Wrap Text
LAF - Lonrho Plc - Lonrho reports strong revenue and profit growth for 2011 and
67% growth in revenues for final quarter
LONRHO PLC
(Incorporated and registered in England and Wales)
(Registration number 2805337)
(Share code: LAF; ISIN number: GB0002568813)
("Lonrho" or "the Company")
LONRHO REPORTS STRONG REVENUE AND PROFIT GROWTH FOR 2011 AND 67% GROWTH IN
REVENUES FOR FINAL QUARTER
Lonrho, the conglomerate aligned with the growth of Africa, announces its
results for the final quarter and the 15 month period ended 31 December 2011.
Financial Highlights for the three months to 31 December 2011:
- Revenue in the quarter for continuing operations of GBP46.1 million, a 67%
increase from the same quarter in the prior year (2010: GBP27.5 million).
For the 15 months, revenue from continuing operations was GBP188.4 million,
up from GBP107.4 million in the 12 months to September 2010. Discontinued
operations (airfreight business) accounted for GBPnil in the quarter and
GBP0.2 million in the 15 months to December 2011.
- Growth has been experienced across each of the Company`s operating
divisions and gross margin across the Group has risen by 0.6% on an
adjusted like-for-like basis.
Continuing Operations
Quarter to Dec Reported growth Adjusted like-
2011 for-like**
growth
GBP million
Revenue
- Agribusiness 22.1 45.6% 15.4%
- Transportation 11.2 144.1% 109.0%
- Infrastructure 4.1 27.3% 30.2%
- Hotels 2.5 25.4% 4.5%
- Support Services 6.1 144.6% 38.3%
Lonrho 46.1 67.0% 30.2%
Group Gross Margin 25.6% 0.9% 0.6%
- Net Operating Profit* in the Group for the quarter was GBP0.7 million on
continuing operations, compared to a GBP3.0 million loss in the same period
in the prior year. For the 15 month period the net operating profit was
GBP6.8 million, up from a break even position in the 12 months to September
2010.
- The Group reported an impairment charge of GBP4.3 million on the carrying
value of its investment in Lonrho Mining Limited, its ASX listed mining
associate, due to the fall in its share price from AUD 0.043 to AUD 0.007.
After this charge, the Group made a loss before tax for the quarter of
GBP2.8 million and for the 15 month period, profit before tax on continuing
operations was GBP1.9 million.
- Net assets at 31 December 2011 stood at GBP155.7 million. At 30 September
2011 the comparative figure was GBP151.6 million and at 30 September 2010
was GBP127.7 million.
Cash balances held at 31 December 2011 totalled GBP12.7 million, compared to
GBP14.6 million at 30 September 2011 and GBP7.8 million at 30 September 2010.
The final quarter of the lengthened fifteen month financial year has seen the
Group progress on its strong performance to date:
- Oceanfresh has made significant progress into the USA market where sales
have proven that strong demand exists for Oceanfresh products.
- Fresh Direct commenced delivery of a strawberry programme for Pic`n`Pay
during the quarter, representing the vast majority of the supermarket`s
South African supply during the season. Volumes in December reached 15
tonnes per week and continued to increase into the New Year with a total of
900 tonnes scheduled to be delivered over the agreed 8 month programme.
- Trak-Auto (the John Deere franchise in Mozambique) had a slow quarter in
terms of new tractor sales but parts and service revenues remained strong
and a new branch was opened in Tete to meet increasing demand from the
North of Mozambique.
- Biological asset gains, primarily on the Company`s stone fruit plantations,
in the quarter were GBP10.4 million reflecting good yields in the autumn
harvest, reduced farming costs and a foreign exchange gain of GBP0.5
million.
- e-Kwikbuild had a quiet quarter with reported revenue of GBP0.9 million and
stock/ work-in-progress write-off of GBP0.5m. However, 2012 has started
very strongly with the award of a contract to supply 116 schools in the
Eastern Cape. The work will include supplying 398 classrooms and 8
laboratories in a deal valued at R123 million to be delivered over the next
two quarters.
- Luba Freeport, the oil logistics terminal, saw a significant increase in
drilling and exploration activity in the Gulf of Guinea, with a related
rise in the number of vessel movements at the port. Vessel movements
increased 43% quarter-on-quarter, helping to boost revenues, which
increased 22% on the same quarter in the prior year.
- AFEX Group signed an initial 12 month contract with Tullow Oil which
commenced during the period. The contract will service 160 clients and 40
AFEX staff will be based at the company`s camp in Lokichar, Northern Kenya.
- Fly540 began flights in Ghana between 4 domestic destinations (Accra,
Kumasi, Tamale and Takoradi), completing the third strategic hub to the
network. The airline also enjoyed a strong Christmas period flying a total
of 58,619 passengers in December. Passenger numbers continue to grow on all
routes.
- The AIM quoted investment shell, Rubicon Diversified Investments Plc,
announced the appointment of the Lonrho Executive Chairman and CEO to the
Rubicon Board in December 2011, and later announced that it is in
discussions with Lonrho to reverse Fly540 into Rubicon, change its name to
FastJet.com and bring easyGroup, it`s founder Sir Stelios Haji-Iannou and a
very senior aviation management team, into Rubicon to develop the Fly540
platform. In November 2011, Lonrho subscribed for 9,500,000 new ordinary
shares at 1 pence each. Following this and Rubicon`s subsequent placing in
December 2011 to raise GBP9.0 million, Lonrho holds a 3.2% stake in
Rubicon.
Lonrho Plc announced in the quarter its intention to conduct an equity raise for
GBP26.9 million, which was completed post year end. The Company received valid
acceptances in respect of 22,534,994 New Ordinary Shares from Qualifying
Shareholders, representing approximately 20.8 per cent of the New Ordinary
Shares offered under the Open Offer. A total of 269,498,795 shares were issued
at an issue price of 10 pence per New Ordinary Share.
The Group has started 2012 encouragingly, with important new business wins
across all divisions.
David Lenigas, Lonrho`s Executive Chairman, commented:
"Lonrho has made good progress during the period to the end of 2011. Financial
performance in the final quarter of the year has been very encouraging and gives
confidence moving into 2012. Having completed the Company`s strategic investment
programme, each operating division is well aligned to service the expansion in
demand from the growth in emerging Africa and now has the necessary
infrastructure and platforms in place to deliver strong growth and improved
margins for 2012 and beyond."
* Net Operating Profit is defined as profit before tax for the period (from
continuing operations) excluding the share of the results of associates and
other movements in the carrying value of associates and investments
**Adjusted like-for-like figures compare Group businesses held at 31 December
2011 as if they had been owned from 1 January 2010 and include acquisitions
based on unaudited management accounts, excludes start-up businesses trading for
less than 12 months and is adjusted to constant currency
ENDS
Enquiries:
Lonrho Plc +44 (0) 20 7016 5105
David Lenigas
Geoffrey White
David Armstrong
FTI Consulting
Edward Westropp +44 (0) 20 7831 3113
Georgina Bonham
Statutory accounts
The financial information set out in this announcement does not constitute the
Company`s statutory accounts for the 15 month period ended 31 December 2011 or
the year ended 30 September 2010. The financial information for the year ended
30 September 2010 is derived from the statutory accounts for that year. The
audit of statutory accounts for the 15 month period ended 31 December 2011 is
complete. The auditors reported on those accounts, their report was unqualified
and did not include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their report.
Lonrho`s full annual report and financial statements will be published on its
website (www.lonrho.com) today and are being posted to shareholders.
Chairman`s Statement
Lonrho has made solid progress during the period to the end of 2011 and I am
pleased to report strong performances across the majority of Lonrho`s operating
divisions in Africa.
With gross revenues for the Group of GBP188.4 million, and net operating profit
of GBP6.8million for the 15 month ended period 31 December 2011, the Board of
Directors` focus for 2012 will be to optimize profits, whilst continuing to grow
the Company`s core businesses. Lonrho`s Agribusiness division now represents
over 50% of Lonrho`s entire business and I would expect to see this division`s
percentage of Lonrho`s total business grow steadily over the coming years.
Investing in Africa has its own unique challenges, particularly with respect to
timely delivery of projects, but I feel confident that, having largely completed
the Company`s investment programmes, Lonrho is now well positioned to deliver
strong growth for 2012 and beyond.
As a result of the Group`s increasing profit expectations over the coming years,
the Board of Directors intends to introduce a dividend policy for the Company to
be made public during 2012 and implemented in 2013.
2011 also saw Lonrho move from the London AIM exchange to the premium list on
the main market of the London Stock Exchange ("LSE"). As a result of this move,
Lonrho strengthened its Board with the appointment of Sir Richard Needham as an
Independent Non-Executive Director, and Ambassador Frances Cook stepped up to
become Senior Independent Director.
As a Board, we are responsible to the Company`s shareholders for delivering
shareholder value sustainably over the long term through effective management
and good governance. We believe that a robust discussion focused on the critical
strategic issues and risks is key to achieving these aims and we are fortunate
to have Non - Executive Directors with extensive industry and international
experience who can actively contribute to this debate. The Board also seeks to
develop and maintain a good understanding of the Company`s operations by
conducting site visits each year.
Lonrho`s compliance with the UK Corporate Governance Code is described more
fully in the Corporate Governance section of the annual report.
Lonrho`s success this year is based around excellent management teams, which
have a clear understanding of our markets, and the respect in Africa for the
unique Lonrho brand name. This is combined with the deliberate positioning of
each Lonrho division to be able to assist and benefit from the growth of Africa
as an emerging market.
Africa has changed fundamentally in the last decade. It is by no means perfect,
but it is no longer the "Dark Continent of old". Governance, political reform,
education and historic debt restructuring has allowed Africa to progress to a
point where it is now a vibrant, rapidly developing emerging market.
Significantly the general public perception of Africa is, in Lonrho`s opinion,
at least ten years behind the reality on the ground. Within Africa today you
find a dynamic and expanding commercial market full of opportunity. This is, at
last being recognised by investors. From a low base, the rate of growth across
the Continent is building quickly. Less than 1% of global investment was into
Africa in 2000, in 2011 that figure has risen to 4.5% and is continuing to rise.
One of the clear drivers of change is that the World is beginning to realise
that global growth and food supply are dependent on Africa as an integral part
of the World economy. For the first time, analysts and business leaders are
talking about `essential Africa` and are agreeing that Africa will play a
fundamental and important role in the global economy moving forward.
The economic opportunity of Africa is driven by a population of one billion
people and its land and natural resources, containing 60% of the World`s arable
land, with abundant sunlight, ample natural water from rainfall and highly
competitive labour rates, and, potentially, holding a significant proportion of
the World`s oil and gas and mineral reserves.
As a result of these fundamental basic economic drivers, seven of the top ten
fastest growing economies globally are now within Africa. The growing economic
development across the Continent is creating a burgeoning middle class, with
forecast consumer spending within the next ten years rising to over USD 1.6
trillion per annum.
The relevance of this opportunity and economic development to Lonrho is that,
over the past four years, Lonrho has deliberately and strategically aligned its
core businesses to service and interact with these growth drivers for Africa.
This year should prove to be an exciting year for Lonrho. To this extent, I
would like to thank you, the shareholder, for your support of the Board of
Directors, as well as the Company`s senior management and all of its employees,
sub-contractors, and consultants, who are working diligently to make Lonrho a
positive economic force in Africa.
David Lenigas
Executive Chairman
3 April 2012
Chief Executive Officer`s Statement
Lonrho has developed significantly over the past four years and 2011 sees the
culmination of the investment programme and the completion of this stage of the
roll-out of the Group`s business strategy.
Lonrho has now positioned itself well, with a group of operating divisions
directly related to supporting the requirements needed for African growth. The
Group is operating in markets that are typically growing five to six per cent
per year and the Group expects these markets to continue growing for the coming
decade.
The focus during 2011 was to continue to develop and build each division`s
infrastructure. Within each sector of the Group`s operations there is now
critical mass and Lonrho is a major participant in the markets where it
operates. Acquisitions during the year and further investment in new facilities
have delivered on this plan.
Excellent, well motivated, management teams are essential for any growing
company, especially one in an emerging market environment where there are
exceptional challenges. Lonrho has developed a senior divisional management team
across each of its divisions that add real value with their experience of Africa
and specific industries.
The end of 2011 sees these platforms in place and the Group is in a good
position to deliver strong and sustainable growth moving forward.
With the Company`s upgrade to the premium section of the main market of the LSE,
we have seen new, strong, institutional shareholders join the share register of
Lonrho which underlines our belief that the Company is increasingly identified
as a proxy for African growth.
Agribusiness
The agribusiness division has grown to become the largest part of Lonrho`s
business, accounting for over half of Group revenues in 2011. This division is
focused on the vertical integration of the agriculture and agri-logistics supply
and delivery chain. The strategy continues to be to develop the capability to
take fruit, vegetables, fish, crustacea and meat production from Sub-Saharan
Africa, whether produced by Lonrho or others, and seamlessly deliver it to
global supermarkets. The Group has now become one of Sub-Saharan Africa`s market
leaders in this sector and Lonrho sees significant further growth opportunities
in this market.
The exclusive John Deere equipment distributorships in Mozambique and Angola are
building strong customer allegiance and increasing market share as Lonrho`s
reputation for service, support and spares availability increases.
Transportation
The transportation division, Fly540, is a regional airline that provides
scheduled, punctual and reliable passenger flights within Africa, delivering
regional distribution to an international standard. 2011 saw the completion of
the three hub strategy for the airline with hubs now operational in Kenya,
Angola and Ghana. This establishes Fly540 as the first private sector carrier in
Africa with a true pan-African network. Having completed the base network during
the year, Fly540 is now reviewing the opportunities for growth and expansion in
conjunction with major corporations within the aviation sector.
Infrastructure
Within the infrastructure division, Lonrho saw the oil logistics business, Luba
Freeport, report a steady year in 2011. Due to global economic concerns, several
proposed drilling projects in the waters of the Gulf of Guinea were delayed,
therefore growth at the port during the period was slower than anticipated.
However, 2012 has substantially more activity confirmed including programmes
that were scheduled for 2011, but delayed, plus those scheduled for 2012.
The prefabricated building business, e-Kwikbuild, saw strong revenue growth
during the period and the strategy of targeting the private sector rather than
purely Government contracts has been implemented successfully.
Hotels
The hotels division has had a year of consolidation of its existing properties
and has strengthened the management team in preparation for further growth. The
strategy remains to utilise the Lonrho brand name, and the quality of our
existing portfolio of hotels to attract new management agreements for the
division. Post year end, a management agreement was entered into for the Grand
Hotel in Kinshasa in the DRC.
During the year, a master franchise agreement was signed with easyHotel to
develop a chain of budget hotels across Africa. These will offer budget price
accommodation whilst offering a safe, clean, quality environment with wifi
access for guests. It is planned to open fifty hotels within the next three
years, providing a consistent budget brand across Africa.
Support Services
The support services division continued to build with a very successful year
from Lonrho IT. The division was strengthened by the acquisition of AFEX, a
logistics and camp business based in Kenya that operates in South Sudan, Uganda
and Tanzania supporting natural resource and NGO and USAID projects. AFEX
provides a platform for accessing new business opportunities as South Sudan
develops.
Outlook
Africa is seeing rapid development as an emerging market and this is creating a
significant and growing consumer demand. Lonrho`s core businesses are directly
aligned with the growth drivers of the African economy. The foundations of each
divisional business are now in place for Lonrho to deliver on these growth
opportunities.
Geoffrey White
Chief Executive Officer
3 April 2012
Statement of Directors` responsibilities in respect of the annual report and the
financial statements
The Directors are responsible for preparing the annual report and the Group and
parent company financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Group and parent company financial
statements for each financial year. Under that law they are required to prepare
the Group financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU and applicable law and have
elected to prepare the parent company financial statements on the same basis.
Under company law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and parent company and of their profit or loss for that period. In
preparing each of the Group and parent company financial statements, the
Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with IFRSs as adopted
by the EU; and
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and parent company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent company`s transactions and disclose
with reasonable accuracy at any time the financial position of the parent
company and enable them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for
preparing a Report of the Directors, Directors` Remuneration Report and
Corporate Governance Statement that complies with that law and those
regulations.
The Directors are responsible for the maintenance and integrity of the corporate
and financial information included on the Company`s website. Legislation in the
UK governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual report
We confirm to the best of our knowledge:
- the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
- the information that is cross - referred from the Business Review section
of the Report of the Directors includes a fair review of the development
and performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with
a description of the principal risks and uncertainties that they face.
Consolidated income statement
For the 15 months ended 31 December 2011 and 12 months ended 30 September 2010
15 months ended 31 12 months ended 30
December 2011 September 2010
(represented)
Note Contin Total Contin Total
uing Discon GBPm uing Discon GBPm
operat tinued operat tinued
ions operat ions operat
GBPm ions GBPm ions
GBPm GBPm
Revenue 4, 5 188.4 0.2 188.6 107.4 0.4 107.8
Cost of sales 6 (137.2 (0.7) (137.9 (78.2) (1.1) (79.3)
) )
GROSS PROFIT/(LOSS) 51.2 (0.5) 50.7 29.2 (0.7) 28.5
Gain arising on fair 6, 15 27.4 - 27.4 9.0 - 9.0
valuation of biological
assets
Other operating income 6
- Gains on acquisitions 15.8 - 15.8 - - -
- Other 2.2 - 2.2 3.6 - 3.6
Operating costs 6 (80.4) (0.6) (81.0) (44.7) (0.7) (45.4)
OPERATING PROFIT/(LOSS) 16.2 (1.1) 15.1 (2.9) (1.4) (4.3)
Finance income 10 6.8 - 6.8 8.6 - 8.6
Finance expense 10 (16.2) - (16.2) (5.7) - (5.7)
NET FINANCE (EXPENSE)/ (9.4) - (9.4) 2.9 - 2.9
INCOME
NET OPERATING 6.8 (1.1) 5.7 - (1.4) (1.4)
PROFIT/(LOSS)
Share of results of 17 (5.9) - (5.9) 2.3 2.3
associates -
Share of results of joint 17 - - - (0.4) - (0.4)
ventures
Gain on other investments 18 1.0 - 1.0 - - -
PROFIT/(LOSS) BEFORE TAX 1.9 (1.1) 0.8 1.9 0.5
(1.4)
Income tax charge 11 (0.3) - (0.3) (0.7) - (0.7)
PROFIT/(LOSS) FOR THE 1.6 (1.1) 0.5 1.2 (1.4) (0.2)
PERIOD
ATTRIBUTABLE TO:
Owners of the Company 23 7.1 (1.1) 6.0 1.7 (1.4) 0.3
Non-controlling 23 (5.5) - (5.5) (0.5) - (0.5)
interests
PROFIT/(LOSS) FOR THE 1.6 (1.1) 0.5 1.2 (1.4) (0.2)
PERIOD
EARNINGS PER SHARE
Basic earnings/(loss) per 12 0.58 (0.09) 0.49 0.16 (0.13) 0.03
share (pence)
Diluted earnings/(loss) 12 0.57 (0.09) 0.48 0.16 (0.13) 0.03
per share (pence)
The notes to the financial statements are an integral part of these financial
statements.
Consolidated and Company statements of comprehensive income
For the 15 months ended 31 December 2011 and 12 months ended 30 September 2010
Group Company
30 30
31 December 2011 September 31 Septembe
GBPm 2010 Decembe r
Notes GBPm r 2011 2010
GBPm GBPm
Foreign exchange translation (0.2) (8.7) - -
differences 23
Revaluation of property, plant and 7.2 - - -
equipment 14
Total other comprehensive income for 7.0 (8.7) - -
the period/year
Profit/(loss) for the period/year 0.5 (0.2) (17.3) (10.1)
Total comprehensive income 7.5 (8.9) (17.3) (10.1)
ATTRIBUTABLE TO:
Owners of the Company Non- 9.7 (7.2) (17.3) (10.1)
controlling interests (2.2) (1.7) - -
Total comprehensive income 7.5 (8.9) (17.3) (10.1)
The notes to the financial statements
are an integral part of these
financial statements.
Consolidated and Company statement of changes in equity
For the 15 months ended 31 December 2011 and 12 months ended 30 September 2010
2011 2010
Owners Non- Total Owners Non- Total
of the controlli of the control
Company ng Compan ling
interests y interes
ts
GBPm GBPm GBPm GBPm GBPm GBPm
AT 1 OCTOBER 107.4 20.3 127.7 78.1 3.0 81.1
Profit/(loss) for the 6.0 (5.5) 0.5 0.3 (0.5) (0.2)
period
Foreign exchange (0.5) 0.3 (0.2) (7.5) (1.2) (8.7)
translation differences
Revaluation of property 4.2 3.0 7.2 - - -
Total comprehensive 9.7 (2.2) 7.5 (7.2) (1.7) (8.9)
income
Issue of shares 18.9 - 18.9 37.0 - 37.0
Share based payment 0.7 - 0.7 2.2 - 2.2
charge
Costs associated with (0.4) - (0.4) - - -
share issues
Share options exercised 0.7 - 0.7 - - -
Purchase of non- - - - (5.5) (4.1) (9.6)
controlling interests
Subsidiaries acquired - 2.2 2.2 -- - -
Subsidiaries disposed - (0.2) (0.2) (0.1) (0.1)
Non-controlling - - - -- 25.5(0. 25.5(0
interests - (0.2) (0.2) 4) .4)
contributionNon-
controlling interest
dividends
Transfer from joint - - - - 0.9 0.9
venture to subsidiary
Transfer from non- - - - 2.8 (2.8) -
controlling interest
(1)
Non-controlling (2.3) - (2.3) - - -
interest put option
Capital element of 1.1 - 1.1 - - -
Convertible Bond
Elimination of non- (0.6) 0.6 - - - -
controlling interest
(2)
AT 31 DECEMBER/30 135.2 20.5 155.7 107.4 20.3 127.7
SEPTEMBER
The notes to the
financial statements
are an integral part of
these financial
statements.
The Company had total equity brought forward of GBP123.0m (2010: GBP93.9m), and
during the period issued shares of GBP18.9m (2010: GBP37.0m) with share options
of GBP0.7m (2010: GBP2.2m), share options exercised of GBP0.7m (2010: GBPnil),
costs associated with share issues of GBP0.4m (2010: GBPnil) and a loss for the
period of GBP17.3m (2010: GBP10.1m) resulting in total equity carried forward of
GBP125.6m (2010: GBP123.0m).
(1) The transfer represents the amount of losses previously not allocated to
non-
controlling interests now allocated following additional capital contributions
by the non-controlling interests.
(2) The elimination of non-controlling interest relates to removal of the
interest of minority shareholders during the period.
Consolidated and Company statements of financial position
As at 31 December 2011 and 30 September 2010
Group Company
30 30
31 Septemb 31 Septemb
Decembe er Decembe er
Notes r 2011 2010 r 2011 2010
GBPm GBPm GBPm GBPm GBPm
ASSETS
Goodwill 13 17.8 15.5 - -
Other intangible assets 13 21.9 4.5 - -
Property, plant and equipment 14 166.2 109.2 0.4 0.4
Biological assets 15 33.8 9.0 - -
Investments in subsidiaries 16 - - 31.5 31.5
Investments in associates and 17 6.9 10.3 5.9 7.7
joint ventures
Other investments 18 1.7 0.6 - -
Deferred tax 19 1.8 0.7 - -
TOTAL NON-CURRENT ASSETS 250.1 149.8 37.8 39.6
Inventories 20 20.1 4.9 - -
Trade and other receivables 21 48.8 33.9 128.2 85.7
Cash at bank 22 12.7 7.8 - 0.6
TOTAL CURRENT ASSETS 81.6 46.6 128.2 86.3
TOTAL ASSETS 331.7 196.4 166.0 125.9
EQUITY
Share capital 23 13.0 11.7 13.0 11.7
Share premium account 23 138.2 138.0 138.2 138.0
Revaluation reserve 23 9.1 3.3 - -
Share option reserve 23 5.4 4.7 5.4 4.7
Translation reserve 23 (10.4) (8.7) - -
Other reserves 23 11.0 (5.5) 17.7 -
Retained earnings 23 (31.1) (36.1) (48.7) (31.4)
TOTAL EQUITY ATTRIBUTABLE TO
EQUITY
HOLDERS OF THE COMPANY 135.2 107.4 125.6 123.0
NON-CONTROLLING INTERESTS 23 20.5 20.3 - -
TOTAL EQUITY 155.7 127.7 125.6 123.0
LIABILITIES
Loans and borrowings 24 76.7 24.6 - 1.3
Deferred tax 19 4.1 3.0 - -
Obligations under finance leases 24 18.6 1.8 - -
Trade and other payables 27 16.1 2.5 38.0 0.4
TOTAL NON-CURRENT LIABILITIES 115.5 31.9 38.0 1.7
Bank overdraft 22,24 12.2 3.9 0.7 -
Loans and borrowings 24 3.0 4.6 - -
Obligations under finance leases 24 4.9 1.0 - -
Trade and other payables 27 39.7 27.0 1.7 1.2
Tax liability 0.7 0.3 - -
TOTAL CURRENT LIABILITIES 60.5 36.8 2.4 1.2
TOTAL LIABILITIES 176.0 68.7 40.4 2.9
TOTAL EQUITY AND LIABILITIES 331.7 196.4 166.0 125.9
The notes to the financial statements are an integral part of these financial
statements.
These financial statements were approved by the Board of Directors and
authorised for issue on 3 April 2012. They were signed on its behalf by:
David Lenigas Director
Consolidated and Company statements of cash flows
For the 15 months ended 31 December 2011 and 12 months ended 30 September 2010
No Group Company
te
30 30
31 Septem 31 Septem
Decemb ber Decemb ber
er 2010 er 2010
2011 GBPm 2011 GBPm
GBPm GBPm
CASH FLOWS FROM OPERATING ACTIVITIES 28
Profit/(loss) for the period 0.5 (0.2) (17.3) (10.1)
Adjustments (16.4) (3.7) 4.9 2.4
CASH FLOWS FROM OPERATING ACTIVITIES
BEFORE
MOVEMENTS IN WORKING CAPITAL (15.9) (3.9) (12.4) (7.7)
Change in inventories (14.3) (0.1) - -
Change in trade and other receivables (17.3) 1.0 (43.1) (16.1)
Change in trade and other payables 13.3 (10.4) 37.1 0.7
CASH GENERATED FROM OPERATIONS (34.2) (13.4) (18.4) (23.1)
Interest received 0.8 0.1 0.1 -
Interest paid (8.1) (2.3) - -
Interest element of finance lease (0.5) - - -
rental payments
Income tax paid (1.2) (0.4) - -
NET CASH FROM OPERATING ACTIVITIES (43.2) (16.0) (18.3) (23.1)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, 2.2 0.4 - -
plant and equipment
Investment in restricted cash (3.2) - - -
Acquisition of subsidiary, net of cash 7 (6.1) (3.2) - -
acquired
Acquisition of property, plant and (18.4) (6.8) (0.1) (0.5)
equipment
Acquisition of intangible assets 13 (5.1) - - -
Acquisition of associates and joint (1.2) (1.2) -
ventures (0.1)
Acquisition of investment - (0.4) - -
Proceeds from sale of subsidiary 0.7 - - -
undertaking
NET CASH FROM INVESTING ACTIVITIES (31.1) (10.1) (1.3) (0.5)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of share 23 18.9 23.6 18.9 23.6
capital
Proceeds from the issue of share 0.7 - 0.7 -
options
Loan advance 61.1 3.7 - 1.3
Repayment of borrowings (10.6) (1.3) -
(2.1)
Payment of finance lease liabilities (3.7) (0.9) - -
Non-controlling interest dividends paid 0.2 (0.4) - -
NET CASH FROM FINANCING ACTIVITIES 66.6 23.9 18.3 24.9
Net (decrease)/increase in cash and (7.7) (2.2) (1.3) 1.3
cash equivalents
Cash and cash equivalents at the 3.9 6.0 0.6 (0.7)
beginning of the period
Foreign exchange movements 1.1 0.1 - -
CASH AND CASH EQUIVALENTS AT END OF THE 22 (2.7) 3.9 (0.7) 0.6
PERIOD
The notes to the financial statements are an integral part of these
financial statements.
Notes to the financial statements
1.Reporting entity
Lonrho Plc (the "Company") is a company incorporated and domiciled in the United
Kingdom. The consolidated financial statements of the Company for the 15 months
period ended 31 December 2011 comprise the Company and its subsidiaries
(together referred to as the "Group") and the Group`s interest in associates and
jointly controlled entities.
The financial statements were authorised for issue by the Directors on 3 April
2012.
The Company changed its financial year end from 30 September to 31 December
annually with effect from the current financial period ended 31 December 2011.
Accordingly the current period information is for the 15 month period to 31
December 2011 with the comparatives for the year ended 30 September 2010.
2. Basis of preparation
Statement of compliance
Both the parent Company and the consolidated financial statements have been
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union (Adopted IFRS). On publishing the parent
Company financial statements here together with the Group financial statements,
the Company is taking advantage of the exemption in section 408(4) of the
Companies Act 2006 not to present its individual income statement and related
notes that form a part of these approved financial statements. The loss of the
Company is disclosed in note 23 to the accounts.
Going concern
Although the current ongoing economic conditions create uncertainty, the Group`s
forecasts and projections, taking account of reasonable possible changes in
trading performance, together with mitigation actions that are within
management`s control show that the Group is expected to be able to operate
within the level and covenant conditions of its debt facilities.
The Directors are carefully monitoring cash resources across the Group and have
instigated a number of initiatives to ensure funding will be available for
planned projects. As described in Note 35, the Group raised GBP26.9m in January
2012 through the placing of shares.
Following the capital raise and review of ongoing performance, and after making
due enquiries, the Directors have a reasonable expectation that the Group has
adequate resources to continue operational existence for the foreseeable future.
For this reason they continue to adopt the going concern basis in preparing the
accounts.
Functional and presentation currency
The financial statements are presented in pounds sterling which is the Company`s
functional currency. All financial information presented has been rounded to the
nearest GBP0.1 million.
Basis of measurement
The financial statements have been prepared on the historical cost basis except
for the revaluation of certain long leasehold properties, and the recognition of
available-for-sale financial assets at fair value.
The accounting policies set out in these financial statements have been applied
consistently to all periods presented. A number of new accounting standards,
amendments to standards and interpretations are effective for periods beginning
on or after 1 October 2010 but do not have a significant effect on the
consolidated financial statements of the Group.
The following standards are issued but not yet effective, and have not been
applied to these financial statements. The impact of these is not expected to
be material;
- Transfers of Financial Assets (Amendments to IFRS 7)
- Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12)
- Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)
- IFRS 10: Consolidated Financial Statements
- IFRS 11: Joint Arrangements
- IFRS 12: Disclosure of Interests in Other Entities
- IFRS 13: Fair Value Measurement
- IAS 19: Employee Benefits (amended 2011)
- IAS 27: Separate Financial Statements (2011)
- IAS 28: Investments in Associates and Joint Ventures (2011)
- IFRIC 20: Stripping Costs in the Production of a Surface Mine
- Government Loans (amendments to IAS 1)
- Disclosures: Offsetting Financial Assets and Financial Liabilities
(Amendments to IFRS 7)
- Offsetting Financial Assets and Financial Liabilities (Amendments to IAS
32)
- IFRS 9: Financial Instruments
Use of estimates and judgements
The preparation of financial statements in conformity with Adopted IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects both current and future
periods.
Estimates made by management in the application of Adopted IFRS that have
significant effect on the financial statements with a significant risk of
material adjustment in the next year are discussed in the following notes:
- valuation of intangible assets and the level of negative goodwill arising
and resulting in the gain on acquisitions (notes 7 and 13)
- valuation of associates and joint ventures (note 17)
- valuation of biological assets (note 15)
Judgements made by management in the application of Adopted IFRS that have
significant effect on the financial statements are:
- the determination of the functional currencies of subsidiaries (see below)
- the determination of the accounting treatment in respect of the acquisition
of investments as either associates, joint ventures or subsidiaries (note
3(a))
- the determination whether certain transactions represent business
combinations (note 7)
The timing of revenue recognition is not subject to significant uncertainty.
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements. The accounting
policies have been applied consistently by Group entities.
(a) Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of
Lonrho Plc and entities controlled by Lonrho Plc (its subsidiaries). Control is
achieved where Lonrho Plc (the Company) has the power to govern the financial
and operating policies of an investee entity so as to obtain benefits from its
activities.
The portion of a non-controlling interest is stated at the non-controlling
interest`s proportion of the fair values of the assets and liabilities
recognised. Subsequently, losses applicable to the non-controlling interest in
excess of the non-controlling interest in the subsidiary`s equity are allocated
against the interests of the Group where the non-controlling interest has a
specific exemption from making an additional investment to cover the losses.
Future profits attributable to the non-controlling interest are not recognised
until the unrecognised losses have been extinguished.
The results of entities acquired or disposed of during the year are included in
the consolidated income statement from the effective date of acquisition or up
to the effective date of disposal, as appropriate.
All intra-Group transactions, balances, income and expenses are eliminated on
consolidation.
Associates and Joint Ventures
An associate is an entity in which the Group has the ability to exercise
significant influence but not control over the financial and operating policies.
A joint venture is an entity where the Group jointly controls its financial and
operating policy together with other parties. Associates are accounted for using
the equity method and are initially measured at cost as adjusted by post-
acquisition changes in the Group`s share of the net assets of the associate,
less any impairment of the individual investments, from the date that
significant influence commences until the date it ceases.
Losses of the associates in excess of the Group`s interest in those associates
are not recognised except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of its investee. The Group`s
investment includes goodwill identified on acquisition, net of any impairment
losses. Any excess of the cost of acquisition over the Group`s share of the fair
values of the identifiable net assets of the associate at the date of
acquisition is recognised as goodwill. Any deficiency of the cost of acquisition
below the Group`s share of the fair values of the identifiable net assets of the
associate at the date of acquisition (i.e. discount on acquisition) is credited
to the income statement in the period of acquisition.
The Company records interests in associate and joint ventures initially at cost
and thereafter at cost less provisions for impairment.
Business combinations
The acquisition of subsidiaries and businesses is accounted for using the
purchase method. The cost of the acquisition is measured at the aggregate of the
fair values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of
the acquiree. The acquiree`s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 are recognised
at their fair values at the acquisition date, except for non-current assets that
are classified as held for sale in accordance with IFRS 5, which are recognised
and measured at fair value less costs to sell.
Goodwill arising on acquisition is initially measured at cost, being the excess
of the fair value of the consideration over the Group`s interest in the net fair
value of the identifiable assets, liabilities and contingent liabilities
recognised.
When the excess is negative the identified fair values are reassessed to ensure
that all acquired assets and liabilities have been recognised. If, after
reassessment, the Group`s interest in the net fair value of the acquiree`s
identifiable assets, liabilities and contingent liabilities exceeds the fair
value of the consideration, the excess is recognised immediately in the income
statement.
The interest of non-controlling interests in the acquiree is initially measured
at the non-controlling interest`s proportion of the net fair value of the
assets, liabilities and contingent liabilities recognised.
Put options
Equity put options held by non-controlling interest holders are recognised as
financial liabilities at the present value of amounts payable on their exercise
with a corresponding entry to other reserves. The Group continues to recognise
non-controlling interests in respect of these equity investments where the risks
and rewards of ownership are deemed to have been retained by the non-controlling
interest holders.
(b) Intangible assets Goodwill
Positive goodwill arising on consolidation is recognised as an asset.
Following initial recognition, goodwill is subject to impairment reviews, at
least annually, and measured at cost less accumulated impairment losses. The
recoverable amount is estimated at each reporting date. Any impairment loss is
recognised immediately in the income statement and is not subsequently reversed
when the carrying amount of the asset exceeds its recoverable amount.
Any impairment losses recognised in respect of cash generating units are
allocated first to reduce the carrying amount of any goodwill allocated to cash-
generating units (groups of units) and then, to reduce the carrying amount of
other assets in the unit (groups of units) on a pro rata basis.
On disposal of a subsidiary, the attributable amount of goodwill is included in
the determination of the gain or loss on disposal. Goodwill arising on
acquisitions before the date of transition to adopted IFRS has been retained at
the previous UK GAAP amounts, after being tested for impairment at that date.
Other intangible assets
Other intangible assets are measured initially at cost and are amortised on a
straight-line basis over their estimated useful lives. The carrying amount is
reduced by any provision for impairment where necessary.
On a business combination, as well as recording separable intangible assets
already recognised in the statement of financial position of the acquired entity
at their fair value, identifiable intangible assets that are separable or arise
from contractual or other legal rights are also included in the acquisition
statement of financial position at fair value.
Amortisation on intangible assets is charged on a straight line basis over their
useful economic life, on the following basis:
Brands 5 years
Intellectual property 5 years
Licences Life of licence, not to exceed 5 years
Customer relationships 5 years - 10 years
Franchises 5 years
Contractual rights Life of right, not to exceed 20 years
Costs directly associated with the acquisition of the licenses required to
provide commercial airline services are capitalised as intangible assets in
accordance with IAS38 within contractual rights. Costs are capitalised from the
point that it is highly likely the conditions to acquire the licence will be met
and the commercial success of the airline operations is anticipated.
Capitalised costs excluded start up losses and any costs not directly
attributable to obtaining the licence. These costs have been expensed in prior
years as they did not meet the conditions for capitalisation as intangible
assets.
(c) Foreign currencies
The individual financial statements of each Group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each Group company are expressed in pounds
sterling, which is the functional currency of the Company, and the
presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions
denominated in foreign currencies are translated into the respective functional
currency of the Group entities using the exchange rates prevailing at the dates
of transactions. Non-monetary assets and liabilities are translated at the
historic rate. Monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the rates of exchange ruling at
the reporting date. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to the functional
currency at the exchange rate at the date that the fair value was determined.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in the income statement for the
period. Exchange differences arising on the retranslation of non-monetary items
carried at fair value in respect of which gains and losses are recognised
directly in equity are also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group`s foreign operations are translated at exchange rates
prevailing at the reporting date. Income and expense are translated at the
average exchange rates for the period, unless exchange rates fluctuate
significantly during that period, in which case weighted average rates are used.
Exchange differences arising, if any, are classified in equity and are
transferred to the Group`s foreign currency translation reserve within equity.
Such translation is recognised as income or as expense in the period in which
the operation is disposed of.
All foreign exchange gains or losses that are reflected in the income statement
are presented within financing income or expense.
(d) Taxation
The tax expense represents the sum of current tax and deferred tax.
Current taxation
Current tax is based on taxable profit for the period. Taxable profit differs
from net profit as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group`s liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the reporting date.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on the investments in subsidiaries and associates, except where the
Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates substantially enacted at the
reporting date, that apply in the period when the liability is settled or the
asset is realised. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis.
(e) Investments
The Group`s investments in equity securities that are not associates or joint
ventures are classified as either available-for-sale financial assets or assets
at fair value through profit and loss. This designation is made on acquisition
of individual investments. For available for sale financial assets subsequent to
initial recognition, they are measured at fair value or cost where fair value
cannot be assessed and changes therein, other than impairment losses (see
below), are recognised directly in equity. When an investment is de-recognised,
the cumulative gain or loss in equity is transferred to the income statement.
For assets at fair value through profit and loss, subsequent to initial
recognition they are measured at fair value and changes recognised within
gains/losses on other investments in the income statement.
Impairment
A financial asset is assessed at each reporting date to determine whether there
is any objective evidence that it is impaired.
A financial asset is considered to be impaired if objective evidence indicates
that one or more events have had a negative effect on the estimated future cash
flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount, and the present value
of the estimated future cash flows discounted at the original effective interest
rate. An impairment loss in respect of an available-for-sale financial asset is
calculated by reference to its fair value.
All impairment losses are recognised in the income statement. Any cumulative
loss in respect of an available-for-sale financial asset recognised previously
in equity is transferred to the income statement.
An impairment loss is reversed if the reversal can be related objectively to an
event occurring after the impairment loss was recognised. For financial assets
measured at amortised cost, the reversal is recognised in the income statement.
For available-for sale financial assets that are equity securities, the reversal
is recognised directly in equity.
(f) Property, plant and equipment
Long leasehold land and buildings are stated in the statement of financial
position at their revalued amounts, being the fair value at the date of
revaluation, less any subsequent accumulated depreciation and subsequent
accumulated impairment losses. Revaluations are performed with sufficient
regularity such that the carrying amount does not differ materially from that
which would be determined using fair values at the reporting date.
Any revaluation increase arising on the revaluation of such land and buildings
is credited to the revaluation reserve, except to the extent that it reverses a
revaluation decrease for the same asset previously recognised as an expense, in
which case the increase is credited to the income statement to the extent of the
decrease previously charged. A decrease in carrying amount arising on the
revaluation of such land and building is charged as an expense to the extent
that it exceeds the balance if any, held in the revaluation reserve relating to
a previous revaluation of that asset. Depreciation on revalued buildings is
charged to the income statement. On subsequent sale or retirement of a revalued
property, the attributable revaluation surplus remaining is transferred directly
to retained earnings.
All other assets are stated at historical cost less accumulated depreciation and
accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets (less
estimated residual values updated annually), other than long leasehold land,
over their estimated useful lives, on the following basis:
Long leasehold land and buildings 2% of cost
Short leasehold land and buildings Over the term of the lease
Plant and machinery 10% of cost
Aircraft 5%-6.67% of cost
Fixtures and fittings 15%-25 % of cost
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in the income statement for the period.
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets, or where shorter, over the relevant
lease term.
In respect of aircraft, subsequent costs incurred which lend enhancement to
future periods such as long term scheduled maintenance and major overhaul of
aircraft and engines are capitalised and amortised over the length of the period
benefiting from those enhancements. All other costs relating to maintenance are
charged to the income statement as incurred.
(g) Biological assets
Certain Group subsidiaries involved in the production of fresh produce recognize
biological assets, which includes agricultural produce due for harvest on fruit
plantations. Under IAS41, Biological Assets are required to be included at fair
value. Fair value is determined by reference to the net present value of the
biological asset of the reporting date. Biological assets are stated at fair
value less estimated point of sale costs, with any resultant gain or loss
recognized in the income statement. The valuation of the fruit plantations is
based on discounted cashflow models whereby the fair value of the assets is
calculated using cashflows for continuous operations taking into account growth
and yield potential.
When the fruit or other biological asset is harvested, it is transferred to
inventory at the lower of cost and net realisable value.
(h) Impairment of assets excluding goodwill, inventories and deferred tax assets
At each reporting date, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of
any impairment loss. Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. Recoverable amount is the
higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time
value and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset (or cash-
generating unit) is reduced to its recoverable amount.
An impairment loss is recognised as an expense immediately, unless the relevant
asset is carried at a revalued amount in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation increase.
(i) Financial instruments
Financial assets and financial liabilities are recognised in the Group`s
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits and other
short term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Bank overdrafts that are repayable on demand and form an integral part of the
Group`s cash management are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.
Trade receivables
Trade receivables are measured at initial recognition at fair value and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated recoverable amounts are recognised
in the income statement when there is objective evidence the asset is impaired.
Restricted cash
Restricted cash is cash at bank that is not freely available due to specific
restrictions on its use (note 29). It is presented together with Cash and cash
equivalents as Cash at bank in the Statement of financial position.
Trade payables
Trade payables are initially measured at fair value and are subsequently
measured at amortised cost using the effective interest rate method.
Financial liabilities
Financial liabilities are classified according to the substance of the
contractual arrangements entered into.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
Capital management
The Board`s policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the business. The Board of Directors monitors the return on capital, which the
Group defines as net operating income divided by total shareholders` equity,
excluding minority interests.
(j) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and where applicable direct expenditure and
attributable overheads that have been incurred in bringing the inventories to
their present location and condition. Net realisable value represents the
estimated selling price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution.
(k) Share based payments
The Group provides benefits to certain employees, including senior executives,
in the form of share based payments, whereby employees render services in
exchange for shares or rights over shares (equity-settled transactions). The
cost of these equity-settled transactions with employees is measured by
reference to the fair value of the equity instruments at the date at which they
are granted. The fair value is determined by using a Black-Scholes model. The
dilutive effect, if any, of outstanding options is reflected as additional share
dilution in the computation of earnings per share.
(l) Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are stated at amortised cost with any difference between cost
and redemption value being recognised in the income statement over the period of
the borrowings on an effective interest basis.
(m) Dividends
Interim dividends are recognised when paid and final dividends are recognised as
liabilities in the period in which they are approved by shareholders.
(n) Provisions
A provision is recognised in the statement of financial position when the Group
has a present legal or constructive obligation as a result of a past event, and
it is probable that an outflow of economic benefits will be required to settle
the obligation. If the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
(o) Revenue recognition
Revenue, for the other major segments not detailed below, is derived from the
sale of goods and services and is measured at the fair value of consideration
received or receivable, after deducting discounts, volume rebates, value-added
tax and other sales taxes. A sale of goods and services is recognised when
recovery of the consideration is probable, there is no continuing management
involvement with the goods and services and the amount of revenue can be
measured reliably.
A sale of goods is recognised when the significant risks and rewards of
ownership have passed to the buyer, the associated costs and possible return of
goods can be estimated reliably. This is when title and insurance risk have
passed to the customer and the goods have been delivered to a contractually
agreed location.
A sale of services is recognised when the service has been rendered.
Aircraft division
Revenue for the aircraft division comprises the invoiced value of airline
services, net of passenger taxes, discounts, plus ancillary revenue. Revenue
from the sale of flight seats (passenger revenue) is recognised in the period in
which the service is provided. Unearned revenue represents flight seats sold but
not yet flown and is included within deferred income.
Infrastructure division
Included within the infrastructures division is revenue from port activities.
Revenue from port activities represents the income earned from the provision of
port facilities, which comprise cargo handling, towage, pilotage, conservancy
services and port related rental income. Such revenue is recorded once the
service has been provided.
Agribusiness division
Revenue for the agribusiness division includes the invoice value of goods where
the Group grows or takes ownership risk on the relevant produce. Where the
Group provides logistics or processing services without taking ownership risk on
the relevant produce, revenue comprises the invoiced value of the services
provided. Revenue is recognised when the supply of the goods or is services
completed. There are no discounts or other arrangements that create uncertainty
over the level of revenue recognised.
Support services division
The Group supplies an immaterial amount of bundled IT services. When these
occur revenue is allocated based on the fair values of the respective services
provided.
(p) Leases
Leases are classified according to the substance of the transaction. A lease
that transfers substantially all the risks and rewards of ownership to the
lessee is classified as a finance lease. All other leases are classified as
operating leases.
Finance leases
Finance leases are capitalised in the statement of financial position at their
fair value or, if lower, at the present value of the minimum lease payments,
each determined at the inception of the lease. The corresponding liability is
shown as a finance lease obligation to the lessor. Leasing repayments comprise
both a capital and a finance element. The finance element is written off to the
income statement so as to produce an approximately constant periodic rate of
charge on the outstanding obligation.
Operating leases
Operating lease rentals are charged to the income statement on a straight line
basis over the period of the lease.
(q) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalisation.
All other borrowing costs are recognised in the income statement in the period
in which they are incurred.
(r) Earnings per share
Basic earnings per share is calculated based on the weighted average number of
ordinary shares outstanding during the period. Diluted loss per share is based
upon the weighted average number of shares in issue throughout the year,
adjusted for the dilutive effect of potential ordinary shares. The potential
dilutive ordinary shares in issue are employee share options and the equity
conversion element of the convertible bond.
(s) Reportable Segments
Segments are determined to be the lowest operational segment that the Chief
Operating Decision Maker ("CODM") evaluates the result of the segment and
allocates resources to that segment. This is based on the Group`s internal
organization and the financial information provided to the CODM.
(t) Assets and liabilities classified as held for sale
Non-current assets (or disposal groups comprising assets and liabilities) that
are expected to be recovered primarily through sale rather than through
continuing use are classified as held for sale. Immediately before
classification as held for sale, the assets (or components of a disposal group)
are remeasured in accordance with the Group`s accounting policies. Thereafter
generally the assets (or disposal group) are measured at the lower of their
carrying amount and fair value less cost to sell. Any impairment loss on a
disposal group first is allocated to goodwill, and then to remaining assets and
liabilities on a pro rata basis, except that no loss is allocated to
inventories, financial assets and deferred tax assets, which continue to be
measured in accordance with the Group`s accounting policies. Impairment losses
on initial classification as held for sale and subsequent gains or losses on re-
measurement are recognised in the income statement. Gains are not recognised in
excess of any cumulative impairment loss.
(u) Convertible bonds
Convertible bonds are regarded as compound instruments, consisting of a
liability component and either an equity component or an embedded derivative
component.
At the date of issue, the fair value of the liability component is estimated
using the prevailing market interest rate for similar non convertible debt. The
difference between the proceeds of issue of the convertible bonds and the fair
value assigned to the liability component represents the value of either an
equity component or an embedded derivative component attributable to the
embedded option to convert the bonds into equity of the Group.
IAS 32 states that a derivative contract that will be settled by the entity
receiving or delivering a fixed number of its own equity instruments in exchange
for a fixed amount of cash or another financial asset is an equity instrument.
It also states that a contract that will be settled by the entity delivering or
receiving a fixed number of its own equity instruments in exchange for a
variable amount of cash or another financial asset is a financial asset or
financial liability. For the purposes of the consolidated financial statements,
when making the assessment of whether a convertible bond, when exercised, gives
rise to the exchange of a fixed or variable amount of cash, or other financial
asset, the functional currency of the parent company relative to the currency
denomination of the bonds is considered in addition to other features within the
bond.
For convertible bonds issued by the Group where there is a difference between
the currency of the bond and the functional currency of the issuer, the embedded
option to convert the bonds is recorded as a derivative liability because it is
not a contract to exchange a fixed number of shares for a fixed amount of bonds.
The embedded derivative liability component is separately identified and
measured at fair value through profit or loss. For convertible bonds issued by
the Group where the currency of the bond and the functional currency of the
issuer are the same, i.e. where on conversion of the bonds a fixed number of
shares is exchanged for a fixed amount of bonds, the value of the embedded
option to convert the bonds is recorded within equity on initial recognition.
Issue costs are apportioned between the liability and embedded option components
of the convertible bonds (recorded as equity or as a derivative liability) based
on their relative carrying amounts at the date of issue.
The interest expense on the liability component is calculated by applying the
prevailing market interest rate for similar non-convertible debt to the
liability component of the instrument. This interest expense, recognised in the
income statement, is calculated using the effective interest method, i.e. the
difference between the interest expense on the liability component and the
interest paid is added to the carrying amount of the convertible bond.
4. Segment reporting
The "Chief Operating Decision Maker" (CODM) is deemed to be the Executive
Committee who monitor the results of the business segments to assess performance
and make decisions about the allocation of revenues. Segment performance is
evaluated on both revenue and operating profit/(loss).
Segment results, assets and liabilities include items directly attributable to a
segment as well as those that are allocated on a reasonable basis. Unallocated
items comprise mainly corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than one period.
There is no inter-segment revenue.
Business segments
The Group has five continuing reportable segments which are organized around the
basis of products and services which they provide:
- Agribusiness
- Infrastructure
- Transportation
- Support services
- Hotels
The Group has not aggregated any operating segment in arriving at this analysis.
Geographical analysis
All of the segments operate in various parts of Africa, Europe and Americas.
Business segments
15 months ended 31 December 2011
Agribu Infras Transp Suppor Consol
siness tructu ortati t idated
GBPm re on servic Hotels contin Discon
GBPm GBPm es GBPm uing tinuin
GBPm operat g
ions operat
GBPm ion
GBPm
EXTERNAL REVENUE 94.5 21.8 35.5 25.1 11.5 188.4 0.2
Segment result 35.0 0.7 (9.9) 0.2 3.3 29.3 (1.1)
Unallocated (13.1) -
expenses
OPERATING 16.2 (1.1)
PROFIT/(LOSS)
Net finance (2.9) (0.8) (1.8) 0.8 (0.2) (4.9) -
(expense)/income
Unallocated net (4.5) -
finance expense
NET OPERATING 6.8 (1.1)
PROFIT/(LOSS)
Share of results (5.9) -
of associates
Gain on 1.0 -
investments
Income tax charge (0.3) -
PROFIT/(LOSS) FOR 1.6 (1.1)
THE PERIOD
Business segments
12 months ended 30 September 2010
Agrib Infra Trans Suppo Conso
usine struc porta rt lidat
ss ture tion servi Hotel ed Disco
GBPm GBPm GBPm ces s conti ntinu
GBPm GBPm nuing ing
opera opera
tions tion
GBPm GBPm
EXTERNAL REVENUE 55.3 14.0 21.1 11.1 5.9 107.4 0.4
Segment result 7.9 4.1 (6.2) 0.1 0.2 6.1 (1.4)
Unallocated expenses (9.0) -
OPERATING LOSS (2.9) (1.4)
Net finance (1.7) (1.0) (0.7) 0.1 (0.8) (4.1) -
(expense)/income
Unallocated net finance 7.0 -
income
NET OPERATING LOSS - (1.4)
Share of results of 2.3 -
associate
Share of results of joint (0.4) -
venture
Income tax expense (0.7) -
PROFIT/(LOSS) FOR THE 1.2 (1.4)
YEAR
31 December 2011
Agrib Infra Trans Suppo Other Conso
usine struc porta rtser GBPm lidat
ss ture tion vices Hotel ed Disco
GBPm GBPm GBPm GBPm s conti ntinu
GBPm nuing ing
opera opera
tions tion
GBPm GBPm
Segment operating 112.2 82.1 53.0 15.3 46.4 - 309.0 0.3
assets
Investment in - - - - - 6.9 6.9 -
associates/joint
ventures
Unallocated - - - - - 15.5 15.5 -
assets/interest
bearing assets
TOTAL ASSETS 112.2 82.1 53.0 15.3 46.4 22.4 331.4 0.3
Segment operating 47.1 13.2 39.5 9.0 16.9 - 125.7 0.1
liabilities
Unallocated - - - - - 50.2 50.2 -
liabilities
TOTAL LIABILITIES 47.1 13.2 39.5 9.0 16.9 50.2 175.9 0.1
Depreciation of 2.3 4.1 1.2 0.6 1.5 0.2 9.9 -
segment assets .0
Amortisation of 10.0 0.1 0.6 0.4 - - 2.1 -
segment assets
Capital expenditure 6.4 4.7 30.9 0.8 0.5 0.1 43.4 -
30 September 2010
Agribu Infras Transp Suppor Other Consoli
siness tructu ortati t GBPm dated Disconti
GBPm re on servic Hotels continu nuing
GBPm GBPm es GBPm ing operatio
GBPm operati n
ons GBPm
GBPm
Segmen 0.3
t 51.1 82.9 16.1 3.9 23.3 - 177.3
operat
ing
assets
Invest - - - - - 10.3 10.3 -
ment
in
associ
ates/j
oint
ventur
es
Unallo - - - - - 8.5 8.5 -
cated
assets
/inter
est
bearin
g
assets
TOTAL 51.1 82.9 16.1 3.9 23.3 18.8 196.1 0.3
ASSETS
Segmen 28.8 14.5 6.6 1.2 9.9 - 61.0 0.8
t
operat
ing
liabil
ities
Unallo - - - - - 6.9 6.9 -
cated
liabil
ities
TOTAL 28.8 14.5 6.6 1.2 9.9 6.9 67.9 0.8
LIABIL
ITIES
Deprec 1.5 3.0 0.6 0.1 0.6 0.1 5.9 -
iation
of
segmen
t
assets
Amorti 0.5 - 0.1 0.2 - - 0.8 -
sation
of
segmen
t
assets
Capita 2.9 3.7 0.8 - 1.4 0.3 9.1 -
l
expend
iture
Geographical analysis
15 months ended 31 December 2011
Conso
South East West Centr lidat Disco
ern Afric Afric al Europ Ameri ed ntinu
Afric a a Afric e cas conti ing
a GBPm GBPm a GBPm GBPm nuing opera
GBPm GBPm opera tion
tions GBPm
GBPm
Revenue by location of 100.3 36.5 16.2 10.0 19.0 6.4 188.4 0.2
external customers
Revenue by location of 128.2 35.9 14.7 8.9 0.7 - 188.4 0.2
assets
Net 66.4 10.7 65.1 20.3 (7.0) - 155.5 0.2
assets/(liabilities)
Capital expenditure 7.7 30.3 4.9 0.3 0.2 - 43.4 -
12 months ended 30 September 2010
Consol
Southe East West idated Discon
rn Africa Europe Americ contin tinuin
Africa GBPm GBPm as uing g
Africa GBPm GBPm operat operat
GBPm ions ion
GBPm GBPm
Revenue by location 61.1 21.1 11.9 11.4 1.9 107.4 0.4
of external customers
Revenue by location 73.9 21.1 11.9 0.5 - 107.4 0.4
of assets
Net 34.2 8.7 74.2 11.1 - 128.2 (0.5)
assets/(liabilities)
Capital expenditure 2.4 0.2 6.2 0.3 - 9.1 -
5. Revenue
Continuing operations Discontinued operation Total
15 months 12 15 12 15 12 months
ended 31 mont mont mont mont ended 30
December hs hs hs hs September
2011 ende ende ende ende 2010
d 30 d 31 d 30 d 31
Sept Dece Sept Dece
embe mber embe mber
r 2011 r 2011
2010 2010
GBPm GBPm GBPm GBPm GBPm GBPm
Sale of goods 52.1 17.0 - - 52.1 17.0
Services 136.3 90.4 0.2 0.4 136. 90.8
5
188.4 107. 0.2 0.4 188. 107.8
4 6
6. Group net operating costs
15 months 12 months
ended 31 ended 30
December September
2011 2010
GBPm GBPm
Cost of sales 137.9 79.3
Operating costs 81.0 45.4
Gain arising on fair valuation of biological assets (27.4) (9.0)
(note 15)* (18.0) (3.6)
Other operating income
NET OPERATING COSTS 173.5 112.1
Administrative expenses include management related
overheads for operations and head office.
INCLUDED IN NET OPERATING COSTS ABOVE ARE:
Depreciation of property, plant and equipment 9.9 5.9
Amortisation of intangible assets (other than 2.1 0.8
goodwill)
Share based payments (notes 23 and 26) 0.7 2.2
Operating lease rentals:
- Land and buildings 1.7 1.7
- Plant and machinery - 0.1
- Other 6.0 1.8
Staff costs (note 9) 41.4 21.8
Legal fees and listing costs 2.8 2.7
Gain on acquisition - ATdM (note 7)* (4.0) -
Gain on acquisition - Home Farms (note 7)* (11.8) -
Acquisition costs 0.5 0.2
Impairment of trade receivables 0.5 0.6
Impairment of other investments 0.4 -
Profit on disposal of subsidiary (0.7) -
Included in the current period result of the transportation segment are
start up costs of GBP8.1m.
* In accordance with the requirements of IAS 1, the Directors have presented
movements in the fair value of biological assets and gains arising on
acquisition as separate items on the face of the income statement to provide
full visibility of these items.
Auditors remuneration
15 months 12 months
ended 31 ended 30
December September
2011 2010
GBPm GBPm
Fees payable to the Company`s auditors for the 0.1 0.2
audit of the Company`s annual accounts
For the audit of the Company`s subsidiaries 0.4 0.3
pursuant to legislation
Total audit fees 0.5 0.5
Other fees payable to the Company`s auditors * 0.8 0.1
Total fees payable to the Company`s auditors 1.3 0.6
* Other fees payable: other fees relating to listing and share issues during the
period.
7.Acquisition of subsidiaries
7a Acquisition of subsidiaries in the current period
AFEX
With effect from 1 January 2011, the Group acquired 100% of the issued share
capital of Global Horizons Ltd a company registered in the Isle of Man (which
via subsidiaries in Kenya and South Sudan trades as AFEX) for an initial
consideration of USD 3m (GBP1.9m). Further payments of up to USD 5m (GBP3.1m)
will be payable over two years based on an EBIT related earn-out formula. AFEX`s
main focus of current operations is in supplying secure accommodation in Juba in
the Republic of South Sudan. This infrastructure is in great demand from
corporate clients, NGO`s, and Government Aid Agencies working in the Republic of
South Sudan.
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 1 January 2011 is set out below:
Pre Values
acquisitio Fair value recognised
n carrying adjustment on
value on acquisitio
GBPm acquisitio n
n GBPm
GBPm
Property, plant and equipment 2.9 - 2.9
Inventory 0.1 - 0.1
Trade and other receivables 1.6 - 1.6
-
Cash and cash equivalents 0.6 - 0.6
Trade and other payables (3.3) 0.1 (3.2)
Deferred tax liability - (0.5) (0.5)
Intangible related to customer - 2.3 2.3
relationships 1.5
NET IDENTIFIABLE ASSETS AND LIABILITIES 1.9 1.9 3.8
Consideration paid 1.9
Contingent consideration 2.5
Goodwill on acquisition 0.6
The transaction costs incurred to acquire the company were GBP0.1m and have been
expensed in operating costs in the income statement.
The goodwill arising on the acquisition of AFEX is attributable to the
anticipated profitability of the distribution of the company`s services to new
customers and the value attributed to the skills and experience of the acquired
work force.
AFEX contributed GBP8.4m to the Group`s revenue and GBP0.7m profit to the
Group`s profit before tax for the period between the date of acquisition and the
reporting date.
FISH ON LINE (PTY) LIMITED
With effect from 1 June 2011, the Group acquired 51% of the issued share capital
of Fish On Line (Pty) Limited for an initial consideration of GBP0.3m.
Pursuant to the share purchase agreement, the sellers have been granted a put
option to sell their remaining 49% to Lonrho three years after the signature
date at a purchase price of 6x multiple of Fish On Line`s profit before tax for
the 2014 financial year end, which is capped at a maximum of ZAR 35.0m
(GBP3.0m).
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 1 June 2011 is set out below:
Pre Values
acquisiti Fair recognise
on value d on
carrying adjustmen acquisiti
value t on on
GBPm acquisiti GBPm
on
GBPm
Property, plant and equipment 0.1 - 0.1
Inventory 0.8 - 0.8
Trade and other receivables 1.2 - 1.2
-
Cash and cash equivalents (0.8) - (0.8)
Trade and other payables (0.7) - (0.7)
Loans and borrowings (0.2) - (0.2)
Intangible related to customer - 0.1 0.1
relationships
NET IDENTIFIABLE ASSETS AND LIABILITIES 0.4 0.1 0.5
Non-controlling interest share (0.2)
Consideration paid 0.3
Goodwill on acquisition -
The transaction costs incurred to acquire the company were GBP0.1m and have been
expensed in operating costs in the income statement. The transaction has been
accounted using the present access method as the non-controlling interest is
considered to have an ongoing interest in the results of the company. The put
option liability has been calculated at GBP2.3 m allowing for the effect of
discounting. The corresponding entry has been recorded as a debit to other
reserves.
Fish On Line (Pty) Limited contributed GBP5.8m to the Group`s revenue and
GBP0.1m loss to the Group`s profit before tax for the period between the date of
acquisition and the reporting date.
GRINDROD PCA
With effect from 1 July 2011, the Group acquired 100% of the trading assets of
South African based Grindrod PCA for a consideration of ZAR 50m (GBP4.6m).
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 1 July 2011 is set out below:
Pre Values
acquisitio Fair value recognised
n carrying adjustment on
value on acquisitio
GBPm acquisitio n
n GBPm
GBPm
Property, plant and equipment 0.6 - 0.6
Trade and other receivables 5.4 - 5.4
Cash and cash equivalents 0.9 - 0.9
Trade and other payables (5.1) - (5.1)
Deferred tax liability - (0.3) (0.3)
Intangible related to customer - 1.2 1.2
relationships
NET IDENTIFIABLE ASSETS AND LIABILITIES 1.8 0.9 2.7
Consideration paid 4.6
Contingent consideration -
Goodwill on acquisition 1.9
The transaction costs incurred to acquire the company were GBP0.1m and have been
expensed in operating costs in the income statement.
The goodwill arising on the acquisition of Grindrod PCA is attributable to the
anticipated profitability of the distribution of the company`s services, and the
experience and expertise of the acquired work force.
Grindrod PCA contributed GBP17.2m to the Group`s revenue and GBP0.2m profit to
the Group`s profit before tax for the period between the date of acquisition and
the reporting date.
ALDEAMENTO TURISTICO DE MACUTI SARLI "ATDM"
On 30 September 2011, the Group acquired 80% of the issued share capital of ATdM
from Lonzim Plc for USD 5.1m (GBP3.4m), which will be settled in cash over the
next 5 years. Pursuant to the share purchase agreement, Lonrho Hotels will also
take responsibility for liabilities up to USD 2.7m (GBP1.7m), the fair value of
which has been determined at GBP1.2m.
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 30 September 2011 is set out below:
Pre Values
acquisitio Fair value recognised
n carrying adjustment on
value on acquisitio
GBPm acquisitio n
n GBPm
GBPm
Property, plant and equipment 4.5 6.1 10.6
Trade and other payables (0.6) - (0.6)
NET IDENTIFIABLE ASSETS AND LIABILITIES 3.9 6.1 10.0
Non-controlling interest share (2.0)
Liabilities acquired not attributable 0.6
to non-controlling interest
Deferred consideration 3.4
Gain on acquisition (4.0)
The transaction costs incurred to acquire the company were GBP0.1m and have been
expensed in operating costs in the income statement.
As a first phase Lonrho Hotels plans to refurbish existing property on the site
to establish an easyHotel by Lonrho and provide quality office space for key
companies seeking to establish offices in Beira.
The negative goodwill arising on the acquisition of ATdM is attributable to the
fair value of the property reflecting its current development potential and
arises as the vendor was unable to provide the necessary experience and funding
required to exploit the business fully and realise its fair value. The gain
arising from negative goodwill of GBP4.0m is presented within operating income
within the income statement.
ATdM contributed GBPnil to the Group`s revenue and GBPnil profit to the Group`s
profit before tax for the period between the date of acquisition, and the
reporting date.
HOME FARMS
On 31 August 2011 the Group acquired 100% of the issued share capital of
Sportsgear Investments (Private) Limited, Burp Track Investments (Private)
Limited and Crosshairs Point (Private) Limited collectively known as Home Farms
for a consideration of USD 60. Home Farms consists of 3 leased farms (20 year
leases) and substantial leasehold buildings including a 58,000 square feet
agricultural packhouse and high care unit.
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 31 August 2011 is set out below:
Pre Values
acquisiti Fair recognise
on value d on
carrying adjustmen acquisiti
value t on on
GBPm acquisiti GBPm
on
GBPm
Intangible related to operating leases - 11.8 11.8
Inventory 0.1 - 0.1
Trade and other payables - (0.1) (0.1)
NET IDENTIFIABLE ASSETS AND LIABILITIES 0.1 11.7 11.8
Consideration paid -.
Contingent consideration --
Gain on acquisition (11.8)
The transaction costs incurred to acquire the company were GBP0.1m and have been
expensed in operating costs in the income statement.
The negative goodwill arising on the acquisition of Home Farms is attributable
to the beneficial lease arrangements acquired in respect of leasehold land and
buildings. No fair value has been attributed to the work force or customer
relationships acquired as these were considered immaterial. Working capital
assets and liabilities at date of transition remain with the vendors. The
negative goodwill arises as the vendors were unable to provide sufficient
working capital to achieve the operations full potential and did not have
sufficient international experience to reach all potential markets.
The GBP11.8m benefit arising from the negative goodwill is presented within
operating income within the income statement.
Home Farms contributed GBP1.0m to the Group`s revenue and GBP0.5m loss to the
Group`s profit before tax for the period between the date of acquisition and the
reporting date.
7b Acquisition of subsidiaries in the prior year
TRAK AUTO
On 8 April 2010, the Group acquired 100% of the issued share capital of Trak
Auto Lda for an initial consideration of USD 2 m (GBP1.3 m). Further payments of
USD 1 m (GBP0.6 m) a year for three years will be payable upon the meeting of
growth targets. Trak Auto Lda holds the exclusive John Deere and Komatsu
dealership agreements for Mozambique and is involved in the sale and after-sale
service of these vehicles.
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 8 April 2010 is set out below:
Pre Values
acquisitio recognised
n carrying on
value acquisitio
GBPm n
GBPm
Property, plant and equipment 0.2 0.2
Inventory 0.4 0.4
Trade and other receivables 0.7 0.7
Interest-bearing loans and borrowings (0.1) (0.1)
Trade and other payables (0.8) (0.8)
Intangible related to franchise - 1.7
NET IDENTIFIABLE ASSETS AND LIABILITIES 0.4 2.1
Consideration paid 1.3
Contingent consideration 1.6
Goodwill on acquisition 0.8
The transaction costs incurred to acquire the company were GBP0.1 m and have
been expensed in the income statement.
The goodwill arising on the acquisition of Trak Auto Lda is attributable to the
anticipated profitability of the distribution of the company`s services and
products to new customers.
Trak Auto Lda contributed GBP3.5 m to revenue and GBP0.8 m profit to the Group`s
profit before tax for the period between the date of acquisition and 30
September 2010.
The Group has not made any adjustment to the purchase accounting in the current
period.
OCEANFRESH
On 7 June 2010, the Group acquired 51.0% of the issued share capital of
Oceanfresh Seafood (Pty) Limited for a consideration of R3.8 m (GBP0.3 m)
including R0.8 m (GBP0.1 m) related to the subscription of shares with the
proceeds retained in Oceanfresh Seafood (Pty) Limited. An additional working
capital injection of R7.7 m (GBP0.7 m) was provided by way of an interest
bearing loan. Oceanfresh Seafood (Pty) Limited is a supplier of frozen fish and
crustaceans from Mozambique with customers across South Africa and also in the
United States.
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 7 June 2010 is set out below:
Pre Values
acquisiti Subscript recognise
on ion of d on
carrying shares acquisiti
value recognise on
GBPm d GBPm
GBPm
Property, plant and equipment 0.5 - 0.5
Inventory 0.9 - 0.9
Trade and other receivables 1.7 - 1.7
Deferred tax asset 0.3 - 0.3
Cash and cash equivalents (1.6) 0.1 (1.5)
Trade and other payables (2.4) - (2.4)
Intangible related to customer - - 0.2
relationships
NET IDENTIFIABLE ASSETS AND LIABILITIES (0.6) 0.1 (0.3)
Non-controlling interests 0.1
Consideration paid 0.3
Goodwill on acquisition 0.5
The transaction costs incurred to acquire the company were GBP0.1 m and have
been expensed in the income statement.
The goodwill arising on the acquisition of Oceanfresh Seafood (Pty) Limited is
attributable to the anticipated profitability of the distribution of the
company`s services and products to new customers.
Oceanfresh Seafood (Pty) Limited contributed GBP2.3 m to revenue and GBP0.2 m
loss to the Group`s profit before tax for the period between the date of
acquisition and 30 September 2010.
The Group has not made any adjustment to the purchase accounting in the current
period.
8. Discontinued operations FLY 540 Uganda
Following a review by the Board in December 2011, the Group decided not to
continue to support air freight operations of Fly 540 Uganda Ltd, which
consequently ceased trading. Costs of discontinuing the operation were less than
GBP0.1m. The comparatives have been represented accordingly.
15 months 12 months
ended 31 ended 30
December 2011 September
GBPm 2010
GBPm
CASH FLOWS FROM DISCONTINUED OPERATION
Net cash used in operating activities (1.7) (1.2)
Net cash from financing activities 1.9 0.8
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 0.2 (0.4)
9. Staff numbers and costs
The aggregate remuneration comprised (including Executive Directors):
Group Company
15 12 15 12
months months months months
ended ended ended ended
31 30 31 30
Decembe Septem Decemb Septem
r 2011 ber er ber
GBPm 2010 2011 2010
GBPm GBPm GBPm
Wages and salaries 39.4 20.8 5.6 3.5
Compulsory social security contributions 1.8 0.8 0.5 0.3
Share based payments 0.7 2.2 0.7 2.3
Pension costs 0.2 0.2 0.2 0.2
42.1 24.0 7.0 6.3
The average number of employees (including
Executive Directors) was:
Group Company
15 12 15 12 months
mo months mont ended 30
nt ended hs September
hs 30 ende 2010
en Septem d 31 Number
de ber Dece
d 2010 mber
31 Number 2011
De Numb
ce er
mb
er
20
11
Nu
mb
er
Infrastructure 23 209 - -
4
Agribusiness 1, 732 - -
63
4
Transportation 52 405 - -
1
Support services 90 56 - -
2
Hotels 36 314 - -
4
Central 30 32 21 22
3, 1,748 21 22
68
5
REMUNERATION OF DIRECTORS
Detailed disclosure of remuneration of Directors is given in the Directors
Remuneration Report.
Notes to the financial statements continued
10. Net finance income
15 months 12 months ended
ended 31 30 September
December 2010
2011 GBPm
GBPm
Bank interest receivable Foreign exchange 0.8 0.1
gain 6.0 8.5
FINANCE INCOME 6.8 8.6
Loans repayable within five years and (8.6) (2.1)
overdrafts
Foreign exchange loss (7.1) (3.4)
Finance leases (0.5) (0.2)
FINANCE EXPENSE (16.2) (5.7)
NET FINANCE (EXPENSE)/INCOME (9.4) 2.9
11. Income tax expense
Recognised in the income statement 15 months 12 months
ended 31 ended 30
December September
2011 2010
GBPm GBPm
CURRENT TAX EXPENSE Current period
1.6 1.0
DEFERRED TAX
Credit for the period (1.3) (0.3)
TOTAL INCOME TAX EXPENSE IN THE INCOME STATEMENT 0.3 0.7
Reconciliation of effective tax rate 15 months 12 months
ended 31 ended 30
December September
2011 2010
GBPm GBPm
Profit before tax 0.8 0.5
Income tax using the domestic corporation tax 0.2 0.1
rate
Effect of tax rates in foreign jurisdictions (7.3) (1.1)
Reversal of provision against carrying value of 1.0 (0.9)
associate
Net losses where no Group relief is available 10.7 4.7
G
Effect of tax losses utilised (1.5) (0.3)
Non taxable items (2.8) (1.8)
TOTAL TAX EXPENSE 0.3 0.7
UK Corporation tax is calculated at a rate of 26.8% (2010: 28%) of the estimated
assessable loss for the year. Taxation for other jurisdictions is calculated at
the rates prevailing in the respective jurisdictions.
Recognised in other comprehensive income and equity
There is no material taxation effect arising on transactions recorded in other
comprehensive income and equity.
12. Earnings per share
The calculation of the basic and diluted profit per share is based on the
following data:
2011 2010
GBPm GBPm
Profit for the purposes of basic earnings per share being net profit
attributable to
equity holders of the parent 6.0 0.3
Profit for the purposes of diluted earnings per share 6.0 0.3
Number of shares (millions) 2011 2010
No. No.
Weighted average number of ordinary shares for the 1,236.1 1,017.1
purposes of basic earnings per share
Effect of dilutive potential ordinary shares:
- Share options 20.1 13.6
Weighted average number of ordinary shares for the 1,256.2 1,030.7
purposes of diluted earnings per share*
*The calculation of diluted earnings per share is based on the weighted average
number of shares outstanding. The weighted average number of ordinary shares
outstanding during the period was considered in light of the convertible bond
(note 29) issued in the period. The potential ordinary shares associated with
the bond issue are considered anti-dilutive as their conversion to ordinary
shares would increase earnings per share from continuing operations. The
weighted average number of ordinary shares has therefore not been adjusted in
respect of the potential ordinary shares associated with the bond issue.
Earnings per share 2011 2010
Earnings per share 0.49p 0.03
p
Diluted earnings per share 0.48p 0.03
p
Headline earnings/(loss) per share
The headline loss for the period was GBP5.8 million.
The headline loss was 0.47p per share.
Headline Earnings Reconciling Items
2011
GBPm
Basic earnings per IAS 6.0
Gain on acquisition (15.8)
Impairment of investments 4.7
Profit on sale of subsidiaries (0.7)
Headline earnings/(loss) (5.8)
13. Intangible assets
Goodw Deve Bran Inte Cont Lice Tota
ill lopm Cust ds llec ract nces l
GBPm ent Fran omer GBPm tual ual GBPm GBPm
cost chis rela prop righ
s es tion erty ts
GBPm GBPm ship GBPm GBPm
s
GBPm
COST
Balance at 1 October 14.8 - - 3.2 -
2009 1.0 0.1 0.2 19.3
Acquired through 1.3 - 1.7 0.2 - - - 3.2
business combinations -
BALANCE AT 30 16.1 - 1.7 3.4 1.0 0.1 - 0.2 22.5
SEPTEMBER 2010
Balance at 1 October 16.1 - 1.7 3.4 1.0 0.1 - 0.2 22.5
2010
Additions - 0.2 - - 0.4 - 4.5 - 5.1
Acquired through 2.5 - - 3.6 - - 11.8 - 17.9
business combinations
Effect of movements (0.2) - - (0.1 - - (0.9 - (1.2
in foreign rates ) ) )
BALANCE AT 31 18.4 0.2 1.7 6.9 1.4 0.1 15.4 0.2 44.3
DECEMBER 2011
AMORTISATION AND
IMPAIRMENT LOSSES
Balance at 1 October 0.6 - - 0.3 0.6 - - 0.2 1.7
2009
Amortisation for the - 0.2 0.4 0.2 - 0.8
year - - -
BALANCE AT 30 0.6 - 0.2 0.7 0.8 - 0.2 2.5
SEPTEMBER 2010 -
Balance at 1 October 0.6 - 0.2 0.7 0.8 - 0.2 2.5
2010 -
Amortisation for the - 0.3 0.7 0.3 0.1 0.7 2.1
period - -
BALANCE AT 31 0.6 - 0.5 1.4 1.1 0.1 0.7 0.2 4.6
DECEMBER 2011
CARRYING AMOUNTS
At 1 October 2009 14.2 - - 2.9 0.4 0.1 - - 17.6
AT 30 SEPTEMBER 2010 15.5 - 1.5 2.7 0.2 0.1 - 20.0
-
At 1 October 2010 15.5 - 1.5 2.7 0.2 0.1 - 20.0
-
AT 31 DECEMBER 2011 17.8 0.2 1.2 5.5 0.3 - 14.7 - 39.7
Amortisation and impairment charge
The amortisation and impairment charge is recognised in the operating costs line
of the income statement.
Goodwill acquired in a business combination is allocated at acquisition to the
cash generating units (CGU`s) that are expected to benefit from that business
combination. Before recognition of impairment losses, the carrying amount of
goodwill had been allocated as follows:
Primary CGU
Reporting
Segment 2011 2010
GBPm GBPm
AGRIBUSINESS Rollex (Pty) Limited 7.7 7.8
Trak Auto Lda 0.8 0.8
Oceanfresh Seafoods (Pty) Limited 0.5 0.5
Lonrho Logistics (Pty) Limited 1.9 -
10.9 9.1
INFRASTRUCTUR Luba Freeport Limited 3.4 3.5
E
KwikBuild Corporation Limited 2.8 2.8
6.2 6.3
TRANSPORTATIO Five Forty Aviation Limited 0.1 0.1
N
0.1 0.1
SUPPORT Swissta Holdings Limited 0.6 0.6
SERVICES
Global Horizons Limited 0.6 -
1.2 0.6
TOTAL 18.4 16.1
At 31 December 2011 accumulated impairment losses in respect of goodwill
totalled GBP0.6m (2010: GBP0.6 m) fully impairing the goodwill related to
Swissta Holdings Limited.
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired which include the current
economic environment. The recoverable amounts are determined from value in use
calculations. The key assumptions for the value in use calculations are those
regarding discount rates, growth rates, expected changes to selling prices and
direct costs during the periods considered.
Management estimates discount rates using pre-tax rates that reflect current
market assessments of the time value of money and the risks specific to the
units. The growth rates are based on management`s assessment of the markets in
which the businesses are operating and reflect known contracts and customer
relationships combined with anticipated growth in markets and market share.
Industry growth forecasts are not always considered applicable as many of the
businesses are operating in non-established markets. Changes in the selling
prices and direct costs are based on past practices and expectations of future
changes in the individual markets.
The Group prepares cash flow forecasts derived from the most recent financial
budgets included in the individual reporting unit`s three year business plan
which are approved by the Board. For Rollex (Pty) Limited, KwikBuild Corporation
Limited, Trak Auto Lda and Oceanfresh Seafoods (Pty) Limited, the Directors have
not considered cashflow beyond a five year period in determining value in use
although these business are considered to have a continuing value beyond this
period. The forecasts used for these businesses are the three year plan approved
by the Board with years 4 and 5 based on year 3 performance escalated for growth
of 10% for all companies. A similar appraoach has been taken for entities
acquired in the period (Global Horizons Limited and Lonrho Logistics (Pty)
Limited). For Luba Freeport Limited, reflecting the significant capital
investments in the project and the length of the remaining operating concession
(17 years), the Directors have extended the 3 year forecast approved by the
Board to reflect the remaining life of the concession using a 3.5% growth rate
over this period in determining value in use. The pre-tax rates used to
discount the forecast cash flows within Agribusiness are Rollex (Pty) Limited
12% (2010: 12%), Trak Auto Lda 12%(2010: 12%), Oceanfresh Seafoods (Pty) Limited
12% (2010: 12%), Lonrho Logistics (Pty) Limited12%; Infrastructure, Luba
Freeport Limited 10% (2010: 10%) and KwikBuild Corporation Limited 20% (2010:
15%); Transportation, being Five Forty Aviation Limited 12% (2010: 12%); and
Support Services being Global Horizons Limited 12%. The 10% growth rate used
reflects the continued early stages of these operations.
Management carried out a range of sensitivity analysis on all the assumptions
used for each business. There is no single factor impacting the sensitivity of
the CGU analysis, other than the continued growth in the core markets as noted.
The results of this analysis confirmed that there was sufficient headroom in the
carrying value of goodwill for these entities. The Directors do not consider
that any reasonably possible scenario currently foreseen could result in
goodwill impairment. Whilst risk exists in relation to the growth rate assumed
this is mitigated by the absence of a terminal value in the calculations. The
discount rate used reflects the approach to only include five years of cashflows
despite the longer term nature of these businesses.
Estimates and judgements
The Directors believe that the estimates and judgments used in preparing these
financial statements would not have a material impact on the carrying values of
the intangible assets described above. The Directors` do not consider there to
be any indicators of impairment on the other intangible assets.
14. Property, plant and equipment
Long Shor Plan Fixtu Airc Tot
leasehol t t res raft al
d land leas and and GBPm
and ehol mach fitti GBP
building d iner ngs m
s land y GBPm
GBPm and GBPm
buil
ding
s
GBPm
COST
Balance at 1 October 2009 17.1 47.4 8.5 4.4 5.3 82.
7
Additions 0.9 4.3 2.1 1.7 0.1 9.1
Business combinations - - 0.6 0.1 - 0.7
Additions due to joint - 11.1 - 1.0 - 12.
venture becoming a 1
subsidiary
Non-controlling interest 25.5 - - - - 25.
contribution 5
Disposals (0.4) - (0.3 (0.1) - (0.
) 8)
Effect of movements in (2.2) 0.8 1.2 (1.1) 0.1 (1.
foreign exchange 2)
BALANCE AT 30 SEPTEMBER 40.9 63.6 12.1 6.0 5.5 128
2010 .1
Balance at 1 October 2010 40.9 63.6 12.1 6.0 5.5 128
.1
Additions 1.2 2.8 8.0 1.7 29.7 43.
4
Business combinations 10.6 2.0 0.9 0.7 - 14.
2
Revaluations 6.6 0.1 - - - 6.7
Disposals (0.2) - (0.8 (0.1) (2.1 (3.
) ) 2)
Effect of movements in 1.9 1.0 (0.4 1.3 1.0 4.8
foreign exchange )
BALANCE AT 31 DECEMBER 2011 61.0 69.5 19.8 9.6 34.1 194
.0
DEPRECIATION AND IMPAIRMENT
LOSSES
Balance at 1 October 2009 0.7 6.5 3.4 1.6 0.7 12.
9
Depreciation charge for the 0.1 2.7 2.0 0.8 0.3 5.9
year
Disposals - - (0.3 (0.1) - (0.
) 4)
Effect of movements in - 0.2 0.7 (0.4) - 0.5
foreign exchange
BALANCE AT 30 SEPTEMBER 0.8 9.4 5.8 1.9 1.0 18.
2010 9
Balance at 1 October 2010 0.8 9.4 5.8 1.9 1.0 18.
9
Depreciation charge for the 0.2 4.2 3.1 1.6 0.8 9.9
period
Eliminated on revaluation (0.4) (0.1 - - - (0.
) 5)
Disposals - - (0.7 - (0.3 (1.
) ) 0)
Effect of movements in 0.1 0.3 (0.3 0.4 - 0.5
foreign exchange )
BALANCE AT 31 DECEMBER 2011 0.7 13.8 7.9 3.9 1.5 27.
8
CARRYING AMOUNTS
At 1 October 2009 16.4 40.9 5.1 2.8 4.6 69.
8
At 30 September 2010 40.1 54.2 6.3 4.1 4.5 109
.2
At 1 October 2010 40.1 54.2 6.3 4.1 4.5 109
.2
At 31 December 2011 60.3 55.7 11.9 5.7 32.6 166
.2
In the current period, the Company had fixed assets brought forward with a net
book value of GBP0.4m (2010:GBPnil). During the period, the Company acquired
fixed assets for GBP0.1m (GBP2010: GBP0.5m). The depreciation charge for the
period was GBP0.1m (2010: GBP0.1m). The net book value as at 31 December 2011
was GBP0.4m (2010:GBP0.4m). These fixed assets relate to fixtures and fittings.
Leased plant and machinery and aircraft
At 31 December 2011, the net carrying amount of leased assets were GBP25.1 m
(2010:GBP0.4 m). See note 24 for details of the lease obligations.
Long leasehold land and buildings
In 2010 GBP25.5 m of long leasehold land and buildings were recognised in
relation to the valuation of the land assigned under the concession agreement
from GEPetrol following the completion of Phase 1 development and capitalisation
of Lonrho loans. The value had not previously been recognised as assignment and
availability of the land was effectively established following Phase 1
development completion. Depreciation has not yet commenced on this asset as it
has yet to be put into service. Depreciation is expected during 2012.
Long leasehold land and buildings, relating to Sociedade Comercial Bytes &
Pieces Limitada, were revalued in January 2009, by Zambujo & Associados Lda,
independent valuers, on the basis of market value. The valuations conform to
International Valuation Standards and were based on recent market transactions
at arm`s length terms for similar properties. The Directors believe these
valuations remain appropriate and accordingly have not commissioned new
valuations since January 2009.
Long leasehold land and buildings relating to Hotel Cardosa SARL and the Grand
Karavia Hotel, were revalued in December 2011, by SC property Valuation Services
CC, independent valuers, on the basis of the profit method of valuation. The
valuations conform to International Valuation Standards and were based on
historical feasibilities and comparative market information reflecting the
current demand for hotels in the relevant cities. A revaluation gain of GBP7.2m
has arisen on Hotel Cardosa. No gain has been recorded on Grand Karavia as
although the revaluation report indicated an uplift certain of the key
assumptions were considered by the Directors to be unsupported at this stage.
On 31 December 2011, had revalued long leasehold land and buildings been carried
at historical cost less accumulated depreciation, their carrying amount would be
approximately GBP1.7 m (2010: GBP1.9 m). The revaluation surplus is disclosed in
note 23. The revaluation surplus arises in a subsidiary and cannot be
distributed to the parent due its legal restrictions in the country of
incorporation.
Assets in the course of construction
Included within short leasehold land and buildings are assets in the course of
construction totalling GBP1.6m (2010: GBP1.4 m) which are not depreciated until
they are brought into use. Assets of GBP1.2 m were brought into use in the
period.
Capital commitments
Details of capital commitments in relation to property, plant and equipment are
disclosed in note 31.
Borrowing costs
The amount of borrowing costs in respect of interest capitalised during the year
was GBPnil (2010: GBP0.1 m) and has been included within long leasehold land
and buildings.
15. Biological assets
Blueberr Livestoc Total
Stone ies k GBPm
fruit GBPm GBPm
orchards
GBPm
Balance at 1 October 8.9 - 0.1 9.0
2010
Due to physical Phase 2 6.7 - - 6.7
changes Stone
fruit
Phase 3 14.8 - - 14.8
Stone
fruit
Due to physical - 0.9 - 0.9
changes
Transfer to inventory (0.1) - - (0.1)
Changes in assumption: 4.5 - - 4.5
reduction in farming
costs
Discount unwinding Phase 1 0.5 - - 0.5
Stone
fruit
Foreign exchange (2.5) - - (2.5)
movements
BALANCE AT 31 DECEMBER 32.8 0.9 0.1 33.8
2011
The Group has a 200 hectare stone fruit orchard that grows a range of stone
fruits (primarily peaches) and blueberries. The orchard was planted in 3 Phases
over the previous 3 years. The stone fruit trees take an average of 5 years to
become fully mature to give maximum yields and have on average 15 years of
minimum productive life cycle thereafter. In the initial one to two years of
life the fair value of the plantation cycle is not considered material due to
the risks attached to the start up operations.
Under IAS41, Biological Assets are required to be included in fair value less
costs to sell. Fair value less cost to sell is determined by reference to the
net present value of the biological asset at the reporting date. The calculation
of the peaches and blueberries is based upon the expected life of the trees and
bushes and the anticipated yield of each tree and bush per year of life. These
yields are multiplied by the anticipated selling price of each variety of peach
and blueberry based on current market price. Market price can be volatile
depending on the date of harvest which can affect the quality of the product.
Management has sought to use prices that are considered conservative with
regards to long term market trends.
Associated farming costs and cost of sales of the farm are then deducted from
the forecast income to give a net income for each of the years of production of
the peaches and blueberries. The net income is discounted at 14.86% (2010:
14.86%) being the group weighted average cost of capital plus of 10.86% plus 4%
as a farming industry risk factor.
The base currency for those calculations is the South African Rand as the market
price for peaches and blueberries is determined in that currency. Each year
after initial recognition there will be a foreign exchange movement on the
opening fair value. The exchange rate used on 31 December 2011 is 12.5437 (Rand
to the Pound) (2010: 11.0264).
As the biological asset matures the discount rate unwinds year on year to give a
movement in the fair value. Fair value movements in either direction are taken
to the income statement for the relevant year and disclosed as other operating
income or other operating costs as required by IAS 41.
At the point of harvest, the harvested fruits will be transferred to inventory
and accounted for under IAS 2 - Inventory. In the current period the harvest
amounted to GBP0.1m (2010: GBPnil).
The Group has used a third party to assist in its assessment of future yields
for the biological assets.
In 2010 the life cycle for Phase 1 of the orchard had reached a point where 48
hectares of the orchard had developed and were about to yield fruit. In the
current year both Phase 2 and 3 have reached a point where the remaining 152
hectares of the orchard already have or are ready to yield fruit. This has
resulted in a fair value increase of GBP21.5m (2010: GBP8.9m).
As the orchard matures the associated costs of farming also become more viable
and combined with savings generated from improved efficiencies of scale and
better use of technology this has resulted in a further increase in fair value
of the total orchard of GBP4.5m for the period (2010: GBPnil).
Over the life of the orchard, the fair value will be affected each year by the
unwinding of the discount factors and this figure is an increase in value of
GBP0.5m for the current period (2010: GBPnil).
Exchange differences arising on the retranslation of the asset amount to a loss
of GBP2.5m, which is recognised directly in equity.
A 1% change in discount rate would affect the value by GBP2.1 m. A 10% change
in harvested yields would alter the valuation by GBP4.1m. A 10% change in
market prices would impact the valuation by GBP4.8m.
The Directors note that there is significant estimation and judgement in the
valuation of the biological assets. There is also significant operational risk
associated with the orchard including flooding, frost impact and general loss of
plantation and harvest.
At 31 December 2011 stone fruit trees comprised approximately 181,000 peach
trees and 12,700 blueberry bushes (2010: 108,000 peach trees and 11,000
blueberry bushes) which range from newly established trees to plantations that
are 2 years old and are producing fruit for current harvest.
At 31 December 2011 livestock comprised 153 cattle, of which nil (2010: 9) are
less than one year old and considered to be immature assets. During the year the
Group did not sell any cattle.
16. Investments in subsidiaries
The investment by the Company in respect of Lonrho Africa (Holdings) Limited is
stated at cost. This is subject to impairment testing.
A list of principal subsidiaries is set out in note 34.
17. Investments in associates and joint ventures
Group Company
2011 2010 2011 2010
GBPm GBPm GBPm GBPm
At 1 October 10.3 9.2
7.7 7.7
Additions to associate 2.5 0.1 1.2 -
Transfer from joint venture to - (0.9) - -
subsidiary(1)
Share of (loss) after taxation - joint - (0.4) - -
ventures
Share of (loss) after taxation - (1.6) (1.1) - -
associates
Provisions in the year (4.3) - (3.0) -
Write back of impairment - 3.4 - -
AT 31 DECEMBER/30 SEPTEMBER 6.9 10.3 5.9 7.7
Additions to associates represents the purchase of additional shares in
Lonrho Mining Limited and LonZim Plc (see note 33).
The transfer from joint venture to subsidiary in the prior period relates to
control of Grand Karavia SPRL being obtained and the joint venture being
classified as a subsidiary. This reclassification resulted in fixed assets of
GBP12.1 m, loans of GBP10.4 m, inventory of GBP0.2 m, receivables of GBP0.3 m
and other creditors of GBP0.2 m being recognised.
The Group had the following investments in associates and joint ventures at the
reporting date:
Ownership of
Country ordinary share capital
2011 2010
Associates
LonZim Plc+ Isle of Man 22.92% 24.61%
Lonrho Mining Limited Australia 13.96% 13.16%
+ Held directly by Lonrho Plc.
Lonrho Mining Limited
Lonrho Mining Limited is an associate due to the Group being able to exert
significant influence over the company. Due to additional share capital
subscribed to in the period, the shareholding increased to 13.96%. The value of
the Group`s investment in Lonrho Mining Limited was impaired by GBP4.3m in the
period to reflect the fall in value of the shares on the Australian Securities
Exchange. The impairment loss was recorded in Share of results of associates on
the face of the Income Statement. At 30 September 2010, Lonrho Mining`s share
price had risen and thus a gain of GBP3.4m was included in the prior period
accounts. The Directors consider the valuation as at 31 December 2011 reflects
the long term outlook for the Group.
Summary financial information on associates and joint ventures (100%)
Revenue Loss
s for
Assets Liabili Equity for the
GBPm ties GBPm the period
GBPm period GBPm
GBPm
2011
Associates
LonZim Plc* 35.1 (4.2) 30.9 5.9 (6.6)
Lonrho Mining Limited 7.9 (0.2) 7.7 - (1.7)
Revenue Loss
s for
Assets Liabili Equity for the
GBPm ties GBPm the year
GBPm year GBPm
GBPm
2010
Associates
LonZim Plc* 36.3 (4.4) 31.9 4.9 (5.1)
Lonrho Mining Limited 4.7 (0.2) 4.5 - (1.7)
* The reported LonZim profit is adjusted to exclude amortisation of the element
of the non-compete agreement not recognised in these accounts on formation of
LonZim.
LonZim Plc
The market value of the Group`s investment in LonZim Plc at 31 December 2011 was
GBP2.4 m (30 September 2010: GBP2.1 m) with a book value of GBP5.9 m (30
September 2010: GBP5.9 m). The entity`s year end is 31 August and it was
incorporated on 25 October 2007. It was quoted on the AIM market of the London
Stock Exchange on 11 December 2007 whereby Lonrho Plc received 20% of the shares
in exchange for a non-compete agreement in Zimbabwe and the Beira corridor of
Mozambique. At 3 April 2012, the market value of the Group`s investment in
LonZim Plc was GBP1.8m. The Directors do not believe there is any need for
impairment in the carrying value of the investment in LonZim Plc and note that
the Group share of the net assets of the business is GBP7.0m at 31 December
2011.
Following review of the carrying amount of the investment in the Company, the
Directors decided on an impairment of GBP3.0m to align the carrying value to
that in the Group.
The shareholders of LonZim Plc approved the change of name of LonZim Plc, on 24
February 2012, to Cambria Africa Plc.
Grand Karavia SPRL
On 1 April 2010 Lonrho Plc obtained Board control of Grand Karavia SPRL and has
changed the status of the investment from a joint venture to a subsidiary.
Estimates and judgements
The Directors use estimates when assessing the carrying value of the Group`s
investments in associates and joint ventures. In assessing the carrying value of
these investments, the Directors consider a number of sources of information
including financial forecasts prepared by management and market information
where available. In considering impairment risks, the Directors have regard to
the quoted share price of Lonrho Mining Limited and LonZim Plc.
The Directors believe the estimates and judgements used in preparing the
financial statements of associates and joint ventures do not have a material
impact on the carrying values of investments described above. Where associates
and joint ventures do not have 31 December as their year end the most recent
audited financial statements, adjusted as appropriate to align with the Lonrho
year end, are used for consolidation purposes.
Notes to the financial statements continued
18. Other investments
2011 2010
GBPm GBPm
At 1 October 0.6 0.6
Acquired in year 0.1 0.4
Fair value gain 1.4 -
Impairment charge (0.4) (0.4)
AT 31 DECEMBER/30 SEPTEMBER 1.7 0.6
These investments present the Group with opportunity for return through dividend
income and trading gains. They have no fixed maturity or coupon rate. These
investments are designated as at fair value through profit and loss. There are
no investments held as available for sale.
19. Deferred tax assets and liabilities Recognised deferred tax assets and
liabilities
Assets Liabilities
2011 2010 2011 2010
GBPm GBPm GBPm GBPm
At 1 October 0.7 - 3.0 3.0
Acquisition of intangible assets from - - - -
acquisition of subsidiaries
Recognised in period in respect of current 1.3 0.3 - -
trading losses
Revaluation of property, plant and equipment - - - -
On acquisition of subsidiary - 0.3 0.8 -
Exchange differences (0.2) 0.1 0.3 -
AT 31 DECEMBER/30 SEPTEMBER 1.8 0.7 4.1 3.0
The deferred tax liability at 1 October 2010 and 2009 related to the revaluation
of property, plant and equipment.
There have been no deferred tax assets and liabilities off-set in the current or
proceeding period.
The deferred tax asset relates to previous trading losses. The asset will be
recoverable in future periods, which is supported by the future cashflows of the
business.
Unrecognised deferred tax assets
Additional deferred tax assets have not been recognised in respect of tax losses
totalling GBP7.1 m (2010: GBP6.5 m) due to uncertainty against the ability to
deduct these losses against future profits.
Notes to the financial statements continued
20. Inventories
2011 2010
GBPm GBPm
Raw materials and consumables 3.7 1.4
Finished goods 16.4 3.5
20.1 4.9
Trade and other receivables
Group Company
2011 2010 2011 2010
GBPm GBPm GBPm GBPm
Amounts receivable from the sale of goods and 28.3 16.8 - 0.4
services
Amounts due from associates 0.1 1.0 - -
Other receivables 12.7 10.5 0.1 0.2
Pre-payments and accrued income 7.7 5.6 0.8 0.2
Amounts owed by Group undertakings - - 127.3 84.9
48.8 33.9 128.2 85.7
The average credit period taken on sales of goods and services is 56 days (2010:
57 days). No interest is charged on receivables.
The Directors consider the carrying amount of trade and other receivables for
the Group and Company approximates to their fair value.
2011 2010
Movement in the allowance for doubtful debts GBPm GBPm
At 1 October 0.9 0.3
Increase in allowance recognised in the income statement 0.5 0.6
Utilised (0.4) -
AT 31 DECEMBER/30 SEPTEMBER 1.0 0.9
Refer to note 29 for further information on credit risk management.
22. Cash at bank
2011 2010
GBPm GBPm
Bank balances 9.5 7.8
Bank overdrafts (12.2) (3.9)
CASH AND CASH EQUIVALENTS IN THE STATEMENT (2.7) 3.9
OF CASH FLOWS
The Company had a bank overdraft of GBP0.7 m at 31 December 2011 (2010: bank
balance of GBP0.6 m).
Cash at bank includes GBP3.2m subject to restrictions on use that means it is
not freely available and accordingly does not represent cash and cash
equivalents.
23. Capital and reserves
Group reconciliation of movement in capital and reserves
Attributable to equity holders of the parent
Shar Shar Tran Shar Reva Reta Tota Non- Tota
e e slat e luat ined Othe l cont l
capi prem ion opti ion r GBPm roll equi
tal ium rese onre rese earn rese ing ty
GBPm GBPm rve serv rve ings rves inte GBPm
GBPm e GBPm GBPm GBPm rest
GBPm GBPm
At 1 October 8.0 104. (2.0 2.5 4.1 (39. - 78.1 3.0 81.1
2009 7 ) 2)
Share capital 3.7 33.3 - - - - - 37.0 - 37.0
issued
Share based - - - 2.2 - - - 2.2 - 2.2
payment
charge
Purchase of - - - - - - (5.5 (5.5 (4.1 (9.6
non- ) ) ) )
controlling
interests
Non- - - - - - - - - 25.5 25.5
controlling
interests
contribution
Non- - - - - - - - - (0.4 (0.4
controlling ) )
interest
dividends
Profit/(loss) - - - - - 0.3 - 0.3 (0.5 (0.2
for the year ) )
Transfer from -- -- -- -- -- -- -- -- 0.9 0.9(
joint venture (0.1 0.1)
to subsidiary )
Subsidiaries
acquired
Transfer - - - - - 2.8 - 2.8 (2.8 -
between )
accounts
Foreign -- - (6.7 - (0.8 - - (7.5 (1.2 (8.7
exchange ) ) ) ) )
translation
AT 30 11.7 138. (8.7 4.7 3.3 (36. (5.5 107. 20.3 127.
SEPTEMBER 0 ) 1) ) 4 7
2010
At 1 October 11.7 138. (8.7 4.7 3.3 (36. (5.5 107. 20.3 127.
2010 0 ) 1) ) 4 7
Share capital 1.2 - - - - - 17.7 18.9 - 18.9
issued
Share based - - - 0.7 - - - 0.7 - 0.7
payment
charge
Share options 0.1 0.6 - - - - - 0.7 - 0.7
exercised
Costs - (0.4 - - - - - (0.4 - (0.4
associated ) ) )
with share
issues
Non- - - - - - - - - (0.2 (0.2
controlling ) )
interest
dividends
Profit/(loss) - - - - - 6.0 - 6.0 (5.5 0.5
for the )
period
Subsidiaries - - - - - - - - 2.2 2.2
acquired
Subsidiaries - - - - - - - - (0.2 (0.2
disposed ) )
Transfer - - - - (0.1 0.1 - - - -
between )
accounts
Revaluation - - - - 4.2 - - 4.2 3.0 7.2
Non- - - - - - - (2.3 (2.3 - (2.3
controlling ) ) )
interest put
option
Capital - - - - - - 1.1 1.1 - 1.1
element of
Convertible
Bond
Elimination - - - - - (0.6 - (0.6 0.6 -
of non- ) )
controlling
interest
Foreign - - (1.7 - 1.7 (0.5 - (0.5 0.3 (0.2
exchange ) ) ) )
translation
AT 31 13.0 138. (10. 5.4 9.1 (31. 11.0 135. 20.5 155.
DECEMBER 2011 2 4) 1) 2 7
Share capital and share premium
Ordinary shares
In millions of 1p shares 2011 2010
On issue at 1 October 1,171.8 799.1
Issued for cash 118.0 251.2
Issued as part of acquisition - 120.3
Exercise of share options 8.8 1.2
ON ISSUE AT 31 DECEMBER/30 SEPTEMBER - FULLY 1,298.6 1,171.8
PAID
On 20 May 2011, 118,000,000 new ordinary shares of 1p each were issued by a
placing of shares. The placing structure utilised attracted merger relief under
Section 612 of the Companies Act 2006, resulting in a credit to a merger reserve
of GBP17.7m. Subsequent internal transactions required to complete the placing
structure have resulted in this becoming distributable.
The costs of other share issues of GBP0.4 m have been deducted from the share
premium account (2010: GBP1.4 m).
In the comparative period, the Company issued 120.3 m shares at 10.98 pence in
respect of the purchase of the non-controlling interests in Fresh Direct Limited
and Rollex (Pty) Limited. 8.8 m shares (2010: 1.2m shares) were issued on the
exercise of share options in the current period.
The "purchase of non-controlling interests" in the comparative period relates to
the purchase of the remaining minority shareholdings in Rollex (Pty) Limited and
Fresh Direct Limited.
The "non-controlling interests contribution" in the comparative period relates
to the recognition of the value associated with the long leasehold land and
buildings provided by the non-controlling interests in Luba Freeport Limited as
described in note 14.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regard to the Company`s residual assets.
The Group also issued share options in 2011 (see note 26).
Company reconciliation of movement in capital and reserves
Share Shar Shar Other Retai Total
capit e e reser ned GBPm
al prem opti ve earni
GBPm ium on GBPm ngs
GBPm rese GBPm
rve
GBPm
At 1 October 2009 8.0 104. 2.5 - (21.3 93.9
7 )
Share capital issued 3.7 33.3 - - -
37.0
Equity settled - - 2.2 - -
transactions 2.2
Loss for the period - - - -
(10.1 (10.1
) )
AT 30 SEPTEMBER 2010 11.7 138. 4.7 - (31.4 123.0
0 )
At 1 October 2010 11.7 138. 4.7 - (31.4 123.0
0 )
Share capital issued 1.2 - - 17.7 - 18.9
Share options issued - - 0.7 - - 0.7
Share options exercised 0.1 0.6 - - - 0.7
Costs associated with share - (0.4 - - - (0.4)
issues )
Loss for the period - - - - (17.3 (17.3
) )
AT 31 DECEMBER 2011 13.0 138. 5.4 17.7 (48.7 125.6
2 )
Translation reserve
The translation reserve comprises all foreign exchange differences arising from
the translation of the financial statements of foreign operations since the
conversion to Adopted IFRS on 1 October 2006.
Revaluation reserve
The revaluation reserve relates to property, plant and equipment (see note 14).
Share based payment reserve
The share based payment reserve comprises the charges arising from the
calculation of the share based payments posted to the income statement (see note
26).
24. Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group`s
interest-bearing loans and borrowings. For more information about the Group`s
exposure to interest rate and foreign currency risk, see note 29.
2011 2010
GBPm GBPm
NON CURRENT LIABILITIES
Finance lease liabilities 18.6 1.8
Unsecured bank loan 27.9 20.3
Convertible Bond 44.4 -
Shareholder loans 3.6 2.5
Other loan 0.8 1.8
95.3 26.4
CURRENT LIABILITIES
Unsecured bank loans 2.9 2.8
Current portion of finance lease liabilities 4.9 1.0
Other loan 0.1 1.8
Bank overdrafts 12.2 3.9
20.1 9.5
At the reporting date the Company had interest bearing loans of GBPnil (2010:
GBP1.3m).
Finance leases
Finance lease liabilities are denominated in US dollars and are payable as
follows:
2011 2010
Future Present value Future Present value
minimum of minimum minimum of minimum
lease lease lease lease
payments Interest payments payments Interest payments
GBPm GBPm GBPm GBPm GBPm GBPm
Less than one year 6.4 (1.5) 4.9 1.0 - 1.0
Between one and five 13.6 (4.8) 8.8 1.9 (0.1) 1.8
years
More than 5 years 11.6 (1.8) 9.8 - - -
31.6 (8.1) 23.5 2.9 (0.1) 2.8
Interest is payable on the leases within a range of 7.5% to 25% per annum.
Under the terms of the lease agreements, no contingent rents are payable.
Bank overdrafts
Bank overdrafts are repayable on demand and are unsecured. The currency profile
is as follows:
2011 2010
GBPm GBPm
South African Rand
Central African Franc US Dollar
Sterling
5.7 3.1
0.3 -0.20.
5.5 6
0.7
12.2 3.9
The weighted average interest rates paid were 10%
(2010:12%).
The Directors consider the carrying amount of the Group`s
loans and borrowings approximates their fair value.
25. Shareholder loans
2011 2011
GBPm
GBPm
Shareholder loans 3.6 2.5
3.6 2.5
26. Share options
At 31 December 2011 there were 119,510,000 (30 September 2010: 89,305,000) share
options in issue with an average exercise price of 11.09p (2010: 12.6p).
The following share options over 1p ordinary shares were granted under an
Unapproved Share option scheme on 4 August 2011:
Name Date Number Exer Period during Market
granted ofshar cise which price
e exercisable per
option Pric share
sgrant e at date
ed of
grant
or
modific
ation
David Lenigas 04/08/201 3,333, 18.4 04.08.2012-03. 16.75p
1 333 p 08.2016
David Lenigas 04/08/201 3,333, 22p 04.08.2013-03. 16.75p
1 333 08.2016
David Lenigas 04/08/201 3,333, 25p 04.08.2014-03. 16.75p
1 334 08.2016
Geoffrey White 04/08/201 3,333, 18.4 04.08.2012-03. 16.75p
1 333 p 08.2016
Geoffrey White 04/08/201 3,333, 22p 04.08.2013-03. 16.75p
1 333 08.2016
Geoffrey White 04/08/201 3,333, 25p 04.08.2014-03. 16.75p
1 334 08.2016
David Armstrong 04/08/201 2,000, 18.4 04.08.2012-03. 16.75p
1 000 p 08.2016
David Armstrong 04/08/201 2,000, 22p 04.08.2013-03. 16.75p
1 000 08.2016
David Armstrong 04/08/201 2,000, 25p 04.08.2014-03. 16.75p
1 000 08.2016
Other employees and 04/08/201 2,000, 18.4 04.08.2014-03. 16.75p
consultants 1 000 p 08.2016
Other employees and 04/08/201 2,000, 22p 04.08.2013-03. 16.75p
consultants 1 000 08.2016
Other employees and 04/08/201 2,000, 25p 04.08.2014-03. 16.75p
consultants 1 000 08.2016
Other employees and 04/08/201 7,000, 18.4 04.08.2014-03. 16.75p
consultants 1 000 p 08.2016
Total options issued 39,000
in period ,000
The following share options were outstanding as at 31 December 2011.
Name Date Number Exer Period during Market
granted ofshar cise which price
e exercisable per
option Pric share
sgrant e at date
ed of
grant
or
modific
ation
David Lenigas* 30.04.20 3,750, 6.5p 30.04.2007-29. 5.8p
07 000 04.2012
Emma Priestley* 30.04.20 1,250, 6.5p 30.04.2007-29. 5.8p
07 000 04.2012
Geoffrey White* 30.04.20 2,500, 6.5p 30.04.2007-29. 5.8p
07 000 04.2012
Martin Horgan 30.04.20 1,000, 34.5 30.04.2007-29. 32.5p
(former director) 07 000 p 04.2012
James Hughes* 30.04.20 750,00 6.5p 30.04.2007-29. 5.8p
07 0 04.2012
Gerard Holden 30.04.20 3,500, 34.5 30.04.2007-29. 32.5p
(former director) 07 000 p 04.2012
Other employees and 30.04.20 290,00 34.5 30.04.2007-29. 32.5p
consultants 07 0 p 04.2012
Other employees and 30.04.20 975,00 6.5p 30.04.2007-29. 5.8p
consultants 07 0 04.2012
David Lenigas* 20.07.20 1,615, 6.5p 20.07.2007-19. 5.8p
07 000 07.2012
Emma Priestley* 20.07.20 1,065, 6.5p 20.07.2007-19. 5.8p
07 000 07.2012
Geoffrey White* 20.07.20 1,065, 6.5p 20.07.2007-19. 5.8p
07 000 07.2012
Martin Horgan 20.07.20 200,00 44.0 20.07.2007-19. 39.5p
(former director) 07 0 p 07.2012
James Hughes* 20.07.20 350,00 6.5p 20.07.2007-19. 5.8p
07 0 07.2012
Jean Ellis* 20.07.20 350,00 6.5p 20.07.2007-19. 5.8p
07 0 07.2012
Other employees and 20.07.20 100,00 44.0 20.07.2007-19. 39.5p
consultants 07 0 p 07.2012
David Lenigas 13.01.20 2,500, 6.5p 13.01.2009-12. 5.8p
09 000 01.2014
Emma Priestley 13.01.20 1,000, 6.5p 13.01.2009-12. 5.8p
09 000 01.2014
Geoffrey White 13.01.20 2,000, 6.5p 13.01.2009-12. 5.8p
09 000 01.2014
Jean Ellis 13.01.20 500,00 6.5p 13.01.2009-12. 5.8p
09 0 01.2014
David Armstrong 13.01.20 1,000, 6.5p 13.01.2009-12. 5.8p
09 000 01.2014
Other employees and 13.01.20 1,750, 6.5p 13.01.2009-12. 5.8p
consultants 09 000 01.2014
David Lenigas 01.04.20 20,000 13.7 01.04.2010-31. 12.5p
10 ,000 5p 03.2015
Geoffrey White 01.04.20 20,000 13.7 01.04.2010-31. 12.5p
10 ,000 5p 03.2015
David Armstrong 01.04.20 6,500, 13.7 01.04.2010-31. 12.5p
10 000 5p 03.2015
Emma Priestley 01.04.20 1,000, 13.7 01.04.2010-31. 12.5p
10 000 5p 03.2015
Other employees and 01.04.20 5,500, 13.7 01.04.2010-31. 12.5p
consultants 10 000 5p 03.2015
David Lenigas 04.08.20 3,333, 18.4 04.08.2012-03. 16.75p
11 333 p 08.2016
David Lenigas 04.08.20 3,333, 22p 04.08.2013-03. 16.75p
11 333 08.2016
David Lenigas 04.08.20 3,333, 25p 04.08.2014-03. 16.75p
11 334 08.2016
Geoffrey White 04.08.20 3,333, 18.4 04.08.2012-03. 16.75p
11 333 p 08.2016
Geoffrey White 04.08.20 3,333, 22p 04.08.2013-03. 16.75p
11 333 08.2016
Geoffrey White 04.08.20 3,333, 25p 04.08.2014-03. 16.75p
11 334 08.2016
David Armstrong 04.08.20 2,000, 18.4 04.08.2012-03. 16.75p
11 000 p 08.2016
David Armstrong 04.08.20 2,000, 22p 04.08.2013-03. 16.75p
11 000 08.2016
David Armstrong 04.08.20 2,000, 25p 04.08.2014-03. 16.75p
11 000 08.2016
Other employees and 04.08.20 2,000, 18.4 04.08.2014-03. 16.75p
consultants 11 000 p 08.2016
Other employees and 04.08.20 2,000, 22p 04.08.2013-03. 16.75p
consultants 11 000 08.2016
Other employees and 04.08.20 2,000, 25p 04.08.2014-03. 16.75p
consultants 11 000 08.2016
Other employees and 04.08.20 7,000, 18.4 04.08.2014-03. 16.75p
consultants 11 000 p 08.2016
Total options in 119,51
issue 0,000
* The exercise price was amended to 6.5p on 13 January 2009.
The following share options were exercised during the year.
Name Date Number Shar Exerc Pre
granted of e ise tax
share pric price Date of gain
option e at exercis at
s date e date
exerci of of
sed exer exerci
cise se
GBP
David Lenigas 25.01.20 3,500, 17.5 6.5p 16.02.2 385,00
06 000 p 011 0
Frances Cook 13.01.20 500,00 17.5 6.5p 16.02.2 55,000
09 0 p 011
Emma Priestley 11.04.20 1,250, 17.5 6.5p 16.02.2 137,50
06 000 p 011 0
James Hughes 25.01.20 1,000, 17.5 6.5p 16.02.2 110,00
06 000 p 011 0
Other employees and 30.04.20 545,00 18.0 6.5p 20.11.2 61,300
consultants 07 0 p 010
Other employees and 20.07.20 250,00 18.0 6.5p 20.11.2 28,750
consultants 07 0 p 010
Other employees and 30.03.20 1,500, 18.0 17.0p 20.11.2 15,000
consultants 06 000 p 010
Other employees and 13.01.20 250,00 16.7 6.5p 02.03.2 25,625
consultants 09 0 5p 011
8,795,
000
The number of shares exercised in the table above is consistent with the number
of share options granted at the respective grant date. GBP0.7m was received
from the exercise of the above share options.
In accordance with IFRS 2 `Share-based payments` share options granted or re-
priced during the year have been measured at fair value at the date of grant or
re-pricing and, in the case of re-priced options, the increase in the fair value
compared with the value of the original award at that date has been spread over
the remaining vesting period. The fair value of the options granted has been
estimated at the date of grant using the Black-Scholes option-pricing model. The
estimated fair value of the options granted on 4 August 2011 was GBP4.5 m.
Date of Grant
04.08 04.08. 04.08
.2011 2011 .2011
Share price 16.75 16.75p 16.75
p p
Exercise price 18.4p 22.0p 25.0p
Expected volatility 48.0% 56.0% 85.0%
Expected life 5 5 5
years years years
Expected dividends 0.00 0.00 0.00
Risk-free interest rate 1.46% 1.46% 1.46%
Date of Grant
01.04 13.01 20.07. 30.04
.2010 .2009 2007 .2007
Share price 12.5p 5.8p 39.5p 32.5p
Exercise price 13.75 6.5p 44.0p 34.5p
p
Expected volatility 59% 49.0% 45.3% 45.3%
Expected life 2.5 2.5 2.5 2.5
years years years years
Expected dividends 0.00 0.00 0.00 0.00
Risk-free interest rate 2.95% 5.50% 5.50% 5.50%
Volatility has been calculated by reference to the movement of the Company`s
share price over the previous three and a half years.
All share options issued prior to 1 October 2010, vest at the date of grant and
the basis of settlement is in shares of the Company.
27. Trade and other payables
Group Company
2011 2010 2011 201
GBPm GBPm 0
GBPm GBP
m
Trade payables 30.0 17.9 0.8 0.8
Amounts owed to Group undertakings - - 38.0 0.4
Indirect tax and social security 0.5 0.6 0.1 0.1
liabilities
Deferred income 1.4 1.5 - -
Non-trade payables and accrued expenses 23.9 9.5 0.8 0.3
55.8 29.5 39.7 1.6
Group Company
2011 2010 2011 201
GBPm GBPm 0
GBPm GBP
m
Analysed as:
Current liabilities 39.7 27.0 1.7 1.2
Non-current liabilities 16.1 2.5 38.0 0.4
55.8 29.5 39.7 1.6
Trade payables principally comprise outstanding amounts for trade purchases and
on-going costs. The average credit period taken for trade purchases is 85 days
(2010: 82 days). The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
28 Notes to the statements of cash flows
Group Company
2011 2010 2011 2010
GBPm GBPm GBPm
GBPm
Depreciation of property, plant and 0.1
equipment Amortisation of intangible -
assets 9.9 5.9 0.2
2.1 0.8 -
Impairment of investment - 0.4 - -
Gains on investments (1.0) - - -
Foreign exchange loss/(gain) 1.1 (5.1) 1.0 -
Share based payment charge 0.7 2.3 0.7 2.3
Finance income (0.8) (0.1) (0.1) -
Finance expense 9.1 2.3 - -
Profit on disposal (0.5) - - -
Share of loss/(profit) of associates 5.9 (1.9) 3.0 -
Gain arising on fair valuation of (27.4) (9.0) - -
biological assets
Gain on acquisitions (15.8) - - -
Income tax expense 0.3 0.7 0.1 -
ADJUSTMENTS TO PROFIT/LOSS FOR THE PERIOD (16.4) (3.7) 4.9 2.4
The Company has no financial assets apart from the Other receivables and amounts
owed by Group undertakings included within note 21. The Company applies a
similar approach to credit risk management as the Group. The Directors believe
that there are no significant credit risks to the Company at the reporting date.
Exposure to credit, liquidity, interest rate, foreign and currency and market
risks arises in the normal course of the Group`s business.
This note presents information about the Group`s exposure to each of the above
risks, the Group`s objectives, policies and processes for measuring and managing
risk, and the Group`s management of capital which the Directors consider to be
the components of Total Equity excluding minority interests. Further
quantitative disclosures are included throughout these consolidated financial
statements. The Board of Directors have overall responsibility for the
establishment and oversight of the Group`s risk management framework.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group has
adopted a policy of only dealing with credit worthy counterparties and obtaining
sufficient collateral where appropriate, as a means of mitigating the risk of
financial loss from defaults. No collateral is held at the reporting date. The
Group`s exposure and the credit ratings of its counterparties are continuously
monitored and the aggregate value of transactions concluded is spread amongst
approved counterparties.
Trade receivables consist of a large number of customers, spread across diverse
industries and geographical areas. Ongoing credit evaluation is performed on the
financial condition of accounts receivable. The Group does not have any
significant credit risk exposure to any single counterparty or any Group of
counterparties having similar characteristics. The credit risk on liquid funds
is limited because the counterparties are banks with high credit- ratings
assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the financial statements,
net of any allowances for losses, represents the Group`s maximum exposure to
credit risk without taking account of the value of any collateral obtained. At
the reporting date, there were no significant credit risks. The maximum exposure
to credit risk of customers at the reporting date was GBP41.1 m being the total
of the carrying amount of financial assets, excluding equity investments as
shown in the table below:
2011 2010
GBPm GBPm
Cash and cash equivalents
Trade receivables 12.7 7.8
Other receivables(1) 28.3 16.8
12.8 11.5
53.8 36.1
Other receivables includes other receivables of GBP12.7 m (2010:
GBP10.5 m) and amounts due from associates of GBP0.1 m (2010: GBP1.0
m)
The ageing of trade receivables at the reporting date was:
2011 2010
GBPm GBPm
Not due 15.6 9.3
Past due 0-30 days 5.3 2.9
Past due 31-60 days 2.2 1.4
More than 60 days past due 5.2 3.2
28.3 16.8
The movement on the provision for doubtful debts is disclosed in note 21. The
provision at the reporting date of GBP1.0 m (2010: GBP0.9 m) relates to and is
included within trade receivables more than 60 days past due. Other amounts past
due are considered collectible based on prior experience.
The maximum exposure to credit risk for trade 2011 2010
receivables by geographic region was: GBPm GBPm
West Africa 1.9 1.3
Southern Africa 21.3 13.3
East Africa 4.4 1.8
Europe 0.7 0.4
28.3 16.8
The maximum exposure to credit risk for trade
receivables at the reporting date by type of
counterparty:
2011 2010
GBPm GBPm
Wholesale customers 19.8 16.8
Retail customers 8.5 -
28.3 16.8
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which has built an appropriate liquidity risk management framework
for the management of the Group`s and Company`s short, medium and long term
funding and liquidity management requirements. The Group and Company manages
liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities.
The following are the contractual maturities of financial liabilities, including
estimated interest payments and excluding the effect of netting agreements:
2011
1 to 2 to 5yea
Carry Contra 1 <2ye <5ye rs
ing ctual year ars ars and
amoun cash or GBPm GBPm over
t flows less GBPm
GBPm GBPm GBPm
Bank overdrafts 12.2 12.2 12.2 - - -
Trade and other payables 55.8 55.8 39.6 13.7 2.5 -
Bank loans 30.8 37.2 6.3 11.0 19.9 -
Finance leases 23.5 31.6 6.4 5.0 8.6 11.6
Shareholder loans 3.6 3.8 0.1 0.3 0.2 3.2
Convertible Bond 44.4 57.1 3.2 3.2 50.7 -
Other loans 0.9 0.9 0.1 0.8 - -
171.2 198.6 67.9 34.0 81.9 14.8
2010
Carry Contr 1 1 to 2 to 5year
ing actua year <2yea <5yea s and
amoun l or rs rs over
t cash less GBPm GBPm GBPm
GBPm flows GBPm
GBPm
Bank overdrafts 3.9 3.9 3.9 - - -
Trade and other payables 29.5 29.5 27.0 2.5 - -
Bank loans 23.1 25.5 4.8 5.6 14.4 0.7
Finance leases 2.8 2.9 1.0 1.9 - -
Shareholder loans 2.5 2.5 2.5 - - -
Other loans 3.6 3.6 1.8 - -
1.8
65.4 67.9 41.0 11.8 14.4 0.7
Convertible Bond
On 15 October 2010, LAH Jersey Limited, a wholly-owned subsidiary company
incorporated in Jersey, completed the offering of USD 70 m 7.0% Guaranteed
Convertible Bonds due 2015, convertible into preference shares of LAH Jersey
Limited at the holder`s option, immediately exchangeable for Ordinary Shares of,
and unconditionally and irrevocably guaranteed by, Lonrho plc.
The bonds are convertible into Ordinary Shares of Lonrho plc at an exchange
price of 15.59p and at fixed exchange rate at any time from 1 November 2010 to 8
October 2015, or, if the Bonds shall have been called for redemption by LAH
Jersey Limited before 15 October 2015, the close of business on the day which is
seven days before the date fixed for redemption. Each USD 10,000 principal
amount of bonds will entitle the holder to convert into a USD 10,000 paid-up
value of preference shares of LAH Jersey Limited. Upon a change of control the
Bonds may be redeemed at the holder`s option at their early redemption amount
(together with accrued interest), to the date fixed for redemption.
If the conversion option is not exercised, the unsecured Convertible Bonds will
be redeemed on 15 October 2015 at a redemption price equivalent to 106.0031% of
their principal amount.
The net proceeds received from the issue of the Convertible Bonds have been
split between the debt component and an embedded derivative component. This
embedded derivative component represents the fair value of the equity conversion
call option held by the bondholders.
The interest charged for the year is calculated by applying an effective
interest rate of 8.25%. This includes a coupon interest rate of 7.0% per annum.
The Directors estimate the fair value of the liability component of the 7.0%
convertible US Dollar Bonds 2015 at 31 December 2011 to be approximately GBP38.1
m. This fair value has been determined by reference to the market price at 31
December 2011.
In respect of income-earning financial assets and interest-bearing financial
liabilities, the following table indicates their effective interest rates at the
reporting date and the periods in which they re-price.
2011
Effective
interest 1 year 1-2 2-5 5 years
rate Total or less years years and over
% GBPm GBPm GBPm GBPm GBPm
Cash and cash 1.0% 12.7 12.7 - - -
equivalents
Loans 7.8% (35.3) (31. (0.3 (0.2 (3.3
5) ) ) )
Finance lease 8.8% (23.5) (4.9 (5.0 (8.6 (5.0
liabilities ) ) ) )
Convertible Bond 8.25% (44.4) - - (44. -
4)
Bank overdrafts 9.5% (12.2) (12. - - -
2)
(102.7) (35. (5.3 (53. (8.3
9) ) 2) )
2010
Effective
interest 1 year 1-2 2-5 5 years
rate Total or less years years and over
% GBPm GBPm GBPm GBPm GBPm
Cash and cash 1% 7.8 7.8 - - -
equivalents
Loans 8.6% (29.2) (8.4 (6.8 (13. (0.7)
) ) 3)
Finance lease 9.2% (2.8) (1.0 (1.8 - -
liabilities ) )
Bank overdrafts 10.2% (3.9) (3.9 - - -
)
(28.1) (5.5 (8.6 (13. (0.7)
) ) 3)
Foreign currency risk management
The Group is exposed to foreign currency risk on sales, purchases and borrowings
that are denominated in a currency other than pounds sterling. The currencies
giving rise to this risk are primarily, US Dollars, South African Rand,
Mozambique Metical, Kenyan Shilling, Central African Franc and the Euro.
The carrying amount of the Group`s foreign currency denominated monetary assets
and monetary liabilities, and its total net assets at the reporting date is as
follows:
Monetary net Total net
assets assets
2011 2010 2011
GBPm GBPm 2010
GBPm
GBPm
U.S.Dollar (2.8) (10.0) 52.4 10.
9
South African Rand 13.0 (6.5) (3.9) 10.
0
Mozambique Metical 4.6 0.1 26.7 12.
1
Kenyan Shillings - (1.5) 2.5 0.9
Central African Franc - (8.1) (12.3 62.
) 6
Sudanese Pound 0.3 - (0.8) -
Angolan Kwanza - 0.1 - 1.0
Zambian Kwacha 0.3 (0.1) - -
15.4 (26.0) 64.6 97.
5
The following significant exchange
rates applied during the year:
Average Rate Closing
2011 2010 Rate
2011
2010
US Dollar 1.56 1.56 1.5 1.58
5
Euro 1.18 1.16 1.1 1.16
9
South African Rand 12.74 11.68 12. 11.0
54 3
Mozambique Metical 41.32 48.64 40. 57.3
95 9
Kenyan Shilling 133.35 125.91 129 133.
.21 45
Central African Franc 760.29 773.63 768 777.
.48 07
The Company does not have any exposure to foreign currencies at the reporting
date (2010: GBPnil).
Foreign currency sensitivity analysis
A 10% strengthening of the UK sterling against the following currencies at 31
December would have increased/(decreased) equity and profit or loss by the
amounts shown below. This analysis assumes that all other variables remain
constant. The analysis is performed on the same basis for 30 September 2010.
2011 2010
Equity Profit/(loss) Equity Profit/(loss)
GBPm GBPm GBPm GBPm
US Dollar (4.8) 1.4 9.9 (4.6)
Mozambique Metical (2.4) (0.2) 11.0 1.2
South African Rand 0.4 - 9.1 4.4
Central African Franc 1.1 0.1 56.9 0.2
Kenyan Shilling (0.2) - 0.8 (0.6)
A 10% weakening of UK sterling against the above currencies at 31 December 2011
and 30 September 2010 would have had the equal but opposite effect on the above
currencies to the amounts shown above, on the basis that all other variables
remain constant.
Notes to the financial statements continued
29. Financial instruments (continued)
Interest rate risk management
The Group is exposed to interest rate changes on its floating rate borrowings,
arising principally from changes in borrowing rates in US Dollars, South African
Rand, Central African Franc, Kenyan Shilling, Mozambique Metical and Sterling.
The Group`s manages interest rate risk by issuing a combination of fixed and
floating rate debt instruments. At 31 December 2011, the Group had 57% (30
September 2010: 7%) of fixed rate debt and 43% (30 September 2010: 93%) of
floating rate debt based on a gross debt of GBP115.4 m (30 September 2010:
GBP35.9 m).
The Group`s exposures to interest rates on financial assets and financial
liabilities are detailed in the liquidity risk management section of this note.
Market risk management
Market risk is the risk that the value of an investment will change due to
movements in market factors. The Group is exposed to market risk by virtue of
its investment in Lonrho Mining Limited and other investments. A 10% reduction
in the market share price of Lonrho Mining Limited at 31 December 2011 would
have decreased equity and profit by GBP0.2 m.
Capital management
The Board`s policy for the Group and Company is to maintain a strong capital
base so as to maintain investor, creditor and market confidence and to sustain
future development of the business. The Board of Directors monitors the return
on capital, which the Group defines as net operating income divided by total
shareholders` equity, excluding non-controlling interests.
As the Group is in a phase of expansion, the key capital requirements are to
ensure that funding is available for current and planned projects. Historically
this has been achieved through capital raises, but as the Group has developed
funding has been raised through a mix of debt and equity.
The Group considers shareholders funds plus long term debt to represent capital
as defined by IAS 1. The Group currently has no target debt to equity funding
range.
The Board of Directors intends to introduce a dividend policy for the Company to
be made public during 2012 and implemented in 2013.
Fair values
The Directors consider fair values are approximate to the carrying amounts shown
in the statement of financial position in the current and proceeding year. The
following summarises the major methods and assumptions used in estimating the
fair values of financial instruments.
(a) Interest-bearing loans and borrowings
Fair value is calculated based on discounted expected future principal and
interest cash flows.
(b) Fnance lease liabilities
The fair value is estimated as the present value of future cash flows,
discounted at market interest rates for homogeneous lease agreements. The
estimated fair values reflect change in interest rates.
(c) Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the
notional amount is deemed to reflect the fair value. All other
receivables/payables are discounted to determine the fair value.
The fair value of assets and liabilities can be classed in three levels:
Level 1 - Fair values measured using quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 - Fair values measured using inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either
directly(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Fair values measured using inputs for the asset or liability that are
not based on observable market data (i.e. unobservable inputs).
All assets and liabilities held within Lonrho are within Level 1 of the
hierarchy.
Notes to the financial statements continued
30. Operating leases
At the reporting date, the Group had outstanding commitments for future minimum
lease payments under non-cancellable operating leases, which fall due as
follows:
Aircraft Property Equipment
Total
2011 2010 2011 2010 2011 2010 2011 2010
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Less than one year 2.3 2.2 1.7 0.6 0.1 - 4.1 2.8
Between one and five 3.0 3.4 8.7 2.9 0.2 - 11.9 6.3
years
5.3 5.6 10.4 3.5 0.3 - 16.0 9.1
Included in the above are property leases of the Company amounting to GBP0.4 m
(2010: GBP0.1 m) less than 1 year and GBP1.7 m (2010: GBP0.8 m) between one and
five years.
For leased aircraft, the amount disclosed includes all maintenance obligations.
31. Capital commitments
The Group has a capital commitment in respect of a cold room facility upgrade.
The total cost of the upgrade is GBP200k of which GBP48k has been paid and is
included within the assets in course of construction (Note 14). The balance of
GBP152k will be paid within the next financial year.
Other capital commitments of GBPnil will be paid within the next financial year
(2010: GBP1.1 m).
The Company had no capital commitments at 31 December 2011 (2010: GBPnil).
32. Contingent liabilities
There were no contingent liabilities at the reporting date (2010: GBPnil), the
outturn of which the Directors consider could materially impact the financial
statements. The Group has no contractual obligation to provide future funding to
associates and has no contingent liabilities in respect of its associates.
33. Related parties
The Group has a related party relationship with its subsidiaries (see note 34),
associates and joint ventures (see note 17), companies in which the Group has an
investment, and with its Directors.
Transactions with subsidiaries
Transactions within the Group companies have been eliminated on consolidation
and are not disclosed in this note.
At the reporting date Lonrho Africa (Holdings) Limited owed the Company GBP127.3
m (2010: GBP87.9 m). Lonrho Africa (Holdings) Limited holds the operating bank
accounts for the Group and the majority of the Group`s investments in
subsidiaries. The movement on the intercompany balance represents the transfer
of cash raised during the year through the capital raises.
Transactions with associates
LonZim Plc
On 29 November 2010, the Company announced that it had participated in a placing
of shares in its associate company, LonZim Plc. Lonrho subscribed for 4,384,011
LonZim shares as a cost of GBP1.2m taking its total interest to 13,324,010
ordinary shares.
At the reporting date, the Company owned 22.92% of LonZim Plc (2010: 24.61%) and
exerts significant influence over the company. On admission to AIM in 2007
LonZim Plc issued shares to the value of GBP7.3 m in exchange for Lonrho Plc
entering into a non-compete agreement. The agreement covers a period of five and
a half years from November 2007.
During the period the Company charged GBP0.7 m (2010: GBP0.5 m) to LonZim Plc as
a management charge. At the reporting date GBPnil m was due from LonZim Plc
(2010: GBP0.2 m).
Notes to the financial statements continued
Related parties (continued)
Transactions with associates (continued)
Since 1 October 2010, Lonrho Hotels has charged GBP0.1m to the Leopard Rock
Hotel Company (Pty) Limited, a LonZim company, in relation to management fees.
At the reporting date GBP0.1m was outstanding.
On 1 July 2009 LonZim acquired an aircraft from Lonrho Air Three (BVI) Limited,
a subsidiary of Lonrho Plc, for a total of USD 4.3 m (GBP2.6 m). The aircraft is
leased to Five Forty Aviation Limited, a Lonrho subsidiary, for USD 55k per
month. As at 31 December 2011, USD 27k (GBP17k) is payable from Fly540 Kenya to
LonZim Air. Five Forty Aviation provides maintenance and other ancillary
services to LonZim Air relating to the leased aircraft. At reporting date the
outstanding amounts due to Five Forty Aviation from LonZim Air was GBP356k
(2010: GBPnil).
LonZim leases one aircraft on industry standard operating lease terms to Fly 540
Uganda with a monthly rental amount of USD 28k (GBP17k) payable and as at 31
December 2011 $174k (GBP112k) is due from Fly540 Uganda to LonZim. During the
period ended 31 December 2011 LonZim leased a further aircraft to Fly540 Uganda
on industry standard operating lease terms, however this lease arrangement came
to an end in February 2011. Total amounts charged under this arrangement in the
period to 31 December 2011 was GBP87k (2010: GBP202k). At the reporting date
GBPnil was outstanding. Fly540 Kenya is acting as an agent in the recovery of
the insurance money relating to the LonZim Air (BVI) Ltd aircraft written off.
On 30 September 2011 Lonrho Hotels (Holdings)Limited acquired an 80% interest
from LonZim in the share capital of Aldeamento Turistico de Macuti S.A.R.L.
(details provided in Note 7).
Investments
Lonrho Mining Limited
In December 2010, the Group increased its stake in Lonrho Mining Limited from
13.16% to 17.04% at a cost of GBP1.3 m. Following this, there was a capital
raise in December 2011 which diluted the shareholding 13.96% at the reporting
date. At the reporting date GBPnil was due from Lonrho Mining Limited (2010:
GBP0.9 m).
Swissta DRC SpRL
The Group holds 20% of Swissta DRC SpRL. At the reporting date GBP0.1 m (2010:
GBP0.1 m) was due from Swissta DRC SpRL as a result of a short term non-interest
bearing loan.
Transactions with key management personnel
Key management personnel are considered to be the Company`s Directors.
During the period GBP0.03 m (2010:GBP0.1 m) was charged to the Group by DSG
Chartered Accountants. Jean Ellis is a partner in this firm.
The key management personnel compensations are as follows:
15 12
months months
ended ended
31 30
Decembe Septemb
r er
2011 2010
GBPm GBPm
Short-term employee benefits 4.0 2.5
Post-employment benefits 0.2 0.2
Share based payment (see note 26) 0.5 2.3
4.7 5.0
Total remuneration is included in "staff costs" (see note 9).
Notes to the financial statements continued
34. Group entities
Principal subsidiaries
Country of Ownership
incorporation interest201
1 2010
Luba Freeport Limited Jersey 63% 63%
Five Forty Aviation Limited Kenya 49% 49%
Lonrho Air (BVI) Limited British Virgin 100% 100%
Islands
Sociedade Comercial Bytes & Pieces Mozambique 65% 65%
Limitada
Hotel Cardoso SARL Mozambique 59.04 59.0
% 4%
Lonrho Africa (Holdings) Limited* UK 100% 100%
Rollex (Pty) Limited South Africa 100% 100%
e-Kwikbuild Housing Company (Pty) South Africa 35.91 35.9
Limited % 1%
Trak Auto Lda Mozambique 100% 100%
Oceanfresh Seafoods (Pty) Limited South Africa 51% 51%
Fresh Direct Limited British Virgin 100% 100%
Islands
Grand Karavia SPRL Democratic 50% 50%
Republic of
Congo
Lonrho Agribusiness (BVI) Limited British Virgin 100% -
Islands
Aldeamento Turistico de Macuti SARL Mozambique 80% -
LonAgro Equipamentos Agricolas Angola 51% -
Limitada
Lonrho Logistics (Pty) Limited South Africa 100% -
Fish On Line (Pty) Limited South Africa 51% -
Global Horizons Limited Isle of Man 100% -
Africa Expeditions Limited Kenya Kenya 100% -
Sportsgear Investments (Private) Zimbabwe 100% -
Limited
Burp Track Investments (Private) Zimbabwe 100% -
Limited
Crosshairs Point (Private) Limited Zimbabwe 100% -
* Directly held by the Company.
Inclusion of all the subsidiaries in the Group would be excessive and therefore
only the significant trading entities are shown above.
Although the Group owns less than half of the voting power of Five Forty
Aviation Limited, it is able to govern the financial and operating policies of
that company by virtue of an agreement with the other investors of Five Forty
Aviation Limited. Consequently, the Group consolidates its interest in that
company.
Similarly for e-Kwikbuild Housing Company (Pty) Limited and Grand Karavia SPRL,
the Group has Board control giving it the ability to govern the financial and
operating policies of those companies and hence the Group consolidates its
investment in these companies. In the case of the Grand Karavia SPRL, control
was obtained during the prior year (see note 17). Exchange control procedures
exist in Kenya, Mozambique, Angola, Zimbabwe, Democratic Republic of the Congo
and South Africa which place restrictions on repatriation of cash to the Group.
Notes to the financial statements continued
Events after the reporting date
In January 2012:
- The group raised GBP26.9m before expenses through a placing of 161,280,925
Firm Placing Shares and 108,217,870 Open Offer Shares both at an issue
price of 10 pence per New Ordinary Share each.
- Announced that it had completed a share purchase agreement to acquire 100%
of Lonagro Tanzania Limited for USD 1.4m (GBP0.9m) and had also entered
into a Memorandum of Understanding directly with John Deere to become the
exclusive John Deere dealership in South Sudan.
Assets acquired for John Deer Tanzania included GBP0.1m inventory and GBP0.8m
intangibles relating to franchises.
In February 2012:
- The Group announced that Lonrho Hotels, had entered into a ten year
management agreement for the 450-room Grand Hotel Kinshasa in the capital
of Democratic Republic of the Congo.
In March 2012:
- The Group announced that e-Kwikbuild had won contracts totalling GBP10.2m
for the supply and construction of 116 new schools for remote parts of the
Eastern Cape of South Africa.
In April 2012:
- The Group announced that, under its exclusive franchise agreement with Sir
Stelios Haji-loannou`s easyGroup, the first easyHotel.com branded hotel is
scheduled to open by the end of the year at the historic former Stuttafords
Department Store building in the Johannesburg Central Business District in
South Africa.
4 April 2012
South African sponsor
Java Capital
Date: 04/04/2012 10:42:13 Supplied by www.sharenet.co.za
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