Wrap Text
LAF - Lonrho Plc - Unaudited trading update for the quarter ended 30 September
2009
LONRHO PLC
(Formerly Lonrho Africa Plc)
(Incorporated and registered in England and Wales)
(Registration number 2805337)
(Share code: LAF; ISIN number: GB0002568813)
("Lonrho" or "the Company")
Unaudited Trading Update for the Quarter Ended 30 September 2009
These results (and comparative figures included therein) do not form audited
accounts nor have been extracted from audited accounts. The results disclosed in
this trading update may potentially be subject to adjustments during the audit
in respect of goodwill valuations and other minor items. The comparative figures
used are year on year due to the influence of seasonality within the different
businesses in the group.
"Lonrho delivers an 88% like for like increase in turnover for the fourth
Quarter and a 55% like for like growth in turnover for the full Year"
Lonrho PLC (AIM:LONR) today announces its unaudited fourth quarter results
delivering an 88% increase in turnover for the quarter and a 55% increase in
turnover for the year ended 30th September 2009 on a like for like basis.
Highlights for the quarter include:
- Fourth Quarter turnover from continuing operations was GBP29.6m. This
represents a significant increase of 312% on a reported basis, and an 88%
increase on a like for like basis against the prior year.
- Turnover in the fourth quarter has been driven by growth in all divisions
which has delivered the highest quarterly turnover reported to date, led by
growth of the agricultural division.
- Turnover for the twelve months was GBP90.8m. This is an increase of 55% on
a reported basis against the previous year and 266% increase on a like for
like basis.
- EBITDA in the fourth quarter was a positive GBP9.3m, compared with a loss
of GBP7.0m in the same quarter in the prior year on a reported basis.
- EBITDA for the full year was GBP2.3m with each major operating business
cash positive.
- Unaudited loss before tax for the twelve months ending 30 September 2009 on
a reported basis was a loss of GBP4.5m compared with a loss of GBP38.7m in
the previous year.
- Net assets at the end of the fourth quarter stood at GBP84.0m, up from
GBP82.6m at 30 June 2009.
- The company held cash balances of GBP6.4m at 30 September 2009.
- The market capitalisation of the company at the end of the period was
GBP64m.
- Agreement in principle has been reached to settle the outstanding legal
case with Incat, the previous owners of Luba Freeport, where Incat was
claiming US$8.5m (GBP5.3m) in disputed outstanding invoices, by an agreed
full and final payment of US$1m (GBP0.6m) to be paid in monthly instalments
over a twelve month period subject to Luba Board approval. Lonrho had made
provision for liabilities arising from this claim and as such is expecting
to record an exceptional gain of US$5.5m (GBP3.5m) before legal costs in
the first quarter of the current financial year.
- Currency movements have had a negative impact on the Sterling results.
Sterling has continued to be subject to significant currency fluctuation
against the US Dollar and the South African Rand during the current
quarter. Sterling weakened by 4.7% and 2.9% respectively against the South
African Rand and the US Dollar. The US Dollar weakened by 1.9% against the
South African Rand. Lonrho`s turnover is predominantly reported in US
Dollars.
Operational Highlights
The fourth quarter of 2008/09 has seen continued growth and delivery in the
Group`s core businesses, despite depressed global markets. The Company`s
strategy of operating in five key industrial sectors inextricably linked to the
growth of Africa (Transportation, Infrastructure, Agriculture, Support Services
and Hotels) with operations in seventeen countries across Africa is demonstrably
successful and clearly mitigates both political and commercial risk in that
continent.
Lonrho remains focussed on operating to first world standards across all of its
business units, and employing high calibre, well motivated management teams that
are experts in their divisional industry to operate the day to day operations
within the Group.
The quarterly results show that Lonrho has built a sustainable portfolio of
strong businesses across the continent that are well placed for significant
growth year on year.
Agribusiness
- Rollex SA (51% holding), continues to be the central platform within
Lonrho`s Agriculture business division and like for like fourth quarter
sales were up 65% year on year. Year on Year sales have risen 49%. The
Rollex strategic focus remains the vertical integration of the agriculture
market, taking African produce, processing and packaging it and delivering
it to both local and international markets including Europe, the Middle
East and Scandinavia. Lonrho`s agribusiness is a significant component of
Lonrho`s recently completed 5 year strategic business review. The division
benefits from the continued development of agriculture for local and export
markets in Africa and the growing requirement to deliver production from
farm to consumer across the continent.
- Rollex has successfully increased volumes supplied to two large domestic
supermarkets in South Africa, Pick n Pay and Spar, by 15% quarter on
quarter. Export volumes to Europe continue to be affected by a decreased
demand for fruit and vegetables in the current global economic conditions.
- The Namibian fish processing and packing cold store has seen volumes
increase from 95 tons in both July and August up to 167 tons in September.
Fish exports remain highly related to the volume demand for premium fish
from Europe.
- Rollex Freight and Rollex Cargo continue to grow their businesses
maximising the back load efficiencies for the trucking fleet used for
collecting agricultural produce across southern Africa.
- Building work continues on the John Deere distributorship for Angola (51%
holding) located in Catete, in the Bengo Province. John Deere Angola
exhibited at the Angolan National Agricultural Fair (FILPA) on the 14 July
2009. The Lonrho John Deere stand attracted great interest and significant
sales enquiries and firm orders. Agricultural redevelopment remains a
primary Angolan Government objective. The Government has announced that it
intends to invest US$2 billion in rebuilding Angolan agriculture of which a
reported US$350m of financial incentives is being made available to
indigenous farmers to purchase agricultural equipment.
Infrastructure
- At Luba Freeport (63% holding), the Lonrho oil services terminal in the
Gulf of Guinea, and Lonrho`s largest single asset, Noble Energy has
committed (announced 27th October) to utilise the port as a central
operational base for it`s Gulf of Guinea operations. Noble is expected to
develop into a further major client for Luba, joining the extensive list of
world class tenants already established at the port, including companies
such as ExxonMobil, Schlumberger, Hess, M-I Swaco and SBM.
- Revenue at Luba has increased by 16% on a reported quarterly basis against
the previous year. Full year revenues have increased 9%. The activity for
the current quarter is showing strong signs of growth with new drilling
programs being initiated off shore by several existing Luba tenants and
general oil industry confidence in the Gulf of Guinea is clearly growing.
- Agreement in principle has been reached to settle the outstanding dispute
with Incat, the previous owners of Luba Freeport, where Incat was claiming
US$8.5m (GBP5.3m) in outstanding invoices, with an agreed payment of US$1m
(GBP0.6m) paid in twelve instalments. Lonrho had made provision for
liabilities from this claim and as such is expecting to record an
exceptional gain of US$5.5m (GBP3.5m) before legal costs in the first
quarter of the current financial year.
- There has been a delay with the delivery of the new fixed container scanner
for the port which is now due to arrive and be installed in the first
quarter of 2010. When operational, the scanner will provide the premier
container scanner security service in Equatorial Guinea and be a major
asset for the port.
- Luba has established a debt facility with both CCEI bank and BNGE bank to
fund immediate capital requirements as they arise and to meet the capital
required for developing new infrastructure for tenants as they arrive at
the port. These facilities are secured against the port`s existing assets.
- Kwikbuild Corporation Limited (62% holding) and the South African
subsidiary e-Kwikbuild (52% holding) has reported that, as explained in
the previous quarterly update the elections in South Africa this year led
to a decrease in the number of tenders that were issued as Government
contracts. During the current quarter there has been a four fold increase
in the number of projects released for tender by the South African
Government, compared with the previous two quarters. Kwikbuild has reacted
to the opportunity created by the upsurge in the tender process and has
tendered for significant potential volumes. Historically, the company wins
circa 40% of tender applications that they have submitted. During quarter
four Kwikbuild has secured new orders to the value of GBP1.5m (ZAR 18m).
Hotels
- At the Hotel Cardoso in Mozambique (59% holding + Management Contract),
occupancy continues to exceed expectations with close to 80% during July
and achieving an average room rate of over US$100 per night compared with a
room rate of US$73 per night in July 2008. This was driven by increased
tourist numbers coming from South Africa. The refurbished restaurant with
its new terrace overlooking the bay and the redevelopment of the park
adjacent to the hotel, including the new playground and coffee shop, have
firmly re-established the Hotel Cardoso at the premier end of the Maputo
hotel market.
- Hotel Grand Karavia in Lubumbashi, DRC, (50% holding + Management Contract)
continues with its US$20m refurbishment. The hotel will provide the only
international standard accommodation in Lubumbashi, the centre of the
burgeoning copper belt of the DRC. Development of the hotel has had some
supplier delays in regard to delivery of windows and other items from
Turkey resulting in the opening of the hotel scheduled for December 2009
being likely to be put back until January 2010. The recovery of the copper
sector in Lubumbashi continues and demand for hotel rooms is expected to be
even greater in 2010. The executive management team at the hotel have
joined the company as from the 1st October as planned and are working on
the opening program.
Transport
- Lonrho`s pan African regional aviation company, Fly540, has continued to
expand its network and build on its reputation for reliability, safety and
punctuality. Fly540 remains focused on delivering the first international
standard regional African airline that services two key markets; regional
distribution for intercontinental carriers flying into Africa and the
ability for passengers in Africa to travel north to south and east to west
across the continent.
- The Fly540 Kenya and Tanzania businesses continue to operate profitably as
a result of increased local demand, with 58,008 passengers carried during
this quarter, which is 19% higher than the previous quarter. Revenue this
quarter has grown by 160% compared to the prior year. Advance bookings for
the peak December period have already been sold out at full fare, and
additional peak December flights provided in the quarter also sold out
within a short period of being made available.
- 540 Angola (60% holding) has, during the quarter, continued to work with
the Angola Civil aviation authority to convert the Air Services Licence
(ASL), received in the previous quarter, to an Air Operators Certificate
(AOC) necessary to permit flight operations to commence. It is expected
that flight operations will commence before the end of the calendar year.
Initial destinations for Fly540 Angola will include the major centres of
Cabinda, Luanda, Soyo, Benguela, Huambo, and Malanje and thereafter grow to
fifteen domestic destinations. Operations are centred out of Cabinda, (the
centre of the oil industry) and Luanda. Lonrho plans to initially deploy
two new ATR72 aircraft to Angola to establish the primary routes and
further aircraft as the operation grows. The company is in the process of
concluding the necessary financing arrangements.
- Fly 540 Ghana (60% holding), has during the quarter been awarded an Air
Services Licence by the Ghana Civil Aviation Authority and is rapidly
finalising the process to convert this ASL to an Air Operators Certificate
(AOC). Flight operations are expected to commence early in 2010.
- Fly 540 Tanzania (90% holding), during the fourth quarter started scheduled
and charter flight services. Following on from the successful launch,
Fly540 Tanzania has initially serviced the safari circuit in Tanzania and
during the next quarter the following new routes are scheduled to commence
operations, Kisauni - Dar - Kilimanjaro. Fly 540 Tanzania has had several
high profile charter flights including carrying the president of Tanzania.
- Fly 540 Zimbabwe (a LonZim company), plans to commence operations in the
next quarter. Lonzim Air, a wholly owned subsidiary of Lonzim Plc, has
purchased one ATR 42 turbo prop from the Lonrho Aviation Fleet for US$4.3m
to facilitate passenger operations in Zimbabwe as leasing aircraft into
Zimbabwe in the current environment is difficult. Fly 540 will earn a
license fee of 2.5% of gross turnover and a monthly management fee of
US$35,000 for managerial services to Fly 540 Zimbabwe.
Support Services
- Bytes & Pieces (65% holding), is the market leader in the IT sector in
Mozambique and continues to grow as a result of expanding business to
existing clients as the market benefits from the continued economic growth
of Mozambique. Bytes and Pieces accounts for 80% of the revenue generated
by the support services division. Revenue has grown this quarter by 28%
compared with the same period last year.
- During the current quarter Bytes and Pieces has won a complete IT
outsourcing contract with Riverdale Mining Limited valued at circa US$145k
per year and has also been appointed as their sole IT supplier. Riverdale
Mining Limited has acquired coal exploration tenements in Mozambique with
the combined tenement size now in excess of 250,000 hectares in the Tete-
Moatize area. New products added during the quarter include the Silver Bed
wide area network accelerator.
- CES Zambia (50% holding+ Board Control), started trading in quarter three
and is already on track to achieve US$1m turnover in the first 12 months of
operation.
- Lonrho IT (CES, 50% holding + Board Control), continues to grow its
operations - across Southern Africa. In South Africa the Johannesburg and
Nelspruit offices continue to expand. Plans to take CES into Malawi and the
booming Angolan market where the company can utilise its in-house
Portuguese workforce to gain a competitive advantage are well advanced.
LonZim Plc
- Lonzim Plc, (LonZim) in which Lonrho has a 27.87% shareholding and a
management contract, previously announced that AMB Capital (Ireland)
Limited ("AMB"), acting in concert with Damille Partners (Damille) had
requisitioned an Extraordinary General Meeting ("EGM") of its shareholders
to dispose of the Company`s assets and return cash to shareholders. LonZim
is pleased to announce that at the Extraordinary General Meeting held on 30
July, that all of the proposed hostile resolutions were defeated. In a
strong vote of confidence in the Company, its Directors and its objectives,
a significant majority of shareholders voted to support the existing Board
and maintain the Company`s current investment mandate to develop a business
portfolio in Zimbabwe.
- A market update issued by LonZim on the 15 October 2009 highlighted that
the portfolio of businesses acquired by LonZim over the past two years
reflected (at acquisition cost) that LonZim`s market capitalisation
represented a 62% discount to the cost of the businesses acquired.
- LonZim Plc announced that it had invested US$2.3m for 51% of Panafmed, a
new start up business that imports, wholesales and distributes
pharmaceutical products in Zimbabwe. Panafmed has filled an essential
market need supplying NGO`s, private and public hospitals, clinics and
pharmacies with quality products delivered via a professional, secure and
chilled refrigerated logistics chain.
- Lonzim Plc also announced that two new Directors have been appointed.
- David Armstrong, the Lonrho Plc Finance Director, has also assumed the role
of Finance Director for LonZim Plc. David is an experienced Finance
Director, with extensive knowledge of the African market, gained whilst the
Commercial Director at Diageo Africa.
- Colin Orr Ewing has been appointed as a non executive Director of LonZim
Plc. Colin is highly experienced in the African resources sector and his
career as an investment manager, initially with Shell Pension Fund and
thereafter with a series of fund managers focused on Africa, brings a
strong set of independent skills to the Board
Financing Activities
- Lonrho announced on 11th August that it had issued 35,277,423 ordinary
shares at a price of 7.047p (equating to 4.415% of the Company) to Altima
Global Special Opportunities Master Fund Limited a fund managed by Altima
Partners LLP for cash to meet an existing obligation under the purchase
agreement of its 51% stake in Rollex (SA) Pty Ltd (`Rollex`) announced in
April 2008. The shares issued by the Company Directors are under the
existing authority approved at the Company`s EGM on the 9th December 2008.
Unaudited Loss Before Tax
Interim results reported a profit before tax of GBP0.6m after recognising a
foreign exchange gain (GBP6.1m). The unaudited loss before tax of GBP4.5m for
the full year is in line with management expectations during this start-up and
growth phase of the company, and in particular includes the continued roll out
of Fly 540, the pan African aviation company during the second half of the year.
Current Trading and Future Outlook
Each of the Company`s core businesses continued to perform to expectations
during the fourth quarter. The impact of the global recession on the African
continent is less severe and the majority of economic forecasts expect sub
Saharan growth in GDP to continue in 2009 albeit at a slower rate and to recover
strongly in the oil, natural resource and agriculture focused economies across
the continent in 2010.
The Lonrho strategy has proven to be resilient and the company focuses on the
industry sectors and specific countries which it believes will continue to
provide the strongest growth in Africa.
The fact that the Group has been able to deliver a positive EBITDA for the year
reinforces the growth that has occurred within the Group during the current
year. The first quarter of 2010 is set to see strong progress for the group with
540 Angola commencing flight operations, and the Karavia hotel opening in
January 2010 and Lonrho Agribusiness opening the John Deere operations in Angola
and commencing exports to supermarkets in the Middle East. However trading
conditions remain challenging as a result of the global economic climate and
fluctuations in the currency markets.
The audited full year accounts will be released in the first quarter 2010.
David Lenigas, Lonrho`s Executive Chairman commented:
"I am delighted that the Lonrho management teams have demonstrated significant
progress delivering real growth and strong tangible businesses on the ground.
Turnover for the year has risen to GBP90.8m and each division is operationally
cash positive. Lonrho has produced EBITDA positive results for the year proving
that the Company has delivered on its commitments and has become a significant
African business.
The solid foundations that are now in place across all five divisions, in
seventeen countries, provide the building blocks for further development and
profitable growth this year.
To develop it`s assets and to take advantage of other opportunities as they
arise may require capital. Lonrho has minimal debt and with these impressive
divisional results, each of the divisions is in a good position to raise local
debt to help fund further expansion.
The future African economy is driven by oil, natural resources and agriculture.
Lonrho is ideally placed to participate in and benefit from these specific
market opportunities across the continent."
LONRHO GROUP
GROUP TURNOVER
1 July to 30 September 2009
GBP`000S
TURNOVER on a reported basis
3 Months to 3 Months to Variance Var %
30 Sept 2009 30 Sept 2008
Agri Processing
Rollex 13,825 0 13,825 100%
Transport
Lonrho Aviation 8,939 3,444 5,495 160%
Support Services
Bytes & Pieces 1,632 1,272 360 28%
Other 611 328 282 86%
Infrastructure
Luba Freeport 1,950 1,679 271 16%
E-Kwikbuild 317 0 317 100%
Hotels
Hotel Cardoso 849 465 384 83%
Hotel management services 425 0 425 100%
Other/ Head office 1,035 0 1,035 100%
Continuing operations 29,582 7,188 22,394 312%
Shipping -Discontinued
SAILS 0 4,212 -4,212 -100%
Discontinued operations 0 4,212 -4,212 -100%
Total Turnover 29,582 11,400 18,183 160%
Including Rollex and E-Kwikbuild and removal of Sails from 2008 results
Results and turnover sourced from September 2009 management accounts
LONRHO GROUP
GROUP TURNOVER
1 July to 30 September 2009
GBP`000S
LIKE FOR LIKE TURNOVER
3 Months to 3 Months to Variance Var %
30 Sept 2009 30 Sept 2008
Agri Processing
Rollex 13,825 8,346 5,479 65%
Transport
Lonrho Aviation 8,939 3,444 5,495 160%
Support Services
Bytes & Pieces 1,632 1,272 360 28%
Other 611 328 282 86%
Infrastructure
Luba Freeport 1,950 1,679 271 16%
E-Kwikbuild 317 169 147 87%
Hotels
Hotel Cardoso 849 465 384 83%
Hotel management services 425 0 425 100%
Other/ Head office 1,035 0 1,035 100%
Continuing operations 29,582 15,703 13,879 88%
Shipping -Discontinued
SAILS 0 4,212 -4,212 -100%
Discontinued operations 0 4,212 -4,212 -100%
Total Turnover 29,582 19,915 9,667 49%
Including Rollex and E-Kwikbuild and removal of Sails from 2008 results
Results and turnover sourced from September 2009 management accounts
LONRHO GROUP
GROUP TURNOVER
TWELVE MONTHS to 30 SEPTEMER 2009
GBP`000S
TURNOVER on a reported basis
12 Months to 12 Months to Variance Var %
30 SEPT 2009 30 SEPT 2008
Agri Processing
Rollex 46,529 0 46,529 100%
Transport
Lonro Aviation 20,834 9,304 11,530 124%
Support Services
Bytes & Pieces 6,773 5,161 1,612 31%
Other 1,728 915 813 89%
Infrastructure
Luba Freeport 7,974 7,323 651 9%
E-Kwikbuild 1,276 0 1,276 100%
Hotels
Hotel Cardoso 3,022 1,783 1,239 70%
Hotel management services 425 0 425 100%
Other/ Head office 1,035 0 1,035 100%
Continuing operations 89,595 24,486 65,109 266%
Shipping -Discontinued
SAILS 1,187 18,566 -17,379 -94%
Discontinued operations 1,187 18,566 -17,379 -94%
Total Turnover 90,782 43,052 47,730 111%
Including Rollex and E-Kwikbuild and removal of Sails from 2008 results
Results and turnover sourced from September 2009 management accounts
LONRHO GROUP
GROUP TURNOVER
TWELVE MONTHS to 30 SEPTEMER 2009
GBP`000S
LIKE FOR LIKE TURNOVER
12 Months to 12 Months to Variance Var %
30 SEPT 2009 30 SEPT 2008
Agri Processing
Rollex 46,529 31,132 15,397 49%
Transport
Lonrho Aviation 20,834 9,304 11,530 124%
Support Services
Bytes & Pieces 6,773 5,161 1,612 31%
Other 1,728 915 813 89%
Infrastructure
Luba Freeport 7,974 7,323 651 9%
E-Kwikbuild 1,276 2,241 -965 -43%
Hotels
Hotel Cardoso 3,022 1,783 1,239 70%
Hotel management services 425 0 425 100%
Other/ Head office 1,035 0 1,035 100%
Continuing operations 89,595 57,859 31,737 55%
Shipping -Discontinued
SAILS 1,187 18,566 -17,379 -94%
Discontinued operations 1,187 18,566 -17,379 -94%
Total Turnover 90,782 76,425 14,358 19%
Including Rollex and E-Kwikbuild and removal of Sails from 2008 results
Results and turnover sourced from September 2009 management accounts
Enquiries
Lonrho Plc -
David Lenigas, Executive Chairman +44 (0) 20 7016 5105
Geoffrey White, Chief Executive Officer +44 (0) 20 7016 5105
David Armstrong, Finance Director +44 (0) 20 7016 5105
Pelham PR
Charles Vivian +44 (0) 20 7337 1538
+44 (0) 7977 297903
James MacFarlane +44 (0) 20 7337 1527
+44 (0) 7841 672831
Beaumont Cornish Limited (Nomad)
Rosalind Hill Abrahams +44 (0) 20 7628 3396
Roland Cornish +44 (0) 20 7628 3396
9 November 2009
South African Sponsor
Java Capital (Proprietary) Limited
Date: 10/11/2009 08:36:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
