribolioa lo uedu onu Oedtarn
PUBLIC NOTICES
are required, on or before 2btb tone , beta
tbc Iasi date for proving, to send in' Ibeir ft*
Christian and surnames and addresses af Ibeir
volienon i if any!, in ibe andenlened-Jobn
WUfcan EWe and Michad Timotoy BoweB tf •
Levy Gee. +ih Floor. Southfield Hotoe.ll
Liverpool Gardena. WfanfiingL Wot SoamA WfU
Harwil Trading Limited
trading as “Winners"
(In Administrative Receivership)
Profitable 18 hole
golf course
SCOTTISH EQUITABLE
POLICYHOLDERS TRUST LIMITED
IRY, Ihc Irani LtonkUbas of the
ad. i t sd required by notice in re
notice in wrirfas tamta
vsad Join Liquidators, arc. pcnonaB* m by Itav
Mbcfaora. to come In and prove that dt w.gm
daunsal rod) time rod place as dull be ■poof*'*
b sack KUtoc. a in default then*/ w2I fa
e achulr d tom the benefit of any ifiui Auden: A
Ora >ed find dividend a Intended 10 be dtobn]
and paid on dh July W5.
Dated tota May
JW Powell MT Hotel
The Joint Administrative Receivers offer for sale as a going concern the
business and assets of Harwil Trading Limited, trading as ''Winners’* discount
retailers.
Principal features include:
■ Modem freehold head office and warehouse facilities on 1 .73 acres in
Gateshead.
■ 25 retail units across Tyne/Tees and Cumbria.
■ Stocks of circa £2.2 million of mainly branded goods.
■ Turnover: - Retail approximately £8 million per annum
- Wholesale approximately £5 million per annum
■ Transport fleet for distribution.
For further information contact the Joint Administrative Receiver, Julian Whale.
KPMG, Maybrook House. 27 Grainger Street, Newcastle upon Tyne. NE1 5JT.
232 . Fax. 230 .
• Retirement sale
• East Midlands
• 830+ members
NOTICE IS HEREBY GIVEN that the swirond ANNUAL GENERAL MEETING of
Quilltytr® Policyholders of Saotftoh Equitable Ptoicvtioldcn Trust Limited will be
held to 3 St Andrew Square. Edinfruigh on Morally 19 June to 9 JO am tor Ibe
following purpora-K
1. To cunsldcr the Report on the activities of the Company for ihe roar ended J1
December .
Joint agents
Mather Jamie Humberts Leisure
Tfel: Tfel: 629
Fax: 2- Fax: 409
. Ref: AMW Ref: BPJA
To approve the aggregate ordinary remuneration to be made available to (hr
Dm-rtifb pi the Company.
To reappoint Director* of Ihe Company retiring by rotation at the Meeting,
rvmtelv:
FOR SALE
KPMG Corporate Recovery
INJECTION MOULDING BUSINESS
FOR
RANGE OF PRE - SCHOOL TOYS
Sales of £800K in
tal Eric I CuthbertBcm VVS
ibt Peter Stormonth Darting M A
(el HamfahMIngH-CA
Any Quahfvmg PfabrytinMcr who ir. emitted to abend and vjte b entitled to appoint
another prroan (who need not be a Qualifying Policy ht4deri as hta proxy to attend and
vole i retrod of him. A proxy u entitled lo rote but ra not entitled to speak except to
demand or Kan in demanding a poll. Proxy forma, which cun be obtained from the
Company Secretary (at the follow Ing address), mutt be deposited at 28 St Andrew
Square. Edoduiigh before 9.10 am coi 17 |unr
Ever y Cfria lltytng PfaHcyholder whuse policy, as at the commenconenr of the Meeting,
b tn forer. and has bem at kxitt one year in force b emitted to attend mi vole at fate
Meeting.
Qualifying Polkylkildm tor the purposes of ttua Notice has the meaning act out in
the trust deed e- railed by fair Company on 31 December and extend'! tre
tat any penun who was a member nf Scottish Equitable LHe Assurance Society and
whove policy Inn been transterred lo Scnttlsh Equitable pk.
(bl any person who has a with prefabs policy with Scottish Equitable pic where ihc
policy bas been linLni to the Wuh Proi.lv Sub-Fund lor a cutatoirous period of at
least one year as to the cmnmenocnwnt to Ihc Meeting.
AnvqwTOi to respect of the qualification to pobcyhtodcis to attend and vote at the
Morttog should to- add reward In Ihe Company Secretary (at Ihc address specified
ADVERTISEMENT TO CREDHOKS
to suBurr claims
THE INSOLVENCY ACT «W
KONICA CAPITAL tU» LIMITED
Ita Motes Vtomno Ui piMtatof
NOTICE IS HEREBY GIVEN tfast Ibe ctediUrt
to Ibe above warn sd coopiay we required bb at
before Ibe 30ib dav of Jbbc l«j to send in
"ruing tbeir linn and addresses and ik*
tnrtlcaUii to ibeir debts or dal ms. If aov. M>
T1 mollis Richard Harris of COOPERS ft
LYBRAND. Hillg ile House. 26 Old Bsllc).
Lot don EC4M 7PL tac jam Bqritaot of Ibe mi
company, oi tn default thereat they will be
e scl acted from the bcocUt of say dhtrtbotktfi
ma de be fore act debts are proved.
DATED tbb 2Slb day of May I99S
Tmaaifa) Rated Hants
Jotai I iqairhmi
This amt fa formal: all known ered im rs taw
been ptoder provided fte in fiilL
NnBee to ami sinlmiis of John Liq u id ate t i
Vbfcmary Wtarfiag Op
Vntetesy Wtadnc Dp
(Members arCredlters]
meant u> state IHdlte
blii t w.s e / Act M#
IV»f Country hamM or? obi oiled for OITT 100 years supplying higfi-cfwas jjwnis Id
household name nictuMiiv.
Owner w cuU lur at teasd b oxeiDv for iTCitinuih. Errabnc Iu> al stalf ant]
pnansas, (he rent or buy) m plcauri Iiacjtkm.
19*M !urrurti.T CbOTJVai. Profit before tt» CISUXU ConUmulli profitable lor mans
years tot er 600.0U) pr annum as-orape IRf* to IWl.
Wnie tV'c Favtnoal Tunes. Cite Soishwart PraJijr L. eal et 5F.: “HI.
Appear in toe Financial Tanas
cn TuaGOays. Fnfaay3 and Saturdays
fer b*nr mtamanor.
or to advertSQ n this seeuxt
please comnet
Kart Layman on *44 073 -57 GO
er Lesley Sumner -44 S73
Tooling, Brand name. Stock and Order Book Available
Excellent Customer List
Principally Major UK Names
Brea No. Bym, Financial Time*, One South warit Bridge, London SEl SHU
3* St Andrew Square. Edinburgh EH2 I W
Hy Order to tte Bcurd
PH Grace
Manappnq Director
Cwtiyan r Number- H tec to Cnmfanr-
K ncin-e Cbpilal |UE1 LhnOod Picvinot name to
Compact , BiwJjpm Lbtolcd. Name to bufano*
Flnmaal advtmy and Im iam ad wnices. IJp
to li quidat ion: Members. Address of itjiieined
office: Hill rum Home. 2b Old Bailey. Ire**
PERSONAL
ECIM JPL Llqnldaiore am» sad addresses
TlmtoDy Ruted Ibnb are! Nfad Jotw MjO 0*-
Ctroptn A LibfSnd, Hlllgare Houar, 26 OM
Hi l . Loudon ECJM 7H-. Oft ict balder
miutinj: and b3J< Doc to upfoanoeto. 25
May IIW5. By stno qpMoteii Membere.
StgKiL
Tbrnaks Rictasd Hlrrn A N^l fota Mxgfa
Urn LaprtilalnN Dreed ^ Ma» 19°^
'CHRBT EXED to nova you bom you skis
For n fnw OooMol. oieose wrtlo lo: Box
B3B33. Financial Tknon. Ona Soutnwreh
BtUgo. London SEt BHL
A» Aholronn tanbkqs are iccqte tom »
« mreu Trfna red C.mfow. crocs to wbid
ret niUlc by nblq d
T ile Advcitbcmeia Crmphreue DneOac.
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the development of a virtual reality
simulation involving programmars
linked between its base in the UK.
and Seattle. "Die attraction of vir-
tual reality is, if it is well designed,
the manager has to unders tand the
Interactions before making prog- -
ress. The simulations we have
developed examine real business
issues,” says Obeng.
Nuclear Electric's David Heap,
one of the first managers to experi-
ence the simulation, believes it
could prove valuable. “Examining
business processes requires a- tool
which shows how they flow through
the business. Seeing ail the various
processes and how they interact on
the screen brings it to life and
makes it easier to take a broader
perspective," he says. “The only
limitation is coming to terms with
the simulation and how ft works.
Once you can understand this, you
can make it happen."
The simulati on doesn’t take up
huge amounts of room on a PC and
can be sent down tines
quickly and cheaply. It is highly
traditional in one respect, however
as the manager progresses through
the program, success is measured
by the physical size of the pound
sign displayed.
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LEGAL
MOTtCES
K.-45TKH Mt-MU ’ •
p no-Mii'r-.i- •
atrww*' 1 ■'•
ip'Wfia*.'' -
rMkiw: s*- ■■• ■•••
Oglin'' ••• - •
in: 5. •- -
IH; the first flush of
entlrasiasm sponsors rally
round; for a year oar two. they
keep-ttae^dtli. tben they fall
away and the ftdzval orgHnis-
mnmstspefldmoretimetry-
ing to raise money than pre-
paring a progr a m me , f
ht th^'Jast tw years, , with
corporate sponsors wanting a
tai^ible retnrh from their sup-
port and felnctant to commit
in : 'the long-' term; festivals
hate £ound it harder to main-,
tain rev qma. T he ArtrCotmcfl
-is not supportive, ^particularly
of new festivals, and local
authorities . ean offer little
mare than moral aid. .
Sponsorship/Antony Thomcroft
London festival flush with aid
This year those regular
stand-bys, charitable trusts
and foundations, have been
less generous; lower interest
rates have reduced their
income and they are holding
on to their resources in readi-
ness, to fond National Lottery
projects. Fortunately festivals
can adapt: they rarely own
premises, or employ large
staffs, and they can trim their
plans to fit the income.'
While many festivals Strug-
gje, some thrive. The first
Islington International Festi-
val opened yesterday. It was
started by Sonia Serafin, who
has raised an extraordinary
£500,000 to fond the five-day
event, which takes an Idiosyn-
cratic view of the arts.
Ms Serafin finds her inspira-
tion in the opening ceremonies
of recent Olympic Games and
70 per cent of the money
raised has paid for visits by
continental performance arts
troupes that gave the Barce-
lona Games such a riotous
send-off. So circus performers,
and creators of surrealist
sculptures, and pyrotechnic
groups are prominent. On top
.of Islington Town Hall Dutch
artist Erik Hobjin creates fire
sculptures, and atop Upper
Street’s commercial premises
Airvag is Installing inflatable
stars, cones and moons.
About 100 companies have
sponsored the ftm and the key
was getting core funders with
seed corn cash. Islington coun-
cil gave £150,000 to cover two
years and the Business Design
Centre offered a crucial
£50,000. This was enough to
get the revenue drive off the
ground and local shops, busi-
nesses and the nearby City ral-
lied round.
A leading snpporter has
been Arsenal Football Club,
which contributed £12.500. As
a first-time arts sponsor this
attracted matching funding
under the government's Pair-
ing Scheme. In fact the festival
has been so successful in rais-
ing contributions from first-
time sponsors that it quickly
reached the maximum £50,000
available in subsidy for a sin-
gle event under the scheme.
Arsenal was fazed when the
festival chose the cockerel as
its mascot - the symbol of its
arch rivals, Tottenham Hot-
spur. The festival discreetly
switched to an African golden
crested crane for tts emblem.
But the Arsenal connection
has impressed local traders,
many of whom have given
between £100 and £5,000. Typi-
cal has been the NatWest
Property Group, which con-
tributed the £2,000 raised from
a ■‘wear what you like at work
day**: its staff turned up in
jeans and T-shirts bnt paid for
their fim, while managers paid
for wearing salts.
An Islington festival gains
from having rich and trendy
locals with contacts in the
City. Around a quarter of the
City firms Ms Serafin proposi-
tioned made a contribution,
including Schroder, Morgan
Grenfell, Slaughter and May,
and Garhnore. Even the City
Corporation, now a keen arts
s u pport e r, gave a neighbourly
sum.
So this weekend Islington is
swathed in tents, in street
theatre, in urban fairground,
in continental mayhem. If any
part of tite country Is ready for
Europe it is this part of North
London. The main arts vennes
in the area, Sadler’s Wells, the
Almeida, the Crafts Council,
have stayed aloof • at least for
tills first year. Their sup p ort
will be needed in when,
like most festivals, Ms Serafin
struggles to maintain momen-
tum.
She can take inspiration
from the largest arts festival
in the UK, if not the world,
Edinburgh, which this year
wifi get just over Elm, or 20
per cent of its income, from
sponsorship- There is an extra
20 per cent coming from the
corporate sector, with impor-
tant new sponsors NEC, Den
Dausfce Bank and Air UK help-
ing to make up the fall-off
from trusts and foundations.
More typical of festivals is
Spitalfields, which begins next
week. Its biggest source of
unearned income, trusts and
foundations, is down sharply
this year, from £95,000 to
£65 , 000 (although the Baring
Foundation delivered its prom-
ise). But director Judith Serota
bas raised £14,000 more over-
all - from corporate dona-
tions, from the Arts Council,
even from the local authority.
Tower Hamlets, and from com-
mercial sponsors, up from
£16,500 to £21,000.
Two new first-time support-
ers, St George, which is re-
boSding the recently fire-dam-
aged Spitalfields market, and
Gibbs, Hartley & Cooper both
attracted top-ups from the
Pairing Scheme. The latter,
surprisingly, is a Lloyd's bro-
ker.
^j Qpera/Richard Falrman
'Cunning Little
Vixen’ jumps
across Channel
T he introductwy page to
the programmes at the
Theatre du CMtelet has
f»Tr«n on an -extra significance
in .the. last few weeks. Writing
a year ago in his capacity as
mayor of Paris, Jacques Chirac
affirmed hto- support for the
opera house which the city
pays for out of its own funds
and wished it a successful sea-
son.
-Since then the French elec-
torate has stepped in to call
the time. With Chirac elevated
to the presidency, the old
rivalry between the CMtelet
and- the state-run Bastille : -
Francois Mitterrand's: opera
house of the people and for-
merly a bastion of socialist ide-
alism — looks less dear-cut. In
future, the two eatabBafament i
will be fighting more to .score
artistic points than political .
ones - a battlefield where the .
CMtelet at present has a
strong advantage.
As Qhirac; jiromised,- the
theatre’s -95 season has
been an adventurous one: a
new Ring cycle, the ambitious
production of PurceB’s Emg
Arthur which:came to Loudon.
Britten's Peter Grimes and -
the last event - Janflcek's The
Cwmmg little Viren, which is
more .of; an adventure in
France than it would be in
Britain. -
The operas of Jan&Sek are
still comparative rarities in
France. ;In -an interview,
Charles Mackerras suggested
that there has been no musi-
cian wiuf fcas_ championed Jan-
&Sek*s music there as he has to .
Britain, which may be true.
Certainly, the CMtelet did
well to invite him to conduct
this: production. There is
nobody with mare experience
than . Mackerras in this music
and he had given the Orch^tre
de Paris a thorougt^roundnigr
in the best JanSCek style -
lucid, and transparent, every
detail : tingling ■ with joyous
energy. ,
It woald seem that Macker-
ras was the presiding genius of
the enterprise. It was he' who
insisted that the opera should
be sung in the original Czech,
behaving that translations of
Jan&tek into French do not
work; and (Hie imagin e s that
he also . had an input in
didosing the producer, reav-
ing a partnership with Nicho-
las Hytner that worked so well
for Handel's Xerxes at English
National Opera.
- Although Bob Crowley’s
designs flooded the stage with
brilliant green, Hytner avoided
torntog the argument of The
Cunning Little Vixen into a
comparably green tract.
Humans and animals alike
were shown to have their
cruel side, while at the end
the gamekeeper stood among
the forest creatures as an
equal.
If Only tire animals an d birds
had been less professionally
cute, instead of dancers in
fancy dress, heavily choreo-
graphed, like the chorus fin* of
a West End musical.
The Czech soprano Eva Jeuis
sang a bright, confident Vixen,
playing her more as a woman
in iox-fur than a creature of
nature; Hana Mmutfllo was her
beau, the - Fox, uncomfortable
with some of the higher music,
as mezzos often are in this
role.
Hytner. had their courtship
take place on a double-bed
made from fences and a quilt
of leaves. Later, as parents of a
sizable litter, they had become
the perfect middle-aged couple:
she wore an ankle-length
dress, he Md braces and a car-
digan. ’■!' '•
By contrast with the bright
colours of .the forest human
life seemed a drab existence.
The- Schoolmaster and the
Priest, sung by Josef Hajna
and Richard Novak, boozed
their evenings away in an tun
shaped like a giant cognac bot-
tle. When the schoolmaster
gets tipsy and fells over, the
set turned upside down and
cartoon-style stare twinkled in
his eyes - a delightful touch.
Thomas Allen made the game-
keeper worldly and sympa-
thetic, fifting the opera on to a
higher plane in the final scene,
as. every singer of the role
should.
If the Chaielet is to pursue a
full JanAfcek cycle, this made a
good start Next season Simon
Battle and the City of Birming-
ham Symphony Orchestra keep
up the British connection
when they visit for a new pro-
duction of Jertufa.
Of aR the products to travel
through the rhannri tunnel, a
trade in Czech operas must be
am ring the most unKfceiy .
Theatre
F or the Open Air Thea-
tre in Regent's Park,
the actor Brian Cox
has staged Shake-
speare's Richard ZZ7. Not their
usual kind of show, but sur-
prisingly effective; and much
the same could be said erf their
Richard, Jasper Britton, who
played tire weedy Dauphin in
Shaw's Saint Joan last year as
if to the shrinking manner
born.
Cox hims elf is not to be seen,
but his style as an actor -
energetic, truculent,
no-nonsense - is vigorously
stamped upon the whole pro-
duction.
It goes at a terrific pace; the
text is shortened, of course,
but an astonishing amount of
it is retained, and projected
with sterling clarity. Almost
every scene comes snapping at
the heels of the previous one,
with scarcely time to draw
breath, lire actors pelt up and
down the gangways as if in
constant panic.
Richard m is not much of an
outdoors play, so there is more
stage than is usual in this
venue. Tanya McCallin's set is
mostly scaffolding, with a long
forward platform through
which Richard erupts at the
start, maggot-naked but for
some ugly bandages.
He dons his custom-built,
misshapen jacket and trews
while snarling his way through
“Now is the winter of our
discontent . . .” What was mere
greenstick boyishness in Brit-
ton’s Dauphin becomes vicious
‘Richard III’
at speed
Simon Treves, left, and Jasper Britton: solid and strong in ‘Richard DT at the Open Air Theatre
malcontent here, trembling at
the end into fearful coll-
apse.
Black comedy is inevitable,
since with the cut text the end-
less series of murders proceeds
at near-farcical speed.
Vet the key scenes strike
home with force: if the seduc-
tion of Lady Anne (Natascha
McElhone, fair and faint) is
even less pla usib le than usual,
everything that is frankly
nasty gets a sharp cutting
edge.
There is a splendid Queen
Margaret from Anne White,
hurling her curses like gre-
nades, and the set-piece for the
three bereft women (including
Veronica Clifford's formidable
Duchess and Harriet Thorpe's
grim Elizabeth) is hair-
raising.
Among an excellent cast,
many of them in double or tri-
ple roles, Brian Protheroe's
wary Hastings stands out. So
do Simon Treves' solid Buck-
ingham; Peter de Jersey’s Riv-
ers and Richmond; and Chris-
topher Hollis’s Tyrrel and
Blunt.
But it is Richard who must
cany the evening (there will
be matinees, but Jason Tay-
lor's lighting is predicated on
nocturnal darkness); and Brit-
ton's stamina is no less
impressive than his glinting
intelligence, wit and crooked
mobility. His performance will
stick uncomfortably in one's
mind for a long time.
David Murray
Theatre /Ian Shuttleworth
Icon of the sixties masters the old times
T he experience of seeing Julie
Christie on stage does not
attain the near-religious
dimensions alluded to in
same other critical quarters for those
of us who grew up during her cam-
paigning years rather than her golden
screen era.
If we needed reminding, however,
Theatr Clwyd bas thoughtfully pro-
grammed a cinema season of Chris-
tie’s greatest achievements in
parallel with her impressive perfor-
mance in Lindy Davies' production of
Harold Pinter's play Old
Tones.
Julian McGowan's set - an enor-
mous would-be granite back wall
behind a large, nnfossy lounge area -
suggests in the Emlyn Williams Thea-
tre’s large studio space, the
domestic expanse of Charles Foster
Kane’s Xanadu shrunken to the
dimensions of the prosperous chatter-
ing classes.
And, as in the Xanadu scenes of
Orson Welles’ film, Pinter’s three
characters spend their time
tailing ever to communicate meaning-
fully.
Leigh Lawson, as Deeley (oddly
reminiscent, here, of Richard John-
son). and Carol Drinkwater. as Anna,
impart an appropriate air of slightly
stilted artiSdality to the delivery of
their lines, as if the characters, too,
are performing rather than interact-
ing.
Their individual threads of recollec-
tion, and that of Kate (Christie), grad-
ually twine together but grow no
closer to constituting a common past
Anna may or may not be a past lover
of Kate's, or tire personification of an
aspect (rf her personality, or a figment
of the dead past or all three: her
status, like the old times themselves,
is essentially elusive.
K ate’s other-worldhness is para-
doxically rendered by Christie
in a more naturalistic perfor-
mance than those of her fellows;
when she breaks out of her frequent
silences she is recognisably a person
rather than a persona.
What seems at first like a flaw in
Christie's performance - an inability
to subordinate herself to the demands
of Pinterishness - slowly acquires
strength untiL in her closing remem-
brance. it meshes with Kate's nature
as tire only one of the three who genu-
inely inMbits both the past and the
present, as Deeley and Kate lapse into
tearful silence.
The passage of time since the play’s
composition has also fortified Its reso-
nance.
When it was written, its characters
were recalling the Joys of early s
London immediately post-austerity;
however, it is impossible to read this
production except as centring on the
recollection by three fortysomethings
of the glorious s in what is
now a (for them) more comfortable
but hollower world.
In this respect, of course, Christie's
presence as a lateHOs icon does no
harm to the atmosphere of mis-re-
me mb ranee of things past.
Old Times constitutes an object
example of outgoing artistic director
Helena Kaut-Howson's policy of mar-
rying audience appeal to program-
ming which gently pushes the enve-
lope of mainstream theatre-going. On
its own terms, it achieves a power
undeniable even by those for whom
Pinter may not be their particular tea
party.
At Theatr Clwyd, Mold, until Jane 10
(-).
m -~r. ■7r. , y?r7 j.
■ AMSTERDAM
CONCERTS '
Itat Concartgebouw : (020) 671
• Royal Gonrartgebouw. Orchestra:
wife the Netherlands Ra > * *94 *98 W VS
- ...
J ' ' - !' . »»' • /’
a S.+TH-'L*', . A 1 *
a.
E arlier this' week,
Banco Bilbao Vizcaya
of Spain became the
first foreign bank to
acquire a majority sharehold-
ing In a Mexican bank when it
took control of Probursa, a
small bank burdened with a
huge portfolio of bad debts.
The government helped the
transaction by agreeing to take
$S00m of bad loans off Probur-
sa's balance sheet.
President Ernesto Zedfllo is
keen to promote foreign direct
investment in all sectors of the
economy, which he regards as
the only way of reducing
Mexico's dependence .on
short-term finance. Mr Tadirin
has said he intends to privatise
“everything allowed by the
constitution”.
However, beyond immariiata
crisis management and hopes
that exports and foreign direct
investment will continue to
grow, Mr Zedillo has given fit-
tie indication of how he
intends to steer the economy
back to growth. There were
few firm proposals in the
National Development Plan
announced this week to deal
with Mexico's low domestic
savings rate, contain the crip-
pling cost of the state-run
social security system, or cre-
ate 1m new jobs each year for
Mexico’s young workforce.
It is problems such as these
that Ah* Zedillo must address if
he is to convince those who
stand in vigil outside the
cathedral in Mexico City that
the present crisis, although
painfi il, will be transitory.
r.£.g.'a»iu»
Jan
Sxnaa: Rnanca Mt&ay
Jan *85 Apr
programme. The change of
mood in Mexico's financial
markets is palpable. The peso
has stabilised at about 6. 15 to
the dollar from its all-time low
of 7.45 in early March,
although it is still vulnerable
to the wide fluctuations in
Mexican interest rates. The
benchmark interest rate on 28-
day treasury bills, known as
Cetes, has fallen from a peak of
82.65 per cent in the financial
turmcdi of early March to 51.39
per cent at this week’s auction.
When the rate dipped below 50
per cent last week, the peso
weakened markedly against
the dollar - a sign that inves-
tors are still d emanding high
returns to remain in pesos.
The business community
appears to be adjusting to the
novelty of a floating exchange
rate. And the stock market has
rallied by more than 50 per
cent in dollar terms as inves-
tors seek to recoup earlier
losses. Inflation is believed to
have peaked at 8 per cent hi
April, while interest rates are
declining.
Fears that Mexico might
defeuit on its short-term for-
eign debt have receded,
although there wiU be Little
respite from the heavy repay-
ment schedule nntj ) the end of
August. The emergency funds
provided by the US Treasury
and International Monetary
Fund have allowed Mexico to
redeem almost $17bn of doQar-
1 ink ed treasury bills, known as
tesobonos. as well as $9.49bn
on other external debt.
With another S7-32bn in teso-
bonos falling due over the next
three months, Mexico will have
to draw down additional US
and IMF funds. But officials at
the finance ministry are
encouraged by the feet that a
growing proportion of matur-
ing debt is being reinvested in
Mexico - an indication that the
tight monetary policy is having
same success in stemming cap-
ital flight
“To the extent that dollars
remain in the economy, more
credit will be available and
interest rates will begin to
fall," says Mr Ariel Buira, a
LETTERS TO THE EDITOR
Number One Southwark Bridge, London SE1 9HL
We are keen to encourage letters from readers around the world. Letters may be faxed to +44 171-873 (please set fax to 'Hue').
Translation may be available for letters written in the main international la n gua g es.
US /Japan trade
dispute may lead
to WTO ‘bust-up’
Cashflow measure an
important aid
to investment
From Sir Roy Denman.
Sir. The European Union's
approach to the dispute
between Japan and the US on
cars seems strangely blinkered.
The European Commission is
entirely correct in declaring
that the US action, in threaten-
ing unilateral tariff increases if
Japan does not comply with its
requests, violates international
trading rules. When Mr Ron
Brown, US commerce secre-
tary, says opinions on the
legality of these measures are
mixed be is condoning danger-
ous rubbish (“Japan ahead by
a nose in hearts and minds bat-
tle". May 26). The World Trade
Organisation, like the General
Agreement on Tariffs and
Trade before it. stands for the
rule of law in international
trade. After all, it was an
American who once said cases
were better settled in a judge’s
chambers rather than in the
chambers of a six-shooter.
This having been said, the
Americans still have a prob-
lem. It has nothing to do with
a large Japanese trade surplus;
no international trading rules
limit these. The problem is
that Japan has for long limited
its imparts of manufactures by
a variety of devices, from tech-
nical standards to cartels and
arrangements between compa-
nies-Tbis is a problem for the
world trading community. The
Americans have chosen the
wrong way of going about it,
but if it is not tackled Congress
will deal with it This would be
like turning a man-eating tiger
loose in a shopping mall.
Meanwhile, the Commission
is standing on tbe sidelines,
clucking its tongue at the
Americans and endeavouring
to attract admiring glances
from the Japanese. This will
get it nowhere. But there is a
perfectly legal route which the
Americans have initiated but
have not yet concluded. An
article of Gatt, now the WTO.
has long provided that if any
member considers that the
benefits It has secured in trade
negotiations are being “nulli-
fied or unpaired" by another
and it cannot get satisfaction,
then it can ask the WTO for
authority to raise tariffs
against the party concerned.
Ironically, the Commission
suggested joint action on these
lines to Washington in .
The Americans said that they
were not prepared to “gang
up" against Japan. In vain the
Europeans pointed out that
they did not want to gang up
against anyone, but simply
wanted to ensure that all mem-
bers of the world trading club
fully paid tbeir dues in terms
of open markets for imports.
This is an area where the US
and Europe, and ot her world
trading nations, can cooperate
to remove a real irritant to
world trade. If the Americans
are left to go it alone on a
non-legal route then Congress
will take over. And Congress ,
could bust up the WTO.
Roy Denman.
26 St Luke's Street,
London SW3 3RP. UK
From Mr Chris Faber.
Sir, The “Valuation yard-
sticks’* Lex column (May 30)
should be applauded for its rec-
ognition that simplistic,
accounting-based measures
such as price/earnings multi-
ples and yield should be com-
plemented by analysis which
strips out accounting distor-
tions. Its recognition of return
on capital as an alternative
measure is a step in the right
direction, but equity market
participants are still way
ahead of you.
Leading investors in the
equity market look beyond
return on capital and pay for
cashflow return on investment.
To date, there are 28 institu-
tional investors in the City
who rely on this as a measure
of corporate performance. This
measure eliminates accounting
distortions mentioned in your
article such as leases and good-
will, inflation, depreciation and
revaluations. Your readers
may be interested in knowing
that when adjusted for these
distortions, the cashflow
return on investment for “UK
j pic” is between 6 per cent and
8 per cent as compared to tbe
still-overstated 18 per cent to
24 per cent return on capital
highlighted in your column.
On a company-specific basis,
monitoring this measure leads
to significant insights about
whether management strategy
Is likely to enhance or destroy
shareholder value. Lloyd's
Chemist, for example, boasts a
32 per cent return on equity
and a 28 per cent return on
capital employed, which would
lead one to believe aggressive
growth should increase share-
holder value because returns
exceed the cost of capital. How-
ever, cashflow return on
investment is only 3 per cent,
which leads to the insight that
aggressive growth Is actually
destroying shareholder value
because returns are below the
cost of capital
Chris Faber,
HOLT Value Associates, .
300 South Riverside Plaza,
Suite MOON,
Chicago.
Illinois .
US
Some little piggies do fly
From Mr Roy Suckling.
Sir, The Observer column's
normally humorous last item,
on May 31 under the headline,
“Fattened up", reads:
"And so another mouth ends.
All targets met. All systems
working. All customers satis-
fied. All staff eager and
enthusiastic. Al] pigs fed
and ready to fly.”
In our case this is a normal
and highly satisfactory
monthly report
Roy Suckling,
director.
Suckling Airways.
Cambridge Airport.
Newmarket Road.
Cambridge CBS 8RT. UK -
Little of substance seems required of new CBI leader
From Mr Ralph Wmdle.
Sir. Like others, I occasion-
ally scan the job advertise-
ments (especially Top Jobs)
with the same dispassionate
Interest as for the obituaries or
court circular.
So, given the imminent and
sadly premature departure of
Howard Davies, who could fall
to notice the prominent ads for
a successor director-general of
the Confederation of British
Industry.
Interesting reading. Was it
the CBI. or possibly Norman
Broadbent International which
seemed to be do wn grading this
important role to something
between a public relations offi-
cer Tree-to-travcl and a spin
doctor?
Beyond the obvious bro-
mides about “leadership and
stature" (mainly artefacts of
image-makers these days) the
only- specific attributes
demanded relate to “communi-
cation", “promotion”, "skills as
a speaker, broadcaster and
writer" and so on. Certainly
some decent aptitude for
expression might not come
amiss. But what about the sub-
stance?
Totally absent was any men-
tion of real industrial experi-
ence, technology, manufactur-
ing. industrial relations,
markets, investment - even a
smattering of economics or
sustained executive achieve-
ment. What about the skills to
start converting the UK's too-
n inner ous employer federa-
tions into something like the
real confederation or British
industry we so badly lack? Get-
ting a better competitive prod-
uct to "promote"?
Surely chatting up the press
and ministers can’t be every-
thing can it? No wonder hearts
are a-flutter among the “chat-
tering classes", business jour-
nalists, PR agencies, broadcast'
ers and career-anxious junior
ministers. What about a
woman to wake them up In the
Athenaeum?
Ralph Windle,
Cheswell Cottage,
Standlake.
Oxon OX8 7QN, UK
deputy governor at the-.eenfaai
tank. This is of critical inm®
tance for Mexico’s 'troubled
banks- The fourfold ^Sbcrease in
domestic interest rates , trig-
gered an- avalanche of lom
defaults just as the .fiaanrial
crisis suddenly cut og. their
access to foreign credit -
The central 4«hk lau pro.
vided billions of , dollar jn
emergency credit . ihd
long-term funds “fa ^nitae
banks to restnfeture baddefife.
The extent ol the dauiage, fiog^
ever, remains unknown:-
omists fear the wholescale
rescheduling of loans .that lave
already fallen due and are not
being repaid has merely post-
poned the Inevitable day of
reckoning for some, of the
weaker institutions. They wara
there may be bank failures
before the mid of the yeat "
The banking.- . law was
amended earlier this year^ to
allow majority foreign owner-
ship of domestic banks fertile
hope that same foreign taves-
tors may be found to recapital-
ise Mexico's debilitated - finan-
cial groups.
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Both countries acknowledge their
close relationship- Mr Jiang
China's president, depicted the
bond as *fa>t of “tether and son* in
a speech in January calling for
close* ties with Taiwan leading ulti-
mately to reunification.
Mr Lee borrowed the analogy of
“older brother and younger
brother " in his riposte to Mr Jiang
to describe his vision of relations
between China and the island Bei-
jing regards as a rebel-occupied
province.
Ms Hmn-iiap Annette Lu, a legis-
lator from the Democratic Progres-
sive party (DPP), Taiwan's leading
opposition, and co-chair of the legis-
lature's foreign affairs committee,
prefers a different metaphor that of
a divorced couple. “China divorced
Taiwan 100 years ago, and now it
feels regretful because the ex-wife
has become so attractive,” she says.
“So now they say, 7 still love you,
will you marry me again?' "
Ms Lu, a former political prisoner
who recently declared her candi-
dacy for the vice-presidency, adds:
“Beijing has never given up the
threat of military invasion. Besides,
China still tries to prevent Taiwan
fr om going out and dating and mak-
ing friends with the world. Taiwan
is now an emancipated ex-wife who
is not happy to return to the arms
of her ex-husband.”
Since the United Nations
switched recognition from Taipei to
B eij in g in , China has success-
fully employed strong-arm tactics to
persuade all but a handful of sm«n
countries to concede - publicly at
least - that Taiwan belongs to it
Mr Peng Ming-min. a legal
scholar seen as the DPP's most
likely presidential candidate argues
that Beijing’s legal claim over
Taiwan is tenuous at best “Purely
from a legal point of view, there is
no document or treaty with legal
effect which says that Taiwan is a
part of China," he says.
China controlled Taiwan only
from . when the island was
made a province, until 1S95, when
Strained relations
in family feud
Beijing's efforts to reassert its claim to Taiwan come as
the island gears up for elections, says Laura Tyson
Taiwan and China: close relatives or dnrarced couple?
■gmmm
its future. The mainstream faction
which controls the Nationalist
party differs from the DPP on the
issue only in nuance.
"For the first time, the people on
this island win choose their own
leader,” says Ms Lu. “No matter
who gets elected, he will be the true
leader, and he wfll have the guts
and determination to say what he
really wants to say. President Lee is
not free to express his opinions.”
For now, the government is call-
ing on Beijing and the rest of the
world to recognise Taiwan as a sov-
ereign political entity, separate
from and equal to China - so far in
v ain. The Na tionalis t riaim is based
more on effective control - akin to
squatters’ rights - than on legali-
ties. Were it not for the threat of
attack by China, many political ana-
lysts believe the ruling party would
seek to formalise Taiwan’s 46 years
of de facto independence.
“No government is unilaterally
going to recognise Taiwan, at least
for the foreseeable future,” says a
western diplomat. “It’s just not
worth the trouble of crossing
China.”
But the Taiwanese are fearful of
binding- their fete to that of histori-
cally volatile China. And there is no
consensus on the country’s identity.
In a recent poll, 29 per cent of
respondents felt themselves to be
Taiwanese; 35 per cent said they
were Chinese; and 27 per cent saw
themselves as both Taiwanese and
Chinese. The rest were unsure.
► • L m ".y*' si. - «; - ..
T hat Taiwan is not a part
of the People’s Republic
of China is one of the
few points upon wbich
residents of all political
persuasions agree. Taiwan's future
president will have little time and
less ammunition to fend off an
acquisitive Beijing. The island’s eco-
nomic dependence on China is
growing and Hong Song serves as
the conduit for the majority of
cross-strait trade and investment
Befling is already using Hong
Kong’s reversion to Chinese control
in to force Taipei to make con-
cessions. In recent weeks. China
has thwarted Taiwan's efforts to
renew an air services pact with
Hong Kong and to restore limited
direct shipping bwics to China.
For the past century, Taiwan has
been shaped by different forces,
both culturally and politically, from
China. Mr Peng stresses that
Taiwan is today distinctly different,
after 50 years of Japanese occupa-
tion and the postwar period when
US influence was pervasive.
“The ancestors of the majority of
people here came from China but
the history of the island is totally
different,” he says. “We have devel-
oped our own identity. We are Chi-
nese as much as Americans, New
Zealanders, Australians or Cana-
dians are British. We have a right
to self-determination.”
the imperial court ceded it to Japan
“in perpetuity".
“What is the actual basis for
mainland China's claim over
Taiwan?” asks Mr Peng, a former
political exile known as the “godfa-
ther” of the Taiwan independence
movement He returned to Taiwan
two years ago after 23 years in the
US. “One justification is that ‘We
are all Chinese' - hut can origin of
population be a basis for a legal
claim? Thp. other is that Hhma hag
an ancient territorial Harm but this
is not sufficient either.”
During the second world war. the
allies called for the restoration of
“Formosa [Taiwan] and the Pesca-
dores [Penghu, a group of small
islands in the Taiwan strait]" to the
Republic of China. But the two dec-
larations - in and - were
policy statements rather than
legally binding documents, Mr Peng
says. Japan renounced all claim
over Taiwan in the San Francisco
treaty of - but this did not
speedy the country to which sover-
eignty was to be transferred. Taipei
and Japan signed a treaty with the
same wording shortly after, but
again no beneficiary was named.
To back its claim, Beijing rites
the Shanghai Communiqufe, a policy
statement signed in by Richard
Nix o n, tii on us president, and Mao
Zedong, chairman of the Chinese
Communist party. In it, the US
“acknowledged” that both Rpjj in g
and Taipei agree that there is only
n no China an d fchafr Taiwan is port
Hsm-Han Annette Lm “Taiwan is an
emancipated ex-wife’ Reum
of it Other governments use similar
language: Canada “takes note oT
China’ s claim; Japan “respects” Bei-
jing’s position. All are formulas. Mr
Peng argues, to get around formal
recognition of Beijing’s claim to
outright ownership of Taiwan,
which few countries grant
But soon the world will be forced
to ponder Taiwan’s role in the
“C hina family". Ms Lu says: “It's
time for the world to stop spoiling
China. The whole world takes it for
granted that whatever China says,
whatever Beijing claims about
Taiwan, is feet”
Adding to the confusion, Taiwan's
government also upholds the
notional claim that the island is
part of China - a China ruled by
the Nationalists, who retreated to
the island in after the defeat of
Generalissimo Chiang Kai-shek by
tile Communists. The Nationalists
also purport to seek reunification,
but in Taiwan both of these claims
are widely regarded as little more
titan lip-service to a potentially hos-
tile China.
The presidential election, how-
ever, will force Taiwan to resolve
The success of intervention in currency markets may depend on timing, argues Robert Chote
T he world’s leading central Wt 7t%% T C 1 1 tilde to the dollar. As a relatively
banks startled the foreign III I t I I m V III J U m W lilll B closed economy the US need no
exchange markets on J J a ff worry too much about the inflation
Wednesday by intervening ary impact of a weak currency, or -
T he world’s leading central
banks startled the foreign
exchange markets on
Wednesday by intervening
in concert to support the dollar.
Early indications suggested that it
was money well spent
The central banks bought dollars
in quiet New York trading, neatly
timed to wrongfoot speculators who
had placed bets that the currency
would fell again. By dose of play in
London, the dollar was three pfen-
nigs and two yen higher. It slipped
yesterday but stayed above its pre-
level
Market participants were united
in admiration for the skill with
which the intervention was carried
out However, they were divided in
predicting whether intervention
would have an enduring effect - a
subject of long-nximmg debate.
The case far such intervention
has gained ground in recent years.
Mr Pietro Catte and colleagues from
the Bank of Italy concluded last
year that concerted intervention by
the Federal Reserve, toe Bundes-
bank and the of Japan
been a big influence on currency
trends since the mid-s.
Mr Catte identified 19 significant
Hurricane Jim
hits town
■ Washington is familiar with
political whirlwinds. But few hit
town faster thar> Jim Wolfensahn,
who officially took over as president
of the World Bank yesterday. He
has alto bought a large honse.
accepted an honorary knighthood
from the bands of the British
ambassador, and announced that be
will have to step down as chairman
Of the Kennedy C entre for toe
Performing Arts, the ne plus ultra
of the capital’s culture.
The house, in the upmarket
sector known as Katarama, has
brought relief to depressed real
estate agents. But his departure
fromtheKennedyCeorire-after
five years as unpaid head - has toe
arts set grieving.
Wolfensohn had first said he
would stay an, but then announced
he could not do justice to it and the
bank, for which he plans to travel
six months a year. Some
disappointed Kennedy board
mambas bad a slightly different
view, saying the bank would not let
Wolfensohn raise money for the
arts as well as capital for the poorer
nations.
Althoug h Anstralianhom, he
cannot use the “sir* in front of his
name because he took American
citizenship in , once if became
apparent that Ms career as an
inv estment banker - and his
ambi tion for the World Bank
episodes of concerted intervention
between and . Nine
prompted an enduring reversal of
the dollar's trend, seven succeeded
for several months and only three
were outright failures. The study
also asserted that every significant
dollar turning-point in that period
coincided with concerted interven-
tion.
Intervention in the currency mar-
kets since has yet to be ana-
lysed rigorously, but casual obser-
vation suggests toe record has been
much less impressive. The central
banks have certainly been power-
less to resist the dollar’s slide over
the past year and a half.
Conventional wisdom suggests
that intervention works only if
accompanied by supportive policies,
especially interest rate changes.
The Italian study confirmed that
this was true in most cases, but
found that intervention sometimes
worked even when rates were on
hold or moving unhelpfully.
Mr Paul Chertkow, head of global
currency research at UBS, invest-
ment bank, points out that inter-
vention and supportive policy failed
to prop up the dollar in , with
only a brief rally after toe Louvre
Accord. The turning-point came in
early when central banks
pounced on a quiet market and
bought dollars at the right price.
Mr Chertkow argues that it was
shrewd of the central banks to
launch Wednesday’s initiative when
short-term speculators were domin-
ating the market action and longer-
term investors - such as mutual
ftmds - were sitting on the side-
lines. It costs much more to support
a currency when the long-term
investors are sellers.
M r Gerard Lyons, econo-
mist at DKB Interna-
tional, the securities
house, also admires
their tactics. Be says they chose to
intervene when the dollar looked in
dang er of facing through the psy-
chological barriers of DM1.35 and
Y80, both trigger points for more
dollar selling.
This suggests that if intervention
is to be successful, then timing is
everything. As Mr Catte concluded:
“It has to be used very skilfully and
in the right circumstances because
its effectiveness depends critically
on credibility, an asset that can eas-
ily evaporate. It is essential that
intervention be used only when its
objectives are truly shared by toe
authorities involved.”
Hence the care taken by Mr Rob-
ert Rubin, US Treasury secretary, to
link Wednesday's intervention with
last month's commitment by the
Group of Seven leading industrial
countries to “continue to cooperate
closely in exchange markets”.
The action appears consistent
with the domestic economic needs
of Germany and Japan. Both have
been hit bard by their currencies’
strength against the dollar, with
exporters squealing in pain in Ger-
many and unemployment at a post-
war record high in Japan.
But the key to the long-term suc-
cess of intervention may be the
market’s assessment of the US atti-
tude to the dollar. As a relatively
closed economy the US need not
worry too much about the inflation-
ary impact of a weak currency, or -
for that matter - about the danger
that a stronger one would push it
back into recession.
The best tonic for the dollar
might well be a perception that the
US no longer believed a weak cur-
rency to be in its interests, perhaps
because it had decided to fight its
trade war with Japan through sanc-
tions rather than depredation.
But Mr Jim O'Neill of Swiss Bank
Corporation doubts the US will hold
the line for long; “This may just be
a happy marriage of temporary con-
venience between the US and Ger-
many. If their economies are stron-
ger three months down the line,
things may look very different,”
This reinforces the observation of
US economist Mr Benjamin Cohen
that “international monetary
co-operation, like passionate love, is
a good thing but difficult to sus-
tain”. Experience suggests that con-
certed action to support the dollar
will succeed only for as long as the
domestic policy imperatives of the
principal players point in the same
direction.
Observer
presidency - would be US-based.
Stfll, as he told Cohn Powell,
another honorary knight, at the
embassy investiture dinner “I don’t
have to call you sir any more.”
Unavoidable
■ Heard toe old story about
thousands of public-sector
employees going on strike and
no-one noticing? It got updated on
Wednesday, when police, health
workers, teachers and road builders
downed tools in Norway. The
strikers say that each day will bring
an rnc rep»pnfal ti ghtening of the
action, though up to what point -
maybe until someone notices? -
isn’t clear.
The last time Norwegian police
went bn strike was in ,
whereupon toe government banned
such unseemly behaviour. The ban
was lifted this year, and once the
annual wage talks collapsed, the
police flexed their disgnmtlement
Downtown Oslo, where crime rates
are low compared with other
European capitals, was as peaceful
as always on Wednesday. The strike
probably went off like a damp squib
in a desert because Norway has a
more serious preoccupation - the
worst floods for more than a
century.
Two legs good
■ Oktay Kkshi, bead of Turkey’s
press council, is in Helsinki, where
he is trying to convince a
conference of the World Association
of Press Councils to set up a body to
"deal with violations” by the
foreign press.
He’s got his eye on examples of
allegedly biased reporting by the
Der Spiegel The Times and - we
have to - the FT Jtselt Birshi
thinks all these organs, wbich
criticised Turkey’s recent incursion
into northern Iraq and alleged
human rights violations by toe
Turkish army, need a jolly good
telling off. Furthermore, he’s
pushing for a world body to
regulate international print and
broadcast media, because “there is
no authority to deal with these
things”.
T hank the heav ens for that.
Otherwise Observer might end up
in the nick - Hke so many Turkish
journalists.
I was wrong
■ Wealthy Texan Robert
Mosbacher doesn't like the US
Commerce Department He wants to
see it downsized - in fact run out
of town. Which is a little strange to
American ears because he was once
happy enough to run the place as
its secretary.
“When I became secretary of
commerce, I might have been a
little doubtful of whether anything
could be done. Well I was
wrong. . ■ government can be a
positive difference in our lives.” he
said near toe end of his tenure.
What ran we say? Times change.
Mind you. Commerce officials have
been more than a little surprised by
his attacks on *~hp hand that fed
him. They pointedly remark that
only recently a former deputy
assistant secretary, who served
under Mosbacher, visited toe
department’s International Trade
Administration for some assistance.
The visitor is said to have sought
information about forming a
consortium to invest in Latin
America.
And the visitor’s job? Paid
consultant to one Robert
Mosbacher, who now operates a
Houston-based energy company.
Board and lodging
■ Bernard Tapie, the colourful
French businessman and politician,
might soon be packing bis bags for
Belgium.
Tapie has so for done his best to
take advantage of his parliamentary
Immunity, political connections and
every legal ploy to delay definitive
judgment on his bankruptcy,
football-bribing allegations and
other such affairs.
He says he won't interfere with
French justice, but added that he is
consi de ring shifting his family
away from the cruel spotlight of
publicity which his multiple court
cases have brought him. And they
obviously need somewhere to live;
the courtappointed liquidators sold
one of bis houses yesterday in
Paris, for FFr2.7m.
50 years ago
Value of the pound
Mr Craven-Ellis asked the
Chancellor of the Exchequer in
toe House of Commons what was
the price level for and
taking as 100. The
Chancellor replied: Comparisons
with are not available. On
.the basis of the official cost of
firing index for and
and of the price changes between
and , the price level,
taking as 100, was 156 in
and 239 in .
Shortage of textiles
The seriousness of the textile
supply position is again
emphasised by the statistics of
wholesale trade and stocks for
April compiled by toe Bank of
Bn gfami for the Wholesale
Textile Association. The level of'
stocks was 28.5 per cent below
the fevd at the end of April ,
white turnover rose by 7.7 per ■
cent
Madras Electric .•
As with all similar concerns, • -
publication of war-year figures
has been prohibited, but toe
reduction frtan the normal
dividend rate of 8 per cent, tax
free, to 4 per cent less tax tells
its own.story of evacuation
trembles and reduction of civilian
consumption which was not
.offset by increased munitions
demands.
r vrre-i -
14
Brossette B77
Sanrtaire ■ ChauFfage ■ Canalisation
Xtutmmo-a*
FINANCIAL TIMES
Friday June 2
) Looking Towards
' ; , . ;
| Look Towards
. Newport
( : . ~
How the West was wooed
by US presidential rivals
By (Irak Martin in Washington
W innin g the West is serious
politics for anyone who wants to
be US president Over the last 34
hours three men with serious
ambitions for , Bill Clinton,
Bob Dole and Pete Wilson, have
been telling their potential con-
stituents what is right and what
is wrong with the country.
Much the most striking was
Senator Dole, the majority Leader.
It was not so much what he said
- another blast at the “night-
mares of depravity’* foisted on
the country by the entertainment
industry - but where he said it,
in the den of iniquity, Hollywood.
Having duly consulted reli-
gious and social conservatives,
Mr Dole picked up where former
vice-president Dan Quayle's ser-
mons on “family values" left off.
He took on movies and “gangsta
rap" music for their violent and
sexual content, ricking off a list
of the worst offenders. However,
an aide confessed the senator had
not seen or heard any of them.
“We have reached the point,”
he said, “where our popular cul-
ture threatens to undermine our
character as a nation." He
pointed a direct finger of blame
at Time Warner for its promotion
of suggestive music. “You have
sold your souls but must you
debase our nation and threaten
our children as well?"
Mr Dole naturally denied
attacking Hollywood was a parti-
san political matter. But he did
not choose to mention that Mr
Clinton has also suggested the
entertainment industry should be
more socially responsible, nor
that Mrs Upper Gore, wife of the
vice-president, once led a cam-
paign to clean up popular music
lyrics.
Mr Clinton, also has quite good
connections in current Holly-
wood circles, which are no longer
under the sway of the industry's
first president, Ronald Reagan.
Several Hollywood denizens were
critical of Mr Dole, one pointing
out that Hollywood was, just like
Congress, in it “for short-term
profit".
Governor Pete Wilson, of Calif-
ornia, does not have to leave the
state to get across his political
message, though a throat opera-
tion has kept him silent and at
home more than his faltering
campaign needs.
But yesterday he used his pen
- in the forms of executive orders
and an open letter to Californians
- to declare an end to the era of
state affirmative action to benefit
women and minorities. Pro-
grammes covering the employ-
ment and procurement policies of
virtually every state agency will
be terminated.
“No one envisioned," he wrote,
“that redressing two centuries of
unfairness would launch a whole
new era of unfairness. But it
has." Tngtrad he was determined
to recreate “the American ideal
that anyone who works hard and
plays by the rules has an equal
chance."
Mr Dole and Mr Wilson always
had a lot In common as prag-
matic Republicans with more
than a taste for effective govern-
ment. However, the new party
political climate keeps them
together in competitive lockstep
on the anti-government right.
California and Hawaii apart,
the West is now hostile territory
for Mr Clinton. But in a two-day
swing through Colorado and
Montana, he has gamely tried to
preach to the unconverted and
unconvertible.
Montana, something of a final
frontier until Californians began
to emigrate there in droves, is a
particular!)’ tough nut for him to
crack. It houses one of the most
prominent militia movements,
which is much exercised by the
activities of federal agents, and
the state deeply resents govern-
ment environmental policies.
But Mr Clinton took them both
on. He told the paranoid right
that “people should deal with
each other as neighbours" not
potential enemies. He again
appealed for more civil public
discourse and accused Republi-
cans of “demonising" hrm
Toyota to drop its graduate
recruitment by one-third
By Miehiyo Nakamoto in Tokyo
Toyota, Japan’s leading
carmaker, is to cut recruitment
of university graduates next
spring by about 30 per cent.
The decision - which will bring
graduate recruitment to its low-
est level since - reflects
mounting pressures on the
domestic car industry in the face
of the yen’s sharp rise and the
risk of 1Q0 per cent punitive tar-
iffs on luxury cars exported to
the US.
Toyota said reduced recruit-
ment resulted from the uncertain
economic environment It plans
to hire 140 university graduates
next spring, compared with 206
this year and 883 in .
The company said it had
delayed a derision on bow many
employees it would hire for
production-related jobs until it
had a better view of Japan's eco-
nomic state.
Overall recruitment in Japan is
likely to fall this year because of
the difficult outlook.
Unemployment in April hit a
record &2 per cent and univer-
sity graduates have seen the
number of job offers toll sharply
since the late s.
Toyota has also been moving a
greater proportion of its produc-
tion overseas, which has raised
concerns about the “hollowing
out” of Japanese manufacturing.
It expects overseas production to
rise 21 per cent this year, while
exports are forecast to toll 22 per
cent
In addition to the setback to
the domestic economy caused by
the high yen, Toyota and other
Japanese carmakers are begin-
ning to feel the impact of US
sanctions announced in the dis-
pute over access to the Japanese
car and car parts market Lead-
ing carmakers have temporarily
cut production of luxury cars
bound for the US and shipmpnte
have been curtailed.
As many as 4,000 luxury cars
Intended for the US market are
still in Japanese ports and at
manufacturers’ warehouses,
according to the Ministry of
International Trade and industry.
Although there is about one
month before US sanctions take
effect the cost to Japanese car-
makers prevented from shipping
vehicles to the US already
amounts to Y9.2bn ($106m), the
ministry says.
The impact on the Japanese
economy is forecast to be even
greater. According to a report by
Asahi Bank, the cost or reduced
production by Japanese industry
could be as high as Y1.400bn.
A decline in car production will
lead to an even greater fell in
output in related industries, the
report notes. In particular, the
sanctions will severely affect the
steel and electronics sectors.
VW rejects legal action against former chief
Continued from Page l
Jos£ Ignacio L6pez de Arriortua,
Mr Liesen said he was not aware
of any new evidence which con-
tradicted an internal probe at the
company. This investigation .com-
missioned by the supervisory
board against Mr Pitch's wishes,
concluded that although Mr
L6pez and colleagues had
brought with them data from
General Motors, their previous
employer, none of it was secret
Mr PiSch restricted yesterday’s
remarks to shareholders to com-
mercial matters, repeating con-
cerns about the effects of the
strong D-Mark on sales prospects.
Vehicle deliveries in the first
five months were below target,
he said. Worldwide sales to cus-
tomers had risen 15 per cent by
the end of May to 1.4m units,
although domestic deliveries had
fallen 0.6 per cent to 419,000.
The North American market
was down 33 per cent while sales
in the Asia-Pacific region were
up 38 per cent.
UK-Iraq
arms sales
probe hits
new delay
By Jimmy Bums and
Robert Peston in London
The Scott report on UK sales of
arms to Iraq will not be pub-
lished until October at the earli-
est, according to the office of Sir
Richard Scott, the judge who is
conducting the inquiry.
The disclosure has prompted
renewed criticism from senior
Tories about the conduct, length
and cost of the exercise. They
also fear the report - expected to
criticise several ministers - will
be published at the most politi-
cally damaging time for the gov-
ernment, dose to the Conserva-
tive party’s conference and the
Tory leader re-election date.
A spokesman for the inquiry
said yesterday that publication
was now possible in October and
not July as hoped. The inquiry,
running for more than 2'.4 years,
was originally to publish its
report fest autumn.
Sir Richard, a senior high court
judge, has justified the delay on
the need to be “fair and thor-
ough". He has sent draft extracts
to civil servants and ministers,
giving them the right to reply to
any criticism. Some replies are
thought to have taken much lon-
ger to arrive than expected.
Critics of Sir Richard, led by
Lord Howe, the former foreign
secretary, say the judge has
brought difficulties on himself by
not seeking early expert advice
on the conduct of government
and legislation as weB as not
allowing witnesses at the outset
the right to legal representation.
One former Tory minister said
last night “Sir Richard has been
living in a world of his own. It is
a tragedy that the conduct of this
inquiry has been shaped in such
a way. It could have taken much
less time and possibly cost less.”
Sir Richard's office refitted alle-
gations by some senior members
of the government that he has
been distracted by outside work,
saying he was engaged full-time
on the report
Poland rating
Continued from Page 1
emerging markets research at
Salomon Brothers in London.
Poland is seen as a success story
among the former communist
economies with impressive GDP
and foreign trade growth and a
strong private sector.
The ratings were made possi-
ble by last year's Brady agree-
ment with western commercial
banks which reduced Poland’s
$14bn commercial debt by almost
half.
The new credit rating win help
Warsaw to raise Its credibility
abroad. Mr Grzegorz Kolodko.
the minister of finance and dep-
uty prime minister, will shortly
lead a presentation to investors
in Aria, Europe and the US to
drum up support for its expected
S200m. three to five-year matu-
rity debut eurobond issue.
FTWEATHERGUIDE’LL,^
Europe today
A warm front moving east wiD cause
Increasing cloud with afternoon rain In
Ireland. Scotland and northern England
should be doudy with scattered rain.
Southern England, the Low Countries and
northern and central France will be dry
with sunny spetis owing to high pressure.
A front will cross eastern Germany and
Poland accompanied by cloud and
showers or thunder storms. The western
Alps should become dearer but showers
will linger in the east Russia and the
Balkans will be humid with thunder storms,
some of which may be heavy in Romania.
Spain. Portugal and southern Italy will be
rather sunny as a ridge of high pressure
builds over the western Mediterranean.
Five-day forecast
Rain will spread across the British Isles
during the weekend and will reach the Low
Countries and France by Sunday. Next
week these regions will remain unsettled.
Eastern Europe will become much cooler
with thunder storms on Saturday. High
pressure will build over the Mediterranean
bringing continued dry and sunny
conditions.
TODAY'S TEMPERATURES
Situation at J2 GMT. Tempenttras maximum for Say. forecasts by Afereo Consult of the Netherlands
Maximum
Betfng
sun
28
Caracas
fair
31
Faro
sun
27
Celsius
Belfast
cloudy
15
Cardiff
shower
IT
FrarVdVet
shower
17
Abu Dhabi
sun
Belgrade
fair
25
Casablanca
sun
24
Geneva
doudy
20
Accra
shower
33
BwMn
rain
19
Chicago
Shower
24
Gibraltar
sun
23
Algiers
sun
24
Bermuda
fair
27
Cologne
fax
18
Glasgow
shower
15
Amsterdam
fair
17
Bogota
shower
20
Dakar
sun
27
Hamburg
shower
18
Athens
fair
29
Bombay
fa t
34
Dallas
fair
33
HefaMd
fair
25
Atlanta
shower
28
Brussels
fair
18
Demi
sun
45
Hong Kong
shower
32
a Aires
lair
19
Budapest
thund
28
Dube!
sun
40
Honolulu
fair
31
BJtam
shower
17
C.hagen
shower
18
Dublin
cloudy
16
istantnA
an
29
Bangkok
shower
34
Cairo
fair
33
Dubrovnik
shower
22
Jakarta
doudy
32
Barcelona
sun
21
Cepe Town
star
19
Edinburgh
shower
15
Jersey
fair
15
Majorca
sun
sun
etei
doudy
doudy
fair
sw
fair
robi
fair
We can't change the weather. But we can
always take you where you want to go.
Lufthansa
Kuwait
1_ Angeles
Las Palmas
Lima
Lisbon
London
LuxJmuq
Lyon
Madeira
fan-
sun
fair
far
ftii,
■sun
doudy
ter
tar
sun
37 Nairobi
42 Nodes
2t Nassau
26 New York
22 N«e
28 Nicosia
79 Oslo
17 Phis
20 Perth
S-i Prague
shower
Ur
shower
shower
tdr
sun
far
fair
Ur
ram
Z7 FUngoon
24 Reykjavik
23 Ra
>5 Rome
33 S.Pfaoo
15 Seoul
22 S i ngapore
31 Stockholm
20 Strasbourg
25 Sydney
29 Tangier
16 Aviv
25 Tokyo
22 Toronto
30 Vancouver
27 Venice
22 Vwnna
32 Warsaw
22 Washington
IS HMngfcn
19 Winnipeg
20 Zurich
shower
lair
te
fat
doudy
tdr
doudy
fair
doudy
diower
sun
sun
tdr
rain
fafr
shoarar
thund
shower
Shower
fair
Viewer
33
It
25
23
19
26
33
27
18
17
26
30
22
26
21
21
23
30
27
9
24
15
THE LEX COLUMN
Buyers’ market
Investors in the international equities
market are In an enviable position,
with an estimated $i2Dbn of interna-
tional offerings, including many priva-
tisations, to choose from in the next
2K years. A decade after BT came to
the market, fund managers can now
take their pick from a range of Euro-
pean telecommunications companies.
The result is that deals freon France.
Germany, Holland, Spain, and Portu-
gal may squeeze out offerings from
less developed countries.
Following a sharp retrenchment in
the wake of Mexican financial cri-
sis, investors have started buying
n gabi But thw backlog caused by the
hiatus has further tipp ed the balance
in their favour. In spite of the hype
surrounding “global” offerings, the
universe of truly faternaf-irmaf fund
managers is relatively groan , and most
are based in the US and the UK Some
SO or 60 fund managers can make or
break a deal and they often move in a
herd. The result is that it is difficult
for ennypsning to buck the trend if
sentiment is unfavourable.
The rationale for international
placements still holds tree in theory:
large offerings can be placed at a
higher price by enlarg in g the potential
investor base. But companies with a
strong domestic investor base may
find little benefit in the current cli-
mate from a global offering. Still,
man y duals could BOt be dfma without
the participation of international
investors. So governments in urgent
need of privatisation revenues, partic-
ularly those in gmro- ghi g wiaritate , may
have to drop their prices.
FT-SE Eurotrack 200:
.2 i-f 23.11
I n te rnatio nal eqttHy Issue*
60 —
Source: Sunxnonay Bond*®*
are also in demand as companies- seek
to im prove their productivity. More,
over, Siebe is winning ^narket ^are^
Not only are smaller, rivals fin ding ft
haul to keep up the high level of
research and development: Siebe fe J
winning share from Honevwen and
Emerson, its biggest c o mp e titors, jfn
industrial control systems. ;
investors have been slow- to recog-
nise Siebe’s strengths because of bad
. experiences in the late s and early
s when the company launched ^
string of rights issues and adopted
questionable accounting practices. Kit
Siebe has a new chief executive and
has cleaned up its accounting, prac-
tices. Doubts about the company. are
now harder to sustain.
them more dependent on just-in-time
deliveries by express companies. And
though domestic economic growth in
much of Europe remains sluggish,
exp o r ts have been rising strongly, to
the benefit of the courier companies.
Intra-European traffic is also grow-
ing fast, suggesting the potential of a
single market is at last being foifiBed.
The international groups are best
placed to benefit from this trend.
Small, national companies may prove
able to compete on a local basis, but
they do not have the strength to rival
the intgmatinnfli companies’ tracking,
tracing and hilling technologies. It is
now up to the big groups to deliver the
financial goods.
Siebe
Couriers
At first glance, UPS’s intention to
invest mare than £2 bn an its European
logistics operations looks like the tri-
umph of hope over experience. After
all. express delivery services in
Europe have proved rather more effec-
tive at posting parcels than profits. In
the late s. Federal Express. DHL.
UPS and TNT spent heavily on bond-
ing extensive pan-European networks.
But hopes of capitalising on the cre-
ation of the single European market
were dashed. Too much capacity chas-
ing too little business led to vicious
price-cutting. Eventually Federal
Express pulled its intra-European ser-
vices. and TNT retreated into an alli-
ance with five post offices.
This time the investment may be
justified. Paradoxically, the recession
has helped, forcing industrial custom-
ers to rationalise warehouses, making
Siebe has a good story to tell but it
has mostly fatten on draf ears. Inves-
tors are gradually waking up, pushing
the company's share price up by 3%
per cent yesterday. But it still trades
at only a modest premium to the Lon-
don market. Given its growth pros-
pects, a bigger premium would be
appropriate.
Siebe met its target of increasing
sales from existing operations by 10
per cent last financial year. Given that
the group’s order book is up by around
15 per cent, excluding the effect of
acquisitions, there should be little
problem hitting the target again this
year. Margins are also edging up from
already high levels, as the cost-control
programme continues.
Siebe’s main markets are expanding.
Sales of appliance controls are grow-
ing as washing machines and the like
sport increasingly sophisticated fea-
tures. Control systems for factories
Boots
Boots’ cash-pile is bunting a hols in'
its pocket. Once the final proceeds
from the disposal of its drugs division'
arrives, the company will hold about
£600m (m) in cash. That pile wlH
grow: Boots the Chemists, the UK
pharmacy and retailing business, con-
tinues to throw off more money than
it can consume. Thankfully, manage-
ment is not talking about further
retail acquisitions, a field in which its
record is dismal. After nearly five
years. Ward White remains disastrous.
Only Halfords looks as though it wSl
important in the long term. Otherwise,
the group has proved studiously inca-
pable of translating its expertise at
Boots file Chemists' to home decorat-
ing or do-it-yourself businesses.
Whether plunging deeper into non ■
prescription drugs is a better use of
cash is doubtful. Without the research
and development associated with pre-
scription medicines, Boots will have to
rely on other companies to license it
new products. But until Boots has an
adequate European distribution net-
work, it will remain an unattractive
partner. Management says the biggest
gap is Germany. But there is some
comfort that Boots has dragged its
feet, willing to walk away from over-
priced deals. In the end, if the group
cannot find an effective use for the
money it should hand the cash back to
shareholders as it did in November.
Boots" rating is stuck in no-man’s
land, stranded between the fikes of
WR Smith at one extreme and Marks
and Spencer at the other. Until the
cash issue Is settled, it is likely to
remain there.
Additional Lex comment on UK
housing. Page 20
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Kmart launches
second wave of
store closures
By Richard Tomkins in New York
Kmart, the struggling US
discount store group, yesterday
announced, its second big store
closing- programme in to« than
nine months.
- It plans to close another 72
stores which did not meet the
company's sales, profit and
return on investment require-
ments.
As a result, 5,800 more jobs
would go, from store managers to
part-time employees.
Kmart said the stores would
dose between the beginning of
August and the end of the year.
The costs involved would come
out of the $L35bn store restruct-
uring provision recorded in the
fourth quarter of .
The latest retrenchment comes
OH top of the cuts flnnnnnrtnri last
September when Kmart said it
was dosing 110 discount stores
with the loss of 6,000 jobs.
It also announced plans to cut
its management workforce by 10
per cent
The latest plans of store clo-
sures involve the loss of almost
the same number of jobs over a
smaller number of stores, indicat-
ing that the cuts are beginning to
fall on ever-larger units as Kmart
seeks to shrink itself to a profit-
able core.
Mr Donald Keeble, executive
vice-president of store operations.
State will reduce
stake in Usinor
to less than 10%
By John RkJcHng
in Parte
The French government is
expected to reduce its stake in
Usinor SacOor, the steelmaker,
to below 10 per cent as part of its
privatisation, while a group of
core investors will hold about 15
par cent of its shares,
Usinor said yesterday the core
investors, which will form a
noyau dwr. Is expected to include
French and international indus-
trial and financial groups. Possi-
ble candidates include Lu echini,
the Italian steel concern. Electri-
city de France, and Air Uquide,
the French industrial gases com-
pany.
Mr Robert Hudry, Usinor
finance director, said a tender
offer for core shareholders would
be launched shortly, and that a
decision on the composition of
the group should he known by
June 20.
The price of shares in the pri-
vatisation Issue is scheduled to
he announced on June 26.
although a guideline range is
expected a fortnight earlier. The
operation is scheduled to be com-
pleted by July 4.
The privatisation, the first by
the new conservative govern-
ment which took office last
month, is expected to value Usi-
nor at about FFr20bn ($4bn>- The
government holds 80 per cent of
the shares in the company,
which is the largest steel pro-
ducer in Europe.
Most of the shares left after
allocations for the state and the
core investors are expected to be
allocated to institutional inves-
tors.
The public is likely to be
offered between 15 per cent and
18 per cent, with about 4 or 5 per
cent being offered to employees
of the steel group.
The government has
announced that the privatisation
will be accompanied by a FFrSbn
capital increase aimed at reduc-
ing Ustnor’s debt, which stands
at FFrl7.4bn.
Mr Alain Madelin, France’s
economy minister, has also indi-
cated the government would be
prepared to lend support to the
steel group should it be faced
with another sharp downturn in
the international market
In spite of such reassurances,
and pledges by Usinor that there
is no need for farther substantial
restructuring, trade unions
remain opposed to the sale.
The Communist-led Confedera-
tion Gtofcrale du Travail yester-
day called for a protest against
privatisation on June 14.
“A national asset is being
thrown into the private sector
with consequences for its
workers," the CGT said yester-
day.
Yen forces Sega to
shift all production
By Raul Taylor to London
Sega Enterprises, the Japanese
electronic- games maker, is to
shift all production of its games
machines to overseas factories
before the end of its financial
year because of the strength of
the yen.'
' Sega already produces almost
all its game machines for the
overseas market, and 60 per cent
of those for the home Japanese
market, in Taiwan, Oiina, Thai-
land, Tnrinwwda and Malaysia.
- Mr Malcolm Miller, chief execu-
tive of Sega Europe, confirmed
yesterday that the group would
■ be moving all production out of
Japan "to counteract the
strength offlie yen".'
The offshore move before the
end of March will help Sega to
control costs In its current finan-
cial year.
The. decision to shift produc-
tion was foreshadowed two
weeks ago when Sega announced
& 41 per cent fall in full-year
recurring profits - before
extraordinary Items and tax - to
YlZShn (Siam) in the year to
March. ,
The- decline reflected the
strength of the yen and the
downturn in the video games
market as consumers wait for the
new generation, of machines.
When Sega announced its
results it forecast a recovery this
year based on the shift to over-
seas production and the interna-
tional launch of Saturn, its 32-bit
system. As a result, it said it
hoped to raise sales this year to
Y3&bn and recurring profits to
Y26bn.
Sega said yesterday it would
cut the price of Saturn by 710,000
to Y34£0Q in Japan from mid-
June. Sega is not considering cut-
ting the price in the US, where
■ the machine was launched last
month. - four months ahead of
schedule. Saturn is due to be
brrmchpd in Europe this year.
The price cut is further evi-
dence of the fierce competition
developing in the industry as
manufacturers fight for market
share in the emerging market for
the new generation of games
machines.
Sega and Nintendo dominated
the market for the old-style car-
tridge games machines. However,
they face competition from new
entrants such as Sony in the
market for the next generation of
wiarhirTfis
John Gapper reports on Eurotunnel’s efforts for debt refinancin
rhxirmnn of Enno famnal, is Banks see light at the end
fond of recalling an encoun- '
ter with the company's hanking p . -y p. ■* -f
of tunnel after a long haul
the risks and uncertainties of the ^ J
said the additional stores had
been identified for closure as
Kmart focused on improving its
core discount store business.
The company's shares edged up
$’/* to $ 12 '/t in early trading.
Kmart has been struggling for
years to counter a loss of busi-
ness to more successful rivals -
notably Wal-Mart Stores, the
world’s largest retailer.
Last month it produced its
ninth consecutive quarter of
deteriorating results when it
reported a net loss of $28m for its
firat quarter to April compared
with net profits of $i8m a year
earlier.
The company has also failed so
for to recruit a replacement for
Mr Joseph Antonini, Its former
chief executive, who resigned
under pressure earlier in the
year. And last week it announced
it would have to take a charge of
SI 85m in its second quarter to
reflect a writedown on the sale of
its Borders bookstore subsidiary.
Smar t’s strategy over the past
few years has been to close
smaller stores and replace them
with larger units, which have
proved to be more profitable.
Hundreds of stores have been
replaced in this way. But in
recent months, the store closures
have ceased to be accompanied
by announcements of new store
openings.
S ir Alastair Morton, the co-
chairman of Eurotunnel, is
fond of recalling an encoun-
ter with the company's banking
syndicate a few years ago. After
bankers had complained about
the risks and uncertainties of the
project, Sir Alastair suggested
they give up restrictions an the
repayment of £73bn (512.2bn>
debt
“You must be joking," one
banker replied, “Once the tunnel
opens, this is the best piece of
business on our books." Even
now, a decade after the start of
the project, with Eurotunnel at
least two years away from break-
ing even, its 225 banks are more
sanguine than an outsider might
anticipate.
This autumn, Eurotunnel wiH
enter artnthwr marathon of faiks
with its bankers in an effort to
refinance itself.
On the face of it, it has a -poor
negotiating hand, as it requires
further waivers even to win
agreement for the second tranche
of a £S83m facility contained in
last year’s refinancing.
Predictably, Sir Alastair dis-
agrees, dismissing out of hand
the possibility that his long-suf-
fering banks will simply pull the
plug and put it in receivership.
“How realistic is it that a
pretty incoherent group of 225
I banks is going to put its clients
under at the first hurdle?" he
asks.
Sir Alastair and his co-chair-
man Mr Patrick Ponsolle will be
pressing for a reduction in the
interest rate paid on the debt
from the current average of
about 1.6 percentage points over
the cost of funds. Last year's
senior debt is the most expensive
of all, at a 2.5 percentage point
marg in
Less predictably, even the
group's bankers are starting to
see tight at the end of the t unne l.
As Sir Alastair points out, banks
are virtually alone in having
made money an the project Now
that trains are running, even in a
patchy way, the risk of default on
their debt is also low.
Perhaps this accounts for posi-
tive enthusiasm among some of
the project’s bankers about its
long-term prospects, despite a
dire short-term predicament.
“Sooner or later, this is going to
be a big success, and most big
banks in the world will want to
have a relationship with it," says
one banker.
Nor are banks too concerned
yet about the fact that success
will come a lot later than antici-
pated - if at alL
Afthough it remains some way
from capturing the market share
that was predicted in its rights
issue prospectus last May, bank-
ers argue that they can afford to
wait
They key to this confidence is
the franchise, which extends
until the year .
“The perception is that Euro-
Siebe rises
after record
demand
By Tim Burt in London
Siebe, the UK controls group,
yesterday announced a sharp
increase in profits amid record
demand for industrial controls
and temperature appliances and
an improved performance by Fax-
boro, its US subsidiary.
The group, which claims to be
one of the world’s top three con-
trols manufacturers, saw pre-tax
profits jump 27 per cent to
£275 Jm ($432m) in the year to
April 1 as sales reached £2.15bn,
against £1.86bn.
Mr Allen Yurko, chief execu-
tive, pledged to improve effi-
ciency and production further by
inrTfiflfrtng capital spending by 10
per cent to £165m. The invest-
ment should cut lead times on
Siebe's order backlog, which
climbed to a high of £6£L2m.
Those orders were dominated
by a 24 per cent increase in prof-
its to £127 m fr o m £30L8m in the
control systems division, the
company’s largest, on sales of
£803-7m compared with £647.2m.
Its improved performance was
fuelled by Foxboro which
reported margins of 20 per cent
and lifted its share of the world's
market for intelligent automation
systems to 12 per cent.
Although Siebe detected a soft-
ening in the US economy, slower
growth in North America was off-
set tor buoyant sales elsewhere,
particularly in the Middle East
and Pacific Him
The group, which spent more
than £20Qm mi acquisitions last
year, hinted at further purchases.
Mr Yurko predicted Siebe
would improve its performance
following a £5m restructuring,
involving 500 job losses.
Earnings ‘per share rose to
37.5p from 31.4p. A final dividend
of 8-07p lifted the total for the
year to Hip from lip.
ter, Page 14
EUjRffiniiam o
SHARE PRICE
^
ju . -try &
Bank Joons Jn £
Bank loans In F9r
403 IB Bank taarts in BFr
365 H Bank loans In S
171 | Bar* loans In Ecu
7JB57 Total bank loans
Bank loans iss J Accrued Interest
and overdrafts (£m) 2 | Bank overdrafts
31 December 8,015 Total
v
tunnel is now a maturity risk,
not a credit risk. It has taken
longer than it should, but this is
a first-class transport system that
is going to carry on earning
money," says a banker.
Given that most banks think
they will eventually get their
money back, Eurotunnel debt has
obvious attractions. Its yield of
L6 per cent is eight times the
average margin on lending to an
investment grade company at the
moment. Many hanks are eager
holders to raise sufficient sums.
The company has ruled this out
this year, although one banker
comments that “companies
always say that”.
Another class ic solution would
be forgiveness of debt in a debt
for equity swap.
However, bankers are not keen
on such a solution, arguing that
they would simply lose their pri-
ority rights to the company's
cashflow.
“It is. extremely premature to
‘How realistic is it that a
pretty incoherent group of
banks will put its client under
at the first hurdle?’
Sir Alistair Morton, Eurotunnel co-chairman
to lend to large creditworthy
companies.
So the banks have reason to
keep Eurotunnel going. The issue
is on what terms they will do so.
Its cashflow covers operating
costs and marginal capital expen-
diture. and the shortfall is due to
a £700m annual interest MIL
Sir Alastair says ft makes no
sense to borrow more to pay it
One obvious alternative is a
further rights issue, although
with shares dosing yesterday lp
higher at 183p, this would imply
large dilution of its retail share-
talk about anything like a debt
swap," says one.
If these two avenues are ruled
out, Eurotunnel will have to find
other sources of cash.
Sir Alastair points out that it
could yet gain £2.3bn from a
claim against the tunnel train
operators, which it says have set
fare structures wrongly. This
claim is being considered by arbi-
trators.
But this is not a reliable source
of income. Neither are warrants
issued in which have a con-
version price of 310p per share,
and are exercisable at the end of
October. Even Sir Alastair con-
cedes that Eurotunnel has only a
“racing chance" of gaining £150m
from full conversion.
The likelihood is that Euro-
tunnel will have to refinance its
debt Some bankers suggest that
as the risks have reduced, it
might find a willing backer in a
long-term credit bank or one of
its leading banks, which would
be prepared to offer a loan at a
tower yield to allow it to pre-pay
debt
But banks would require
inducements to lend on such
terms. One possibility is a con-
vertible loan issue, allowing
banks to convert to equity in five
years’ time. Eurotunnel would
seek a call option in such a loan
to allow it to prevent the dilution
of shareholders if its cashflows
improve in that time.
The golden scenario for Euro-
tunnel would be to keep pushing
back conversion rights until its
cashflows were strong enough to
take out a large tranche of bank
debt in bond markets. But even
the most optimistic of its sup-
porters concede that this is
unlikely to occur before the turn
of the century.
“What good does it do anyone
to increase our burden? Why
don’t we just play it forward
together?” asks Sir Alastair.
Yet even his legendary negotia-
ting skills will be required in full
to keep Eurotunnel going until
the still-distant moment when it
turns into the loan that every
bank wants.
IMI
The Bank
for Investment
in Italy
Consolidated Highlights
at December 31,
( Lire billions }
Balance Sheet Data
Total Loans
49,863
49.291
Total Assets
69,317
77,671
Shareholders' Equity
7,498
7,207
Funds under management
21,246
20.789
Financial Margins
Profit before transfer to Reserve
for general banking risks
551
623
Profit for the year
551
560
The contents of this statement, for which the Directors of IMI are solely
responsible, have been approved for the purpose of Section 5.7 of the Financial
Services Act by Price Waterhouse S.cls. as art authorised person.
The English version of the Annual Report, including US GAAP
reconciliation, will be available upon request from the Head Office of JMI S.p.A.
at the end of May.
ISTITUTO MOBIL IA RE ITALIANO S.p.A.
Head Office in Rome (Italy) - Viaie dell 'Arte, 25 - . (39-6) 59.591
Inscribed in ibe Tribunal of Rome no. /91 . Inscribed in ihe Registry
of Banks and Parent Company of the IMI Group. Inscribed in lhc Registry
of Banking Groups. Tax Code no. Q588 - VAT no.
French bank feud goes to court
By Andrew Jack
in Paris
Credit Lyonnais, France's
largest state-owned bank, yes-
terday confirmed it is suing
Society Generate, one of its
leading private-sector rivals, in
an escalation of the bitter dis-
pute between the two.
It claims that Societe Gener-
ale indulged in “unfair compe-
tition" earlier this year by
writing to Credit Lyonnais cli-
ents using “misleading adver-
tising” in an effort to persuade
them to switch banks.
The law suit also raises
questions about the way in
which h anks may be obtaining
and using personal information
on the clients of their competi-
tors. a practice governed by
strict privacy regulations in
France.
Credit Lyonnais is seeking
symbolic damages of FFrl
against its rival in the Paris
commercial court, as well as
FFr50,000 ($10,059) in legal
costs in a case due to be heard
on June 27.
It yesterday described
Societe Gen&rale’s action as
“unacceptable”, and said it had
been forced to react
The bank claims that letters
sent to its customers around
the country during March
unfairly highlighted "difficul-
ties” at Credit Lyonnais, and
made statements about its ser-
vices which were untrue.
It alleged that some of the
addresses used to send the
letters appeared to have been
obtained from information con-
tained in banking documents,
such as cheque books, rather
than from publicly-available
sources. In an apparent breach
of French law.
The Commissions Nationale
de lTnformatique et des Lfb-
ertes, a watchdog which scru-
tinises the use of personal
information held on computer,
confirmed yesterday it had
received complaints last week
from Credit Lyonnais custom-
ers. It said it was launching an
inquiry.
Societe Generate confirmed
that marketing letters had
been sent out to clients of
other banks, but said the
operation was conducted
through its local agencies
without central coordination,
and that Credit Lyonnais
had not been specifically
targeted.
The bank stressed that the
tactic did not go beyond stan-
dards of “healthy competition".
and said it found Credit Lyon-
nais' complaint ironic in light
of its request for a FFrl35bn
government-backed rescue
package to deal with losses
incurred by risks taken in the
past.
Soci£t& Generate, along with
Banque Nationale de Paris,
nnot-hpr leading private sector
bank, publicly criticised as
“anti-competitive" the rescue
package for Credit Lyonnais
agreed earlier this year with
the French state. The package
is being scrutinised by the
European Commission.
Mr Marc Vienot, chairman of
Societe Generate, has since
threatened to take Credit Lyon-
nais to the European Court of
Justice if his discussions with
c om petition officials in Brus-
sels fail to force modifications
the rescue plan.
Oryx seals
sale of UK
holding
Renault VI and MAN plan link
By John Ridding in Paris
By Robert Corzine hi London
Oryx Energy, the debt-laden
Dallas-based oil explorer, has
concluded the largest asset
sale this year in the UK sector
of the North Sea. It sold a 15.5
per cent stake in the Alba oil
field to Union Texas Petroleum
for $270m. which represents
about $5.10 a barrel.
"This transaction is a signifi-
cant step in the achievement of
our year-end debt target of
$1.3bn," said Mr Robert Reiser,
c hairman and chief executive.
Oryx’s debt peaked at $3.2bn in
.
The sale of Oryx's Alba bold-
ing comes just five months
after it announced a new strat-
egy to stabilise its financial
position. Once the Alba sale 'is
formally concluded, the com-
pany will be able to meet its
target to reduce debt this year
by $400m.
However, it said it would
continue to be “opportunistic"
about additional deals, and
another S70m-$150m in assets
may eventually be sold. But
there are no specific plans to
sell any of its other North Sea
assets, says Ms Patricia Hors-
fall, UK managing director.
The Alba oil field lies above
the Britannia natural gas res-
ervoir. in which Union Texas
also has a stake.
Renault VI, the trucks and
buses arm of the French state-
owned motor group, has signed
a memorandum of understand-
ing with MAN of Germany to
study the joint development
and manufacture of comp-
onents.
The move represents a poten-
tially significant step in the
French group's strategy of
finding partners for specific
co-operation projects. It has
sought to extend this strategy
since the collapse of merger
plans with Volvo of Sweden at
the end of .
The move also reflects the
broader move by motor manu-
facturers to form partnerships
in an attempt to reduce costs
and achieve economies of
scale. Renault said the two
companies had agreed to con-
clude their studies in the near
future.
Under the terms of the agree-
ment, Renault and MAN wiS
initially focus their studies on
co-operation in medium-sized
engines, mechanical bus parts,
and axles for trucks.
Concerning the engines, the
groups will examine the devel-
opment of diesel engines of
between 100 and 280 horse-
power. According to Renault
VI, the aim would be to exam-
ine the development of engines
for satisfying new European
Anri US emission regulations.
In the area of components,
the French and German
manufacturers will assess the
scope for standardising axles
and key mechanical parts. As
with motors, the aim is to cut
development and production
costs.
Paris bourse reports
29% slide in profits
Nestle still
reluctant to
list on NYSE
By Andrew Jack
The Paris bourse yesterday
announced a 29 per cent slide
in net profits for to
FFr147 ,8m <$29 .8m), in spite of
a sharp rise in transactions on
the stock market last year.
The Soci6t£ des Bourses
Franpaises saw operating
profit more than double to
FFr91-9m from FPr39.4m_ The
FFr60. 1m decline in net profit
was the result of exceptional
gains in . Turnover rose 3.1
per cent to FFr696 -8m, while
operating costs were almost
stable at FFr510.5m.
Market commissions rose 4-3
per cent to FFr385. 4m and
share transactions advanced 19
per cent to 22.&n in the year.
The bourse said the modest
increase reflected its policy of
reducing the transaction costs
for market participants.
A 43 per cent increase in the
dividend to FFr10 per share
was approved yesterday.
The SBF last year undertook
a number of important struc-
tural initiatives. These include
the development of the “new
market", designed to offer
equity development funding
for small, fast-growing busi-
nesses based in France and
across other parts of Europe.
The disadvantages for Nestte
of a listing on the New York
Stock Exchange outweigh the
advantages, Mr Helmut
Maucher, chairman and chief
executive said yesterday.
AP-DJ reports from Lausanne.
Speaking at a shareholders
meeting. Mr Maucher made
clear that accounting stan-
dards and transparency levels
required for a New York listing
were not among the reasons
preventing the Swiss foods
group from seeking a listing
there. He said Nestles finan-
cial position meant there was
no need to raise funds through
a listing on the foreign board.
mmmm
; S.i
HSlin
* 111:1 f -
If you’re wondering where to invest,
we have just the place.
in locations as diverse as Europe, Latin America.
Australia and the Middle EasL you'll find us on
the leading edge of cellular and wireline
systems, \ellow Pages directories and software.
Even cable television companies.
.And in the U.S., where most people still know
us as Southwestern Beil, we continue to provide
over 16 million customers with communications
solutions using advanced fiber optic, digital and
microcell technologies.
But we aren't content to stop there.
We believe there's always another opportunity
out there somewhere — provided you know where
to look.
| First Quarter
Results
%Chg.
RevenuesfOOO.OOO i
2.877.7
2.
8.7
Nel lncome(Q00,000)
595.2
557.7
10.5
Earnings per Share
.65
.59
10.1
Assetef 000.000)
26.078.2
26,005.5
0.5
Access Lines(QOO)
15.794
15.515
5.0
Cellular Customers iOOOi
5,092
2,210
59.9
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>BL i.»fiiin>iiii' J'l"
Lit II. ‘..uliniiirni Rt-i: ■ ■■nipi.il. -
Barings has
little impact
on results
at ING
By David Brown
in Amsterdam
Internationale Nederlanden
Groep, the Dutch financial ser-
vices group which rescued the
collapsed Barings Bank of the
UK. said its new merchant
banking subsidiary produced
virtually no operating profit in
the first quarter of this year.
ING reiterated its forecast
that Barings would have a
neutral effect on group profits
this year, but it expects reve-
nue to start coming in .
ING consolidated Barings’
operations into the balance
sheet at the end of March.
The Dutch group’s own net
profit for the first three
months ended March advanced
by 10.6 per cent to FI 520m
(£328.5m) from FI 470m, at the
lower end of analysts’ expecta-
tions. Management is forecast-
ing that full-year net earnings
will “at least equal” the
FI 2.3bn in .
Pre-tax earnings were ahead
18.5 per cent to FI 723m from
FI 610m.
The group’s life insurance
operations accounted for
FI 245m of the pre-tax result,
up 26 per cent, and were par-
ticularly strong in the Nether-
lands and in Hungary.
Earnings in the non-life
operation pushed back into the
black, climbing FI 75m to
FI 64m after a lull in liabilities
for natural catastrophes. Earn-
ings in Australia slipped, how-
ever, and the foil-year increase
in non-life business will be
less pronounced, the group 1
cautioned.
The insurance operation as a
whole reported a net profit of
FI 482m during the period, up
36 per cent. The bulk of earn-
ings in both insurance and
banking are generated in the
Netherlands.
For ING’s banking arm. the
q Harter’s results were less stir-
ring. Earnings slipped by
about 5 per cent to FI 255m, a
figure which has been
adjusted for new accounting
procedures.
Losses in financial trading
were sharply reduced, to
FI 42m from FI 234m during
the same three-month period a
year earlier. Interest rate mar-
gins narrowed considerably.
Mortgage Funding
Corporation No 2 Pic
SI 15,000,000 Class B-l
SI 1.000,000 Class B-2
Mortgage backed floating
rate notes August
For the interest period 31
• Mayl995 to 31 August the
Class B-l notes will bear
interest at 7.% per annum.
Interest payable on 31 August
will amount to SI. 767.53
per & 100,000 note. The Class
B-2 notes will bear interest at
7. % per annum. Interest
, payable on 31 August will
amount to SI, 81 1.64 per
S 100.000 note.
Agent Morgan Guaranty
Trust Company
JPMorgan
General Motors Corporation
NOTICE IS HEREBY GIVEN Uul rcsollm?
from the curpvial ion's OccUnlion of a
dividend of $11 2il iprn^., per tfiarr of (he
cvmwuo Mix* oi lir wrponuos passhlr -tn
da; liitta June, IW iberc wifi bccwuc due in
^5 will amount to
Tl, ‘ f Musmlne Notes mil bear
interest at , 5 - per annum. Interest pavable on 3 1st August,
will amount f £ I .U& 2 .SS r^r £100,000 Norc. W '
Bankers Trust {
^C ompan y, London Agent Bank !
Secured AmonlaHig Floating
Rate Notes due
For tho rtwo mo wn tntnrosi pored
May 31. J995 to August 31. 1 995.
lie redo has been doiaiminod at
8 %, Tho interest payatto on
tho rolevnnl etoncu paymnni dale.
August 31, 1Mb will be Cl .009.94
per C5B.175.S2 principal amount ot
Notes
W Wstt mUH—
to»e»a, tgoUBeft
iunn 1 .
To the holders of
Mortgage Capital Trust I
Collateralized Mortgage Obligations, Series A
Chin A - 1 Bonds Due lsr June,
fir1| CC . ,S . hcKJ '' Mlve 9 'he interesi rotuon rhedasu A-l
lst ,Wk - ,,> ’ 5 fhr ’^' «' T ^ -
B-. : Banlten. Trust Companv. as Tnisti'e.
4.:- '
included the Vigdis oil: field;
which is due to come .on
stream in the summer of ,
and the eastern part of the Tbr-
dis field, which is also due to
start production in . '
Also, production from - the
Varg field will start in athw
or , Saga said.
Production at Tordis picked
up from 74,000 barrels a day to
78,000 b/d in April. Pilot pro-
duction from the Mabruk ftaid
in Libya began in February at
a rate of 2,500 b/d. . .
Exploration activity was
higher' with Saga participating
in eight wells with a further
seven scheduled.
-K? '•«»
i -aKSS?
-
... ,7
■ j 'Cvprijik : =
JkA^iriu sees
jovery a ^ R ' r
nor first quarter
TSirt;
A/ >&•:
.se.tif47-.ji
kScJS*"'
Portugal Telecom also
acquired 94 per cent of
Companhia Portuguesa de
RAdio Marconi, Portugal's
intercontinental telecoms
group, during the sale. It
exchanged shares with private
shareholders who owned 49.6
per cent of Marconi; it plans to
bid for 100 per cent.
• As part of a second effort to
tap international markets, the
government yesterday set a
price range of Es920 to EsUlO
a share for a global offer of 40
per cent of Portncel-Ihdiistrial,
a eucalyptus pulp producer.
-
l .
wm
iHapoiiiirr
**iih 34 . ji.iin
■x&m.
^°fishoot in [% rv
Requisition
4Cs3i i:
isr&.ir.
>4F St 1 ?
'asjWfe
is
... :i‘ vti&fyi,
.. VHsplt
- r 1 T o Jt‘ 'CtiR
Oc
p.Bou.e,, .
nw»e
ry
MPflieut-
"*• rtsea LjV
* "iTr
■R&-
to£S5>;
Cars» ,s |:
tht ',. ^
«i ni*'*-
tr «c;c: t : ;-
ie
•i c C:.
Ui °* a rJw
‘v -
* 2 ** 1 .'
v-
^53?® '>
■"ia'i £*
saJe^gf
leum
I international companies and finance
UJnS attracted by falling borders
United Parcel Service is to invest $lbn in Europe, reports Simon Knper
rf^ toie' yews .ago Fed^al
I Express- teited its inter*
Jb ELaJ '* • European
operaiio^. Ilpited Parcel. Ser-
vice, anotW B&iteffid delivery
company^ fiasvjiet. to make a
.profit -in Europe: Yet UPS. has
just dacfatedfoFJixBGst another
Jlbn m the conjfnent, to add -to
tM ^hn-T^ent over . the last
* y '-05
'*=**: H
D5I-* "*
. . - - Jl
MSB, Saga
brt
■- Theiure te-the'-d emim of bor-
der amends to, jibe European
Unto: - as it. was for. FedEx
faefiwre , wbenibn recession
spiked the company’s plans.
Mr Ed Bateman, whoyesterday
heeante the first president of
UPS-Europe, says the falling
borders are .taking away “the
tremendous obstacles involved
in customs " clearance, b frg
paperwork that went ! with
that**. .. i'
- UPS;: an unquoted company,
has spent the last few years
raising Its profile in .Europe.
Mr Reitxnan, who has bean
with. TJPS for more than 25
years, helped negotiate its pur-
chases, of .16. European compa-
nies between and .,
giving it a presence in all main
conttaental;maikets, •• . -• ; -
‘It's been# Hercidean’task,"
he says.SofarUP&hasmadea
profit in Europe only in the
express market - the market
for. deliveries wfthJn guaran-
teed times-, mostly by air.
“Where we’ve had more diffi-
culty , w explains Mr Beitman,
“is in the ground operations,
because we have -covered the
length and breadth of every
‘We hope to be
profitable in two
or three years.
But I have no
directive, because
we’re here for the
long haul’
country, - and we have not cov-
ered our costs."
For the moment UPS
depends heavily on its home
base in the US. It carried 272m
packages in Europe last year,
for revenues of $L4hn, just 7
per cent of total turnover.
Bitt the company claims its
international express volume
grew 36.3 per cent in the first
quarter of 199 s, compared with
file -same period far . Vol-
tunes on its intra-European
road based service doubled
over the same period.
Mr Rettman says UPS will be
“very" patient with Europe.
“We hope we will be profitable
in two or three years. But I do
not have a directive, because
we're here for the long haul"
Over the next five years,
UPS expects to spend $300m on
ground vehicles, $3Q0m on
bofldtngs and facilities, $20Gm
cox information technology and
m an aircraft support Mr
Rettman says UPS will proba-
bly continue to use existing
suppliers and manufacturers.
These include Boeing, Rolls
Royce, Mercedes, the Flens-
burg Fahrzeughau Gesellschaft
(which makes vehicle body
parts) and local companies.
Part two of the plan is to
make “double-digit per cent
cost savings". Mr Reitman
hopes to achieve thts through
the benefits of higher volumes,
and Improved efficiency.
“Right now we have excess
capacity, so I don’t see a tre-
mendous inrrpasg vn the num-
ber of people we would
employ," he says. UPS has
more than 26,000 staff in
Europe.
NEWS DIGEST
Bank Austria sees
recovery after
poor first quarter
Batik Austria, the country's largest bank, said
it expected prated profits in to be broadly
similar to the Sch&ittm (m) earned In ,
writes Ian Rodger in Zurich.
••• *We hope ami expect that we can reach our
profit level If there is no downturn in the
environment." Mr Gerhard Randa, chief execu-
tive, said at file hank’s rimmal meeting in
Vienna.
Mr Randa said the first quarter was disap 1
pom rin g, but April andMay were considerably
better,' so that operating profits in the first five
months reached SchLSbn, about the same
level as in . .ft . V^' ; ' ' " "
He said the bank inteaided to raise new capi-
tal next year. The Austrian, government
which holds a 19 per cent stake, would not
take part. Itis.txyifakfo sell its shares, bid Mr ;
Randa said be knew of ho one interested in
buyfog than. v ' .-
He also exprMsoi ajnfidence that' the gov-
emmenf and parliament would soon approve a
measure to giveUjfrbank a 10 -year transition
period to adapt to Enropeor Union accounting
('r fttGtififfafirirf -raftpfrrptriftltfg.-
The issue is sensitive because ota large loan
made by fim ^atto its controlling share-
holder tast ye^rto flimuce a partial takeover
of C5rdCradit,^Austm’s"tbird Target bank.
Bank Hapoalim starts
year with 34% gain
Bank Hapoalim, Issuers largest, bank, said its
first-quarter net profit rose 34 per cent to 965m
fram.$49m q year ago, Reuter reports from Td
Avtv:£"--* • - • ."."r
: Netjreinm on equity was 14i per cent com-
pared.with 11.4 per cent a year earlier.
'_The provision for doubtful debts was 387m
compared with 980m last year, influenced by
the decline in share prices on the stock market
aj^ fim agncultural sectqr' . .
: The improyed prdfitabiltty restated from , a
44p^.cent,merease in financing profit before
provtsto for doubtful debts Of .m, cam-.
pared wjtii^76m-last yeaL • ... . _
DOVf offshoot In tyre
cord acquisition
Skiiram Fibres fSEJF), a diversified manufac-
turing and tradiiig-compMsy of the . Delhi-based ;
.DCM group, yesterday . announced that it had
acquired the nylon tyre cord dMstaQof CEAT,
a Iead3ng~Ihdian tyre manufacturer belonging
to the RE. Goenka (RPG) industrial group, at a
j cost cf more than Rs3^bn (.4m),; writes
Shiraz Sldliva in New Delhi. ; ■ - -
Mr Arim Bhar at Ram, . yipe-chairman and
. managing (firector of 'SRF, mid his company
would acquire CHEAT’S nylon cord plant at
Malanpur, near 'Gwalior In' Madhya Pradesh,
by Septejmber.^- K : ■ ; ri :
The new^^ic^nsitioai, he - said,-: would help .
SRF strengthen ite domestrc inarket share of
more than 40 per cent; and allow the company
-.fo- homnw ^ ^ . “mremfog fiil pbry PT^ rrn the intCTr :
: national mart tiet: *-•'
i ti^al prediction capacfty of nyto
%ra - (nscd fobric isL^OOO formes ' a : year, of
which SRFmanufocfores' 11,000 frames.
SmBem, BouYeues m >
v 4ilwye pptfomis move
Offshore of
Ftaoi»: are . td .form a new rampany to supply
Aw iwnAlhiso +n
ofEsKdrfejM
tbfiM®
pwnedby !
mJTOXlJUMiBTt. iyU JLMM I MMMIM .
>,^thB“UBw- company^ win be
p. which is the plant engineer-.
.sttfte.
“pup. imdrhaff "by Bouygues Off-
In a statement, the companies said that the
new group would be better able to respond to
the demands of the oil industry in areas such
as the African coast, excluding north Africa,
and the Atlantic coast of South America.
Saibos will acquire one of Saipem’s specialist
ships and a support vessel from Bouygues Off-
. shore.
C&W’s Italian offshoot
seeks cellular licence
The Italian subsidiary of Cable & Wireless, the
UK-based telecommunications group is to ask
Italy's teigrarrm minis ter to open the bidding
for a third cellular licence, writes
Andrew BDL
Mr Stefano Borghi, the new manag in g direc-
tor of C&W in Italy, wants Mr Agostino Gam-
bino to invite bids for a personal communica-
tions network (PCN), similar to the
One-To-One system which the group already
operates in the UK. France and Germany also
have PCNs.
PCNs are a cheaper version of established
di gital mobile networks. The tech-
. nology is based on a higher frequency than
'existing services, and is aimad more at thp
Tnasa market
Mr Bor^d said the group Intended to use its
experience in the field to launch a strong hid
for a third Italian licence, possibly at the bead
of a consortium.
So for, C&W has sought mainly business and
- professional clients in the Italian market.
Italy has been slower to open its mobile
communications sector to competition than
some other European countries.
Omnitel Pronto Italia, owned by an interna-
tional consortium, wan the licence for Italy's
second GSM network last year and should
launch its service later this year.
: Italmobiliare bounces
back to black
italmobiliare, the main holding rampany of
Italian industrialist Mr Giampiero Pesenti, saw
consolidated remits swing to a profit of
Ll2bn ($7.3m) from a loss of L265bn in ,
Reuter reports from Milan.
■| Revenues rose slightly to L5,53?bn from
L5.509bn, and operating profits increased to
5bn from L174bn, the company said.
Last year. Italmobiliare chang ed its fiyal
year to one that ends on the calendar year
from a March-ending year.. The years are,
therefore, not strictly comparable since the
year represents only nine months of
results. .
The company added that results in the first
quarter of were better than the compara-
ble period of , and ft expects profits to
be hl ghm- riian in .
October debut
planned for Foxtel
Faxtek the. Australian pay-TV joint venture
" between Mr Rupert Murdodh’s News Corpora-
tion and Telstra, the large government-owned
telecommunications group, said yesterday that
. it planned to start broadcasting in October,
writes NOM Tail in Sydney. By that stage, the
cable ^ Infrastructure, which Tdstra is laying,
would be available to some 700,000 homes,
according to Mr Mark Booth, FasteL’s chief
executive. . . r
Pay-TV began to become available in Austra-
lia this' year, when Australis, the satellite
broadcaster, started operations, but the num-
bOT ffcaWngprograminmg are very sman.
Air France/JAL deal
Air France said fl bad extended its co-opera-,
-tibn agreement with Japan Airlines to include,
from November 1, ffxrhangjng their frequent
. flyer programmes. Renter reports from Paris.
’ The two carriers hope to fanprove their connec-
tions at Tokyo and Paris airports.
Mr Reitman’s rpaiu tesk as
he sees it, is to offer a service
that is the same throughout
Europe, so that multinational
companies using UPS know
what to expect “A shipper in
the UK will have the same ser-
vice available to him as a ship-
per In Italy," Mr Reitman says.
So does he have any doubts
about the European market?
"We're still very concerned
about unfair competition.” He
claims that the Bundespost,
the German postal service, has
received DM4.1bn in govern-
ment subsidies.
UPS has complained to Bonn
ami Brussels. "Germany is not
the only country giving subsi-
dies, but it's the worst for the
time being,” Mr Reitman says.
So far at least. UPS has not
been deterred by its foreign
travails. Last year it claimed
its international operations
bad finally broken even.
Chairman and chief execu-
tive officer Mr Kent “Oz” Nel-
son said at the time: “Outside
file US we projected we would
lose 35bn over five years, sod
we have. But we are dead seri-
ous about being a worldwide
letter and package deliverer."
See Lex
Ciba to end
relationship
with Glaxo’s
Affymax unit
By Dante] Green m London
Ciba, the Swiss pharma-
ceuticals company, is set to
end its relationship with Afly- 1
max, the Californian biotech-
nology company which was
bought by Glaxo Wellcome of
tiie UK In January for m.
Affymax, like many biotech-
nology companies, has a series
of partnerships with large
pharmaceuticals companies.
The fate of these arrangements
has been unclear since Glaxo’s
acquisition of the company.
Mr Alex Krauer, Ciba’s
chairman and chief executive,
said he thought it unlikely the
four-year relationship with
Affymax would continue
beyond the enrrent contract,
winch expires next month.
He said Ciba’s lawyers were
working on untangling the
relationship, in which Ciba
used Affymax’s technologies
to test possible research
approaches.
Affymax had similar rela-
tionships with Johnson &
Johnson of the US: Marion
MerreQ Dow, the US drugs
company bought by Hoechst of
Germany; American Home
Products, which a year ago
entered into a five-year con-
tract worth a minimum of
857m; and Alza, another Cali-
fornian company.
Although these relationships
may be curtailed because of
the acquisition of Affymax.
AHP said yesterday the rela-
tionship with the Glaxo sub-
sidiary should “prosper".
The research part of the
Johnson & Johnson relation-
ship ended in ApriL The MMD
relationship continues until
.
France Telecom
turns in profit
of FFr9.9bn
France Telecom, the co unt ry ’ s
sole provider of basic tele-
services, made a consol-
idated net gronp profit of
FFr9^bn (92.11m) in on
revenue of FFr142. 6bn, AP-DJ
reports from Paris.
It is the first time the state-
owned. utility has published
consolidated accounts. Previ-
ously, France Telecom pub-
lished separately the earnings
of its parent company and
those of Cogecom, a holding
company that controls its 87
subsidiaries.
France Telecom said its
consolidated revenue puts it in
fourth place among the
world’s telecommunications
operators. Revenue from tele-
operations accounted
foT 74 per cent of the
total, up 1 per cent from .
The utility said its financial
debt a m o unt e d to FFi96.6bn at
the end of , accounting for
71 per cent of the sharehold-
ers* equity before distribution
of profits.
•-f &5- ^20Gj000,QG0
• Beating Ratej .
• . Notes &e
three- months 31s Ms?.
to' iis Ayp®, the
Notes cany a&tafocx we of
fcflEH l pn annu m and cotgum
afoWUS.S163.72pw US
SWOB Nc«, ted U&H09Z&
l«y5.S25a«flNore. r; .
Cr^cfit Local de France
USD 150,000,000
Collared Hooting Ran® Notes due
In accordance whh the^ Terms and Conditions of tf» Notes, note
s hereby given ih« for interest Period ftom June 02. to
December Oa.^ the Notes wft cany an Interest Rata of 5.7S%
per annum.
The Coupon Amount payable on the relevant Interest Payment
Date. December 04. wS be USD per USD 1 .000 pro-
ripai amount of Note, USD 2S&49 per USD 10.000
tiSSfiwMn
pnrtepaJarncumofltoe. iSxBu^SSa
TOTAL
ANNUAL AND EXTRAORDINARY SHAREHOLDERS’ MEETINGS OF MAY 31,
“Your company continued to improve its earnings in despite the downturn in our
business environment. The outlook for growth is exceptional Serge Tchuruk.
U] fl d
□ lu enure |
□ M«IMM
imo ian i «2 ii
I N
1 /
Payout; 54%
YMd; 3S %
. TOTAL vhureholdcT* today in annual and extraordinary
meetings under ihe chairmanship of Mr Serge Tchuruk. Chairman and DIVIDEND GROWTH
Chief Executive pfficer. They approved all the resolutions submitted 10 the
annual meeting. The accounts were approved, as wdl as the payment ^
of a dividend nei of tax credit of 8.00 French Francs o share, up 7'«f from U + SO ^
. Tax credit amounts to 4.00 francs a share. 11 ■ ■** pH ■
Shareholders were again given the option of reinvesting their • < ?
dividend in new shares with dividend rights as of Januaty 1. . at a unit *. *~s ■ — ti □ luemre
price of FF 277. s, Diaanmv
Mr Serge Tchuruk was re-elecicd to the Board of Directors for a ,
new s Li -year tenn. 1
Shareholders also approved all of the resolutions submitted to the t«a i«o m i«a is« i»«
extraordinary meeting. , , , — ;
N Pwout; MW
CHAIRMAN'S ADDRESS [_ / \ VtMjjlM-s
“Ladies and Gentlemen. Fellow Shareholders.
I would like to begin by thanking you for your faithful presence at
our annua! meeting. To fully appreciate the post year's financial results - Responsible - because we are careful in our forecasts and actions,
which improved over ihe year before - 1 would like to review the three ln about our earnings outlook, for . the uncertainly
driving forces underlying our actions. surrounding our major economic parameters - such as oil prices, the
Commitment to a growth strategy dollar and refining margins - makes it wiser to discuss only the general
_ , , ... . . trend for the first half. There is no doubt ihai the recession in European
First, your Company is resolutely committed to a growth _ . . ...
. . ' . . . . .... .. * . refining has deepened, only slightly offset by the petrochemicals ai
strategy aimed at making us one of the world * largest oil. gas and . _ . . , ........
. , u • i >■- ■ . .- . TOTAL. This smtauon combined wuh the drop in the dollar will pul
specialty chemicals groups. In line wuh this commitment, our . . r
exploration and produclioo business has sellbe goal of doublure our oil and P ressurc on ^ eam,n ^‘ Bm wbiU “ tial ^ w, "^ ma * lR a ^'
gas production outside the Middle East during this decade, rearbinn loud ex P* onaion “« P rodm 0oce W
output of some one million barrcls/day by around .' This wilhin 10 6nd ^ resour « s nceded 10 msun,ai ° am,n S s
objective will be met. In the gas segment we expect to become one of the Performance. As you are well aware, this has been our constant objective
global industry's most im^nam players, particulariv in the area of ihroughout die depression we have endured in rccem >c ws.
liquefied naiural gas. (hanks to our numerous projects in the Middle East Your Company continued to improve its earnings in 1 994. despite
and Asia. Ustly. our specialty chemicals business is quickly gaining the nearly FF2 billion in lost income due to the downturn in our business
global mass and sales should reach neartv thirty billion francs by . environment. You have also seen that the outlook for growth is
which represents fifty percent increase in six years. exceptional and will undoubtedly raise TOTAL'S ranking among the
This strong growth is being achieved without diminishing your world s leading oil companies.
Company's financial strencth. Our balance sheet is sound and our debt load . . . .
, “ . , , , . . Rusons behind performance
has been reduced to among the lowest of the international oil
companies. We owe this performance primarily to our employees, who
demonstrated their dedication in all aspects of our business, even in the face
Good resilience to an almost continuous deterioration rf challenging demand for change and adaptation. Today, they own nearly
Second, your Company's earnings have shown good resilience to 255- of the Company, thereby proving their confidence in its future,
the almost continuous deterioration, since the early nineties, in the global The past year's performance has also been driven by a cohesive
oil industry parameters to which our business base just happens to be the ieam of talented, enterprising senior executives. In the five years that 1 have
most sensitive. These include refining margins in Europe, the doliar/franc led the Group, my personal role has evolved from deep involvement in the
exchange rate, and the price of erode oiL While it is reasonable to assume definition and execution of necessary actions to delegating a growing
that our business environment will be less unfavourable in the future, we portion of responsibility to the executive team. Today, the first
feel it wise to pursue and even strengthen the programs underway to results are in and actions are being pursued without hesitation to achieve
improve profitability. For this, we must mamtain efforts to increase our dearly defined objectives, ln the same spirit, during these five years. I
productivity in all aspects of our Kisiness. just as our large international have deeply involved in die selection and training of Group
competitors are doing. executives, with a focus on diversifying experience and on learning how to
Already, it is clear that strong expansion in our upstream an reach consensus,
chemicals segments will feed through to better profitability ratios, thunks to
the ensuing economies of scale. We are being careful not to increase fixed Confidence in Total’s future
costs in these segments, even though their volumes arc poised forsubstan- Tw w the Board of Directors of Alcaiel Alsihom wishes to
lial growih. It is just as dear that costs also need to come down in segments jn , mc Chainnailt IO lead Ais bi e French companv. If 1 had
such as refining and marketing .ha, will not enjoy the same type of growih. had ^ & ^ abom ^ #bi , Uy of , be leanJs in plaee in TOTAL
Discussions on tins sut*ec, are underway with employee representatives. (q ^ ^ mdeiwy , , wwU haw refused the offer whhoui
Reliable, open, responsible hesitation. Bui I am convinced of the contrary, and I am happy that the
Lastly, wc are committed to makine vour Companv ever more T0TAL Boaid meelin ? > e5ttrda >' m l P^ 3 ' ICl a PP° ,n ‘ ^
reliable, open and responsible in its relationship with shareholders. Chairman the man whom I made my closest associate. Thierry
Reliable - because we understand and manage the risks inherent «o Dcs™arest. Shareholder, will be called to a meeting in the near future to
the oil business. The industrial risks related io the enormous ™' * wo meeri n S s -
oU and gas producing countries. ln 3 minutes, you will be asked to re-elect me tn the Board ft
Open - because we are commined to communicating with our share- l' 00 •te. I w-ill be a vrry involved member, ready ro assume any
holders. Our Eyewitness Shareholder; arc an innovative example of this responsibilities that it would wish to give me.
commitment. The Shareholders' Advisory Committee also gives us Ai this important moment in my life. I
valuable advice in (his area. Your Companv is open as well in its would like to thank everyone who has helped
management. We will soon be asking the Board to form an audit and supported me at TOTAL, and most
committee for the assessment of Company accounts. We are also importantly all of the Groups employees.
considering the nomination of new Directors to the Board, if elected they' TOTAL is a wonderful company. 1 have total
could speak on behalf of the non-French shareholders that own more than confidence in its future - confidence that I
forty percent of oar capital, os well os on behalf of individual shareholders. would like you all to share with me today."
The Annual Report may be obtained upon request ro: TOTAL • Direction de la Communication - 24 Cours Michelet - Pans La Defense - France.
Responsible - because we are careful in our forecasts and actions.
In speaking about our earnings outlook for 199S. the uncertainty
surrounding our major economic parameters - such as oil prices, the
dollar and refining margins - makes it wiser to discuss only the general
trend for the first half. There is no doubt that the recession in European
refining has deepened, only slightly offset by the petrochemicals at
TOTAL. This situation combined with the drop in the dollar will pul
pressure on our earnings. But substantial gains will be made in other anus,
notably exploration and production. Once again, therefore, we are reaching
within ourselves to find the resources n e ede d to maintain our earnings
performance. As you are well aware, this has been our constant objective
throughout the depression we have endured in recent years.
Your Company continued to improve its earnings in . despite
the nearly FF 2 billion in lost income due to the downturn in our business
environment. You have also seen that the outlook for growth is
exceptional and will undoubtedly raise TOTAL'S ranking among the
world's leading oil companies.
Rusotu behind performance
We owe this performance primarily to our employees, who
demonstrated their dedication in all aspects of our business, even in the face
of challenging demand for change and adaptation. Today, they own nearly
255' of the Company, thereby proving (heir confidence in its future.
The past year's performance has also been driven by a cohesive
team of talented, enterprising senior executives. In the five years that 1 have
led the Group, my personal role has evolved from deep involvement in the
definition and execution of necessary actions to delegating a growing
portion of responsibility to the executive team. Today, the first
results are in and actions are being pursued without hesitation to achieve
our dearly defined objectives. In the same spirit, during these five years. I
have been deeply involved in die selection and training of Group
executives, with a focus on diversifying experience and on learning how to
reach consensus.
Confidence in Total’s future
Today, the Board of Directors of Alcaiel Alsihom wishes to
appoint me Chairman, to lead this other bie French company. If 1 had
had the slightest doubt about (be ability of the teams in place in TOTAL
to pursue the actions underway. I would have refused the offer without
hesitation. But I am convinced of the contrary, and I am happy that the
TOTAL Board meeting yesterday approved my proposal io appoint as
Chairman the nun whom I made my closest associate. Thierry
Dcsmaresi. Shareholders will be called to a meeting in the near future to
ratify this appointment as Director, to replace Bernard Esambert. who
wished to resign. Thierry Desmarest will take up his duties immediately
after today's two meetings.
In a few minutes, you will be asked to re-elect me in the Board If
you do. I will be a vrry involved member, ready ro assume any
responsibilities that it would wish to give me.
At this important moment in my life. I
would like to thank eveay one who has helped
and supported me at TOTAL, and most
important]) all of the Groups employees. |nT fl I
TOTAL is a wonderful company. 1 have total
confidence in its tuturc - confidence that I
would like you all to share with me today."
TOTAL
The Annual General Meeting of Shareholders held on
May 30. has set the dividend at FF 8.03 per share.
A tax credit of FF 4.00 will be added to this dividend.
Payment of the dividend, the amount of which will be
dependent on the terms of the douhfe tax convention between
France and Great Britain, will be settled upon presentation of
the coupon and completion of form RF 4 GB.
Residents may lodge tilts form with the Bank acting as
their agent, either in France or in the United Kingdom, at any
time up to December 31 of the second year following the
collection date of the coupons. As a result of French legislation
on the ~dc materialisation" of securities, payment of the
coupons wfll be made through the banks with which the
securities have been deposited.
The Annual General Meeting has decided to offer each
shareholder the option to receive the dividend either in
cash or in shares. The issue price of such shares - carrying
dividend and voting rights effective from January 1 . - has
ten set at FF 277.0 per share.
Shareholders opting to receive the dividend in the form
of shares will be required to make such election between
June ti. . the dividend record date.
and June 30. .
Any shareholder who has not made m m
such election by June 30. , shall | lip^L
automatically receive the dividend in
cash, payable as of July 21. . iKmmKK
TOTAL - 21 Coots Micbdrr - cedes 47. 92D69 Paris ta Defense. France
ANGLOVAAL GROUP
Declaration of Final Dividends |\V*\
— Year Ending 30 June
Dividend* have today been declared in the currency of the Republic of South Africa
to holders of ordinary shares listed below. Salient dates retard to these declarations
arc:
Last day to regisier for dividends and far changes
of address or dividend inseroctwns Friday 30 June
Period during which transfer books and registers of Samrday/Fnday
mouben will be ck»cd [both days inclusive) 1 to 7 July
Currency conversion dale for gcriing payments to
shareholders paid from London Monday 10 July
Dividend wazmns posted (on or abom) Pnday 28 July
Dividend declared Total for
Cents per share finandal year
Jane June Cents per share
Name of company Notes No.
Eastern Transvaal
Consolidated Mines, Lid
Rfg.No. 01/X6
Hariebeestfostein Gold
Mining Company tot
Reg. Mx 05/319:
Zandpan Gold Mating
Company Ltd
Reg. No.
Notes: J. The dividends arc paid subject to cooditiQns winch can be inspected as the
registered office or office of die Loadoa Secretaries of the companies.
These companies we incorporated in the Republic of South Africa.
2- E sti m a te d profit after taxation amounts to R24 097 000 : R34 526 OOOj
ant amount absorbed by dividends is R23 827 000 1 : R34 633 000 1 .
8
8.5
14 1
85
115
160
14.6
183
2&6
By order of boards London Secretaries Registered office
Angkrraal L i mn ed Anglovaal Trustees iJmiW Angkraal House
Secretaries 33 Danes Street 56 Main Street
London W1Y 1FN Johannesburg
Pen K G WMiams
l June
Registered ofTlce
Anglovaal House
56 Main Street
Johannesburg
KANSALLIS-OSAKE-PANKKI
NOTICE
to the holders of (he outstanding
U .S .000,000 Subordinated Floating Rule Notes Due
Extendible for further 50 year periods
(the “Securhies _ i
of
KANSALUS-OSAKE-PANKKJ
NOTICE IS HEREBY GIVEN to the holders of the above Securities that, at
the adjourned Meeting of such holders convened by the Notice of adjourned
Meeting published in the Financial Times and Luxemburger Wait on 1 2th
May. and held at 11.00 a.m. (Loudon lime) on 3 1st May. , the
Extraordinary Resolution set out in such Notice was duly passed.
Accordingly the modifications jo the Terms and Cretdiiicms of such
Securities referred to in such Notice have been mode with effect from 3 1st
May, .
KANSALUS-OSAKE-PANKKI rf M r»t^ A a
2 June. C/7 / tt>AN\G&
The Mortgage Bank and Financial
Administration Agency of the
Kingdom of Denmark
f fCorigeriger Danmorks Hypoukbank og Fnrumsfomdniiiig)
U.S. $100,000,000
Guaranteed floating Rate Notes due
unconditionally and irrevocably guaranteed by
The Kingdom of Denmark
For the six month Interest Period 1st June, ro 1st December,
the Notes will carry a Rate of Interest of 5. per cent, per annum,
with Coupon Amounts of U-$. $146-46 and U.S. 52.929.27 per
U.S. $5, COO and U.S. 5IOO.COO Notes respectively. The relevant
Interesr Payment Date will be 1st December, .
Bankers Trust
Company, London
Agent Bank
T AS active
To receive the first month FREE
Adnmd uebniod asa>7)ti fer
Braden. TVe new iafermaUon amice
PobiMicd weekly bj orajr CM pa.
Published by PtriUip AJeraatta
Smmnw and Future* Lathed
(26 HHGHT-R1DDH)*S FUTURES MARKET DATAKJT FOR ONLY $895
OlteMmgSfrtMiamQtMmii O Wl tto Em-*Ov» Phb» flwml run—
OuM^vUJWiairidevwHHMi OommigiiBaaitmiUutamaiio
OmmaMi
t 12 N wrftt «f date and aetiuntor fust 305 piua portage and packing.
UM Mwwrf « i: lh»i^Wa»ra «ta Mt .t ]a — EC4Vltffc f B» per cent in the latest
quarter.
By Tony Jackson hi New York
CIBC earnings slide
12% in second quarter
By Bernard Simon
Canadian Imperial Bank of
Commerce blamed weak capi-
tal markets and the costs of
an ambitious Investment bank-
ing expansion for a 12 per cent
slide In second-quarter
earnings.
The investment hanMng set-
back and tighter lending mar ,
gins more than offset a 23 per
cent drop in loan-loss provi-
sions, making CIBC the only
one of Canada's big six banks
to report lower second-quarter
earning s
Net earnings were C$192m
(TJS$137m), or 76 cents a share,
in the three months to April
30, down from C$217m, or 86
cents, a year earlier. Return on
equity fell to 9.8 per cent from
115 per cent, while return on
assets narrowed to 0.51 per
cent from 0.61 per cent
The non-performing loan
portfolio grew to C$l-53bn on
April 30 from C$1.4bn three
months earlier, which reflected
the collapse of Bramalea, a
large Toronto-based property
developer.
CIBC Is in the process of an
ambitious project to became a
global force in specialised
financial products, such as
derivatives and high-yield debt
Costs related to this expansion
made up the bulk of a C*47m
increase in expenses.
Fee income slumped 13 per
cent to C$476m, due mainly to
the sharp contraction in under-
writing business which has hit
many North American invest-
ment banks. Assets rose 7 per
cent to 0*157
AUiedSignal, the diversified
US manufacturer, has acquired
Polymer und Filament Rudol-
stadt, a nylon manufacturer in
east Germany, for an undis-
closed sum. The company said
it would invest about m In
the plant in the next three
years.
AUiedSignal, which claims
world leadership in the pro-
duction of certain types of
nylon, said the plant would
serve as the springboard for
its growth in European plas-
tics and fibres. Purchased
from the state of Thuringia, it
will initially employ 300.
AlUedStaufl already wmium
artificial fibres at plants in
France and the Netherlands,
but this will be its first pro-
duction site for nylon plastics
in Europe. The company said
that while revenues at the
Rudolstadt plant were not sub-
stantial at present, it would
allow expansion into other
areas such as the manufacture
of materials for car airbags.
The company said the attrac-
tions of the plant included
well-developed infrastructure
and good manufacturing
equipment. It plans to invest
in upgrading and expanding
production, and in a develop-
ment centre for plastics appli-
cations. 1
In recent years, AUiedSignal |
has been active in making
European acquisitions, some
in eastern Europe. At the start
of this year, its automotive
division acquired Flat’s broke
business in Poland. Last year,
It bought Ford's spark plug
business in Wales.
Other recent European
acquisitions include two pur-
chases from Azko: a fluoro-
chemicals business, bought
last year, and a carpet fibres
company, which came into the
group in .
AUiedSignal employs a
workforce of about 16,006
across Europe and has built up
annual sales of some SSbn.
Mr Frederic Poses, president
of AUiedSignal engineered
materials, said the German
deal was an important part of
the group's strategy to extend
its plastics and fibres technol-
ogy leadership.
N ew Holland, Fiat's
wholly-owned tractors
and «wnhine harvest-
ers subsidiary, reported net
warning s of m last year, its
first profits after three years of
restructuring during which it
accumulated losses of about
Slbn.
The figures far , the first
to be announced publicly,
imfiprtine the Strong financial
tumround at London-based
New Holland since its citation
in from the agricultural
and earthmoving equipment
interests of Ford, the US motor
group, and Fiat, the Italian
conglomerate .
Sales surged last year from
83.631m in to $4.7bn, which
includes m from the 54 per
cent-owned Fiat-Hitachi
hydraulic excavator company.
Operating profit jumped to
m from 859m- Unit sales
of tractors, excluding unconso-
lidated operations, rose to
86,300 from 73,000, while com-
bined harvester sales surged to
4,700 units from .
The tumround is important
for Fiat, which announces its
final results today,
because New Holland accounts
for 12 per cent of group sales.
Mr Giorgio Garuzzo, New
Holland's chairma n and Fiat's
chief operating officer, said
sales would exceed S5bn this
year.
Net profits would fall
because of higher tax pay-
ments - last year the company
was still using up tax loss
carry-forwards.
The creation of what was
originally called N.H. Geotech
has been one of the most ambi-
tious and painful global
restructuring exercises In the
off-highway equipment indus-
try. In an interview last
month, Mr Garuzzo said the
decision to create the company
- in which Ford initially
retained a 20 per cent stake -
had been the right one, even if
there had been some surprise
that Fiat was getting deeper
into an industry from which
Ford was withdrawing.
Both companies were the
wrong size, he said, because
they were squeezed between
the biggest groups in the
industry and niche producers.
As full-line producers, their
volumes were not big enough
to cover heavy development
and other costs.
However, Fiat wanted to stay
in the agricultural equipment
industry because it saw overall
global demand might grow,
with rising sales in developing
countries offsetting further
declines in Europe and
a broadly stable position in
the US.
New Holland'
j ofl* 1 *
!^30.7
o
« N ■■
. /a"
-7.- . rr * • •< . -.*• • • • • - ** »;
NatinconwfSrn) " '".i- ' H- 655 X*
will be paying dnddetids.^'.-i.^
if New HoHand's early ,
were worse than expected*^
current financ ial perfarnahce
was better, said Ur : Garuzm.
More than half of -Taft year's
tumround coold be^attrQnited
to efficiency improvements
with the rest phased
increased volume and a better
sales mix. :
On balance,,; "currency"
changes had been a sliaht bri p
bat . selling prices had' uoT-
improved much. . ! . ;T
. ., lT
iVV-
• '-fife j
. ..
,-r
North America
Other countries
* :>.*??* v " 412A • • "rf#
M r Garuzzo -said Se*
Honand’stwthstrat-
egy was" to. Tmfr p
high-technology gg.
the developed wartd arid mgs. -
basic equipment "for developing
countries.
Already, 36,000 New HoM
tractors are produced each
year under licence m. Turkey
Pakistan and India;- and Hr
Garuzzo said he wouM not be
surprised if half its tractor -
sales, by volume, were o nfaJifa
Europe and North and South
America by the end of the cot
tury.
Traditional markets would
still produce greater profit,
because the more sophisticated
■marhinftfl haw hlghpr margins;
Mr Garuzzo Is particularly
interested in developing New
Holland's presence and product
range in India, where ' it
already has a minority stake in
Escort Tractors. “The market
will grow in sophistication, if
not in the number of tractors
sold," he said.
China was a less imm ediate
priority, he said, and it was too
early for New Holland to estab-
lish a presence there..-
So^ca: Company reports . ' Vir
T he two companies' prod-
uct ranges and geo-
graphical strengths pro-
duced a near perfect fit, he
said, but New Holland faced a
“down-to-earth, practical prob-
lem” in creating a global pro-
ducer without losing market
share or Impairing product
development
It was a question of cutting
overheads by half,” he said.
Plant closures and retrench-
ment in Europe and North
America reduced the workforce
from an initial 30,100 to a low
point of 17,700 in the third
quarter of .
Better market conditions
since then have seen the work-
force expand to about 19,500.
That includes virtually all the
1,700 workers at Fiat-Hitachi.
In spite of the upheaval, New
Holland's claimed global mar-
ket share in tractors rose to
205 per cent from 19 per cent
at the time of the merger - 7.6
per cent from Fiat and 11.4 per
cent from Ford, said Mr
Garuzzo.
He attributed this partly to
keeping key people, including
dealers, reassured about the
changes. Also, new product
development has been ring-
fenced, and by all New
Holland products will have
been launched after the
merger. “We believe our pro-
duction capacity is adequate
for the demand, and we may
even be a bit short of capacity.
A lot of overtime is being
worked in our Basildon factory
[in the UK]," be said.
Mr Garuzzo admitted, how-
ever, that the cost of integrat-
ing the two companies was per-
Tembec in C$300m bid for rival
By Robert Gibbons In Montreal
Tembec, an east Canadian
timber, speciality pulp, news-
print and cartonboard pro-
ducer, has launched a bid
worth more than C$300m
(US$220m) for competitor
Malette.
The two would form an inte-
grated forest products group
with annual sales of more than
CSIbn, modem mills in Ontario
and Quebec, and ample fibre
resources.
Mr Gaston Malette, founder-
chairman of Malette who con-
trols nearly all its senior vot-
ing stock, will tender his
shares to the bid.
Analysts expect the bid to
achieve more than the required
two-thirds acceptance from
subordinated voting share-
holders.
Tembec is offering C$16.50
cash per Malette share, or
alternatively 1.138 Tembec
shares. It would also assume
Malette's debt Malette shares
had been trading at about CS15
before the bid was announced.
• Repap Enterprises, the big
North American timber, pulp
and coated paper producer, is
definitely not for sole, Mr
George Petty, chairman, told
the annual meeting yesterday.
“We, too, have heard the
takeover rumours but I own 25
per cent of the shares and
management a further 4 per
cent," he said. “We’re no sit-
ting duck and a lot more
shares are in friendly hands."
Italian Lire 100,000,000,000
This announcement appears as a matter of record only.
June
LB Rheinland-Pfalz Finance B.V.
(Incorporated under Dutch Law as a limited liability company in Amsterdam, The ^Netherlands)
DM 1,000,000,000
7V4 per cent. Notes of /
Unconditionally and Irrevocably Guaranteed by
Landesbank Rheinland-Pfalz -Girozentrale-
(Incorporated under Public Law in the Federal Republic of Germany)
Lehman Brothers Bankhaus Aktiengesellschaft Morgan Stanley Bank AG
Landesbank Rheinland-Pfalz — Girozentrale -
ABN AMRO Hoare Govett
Paribas Capital Markets
Banque Paribas (Deutschland) oHG
Caisse des depots et consignations GmbH
Bayerische Landesbank Girozentrale
Commerzbank
Aktiengeccllschalt
Deutsche Bank
Aktienges ells chafe
Goldman, Sachs & Co. oHG
Dai-Ichi Kangyo Bank (Deutschland) AG
Lehman Brothers
Dresdner Bank
Aktiengeaellschaft
Indus triebank von Japan
(Deutschland) AktiengeseBscnaix
Merrill Lynch Bank AG
Norddeutsche Landesbank
Girozentrale
Salomon Brothers AG
Schweizerische Bankgesellschaft
(Deutschland) AG
Siidwestdeutsche Landesbank Girozentrale
Schweiserischer Bankverein
(Deutschland) AG
Westdeutsche Landesbank
Girozentrale
CREDIOP S.p.A.
aOTOH»Lril"UIIUlFWHJ««JM
Credito per le Imprese e le Opere
Pubbliche Societa per Azioni
Boating Rate Notes Due
In accordance with the Parisians at the Notes, notice is hereby given
that tor the Interest Period from May 31, to NovemberSO. the
Notes wtt cany an Interest Rate of 11% per annum. The amount
of Interest payable on Ncwember 30, wfl be Italian Lire
55,150,685 per Italian Ure 1 ,000,000,000 principal amount of Notea
By: The Chase Manhattan Bank, N. A.
London, Agent Bank
CHASE
June 2.
ABTRUST ATLAS FUND
SoriAt d’investissemenr a capital variable
Registered Office; 13 me Goethe, L-I637 Luxembourg
R.C. Luxembourg 827.229
DIVIDEND NOTICE
Ai the Ammo] General Meeting of Shareholders held on 26 May it was resolved to
pay the [oUowiog tfividcotfa:
UK Growth uflntunx: Portfolio
GBP per ibuc
io shareholder* on record on 26 May with on cx-dmdend date of 29 May
and a payment date of 9 lone .
Paying Agenc
Bank of Bermuda (Luxembourg) SA.
13, me Goethe
L- Luxembourg
FORD CREDIT EUROPE PLC
£200,000,000 FLOATING RATE NOTES DUE
Notice is hereby given that the Rate or Interest has been fixed at
6.% and that the interest payable on the relevant Interest
Payment Date December 1, against Coupon No. 4 will be
£34.91 In respect or £1.000 nominal of the Notes and £349.08 in
respect of £10.000 nominal of the Notes.
June a _____ .
By: Citibank. N A (Issuer Services), Agent Bar* C/776AAKO
FINANCIAL TIMES
Carlton
Communications Plc
Exchangeable Capital
Securities and Bearer
Securities
Carlton Communication* Plc
(■Carlton") published It* mutts for the
she month* ended 31st March on
l Jims . Copies of the half yearly
report are available to holders of
Carlton’a Exchangeable Capital
Securities ("Ex-Cap*-) ood to holders in
hearer form of Carlton'* 7-/^6
Convertible Subordinated Bonds due
("Bonds") from Carlton'*
registered office HU9 George Sheet.
Hanover Square, London WIR OLU
and from Morgan Guaranty Trust
Company of New York (Global Trust
and Agency Services Department) h0 '
Vkrorla Embankment. London EC«Y
OJP lor and on behalf of the tnunt of
the Ex-Caps *nd of the Bomb.
international
A mk)ne quarterly worce of
reference front (taaudal Times
Ftnandal Pubtisbiiig, esKotlal to
aU playm In the taternatkmal
FwaFREEta ^ boo Utt amtaa:
CahMrtmO'Ku&t,
fiamietaf 71ms fluneU AdUbUng
MqpfrJfein*,
149 Ibttatbea Court Road,
Lnadom WIP 9 LL. Bntaod.
TH: +44
35.000 Xg,
i ciarke
produce grea
Ste tnore sophi,
wTiavehighe^
.Ganm« is ptTijr -
to dev
Tractors
said
gta *8* a .s;
gatr. said, e;:-
a trferSew Kcllas* -
ftaunsaace ”
wcs and
fforces
nt
for sale
BytMddTalt
InSydney
Nqtinnni [ Mntnal. ’ jh e Austral
lan flife insurer in which
France’s Ami, group is seeking
to acquire a 51 per cent stake
in retamlor a AgLlbn capital
injection, yesterday reported a
net-loss Of AjSp-Tm (US$22.Un)
to the half-year -to end-March.
The- insurer, which calcu-
lates the results' xinder Its own
capital- raising plan mefhodol-
ogy^and. (Hke~ most- Australian,
insurers). includes both real-
ised, and unrealised tovestznenl
gain's /losses in. the numbers,
said- -that: the figure compared
with a A$20.6m; profit .a year
It said that premium income
dipped slightly .to A?1.17hu,
horn A$L19bn to the first half
at 199S94, but that the invest-
ment contribution, fell much
more -sharply, to AyiRm fr om
Ay yiftm
The latter "Bgjm comprises
investment income of
A$35l.9m, compared, -with
A$388.4m, offset by A.7m of
realised and unrealised. invest-
ment . losses, compared with a
Renison Gold close to
winning Pancontinental
By Mkfci T&ft - I
'Renison Goldfields, the
Australian mining group In
which Hans on,' the UK con-
glomerate, holds a 40. per cent
state, yesterday claimed to be
dose to victory in its hotly-
contested A$500m (US$360m)
h \d for PaTwmtimmtel Mining
It said that, as of nrid-mom-
ing, it controlled 42.9 per cent
of ..'Pancon's equity, and
claimed to have written confir-
mation of intentions to tecept
its offer for a further . I8in
share*.-. '•
By lateafternoazvthe farmer
figure had- risen to 49.1 per
cent, with an . additional 5m
potential, acceptances. If all
these acceptmices materialised.
Goldfields — the Renison bid
vehicle - would control mare
than 50 per cent of Pancon.
However, P ancon directors
aairt they hail Tin irrtentinn of
conceding defeat at this stage,
and condemned the Renison.
use of “phantom” acceptances
- that is, those that have not
actually been received - in cal-
culating the number. Pancon's
shares closed 8 cents higher
yesterday, at A$2, while Reni-
son remained unchanged at
AK30.
The bidder has . set today as
the deadline by which it wants
to achieve 50 per cent accep-
tances, in order to declare its
. bod unconditio nal, saying- that
the offer will otherwise lapse.
But: Pancon has also disputed
this cut-off saying it is “artifi-
-cfaT and “self-imposed”.
Bank Bira profits
soar iit first quarter
By Manual* Saragosa .
bt Jakarta
Bank Bira, one of Indonesia’s
leading banks in commercial
paper lending and domestic
loan, tendicatioh, said its net
prcftt-for toe first quarter rose
more, than loo per cent on
rapid, growth -in -total assets
and feehased income.
- Rank Bira, which waa listed
on thte Jakarta stock, exchange
hr an imtiaTpablic offering last
July, said net profit to the first
quarter - rose to Rp6.4bn
(DS$2ton) from Rp2^hnm the
same period of the previous
-year;
Foods raised from the IPO
were used to increase the
bankas assets, which stood, at -
Rph292bn on March 31
compared with Rp656bn a year
earlier. Growth in assets has
resulted to an increase of 120
per cent in interest income,
which totalled Rp52.6bn in the
first quarter this year.
The bank has stepped up its
activities to commercial paper
and loan, syndication in the
past year, with the result that
fee-based income grew by over
200 per cent to Rp7.6bn in the
first quarter.
Among . the facilities
arranged by Bank Bira are a
US$50m syndicated loan for an
fndcnesfan ceramics company
and a. US$3 lm loan for the
construction and development
of the Bttz-Carlton resort in
Bafi.
INTERNATIONAL COMPANIES AND FINANCE
to net
L$3Q.7m
Atis 9m loss last time.
Payments under policies
' were down to- A$1.39bn. from
Afl.Sbn a year ago. but the
positive adjustment to policy-
related Tiahilit ip* was gmaTIpr -
A$4Hm against AS915m.
Operating expenses were
A$262m, against A$292m a year
earlier., ’
This left earnings before tax
more than halved, to A$105m
from A$225 hl National Mutual
then enjoyed a A$88m (A$£ta)
tax surplus, but after “earn-
ings credited to policyholders"
of A$222m, a gain gt Aagiom, the
■group was left with a A$30.7m
loss.
Statutory reserves fell by
A$73m to A$L39bn-
The A ra deal was announced
to January, but policyholders
-.have yet to approve the demu-
tualisation scheme, and assod-
- ated issue of shares to the
French group.
This process - which will
require' a 75 per cent approval
level - is expected to get under
way shortly. If it is successful.
National Mutual would expect
to list its shares within two
years.'.
Reprimand
for Morgan
Stanley’s
HK arm
By Sfmon Holberton
in Hong Kong
Morgan Stanley Aida United,
the Hong Kong arm of the US
investment bank, was yester-
day reprimanded by the Secu-
rities and Futures Commis-
sion, Hong Kong's corporate
watchdog, for allowing four
employees to trade securities
without a licence.
The Hone Kona rep rim and
follows the £240,000 ($381,000)
fine which the UK’s Securities
and Futures Authority levied
on the US bank for breaches of
financial services regulations
- the largest fine imposed by
the authority.
It emerged on Tuesday that
Morgan Stanley had also
offered compensation of about
$30m to five clients who suf-
fered losses on their invest-
ments. It also paid for the
costs on the UK authority’s
investigation.
to Hong Kong, the commis-
sion said Morgan Stanley bad
also failed to provide suffi-
cient internal procedures to
ensure that those needing reg-
istration were registered.
It noted, however, that in
considering the level of pen-
alty to be imposed on Morgan
Stanley - a warning letter - it
took into account the bank’s
co-operation with the inquiry,
and its prompt introduction of
procedures and management
controls to ensure that staff
were properly registered.
The mwimracinw said that it
also took into account the fact
that no investor, in Hong
Kong or overseas, had been
financially prejudiced by toe
late registration.
Philip Morris
may be sued
over Slovak unit
By David Wighton
Philip Morris, the US tobacco
and foods group, is being
threatened with legal action
over the treatment of minority
shareholders in Its Slovak
chocolate subsidiary, Figaro.
Institutions with 11.8 per
cent of Figaro’s shares have
said they will take the com-
pany to court . unless it
changes its response to their
requisition of a special share-
holders’ meeting. The com-
pany insists it has complied
with all legal requirements.
Following the requisition an
May 9, the company said it
would hold an extraordinary
meeting at the same time as
toe annual meeting on June
16. But the dissident share-
holders, led by Czech fund
manager Prague Capital Part-
ners and VS arbitrage firm
Wyser-Pratte & Co, said the
company had failed to publish
details of the agenda they
requested.
The shareholders have
accused Kraft Jacobs Suchard,
the Philip Morris subsidiary
that manages Figaro, of
depressing profits by channel-
ling sales through other group
companies and exacting high
management charges.
On 31 May 19*5 tteFtaning Fond Management adverttenKnt'was pabttshed In error.
Ptene find bddw the amectVcnfoa.
— F1JEMING FLAGSHIP FUND
SodMd'Im a iia emrm A Cafiltd VariabU
...'? £tmpean Bank & Susinea Centn: 6, route dt Diva
L-2i&3Sri uuHg e r i*rfrGm}idDucbjofLxBt*alving
JLC IjumbourgNa. B 9*78
A» the find Extraordinary Gonerd Moating bold on 15 May did no* have tfw
.. required' quotum of oagbaK of the d»mo« twtteandhij, thoatiareholdaia— ha«aby
* '* convened to a .
Second; Extraordinary General Meeting
so ]be held oo Wednesday 14 j one . at 14JO hoars at the registered office, of the Company. European
Bank ie Baanesa Centre, A" roiile.de Ittves, D-26S3 Senniqgerbeig, whh the following agenda:
J . To amend and complete Artide 21 of the Articles of Associa ti o n, to permit die Board of Directors
■ to die period, for repa yment of redemption proceeds, to such period hoi exceeding fifty
" -business days, a* may be- required due do prevamng conditions tn certain markets In which future
cfossesoftheConma^mayinvesL
2. To a m»«d Article 4, first paragraph, second sentence of the Artides of Association by adding the
Wrd ^subsidiaries* after ‘"Branches'*.. . . „
8. Tb complete Artide 16 of the Articles of theAssotiation by adding the following paragraph: Tnvest-
;- -xnqa a of the Company may be made either directly or indirectly, through subs i dia r ies, as the Board
~bfffir ec m r s T nay from dmeto dme detide. Reference in these articles .to “investments* and “assets*
shall mem; appropriate, . either investments made and assets beneficially held directly or
‘ hnekmentt and assets benefitiaUy held indirectly through the aforesaid subsidiaries".
4.1b tenmlete ArtSte 22 of ifie Artides oTAsiociadco bf adtfi ag ihe foDomng par^raph as p emihim a te
paiagrsqjh: “(vii> while die jact asset value of any subsidiaiy of the Company may not be determined
acc u ra m y. .
The shareboldera are advised that oo quorum is required for the. holding of this Extraordinary Gene-
ral Meeting. ResototionswOI be validly adopted if voted in fwour bya cmKbirds majority of the shares
pesenior represented at such' ineeting.
hi order to be etitificdtoAttend the meeting, holders of bearer sharesmnst deposit tbeir bearer share
certificates seven days prior to die meeting with the following institution:
Kredtefa an kSJL bixfimboufgootto. 48, bouWvord Royd
> Luxwnbow^ Grand Duchy of luxombourg
Sbanfooldeisstifo tannotpmbnafly attend the merai^m^ at any time art by proxy using the prescribed
form of proxy (available at tberegistered office of the 'Company) and return it ar feast ac ven w otking
dOTmiOTw‘tbeda«:oftheExtraoidiiiarya»rehoidcrs' meeting to the Company, c/o Hemmg Fund
\tevag wr i imr (1 Anremh raiT^) ?LA. Ir Luxembourg-
KyOrdey of the Board of Directors: HEAIRYG KELLY; May
Changoof danbmitealipro in addition, sharehokferi are informed of the change rfd ffo teBtiw
tmUmmffPiirrwin Fund. FFF-Fl tmfflg Eurooean Smaller
ig Imernatioual .Equity Fond. -
Flemings
MAS airline operations find going tough
Malaysian carrier shows overall
improvement, but analysts are
disappointed, writes Kieran Cooke
M alaysia Airlines
(MAS), cob of Asia’s
most ambitious but
finamdaiiy unpredictable carri-
ers, has revealed mixed year-
j end results with improvements
I to overall group profit bnt
reflecting con tinuing difficul-
ties to airline operations.
Group pre-tax profit for the
i year to March 31 was
M$148m (US$59m), compared
with a pre-tax pr ofit of M$16m
last year. Turnover increased
by 17 per cent to M$4.76hn. The
MAS board is recommending a
final dividend of 7 cents, com-
pared with 2 cents last year.
Mr Tejodin Ramii, a Malay-
sian. entrepreneur who took
control of MAS to a highly
leveraged M$1.79bn deal last
year, said he was more than
satisfied with the results. But
he admitted that in spite of a
considerable upturn in the
international airline industry
and a reorganisation of MAS'S
management structure, the
group’s airline operations were
still not making money.
Mr Tajudin said associated
activities snch as catering and
duty-free operations had con-
tributed to the improvement in
overall performance.
MAS was reluctant to
divulge many financial details.
R said there was high growth
in income from leasing aircraft
but would not say how much
was involved. MAS both leased
out and leased to aircraft dur-
ing the year. Analysts say it is
not dear if the costs from leas-
ing in aircraft were included to
file figures.
“These results are well below
market expectations," said a
Singapore-based *Mirw» indus-
try analyst “MAS is operating
in the most buoyant airline
market in the world. It ghnnid
be showing some better figures
by now.”
MAS has always had big
ambitions In the early s,
when iht> global indus-
try was in recession, the
Malaysian, carrier announced
one of the world’s most com-
prehensive fleet expansion pro-
grammes, ordering 72 aircraft
for delivery over the -96
period costing a total of
M$10.6bn. MAS is now the
biggest operator of Boeing
737-400S outside the US.
MAS said the purchases were
needed to meet the needs of a
fast expanding market, particu-
larly in the east Asia region.
But the expansion programme
has resulted in a steadily
mounting debt: MAS its
net debt now stood at M$6.6bn.
Finance charges rose by
M$143m, or 77 per cent, in the
last yean analysts say debt
could soar to more than M$8bn
by next year. At the end of
, MAS raised US$700m in
what was Malaysia’s biggest
rights issue. Analysts predict
another r-ach rail In fha nftrt 12
months, thoug h Mr Tajudin
said yesterday that this was
unlikely.
MAS has expanded its capac-
ity by 19 per cant over the last
year and passenger and cargo
traffic grew by a similar
amount However, the overall
load factor - seen as an impor-
tant barometer of performance
in the industry - improved
only marginally to 64 per rant
The load factor of neighbour-
ing Singapore Airlines (SI A) is
70 per cent SLA is competing
fiercely with MAS on many
routes: unlike the Malaysian
carrier, SIA is debt-free.
Investors have pinned their
hopes on Mr Tajudin and his
new team MAS shares have
MAS passenger and cargo Reet ",
Oitei“ iMBSd fiwtod Oii Option
fm nnii|jii ' :■ In:- . ..' ortftr
B74T-400 10 - 1 8
■ .. 'dim msmmr t&s&M
B747S00 1
' - && swe
A300 1 - 1
■ . mmmasssei ssss
jj. v* B737-400 39 5 5 Z 6
7- ■ 2 mm
".L - 8 fsq n - 2
been eHmhrng steadily °u the
Kuala Lumpur market over the
last 18 months - from M$5 at
the beginning of to just
under M$9 now.
Mr Tajudin, who has multi-
miTHrm dollar interests in tele-
communications, tourism and
transport, has cut staff and
divided MAS operations into
autonomous “profit centres”.
Capacity has been added to
lucrative long-haul routes, par-
ticularly those to Euro pe. MAS
has been at the forefront of a
price war among Asia’s air-
lines, cutting fores on some
routes by as much as 30 per
cent
From yesterday MAS is oper-
ating 14 flights a week to Lon-
don under a code-sharing
agreement with Virgin Atlan-
tic. The Virgin arrangement
will also operate on MAS
flights to Australia. A fur ther
code-sharing arrangement has
been agreed with British Mid-
land on routes within the UK
and to Dublin.
MAS is also opening new
routes to North America.
Meanwhile, mas has bought
stakes in smaller carriers in
Cambodia and the Maldives,
“Our amhirinri is big, very big”
says Mr Tajudin.
A nalysts are holding
their breath, however.
They point out that
though MAS is now fully priva-
tised, the government still
retains a “golden share". MAS
is still burdened with many
lossmaking domestic routes.
Domestic fares were increased
by up to 20 per cent in .
The government, battling to
counter inflationary pressures
in toe fast-expanding economy,
is unlikely to countenance fur-
ther fare Increases- MAS said
that over the past year, reve-
nues on its international
routes grew by 19 per cent.
However, on local routes there
was only a 1 per cent rise.
The government has made
various announcements con-
cerning the formation of a sec-
ond airline which would take
over many local routes, but
negotiations have stalled.
Meanwhile, some lossmaking
international routes - to
Mexico City and Buenos Aires
- seem to have been inaugu-
rated more to raise Malaysia’s
global profile than for commer-
cial reasons. Mr Tajudin said
there were no plans at present
to cut these routes.
MAS is forecasting a better
performance over the ranting
year, but observers will be
keeping their seat belts firmly
fasten pH in the Tnnnfhc ahead
NS
An encouraging start.
In the first year of recovery after the Rights
Issue, our performance is very encouraging. We
are particularly pleased with the progress made in
reducing borrowing and gearing and with the
growth in our core businesses.
Health and Personal Products achieved
overall growth of 5.5% to £286.7 million (:
£271.8 million). The Group’s core thin film barrier
protection products achieved “underlying" sales
growth for the year of 14.4%, after adjusting for
currency movements, brand disposals and
promotional smoothing.
Sales of our family planning products
increased to £100.4 million (: £92.9m) with
underlying growth of 9.0%.
We launched our new
polyurethane condom, Avanti, in the
western states of the USA in
November. It has already achieved a
3% value share of the region.
We again achieved significant
growth in surgical gloves, with an
FINANCIAL HIGHLIGHTS
Sales
Sales excluding
photoprocessing
Operating profit
pre-exceptionals
Pre-tax profit/ (loss)
94/95
£m
93/94
£m
318.1
396.6
286.7 1
271.8
26.6
7.5
15.2
(175.1)
4.02
(90.62)p’
I.OOp
NIL
* As restated
increase in sales of 32.8% to £51.4 million (:
£38.7 million). Underlying growth was 27.1%.
We have reduced our gearing to under 40%.
The new year has begun positively, with
encouraging signs for further recovery and future
growth. We continue to gain market share in our
core businesses, while the benefits of our
rationalisation and cost reduction programmes are
beginning, and will continue, to flow through.
London International Group pic
Innovators in Thin Film Barrier Technology
35 New Bridge Street London EC4V 6BJ
Site &
Biogel Kingtex tamfi? RAMSES
The kxwi boms an coda m*ki rf campuhw a LMan immataui Otup (Sc
Il
ifll
Shareholders agree £860m investment banking sale to SBC
Approval for Warburg disposal
By John Gapper,
Banking Editor
The sale of SG Warburg’s Inv-
estment banking businesses to
Swiss Bank Corporation was
agreed at a subdued 15-minute
shareholders meeting yester-
day despite strong criticism of
the UK bank's management
from a former board director.
The meeting at Warburg’s
headquarters, attended by
about 150 shareholders,
approved the £S60m <$l.35bnj
sate with only about 10 votes
cast against The sate is still
conditional on approvals by
regulators.
Sir David Scholey, Warburg's
rfiaiiTnan and rhipf executive,
was questioned critically by Mr
Peter Hardy, who retired three
years ago as a managing direc-
tors of the investment banking
arm, »wd who described the
sale as “rather depressing".
Mr Hardy said that Warburg
had undergone an “ill-con-
ceived expansion, and unjustif-
ied increase in costs". Share-
holders were having to sell a
business that until a year ago
was considered the UK’s pre-
mier investment bank.
He said that the £63m pre-
mium to net asset value being
paid by SBC was “miniscule in
relation to the value and good-
will in the group, and ter less
than was paid by Warburg fin-
many of tha constituent busi-
nesses of the group".
Sir David replied to another
shareholder's question on
whether Warburg’s Investment
h ank could have remained
independent by saying the
results in the year to March 31
had been “surprisingly and
seriously negative".
He said that for the invest-
ment bank to have remained
as an independent business
"would have required
extremely radical and wrench-
ing surgery, with other thing s
happening in the market place
that would not have assisted
us".
The board had “looked very
carefully at the alternatives",
but had decided that the costs
that would have been required
to reshape the business “were
greater than the c u rr e nt share-
holders should be asked to
bear".
The investment hank sale,
giving shareholders 365p per
share, is to be followed by a
proposal for "a scheme of
arrangement" to allow War-
burg's 75 per cent stake In Mer-
cury Asset Management to be
distributed thpm
A document giving details of
the proposed scheme is expec-
ted to be posted to sharehold-
ers shortly.
Irish Press
board says
it faces
liquidation
Cash-rich Boots looks for
continental purchases
By NeB Buckley
The Irish newspaper group,
Irish Press Newspapers, is to
be put into liquidation next
week, according to the compa-
ny's board. None of the
gronp's three titles have
appeared for more than a week
because of industrial action by
the National Union of Journal-
ists after the summary dis-
missal of a journalist.
The group is losing
1£200.000 a month and its
financial position has dramat-
ically weakened in recent
weeks. The Irish supreme
court has overturned a judg-
ment that the Irish Press was
owed l£9m in damages by Its
former 50 per cent owner,
Ingersoll Publications.
Union sources suggest the
dismissal of the group’s busi-
ness editor, for publicly critici-
sing the company, was a tactic
by the management to engi-
neer a dispute and so bring
liquidation closer.
The lossmaking group was
propped up last December
when Mr Tony O’Reilly's Inde-
pendent newspapers took a 25
per cent stake for I£1.3m and
lent the group another l£2m.
The Irish competition author-
ity subsequently ruled the
investment was illegal and an
abuse of a dominant position.
The group due to go into liq-
uidation next Tuesday, which
allows four days for political
intervention to save the com-
pany. One option is for the
government to overrule the
competition authority allow-
ing further investment by
Independent newspapers
which is now semi as the only
possible investor.
Boots, the retailing and
healthcare group, said it had
“no inhibitions” about handing
back more of its £600m-plus
cash idle to shareholders if it
could not find “sensible” acqui-
sitions. The group announced
an 8 per cent increase in prof-
its, before exceptional gains, to
£525. 6m. ($825 ,2m).
Boots has already returned
£508m to shareholders through,
a share buy-back last Novem-
ber.
Sir James Blyth, execu-
tive, said the company was
searching for acquisitions to
strengthen its over-the-counter
drugs business - Boots Health-
care International - especially
in continental Europe. But
with other groups seeking sim-
ilar acquisitions, asset prices
were high.
Sir James said a retail acqui-
sition was unlikely until the
UK store chains acquired
through its £9QQm purchase of
Ward White in were per-
forming up to scratch.
The City believes another
share buy-hack or special divi-
.:;3ePv^ : — * ...
-:v ,:;v *:?*£:*
Sir Michael Angus, chairman: money could go to shareholders
dead is likely. But the shares
fell 8p to 5l0p, on disappoint-
ment that there was no imme-
diate buy-back. Analysts down-
graded current year profits
forecasts by £20m to £520m-
£530m after Boots warned of a
high m- taT charge.
Last year’s pre-tax figure
was before an exceptional gain
of £320.1m on the disposal of
Boots pharmaceuticals to
BASF and the Farleys food
business to Heinz - after
charging goodwill of £383.4m -
and other exceptional profits of
£4m.
The core Boots the Chemists
chain increased like-for-like
sales by 3.9 per cent and oper-
ating profits grew 8 per cent to
£350xn. Halfords, the car acces-
sories chain, lifted like-for-like
sales 4 per cent with profits up
more than 40 per cent to
£20.5m.
American Endeavour action
By Andrew Taylor
The American Endeavour
Fund is facing further legal
proceedings over its decision to
appoint Kleinwort Benson (Jer-
sey) Asset Managers as its
fund manager in place of
Berkeley Govett International.
American Endeavour in Feb-
ruary, sacked Govett, alleging
'a sustained pattern of wrong-
doing 1 which had resulted in
damag e to the fund. It is suing
for damages of at least 820m.
Govett in turn is suing
American Endeavour for dam-
ages of more than $l00m for
allegedly causing its proposed
acquisition of Duff Phelps, the
US fond manager, to fail.
Yesterday American Endea-
vour announced that Pacific
Investments a registered share-
holder in the fund had also
begun legal proceedings in the
Royal Court of Jersey.
Pacific Investments Is asking -
the court to set aside the
appointment of Kleinwort Ben-
son, replace directors of Ameri-
can Endeavour with court
appointees and restrict the vot-
ing rights of Firmandale
Investments, American Endea-
vour’s majority shareholder.
The fund said it would
defend the action brought by
Pacific Investments.
LIG bounces back with £15.2m
By Peggy Hoflinger
London International Group,
the condom and rubber glove
manufacturer, yesterday
offered the market a bullish
progress report on the first
stage of its three-year recovery
programme with a substantial
swing back into the black.
Pre-tax profits were £15^m
for the year to March 31,
against losses of £175.1m.
Exceptional charges amounted
to £2&n (£16K3m).
Mr Nick Hodges, chief execu-
tive, said LIG bad exceeded tar-
gets set at the time of the
£115m rescue rights issue in
June last year. Gearing, at 4G
per cent, was comfortably
below the 50 to 70 per cent goal
and net debt was down from
£168m to £44Jjm.
LIG was also on track with
its remaining disposals in the
health and beauty aids busi-
ness, having withdrawn from
photoprocessing. The company
expected to raise between £30m
and £50m from asset sales.
The withdrawal from photo-
processing left group sales
down by 20 per cent at £3 18.1m.
Operating profits, excluding
discontinued businesses,
increased by £&9m to £26.6m.
Mr Hodges said the first year
of the recovery programme bad
been successful, despite chal-
lenging targets, but there was
still much more to achieve.
LIG would now focus on
building its core businesses
organically - through new
products such as the polyure-
thane condom, Avanti - and
by acquisition.
The global condom market
had been slow in the last year,
growing on average just 2 to 3
per cent. Manufacturers had
also been hit by doubled latex
prices. However, Mr Hodges
said LIG had been able to
cover higher raw material
costs with price increases.
London International
Share price (penes)
250
200 - i 1- -“ -
Source: Oatastnan
Allied
Domecq
shakes up
managers
LEX COMMENT
By Christopher Price
RESULTS
ABUim —
Barooa
Boots
Brawn &Tane
Senear A
Hogg itoUnoa .
London hdf
Lookers
M&G
MU Kent
Mfeinet*
N Inland Boot -
OMI M
PBv Property _
PoweH Daffcyn -
Qu adrant
Rowtnson Sacs
Saba
llnidaret __
Warner Estate
Wtotnst
Investment Trusts
F&C Pep
Stem Selective
. G nrita to Mar 31
Yr to Mar 71
UK
a'-*
Mr David Jarvis, chief
executive of Allied Domecq’s
wines and spirits division and
a main board director, was
yesterday redundant as
tfae drinks retailing group
announced a shake-up of its
senior management.
While Mr Jarvis was depart-
ing, two other senior manage
ers were appointed to the
board as the company made its
first substantial organisa-
tional changes since the take-
over of the Domecq spirits
group last year.
Mr Michael Jackaman,
chairman, said: “David Jarvis
has done an excellent job and
been a very effective chief
e xe c u tive, but under the reor-
ganisation his job has been
taken over by the group chief
executive, Tony Hales. There
isn’t a job which matches
David’s experience or his level
of responsibility."
He added: “He should be a J
chief executive in another big ,
pie.” Hie two rides are dis- I
cussing compensation. Mr Jar-
vis was on a three-year rolling
contract and is fikriy ’to seek
additional compensation.
Mr Jarvis, 47, joined Allied
in and was appoi n ted to
the board in as chairman
and chief executive of Lyons,
the group’s food subsidiary.
He became chief exec u tiv e of
the spirits business a year
later.
Allied is to cmnhhie its tra-
ditional wines and spirits busi-
ness with its Dome cq Int erests,
organising it on a brands and
regional operations basis. The
brands division wfll be headed
by Mr Feta- Wood, who has
been undertaking a similar job
at Allied Domecq Spirits.
Among the regions. Euro-
pean operations will be beaded
by Mr David Scotland, who
wfll also join the board. Mr
George McCarthy is also join-
ing the board as director
responsible for the group’s
north and south American
operations, with the exception
of Mexico.
“The hoard’s strategic prior-
ities of developing our founds
and international business
will be matched by a structure
which achieves the right bal-
ance between overall brand
focus and closeness to the
local market”
The housing industry’s campaign to reverse
government cuts in tax relief and income sup-
port for home buyers looks set to end in
defeat With Mr John Major apparently blam-
ing home buyers for the late s’ inflationary
spiral, he can hardly be expected to fuel a
return of house price Inflation.
With little hope of salvation from the gov-
ernment, hmwg owners might hope for the
economy to come to their resale. After ag, as
hinmnes rise, homes are becoming more afford-
able and concerns over rising interest rates
are fading; hence the recent rise in the h ouse -
bufldera’ shar e prices. Unfortunately, the buy-
ers are still not biting. Mortgage lending is
down, the latest set of statistics on property
prices show further falls, a nd few er new
homes are bring built. Job insecurity remains
high many economists argue that the
number of workers an short-term contracts is
growing Not surprisingly, people are less will-
ing to commit thems elves to 25 year property
loans. So the prospects for house prices this
year are bleak.
Next year, though, the market should pick
up. Tax cuts seem certain before the next
general election. This should feed through into
-22fl.r-rrr
21 Q ~
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cons umer confidence and the hausfaig market
Further increases in incomes will also make V
property increasingly affordable, drawing-
more first-time buyers into the market and
allowing existing hone owners to move up the
property ladder. But the speculative froth of
the last property cycle is unlikely to be
repealed. r
SKr680m Nordic travel
buy for Hogg Robinson
rrftril,
By Sctietierazade Daneshkhu
Leisure Industries
Correspondent
Hogg Robinson, the travel,
transport and financial ser-
vices group, yesterday
announced agreement to
acquire the Bennett Travel
Group, the Nordic business
travel management company,
for SKrtWOm
Bennett Travel is part of
Business Travel International
(BTQ, the joint venture busi-
ness travel TnawagBmgnt group
in which Hogg Robinson has a
13.5 per cent holding. The
acquisition will make Hogg
Robinson, which manages
BTI’s operations, the largest
shareholder with 2L5 per cent
Funding will come partly
from a placing and open offer
of 17.39m shares at 160p to
raise asam- New borrowings
will £20m and the balance
will come from resources.
Shareholders will be offered
new shares on a l-for-4 basis.
The shares foil 5p to 175p.
Bennett Travel, the market
leader in business travel in
Norway, Finland, Denmark
and Sweden, was put up for
sale by its owners Volvo and
the Swedish Co-operative Soci-
ety in February.
Mr Brian Ferry, chairman
Hogg Robinson said that gives.
Bennett Travel’s role In Bn,
its acquisition was a “major
move within the overall busi-
ness travel sector and should
greatly enhance our interna-
tional positioning.”
Bennett Travel reported pre-
tax profits for ctf SKrtLSm
and has net assets of SKr4&2m.
Hogg Robinson also
announced pre-tax profits of
£14£m (£2L5m) for the year to
March 3L ifttrinding exception-
als profits were £17.4m (£16m).
vm
.. f
■ . . 7- . i-n
- - .vV5- Mf,
Raw material costs hit Lamont
By Motoko Rich
Rising raw material prices and the depressed
UK housing market forced Lamont Holding s,
the Northern Ireland-based textile group «"d
carpet manufacturer, to issue a trading state-
ment yesterday which left the shares down 47p
to 300p.
At the company's annual meeting in London,
Sir Desmond Lorimer, chairman, echoed the
sentiments of other UK household goods manu-
facturers earlier this year. He said trading in
the UK during the past two months had been
“much more difficult than anticipated" and
“maintained at levels".
Analysts downgraded their forecasts by
more than vim to about viam. Lament's
pre-tax profits fell from £ll.49m to £9.1m
be c a us e of restru cturing costs and difficulties m
passing on price rises.
The group was the second carpet maker in a
week to blame raw material price rises for a cut
in profitability. Readicut, the household textile,
carpeting and yarn company, reported a 33 per
cent drop in pre-tax profits last week.
Lamont said it had suffered 150 per cent
increases in the price of polypropylene, used in
its furnishings fabrics and carpets.
• ;■•••—' ''4
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_ 6 rafts to Mar 31
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paitoWt
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DtvWends shown net Figures In bradetfs are for ccnaa p ondtog parted. *Gompaattvss ,
4Ate Btcep&raj charge. V After exceptional credit tComparatfves lor 9 raartha. tOn
suh:-.-.- -
“A major step forward
in our long term development plans
and a further advance in profits”
• 100% Tees Ports ownership
• 10% improvement in profit before tax
• Strong ports performance
• Successful 1 for 4 rights issue
• Increased capital expenditure
Increased total dividend
r
Results
1
Change
Profit before exceptional
£40.1m
£3 6.0 m
+1A%
Profit before tax
£36.9m
£33. 4m
+10%
Dividends per share
. -40JUS*CC tor rights issue
2S.0p
23.6p
+8%*
POWELL DUFFRYN
CALL FOR
EXPRESSIONS OF INTEREST IN PURCHASING THE
ASSETS OF “THE UNITED PACKAGING INDUSTRIES
OF GREECE S JL”, OF ATHENS, GREECE
ETHN1KT KEPHALEOU SA, Administration or Assets and Liabilities, of 1
Stouten* ou Sir.. Athens. Greece. In Its capacity as Liquidator of THE UNITED
PACKAGING INDUSTRIES OF GREECE SA‘. ■ company with Its ragtotemd office
In Athens, Greece, (the "Company - ), presently under specter BqiAdaUon according
to the provisions ctf Section «6a of Law 1 882/1 990, by virtue of Decision /95 of
the Atfrera Cout of Appeal hniftas interested partes to submit within twenty (20)
days from ttw pubfcation of tree cafl. a nonbtodng wrtaen expression of Meres to
purchasing the poups of assets mentioned beJow.
BRIEF INFORMATION
The Company was estabftahed to , In a was declared bankrupt and on
16.5.95 It was placed under special liquidation. Its objectives Included the
production ana sale ol portaging materials.
GROUPS OF ASSETS OFFERED FOR SALE
This assets being ottered for sale Indude a factory sandtog on a ptoc of land of
MttaRy 80,753 sq.m, reduced to approximately 52,000 sq.m. foOowina street
aBpvnsnt end land exprop ria tion m Pie area at the 2nd ttn of Pie TrtpoS- Argos
National Rood, containing machinery and mechanical equipment The credo name
of the company Is also ottered tor eais.
T vr j&Siif*
iih -S734. Jita
SALE PROCEDURE
The sale of the asses of Vie Company wfll lake piece by way of PiAHc Auction to
a ccor da nce with die proutalong of Section 46a of Law 1 B82/1 990. aa supplemen t ed
by art.14 of L200CV19B1 and art 53 of L and ths writs set out In Pm
C ell far Tenders tor die Ngheat bid tor the purchase of die above assets, to be
pubBshed to the &eek and toraipi press on the dales provided by Law.
SUBMtSSTON OF EXPRESSIONS OF INTEREST - OFFERING
MEMORANDUM ■ INFORMATION
For the submission of Expressions of Interest end tor oMalnfcig a copy of Pie
Ottering Memorandum, please con tad the Liquidator, *ETHNIKJ KEPHALEOU
&A.. Adm i ni s tr a t i on of Assets and LieMdoa. 1 Sfcoutortou S».. Athena 10S SI.
GREECE. : *30-1-323.14.87-7. Fax *30-1-321.79.05 (attention Mrs Marfea
Frangakta).
Smith Kline Beecham PLC
Floating Rats Unsecured
Loan Stock
/
Interest Rate &375% per annum
Interest Period 1 June to
1 September
Midland Bank pic
Agent Sank
tNCSSES- FOR SALE
l*Lp»fc'A'.v/av4i'i3 6; .- .. . * .
arena s
• • ‘ ~v» ■ 1 -•
' v — ' -rr->
The essential twice-monthly, global update on
the biotechnology industry
biotechnology Business News provides regular, authoritative reports of
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‘ •- A • .
DISTRIBUTION • ENGINEERING
9 j}\ I/O
FEN&NClAL TIMES FRIDAY JUNE 2 * + ★
RECRUITMENT
Wfltg
peretoaso T J?J
■speculative
%ffl 'sufijeckfe nwre-Eranfi
fmj to fashionable theoris-
1 * 221g flHOJ mn p ln y m wwt ■
Apocalyptic talk about tiie
“end of the job" and “the aboli-
tion. of- work^ has^ grown .
pmong employment gurus in
recent years; as they have
bmopetM tbe^arrival erf what
they call the “new" flexible
labour niarketif-' ■
: • The. fall-time .permanent job
is being rapidly 'replaceclhy the
greater, use of' subcontracting
and temporary w o rk, as well as
antacreased autonomy in hir-
ing end work allocation . by
skilled; work groups . and
greater managerial discretion
tn the workplace in the malting
of employment decisions.
Those trendsaremoredevd-
oped in the BS than in Europe.
As Mr 'Peter - CappeDi, codi-
rector of the US-based indepen-
dent' National 'Center on the
Educational Quality of the
Workforce, told a conference
tid^ week in Washington, all of -
this was familiar In work
CHganffiatiou m pre- Amer-
ica. ; • ;■ ..
He said; at that time there,
was the “put tin g out" system
where- piece-rate contracts
were negotiated with home
workers; “internal contract-
ing" which covered contractors
working tnoiHa the company; -
and the “drive”, system which
JOBS; Is the ‘new’ flexible labour market a return to the past? asks Robert Taylor
Subcontractors and temporaries take over
provided foremen with com-
plete autonomy in the work-
place.
; Their common - theme, Cap-
peDi argued, was “the absence
of a system of formal rules for
managing employees and
heavy reliance on markets and
infflsi dual contracting".
• After the first world war,
employers found it was mare
efficient for them to manage
employment inside the com-
pany rather thaw through mar-
ket-based contracting. It
ensured “predictability and
order" in the workplace,
reduced “costly and time-con-
suming” efforts in enforcing
contracts, and reflected scien-
tific management where each
job had a narrowly specified
description.
These features characterised
the 20th century organisation
of work that “helped insulate
employment from the pres-
sures of competitive product
and labour markets"
But CappeDi argues that in
recent years, changes in mar-
ket preferences have nfede
Cooperathsjj
*** ciaa>.
am said tba &
Travel's rob
Sltiou wa< = v.
Within the ove-jjjt"!
stare! seercr zzi h!
enh accg our rAT ■
■POEiti02JJ2g“
Travel rsMr.5;-,
assess rfi
Wm\ Bobiasaa 7
tetea H^ed pre-tax =-4
Kmmi'Sai - :o:
Exclude?
O'
fixed investments like
long-term labour costs obsolete
much more quickly as develop-
ment time hag hum cut drasti-
cally. Increased competition
has added to the pressures on
the internal employment sys-
tem, while in the US trade
uwlpn ttor.lrno and Jaws malting
it more expensive to hire
full-time workers have
enhanced the strategic advan-
tage of a return to the market-
based contract culture of pre-
America.
The results have not all
proved beneficial, particularly
for workers. It has meant “less
job security, especially for
employees whose characteris-
tics seem to put them in the
‘core* of the workforce, more
job switching, flatter job hier-
archies that are more difficult
to enter and to move up. ^
compensation and training
decisions that are more gov-
erned by the outside labour
market”.
Changes in work demand
special skills and tr ainin g
which assumes greater
The shbsfage df sUlled faboia 1
% of flmda«urfnfl*n»saing shortage as aiconswrfnt -95
50 — —-1—^ — • *•
40 r :
2Q
65 . 70 78
Souce: CSl QjafWrty InciurtM Twxtesnvey.
employee attachment and ten-
ure to ensure firm-specific
investments pay off; but
instead attachment of the
worker to the firm seems to be
weakening. The growth in
occupation -specific skills
makes it less attractive to indi-
vidual employers to train
because they may not recoup
the investment made in their
workers who become more
marketable. As a result, work-
ers themselves will have to
develop their own siting and
manage their own careers with
a likely decline in work-based
training.
CappeDi warns of the “dis-
tributive justice aspects” of
these trends. He points out
that at present employers are
initiating and reaping gains
from the changes in the
employment relationship with
their strengthened bargaining
position through the derilfap in
real wages, rise tn job insecu-
rity and spread of involuntary
part-time employment
It 1ms become a chcfafe that
the UK economy - unlike oth-
ers in western Europe - suffers
from the consequences of per-
sistent skill shortages. But in a
spirited rebuttal to the conven-
tional wisdom, Mr Peter Robin-
son, from the independent Cen-
tre for Economic Performance
at the London School of Eco-
nomics. argues the familiar
picture needs challenging.
“The current incidence of
reported skill shortages is low
by historical standards.” he
asserts. In January the Confed-
eration of British Industry
found only 10 per cent of man-
ufacturing firms reported their
output would be limited over
the coming four months by
skilled labour shortages. But
during the period from to
, an average 24 per cent of
firms reported such shortages
as an output constraint with
peaks of 42 per cent in June
and 51 per emit in October
. The picture improved to
28 per cent in .
Posing the question of
whether a gradual and sus-
tained output recovery, with
an annual 3 to 4 per cent
growth rate sufficient to cut
unemployment by one percent-
age point a year, would lead to
skill shortages large enough to
stimulate significant additional
wage inflation, Robinson
answers with a resounding No.
He believes what labour short-
ages the UK suffers from have
“minimal implications for
waga inflation”. He argues the
“real” skill shortages in the
labour market lie primarily
among professional and techni-
cal occupations, seen in the
demand for certain kinds of
teachers, nurses, engineers and
tpchttleiaTig
But since there has been
a “significant increase in
higher education enrolment”
which he believes “augurs well
for the general supply of
highly qualified labour". He
also believes some genuine
skill shortages “probably" exist
among certain craft and other
intermediate skill occupations,
but he believes it remains
unclear just how "many of the
recruitment problems faced by
employers are to do with Indi-
viduals lacking appropriate
qualifications as opposed to
appropriate experience or per-
sonal skills”.
“It is hard to conclude from
the evidence that British
employers are reporting they
face shortages of tens of thou-
sands of craft workers so it is
not dear the authorities' need
to sponsor vast training
schemes,” he says. He urges
more “small scale, well tar-
geted high quality pro-
grammes”. In a message that
will please the government, he
believes “renewed wage and
price inflation may well
threaten in the event of
another external shock to the
economy, but skill shortages in
the s do not pose a major
threat to a sustained gradual
economic recovery”.
1 Rethinking Employment by
Peter Cappelli. taken from
Change at Work a forthcoming
book firm Oxford University
Press. 2 Skill Shortages and
Full Employment; How Serious
a Constraint? by Peter Robin-
son, Centre for Economic Perfor-
mance, London School of Eco-
Excellent Salary and Benefits
We represent a major international securities house who are seeking to recruit a talented individual
to join its highly successful bond strategy team as a European Economist focusing particularly on the
French arid German markets.
Ideally aged mid to late 20's, candidates should have a strong economics background, preferably with a
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For a confidential discussion please contact Patrick Morrissey. : -, Fax: -236 or apply
in writing to Sheffield-Haworth Limited, Prince Rupert House, 64 Queen Street, London EC4R 1AD.
Consultants in Search and Selection
—7^ . INVESTMENT MARKETING = —
;;: ; a A; a } manager
... Scotland
Our client, as part of an expanding blue chip organisation with assets under management of around £60
billion, is a highly successful Life Assurance, Pension and Investment Management company. As part of a
structured development programme they now seek to recruit an additional Investment Marketing Manager.
Reporting to the Head erf Investment Marketing you will assist, develop and maintain an effective and
j«roactiye investment marketing service in order to support our client's marketing and sales effort and their
CFAdSent base. ; - . -
Key responsibilities will include: providing investment expertise and specialist knowledge to assist the
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You- should hold a degree or relevant professional qualification with a minimum of 5 years investment-
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Applications instrictest confidence,. providing salary details to: Karen
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Edinburgh,- EH2 3AT. : () 226 , Fax () 220 .
FLETCHER
JONES
JAPAN/HK
EQUITY FUND MANAGER
A leading international insurance company is seeking a Japanese/HK equity
fund manager for it’s City based Investment Office. The post will involve
considerable autonomy for the right candidate working within a small
specialised investment team.
The essential attributes for the position are:
• At least four years experience managing Japanese equity funds
• Established performance record
• In depth knowledge of Japanese market and economy
• Some experience of managing Hong Kong equity funds
• OMR or 1MC qualification advantageous
An attractive salary and comprehensive benefits package will be offered,
depending on experience.
Please apply in writing, enclosing your CV to:
Box , Financial Times,
One Southwark Bridge, London SE1 9HL
TECHNOLOGY ANALYST/
FUND MANAGER
MID 20*s
The company is one of the most respected
independent fund managers and a leader in
investing in the technology field. It has a number of
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company is committed to expanding its technology
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As an Analyst/Fund Manager you would work
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CITY
You need to have been very well trained as an
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company will provide a good performance related
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Please write in confidence, giving frill details of
your training and experience, to Terence Hart
Dyke, consultant to the company, at Haley BDC.
63 Mansell Street, London El 8 AN.
:. Looking 'Good For Your Future
FUND MANAGEMENT
Asian Equities
Scottish Widows' Investment Management is the investment management operation of the Scottish Widows group
with around _£l9bn under management. Our modem, custom-built offices are attractively located in the historic dry
of Ediubnigh. .
- This is an exciting opportunity for highly motivated individuals to join a dynamic and successful team currently
managing - Far Easrequities, in a variety of types of portfolios.
v .V ' .A'key-pbyer in’ strengthening and expanding our expertise in this specialised area, your credentials must include a
^irrfrtnmL yens ■ experience m portfolio managcment in Far East markets and proven stock-picking ability with a
dscenrible trade rccoti You should jIso have a strong academic background. Good communication skills and the ability t»
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^VLThis is a sigmficanc czreer opportunity with an attractive remuneration package, including performance bonus,
^■ytitifedre profile andxwsh tbface dwHenge please write, en rioting CV. to: Neil Leueh, Personnel Department,
-C Scottidt Widows’ Investment Management Limited,
• \ : f - " 15 Dalkeith Road, Edinburgh EHI6 5BU
SCOTTISH WIDOWS
APPOINTMENTS
ADVERffi^
f appears mitre UK : .
. v edition'- every -
• Wednesday & . ,
and in the
International edition
'.: .;eryery Friday
; Ebif forfber ’' .
iafbzinatios please
k.‘‘‘ call: , ■
Andrew Skarzyoski
+44 #171 :
Cox-Freeman
*44 6mm 3m
Joanne Gerrard m
+ *73
Bloomberg
FINANCIAL MARKETS w
Client Support
Use your front office experience in a front line role
This is an opportunity for young, professional people with experience gained in the
financial markets to develop their career in a world leading company.
Bloomberg is a rapidly growing supplier of sophisticated screen based news,
information and decision support services within the international financial markets.
Expansion of the business and internal promotion has created opportunities for
client support staff to join the Analytics Desk. You will provide support to customers
in the UK and Europe handling questions on the use of the Bloomberg to support
trading activity.
To be considered you must have an understanding of financial instruments such as
fixed income or equities. You should have 1-5 years experience probably gained in a
trading or support role in the front office- Applicants who have used the Bloomberg
mil be of particular interest, as will those with a second language.
High professional standards, a positive and enthusiastic approach and the ability
to work well under pressure are essential.
To apply contact The Freshman Consultancy during office hours on
-721 or send your CV by post or fox quoting reference FT/CS.
FRESH M A N
The Freshman Consultancy, Coppergate House, 16 Bnrae Street, London El 7NJ
; -721 Facsimile: -721
■ ( hi
Direct Profit Share +
UK Merchant Banking
City j
excellent salaries
Group
1
^ nj.-w4.-v>>
i
Team
UmMed opportunity /or on effective financial services team to contribute
to the development of this well-known and long-established group. The
bank has strengths in UK commercial and investment banking, domestic and
international investment management, private banking and specialist
advisory services with access to a very substantial balance sheet. Through
significant investment and imaginative strategies, the bank has successfully
developed mainstream and niche businesses realising synergies from
integrated marketing.
Applications are invited from the principals of successful teams who want to
make a unit move. Principals should have business plans which
demonstrate the profitable development of business into the medium term.
Substantial potential to contribute to business growth in a bank with a
record of accommodating and rewarding successful teams.
Leeds
London 493
Manchester 499
w •
Selector Euro pe
Spencer Stuart
PROJECT FINANCE
City based
Our c«ent is a leading and active Investor In major capital projects throughout the wild. Now. l ^ SOVWssas
project development it has identified a need for further expansion of Its highly focused Project Finance Teem.
The Role _ '• ■■
■ To take Ml responsJbffiy for all financing aspects
of projects from the earfiest stages through to
completion including the structuring of equity.
• To provide advice, and co-ordinate the
development and arrangement of limited
recourse and non-recourse debt faeffities for
the financing of major capital projects, normaky
in conjunction with an external advisor.
• Responsible for advising on the structuring
and cmp oi ala finance issues In respect of
overseas projects.
The Candidate
• An in depth appreciation of project risk and good
financial modelling akffis are essential.
Applicants should possess the capebflrty and ’
experience needed to successfully lead negattedibns
of debt facilities.
Candidates wfll have gained several years experie nc e
to Project Finance or Corporate Finance wtthtoa_
recognised financial Institution or Industrial sponsor. "■
Finally the successful candidate wifi be an energetic;
cretible individual who has the confidence to
meet the challenges of this demanding role. . .
Rewards
for a high level of deal exposure and
• A high profile role providing external and corporate
exposure and doss involvement at project level
If you feel you hove die ne ce ssar y skills and enthusiasm for this role and wish for further information
please contact to aimplae confidence Sean Carr or Richard Lyons.
: -623
Facsimile: -626
Astral House,
125-129 Middlesex Street
London El 7JF
Search & Selection limited
X ft. V*-**-*:-:
*%:. .:*v
Prudential Venture Managers is a leadir^^«».-}h The present
the UK Venture Capital Industry. Managing
funds, botfttesptive and external, the company capr
and invests larger transactions in its market]* cg®i^a variety «
partkujfiriy rt^igjment buyouts. t0 demonstr
V»& ! are njsgtf-feking to recruit a small number of * a t ^ e 5 r
j^sng profe^S^s, probably in their mid-twenties to * excellent an
~.?ea$y thirties, llfjijn the existing team. The successful * cornmerc ’al
'.-.candidates will expected to participate fully in all * 51,0,19 comi
• an underst;
aspec&$£»ftiie investment process.
The present team comes irojtkyJ&fjtt&ty. the
and consuFtaf^^fessions, and
•^it^ ^u 're' capital sector happy to
cprfitSfc^a variety of backgraur^j^b^^^idates will
need to demonstrate:
• a high degree of numeral## £*
• excellent analytical skills; '
• commercial flair; Pi
• strong communication sl^
• an understanding of art^ -commitment -to the
UK Equity Research
• -
ill indude:
ffying potential investee companies;
investment opportunities;
arid completing transactions.
venture capital process.
, 33 JrijpS Mews, London. IN 2NS.
1 ^ Fax: Q^-831 .
itfons. ^ ^ ***’ " Weafe an equal opg^ftiftity employee
M/ '%0? #
PRUDENTIAL j r
Venture Managers
Our client is a major US investment bouse with substantial assets managed worldwide and a growing business in London.
As a result of continuing growth, they are now looking to appoint a UK analyst to work within the pan-European equity
team.
Responsibilities of this position will include in-depth analysis of companies including medium /sm al le r capitalised stocks,
by evaluating shares, meeting company management and making recommendations to Fund Managers. Emphasis will be
placed on identifyin g g ro w t h co Tppanirsfhar will generate long t erm outpcrformance. Candidates will need to bold a degree
in a relevant subject and have at least 4 years experience of the UK market, preferably in an investment environment.
Communication skills and an ability to work in a team are essential.
A competitive' salary and benefits scheme is available.
For further Information, please call Martin Symon on 623
Jonathan Wren Financial Recruitment Consultants
No 1 New Street, London EC2M4TP 62 3 Facsimile 626 S2S9
CJA
RECRUITMENT CONSULTANTS GROUP
2 London Wall Buildings, London Wall, London EC2M 5PP
: -588 or -588
Fax No. -256
toteflectualty challenging opportunities at the leading edge of monar ch where your Input wfll have a direct Impact on fund perfor ma n ce .
ECONOMETRICIANS -
MODELLING MARKETS AND ECONOMIES
LONDON £60,000 - £90,000
FAST GROWING LONDON BUSINESS OF A PRESTIGIOUS WALL STREET INVESTMENT FIRM
We Invite appHcations from candidates In Bieir late 20afeariy 30s. who must have a poet graduate qualification and have had at least 4 years' experience
of applied econometric mcdelEng. probably gained within the financial sector, an economic research organisation or academic Institution- A sotaid grasp of
macroeconomics Is essentiaL As toe selected applicant you wB be part at a small team that is devetoptog econometric models for various markets and
economies. This research grot*}, which Includes academics, generate s tradtog ideas for prioritising markets. Essential qualities are ftaxMfty, to have a
rod-up sleeves attitude to work, to be wDfog to deal with a wide range of projects and above ail to be an effective team player. Initial salary negotiable
£60,0Q0-£90,0Q0. Ref: SE2S648SST
£35,000 - £55,000
This same cUart also seeks appBcations tram younger people who are amrtarty qualified with less experience. A background of econometric modstfing is
essential. Ref: JEVST
For both these vacancies some programming experience (tore*) is desirable, though not essentiaL
AppBcations, In strict confidence, quoting appropriate reference should be sent or faxad to the above address, wiB be forwarded tooureflent In
the first instance. If there are co mp a nies to whore you do not wish your application to be sent, these should be fisted in a covering tatter
addressed to the Security Manager, CJRA.
VACANCY NOTICE - Telecommunications Marketing Executive
Nassau, Bahamas
The Bahamas Telecommunications Corporation provides
telecommunication products and information services to customers
spread over a 100,000 square mOe archipelago. We serve over 270.000
permanent residents and help fuel an economy based mostly on
tourism and off-shore banking. Our telecommunications technology is
stare of the ail; 100% digital, with service access of 27,900 business and
52,500 residential customer lines.
The Corporation is seeking the services of a highly competent
Marketing Executive with a proven track record of gene ra ting positive
results through innovative marketing programs and initiatives.
This job is at executive management level with overall responsibility
for
i) The attire marketing process inclusive of market planning, service
development, product management, advertising and promotion.
ii) Recruiting, training and organising a dynamic and effective
marketing unit
The required qualification for this position is a Degree in Marketing or
Engineering, with a minimum of ten (10) years exemplary industry
peribnnanoe at senior management and executive levels.
This assignment is for a period of 2 - 3 years.
Please forward your resume, in confidence, to:
Bahamas mecomnnniiCBtiana C o rpo ra tion
Mr. Roscow A.L. Davies
Assistant General Manager
Homan Resources, Training Be Quality
P.O. Box N-
Nassau, Bahamas
Fax:(809)326-
We thank you for your interest.
Bahamas Telecommunications Corporation
Old Mutual Portfolio Managers la a rapidly growing asset
management company. It has a stable, committed team
of Investment professionals and has delivered superior
Investment performance for Ks clients over severe!
years.
UK/EUROPEAN EQUITIES
Our performance in Continental Europe places us among the
top few companies in industry performance tables over peri-
ods between 2 years and 10 years. This performance has
attracted substantial new money, including hedge portfolios.
We now wish to recruit an analyst and/dr portfolio manager
to assist In the management of these funds. The successful
candkiatefs) wfH be highly numerate and have at least 2
years experience of European or UK equity markets in an
analytical, fund management or broking rale.
This Is a challenging opportunity to join a highly successful
and stable team of investment professionals operating to a
culture which supports Individual achievement The remu-
neration package is unlikely to be an obstacle when we find
the right individual.
If this sounds like the opportunity you are looking (or then
please write, enclosing full curriculum vitae, to:
Tatel Shakarchf, European Portfolio Manager,
Old Mutual Portfolio Managers,
2 Bartley Way, Hook, Hampshire. RGZ7 9XA.
THE
BANKQF
NEW"
YORK
Trade Finance
Officer
OLD_
; MUTUAL
I ri vestment
Analyst
Personal investor located in Monte Carlo is looking lor a
fluently bilingual (english - french) Investment
analyst/adminislrator. The candidate must have a
minimum of 3 years experience in financial markets and
investments, a strong analytical background m various
classes of investments, and must be comfortable with
international counterparts.
Dunes of this position include the management of
international portfolios, financial research and analysis,
and decision-making regarding potential investments.
Applications and CVs are to be sent to:
Andre Marcus Office
33 Bd Frincesse Charlotte
Monte Carlo . Principality of Monaco
: 33- Fax: 33-92
The Bank of New York has an outstanding opportunity in its
London Office for a Trade Finance Officer. The selected
individual will be responsible for developing Asian trade fi-
nance business with European institutions across the continent.
Candidates must have a college degree, and at least eight years
of successful sales experience in a U.S. or Western European
bank. Product knowledge of letter of credit, bank-to-bank
reimbursements, collections, and funds transfer is required
along with a familiarity with Asian trade practices. Fluency in
French, Spanish and/or German is a plus.
We offer a competitive salary and benefits package. Please
send your resume to:
The Bank of New York - Personnel/LR-A
One Wall Street. 13th floor
New York. N.Y.
or
fax to LR-A (212) 635-.
EQUAL OPPORTUNITY EMPLOYER
INTERNATIONAL INVESTMENT
MARKETING MANAGER
c. £40,000 package + car London based
/*TMI fs the International arm or have Investment experience and be
the Clerical Medical Investment familiar with the relevant. rcjudatnrv
pwiwusgi
International Investment
Company is looking for:
highly stalled professional for
a position in the NY office.
Experience required hn
different kinds of investment
analysis, like: Currencies.
Stocks, Bonds, De riva tives,
end other financial
instruments in the OECO
and Emerging Countries. An
attractive salary and benefits
is available. To apply, please
write a detailed curriculum
vitae and indicating your
current remuneration
package to:
CARLOS SALEM
923 Fifth Ave. Apt. UA
New York. NY
US/Canadian Government
Bond Salesperson
The Investment Banking Division of a North American Bank
seeks a graduate level salesperson with a minimum of 5 years
recent experience selling US Treasuries and Canadian
Government Bonds to Institutional Accounts, one year of which
should have been hased in either the USA or Canada, licensed
in Financial Futures and acquaintance with regulatory
reqnirements would be advantageous. Fluency in German
essential. An established client base would be preferred. Salary
will be commensurate to experience.
Please reply to Box AS5S3, Financial Times.
One Southwark Bridge. London SEl 9BL
/*TMI is the International arm or
VJ the Clerical Medical Investment
Group, one or the UK's leading and
most innovative financial services
organisations. CMl's International funds
have produced consistently competitive
performance and are held In high
esteem In the market place. As a result
of significant success (Queen's Award
Tor Export Achievement . plus
three recent Mlcropa! performance
awards), wc now need to fill this
position with an experienced
professional, based ot our offices In
St James's Square.
"forking closely wtlli the Marketing
Director (Funds), you will assist In the
development and Implementation of
marketing strategy for our International
Investment funds. This will Involve
liaison with Fund Advisers worldwide,
evaluating and Interpreting own and
competitor performance and providing
relevant sales support material for the
International sales tram. Worldwide
travel may be required.
With at least five years' experience
In investment marketing, yon will
have Investment experience and be
familiar wlUi the relevant regulatory
requirements. You should also be
accustomed to handling media and
related PR work. First class
presentation skills are essential as Is
the ability to produce effective
communications with customers from a
diversity of cultures and backgrounds.
Creative, with strong Influencing skills,
you should have the stature aod
credibility to make a substantial
contribution to the work of a highly
professional team.
The excellent benefits package
Includes non-contributory pension,
private health Insurance and mortgage
subsidy together with plenty of potential
for forther career advancement wlUiin a
dynamic, fast expanding InicmaUoaa!
business.
Please write enclosing a full CV
explaining why you should be
considered, to Debbie F.ngland. Clerical
Medical International. 15 St James's
Square. London Stt'IV -IL0-
Closing dale for applications
13 June .
A MAJOR FORCE IN THE
INVESTMENT WORLD
appointments advertisinc
,TO ^ =0;:,0n evs ^ ^ ■
Joanne Gerrard on -44 873 Andrew Skarzynski on -44 017
pJNAN<2Afc TIMES FRIDAY JUNE 2
Business Analysts - London
The eyes and ears of a
growing business.
.-^Weare an ex pandin g, , professionally managed business Group with a global presence. Our operations are spread
;^°yerfifteen tionnfries including Japan, Hongkong, Singapore, Taiwan, Korea. UAE, Oman. UK. USA and India.
> Our jacfcrVities .cover a wide spectrum of core areas for the wholesale and retail distribdon of consumer durables,
•=_ electronic goods and the manufacture and distribution of liquor,' beer consumer products, tyre and industrial
. ^ . nibba prodwts and engineering-products and services. The Group has a turnover in excess of US$1 billion.
■to order to strengthen our Strategic Planning activities far our expansion and acquisition plans for Europe, USA
' arid'Far East, we require the following persons to be based in Dubai :
Job: Responsible for planning and raising of capital in
the international markets. Job includes liaising and
coordination for public floatations of our Group
Companies. '
Person: High calibre individuals likely to be aged
around 30, who win be self-starters having accounting/
banking background with excellent inter-personal skills
and considerable experience in dealing with
investment/mercham banks and international, financial
institutions. ! Specific exposure to public floatations,
private placements and other areas related to raising of
capital, would be essential.
Job: Responsible for the commercial analysis of
existing operations and participating in the execution
of future development strategies for all business
activities. Successful candidates would be required to
provide independent and objective advise and interact
with decision makers at all levels of business.
Person: Candidates around 30, with suitable
accounting/MBA qualifications and more importantly
able to demonstrate a strong and successful track
record of commercial and professional achievements.
Excellent inter-personal and presentation skills and a
high degree of self-motivation will be prerequisites.
Expatriate toms will, be offered including accommodation, medical insurance, transportation and home leave.
Interviews will be held in- London on 15th & 16th June . Please mail/fax your detailed resume in strict
confidence within 10 days to'
Vice President - Personnel & Administration,
Jumbo Electronics Company Limited
■ L- . .. Post Box No., Dubai, U.AJE. Fax No_- 971-1- .
ABN AMRO Bank
■ Relationship Manager ■
ABN AMRO Bank is a leading international bank with more than 1,900
offices in 63 countries.
We are seeking to recruit highly experienced relationship managers to join
bur Milan and Rome marketing teams.
Dealing with a wide variety of large corporate clients, you will need a
minimum of 5 years experience gained in the environment of a
sophisticated financial institution with exacting credit standards. A good
knowledge of corporate finance and treasury products are required
qualifications for these positions, along with effective marketing and
commumcatkm skills.
You are aged between 28 and 33, educated to university level, and bilingual
or native Italian speaker.
Written applications please, with details of current package to
. ' " - ABN. AMRO Bank N.V., Milan Brandi ’ v .
Atta- Human Resources DepC, Mrs. M. Ongering
•• ViaMengoni, 4
: ' . 20G1 MSbum, Italy
•: &X. +39 2 72JMHL7I0
LOCAL MARKET RISK MANAGERS
Major European Bank
I'nmklurt London New York Sydney Singapore Hong Kong
Gur client, a '“AA” rated European book with a sophisticated global derivatives capability,
is building up a global market risk group. Successful candidates will preferably have
advanced degrees in statistics, mathematics, physics, engineering or related subjects and
havemore than two years experience in actual risk management or structuring and pricing
longrdaled derivative products. The positions entail validation of pricing models for
derivatives, quantifying the risks of proprietary trading and the necessary hedges for both
proprietary trading and customer positions, reviewing monetary value at risk for any given
position and its most appropriate and efficient hedge vehicle. Stress testing and simulations
wfQ be carried oulfor significant market movements. Global market risk management will
be' run from die Head Office, although tire local positions will also report to the regional
bead of capilal markets. Salaries and bonuses are well above industry standards.
:. O’Connexx. Associates
Recruitment Specialists in Risk Management
■ Vicarage House, 58/60 Kensington Chord) Street, London W8 4DB .
•> Ttt 938 Fax 938
EXCHANGE TRADER
a leading South African based merchant bank which is listed,
on the Johannesburg Stock Exchange offers a range of core banking services inducting
ti anVh wjfnrnorate lending, treasury and property lending services.
of the expansion of- their Treasury function they are now seeking an
4) ^ A network of contacts on the supply side and demonstrable corporate and
JnstituJioijaJ cQirfacts ccn die Customer side.
^ ideal ^ndfafatewillbe a young dynamic and motivated individual and will have a
proven; track record in building a successful trading team in the South African currency
mai&ets.- V WAA
fatty are ^fefitgAcon^etitive market related package and the opportunity to help a
international orgmisationexpand.-
xeferonce CB07 to P O Box A, finandal Time^ One
ybn w&ch additional bnsiness reader^ in France- Oar link with the French business
gyp* y«y» a ranqrerecnritmMit advertising opportunity to capitalise qnihe FTs
B§Pf^»tiership icdto further wager the French business woridjsw information on rates and farther
: detaflspkase :
: flypluHite rmJnwitttt op +44 873 36M
Communications
AGENCY - DIBECTOI
With ngrtfiom etpehenro In
fanool Pit you «d be dm ef the .
in tf* business, frotatiy *tady J
i (Vector, you wfl metre hi£i *
levd corporate eouacftng jnd 9
ma nagem e nt. tou wB need a rfw |
this wrjr profitable ovsdoncy tb* *
youtaic nuutu a m their emttte I
bottom in*. *
5*rr£En2fcrx-Nq.
CITY/CORPORATE
European expansion
As part of one of the world’s largest corporations, GE Capital, with worldwide assets of $200 billion, has
interests in 24 efiflerem businesses aora the giobc, each of which is a key player in in niche markets.
We are committed to expanding in Europe and fisher Business Analysts are required to support an
egahfahiri wWMTguvwfll, Londnndwgd Team whirh reports dirtetiy to thr Director of Business DcvelqxncnL
What you’ll do
Your respoosibQiues will include:
• ^«iexoJik
Pj ONLINE hBpaTwwwjeM ji^ Pt kJ e ja nV
PARAMOUNT HOUSE. 104-108 OXFORD
STREET. LONDON WIN 9FA
PRINCIPAL INVESTMENT ASSOCIATE
c. £30,000 + bonus
Out dieal is a recognised leader is the leveraged principal investment
industry. The Group ins recently identified the need far an exceptional
young professional to join its team based in London.
As i member of the learn you wfll be involved in all stages of the
investment process indndmg identifying potential acquisition targets and
transaction opportunities, evaluating ihr strategic and commercial outlook
for potential targets, creating financial models to assess the value of
businesses, analysing capital structure alternatives, developing financing
proposals, as wdl as negotiating with vendors and providers of finance.
The candidate will be a graduate of an internationally recognised
university with fist dass honours (or equivalent) undergraduate degree in
business/ economics. The s»ycf*$fol candidMe will have training and/or
expe ri e n ce with a leading international investment hank and have over 2
yeas principal investment experience involving the sourcing, a s sessi ng
and transacting of large scale leveraged buyouts (£50 million +) with a
maj or jfljrppriflnil investment bank or principal investment firm.
Interested candidates sbouid send their C.V tor
Boor A, Financial limes,
One Sotnhwark Bridge, London SGI 9HL
The International Federation of Red Cross and
Red Cresceit Societies seelcs to fill the position of
HEAD, TREASURY
Wo^ponsnriUHes: This position reports to the Director erf Finance and
is responsible for the management of the Federation's cash and
investments, directly and through external investment managers.
(S)he will contribute to optimising the income generated by the
Federation's cash and investments within established policies and
guidelines, and minimising the adverse effects of currency
fluctuations. Other responsibilities indude supervision of the receipt
and disbursement of funds; management of the Federation's liquidity
Fond; maintenance of relations with die Federation's banks and of
banking arrangements; supervision of banking relations for field
delegations; supervision of external investment managers;
development and implementation of a sy s te m of cadi flow forecasting
and expos u re mana gement; provision of reports as required.
OnalifieaHopg University degree in business or finance or equivalent
training, supplemented by a minimum of 5 years experience, 3 of
which are in banking or. financial management as wdl as practical
experience in foreign exchange and securities trading and in
corresponding back-room oper ati ons. Familiar with Swiss banking
practices. Excellent knowledge of Engfish, good knowledge of French,
knowledge of other languages are an advantage.
The position is based in Geneva. The Federation is an equal
o ppor t un ity employee Ap p li cat i o ns to be sent by 31st of May to
The IntexnatioiBl Federation of Red Cross and Red Crescent Societies
Human Reso ur ces De partm ent
FD. Box 372
Geneva 19, Switzerland.
Euc (022)733 03 95
DERIVATIVE PRODUCTS
Graduate with a good Economics, Engineering,
Mathematics or Accountancy Degree
Sumitomo Bank Capital Markets requires recent graduate to join
an existing derivative products group, initially as a trainee.
Future pros p ect s are excellent for the successful applicant.
Applicants sbouid reply to:
Miss Ansa Hasddei, SBCM Limited,
4th Hoot; Temple Court, 11 Queen Victoria Street,
LONDON EC4N4XA
enclosing a detailed CV.
A small London based investment management firm,
with seven professionals . specialising in global fixed
income, currency and equity markets is looking for a
professional asset manager to join its highly
successful fixed income team.
The ideal candidate will have a varied educational
background with relevant professional experience, not
necessarily limited to asset management but could
be from an economics team, a currency group or
fixed income and derivatives background. An ability
to conceptualise and implement investment strategy
is essential as are the verbal and written skills to
articulate it. We envisage the age range for this
position to be mid thirties. The individual will be self
motivated and comfortable working in the
environment of a small collegial group.
The investment style of this firm is fundamentally
orientated and research intensive which will
necessitate foreign travel.
The position is a senior one reporting directly to the
Executive Director responsible for global fixed income
and currency management, and will involve the
supervision of a trading desk with responsibility for the
development of the junior members of the team.
Salary will be commensurate with a position of this
level and will also carry a competitive benefits
package including bonus.
Interested applicants should appiy in strictest
confidence, enclosing a current curriculum vitae, to:
P.O. Box A, Financial Times,
One Southwark Bridge, London, SE1 9HL,
SALES PRODUITS DERIVES ACTIONS
CLIENTELE INTERNATIONALE.
I f klous sommes une tres importante insliiution bancarre et financi&re et noire
j| IN professionnalisroe dans le domaine des adivitfe de marches est largement reconnu.
* Dans le cadre du developpement rapide de nos activiltis, nous souhaitons renforcer i"
jjjj Paris notre 6quipe de venie en integrant un sales qui inlerviendra sur
H toule la palette de produte derives actions (convertibles, structures... I pour le compte
I* d'une clientele d’investisseurs institutionnels sur une zone gSographique dffinie
1| (Grande-Bretagne. Suisse, Moyen-Orienl — ).
r Vous avez 30 ans environ, vous etes diplonte de I'enseignement supfrieur et vuus etes
If lolalement bilingue fran&is/anglais. Votre experience de I’ordie de 5 annees vous a
H perm is de fid£iiser une clientele d' institutionnds europeens ou moyen-orientaux el de
1 dSvelopper en toute autonomie une relation de con fiance avec vos interiocuteurs.
j| Obligator remem specialists des produits actions, vous etes ictealemenl famil iarise avec
» leurs derives. Merci rfadresser votre candidature k notre conseil Marc de SOUZA,
j* dtipartement banque/flnance, Srnca, 20 avenue de ('Opera, Paris (France), sous fa
1 tefeence 800.684 FT.
S I R C A
AnTICIPER LA 1EUSSITE
HSIMfC
Investment Analyst
Telecoms
£NEG
CITY
Major international securities house with a highly regarded research department is
looking to recruit an additional Analyst to work as part of its Telecoms team.
Responsibilities will include detailed company analysis, marketing of the research
product to an international client base and support of Corporate Finance/Mergers and
Acquisitions activities.
You are likely to be a well qualified graduate, possibly an ACA or an MBA, with City
experience and/or industry knowledge. This could have been gained within the industry,
for example through strategic planning or business development, as an Analyst as an
industry consultant, or through corporate advisory work. Strong analytical, written and
communication skfll^are essential. You should also be extremely computer literate.
An excellent remuneration package, including full banking benefits will be available for
the successful individual.
Interested applicants should forward their Curriculum Vitae to P.O. Box No A,
Financial Times, One Southwark Bridge, London SE1 9HL.
SENIOR EXECUTIVE -
MARKETING AND
MANAGEMENT
CENTRAL ASIA
iBienatiaoal container trading
company require l senior wim i ti vc for
Central Asia with 3-10 yens’ mufariag
yffl wMgM nwri flpQ jwfl.
Knowledge of Central Asia and iU
language * {Ssiaa advanage.
Attractive salary and benefits package.
Plane tend CV to Barbara Nadia,
Box A555S.Fintneial Times, One
Soadwark Bridge, London SEi 9BL
Are you about to
graduate?
A large leading firm of U.S. stockbrokers seeks
several hungry high-quality trainees. Exciting career
prospects in U.S. equity sales with dynamic and
successful organisation.
Please write, enclosing full resume, to: Alan Young,
Barkers Human Resources, 30 Faningdon Street,
London EC4A 4EA.
^ wnnacovi &■ '$£/*> 3f '*> .
II 1 I I Bj I »
v>i-i'l-iiuT!5^55CSE!iE
Our goal Is to
become the best
f inancia l services
International
Treasury Consultant
ASSISTANT TREASURER
London e£38,000 + benefits
company In the
world. We bed eve
A KEY ROLE IN EXTENDING CHASE’S MARKETING EDGE
Global Payment & Treasury Services • Europe • Middle East • Africa
This major blue chip retail group
with an international presence has
an opportunity for a highly motivated ■
finance professional looking to develop
a career in Corporate Treasury.
Main Board on ail aspects of treasury
management and providing support
to other areas of the business.*'.
five corporate
Substantial package
City base
values -customer
focus, respect for
:• -t;
f” work, qualttyand
Q wr Manhattan Bonk a a global leader in die provision of
transaction and nifimuarion services to multi-oaricmal
corporations. Oar product and services capability extendh far beyond
payments and coUecdoos to die delivery of comprehensive solutions
covering areas such as exposure, liquidity and Investment
management. We are successful through a consultative approach bo
marketing which demonstrates tangible benefits co dimes.
blue chip multi-national or consultancy will have equipped the right
candidate with diverse exposure to international treasury
management, taxation, accountancy IT and systems. Ou tstandin g
interpersonal, pres e ntation and delivery skills arc cor requirements.
In shocc, you will now be prepared far a visible consultancy role
which will hdp shape the way we approach treasury services and
establish you as an acknowledged authority.
The Role
This new appointment offers a wide
range of involvement, with the
following key responsibilities.
■ Financial control responsibility for .
treasury operations and the analysis
of the underlying financial risks
inherent in the Group's financial
assets, liabilities and flows;
The Person
■ A qualified accountant arid
qualified ACT (or commitment to
studying for the ACT qualification),
preferably with two years treasury
experience.
■ Outstanding analytical ska Is; .
■ A team player,
■ Strong inter-personal skills. being
a self-starter with a flexible approach.
•ViV-v. .’•.v.'s/*-" ", «■
Lt v. . . » -i. - • .• ^
■fiXL:.* . -kxs.-..
. A nucleus of treasury experts works in parallel with our regional sales
■and relationship n m nagw*. providing technical advice and guidance,
-a» well as practical — throughout the sales cycle.
In mMiriri to the negotiable salary, an attractive benefits package
ind udes car allowance, wibnidiied mortgage, non 'Contributory
pension, privat e health insurance and pezfotmance related bonus.
■ Evaluation of new financial products
and modelling of complex funding and
risk management structures;
■ Development of management
information systems;
■ A key member of a small
professional team reporting to the
Salary will not be a limiting factor
for the right candidate. Excellent
career prospects are available within
the Group.
I : a » ;•***.
•.V.w'iV.-.v ",
Chase Hie provider
Chased consultancy team’s strength lie# in to ‘bands an’ senior level
treasury operations in industry and commerce,
reinforcing qu ability to link cash to international treasury
appagacdenusAa a result of continuing expansion, we are seeking an
ftMirirtaifl treasury consultant to join this influential team of experts.
you CV in the HR Bgaouxring Manager, Chase Manhattan
Bank N A, Woolgate House, Coleman Street, London ECZP ZHD.
Please quote reh DL/15/FT cm both your application and enwdope-
Oosing ifatg 30 June .
NIGEL HOPKINS
a ASSOC 1ATES
-FINANCIAL & TREASURY SELEC
Please write enclosing full
curriculum vitae quoting ref; 165 to:
Nigel Hopkins FCA, London House,
53-54 Haymarket, London SW1.Y 4RP
: 839
Fax; 925
--73
c- ■ :.-cr=Ai - -ftf
of choice, the
drills and an international perspective are
, Around ten years’ experience with a major
CHASE MANHATTAN .
PROFIT FROM THE EXPERIENCE?
investment of
choice and the
a . i.
o
w'JcT'. ■ j
financial Anas
CHASE
International Major Blue Chip Pic
Treasury Management
cU^e The National Autistic Society
NW London
£35-£40,000 + benefits
c. £50,000 + Car + Profit Share
London Based
& a v 7 v*^ k t dfi'yj
. r»lL r,x~ " *'Tj» v ■ _•
Continuing growth and expansion of our Client, a major
household name UK Pic wilh worldwide operations and a market
leader in its sector, has created the need for a pro-active international
finance professional or treasury specialist to join its central Group
Treasury team.
As Treasury Manager, your primary responsibility will be the
provision of Treasury services to the Group's international operating
regions, including negotiating the full range of overseas banking
services. Your aim will be to optimise group cash resources and
minimise the financial risk of unprotected exposure to operating units
and the Group; as well as adding value to business operations by
providing more general treasury consulting and advisory support as
part of the Group's central Finance team.
Additionally, as a key member of multidisciplinary project teams,
you will be involved in the evaluation and execution ol major
investment, disposal and refinancing proposals. With the credibility
and cultural sensitivity to operate effectively in a truly international
environment, you will interact at a very senior level, both within and
externally to the organisation, and will be required to undertake a
certain amount of overseas travel.
You are < Reefy to be a graduate, qualified accountant or MBA. and
quite likely to be an ACT/MCT (or, have an interest in becoming a
member). You will also possess strong communication and influencing
skills, and have exposure to international financing and financial
management in a multi-currency environment This could have been
gained via dedicated treasury experience within a corporate. mstituttan or
via treasury consulting or, possibly, through a broader regional financial
maiagement position. Some linguistic ability, especially in Spanish, or
a willingness to learn would be an added bonus.
Yon should write In confidence, enclosing a resume
together with current remuneration details and
daytime/evening contact numbers, quoting
reference 506/A on both envelope and letter, to the
address below:
The National Autistic Society owns and manages six schools and six adult centres in
the UK. In addition to promoting professional and public awareness of the needs of
those who live and work with autism, the Society provides training, advisory and
information services and maintains and encourages research. The Society has an income
of £14m and employs 550 staff.
As a result of the Society's rapid and continuing growth, and in order to allow
increased efficiency, there has been a restructuring at die head office. This has led to the
opportunity for an experienced and creative finance professional to join the Senior
Management Team. Assisted by five staff, you will be re s pon si ble for managing all the
Society's financial affairs, including those relating to project development, and playing a
key role In the Society's strategic development
This challenging and rewarding role requires a committed, dynamic and energetic
team player. You must be a qualified accountant with at least ten years' broad experience
gained at management level within a progressive, service led organisation. Although
experience in the voluntary sector is not essential, you must have, or rapidly acquire, a
dear understanding of the issues currently affecting charities. A strategic thinker, with a
practical, commercial approach, you will have excellent interpersonal skills and the
ability to buBd effective working relationships with a wide range of people.
Closing date for applications -8 June .
To apply please send a CV with salary details quoting ref to Richard Holland
( 489 ). Binder Hamlyn Fry, 20 Old Bailey, London EC4M 7BH.
Chryssaphes Hammlger Associates. Bechtel House, 245 Hammersmith Road, London W6 8DP.
Binder Hamlyn Fry
Arthur Andersen worldwide organisation
TIME WARNER
CHALLENGING OPPORTUNITIES IN TAXATION
GROUP FD... COM f'i
Time Warner Inc. is the world's largest media/ entertainment group. With annual revenues in the region Sid bn it has experienced impressive growth in the s. its operations in Europe have revenues in excess of S2.0 bn and continue to expand both organically and by acquisition.
The company now has activities in most European countries and is developing a strong presence in Eastern Europe. The European Tax Department currently has four professionals based in Central London and one In Hamburg. Us function is to advise local and U.S. management on
the cut implications of all business tra n sacti o ns in the region. The Tax Department has now created two additional positions In order to continue to serve the ever - increasing needs of the businesses.
EUROPEAN TAX MANAGER ^EXCELLENT TAX INFORMATION ANALYST ^EXCELLENT
Reporting to the Director of Taxes this position will Involve a blend of both tax planning and tax reporting The geographical remir will Reporting to the European Tax Manager this position will involve extensive liaison with the Tax Information Systems Department in the U.S-
cti cum pass the entire region excluding the U.K. and Germany. The role will Involve advising on business acquisitions and disposals, group The role is essentially project based and will involve implementing a system such that information can be extracted from subsidiary company'
reorganisations and restructurings as well as working closely with the U.S. Tax Department on reporting issues. The successful individual will accounts and placed into a format which corresponds with the U.S. tax reporting schedules. As well as giving advice and «ci«w n .- r do the tax
also play a major pan in reviewing the group wide tax repotting procedures.
The ideal ca n didate will be a graduate ACA who will have progressed through a Big Six tax department to a managerial capacity. He she will compliance.
department on computer related issues it is hoped the individual will be able to assist the UJC. tax team with comp utati ons and corporation tax
have already had exposure to European tax issues and Ideally be currently working within a commercial environment- As well as possessing
excellent communication skills, the successful candidate must also be prepared to travel to overseas locations on an ad hoc basis.
The ideal candidate will be a graduate accountant who will have gained extensive accounting and taxation computer systems experience.
He/she will have a broad knowledge of accounting software as well as possessing excellent interpersonal dcilk
To discover more regarding these two exceptional opportunities contact David Burton at Robert Walters Associates on 379 or send a current CV to him at 25 Bedford Sneer, London WCZE 9HP. (fax 915 (Time Warner is an equal opportunities employer).
SaKfeixL.
^’■Oiflana
fteisiyc-.
5cn nectivit
with re
executive s
0l*2nturr. o
^ire s 5 "
VQu v*ilhe
^en.rp
ROBERT WALTERS ASSOCIATES
music
entertainment!
GROUP ACCOUNTANT
Attractive Salary
Geneva
london wl
Two opportunities within a dynamic International musk company comm i tted to significant growth in ail markets. B is axpamflng Its existing operations from 16
to 27 countries, with new record companies opening up across Europe, Latm America and Asia Pacific.
High profile role and an outstanding opportunity for a high
calibre, ambitious qualified accountant
inancial Analyst
Hyperion Accountant
2 young ACAs
empathy with
the product
A more dynamic and fluid role than that of a traditional planner, which has
been created to provide management with a non regionahsed overview of the
global music operations. You wffl need to gain a sound business understanding
of ait markets, taking primary responsibility for forecasting end planning. Key
responsibilities wiU Include:
An information gathering and presentation role pulling results in from the
territories and producing consolidated month end reports. Hyperion’s powerful
global consofidation system minimises the routine elements, freeing up time to
help develop management reporting, including sales analysis by label and
artist release profitability. Key responsibilities Include;
excellent
variance analysis and forecasting of worldwide results
label and artist profitability analysis
competitor and marketshareaiafysis
new market entry planning
financial consolidations and management reporting
validation of worldwide financial data
supporting fmandal analysis & control
systems development & maintenance
The Company
• an International Trading Group.
• highly successful and h^hly competitive.
• undergoing a major systems review and evolution of its
business systems.
.€ r;
The Role
• Reporting to the General Manager responsible for the
accounting function of a major division with seven
operating entities. . .
■ Liaise with operational management and furnish them with
quality, timely and reliable management information.
Key member of the strategic management group providing
input to both the planning and development process.
We are looking for people who set and meet high standards, have a good attitude and sr^oy teamwork. The ffexfiflIHy to share the workload, help with
ad hoc prajects and ad^rt to rapid change is crucial. The environment a very professional, hardworking hut relaxed and Informal. Both rotes offer
eariy responsfbifity and the opportunity to team and progress within a challenging peer group environmen t
The Person
• Graduate, qualified Accountant
First Class technical skills with a hands-on approach
• Fluency in both French and English. Italian would «kn be
very useful.
■
‘ W|
r 'r&--*iws £*■-
farn williams
Please send CV, reh /6 to recruitment specialists Farn Williams, 1 Benjamin Street, London EC1M 5QL. : + 44 (0) 171 608 Fax.+ 44 (Oj 171 603
Please send full CV, stating present salary to Galaxy
Management SA. 27, route de Prt-Bobc, 7*0. Box 347,
Geneva 15,
Attn. Mr. Bony RothweU
- , ■««.
V 1; • .
■ - 'Wed jtr^rjr
: ^ Tr '
'*'**■ Ren:
-***■«. F*
Finance Director
Guildidxd, Surrey
Doimia Specialist Vehicles has a world-wide
iepjitatibii as a leadmgtms and coach chassis
and ftre engine manufacturer. Turnover and
prcffitehave rnore than doubted in 1h© last 2 years
and h continues, thrcrngh liightraild quality and
product innovation, to work at 120% capacity.
Afford of output is exported, mainly to the Far
East^ndiexe the company has recently set up
file first of a planned secies of joint ventures,
ft is the largest company within the Trinity
Holdings Group, which was floated in
@ J20p(corrent price c350p). ;
Hi® next finance Director will be Rtf
znid/lkte 30 f s, a graduate; • •
c£55,000 + car, bonus, options, etc
Id-wide qualified accountant, with senior financial and
h chassis coiraaerdal management experience in a light
rex and engineering context with a broad supplier base,
a last 2 years and familiar with exports, trade financing, and
juahty and international negotiating.
capacity. Clearly, this is an exceptional situation requiring
to the Far a candidate rtf nuts tanrirug aVrility anri pote nti al
y setup Only those who can folly meet the very
sutures. demanding criteria should apply to
cu> **y Management Appointments Limited, Finland
House; 56 Hayraarket, London SW1Y 4RN.
_ « _ : 930 .
n|| Hi Facsimile: 930 .
Management Jb Appotufments Quoting xaferenoa .
limited
AMSTERDAM ■ BAUUCCfiE • lUtUS ■ rSAMBURT • LCMDOM • LOS ANCFLE 5 ■ MOTTOS - PARIS
GROUP
PROJECT
ACCOUNTANT
London
to £45,000 + car
Pearson pic is an international media group with
extensive interests in book and newspaper
publishing, television, consumer software and theme
parks. Based in London, it has a portfolio of market-
leading businesses built around famous names such
as the Financial Times, Penguin, Madame Tussauds
and Thames Television. It had sales of £1 .55bn in
and employs around 17,000 worldwide.
Following the promotion of the current incumbent a
young accountant is sought to work on a range of
strategic projects. The projects will include business
and acquisition evaluations as well as investigation of
more general corporate finance matters relevant to
Pearson. Reporting to the Group Financial
Controller, the position provides an ideal
introduction to this rapidly developing and highly
regarded organisation.
Applicants, ideally aged around 30, should be
graduate accountants with corporate finance
experience gained in either the profession or
commerce. Good analytical, technical and
presentational skills are necessary and an MBA
qualification is highly desirable.
Please write, enclosing a career/salary history
and daytime number, to David Hogg FCA
quoting reference H/ 140/FT.
» -order ta 2
vSftsJfas hd tr ;he
(ttLtin k*n the Serrjjr
3 i Ole
and pbvL-rs ’
,«nd sr-er^hc
broad eaperw.,'
Richard H
wJ b* a
manijfKr
inform
iff.**
Financial Analyst - Dubai
_ " high-calibre young accountant
£28-3 4K ( D E PEN Dkl N G ON EXPERIENCE) + BENEFITS
• Effemcx is an international marketing and
distribution company within Mars, Incorporated,
with a continuing mission to develop major new
The role offers extensive scope to contribute
to the ongoing success of a dynamic. leading
Middle Eastern business, together with excellent
market?! around the world for Mats’ outstanding . . opportunities to progress your career.
portfolio offnands - which include Mars. ■
- Galaxy; Snickers, Pedigree, Whiskas, Dohnio
and Unde Ben’s. ’ .
iWebavtibeen operating from our purpose-
built office in Dubai for eighteen months, strengtb-
enmgpur lmfawith oar trading partners in the
Middle East Wehow have ah opportunity for a
young, comroeitfflllyfocuae^accoantani to join us.
You wiUpby'a mqpr part in developing the
finance function to meet the future needs of our
expanding operation. Your challenge wiH be to
xxahbmeactive-uiVDtvemenl in fiziiiha'id
pjanningand business reviews with direct ■
respqpabflity for many are^s of finnnciaJ
acc ounti ng and control. You must be willing to ■
travel throughout the Middle.Ea5t, and able- to .
; -speak, andwnte in both Englk h^t Arabic. ■/
Our ideal candidate will have a good degree
(preferably UK or USAj plus a professional
accounting qualification (ACA/C1MA/ACCA)
and around 1-3 years' post-qualification
. experience with a blue-chip multinational or top
accounting firm. In addition, you win back
strong commercial awareness with weO-developed
analytical and communication skills.
Your package will indude salary (tax-free),
accommodation allowance, medical cover etc. To
apply, please write - enclosing your cv and outlining
your suitability for this role - to pur advising
consultant, John Steeds, at An^o- Arabian
Services Ltd, London House. 53/54 Haymaikeu
London SW1Y 4RP. 925 .
. Fax: 930-C6I. Please quote ret EFA/FT.
Closing date: 19th June.
Telecommunications
Surrey
Hi ghly regarded international rpW nmmiiniVarimK group. Major player in providing leading edge systems and services to top
fixed and mobile network operators. Exponential growth has led to creation of two key financial positions. Opportunity to join
d ynamic strategic division and promote financial excellence. Secure, fast paced, open culture with excellent career prospects.
Finance Manager Sector Controller
c.£40,000 + Benefits Reft SP2I30 c.£3 3,000 + Benefits Reft SP2 131
THE POSITION THE POSITION
4^ Provide Gist rla« financial information and consolidated reporting of £300ra ♦ Provide full range of financial support to £50m turnover cellular
turnover strategic business imn* Report to Divisional Finance Director. communications business unit. Report 10 Divisional F inan c e Director.
♦ Ensure excellent monitoring and budgetary controls. Improve forecasting ♦ Influence management on business development. Analyse performance. Build
processes and systems. relationships throughout the business.
♦ Enhance ream’s skills. Work dosdy with commercial sectors 10 achieve business ♦ Ensure accurate and timely reporting. Develop systems and procedures,
objectives. Contribute substantially m development of department and division. Contribute to financial control arid strategy of divison.
QUALIFICATIONS QUALIFICATIONS
♦ Graduate qualified accountant. Probably early to mid 30s. Experience of ♦ Technically strong accountant. Probably early 30s. Excellent financial
frnnnrwi .nu r m i imH n^mr ring in huge, dynamic, commercial business. management and analytical stalls.
♦ Sound knowledge of systems. Proven staff management skills. Able 10 ♦ Robust yet diplomatic. IT literate. First class communication and presentation
enhance business performance. skills-
♦ Structured yet flevih]^ in approach. Excellent presentation skills. Credible at ♦ Highly motivated and ambitious. Commercially minded,
all levels. Ambition to progress.
Please send full cv, s t ating salary, quoting relevant reference, to NBS, 7 Shaftesbury Court, Chalvey Park, Slough SLI 2ER
_ Sbugh -London 4U&392
Aberdeen* Birmingham • Bristol • City
Edinburgh • Glasgow • Leeds ■ London
Manchester - Slough ■ Madrid ■ Paris
^ N B SELECTION LTD
a BNB Resources pJc company
To advertise in this section.
<1
imwm
1
please call
Andrew Skarzynski on
r.
£
<-
+44 873
GROUP FD... COMPUTER PERIPHERALS MBO!
Finance Director
South East
c £55,000 + Car + Bonus + Options
Our client is a highly profitable, rapidly expanding,
£60 million rum over, UK pic which has
international operations in die design, manufacture
and marketing of leading edge electronics for
worldwide blue-chip customers.
The Finance Director will be responsible for
financial management, systems development,
corporate finance, international tax and treasury,
ensuring that comprehensive control and reporting
procedures exist and continue to evolve in a 11 areas
of the business.
Additional requirements will be to maintain a strong
interface with City analysts, institutional
investors and external advisers and to
contribute to die company's overall
commercial strategy, maximising die potential for
future global expansion.
Candidates, aged 32 to 40, will be graduate qualified
accountants who can demonstrate proven senior
financial management experience preferably gained
in a fast moving, international pic environment.
Excellent technical and commercial ability
combined with outstanding communication skills,
strong personal presence, enthusiasm, drive and a
hands-on management scyle are prerequisites.
Applicants should forward a comprehensive
curriculum vitae, quoting ref , to
Marie Hurley FCMA, Executive Division,
Michael Page Finance, Page House,
39-41 Parker Street, London WC2B 5LH.
Michael Page Finance
Specialists in Financial Recruitment
London Bristol Windsor St Albans L eatberfaead Birmingham
Nottingham Manchester Leeds Glasgow Edinburgh & Worldwide
’V HE ALE • THOMAS • HODGINS ■ PEG
COMMERCE financial director
.!Wo^Leade^3hinB ^minnianlatibri •’ ‘Qp* MWW0
jsjgftjba jjjoce traffic congestion. New construction is an unacceptable solution. But real-time traffic information and
‘ can
dfthafrft nf tnffic stnyemancc-^nqnnep^ we seek to recruit a high-calibre commerml/finandal director to
$ ia preparation-forage^
'■jjaeVCMi.iwHUXImirM open&ns. In aWidon. he or she win be a toy ante of the
Will ps afn yhiy k*ve had experience in a high technology nra iur far fii ring company in a tnm-around situation,
should be- aide to demonstwttlleaderthq) through a period of change- Yw wffl be a oonmriReed team-player with the ability to
a Twb-ae*hteatmiaachto^II«Dects of VOnrwoikwiB be icmrired and whfla not esscsniaLpubHc listing experience
one tour fiom the ootskiris of London, a few mhniies from Oxford and dose to the Cotswolds. Please send yoor
CVwtfi^a ha«d-Wiitfen leticrSttttag bow y our ea^erieuce matches our requirements, to;
--■hfcM, RniHngheny jPewnaiaJ Managec. Golden Breglkafik LUL, Bicnster 0X6 7XT.
Financial
Controller
International Operations
M4/M40 Corridor
£40-45,000 p.a. Plus Car
and Benefits
Hils is an exceptional opportunity for a Chartered Accountant to develop
international experience (Europe and US) within a well-known organisation
during a period of considerable change and development.
Specifically you will:
• Manag e the development of common financial contr ol policies, procedures and
reporting across Europe and the US to accommodate Group and UK statutory,
as well as local legislative, requirements.
• Lead, motivate and develop a large team.
• Challenge existing processes, and seek positive developments sod
sfanpllfiations thereby improving both effldenhy quality,
9 Various ad hoc development projects associated with supporting the
mrnmPTTial fiMM t service.
To deal with the wide variety of responsibilities, the geographic spread of your
direct reports and the ongoing demand for continuous development and
Improvement within the Grraip you must dearly tkmonstrate:-
• A s trong technical and disciplined approach with foe highest level of Integrity.
• Up-to-date knowledge erf* and Interest far UK legislation (and possibly, although
ant esse n tial ly , US andlor European g u i d elines).
• A high level of personal maturity and cradlbfflry, able to build rel a ti onsh i p s at
nil teupk, within all fimrtinr »« and »fm« int ernatio nal boundaries.
• A dynamic approach to motivating and developing staff
Additionally you must be prepared to travel with a second European language
befog highly deniable.
To explore dlls opportunity further write to Karen WQson at I dfeShrr'tfj
Hoggett Bowen, 7-9 Bream's Buildings, Chancery Lane, IffiFrajW ▼ |
London. EC4A iDY enclosing a recent CV and a note of — H
current salary quoting XefiWKW/iooyj/FT. 1
Hoggett Bowers
EXECUTIVE SEARCH AND SELECTION
26
FINANCIAL TIMES FRIDAY JUNES I995
E30-35K package
MIC
Tanzania
★ * *
Financial Controller
Outstanding opportunity for ambitious professional
offering excellent career prospects In a worldwide group.
The Company
MilDcom International Cellular S A. (MIC) is a leading operator of cellular services vroridwida Through joint
ventures MIC currently holds 25 licenses to operate cellular networks in 19 countries with a combined population of
390 million people. The majority of MIC*s operations are In emerging markets. MIC Tanzania has been operational
since September and is expected to sustain its rapid development
London
The Posttion
• Hands-on management of all day-to-day accounting and financial control, as well as of financial reporting to
headquarters.
• Assist tiie General Manager in the administration and management of the company.
• Responsible for billing and collecting.
• Manage both long and short term treasury activities.
• Liaise with external professional services and governmental entities.
c£35,000
+ discretionary
bonus + car
The British arm of a major international waste
management group, our client has grown very
rapidly since it was set up in this country some five
years ago. It currently has a turnover around £60m
and it is successfully running long-term municipal
contracts throughout the UK. Continuing business
expansion in other aspects of waste management
and the imminent prospect of several new contracts
have led to an operational role for the present
Financial Controller and the need to appoint a high-
cafibre, commercially astute accountant to succeed
him.
OUAUHCATIONS
• Experience in a similar role in a developing country is essential. -
• Age 28-40. ProtessionaUy qualified accountant
• Good leadership and communications skills. Dynamic and hands-on personality.
An important member of a small head office team,
the successful candidate will work closely with the
Finance Director, supporting him on business
initiatives and providing the Board with meaningful
management information. The brief will also entail
close liaison with the Contract Managers, helping to
prepare bids and analyse potential contracts,
maintaining tight cost controls, develcprng tudgets
and reporting on performance. .. • *
Candidates, probably aged 28-35,. should; be
qualified accountants or financial MBAs, with at
least- three years' PQE, preferably gained in' aK -
indust rial/commercial environment. We are looking .
for someone who combines well-developed'.,
management accounting and financial mode King '•
skills, with strong commercial awareness and the J
ability to relate well to operational managers. For. an
ambitious individual with initiative and drivejhis is a
challenging and varied role which offers real career
development opportunities.
Please write, in confidence, with foil career and '
salary details, to Paul Carvosso, MSL International '
Limited, 32 Aybrook Street, London W1M 3JL
Please quote reference .
If you wish to apply for this position, please send your CV in strict confidence to:
Mrs. Viveca Van Blade! - NWcom International Cefciar &A.
75, Route de Longwy - L- Bertrange, LUXEMBOURG
Fax: (352) 45 73 52
. INTERNATIONAL ' ' ■ " . EXECUTIVE RECRUITMENT CONSULTANTS
, LONDON BIRMINGHAM GLASGOW LEEDS MANCHESTER
487 0I2I4S4S864 245 S35 .
—
High Profile Commercial Input
FINANCIAL ACCOUNTANT
St Albans £Competitire + Package
Thames Valley £28 - 34,000 p.a. Plus Car etc
Genuine day-to-day Involvement in a fast moving commercial environment and real business decision making is rare. Both these roles offer just such opportunities.
Commercial Manager
This role will provide commercial support to the Buying and Merchandising Functions and
will evaluate the finan cial performance of key products.
Specific responsibilities Include:
• Analysis of all sales and purchases with evaluation of margin opportunities and
management of discounting activity.
• Full financial appraisal of product performance.
• Ad hoc projects associated with the development of the business.
You will be a qualified Accountant with 2-4 years post qualification experience plus a
background In ffnanriai pl anning and analysis.
Additionally you will:
• Be highly commercial and analytical
• Have excellent communication, interpersonal and presentation skills.
• Be able to take the initiative and investigate areas of opportunity and concern.
Re£ WKW//FT
Operations Accountant (UK/Europe)
This position will provide Operations M anag ement with actual results on sales and costs, as
well as generate forecasts ana overall commercial finance support
Specific responsibilities include:
• Periodic reporting including variance analysis, forecasting; and budgeting;
• Financial review of performance and setting of financial targets.
• Assistance in cost Initiatives and ad hoc financial analysis
John Sisk & Son Ltd is a privately owned expanding national
building co n tractor, whose multi- milli on pound work portfolio
ranges from new build and refurbishment projects for clients in
the Retail, Leisure, Health, Hotel & Manufacturing sectors. Our
quality reputation and strength is founded on a traditional work
ethic, combined with advanced management techniques, which
has placed us at the forefront of our industry.
You will be a qualified Accountant with 1-3 years post qualification experience plus a strong
management accounting and financial analysis background.
Additionally you will:
• Demonstrate the commercial and personal maturity to work effectively with, and as
necessary influence, senior non-finandal management. '
• Have good analytical, communication and presentation skills
• Be able to work under pressure to strict deadlines. ^
Due to the successful growth, and future expansion plans for the
company, we are now seeking to recruit a Financial Accountant
who can bring stricter controls to the accounting & management
functions. The position calls for a pragmatic and tough minded
qualified chartered accountant, a self-starter probably aged 26-
35. Ideally with a Practice & Construction industry background,
the successful candidate will certainly have experience in a
senior financial management position, in a medium/large sized
company. As part of the senior management team, you will be
commercially minded, and will be responsible for all financial
reporting. You will possess good communication skills, and
enjoy the challenges of working within a dynamic environment
where real career opportunities exist for the successful candidate.
..... , ... . Re£ WKW/ 1 /FT y
Both roles would benefit from a background in branded goods, preferably retail or FMCG, with a second European | vaay CS
languag e being advantageous and good PC skills essential.
To explore these opportunities further write to Karen Wilson at Hoggett Bowers, 7-9 Bream’s Buildings, Chancery Lane, / C/’ kf / ■ U/\ T T! >y \
London, EC4A iDY enclosing a recent CV and a note of your current salary quoting the relevant reference number. M M9. f XJLJlrlr Cf A
Please write with a full CV, including current salary details
to:
-9 Bream’s Buildings, Chancery Lane,
re relevant reference number.
I — — ■ t— gL-J
Ho6£ett Bowers
EXECUTIVE SEARCH AND SELECTION
Helen Gill, Recruitment Manager,
John Sisk & Sod Ltd,
Park House, Frogman,
St Albans, Herts AL2 2NH.
FINANCE
DIRECTOR
Having already established an international reputation for
excellence across a range of capital intensive manufacturing
sectors, this international organisation is now pursuing an
aggressive marketing strategy to enhance further its profile
by targeting a range of projects that require substantial
levels of investment on an international basis.
Finance Director
INTERNATIONAL
PROJECT FINANCE
Warwickshire
Circa £65,000
+ Car + Benefits
+ Full Relocation
The key feature of this strategy has
been the formation of a skilled and
capable organisation which has
provided the foundation of a new
company dedicated to spearheading
an innovative and creative approach
to project financing.
The appointment of a Director for
this position is seen as an important
step in enhancing dear financial
controls, procedures and disciplines
across the business as well as
providing an in-depth knowledge
and understanding of implementing
key initiatives which will need to be
put into place. Specifically you will:-
management or international
project financing gained from
within a corporate or institutional
environment, you will now be ready
to move into one of the most exciting
and dynamic business environments
and contribute to the undoubted
successes and achievements that
it will make.
West London
to £50,000 + Car
,T*"'
Identify and assess major
international project financing
proposals.
Source and agree appropriate
levels of financing from a variety
of institutional and industrial
sources.
Develop key financial and analytical
mechanisms for monitoring the
on-going profitability of projects
and assessing longer term
investment return.
You must be able to demonstrate
a dear level of responsibility and
authority at Board level and possess
superior interpersonal skills which
will be key characteristics for this
appointment.
/nterested candidates should write
to Charles Austin at Herst Austin
Rowley. 30 St. George Street.
London W1R 9 FA. enclosing a full
Curriculum Vitae and quoting
reference CA601.
Our client is a highly profitable, £45 million
turnover, autonomous subsidiary of a market
leading UK pic. As a customer focused, service
led business, they have established an excellent
reputation in a niche sector and seek further
expansion.
The Finance Director will be responsible for the
entire Finance function with particular emphasis
on operational financial management, planning,
project financing, statutory reporting and the
ongoing development of an accounting team. It
is essentially a hands-on role, demanding the
ability to be equally effective at both routine and
strategic levels. The successful candidate
will support the Managing Director in
the formulation and execution of profitable long
term strategies for the business.
Candidates, unlikely to be aged less than 40, will
be qualified accountants who can demonstrate a
broad range of senior level experience gained in
a variety of service led environments. Srrong
technical and commercial abiliry, excellent
managerial, communication and negotiating
skills are essential.
Applicants should forwaid a comprehensive CV,
quoting ref to Mark Hurley FCMA,
Executive Division, Michael Page Finance,
Page House, 39-41 Parker Street,
London WC2B 5LH.
HERST AUSTIN
Michael Page Finance
SpNuluts In Financial Recruit mem
London Bristol Windsor St ADmu Lemherfacad Birmingham
Nottingham Manchester Leeds Glasgow Edinburgh & Worldwide
ROWLEY
With an already established
track record in senior financial
i L * v K c 11 •**
1 \ r
1 1 O \
f a k r x
: R •*'
H 1 1’
BOLOGNA • COLOGNE • LISBON • LONDON
MADRID • PARIS - WARSAW
APTOINTMENTS
FINANCIAL PLANNING MANAGER
CHARLES CHURCH
£3 5,000+ Car
Our client, CHARLES CHURCH, is a
well-known and highly regarded house
builder. Over the years the company has
developed a very distinctive and
recognisable house style, creaking a
strong brand image. Turnover in
was up 44% to £3 2!m with even greater
improvement in operating profits.
Reporting to the Group Finance D i r e ct o r,
the role of Financial Planning Manager Is
focused on several key areas:
• Financial planning and analysis for the
whole group including regular
reforecasting
• Commercial involvement with
operational management
•Cashflow forecasting and
reporting for external
institutions
• Competitor comparative pe rfo r m ance
analysis.
This will involve considerable exposure
to senior manag e m en t across the
company, and provide the opportunity to
make a significant contribution to the
group’s financial performance.
You wfll be a qualified aceountahtaged
28-34 with experience of aplarenlng and
analysis role In a for ce ful, demanding
environment. Sound commercial
judgement, attention to detail, flexibility
and the capacity to work to tight
' deadlines wHl be essential
To apply, please write wHhafuH
cv Quoting ref. no. 211 2 4/FT to
WfeyneThomas, Wheaie Thomas
Hodgins Pic, Executive
Resourcing, 13 Berkeley Square.
CHftorvBrisio! BS8 1HG.
appears in the UK edition
every
Wednesday & Thursday
and in the International
edition every Friday
Tourism & Hospitality Consultants
Middle East
Excellent Remuneration Package
For further information
please call:
Andrew Skarzynski on
+44 873
Toby Flnden-Crofts on
+
Will Thomas on
+44
Our Middle East tourism and hospitality practice is seeking to recruit managers
with substantial experience in tourism and hospitality consulting.
Based in Amman, you will travel throughout the Middle East managing
engagements for Governments, owners or operators of tourist developments.
You will have a proven track record with a major firm, hotel and tourism
consultancy practice or major hotel group. Knowledge of Arabic would be an
advantage but is not mandatory.
The compensation package is commensurate with the seniority of the position
offered and will not prove a limiting factor. Opportunities for career
advancement in our expanding Middle East practice are outstanding.
Please forward a brief CV or Helen Whiteman at Arthur Andersen
1 Surrey Street. London WC2R 2P5 on 438 .
Joanne Gerrard on
+ 44 873
.Arthur
Andersen
Arthur ANDOBEN&Ga SC
Petals
&
meia
i hig
■; ^ ;: W 5r. owm
* . srtltat’
' ■ « • ~£; ’t*s4
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27
FINANCIAL, TIMES FRIDAY JUNE 2 1 995
Xs VP-&
COMMODITIES AND AGRICULTURE
market report
-should
MBAs
gained
wsll-dev
model
aod drive »h,
r«!
■faH career
-MSI -!nte
amt
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ilidcrMyL
COPPER ledother base metal
prices higher on the London
Metal Exch ange y esterday but
TIN and NICKEL broke away
from the pack to race up
sharply ^m late afteinoari deal-
er vt
Copper 7 .. broke above key.
technical -resistance around
$2,845 a tonne for the three
months delivery position, trig-
gering -sf op-pre-set buying
orders. -The .price reached
$2j675 at one point but the rise
was capped by commission
house selling and profit-taking
and by -the pnd of after-hours
“kerb" trading three months
copper- stood at $2^567, up $26.
As. copper was setting back
TIN ehpr gwi Vii g hpr rnirtiisg the
day up $365, or over 6 per cent,
at a four-month high of $6,360.
Stoploss buying orders were
triggered at' various chart-
basal resistance levels, fuel-
ling the rally, traders said. But
there was good fundamental
justification, for higher prices
with' 'supplies- of high-grade
material still -tight. That was
evident in, the widening of the
cash premium over the three
months price widening from
$67 to more than $75 a tonne.
Traders generally expected
LME stocks to continue to
decline; possibly pushing
nearby spreads even wider.
But some noted a fair level of
lending (selling naah and buy*
. mg forward) had emerged, sug-
gesting that the tightness
should not bite too hard.
Nickel rose In tandem with
copper early on before-rising
sharply with tin during the
afternoon.
London Commodity
Exchange white SUGAR
futures turned tall In afternoon
dealings on a perception the
earlier buying on news of a
sharp rise In the Brazilian
export had been overdone. A
trader said the Brazilian deci-
sion to raise the tax from 2 per
cent to 40 per cent indicated
future supplies would be
-tighter but its affect cm sup-
plies might be limited given
that analysts had been upgrad-
ing output forecasts. •
Compiled from Renters
loco nickel expansion
reports ‘premature’
ty Richard Mooney
Reports , that Inco of Canada
planned, to increase nickel pro-
duction ai its partly-owned
Indonesian subsidiary by 120
per cent by: the year were
described by the company yes-
- terday as “premature”. . . v
The reports said the . expan-
sion *tETfriav in which Inco
has a 58 per cent stake, would
cost US$lbn: and raise output
to 220m lb a year from the
present 100m. •/; '
But in/h: statement issued
yesterday to “clarify” the poo-
COMMODITIES PRICES
-turn Inco said; “the only expan-
sion currently ' under way and
contemplated fin 1 the near term
involves a previously
announced expansion expected
to cost in the area of $300m
which would increase PT
Inco’s annual capacity from
100m lb to 150m lb by late June
”.
“Over the longer term," it
said, “PT Inco sees other poten-
tial expansions the could
Increase its annual capacity to
about 220m lb. . . but.it is pre-
mature- to talk about timing
and the potential cost”
Coffee
deficit put
at 7.5% in
-96
German statistics agency F.O.
Ucht expects -96 world cof-
fee production to tell short of
demand by 7m bags (60kg
each), reports Reuters from
Rateebnrg.
In a report, Ucht said the
full effects of last year's frost
and drought in Brazil would be
felt in the -96 crop year.
initial estimates of Brazil's out-
put varied, it said, “but at this
stage 16m bags appears to be a
realistic forecast". That would
compare with an estimated
26m bags this season and 272
in *4.
“This points to world produc-
tion telling to some 85m bags
or about 7m bags below global
demand,'' Ucht s aid
The report warned, however,
that said Brazil’s stocks of
14.68m bags should not be
overlooked, although the Bra-
zilian government had stated
they will only become avail-
able for export when the 20-day
moving average of the Interna-
tional Coffee Organisation's
arabica indicator rose above
' 190 US cents a pound, about 35
cents above the present level.
“The future market trend
would seem to depend upon
whether producers can afford
to adhere to their [supply]
retention scheme and whether
the Brazilian government stick
to their assurance over these
stocks,” Ucht said.
The report sharply reduced
estimated world coffee con-
sumption in the current crop
year.
' In its second estimate of the
world coffee balance, it said it
revised its forecast to
match production at 91.5m
bags from a December forecast
of a production deficit of about
l.lm bags.
Licht said the statistical
position of coffee had changed
sharply in the past six months
largely owing to a major revi-
sion in consumption estimates.
It cut its forecast for con-
sumption from 93.4m bags in
December and it production
forecast from 92.4m.
CBoT launches trail-blazing maize yield futures
By Laurie Morse In Chicago
The Chicago Board of Trade
today opens a new futures con-
tract that will reflect market
expectations of the size of the
maize crop in Iowa.
The contract is a limited
experiment by the exchange to
determine if farmers, crop
insurers, grain transportation
companies and food processors
will use an instrument that
allows them to hedge the size,
rather thaw the price, of a par-
ticular crop. If the concept is
viable, the CBoT Intends to
offer an extensive menu of
regional crop yield insurance
futures and options for maize,
wheat, and soyabeans.
The crop insurance contracts
are a twist on the CBOTs tra-
ditional grain and soya futures
markets, which for more than
a century have offered a meats
for traders to determine the
price of a commodity for deliv-
ery sometime in the future.
Crop size, or yield, is often a
major factor m price expecta-
tions, but designers of the Iowa
Com [maize] Yield Insurance
futures say there is a need for
a contract that focuses exclu-
sively on crop size.
“Now, with this contract,
you can not only hedge price,
but also quantity, and q uanti ty
times price equals revenue."
said Mr Ferry Iverson, a prod-
uct manager for the CBoT. He
says that crop re-insurers and
any business that deals in
large volumes of maize are
potential Iowa Com Yield
Insurance futures traders.
Even the contract’s promot-
ers admit, however, that the
concept Is so new that it may
take time for the target audi-
ence - crop insurers - to
understand mid use it
The CBoT has been urged to
develop a crop yield deriva-
tives contract for the past year
by the US Department of Agri-
culture and other federal agen-
cies. With Congress whittling
away term subsidy payments
as they write the farm bill
the government Is seeking
market-based safety nets for
agriculture and agribusiness.
Exchange officials say the
impetus for the yield contracts
actually began last year, when
the USDA undertook extensive
reforms in the federal pro-
gramme that gives farmers
crop insurance, and limited the
extent of its protections.
“Significant changes in the
crop insurance industry precip-
itated by the Federal Crop
Insurance Act of has cre-
ated an even greater need for
mallet-based tools,” said Mr
Patrick Arbor, the CBoT's
chairman. “Over the past sev-
eral months we have seen over-
whelming interest and ripmanri
for these contracts.”
The Iowa Com [maize] Yield
Insurance futures and options
that are launched today will
allow traders to bet on what
the average harvested yield per
acre for the US's biggest cash
crop will be this autumn in
Iowa, whose farmers are the
country’s biggest producers of
ttihI TP
The futures and options con-
tracts will be settled in US dol-
lars based on the US Depart-
ment of Agriculture's maize
crop production estimates for
Iowa in September and Janu-
ary. There will be only two
contract months - September
and January. Price will be $100
times the estimated yield.
Using last year’s USDA aver-
age Iowa maize yield of 152
bushels an acre, for example, a
contract's value at settlement
would have been $.
Traders say this spring’s wet
weather and delayed maize
plantings in the US make this
an Ideal time for the contract
launch. “Once the crop is
planted, this contract becomes
purely a weather contract.”
says Mr Peter Leavitt, a meteo-
rologist with Weather Services
Inc., a forecasting group that
specialises in advising agri-
businesses. “This is one of just
a few futures contracts that
pays off on an actual number
[the USDA yield figure], not on
where buyers and sellers think
prices should be."
Indian sugar production set to reach all-time high
By Kunal Bose in Calcutta
India, the world's biggest
producer of sugar, is set to fin-
ish the current season in Sep-
tember with a record output.
Latest estimates put -95
production at at least 14.5m
tonnes, compared with only
9.83m in -94. The previous
best season was -92, when
13.4m tonnes was produced.
The industry had already
produced 13.7m tonnes of sugar
by the middle of May and
many factories are still crush-
ing cane. There have been a
sharp rises in Maharashtra,
Uttar Pradesh, Tamil Nadu.
Karnataka and Andhr a Prad-
esh. Production is down only
in drought-hit Gujarat.
The bumper crop and a lib-
eral release of the commodity
by the government (sugar is
still a tightly controlled indus-
try in India), have led to a
sharp tell in domestic prices.
As a result sugar factories are
finding it difficult to settle
their cane hiTis. Officials say
the mills' outstanding cane
dues exceed $112m.
As the government was ear-
lier under the impression that
sugar production would be
between 11.5m tonnes and 12m
tonnes, it allowed state agen-
cies to import about 400,000
tonnes. Parliamentary elec-
tions wiQ be held early next
year and the government fears
public resentment would be
caused by a repeat of last
year’s very high sugar prices.
But the ruling Congress
Party, now faces the wrath of
the millions of farmers who are
not receiving prompt payment
for their cane.
The Indian Sugar Mills Asso-
ciation and the National Feder-
ation of Co-operative Sugar
Factories have convinced the
government that the “crisis
spelt by the excess supply of
sugar" has to be met by creat-
ing a buffer stock of lm tonnes
to 1.5m tonnes, allowing
exports and “rolling over the
import contracts to later deliv-
ery”. if not scrapping them.
The total availability of
sugar in the current season
will be at least 17.6m tonnes,
including the carryover stock
of 3.1m tonnes. (This, however,
does not take into account the
400,000 tonnes that may be
imported.) Domestic consump-
tion will not be more than
122m tonnes (last year, it was
11.96m tonnes) and as the
crushing of cane picks up in
the middle of December, the
-96 season opening stock
should ideally be 3m tonnes.
The balance of 22m tonnes
will have to be taken care of by
building a buffer stock and
selling sugar abroad Payment
to the mills for the sugar to be
put in the buffer stock can be
made from the Sugar Develop-
ment Fund, which has been
built up over the years by way
of a levy on sugar production.
According to industry offi-
cials the urgency of sugar
exports is the greater because
the country is likely to produce
15.5m tonnes during -96.
“The area under cane has
increased by nearly 13 per
cent A normal monsoon has
been forecast for . There-
fore, we will have another
bumper production of sugar
next season," they point out
India, which resumed the
export of the commodity in
-91 after a long break, had
to import 2m tonnes of sugar
last year because of the short-
fall in domestic production.
Australian group may take 80% of Argentine potash project
By Nikki Taft In Sydney
CRA, the Australian mining
group, has signed an option
agreement which could see it
take an 80 per cent stake in the
development of one of the
world’s biggest potash deposits
in Argentina.
The agreement with Potasio
Rio Colorado - part of the
Argentine Mm era mining com-
pany - provides far CRA to
contribute financial and tech-
nical resources to assess the
project over the next 12 to 18
months. If the project is even-
tually given the go-ahead, the
option will allow CRA to
acquire an 80 per cent interest.
No finan cial details were pro-
vided.
CRA said that the deposit,
located near Rio Colorado, con-
tained an identified mineral
resource of 59 m tonnes of
recoverable potassium chlo-
ride. used mainly as a fertil-
iser. The identified resource
lies an area of about 20 square
kilometres. However, CRA said
that “elsewhere in the 380 sq
km mining lease, sufficient
drilling exists to infer a much
larger additional resource”.
CRA has traditionally
focussed mainly on develop-
ments in Australia and the
Asia-Pacific region. Earlier this
year, however, Mr Leon Davis,
its new chief executive, indi-
cated that the group intended
to take a broader approach.
“While CRA has made no
JOTTER PAD
secret of its focus on Australia,
Asia and the Pacific, we have
also said that we will look at
the good opportunities wher-
ever they may be,” commented
Mr Ian Gould, head of explora-
tion, in a statement yesterday.
The project represented "a sig-
nificant strengthening of com-
mitment to the Arg entine min-
ing industry”, he added.
BASE METALS
UHlDCMf METAL EXCHANGE
(Moai-*OT JraUffVTBVad MotaTradtotf
■ MJm«NttlM,flaL7PURn!VffpW lonro^
•' .'.CmH " "’S"inih* : -"
CtoM ^ V. -32 , : -62
Provioua .5-13-5 -35J)
HtfVtow. . - v . . /
AM Qffcta r ‘ 188 MBS * -48-
Karbcfcna ' *
Open lot, '
ToM close . • • -20 ■
Open hit *- • 42*30
Ttfta dtity tunwwr 8*16 .
8TW«p9ftecMi - - - ' . .
Goo*”’-’. 6WS-7S : - .-300
Frtwtouj :-eoe&-75-. - eooo-io
Hgh/to* - /
AM Official. • 618CWM0 B11IW0
- Kerb dose - ... .. . -20 ■
Opan tat 17,681 .
Total "dally tranowr .
■ ZINC, apodal high yadn per tonne) . • •
Ckm ; ? - 1QB8r-29 V -G5
Pravtaut • .. T020J>-21:5 -47
Hgh/to*. •
AM OflfctaJ .5-210 -51 -
Marti aids*.'. . -I®** 7 .
Optnlrit.; - : ... 83,800-'. ■; -
TaW «ta9y timaw 12^81
ffi COPPEB, tpnW A ($~par tonn^ . . '
Hon* -'-02 - -70 .
Piwtowf - • ’’ -52 '- •'"-^34. -
'Y 6
Sip +028 1.26*
Oct MIW +022 323
DM *021 25J8
JR *021 25.75 234
TaW
■ SOYABEAN MEAL CBT (100 tww; 3rton|
Jut +3.1 14.789
tag +15 2,432
Sap +06 1,137
Oat +33 830
Dr +33 1B23
Jr IBM +3.4 1B37 90
Tata q 21 3«
■ POTATOS LCE (E/tome)
Jr
Dm 973
Bar
Apr - 476 3T
TOW 480 81
■ FREKmTjBlFFBqLCetSIOAndiix point)
Jr -15 449
JW -45 B14 68
AW - 13 4) 130
Oct -60 1,339 115
Jr -40 172S 495 116
tar -40 15 15
Tttfal 498
Gfeea Mv
SR
■ COFFEE ■C* CSCE (37,500ta: cents/fcs)
39 +430 159.75 154,75
Sep +4 JO
OR 163.75 +435 WJO 5,174 109
Bar mis +435 62
May 167.00 +435 186 32
JU 165.05 +4.70 - - 28 12
Total 37,107 8JDB7
■ COffg QCCQ (US cents/pomcQ
May 31 Mce Prate day
Comp. s; certa/te^
M -3.75 107J5 104J5 13^14 G77
tep -3,10 8^27 42D
Rev MULOO -2J5 2,110 198
J» 100» >1.75 HOOD 2.673 285
Bar 112.45 -190 798 48
Bay 11SL45 -055 - - 42E 7
Tfttf 25^83
VOLUME DATA
Open Interest and Votarw (tats shown for
contracts traded or COMEX, NYMEX, CBT,
NYCE, CME, CSCE and IPE Crude 01 ere one
day In arraara
INDICES
■ ftEOTERSPmg 15/5/31*100)
Jun 1 May 31 month ago year age
.1 .4 .4 .8
■ CRB Futures (Base -100)
May 31 May 30 month age ywr ago
232.72 232.78 23&8S
PnoMuw Atgut- Tte. London fnm 059 eras
■ OTHER
Gold (par troy on)? ,30 +0.15
Steer (per troy ootf 530.50c
Ptakitira (per troy oz.) S430JZ5 -3.85
PaBattam (par troy oz.) sisazs -3.75
Copper (US prod.) Unq.
Lead (US pradj 41.75c
Tin (Kuala Lumpur) 1 4.90m *
Tin (New York) 310£0e +17.00
Cailfe (Sue ttWohOr 123.07p *131-
Sheep give weighqt* I1&23p +G.D7'
ngs Diva weight)! 94^6p -1^*
Lon. day sugar (raw) S351-3 +11X
Lon. day sugar (wtal S401J) +15.0
Tate & Lyle export £334.0 +9.0
Barley (Eng. lead) Unq.
Made (US No3 Yedow) E147.0
Wheat (US Dark North) Unq.
Rubber *%-00) Metrll Lynch Bar*
99.72SR JuL£XD3 O30R +l7tt<5\ta%-03)Ra0ab8nK Nadadand
LUXEMBOURG FRANCS
Ora aM tda f orttoTOato a nM Zbn 730 103.76 Sap BIL
Hnal forma, non-cadobto urdesa staled. Yield spread (over retevoti gavonvnant bond} at launch nip pS art by toad ma nager. *Lk«stod._t
Ftoattog-rete nota «Semtannuai coupon. R: fixed ra-oftar price; feea shown at re-oflor tovaL a) CafiaMa on co tyon datee ftom « fcn38
at par. al) 3-mth Ubor +15bp. b) QMk an coupon dates (ram JtaiSB at par. bl) 3-mth Libor +20bp.. c) 3-mtti Libor +4?*. d) PSont
bark bunched separate S20m deal wdh identical terms, e) Long 1st coupon.
All three issues were said to
have met with strong demand
from financial institutions,
especially in Japan.
Strong demand for dollar
floaters means the threat of
oversupply in the sector is
slim, said another dealer. "We
are not building up much
inventory - this is a very liq-
uid market and , if anything,
our problem is to find enough
product to fill the demand.”
Germany’s DSL Finance, the
financing subsidiary of govern-
ment-owned DSL Bank, issued
DM500m of five-year 6 per cent
bonds, t.ikp three other five-
year deals issued this week, it
was largely arbitrage-driven,
although lead manag er Merrill
Lynch reported strong demand,
especially in east Asia. The
deal was sold through a selling
group, with Merrill expected to
place more than 80 per cent of
the issue.
Manufacturing figures spark US upturn
By Lisa Bransten in New York
and Graham Bowiey fn London
Figures suggesting a decline in
manufacturing activity helped
US Treasuries recover from
early losses yesterday morn-
ing. By miriHay the benchmark
30-year Treasury was up £ at
to yield 6.620 per cent. At
the short end, the two-year
BONDS
note rose & at lOOg to yield
5.755 per cent.
Treasuries started the day
mostly lower, on the heels of
bearish sessions in Tokyo and
London, but rebounded after
the release of figures from the
National Association of Pur-
chasing Management. The
NAPM put its index of busi-
ness activity at 46.1 per cent
for May - its lowest since May
. Anything below 50 per
cent is considered a sign of
decreasing factory activity.
Investors paid increasing
attention to economic data this
week, as they looked for clues
about what today’s employ-
ment figures would telL On
Wednesday, the market rally
stumbled because a downward
revision in the inventory com-
ponent of the gross domestic
product data suggested the sec-
ond quarter might not be as
weak as many had come to
expect
Other figures released yester-
day were mixed, but they had
less impact on the market
because they were April data.
Factory orders fell 1.9 per cent
in April But while it was the
third straight monthly drop,
analysts had forecast a decline
closer to 13. per cent
Figures on April personal
income and consumption both
showed 0.3 per cent increases.
WORLD BOND PRICES
BENCHMARK GOVERNMENT BONDS
Austnai
Austria
Belgium
Canada *
Danmark
Franca
Germany Bund
Ireland
Italy
Japan No
Netherlands
Portugal
Spain
US Treasury *
ECU (Frwicb Govt}
Coupon
Rad
Date
Price
Day's
change
YMd
Week
ago
Month
ago
07/05
90.
_
835
877
9.84
05(05
-
6.96
731
739
03/05
94.
+
7.31
738
731
12/04
108.
+
837
830
B.62
7.000
12/04
92.
*0.060
an
aoe
873
7.750
04/00
102.
+0.060
6.97
638
738
04/05
+4X290
7.41
7.41
7.78.
05/05
+4X300
631
an
739
10/04
+
fljp
831
883
9.500
01/05
+4X540 1 1.BBf
06/99
+0.078
238
252
250
4.600
□8AM
-0.590
280
237
837
7.000
08/05
101.
+0.160
6.75
879
7.18
02/05
-
11.83
11.79
10.000
02/05
91.
+
02/05
+0.100
10.52
11.57
08/99
94-21
+17/32
7.E2
738
831
8.500
12 /OS
104-08
+5/32
7.90
737
835
9.000
10/08
109-08
+25/32
737
733
835
05/05
102-00
+22/32
839
7.02
7.625
02/25
112-29
+29/32
6.62
874
734
6.000
04/04
+4X280
7.71
7.77
8.14
t Gras* (hcfcc eWaUhg ax at 123 pa i
Pncna- US, UK ti 32r*dn, ottxn to drc*no>
Open Sett prica Change High Low
UK GILTS PRICES
634
100 ,;
101 % 1
8.44
.
104* 1
13JB
048
,
lOSTi 1
14.17
052
109 s , 1
064
J
__
. 1
MO
OBI
iov<
104A 1
701
109*1
+A
W. 1
096
7JQ
«Kh’.
10SU 1
707
734
mi
sea
048
717
+A
hr,’. i
724
+A
MBfi 1
024
732
1 DSA
+A
1
7.28
753
6 QB
+A
»•
007
757
♦u
BBU
757
123A
123H 1
HUB
7.46
113|] 1
096
748
108 m
+J«
106A 1
—
-100A*
load
751
H5d
+U 1I5A 1
OSS
751
iwtl
+B
109Q 1
OSS
751
B4J
+i
♦A
9*fl
03*
758
109U
1
853
754
105U
+H
105K 1
750
122 A
+ii
7.88
01 Da
+H
1 D1M
80S
7.87
H01J
110 U II
n.es
742
,
tA
117J, 1
727
755
+u
8 B>2 1
082
7.7B
noa
->2
110 ft ii
782
7S1
lord
+U
101 /, !
OSS
753
!
TlWj 11
084
7.76
116B
♦« 11W 1
*74
755
ro*
♦Hi
Ktfi '
flSJ
757
1I0>1
+n
udij ii
in line with expectations.
Bonds drew some support
from a stranger dollar, which
continued to gain after Thurs-
day’s intervention by G10 cen-
tral banks. Near midday the
US currency was changing
hands far Y85.03 and DMJL,
compared with Y84.50 and
DM1. late Wednesday.
"This is still very much a US
phenomenon, although it is
underpinned by signs, in Ger-
many and the UK, of a Euro-
pean slowdown,” said Mr
GeorgB Magnus, international
economist at S.G. Warburg in
London.
■ US Treasuries led European
markets sharply higher yester-
day after US data pointed to a
continued slowdown in the US
economy.
All bond markets rallied,
with shorter-dated bands show-
ing particular strength as opti-
mism spread that the US
authorities may begin to cut
interest rates soon.
US jobless figures, at their
highest level since January
, weak factory goods data,
and a low pur chasing manag-
ers' index were all taken as
evidence of a slowing economy.
■ German government bonds
rallied, with the yield on the
10-year benchmark bund fall-
ing to 6.61 per cent.
The Bundesbank left
short-term interest rates
unchanged at its regular coun-
cil meeting in spite of intense
speculation that the central
bank might move to relax mon-
etary policy.
Nevertheless, traders said
they still expected German
interest rates to fall once again
in the curre nt economic cycle.
The June bund futures con-
tract on Uffe was 0.33 point
higher at 95.58 in late
trading.
■ BUND HJTURE8 OPTIONS (UFFE) PM2SO.QOO pototo ol 100%
_____ /N|| |G _
DirTQ —
oui mi
Price
jul
1 ini t It ■■
Aug Sop
Doc
JU
Aua
rUfS
Sad
ruw-
873
038 1.15
132
032
037
0.74
136
0.45
o.n a 88
1.01
034
0.80
037
135
038
030 0.67
033
035
1.Q8
136
137
Est «aL total. Cote B501 Puta M04. Preteug day', opm kit, Cdb Puts S
Italy
■ NOTIONAL ITALIAN GOVT. BOND (BTP) FUTURES
(UFFEy Lba 200ra lOOtha of 100%
Open Sott prtea Change High Low EsL vd Open tot
Jim 100.17 100-75 +038 100.97 100.03
Sep 80,90 100.34 +0.59 100.57 99.70
■ ITALIAN GOVT. BOND (gTP) FUTURES OPTIONS (UTFq Ura200m IQOths o 1 100%
Stite CALLS PUTS
Price Sep Dec Sop Doc
. t*
* c:’ -
,.
Jr *^3* •
. fc-fVfr'-'
r
' i*4- •'.**#!
s4^f4\ :
f’i
t*?*:
.laftFr-fJn
. jtr rsjMf--
- -rtr J9M*
• ; * • : :
_• •*.
■ .-.ry --
-ri&Ctj :
i.-T-;. -*«»-
;--ti vSp®-
FT-ACTUARIES FIXED INTEREST INDICES
Moa IncScas
UK Gita
1 Up to 5 yeera(23)
2 5-15 years (21)
3 Over IS yoaa [91
4 Irredoomablea (6)
5 Afl stocks t5fl)
Wad
% May 31
Accruod
(nureat
led at*
ytd
— Low cotowa yield —
Jun 1 Mav 31 Yr. irao
— MkKfiun coupon yield —
— -Mgfi coupon ytaid —
Jin 1 Mav 31 YV. an
121.77
233
437
5 yra
7.65
7.74
834
736
7.75
851
7.71
731
865
145.65
135
5.44
15 yra
739
736
849
73B
7.97
863
803
810
830
1B5.01
236
5.03
20 yra
730
7.96
846
730
738
863
801
807
873
1-02
638
lnad-t
737
739
880
141-33 •
234
438
;
—
— Inflation 5% .
— Motion 10%
. .: v -~rfrr
cr
-t. itotm;*
. '■
■■■ ;
* !. ;
■ -,xcf£
•- -*u,
Jun 1 May 31 Yr.
Jun 1 May 31 Yr. ago
6 Up to 5 yeara C9
7 Ovor 5 years ft 1)
8 AS stocks ( 13 )
195J8 ♦0.13 195J1
iaaa 2 +aia
186.86 +0.18 186.52
2 - 5 ? Up to 5 yra
1.73 Owor 5 yra
1JI1
3.09 3.16 384
3J5S 3L56 3.87
1^6 ini 2J6
338 337 3.68
A TL^. ,-aaAatia Mr
UK CfiCSS KATLS
AKtega Brow rMnrpaai yfefcto wtt ten Am Coupon Bancte Lome OH-TKIn: Madtet B%-1(8*%; High: 11% and am. f Hot yfafcL ytd Yav to d mm
FT FIXED INTEREST INDICES GILT EDGED ACTIVITY INDICES
Junl May 31 May 30 May 28 May 26 Yr ago High* Low May 31 May 30 May 28 May 25 May 2*
Oort. Sac*. (UK) 84,81 94.80 92.09 94.81 Gtt Edgad bagatos 109.4 228.1 903
Rxad Interest 113.88 109.12 108.77 5 -dpy oreraga 121.1 11&0 872
- lor 19 ». OrnmiM Secutere hfch since compaadon. ISrt/W, tom P 71 / 7 SL Fired Irteeat high item oonpindo n : T 33 .B 7 C 21 / 1 W) , low ( 371 / 75 ) . Bads 100 : Oovomren. Socufdm 1 S 1 W
26 sna fined htawt . SE scuvKy hdem raband IB 74 .
FT/TSMA INTERNATIONAL BOND SERVICE
P 3 Z 33
ran
97J,
67^
^1
ICO
1Q6><
106^
150
94t,
94\
*
800
B7h
®7%
*
ooo
99
884
+>2
TOO
104 s ,
,
*
500
105
V&,
1S3
,
,
400
110%
110%
ZOO
86
a*
*
300
105^
TO0
TOO
250
IIS,
.
i«iz
1 trail
j.
150
o
m£
f 1-lSte
4J.
150
■ ■
,
113*8
TOO
89>4
90
+ 1 *
. 75
TOBt,
,
ih
OOO
831,
83*«
ft
iia^a
ft
i23Js
ft
103*
ft
112%
ft
123/4
ft
,
b
120%
ft
lift
ft
IQS',
*pstl
- -j
m
m
^ system.
• 55 $
so^g:
BW faaal!y*’^*.
osanuall^p,
^P 1 ooi J .
details
« th 6 3
^*ich cwm-j!
toe link <},_
CedeJ - £«£*
3€ house J§*.
K2jP ■ womg
<*«g
Wic*
available to tl
*«ttaar and £
Jtiwides^
U . > l V
■ srhich t
to borrow ^
dou*rrpIay^
o scon? s*.
be a.*«i
. ?sr.x x
be nd
Mra't be-lsev, £tv
■It will i»
CURRENCIES AND MONEY
VURKXT5 REPORT
Dollar fails to sustain post-intervention rally
Tie ■ doHar's impressive
posM^vertMn - rally proved
short-lived yesterday as codlt
■an? sipiq an economic slow-
dqWftV.fevthe.TJS . reasserted
Sseif, Writes Gaurith.
; - Tie US anwaacj^s failure to
gnst^B^the five, pfennig rally;
DM1. to
DM1., also reflected the
makers . continued unwilling 1
ness to heBeve that the condi-
tions ■are : in place tor a sus-
tainedzafiy. . -• r v 1
The . dollar gTTishfd in Lon-.
_ dxmaf 4)ML413irom DM1.
an Wednesday ^ ani at Y84.645
andfrom . It lost over two
pfennigs , during ^New York
trading faUowh^rthfi release of -
aweaker than expected par-
chasing managers report.;.
- . Tba other large move of the
day came from the Belgian
franc ; winch, broke 1 otit of a
trading range that dates back
to the beginning of last year. It
. closed at BFr20/48 against the
D-Markrfroin ~BFi20.54. The
move appeared to be techni-
cally . driven,", especially once
the franc breached the
BFr20.52 leveL rather than a
re flecti on of any new develop-
ments.
Elsewhere, the Bundesbank
council left .interest rates
unchanged, hi Britain, signs of
weakness in the purchasing
: managers, index prompted a
rally in interest rate markets,
with the September short ster-
ling contract closing 13 basis
points firmer at 93.10.
Sterling had quite a good
day, finishing firmer against
bofch tha D-Mark and dollar. It
closed at DM2. from
DM, .and at . $ from
$. •••■
■ The dollar had a bright start
to. the day, rising around i y.
- pfennigs in the first ten nttn-
utes of trading. Humours that
■ PoMOd la Maw York
-Pm. dosB-
15B7S
. 1.
.
German funds were buying
stimulated farther dollar pur-
chases, with toe market rea-
soning that the funds had
some insight into the likely
outcome of the Bundesbank
council meeting.
In feet, the brevity of the
meeting suggested the agenda
was devoid of controversy. The
subsequent retreat in the dol-
lar was not so much the result
of disappointment at Bundes-
bank inactivity as a response
to rumour and statistics.
The rumours centred around
an tnflno^HaT indus try news-
letter which reported that the
Bundesbank bad been reluc-
tant participants in the inter-
vention. It also suggested that
a rising dollar would serve as
an obstacle to a cut in German
interest rates.
Ms Alison Cottrell, analyst at
Paine Webber in London, said
that neither of these conten-
tions carried much weight. As
to the Bundesbank's stance,
she noted: “I'm sure that is 100
per cent accurate. They only
Dollar
Tf8dM«J9htadin<£tt- ' •
:Sr:
‘ Nov 94
Source: DataaU— in
\-aoB Jon
ever intervene reluctantly."
But she also added that the
Bundesbank only intervened
when it stood to make money.
Ms Cottrell also disputed
that a firmer dollar would get
in the way of a rate cut, point-
ing out that a rally from
DM158 to DM1.42 would hardly
strike fear into the Bundes-
bank's heart “It is easier
to cut rates into a slightly
firmer or stable dnnar th^n a
crashing dollar, because then It
can be presented on purely
domestic grounds."
Intervention had, however,
removed the prospect of any
German rate cut yesterday,
said Ms Cottrell. She said it
would be anethema to the
Bundesbank to be seen to be
cutting rates as part of a co-or-
dinated plan to h e l p the dollar.
Sentiment was also knocked
by the weak NAPM report,
described by Mr Tony Norfidd,
UK treasury economist at ABN
AMRO, as being in “hard land-
ing territory". The dollar has
recently tended to weaken
when confronted with eco-
nomic data showing a slow-
down in the economy.
Mr Norfidd said most of toe
Interbank market was sceptical
about the dollar rallying, but
also wary of selling the cur-
rency in the face of possible
central hank intervention.
Mr Jeremy Hawkins, chief
economist at the Bank of
America in London, sai d the
passage of the dollar yesterday
had illustrated two points: the
short-lived effect of interven-
tion, and that sentiment
towards the dollar “is going to
be determined by how toe fig-
ures come in.”
While intervention had pro-
vided the dollar with a
short-term base, said Mr Hawk-
ins, he continued: “Unless we
see a pick-up in US data, there
is every possibility we are
going to see a record low
before the year is out”
■ The Bank of England pro-
vided UK money markets with
£555m late assistance, and
£85m at established rates, after
forecasting a £750m shortage.
Three month LIBOR traded at
6g per oenL
Jgol £ S
Hwgsy - -
- .® -
total CL • -
POM 3. - - S
ftmfe 7* - .70 -
UAL - •
DOLLAR SPOT FORWARD AGAINST THE DOLLAR
Ctootog Change L fikttoflor
n*Hx*it on day ■gj*
Day's l«d
Wsft low
'Europe'.
Austria
Belgium '-- : -
Denmsk
FHand .
France '•
Germany'”
-Greses
Wend
iwy . -•••
Luxembourg
Ho M te tfU i"
No«*y -V
Portugal
BP* „ ..
Satodan ;
Swdzariand
UK
Ecu -
sotf. ;* •.
fScffl- 1
(Bfi)-4aa79i
pKr) -
(FM) S43S3
(Fft) \
(DM) 7.
(Drj 382.449
gq .
(L) .44
(L ft)
(Fl) :
. (Es}
(Pta) . '
(SKi)
(SFf)
W
-
" r- 1. :
-+0. 144
+ 501 '
+0. 310
+ 283'
+0 482
+0.01 ee 834
- 116 ■
+ 794
+20.01 200
+0 27M 501
+ 279
+ 398 ■
+ 224 -
+ 137-
+ 717 ^
+0.014 874
301
061
440
413
607
.655
782 363.838
809 -
598 ;
081-
310 2.
536
550 :
327 .197.168
918
700
+ 227-243 142S3
On* month
Rate KPA
Throe montha
Ran %PA
On* yaar Bark of
Rate KPA Ena. Index
Jun 1
Ckteng
Tid-potm
Change
on day
BkJ/Oftar
spread
Day's mid
high low
One month
Rate KPA
Three months
Rata %PA
One year j.p Mregan
Rata KPA Incfa
15.
1.7
IB
Europ*
Austoia
(Sch)
+
053 * 095
1H
1.4
1.3
9.
13
40S141
1.7
48.
1.7
1.7
1*3
Belgium
{BFiJ
29.15*
+0.125
400 - 600
29.44* 29.
1.4
29.06
13
07
8J411
-05
02
04
1*3
Denmaik
(DKi)
+0.
520 - 570
-0.7
-07
- 0.6
-
-
-
-
-
-
873
FWand
(FU)
4.
+
564 - 015
4.
4.33*
05
05
Ol
66.1
7RB2S
-IS
7.
-08
7.
03
France
tFPrJ
4.
+0.
970 - 020
5.
-15
-13
-0.7
107.7
2^612
1.7
2L0
23
111.7
Germany
(DM]
1.
+0.
2* - 236
1.
1.
15
1X178
1.8
1.
1.3
111.1
• -
-
-
-
-
•
683
Greece
m
-
660 - 960
229.790 226.780
231.01
-105
gMwa
-lOI
-8.4
873
OS
02
03
97.7
Ireland
(El
1.
-
225 - 241
1.
1.
-04
-08
-04
ra
JM
-4.3
.44
-4.1
-08
673
Italy
W
1B
+10
900 - 000
.00 .25
— 4.B
.75
-4.7
-43
873
*8-
1.7
48.
1.7
1.7
Luxarnboug
(LFO
29.15*
+
4* - 6*
29.44* 29.04*
1.4
29,06
13
0.7
109.4
2S254
Lfl
2J32X!
2.4
NOherianda
m
+
*3-903
1.
1.
1.7
1.
1.7
1.4
T
TjJ
fOOT 44
IS
15
SS.1
Norway
iNKr]
+0.
120 - 170
6.
-02
04
02
831
237S22
4A
-33
-
.
955
Portugal
(Ea)
149.630
+037
770 - *0
151.3*
-3.6
151-28
-33
157.06
-43
95.4
198.732
-3.1
197.807
-02
-3A
809
Spain
(Pta )
+086
310 - 360
124.450 122.750
-33
124-473
-3.7
-45
*5
11^841
-02
11.
-02
11.
-02
773
Sweden
(SKrl
+ 379-464
7.
731*
-25
-25
-32
783
1S64
30
1.
02
1.
04
113.0
Swtaertand
(SFr)
1.
+0.007
740- 750
1.
1.
1.
2.7
1.
2.7
1.
2.4
-
-
.
-
-
84.8
IK
(9
+
906 - 915
02
05
1.0
83.7
1.
ao
04
07
-
Ecu
-0.
9* - 009
1.
Ol
01
03
-
■V *41 ..
j^MB" SS?
?vT
Aigentfno (Peso) + 904 - 91&
Bran . - ;• (R$) . + 411 - 435
Canada ... - (CS) 2. + 853 - 874
Maodco Maw Pteo) + 617-160
ISA... ' (S) . + 906-015
faii/ jiiiirD — “
Australia ■ (AS) -* 282 - 290
Hong Kong (W3) +0. 041 -120
Mn (Ra)_4&fl748 + 448-049
Inal -'.{SWfl r . + 941-082
Japan- - : ; (y)13&^8 . : +0.985 28T - 616
Matayaia.' -f -(MS] +a000eH5 -:i83
Nfiir Tilrtairt (NZS) - 2.40SQ .+ 034-068
PtOpferaa psa^ + 784 - 1M
SawfiAra^a '.•..(SR).: +0. ^7 - 894
Stem r e*) ; -040* 117-148.
South Africa . . (0)^ +0.01 69 SBB- BS2
South Koras (WoflJ +547 633 - MB
Taiwan rtn 4a a
mO+«m n txab ta» and th> OnBar^M WHMteAwdJten ■
1.
2. 2.
. 9.
'
Argentina (Peso)
Brszfi (R Si
+0. 999 - 000 140* 0.
- 0* - 070
-1^*
-13
02
824
Canada
ICS)
+
739 - 744
-
-
-
-
-
-
-
Mexico (New Peso)
+035
*0-3*
15*8
02
05
13
89.1
USA
-
.
-
PadSc/MkkSe East/AMca
-13
-13
-07
77.7
Austrafia
(AS)
1.40*
+
996 - 008
04
0.4
07
-
Hong Kong
(KKS)
7.
+
355 - 365
-
-
-
-
-
-
-
Intia
(W
31.41*
-
0* - 2*
’ -
-
.
.
.
-
-
(ante
(Shk)
-
140-199
S3
5.4
127.718
5.7
1*5
Japan
ro
85.10*
+
500 - 5*
-
-
-
-
-
-
-
Malaysia
(MS)
-
610 - 620
-24
-25
-13
973
New Zealand
(NZS
+0.
110-122
-14 1. -14 -12 812
-0.4 -OA -02
89.9
id by Bank of
THE VWW HO JTCT
tart ptaaa Forward ara not Aacdy quoted to ma rariJl
Bara raanga - m Max iB braid ices, bkj, OOv rad
«J SPOT RATES. Soma vabaa aa roundad by lh» F.T.
-1.4 1^ -14 1. -14 794
03 7. 01 7. -02
-3.1 31.735 -41 - -
4.7 84.06 *.9 4.7
14 2^ 07 2. 04
-2.7 -2.7 -14
Phfllpinsa (Pa»4 *
Saud Arabia (SR) 3.
Singapore (S$)
South Africa (16 3.
South Korea (Won)
Tahaai (TS) 25.
ThaBand (BQ
- 000- 000 25. 25.70*
- 5* - 508 3.
-0. 906 - 915
+0. 838 - 853 16S4S 3.
+24 3* - 4* 7BCL400 757.1*
+0.125 970 - 050 25. 25.
+ 850 - 050 24. 24.68* 24.710
t SDR rata par $ ta May 31. Bdfetiar ipreeda to Sw Data Spot tabto stow orty tho tost Ana d
marital bts are i mp fcd by eurant inrarat ram. UK Wand 4 BOO an quoted to US cuimoy. J4.
’ -04 -04 -0.4
I 44 19 24
I -64 175* -74 4. -34
i -4.7 -3^ -33
-04 25.761 -04 -
I -1.0 24. -04 -15
eternal ptocaa. Forvmrd ntaa are not ttoaedy quoted » tha
». Mtxyan nomtoto ndca May 31. Bara averse -100
■ S UBOA FT London
mt a rtra nk rbdng - Si
week ago - 6*
US Dolar CDs - 5.79
weak ago - 5.78
ECU Unhad Os 61+
weak ego - 6%
BOR Linked Da - 4
week ago - 4
S UBOR totarbrak Ibttog rate era otaad
at 11m each working day. The banka
64 6 6
64 a* 04
5.79 5.78 5.77
6.79 5.77 5.78 ---
64 0% 6H - - -
44 44 4W
44 44 41*
rates ta Si Dm quote to the medial by lour nderance bento
are: Bonkers Trust. Bar* at Tokyo, Barclays aid NaaonM
Md ndaa are shown hr tha domaada Money Ratee. US* COa, ECU S SOR Ltotod Depous
EURO CURRENCY INTEREST RATES
Jwi 1 Short 7 days One Three Six One
Belgian Franc
Danish Krone
D-Mark
Dutch Guldar
Ranch Franc
Spanish Peseta Btt - 8J2
Strafing 5*8-57*
Swiss Franc 3‘+ - 3
Can. Data Th ■ 7fl
LK Dolar 6 A - Sit
Bafien Ura 10^-10
Yen 1ft - 1U
Asian SStng ** - h
Bhort lane rraw are ad ta the
■ TMFted MONTH PtBOft
Short
tram
7 days
notfoe
One
month
Three
months
Six
months
0(10
year
4h-4h
4 ik
•4ft
4fi
-4ft
4%
4ft
5-
4ft
5ft
-5ft
ft - 8
7ft
-7ft
7ft
-7ft
7ft
-7ft
7ft
-7ft
7ft
■7ft
4ft - 4ft
4ft
-4 ft
*3
-43
443
-4U
■4ft
4A
■4ft
4ft -4>4
4ft
-4ft
4ft
-4ft
4ft
-4ft
4ft
-4£
4ft
■4*
7ft -7ft
7ft
-7ft
7ft
-7ft
7ft
-7ft
7ft
-7
6H
-6 S
B - 8ft
ft
-8i2
ft
-ft
10
-9S
10ft
■10A
11 A
-
9-Sh SH-&4 9S-9ft 1Dft-9S| 10^ - lift
6ft -5!1 8ft -A B1S-6J3 Bit - 8ft 7ft -7
3*4 -3h 3^-319 3ft - 3ft 3* - 314 312-31*
7% -7ft 71,-7* 7ft - 7ft 7ft -7ft 7^ - 7ly
6A - SB 6ft - sit - 5iJ 6 - 5* B - 5%
lofl - 10ft 10ft • 10ft 10 a - 10ft 101* - 105* 11 - 10%
Ig-ift ift-1^4 ift-i»fi ft -14 1ft -1
>2 -la 1-^ ft -ft 2 1 4-2 1 s
US Data and Yen. oorara; mo ttsy* nodca.
FUTURES (MA71F) Paris Interbank offered rata {FFiSnfl
+0.04 95.68 *
+045 95.57 95.45
95.40 +0.* 95.45
[ ROtml EUROURA DfTJtATE FUTURES (UFFE) LI 000m pokita Of 1*9*
Opan
Sett price
Change
High
Law
EsL vol
Open tot.
89.40
*033
*54
*33
*77
89/42
+007
*51
68*
*.43
*.41
+036
*50
*38
168*
89/42
89.40
+005
*.48
*37
■ ma MOUTH RURO SWISS FRANC FUTIffiES (UFFT9 SFrtm polnis of 1*M
Open
Sett price
Change
High
Low
EsL vol
Open toL
96.68
86.67
+032
96.69
98.64
96.66
+033
96.70
+005
+005
SO40
457
■ THREE MONTH ECU FUTURES (UFFE) Eculm points of 1*9*
Open Sett price Change FI* Low Esl vol
tal +0.03 508
Sep 91B5 +0.04 81* 3*
fee +0.04 91B4 10
Mer +0.04 91* 39
' UFFE tutuee dra traded an APT
■ BUROURA OPTIONS (UFFE) LI 000m points of 1*96
Open int
Strto
Price
Jui
- CALLS -
Sep
Dec
Jun
— PUTS -
Sep
Dec
032
067
0.78
0.17
050
052
018
052
064
028
050
0.73
O10
040
052
0/45
073
088
CROSS RATES AND DERIVATIVES
w?
Pal||fiah
(BF«:-tM
- 1B58V
17.1 S
2.113
5.454
21.85
25.10
4.028
2.157
4.714
Denmark
(PKr) S247
10 ■ ■
-
1.1*
29*
209.7
799 0
1.132
2.474
15*
153.1
Ranoa -.
• (F&)
11.11
10.
32*
12.62
248.7
2.743
23*
Genmany
PM)
1 •
1.117
4.435
865B
5.158
59.76
-f ■
kntaid
m
-8.116
1
13*
1.623
138.1
Raft
«
1*.
03*
7 An
a445
ao*
5.156
:(H)
3>t94
1
4.618
OBPO
53.50
Norway
9*
■
4.900
1/423
6.310
1.174
0.829
1
0.7*
Japan J
(V)
5.879
.
19*
15*
7.421
-176.1
65*
07*
1.176
100.
Ecu
37.91
6.504
.
2.068
82*
1.7S7
1
Denton Krone,. Ptandi Ffmc. tUmtOm Kroner, end Sewtai Kronor per W. 8Mpwr Frano. EecxKto U> and fHnwn per tea
■ MUM
nirunas 94M) DM * per DM
■ J4
Mm
E YM VUTURtt (IMM) Yen 125m per Yen 1*
MARGINED FOREIGN
EXCHANGE TRADING
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LONDON +
LONDON+171 329 NEW TORK+212 FRAMGURT+49B9
Laum Change, rtgh Low Ett vol Opan Int
0. -0*89 0. *424
-0. 0.70* 0-
-0*73 -. - 0.7D50 ' 29 I486
OMM) afir perSFt
1 Latest Change Hgh Low Eat vol Open kit.
18S 1.17B4 4X 1. 1. 57,766
. 1.19* 1. 1.
82 18 884
I v ^ 1 I
88 DOVES STREET, LONDON W1X3RB
: FAX:
RlTUm (WM) £62,5* per £
-
-0.
■
L
U
''054*
SfiOS. .
.788 .
- ■
S 738
m '-ft
UK iNTEREST RATES
WffW Wf
-0.
-0.
158* .
157*
887
2
1,778
176
OPEAN CURRENCY UNIT RATES
Ecu eon. Rrae Change
uses against Ecu on ctoy
94 +7- bom
oan. race
% spread
Wv.
tod.
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[1 v •
EZlJJu
Opan Settprice Change High
i i ISHSIZI i' t i r^t i a , i t v . , . , ra j iT ;. flVf i M
, NatftariamfB
2.
+
-2.78
5u49
-
! SaigkaB
91
+0.067
-273
5.48
20
j Austria
13A383
13.
.+
-215
4.18
2
Germany
*
+
>2*
477
. -
Bpetoi
-
-028
257
2
Denmark
*
+
020
238
-1 '
Portugal
195.792
+
062
13S
-4
Mand
-Q30B588
134
052
-13.
France
+
258
030
-22
NON EFIM H4EMB91S
9mm' .
-
-
220
037
Daft
.16
.19
-
242
015
-
UK
-
4.70
-211
-
Ecu Bream ratoe
te by fta anpecu Cervntodon. Curranda# are to dneandtag rataUva atranrah.
BMttonwna etongaa are ta Ecu; apcattraefaneedarttM a vnwfc currency. Dfrargenca atoM die i
ado betwaantwD ranata faa
perewttag* tffl
Bwotbrnan
MttKiwMAdEoucarninM
for « cuTwey, aod tba nKAnum pantitoad pvomg» dMtnon ol cmnert iwwmtima
* fioo KmeaM rba
(17/BiBS) Strafing and KOtoo Lba sueoandad bom BOL A&mtmtn calatead by Sia Ftoanctol Ttotos.
M WaLADBJ.PtOA Wt t/9 OPTtOMB E31J250 jserta par {meet)
SWa
Price
Jun
- CALLS —
JU
Aug •
Jun
PUTS
Jtf
Aug
6.17
-
-
>
-
0.72
354
-
434
014
-
133
133
2.75
337
058
158
226
15*
071
158
221
159
277
■847
- •
017
_
135
3.79
439
15S0
-
033
-
B.11
-
-
Pnvbus oayto ref. Cafa lPuto 14JB7.I
aiw. d^a open toL, 00* Not S375E1 . 1
TAX-I RE E FUTURES 0\
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• TMNBe MONTH HURQOOUAR flriMJ *1m pcMa of 100M (May 26?
. Opan Latest Change Hgh Low Esl vol Open int.
Jut - 49,724 3*
Sop - - 94.18
Doc •. - 94.19
■ US THURURY RSX nmHRM OMM $lm per 100W (May 26)
Jan - +042 94.42 9*M 1,1* 8,105
Sap +041
Dec . . - 189 11^61
AIQpw karatoiBBfcaratapravtaraday
■ BIlilORHW K C S'lW S lUf^DMIiBpckteQMOON ' "
Soto — MILS — PUTS
Price J* Jii Aug Sap Jun Ji^ AugSep
110 022 025 028 0.02 008 011 014
002 049 013 0.15 019 020 024 026
0 003 004 047 042 039 040 043
BL wt WaL CM1 Ftts 1*845. Piwdoiia day^ aprat te, CMa Putt
■ BUROUWSMMMCOynOMSflJFFEj Sprint poire Ctf
0cs, L- Luxembourg, BLC- Luxembourg No. 034 990
PAYMENT OF DIVIDEND
Notice is hereby given ta shareholders dial u micron dividend for die six months
ended 31st March, of 3 -Up for ihe Reserve Fund has been declared by ibe
Board. Hits dividend will be paid on 6ih June. to registered shareholders of die
Fund who were on the register tn 31s Match. .
This dividend will be paid from 6tb June. to bearer shareholders of the Fund
against presentation of coupon do. 13 *1 an> of ihc company's paying agents
including its paying agem in the Umied Kingdom.
SG. WARBURG * CO. LTD.
Credits Paying Agency, 2 Finsbury Avenue. London EC2M 2PA
from whom claim forms can be obtained. United Kingdom ta* will be deducted
from claims in the United Kingdom at (he rate of 25 per cent, unless claims are
a cco mpanied by an aflidaviL
2nd June. MERCURY OFFSHORE STERLING TRUST (SICAV i
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FT-SfrA AH-Sham IndMf
MARKET REPORT
extant .
Equities shrug off early decline on Wall Street
By Steve Thompson, UK Stock
Market Editor
London’s equity market slipped
back from its highs yesterday but
still recorded its best closing level
of , in the wake of Wall Street's
upsurge on Wednesday.
European equity markets were
unsettled during the afternoon by a
weak opening on Wall Street, which
reflected the latest economic news
from the US. Another increase in
US unemployment claims, coupled
with a much lower than expected
National Association of Purchasing
Management index for May,
increased market fears that the US
could be heading for a “hard land-
ing” or recession, rather than a
“soft landing”.
Following the NAPM news and
aim the Bundesbank’s “no change”
policy on German interest rates, the
dollar began to lose ground against
the D-Mark, yen and French franc.
There was some comfort for
equity markets, however, in the per*
formance of bonds, bunds and gflts
which delivered another impres-
sively strong showing.
At the close the FT-SE 100 Index
was 2L2 firmer at 3,340.6. The FT-SE
Mid 250 index ended 21 up at a
closing peak of 3,674.8. Turnover
was 663.1m shares yesterday, while
the value of customer business on
Wednesday unproved to £l-2bn.
Marketmakers in London refused
to be panicked by Wall Street's
opening slide. “We are still very
bullish; we have given back some of
the market's earlier gain, but the
feeling In the marketplace is still
very positive,” said the head of
marketmaking at one of the leading
UK securities houses.
He added that the market was
expecting a flurry of corporate
activity in coming weeks, spear-
headed by the bid battle for control
of VSEL, the warship manufacturer.
The pharmaceuticals sector Is
another area where corporate activ-
ity is thought to be imminent, with
the Fisons/Medeva merger terms
expected very soon. And talk that a
sizeable bid is on the cards in the
merchant banks refuses to die
down. Kleinwort Benson has long
been a prime target in the sector.
Wednesday's 86-point leap by the
Dow Jones Industrial Average and
an initial farther rise in the dollar
triggered an early mark-up in UK
equities. The FT-SE 100 opened
some 33 points ahead and stayed
around the 3,350 level until the
early afternoon, when a jittery Wall
Street saw the Footsie close some 12
points below the day’s high.
Most of the day’s corporate
reports were well up to expectations
and often exceeded consensus fore-
casts. Siebe, the diversified engi-
neering group, topped the FT-SE 100
performance table after delivering
excellent figures accompanied by an
encouraging statement.
Northern Ireland Electricity fig-
ured prominently in the FT-SE MM
250 Index after bumper figures and
as the company announced that it
was seeking shareholder permission
to buy back 15 per cent of its own
shares.
Mr Richard Jeffrey, economist
and equity market strategist at
Charterhouse Tilney, the stockbro-
ker, maintaine d “there is a lot of
value in London, more s o than in
Wall Street”, pointing to i mp ro v ed
institutional liquidity and also to
faTirngr gfih yields, “which reveal thp
value in the equity market”.
■ C v -
'-bb F* ’ •
'■« *? ? C -
• fV *r-
■ - Par May
Source: FT Graphite 769d
• **£? .-t .
.«> <*»-••; t-r ■ ’
.45 *<*•> : *
NmBcmbs and ratios
FT-SE 100 .6
FT-SE Mid 250 .8
FT-SE-A 350 .9
FT-SfrA A4-Sham L33
FT-SE-A AB-Shara yMd 3.94
FT Ordinary index .8.
FT-SE-A Non Fins p/e 16X0
FT-SE 1 00 Fut Jun
lOyrGM yteld . . 7X8
Long gBt/equfty ytd ratio: 2.C3
;r
^7* "t
. .Cx? -V ; •n
Best preforming sect ors
1 Household Goods
2 Banks, Retail
3 Property
4 Media
5 Tobacco
Worst peifCMuiluti s ect or s .
i
2 BuflcSng Mata _ —
3 Chemicals
4 PharmacetiUcda ..
5 other Financial —
-i it '&*■ .
r.-r T* ,f '
V
Valuation
fears for
Glaxo
Pharmaceuticals leader Glaxo
Wellcome declined 4 to 723p,
against the trend In the sector
and the market, on the back of
an odd and disturbing story
that emanated from the US.
UK dealers said some very
negative comments had
appeared in a US tip sheet The
manager of a generics supply
group was believed to have
argued that the American
Depositary Receipts were over-
valued by $6.00. No US ana-
lysts were able to suggest a
rationale to the speculation,
although Smith Barney said it
retained its view that the
shares were overvalued. If the
story had any basis it could
knock around 190p off the UK
share price.
Closer to home there was
surprise and disappointment at
news that Dr David Barry, the
deputy to the head of research
at Glaxo Wellcome, and two
other executive directors, had
resigned from the company.
Analysts said that, although
senior resignations were fore-
cast, Dr Barry had been expec-
ted to remain.
The release earlier in the week
of disappointing national mort-
gage lending figures, coupled
with talk of broker down-
grades, presented an opportu-
nity for profit-taking.
There was also concern that
the range of profits forecasts
was too wide and the current
share price reflected the higher
- end of valuations. However, Mr
Peter Toeman of Hioare Govett,
who predicts current-year
earnings of £L6bn, compared
with lower end forecasts of
around £l.2bn, says he
includes £300m of exceptlonals
in his estimates. He argues
that his figures are, in fact,
broadly in hoe with the con-
sensus and the selling was
overdone.
Smith New Court and at
least one other leading UK
securities house were said to
have reiterated sell stances,
while UBS stressed its buy
argument. The divergence of
views prompted hectic two-way
trading, which saw the stock
recover to finish the day 2 off
at 652p with 7.8m shares
changing hands.
Lloyds volatile
Lloyds Bank shares weak-
ened ll’/i in early trading in
response to worries over prof-
its and a feeling that the stock
was over valued.
Lloyds has outperformed the
broad market by almost 15 per
cent since the start of the year.
Hanson busy
International conglomerate
Hanson was very heavily
traded as institutional inves-
tors piled In following the
official demerger of US Ind-
ustries (USD-
More than 15m shares
changed hands, as the stock
traded ex a 9p special dividend
that reflected the demerger
and closed a net 2H higher at
232Vip.
Hanson has underperformed
the broad market by 6 per cent
since late February, when the
demerger was first announced.
The lag reflected the dilution
2 /am
The Royal Bank of Scotland pic
Registrar's Department
announces that the results of the polls conducted at
the 9th Annual General Meeting of
British Gas pic
held on Wednesday 31 May. at the
London Arena, Limeharbour, London are as follows:
Votes in favour
Votes against
Resolution 3
2,,623
33,859,822
Carried
Votes in favour
Votes against
Resolution 4
2J 74,634,884
32J324.18S
Carried
Votes in favour
Votes against
Resolution 5
2,175.743,162
31.498,720
Votes in favour
Voles against
Votes in favour
Votes against
Votes in favour
Votes against
Votes in favour
Votes against
Resolution 6
2,154.010,970
53,376,208
Resolution S
2,174,704,372
.944
Resolution 12
211.
,672^42
Resolution 13
354,304,533
1,742,797.764
Carried
Carried
Defeated
Defeated
W The Royal Bank
7MC of Scotland
Tk-R»m S tinJpL tOfmryniljeur J6St AndmrSkfimirr Eb*hrq/i O E JYR
Rapa*nt la SxtfbiJ >1Z Krtfitamt fry JMRQ 7/1 ami DtmW hwiinm Anluatrt
The international private banking market is estimated at $4 Trillion and
growing. Haw Has deregulation and strong economic growth in a wide range
of countries changed mis business In recent years?
For more Information on editorial content and details of advertising
opportunities available In mis survey, please contact:
IN NEW YORK - Tbn Hart
: (212) 745-
Fax: (212) 319-0 7 OJ
IN LONDON - Hannah Pursall
: +44-171-873-
Fax: +44 171 873
David Raed
: +44-171-873-
Fax: +44-11-873-
FT Surveys
created by the move and, later,
unwillingness by Institutions
to buy the shares while they
included the USI element.
With that unwillingness
removed and thn dilution dis-
counted buyers moved in for
the 3p quarterly dividend to be
paid on Monday. USI shares
held their $14 flotation price
during most of the UK trading,
but ticked back to just above
$13 by the close.
Retailer Boots moved against
the strong market trend, foil-
ing 8 to 5lQp In solid tr ading of
6.4m after the group reported
figures that disappointed the
market The retreat made it
the day’s worst performing
stock in the FT-SE 100.
At the post-results meeting
with the company, analysts
were particularly disappointed
by news of a higher than antic-
ipated tax charge and the lack
of news on another share buy-
back scheme.
Brokers downgraded full-
year profit expectations, with
UBS reducing its current year
estimate by £20m to £530m.
However, the securities house
remains positive on the stock,
“on the basis of the steady per-
formance at Boots the Chemist
and cash flow considerations”.
However. Hoare Govett,
which has bad the stock an its
sell list for the last few
months, lowered its forecast by
£l5m to £530m and remains
negative.
Northern Ireland Electricity
stood out among the regional
electricity companies after it
reported figures ahead of mar-
ket expectations. Dealers were
also cheered by news that the
company will be seeking
authority to buy back up to
149 per cent of its stock.
The shares jumped 15 to 369p
as several brokers upgraded
current-year profits expecta-
tions.
Renewed enthusiasm for
property shares underpinned
FINANCIAL TIMES EQUITY INDICES
Jun 1 May SI May 30 May 26 May 25 Yr ago "Ugh Tow
Ordhrery Sham a .7 .3 2S13X .6 2S22.C .3
Onl dv. yMd 4 20 4.28 426 4.28 4.24 4X6 4.73 4X0
P/E ratio not 15.73 16.68 15.87 19.14 15.73
P/E ratio nl 16.49 15.04 1SS3 15.64 15.67 19.71 15.49
‘For . Ordmnr Shn MM tinoa eomp T. Ntfl 2/02/94; low 494 20/9/40
FT Oifevay Sham kitten bon data 1/7XKL
O nU i ia r y Share hourly changes
Open (LOO IIjDO 12X0 14X0 Wgh Low
.4 .1 a .8 .7 2S27.0 .0 .B .7
Jun 1 May 31
May 30
May 26
May 26
Yr ago
SEAQ btogahis
24X83 22.031
20X03
23.131
29,164
Equity turnover (Err^t
952.7
X
X
X
Equrty bwgamst
- 32X89
30X72
42X10
30X73
Strew traded .
131.8
733
689 Brit Aarn Cap Uta
720
+2
-
FA
143.7
105
100 Duinyat An Dhr
105
M62
-
7A
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267
105
100 D 6 Monthly Dhr
105
M5X2
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25X
103
98 Ftrabury WoridoMa
101
-
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190
FA
197 166*2 Omar* Crtfe
173
+2
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80
F.P.
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98
80 Gus Carter
92
V-
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202
3
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2X3
3*2
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3*2
HvfLI
2.6
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13.0
650
850 Oryx India
650
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1.00
250
250 Do Warrants
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20.7
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The UK Series
Business Information
Jun 1
Day's
chgefe May 31 May 30 May 28
Year
ago
Dhr.
yMd%
Net
cover
P/E
ratio
Xd at*
V«
Total
Rstaan
FT-SE 100
.0
+0.6 .4 X .1
X
4.13
2.01
15.08
X5
FT-SE Wd 250
.8
+0.6 .8 .6 .0
3X4
1X6
52X1
X6
FT-SE MM 250 ax hnr Trusts
X
+OX .0 .0 X
.5
668
1X3
17X6
64X0
.57
FT-SE-A 350
.9
♦OX 165aS 1B45.8 X
.9
4.00
1.06
15X1
.49
FT-SE-A 350 Higher YMd
X
+0-B .8 .6 .0
.1
4.87
1.76
14X7
37X7
X4
FT-SE-A 350 Lower Yield
X
+0.6 1B29.2 .9
2-97
2.42
17X9
FT-SE SmaSGop
.85
+0X 1B60.75 .10 X5 .84
3X7
1.82
23X0
27.62
.78
FT-SE SmaXCap ex tnv Trusts
.30
♦OX 1S 183BX8 X5
3.47
1.70
21X3
.88
FT-SE-A ALL-SHARE
X3
+66 X6 X4 .35 .89
394
1X5
16X2
29X0
X0
■ FT-SE Actuaries All-Share
Day's
Year
Dh.
Not
P/E
Cd ad|.
Total
Jun 1
chgeM May 31 May 3D May 28
BBO
>Md%
cover
ratio
yW
Return
140*2 *1**
232 *1
983
as2
1.700
3BB
rxoo
380
1^00
BZO
ID HNBIAL EXTTUCnONC24|
12 Extractive lndustries(7)
15 CM, Integr a teOgl
20 GEN MDUSTftIALS(Z78)
21 BuBdng 8 Construc8on(38)
22 Bukfing Matia & MarctaQl)
23 Churicate(22)
24 D/veralftod tndustrtats(l8J
25 Boctrorrc & Bed Eqt4p(36)
26 EngoK«i1ng(72}
21 Engineering. VcHctest*3)
28 Pacer. Pckg & Pnotmgp7)
M Textiea S
+0-9 .00 .81 J1 ^2
+1.0 .10 ^2 .37
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+0.5 .59 .81 .13 .B7
+0.4 .12 X7 997.78
1H2SJ38 .62 X6 X9
♦0.1 X0 .72 .18 .06
+0.7 d .84 .47 X9
+0.7 .87 .64 .06 .65
+0.6 .58 .31 X2 182X51
+0.7 X2 .70 X8 X4
+OX X3 .72 X1
18.62 61.64
9lX4
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77.58 31.57 .76
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1.71
18X5
34.03
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1X8
17X0
20X4
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1.94
37.17
887X8
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44X9
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1.59
15X0
40X2
997.97
1X4
14.72
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1X4
21.41
26X4
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0.54
57.83
47X8
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2X9
1.80
17.16
41X7
38X7
.48
Sorted
In the age of information, the hanJ thing is to find the
rigfu son: key company information that's relevant and to
30 CONSUMER GOOOSt93)
31 BreweriesflB)
32 Spirits. VWrws 8 CUors(10t
33 Food Produc0rs<24)
34 Househotd GoodsflO)
3 fl Health Carefi7)
37 P 1 ram T» CBUttcala <1 23
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18.38 67.78
14X0
15.68 77.07
15j17 55.78
54X0
18.46 24.09
19X6 69.31
12.18 131X9
the point
FT McCarthy is your vital source. Our network can
provide comprehensive information on the exact companies
and sectors that interest you. Every day we gather
information from the world's top business publications -
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by industry, by country or by market. Industry speculation as
40 SERVlC£Sf22U)
41 Distributare(32)
42 Letsura 3 Hotefsf29|
43 MMfia(43)
44 Rotators, FoodO©
45 Rotators. Oanora(44)
48 Support SarvicasOT)
49 Transported]
51 Other Sendees 6
60 lfTHJTIES(37)
62 BertricttytITI
64 Gas DtetribudonCl
66 TotecommunlcatJofra^
well as the hard facts.
70 HNANCIAL8(117I
71 Banks. RetaU(0)
72 Bonks. MochanKBI
73 IneuanceOiS)
74 Lite Assurance®
77 Other Fnondai(2Z)
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+65 X7 X9 .07 .09
+0.3 X1 .91 2S75X3
+63 X1 X1 X0 .00
♦1.1 X4 X0 .56
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17.84 32.12
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18.68 27X8 925X4
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FT McCarthy. The right business information
Compile ton coupon and tend it 10 : Michael Ridgway. FT McCarthy.
Financial Times Information. Fltzroy House. 13-17 Epnorth SirccL
London EC2A 4DL : 0I 7 I-S2f 79S3. Please tend me details
of FT McCantn.-
■ Hourly movements
Open 600 10JQ 11 x 0 12X0 13JQ 14X0 16X0
FT-SE 100 X X X X .0 X
FT-SE MW 250 9 X X
FT-SE-A 350 .7 10B4X .9 .1 .6 .7
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Ckw Prmrtoua Changn
RNANC1AL TIMES
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+.10 710
+xo a 48
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+4 258 192 10
+.80 4<50 _
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+20
+21
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+19 870
♦12 847
—4a 797
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US INDICES
60 0 — _
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880 — —
420 _ _
MW May
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3.77 -.02 3X6 108
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4.01 * 415 3X3
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AUSTRALIA (Jun 1 /AustSJ
+12 4,82
+ 08 310
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+J0 14X0
+40 H20
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+.19 7JS
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Asia/Pacific: + 81 3 17 11 USA/Canada: + 1 212 752
■ TOKYO ■ NK**T ACTHI IffOCHCti ‘ThuredBy, June 1 , IMS.
36
4 pm dose June i
NEW YORK STOCK EXCHANGE COMPOSITE
m iv a Dm
flak Im Stack Dk % E wta Lm Mb Cher
15% 12% AAR 048 12 25 473*15% 14% 14% -%
34 l7AtPrarmaA UlB 1*144 177 18% 18% 18% +%
48% 35 AMP 032 22 32 43 42% «2% +%
70 53% AIM =2 09% 88% 09 +%
47% 41% ASA 1.71 3.9 29 882 44% 43% 44% +%
40% 30% AOtttL 084 11 20 40% 30% 40
17% UAWMPrt 040 2. 18% 18% 16%
24% 21 ASM kid 060 28 13 10 23% 22% 23% +%
18% 13% Acphceta B 484 14% 14 14% »%
27% 21% ACE Ltd 056 22 8 25% Z5 25% -%
9% 8% ACM M h 090 9.7 8 207 9% 9% 9%
7% 6% ACM GrOpp DBG 91 233 7% 7% 7% +%
7% 5% ACMGrtSp * 121 7 6% 8%
8% 7% ACM OH Sa 0X10* 347 8% 8% 8%
8% 7%AOI*«i 1.08 11 8 338 9% 9% 9% -%
28% 10% AcmpChr 048 20 12 221 24% 23% 24% +$
37% 12% Acme Bed 67 701 27% 2B% 27% -%
34% XAcndta 072 23 18 10 30% 30% 30% +%
11% 8%Adm 038 3.4 B 532 10% 10% 10%
18% 10% Aoaun 22 433 11% II II
70 53% AMR
47% 41% ASA
40% 30% AMMO.
28% 10% AcmoChr
37% 12% Acme Beet
34% 30 Aorta
11% 8%Adm
18% 10% Aoraon
17% 15% Altana Ejqpr 048 2.8 0 142 17% 17% 17%
BG 65 SB
34 32% 33%
B% 8 8%
21 % 21 21 %
81% 81 81%
£££
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22% 23% 22%
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37% 25«k*«c 9 34 32%
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21% 16%Adwlnc 010 05 17 188 21% 21
81 S2 Aegon 257 12 16 19Bu81% 81
4% 3% Aorta 6 407 U4% 4%
60% 46% AetaaL 276 4* II 59% 50%
43% 31% ASK 052 1* 14 707 43% 41%
23% 16/Uinwun 0*8 3* 13 22% 22%
1% S Atomic 0 2B0 % flV3
54% 43% AkPiC 1.04 20 53 52%
24% 18%AktneFrt 030 1 6 11 5X 18% 18%
27 19% Abas He ZB 882 26 25%
15 11% (Urban 1*8 102 10 25 14% 14%
X 34 AiTtfi 122 27% 28%
17% 13%Ate*aAr 020 1* 17 2AS 16% 16%
22% 17% Aten? W 040 1* 23 403 u22% 23%
16 12% Atom 020 1*18 15% 15%
32% 35$AM0B 032 1* 18 195 u32% 31%
28 23 AJQjMT A 032 1* 20 54 27% 38%
32% 27% Alban 052 1* 16 29% 77%
30% 23% AicnAI OX 1.0 24 29% 29%
73% 61% AfcuSI 1.04 1* 48 71% 71%
« 30% Alerftomi 070 1* 9 898 40% 39%
030 1 6 11 596 18% 18% 18%
ZB 882 26 25% H %
26% 18% AtaAl i 010 0 4 13 989
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9% 8% ASnee Q
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34% 37% Amfieri 1 24 16 11 u34% 34% 34% +%
6% 4% Am Garth 077 14.0 221 5% 5% 5%
22% 19% Am m Pr 2.30 1Q.8 46 17G 21% 21% 21% •%
19% 16% An Herege 072 17 10 47 19% 19% 19%
70% 61 % AmHann IX 4 0 71% 72% 74% +%
3% 2% AmHotBta 0.75 211 14 3 3% 3% 3%
118% 9S% Amtifl 0 48 04 18 % 112% 113% -%
7% 5% Am Opp he 1.X 14* 376 8% 6% 5% -%
15% 23% Anfrem 1.00 AO 1« 177 25 24% 24% -%
24% ?1 Am Pram 040 18 11 386 34% 24% 24%
8>2 7% Am Had E3 044 s* 4 274 8% B 8
27% 23% AmSW 0*6 If 10 27 28% 28% ♦%
19% 17 Am (Mr M 125 09 10 18 17% 18 +%
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77% 19% AnSnd 32 6S0uZ7% 27% 27% +%
79% 61% AmHann
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115% 9S% Amtil
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18% 15% Amttok 0*4 1* 15 451 17% 17% 17% +%
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27% 34% Angara 094 17 17 32 2fi 35% 25%
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29% 22% AHKflaQp a 38 1.0 44 197B u29% 29 29
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AMEX COMPOSITE PRICES
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- Gaintneedge ovaryoi cpmpeWore by Iwingme Financial Times deSveral W your homeor office every working ; day.
• ’ HaridrdeiivHy sente a»«ailable.fcr all subscribers throughout Cyprus subject to confkrration by the Distributor.
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Financial Times. World Business Newspaper.
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DM 17 354 38%
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United 51
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US Energy
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1A0 31%
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15% 15b
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«ii
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21
42
4%
uwsealA
Wmtle n-DQ
WiteSamo
Wotohan Lx028
Wttngt 044
wpp Grom an
Wyman-Gdn 0;ATBENS r
showed little nsactiahjfof& •
news that the , Greek~ J an ^V ~
meat had
tional treaty, whi^vwqoid-
allow it to doublefijfc extebtqf: '
its territorial wafers^te
miles. Turkey has saMMifcat.-
edly in the past that aqcfefcff .
extension could
armed conflict. : jr ; : v.-y
The composite Inflfisr'hi
anbul gained l.OSAlT'or'aaW :
cent to 48,465.09, :ha. ifoj? ‘
high of S8, in turite*® dr -
TL10.500bn, while tt^ASsc&a
general share index e&gei'm '
to 890.31 in . turhoy^Tvof '
Di25bn. i?';.-
WARSAW lost 3.4 Jtecceiftay-
turnover dipped by 26
to 40m zlotys. The- Wig index
fen 288.9 to 7,687.8. *
Brokers remarked ; ^hBt^the' r
recent volatility of eqihtilB wa',
causing uncertainty among the -
domestic investors whadonfr.
nated trading activity.
Written and edited bjr Wffitan
Cochrane and John Wtt 1 >/; •.
Nikkei recovers as region responds to gains in Dow
Tokyo
Investor sentiment improved
fhanVs to the rise in the dollar,
but equities fluctuated on tech-
nical and speculative activity
before the Nikkei index closed
1 per cent higher, writes Emiko
Terazono in Tokyo.
The 225 average rose 157.78
to 15,594.57 after moving
between 15,420.16 and 15,647.47.
An initial boost on concerted
dollar-buying intervention by
leading central banks was
reversed by a fall in futures
which triggered arbitrage
unwinding, but speculative
afternoon buying left share
prices higher at the end.
Volume totalled 256m shares,
against 247m. The Topix index
of all first section stocks
gained 6.49 at 1,260.60 and the
Nikkei 300 edged up 0.86 to
234.72. while advances led
declines by 654 to 313, with 171
issues unchanged. In London
the ISE/Nikkei 50 index firmed
1.38 to 1,042.53.
Financial institutions and
public funds were absent from
the market, while overseas
investors took small-lot profits.
Some traders took heart in the
speculative activity as an indi-
cation of the return of individ-
ual Investors to the market,
but most investors expect such
trading to be shortlived.
Among speculative favourites,
Daido Steel Sheet rose by its
daily limit of Y100 to Y795 and
Tamura Electric Works by its
limit of Y102 to Yl,020.
Individuals also bought con-
struction issues, traded
actively over the past few
months on the Kobe recon-
struction theme. Fudo Con-
struction, the day’s most active
issue, added Y41 at Y699. Sumi-
tomo Construction Y20 at Y520
and Penta-Ocean Construction
Y24 at Y568."
Semiconductor-related com-
panies were higher. Nikon, the
camera maker, climbed Y59 to
Y840. The stock has risen 17
per cent since the start of the
month on its earnings forecast
supported by demand for its
semiconductor equipment.
Tokyo Electron, the semicon-
ductor manufacturing equip-
ment concern, rose Y70 to
Y2.800 and Advantest, the
semiconductor testing device
producer, gained Y70 at Y3.010.
Sega, the video game mak er,
rose Y30 to Y3.200 in spite of
earlier selling by individuals.
The company announced yes-
terday that It would shift all
production of its video games
for households overseas. Dis-
couraged by Sega's weak earn-
ings reported earlier this
month, the stock has fallen 18
per cent since the end of April
In Osaka, the OSE average
put on 107.92 at .12 in vol-
ume of 12.7m shares. Murata
moved ahead Y100 to Y3.330 an
buying by overseas investors.
Roundup
The region was inspired by
Wall Street’s overnight perfor-
mance and extended Wednes-
day's gains, Jakarta and Kuala
Lumpur outperforming after a
day's holiday; exceptions
included Karachi, where trad-
ing was curtailed by a bomb
scare.
HONG KONG closed at its
highest level in seven months,
with foreign institutions again
showing interest. The Hang
Seng index added or 1.62
per cent at 9,559.74, having
seen an intraday high of
9,625.35. Turnover leapt to
HKS720bn from HK$4.62bn.
Some brokers expected that
foreign funds would continue
to enter the market if US inter-
est rates were perceived to be
on a downtrend.
Among banking stocks,
HSBC rose HK82.50 to HKS103
and Hang Seng Rank firmed 75
cents to HK560.75. Elsewhere.
Cheung Kong put on 70 cents
at HKS38.80, Sun Hung Kai
Properties jumped HK$L7o to
HK857.75 and New World I
Development climbed 60 cents
to HK824.70.
SHANGHAI B shares rose 18
per cent, assisted by the gains
in Hong Kong. The B index
finned 0.703 to 55.85 on high
volume of 13.8m shares.
TAIPEI recorded its fourth
successive gain, and the
weighted index added 39.78 at
5., oil a high of 5,727.65.
Turnover was T$28.7bn.
Cement issues were strong
throughout the session on an
expected rise in prices for
imported cement. Lucky
Cement and Chia Hsrn Cement
both rose by the daily permit-
5® owrK1) hv FtnanoaJ Times Ltd., Goldman. Sacha 5 Co. and Standard & Poor's. The Indfcss are cwrmtad by The Financial Tim* and
Goldman Sachs n coniurwion with tha Instltuia of Actuaries and the FacUty of Actuaries. NatWfost Securities Lid. was a co-founder of the Irrfcss
NATIONAL AND
NATIONAL AND
REGIONAL MARKETS — — WEDNESDAY MAY 31 TUESDAY MAY 30 IMS DOLUW BKJEX
Fiy as mi psrentwses US Day's Pound Local Ldcal Grass US Local WD6 *— "
^Kwnumber of ines Ooflar Change Storing Yen DM Currency % chg DN. Dollar Sterilng Yen DM Currency 52 week SZ week ££
— 15 !2£! jndex Index index on day Yield Index Indes Index Index Index High Low (a^ro^
Australia (83)
Austria (26)
Belgium 139
Bradl 618) .
Canada (102)
Denmark (331
Finland £24).
Franco (toil...
Germany (59)
Hong Kong (SS).. .
Ireland |16)
Italy (SB)...
Japan (483)
Malaysia (97) ..
Mexico (16i .
Netheriand | 10 J
New Ceatand fUl
Norway (331
Singapore (44j__ . .......
South Africa tfij
Spain (38)..
Sweden (48)
Switzerland (4®._
Thailand H6I
United Kingdom (203).
USA )
Americ as i65 4i
Exrope P'391 ....
Horde (136)
Padfic Beam (
Euro-Paciflc (1S61)...
North America (608)....
Europe Ex. UK (S3S) ......
Pacrf c &. Japan (339)
World Er. US ()
World Ex. UK ()
Work) Ex. Japan (
187 35
193.37
.. 104.63
134.99
.....141.62
200 77
— -207 83
...184 63
153 83
. — .369 01
-.226.91
... ..75.00
140.05
S
—
— 247 44
. .~.22 1 54
403 30
341-37
145.54
....256.60
I9S.B3
213.89
— -218.21
.....109.88
.... 187.00
.....248.36
160.04
....171 17
....213.47
• —
... -256 82
171 79
......163 09
.....206.47
157.05 175.20
167.46 174.16
161.66 171.35
181.11 183.84
180.55 188.06
ted 7 per cent limit to TS31.50
a nd T$ 3L70 respectively.
SYDNEY was just slightly
firmer as the weakness of the
Australian dollar weighed on
sentiment. The All Ordinaries
index closed 1.5 higher at
2,021.0, having peaked during
the session at 2,034^. Turnover
amounted to A$445.33m.
Renison Goldfields was
steady at AS4.30, after announ-
cing that it had acquired 50.2
per cent of its takeover target
Pancontinental, which rose 3
cents to AS2.00.
SEOUL saw broad-based buy-
ing prompted by persistent
intervention from the stock
market stabilisation fund. The
composite index added 8-93 at
891.43. MANILA broke through
the 2,800 resistance level the
composite index closing 30-35
higher at 2£02.72.
JAKARTA brokers said for-
Indonesia
Jakarta Gomp ol te Index
490
440
420
Jan 19SS
Somes; Datassraom
eign funds were pouring into
the market as the JKSE com-
posite index rose 10.50 or 22
per cent to 485.78. KUALA
LUMPUR put on 2 per cent, the
KLSE composite index ending
20.82 up at 1,070.82. Dealers
said the lack of negative mar-
ket talk ahead of the
announcement of anti-inflation
measures today by Prime Min-
ister Mohamad also
boosted investor confidence.
SINGAPORE saw buying in
blue chips, h anks and proper-
ties, in response to Wall Street
and a prime rate cut by UOB
R ank , thought likely to be
matched by three other big
Singapore banks. The Straits
Times Industrial index rose
26.67 or 1.2 per cent to 2^05.03.
The prospect of lower inter-
est rates lifted property compa-
nies. Developer Wing Tai fin-
ished 10 cents ahead at S82.82
after a day’s high of S$285.
BANGKOK retreated during
the afternoon as profits were
realised in the banks. The SET
index, which had seen a high
of 1,429.55, was finally 9.29
up at 1,401.60. Turnover came
to Bt2L8bn. Rises led falls by
184 to 160, with 98 issues
unchang ed
BOMBAY gave credit tb good
corporate results, following
Telco’s trebled profits on
Wednesday, as the BSE 30-
share index rose 58.37 or L7
per cent to 3,409.85. Among
other big blue chips. Reliance,
put on Rs7 at Rs278.50 and
Tisco Rsll-50 at Rs234. COL-
OMBO closed 1.4 per ; cent
higher on institutional buying,
the CSE all-share index advan-
cing 9.84 to 703.64.
KARACHI suspended trading
45 minutes from the dose after
two car bombs exploded in the
city, and after an anonymous
caller telephoned a bomb warn-
ing to the Karachi SE itsett
The KSE 100-share index had
risen 6.76 to 1.522.15 by the
time trading was halted.
Record sales
and profits.
The result of
world-class
engineering.
Preliminary results for die year ended
April I.
Turnover
Profit before tax
Earnings per share
Final dividend
Specialist Mechanical Engineering
Safety and LjlY- Support
_. : vr4v ) r;V.a->V' V
■ J fe. “I.'
JSPIP1
■■ i-fe vV T
mmmm
Compressed
'These excellent results, which demonstrate strong organic
growth, are not just due to the improved world-wide economic
environment but are also derived from market share growth,
keen cost control and continuous product innovation. Recent
acquisitions also played a part To support our accelerating sales
growth programmes, we have allocated a record level of capital
spending for the next fiscal year of £165.0 million. For the *
first time in nearly a decade, much of this spending will be I
on increasing production capacity Wrth order backlog §«
up 20-4% we have started the current year in a healthy
position and encouragingly the national economies wHjdV.we
serve continue to prosper Further our policy of substandard
ongoing investment in research and development togetherWrth
the opportunities available to us from recent acquisitions,
us significant confidence in the continuing success of the Creep-
We face an everting future as we press forward towards our
><& goals and entrench our position as orje of the world's
£ 1 = teadmg engineenng groups. Indeed, Siebe is actoowledg^!
g|H to be a world leader in its chosen markets."
^ Barrie Stephens. Qidro»n
'-Tfe
. -V^7V---.v
Tha Worid Index IL- -185.79 -OJ 173.33 33 ^ vwm nt : : — 1—
= 2==. 0 6 ^34 188J8 173-66 87.7 9 134.88 147^8 188^7 165^2
■^P yriQW- Th# Rnanfilal Lmttad, Coldnur, Sadis and Cn mart g p— ,nnr fe ^ — — ■ ■' ■■■
CONSTmiENT CHAMQE VWBc Narno changr
SIEBE THE ENGINEER. HERE, THERE AND EVERYWHERE.
Siebe pic. iwon H ou**. 2-4 Viewva Strea.. Wiodsm- Ren Jhire SLl IEr I. En^and.
I
dry^
\ jy-t
FINANCIAL TIMES SURVEY
DEDIIDI |^ H FINANCE, INDUSTRY
ViiEvn nErUDLlVi and INVESTMENT
wSOper cen? .-/'to.--,.
Sft'SMr asaif^
*-*ose PM-; to x£.* x-
M'mm L-sV;^
te4dr::PC$ h/T 1 *-- '■■
gttlito first
Betr.*;' "■ * j ^.-
EgP*&. and ‘
g*ML:th* Cr^i: lf| c
fefrad ratified »v+
^treaty wi-S^
double ira". >
territorial
fp^feyias i-:i; ■ J ;
30 we pas: ;rp*.
Mito* could
jfifnifiiet. " * •%,
(fr^eamposiie ;_- ^ .
i| jS&ed i,np4 ~V
3b-48A6iOS. as-'^Ji
3tf %52SS3. b
^Obn,- while -vT^^t
fisfsfere iaws'Il.^
ttfeSi.’ in
sfet.-'.r ■■'-• -c
W dipped b>
M.?)n(TG Ti,.
ofer dipped b\
aw iiotys. Tto 0
Rfc&tcrT.SST.f ■
Steprs remarftc :,
tft'volEtilitv of : ' k
investors
drag act!*.-:?.
Miiiarid wilted ^Tvi;
. Turr-%- -
IMmc K«i :,'; •••/.:
&360, u-::- -s’t..
saw 4 -
SBK32
W jfLjtEe blec
r:-:-r 1: ' •'■ •
faW^P Iv.ri; /—
: ‘-r^ :.G
j- r.-_"- ! -
ggW» ■■■ t:
" *te taft::'.i'' ':'~:.~
4^f*Ri5a^v- -:r
W-rfSf.t-i
fcotfcljs itic;
Sifter :v. v..:i:
! nST'- . — ;i ii
IWfrS.hVr
FRIDAY JUNE 2 T
I V fiTe 'sbbrt’ years the
CzMhs'havfe 'transformed
the most .igribodok centrally
planned 'system Into; the most
deregulated and' privatised of
mils, Na other . country. Has.
dtmeasmcichto roflbackwhat
the prime, minister, Vaclav
Elans, describes as “the pater-
nalism, of the state". Inthe pro-
cess theCze^.ta^
sot only the ecpnofiry bat 'also ,
theinselves,lii^i^&^ihuch of ■
the seIfY»npd^ije.llitat Nazi/,
invasion anJLAJmore than -40 ;
years of fojtohtotisitf had
eroded.’' . ■
The greatest^ajbhleyemertt:;
has . been t±ta,;mico^sM ^oiit J
pfetion: ofijui most a&ddQus '
ever - undertakers. anywhere. -
Millions of/citteetof; have
become shareholders inVinas-
sive .transfer .«f assets from'the
state to indiyiduala'and privat^
juTOt fanfint j iTn^ fi, -, _2
The govemmenfS; -
80 per cent jhf tbe economy h ,
in private hands is, hjoW«frer,
an e r gggerat m . The J^afimial
Property Pond.- stpl holds big
stakes in many partly! priva-
tised comparde^ &od^ils in cor-
porate boardroomstalongside
private sli^r^wIdersN. who
vneld most influence.;
But after lour years of reces-
sion the largely 'privatised but .
undercapitalised economy has
started to grow again, although
personal incomes appear to be
rising faster.-than productivity '
and tboosands of enterprises
stm. need mpdenusation and
restrocturing,. .
Meanwh^eyr 1 the •• Czech
koruna has bfecome jane of the
most stable corzencies in'
Eurcg>e andisheadtagtowards
ccmvertiMBts. The .service sec-
tor in par&ular r fe bDomrng.
Most of the date. habk<; .have .
been privatised arid re-capital-,
ised and have been Joined by
more than 5fl" banks, some ot
which; are small and ^poorly ,
Direct foreign investment
As of December 31. : $3.1 bOBon
I By country of origin
US 21.2K
Othera tao%
By sector
Consumer goods, . >ucA--, '
tobacco 20L6% ' >•. .
O' v-'ri
■!» -="f -v
‘CT’ v
Othera 2Z6%
Germany 3&2%
France 114%
Austria 74)%
Belgium 6 . 1 %
Transportation
equipment 2^3%
Construction
12.7%
e
- i — Banking, savings,
insurance
11 . 6 %
G
Food 9^%
! Bridge, Prague: after four years of recession the largely privatised but imtar-captadtsed economy has i
I to grow again
Change aided by winds of recovery
A paperless di>ck exchange ;
and electronic
market rirn»' wi~ jiffiong fa. 1
as yet naceijtain hbotit- thei^ ;
roles. . '
Ctmstmctton nhl Mpdns^ \
output are alw . piCkh^ ’pip,'
botsted hy inopeihato; $abh of
foreign investment ’ which .is
helping to mqagh^^aBcaiK: ...
omy and bind the country ever
closer to the west Membership
of the European Union around
the turn of the century awaits
the nod from Brussels. What,
some government ministers
ask, is there left to be done?
The answer, inevitably, is a
lot. Some politicians show a
worrying tendency to equate
the end of coupon privatisation
with the end .of history. But
with general elections due next
year the political debate is
starting to focus more sharply
an, economic. Issues. “It is not
enough to be triumphalist
about the economy.” says
Vladimir Dlouhy, the trade and
industry minister. “There are a
thousand small things to be
done to ensure the success of
ebortomic. reform at the enter-
prise leveL”
. Piffeences within the coali-
tM Aon economic policy are
grpwihg, in a battle between
pragmatism and ideology. Mr
Dfe tih ys : ~smap Civic Demo-
cratic 'AlKahce paity is trying
to- distmgmsh itsdf from the
prime minister’s ‘ dominant
eSvK'Denoihatic Party which:
The transfer from command economy to deregulated market is moving
into its second phase. Vincent Boland looks at its development
sets the tone of economic pol-
icy.
Mr Dlouhy points to a swell-
ing trade deficit which he esti-
mates could reach KcSObn
: ($3bn) by the end of the year,
as evidence of some still
deep-rooted weaknesses in the
economy. This gap is usually
masked by revenue from tour-
ism which earned more than
$2bn last year. But Mr DIouhy
fears that the Czech economy
is losing its competitive edge.
“Productivity and microeco-
nomic competitiveness are the
•main problems," he says.
Up until now. an underval-
ued koruna has artificially pro-
tected industry from competi-
tion. It has allowed exports to
compete on price rather than
higher quality.
But full current account con-
vertibility. which the Czech
National Bank proposes to
introduce by July, is likely to
. force ;the pace of restructuring
as koruna appreciation exposes
these weaknesses.
Gross domestic product grew
by 16 per cent in , while
inflation was halved to just
under 10 per cent. Further
growth of about 3.5 per cent is
expected this year. But reduc-
ing inflation will be impossible
without higher investment and
microeconomic changes at the
enterprise level, the Czech
National Bank believes.
The need to combat inflati on
presents the anti-regulatory
government with a Hilemma. It
is faced with often contradic-
tory de man ds for official action
to help exporters, liberate
wages and the labour market,
regulate monopolies, crack
down on insider trading and
rogue stockbrokers and even to
keep “jewels” such as SPT
Telecom in domestic hands.
- But the whole point of cou-
pon privatisation was to leave
the separation of good and bad
companies to the market This
is a task for mana gers, share-
holders and bankers, not gov-
ernment, Mr Klaus argues.
The problem is that the rules
governing the economy gener-
ally. and the capital markets in
particular, were drawn up to
facilitate the macs sell-off of
state assets. Now that this has
been done many argue that
new guidelines and rules are
needed.
Coupon privatisation gave
enormous power to the invest-
ment funds which underwrote
its success. But it created a
unique capital market struc-
ture which is still in the early
stages of development
One problem, for example, is
the lack of stock market liquid-
ity caused by a fear among
investment funds of diluting
their shareholdings and a
reluctance to sell stock. Owner-
ship remains mare important
than returns for investors to
many of the inexperienced par-
ticipants in the market.
Regulations do exist, but
enforcement is weak, again
due largely to lack of experi-
ence. Creating a framework
that would ensure proper regu-
lation of markets “is some-
thing we have not spent
enough time thinking about",
says Zdenek Bakala, chairman
of the investment hank, Patria
Finance. The government does
not necessarily have to invent
new regulations, bankers and
investors say. It just has to
facilitate implementation of
the few ground rules needed to
see that all parts of the capital
market work more or less in
harmony.
To do so could even be politi-
cally desirable. Jiri Kunert,
president and chief executive
of- Zivnostenska Banka, the
first Czech bank to be priva-
tised, says: “The government
must be aware that if some-
thing goes wrong with a fund,
or a bank, people will not
blame the managers. They will
blame the politicians.”
The country is moving into
electioneering mode ahead of
next year’s June general elec-
tions and two items currently
dominating the privatisation
schedule could yet shape cam-
paign issues. They are the $lbn
flagship telecoms privatisation
deal now being finalised and
the planned $7 00m investment
in the country's two main oil
refineries by foreign oil compa-
nies.
Both have sparked an
intense debate about the desir-
ability of giving domestic
shareholders, industries and
banks a bigger say in the
future of these key industries
or of keeping them in local
hands altogether.
Mr Klaus, the prime minis-
ter, now goes out of his way to
reassure foreign investors, and
Czech voters, that foreign
investment has been good for
the Czech Republic, while ref-
using to grant concessions
which would give foreigners an
Economy; Industry 2
Policy and its makers
Privatisation .. — — 3
Banking 4
The stock market
Investment funds 6
The brewing industry 7
Car components
The truck industry 10
Profiles
Industry:
Skoda Plzen 7
Skoda Automobflova 9
CKD Praha Holding 9
Balking
Pavel Kavanek of the CSOB
Obchodhi Banka 4
Zdenek Bakala of Patria
Finance
Dr Richard Salzmann of
Komerfcni Banka
Ceska Sporitetna 5
VBrtor Kozeny of Harvard
investment fields IQ
Business fact file 10
Edttoria i production:
Sarah Murray
unfair advantage over local
investors.
But foreign investment has
developed a bad image among
many ordinary Czechs. Disillu-
sion set in after Volkswagen
curtailed its big investment in
Skoda Auto in . expen-
sively hired American manag-
ers foiled to pull round the ail-
ing Tatra truck plant and Air
France pulled out of Czechoslo-
vak Airlines last year.
Daniel Arbess, managing
partner in Prague of White &
Case, the US law firm, believes
Czech expectations of foreign
direct investment in the early
days were too high, so disap-
pointment when some went
wrong was all the greater.
“The government has played
some thin g of a role by allow-
ing the record not to reflect
accurately what these deals
entailed," Mr Arbess says.
Czechs are proudly sceptical
people. Many feel they can get
by on their own without rely-
ing on foreigners. Their "velvet
revolution" has entailed rela-
tively little dislocation.
The next few years will show
how fast they can reap the
fruits of the new private econ-
omy that they have created
through their own brand of
popular capitalism.
O VNCKtA M06 •_
V"
t/
" W' ' ‘ /
fitter’ '■A'/.'j' ' *
~Z2r )
Hiv- -j, . i
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mm
■ ; A- 0 { i;Y
THE CZECH REPUBLIC I’chek rl’pablikl • Premier Vdclav Klaus:
population of 10,5 million; stable government; parliamentary democracy;
balanced budget; GDP 2.5%; stable exchange rate 1 USD - 27,8 CZK; low
Inflation 10%; low unemployment 3,1%; high foreign currency reserves
USD 8.4 billion; low foreign debt USD 9,1 billion; average monthly salary
7.Q00 CZK; PSE market capitalization USD 12,4 billion; 80% economy in
private bands; skilled and educated work-force; convertible currency, free
repatriation or profits; tax treaties: U.SA, Netherlands. Cyprus and others
■ History; from 5th to 6th century' arrival of Czech tribes; from 9th to 10th
century establishment of the Czech state, Charles IV. Roman -
Emperor and King of Bohemia; 134 S Charles University of Prague founded;
191S proclamation of Czechoslovakia; Prague Spring; procla-
mation of the Czech Republic; Charter 77; Velvet Revolution,
beginning of democratic changes In society; the Czech and Slovak
Federative Republic; establishment of HC&C, The BUI of Rights;
first wave of privatization; dissolution of Czechoslovakia
and establishment of the Independent Czech Republic; signature
of Partnership for Peace agreement; affiliated member of EU; comple-
tion of second wave of privatization; municipal elections confirmed
Czech citizens strong support for market economy in November .
if
&
W& : \
-:-V Vi ;/ s
Thinking
HARVARD FUNDS Iba.'ved fandz] • closed funds; established In ;
one of the largest funds in the Czech Republic, 10% market share;
licensed and approved investment funds by the Ministry of Finance,
the Czech Republic; member of tbe Association of Investment Funds and
Companies; largest shareholder of Harvard Funds, Harvard Brokerage
Services, fund manager Viktor Kozeny, education: Harvard University;
fund management company; Harvard Capital & Consulting, Prague, to?
Czech Republic, established since 1 990; over one bUUon USD in assets
under management; 23 Investment funds; largest funds: Harvard Dividend
Investment Fund and Harvard Growth Investment Fond; listings; Prague
Stock Exchange; brokerage, transfer agent and market maker. Harvard
Brokerage Services, member of Prague, Bratislava and Moscow Stock
Exchanges: largest holdings: utilities 25%, financial institutions 22%.
telecommunications 18%, chemical 12%. other 10%. pulp and paper 6%.
construction 4% and consumer goods 3%; retain based on initial price
of voucher book: two thousand eight hundred and fifty percent. 2.850%
(from May 1. to December 16, : 1.035 CZK. Le. the price oi
a voucher book), average annual return three hundred and fifty percent
350%; discount to Net Asset Value 62% as of 16 December. on PSE llast
trading day for the yean December 16, ); dividend per share 132 CZK.
Harvard Funds
l WaroincAdVeriiKement aoaekrs for information* onlc. It does not constitute so oiler to bar or sell securities. None of ibese securities have been.approved for purchase v ^ f. Q a n n K 1 I n
f . v . Wteorlty ' wuSdT the Czech Republic: Coatact address and : N*m. BrdlnC 4B. 140 00 Praha 4 - 00-42-2- 11 21. fax 00-42-2-6 106 41 11. IHe LZeCtt KepUDIlC
r
FINANCIAL- TIMES FRIDAY JUNE 2
T he Czech Republic has
earned a well-deserved
reputation as a beacon
of macro-economic stability
and low unemployment in the
turbulent post communist
world. Five years of monetary
discipline and fiscal rectitude
have created a solid basis for
growth.
But the emphasis is shifting
to the micro-economy where
enterprises need to be
revamped and a weak and
largely unenforced regulatory
framework needs to be given
real teeth. The banking sys-
tem. with too many small,
under-capitalised institutions,
also needs further rationalisa-
tion. Meanwhile the stock
exchange, which enjoyed a
brief speculative bubble in late
and early , fuelled by
foreign investors, remains hob-
bled by a lack of transparency
and the reluctance of ordinary
Crech s and many of the invest-
ment funds to trade their
newly acquired paper assets.
With an estimated 80 per
cent of the economy in private
hands, or at least partially pri-
vatised, the financial system
will need refinement and addi-
tions before it can provide the
funds needed to modernise
newly privatised enterprises
and build on the Czech tradi-
tion of engineering excellence
and banking sophistication.
Meanwhile the recent
resumption of economic
growth has been accompanied
by large and potentially desta-
bilising inflows of foreign capi-
tal. This has provoked an
intense policy debate which is
likely to become more politi-
cised as the general election
looms. It is a debate between
those, such as the prime minis-
ter, Vaclav Klaus, who want to
retain nominal exchange rate
stability as the policy anchor,
and those such as Jozef Tosov-
sky. governor of the Czech
National Bank (CNB), who
argue that a broader fight
against inflation should be the
priority.
Unlike other post-communist
states the Czechs never suf-
fered the ravages of hyperinfla-
tion. inflation reached 20.8 per
cent on an annualised basis in
, due to a surge in the first
quarter after introduction of
value added tax and the split
with Slovakia, but dropped to
10 per cent last year.
But the long-term aim of
reducing inflation to single dig-
its, and eventually down to
about 3 per cent in line with
average EU inflation, is likely
to remain stubbornly out of
reach in against a back-
ground of strongly rising real
incomes and domestic demand.
CZECH FINANCE. INDUSTRY AND INVESTMENT 2
Growth has provoked a policy debate, says Anthony Robinson
Inflation fight a priority
Real GDP and wages
M
Real average*
BO
Until 12 months ago the
regime of balanced budgets
and tightly controlled money
supply operated against a
depressed macro-economic
backdrop of declining gross
domestic product This statisti-
cal decline masked structural
changes and rising real
incomes as the Czech koruna -
nominally fixed to a “basket of
currencies" in which the
D-mark accounts for two-thirds
of the weighting arid the US
dollar qth> third - appreciated
in real terms against leading
currencies such as Sterling and
the Italian Lira.
The debate on economic
strategy coincides with a sus-
tained rise in global trade and
higher export demand from
reviving EU markets, in partic-
ular Germany, which has
fuelled economic growth
throughout central Europe.
But thus far Poland, Slo-
vakia and latterly Hungary
have benefited more than the
Czech Republic - surprising
given Czech contiguity with
Germany and Austria, and the
increasingly close links with
Its German-speaking neigh-
bours. Last year, for example,
more than 48 per cent of for-
eign direct investment into the
ftev»h Republic came from Ger-
many and a further 9 per cent
from Austria.
Domestic factors, not
exports, lay behind last year's
2.6 per emit GDP growth after
four years of decline. The main
stimulus was a 7.8 per cent rise
in domestic demand at con-
stant prices, according to the
CNR Furthermore, 54 per cent
of the increase in domestic
demand was covered by
increased imports of goods and
services, the bank added.
This is reflected in a deterio-
ration in the foreign trade com-
ponent of the current account,
which shifted from a surplus of
$343m in to a deficit of
$436m last year and a deficit of
Jozef Tofcovsky, gov ernor of the
Czech National Bank
{231m in January alone.
The rising deficit is not yet a
problem, and was more than
offset by last year's $2.4bn
income from tourism and con-
tinuing strong inflows on the
capital account. But it does
raise questions about the com-
petitiveness of the Czech econ-
omy, whose enterprises appear
to have restructured less than
Polish companies, which have
depended mainly on their own
resources, or in Hungary,
which has been aided by $Sbn
of foreign investment over the
past five years.
Another negative aspect oi
the Czech Republic’s consump-
tion-and inventory-led recovery
is the relatively low level of
investment. The growth of
investment slipped to 4.4 per
cent in from 7.7 per cent
in , despite a substantial
improvement in the financial
hpptth of the enterprise sector.
Last year the gross profits of
Czech enterprises more than
doubled from Kc39.1bn to
KcS2Jhn. The CNB also noted
a sharp foil in inter-enterprise
bad debts, whose accumulation -
was a worrisome feature of the
parly years of transition, which
stemmed from a reluctance to
push loss-making state-owned
enterprises into bankruptcy
and liquidation.
The rising tide of economic
growth, which accelerated over
the second half of and is
conservatively expected to
reach between 3J5 and 4. per
cent this year, (dearly helped
to prop up weaker as well as
stronger enterprises. State sub-
sidies to industry dropped from
8.4 per cent of total fin a ncin g
needs to 4.1 per cent last year.
Companies were also better
placed to fund their own
investment plans. Overall,
enterprises, financed 68&&'
cent of investment finmi&Sr
own resources, Tip
per cent hi . . .. : g
Despite persistent coin
plaints, about high •• w
charges and interest - liter
enterprises also raised their 1
bon owing from hanirg ^ cover-
ing 20.5 per cent, of - their
tev^ t miKD^ i^ds from
per emit in l993,.aoc«tlinS
the CNB.
Most important cf alt the
resumption of growth appears
to have stimulated, higher
labour productivity!' Tt» cNg
estimates that productivity fo
industry rose 5 2 per cent last
year and 6.7 per cent in-.coat-
struction. In January abate an
8.4 per cent jump in industrial
output was achieved with a
lower labour force than a year
ago. Labour productivity
jumped 10.4 per cent . .
If this trend contimas, scep-
ticism about the speed and
extent of microeconomic
restructuring could move
■ .. -
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will be difficult to sustain with-
out sharply hig he r investment
and a special effort to remove
the infrastructural and oths
bottlenecks which the central
bank believes is essential, if
non-inflationary growth is to
be assured.
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VtacSmir Dtouhy, minister for trade and industry:
■From now on we should adopt a tougher yardstick’
Karel Dyba, minister of the economy: 'employment in
the biggest 20 companies has been cut 1
H itler insisted that Czech
industry should make
more guns. St alin
ordered it to make the steel
and heavy machine tools need
to re-equip war torn Russia
and industrialise his new cen-
tral European empire. Between
them they managed to pervert
the natural course of industrial
development in ’Bnhnmia and
Moravia, among the most
highly industrialised “metal-
bashing" regions of Europe for
almost half a millennium.
Bohemian industry, centred
around Prague and the mining
and metallurgy-based towns
around Ostrava, and Moravian
industry concentrated in the
suburbs of Brno, draws on cen-
turies-long experience in fine
glass , high q uali ty armour and
weapons and precision engi-
neering.
As a result the first Czecho-
slovak republic became of one
of Europe’s most advanced
economies. In the lnter-war
years it specialised in high
Employment trends (OOOs of employees) by selected sector
Total
MMng
Manufacture
Etocfridty
Qas, water
A^fcuttuB
Construction
Wholesale
Ratal
Trade
Repairs
Financial
services
Health
Social
work
5,351
2,113
629
403
524
28
260
4,853
1,710
331
453
609
66
263
%
change
-9A
-19.1
-47.4
+12.4
+16^
+132.1
-6.1
Suoi-Qsc«SWdWCMt»
Anthony Robinson on investment and industry
New energy arrives
value products, including lux-
ury glass and consumer goods,
motor cars and trucks, special
steels, arms - and a wide
range of engineering products.
It was a high value added
product mix suited to a land-
locked country with limited
Tie Bam ii tie Heart of Europe
NEW MARKET
YOU ALWAYS NEED
TRUSTWORTHY
LARGEST
E S AT
GUIDE.
KOMERCNf BANKA
MmSmM
BANK
Czech Republic
offers
FOREIGN CORPORATE,
INSTITUTIONAL
Thanks
A View of Prague in the 1 6th Century
PRIVATE
CLIENTS
energy and raw materials. But
Industrial companies were
nationalised by the communist
regime and forced to develop a
heavy industrial bias. They
became increasingly dependent
on Soviet raw materials and
markets and divorced from the
rapid technological changes
taking place in the west
The communist era conse-
quently left the Czech Repub-
lic, and even more so Slovakia,
with a plethora of over-sized,
often technologically obsoles-
cent plants geared to providing
millions of tons of steel and
thousands of tons of heavy
machine tools as well as heavy
duty trucks, nuclear reactor
cores, trams and basic con-
sumer goods.
One of the big question
marks over the first five years
of post-communist rule is
whether the government has
allowed enough “constructive
destruction”. While much has
been done to downsize and
seek new markets, socialist-era
monoliths, such as the Tatra
truck company, and the CKD
tram complex, remain saddled
with heavy, accumulating
debts and hoping for an u pturn
in demand from the former
Soviet bloc.
Instead of sanctioning the
closure of enterprises, often
the main source of livelihood
for entire towns, the govern-
ment opted to keep wages low
in the still state-owned sector
by a punitive tax on wage
increases. Low wages reduced
the cost of bloated payrolls.
They also encouraged younger
and more ambitious workers to
seek better paying jobs in the
fast-expanding service and
other sectors.
Millions of workers have
voted with their feet “Employ-
ment in the biggest 20 compa-
nies has been cut by between
30 and 40 per cent over the past
five years. The Ostrava coal
minas have cut back by 50-60
per cent,” says Karel Dyba,
minister of the economy. At
the same time employment in
the new finan cial sector for
example haa quadrupled and
thousands of new tourism-re-
lated jobs have emerged.
V ladimir Dlouh?, the min-
ister for trade and Indus-
try, is not so sanguine.
“Over 3,000 state owned enter-
prises are waiting for liquida-
tion. In the meantime they are
sucking up subsidies and keep-
ing people inefficiently
employed,” he says. Until now,
he adds, “we have been com-
paring ourselves favourably
with the other former commu-
nist countries in the region.
From now on we should adopt
a tougher yardstick and com-
pare our productivity with that
of the EU countries we aspire
to join”.
The signs are that with mass
privatisation now formally
over, managers of the newly
privatised companies will act
more determinedly in future to
cut costs and raise productiv-
ity. They are expected to shed
excess labour, invest in new
plant and equipment and
attract foreign partners.
Last year alone newly priva-
tised companies borrowed
£L.6bn from foreign banks to
finance their development
plans. Over the past five years
foreign direct investment
amounts to S3-47bn. The big-
gest single investment is by
Volkswagen which has
attracted a raft of collateral
investment in the components
sector. Not surprisingly, for-
eign Investment in the ante
sector as a whole accounted fir
22 per cent of total foreign
investment, with consumer
goods industries and tobacco
absorbing a further 20 per cent
Foreign investment has been
encouraged by the republic’s
low foreign debt, stable cur-
rency, cheap skilled wage rates
and proximity to Germany and
other EU markets. These
advantages are also recognised
by the principal credit rating
agencies which have given the
Czech Republic investment
grade rating - something
unique among forms' commu-
nist states.
"Until now we’ve had to
restructure industry and the
economy in the teeth of a
recession. Now we are complet-
ing the process aided by the
fair wind of an economic recov-
ery. That is a big difference,"
says Mr Dyba, a long-time
friend and colleag ue of Vaclav
Klaus, the prime minister.
Mr Dyba is also in charge of
the steering committee set up
to supervise privatisation of
the telecommunications indus-
try, which should shortly see
an injection of SI bn and much
new technology. His colleague
Mr Dlouhy is in a similar post
ical hot seat as he seeks an.
industrially sound and politi-
cally acceptable deal for mod-
ernisation of the petrochemi-
cal industry which could
involve a $7D0m foreign invest-
ment in another key sector.
Another big foreign financ-
ing in the pipeline is expected
to provide $250m for construc-
tion of a high-tech mini steel
mill at Nova Hut sled works in
Moravia which will cut the
Czech Republic's reliance on
Imports of Slovak flat rolled
steel and Is part of a wider
rationalisation of this bloated
sector.
The combination of foreign
financing and know-how for
the modernisation of specific
key sectors and the efforts of
thousands of newly privatised
Czech-owned companies,
should inject new energy into
economic restructuring over
the rest of this decade.
It Is this prospect which
leads foreign observers such as
Charles Harman, r hiaf execu-
tive of MC Securities, the
newly formed London-based
investment hank which has a
49 per cent stake in Prague’s
Patria Finance, to conclude the
the Czech Republic has "the
best business environment hi
the post-communist world".
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FINANCIAL TIMES. . : FRII>AY JCJNE 2 599?
CZECH FINANCE. INDUSTRY AND INVESTMENT 4
T he Czech banking sector
was the first key indus-
try to be partially priva-
tised and restructured when
economic reforms began. The
old Czechoslovak State Bank
was relieved of its commercial
and foreign exchange and
trade arms to become a central
bank proper (its descendant In
the Czech Republic is now the
Czech National Bank).
The slimming-down created
three big commercial banks -
Komercni Ranka and Inves-
ticni Banka, now the main
hanke rs to industry, and Ces-
koslovenska Obchodni Banka
(CSOB), the Czech and Slovak
trade hank. A special state-
owned institution called the
Consolidation Rnn k took over
much of the bad debt these
new banks inherited, enabling
them to recapitalise and begin
the task of becoming standard
universal banks.
At the same rhne new banks
were encouraged by a liberal
licencing policy hum the CNB
so that today just under 60
banks operate in the Czech
Republic in a fiercely competi-
tive environment
Yet. despite wide financial
sector reform since the early
days, the country has what one
Prague banker calls “a deeply
disfunctional banking system”.
There are several reasons for
this. First, Komercni, Inves-
ting and CSOB, along with
Ceska Sporitelna, the savings
bank, retained a virtual
monopoly of their respective
markets, leading to accusa-
In spite of reforms, the banking sector is still dominated by the ‘Big Four’, says Vincent Bola nd
Still no room for the smaller operator
In terest rates
15%
14%
Lombard
12% 2X1
996
Discount ■
7%
Souoe WGCcpta*
tions of running a cartel. Sec-
ond, the market lacks a mid-
sized banking tier. Few mid-
sized institutions lie between
the Big Four and the numerous
small h anks set up to compete
with them.
Third, Komercni, Investicni
and Ceska Sporitelna have
large investment fund manage-
ment arms through which they
control big stakes in the coun-
try's leading companies. This,
rivals claim, allows them to
force lending decisions on com-
pany executives, who are thus
prevented from seeking more
competitively priced resources
elsewhere.
Finally, the rapid expansion
of the sector has led to heavy
investment in new technology,
branch networks and, person-
nel, but not necessarily to an
improvement in service. The
country is overbanked and,
arguably, underserviced.
Jiri Kunert. president and
chief executive of Zivnostenskd
Banka, a niche operator and
the first Czech bank to be pri-
vatised, says the Kg Four “are
running the country and it is
still hard [for others] to break
in to the market". Zivnosten-
ska, (me of the few mid-sized
banks, is luckier than most, it
Is 40 per cent owned by BhF
Bank of Germany and is active
in joint venture financing as
weD as having a sizeable fund
management and investment
banking arm.
Executives of the main
banks reject the claim that
they have a monopoly of busi-
ness. “I want to energetically
deny that there is a cartel,”
says Richard Sal smarm, chair-
man 0 i K nrnftwmi R anka. “All
the banks compete.” As an
example, he says that his bank
is gaining market share in for-
eign trade while CSOB is win-
ning more and more corporate
lending business.
They point out that in many
countries the banking market
is dominated by two, three or
four big institutions with
smaller hanks becoming niche
operators in those markets.
This is a fact of life that small
hanks will have to get used to
and exploit, they say.
Attempts by smaller banks
to establish a firm foothold in
the market have been falter-
ing. Sometimes the only lend-
ing opportunities are those
rejected by the Big Four or the
foreign banks that have set up
in Prague. T aking on these
Banting: «recB«* awrfrtepoaH* -U
gainers early in tile' cyt3e-f^tmaV\;; r - -
the upturn in the^concm ^h e^fe-
says. - . .....
CNB policy now is.ro ,
age mergers among -
banks' with the
braiding up the snSdaeS;
tor. It also encourages fimeigglli::
banks seeking to : ^
market to took
existing banks. . .. N V
Ftxr-torBmt banka
kmiajoa-14%'
V-v| Deposits
— . . - -■ Vi ‘ • ... / -
r y 33% Ko
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OmarS-22%
CKm 27%
17 % Spw®sfe» '42%"
V *•.; fV '
8CUBWK CuWuui l f lKM
risks can prove disastrous.
In two small banks -
AB Ranka and Kreditni a Pro-
myslova Banka - collapsed
because of securities trading
losses and poor lending deci-
sions. A third, Banka Bohemia,
at the time a substantial mid-
sized institution, issued $lbn
in fake securities abroad. The
CNB, embarrassingly, was
alerted to that crisis by the US
Securities & Exchange Com-
mission. Criminal charges are
pending a gains t, former Banka
Bohemia executives.
Banking supervision was
beefed up after these crises.
and the central bank stopped
issuing new licences. The CNB
has since moved swiftly to
stem other impending disas-
ters.
The most dangerous of these
was at Agrobanka, a mid-sized
private bank that flirted with
disaster last year. It is still
undo- CNB supervision, along
with about six other banks,
including the three that failed
in .
Ota Kaft an, head of supervi-
sion, believes the operations of
Czech banks has improved
markedly in the past two
years, with managers and own-
ers more cautious and less
interested in quick returns on
their investments.
The n*ain Czech banks have
raised their capital adequacy
ratios to Bank of International
Settlements levels quickly over .
the past four years. And, piggy-
backing on the country's cov-
eted investment grade rating,
Komercni, Invest! cni and
CSOB all raised syndicated
irmns at competitive rates in
the past year.
Pavel Kavanek, chairman of
CSOB, believes the danger for
foe Czech banking system is
over. “Banks should be big
the recent' acquJsitfoa
per rent stake in "Banka" '
a Moravian bank, fr^KredteL ■
bank of Belgium. - -
. Most foreign banks In the
country have followed existing
clients in to the market to
finance joint ventures but -
some, such as Bayerische
Vereinsbank and Bank Aus-
tria, are. expanding fry estab- -
fishing modest retail branch
networks. Foreign banks are
also luring much, of foe best
business away from Czech cor-
porate customers fry offering
products, such as derivatives'
and hedging, that many. Czech .
banks are stig inexperienced at,
providing. This . might cost
Czech .banks customers but ft
has Its positive aspects, west-
em bankers say. . . . .
Nicholas Teller, director of
the Prague office of Common- ■
hank, believes foe influx offer- •"
sign banks has given & sub-
stantial transfer of know-how
and skills to the Czech bankrog
sector. "We are talking .to
Czech banks today about prod-
ucts they wouldn’t be thfflng
to each other about if we were
not here,” he says. '..
Profile: Obchodni Banka
Profile: Pavel Kavanek, chairman of CSOB
A foot in both camps Economists emerge from obscurity
Throughout the former
communist world, the most
“westernised” bank staff and
the most sophisticated under-
standing of modern banking
tend to be found at the former
monopoly foreign trade banks,
such as Poland's Bank Han-
dlowy or Hungary's Magyar
Kulkereskedelmi Bank.
The trade banks were the
only banks permitted to oper-
ate abroad with carefully cho-
sen staff who were judged
smart enough to absorb the
techniques of western banking,
but politically reliable enough
to keep their experience to
themselves.
The Czech Republic is no
exception and the former
monopoly foreign trade bank
Ceskoslovenska Obchodni
Banka (CSOB), although the
smallest of the big four banks,
is rapidly gaining a reputation
as foe best run and foe most
profitable among them.
This will be an important
considerations within foe next
few months when the institu-
tion is slated for partial privati-
sation.
“Banking is all about risk
assessment," says Pavel Kava-
nek. the bank’s partially US-ed-
ucated chairman. "We were
around at foe time of foe Her-
statt bank collapse in and
other spectacular failures. We
learnt foe bard way about
exposure to risk" Mr Kavanek
says.
CSOB specialises in trade
finance and its core business is
concentrated on foe top 100
Czech companies. Its emphasis
is an increasingly sophisticated
services, such as structured
finance and investment advice,
treasury, custody and corpo-
rate banking to the top end of
The bank has a unique
dual status as a Czech
and Slovak institution
foe market
“We are net borrowers of
funds from foe inter-bank mar-
ket and will probably remain
more narrowly focused than
other banks which have set out
on foe universal bank trail,"
Mr Kavanek says.
The bank's now unique dual
status as a Czech and Slovak
institution puts it in a strong
position to take advantage of
foe expected end of the Ecu-de-
nominated clearing account
trade system which has regu-
lated Czech-Slovak bilateral
trade since early .
The system prevented the
feared collapse in bilateral
trade in foe early days of foe
divorce when both countries
were short or hard currency
reserves. But it is cumbersome
and needs replacing with nor-
mal trade amri trade flnanriTig .
“With our experience and
strong presence in both coun-
tries we will be able to offer
foe lowest transaction costs
and gain the highest volume,”
Mr Kavanek says.
“The resumption of normal
trading means we can be flexi-
ble and offer longer-term cred-
its and better terms,” be adds.
Slovakia - with competition
from foreign banks less intense
than in the Czech Republic -
already generates more than a
third of revenues. “Slovakia’s
strong export-led growth vindi-
cates the derision of both gov-
ernments to keep the banking
link through Obchodni.” Mr
Kavanek says.
CSOB strengthened its inter-
national and domestic position
last December through a mer-
chant banking joint venture
with NMRofokhild, foe Lon-
don investment bank.
For CSOB, foe link estab-
lishes it in areas such as priva-
tisation. mergers and acquisi-
tions and corporate advisory
services, where it had no previ-
ous experience. “It was a good
step and is working well,” Mr
Kavanek says.
Anthony Robinson
The brutal suppression of the
Prague spring by Soviet tanks
in was followed by the
triumph of mediocrity as
many of the most talented
Czechs and Slovaks either emi-
grated, were jailed or resigned
themselves to cultivating then-
private or professional inter-
ests. Top jobs In all profes-
sions were allocated on the
basis of political loyalty or
quiescence. Competence was
only a marginal requisite of
office.
The events of November
cleared away this accu-
mulated human deadwood and
opened the way for the rapid
promotion of energetic and
ambitions people capable of
guiding the transition to a
market economy.
Obscure economists such as
Vaclav Klaus and Karel Dyba
emerged from back room
research departments to
become politicians, ministers
and economic reformers. Men
such as the National Bank’s
Jozef Tosovsky, Komercni
Banka’s Richard Salzmann
and CSOB’s Pavel Kavanek -
who had been beavering away
in important but essentially
technical jobs in the banking
system - emerged to take over
foil responsibility for restruct-
uring the banks and the entire
financial system.
Ur Kavanek, a lean, intense
man with a passionate interest
in the theory as weQ as foe
practice of banking, spent a
year as a senior foreign
exchange dealer at Zivnos-
tenka Banka in Loudon in
before retnrning to
Prague to spend 13 years as
the chief dealer in CSOB’s for-
eign exchange department
In he was appointed
main board director responsi-
ble for the bank’s capital and
money market operations
when the collapse of foe com-
munist regime opened the way
for talented people to take
their place at the fop. In
he was appointed chairman
and chief executive.
His brief exposure to the
Anglo-Saxon financial world
in the s, and his years as
chief foreign exchange dealer
in constant touch with the
global forex market, have
given him a keen awareness of
the cultural factors which are
pushing the Czech financial
syst e m “in the directum of a
German-style bank-based
rather than UK-style market-
based system”.
After centuries of Austrian
dominance under the Haps-
Paml Kavanek: the dangerous period for Czech banking is owe*
burg monarchy the 40 years of
m mmnnirt rule "were just
another crown around the
head of the emperor,” he says.
Their history and tempera-
ment has made the Czechs cau-
tious and left them with a
strong desire to control any
risks, be says. “In the banking
world this means constantly
checking the risk/reward anal-
ysis, getting the checks and
balances in place and moving
forward in a stable, cautious
way."
The really dangerous period
for the Czech banking system
is now over, he betieves. “The
situation was dangerous dar-
ing the economic downturn
when we bad to make provi-
stons for bad debts. But banks .
should be big gainers early in
the cycle from the upturn in
ti»e economy.” -
Another positive feature, he
adds, “is the great improve-
ment in central bank supervi-
sion of the banking systan”.
The Czech National Bank
has moved fast to tighten
supervision both externally
and within the commercial
banks themselves since fraud
was revealed by the US regula-
tory authori ties at the Batik of
Bohemia last year.
“Our proudest achievement
is the development of our
product range, especially in
the safe custodian area both
here and in Slovakia," he says.
“This provides an important
service to the capital market
as a whole and requires a stan-
dard of service equal to that
available from western banks.
We have proved ourselves
with clients such as JP Mor-
gan and are bigger custodians
than ING bank.”
He says lhat the shortage of
skills remains the biggest
problem for the bank. "Our
people have grown much more
confident but 1 would love to
have a queue of good hankers
to choose from.
“Instead we spend a lot of
money on tabling people, and
aggressive rivals such as ING
hank snap them Up,” he sayk
ruefully, giving another dear
hint that, in the Czech market,
it Is the hungry foreign banks,
rather than local institutions,
that provide the strongest
competition.
Anthony Robinson
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'3mi
Wi
a*
V.f*|
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.at the Banks'
year.
achievens
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as area bet
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capita! safe
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FINANCE, INDUSTRY AND INVESTMENT 5
Profile: Richard Salzmann, chairman and chief executive of Komercni Banka
An impressive force in the sector
in fiania J!s
... to. the martyr
r ... £*
bv 4*
. t retail ’h^
Forei fn baS
! moch of tbT»?
wwy from
try IK
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gstooersby; ■
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the Czech oafi)
, .«%.• are taikjj}
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WWWnt De taiw
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says.
PI
Coui&TOtti* caste tfta bank dominates tbs ratri savings market
flng that caste tha bank dominates the retafl savings market *
Profiled Sporitelna, the top Czech savings bank
Source of liquidity
The_ most . popnlar form; of
savings jn^Sffi;(Se(* Republic
remains-the - ftiiiw '. ^Mwteina
savings boot “Thjete are 12m
of the - passport-sized docu-
ments. lii circulation, more „
than the Czech , population, '
although many Slovaks
retained their .old accounts
after the spRt,” says Jans--
lav Klapal, the bank’s presi-
dent “Some people have' two
or three -and open a new
account, for every .new-born
child; Some even read than at
night for pleasure,” he adds.
Old loyalties and. the capil-
lary ■ impact of - its - 2,000
h wmrhwg -awp ■ fha h wrilrV i StJUng '
jinm^ although .the number of _
brandies has . dropped by 800 .
over the past five years. The
redaction fellows the. closure of. .
gnufl- nna^ononiic hr ancbes
and the loss, of 600 outlets in
post Offices when Invest! cni
Banka ..took over Postovni
Itowte^tTifl frrmfari Jhflwk-
The- very popularity of the
bank demands a conservative
approach : to -the- business’. . .
“Retail savers are a cautious'
lot.. We noticed a reflm of .
savings back' to us after the -
crisissurroonding. BankBohe-
mia, ~ Agrobanka J^an d other
hanks last year.. We no lancer"
have 100 per cent of -the retail,
savings? market, but .we stiU .
have about 80 per cent hi total
we attract tdxmt 37 per coat of"
all primary^arvings. including
deposits of enterprises ' and
business: people," Mr Klapal
adds. -,i . "
With such a strong deposit
base Sporitehia {pronounced
Spozhitehia)mataraBy became
thn twKti Rnnrvn nf hijwiHtfy frw •:
the new interbank money mar- ’
ket whui emergedas part of
the banking; reforms and . the -
wholesale Ucanstng of new
banks in the eariy s. . .
“Roughly a half of our bal-
ance sheet of Kc358bn is ;
devote to the .interbank mar- ■
ket and -roughly * third, or
about gci2Qbn4s lent -to- finch- r.
viduals afidroiporaticais,” says
Mr .napal; “Butwealsohave a.
Ec50hn band parOoho and ^ay -
an active tofe-in toe bond max- -
ket We recenily lead a Kcfibn .
bond Issiie tor CE2. tob deo^
txidty utility, for ecrample 1 ’’-
.But Sporitelna's exposure to
thp i nte rb ank money-market at
a thne ; when the Czech repub-
lic is over-hankedand beadmg :.
fin- a painful consoHdatkm pgx)-
Cess dwmnniihi heav y provision-,
tog and careful monitoring of
the bahks’.bojTowing funds.
Jaroelav lOapafc *raM savers are a cautious lotf
AMtcnf tUbmson
“Last year we reported net
profits of only Kclbn after set-
ting aside KcTbn, bringing our
total provisions^ for bad debts
to Kd7bn, or 5 per cent of toe
total balance sheets" says Mr
Klapal: ; --
- Furthennore, as part of the
bankas efforts to limi t risks
Intmbank lending is a
risky business. But we
. cannot just stop our
activity with shaky banks’
from interbank lending, Spcori-
tetua has myested- heavily in
training -people to staff its
intenud credit rating section.
“As a result we know a lot
about the- credit worthiness of
other hanks and we are only
involved in lending to 20 out of
the 59 hanks in existence."
-The list is a closely kept
commercial secret But senior
officials in Sporitelna’s compet-
itor hanks believe that not all
it? lending is voluntary and
Sporitelna is obliged to con-
tinue funding banks whose
uncovered exposure would lead
to collapse if Sporitelna pulled
the credit plug.
Mr Hapal is clearly aware cf
the dilemma. “Interbank lend-
ing is a risky business. But we
cahnot .justlstop our activity
with shaky hanks. If we killed
them it would cause problems
for us too. But our commit-
ment is not open-ended and we
periodically review ratings and
re-set credit limits for them,”
be says.
With the economy showing
signs of growth, personal
incomes rising even foster and
banks building up their bad
debt provisions, the central
hank- believes that the bad debt
problem is receding. That is
especially good news for a
bank such as Sporitelna.
But the awkward fact
re mains that the Czech repub-
lic has far too many banks to
serve a population of 10.3m.
Some of those expected to foil
and face bankruptcy or absorp-
tion by bigger banks in coming
months are among Sporitelna’s
interbank creditors.
Sporitelna’s provisions are
likely to be tested in the
months ahead. A question
remains ova- whether they will
prove to be sufficient But
Sporitehia itself ought to be as
safe as bouses, especially wife
elections due in and so
many of fee electors holding
Sporitelna savings passbooks
among their most prized pos-
sessions. .
Anthony Robinson
U naccustomed as they
are to public admira-
tion, most senior bank-
ing people prefer to remain
invisible. Not so Richard Salz-
mann, doyen of Czech bankers.
He had enough of being
invisible during fee s and
s when, like many of
today's leading reformers, he
worked at the old Czechoslo-
vak State Bank. That was
when, as he once said, he was
“a man of influence but no
power". Now be wields large
amounts of both.
Dr Salzmann is chairman
and chief executive of
Komercni Banka (KB) which,
a lon g with the fbarfr National
Bank, is one of the country's
two leading financial institu-
tions. .
A dapper, multilingual 66-
year-old who looks remarkably
like a Swiss private banker, he
is regarded as one of the great
salesmen of the reforms in the
Czech Republic, earning in toe
process a public profile that is
the envy of his peers.
His leading role in presiding
over the reform of the banking
industry, one of the first tackc
of the transformation process,
and his continued influence
are acknowledged today by
other bankers. “He is the one
whose voice is always authori-
tative and on whom many peo-
ple rely tor advice,” says a
banker who has worked with
him
Dr Salzmann took control of
EB at a cradal time for the
banking sector and tor the
entire reform process. The
break-up of the central bank-
tog system in led to the
creation of four new commer-
cial banks from its various
operational arms.
O n any other subject
Tdonpk Bakala remains
in his seat. Bat start
him talking about the impend-
ing marriage of 5PT Telecom
and its foreign partner, and
the chairman of Patria
Finance begins pacing the
room.
The sale of toe SPT stake to
a foreign telecoms group is
generating much excitement
in Prague, probably nowhere
more so than in Patna’s office,
located in a renovated palace
in the city’s Old Town.
The one-year-old investment
bank, along with the UK’s
Schroders, is advising Tele-
Danmark in the international
tender. As an announcement
of the winner nears, the ten-
sion is clearly mounting.
“Winning the mandate [from
TeleDanmarit] was an honour,
but it is not in itself a big
deal,’* Mr Bakala says. “Win-
ning the tender win put us in
the big league.” As the only
fully Czech investment bank
acting in an advisory capacity
to a bidder, a Danish victory
in the tender would cement
Patria’s arrival on the domes-
tic banking scene.
Mr B akala, a boyish-looking
34-year-old, established Patria
Na Prikopo, Prague's street of banks: Salzmann took control of KB at a crucial time for the sector Antmr ntunoi
These were thrown in at the
deep end of the new market
system. A specially created
institution called the Consoli-
dation Bank had taken fee
worst of fee sector’s bad loans
of f its hands, but t her e was to
be little further state help.
KB, the main banker to
industry, simply had to survive
to avoid undermining other
reforms and the confidence of
the country- It was not an easy
tasir 1 as th e bank's customers
struggled to adapt to the mar- '
ket economy and the sudden
credit crunch. Dr Salzmann.
instinctively cautious and phil-
osophical, established the bank
as a supporter of its many ail-
ing customers while making
clear to them that money no
longer grew on trees.
Other bankers acknowledge
that Dr Salzmann's expertise
helped to turn KB around, and
regard it as a crucial achieve-
ment of fee reforms.
“He took an institution that
could have been a disaster and
put it on a sound footing,” says
a banker who knows him welL
Today m is the dominant
force in Czech banking, but it
is not a one-man band, despite
its close identification with Dr
Salzmann.
The bank has installed a
respected management team,
and one which is generally
regarded as the best among fee
privatised banks. “There is
good communication among
fee management." says Martin
Masek, head of research at CS
First Boston in Prague.
KB is the house banker to
leading companies such as SPT
Telecom, the state
company, and has expanded
into investment banking, fund
Profile: Zdenek Bakala, chairman of Patria Finance
Filling a niche
in May last year after stepping
down as co-head of CS First
Boston in Prague. His new
venture has the backing of
Hans-JOrg Radi off, the former
head of CSFB who pioneered
that firm's drive into eastern
Europe's emerging markets,
and who remains a key influ-
ence.
Mr Bakala’s departure from
CSFB stems from his disQlu-
sion with the changes forced
on the firm after Mr RndlofFs
departure which have cur-
tailed its once-pioneering
ways.
Both Mr Bakala and Ivo Lnr-
vink, CSFB’s general director
in the Czech Republic, attest
that the split was “gentle-
manly and mature”.
“I really believe that Patria
will do well and that there is
room for a local merchant
bank,” Mr Lnrvink says. “We
both have to live together in a
small market” And as in any
small market there will be the
occasional glitch. For example,
Mr Bakala recently hired
George Coffins, CSFB’s bead of
asset management to play a
similar role at Patria, a move
believed to have irritated
CSFB executives.
Mr Bakala is convinced that
there is a niche in the Czech
Republic for an investment
bank such as his, operated by
locals who speak the language
and have intimate contacts in
the country's reserved and
conservative business world.
H e is seeking to convince
companies to use the
stock market to raise
new capital instead of relying
on their own bankere.
He believes that several
bond issues Patria has exe-
cuted in the past year are get-
ting fee message across “that
there is capital outside the
banks".
Patria lost one of its most
important young executives in
February when Martin Ruz-
icka, head of equity trading
who left CSFB wife Mr Bak-
ala, was killed in a car acci-
dent
But its expansion in one
year has been hectic. It has 47
staff engaged in capital mar-
kets activity, corporate
finance, asset management,
research, treasury, and sup-
port operations. By the end of
the year the number should
reach 60, the minimum Mr
Bakala believes necessary to
create a substantial operation.
Bnt with the stock market in
the doldrums, “that is a lot of
months to feed”, says one
banker.
Mr Bakala is an instinctive
deal-maker and some bankers
wonder if he has the patience
to wait as long as it may take
to fulfil his ambitions.
He is a friend of Viktor Koz-
eny, the entrepreneur who pri-
vatisation with fee Harvard
investment funds. Both are
management and other finan-
cial services. It is the third big-
gest listed company on the
Prague bourse, wife a market
capitalisation of $925m on May
9, and one of fee most heavily
traded.
Bat its pioneering days may
be over. As competition in the
banking sector intensifies -
there are nearly 60 banks in
Prague - KB is fighting to
retain its market share. Sev-
eral rival bankers say Dr Salz-
mann is a behind-the-scenes
advocate of greater Czech -
and therefore greater Czech
banking - participation in two
big privatisation transactions
involving foreign inves tors, the
sale of stakes in SPT Telecom
and in two oil refineries.
He argues that KB, having
weathered the initial storm, is
now sufficiently liquid to con-
sider big-ticket lending deci-
sions.
A more pressing interest lies
behind such a decision - it
stands to lose valuable lending
bumness to the bankers sup-
porting foreign investors. “SPT
is our number one client,” he
says.
With SPT expected to spend
several billion dollars on its
modernisation programme
over the next five years, the
opportunities for lending will
be immense.
The fear among local hank-
ers is that most of the business
will go abroad. While he sup-
ports the i dea of a strategic
partner for SPT, Dr Salzmann
says: “There should be a share
[of its advantages] for domestic
interests, for example Czech
banks.”
Vincent Boland
remarkably similar in age,
background and temperament
“I think Zdenek looked at
Viktor and saw what he has
done and wants to achieve
something similar with
Patria,” says another banker.
But as the Czech market
matures, opportunities such as
those that Mr Kozeny has spot-
ted and exploited are less
likely to emerge.
Indeed, the pace of future
mergers and acquisitions
activity, will be set by funds
such as Harvard. These funds
have been the most influential
shareholders in Czech Industry
since coupon privatisation and
are generally conservative
institutions.
Deals such as the sale of the
SPT Telecom stake are also
unlikely to appear on a regu-
lar basis in the future.
Yet there is something of the
evangelist about Mr Bakala.
He appears regularly on a tele-
vision stock market pro-
gramme and Is liked and
respected in financial circles.
He is also aware of the hur-
dles.
“It win be a struggle,” he
admits. “Czechs are more Ger-
manic t ha n they ere willing to
admit.”
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Privatisation is revolutionising shareholder power
Fund managers fuel
corporate change
The hundreds of i nves tment
privatisation funds (CPFs) that
und er wr ote the successful cou-
pon privatisation programme
are emerging as the key insti-
tutions that will shape the
Czech Republic's corporate
culture.
Unlikely as it now seems,
the coupon programme almost
failed in its very eariy days,
when recession-hit Czechs
were more uncertain about
their future. The programme
aimed to privatise companies
as they were, with market
forces left to do the restructur-
ing. Sceptical citizens, who
worked in state industry
instinctively saw this as a
□awed argument.
But when Viktor Eozeny, an
young entrepreneur who had
founded the Harvard invest-
ment company, began offering
guaranteed returns if citizens
gave their coupon points to his
funds, investors were won
over. Mr Eozeny was soon fol-
lowed by other fund managers.
About 70 per cent of the cou-
pons in the first mass privati-
sation round in were thus
entrusted to IPFs. The propor-
tion was slightly lower in the
second round, which finished
last February.
Today, the EPFs are the insti-
tutions that have willy-nilly
been entrusted with corporate
restructuring, the least devel-
oped aspect of the reform pro-
cess. They are not the biggest
shareholders - controlling
about 29 per cent of all out-
standing Czech shares while
the National Property Fund
holds 40 per cent and indus-
trial and portfolio investors
own 25 per cent, says Martin
Masek, head of research at CS
First Boston - but they are the
most influential. But the top
20 or so, which got 90 per cent
of those coupons entrusted,
and which in most cases have
influential financial backers
such as banks, are the new
power centres of the economy.
These EPFs indude Harvard
(which does not have a finan-
cial backer); Prvni Investicni
(PIAS), run by Investicni a
Postovni Bank; Expan di a; ZB
Trust, run by Zivnostenska
Bank; KIS, run by Komercni
Bank; Creditanstalt Invest-
ment Co; and funds run by the
Czech Insurance Co. They are
helping to create something of
a revolution in the traditional
Czech corporate culture by
wresting power away from
company executives in favour
of company owners. Share-
holder power rules.
T hat is the theory, but while
ft is also increasingly the prac-
tice, it is a slow process. Even
the best-run IPFs have limited
resources of finance and per-
sonnel to police all the compa-
nies in which they have stakes
(some have stakes in as many
as 200 companies). High man-
agement fees also have per-
suaded some fund managers
simply to stt tight and collect
easy money.
Two main hurdles block far-
ther progress, fund managers
say. First, the law governing
IPFs limits the stake a fund
can own in a company to 2 per
cent. This prevents the greater
concentration of ownership
that would aid restructuring
and help refine corporate gov-
ernance.
Daniel Arbess, managing
partner In Prague of White &
Case, the US law firm, says
this rule was introduced by a
Investment privatisation
funds are wresting
power away from
company executives in
favour of company
owners. In theory, and
often in practice,
shareholder power rules
suspicious government to curb
the influence of fund manag-
ers such as Mr Eozeny, and
that it should be repealed.
Second, there is a potential
conflict of interest between the
banks that manage inves t m e nt
funds and those hanks' own
corporate lending arms. Some
fund managers say bank-con-
trolled fluids are too often rep-
resented on company boards
by members of the banking
arm rather than the fund man-
agement arm. The relationship
between banks and industry is
dose and is one that neither
side appears willing to end.
Hence decisions that may be
in the company’s and its
shareholders' interest but not
in the bank’s can be voted
down. In practice, this often
means companies are forced to
borrow for Investment, or to
undertake bond issues often
bandied by their bouse bank.
The bank's own IPFs some-
times take up the lion's share
of these issues, increasing its
influence on a company.
Richard Salzmann, chair-
man and chief executive of
Komercni Banka, denies that a
conflict of interest exists at his
bank and says the relationship
between the two is exagger-
ated. “We really don't try to
influence companies through
the funds. We have built a Chi-
nese wall fen the strictest sense
of the word,” he says.
Unman Ceska, ehairptan of
the National Property Fund,
the state holding company
that is a big shareholder and
sits alongside the IPFs in
many corporate boardrooms,
says this issue “is not a practi-
cal problem in my experi-
ence." Proposed amendments
to the hanking law, however,
are likely to insist on a spe-
cific division of the activities
of hankie and their funds.
Because of the unique role
given to EPFs in the Czech pri-
vatisation system their status
goes ter beyond that of a typi-
cal western fund, the manager
of which bays and sells shares
freely but rarely forces man-
agement chang es. Czech IPFs
in theory do both, yet not aB
have the same goals.
"There is a strong ambiguity
among the funds,” says Ales
Barabas, board member at Ziv-
nostenska Banka and responsi-
ble for the bank’s investment
fluid division. Too many IPFs,
be argues, are afraid to dilute
their holdings in companies,
leading to paralysis on the
stock market and to a reluc-
tance to consider new equity
issues, which some may not be
able to subscribe for due to
lack of liquidity.
Moves are under way to
force IPFs to become either
portfolio managers or strate-
gic, long-term investors. These
are being resisted by the IPFs,
which insist that there is no
conflict between the two roles.
Mr Ceska says the NPF will
recommend that the two activ-
ities he clearly defined and
that the 20 per cent rule for
strategic Investors be
removed. For portfolio manag-
ers. however, that rale would
be tightened and could be low-
ered to 10 per cent.
Nigel Williams, phahuian of
Creditanstalt Investment Co,
believes such legislation is
unnecessary and that IPFs are
winning the argument with
regulators. “There is no funda-
mental conflict between funds
as long-term or short-term
shareholders.” he says. “The
clearest way to define an IFF
is to run it according to the
criteria by which it was set
up," he adds. In other words,
do not introduce new rules;
just enforce the existing ones.
Vincent Boland
Whilp tradina is slow, stock market mechanisms are under scrutiny, says Vi ncent Boland
2 — 1 ! " " • ” 777'-:*
transparency oil
These are dog days on the
Prague stock exchange. As
summer approaches with little
sign of an improvement in the
market's performance or in the
way it operates, share prices
look likely to continue drifting
sideways with sellers hovering
on the sidelines.
The good news is that the
market's structural problems,
which are as much responsible
for low share prices as are
investment considerations, are
at last the subject of an intense
debate.
Amendments to the securi-
ties law, currently being
dratted, should ensure greater
transparency in trading and
share pricing, impose stiff pen-
alties for insider trading, pro-
vide more protection for inves-
tors awH brokers and ensure
that regulations are more con-
sistently enforced.
“For the first time in a tew
months I'm pretty optimistic,”
says Richard Wood, managing
director of Wood & Co, a lead-
ing independent brokerage. “A
transparent market has got to
be good for share prices.”
One of the mair> catalysts for
reform of the mar ket mecha-
nisms is Tomas Jezek, a former
chairman of the National Prop-
erty Fund, the state holding
company, and one of the lead-
ers of the reform process.
Mr Jezek has proposed that
share dealing be concentrated
in the Prague stock exchange,
one of two markets where
shares can be traded and
which is effectively the official
stock market
One of Mr Jezek’s most con-
troversial measures is a ban on
off- market or over-the-counter
trading, which currently
accounts for between 50 and 80
per cent of all the market's
daily activity.
He wants OTC trades, now
only reported weekly, to be
routed through the PSE, which
would force daily disclosure of
prices and reflect more accu-
rately the volume of business
in a particular stock. Stock
market trading reports in
newspapers bear little relation
to actual activity because of
the lack of real-time reporting
of trades.
Some big independent invest-
ment funds are opposed in
principle to this measure, how-
ever.
They argue that forcing trad-
ers to deal in a particular mar-
ket is undemocratic and a sop
to the PSE's shareholders - the
big banks and brokerages.
Some fear it would increase
costs and force even greater
disclosure of trading than
exists in more sophisticated
markets.
“In a free market the OTC
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Prague stock exchange: the market's structural problems are at test the subject of an intense debate
Stock market Indices
HN-Wood index
4,000 r
3,000 —
2,000 —
1,000-'
HN-Wood index
R5C-50indac
-?^oa
’
SniwMCeW
has proved it is the market
investors want to use," says
Nigel Williams, ffH^trman of
Creditanstalt Investment Co.
“If rm forced to deal with a
monopoly group of brokers,
that is anti-democratic and
anti-market”
The finance ministry, which
regulates the stock markets, is
opposed to the ban on OTC
trading and is expected to
draw up its own measures for
reform of the capital markets.
The current securities law,
drafted in the early days of the
market is outdated and dotted
with loopholes that are often
exploited by unscrupulous
traders.
Mr Wood says one problem is
“the constant all-pervasive
dishonouring of trades”, in
which one party, for whatever
reason, refuses to honour a
deal once entered into. The
present securities law allows a
party to withdraw team a deal
if settlement is late, a loophole
that brokers want to see closed
as quickly as possible.
In a deal Wood & Co recently
struck with a big Czech hank,
tiie hank pulled out when set-
tlement was delayed. Such
activity has cost Wood & Co
515m in the past two years,
says Mr Wood.
“E is the nightmare of every
honest broker in the Czech
Republic," he adds.
Yet in other areas the mar-
ket has made great strides for-
ward. The bond market has
become an increasingly impor-
tant source of capital vehicle
and new issues are usually
over-subscribed.
The flow of information on
rampantos is- also improving,
with a string of results in the
pact Ihrpp TnnnHia.
Figures from high capitalisa-
tion stock such as CEZ and
SPT Telecom were well
received hut the market’s
wider worries kept share prices
from responding.
Since a dearth of accurate
information has up until now
been a dampener on prices,
this augurs well for the future.
“There is a distinct relation-
ship between information and
prices,” says Roman Cufik,
deputy director of investment
hanking at Komercni Banka _
But he adds that the new
securities law needs to
strengthen reporting require-
ments, and that it is not
enough for analysts to be
forced to rely on annual
reports to reach condush^cm
companies they, may tecom-
mwnri for investments : > -.
.There is,.of course, nogdar-
antee-thatamoretKo^jareiU
market will immediate^, mean
higher share prices. Analysts
say regulatory concerns -sur-
rounding electricity anti tele-
charges need tp be clari-
fied before the share prices of
CEZ and SPT Telecom, the
market’s two biggest' issues,
will rally, which cohld, keep
the main market- indices
depressed. . . . -> • ; •
The biggest block on . the
market is the reluctance of the
investment funds to sell Alas
Barabas, board foiemberAt Ziv-
nostenska -Banka responsible
for v investment. : fend
operations, believes that the
funds -are caught between
becoming true portfolio inves-
tors or long term strategic
shareholders. '
“I am convinced that we can
get higher liquidity, without
foreign investors, ff they can
riiKtingni«di between the- two,”
he aays. ...
If the authorities succeed in
establishing . a. new set of
ground rules for the market’s
operations this dilemma could
be substantially eas ed.
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FINANCE, INDUSTRY AND INVESTMENT 7
Profile: Skoda Plzen
Ambitious plans about
reach concj^
they mar lV
itor^inyestraenv
©.Is* of ccurss.
mors
Will.
shore prlcss. >!
story
etarcricity
tltSC w.jij
the
SPT TtIccc*
wages: i
wtiir. -:eic s
i'JWffiest fc <•
X9 the re/wcuw:
wl-i T-il '
jsaarc s^ter^
Ptevesmrr.n
behevss as"
CSL.'h - t'-.T-
{rue -
Iftrcva -.zi.: 7:
tz
r; .r
ee.,
to be put on trial
ui
— i— ;>'•■•' - *•
7 ...
tigg jofi the , biggest tests of
' wpefjte?\ 02 .sprawling, comnm-
ntejC um on gfrftapfing ' cOOgtam-'
: ^tat^^cah^ become -a focused
is (osier way in
"flm^irest Bo&mlan to wn of
Pilien, more famous for its
bem-. than its. high quality
engineering,
“ ~Sk*ta Plze&was founded in
18G9 ; wbeii Emfl Skoda bought:.
fpwH ^n glVwHig wunjiany
•fed. tnnoed it into one of the
Bapsbnrg J^jp.tre’5 .biggest'
profecers of arms,' steel forg-
tags, and k vast range of
heavy engineering products.
- After Supplying- the /Nan
armies , during the second
world, war the sprawling fac-
tory complex'- was ~70 per cent
destroyed by hlUed bctmUng:
: It was rebuilt after the'com-
nnmist takeover of into 'a
Soviet-style state enterprise
which dominated tbe towh and'.
provided direct emplo y me n t to
nearly 40,000 workers. Its
product range continued to
span the spectrum of heavy
engineering, from locomotives
to turbines, machine tools to
metallurgy..
But Skoda’s vast market
throughout the former Soviet,
world collapsed virtually over-,
night in and foreign engi-
neering -companies, started
nmffhiff . around the plant to
see what could be salvaged,
and. in many cases , what could
be dosed down.:
Siemens of Germany, -with
its own extensive nuclear engi-
neering and electrical engi-
neering interests, was -a partic-
ularly assiduous wooer; But
the Czech g o v ern ment, faming
that » foreign - buyer, would
merely poach talent and ideas
and then dose down most of
Skoda V product tines and dis-
perse its skills, rejected for-
eign bids -and opted far a nan-
conventional Czech solution.
The solution was to put- the
company’s future into the
hands ofLubamir Soudek, a
self-confident former manag-
ing director of the Elites tex-
tile machinery company and
the ZBS engineering company
in Brno, which, employed
45,000 people and made 40 per
cent of its turnover from mili-
tary production.
Intense, mercurial and sure
of himself Mr Soudek, a for-
mer “r ank and file commu-
nist 1 ?, emerged from the
wreckage of the old system
with an intimate knowledge of
the industry, a full contacts
.book and a burning desire to
. rim his own show.
Mr Soudek’s big break came
in when Karel Dyba, the
economy minister, sought an
entrepreneurial manager to
ensure the survival of one of
the country's biggest engineer-
ing companies. Mr Soudek
'V So far Mr Soudek’s
strategy appears to be
working. Sales have
doubled since and
profits are rising again
after a skimp
came up with his own business
plan ami -persuaded both Mr
Dyba and prime minister Vac-
lav Klaus that he had the
drive and managerial skills
needed to lift this national
asset from its knees.
In return Mr Soudek
demanded a controlling stake
in the company. He p v w ifnany
agreed to a more modest 20
per cent stake, which he
financed by raising a Kc350m
bank loan. The deal, he says,
was personally approved by
the p rimp minister.
. Mr Soudek's investment has
been a good one. Market value
of tiie privatised company on
May 9 was about $195m. Two
other key shareholders,
Komercni Banka and Inves-
ticnl a Postovni Banka, have
also seoi the value of their
own 10 per cart and 9 per cent
shareholdings rise in value.
Both h anks are also big
lenders to the company. The
state, retains 19 per cent
through the National Property
Fund while two Slovak Invest-
ment privatisation funds have
9.4 per cart between them. A
fixrtber 32.6 per cent of the
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Marketing experiment
company’s share capital is
widely spread among thou-
sands of small shareholders.
Mr Soudek is content to
have the backing of big hanks
and a mass of powerless small
shareholders. He is particu-
larly pleased “that we do not
have lots of funds on our
board,” he says. Investment
fonda are becoming increas-
ingly influential shareholders
in Czech industry, often
restructuring and bringing in
new management talent where
they have the resources to do
so. But not at Skoda. With the
present share ownership struc-
ture Mr Soudek runs the com-
pany his way. “T must be able
to get my decisions through.
Otherwise there Is no point in
being chief executive officer,”
he says bluntly.
Exports are a crucial ele-
ment in Skoda Plzen's survival
plan. Last year export sales
more than doubled to Kc54)bn
and farther export-led growth
is essentia] if the company is
to enter the big league of
global engineering groups. In
a presentation to banks on
April 5, the company forecast
that by gronp turnover
will have tripled to Kc51bn,
exports will have risen five
fold to Kc30bn, and pre-tax
profits will have risen to
Kc2.1bn.
Sales have doubled since
, productivity has quadra
pled and profits are rising
again. After a fall in pre-tax
profits from Kc507.3m to
Kc315m in , earnings
recovered last year to Kc525m
on sales of Kcl6Jbn.
Despite last year's 58 per
cent jump in profits this still
represents only a 3.18 per cent
return on sales, well below the
pre-tax level of Kc70&2m
on sales of 9.21m.
But bank debt has been
more than halved to Kc2.1bn
since and productivity
has risen sharply. Employ-
ment has fallen from just over
25,000 in when Mr Sou-
dek took over, to 19,107 last
year.
Mr Soudek's latest move is
back into south-east Asia and
China, where Skoda remains a
familiar name. He recently set
np a joint venture in China to
make turbines for smaller
power plants, reached agree-
ment on a machine tools joint
venture and signed a contract
for an automotive deal. “Our
deals are in the tens of mil-
lions of dollars range so far
but our goal is to puQ off deals
in the SI 00m range,” he says.
He is also taking Skoda back
inin other traditional markets,
Skoda’s latest contract, signed
at the end of April, is with
VMZ, a Russian engineering
group, to make trolley buses
for tire Russian market.
So far Mr Soudek's strategy
appears to he working. Yet
Skoda’s real test is still to
come. As Skoda Flzefi pashes
further into export markets it
will find itself np against pow-
erful multinationals such as
Siemens, Westinghouse and
Asea Brown Boveri. Further
cost-cutting and streamlining
of what is still an on wieldly
group will he needed. To keep
pace “the restructuring of
Skoda will continue", Mr Sou-
dek says. “There will be more
change in the search for
greater productivity.”
Vincent Boland and
Anthony Robinson I
Chances are rfs not Czech: although an Germany's doorstep, producers lack marketing resources rom/Mn
The beer industry has yet to realise its potential
Global profile eludes
the brewers
At first glance, the Czech beer
industry has everything going
for it It has a long and illustri-
ous history stretching back
nearly 1.000 years, and two of
the world’s best-known beers,
Budweiser and Pilsner, are
named after its pretty Bohe-
mian towns.
Its products have a premium
image and command premium
prices wherever they are sold
abroad, and in any league table
of the world's beer drinkers the
Czechs usually come out on
top.
Yet in this quintessen-
tially Czech industry barely
hroke even. Many of the coun-
try’s 71 breweries are cash-
starved and fighting to main-
tain their positions in a fickle
domestic market A half-litre of
beer in the Czech Republic
often costs less than a bottle of
water or Coca-Cola or a cup of
coffee.
Production fell by nearly 10
per cent in , to 178m hec-
tolitres, and barely recovered
last year, according to the
Czech Brewers and Maltsters
Association. “Image is one
thing, reality is another,” says
Vficlav Vftovec, director of
strategic development at Plzen-
sky Prazdroj. one of the coun-
try's big four breweries.
There are two reasons why
Czech brewers, including the
big ones, are not making
money. The first is price:
domestic consumers resist
increases and change brand
loyalty easily. Second is the
cost of new production
systems: state-of-the-art brew-
ing technology is designed in
tiie west and sells for western
prices that Czech brewers can
ill afford.
The fact that few inroads
have been made into the poten-
tially lucrative export market
is not helping. "Breweries
expanded capacity without
finding new markets ," says
Vladimir MOtlik, managing
director of EPIC, the invest-
ment bank that has helped
introduce foreign investment
to the industry.
The fall in output in ,
caused mainly by the introduc-
tion of value added tax and by
tbe split with Slovakia, came
about in spite of this expansion
of capacity.
The domestic market is char-
acterised by fierce competition,
with small breweries undercut-
ting the bigger companies on
price. It is also divided along
regional lines: only the two
biggest breweries, Prazdroj and
Radegast. can claim to have
national distribution.
The crowded home market
has heightened the importance
of exports, yet even the big
Czech brewers have a low pro-
file internationally. This
means marketing and distribu-
tion deals are expensive. Even
though they are on the door-
step of Europe's main beer
market in Germany and north-
ern Europe, the Czech compa-
nies lack the financial
resources to market their prod-
ucts themselves. Ins tead , dis-
tribution deals are signed with
foreign companies that may
often under-resource market-
ing efforts and take a slice of
the profit
The difficulties Czech brew-
ers face in exporting is high-
lighted by the case of Slovakia,
which until was a "home"
market Last year, according to
figures from the Czech Brewers
and Maltsters Association.
Czech exports to its former sis-
ter republic feu by just over
half, to 441.256 hectolitres. The
devaluation of the Slovak
koruna and a 10 per cent sur-
charge that the new country
slapped on imports pushed up
the price of Czech beer.
Although exports to Ger-
o
r r o w
We manufacture and deliver products under traditional trademark of Winged Arrow
that has made the company famous all over the world
V- METALLURGY
TRANSPORT SYSTEMS
• HEAVY CURRENT ELECTRICAL ENGINEERING
POWER SYSTEMS
;/-• - HEAVY ENGINEERING
V *.* AUTOMATION
■ forgings and'crankhafts - machine tools . tools . rolling mill equipment . foundry equipment
hydraiifcptesses ; Industrial fuel tumaces . gearboxes . tobacco machinery . steam turbines up to MW
nuclear reactors ., tarboaitemators . hydroelectric alternators . transformers . electric apparatus
electric tpotors . electronic equipment for industrial automation . electric locomotives . trolleybuses
electromob iles . fibreglass vessels . engineering, project management commissionong and support services
v. - SKdwks,Tviova57.3i6a)Pi2afl, csecn Repuouc
+*42/i9 (77 mil. Fax ++4S / 19 / 722 . Telex - 2
many, the second biggest
export market, were broadly
unchanged and those to Russia
and Britain - third and fourth
respectively - rose sharply,
foreign sales overall were just
under 80 per cent of their
levels - despite a slight rise in
total production to 18m hecto-
litres.
Mervyn Childs, a director of
Pra4sk§ Pivovary (Prague
Breweries), in which Bass of
Whether Czech beer can
capitalise on its many advan-
tages will be seen in the
progress of a marketing
drive currently undo* way in
Britain for Staropramen,
Prague Breweries’ main
brand. Staropramen has just
been introduced into 5,500
off-licences and 1,500 pubs in
the UK by Bass, backed by a
£3 .5m marketing budget.
With new, a tt ract i ve label-
ling emphasising tbe beer’s
connections with the Golden
(Sty, Mr ChQds is confident
it will wow discerning beer
drinkers in metropolitan
Britain, though these are
early days as yet. Italy is
also a main target of the
brand-
Other Czech breweries are
watching the campaign with
interest, and even domestic
consumers will notice a dif-
ference - labelling on bottled
Staropramen in the Czech
the UK has a 34 per cent stake,
believes prices rose last year
by an average of 5 per cent, but
inflati on was 10 per cent Like
many of the Czechs who work
fax the sector, he says he rates
Czech beer “ahead of all oth-
ers, hut it has gut to start get-
ting a sensible return on its
investment”.
Forcing prices up and keep-
ing them that way is the big-
gest challenge the industry
faces. In Prazdroj raised
the prices of two of its three
leading brands, Gambrinus and
Primus, by a total of about 5
per cent, Mr Vitovec says. (The
company’s premium lager, P0-
sener UrqueLL one of the two
most famous Czech beers along
with Budvar, was not affected.)
The increases were stag-
gered, with tbe final jump last
December. Yet other compa-
nies did not follow suit and in
April this year after a fall in
sales - especially for Primus, a
mass-market beer - Prazdroj
reversed its December
increase. Given these kinds of
commercial pressures, it is
hardly surprising that Prazdroj
made profits of just Kc3m last
year on turnover of abont
Kcdbn.
The entry of Bass into
Prague Breweries, one of the
big four breweries along with
Prazdroj, Budfijovicky Budvar
Republic is alsn being given
a facelift though the taste, of
course, remains the same.
Therein, perhaps, lies one
secret of the industry's
future success: don't change
the product, change tbe pack-
aging.
Another factor may lie in
tiie Czech Republic’s growing
wealth. As wages rise - and
tbe cost of public transport,
utilities and food rises in
tandem - higher beer prices
may also become accepted.
After all, the country’s
pole position in tbe beer-
drinking stakes is slightly
misleading. The figure for
litres of beer consumed per
head does not make allow-
ances for the millions of
tourists for whom a visit to a
Prague pivnice, or local pub,
for a few cheap beers is as
much a part of their holiday
as a walk across the city’s
Charles Bridge.
and Radegast, may help to
change attitudes within the
Czech brewing industry. Bass
plans to invest up to £50m in
its acquisition over five years,
and, along with Austria's Brau-
Union, which is acquiring Sta-
robmo in Moravia, it remains
one of the few foreign inves-
tors in the industry.
Most Czechs view their brew-
ing industry as a national trea-
sure, and. given its history and
qnality, it is hard to argue with
Is them. Hence the resistance
to foreign domination in gen-
Last year's foreign sales
overall were just under
80 per cent of their
levels despite a slight
rise in total production to
18m hectolitres
eral and the protracted
national debate over the future
of Budvar. where a trademark
dispute with the US brewer,
Anheuser Busch, has delayed
privatisation and left a ques-
tion mark over its future. Yet.
as Mr Vitovec acknowledges,
brewing is now a global con-
sumer industry in which
trends are being set elsewhere.
Vincent Boland
^ .M -P - A
Our April 25-28 conference in Prague and
Warsaw was attended by 60 investors. Please
mark your diaries for our next
conference on September 18 - 22 .
NATIONAL PROPERTY FUND OF THE CZECH REPUBLIC
is offering investors worldwide
a chance to participate in the most successful privatization
process in Central and Eastern Europe.
We are offering a number of important state-owned enterprises and properties to be sold through
- auctions
- public tenders
- stock markets
These are some examples of the enterprises and companies that will be privatised in through
the above-stated methods (in parentheses: approximate price):
TOS Hostivaf, machinery development and production (396 million CZK),
Strojimy Kalin, machinery production (320 million CZK\
Litom£fick6 mrazirny. frozen food production (299 mfiJJon CZK).
Kabio Velk£ MeziffH, power cable production (750 million CZK),
Tesla HoleSovice, development and production of electric light sources, vacuum technology,
technical gases (656 million CZK).
JAWA Tynec nad Sdzavou. motorcycle development and production (255 million CZK).
Hotel Panorama Prague, tourism (171 million CZK).
LIAZ Jablonec, truck development, production, service, maintenance < 1 004 million CZK).
Lovocbemie Lovosice, chemical production (500 million CZK),
CRYSTALEX Novy Bor. glass production (390 million CZK).
OUanskd papfrny OlSany, paper mil] (668 milli on CZK).
Tbe total number of companies privatised in will be approximately 400.
If you are interested in being regularly informed about news about tbe offerings of the National
Property Fund of tbe Czech Republic, just subscribe to our bi-monthly Privatization Newsletter,
which are also published in English, Please send your orders to Press Department. National Proper-
ty Fund (FNM), RaSiuovo nfihfeH 42, 128 00 Prague 2, Czech Republic.
Personal inquiries about offered properties will be answered by the newly established Information
Center, located at the same address, : -2-249 91 364.
National Property Fond of tbe Czech Republic
Raanovo nfibfcff 42
128 00 Prague 2
- -2-249 91 285, tax: -2-249 91 379
Company ICEBERG was
ffoaaded in . During a
four year development, when
it became a founder and an
important element of the
Czech economy - capital
market, the company became
well known in the financial
society under the name
Dominick and Dominick
Praha a.s. Increasing capital
power and importance of our
company on a domestic
capital market, the expected
full convertibility of Czech
currency in this year, the entry
of foreign companies among
shareholders, and our long
term strategic goals resulted in
a decision to enter and operate
on the international capital
markets under the name
ICEBERG a.s.
Company ICEBERG a.s. is
currently the most capitalized
□on-bank brokerage company
in the Czech Republic. It is
intending to increase its
equity of CZK 110.5 million
(USD 4.4 million) to CZK 500
million (USD 20.0 million)
by the end of . Reaching
this limit, together with other
parameters, will enable us
to carry out plans of obtaining
a bank license. The company
ICEBERG
AKCIOVA SPOLEeNOST
has generated an after tax
profit of CZK 19.5 million
(USD 750 thousand) in ,
Our two main shareholders are
the foreign companies,
ICEBERG s.a. Switzerland
which represents 17.5 per cent and Mancini Investments
of the net profit on equity. Dublin.
f T rading Division
Trading on Prague
Stock Exchange
This division provides
execution of trades for the
clients of our company. It is
responsible for the fast and
accurate processing of trade
instructions. Buy and sell
orders come from the capital
markets division, direct from
local investors and also from
individual trading points in
different parts of the country.
The core activities of this
division are conducted by a
team of six brokers, each fully
licensed by the Ministry of
Finance of the Cfeecfa Republic.
The activities of other
departments within this
division are consequent to their
activities. DEALING
provides contact with main
subjects ou the market,
arranges (mostly by )
specific deals, and seeks out the
most advantageous and reliable
counterpart from the supply
and demand on the market with
an emphasis on identifying
large blocks or shares. STOCK
EXCHANGE TRADING is a
department which processes the
individual instructions, on the
basis of one daily fixing at 11
am. into a computer trading
system networked with the
Prague Stock Exchange.
During the day the department
provides trading at a fixed price
through a system that the stock
exchange offers in order to
adjust ledges of supply and
demand from the morning
fixing. CLEARING AND
SETTLEMENT is a department
which settles trades performed
on the stock exchange and
OTC market. It arranges
property transfers in the Stock
Mr Jiri Nadrasky
Exchange Depository,
Securities Center, and in a
clearing bank. DEPARTMENT
OF STOCK PAYMENTS
processes the daily results of
individual trades, prepares
financial settlements of
individual trades in local
currency for the clearing bank
records, and processes date for
the main economic division of
the company. STOCK
EXCHANGE DEPOSITORY is
a department which guarantees
accurate correspondence of
property accounts in the
Securities Center, Stock
Exchange Depository and
company’s central computer.
LOCAL MARKETS manages
the daily communication within
an extensive network of trading
points in the Czech Republic.
They process the local trading
points’ demand and supply
orders which are comprised
mostly of requests from the
small local investor.
Development of
Trading Operations
Volume
In , our division processed
and executed trading
instructions: most of which
were performed on the Prague
Stock Exchange. The
company’s turnover for ,
for stock exchange operations,
was CZK 8.1 thousand milli on
(USD 324 million). Buy and
sell instructions ou average
exceeded our target boundary
of 1 million Czech crowns.
These trades reflected a 13 per
cent share of the total turnover
of the Prague Stock Exchange.
Unprecedented growth is
already indicated for our
company in , with
trade instructions executed and
turnover of our stock exchange
operations exceeding CZK 15
thousand million (USD 610
million) in just the first four
months.
Expected Directions of
Future Development
Our division is actively
preparing for the increased
volume in trading our
company expects on the
capital market. Hie realization
of our objectives is dependent
on the implementation of a
multi-terminal input into the
Prague Stock Exchange’s
trading system, upon finding a
qualitatively higher form of
cooperation with the Securities
Center’s Central Database,
and finding within the
legislative environment, the
most appropriate means of
implementing nominee
accounts with standards
common to more developed
markets. Our division also
strives to find a clearing
method for the clearing of
stock exchange operations
with the presence of more than
one bank; with the intent of
expanding oar cooperation
within the largest custodians
of the Czech capital market.
Analytic Base of
The Company
Fall indicated that large
volume trading could be
expected on the Czech capit al
market, especially if
predictions of high levels of
foreign investor interest were
accurate. Our company,
having decided at-that time to
qualitatively reinforce and
expand the analytic branch of
our operation, positioned itself
through continuous staff
additions to offer the highest
quality service to larger clients
based locally and abroad. A
specific emphasis was placed
on serving the needs of foreign
institutional costomers. By
expanding the expertise of our
capital markets division, we
were soon able to satisfy the
significant demands of local
and foreign institutional
clients. Several subdivisions
were created in the process;
greatly expanding the number
of services we now provide.
They include: PORTFOLIO
MANAGEMENT - where
capable individuals manage
the portfolios of our individual
and institutional investors;
FINANCIAL department
where the status of an
acconnts liquidity in a clearing
bank is observed daily through
an on line connection with
Giro Credit, Praha, settlements
are made on trades conducted
in local currency, and
exchange rate hedging and
foreign currency operations
are managed; SPECIAL
OPERATIONS deals with non-
standard market transactions
such as repurchase agreements,
options and futures, exchange
rate arbitration, strategic
acquisitions, investment
into our own account, etc;
FOREIGN CLIENTS
OPERATIONS executes
the daily instructions of our
foreign clientele including buy
and sell orders which are not
related to the portfolio
management activities of our
foreign banking clients. This
division is also responsible for
supplying our clients with
urgently needed information
about developing situations on
the market and notifying
clients immediately when
sought after securities appear
on the market. RESEARCH
makes fundamental and
technical analysis of
developments on the market,
compiles customized research
illilllllllll
Mr RadekPeleska
data, provides daily
commentary of the events
taking place on the Prague
Stock Exchange, and
continuously observes the
market for primary issues and
the introduction of any new
securities.
Review of the Market
Even a glance at selected
indices of the Czech Stock
Market (see graph) evidences
that share prices have plunged
continuously for nearly a year.
Dramatic slides in share
values are typical of nearly all
newly developed markets in
their initial stages of operation
since shares prices are usually
introduced with universally
high values. With die onset of
trading in late and early
, it was typical for shares
to be traded at prices 10 and
decrease a share price could be
sold for (known as the supply
ledge code 6).
When the HN Wood 30 index,
fell to a value of in
February ‘94, where it hovered
for over 3 months, it seemed
that the market had finished
reacting to the initial market
trade activities experienced in
the first months of trading on
the Czech capital market.
Many important foreign
investors viewed this period as
the anticipated mark of
stablization. In depth analyses
of the issues that challen ge our.
company daily. .We recognize,
the impact these conditions
can have particularly on om-,
relationships with, foreign/
clients and therefore;
understand the added -
importance of, along with,
providing the highest . standard
of professional service,'
offering maximum flexibility,
adniinistrative simplicity- and
uncompromised reliability.
Risks in delivery vs. payment
are of a special concern (see
graph indicating ■ dollar
[ □ Fonetgn cfientg M Domos trc cflents (
were conducted to evaluate
perspective share selections,
and all awaited the arrival of
long term international
portfolio
investors.
...
” * • .
turnover trends for this' yea^T;
Unreliable partnerships
be afforded
specialize in the trade-qf Sagged
blocks of securities o&j&g/
Prague Stock Exchange!^
clear large dollar items-*
through Giro Credit,
Direct trading £3 Central market J
sometimes 20 times their
nominal value. Naturally,
steep price declines followed
such a trading boom as more
realistic values were realized.
Consequently institutional
investors disposed of large
blocks of shares and large
amounts of speculative capital
began to leave the market. The
small investor had nearly no
chance of selling his/her
shares because of the
restrictions placed on trading
which limited the margin of
Unfortunately, it became soon
apparent the period of price
stabilization was off in the
distance as prices once again
began to plunge in June .
It was in fact yet a full year
away, until now, when it
finally appears that prices have
“bottomed out”, and the
weakness and strengths in the
Czech capital market are fully
exposed.
Risks On the Market
Liquidity, functioning and
market transparency are a few
For detailed information feel free to
contact us at the following numbers:,
Expected Development "
in
This year we expectTfoU
concentrate our human an e
JS* irdtie of laig
^curiiics on fe
^Exchange ^
dollar itm
OPMEXT
we e\pecs u
*r hu^anas
pabi litres a
$&6 volume z[
ope r.it iocs
Ihc nu.^b
clions. and
capnai
cnabi-a
wu: coe
«mpiO>rcS
car-'.!-^ !
ic=c^!
most U=*
issue c
free to
bers:
^ atSbmotlve. compo-
avaits ; Industry has
beetttnfi onB of the lnain
; . Encouraged by Volkswagen's
takeover of jSkod& in
many , w&teni components
suppEere h^vc'lbllowEd in the
flrpfrprifrtm ft^wnwn rarmafcpr
.'Thfriv.hHMffibttve "sector
accounts tfar- about 22.5 per
ceut'ofcall foreigttdlrect invest-
ment Tn the r country, ahead of
asy :otbc? -industry. More than
*40doinf 4 ventures: have: been'
estaWished with gristing Czech
suppliers, along with nearly 20
new plants built, an greenfield
sitek' ,v V^." ' • •/ - -
~ ' 'The Inltial^attraCtion for.
wesfto conaxmants suppliers
: was^^oppcStunity ^of extend-
' ju g - jf fffl ir : ¥ * I f f 1 hi g r BlaHnnchip^
with' VW, Europe's biggest car
producer*’ into -the -Czech
Republic. Several are also find-
ing, h o wever, that the country
is anattractive low-costr source .
- from Tndnclvto supply parts to '
other iarpLakers . in', . west
Europe as weffas to other VW
group operations.;
Progress has hot always
CZECH FINANCE. INDUSTRY AND INVESTMENT 9
Kevin Done finds western car components suppliers rushing to establish themselves in the country
Magnet for foreign investment
been smooth for the western
investors. “We see it as a long,
bard slog,” says the market
development director of a lead-
ing west European components
maker,-, which now holds a
majority stake in a joint ven-
ture in the Czech Republic.
“There is a big lack of experi-
enced Czech managers, and the
good ones are attracted quickly
to service industries. There is a
-real resource proWem;and It is
difficult to get managers to
work in mamifacturfng.’’
' Some companies under-esti-
mated the scale of the training
and education programmes
needed to raise quality and
. productivity to western stan-
dards, and have found them-
selves at the same time under
heavy pressure horn Volkswa-
gen to lower costs.
“We have all come to realise
that taking a strong interest in
a previously communist indus-
try does not mean you can
wish away decades of practices
overnight,” says the director of
one components joint venture.
~When you talk of total qual-
ity and just-in-time delivery, it
is easy for local managers to
say yes, we understand, but
when you come to put it into
practice It's different"
Most ventures are growing,
however, to meet Skoda’s ris-
ing domestic production and to
serve carmakers In west
Europe, and some have already
been able to raise productivity
to German benchmark levels,
while taking advantage of
labour costs that are a tenth of
German levels.
On the debit side, western
producers are worried by
increasing absenteeism at their
Czech operations, in particular
in areas close to Prague, where
unemployment rates are barely
1 per cent At the same time,
while most companies have
been privatised quickly, prog-
ress on restructuring has failed
to keep pace.
The list of western compo-
nents producers in the Czech
Republic ' already includes .
many of the leading US and
west European producers led
by groups such as TRW. ITT,
Johnson Controls, General
Motors and Ford from the US,
Bosch, Eolbenschmidt, Hella,
Varta and Continental from
Germany and Lucas and T&N
(Goetze) from the UK.
The development and
restructuring of the automo-
tive components sector has
been led by VW. It has worked
hard to attract western compo-
Cruakfag under Ihe burden of debt tram s In Namutri Mafostnmske Square, Prague
: New bwr»ers are to restructure the ailing CKD engineering group
Shock of the free market
Creaking binder an onerous
debt btaden and battoed by.
three .successive: years', of :
- losses, CKD Ptaha Holding,, the
heavy engineering group tradt-
tzanaly at the heart of Czech
industry, is struggling to come
to terms with life brthe mar-
ket economy. .
Its industrial capacities for
products -Tanging from , trams
and locomotives to compres-
sors, diesel engines, and elec-
trical generators, motors and
transformers were, buffi up to
serve thp enormous tngri wfat of
Comeodbi the farmer commu-
nist trading bloc. . ■,
The collapse of these econo-
mes wiped out a large part of
its sales .and left it with severe
-problems. of ob taining payment .
for equipment already deliv-
ered, in particular to the for- -
nMt Soviet Union.' .
. since late. last year ihe group
has come under new owner-,
ship, however, and a fresh :
managtoxent team .lias been
drafted in to undertake an
urgent programme of restructr ,
uriB£ The task of restoring foe
fortunes of one id the, country's ;
n^tef tr aifittoh -laden indnstrial "
groups'- has! .been taken on by-'
Inpro, the Czech engineering ;
and management, consultancy,
which emerged as foe. majority ■
aimer in June last' year.
~ Ihpro, itseff privatised "earlier .
through a management -
bnymit pajd dose to Kclbn to .
acquire u 51 per' cent stake
from the state in a -public tmr
tier. offer. 1 •
CKD Praha Holding, for-
meriy the CKD -group, which
had a workforce of 30.000 at its 7
peak in the s and still Gad-
about -25,000 employees in
-90 at the time of the “vel-
vet • revolution" has - been
reduced to a workforce of
12,000 during the past five
years. Some of its operations
have been separately priva-
tised, -some closed and the
workforce has been cut back.
Last year CKD suffered a
loss of Kc360m on a turnover of
Kc7.Ihn, but the new manage-
ment team^ believes the group
can be returned to profit this
year. According to Petr Forxoa-
neir , 'member of the board for
management strategy and part
of foe 30-strangteam brought
in from Jnpro, CKD is forecast-
ing a profit of Kc26fan this year
helped, by a 37 per cent
Increase in turnover to
Kc9.7bn.
Exports account to about 40
per cent of turnover with the
most important markets still to
be found In the former Soviet
Union in Russia, Ukraine, Bela-
rus »nd . Kazakhstan, which
make up half of CKD’s. foreign
- The group says that it is
experiencing some upturn In
orders from the countries of
the former .Soviet ■ Union,
including for trams ' 'from -
Ukraine, where it has a 34 per
cent stake in a joint venture,
which assembles trams from
parts supplied by CKD. '
It_has embarked on a four-
year restructuring programme.
In early measures it has closed
down _a foundry and has
merged two of its service-divi-
stans in' Prague. Mr Formanek
says , the -group is also seeking
to dispose of assets uncon-
nected to the main businesses
including several recreation
centres, three castles and a
stock of 3,000 apartments.
"We must concentrate our
production," Mr Formanek
says. “A lot of our factories are
too big, with overcapacity asso-
ciated with our earlier exports
to the Soviet Union. These
markets have disintegrated but
our production base is still
there."
In other areas the group
mu st st ill invest, for example
in CKD Tatra, its prestigious
tram subsidiary, which claims
to have made a third of the
trams in use around the world.
“CKD Tatra could have a very
prosperous future, but it needs
an investment of about Kclbn
by ," he says.
i :kh has ended the joint ven-
ture originally agree d in p rinri-
ple in between CKD Tatra
and AEG, the electrical engi-
neering subsidiary of Daimler-
Benz of Germany, in order to
regain control of the tram
operations, which are regarded
as one of the group's most
promising business areas.
“Many foreign companies
came to the Czech Republic
with one aim: to take part in
our companies, to control the
business, cancel R&D and
transfer research work to
themselves and to use us as
cheap 'labour," says Vaclav
Brora, group spokesman.
“We will never agree with
such attitudes. We are ready to
cooperate with western part-
ners, but under equal condi-
tions. We are continuing to
cooperate with AEG on a com-
mercial basis case by case ."
While many of the CKD
plants are antiquated. CKD
Tatra is operating from a huge
modem plant constructed dur-
ing the s in the Prague
suburb of Zbcin and was con-
ceived before the revolution to
build 1,800 trams a year.
The new plant badt its first
tram in , but the collapse
of communism has presented it
with appall ing problems. In
when CKD Tatra’s for-
tunes were at their lowest ebb
it built only 20 trams.
Gradually orders are picking
up, however, and Vladimir KLa-
bik, the deputy plant manager
expects to build 270 trams this
year - op from 70 in .
Domestic orders are picking
up with 80 trains for Prague -
the first order from the capital
for six years - 20 for Brno and
10 for Ostrava, in addition to
orders from Ukraine, Belarus
and Uzbekistan.
One of the most urgent tasks
facing the new management
team has been to arrange a
restructuring of its mountain
of debts with Kcfiira of bank
debts and Kc4bn owing to
other suppliers.
The group’s financial prob-
lems are aggravated by the
burden of about Kc6bn of
unpaid receivables, most
importantly from Russia,
which alone account? for
KcS^bn of the money owing.
The group has stiff not been
paid for 200 locomotives deliv-
ered to Russia in 199L
Kevin Done
nents makers in order to
improve the competitiveness of
Skoda’s domestic supply base.
W e are only competitive
if the supplier indus-
try is competitive. We
must help this restructuring,’’
says Volkhard Kfihler, deputy
chairman of Skoda Automobi-
lova, and the man installed by
VW to lead the transformation
of the Czech carmaker.
Progress has been rapid
since the group held two con-
ferences in Prague and Brati-
slava, the Slovakian capital, in
early to introduce Czech
and Slovakian components pro-
ducers to potential partners
from VW’s existing supplier
network.
Last year Skoda’s purchasing
bill for production materials
and components totalled
Kcl9.6bn of which more than
80 per cent came from the
Czech Republic (Kcl4bn) and
Slovakia (Kc2.1bn). Already
about 44 per cent of Skoda's
total purchases are from 42
joint ventures that have been
established in the two coun-
tries by western producers,
however, and a further 6.5 per
cent came from 17 greenfield
site operations.
The introduction of western
partners has been crucial to
VWs strategy for raising the
quality and the productivity of
Its Czech and Slovak suppliers
and for lowering its purchasing
costs. The group employs a 30-
strong team in its purchasing
operations with the crucial
task of raising the quality and
competence of the domestic
supply base.
The restructuring of the
Czech components sector is far
from complete, but VW and
Skoda have made significant
progress.
Of 134 components plants
audited for quality by Skoda in
only two came into the
top “A" category, but in a simi-
lar audit of the same plants
earlier thia year 27 qualified
for the top ranking. Equally
the number of plants languish-
ing in the lowest “C" category
had been reduced from 84 two
years ago to 19.
The tough process of weed-
ing out the least competitive
domestic suppliers is only
likely to intensify in the next
two years. As Volkswagen inte-
grates the Skoda product range
into its overall VW group car
development and engineering
system, it is inevitable that the
local Czech and Slovak content
of Skoda cars will be reduced,
and that the imported content
will rise. The new Skoda range
to be launched towards the end
of , for instance, will be
based on the same so-called
“A" chassis platform as a new
small Audi, to be unveiled next
year, as well as the next gener-
ation Volkswagen Golf.
Mr Kfihler argues, however,
that the development of such
common platforms for the
group's Audi, VW, Seat and
Skoda marques will open up
export opportunities for com-
petitive Czech suppliers, as the
group moves to so-called
“global sourcing” in the search
for new low-cost suppliers.
He says that the process is
already at work. “The more
A-category suppliers we have,
the more we can get them into
the VW group network.” Con-
tracts already awarded guaran-
tee Czech components exports
to VW plants abroad worth
DM300m by . The increase
in the value of such export
contracts will more than offset
the lower Czech content of
future Skoda cars, says Mr
Kfihler.
Kevin Done examines progress being made at Skoda Automobilova
Proud heritage is revitalised
The prison block that once
housed part of the labour force
for the old Skoda car plant has
been demolished. In Its place
stands a gleaming white and
grey building, finished in
recent weeks, that wiD soon
house Skoda Antomobilova’s
new paint plant. Nearby,
earth-moving equipment is
hard at work preparing the
foundations for a new car
assembly plant. This is the
face of Czech industry in tran-
sition.
The rusty pipework and the
tall chimneys of the factory-
run heat and power plant -
the ubiquitous landmarks of
every Czech industrial town -
still frame the Skoda plant As
do the grim rows of concrete
apartment blocks at the edge
of Mladfl Boleslav, an indus-
trial city 65kms north-east of
Prague.
But in tbeir midst the new
Skoda is taking shape. The
Czech carmaker - its once
proud engineering heritage
reduced to the butt of cruel
jokes in some western markets
during the communist era - is
being revitalised as the fourth
marque of the Volkswagen
group, alongside VW itself,
Audi and Seat
Last year's production of
174.000 cars, depressed by the
changeover to a new model
range, is forecast to rise to
210.000 this year and to about
350.000 by the late s, sup-
ported by the launch of a sec-
ond car range at the end of
.
Much is riding on the suc-
cess of the transformation pro-
cess at Skoda. With a turnover
of Kc35bn ($L3bn) it is the sec-
ond largest Czech industrial
group after CEZ, the Czech
elec tri c ity utility. It accounts
for 5 per cent of the Czech
Republic’s total exports - 14
per cent of the country’s
exports to the UK ami 10 per
cent of exports to France -
and it employs directly and
indirectly (through Its compo-
nents suppliers) 3 per cent of
the working population.
The decision by Volkswagen,
Europe’s biggest carmaker, to
spend DM1.4bn (m) to
acquire a 70 per cent stake in
the Skoda car operations was a
pioneering step, when the deal
was agreed four years ago, and
it remains the single biggest
foreign direct i n ves t me n t.
“It was hugely important for
the then Czechoslovakia and
for the region. It put Czecho-
slovakia on the map as far as
foreign direct investment is
concerned,” says Daniel
Arbess, executive partner in
Prague for White & Case, the
US law firm and an adviser to
the government on the origi-
nal deal.
Xf'rt'.i/tt _
The group’s imm ediate fortune s are riding on the success of the recently launched FeBda
Given the . domestic signifi-
cance of the project, however,
VW’s handling of the business
and its relationship with the
Czech government, still the
minority shareholder in the
joint venture, has at times
been surprisingly abrupt
The early euphoria gener-
ated by the deal was dispelled
for good in late , when
VW abandoned without warn-
ing a prestige DMl.4bn loan
facility for Skoda' only hours
before it was due to be signed-
VW’s withdrawal, made witb-
been sold short At the begin-
ning of the relationship there
was more passion, but now
there is more reason. Both
sides are winning.”
The original estimate of a
DM9.5bn, 10-year investment
programme for Skoda has been
cut back to about DM3.7bn for
the years -. The
capacity of 390,000 first
mooted by VW has been cot to
a plan to create a capacity for
340,000 cars a year, and the
plan for a new engine plant
has been dropped.
There have only been minor problems,
and we have always found solutions’
out prior word to the Czech
government, sent shockwaves
through Prague and soured a
relationship that bad begun
with such high hopes.
Fifteen months of laborious,
painful negotiations between
Prague and Wolfsburg, the
VW headquarters, resulted in
a revised agreement at the end
of last year, however.
The turbulence between VW
and the Czech government
does appear to have soured
public attitudes towards for-
eign investment, but it is a
reaction that government min-
isters are keen to overcome.
“Overall, this joint venture
has been a success,” says
Karel Dyba, Czech economy
minister. “There have only
been minor problems, and we
have always found solutions.
There is not the perception
that the Czech Republic has
Volkswagen is pushing
ahead, however, with the
development of a second
Skoda car range to be
launched in late , and it
will maintain and further
develop the existing 1.3 litre
Skoda engine family.
It is buffding the new paint
plant at the heart of the main
Skoda facility at Mlada Boles-
lav, with a planned eventual
maximum capacity for pro-
cessing 1,600 cars a day or
close to 380,000 cars a year,
working three-shifts, around
the dock. And it is buffding
the new assembly plant
“For the new car we will
start with a capacity of about
300 a day (70,000 a year), but
we can expand to about 800 a
day (185,000 a year) if the mar-
ket demand is there," says
Gerald Weber, Skoda Automo-
bilova technical director.
The group’s immediate for-
tunes are riding, however, on
the success of the recently
launched Felicia small family
car, a radical updating of the
aged Skoda Favorit
It is examining a strategy
for expanding Skoda into
other markets in central and
east Europe through the estab-
lishment of local kit assembly
plants to overcome high
import tariffs, and it wilJ
assemble up to 8,000 cars this
year in Poland at a VW group
joint venture plant in Poznan.
The German carmaker is
also pressing ahead with
planned reforms at Skoda,
which in some respects are
more daring in scope than
anything it is attempting at its
domestic plants - in particular
in regard to the integration of
components suppliers into its
factories.
Skoda is established as the
low-cost car producer in the
VW group, but there are con-
cerns about rising absenteeism
and lack of labour mobility in
the Czech Republic. “We must
get lean structures,” says
Volkhanl Kfihler, Skoda Auto-
mobilova deputy chairman.
“We have to look intensively
all the time to cot costs.”
While production is set to
rise sharply during the next
three years - from 174.000 in
to about 350,000 in the
late s - Skoda is deter-
mined to reduce its workforce
farther in order to Improve
prod activity. The number of
employees is due to fall from
17,048 in to 14,460 by the
end of .
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IZI
C^gCH FINANCE, INDUSTRY AND INVESTMENT IQ
Truck makers are still recovering from the loss of Comecon markets, says Kevin Done | ^ 1
Not yet out of the woods
C ommercial vehicle mak-
ers in the Czech Repub-
lic are treading a tight-
rope, as they struggle to find a
route to Survival-
Operating In a European
industry beset by overcapacity
and still battling to overcome
the heavy losses of recent
years, Czech truck producers
have failed to find partners in
west Europe.
For Tatra and Liaz, the
Czech heavy truck makers, the
future remains clouded by the
heavy debts and the lack of
short-term finance. Both suf-
fered losses last year, and both
have still to come to terms
with losing their previously
captive markets in communist
eastern Europe and in the for-
mer Soviet Union.
The uncertainty surrounding
Liaz, once one of the leading
makers of on-road heavy
trucks for long distance haul-
age in eastern Europe, is com-
pounded by government moves
to seD off a majority 52J> per
cent stake in the group
through a public tender offer,
to be completed this s umm er.
Tatra, the specialist producer
of heavy off-road trucks and
traditionally a leading supplier
of trucks to the Russian oil and
gas industry, was one of the
earliest Czech companies to be
virtually 100 per cent priva-
tised.
Its new owners, led by a
group of five investment funds,
are still struggling with its
deep-seated financial problems,
however. It is currently locked
into negotiations with its
banks over a further restruct-
uring of its debts, which total
about Kc3.8bn_
By contrast, the plight of
Avia, the Prague-based light
truck and heavy van producer,
may soon be eased. Daewoo,
one of South Korea's biggest
industrial groups and its third
largest carmaker, is about to
acquire a majority stake in a
joint investment with Steyr-
Daimler Puch. the Austrian
engineering group.
The acquisition depends on
the Korean group reaching an
agreement with the Czech
National Property Fund over
liabilities for environmental
damage at Avia, but Daewoo
hopes a deal will be finalised
shortly.
The demise of Tatra has
taken its toll on the small
industrial town of
Koprivrace
Production by the three
truck and van makers has
plummeted since the collapse
of Comecon. the former com-
munist trading bloc, from
50,300 in to only last
year, although the industry
believes that demand has
begun to recover this year,
albeit from a very low level.
Tatra suffered a loss of about
Kc70Qm last year, its third suc-
cessive deficit, following a loss
of Kc&26hn in , according
to Karel Beneda, who took over
as Tatra chairman and chief
executive last autumn. His
appointment followed the
short-lived and controversial
management of Tatra by a trio
of US executives led by Gerald
Greenwald, the former Chrys-
ler executive and now chair-
man and chief executive of
UAL, the holding company for
United Airlines.
Tatra production, r unning at
about 15.000 trucks a year at
the end of the s, fell to
only 1,400 last year. Output
had to be halted completely for
periods during and .
The group, which had a
workforce of about 15,000
before the fall of communism,
has been forced to undertake a
drastic restructuring, as it tries
to bring its operations into line
with its modest sales. Most of
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the top management has been
changed since September last
year, following the departure
of the US executives.
The Tatra workforce has
been more than halved to only
with the latest dismissal
of workers taking place at
the be ginning of this year. The
demise of Tatra has taken its
toll on the small industrial
town of Koprivnice, in north-
ern Moravia, where the truck
maker dominates the local
economy. Unemployment in
the area has grown to about 9
per cent compared with levels
of 1 per cent or less in indus-
trial towns around Prague.
But Mr Beneda believes that
truck output reached its low
point in at 1,400 and says
that production could increase
to about this year helped
by a rise in sales from
last year to about 2,500 in .
TUtra is still dependent for 90
per cent of its sales an foreign
markets, chiefly in Russia,
China. India and the Middle
East with 60-70 per cent of pro-
duction still going to Russia.
Crucially “the Russian market
has s tabilis ed and orders are
going up again", says Mr
Beneda.
At Liaz - where production
fell to the lowest point in its
history last year at 943 trucks
compared with in -
demand has also begun to pick
up modestly, led by the home
market, but the company's
ability to raise output is con-
strained by its shortage of
working capitaL
“We have orders and the
technical capacity to produce
more, but we don't have
enough money to finance the
production,'' says Jaromlr Jir-
icny, Liaz general director.
“Our output is limited by our
financial resources. This is our
biggest problem.**
Mr Jiricny believes that the
banka are unwilling to increase
their exposure to Liaz, until a
new majority shareholder
emerges from the current pub-
lic tender offer.
Bids must be made in mid-
July and the result of the ten-
der should be known before
the end of August.
At least for Avia, a new part-
ner has emerged in recent
weeks in the shape of Daewoo,
the Korean vehicle maker,
which is seeking to expand
aggressively in Europe. It has
entered into a car manufactur-
ing joint venture in Romania
and is in advanced negotia-
tions on a Joint venture in
Poland.
hi a consortium with Steyr-
Daimler Pach, Daewoo won a
public tends: to take over the
state’s 34 per cent holding in
Avia for Kcl80m. It has since
reached agreement with a
number of investment funds to
acquire an additional 163 per
cent for Ecm.
According to Ro Jn-Yung,
director of Daewoo’s Prague
office, the Korean group is aim-
ing to triple production of
Avia’s current range of light
trucks and heavy vans from
4,000 this year to about 12,000 a
year by . About $60m
would be invested to modern-
ise the products and increase
production capacity.
.. O'''.
^ ..
Okl Town Square, Prague
Business fact file
gmi'?
The^cc--
Profile: Viktor Kozeny
Informa tion and advice . ;■ ;
———.fax: +4^.
Tirade Links teh +422 / GzecMnvest, the agency for fbra^Biw^oSM
US Embassy Foreign Commercial Service (d i rector. Jan Haveika) PoOtickycti Vezi^2f t :‘ii243
taL +422 Praha 1 ’ - ^ ’
Privatisation pioneer
toL +422
British Embassy Com m ercial Section
tefc +422
...tBt ; +422'2^2i540-
„fax: +4^2^
Prague stock exchange, Burza Praha, Na mustku
3, Praha 1
: +422
Banking
Viktor Kozeny, the whizz kid
of Czech privatisation, still
makes his presence felt in
Prague, even though he now
lives several thousand miles
away from the scene of his tri-
umph in the sunnier surround-
ings of the Bahamas.
His Harvard group of invest-
ment funds is one of the most
influential - arguably the most
influential - of the 350-odd
funds that have become share-
holders in Czech industry as a
result of coupon privatisation.
Other fund managers consider-
ing whether to sell or buy
shares ask themselves what he
would do in their shoes. Har-
vard's brokerage arm is a main
trader on the Prague stock
exchange, and his company’s
research arm is one of the
most highly regarded in
Prague.
Mr Kozeny used the market-
ing skills he learned during a
spell in the US in the late s
to convince sceptical Czechs of
the benefits of the govern-
ment’s mass sell-off pro-
gramme when it was launched
in .
He offered to invest the cou-
pons, for which citizens paid
Kcl.OOQ each, on their behalf in
exchange for guaranteed
returns of up to 1,000 per cent
He ploughed the coupons his
fends received into shares in
50 of the country’s top compa-
nies, other fund managers fol-
lowed suit, and the privatisa-
tion programme took off
For the past 18 months, how-
The mass privatisation
programme has been of
benefit to many and
painful for some
ever, he has been living in
self-imposed exile abroad, first
in Zurich and now in Nassau.
In he accused a former
Czechoslovak secret service
agent of blackmail. The agent,
Vaclav Wallis, accused Mr Koz-
eny in turn of blackmailing
him. Mr Wallis was convicted
of abuse of office and jailed but
is now free again.
Mr Kozeny left the Czech
Republic during the trial early
last year and has not returned
since. An investigation into ins
role in the “Wallis Affair", as
the case is known, remains
inconclusive. The main allega-
tion made against hm> is that
he received inside information
from Mr Wallis to allow him to
build up big stakes in the most
important Czech companies
ahead of other funds. That
charge baa not been proven.
Mr Kozeny is at the very
least a victim of his own suc-
cess. The mass privatisation
programme has been of benefit
to many and painfal for some.
His youth and brashness have
not sat easily in the reserved
and secretive world of Czech
business. He and his family
indirectly own 25 per cent of
the assets of Harvard’s portfo-
lios, and he is estimated to be
worth $200m. In a country
where success often seems to
be something to be endured
rather than celebrated, Mr Koz-
eny*s love of publicity raised
hackles.
Some fund managers also
resent his identification with
the success of the coupon pro-
gramme. “Other funds did
what he did and are just as
successful," says a rival. Fund
management companies such
as those operated by the big
Czech banks wield at least as
Ministries
Min is tr y of economy (minister Karel Dyba) Staro
mestske nam. 6, Praha 1 ..
.: +422
fax: +422
Ministry of finance (minister Ivan Kocamtk) Leten-
ska 15, Praha 1
tot +422
-fax +422
Ministry of trade & Industry (minister Vladimir
Dkxihy) Na Frantisku 32. Praha 1
: + 422
fax: +422
Ministry of privatisation (minister Jiri Skalicky)
Lazarska 7, Praha 1
: +422
.. ..fax: +422
Czech National Bank (governor Jozef ToSovsky)
Na Prikope 28, Praha 1
CeskosJovenska Obchodnf Banka,: Na , ^
14, Praha' 1 ; — . +422 24H
Ceska Sporitekna, Na Prikope 29, Praha 1
+4?'
Komerenl Banka, Na Prikop 33, Praha i.
tek +422 1 1l
Zhmostenlte Banka, Na Prikope 20,Praba i Z- e .
: ™tal; +422
Investicni Banka a Postovnl Banka, SenovBErn
namesti 32, Praha 1
tef: +422
AAA Taxi
WBkrohix
TiutSs :
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AHne offices
fafc
much influence as Harvard
does, but none is run by some-
one as flamboyant as Mr Koz-
eny.
Mr Kozeny continues to run
Harvard from his new base,
but friends in Prague privately
say that it has lost its direc-
tion. Petra Wendelova, Har-
vard's highly regarded director
of fund management and Mr
Kozeny's key official at the
group, was recently snapped
up by CS First Boston to head
its fond management business.
Prague’s financial circles are
also maturing, and its pioneer-
ing days are dearly behind it
Mr Kozeny has expanded his
interests to China and other
frontier markets. If he were to
come back to- bis homeland
now he might find that- the
Opportunities it. offers are wt
as attractive as they were.'-
Vincent Boland
*5 "73 j-
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