TIDMLONR
RNS Number : 4141V
Lonrho PLC
02 November 2010
2nd November 2010
These results (and comparative figures included therein) do not form audited
accounts nor have they been extracted from audited accounts. The results
disclosed in this trading update may potentially be subject to adjustments
during the year-end audit in respect of goodwill valuations and other minor
items. The comparative figures used are year on year due to the influence of
seasonality within the different businesses in the group.
LONRHO PLC
("Lonrho" or the "Company" or the "Group")
Lonrho reports strong growth with GBP33.6m turnover and a GBP2.9m profit for the
4th Quarter
Lonrho Plc (AIM:LONR) today announces its unaudited results for the fourth
quarter and the full year to 30 September 2010. The year has seen strong growth
in the existing business and Lonrho make several complementary strategic
acquisitions to further develop its core divisions. During the final quarter of
the financial year, the Company has generated GBP33.6m of turnover and a profit
before tax of GBP2.9m.
On 8 October the Company announced both the launch and completion of a US$60m
Convertible Bond offering, with a US$10m overallotment. The bond issue was
significantly oversubscribed and the US$70m bond was approved at a shareholder
meeting on the 29th October 2010. The primary use of the proceeds will be to
restructure existing expensive debt and provide capital for the fish and
agricultural division to maximise current opportunities.
Financial highlights for the quarter and year include:
· Group turnover from continuing operations in the quarter, at GBP33.6m,
has increased 13% ahead of the same quarter in the prior year.
· Full year, turnover has increased by 20% to GBP107.7m.
· In the final quarter of 2010 the Group has achieved EBITDA of GBP5.1m.
This brings the full year figure to GBP9.4m, a GBP7.2m increase on 2009.
· Profit before tax for the quarter was GBP2.9m, compared to a GBP0.6m loss
in the final quarter of the previous financial year.
· Full year profit before tax stands at GBP0.5m, compared with a loss of
GBP4.5m for the financial year to 30th September 2009.
· Net Assets at the year end stood at GBP100.3m, compared with GBP101.9m as
at 30th June 2010.
· Cash balances in the Group at year end were GBP7.7m.
· Company market capitalisation was GBP128.9m at 30th September 2010. By
1st November 2010 this had risen to over GBP200m.
Operational highlights for the quarter include:
· Following an eight month in store trial, Oceanfresh, the Lonrho
Agricultural division fish distributor has commenced sales of Oceanfresh branded
wild caught, sustainably sourced, frozen hake fillets into the major US retailer
Costco. The initial range being supplied to Costco has already grown with the
addition of Oceanfresh Magic Kiddies Fish Fingers and four other lines to be
delivered into the Costco range shortly. Oceanfresh is implementing a roll out
plan with Costco to enter all the stores which Costco operates throughout the US
and UK.
· During the quarter, Lonrho completed the purchase of the remaining 49% of
Fresh Direct. The business has volume production agreements on 200 hectares of
commercial farmland and as a result of agreed planting programmes, the Lonrho
Agriculture division has installed irrigation equipment and planted over 120,000
fruit trees during the year. These will be delivering volume commercial crops
during the coming financial year and have already started yielding fruit for
Tesco, Sainsbury's and Waitrose in the UK.
· A contract from Xstrata Mining for Lonrho to establish a community based
commercial farming and agri-processing project site is a template project that
has significant future potential. Directly aligned with President Zuma's
Comprehensive Rural Development Programme (CRDP) the project, funded by Xstrata,
will develop community based viable standard farms that act as cooperatives and
through the existing Lonrho agri-logistics cold chain have access to both
domestic and international commercial markets.
· Tenaris, a world leading supplier of pipes, tubular products and related
services, has become a large client at Luba Freeport during the quarter. The
arrival of Tenaris, plus that of Noble Energy and Dickerman, re-enforces Luba's
position as the premier oil services port in the region and will continue to
drive growth for 2011.
· Lonrho has strengthened management during the quarter with the
appointment of Kiran Morzaria as a non-executive director on the Board of
Lonrho, Ewan Cameron as CEO of the Lonrho Hotel division and Roger Stringer as
Commercial Director at Kwikbuild.
Divisional Highlights:
Agribusiness
The integration and growth of Oceanfresh, the Lonrho fish distributer, has
worked well having strong synergies with the existing Lonrho cold store and
processing capabilities. The increasing demand for wild caught, sustainably
sourced fish from Southern Africa is a strong growth opportunity.
· Agribusiness divisional turnover for the quarter increased 28% to
GBP17.7m bringing turnover for the full year to GBP55.3m, an increase of 19%.
· A contract from Xstrata Mining for Lonrho to establish a community based
commercial farming and agri-processing project site is a template project that
has significant future potential. The project is directly aligned with President
Zuma's Comprehensive Rural Development Programme (CRDP) and the Government Rural
Development and Land Reform plans. The project, funded by Xstrata as part of
their Social and Labour Plan will develop community based viable standard farms
that act as cooperatives and through the existing Lonrho agri-logistics cold
chain have access to both domestic and international commercial markets.
· Export freight tonnages of fruit and vegetables by Rollex during the
quarter rose by 27% compared to the same quarter in the prior year to nearly
4,800 tonnes, an increase of 29% on the previous quarter. This was partially
offset by lower domestic volumes within South Africa and reduced volumes of
general cargo travelling northbound from Johannesburg. The exceptional strength
of the Rand (13% stronger year on year) also impacted on reported sterling
figures which fell by 5.9%,
· As mandated at the start of the year, Rollex has concentrated on
improving margins by increasing processing efficiencies, rationalising costs
where possible and negotiating better terms from customers. The success in this
strategy can be measured in the gross margin which for the quarter stands at
15.4%, compared to 13.0% in the prior year.
· During the quarter, Oceanfresh Seafoods (51% holding) has commenced
delivery of product to Costco in the US. After an initial eight month evaluation
period, Oceanfresh is now supplying Costco with Hake fillets throughout the Los
Angeles, San Diego and Texas regions with a phased rollout starting in the
Chicago and the Northwest regions and building to all stores by mid 2011.
· Following on from the success of the Hake fillet product, Costco has now
agreed to add two further lines commencing delivery by early 2011 including
Oceanfresh Kiddies Magic Fish Fingers before Christmas and the Oceanfresh Hake
Light launching in the 1st week of January 2011. Costco has now approved six
separate Oceanfresh lines.
· As well as success in export markets, Oceanfresh has been thriving in the
domestic South African market. Checkers have recently awarded Oceanfresh the
title of 'supplier of the year' and added a further 2 new Oceanfresh deli items
to their buying list. Shoprite has become a new customer for Oceanfresh joining
the other South African retail chains.
· On 28 August, Lonrho completed the acquisition of the remaining 49%
minority interest in Fresh Direct. The consideration was settled by the issue of
78,221,479 new ordinary shares at a price of 10.98p, a total purchase price of
GBP8.58m.
· Lonrho Agricultural division has now installed irrigation facilities on
200 hectares of farmland and has, to date, planted 122 hectares with 120,000
fruit trees and more than 10,000 blueberry bushes. The remaining 78 hectares are
due to be planted in the coming financial year taking the total number of plants
to over 200,000. The first crop has begun harvesting with peaches being sent to
Tesco, Sainsbury's and Waitrose in the UK.
· During the quarter, Trak-Auto (100% holding) has started to supply highly
competitively priced John Deere tractors manufactured in their Indian factory to
the Mozambique market. Trak-Auto is seeing strong growth in the local market and
increasing margins. On the back of the continued success of selling John Deere
units, Trak-Auto has generated growth in its parts and servicing business,
adding a strong continuing turnover stream in spares and service.
Transport
The transport division has seen another strong quarter with load factors
increasing 19% on the prior year. The division is well placed for growth in the
coming financial year with the launch of the Angola and Ghana hubs completing
the core pan-African network.
· Fourth quarter turnover in the transport division was GBP6.7m, taking the
full year figure to GBP21.3m. After adjusting the prior year for GBP2.6m of
exceptional revenue from the sale of aircraft, this equates to an annual
increase of 14%.
· Fly540 Angola, after a long drawn out bureaucratic process, is ready to
commence commercial operations. The operations have undergone an extensive ICAO
audit and Fly540 Angola will be the only private sector airline in Angola that
is ICAO registered. The Angolan regional and domestic market remains
significantly under serviced and the demand for Fly540 Angola is evident at all
levels.
· Fly540 Uganda (100% holding) during the quarter signed an agreement with
Chapman Freeborn, the world leading air charter service company. This joint
venture will help to expand the capabilities of Fly540 Uganda and add further
clients to the Fly540 Group through the association with Chapman Freeborn.
· Fly540 Kenya (49% holding + board control) has commenced flying the
Nairobi to Dar es Salaam route during the quarter. The route has helped to
increase passenger numbers on the airline and increased profitability.
Additionally, the airline will begin servicing coastal routes to Ukunda and
Diani in November of 2010 to give Fly540 an even more comprehensive portfolio of
routes.
· The Fly540 group has signed operating lease agreements for 2 additional
CRJ regional jet aircraft which will be added to the fleet in Kenya and Tanzania
(90% holding). The additional capacity that these aircraft add will allow the
group to increase passenger numbers and profitability in 2011.
Infrastructure
Luba Freeport and Kwikbuild have finished the year with very strong performance
significantly increasing turnover in comparison to Q4 2009. The Infrastructure
divisional turnover has increased 49% from the same quarter last year, with new
clients at Luba and projects with the Department of Health and Western Cape
Department for Education at Kwikbuild helping to fuel the growth.
· For the final quarter of 2010, Luba Freeport recorded turnover of
GBP2.7m, a 39% increase compared to the same quarter in the prior year. The
continuing growth in quality of services provided by the port has meant that
annual turnover has grown to GBP11.0m, up from GBP8.0m in the prior year.
· During the quarter, Luba Freeport (63% holding) has added 2 further
clients to an already strong client list, Tenaris and Dickerman.
· Tenaris is a world leading supplier of pipes, tubular products and
related services for the world's energy industry and will provide products and
services to the oil companies operating from Luba Freeport and in the Gulf of
Guinea from their new logistics facility at Luba.
· The fourth quarter has also seen Dickerman added to the service providers
at Luba. Dickerman has been one of the world leaders in surface preparation and
coating activities both offshore and onshore for 30 years. Their move to Luba
further extends the servicing capability of the port and further advances the
objective for Luba to be the one stop shop for all oil companies in the region.
· Kwikbuild has added GBP0.7m to turnover in the final quarter compared to
GBP0.3m in the prior year, a GBP0.4m increase. Annual turnover of GBP3m is more
than twice the GBP1.3m achieved in 2009, with a strong order book entering the
new year.
· During the quarter, e-Kwikbuild (51% holding) has delivered a medical
laboratory in Kwa Zulu Natal for the Department of Health. The Laboratory has
been well received to the extent that Kwikbuild has since received an order for
a Tuberculosis testing laboratory in Somerset West. This is a pilot unit for the
national rollout of these Laboratories. The programme is part of a drive to try
and stem the expansion of TB and to treat the 10 million sufferers of the
disease in South Africa.
Hotels
The hotel division has had a steady quarter. The Hotel Cardoso continues to
perform well in the Maputo marketplace with the Grand Karavia business building
month on month since the formal opening by President Kabila.
· The hotel division, driven by the continued strong performance of the
Cardoso and the opening of the Grand Karavia, has increased quarterly turnover
to GBP2.1m from GBP1.3m in the prior year, a 68% increase. In the twelve months
to September 2010 the total turnover generated in the hotels division stood at
GBP5.9m, 71% higher than the GBP3.4m in 2009.
· During the quarter, given the growth opportunities for the division, a
new CEO for Lonrho Hotels has been recruited to the team. Ewan Cameron, who
joins having worked with some of the world's strongest hotel brands,
(InterContinental, Holiday Inn, LeMeridian, Grosvenor House and Crowne Plaza)
will manage the growth of the Lonrho hotels division as the portfolio of
properties increases through a combination of new acquisitions, redevelopments
and further management contracts.
· The Cardoso hotel (59% holding + Management Contract) continues to
deliver strong performance. Both occupancy and room rates have been impressive
in the final quarter of the year. Occupancy continues to remain around 80% with
room rates having increased 24% on the prior year.
· Food and beverage sales at the Cardoso have also been strong. With the
new Fiamma restaurant and conference centre, the hotel has been able to tap into
the conference market in Maputo and prove its ability to hold exceptional
events.
· The Grand Karavia hotel (50% holding + Management Contract) is now fully
operational. During the quarter the hotel has hosted a number of large functions
which have helped to prove the hotels capability to hold such events and also
helped to raise the profile of the hotel amongst businesses in the area. The
mining sector in Lubumbashi is seeing a resurgence of confidence driven by
Freeport McMorran, the single largest project, settling the terms of its mining
licence in October.
· The Leopard Rock hotel (Management Contract) has continued to attract
conferences, tourists and golfers to the superb resort and golf course. Having
completed the refurbishment program, the resort is seeing growing occupancy
levels. The resort is in the process of organising a Pro-Am event which will
attract some of the top South African PGA professionals to be held early in
2011.
Support Services
Thanks to project wins for Bytes & Pieces at Riversdale and Tribunal
Adminstrativo, as well as the continued growth of IndIT and the CES businesses,
the support services division has recorded its strongest quarter to date.
· The support services division has in the final quarter of 2010 achieved a
record turnover figure of GBP3.6m. This result is 27% higher than the same
quarter in the prior year, with annual turnover increasing 22% in the division
to GBP11.1m.
· Bytes & Pieces, Mozambique's largest IT services company, saw fourth
quarter turnover increase 43% on the same quarter in the prior year, recording
its best ever quarterly turnover thanks to large project wins.
· Bytes & Pieces (65% holding) have won the tender to implement the IT
infrastructure for Riversdale Mozambique (a coal mining operation in Tete,
Mozambique). The solution involved implementation of a turnkey solution over
three sites, supplying, installing and configuring of the Riversdale servers,
storage and workstations. Bytes & Pieces also won the Managed Services contract
for Riversdale IT and continues to provide ongoing support and service. This
contract is worth US$120,000 to Bytes & Pieces per annum..
· Tribunal Adminstrativo, the organization which handles contracts for the
Government of Mozambique has awarded Bytes & Pieces the contract for the
installation of their Wide Area Network (WAN). The project involves designing
and implementing the IT network infrastructure, WAN optimization and
post-installation services. This contract is valued at US$600,000.
· CES Zambia (50% holding) have achieved sales 20% ahead of budget in the
year. Having started trading in the current financial year, the business has
managed to build a significant blue chip customer base and achieved sales in
excess of US$1.2m.
· During the quarter, IndIT (45% holding + board control) has seen strong
sales progress in sales of Cyberoam products. IndIT is the sole distributor of
Cyberoam, a comprehensive network security product, in South Africa, and has
additionally held certification training for re-sellers.
· IndIT has successfully launched its new website. Including regularly
updated downloadable guides and product data it has lead to increased contact
with customers resulting in increased sales.
Outlook
Lonrho has reached an important point in its development. Having moved into
profitability for the financial year and following on from its successful bond
issue, the Company is in a position of strength entering the new financial year
to deliver further growth. The opportunities now being implemented by Oceanfresh
in the US and the imminent launch of Fly540 Angola and Ghana, the recent opening
of new hotels, new clients arriving at Luba and the continued growth of the
African economy mean the Group is well positioned to deliver substantial growth.
David Lenigas, Lonrho's Executive Chairman commented:
"The solid foundations of the business are in place and performing well and
Lonrho is now seeing profits emanating from its investments. The beneficial
financial results from the capital expenditure into our core divisions are
becoming more and more evident.
This will be a continuing trend as further investment that has been made during
the past year comes online and contributes to results. The capital expenditure
programmes at Fly540 Angola, John Deere Angola, the Karavia hotel, Luba Freeport
and Lonrho Agriculture are practically complete and these businesses will be
delivering additional growth for Lonrho during the coming financial year.
Management teams have been strengthened to support the forecasted growth in the
coming twelve months and the Company remains focused on its five core divisions
: agriculture, infrastructure, transport, hotels and support services and
continues to operate in seventeen countries thus de-risking the Company's
operations geographically.
Lonrho is one of the first UK mid-caps to successfully place a convertible bond
(US$ 70m) since the financial crisis. The demand for the bond from existing
stakeholders and other institutional investors emphasises the growing confidence
in the Lonrho business as well as in Africa as an emerging market."
+-----------+-------------+------------+------------+----------+----------+
| Reported Figures | | | | |
+-------------------------+------------+------------+----------+----------+
| Lonrho Group | | | | |
+-------------------------+------------+------------+----------+----------+
| Divisional | | | | |
| Turnover, GBP000s | | | | |
+-------------------------+------------+------------+----------+----------+
| | | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | | 3 months to | | |
+-----------+-------------+-------------------------+----------+----------+
| | | 30 | 30 | Variance | Var % |
| | | September | September | | |
| | | 2010 | 2009 | | |
+-----------+-------------+------------+------------+----------+----------+
| Agribusiness | | | | |
+-------------------------+------------+------------+----------+----------+
| | Rollex | 13,009 | 13,825 | (816) | (5.9%) |
+-----------+-------------+------------+------------+----------+----------+
| | Other | 4,713 | 0 | 4,713 | N/a |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 17,721 | 13,825 | 3,896 | 28.2% |
+-----------+-------------+------------+------------+----------+----------+
| Transport | | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | 540 | 6,747 | 6,870 | (123) | (1.8%) |
| | Group | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Aircraft | 0 | 2,600 | (2,600) |(100.0%) |
| | Sales* | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 6,747 | 9,470 | (2,723) | (28.8%) |
+-----------+-------------+------------+------------+----------+----------+
| Support Services | | | | |
+-------------------------+------------+------------+----------+----------+
| | Bytes & | 2,331 | 1,632 | 699 | 42.9% |
| | Pieces | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Other | 1,290 | 1,221 | 69 | 5.6% |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 3,621 | 2,853 | 768 | 26.9% |
+-----------+-------------+------------+------------+----------+----------+
| Infrastructure | | | | |
+-------------------------+------------+------------+----------+----------+
| | Luba | 2,710 | 1,950 | 760 | 39.0% |
| | Free | | | | |
| | Port | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | e-Kwikbuild | 671 | 317 | 354 | 111.6% |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 3,381 | 2,267 | 1,114 | 49.1% |
+-----------+-------------+------------+------------+----------+----------+
| Hotels | | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Hotel | 1,183 | 849 | 334 | 39.4% |
| | Cardoso | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Other | 957 | 425 | 532 | 125.2% |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 2,141 | 1,274 | 867 | 68.0% |
+-----------+-------------+------------+------------+----------+----------+
| Total Turnover | 33,611 | 29,689 | 3,922 | 13.2% |
+-------------------------+------------+------------+----------+----------+
| | | | | | |
+-----------+-------------+------------+------------+----------+----------+
| * In the fourth quarter of the year to 30th September 2009, |
| Lonrho aviation sold an aircraft held for resale for proceeds |
| of GBP2.6m |
+-------------------------------------------------------------------------+
| | | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | | 12 months to | | |
+-----------+-------------+-------------------------+----------+----------+
| | | 30 | 30 | Variance | Var % |
| | | September | September | | |
| | | 2010 | 2009 | | |
+-----------+-------------+------------+------------+----------+----------+
| Agribusiness | | | | |
+-------------------------+------------+------------+----------+----------+
| | Rollex | 48,148 | 46,529 | 1,619 | 3.5% |
+-----------+-------------+------------+------------+----------+----------+
| | Other | 7,145 | 0 | 7,145 | N/a |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 55,293 | 46,529 | 8,764 | 18.8% |
+-----------+-------------+------------+------------+----------+----------+
| Transport | | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | 540 | 21,339 | 18,765 | 2,574 | 13.7% |
| | Group | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Aircraft | 0 | 2,600 | (2,600) |(100.0%) |
| | Sales | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 21,339 | 21,365 | (26) | (0.1%) |
+-----------+-------------+------------+------------+----------+----------+
| Support Services | | | | |
+-------------------------+------------+------------+----------+----------+
| | Bytes & | 7,481 | 6,773 | 708 | 10.5% |
| | Pieces | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Other | 3,627 | 2,339 | 1,288 | 55.1% |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 11,108 | 9,112 | 1,996 | 21.9% |
+-----------+-------------+------------+------------+----------+----------+
| Infrastructure | | | | |
+-------------------------+------------+------------+----------+----------+
| | Luba | 11,024 | 7,974 | 3,050 | 38.3% |
| | Free | | | | |
| | Port | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | e-Kwikbuild | 3,010 | 1,276 | 1,734 | 135.9% |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 14,034 | 9,250 | 4,784 | 51.7% |
+-----------+-------------+------------+------------+----------+----------+
| Hotels | | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Hotel | 4,350 | 3,022 | 1,328 | 44.0% |
| | Cardoso | | | | |
+-----------+-------------+------------+------------+----------+----------+
| | Other | 1,534 | 425 | 1,109 | 261.0% |
+-----------+-------------+------------+------------+----------+----------+
| | Sub-Total | 5,885 | 3,447 | 2,438 | 70.7% |
+-----------+-------------+------------+------------+----------+----------+
| Continuing | 107,659 | 89,703 | 17,956 | 20.0% |
| Operations | | | | |
+-----------+-------------+------------+------------+----------+----------+
Enquiries
+---------------------------------------+---------------------+
| Lonrho Plc | |
+---------------------------------------+---------------------+
| David Lenigas, Executive Chairman | +44 (0)20 7016 5105 |
+---------------------------------------+---------------------+
| Geoffrey White, Chief Executive | +44 (0)20 7016 5105 |
| Officer | |
+---------------------------------------+---------------------+
| David Armstrong, Finance Director | +44 (0)20 7016 5105 |
+---------------------------------------+---------------------+
| Emma Priestley, Executive Director | +44 (0)20 7016 5105 |
+---------------------------------------+---------------------+
| | |
+---------------------------------------+---------------------+
| Beaumont Cornish Limited(Nomad) | |
+---------------------------------------+---------------------+
| Rosalind Hill Abrahams | +44 (0) 20 7628 |
| | 3396 |
+---------------------------------------+---------------------+
| Roland Cornish | |
+---------------------------------------+---------------------+
| | |
+---------------------------------------+---------------------+
| Pelham Bell Pottinger | |
+---------------------------------------+---------------------+
| Charles Vivian | +44 (0) 20 7861 |
| | 3126 |
+---------------------------------------+---------------------+
| | +44 (0) 7977 297 |
| | 903 |
+---------------------------------------+---------------------+
| James MacFarlane | +44 (0) 20 7861 |
| | 3864 |
+---------------------------------------+---------------------+
| | +44 (0) 7841 672 |
| | 831 |
+---------------------------------------+---------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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