Lonrho Regulatory News (LONR)

9 Jun 2009 07:00



9 June 2009

Lonrho Plc

('Lonrho' or the 'Company')

Interim results for the 6 months ended 31 March 2009

Lonrho Plc (AIM: LONR), Lonrho (AIM: LONR), the conglomerate with a structured portfolio of African investments, announces its unaudited Interim Results for the sixth months ended 31 March 2009. The financial information in this statement does not constitute the Company's statutory accounts within the meaning of Section 240 of the Companies Act 1985.

The interim report and financial statements are being posted to shareholders and will be published on the Company's website (www.lonrho.com) today.

LONRHO ENQUIRIES

Chief Executive's Statement

During the period Lonrho has continued to focus on the growth and development of its core businesses. The Company remains committed to its strategy of investing in Africa, and concentrating on building businesses that are essential to, and benefit from, the growth of the continent.

In line with this strategy we continue to mitigate risk by operating in a series of countries across the continent and developing our tried and tested proven core businesses.

Lonrho operates in seventeen African countries in five strategic sectors. 

Agriculture and agri-processing

Transportation

Infrastructure

Support Services 

Hotels

In these challenging World markets, Lonrho is well placed to advance, and is investing in one of the strongest global emerging markets. While the rest of the World struggles to generate economic growth, Africa manages to remain with positive GDP growth year on year.

Prudently, Lonrho has successfully developed a portfolio of businesses geographically distributed across Africa's strongest emerging economies. These businesses are now well positioned to capitalise on further growth opportunities.

Financial highlights:

Year to date turnover on continuing operations for the first six months was £41.5m, this is an increase of +275% on a reported basis against the previous year and 60% increase on a like for like basis.

The Group held cash balances of £13m at 31 March 2009.

Net assets have increased to £85.4m up from £69.7m at 30 September 2008.

Profit before tax for the first six months on a reported basis was £0.6m compared to a loss of £7.8m in the previous year. 

The Group has recognised foreign exchange gains of £6.1m in respect of the half year to 31 March 2009. As at 31 March 2009, the Group also had unrecognised foreign exchange gains of £7.1m. 

The six months profit before tax includes a one off gain of £2.3m in relation to the liquidation of S A Independent Liner Services Pty Limited (SAILS) in October 2008.

OPERATIONAL REVIEW

A review of the major operations, by division, follows.

AGRICULTURE 

Rollex Pty Limited ("Rollex") (51%holding)

Rollex continues to be the central focus within Lonrho Agriculture's logistical division based around its 4,600m² airside agri-processing facility at Johannesburg International Airport. Rollex vertically integrates the African agricultural market, taking produce from growers, processing it and delivering it to the supermarket shelf. The company supplies local African supermarkets for domestic consumption as well as exporting fresh fruit and vegetables to the major European supermarkets.

During the period, the company has grown and has established the infrastructure and export logistics capability to export fish and meat from Namibia to Europe. 

Further cold store and agri-processing facilities are planned for Angola, Malawi and Zimbabwe. 

Lonrho Agribusiness (BVI) Limited ("Lonrho Agriculture") (100% holding)

Lonrho Agriculture has engaged agronomists who are currently finalising reports on proposed new farming operations in Malawi, Angola and Mali. Over the next two to three years Lonrho intends to bring 350,000 hectares of latent agricultural land into production to support the Rollex operations for the local and export markets. It is planned that when optimised the Rollex business will generate 40% of its own inputs and source 60% from local producers. 

John Deere

The John Deere franchise for tractors and agricultural equipment for Angola is under development. It is planned to commence trading this summer and will be one of the largest John Deere operations in Africa. The Angolan Government has announced significant financial incentives (US$350 million (£220 million)) to stimulate the agricultural sector in Angola. The Lonrho John Deere business will incorporate a training centre for agricultural mechanics and a comprehensive maintenance and spares facility to provide support for the tractors and equipment to be supplied.

TRANSPORTATION

Lonrho Aviation (BVI) Limited ("Fly540") (100% holding)

Lonrho's pan African aviation company, branded Fly540, has continued to expand its operations. The business model remains to create an international standard airline that can provide regional distribution for international carriers flying into Africa and the first credible regional service connecting Africa. Fly540 has built a significant network, connecting East Africa, based from its Kenyan hub, Five Forty Aviation Limited (49% holding), and has grown to become the second largest carrier in Kenya. 

The roll out plans for a South West Africa hub based in Angola and a west African hub in Ghana continue to proceed and are expected to be operational before the year end. This will deliver, for the first time, an international standard airline that connects Africa from North to South and East to West.

The Fly540 fleet is based around the ATR 72-500, a new 72 seater turbo prop aircraft manufactured by an Airbus joint venture. The aircraft are ideally suited to the African environment, and importantly are highly fuel efficient using only a third of the fuel of comparable regional jets. 

INFRASTRUCTURE

Luba Freeport Limited ("Luba Freeport") (63% holding)

Luba Freeport is the foremost natural deepwater port in the Gulf of Guinea. The Gulf of Guinea is the burgeoning centre of the oil industry in Africa and is forecast to provide one quarter of all USA oil requirements over the coming years. 

The port continues to attract new clients as the oil industry in the region expands. Anchor tenants on long term leases include Exxonmobil, Hess, MI Swaco, Schlumberger and SBM. The agreed 300 metres of deepwater quay has been completed and will become fully operational in July 2009.

Negotiations are proceeding well for further clients to utilise the port as a central operational base. Noble Energy has agreed a US$2 billion (£1.3 billion) contract with the Government of Equatorial Guinea and has signed an MOU to locate their operations at Luba.

Kwikbuild Corporation Limited ("Kwikbuild") (62% holding)

Kwikbuild manufactures a range of prefabricated buildings including classrooms, clinics and workers camps. Turnover has been lower than expected due to the South African government postponing awarding contracts until after the elections which were in April. Margins have improved during the current quarter and this is attributable to the new plant that was opened during the period which is functioning as planned and has significantly increased production capacity.

SUPPORT SERVICES

Sociedade Comercial Bytes & Pieces Limitada ("Bytes & Pieces") (65% holding)

Bytes & Pieces, the established market leader in the IT sector in Mozambique, continues to grow as a result of expanding business provided to existing clients as the market benefits from the continued rejuvenation of Mozambique. The solutions that are offered to customers are based on converged technologies and unified communications. Avaya IP Telephony systems and Polycom video conferencing products have been added to the product portfolio to complement the Dell, HP, Tata, CISCO and Microsoft products offered.

Computer Enterprise Solutions Limited ("CES") (50% holding)

The African roll out of Lonrho IT through CES continues to grow its operations in South Africa and gain market share. It has also opened a new branch in Lusaka in Zambia on the 1st April and anticipates opening another branch in Angola in the coming quarter and thereafter in Malawi.

LONRHO HOTELS

Hotel Cardoso SARL ("Hotel Cardoso") (59% holding plus management contract)

The refurbishment of the Hotel Cardoso in Mozambique (together with the redevelopment of the adjacent park) has now been completed. The hotel has once again become one of the premier hotels in Maputo and is achieving strong growth in both occupancy levels and revenue per average room. The redevelopment of the adjacent park has proved highly successful, not only commercially but also by re-establishing the area of the hotel as the one of the most popular in Maputo.

Grand Karavia SARL ("Grand Karavia") (50% holding plus management contract)

The hotel Grand Karavia in Lubumbashi, the centre of the mining region in the DRC, is well advanced on its US$20 million (£12.5 million) refurbishment. Contractors are on site and redeveloping the hotel and landscaping the grounds. The 215 room hotel is scheduled to re-open in late 2009 and will provide the only international standard accommodation in Lubumbashi. 

With the surge of new projects in Lubumbashi, the demand for hotel accommodation is strong and the Karavia is expected to operate with high occupancy levels. 

OTHER INVESTMENTS 

Lonrho Mining Limited ("Lonrho Mining") (25.32% holding)

Lonrho Mining is exploring a highly prospective diamond concession in Angola, the Lulo concession, where the initial survey and aeromagnetic results are very encouraging.

Lonzim Plc ("Lonzim") (24.53% holding)

Zimbabwe has seen a difficult six months and both the economic and political environment have been challenging. However significant progress has been made and there is optimism that Zimbabwe has entered a period of consolidation and the economic decline of a country, once so successful, is coming to an end.

LonZim continues to focus on commercial opportunities in Zimbabwe and the Beira corridor and looks to invest in industries that the Board believes will show strong and speedy recovery when Zimbabwe begins economic growth.

The historic investments made by LonZim in Zimbabwe continue to trade in the difficult economic environment. The focus for each company has been to retain quality staff and the capabilities necessary to grow and gain market share as and when Zimbabwe recovers. Each is well positioned to do so, and with LonZim backing, the portfolio of investments is strategically placed to be able to benefit from the recovery.

Consolidated Interim Income Statement

Consolidated Interim Balance Sheet

Consolidated Interim Statement of Recognised Income and Expenses

Consolidated Interim Cash Flow Statement

Notes

Note of preparation

1. The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with the recognition and measurement requirements of IFRSs as adopted by the EU.

The financial information is unaudited and does not constitute the Company's statutory accounts within the meaning of Section 240 of the Companies Act 1985.

Statutory accounts for the year ended 30 September 2008 have been delivered to the Registrar of Companies. The comparative figures for the financial year ended 30 September 2008 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

2. Basic and diluted earnings per share are arrived at by dividing the profit for the period by the average number of shares in issue during the period.

3. Given the current global financial crisis, the Directors are carefully monitoring cash resources within the Group and have instigated a number of initiatives to ensure funding will be available for planned projects. If such funding cannot be secured, the projects will be delayed or cancelled to ensure that the Group can manage its cash resources for the foreseeable future and hence the financial statements have been prepared on a going concern basis.

Corporate Information