| Fri 5 Feb 2010, 9:43 | | LAF - Lonrho Plc - Trading update for the quarter ended 31 December 2009 |
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LAF
LOLAF
LAF - Lonrho Plc - Trading update for the quarter ended 31 December 2009
LONRHO PLC
(Formerly Lonrho Africa Plc)
(Incorporated and registered in England and Wales)
(Registration number 2805337)
(Share code: LAF; ISIN number: GB0002568813)
("Lonrho" or "the Company")
Trading Update for the Quarter Ended 31 December 2009
"Lonrho reports strong growth and improved operating margins"
Lonrho Plc (AIM:LONR) today announces its unaudited first quarter trading
results for the three months to 31 December 2009. The Company has performed on
target and delivered growth expectations.
All of the Group`s turnover is denominated in foreign currency, predominantly
the US Dollar and the South African Rand. The inter-relationships between
these currencies in particular has had a significant effect on reported
turnover in Pound Sterling. The past twelve months have witnessed large swings
in foreign exchange rates particularly in relation to the South African Rand
and the US Dollar. In order to demonstrate Lonrho`s true performance at
divisional level the Group is reporting its quarterly turnover figures by
restating the previous year`s turnover using comparable currency exchange
rates as well as on a reported Sterling basis.
Highlights for the first quarter include:
- Turnover from operations reached GBP22.7m. Adopting the comparable
currency basis as explained above this represents an increase of 21.7%
compared to the same period in the previous year which is equivalent to
3.1% on a reported basis.
- Growth of the turnover in the first quarter has been driven by expected
expansion and growth across all divisions.
- During the quarter, the Company`s strategy was to focus on increasing
operating margins. As a result, gross margins have generally improved
across the businesses and have significantly improved in the Agribusiness
and Infrastructure divisions.
- Net assets at the end of the first quarter stood at GBP104m, an increase
of GBP20m since 30 September 2009.
- The Company held cash balances of GBP32m at the end of the quarter.
- Over the last quarter the share price rose 46.1% from 8.04p at close on 1
October 2009 to 11.75p at close of business on 31 December 2009.
- Market capital increased from GBP64.2m to GBP123.4m in the last quarter.
- As forecast, EBITDA in the first quarter was a reduced loss of GBP1.2m,
compared with a loss of GBP1.9m in the same quarter in the prior year on
a reported basis, reflecting the improvement of gross margins across the
businesses.
- For the three months ended 31 December 2009 the loss before tax was
GBP3.3m compared to GBP2.7m in the previous year on a reported basis. The
increased loss for the quarter reflects the additional interest and
depreciation on the capital expenditure programme required to expand the
Agribusiness and Infrastructure divisions combined with the effect of a
20% strengthening of the South African Rand against Pound Sterling.
Operational Highlights
The first quarter of 2009/10 has seen continued performance and delivery in
the Group`s core businesses. Despite the global economic crisis, the Company`s
core markets are continuing to expand and grow across the Continent.
All five reporting divisions (Infrastructure, Agribusiness, Regional
Transportation, Support Services and Hotels) have shown real growth in their
operations.
Agribusiness
- Rollex SA (Pty) Limited (51% holding) remains the central platform within
Lonrho`s Agribusiness division. First quarter sales increased 14%
compared to the same period in the previous year on a comparable currency
basis. The business experienced a tightening of international markets in
Europe during the quarter but was more than able to compensate through
growth in South Africa and the opening of new markets in the Middle East
and Scandinavia.
- Gross margins have improved from 15% to 18%. The improvement in the gross
margin is linked directly to the increased volumes of fresh produce and
fish exported during the quarter. Airfreight volumes have increased by 7%
for the quarter compared to the previous year. The increase has been
driven by growing demand for fresh fish from European customers. Fish
exports increased by 18% in November and 16% in December against the
prior year.
- Rollex has successfully increased volumes supplied by 182% to two large
domestic supermarkets in South Africa: Pick n Pay and Spar, quarter on
quarter, and by 292% against the same period in the previous year. This
is as a result of innovative new lines being introduced to expand the
products on offer to these existing customers. Volumes provided to Pick
`n Pay and Spar will continue to grow as Rollex has become a preferred
supplier to both retail chains.
Infrastructure
- Revenue for this quarter at Luba Freeport (63% holding) has increased by
8% against the previous year on a comparable currency basis. This
encouraging increase is stimulated by a series of new drilling programmes
being initiated off-shore by a number of existing tenants.
- The Company strategy of improving margins in the quarter has been
successful and resulted in gross margins this quarter at Luba Freeport
increasing by 3% compared to the previous year.
- The number of liner and tanker calls to Luba Freeport has seen a
significant increase of 56% compared to the previous year. This is due to
the demand for materials and supplies required to support the new
drilling programmes that have been initiated by Amerada Hess, Exxon Mobil
and Noble Energy.
- As previously announced, Noble Energy commenced operations at Luba
Freeport during the quarter and has committed to exclusively utilise the
port as a central operational base for its Gulf of Guinea operations.
- During the quarter Lonrho increased its holding in its Kwikbuild
Corporation subsidiary to 70% as announced on 21st December 2009.
Kwikbuild Corporation Limited has a 51% shareholding in the South African
prefabricated building solutions company e-Kwikbuild.
- Turnover at e-Kwikbuild increased 39% from the previous year on a
comparable currency basis. The order book stood at a record ZAR 30m
(GBP2.5m) at the end of the quarter.
- In line with the Company`s strategy to improve margins, gross margins at
e-Kwikbuild have increased by over 10% from the previous year.
- Following the successful commissioning and integration of the new
manufacturing facilities in South Africa, e-Kwikbuild has tendered for a
number of export projects in Tanzania, Angola, Kenya and Mozambique
during the current quarter. These export projects are all potentially
highly profitable and this new pan-African focus for the Company, and the
leveraging of the strong Lonrho brand and relationships, is an important
step in the planned expansion of the business.
Hotels
- Hotel Cardoso in Mozambique (59% holding + Management Contract), has
delivered average occupancy for the quarter of over 74%. Average room
rates have improved to over US$100 per night compared with a room rate of
US$78 per night in December 2008. The refurbishment of the hotel rooms,
restaurants and conference facilities were completed this quarter and
have been very well received by guests and locals, firmly establishing
the hotel as a leading facility in Maputo.
- Turnover at the Cardoso increased 78% on the prior year on a comparable
currency basis.
- Hotel Grand Karavia in Lubumbashi, DRC (50% holding + Management
Contract) is nearing completion of its US$20m refurbishment. During the
quarter US$7.6m of the hotel`s US$10m DBSA senior debt facility was drawn
down for the refurbishment programme. The hotel is scheduled to open at
the end of March 2010 and will provide 216 rooms and suites of the only
international standard accommodation in Lubumbashi, the centre of the
burgeoning copper belt of the DRC.
- The recovery of the copper sector in Lubumbashi continues and demand for
quality hotel rooms is expected to be even stronger in 2010.
Transport
- Lonrho Aviation has seen turnover increase by 41% compared to the same
quarter last year on a comparable currency basis.
- During the quarter, Fly 540 launched a new service from Nairobi to Mwanza
and Bujumbura and began a scheduled service connecting Zanzibar to
Kilimanjaro and the Serengeti. The Fly540 service continues to connect
East Africa. Further growth will continue in Tanzania with two further
aircraft being deployed to the fleet during the second quarter.
- Fly 540 has taken delivery of its first CRJ regional jet which will be
used for longer distance regional routes not suitable for turboprops
(Entebbe, Mwanza, Bujumbura and Zanzibar). The introduction of the jet to
the fleet is an important step in the expansion of the airline and the
delivery of a pan-African integrated operation.
- The application processes for Air Operators Certificates in Ghana and
Angola are nearing completion and both hubs are gearing up to launch
operations. Local infrastructure is complete, staff have been recruited
and training is ongoing.
Support Services
- Bytes & Pieces (65% holding), has seen revenues has grow this quarter by
5% when compared with the same period last year.
- During the quarter Bytes and Pieces partnered with Xerox to offer
customers new paperless office solutions for the first time. In addition
they have also secured service contracts with Capital Star Steel, SA in
Mozambique and enjoyed strong revenues from First National Bank,
Riversdale Mining Limited and Global Alliance.
- Lonrho IT (CES, 50% holding + Board Control), continues to grow its
operations across Southern Africa. In South Africa the Johannesburg and
Nelspruit offices continue to expand with the arrival of a new Business
Development Manager at the end of January 2010. During the quarter
projects undertaken have included the Ministry of Energy and Minerals in
Uganda, Cross Border Road Transport Agency in South Africa and Carmague
insurance underwriters.
- CES Zambia (50% holding+ Board Control), continues to exceed expectations
and remains on track to achieve US$1m turnover in the first 12 months of
operation. The list of clients continues to grow with the addition of
Zambian Breweries, KPMG and PWC amongst others.
- Swissta Mozambique (100% holding) won a contract from the ruling Frelimo
party to supply bottled water at polling stations during the elections
held at the end of October 2009 driving volume growth of 10% compared
with the previous quarter. During the coming months Lonrho Water will
launch a new line of water sachets, which have proved to be very
successful elsewhere in Africa.
- The new bottling plant scheduled for Luanda is making gradual progress.
Site work has commenced and the expediting of the equipment is awaiting
EXIM funding approval for the confirmation of orders and subsequent
delivery.
LonZim Plc
- Lonrho has a 24.61% shareholding in LonZim (AIM:LZM).
- LonZim has invested GBP26m on acquiring a portfolio of companies that are
well placed to benefit from economic recovery across key sectors in
Zimbabwe. The current market capitalisation of LonZim represents a 51%
discount on the acquisition cost of the portfolio.
- On 4 December 2009, LonZim announced it had raised a further GBP1.17m
gross by way of a private placing of 4,255,525 new ordinary shares. At
year end LonZim had cash reserves of GBP2.4m.
- On 26 January 2010, LonZim announced its results for the year ending 31
August 2009, reporting a turnover of GBP2.6m and profit before tax of
GBP0.9m. Each operating company is cash flow positive.
- LonZim has reported a significant improvement in the commercial
environment and the economy in Zimbabwe since the formation of the
Government of National Unity and the US dollarization of the currency in
February 2009. Hyperinflation has gone and businesses are starting to
trade normally.
Financing Activities
Lonrho successfully raised GBP25.1m this quarter, mainly from existing
shareholders. These funds will provide the Company with the ability to
increase its equity stake in its core established businesses, specifically its
agricultural and building divisions and increase available working capital.
Current Trading and Future Outlook
Each of the Company`s businesses continued to perform to expectations during
the first quarter and grew their core operations.
The Lonrho strategy continues to be resilient to the global economic crisis
and the Company focuses on the industry sectors and specific countries which
it believes will continue to provide the strongest growth in emerging Africa.
Clear opportunities continue to exist in focusing on and serving the oil,
agricultural and mineral industries across the continent.
The first half of 2010 will see new operations that are nearing completion
come to fruition for the Group: the Karavia Hotel opening in late March 2010;
540 Angola and Ghana commencing flight operations, subject to receiving final
Air Operator Certifications; and Lonrho Agribusiness opening its John Deere
operations in Angola.
It is intended that the next quarterly update for the Company will be released
in May 2010.
David Lenigas, Lonrho`s Executive Chairman commented:
"The 21.7% increase in revenue delivered this quarter on a comparable currency
basis to the prior year demonstrates that Lonrho is on track and is meeting
its ambitious targets for the year. This success is down to careful planning,
and the focus and the quality of the Lonrho management teams, who continue to
grow their businesses whilst having to operate in a particularly challenging
economic environment.
Lonrho has GBP32m in cash reserves and has solid, performing businesses in
strategic sectors which are well positioned to benefit from, and help deliver,
the emerging economies in Africa. We continue to see the provision of services
to the oil, agriculture and mineral industries as these are the core economic
drivers for emerging Africa. Lonrho`s operations remain aligned with the
countries growing with the boom in these sectors.
I am particularly excited about the expansion of Fly 540, the opening of the
Hotel Karavia in Lubumbashi and the John Deere distributorship for Angola.
Each is a commercial milestone in the development of the Company. These new
operations complement our existing businesses and will further enhance
Lonrho`s reputation and delivery in our specific market sectors."
LONRHO GROUP
GROUP TURNOVER
GBP`000S
TURNOVER on a reported basis
3 3
Months Months
to to
31 Dec 31 Dec Variance Var %
2009 2008
Agri Processing
Rollex 11,511 12,189 (678) (6%)
Transport
Lonrho Aviation 5,177 4,206 971 23%
Support Services
Bytes & Pieces 1,572 1,925 (353) (18%)
Other 669 438 231 53%
Infrastructure
Luba Freeport 2,024 2,111 (87) (4%)
E-Kwikbuild 574 377 197 52%
Hotels
Hotel Cardoso 970 700 270 39%
Hotel Management 119 0 119 100%
Services
Other/ Head office 135 115 20 17%
Continuing 22,751 22,061 690 3.1%
Operations
Shipping- 0 1,187 (1,187) (100%)
discontinued
Discontinued 0 1,187 (1,187) (100%)
Operations
Total Turnover 22,751 23,248 (497) (2.1%)
TURNOVER on a COMPARABLE CURRENCY
BASIS
3 3
Months Months
to to
31Dec 31 Dec Variance Var %
2009 2008
Agri Processing
Rollex 11,511 10,124 1,387 14%
Transport
Lonrho Aviation 5,177 3,678 1,499 41%
Support Services
Bytes & Pieces 1,572 1,503 69 5%
Other 669 451 218 48%
Infrastructure
Luba Freeport 2,024 1.866 158 8%
E-Kwikbuild 574 413 161 39%
Hotels
Hotel Cardoso 970 546 424 78%
Hotel Management 119 0 119 100%
Services
Other/ Head office 135 115 20 17%
Continuing 22,751 18,696 4,055 21.7%
Operations
Shipping- 0 1,187 (1,187) (100%)
discontinued
Discontinued 0 1,187 (1,187) (100%)
Operations
Total Turnover 22,751 19,883 2,868 14.4%
Results and turnover sourced from December 2009 management accounts
Enquiries
Lonrho Plc
David Lenigas, Executive Chairman +44 (0)20 7016 5105
Geoffrey White, Chief Executive +44 (0)20 7016 5105
Officer
David Armstrong, Finance Director +44 (0)20 7016 5105
Pelham Bell Pottinger
Charles Vivian +44 (0) 20 7337
1538
+44 (0) 7977 297903
James MacFarlane +44 (0) 20 7337
1527
+44 (0) 7841 672831
Klara Kaczmarek +44 (0) 207337 1524
+44 (0) 7912 539
973
Beaumont Cornish Limited (Nomad)
Rosalind Hill Abrahams +44 (0) 20 7628
3396
Roland Cornish +44 (0) 20 7628
3396
5 February 2010
South African Sponsor
Java Capital (Proprietary) Limited
Date: 05/02/2010 09:43:07 Produced by the JSE SENS Department.
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