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LONRHO AFRICA PLC - INTERIM RESULTS
Lonrho Africa plc
Interim Results for the six months to 31 March 2002
Group Strategy & Progress
Progress on our disposal programme continues and is summarised below. Net
borrowings have been reduced from GBP5.7 million at 30 September 2001 to
GBP4.3 million at 31 March 2002.
Motors
In January 2002 we sold our interest in Lonrho Motors Swaziland Limited to a
management consortium. Lonrho Africa`s share of the proceeds amounted to
GBP0.4 million.
Since 31 March 2002 we have sold Turnpan, the mining supplies company based
on the Zambian Copperbelt, for a consideration of GBP0.4 million.
In May 2002 the purchasers of Farming & Engineering Services in Malawi
redeemed the GBP0.3 million preference shares held by Lonrho Africa and
which formed part of the disposal consideration.
Negotiations for the sale of the group`s motor interests in Angola for
GBP2.6 million have been protracted, but were completed in June 2002.
An offer for the remaining Zambian motor operations based in Lusaka of
GBP0.2 million has been accepted with completion due once Sale & Purchase
Agreements have been agreed.
An offer has been received for the group`s 80% shareholding in W Dahmer, the
bus building operation based in Zimbabwe.
Food Processing
The GBP0.5 million held in escrow as part of the sale agreement of Farmer`s
Choice has now been released and has been taken to profit as an exceptional
item during the period.
Hotels
Negotiations for the sale of the Hotels and the Ol Pejeta Ranch continue
with a number of interested parties.
Property
The sale of agricultural land at Nandi Estates in Kenya continues. Proceeds
exceed GBP12.5 million, with GBP1.1 million being received during the half-
year.
The sale of Lusaka Hotel has now been finalised with the payment of
US$850,000 received together with settlement of all inter group
indebtedness. A deferred payment of US$120,000 will be received over a
period of twenty-four months.
The sale of an industrial property in South Africa for GBP0.2 million was
concluded.
General
An agreement has been signed for the sale of the Lonrho Africa shareholding
in Kariba Minerals, Zambia for GBP0.2 million. Completion awaits
ratification by the Attorney General, which has been outstanding since
February.
The Court hearing to determine the extent of the Trustee`s power under the
Pension Fund Trust Deed has been set for late November 2002 (See note 3).
Both the Liverpool and Harare offices will be closed at the end of June with
the remaining staff being relocated in order to save costs.
Operating Review
Motors
The economic and political turmoil in Zimbabwe continues and had an adverse
effect on Dahmer, our bus building business. Whilst sales of units were 30%
down on the previous half-year, margins improved, as did those in respect of
the after-market operations. The operating profit of GBP0.2 million
represents a 15% decline. Sufficient inventory has been built up to assure
operations to the end of September 2002, despite a critical shortage of
foreign currency. The loss of skills from the country continues to be a
concern, with both the Managing and Financial Directors of Dahmer having
resigned in the past three months. The divisional office for Motors, based
in Harare, has been closed.
The announcement by Anglo American that they would cut off financing to
Zambia Copper Investments led, indirectly, to a 15% devaluation of the
Zambian kwacha. This in turn resulted in our Zambian motor operations
incurring an exchange loss of GBP0.5 million and an operating loss of GBP0.8
million. The remaining motor operations based in Lusaka have been scaled
back to reduce currency exposure, and in anticipation of a sale in the near
future.
Following the sale of Farming & Engineering Services the Malawi country
office has been closed, with the Chairman remaining on a consultancy basis
to complete outstanding issues.
The Angolan operation continued to sell existing inventories with no new
orders placed with manufacturers. A loss of GBP0.2 million was reported.
Timber
The disposal of the remaining wattle extracts stock from Kenya has continued
at the expected rate, with the stock at the end of March reduced to 900
tons.
Ranching
Ol Pejeta produced a marginal loss for the half-year, with reduced returns
derived from land rented out to third party wheat growers. Rains have been
satisfactory, with livestock numbers now totalling 5,700 cattle and 4,200
sheep.
Hotels
The tragic events of 11 September 2001 had a severe impact on our hotel
operations, with overall occupancies dropping 18%, from 52% to 43%. As a
result a pre-tax loss of GBP0.2 million was incurred, as opposed to a profit
of GBP1.0 million in the prior half-year.
The Kenyan hotels suffered a 15% occupancy reduction to 38%. There was a
38% drop in the number of guests from the United States, which in the prior
year represented 41% of our business. Successful efforts have been made to
replace this business with regional visitors (up 25% in this market segment)
but at the cost of declining yields. European business dropped 18% but the
UK market, somewhat surprisingly, registered a 3% increase. We have
recently employed a Sales Manager for Europe and bolstered the sales and
marketing budget. The 30% occupancy rate at the Norfolk Hotel (down 25%)
has also led us to appoint a Sales Manager to specifically concentrate on
this hotel. Costs have been generally well controlled with the targeted
savings of GBP0.5 million being achieved.
The Labadi Beach Hotel in Ghana suffered a 17% drop in occupancies to 70%
despite a slippage in room rates. This led to a 70% decrease in profit to
GBP0.1 million. The British Airways air crew contract was renewed for a
further two years. The hotel was also successful in securing the Lufthansa
contract, which replaces the South African Airways contract at a more
beneficial rate. Tony Blair stayed at the hotel during his visit to Accra
in October 2001.
Occupancies at the Cardoso Hotel in Mozambique were a disappointing 36%
compared to 51% for the prior half-year. There has been a 14% increase in
the supply of hotel rooms in Maputo which has inevitably resulted in a
dilution of the average room rate. The loss for the period amounted to
GBP0.1 million.
For further information please contact:
John Chief Financial Officer Tel: 0151 243 5300
Garnett
Nadja Cardew & Co Tel: 020 7930 0777
Vetter
M: 07941 340 436
Basis of preparation of the interim financial information
The interim financial information set out on pages 5 to 10 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 September 2001 with the
exception of FRS19 (Deferred Taxation) and FRS18 (Accounting Policies),
which have been adopted during the period. Neither of these standards has
had an effect on the interim statement. The figures for the six months to 31
March 2002 and 31 March 2001 are unaudited. The figures for the year ended
30 September 2001 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 continue to adopt the going concern basis in preparing the
financial statements as the disposal process continues to reduce net debt in
accordance with the Board`s strategy. Net debt at 31 March 2002 was GBP4.3
million compared to GBP5.7 million at 30 September 2001 and GBP16.0 million
at 31 March 2001. The Directors remain confident that more disposals will
be made during the year to further reduce net debt.
Bank facilities are now uncommitted but the principal lenders have an agreed
repayment schedule based on a share of disposal proceeds. Regular meetings
are held to discuss the progress of the disposal programme and whilst this
is taking longer than anticipated (in particular the Hotels) sufficient
progress has been made for the Directors to believe that the support of the
principal lenders will remain in place.
Asset Values
In preparing the financial statements the Directors have reviewed the
carrying values of both fixed and current assets in light of the current
economic uncertainties, and have made such adjustments as they consider
reasonable and prudent.
Consolidated profit and loss account
6 6 6 6 months 6 6 12
months months months months months months
to to to to to to to
31.3.0 31.3.0 31.3.0 31.3.01 31.3.01 31.3.01 30.9.01
2 2 2
Contin Discon Continuin Disconti
uing tinued g nued
Operat Operat Total Operation Operatio Total Total
ions ions s ns
N GBPm GBPm GBPm GBPm GBPm GBPm GBPm
o
t
e
Turnover
Group 12.6 2.0 14.6 14.2 61.7 75.9 105.7
Joint 0.2 - 0.2 0.3 7.5 7.8 8.9
ventures
12.8 2.0 14.8 14.5 69.2 83.7 114.6
Group (13.9) (2.0) (15.9) (13.3) (58.7) (72.0) (108.2)
net
operatin
g costs
Operatin
g (loss)
/ profit
Group (1.3) - (1.3) 0.9 3.0 3.9 (2.5)
Joint 0.1 - 0.1 - 0.4 0.4 0.9
ventures
(1.2) - (1.2) 0.9 3.4 4.3 (1.6)
Loss on
sale or
terminat 2 (0.7) (7.5) (11.9)
ion of
operatio
ns
Net (0.2) (2.8) (3.3)
interest
payable
Loss (2.1) (6.0) (16.8)
before
taxation
Taxation (0.2) (1.5) (1.8)
Loss (2.3) (7.5) (18.6)
after
taxation
Minority - (1.0) (1.2)
interest
s
Retained (2.3) (8.5) (19.8)
loss
Loss per
share
(basic (1.5)p (5.4)p (12.6)p
and
diluted)
Loss per
share
before
exceptio
nal (0.9)p (1.6)p (3.9)p
items
(basic
and
diluted)
Earnings per share
Loss per share (basic and diluted of (1.5)p (2001 - (5.4)p) has been
calculated using the loss after taxation and minority interest of
GBP(2.3)million (2001-GBP(8.5)million) applied to 157,572,088 shares.
Loss per share before exceptional items of (0.9)p (2001-(1.6)p) has been
calculated on the loss after taxation and minority interest but before
exceptional items applied to 157,572,088 shares.
Note: The figures for the six months ended 31 March 2001 have been restated
to reflect operations that have been discontinued since 31 March 2001.
Group balance sheet
31 31 30
March March September
2002 2001 2001
Note GBPm GBPm GBPm
Fixed assets
Tangible 37.0 46.5 38.5
Investments :
Joint ventures 0.2 1.0 0.3
Other investments _ 1.0 0.6
37.2 48.5 39.4
Current assets
Stocks 4.2 20.3 5.8
Debtors
Amounts falling
due within one
year
Amounts falling 3
due after one year
16.3 30.8 20.5
Cash at bank 4.2 5.2 5.7
24.7 56.3 32.0
Creditors: amounts
falling due within one
year
Bank loans - (0.7) (1.3)
Overdrafts (8.5) (20.4) (10.1)
Other creditors (0.3) (28.3) (14.5)
Net current assets 5.9 6.9 6.1
Total assets less
current liabilities 43.1 55.4 45.5
Creditors: amounts
falling due after more
than one year
Bank loans - (0.1) -
Tax creditor - (0.3) -
Provisions for (4.6) (5.1) (5.1)
liabilities and
charges
Net assets 38.5 49.9 40.4
Capital and reserves
Called up share 31.5 31.5 31.5
capital
Revaluation reserve 19.2 24.1 20.2
Other reserves 48.1 34.1 48.5
Profit and loss (66.3) (47.6) (66.1)
account
Shareholders` funds 32.5 42.1 34.1
Minority interests 6.0 7.8 6.3
(equity)
38.5 49.9 40.4
Consolidated cash flow statement
6 6 12
months months months
to to to
31.3.0 31.3.0 30.9.0
2 1 1
Not GBP GBPm GBPm GBPm GBPm GBPm
e m
Net cash flow from
operating activities
- continuing 0.4 (8.7) (6.3)
operations
- discontinued 0.7 12.4 12.7
operations
___ ____ ____
__
1 1.1 3.7 6.4
Return on investments (0.2) (2.9) (3.4)
and servicing of
finance
Tax paid (0.3) (1.5) (1.9)
Net cash 0.6 (0.7) 1.1
inflow/(outflow)
before investing
activities
Net capital receipts 1 1.0 3.3 5.6
Net proceeds from 1 (0.4) 11.6 17.0
disposal of
subsidiaries
Net cash inflow 1.2 14.2 23.7
before financing
Financing
Net repayment of bank (1.1) (3.6) (2.5)
loans
Increase in cash 1 0.1 10.6 21.2
Movement in net borrowings for the six months to 31 March 2002
1 Net Exchang 31
October cash e March
2001 flows Movemen 2002
t
GBPm GBPm GBPm GBPm
Cash 5.7 (1.4) (0.1) 4.2
Overdrafts (10.1) 1.5 0.1 (8.5)
(4.4) 0.1 - (4.3)
Loans (1.3) 1.1 0.2 -
Net borrowings (5.7) 1.2 0.2 (4.3)
Statement of total recognised gains and losses
6 months 6 months 12
months
to 31.3.02 to to
31.3.01 30.9.01
GBPm GBPm GBPm
Loss for the period (2.3) (8.5) (19.8)
Decrease arising on - - (1.5)
revaluation of assets
Exchange adjustments 0.7 (9.6) (6.8)
Total recognised losses (1.6) (18.1) (28.1)
in the period
Reconciliation of movements in shareholders` funds
6 months 6 months 12
months
to 31.3.02 to to
31.3.01 30.9.01
GBPm GBPm GBPm
Recognised losses (1.6) (18.1) (28.1)
relating to the period
Goodwill on sale of
subsidiaries previously
set off against reserves - 3.1 5. 1
Net decrease in
shareholders` funds
in the period (1.6) (15.0) (23.0)
At beginning of period 34.1 57.1 57.1
At end of period 32.5 42.1 34.1
Historical cost profits and losses
6 months 6 months 12
months
to 31.3.02 to to
31.3.01 30.9.01
GBPm GBPm GBPm
Reported loss before (2.1) (6.0) (16.8)
taxation
Difference between
historical cost
depreciation charge
and the actual depreciation
charge calculated
on the revalued amount 0.1 0.1 0.2
Realisation of property 1.4 2.3 4.2
revaluation gains
Historical cost loss before (0.6) (3.6) (12.4)
taxation
Historical cost loss after
taxation and
minority interests (0.8) (6.1) (15.4)
Notes to the half year accounts
1. Consolidated cash
flow statement
6 6 6 6 6 6 12
months months month months months month month
s s s
to to to to to to to
31.3.0 31.3.02 31.3. 31.3.0 31.3.01 31.3. 30.9.
2 02 1 01 01
Contin Discont Contin Discont
uing inued uing inued
Operat Operati Total Operat Operati Total Total
ions ons ions ons
Net cash flow
from GBPm GBPm GBPm GBPm GBPm GBPm GBPm
operating
activities
Operating (1.3) - (1.3) 0.9 3.0 3.9 (2.5)
(loss)/profit
Depreciation 0.8 - 0.8 1.0 1.8 2.8 3.2
charge
Provisions for
impairment of - - - - (2.1) (2.1) 0.6
assets
(Increase)/decr (0.5) 1.0 0.5 0.2 2.9 3.1 6.8
ease in stocks
Decrease/(incre 2.5 1.3 3.8 (3.2) (4.6) (7.8) (3.5)
ase) in debtors
(Decrease)/incr (1.1) (1.6) (2.7) (7.6) 11.4 3.8 1.8
ease in
creditors
Net cash flow
from 0.4 0.7 1.1 (8.7) 12.4 3.7 6.4
operating
activities
6 6 months 12
month month
s s
to to 31.3.01 to
31.3. 30.9.
02 01
Net capital GBPm GBPm GBPm
receipts/(payments)
Purchase of (0.2) (1.5) (2.2)
tangible fixed
assets
Sale of tangible 0.6 4.3 7.0
fixed assets
Sale of fixed asset 0.6 0.5 0.8
investments
1.0 3.3 5.6
6 6 months 12
month month
s s
to to 31.3.01 to
31.3. 30.9.
02 01
Net proceeds from GBPm GBPm GBPm
disposal of
subsidiaries
Sale of joint - - 1.2
ventures
Disposal and (0.5) - (0.9)
closure costs
Sale of 0.1 11.6 16.7
subsidiaries
(0.4) 11.6 17.0
6 6 months 12
month month
s s
to to 31.3.01 to
31.3. 30.9.
02 01
Reconciliation of net cash flow GBPm GBPm GBPm
to movement in net borrowings
Increase in cash in the period 0.1 10.6 21.2
Cash inflow from changes in 1.1 3.6 2.5
financing
Change in net debt arising from 1.2 14.2 23.7
cash flows
On disposal of subsidiaries - 0.7 1.2
Exchange rate movements 0.2 1.5 1.8
Movement in net borrowings 1.4 16.4 26.7
Balance at beginning of period (5.7) (32.4) (32.4
)
Net borrowings (4.3) (16.0) (5.7)
2. Non operating
exceptionals
6 6 6 6 6 6 12
months months month months months months months
s
to to to to to to to
31.3.0 31.3.02 31.3. 31.3.0 31.3.01 31.3.0 30.9.0
2 02 1 1 1
Contin Discont Contin Discont
uing inued uing inued
Operat Operati Total Operat Operati Total Total
ions ons ions ons
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Profit/(loss)
on disposal of:
Motors - (0.4) (0.4) - (0.2) (0.2) (2.5)
Agribusiness - 0.5 0.5 - (0.4) (0.4) 1.0
Distribution - - - - (0.8) (0.8) (2.6)
Property - (0.3) (0.3) - (3.0) (3.0) (1.2)
Other
disposal and - (0.5) (0.5) - - - (1.5)
closure costs
Goodwill
previously - - - - (3.1) (3.1) (5.1)
set off
against
reserves
- (0.7) (0.7) - (7.5) (7.5) (11.9)
Debtors
Amounts falling due
after one year
Included in the above is a UK pension scheme asset of GBP8.1 million,
which relates to a prepayment of contributions calculated under Statement of
Standard Accounting Practice No 24 ("SSAP24")
This prepayment would normally be realised by suspending future
contributions so that the prepayment would reverse as pension liabilities
increased. However, because the number of active members has reduced in
recent years this asset will not be realised for some considerable time.
Inland Revenue regulations stipulate that in order to continue to be tax
exempt, Pension Funds must maintain assets at no more than 105 per cent. of
liabilities, and Pension Funds should be valued at three year intervals
using prescribed actuarial assumptions in order to ensure that this ratio is
maintained.
Because the September 1999 valuation disclosed that assets were in excess of
105 per cent. of liabilities the Trustee of the scheme proposed a series of
benefit improvements for members plus an application to the Pensions
Regulator ("OPRA") to grant a modification order to authorise a repayment to
the sponsoring employer, of approximately GBP8.5 million after tax has been
deducted.
In accordance with the Pensions Act the modification order process started
in August 2000 by consulting the members of the Scheme. Objections were
received from six members and because of these objections the Trustee has
been advised by legal counsel to seek the direction of the court over the
correct interpretation of the Trustee`s power under the Trust Deed. In the
meantime, the application to OPRA has been stayed.
The court hearing has been fixed for late November 2002. Pending the
outcome of the court hearing and the application to OPRA it is not certain
whether a repayment to the sponsoring employer can be made or if it can be
made how much of the requested GBP8.5 million after tax can be repaid.
Date: 20/06/2002 09:08:39 AM Produced by the SENS Department
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