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LONRHO
18 JUNE 1998
SUMMARY OF INTERIM RESULTS FOR SIX MONTHS TO 31 MARCH 1998
"I AM VERY PLEASED TO REPORT THAT WE HAVE ACHIEVED ALL OUR MAJOR OBJECTIVES,
INCLUDING THE DEMERGER OF LONRHO AFRICA, AND TRANSFORMED LONRHO INTO A MINING
GROUP WITH HIGH QUALITY OPERATIONS, WITH THE POTENTIAL TO EXPAND AND DEVELOP
INTO A WORLD CLASS INTERNATIONAL MINING RESOURCES GROUP. OPERATING PROFITS FROM
OUR MINING BUSINESSES HAVE INCREASED 21 PC CENT TO GBP35 MILLION IN THE FIRST
HALF OF 1998, AND GROUP EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS ARE UP 48
PER CENT TO 13.6 PENCE.
THE SALE OF PRINCESS HOTELS, WHICH WILL BE PUT TO SHAREHOLDERS SHORTLY, WILL
COMPLETE THE UNBUNDLING PROCESS AND RESULT IN LONRHO HAVING A STRONG CAPITAL
STRUCTURE AND REDUCE NET BORROWINGS TO GBP133 MILLION.
THE EXPECTED BENEFITS FROM THE RECENT ACQUISITION OF THE TAVISTOCK COAL MINING
BUSINESS IN SOUTH AFRICA ARE ALREADY IN THE PROCESS OF BEING ACHIEVED. THIS
ACQUISITION REPRESENTS AN EXCITING OPPORTUNITY FOR LONRHO AND CONSIDERABLY
ENHANCES THE VALUE OF THE GROUP'S EXISTING COAL MINING OPERATIONS, LONRHO
PLATINUM HAS HAD AN EXCELLENT FIRST HALF WITH OPERATING PROFITS UP BY 190 PER
CENT.
A MAJOR LANDMARK IN THE FIRST HALF WAS THE BUYBACK OF THE 166.7 MILLION SHARES
OWNED BY ANGLO AMERICAN. FOR THE FIRST TIME IN MANY YEARS LONRHO IS
INDEPENDENT OF ANY LARGE MINORITY SHAREHOLDER AND THE OVERHANG IN THE MARKET
HAS BEEN REMOVED."
NICHOLAS MORRELL
CHIEF EXECUTIVE
- PROFIT BEFORE TAXATION, EXCLUDING EXCEPTIONAL ITEMS, WAS GBP39M COMPARED WITH
GBP38M IN 1997.
- PROFIT BEFORE TAXATION, EXCLUDING EXCEPTIONAL ITEMS FROM CONTINUING
OPERATIONS, WAS GBP37M COMPARED WITH GBP14M IN 1997.
- EARNINGS PER SHARE, EXCLUDING EXCEPTIONAL ITEMS, WERE 13.6 PENCE COMPARED
WITH 9.2 PENCE.
- OPERATING PROFIT FROM MINING ACTIVITIES WAS GBP35M COMPARED WITH GBP29M IN
1997.
- DIVIDEND PER SHARE IS 7.2 PENCE.
PRESS ENQUIRIES
ANTHONY CARDEW
CARDEW & CO
0171 930 0777
CONTENTS
PAGE NO.
HIGHLIGHTS 3
CHIEF EXECUTIVE'S STATEMENT 4
HALF YEAR RESULTS 8
CONSOLIDATED BALANCE SHEET 9
CONSOLIDATED CASH FLOW STATEMENT 10
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 11
RECONCILIATION OF MOVEMENT IN EQUITY INTERESTS 11
NOTES TO HALF YEAR ACCOUNTS 12
HIGHLIGHTS
6 MONTHS TO 6 MONTHS TO YEAR TO
31 MARCH 1998 31 MARCH 1997 30 SEPTEMBER 1997
RESTATED RESTATED
RESULTS
OPERATING PROFIT FROM
CONTINUING OPERATIONS GBP44M GBP34M GBP88M
PROFIT BEFORE TAXATION,
EXCLUDING EXCEPTIONAL
ITEMS GBP39M GBP38M GBP101M
EARNINGS PER SHARE,
EXCLUDING EXCEPTIONAL
ITEMS 13.6P 9.2P 24.4P
DIVIDENDS PER SHARE 7.2P 9.0P 21.0P
BALANCE SHEET
EQUITY INTERESTS GBP433M GBP942M GBP975M
GEARING 76% 25% 22%
NET BORROWINGS GBP445M GBP294M GBP259M
THE 1997 INTERIM DIVIDEND OF 9.0 PENCE PER SHARE INCLUDED A 1.0 PENCE
ENHANCEMENT AS A RESULT OF PAYING A FOREIGN INCOME DIVIDEND. AS A RESULT OF
THE SALE OF LONRHO SUGAR AND THE DEMERGER OF LONRHO AFRICA, IT IS NOT POSSIBLE
TO PAY AN ENHANCED FOREIGN INCOME DIVIDEND IN 1998. LONRHO AFRICA HAS DECLARED
AN INTERIM DIVIDEND OF 1.0 PENCE PER SHARE, WHICH SHOULD BE ADDED TO THE 1998
LONRHO INTERIM DIVIDEND OF 7.2 PENCE PER SHARE, WHEN COMPARING THE 1998 INTERIM
DIVIDEND WITH 1997.
THE PROPOSED SALE OF PRINCESS HOTELS, WHEN COMPLETE. WOULD RESULT IN NET
BORROWINGS BEING REDUCED TO GBP133 MILLION AND GEARING TO 23 PER CENT.
EQUITY INTERESTS, GEARING AND NET BORROWINGS AT 31 MARCH 1998 ARE SHOWN AFTER
ADJUSTING FOR THE EFFECTS OF THE ACQUISITION, BY DUIKER MINING, OF TAVISTOCK
COLLIERIES, THE SHARE BUY BACK ON 16 APRIL 1998 AND THE DEMERGER OF LONRHO
AFRICA ON 7 MAY 1998 ("POST BALANCE SHEET EVENTS").
EXCEPTIONAL ITEMS INCLUDE A PROVISION OF GBP69 MILLION AGAINST THE GROUP'S
INVESTMENT IN HONDO OIL & GAS.
GEARING IS CALCULATED ON THE EQUITY INTERESTS AND MINORITY INTERESTS OF THE
GROUP.
CHIEF EXECUTIVES STATEMENT
DEAR SHAREHOLDER.
I AM VERY PLEASED TO REPORT THAT WE HAVE ACHIEVED ALL OUR MAJOR OBJECTIVES,
INCLUDING THE DEMERGER OF LONRHO AFRICA, AND TRANSFORMED LONRHO INTO A MINING
GROUP WITH HIGH QUALITY OPERATIONS, WITH THE POTENTIAL TO EXPAND AND DEVELOP
INTO A WORLD CLASS INTERNATIONAL MINING RESOURCES GROUP. OPERATING PROFITS FROM
OUR MINING BUSINESSES HAVE INCREASED 21 PER CENT TO GBP35 MILLION IN THE FIRST
HALF OF 1998, AND GROUP EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS ARE UP 48
PER CENT TO 13.6 PENCE.
THE SALE OF PRINCESS HOTELS, WHICH WILL BE PUT TO SHAREHOLDERS SHORTLY, WILL
COMPLETE THE UNBUNDLING PROCESS AND RESULT IN LONRHO HAVING A STRONG CAPITAL
STRUCTURE AND REDUCE NET BORROWINGS TO GBP133 MILLION.
THE EXPECTED BENEFITS FROM THE RECENT ACQUISITION OF THE TAVISTOCK COAL MINING
BUSINESS IN SOUTH AFRICA ARE ALREADY IN THE PROCESS OF BEING ACHIEVED. THIS
ACQUISITION REPRESENTS AN EXCITING OPPORTUNITY FOR LONRHO AND CONSIDERABLY
ENHANCES THE VALUE OF THE GROUP'S EXISTING COAL MINING OPERATIONS. LONRHO
PLATINUM HAS HAD AN EXCELLENT FIRST HALF WITH OPERATING PROFITS UP BY 190 PER
CENT.
A MAJOR LANDMARK IN THE FIRST HALF WAS THE BUYBACK OF THE 166.7 MILLION SHARES
OWNED BY ANGLO AMERICAN. FOR THE FIRST TIME IN MANY YEARS LONRHO IS INDEPENDENT
OF ANY LARGE MINORITY SHAREHOLDER AND THE OVERHANG IN THE MARKET HAS BEEN
REMOVED.
RESULTS
PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS FOR THE HALF YEAR IS GBP39 MILLION
COMPARED WITH GBP38 MILLION IN 1997 AND EARNINGS PER SHARE BEFORE EXCEPTIONAL
ITEMS ARE 13.6 PENCE COMPARED WITH 9.2 PENCE.
THE GROUP'S MINING BUSINESSES PERFORMED PARTICULARLY WELL OVERALL, WITH
OPERATING PROFITS UP BY 21 PER CENT TO GBP35 MILLION, ALTHOUGH DUIKER'S RESULTS
WERE DOWN. PRINCESS HOTELS HAS ALSO HAD A GOOD FIRST HALF REPORTING A 30 PER
CENT INCREASE IN OPERATING PROFITS.
THE CONTRIBUTION TO OPERATING PROFITS FROM DISCONTINUED ACTIVITIES WAS DOWN BY
GBP24 MILLION AND CENTRAL INTEREST COSTS WERE ELIMINATED AS A RESULT OF THE
SALE OF VARIOUS SUBSIDIARIES.
LONRHO AFRICA REPORTED LOWER OPERATING RESULTS AS A RESULT OF ECONOMIC AND
CLIMATIC CONDITIONS IN AFRICA.
WE HAVE HAD DISAPPOINTING RESULTS FROM HONDO OIL & GAS AND HAVE FOLLOWED THE
PRUDENT COURSE OF FULLY PROVIDING AGAINST OUR INVESTMENT AS AN EXCEPTIONAL ITEM
MINING
LONRHO PLATINUM ACHIEVED AN OPERATING PROFIT OF GBP21 MILLION FOR THE FIRST
HALF WHICH EXCEEDED THEIR HALF YEAR RESULT FOR 1997 BY GBP14 MILLION.
TOTAL TONNES MILLED FOR THE FIRST HALF OF THE YEAR WAS DOWN BY 0.4 PER CENT
AGAINST THE PREVIOUS YEAR, BUT ORE FROM UNDERGROUND OPERATIONS WAS UP BY
282,500 TONNES, THEREBY IMPROVING THE YIELD BY 0.14 GRAMMES PER TONNE. THE
IMPROVED YIELD CONTRIBUTED TO THE PRODUCTION OF 568,000 OUNCES OF PLATINUM
GROUP METALS REPRESENTING A 17,000 OUNCE INCREASE ON THE FIRST HALF OF LAST
YEAR. THE INCREASE IN UNDERGROUND ORE PRODUCTION, AS WELL AS THE HIGH YIELD,
HELPED ACHIEVE A BELOW INFLATION RATE INCREASE OF 4 PER CENT IN THE COST PER
KILOGRAMME OF NOBLE METALS PRODUCED.
PLATINUM GROUP METAL PRICES CONTINUE TO REFLECT UNCERTAINTIES SURROUNDING
RUSSIAN STOCK LEVELS AND DELIVERY PATTERNS. THE OUTLOOK FOR PLATINUM GROUP
METAL PRICES IS POSITIVE AND THE CURRENT PRICE MIX OF THE METALS PARTICULARLY
FAVOURS LONRHO PLATINUM. THE MAJOR PORTION OF CAPITAL EXPENDITURE CONTINUES TO
BE ON UNDERGROUND DEVELOPMENT TO ENHANCE OPERATIONAL EFFICIENCY.
DUIKER MINING REPORTED A REDUCTION IN OPERATING PROFITS TO GBP5 MILLION IN THE
FIRST HALF. LOWER SALES AND EXPORT PRICES COMBINED WITH A HIGHER UNIT COST OF
PRODUCTION, ARISING FROM LOWER PRODUCTION VOLUMES, ERODED THE AVERAGE PROFIT
MARGIN BY 12 PER CENT IN SA RAND TERMS. BITUMINOUS COAL SALES WERE REDUCED IN
THE HALF YEAR, MAINLY DUE TO THE COMPLETION OF A SHORT TERM CONTRACT FOR THE
SALE OF UNBENEFICIATED PRODUCT TO A MAJOR INLAND CUSTOMER. THIS RESULTED IN A
CHANGE IN THE PRODUCT MIX AND A CONSEQUENT INCREASE IN THE AVERAGE INLAND PRICE
REALISED.
DUIKER MINING CONTINUED TO UTILISE ITS RICHARDS BAY COAL TERMINAL EXPORT
ENTITLEMENT IN FULL, BUT WAS UNABLE TO LEASE ADDITIONAL CAPACITY FROM OTHER
SHAREHOLDERS, AS WAS PREVIOUSLY THE PRACTICE. THE OVERSUPPLY SITUATION IN
EXPORT MARKETS CONTINUED AND THIS RESULTED IN A REDUCTION OF 7 PER CENT IN
EXPORT PRICES REALISED FOR THE PERIOD UNDER REVIEW.
SHIPPING DELAYS AT THE TERMINAL DURING DECEMBER 1997 RESULTED IN ABNORMALLY
HIGH DEMURRAGE AND SHIP LOADING PENALTY CHARGES, WHICH CONTRIBUTED TO AN
INCREASE IN DISTRIBUTION COSTS. PRODUCTION HAS ALSO BEEN CURTAILED AT GROUP
MINES WITH AN UNFAVOURABLE EFFECT ON UNIT COSTS. COAL PRICES HAVE BEEN
RELATIVELY WEAK DURING THE PERIOD.
THE INTEGRATION OF THE TAVISTOCK OPERATIONS IS PROCEEDING SMOOTHLY AND EXPECTED
BENEFITS ARE ALREADY ACCRUING. PRODUCTION AT TWO OF THE TAVISTOCK MINES HAS
BEEN RATIONALISED WITH THAT OF THE DUIKER MINES, RESULTING IN A SUBSTANTIAL
IMPROVEMENT IN YIELD. THE ENLARGED EXPORT ENTITLEMENT OF THE DUIKER GROUP WILL
BE FULLY UTILISED BY THE END OF 1998.
LONRHO'S BENEFICIAL INTEREST IN DUIKER MINING HAS INCREASED FROM 61 PER CENT TO
68 PER CENT AS A RESULT OF THE RIGHTS ISSUE TO FUND THE ACQUISITION OF
TAVISTOCK COLLIERIES.
WITH THE NEW SIGUIRI MINE IN GUINEA NOW COMMISSIONED AND THE BIBIANI MINE IN
GHANA NEAR FULL COMMISSIONING, THE ASHANTI GROUP ACHIEVED RECORD GOLD
PRODUCTION OF 331,414 OUNCES IN THE QUARTER ENDED 31 MARCH 1998, WHICH WAS 14
PER CENT HIGHER THAN IN THE CORRESPONDING PERIOD IN 1997. CASH OPERATING COSTS
FOR THE GROUP, INCLUDING THE INITIAL PRODUCTION FROM BIBIANI AND SIGUIRI WERE
US$237 PER OUNCE FOR THE QUARTER, 9 PER CENT LOWER THAN THE FIRST QUARTER 1997
COSTS OF US$261 PER OUNCE.
THE REALISED GOLD PRICE REDUCED FROM US$450 PER OUNCE TO US$400 PER OUNCE. THE
GROUP'S SHARE OF ASHANTI'S OPERATING PROFIT DECREASED FROM GBP9 MILLION TO GBP8
MILLION.
EXCELLENT PERFORMANCES WERE RECORDED BY THE FREDA-REBECCA AND AYANFURI MINES,
WHICH TOGETHER CONTRIBUTED 12 PER CENT OF ASHANTHI'S PRODUCTION AT AN AVERAGE
CASH OPERATING COST OF US$182 PER OUNCE.
ALL OF THE ASHANTI GROUP'S OPERATIONS ATTAINED THEIR TARGETS AND THE GROUP IS
WELL POSITIONED TO ACHIEVE ITS GOAL OF 1.385 MILLION OUNCES IN 1998.
HONDO OIL & GAS
HONDO OIL AND GAS'S ("HONDO") INTEREST IN THE OPON GAS FIELD IN COLOMBIA HAS
SEEN SOME DISCOURAGING DEVELOPMENTS IN RECENT MONTHS. THE LATEST WELL, OPON 14,
HAS BEEN UNSUCCESSFUL AND DID NOT DISCOVER SIGNIFICANT AMOUNTS OF HYDROCARBON.
IN ADDITION, GREATER THAN EXPECTED DECREASES IN THE FLOWING PRESSURES OF THE
TWO PRODUCING WELLS HAVE OCCURRED. THE PARTIES TO THE OPON CONTRACT HAVE
COMMENCED A NEW ANALYSIS OF THE OPON STRUCTURE, RESERVOIR AND RESERVES, BUT THE
DIRECTORS HAVE DECIDED TO MAKE A FULL PROVISION AGAINST THE GROUP'S INVESTMENT
OF GBP69 MILLION IN HONDO. THE REQUIREMENT FOR SUCH A PROVISION WILL CONTINUE
TO BE REVIEWED IN THE LIGHT OF FURTHER INFORMATION AS IT BECOMES AVAILABLE.
PRINCESS HOTELS
IN VIEW OF THE VOLATILE MARKET FOR HOTELS, PARTICULARLY IN THE UNITED STATES,
THE RE-MARKETING OF THE PRINCESS HOTELS FOLLOWING THE BREAKDOWN OF THE PREVIOUS
NEGOTIATIONS HAS TAKEN THE FORM OF A FULL AUCTION PROCESS MANAGED BY DEUTSCHE
MORGAN GRENFELL, THE COMPANY'S ADVISERS. THIS PROCESS IS NOW COMPLETE AND
AGREEMENT HAS BEEN REACHED, SUBJECT TO SHAREHOLDERS' CONSENT, TO SELL PRINCESS
HOTELS TO CANADIAN PACIFIC HOTELS & RESORTS INC. FOR A TOTAL GROSS
CONSIDERATION OF GBP332 MILLION, INCLUDING GBP44 MILLION OF PRINCESS HOTELS
DEBT BEING ASSUMED BY THE PURCHASER. THE NET CONSIDERATION RECEIVABLE BY LONRHO
FROM THE SALE IS GBP242 MILLION AFTER EXPENSES, TAXATION AND THE REPAYMENT OF
PRINCESS HOTELS' DEBT.
DESPITE THE DISTRACTIONS OF THE SALE PROCESS THE HOTELS ARE TRADING WELL.
OPERATING PROFIT AT GBP13 MILLION IS UP BY GBP3 MILLION ON 1997. PROFITS IN
MEXICO WERE AFFECTED BY A HURRICANE IN EARLY OCTOBER, ALTHOUGH THE REDUCTION
WAS PARTIALLY OFFSET BY AN INSURANCE CLAIM. ALL OTHER HOTELS REPORTED IMPROVED
PROFITS AND OVERALL AVERAGE ROOM RATES HAVE IMPROVED BY 8 PER CENT.
LONRHO AFRICA
IN ACCORDANCE WITH CURRENT ACCOUNTING STANDARDS, LONRHO AFRICA'S RESULTS HAVE
BEEN CONSOLIDATED AS A DISCONTINUED ACTIVITY. FULL DETAILS OF LONRHO AFRICA'S
PERFORMANCE FOR THE SIX MONTHS TO 31 MARCH 1998 ARE INCLUDED IN ITS INTERIM
STATEMENT PUBLISHED ON 11 JUNE 1998.
OTHER GENERAL TRADE
CRAMLINGTON TEXTILES WAS SOLD FOR A NOMINAL CONSIDERATION IN OCTOBER 1997 WHICH
MARKS, FOLLOWING THE SALE OF THE ASSOCIATED RETAILING ACTIVITIES IN 1995 AND
1996, THE EXIT OF THE GROUP FROM THE HIGHLY COMPETITIVE UNITED KINGDOM
HOUSEHOLD TEXTILE MARKET. THE DUTTON FORSHAW GROUP WAS SOLD IN DECEMBER 1997
FOR A TOTAL CONSIDERATION OF GBP113 MILLION, INCLUDING THE ASSUMPTION OF DEBT.
BALANCE SHEET
AFTER TAKING ACCOUNT OF THE DEMERGER OF LONRHO AFRICA, THE BUY BACK OF SHARES
ORIGINALLY HELD BY THE ANGLO AMERICAN GROUP, WHICH HAVE REDUCED RESERVES BY
GBP415 MILLION, AND THE ACQUISITION OF THE TAVISTOCK GROUP, EQUITY INTERESTS
ARE GBP433 MILLION. THE STRENGTH OF STERLING, PARTICULARLY AGAINST THE US
DOLLAR AND SOUTH AFRICAN RAND, ALSO ACCOUNTED FOR A GBP67 MILLION DECREASE IN
RESERVES. THE PROVISION AGAINST THE GROUP'S INVESTMENT IN HONDO ACCOUNTED FOR A
FURTHER GBP69 MILLION OF THE REDUCTION.
PROFORMA NET BORROWINGS, TAKING INTO ACCOUNT THE ABOVE TRANSACTIONS, AMOUNTED
TO GBP445 MILLION COMPARED TO GBP259 MILLION AT 30 SEPTEMBER 1997. THE PROPOSED
SALE OF PRINCESS HOTELS, WHEN COMPLETE, WOULD RESULT IN NET BORROWINGS BEING
REDUCED TO GBP133 MILLION AND GEARING TO 23 PER CENT.
CAPITAL EXPENDITURE AT THE MINES AMOUNTED TO GBP14 MILLION IN THE FIRST HALF
COMPARED WITH GBP18 MILLION IN 1997.
DIVIDEND AND OUTLOOK
THE BOARD HAS DECIDED TO DECLARE AN INTERIM DIVIDEND OF 7.2 PENCE PER SHARE,
WHICH IS EQUIVALENT TO THE INTERIM DIVIDEND IN 1997 AFTER ADJUSTMENT FOR THE
REDUCTION IN THE SIZE OF THE GROUP AS A RESULT OF THE DEMERGER OF LONRHO
AFRICA, AND, AS A RESULT OF THE DISPOSAL OF LONRHO SUGAR CORPORATION AND THE
DEMERGER OF LONRHO AFRICA, THE INABILITY TO PAY A FOREIGN INCOME DIVIDEND. THE
INTERIM DIVIDEND WILL BE PAYABLE ON 6 APRIL 1999, IN ORDER TO TAKE ADVANTAGE OF
THE CHANGE IN LEGISLATION ABOLISHING ADVANCE CORPORATION TAX, RATHER THAN ON 1
OCTOBER 1998. THE BOARD RECOGNISES THAT THE DELAY IN PAYING THE INTERIM
DIVIDEND MIGHT INCONVENIENCE CERTAIN SHAREHOLDERS, AND INTENDS TO RECOMMEND AN
INCREASE IN THE AMOUNT OF THE FINAL DIVIDEND BY THE AMOUNT OF THE NET TAX
SAVING ACHIEVED. IT IS ANTICIPATED THAT THE FINAL DIVIDEND WILL ALSO BE PAYABLE
ON 6 APRIL 1999.
THE BOARD BELIEVE THAT AT CURRENT EXCHANGE RATES AND COMMODITY PRICES, TRADING
FROM OUR MINING OPERATIONS WILL BE AHEAD OF LAST YEAR.
YOURS SINCERELY,
NICHOLAS MORRELL
18 JUNE 1998
HALF YEAR RESULTS
THE UNAUDITED RESULTS OF THE LONRHO GROUP OF COMPANIES IN RESPECT OF THE SIX
MONTHS ENDED 31 MARCH 1998 AM AS FOLLOWS:
1998 1998 1998 1997 1997 1997
BEFORE BEFORE
EXCEPTIONAL EXCEPTIONAL EXCEPTIONAL EXCEPTIONAL
ITEMS ITEMS TOTAL ITEMS ITEMS TOTAL
RESTATED RESTATED
GBPM GBPM GBPM GBPM GBPM GBPM
TURNOVER
(INDCLUDING
ASSOCIATES)
- CONTINUING
OPERATIONS 378 378 364 364
- DISCONTINUED
OPERATIONS 327 327 647 647
705 705 1,011 1,011
OPERATING PROFIT
- CONTINUING
OPERATIONS 44 44 34 34
- DISCONTINUED
OPERATIONS 15 (2) 13 39 39
59 (2) 57 73 73
PROFIT ON DISPOSAL
OF FIXED ASSETS
- DISCONTINUED
OPERATIONS 2 2
PROFIT/(LOSS) ON
SALE OR TERMINATION,
OF OPERATIONS
- CONTINUING
OPERATIONS (70) (70) (15) (15)
- DISCONTINUED
OPERATIONS 5 5 (3) (3)
NET INTEREST
PAYABLE (20) (20) (35) (35)
PROFIT/(LOSS)
BEFORE TAXATION 39 (67) (28) 38 (16) 22
TAXATION (5) (5) (5) (5)
PROFIT/(LOSS)
AFTER TAXATION 34 (67) (33) 33 (16) 17
MINORITY INTERESTS (7) (7) (15) (15)
PROFIT/(LOSS)
FOR THE SIX MONTHS 27 (67) (40) 18 (16) 2
EARNINGS PER SHARE 13.6P (33.7)P (20.1)P 9.2P (8.2)P 1.0P
DISCONTINUED ACTIVITIES INCLUDE THE RESULTS OF CRAMLINGTON TEXTILES, DUTTON
FORSHAW, HARRISON & SONS, LONRHO CONTINENTAL, LONRHO SUGAR AND METROPOLE
HOTELS, WHICH HAVE BEEN SOLD AND LONRHO AFRICA WHICH WAS DEMERGED.
THE MARCH 1997 PROFIT FIGURES HAVE BEEN RESTATED IN ACCORDANCE WITH FINANCIAL
REPORTING STATEMENT 9, WHICH REQUIRES THAT OPERATING PROFIT AND NET INTEREST
PAYABLE OF ASSOCIATES BE SHOWN SEPARATELY.
CONSOLIDATED BALANCE SHEET
THE UNAUDITED BALANCE SHEET OF THE LONRHO GROUP OF COMPANIES AS AT 31 MARCH
1998, AS ADJUSTED FOR THE EFFECTS OF THE POST BALANCE SHEET EVENTS, IS AS
FOLLOWS:
31 MARCH 30 SEPTEMBER 31 MARCH
1998 1997 1997
GBPM GBPM GBPM
FIXED ASSETS
TANGIBLE ASSETS 908 1,164 1,097
ASSOCIATES 116 138 141
OTHER INVESTMENTS 82 77 70
1,106 1,379 1,308
CURRENT ASSETS
STOCKS 45 238 279
DEBTORS 110 262 313
INVESTMENTS 1 1 2
CASH FROM SALE OF
LONRHO SUGAR CORPORATION 220
CASH AT BANK AND IN HAND 52 260 123
208 761 937
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR:
- CURRENT BANK LOANS
AND OVERDRAFTS (83) (275) (256)
- OTHER CREDITORS (208) (394) (431)
NET CURRENT ASSETS (83) 92 250
TOTAL ASSETS LESS
CURRENT LIABILITIES 1,023 1,471 1,558
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR:
- LOAN FROM MINORITY SHAREHOLDER (4) (7) (11)
- OTHER LOANS (410) (237) (370)
- OTHER CREDITORS (24) (15) (20)
PROVISIONS FOR
LIABILITIES AND CHARGES (3) (27) (4)
582 1,185 1,153
CAPITAL AND RESERVES
CALLED UP SHARE CAPITAL 157 198 196
RESERVES 276 777 746
EQUITY INTERESTS 433 975 942
MINORITY EQUITY INTERESTS 149 210 211
582 1,185 1,153
THE ACTUAL LONRHO GROUP BALANCE SHEET INCLUDING LONRHO AFRICA AS A SUBSIDIARY
AT 31 MARCH 1998 AND EXCLUDING THE ACQUISITION OF TAVISTOCK COLLIERIES AND THE
SHARE BUY BACK, IS SHOWN IN NOTE 13 ON PAGE 18.
CONSOLIDATED CASH FLOW STATEMENT
THE UNAUDITED CASH FLOW STATEMENT OF THE LONRHO GROUP OF COMPANIES FOR THE SIX
MONTHS ENDED 31 MARCH 1998 IS AS FOLLOWS:
1998 1997
GBPM GBPM
NET CASH INFLOW FROM OPERATING ACTIVITIES
- CONTINUING OPERATIONS 40 19
- DISCONTINUED OPERATIONS 5 57
45 76
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (22) (38)
TAXATION (13) (14)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (19) (49)
ACQUISITIONS AND DISPOSALS 25 299
DIVIDENDS PAID (15) (15)
CASH FLOW BEFORE FINANCING
- CONTINUING ACTIVITIES 18 336
- DISCONTINUED ACTIVITIES (17) (77)
1 259
FINANCING (23) (319)
DECREASE IN NET CASH (22) (60)
THE ABOVE STATEMENT DOES NOT INCLUDE THE EFFECTS OF THE POST BALANCE SHEET
EVENTS.
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
6 MONTHS TO 6 MONTHS TO
31 MARCH L998 31 MARCH 1997
GBPM GBPM
(LOSS)/PROFIT FOR THE PERIOD (40) 2
DILUTION OF THE GROUP'S INTEREST IN ASHANTI 22
EXCHANGE ADJUSTMENTS (67) (30)
TOTAL RECOGNISED LOSSES IN THE SIX MONTHS (107) (6)
RECONCILIATION OF MOVEMENT IN EQUITY INTERESTS
6 MONTHS TO 6 MONTHS TO
31 MARCH 1998 31 MARCH 1997
GBPM GBPM
EQUITY INTERESTS AT 1 OCTOBER 975 799
RECOGNISED LOSSES RELATING TO THE PERIOD (107) (6)
DIVIDEND (12) (18)
SHARES ISSUED 2 6
(SURPLUS)/GOODWILL REALISED
ON DISPOSAL OF SUBSIDIARIES (2) 71
GOODWILL ON ACQUISITION OF SUBSIDIARIES (2) (5)
GOODWILL ON ACQUISITION WRITTEN OFF BY ASHANTI(18) (36)
OTHER ITEMS (6) (4)
EQUITY INTERESTS AT 31 MARCH 830 807
POST BALANCE SHEET EVENTS:
- DEMERGER OF LONRHO AFRICA (220)
- SHARE BUY BACK (195)
- SURPLUS ON ACQUISITION
OF TAVISTOCK BY DUIKER 18
- PROFIT ON SALE OF LONRHO SUGAR CORPORATION 129
- GOODWILL REALISED ON
SALE OF LONRHO SUGAR CORPORATION 6
PROFORMA EQUITY INTERESTS AT 31 MARCH 433 942
NOTES TO HALF YEAR ACCOUNTS
1. PROFIT FOR THE PERIOD
1998 1997
CONTINUING DISCONTINUED
CONTINUING DISCONTINUED OPERATIONS OPERATIONS TOTAL
OPERATIONS OPERATIONS TOTAL RESTATED RESTATED RESTATED
GBPM GBPM GBPM GBPM GBPM GBPM
TURNOVER
GROUP 321 327 648 309 631 940
ASSOCIATES 57 - 57 55 16 71
378 327 705 364 647 1,011
GROUP 36 14 50 24 38 62
ASSOCIATES 8 1 9 10 1 11
OPERATING
PROFIT 44 15 59 34 39 73
NET INTEREST
PAYABLE
- GROUP (6) (13) (19) (17) (15) (32)
- ASSOCIATES (1) - (1) (3) - (3)
PROFIT BEFORE
EXCEPTIONAL
ITEM 37 2 39 14 24 38
EXCEPTIONAL
ITEMS (70) 3 (67) (15) (1) (16)
PROFIT/(LOSS)
BEFORE TAXATION (33) 5 (28) (1) 23 22
TAXATION (4) (1) (5) (2) (3) (5)
PROFIT/(LOSS)
AFTER TAXATION (37) 4 (33) (3) 20 17
MINORITY
INTERESTS (7) - (7) (7) (8) (15)
PROFIT/(LOSS)
FOR THE PERIOD (44) 4 (40) (10) 12 2
EARNINGS PER
SHARE EXCLUDING
EXCEPTIONAL
ITEMS 13,1P 0.5P 13.6P 2.6P 6.6P 9.2P
EARNINGS PER
SHARE BASED ON
PROFIT/(LOSS)
FOR THE PERIOD (22.1)P 2.0P (20.1)P (5.1)P 6.1P 1.0P
2. TURNOVER BY ACTIVITY AND GEOGRAPHICAL AREA
AN ANALYSIS BY ACTIVITY AND GEOGRAPHICAL AREA OF TURNOVER IS GIVEN BELOW:
6 MONTHS TO 31 MARCH 1998 6 MONTHS TO 31 MARCH 1997
GROUP ASSOCIATES TOTAL GROUP ASSOCIATES TOTAL
GBPM GBPM GBPM RESTATED RESTATED RESTATED
GBPM GBPM GBPM
MINING AND
REFINING 172 54 226 164 52 216
PRINCESS HOTELS 93 3 96 93 3 96
GENERAL TRADE 56 - 56 52 - 52
DISCONTINUED
OPERATIONS 327 - 327 631 16 647
648 57 705 940 71 1,011
SOUTH AFRICA 155 - 155 145 - 145
THE AMERICAS 93 3 96 93 3 96
ZIMBABWE
AND GHANA 17 54 71 19 52 71
EUROPE 56 - 56 52 - 52
DISCONTINUED
OPERATIONS 327 - 327 631 16 647
648 57 705 940 71 1,011
3. OPERATING PROFIT BY ACTIVITY AND GEOGRAPHICAL AREA
AN ANALYSIS BY ACTIVITY AND GEOGRAPHICAL AREA OF OPERATING PROFIT IS GIVEN
BELOW:
6 MONTHS TO 31 MARCH 1998 6 MONTHS TO 31 MARCH 1997
GROUP ASSOCIATES TOTAL GROUP ASSOCIATES TOTAL
RESTATED RESTATED RESTATED
GBPM GBPM GBPM GBPM GBPM GBPM
MINING AND
REFINING 27 8 35 20 9 29
PRINCESS HOTELS 13 - 13 9 1 10
GENERAL TRADE - - - - - -
CENTRAL COSTS (4) - (4) (5) - (5)
36 8 44 24 10 34
DISCONTINUED
OPERATIONS 14 1 15 38 1 39
50 9 59 62 11 73
EXCEPTIONAL
ITEMS (67) (16)
NET INTEREST
PAYABLE (20) (35)
(LOSS)/PROFIT
BEFORE TAXATION (28) 22
6 MONTHS TO 31 MARCH 1998 6 MONTHS TO 31 MARCH 1997
GROUP ASSOCIATES TOTAL GROUP ASSOCIATES TOTAL
RESTATED RESTATED RESTATED
GBPM GBPM GBPM GBPM GBPM GBPM
SOUTH AFFICA 26 - 26 20 - 20
THE AMERICAS 13 - 13 9 1 10
ZIMBABWE
AND GHANA 1 8 9 - 9 9
EUROPE - - - - - -
CENTRAL COSTS (4) - (4) (5) - (5)
36 8 44 24 10 34
DISCONTINUED
OPERATIONS 14 1 15 38 1 39
50 9 59 62 11 73
EXCEPTIONAL
ITEMS (67) (16)
NET INTEREST
PAYABLE (20) (35)
(LOSS)/PROFIT
BEFORE TAXATION (28) 22
4. PROFIT BEFORE TAXATION ACTIVITY AND GEOGRAPHICAL AREA.
AN ANALYSIS BY ACTIVITY AND GEOGRAPHICAL AREA OF PROFIT BEFORE TAXATION IS
GIVEN BELOW:
6 MONTHS TO 6 MONTHS TO
31 MARCH 1998 31 MARCH 1997
GBPM GBPM
MINING AND REFINING 27 20
PRINCESS HOTELS 10 6
GENERAL TRADE - -
CENTRAL FINANCE AND COSTS - (12)
37 14
DISCONTINUED OPERATIONS 2 24
EXCEPTIONAL ITEMS (67) (16)
(LOSS)/PROFIT BEFORE TAXATION (28) 22
SOUTH AFRICA 20 15
THE AMERICAS 10 6
ZIMBABWE AND GHANA 7 5
EUROPE - -
CENTRAL FINANCE AND COSTS - (12)
37 14
DISCONTINUED OPERATIONS 2 24
EXCEPTIONAL ITEMS (67) (16)
(LOSS)/PROFIT BEFORE TAXATION (28) 22
5. EXCEPTIONAL ITEMS
1998 1997
CONTINUING DISCONTINUED CONTINUING DISCONTINUED
OPERATIONS OPERATIONS TOTAL OPERATIONS OPERATIONS TOTAL
GBPM GBPM GBPM GBPM GBPM GBPM
REORGANISATION
AND
RATIONALISATION
COSTS (2) (2)
DISPOSAL OF
FIXED ASSETS 2 2
SALE OR
TERMINATION OF
OPERATIONS
- PROFIT ON
THE SALE OF
DUTTON FORSHAW 8 8
- PROVISION
AGAINST
INVESTMENT
IN HONDO (69) (69)
- PROVISION
AGAINST
AMANTAYTAU
GOLD MINE (15) (15)
- OTHER (1) (3) (4) - (3) (3)
TAXATION (70) (3) (67) (15) (1) (16)
6. BECAUSE OF THE INCIDENCE OF ACCELERATED TAX ALLOWANCES, THE TAX CHARGE
PROVIDED AT THE HALF YEAR CAN ONLY BE ESTIMATED.
7. EARNINGS PER SHARE
EARNINGS PER SHARE HAS BEEN CALCULATED ON THE PROFIT ATTRIBUTABLE TO
SHAREHOLDERS OF GBP27 MILLION (1997 - GBP18 MILLION) BEFORE EXCEPTIONAL ITEMS
AND A LOSS OF GBP40 MILLION (1997 - PROFIT OF GBP2 MILLION) AFTER EXCEPTIONAL
ITEMS USING A WEIGHTED AVERAGE OF 198,671,280 (1997 RESTATED - 195,788,643)
ORDINARY SHARES.
8. DIVIDEND
THE BOARD HAS DECLARED AN INTERIM DIVIDEND OF 7.2 PENCE (1997 RESTATED - 9.0
PENCE) PER SHARE.
THE TOTAL DISTRIBUTION IS EXPECTED TO AMOUNT TO GBP12 MILLION (1997 - GBP18
MILLION).
THE 1997 DIVIDEND PER SHARE HAS BEEN RESTATED TO REFLECT THE SHARE
CONSOLIDATION IN APRIL 1998.
THE INTERIM DIVIDEND WILL BE PAID ON 6 APRIL 1999.
CONSOLIDATED BALANCE SHEET
9. NET BORROWINGS
NET BORROWINGS, AS ADJUSTED FOR THE POST BALANCE SHEET EVENTS, CAN BE ANALYSED
BY GEOGRAPHICAL AREA AS FOLLOWS:
31 MARCH 1998 30 SEPTEMBER 1997
GBPM GBPM
SOUTH AFRICA 115 42
THE AMERICAS 65 76
ZIMBABWE 11 8
EUROPE (6) (7)
UNITED KINGDOM CENTRAL FINANCE 260 (45)
445 74
DISCONTINUED OPERATIONS - 185
445 259
CONSOLIDATED CASH FLOW STATEMENT
10. A RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOW FROM OPERATING
ACTIVITIES IS GIVEN BELOW:
6 MONTHS TO 6 MONTHS TO
31 MARCH 1998 31 MARCH 1997
GBPM GBPM
OPERATING PROFIT FROM
CONTINUING ACTIVITIES 44 34
SHARE OF PROFITS OF ASSOCIATES 8 (10)
DIVIDEND FROM ASSOCIATE 2 -
DEPRECIATION CHARGE 12 15
MOVEMENT IN WORKING CAPITAL (8) (19)
OTHER ITEMS (2) (1)
NET CASH INFLOW FROM
CONTINUING OPERATING ACTIVITIES 40 19
NET CASH INFLOW IN RESPECT
OF DISCONTINUED ACTIVITIES 5 57
NET CASH INFLOW FROM
OPERATING ACTIVITIES 45 76
11. RETURNS ON INVESTMENTS AND SERVICING OF FINANCE CAN BE ANALYSED AS FOLLOWS
6 MONTHS TO 6 MONTHS TO
31 MARCH 1998 31 MARCH 1997
GBPM GBPM
NET INTEREST PAID (19) (32)
DIVIDENDS PAID TO MINORITIES (3) (6)
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (22) (38)
12. CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT CAN BE ANALYSED AS FOLLOWS:
6 MONTHS TO 6 MONTHS TO
31 MARCH 1998 31 MARCH 1997
GBPM GBPM
PURCHASE OF TANGIBLE ASSETS (24) (38)
PURCHASE OF VEHICLES
FOR LEASING - (15)
PURCHASE OF FIXED
ASSET INVESTMENTS (3) (7)
SALE OF TANGIBLE ASSETS 7 3
SALE OF INVESTMENTS/ASSOCIATES - 2
LOANS REPAID 1 8
INVESTMENT IN ASSOCIATES - (2)
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT (19) (49)
13. GROUP BALANCE SHEET AT 31 MARCH 1998
THE LONRHO GROUP BALANCE SHEET, INCLUDING LONRHO AFRICA AT 31 MARCH 1998 AND
LONRHO SUGAR AT 31 MARCH 1997, IS AS FOLLOWS:
31 MARCH 1998 31 MARCH 1997
GBPM GBPM
FIXED ASSETS
TANGIBLE ASSETS 959 1,198
ASSOCIATES 119 141
OTHER INVESTMENTS 8 72
1,086 1,411
CURRENT ASSETS
STOCKS 150 321
DEBTORS 222 323
INVESTMENTS 1 2
CASH AT BANK AND IN HAND 240 139
613 785
CREDITORS: AMOUNTS FALLING
DUE WITHIN ONE YEAR:
- CURRENT BANK LOANS
AND OVERDRAFTS (191) (276)
- OTHER CREDITORS (290) (441)
NET CURRENT ASSETS 132 68
TOTAL ASSETS LESS
CURRENT LIABILITIES 1,218 1,479
CREDITORS: AMOUNTS FALLING DUE
AFTER MORE THAN ONE YEAR:
- LOAN FROM MINORITY
SHAREHOLDER (4) (11)
- OTHER LOANS (209) (371)
- OTHER CREDITORS (19) (22)
PROVISIONS FOR LIABILITIES
AND CHARGES (12) (4)
974 1,071
CAPITAL AND RESERVES
CALLED UP SHARE CAPITAL 199 196
RESERVES 631 611
EQUITY INTERESTS 830 807
MINORITY EQUITY INTERESTS 144 264
974 1,071
14. FOREIGN CURRENCY ASSETS AND LIABILITIES HAVE BEEN TRANSLATED INTO STERLING
AT THE EXCHANGE RATES RULING AS AT THE BALANCE SHEET DATE.
15. THE BALANCE SHEET AT 30 SEPTEMBER 1997 IS TAKEN FROM BUT DOES NOT
CONSTITUTE THE COMPANY'S STATUTORY ACCOUNTS FOR THE YEAR ENDED 30 SEPTEMBER
1997. STATUTORY ACCOUNTS FOR THAT YEAR HAVE BEEN DELIVERED TO THE REGISTRAR OF
COMPANIES. THE AUDITORS MADE AN UNQUALIFIED REPORT THEREON AND SUCH REPORT DID
NOT CONTAIN A STATEMENT UNDER SECTION 237(2) OR (3) OF THE COMPANIES ACT 1985.
16. AS A RESULT OF THE RESTRUCTURING OF LONRHO PLC INTO A MINING GROUP, IT HAS
NOW BEEN RECLASSIFIED UNDER EXTRACTIVE INDUSTRIES SECTION IN FTSE ACTUARIES
INDUSTRY CLASSIFICATION. LONRHO AFRICA PLC IS CLASSIFIED UNDER DIVERSIFIED
INDUSTRIALS.
17. FOR CAPITAL GAINS TAX PURPOSES, SHAREHOLDERS DISPOSING OF SHARES IN EITHER
LONRHO PLC OR LONRHO AFRICA PLC AFTER 7 MAY 1998, WHO HELD SHARES PRIOR TO THE
DEMERGER, SHOULD APPORTION THE BASE COST OF THEIR ORIGINAL LONRHO SHARES
BETWEEN THE TWO COMPANIES. BASED ON THE CLOSING SHARE PRICES ON 7 MAY 1998,
THIS APPORTIONMENT WOULD BE 80 PER CENT FOR LONRHO PLC AND 20 PER CENT FOR
LONRHO AFRICA PLC.
18. THE 1997 INTERIM DIVIDEND OF 9,0 PENCE PER SHARE INCLUDED A 1.0 PENCE
ENHANCEMENT AS A RESULT OF PAYING A FOREIGN INCOME DIVIDEND. FOLLOWING THE SALE
OF LONRHO SUGAR AND THE DEMERGER OF LONRHO AFRICA, IT IS NOT POSSIBLE TO PAY AN
ENHANCED FOREIGN INCOME DIVIDEND IN 1998. LONRHO AFRICA HAS DECLARED AN INTERIM
DIVIDEND OF 1,0 PENCE PER SHARE, WHICH SHOULD BE ADDED TO THE 1998 LONRHO
INTERIM DIVIDEND OF 7.2 PENCE PER SHARE, WHEN COMPARING THE 1998 INTERIM
DIVIDEND WITH 1997.
19. THE 1997 DIVIDENDS PER SHARE AND EARNINGS PER SHARE HAVE BEEN RESTATED TO
REFLECT THE SHARE CONSOLIDATION IN APRIL 1998.
THE INTERIRNM STATEMENT WILL BE POSTED TO MEMBERS SHORTLY AND COPIES WILL BE
AVAILABLE ON 23 JUNE 1998 FROM THE SECRETARY, LONRHO PLC, 4 GROSVENOR PLACE,
LONDON SW1X 7DL.
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