Lonrho Regulatory News (LONR)

1st February 2013

Lonrho Plc ("Lonrho", the "Company" or the "Group")

Trading Statement

These results (and comparative figures included therein) do not form audited accounts nor have they been extracted from audited accounts. The results disclosed in this trading update may potentially be subject to adjustments during the year-end audit.

As part of the year end process, Lonrho today updates the market on its trading performance in Quarter 4 of the financial year to 31st December 2012. The Group's preliminary results will be released in late March 2013.

Throughout 2012, the Group has continued to develop its operational businesses and remains confident that these are aligned with the strongest growth opportunities in Africa. However, progress in certain areas has been slower than expected in the final quarter, impacting on revenue and profitability in 2012. The Board now expects to report a net operating loss* of between (£3m) and (£5m) for the full year due to the factors outlined below.

Geoffrey White, Lonrho's Chief Executive Officer, commented:

"2012 has delivered good progress for the Group with revenues growing by 44.3% and the successful reverse of Lonrho's aviation business into Fastjet Plc. Following the departure of the Group Executive Chairman in September, the Executive Directors carried out a strategic review of the Group's businesses and implemented a plan across the Group to heighten focus on margin improvements. This strategic review resulted in the discontinuance of a number of lines of business where exchange risk or the desired margins did not meet the Board's revised investment criteria. The strategic decision to focus on improving margins across the Group has not had a demonstrable impact on the latter part of 2012 but has positioned the Group to approach 2013 from a stronger and more reliable base with much improved budgeting. Each business division has, during the year, transitioned to become cash generative for the Group and the balance sheet is satisfactory to support the Group and the Board's plans.

Quarter 4 has been demanding in several areas of the business where the lead times on delivering new product lines have proven longer than previously expected. Whilst the reporting of a net operating loss in 2012 is disappointing, the shortfalls have largely reflected delays in the timing of delivery of major contract or project implementation delays and not any weakness in the underlying business models, which remain very positive.

Over the past five months the Group has realigned itself to move away from a short term trading focus to concentrate on building long term, sustainable, businesses with large, global corporate clients. Lonrho is in the right markets at the right time, and the opportunities facing the Group as we move into 2013 are clear for the Board and the management team to deliver strong, profitable and reliable growth for shareholders."

Headline and like-for-like revenue growth has been strong across all four operating divisions reaching £186.1m for the full year.

·; Revenue in the Quarter 4 increased 34.3% to £46.2m (2011: £34.4m). Like-for-like revenue at constant currency increased by 28.9%.

·; For the full year to 31 December 2012, reported revenue was up 44.3%, from £128.9m to £186.1m, a like-for-like increase at constant currency of 23.9%. Strong performance was recorded at Luba Freeport, LonAgro Angola, and from in-house farming operations all of which exceeded management expectations. The farming off-take and outgrower programmes have been established, are expanding, and have started delivery. The Group is successfully transitioning its agricultural operations from short term individual trading contracts to demand driven, longer term, sustainable, growing programmes in conjunction with and in partnership with the world's leading retail chains.

Over the past five months, the increased corporate focus on long-term profitability, subsequent restructuring and a number of implementation delays impacted on the Group's performance in Quarter 4 versus management expectations. These impacts are mainly now historic and completed or timing related, where contracts and business development that were forecast for 2012 have rolled over into the financial year 2013:

·; Adjustments to management expectations in Quarter 4 were largely driven by:

o Delivery by Oceanfresh of hake volumes to fulfil the Costco Lent promotion for Kirkland Signature Hake Loins fell short of expectations. The fulfilment of the required volumes and sizes was delayed, but sales remain on track for 2013 (shortfall in 2012 Revenue of £6m). Fish volumes were good in November and the first part of December but sizes were, unusually, smaller than normal impacting the Oceanfresh loin availability. Fish sizes being landed have recovered strongly in late December and January and sufficient stock has now been secured to meet Costco's promotional requirements. However, this revenue was largely delayed from accruing in 2012 into 2013.

o Trak Auto, the Lonrho John Deere distributor in Mozambique, experienced significant import delays of tractors and other equipment arriving into Mozambique in Q4 due to port congestion in Maputo port, a transport workers' strike and production delays at John Deere (shortfall in 2012 Revenue of £4m). This delayed delivery of some 72 units, all of which were successfully delivered in late December and January.

o The Lansmore Hotel in Libreville, Gabon, and the first easyHotel in Johannesburg were forecast to open in the fourth quarter 2012 but have been delayed and will now open in 2013 (shortfall in 2012 Revenue of £1.2m). The Lansmore Masa Square in Botswana opened on schedule and has rapidly become the number one hotel in Gaborone.

o Lonrho Logistics declined to renew a contract to source and supply animal feed to the Middle East dairy farming market (shortfall in 2012 Revenue of £4m). This is in line with the Group's new strategic focus on increasing Group margins. Management concluded that, although this was a sizeable revenue opportunity, it would be challenging to achieve satisfactory profitability and the project margin was overly sensitive to the Rand / US$ exchange and freight rates.

o e-Kwikbuild continued to encounter delays in completing its two key Government contracts in South Africa for 418 Eastern Cape Schools and for 112 victim friendly units, kitchens and offices for the South African Police Service (shortfall in 2012 Revenue of £1.6m). Both contracts are now expected to be substantially complete in Quarter 1 of 2013. e-Kwikbuild continues to focus on developing a larger part of its business with the private sector.

o The vertical integration and reorganisation of Rollex Pty and Lonrho Logistics to improve efficiencies and customer service levels has been completed in Q4. This has led to one-off restructuring costs totalling £1.3m, including the costs of closing Rollex Pvt' s discontinued retail activities, closing transport contracts that did not meet the Group's new margin threshold and the recruitment of new senior management. Lonrho Logistics now incorporates all the freight forwarding activities of the Group, including the rapidly growing sea freight business.

o Rollex Pty is now solely focused on its high value Agri-Processing business based at Johannesburg International airport and building long term, sustainable, supply contracts for major global supermarkets.

o The deterioration of foreign exchange rates versus expectations caused a shortfall of £2.7m in Quarter 4 Revenue. In particular the South African Rand (which is the reporting currency for over 40% of the Group's Revenue), declined 6% versus previous forecasts.

In addition, as announced on 13th September 2012, David Lenigas was awarded 8,138,352 shares in lieu of notice and other benefits upon his departure from the Company. This has resulted in a share based payment charge of £0.9m.

The Board believes that the strategic action taken in Q3 and Q4 2012, to focus on increasing margins through operational efficiencies and build long term sustainable customer relationships, coupled with the decision to withdraw from less profitable lines of business, positions Lonrho well for entering 2013.

* Net operating profit/(loss) is defined as Profit before Tax for the core 4 operating divisions adding back gain/(loss)on associates, jointly controlled entities, investments, amortisation and share based payments

** Includes acquisitions (pre-acquisition comparables based on un-audited management accounts), excludes start-up businesses trading for less than 12 months.

ENDS