| Thu 29 Jul 2010, 8:58 | | LAF - Lonrho Delivers 45% Increase in Third Quarter Turnover |
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LAF
LOLAF
LAF - Lonrho Delivers 45% Increase in Third Quarter Turnover
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")
Lonrho Delivers 45% Increase in Third Quarter Turnover
These results (and comparative figures included therein) do not form audited
accounts nor have been extracted from audited accounts. The results disclosed
in this trading update may potentially be subject to adjustments during the
yearend audit in respect of goodwill valuations and other minor items. The
comparative figures used are year on year due to the influence of seasonality
within the different businesses in the group.
Lonrho Plc (AIM:LONR) today announces its unaudited results for the third
quarter to 30 June 2010. The Company continues to grow, both through its
underlying businesses and via strategic acquisitions within Lonrho`s chosen
strategic business sectors.
Financial highlights for the quarter include:
Turnover from operations for the quarter increased by 44.6% (42.4% in
comparable currency) compared to the prior year, to reach GBP26.8m. Results
for the 9 months to 30 June reported improved turnover of 23.4% to GBP74.0m,
in comparable currency this increase was 30.3%.
The Company improved EBITDA performance reporting a positive GBP1.5m in the
third quarter, compared to a loss in the prior year of GBP2.4m. EBITDA for the
year to date is now GBP4.3m, well ahead of the GBP7.0m loss at the same point
in the prior year.
Year to date, the Company has made a loss before tax of GBP2.5m. This is
compared to the reported loss in the prior year of GBP6.2m, when adjusted for
exceptional items.
Net Assets at 30 June stood at GBP101.9m whilst the Company market capital was
GBP114.7.
Operational highlights for the quarter include:
The 197 room Hotel Grand Karavia in Lubumbashi in the DRC was opened on budget
and inaugurated by President Kabila. Initial responses to the hotel have far
exceeded expectations.
The purchase of a majority stake in Oceanfresh Seafoods, further expanding the
capabilities and synergies in the Lonrho agribusiness division opening up new
trade opportunities in the USA market.
Purchasing the remaining 49% of Rollex, the vertically integrated agri-
processing company, to increase ownership in the Company`s most profitable
business to 100%.
The acquisition of Trak-Auto, the John Deere tractor and Komatsu equipment
dealership in Mozambique, a country with significant mineral and agriculture
growth potential.
Divisional Highlights:
Agribusiness
During the quarter, the Agribusiness division has undergone significant
strategic development which will help to deliver the forecast growth in the
future. This has included the purchase of two businesses, as well as the
acquisition of the remaining 49% of shares in Rollex which were not previously
owned by the Company.
During the quarter, the Agribusiness division has added 39% to reported
turnover compared to Q3 2009, growing the quarterly turnover to GBP13.7m. For
the 9 months to 30 June the increase in revenue in the division has been
14.9%, and when taken in comparable currencies 20.9%.
On 7 June, the Company completed the purchase of Oceanfresh Seafoods (51%
holding), a leading vertically integrated producer and supplier of premium,
sustainable seafood from Africa. The acquisition was aimed at expanding the
operations of Lonrho Agriculture into new markets including the USA. Lonrho
paid a consideration of R3.8m (GBP336,860) for the equity, and made a working
capital injection of R7.7m (GBP682,642) to provide the company with the
financial ability to meet its growth opportunities.
The strength of the acquisition strategy with Oceanfresh has already been
demonstrated, with the Company announcing on 20 July it had won a contract to
supply leading US retailer Costco with `Cape Hake Fillets`. This new product,
which has been on a successful trial at Costco for the past eight months, will
be rolled out through 50 stores in the Los Angeles region in the coming
months. With further stores in the San Diego, Texas and Chicago regions to be
supplied in 2011, the growth potential of this business is significant. The
Oceanfresh management have further seen an impressive increase in orders from
the South African retail sector since acquisition and are implementing
strategic synergies with Rollex that will improve margins and reduce overheads
for both businesses.
On 18 May, the Company announced the agreement to acquire the remaining 49 per
cent of the issued share capital in Rollex SA Pty Ltd that Lonrho did not
previously own from the trustees of the De Robillard Family Trust. The effect
of the transaction on the Company will be to give Lonrho 100 per cent control
of Rollex and as a result, increase the level of profit attributable to Lonrho
shareholders in the Group profit and loss account. The acquisition has been
paid for by the issue of 42,119,258 Lonrho shares to an agreed price of
R51,450,000 being approximately 10.98 pence per share. The previously agreed
purchase of the remaining minority stake in the Fresh Direct agricultural
company in the coming quarter will complete the integration of the Lonrho
agribusiness division.
On 8 April, the Company completed the acquisition of 100% of Trak-Auto Lda
(Trak-Auto), the existing holder of the John Deere and Komatsu dealerships in
Mozambique. John Deere is a leading supplier of agricultural equipment and
Komatsu is one of the world`s largest manufacturers of construction, mining
and utility equipment. Lonrho acquired the company at a cost of US$2m payable
on acquisition and three annual payments of US$1m deferred and contingent on
the vendor, who continues to manage the business, meeting agreed growth
targets. Since acquisition the company has seen strong demand from the growing
number of new large scale agricultural and mining projects being launched in
Mozambique.
Transport
Fly540 East Africa has opened a ninth domestic route in Kenya and reported
strong growth from increased capacity in Tanzania resulting from building
demand for Fly540 services. With the Fly540 Southern Africa hub in Angolan
finally scheduled to have its first flight on the 15 August, the transport
division is continuing to develop and meet the objective of building Fly540
into the preeminent regional carrier connecting Africa.
Revenue for the division has increased to GBP4.8m, 23% above the figure
reported for the same period in the prior year. Year to date Fly540 has
generated GBP14.6m in turnover, and with the 4th quarter traditionally
generating around 40% of annual turnover, the Company is confident 2010 will
deliver significant year on year growth as the airline expands and grows
demand.
The first flight from the Angolan hub is scheduled for 15 August. Whilst being
delayed from the Company`s planned start date, this flight will represent a
step change in the trajectory of the Fly540 network into a domestic and
regional market that is seeing an economic boom and is chronically
underserviced presently.
Fly540 Kenya has, during the quarter added a new ninth domestic route to its
already comprehensive schedule. Now flying to Kakamega, Fly540 is able to open
up parts of western Kenya which were previously incredibly difficult to reach.
This expansion, along with continued growth on existing routes means passenger
numbers were 12% higher in the quarter compared to the same quarter in the
prior year, with turnover increasing by 22%.
Flights to the Masai Mara safari region operated by Fly540 Kenya have been
moved from Jomo Kenyatta to Wilson airport, the traditional departure point
for safari operators. Along with this move, new flights to Amboseli, Nanyaki
and Sambura will begin in August.
For the last month of the quarter, Fly540 Tanzania has operated an additional
aircraft, doubling its capacity to meet market demand. This has lead to a 66%
increase in turnover for the quarter compared to the same quarter in the prior
year.
Infrastructure
The Infrastructure division has had a strong quarter, building on previous
successes. Luba Freeport has again broken its record for vessel calls and
Kwikbuild, with large contract wins at Cape Town Station and orders for a new
primary school, has shown it is now delivering real growth as a result of the
new production plant capacity and strengthened management teams.
The infrastructure division has reported the highest growth in the Company
compared to the same period in the prior year. The 118% increase which has
been achieved takes the quarterly revenue to GBP4.3m. Year to date, turnover
stands at GBP10.7m, an increase on 2009 of 53%.
At Luba Freeport (63% holding), an increase in drilling by all the major
clients, combined with the introduction of Noble Energy to the client list,
has meant an impressive 79% increase in turnover compared to the same quarter
in the prior year.
Liner and tanker calls to Luba Freeport have again increased in the quarter,
with the third quarter seeing the largest number of vessel calls in the port`s
history, exceeding the previous record figure achieved in Q2. Demand for
materials and supplies to support new drilling programmes that have been
initiated by Hess, MEGI and Noble Energy have resulted in significantly more
traffic being seen through the port. In addition, the transfer of all MI Swaco
(Equatorial Guinea) operations to Luba from the general cargo port in Malabo
has resulted in all the vessels requiring drilling muds and bulk chemicals,
(essential for drilling programs) to now call exclusively at Luba.
In the quarter, e-Kwikbuild (51% holding) was awarded two large tenders to
develop the 480 units at Cape Town Station Traders Mall and to build a 23
classroom, 700 pupil school near Port Elizabeth. Both of these projects are
fast track projects ideally suited to the Kwikbuild product and are to be
completed within four and a half months.
The application of Kwikbuild design and building solutions to meet the
requirements of the Cape Town Station Traders Mall project demonstrates the
diverse markets available for Kwikbuild product and the wide potential for
the company throughout the Continent.
Hotels
With the Cardoso hotel in Maputo completing its refurbishment and the Grand
Karavia hotel in Lubumbashi open and trading, having been officially
inaugurated by President Kabila in June, the hotels division is completing a
very successful year.
Turnover for the quarter in the hotels division has reached GBP1.4m, taking
the year to date revenue to GBP3.7m. These figures are 61% and 72%
respectively higher than in the previous year.
On 15 June, after an US$20m refurbishment completed on budget, President
Kabila of the DRC officially opened the Grand Karavia hotel (50% holding +
Management Contract). The Grand Karavia provides the only international
standard accommodation in Lubumbashi, the capital of the copper and cobalt
mining province of Katanga. The hotel is situated in secure landscaped gardens
beside a lake and was immediately granted five star status when inaugurated.
The accommodation combined with restaurants, bars, internet access and
conference facilities as well as a health club, swimming pool and sports
facilities is a much needed facility in an area of strong economic growth such
as Katanga.
Hotel Cardoso (59% holding + Management Contract) continues to build market
share. Room revenue for the quarter is up 15% compared to the same period in
the prior year. Rates have remained strong despite the impact of the World Cup
in South Africa with gross margins increasing by nearly 2% compared to Q3
2009.
Support Services
The Support Services division is dedicated to providing the essential first
world standard IT infrastructure required for African businesses to grow. By
continuing to add more blue chip clients to the customer base during the
quarter, the division has had the opportunity to demonstrate the quality of
the work they can perform and to increase market share from the client base in
its core markets.
The support services division has added 20% to its quarterly revenue, taking
the recorded amount to GBP2.4m. In comparable currencies, this increase is
33%. For the 9 months, turnover is GBP7.0m compared to GBP6.3m in the prior
year.
New clients in the period for Lonrho IT included ABC bank, where an Avaya VOIP
system has been installed and Capital bank for whom an infrastructure upgrade
is taking place in Gaborone, Botswana.
Lonrho IT is continuing work on a Cross Border Road Transportation network
infrastructure upgrade in Johannesburg.
Bytes & Pieces (65% holding) in Mozambique has during the quarter been awarded
a network infrastructure contract by Tribunal Administrativo in Mozambique.
Lonrho Water continues to develop its operations, with 3 significant customers
committing their business in the quarter, waiting on quality certification.
Outlook
Within the Lonrho annual business cycle, the third quarter is traditionally
the lowest quarter for the Company. Despite this, the Company has managed to
increase revenue by 45% compared to the third quarter of the prior year. As
well as generating this growth, the Company has been able to purchase and
integrate two strategic acquisitions which will help to add value to the
Company`s existing divisions into the last quarter of 2010 and throughout
2011. Inevitably in the African environment, some delays arise in the
implementation of projects undertaken as a result of management insisting that
projects are carried out to the highest international standards and meet good
practice corporate governance. New business revenue streams that are now
operating will build through the year end and 2011, and will deliver
significant growth in both turnover and profitability for the Company.
David Lenigas, Lonrho`s Executive Chairman commented:
"The 45% year-on-year increase in third quarter turnover is an excellent
achievement by the management of each division in the current economic
climate. Lonrho continues to deliver on its core strategy of investing in, and
growing businesses with focused synergies to the core economic drivers of
Africa; Oil, Agriculture and Minerals. All the divisions of Lonrho have
delivered considerable growth in the quarter, with reported turnover increases
ranging between 20% and 118%. Having completed, or nearly completed the
investment phase in many of the businesses the Company can be confident that
the last quarter of 2010 and 2011 will reflect the strong foundations for
growth that have now been successfully established."
Reported Figures
3 months to
30 June 30 June Variance Var %
2010 2009
Agribusiness
Rollex 11,243 9,845 1,398 14.2%
Other 2,432 0 2,432 N/a
Sub-Total 13,675 9,845 3,830 38.9%
Transport
540 Group 4,774 3,882 892 23.0%
Support Services
Bytes & 1,776 1,574 202 12.8%
Pieces
Other 574 382 192 50.3%
Sub-Total 2,350 1,956 394 20.1%
Infrastructure
Luba Free 3,330 1,861 1,469 78.9%
Port
e- 951 106 845 797.2%
Kwikbuild
Sub-Total 4,281 1,967 2,314 117.6%
Hotels
Hotel 1,087 861 226 26.2%
Cardoso
Other 296 0 296 N/a
Sub-Total 1,383 861 522 60.6%
Head office 304 0 304 N/a
Total Turnover 26,767 18,511 8,256 44.6%
EBITDA 1,483 (2,419) 3,902 N/a
Profit Before Tax (903) (4,523) 3,620 N/a
9 months to
30 June 30 June Variance Var %
2010 2009
Agribusiness
Rollex 35,140 32,704 2,436 7.4%
Other 2,432 0 2,432 N/a
Sub-Total 37,572 32,704 4,868 14.9%
Transport
540 Group 14,592 11,895 2,697 22.7%
Support Services
Bytes & 5,150 5,141 9 0.2%
Pieces
Other 1,899 1,118 781 69.9%
Sub-Total 7,049 6,259 790 12.6%
Infrastructure
Luba Free 8,313 6,024 2,289 38.0%
Port
e- 2,338 959 1,379 143.8%
Kwikbuild
Sub-Total 10,651 6,983 3,668 52.5%
Hotels
Hotel 3,167 2,173 994 45.7%
Cardoso
Other 577 0 577 N/a
Sub-Total 3,744 2,173 1,571 72.3%
Head office 440 0 440 N/a
Continuing 74,048 60,014 14,034 23.4%
Operations
Shipping - 0 1,187 (1,187) (100.0%)
discontinued
Total Turnover 74,048 61,201 12,847 21.0%
EBITDA 4,295 (7,007) 11,302 N/a
Profit Before Tax (2,462) (3,887) 1,425 N/a
Extraordinary Items 0 2,312 (2,312) N/a
Adjusted PBT (2,462) (6,199) 3,737 N/a
Comparable Currency
3 months to
30 June 30 June Variance Var %
2010 2009
Agribusiness
Rollex 11,243 10,216 1,027 10.1%
Other 2,432 0 2,432 N/a
Sub-Total 13,675 10,216 3,459 33.9%
Transport
540 Group 4,774 4,028 746 18.5%
Support Services
Bytes & 1,776 1,327 449 33.8%
Pieces
Other 574 445 129 29.0%
Sub-Total 2,350 1,772 578 32.6%
Infrastructure
Luba Free 3,330 1,931 1,399 72.4%
Port
e- 951 124 827 666.9%
Kwikbuild
Sub-Total 4,281 2,055 2,226 108.3%
Hotels
Hotel 1,087 727 360 49.5%
Cardoso
Other 296 0 296 N/a
Sub-Total 1,383 727 656 90.2%
Head office 304 0 304 N/a
Total Turnover 26,767 18,798 7,969 42.4%
9 months to
30 June 30 June Variance Var %
2010 2009
Agribusiness
Rollex 35,140 31,065 4,075 13.1%
Other 2,432 0 2,432 N/a
Sub-Total 37,572 31,065 6,507 20.9%
Transport
540 Group 14,592 11,385 3,207 28.2%
Support Services
Bytes & 5,150 4,348 802 18.4%
Pieces
Other 1,899 1,275 624 48.9%
Sub-Total 7,049 5,623 1,426 25.4%
Infrastructure
Luba Free 8,313 5,766 2,547 44.2%
Port
e- 2,338 1,143 1,195 104.5%
Kwikbuild
Sub-Total 10,651 6,909 3,742 54.2%
Hotels
Hotel 3,167 1,831 1,336 73.0%
Cardoso
Other 577 577 N/a
Sub-Total 3,744 1,831 1,913 104.5%
Head office 440 14 426 N/a
Continuing 74,048 56,827 17,221 30.3%
Operations
Shipping - 0 1,187 (1,187) (100.0%)
discontinued
Total Turnover 74,048 58,014 16,034 27.6%
LONRHO ENQUIRIES
Lonrho Plc +44 (0)20 7016 5105
David Lenigas, Executive Chairman +44 (0)7881 825 378
Geoffrey White, Chief Executive +44 (0)7717 307 308
Officer
David Armstrong, Finance Director +44 (0)7833 054 693
Pelham Bell Pottinger PR
Charles Vivian +44 (0) 20 7861 3126
+44 (0) 7977 297903
James MacFarlane +44 (0) 20 7861 3864
+44 (0) 7841 672 831
Beaumont Cornish Limited (Nomad)
Rosalind Hill Abrahams +44 (0) 20 7628 3396
Roland Cornish +44 (0) 20 7628 3396
29th July 2010
South African Sponsor
Java Capital (Proprietary) Limited
Date: 29/07/2010 08:58:01 Produced by the JSE SENS Department.
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