The Guardian from London, Greater London, England • 24

FINANCIAL GUARDIAN 24 Wednesday February 12 1980 Give people what they want, at a price they can afford, and they will buy what it is best at: it will bear the risk of all future losses. The benefit for the market is that it will clear Lloyd's name both- with tomers and' future names. The losses will be spread very thinly, so that individual names will hardly notice them. Such a deal would seem extremely sensible: and be a small price for restoring an element of public (not to say parliamentary) faith in Lloyd's. The precise split is still open for negotiation, though it would be unwise for both the brokers and Lloyd's to make the same mistake as in the past, and be too mean.

video recorder to follow. (It is, if you think about it, nutty that recorders and TVs have to be in separate boxes with wires trailing in between them.) But obviously the pressure is on the group to keep interpreting correctly what consumers want and consumers not just in the UK but internationally too. The real trick is yet to come. Can Alan Sugar build a group which can produce better mousetraps for the world consumer? Ultimately the group will have to work on a global scale, if only because that is the only sure protection from national swings in taste and demand. loss is still unclear even to those most closely concerned.

No one still knows how much has already been lost, let alone the scale of claims which will determine further losses- Basic statistics are simply not there. But there is an effective deadline of Easter for some settlement to be hammered out, because names -will have to pass Lloyd's solvency test at the end of May and many will not be able to do so without help. In fact the bones of a deal are now in place; This would involve the names, paying a substantial but fixed amount of the known losses. The sort of figure being talked about is of the order of 50-60 million. It will never be possible to determine precisely how much of the loss is a result of; bad underwriting (for which names are clearly liable) and how much as a result of fraud (for which they should not.

he). Clearly there -was' some element of sloppy underwriting, though names would contend that edge of what people want to buy. We are, ij this country, extraordinarily innovative consumers we took to things like -video recorders and home computers faster than any country in the world. With tilings like the 399 word processor, Amstrad has shown an extraordinary ability to bring here a range of products which do precisely what we inventive consumers want. Now critics of Mr Sugar argue that he is merely importing the products of the Far Eastern electronics boom: that bis skill is one of marketing rather than anything more substantial.

But this seems a touch unfair, as there is some British production of Amstrad goods, and in any case the main value added is in the design and marketing, rather than production. Results like yesterday's are inevitably highwire stuff. There are, it seems, a string of further products on the horizon, with video disc players in the front, and maybe things like a combined TV NOTEBOOK Edited by KamishMcRae SO MANY fortunes seem to lie made by financial manipulation that it is good ito see that the build a better mousetrap principle sometimes triumphs. The thing that has made Mr Sugar's Amstrad such a success is a precise knowl NFU condemns Chairman Alan Sugar becomes 27 richer Shares rocket as Amstrad interim climbs to 27.5 By Rosemary Collins, Agriculture Correspondent Farmers will not accept a further drop in income after last year's 43 per cent fall in order to shift food surpluses, and they will resist any new EEC farm strategy which discriminates against UK producers, delegates to the National Farmer's Union annual meeting said yesterday. First Ilichael Jopling, the agriculture minister, and later Margaret Thatcher herself told them that the government was determined to curb surplus production and believed it could do so without jeopardising the well-being of the industry.

The farmers remained sceptical, and passed unanimously a resolution condemning the government's farm Building society wins Sipra order bated in the select committee examining the bill in the next couple of weeks. But even if the exclusion gets through the select committee, there will be six uncomfortable months during which the Lloyd's heirarchy has to demonstrate that 'the present legislation is working well enough to justify exclusion. Whatever the inquiry under Sir Partick Neill concludes, Lloyd's also has several practical hurdles to clear if it is to convince MPs of the workability of the 1S82 Lloyd's Act. One such hurdle is obviously finding and installing a credible successor to Ian Hay Davison, the chief executive. Lloyd's is thought to be having the gravest difficulty in finding a suitable candidate.

In a rather different vein is the need to reach agreement with the names of the former PCW syndicates, who stand to lose something like 130 million as a result of a complex web of negligence and fraud. The actual figure for the Mexico denies debt By Peter Rodgers, City Editor MEXICO'S Foreign Minister, Mr Bernardo Sepulveda, was yesterday forced to deny rumours sweeping New York's commodity and financial markets that his country was about to declare a debt moratorium because of the collapse in oil prices. Be said in Washington after a meeting with the Secretary of State, Mr George Shulz: "I deny it, there is nothing to it." In spite of the statement, a number of major banks are already facing up to the serious possibility that Mexico will either declare a temporary moratorium on interest payments or more likely, that it wiU unilaterally impose a substantially lower rate of interest on its creditors. The denial, backed by senior bankers involved in negotiations with Mexico, conies at a time when talks about the country's financing needs appear to have ground to a halt The banks say they will not provide their share of the $9 billion needed this year and there is reported to be an impasse in Mexican negotiations with the International Monetary Fund, which could take months to resolve. The possibility of a Mexican-imposed 6 per cent interest rate Is being widely discussed, and the idea has been received sympathetically by at least one British bank, on the grounds that other options are disappearing rapidly.

This level is well below the cost of dollar funds to the banks, and it accords with a recent statement by the Mexican Finance Minister, Mr Silva Herzog, that interest rates need to be 3 per cent lower. The rumours of a moratorium caused a marginal but noticeable increase In the borrowing rates paid on certificates of deposit by major bank lenders to Mexico in New York, compared with other interest rates. This is a classic sign of unease. Bankers pointed out that if Mexico cut its interest payment on its near $97 billion debt to 6 per cent it would be equivalent to a discbunt of something over 20 per cent on the capital value of the This is roughly the discount at which Mexican Joans are trading in the unofficial market where Third World debt is bartered between banks. Mexico's foreign exchange reserves are between $5 billion and $6 billion but the government Is unlikely to favour running down reserves much further.

6 A new set of proposals drafted by Fritz Leutwller, the Swiss banker mediating between South Africa and its creditor banks, provides for repayment of a portion of the country's foreign debt in 1986, according to sources close to the negotiations. Such early repayment is in sharp) contrast to the South African Government's original rescheduling proposals, which Included a moratorium on repayments until 1990. delay Mr Sugar richer in the half year but it managed to organise extra manufacturing capacity and was rewarded by good, business through its companies in France and Hong Kong selling to agents in Germany, Spain, Australia, Scandinavia and the. US. In the UK -the group's computers account, for -60 percent sales.

The potential of the US market is vast and has proved a trap for other companies in the However' Alristrad- is going in with a mjnimum of fi Only 2 per cent had a business degree or manage-, ment qualification and seven out of 10 managers in industry 'h'adS trained for 'thefrirdle-' What cannot be denied' ijSfcthat our managers pnvavejrage less well-. ptheir jobs than ipanagers -of our major international competitors," he-sdid. He hoped that by the end of the year every secondary school would have a "mini-enterorise" scheme operating and said that 400,000 was being found by the Trade and Industry Department to coordinate the wort shadowing project in which school students follow top executives for a week to see how businesses are run. He is right, of course. But is it unkind to say that if the heirs to big companies like Guinness went into the sorts of business which had made them their fortunes, instead of messing about in politics, we would have more highly qualified managers in the brewing industry.

policy firm but fair measures, and tried to reassure delegates that the government would defend their interests in spite of the strained, relations between the NFU and Mr Jopling on key areas of policy. But she did not understate the nature of the crisis facing farming. "The silence of the intervention store has taken over from the hubbub of the market place," she said. The industry had been forced to concentrate on production rather than on selling, and as a result the demands of the market had lost their former pre-eminence. She challenged farmers to restore their incomes by satisfying consumer' demand for more natural and higher quality products and to win more of the home market for themselves.

NEWS IN BRIEF STAKIS, the hotel and leisure group, yesterday bought the Aviexnoie centre from House of Fraser. The price was not disclosed, but is believed to be around 800,000. The 100-acre centre, opened in 1966, includes a hotel, chalets, caravan park, theatre, conference hall, craft shops and sports facilities. Statis, which already owns two nearby hotels, will hold the ground lease for the three remaining hotels. THE TAKEOVER Panel has agreed to extend the offer timetables tor Hanson Trust and Imperial Group's respective bids until after the Department of Trade and Industry has decided whether either of the bids should be referred to the Monopolies and Mergers Commission.

WESTmwSrEK Property, the group which was taken over by Mtr Jim Raper two years ago amid, a City row, has been -wound up. Control of Westminster had passed those two years from Milbury to St Piran, both Baper companies, and then on to an offshore company, GrinkleleaiF. The Official Receiver was sent into Westminster last October to liquidate the company, and he will now convene a meeting of Westminster creditors. PAYMENT of the final 40p instalment on shares in British Telecom must be paid by Wednesday, April 9, it was announced yesterday, with the shares presently quoted on the stock market at 185p. compared with their nominal value of 80p, GRANADA has paid two directors who ojuit the TV and leisure group last year golden handshakes totalling 342.000.

Mr Christopher Stanton, the group finance director, and Mr Bryan Quitter, a chairman of Granada subsidiaries including Granada theatres and Motorway services, left separately in 1985. Granada woud not comment on why they had left. ARROW Air, one of whose planes crashed last December killing 248 US troops, yesterday filed for bankruptcy. The company listed nearly 500 creditors, the largest of which is American Marketing of New Vork, Arrow's planes were grounded this week and the US Air Force has suspended its contract with the carrier. ABBEY 1EFE and Skandia last night reached agreement over the legal action involving Abbey employees who left to join Skandia.

Abbey sued the Skandia group of companies and nine employees in a case which started in 1979 alleging conspiracy and breach of fiduciary duty, claiming that the nine senior employees involved had colluded with Skandia. while still working at Abbey. The terms of the settlement are not disclosed but are said to be acceptable to both parties. AUTOMATING; the does work, according to a government-sponsored survey by the National Computing Centre. Fifty-five per cent of firms said their investment had been successful.

Only 6 per cent were disappointed. fraud accounts for the vast bulk of the losses. Initially they are likely to resist. But the attraction is that once, the names have stumped up their portion, they will not be asked to find any more. In return, they will have to sign a legal waiver.

But at least it is, for them, the end of the matter. The people whom the names have threatened to sue, principally the broking, firms Howden, Minet and Sedgewick, will then have another large chunk to jay, One recent broker's estimate put the bill for Sedgewick alone at 30 million, and though this is thought by some people within the market to be high, this would point to the brokers putting at least as much as, if not more than, the names. For them, too, it would be the end of the matter. And the rest? The balance, small on present estimates, though possibly large and spread over many years, will come from the membership of Lloyd's as a whole. The market will be doing policy as "wholly irresponsible" and guided by "short-term political and financial expediency." "There seems to be no answer beyond the till at the end of the counter," a Barnsley farmer told Mr Jopling, who was met with muted applause and hostile questions.

Sir Ricbjrd Butler, retiring NFU president, pleaded for "time to enable farmers to make the necessary changes and find alternative uses for He said that government money must be use-d to help the industry change direction and get rid of stocks built up over the years Mr Jopling reminded him that public spending on agriculture rose last year by 5O0 million to 2.2 billion. Delay in solving the crisis was not in Mr Sipra arrears dred thousand pounds after all debts have been cleared. The Bank of England, which had a charge on tne nouse until last summer, released it for only 65,000, on the basis of a valuation of only 450,000, which Labour MP Mr Brian Sedeemore said last autumn amounted to a gift to Mr Sipra. Most of Mr Sipra's debts were run up through companies which are now in liquidation, and there are few-personal claims against him. free shares could equal almost 5 per cent of the total value put on Vickers, which is expected to attract a bid of about 50 million when it is offered for sale, as part of the privatisation of the British Shipbuilders warship yards, later this month.

The scale of the incentive reflects the attempts by the management consortium to outmanoeuvre other bidders, who will be led by Trafalgar House, for control of the yard which is being sold as a single package with the Cammell Laird yard at Birkenhead. The consortium and its backers believe they can win government support for their offer if they are seen to be demonstrating in practice the Tories' own "principles of wider share ownership. The consortium has already announced that it is to offer shares in the yards to residents of both Barrow-in-Furness and Birkenhead, although they will not qualify either for free shares or for cheap loans for share buying. robot installation rate from 116 to 96. The association also commissioned an Anglo-American industrial survey which indicated a striking contrast in attitudes.

In Britain, according to this survey, it is middle, managers and supervisors who are pushing for automation against the weight of top management. In the US, it is top management pushing change on those below. On a question about supporting the introduction of robots, 92 per cent of American senior management voted yes against 73 per cent in the UK. Among middle managers, the US vote dropped to 57 per cent while the UK figure rose to 76 per s' -X 1 First skirmishes in Fleet St ad war By our Financial Staff Attentats are being made by a London building society to serve a Dossession order on Johnson Matthey Bankers' biggest debtor Mr Mahmud Sipra, to take back his luxury house in one of London's smartest streets. The Waltharastow Building Society has won a court order to repossess the house, 1 Chester Terrace, Regents Park, because Mr Sipra has not kept up the payments on his 300,000 mortgage.

The house is believed to be worth at least 650,000. But Mr SiDra has been in Pakistan and the United States for the last couple of months and the order has not been served. The society may go back to court for an immediate posses sion order wmcn would not need to be served personally on Mr Sipra. However the society is considering an offer from Mr Sipra's solicitors, Adrian ffuggins Co, to sell the house and pay off the mortgage. A.

number of potential buyers are understood to have expressed interest. There is one other mortgage of 125.000 and a further charge on the house. But Mr Sipra could make several nun By Tony May Alan Sugar become 27 million richer yesterday when a dazzled stock market greeted a leap in interim profit by his Amstrad Consumer Electronics group from 9.5 million to 27,5 million. This was 7 million more than the group made in the whole of last year and nearly as much as some analysts were expecting for the full year. The group's shares soared 48p to 340p over the day and as Mr Sugar owns half the group's equity his personal paper fortune jumped 27 million to 186.5 million.

The success of the group's computers, especially the complete, word processing package which sells for under 400, was a large factor in the increase in sales from 69 million to 128 million. The group's margins, already good at 14 per cent widened to 21 per cent. Mr Sugar puts Amstrad's success down to the superficially obvious formula which has eluded many of his competitors of having the right products at the right price at the right time without carrying expensive stocks. Demand was much greater than the group had expected IBM cuts prices of outdated computers By our Technology Editor IBM yesterday cut price's on its current big computers by up to 29 per cent while Sri' nouncing new models. The; American giant sells about two- thirds of the world's computers: by value and its move will in-i tensify the fierce competition in mainframe computers.

IBM customers who are waiting in the purchase queue for the now outdated machines are offered two options still to buy the old at cut prices or take the new at about the same price. There are two new computers for the 3090 family of big systems and four replacements for the mid-range 4381 series. The new 3080 models range in price from 1 million to 6.3 million and the smaller range from 140,000 to 600,000. IBM said that because the same technology had been maintained, some old models could be upgraded to new at a customer's site within six to eight hours." Prices of the old 3090s are cut by 14 per cent and prices of the remaining middle-range 308X computers are cut by up to 29 per cent with a 52 per cent cut on some upgrade prices. On the new models, IBM is able to make the standard boasts about more computer power at lower cost, mainly due to the continuing advances in mlcrochippery.

The new computers include memory chips holding 288,000 bits of information and logic chips reduced in size by 30 per cent, i Board bashing NO SOONER is Mr Channon installed at the DTI than he gets into management bashing. Speaking at a British Institute of Management conference he went into the stuff about British managers being under-qualified. farming the interests of UK farmers, the minister said, and whatever package of salvage measures is eventually fixed in Brussels, he was determined that price restraint would be its major component. "I know that is no road to personal popularity," he told delegates, and they muttered angrily that he was right. A voluntary scheme to take marginal land out of grain production would suit Mr Jopling.

Delegates interpreted that as meaning the whole, of Southwest England where, they said, the dairy industry has already been carelessly castrated with a very blunt knife Mr Jopling reminded them that the days were gone when the British government could determine agriculture policy on its own. Mrs Thatcher promised TSB and Treasury appeal An appeal by the Trustee Savings Bank and the Treasury against a Scottish court decision that the bvik's assets belong to its depositors opened in Edinburgh yesterday. The judgment by Lord Davidson at the court of session in Edinburgh last November delayed Government plans to sell off: the bank. It was won by Mr James Ross of Mtynathort in Tayside, a retired civil servant, and it forced the bank to shelve its plans for a billion pound flotation. Mr Alan Johnston, QC, ap- the issue in the case was the extent to wnicn tne Bank's de positors had a proprietary interest in any surplus when the bank closed.

He said the context in which the matter arnsp war ivith rr foranna tn fho TSB Act of 1985, which sought co onng aDout tne sale of the bank to the public by the issue rvf chamc He told' three judges hearing imc appeal in tne court or session vestenrtav that umfar aha transferred to a new institution. enecnveiy Bringing about its closure. Mr Ross had said that Such a transfer amnnntnl appropriation of his property as Mr Johnston said the main areniment nf the hanv snj Treasury was that the bank was a "legal personality separate from the depositors. The corol-larv nf that mm that UIC aeposuors were not members of L11C U3I1K. He said Hip riofctc nf itsnngi.

VJL 1-CU)1 tors were regulated and limited wy contract, rne terms of that corrtract were to be found in the relevant tooislatinn tua rules of the bank. The Treasury cijiu. uaus were unitea in this approach but various aspects of it would be considered in their submissions to the court. He said there were two ways of annroarhinc tho matta rph II MWb.bl, rreasury took the view that one nan to iook no turtner than the terms of the TSB Act 1981. This latlon and the Treasury be- iwjvea mat was tne determining fantrfir 3G iho tnattai Tin.

point of view was to look at the history of the bank and its forerunners, Mr Johnston said. Appearing for the Treasury are the Lord Advocate, Lord Cameron of Lochbroom and Mr AJan Johnston QC. The case is expected to last four days, and judgment will be deferred. down cent; and among supervisors the yes figure was 55 per cent and the American 31 per cent. The survey showed an appreciation that the "skill twist" is at dts sharpest in robotics.

W-hile respondents to, the survey overwhelmingly complained about the lack of training in Britain, they reckoned that 58 per cent of the people in semi-skdllcd jobs replaced by robots would be likely to join the long-term unemployed. On robot installations, there was one gleam of light: over 20 robots were bought by universities, more than ever btsfore in one year. Good deal NOW THAT the Financial Services Bill is inching its way through Parliament, the pressure is on Lloyd's to justify its exclusion from the legislation. The particular clause exempting Lloyd's will be de nancial commitment as it is working through a "substantial American company which will be holding the stocks and which Mr Sugar regards as just another customer. The group has been, selling computers in the US since November but the big drive starts this month with a con tract which calls for deliveries of 10,000 word, processors a.

montn. Mr sugar expects tne US business to make a "nice on profit in the second half but does not expect the real i payoff to come until 1986-7. Meanwhile other new products are in the pipeline the latest being two complete hi-fi systems featuring compact disc players for under 350 which go on sale next week. A new VCK recorder and, more computers and peripherals are also planned. Mr Sugar says that the second half of the year has started well and sales forecast to June "present a healthy picture." He is looking for "a very satisfactory rate of growth for the group.

Analysts were getting a headache yesterday trying to guess at the group's full-year profits but something between 48 million and 49 million seems popular. larger. Newspapers are starting to resemble television companies, where making deals is commonplace." The consensus view of the agencies is that the broadsheets are now coming under pressure, with the financially stricken Sunday Telegraph and Daily Telegraph in particular moving away from their traditional adherence to a fixed rate card. The Sunday Exnress is also reported to be discounting more. Mr Eddy Shah predicts that the real cost of advertising in the national press should drop sharply by at least 60 per cent, once the gale of change blown up by his competition, and by the much reduced production costs as represented by Mr Rupert Murdoch's News International plant at Wapping, start feeding through.

And, Sir Gordon concluded "The situation is in itself unsatisfactory, given the importance of the programme and the scale of the resources involved." The full public sector costs in the enterprise zones are unknown, the report pointed out, but could have amounted to 180 million up to the end of 19845, with unconvented benefits on rates exemption alone possibly costing the Treasury 70 million over a 10-year period. In particular, Sir Gordon ruled, A closer evaluation will be necessary should there be any question of designating further zones or extending the lives of existing zones." Soft drinks merger The soft drinks interests of the brewers, Bass, Whitbread and Allied-Lyons, are being united to resist the domination of Coca Cola, Pepsi and Schweppes. Allied-Lyons said yesterday that it has agreed to merge its Britvic fruit juice subsidiary With Canada Dry Rawlings, the joint holding company run by Bass (65 per cent) with Whitbread (35 per cent); The deal requires clearance from the Office of Fair Trading. In return for Britvic, Allied Lyons will get "a small cash adjustment and 25 per cent of the new alliance. Bass's share falls to 50 per cent 1 By Maggie Brown i The first.

signs of a spring advertising rates war in Fleet Street, featuring discounts of between 25 and 30 per cent, are being reported by a range of media buyers in London's big agencies. The surprising aspect is that it is breaking out before the launch or Mr Eddy snan new (colour newspaper on March 4. The agencies say that it is not just News International offering substantial rebates in compensation for its imperfect distribution system. One media director in a London agency summed up the trend yesterday National newspapers are becoming much more of a negotiable medium. It is a very sensitive topic, but we are finding that tne discounts we can get are becoming Free shares carrot for Vickers yard workers Questioning the merits of enterprise zones By our "Business Correspondent The institutions funding the proposed management buyout nf the Vickers nuclear sub marine yard at iBarrow-in-Fur-ness are prepared to give away up to 2 million of free shares in the company to employees who participate in the bid for the yard.

Yesterday the yard's managers who are organising the bid revealed that employees who buv un to 500 snares in the yard would receive 150 free snares, witn a nominal vaiue of 150, if the management consortium offer succeeds. These shares will be tax free and will be donated by the institutions, headed by Lloyds Merchant Bank, which are sup-riortine the offer. The shares will come from the institutions' own holdings. This bonus comes on top of the tax free loans whicn have already been arranged by the consortium to encourage employee participation in the bid. The maximum value of tne The robot is, of course, only a crude barometer of industrial change, but the association's president, Mr John Collins, who is director of manufacturing at TI Domestic Appliances, said the survey was an indication that in Industry Year the UK was "sliding Insidiously into cardboard engineering packaging other people's products.

The association report notes that one cause of the decline is that the use of robots in spot welding, mainly in the car industry, has reached saturation point. But in the UK this has not been offset bv growth in other areas. Even Britain's electronics industry reduced its By David Simpson, Business Correspondent The government's failure to maintain an accurate record of the cost of the 25 enterprise zones established between 1981 and 1984 has been sharply criticised by the National Audit Office. In a report published yesterday, the Comptroller and Auditor General, Sir Gordon Downey, wrote: "The absence of essential information and analysis, and doubts on the reliability of some of the available data, make it impossible to draw firm conclusions about the merits of the enterprise zone concept, the true costs involved, arid the effectiveness of enterprise zones in securing the results increased. 1 capital resources from the 1.5 millions invested to start the company in 1B82.

According to research commissioned by Fraser Peacock, the UK video duplication market is likely to be worth 45 million this year, rising to 60 million in 1988. Fraser Peacock, with the existing management and staff intact, will be in a strong position acquire a larger share of this business. The management buyout will not signal a complete divorce from Granada. Peacock will provide a duplication service for Granada Video Robot recruitment slows Granada sells video company to managers By Peter Large, Technology Editor For the first time, Britain's rate of Introducing robots into industry declined last year. The annual survey of the British Robot Association, published yesterday, shows that 585 new industrial robots were installed in 1985, compared with 679 in 1984.

The national total is only 3,208. This compares with" a rise from 6,600 to 8,800 in West Germany and from 13,000 to 20,000 in the United States. Nevertheless, Britain retains its sixth place in the world table of robot use By. Dennis Barker The second, largest video duplicating firm in Britain, Fra-ser Peacock Video, has been bought out by its own management, it was announced yesterday. Previously the majority shareholder in the Wimbledon-based firm was the Granada Group.

Mr David Tuckman, managing director of Fraser Peacock, said yesterday. We. didn't fit into Granada's future plans." The sum the management team paid for the shares was not revealed, but Mr Tuckman said that there was finance available for building up the.