TIDMLONR
RNS Number : 3933X
Lonrho PLC
06 December 2010
6 December 2010
Lonrho Plc
("Lonrho" or the "Company")
Results for the year ended 30 September 2010
Lonrho (AIM:LONR), the conglomerate focused on investing in and building
businesses in Africa, is pleased to publish its audited results for the year
ended 30 September 2010. These are broadly in line with the quarterly report and
trading update released on 2nd November 2010.
Lonrho has continued to develop its investments in agribusiness, infrastructure,
transportation, hotels and support services.
Financial review
The trading results remain in line with the Company's expectations. The year has
seen strong growth in the existing businesses and Lonrho made several
complementary strategic acquisitions to further develop its core divisions.
· Turnover on continuing operations increased by 20% to GBP107.8m
(up from GBP89.7m in 2009)
· Net assets increased to GBP127.7m (up from GBP81.1m in 2009)
· Profit before tax on continuing operations was GBP0.5m (2009:
loss of GBP5.9m)
David Lenigas, Executive Chairman of Lonrho commented:
"This has been a strong year for Lonrho. The foundations are already in place in
each Group division to deliver the budgeted expansion in the coming year. We are
seeing growing demand for our core services across all the seventeen countries
in which Lonrho operates.
Africa is making real progress, stimulated by a population that has reached one
billion people and the booming oil and mineral industries that are driving
economic growth and the concerns about global food shortages that are
stimulating the agriculture sector. "
LONRHO ENQUIRIES
Lonrho Plc +44
(0)20 7016 5105
David Lenigas, Executive Chairman +44 (0)7881 825378
Geoffrey White, Chief Executive Officer +44 (0)7717 307 308
David Armstrong, Finance Director +44 (0)7833 054 693
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
Beaumont Cornish Limited (Nomad)
Rosalind Hill Abrahams +44 (0)20 7628
3396
Roland Cornish +44
(0)20 7628 3396
Statutory accounts
The financial information set out in this announcement does not constitute the
Company's statutory accounts for the years ended 30 September 2010 or 2009. The
financial information for the year ended 30 September 2009 is derived from the
statutory accounts for that year. The audit of statutory accounts for the year
ended 30 September 2010 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.
Lonrho's full annual report and financial statements are published on its
website (www.lonrho.com) today and are being posted to shareholders next week.
Chairman's Statement
David Lenigas
Executive Chairman
3 December 2010
I am delighted to report to shareholders that Lonrho is making excellent
progress. Lonrho is specific in that it is exclusively focused on the growth
opportunities relating to the emerging African economy.
We are tremendously proud of the Lonrho legacy of more than one hundred years of
building real businesses across the continent. Hundreds of thousands of people
have had their lives improved by Lonrho over the years, and the Group continues
to create employment and prosperity where it operates.
Private sector investment is a real driver of sustainable economic development
in Africa. Lonrho operates in seventeen countries and our portfolio of
businesses is strategically focused on business sectors that are an integral
part of the growth of Africa.
Lonrho's five core philosophies continue to be clearly defined as:
· 100% focus on Africa.
· Geographical diversity across the continent to mitigate risk.
· Operations in five separate divisions, each independent of the other.
· Focus on servicing the requirements of the oil, agriculture and mineral
sectors, the drivers of economic growth in Africa.
· Build the highest quality management teams and operate to international
standards.
In Africa the opportunities for responsible businesses are significant. The
continent today has over one billion people. By 2050 it will have doubled to two
billion, equating to 22% of the global population (UN population division).
According to a McKinsey report in 2010, Africa is forecast to have 128 million
households with disposable income by 2020.
Gross domestic product (GDP) in Africa between 2000 and 2010 increased on
average at 5.5% per year, with many countries delivering double digit growth.
External debt has decreased from 65% of GDP to 23% and investment has grown from
17% of GDP to 23%. A 2010 McKinsey report on Africa forecast that Africa's
collective GDP will reach US$ 2.6 trillion (GBP1.67 trillion) by 2020.
Africa now has some of the fastest growing economies in the world primarily
driven by the expanding oil, gas and mineral industries. As a result, Africa is
seeing growing attention from the global investment community, which is
gradually becoming more aware of the economic potential of the continent.
Increasing political stability, growing foreign direct investment and improving
levels of transparency are all assisting economic growth. The increasing number
of success stories in Africa, such as Angola, Ghana, Equatorial Guinea and
Mozambique, are delivering real economic progress and offer some of the most
exciting growth opportunities globally. However, the continent continues to
suffer from a widely portrayed international perception that is outdated and
years behind the reality of progress on the ground.
Lonrho is successfully working with the growing economies in Africa and is
helping to deliver the infrastructure and service related industries that are
essential to support growth.
Chief Executive's Statement
Geoffrey White
Director and Chief Executive Officer
3 December 2010
Lonrho has had a good year. The Group is showing growth across all divisions
and, importantly, the management teams across the Group operations have
delivered on the objectives set by management for the past twelve months.
Financial highlights for the year include:
· Turnover on continuing operations increased by 20% to GBP107.8m.
· EBITDA of GBP9.4m, a GBP7.2m increase on 2009.
· Full year profit before tax on continuing operations was GBP0.5m,
compared with a loss of GBP5.9m for the financial year to 30 September 2009.
· Net assets at year end stood at GBP127.7m compared with GBP81.1m as at
30 September 2009.
· Cash balances in the Group at year end were GBP7.8m.
The Group is in a strong position with each division performing well, with sound
management teams in place to continue to drive development and further growth.
The Group remains focused on prudent investment in the emerging African market.
With geographical and industry diversity, the Group significantly mitigates risk
from both a political and commercial perspective.
Lonrho has continued to focus on its five current divisions: agribusiness,
infrastructure, transportation, hotels and support services. Each of these has
clear opportunity for organic growth. The foundations of the businesses in each
divisional sector are established and successful, and the corporate strategy for
the coming year is to develop and replicate existing businesses to increase
turnover and profitability and to build a wider geographical spread.
Margins are constantly reviewed for each division and compared with industry
standards. As individual businesses expand, margins often have the ability to be
increased as scale reduces operational costs and greater volumes improve
purchasing and logistics overheads.
Quality human resources are key to success in any market, but especially in an
emerging market. Lonrho makes great efforts to ensure that its divisional and
operational management are of the highest possible calibre and are top of their
industry sectors. This is fundamental to the corporate aim of meeting
international standards of operations in all of Lonrho's businesses. As the
Group develops, so its ability to retain and develop existing management and to
attract quality new management for growth improves.
The Group focuses on servicing the requirements of the oil, mineral and
agriculture sectors in Africa. The countries that have significant oil, mineral
or agricultural output are those where the strongest growth can be seen. As a
consequence of this policy, Lonrho's businesses typically operate in an
environment that is delivering strong market growth.
Outlook
Lonrho has reached an important point in its development. Having moved into
pre-tax profitability for the financial year and following on from its
successful bond issue after the financial year end, the Group is entering the
new financial year well funded with several new projects coming on stream to
deliver further growth.
During the financial year Lonrho continued with its investment program in a
number of new projects across the Group that the Directors believe will be
reflected in further growth for the 2011 financial year.
Chief Executive's Review
New Lonrho businesses
New businesses within the Group include:
Grand Karavia Hotel
The Grand Karavia hotel in Lubumbashi, the centre of the Democratic Republic of
Congo copper province, was opened by President Kabila on 15 June 2010. The only
international standard hotel in the centre of the burgeoning copper region, the
Grand Karavia has seen immediate strong demand for the hotel and its conference
facilities. The hotel commenced official trading after the Presidential opening
and will be a significant addition to the revenue and profitability of the Group
for the coming year.
Oceanfresh
In June 2010 Lonrho acquired a 51% stake in Oceanfresh, a leading vertically
integrated producer and supplier of premium, sustainable seafood sourced from
Southern Africa, including Mozambique, Namibia and South Africa. As a result of
synergies in processing and handling with existing Lonrho agricultural
businesses, significant operational cost efficiencies have been achieved. As a
result of joining the Lonrho Group, Oceanfresh has been able to expand its core
business outside of its traditional South African retail markets and post year
end has commenced volume deliveries into the European and US markets.
The demand for wild (not farmed) sustainable sourced fish is growing globally.
Oceanfresh fulfils this requirement. There is grave concern about sustainable
fishing practices in many traditional fishing grounds, with claims of
overfishing, quota abuse and depletion of fish stocks threatening the long term
survival of many species. Oceanfresh operates within, and supports, the World
Wildlife Foundation SASSI (Southern Africa Sustainable Seafood Initiative).
Lonrho is committed to helping to ensure that wild fish stocks are managed
responsibly and that stocks will continue for the benefit of generations to
come. The scheduled roll-out of Oceanfresh products to the international markets
in the USA and Europe during 2011 will establish Oceanfresh as one of the
leading international seafood brands.
John Deere
The investment that was made during 2010 in the John Deere distributorship in
Angola will allow the new facility, incorporating sales, servicing and training,
to open early in 2011. The Angolan Government is funding the rapid rebuilding of
the agricultural sector across Angola. Historically, agriculture was a very
successful economic sector for Angola. The abundant water, land and the ideal
climate gives Angola an enormous agricultural potential for serving both the
domestic and export market. The availability of quality equipment, servicing and
training from Lonrho's John Deere operations in Angola are an essential element
of the support necessary for the growth in this sector.
Trak Auto
In April 2010 the Group acquired 100% of Trak Auto, the John Deere and Komatsu
equipment dealership in Mozambique. During the year, Trak Auto started to supply
highly competitively priced John Deere tractors manufactured in their Indian
factory to the Mozambique market.
Fly540 Angola
The demand for an international standard domestic and regional airline in the
booming Angolan economy is clearly evident. The establishment of Fly540 Angola
and the process of launching the first private sector International Civil
Aviation Organisation (ICAO) registered airline for Angola has been a long and
difficult procedure. This has involved the training and education of staff to
the standards required for an international airline. Fly540 Angola should
commence commercial operation by the end of 2010.
Post year end bond issue
In October 2010 the Company completed the issue of US$70m (GBP44.3m) Guaranteed
Convertible Bonds due 2015 ("Bonds"). The bond issue was significantly
oversubscribed and was approved at a shareholder meeting on 29th October 2010.
The proceeds of the Bonds will be used to restructure some expensive debt within
the Lonrho divisions and provide the capital necessary for the agribusiness
division to meet the targeted development schedules for 2011 into the US and
European markets.
A review of the five divisions follows:
Agribusiness
Lonrho's Agribusiness division remains the Group's largest division, providing
51% of Group turnover.
The division focuses on the vertical integration of the Southern African
agricultural sector, providing the production, sourcing, logistics, processing
and distribution of agricultural products from Southern Africa to the consumer,
both to the domestic market and globally.
Lonrho Agribusiness focuses on the fruit, vegetable, fish and meat sectors,
working closely with a wide range of the leading retailers in South Africa and
internationally in Europe, the USA, Middle East, and Scandinavia.
Agro-economic forecasts are raising growing concerns regarding the worldwide
capabilities for the global agricultural industry to meet future demand. The
United Nations Food and Agriculture Organisation predict that global agriculture
will have to increase 70% to meet food demand forecasts by 2050. The situation
is being made worse by the continual depletion of historic water supplies
available for traditionally agriculturally productive regions, changing global
climate patterns and increasing desertification.
Southern Africa is seen as a partial solution to the pending threat. Southern
Africa has abundant under-utilised land, a willing labour force and the ideal
climatic conditions (rainfall and heat units) to become a significant global
source of food. Africa has more than a quarter of the world's arable land yet
only generates 10% of global agricultural production (UNFAO). The potential is
tremendous.
Lonrho focuses operations on what it believes is the strongest potential
production belt across the continent, from Angola across to Mozambique,
including Zimbabwe, Zambia, and the south of the DRC and Kenya. This region,
including South Africa, not only has the correct elements in place to be
productive, it also has a strong domestic consumer market and efficient logistic
access to highly competitive air freight capabilities out of Johannesburg to
deliver to the international marketplace.
The Southern African region is becoming an important agricultural producer for
the world, and Lonrho Agriculture is aligned with this growth opportunity with
operations in South Africa, Mozambique, Zimbabwe, Zambia and Angola. The
division is well positioned to benefit from the forecast growth across the
region.
Agribusiness highlights
· Agribusiness divisional turnover for the full year increased 19% to
GBP55.3m.
· In May 2010 the Group increased its holding in Rollex to 100% by
acquiring the remaining 49% not previously owned. In August 2010 the Group also
increased its holding in Fresh Direct to 100% by acquiring the remaining 49% not
previously owned.
· Irrigation equipment has been installed on 200 hectares of land and
approximately 119,000 fruit trees were planted during the year. These will be
delivering volume commercial fruit crops during the coming financial year and
have already started yielding produce for Tesco, Sainsburys and Waitrose in the
UK.
· An agreement has been reached with Xstrata for Lonrho to establish a
community based commercial farming and agri-processing project site, which 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 farms that act as cooperatives.
Through the existing Lonrho logistics cold chain the farms will have access to
both domestic and international commercial markets.
· During the year, Rollex made good progress on improving margins by
increasing processing efficiencies, rationalising costs where possible and
negotiating better terms from customers. Gross margins for the final quarter
stood at 15%, compared to 13% for the final quarter in the previous year.
· Following an eight month evaluation period, Oceanfresh is now supplying
Costco with hake fillets throughout Los Angeles, San Diego and Texas with a
phased roll-out starting in Chicago and the Northwest regions, building to all
US stores by mid-2011. Following on from the success of the hake fillet product,
Costco has now agreed to include six new lines commencing delivery in early
2011.
· Checkers, a leading South African retailer, has recently awarded
Oceanfresh the title of 'supplier of the year' and added a further two new
Oceanfresh product lines to their buying list. Shoprite has also become a new
customer for Oceanfresh.
Infrastructure
West Africa is seeing a spate of exploration projects for the oil industry, and
indicated oil and gas reserves and proven resources for the region are growing
fast. West Africa's traditional oil producer, Nigeria, is now only one of
several economies seeing rapid economic development on the back of oil revenues.
Angola became the Chair of OPEC and has increased production to over 2 million
barrels a day, arguably becoming Africa's largest producer. Equatorial Guinea,
Ghana, Gabon and the DRC all have growing oil industries and some estimates
indicate that up to 25% of global oil resources may be in Africa.
The USA currently sources 18% of its oil imports from Africa and 30% from China.
Both are forecast to increase these levels as Africa develops the oil sector
further. The oil industry is stimulating significant foreign direct investment
("FDI"), such that oil producing states received 80% of total African FDI
inflows of US$59 billion (GBP37.8 billion) in 2009. The oil industry is now the
pre-eminent economic driver in West Africa.
Luba Freeport, the Lonrho oil services terminal in the Gulf of Guinea which is a
private public partnership with the Government of Equatorial Guinea, has seen
increases in the number of vessels using the port and the number of tenants
based there. Revenues are growing month on month and the returns from operating
an oil service terminal are higher than a standard port due to the long term
contracts with tenants (generally ten years for oil companies and five years for
service companies) and the economic strength of the oil sector. Lonrho has
invested heavily in building the infrastructure for the port and the returns on
the investment are now tangible. The initial phase of the development of the
port is now complete per the original business plan and the right to the
concession granted by the Equatorial Guinea government is now capable of being
valued and recognised. Vessel movements at Luba Freeport have grown to an
average of 107 a month from 67 last year as the port has developed into the
centre for the oil industry in Equatorial Guinea.
e-Kwikbuild's prefabricated buildings are an ideal solution to meet the growth
of the emerging African marketplace. Fast to deliver and install, e-Kwikbuild's
buildings provide cost effective solutions for schoolrooms, clinics, offices,
workers' camps and general purpose buildings in Africa. Designed to a quality
standard that meets a 30 year product life, the company is seeing growing demand
for its products in South Africa and in the rest of Africa.
Infrastructure highlights
· The continuing growth in the number of tenants and vessel movements
resulted in the annual turnover for the port growing to GBP11.0m, up from
GBP8.0m in the prior year.
· New tenants and further oil blocks being released by the Government will
continue to build future port revenues.
· Tenaris, a world leading supplier of pipes, tubular products and related
services for the world's energy industry, has established a new logistics
facility, which will provide products and services to the oil companies
operating from Luba Freeport and in the Gulf of Guinea.
· Dickerman, one of the world leaders in surface preparation and coating
activities both offshore and onshore for 30 years, has established a new base at
Luba Freeport.
· In December 2009 the Group increased its holding in Kwikbuild, the
holding company of e-Kwikbuild, to 70%.
· e-Kwikbuild's turnover has doubled year on year and margins have improved
as a result of investment in the manufacturing process and improved raw material
pricing. As the business develops, further margin improvements are expected as
volumes grow.
Transportation
International standard regional aviation is a fundamental requirement for any
emerging market. Africa has over one billion people hampered by poor
infrastructure, a lack of roads and railways, and long distances between urban
populations. Regional aviation is a market that is growing rapidly as the
requirement for people to travel around the continent expands with economic
development.
The number of passengers flying into Africa has seen strong growth, and the
continent is serviced by an expanding number of global carriers such as BA,
Virgin, Delta, Air France, Emirates, Qatar, and Singapore. In 2009, 31 million
international air passengers travelled to Africa.
Lonrho's regional airline, Fly540, is building an international standard
regional carrier operation that will be the first airline to address two
markets, the regional movement of passengers within Africa, East to West and
North to South, and the regional distribution of passengers arriving in Africa
from intercontinental flights.
This market is currently underserved and Fly540 is already well established in
the roll-out of the first pan-African network centred around three strategic
hubs in Kenya, Angola and Ghana. Fly540's East African hub is showing strong
growth and has built market share to 15% of the domestic market in Kenya. The
services into Tanzania, Uganda and Burundi further expanded the network during
the year.
Transportation highlights
· Turnover in the transportation division was GBP21.5m and the Fly540
network is building towards carrying half a million passengers per year. This
will grow significantly once the Angolan and Ghanaian hubs are operational and
the objective for the network remains to be connecting eighteen countries by the
end of 2012.
· Fly540 Angola, after a long drawn out process, is nearly 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 underserved and the demand for Fly540 Angola to meet this latent
demand is clear.
· Fly540 Ghana is expected to commence operations in 2011.
Hotels
Hotels are an important fundamental to building an economy in an emerging
market. The ability for businessmen and investors to meet, stay and transact in
a safe and quality environment has a direct correlation with their propensity to
transact, invest, build businesses and to drive economic development. Lonrho
focuses on management contracts for third party owners and its own hotel
portfolio.
Lonrho Hotels is a long established and recognisable brand name in Africa. The
hotel management team is actively sourcing new hotel projects for the Group
where it is believed that Lonrho can add real brand value. The hotel sector in
Africa accommodates an estimated 45 million international visitors a year.
Hotels highlights
· The hotel division, driven by the continued strong performance of
Hotel Cardoso and the opening of the Grand Karavia in June 2010, has increased
turnover 74% year on year.
· A new CEO for Lonrho Hotels has been recruited who has worked with
some of the world's strongest hotel brands such as InterContinental, Holiday
Inn, LeMeridian, Grosvenor House and Crowne Plaza.
· The Hotel Cardoso in Maputo has seen occupancy levels remain over 80%
all year. Room rates have increased 24% on the prior year following the
completion of the refurbishment program and the opening of the new restaurant
and conference facilities.
· The Grand Karavia hotel, opened by President Kabila in June 2010, is
seeing occupancy and conference business building strongly since its
inauguration. The only international standard hotel in Lubumbashi, the centre of
the copper region of the DRC, the property has established itself as a centre
for Government, business and social events.
· 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 to be held
early in 2011, which will attract some of the top South African PGA
professionals.
Support Services
Lonrho IT (comprising Bytes & Pieces, CES and Indit)
The requirement for quality corporate IT services in Africa is stimulated by
foreign direct investment as companies develop projects across the continent.
The Lonrho strategy to focus on the oil, mineral and agriculture sectors that
drive economic growth in Africa implicitly means that these sectors require
complementary IT infrastructure as they develop. Lonrho IT has, as a result,
seen strong growth during the year and continued growing demand for its
services.
A full systems integrator and manager, Lonrho IT designs, builds, develops and
integrates IT solutions for large corporate clients, banks and Governments and
then undertakes management contracts to run and manage installations. Lonrho IT
is a top tier distributor for Cisco, Microsoft, Dell and Hewlett Packard systems
and equipment and is strategically building a pan-African network of IT
companies.
Already the market leader in Mozambique, Lonrho IT has successfully established
further operations in South Africa and Zambia and will open in three further
countries in the coming year.
Lonrho Water
The demand for clean, potable, water to be available to the one billion people
living across Africa is immense. From both a social development and a health
perspective the requirement for the continent to build the ability to provide
safe drinking water to the population is fundamental.
Lonrho's water division develops and operates water bottling plants and this
year has further utilised the technology from these plants to develop a stand
alone, solar powered, containerised water purification plant. These are suitable
for a myriad of applications where a local water source (river, borehole, lake)
is used for water supply. The Lonrho Water unit will take any local water source
and treat the water to ensure it is potable and safe. The interest in the unit
has been significant from corporates, municipalities, central governments and
the agricultural sector.
Support services highlights
· The support services division has seen annual turnover increasing 22% in
the division to GBP11.1m.
· The Lonrho IT company, Bytes & Pieces, won the tender to implement the IT
infrastructure for Riversdale Mozambique (a coal mining operation in Tete,
Mozambique). The project involves implementation of a turnkey solution over
three sites, supplying, installing and configuring 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.
· Tribunal Adminstrativo, the organisation 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 optimisation and
post-installation services.
LonZim Plc
LonZim is an investment company that is focused on investments in Zimbabwe and
the Beira corridor of Mozambique and is quoted on the AIM market of the London
Stock Exchange. Lonrho Plc owns 24.61% of LonZim and holds a management contract
to manage it. LonZim has acquired a number of companies in Zimbabwe and has
invested in restructuring and recapitalising them to prepare for economic
recovery in the country. The opportunities for growth in the Zimbabwe market are
significant, and the beginning of an economic recovery is evident across the
LonZim Group. LonZim has invested GBP29m in creating a portfolio in Zimbabwe
that is well placed for growth. During the year, each company has reported
progress and become financially independent. Businesses acquired include: the
iconic Leopard Rock hotel; a leading commercial security printing company; a
chemical distribution company; a microfinance company; and the foremost
electronic funds transfer platform for payroll and interbank transfers. LonZim
also holds the rights to FMNA, an instant messaging software package for cell
phones that permits users to send and receive data and emails on a standard
mobile. FMNA has seen significant interest from cell phone companies across
Africa and is building a large footprint with carriers such as Econet, Glo,
Safraicom, Warid and others.
Lonrho Mining Limited
Lonrho held a 13.16% interest in ASX listed Lonrho Mining at the year end.
Lonrho Mining holds the Lulo diamond concession in Angola that covers a total
area of about 3,000km2 and is located in the Cuango River Basin within the Lunda
Norte Province of north-eastern Angola. The project area is situated
approximately 630km from Angola's capital city of Luanda and can be accessed via
sealed road.
The project is operated as a joint venture with the Government-owned diamond
company, Endiama, the exclusive concessionary for Angolan diamond mining rights.
Under the joint venture arrangement, Lonrho Mining holds a 39% interest in the
concession, with Endiama holding a 51% interest and the remaining 10% owned by a
private Angolan interest. Lonrho Mining is the manager and operator on the
concession and funds all exploration activities.
The Lulo Project, which covers both an extensive alluvial diamond field and more
than 200 kimberlite targets, has commenced sampling on the concession, operating
a Dense Media Separation plant. Early results have been very positive with the
recovery of large, quality diamonds from the initial sampling, including a
22.25ct gem quality diamond post year end.
Corporate Social Responsibility
Lonrho Group companies make a strong contribution to development by supporting
economic growth in Africa. Each of the five industry sectors in which the Lonrho
Group operates: Agribusiness, Infrastructure, Transportation, Hotels and Support
Services, are important to Africa's economic growth and create employment and
prosperity in the communities where Lonrho works. Lonrho's core philosophy is
building long term sustainable businesses in Africa.
Operational: Employee Health and Safety and Training
Responsible business practices are important within the Group's operations. This
includes the health and safety of staff and their training and skills
development. Examples include:
· Luba provides work experience opportunities for students and has an
extensive ongoing training programme for employees, which includes
internationally recognised qualifications.
· In the Lonrho Hotels division, the Hotel Cardoso in Mozambique provides an
in-house clinic for staff and immediate families, with a full time nurse and a
qualified doctor who visits the clinic twice daily, whilst employees at the
Grand Karavia Hotel in the Democratic Republic of the Congo are offered free
medical treatment for themselves, their spouses and up to five children. Staff
members at the Grand Karavia are benefiting from training in information
technology, first aid and CPR.
· Rollex complies with international standards such as BRC Global Standards
and the Hazard Analysis Critical Control Point.
· e-Kwikbuild is a level 1 Broad Based Black Economic Empowerment company and
seeks to promote the transfer of skills and creation of work opportunities for
people local to their projects. The company is working towards ISO 18001
certification for their Occupational Health and Safety Management System.
Strengthening the Local Economy and Protecting the Environment
The Group is mindful of the impacts its businesses have on their environment.
Examples of the initiatives taken by Lonrho Group companies include:
· Complete Enterprise Solutions is encouraging staff to use less paper in
their work and to recycle where possible and are now looking to gain ISO 14001
on Environmental Management Systems.
· The town of Luba currently has no means of disposing household waste so
Luba Freeport supplies waste skips throughout the town and collects and disposes
local waste daily.
· Oceanfresh has a Sustainable Seafood Policy and actively participates in
the World Wildlife Fund's South African Sustainable Seafood Initiative. The
company works closely with other stakeholders to improve practices and to attain
Marine Stewardship Council certification on its products.
· Hotel Cardoso separates and recycles hotel waste, has low energy bulbs
across the hotel and wherever possible uses recycled paper for stationary and
consumables.
· e-Kwikbuild's buildings are energy efficient and resistant to extreme
weather conditions
· Fly540 donated tree seedlings which were planted at the Kenya National
Park.
· Luba Freeport supports an open air market in the town by supplying
floodlighting and sponsors an English language night school for the local
community to help them access job opportunities in the oil and gas industry.
· Rollex provides support to farms in terms of advice on new farming
techniques and quality inputs.
Supporting Communities
All Lonrho companies have a strong tradition of supporting local communities. In
some cases financial support is given, in others the support is in kind. For
example:
· Hotel Cardoso has supported the repainting of the local high school and
regularly supports Imagine Mozambique to cover costs of food support and
distribution to vulnerable families and children. The hotel also donates soap to
campaigns that highlight the importance of hand washing to poor communities.
· Fly540 has supported numerous local community organisations by providing
free return flight tickets. It has also supported a community service project of
Médicins Sans Frontières by airlifting, free of charge, doctors and medicines in
Kenya and has supported the Imani Childrens' Home and the Terry Hope Centre, a
children's orphanage.
· Rollex donates vegetables, fruit and salad to a local old age home and
supports the education of children at Churchill farm while their parents work.
· Luba Freeport sponsors a pre-school in Luba, supplies medicines to the
local hospital and provides emergency response services for fires in the Luba
area through a qualified fire fighting unit.
· e-Kwikbuild has supported two day care centres for children from
disadvantaged communities in Cape Town.
The Company has established a Board Committee on Corporate Social Responsibility
(CSR). The Committee is developing a strategic approach to CSR across the Lonrho
Group.
Executive Directors
David Lenigas Executive Chairman
David Lenigas was appointed to the Board of Lonrho on 21 December 2005 and holds
a Bachelor of Applied Science in Mining Engineering. He has extensive experience
operating in the public company environment and is currently the Executive
Chairman of LonZim Plc, Leni Gas & Oil Plc and Solo Oil Plc. Mr Lenigas is also
a Non-Executive Chairman of Lonrho Mining Limited and is a Director of Vatukoula
Gold Mines Plc and Reef Resources Ltd.
Geoffrey White Director & Chief Executive Officer
Geoffrey White holds a BSc in Economics andManagement Science and joined the
Board of Lonrho Plc on 5 October 2007, having been Chief Operating Officer from
1 May 2007. . During his 29 year career he has held senior management roles with
Thomas Tilling Plc, BTR Plc, Dee Corporation Plc, Asda Plc and latterly worked
for five years for a private investment firm based in London. He has been
responsible for the planning, financing, development and management of a range
of projects in the leisure, industrial and natural resource sectors. These
projects include establishing joint ventures with international corporations
such as Hilton Hotels International, Ford Motors (PAG), Praton International
GmbH and FFS Refiners (pty) Ltd. Prior to joining Lonrho he had direct
experience with the natural resources, distribution and logistics sectors in
Africa. He is also an Executive Director and the Chief Executive Officer of
LonZim Plc.
David Armstrong Finance Director
David Armstrong (FCA) joined Lonrho Plc as Finance Director on 1 December 2008
and brings with him extensive experience of operating across Africa having been,
until October 2004, the Commercial Director of Diageo Africa with combined
functional responsibility for finance, information systems, strategy and
business development. He contributed to the successful deployment of Diageo's
pan-African growth strategy, encompassing over 50 countries, and was also the
COO of McArtherGlen in the UK and Europe. He is also the Finance Director of
LonZim Plc.
Emma Priestley Executive Director
Emma Priestley was appointed Executive Director on 24 February 2006, having
worked in investment banking for the previous five years following a career as a
mining engineer. She has a background in mining and financial services having
worked with consultants IMC Mackay & Schnellman, investment bank CSFB, advisors
VSA resources and Ambrian Partners, where she worked as a corporate broker and
advisor. Emma is a graduate of Camborne School of Mines, a Chartered Mining
Engineer and Chartered Mineral Surveyor. She is also an Executive Director of
LonZim Plc.
Non-Executive Directors & General Counsel
Jean Ellis Non-Executive Director
Jean Ellis is a Chartered Accountant and Chartered Tax Advisor, and holds an
Insolvency Practitioner's license. She is the senior partner in the regional
firm of Chartered Accountants, Duncan Sheard Glass, having been a partner there
since 2002. Prior to this, she was Group Financial Controller and Tax Manager
with Lonrho Plc and holds a number of directorships for its subsidiary
companies. Jean has a Bachelor of Arts Degree in Pure Mathematics from Liverpool
University. She was formerly Finance Director of Lonrho Plc, having been
appointed on 1 June 2007, and became a Non-Executive Director on 1 December
2008. She was also formerly Finance Director of LonZim Plc and is now a
Non-Executive Director of LonZim Plc.
Ambassador Frances Cook Non-Executive Director
A former U.S. ambassador to Burundi, to Cameroon and to the Sultanate of Oman,
Ambassador Cook also held numerous senior positions in the Department of State,
including Deputy Assistant Secretary of State for Refugee Programs, and Deputy
Assistant Secretary of State for Political-Military Affairs, Consul General in
Alexandria, Egypt, and Director for West Africa. She transitioned to the private
sector in May 1999, where she runs an international business consulting firm,
The Ballard Group llc. Ambassador Cook is also a Director of Global Options
Group (NASDAQ), and the Corporate Council on Africa. She is a Senior Fellow at
the Center for Naval Analyses, and a member of the Council on Foreign Relations.
She was educated at the Universities of Virginia and Harvard, and resides in
Washington, D.C.
Kiran Morzaria Non-Executive Director
Mr Morzaria holds a Bachelor of Engineering (Industrial Geology) from the
Camborne School of Mines and an MBA (Finance) from CASS Business School. He has
eight years of experience in the mineral resource industry covering gold and
diamonds. Mr Morzaria spent his first four years in exploration, mining and
civil engineering and in 2004 was appointed Finance Director of Vatukoula Gold
Mines Plc. In this role, Mr Morzaria has been active in corporate acquisitions,
joint venture agreements, valuations, qualified persons reports and due
diligence. Mr. Morzaria is also currently a non-executive director of Solo Oil
Plc and Hot Tuna (International) Plc.
Michael Bennett General Counsel
Michael Bennett has a BA LLB degree from Rhodes University in South Africa and
was admitted as a legal practitioner in the Republic of Zimbabwe in 1996. He
practised law at one of the biggest firms in Zimbabwe before moving to the
United Kingdom in 2000 where he joined a corporate law firm in Central London
specialising in mergers and acquisitions and AIM related transactional work. He
qualified as an English solicitor in 2001 becoming a partner in 2004. Michael
has specialised in the acquisition and disposal of companies across a variety of
sectors and in jurisdictions ranging across Africa, Europe, the former Soviet
Union and North America.
Statement of Directors' responsibilities in respect of the Annual Report and
Accounts
The Directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent company financial
statements for each financial year. As required by the AIM Rules of the London
Stock Exchange they are required to prepare the Group financial statements in
accordance with IFRSs as adopted by the EU and applicable law and have elected
to prepare the parent company financial statements on the same basis.
Under company law the Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and parent company and of their profit or loss for that year. In
preparing each of the Group and parent company financial statements, the
Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and estimates that are reasonable and prudent;
· state whether they have been prepared in accordance with IFRSs as adopted
by the EU; and
· prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the parent company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
company and enable them to ensure that its financial statements comply with the
Companies Act 2006. They have general responsibility for taking such steps as
are reasonably open to them to safeguard the assets of the Group and to prevent
and detect fraud and other irregularities.
Report of the Directors
For the year ended 30 September 2010
The Directors of Lonrho Plc are pleased to submit their report, together with
the audited financial statements for the year ended 30 September 2010.
The Company number is 2805337.
Principal activities
The Group has a diverse portfolio of investments across Sub-Saharan Africa in
five key sectors: agribusiness, transportation, infrastructure, hotels and
support services. In order to create maximum value for shareholders the
management is implementing the investment strategy outlined in the Chairman's
Statement.
Business review and development
The year has seen strong growth in the existing businesses and Lonrho made
several complementary strategic acquisitions to further develop its core
divisions. The Chairman's statement and the Chief Executive's review of
operations contain information on developments during the year and key potential
future developments.
The requirements of the enhanced business review in relation to strategy and
progress thereon are contained in the Chairman's statement and the Chief
Executive's review of operations. The principal risks and uncertainties relate
to the revenue generation in the Group's businesses, which being located in
Africa are subject to respective government policies, political stability and
general economic conditions in the relevant country. Other risks to which the
Group is exposed are the lack of suitably experienced management and exposure to
foreign currency movements.
The Group monitors cash flow as its primary key performance indicator. Given the
current global financial situation, the Directors are carefully monitoring cash
resources within the Group and have instigated a number of initiatives to ensure
funding will be available for planned projects. The operating cash outflow for
the year to 30 September 2010 was GBP16.0 million (2009: GBP14.5 million). If
such funding cannot be secured, the projects will be delayed or cancelled to
ensure that the Group can manage its cash resources for the foreseeable future
and hence the financial statements have been prepared on a going concern basis.
The Group has raised additional capital since the year end by way of an issue of
US$70 million (GBP44.3 million) guaranteed convertible bonds due 2015 (note 35).
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.
The Group also uses a number of other key performance indicators which are
measured at different tiers in the operation. At the top level the Group tracks
turnover, gross margin, contribution to overheads, cash generation and
performance against budget. The Group uses a number of specific, non-financial,
key performance indicators at individual business levels. For example passenger
numbers and load factors for Fly540, occupancy levels at Hotel Cardoso, and ship
movements at Luba Freeport.
The Directors wish to mitigate risk by proper evaluation of every investment
that is made and follow a risk analysis reporting procedure, which links into
the Company's Corporate Governance procedures. The Group is continuing to
strengthen its management team by the recruitment of highly experienced
individuals.
Further information concerning the Group's policies and exposure to financial
risk can be found in note 29 to the financial statements.
Post balance sheet events
Details of the significant events since the balance
sheet date are contained in note 35 to the financial statements.
Dividend
The Directors do not recommend the payment of a dividend (2009:
GBPnil).
Corporate governance
Compliancewith the Combined Code
The Directors recognise the value of the Combined Code on Corporate Governance
and, whilst under AIM rules full compliance is not required, the Directors have
considered the recommendations and applicability insofar as is practicable and
appropriate for a public company of its size.
Board of Directors
The Board of Directors currently comprises four Executive Directors, one of whom
is the Chairman, and three Non-Executive Directors. The Directors are of the
opinion that the Board comprises a suitable balance to enable the
recommendations of the Code to be implemented to an appropriate level. The
Board, through the Chairman and Chief Executive Officer in particular, maintains
regular contact with its advisors, public relations consultants and
institutional investors in order to ensure that the Board develops an
understanding of the views of the major shareholders of the Company.
The Board meets quarterly and is responsible for formulating, reviewing and
approving the Company's strategy, financial activities and operating
performance. Day to day management is devolved to the executive management who
are charged with consulting the Board on all significant financial and
operational matters. Consequently decisions are made promptly following
consultation amongst the Directors and managers concerned where necessary and
appropriate.
All necessary information is supplied to the Directors on a timely basis to
enable them to discharge their duties effectively, and all Directors have access
to independent professional advice, at the Company's expense, as and when
required.
The Chairman is available to meet with institutional shareholders to discuss any
issues and concerns regarding the Group's governance. The Non-Executive
Directors may also attend meetings with major shareholders if requested.
The participation of both private and institutional investors at the Annual
General Meeting is encouraged by the Board.
Internal controls
The Directors acknowledge their responsibility for the Company's and the Group's
systems of internal control, which are designed to safeguard the assets of the
Group and ensure the reliability of financial information for both internal use
and external publication. Overall control is ensured by a regular detailed
reporting system covering the state of the Group's financial affairs. The Board
has implemented procedures for identifying, evaluating and managing the
significant risks that face the Group.
Any system of internal control can provide only reasonable, and not absolute,
assurance that material financial irregularities will be detected or that the
risk of failure to achieve business objectives is eliminated.
Committees
The Board has devolved duties to the following committees:
Executive Committee
The Executive Committee ("the Committee") comprises the Executive Directors and
senior managers including the Group's General Counsel, Group Financial
Controller and the Business Development Manager. The Chairman of the Committee
is David Lenigas or, in his absence, Geoffrey White. Its terms of reference
indicate at least eight regular meetings per year. The Committee's primary
responsibilities are to review the operating performance of each Group operating
company, manage the Group's strategic planning process and corporate acquisition
and disposal programme, monitor and approve capital expenditure and contracts
entered into by the Group and to manage the Group's HR policies.
Audit Committee
The Audit Committee ("the Committee") comprises two Directors, both of whom are
Non-Executive Directors. The current members are Jean Ellis (Chairperson), and
Kiran Morzaria. Until his resignation, Donald Strang chaired the Committee with
Jean Ellis and Geoffrey White as Committee members. Its terms of reference
indicate at least three regular meetings per year. The Committee's primary
responsibilities are to review the effectiveness of the Company's systems of
internal control and financial reporting systems (including financial,
operational, compliance and risk management), to review with the external
auditors the nature, scope and results of their audit, to evaluate and select
external auditors ensuring their independence and objectivity, and to review the
Company's financial statements.
Remuneration Committee
The Remuneration Committee ("the Committee") comprises two Directors, both of
whom are Non-Executive Directors. The current members are Ambassador Frances
Cook (Chairperson), and Kiran Morzaria. Until his resignation, Donald Strang
chaired the committee with Ambassador Frances Cook and David Armstrong as
Committee members. Its terms of reference indicate at least two regular meetings
per year. The Company's policy is to remunerate senior executives fairly in such
a manner as to facilitate the recruitment, retention and motivation of staff.
The Committee will agree with the Board a framework for the remuneration of the
Chairman, the Executive Directors and the senior management of the Group.
The principal objective of the Committee is to ensure that members of the
executive management of the Company are provided incentives to encourage
enhanced performance and are, in a fair and responsible manner, rewarded for
their individual contributions to the success of the Group bearing in mind inter
alia the size, profitability, market capitalisation of the Company, its
reputation and performance relative to other companies, the performance of
individuals and the best interests of shareholders. Non-Executive Directors'
fees are considered and agreed by the Board as a whole.
Nomination Committee
The Nomination Committee ("the Committee") comprises three Directors, two of
whom are Non-Executive Directors. The current members are Jean Ellis
(Chairperson), Ambassador Frances Cook and Geoffrey White. Its terms of
reference indicate at least two regular meetings per year. The Committee's
primary responsibility is to identify candidates to fill Board vacancies as and
when they arise, give consideration to succession planning, review the
structure, size and composition of the Board and to review the leadership needs
of the organisation.
Corporate Social Responsibility ("CSR") Committee
The CSR Committee ("the Committee") comprises three Directors, two of whom are
Non-Executive Directors. The current members are Ambassador Frances Cook
(Chairperson), Jean Ellis and Geoffrey White, and the Committee is supported by
Julia Lewis, Commercial Manager - Corporate Projects. The Committee meets at
least twice a year and is responsible for reviewing and approving policies and
initiatives relating to CSR matters.
Directors
The following Directors have held office during the year: Mr D A Lenigas
(appointed 21 December 2005); Mr G T White (appointed 5 October 2007); Mr D J
Armstrong (appointed 1 December 2008); Ms E K Priestley (appointed 24 February
2006); Ambassador F D Cook (appointed 23 October 2007); Mrs J M Ellis (appointed
Finance Director 1 June 2007 and became a Non-Executive Director 1 December
2008); Mr D I G L Strang (appointed 19 December 2006 and resigned 30 June 2010);
and Mr K C Morzaria (appointed 28 September 2010).
At the next Annual General Meeting, Mr D A Lenigas and Ambassador F D Cook will
retire by rotation. Mr K C Morzaria, having been appointed since the last Annual
General Meeting, will also retire. Being eligible, they will all offer
themselves for re-election. Biographical details of all Directors are set out on
pages 12 and 13.
Directors' share interests
The Directors at the year-end are set out below. All Directors served throughout
the year unless otherwise indicated.
+-----------------------------------------------+---------------+---------------+
| | | At 01.10.09 |
| | At | (or date of |
| | 30.09.10 | appointment |
| | No of shares | if later) |
| | | No of shares |
+-----------------------------------------------+---------------+---------------+
| D A Lenigas | 250,000 | 250,000 |
+-----------------------------------------------+---------------+---------------+
| G T White | 200,000 | 200,000 |
+-----------------------------------------------+---------------+---------------+
| D Armstrong | 200,000 | 200,000 |
+-----------------------------------------------+---------------+---------------+
| E K Priestley | 40,712 | 40,712 |
+-----------------------------------------------+---------------+---------------+
| Ambassador F D Cook | Nil | Nil |
+-----------------------------------------------+---------------+---------------+
| J M Ellis | 4,000 | 4,000 |
+-----------------------------------------------+---------------+---------------+
| K C Morzaria (appointed 28 September 2010) | Nil | Nil |
+-----------------------------------------------+---------------+---------------+
All of the above interests are recorded in the Company's Register of Directors'
Share and Debenture Interests. No Director has a beneficial interest in the
shares or debentures of any of the Company's subsidiary undertakings. There have
been no changes in Directors' share interests since 30 September 2010.
Share options
Following shareholder approval at the Company's Annual General Meeting on 31st
March 2010, unapproved share options were granted to Directors over ordinary
shares, as set out below. These options are embodied in an individual contract
between the Company and the individual and have been granted under The Lonrho
Plc Unapproved Share Option Plan.
+----------------+-----------+----------+------------+------------+---------------------+
| | | | | | |
| | | | Granted | | |
| | As at | Exercise | during | As at | Exercise |
| | 1.10.2009 | price | the | 30.09.10 | period |
| | | | year | | |
+----------------+-----------+----------+------------+------------+---------------------+
| | | | | | |
+----------------+-----------+----------+------------+------------+---------------------+
| D A Lenigas | 3,500,000 | 6.5p | - | 3,500,000 | Jan 2006 - March |
| | | | | | 2011 |
+----------------+-----------+----------+------------+------------+---------------------+
| D A Lenigas | 3,750,000 | 6.5p | - | 3,750,000 | April 2007 - April |
| | | | | | 2012 |
+----------------+-----------+----------+------------+------------+---------------------+
| D A Lenigas | 1,615,000 | 6.5p | - | 1,615,000 | July 2007 - July |
| | | | | | 2012 |
+----------------+-----------+----------+------------+------------+---------------------+
| D A Lenigas | 2,500,000 | 6.5p | - | 2,500,000 | Jan 2009 - Jan 2014 |
+----------------+-----------+----------+------------+------------+---------------------+
| D A Lenigas | - | 13.75p | 20,000,000 | 20,000,000 | April 2010 - March |
| | | | | | 2015 |
+----------------+-----------+----------+------------+------------+---------------------+
| G T White | 2,500,000 | 6.5p | - | 2,500,000 | April 2007 - April |
| | | | | | 2012 |
+----------------+-----------+----------+------------+------------+---------------------+
| G T White | 1,065,000 | 6.5p | - | 1,065,000 | July 2007 - July |
| | | | | | 2012 |
+----------------+-----------+----------+------------+------------+---------------------+
| G T White | 2,000,000 | 6.5p | - | 2,000,000 | Jan 2009 - Jan 2014 |
+----------------+-----------+----------+------------+------------+---------------------+
| G T White | - | 13.75p | 20,000,000 | 20,000,000 | April 2010 - March |
| | | | | | 2015 |
+----------------+-----------+----------+------------+------------+---------------------+
| D J Armstrong | 1,000,000 | 6.5p | - | 1,000,000 | Jan 2009 - Jan 2014 |
+----------------+-----------+----------+------------+------------+---------------------+
| D J Armstrong | - | 13.75p | 6,500,000 | 6,500,000 | April 2010 - March |
| | | | | | 2015 |
+----------------+-----------+----------+------------+------------+---------------------+
| E K Priestley | 1,250,000 | 6.5p | - | 1,250,000 | April 2006 - April |
| | | | | | 2011 |
+----------------+-----------+----------+------------+------------+---------------------+
| E K Priestley | 1,250,000 | 6.5p | - | 1,250,000 | April 2007 - April |
| | | | | | 2012 |
+----------------+-----------+----------+------------+------------+---------------------+
| E K Priestley | 1,065,000 | 6.5p | - | 1,065,000 | July 2007 - July |
| | | | | | 2012 |
+----------------+-----------+----------+------------+------------+---------------------+
| E K Priestley | 1,000,000 | 6.5p | - | 1,000,000 | Jan 2009 - Jan 2014 |
+----------------+-----------+----------+------------+------------+---------------------+
| E K Priestley | - | 13.75p | 1,000,000 | 1,000,000 | April 2010 - March |
| | | | | | 2015 |
+----------------+-----------+----------+------------+------------+---------------------+
| F D Cook | 500,000 | 6.5p | - | 500,000 | Jan 2009 - Jan 2014 |
+----------------+-----------+----------+------------+------------+---------------------+
| J M Ellis | 350,000 | 6.5p | - | 350,000 | July 2007 - July |
| | | | | | 2012 |
+----------------+-----------+----------+------------+------------+---------------------+
| J M Ellis | 500,000 | 6.5p | - | 500,000 | Jan 2009 - Jan 2014 |
+----------------+-----------+----------+------------+------------+---------------------+
Insurance
The Company has offered Directors and Officers Liability insurance cover for
Group Directors.
Substantial shareholdings
The Directors have been advised of the following shareholdings at 2 December
2010 in 3 per cent. or more of the Company's issued share capital:
+---------------------------------------------+-------------+----------------+
| | Number of | % of Issued |
| | Shares | Capital |
+---------------------------------------------+-------------+----------------+
| Mackenzie Financial Corporation | 128,986,072 | 11.01% |
+---------------------------------------------+-------------+----------------+
| Zesiger Capital Group LLC | 120,833,950 | 10.31% |
+---------------------------------------------+-------------+----------------+
| BlackRock, Inc. | 90,526,973 | 7.73% |
+---------------------------------------------+-------------+----------------+
| Capital Group International | 88,578,895 | 7.56% |
+---------------------------------------------+-------------+----------------+
| Oak Nominees Limited | 78,221,479 | 6.68% |
+---------------------------------------------+-------------+----------------+
| EP Cayman, Ltd, Eton Park Fund & Eton Park | 70,000,000 | 5.97% |
| Master Fund, L.P. | | |
+---------------------------------------------+-------------+----------------+
| Capital Research & Management Company | 49,607,000 | 4.23% |
+---------------------------------------------+-------------+----------------+
| Rensburg Sheppards Investment Management | 45,761,951 | 3.90% |
| Ltd | | |
+---------------------------------------------+-------------+----------------+
Share price performance
Between 1 October 2009 and 30 September 2010 the share price in London varied
between a high of 14.5p and a low of 7.7p and in Johannesburg a high of Rand 1.8
and a low of Rand 0.85. At 30 September 2010 the mid-market price of the shares
was 11.0p in London and Rand 1.8 in Johannesburg. At 2 December 2010, the
mid-market price of the shares was 16.5p in London and Rand 1.53 in
Johannesburg.
Political and charitable donations
No political or charitable donations, save for those disclosed on pages 10 and
11, have been made by the Group during the year. The Group is involved in a
number of charitable projects through its subsidiaries and investments, details
of which are set out on pages 10 and 11.
Payment to suppliers
The Group does not follow any code or standard with regard to the payment of its
suppliers. The Group's policy is to agree terms and conditions with suppliers in
advance; payment is then made in accordance with the agreement provided the
supplier has met the terms and conditions. Amounts due to suppliers at the
balance sheet date are contained in note 27.
City Code on Takeovers and Mergers
The Panel on Takeovers and Mergers confirmed that, at the date the Listing
Particulars were issued in May 1998, Lonrho was subject to the City Code on
Takeovers and Mergers (the "Code"). The Directors believe that, so far as is
practicable, they have operated and will continue to operate the Group so that
it will continue to be subject to the Code.
Auditors
A resolution to re-appoint KPMG Audit Plc and to authorise the Directors to fix
their remuneration will be proposed at the Annual General Meeting in accordance
with section 489 of the Companies Act 2006.
The Directors who held office at the date of approval of this Directors' Report
confirm that, so far as they are each aware, there is no relevant audit
information of which the Company's Auditors are unaware; and each Director has
taken all the steps that he/she ought to have taken as a Director to make
himself/herself aware of any relevant audit information and to establish that
the Company's Auditors are aware of that information.
By order of the Board
J. Hughes
Company Secretary
3 December 2010
Consolidated income statement
For the year ended 30 September 2010
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| | Note | Continuing | 2010 | Total | Continuing | 2009 | Total |
| | | operations | | | operations | | |
| | | GBPm | Discontinued | GBPm | GBPm | Discontinued | GBPm |
| | | | operations | | | operations | |
| | | | GBPm | | | GBPm | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Revenue | 4, 5 | 107.8 | - | 107.8 | 89.7 | 1.2 | 90.9 |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Cost of sales | 6 | (79.3) | - | (79.3) | (72.8) | (1.9) | (74.7) |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| GROSS PROFIT/(LOSS) | | 28.5 | - | 28.5 | 16.9 | (0.7) | 16.2 |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Gain arising on fair valuation of | 6, 15 | 9.0 | - | 9.0 | - | - | - |
| biological assets | | | | | | | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Other operating income | 6 | 3.6 | - | 3.6 | 1.1 | 2.2 | 3.3 |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Operating costs | 6 | (45.4) | - | (45.4) | (29.5) | (0.1) | (29.6) |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| OPERATING (LOSS)/PROFIT | | (4.3) | - | (4.3) | (11.5) | 1.4 | (10.1) |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Finance income | 10 | 8.6 | - | 8.6 | 6.6 | | 6.6 |
| | | | | | | - | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Finance expense | 10 | (5.7) | - | (5.7) | (1.2) | - | (1.2) |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| NET FINANCE INCOME | | 2.9 | - | 2.9 | 5.4 | - | 5.4 |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Share of results of associates | 17 | 2.3 | | 2.3 | 0.4 | | 0.4 |
| | | | - | | | - | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Share of results of joint | 17 | (0.4) | - | (0.4) | (0.2) | - | (0.2) |
| ventures | | | | | | | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| PROFIT/(LOSS) BEFORE TAX | | 0.5 | | 0.5 | (5.9) | 1.4 | (4.5) |
| | | | - | | | | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Income tax charge | 11 | (0.7) | - | (0.7) | (0.8) | - | (0.8) |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| (LOSS)/PROFIT FOR THE YEAR | | (0.2) | - | (0.2) | (6.7) | 1.4 | (5.3) |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| ATTRIBUTABLE TO: | | | | | | | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Owners of the Company | 23 | 0.3 | - | 0.3 | (7.6) | 1.4 | (6.2) |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Non-controlling interests | 23 | (0.5) | - | (0.5) | 0.9 | - | 0.9 |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| (LOSS)/PROFIT FOR THE YEAR | | (0.2) | - | (0.2) | (6.7) | 1.4 | (5.3) |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| EARNINGS PER SHARE | | | | | | | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Basic earnings/(loss) per share | 12 | 0.03 | - | 0.03 | (1.06) | 0.20 | (0.86) |
| (pence) | | | | | | | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
| Diluted earnings/(loss) per share | 12 | 0.03 | - | 0.03 | (1.06) | 0.20 | (0.86) |
| (pence) | | | | | | | |
+-----------------------------------+-------+------------+--------------+--------+------------+--------------+--------+
The notes on pages 25-65 are an integral part of these financial statements.
Consolidated and Company statements of comprehensive income
For the year ended 30 September 2010
+-------------------------------------------+-------+-------------------------------------------+--------+--------+-------+
| | Note | Group | Company |
+ + +----------------------------------------------------+----------------+
| | | 2010 | 2009 | 2010 | 2009 |
| | | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------------+-------+-------------------------------------------+--------+--------+-------+
| Foreign exchange translation differences | 23 | | | - | - |
| | | (8.7) | (2.8) | | |
+-------------------------------------------+-------+-------------------------------------------+--------+--------+-------+
| Total other comprehensive income for the year | (8.7) | (2.8) | - | - |
+---------------------------------------------------+-------------------------------------------+--------+--------+-------+
| Loss for the year | (0.2) | (5.3) | (10.1) | (7.0) |
+---------------------------------------------------+-------------------------------------------+--------+--------+-------+
| Total comprehensive income | (8.9) | (8.1) | (10.1) | (7.0) |
+---------------------------------------------------+-------------------------------------------+--------+--------+-------+
| ATTRIBUTABLE TO: | (7.2) | (8.6) | (10.1) | |
| Owners of the Company Non-controlling interests | (1.7) | 0.5 | - | (7.0) |
| | | | | - |
+---------------------------------------------------+-------------------------------------------+--------+--------+-------+
| Total comprehensive income | (8.9) | (8.1) | (10.1) | (7.0) |
+---------------------------------------------------+-------------------------------------------+--------+--------+-------+
| The notes on pages 25-65 are an integral part of | | | | |
| these financial statements. | | | | |
+-------------------------------------------+-------+-------------------------------------------+--------+--------+-------+
Consolidated statement of changes in equity
For the year ended 30 September 2010
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| | 2010 | 2009 |
+------------------------+-----------------------------------+-----------------------------------+
| | Owners | Non-controlling | Total | Owners | Non-controlling | Total |
| | of the | interests | | of the | interests | |
| | Company | | | Company | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| AT 1 OCTOBER | 78.1 | 3.0 | 81.1 | 69.6 | 0.1 | 69.7 |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| | | | | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Profit/(loss) for the | 0.3 | (0.5) | (0.2) | (6.2) | 0.9 | (5.3) |
| year | | | | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Foreign exchange | (7.5) | (1.2) | (8.7) | (2.4) | (0.4) | (2.8) |
| translation | | | | | | |
| differences | | | | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Total comprehensive | (7.2) | (1.7) | (8.9) | (8.6) | 0.5 | (8.1) |
| income | | | | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Issue of shares | 37.0 | - | 37.0 | 16.8 | - | 16.8 |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Issue of share options | 2.2 | - | 2.2 | 0.3 | - | 0.3 |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Purchase of | (5.5) | (4.1) | (9.6) | - | 0.2 | 0.2 |
| non-controlling | | | | | | |
| interests | | | | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Subsidiaries disposed | - | - | - | - | 2.9 | 2.9 |
| Subsidiaries acquired | - | (0.1) | (0.1) | - | - | - |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Non-controlling | - | 25.5 | 25.5 | - | - | - |
| interests contribution | | | | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Minority dividends | - | (0.4) | (0.4) | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Transfer from joint | - | 0.9 | 0.9 | - | - | - |
| venture to subsidiary | | | | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| Transfer between | 2.8 | (2.8) | - | - | (0.7) | (0.7) |
| accounts (¹) | | | | | | |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
| AT 30 SEPTEMBER | 107.4 | 20.3 | 127.7 | 78.1 | 3.0 | 81.1 |
+------------------------+---------+-----------------+-------+---------+-----------------+-------+
+-------------------------------------------------------------+
| The notes on pages 25-65 are an integral part of these |
| financial statements. |
+-------------------------------------------------------------+
The Company had total equity brought forward of GBP93.9m (2009: GBP83.8m), and
during the year issued shares of GBP37.0m (2009: GBP16.8m) with share options of
GBP2.2m (2009: GBP0.3m) and a loss for the year of GBP10.1m (2009: GBP7.0m).
(¹) The transfer represents the amount of losses previously not allocated
to non-controlling interests now allocated following additional capital
contribution by the non-controlling interests.
Consolidated and Company statements of financial position
As at 30 September 2010
+------------------------------------+-------------+--------+--------+--------+-----------+
| | | Group | Company |
+------------------------------------+-------------+-----------------+--------------------+
| | Note | 2010 | 2009 | 2010 | 2009 |
| | | GBPm | GBPm | GBPm | GBPm |
+------------------------------------+-------------+--------+--------+--------+-----------+
| ASSETS | | | | | |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Goodwill | 13 | 15.5 | 14.2 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Other intangible assets | 13 | 4.5 | 3.4 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Property, plant and equipment | 14 | 109.2 | 69.8 | 0.4 | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Biological assets | 15 | 9.0 | - | - | |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Investments in subsidiaries | 16 | - | - | 31.5 | 31.5 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Investments in associates and | 17 | 10.3 | 9.2 | 7.7 | 7.7 |
| joint ventures | | | | | |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Other investments | 18 | 0.6 | 0.6 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Deferred tax | 19 | 0.7 | - | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL NON-CURRENT ASSETS | | 149.8 | 97.2 | 39.6 | 39.2 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Inventories | 20 | 4.9 | 3.4 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Trade and other receivables | 21 | 33.9 | 32.4 | 85.7 | 56.3 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Cash and cash equivalents | 22 | 7.8 | 6.9 | 0.6 | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL CURRENT ASSETS | | 46.6 | 42.7 | 86.3 | 56.3 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL ASSETS | | 196.4 | 139.9 | 125.9 | 95.5 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| EQUITY | | | | | |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Share capital | 23 | 11.7 | 8.0 | 11.7 | 8.0 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Share premium account | 23 | 138.0 | 104.7 | 138.0 | 104.7 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Revaluation reserve | 23 | 3.3 | 4.1 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Share option reserve | 23 | 4.7 | 2.5 | 4.7 | 2.5 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Translation reserve | 23 | (8.7) | (2.0) | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Other reserves | 23 | (5.5) | - | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Retained earnings | 23 | (36.1) | (39.2) | (31.4) | (21.3) |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL EQUITY ATTRIBUTABLE TO | | 107.4 | 78.1 | 123.0 | 93.9 |
| EQUITY | | | | | |
+------------------------------------+-------------+--------+--------+--------+-----------+
| HOLDERS OF THE COMPANY | | | | | |
+------------------------------------+-------------+--------+--------+--------+-----------+
| NON-CONTROLLING INTERESTS | 23 | 20.3 | 3.0 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL EQUITY | | 127.7 | 81.1 | 123.0 | 93.9 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| LIABILITIES | | | | | |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Financial liabilities | | - | 0.3 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Loans and borrowings | 24 | 24.6 | 15.3 | 1.3 | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Deferred tax | 19 | 3.0 | 3.0 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Obligations under finance leases | 24 | 1.8 | 1.1 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Trade and other payables | 27 | 2.5 | - | 0.4 | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL NON-CURRENT LIABILITIES | | 31.9 | 19.7 | 1.7 | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Bank overdraft | 22,24 | 3.9 | 0.9 | - | 0.7 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Loans and borrowings | 24 | 4.6 | 1.5 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Obligations under finance leases | 24 | 1.0 | 0.2 | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Trade and other payables | 27 | 27.0 | 36.5 | 1.2 | 0.9 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| Tax liability | | 0.3 | - | - | - |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL CURRENT LIABILITIES | | 36.8 | 39.1 | 1.2 | 1.6 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL LIABILITIES | | 68.7 | 58.8 | 2.9 | 1.6 |
+------------------------------------+-------------+--------+--------+--------+-----------+
| TOTAL EQUITY AND LIABILITIES | | 196.4 | 139.9 | 125.9 | 95.5 |
+------------------------------------+-------------+--------+--------+--------+-----------+
The notes on pages 25-65 are an integral part of these financial statements.
These financial statements were approved by the Board of Directors and
authorised for issue on 3 December 2010. They were signed on its behalf by:
David Lenigas
Director
Consolidated and Company cash flow statements
For the year ended 30 September 2010
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| | Note | Group | Company |
+ + +-----------------------------------------------------+-----------------+
| | | 2010 | 2009 | 2010 | 2009 |
| | | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| CASH FLOWS FROM OPERATING ACTIVITIES | 28 | (0.2) | (5.3) | (10.1) | (7.0) |
| Loss for the year | | (3.7) | (0.7) | 2.4 | 0.3 |
| Adjustments | | | | | |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
| BEFORE | | | | | |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| MOVEMENTS IN WORKING CAPITAL | | (3.9) | (6.0) | (7.7) | (6.7) |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Change in inventories | | (0.1) | (1.1) | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Change in trade and other receivables | | 1.0 | (16.7) | (16.1) | (10.9) |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Change in trade and other payables | | (10.4) | 10.1 | 0.7 | 0.5 |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| CASH GENERATED FROM OPERATIONS | | (13.4) | (13.7) | (23.1) | (17.1) |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Interest received | | 0.1 | 0.2 | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Interest paid | | (2.3) | (1.0) | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Income tax paid | | (0.4) | - | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| NET CASH FROM OPERATING ACTIVITIES | | (16.0) | (14.5) | (23.1) | (17.1) |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Proceeds from the sale of property, plant | | 0.4 | 3.7 | - | - |
| and equipment | | | | | |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Acquisition of subsidiary, net of cash | 7 | (3.2) | (2.5) | - | - |
| acquired | | | | | |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Acquisition of property, plant and | 14 | (6.8) | (14.7) | (0.5) | - |
| equipment | | | | | |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Acquisition of associates | | (0.1) | (2.4) | - | (0.4) |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Acquisition of investment | | (0.4) | - | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| NET CASH FROM INVESTING ACTIVITIES | | (10.1) | (15.9) | (0.5) | (0.4) |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Proceeds from the issue of share capital | 23 | 23.6 | 16.8 | 23.6 | 16.8 |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Loan advance | | 3.7 | 11.4 | 1.3 | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Repayment of borrowings | | (2.1) | (1.1) | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Payment of finance lease liabilities | | (0.9) | (0.2) | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Minority dividends paid | | (0.4) | - | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| NET CASH FROM FINANCING ACTIVITIES | | 23.9 | 26.9 | 24.9 | 16.8 |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Net (decrease)/increase in cash and cash | | (2.2) | (3.5) | 1.3 | (0.7) |
| equivalents | | | | | |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Cash and cash equivalents at 1 October | | 6.0 | 9.4 | (0.7) | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| Foreign exchange movements | | 0.1 | 0.1 | - | - |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| CASH AND CASH EQUIVALENTS AT 30 SEPTEMBER | 22 | 3.9 | 6.0 | 0.6 | (0.7) |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
| The notes on pages 25-65 are an integral part of these financial statements. |
+--------------------------------------------+-------+--------------------------------------------+--------+--------+--------+
Notes to the financialstatements
1 Reporting entity
Lonrho Plc (the "Company") is a company incorporated and domiciled in the United
Kingdom. The consolidated financial statements of the Company for the year ended
30 September 2010 comprise the Company and its subsidiaries (together referred
to as the "Group") and the Group's interest in associates and jointly controlled
entities.
The financial statements were authorised for issue by the Directors on 3
December 2010.
2 Basis of preparation
Statement of compliance
Both the parent Company and the consolidated financial statements have been
prepared in accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union (Adopted IFRS). On publishing the parent
Company financial statements here together with the Group financial statements,
the Company is taking advantage of the exemption in section 408(4) of the
Companies Act 2006 not to present its individual income statement and related
notes that form a part of these approved financial statements. The loss of the
Company is disclosed in note 23 to the accounts.
Going concern
Given the current global financial crisis, the Directors are carefully
monitoring cash resources within the Group and have instigated a number of
initiatives to ensure funding will be available for planned projects. As
described in note 35, the Group has raised US$70 million (GBP44.3 million) in
October 2010 through the issue of convertible bonds.
Following the capital raise, and after making due enquiries, the Directors have
a reasonable expectation that the Group has adequate resources to continue
operational existence for the foreseeable future. For this reason they continue
to adopt the going concern basis in preparing the accounts.
Functional and presentation currency
The financial statements are presented in pounds sterling which is the Company's
functional currency. All financial information presented has been rounded to the
nearest GBP0.1 million.
Basis of measurement
The financial statements have been prepared on the historical cost basis except
for the revaluation of certain long leasehold properties, and the recognition of
available-for-sale financial assets at fair value.
The following standards and interpretations have been applied during the period:
Revised IAS 1 Presentation of Financial Statements (2007)
Revised IAS 1 introduces the term total comprehensive income, which represents
changes in equity during a period other than those changes resulting from
transactions with owners in their capacity as owners. Total comprehensive income
may be presented in either a single statement of comprehensive income
(effectively combining both the income statement and all non-owner change in a
single statement), or in an income statement and a separate statement of
comprehensive income.
Revised IFRS 3 Business combinations (2008)
Revised IFRS 3 incorporates the following changes that are relevant to the
Group's operations:
· The definition of a business has been broadened, which is likely to
result in more acquisitions being treated as business combinations.
· Contingent consideration will be measured at fair value, with subsequent
changes therein recognised in the income statement.
· Transaction costs, other than share and debt issue costs, will be
expensed as incurred.
· Any pre-existing interest in the acquiree will be measured at fair value
with the gain or loss recognised in the income statement.
· Any non-controlling (minority) interest will be measured at either fair
value, or at its proportionate interest in the identifiable assets and
liabilities of the acquiree, on a transaction-by-transaction basis.
Revised IFRS 3, which is mandatory in these consolidated financial statements,
has been applied prospectively and therefore there is no impact on prior
periods.
Amended IAS 27 Consolidated and separate financial statements (2008)
Amended IAS 27 requires accounting for changes in ownership interests by the
Group in a subsidiary, while maintaining control, to be recognised as an equity
transaction. When the Group loses control of a subsidiary, any interest retained
in the former subsidiary will be measured at fair value with the gain or loss
recognised in the income statement. The amendments to IAS 27, which are
mandatory in these consolidated financial statements, have impacted minority
interests in the consolidated financial statements.
The following standards have been effective during the year but are not deemed
to have had a significant impact on the Group, other than minor disclosure
effects where applicable.
· IFRS 2 - Share based payments
· IFRS 7 - Financial Information Disclosure
· Amendments to IAS 32 - Financial Instruments Presentation
· IFRIC 13 - Customer Loyalty Programmes
· IFRIC 14 - IAS 19 - Limit of a Defined Benefit Asset
· IFRIC 15 - Agreement of Construction Real Estate
· IFRIC 16 - Hedges of a Net Investment in a Foreign Operation
At the date of authorisation of the financial statements, the following
Standards and Interpretations are issued but not yet effective which have not
been applied to these financial statements:
· IFRIC 19 Extinguishing financial liabilities with equity instruments
· Revised IAS 24 Related Party Disclosures
· Amendments to IFRS 2 Group Cash-settled Share-based payment transactions
· Amendment to IAS 32 Financial Instruments: Presentation: Classification
of Rights Issues
· Amendments to IFRIC 9 and IAS 39 Embedded Derivatives
· Amendments to IFRS 5 - Non-current assets held for sale and discontinued
operations
· Amendment to IAS 7 - Classification of expenditures on unrecognised
assets
· Amendment to IAS 17 - Classification of leases of land and buildings
Use of estimates and judgements
The preparation of financial statements in conformity with Adopted IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period of
the revision and future periods if the revision affects both current and future
periods.
Estimates made by management in the application of Adopted IFRS that have
significant effect on the financial statements with a significant risk of
material adjustment in the next year are discussed in the following notes:
· valuation of intangible assets (note 13)
· valuation of associates and joint ventures (note 17)
· valuation of biological assets (note 15)
Judgements made by management in the application of Adopted IFRS that have
significant effect on the financial statements are:
· the determination of the functional currencies of subsidiaries (see
below)
· the determination of the accounting treatment in respect of the
acquisition of investments as either associates, joint ventures or subsidiaries
(note 3(a)).
The timing of revenue recognition is not subject to significant uncertainty.
Luba Freeport Limited
Luba Freeport Limited, a Jersey registered company, uses US dollars as its
functional currency as the significant transactions of the business are
denominated in US dollars.
2 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 as 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 portion of a non-controlling interest is stated at the non-controlling
interest's proportion of the fair values of the assets and liabilities
recognised. Subsequently, losses applicable to the non-controlling interest in
excess of the non-controlling interest in the subsidiary's equity are allocated
against the interests of the Group except to the extent that the non-controlling
interest has a binding obligation and is able to make an additional investment
to cover the losses. Future profits attributable to the non-controlling interest
are not recognised until the unrecognised losses have been extinguished.
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 and Joint Ventures
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.
A joint venture is an entity where the Group jointly controls its financial and
operating policy together with other parties. 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.
The Company records interests in associate and joint ventures initially at cost
and thereafter at cost less provisions for impairment.
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. 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 fair value of the consideration 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 fair value of the consideration, the excess is recognised immediately in the
income statement. The interest of non-controlling interests in the acquirer is
initially measured at the non-controlling interest'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 on a straight line basis over their
useful economic life, on the following basis:
+--------------------+-----------------------------------------------------+
| Brands | 5 years |
+--------------------+-----------------------------------------------------+
| Intellectual | 5 years |
| property | |
+--------------------+-----------------------------------------------------+
| Licences | Life of licence, not to exceed 5 years |
+--------------------+-----------------------------------------------------+
| Customer | 5 years - 10 years |
| relationships | |
+--------------------+-----------------------------------------------------+
| Franchises | 5 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
carried at fair value in respect of which gains and losses are recognised
directly in equity are 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 weighted average rates 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) 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 substantially enacted at the balance
sheet date, that 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.
(e) Available for sale financial assets
The Group's investments in equity securities that are not associates or joint
ventures 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-for sale financial assets that are equity securities, the reversal
is recognised directly in equity.
(f) 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 (less
estimated residual values updated annually), other than long leasehold land,
over their estimated useful lives, on the following basis:
+------------------------------------+------------------------------------+
| Long leasehold buildings | 2% of cost |
+------------------------------------+------------------------------------+
| Short leasehold land and buildings | Over the term of the lease |
+------------------------------------+------------------------------------+
| Plant and machinery | 10% of cost |
+------------------------------------+------------------------------------+
| Aircraft | 5%-6.67% of cost |
+------------------------------------+------------------------------------+
| Motor cars | 15%-25% of cost |
+------------------------------------+------------------------------------+
| Fixtures and fittings | 15%-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.
(g) Biological assets
Certain Group subsidiaries involved in the production of fresh produce recognize
biological assets, which includes agricultural produce due for harvest on fruit
plantations. Biological assets are stated at fair value less estimated point of
sale costs, with any resultant gain or loss recognized in the income statement.
The valuation of the fruit plantations is based on discounted cashflow models
whereby the fair value of the assets is calculated using cashflows for
continuous operations taking into account growth and yield potential.
When the fruit is harvested, it will be transferred to inventory and accounted
for under IAS 2 - Inventory.
(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.
An 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.
(h) 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.
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.
(i) 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.
(j) 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.
(k) 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.
(l) Dividends
Interim dividends are recognised when paid and final dividends are recognised as
liabilities in the period in which they are approved by shareholders.
(m) 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.
(n) 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.
Luba Freeport
Revenue from port activities represents the income earned from the provision of
port facilities, which comprise cargo handling, towage, pilotage, conservancy
services and port related rental income. Such revenue is recorded once the
service has been provided.
(o) 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 dilutive ordinary shares in issue are employee share options.
(s) Reportable Segments
Segments are determined to be the lowest operational segment that the Chief
Operating Decision Maker ("CODM") evaluates the result of the segment and
allocates resources to that segment. This is based on the Group's internal
organization and the financial information provided to the CODM.
(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 a pro 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.
3 Segment reporting
The "Chief Operating Decision Maker" (CODM) is deemed to be the Executive
Committee who monitor the results of the business segments to assess performance
and make decisions about the allocation of revenues. Segment performance is
evaluated on both revenue and operating profit/(loss).
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 interest earning assets, 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.
There is no inter-segment revenue.
Business segments
The Group has five continuing reportable segments which are organized around the
basis of products and services which they provide:
· Agribusiness
· Infrastructure
· Transportation
· Support services
· Hotels
· Cargo and shipping (discontinued)
The Group has not aggregated any operating segment in arriving at this analysis.
Geographical analysis
All of the segments operate in various parts of Africa.
Business segments
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| | Agribusiness | Infrastructure | Transportation | Support | 2010 | Consolidated |
| | GBPm | GBPm | GBPm | services | | continuing |
| | | | | GBPm | | operations |
| | | | | | Hotels | GBPm |
| | | | | | GBPm | |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| EXTERNAL REVENUE | 55.3 | 14.0 | 21.5 | 11.1 | 5.9 | 107.8 |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| Segment result | 7.9 | 4.1 | (7.6) | 0.1 | 0.2 | 4.7 |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| Unallocated expenses | | | | | | (9.0) |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| OPERATING LOSS | | | | | | (4.3) |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| Net finance income | | | | | | 2.9 |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| Share of results of | | | | | | 2.3 |
| associates | | | | | | |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| Share of results of | | | | | | (0.4) |
| joint venture | | | | | | |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| Income tax charge | | | | | | (0.7) |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
| LOSS FOR THE YEAR | | | | | | (0.2) |
+----------------------+--------------+----------------+----------------+----------+--------+-----------------+
Business segments
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| | Agribusiness | Infrastructure | Transportation | Support | 2009 | Consolidated | Cargo |
| | GBPm | GBPm | GBPm | services | | continuing | and |
| | | | | GBPm | | operations | shipping |
| | | | | | Hotels | | discontinued |
| | | | | | GBPm | GBPm | operations |
| | | | | | | | GBPm |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| EXTERNAL REVENUE | | | | | | | |
| | 46.5 | 9.3 | 21.4 | 9.1 | 3.4 | 89.7 | 1.2 |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| Segment result | 1.0 | (4.5) | (5.1) | 0.1 | 0.4 | (8.1) | (0.8) |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| Unallocated expenses | | | | | | (3.4) | 2.2 |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| OPERATING (LOSS)/PROFIT | | | | | | (11.5) | 1.4 |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| Net finance income | | | | | | 5.4 | - |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| Share of results of | | | | | | 0.4 | - |
| associate | | | | | | | |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| Share of results of | | | | | | (0.2) | - |
| joint venture | | | | | | | |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| Income tax expense | | | | | | (0.8) | - |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
| (LOSS)/PROFIT FOR THE | | | | | | (6.7) | 1.4 |
| YEAR | | | | | | | |
+-------------------------+--------------+----------------+----------------+----------+--------+--------------+--------------+
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| | Agribusiness | Infrastructure | Transportation | Support | 2010 | Other | Consolidated |
| | GBPm | GBPm | GBPm | services | | GBPm | continuing |
| | | | | GBPm | | | operations |
| | | | | | Hotels | | GBPm |
| | | | | | GBPm | | |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Segment operating assets | | | | | | | |
| | 51.1 | 82.9 | 16.4 | 3.9 | 23.3 | - | 177.6 |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Investment in | - | - | - | - | - | 10.3 | 10.3 |
| associates/joint ventures | | | | | | | |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Unallocated | - | - | - | - | - | 8.5 | 8.5 |
| assets/interest bearing | | | | | | | |
| assets | | | | | | | |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| TOTAL ASSETS | 51.1 | 82.9 | 16.4 | 3.9 | 23.3 | 18.8 | 196.4 |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Segment operating | 28.8 | 14.5 | 7.4 | 1.2 | 9.9 | - | 61.8 |
| liabilities | | | | | | | |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Unallocated | - | - | - | - | - | 6.9 | 6.9 |
| liabilities/interest | | | | | | | |
| bearing liabilities | | | | | | | |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| TOTAL LIABILITIES | 28.8 | 14.5 | 7.4 | 1.2 | 9.9 | 6.9 | 68.7 |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Depreciation of segment | 1.5 | 3.0 | 0.6 | 0.1 | 0.6 | 0.1 | 5.9 |
| assets | | | | | | | |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Amortisation of segment | 0.5 | - | 0.1 | 0.2 | - | - | 0.8 |
| assets | | | | | | | |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Capital expenditure | 2.9 | 3.7 | 0.8 | - | 1.4 | 0.3 | 9.1 |
+---------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| | Agribusiness | Infrastructure | Transportation | Support | 2009 | Other | Consolidated |
| | GBPm | GBPm | GBPm | services | | GBPm | continuing |
| | | | | GBPm | | | operations |
| | | | | | Hotels | | GBPm |
| | | | | | GBPm | | |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Segment operating assets | 31.8 | 58.7 | 14.5 | 4.5 | 11.9 | - | 121.4 |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Investment in | - | - | - | - | 1.3 | 7.9 | 9.2 |
| associates/joint | | | | | | | |
| ventures | | | | | | | |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Unallocated | - | - | - | - | - | 9.3 | 9.3 |
| assets/interest bearing | | | | | | | |
| assets | | | | | | | |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| TOTAL ASSETS | 31.8 | 58.7 | 14.5 | 4.5 | 13.2 | 17.2 | 139.9 |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Segment operating | 19.4 | 22.5 | 5.3 | 1.2 | 1.2 | - | 49.6 |
| liabilities | | | | | | | |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Unallocated | - | - | - | - | - | 9.2 | 9.2 |
| liabilities/interest | | | | | | | |
| bearing liabilities | | | | | | | |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| TOTAL LIABILITIES | 19.4 | 22.5 | 5.3 | 1.2 | 1.2 | 9.2 | 58.8 |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Depreciation of segment | 1.4 | 2.4 | 1.0 | 0.1 | 0.4 | - | 5.3 |
| assets | | | | | | | |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Amortisation of segment | 0.3 | 0.1 | 0.1 | 0.1 | - | - | 0.6 |
| assets | | | | | | | |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
| Capital expenditure | 4.6 | 3.6 | 1.5 | 0.9 | 4.1 | - | 14.7 |
+--------------------------+--------------+----------------+----------------+----------+--------+-------+--------------+
Geographical analysis
+-------------------------------+----------+--------+--------+--------+--------+--------------+
| | 2010 |
+-------------------------------+-------------------------------------------------------------+
| | | | | | | Consolidated |
| | Southern | East | West | | United | continuing |
| | | | | Europe | | operations |
| | Africa | Africa | Africa | GBPm | States | GBPm |
| | GBPm | | | | | |
| | | GBPm | GBPm | | GBPm | |
+-------------------------------+----------+--------+--------+--------+--------+--------------+
| Revenue by location of | 61.1 | 21.5 | 11.9 | 11.4 | 1.9 | 107.8 |
| external customers | | | | | | |
+-------------------------------+----------+--------+--------+--------+--------+--------------+
| Revenue by location of assets | 73.9 | 21.5 | 11.9 | 0.5 | - | 107.8 |
+-------------------------------+----------+--------+--------+--------+--------+--------------+
| Segment net assets | 34.2 | 8.2 | 74.2 | 11.1 | - | 127.7 |
+-------------------------------+----------+--------+--------+--------+--------+--------------+
| Capital expenditure | 2.4 | 0.2 | 6.2 | 0.3 | - | 9.1 |
+-------------------------------+----------+--------+--------+--------+--------+--------------+
+-------------------------------+----------+--------+--------+--------+--------------+--------------+
| | 2009 |
+-------------------------------+-------------------------------------------------------------------+
| | | | | | Consolidated | Southern |
| | Southern | East | West | | continuing | Africa |
| | Africa | Africa | | Europe | operations | discontinued |
| | GBPm | | Africa | | GBPm | operations |
| | | GBPm | | GBPm | | GBPm |
| | | | GBPm | | | |
+-------------------------------+----------+--------+--------+--------+--------------+--------------+
| Revenue by location of | 59.8 | 21.4 | 8.0 | 0.5 | 89.7 | 1.2 |
| external customers | | | | | | |
+-------------------------------+----------+--------+--------+--------+--------------+--------------+
| Revenue by location of assets | 59.8 | 21.4 | 8.0 | 0.5 | 89.7 | 1.2 |
+-------------------------------+----------+--------+--------+--------+--------------+--------------+
| Segment net assets | 29.5 | 8.6 | 35.0 | 8.0 | 81.1 | - |
+-------------------------------+----------+--------+--------+--------+--------------+--------------+
| Capital expenditure | 9.6 | 1.5 | 3.6 | - | 14.7 | - |
+-------------------------------+----------+--------+--------+--------+--------------+--------------+
4 Revenue
+-----------------------------------+-------+-------+--------+------+-------+-------+
| | Continuing | Discontinued | Total |
| | operations | operations | |
+-----------------------------------+---------------+---------------+---------------+
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
+-------------------------------------------+-------+--------+------+-------+-------+
| GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------------+-------+--------+------+-------+-------+
| Sale of goods | 17.0 | 12.4 | - | - | 17.0 | 12.4 |
+-----------------------------------+-------+-------+--------+------+-------+-------+
| Services | 90.8 | 77.3 | _ | 1.2 | 90.8 | 78.5 |
+-----------------------------------+-------+-------+--------+------+-------+-------+
| | 107.8 | 89.7 | _ | 1.2 | 107.8 | 90.9 |
+-----------------------------------+-------+-------+--------+------+-------+-------+
5 Group net operating costs
+-----------------------------------------------------------+----------+-------+
| | | |
| | 2010 | 2009 |
| | GBPm | GBPm |
+-----------------------------------------------------------+----------+-------+
| | | |
| Cost of sales | 79.3 | 74.7 |
| Operating costs | 45.4 | 29.6 |
| Gain arising on fair valuation of biological assets | (9.0) | - |
| Other operating income | (3.6) | (3.3) |
+-----------------------------------------------------------+----------+-------+
| | | |
+-----------------------------------------------------------+----------+-------+
| NET OPERATING COSTS | 112.1 | 101.0 |
+-----------------------------------------------------------+----------+-------+
| Administrative expenses include management related | | |
| overheads for operations and head office. | | |
+-----------------------------------------------------------+----------+-------+
| INCLUDED IN NET OPERATING COSTS ABOVE ARE: | | |
+-----------------------------------------------------------+----------+-------+
| Depreciation of property plant and equipment | 5.9 | 5.3 |
+-----------------------------------------------------------+----------+-------+
| Amortisation of intangible assets (other than goodwill) | 0.8 | 0.6 |
+-----------------------------------------------------------+----------+-------+
| Share based payments (notes 23 and 26) | 2.3 | 0.3 |
+-----------------------------------------------------------+----------+-------+
| Operating lease rentals: | | |
+-----------------------------------------------------------+----------+-------+
| - Land and buildings | 1.7 | 0.4 |
+-----------------------------------------------------------+----------+-------+
| - Plant and machinery | 0.1 | 0.1 |
+-----------------------------------------------------------+----------+-------+
| - Other | 1.8 | 1.7 |
+-----------------------------------------------------------+----------+-------+
| Staff costs (note 9) | 24.1 | 13.0 |
+-----------------------------------------------------------+----------+-------+
| Impairment of trade receivables | 0.6 | 0.2 |
+-----------------------------------------------------------+----------+-------+
| Impairment of other investments | 0.4 | 0.1 |
+-----------------------------------------------------------+----------+-------+
The costs above include the following relating to discontinued operations:
+-----------------------------------------------------------+--------+-------+
| | 2010 | 2009 |
+-----------------------------------------------------------+--------+-------+
| | GBPm | GBPm |
+-----------------------------------------------------------+--------+-------+
| Gain arising on liquidation of SAILS | - | (2.2) |
+-----------------------------------------------------------+--------+-------+
| Other operating lease rentals | - | 0.6 |
+-----------------------------------------------------------+--------+-------+
Auditors remuneration
+------------------------------------------------------------+----------+------+
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------------------------------+----------+------+
| Fees payable to the Company's auditors for the audit of | 0.2 | 0.2 |
| the Company's annual accounts | | |
+------------------------------------------------------------+----------+------+
| For the audit of the Company's subsidiaries pursuant to | 0.3 | 0.1 |
| legislation | | |
+------------------------------------------------------------+----------+------+
| Total audit fees | 0.5 | 0.3 |
+------------------------------------------------------------+----------+------+
| Other fees payable to the Company's auditors | 0.1 | - |
+------------------------------------------------------------+----------+------+
| Total fees payable to the Company's auditors | 0.6 | 0.3 |
+------------------------------------------------------------+----------+------+
6 Acquisition of subsidiaries
Trak Auto
On 8 April 2010, the Group acquired 100% of the issued share capital of Trak
Auto Lda for an initial consideration of US$2 million (GBP1.3 million). Further
payments of US$1 million (GBP0.6 million) a year for three years will be payable
upon the meeting of growth targets. Trak Auto Lda holds the exclusive John Deere
and Komatsu dealership agreements for Mozambique and is involved in the sale and
after-sale service of these vehicles.
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 8 April 2010 is set out below:
+----------------------------------------------------+-------------+-------------+
| | Pre | Values |
| | acquisition | recognised |
| | carrying | on |
| | value | acquisition |
| | GBPm | GBPm |
+----------------------------------------------------+-------------+-------------+
| Property, plant and equipment | 0.2 | 0.2 |
| Inventory | 0.4 | 0.4 |
| Trade and other receivables | 0.7 | 0.7 |
+----------------------------------------------------+-------------+-------------+
| Interest-bearing loans and borrowings | (0.1) | (0.1) |
+----------------------------------------------------+-------------+-------------+
| Trade and other payables | (0.8) | (0.8) |
| Intangible related to franchise | - | 1.7 |
| | | |
+----------------------------------------------------+-------------+-------------+
| NET IDENTIFIABLE ASSETS AND LIABILITIES | 0.4 | 2.1 |
+----------------------------------------------------+-------------+-------------+
| Consideration paid | | 1.3 |
+----------------------------------------------------+-------------+-------------+
| Contingent consideration | | 1.6 |
+----------------------------------------------------+-------------+-------------+
| Goodwill on acquisition | | 0.8 |
+----------------------------------------------------+-------------+-------------+
The transaction costs incurred to acquire the company were GBP0.1 million and
have been expensed in the income statement.
The goodwill arising on the acquisition of Trak Auto Lda is attributable to the
anticipated profitability of the distribution of the company's services and
products to new customers.
Trak Auto Lda contributed GBP3.5 million to revenue and GBP0.8 million profit to
the Group's profit before tax for the period between the date of acquisition and
the reporting date.
Oceanfresh
On 7 June 2010, the Group acquired 51.0% of the issued share capital of
Oceanfresh Limited for a consideration of R3.8 million (GBP0.3 million)
including R0.8 million (GBP0.1 million) related to the subscription of shares
with the proceeds retained in Oceanfresh. An additional working capital
injection of R7.7 million (GBP0.7 million) was provided by way of an interest
bearing loan. Oceanfresh is a supplier of frozen fish and crustaceans from
Mozambique with customers across South Africa and also in the United States.
The transaction has been accounted for by the purchase method of accounting. The
fair value of the net assets at 7 June 2010 is set out below:
+------------------------------------------+-------------+--------------+-------------+
| | Pre | | Values |
| | acquisition | Subscription | recognised |
| | carrying | of shares | on |
| | value | recognised | acquisition |
| | GBPm | GBPm | GBPm |
+------------------------------------------+-------------+--------------+-------------+
| Property, plant and equipment | 0.5 | - | 0.5 |
| Inventory | 0.9 | - | 0.9 |
| Trade and other receivables | 1.7 | - | 1.7 |
| Deferred tax asset | 0.3 | - | 0.3 |
+------------------------------------------+-------------+--------------+-------------+
| Cash and cash equivalents | (1.6) | 0.1 | (1.5) |
+------------------------------------------+-------------+--------------+-------------+
| Trade and other payables | (2.4) | - | (2.4) |
| Intangible related to customer | - | - | 0.2 |
| relationships | | | |
+------------------------------------------+-------------+--------------+-------------+
| NET IDENTIFIABLE ASSETS AND LIABILITIES | (0.6) | 0.1 | (0.3) |
+------------------------------------------+-------------+--------------+-------------+
| Non-controlling interests | - | - | 0.1 |
+------------------------------------------+-------------+--------------+-------------+
| Consideration paid | - | - | 0.3 |
+------------------------------------------+-------------+--------------+-------------+
| Goodwill on acquisition | - | - | 0.5 |
+------------------------------------------+-------------+--------------+-------------+
The transaction costs incurred to acquire the company were GBP0.1 million and
have been expensed in the income statement.
The goodwill arising on the acquisition of Oceanfresh Limited is attributable to
the anticipated profitability of the distribution of the company's services and
products to new customers.
Oceanfresh Limited contributed GBP2.3 million to revenue and GBP0.2 million loss
to the Group's profit before tax for the period between the date of acquisition
and the reporting date.
7 Discontinued operations
SAILS
Following a review by the Board in September 2008, the Group decided not to
continue to support SAILS. The Board began actively marketing the company for
sale prior to the 2008 year end. Unfortunately this proved unsuccessful and the
company was placed into liquidation on 15 October 2008. No cash flow relating to
this business arose in the year and none is anticipated in the future.
+-----------------------------------------------------------+------+-------+
| | 2010 | 2009* |
| | GBPm | GBPm |
+-----------------------------------------------------------+------+-------+
| CASH FLOWS FROM DISCONTINUED OPERATION | | |
+-----------------------------------------------------------+------+-------+
| Net cash used in operating activities | - | (0.1) |
+-----------------------------------------------------------+------+-------+
| NET MOVEMENT IN CASH AND CASH EQUIVALENTS | - | (0.1) |
+-----------------------------------------------------------+------+-------+
* In the period to liquidation
8 Staff numbers and costs
The aggregate remuneration comprised (including Executive Directors):
+--------------------------------------------+--------+--------+--------+--------+
| | Group | Company |
+ +-----------------+-----------------+
| | 2010 | 2009 | 2010 | 2009 |
| | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------------+--------------------------------------------+--------+--------+--------+
| Wages and salaries | 20.8 | 11.6 | 3.5 | 2.5 |
+--------------------------------------------+--------+--------+--------+--------+
| Compulsory social security contributions | 0.8 | 1.1 | 0.3 | 0.2 |
+--------------------------------------------+--------+--------+--------+--------+
| Share based payments | 2.3 | 0.3 | 2.3 | 0.3 |
+--------------------------------------------+--------+--------+--------+--------+
| Pension costs | 0.2 | - | 0.2 | - |
+--------------------------------------------+--------+--------+--------+--------+
| | 24.1 | 13.0 | 6.3 | 3.0 |
+--------------------------------------------+--------+--------+--------+--------+
| The average number of employees (including | |
| Executive Directors) was: | |
+--------------------------------------------+-----------------------------------+
| | Group | Company |
+ +-----------------+-----------------+
| | 2010 | 2009 | 2010 | 2009 |
| | Number | Number | Number | Number |
+--------------------------------------------+--------------------------------------------+--------+--------+--------+
| Infrastructure | 209 | 183 | - | - |
+--------------------------------------------+--------+--------+--------+--------+
| Agribusiness | 732 | 217 | - | - |
+--------------------------------------------+--------+--------+--------+--------+
| Transportation | 405 | 300 | - | - |
+--------------------------------------------+--------+--------+--------+--------+
| Support services | 56 | 88 | - | - |
+--------------------------------------------+--------+--------+--------+--------+
| Hotels | 314 | 161 | - | - |
+--------------------------------------------+--------+--------+--------+--------+
| Central | 32 | 21 | 22 | 21 |
+--------------------------------------------+--------+--------+--------+--------+
| | 1,748 | 970 | 22 | 21 |
+--------------------------------------------+--------+--------+--------+--------+
REMUNERATION OF DIRECTORS
Detailed disclosure of remuneration of Directors is given in note 33.
9 Net finance income
+-----------------------------------------------------+-------------+--------+
| | 2010 | 2009 |
| | GBPm | GBPm |
+-----------------------------------------------------+-------------+--------+
| Bank interest receivable | | 0.2 |
| Foreign exchange gain | 0.1 | 6.4 |
| | 8.5 | |
+-----------------------------------------------------+-------------+--------+
| FINANCE INCOME | 8.6 | 6.6 |
+-----------------------------------------------------+-------------+--------+
| Loans repayable within five years and overdrafts | 2.1 | 0.9 |
+-----------------------------------------------------+-------------+--------+
| Foreign exchange loss | 3.4 | 0.2 |
+-----------------------------------------------------+-------------+--------+
| Finance leases | 0.2 | 0.1 |
+-----------------------------------------------------+-------------+--------+
| FINANCE EXPENSE | 5.7 | 1.2 |
+-----------------------------------------------------+-------------+--------+
| NET FINANCE INCOME | 2.9 | 5.4 |
+-----------------------------------------------------+-------------+--------+
The foreign exchange gain of GBP8.5 million (2009: GBP6.4 million) has arisen on
the translation of intercompany balances.
10 Income tax expense
+------------------------------------------------------+-------------+--------+
| Recognised in the income statement | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------------------------+-------------+--------+
| CURRENT TAX EXPENSE | | |
| Current year | | |
| | 1.0 | 0.8 |
+------------------------------------------------------+-------------+--------+
| DEFERRED TAX | | |
+------------------------------------------------------+-------------+--------+
| Credit for year | (0.3) | - |
+------------------------------------------------------+-------------+--------+
| TOTAL INCOME TAX EXPENSE IN THE INCOME STATEMENT | 0.7 | 0.8 |
+------------------------------------------------------+-------------+--------+
| Reconciliation of effective tax rate | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------------------------+-------------+--------+
| Profit/(loss) before tax | 0.5 | (4.5) |
+------------------------------------------------------+-------------+--------+
| Income tax using the domestic corporation tax rate | 0.1 | (1.2) |
+------------------------------------------------------+-------------+--------+
| Effect of tax rates in foreign jurisdictions | (1.1) | (0.5) |
+------------------------------------------------------+-------------+--------+
| Reversal of provision against carrying value of | (0.9) | - |
| associate | | |
+------------------------------------------------------+-------------+--------+
| Net losses where no Group relief is available | 4.7 | 3.8 |
+------------------------------------------------------+-------------+--------+
| Gain on disposal of subsidiary undertaking not tax | - | (0.7) |
| effected | | |
+------------------------------------------------------+-------------+--------+
| Effect of tax losses utilised | (0.3) | (0.3) |
+------------------------------------------------------+-------------+--------+
| Non taxable items | (1.8) | (0.3) |
+------------------------------------------------------+-------------+--------+
| TOTAL TAX EXPENSE | 0.7 | 0.8 |
+------------------------------------------------------+-------------+--------+
UK Corporation tax is calculated at a rate of 28% (2009: 28%) of the estimated
assessable loss for the year. Taxation for other jurisdictions is calculated at
the rates prevailing in the respective jurisdictions.
11 Earnings per share
The calculation of the basic and diluted profit/(loss) per share is based on the
following data:
+-----------------------------------------------------------+--------+-------+
| | 2010 | 2009 |
+-----------------------------------------------------------+--------+-------+
| | GBPm | GBPm |
+-----------------------------------------------------------+--------+-------+
| Profit/(loss) for the purposes of basic earnings per | | |
| share being net loss attributable to | | |
+-----------------------------------------------------------+--------+-------+
| equity holders of the parent | 0.3 | (6.2) |
+-----------------------------------------------------------+--------+-------+
| Profit/(loss) for the purposes of diluted earnings per | 0.3 | (6.2) |
| share | | |
+-----------------------------------------------------------+--------+-------+
+------------------------------------------------------------+---------+-------+
| Number of shares (millions) | 2010 | 2009 |
| | No. | No. |
+------------------------------------------------------------+---------+-------+
| Weighted average number of ordinary shares for the | 1,017.1 | 715.7 |
| purposes of basic earnings per share | | |
+------------------------------------------------------------+---------+-------+
| Effect of dilutive potential ordinary shares: | | |
+------------------------------------------------------------+---------+-------+
| - Share options | 13.6 | 37.5 |
+------------------------------------------------------------+---------+-------+
| Weighted average number of ordinary shares for the | 1,030.7 | 753.2 |
| purposes of diluted earnings per share* | | |
+------------------------------------------------------------+---------+-------+
*The calculation of diluted loss per share is based on the weighted average
number of shares outstanding. In 2009 the Group made a loss and hence the effect
of share options is considered to be anti-dilutive.
+------------------------------------------------------------+---------+---------+
| Earnings per share | 2010 | 2009 |
+------------------------------------------------------------+---------+---------+
| Earnings per share | 0.03p | (0.86)p |
+------------------------------------------------------------+---------+---------+
| Diluted earnings per share | 0.03p | (0.86)p |
| | | |
+------------------------------------------------------------+---------+---------+
12 Intangible assets
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| | Goodwill | | | Brands | Intellectual | Licences | Total |
| | GBPm | | Customer | GBPm | property | GBPm | |
| | | Franchises | | | GBPm | | GBPm |
| | | GBPm | relationships | | | | |
| | | | GBPm | | | | |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| COST | | | | | | | |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Balance at 1 October 2008 | 10.8 | - | - | 1.0 | 0.1 | 0.2 | 12.1 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Acquired through business | 9.1 | - | 3.2 | - | - | - | 12.3 |
| combinations | | | | | | | |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Discontinued business | (5.1) | - | - | - | - | - | (5.1) |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| BALANCE AT 30 SEPTEMBER 2009 | 14.8 | - | 3.2 | 1.0 | 0.1 | 0.2 | 19.3 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Balance at 1 October 2009 | 14.8 | - | 3.2 | 1.0 | 0.1 | 0.2 | 19.3 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Acquired through business | 1.3 | 1.7 | 0.2 | - | - | - | 3.2 |
| combinations | | | | | | | |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| BALANCE AT 30 SEPTEMBER 2010 | 16.1 | 1.7 | 3.4 | 1.0 | 0.1 | 0.2 | 22.5 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| AMORTISATION AND IMPAIRMENT | | | | | | | |
| LOSSES | | | | | | | |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Balance at 1 October 2008 | 5.7 | - | - | 0.4 | - | 0.1 | 6.2 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Amortisation for the year | - | - | 0.3 | 0.2 | - | 0.1 | 0.6 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Discontinued business | (5.1) | - | - | - | - | - | (5.1) |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| BALANCE AT 30 SEPTEMBER 2009 | 0.6 | - | 0.3 | 0.6 | - | 0.2 | 1.7 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Balance at 1 October 2009 | 0.6 | - | 0.3 | 0.6 | - | 0.2 | 1.7 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| Amortisation for the year | - | 0.2 | 0.4 | 0.2 | - | - | 0.8 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| BALANCE AT 30 SEPTEMBER 2010 | 0.6 | 0.2 | 0.7 | 0.8 | - | 0.2 | 2.5 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| CARRYING AMOUNTS | | | | | | | |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| At 1 October 2008 | 5.1 | - | - | 0.6 | 0.1 | 0.1 | 5.9 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| AT 30 SEPTEMBER 2009 | 14.2 | - | 2.9 | 0.4 | 0.1 | - | 17.6 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| At 1 October 2009 | 14.2 | - | 2.9 | 0.4 | 0.1 | - | 17.6 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
| AT 30 SEPTEMBER 2010 | 15.5 | 1.5 | 2.7 | 0.2 | 0.1 | - | 20.0 |
+-------------------------------+----------+------------+---------------+--------+--------------+----------+-------+
Amortisation and impairment charge
The amortisation and impairment charge is recognised in the operating costs line
of the income statement, with the exception of the goodwill relating to
discontinued operations which has been disclosed separately.
Goodwill acquired in a business combination is allocated at acquisition to the
cash generating units (CGU's) that are expected to benefit from that business
combination. Before recognition of impairment losses, the carrying amount of
goodwill had been allocated as follows:
+----------------+-----------------------------------------+----------+-------+
| Primary | CGU | | |
| Reporting | | | |
| Segment | | 2010 | 2009 |
| | | GBPm | GBPm |
+----------------+-----------------------------------------+----------+-------+
| AGRIBUSINESS | Rollex (Pty) Limited | 7.8 | 7.8 |
+----------------+-----------------------------------------+----------+-------+
| | Trak Auto Lda | 0.8 | - |
+----------------+-----------------------------------------+----------+-------+
| | Oceanfresh Seafoods (Pty) Limited | 0.5 | - |
+----------------+-----------------------------------------+----------+-------+
| | | 9.1 | 7.8 |
+----------------+-----------------------------------------+----------+-------+
| INFRASTRUCTURE | Luba Freeport Limited | 3.5 | 3.5 |
+----------------+-----------------------------------------+----------+-------+
| | KwikBuild Corporation Limited | 2.8 | 2.8 |
+----------------+-----------------------------------------+----------+-------+
| | | 6.3 | 6.3 |
+----------------+-----------------------------------------+----------+-------+
| TRANSPORTATION | Five Forty Aviation Limited | 0.1 | 0.1 |
+----------------+-----------------------------------------+----------+-------+
| | | 0.1 | 0.1 |
+----------------+-----------------------------------------+----------+-------+
| SUPPORT | Swissta Holdings Limited | 0.6 | 0.6 |
| SERVICES | | | |
+----------------+-----------------------------------------+----------+-------+
| TOTAL | | 16.1 | 14.8 |
+----------------+-----------------------------------------+----------+-------+
At 30 September 2010 accumulated impairment losses in respect of goodwill
totalled GBP0.6million (2009: GBP0.6 million) fully impairing the goodwill
related to Swissta Holdings Limited.
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired which include the current
economic environment. The recoverable amounts are determined from value in use
calculations. The key assumptions for the value in use calculations are those
regarding discount rates, growth rates, expected changes to selling prices and
direct costs during the periods considered.
Management estimates discount rates using pre-tax rates that reflect current
market assessments of the time value of money and the risks specific to the
units. The growth rates are based on management's assessment of the markets in
which the businesses are operating and reflect known contracts and customer
relationships combined with anticipated growth in markets and market share.
Industry growth forecasts are not always considered applicable as many of the
businesses are operating in non-established markets. Changes in the selling
prices and direct costs are based on past practices and expectations of future
changes in the individual markets.
The Group prepares cash flow forecasts derived from the most recent financial
budgets included in the individual reporting unit's five year business plan
which are approved by management. For Rollex (Pty) Limited and KwikBuild
Corporation Limited the Directors have not considered cashflow beyond the five
year period in determining value in use. The forecasts used for these businesses
are the three year plan approved by the Board with years 4 and 5 based on year 3
performance escalated for growth of 5% in Rollex (Pty) Limited and 10% in
Kwikbuild Corporation Limited. For Luba Freeport Limited, reflecting the
significant capital investments in the project and the length of the remaining
operating concession (18 years), the Directors have extended the 3 year forecast
approved by the Board to reflect the remaining life of the concession using a 5%
growth rate over this period in determining value in use. For Trak Auto Lda and
Oceanfresh Seafoods (Pty) Limited the Directors have considered the 5 year
acquisition case business models updated for current development as appropriate.
The pre-tax rates used to discount the forecast cash flows within Agribusiness
are Rollex (Pty) Limited 12%; Infrastructure, Luba Freeport Limited 10% (2009:
10%) and KwikBuild Corporation Limited 15% (2009: 15%); and Transportation,
being Five Forty Aviation Limited 15% (2009: 15%).
Management carried out a range of sensitivity analysis on all the assumptions
used for each business. There is no single factor impacting the sensitivity of
the CGU analysis, other than the continued growth in the core markets as noted.
The results of this analysis confirmed that there was sufficient headroom in the
carrying value of goodwill for these entities. The Directors do not consider
that any reasonably possible scenario currently foreseen could result in
goodwill impairment.
Estimates and judgements
The Directors believe that the estimates and judgments used in preparing these
financial statements would not have a material impact on the carrying values of
the intangible assets described above.
13 Property, plant and equipment
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| | Long | Short | Plant | Fixtures | Aircraft | Total |
| | leasehold | leasehold | and | and | GBPm | GBPm |
| | land | land and | machinery | fittings | | |
| | and | buildings | GBPm | GBPm | | |
| | buildings | GBPm | | | | |
| | GBPm | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| COST | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Balance at 1 October 2008 | 10.0 | 39.7 | 5.5 | 2.7 | 6.6 | 64.5 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Additions | 7.1 | 3.6 | 1.0 | 1.5 | 1.5 | 14.7 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Business combinations | 0.7 | - | 2.4 | - | - | 3.1 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Disposals | - | - | (1.2) | (0.2) | (3.2) | (4.6) |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Effect of movements in | (0.7) | 4.1 | 0.8 | 0.4 | 0.4 | 5.0 |
| foreign exchange | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| BALANCE AT 30 SEPTEMBER 2009 | 17.1 | 47.4 | 8.5 | 4.4 | 5.3 | 82.7 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Balance at 1 October 2009 | 17.1 | 47.4 | 8.5 | 4.4 | 5.3 | 82.7 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Additions | 0.9 | 4.3 | 2.1 | 1.7 | 0.1 | 9.1 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Business Combinations | - | - | 0.6 | 0.1 | - | 0.7 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Additions due to joint | - | 11.1 | - | 1.0 | - | 12.1 |
| venture becoming a subsidiary | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Non-controlling interest | 25.5 | - | - | - | - | 25.5 |
| contribution | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Disposals | (0.4) | - | (0.3) | (0.1) | - | (0.8) |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Effect of movements in | (2.2) | 0.8 | 1.2 | (1.1) | 0.1 | (1.2) |
| foreign exchange | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| BALANCE AT 30 SEPTEMBER 2010 | 40.9 | 63.6 | 12.1 | 6.0 | 5.5 | 128.1 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| DEPRECIATION AND IMPAIRMENT | | | | | | |
| LOSSES | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Balance at 1 October 2008 | - | 4.4 | 1.6 | 1.1 | 0.6 | 7.7 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Depreciation charge for the | 0.5 | 1.9 | 1.6 | 0.6 | 0.7 | 5.3 |
| year | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Disposals | - | - | - | (0.1) | (0.8) | (0.9) |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Effect of movements in | 0.2 | 0.2 | 0.2 | - | 0.2 | 0.8 |
| foreign exchange | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| BALANCE AT 30 SEPTEMBER 2009 | 0.7 | 6.5 | 3.4 | 1.6 | 0.7 | 12.9 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Balance at 1 October 2009 | 0.7 | 6.5 | 3.4 | 1.6 | 0.7 | 12.9 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Depreciation charge for the | 0.1 | 2.7 | 2.0 | 0.8 | 0.3 | 5.9 |
| year | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Disposals | - | - | (0.3) | (0.1) | - | (0.4) |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| Effect of movements in | - | 0.2 | 0.7 | (0.4) | - | 0.5 |
| foreign exchange | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| BALANCE AT 30 SEPTEMBER 2010 | 0.8 | 9.4 | 5.8 | 1.9 | 1.0 | 18.9 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| CARRYING AMOUNTS | | | | | | |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| At 1 October 2008 | 10.0 | 35.3 | 3.9 | 1.6 | 6.0 | 56.8 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| At 30 September 2009 | 16.4 | 40.9 | 5.1 | 2.8 | 4.6 | 69.8 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| At 1 October 2009 | 16.4 | 40.9 | 5.1 | 2.8 | 4.6 | 69.8 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
| At 30 September 2010 | 40.1 | 54.2 | 6.3 | 4.1 | 4.5 | 109.2 |
+-------------------------------+-----------+-----------+-----------+----------+----------+-------+
During the year, the Company acquired fixed assets for GBP0.5m (GBP2009:
GBPnil), with a depreciation charge of GBP0.1m (2009: GBPnil) in the year. The
net book value as at 30 September 2010 was GBP0.4m (2009:GBPnil). These fixed
assets relate to fixtures and fittings.
Leased plant, machinery and aircraft
At 30 September 2010, the net carrying amount of leased assets were GBP0.4
million (2009:GBP1.5 million). See note 24 for details of the lease obligations.
Revalued long leasehold land and buildings
The GBP25.5 million recognition of long leasehold land and buildings in the year
relates to the valuation of the land assigned under the concession agreement
from GEPetrol following the completion of Phase 1 development and capitalisation
of Lonrho loans. The value had not previously been recognised as assignment and
availability of the land is effectively established following Phase 1
development completion.
Long leasehold land and buildings, relating to Hotel Cardoso SARL and Sociedade
Comercial Bytes & Pieces Limitada, were revalued in June 2008 and January 2009
respectively, by Zambujo & Associados Lda, independent valuers, on the basis of
market value. The valuations conform to International Valuation Standards and
were based on recent market transactions at arm's length terms for similar
properties. The Directors believe these valuations remain appropriate and
accordingly have not commissioned new valuations since January 2009.
On 30 September 2010, had revalued long leasehold land and buildings been
carried at historical cost less accumulated depreciation, their carrying amount
would be approximately GBP1.9 million (2009: GBP2.0 million). The revaluation
surplus is disclosed in note 23. The revaluation surplus arises in a subsidiary
and cannot be distributed to the parent due its legal restrictions in the
country of incorporation.
Assets in the course of construction
Included within short leasehold land and buildings are assets in the course of
construction totalling GBP1.4 million (2009: GBP8.3 million) which are not
depreciated until they are brought into use.
Capital commitments
Details of capital commitments in relation to property, plant and equipment are
disclosed in note 31.
Borrowing costs
The amount of borrowing costs in respect of interest capitalised during the year
was GBP0.1 million (2009: GBP0.3 million) and has been included within long
leasehold land and buildings.
14 Biological assets
+------------------------------------------+----------+-----------+---------------+
| | | Livestock | Total |
| | Stone | GBPm | GBPm |
| | fruit | | |
| | orchards | | |
| | GBPm | | |
+------------------------------------------+----------+-----------+---------------+
| | | | |
+------------------------------------------+----------+-----------+---------------+
| Balance at 1 October 2009 | - | - | - |
+------------------------------------------+----------+-----------+---------------+
| Due to physical changes | 8.9 | 0.1 | 9.0 |
+------------------------------------------+----------+-----------+---------------+
| | | | |
+------------------------------------------+----------+-----------+---------------+
| BALANCE AT 30 SEPTEMBER 2010 | 8.9 | 0.1 | 9.0 |
+------------------------------------------+----------+-----------+---------------+
The Group has a 200 hectare stone fruit orchard in Zimbabwe that grows a range
of stone fruits. The fair value at the start of the plantation cycle was not
considered material due to the risks attached to the start up of operations. The
cycle has now reached a point where 47 hectares of the orchard has developed and
is about to yield fruit. The fair value at the end of the plantation cycle
represents the discounted value of future net cashflows over the life of the
orchard, taking into account the expected yield of the fruit, at a current
market value discounted at a rate of 15% over the future period. The Group has
used a third party to assist in its valuation. A 1% change in discount rate
would affect the value by GBP0.7 million.
At the point of harvest, the harvested fruits will be transferred to inventory
and accounted for under IAS 2 - Inventory.
The discounted cashflows for the orchard represent the future discounted revenue
less estimated point of sale costs.
The Directors note that there is significant estimation and judgement in the
valuation of the biological assets. There is also significant operational risk
associated with the orchard including flooding, frost impact and general loss of
plantation and harvest.
At 30 September 2010 stone fruit trees comprised approximately 108,000 peach
trees and 11,000 blueberry bushes (2009: Nil) which range from newly established
trees to plantations that are 2 years old and are producing fruit for current
harvest.
At 30 September 2010 livestock comprised 153 cattle, of which 9 are less than
one year old and considered to be immature assets. During the year the Group did
not sell any cattle.
15 Investments in subsidiaries
The investment by the Company in respect of Lonrho Africa (Holdings) Limited is
stated at cost. This is subject to impairment testing.
A list of principal subsidiaries is set out in note 34.
16 Investments in associates and joint ventures
+--------------------------------------------+----------+----------+--------+-------+-------+
| | Group | Company |
+ +------------------------------+---------------+
| | 2010 | 2009 | 2010 | 2009 |
| | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------------+--------------------------------------------+---------------------+--------+-------+
| At 1 October | 9.2 | 8.8 | | |
| | | | 7.7 | 7.3 |
+--------------------------------------------+---------------------+--------+-------+-------+
| Acquisition of joint venture | - | 1.5 | - | - |
+--------------------------------------------+---------------------+--------+-------+-------+
| Transfer to business acquisitions | - | (2.2) | - | - |
+--------------------------------------------+---------------------+--------+-------+-------+
| Additions to associate | 0.1 | 0.9 | - | 0.4 |
+--------------------------------------------+---------------------+--------+-------+-------+
| Transfer from joint venture to | (0.9) | - | - | - |
| subsidiary(2) | | | | |
+--------------------------------------------+---------------------+--------+-------+-------+
| Share of (loss) after taxation - joint | (0.4) | (0.2) | - | - |
| ventures | | | | |
+--------------------------------------------+---------------------+--------+-------+-------+
| Share of (loss)/profit after taxation - | (1.1) | 0.4 | - | - |
| associates (1) | | | | |
+--------------------------------------------+---------------------+--------+-------+-------+
| Write back of impairment(1) | 3.4 | - | - | - |
+--------------------------------------------+---------------------+--------+-------+-------+
| AT 30 SEPTEMBER | 10.3 | 9.2 | 7.7 | 7.7 |
+--------------------------------------------+---------------------+--------+-------+-------+
| Additions to associates represents the purchase of additional shares in Lonrho Mining |
| Limited (see note 33) |
+-------------------------------------------------------------------------------------------+
| | | | | | |
+--------------------------------------------+----------+----------+--------+-------+-------+
(1) The net value of the write back of impairment and share of loss in
associate of GBP2.3 million is shown in the consolidated income statement, as
"share of results of associates."
(2) The transfer from joint venture to subsidiary relates to control of Grand
Karavia SPRL being obtained and the joint venture being classified as a
subsidiary. This reclassification has resulted in fixed assets of GBP12.1
million, loans of GBP10.4 million, inventory of GBP0.2 million, receivables of
GBP0.3 million and other creditors of GBP0.2 million being recognised.
The Group had the following investments in associates and joint ventures at the
balance sheet date:
+--------------------------+-----------+----------+--------+
| | Country | Ownership of |
| | | ordinary share |
| | | capital |
+--------------------------+-----------+-------------------+
| | | 2010 | 2009 |
+--------------------------+-----------+----------+--------+
| Associates | | | |
+--------------------------+-----------+----------+--------+
| LonZim Plc+ | Isle | 24.61% | 27.87% |
| | of Man | | |
+--------------------------+-----------+----------+--------+
| Lonrho Mining Limited | Australia | 13.16% | 25.32% |
+--------------------------+-----------+----------+--------+
| Arlington Associates | UK | 20.00% | 20.00% |
| Limited | | | |
+--------------------------+-----------+----------+--------+
| | | | |
+--------------------------+-----------+----------+--------+
| Joint ventures | | | |
+--------------------------+-----------+----------+--------+
| Grand Karavia SPRL | DRC | - | 50.00% |
+--------------------------+-----------+----------+--------+
+ Held directly by Lonrho Plc.
Lonrho Mining Limited
Lonrho Mining Limited was presumed not to be an associate in 2007 due to the
Group not being able to exercise significant influence over the company. As a
result of a change in the Board of Lonrho Mining Limited in September 2008, this
was no longer the case and hence it was reclassified from other non-current
asset investments with effect from this date.
Following the rights issue that the Group did not participate in, the
shareholding was diluted to 13.16% at the year end. The Group still exerts
significant influence due to the Board positions held by Lonrho.
The value of the Group's investment in Lonrho Mining Limited was impaired by
GBP4.0 million in 2008, to reflect the fall in the value of the shares on the
Australian Securities Exchange. The impairment loss was included in share of
loss after taxation. At 30 September 2010, Lonrho Mining Limited's share value
had risen, and thus GBP3.1 million of the impairment loss has been written back
and included in the share of profit after taxation. The Directors consider that
this is due to a change in the long term outlook of the business, primarily in
relation to developments in the mine plan.
Summary financial information on associates and joint ventures (100%)
+---------------------------------+----------------+-------------+--------+----------+-------+
| | | | | Revenues | Loss |
| | | | | for the | for |
| | Assets | Liabilities | Equity | year | the |
| | GBPm | GBPm | | GBPm | year |
| | | | GBPm | | |
| | | | | | GBPm |
+---------------------------------+----------------+-------------+--------+----------+-------+
| 2010 | | | | | |
+---------------------------------+----------------+-------------+--------+----------+-------+
| Associates | | | | | |
+---------------------------------+----------------+-------------+--------+----------+-------+
| LonZim Plc* | 36.3 | (4.4) | 31.9 | 4.9 | (5.1) |
+---------------------------------+----------------+-------------+--------+----------+-------+
| Lonrho Mining Limited | 4.7 | (0.2) | 4.5 | - | (1.7) |
+---------------------------------+----------------+-------------+--------+----------+-------+
| Arlington Associates Limited | - | - | - | - | (0.1) |
+---------------------------------+----------------+-------------+--------+----------+-------+
| | 41.0 | (4.6) | 36.4 | 4.9 | (6.9) |
+---------------------------------+----------------+-------------+--------+----------+-------+
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| | | | | Revenues | Profit/(loss) |
| | | | | for the | for the |
| | | | | year/period | year/period |
| | | | | from | from |
| | Assets | Liabilities | Equity | acquisition | acquisition |
| | GBPm | GBPm | | GBPm | GBPm |
| | | | GBPm | | |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| 2009 | | | | | |
| | | | | | |
| | | | | | |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| Associates | | | | | |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| LonZim Plc* | 37.4 | (3.9) | 33.5 | 2.6 | 1.2 |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| Lonrho Mining Limited | 2.7 | (2.5) | 0.2 | - | 0.7 |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| Arlington Associates Limited | 0.1 | - | 0.1 | - | (0.3) |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| | 40.2 | (6.4) | 33.8 | 2.6 | 1.6 |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| Joint ventures | | | | | |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
| Grand Karavia SPRL | 2.6 | - | 2.6 | - | (0.4) |
+---------------------------------+----------------+-------------+--------+-------------+---------------+
* The reported LonZim profit is adjusted to exclude amortisation of the element
of the non-compete agreement not recognised in these accounts on formation of
LonZim.
LonZim Plc
The market value of the Group's investment in LonZim Plc at 30 September 2010
was GBP2.1 million (2009: GBP2.2 million) with a book value of GBP5.9 million
(2009: GBP6.9 million). The entity's year end is 31 August and it was
incorporated on 25 October 2007. It was quoted on the AIM market of the London
Stock Exchange on 11 December 2007 whereby Lonrho Plc received 20% of the shares
in exchange for a non-compete agreement in Zimbabwe and the Beira corridor of
Mozambique. At 1 December 2010 the market value of the Group's investment in
LonZim Plc was GBP2.7million. The Directors do not believe there is any need for
impairment in the carrying value of the investment in LonZim Plc.
Grand Karavia SPRL
On 1 April 2010 Lonrho Plc obtained Board control of Grand Karavia SPRL and has
changed the status of the investment from a joint venture to a subsidiary.
Estimates and judgements
The Directors use estimates when assessing the carrying value of the Group's
investments in associates and joint ventures. In assessing the carrying value of
these investments, the Directors consider a number of sources of information
including financial forecasts prepared by management and market information
where available. In considering impairment risks, the Directors have regard to
the quoted share price of Lonrho Mining Limited and LonZim Plc. Management
forecasts have been used to assess whether impairment of the Group's other
investments in associates and joint ventures was necessary. Taking all of these
factors into account, including the early stage of development of these
businesses, whilst the carrying value of these interests exceed their quoted
market values at 30 September 2010 the Directors do not consider these
investments impaired.
The Directors believe the estimates and judgements used in preparing the
financial statements of associates and joint ventures do not have a material
impact on the carrying values of investments described above. Where associates
and joint ventures do not have 30 September as their year end the most recent
audited financial statements, adjusted as appropriate to align with the Lonrho
year end, are used for consolidation purposes.
17 Other investments
+----------------------------------------------------+----------+----------+
| | |
+ +---------------------+
| | 2010 | 2009 |
| | GBPm | GBPm |
+----------------------------------------------------+----------------------------------------------------+----------+
| At 1 October | 0.6 | 0.7 |
+----------------------------------------------------+----------+----------+
| Acquired in year | 0.4 | - |
+----------------------------------------------------+----------+----------+
| Impairment charge | (0.4) | (0.1) |
+----------------------------------------------------+----------+----------+
| AT 30 SEPTEMBER | 0.6 | 0.6 |
+----------------------------------------------------+----------+----------+
These investments present the Group with opportunity for return through dividend
income and trading gains. None are traded on active equity markets. They have no
fixed maturity or coupon rate. The fair values, and carrying values, of these
investments are stated at cost less provisions for impairment.
The Directors consider the fair value of these investments is equal to their
book value. The impairments are based on a review of the Company's net assets
and prospects.
Other investments are classified as available-for-sale financial assets.
18 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
+-------------------------------------------------+---------+------+------+----------+-----+
| | Assets | Liabilities |
+ +----------------+-----------------------+
| | 2010 | 2009 | 2010 | 2009 |
| | GBPm | GBPm | GBPm | GBPm |
+-------------------------------------------------+-------------------------------------------------+---------+-------------+----------+
| At 1 October | - | - | 3.0 | 0.7 |
+-------------------------------------------------+---------+------+------+----------------+
| Acquisition of intangible assets from | - | - | - | 1.0 |
| acquisition of subsidiaries | | | | |
+-------------------------------------------------+---------+------+------+----------------+
| Recognised in period in respect of current | 0.3 | - | - | - |
| trading losses | | | | |
+-------------------------------------------------+---------+------+------+----------------+
| Revaluation of property, plant and equipment | - | - | - | 1.0 |
+-------------------------------------------------+---------+------+------+----------------+
| On acquisition of subsidiary | 0.3 | - | - | - |
+-------------------------------------------------+---------+------+------+----------------+
| Exchange differences | 0.1 | - | - | 0.3 |
+-------------------------------------------------+---------+------+------+----------------+
| AT 30 SEPTEMBER | 0.7 | - | 3.0 | 3.0 |
+-------------------------------------------------+---------+------+------+----------------+
| | | | | | |
+-------------------------------------------------+---------+------+------+----------+-----+
The deferred tax liability at 1 October 2010 and 2009 related to the revaluation
of property, plant and equipment.
There have been no deferred tax assets and liabilities off-set in the current or
proceeding period.
The deferred tax asset relates to previous trading losses. The asset will be
recoverable in future periods, which is supported by the future cashflows of the
business.
Unrecognised deferred tax assets
Additional deferred tax assets have not been recognised in respect of tax losses
totalling GBP6.5 million (2009: GBP4.1 million) due to uncertainty against the
ability to deduct these losses against future profits.
19 Inventories
+------------------------------------------+--------------------------+------+
| | 2010 | 2009 |
| | GBPm | GBPm |
+------------------------------------------+--------------------------+------+
| Raw materials and consumables | 1.4 | 0.9 |
+------------------------------------------+--------------------------+------+
| Finished goods | 3.5 | 2.5 |
+------------------------------------------+--------------------------+------+
| | 4.9 | 3.4 |
+------------------------------------------+--------------------------+------+
20 Trade and other receivables
+----------------------------------------------------+----------------------------------------------------+-------+------+----------+----------+
| | Group | Company |
+ +------------------------------------------------------------+----------------------------+
| | 2010 | 2009 | 2010 | 2009 |
| | GBPm | GBPm | GBPm | GBPm |
+----------------------------------------------------+----------------------------------------------------+-------+-----------------+----------+
| Amounts receivable from the sale of goods and | 16.8 | 18.6 | 0.4 | - |
| services | | | | |
+----------------------------------------------------+----------------------------------------------------+-------+------+---------------------+
| Amounts due from associates | 1.0 | - | - | - |
+----------------------------------------------------+----------------------------------------------------+-------+------+---------------------+
| Other receivables | 10.5 | 7.8 | 0.2 | 0.5 |
+----------------------------------------------------+----------------------------------------------------+-------+------+---------------------+
| Pre-payments and accrued income | 5.6 | 6.0 | 0.2 | - |
+----------------------------------------------------+----------------------------------------------------+-------+------+---------------------+
| Amounts owed by Group undertakings | - | - | 84.9 | 55.8 |
+----------------------------------------------------+----------------------------------------------------+-------+------+---------------------+
| | 33.9 | 32.4 | 85.7 | 56.3 |
+----------------------------------------------------+----------------------------------------------------+-------+------+---------------------+
| | | | | | |
+----------------------------------------------------+----------------------------------------------------+-------+------+----------+----------+
The average credit period taken on sales of goods and services is 57 days (2009:
66 days). No interest is charged on receivables.
The Directors consider the carrying amount of trade and other receivables for
the Group and Company approximates to their fair value.
+---------------------------------------------------------------+------+------+
| | 2010 | 2009 |
+---------------------------------------------------------------+------+------+
| Movement in the allowance for doubtful debts | GBPm | GBPm |
+---------------------------------------------------------------+------+------+
| At 1 October | 0.3 | 0.1 |
+---------------------------------------------------------------+------+------+
| Increase in allowance recognised in the income statement | 0.6 | 0.2 |
+---------------------------------------------------------------+------+------+
| AT 30 SEPTEMBER | 0.9 | 0.3 |
+---------------------------------------------------------------+------+------+
Refer to note 29 for further information on credit risk management.
21 Cash and cash equivalents
+------------------------------------------------+---------------------+-------+
| | 2010 | 2009 |
+------------------------------------------------+---------------------+-------+
| | GBPm | GBPm |
+------------------------------------------------+---------------------+-------+
| Bank balances | 7.8 | 6.9 |
+------------------------------------------------+---------------------+-------+
| Bank overdrafts | (3.9) | (0.9) |
+------------------------------------------------+---------------------+-------+
| CASH AND CASH EQUIVALENTS IN THE STATEMENT | 3.9 | 6.0 |
| OF CASH FLOWS | | |
+------------------------------------------------+---------------------+-------+
The Company had a bank balance of GBP0.6 million at 30 September 2010 (2009:
GBP(0.7) million).
22 Capital and reserves
Group reconciliation of movement in capital and reserves
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| | | Attributable to equity holders | | | | |
| | | of the parent | | | | |
+-----------------+---------+-----------------------------------------------------------+----------+-------+-----------------+--------+
| | Share | Share | Translation | Share | Revaluation | Retained | | Total | Non-controlling | Total |
| | capital | premium | reserve | option | reserve | earnings | Other | | | equity |
| | GBPm | GBPm | GBPm | reserve | GBPm | GBPm | | GBPm | interest | GBPm |
| | | | | GBPm | | | reserves | | GBPm | |
| | | | | | | | | | | |
| | | | | | | | GBPm | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| At 1 October | 4.6 | 91.3 | - | 2.2 | 4.5 | (33.0) | - | 69.6 | 0.1 | 69.7 |
| 2008 | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Share | 3.4 | 13.4 | - | - | - | - | - | 16.8 | - | 16.8 |
| capital | | | | | | | | | | |
| issued | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Share | - | - | - | 0.3 | - | - | - | 0.3 | - | 0.3 |
| options | | | | | | | | | | |
| issued | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Subsidiaries | - | - | - | - | - | - | - | - | 0.2 | 0.2 |
| acquired | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Subsidiaries | - | - | - | - | - | - | - | - | 2.9 | 2.9 |
| disposed | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Transfer | - | - | - | - | - | - | - | - | (0.7) | (0.7) |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Loss for the | - | - | - | - | - | (6.2) | - | (6.2) | 0.9 | (5.3) |
| period | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Foreign | - | - | (2.0) | - | (0.4) | - | - | (2.4) | (0.4) | (2.8) |
| exchange | | | | | | | | | | |
| translation | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| AT 30 | 8.0 | 104.7 | (2.0) | 2.5 | 4.1 | (39.2) | - | 78.1 | 3.0 | 81.1 |
| SEPTEMBER | | | | | | | | | | |
| 2009 | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| At 1 October | 8.0 | 104.7 | (2.0) | 2.5 | 4.1 | (39.2) | - | 78.1 | 3.0 | 81.1 |
| 2009 | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Share | 3.7 | 33.3 | - | - | - | - | - | 37.0 | - | 37.0 |
| capital | | | | | | | | | | |
| issued | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Share | - | - | - | 2.2 | - | - | - | 2.2 | - | 2.2 |
| options | | | | | | | | | | |
| issued | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Purchase of | - | - | - | - | - | - | (5.5) | (5.5) | (4.1) | (9.6) |
| non-controlling | | | | | | | | | | |
| interests | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Non-controlling | - | - | - | - | - | - | - | - | 25.5 | 25.5 |
| interests | | | | | | | | | | |
| contribution | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Minority | - | - | - | - | - | - | - | - | (0.4) | (0.4) |
| dividends | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Profit/(loss) | - | - | - | - | - | 0.3 | - | 0.3 | (0.5) | (0.2) |
| for the | | | | | | | | | | |
| period | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Transfer | - | - | - | - | - | - | - | - | 0.9 | 0.9 |
| from joint | - | - | - | - | - | - | - | - | (0.1) | (0.1) |
| venture to | | | | | | | | | | |
| subsidiary | | | | | | | | | | |
| Subsidiaries | | | | | | | | | | |
| acquired | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Transfer | - | - | - | - | - | 2.8 | - | 2.8 | (2.8) | - |
| between | | | | | | | | | | |
| accounts | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| Foreign | -- | - | (6.7) | - | (0.8) | - | - | (7.5) | (1.2) | (8.7) |
| exchange | | | | | | | | | | |
| translation | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
| AT 30 | 11.7 | 138.0 | (8.7) | 4.7 | 3.3 | (36.1) | (5.5) | 107.4 | 20.3 | 127.7 |
| SEPTEMBER | | | | | | | | | | |
| 2010 | | | | | | | | | | |
+-----------------+---------+---------+-------------+---------+-------------+-----------+----------+-------+-----------------+--------+
Share capital and share premium
+---------------------------------------------+------------------------+-------+
| | Ordinary shares |
+---------------------------------------------+--------------------------------+
| In millions of 1p shares | 2010 | 2009 |
+---------------------------------------------+------------------------+-------+
| On issue at 1 October | 799.1 | 454.9 |
+---------------------------------------------+------------------------+-------+
| Issued for cash | 251.2 | 308.9 |
+---------------------------------------------+------------------------+-------+
| Issued as part of acquisition | 120.3 | 35.3 |
+---------------------------------------------+------------------------+-------+
| Exercise of share options | 1.2 | - |
+---------------------------------------------+------------------------+-------+
| ON ISSUE AT 30 SEPTEMBER - FULLY PAID | 1,171.8 | 799.1 |
+---------------------------------------------+------------------------+-------+
The "purchase of non-controlling interests" relates to the purchase of the
remaining minority shareholdings in Rollex (Pty) Limited and Fresh Direct
Limited during the period.
The "non-controlling interests contribution" relates to the recognition of the
value associated with the long leasehold land and buildings provided by the
non-controlling interests in Luba Freeport Limited as described in note 14.
At the AGM of the Company on 31 March 2010, a resolution was passed to remove
the authorised share capital of the Company. At 30 September 2009, the
authorised share capital comprised 1,100,000,000 ordinary shares (2008:
550,000,000) of 1p each.
During the year ended 30 September 2010, the Company issued 160.3 million and
90.9 million shares both at the prices 10p (2009: 308.9 million and 35.3 million
at prices of 5p and 7p respectively). The costs of the share issues of GBP1.4
million (2009: GBP1.1 million) have been deducted from the share premium created
on issue.
The Company also issued 120.3 million shares at 10.98 pence in respect of the
purchase of the non-controlling interests in Fresh Direct Limited and Rollex
(Pty) Limited. 1.2 million shares were issued on the exercise of share options.
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 2010 (see note 26).
Company reconciliation of movement in capital and reserves
+------------------------------+------------------+---------+---------+----------+--------+
| | Share capital | Share | Share | Retained | Total |
| | GBPm | premium | option | earnings | GBPm |
| | | GBPm | reserve | GBPm | |
| | | | GBPm | | |
+------------------------------+------------------+---------+---------+----------+--------+
| At 1 October 2008 | 4.6 | 91.3 | 2.2 | (14.3) | 83.8 |
+------------------------------+------------------+---------+---------+----------+--------+
| Share capital issued | 3.4 | 13.4 | - | - | 16.8 |
+------------------------------+------------------+---------+---------+----------+--------+
| Equity settled transactions | - | - | 0.3 | - | 0.3 |
+------------------------------+------------------+---------+---------+----------+--------+
| Loss for the period | - | - | - | (7.0) | (7.0) |
+------------------------------+------------------+---------+---------+----------+--------+
| AT 30 SEPTEMBER 2009 | 8.0 | 104.7 | 2.5 | (21.3) | 93.9 |
+------------------------------+------------------+---------+---------+----------+--------+
| At 1 October 2009 | 8.0 | 104.7 | 2.5 | (21.3) | 93.9 |
+------------------------------+------------------+---------+---------+----------+--------+
| Share capital issued | 3.7 | 33.3 | - | - | 37.0 |
+------------------------------+------------------+---------+---------+----------+--------+
| Equity settled transactions | - | - | 2.2 | - | 2.2 |
+------------------------------+------------------+---------+---------+----------+--------+
| Loss for the period | - | - | - | (10.1) |(10.1) |
+------------------------------+------------------+---------+---------+----------+--------+
| AT 30 SEPTEMBER 2010 | 11.7 | 138.0 | 4.7 | (31.4) | 123.0 |
+------------------------------+------------------+---------+---------+----------+--------+
Translation reserve
The translation reserve comprises all foreign exchange differences arising from
the translation of the financial statements of foreign operations since the
conversion to Adopted IFRS on 1 October 2006.
Revaluation reserve
The revaluation reserve relates to property, plant and equipment (see note 14).
Share based payment reserve
The share based payment reserve comprises the charges arising from the
calculation of the share based payments posted to the income statement (see note
26).
23 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's
interest-bearing loans and borrowings. For more information about the Group's
exposure to interest rate and foreign currency risk, see note 29.
+---------------------------------------------------------------+-------+-------+
| | | |
| | 2010 | 2009 |
| | GBPm | GBPm |
+---------------------------------------------------------------+-------+-------+
| NON CURRENT LIABILITIES | | |
+---------------------------------------------------------------+-------+-------+
| Finance lease liabilities | 1.8 | 1.1 |
+---------------------------------------------------------------+-------+-------+
| Unsecured bank loan | 20.3 | 5.2 |
+---------------------------------------------------------------+-------+-------+
| Shareholder loans | 2.5 | 7.3 |
+---------------------------------------------------------------+-------+-------+
| Other loan | 1.8 | 2.8 |
+---------------------------------------------------------------+-------+-------+
| | 26.4 | 16.4 |
+---------------------------------------------------------------+-------+-------+
| CURRENT LIABILITIES | | |
+---------------------------------------------------------------+-------+-------+
| Unsecured bank loans | 2.8 | 1.2 |
| | | |
+---------------------------------------------------------------+-------+-------+
| Convertible loan note | - | 0.3 |
+---------------------------------------------------------------+-------+-------+
| Current portion of finance lease liabilities | 1.0 | 0.2 |
+---------------------------------------------------------------+-------+-------+
| Other loan | 1.8 | - |
+---------------------------------------------------------------+-------+-------+
| Bank overdrafts | 3.9 | 0.9 |
+---------------------------------------------------------------+-------+-------+
| | 9.5 | 2.6 |
+---------------------------------------------------------------+-------+-------+
At the year end the Company had interest bearing loans of GBP1.3m (2009:
GBPnil).
Finance leases
Finance lease liabilities are denominated in US dollars and are payable as
follows:
+---------------------------+----------+----------+----------+----------+----------+----------+
| | 2010 | 2009 |
+---------------------------+-------------------------------------------+---------------------+
| | Future | Interest | Present | Future | Interest | Present |
| | minimum | GBPm | value | minimum | GBPm | value |
| | lease | | of | lease | | of |
| | payments | | minimum | payments | | minimum |
| | GBPm | | lease | GBPm | | lease |
| | | | payments | | | payments |
| | | | GBPm | | | GBPm |
+---------------------------+----------+----------+----------+----------+----------+----------+
| Less than one year | 1.0 | - | 1.0 | 0.3 | (0.1) | 0.2 |
+---------------------------+----------+----------+----------+----------+----------+----------+
| Between one and five | 1.9 | (0.1) | 1.8 | 1.2 | (0.1) | 1.1 |
| years | | | | | | |
+---------------------------+----------+----------+----------+----------+----------+----------+
| | 2.9 | (0.1) | 2.8 | 1.5 | (0.2) | 1.3 |
+---------------------------+----------+----------+----------+----------+----------+----------+
Interest is payable on the leases at 9.5% per annum. Under the terms of the
lease agreements, no contingent rents are payable.
Bank overdrafts
Bank overdrafts are repayable on demand and are unsecured. The currency profile
is as follows:
+---------------------------------------------------------------+-------+-------+
| | | |
| | 2010 | 2009 |
| | GBPm | GBPm |
+---------------------------------------------------------------+-------+-------+
| South African Rand | | |
| Central African Franc US Dollar | 3.1 | - |
| Sterling | - | 0.1 |
| | 0.2 | 0.1 |
| | 0.6 | 0.7 |
| | | |
+---------------------------------------------------------------+-------+-------+
| | 3.9 | 0.9 |
+---------------------------------------------------------------+-------+-------+
| The weighted average interest rates paid were 12% (2009:12%). |
| |
| The Directors consider the carrying amount of the Group's loans and |
| borrowings approximates their fair value. |
+---------------------------------------------------------------+-------+-------+
24 Shareholder loans
+----------------------+----------+-------+----+---------------+-------+
| | | | | 2010 | 2009 |
| | | | | GBPm | GBPm |
+----------------------+----------+-------+----+---------------+-------+
| Shareholder loans | | | | 2.5 | 7.3 |
+----------------------+----------+-------+----+---------------+-------+
| | | | | 2.5 | 7.3 |
+----------------------+----------+-------+----+---------------+-------+
The loans are unsecured and are repayable at the discretion of the Directors.
25 Share options
At 30 September 2010 there were 89,305,000 (2009: 37,505,000) share options in
issue with an average exercise price of 12.6p (2009: 10.8p).
The following share options over 1p ordinary shares were granted under an
Unapproved Share option scheme on 1 April 2010:
+----------------------+------------+------------+----------+-----------------------+--------------+
| Name | Date | Number | Exercise | Period during | Market |
| | granted | of | Price | | price |
| | | share | | which | per |
| | | options | | exercisable | share |
| | | granted | | | at |
| | | | | | date |
| | | | | | of |
| | | | | | grant |
| | | | | | or |
| | | | | | modification |
+----------------------+------------+------------+----------+-----------------------+--------------+
| David Lenigas | 01.04.2010 | 20,000,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
+----------------------+------------+------------+----------+-----------------------+--------------+
| Geoffrey White | 01.04.2010 | 20,000,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
+----------------------+------------+------------+----------+-----------------------+--------------+
| David Armstrong | 01.04.2010 | 6,500,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
+----------------------+------------+------------+----------+-----------------------+--------------+
| Emma Priestley | 01.04.2010 | 1,000,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
+----------------------+------------+------------+----------+-----------------------+--------------+
| Other employees and | 01.04.2010 | 5,500,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
| consultants | | | | | |
+----------------------+------------+------------+----------+-----------------------+--------------+
| Total options in | | 53,000,000 | | | |
| issue | | | | | |
+----------------------+------------+------------+----------+-----------------------+--------------+
The following share options were outstanding as at 30 September 2010.
+------------------------+------------+------------+----------+-----------------------+--------------+
| Name | Date | Number | Exercise | Period during | Market |
| | granted | of | Price | which | price |
| | | share | | exercisable | per |
| | | options | | | share at |
| | | granted | | | date of |
| | | | | | grant or |
| | | | | | modification |
+------------------------+------------+------------+----------+-----------------------+--------------+
| | | | | | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| David Lenigas* | 25.01.2006 | 3,500,000 | 6.5p | 25.01.2006 - | 5.8p |
| | | | | 31.03.2011 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Emma Priestley* | 11.04.2006 | 1,250,000 | 6.5p | 11.04.2006 - | 5.8p |
| | | | | 10.04.2011 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| James Hughes* | 25.01.2006 | 1,000,000 | 6.5p | 25.01.2006 - | 5.8p |
| | | | | 24.01.2011 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Other employees and | 30.03.2006 | 1,500,000 | 17.0p | 30.03.2006 - | 15.0p |
| consultants | | | | 29.04.2011 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| | | | | | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| David Lenigas* | 30.04.2007 | 3,750,000 | 6.5p | 30.04.2007 - | 5.8p |
| | | | | 29.04.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Emma Priestley* | 30.04.2007 | 1,250,000 | 6.5p | 30.04.2007 - | 5.8p |
| | | | | 29.04.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Geoffrey White* | 30.04.2007 | 2,500,000 | 6.5p | 30.04.2007 - | 5.8p |
| | | | | 29.04.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Martin Horgan | 30.04.2007 | 1,000,000 | 34.5p | 30.04.2007 - | 32.5p |
| | | | | 29.04.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| James Hughes* | 30.04.2007 | 750,000 | 6.5p | 30.04.2007 - | 5.8p |
| | | | | 29.04.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Gerard Holden | 30.04.2007 | 3,500,000 | 34.5p | 30.04.2007 - | 32.5p |
| | | | | 29.04.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Other employees and | 30.04.2007 | 290,000 | 34.5p | 30.04.2007 - | 32.5p |
| consultants | | | | 29.04.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Other employees and | 30.04.2007 | 1,520,000 | 6.5p | 30.04.2007 - | 5.8p |
| consultants | | | | 29.04.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| | | | | | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| David Lenigas* | 20.07.2007 | 1,615,000 | 6.5p | 20.07.2007 - | 5.8p |
| | | | | 19.07.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Emma Priestley* | 20.07.2007 | 1,065,000 | 6.5p | 20.07.2007 - | 5.8p |
| | | | | 19.07.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Geoffrey White* | 20.07.2007 | 1,065,000 | 6.5p | 20.07.2007 - | 5.8p |
| | | | | 19.07.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Martin Horgan | 20.07.2007 | 200,000 | 44.0p | 20.07.2007 - | 39.5p |
| | | | | 19.07.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| James Hughes* | 20.07.2007 | 350,000 | 6.5p | 20.07.2007 - | 5.8p |
| | | | | 19.07.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Jean Ellis* | 20.07.2007 | 350,000 | 6.5p | 20.07.2007 - | 5.8p |
| | | | | 19.07.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Other employees and | 20.07.2007 | 100,000 | 44.0p | 20.07.2007 - | 39.5p |
| consultants | | | | 19.07.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Other employees and | 20.07.2007 | 250,000 | 6.5p | 20.07.2007 - | 5.8p |
| consultants* | | | | 19.07.2012 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| | | | | | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| David Lenigas | 13.01.2009 | 2,500,000 | 6.5p | 13.01.2009 - | 5.8p |
| | | | | 12.01.2014 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Emma Priestley | 13.01.2009 | 1,000,000 | 6.5p | 13.01.2009 - | 5.8p |
| | | | | 12.01.2014 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Geoffrey White | 13.01.2009 | 2,000,000 | 6.5p | 13.01.2009 - | 5.8p |
| | | | | 12.01.2014 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Frances Cook | 13.01.2009 | 500,000 | 6.5p | 13.01.2009 - | 5.8p |
| | | | | 12.01.2014 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Jean Ellis | 13.01.2009 | 500,000 | 6.5p | 13.01.2009 - | 5.8p |
| | | | | 12.01.2014 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| David Armstrong | 13.01.2009 | 1,000,000 | 6.5p | 13.01.2009 - | 5.8p |
| | | | | 12.01.2014 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Other employees and | 13.01.2009 | 2,000,000 | 6.5p | 13.01.2009 - | 5.8p |
| consultants | | | | 12.01.2014 | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| | | | | | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| David Lenigas | 01.04.2010 | 20,000,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Geoffrey White | 01.04.2010 | 20,000,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
+------------------------+------------+------------+----------+-----------------------+--------------+
| David Armstrong | 01.04.2010 | 6,500,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Emma Priestley | 01.04.2010 | 1,000,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Other employees and | 01,04.2010 | 5,500,000 | 13.75p | 01.04.2010-31.03.2015 | 12.5p |
| consultants | | | | | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| Total options issued | | 89,305,000 | | | |
+------------------------+------------+------------+----------+-----------------------+--------------+
| | | | | | |
+------------------------+------------+------------+----------+-----------------------+--------------+
* The exercise price was amended to 6.5p on 13 January 2009.
The following share options were exercised during the year.
+------------------------+------------+-----------+----------+----------+------------+----------+
| Name | Date | Number | Share | Exercise | | Pre tax |
| | granted | of | price | price | | gain at |
| | | share | at | | Date of | date of |
| | | options | date | | exercise | exercise |
| | | exercised | of | | | GBP |
| | | | exercise | | | |
+------------------------+------------+-----------+----------+----------+------------+----------+
| | | | | | | |
+------------------------+------------+-----------+----------+----------+------------+----------+
| Donald Strang | 30.04.2007 | 500,000 | 11.5p | 6.5p | 09.08.2010 | 25,000 |
+------------------------+------------+-----------+----------+----------+------------+----------+
| Donald Strang | 20.07.2007 | 200,000 | 11.5p | 6.5p | 09.08.2010 | 10,000 |
+------------------------+------------+-----------+----------+----------+------------+----------+
| Donald Strang | 13.01.2009 | 500,000 | 11.5p | 6.5p | 09.08.2010 | 25,000 |
+------------------------+------------+-----------+----------+----------+------------+----------+
| | | 1,200,000 | | | | |
+------------------------+------------+-----------+----------+----------+------------+----------+
The number of shares exercised in the table above is consistent with the number
of share options granted at the respective grant date.
In accordance with IFRS 2 'Share-based payments' share options granted or
re-priced during the year have been measured at fair value at the date of grant
or re-pricing and, in the case of re-priced options, the increase in the fair
value compared with the value of the original award at that date has been
recognised as an expense in the income statement with a corresponding increase
in equity. The fair value of the options granted has been estimated at the date
of grant using the Black-Scholes option-pricing model. The estimated fair value
of the options granted on 1 April 2010 was GBP2.3 million.
+-------------------------------------------+-------------------------------------------+------------+------------+------------+
| | Date of Grant |
+ +----------------------------------------------------------------------------------+
| | 01.04.2010 | 13.01.2009 | 20.07.2007 | 30.04.2007 |
+-------------------------------------------+-------------------------------------------+------------+------------+------------+
| Share price | 12.5p | 5.8p | 39.5p | 32.5p |
+-------------------------------------------+-------------------------------------------+------------+------------+------------+
| Exercise price | 13.75p | 6.5p | 44.0p | 34.5p |
+-------------------------------------------+-------------------------------------------+------------+------------+------------+
| Expected volatility | 59% | 49.0% | 45.3% | 45.3% |
+-------------------------------------------+-------------------------------------------+------------+------------+------------+
| Expected life | 2.5 | 2.5 | 2.5 | 2.5 |
| | years | years | years | years |
+-------------------------------------------+-------------------------------------------+------------+------------+------------+
| Expected dividends | 0.00 | 0.00 | 0.00 | 0.00 |
+-------------------------------------------+-------------------------------------------+------------+------------+------------+
| Risk-free interest rate | 2.95% | 5.50% | 5.50% | 5.50% |
+-------------------------------------------+-------------------------------------------+------------+------------+------------+
Volatility has been calculated by reference to the movement of the Company's
share price over the previous three and a half years.
All share options vest at the date of grant and the basis of settlement is in
shares of the Company.
26 Trade and other payables
+------------------------------------------------+--------+-------+-------+-------+
| | Group | Company |
+------------------------------------------------+----------------+---------------+
| | | | | |
| | 2010 | 2009 | 2010 | 2009 |
| | GBPm | GBPm | GBPm | GBPm |
+------------------------------------------------+--------+-------+-------+-------+
| Trade payables | 17.9 | 21.1 | 0.8 | - |
+------------------------------------------------+--------+-------+-------+-------+
| Amounts owed to Group undertakings | - | - | 0.4 | 0.4 |
+------------------------------------------------+--------+-------+-------+-------+
| Indirect tax and social security liabilities | 0.6 | 0.4 | 0.1 | - |
+------------------------------------------------+--------+-------+-------+-------+
| Deferred income | 1.5 | 4.0 | - | - |
+------------------------------------------------+--------+-------+-------+-------+
| Non-trade payables and accrued expenses | 9.5 | 11.0 | 0.3 | 0.5 |
+------------------------------------------------+--------+-------+-------+-------+
| | 29.5 | 36.5 | 1.6 | 0.9 |
+------------------------------------------------+--------+-------+-------+-------+
+------------------------------------------------+-------+-------+-------+-------+
| | | |
| | Group | Company |
+------------------------------------------------+---------------+---------------+
| | | | | |
| | 2010 | 2009 | 2010 | 2009 |
| | GBPm | GBPm | GBPm | GBPm |
+------------------------------------------------+-------+-------+-------+-------+
| Analysed as: | | | | |
+------------------------------------------------+-------+-------+-------+-------+
| Current liabilities | 27.0 | 36.5 | 1.2 | 0.9 |
+------------------------------------------------+-------+-------+-------+-------+
| Non-current liabilities | 2.5 | - | 0.4 | - |
+------------------------------------------------+-------+-------+-------+-------+
| | 29.5 | 36.5 | 1.6 | 0.9 |
+------------------------------------------------+-------+-------+-------+-------+
Trade payables principally comprise outstanding amounts for trade purchases and
on-going costs. The average credit period taken for trade purchases is 82 days
(2009: 45 days). The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
27 Notes to the cash flow statement
+-----------------------------------------------+-------+-------+------+------+
| | Group | Company |
+-----------------------------------------------+---------------+-------------+
| | 2010 | 2009 | 2010 | 2009 |
| | GBPm | GBPm | GBPm | GBPm |
+-----------------------------------------------+-------+-------+------+------+
| Depreciation of property, plant and equipment | | | | |
| Amortisation of intangible assets | | | | |
| Impairment of investment | 5.9 | 5.3 | 0.1 | - |
| | 0.8 | 0.6 | - | - |
| | 0.4 | - | - | - |
+-----------------------------------------------+-------+-------+------+------+
| Share based payment expense | 2.3 | 0.3 | 2.3 | 0.3 |
+-----------------------------------------------+-------+-------+------+------+
| Finance income | (2.9) | (5.4) | - | - |
| | | | | |
+-----------------------------------------------+-------+-------+------+------+
| Share of profit of associates | (1.9) | (0.2) | - | - |
| | | | | |
+-----------------------------------------------+-------+-------+------+------+
| Gain arising on fair valuation of biological | (9.0) | - | - | - |
| assets | | | | |
+-----------------------------------------------+-------+-------+------+------+
| Gain on disposals of assets/liabilities held | - | (2.2) | - | - |
| for sale | | | | |
+-----------------------------------------------+-------+-------+------+------+
| Loss on sale of intangible fixed asset | - | 0.1 | - | - |
| | | | | |
+-----------------------------------------------+-------+-------+------+------+
| Income tax expense | 0.7 | 0.8 | - | - |
| | | | | |
+-----------------------------------------------+-------+-------+------+------+
| ADJUSTMENTS TO LOSS FOR THE YEAR | (3.7) | (0.7) | 2.4 | 0.3 |
+-----------------------------------------------+-------+-------+------+------+
28 Financial instruments
The Company has no financial assets apart from the other receivable amounts owed
by and to Group undertakings included within note 21. The Company applies a
similar approach to credit risk management as the Group. The Directors believe
that there are no significant credit risks to the Company at the year end.
Exposure to credit, liquidity, interest rate and currency risks arises in the
normal course of the Group's business.
This note presents information about the Group's exposure to each of the above
risks, the Group's objectives, policies and processes for measuring and managing
risk, and the Group's management of capital which the Directors consider to be
the components of Total Equity excluding minority interests. Further
quantitative disclosures are included throughout these consolidated financial
statements. The Board of Directors have overall responsibility for the
establishment and oversight of the Group's risk management framework.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group has
adopted a policy of only dealing with credit worthy counterparties and obtaining
sufficient collateral where appropriate, as a means of mitigating the risk of
financial loss from defaults. No collateral is held at the year end. The Group's
exposure and the credit ratings of its counterparties are continuously monitored
and the aggregate value of transactions concluded is spread amongst approved
counterparties.
Trade receivables consist of a large number of customers, spread across diverse
industries and geographical areas. Ongoing credit evaluation is performed on the
financial condition of accounts receivable. The Group does not have any
significant credit risk exposure to any single counterparty or any Group of
counterparties having similar characteristics. The credit risk on liquid funds
is limited because the counterparties are banks with high credit- ratings
assigned by international credit rating agencies.
The carrying amount of financial assets recorded in the financial statements,
net of any allowances for losses, represents the Group's maximum exposure to
credit risk without taking account of the value of any collateral obtained. At
the balance sheet date, there were no significant credit risks. The maximum
exposure to credit risk at the balance sheet date was GBP41.7 million being the
total of the carrying amount of financial assets, excluding equity investments
as shown in the table below:
+-------------------------------------------------+-----------------+--------+
| | | |
| | 2010 | 2009 |
| | GBPm | GBPm |
+-------------------------------------------------+-----------------+--------+
| Cash and cash equivalents | | |
| Trade receivables | 7.8 | 6.9 |
| Other receivables(1) | 16.8 | 18.6 |
| | 11.5 | 7.8 |
+-------------------------------------------------+-----------------+--------+
| | 36.1 | 33.3 |
+-------------------------------------------------+-----------------+--------+
| (1) Other receivables includes other receivables of GBP10.5 million |
| (2009: GBP7.8 million) and amounts due from associates of GBP1.0 million |
| (2009: GBPnil) |
| |
| The ageing of trade receivables at the balance sheet date was: |
+----------------------------------------------------------------------------+
| | 2010 | 2009 |
+-------------------------------------------------+-----------------+--------+
| | GBPm | GBPm |
+-------------------------------------------------+-----------------+--------+
| Not due | 9.3 | 7.7 |
+-------------------------------------------------+-----------------+--------+
| Past due 0-30 days | 2.9 | 3.4 |
+-------------------------------------------------+-----------------+--------+
| Past due 31-60 days | 1.4 | 2.1 |
+-------------------------------------------------+-----------------+--------+
| More than 60 days past due | 3.2 | 5.4 |
+-------------------------------------------------+-----------------+--------+
| | 16.8 | 18.6 |
+-------------------------------------------------+-----------------+--------+
The movement on the provision for doubtful debts is disclosed in note 21. The
provision at the year end of GBP0.9 million (2009: GBP0.3 million) relates to
and is included within trade receivables more than 60 days past due. Other
amounts past due are considered collectible based on prior experience.
+---------------------------------------------------------+----------+--------+
| The maximum exposure to credit risk for trade | 2010 | 2009 |
| receivables by geographic region was: | GBPm | GBPm |
+---------------------------------------------------------+----------+--------+
| West Africa | 1.3 | 8.4 |
+---------------------------------------------------------+----------+--------+
| Southern Africa | 13.3 | 9.2 |
+---------------------------------------------------------+----------+--------+
| East Africa | 1.8 | 1.0 |
+---------------------------------------------------------+----------+--------+
| Europe | 0.4 | - |
+---------------------------------------------------------+----------+--------+
| | 16.8 | 18.6 |
+---------------------------------------------------------+----------+--------+
| | | |
| The maximum exposure to credit risk for trade | | |
| receivables at the balance sheet date by type of | | |
| counterparty: | | |
+---------------------------------------------------------+----------+--------+
| | 2010 | 2009 |
+---------------------------------------------------------+----------+--------+
| | GBPm | GBPm |
+---------------------------------------------------------+----------+--------+
| Wholesale customers | 16.8 | 18.6 |
+---------------------------------------------------------+----------+--------+
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which has built an appropriate liquidity risk management framework
for the management of the Group's and Company's short, medium and long term
funding and liquidity management requirements. The Group and Company manages
liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities by continuously monitoring forecast and actual cash flows
and matching the maturity profiles of financial assets and liabilities.
The following are the contractual maturities of financial liabilities, including
estimated interest payments and excluding the effect of netting agreements:
+------------------------+----------------+-------------+------+---------+---------+--------+
| | Carrying | Contractual | 2010 | 1 to | 2 to | 5years |
| | amount | cash flows | | <2years | <5years | and |
| | GBPm | GBPm | 1 | GBPm | GBPm | over |
| | | | year | | | GBPm |
| | | | or | | | |
| | | | less | | | |
| | | | GBPm | | | |
+------------------------+----------------+-------------+------+---------+---------+--------+
| Bank overdrafts | 3.9 | 3.9 | 3.9 | - | - | - |
+------------------------+----------------+-------------+------+---------+---------+--------+
| Trade and other | 29.5 | 29.5 | 27.0 | 2.5 | - | - |
| payables | | | | | | |
+------------------------+----------------+-------------+------+---------+---------+--------+
| Bank loans | 23.1 | 25.5 | 4.8 | 5.6 | 14.4 | 0.7 |
+------------------------+----------------+-------------+------+---------+---------+--------+
| Finance leases | 2.8 | 2.9 | 1.0 | 1.9 | - | - |
+------------------------+----------------+-------------+------+---------+---------+--------+
| Shareholder loans | 2.5 | 2.5 | 2.5 | - | - | - |
+------------------------+----------------+-------------+------+---------+---------+--------+
| Other loans | 3.6 | 3.6 | 1.8 | 1.8 | - | - |
+------------------------+----------------+-------------+------+---------+---------+--------+
| | 65.4 | 67.9 | 41.0 | 11.8 | 14.4 | 0.7 |
+------------------------+----------------+-------------+------+---------+---------+--------+
+-------------------------+----------------+-------------+------+---------+------+----------+--------+
| | 2009 |
+-------------------------+--------------------------------------------------------------------------+
| | Carrying | Contractual | 1 | 1 to | 2 to <5years | 5years |
| | amount | cash flows | year | <2years | GBPm | and |
| | GBPm | GBPm | or | GBPm | | over |
| | | | less | | | GBPm |
| | | | GBPm | | | |
+-------------------------+----------------+-------------+------+---------+-----------------+--------+
| Bank overdrafts | 0.9 | 0.9 | 0.9 | - | - | - |
+-------------------------+----------------+-------------+------+---------+------+-------------------+
| Trade and other | 36.5 | 36.5 | 36.5 | - | - | - |
| payables | | | | | | |
+-------------------------+----------------+-------------+------+---------+------+-------------------+
| Bank loans | 6.4 | 6.9 | 1.3 | 1.4 | 4.2 | - |
+-------------------------+----------------+-------------+------+---------+------+-------------------+
| Finance leases | 1.3 | 1.5 | 0.3 | 0.3 | 0.9 | - |
+-------------------------+----------------+-------------+------+---------+------+-------------------+
| Shareholder loans | 7.6 | 12.1 | 0.9 | 0.9 | 2.7 | 7.6 |
+-------------------------+----------------+-------------+------+---------+------+-------------------+
| Convertible loans | 0.3 | 0.3 | 0.3 | - | - | - |
+-------------------------+----------------+-------------+------+---------+------+-------------------+
| Other loans | 2.8 | 3.4 | 0.3 | 3.1 | - | - |
+-------------------------+----------------+-------------+------+---------+------+-------------------+
| | 55.8 | 61.6 | 40.5 | 5.7 | 7.8 | 7.6 |
+-------------------------+----------------+-------------+------+---------+------+-------------------+
| | | | | | | | |
+-------------------------+----------------+-------------+------+---------+------+----------+--------+
In respect of income-earning financial assets and interest-bearing financial
liabilities, the following table indicates their effective interest rates at the
balance sheet date and the periods in which they re-price.
+----------------------------+-----------+----------+-------+-------+--------+--------+
| | 2010 |
+----------------------------+--------------------------------------------------------+
| | Effective | Total | 1 | 1-2 | 2-5 | 5 |
| | interest | GBPm | year | years | years | years |
| | rate | | or | GBPm | GBPm | and |
| | % | | less | | | over |
| | | | GBPm | | | GBPm |
+----------------------------+-----------+----------+-------+-------+--------+--------+
| Cash and cash equivalents | 1% | 7.8 | 7.8 | - | - | - |
+----------------------------+-----------+----------+-------+-------+--------+--------+
| Loans | 8.6% | (29.2) | (8.4) | (6.8) | (13.3) | (0.7) |
+----------------------------+-----------+----------+-------+-------+--------+--------+
| Finance lease liabilities | 9.2% | (2.8) | (1.0) | (1.8) | | - |
+----------------------------+-----------+----------+-------+-------+--------+--------+
| Bank overdrafts | 10.2% | (3.9) | (3.9) | - | - | - |
+----------------------------+-----------+----------+-------+-------+--------+--------+
| | | (28.1) | (5.5) | (8.6) | (13.3) | (0.7) |
+----------------------------+-----------+----------+-------+-------+--------+--------+
+---------------------------+------------+----------+-------+-------+-------+-------+
| | 2009 |
+---------------------------+-------------------------------------------------------+
| | Effective | Total | 1 | 1-2 | 2-5 | 5 |
| | interest | GBPm | year | years | years | years |
| | rate | | or | GBPm | GBPm | and |
| | % | | less | | | over |
| | | | GBPm | | | GBPm |
+---------------------------+------------+----------+-------+-------+-------+-------+
| Cash and cash equivalents | 1% | 6.9 | 6.9 | - | - | - |
+---------------------------+------------+----------+-------+-------+-------+-------+
| Loans | 12% | (16.5) | (1.2) | (2.8) | (5.2) | (7.3) |
+---------------------------+------------+----------+-------+-------+-------+-------+
| Convertible loan note | 8% | (0.3) | (0.3) | - | - | - |
+---------------------------+------------+----------+-------+-------+-------+-------+
| Finance lease liabilities | 9.9% | (1.3) | - | (1.3) | - | - |
+---------------------------+------------+----------+-------+-------+-------+-------+
| Bank overdrafts | 12% | (0.9) | (0.9) | - | - | - |
+---------------------------+------------+----------+-------+-------+-------+-------+
| | | (12.1) | 4.5 | (4.1) | (5.2) | (7.3) |
+---------------------------+------------+----------+-------+-------+-------+-------+
Foreign currency risk management
The Group is exposed to foreign currency risk on sales, purchases and borrowings
that are denominated in a currency other than pounds sterling. The currencies
giving rise to this risk are primarily, US Dollars, South African Rand,
Mozambique Metical, Kenyan Shilling, Central African Franc and the Euro.
The carrying amount of the Group's foreign currency denominated monetary assets
and monetary liabilities, and its total net assets at the reporting date is as
follows:
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| | Monetary net | Total net |
| | assets | assets |
+--------------------------------------------+-------------------------------------------------------+-----------------+
| | 2010 | 2009 | 2010 | 2009 |
| | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| U.S.Dollar | (10.0) | (13.8) | 10.9 | 50.5 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| South African Rand | (6.5) | (7.7) | 10.0 | 12.3 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Mozambique Metical | 0.1 | 1.0 | 12.1 | 14.0 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Kenyan Shillings | (1.5) | - | 0.9 | - |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Central African Franc | (8.1) | (5.4) | 62.6 | (5.4) |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Angolan Kwanza | 0.1 | - | 1.0 | - |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Zambian Kwacha | (0.1) | - | - | - |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| | (26.0) | (25.9) | 97.5 | 71.4 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| The following significant exchange rates | | | | |
| applied during the year: | | | | |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| | Average Rate | Closing Rate |
+ +-------------------------------------------------------+-----------------+
| | 2010 | 2009 | 2010 | 2009 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| US Dollar | 1.56 | 1.55 | 1.58 | 1.60 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Euro | 1.16 | 1.15 | 1.16 | 1.09 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| South African Rand | 11.68 | 13.99 | 11.03 | 12.12 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Mozambique Metical | 48.64 | 40.35 | 57.39 | 46.36 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Kenyan Shilling | 125.91 | 125.11 | 133.45 | 124.99 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
| Central African Franc | 773.63 | 766.2 | 777.07 | 717.73 |
+--------------------------------------------+--------------------------------------------+----------+--------+--------+
The Company does not have any exposure to foreign currencies at the reporting
date (2009: GBPnil).
Foreign currency sensitivity analysis
A 10% strengthening of the UK sterling against the following currencies at 30
September would have increased/(decreased) equity and profit or loss by the
amounts shown below. This analysis assumes that all other variables remain
constant. The analysis is performed on the same basis for 2009.
+--------------------------------------------+----------+---------------+--------+---------------+
| | 2010 | 2009 |
+--------------------------------------------+--------------------------+------------------------+
| | Equity | Profit/(loss) | Equity | Profit/(loss) |
| | GBPm | GBPm | GBPm | GBPm |
+--------------------------------------------+----------+---------------+--------+---------------+
| US Dollar | 9.9 | (4.6) | (3.3) | (1.0) |
+--------------------------------------------+----------+---------------+--------+---------------+
| Mozambique Metical | 11.0 | 1.2 | (0.8) | 0.1 |
+--------------------------------------------+----------+---------------+--------+---------------+
| South African Rand | 9.1 | 4.4 | (0.6) | 0.1 |
+--------------------------------------------+----------+---------------+--------+---------------+
| Central African Franc | 56.9 | 0.2 | (0.3) | (0.3) |
+--------------------------------------------+----------+---------------+--------+---------------+
| Kenyan Shilling | 0.8 | (0.6) | - | - |
+--------------------------------------------+----------+---------------+--------+---------------+
A 10% weakening of UK sterling against the above currencies at 30 September
would have had the equal but opposite effect on the above currencies to the
amounts shown above, on the basis that all other variables remain constant.
Interest rate risk management
The Company and the Group are not exposed to interest rate risk due to entities
in the Group with larger borrowing, making these borrowing on long term, fixed
rate agreements. The only major loan carries a fixed interest rate as detailed
in note 24. The Company and the Group's exposures to interest rates on financial
assets and financial liabilities are detailed in the liquidity risk management
section of this note.
Capital management
The Board's policy for the Group and Company 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.
As the Group is in a phase of expansion, the key capital requirements are to
ensure that funding is available for current and planned projects. To date this
has been achieved through capital raises, and since the year end an issue of
convertible bonds.
The Group considers shareholders funds plus long term debt to represent capital
as defined by IAS 1.
Reflecting the stage of development of the Group, no formal dividend policy
exists.
Fair values
The Directors consider fair values are approximate to the carrying amounts shown
in the balance sheet in the current and proceeding year. The following
summarises the major methods and assumptions used in estimating the fair values
of financial instruments.
(a) Interest-bearing loans and borrowings
Fair value is calculated based on discounted expected future principal and
interest cash flows.
(b) Finance lease liabilities
The fair value is estimated as the present value of future cash flows,
discounted at market interest rates for homogeneous lease agreements. The
estimated fair values reflect change in interest rates.
(c) Trade and other receivables/payables
For receivables/payables with a remaining life of less than one year, the
notional amount is deemed to reflect the fair value. All other
receivables/payables are discounted to determine the fair value.
The fair value of assets and liabilities can be classed in three levels:
Level 1 - Fair values measured using quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 - Fair values measured using inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either
directly(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Fair values measured using inputs for the asset or liability that are
not based on observable market data (i.e. unobservable inputs).
All assets and liabilities held within Lonrho are within Level 1 of the
hierarchy.
29 Operating leases
At the balance sheet date, the Group had outstanding commitments for future
minimum lease payments under non-cancellable operating leases, which fall due as
follows:
+-----------------------------------+------+----------+------+----------+--------+-------+-------+------+
| | Aircraft | Property | Total |
+-----------------------------------+-----------------------------------+----------------+--------------+
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 |
+-----------------------------------------------------+-----------------+--------+-------+-------+------+
| GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------------------------------------------+-----------------+--------+-------+-------+------+
| Less than one year | 2.2 | - | 0.6 | 0.4 | 2.8 | 0.4 |
+-----------------------------------+------+-----------------+-------------------+-------+-------+------+
| Between one and five years | 3.4 | - | 2.9 | 1.4 | 6.3 | 1.4 |
+-----------------------------------+------+-----------------+-------------------+-------+-------+------+
| | 5.6 | - | 3.5 | 1.8 | 9.1 | 1.8 |
+-----------------------------------+------+-----------------+-------------------+-------+-------+------+
| | | | | | | | | |
+-----------------------------------+------+----------+------+----------+--------+-------+-------+------+
Included in the above, are property leases of the Company amounting to GBP0.1
million (2009: GBP0.3 million) less than 1 year and GBP0.8 million (2009: GBP0.2
million) between one and five years.
For leased aircraft, the amount disclosed includes all maintenance obligations.
30 Capital commitments
The Group has long term capital commitments in respect of an order for two ATR
aircraft (2009: ten). The total purchase price for the two aircraft is capped at
US$37.0 million (GBP23.5 million). The deposits for the two (2009: two)
aircraft of US$7.9 million (GBP4.9 million) have been paid and are included
within other receivables (note 21). The timing of the delivery and finance for
the two aircraft continues to be negotiated. An Export Credit Agency Promise of
Guarantee has been issued by Coface for 80% of the financing of the two
aircraft.
The above commitments are contingent on the successful arrangement of commercial
finance which will be arranged by ATR. Other capital commitments of GBP1.1
million will be paid within the next financial year (2009: GBP1.2 million).
The Company had no capital commitments at 30 September 2009 (2009: GBPnil). The
Group's share of capital commitments of joint ventures is GBPnil (2009: GBP4.5
million).
31 Contingent liabilities
There were no contingent liabilities at the balance sheet date (2009: GBPnil),
the outturn of which the Directors consider could materially impact the
financial statements. The Group has no contractual obligation to provide future
funding to associates and has no contingent liabilities in respect of its
associates.
32 Related parties
The Group has a related party relationship with its subsidiaries (see note 34),
associates and joint ventures (see note 17), companies in which the Group has an
investment, and with its Directors.
Transactions with subsidiaries
Transactions within the Group companies have been eliminated on consolidation
and are not disclosed in this note.
At the balance sheet date Lonrho Africa (Holdings) Limited owed the Company
GBP76.3 million (2009: GBP55.8 million). Lonrho Africa (Holdings) Limited holds
the operating bank accounts for the Group and the majority of the Group's
investments in subsidiaries. The movement on the intercompany balance represents
the transfer of cash raised during the year through the capital raises.
Transactions with associates
LonZim Plc
At the balance sheet date, the Company owned 24.61% of LonZim Plc (2009: 27.87%)
and exerts significant influence over the company. On admission to AIM in 2007
LonZim Plc issued shares to the value of GBP7.3 million in exchange for Lonrho
Plc entering into a non-compete agreement. The agreement covers a period of five
and a half years from November 2007.
Between 5 February 2009 and 11 February 2009 Lonrho Plc acquired 1,650,000
ordinary shares of GBP0.0001 each in LonZim Plc, taking its total interest to
8,940,000 ordinary shares, which represented an approximate 24.53 per cent.
holding in LonZim's total issued share capital at that time. The reduction in
the overall interest reflects the impact of a share issue by LonZim in December
2009 in which the Group did not participate.
During the period the Company charged GBP0.5 million (2009: GBP0.4 million) to
LonZim Plc as a management charge. At the balance sheet date GBP0.2 million was
due from LonZim Plc (2009: GBPnil).
In the prior year LonZim acquired 59,682,817 shares in Lonrho Plc at a weighted
average cost of 5p per share. At the prior year end LonZim Plc held 17,182,817
shares in Lonrho Plc. These were sold over the period to December 2009.
On 1 July 2009 LonZim acquired an aircraft from Lonrho Air Three (BVI) Limited,
a subsidiary of Lonrho Plc, for a total of US$4.3 million (GBP2.6 million). The
aircraft is leased to Five Forty Aviation Limited, a Lonrho subsidiary, for
US$50k million per month. The total lease income for the year to 30 September
2010 amounted to US$0.1 million (GBP0.1 million).
Investments
On 1 October 2008 LonZim leased two aircraft to 540 (Uganda) Limited, a Lonrho
subsidiary, for US$50k (GBP31k) per month under rolling monthly agreements. The
total lease expense for the year to 30 September 2010 amounted to US$0.6 million
(GBP0.4 million).
From 1 January 2009 until 31 July 2010 ForgetMeNot Africa Limited, a 51%
subsidiary of LonZim, leased office space from Lonrho Plc for GBP2k per month.
The total amount for the year amounted to GBP20k.
On 16 December 2008 Lonrho Africa (Holdings) Limited transferred the entire
share capital of Lonrho Africa Property (Holdings) Limited to LonZim Holdings
Limited for GBP1 consideration.
Lonrho Mining Limited
During the prior year the Group increased its stake in Lonrho Mining Limited
from 24.16% to 25.32% at a cost of GBP0.5 million. During the year Lonrho Mining
Limited issued new shares in which Lonrho did not participate, hence reducing
the holding to 13.16%. At the balance sheet date GBP0.9 million was due from
Lonrho Mining Limited (2009: GBP0.1 million) which arose from a short term
convertible interest bearing loan.
Arlington Associates Limited
In the prior year the Group completed its acquisition of 20% of the ordinary
share capital of Arlington Associates Limited for GBP0.04 million.
Swissta DRC SpRL
The Group holds 20% of Swissta DRC SpRL. At the balance sheet date GBP0.1
million (2009: GBP0.1 million) was due from Swissta DRC SpRL as a result of a
short term non-interest bearing loan.
Transactions with key management personnel
Key management personnel are considered to be the Company's Directors.
During the year GBP0.1 million (2009:GBP0.1 million) was charged to the Group by
DSG Chartered Accountants. Jean Ellis is a partner in this firm.
The key management personnel compensations are as follows:
+-----------------------------------------------+----+--------+--------+
| | | Year | Year |
| | | ended | ended |
| | | 2010 | 2009 |
+-----------------------------------------------+----+--------+--------+
| | | GBPm | GBPm |
+-----------------------------------------------+----+--------+--------+
| Short-term employee benefits | | 2.5 | 1.7 |
+-----------------------------------------------+----+--------+--------+
| Post-employment benefits | | 0.2 | - |
+-----------------------------------------------+----+--------+--------+
| Share based payment (see note 26) | | 2.3 | - |
+-----------------------------------------------+----+--------+--------+
| | | 5.0 | 1.7 |
+-----------------------------------------------+----+--------+--------+
Total remuneration is included in "staff costs" (see note 9).
Directors' remuneration
+----------------------------------+--------+--------+----------+--------+
| | Fees | Bonus | Benefits | Total |
| | | | in Kind | |
+----------------------------------+--------+--------+----------+--------+
| Excluding pension contributions: | GBP000 | GBP000 | GBP000 | GBP000 |
+----------------------------------+--------+--------+----------+--------+
| D Lenigas | 500 | 292 | - | 792 |
+----------------------------------+--------+--------+----------+--------+
| G White | 464 | 239 | 4 | 707 |
+----------------------------------+--------+--------+----------+--------+
| D Armstrong | 324 | 127 | 6 | 457 |
+----------------------------------+--------+--------+----------+--------+
| E Priestley | 300 | 45 | 19 | 364 |
+----------------------------------+--------+--------+----------+--------+
| Jean Ellis | 40 | 3 | 3 | 46 |
+----------------------------------+--------+--------+----------+--------+
| Ambassador Frances D Cook | 40 | 23 | - | 63 |
+----------------------------------+--------+--------+----------+--------+
| D Strang | 30 | 12 | - | 42 |
+----------------------------------+--------+--------+----------+--------+
| | 1,698 | 741 | 32 | 2,471 |
+----------------------------------+--------+--------+----------+--------+
| One-off pension contributions: G | | | | 213 |
| White | | | | |
+----------------------------------+--------+--------+----------+--------+
| Total Directors' remuneration | | | | 2,684 |
+----------------------------------+--------+--------+----------+--------+
There are no further recurring pension obligations in respect of the Directors
or other employees.
G White was the highest paid employee of the Company and the Group in the year,
with total remuneration of GBP920k.
33 Group entities
Principal subsidiaries
+-----------------------------------------+--------------------+-------------------+--------+
| | Country of | Ownership |
| | incorporation | interest |
| | | 2010 2009 |
+-----------------------------------------+--------------------+----------------------------+
| Luba Freeport Limited | Jersey | 63% | 63% |
+-----------------------------------------+--------------------+-------------------+--------+
| Five Forty Aviation Limited | Kenya | 49% | 49% |
+-----------------------------------------+--------------------+-------------------+--------+
| Lonrho Air (BVI) Limited | British Virgin | 100% | 100% |
| | Islands | | |
+-----------------------------------------+--------------------+-------------------+--------+
| Sociedade Comercial Bytes & Pieces | Mozambique | 65% | 65% |
| Limitada | | | |
+-----------------------------------------+--------------------+-------------------+--------+
| Complete Enterprise Solutions Limited | Mauritius | 50% | 50% |
+-----------------------------------------+--------------------+-------------------+--------+
| Complete Enterprise Solutions South | South Africa | 40% | 40% |
| Africa (Pty) Limited | | | |
+-----------------------------------------+--------------------+-------------------+--------+
| Indit Technology Distribution (Pty) | South Africa | 45% | 45% |
| Limited | | | |
+-----------------------------------------+--------------------+-------------------+--------+
| Swissta Holdings Limited | Mauritius | 100% | 100% |
+-----------------------------------------+--------------------+-------------------+--------+
| Swissta Mozambique Lda | Mozambique | 100% | 100% |
+-----------------------------------------+--------------------+-------------------+--------+
| Hotel Cardoso SARL | Mozambique | 59.04% | 59.04% |
+-----------------------------------------+--------------------+-------------------+--------+
| KwikBuild Corporation Limited | Isle of Man | 70.42% | 61.97% |
+-----------------------------------------+--------------------+-------------------+--------+
| Lonrho Africa (Holdings) Limited* | UK | 100% | 100% |
+-----------------------------------------+--------------------+-------------------+--------+
| Rollex (Pty) Limited | South Africa | 100% | 51% |
+-----------------------------------------+--------------------+-------------------+--------+
| e-Kwikbuild Housing Company (Pty) | South Africa | 35.91% | 32% |
| Limited | | | |
+-----------------------------------------+--------------------+-------------------+--------+
| Trak Auto Lda | Mozambique | 100% | - |
+-----------------------------------------+--------------------+-------------------+--------+
| Oceanfresh Seafoods (Pty) Limited | Mozambique | 51% | - |
+-----------------------------------------+--------------------+-------------------+--------+
| Fresh Direct Limited | South Africa | 100% | - |
+-----------------------------------------+--------------------+-------------------+--------+
| Grand Karavia SPRL | Democratic | 50% | - |
| | Republic of Congo | | |
+-----------------------------------------+--------------------+-------------------+--------+
| Complete Enterprise Solutions Zambia | Zambia | 50% | - |
| Limited | | | |
+-----------------------------------------+--------------------+-------------------+--------+
* Directly held by the Company.
Inclusion of all the subsidiaries in the Group would be excessive and therefore
only the significant trading entities are shown above.
Although the Group owns less than half of the voting power of Five Forty
Aviation Limited, it is able to govern the financial and operating policies of
the company by virtue of an agreement with the other investors of Five Forty
Aviation Limited. Consequently, the Group consolidates its interest in the
company.
Similarly for Complete Enterprise Solutions South Africa (Proprietary) Limited
and Indit Technology Distribution (Proprietary) Limited, e-Kwikbuild Housing
Company (Pty) Limited and Grand Karavia SPRL, the Group has Board control giving
it the ability to govern the financial and operating policies of the companies
and hence the Group consolidates its investment in these companies. In the case
of the Grand Karavia SPRL, control was obtained during the year (see note 17).
Exchange control procedures exist in Kenya, Mozambique and South Africa which
place restrictions on repatriation of cash to the Group.
34 Events after the balance sheet date
In October 2010:
Lonrho Plc announced that it had successfully completed the offering of US$60m
(GBP38.0m) Guaranteed Convertible Bonds due 2015 ("Bonds") via a wholly owned
subsidiary company LAH (Jersey) Limited. Lonrho has then further placed US$10m
(GBP6.3m) of additional Bonds, which were fully subscribed. The net proceeds of
the offering will be used to allow the Company and its subsidiaries to repay
certain existing indebtedness, to fund general working capital and to accelerate
growth in its operations. A copy of the Offering Circular in relation to the
Bonds is available on the Company's website: www.lonrho.com.
In November 2010:
The Group disposed of its subsidiary company, Peninsular Horticulture (Pty)
Limited, for a cash consideration of GBP0.7 million.
Lonrho Plc announced that it had participated in a placing of shares in its
24.61% owned associate company LonZim Plc. Lonrho subscribed for 4,384,011
LonZim shares at a cost of GBP1,227,523, maintaining its 24.61% interest.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LFFIVFTLEIII
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