TIDMLONR
RNS Number : 7578P
Lonrho PLC
30 March 2009
30th March 2009
Lonrho Plc
("Lonrho" or the "Company")
Results for the year ended 30 September 2008
Lonrho (AIM: LONR), the conglomerate with a structured portfolio of African
investments, is pleased to publish its full results for the year ended 30
September 2008.
Lonrho has continued to develop its investments in infrastructure, transport,
agriculture, support services, hotels and natural resources. Having established
a solid platform through these investments, Lonrho's primary objective is to
create value through expanding these businesses and enhancing their
profitability and growth potential.
Financial Review
With the exception of the investment in SAIL's, the financial results remain in
line with the Company's expectations. The year has been instrumental in
demonstrating the effectiveness of Lonrho's investment strategy, with all of the
Companies businesses contributing towards a considerable increase in Lonrho's
turnover.
* Turnover increased by 284% to GBP43.0m (up from GBP11.2m in 2007)
* Net assets increased to GBP69.7m (up from GBP 42.7m in 2007)
* Loss after tax of GBP41.0m (2007: GBP17.4m) largely related to the closure of
SAILS (GBP33.0m)
* Attributable loss to Lonrho's equity shareholders of GBP33.3m (2007: GBP15.5m)
David Lenigas, Executive Chairman of Lonrho commented:
"It is nearly three years since shareholders took the decision to rebuild Lonrho
into an African conglomerate. I am pleased to report that, in that time, your
company has made significant progress. In the process, there have been highs and
lows, but the overall results for the first three years of implementing the new
shareholders mandate are tremendously encouraging.
"Lonrho has set in place strong foundations for the continued growth of the
Group and has attracted the essential experienced management teams and
executives to ensure that its plans are delivered.
We believe that Africa remains a strong emerging market. By being selective in
the sectors that Lonrho enters and the countries in which Lonrho operates it is
possible to minimise risk exposure whilst maximising the growth and return
opportunities for the Group. Some of Africa's economies, such as Angola,
Mozambique and Equatorial Guinea are delivering substantial economic development
and growth,
"Lonrho has delivered on a series of businesses that are expanding their core
operations as planned to become pan-African. We expect to see continued strong
growth across the portfolio during the coming year as each of the businesses
expands."
LONRHO ENQUIRIES
+----------------------------------------------+---------------------------+
| Lonrho Plc | +44 |
| | (0)20 |
| | 7016 |
| | 5105 |
+----------------------------------------------+---------------------------+
| David Lenigas, Executive | +44 |
| Chairman | (0)7881 |
| | 825 378 |
+----------------------------------------------+---------------------------+
| Geoffrey White, Chief | +44 |
| Executive Officer | (0)7717 |
| | 307 308 |
+----------------------------------------------+---------------------------+
| David Armstrong, Finance | +44 |
| Director | (0)7833 |
| | 054 693 |
+----------------------------------------------+---------------------------+
| | |
+----------------------------------------------+---------------------------+
| Pelham PR | |
+----------------------------------------------+---------------------------+
| Charles Vivian | +44 |
| | (0) |
| | 20 |
| | 7337 |
| | 1538 |
+----------------------------------------------+---------------------------+
| | +44 |
| | (0) |
| | 7977 |
| | 297903 |
+----------------------------------------------+---------------------------+
| James MacFarlane | +44 |
| | (0) |
| | 20 |
| | 7337 |
| | 1527 |
+----------------------------------------------+---------------------------+
| | +44 |
| Collins Stewart Europe : | (0) |
| NOMAD to Lonrho | 7841 |
| Hugh Field | 672831 |
| | +44 |
| | (0) 20 |
| | 7523 |
| | 8350 |
+----------------------------------------------+---------------------------+
Statutory accounts
The financial information set out in this announcement does not constitute the
company's statutory accounts for the years ended 30 September 2008 or 2007. The
financial information for the year ended 30 September 2007 is derived from the
statutory accounts for that year. The audit of the statutory accounts for the
year ended 30 September 2008 is complete. The auditors reported on those
accounts; their report was unqualified and did not include references to any
matters to which the auditors drew attention to by way of emphasis without
qualifying their report.
The full annual report and financial statements are being posted to shareholders
and published on its web site (www.lonrho.com) today.
Chairman's Statement
David Lenigas
Executive Chairman
30 March 2009
It is nearly three years since shareholders took the decision to rebuild Lonrho
into an African conglomerate. I am pleased to report that, in that time, your
company has made significant progress. In the process, there have been highs and
lows, but the overall results for the first three years of implementing the new
shareholders' mandate are tremendously encouraging.
Turnover has grown significantly year on year as the Group has invested in a
strong profile of business opportunities across the Continent. Although the loss
for the year was GBP41.0 million, this included GBP34.4 million in respect of
discontinued activities, mainly relating to the shipping division (GBP33.0
million) which was placed into liquidation shortly after the year end. We were
generally satisfied with the progress made by our other investments which were
in line with expectation. Further details of the financial results are given in
the Chief Executive's review.
Lonrho has set in place strong foundations for the continued growth of the Group
and has attracted the experienced management teams and executives essential to
ensure that its plans are delivered.
The Group has established clearly defined investment parameters, but more
importantly, has the experience and knowledge to monitor and support its
investments and to aid and facilitate their growth.
A conglomerate is the best way to invest in Africa, and over the past three
years the Group has grown from owning a single hotel in Mozambique to operating
in seventeen countries across Africa. This geographical diversity not only opens
up the pan-African business opportunities that are our objective, but also
spreads country and political risk for shareholders.
I believe that Africa remains a strong emerging market. By being selective in
the industry sectors Lonrho enters and the countries in which Lonrho operates it
is possible to minimise risk exposure whilst maximising the growth and return
opportunities for the Group. Some of Africa's economies, such as Angola,
Mozambique and Equatorial Guinea, are delivering substantial economic
development and growth.
Lonrho has delivered a series of businesses that are expanding their core
operations as planned to become pan African. I expect to see continued strong
growth across the portfolio during the coming year as each of the businesses
expands.
Chief Executive's Review
Geoffrey White
Director & Chief Executive Officer
30 March 2009
During the year, Lonrho has successfully continued to grow its key businesses
with turnover in continuing operations year on year increasing by 140%. The
Group has made good progress in all sectors with the exception of the cargo and
shipping division which closed shortly after the year end following Lonrho's
decision not to provide further funding.
The corporate strategy of the Group is to develop companies within the African
Continent and to focus on business opportunities that are directly related to
the economic growth and development of the Continent.
Lonrho remains one of the strongest commercial brand names in Africa and the
Group is proud of its heritage of over one hundred years and reputation for
delivering projects that create employment and prosperity for Africans. The
Group's philosophy is to continue this tradition, and build real businesses that
provide employment opportunities that add to the economic progress being made
across the continent.
The Group's operations are now focused on five clearly defined operating sectors
which are inextricably linked to the growth of Africa.
Lonrho's main operating segments are: Infrastructure, Transportation,
Agriculture (post year end), Hotels, and Support Services
IMF and World Bank economic forecasts indicate that African GDP will continue to
grow, and by careful selection of the countries in which we operate, Lonrho can
continue to develop each of its business units within an expanding market and
commercial environment.
The Group has matured significantly during the year. The requisite resources and
corporate structures have been strengthened to ensure that the appropriate
management and control systems are in place to support each division and to
manage the forecasted expansion of operations. The appointment of a new full
time Finance Director, David Armstrong, who has extensive African experience, at
the start of December 2008 was a fundamental step in ensuring that the Group's
management structures are in place. The previous Financial Director, Jean Ellis,
moved to a non-executive role on the Board and we thank her for her advice and
assistance whilst an executive Director of the Company. Her knowledge of Lonrho
and its history over the years provides strong continuity. During the year the
Group has also appointed country managers for South Africa and Angola.
In light of the current World financial markets, and with cogniscence of a
global economic slowdown affecting the shipping market, the Board felt it was
prudent to review its ongoing support for SA Independent Liner Services Pty
Limited (SAILS) and decided to withdraw any further funding and actively market
the company for sale. Unfortunately this was unsuccessful and the Group
announced the liquidation of SAILS shortly after the year end.
The closure of SAILS and the total loss incurred for the year of GBP33.0 million
was a difficult and substantial event for the Group. The stand-alone divisional
corporate structure of Lonrho means that each division is a separate, isolated
investment and hence the closure of one division, such as SAILS, has no
financial impact on other divisions within the Group.
Operational Review
Infrastructure
Luba Freeport Limited ("Luba") 63% holding
Luba Freeport is an oil services terminal located on Bioko Island in Equatorial
Guinea. The port is a venture in conjunction with the Government of Equatorial
Guinea where Lonrho owns 63% and the Government owns 37%. The port is managed by
Lonrho and operates as a true Freeport.
Equatorial Guinea has a booming oil industry, currently producing some 450,000
bpd. With established reserves of 1.5 billion barrels, it has only released 20%
of its identified oil blocks. The outlook for Equatorial Guinea and the wider
Gulf of Guinea is strong, driven by the USA openly stating their objective of
sourcing 25% of all USA oil from the Gulf of Guinea.
Lonrho has invested over US$60 million in the development of the port and
building the required infrastructure for the port to service the international
oil companies that are its clients. The port is operating profitably and has
attracted the major oil companies operating in the Gulf of Guinea as clients.
ExxonMobil, Amerada Hess; Schlumberger; Baker Hughes,
MI Fluids, CNOOC, Noble and others now have operational bases in Luba port.
Lonrho's clients, including the anchor tenant ExxonMobil, are typically on long
term contracts up to ten years.
The number of the tenants at the port is increasing year on year and several
current tenants are expanding their operations at the port. Lonrho has completed
its initial phased development for the port and 300 metres of deepwater quay
will be available from March 2009.
Luba port is located on a large natural harbour, and provides some of the best
deepwater anchorage positions available in West Africa. Further expansion at the
port is being considered to meet demand for services for the oil industry. This
includes oil rig repair facilities (currently oil rigs from the Gulf of Guinea
are sent to Europe or Cape Town for major repairs),
a container trans-shipment centre (depths at Luba could accept the largest
container ships), a drill cutting processing facility and waste management
facilities.
KwikBuild Corporation Limited ("KwikBuild") 61.97% holding
KwikBuild, through its associate investment, e-KwikBuild Housing (Pty) Limited
("e-KwikBuild") (49% holding), is a manufacturer and supplier of insulated
prefabricated building solutions for permanent and relocatable structures.
e-KwikBuild is a leader in fast, innovative and highly efficient construction
solutions that can be installed in days with an unskilled workforce. It also
requires no civil works and can be free standing thus reducing the cost and time
for projects.
e-KwikBuild supplies clinics, workers camps, accommodation, school rooms,
meeting rooms and offices and a range of structures to meet client's
requirements. Customers include the South African Government, universities,
hospitals, schools and large corporates such as Eskom, Chevron and Sonangol.
In November 2008, e-KwikBuild opened a new 2,700 m2 facility in Port Elizabeth,
South Africa for the manufacture of its buildings to increase production volumes
in order to meet forecast demand. The new factory can produce 240 (35 m2) panels
in a six hour shift.
Transportation
Lonrho Aviation (BVI) Limited ("Lonrho Aviation") 100% holding
Through Lonrho Aviation and the Fly540 concept, Lonrho is developing the first
international standard airline that plans to connect Africa north to south and
east to west and provide quality regional distribution for long haul carriers
flying into Africa.
The roll out of the airline made significant progress in 2007/2 008 and the
Kenyan operational hub, Five Forty Aviation Limited (49% holding), which started
flying in 2006, continues to trade profitably and demonstrates the market
opportunity for Fly540. The airline is developing a further two African hubs in
Angola and Ghana. Fly540 will service the regional countries surrounding each
and, by connecting the three hubs, establish a full pan-African network.
Fly540 senior management are ex British Airways and are operating to
international standards with regard to training, operations and maintenance.
The Kenya hub is successfully serving the domestic market in Kenya and has
commenced regional expansion with operations now flying in Southern Sudan and
Uganda, with Tanzania forecast to commence post September 2009.
The Angolan and Ghanaian hubs will be established in 2009 and will service South
West Africa and West Africa accordingly.
The proposed routes which will be operated are:
+----------+--------------+----------+------------+-----------------+----------+----------+
| Kenya | Angola | Ghana | DRC | Tanzania | Uganda | Sudan |
+----------+--------------+----------+------------+-----------------+----------+----------+
| Nairobi* | Luanda | Accra | Lubumashi | Dar Es | Juba |
| | | | | Salaam Entebbe* | |
+----------+--------------+----------+------------+-----------------+----------+
| Mombasa* | Cabinda | Kumasi | Kolwezi | Zanzibar | Kigali | Rumbek |
+----------+--------------+----------+------------+-----------------+----------+----------+
| Kisumu* | Soyo | Tamale | Mbuji-Mayi | Arusha | Burundi | Waw |
+----------+--------------+----------+------------+-----------------+----------+----------+
| Entebbe* | Benguela | Takoradi | Ndola | Mwanza* | Goma | Khartoum |
+----------+--------------+----------+------------+-----------------+----------+----------+
| Juba | Huambo | Lome | Lusaka | Mombasa | Juba | |
+----------+--------------+----------+------------+-----------------+----------+----------+
| Rumbek | Luena | Cotonou | Harare | Nairobi* | Nairobi* | |
+----------+--------------+----------+------------+-----------------+----------+----------+
| Eldoret* | Malange | Lagos | Lilongwe |
+----------+--------------+----------+------------+
| Lamu | Johannesburg | | |
+----------+--------------+----------+------------+
| Malindi* | Accra | | |
+----------+--------------+----------+------------+
| Mara* | | | |
+----------+--------------+----------+------------+
| Harare | | | |
+----------+--------------+----------+------------+-----------------+----------+----------+
* Existing routes in the year to 30 September 2008.
The Fly 540 business model is based around the deployment of new or recent
modern turboprop aircraft. Modern turboprop aircraft provide a highly efficient
solution to regional travel. The flight time for routes up to one and a half
hours is similar to a regional jet, whilst the fuel costs related to the journey
are 70% less. Thus the breakeven operational load factors required for the Fly
540 operations are significantly lower than competitive airlines utilising jets
for regional distribution.
Fly 540 current operations achieve a 96% average for departure within ten
minutes of schedule, and are attaining high average load factors and sector
yields. Operationally, the airline offers a simplified low cost ticket
structure, supported by ticketing on the internet, call centres and through
direct sales offices.
Passenger numbers rose by 93.0% to 171,160 in the year ended 30 September 2008
(2007: 88,571). Load factors in the financial year were 63.0% (2007: 65.8%).
Agriculture
Lonrho Agribusiness (BVI) Limited ("Lonrho Agriculture") 100% holding
Lonrho Agriculture, which was incorporated in May 2008, plans to deliver
vertical integration of the agricultural production and processing chain to
provide the ability for African produce to reach consumers either in Africa or
internationally. In October 2008 Lonrho acquired 51% of Rollex Pty Limited
("Rollex"), an agri-processing and logistics company that sources produce from
Southern Africa, processes it and delivers it to market. The Rollex processing
facility is airside at Johannesburg international airport and current customers
in South Africa include Woolworth and Spar, and in Europe include Marks &
Spencer, Tesco, Carrefour and others.
The development of further cold store and agri-processing facilities across the
continent to expand the Rollex model and expertise will be the focus of growth
for Lonrho Agriculture. To support this logistics capability, it is planned that
40% of the input requirements will be produced by Lonrho
Agriculture projects and 60% sourced in conjunction with the local market.
Lonrho signed an agreement in June 2008 to develop a cold store and
agri-processing facility airside at Lilongwe airport in Malawi. This will be
utilised to commence the export of fresh produce from Malawi and neighbouring
countries to the Middle East market. To complement the facility, the agreement
further included a 100 hectare agriculture site adjacent to the airport. A full
feasibility study is being undertaken to identify the intensive farming crops
most commercially suitable for the export market.
Post year end, Lonrho also signed an agreement to rehabilitate 25,000 hectares
of agricultural land in Angola, to initially service the domestic market.
Hotels
Hotel Cardoso SARL 59.04% holding plus management contract
The Hotel Cardoso is located in the pre-eminent position in Maputo, Mozambique,
overlooking the bay. The hotel has undergone a full refurbishment during the
year, with the majority of rooms being updated and the grounds
re-landscaped by the year end. Subsequent to the year end, the restaurant and
conference facilities are being upgraded and improved and a new panoramic
restaurant is being added to the top floor of the hotel.
The small municipal park adjacent to the hotel was put under Lonrho's control
and has been cleaned, refurbished, children's rides installed and a coffee shop
developed. This development, in conjunction with the improvements to the hotel,
have lifted the hotel's location to become one of the most popular and pleasant
parts of Maputo.
The hotel currently trades profitably and following the completion of the
refurbishment program in early 2009 will be a flagship hotel for Mozambique.
Grand Karavia SARL ("Karavia") 50% holding plus management contract (post year
end)
During the year Lonrho won a Democratic Republic of Congo (DRC) Government
tender to refurbish and thereafter manage the Karavia hotel in Lubumbashi in the
DRC. The hotel closed in 1985 and became very dilapidated. The Karavia will
reopen for business in the second half of 2009 as the only international
standard hotel in Lubumbashi.
The Development Bank of South Africa (DBSA) has agreed to provide US$10 million
as debt funding for the refurbishment project. The hotel will provide 213 rooms
to a five star standard and cater for the significant market related to the
Katanga Province and the development of the copper and cobalt mining interests
in the region.
Support Services
Sociedade Comercial Bytes & Pieces Limitada ("Bytes & Pieces") 65% holding &
Complete Enterprise Solutions Limited ("CES") 50% holding
Lonrho's IT company in Mozambique, Bytes and Pieces, continues to lead the
market in the turnkey delivery of IT solutions to major corporate clients.
Following on from the success of Bytes and Pieces, CES has opened in
Johannesburg and has begun to attract clients and build business.
Post the year end, at the request of Dell Computers, CES opened a company in
Zambia to meet growing demand for IT services in that market. CES is further
beginning to utilise its Portuguese speaking workforce in Mozambique to address
market expansion opportunities in Angola.
Lonrho Springs BVI Limited ("Lonrho Springs") 100% holding
Lonrho Springs is developing strategic water bottling opportunities in clearly
defined markets. Lonrho currently has operations in Mozambique (100% holding)
and in Kinshasa (21.4% holding) trading under the Swissta brand. Both plants
have capacity of around 300,000 litres per month. Swissta Mozambique produced
over 3 million litres in the year to
30 September 2008.
A new plant is under development in Angola, to become the largest Lonrho Springs
plant to date. Planned to start producing in 2009, the plant will have the
ability to deliver 4 million litres of bottled water a month to the Angolan
market.
A second new plant is under planning for a proposed development for Lubumbashi
which has also been highlighted as a location with a strong market demand for
bottled water.
Goodwill arising on the initial acquisition of Swissta Holdings Limited of
GBP0.6 million has been impaired at the year end to reflect the current economic
conditions of the markets in which the businesses are operating.
Other
Lonrho Mining Limited ("Lonrho Mining") 25.5 9% holding
Lonrho Mining continues to focus its attention on the highly prospective Lulo
diamond concession in Angola. Following the year end, within the 3,000 km2
concession, 217 aeromagnetic anomalies were identified and six initial targets
were explored on the ground.
All six sampled targets provided high counts of kimberlitic indicator minerals
and following the encouraging sampling program, it is planned to implement a dry
season drilling and bulk sampling program at the primary target and eight other
targets.
LonZim Plc ("LonZim") 24.53% holding
LonZim is a specific investment vehicle, listed on the London AIM stock
exchange, that was established to invest in recovery opportunities in Zimbabwe
and the Beira corridor in Mozambique.
Lonrho received a 20% free carry interest of the issued share capital of Lonzim
worth GBP7.3 million, which resulted in a GBP5.8 million credit to the
consolidated income statement. Lonrho has increased its shareholding to 24.53%
since the year end.
Lonrho holds a management contract for operating LonZim, and charges the higher
of US$500,000 or 2% of funds invested as a management charge.
Norse Air Limited
Lonrho made a full provision against its associate investment, Norse Air
Limited, in the 2007 accounts. A legal case against the management and the other
shareholders of Norse Air Limited is ongoing.
Financial Highlights
* Turnover for continuing operations increased to GBP24.5 million (2007 GBP10.2
million), a 140% increase. The largest contributor to the growth in turnover was
Fly540, which grew more than threefold to GBP9.3 million on the back of
substantially increased passenger volumes in Kenya. Total turnover for the Group
for the year was GBP43.1 million (2007 GBP11.2 million).
* The loss for the year of GBP41.0 million (2007 GBP17.4 million) was impacted by
the total trading losses and impairment charges of GBP33.0 million incurred in
SAILS which was put into liquidation shortly after the year end. The loss in
respect of continuing operations was GBP6.6 million (2007 GBP12.0 million) which
was in line with expectations as Lonrho continues to invest in the development
of its businesses.
* Lonrho received shares in Lonzim Plc with a value of GBP7.3 million in respect
of a non-compete agreement. This resulted in a credit in the consolidated income
statement of GBP5.8 million.
* In light of the state of the global financial markets, an impairment provision
was made against the Group's investment in Lonrho Mining Limited of GBP4.0
million to reflect the current market value of the shares on the Australian
Securities Exchange. However, the Directors are confident that the long term
value of this investment will significantly exceed the current value.
* Of the Group's cash balances of GBP10.2 million (2007: GBP15.2 million), cash
held in the United Kingdom was GBP8.1 million (2007 GBP14.0 million).
* The Company raised GBP59.9 million, net of issue costs, through three share
issues in the year to 30 September 2008. Total equity attributable to equity
holders of the Company was GBP69.6 million (2007: GBP41.1 million) at 30
September 2008.
* Since the year end, and despite difficult market conditions, the Group has
successfully raised GBP15.4 million, before expenses, through a placement of
shares.
At the time of the placing in November 2008, we noted that our strategic
planning assumed that the Company would not have to return to shareholders for
further funding during 2009. We still believe that this remains the case and
progress is also being made in the reduction of central overheads discussed in
the same announcement.
These are the first annual reports and accounts prepared in accordance with
Adopted International Financial Reporting Standards (IFRS). The comparative
figures have been restated accordingly`.
Consolidated income statement
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| for the year ended 30 | Continuing | 2008 | Total | Continuing | 2007 | Total |
| September 2008 | | Discontinued | | | Discontinued | GBPm |
| | operations | operations | GBPm | operations | | |
| | GBPm | GBPm | | GBPm | operations | |
| | | | | | GBPm | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Revenue | 24.5 | 18.6 | 43.1 | 10.2 | 1.0 | 11.2 |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Cost of sales | (15.6) | (38.3) | (53.9) | (7.8) | (3.2) | (11.0) |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| GROSS PROFIT/(LOSS) | 8.9 | (19.7) | (10.8) | 2.4 | (2.2) | 0.2 |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Gain on sale of | 5.8 | - | 5.8 | - | - | - |
| intangible asset | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Other operating income | 0.3 | - | 0.3 | 0.4 | - | 0.4 |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Impairment of goodwill | (0.6) | (5.1) | (5.7) | - | - | - |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Operating costs | (22.6) | (4.8) | (27.4) | (14.6) | (0.1) | (14.7) |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| OPERATING LOSS | (8.2) | (29.6) | (37.8) | (11.8) | (2.3) | (14.1) |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Finance income | 6.6 | - | 6.6 | 0.5 | - | 0.5 |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Finance expense | (0.8) | (2.7) | (3.5) | (0.7) | - | (0.7) |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| NET FINANCE | 5.8 | (2.7) | 3.1 | (0.2) | - | (0.2) |
| INCOME/(EXPENSE) | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Share of results of | (4.0) | - | (4.0) | | (3.7) | (3.7) |
| associates | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| LOSS BEFORE TAX | (6.4) | (32.3) | (38.7) | (12.0) | (6.0) | (18.0) |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Income tax | (0.2) | (2.1) | (2.3) | - | 0.6 | 0.6 |
| (charge)/credit | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| LOSS FOR THE YEAR | (6.6) | (34.4) | (41.0) | (12.0) | (5.4) | (17.4) |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| ATTRIBUTABLE TO: | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Equity holders of the | (5.7) | (27.6) | (33.3) | (11.0) | (4.5) | (15.5) |
| parent | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Minority interest | (0.9) | (6.8) | (7.7) | (1.0) | (0.9) | (1.9) |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| LOSS FOR THE YEAR | (6.6) | (34.4) | (41.0) | (12.0) | (5.4) | (17.4) |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| EARNINGS PER SHARE | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Basic loss per share | (1.5) | (7.5) | (9.0) | (4.5) | (1.9) | (6.4) |
| (pence) | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
| Diluted loss per share | (1.5) | (7.5) | (9.0) | (4.5) | (1.9) | (6.4) |
| (pence) | | | | | | |
+-----------------------------+------------+--------------+--------+------------+--------------+--------+
Consolidated statements of recognised income and expense
for the year ended 30 September 2008
+-------------------------------------------------------+-----------+-----------+
| | Group |
+-------------------------------------------------------+-----------------------+
| | 2008 | 2007 |
| | GBPm | GBPm |
+-------------------------------------------------------+-----------+-----------+
| Foreign exchange translation differences | 0.4 | 0.1 |
| Revaluation of property, plant and equipment | 4.9 | - |
| Deferred tax on revaluation of property, plant and | (1.0) | - |
| equipment | | |
+-------------------------------------------------------+-----------+-----------+
| NET INCOME RECOGNISED DIRECTLY IN EQUITY | 4.3 | 0.1 |
+-------------------------------------------------------+-----------+-----------+
| Loss for the year | (41.0) | (17.4) |
+-------------------------------------------------------+-----------+-----------+
| Total recognised expense for the year | (36.7) | (17.3) |
+-------------------------------------------------------+-----------+-----------+
| ATTRIBUTABLE TO: | (31.4) | (15.3) |
| - Equity holders of the parent | (5.3) | (2.0) |
| - Minority interest | | |
+-------------------------------------------------------+-----------+-----------+
| Total recognised expense for the year | (36.7) | (17.3) |
+-------------------------------------------------------+-----------+-----------+
Consolidated balance sheets
As at 30 September 2008
+----------------------------------------+----------+---------------+
| | Group |
+----------------------------------------+--------------------------+
| | 2008 | 2007 |
| | GBPm | GBPm |
+----------------------------------------+----------+---------------+
| ASSETS | | |
+----------------------------------------+----------+---------------+
| Goodwill | 5.1 | 6.5 |
+----------------------------------------+----------+---------------+
| Other intangible assets | 0.8 | 1.2 |
+----------------------------------------+----------+---------------+
| Property, plant and equipment | 56.8 | 36.9 |
+----------------------------------------+----------+---------------+
| Investments in subsidiaries | - | - |
+----------------------------------------+----------+---------------+
| Investments in associates | 8.8 | - |
+----------------------------------------+----------+---------------+
| Other investments | 0.7 | 5.0 |
+----------------------------------------+----------+---------------+
| Deferred tax | - | 2.2 |
+----------------------------------------+----------+---------------+
| TOTAL NON-CURRENT ASSETS | 72.2 | 51.8 |
+----------------------------------------+----------+---------------+
| Inventories | 2.2 | 1.4 |
+----------------------------------------+----------+---------------+
| Trade and other receivables | 11.6 | 4.0 |
+----------------------------------------+----------+---------------+
| Cash and cash equivalents | 10.2 | 15.2 |
+----------------------------------------+----------+---------------+
| Assets classified as held for sale | 2.6 | - |
+----------------------------------------+----------+---------------+
| TOTAL CURRENT ASSETS | 26.6 | 20.6 |
+----------------------------------------+----------+---------------+
| TOTAL ASSETS | 98.8 | 72.4 |
+----------------------------------------+----------+---------------+
| EQUITY | | |
+----------------------------------------+----------+---------------+
| Share capital | 4.6 | 2.8 |
+----------------------------------------+----------+---------------+
| Share premium account | 91.3 | 33.2 |
+----------------------------------------+----------+---------------+
| Revaluation reserve | 4.5 | 1.6 |
+----------------------------------------+----------+---------------+
| Share option reserve | 2.2 | 2.2 |
+----------------------------------------+----------+---------------+
| Foreign currency reserve | - | 0.2 |
+----------------------------------------+----------+---------------+
| Retained earnings | (33.0) | 1.1 |
+----------------------------------------+----------+---------------+
| TOTAL EQUITY ATTRIBUTABLE TO EQUITY | | |
+----------------------------------------+----------+---------------+
| HOLDERS OF THE COMPANY | 69.6 | 41.1 |
+----------------------------------------+----------+---------------+
| MINORITY INTEREST | 0.1 | 1.6 |
+----------------------------------------+----------+---------------+
| TOTAL EQUITY | 69.7 | 42.7 |
+----------------------------------------+----------+---------------+
| LIABILITIES | | |
+----------------------------------------+----------+---------------+
| Financial liabilities | 0.3 | 1.8 |
+----------------------------------------+----------+---------------+
| Deferred tax | 1.7 | 0.7 |
+----------------------------------------+----------+---------------+
| Obligations under finance leases | 1.1 | 1.1 |
+----------------------------------------+----------+---------------+
| TOTAL NON-CURRENT LIABILITIES | 3.1 | 3.6 |
+----------------------------------------+----------+---------------+
| Bank overdraft | 0.4 | 0.7 |
+----------------------------------------+----------+---------------+
| Interest-bearing loans and | 3.3 | 3.6 |
| borrowings | | |
+----------------------------------------+----------+---------------+
| Obligations under finance leases | 0.2 | 0.2 |
+----------------------------------------+----------+---------------+
| Trade and other payables | 13.8 | 21.6 |
+----------------------------------------+----------+---------------+
| Liabilities classified as held for | 8.3 | - |
| sale | | |
+----------------------------------------+----------+---------------+
| TOTAL CURRENT LIABILITIES | 26.0 | 26.1 |
+----------------------------------------+----------+---------------+
| TOTAL LIABILITIES | 29.1 | 29.7 |
+----------------------------------------+----------+---------------+
| TOTAL EQUITY AND LIABILITIES | 98.8 | 72.4 |
+----------------------------------------+----------+---------------+
Consolidated cash flow statements
For the year ended 30 September 2008
+--------------------------------------------------+---------------+------------+
| | Group |
+--------------------------------------------------+----------------------------+
| | 2008 | 2007 |
| | GBPm | GBPm |
+--------------------------------------------------+---------------+------------+
| CASH FLOWS FROM OPERATING ACTIVITIES Loss | (41.0) | (17.4) |
| for the year | 6.6 | 7.9 |
| Adjustments | | |
+--------------------------------------------------+---------------+------------+
| CASH FLOWS FROM OPERATING ACTIVITIES BEFORE | | |
+--------------------------------------------------+---------------+------------+
| MOVEMENTS IN WORKING CAPITAL | (34.4) | (9.5) |
+--------------------------------------------------+---------------+------------+
| Change in inventories | (0.5) | (0.6) |
+--------------------------------------------------+---------------+------------+
| Change in trade and other receivables | (5.4) | (1.3) |
+--------------------------------------------------+---------------+------------+
| Change in trade and other payables | 0.4 | 4.2 |
+--------------------------------------------------+---------------+------------+
| CASH GENERATED FROM OPERATIONS | (39.9) | (7.2) |
+--------------------------------------------------+---------------+------------+
| Interest received | 7.1 | 0.5 |
+--------------------------------------------------+---------------+------------+
| Interest paid | (2.7) | (1.9) |
+--------------------------------------------------+---------------+------------+
| Income tax paid | (0.2) | - |
+--------------------------------------------------+---------------+------------+
| NET CASH FROM OPERATING ACTIVITIES | (35.7) | (8.6) |
+--------------------------------------------------+---------------+------------+
| CASH FLOWS FROM INVESTING ACTIVITIES | | |
+--------------------------------------------------+---------------+------------+
| Proceeds from the sale of property, plant | - | 0.1 |
| and equipment | | |
+--------------------------------------------------+---------------+------------+
| Proceeds from the sale of investments | - | 1.8 |
+--------------------------------------------------+---------------+------------+
| Receipt of deferred consideration in respect | - | 1.0 |
| of sale of subsidiary | | |
+--------------------------------------------------+---------------+------------+
| Acquisition of subsidiary, net of cash | (2.1) | (2.2) |
| acquired | | |
+--------------------------------------------------+---------------+------------+
| Deposits paid in respect of property, plant | (4.4) | - |
| and equipment | | |
+--------------------------------------------------+---------------+------------+
| Acquisition of property, plant and equipment | (12.5) | (18.6) |
+--------------------------------------------------+---------------+------------+
| Acquisition of associates | (1.3) | (4.4) |
+--------------------------------------------------+---------------+------------+
| NET CASH FROM INVESTING ACTIVITIES | (20.3) | (22.3) |
+--------------------------------------------------+---------------+------------+
| CASH FLOWS FROM FINANCING ACTIVITIES | | |
+--------------------------------------------------+---------------+------------+
| Proceeds from the issue of share capital | 51.9 | 15.8 |
+--------------------------------------------------+---------------+------------+
| Proceeds received in advance of future share | - | 8.0 |
| issue | | |
+--------------------------------------------------+---------------+------------+
| Loan advance | 0.1 | - |
+--------------------------------------------------+---------------+------------+
| Repayment of borrowings | (1.1) | (0.3) |
+--------------------------------------------------+---------------+------------+
| Payment of finance lease liabilities | (0.2) | 1.3 |
+--------------------------------------------------+---------------+------------+
| NET CASH FROM FINANCING ACTIVITIES | 50.7 | 24.8 |
+--------------------------------------------------+---------------+------------+
| Net decrease in cash and cash equivalents | (5.3) | (6.1) |
+--------------------------------------------------+---------------+------------+
| Cash and cash equivalents at 1 October | 14.5 | 20.6 |
+--------------------------------------------------+---------------+------------+
| Foreign exchange movements | 0.2 | - |
+--------------------------------------------------+---------------+------------+
| CASH AND CASH EQUIVALENTS AT 30 SEPTEMBER | 9.4 | 14.5 |
+--------------------------------------------------+---------------+------------+
| | | |
+--------------------------------------------------+---------------+------------+
Notes to the financial statements
1. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements and in preparing an
opening Adopted IFRS balance sheet at 1 October 2006 for the purposes of the
transition to Adopted IFRS. The accounting policies have been applied
consistently by Group entities.
a. Basis of consolidation
Subsidiaries
The consolidated financial statements incorporate the financial statements of
Lonrho Plc and entities controlled by Lonrho Plc (its subsidiaries). Control is
achieved where Lonrho Plc (the Company) has the power to govern the financial
and operating policies of an investee entity so as to obtain benefits from its
activities.
The interest of minority shareholders is stated at the minority's proportion of
the fair values of the assets and liabilities recognised. Subsequently, losses
applicable to the minority in excess of the minority's interest in the
subsidiary's equity are allocated against the interests of the Group except to
the extent that the minority has a binding obligation and is able to make an
additional investment to cover the losses.
The results of entities acquired or disposed of during the year are included in
the consolidated income statement from the effective date of acquisition or up
to the effective date of disposal, as appropriate.
All intra-Group transactions, balances, income and expenses are eliminated on
consolidation.
Associates
An associate is an entity in which the Group has the ability to exercise
significant influence but not control over the financial and operating policies.
Associates are accounted for using the equity method and are initially measured
at cost as adjusted by post- acquisition changes in the Group's share of the net
assets of the associate, less any impairment of the individual investments, from
the date that significant influence commences until the date it ceases.
Losses of the associates in excess of the Group's interest in those associates
are not recognised except to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of its investee. The Group's
investment includes goodwill identified on acquisition, net of any impairment
losses. Any excess of the cost of acquisition over the Group's share of the fair
values of the identifiable net assets of the associate at the date of
acquisition is recognised as goodwill. Any deficiency of the cost of acquisition
below the Group's share of the fair values of the identifiable net assets of the
associate at the date of acquisition (i.e. discount on acquisition) is credited
to the income statement in the period of acquisition.
Business combinations
The acquisition of subsidiaries and businesses is accounted for using the
purchase method. The cost of the acquisition is measured at the aggregate of the
fair values, at the date of exchange, of assets given, liabilities incurred or
assumed, and equity instruments issued by the Group in exchange for control of
the acquiree, plus any costs directly attributable to the business combination.
The acquiree's identifiable assets, liabilities and contingent liabilities that
meet the conditions for recognition under IFRS 3 are
recognised at their fair values at the acquisition date, except for non-current
assets that are classified as held for sale in accordance with IFRS 5, which are
recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured
at cost, being the excess of the cost of the business combination over the
Group's interest in the net fair value of the identifiable assets, liabilities
and contingent liabilities recognised.
If, after reassessment, the Group's interest in the net fair value of the
acquiree's identifiable assets, liabilities and contingent liabilities exceeds
the cost of the business combination, the excess is recognised immediately in
the income statement. The interest of minority shareholders in the acquirer is
initially measured at the minority's proportion of the net fair value of the
assets, liabilities and contingent liabilities recognised.
b. Intangible assets
Goodwill
Goodwill arising on consolidation is recognised as an asset.
Following initial recognition, goodwill is subject to impairment reviews, at
least annually, and measured at cost less accumulated impairment losses. The
recoverable amount is estimated at each balance sheet date. Any impairment loss
is recognised immediately in the income statement and is not subsequently
reversed when the carrying amount of the asset exceeds its recoverable amount.
Any impairment losses recognised in respect of cash generating units are
allocated first to reduce the carrying amount of any goodwill allocated to
cash-generating units (groups of units) and then, to reduce the carrying amount
of other assets in the unit (groups of units) on a pro rata basis.
On disposal of a subsidiary, the attributable amount of goodwill is included in
the determination of the gain or loss on disposal.
Goodwill arising on acquisitions before the date of transition to Adopted IFRS
has been retained at the previous UK GAAP amounts, after being tested for
impairment at that date.
Other intangible assets
Other intangible assets are measured initially at cost and are amortised on a
straight-line basis over their estimated useful lives. The carrying amount is
reduced by any provision for impairment where necessary.
On a business combination, as well as recording separable intangible assets
already recognised in the balance sheet of the acquired entity at their fair
value, identifiable intangible assets that are separable or arise from
contractual or other legal rights are also included in the acquisition balance
sheet at fair value.
Amortisation on intangible assets is charged over their useful economic life, on
the following basis:
Brands 5 years
Intellectual property5 years
Licences 5 years
Contracts 3 years
c. Foreign currencies
The individual financial statements of each Group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each Group company are expressed in pounds
sterling, which is the functional currency of the Company, and the
presentational currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions
denominated in foreign currencies are translated into the respective functional
currency of the Group entities using the exchange rates prevailing at the dates
of transactions. Non-monetary assets and liabilities are translated at the
historic rate. Monetary assets and liabilities denominated in foreign currencies
are translated into the functional currency at the rates of exchange ruling at
the balance sheet date. Non-monetary assets and liabilities denominated in
foreign currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair value was
determined.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in the income statement for the
period. Exchange differences arising on the retranslation of non-monetary items
earned at fair value are included within the income statement for the period
except for differences arising on the retranslation of non-monetary items in
respect of which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is also
recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and
liabilities of the Group's foreign operations are translated at exchange rates
prevailing at the balance sheet date. Income and expense are translated at the
average exchange rates for the period, unless exchange rates fluctuate
significantly during that period, in which case the exchange rates at the date
of transactions are used. Exchange differences arising, if any, are classified
in equity and are transferred to the Group's foreign currency translation
reserve within equity. Such translation is recognised as income or as expense in
the period in which the operation is disposed of.
All foreign exchange gains or losses that are reflected in the income statement
are presented within financing income or expense.
d. Hyperinflation
The Group acquired an associate, LonZim Plc, during the year whose main
operations are in Zimbabwe. The policy adopted by LonZim Plc for hyperinflation
is stated below.
The Company will apply International Accounting Standard 29, Financial Reporting
in Hyperinflationary Economies ("IAS 29"). IAS 29 requires the Adopted IFRS
financial statements of any entity operating in a hyperinflationary economy to
take full account of the effect of inflation using a "current purchasing power"
approach, which is implemented using a complex set of procedures and
reconciliations.
Under IAS 29, when an entity has foreign operations (for instance, a subsidiary)
whose financial currency is hyperinflationary, the subsidiary's financial
statements must be adjusted before being translated and included in the parent
consolidated financial statements. It is a matter of judgement as to when
restatement for hyperinflation becomes necessary, according to the
characteristics of the economy in which the subsidiary conducts its operations
and maintains its functional currency.
Under IAS 29, Zimbabwe is considered a hyperinflationary economy and therefore
LonZim Plc's consolidated financial statements, to the extent its portfolio
companies use the Zimbabwean Dollar as a functional currency, will need to be
reinstated by LonZim Plc, to account for changes in the general purchasing power
of the Zimbabwean Dollar measured against the consumer price index published by
the Central Statistical Office of Zimbabwe.
Exchange rates
It is the view of the Directors that the translation of the foreign balances and
operations to local currency should be based on an exchange rate that is aligned
to the market forces and fairly presents the true value of foreign balances and
operations when translated to local currency. It should be emphasised that the
policy is for fair presentation purposes only and does not indicate an intention
of the Group to transact at these rates in a local Zimbabwe market.
In applying this policy, all foreign balances at period end are translated at
the Old Mutual implied rate (OMIR) and operational activities for foreign
operations are translated at the OMIR at the time of activity during the period.
The application of this policy will be reviewed when appropriate.
Inflation adjustment
One characteristic that leads to the classification of an economy as
hyperinflationary, necessitating the application of IAS 29 restatement, is a
cumulative three-year inflation rate approaching or exceeding 100%. The
restatement has been calculated by means of conversion factors derived from the
Consumer Price Index (CPI).
The main procedures applied for the above restatement are as follows:
* Financial statements prepared in the currency of a hyperinflationary economy are
stated in terms of a measuring unit current at the balance sheet date, and
corresponding figures for the previous period are stated in the same terms.
* Monetary assets and liabilities that are carried at amounts current at the
balance sheet date are not restated because they are already expressed in terms
of the monetary unit current at the balance sheet date. Monetary items comprise
cash held and items to be recovered or paid in cash.
* Non-monetary assets and liabilities that are not carried at amounts current at
the balance sheet date and components of shareholders' equity are restated by
applying the relevant conversion factors.
* Comparative financial statements are restated by using inflation indices in
terms of a measuring unit current at the latest balance sheet date.
* All items in the income statement are restated by applying the relevant monthly,
yearly average or year end conversion factors with the exception of depreciation
expense, impairments of investments, profit or loss on disposal of property,
plant and equipment, net exchange gains or losses and increase or decrease in
the value of quoted investments.
* Depreciation expense, profit or loss on disposal of property, plant and
equipment are based on the restated carrying amount of property, plant and
equipment and restated disposal proceeds while impairment of investments is
based on the restated carrying amount of the investments.
* Net exchange gains or losses are based on the restated opening carrying amount
of the foreign cash balances against the closing balances at the closing
exchange rate.
* Increase or decrease in the value of quoted investments is based on the fair
market values of the quoted investments.
* The effect on the net monetary position of the Group is included in the income
statement as a monetary adjustment.
* The monetary adjustment reflects the net loss or gain in purchasing power that
arises as a relationship of net monetary assets and monetary liabilities.
The application of the IAS 29 restatement procedures has the effect of amending
certain of the accounting policies, which are used in the preparation of the
financial statements under the historical cost convention. The amended policies
include:
* Property, plant and equipment
* Inventories
* Prepayments
* Deferred tax
The indices and conversion factors used were:
Index Conversion Factor
30 June 2008
1,227,614,935,650 1
30 June 2007 11,666,826 105,223
30 June 2006
158,709 7,735,005
e. Taxation
The tax expense represents the sum of current tax and deferred tax.
Current taxation
Current tax is based on taxable profit for the period. Taxable profit differs
from net profit as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that
affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on the investments in subsidiaries and associates, except where the
Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited to equity, in which case the deferred tax is also dealt with
in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the Group intends to settle its current tax assets and liabilities on a net
basis.
f. Available for sale financial assets
The Group's investments in equity securities are classified as
available-for-sale financial assets. Subsequent to initial recognition, they are
measured at fair value and changes therein, other than impairment losses (see
below), are recognised directly in equity. When an investment is de-recognised,
the cumulative gain or loss in equity is transferred to the income statement.
Impairment
A financial asset is assessed at each reporting date to determine whether there
is any objective evidence that it is impaired.
A financial asset is considered to be impaired if objective evidence indicates
that one or more events have had a negative effect on the estimated future cash
flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is
calculated as the difference between its carrying amount, and the present value
of the estimated future cash flows discounted at the original effective interest
rate. An impairment loss in respect of an available-for-sale financial asset is
calculated by reference to its fair value.
All impairment losses are recognised in the income statement. Any cumulative
loss in respect of an available-for-sale financial asset recognised previously
in equity is transferred to the income statement.
An impairment loss is reversed if the reversal can be related objectively to an
event occurring after the impairment loss was recognised. For financial assets
measured at amortised cost, the reversal is recognised in the income statement.
For available-forsale financial assets that are equity securities, the reversal
is recognised directly in equity.
g. Property, plant and equipment
Long leasehold land and buildings are stated in the balance sheet at their
revalued amounts, being the fair value at the date of revaluation, less any
subsequent accumulated depreciation and subsequent accumulated impairment
losses. Revaluations are performed with sufficient regularity such that the
carrying amount does not differ materially from that which would be determined
using fair values at the balance sheet date.
Any revaluation increase arising on the revaluation of such land and buildings
is credited to the revaluation reserve, except to the extent that it reverses a
revaluation decrease for the same asset previously recognised as an expense, in
which case the increase is credited to the income statement to the extent of the
decrease previously charged. A decrease in carrying amount arising on the
revaluation of such land and building is charged as an expense to the extent
that it exceeds the balance if any, held in the revaluation reserve relating to
a previous revaluation of that asset. Depreciation on revalued buildings is
charged to the income statement. On subsequent sale or retirement of a revalued
property, the attributable revaluation surplus remaining is transferred directly
to retained earnings.
All other assets are stated at historical cost less accumulated depreciation and
accumulated impairment losses.
Depreciation is charged so as to write off the cost or valuation of assets,
other than long leasehold land, over their estimated useful lives, on the
following basis:
Long leasehold buildings 2% of cost
Short leasehold land and buildingsOver the term of the lease
Plant and machinery 10% of cost
Aircraft 5%-6.67% of cost
Motor cars15%-25% of cost
Fixtures and fittings15%-25 % of cost
The gain or loss arising on the disposal of an asset is determined as the
difference between the sales proceeds and the carrying amount of the asset and
is recognised in the income statement for the period.
Assets held under finance leases are depreciated over their expected useful
lives on the same basis as owned assets, or where shorter, over the relevant
lease term.
In respect of aircraft, subsequent costs incurred which lend enhancement to
future periods such as long term scheduled maintenance and major overhaul of
aircraft and engines are capitalised and amortised over the length of the period
benefiting from those enhancements. All other costs relating to maintenance are
charged to the income statement as incurred.
h. Impairment of assets excluding goodwill, inventories and deferred tax
assets
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of any impairment loss. Where the asset does not generate cash flows that
are independent from other assets, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs. Recoverable amount is the
higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using
a pre-tax discount rate that reflects current market assessments of the time
value and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount.
Impairment loss is recognised as an expense immediately, unless the relevant
asset is carried at a revalued amount in which case the impairment loss is
treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation increase.
i. Financial instruments
Financial assets and financial liabilities are recognised in the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits and other
short term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Bank overdrafts that are repayable on demand and form an integral part of the
Group's cash management are included as a component of cash and cash equivalents
for the purpose of the statement of cash flows.
Trade receivables
Trade receivables are measured at initial recognition at fair value and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated recoverable amounts are recognised
in the income statement when there is objective evidence the asset is impaired.
Trade payables
Trade payables are initially measured at fair value and are subsequently
measured at amortised cost using the effective interest rate method.
Financial liabilities
Financial liabilities are classified according to the substance of the
contractual arrangements entered into.
Bank borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs. Finance charges, including premiums payable
on settlement or redemption and direct issue costs, are accounted for on an
amortised cost basis to the income statement using the effective interest method
and are added to the carrying amount of the instrument to the extent that they
are not settled in the period in which they arise.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
Capital management
The Board's policy is to maintain a strong capital base so as to maintain
investor, creditor and market confidence and to sustain future development of
the business. The Board of Directors monitors the return on capital, which the
Group defines as net operating income divided by total shareholders' equity,
excluding minority interests.
j. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
comprises direct materials and where applicable direct expenditure and
attributable overheads that have been incurred in bringing the inventories to
their present location and condition. Net realisable value represents the
estimated selling price less all estimated costs of completion and costs to be
incurred in marketing, selling and distribution.
k. Share based payments
The Group provides benefits to certain employees, including senior executives,
in the form of share based payments, whereby employees render services in
exchange for shares or rights over shares (equity-settled transactions).The cost
of these equity-settled transactions with employees is measured by reference to
the fair value of the equity instruments at the date at which they are granted.
The fair value is determined by using a Black-Scholes model. The dilutive
effect, if any, of outstanding options is reflected as additional share dilution
in the computation of earnings per share.
l. Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference
between cost and redemption value being recognised in the income statement over
the period of the borrowings on an effective interest basis.
m. Dividends
Dividends are recognised as a liability in the period in which they are
declared.
n. Provisions
A provision is recognised in the balance sheet when the Group has a present
legal or constructive obligation as a result of a past event, and it is probable
that an outflow of economic benefits will be required to settle the obligation.
If the effect is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and, where appropriate, the risks specific to the
liability.
o. Revenue recognition
Revenue, for the other major segments not detailed below, is derived from the
sale of goods and services and is measured at the fair value of consideration
received or receivable, after deducting discounts, volume rebates, value-added
tax and other sales taxes. A sale of goods and services is recognised when
recovery of the consideration is probable, there is no continuing management
involvement with the goods and services and the amount of revenue can be
measured reliably.
A sale of goods is recognised when the significant risks and rewards of
ownership have passed to the buyer, the associated costs and possible return of
goods can be estimated reliably. This is when title and insurance risk have
passed to the customer and the goods have been delivered to a contractually
agreed location.
A sale of services is recognised when the service has been rendered.
Aircraft division
Revenue for the aircraft division comprises the invoiced value of airline
services, net of passenger taxes, discounts, plus ancillary revenue. Revenue
from the sale of flight seats (passenger revenue) is recognised in the period in
which the service is provided. Unearned revenue represents flight seats sold but
not yet flown and is included within deferred income.
Shipping division (discontinued operation)
Revenue for the shipping division comprises the invoiced value of shipping
services, net of taxes and duties.
Revenue is generated from the transport of containerised goods. The transport of
these goods is referred to as a voyage, and a completed voyage comprises both a
North bound and South bound leg.
Revenue is recognised on a completed voyage basis.
p. Leases
Leases are classified according to the substance of the transaction. A lease
that transfers substantially all the risks and rewards of ownership to the
lessee is classified as a finance lease. All other leases are classified as
operating leases.
Finance leases
Finance leases are capitalised in the balance sheet at their fair value or, if
lower, at the present value of the minimum lease payments, each determined at
the inception of the lease. The corresponding liability is shown as a finance
lease obligation to the lessor. Leasing repayments comprise both a capital and a
finance element. The finance element is written off to the income statement so
as to produce an approximately constant periodic rate of charge on the
outstanding obligation.
Operating leases
Operating lease rentals are charged to the income statement on a straight line
basis over the period of the lease.
q. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of a qualifying asset, which are assets that necessarily take a
substantial period of time to get ready for their intended use or sale, are
added to the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings
pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalisation.
All other borrowing costs are recognised in the income statement in the period
in which they are incurred.
r. Loss per share
Basic loss per share is calculated based on the weighted average number of
ordinary shares outstanding during the period. Diluted loss per share is based
upon the weighted average number of shares in issue throughout the year,
adjusted for the dilutive effect of potential ordinary shares. The only
potential ordinary shares in issue are employee share options.
s. Segment reporting
A segment is a distinguishable component of the Group that is engaged either in
providing products or services (business segment), or in providing products or
services within a particular economic environment (geographical segment), which
is subject to risks and rewards that are different from those of other segments.
t. Assets and liabilities classified as held for sale
Non-current assets (or disposal groups comprising assets and liabilities) that
are expected to be recovered primarily through sale rather than through
continuing use are classified as held for sale. Immediately before
classification as held for sale, the assets (or components of a disposal group)
are remeasured in accordance with the Group's accounting policies. Thereafter
generally the assets (or disposal group) are measured at the lower of their
carrying amount and fair value less cost to sell. Any impairment loss on a
disposal group first is allocated to goodwill, and then to remaining assets and
liabilities on apro rata basis, except that no loss is allocated to inventories,
financial assets and deferred tax assets, which continue to be measured in
accordance with the Group's accounting policies. Impairment losses on initial
classification as held for sale and subsequent gains or losses on re-measurement
are recognised in the income statement. Gains are not recognised in excess of
any cumulative impairment loss.
2. Segment Reporting
Segment information is presented in respect of the Group's business and
geographical segments. The primary format, business segments, is based on the
Group's management and internal reporting structure.
There is no inter-segment revenue.
Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly income-earning assets and revenue,
interest-bearing loans, borrowings and expenses, and corporate assets and
expenses.
Segment capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than one period.
Business segments
For management purposes, the Group is currently organised into six operating
divisions.
* Infrastructure
* Transportation
* Support services
* Hotels
* Cargo and shipping (discontinued)
* Other
Geographical segments
All of the segments operate in various parts of Africa.
Business segments
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| | Infrastructure | Transport | Support | | Other | Consolidated | Cargo |
| | GBPm | GBPm | services | 2008 | GBPm | | and |
| | | | GBPm | Hotels | | continuing | shipping |
| | | | | GBPm | | operations | discontinued |
| | | | | | | GBPm | operations |
| | | | | | | | GBPm |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| EXTERNAL REVENUE | 7.3 | 9.3 | 6.1 | 1.8 | - | 24.5 | 18.6 |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Segment result | (0.6) | (4.5) | (0.6) | 0.1 | - | (5.6) | (24.5) |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Unallocated expenses | | | | | | (7.8) | - |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Impairment of | | | (0.6) | | | (0.6) | (5.1) |
| goodwill | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Gain on sale of | | | | | | 5.8 | - |
| intangible asset | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| OPERATING LOSS | | | | | | (8.2) | (29.6) |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Net finance | | | | | | 5.8 | (2.7) |
| income/(expense) | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Share of results of | | | | | | (4.0) | - |
| associate | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Income tax expense | | | | | | (0.2) | (2.1) |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| LOSS FOR THE YEAR | | | | | | (6.6) | (34.4) |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
+------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| | Infrastructure | Transport | Support | | | Consolidated | |
| | GBPm | GBPm | services | | Other | continuing | |
| | | | GBPm | | GBPm | operations | Cargo |
| | | | | 2007 | | GBPm | and |
| | | | | Hotels | | | shipping |
| | | | | GBPm | | | discontinued |
| | | | | | | | operations |
| | | | | | | | GBPm |
+------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| EXTERNAL REVENUE | 5.4 | 3.0 | 0.4 | 1.4 | - | 10.2 | 1.0 |
+------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Segment result | (0.7) | (1.4) | (0.1) | 0.1 | - | (2.1) | (2.3) |
| Unallocated expenses | | | | | | (9.7) | - |
+------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| OPERATING LOSS | | | | | | (11.8) | (2.3) |
+------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Net finance expense | | | | | | (0.2) | - |
| Share of results of | | | | | | | |
| associate | | | | | | - | (3.7) |
| Income tax credit | | | | | | - | 0.6 |
+------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| LOSS FOR THE YEAR | | | | | | (12.0) | (5.4) |
+------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| | Infrastructure | Transport | Support | | Other | | Cargo |
| | GBPm | GBPm | services | | GBPm | Consolidated | and |
| | | | GBPm | 2008 | | continuing | shipping |
| | | | | Hotels | | operations | discontinued |
| | | | | GBPm | | | operations |
| | | | | | | GBPm | GBPm |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Segment operating | 44.2 | 14.6 | 4.3 | 11.7 | - | 74.8 | 2.5 |
| assets | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Investment in | 2.2 | - | - | - | 6.6 | 8.8 | - |
| associates | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Unallocated assets / | - | - | - | - | - | 12.6 | 0.1 |
| interest bearing assets | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| TOTAL ASSETS | | | | | | 96.2 | 2.6 |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Segment operating | 9.3 | 2.5 | 0.8 | 1.7 | - | 14.3 | 7.8 |
| liabilities | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Unallocated liabilities | | | | | | | |
| / interest bearing | | | | | | 6.5 | 0.5 |
| liabilities | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| TOTAL LIABILITIES | | | | | | 20.8 | 8.3 |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Depreciation of | 2.1 | 0.7 | 0.1 | 0.2 | - | 3.1 | - |
| segment assets | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Amortisation of | | 0.1 | 0.2 | - | - | 0.3 | - |
| segment assets | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Capital expenditure | 8.5 | 2.1 | 0.1 | 1.8 | - | 12.5 | - |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
| Impairment of | - | - | 0.7 | - | - | 0.7 | 5.1 |
| intangible assets | | | | | | | |
+-------------------------+----------------+-----------+----------+--------+-------+--------------+--------------+
+--------------------------+----------------+-+-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| | | 2007 |
+--------------------------+------------------+---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+
| | Infrastructure | Transport | Support | Hotels | Other | | |
| | GBPm | GBPm | services | GBPm | GBPm | Consolidated | Cargo |
| | | | GBPm | | | continuing | and |
| | | | | | | operations | shipping |
| | | | | | | GBPm | discontinued |
| | | | | | | | operations |
| | | | | | | | GBPm |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| Segment operating | 31.7 | 5.9 | 3.1 | 3.9 | | 44.6 | 6.2 |
| assets | | | | | - | | |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| Unallocated assets / | | | | | | 21.6 | - |
| interest bearing assets | | | | | | | |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| TOTAL ASSETS | | | | | | 66.2 | 6.2 |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| Segment operating | 9.1 | 0.9 | 0.4 | 0.1 | - | 10.5 | 3.4 |
| liabilities | | | | | | | |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| Unallocated liabilities | | | | | | 15.3 | 0.5 |
| / interest bearing | | | | | | | |
| liabilities | | | | | | | |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| TOTAL LIABILITIES | | | | | | 25.8 | 3.9 |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| Depreciation of | 1.0 | 0.2 | - | 0.1 | - | 1.3 | - |
| segment assets | | | | | | | |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| Amortisation of | 0.1 | - | - | - | - | 0.1 | - |
| segment assets | | | | | | | |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| Capital expenditure | 14.0 | 4.7 | - | 0.3 | - | 19.0 | - |
+--------------------------+----------------+-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
| Impairment of | - | - | - | - | - | - | - |
| intangible assets | | | | | | | |
+--------------------------+----------------+-+-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------+----------+--------+-------+--------------+--------------+
Geographical segments
+-----------------------------------+----------+--------+--------+--------+--------------+--------------+
| | 2008 |
+-----------------------------------+-------------------------------------------------------------------+
| | Southern | East | West | Europe | Consolidated | Southern |
| | Africa | Africa | Africa | | Continuing | Africa |
| | | | | | operations | Discontinued |
| | | | | | | operations |
+-----------------------------------+----------+--------+--------+--------+--------------+--------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------------------+----------+--------+--------+--------+--------------+--------------+
| Revenue by location of | 7.7 | 9.3 | 7.3 | 0.2 | 24.5 | 18.6 |
| external customers | | | | | | |
+-----------------------------------+----------+--------+--------+--------+--------------+--------------+
| Revenue by location of assets | 7.9 | 9.3 | 7.3 | - | 24.5 | 18.6 |
+-----------------------------------+----------+--------+--------+--------+--------------+--------------+
| Segment net | 17.5 | 11.6 | 33.7 | 12.6 | 75.4 | (5.7) |
| assets/(liabilities) | | | | | | |
+-----------------------------------+----------+--------+--------+--------+--------------+--------------+
| Capital expenditure | 2.0 | 1.8 | 8.4 | 0.3 | 12.5 | - |
+-----------------------------------+----------+--------+--------+--------+--------------+--------------+
+-----------------------------------+---+----------+--------+--------+--------+--------------+--------------+
| | 2007 |
+-----------------------------------+-----------------------------------------------------------------------+
| | Southern | East | West | Europe | Consolidated | Southern |
| | Africa | Africa | Africa | | Continuing | Africa |
| | | | | | operations | Discontinued |
| | | | | | | operations |
+-----------------------------------+--------------+--------+--------+--------+--------------+--------------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------------------+--------------+--------+--------+--------+--------------+--------------+
| Revenue by location of external | 1.6 | 3.1 | 5.4 | 0.1 | 10.2 | 1.0 |
| customers | | | | | | |
+---------------------------------------+----------+--------+--------+--------+--------------+--------------+
| Revenue by location of assets | 1.7 | 3.1 | 5.4 | - | 10.2 | 1.0 |
+---------------------------------------+----------+--------+--------+--------+--------------+--------------+
| Segment net assets | 6.5 | 5.0 | 22.6 | 6.3 | 40.4 | 2.3 |
+---------------------------------------+----------+--------+--------+--------+--------------+--------------+
| Capital expenditure | 0.3 | 4.7 | 14.0 | - | 19.0 | - |
+-----------------------------------+---+----------+--------+--------+--------+--------------+--------------+
3. Revenue
+--------------------------+----------------------------------+-+----+-+--------+-------+-+--------+------+
| Continuing operations | Discontinued | Total |
| | operations | |
+----------------------------------------------------------------------+------------------+---------------+
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
+---------------------------------------------------------------+------+--------+---------+--------+------+
| GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+---------------------------------------------------------------+------+--------+---------+--------+------+
| Sale of goods | 6.1 | 0.4 | - | - | 6.1 | 0.4 |
+--------------------------+----------------------------------+------+----------+-------+----------+------+
| Services | 18.4 | 9.8 | 18.6 | 1.0 | 37.0 | 10.8 |
+--------------------------+----------------------------------+------+----------+-------+----------+------+
| | 24.5 | 10.2 | 18.6 | 1.0 | 43.1 | 11.2 |
+--------------------------+----------------------------------+-+----+-+--------+-------+-+--------+------+
4. Group net operating costs
+-------------------------------------------------------------------+--------------+-------+
| | 2008 GBPm | 2007 |
| | | GBPm |
+-------------------------------------------------------------------+--------------+-------+
| Cost of sales | 53.9 27.4 | 11.0 |
| Administrative expenses | (0.3) | 14.7 |
| Other operating income | | (0.4) |
+-------------------------------------------------------------------+--------------+-------+
| NET OPERATING COSTS (BEFORE IMPAIRMENT OF GOODWILL | | |
+-------------------------------------------------------------------+--------------+-------+
| AND THE GAIN ON SALE OF INTANGIBLE ASSETS ) | 81.0 | 25.3 |
+-------------------------------------------------------------------+--------------+-------+
| Administrative expenses include management related overheads | | |
| for operations and head office. | | |
+-------------------------------------------------------------------+--------------+-------+
| INCLUDED IN NET OPERATING COSTS ABOVE ARE: | | |
+-------------------------------------------------------------------+--------------+-------+
| Depreciation of property plant and equipment | 3.1 | 1.3 |
+-------------------------------------------------------------------+--------------+-------+
| Profit on the sale of property plant and equipment | | (0.1) |
| | - | |
+-------------------------------------------------------------------+--------------+-------+
| Impairment of intangible assets (other than goodwill) | 0.1 | |
| | | - |
+-------------------------------------------------------------------+--------------+-------+
| Amortisation of intangible assets (other than goodwill) | 0.3 | 0.1 |
+-------------------------------------------------------------------+--------------+-------+
| Share based payments | | 2.6 |
| | - | |
+-------------------------------------------------------------------+--------------+-------+
| Operating lease rentals: | | |
+-------------------------------------------------------------------+--------------+-------+
| - Land and buildings | 0.3 | 0.2 |
+-------------------------------------------------------------------+--------------+-------+
| - Plant and machinery | 0.1 | 0.7 |
+-------------------------------------------------------------------+--------------+-------+
| - Other | 13.6 | 1.7 |
+-------------------------------------------------------------------+--------------+-------+
| Release of negative goodwill to income | | (0.7) |
| | - | |
+-------------------------------------------------------------------+--------------+-------+
| Staff costs | 9.9 | 5.0 |
+-------------------------------------------------------------------+--------------+-------+
| Impairment of trade receivables | 0.7 | |
| | | - |
+-------------------------------------------------------------------+--------------+-------+
| Legal fees relating to discontinued operations | 1.4 | |
| | | - |
+-------------------------------------------------------------------+--------------+-------+
| Write off of loan due from associate | | 1.0 |
| | - | |
+-------------------------------------------------------------------+--------------+-------+
| The costs above include the following relating to discontinued | | |
| operations: | | |
+-------------------------------------------------------------------+--------------+-------+
+-----------------------------------------------------------------+--------+--------------+
| | | 2007 |
| | | (From |
| | | 2008 |
| | | acquisition) |
+-----------------------------------------------------------------+--------+--------------+
| | GBPm | GBPm |
+-----------------------------------------------------------------+--------+--------------+
| Other operating lease rentals | 13.6 | 1.6 |
+-----------------------------------------------------------------+--------+--------------+
| Staff costs | 0.3 | - |
+-----------------------------------------------------------------+--------+--------------+
| Impairment of trade receivables | 0.6 | - |
+-----------------------------------------------------------------+--------+--------------+
| Legal fees | 1.4 | - |
+-----------------------------------------------------------------+--------+--------------+
Auditors remuneration
+----------------------------------------------------------------+--------------+------+
| | 2008 | 2007 |
+----------------------------------------------------------------+--------------+------+
| | GBPm | GBPm |
+----------------------------------------------------------------+--------------+------+
| Fees payable to the Company's auditors for the audit of the | 0.2 | 0.1 |
| Company's annual accounts | | |
+----------------------------------------------------------------+--------------+------+
| For the audit of the Company's subsidiaries pursuant to | 0.1 | 0.1 |
| legislation | | |
+----------------------------------------------------------------+--------------+------+
| TOTAL AUDIT FEES | 0.3 | 0.2 |
+----------------------------------------------------------------+--------------+------+
5. Earnings Per Share
The calculation of the basic and diluted loss per share is based on the
following data:-
+----------------------------------------------------------------+--------------+--------+
| | 2008 | 2007 |
+----------------------------------------------------------------+--------------+--------+
| | GBPm | GBPm |
+----------------------------------------------------------------+--------------+--------+
| Loss for the purposes of basic earnings per share being net | (33.3) | (15.5) |
| loss attributable to | | |
| equity holders of the parent | | |
+----------------------------------------------------------------+--------------+--------+
| Loss for the purposes of diluted earnings per share | (33.3) | (15.5) |
+----------------------------------------------------------------+--------------+--------+
| Number of shares (millions) | 2008 | 2007 |
| | No. | No. |
+----------------------------------------------------------------+--------------+--------+
| Weighted average number of ordinary shares for the purposes | | |
| basic earnings per share | 371.2 | 242.6 |
+----------------------------------------------------------------+--------------+--------+
| Effect of dilute potential ordinary shares: | | |
+----------------------------------------------------------------+--------------+--------+
| - Share options | 7.2 | 7.2 |
+----------------------------------------------------------------+--------------+--------+
| Weighted average number of ordinary shares for the purposes | | |
| of diluted earnings per share | 378.4 | 249.8 |
+----------------------------------------------------------------+--------------+--------+
The calculation of diluted loss per share is based on the weighted average
number of shares outstanding adjusted by the dilutive share options. There is no
dilution per share in respect of both the current and prior year as the Group
has made a loss and hence the effect of share options is considered to be
anti-dilutive.
6. Capital and Reserves
Group reconciliation of movement in capital and reserves
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| | Attributable to equity holders of | | |
| | the parent | | |
| | Share | | |
| | | | |
+-------------------+-----------------------------------------------------------------------------+----------+--------+
| | Share | Share | Translation | option | Revaluation | Retained | Total | Minority | Total |
| | capital | premium | reserve | reserve | reserve | earnings | GBPm | interest | equity |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | | GBPm | GBPm |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| At 1 October | 2.2 | 17.4 | - | 0.1 | 1.6 | 16.6 | 37.9 | 1.6 | 39.5 |
| 2006 | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Share capital | 0.6 | 15.8 | - | - | - | - | 16.4 | - | 16.4 |
| issued | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Subsidiaries | - | - | - | - | - | - | - | 2.0 | 2.0 |
| acquired | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Loss for the | - | - | - | - | - | (15.5) | (15.5) | (1.9) | (17.4) |
| period | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Equity-settled | | | | | | | | | |
| transactions | - | - | - | 2.1 | - | - | 2.1 | - | 2.1 |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Foreign exchange | | | | | | | | | |
| translation | - | - | 0.2 | - | - | - | 0.2 | (0.1) | 0.1 |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| AT 30 | 2.8 | 33.2 | 0.2 | 2.2 | 1.6 | 1.1 | 41.1 | 1.6 | 42.7 |
| SEPTEMBER 2007 | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| At 1 October | 2.8 | 33.2 | 0.2 | 2.2 | 1.6 | 1.1 | 41.1 | 1.6 | 42.7 |
| 2007 | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Share capital | 1.8 | 58.1 | - | - | - | - | 59.9 | - | 59.9 |
| issued | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Subsidiaries | - | - | - | - | - | - | - | 3.8 | 3.8 |
| acquired | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Revaluation | - | - | - | - | 2.9 | - | 2.9 | 2.0 | 4.9 |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Loss for the | - | - | - | - | - | (33.3) | (33.3) | (7.7) | (41.0) |
| period | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Deferred tax | - | - | - | - | - | (0.8) | (0.8) | (0.2) | (1.0) |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| Foreign | | | | | | | | | |
| exchange | - | - | (0.2) | - | - | - | (0.2) | 0.6 | 0.4 |
| translation | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
| AT 30 | 4.6 | 91.3 | - | 2.2 | 4.5 | (33.0) | 69.6 | 0.1 | 69.7 |
| SEPTEMBER 2008 | | | | | | | | | |
+-------------------+---------+---------+-------------+---------+-------------+----------+--------+----------+--------+
Share capital and share premium
+--------------------------------------------------+--------------------------+-------+
| | Ordinary shares |
| | |
+--------------------------------------------------+----------------------------------+
| In millions of 1p shares | 2008 | 2007 |
+--------------------------------------------------+--------------------------+-------+
| On issue at 1 October | 277.1 | 224.2 |
+--------------------------------------------------+--------------------------+-------+
| Issued for cash | 177.8 | 51.4 |
+--------------------------------------------------+--------------------------+-------+
| Bonus issue | - | 1.5 |
+--------------------------------------------------+--------------------------+-------+
| ON ISSUE AT 30 SEPTEMBER - FULLY PAID | 454.9 | 277.1 |
+--------------------------------------------------+--------------------------+-------+
At 30 September 2008, the authorised share capital comprised 550,000,000
ordinary shares (2007: 400,000,000) of 1p each. The increase of 150,000,000 took
place on 6 December 2007.
During 2008, the Company issued 44.7 million, 56.9 million and 76.2 million
shares at prices of 38p, 43p and 26p respectively (2007 51.4 million at 34.5p).
The costs of the share issues of GBP1.4 million (2007 GBP0.7 million) have been
deducted from the share premium created on issue. During 2007, the Company also
issued and allotted 1. 5m shares at a price of 34. 5p per share which resulted
in a charge to the income statement of GBP0.5 million as a bonus award to Gerard
Holden.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at meetings of the
Company. All shares rank equally with regard to the Company's residual assets.
The Group also issued share options in 2007.
7. Notes to the Cash Flow Statement
+-------------------------------------------------+--------------------------+--------+
| | Group | 2007 |
| | | GBPm |
| | | |
| | 2008 | |
| | GBPm | |
+-------------------------------------------------+--------------------------+--------+
| Depreciation of property, plant and equipment | 3.1 | 1.3 |
| Amortisation of intangible assets | 0.3 | 0.1 |
| Impairment of goodwill and other intangible | 5.8 | - |
| assets Negative goodwill | - | (0.7) |
+-------------------------------------------------+--------------------------+--------+
| Share based payment expense | | 2.6 |
| | - | |
+-------------------------------------------------+--------------------------+--------+
| Finance (income)/expense | (3.9) | 0.2 |
+-------------------------------------------------+--------------------------+--------+
| Share of profit of associates | | 0.3 |
| | - | |
+-------------------------------------------------+--------------------------+--------+
| Impairment/write off of goodwill and | 4.0 | 3.4 |
| investment in associate | | |
+-------------------------------------------------+--------------------------+--------+
| Write off of loan due from associate | | 1.0 |
| | - | |
+-------------------------------------------------+--------------------------+--------+
| Impairment/loss on disposal of investments | 0.8 | 0.3 |
+-------------------------------------------------+--------------------------+--------+
| Gain on sale of intangible fixed asset | (5.8) | - |
+-------------------------------------------------+--------------------------+--------+
| Income tax expense | 2.3 | (0.6) |
+-------------------------------------------------+--------------------------+--------+
| ADJUSTMENTS TO LOSS FOR THE YEAR | 6.6 | 7.9 |
+-------------------------------------------------+--------------------------+--------+
8. Events After the Balance Sheet Date
In October 2008, the Group:
* Liquidated SA Independent Liner Services Pty Limited (SAILS). Losses totalling
GBP0.9 million for the period from 1 October 2008 to 15 October 2008 will be
reflected in the income statement for the year to 30 September 2009. At the date
of liquidation, the impact on the Group's financial position will be as follows:
+----------------------------------------------------------------------+-------------+
| | Recognised |
| | values |
| | GBPm |
+----------------------------------------------------------------------+-------------+
| Property, plant and equipment | 0.1 |
+----------------------------------------------------------------------+-------------+
| Trade and other receivables | 2.8 |
+----------------------------------------------------------------------+-------------+
| Cash and cash equivalents | 0.1 |
+----------------------------------------------------------------------+-------------+
| Non interest bearing financial liabilities | (2.0) |
+----------------------------------------------------------------------+-------------+
| Bank overdraft | (0.5) |
+----------------------------------------------------------------------+-------------+
| Trade and other payables | (6.6) |
+----------------------------------------------------------------------+-------------+
| Net identifiable assets and liabilities | (6.1) |
+----------------------------------------------------------------------+-------------+
| Minority interest | 3.8 |
+----------------------------------------------------------------------+-------------+
| Gain on disposal | (2.3) |
+----------------------------------------------------------------------+-------------+
* Signed an agreement to develop an aggregate project in Bengo Province, Angola.
* Participated in a placement of shares and options by Lonrho Mining Limited at a
cost of AUD $850,000, increasing its holding to 2 5.59%.
* Took effective control of the Rollex Group through Board representation. See
below for further details.
In November 2008, the Group:
* Raised GBP15.4 million before expenses through a placing of 308,846,000 new
ordinary shares of 1 pence each in the share capital of the Company at 5 pence
per share.
* Announced that e-KwikBuild, Lonrho's 30.37% owned associate, had completed and
commenced production from a new prefabricated production plant in Port
Elizabeth, South Africa.
In December 2008, the Group:
* Announced that e-KwikBuild, had been awarded two contracts in Angola for its
prefabricated buildings.
* Completed the acquisition of 51% of the Rollex Group, an agri-processing and
logistics company for GBP5.5 million. The Group subscribed for GBP1.1 million of
ordinary share capital with further deferred consideration of GBP4.4 million
based on the achievement of financial targets. The acquisition, which has an
effective date of 1 October 2008, had the following effect on the Group's assets
and liabilities at the acquisition date:
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| | Pre | Shares | Fair value | Provisional |
| | acquisition | GBPm | Adjustment | values |
| | Subscription | | GBPm | recognised |
| | of | | | on |
| | carrying | | | acquisition |
| | value | | | GBPm |
| | GBPm | | | |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| Property, plant and equipment Intangible assets | | - | 0.1 | 3.1 |
| Inventory | | - | - | 3.0 |
| Trade and other receivables | | - | - | 0.1 |
| | | - | - | 3.5 |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| Cash and cash equivalents | 0.8 | 1.1 | - | 1.9 |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| Interest-bearing loans and borrowings | (2.6) | - | - | (2.6) |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| Trade and other payables | (7.7) | - | - | (7.7) |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| NET IDENTIFIABLE ASSETS AND LIABILITIES | 0.1 | 1.1 | 0.1 | 1.3 |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| Minority interest | | | | (0.7) |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| Consideration paid* | | | | (1.3) |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| Deferred consideration | | | | (4.4) |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| GOODWILL ON ACQUISITION | | | | (5.1) |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| NET CASH INFLOW ARISING ON | | | | |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| ACQUISITION BEFORE DEFERRED CONSIDERATION | | | | 0.6 |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
| * The consideration includes GBP0.2 million | | | | |
| for acquisition costs. | | | | |
+-------------------------------------------------------+---------------+----------+-------------+--------------+
The intangible assets in the fair value of the assets acquired represent
customer relationships and contracts.
The goodwill arising on the acquisition of Rollex is attributable to the
investment in management and anticipated additional future profitability of the
business.
In January 2009, the Group:
* Signed a development agreement with the Angolan Government to develop 25,000
hectares of agricultural projects in Angola.
* Signed an agreement to become the John Deere tractor and agricultural equipment
distributor for Angola.
* Acquired 1,550,000 shares in LonZim Plc taking its total interest to a 24.25%
holding.
In February 2009, the Group:
* Announced the liquidation of Lonrho Mining SA (Pty) Ltd, a wholly owned South
African subsidiary of Lonrho Mining Ltd.
* Acquired a further 100,000 shares in LonZim Plc taking its total interest to a
24.53% holding.
* Announced that LonZim Plc had a 7.81% holding in the Company. This investment
had been built up in the period since the year end.
9. Explanation of transition to Adopted IFRS
These are the Group's first consolidated financial statements prepared in
accordance with Adopted IFRS.
The accounting policies set out have been applied in preparing the financial
statements for the year ended 30 September 2008, the comparative information
presented in these financial statements for the year ended 30 September 2007 and
in the preparation of an opening Adopted IFRS balance sheet at 1 October 2006
(the Group's date of transition).
In preparing its opening Adopted IFRS balance sheet, the Group has adjusted
amounts reported previously in financial statements prepared in accordance with
its old basis of accounting UK GAAP. An explanation of how the transition from
previous GAAP to Adopted IFRS has affected the Group's financial position,
financial performance and cash flows is set out in the following tables and the
notes that accompany the tables.
The Group has taken advantage of the relief in IFRS 1 to deem the cumulative
translation difference for all foreign operations to be zero at the date of
transition to Adopted IFRS.
Group balance sheets
+------------------------------+----------------------------------------+--+------+--+------------+---------+---+--+---------+----+--+------+
| | | UK GAAP | | Adopted | | | Adopted |
| | | | Effect | IFRS | UK | Effect | IFRS |
| | | | of | | GAAP | of | |
| | | | Transition | | | Transition | |
| | | | to Adopted | | | to Adopted | |
| | | | IFRS | | | IFRS | |
+------------------------------+----------------------------------------+------------+------------+---------+------+--------------+---------+
| | | 1 October 2006 | 30 September 2007 |
+------------------------------+----------------------------------------+-------------------------+-----------------------------------------+
| | Note | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| ASSETS | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Goodwill | (a), | 3.3 | - | 3.3 | 6.7 | (0.2) | 6.5 |
| | (d) | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Other intangible assets | (a), | - | - | - | - | 1.2 | 1.2 |
| | (d) | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Property, plant and | | 19.8 | - | 19.8 | 36.9 | | 36.9 |
| equipment | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Other investments | | - | - | - | 5.0 | - | 5.0 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Deferred tax assets | | - | - | - | 2.2 | - | 2.2 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL NON-CURRENT ASSETS | | 23.1 | - | 23.1 | 50.8 | 1.0 | 51.8 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Inventories | | 0.2 | - | 0.2 | 1.4 | - | 1.4 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Investments | | 7.1 | - | 7.1 | - | - | - |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Prepayments | | 0.2 | - | 0.2 | 0.8 | - | 0.8 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Trade and other | | 2.1 | - | 2.1 | 3.2 | - | 3.2 |
| receivables | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Cash and cash equivalents | | 20.7 | - | 20.7 | 15.2 | - | 15.2 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL CURRENT ASSETS | | 30.3 | - | 30.3 | 20.6 | | 20.6 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL ASSETS | | 53.4 | - | 53.4 | 71.4 | 1.0 | 72.4 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| EQUITY | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Issued share capital | | 2.2 | - | 2.2 | 2.8 | - | 2.8 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Share premium account | | 17.4 | - | 17.4 | 33.2 | - | 33.2 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Revaluation reserves | (d) | 1.6 | - | 1.6 | 1.5 | 0.1 | 1.6 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Share option reserve | | 0.1 | - | 0.1 | 2.2 | - | 2.2 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Foreign currency reserve | (d) | - | - | - | - | 0.2 | 0.2 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Retained earnings | (c) | 18.2 | (1.6) | 16.6 | 2.9 | (1.8) | 1.1 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL EQUITY ATTRIBUTABLE | | | | | | | |
| TO | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| EQUITY HOLDERS OF THE PARENT | | 39.5 | (1.6) | 37.9 | 42.6 | (1.5) | 41.1 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| MINORITY INTEREST | (c) | 0.5 | 1.1 | 1.6 | (0.2) | 1.8 | 1.6 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL EQUITY | | 40.0 | (0.5) | 39.5 | 42.4 | 0.3 | 42.7 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| LIABILITIES | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Other financial | | - | - | - | 1.8 | - | 1.8 |
| liabilities | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Obligations under finance | | | - | - | 1.1 | - | 1.1 |
| leases | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Deferred tax liabilities | (a),(b) | - | 0.5 | 0.5 | - | 0.7 | 0.7 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL NON-CURRENT | | - | 0.5 | 0.5 | 2.9 | 0.7 | 3.6 |
| LIABILITIES | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Interest-bearing loans and | | 4.3 | - | 4.3 | 4.3 | - | 4.3 |
| borrowings | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Other financial | | - | - | - | - | - | - |
| liabilities | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Current tax liabilities | | - | - | - | - | - | - |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Trade and other payables | | 9.1 | - | 9.1 | 21.6 | - | 21.6 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| Obligation under finance | | - | - | - | 0.2 | - | 0.2 |
| leases | | | | | | | |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL CURRENT LIABILITIES | | 13.4 | - | 13.4 | 26.1 | - | 26.1 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL LIABILITIES | | 13.4 | 0.5 | 13.9 | 29.0 | 0.7 | 29.7 |
+------------------------------+-------------------------------------------+------+---------------+-------------+------------+-------+------+
| TOTAL EQUITY AND | | 53.4 | - | 53.4 | 71.4 | 1.0 | 72.4 |
| LIABILITIES | | | | | | | |
+------------------------------+----------------------------------------+--+------+--+------------+---------+---+--+---------+----+--+------+
Reconciliation of Group loss for the year ended 30 September 2007
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| | Note | UK | Effect | Adopted |
| | | GAAP | of | IFRS |
| | | GBPm | transition | GBPm |
| | | | to | |
| | | | Adopted | |
| | | | IFRS | |
| | | | GBPm | |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Revenue Cost of sales | | 11.2 | - | 11.2 |
| | | (11.0) | - | (11.0) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| GROSS PROFIT | | 0.2 | - | 0.2 |
| Other operating income | | 0.4 | - | 0.4 |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Operating costs | (a),(d) | (15.6) | 0.9 | (14.7) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| OPERATING LOSS BEFORE FINANCE EXPENSE | | (15.0) | 0.9 | (14.1) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Finance income | | 0.5 | - | 0.5 |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Finance expense | (d) | (0.9) | 0.2 | (0.7) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| NET FINANCE EXPENSE | | (0.4) | 0.2 | (0.2) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Impairment of associates | | (3.4) | - | (3.4) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Profit on sale of fixed asset | (d) | 0.1 | (0.1) | - |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Share of loss of associates | (d) | (0.1) | (0.2) | (0.3) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| LOSS BEFORE TAX | | (18.8) | 0.8 | (18.0) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Income tax credit | | 0.6 | - | 0.6 |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| LOSS FOR THE PERIOD | | (18.2) | 0.8 | (17.4) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| ATTRIBUTABLE TO: | | | | |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Equity holders of the parent | | (15.5) | - | (15.5) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| Minority interest | (c) | (2.7) | 0.8 | (1.9) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| LOSS FOR THE PERIOD | | (18.2) | 0.8 | (17.4) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| BASIC EARNINGS PER SHARE (PENCE) | | (6.4) | - | (6.4) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
| DILUTED EARNINGS PER SHARE (PENCE) | | (6.4) | - | (6.4) |
+--------------------------------------------+-----------------+-------------------------+----------------------------+------------------+
a. IFRS 3 - Business combinations
Under IFRS 3, goodwill is not amortised but is measured at cost less impairment
losses. Under UK GAAP, goodwill was amortised on a straight line basis over the
period of its expected useful life. This adjustment increases profit before tax
and goodwill for the year to 30 September 2007 by GBP0.2 million.
IFRS 3 requires that intangible assets arising on acquisition, that are
separable or arise from contractual or other legal rights, be recognised as
intangible assets separately from goodwill. This adjustment results in
additional intangible assets of GBP1.3 million at 30 September 2007 with a
corresponding reduction in goodwill of GBP0.6 million and the creation of
negative goodwill of
GBP0.7 million which has been written off immediately in the income statement.
These adjustments give rise to a deferred tax liability and a corresponding
increase in goodwill of GBP0.2 million at 30 September 2007.
The intangible assets will be amortised on a straight line basis over their
expected useful economic life. This increases the loss before tax and decreases
intangible assets for the year to 30 September 2007 by GBP0.1 million.
b. IAS 12 - Deferred taxation
Under UK GAAP deferred tax was provided on timing differences that had
originated, but had not reversed, before the balance sheet date. IAS 12 requires
that deferred tax is provided on temporary differences based upon the recovery
of settlement of assets and liabilities recognised in the balance sheet.
As a result, an additional tax liability of GBP0.5 million has been provided on
translation. This change is as a result of property, plant and equipment being
revalued with no equivalent adjustment made for tax purposes.
c. Minority interest
Under UK GAAP the losses of a subsidiary undertaking are allocated against the
majority and minority in accordance with their respective shareholdings. IAS 27
requires losses of a subsidiary undertaking to be allocated against the majority
except to the extent that the minority has a binding obligation and is able to
make an additional investment to cover the losses. If the subsidiary undertaking
subsequently reports profits, such profits are allocated to the majority
interest until the minority's share of the losses previously absorbed by the
majority, have been recovered. Losses of GBP1.1 million have been allocated
against retained earnings in respect of this adjustment due to a binding
obligation not being in existence in respect of certain subsidiary undertakings
as at 1 October 2006 and an additional GBP0.7 million in respect of the year to
30 September 2007.
d. Presentational adjustments
The financial information is in Adopted IFRS format and reflects a number of
differences in presentation between UK GAAP and Adopted IFRS as follows:
(i) the disclosure of goodwill as separate from intangible assets on the balance
sheet;
(ii) the disclosure of deferred tax as a non-current asset/liability;
(iii) the classification of foreign exchange reserves arising on retranslation
of subsidiaries with a functional currency other than sterling from retained
earnings to other reserves;
(iv) the format of the income statement will be substantially similar to that of
the profit and loss account in the Group's previous UK GAAP financial
statements. The Companies Act schedule 4 format of the profit and loss account
is no longer used under Adopted IFRS.
(v) associated undertakings are equity accounted for under both IAS 28 and UK
GAAP. The only difference between the treatments of associates under Adopted
IFRS compared to UK GAAP is the disclosures in the income statement. The share
of post tax profits/losses of its associate were disclosed separately, with the
associates' tax charge included in the Group's tax charge. This had no effect
on the numbers in the periods disclosed.
(vi) the adjustments to the cash flow statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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