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Lonrho Plc reports strong revenue growth for 2012 and 32% growth in revenues for final quarter
Lonrho Plc
(Incorporated and registered in England and Wales)
(Registration number 2805337)
(JSE share code: LAF; ISIN number: GB0002568813)
(“the company”)
27 March 2013
Lonrho Plc reports strong revenue growth for 2012 and 32% growth in revenues for final quarter.
Lonrho Plc announces its results for the final quarter and 12 month period ended 31 December 2012.
Lonrho’s primary focus is on the expanding agriculture and oil and gas markets across Africa.
2012 was a very significant year for Lonrho and the fourth quarter saw completion of the transition of Lonrho into a
Company that strategically has aligned its core business units with what it believes are the most important growth
opportunities occurring in Africa.
As announced in the trading statement issued in February 2013, Quarter 4 2012 was challenging in several areas of the
business where longer than expected lead times on delivering new product lines and stock availability pushed a number of
2012 expectations into 2013 and the Group withdrew from unprofitable lines of business.
Notwithstanding those challenges, during 2012 the Group showed strong progress on its underlying revenue performance,
leaving the core businesses well positioned for 2013.
Financial Highlights up to 31 December 2012:
- Revenue from core operating divisions1 in the fourth quarter was £46.0m compared with £34.8m for the 3 months to
31 December 2011. On an adjusted like-for-like basis at constant currency2 revenue has increased across all
divisions, with an overall increase of 28.0%.
- For the full year to 31 December 2012, reported revenue was up 21.8% compared to the 15 months to 31 December
2011, from £152.9m to £186.3m, a like-for-like increase at constant currency of 23.6%.
- The Group’s total reported gross margin increased from 26.9% to 28.9% (comparing the 12 month period with the
prior 15 months).
- Net operating loss3 for the year from core operating divisions was £3.4m which falls within the range of £3m - £5m
as highlighted in the trading statement released on 1 February 2013.
- Due to the market conditions faced by Fastjet Plc, the Executive Directors carried out a review of Lonrho’s
investment in Fastjet which resulted in an impairment charge of £7.7m recorded to the income statement. As a
result Lonrho reported a Loss before Tax of (£6.3m compared with a Profit before Tax of £0.8m in the 15 months
ended 31 December 2011
- The Group’s Net Indebtedness reduced marginally to £87.2m at the end December 2012 from £88.4m at the end of
the 3rd quarter and from £99.1m as at 31 December 2011.
Continuing 4th Quarter 2012 Full Year 2012
Operations
2 2
Quarter to Reported Adjusted 12 months to Reported Adjusted
December Growth like-for-like December Growth vs like-for-like
2012 growth 2012 15 months growth
to December
2011
£ million £ million
Revenue
Agribusiness 27.6 28.3% 23.1% 123.6 30.8% 24.5%
Infrastructure 6.6 62.9% 68.7% 23.5 7.8% 30.4%
Support Services 8.2 29.4% 22.7% 27.0 7.6% 19.9%
Hotels 3.6 41.4% 18.9% 11.9 3.5% 9.7%
Other 0.3
Core Divisions 46.0 32.3% 28.0% 186.3 21.8% 23.6%
Transportation 0.0 20.2
Lonrho Plc 46.0 206.5
1
Core operating divisions include Agribusiness, Infrastructure, Hotels, Support Services and Other.
2
Adjusted like-for-like figures include acquisitions (pre-acquisition comparables based on un-audited management accounts), exclude
start-up businesses trading for less than 12 months and are adjusted to constant currency.
3
Net operating profit/(loss) is defined as profit before tax for the period (from core operating divisions) excluding, gain/(loss) on
associates, jointly controlled entities, investments, amortisation and share based payments.
Operational Highlights in the Fourth Quarter:
Agribusiness Division
- Lonrho’s 177, 000 tree stone fruit plantation continues to mature and during the last quarter the first commercial
peach harvest from the plantation was exported to Europe. The plantation benefits from a seasonal advantage of
coming ripe before the South African crop, and hence attracts strong pricing. The crop produced sufficient quality
(even though the planation is still young) that peaches and nectarines were delivered to Tesco in November and
December for marketing up to Christmas 2012. The results of this first crop of produce from this plantation, now
one of the largest stone fruit orchards in the southern hemisphere, has already generated strong demand for the 2013
crop. The 2013 crop is expected to be three times the size of the 2012 crop as the plantation matures. The
plantation will reach full maturity in 2014 and is forecast to yield four million kilograms of fruit per year thereafter.
- The exclusive Lonrho John Deere distributorships in Angola, South Sudan and Tanzania delivered strong results for
the John Deere business and sold close to 150 tractors, implements and equipment in the final quarter. LonAgro
Angola delivered impressive year on year growth and revenues were up 383% compared to October to December
2011. The logistical issues encountered by Trak Auto in Mozambique have largely been resolved and the business
has begun the year strongly. Entering 2013 Lonrho now has four exclusive John Deere territories and positions the
business as one of the leading suppliers of John Deere equipment in Africa.
- Fish On Line, the fish division’s wholesale company, delivered its first own branded goods to Food Lovers Market
(a new, fast growing, quality retail chain) in South Africa in the last quarter. This new business relationship
provides a quality fish range throughout the 100 stores currently trading across the South Africa.
- The fourth quarter saw the conclusion of the vertical integration and reorganisation of the agriculture division to be
able to deliver a seamless ‘field to fork’ solution for our clients. The costs of this restructuring exercise were
£1.3m. The unification of Rollex Pty and Lonrho Logistics has been completed to improve efficiencies and
customer service levels across these businesses. Lonrho Logistics now incorporates all the freight forwarding
activities of the Group, including the rapidly growing sea freight business, whilst Rollex Pty is now solely focused
on its high value Agri-Processing business based at Johannesburg International airport and building long term,
sustainable, supply contracts for major global supermarkets. The reaction from customers to a single source,
traceable, verifiable and continuity-focused supply solution has been immensely positive, and the number of
supermarkets entrusting Lonrho with their African requirements is increasing rapidly. Having now completed this
one stop solution, we are continuing to see strong traction with supermarkets around the world now placing long
term, sustainable, growing programmes with the Company to meet their needs. This is the culmination of the
‘demand driven’ business model that Lonrho has focused on delivering over the past three years.
- Lonrho’s Oceanfresh has continued to build on its core business. To the African consumer the ‘Cape Point’ own
brand for Shoprite Chequers; the “M” brand to Makro / Massmart and the Spar own brand have all seen strong
traction during the year. On the international markets, the Company has seen the deployment of ‘Kirkland Signature
Hake’ to Costco roll-out to all of the US market although supply issues noted in the February trading statement
caused a reduction in planned promotional activity to coincide with Lent.. Hake is a sustainably sourced, quality
white fish that is growing in popularity with the US consumer as they discover its texture and taste. Two further
Costco Kirkland Signature lines have been agreed, one being Mahi Mahi, which started deliveries to Costco US
stores before the year end and the third is due to be launched in the second half of 2013. Other US success in the
year has been the start of deliveries of hake into Walmart Sam’s Club stores and United Airlines choosing Lonrho’s
hake for its first and business class in-flight catering.
- During the year Lonrho was awarded a five year exclusive tuna fishing quota for the 200 mile exclusive fishing
zone for the territorial waters off Mozambique. This is a significant opportunity and will come into service in mid-
2013.
Infrastructure Division
- Lonrho’s oil services logistics port, Luba Freeport, continued to perform well and has a seen a healthy increase in
vessel movements in the fourth quarter when compared to the prior year. The port saw a total of 277 vessel calls
from October to December 2012 compared to 261 in 2011, a 6% increase. The release of eight further exploration
blocks and recent positive drilling results are expected to generate significantly increased activity throughout 2013.
The larger customers at the port include ExonMobil, Schlumberger, Baker Hughes, Noble, Tenaris and MI Swaco.
- E-Kwikbuild continues to face challenges delivering its existing Government projects on a number of levels (which
will carry on into Q2 of 2013), whilst the new focus on winning private sector business is building momentum.
Hotels Division
- After opening in July, Lonrho’s new ‘Lansmore’ Masa Square in Gaborone has quickly established itself as one of
the leading hotels in Botswana.
- The Cardoso Hotel in Maputo, Lonrho’s longest and well established hotel, continues to perform well as the
cornerstone of the Hotel division, with occupancy for the year trending over 90%.
- The first easyHotel by Lonrho in Johannesburg opened successfully in March having been delayed from its planned
opening date in December 2012. Initial demand has exceeded expectations.
- The opening of the Lansmore in Libreville, Gabon is now expected to be in Q2 of 2013.
Support Services
- The Support Services division expanded its scope of services with the new business start-up Arlington Associates
which has successfully won and implemented an initial contract with the Government of Nigeria for the inspection
of crude oil and gas exported from Nigeria.
- The AFEX group service contract with Tullow Oil continued to do well after the opening of a new 250- man camp
in northern Kenya in the third quarter and with expected increased drilling by Tullow, revenues received from
AFEX’s support contract should nearly double in 2013.
Outlook
2012 was a very significant year for Lonrho and saw the conclusion of the transition of Lonrho into a Company that has
successfully completed building the foundations of its core business units. Africa is forecast to deliver strong growth in 2013,
and Lonrho has strategically aligned its operations with what it believes are the most important growth opportunities
occurring in Africa, supporting the increasing demand from the expanding agriculture, oil and gas and consumer markets.
Despite challenging global market conditions, Lonrho’s outlook for 2013 remains in line with the Board’s expectations and
the Group expects to continue to deliver improved performance across each of its operating divisions.
The Board believes that the strategic action taken in Q3 and Q4 2012, to focus on increasing margins through operational
efficiencies and build long term sustainable customer relationships, coupled with the decision to withdraw from less profitable
lines of business, positions Lonrho strongly for entering 2013.
Enquiries:
Lonrho Plc +44 (0) 20 7016 5105
Geoffrey White
David Armstrong
FTI Consulting
Edward Westropp +44 (0) 20 7831 3113
Georgina Bonham
South African sponsor
Java Capital
Statutory accounts
The financial information set out in this announcement does not constitute the Company’s statutory accounts for the 12 month
period ended 31 December 2012 or the 15 month period ended 31 December 2011. The financial information for the 15
month period ended 31 December 2011 is derived from the statutory accounts for that period. The audit of statutory accounts
for the 12 month period ended 31 December 2012 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
Ambassador Frances Cook
Non-Executive Chairman
27 March 2013
It is a special honour for me to be addressing shareholders in my first months as your new Chairman.
I have, during my long career with the US Government State Department, lived in Africa for a dozen years and have a strong
affinity with the Continent and its people. I have now served 5 years as a Non-Executive Director on the Board of Lonrho and
after visiting many of our operations in Africa, I can report, with conviction, that we are very well positioned to participate in,
and to help, Africa’s emergence as a significant international economic motor.
Already, seven of the world’s ten fastest growing economies are in Africa, assisted by the discovery of the impressive
quantities of new onshore and offshore hydrocarbons in West and in East Africa.
At Lonrho we are well positioned to support Africa’s export sector growth in hydrocarbons and in agriculture. Africa is
undergoing the longest single period of economic expansion on the Continent since the independence years a half century
ago. Significantly, Africa’s macro level growth is widespread, far beyond the oil economies. Expected growth will rise from
around 4.5% last year to 4.8% in 2013. Foreign direct investment has been slower into Africa than it should have been, given
this kind of impressive record (though it is expected to rise, in the non-oil sectors, from around US$33 billion currently, to
around US$84 billion in 2014.) Our CEO, Geoffrey White reports an increasingly new and interested audience, wanting to
understand Africa’s potential and what our historic Company is doing to take advantage of the Continent’s current immense
opportunities.
Shareholders know that Lonrho is already invested in core sectors, from Agribusiness to Infrastructure, to Support Services
and Hotels, sectors that are necessary to support the rapid growth that is already happening.
Our key division, Agribusiness, which accounts for over 65% of Lonrho revenue from core operating divisions, has been
going through a management transition, and restructuring, so it can better compete in the fast moving, global, and demanding
agriculture and logistics space. We hired a well-qualified CEO to specifically oversee this division of Lonrho operations,
located across Southern Africa, and ranging from fruit and vegetables, to fish and crustacea, and farm machinery. He will be
focusing on margin improvement, moving away from a short term trading focus, while continuing to garner contracts with the
world’s largest food importers (Costco, Walmart and the majority of the UK branded stores are already customers). We have
just opened a sales office in China as well. Whilst we had a few disappointments in this sector during this transitional year, it
was not due to the revamped business model, but rather to the late delivery of tractors to our John Deere sales operation in
Mozambique, and to lower than expected fish size off Namibia. Even with these late year slippages, our Agribusiness division
proudly posted a 12 month revenue growth figure of 24.7%. In short, this is a growth platform, and record, we can be proud
of.
Our Infrastructure and Support Services core operating divisions continue to grow at a healthy rate, expanding business across
a broad range of activities which, among other things, will support the rapid expansion of energy production in Africa. Our IT
operations have added another country (Namibia), and our facilities operations, both e-KwikBuild and base support
operations (for oil exploration companies, for example) are also expanding into servicing the energy sector. Our oil and gas
port operation in Luba, Equatorial Guinea, which I visited in February 2013, will be a model for our engagement with this
sector (with a major new Lonrho managed oil and gas logistics port expected to be announced in 2013 in Ghana). These are
exciting times in the oil and gas industry in Africa, and Lonrho is becoming a highly regarded leader in logistics for this
sector.
Hotels are legacy projects for Lonrho, but we are moving into a more modern form of participation in that sector, creating our
own brand for higher end facilities, and opening a series of “easyHotels by Lonrho” for budget business travellers all over the
Continent. We opened a Lonrho “Lansmore” in Botswana this year, adding to an historic hotel property in Mozambique, as
well as large renovation and management efforts in the DRC of major government owned hotels. In 2013, we expect to
expand the “easyHotel by Lonrho” brand all over South Africa, and to launch into North, East and West Africa.
FastJet is in the midst of converting Lonrho’s much appreciated Fly540 brand of smaller regional planes, flying local routes,
into a continental budget airline, flying larger planes, following the separation of Lonrho’s aviation division in June 2012.
FastJet Plc, in which Lonrho is the largest shareholder, will still service the under-served “connector” market, as well as
extending flights to regional destinations, with reliable, safe and inexpensive flights, using very modern pricing algorithms.
From the start of the new operating model in Tanzania four months ago, we expect FastJet to expand its no-frills, reliable
service in 2013.
Throughout its 100 year old legacy, Lonrho has been known for its Corporate Responsibility (“CR”) across Africa. In 2012,
each of our companies named a CR coordinator, so that we can better focus in our chosen areas, education and good
environmental citizenship. You will see photographs throughout this report of our CR activities, which should be a source of
pride to all Lonrho shareholders. We have instituted, companywide, an annual CR prize, trained our Directors in CR, and
joined the UN Global Compact which monitors CR globally. We are committed to leaving a positive “footprint” wherever we
work, and to being a good corporate citizen in the 18 countries where we are engaged.
Chief Executive Officer’s Statement
Geoffrey White
Director and Chief Executive Officer
27 March 2013
2012 was a very significant year for Lonrho and saw the conclusion, by the end of the year, of the transition of Lonrho into a
Company that has successfully completed the establishment of its core business units and is now in a strong position to build
on the opportunities in Africa. This transition took longer to complete than expected, and there were some delays in our 2012
plans that caused potential 2012 business to move to 2013. The majority of these delays have now played out and the Group is
well positioned in 2013 to deliver positive results for shareholders
Lonrho remains solely focused on Africa and being aligned with economic development across the Continent.
In 2013 African growth is being stimulated by the burgeoning oil and gas industry, agricultural opportunities and a consumer
market that is young, communicative and developing as a very significant segment of society. The formal sector of the
African consumer market is forecast to be US$1.3 trillion by 2020, and the informal sector is forecast to be similar in size.
Africa is becoming one of the world’s largest consumer markets.
There is a now an increasing commercial momentum to address this growing consumer market that can be seen across much
of Africa, where the development of infrastructure, shopping centres, and consumer focused projects is expanding rapidly,
albeit from a very low base.
Surprising to many, seven of the top ten fastest growing economies in the world are now in Africa.
The consumer market, of over one billion people, a large percentage of which are under the age of 25, creates a significant
commercial opportunity, and Lonrho’s businesses entering 2013 are strategically aligned with the requirements and services
needed to meet some of the central demands of African consumer growth.
The growing demand of the consumer market within Africa provides significant opportunities for Lonrho’s core businesses.
Our core businesses focus on the oil and gas industry and the agriculture sector. These are not only helping to fuel African
consumer growth by creating investment and prosperity, but are also fundamentally changing the standing and importance of
Africa to the world. For the first time, the wider world is relying on Africa for energy and for food production.
25% of the world’s oil and gas is now believed to be in Africa and 60% of the world’s potentially arable land is in Africa.
These are important statistics that make the Africa of today of growing global significance. The tide is beginning to turn,
rather than Africa being dependent on the world, the world is increasingly becoming dependent on Africa for energy and for
food production.
Lonrho has, over the past four years, strategically positioned its core businesses to be well placed to service the requirements
of this new dynamic market. Having invested heavily in building the international standard infrastructure to meet this trend,
global food retailers are now approaching Lonrho to source fresh and frozen produce from Africa, and the global oil and gas
industry is encouraging and supporting our development of the essential infrastructure and logistics necessary to
commercially develop Africa’s oil and gas resources.
In September 2012, David Lenigas, who was the Executive Chairman of Lonrho since 2006, stepped down from the position
to become the Executive Chairman of FastJet plc. The Board thank him for his guidance, time and effort as the Executive
Chairman of Lonrho over the past seven years.
Following a review, the Company’s senior independent director, Ambassador Frances Cook, was appointed as the Non-
Executive Chairman of the Company on the departure of Mr Lenigas. Ambassador Cook brings a unique network of contacts
and experience in Africa and the Company looks forward to further benefitting from her guidance and knowledge of the
Continent.
Human resources are key to successful operations in Africa. During 2012 the Group continued to recruit industry specialists
to further bolster and develop each of the divisional operations. The most senior during 2012 being the appointment of Ben
Ward as the CEO of the Agribusiness division. Ben brings with him a long and experienced understanding of the sector.
Entering 2013 Lonrho is structured into four divisions:
Agribusiness (66% of core operating revenues)
Sourcing, production, cold chain logistics, processing and packaging of fruit, vegetables and seafood for Arican and
international supermarkets.
At the end of 2012, Lonrho completed the development of a unique, vertically integrated, international standard, cold chain
logistics and processing infrastructure. This incorporates the capacity required to source; produce, process, package and
deliver fresh and frozen produce from across the countries of southern Africa to market. This division supplies leading
retailers in Africa such as Shoprite, Chequers, Makro, Food Lovers and Spar who are all geographically expanding their
operations to serve the growth in the African consumer market.
The division also increasingly supplies produce into international supermarket chains such as Costco, Walmart, Asda, Tesco,
Spinneys, Waitrose, Carrefour and others.
The world is becoming more and more dependent on Africa for food security. Lonrho provides the international standard
delivery infrastructure required for the export of fresh produce from Africa to the global marketplace meeting demand from
Europe, the USA, Middle East and, increasingly, China and the Far East.
Lonrho is helping to fulfil the rapidly increasing demand from global supermarkets as they look to Africa as an essential
source of fresh produce.
Within the division, Lonrho has also established niche market, demand driven, growing programmes aligned with specific
customer requirements.
The division also distributes John Deere agricultural equipment into Africa.
Infrastructure (13% of core operating revenues)
Providing the logistical infrastructure necessary for the expanding oil and gas industry in Africa
Lonrho Ports division has developed an exclusive oil and gas logistics terminal, Luba Freeport, that is a ‘one stop shop’ that
supports the growing logistics requirements of the offshore industry in Equatorial Guinea. Equatorial Guinea is Africa’s third
largest oil producer. Following completion of the second phase expansion of the Luba Freeport project, entering 2013, the oil
services terminal has grown and is now forecast to handle 85%+ of all the support logistics for the Equatorial Guinea offshore
fields.
Long term tenants at Luba Freeport include ExxonMobil, Schlumberger, Noble, Mi Swacco, Ophir, CNOOC, Baker Hughes,
Tenaris, Hess, Marathon and others.
Lonrho is seeking to replicate the success of the Luba Freeport project into other locations in both West and East Africa
supporting the increasing infrastructure requirements for oil and gas finds on both sides of the Continent, the most advanced
being a proposed oil and gas logistics terminal in Ghana.
Hotels (6% of core operating revenues)
The provision of safe, quality accommodation is an essential precursor for economic growth and development in an
emerging market.
During 2012 Lonrho Hotels division continued with the plan to roll-out its hotel management company and create a Lonrho
branded, corporate focused, hotel chain in Africa. Lonrho Hotels has won management contracts and leases to operate some
of the leading hotels in Africa. Managing hotels in five countries, the Lonrho Hotels brand is becoming the choice of
travellers to Africa. During 2012 the division successfully added the Grand Hotel Kinshasa, DRC, and The Lansmore Hotel in
Gaborone, Botswana to the portfolio.
In early 2013 Lonrho Hotels launched the first ‘easyHotel by Lonrho’ to meet the growing market demand for budget hotels.
The objective being to establish a chain of budget hotel properties managed on behalf of owners, branded ‘easyHotel by
Lonrho’ that provide safe budget accommodation to a consistent standard with reliable quality across the whole of Africa.
Support Services (15% of core operating revenues)
Providing a single point service solution for resource companies, large corporates, NGO’s and Governments.
Lonrho’s Support Services division provides a fully cohesive support service to major clients across the Continent, delivering
a one stop shop for logistics, accommodation, catering, IT and services. Customers are typically oil companies, mining
companies, NGO’s, the UN, and international Governments who see the benefit in a one stop shop provider offering a total
solution for their requirements as they deploy into Africa.
FastJet
In June 2012, Lonrho announced that it had agreed to separate its aviation division, Lonrho Aviation, into Rubicon
Diversified Investments Plc, an AIM listed investment company that was subsequently renamed FastJet Plc. (LON : FJET) As
a consequence of the separation, Lonrho became the largest shareholder of FastJet with a 74% holding.The founder and
largest shareholder in easyJet, Sir Stelios Haji-Ioannou’s investment company easyGroup, became a shareholder in FastJet
and provides strategic management of the company.
FastJet, in which Lonrho maintains a passive, arms-length, shareholding has subsequently launched as a low cost carrier
domestically in Tanzania and believes that with Sir Stelios’ direction and experience FastJet has the potential to develop into
Africa’s leading low cost carrier.
Lonrho’s stake in FastJet has been reduced from 74% to 55% post-separation as Fastjet raises development capital to
implement its business plan.
Due to current market conditions experienced by FastJet Plc, an impairment review has been carried out which resulted in an
impairment charge being recorded in the income statement of £7.7m.
Outlook
2012 was a very significant year for Lonrho and saw the conclusion of the transition of Lonrho into a Company that has
successfully completed building the foundations of its core business units. Africa is forecast to deliver strong growth in 2013,
and Lonrho has strategically aligned its operations with what it believes are the most important growth opportunities
occurring in Africa, supporting the increasing demand from the expanding agriculture, oil and gas and consumer markets.
Despite challenging global market conditions, Lonrho’s outlook for 2013 remains in line with the Board’s expectations and
the Group expects to continue to deliver improved performance across each of its operating divisions.
The Board believes that the strategic action taken in Q3 and Q4 2012, to focus on increasing margins through operational
efficiencies and build long term sustainable customer relationships, coupled with the decision to withdraw from less profitable
lines of business, positions Lonrho strongly for entering 2013.
Statement of Directors Responsibilities
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 judgements 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.
The Directors who held office at the date of approval of this Report of the Directors confirm that, so far as they are each
aware, there is no relevant audit information of which the Company’s Auditors are unaware; and each Director has taken all
the steps that he/she ought to have taken as a Director to make himself/herself aware of any relevant audit information and to
establish that the Company’s Auditors are aware of that information.
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.
The Directors of Lonrho Plc are pleased to submit their report, together with the audited financial statements for the 12 month
period ended 31 December 2012.
The Company number is 2805337.
Consolidated income statement
For the year ended 31 December 2012 and 15 months ended 31 December 2011
Year ended 31 December 2012 15 months ended 31 December 2011
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
Note £m £m £m £m £m £m
Revenue 4, 5 206.5 – 206.5 188.4 0.2 188.6
(146.9) – (146.9)
Cost of sales 6 (137.2) (0.7) (137.9)
GROSS PROFIT/(LOSS) 59.6 – 59.6 51.2 (0.5) 50.7
Gain arising on fair valuation of biological –
6, 16 9.2 9.2 27.4 – 27.4
assets
Other operating income 6
– Gains on acquisitions – – – 15.8 – 15.8
– Other 0.6 – 0.6 2.2 – 2.2
Operating costs 6 (77.0) (0.1) (77.1) (80.4) (0.6) (81.0)
OPERATING (LOSS)/PROFIT (7.6) (0.1) (7.7) 16.2 (1.1) 15.1
Finance income 10 5.5 0.1 5.6 6.8 – 6.8
Finance expense 10 (14.7) – (14.7) (16.2) – (16.2)
NET FINANCE (EXPENSE)/INCOME (9.2) 0.1 (9.1) (9.4) – (9.4)
NET OPERATING (LOSS)/PROFIT* (12.3) – (12.3) 9.6 (1.1) 8.5
Share based payments expense 6 (2.3) – (2.3) (0.7) – (0.7)
Amortisation 14 (2.2) – (2.2) (2.1) – (2.1)
OPERATING (LOSS)/PROFIT AFTER
(16.8) – (16.8) 6.8 (1.1) 5.7
FINANCING
Share of results of associates 18 (4.4) – (4.4) (5.9) – (5.9)
Share of results of jointly controlled entity 19 (10.6) – (10.6) – – –
Gain on contribution of subsidiary to jointly – – – –
11 33.5 33.5
controlled entity
Impairment of jointly controlled entity 19 (7.7) – (7.7) – – –
–
(Loss)/gain on other investments 19 (0.3) (0.3) 1.0 – 1.0
(LOSS)/PROFIT BEFORE TAX (6.3) – (6.3) 1.9 (1.1) 0.8
Income tax credit/(charge) 12 0.3 – 0.3 (0.3) – (0.3)
(LOSS)/PROFIT FOR THE YEAR/PERIOD (6.0) – (6.0) 1.6 (1.1) 0.5
ATTRIBUTABLE TO:
Owners of the Company 24 (1.7) – (1.7) 7.1 (1.1) 6.0
Non-controlling interests 24 (4.3) – (4.3) (5.5) – (5.5)
(LOSS)/PROFIT FOR THE YEAR/PERIOD (6.0) – (6.0) 1.6 (1.1) 0.5
EARNINGS PER SHARE
Basic (loss)/earnings per share (pence) 13 (0.11) – (0.11) 0.58 (0.09) 0.49
Diluted (loss)/earnings per share (pence) 13 (0.11) – (0.11) 0.57 (0.09) 0.48
The notes are an integral part of these financial statements.
* The directors have defined Net Operating (Loss)/Profit, a non -GAAP measure, as its key profit performance measure as explained
in Note 3
Consolidated and Company statements of
comprehensive income
For the year ended 31 December 2012 and 15 months ended 31 December 2011
Group Company
31 December 31 December
2012 2011 2012 2011
Notes £m £m £m £m
Foreign exchange translation differences 24 (14.8) (0.2) – –
Revaluation of property, plant and equipment 15 2.5 7.2 – –
Total other comprehensive (expense)/income for the –
(12.3) 7.0 –
year/period
(Loss)/profit for the year/period (6.0) 0.5 (21.6) (17.3)
Total comprehensive (expense)/income (18.3) 7.5 (21.6) (17.3)
ATTRIBUTABLE TO:
Owners of the Company (13.1) 9.7 (21.6) (17.3)
Non-controlling interests (5.2) (2.2) – –
Total comprehensive (expense)/income (18.3) 7.5 (21.6) (17.3)
The notes are an integral part of these financial statements.
Consolidated and Company statements of
changes in equity
For the year ended 31 December 2012 and 15 months ended 31 December 2011
2012 2011
Owners Non- Owners Non-
of the controlling of the controlling
Company interests Total Company interests Total
£m £m £m £m £m £m
AT 1 JANUARY 2012/ 1 OCTOBER 2010 135.2 20.5 155.7 107.4 20.3 127.7
(Loss)/profit for the year/period (1.7) (4.3) (6.0) 6.0 (5.5) 0.5
Foreign exchange translation differences (12.9) (1.9) (14.8) (0.5) 0.3 (0.2)
Revaluation of property 1.5 1.0 2.5 4.2 3.0 7.2
Total comprehensive income (13.1) (5.2) (18.3) 9.7 (2.2) 7.5
Issue of shares 23.1 – 23.1 18.9 – 18.9
Costs associated with share issues – – – (0.4) – (0.4)
Provision for warrants 1.0 - 1.0 - - -
Share based payment charge 2.3 – 2.3 0.7 – 0.7
Share options exercised 1.1 – 1.1 0.7 – 0.7
Shares issued in relation to earn out agreement 0.4 – 0.4 – – –
Subsidiaries acquired – – – – 2.2 2.2
Subsidiaries disposed – – – – (0.2) (0.2)
Transfer from subsidiary to jointly controlled entity 0.5 8.6 9.1 – – –
Non-controlling interest dividends – (0.2) (0.2) – (0.2) (0.2)
Non-controlling interest put option – – – (2.3) – (2.3)
Capital element of Convertible Bond – – – 1.1 – 1.1
Elimination of non-controlling interest (1) – – – (0.6) 0.6 –
AT 31 DECEMBER 150.5 23.7 174.2 135.2 20.5 155.7
The notes are an integral part of these financial statements.
The Company had total equity brought forward of £125.6m (2011: £123.0m), and during the period issued shares
of £23.1m (2011: £18.9m) with share based payment charges of £2.3m (2011: £nil), shares issued in relation to
earn out agreement of £0.4m (2011: £nil), share options issued of £nil (2011: £0.7m), provision for warrants of
£1.0m (2011: £nil), share options exercised of £1.1m (2011: £0.7m), costs associated with share issued of £nil
(2011: £0.4m) and a loss for the period of £21.6m (2011: £17.3m) resulting in total equity carried forward of
£131.9m (2011: £125.6m).
(1) 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 2012 and 31 December 2011
Group Company
31 December 31 December
2012 2011 2012 2011
Notes £m £m £m £m
ASSETS
Goodwill 14 17.5 17.8 – –
Other intangible assets 14 16.8 21.9 – –
Property, plant and equipment 15 130.0 166.2 0.3 0.4
Biological assets 16 40.4 33.8 – –
Investments in subsidiaries 17 – – 31.5 31.5
Investments in associates 18 – 6.9 – 5.9
Investment in jointly controlled entity 19 37.4 – – –
Other investments 19 0.1 1.7 – –
Deferred tax assets 20 2.0 1.8 – –
TOTAL NON-CURRENT ASSETS 244.2 250.1 31.8 37.8
Inventories 21 23.1 20.1 - –
Trade and other receivables 22 44.2 48.8 147.5 128.2
Cash at bank 23 17.0 12.7 – –
TOTAL CURRENT ASSETS 84.3 81.6 147.5 128.2
TOTAL ASSETS 328.5 331.7 179.3 166.0
EQUITY
Share capital 24 16.0 13.0 16.0 13.0
Share premium account 24 140.3 138.2 140.3 138.2
Revaluation reserve 24 9.0 9.1 – –
Share option reserve 24 7.8 5.4 7.8 5.4
Translation reserve 24 (20.7) (10.4) – –
Other reserves 24 31.4 11.0 38.1 17.7
Retained earnings 24 (33.3) (31.1) (70.3) (48.7)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE
150.5 135.2 131.9 125.6
COMPANY
NON-CONTROLLING INTERESTS 24 23.7 20.5 – –
TOTAL EQUITY 174.2 155.7 131.9 125.6
LIABILITIES
Loans and borrowings 25 76.3 76.7 – –
Deferred tax liabilities 20 3.3 4.1 – –
Obligations under finance leases 25 1.3 18.6 – –
Provisions 29 1.5 – – –
Trade and other payables 28 4.3 16.1 45.1 38.0
TOTAL NON-CURRENT LIABILITIES 86.7 115.5 45.1 38.0
23,
5.9 12.2 1.0 0.7
Bank overdraft 25
Loans and borrowings 25 22.9 3.0 – –
Obligations under finance leases 25 1.2 4.9 – –
Trade and other payables 28 37.2 39.7 1.3 1.7
Tax liability 0.4 0.7 – –
TOTAL CURRENT LIABILITIES 67.6 60.5 2.3 2.4
TOTAL LIABILITIES 154.3 176.0 47.4 40.4
TOTAL EQUITY AND LIABILITIES 328.5 331.7 179.3 166.0
The notes are an integral part of these financial statements.
These financial statements were approved by the Board of Directors and authorised for issue on 27 March 2013.
They were signed on its behalf by:
Geoffrey White
Director & Chief Executive Officer
Consolidated and Company statements of cash flows
For the year ended 31 December 2012 and 15 months ended 31 December 2011
Group Company
31 December 31 December
2012 2011 2012 2011
Notes £m £m £m £m
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit for the period (6.0) 0.5 (21.6) (17.3)
Adjustments 30 1.9 (16.4) 14.0 4.9
CASH FLOWS FROM OPERATING ACTIVITIES BEFORE
MOVEMENTS IN WORKING CAPITAL (4.1) (15.9) (7.6) (12.4)
Change in inventories (8.1) (14.3) – –
Change in trade and other receivables (9.8) (17.3) (19.7) (43.1)
Change in trade and other payables 0.2 13.3 0.4 37.1
CASH GENERATED FROM OPERATIONS (21.8) (34.2) (26.9) (18.4)
Interest received 0.7 0.8 – 0.1
Interest paid (10.7) (8.1) – –
Interest element of finance lease rental payments (0.4) (0.5) – –
Income tax paid (0.9) (1.2) – –
NET CASH FROM OPERATING ACTIVITIES (33.1) (43.2) (26.9) (18.3)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant and equipment 2.6 2.2 – –
Investment in restricted cash (3.2) (3.2) – –
Utilisation of restricted cash 3.2 – –
Acquisition of subsidiary, net of cash acquired 7 (0.9) (6.1) – –
Acquisition of property, plant and equipment 15 (12.6) (18.4) (0.1) (0.1)
Acquisition of intangible assets 14 (0.4) (5.1) – –
Acquisition of associates and joint ventures – (1.2) – (1.2)
Proceeds from sale of associates 18 2.5 1.1
Proceeds from sale of other investments 19 1.0 – – –
Bank overdraft transferred to jointly controlled entity 11 3.5 – – –
Proceeds from sale of subsidiary undertaking – 0.7 – –
NET CASH FROM INVESTING ACTIVITIES (4.3) (31.1) 1.0 (1.3)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of share capital net of costs 24 24.1 18.9 24.1 18.9
Proceeds from the issue of share options 24 1.1 0.7 1.1 0.7
Loan advance 28.3 61.1 – –
Finance leases advanced 1.3 – –
Repayment of borrowings (3.9) (10.6) – (1.3)
Payment of finance lease liabilities (2.7) (3.7) – –
Non-controlling interest dividends paid 24 (0.2) 0.2 – –
Dividends received from Group companies – – 0.4 –
NET CASH FROM FINANCING ACTIVITIES 48.0 66.6 25.6 18.3
Net increase/(decrease) in cash and cash equivalents 10.6 (7.7) (0.3) (1.3)
Cash and cash equivalents at the beginning of the period (2.7) 3.9 (0.7) 0.6
Foreign exchange movements – 1.1 – –
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 23 7.9 (2.7) (1.0) (0.7)
The notes are an integral part of these financial statements.
Notes to the Financial Statements
1 . . R e p o r ti n g e n t i t y
Lonrho Plc (the “Company”) is a company incorporated and domiciled in the United Kingdom. The consolidated financial
statements of the Company for the 12 month period ended 31 December 2012 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 27 March 2013.
The Company changed its financial year end from 30 September to 31 December annually with effect from the financial period
ended 31 December 2011. Accordingly the comparative period information is for the 15 month period to 31 December 2011.
2 . B a s i s o f p r e p a r a ti o n
Statement of compliance
Both the parent Company and the consolidated financial s tatements hav e been prepared in accordance with International
Financial Reporting St andards (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 24 to the accounts.
Going concern
Although the current on -going economic condit ions create uncertainty, the Group’s forecast and projections, taking into account
possible changes in trading performance, together with mitigating actions that are within managements control show that the G roup
is expected to be able to operate within th e level 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.
Following the careful review of on -going 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 cont inue
to adopt the going concern basis in preparin g the accounts
Functional and presentation currency
The financial statements are presented in pounds sterling which is the Company’s functional currency. All financial informati on
presented has been rounded to the nearest £0.1m.
Basis of measurement
The financial statements have been prepared on the historical cost basis except for the revaluation of certain long leasehold
properties, related derivative financial instruments at fair value and certain jointly controlled entities and biological as sets at fair
value.
The accounting policies set out in these financial statements have been applied to all periods presented. A number of new sta ndards,
amendments to standards and interpretations are effective for annual periods beginning after 1 January 2013 an d have not been
applied in preparing the Group accounts. None of these are expected to have a significant effect on the financial statements of the
group, except for IFRS 9 Financial Instruments. The Group does not plan to adopt this standard early and the extent of the impact has
not been
determined.
Use of estimates and judgments
The preparation of financial statements in conformity with Adopted IFRS requires management to make judgments, 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 un der 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:
? v aluation of associates (note 18)
? v aluat ion of biological assets (not e 16)
? s hare of res ults of jointly cont rolled ent it y (not e 19)
? impairm ent of int erest in joint ly c ontrolled ent it y (not e 19)
Judgements made by management in the application of Adopted IFRS that have significant effect on the f inancial
statements are:
? the determination of the functional currencies of subsidiaries (note 3c)
? 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 cert ain transactions represent business combinations (note 7)
? the determination of inv estments as jointly controlled entity based on relativ e shareholder interest (note 11)
? the conclusion as to whether certain businesses should be p resented as part of continuing or discontinuing operations (not e
8)
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 Lo nrho 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 t he subs idiary’s equit y are alloc at ed against the int eres ts of t he Group where the non -
c ont rolling interest has a s pecif ic 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 di sposal, as appropriate.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation.
Associates, Joint Ventures and jointly controlled entities
Associates are those entities in which the Group has significant influence, b ut not control or joint control, over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 percent and 50 percent of the
voting power of
another entity. Jointly controlled entities are those ent ities whose activities the Group has joint control, established by
contractual arrangement.
Investments in associates and jointly controlled entities are accounted for under the equity method and are usually recognise d
initially at cost. The cost of the investment includes transaction costs. Upon contribution of a subsidiary to a jointly controlled
entity, the Group derecognises the assets and liabilities of the subsidiary, and replaces with the fair value of the jointly controlled
entity. Any gain arisin g is recognised in full in the income statement.
The consolidated financial statements include the Group’s share of the profit or loss and other comprehensive income of equi ty-
accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant
influence or joint control commences until the date that significant influence or joint control ceases.
W hen the Group’s share of losses exceeds its interest in an equity accounted investee, the carryi ng amount of the investment,
including any long term interests that form part thereof, is reduced to zero, and the recognition of further losses is discon tinued
except to the extent that the Group has an obligation or has made payments on behalf of the inv estee.
The Company records interests in associate, joint ventures and jointly controlled entities initially at cost and
thereafter at cost less provisions for impairment.
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 accorda nce with IFRS 5, which are recognised and
measured at fair value less costs to sell.
Business combinations
Goodwill arising on acquisition is initially measured at cost, being the excess of the fair value of the consideration over t he
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 reserv es. The Group continues to recognise non -controlling
interests in respect of these equity investments whe re 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 subseque ntly rev ersed when the carrying amount of the asset exceeds its recov erable
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 disp osal.
Goodwill arising on acquisitions before the date of transition to adopted IFRS has been retained at the prev ious UK GAAP
amounts, after being tested for impairment at that date.
Other intangible assets
Other intangible assets are measured initially at cost a nd 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 t he statement of financial
position of the acquired entity at their fair value, identifiable intangible assets that are separable or arise from contract ual or
other legal rights are also included in the acquisition statement of financial position at fair va lue.
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
Cus t om er relat ions hips 5 year s – 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 capitalise d 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. Capita lised
costs excluded start up losses and any costs not directly attributable to obtaining the licence. No such costs have been
incurred in 2012 as they did not meet the conditions for capitalisation as intangible assets.
(c) Foreign currencies
The indiv idual financial statements of each Group c ompany are presented in the currency of the primary economic
env ironment 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 pou nds 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 functiona l 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 diff erences 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 d uring 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) T a x a t i o n
The tax expense represents the sum of current ta x 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 ye ars 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 exp ected to be payable or recov erable on differences bet ween 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 lia bility 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 av ailable 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 neit her 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 t he Group is able to c ontrol t he revers al of t he tem porary diff e renc e and it is probable
t hat t he tem porary 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 enforcea ble 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. W hen an investment is de-recognised, the cumulative gain or
loss in equity is transferred to the income statement. For assets at fair value through prof it and loss , s ubsequent to
init ial recognit ion t hey are meas ured at fair v alue and c hanges rec ognis ed wit hin 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 evi dence 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 car rying
am ount , and t he pres ent v alue of t he est im at ed f ut ure c as h f lo ws dis c ount ed at t he original ef f ect iv e int erest rat e. 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 availabl e-
for-sale financial assets that are equity securities, the reversal is recognised di rectly in equity.
(f) P ro pe r t y, pl a nt a nd e qui pm en t
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 whic h
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 prev iously 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
Fixtures and fittings 15% – 25% of cost
Aircraft 5% – 6.67% of cost
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carry ing
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 incur red.
(g ) B i o l o g i c a l a s s e t s
Certain Group subsidiaries involv ed in the production of fresh produce recognise biological assets, which includes agricultur al
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 assets at the reporting date. Biological assets are stated at fair
value less estimated point of sale costs, with any resultant gain or loss recognised in the i ncome statement. The valuation of the
fruit plantations is based on discounted cashflow models whereby the fair value of the assets is calculated using cashflows f or
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 imp airment loss. W here 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. Recov erable amount is the higher of fair v alue less
costs to sell and v alue in use. In assessing v alue 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 whic h 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 reco verable 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, th e 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 be en 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 revalua tion increase.
(i) F i n a n c i a l i n s tr u m e n t s
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 repayab le 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 v alue 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 23). 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 entere d 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 cost s.
Derivative cash flow hedging instruments
Derivative cash flow hedging instruments are initially recognised, and subsequently measured, at fair value. The fair values of
derivative hedging instruments are determined based on market data to calculate the present value of all estimated flows
associated with each instrument at the balance sheet date. Changes in their fair values are recognised directly in other
comprehensive income (to the extent that they are effective), with the ineffective portion be ing recognised in the income
statement. In order to qualify for hedge accounting, the Group is required to document prospectively the relationship between
the item being hedged and the hedging instrument.
The Group is also required to demonstrate an asse ssment of the relationship between the hedged item and the hedging instrument
which shows that the hedge will be highly effective on an ongoing basis. This effectiveness testing is re -performed periodically to
ensure that the hedge has remained, and is e xpected to remain, highly effective.
(i)Financial instruments (continued)
Hedge accounting is discontinued when a hedging instrument is derecognised (e.g. through expiry or disposal), or no longer
qualifies for hedge accounting. Where the hedged item is a highly probable forecast transaction, the related gains and losses
remain in equity until the transaction takes place, when they are reclassified to the income statement. When a hedged
futuretransaction is no longer expected to occur, any related gains a nd losses, previously recognised in other comprehensive
income,are immediately reclassified to the income statement.
Derivative fair value changes recognised in the income statement are either reflected in arriving at operating profit (if th e hedged item
is similarly reflected) or in finance expense.
(j)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 b usiness. The Board of Directors monitors ROCE (return on
capital
employed) and ROE (return on equity) as part of its capital management.
(k)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.
. Significant accounting policies (continued)
( l ) S h a r e b a s e d p a ym e n t s
The Group provides benefits to certain employees, including senior executives, in the form of share based payments, w hereby
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 v alue of the equity instruments at the date at wh ich
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.
(m ) In te re s t -b e ar ing bo r row in gs
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.
(n) Dividends
Interim dividends are recognised when paid and final dividends are recognised as liabilities in the period in which they are
approved by shareholders.
(o) Provisions
A prov ision is recognised in the statement of financial position when the Group has a present legal or constructive obligatio n as
a result of a past event, and it is probable that an outflow of economic benefits will be required to settle t he 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 liabil ity.
(p) Revenue recognition
Rev enue, for the other major segments not detailed below, is derived from the sale of goods and serv ices and is measured at the
fair value of consideration received or receivable, after deducting discounts, volume rebates, value -added tax and other sales t axes.
A sale of goods and serv ices is recognis ed when recov ery of t he cons ideration is probable, t here is no cont inuing
management involvement with the goods and serv ices 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.
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 and other handling, towage, pilotage, conservancy and wast e
management services and port related rental income. Such revenue is recorded once the service has been pro vided.
Agribusiness division
Revenue for the agribusiness division includes the invoice value of goods where the Group grows or takes ownership risk on th e
relev ant produce. W here the Group prov ides logistics or processing serv ices without taking ownership risk on the relev ant
produce, rev enue comprises the inv oiced v alue of the serv ices prov ided. Rev enue is recognised when the supply of the goods
or serv ices are completed. There are no discounts or other arrangements that create uncertainty ov er the lev el of rev enue
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.
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 provid ed.
Unearned revenue represents flight seats sold but not yet flown and is included within deferred income.
(q) Leases
Leases are classified according to the substance of the transaction. A lease that transfers substantially all the risks and r ewards 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 of f 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.
(r ) Bo rr ow ing c os ts
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 ass ets, 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 capit alisation.
All other borrowing costs are recognised in the income statement in the period in which they are incurred.
(s) Earnings per share
Basic earnings per share is calculated based on the weighted average number of ordinary shares outstanding during the p eriod.
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.
(t) R e p o r ta b l e s e g m e n t s
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 segme nt. This is based on the Group’s internal organisation and the financial
information provided to the CODM.
(u) 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 a ssets (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 impairmen t loss on
a disposal group first is allocated to goodwill, and then to remaining assets and lia bilities 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 f or 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.
(v) Convertible bonds
Conv ertible bonds are regarded as compound instruments, consisting of a liability component and either an equity component
or an embedded deriv ativ e component.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for si milar non-
conv ertible debt. The differenc e bet ween the proceeds of issue of the conv ertible bonds and the fair v alue assigned to the
liability component represents the v alue of either an equity component or an embedded deriv ativ e component attributable to the
embedded option to convert the bonds i nto 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 instrum ent. 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. Fo r 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 v ariable amount of cash, or other financial asset, the functional currenc y of the pa rent company relativ e to the
currency denomination of the bonds is considered in addition to other features within the bond.
For conv ertible bonds issued by the Group where there is a difference bet ween 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 i s
exchange d for a fixed amount of bonds, the v alue of the embedded option to conv ert the bonds is recorded within equit y 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 liabilit y 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 a nd the
interest paid is added to the c arrying amount of the convertible bond.
( w ) N o n - G A AP m e a s u r e s
Following a review of key performance indicators used by the Directors and consultations wit h key stakeholders, the Directors
hav e rev ised the key non -GAAP profit measure used to monitor performance of the business. From 1 January 2012 the key non -
GAAP profit measure used by the board is net operating profit which is defined as operating profit before amortisation of
acquired intangible assets and share based payment charges less net finance charges. The directors believe that this measure
best reflect the trading performance of the group.
4 . S e g m e n t r e p o r ti n g
The “Chief Operating Decision Maker” (CODM) is deemed to be the Executive Committee who monitors 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 net operating profit/(loss).
Segment results, assets and liabilities include items directly attributable to a segment as well as those t hat 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 us ed
for more than one peri od.
There is no inter-segment revenue.
Business segments
The Group has four core continuing reportable segments which are organised around the basis of products and services which
they provide:
? A gr ib us i nes s
? Infrastructure
? Support serv ices
? Hotels
The Group has not aggregated any operating segment in arriving at this analysis. Following the contribution of a subsidiary to a
jointly controlled entity (note 11), the transportation division from the 29 June 2012 is no longer considered a core operati ng
division but remains a continuing operation. This is consistent with the reports provided to the (CODM).
The head office division includes head office costs that are not allocated to the operating divisions. The revenue from the h ead
office division relates to income from related parties.
Geographical analysis
All of the segments operate in various parts of Africa, Europe and Americas.
Business segments
Year ended 31 December 2012
Core Continuing Dis- Total
Agri- Infra- Support Head operating Trans- operations continued
business structure Services Hotels office divisions portation operations
£m £m £m £m £m £m £m £m £m £m
EXTERNAL
REVENUE 123.6 23.5 27.0 11.9 0.3 186.3 20.2 206.5 – 206.5
Net operating
profit/(loss):
Segment result* 2.0 2.8 2.1 (1.9) (8.4) (3.4) (8.9) (12.3) – (12.3)
Amortisation (1.4) – (0.3) – – (1.7) (0.5) (2.2) – (2.2)
Share based
payments expense – – – – (2.3) (2.3) – (2.3) – (2.3)
OPERATING
PROFIT/(LOSS)
AFTER FINANCING 0.6 2.8 1.8 (1.9) (10.7) (7.4) (9.4) (16.8) – (16.8)
Share of results of
associates – – – – (4.4) (4.4) – (4.4) – (4.4)
Share of results of
jointly controlled
entity – – – – (10.6) (10.6) – (10.6) – (10.6)
Gain on
contribution of – – – – 33.5 33.5 – 33.5 – 33.5
subsidiary to jointly
controlled entity
Impairment of
jointly controlled – – – – (7.7) (7.7) – (7.7) – (7.7)
entity
Loss on other
investments – – – – (0.3) (0.3) – (0.3) – (0.3)
Income tax 1.3 (0.3) (0.3) (0.4) - 0.3 – 0.3 – 0.3
credit/(charge)
PROFIT/(LOSS) FOR
THE YEAR 1.9 2.5 1.5 (2.3) (0.2) 3.4 (9.4) (6.0) – (6.0)
Net operating profit
/(loss) before
financing 4.9 4.3 2.1 (0.4) (6.4) 4.5 (7.6) (3.1) (0.1) (3.2)
Net finance
(expense)/income (2.9) (1.5) – (1.5) (2.0) (7.9) (1.3) (9.2) 0.1 (9.1)
NET OPERATING
PROFIT/(LOSS):
SEGMENT RESULT* 2.0 2.8 2.1 (1.9) (8.4) (3.4) (8.9) (12.3) – (12.3)
*See accounting policy note (w)
Business segments
15 months ended 31 December 2011
Core Continuing Dis-continued Total
Agri- Infra- Support operating Trans- operations operations
business structure Services Hotels Head office divisions portation
£m £m £m £m £m £m £m £m £m £m
EXTERNAL REVENUE 94.5 21.8 25.1 11.5 – 152.9 35.5 188.4 0.2 188.6
Net operating
profit/(loss):Segment
result* 32.5 (2.4) 1.4 3.1 (14.0) 20.6 (11.0) 9.6 (1.1) 8.5
Amortisation (1.0) (0.1) (0.4) – – (1.5) (0.6) (2.1) – (2.1)
Share based payments
expense – – – – (0.7) (0.7) – (0.7) – (0.7)
OPERATING
PROFIT/(LOSS) AFTER
FINANCING 31.5 (2.5) 1.0 3.1 (14.7) 18.4 (11.6) 6.8 (1.1) 5.7
Share of results of
associates – – – – (5.9) (5.9) – (5.9) – (5.9)
Share of results of
jointly controlled entity – – – – – – – – – –
Gain on contribution of
subsidiary to jointly
controlled entity – – – – – – – – – –
Gain on other
investments 0.6 – – – 0.4 1.0 – 1.0 – 1.0
Income tax (0.4) – (0.5) (0.2) 0.8 (0.3) – (0.3) – (0.3)
credit/(charge)
PROFIT/(LOSS) FOR THE
PERIOD 31.7 (2.5) 0.5 2.9 (19.4) 13.2 (11.6) 1.6 (1.1) 0.5
Net operating profit
/(loss) before financing 35.4 (1.6) 0.6 3.3 (9.5) 28.2 (9.2) 19.0 (1.1) 17.9
Net finance
(expense)/income (2.9) (0.8) 0.8 (0.2) (4.5) (7.6) (1.8) (9.4) – (9.4)
NET OPERATING
PROFIT/(LOSS): SEGMENT
RESULT* 32.5 (2.4) 1.4 3.1 (14.0) 20.6 (11.0) 9.6 (1.1) 8.5
*See accounting policy note (w)
Year ended 31 December 2012
Infra- Support Head Core operating Trans- Continuing Dis-continued Total
Agri-business structure Services Hotels office divisions portation operations operations
£m £m £m £m £m £m £m £m £m £m
Segment operating
assets 136.8 85.4 16.2 46.3 – 284.7 – 284.7 0.7 285.4
Other investments – – – – 0.1 0.1 – 0.1 – 0.1
Investment in
jointly controlled – – – – 37.4 37.4 – 37.4 – 37.4
entity
Unallocated
assets/interest – – – – 5.6 5.6 – 5.6 – 5.6
bearing assets
Total Assets 136.8 85.4 16.2 46.3 43.1 327.8 – 327.8 0.7 328.5
Segment operating 60.9 15.9 9.5 18.5 – 104.8 – 104.8 0.5 105.3
liabilities
Unallocated
liabilities/interest – – – – 49.0 49.0 – 49.0 – 49.0
bearing liabilities
Total Liabilities 60.9 15.9 9.5 18.5 49.0 153.8 – 153.8 0.5 154.3
Depreciation of 2.7 3.5 0.6 1.5 0.2 8.5 1.1 9.6 – 9.6
segment assets
Amortisation of 1.4 – 0.3 – – 1.7 0.5 2.2 – 2.2
segment assets
Capital expenditure 7.2 3.0 0.6 3.0 0.2 14.0 0.3 14.3 – 14.3
15 months ended 31 December 2011
Head Core Continuing Dis-continued Total
Agri- Infra- Support office operating Trans- operations operations
business structure Services Hotels divisions portation
£m £m £m £m £m £m £m £m £m £m
Segment operating 112.2 82.1 15.3 46.4 – 256.0 53.0 309.0 0.3 309.3
assets
Investments in – – – – 6.9 6.9 – 6.9 – 6.9
associates
Other investments – – – – 1.7 1.7 – 1.7 – 1.7
Investment in
jointly controlled – – – – – – – – – –
entity
Unallocated assets/
interest bearing – – – – 13.8 13.8 – 13.8 – 13.8
assets
Total Assets 112.2 82.1 15.3 46.4 22.4 278.4 53.0 331.4 0.3 331.7
Segment operating
liabilities 47.1 13.2 9.0 16.9 – 86.2 39.5 125.7 0.1 125.8
Unallocated
liabilities/interest – – – – 50.2 50.2 – 50.2 – 50.2
bearing liabilities
Total Liabilities 47.1 13.2 9.0 16.9 50.2 136.4 39.5 175.9 0.1 176.0
Depreciation of 2.3 4.1 0.6 1.5 0.2 8.7 1.2 9.9 – 9.9
segment assets
Amortisation of 1.0 0.1 0.4 – – 1.5 0.6 2.1 – 2.1
segment assets
Capital expenditure 6.4 4.7 0.8 0.5 0.1 12.5 30.9 43.4 – 43.4
Geographical analysis
Year ended 31 December 2012
Consolidated
continuing Discontinu
Southern East West Central Asia operations
£m £m ing
Africa Africa Africa Africa Americas
Europe £m operation
£m £m £m £m £m £m
Rev enue by location of
external customers
123.7 27.3 18.4 18.8 5.7 10.9 1.7 206.5 –
Revenue by location of assets 144.3 25.2 17.7 18.8 0.5 – – 206.5 –
Net assets 99.4 2.1 69.5 8.8 (5.9) – – 173.9 0.3
Capital expenditure 9.9 0.5 2.9 0.9 0.1 – 14.3 –
– –
15 months ended 31 December 2011
Consolidated
continuing
Southern East West Central Americas operations Discontinuing
Africa Africa Africa Africa Europe £m £m operation
£m £m £m £m £m £m
Rev enue by location of
external customers 100.3 36.5 16.2 10.0 19.0 6.4 188.4 0.2
Revenue by location of assets 128.2 35.9 14.7 8.9 0.7 – 188.4 0.2
Net assets/(liabilities) 66.4 10.7 65.1 20.3 (7.0) – 155.5 0.2
Capital expenditure 7.7 30.3 4.9 0.3 0.2 – 43.4 –
5. Revenue
Continuing operations Discontinued operation Total
15
Year 15 months Year Year 15 months
months
ended 31 ended 31 ended 31 ended 31 ended 31
ended 31
December December December December December
December
2012 2011 2012 2011 2012 2011
£m £m £m £m £m £m
Sale of goods 80.3 52.1 – – 80.3 52.1
Services 126.2 136.3 – 0.2 126.2 136.5
206.5 188.4 – 0.2 206.5 188.6
6. Group net operating costs
Year
ended 15 months
ended 31 ended 31
Decembe December
r
2012 2011
£m £m
Cost of sales 146.9 137.9
Operating costs 77.1 81.0
Gain arising on fair valuation of biological assets (note 16)* (9.2) (27.4)
Other operating income (0.6) (18.0)
NET OPERATING COSTS 214.2 173.5
INCLUDED IN NET OPERATING COSTS ABOVE ARE:
Depreciation of property, plant and equipment 9.6 9.9
Amortisation of intangible assets (other than goodwill) 2.2 2.1
Share based payments (notes 24 and 27) 2.3 0.7
Operating lease rentals:
– Land and buildings 3.1 1.7
– Plant and machinery 0.2 –
– Aircraft 3.4 6.0
Staff costs (note 9) 35.0 41.4
Legal fees and listing costs 1.6 2.8
Gain on acquisition – ATdm (note 7)* – (4.0)
Gain on acquisition – Home Farms (note 7)* – (11.8)
Restructuring and reorganisation costs 4.0 -
Pre-operating losses 1.8 -
Acquisition costs – 0.5
Impairment of trade receivables 0.5 0.5
Impairment of other investments – 0.4
Loss on sale of property, plant and equipment 0.4 –
Profit on disposal of subsidiary – (0.5)
Included in the prior period result of the transportation segment are start up costs of £8.1m.
* In accordance with the requirements of IAS 1, the Directors have presented movements in the fair value of biological assets a nd gains arising on acquisition as separate
items on the face of the income statement to provide full visibility of these items.
Auditor’s remuneration
Year 15 months
ended 31 ended 31
December December
2012 2011
£m £m
Fees payable to the Company’s auditors for the audit of the Company’s annual accounts 0.1 0.1
For the audit of the Company’s subsidiaries pursuant to legislation 0.3 0.4
Total audit fees 0.4 0.5
All services related to corporate finance transactions * – 0.8
Total fees payable to the Company’s auditors 0.4 1.3
* Fees relating to listing and share issues during the period.
7. Acquisition of subsidiaries
7(a) Acquisition of subsidiaries in the current period
Lonagro Tanzania
With effect from 17 January 2012, the Group acquired 100% of t he issued share capital of LonAgro Tanzania Limited for a
consideration of US1.4m (£0.9 m). LonAgro Tanzania is based in Dar es Salaam, the commercial hub of Tanzania, and has
exclusive John Deere distributorship for Tanzania.
Fair value Values
Pre acquisition adjustment recognised on
carrying value on acquisition acquisition
£m £m £m
Inventory 0.1 – 0.1
Intangible assets related to franchise – 1.2 1.2
Trade and other payables (0.1) – (0.1)
Deferred tax liability – (0.3) (0.3)
NET IDENTIFIABLE ASSETS AND LIABILITIES – 0.9 0.9
Consideration paid – – 0.9
Goodwill on acquisition – – –
LonAgro Tanzania contributed £1.8m to the Group’s revenue and £0.4m loss before tax for the period between the date of
acquisition and the reporting date.
There were no significant transaction costs incurred to acquire the company.
7(b) Acquisition of subsidiaries in the prior period
AFEX
W ith effect from 1 January 2011, the Group acquired 100% of the issued share capital of Global Horizon s Ltd a company
registered in the Isle of Man (which via subsidiaries in Kenya and South Sudan trades as AFEX) for an initial consideration o f
US$3m (£1.9m). Further payments of up to US$5m (£3.1m) will be payable over two years based on an EBIT related ea rn-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 o f
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:
Fair value Values
Pre acquisition adjustment recognised on
carrying value on acquisition acquisition
£m £m £m
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 relationships – 2.3 2.3
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 £0.1m 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.
In 2011, AFEX contributed £8.4m to the Group’s revenue and £0.7m profit to the Group’s profit before tax for the period
between the date of acquisition and the reporting date.
There have been no changes in the recognised amount of contingent consideration, which have been based on the future
probability of the business.
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 £0.3m.
Pursuant to the share purchas e 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 South African Rand (ZAR) 35.0m (£3.0m).
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:
Fair value Values
Pre acquisition adjustment recognised
on
carrying value on acquisition
acquisition
£m £m £m
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 relationships – 0.1 0.1
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 £0.1m 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 £2.3m allowing for the effect of discounting. The corresponding entry has
been recorded as a debit to other reserves.
In 2011, Fish On Line (Pty) Limited contributed £5.8m to the Group’s revenue and £0.1m loss to the Group’s profit before tax for the period
between the date of acquisition and the reporting date.
7(b) Acquisition of subsidiaries in the prior period (continued)
GRINDROD PCA (now LONRHO LOGISTICS)
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 (£4.6m).
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:
Fair value Values
Pre acquisition adjustment recognised
on
carrying value on acquisition
acquisition
£m £m £m
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 relationships – 1.2 1.2
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 £0.1m 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.
In 2011, Grindrod PCA contributed £17.2m to the Group’s revenue and £0.2m profit to the Group’s profit before tax for the
period between the date of acquisition and the reporting date.
ALDEAMENTO TURISTICO DE MACUTI SARL “ATDM”
On 30 September 2011, the Group acquired 80% of the issued share capital of ATdM from Cambria Africa Plc
(formally LonZim Plc) for US$5.1m (£3.4m), which will be settled in cash over the next 5 ye ars. Pursuant to the
share purchase agreement, Lonrho Hotels will also take responsibility for liabilities up to US$2.7m (£1.7m), the fair
value of which has been determined at £1.2m.
The transaction has been accounted for by the purchase method of account ing. The fair value of the net assets at 30
September 2011 is set out below:
Fair value Values
Pre acquisition adjustment recognised
on
carrying value on acquisition
acquisition
£m £m £m
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 to non-controlling interest 0.6
Deferred consideration 3.4
Gain on acquisition (4.0)
The transaction costs incurred to acquire the company were £0.1m 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 i s 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 v alue. The gain ar ising from negativ e goodwill of £4.0m is
presented within operating income within the income statement.
In 2011, ATdM contributed £nil to the Group’s revenue and £nil profit to the Group’s profit before tax for the period
between the date of acquisition, and the reporting date
7(b) Acquisition of subsidiaries in the prior period (continued)
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 a nd Crosshairs Point (Private) Limited collectively known as Home Farms for a consideration of
US$60. Home Farms consists of 3 leased farms (20 year leases) and substantial leasehold buildings including a 58,000 square f eet
agricultural packhouse and high c are 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:
Fair value Values
Pre acquisition adjustment recognised
on
carrying value on acquisition
acquisition
£m £m £m
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 £0.1m and have been expensed in operating costs in the income
statement.
The negative goodwill arising on the acquisition of Hom e Farms is attributable to the beneficial lease arrangements acquired in
respect of leasehold land and buildings. No fair v alue has been attributed to the work force or customer relationships acquir ed as
these were considered immaterial. W orking capital as sets 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 an d did not
have sufficient international experience to reach all potential markets.
The £11.8m benefit arising from the negative goodwill is presented within operating income within the income statement.
In 2011, Home Farms contributed £1.0m to the Group’s revenue and £0.5m loss to the Group’s profit befor e tax for the period
between the date of acquisition and the reporting date.
8. D i s c o n t i n u e d o p e r a ti o n s
2012
Support Services division
Following a review by the Board in December 2012, the Group decided not to continue to support
operations of Lonrho W ater and Swissta Mozambique. Costs of discontinuing the operation were
less than £0.1m. The comparatives have been re-presented accordingly.
Year ended 15 months
31 ended 31
December December
2012 2011
£m £m
CASH FLOWS FROM DISCONTINUED OPERATION
Net cash used in operating activities (0.1) –
Net cash from financing activities – –
NET MOVEMENT IN CASH AND CASH EQUIVALENTS (0.1) –
2011
Fly540 Uganda
Following a review by the Board in December 2011, the Group decided not to continue to support air
freight operations of Fly540 Uganda Ltd, which consequently ceased trading. Costs of discontinuing
the operation in 2011 were less than £0.1m.
15 months
ended 31
December
2011
£m
CASH FLOWS FROM DISCONTINUED OPERATION
Net cash used in operating activities (1.7)
Net cash from financing activities 1.9
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 0.2
9.Staff numbers and costs
The aggregate remuneration comprised (including Directors):
Group Company
Year 15 months Year 15 months
ended 31 ended 31 ended 31 ended 31
December December December December
2012 2011 2012 2011
£m £m £m £m
W ages and salaries 33.4 39.4 4.0 5.6
Compulsory social security contributions 1.3 1.8 0.4 0.5
Share based payments 2.3 0.7 2.3 0.7
Pension costs 0.3 0.2 0.3 0.2
37.3 42.1 7.0 7.0
The average number of employees (including Executive Directors) was:
Group Company
Year 15 months Year 15 months
ended 31 ended 31 ended 31 ended 31
December December December December
2012 2011 2012 2011
Number Number Number Number
Infrastructure 265 234 – –
Agribusiness 2,388 1,634 – –
Transportation 288 521 – –
Support services 838 902 – –
Hotels 480 364 – –
Central 27 30 21 21
4,286 3,685 21 21
REMUNERATION OF DIRECTORS
Detailed disclosure of remuneration of Directors is given in the Directors’ Remuneration Report.
1 0 . N e t f i n a nc e i n c o m e
Year 15 months
ended 31 ended 31
December December
2012 2011
£m £m
Bank interest receivable 0.7 0.8
Foreign exchange gain 4.9 6.0
FINANCE INCOME 5.6 6.8
Interest on loans repayable within five years and overdrafts (10.6) (8.6)
Foreign exchange loss (3.7) (7.1)
Interest on finance leases (0.4) (0.5)
FINANCE EXPENSE (14.7) (16.2)
NET FINANCE EXPENSE (9.1) (9.4)
Included in interest payable on loans rep ayable within five years and overdrafts of £10.6m is an amount of £2.3m (2011: £nil) relating to
the premium payable at the maturity of the US$70m 7.0% Guaranteed Convertible Bonds due 2015 (refer to note 31).
1 1 . T r a nsf er of su b si di ar y t o j oi nt l y c o nt r ol l e d e nt i t y
On the 29 June 2012 Lonrho Plc transferred its Transportation division headed by Lonrho Aviation BVI
to a jointly controlled entity Rubicon Diversified Investments Plc ('Rubicon'), renamed Fastjet Plc
(‘Fastjet’) on the 6 August 2012, resulting in a 73.6% equity interest in Fastjet Plc immediately post the
transaction with a market value of £55.7m represented by 1,160,037,455 ordinary shares in Fastjet Plc
at 4.8p per share. Due to the terms of the articles of association, shareholder agreements in place and
board constitution the Directors do not consider that Lonrho has control of Fastjet Plc. The Directors
consider that, due to the composition of the board of Directors of Fastjet, Lonrho controls this entity
jointly with easyGroup and as such the Group's interest in Fastjet Plc is consolidated as a jointly
controlled entity. In accordance with IFRS3 (2008) the interest in Fastjet Plc was recognised at its fair
value at the date of transaction and the resulting gain recognised in the income stat ement. The assets
and liabilities transferred to Fastjet Plc and the gain at 29 June 2012 are set out in the table below:
29 June
2012
£m
ASSETS
Goodwill 0.1
Other intangible assets 3.4
Property, plant and equipment 30.7
Inventories 2.9
Trade & other receivables 11.7
TOTAL ASSETS 48.8
LIABILITIES
Loans and borrowings (1.1)
Deferred tax (0.2)
Obligations under finance leases (19.3)
Trade & other payables (15.2)
Bank overdraft (Net) (3.5)
TOTAL LIABILITIES (39.3)
NET ASSETS 9.5
Fair value of jointly controlled entity 55.7
Net assets of subsidiary contributed (9.5)
Non-controlling interests * (8.6)
Liabilities recognised on transaction and held in provisions (1.5)
Costs relating to transaction (2.1)
Cumulative foreign exchange translation differences recognised (0.5)
Gain on contribution of subsidiary to jointly controlled entity 33.5
*Non-controlling interest represents the accumulated share of results attributable to non -controlling
interest of the Lonrho Aviation Group immedia tely prior to the transaction.
1 2 . I ncome t ax expense
Year 15 months
ended 31 ended 31
December December
2012 2011
Recognised in the income statement £m £m
CURRENT TAX EXPENSE
Current period 0.6 1.6
DEFERRED TAX
Credit for the period (0.9) (1.3)
TOTAL INCOME TAX (CREDIT)/EXPENSE IN THE INCOME STATEMENT (0.3) 0.3
Year ended 31 15 months
December ended 31
December
2012 2011
Reconciliation of effective tax rate £m £m
(Loss)/profit before tax (6.3) 0.8
Income tax using the domestic corporation tax rate (1.5) 0.2
Irrecoverable withholding taxes 0.3 0.2
Effect of tax rates in foreign jurisdictions (2.7) (7.3)
Capital losses utilised in respect of gain on contribution of subsidiary to jointly controlled entity (8.2) –
Impairment of jointly controlled entity non taxable 1.9 –
Reversal of provision against carrying value of associate – 1.0
Losses for which deferred tax is unrecognised 8.5 10.5
Effect of tax losses utilised (2.3) (1.5)
Non taxable items 3.7 (2.8)
TOTAL TAX EXPENSE (0.3) 0.3
UK Corporation tax is calculated at a rate of 24.5% (2011: 26.8%) of the estimated assessable loss (2011: profit) for the yea r. 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.
13. Earnings per share
The calculation of the basic and diluted profit per share is based on the following data:
Year ended 15 months
31 December ended 31
2012 2011
£m £m
(Loss)/profit for the purposes of basic earnings per share being net profit attributable to
equity holders of the parent (1.7) 6.0
(Loss)/profit for the purposes of diluted earnings per share (1.7) 6.0
2012 2011
Number of shares (millions) No. No.
Weighted average number of ordinary shares for the purposes of basic earnings per share 1,574.2 1,236.1
Effect of dilutive potential ordinary shares:
– Share options 1.8 20.1
Weighted average number of ordinary shares for the purposes of diluted earnings per share*
1,576.0 1,256.2
* The calculation of diluted earnings per share is based on the weighted average number of shares outstanding. The weighted aver age number of ordinary shares
outstanding during the period was considered in light of the Convertible Bond (note 31). The potentia l 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 av erage number of
ordinary shares has therefore not been adjuste d in respect of the potential ordinary shares associated with the bond issue.
Earnings per share
Year ended 31 December 15 months ended 31
2012 December 2011
(Loss)/earnings per share (0.11p) 0.49p
(Loss)/Diluted earnings per share (0.11p) 0.48p
14. Intangible assets
Development Customer Intellectual Contractual
Good costs Franchises relationships Brands property rights Licenses Total
will
£m £m £m £m £m £m £m £m £m
COST
Balance at 1 October 2010 16.1 - 1.7 3.4 1.0 0.1 - 0.2 22.5
Additions - 0.2 - - 0.4 - 4.5 - 5.1
Acquired through business combinations 2.5 - - 3.6 - - 11.8 - 17.9
Effect of movements in foreign exchange
rates (0.2) - - (0.1) - - (0.9) - (1.2)
BALANCE AT 31 DECEMBER 2011 18.4 0.2 1.7 6.9 1.4 0.1 15.4 0.2 44.3
Balance at 1 January 2012 18.4 0.2 1.7 6.9 1.4 0.1 15.4 0.2 44.3
Additions – 0.2 – – – – – 0.2 0.4
Acquired through business combinations
– – 1.2 – – – – – 1.2
Transfer of subsidiary to jointly controlled
entity (0.1) – – – – (0.1) (4.4) (0.2) (4.8)
Effect of movements in foreign exchange
rates (0.2) – – (0.1) – – (1.1) – (1.4)
Transfer to discontinued operations (0.6) – – – – – – – (0.6)
BALANCE AT 31 DECEMBER 2012 17.5 0.4 2.9 6.8 1.4 – 9.9 0.2 39.1
AMORTISATION AND IMPAIRMENT
Balance at 1 October 2010 0.6 – 0.2 0.7 0.8 – – 0.2 2.5
Amortisation for the period – – 0.3 0.7 0.3 0.1 0.7 – 2.1
BALANCE AT 31 DECEMBER 2011 0.6 – 0.5 1.4 1.1 0.1 0.7 0.2 4.6
Balance at 1 January 2012 0.6 – 0.5 1.4 1.1 0.1 0.7 0.2 4.6
Amortisation for the year – – 0.4 0.7 0.1 – 1.0 – 2.2
Transfer of subsidiary to jointly controlled
entity – – – – – (0.1) (1.0) (0.2) (1.3)
Effect of movements in foreign exchange
rates – – – – – – (0.1) – (0.1)
Transfer to discontinued operations (0.6) – – – – – – (0.6)
BALANCE AT 31 DECEMBER 2012 – – 0.9 2.1 1.2 – 0.6 – 4.8
CARRYING AMOUNTS
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
AT 31 December 2012 17.5 0.4 2.0 4.7 0.2 – 9.3 0.2 34.3
Amortisation and impairment charge
The amortisation and impairment charge is recognised in the operating costs line of the in come statement.
Goodwill acquired in a business combination is allocated at acquisition to the cash generating units (CGUs) that are
expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:
2012 2011
Primary Reporting Segment CGU £m £m
AGRIBUSINESS Rollex (Pty) Limited 7.9 7.7
Trak Auto Lda 0.8 0.8
Oceanfresh Seafoods (Pty) Limited 0.5 0.5
Lonrho Logistics (Pty) Limited 1.5 1.9
10.7 10.9
INFRASTRUCTURE Luba Freeport Limited 3.5 3.4
KwikBuild Corporation Limited 2.7 2.8
6.2 6.2
TRANSPORTATION Five Forty Aviation Limited – 0.1
– 0.1
SUPPORT SERVICES Global Horizons Limited 0.6 0.6
0.6 0.6
TOTAL 17.5 17.8
At 31 December 2012 the Directors have reconsi dered the economic lives attributed to these assets and consider they
remain appropriate. No cash generating unit is considered to have any individual significant amount of goodwill.
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 forecast s 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. The Directors considers cashflow for a five year period
as well a terminal value in the sixth year in determining value in use. 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 rate
determined for each individual company consideri ng historic and future compounded annual growth rates. The growth
rates used for the year 4 and 5 forecast within Agribusiness are Rollex (Pty) Limited 4% (2011: 12%), Trak Auto Lda 10%
(2011: 12%), Oceanfresh Seafoods (Pty) Limited 5% (2011: 12%), Lonrho Logistics (Pty) Limited 6% (2011: 12%);
Infrastructure, Luba Freeport Limited 8% (2011: 10%) and KwikBuild Corporation Limited 16% (2011: 20%); and Support
Services being Global Horizons Limited 6% (2011: 12%). The only exceptions are for Luba Freeport Li mited, reflecting the
significant capital investments in the project and the length of the remaining operating concession (16 years), the
Directors have extended the 3 year forecast approved by the Board to reflect the remaining life of the concession in
determining value in use. For KwikBuild Corporation, reflecting the challenges faced in delivering certain contracts, the
directors have adjusted the 3 year forecast approved by the Board to reflect latest management expectations. The
directors are satisfied that, based on these revised forecasts, sufficient headroom exists for no impairment to be required
as at 31 December 2012. This will be revisited in future years when an impairment charge may be required if the planned
improvements to this business do not materialise. The pre-tax rates used to discount the forecast cash flows within
Agribusiness are Rollex (Pty) Limited 13% (2011: 12%), Trak Auto Lda 15% (2011: 12%), Oceanfresh Seafoods (Pty)
Limited 13% (2011: 12%), Lonrho Logistics (Pty) Limited 13% (2011: 12%); Infrastructure, Luba Freeport Limited 13%
(2011: 10%) and KwikBuild Corporation Limited 15% (2011: 20%); and Support Services being Global Horizons Limited
15% (2011: 12%).
Management carried out a range of sensitivity analysis on all the as sumptions 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 t his
analysis confirmed that there was sufficient headroom in the carryi ng value of goodwill for these entities.
Other than as noted above, the Directors do not consider that any reasonably possible scenario currently foreseen could
result in goodwill impairment.
Estimates and judgements
The Directors believe that the esti mates 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.
1 5 . P rop e r ty, pl a nt a nd equ ipm en t
Long Short
leasehold leasehold
Fixtures
land and land and Plant and
and
buildings buildings machinery fittings Aircraft Total
£m £m £m £m £m £m
COST
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 foreign exchange 1.9 1.0 (0.4) 1.3 1.0 4.8
BALANCE AT 31 DECEMBER 2011 61.0 69.5 19.8 9.6 34.1 194.0
Balance at 1 January 2012 61.0 69.5 19.8 9.6 34.1 194.0
Additions * 0.2 4.8 5.9 3.1 0.3 14.3
Revaluations 2.3 – – – – 2.3
Disposals (0.1) (0.3) (1.1) (0.2) (3.3) (5.0)
Elimination of subsidiary to jointly controlled entity – – (1.2) (1.7) (30.6) (33.5)
Transfer between asset class – – 0.6 (0.6) – –
Effect of movements in foreign exchange (5.4) (3.3) (1.7) (1.0) (0.5) (11.9)
BALANCE AT 31 DECEMBER 2012 58.0 70.7 22.3 9.2 – 160.2
DEPRECIATION AND IMPAIRMENT LOSSES
0.8 9.4 5.8 1.9 1.0 18.9
Balance at 1 October 2010
0.2 4.2 3.1 1.6 0.8 9.9
Depreciation charge for the period
(0.4) (0.1) – – – (0.5)
Eliminated on revaluation
– – (0.7) – (0.3) (1.0)
Disposals
0.1 0.3 (0.3) 0.4 – 0.5
Effect of movements in foreign exchange
0.7 13.8 7.9 3.9 1.5 27.8
BALANCE AT 31 DECEMBER 2011
0.7 13.8 7.9 3.9 1.5 27.8
Balance at 1 January 2012
Depreciation charge for the year 0.3 3.7 3.2 1.5 0.9 9.6
Eliminated on revaluation (0.2) – – – – (0.2)
Disposals (0.1) (0.2) (0.7) (0.1) (0.9) (2.0)
Elimination of subsidiary to jointly controlled entity – – (0.4) (0.9) (1.5) (2.8)
Effect of movements in foreign exchange – (0.8) (1.2) (0.2) – (2.2)
BALANCE AT 31 DECEMBER 2012 0.7 16.5 8.8 4.2 – 30.2
CARRYING AMOUNTS
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
At 31 December 2012 57.3 54.2 13.5 5.0 – 130.0
* Additions of £14.3m include £1.7m for non cash items.
In the current period, the Company had fixed assets brought forward with a net boo k value of £0.4m (2011: £0.4m). During the
period, the Company acquired fixed assets for £0.1m (2011: £0.1m). The depreciation charge for the period was £0.2m (2011:
£0.1m). The net book value as at 31 December 2012 was £0.3m (2011: £0.4m). These fixed ass ets relate to fixtures and fittings.
Leased plant and machinery and aircraft
At 31 December 2012, the net carrying amount of leased assets was £4.0m (2011: £25.1m). See note 25 for details of
the lease obligations.
Long leasehold land and buildings
In 2010 £25.5m 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 at Luba Freeport 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 servi ce.
Long leasehold land and buildings relating to Hotel Cardoso SARL were revalued in December 2012 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 feasabilities and comparative market information reflecting the current
demand for hotels in the relevant cities. A revaluation gain of £2.5m has arisen on Hotel Cardoso.
On 31 Dec ember 2012, had rev alued long leas ehol d land and buildings been c arried at his torical c ost less
accum ulat ed depreciation, their carrying amount would be approximately £0.6m (2011: £0.8m). The revaluation
surplus is disclosed in note 24. 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 £2.6m (2011:
£1.6m) which are not depreciated until they are brought into use. Assets of £nil (2011: £nil) were brought into use in
the period.
Capital commitments
Details of capital commitments in relation to property, plant and equipment are disclosed in note 33.
Borrowing costs
The amount of borrowing costs in respect of interest capitalised during the year was £nil (2011: £nil) and has been
included within long leasehold land and buildings.
16. Biological assets
Stone fruit
orchards Blueberries Livestock Total
£m £m £m £m
Balance at 1 January 2012 32.8 0.9 0.1 33.8
Transfer to inventory (0.2) – – (0.2)
Due to physical changes – 2.6 – 2.6
–
Changes in assumption: reduction in farming costs 1.4 – 1.4
Changes in assumption: reduction in WACC 5.2 0.2 – 5.4
Changes in assumption: reduction in stone fruit yields (4.4) – – (4.4)
Discount unwinding 3.9 0.3 – 4.2
Foreign exchange movements (2.3) (0.1) – (2.4)
31 December 2012 36.4 3.9 0.1 40.4
The Group has a 200 hectare fruit orchard that grows a range of stone fruits, primarily peaches (188 hectares), and
blueberry bushes (12 hectares) which are part of a longer term farming operation. The stone fruit orchard was planted
in 3 Phases (Phase 1, Phase 2 and Phase 3) over the period 2009 to 2011. The stone fruit trees take an average of 5
years to become fully mature to give maximum yields and have on average 15 year s of minimum productive life cycle
thereafter. The blueberry bushes plantation was also planted in 3 Phases (Phase 1, Phase 2 and Phase 3) over the
period 2010 to 2012. The blueberry bushes take an average of 3 years to become fully mature to give maximum
yields and have on average 10 to 12 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 startup
operations.
Under IAS 41, Biological Assets are required to be accounted for at 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 stone fruit 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 stone
fruit and blueberry based on the 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 12.70%
(2011: 14.86%) being the group weighted averag e cost of capital of 8.7% (2011: 10.86%) plus 4% as a farming
industry risk factor. The movement in fair value arising on foreign exchange is taken to reserves (£2.4m), the transfer
to inventory is taken to the balance sheet (£0.2m) and the remaining net m ovement is taken to the income statement
(£9.2m).
The change in discount rate to 12.70% (2011: 14.86%) has resulted in a fair value increase of £5.4m (stone fruit
£5.2m, blueberries £0.2m).
As the biological asset matures the discount rate unwinds year o n year to give a movement in the fair value. Both fair
value gains and losses 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. The unwinding of the discount rate has led to a fair value gain
of £4.2m (stone fruit £3.9m, blueberries £0.3m).
The base currency for the fair value calculations is the South African Rand as the market price for peaches and
blueberries is determined in that currency and the biological as set is held in a Rand functional currency entity. Each
year after initial recognition there will be a foreign exchange movement on the opening fair value. The exchange rate
used on 31 December 2012 is 13.6859 (Rand to the Pound) (2011: 12.5437). This has r esulted in a negative
movement on opening fair value of £2.4m arising on foreign exchange (stone fruit £2.3m, blueberries £0.1m).
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 stone fruit harvest amounted to £0.2m (2011: £0.1m).
The Group has used a third party to assist in its assessment of future yields for the biological assets.
In 2012, the life cycle for Phases 1, 2 and 3 progressed to reach a point where Phase 1 (48 hectares) is due to yield in
full in 2013, Phase 2 (92 hectares) is due to yield at approximately 67% in 2013 and Phase 3 (48 hectares) is due to
yield at approximately 30% in 2013. Long term yield forecasts were revised down in the cur rent year by 11%. This
resulted in a net fair value loss of £4.4m.
In 2012, a phase 2 and phase 3 planting program of blueberry bushes has been completed. The value of these
bushes recognised at 31 December 2012 is £2.6m (Phase 1 £0.2m, Phase 2 and 3 £2. 4m).
As the orchard matures the associated costs of farming also become more stable 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 £1.4m for the period. The orchard is part of a larger farming operation incorporating
the growing of cash crops which have further reduced the farming costs directly associated to the stone fruit orchard.
Over the life of the orchard, the fair val ue will be affected each year by the unwinding of the discount factors and this
figure is an increase in value of £4.2m for the current period (2011: £0.5m).
Sensitivities over critical assumptions are included here: A 1% change in discount rate would af fect the value by
£2.7m; a 10% change in harvested yields would alter the valuation by £3.8m; and a 10% change in market prices
would impact the valuation by £4.9m.
The Directors note that there is significant estimation and judgment in the valuation of th e 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 2012 stone fruit trees comprised approximately 177,300 peach trees and 3 1,800 blueberry bushes (2011:
181,000 peach trees and 12,700 blueberry bushes) which range from newly established trees to plantations that are 3 years old
and are producing fruit for current harvest.
At 31 December 2012 livestock comprised 153 cattle, of which nil (2011: nil) are less than one year old and considered to be
immature assets. During the year the Group did not sell any cattle.
17. Investments in subsidiaries
The principal investment by the Company is in respect of Lonrho Africa (Holdings) Lim ited is stated at cost. This is subject to
impairment testing.
A list of principal subsidiaries is set out in note 36.
18. Investments in associates
Group Company
2012 2011 2012 2011
£m £m £m £m
6.9
At 1 January 2012/ 1 October 2010 10.3 5.9 7.7
– –
Additions to associate 2.5 1.2
(2.6) –
Share of (loss) after taxation – associates (1.6) –
(2.0)
Provisions in the year/period (4.3) (4.6) (3.0)
(2.3) – –
Disposals (1.3)
–
AT 31 DECEMBER 6.9 – 5.9
Disposal of associates
During the year, the Company disposed of its interest in Cambria Africa Plc (formally LonZim Plc). In addition the
Group disposed
of its interest in Lucapo Diamond Company Limited (form ally Lonrho Mining Limited). The share of results of
associates on the
income statement includes the trading results for the period when the Group had significant influence, as well as
the profit/loss
on disposal.
Cambria Africa Plc Lucapo Diamond
Co Total
£m £m
£m
Carrying value at 1 January 2012 5.9 1.0 6.9
Share of losses recognised in year (4.6) – (4.6)
Net book value at date of disposal 1.3 1.0 2.3
Sale proceeds 1.1 1.4 2.5
(Loss) /gain on disposal (0.2) 0.4 0.2
The Group had the follo wing inv estments in associates at the 2011 report ing date. The Group has no interest in
associates at 31
December 2012.
Country Ownership of ordinary share capital
2012 2011
Associates
Cambria Africa Plc (formally LonZim Plc) Isle of Man 0% 22.92%
Lucapo Diamond Company Limited (formally Lonrho Mining Ltd) Australia 0% 13.96%
19. Investments in jointly controlled entity and other Investments
Investments in jointly controlled entity
2012 2011
£m £m
–
At 1 January 2012 / 1 October 2010 –
–
Transfer from subsidiary (note 11) 55.7
134
–
Share of loss for the period (10.6)
–
Impairment of investment in jointly controlled entity (7.7)
–
AT 31 DECEMBER 37.4
The investment in jointly controlled entity represents the Group’s interest in Fastjet Plc.
Fastjet Plc
The market value of the Group's investment in Fastjet Plc at 31 December 2012 was £44.4m (31 December 2011:
£nil) with a book value of £37.4m (31 December 2011: £nil). At 27 March 2013, the market value of the Group's
investment in Fastjet Plc was £28.4m. FastJet Plc has not released its audited results for the period to 31
December 2012 at the date of this report and ac cordingly the Directors hav e included an estimate of the Group’s
share of the results of FastJet Plc for the period from 29 June 2012 to 31 December 2012. This estimate has
been deriv ed from management accounts of FastJet Plc updated to include an ov erlay for appropriate IFRS
adjustments. This process inc ludes the application of judgements and assumptions but the directors consider the
amounts disclosed to be materially accurate. W hilst there were no indiv idually signif icant estimates used in this
process it is possible that the reported result of Fastjet will differ from those assumed.
The carrying amount of jointly controlled entities are assessed at each reporting date to determine whether
there is any objectiv e ev idence that it is impaired and if a ny such indication exists, an impairment charge is
recorded in the income statement. Due to current market conditions experienced by FastJet Plc, an
impairment rev iew has been carried out which resulted in an impairment charge being recorded in the income
statement of £7.7m.
Summary of financial information on jointly controlled entity
Assets Liabilities Equity Revenues for Loss for
the
period the period
£m £m £m £m £m
2012
100.8 (50.9) 49.9 21.7 (17.0)
Other Investments
2012 2011
£m £m
At 1 January 2012 / 1 October 2010 1.7 0.6
–
Additions 0.1
–
Fair value gain 1.4
–
Impairment charge (0.4)
–
Disposals (1.3)
–
Elimination of subsidiary to jointly controlled entity (0.3)
AT 31 DECEMBER 0.1 1.7
During the year the Group disposed of its interest in Southwest Energy. The impact of this is shown below:
Southwest
Energy
2012
£m
Carrying value at 1 January 2012 1.3
Sale proceeds 1.0
Loss on disposal (0.3)
135
20. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Assets Liabilities
2012 2011 2012 2011
£m £m £m £m
At 1 January 2012/1 October 2010 1.8 0.7 4.1 3.0
Origination of temporary timing differences 1.4 1.3 - -
Reversal of temporary timing differences (1.2) - (0.7) –
On acquisition of subsidiary – – 0.3 0.8
Disposals – – (0.1) –
Elimination of subsidiary to jointly controlled entity – – (0.2) –
Exchange differences – (0.2) (0.1) 0.3
AT 31 DECEMBER 2.0 1.8 3.3 4.1
The deferred tax liability at 1 January 2012 and 1 October 2010 related to the revaluation of property, plant and
equipment and deferred tax liabilities recognised on a cquired intangibles.
There have been no deferred tax assets and liabilities off -set in the current or preceding period.
The deferred tax asset relates to previous trading losses in certain Group companies. The asset will be
recoverable in future periods, which is supported by the future cashflows of the relevant businesses. There are no
expiry dates on the carry forward of losses.
21. Inventories
2012 2011
£m £m
Raw materials and consumables 2.4 3.7
Finished goods 20.7 16.4
23.1 20.1
22. Trade and other receivables
Group Company
2012 2011 2012 2011
£m £m £m £m
Amounts receivable from the sale of goods and services 27.3 28.3 – –
Amounts due from associates – 0.1 – –
Other receivables 11.2 12.7 0.6 0.1
Prepayments and accrued income 5.7 7.7 0.9 0.8
Amounts owed by Group undertakings – – 146.0 127.3
44.2 48.8 147.5 128.2
The average credit period taken on sales of goods and services is 50 days (2011: 56 days). No interest is charged on
receivables.
The Directors consider the carrying amo unt of trade and other receivables for the Group and Company
approximates to their fair value.
2012 2011
Movement in the allowance for doubtful debts £m £m
At 1 January 2012 / 1 October 2010 1.0 0.9
Increase in allowance recognised in the income statement 0.5 0.5
Utilised (0.2) (0.4)
Elimination of subsidiary to jointly controlled entity (0.1) –
AT 31 DECEMBER 1.2 1.0
136
Refer to note 31 for further information on credit risk management.
23. Cash at bank
2012 2011
£m £m
Bank balances 13.8 9.5
Bank overdrafts (5.9) (12.2)
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS 7.9 (2.7)
The Company had a bank overdraft of £1m at 31 December 2012 (2011: bank overdraft of
£0.7m).
Included in Cash at bank of £17.0m (2011 £12.7m) as presented in the Statement of financial position is £3.2m (2011:
£3.2m) subject to restrictions on use that means it is not freely available and accordingly does not represent cash and
cash equivalents.
24. Capital and reserves
Group reconciliation of movement in capital and reserves
Attributable to equity holders of the parent
Share Non
Share Share Translation option Revaluation Retained Other controlling Total
capital premium reserve reserve reserve earnings reserves Total interest equity
£m £m £m £m £m £m £m £m £m £m
At 1 October 2010 11.7 138.0 (8.7) 4.7 3.3 (36.1) (5.5) 107.4 20.3 127.7
Share capital issued 1.2 – – – – – 17.7 18.9 – 18.9
Share based payment charge – – – 0.7 – – – 0.7 – 0.7
Share options exercised 0.1 0.6 – – – – – 0.7 – 0.7
Costs associated with share
issues – (0.4) – – – – – (0.4) – (0.4)
Non-controlling interest dividends – – – – – – – – (0.2) (0.2)
Profit/(loss) for the period – – – – – 6.0 – 6.0 (5.5) 0.5
Subsidiaries acquired – – – – – – – – 2.2 2.2
Subsidiaries disposed – – – – – – – – (0.2) (0.2)
Transfer between accounts – – – – (0.1) 0.1 – – – –
Revaluation of property, plant &
equipment – – – – 4.2 – – 4.2 3.0 7.2
Non-controlling interest put option – – – – – – (2.3) (2.3) – (2.3)
Capital element of Convertible
Bond – – – – – – 1.1 1.1 – 1.1
Elimination of non-controlling
interest – – – – – (0.6) – (0.6) 0.6 –
Foreign exchange translation – – (1.7) – 1.7 (0.5) – (0.5) 0.3 (0.2)
AT 31 DECEMBER 2011 13.0 138.2 (10.4) 5.4 9.1 (31.1) 11.0 135.2 20.5 155.7
At 1 January 2012 13.0 138.2 (10.4) 5.4 9.1 (31.1) 11.0 135.2 20.5 155.7
*
Share capital issued 2.7 – – – – – 20.4 23.1 – 23.1
Share based payment charge 0.1 0.8 – 1.4 – – – 2.3 – 2.3
Provision for warrants – – – 1.0 – – – 1.0 – 1.0
Share options exercised 0.2 0.9 – – – – – 1.1 – 1.1
Shares issued in relation to earn-
out agreement – 0.4 – – – – – 0.4 – 0.4
Non-controlling interest dividends – – – – – – – – (0.2) (0.2)
Loss for the year – – – – – (1.7) – (1.7) (4.3) (6.0)
Elimination of subsidiary to jointly controlled
entity _ _ 0.5 _ _ _ _ 0.5 8.6 9.1
Revaluation of property, plant & equipment – – – – 1.5 – – 1.5 1.0 2.5
Foreign exchange translation – – (10.8) – (1.6) (0.5) – (12.9) (1.9) (14.8)
AT DECEMBER 2012 16.0 140.3 (20.7) 7.8 9.0 (33.3) 31.4 150.5 23.7 174.2
*Share capital issued proceeds of £24.1m less non cash costs of £1.0m
Share capital and share premium Ordinary shares
In millions of 1p shares 2012 2011
On issue at 1 January 2012 / 1 October 2010 1,298.6 1,171.8
Issued for cash 269.5 118.0
137
Shares issued to former director 8.2 -
Shares issued in relation to earn-out agreement 4.3 -
Exercise of share options 16.7 8.8
ON ISSUE AT 31 DECEMBER – FULLY PAID 1,597.3 1,298.6
On 3 January 2012, 269.5m new ordinary shares of 1p each were issued by a placing of shares at 10.0p per share.
The placing structure utilised attracted merger relief under Section 612 of the Companies Act 2006, resulting in a net
credit to a merger reserve of £20.4m. Subsequent internal transactions requir ed to complete the placing structure
have resulted in this becoming distributable.
On 20 May 2011, 118.0m new ordinary shares of 1p each were issued by a placing of shares at 16.5p per share. The
placing structure utilised attracted merger relief under Sec tion 612 of the Companies Act 2006, resulting in a net
credit to a merger reserve of £17.7m. Subsequent internal transactions required to complete the placing structure
have resulted in this becoming distributable.
The costs of share issues of £nil have be en deducted from the share premium account (2011: £0.4m).
On 13 September 2012, 8.2m ordinary shares of 1p were issued to a former director, David Lenigas (see
Remuneration Report). The share price at that date was 10.3p. The cost of this award has been re cognised in the
income statement and then transferred to share capital and share premium.
On 3 November 2012, 4.3m ordinary shares of 1p were issued in relation to the earn -out agreement with Trak Auto
LDA. The share price at that was 11.2p.
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.
Company reconciliation of movement in capital and reserves
Share Share Share Other Retained
capital premium option reserve earnings Total
£m £m £m £m £m £m
At 1 October 2010 11.7 138.0 4.7 – (31.4) 123.0
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 issues – (0.4) – – – (0.4)
Loss for the period – – – – (17.3) (17.3)
AT 31 DECEMBER 2011 13.0 138.2 5.4 17.7 (48.7) 125.6
At 1 January 2012 13.0 138.2 5.4 17.7 (48.7) 125.6
Share capital issued 2.7 – – 20.4 – 23.1
Share based payment charge 0.1 0.8 1.4 – – 2.3
Provision for warrants – - 1.0 – – 1.0
Share options exercised 0.2 0.9 – – – 1.1
Shares issued in relation to earn out agreement – 0.4 – – – 0.4
Loss for the year – – – – (21.6) (21.6)
AT 31 DECEMBER 2012 16.0 140.3 7.8 38.1 (70.3) 131.9
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 15).
Share based payment reserve
The share based payment reserve comprises the charges arising from the calculatio n of the share based payments
posted to the income statement (see note 27).
25. Interest-bearing loans and borrowings
138
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 31.
2012 2011
£m £m
NON-CURRENT LIABILITIES
Finance lease liabilities 1.3 18.6
Bank loans 25.2 27.9
Debt related derivative financial instruments 0.1 -
Convertible bond 43.0 44.4
Shareholder loans 3.2 3.6
Other loans 4.8 0.8
77.6 95.3
CURRENT LIABILITIES
Finance lease liabilities 1.2 4.9
Bank loans 22.0 2.9
Shareholder loans 0.2 –
Other loans 0.7 0.1
Bank overdrafts 5.9 12.2
30.0 20.1
At the reporting date the Company had interest bearing loans of £nil (2011: £nil).
Finance leases
Finance lease liabilities are payable as follows:
2012 2011
Present Present
Future Future
value value
of
minimum minimum of minimum
minimum
lease lease lease lease
payments Interest payments payments Interest payments
£m £m £m £m £m £m
Less than one year 1.3 (0.1) 1.2 6.4 (1.5) 4.9
Between one and five years 1.4 (0.1) 1.3 13.6 (4.8) 8.8
More than 5 years - – - 11.6 (1.8) 9.8
2.7 (0.2) 2.5 31.6 (8.1) 23.5
Interest is payable on the leases within a range of 7.8% 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:
2012 2011
£m £m
South African Rand 3.8 5.7
Central African Franc – 0.3
US Dollar 0.1 5.5
Sterling 1.0 0.7
Mozambique Metical 0.6 –
Tanzanian Shilling 0.2 –
Botswana Pula 0.2 –
5.9 12.2
The weighted average interest rates paid were 8.9% (2011: 10%).
The Company overdraft of £1.0m (2011 £0.7m) was denominated in sterling.
26. Shareholder loans
2012 2011
£m £m
139
Shareholder loans 3.4 3.6
3.4 3.6
2 7 . S h a r e o p ti o n s
At 31 December 2012 there were 97,250,000 (31 December 2011: 119,510,000) share options in issue
with an average exercise price of 16.28p (2011: 15.73p). No share options were granted or re -priced in
the current period.
The following share options were outstanding as at 31 Dece mber 2012:
Market price
per
Number of share at
share
Exercise Period during date of
options
Name Date granted granted Price which exercisable modification
Emma Priestley 13.01.2009 1,000,000 6.5p 13.01.2009–12.01.2014 5.8p
Geoffrey White 13.01.2009 2,000,000 6.5p 13.01.2009–12.01.2014 5.8p
David Armstrong 13.01.2009 1,000,000 6.5p 13.01.2009–12.01.2014 5.8p
Other employees and consultants 13.01.2009 1,750,000 6.5p 13.01.2009–12.01.2014 5.8p
David Lenigas 01.04.2010 20,000,000 13.75p 01.04.2010–31.03.2015 12.5p
Geoffrey White 01.04.2010 20,000,000 13.75p 01.04.2010–31.03.2015 12.5p
David Armstrong 01.04.2010 6,500,000 13.75p 01.04.2010–31.03.2015 12.5p
Emma Priestley 01.04.2010 1,000,000 13.75p 01.04.2010–31.03.2015 12.5p
Other employees and consultants 01.04.2010 5,500,000 13.75p 01.04.2010–31.03.2015 12.5p
David Lenigas 04.08.2011 3,333,333 18.4p 04.08.2012–03.08.2016 16.75p
David Lenigas 04.08.2011 3,333,333 22p 04.08.2013–03.08.2016 16.75p
David Lenigas 04.08.2011 3,333,334 25p 04.08.2014–03.08.2016 16.75p
Geoffrey White 04.08.2011 3,333,333 18.4p 04.08.2012–03.08.2016 16.75p
Geoffrey White 04.08.2011 3,333,333 22p 04.08.2013–03.08.2016 16.75p
Geoffrey White 04.08.2011 3,333,334 25p 04.08.2014–03.08.2016 16.75p
David Armstrong 04.08.2011 2,000,000 18.4p 04.08.2012–03.08.2016 16.75p
David Armstrong 04.08.2011 2,000,000 22p 04.08.2013–03.08.2016 16.75p
David Armstrong 04.08.2011 2,000,000 25p 04.08.2014–03.08.2016 16.75p
Other employees and consultants 04.08.2011 2,000,000 18.4p 04.08.2012–03.08.2016 16.75p
Other employees and consultants 04.08.2011 2,000,000 22p 04.08.2013–03.08.2016 16.75p
Other employees and consultants 04.08.2011 2,000,000 25p 04.08.2014–03.08.2016 16.75p
Other employees and consultants 04.08.2011 6,500,000 18.4p 04.08.2014–03.08.2016 16.75p
Total options in issue 97,250,000
The following share options were exercised during the period:
Share Pre tax gain
Number of
Price at
share date of
At date of Exercise Date of
options exercise
Name Date granted exercised exercise price exercise £
Emma Priestley 30.04.2007 1,250,000 8.36p 6.5p 21.06.2012 23,250
Jean Ellis 20.07.2007 350,000 8.36p 6.5p 21.06.2012 6,510
Jean Ellis 13.01.2009 500,000 8.36p 6.5p 21.06.2012 9,300
David Lenigas (former director) 13.01.2009 2,500,000 9.98p 6.5p 11.10.2012 87,000
David Lenigas (former director) 30.04.2007 3,750,000 10.25p 6.5p 21.09.2012 140,625
David Lenigas (former director) 20.07.2007 1,615,000 10.25p 6.5p 21.09.2012 60,563
Emma Priestley 20.07.2007 1,065,000 9.16p 6.5p 25.09.2012 28,329
Geoffrey White 30.04.2007 2,500,000 8.85p 6.5p 26.09.2012 58,750
Geoffrey White 20.07.2007 1,065,000 8.85p 6.5p 26.09.2012 25,028
140
Other employees and consultants 30.04.2007 875,000 11.25p 6.5p 24.04.2012 41,563
Other employees and consultants 30.04.2007 850,000 8.36p 6.5p 21.06.2012 15,810
Other employees and consultants 20.07.2007 350,000 8.36p 6.5p 21.06.2012 6,510
16,670,000
The number of shares exercised in the table above is 5,590,000 less than the numbe r of share options granted
at the respective grant date due to share options lapsed and forfeited. £1.1m was received from the exercise
of the above share options.
In accordance with IFRS 2 ‘Share -based payments’ share opt ions granted or re -priced during the
year hav e 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.
Date of Grant
04.08.2011 04.08.2011 04.08.2011
Share price 16.75p 16.75p 16.75p
Exercise price 18.4p 22.0p 25.0p
Expected volatility 48.00% 56.00% 85.00%
Expected life 5 years 5 years 5 years
Expected dividends 0 0 0
Risk-free interest rate 1.46% 1.46% 1.46%
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, vested at the date of grant and the basis of
settlement is in shares of the Company.
Long Term Incentive Plan:
On 13 September 2012, 10,491,100 potential ordinary shares were awarded to t wo directors in accordance with a
long term incentive plan.
The awards will be subject to a performance target based on the Company’s Total Shareholder Return (TSR). An
initial comparator index of 27 companies has been chosen from the FTSE Small Cap Supp ort Services Index, the
FTSE Food Producers Index and the FTSE 350 Food Processors Index. 25 per cent of the shares subject to an
award would vest if Lonrho’s TSR over the period from date of grant to vesting date was in the top half of the
relative comparator index and 100 per cent of the shares would vest if it was in the top quartile of the same index.
The Remuneration Committee may amend, vary or waive a performance target if events have occurred which cause
the Remuneration Committee to consider that it has become unfair or impractical.
Where an award vests before the intended vesting date in circumstances where the performance target cannot be
measured in the manner originally intended, the Remuneration Committee will determine the extent to which th e
award vests by reference to the Company’s performance over the period from the date the award was granted to
the date of vesting, having such regard to the performance target as it considers appropriate.
The income statement charge in 2012 for potential shares awarded under the long term incentive plan was not
significant (less than £0.1m). Refer to remuneration report for further details.
2 8 . T r a d e a n d o th e r p a ya b l e s
Group Company
2012 2011 2012 2011
£m £m £m £m
Trade payables 22.6 30.0 0.6 0.8
Amounts owed to Group undertakings – – 45.2 38.0
Indirect tax and social security liabilities 0.8 0.5 0.1 0.1
Deferred income 4.2 1.4 – –
Non-trade payables and accrued expenses 13.9 23.9 0.6 0.8
41.5 55.8 46.5 39.7
Group Company
2012 2011 2012 2011
£m £m £m £m
Analysed as:
Current liabilities 37.2 39.7 1.3 1.7
Non-current liabilities 4.3 16.1 45.1 38.0
41.5 55.8 46.4 39.7
141
Trade payables principally comprise outstanding amounts for trade purchases and on -going costs.
The average credit period taken for trade purchases is 59 days (2011: 85 days). The Directors
consider that the carrying amount of trade and other payables approximates to their fair value.
29. Provisions
As at 31 December 2012, the Group had provisions of £1.5m being li abilities recognised as part of the Fastjet
transaction. The Board expects this to be utilised within 1 -5 years (Note 11).
3 0 . No te s to th e s ta t e m e n t s o f c a s h fl o w s
Group Company
2012 2011 2012 2011
£m £m £m £m
Depreciation of property, plant and equipment 9.6 9.9 0.2 0.2
Amortisation of intangible assets 2.2 2.1 – –
Impairment of investment – – 4.6 –
Impairment of jointly controlled entity 7.7 – – –
Loss on other investments 0.3 (1.0) 0.2 –
Contribution of subsidiary to jointly controlled ent ity (33.5) – – –
Foreign exchange (gain)/loss (1.2) 1.1 (1.7) 1.0
Share based payment charge 2.3 0.7 2.3 0.7
Finance income (0.7) (0.8) – (0.1)
Finance expense 11.0 9.1 8.4 –
Profit on disposal of subsidiary – (0.5) – –
Share of results of associates 4.4 5.9 – 3.0
Share of loss of jointly controlled entity 10.6 – – –
Loss on sale of property, plant and equipment 0.4 – – –
Gain arising on fair valuation of biological assets (9.2) (27.4) – –
Gain on acquisitions – (15.8) – –
Revenue in respect of barter transactions (1.7) – – –
Income tax (credit)/expense (0.3) 0.3 – 0.1
ADJUSTMENTS TO LOSS/PROFIT FOR THE YEAR/PERIOD 1.9 (16.4) 14.0 4.9
3 1 . F i n a n c i al i n s t r u m e n t s
The Company has no financial assets apart from the Trade and other receivables and amounts owed by Group
undertakings included within note 22. 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, market and foreign currency risks arise 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 statemen ts. 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 resul ting 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 a ny 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 on
customers at the reporting date was £38.5m being the total of the carrying amount of trade and other receivables
as shown in the table below:
2012 2011
£m £m
Cash at bank 17.0 12.7
Trade receivables 27.3 28.3
Other receivables 11.2 12.8
55.5 53.8
The ageing of trade receivables at the reporting date was:
142
2012 2011
£m £m
Not due 12.7 15.6
Past due 0-30 days 6.8 5.3
Past due 31-60 days 2.8 2.2
More than 60 days past due 5.0 5.2
27.3 28.3
The movement on the provision for doubtful debts is disclosed in note 22. The provision at the
reporting date of £1.2m (2011: £1.0m) 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 receivables by geographic region was:
2012 2011
£m £m
W est Africa 2.3 1.9
Southern Africa 21.2 21.3
East Africa 0.5 4.4
Europe 1.0 0.7
North America 0.6 -
Rest of the W orld 1.7 -
27.3 28.3
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 ma tching the maturity profiles of
financial assets and liabilities.
The Group had undrawn facilities in respect of uncommitted bank overdraft of £7.3m at 31 December
2012 (2011: £26.1 m).
The following are the contractual maturities of financial liabilities , including estimated interest
payments and excluding the effect of netting agreements:
2012
Carrying Contractual 1 year 1 to 2 to 5 years
Amount cash flows or less <2 years <5 years and over
£m £m £m £m £m £m
Bank overdrafts 5.9 5.9 5.9 - - -
Trade and other payables 41.5 41.5 37.2 3.2 1.1 -
Bank loans 47.2 52.7 24.6 10.6 15.5 2.0
Debt-related derivative financial instruments 0.1 0.1 - 0.1 - -
Finance leases 2.5 2.7 1.3 0.8 0.6 -
Shareholder loans 3.4 5.4 0.6 0.2 0.6 4.0
Conv ertible bond 43.0 55.0 3.0 3.0 49.0 -
Other loans 5.5 8.3 1.0 2.9 0.8 3.6
9.6
149.1 171.6 73.6 20.8 67.6
2011
Carrying Contractual 1 year 1 to 2 to 5 years
amount cash flows or less <2 years <5 and
£m £m £m £m years over
£m £m
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
Convertible Bond
143
On 15 October 2010, LAH Jers ey Limited, a wholly -o wned subsidiary company incorporated in Jersey,
completed the offering of US$70m 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 pri ce 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 sev en
days before the date fixed for redemption. Each US$10,000 principal amount of bonds will entitle the holder to
convert into a US$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. The Group is therefore exposed to market risk in relation to the
convertible bond.
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 receiv ed from the issue of the Conv ertible Bonds hav e been split bet ween 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 8.2%. 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 2012 to be approximately £38.7m. This fair value has
been determined by reference to the market price at
31 December 2012.
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.
2012
Effective
interest 1 year 1-2 2-5 5 years
rate Total or less years years and
over
% £m £m £m £m £m
Cash at bank 0.2% 17.0 17.0 - - -
Loans 7.3% (56.1) (23.5) (2.7) (24.5) (5.4)
Finance lease liabilities 10.3% (2.5) (2.5) - - -
Conv ertible Bond 8.2% (43. 0) - - (43. 0) -
Bank overdrafts 8.9% (5.9) (5.9) - - -
(90.5) (14.9) (2.7) (67.5) (5.4)
2011
Effective
interest 1 year 1-2 2-5 5 years
rate Total or less years years and over
% £m £m £m £m £m
Cash at bank 1.0% 12.7 12.7 – – –
Loans 7.8% (35.3) (31.5) (0.3) (0.2) (3.3)
Finance lease liabilities 8.8% (23.5) (4.9) (5.0) (8.6) (5.0)
Conv ertible Bond 8.25% (44.4) – – (44.4) –
Bank overdrafts 9.5% (12.2) (12.2) – – –
(102.7) (35.9) (5.3) (53.2) (8.3)
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 and Central African
Franc, South Sudanese Pound, Tanzanian Shilling, Botswana Pula, and Namibian Dollar.
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 assets Total net assets
2012 2011 2012 2011
£m £m £m £m
US Dollar (51.5) (77.8) 61.4 52.4
144
South African Rand (8.8) (7.9) 31.2 (3.9)
Mozam bique M et ical 0.6 1.8 32.1 26.7
Kenyan Shillings (0.9) (1.0) 7.3 2.5
Central African Franc (11.3) (12.3) (11.3) (12.3)
South Sudanese Pound – – 1.4 (0.8)
Zambian Kwac ha – 0.3 – –
Tanzanian Shilling (0.4) – (0.3) –
Botswana Pula (3.6) – (1.3) –
Nam ibian Dollar 0.1 – – –
75.8 (96.9) 120.5 64.6
The following significant exchange rates applied during the year:
Average Rate Closing Rate
2012 2011 2012 2011
£m £m £m £m
US Dollar 1.58 1.56 1.62 1.55
South African Rand 12.99 12.74 13.69 12.54
Mozambique Metical 44.28 41.32 47.57 40.95
Kenyan Shilling 131.85 133.35 138.26 129.21
Central African Franc 797.17 760.29 800.23 768.48
The Company does not have any exposure to foreign currencies at the reporting date (2011: £nil).
Foreign currency sensitivity analysis
A 10% strengthening of the UK sterling ag ainst 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.
2012 2011
Equity Profit/(loss) Equity Profit/(loss)
£m £m £m £m
US Dollar (5.6) (0.1) (4.8) 1.4
South African Rand (2.8) (0.5) 0.4 –
Mozambique Metical (2.9) (0.1) (2.4) (0.2)
Kenyan Shilling (0.7) – (0.2) –
Central African Franc 1.0 0.1 1.1 0.1
South Sudanese Pound (0.1) (0.2) – –
Botswana Pula 0.1 0.1 – –
A 10% weakening of UK sterling against the above currencies at 31 December 2012 and 31 December 2011 would
have had the equal but opposite effect on the above currencies to the am ounts shown abov e, on the basis that all
other variables remain constant.
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, and
through the use of derivative instruments (interest rate swaps). At 31 December 2012, the Group had 72% (2011:
57%) of fixed rate debt and 28% (2011: 43%) of floating rate debt based on a gross debt of £108.8m (2011:
£115.4m).
The fair value of derivative instrument liabilities at 31 December 2012 was £0.1m (20 11: nil).
The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk
management section of this note.
Capital management
The Board’s policy for the Group and Company is to maintain a strong ca pital 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 t he 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.
145
The Directors keep under review the capital structure of the Group, with the objective of adopting a progressive,
prudent dividend policy once the Company has sufficient distributable reserves and has achieved a level of
sustained profitability, taking into account the Group’s financial position, underlying earnings and cash flows, the
resources required for the Group’s development and the prevailing market outlook.
Fair values
The fair value of a financial instrument is the price at which one party would assume the rights and/or duties of
another party. The following summarises the major methods and assumptions used in estimating the fair values
of financial instruments at the balance sheet date.
a) Investment in jointly controlled entity
Fair value is calculated with reference to the quoted price (unadjusted) of the instrument in an active market.
b) 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.
c) Finance 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 val ues reflect changes in interest rates.
d) Loans and borrowings
Fair value is calculated based on discounted expected future principal and interest cash flows.
e) Convertible bond
Fair value is calculated with reference to the quoted price (unadjusted) of the i nstrument in an active market.
f) Debt-related derivative financial instruments
The fair value is calculated by discounting expected future cash flows and translating at the appropriate balance
sheet rates.
The following table compares the estimated fair va lues of certain financial assets and liabilities to
their carrying values at the balance sheet date.
2012 2011
Net carrying amount Estimated Net carrying Estimated
fair value amount fair value
£m £m £m £m
NON-CURRENT ASSETS
Investment in jointly controlled entity 37.4 44.4 - -
CURRENT ASSETS
Trade and other receivables 44.2 44.2 48.8 48.8
Cash at bank 17.0 17.0 12.7 12.7
NON-CURRENT LIABILITIES
Finance lease liabilities (1.3) (1.3) (18.6) (18.6)
Loans and Borrowings (33.3) (32.5) (32.3) (28.5)
Debt-related derivative financial instruments (0.1) (0.1) - -
Convertible bond (43.0) (38.7) (44.4) (38.1)
Trade and other payables (4.3) (3.7) (16.1) (13.9)
CURRENT LIABILITIES
Finance lease liabilities (1.2) (1.2) (4.9) (4.9)
Loans and Borrowings (22.9) (25.3) (3.0) (6.2)
Bank overdrafts (5.9) (5.9) (12.2) (12.2)
Trade and other payables (37.2) (37.2) (39.7) (39.7)
The estimated fair values of the remaining financial assets and liabilities are consistent with their
carrying values at the balance sheet date
Fair value measurement hierarchy
146
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).
The following table presents the Group’s assets and liabilities that are measured at fair value.
2012 2011
Level 1 Level 2 Total Level 1 Level 2 Total
£m £m £m £m £m £m
LIABILITIES
Debt-related derivative financial instruments - 0.1 0.1 - - -
- 0.1 0.1 - - -
3 2. Op er at ing le ases
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
2012 2011 2012 2011 2012 2011 2012 2011
£m £m £m £m £m £m £m £m
Less than one year – 2.3 2.7 1.7 0.2 0.1 2.9 4.1
Between one and five years – 3.0 12.4 8.7 0.2 0.2 12.6 11.9
Over five years – - 13.5 - - - 13.5 -
– 5.3 28.6 10.4 0.4 0.3 29.0 16.0
Included in the above are property leases of the Company amounting to £0.4m (2011: £0.4m) less than 1
year and £1.3m (2011: £1.7 m) between one and five years.
All leases are on standard market terms with no amounts of variable lease payments.
33. Capital commitments
Other capital commitments of £nil will be paid within the next financial year (2011: £0.2m). The Company had
no capital commitments at 31 December 2012 (2011: £nil).
3 4 . Co n ti n g e n t l i a b i l i ti e s
There were no contingent liabilities at the reporting date (2011:none), the outturn of which t he
Directors consider could materially impact the financial statements . The Group has no contractual
obligation to provide future funding to associates or joint ventures and has no contingent liabilities in
respect of its associates and joint ventures. The Directors do not consider that any of the Group’s
associates or joint ventures have material contingent liabilities.
3 5 . Re l a te d p a r ti e s
The Group has a related party relationship with its subsidiaries (see note 36), associates and
jointly controlled entity’s (see note 18 and 19), 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 £144.2m (2011: £127.3m).
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.
Other amounts owed by Group undertakings at the reporting date were Lonrho Projects South Africa
(Pty) Limited £0.1m (2011: £nil), Lonrho Hotels Management Services Limited £0.1m (2011: £nil),
147
Lonrho Agribusiness Limited £0.3m ( 2011: nil) and Lonrho Support Services Limited £1.6m (2011:
£nil).
At the reporting date the Company owed Lonrho Africa Holdings (Jersey) Limited £44.8m (2011:
£37.2m), Lonrho Agribusiness Limited £0.8m (2011: nil), Lonrho Africa (Holdings) Limited £nil ( 2011:
£0.3m), and Eatec Limited £0.4m (2011: £0.4m).
Transactions with associates
Cambria Africa Plc (formally LonZim Plc)
During the period Lonrho disposed of its entire holding in Cambria Africa Plc (formally Lonzim Plc).
The final disposal took place on 12 September 2012. At 31 December 2012, the Company owned 22.92% of Cambria
Africa Plc and therefore is deemed to have exerted significant influence over the company during the year and up to the
point of disposal. During the period the Company charg ed £0.3m (2011: £0.7m) to Cambria Africa Plc as a
management charge. At the reporting date £0.3m was due from Cambria Africa Plc (2011: £nil).
During the year, Lonrho Hotels charged £0.1m to the Leopard Rock Hotel Company (Pty) Limited (2011: £0.1m), a
Cambria Africa Plc company, in relation to management fees. At the reporting date £0.1m remained outstanding (2011:
£0.1m).
On 1 July 2009 Cambria Africa Plc acquired an aircraft from Lonrho Air Three (BVI) Limited, a subsidiary of
Lonrho Plc, for a total of US$4.3m (£2.6m). The aircraft is leased to Five Forty Aviation Limited (which was a
Lonrho subsidiary until 29 June 2012). Total amounts charged under this arrangement during the year until 29
June 2012 were £0.2m (period ending 31 December 2011: £0.4m).
Cambria Africa Plc also leased one aircraft to Fly 540 Uganda, which was a Lonrho subsidiary for part of the
year (refer note 8), on industry standard operating lease terms. Total amounts charged under this arrangement
during the year until 29 June 2012 were £0.1m (period ending 31 December 2011: £0.3m).
During the period ended 31 December 2011 Cambria Africa Plc leased a further aircraft to Fly540 Uganda on
industry standard operating lease terms, however this lease arrangement came to an end in Febru ary 2011. Total
amounts charged under this arrangement in the period to 31 December 2011 were £0.1m.
On 30 September 2011 Lonrho Hotels (Holdings) Limited acquired an 80% interest from Cambria Africa Plc
in the share capital of Aldeamento Turistico de Ma cuti S.A.R.L. (details provided in Note 7b). During the
year up to the point at which Cambria Africa Plc was no longer a related party, Lonrho Hotels (Holdings)
Limited made deferred consideration, interest and loan payments to Cambria Africa Plc in respect of this
acquisition totaling £1.0m (2011:£0.2m). At the date of disposal £2.4m (2011: £3.1m) of deferred
consideration and £0.3m (2011: £0.6m) of loans were payable by Lonrho Hotels (Holdings) Limited to
Cambria Africa Plc.
Investments
Swissta DRC SPRL
The Group holds 20% of Swissta DRC SPRL. At the reporting date £0.1m (2011: £0.1m) was due from Swissta
DRC SPRL as a result of a short term non -interest bearing loan.
Arlington Associates International Limited
The Group recognised management fee income f rom Arlington Associates International Limited of £1.0m (2011:
£nil), which was outstanding at the reporting date.
Transactions with key management personnel
Key management personnel are considered to be the Company’s Directors.
During the period £0.04m (2011: £0.04m) was charged to the Group by DSG Chartered Accountants. Jean Ellis, non -
executive Director, is a partner in this firm.
The key management personnel compensations are as follows:
15 months
ended
Year ended
31 December 31 December
2012 2011
£m £m
Short-term employee benefits 2.6 4.0
148
Post-employment benefits 0.3 0.2
Gain on share options exercised 0.4 0.5
Payment in lieu of notice and other benefits 0.8 –
4.1 4.7
Total remuneration is included in “staff costs”
(see note 9).
36. Group entities
Principal subsidiaries
Ownership interest
Country of incorporation 2012 2011
Luba Freeport Limited Jersey 63% 63%
Sociedade Comercial Bytes & Pieces Limitada Mozambique 65% 65%
Hotel Cardoso SARL Mozambique 59.04% 59.04%
Lonrho Africa (Holdings) Limited* UK 100% 100%
Rollex (Pty) Limited South Africa 100% 100%
e-Kwikbuild Housing Company (Pty) Limited South Africa 35.91% 35.91%
Trak Auto Lda Mozambique 100% 100%
Oceanfresh Seafoods (Pty) Limited South Africa 51% 51%
Indigo Bay Seafoods Incorporated USA 51% 51%
Protea Seafoods Mauritius Mauritius 51% 51%
Fresh Direct Limited British Virgin Islands 100% 100%
Grand Karavia SPRL Democratic Republic of Congo 50% 50%
Lonrho Agribusiness (BVI) Limited British Virgin Islands 100% 100%
Aldeamento Turistico de Macuti SARL Mozambique 80% 80%
LonAgro Equipamentos Agricolas Limitada Angola 51% 51%
Lonrho Logistics (Pty) Limited South Africa 100% 100%
Fish On Line (Pty) Limited South Africa 68% 51%
Global Horizons Limited Isle of Man 100% 100%
Africa Expeditions Limited Kenya 95% 95%
Sportsgear Investments (Private) Limited Zimbabwe 100% 100%
Burp Track Investments (Private) Limited Zimbabwe 100% 100%
Crosshairs Point (Private) Limited Zimbabwe 100% 100%
Yuagong (Pty) Limited Botswana 100% 100%
Lonrho Support Services Limited* UK 100% 100%
LAH Jersey Limited* Jersey 100% 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.
A full list of Group companies will be included in the annual return registered with Companies House.
Although the Group owns less than half, or half, of the voting power of e-Kwikbuild Housing Company
(Pty) Limited and Grand Karavia SPRL, th e Group has Board control giving it the ability to gov ern
the financial and operating policies of those companies and hence the Group consolidates its
inv estment in these companies.
Exchange control procedures exist in Mozambique, Angola, Zimbabwe, Democr atic Republic of
Congo and South Africa which place restrictions on repatriation of cash to the Group.
37. Events after the reporting date
On 9 January 2013, the Company granted options over 484,612 ordinary shares of 1p each in the Company,
exercisable on 1st February 2016 in accordance with the rules of the Lonrho Sharesave Scheme at 7.8p per share.
On 18 January 2013, the Company granted options over 2,000,000 ordinary shares of 1p each in the Company
under the Lonrho Unapproved Share Option Plan exer cisable at 9.252p per share. The options have a two year
vesting period and a four year exercise period from date of grant.
Reconciliation to headline earnings/(loss) per share
The headline loss for the period was £12.2 million. The headli ne loss was 0.78p
per share.
149
31-
Dec-
Headline Earnings Reconciling Items 12
£m
Basic earnings per IAS (1.7)
Gain on contribution of subsidiary to jointly controlled entity (33.5)
Share of jointly controlled entity 10.6
Impairment of jointly controlled entity 7.7
Gain/(Loss) on Disposal of Associates and Investments 0.3
Share of results/Revaluation of associates 4.4
Headline loss (12.2)
150
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