TIDMLONR
RNS Number : 9722F
Lonrho PLC
05 May 2011
5 May 2011
These results (and comparative figures included therein) do not
form audited accounts nor have they been extracted from audited
accounts. The results disclosed in this trading update may
potentially be subject to adjustments during the year-end audit in
respect of goodwill valuations and other minor items. The
comparative figures used are year on year due to the influence of
seasonality within the different businesses in the Group.
LONRHO Plc
("Lonrho" or the "Company" or the "Group")
Lonrho reports 37% growth in revenue in Q2 and profit
improvement of GBP4.2m at the half year
Lonrho Plc ( LONR ) today announces its unaudited results for
the second quarter to 31 March 2011. The unaudited interim results
for the six months to 31 March 2011 will be announced by the end of
May.
Lonrho is delighted that it was admitted to the Main Market of
the London Stock Exchange as a Premium Listing with effect from
26(th) April 2011. The Directors believe that a listing of the
Company's ordinary shares on the Official List is the most
appropriate platform for the continued growth of the Company.
Specifically, the Company's Board anticipates that trading on the
London Stock Exchange's Main Market will raise the Company's
profile and provide the ability for a broader range of
institutional and other investors from around the world to have the
ability to participate in the Company.
On admission to the Main Market, the Rt. Hon Sir Richard Needham
joined the Board as an independent Non-Executive Director. Sir
Richard has had a distinguished career in Parliament culminating in
his time as Britain's longest serving Minister in Northern Ireland
from 1985 - 1992 and as Minister of Trade from 1992 - 1995. Sir
Richard left politics in 1997 and has since focused on the private
sector, and has been a director of GEC Plc, Meggitt Plc, and
currently is the Vice Chairman of NEC Europe Ltd. He has been on
the Board of Dyson Ltd for over 15 years, and is currently the
Senior Independent Director. He has been Non-Executive Chairman of
Avon Rubber Plc since January 2007.
During the quarter the Group also announced the completion of
the purchase of the AFEX group of companies. AFEX's main focus of
operations is in supplying services and secure accommodation in
Juba, Southern Sudan. This infrastructure is in great demand from
corporate clients, NGO's and Government Aid Agencies working in
Southern Sudan. Juba is forecast to be one of the fastest growing
cities globally following the referendum establishing Southern
Sudan as an independent country. Lonrho has purchased 100% of AFEX
for an initial cash consideration of US$3 million and an EBIT
related, capped earn-out payment. The existing management of AFEX
will remain in place to develop and grow the company during the
transitional period.
Financial highlights for the second quarter include:
-- Group turnover from continuing operations in the quarter has
increased 37% ahead of the same quarter in the prior year to reach
GBP33.5m. For the half year the turnover of GBP61.1m is 29% ahead
of the first half of FY10.
-- In the second quarter of 2011 the Group has achieved EBITDA
of GBP1.9m, a GBP2.7m improvement on the second quarter of 2010.
The six months to March have seen EBITDA rise to GBP3.6m, GBP6.1m
ahead of the same point in the prior year.
-- In the first half, the loss before tax was GBP2.9m. When
compared to the prior year, and after excluding an exchange gain of
GBP5.7m in that year (current year GBPnil), this represents an
underlying improvement of GBP4.2m.
-- Net assets at 31 March 2011 stood at GBP123.7m, compared with
GBP124.5m as at 31 December 2010.
-- Cash balances in the Group at 31(st) March 2011 were
GBP17.8m.
Divisional highlights for the quarter include:
Agribusiness
The agribusiness division has increased turnover during the
quarter by 33%, a GBP4.1m increase on the same quarter of FY10 to
GBP16.5m for the quarter. Oceanfresh and Trak-Auto both had their
best quarters since becoming Lonrho companies.
-- In the first half of FY11, as planned, Rollex (100% holding)
has refocused its strategy around pure vertically integrated
agribusiness with less emphasis on general logistics. As a result
revenues in the quarter fell by 11.6% compared to the prior year
but the focus on the core business and new good margin
opportunities for produce from formal growing agreements in
Mozambique, Zambia and Zimbabwe position the business well for core
business growth in the second half of the year. The comparison for
Rollex in FY10 also includes the Peninsula business which locked
exclusive supply to the Woolworths retail chain. This was disposed
of in November 2010 to strategically diversify supply to other
retailers and have no exclusive lock-in agreements that restrict
growth. This strategy is now showing results with alternative
retail clients and excluding Peninsula revenue of GBP2.1m, turnover
grew by 12.3%.
-- During the quarter a significant new sea-freight opportunity
was commenced, shipping citrus products from Cape Town to customers
in the Far East. The planned delivery schedules will generate
significant additional revenue through the second half of 2011 and
into FY12.
-- In the USA, Oceanfresh (51% holding) ran a very successful
Lent promotion on 3 items with Costco on the West Coast. Costco
continues to increase the distribution and range of Oceanfresh
lines to further stores within the Costco Group. Also in the US,
Oceanfresh products have now been rolled out to a further major US
retailer (Fresh & Easy). In the UK, Oceanfresh will launch the
Kiddies Magic Fish range with Costco UK in May and is expected to
start supplying fresh seafood to ASDA in the near future.
-- In South Africa, Oceanfresh has launched its own brand of
coated fish items with Makro, which has been extremely successful.
As a result, the product will change to the Makro private label in
June 2011 substantially increasing sales volumes. Oceanfresh is
also working on expanding operations within the Massmart group, to
include the Shield stores. Oceanfresh has also won a contract for
the first time with South Africa's largest retailer, Pick 'n' Pay,
to supply 16 product lines both domestically and internationally,
which will commence towards the end of FY11.
-- Oceanfresh has further secured its first orders for the Far
East, where it will be supplying retail lines to Carrefour
stores.
-- Oceanfresh is in the process of relocating to bigger premises
in Johannesburg to meet forecast demand and increase in-house
capabilities. The new facility, which will quadruple capacity,
includes a 500 tonne cold store unit, a high-care processing area
and a general processing area. The new facility will allow
Oceanfresh to further increase the export and local retail lines
available for customers.
-- Trak-Auto (100% holding) had its strongest quarter in its
history with turnover of GBP2.6m, 34% ahead of the first quarter.
Trak-Auto has significantly increased the John Deere market share
in Mozambique. The order book is also strong with 32 new John Deere
units ordered and 3 Komatsu units in the quarter.
Transport
On a revenue basis, the transport division has had a strong
quarter. Turnover for the division was 18% higher than in the same
quarter of FY10, with all of the major markets showing good growth.
Most pleasing is the growth in Tanzania where new routes have
helped to increase turnover in excess of 300% compared to Q2
FY10.
-- Fly540 Kenya (49% holding + board control) has been
successful in increasing the number of passengers being flown,
being 25% higher than the same quarter in FY10. Despite the
continued strong presence of competition in the market which has
depressed prices on some routes, revenues for Kenya have grown by
8% compared to the same quarter in the prior year.
-- The first scheduled operational flights for Fly540 Angola
(60% holding) commenced on 31 January 2011. The deployment of the
Angolan hub has been building as new aircraft arrive in the
country. This has been a slow initial process. Since the quarter
end business has been building with three aircraft operating
scheduled services in May with a plan for five to be operating
scheduled services by the end of July. Regular services between
Cabinda, Soyo and Luanda have ensured that operating systems and
procedures are working efficiently and initial flights in Angola
have proved successful with load factors on the routes being served
over 40% prior to any marketing activity taking place or brand
recognition. An encouraging start.
-- Operations at Fly540 Ghana (60% holding), following the set
strategy, will commence towards the end of FY11. Management will
ensure that the Angola hub is bedded in before focusing attention
and human resources on the launch of the Ghana hub for West
Africa.
-- With new routes now being operated, Fly540 Tanzania (90%
holding) experienced its most productive quarter ever. With load
factors over 80% and over 15,000 passengers flown in the quarter to
10 destinations, Fly540 Tanzania has entered a new phase of
expansion with further investment being made in the business in
order to gain the full reward from the opportunity.
-- Operating margins have remained low in the aviation division
due to the continuing price war in Kenya and the rising price of
fuel. These issues have recently begun to ease with the price war
diminishing and fuel surcharges being introduced, therefore margins
in March were above those seen in the first two months of the
quarter.
-- Fly540 Kenya has recently announced it intends to commence
flights from Nairobi to Juba. Operations are scheduled to commence
in May, with the additional revenues being seen in Q3 FY11. Demand
for flights to the Southern Sudan region is steadily increasing
driven by investors, financial service providers and
industrialists, all looking to make the most of the prospects of
the region since its independence vote in January.
Infrastructure
The Infrastructure division has experienced revenue growth in
the quarter of 12% over the same period in FY10. Both companies in
the division have had good successes in the quarter which underpin
confidence in their future. The order book at KwikBuild is standing
at a record high, with in excess of R42m of new orders taken in the
quarter. Important works have been completed at Luba to accommodate
new clients arriving in the second half of the year.
-- During the quarter Luba Freeport (63% holding) saw the
completion of facilities for Dickerman, with rent commencing on 1
March 2011 and a further open storage and inspection area for
Tenaris was also completed in the quarter, for which rents
commenced on 1 January 2011. Both of these facilities will help
generate further fixed revenues, with the Tenaris facility also
leading to more movements across the quay, increasing the variable
element of income.
-- Luba Freeport also took delivery of its mobile container
scanner in the quarter. Installation and training on use of the
scanner is now underway, with the first revenues to be generated
from the scanner from June. This increases the ports security in
line with international practices.
-- Luba saw supply vessel movements in the port total 275, a
marginal fall of 1% on Quarter 1 due in part to delays in the
launch of two new offshore projects with Ophir and Rocoil which are
now scheduled to commence in the second half of the year.
-- Luba has had confirmation that Technip, a leading engineering
and project management company, will be performing work out of the
port. Further to this the start up of SBM's project with Noble
Energy has been confirmed, with materials arriving for preparation
works prior to the arrival of a floating production, storage and
offloading unit (FPSO) before the end of 2011.
-- In February KwikBuild (51% holding) won the largest part of
the IDT Emergency Schools programme, having been selected to
provide 103 classrooms to replace mud and storm damaged classrooms
in the Eastern Cape. The first stage of this project is worth over
R20m in revenue and demonstrates the company's ability to
successfully compete for large scale projects, which should in turn
help to increase margins through the economies of scale.
-- KwikBuild has also mobilised its SAPS (South African Police
Service) contract to support the installation of Trauma Victim and
other Units. SAPS is a new client to KwikBuild and the contract is
again significant, demonstrating a broader client-base and focus on
higher value deals. Mobilisation has gone well and already led to
further direct business from other SAPS units.
-- Orders in the second quarter for KwikBuild totalled in excess
of R42m, representing a new record for the business. Turnover for
the quarter of GBP1.5m is the largest it has achieved and with the
factory operating three shifts the strategic restructure of
KwikBuild has proven to be a good decision and has created a
substantially stronger company ready for further growth.
Hotels
The hotels division enjoyed a good quarter, driven both by
exceptional occupancy at the Hotel Cardoso and some improvement at
the Grand Karavia. March trading at the Grand Karavia, as well as
the latest quarter, have been the best seen to date with both
occupancy and room rates higher than previous months as the hotel
continues to move towards its full business plan, after a slower
than expected start.
-- Atthe Hotel Cardoso (59% holding) occupancy has been high,
averaging over 85% since January. High occupancy at the hotel has
also been backed up by strong room rates, with March's average room
rate rising to $153, a 37% increase on the same period a year
ago.
-- Compared to the same quarter in the prior year, the
Mozambique Metical has devalued 17% against sterling. This movement
has had the effect of reducing reported turnover from the Hotel
Cardoso by GBP0.2m. Despite this movement in exchange, revenues for
the quarter have grown by 7% compared to Q2 FY10.
-- During March occupancy at the Grand Karavia (50% holding +
management contract) was approaching 50% - its highest level since
opening in June 2010. The growth in occupancy has been driven by a
new sales and marketing strategy, including representation at
INDABA, the African mining conference. The hotel has also seen
changes in personnel and growth is expected to continue in the
second half.
-- Lonrho Hotels has successfully signed a new lease in the
Gabon capital of Libreville. The 49 room, 5-star boutique hotel is
scheduled to check-in its first guests in July 2011 and is
anticipated to trade as the top five star hotel in Gabon.
-- Lonrho Hotels Management Services has seen other projects
which it had hoped to sign in Q2 slip into the second half of the
year. Additional management contracts are now expected to be signed
during the second half of the year with revenues accruing in the
fourth quarter.
Support Services
Throughout the support services division there have been strong
contract wins. The success in big contracts was especially
prevalent in CES Zambia where revenue was GBP0.6m, which was
GBP0.5m or 500% ahead of the same quarter in the prior year,
demonstrating the viability of the CES roll out through Southern
Africa. Despite the impact of the weaker metical, which lowered
turnover by GBP0.2m, Bytes & Pieces managed to increase
turnover by 15% in the quarter compared to the prior year. AFEX
group was also added to the division during the quarter, adding
additional revenues.
-- Bytes & Pieces (65% holding) has had a number of
successes in the period. These include new contract wins as well as
completing important projects for a number of clients. New client
wins in the quarter include Banco Unico, where a production and
disaster recovery platform is being installed, Assoiacao Nacional
de Estradas, where the first sale of a Dell blade in Mozambique has
been made with installation underway, and Maputo Port Development
Corporation with whom Bytes & Pieces are converting their
current infrastructure to VMWare.
-- The biggest contract win in the quarter for Bytes &
Pieces was at Bank BCI Formento, where nearly US$2m worth of
contracts have been won to supply and install Dell servers,
Riverbed WAN optimisation as well as Cisco networking and
services.
-- Bytes & Pieces has recently won a number of awards from
PMR Africa, a leading consulting and research firm across Africa,
including being the highest rated IT consulting company in
Mozambique and also the highest rated IT sales and service company
in Mozambique.
-- CES Zambia (40% holding + board control) has had an
exceptional quarter with growth being driven by a number of new
contract wins. Among these were Africonnect, FHI (USAID) and World
Vision with new orders being in excess of US$300k.
-- AFEX (100% holding), whose purchase was completed during the
quarter, has continued to progress under Lonrho ownership. Key to
the AFEX business is the Riversdale Lodge in Juba, on which a new
16 year lease has been signed. Since acquisition the camp has added
18 new VIP containerised accommodation units, expanding the camp's
revenue generating potential.
-- AFEX has also had further wins for a contract to provide the
camp and services for a seismic exploration in Kenya and a short
term contract to erect a tented camp in Ethiopia. The contract to
provide security services for the World Bank in Sudan was also
renewed for another year and the contract to provide security
services for Tri Star in Sudan was extended to eight new
locations.
-- Lonrho Water's bulk water business (100% holding) is
beginning to gain momentum, with the business starting two sizeable
projects in Q2 being a sewage pump station in Luanda and six solar
powered boreholes in South Africa. Both of these projects have
resulted in additional opportunities from the respective clients,
with two more pump stations and a Sewage treatment plant in Angola
and 30 additional boreholes in South Africa being quoted.
-- In the corporate water bottling business, the prime target
client in South Africa, Fedics, has been secured and volumes will
begin to grow steadily from this customer. In addition several new
smaller customers are being secured every month, which all
contribute to the ongoing growth of the business.
Outlook
Lonrho has had a good start to the financial year. Having
completed the placing of a convertible bond and also securing
admission to the London Stock Exchange's Main Market as a Premium
Listing, the Company is well placed to take advantage of the
opportunities which present themselves in the second half of the
year. The Company is focused on ensuring that the strategies it
puts in place will continue to deliver year-on-year growth for the
rest of this year and into FY12.
Oceanfresh remains a strong contributor to growth. The business
is continuing to add new customers both in South Africa and
internationally, specifically seeing strong demand from the US, as
well as extending the range of products being offered. Trak-Auto,
with a strong order book going into the second half of the year is
on track to deliver excellent results and LonAgro, the John Deere
distributor in Angola should begin generating revenues in the next
quarter.
The Company has seen short-term delays affect the speed of
deployment in some of the growth businesses such as the roll out of
Fly540 Angola but these are now coming on track and delivering
promising results. It is anticipated that there will be 10 routes
operational in Angola by the end of the year with more following in
FY12. Margins in the aviation division in Kenya remain under
pressure due to high levels of competition in the Kenyan
market.
The Grand Karavia hotel had a slow start following opening but
results in the last 8 weeks have been encouraging. The pipeline of
potential new hotel projects is strong with opportunities
identified by the new management team.
The 2010 financial year saw exceptional foreign exchange gains
of GBP6.9m arising on the re-translation of intercompany loans
whilst the effect of currency fluctuations for FY11 remain unclear.
The devaluation of the Mozambique Metical and the strength of the
South African rand continue to exert pressure on several of the
Group's businesses.
The overall trading performance of the Group for the first half
has shown significant progress on the previous year, and the second
half of the financial year is expected to deliver further increased
improvement on the underlying 2010 results.
David Lenigas, Lonrho's Executive Chairman, commented:
"The results for the half year are positive, showing a 33%
increase in turnover for the past quarter and a 29% increase in
turnover for the six months when compared to the previous year.
EBITDA for the Company for the second quarter was GBP1.9m with a
total for the half year improving by GBP6.1m over the same period
last year.
We are seeing strong growth across all of the five divisions of
Lonrho in all seventeen countries where we operate. Sub Saharan
Africa is attracting growing interest from global investors as the
significance of the oil, gas, mineral and agriculture potential of
the continent becomes clearer. These are fundamental resources of
significant importance to the rest of the world. This, combined
with the domestic market generated from a population approaching
one billion people, is driving continuing growth in Africa."
3 months to
31 March 31 March
2011 2010 Variance Var %
GBP000s GBP000s
Agribusiness Division
Turnover 16,502 12,386 4,117 33.2%
Gross Margin 17.2% 18.5% -1.3% -
Gross Profit 2,831 2,286 545 23.8%
Transportation Division
Turnover 5,492 4,642 850 18.3%
Gross Margin 18.2% 8.9% 9.4% -
Gross Profit 1,002 411 590 143.5%
Support Services Division
Turnover 5,165 2,496 2,669 106.9%
Gross Margin 24.7% 32.0% -7.2% -
Gross Profit 1,276 797 479 60.1%
Infrastructure Division
Turnover 4,225 3,771 454 12.0%
Gross Margin 42.8% 49.5% -6.6% -
Gross Profit 1,809 1,865 -56 -3.0%
Lonrho Hotels Division
Turnover 2,151 1,272 880 69.2%
Gross Margin 67.9% 70.1% -2.2% -
Gross Profit 1,462 892 570 63.9%
Group Turnover 33,536 24,566 8,969 36.5%
========= ========= ========= =======
Group Gross Profit 8,380 6,252 2,128 34.0%
========= ========= ========= =======
Group EBITDA 1,910 -820 2,730 N/a
6 months to
31 March 31 March
Var
2011 2010 Variance %
GBP000s GBP000s
Agribusiness Division
Turnover 31,653 23,897 7,756 32.5%
Gross Margin 17.0% 18.0% -1.0% -
Gross Profit 5,370 4,302 1,068 24.8%
Transportation Division
Turnover 10,066 9,818 248 2.5%
Gross Margin 12.0% 9.6% 2.4% -
Gross Profit 1,206 943 263 27.9%
Support Services Division
Turnover 7,820 4,873 2,947 60.5%
Gross Margin 27.4% 30.4% -3.0% -
Gross Profit 2,145 1,482 663 44.8%
Infrastructure Division
Turnover 7,431 6,370 1,061 16.7%
Gross Margin 49.4% 47.2% 2.2% -
Gross Profit 3,669 3,008 661 22.0%
Lonrho Hotels Division
Turnover 4,171 2,361 1,810 76.7%
Gross Margin 67.5% 68.8% -1.2% -
Gross Profit 2,817 1,623 1,194 73.6%
Group Turnover 61,140 47,319 13,821 29.2%
========= ========= ========= ======
Group Gross Profit 15,208 11,359 3,849 33.9%
========= ========= ========= ======
Group EBITDA 3,552 -2,514 6,066 N/a
Enquiries:
Lonrho Plc -
David Lenigas, Chairman +44 (0)20 7016 5105
Geoffrey White, Chief Executive Officer +44 (0)20 7016 5105
David Armstrong, Finance Director +44 (0)20 7016 5105
Pelham Bell Pottinger
Charles Vivian +44 (0) 20 7861 3126
+44 (0) 7977 297903
James MacFarlane +44 (0) 20 7861 3864
+44 (0) 7841 672831
Beaumont Cornish Limited (Nomad)
Rosalind Hill Abrahams +44 (0) 20 7628 3396
Roland Cornish +44 (0) 20 7614 8388
Panmure Gordon (UK) Limited
Tim Linacre
Dominic Morley
This information is provided by RNS
The company news service from the London Stock Exchange
END
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