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26 Where America leads, Europe usually follows. If the old adage holds good for the car. rental business, then Avis Europe is a stock for 1992 and beyond. At present, the business on this side of the Atlantic is fragmented. The four largest- companies haye only 50 per. cent of the market. In the, US the quartet of leaders accounts for no less than. 85 per cent of; the sector. Industry, sources expect the big four in Europe to bring their slice of the market up a further 10 percentage points to 60 per cent by the time the unified market dawns. That should mean a substantial boost for Avis’s present 14 per cent share. - Analysts have been raising their expectations after last week’s figures.,The more they look the more they seem to find. On the rental side, where Avis" has a fleet of: 76,000 vehicles operating from 1,800 locations across Europe, rental volume grew 19 per cent last year. The: margin improvement from 14.2 per cent to 17.2 per cent is seen as further proof that the management is worth backing. The long-term ambition here is to open an outlet in every European town with a population greater than 50,000. The second leg to the group, fleet leasing and contract hire, is a ls o underdeveloped in Europe compared with the US, and concentrated mainly in Britain, France and Belgium. Avis sees excellent scope for expansion, especially in Italy and West Germany. The record of last year seems’ to bear'that out, with organic growth of almost a quarter. Vehicle dealerships appear a sideshow even jhough they produced a healthy £1 million. rise to £5.5 million profit last year. In the context of a total £72 million group profit and with little likelihood of a push to expand across the Channel, Avis’s future lies with its other two main operations. As with most leasing companies, gearing is high at about 400 per cent. But interest cover of 3.2 times suggests that there is little problem in financing future growth. ■Since their-debut-in late 1986 Avis shares' have left the' FT-SE 100 index in the rear to Dresdner Bank of West Germany said it wants to build a defence against hostile takeover attempts by limiting the voting rights granted to individual shareholders. Herr Wolfgang . Roeller, Dresdner management board chairman, said the bank would limit voting rights to 10 per cent per shareholder, irrespective of the stake-holding. However, Herr Roeller said' the measure would only take BUSINESS AND FINANCE C TEMPUS E u r o p e s e t t o NEXT SHARE PRICE Under current legislation Friendly Societies are allowed ta invest monies, an your behalf, FREE OF ALL TAX. .-,■ Because the.L9 ncashire.8 1 Yorkshire W J * .> ........ I ^ ^ Next shares not for selling: George Davies, who left the retail chain last year SMiSffi&s Relative to! FTA Index' fund is exempt from tax, anyone between 1 8 an d .7 0 sav in g am ax im u m af£ 9 a 1 month ar £ 1 0 0 ayear, ar a lump sum af , £791 with Lancashire & Yorkshire,' can receive the benefits af paying N O income tax and N O capital gains tax an their investment. As a result, your returns are . substantially iricreosed. You will olso receive life cover with no medical examination. Lancashire & Yorkshire is one of the largest Friendly Societies and has is excess of £ 4 0 milliop under management on behalf of over 50,000 investors. THE TAX FREE PLAN .1984 .1985 1986 1987 1988,1989 view mirror, , rising well over 50 per cent against a: market gain of little more than 20 per cent. At 375p, they sell for 11.4 times earnings, according to forecasters at County Natwest WoodMac and Smith New Court. Well worth tucking away. ', ■ Quadrant It is'a peculiar misfortune of fast-track, fast-growth mini- conglomerates that if their appetite for corporate acquisitions slackens, the market is- inclined to , forget they ■ exist* \ j • - Quadrant Group’s1 dash for "growtK. came to a pause last November with a.£22 million Investment with Lancashire & Yorkshire's TAX FREE PLAN is on our Unit . Builder Fund which is one.of the highest performing Friendly Society Unit-Linked funds open to n e w investment over the last three years. (Source: "Money Management" 3 yr fund performance tables). However unit prices can fall as well as rise, and past By Our City Staff:,, effect if there were signs that an individual shareholder controlled, or was about to gain control of, more than 10 per cent of the company’s shares. Shareholders will be asked to approve the measure at Dresdrier’s annual meeting on May 26. Limiting the number of voting rights is a fairly standard practice in West Germany. Many firms introduced such clauses during the 1970s, .. t Holding Next shares was proving a severe pain in the wallet even before Mr George Davies, the retail chain's leading light, left last year. They slumped from a pre-crash high of 370p to 170p just before his departure and plunged further to 125p when the boardroom dispute ■ surfaced. But they have re-traced most of that and, despite a grim profits fall last week, perked up 6p on Friday to close at 152p. Could it be that bears such as WI Carr, the broker, which urged a sell at 144p after the profits news, are losing the battle with those who say that cash call and three further acquisitions. The rights isslie price was 215p; by. the start of this year the shares were becalmed; at 220p, and they, have since missed out on the 15 per cent rise in the FTSE 100, closing at 224p on Friday. On this basis the former Sangers Photographic, built up by Mr Jeremy . Peace, the youthful former stockbroker, starts to look lfke good longterm value, given earnings per .share growth in the current financial year and the next whicli is unlikely to drop much below 25 per cent. ' The market’s caution is not to foil1 Arab takeover bids at the height of the oil price boom..:■ Companies with limited voting rights include Bayer, the chemicals group, Deutsche Bank and Continental, the tyre manufacturer. Earlier, Dresdner Bank announced that group partial operating profit haid risen to DM1.6 billion (£503 million) in 1988, from DM1:53 billion previously. ' The Plan, a minimum tenryear whole . of life tax-exempt policy, is limited by the Revenue to ONE per adult so make-sure you have your TAX-FREE entitlement, contact us free, by telephoning anytime or fill out the performance is not necessarily a guide to . coupon COupon today and ana post posi it ir ■ i. ij - j r i future growth. .. . without charge. fv O ln r PHONE FREE NOW 0 8 0 0 OR ASK THE OPERATOR FOR FREEPHONE 5 0 9 3 TODAY ~ ~ O lf F R E E P O S T T O D A Y : LANCASHIRE&YORKSHIRE, FREEPOST, ROTHERHAM S60 2BR Name—- Address N o stamp is required.'.No salesman.will call. __________________________________ _ Postcode . I Lancashire & Yo r k shire | ASSURANCE SOCIETY Amemberof laUTKuJ THE TIMES MONDAY APRIL 17 1989 Next shares are in the basement,) if not yet especially bargain priced? A prospective yield of almost 7 per cent and a 125p asset value, given some disposals, are powerful props to any bombed-out stock. The new management has swept: the stockroom clean with writeoffs and other prudent housekeeping. This should ensure a bounce in profits even if trading prospects reinain subdued. Burton group,. like Next, once had its traumas. Afterwards, Burton shares paid off handsomely. At these prices, Next . is not for selling. businesses look exposed to an economic slow-down. Quadrant supplies estate agents with photographs while distributing photographic products to retailers. Although the , tw o' photographic operations continue to \ supply the lion’s share of profits, its fast-growing business supplying airtime on the Cellnet and Vodafone networks looks the key to the future. It is the 12th largest service provider by subscriber numbers in the country,- and the sixth largest for Vodafone alone. Quadrant retains £10 million in the ‘bank from 'the rights and' caif afford to be selective about acquisitions. RTZ, which announced in early January that it was prepared to buy BP Minerals’ world-wide mining assets for $4.32 billion (£2.5 billion), is still involved in its preliminary investigations, the group said yesterday. There is no indication of when the study, which covers extensive mining interests across the world, and involves complex pre-emptive rights issues, will be completed. Stock market circles had expected an RTZ statement by early April. The “due diligence” and investigation of assets to be purchased — which range from the copper/gold Bingham Canyon deposit in the United States, to the uranium/copper/gold Olympic Dam project in Western Australia - was scheduled, under an internal RTZ time- I I I I \ I By Our Gity Staff Concern is growing about the boom in foreign currency mortgages as hard-pressed home buyers switch to cheaper forms of financing. Interest rates on mark or Swiss franc loans are roughly half those on conventional mortgages and are especially attractive to first-time buyers caught out by last year’s severe rise in interest rates. “These are not mortgages for the novice,” said Mr Jeff Wagland, of the Nationwide Anglia Building Society. “Unless borrowers are sophisticated they could find, themselves coming seriously , unstuck. . “People may be attracted by the much lower cost of foreign currency borrowing, but unless they happen to be foreign exchange dealers they will find it difficult to understand the risks involved.” The risks arise from the normal fluctuations of-foreign exchange markets which mean that the foreign capital borrowed at low interest rates may increase sharply in sterling terms. Unlucky homeowners could find that- even though they meet their repayments regularly, the amounts they owe may be rising instead of falling. The favourite “hard” cur- Preliminary figures for the year to end-February are due in the week beginning May .8, a n d should show a pre-tax advance from £2.17:million to £4.3 million. But it is in the current financial year that progress from the communications side should be seen, earnings coming from virtually nothing in 1987-88 to £2.75.million. With photographic chipping in £3.8 million, the company is on course for perhaps ,£8.5 million pre-tax, putting it on a prospective; , multiple of 12. Further equity issues can be ruled out at the shares’ current low level, and the shares could start to advance again once the figures are announced. Whim Creek London . shareholders in Whim Creek, the Australian gold mining company (one of : The Times five mining shares for 1989), can safely sit on their hands and make Dominion . Mining sweat ahead of tomorrow’s closing date of its bid. Dominion has offered takeover terms of nine-for-five for a company which currently produces twice as much gold as. the bidder, but on terms which are variously dismissed as being neither, fair nor reasonable. Dominion, which is a promising investment situation in its own right, currently holds 28.8 per cent of Whim Creek and — in private — both managements admit a regard for each other. An independent report by Rothschild Australia concludes the worth offered to Whim Creek is A$1.50 a Whim Creek share - equivalent to a 26 per cent discount. For its side Dominion ar gues that the combined company would have a. gold production of 350,000 ozs in 1990 rising to 400,000 ozs in 1991, which would put the two companies together in aworld class comparable with BHP Gold or Newmont Australia. However, if Dominion wishes to expand along the Whim Creek path then it must be prepared to raise its bid -r and London shareholders can best demonstrate that message •by sitting tight. Another■ bidder may well come along later. By Colin Campbell table, to have been completed by April ,1. While RTZ is still expected' to go ahead with its deal to buy BP Minerals, the overall package first put up for sale in January has yet to be fully defined. The question of preemptive rights held by current fellow partners with BP Minerals has yet to be resolved. The most notable of these rights is at the Olympic Dani project in Australia, in' which Western Mining holds a 51 per cent stake. Under the joint venture agreement with BP Minerals, Western Mining has first right to buy BP Minerals’ 49 per. cent stake in Olympic Dam. A decision by Western Mining on whether it wishes to exercise the right has yet to be made. There is also some un Many gilt market participants must be wondering why the Chancellor is so reluctant to raise base rates to 14 per cent, given the:, pronounced' deterioration in the inflation outlook and the failure of the current account deficit to narrow significantly. Evidence of a real economic slowdown is emerging in both M0 (down 1.7 per ceiit in the past three months annualized) , arid; retail sales (virtually static in the past three months). In fact, real growth in M0 has been ■ negative in this period. One obvious policy switch .has been the Chancellor’s increased emphasis on M0, whereas in the first half of , 1988 he favoured stabilizing the nominal exchange rate. But although M0 growth has slowed, sterling’s depreciation in the first quarter of 1989 is giving different monetary signals; the trade index has fallen by 2.7. per cent since the beginning of 1989 — hardly evidence of a firm exchange rate policy. Nor is there convincing evidence of broad money growth slowing rapidly; despite falling personal lending, corporate borrowing remains buoyant. Evidence from the housing market is alsoambiguous. House price inflation, is rising at a national rate of 31, per cent a year and the deceleration in the South-east is offset by 50 per cent rises in some northern regions. Comparison with previous cyclical downturns show that substantial falls in. real as opposed to nominal house prices were often asso- 1 ciated with monetary, tightening (real house prices fell by about 10 per cent in 1973- 74 and 1980-81). This suggests the monetary stance required to secure a sustainable and significant drop in core inflation implies a further increase in base rates and that the authorities’ fears of monetary overkill are misguided. The monetary rule of thumb the Treasury was supposed to be using in the first thalf of 1988 equated the monetary impact on the economy of a 4 per cent sterling movement in the trade weighted index (TWI) with a 1 per cent change in baserates:.onthis,basis,the TWI slippage of 2;7 per cent certainty over other .preemptive rights agreements, notably those concerning the promising Lihir Island gold project in Papua New Guinea, in which BP Minerals holds 80 percent. , ., ; The balance in the Lihir project is held by Australia- quoted Niugini Mining. The Niugini directors flew to London last month to tackle directly the heads of RTZ and. BP Minerals over what they believe to be Niugini’s right to increase it stake in the Lihir project. Lihir is potentially one of the largest, and richest, gold mining projects outside South Africa. RTZ is understood to have a “ relaxed” attitude to Niugini’s claims, and believes that under current arrangements RTZ'will retain the : lion’s share of Lihir. ( GILT-EDGED ) to so far this year should be offset by a rise of a least 0.5 per cent in base rates. Furthermore, simulations on the Treasury model show that a slippage of 5 per cent , in the sterling TWI (if sustained) adds 3 per cent to retail price inflation over three years. Slippage in the monetary stance has occurred when cost-push pressures have increased in the labour and ; energy markets. Average earnings growth of 9.25 per cent, a sharp acceleration in the growth of unit labour costs (up 3.4 per cent economy-wide. in the year to 1988, fourth quarter) and : Exchange rates can exceed saving on mortgages The soaring value of a eiOiOOO mark mortgage £ 40.000 35.000 30.000 25.000 20.000 15,000 r 10,000 1:1 t.:, r., ■ , | I M l.l|ia KI.RU. 5,000 1964 65, 67 69 71 73 75 ’ 77' 79 8 1 ' 83 85 87 89 rencies mainly used for this growing form of mortgage lending are the yen, Swiss franc and mark. In the long run these low interest rate currencies have appreciated strongly against the pound., A loan of £10,000 taken out in marks 25 years ago would now amount to more than. £34,500 due to the relative weakness of sterling 'over the period. John Charcol, a leading firm in this business, has arranged advances . of more than £70 million in currency loans since last year and says it has turned down thousands of applicants as unsuitable. “We prefer to do business with people who are financially aware and,understand the risks they are taking on t . board,” said Mr Ian Darby, the marketing director. “The kind of person we favour might be a dealer in the market who is watching curre n c y movements in the course of his work.” The boom in foreign currency lending has been ignored by the leading high street banks, fearful of bad publicity which might arise if unsophisticated borrowers are caught out by. exchange fluctuations. Charcol is offering loans at rates which look like bargains to most British home buyers. Yen-based mortgages cost about 6.75 per cent while mark a n d Swiss franc loans are available at l xh per cent. Dutch guilders can be borrowed at-10 per cent while dollar tion in National Insurance contributions — from October 1989 - also appears to be a safety net in the event o f a hard, or crash, landing for domestic demand.- But the Treasury’s published, fore-: cast does not square with the' model-based forecast on either the current account • (where we find Micawberish : optimism in the published forecast) or the PSDR ■ (where we find Scrooge-like pessimism). he current account and PSDR; forecasts' may have been subject ■ to greater judgemental influence than usual in the .Bud^- ' get forecast. Using main--: rising pay settlements sug stream assumptions’ on ingest the labour market re terest rates and unchanged mains the Achilles’ heel of exchanges, we found it easy counter-inflation strategy. to generate rising current ac-! Declining labour force count deficits over the medgrowth over the medium: . iiim term on the'Treasury ; term and evidence that trade model between £16 billion; | unions still have a utility and £20 billion for 1990-91. function in which real -wage Conversely; the PSDR. gains are favoured relative to numbers show, an increasing employment, suggest that trend from the likely 1988-; upward pressure on real 89 result ofabout £15 bilwages will persist^ despite lionj whereas the ChanMllor, the contraction in real eco is projecting them falling nomic growth. It is also not sharply from £14 billion ip clear that an increase in 1989-90 to. £3 billion in unemployment, likely in 1992-93, accompanied by. 1989-90, will restrain real fiscal, adjustments, amount wages, given ihese-factorS. ing to only £6 billion. ; . Apart from the Chancel What does this mean for lor’s pro-growth bias and gilts in 1989? The reluctant poor inflation record, his re and gradualist monetary,, luctance to raise short inter stance may prolong the perest rates.again may reflect iod of 13 per cent base rates , the increased interest-rate because the Chancellor, insensitivity of real economic ,'sists on trying to fine-tune growth in the Treasury’s new monetary policy when'stern-;, “slim” model; a 1 per cent ©r measures are requiredtoincrease in rates reduces real lower inflation expectations. growth by. 1 per cent after Since we expect the current: four quarters. account deficit to widen to at But it would seem sen least £18 billion in 1989, an sible for the Chan increased interest rate precellor to squeeze real mium will probably be regrowth and inflation aggres quired to preserve a stable | sively at this stage to drive exchange rate, let alone to the economy on to a lower permit appreciation. inflation and real growth This makes the short end plane in 1990. This would still vulnerable to further in give him a base from which creases in both international to expand the economy for and even British short rates, an election in 1991. particularly as' global infla- . The Chancellor’s Budget tion has yet to peak. Interest forecast reflects the belief rate peaks often follow' out-| T I that 13 per cent base rates put peaks by some months;; 1 are sufficient to slow infla- thus the traditional adverse,'_; tion to 5.5 per cent in the seasonal pattern in gilt yields fourth quarter of 1989, to from April to September . I reduce the current account may well be repeated in 1989 ;I deficit to £12 billion an before better buying op^ 1 nualized in. the first half of portunities emerge. : 1990 and cut domestic de Robin Marshall ana mand growth to 1.5 per cent Neil MacKinnon in the same period. - v The timing of the reduc C h ^ e l h v ^ m e n t B a n k " : Shorts in avert strike aetilWi By Robert Rodwell Contacts between manage- „ past two years.,. Shorts lost ment and unions were contin £142 millibn in 1987-88; as ‘ uing over the weekend in the government accountants' hope of averting an indefinite cleared' the financialdecks, strike by 3,500 manual work involving both accumulated ers being DClllg called tailCU today at Short and anticipated losses; -in 1 _ •_..A UJW4JT _ __ .J WIV"*?** : - — * U A 'p n 10 1- V;m Brothers’ aircraft and missile preparation for the sale; factories in Belfast. One-day strikes- the larg- An all-out stoppage could est last Friday.- have im- ,,, threaten the chances of the peded production“ at'-j state-owned company being normal work sold successfully to one of two plant is not possible, Shorts . potential bidders. Bombard- says. It has virtually.suspenier, the Canadian transport ded production ° r its .own equipment,group, « ( , . « » “ I S sortium of GEC and Fokker, the Dutch aerospace com structure work, and limit the;■_. pany, are finalizing their res effect on big airframe'compopective bid proposals, due at nent contracts for Boeing and the Northern Ireland Office, Fokker. The workers being and its financial adviser, laid off are those who, cannot, Kleinwort Benson, by April be transferred. Protective no 30, in time for the sale to be tice has also been issued to . concluded in June. about 500 staff. Staff Man at ax Shorts, oiioiu»s Ulster’s uiaici o lar- Shop stewards advised . » all gest manufacturing employer 3,500 manual workers to-rewith 17,700 workers, say they port normally today, to enable have had no increases in the them to seek further talks. loans are on offer at 12,per cent. These rates vary from day to day. Most building society rates are 13.5 per cent. Some lenders offer hedging facilities to minimize the effect of moving exchange rates but these are often expensive and offer only partial protection for borrowers. “In our experience the three possible hedging contracts, forward covering, futures contracts and options are all counter-productive,” said Mr Michael Petley, who heads Petley and Co, a private client broker in futures and options. “If there were a ,loophole allowing you to borrow at a reduced rate and protect yourself, the entire London foreign exchange market would be in there within a split second.” The cost of the hedge can be equal to or greater than the saving in interest rates. “Hedgers are unwittingly locking in guaranteed losses.” John Charcol structures its contracts to include a switching option so that borrowers may convert their loans back into sterling within 48 hours. “This is essential in our opinion,” said Mr Darby. There is also a “stop-loss” provision which allows the, lender to switch back the loans into sterling if they have grown to 70 per cent of the value of a house. THE TIMES 08 9 8 141141 • Stockwatch gives- instant access to more than 10,000 share, unit trust and bond prices; The' inf; formation you, require, is on the following telephone numbers: • Stock market ; comment: general. market 0898 121220; cqmpariy news 089812122,1; active, shares 0898 121225 • • Calls charged 5p for 8 seconds peak, 12 seconds off -peak, inc. VAT. i N o w L e a d t o j g L e a s i n g f r o m I x H i d o r i . R JH O A K E West Garden Huce,.Kendal Street London WS22.VQ. Tel. 014034H)77.Fax:^01
-v.-— THE TIMES MONDAY APRIL 17 1989 BUSINESS AND FINANCE 27 Montreal distillery in negotiations with two liqueur companies . By Derek Harris • Industrial Editor It is a year since Seagram of Montreal; one of the. world’s top four distilleries but the least known; acquired Martell, the French cognac house. The venture is going so well, still family-runbut profiting from Seagram’s leadership as a world distribution chain,; that. ’Seagram has started, on anotheracquisitiontrail. In a 'rare interview; Mr Ed McDonnell, the. president of Seagram International, which- coyers. all the :oi]ganization’s operations . outside North America,: Xold The Times that he. had begun talks with two . liqueury . companies . with brands of international stat-; lire. There were also. other ‘ possibilities. ; ■ , ,.■.. - " ■ ■:.1 Mr'McDonnell is not yet identifying his .quarry but; ' there are a limited 'number, of stijl-independcnt liqueur pro- ■ ducers. . Among them are Cointreau,; Grand Marnier and Marie Brizard, all French. Bols,: in the Netherlands, is another possibility;1 Excluded: are 'the monastery-produced brands like Benedictine and : Chartreuse.; • . . ■ Mr McDonnell said: “Char- acteristically; there is still family involvement iricom- panies like these. But we arc not .about to become the big bully because that is not the way we work. We are prepared to buy a minority stake arid leave that in place as 'patient • money, so that, perhaps after another geiiferatibn, the family might decide to sell out.” McDonnell: the takeover of Martell, the French cognac house, has proved a big success Seagram itself continues to which makes Scotland’s best- malt and .10(3 Pipers, among : have a strong family involve- selling dark rumr But Seagram the Scotch: whiskies, Muminri ' merit, with the Bronfmans still has been busiest in building its . champagnes (acquired three: ; holding about 40 per cent arid portfolio of 'world brancls, a ; years. • ago) and Sandemari: having an involvement in top preoccupation shared, by its' : ports and sherries. . ■ management.; ■ '-H ; ; 7 . : main competitors. These arc , With the Martell: ac- Seagrarri is also continuing led by Guinness with its quisition also came Janrieau; its parallel policy of acquiring- distilling interests which in- : the world’s bestsellingAr- companies which supply only elude the Johnnie Walker and magnac. In Britain, Seagram their, own national market. Haig whisky brands as well as also produces. Burnett’s, gin There have been; 15 such deals ’ Gordons gin.’ '; "v ■ ; and Captain Morgan rum. in Europe alone during the The Seagram brands selling •< Mr McDonnell sees, the big past five years, from brandy internationally include'Chivas four continuing to get. bigger : arid wine producers to OVD, Regal, The Glenlivet single" as ‘ the emphasis, grows ■ on ; global branding. Of Seagram, he said: “On the acquisition front, we are; perhaps not as aggressive as the others are but : we do our share and by strictly friendly takeovers. The emp- .hasis'hasbeenonconsolidatT ing the relationship : with brand owners.”. ■". Seagram sells to mote than 150 countries with about 700 brands ofwinesand spirits, for some'.of which it acts as agent. : Last month, Seagram reported. sales up by almosta third'to . USS5 billion (£2,9 billion) and operating; profits up 48- per cent. Net: profit was up .13 per cent; V affected by., the : ac quisition costs not only : of Martell but of the Tropicana fruit juice business.. y Mr McDonnell said:“Dis- . tribution is the secret with our : company — 'the system is. number one in the industry.” This is particularly so in the Far East, a market which excites Mr McDonnell’s ent husiasm because it is so fast growing. ; . -S;■{,■;. j Spirits sales growth around the Pacific Rim countries is running at about 10 per cent when other markets like. North America and Britain have lately been unexciting, v Japan’s bringing down of I high tax;'barriers for imported , spirits is.an extra bonus. , ■ Cognacsales, moreover, are; ■ exceeding the general rate, of spirits growth, underlining the Seagram' strategy in buying- Martell. Mr McDonnell said: “Thp(Far:&st prospects were, the key reason. for buying Martell. It provides a stronger platform for.bringing in other products.” rises By Our City Staff Taxpayers who do riot sendiri . their tax returns could face :1 fines of up to £300 frqrii this year. They could also have to : pay uj) tip a further £60 a day if they still delay.1 : The; tough measures, con tained in the Finance Bill, just , published, come astax.'retum . forms land on doormats throughout the country. — ■ Most people take weeks and often months before they get round to, filling' them in. The Inland Revenue :has always all6wed;3’Odays,7theri.sentout: ' reriiindei's. - '■ Wheri the taxman finally runs, out of patience the matter is passed ’ to the independent Appeal Commissioriere, who have ■. po^er ,tP 'impose pen- . alties. Since I960,;. the maxi-. mum' perialty for faiilure to make a. tax return has been £50. and . the hiaximum' dailyf penaltyfor failuretocontinue after that has been £10. ;;. But.nowthepenalties will be .increased. in .line with : inflation — which, it is hoped, will encourage people to send in their returns quickly. The number of cases of nonr- return taken before the Appeal Commissioners is small and casies usually involve peopje suspected of more siriister . reasons for not filling in their returns than straightforward . neglect. • Other increaseis in penalties are also proposed in the Bill. The • iriaximurii penalty for v fraudulently or negligently- giving incorrect inforriiatiori rises''to £3,000. Accountants coulS face a.firiie bf.£3i000 for each false fetuhi. j.: , :■■■'• By Our Industrial Editor Three European management institutioris, including Ash- ridge, Management College in the Hertfordshire Chijterns, are combining to help prepare business executives face the challenges of the single Euro pean, market. The other institutions are France’s . Centre de Perf- cctionncmcnt aux AfTaires in Paris., and West Geririany’s U niversitatsseminar der. Wirt- schaft in Cologne. • ' ; The , pioneering move is expected to produce, an: initial three-\yeek programme in March iiext .year, to be split- between the. Paris arid Col ogne institutions.;: There .will be. further .ories';'later, involv ing all three bodies. The management pro grammes will be aimed at those people with respon-, sibility for formulating, and i implementing Europe-wide company strategies, i lit; is expected thaV partici- i pants will come, not only from the European countries, but also from the United States s and Japan. .; ’■ By pooling their knowledge, and their “.cultures,” the three' institutions believe they can help those participating in the programmes to better under-: stand the European business , .: context..-.- Leading -European . executives - will- : share ': their ■' experiences with the programme partjeiparits;' ^ ■ Ashridge. sees the introduc tion of the programmes as a way ' of speeding the emer gence of a new breed of manager, who will be increas ingly : rieeded by companies wishing to survive in the single market. ' It argues that in future managers , will have to think . strategically iri. Eiiropeari '• ac quisition and production terriis,.not; only in sales and marketing — as has been the case so V-.1.'- Flexibility] the ability to think in inter-cultural, terms and a desire to iearn new ways of working will be essential qualities. for. the successful : European;.:manager,, '.' it::.is •aiBu! ordon Pepper’s latest pamphlet ; for the Institute o f Economic 1 Affairs makes nostalgic reading.: Called A Firm Foundation for-Mone- - tary Policy,: i t seeks to reopen the debate about monetary base con trol' which engaged j so much attention at the beginning o f the decade. Mr Pepper has a point in saying that . the: recent uptick in inflation argues for a re-examination o f the G overn m ent’s, monetary techniques. Moner tarists like Tim Congdon haye cla im ed th a t; the ; broadly defined versions i o f the m oney supply were ' clearlyshbwing-inflatibnarypressures;; early last year. Then, MO, the G oveni- ; m ent’s own preferred measure, y/as rising out o f the; target range. The Chancellpr him self has acknowledged that, with hindsight, , interest rates were lowered too far at the start o f last ,summen .. .■ / , H A re-examination need not start on the presumption that‘ better methodsi ’ m ust be available. M ethods o f m one tary control, at least in their , practical application, tend to be rather like ChurchiiFs definition o f democracy as : a form o f governm ent — the worst possible, except for all the others. ;. V Mr Pepper, like maiiy others, would like to take interest rate decisions out o f the hahds o f politicians arid central bankers. The philosopher’s stone he is searching for is the le a st, fallible indicator o f monetary conditions and the strongest means o f influencing the econom y which leaves the m inim um am ount o f discretion in the hands o f the authorities. Systems w ith; strong and clear rules, so long as the rules continue to appear sensible under a variety o f conditions, give markets confidence in government policy. Control o f monetary conditions through the m o n e ta e base would, require the Bank o f England to con trol. the ^mount o f cash and balances held with it by the banks — the “high- ; powered m oney” on which the banks ■ • build their lending — by direct market operations. This can be described as controlling the supply o f m oney rather than operating through interest rates 1 to control the demand for it. Mr Pepper constructs a Bank o f England conspiracy theory to explain why this solution has never been ad opted. But he does not explore fully why quantitative control is superior to control by direct action on interest rates when interest rates will be the means by which control o f the m onet ary base will diffuse its effect through the banking system and the econom y. N or does he address the suspicions o f som e City practitioners that there is no monetary base so fundamental to the system that financial markets will hot find a way o f substituting for it. A'second-order objection — but an important one — is that interest rates under a: system o f monetary base c o n -;: trol might-'be much more volatile. Monetary fundam entalists may re- ' spond that that is just the point: rates: should reflect market pressures rather thaninstitutiqnalandpolitical conve nience. But, if they can be distin guished from more fundamental ; m ovem ents, there is som ething to be said for ;: sm oothing out day-by-day fluctuations.. : 5 However, all this does not mean th at monetary base control is not worth re-examining. It might also be worth taking another look ; at D ivisia indices which com bine several meas ures o f m oney in a weighted com pos ite.' After the exchange rate targeting episode, the G overnm ent’s monetary framework, is not so transparent and so robust; that re-consideration is likely to harm confidence. , : : Biig Dipper daze n some days last week it was' I ratherlike riding the Big Dipper for British economy-watchers. It started with a gasp o f alarm as we hurtled towards the menacing shape of input price inflation, followed by- a sigh1 o f relief at the friendly form o f lower bank lending to consumers and the pause in ' house prices in the South shown by the Halifax index. Later there were further shrieks o f excitement at the : average earnings figures which then turned into cheers. for the,' US and British inflation'figures on Friday as we slowed down. - , / At the end o f the experience we are on much the same level as we started, with just a few more grey hairs. Evidence for 1 a slowdown in the economy is mixed but far from negligible. Interest rates at 13 per cent are evidently having some effect though it is not yet clear whether this will be enough. lt would be surprising if consumers did not react to higher interest rates. Including mortgage payments, the interest payments they face are now on average 1 lh times the interest receipts they enjoy. Hold on to your hats for this week’s ride featuring industrial production, retail sales, money supply and.the public sector borrowing requirement. Rodney Lord Economics Editor iyisiralmii diamond fooost Australia; already the world’s largest producer of diamonds by vblume, ;is. poised; to ^.dis cover yet more diamondpipes as ,' the pace of geological explbratiori. increases through out the cbritinerit. ; : . Metana Minerals, a widely held Loridbri Australian group with diverse gold and other miriing interests, will this year be spending at least 20 per; cent of its- arinual exploration budget on the . hunt for diamonds. ; Mr Graham Hutton, Metana’s ‘ joint i managing director, said that Metana had already had.“early success” irt By Colin Campbell., evaluating ■ a potential ; di- 1 amond pipe in Western : Australia, the honie state; of the .Argyle diamond pipe which, has made the country the world’s largest producer, of diamonds.. ; . . . ■ ; Mr Hutton has suggested that the pipe Woiiid contain more gem than industrial .siones. :, '■; Metana is exploririg several of Hs 100 per cent^ownedsites,: and in a number of instances ‘ is working in joint venture arrangements.' One ofparticii- lar- significance is with Stockdale, the prospectirig;, arm of the De Beers/Anglo American; gold-kJiamond..em- ) pire, which : has itself beeri hunting . for diamorids ;; in Australia for several years. . ,-, Mr Hutton said Metana had -been approached by Stockdale to participate in the search for diamond pipes in various : parts, of Australia, and added that ;the chances- of success were “pretty high.” . ‘ . . . Australian gold mining companies are. increasingly turning their exploration attention to other minerals, . base and precious metals in a determined effort to diversify away from their original gold base. ■ V, ' ' ' Parkinson’s reward energy The .choice of Cecil Parkinson to open the.! British-Soviet j Month at Moscow’s World Trade Centre last week jeft mariy:;Britishbusiiiessmeri rather., puzzled. Where.; was Lord Young, the embattled Trade Secretary,: or Alan .Clark, ; the minister who is heavilyfocused: on trade with the Soviet bloc? The official explanation .was that the first; ■ week' was devoted to . talks about energy deals. But others speculated; that Parkinson is likely to add the trade and industry portfolio to his en- ei^y ..brief when the two departments, are merged, probably at the next Cabinet reshuffle.; The rehabilitated Parkinson’s remarks at the openirig ceremony, certainly gavea hint of greater things to come. And . what' of Lord Young?'Well,/he ,was 'defi- ; nitely in the running for the Conseirv'ative party chairman- r, ship after- Norman Tebbit stood down. ... Vodka tonic Switching ori the television set; . in my. hotef robm, I was; cphfrbnted.by ribne other than , :. Arthur Daley — speaking flu ent Russian. The episode: of . Minder formed part of • THames^'TeleVisibn’s. mirior • coupon ^putting ori: 10 hours of” programmes on the. Soviet Chaririel '2 — advertisements ; arid all: And, with an! audiente; of; 200' million; albeit still:. hard up for hard cuitency ;which,advertiserwould'notbe■ interested? •- : MOSCOW DIARY Mamrtier arid sickle The name of Armand Ham mer, the American oil magnate with a long-standing soft spot for the Russiaris, pervades the ;!;Soviet capital in a fasciriating way. For one thing, the Occi dental Petroleum chief has lived in the British Embassy building, a gem . of a small tsarist palace days that looks out over the Moskva river to the gilded domes of the Krem lin. In a way,ihe has also lent his name to the currerit ceritre for international business — . Sovincentr, -Th is massive com plex on 20 floors; arid with ' more than 600 rooms-is also: known as the World Trade Centre, or Mezhdunarodnaya, the name of the hotel which is, housed in iti However, it is' difficult to find Soviet officials or taxi drivers who know it by any name, other than the • -.‘Hammer Ceritre.” ;; \ '; Party line In Moscow, the special phones you; use for iritemational calls are coloured red. But, sad to; say,. last week there, were not : enough of . them to. acc- - omodate the 300 UK firms r “Apparently it.is our fault, for paying increased ; ■ mortgage ihterest” represented - at the British Soviet Month; The British Soviet Chamber of Commerce -- kindly, niade .its red; phone generally available, but is 1 dreadirig to think what its next bill'.will be. Roll- ori the autumn, start o f the1 joint venture between GPT arid the Moscow - telephone authority. ■ The GPT pay phones — only. 100; initially — might help to ease the busiri.essm'an’s,. burden. ... • Executives from iBrnst / & Whinney, . the accountants, ; were absolutely spellbound by a waiter’s; ability to hold, and pour, wine from a bottle. without using his fingers — somehow holding the bottle with the palm of his hand only. Richard Lewis, E&VV’s.newly appointed permanent ■ repre sentative in Moscow, applied his fluent Russian to ask politely how it was done. The waiter leaned over ..and- dis-r ■ creetly-’replied: “Know-how,” Havirig suffered the loss -r in 1917 — of its St Petersburg (now Leningrad) factory; Mor gan Crucible has under standably been rather, wary about-;: becbiriing - involved again. with the Soviet-Union. But, as history - heals; the wounds, the. world’s leading •supplier of crucibles; to mints and metallurgists': is again taking ari active interest in the Russian market and is strongly represented during the trade month. The, com pany — which declares its final results' today — .has ' even considered joint ventures with ■ Soviet industry. Haying;natu-; rally enough lost touch with the .'goings-onsat, the: plant it lost during the Bolshevik reyblufiori, - Morgan .was. sur prised — to put it mildly — when it was contacted recently by the plant, which is still making the clay-graphite cru cibles' along: the . oldlines. Morgan’s export sales en gineer, Fraricis Adcock, com mented: “Once- bitten, twice shy.” Still, in the present business climate anything is., possible. ■ : : : in black : Ralph French, the chairman of the.BritisK Soviet Chamber ofCommerce, washappy.to be able to anriburice at the ariiiual meeting that the chamber, which almost came to finan cial grief a fe w years ago, is nb longer in the red. In fact, it showed a profit of £35,622 last year.' - •_ CoHn Narbrough ;V ■’ADVERTISEMENT TELEVISION UPDATE ; i s t o b e l a u n c l i e d ' o r L M a y 1 . T h e 6 0 : . m a x i m u m e x p o s u r e d u r i n g t t L e b a i L k h o l i d a y w e e k e n d , a n d w i l l s u p p o r t a n o u t s t a n d i n g s p r i n g a n d s u m m e r s c h e d u l e o f p r o g r a m m e s ; T o a d d . ; s t r e n g t h t o t h e p u s h ; t h e r e w i l l a l s o b e m a j o r p r o m o t i o n a l e f f o r t s b y A m s t r a d , t h e n a t i o n ’s l a r g e s t . v o l u m e ; s u p p l i e r o f s a t e l l i t e r e c e i v e r s , a n d D i x o n s , t h e l e a d i n g c o n s u m e r e l e c - ' t r o n i c s r e t a i l e r . T h e s t a r t o f ' S k y ’s £ 1 3 m i l l i o n p r o m o t i o n - c a m p a i g n h a s b e e i i t i m e d t o c o i n c i d e w i t h t h e . f l o o d o f d i s h e s n o w a r r i v i n g i n . s h o p s ' ( s e e . n e x t r e p o r t ) . T h e 6 0 s e c o n d c o m m e r c i a l i n t r o d u c i n g t h e s i x - c h a j i n e i r a n g e o f S k y ’ s s e r v i c e s w i l l b e s u p p o r t e d b y T H E D I S H F A M I I U E i s c o m i n g t o a n e n d . . A s u r v e y o f - 2 0 m a n u f a c t u r e r s c o n d u c t e d , l a s t w e e k s h o w s . t h a t s u p p l i e s , r e a c h i n g t h e n a t i o n ’s - r e t a i l e r s a r e b u i l d i n g u p f a s t l l ^ i ' M a r c h , 2 4 , 0 0 0 u n i t s w e n t o n s a l e ; I n A p r i l a n d M a y , m o r e t h a i i 8 0 0 , 0 0 0 r e c e i v e r k i t ® w i l l c o m e - t o . m a i ? k e t . ‘ : . ■ - ' ■ v " . ■ ' - . . . V . -. /' . •/. S K Y C H A H O i T B L h a s a x m b u n c e d t i b e f i r s t i i i a s e r i e s o f e x c l u s i v e , l i v e s p e c i a l e v e n t s ; ;E l t o n , J o h n ’s c o n c e r t i n V e r o n a , I t a l y , w i l l b e b r o a d c a s t l i v e , i n s t e r e o , o n t h e n i g h t o f A p r i l 2 6 . : ' . T h e s p e c i a l p r o g r a m m e w i l l b e p r o m o t e d w i t h n e w s p a p e r a d v e r t i s i n g . S k y w i l l s o o n : a n n o u n c e m o r e h v e s p e c i a l ' s , w h i c h a r e i n t e n d e d : t o s u p p o r t a r a p i d t a J s e - u p o f s a t e l l i t e r e c e i v e r k i t s . ... ■ ' ; . . ' i ' - , F U R T H E R E V I D E N C E o f t h e s t r o n g d e m a n d f o r s a t e l l i t e ; t e l e v i s i o n i s a r e p o r t l a s t w e e k , t h a t : e v e n b e f o r e t h e s t a r t o f S k y ' s m a j o r m a r k e t i n g e f f o r t . a l m o s t o n e h o u s e h o l d i n f i v e ( r e p o r t s a n i n t e n t i o n t o d e f i n i t e l y - b r - p r o b a b l y b u y s a t e l h t e e q u i p m e n t ; T h e d a t a c o m e s , f r o m T h e F i n a n c i a l T i m e s S a t e l l i t e M o n i t o r , a n e w m a r k e t r e s e a r c h p r o j e c t : T e l e p h o n e i n t e r v i e w s w i t h m o r e t h a n ;. 4 ' , P 0 0 , p e o p l e i n B r i t a i n . d u r i n g F e b r u a r y a n d M a r c h p r o d u c e d d a t a s u g g e s t i n g t h a t t h e r e a r e a l r e a d y a b p u t 5 8 , 0 0 0 s a t e l l i t e d i s h e s i n u s e . S E Y M O V I E S h a s a n n o u n c e d s o m e o f t h e h i g h l i g h t s i n i t s s p r i n g a n d ^ i n n i e r f i l m s c h e d u l e . . A m o n g t h e m a j o r f i l m s t o b e . s h o w r i a r e T h e N a m e O f T h e . R o s e , H a n n a h A n d H e r S i s t e r s , L a b y r i n t h , P r i z z i ’s H o n o r , a n d T e r m i n a t o r . S k y M o v i e s r e m a i n s f r e e t o v i e w e r s . d u r i n g i t s p r e v i e w p e r i o d ; l a t e r t h i s y e a r , t h e s e r v i c e y r i l i ' b e s c r a m b l e d a n d m a d e a v a i l a b l e ; i n c o m b i n a t i o n M t h T h e D i s n e y C h a i n i e l f w h i c h l a u n c h e s o n A u g u s t l ^ f o r a f e e o f ^ l S p e r m o n t h . ' ; ;; , ; M O R E T H A N 1 2 0 a d v e r t i s e r s , a r e n o w ' t a k i n g a d v a n t a g e o f t h e u n i q u e o p p o r t u n i t i e s o f f e r e d b y S k y T e l e v i s i o n : ‘M ^ p r b e n e f i t s m a i l a b l e f r o m S k y i n c l u d e p r o d u c t a n d s e r - ^ c e - ; e x c l u s i v i t y , s p e c i f i c t a r g e t t i n g , l o w e n t r y c o s t s a n d s p o n s o r s h i p b p p o r t u i i i t i i e s . A l l o f S k y ’s c h a n n e l s a r e s u c c e e d i n g i n r e a c h i n g v i e w e r s w h o a r e y o u n g e r a n d m o r e a f f l u e n t t h a n t y p i c a l I T V a u d i e n c e s . F o r m o r e i n f o r m ^ t i o n o n ; a d v e r t i s i n g o n S k y T e l e v i s i o n c o i i - t a c t S k y S a l e s . o n 0 1 : 6 3 6 - 5 0 1 0 . : i- S K Z N E W S , t h e 2 4 - h o u r n e w s s e r v i c e o f S k y . T e l e v i s i o n , , t h i s m o n t h m o u n t e d i t s m o s t a m b i t i o u s o u t s i d e b r o a d c a s t e f f o r t s o f a r t o c o v e r t h e v i s i t t o B r i t a i n , o f S o v i e t P r e s i d e n t M i k h a i l G o r b a c h e v ; S k y N e w s w a s t h e o n l y n e t w o r k t o b r o a d c a s t l i v e t h e s p e e c h e s - m a d e b y P r e s i d e n t G . o r b a c h e y i a n d P r i m e M i n i s t e r ' T h a t c h e r a t t h e ' d i n n e r g i v e n a t 1 0 D o w n i n g . S t r e e t d u r i n g t h e s t a t e v i s i t , M r s T h a t c h e r w a s i n t e r v i e w e d b y S k y N e w s a n d h a s b e c o m e a r e g u l a r v i e w e r . T b e S o v i e t E m b ' a s s y , . w h i c h r e c e n t l y t o o k d e l i v e r y o f a ' S k y d i s h , a l s o t u n e s i n . ■ v: ,v • ■ " ■ - ' V ■ - For more information about the services o f Sky Television, please tvrite to y Victoria Clark, Sky Television Centre, Grant Way, Islewor.th, Middlesex TW7 5QD . V i- ij. 1 .-/ '-V
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