Bock plans to sell off Lonrho's hotel interests

Click to follow
The Independent Online
Dieter Bock took a further step towards a possible break-up of Lonrho yesterday as he confirmed that the mining and agriculture conglomerate planned to float off its wide-ranging hotel interests, possibly this year.

The move, which accompanied better-than-expected results for 1994, is certain to create a further rift with Roland "Tiny" Rowland, who was ousted from the board last November and is understood to be set against a flotation of the division.

Apart from the diversity of the group's interests, which include luxury American hotels, the Metropole chain in Britain and safari lodges in Kenya, another possible stumbling block to any flotation is expected to be the one-third stake held in the Metropole chain by the Libyan government.

Mr Rowland courted controversy in the wake of the Lockerbie bombing, when he raised £177m from Colonel Gaddafi, the Libyan leader, for the stake. He had bought the whole chain 12 years previously for less than £20m.

Mr Bock, who poured cold water on rumours that he is poised to sell up to half his 18.5 per cent holding in Lonrho, also said that flotation was an option being considered for the group's general trading operations, whose interests include motor and equipment trading and textiles.

The market was unsurprised by the decision to float parts of the Lonrho empire, which Mr Bock sees as a way of establishing a proper value for the group's assets. Although they are stated in the books at only 135p a share, Mr Bock and others in the City believe they could actually be worth more than 200p.

The expectation that Lonrho's hidden value might be realised now that Mr Rowland has been pushed upstairs to the position of president has led to a 20 per cent rise in the share price since the coup.

The day before Mr Rowland stepped down from the board after 34 years at Lonrho, the shares traded at 132.5p compared with a high of 300p in 1990. Yesterday they closed 2.5p higher at 158.8p.

As well as confirming that he would be holding on to the stake he bought two years ago, Mr Bock said he had no intention of buying Mr Rowland's remaining 6 per cent stake: "When I started at Lonrho I needed to have an influence. This is no longer necessary."

Underlying profits grew strongly during 1994, with a 56 per cent improvement at the pre-tax level from £72m to £112m. Including an £87m profit from business disposals in 1993 they fell from £165m. Earnings per share jumped from 1.9p to 6.6p and the dividend increased from 4p to 4.75p.

Mining, which generates about half the group's operating profits benefited from a 7 per cent rise in production from the recently floated Ashanti mines. The division is set to produce 1 million ounces of gold this year and costs remain low at $167 an ounce. The platinum division's profits were knocked by a 38 per cent decrease in the rhodium price but platinum volumes and prices both rose during the year.

The hotels division, which has 7,000 rooms in 19 hotels and seven Kenyan safari lodges, increased profits from £19m to £28m despite persistently low occupancy rates, notably in Mexico where political instability kept hotels two thirds empty.

The agriculture division, Africa's largest commercial food producer with operations in 11 countries covering 1 million acres, was boosted by its dominant sugar arm where profits grew 65 per cent to £28m.

Of the four core divisions, only general trade fell, from £33m to £21m, as its manufacturing activities turned a £4m profit into a £5m loss.

Outlook, this page