Investment: Lonhro Africa shares shrug off pounds 5.7m loss

LONRHO AFRICA, the troubled hotels-to-cotton conglomerate, yesterday posted a disastrous set of results and pledged to sell a range of underperfoming businesses.

The group, demerged from the late Tiny Rowland's mining empire in May, said it had been hit by a mix of tough market conditions, devaluations of African currencies and political trouble on the continent.

These plunged the company into a pounds 5.7m pre-tax loss for 1998 compared with a pounds 22.6m profit in 1997. However the shares, which have fallen from their 95p float price, shrugged off the figures and rose 3.25p to 50p.

Bernard Asher, Lonrho Africa's outspoken chairman, said the company's plight had been compounded by a revolt by a group of shareholders backed by financier George Soros. Blakeney Management and African Lakes, two emerging market funds with a 10.1 stake in the group, sought to replace half the board in a bid to break up the company. They were defeated by a narrow margin at a shareholder meeting last month.

Mr Asher said the costs of the rebellion "had been incredibly high. This company was completely disrupted for months and on top of this we have the monetary costs to advisers," to be revealed in this year's accounts.

On financial performance, chief executive Mark Newman said all Lonrho Africa's businesses, ranging from Toyota dealers in Uganda to pig breeding in Kenya, had been savaged by the plunge in the continent's currencies. Some currencies, such as Zimbabwe's, had fallen by over 60 per cent against the pound, wiping some pounds 36m from Lonrho's pounds 425m turnover.

A collapse in cotton prices depressed the company's core agriculture operations, while the bombing of the US embassy in Nairobi destroyed tourism, Mr Newman said.

The chief executive said the company would try to improve performance by selling non-core and poorly-performing businesses. In the long term the company would focus on just two divisions - agribusiness, which includes cotton, timber and food procession, and distribution, including car dealerships and wholesale food.

Mr Asher said business conditions were no better so far this year, although it was unlikely 1999 would see a repeat of "cataclysmic events" such as the Nairobi bomb.

Analysts cautioned that Lonrho's core markets would remain tough for most of 1999. "We are likely to see a poor set of figures in the first half of 1999 followed perhaps by a bit of a pick-up in motors in the second half," said John Meyer at SG Securities.

Commentators noted that Lonrho Africa's shares are trading at a huge discount to its net assets of 106p, making the company a takeover target. "There are a lot of emerging markets funds which would be interested," one said.

Jenni Chamberlain, African equity analyst at HSBC, said the shares should be bought "because of the chance of somebody taking them over, but also because of the break-up value". She said Mr Newman's disposal strategy would improve the company's performance.

Suggested Topics
Club legend Paul Scholes is scared United could disappear into 'the wilderness'
A model of a Neanderthal man on display at the National Museum of Prehistory in Dordogne, France
Dawkins: 'There’s a very interesting reason why a prince could not turn into a frog – it's statistically too improbable'
newsThat's Richard Dawkins on babies with Down Syndrome
Arts and Entertainment
Eye of the beholder? 'Concrete lasagne' Preston bus station
architectureWhich monstrosities should be nominated for the Dead Prize?
ebooksAn evocation of the conflict through the eyes of those who lived through it
Dinosaurs Unleashed at the Eden Project
Arts and Entertainment
Life and Style
This month marks the 20th anniversary of the first online sale
techDespite a host of other online auction sites and fierce competition from Amazon, eBay is still the most popular e-commerce site in the UK
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Quantitative Analyst (Financial Services, Graduate, SQL, VBA)

£45000 per annum: Harrington Starr: Quantitative Analyst (Financial Services, ...

Application Support Engineer (C++, .NET, VB, Perl, Bash, SQL)

Negotiable: Harrington Starr: Application Support Engineer (C++, .NET, VB, Per...

AIFMD Business Analyst / Consultant - Investment Management

£450 - £600 per day: Harrington Starr: AIFMD Business Analyst / Consultant - I...

Business Analyst Solvency II SME (Pillar 1, 2 & 3) Insurance

£450 - £600 per day: Harrington Starr: Business Analyst Solvency II SME (Pilla...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home