| Fri 28 Mar 2008, 15:28 | | LAF - Lonrho announces year end results |
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LAF
LOLAF
LAF - Lonrho announces year end results
Lonrho Plc
(Formerly Lonrho Africa Plc)
(Incorporated and registered in England and Wales)
(Registration number 2805337)
(Share code: LAF; ISIN number: GB0002568813)
("Lonrho Africa" or "the Company")
Lonrho Announces Year End Results
Lonrho (AIM: LONR), the conglomerate with a structured portfolio of African
investments, is pleased to announce its results for the year ended 30
September 2007.
At the Extraordinary General Meeting held on 24 February 2006, shareholders
gave the Board a new mandate to commence the rebuilding of Lonrho and the re-
establishment of a significant presence in the continent of Africa by
investing in entities operating in a broad range of sectors. The current
global interest in Africa and the opportunities that exist there continue to
make this a coherent and logical strategy. This strategy has, to date,
resulted in Lonrho investing in a port, shipping, aviation, water bottling
plants, hotels, information technology businesses and natural resources.
Financial Review
The results for the year, as expected, reflect the fact that the businesses
invested in were either new start-up ventures or established businesses which
required resource in the form of cash and management. For the period to 30
September 2007 the Company has:
- Increased its turnover 229% to GBP11.2m (up from GBP3.4m in 2006).
- Incurred a loss of GBP15.5m (2006: GBP0.2m). The Company remains in an
investment and development phase.
- Raised GBP16.46m through the issue of 51,449,381 -ordinary shares of 1p
each at a price of 32p per share in May 2007, raised GBP41.47m in
placements since the year end to fund further acquisitions and expansion
of existing businesses.
- Increased its share price by 66%, up from 26.25p at the start of the
period to 43.5p at the end of the period.
Lonrho currently holds GBP18.2m cash at bank.
Operational Highlights
Lonrho`s core business sectors - transportation, infrastructure, support
services, hotels and natural resources - have continued to develop through
acquisition and the expansion of existing businesses within the Group.
During the year to 30 September, the Company has achieved the following:
Infrastructure
Luba Freeport Limited ("Luba Freeport") (63% holding)
- With Lonrho`s investment, Luba Freeport has developed a new 70 metre
extension to the existing quay. This was completed on time and on
budget, and became operational in November 2007. To meet demand, a
further 83 metres is currently under construction, which is due for
completion in mid-2008, giving the port 350 metres of usable quayside
frontage.
Transportation:
SA Independent Liner Services (Pty) Ltd ("SAILS")(66.7% holding)
- In July 2007 Lonrho acquired an initial 45% of SAILS and assumed Board
control. Since the year end, Lonrho has increased its holding to 66.7%.
- In 2007, SAILS expanded its fleet from 2 to 6 ships in line with
increased demand for services with further expansion plans for the fleet
in 2008.
Five Forty Aviation Limited ("Fly540")(49% holding)
- Fly540 has grown to become the second largest carrier in Kenya, behind
the national airline and has commenced international flights to Sudan,
Uganda and Tanzania.
- In October 2007, Fly540 agreed to establish its second regional hub in
Luanda, Angola. This is now under development and will commence flights
to fifteen domestic airports in mid-2008 with ten aircraft.
Lonrho Air (BVI) Limited ("Lonrho Air")(100% holding)
- Lonrho Air currently owns two ATR 42-320 aircraft, which are on lease to
Fly540, and has options to acquire 10 new ATR 72-500 aircraft which will
be 85% financed.
Norse Air Limited ("Norse Air")
- Because of a dispute with the management and the effect that this had on
the business, Lonrho has made the decision to fully provide against the
carrying value of its investment in Norse Air, effectively excluding it
from Lonrho Group operations, as at 30 September 2007. Please refer to
the Chief Executive`s Review below for further details.
Support Services
Water Bottling
- Since the acquisition of 100% of Swissta Holdings Limited in April 2007,
which owns a plant in Maputo, Mozambique, Swissta brand water has become
one of the market leaders of bottled water in Maputo.
- Lonrho Springs has been established to apply the business model
throughout the continent with water bottling plants now under
development in South Africa, the DRC and Angola.
Sociedade Comercial Bytes & Pieces, Limitada ("Bytes & Pieces")(65% holding)
- Lonrho acquired 65% of Bytes & Pieces based in Mozambique with plans to
replicate the business model throughout Africa. The expansion outside
Mozambique has begun under the name of Complete Enterprise Solutions
(CES) and has established an operational office and sales force in
Johannesburg.
Hotels
Hotel Cardoso
- The Hotel Cardoso, based in Mozambique, has seen a 22% increase in room
revenue over the past year and is currently undergoing a major
refurbishment due to be completed during 2008.
Further Hotel Opportunities
- A hotel project is underway in Lubumbashi in the DRC, and further
opportunities have been identified in Angola, Ivory Coast and Sudan.
Natural Resources
Lonrho Mining Limited ("Lonrho Mining")(21.64% holding)
Lonrho Mining has recently entered into a joint venture agreement with
Endiama, the national diamond company of Angola and exclusive concessionary
for diamond mining rights, on the 3,000 square kilometres Lulo Diamond
Concession ("Lulo").
Lulo contains numerous identified kimberlite pipes and two rivers with
extensive terrace gravels. The artisanal miner activity in these rivers
indicates that the gravels are diamond bearing.
Zimbabwe
LonZim Plc ("LonZim") - Post year end
- LonZim was established as a separate company to invest in projects in
Zimbabwe and those related to the Zimbabwean economy. LonZim was listed
on the London AIM stock exchange in December 2007 and raised GBP29
million. LonZim has subsequently made a number of key acquisitions in
the support services, telecommunications sectors and commercial property
in the Beira Corridor in Mozambique.
- Lonrho Plc received a free carry interest of 20% of the current issued
share capital of LonZim (current market value GBP7.5 million) and
charges a fee of 2 per cent of funds invested.
David Lenigas, Executive Chairman of Lonrho commented:
"The strength of Lonrho is founded on its name and long standing legacy
across the continent, where Lonrho as a brand is associated with project
delivery and development. We continue to build on this strength by the
recruitment of highly skilled and motivated individuals, who have detailed
knowledge and experience of working in Africa.
"Lonrho has made a good start towards rebuilding an African wide
conglomerate. From an initial single asset in Mozambique, the Company has
developed its investment strategy and continues to establish and improve its
business models. The key building blocks have been soundly established and
the Group now operates in five core business sectors, operating across
fourteen countries. "
The full Report & Accounts are now available on the Company`s website
www.lonrho.com and are expected to be posted to shareholders by Monday 31st
March 2008.
Enquiries:
Lonrho +44 (0) 20 7016 5105
David Lenigas, Chief Executive +44 (0) 7881 825 378
Emma de Borchgrave de Altena, +44 (0) 7867 785 177
Executive Director
Pelham Public Relations
Charles Vivian +44 (0) 20 7743 6672
+44 (0) 7977 297 903
James MacFarlane +44 (0) 20 7743 6375
+44 (0) 784 167 2831
Collins Stewart Europe Limited
Hugh Field +44 (0) 20 7523 8350
Jonny Sloan
CHAIRMANS STATEMENT
David Lenigas
Executive Chairman
27 March 2008
The African market place is booming, with sub-Saharan Africa achieving over
7% growth in Gross Domestic Product in 2007. Africa is creating some of the
strongest individual economies in the World, driven by the extensive oil, gas
and natural resources being developed.
From a political focus, Africa often features in the World`s news headlines
for its problems. Unfortunately, crisis, unrest and scandal are always
preferred by the headline writers to political progress, economic growth,
development and stability. However, as a Group directly engaged and doing
business across the continent, we are seeing evidence of significant progress
and that socio-political stability in Africa continues to improve.
At the Extraordinary General Meeting held on 24 February 2006, shareholders
gave the Board the mandate to commence the rebuilding of Lonrho and the re-
establishment of a significant presence in the continent of Africa by
investing in entities operating in a broad range of sectors. The current
global interest in Africa and the opportunities that exist there continue to
make this a coherent and logical strategy.
The strength of Lonrho is founded on its name and long standing legacy across
the continent, where Lonrho as a brand is associated with project delivery
and development. We continue to build on this strength by the recruitment of
highly skilled and motivated individuals, who have detailed knowledge and
experience of working in Africa.
Lonrho invests in businesses that will enable and support the economies of
Africa as they continue to grow. These range from the provision of safe
travel and accommodation to infrastructure and transport supporting commerce,
the import and delivery of the raw materials and the export of finished
products. Fundamentals essential to economic progress.
As the Chief Executive Officer`s Review of Operations illustrates, this
strategy has, to date, resulted in Lonrho investing in a port, shipping,
aviation, water bottling plants, hotels, information technology businesses
and natural resources.
It is Lonrho`s intention to develop strategic business units, and once tried
and tested, roll-out each of its business units, as appropriate, across
Africa.
The results for the year, as expected, reflect the fact that the businesses
invested in were either new start-up ventures or established businesses which
required resource in the form of cash and management.
During the year, the Group`s turnover increased to GBP11.2 million (2006:
GBP3.4 million). However, the Group remains in an investment and development
phase, and thus incurred a loss of GBP15.5 million (2006: GBP0.2 million).
The Company`s share price has shown considerable growth in the financial
year, starting at 26.25p and finishing the year at 43.5p (+66%),
demonstrating the market`s support for the development of a pan-African
conglomerate.
Lonrho invested a further GBP13.2 million during the year in Luba Freeport,
which has funded the now completed 70 metre quay extension, warehousing,
offices and handling equipment. Luba Freeport is expecting to move into
operating profit, in line with our projections, during the first quarter of
2008.
Fly540, the Kenyan passenger airline, has, within twelve months of commencing
operations, become the second largest carrier in Kenya, moving into operating
profit during the first quarter of 2008.
Group turnover will significantly increase during 2008 with the roll-out of
the Group`s operations and as each business comes on stream, losses will
reduce.
The management situation at Norse Air, which is more fully explained in the
Chief Executives` Review of Operations, resulted in us instigating legal
action against Norse Air and its non-Lonrho nominated Directors in December
2007. Your Board felt that this approach was necessary to protect the Group`s
interests. This legal action is currently ongoing. As a result, a provision
of GBP4.4 million has been made to write off our investment in Norse Air,
which has adversely affected the results of the year.
Lonrho has made a good start towards rebuilding an African wide conglomerate.
From an initial single asset in Mozambique, the Company has developed its
investment strategy and continues to establish and improve its business
models. The key building blocks have been soundly established and the Group
now operates in five core business sectors, operating across fourteen
countries.
I would like to take this opportunity to thank shareholders for their
continuing support in the rebuilding of Lonrho (placements of new shares both
during the year and after the year end raised a net total of GBP57.93
million). I would also like to thank the Group`s employees for all their hard
work and endeavours in what are, sometimes, harsh environments and trying
conditions.
CHIEF EXECUTIVE`S REVIEW
Geoffrey White
Director and Chief Executive Officer
27 March 2008
Over the past year Lonrho has grown and developed its business significantly
and has driven forward the growth strategy which had been approved by
shareholders in 2006, the continuation of which was approved by shareholders
in 2007.
Lonrho remains focused on business opportunities throughout Africa and aims
to provide the critical and core support and services necessary to enable
businesses to operate, develop and grow.
Lonrho`s core business sectors - transportation, infrastructure, support
services, hotels and natural resources - have continued to develop through
acquisition and the expansion of existing businesses within the Group.
During the year the Board of Directors was strengthened by the appointment of
Jean Ellis as Finance Director and, in October 2007, Ambassador Frances Cook
joined as a non-executive Director. Also in October, I was appointed a
Director and promoted to Chief Executive Officer, having been Chief Operating
Officer since May 2007. This has taken the Board to four executive and two
non-executive Directors, all of whom have extensive experience and knowledge
of working in Africa.
Since the year end, development of the corporate management team included the
appointment of a new business analyst to assist the business development
manager with the appraisal of new projects. A new financial analyst has also
been recruited to increase the efficiency of reporting structures and to
monitor budgetary control and variances.
In addition, operationally, a Country Manager was recruited for South Africa,
based in Johannesburg. This role oversees the Group`s Southern African
operations and provides essential management continuity. A further senior
executive has been employed as General Manager of Lonrho`s expanding Port and
Shipping Division, bringing with him forty years of experience in the port
and shipping industry across Africa.
I am pleased to report that most of the acquisitions that Lonrho made in 2006
and 2007 are developing into strong business units. They have defined our
core business sectors and have formed solid building blocks in each sector
from which Lonrho can accelerate its growth.
The results for the year end are as anticipated, save for the provisions that
were required in respect of Norse Air. Most of the investments made during
2007 were into start-up businesses or businesses which required resource in
respect of cash and management. Lonrho`s share of the loss after tax and
minority interest was GBP15.5 million, which included a loss of GBP4.4
million in respect of the provision against the investment in Norse Air, as
detailed below.
In addition, there was a charge of GBP2.6 million in respect of share options
and share based payments to incentivise executives, employees and
consultants. Whilst this is a charge to the Profit & Loss account, the net
assets of the Group are not affected, the credit being transferred as
movements on reserves in the Balance Sheet.
During 2008, Lonrho will continue to make strategic investments across
Africa, in order to achieve future growth in shareholder value.
A review of operations follows.
INFRASTRUCTURE
Luba Freeport Limited ("Luba Freeport") (63% holding)
Luba Freeport, a venture in conjunction with the Government of Equatorial
Guinea, is operating well and is developing as the foremost deepwater port in
the Gulf of Guinea. Located on Bioko Island, it is strategically placed and
services the rapidly expanding oil and gas industry in the region.
With Lonrho`s investment, Luba Freeport has developed a new 70 metre
extension to the existing quay. This was completed on time and on budget,
and became operational in November 2007. To meet demand, a further 83 metres
is currently under construction, which is due for completion in mid-2008,
giving the port 350 metres of usable quayside frontage.
Since Lonrho`s acquisition in May 2006, Luba Freeport has developed into one
of the most efficient hubs for the offshore oil and gas industry in the Gulf
of Guinea. The port has attracted the leading oil producers and service
companies such as ExxonMobil, Schlumberger, Baker Hughes, MI Fluids, Nalco,
Marathon, Noble Energy and Amerada Hess.
Further expansion of the facilities include the development of long stay
apartments available to the companies operating from the port.
With this further extension of the quay, it is envisaged that the port will
also become the main logistics centre for the region, with 20,000 square
metres of land allocated to meet demand for pipe storage and distribution.
Luba Freeport is the only true, functioning, duty free zone in the Gulf of
Guinea, where suppliers can import and export goods and stocks without
incurring duties.
The offshore resources in the Gulf of Guinea continue to expand with on-going
exploration and new block allocations from the Government of Equatorial
Guinea, Cameroon, Gabon and Sao Tome. The future demand for the port and its
expansion plans directly reflect the forecast growth in the oil and gas
industries in this important region. The Gulf of Guinea currently supplies 10
- 12% of US oil imports and the US Government recently announced that it
intends to increase this to 25%.
TRANSPORTATION
SA Independent Liner Services (Pty) Ltd ("SAILS") (66.7% holding)
Lonrho has spent some time evaluating the market for regular scheduled
shipping services between the African markets and the rest of the world. This
sector was seen as a fundamental core business for the Group.
The shipping market in Africa demonstrates better than average margins in
relation to the worldwide shipping market. In July 2007, Lonrho acquired an
initial 45% of SAILS, a South African company providing containerised
shipping services. Lonrho is confident that, with the correct capacity and
proper resources, SAILS can develop into a significant shipping line.
Since Lonrho`s acquisition and the assumption of Board control, a further
four, new, 1,100 TEU container vessels have been chartered for the fleet and
1,000 `reefer` refrigerated containers added to the company`s resources. This
enables SAILS to access the higher margin markets for the transportation of
chilled fresh produce from Africa to Europe, and medical supplies and other
chilled cargoes from Europe to Africa.
Since the year end Lonrho has increased its stake in the company from 45% to
66.7% by supporting capital raisings by SAILS. The further funds have been
utilised for working capital, the expansion and deployment costs for the
larger fleet and relocation to a larger office. The increased capacity at
SAILS has resulted in new contracts with a value of over US$14 million (GBP7
million).
Within the coming six months the fleet will be fully committed at six vessels
and it is expected that further vessels will be chartered to expand SAILS`
market share during 2008.
Five Forty Aviation Limited ("Fly540") (49% holding)
Fly540 meets a specific market requirement for aviation in Africa. Launched
as a new airline in November 2006, Fly540 has grown to become the second
largest carrier in Kenya next to the national airline. Initially servicing
the domestic market, the airline has grown steadily, carrying over 20,000
passengers in the peak months. Having successfully established its domestic
market, the airline has commenced its international scheduled roll-out from
its Nairobi hub. It has now added flights to Sudan, Uganda and Tanzania.
With the successful track record of Fly540 in Kenya the expansion of the
Fly540 concept to create a true pan-African airline is being implemented.
In October 2007, Fly540 agreed to establish its second regional hub in
Luanda, Angola. This is now under development and will commence flights to
fifteen domestic airports in mid-2008 with ten aircraft. This followed the
signing of an exclusive Memorandum of Understanding in June 2007 between
Lonrho and one of the largest internal investment companies in Angola to
develop a new airline in Angola for the passenger, freight, leasing and
charter markets.
Further regional hubs in Central and West Africa are under negotiation and
planned for 2008/2009. As the key regional hubs become operational, initially
servicing domestic destinations in each country and thereafter flying to
adjacent countries, flights will be established to connect each regional hub.
This will fulfil the strategy of becoming an African-wide airline.
Norse Air Limited ("Norse Air")
Lonrho`s original investment in Norse Air was made in November 2006. Norse
Air is a charter, leasing and maintenance company that operates from a base
in South Africa. Although we initially only acquired 43% of this company we
believed that, through the terms of the shareholder agreement, we had control
and hence Norse was treated as a subsidiary of the Group and its results were
fully consolidated for the period since acquisition in our interim results
for the six months ended 31 March 2007. Lonrho believed that it had increased
its shareholding in Norse to 51% on 5 September 2007. However this is
disputed by the other shareholders and is now subject to ongoing legal
action.
Unfortunately, we have also subsequently had a number of other serious issues
with management of Norse Air (who own the balance of the equity). It has
been argued by the management that Lonrho cannot exercise the control that we
believe we had. As a result of this, our investment in Norse Air has now been
classified as a participating interest in the consolidated accounts, for the
whole of the period since the date of the original acquisition.
Because of the serious loss of confidence in the management of Norse Air and
the effect that this has had on the business, we have made the decision to
fully provide against the carrying value of our investment as at 30 September
2007. This has resulted in a loss of GBP4.4m in the year to September 2007.
The Board believes that this was the most prudent approach to take given the
ongoing uncertainty of the outcomes of the various legal actions, including
to gain access to the financial records of the Norse Air group of companies,
that we have been forced to take against the management of Norse Air. This
legal action is currently ongoing.
The Board confirms that, other than the ongoing legal costs associated with
the action being taken against the management of Norse Air, there is no
further exposure to Lonrho in relation to any liabilities of Norse Air.
The Board has agreed that Lonrho will not inject any further funds into the
Norse Air group of companies to settle any liabilities or losses that have,
or may have, been incurred. It is therefore with regret that, having been
left with no alternative but to instigate legal action in December 2007 for
full disclosure from the management, we have had to take the drastic step of
excluding Norse Air from the Lonrho Group operations with effect from 30
September 2007.
The Board did not take this decision lightly. However, it was felt necessary
in the circumstances in order to protect Lonrho shareholders from any further
exposure in respect of Norse Air.
Lonrho Air (BVI) Limited ("Lonrho Air") (100% holding)
As a further step to expand Lonrho`s involvement in the aviation sector,
Lonrho Air was established as a vehicle to acquire aircraft to on-lease to
its subsidiary operations. Lonrho Air currently owns two ATR 42-320
aircraft, which are on lease to Fly540. Lonrho Air has options to acquire 10
new ATR 72-500 aircraft, which it proposes to debt finance for 85% of the
purchase price in conjunction with a COFACE & SACE government guarantee. The
aircraft will be deployed in the roll-out of Fly540.
Lonrho Air`s model is based on identifying good value aircraft that are
sought after by operators across Africa.
SUPPORT SERVICES
Swissta Holdings Limited ("Swissta") (100% holding)
Since the acquisition of 100% of Swissta in April 2007, which owns a plant in
Maputo, Mozambique, Swissta brand water has become one of the market leaders
of bottled water in Maputo.
Swissta also has a 21.4% stake in a plant in the Democratic Republic of Congo
and recently agreed to invest further funding, pro rata with other
shareholders, to double the plant capacity to meet increasing demand.
Lonrho Springs was established in April 2007 to apply the Swissta model of
water bottling plants across Africa and will become the brand name for
Lonrho`s bottled water subsidiaries, providing efficient, modular,
international standard water filtration and bottling plants.
New bottling plants are under development in Angola, South Africa, and
Lubumbashi in the Democratic Republic of Congo. Each plant is scaled to meet
demand forecasts for the respective markets, and plants range from producing
500,000 litres per month to 10 million litres per month. The roll out of the
Swissta technology will continue across Africa and is forecast to reach eight
countries in the near future.
Sociedade Comercial Bytes & Pieces, Limitada ("Bytes and Pieces") (65%
holding)
Bytes & Pieces is a successful computer hardware and software supplier and
programmer. It is the market leader in Mozambique and provides turnkey
network solutions and maintenance support. In 2007 Lonrho purchased 65% of
the company on the understanding that the senior management would replicate
the successful Mozambique business model across Africa.
Bytes & Pieces is expanding outside Mozambique under the name of Complete
Enterprise Solutions ("CES"). CES, a venture in conjunction with the
management, and has established operational offices and a sales force in
Johannesburg. The company is a Dell Server master franchisee and also
distributes Microsoft and HP products to the large corporate and Government
markets. CES is attracting customers throughout Africa through its ability to
provide bespoke IT solutions and has commenced the tendering and bidding
process on Government, corporate and banking contracts for 2008.
HOTELS
Hotel Cardoso SARL ("Hotel Cardoso") (59.04% holding)
Hotel Cardoso exemplifies the business model for Lonrho Hotels. Utilising
quality management, in a growing business market, the hotel has seen a 22%
increase in room revenue and a 9% increase in occupancy. The Hotel meets the
demands for business and local travellers to Mozambique.
Hotel Cardoso is currently undergoing a US$1.5m (GBP0.75m) refurbishment, due
to be completed in late 2008. The first rooms to be modernised have been
completed, and the outdoor poolside and garden area has also been renovated
for guests enjoying the view and sunsets over the bay from the Hotel. Plans
are also in place to redevelop the park adjacent to the Hotel, which will
enhance the local area.
Lonrho has now secured a further hotel project in Lubumbashi in the
Democratic Republic of Congo to service the demand created by the US$12
billion (GBP6 billion) foreign direct investment being made there by natural
resource companies into copper and cobalt projects in the region. This will
become the only international standard hotel in the region.
Projects have also been identified in Angola, Ivory Coast and Sudan where
there is a disparity between demand and supply of quality accommodation for
business and local visitors.
NATURAL RESOURCES
Lonrho Mining Limited ("Lonrho Mining") (21.64% holding)
Lonrho Mining Limited (formerly Nare Diamonds Limited), is an Australian
listed mining company.
Lonrho Mining`s main operation, the Schmidtsdrift Alluvial Mine near
Kimberley, South Africa, owned 80% in conjunction with the local community,
has produced 13,372 carats of diamonds from 2,603,605 tonnes up to 30
September 2007 since re-commencing trial mining operations in April 2006.
Lonrho Mining has recently entered into a joint venture agreement with
Endiama, the national diamond company of Angola and exclusive concessionary
for diamond mining rights, on the 3,000 square kilometres Lulo Diamond
Concession ("Lulo").
Lulo contains numerous identified kimberlite pipes and two rivers with
extensive terrace gravels. The artisanal miner activity in these rivers
indicates that the gravels are diamond bearing.
Lonrho Mining intends to seek dual listings on the AIM Stock Exchange and
Johannesburg Securities Exchange in the near future.
ZIMBABWE - Post Year End (not reflected in figures)
LonZim Plc ("LonZim") (20% holding)
Lonrho has a long history of being a large commercial participant in the
Zimbabwe economy, but had disposed of all of its business assets in the
country by 2000.
However, the Board are acutely aware that Zimbabwe was once, and will be
again, an economic centre for Southern Africa. In an effort to position
Lonrho as strongly as possible to benefit from an economic recovery, LonZim
was established as a separate company to invest in projects in Zimbabwe and
those related to the Zimbabwean economy. LonZim was listed on the London AIM
stock exchange in December 2007 and raised GBP29 million.
Lonrho has been appointed by LonZim to provide management support services on
the terms of a management services agreement.
Lonrho, on behalf of itself and any of its subsidiaries or companies in which
Lonrho has majority control of the board, has agreed not to make investments
in Zimbabwe or an area of Mozambique known as the Beira Corridor, during the
period of the Management Services Agreement. Lonrho has agreed to provide
services to LonZim including sourcing investment opportunities and is
providing management, accounting, human resources, financial, marketing,
technical and other support services.
Lonrho Plc received a free carry interest of 20% of the current issued share
capital of LonZim (current market value GBP7.5 million) and charges a fee of
2 per cent of funds invested.
CORPORATE AND SOCIAL RESPONSIBILITY
Lonrho aims to improve business in Africa and make a positive difference to
local communities. Lonrho believes that its investments and acquisitions will
encourage job creation as well as economic and political stability throughout
Africa.
Examples of some of the projects currently being undertaken:
Luba Freeport sponsors a school serving Luba Town and the surrounding area.
This is currently attended by over 100 children.
Luba Freeport has established a twice weekly system of rubbish collection and
disposal for the residents of Luba Town.
As a result of increasing requirements for English speaking workers for the
oil industry, a night-school has been set up and is sponsored by Luba
Freeport. This course is available to Luba Freeport employees, local
residents and clients of Luba Freeport and has proven to be very popular.
Hotel Cardoso is also aware of its role in supporting the local community and
provides a well equipped clinic for the use of its staff and their immediate
families. The clinic has a full time nurse and is visited twice daily by a
qualified doctor.
The Hotel supports Association Imagine, a British managed charity caring for
orphaned children and single parent families mainly in the district of
Katembe, adjacent to Maputo. In the last twelve months, donations to the
charity have included mosquito nets, linen and blanketing.
Within the immediate locality of the Hotel, assistance to a local school will
be given. A project for repainting all the school buildings is scheduled to
commence in the near future.
The Hotel has also undertaken the task of rehabilitating the adjacent local
park, renovating gardens and utility infrastructures as well as building new
structures.
Fly540 continually strives to maintain high levels of awareness, amongst
customers and industry travel partners, for Fly540`s reduced impact on the
environment through the deployment of modern, fuel efficient aircraft across
its entire network. The benefits of this strategy have been accelerated
through the recently announced options to buy 10 highly efficient ATR 72-500
turbo prop aircraft.
Fly540 has supported the expansion of the Narok community library with a
donation for the purchase of books and the extension of the reading room. The
library is run by the Maasai Education Discovery organisation which was
founded in 1999 to promote education and community development.
Consolidated profit and loss account
for the year ended 30 September 2007
Continuin Acquisition Total Total
g s 2007
operation GBPm 2007 2006
s GBPm GBPm
2007
GBPm
Turnover
Group 6.8 4.4 11.2 3.4
Group net
operating costs (18.0 (8.2) (26.2) (4.4)
Operating loss (11.2 (3.8) (15.0) (1.0)
Share of
participating
interest
operating loss - (0.1) (0.1)
Write off of
goodwill in
respect of
participating
interest - (2.9) (2.9) -
Total operating
loss (11.2 (6.8) (18.0) (1.0)
Profit on sale of
fixed assets 0.1 0.4
Interest payable (0.9) (0.2)
Amount written
off investment (0.5) -
Interest
receivable 0.5 0.7
Loss before
taxation (18.8) (0.1)
Taxation 0.6 -
Loss after (18.2) (0.1)
taxation
Minority 2.7 (0.1)
interests
Loss for the year (15.5) (0.2)
Loss per share
(basic and
diluted) (6.4)p (0.1)p
Balance sheetsas at 30 September 2007
Group Company
2007 2006 2007 2006
GBPm GBPm GBPm GBPm
Fixed assets
Intangible - goodwill 6.7 3.3 - -
Tangible 36.9 19.8 - -
Investments 5.0 - 31.5 31.5
48.6 23.1 31.5 31.5
Current assets
Stocks 1.4 0.2 - -
Debtors 6.2 2.3 8.0 -
Investments - 7.1 - -
Cash at bank 15.2 20.7 - -
22.8 30.3 8.0 -
Creditors: amounts
falling due within one (26.1) (13.4) (8.4) (11.5)
year
Net current
(liabilities)/assets (3.3) 16.9 (0.4) (11.5)
Total assets less current
liabilities 45.3 40.0 31.1 20.0
Creditors: amounts
falling due after one (2.9) - - -
year
Net assets 42.4 40.0 31.1 20.0
Capital and reserves
Called up share capital 2.8 2.2 2.8 2.2
Share premium 33.2 17.4 33.2 17.4
Revaluation reserve 1.5 1.6 - -
Other reserve 2.2 0.1 2.2 0.1
Profit and loss account 2.9 18.2 (7.1) 0.3
Shareholders` funds 42.6 39.5 31.1 20.0
Minority interests (0.2) 0.5 - -
42.4 40.0 31.1 20.0
These financial statements were
approved by the Board of Directors
on 27 March 2008 and signed on its
behalf by:
D Lenigas
Consolidated cash flow statementfor
the year ended 30 September 2007
2007 2006
GBPm GBPm
Net cash flow from operating
activities
- continuing operations (2.9) (0.5)
- acquisitions (4.5) 0.5
(7.4) -
Returns on investments and servicing
of finance
Interest
- received 0.5 0.7
- paid (1.2) -
Net cash (outflow)/inflow for returns (0.7) 0.7
on investments and servicing of
finance
Capital expenditure and financial
investments
Purchase of tangible fixed assets (18.6) (1.8)
Sale/(purchase) of investments 1.8 (7.1)
Net proceeds from sale of properties 0.1 0.4
Net cash outflow for capital
expenditure and financial investment (16.7) (8.5)
Acquisitions and disposals
Net cost of acquisition of (2.2) (1.7)
subsidiaries
Bank overdraft acquired with (0.5) (0.1)
subsidiary
Loan paid on acquisition of - (6.1)
subsidiary
Net proceeds/(costs) from 1.0 (1.8)
closure/disposal of subsidiaries
Net costs relating to acquisition of (4.4) -
participating interest
Net cash outflow from acquisitions (6.1) (9.7)
and disposals
Net cash outflow before financing (30.9) (17.5)
Financing
Issue of ordinary share capital 15.8 18.0
Funds received in advance for future 8.0 -
share issue
Debt due within one year:
- new finance leases 0.2 -
- loan repayments (0.3) (0.2)
Debt due beyond one year:
- new finance leases 1.1 -
Net cash inflow from financing 24.8 17.8
(Decrease)/increase in cash in the (6.1) 0.3
period
Statement of total recognised gains
and losses
for the year ended 30 September
2007
Group 2006
2007 GBPm
GBPm
Loss for the year (15.5) (0.2)
Increase arising on revaluation of
assets - 0.9
Exchange adjustments to net
investments in overseas companies 0.1 (0.1)
Total recognised (losses)/gains (15.4) 0.6
relating to the year
Total recognised (losses)/gains since (15.4) 0.6
last annual report
Reconciliation of movements in
shareholders` funds
for the year ended 30 September
2007
Group 2006
2007 GBPm
GBPm
Recognised (losses)/gains relating to (15.4) 0.6
the year
Shares issued in year 16.4 18.0
Credit in respect of share options 2.1 0.1
Net increase in shareholders` funds 3.1 18.7
in the year
At beginning of year 39.5 20.8
At end of year 42.6 39.5
Note of historical cost profits and
losses
for the year ended 30 September
2007
Group 2007
GBPm 2006
GBPm
Reported loss before taxation (18.8) (0.1)
Difference between historical cost -
depreciation charge and the actual
depreciation charge calculated on the
revalued amount 0.1
Historical cost loss before taxation (18.7) (0.1)
Historical cost loss after taxation
and minority interests (15.4) (0.2)
Annual General Meeting
The Annual General Meeting will be
held on Monday 28 April 2008 at
11.00am at Plaisterers` Hall, One
London Wall, London EC2Y 5JU.
Statutory Information
The financial information set out
above does not constitute the
Company`s statutory accounts for
the period ended 30 September 2007
but is derived from those accounts.
Statutory accounts for 2007 will be
delivered to the registrar of
companies following the Company`s
Annual General Meeting. The
auditors have reported on those
accounts.
28 March 2008
South African sponsor to Lonrho
Africa Plc
Java Capital (Proprietary) Limited
Date: 28/03/2008 15:28:56 Produced by the JSE SENS Department.
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