| Thu 30 Mar 2006, 9:47 | | Lonrho Africa Plc - Preliminary results for the ye |
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LAF
LOLAF
Lonrho Africa Plc - Preliminary results for the year ended 30 September 2005
Lonrho Africa Plc
(Incorporated and registered in England and Wales)
(Registration number 2805337)
(Share code: LAF; ISIN number: GB0002568813)
("Lonrho Africa", the "Company" or the "Group")
PRELIMINARY RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2005
HIGHLIGHTS
- Successful demerger of Lonrho Africa Trade & Finance Limited
- Disposal strategy almost completed following the sale of the Group"s 100
per cent. interest in Lonrho Hotels Kenya BV
- Strong cash position - GBP20 million cash in bank
Recent Developments
- Appointment of David Lenigas and Emma Priestley as Chief Executive and
Executive Director respectively
- Adoption of a new investment strategy - focused on natural resources and
infrastructure projects in Africa
First investment under the new strategy committed to Brinkley Mining Plc
David Lenigas, Lonrho Africa"s Chief Executive, commented:
"In the first set of results that the Company has announced since I assumed the
position of CEO, I am pleased to be able to report the achievement of some
significant milestones in Lonrho Africa"s history which include the successful
completion of the demerger, the disposal of the Group"s interest in Lonrho
Hotels Kenya BV, and the delivery of a strong cash position. The adoption of the
new investment strategy, I believe, provides us with the flexibility to take
advantage of exciting opportunities within Africa; Lonrho Africa"s recent
investment in Brinkley Mining Plc is illustrative of this. This new strategy is
already beginning to bear results and I believe the Company has a very exciting
future ahead of it."
For further information, please contact:
Lonrho Africa Plc - David Lenigas / T: +44 (0)20 7016 5100
Emma Priestley
Strand Partners Ltd - Simon Raggett / T: +44 (0)20 7409 3494
Matthew Chandler
Cardew Group - Nadja Vetter / Emma T: +44 (0)20 7930 0777
Consett
CHAIRMAN"S STATEMENT
The year ended 30th September 2005 was a period of further change for Lonrho
Africa. As set out previously, Lonrho Africa continued to pursue a strategy of
disposing of its residual assets while continuing to seek opportunities to
maximise value for its shareholders.
In April 2005, we successfully finalised the demerger of our shareholding in
Lonrho Africa Trade & Finance Limited by means of a Court approved Scheme of
Arrangement to Castle Acquisitions Plc.
At the year-end, our strategy of disposing of our hotels, property and other
trading assets in Africa was almost complete, with a small number of residual
issues remaining to be resolved.
Since the year-end, David Lenigas joined the Board as Chief Executive Officer on
21st December 2005, followed by the appointment of Emma Priestley as an
Executive Director on 24th February 2006. Following David"s appointment, the
Board held discussions with a number of Lonrho Africa"s major shareholders and
decided to adopt a new investment strategy for the Group focusing on natural
resources and infrastructure projects in Africa, areas in which both David and
Emma have considerable experience. The new investment strategy was approved by
shareholders at an Extraordinary General Meeting held on 24th February 2006.
Further details of the new investment strategy and the first investment under it
are set out in the Chief Executive"s statement.
I would like to take this opportunity to formally welcome David and Emma to the
Board of Lonrho Africa. We are pleased to have been able to attract two people
of such high calibre and expertise. David has a proven track record in building
companies and extensive experience in the natural resources and infrastructure
sectors across the world. Their considerable knowledge of the natural resources
sector will prove invaluable to the Company"s ongoing growth strategy.
Now that the position of the Group has stabilised and the Group has an exciting
future, I believe that it is an appropriate time for me to step down as your
Chairman and as a Director of the Company and I am delighted that David Lenigas
has agreed to take my place as Chairman following the Annual General Meeting.
I would also like to take this opportunity to thank everybody in the Group for
all their support over the seven years that I have been a Director of the
Company.
Christopher Mills
Chairman
30 March 2006
CHIEF EXECUTIVE"S STATEMENT
Since the end of the period under review, Lonrho Africa has made considerable
progress. Following the sale of the Hotels in Kenya, the Board continued to look
at opportunities to maximise shareholder value. Since my appointment on 21st
December 2005, the Board held discussions with a number of Lonrho Africa"s major
shareholders and concluded that it would be in shareholders" best interests to
use the Group"s strong cash position to re-establish a significant presence on
the African continent. In recent years, Africa has gained renewed momentum and
attracted increasing investor interest. We feel that it is time for Lonrho
Africa to use its good name to make a difference to African business and
development.
The Board"s intention is to focus on making investments in the natural resources
and infrastructure sectors including the mining of advanced precious metals or
base metals and energy related projects such as uranium, oil and gas, and
downstream services to support these sectors.
The Group will seek to acquire or make investments in either quoted or private
companies, partnerships, joint ventures or direct interests in projects. The
Board would prefer that investments are initially represented by substantial
shareholdings in investee companies to maximise the potential of returns to
shareholders. However, investment opportunities will be considered on a case-by-
case basis and minority interest investments will not be ruled out.
Lonrho Africa"s new investment strategy was approved at an Extraordinary General
Meeting held on 24th February 2006. Whilst the Group has now decided to retain
its 59 per cent. shareholding in Hotel Cardoso SARL in Mozambique, it will
continue to complete the disposal of its remaining industrial property in South
Africa.
On 24th February 2006, Emma Priestley joined the Board from Ambrian Partners,
the investment bank specialising in natural resources, where she worked as a
corporate broker and adviser. Emma possesses a wealth of expertise in the
natural resources sector and I have every confidence that her considerable
experience will prove an invaluable asset to management"s implementation of the
Group"s ongoing growth strategy.
On 14 March 2006, Lonrho Africa announced the first investment under its new
investing strategy. The Group agreed to invest GBP5 million in Brinkley Mining
Plc ("Brinkley"), which has significant uranium and molybdenum prospects in the
Karoo region of South Africa. Lonrho Africa has subscribed for 25 million
ordinary shares at a price of 20 pence per share. This represents a 10 per cent.
holding of Brinkley"s issued share capital. Brinkley is seeking an admission on
AIM during the first half of this year. The pre-IPO funding will assist in
confirming the resource potential of the Karoo assets and lead to a feasibility
study for the purposes of commissioning a viable uranium operation.
This is the first investment made under my leadership, in line with Lonrho
Africa"s new strategy. The Board believes that this investment offers
considerable upside potential and is illustrative of the exciting opportunities
available to us in Africa.
We will continue to seek acquisitions or make investments in either quoted or
private companies in the natural resources and infrastructure sectors.
I am pleased to be taking on the role of Chairman following the conclusion of
the Annual General Meeting and would like to thank Christopher Mills for all his
hard work in the previous seven years as a Director, and latterly as Chairman,
of Lonrho Africa.
I thank Lonrho Africa"s shareholders for their continued support and look
forward to the future with confidence.
David Lenigas
Chief Executive
29th March 2006
OPERATING AND FINANCIAL REVIEW
Lonrho Africa Trade & Finance Limited
In February 2005, Castle Acquisitions Plc, an investment company, was formed to
facilitate the demerger of Lonrho Africa Trade & Finance Limited ("LATF"), a
wholly owned subsidiary of Lonrho Africa Plc. Castle Acquisitions Plc, now the
parent company of LATF, was admitted to trading on AIM on 3rd May 2005.
LATF operates a defined benefit pension scheme in the United Kingdom ("UK
Scheme"). The aim of the demerger was to unlock potential shareholder value
inherent within the UK Scheme and to make this potential asset more visible and
attractive to prospective purchasers. Castle Acquisitions" primary objective is
to acquire either a publicly traded company or a private company with attractive
growth prospects and a sizeable UK workforce, as a means of introducing new
members to the pension scheme operated by LATF, subject to the consent of the
Trustee, and subsequently attempting to unlock the inherent value of the surplus
of the pension scheme for the benefit of Castle Acquisitions" shareholders.
On 22nd April 2005 the entire issued share capital of LATF was transferred by
Lonrho Africa, by means of a Court approved Scheme of Arrangement, to Castle
Acquisitions, which allotted shares to qualifying shareholders in Lonrho Africa
by way of consideration.
At that date, the net assets of LATF were GBP1.6 million represented by cash
balances. A demerger dividend of GBP1.6 million is therefore deemed to have
been paid by the Company which represents the value of the assets demerged.
The share capital of the Company was reduced pursuant to a Court approved scheme
for the reduction of capital under which the nominal value of each Lonrho Africa
share was reduced from 20p to 1p. This resulted in GBP29.9 million being
released to the profit and loss account of the Company thereby eliminating the
deficit on the profit and loss account and creating a surplus sufficient for the
purposes of the Scheme of Arrangement.
Hotels
In May 2005 Lonrho Africa completed the disposal of the Group"s 100 per cent.
interest in Lonrho Hotels Kenya BV ("LHKBV") to a subsidiary of Kingdom Hotels
Investments. The cash consideration receivable on completion amounted, after an
adjustment for working capital, to GBP15.6 million with a further GBP1 million
receivable over the next 18 months. This is subject to any adjustment which may
arise in respect of warranty claims.
LHKBV was the parent company of Lonrho Hotels Kenya Limited in Kenya, which
owned The Norfolk Hotel, The Mara Safari Club, 75 per cent. of the Mount Kenya
Safari Club, and 59.67 per cent. of The Aberdare Country Club and The Ark.
Property
The sale of the major part of the agricultural land in Kenya was completed on
17th June 2005 for a cash consideration of GBP1 million.
Two of the three industrial properties in South Africa were sold during the year
for R15.25 million (GBP1.3 million).
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Asset values
In preparing the financial statements the Directors have reviewed the carrying
values of fixed assets, and have made such adjustments as they consider
reasonable and prudent.
Results
The profit for the year amounted to GBP2 million (2004: GBP4 million). An
analysis of Group turnover and operating results by division are shown in the
notes to the financial statements.
Group Performance
The Group"s only operation during the financial year under review was Hotels.
The hotels in Kenya made an operating profit, up to the date of sale, of GBP0.9
million. This is shown in the financial statements under Discontinued
Operations. The Hotel Cardoso in Mozambique made an operating loss of GBP0.2
million, of which the Group"s share was GBP0.1 million.
The profit on the sale of the hotels in Kenya and two of the industrial
properties in South Africa, less the related disposal costs and the cost of the
demerger of Lonrho Africa Trade & Finance Limited to Castle Acquisitions Plc,
amounted to GBP1.7 million.
Financing
Cash balances and interest rate risks are managed centrally in the UK. Exposure
to currencies other than sterling is covered to eliminate any exchange risk
wherever possible.
Cash at bank at the end of the year of GBP20.3 million includes GBP20.1 million
held in the UK.
Dividend
In line with previous years, the Directors do not propose to pay a dividend.
Foreign exchange exposure
The Group"s businesses maintain their accounting records in the currency of the
country in which they operate. However, the Group"s results and assets and
liabilities are consolidated and reported to shareholders in sterling at year
end exchange rates, although results of operations disposed of during the year
are translated into sterling at the exchange rate at the date of disposal.
Therefore, devaluation of local currencies during a financial year will have an
impact on the profit or loss reported throughout the year as well as on the
Group"s balance sheet.
Annual General Meeting
The Annual General Meeting of Lonrho Africa Plc will be held at the Hyde Park
Suite, The Thistle Marble Arch, Bryanston Street, London W1A 4UR at 2.30 p.m. on
Friday, 28th April 2006.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the year ended 30th September 2005
Not Contin- Discont- Total Continuing Discont- Total
e uing inued 2005 operations inued 2004
operatio operati GBPm 2004 operation GBPm
ns 2005 ons GBPm s
GBPm 2005 2004
GBPm GBPm
Turnover
Group 1.0 4.8 5.8 1.1 8.8 9.9
Joint ventures - - - - 0.2 0.2
1.0 4.8 5.8 1.1 9.0 10.1
Group net (1.9) (3.9) (5.8) (2.0) (8.5) (10.5)
operating costs
Operating(loss)/
profit
Group
- before (0.9) 0.9 - (0.9) 0.3 (0.6)
exceptional
items
Non-operating 1 1.7 4.6
exceptional
items
Net finance 0.5 -
income
Profit before 2.2 4.0
taxation
Taxation (0.3) (0.3)
Profit after 1.9 3.7
taxation
Minority 0.1 0.3
interests
Profit for the 2.0 4.0
year
Demerger (1.6) -
dividend
Retained profit 0.4 4.0
for the year
Profit per share 1.3p 2.5p
Profit/(loss)
per share before 0.2p (0.4)p
exceptional
items
Note: The figures for 2004 have been restated to reflect operations that ceased
during 2005 as discontinued.
BALANCE SHEETS
as at 30th September 2005
2005 2004 2005 2004
GBPm GBPm GBPm GBPm
Fixed assets
Tangible 2.6 17.0 - -
Investments:
?Other investments - - 31.5 46.2
2.6 17.0 31.5 46.2
Current assets
Stocks 0.3 1.2 - -
Debtors 1.8 3.3 - -
Cash at bank 20.3 6.0 - -
22.4 10.5 - -
Creditors: amounts falling due (0.6) (3.0) (26.0 (38.4
within one year ) )
Net current assets/(liabilities) 21.8 7.5 (26.0 (38.4
) )
Total assets less current 24.4 24.5 5.5 7.8
liabilities
Provisions for liabilities and (2.5) (2.5) (2.1) (1.0)
charges
Net assets 21.9 22.0 3.4 6.8
Capital and reserves
Called up share capital 1.6 31.5 1.6 31.5
Merger reserve 96.1 96.1 - -
Revaluation reserve 0.8 7.4 - -
Profit and loss account (77.7 (115. 1.8 (24.7
) 6) )
Shareholders" funds (equity) 20.8 19.4 3.4 6.8
Minority interests (equity) 1.1 2.6 - -
21.9 22.0 3.4 6.8
These financial statements were approved by the Board of Directors on 29th March
2006 and signed on its behalf by:
C H B Mills
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 30th September 2005
2005 2004
GBPm GBPm
Net cash flow from operating activities
?- continuing operations (0.8) (0.7)
?- discontinued operations 3.1 (0.2)
2.3 (0.9)
Returns on investments and servicing of
finance
Interest
?- received 0.5 -
?- paid - (0.2)
Net cash inflow/(outflow) after returns on 2.8 (1.1)
investments and servicing of finance
Tax paid
Overseas (0.6) (0.1)
Net cash inflow/(outflow) before investing 2.2 (1.2)
activities and financing
Purchase of tangible fixed assets (0.1) (0.2)
Net proceeds from disposal of subsidiaries 13.7 10.8
Demerger dividend (1.6) -
Increase in cash in the year 14.2 9.4
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the year ended 30th September 2005
Group 2005 2004
GBPm GBPm
Profit for the year 2.0 4.0
Decrease arising on revaluation of assets (0.1) -
Exchange adjustments to net investments in
overseas companies 1.1 (3.0)
Total recognised gains relating to the year 3.0 1.0
Total recognised gains since last annual 3.0 1.0
report
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS" FUNDS
for the year ended 30th September 2005
Group 2005 2004
GBPm GBPm
Recognised gains relating to the year 3.0 1.0
Demerger dividend (1.6) -
Net increase in shareholders" funds in the 1.4 1.0
year
At beginning of year 19.4 18.4
At end of year 20.8 19.4
NOTE OF HISTORICAL COST PROFITS AND LOSSES
for the year ended 30th September 2005
Group 2005 2004
GBPm GBPm
Reported profit before taxation 2.2 4.0
Difference between historical cost 0.1 0.1
depreciation charge and the actual
depreciation charge calculated on the
revalued amount
Realisation of property revaluation gains - 0.2
Historical cost profit before taxation 2.3 4.3
Historical cost profit after taxation and 2.1 4.3
minority interests
NOTES TO THE FINANCIAL STATEMENTS
1. Non-operating exceptional items
2005 2004
GBPm GBPm
Profit on disposal of subsidiaries:
Hotels 2.7 1.3
?Agribusiness - 3.7
Profit on sale of properties 0.5 -
Profit on disposal of joint venture - 0.1
Charge for disposal and closure costs (1.0) (0.3)
Demerger costs (0.5) -
Exchange gains on discontinued activities - 0.3
Recoverable surplus in the pension scheme - (0.5)
written off
1.7 4.6
Non-operating exceptional items analysed
by division are as follows:
Hotels 2.7 1.3
Agribusiness - 3.7
Properties 0.5 -
Central (1.5) (0.4)
1.7 4.6
Profits 3.2 5.4
Losses (1.5) (0.8)
1.7 4.6
STATUTORY INFORMATION
The financial information set out above does not constitute the Company"s
statutory accounts for the years ended 30 September 2004 or 2005 but is derived
from those accounts. Statutory accounts for 2004 have been delivered to the
registrar of companies, and those for 2005 will be delivered following the
Company"s Annual General Meeting.
Date: 30/03/2006 09:47:29 AM Produced by the JSE SENS Department
