| Tue 31 Mar 2009, 10:40 | | LAF - Lonrho Plc - Results for the Year Ended 30 September 2008 |
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LAF
LOLAF
LAF - Lonrho Plc - Results for the Year Ended 30 September 2008
Lonrho Plc
(Formerly Lonrho Africa Plc)
(Incorporated and registered in England and Wales)
(Registration number 2805337)
(Share code: LAF; ISIN number: GB0002568813)
("Lonrho" or "the Company")
Results for the year ended 30 September 2008
30th March 2009
Lonrho (AIM: LONR), the conglomerate with a structured portfolio of African
investments, is pleased to publish its full results for the year ended 30
September 2008.
Lonrho has continued to develop its investments in infrastructure, transport,
agriculture, support services, hotels and natural resources. Having
established a solid platform through these investments, Lonrho`s primary
objective is to create value through expanding these businesses and enhancing
their profitability and growth potential.
Financial Review
With the exception of the investment in SAIL`s, the financial results remain
in line with the Company`s expectations. The year has been instrumental in
demonstrating the effectiveness of Lonrho`s investment strategy, with all of
the Companies businesses contributing towards a considerable increase in
Lonrho`s turnover.
- Turnover increased by 284% to GBP43.0m (up from GBP11.2m in 2007)
- Net assets increased to GBP69.7m (up from GBP 42.7m in 2007)
- Loss after tax of GBP41.0m (2007: GBP17.4m) largely related to the
closure of SAILS (GBP33.0m)
- Attributable loss to Lonrho`s equity shareholders of GBP33.3m (2007:
GBP15.5m)
David Lenigas, Executive Chairman of Lonrho commented:
"It is nearly three years since shareholders took the decision to rebuild
Lonrho into an African conglomerate. I am pleased to report that, in that
time, your company has made significant progress. In the process, there have
been highs and lows, but the overall results for the first three years of
implementing the new shareholders mandate are tremendously encouraging.
"Lonrho has set in place strong foundations for the continued growth of the
Group and has attracted the essential experienced management teams and
executives to ensure that its plans are delivered.
We believe that Africa remains a strong emerging market. By being selective
in the sectors that Lonrho enters and the countries in which Lonrho operates
it is possible to minimise risk exposure whilst maximising the growth and
return opportunities for the Group. Some of Africa`s economies, such as
Angola, Mozambique and Equatorial Guinea are delivering substantial economic
development and growth,
"Lonrho has delivered on a series of businesses that are expanding their core
operations as planned to become pan-African. We expect to see continued
strong growth across the portfolio during the coming year as each of the
businesses expands."
LONRHO ENQUIRIES
Lonrho Plc +44 (0)20 7016 5105
David Lenigas, Executive Chairman +44 (0)7881 825 378
Geoffrey White, Chief Executive Officer +44 (0)7717 307 308
David Armstrong, Finance Director +44 (0)7833 054 693
Pelham PR
Charles Vivian +44 (0) 20 7337 1538
+44 (0) 7977 297903
James MacFarlane +44 (0) 20 7337 1527
+44 (0) 7841 672831
Collins Stewart Europe : NOMAD to Lonrho
Hugh Field +44 (0) 20 7523 8350
Statutory accounts
The financial information set out in this announcement does not constitute
the company`s statutory accounts for the years ended 30 September 2008 or
2007. The financial information for the year ended 30 September 2007 is
derived from the statutory accounts for that year. The audit of the statutory
accounts for the year ended 30 September 2008 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 to by way of
emphasis without qualifying their report.
The full annual report and financial statements are being posted to
shareholders and published on its web site (www.lonrho.com) today.
Chairman`s Statement
David Lenigas
Executive Chairman
30 March 2009
It is nearly three years since shareholders took the decision to rebuild
Lonrho into an African conglomerate. I am pleased to report that, in that
time, your company has made significant progress. In the process, there have
been highs and lows, but the overall results for the first three years of
implementing the new shareholders` mandate are tremendously encouraging.
Turnover has grown significantly year on year as the Group has invested in a
strong profile of business opportunities across the Continent. Although the
loss for the year was GBP41.0 million, this included GBP34.4 million in
respect of discontinued activities, mainly relating to the shipping division
(GBP33.0 million) which was placed into liquidation shortly after the year
end. We were generally satisfied with the progress made by our other
investments which were in line with expectation. Further details of the
financial results are given in the Chief Executive`s review.
Lonrho has set in place strong foundations for the continued growth of the
Group and has attracted the experienced management teams and executives
essential to ensure that its plans are delivered.
The Group has established clearly defined investment parameters, but more
importantly, has the experience and knowledge to monitor and support its
investments and to aid and facilitate their growth.
A conglomerate is the best way to invest in Africa, and over the past three
years the Group has grown from owning a single hotel in Mozambique to
operating in seventeen countries across Africa. This geographical diversity
not only opens up the pan-African business opportunities that are our
objective, but also spreads country and political risk for shareholders.
I believe that Africa remains a strong emerging market. By being selective in
the industry sectors Lonrho enters and the countries in which Lonrho operates
it is possible to minimise risk exposure whilst maximising the growth and
return opportunities for the Group. Some of Africa`s economies, such as
Angola, Mozambique and Equatorial Guinea, are delivering substantial economic
development and growth.
Lonrho has delivered a series of businesses that are expanding their core
operations as planned to become pan African. I expect to see continued strong
growth across the portfolio during the coming year as each of the businesses
expands.
Chief Executive`s Review
Geoffrey White
Director & Chief Executive Officer
30 March 2009
During the year, Lonrho has successfully continued to grow its key businesses
with turnover in continuing operations year on year increasing by 140%. The
Group has made good progress in all sectors with the exception of the cargo
and shipping division which closed shortly after the year end following
Lonrho`s decision not to provide further funding.
The corporate strategy of the Group is to develop companies within the
African Continent and to focus on business opportunities that are directly
related to the economic growth and development of the Continent.
Lonrho remains one of the strongest commercial brand names in Africa and the
Group is proud of its heritage of over one hundred years and reputation for
delivering projects that create employment and prosperity for Africans. The
Group`s philosophy is to continue this tradition, and build real businesses
that provide employment opportunities that add to the economic progress being
made across the continent.
The Group`s operations are now focused on five clearly defined operating
sectors which are inextricably linked to the growth of Africa.
Lonrho`s main operating segments are: Infrastructure, Transportation,
Agriculture (post year end), Hotels, and Support Services
IMF and World Bank economic forecasts indicate that African GDP will continue
to grow, and by careful selection of the countries in which we operate,
Lonrho can continue to develop each of its business units within an expanding
market and commercial environment.
The Group has matured significantly during the year. The requisite resources
and corporate structures have been strengthened to ensure that the
appropriate management and control systems are in place to support each
division and to manage the forecasted expansion of operations. The
appointment of a new full time Finance Director, David Armstrong, who has
extensive African experience, at the start of December 2008 was a fundamental
step in ensuring that the Group`s management structures are in place. The
previous Financial Director, Jean Ellis, moved to a non-executive role on the
Board and we thank her for her advice and assistance whilst an executive
Director of the Company. Her knowledge of Lonrho and its history over the
years provides strong continuity. During the year the Group has also
appointed country managers for South Africa and Angola.
In light of the current World financial markets, and with cogniscence of a
global economic slowdown affecting the shipping market, the Board felt it was
prudent to review its ongoing support for SA Independent Liner Services Pty
Limited (SAILS) and decided to withdraw any further funding and actively
market the company for sale. Unfortunately this was unsuccessful and the
Group announced the liquidation of SAILS shortly after the year end.
The closure of SAILS and the total loss incurred for the year of GBP33.0
million was a difficult and substantial event for the Group. The stand-alone
divisional corporate structure of Lonrho means that each division is a
separate, isolated investment and hence the closure of one division, such as
SAILS, has no financial impact on other divisions within the Group.
Operational Review
Infrastructure
Luba Freeport Limited ("Luba") 63% holding
Luba Freeport is an oil services terminal located on Bioko Island in
Equatorial Guinea. The port is a venture in conjunction with the Government
of Equatorial Guinea where Lonrho owns 63% and the Government owns 37%. The
port is managed by Lonrho and operates as a true Freeport.
Equatorial Guinea has a booming oil industry, currently producing some
450,000 bpd. With established reserves of 1.5 billion barrels, it has only
released 20% of its identified oil blocks. The outlook for Equatorial Guinea
and the wider Gulf of Guinea is strong, driven by the USA openly stating
their objective of sourcing 25% of all USA oil from the Gulf of Guinea.
Lonrho has invested over US$60 million in the development of the port and
building the required infrastructure for the port to service the
international oil companies that are its clients. The port is operating
profitably and has attracted the major oil companies operating in the Gulf of
Guinea as clients. ExxonMobil, Amerada Hess; Schlumberger; Baker Hughes,
MI Fluids, CNOOC, Noble and others now have operational bases in Luba port.
Lonrho`s clients, including the anchor tenant ExxonMobil, are typically on
long term contracts up to ten years.
The number of the tenants at the port is increasing year on year and several
current tenants are expanding their operations at the port. Lonrho has
completed its initial phased development for the port and 300 metres of
deepwater quay will be available from March 2009.
Luba port is located on a large natural harbour, and provides some of the
best deepwater anchorage positions available in West Africa. Further
expansion at the port is being considered to meet demand for services for the
oil industry. This includes oil rig repair facilities (currently oil rigs
from the Gulf of Guinea are sent to Europe or Cape Town for major repairs), a
container trans-shipment centre (depths at Luba could accept the largest
container ships), a drill cutting processing facility and waste management
facilities.
KwikBuild Corporation Limited ("KwikBuild") 61.97% holding
KwikBuild, through its associate investment, e-KwikBuild Housing (Pty)
Limited ("e-KwikBuild") (49% holding), is a manufacturer and supplier of
insulated prefabricated building solutions for permanent and relocatable
structures. e-KwikBuild is a leader in fast, innovative and highly efficient
construction solutions that can be installed in days with an unskilled
workforce. It also requires no civil works and can be free standing thus
reducing the cost and time for projects.
e-KwikBuild supplies clinics, workers camps, accommodation, school rooms,
meeting rooms and offices and a range of structures to meet client`s
requirements. Customers include the South African Government, universities,
hospitals, schools and large corporates such as Eskom, Chevron and Sonangol.
In November 2008, e-KwikBuild opened a new 2,700 m2 facility in Port
Elizabeth, South Africa for the manufacture of its buildings to increase
production volumes in order to meet forecast demand. The new factory can
produce 240 (35 m2) panels in a six hour shift.
Transportation
Lonrho Aviation (BVI) Limited ("Lonrho Aviation") 100% holding
Through Lonrho Aviation and the Fly540 concept, Lonrho is developing the
first international standard airline that plans to connect Africa north to
south and east to west and provide quality regional distribution for long
haul carriers flying into Africa.
The roll out of the airline made significant progress in 2007/2 008 and the
Kenyan operational hub, Five Forty Aviation Limited (49% holding), which
started flying in 2006, continues to trade profitably and demonstrates the
market opportunity for Fly540. The airline is developing a further two
African hubs in Angola and Ghana. Fly540 will service the regional countries
surrounding each and, by connecting the three hubs, establish a full pan-
African network.
Fly540 senior management are ex British Airways and are operating to
international standards with regard to training, operations and maintenance.
The Kenya hub is successfully serving the domestic market in Kenya and has
commenced regional expansion with operations now flying in Southern Sudan and
Uganda, with Tanzania forecast to commence post September 2009.
The Angolan and Ghanaian hubs will be established in 2009 and will service
South West Africa and West Africa accordingly.
The proposed routes which will be operated are:
Kenya Angola Ghana DRC Tanzania Uganda Sudan
Nairobi* Luanda Accra Lubumashi Dar Es Salaam Juba
Entebbe*
Mombasa* Cabinda Kumasi Kolwezi Zanzibar Kigali Rumbek
Kisumu* Soyo Tamale Mbuji- Arusha Burundi Waw
Mayi
Entebbe* Benguela Takoradi Ndola Mwanza* Goma Khartoum
Juba Huambo Lome Lusaka Mombasa Juba
Rumbek Luena Cotonou Harare Nairobi* Nairobi*
Eldoret* Malange Lagos Lilongwe
Lamu Johannesbur
g
Malindi* Accra
Mara*
Harare
* Existing routes in the year to 30 September 2008.
The Fly 540 business model is based around the deployment of new or recent
modern turboprop aircraft. Modern turboprop aircraft provide a highly
efficient solution to regional travel. The flight time for routes up to one
and a half hours is similar to a regional jet, whilst the fuel costs related
to the journey are 70% less. Thus the breakeven operational load factors
required for the Fly 540 operations are significantly lower than competitive
airlines utilising jets for regional distribution.
Fly 540 current operations achieve a 96% average for departure within ten
minutes of schedule, and are attaining high average load factors and sector
yields. Operationally, the airline offers a simplified low cost ticket
structure, supported by ticketing on the internet, call centres and through
direct sales offices.
Passenger numbers rose by 93.0% to 171,160 in the year ended 30 September
2008 (2007: 88,571). Load factors in the financial year were 63.0% (2007:
65.8%).
Agriculture
Lonrho Agribusiness (BVI) Limited ("Lonrho Agriculture") 100% holding
Lonrho Agriculture, which was incorporated in May 2008, plans to deliver
vertical integration of the agricultural production and processing chain to
provide the ability for African produce to reach consumers either in Africa
or internationally. In October 2008 Lonrho acquired 51% of Rollex Pty Limited
("Rollex"), an agri-processing and logistics company that sources produce
from Southern Africa, processes it and delivers it to market. The Rollex
processing facility is airside at Johannesburg international airport and
current customers in South Africa include Woolworth and Spar, and in Europe
include Marks & Spencer, Tesco, Carrefour and others.
The development of further cold store and agri-processing facilities across
the continent to expand the Rollex model and expertise will be the focus of
growth for Lonrho Agriculture. To support this logistics capability, it is
planned that 40% of the input requirements will be produced by Lonrho
Agriculture projects and 60% sourced in conjunction with the local market.
Lonrho signed an agreement in June 2008 to develop a cold store and agri-
processing facility airside at Lilongwe airport in Malawi. This will be
utilised to commence the export of fresh produce from Malawi and neighbouring
countries to the Middle East market. To complement the facility, the
agreement further included a 100 hectare agriculture site adjacent to the
airport. A full feasibility study is being undertaken to identify the
intensive farming crops most commercially suitable for the export market.
Post year end, Lonrho also signed an agreement to rehabilitate 25,000
hectares of agricultural land in Angola, to initially service the domestic
market.
Hotels
Hotel Cardoso SARL 59.04% holding plus management contract
The Hotel Cardoso is located in the pre-eminent position in Maputo,
Mozambique, overlooking the bay. The hotel has undergone a full refurbishment
during the year, with the majority of rooms being updated and the grounds
re-landscaped by the year end. Subsequent to the year end, the restaurant and
conference facilities are being upgraded and improved and a new panoramic
restaurant is being added to the top floor of the hotel.
The small municipal park adjacent to the hotel was put under Lonrho`s control
and has been cleaned, refurbished, children`s rides installed and a coffee
shop developed. This development, in conjunction with the improvements to the
hotel, have lifted the hotel`s location to become one of the most popular and
pleasant parts of Maputo.
The hotel currently trades profitably and following the completion of the
refurbishment program in early 2009 will be a flagship hotel for Mozambique.
Grand Karavia SARL ("Karavia") 50% holding plus management contract (post
year end)
During the year Lonrho won a Democratic Republic of Congo (DRC) Government
tender to refurbish and thereafter manage the Karavia hotel in Lubumbashi in
the DRC. The hotel closed in 1985 and became very dilapidated. The Karavia
will reopen for business in the second half of 2009 as the only international
standard hotel in Lubumbashi.
The Development Bank of South Africa (DBSA) has agreed to provide US$10
million as debt funding for the refurbishment project. The hotel will provide
213 rooms to a five star standard and cater for the significant market
related to the Katanga Province and the development of the copper and cobalt
mining interests in the region.
Support Services
Sociedade Comercial Bytes & Pieces Limitada ("Bytes & Pieces") 65% holding &
Complete Enterprise Solutions Limited ("CES") 50% holding
Lonrho`s IT company in Mozambique, Bytes and Pieces, continues to lead the
market in the turnkey delivery of IT solutions to major corporate clients.
Following on from the success of Bytes and Pieces, CES has opened in
Johannesburg and has begun to attract clients and build business.
Post the year end, at the request of Dell Computers, CES opened a company in
Zambia to meet growing demand for IT services in that market. CES is further
beginning to utilise its Portuguese speaking workforce in Mozambique to
address market expansion opportunities in Angola.
Lonrho Springs BVI Limited ("Lonrho Springs") 100% holding
Lonrho Springs is developing strategic water bottling opportunities in
clearly defined markets. Lonrho currently has operations in Mozambique (100%
holding) and in Kinshasa (21.4% holding) trading under the Swissta brand.
Both plants have capacity of around 300,000 litres per month. Swissta
Mozambique produced over 3 million litres in the year to
30 September 2008.
A new plant is under development in Angola, to become the largest Lonrho
Springs plant to date. Planned to start producing in 2009, the plant will
have the ability to deliver 4 million litres of bottled water a month to the
Angolan market.
A second new plant is under planning for a proposed development for
Lubumbashi which has also been highlighted as a location with a strong market
demand for bottled water.
Goodwill arising on the initial acquisition of Swissta Holdings Limited of
GBP0.6 million has been impaired at the year end to reflect the current
economic conditions of the markets in which the businesses are operating.
Other
Lonrho Mining Limited ("Lonrho Mining") 25.5 9% holding
Lonrho Mining continues to focus its attention on the highly prospective Lulo
diamond concession in Angola. Following the year end, within the 3,000 km2
concession, 217 aeromagnetic anomalies were identified and six initial
targets were explored on the ground.
All six sampled targets provided high counts of kimberlitic indicator
minerals and following the encouraging sampling program, it is planned to
implement a dry season drilling and bulk sampling program at the primary
target and eight other targets.
LonZim Plc ("LonZim") 24.53% holding
LonZim is a specific investment vehicle, listed on the London AIM stock
exchange, that was established to invest in recovery opportunities in
Zimbabwe and the Beira corridor in Mozambique.
Lonrho received a 20% free carry interest of the issued share capital of
Lonzim worth GBP7.3 million, which resulted in a GBP5.8 million credit to the
consolidated income statement. Lonrho has increased its shareholding to
24.53% since the year end.
Lonrho holds a management contract for operating LonZim, and charges the
higher of US$500,000 or 2% of funds invested as a management charge.
Norse Air Limited
Lonrho made a full provision against its associate investment, Norse Air
Limited, in the 2007 accounts. A legal case against the management and the
other shareholders of Norse Air Limited is ongoing.
Financial Highlights
- Turnover for continuing operations increased to GBP24.5 million (2007
GBP10.2 million), a 140% increase. The largest contributor to the growth
in turnover was Fly540, which grew more than threefold to GBP9.3 million
on the back of substantially increased passenger volumes in Kenya. Total
turnover for the Group for the year was GBP43.1 million (2007 GBP11.2
million).
- The loss for the year of GBP41.0 million (2007 GBP17.4 million) was
impacted by the total trading losses and impairment charges of GBP33.0
million incurred in SAILS which was put into liquidation shortly after
the year end. The loss in respect of continuing operations was GBP6.6
million (2007 GBP12.0 million) which was in line with expectations as
Lonrho continues to invest in the development of its businesses.
- Lonrho received shares in Lonzim Plc with a value of GBP7.3 million in
respect of a non-compete agreement. This resulted in a credit in the
consolidated income statement of GBP5.8 million.
- In light of the state of the global financial markets, an impairment
provision was made against the Group`s investment in Lonrho Mining
Limited of GBP4.0 million to reflect the current market value of the
shares on the Australian Securities Exchange. However, the Directors are
confident that the long term value of this investment will significantly
exceed the current value.
- Of the Group`s cash balances of GBP10.2 million (2007: GBP15.2 million),
cash held in the United Kingdom was GBP8.1 million (2007 GBP14.0
million).
- The Company raised GBP59.9 million, net of issue costs, through three
share issues in the year to 30 September 2008. Total equity attributable
to equity holders of the Company was GBP69.6 million (2007: GBP41.1
million) at 30 September 2008.
- Since the year end, and despite difficult market conditions, the Group
has successfully raised GBP15.4 million, before expenses, through a
placement of shares.
At the time of the placing in November 2008, we noted that our strategic
planning assumed that the Company would not have to return to shareholders
for further funding during 2009. We still believe that this remains the case
and progress is also being made in the reduction of central overheads
discussed in the same announcement.
These are the first annual reports and accounts prepared in accordance with
Adopted International Financial Reporting Standards (IFRS). The comparative
figures have been restated accordingly`.
Consolidated income statement
for the year Continuin 2008 Total Continuin 2007 Total
ended 30 g Discon GBPm g Discon- GBPm
September 2008 operation -tinued operation tinued
s operations s operatio
GBPm GBPm GBPm ns
GBPm
Revenue 24.5 18.6 43.1 10.2 1.0 11.2
Cost of sales (15.6) (38.3) (53.9) (7.8) (3.2) (11.0)
GROSS 8.9 (19.7) (10.8) 2.4 (2.2) 0.2
PROFIT/(LOSS)
Gain on sale of 5.8 - 5.8 - - -
intangible asset
Other operating 0.3 - 0.3 0.4 - 0.4
income
Impairment of (0.6) (5.1) (5.7) - - -
goodwill
Operating costs (22.6) (4.8) (27.4) (14.6) (0.1) (14.7)
OPERATING LOSS (8.2) (29.6) (37.8) (11.8) (2.3) (14.1)
Finance income 6.6 - 6.6 0.5 - 0.5
Finance expense (0.8) (2.7) (3.5) (0.7) - (0.7)
NET FINANCE 5.8 (2.7) 3.1 (0.2) - (0.2)
INCOME/(EXPENSE)
Share of results (4.0) - (4.0) (3.7) (3.7)
of associates
LOSS BEFORE TAX (6.4) (32.3) (38.7) (12.0) (6.0) (18.0)
Income tax (0.2) (2.1) (2.3) - 0.6 0.6
(charge)/credit
LOSS FOR THE (6.6) (34.4) (41.0) (12.0) (5.4) (17.4)
YEAR
ATTRIBUTABLE TO:
Equity holders (5.7) (27.6) (33.3) (11.0) (4.5) (15.5)
of the parent
Minority (0.9) (6.8) (7.7) (1.0) (0.9) (1.9)
interest
LOSS FOR THE (6.6) (34.4) (41.0) (12.0) (5.4) (17.4)
YEAR
EARNINGS PER
SHARE
Basic loss per (1.5) (7.5) (9.0) (4.5) (1.9) (6.4)
share (pence)
Diluted loss per (1.5) (7.5) (9.0) (4.5) (1.9) (6.4)
share (pence)
Consolidated statements of recognised income and expense
for the year ended 30 September 2008
Group
2008 2007
GBPm GBPm
Foreign exchange translation differences 0.4 0.1
Revaluation of property, plant and equipment 4.9 -
Deferred tax on revaluation of property, plant (1.0) -
and equipment
NET INCOME RECOGNISED DIRECTLY IN EQUITY 4.3 0.1
Loss for the year (41.0) (17.4)
Total recognised expense for the year (36.7) (17.3)
ATTRIBUTABLE TO: (31.4) (15.3)
- Equity holders of the parent - Minority (5.3) (2.0)
interest
Total recognised expense for the year (36.7) (17.3)
Consolidated balance sheets
As at 30 September 2008
Group
2008 2007
GBPm GBPm
ASSETS
Goodwill 5.1 6.5
Other intangible assets 0.8 1.2
Property, plant and equipment 56.8 36.9
Investments in subsidiaries - -
Investments in associates 8.8 -
Other investments 0.7 5.0
Deferred tax - 2.2
TOTAL NON-CURRENT ASSETS 72.2 51.8
Inventories 2.2 1.4
Trade and other receivables 11.6 4.0
Cash and cash equivalents 10.2 15.2
Assets classified as held for 2.6 -
sale
TOTAL CURRENT ASSETS 26.6 20.6
TOTAL ASSETS 98.8 72.4
EQUITY
Share capital 4.6 2.8
Share premium account 91.3 33.2
Revaluation reserve 4.5 1.6
Share option reserve 2.2 2.2
Foreign currency reserve - 0.2
Retained earnings (33.0) 1.1
TOTAL EQUITY ATTRIBUTABLE TO
EQUITY
HOLDERS OF THE COMPANY 69.6 41.1
MINORITY INTEREST 0.1 1.6
TOTAL EQUITY 69.7 42.7
LIABILITIES
Financial liabilities 0.3 1.8
Deferred tax 1.7 0.7
Obligations under finance leases 1.1 1.1
TOTAL NON-CURRENT LIABILITIES 3.1 3.6
Bank overdraft 0.4 0.7
Interest-bearing loans and 3.3 3.6
borrowings
Obligations under finance leases 0.2 0.2
Trade and other payables 13.8 21.6
Liabilities classified as held 8.3 -
for sale
TOTAL CURRENT LIABILITIES 26.0 26.1
TOTAL LIABILITIES 29.1 29.7
TOTAL EQUITY AND LIABILITIES 98.8 72.4
Consolidated cash flow statements
For the year ended 30 September 2008
Group
2008 2007 GBPm
GBPm
CASH FLOWS FROM OPERATING ACTIVITIES Loss (41.0) (17.4)
for the year 6.6 7.9
Adjustments
CASH FLOWS FROM OPERATING ACTIVITIES BEFORE
MOVEMENTS IN WORKING CAPITAL (34.4) (9.5)
Change in inventories (0.5) (0.6)
Change in trade and other receivables (5.4) (1.3)
Change in trade and other payables 0.4 4.2
CASH GENERATED FROM OPERATIONS (39.9) (7.2)
Interest received 7.1 0.5
Interest paid (2.7) (1.9)
Income tax paid (0.2) -
NET CASH FROM OPERATING ACTIVITIES (35.7) (8.6)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant - 0.1
and equipment
Proceeds from the sale of investments - 1.8
Receipt of deferred consideration in - 1.0
respect of sale of subsidiary
Acquisition of subsidiary, net of cash (2.1) (2.2)
acquired
Deposits paid in respect of property, plant (4.4) -
and equipment
Acquisition of property, plant and (12.5) (18.6)
equipment
Acquisition of associates (1.3) (4.4)
NET CASH FROM INVESTING ACTIVITIES (20.3) (22.3)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of share capital 51.9 15.8
Proceeds received in advance of future - 8.0
share issue
Loan advance 0.1 -
Repayment of borrowings (1.1) (0.3)
Payment of finance lease liabilities (0.2) 1.3
NET CASH FROM FINANCING ACTIVITIES 50.7 24.8
Net decrease in cash and cash equivalents (5.3) (6.1)
Cash and cash equivalents at 1 October 14.5 20.6
Foreign exchange movements 0.2 -
CASH AND CASH EQUIVALENTS AT 30 SEPTEMBER 9.4 14.5
NOTES TO THE FINANCIAL STATEMENTS
1. Significant Accounting Policies
The accounting policies set out below have been applied consistently to
all periods presented in these consolidated financial statements and in
preparing an opening Adopted IFRS balance sheet at 1 October 2006 for
the purposes of the transition to Adopted IFRS. The accounting policies
have been applied consistently by Group entities.
(a) Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of
Lonrho Plc and entities controlled by Lonrho Plc (its subsidiaries). Control
is achieved where Lonrho Plc (the Company) has the power to govern the
financial and operating policies of an investee entity so as to obtain
benefits from its activities.
The interest of minority shareholders is stated at the minority`s proportion
of the fair values of the assets and liabilities recognised. Subsequently,
losses applicable to the minority in excess of the minority`s interest in the
subsidiary`s equity are allocated against the interests of the Group except
to the extent that the minority has a binding obligation and is able to make
an additional investment to cover the losses.
The results of entities acquired or disposed of during the year are included
in the consolidated income statement from the effective date of acquisition
or up to the effective date of disposal, as appropriate.
All intra-Group transactions, balances, income and expenses are eliminated on
consolidation.
Associates
An associate is an entity in which the Group has the ability to exercise
significant influence but not control over the financial and operating
policies. Associates are accounted for using the equity method and are
initially measured at cost as adjusted by post- acquisition changes in the
Group`s share of the net assets of the associate, less any impairment of the
individual investments, from the date that significant influence commences
until the date it ceases.
Losses of the associates in excess of the Group`s interest in those
associates are not recognised except to the extent that the Group has
incurred legal or constructive obligations or made payments on behalf of its
investee. The Group`s investment includes goodwill identified on acquisition,
net of any impairment losses. Any excess of the cost of acquisition over the
Group`s share of the fair values of the identifiable net assets of the
associate at the date of acquisition is recognised as goodwill. Any
deficiency of the cost of acquisition below the Group`s share of the fair
values of the identifiable net assets of the associate at the date of
acquisition (i.e. discount on acquisition) is credited to the income
statement in the period of acquisition.
Business combinations
The acquisition of subsidiaries and businesses is accounted for using the
purchase method. The cost of the acquisition is measured at the aggregate of
the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, and equity instruments issued by the Group in exchange
for control of the acquiree, plus any costs directly attributable to the
business combination. The acquiree`s identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition under IFRS 3
are
recognised at their fair values at the acquisition date, except for non-
current assets that are classified as held for sale in accordance with IFRS
5, which are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially
measured at cost, being the excess of the cost of the business combination
over the Group`s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities 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 cost of the business combination, the excess is recognised
immediately in the income statement. The interest of minority shareholders in
the acquirer is initially measured at the minority`s proportion of the net
fair value of the assets, liabilities and contingent liabilities recognised.
(b) Intangible assets
Goodwill
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 balance sheet date. Any impairment
loss is recognised immediately in the income statement and is not
subsequently reversed when the carrying amount of the asset exceeds its
recoverable amount.
Any impairment losses recognised in respect of cash generating units are
allocated first to reduce the carrying amount of any goodwill allocated to
cash-generating units (groups of units) and then, to reduce the carrying
amount of other assets in the unit (groups of units) on a pro rata basis.
On disposal of a subsidiary, the attributable amount of goodwill is included
in the determination of the gain or loss on disposal.
Goodwill arising on acquisitions before the date of transition to Adopted
IFRS has been retained at the previous UK GAAP amounts, after being tested
for impairment at that date.
Other intangible assets
Other intangible assets are measured initially at cost and are amortised on a
straight-line basis over their estimated useful lives. The carrying amount is
reduced by any provision for impairment where necessary.
On a business combination, as well as recording separable intangible assets
already recognised in the balance sheet of the acquired entity at their fair
value, identifiable intangible assets that are separable or arise from
contractual or other legal rights are also included in the acquisition
balance sheet at fair value.
Amortisation on intangible assets is charged over their useful economic life,
on the following basis:
Brands 5 years
Intellectual property 5 years
Licences 5 years
Contracts 3 years
(c) Foreign currencies
The individual financial statements of each Group company are presented in
the currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each Group company are
expressed in pounds sterling, which is the functional currency of the
Company, and the presentational currency for the consolidated financial
statements.
In preparing the financial statements of the individual companies,
transactions denominated in foreign currencies are translated into the
respective functional currency of the Group entities using the exchange rates
prevailing at the dates of transactions. Non-monetary assets and liabilities
are translated at the historic rate. Monetary assets and liabilities
denominated in foreign currencies are translated into the functional currency
at the rates of exchange ruling at the balance sheet date. Non-monetary
assets and liabilities denominated in foreign currencies that are measured at
fair value are retranslated to the functional currency at the exchange rate
at the date that the fair value was determined.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in the income statement for the
period. Exchange differences arising on the retranslation of non-monetary
items earned at fair value are included within the income statement for the
period except for differences arising on the retranslation of non-monetary
items in respect of which gains and losses are recognised directly in equity.
For such non-monetary items, any exchange component of that gain or loss is
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 balance sheet date. Income and expense are translated
at the average exchange rates for the period, unless exchange rates fluctuate
significantly during that period, in which case the exchange rates at the
date of transactions 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) Hyperinflation
The Group acquired an associate, LonZim Plc, during the year whose main
operations are in Zimbabwe. The policy adopted by LonZim Plc for
hyperinflation is stated below.
The Company will apply International Accounting Standard 29, Financial
Reporting in Hyperinflationary Economies ("IAS 29"). IAS 29 requires the
Adopted IFRS financial statements of any entity operating in a
hyperinflationary economy to take full account of the effect of inflation
using a "current purchasing power" approach, which is implemented using a
complex set of procedures and reconciliations.
Under IAS 29, when an entity has foreign operations (for instance, a
subsidiary) whose financial currency is hyperinflationary, the subsidiary`s
financial statements must be adjusted before being translated and included in
the parent consolidated financial statements. It is a matter of judgement as
to when restatement for hyperinflation becomes necessary, according to the
characteristics of the economy in which the subsidiary conducts its
operations and maintains its functional currency.
Under IAS 29, Zimbabwe is considered a hyperinflationary economy and
therefore LonZim Plc`s consolidated financial statements, to the extent its
portfolio companies use the Zimbabwean Dollar as a functional currency, will
need to be reinstated by LonZim Plc, to account for changes in the general
purchasing power of the Zimbabwean Dollar measured against the consumer price
index published by the Central Statistical Office of Zimbabwe.
Exchange rates
It is the view of the Directors that the translation of the foreign balances
and operations to local currency should be based on an exchange rate that is
aligned to the market forces and fairly presents the true value of foreign
balances and operations when translated to local currency. It should be
emphasised that the policy is for fair presentation purposes only and does
not indicate an intention of the Group to transact at these rates in a local
Zimbabwe market.
In applying this policy, all foreign balances at period end are translated at
the Old Mutual implied rate (OMIR) and operational activities for foreign
operations are translated at the OMIR at the time of activity during the
period. The application of this policy will be reviewed when appropriate.
Inflation adjustment
One characteristic that leads to the classification of an economy as
hyperinflationary, necessitating the application of IAS 29 restatement, is a
cumulative three-year inflation rate approaching or exceeding 100%. The
restatement has been calculated by means of conversion factors derived from
the Consumer Price Index (CPI).
The main procedures applied for the above restatement are as follows:
- Financial statements prepared in the currency of a hyperinflationary
economy are stated in terms of a measuring unit current at the balance
sheet date, and corresponding figures for the previous period are stated
in the same terms.
- Monetary assets and liabilities that are carried at amounts current at
the balance sheet date are not restated because they are already
expressed in terms of the monetary unit current at the balance sheet
date. Monetary items comprise cash held and items to be recovered or
paid in cash.
- Non-monetary assets and liabilities that are not carried at amounts
current at the balance sheet date and components of shareholders` equity
are restated by applying the relevant conversion factors.
- Comparative financial statements are restated by using inflation indices
in terms of a measuring unit current at the latest balance sheet date.
- All items in the income statement are restated by applying the relevant
monthly, yearly average or year end conversion factors with the
exception of depreciation expense, impairments of investments, profit or
loss on disposal of property, plant and equipment, net exchange gains or
losses and increase or decrease in the value of quoted investments.
- Depreciation expense, profit or loss on disposal of property, plant and
equipment are based on the restated carrying amount of property, plant
and equipment and restated disposal proceeds while impairment of
investments is based on the restated carrying amount of the investments.
- Net exchange gains or losses are based on the restated opening carrying
amount of the foreign cash balances against the closing balances at the
closing exchange rate.
- Increase or decrease in the value of quoted investments is based on the
fair market values of the quoted investments.
- The effect on the net monetary position of the Group is included in the
income statement as a monetary adjustment.
- The monetary adjustment reflects the net loss or gain in purchasing
power that arises as a relationship of net monetary assets and monetary
liabilities.
The application of the IAS 29 restatement procedures has the effect of
amending certain of the accounting policies, which are used in the
preparation of the financial statements under the historical cost convention.
The amended policies include:
- Property, plant and equipment
- Inventories
- Prepayments
- Deferred tax
The indices and conversion factors used were:
Index Conversion
Factor
30 June 2008 1,227,614,935,650 1
30 June 2007 11,666,826 105,223
30 June 2006 158,709 7,735,005
(e) Taxation
The tax expense represents the sum of current tax and deferred tax.
Current taxation
Current tax is based on taxable profit for the period. Taxable profit differs
from net profit as reported in the income statement because it excludes items
of income or expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. The Group`s
liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the
initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on the investments in subsidiaries and associates, except where the
Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
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 that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax
is charged or credited in the income statement, except when it relates to
items charged or credited to equity, in which case the deferred tax is also
dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
(f) Available for sale financial assets
The Group`s investments in equity securities are classified as available-for-
sale financial assets. Subsequent to initial recognition, they are measured
at fair value and changes therein, other than impairment losses (see below),
are recognised directly in equity. When an investment is de-recognised, the
cumulative gain or loss in equity is transferred to the income statement.
Impairment
A financial asset is assessed at each reporting date to determine whether
there is any objective evidence that it is impaired.
A financial asset is considered to be impaired if objective evidence
indicates that one or more events have had a negative effect on the estimated
future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between its carrying amount, and the present
value of the estimated future cash flows discounted at the original effective
interest rate. An impairment loss in respect of an available-for-sale
financial asset is calculated by reference to its fair value.
All impairment losses are recognised in the income statement. Any cumulative
loss in respect of an available-for-sale financial asset recognised
previously in equity is transferred to the income statement.
An impairment loss is reversed if the reversal can be related objectively to
an event occurring after the impairment loss was recognised. For financial
assets measured at amortised cost, the reversal is recognised in the income
statement. For available-forsale financial assets that are equity securities,
the reversal is recognised directly in equity.
(g) Property, plant and equipment
Long leasehold land and buildings are stated in the balance sheet at their
revalued amounts, being the fair value at the date of revaluation, less any
subsequent accumulated depreciation and subsequent accumulated impairment
losses. Revaluations are performed with sufficient regularity such that the
carrying amount does not differ materially from that which would be
determined using fair values at the balance sheet date.
Any revaluation increase arising on the revaluation of such land and
buildings is credited to the revaluation reserve, except to the extent that
it reverses a revaluation decrease for the same asset previously recognised
as an expense, in which case the increase is credited to the income statement
to the extent of the decrease previously charged. A decrease in carrying
amount arising on the revaluation of such land and building is charged as an
expense to the extent that it exceeds the balance if any, held in the
revaluation reserve relating to a previous revaluation of that asset.
Depreciation on revalued buildings is charged to the income statement. On
subsequent sale or retirement of a revalued property, the attributable
revaluation surplus remaining is transferred directly to retained earnings.
All other assets are stated at historical cost less accumulated depreciation
and accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets,
other than long leasehold land, over their estimated useful lives, on the
following basis:
Long leasehold buildings 2% of cost
Short leasehold land and
buildings Over the term of the lease
Plant and machinery 10% of cost
Aircraft 5%-6.67% of cost
Motor cars 15%-25% of cost
Fixtures and fittings 1 5%-25 % of cost
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset
and is recognised in the income statement for the period.
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets, or where shorter, over the relevant
lease term.
In respect of aircraft, subsequent costs incurred which lend enhancement to
future periods such as long term scheduled maintenance and major overhaul of
aircraft and engines are capitalised and amortised over the length of the
period benefiting from those enhancements. All other costs relating to
maintenance are charged to the income statement as incurred.
(h) Impairment of assets excluding goodwill, inventories and deferred tax
assets
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to
determine the extent of any impairment loss. Where the asset does not
generate cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to which the
asset belongs. Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value and the risks
specific to the asset for which the estimates of future cash flows have not
been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount.
Impairment loss is recognised as an expense immediately, unless the relevant
asset is carried at a revalued amount in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income immediately, unless
the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation increase.
(i) Financial instruments
Financial assets and financial liabilities are recognised in the Group`s
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits and other
short term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Bank overdrafts that are repayable on demand and form an integral part of the
Group`s cash management are included as a component of cash and cash
equivalents for the purpose of the statement of cash flows.
Trade receivables
Trade receivables are measured at initial recognition at fair value and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated recoverable amounts are
recognised in the income statement when there is objective evidence the asset
is impaired.
Trade payables
Trade payables are initially measured at fair value and are subsequently
measured at amortised cost using the effective interest rate method.
Financial liabilities
Financial liabilities are classified according to the substance of the
contractual arrangements entered into.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are accounted for
on an amortised cost basis to the income statement using the effective
interest method and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they arise.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
Capital management
The Board`s policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the business. The Board of Directors monitors the return on capital, which
the Group defines as net operating income divided by total shareholders`
equity, excluding minority interests.
(j)Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and where applicable direct expenditure and
attributable overheads that have been incurred in bringing the inventories to
their present location and condition. Net realisable value represents the
estimated selling price less all estimated costs of completion and costs to
be incurred in marketing, selling and distribution.
(k)Share based payments
The Group provides benefits to certain employees, including senior
executives, in the form of share based payments, whereby employees render
services in exchange for shares or rights over shares (equity-settled
transactions).The cost of these equity-settled transactions with employees is
measured by reference to the fair value of the equity instruments at the date
at which they are granted. The fair value is determined by using a Black-
Scholes model. The dilutive effect, if any, of outstanding options is
reflected as additional share dilution in the computation of earnings per
share.
(l)Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition, interest-
bearing borrowings are stated at amortised cost with any difference between
cost and redemption value being recognised in the income statement over the
period of the borrowings on an effective interest basis.
(m)Dividends
Dividends are recognised as a liability in the period in which they are
declared.
(n)Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to settle the
obligation. If the effect is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate,
the risks specific to the liability.
(o)Revenue recognition
Revenue, for the other major segments not detailed below, is derived from the
sale of goods and services and is measured at the fair value of consideration
received or receivable, after deducting discounts, volume rebates, value-
added tax and other sales taxes. A sale of goods and services is recognised
when recovery of the consideration is probable, there is no continuing
management involvement with the goods and services and the amount of revenue
can be measured reliably.
A sale of goods is recognised when the significant risks and rewards of
ownership have passed to the buyer, the associated costs and possible return
of goods can be estimated reliably. This is when title and insurance risk
have passed to the customer and the goods have been delivered to a
contractually agreed location.
A sale of services is recognised when the service has been rendered.
Aircraft division
Revenue for the aircraft division comprises the invoiced value of airline
services, net of passenger taxes, discounts, plus ancillary revenue. Revenue
from the sale of flight seats (passenger revenue) is recognised in the period
in which the service is provided. Unearned revenue represents flight seats
sold but not yet flown and is included within deferred income.
Shipping division (discontinued operation)
Revenue for the shipping division comprises the invoiced value of shipping
services, net of taxes and duties.
Revenue is generated from the transport of containerised goods. The transport
of these goods is referred to as a voyage, and a completed voyage comprises
both a North bound and South bound leg.
Revenue is recognised on a completed voyage basis.
(p)Leases
Leases are classified according to the substance of the transaction. A lease
that transfers substantially all the risks and rewards of ownership to the
lessee is classified as a finance lease. All other leases are classified as
operating leases.
Finance leases
Finance leases are capitalised in the balance sheet at their fair value or,
if lower, at the present value of the minimum lease payments, each determined
at the inception of the lease. The corresponding liability is shown as a
finance lease obligation to the lessor. Leasing repayments comprise both a
capital and a finance element. The finance element is written off to the
income statement so as to produce an approximately constant periodic rate of
charge on the outstanding obligation.
Operating leases
Operating lease rentals are charged to the income statement on a straight
line basis over the period of the lease.
(q)Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalisation.
All other borrowing costs are recognised in the income statement in the
period in which they are incurred.
(r)Loss per share
Basic loss per share is calculated based on the weighted average number of
ordinary shares outstanding during the period. Diluted loss per share is
based upon the weighted average number of shares in issue throughout the
year, adjusted for the dilutive effect of potential ordinary shares. The only
potential ordinary shares in issue are employee share options.
(s)Segment reporting
A segment is a distinguishable component of the Group that is engaged either
in providing products or services (business segment), or in providing
products or services within a particular economic environment (geographical
segment), which is subject to risks and rewards that are different from those
of other segments.
(t)Assets and liabilities classified as held for sale
Non-current assets (or disposal groups comprising assets and liabilities)
that are expected to be recovered primarily through sale rather than through
continuing use are classified as held for sale. Immediately before
classification as held for sale, the assets (or components of a disposal
group) are remeasured in accordance with the Group`s accounting policies.
Thereafter generally the assets (or disposal group) are measured at the lower
of their carrying amount and fair value less cost to sell. Any impairment
loss on a disposal group first is allocated to goodwill, and then to
remaining assets and liabilities on apro rata basis, except that no loss is
allocated to inventories, financial assets and deferred tax assets, which
continue to be measured in accordance with the Group`s accounting policies.
Impairment losses on initial classification as held for sale and subsequent
gains or losses on re-measurement are recognised in the income statement.
Gains are not recognised in excess of any cumulative impairment loss.
2. Segment Reporting
Segment information is presented in respect of the Group`s business and
geographical segments. The primary format, business segments, is based on the
Group`s management and internal reporting structure.
There is no inter-segment revenue.
Segment results, assets and liabilities include items directly attributable
to a segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly income-earning assets and revenue, interest-
bearing loans, borrowings and expenses, and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than one period.
Business segments
For management purposes, the Group is currently organised into six operating
divisions.
- Infrastructure
- Transportation
- Support services
- Hotels
- Cargo and shipping (discontinued)
- Other
Geographical segments
All of the segments operate in various parts of Africa.
Business segments
Infrast Tran Support 2008 Othe Consolidat Cargo and
ructure spor services Hotels r ed shipping
GBPm t GBPm GBPm GBPm continuing discontinue
GBPm operations d
GBPm operations
GBPm
EXTERNAL 7.3 9.3 6.1 1.8 - 24.5 18.6
REVENUE
Segment (0.6) (4.5 (0.6) 0.1 - (5.6) (24.5)
result )
Unallocated (7.8) -
expenses
Impairment of (0.6) (0.6) (5.1)
goodwill
Gain on sale 5.8 -
of intangible
asset
OPERATING (8.2) (29.6)
LOSS
Net finance 5.8 (2.7)
income/(expen
se)
Share of (4.0) -
results of
associate
Income tax (0.2) (2.1)
expense
LOSS FOR THE (6.6) (34.4)
YEAR
Infras Trans Support 2007 Consolidate Cargo and
tructu port services Hotels d shipping
re GBPm GBPm GBPm continuing discontinue
GBPm operations d
GBPm operations
Oth GBPm
er
GBP
m
EXTERNAL 5.4 3.0 0.4 1.4 - 10.2 1.0
REVENUE
Segment (0.7) (1.4) (0.1) 0.1 - (2.1) (2.3)
result (9.7) -
Unallocated
expenses
OPERATING (11.8) (2.3)
LOSS
Net finance (0.2) - (3.7) 0.6
expense -
Share of -
results of
associate
Income tax
credit
LOSS FOR THE (12.0) (5.4)
YEAR
Infrast- Transpor Support 2008 Othe Conso- Cargo
ructure t service Hote r lidated and
GBPm GBPm s ls GBPm continuin Shipping
GBPm GBPm g Disconti
operation nued
s operatio
GBPm ns
GBPm
Segment 44.2 14.6 4.3 11.7 - 74.8 2.5
operating
assets
Investment 2.2 - - - 6.6 8.8 -
in
associates
Unallocated - - - - - 12.6 0.1
assets /
interest
bearing
assets
TOTAL ASSETS 96.2 2.6
Segment 9.3 2.5 0.8 1.7 - 14.3 7.8
operating
liabilities
Unallocated 6.5 0.5
liabilities
/ interest
bearing
liabilities
TOTAL 20.8 8.3
LIABILITIES
Depreciation 2.1 0.7 0.1 0.2 - 3.1 -
of segment
assets
Amortisation 0.1 0.2 - - 0.3 -
of segment
assets
Capital 8.5 2.1 0.1 1.8 - 12.5 -
expenditure
Impairment - - 0.7 - - 0.7 5.1
of
intangible
assets
2007
Infrast- Transpo Support Hotels Consolidate Cargo and
ructure rt service GBPm d shipping
GBPm GBPm s continuing discontinue
GBPm Othe operations d
r GBPm operations
GBPm GBPm
Segment 31.7 5.9 3.1 3.9 - 44.6 6.2
operatin
g assets
Unalloca 21.6 -
ted
assets /
interest
bearing
assets
TOTAL 66.2 6.2
ASSETS
Segment 9.1 0.9 0.4 0.1 - 10.5 3.4
operatin
g
liabilit
ies
Unalloca 15.3 0.5
ted
liabilit
ies /
interest
bearing
liabilit
ies
TOTAL 25.8 3.9
LIABILIT
IES
Deprecia 1.0 0.2 - 0.1 - 1.3 -
tion of
segment
assets
Amortisa 0.1 - - - - 0.1 -
tion of
segment
assets
Capital 14.0 4.7 - 0.3 - 19.0 -
expendit
ure
Impairme - - - - - - -
nt of
intangib
le
assets
Geographical segments
2008
Southe East West Europe Conso Southe
rn Afri Africa lidat rn
Africa ca ed Africa
Conti Discon
nuing tinued
opera operat
tions ions
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue by location of 7.7 9.3 7.3 0.2 24.5 18.6
external customers
Revenue by location of 7.9 9.3 7.3 - 24.5 18.6
assets
Segment net 17.5 11.6 33.7 12.6 75.4 (5.7)
assets/(liabilities)
Capital expenditure 2.0 1.8 8.4 0.3 12.5 -
2007
Southe East West Europe Consolidated Southern
rn Afri Africa Continuing Africa
Africa ca operations Discontinue
d
operations
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue by 1.6 3.1 5.4 0.1 10.2 1.0
location of
external customers
Revenue by 1.7 3.1 5.4 - 10.2 1.0
location of assets
Segment net assets 6.5 5.0 22.6 6.3 40.4 2.3
Capital 0.3 4.7 14.0 - 19.0 -
expenditure
3. Revenue
Continuing operations Discontinu Total
ed
operations
2008 2007 2008 2007 2008 2007
GBPm GBPm GBPm GBPm GBPm GBPm
Sale of goods 6.1 0.4 - - 6.1 0.4
Services 18.4 9.8 18.6 1.0 37.0 10.8
24.5 10.2 18.6 1.0 43.1 11.2
4. Group net operating costs
2008 GBPm 2007
GBPm
Cost of sales 53.9 27.4 11.0
Administrative expenses (0.3) 14.7
Other operating income (0.4)
NET OPERATING COSTS (BEFORE IMPAIRMENT OF
GOODWILL
AND THE GAIN ON SALE OF INTANGIBLE ASSETS ) 81.0 25.3
Administrative expenses include management
related overheads for operations and head
office.
INCLUDED IN NET OPERATING COSTS ABOVE ARE:
Depreciation of property plant and equipment 3.1 1.3
Profit on the sale of property plant and - (0.1)
equipment
Impairment of intangible assets (other than 0.1 -
goodwill)
Amortisation of intangible assets (other than 0.3 0.1
goodwill)
Share based payments - 2.6
Operating lease rentals:
- Land and buildings 0.3 0.2
- Plant and machinery 0.1 0.7
- Other 13.6 1.7
Release of negative goodwill to income - (0.7)
Staff costs 9.9 5.0
Impairment of trade receivables 0.7 -
Legal fees relating to discontinued operations 1.4 -
Write off of loan due from associate - 1.0
The costs above include the following relating
to discontinued operations:
2007
(From
2008 acquisition)
GBPm GBPm
Other operating lease 13.6 1.6
rentals
Staff costs 0.3 -
Impairment of trade 0.6 -
receivables
Legal fees 1.4 -
Auditors remuneration
2008 2007
GBPm GBPm
Fees payable to the Company`s auditors for the audit 0.2 0.1
of the Company`s annual accounts
For the audit of the Company`s subsidiaries pursuant 0.1 0.1
to legislation
TOTAL AUDIT FEES 0.3 0.2
5. Earnings per share
The calculation of the basic and diluted loss per share is based on the
following data:-
2008 2007
GBPm GBPm
Loss for the purposes of basic earnings per share (33.3) (15.5)
being net loss attributable to
equity holders of the parent
Loss for the purposes of diluted earnings per share (33.3) (15.5)
2008 2007
Number of shares (millions) No. No.
Weighted average number of ordinary shares for the 371.2 242.6
purposes basic earnings per share
Effect of dilute potential ordinary shares:
- Share options 7.2 7.2
Weighted average number of ordinary shares for the 378.4 249.8
purposes of diluted earnings per share
The calculation of diluted loss per share is based on the weighted average
number of shares outstanding adjusted by the dilutive share options. There is
no dilution per share in respect of both the current and prior year as the
Group has made a loss and hence the effect of share options is considered to
be anti-dilutive.
6. Capital and Reserves
Group reconciliation of movement in capital and reserves
Attributable to equity holders of the parent Share
Share Share Trans- option Reva- Retaine Total
capital premium lation reserv luation d GBPm
GBPm GBPm reserve e reserve earning
GBPm GBPm GBPm s
GBPm
At 1 October 2.2 17.4 - 0.1 1.6 16.6 37.9
2006
Share capital 0.6 15.8 - - - - 16.4
issued
Subsi-diaries - - - - - - -
acquired
Loss for the - - - - - (15.5) (15.5)
period
Equity-settled - - - 2.1 - - 2.1
transactions
Foreign - - 0.2 - - - 0.2
exchange
translation
AT 30 2.8 33.2 0.2 2.2 1.6 1.1 41.1
SEPTEMBER 2007
At 1 October 2.8 33.2 0.2 2.2 1.6 1.1 41.1
2007
Share capital 1.8 58.1 - - - - 59.9
issued
Subsidiaries - - - - - - -
acquired
Revaluation - - - - 2.9 - 2.9
Loss for the - - - - - (33.3) (33.3)
period
Deferred tax - - - - - (0.8) (0.8)
Foreign - - (0.2) - - - (0.2)
exchange
translation
AT 30 4.6 91.3 - 2.2 4.5 (33.0) 69.6
SEPTEMBER 2008
Table continues:.
Mino-rity inte-rest Total equity
GBPm GBPm
1.6 39.5
- 16.4
2.0 2.0
(1.9) (17.4)
- 2.1
(0.1) 0.1
1.6 42.7
1.6 42.7
- 59.9
3.8 3.8
2.0 4.9
(7.7) (41.0)
(0.2) (1.0)
0.6 0.4
0.1 69.7
Share capital and share premium
Ordinary shares
In millions of 1p shares 2008 2007
On issue at 1 October 277.1 224.
2
Issued for cash 177.8 51.4
Bonus issue - 1.5
ON ISSUE AT 30 SEPTEMBER - FULLY PAID 454.9 277.
1
At 30 September 2008, the authorised share capital comprised 550,000,000
ordinary shares (2007: 400,000,000) of 1p each. The increase of 150,000,000
took place on 6 December 2007.
During 2008, the Company issued 44.7 million, 56.9 million and 76.2 million
shares at prices of 38p, 43p and 26p respectively (2007 51.4 million at
34.5p). The costs of the share issues of GBP1.4 million (2007 GBP0.7 million)
have been deducted from the share premium created on issue. During 2007, the
Company also issued and allotted 1. 5m shares at a price of 34. 5p per share
which resulted in a charge to the income statement of GBP0.5 million as a
bonus award to Gerard Holden.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regard to the Company`s residual
assets.
The Group also issued share options in 2007.
7. Notes to the Cash Flow Statement
Group 2007
2008 GBPm GBPm
Depreciation of property, plant and equipment 3.1 1.3
Amortisation of intangible assets 0.3 0.1
Impairment of goodwill and other intangible assets 5.8 -
Negative goodwill - (0.7)
Share based payment expense - 2.6
Finance (income)/expense (3.9) 0.2
Share of profit of associates - 0.3
Impairment/write off of goodwill and investment in 4.0 3.4
associate
Write off of loan due from associate - 1.0
Impairment/loss on disposal of investments 0.8 0.3
Gain on sale of intangible fixed asset (5.8) -
Income tax expense 2.3 (0.6)
ADJUSTMENTS TO LOSS FOR THE YEAR 6.6 7.9
8. Events After the Balance Sheet Date
In October 2008, the Group:
- Liquidated SA Independent Liner Services Pty Limited (SAILS). Losses
totalling GBP0.9 million for the period from 1 October 2008 to 15
October 2008 will be reflected in the income statement for the year to
30 September 2009. At the date of liquidation, the impact on the Group`s
financial position will be as follows:
Recognised
values
GBPm
Property, plant and equipment 0.1
Trade and other receivables 2.8
Cash and cash equivalents 0.1
Non interest bearing financial (2.0)
liabilities
Bank overdraft (0.5)
Trade and other payables (6.6)
Net identifiable assets and (6.1)
liabilities
Minority interest 3.8
Gain on disposal (2.3)
- Signed an agreement to develop an aggregate project in Bengo Province,
Angola.
- Participated in a placement of shares and options by Lonrho Mining
Limited at a cost of AUD $850,000, increasing its holding to 2 5.59%.
- Took effective control of the Rollex Group through Board representation.
See below for further details.
In November 2008, the Group:
- Raised GBP15.4 million before expenses through a placing of 308,846,000
new ordinary shares of 1 pence each in the share capital of the Company
at 5 pence per share.
- Announced that e-KwikBuild, Lonrho`s 30.37% owned associate, had
completed and commenced production from a new prefabricated production
plant in Port Elizabeth, South Africa.
In December 2008, the Group:
- Announced that e-KwikBuild, had been awarded two contracts in Angola for
its prefabricated buildings.
- Completed the acquisition of 51% of the Rollex Group, an agri-processing
and logistics company for GBP5.5 million. The Group subscribed for
GBP1.1 million of ordinary share capital with further deferred
consideration of GBP4.4 million based on the achievement of financial
targets. The acquisition, which has an effective date of 1 October 2008,
had the following effect on the Group`s assets and liabilities at the
acquisition date:
Pre Shares Fair Provisional
acquisition GBPm value values
Subscriptio Adjustmen recognised
n of t on
carrying GBPm acquisition
value GBPm
GBPm
Property, plant and 3.0 3.0 0.1 - 0.1 3.1
equipment Intangible 3.5 - - 3.0
assets - - 0.1
Inventory - - 3.5
Trade and other
receivables
Cash and cash equivalents 0.8 1.1 - 1.9
Interest-bearing loans and (2.6) - - (2.6)
borrowings
Trade and other payables (7.7) - - (7.7)
NET IDENTIFIABLE ASSETS 0.1 1.1 0.1 1.3
AND LIABILITIES
Minority interest (0.7)
Consideration paid* (1.3)
Deferred consideration (4.4)
GOODWILL ON ACQUISITION (5.1)
NET CASH INFLOW ARISING ON
ACQUISITION BEFORE 0.6
DEFERRED CONSIDERATION
* The consideration
includes GBP0.2 million
for acquisition costs.
The intangible assets in the fair value of the assets acquired represent
customer relationships and contracts.
The goodwill arising on the acquisition of Rollex is attributable to the
investment in management and anticipated additional future profitability of
the business.
In January 2009, the Group:
- Signed a development agreement with the Angolan Government to develop
25,000 hectares of agricultural projects in Angola.
- Signed an agreement to become the John Deere tractor and agricultural
equipment distributor for Angola.
- Acquired 1,550,000 shares in LonZim Plc taking its total interest to a
24.25% holding.
In February 2009, the Group:
- Announced the liquidation of Lonrho Mining SA (Pty) Ltd, a wholly owned
South African subsidiary of Lonrho Mining Ltd.
- Acquired a further 100,000 shares in LonZim Plc taking its total
interest to a 24.53% holding.
- Announced that LonZim Plc had a 7.81% holding in the Company. This
investment had been built up in the period since the year end.
9. Explanation of transition to Adopted IFRS
These are the Group`s first consolidated financial statements prepared in
accordance with Adopted IFRS.
The accounting policies set out have been applied in preparing the financial
statements for the year ended 30 September 2008, the comparative information
presented in these financial statements for the year ended 30 September 2007
and in the preparation of an opening Adopted IFRS balance sheet at 1 October
2006 (the Group`s date of transition).
In preparing its opening Adopted IFRS balance sheet, the Group has adjusted
amounts reported previously in financial statements prepared in accordance
with its old basis of accounting UK GAAP. An explanation of how the
transition from previous GAAP to Adopted IFRS has affected the Group`s
financial position, financial performance and cash flows is set out in the
following tables and the notes that accompany the tables.
The Group has taken advantage of the relief in IFRS 1 to deem the cumulative
translation difference for all foreign operations to be zero at the date of
transition to Adopted IFRS.
Group balance sheets
Effect of Effec
Tran- t of
sition to Adopted Tran- Adopte
UK GAAP Adopted IFRS UK sitio d
IFRS GAAP n IFRS
to
Adopt
ed
IFRS
1 30
October September
2006 2007
Note GBPm GBPm GBPm GBPm GBPm GBPm
ASSETS
Goodwill (a), 3.3 - 3.3 6.7 (0.2) 6.5
(d)
Other intangible (a), - - - - 1.2 1.2
assets (d)
Property, plant 19.8 - 19.8 36.9 36.9
and equipment
Other - - - 5.0 - 5.0
investments
Deferred tax - - - 2.2 - 2.2
assets
TOTAL NON- 23.1 - 23.1 50.8 1.0 51.8
CURRENT ASSETS
Inventories 0.2 - 0.2 1.4 - 1.4
Investments 7.1 - 7.1 - - -
Prepayments 0.2 - 0.2 0.8 - 0.8
Trade and other 2.1 - 2.1 3.2 - 3.2
receivables
Cash and cash 20.7 - 20.7 15.2 - 15.2
equivalents
TOTAL CURRENT 30.3 - 30.3 20.6 20.6
ASSETS
TOTAL ASSETS 53.4 - 53.4 71.4 1.0 72.4
EQUITY
Issued share 2.2 - 2.2 2.8 - 2.8
capital
Share premium 17.4 - 17.4 33.2 - 33.2
account
Revaluation (d) 1.6 - 1.6 1.5 0.1 1.6
reserves
Share option 0.1 - 0.1 2.2 - 2.2
reserve
Foreign currency (d) - - - - 0.2 0.2
reserve
Retained (c) 18.2 (1.6) 16.6 2.9 (1.8) 1.1
earnings
TOTAL EQUITY
ATTRIBUTABLE TO
EQUITY HOLDERS 39.5 (1.6) 37.9 42.6 (1.5) 41.1
OF THE PARENT
MINORITY (c) 0.5 1.1 1.6 (0.2 1.8 1.6
INTEREST )
TOTAL EQUITY 40.0 (0.5) 39.5 42.4 0.3 42.7
LIABILITIES
Other financial - - - 1.8 - 1.8
liabilities
Obligations - - 1.1 - 1.1
under finance
leases
Deferred tax (a),(b - 0.5 0.5 - 0.7 0.7
liabilities )
TOTAL NON- - 0.5 0.5 2.9 0.7 3.6
CURRENT
LIABILITIES
Interest-bearing 4.3 - 4.3 4.3 - 4.3
loans and
borrowings
Other financial - - - - - -
liabilities
Current tax - - - - - -
liabilities
Trade and other 9.1 - 9.1 21.6 - 21.6
payables
Obligation under - - - 0.2 - 0.2
finance leases
TOTAL CURRENT 13.4 - 13.4 26.1 - 26.1
LIABILITIES
TOTAL 13.4 0.5 13.9 29.0 0.7 29.7
LIABILITIES
TOTAL EQUITY AND 53.4 - 53.4 71.4 1.0 72.4
LIABILITIES
Reconciliation of Group loss for the year ended 30 September 2007
Note UK GAAP Effect Adopted
GBPm of IFRS
transiti GBPm
on to
Adopted
IFRS
GBPm
Revenue Cost of sales 11.2 - 11.2
(11.0) - (11.0)
GROSS PROFIT 0.2 - 0.2
Other operating income 0.4 - 0.4
Operating costs (a),(d) (15.6) 0.9 (14.7)
OPERATING LOSS BEFORE FINANCE (15.0) 0.9 (14.1)
EXPENSE
Finance income 0.5 - 0.5
Finance expense (d) (0.9) 0.2 (0.7)
NET FINANCE EXPENSE (0.4) 0.2 (0.2)
Impairment of associates (3.4) - (3.4)
Profit on sale of fixed asset (d) 0.1 (0.1) -
Share of loss of associates (d) (0.1) (0.2) (0.3)
LOSS BEFORE TAX (18.8) 0.8 (18.0)
Income tax credit 0.6 - 0.6
LOSS FOR THE PERIOD (18.2) 0.8 (17.4)
ATTRIBUTABLE TO:
Equity holders of the parent (15.5) - (15.5)
Minority interest (c) (2.7) 0.8 (1.9)
LOSS FOR THE PERIOD (18.2) 0.8 (17.4)
BASIC EARNINGS PER SHARE (PENCE) (6.4) - (6.4)
DILUTED EARNINGS PER SHARE (6.4) - (6.4)
(PENCE)
(a) IFRS 3 - Business combinations
Under IFRS 3, goodwill is not amortised but is measured at cost less
impairment losses. Under UK GAAP, goodwill was amortised on a straight line
basis over the period of its expected useful life. This adjustment increases
profit before tax and goodwill for the year to 30 September 2007 by GBP0.2
million.
IFRS 3 requires that intangible assets arising on acquisition, that are
separable or arise from contractual or other legal rights, be recognised as
intangible assets separately from goodwill. This adjustment results in
additional intangible assets of GBP1.3 million at 30 September 2007 with a
corresponding reduction in goodwill of GBP0.6 million and the creation of
negative goodwill of
GBP0.7 million which has been written off immediately in the income
statement. These adjustments give rise to a deferred tax liability and a
corresponding increase in goodwill of GBP0.2 million at 30 September 2007.
The intangible assets will be amortised on a straight line basis over their
expected useful economic life. This increases the loss before tax and
decreases intangible assets for the year to 30 September 2007 by GBP0.1
million.
(b)IAS 12 - Deferred taxation
Under UK GAAP deferred tax was provided on timing differences that had
originated, but had not reversed, before the balance sheet date. IAS 12
requires that deferred tax is provided on temporary differences based upon
the recovery of settlement of assets and liabilities recognised in the
balance sheet.
As a result, an additional tax liability of GBP0.5 million has been provided
on translation. This change is as a result of property, plant and equipment
being revalued with no equivalent adjustment made for tax purposes.
(c)Minority interest
Under UK GAAP the losses of a subsidiary undertaking are allocated against
the majority and minority in accordance with their respective shareholdings.
IAS 27 requires losses of a subsidiary undertaking to be allocated against
the majority except to the extent that the minority has a binding obligation
and is able to make an additional investment to cover the losses. If the
subsidiary undertaking subsequently reports profits, such profits are
allocated to the majority interest until the minority`s share of the losses
previously absorbed by the majority, have been recovered. Losses of GBP1.1
million have been allocated against retained earnings in respect of this
adjustment due to a binding obligation not being in existence in respect of
certain subsidiary undertakings as at 1 October 2006 and an additional GBP0.7
million in respect of the year to 30 September 2007.
(d)Presentational adjustments
The financial information is in Adopted IFRS format and reflects a number of
differences in presentation between UK GAAP and Adopted IFRS as follows:
(i)the disclosure of goodwill as separate from intangible assets on the
balance sheet;
(ii)the disclosure of deferred tax as a non-current asset/liability;
(iii)the classification of foreign exchange reserves arising on retranslation
of subsidiaries with a functional currency other than sterling from retained
earnings to other reserves;
(iv)the format of the income statement will be substantially similar to that
of the profit and loss account in the Group`s previous UK GAAP financial
statements. The Companies Act schedule 4 format of the profit and loss
account is no longer used under Adopted IFRS.
(v)associated undertakings are equity accounted for under both IAS 28 and UK
GAAP. The only difference between the treatments of associates under Adopted
IFRS compared to UK GAAP is the disclosures in the income statement. The
share of post tax profits/losses of its associate were disclosed separately,
with the associates` tax charge included in the Group`s tax charge. This had
no effect on the numbers in the periods disclosed.
(vi)the adjustments to the cash flow statement.
South African sponsor to Lonrho Plc
Java Capital (Proprietary) Limited
Date: 31/03/2009 10:40:33 Produced by the JSE SENS Department.
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