Lonrho Regulatory News (LONR)

24 Mar 2009 07:00



24 March 2009

LONRHO PLC

("Lonrho" or the "Company")

Trading Update for the Quarter Ended 31 December 2008

Lonrho PLC (AIM: LONR) today announces its unaudited trading update for the first quarter ended 31 December 2008 ("First Quarter") and an update with regard to the unaudited results for the year ended 30 September 2008. The Board of Lonrho has resolved to henceforth issue quarterly trading updates on the progress of the Group to ensure that shareholders remain fully informed of developments and progress. 

Both sets of results (and comparative figures included therein) do not form audited accounts nor have been extracted from audited accounts and they have not been filed with Companies House. As set out below the company's intention is to release and post its annual results on or before 31 March 2009

Trading Update - 3 months to 31 December 2008

The Group is delivering significant revenue growth in its continuing operations as investments made during the past three years are now producing tangible results. During the past two years Lonrho has created in excess of one thousand direct and indirect new jobs from its operations in Africa.

The first quarter of 2008/09 has seen Lonrho's investments across Africa continue to report strong operational performances in all of the five strategic sectors of Lonrho's operations. (Transportation, Infrastructure, Agriculture, Support Services and Hotels). Lonrho has built a stable of businesses geographically distributed across Africa's strongest emerging markets. Lonrho believes these businesses are well positioned to capitalise on further growth opportunities.

First Quarter turnover was £21.9m. This represents a significant increase of 132% on a reported basis, and 53% increase on a like for like basis against the prior year. 

EBITDA in the First Quarter to 31 December 2008 was a loss of £1.9m compared to a loss of £3.6m in the prior year on a reported basis, this is a 45% improvement against last year. Operating loss on a reported basis in the first quarter was £2.7m compared to a loss of £3.4m in the previous year, which is a 22% improvement. The First Quarter loss includes rollout costs and operating losses connected to the expansion of Lonrho's aviation subsidiary, Fly 540, into new countries of £1.7m (Nil Q1 08/07).

As at 31 December 2008, the Group also had unrecognised foreign exchange gains of £10.6m in respect of the first quarter. Net assets stood at £87.0m up from £74.9m at 30 September 2008. 

Trading Highlights

The acquisition of 51% of Rollex SA was completed with effect from 1 October 2008. Rollex is the central company within Lonrho Agriculture's logistical division and like for like Quarter 1 sales were up 49% year on year driven by a new cold store and export processing facility in Windhoek, Namibia and expansion and growth of the base operations airside at Johannesburg airport. The fruit salad processing line at the Johannesburg facility is now delivering processed fruit salad in South Africa and opening lucrative export markets in Europe.

Lonrho's pan African aviation company, branded Fly540, has continued to expand its operations to include Uganda and Tanzania. Over 25,000 passengers were carried in December alone and the Kenya airline (49% holding) continues to operate profitably. The roll out plans for Angola and Ghana are well advanced.

The Luba Freeport (63% holding) quay extension has been completed delivering 300m of usable quay. Revenue has increased by 14% on a reported quarterly basis against the previous year. Costs have been kept below budget and negotiations are proceeding well for new clients to utilise the port as a central operational base as the Gulf of Guinea oil exploration market continues to deliver strong growth.

Kwikbuild Corporation Limited's (62% holding) South African subsidiary e-Kwikbuild opened a new production facility on time and on budget in Port Elizabeth in November 2008 almost tripling its capacity. This has enabled it to win its first export orders to Angola. Significant pan African export opportunities are developing for the Company through Lonrho's extensive African network.

Hotel Cardoso in Mozambique (59% holding + Management Contract ) continued with the hotel refurbishment and upgrade and is due to complete works on schedule in the second quarter.

Hotel Grand Karavia in Lubumbashi, DRC, (50% holding + Management Contract) continues with its US$ 20 million refurbishment program of which Lonrho is committed for a maximum of US$ 2.5 million, the balance being funded by DBSA for US$ 10 million and local joint venture partners and banks. The hotel is scheduled to re-open in the Summer of 2009.

Lonrho IT, (CES, 50% holding) continues to grow its operations in South Africa and intends to establish new branches in Zambia and Angola in the coming quarter.

Bytes & Pieces, (65% holding) continues to perform to expectations.

Lonrho Springs (100% holding) continues its operations in Mozambique (100% holding) and Kinshasa, DRC (21.4% holding) and new developments previously announced in Angola (51% holding) and Lubumbashi (51% holding) and South Africa (90%) remain under development.

Lonrho Mining. Lonrho's holding in Lonrho Mining, listed on the Australian Stock Exchange currently stands at 25.59% holding.

Lonrho announced its withdrawal from shipping, and the liquidation of its shipping line (SAILS) to focus on its other core African businesses

Financing Activities

In December 2008, foreseeing significant difficulties in world markets in 2009, the Company raised £15.4 million before costs (US$ 24.4 million) to ensure the continued development of its core businesses. The placing was made following consultation with major institutional investors, by means of the issue of some 308 million new ordinary shares in the Company at 5 pence per Ordinary Share. The Company has no debt at Plc level. The net proceeds of the Placing have significantly reduced the Company's exposure to further insecurity in world financial markets.

Key Developments Announced

During the First Quarter, Lonrho announced some key developments:

Agreement to develop a 75 hectare aggregate project in Angola to meet the ongoing and increasing demand for construction aggregates in Angola

Signed an agreement for 25,000 hectares of agricultural projects in Angola for the domestic market

Signed an agreement to become the John Deere tractor and agricultural equipment distributor for Angola

Undertaking feasibility studies of 25,000 hectares of agricultural land in Malawi 

Undertaking feasibility studies for a five year scheduled development of up to 100,000 hectares in the Niger floodplain in Mali for the domestic and North African market

Appointment of new Finance Director

The Company was pleased to announce the appointment of David Armstrong as Finance Director. Mr Armstrong (FCA) brings extensive experience of operating throughout Africa. With Mr Armstrong's appointment, Ms Jean Ellis stood down as the Company's Finance Director and has assumed the role of a non-executive director of the Company.

Current Trading and Future Outlook

Each of the Company's core businesses has continued to perform to expectations in the first 8 weeks of 2009. Although the impact of the global recession is being felt across Africa, the impact on the African continent is less severe and forecasts expect sub Saharan growth in GDP to continue in 2009 albeit at a slower rate. The board remains confident that the Company is focused on market sectors and specific countries that will continue to see growth.

It is intended that the next quarterly update for the company will be released in April 2009. 

Results for the year ended 30 September 2008

It is the Company's intention to issue and post its audited financial statements for the year ended 30 September 2008 on or before 31 March 2009.The unaudited results to 30 September 2008, (which are still subject to review for final adjustments and foreign exchange movements), are expected to show a Turnover of £42.0m, an attributable loss after tax to Lonrho's equity shareholders of (£33.3m) and net assets of £69.7m (2007: £42.7m). The attributable loss to Lonrho's equity shareholders in the year ended 30 September 2008 includes the operating losses and write off of SAILS (£29.1m) (in which Lonrho held a 67% shareholding) in the current financial year. SAILS contributed Turnover of £18.3m in the year. In light of the current world financial markets, and with cogniscence of a global economic slowdown affecting the shipping market, the board felt it was prudent to review its ongoing support for SAILS and announced the liquidation of SAILS on the 15th October 2008. Closure costs in respect of SAILS are not expected to be material in the current financial year.

David Lenigas, Lonrho's Executive Chairman commented:

"The announcement of the first quarter results marks a tangible coming of age for Lonrho. We now have businesses operating across five strategic sectors in seventeen countries in Africa with reported revenues increasing 53% on a like for like basis against the same period last year."

"We expect Lonrho's operations to continue to deliver strong quarterly trading performances in 2009, and we are focusing on strengthening our core businesses. We remain extremely positive about Lonrho's prospects in our chosen countries of operation and specific market sectors across Africa."

LONRHO GROUP

GROUP TURNOVER YTD - UNAUDITED

DECEMBER 2008

£'000S

* Including Rollex and E-Kwikbuild and removal of Sails and Norse Air from 2007

Results sourced from December 2008 management accounts

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