THE INVESTMENT COLUMN : Lonrho takes shape under Bock

First interim figures since Tiny Rowland's ignominious departure from Lonrho in March were right at the top of expectations. Dieter Bock may lack his predecessor's flamboyance, but he is yet to put a foot wrong in restoring the company's fortunes.

Lonrho shows every sign of becoming another well-run, diversified holding company, even if, careful to avoid the prospect of trading at a permanent discount to net assets, the company stresses it is not simply an investment trust. Trust or not, if it goes ahead with the proposed flotation of its main African businesses and spins off its Metropole and Princess hotels, the market will have the opportunity of putting a firm price on its constituent parts. When and if that happens, the discount of the shares to the underlying worth of the business is likely to seem even more incongruous than it does now.

There is still plenty of work to do, as lower profits from the manufacturing and general trading operations underlined. The occupancy levels at the hotels are also inadequate.

But an underlying improvement in group pre-tax profits of 53 per cent, a doubling in earnings per share before exceptionals and a good jump in the dividend suggest Lonrho is well on track to becoming a proper company again.

Dieter Bock has been criticised, not least by Tiny Rowland himself, for being too slow to bring in deals, but the merger he engineered with Gencor's platinum interests earlier this week showed that he has a good eye for sensible strategic tie-ups that his predecessor would have shunned.

He is at last putting a viable structure in place to increase Lonrho's room for manoeuvre. Mr Bock claims he is committed to Africa, but parcelling the businesses into a sensible package and selling off the parts that don't fit give him the option of trading businesses if he wishes. In the meantime, a valuation of the company hinges on the yawning gap between its share price, up 1.5p to 151.5p, and net assets per share of perhaps 230p. If the market decides Lonrho is little more than an investment trust a typical discount of, say, 20 per cent would imply a share price of 184p.

Given Lonrho's exposure to the political and economic uncertainties of the developing world, however, even that implies a demanding price-earnings ratio of over 20. Dieter Bock says he will exercise his option to buy Mr Rowland's remaining 6 per cent, but he can afford to pay over the odds. For everyone else the shares look pretty fully valued.