| Tue 26 Jun 2001, 0:00 | | Lonro Africa Plc Interim Statement |
|
6 months 6 months 6 months 6 months 6 months
to to to to to
31.3.01 31.3.01 31.3.01 31.3.00 31.3.00
Continuing Discontinued Continuing Discontinued
Operations operations Total operations operations
Note GBPm GBPm GBPm GBPm GBPm
Turnover
Group 48.8 27.1 75.9 61.5 89.1
Joint
Ventures 7.5 0.3 7.8 7.6 0.1
56.3 27.4 83.7 69.1 89.2
Group net
operating
costs (47.0) (24.9) (71.9) (77.6) (94.2)
Operating
profit /(loss)
Group 1.8 2.1 3.9 (16.1) (5.1)
Joint ventures 0.4 - 0.4 0.4 -
2.2 2.1 4.3 (15.7) (5.1)
Profit on disposal
of land and buildings
and fixed asset
investments 0.6 - 0.6 2.4 -
Loss on sale
or termination
of operations
2 - (8.1) (8.1) (1.5) (5.8)
Net interest
Payable (1.7) (1.1) (2.8) (2.1) (5.2)
Profit / (loss)
before taxation 1.1 (7.1) (6.0) (16.9) (16.1)
Taxation 3 (1.0) (0.5) (1.5) (1.6) (0.7)
Profit / (loss )
after taxation 0.1 (7.6) (7.5) (18.5) (16.8)
Minority
Interests (1.0) (1.0) 1.1 2.2
Retained loss (0.9) (7.6) (8.5) (17.4) (14.6)
Loss per share
(basic and
diluted) (5.4) p
Loss per share before exceptional items
(basic and diluted) (1.6) p
6 months 12 months
to to
31.3.00 30.9.00
Continuing Discontinued
Total Total
Note GBPm GBPm
Turnover
Group 150.6 252.9
Joint
Ventures 7.7 14.1
158.3 267.0
Group net
operating
costs (171.8) (283.7)
Operating
profit /(loss)
Group (21.2) (30.8)
Joint ventures 0.4 (1.7)
(20.8) (32.5)
Profit on disposal
of land and buildings
and fixed asset
investments 2.4 2.9
Loss on sale
or termination
of operations
2 (7.3) (15.8)
Net interest
Payable (7.3) (12.8)
Profit / (loss)
before taxation (33.0) (58.2)
Taxation 3 (2.3) (3.9)
Profit / (loss )
after taxation (35.3) (62.1)
Minority
Interests 3.3 4.7
Retained loss (32.0) (57.4)
Loss per share
(basic and
diluted) (20.3) p (36.4) p
Loss per share
before exceptional
items
(basic and
diluted) (5.0) p 7.2) p
Earnings per share
Loss per share (basic and diluted) of (5.4)p (2000 - (20.3)p) has been
calculated using the loss after taxation and minority interest of
GBP(8.5) million (2000 - GBP(32.0) million) applied to 157,572,088 shares.
Loss per share before exceptional items of (1.6)p (2000 - (5.0)p) has been
calculated on the loss after taxation and minority interest but before
exceptional items applied to 157,572,088 shares.
Group balance sheet
31 March 31 March 30 September
2001 2000 2000
GBPm GBPm GBPm
Fixed assets
Intangible - goodwill - 0.9 -
Tangible 46.5 97.3 74.6
Investments :
Joint ventures 1.0 3.1 1.2
Other investments 1.0 0.5 0.4
48.5 101.8 76.2
Current assets
Stocks 20.3 74.3 41.3
Debtors
Amounts falling due within one
Year 27.9 56.6 34.7
Amounts falling due after one
year 2.9 - -
30.8 56.6 4.7
Cash at bank 5.2 10.0 7.2
56.3 140.9 83.2
Creditors: amounts falling due
within one year
Bank loans (0.7) (19.4) (5.1)
Overdrafts (20.4) (58.5) (34.1)
Other creditors (28.3) (69.6) (47.5)
Net current assets/(liabilities) 6.9 (6.6) (3.5)
Total assets less current
liabilities 55.4 5.2 72.7
Creditors: amounts falling due
after more than one year
Bank loans (0.1) (3.7) (0.4)
Tax creditor (0.3) (0.4) (0.6)
Provisions for liabilities and
Charges (5.1) (0.3) (5.9)
Net assets 49.9 90.8 65.8
Shareholders' funds 42.1 83.4 57.1
Minority interests (equity) 7.8 7.4 8.7
49.9 90.8 65.8
Consolidated cash flow statement
6 months 6 months 12 months
to 31.3.01 to 31.3.00 30.9.00
Note GBPm GBPm GBPm GBPm GBPm GBPm
Net cash flow from
operating activities
- continuing operations (5.2) (6.0) 4.8
- discontinued operations 8.9 21.5 18.3
1 3.7 15.5 23.1
Dividends received from
joint ventures - 0.2 -
Return on investments and
servicing of finance (2.9) (6.9) (12.4)
Tax paid (1.5) (3.6) (4.3)
Net cash (outflow)/inflow
before investing activities (0.7) 5.2 6.4
Net capital receipts 1 3.3 7.2 14.0
Net proceeds from disposal
of subsidiaries 1 11.6 (0.2) 21.2
Net cash inflow before financing 14.2 12.2 41.6
Financing
Net repayment of bank loans (3.6) (7.2) (15.6)
Increase in cash 1 10.6 5.0 26.0
Movement in net borrowings for the
6 months to 31 March 2001
1st October Net cash Non cash Exchange 31 March
2000 flows movement movement 2001
GBPm GBPm GBPm GBPm GBPm
Cash 7.2 (1.4) - (0.6) 5.2
Overdrafts (34.1) 12.0 - 1.7 (20.4)
(26.9) 10.6 - 1.1 (15.2)
Loans 5.5) 3.6 0.7 0.4 (0.8)
Net borrowings (32.4) 14.2 0.7 1.5 (16.0)
Statement of total recognised
gains and losses
6 months 6 months 12 months
to 31.3.01 to 31.3.00 to 30.9.00
Note GBPm GBPm GBPm
Loss for the period (8.5) (32.0) (57.4)
Unrealised net surplus on revaluation
of assets
(net of related deferred tax) - 4.9 6.6
Exchange adjustments (9.6) (0.4) (3.0)
Total recognised losses in
the period (18.1) (27.5) (53.8)
Reconciliation of movements
in shareholders' funds
6 months 6 months 12 months
to 31.3.01 to 31.3.00 to 30.9.00
GBPm GBPm GBPm
Recognised losses relating
to the period (18.1) (27.5) (53.8)
Goodwill on sale of
subsidiaries
Previously set off against
reserves 2 3.1 - -
Net decrease in shareholders'
Funds in the period (15.0) (27.5) (53.8)
At beginning of period 7.1 110.9 110.9
At end of period 42.1 83.4 57.1
Historical cost profits
and losses
6 months 6 months 12 months
to 31.3.01 to 31.3.00 to 30.9.00
GBPm GBPm GBPm
Reported loss before taxation (6.0) (33.0) (58.2)
Difference between historical cost
depreciation charge and the actual
depreciation charge calculated
on the revalued amount 0.1 0.2 0.3
Realisation of property revaluation
gains 2.3 3.1 6.9
Historical cost loss before
taxation (3.6) (29.7) (51.0)
Historical cost loss after
taxation and minority interests (6.1) (29.1) (50.8)
Notes to the half year accounts
1. Consolidated cash flow statement
6 months 6 months 6 months 6 months
to to to to
31.3.01 31.3.01 31.3.01 31.3.00
Continuing Discontinued Continuing
Operations operations Total operations
Net cash flow from
operating activities GBPm GBPm GBPm GBPm
Operating profit/(loss) 1.8 2.1 3.9 (14.3)
Depreciation charge 0.9 1.9 2.8 2.1
(Release) /provisions
for impairment of
assets (2.1) - (2.1) 6.4
Amortisation and
impairment of goodwill - - - 0.2
Decrease in stocks 1.8 1.3 3.1 1.2
(Increase)/decrease in
debtors (7.0) (0.8) (7.8) 0.3
(Decrease)/increase in
creditors (0.6) 4.4 3.8 (1.9)
Net cash flow from
operating activities (5.2) 8.9 3.7 (6.0)
1. Consolidated cash flow statement
6 months 6 months 12 months
to to to
31.3.00 31.3.00 30.9.00
Continuing Discontinued
operations Total Total
Net cash flow from
operating activities GBPm GBPm GBPm
Operating profit/(loss) (6.9) (21.2) (30.8)
Depreciation charge 2.4 4.5 7.8
(Release) /provisions
for impairment of
assets 1.7 8.1 12.2
Amortisation and
impairment of goodwill - 0.2 0.9
Decrease in stocks 7.9 9.1 14.8
(Increase)/decrease in
debtors 13.1 13.4 16.7
(Decrease)/increase in
creditors 3.3 1.4 1.5
Net cash flow from
operating activities 21.5 15.5 23.1
6 months 6 months 12 months
to 31.3.01 to 31.3.00 to 30.9.00
Net capital receipts/(payments) GBPm GBPm GBPm
Purchase of tangible fixed assets (1.5) (3.5) (5.9)
Sale of tangible fixed assets 4.3 10.6 19.8
Sale of fixed asset investments 0.5 0.1 0.1
3.3 7.2 14.0
6 months 6 months 12 months
to 31.3.01 to 31.3.00 to 30.9.00
Net proceeds from disposal of
subsidiaries GBPm GBPm GBPm
Sale of joint ventures - - 0.1
Termination of operations included
in non-operating exceptionals - (0.2) (1.2)
Sale of subsidiaries 11.6 - 22.3
11.6 (0.2) 21.2
6 months 6 months 12 months
to 31.3.01 to 31.3.00 to 30.9.00
Reconciliation of net cash flow to movement
in net borrowings GBPm GBPm GBPm
Increase in cash in the period 10.6 5.0 26.0
Cash inflow from changes in financing 3.6 7.2 15.6
Change in net debt arising from cash
flows 14.2 12.2 41.6
Interest rolled-up - (0.2) (0.2)
On disposal of subsidiaries 0.7 - 9.2
Exchange rate movements 1.5 - 0.6
Movement in net borrowings 16.4 12.0 51.2
Balance at beginning of period (32.4) (83.6) (83.6)
Net borrowings (16.0) (71.6) (32.4)
Notes to the half year accounts continued
2. Non operating exceptionals
6 months 6 months 6 months 6 months
to to to to
31.3.01 31.3.01 31.3.01 31.3.00
Continuing Discontinued Continuing
Operations operations Total operations
GBPm GBPm GBPm GBPm
Provision for closure
costs and loss on
disposal of :-
Lonrho Motors East Africa - (0.2) (0.2) -
Cotton operations - (0.1) (0.1) -
Property and construction
including impairment
of assets - (3.0) (3.0) -
John Holt PLC - Goodwill
on acquisition - (3.1) (3.1) -
John Holt PLC - Other - (0.8) (0.8) -
Farmers Choice Limited - (0.9) (0.9) -
Other disposals - - - (1.5)
- (8.1) (8.1) (1.5)
6 months 6 months 12 months
to to to
31.3.00 31.3.00 30.9.00
Continuing Discontinued
operations Total Total
GBPm GBPm GBPm
Provision for closure
costs and loss on
disposal of :-
Lonrho Motors East Africa - - (6.0)
Cotton operations (5.2) (5.2) (5.7)
Property and construction
including impairment
of assets (0.6) (0.6) (1.9)
John Holt PLC - Goodwill
on acquisition - - -
John Holt PLC - Other - - -
Farmers Choice Limited - - -
Other disposals - (1.5) (2.2)
(5.8) (7.3) (15.8)
3. Taxation
6 months 6 months 12 months
to 31.3.01 to 31.3.00 to 30.9.00
GBPm GBPm GBPm
UK corporation tax at 30% - - 0.1
Adjustments in respect of prior periods - 0.1 0.1
Foreign tax
Current tax on income for period 1.2 1.3 3.8
Adjustments in respect of prior periods - 0.7 -
Share of joint ventures' tax charge - - (0.1)
Withholding tax deducted at source 0.3 0.2 -
Tax on profits on ordinary activities 1.5 2.3 3.9
LONRHO AFRICA PLC
INTERIM REPORT 2001
Introduction
Adverse trading conditions continue although in certain markets there has
been some modest improvement. This is reflected in the operating results.
The exception is Zimbabwe where political and economic instability is
hindering the disposal programme and making it difficult to manage our
operations.
Group strategy and progress
Since the year end we have continued with the marketing of businesses,
although it is not easy in present economic circumstances to do so. Our
immediate priority remains to reduce bank debt and in the period under
review net borrowings have reduced from GBP32.4 million to GBP16.0 million.
Motors
In April 2001 we announced that we had entered into conditional agreements
to dispose of our interests in the Toyota Distributorships in Angola, Kenya,
Malawi, Zambia and Zimbabwe to Toyota Tsusho Corporation (TTC) of Japan for
an overall consideration of en 220 million (GBP1.235 million) payable in
full on completion. In addition, TTC will repay the indebtedness
outstanding to the Lonrho Africa Group of GBP0.3 million. TTC have also
agreed to purchase two Group properties for a consideration of US$550,000
(GBP0.4 million).
In May 2001 we sold our interest in the assets and liabilities of Lonrho
Auto Distributors Limited (LAD), which traded under the name of Zimoco and
held the DaimlerChrysler franchise in Zimbabwe, to a consortium including
management. Proceeds totalled Z$52 million (GBP0.3 million),
broadly in line with net asset value, of which Z$27 million (GBP0.15
million) is deferred and payable by 30 September 2001. In
addition, trade finance of Euros 338,000 (GBP0.2 million) owed to the
Lonrho Africa Group was repaid.
The Kenyan court injunction over Lonrho Africa's Kenyan assets, which was
granted pending the hearing of a claim by certain Commercial Paper holders
in Lonrho Motors East Africa Limited (in Receivership), has been lifted.
Lonrho Africa has made an application to strike out the plaintiffs' claim
which is listed for hearing in July 2001. If the strike out application is
not successful the hearing of the claim is expected some time during
2001/2002.
Cotton
Following clearance from the Competition Commission, the bulk of the assets
of the South African cotton operations were sold in December 2000.
Timber
Negotiations with the preferred purchaser have not resulted in a sale.
Food Processing
In January 2001, we completed the sale of Farmers' Choice, our wholly owned
meat processing business in Kenya, for a cash consideration of GBP5.5
million, payable on completion. Net assets at 30 September 2000 amounted to
GBP5.3 million and subsequent to that date Farmers' Choice paid dividends of
GBP2.1 million and settled inter-company debt of GBP3.3 million.
Distribution
In February 2001 we completed the disposal of our 50.6% interest in John
Holt Plc, our distribution business in Nigeria, to a consortium of
management. The consideration was $1.6 million (GBP1.1 million), $1.1
million (GBP0.8 million) payable on completion and $0.5 million
(GBP0.3 million) by 31 July 2003. Lonrho Africa's share of the net assets
at 30 September 2000 amounted to GBP1.1 million. Nigerian bank debt of
GBP10 million transferred with the disposal. Trade finance provided to John
Holt Plc by the Lonrho Africa Group, amounting to GBP5.7 million, is
scheduled for repayment by instalments up to 28 February 2003.
Hotels
Discussions with a preferred purchaser for the Group's Kenyan hotel
interests did not result in an acceptable offer.
Property
The subdivision and sale of 24,000 acres of agricultural land at Nandi
Estates in Kenya continues. The contract for the sale of the Lusaka Hotel
in Zambia has not yet been completed. Negotiations for the sale of Matrix,
our South African property holding company, have not been concluded and its
three remaining units are being marketed individually.
Textiles
On 5 June 2001 we disposed of our interest in David Whitehead Textiles
Limited in Zimbabwe to a consortium including management. Proceeds totalled
Z$40 million (GBP0.2 million), with Z$20 million (GBP0.1 million) paid on
completion and Z$20 million (GBP0.1 million) payable on 31 October 2001.
General
Keith Atkinson stepped down as Chief Executive and as a member of the Board
on 31 May 2001. Gavin Barnes, Chief Operating Officer, has assumed Keith
Atkinson's duties and he and John Garnett, Chief Financial Officer, are now
jointly responsible for implementing Board decisions and policy. The Board
would like to thank Keith for his considerable contribution over many years
and wish him every success in the future.
The Company's shares were admitted to trading on the Alternative Investment
Market of The London Stock Exchange on 26 February 2001 and at the same time
the listing on The Johannesburg Securities Exchange was moved to the
Venture Capital Market sector of that exchange.
A number of cost saving measures have been introduced including a move to
smaller premises in Liverpool. Following the closure of the Nairobi office
responsibility for operations has moved to Harare.
Results
Total turnover in the six months to 31 March 2001 was GBP83.7 million
compared to GBP158.3 million for the same period last year. This reduction
is principally because of the disposal programme. The reduction in the
turnover of continuing operations (down from GBP69.1 million to
GBP56.3 million) is mainly because of the market devaluation of the rate of
exchange for Zimbabwe.
Operating profit was GBP4.3 million (including operating exceptional income
of GBP2.1 million), compared to an operating loss of GBP20.8 million for the
same period last year, which included GBP19.1 million of operating
exceptional costs. The operating profit of GBP2.2 million before operating
exceptional income compares favourably with the operating loss of GBP1.7
million for the same period last year.
Loss on sale or termination of operations totalled GBP8.1 million, although
this included the goodwill on acquisition of John Holt Plc of GBP3.1
million, which had previously been written off through reserves.
Net cash inflow before financing was GBP14.2 million compared to GBP12.2
million in the comparable period last year.
Net borrowings at 31 March 2001 were GBP16.0 million compared to GBP71.6
million at 31 March 2000 and GBP32.4 million at 30 September 2000.
Dividend. No interim dividend is being proposed.
Operating review
Motors
Excluding LMEA, turnover was 15% lower at GBP24.7 million, whilst operating
profit of GBP1.9 million is an improvement on the loss of GBP2.9 million
for the same period last year.
The "managed" exchange rate has resulted in a severe shortage of foreign
exchange in Zimbabwe and made the sourcing of imported product extremely
difficult. With unit sales down 32% on the prior half year, as against 42%
for the overall market, operating profit fell to GBP0.2 million. Efforts
were focused on the aftermarket and the reduction of overheads. Improved
treasury management, together with a reduction in interest rates, led to a
45% decrease in the interest charge to GBP0.1 million.
The Zambian Kwacha appreciated 15% in the period under review. Currency
exchange gains drove operating profit up to GBP1.2 million (2000: loss of
GBP1.3 million), despite a loss of market share as a result of increased
competition. The privatisation of the copper mines has resulted in improved
debt collection and inventory turn, with the interest cost reducing 36% to
GBP0.4 million.
The Malawi economy is going through a particularly difficult time, with the
overall vehicle market reflecting a 27% downturn. Operating profit of
GBP0.8 million was 36% below the same period last year. The tractor
operation has entered into a number of full maintenance leasing deals with
the sugar industry.
The motor operations in Swaziland returned an operating profit of GBP0.1
million (2000: GBP0.3 million). A decision has been taken to close the non-
Toyota/Massey Ferguson operations due to the fact that manufacturers were
insisting on improved facilities, which would have proved uneconomic.
The civil unrest in Angola continues. Management has been concentrating on
the reduction of unit inventories, which have halved since the year end.
Break-even was achieved in operations as against a GBP3.5 million loss for
the last half year. The Peugeot franchise has been withdrawn.
Timber
The Zimbabwe timber operations reported a GBP0.4 million operating profit
(2000: GBP1 million) in extremely difficult circumstances. Gross margins
slipped 5% to 29% as it became difficult to pass on inflationary cost
increases of 58% to customers. At the same time the managed exchange rate
led to reduced earnings from exports.
The estates achieved Forestry Stewardship Council environmental certificates
which will facilitate entry into all export markets.
30% of total landholdings in Zimbabwe have now been designated by Government
for compulsory acquisition in terms of the Land Acquisitions Act. These
designations cover 38% of the Group's planted wattle forests and 33% of its
pine forests. Formal objections have been made on the basis that Government
had previously advised that agro-industrial landholdings would not be
targeted.
The wattle extract factory in Kenya has been closed and the spray drier
relocated to Zimbabwe. Trading losses, closure costs and impairments
totalled GBP0.9 million. 3,400 tonnes of stock remain to be exported.
Hotels
The hotel division reported a 10% increase in turnover to GBP7.6 million,
with a rise in operating profits from GBP0.3 million to GBP1.0 million.
The Kenyan hotels improved occupancies from 41% to 44%, despite a flat
tourism market in the country. Operating profits at the flagship Norfolk
Hotel improved by 78%.
In spite of a substantial increase in the supply of rooms available in
Accra, Ghana, the Labadi Beach Hotel achieved room occupancies of 85% (2000:
80%) resulting in an operating profit of GBP0.5 million (2000: GBP0.1
million). Interest cost was reduced and the final instalments of the
offshore hard currency loans were repaid in May 2001.
Occupancies at the Cardoso Hotel in Maputo, Mozambique, slipped 3% to 51%.
The results for the last half year reflected an influx of aid workers as a
result of the severe flooding in the country.
Distribution
John Holt Plc in Nigeria reported a GBP1.7 million operating profit to the
date of the disposal. High interest and tax charges reduced the
attributable profit to GBP0.1 million (2000: loss GBP0.3 million).
I & E Malawi reported turnover of GBP7.4 million, 2% down on the prior half
year and an operating loss of GBP0.6 million (2000: GBP0.5 million loss).
An increase in borrowing rates to 65% led suppliers to suspend discounts for
non-cash customers. These increased procurement costs could not be passed
on to consumers, as the economy suffered from the poor prices received for
its primary crop, tobacco. Borrowings increased and resulted in an interest
charge of GBP0.3 million.
Textiles
Operating profits halved to GBP0.1 million. Interest costs increased
substantially reflecting a build up of inventory as a shortage of fuel in
Zimbabwe hampered distribution, particularly to export markets. Whilst the
spinning, weaving and hosiery divisions reported some improvement, blanket
sales suffered from a reduction in consumer disposable income.
Basis of preparation of the interim financial information
The interim financial information set out on pages 6 to 11 has been prepared
on the same basis and using the same accounting policies as were applied in
drawing up the statutory accounts for the year ended 30 September 2000. The
figures for the six months to 31 March 2001 and 31 March 2000 are unaudited.
The figures for the year ended 30 September 2000 do not constitute the
statutory accounts for that year which have been filed with the registrar of
companies and on which the auditors' report was unqualified without any
statement under Section 237 of the Companies Act 1985.
Going concern
The Directors consider that it is appropriate to adopt the going concern
basis in preparing the interim financial statements, as the disposal process
continues to reduce net debt in accordance with the Board's strategy. Net
debt at 31 March 2001 was GBP16.0 million, compared to GBP32.4 million at 30
September 2000 and GBP71.6 million at 31 March 2000.
The committed facilities with the UK banks will expire on 30 June 2001 and
it has been agreed that they will not be renewed. However, each bank has an
agreed repayment schedule and as disposals are made a proportion of bank
debt is repaid or deconsolidated from the balance sheet. Barring unforeseen
circumstances, the Directors are confident that the UK banks will agree to
support the Company on an uncommitted basis until all the bank debt has been
eliminated.
The Directors believe that sufficient progress, in terms both of timing of
disposals and proceeds realised, will be made with the disposal programme so
as to maintain compliance with the agreed repayment schedule. In preparing
the interim financial information, the going concern basis continues to
assume that the planned disposals will be completed in an orderly manner.
Consequently, the interim financial information does not include the
adjustments, if any, which might be necessary to reduce the carrying value
of assets to their realisable amounts, to provide for any further
liabilities which might arise or to reclassify fixed assets and long term
liabilities as current were the going concern basis inappropriate.
Asset values
In preparing the interim financial information, the Directors have reviewed
the carrying values of both fixed assets and current assets after the
translation from local currency to sterling at the official rates of
exchange, except for Zimbabwe, where the parallel market rate of exchange
has been used. In carrying out these reviews, there are a wide range of
assumptions which could be made and the impact of these on the carrying
values could be significant and the actual out-turn could vary materially.
Consequently, there can be no certainty that all the appropriate adjustments
have been identified and included in the interim financial information.
