TIDMLONR
RNS Number : 0958B
Lonrho PLC
28 March 2013
28 March 2013
Lonrho Plc ("Lonrho")
Lonrho Plc reports strong revenue growth for 2012 and 32% growth
in revenues for final quarter.
Lonrho Plc announces its results for the final quarter and 12
month period ended 31 December 2012.
Lonrho's primary focus is on the expanding agriculture and oil
and gas markets across Africa.
2012 was a very significant year for Lonrho and the fourth
quarter saw completion of the transition of Lonrho into a Company
that strategically has aligned its core business units with what it
believes are the most important growth opportunities occurring in
Africa.
As announced in the trading statement issued in February 2013,
Quarter 4 2012 was challenging in several areas of the business
where longer than expected lead times on delivering new product
lines and stock availability pushed a number of 2012 expectations
into 2013 and the Group withdrew from unprofitable lines of
business.
Notwithstanding those challenges, during 2012 the Group showed
strong progress on its underlying revenue performance, leaving the
core businesses well positioned for 2013.
Financial Highlights up to 31 December 2012:
-- Revenue from core operating divisions(1) in the fourth
quarter was GBP46.0m compared with GBP34.8m for the 3 months to 31
December 2011. On an adjusted like-for-like basis at constant
currency(2) revenue has increased across all divisions, with an
overall increase of 28.0%.
-- For the full year to 31 December 2012, reported revenue was
up 21.8% compared to the 15 months to 31 December 2011, from
GBP152.9m to GBP186.3m, a like-for-like increase at constant
currency of 23.6%.
-- The Group's total reported gross margin increased from 26.9%
to 28.9% (comparing the 12 month period with the prior 15
months).
-- Net operating loss(3) for the year from core operating
divisions was GBP3.4m which falls within the range of GBP3m - GBP5m
as highlighted in the trading statement released on 1 February
2013.
-- Due to the market conditions faced by Fastjet Plc, the
Executive Directors carried out a review of Lonrho's investment in
Fastjet which resulted in an impairment charge of GBP7.7m recorded
to the income statement. As a result Lonrho reported a Loss before
Tax of GBP6.3m compared with a Profit before Tax of GBP0.8m in the
15 months ended 31 December 2011.
-- The Group's Net Indebtedness reduced marginally to GBP87.2m
at the end December 2012 from GBP88.4m at the end of the 3(rd)
quarter and from GBP99.1m as at 31 December 2011.
Continuing 4th Quarter 2012 Full Year 2012
Operations
------------------ ----------------------------------------- ---------------------------------------------
Quarter Reported (2) Adjusted 12 months Reported (2) Adjusted
to December Growth like-for-like to December Growth like-for-like
2012 growth 2012 vs growth
15 months
to December
2011
------------------ ------------- --------- --------------- ------------- ------------- ---------------
GBP million GBP million
Revenue
Agribusiness 27.6 28.3% 23.1% 123.6 30.8% 24.5%
Infrastructure 6.6 62.9% 68.7% 23.5 7.8% 30.4%
Support Services 8.2 29.4% 22.7% 27.0 7.6% 19.9%
Hotels 3.6 41.4% 18.9% 11.9 3.5% 9.7%
Other 0.3
Core Divisions 46.0 32.3% 28.0% 186.3 21.8% 23.6%
------------------ ------------- --------- --------------- ------------- ------------- ---------------
Transportation 0.0 20.2
Lonrho Plc 46.0 206.5
------------------ ------------- --------- --------------- ------------- ------------- ---------------
(1) Core operating divisions include Agribusiness,
Infrastructure, Hotels and Support Services.
(2) Adjusted like-for-like figures include acquisitions
(pre-acquisition comparables based on un-audited management
accounts), exclude start-up businesses trading for less than 12
months and are adjusted to constant currency.
(3) Net operating profit/(loss) is defined as profit before tax
for the period (from core operating divisions) excluding,
gain/(loss) on associates, jointly controlled entities,
investments, amortisation and share based payments.
Operational Highlights in the Fourth Quarter:
Agribusiness Division
-- Lonrho's 177, 000 tree stone fruit plantation continues to
mature and during the last quarter the first commercial peach
harvest from the plantation was exported to Europe. The plantation
benefits from a seasonal advantage of coming ripe before the South
African crop, and hence attracts strong pricing. The crop produced
sufficient quality (even though the plantation is still young) that
peaches and nectarines were delivered to Tesco in November and
December for marketing up to Christmas 2012. The results of this
first crop of produce from this plantation, now one of the largest
stone fruit orchards in the southern hemisphere, has already
generated strong demand for the 2013 crop. The 2013 crop is
expected to be three times the size of the 2012 crop as the
plantation matures. The plantation will reach full maturity in 2014
and is forecast to yield four million kilograms of fruit per year
thereafter.
-- The exclusive Lonrho John Deere distributorships in Angola,
South Sudan and Tanzania delivered strong results for the John
Deere business and sold close to 150 tractors, implements and
equipment in the final quarter. LonAgro Angola delivered impressive
year on year growth and revenues were up 383% compared to October
to December 2011. The logistical issues encountered by Trak Auto in
Mozambique have largely been resolved and the business has begun
the year strongly. Entering 2013 Lonrho now has four exclusive John
Deere territories and positions the business as one of the leading
suppliers of John Deere equipment in Africa.
-- Fish On Line, the fish division's wholesale company,
delivered its first own branded goods to Food Lovers Market (a new,
fast growing, quality retail chain) in South Africa in the last
quarter. This new business relationship provides a quality fish
range throughout the 100 stores currently trading across the South
Africa.
-- The fourth quarter saw the conclusion of the vertical
integration and reorganisation of the agriculture division to be
able to deliver a seamless 'field to fork' solution for our
clients. The costs of this restructuring exercise were GBP1.3m. The
unification of Rollex Pty and Lonrho Logistics has been completed
to improve efficiencies and customer service levels across these
businesses. Lonrho Logistics now incorporates all the freight
forwarding activities of the Group, including the rapidly growing
sea freight business, whilst Rollex Pty is now solely focused on
its high value Agri-Processing business based at Johannesburg
International airport and building long term, sustainable, supply
contracts for major global supermarkets. The reaction from
customers to a single source, traceable, verifiable and
continuity-focused supply solution has been immensely positive, and
the number of supermarkets entrusting Lonrho with their African
requirements is increasing rapidly. Having now completed this one
stop solution, we are continuing to see strong traction with
supermarkets around the world now placing long term, sustainable,
growing programmes with the Company to meet their needs. This is
the culmination of the 'demand driven' business model that Lonrho
has focused on delivering over the past three years.
-- Lonrho's Oceanfresh has continued to build on its core
business. To the African consumer the 'Cape Point' own brand for
Shoprite Chequers; the "M" brand to Makro / Massmart and the Spar
own brand have all seen strong traction during the year. On the
international markets, the Company has seen the deployment of
'Kirkland Signature Hake' to Costco roll-out to all of the US
market although supply issues noted in the February trading
statement caused a reduction in planned promotional activity to
coincide with Lent. Hake is a sustainably sourced, quality white
fish that is growing in popularity with the US consumer as they
discover its texture and taste. Two further Costco Kirkland
Signature lines have been agreed, one being Mahi Mahi, which
started deliveries to Costco US stores before the year end and the
third is due to be launched in the second half of 2013. Other US
success in the year has been the start of deliveries of hake into
Walmart Sam's Club stores and United Airlines choosing Lonrho's
hake for its first and business class in-flight catering.
-- During the year Lonrho was awarded a five year exclusive tuna
fishing quota for the 200 mile exclusive fishing zone for the
territorial waters off Mozambique. This is a significant
opportunity and will come into service in mid-2013.
Infrastructure Division
-- Lonrho's oil services logistics port, Luba Freeport,
continued to perform well and has a seen a healthy increase in
vessel movements in the fourth quarter when compared to the prior
year. The port saw a total of 277 vessel calls from October to
December 2012 compared to 261 in 2011, a 6% increase. The release
of eight further exploration blocks and recent positive drilling
results are expected to generate significantly increased activity
throughout 2013. The larger customers at the port include
ExxonMobil, Schlumberger, Baker Hughes, Noble, Tenaris and MI
Swaco.
-- E-Kwikbuild continues to face challenges delivering its
existing Government projects on a number of levels (which will
carry on into Q2 of 2013), whilst the new focus on winning private
sector business is building momentum.
Hotels Division
-- After opening in July, Lonrho's new 'Lansmore' Masa Square in
Gaborone has quickly established itself as one of the leading
hotels in Botswana.
-- The Cardoso Hotel in Maputo, Lonrho's longest and well
established hotel, continues to perform well as the cornerstone of
the Hotel division, with occupancy for the year trending over
90%.
-- The first easyHotel by Lonrho in Johannesburg opened
successfully in March having been delayed from its planned opening
date in December 2012. Initial demand has exceeded
expectations.
-- The opening of the Lansmore in Libreville, Gabon is now expected to be in Q2 of 2013.
Support Services
-- The Support Services division expanded its scope of services
with the new business start-up Arlington Associates which has
successfully won and implemented an initial contract with the
Government of Nigeria for the inspection of crude oil and gas
exported from Nigeria.
-- The AFEX group service contract with Tullow Oil continued to
do well after the opening of a new 250- man camp in northern Kenya
in the third quarter and, with expected increased drilling by
Tullow, revenues received from AFEX's support contract should
nearly double in 2013.
Outlook
2012 was a very significant year for Lonrho and saw the
conclusion of the transition of Lonrho into a Company that has
successfully completed building the foundations of its core
business units. Africa is forecast to deliver strong growth in
2013, and Lonrho has strategically aligned its operations with what
it believes are the most important growth opportunities occurring
in Africa, supporting the increasing demand from the expanding
agriculture, oil and gas and consumer markets.
Despite challenging global market conditions, Lonrho's outlook
for 2013 remains in line with the Board's expectations and the
Group expects to continue to deliver improved performance across
each of its operating divisions.
The Board believes that the strategic action taken in Q3 and Q4
2012, to focus on increasing margins through operational
efficiencies and build long term sustainable customer
relationships, coupled with the decision to withdraw from less
profitable lines of business, positions Lonrho strongly for
entering 2013.
ENDS
Enquiries:
Lonrho Plc +44 (0) 20 7016 5105
Geoffrey White
David Armstrong
FTI Consulting
Edward Westropp +44 (0) 20 7831 3113
Georgina Bonham
Statutory accounts
The financial information set out in this announcement does not
constitute the Company's statutory accounts for the 12 month period
ended 31 December 2012 or the 15 month period ended 31 December
2011. The financial information for the 15 month period ended 31
December 2011 is derived from the statutory accounts for that
period. The audit of statutory accounts for the 12 month period
ended 31 December 2012 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 by
way of emphasis without qualifying their report.
Lonrho's full annual report and financial statements will be
published on its website (www.lonrho.com) today and are being
posted to shareholders.
Chairman's Statement
Ambassador Frances Cook
Non-Executive Chairman
27 March 2013
It is a special honour for me to be addressing shareholders in
my first months as your new Chairman.
I have, during my long career with the US Government State
Department, lived in Africa for a dozen years and have a strong
affinity with the Continent and its people. I have now served 5
years as a Non-Executive Director on the Board of Lonrho and after
visiting many of our operations in Africa, I can report, with
conviction, that we are very well positioned to participate in, and
to help, Africa's emergence as a significant international economic
motor.
Already, seven of the world's ten fastest growing economies are
in Africa, assisted by the discovery of the impressive quantities
of new onshore and offshore hydrocarbons in West and in East
Africa.
At Lonrho we are well positioned to support Africa's export
sector growth in hydrocarbons and in agriculture. Africa is
undergoing the longest single period of economic expansion on the
Continent since the independence years a half century ago.
Significantly, Africa's macro level growth is widespread, far
beyond the oil economies. Expected growth will rise from around
4.5% last year to 4.8% in 2013. Foreign direct investment has been
slower into Africa than it should have been, given this kind of
impressive record (though it is expected to rise, in the non-oil
sectors, from around US$33 billion currently, to around US$84
billion in 2014.) Our CEO, Geoffrey White reports an increasingly
new and interested audience, wanting to understand Africa's
potential and what our historic Company is doing to take advantage
of the Continent's current immense opportunities.
Shareholders know that Lonrho is already invested in core
sectors, from Agribusiness to Infrastructure, to Support Services
and Hotels, sectors that are necessary to support the rapid growth
that is already happening.
Our key division, Agribusiness, which accounts for over 65% of
Lonrho revenue from core operating divisions, has been going
through a management transition, and restructuring, so it can
better compete in the fast moving, global, and demanding
agriculture and logistics space. We hired a well-qualified CEO to
specifically oversee this division of Lonrho operations, located
across Southern Africa, and ranging from fruit and vegetables, to
fish and crustacea, and farm machinery. He will be focusing on
margin improvement, moving away from a short term trading focus,
while continuing to garner contracts with the world's largest food
importers (Costco, Walmart and the majority of the UK branded
stores are already customers). We have just opened a sales office
in China as well. Whilst we had a few disappointments in this
sector during this transitional year, it was not due to the
revamped business model, but rather to the late delivery of
tractors to our John Deere sales operation in Mozambique, and to
lower than expected fish size off Namibia. Even with these late
year slippages, our Agribusiness division proudly posted a 12 month
revenue growth figure of 24.7%. In short, this is a growth
platform, and record, we can be proud of.
Our Infrastructure and Support Services core operating divisions
continue to grow at a healthy rate, expanding business across a
broad range of activities which, among other things, will support
the rapid expansion of energy production in Africa. Our IT
operations have added another country (Namibia), and our facilities
operations, both e-KwikBuild and base support operations (for oil
exploration companies, for example) are also expanding into
servicing the energy sector. Our oil and gas port operation in
Luba, Equatorial Guinea, which I visited in February 2013, will be
a model for our engagement with this sector (with a major new
Lonrho managed oil and gas logistics port expected to be announced
in 2013 in Ghana). These are exciting times in the oil and gas
industry in Africa, and Lonrho is becoming a highly regarded leader
in logistics for this sector.
Hotels are legacy projects for Lonrho, but we are moving into a
more modern form of participation in that sector, creating our own
brand for higher end facilities, and opening a series of
"easyHotels by Lonrho" for budget business travellers all over the
Continent. We opened a Lonrho "Lansmore" in Botswana this year,
adding to an historic hotel property in Mozambique, as well as
large renovation and management efforts in the DRC of major
government owned hotels. In 2013, we expect to expand the
"easyHotel by Lonrho" brand all over South Africa, and to launch
into North, East and West Africa.
FastJet is in the midst of converting Lonrho's much appreciated
Fly540 brand of smaller regional planes, flying local routes, into
a continental budget airline, flying larger planes, following the
separation of Lonrho's aviation division in June 2012. FastJet Plc,
in which Lonrho is the largest shareholder, will still service the
under-served "connector" market, as well as extending flights to
regional destinations, with reliable, safe and inexpensive flights,
using very modern pricing algorithms. From the start of the new
operating model in Tanzania four months ago, we expect FastJet to
expand its no-frills, reliable service in 2013.
Throughout its 100 year old legacy, Lonrho has been known for
its Corporate Responsibility ("CR") across Africa. In 2012, each of
our companies named a CR coordinator, so that we can better focus
in our chosen areas, education and good environmental citizenship.
You will see photographs throughout this report of our CR
activities, which should be a source of pride to all Lonrho
shareholders. We have instituted, companywide, an annual CR prize,
trained our Directors in CR, and joined the UN Global Compact which
monitors CR globally. We are committed to leaving a positive
"footprint" wherever we work, and to being a good corporate citizen
in the 18 countries where we are engaged.
Chief Executive Officer's Statement
Geoffrey White
Director and Chief Executive Officer
27 March 2013
2012 was a very significant year for Lonrho and saw the
conclusion, by the end of the year, of the transition of Lonrho
into a Company that has successfully completed the establishment of
its core business units and is now in a strong position to build on
the opportunities in Africa. This transition took longer to
complete than expected, and there were some delays in our 2012
plans that caused potential 2012 business to move to 2013. [The
majority of these delays have now played out and] the Group is well
positioned in 2013 to deliver positive results for shareholders
Lonrho remains solely focused on Africa and being aligned with
economic development across the Continent.
In 2013 African growth is being stimulated by the burgeoning oil
and gas industry, agricultural opportunities and a consumer market
that is young, communicative and developing as a very significant
segment of society. The formal sector of the African consumer
market is forecast to be US$1.3 trillion by 2020, and the informal
sector is forecast to be similar in size.
Africa is becoming one of the world's largest consumer
markets.
There is a now an increasing commercial momentum to address this
growing consumer market that can be seen across much of Africa,
where the development of infrastructure, shopping centres, and
consumer focused projects is expanding rapidly, albeit from a very
low base.
Surprising to many, seven of the top ten fastest growing
economies in the world are now in Africa.
The consumer market, of over one billion people, a large
percentage of which are under the age of 25, creates a significant
commercial opportunity, and Lonrho's businesses entering 2013 are
strategically aligned with the requirements and services needed to
meet some of the central demands of African consumer growth.
The growing demand of the consumer market within Africa provides
significant opportunities for Lonrho's core businesses.
Our core businesses focus on the oil and gas industry and the
agriculture sector. These are not only helping to fuel African
consumer growth by creating investment and prosperity, but are also
fundamentally changing the standing and importance of Africa to the
world. For the first time, the wider world is relying on Africa for
energy and for food production.
25% of the world's oil and gas is now believed to be in Africa
and 60% of the world's potentially arable land is in Africa. These
are important statistics that make the Africa of today of growing
global significance. The tide is beginning to turn, rather than
Africa being dependent on the world, the world is increasingly
becoming dependent on Africa for energy and for food
production.
Lonrho has, over the past four years, strategically positioned
its core businesses to be well placed to service the requirements
of this new dynamic market. Having invested heavily in building the
international standard infrastructure to meet this trend, global
food retailers are now approaching Lonrho to source fresh and
frozen produce from Africa, and the global oil and gas industry is
encouraging and supporting our development of the essential
infrastructure and logistics necessary to commercially develop
Africa's oil and gas resources.
In September 2012, David Lenigas, who was the Executive Chairman
of Lonrho since 2006, stepped down from the position to become the
Executive Chairman of FastJet plc. The Board thank him for his
guidance, time and effort as the Executive Chairman of Lonrho over
the past seven years.
Following a review, the Company's senior independent director,
Ambassador Frances Cook, was appointed as the Non-Executive
Chairman of the Company on the departure of Mr Lenigas. Ambassador
Cook brings a unique network of contacts and experience in Africa
and the Company looks forward to further benefitting from her
guidance and knowledge of the Continent.
Human resources are key to successful operations in Africa.
During 2012 the Group continued to recruit industry specialists to
further bolster and develop each of the divisional operations. The
most senior during 2012 being the appointment of Ben Ward as the
CEO of the Agribusiness division. Ben brings with him a long and
experienced understanding of the sector.
Entering 2013 Lonrho is structured into four divisions:
Agribusiness (66% of core operating revenues)
Sourcing, production, cold chain logistics, processing and
packaging of fruit, vegetables and seafood for Arican and
international supermarkets.
At the end of 2012, Lonrho completed the development of a
unique, vertically integrated, international standard, cold chain
logistics and processing infrastructure. This incorporates the
capacity required to source; produce, process, package and deliver
fresh and frozen produce from across the countries of southern
Africa to market. This division supplies leading retailers in
Africa such as Shoprite, Chequers, Makro, Food Lovers and Spar who
are all geographically expanding their operations to serve the
growth in the African consumer market.
The division also increasingly supplies produce into
international supermarket chains such as Costco, Walmart, Asda,
Tesco, Spinneys, Waitrose, Carrefour and others.
The world is becoming more and more dependent on Africa for food
security. Lonrho provides the international standard delivery
infrastructure required for the export of fresh produce from Africa
to the global marketplace meeting demand from Europe, the USA,
Middle East and, increasingly, China and the Far East.
Lonrho is helping to fulfil the rapidly increasing demand from
global supermarkets as they look to Africa as an essential source
of fresh produce.
Within the division, Lonrho has also established niche market,
demand driven, growing programmes aligned with specific customer
requirements.
The division also distributes John Deere agricultural equipment
into Africa.
Infrastructure (13% of core operating revenues)
Providing the logistical infrastructure necessary for the
expanding oil and gas industry in Africa
Lonrho Ports division has developed an exclusive oil and gas
logistics terminal, Luba Freeport, that is a 'one stop shop' that
supports the growing logistics requirements of the offshore
industry in Equatorial Guinea. Equatorial Guinea is Africa's third
largest oil producer. Following completion of the second phase
expansion of the Luba Freeport project, entering 2013, the oil
services terminal has grown and is now forecast to handle 85%+ of
all the support logistics for the Equatorial Guinea offshore
fields.
Long term tenants at Luba Freeport include ExxonMobil,
Schlumberger, Noble, Mi Swacco, Ophir, CNOOC, Baker Hughes,
Tenaris, Hess, Marathon and others.
Lonrho is seeking to replicate the success of the Luba Freeport
project into other locations in both West and East Africa
supporting the increasing infrastructure requirements for oil and
gas finds on both sides of the Continent, the most advanced being a
proposed oil and gas logistics terminal in Ghana.
Hotels (6% of core operating revenues)
The provision of safe, quality accommodation is an essential
precursor for economic growth and development in an emerging
market.
During 2012 Lonrho Hotels division continued with the plan to
roll-out its hotel management company and create a Lonrho branded,
corporate focused, hotel chain in Africa. Lonrho Hotels has won
management contracts and leases to operate some of the leading
hotels in Africa. Managing hotels in five countries, the Lonrho
Hotels brand is becoming the choice of travellers to Africa. During
2012 the division successfully added the Grand Hotel Kinshasa, DRC,
and The Lansmore Hotel in Gaborone, Botswana to the portfolio.
In early 2013 Lonrho Hotels launched the first 'easyHotel by
Lonrho' to meet the growing market demand for budget hotels. The
objective being to establish a chain of budget hotel properties
managed on behalf of owners, branded 'easyHotel by Lonrho' that
provide safe budget accommodation to a consistent standard with
reliable quality across the whole of Africa.
Support Services (15% of core operating revenues)
Providing a single point service solution for resource
companies, large corporates, NGO's and Governments.
Lonrho's Support Services division provides a fully cohesive
support service to major clients across the Continent, delivering a
one stop shop for logistics, accommodation, catering, IT and
services. Customers are typically oil companies, mining companies,
NGO's, the UN, and international Governments who see the benefit in
a one stop shop provider offering a total solution for their
requirements as they deploy into Africa.
FastJet
In June 2012, Lonrho announced that it had agreed to separate
its aviation division, Lonrho Aviation, into Rubicon Diversified
Investments Plc, an AIM listed investment company that was
subsequently renamed FastJet Plc. (LON : FJET) As a consequence of
the separation, Lonrho became the largest shareholder of FastJet
with a 74% holding.The founder and largest shareholder in easyJet,
Sir Stelios Haji-Ioannou's investment company easyGroup, became a
shareholder in FastJet and provides strategic management of the
company.
FastJet, in which Lonrho maintains a passive, arms-length,
shareholding has subsequently launched as a low cost carrier
domestically in Tanzania and believes that with Sir Stelios'
direction and experience FastJet has the potential to develop into
Africa's leading low cost carrier.
Lonrho's stake in FastJet has been reduced from 74% to 55%
post-separation as Fastjet raises development capital to implement
its business plan.
Due to current market conditions experienced by FastJet Plc, an
impairment review has been carried out which resulted in an
impairment charge being recorded in the income statement of
GBP7.7m.
Outlook
2012 was a very significant year for Lonrho and saw the
conclusion of the transition of Lonrho into a Company that has
successfully completed building the foundations of its core
business units. Africa is forecast to deliver strong growth in
2013, and Lonrho has strategically aligned its operations with what
it believes are the most important growth opportunities occurring
in Africa, supporting the increasing demand from the expanding
agriculture, oil and gas and consumer markets.
Despite challenging global market conditions, Lonrho's outlook
for 2013 remains in line with the Board's expectations and the
Group expects to continue to deliver improved performance across
each of its operating divisions.
The Board believes that the strategic action taken in Q3 and Q4
2012, to focus on increasing margins through operational
efficiencies and build long term sustainable customer
relationships, coupled with the decision to withdraw from less
profitable lines of business, positions Lonrho strongly for
entering 2013.
Statement of Directors Responsibilities
Statement of Directors' responsibilities in respect of the
annual report and the financial statements
The Directors are responsible for preparing the annual report
and the Group and parent company 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. Under that
law they are required to prepare the Group financial statements in
accordance with International Financial Reporting Standards (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 period. 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 judgements 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 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.
Under applicable law and regulations, the Directors are also
responsible for preparing a Report of the Directors, Directors'
Remuneration Report and Corporate Governance Statement that
complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors who held office at the date of approval of this
Report of the Directors 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.
Responsibility statement of the Directors in respect of the
annual report
We confirm to the best of our knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- the information that is cross-referred from the Business
Review section of the Report of the Directors includes a fair
review of the development and performance of the business and the
position of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
The Directors of Lonrho Plc are pleased to submit their report,
together with the audited financial statements for the 12 month
period ended 31 December 2012.
The Company number is 2805337.
Consolidated income statement
For the year ended 31 December 2012 and 15 months ended 31
December 2011
Year ended 31 December 15 months ended 31
2012 December 2011
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
Note GBPm GBPm GBPm GBPm GBPm GBPm
4,
Revenue 5 206.5 - 206.5 188.4 0.2 188.6
Cost of sales 6 (146.9) - (146.9) (137.2) (0.7) (137.9)
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
GROSS PROFIT/(LOSS) 59.6 - 59.6 51.2 (0.5) 50.7
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
Gain arising on fair valuation 6,
of biological assets 16 9.2 - 9.2 27.4 - 27.4
Other operating income 6
- Gains on acquisitions - - - 15.8 - 15.8
- Other 0.6 - 0.6 2.2 - 2.2
Operating costs 6 (77.0) (0.1) (77.1) (80.4) (0.6) (81.0)
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
OPERATING (LOSS)/PROFIT (7.6) (0.1) (7.7) 16.2 (1.1) 15.1
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
Finance income 10 5.5 0.1 5.6 6.8 - 6.8
Finance expense 10 (14.7) - (14.7) (16.2) - (16.2)
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
NET FINANCE (EXPENSE)/INCOME (9.2) 0.1 (9.1) (9.4) - (9.4)
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
NET OPERATING (LOSS)/PROFIT* (12.3) - (12.3) 9.6 (1.1) 8.5
Share based payments expense 6 (2.3) - (2.3) (0.7) - (0.7)
Amortisation 14 (2.2) - (2.2) (2.1) - (2.1)
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
OPERATING (LOSS)/PROFIT
AFTER FINANCING (16.8) - (16.8) 6.8 (1.1) 5.7
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
Share of results of associates 18 (4.4) - (4.4) (5.9) - (5.9)
Share of results of jointly
controlled entity 19 (10.6) - (10.6) - - -
Gain on contribution of
subsidiary to jointly
controlled entity 11 33.5 - 33.5 - - -
Impairment of jointly
controlled entity 19 (7.7) - (7.7) - - -
(Loss)/gain on other investments 19 (0.3) - (0.3) 1.0 - 1.0
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
(LOSS)/PROFIT BEFORE TAX (6.3) - (6.3) 1.9 (1.1) 0.8
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
Income tax credit/(charge) 12 0.3 - 0.3 (0.3) - (0.3)
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
(LOSS)/PROFIT FOR THE
YEAR/PERIOD (6.0) - (6.0) 1.6 (1.1) 0.5
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
ATTRIBUTABLE TO:
Owners of the Company 24 (1.7) - (1.7) 7.1 (1.1) 6.0
Non-controlling interests 24 (4.3) - (4.3) (5.5) - (5.5)
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
(LOSS)/PROFIT FOR THE
YEAR/PERIOD (6.0) - (6.0) 1.6 (1.1) 0.5
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
EARNINGS PER SHARE
Basic (loss)/earnings
per share (pence) 13 (0.11) - (0.11) 0.58 (0.09) 0.49
Diluted (loss)/earnings
per share (pence) 13 (0.11) - (0.11) 0.57 (0.09) 0.48
---------------------------------- ----- ----------- ------------- -------- ----------- ------------- --------
The notes are an integral part of these financial
statements.
* The directors have defined Net Operating (Loss)/Profit, a
non-GAAP measure, as its key profit performance measure as
explained in Note 3
Consolidated and Company statements of
comprehensive income
For the year ended 31 December 2012 and 15 months ended 31
December 2011
Group Company
31 December 31 December
2012 2011 2012 2011
Notes GBPm GBPm GBPm GBPm
-------------------------------------------- ------ ------- ------ ------- -------
Foreign exchange translation differences 24 (14.8) (0.2) - -
Revaluation of property, plant and
equipment 15 2.5 7.2 - -
-------------------------------------------- ------ ------- ------ ------- -------
Total other comprehensive (expense)/income
for the year/period (12.3) 7.0 - -
(Loss)/profit for the year/period (6.0) 0.5 (21.6) (17.3)
-------------------------------------------- ------ ------- ------ ------- -------
Total comprehensive (expense)/income (18.3) 7.5 (21.6) (17.3)
-------------------------------------------- ------ ------- ------ ------- -------
ATTRIBUTABLE TO:
Owners of the Company (13.1) 9.7 (21.6) (17.3)
Non-controlling interests (5.2) (2.2) - -
-------------------------------------------- ------ ------- ------ ------- -------
Total comprehensive (expense)/income (18.3) 7.5 (21.6) (17.3)
-------------------------------------------- ------ ------- ------ ------- -------
The notes are an integral part of these financial
statements.
Consolidated and Company statements of
changes in equity
For the year ended 31 December 2012 and 15 months ended 31
December 2011
2012 2011
Owners Non- Owners Non-
of controlling of the controlling
the
Company interests Total Company interests Total
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------------ -------- ------------ ------- -------- ------------ ------
AT 1 JANUARY 2012/ 1 OCTOBER 2010 135.2 20.5 155.7 107.4 20.3 127.7
------------------------------------------ -------- ------------ ------- -------- ------------ ------
(Loss)/profit for the year/period (1.7) (4.3) (6.0) 6.0 (5.5) 0.5
Foreign exchange translation differences (12.9) (1.9) (14.8) (0.5) 0.3 (0.2)
Revaluation of property 1.5 1.0 2.5 4.2 3.0 7.2
------------------------------------------ -------- ------------ ------- -------- ------------ ------
Total comprehensive income (13.1) (5.2) (18.3) 9.7 (2.2) 7.5
Issue of shares 23.1 - 23.1 18.9 - 18.9
Costs associated with share issues - - - (0.4) - (0.4)
Provision for warrants 1.0 - 1.0 - - -
Share based payment charge 2.3 - 2.3 0.7 - 0.7
Share options exercised 1.1 - 1.1 0.7 - 0.7
Shares issued in relation to earn
out agreement 0.4 - 0.4 - - -
Subsidiaries acquired - - - - 2.2 2.2
Subsidiaries disposed - - - - (0.2) (0.2)
Transfer from subsidiary to jointly
controlled entity 0.5 8.6 9.1 - - -
Non-controlling interest dividends - (0.2) (0.2) - (0.2) (0.2)
Non-controlling interest put option - - - (2.3) - (2.3)
Capital element of Convertible Bond - - - 1.1 - 1.1
Elimination of non-controlling interest
(1) - - - (0.6) 0.6 -
------------------------------------------ -------- ------------ ------- -------- ------------ ------
AT 31 DECEMBER 150.5 23.7 174.2 135.2 20.5 155.7
------------------------------------------ -------- ------------ ------- -------- ------------ ------
The notes are an integral part of these financial
statements.
The Company had total equity brought forward of GBP125.6m (2011:
GBP123.0m), and during the period issued shares of GBP23.1m (2011:
GBP18.9m) with share based payment charges of GBP2.3m (2011:
GBPnil), shares issued in relation to earn out agreement of GBP0.4m
(2011: GBPnil), share options issued of GBPnil (2011: GBP0.7m),
provision for warrants of GBP1.0m (2011: GBPnil), share options
exercised of GBP1.1m (2011: GBP0.7m), costs associated with share
issued of GBPnil (2011: GBP0.4m) and a loss for the period of
GBP21.6m (2011: GBP17.3m) resulting in total equity carried forward
of GBP131.9m (2011: GBP125.6m).
(1) The elimination of non-controlling interest relates to
removal of the interest of minority shareholders during the
period.
Consolidated and Company statements of
financial position
As at 31 December 2012 and 31 December 2011
Group Company
------ ---------------- ----------------
31 December 31 December
2012 2011 2012 2011
Notes GBPm GBPm GBPm GBPm
--------------------------------------------- ------ ------- ------- ------- -------
ASSETS
Goodwill 14 17.5 17.8 - -
Other intangible assets 14 16.8 21.9 - -
Property, plant and equipment 15 130.0 166.2 0.3 0.4
Biological assets 16 40.4 33.8 - -
Investments in subsidiaries 17 - - 31.5 31.5
Investments in associates 18 - 6.9 - 5.9
Investment in jointly controlled entity 19 37.4 - - -
Other investments 19 0.1 1.7 - -
Deferred tax assets 20 2.0 1.8 - -
TOTAL NON-CURRENT ASSETS 244.2 250.1 31.8 37.8
--------------------------------------------- ------ ------- ------- ------- -------
Inventories 21 23.1 20.1 - -
Trade and other receivables 22 44.2 48.8 147.5 128.2
Cash at bank 23 17.0 12.7 - -
TOTAL CURRENT ASSETS 84.3 81.6 147.5 128.2
--------------------------------------------- ------ ------- ------- ------- -------
TOTAL ASSETS 328.5 331.7 179.3 166.0
--------------------------------------------- ------ ------- ------- ------- -------
EQUITY
Share capital 24 16.0 13.0 16.0 13.0
Share premium account 24 140.3 138.2 140.3 138.2
Revaluation reserve 24 9.0 9.1 - -
Share option reserve 24 7.8 5.4 7.8 5.4
Translation reserve 24 (20.7) (10.4) - -
Other reserves 24 31.4 11.0 38.1 17.7
Retained earnings 24 (33.3) (31.1) (70.3) (48.7)
--------------------------------------------- ------ ------- ------- ------- -------
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS
OF THE COMPANY 150.5 135.2 131.9 125.6
--------------------------------------------- ------ ------- ------- ------- -------
NON-CONTROLLING INTERESTS 24 23.7 20.5 - -
TOTAL EQUITY 174.2 155.7 131.9 125.6
--------------------------------------------- ------ ------- ------- ------- -------
LIABILITIES
Loans and borrowings 25 76.3 76.7 - -
Deferred tax liabilities 20 3.3 4.1 - -
Obligations under finance leases 25 1.3 18.6 - -
Provisions 29 1.5 - - -
Trade and other payables 28 4.3 16.1 45.1 38.0
TOTAL NON-CURRENT LIABILITIES 86.7 115.5 45.1 38.0
--------------------------------------------- ------ ------- ------- ------- -------
23,
Bank overdraft 25 5.9 12.2 1.0 0.7
Loans and borrowings 25 22.9 3.0 - -
Obligations under finance leases 25 1.2 4.9 - -
Trade and other payables 28 37.2 39.7 1.3 1.7
Tax liability 0.4 0.7 - -
--------------------------------------------- ------ ------- ------- ------- -------
TOTAL CURRENT LIABILITIES 67.6 60.5 2.3 2.4
--------------------------------------------- ------ ------- ------- ------- -------
TOTAL LIABILITIES 154.3 176.0 47.4 40.4
--------------------------------------------- ------ ------- ------- ------- -------
TOTAL EQUITY AND LIABILITIES 328.5 331.7 179.3 166.0
--------------------------------------------- ------ ------- ------- ------- -------
The notes are an integral part of these financial
statements.
These financial statements were approved by the Board of
Directors and authorised for issue on 27 March 2013. They were
signed on its behalf by:
Geoffrey White
Director & Chief Executive Officer
Consolidated and Company statements of cash flows
For the year ended 31 December 2012 and 15 months ended 31
December 2011
Group Company
------ ---------------- ----------------
31 December 31 December
2012 2011 2012 2011
Notes GBPm GBPm GBPm GBPm
------------------------------------------------------ ------ ------- ------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss)/profit for the period (6.0) 0.5 (21.6) (17.3)
Adjustments 30 1.9 (16.4) 14.0 4.9
------------------------------------------------------ ------ ------- ------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES BEFORE
MOVEMENTS IN WORKING CAPITAL (4.1) (15.9) (7.6) (12.4)
Change in inventories (8.1) (14.3) - -
Change in trade and other receivables (9.8) (17.3) (19.7) (43.1)
Change in trade and other payables 0.2 13.3 0.4 37.1
------------------------------------------------------ ------ ------- ------- ------- -------
CASH GENERATED FROM OPERATIONS (21.8) (34.2) (26.9) (18.4)
Interest received 0.7 0.8 - 0.1
Interest paid (10.7) (8.1) - -
Interest element of finance lease rental payments (0.4) (0.5) - -
Income tax paid (0.9) (1.2) - -
------------------------------------------------------ ------ ------- ------- ------- -------
NET CASH FROM OPERATING ACTIVITIES (33.1) (43.2) (26.9) (18.3)
------------------------------------------------------ ------ ------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property, plant and
equipment 2.6 2.2 - -
Investment in restricted cash (3.2) (3.2) - -
Utilisation of restricted cash 3.2 - -
Acquisition of subsidiary, net of cash acquired 7 (0.9) (6.1) - -
Acquisition of property, plant and equipment 15 (12.6) (18.4) (0.1) (0.1)
Acquisition of intangible assets 14 (0.4) (5.1) - -
Acquisition of associates and joint ventures - (1.2) - (1.2)
Proceeds from sale of associates 18 2.5 1.1
Proceeds from sale of other investments 19 1.0 - - -
Bank overdraft transferred to jointly controlled
entity 11 3.5 - - -
Proceeds from sale of subsidiary undertaking - 0.7 - -
------------------------------------------------------ ------ ------- ------- ------- -------
NET CASH FROM INVESTING ACTIVITIES (4.3) (31.1) 1.0 (1.3)
------------------------------------------------------ ------ ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of share capital net
of costs 24 24.1 18.9 24.1 18.9
Proceeds from the issue of share options 24 1.1 0.7 1.1 0.7
Loan advance 28.3 61.1 - -
Finance leases advanced 1.3 - -
Repayment of borrowings (3.9) (10.6) - (1.3)
Payment of finance lease liabilities (2.7) (3.7) - -
Non-controlling interest dividends paid 24 (0.2) 0.2 - -
Dividends received from Group companies - - 0.4 -
------------------------------------------------------ ------ ------- ------- ------- -------
NET CASH FROM FINANCING ACTIVITIES 48.0 66.6 25.6 18.3
------------------------------------------------------ ------ ------- ------- ------- -------
Net increase/(decrease) in cash and cash equivalents 10.6 (7.7) (0.3) (1.3)
Cash and cash equivalents at the beginning
of the period (2.7) 3.9 (0.7) 0.6
Foreign exchange movements - 1.1 - -
------------------------------------------------------ ------ ------- ------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 23 7.9 (2.7) (1.0) (0.7)
------------------------------------------------------ ------ ------- ------- ------- -------
The notes are an integral part of these financial
statements.
Notes to the Financial Statements
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 12 month period ended 31 December
2012 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 27 March 2013.
The Company changed its financial year end from 30 September to
31 December annually with effect from the financial period ended 31
December 2011. Accordingly the comparative period information is
for the 15 month period to 31 December 2011.
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
24 to the accounts.
Going concern
Although the current on-going economic conditions create
uncertainty, the Group's forecast and projections, taking into
account possible changes in trading performance, together with
mitigating actions that are within managements control show that
the Group is expected to be able to operate within the level of its
debt facilities.
The Directors are carefully monitoring cash resources across the
Group and have instigated a number of initiatives to ensure funding
will be available for planned projects.
Following the careful review of on-going performance, 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 GBP0.1m.
Basis of measurement
The financial statements have been prepared on the historical
cost basis except for the revaluation of certain long leasehold
properties, related derivative financial instruments at fair value
and certain jointly controlled entities and biological assets at
fair value.
The accounting policies set out in these financial statements
have been applied to all periods presented. A number of new
standards, amendments to standards and interpretations are
effective for annual periods beginning after 1 January 2013 and
have not been applied in preparing the Group accounts. None of
these are expected to have a significant effect on the financial
statements of the group, except for IFRS 9 Financial Instruments.
The Group does not plan to adopt this standard early and the extent
of the impact has not been
determined.
Use of estimates and judgments
The preparation of financial statements in conformity with
Adopted IFRS requires management to make judgments, 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 associates (note 18)
-- valuation of biological assets (note 16)
-- share of results of jointly controlled entity (note 19)
-- impairment of interest in jointly controlled entity (note
19)
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 (note 3c)
-- the determination of the accounting treatment in respect of
the acquisition of investments as either associates, joint ventures
or subsidiaries (note 3(a))
-- the determination whether certain transactions represent
business combinations (note 7)
-- the determination of investments as jointly controlled entity
based on relative shareholder interest (note 11)
-- the conclusion as to whether certain businesses should be
presented as part of continuing or discontinuing operations (note
8)
The timing of revenue recognition is not subject to significant
uncertainty.
3. Significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements. 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 where the non-controlling interest has a
specific exemption from making 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, Joint Ventures and jointly controlled entities
Associates are those entities in which the Group has significant
influence, but not control or joint control, over the financial and
operating policies. Significant influence is presumed to exist when
the Group holds between 20 percent and 50 percent of the voting
power of
another entity. Jointly controlled entities are those entities
whose activities the Group has joint control, established by
contractual arrangement.
Investments in associates and jointly controlled entities are
accounted for under the equity method and are usually recognised
initially at cost. The cost of the investment includes transaction
costs. Upon contribution of a subsidiary to a jointly controlled
entity, the Group derecognises the assets and liabilities of the
subsidiary, and replaces with the fair value of the jointly
controlled entity. Any gain arising is recognised in full in the
income statement.
The consolidated financial statements include the Group's share
of the profit or loss and other comprehensive income of
equity-accounted investees, after adjustments to align the
accounting policies with those of the Group, from the date that
significant influence or joint control commences until the date
that significant influence or joint control ceases.
When the Group's share of losses exceeds its interest in an
equity accounted investee, the carrying amount of the investment,
including any long term interests that form part thereof, is
reduced to zero, and the recognition of further losses is
discontinued except to the extent that the Group has an obligation
or has made payments on behalf of the investee.
The Company records interests in associate, joint ventures and
jointly controlled entities initially at cost and thereafter at
cost less provisions for impairment.
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.
Business combinations
Goodwill arising on acquisition is 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.
When the excess is negative the identified fair values are
reassessed to ensure that all acquired assets and liabilities have
been 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 acquiree is
initially measured at the non-controlling interest's proportion of
the net fair value of the assets, liabilities and contingent
liabilities recognised.
Put options
Equity put options held by non-controlling interest holders are
recognised as financial liabilities at the present value of amounts
payable on their exercise with a corresponding entry to other
reserves. The Group continues to recognise non-controlling
interests in respect of these equity investments where the risks
and rewards of ownership are deemed to have been retained by the
non-controlling interest holders.
(b) Intangible assets
Goodwill
Positive 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
reporting 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 statement of financial
position 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 statement
of financial position 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 property 5 years
Licences Life of licence, not to exceed 5 years
Customer relationships 5 years - 10 years
Franchises 5 years
Contractual rights Life of right, not to exceed 20 years
Costs directly associated with the acquisition of the licenses
required to provide commercial airline services are capitalised as
intangible assets in accordance with IAS38 within contractual
rights. Costs are capitalised from the point that it is highly
likely the conditions to acquire the licence will be met and the
commercial success of the airline operations is anticipated.
Capitalised costs excluded start up losses and any costs not
directly attributable to obtaining the licence. No such costs have
been incurred in 2012 as they did not meet the conditions for
capitalisation as intangible assets.
(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 reporting 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 reporting 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 reporting 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
reporting 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 reporting 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) Investments
The Group's investments in equity securities that are not
associates or joint ventures are classified as either
available-for-sale financial assets or assets at fair value through
profit and loss. This designation is made on acquisition of
individual investments. For available for sale financial assets
subsequent to initial recognition, they are measured at fair value
or cost where fair value cannot be assessed 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. For
assets at fair value through profit and loss, subsequent to initial
recognition they are measured at fair value and changes recognised
within gains/losses on other investments in 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 statement of
financial position 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 reporting 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 land and buildings 2% of cost
Short leasehold land and buildings Over the term of the
lease
Plant and machinery 10% of cost
Fixtures and fittings 15% - 25% of cost
Aircraft 5% - 6.67% 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 recognise biological assets, which includes agricultural
produce due for harvest on fruit plantations. Under IAS41,
Biological Assets are required to be included at fair value. Fair
value is determined by reference to the net present value of the
biological assets at the reporting date. Biological assets are
stated at fair value less estimated point of sale costs, with any
resultant gain or loss recognised 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 or other biological asset is harvested, it is
transferred to inventory at the lower of cost and net realisable
value.
(h) Impairment of assets excluding goodwill, inventories and
deferred tax assets
At each reporting 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.
(i) Financial instruments
Financial assets and financial liabilities are recognised in the
Group's statement of financial position 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.
Restricted cash
Restricted cash is cash at bank that is not freely available due
to specific restrictions on its use (note 23). It is presented
together with Cash and cash equivalents as Cash at bank in the
Statement of financial position.
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.
Derivative cash flow hedging instruments
Derivative cash flow hedging instruments are initially
recognised, and subsequently measured, at fair value. The fair
values of
derivative hedging instruments are determined based on market
data to calculate the present value of all estimated flows
associated with each instrument at the balance sheet date.
Changes in their fair values are recognised directly in other
comprehensive income (to the extent that they are effective),
with the ineffective portion being recognised in the income
statement. In order to qualify for hedge accounting, the Group
is required to document prospectively the relationship between
the item being hedged and the hedging instrument.
The Group is also required to demonstrate an assessment of the
relationship between the hedged item and the hedging instrument
which shows that the hedge will be highly effective on an
ongoing basis. This effectiveness testing is re-performed
periodically to
ensure that the hedge has remained, and is expected to remain,
highly effective.
(i)Financial instruments (continued)
Hedge accounting is discontinued when a hedging instrument is
derecognised (e.g. through expiry or disposal), or no longer
qualifies for hedge accounting. Where the hedged item is a
highly probable forecast transaction, the related gains and
losses
remain in equity until the transaction takes place, when they
are reclassified to the income statement. When a hedged
futuretransaction is no longer expected to occur, any related gains
and losses, previously recognised in other comprehensive income,are
immediately reclassified to the income statement.
Derivative fair value changes recognised in the income statement
are either reflected in arriving at operating profit (if the hedged
item is similarly reflected) or in finance expense.
(j)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 ROCE (return on
capital
employed) and ROE (return on equity) as part of its capital
management.
(k)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.
. Significant accounting policies (continued)
(l) 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.
(m) 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.
(n) Dividends
Interim dividends are recognised when paid and final dividends
are recognised as liabilities in the period in which they are
approved by shareholders.
(o) Provisions
A provision is recognised in the statement of financial position
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.
(p) 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.
Infrastructure division
Included within the infrastructures division is revenue from
port activities. Revenue from port activities represents the income
earned from the provision of port facilities, which comprise cargo
and other handling, towage, pilotage, conservancy and waste
management services and port related rental income. Such revenue is
recorded once the service has been provided.
Agribusiness division
Revenue for the agribusiness division includes the invoice value
of goods where the Group grows or takes ownership risk on the
relevant produce. Where the Group provides logistics or processing
services without taking ownership risk on the relevant produce,
revenue comprises the invoiced value of the services provided.
Revenue is recognised when the supply of the goods or services are
completed. There are no discounts or other arrangements that create
uncertainty over the level of revenue recognised.
Support services division
The Group supplies an immaterial amount of bundled IT services.
When these occur revenue is allocated based on the fair values of
the respective services provided.
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.
(q) 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 statement of financial
position 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.
(r) 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.
(s) Earnings per share
Basic earnings 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 potential dilutive
ordinary shares in issue are employee share options and the equity
conversion element of the convertible bond.
(t) 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 organisation and the financial
information provided to the CODM.
(u) 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.
(v) Convertible bonds
Convertible bonds are regarded as compound instruments,
consisting of a liability component and either an equity component
or an embedded derivative component.
At the date of issue, the fair value of the liability component
is estimated using the prevailing market interest rate for similar
non-convertible debt. The difference between the proceeds of issue
of the convertible bonds and the fair value assigned to the
liability component represents the value of either an equity
component or an embedded derivative component attributable to the
embedded option to convert the bonds into equity of the Group.
IAS 32 states that a derivative contract that will be settled by
the entity receiving or delivering a fixed number of its own equity
instruments in exchange for a fixed amount of cash or another
financial asset is an equity instrument. It also states that a
contract that will be settled by the entity delivering or receiving
a fixed number of its own equity instruments in exchange for a
variable amount of cash or another financial asset is a financial
asset or financial liability. For the purposes of the consolidated
financial statements, when making the assessment of whether a
convertible bond, when exercised, gives rise to the exchange of a
fixed or variable amount of cash, or other financial asset, the
functional currency of the parent company relative to the currency
denomination of the bonds is considered in addition to other
features within the bond.
For convertible bonds issued by the Group where there is a
difference between the currency of the bond and the functional
currency of the issuer, the embedded option to convert the bonds is
recorded as a derivative liability because it is not a contract to
exchange a fixed number of shares for a fixed amount of bonds. The
embedded derivative liability component is separately identified
and measured at fair value through profit or loss. For convertible
bonds issued by the Group where the currency of the bond and the
functional currency of the issuer are the same, i.e. where on
conversion of the bonds a fixed number of shares is exchanged for a
fixed amount of bonds, the value of the embedded option to convert
the bonds is recorded within equity on initial recognition.
Issue costs are apportioned between the liability and embedded
option components of the convertible bonds (recorded as equity or
as a derivative liability) based on their relative carrying amounts
at the date of issue.
The interest expense on the liability component is calculated by
applying the prevailing market interest rate for similar
non-convertible debt to the liability component of the instrument.
This interest expense, recognised in the income statement, is
calculated using the effective interest method, i.e. the difference
between the interest expense on the liability component and the
interest paid is added to the carrying amount of the convertible
bond.
(w) Non-GAAP measures
Following a review of key performance indicators used by the
Directors and consultations with key stakeholders, the Directors
have revised the key non-GAAP profit measure used to monitor
performance of the business. From 1 January 2012 the key non-GAAP
profit measure used by the board is net operating profit which is
defined as operating profit before amortisation of acquired
intangible assets and share based payment charges less net finance
charges. The directors believe that this measure best reflect the
trading performance of the group.
4. Segment reporting
The "Chief Operating Decision Maker" (CODM) is deemed to be the
Executive Committee who monitors 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 net operating profit/(loss).
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that are allocated on a
reasonable basis. Unallocated items comprise mainly 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 four core continuing reportable segments which are
organised around the basis of products and services which they
provide:
-- Agribusiness
-- Infrastructure
-- Support services
-- Hotels
The Group has not aggregated any operating segment in arriving
at this analysis. Following the contribution of a subsidiary to a
jointly controlled entity (note 11), the transportation division
from the 29 June 2012 is no longer considered a core operating
division but remains a continuing operation. This is consistent
with the reports provided to the (CODM).
The head office division includes head office costs that are not
allocated to the operating divisions. The revenue from the head
office division relates to income from related parties.
Geographical analysis
All of the segments operate in various parts of Africa, Europe
and Americas.
Business segments
Year ended 31 December 2012
Core Continuing Dis-continued Total
Support Head operating operations operations
Agri-business Infra-structure Services Hotels office divisions Trans-portation
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
EXTERNAL
REVENUE 123.6 23.5 27.0 11.9 0.3 186.3 20.2 206.5 - 206.5
------------------ -------------- ---------------- --------- -------- --------- ----------- ---------------- ----------- -------------- ---------
Net operating
profit/(loss):
Segment
result* 2.0 2.8 2.1 (1.9) (8.4) (3.4) (8.9) (12.3) - (12.3)
Amortisation (1.4) - (0.3) - - (1.7) (0.5) (2.2) - (2.2)
Share based
payments
expense - - - - (2.3) (2.3) - (2.3) - (2.3)
------------------ -------------- ---------------- --------- -------- --------- ----------- ---------------- ----------- -------------- ---------
OPERATING
PROFIT/(LOSS)
AFTER FINANCING 0.6 2.8 1.8 (1.9) (10.7) (7.4) (9.4) (16.8) - (16.8)
------------------ -------------- ---------------- --------- -------- --------- ----------- ---------------- ----------- -------------- ---------
Share of
results
of associates - - - - (4.4) (4.4) - (4.4) - (4.4)
Share of
results
of jointly
controlled
entity - - - - (10.6) (10.6) - (10.6) - (10.6)
Gain on
contribution
of subsidiary
to jointly
controlled
entity - - - - 33.5 33.5 - 33.5 - 33.5
Impairment
of jointly
controlled
entity - - - - (7.7) (7.7) - (7.7) - (7.7)
Loss on
other
investments - - - - (0.3) (0.3) - (0.3) - (0.3)
Income tax
credit/(charge) 1.3 (0.3) (0.3) (0.4) - 0.3 - 0.3 - 0.3
------------------ -------------- ---------------- --------- -------- --------- ----------- ---------------- ----------- -------------- ---------
PROFIT/(LOSS)
FOR THE
YEAR 1.9 2.5 1.5 (2.3) (0.2) 3.4 (9.4) (6.0) - (6.0)
------------------ -------------- ---------------- --------- -------- --------- ----------- ---------------- ----------- -------------- ---------
Net operating
profit /(loss)
before financing 4.9 4.3 2.1 (0.4) (6.4) 4.5 (7.6) (3.1) (0.1) (3.2)
Net finance
(expense)/income (2.9) (1.5) - (1.5) (2.0) (7.9) (1.3) (9.2) 0.1 (9.1)
------------------ -------------- ---------------- --------- -------- --------- ----------- ---------------- ----------- -------------- ---------
NET OPERATING
PROFIT/(LOSS):
SEGMENT
RESULT* 2.0 2.8 2.1 (1.9) (8.4) (3.4) (8.9) (12.3) - (12.3)
------------------ -------------- ---------------- --------- -------- --------- ----------- ---------------- ----------- -------------- ---------
*See accounting policy note (w)
15 months ended 31 December 2011
Core Continuing Dis-continued Total
Support Head operating operations operations
Agri-business Infra-structure Services Hotels office divisions Trans-portation
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
EXTERNAL REVENUE 94.5 21.8 25.1 11.5 - 152.9 35.5 188.4 0.2 188.6
----------------------- -------------- ---------------- --------- -------- --------- ---------- ---------------- ----------- -------------- --------
Net operating
profit/(loss):Segment
result* 32.5 (2.4) 1.4 3.1 (14.0) 20.6 (11.0) 9.6 (1.1) 8.5
Amortisation (1.0) (0.1) (0.4) - - (1.5) (0.6) (2.1) - (2.1)
Share based
payments expense - - - - (0.7) (0.7) - (0.7) - (0.7)
----------------------- -------------- ---------------- --------- -------- --------- ---------- ---------------- ----------- -------------- --------
OPERATING
PROFIT/(LOSS)
AFTER FINANCING 31.5 (2.5) 1.0 3.1 (14.7) 18.4 (11.6) 6.8 (1.1) 5.7
----------------------- -------------- ---------------- --------- -------- --------- ---------- ---------------- ----------- -------------- --------
Share of results
of associates - - - - (5.9) (5.9) - (5.9) - (5.9)
Share of results
of jointly - - - - - - - - - -
controlled
entity
Gain on contribution
of subsidiary
to jointly
controlled
entity - - - - - - - - - -
Gain on other
investments 0.6 - - - 0.4 1.0 - 1.0 - 1.0
Income tax
credit/(charge) (0.4) - (0.5) (0.2) 0.8 (0.3) - (0.3) - (0.3)
----------------------- -------------- ---------------- --------- -------- --------- ---------- ---------------- ----------- -------------- --------
PROFIT/(LOSS)
FOR THE PERIOD 31.7 (2.5) 0.5 2.9 (19.4) 13.2 (11.6) 1.6 (1.1) 0.5
----------------------- -------------- ---------------- --------- -------- --------- ---------- ---------------- ----------- -------------- --------
Net operating
profit /(loss)
before financing 35.4 (1.6) 0.6 3.3 (9.5) 28.2 (9.2) 19.0 (1.1) 17.9
Net finance
(expense)/income (2.9) (0.8) 0.8 (0.2) (4.5) (7.6) (1.8) (9.4) - (9.4)
----------------------- -------------- ---------------- --------- -------- --------- ---------- ---------------- ----------- -------------- --------
NET OPERATING
PROFIT/(LOSS):
SEGMENT RESULT* 32.5 (2.4) 1.4 3.1 (14.0) 20.6 (11.0) 9.6 (1.1) 8.5
----------------------- -------------- ---------------- --------- -------- --------- ---------- ---------------- ----------- -------------- --------
Business segments
*See accounting policy note (w)
Year ended 31 December 2012
Core Continuing Dis-continued Total
Support Head operating operations operations
Agri-business Infra-structure Services Hotels office divisions Trans-portation
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- --------
Segment operating
assets 136.8 85.4 16.2 46.3 - 284.7 - 284.7 0.7 285.4
Other investments - - - - 0.1 0.1 - 0.1 - 0.1
Investment
in jointly
controlled
entity - - - - 37.4 37.4 - 37.4 - 37.4
Unallocated
assets/interest
bearing assets - - - - 5.6 5.6 - 5.6 - 5.6
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- --------
Total Assets 136.8 85.4 16.2 46.3 43.1 327.8 - 327.8 0.7 328.5
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- --------
Segment operating
liabilities 60.9 15.9 9.5 18.5 - 104.8 - 104.8 0.5 105.3
Unallocated
liabilities/interest
bearing liabilities - - - - 49.0 49.0 - 49.0 - 49.0
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- --------
Total Liabilities 60.9 15.9 9.5 18.5 49.0 153.8 - 153.8 0.5 154.3
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- --------
Depreciation
of segment
assets 2.7 3.5 0.6 1.5 0.2 8.5 1.1 9.6 - 9.6
Amortisation
of segment
assets 1.4 - 0.3 - - 1.7 0.5 2.2 - 2.2
Capital expenditure 7.2 3.0 0.6 3.0 0.2 14.0 0.3 14.3 - 14.3
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- --------
15 months ended 31 December 2011
Core Continuing Dis-continued Total
Support Head operating operations operations
Agri-business Infra-structure Services Hotels office divisions Trans-portation
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- ---------------
Segment operating
assets 112.2 82.1 15.3 46.4 - 256.0 53.0 309.0 0.3 309.3
Investments
in associates - - - - 6.9 6.9 - 6.9 - 6.9
Other investments - - - - 1.7 1.7 - 1.7 - 1.7
Investment
in jointly - - - - - - - - - -
controlled
entity
Unallocated
assets/ interest
bearing assets - - - - 13.8 13.8 - 13.8 - 13.8
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- ---------------
Total Assets 112.2 82.1 15.3 46.4 22.4 278.4 53.0 331.4 0.3 331.7
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- ---------------
Segment operating
liabilities 47.1 13.2 9.0 16.9 - 86.2 39.5 125.7 0.1 125.8
Unallocated
liabilities/interest
bearing liabilities - - - - 50.2 50.2 - 50.2 - 50.2
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- ---------------
Total Liabilities 47.1 13.2 9.0 16.9 50.2 136.4 39.5 175.9 0.1 176.0
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- ---------------
Depreciation
of segment
assets 2.3 4.1 0.6 1.5 0.2 8.7 1.2 9.9 - 9.9
Amortisation
of segment
assets 1.0 0.1 0.4 - - 1.5 0.6 2.1 - 2.1
Capital expenditure 6.4 4.7 0.8 0.5 0.1 12.5 30.9 43.4 - 43.4
---------------------- -------------- ---------------- --------- ------- ------- ----------- ---------------- ----------- -------------- ---------------
Geographical analysis
Year ended 31
December
2012
------------ -------- ------ ------------------------- -------------------- ----------------------- -------------
Consolidated
continuing
Southern East West Central Asia Discontinuing
Africa Africa Africa Africa Europe Americas operations operation
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------ -------- ------ ------ ------- -------- -------------------- ----------------------- -------------
Revenue by
location
of
external
customers 123.7 27.3 18.4 18.8 5.7 10.9 1.7 206.5 -
------------ -------- ------ ------ ------- -------- -------------------- ----------------------- -------------
Revenue by
location
of assets 144.3 25.2 17.7 18.8 0.5 - - 206.5 -
------------ -------- ------ ------ ------- -------- -------------------- ----------------------- -------------
Net assets 99.4 2.1 69.5 8.8 (5.9) - - 173.9 0.3
------------ -------- ------ ------ ------- -------- -------------------- ----------------------- -------------
Capital
expenditure 9.9 0.5 2.9 0.9 0.1 - - 14.3 -
------------ -------- ------ ------ ------- -------- -------------------- ----------------------- -------------
15 months ended 31
December 2011
------------------------- -------- ------- ----------------------------- ----------------------- -------------
Consolidated
continuing
Southern East West Central Americas Discontinuing
Africa Africa Africa Africa Europe operations operation
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- -------- ------- --------- --------- ------- ----------------------- -------------
Revenue by location
of
external customers 100.3 36.5 16.2 10.0 19.0 6.4 188.4 0.2
------------------------- -------- ------- --------- --------- ------- ----------------------- -------------
Revenue by location
of assets 128.2 35.9 14.7 8.9 0.7 - 188.4 0.2
------------------------- -------- ------- --------- --------- ------- ----------------------- -------------
Net assets/(liabilities) 66.4 10.7 65.1 20.3 (7.0) - 155.5 0.2
------------------------- -------- ------- --------- --------- ------- ----------------------- -------------
Capital expenditure 7.7 30.3 4.9 0.3 0.2 - 43.4 -
------------------------- -------- ------- --------- --------- ------- ----------------------- -------------
5.Revenue
Continuing Discontinued
operations operation Total
---------------------------- ---------------------------- ----------------------------
Year 15 months Year 15 months Year 15 months
ended ended ended ended ended ended
31 December 31 December 31 December 31 December 31 December 31 December
2012 2011 2012 2011 2012 2011
GBPm GBPm GBPm GBPm GBPm GBPm
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Sale of goods 80.3 52.1 - - 80.3 52.1
Services 126.2 136.3 - 0.2 126.2 136.5
--------------- ------------- ------------- ------------- ------------- ------------- -------------
206.5 188.4 - 0.2 206.5 188.6
--------------- ------------- ------------- ------------- ------------- ------------- -------------
6. Group net operating costs
Year 15 months
ended ended
ended 31 December
31
December
2012 2011
GBPm GBPm
----------------------------------------------------------- ---------- -------------
Cost of sales 146.9 137.9
Operating costs 77.1 81.0
Gain arising on fair valuation of biological assets (note
16)* (9.2) (27.4)
Other operating income (0.6) (18.0)
----------------------------------------------------------- ---------- -------------
NET OPERATING COSTS 214.2 173.5
----------------------------------------------------------- ---------- -------------
INCLUDED IN NET OPERATING COSTS ABOVE ARE:
Depreciation of property, plant and equipment 9.6 9.9
Amortisation of intangible assets (other than goodwill) 2.2 2.1
Share based payments (notes 24 and 27) 2.3 0.7
Operating lease rentals:
- Land and buildings 3.1 1.7
- Plant and machinery 0.2 -
- Aircraft 3.4 6.0
Staff costs (note 9) 35.0 41.4
Legal fees and listing costs 1.6 2.8
Gain on acquisition - ATdm (note 7)* - (4.0)
Gain on acquisition - Home Farms (note 7)* - (11.8)
Restructuring and reorganisation costs 4.0 -
Pre-operating losses 1.8 -
Acquisition costs - 0.5
Impairment of trade receivables 0.5 0.5
Impairment of other investments - 0.4
Loss on sale of property, plant and equipment 0.4 -
Profit on disposal of subsidiary - (0.5)
--------------------------------------------------------- ----- -------
Included in the prior period result of the transportation
segment are start up costs of GBP8.1m.
* In accordance with the requirements of IAS 1, the Directors
have presented movements in the fair value of biological assets and
gains arising on acquisition as separate items on the face of the
income statement to provide full visibility of these items.
Auditor's remuneration
Year 15 months
ended ended
31 31 December
December
2012 2011
GBPm GBPm
========================================================= ========== =============
Fees payable to the Company's auditors for the audit of
the Company's annual accounts 0.1 0.1
For the audit of the Company's subsidiaries pursuant to
legislation 0.3 0.4
Total audit fees 0.4 0.5
All services related to corporate finance transactions
* - 0.8
Total fees payable to the Company's auditors 0.4 1.3
========================================================= ========== =============
* Fees relating to listing and share issues during the
period.
7. Acquisition of subsidiaries
7(a) Acquisition of subsidiaries in the current period
Lonagro Tanzania
With effect from 17 January 2012, the Group acquired 100% of the
issued share capital of LonAgro Tanzania Limited for a
consideration of US1.4m (GBP0.9 m). LonAgro Tanzania is based in
Dar es Salaam, the commercial hub of Tanzania, and has exclusive
John Deere distributorship for Tanzania.
Fair value Values
Pre acquisition adjustment recognised on
carrying value on acquisition acquisition
GBPm GBPm GBPm
---------------------------------------- --------------- -------------- -------------
Inventory 0.1 - 0.1
Intangible assets related to franchise - 1.2 1.2
Trade and other payables (0.1) - (0.1)
Deferred tax liability - (0.3) (0.3)
---------------------------------------- --------------- -------------- -------------
NET IDENTIFIABLE ASSETS AND LIABILITIES - 0.9 0.9
---------------------------------------- --------------- -------------- -------------
Consideration paid - - 0.9
Goodwill on acquisition - - -
---------------------------------------- --------------- -------------- -------------
LonAgro Tanzania contributed GBP1.8m to the Group's revenue and
GBP0.4m loss before tax for the period between the date of
acquisition and the reporting date.
There were no significant transaction costs incurred to acquire
the company.
7(b) Acquisition of subsidiaries in the prior period
AFEX
With effect from 1 January 2011, the Group acquired 100% of the
issued share capital of Global Horizons Ltd a company registered in
the Isle of Man (which via subsidiaries in Kenya and South Sudan
trades as AFEX) for an initial consideration of US$3m (GBP1.9m).
Further payments of up to US$5m (GBP3.1m) will be payable over two
years based on an EBIT related earn-out formula. AFEX's main focus
of current operations is in supplying secure accommodation in Juba
in the Republic of South Sudan. This infrastructure is in great
demand from corporate clients, NGO's, and Government Aid Agencies
working in the Republic of South Sudan.
The transaction has been accounted for by the purchase method of
accounting. The fair value of the net assets at 1 January 2011 is
set out below:
Fair value Values
Pre acquisition adjustment recognised on
carrying value on acquisition acquisition
GBPm GBPm GBPm
--------------------------------------------- --------------- -------------- -------------
Property, plant and equipment 2.9 - 2.9
Inventory 0.1 - 0.1
Trade and other receivables 1.6 - 1.6
Cash and Cash equivalents 0.6 - 0.6
Trade and other payables (3.3) 0.1 (3.2)
Deferred tax liability - (0.5) (0.5)
Intangible related to customer relationships - 2.3 2.3
--------------------------------------------- --------------- -------------- -------------
NET IDENTIFIABLE ASSETS AND LIABILITIES 1.9 1.9 3.8
--------------------------------------------- --------------- -------------- -------------
Consideration paid 1.9
Contingent consideration 2.5
--------------------------------------------- --------------- -------------- -------------
Goodwill on acquisition 0.6
--------------------------------------------- --------------- -------------- -------------
The transaction costs incurred to acquire the company were
GBP0.1m and have been expensed in operating costs in the income
statement.
The goodwill arising on the acquisition of AFEX is attributable
to the anticipated profitability of the distribution of the
company's services to new customers and the value attributed to the
skills and experience of the acquired work force.
In 2011, AFEX contributed GBP8.4m to the Group's revenue and
GBP0.7m profit to the Group's profit before tax for the period
between the date of acquisition and the reporting date.
There have been no changes in the recognised amount of
contingent consideration, which have been based on the future
probability of the business.
FISH ON LINE (PTY) LIMITED
With effect from 1 June 2011, the Group acquired 51% of the
issued share capital of Fish On Line (Pty) Limited for an initial
consideration of GBP0.3m.
Pursuant to the share purchase agreement, the sellers have been
granted a put option to sell their remaining 49% to Lonrho three
years after the signature date at a purchase price of 6x multiple
of Fish On Line's profit before tax for the 2014 financial year
end, which is capped at a maximum of South African Rand (ZAR) 35.0m
(GBP3.0m).
The transaction has been accounted for by the purchase method of
accounting. The fair value of the net assets at 1 June 2011 is set
out below:
Fair value Values
Pre acquisition adjustment recognised on
carrying value on acquisition acquisition
GBPm GBPm GBPm
--------------------------------------------- --------------- -------------- -------------
Property, plant and equipment 0.1 - 0.1
Inventory 0.8 - 0.8
Trade and other receivables 1.2 - 1.2
Cash and Cash equivalents (0.8) - (0.8)
Trade and other payables (0.7) - (0.7)
Loans and borrowings (0.2) - (0.2)
Intangible related to customer relationships - 0.1 0.1
--------------------------------------------- --------------- -------------- -------------
NET IDENTIFIABLE ASSETS AND LIABILITIES 0.4 0.1 0.5
--------------------------------------------- --------------- -------------- -------------
Non-controlling interest share (0.2)
Consideration paid 0.3
--------------------------------------------- --------------- -------------- -------------
Goodwill on acquisition -
--------------------------------------------- --------------- -------------- -------------
The transaction costs incurred to acquire the company were
GBP0.1m and have been expensed in operating costs in the income
statement. The transaction has been accounted using the present
access method as the non-controlling interest is considered to have
an ongoing interest in the results of the company. The put option
liability has been calculated at GBP2.3m allowing for the effect of
discounting. The corresponding entry has been recorded as a debit
to other reserves.
In 2011, Fish On Line (Pty) Limited contributed GBP5.8m to the
Group's revenue and GBP0.1m loss to the Group's profit before tax
for the period between the date of acquisition and the reporting
date.
7(b) Acquisition of subsidiaries in the prior period
(continued)
GRINDROD PCA (now LONRHO LOGISTICS)
With effect from 1 July 2011, the Group acquired 100% of the
trading assets of South African based Grindrod PCA for a
consideration of ZAR 50m (GBP4.6m).
The transaction has been accounted for by the purchase method of
accounting. The fair value of the net assets at 1 July 2011 is set
out below:
Fair value Values
Pre acquisition adjustment recognised on
carrying value on acquisition acquisition
GBPm GBPm GBPm
--------------------------------------------- --------------- -------------- -------------
Property, plant and equipment 0.6 - 0.6
Trade and other receivables 5.4 - 5.4
Cash and Cash equivalents 0.9 - 0.9
Trade and other payables (5.1) - (5.1)
Deferred tax liability - (0.3) (0.3)
Intangible related to customer relationships - 1.2 1.2
--------------------------------------------- --------------- -------------- -------------
NET IDENTIFIABLE ASSETS AND LIABILITIES 1.8 0.9 2.7
--------------------------------------------- --------------- -------------- -------------
Consideration paid 4.6
Contingent consideration -
--------------------------------------------- --------------- -------------- -------------
Goodwill on acquisition 1.9
--------------------------------------------- --------------- -------------- -------------
The transaction costs incurred to acquire the company were
GBP0.1m and have been expensed in operating costs in the income
statement.
The goodwill arising on the acquisition of Grindrod PCA is
attributable to the anticipated profitability of the distribution
of the company's services, and the experience and expertise of the
acquired work force.
In 2011, Grindrod PCA contributed GBP17.2m to the Group's
revenue and GBP0.2m profit to the Group's profit before tax for the
period between the date of acquisition and the reporting date.
ALDEAMENTO TURISTICO DE MACUTI SARL "ATDM"
On 30 September 2011, the Group acquired 80% of the issued share
capital of ATdM from Cambria Africa Plc (formally LonZim Plc) for
US$5.1m (GBP3.4m), which will be settled in cash over the next 5
years. Pursuant to the share purchase agreement, Lonrho Hotels will
also take responsibility for liabilities up to US$2.7m (GBP1.7m),
the fair value of which has been determined at GBP1.2m.
The transaction has been accounted for by the purchase method of
accounting. The fair value of the net assets at 30 September 2011
is set out below:
Fair value Values
Pre acquisition adjustment recognised on
carrying value on acquisition acquisition
GBPm GBPm GBPm
------------------------------------------------------------------ --------------- -------------- -------------
Property, plant and equipment 4.5 6.1 10.6
Trade and other payables (0.6) - (0.6)
------------------------------------------------------------------ --------------- -------------- -------------
NET IDENTIFIABLE ASSETS AND LIABILITIES 3.9 6.1 10.0
------------------------------------------------------------------ --------------- -------------- -------------
Non-controlling interest share (2.0)
Liabilities acquired not attributable to non-controlling interest 0.6
Deferred consideration 3.4
------------------------------------------------------------------ --------------- -------------- -------------
Gain on acquisition (4.0)
------------------------------------------------------------------ --------------- -------------- -------------
The transaction costs incurred to acquire the company were
GBP0.1m and have been expensed in operating costs in the income
statement.
As a first phase Lonrho Hotels plans to refurbish existing
property on the site to establish an easyHotel by Lonrho and
provide quality office space for key companies seeking to establish
offices in Beira.
The negative goodwill arising on the acquisition of ATdM is
attributable to the fair value of the property reflecting its
current development potential and arises as the vendor was unable
to provide the necessary experience and funding required to exploit
the business fully and realise its fair value. The gain arising
from negative goodwill of GBP4.0m is presented within operating
income within the income statement.
In 2011, ATdM contributed GBPnil to the Group's revenue and
GBPnil profit to the Group's profit before tax for the period
between the date of acquisition, and the reporting date
7(b) Acquisition of subsidiaries in the prior period
(continued)
HOME FARMS
On 31 August 2011 the Group acquired 100% of the issued share
capital of Sportsgear Investments (Private) Limited, Burp Track
Investments (Private) Limited and Crosshairs Point (Private)
Limited collectively known as Home Farms for a consideration of
US$60. Home Farms consists of 3 leased farms (20 year leases) and
substantial leasehold buildings including a 58,000 square feet
agricultural packhouse and high care unit.
The transaction has been accounted for by the purchase method of
accounting. The fair value of the net assets at 31 August 2011 is
set out below:
Fair value Values
Pre acquisition adjustment recognised on
carrying value on acquisition acquisition
GBPm GBPm GBPm
---------------------------------------- --------------- -------------- -------------
Intangible related to operating leases - 11.8 11.8
Inventory 0.1 - 0.1
Trade and other payables - (0.1) (0.1)
NET IDENTIFIABLE ASSETS AND LIABILITIES 0.1 11.7 11.8
---------------------------------------- --------------- -------------- -------------
Consideration paid -
Contingent consideration -
---------------------------------------- --------------- -------------- -------------
Gain on acquisition (11.8)
---------------------------------------- --------------- -------------- -------------
The transaction costs incurred to acquire the company were
GBP0.1m and have been expensed in operating costs in the income
statement.
The negative goodwill arising on the acquisition of Home Farms
is attributable to the beneficial lease arrangements acquired in
respect of leasehold land and buildings. No fair value has been
attributed to the work force or customer relationships acquired as
these were considered immaterial. Working capital assets and
liabilities at date of transition remain with the vendors. The
negative goodwill arises as the vendors were unable to provide
sufficient working capital to achieve the operations' full
potential and did not have sufficient international experience to
reach all potential markets.
The GBP11.8m benefit arising from the negative goodwill is
presented within operating income within the income statement.
In 2011, Home Farms contributed GBP1.0m to the Group's revenue
and GBP0.5m loss to the Group's profit before tax for the period
between the date of acquisition and the reporting date.
8. Discontinued operations
2012
Support Services division
Following a review by the Board in December 2012, the Group
decided not to continue to support operations of Lonrho Water and
Swissta Mozambique. Costs of discontinuing the operation were less
than GBP0.1m. The comparatives have been re-presented
accordingly.
Year 15 months
ended ended 31
31 December December
2012 2011
GBPm GBPm
------------------------------------------ ------------ ---------
CASH FLOWS FROM DISCONTINUED OPERATION
Net cash used in operating activities (0.1) -
Net cash from financing activities - -
NET MOVEMENT IN CASH AND CASH EQUIVALENTS (0.1) -
------------------------------------------ ------------ ---------
2011
Fly540 Uganda
Following a review by the Board in December 2011, the Group
decided not to continue to support air freight operations of Fly540
Uganda Ltd, which consequently ceased trading. Costs of
discontinuing the operation in 2011 were less than GBP0.1m.
15 months
ended
31
December
2011
GBPm
------------------------------------------ ---------
CASH FLOWS FROM DISCONTINUED OPERATION
Net cash used in operating activities (1.7)
Net cash from financing activities 1.9
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 0.2
------------------------------------------ ---------
9.Staff numbers and costs
The aggregate remuneration comprised (including Directors):
Group Company
--------------------- ----------------------
Year 15 months Year 15 months
ended ended 31 ended ended
31 31 31
December December December December
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
------------------------------------------ --------- ---------- ---------- ----------
Wages and salaries 33.4 39.4 4.0 5.6
Compulsory social security contributions 1.3 1.8 0.4 0.5
Share based payments 2.3 0.7 2.3 0.7
Pension costs 0.3 0.2 0.3 0.2
------------------------------------------ --------- ---------- ---------- ----------
37.3 42.1 7.0 7.0
------------------------------------------ --------- ---------- ---------- ----------
The average number of employees (including Executive Directors)
was:
Group Company
------------------------------ --------------------- ---------------------
Year 15 months Year 15 months
ended ended 31 ended ended
31 31 31
December December December December
2012 2011 2012 2011
Number Number Number Number
------------------------------ --------- ---------- --------- ----------
Infrastructure 265 234 - -
Agribusiness 2,388 1,634 - -
Transportation 288 521 - -
Support services 838 902 - -
Hotels 480 364 - -
Central 27 30 21 21
------------------------------ --------- ---------- --------- ----------
4,286 3,685 21 21
------------------------------ --------- ---------- --------- ----------
REMUNERATION OF DIRECTORS
Detailed disclosure of remuneration of Directors
is given in the Directors' Remuneration Report.
10. Net finance income
Year 15 months
ended 31 ended 31
December December
2012 2011
GBPm GBPm
------------------------------------------------------------- --------- ---------
Bank interest receivable 0.7 0.8
Foreign exchange gain 4.9 6.0
------------------------------------------------------------- --------- ---------
FINANCE INCOME 5.6 6.8
------------------------------------------------------------- --------- ---------
Interest on loans repayable within five years and overdrafts (10.6) (8.6)
Foreign exchange loss (3.7) (7.1)
Interest on finance leases (0.4) (0.5)
------------------------------------------------------------- --------- ---------
FINANCE EXPENSE (14.7) (16.2)
------------------------------------------------------------- --------- ---------
NET FINANCE EXPENSE (9.1) (9.4)
------------------------------------------------------------- --------- ---------
Included in interest payable on loans repayable within five
years and overdrafts of GBP10.6m is an amount of GBP2.3m (2011:
GBPnil) relating to the premium payable at the maturity of the
US$70m 7.0% Guaranteed Convertible Bonds due 2015 (refer to note
31).
11. Transfer of subsidiary to jointly controlled entity
On the 29 June 2012 Lonrho Plc transferred its Transportation division
headed by Lonrho Aviation BVI to a jointly controlled entity Rubicon
Diversified Investments Plc ('Rubicon'), renamed Fastjet Plc ('Fastjet')
on the 6 August 2012, resulting in a 73.6% equity interest in Fastjet
Plc immediately post the transaction with a market value of GBP55.7m
represented by 1,160,037,455 ordinary shares in Fastjet Plc at 4.8p
per share. Due to the terms of the articles of association, shareholder
agreements in place and board constitution the Directors do not consider
that Lonrho has control of Fastjet Plc. The Directors consider that,
due to the composition of the board of Directors of Fastjet, Lonrho
controls this entity jointly with easyGroup and as such the Group's
interest in Fastjet Plc is consolidated as a jointly controlled entity.
In accordance with IFRS3 (2008) the interest in Fastjet Plc was recognised
at its fair value at the date of transaction and the resulting gain
recognised in the income statement. The assets and liabilities transferred
to Fastjet Plc and the gain at 29 June 2012 are set out in the table
below: 29 June
2012
GBPm
---------------------------------------------------------------- --------
ASSETS
Goodwill 0.1
Other intangible assets 3.4
Property, plant and equipment 30.7
Inventories 2.9
Trade & other receivables 11.7
TOTAL ASSETS 48.8
---------------------------------------------------------------- --------
LIABILITIES
Loans and borrowings (1.1)
Deferred tax (0.2)
Obligations under finance leases (19.3)
Trade & other payables (15.2)
Bank overdraft (Net) (3.5)
TOTAL LIABILITIES (39.3)
---------------------------------------------------------------- --------
NET ASSETS 9.5
---------------------------------------------------------------- --------
Fair value of jointly controlled entity 55.7
Net assets of subsidiary contributed (9.5)
Non-controlling interests * (8.6)
Liabilities recognised on transaction and held in provisions (1.5)
Costs relating to transaction (2.1)
Cumulative foreign exchange translation differences recognised (0.5)
Gain on contribution of subsidiary to jointly controlled
entity 33.5
---------------------------------------------------------------- --------
*Non-controlling interest represents the accumulated share of results
attributable to non-controlling interest of the Lonrho Aviation Group
immediately prior to the transaction.
------------------------------------------------------------------------------------------
12. Income tax expense
Year 15 months
ended ended 31
31 December
December
2012 2011
Recognised in the income statement GBPm GBPm
------------------------------------------------ -------------- ------------------------
CURRENT TAX EXPENSE
Current period 0.6 1.6
DEFERRED TAX
Credit for the period (0.9) (1.3)
------------------------------------------------ -------------- ------------------------
TOTAL INCOME TAX (CREDIT)/EXPENSE
IN THE INCOME STATEMENT (0.3) 0.3
------------------------------------------------ ------------------------
Year ended 15 months
31 December ended 31
December
2012 2011
Reconciliation of effective tax GBPm GBPm
rate
------------------------------------------------ -------------- ------------------------
(Loss)/profit before tax (6.3) 0.8
Income tax using the domestic corporation
tax rate (1.5) 0.2
Irrecoverable withholding taxes 0.3 0.2
Effect of tax rates in foreign jurisdictions (2.7) (7.3)
Capital losses utilised in respect
of gain on contribution of subsidiary
to jointly controlled entity (8.2) -
Impairment of jointly controlled 1.9 -
entity non taxable
Reversal of provision against carrying
value of associate - 1.0
Losses for which deferred tax is
unrecognised 8.5 10.5
Effect of tax losses utilised (2.3) (1.5)
Non taxable items 3.7 (2.8)
------------------------------------------------ -------------- ------------------------
TOTAL TAX EXPENSE (0.3) 0.3
------------------------------------------------ -------------- ------------------------
UK Corporation tax is calculated at a rate of 24.5% (2011:
26.8%) of the estimated assessable loss (2011: profit) for the
year. Taxation for other jurisdictions is calculated at the rates
prevailing in the respective jurisdictions.
Recognised in other comprehensive income and equity
There is no material taxation effect arising on transactions
recorded in other comprehensive income and equity.
13. Earnings per share
The calculation of the basic and diluted profit per share is
based on the following data:
Year ended 15 months
31 December ended
31
2012 2011
GBPm GBPm
---------------------------------------------------- ------------------------ -------------
(Loss)/profit for the purposes of basic earnings
per share being net profit attributable to
equity holders of the parent (1.7) 6.0
(Loss)/profit for the purposes of diluted earnings
per share (1.7) 6.0
---------------------------------------------------- ------------------------ -------------
2012 2011
Number of shares (millions) No. No.
---------------------------------------------------- ------------------------ -------------
Weighted average number of ordinary shares for the
purposes of basic earnings per share 1,574.2 1,236.1
Effect of dilutive potential ordinary shares:
- Share options 1.8 20.1
Weighted average number of ordinary shares for the
purposes of diluted earnings per share* 1,576.0 1,256.2
---------------------------------------------------- ------------------------ -------------
* The calculation of diluted earnings per share is based on the
weighted average number of shares outstanding. The weighted average
number of ordinary shares outstanding during the period was
considered in light of the Convertible Bond (note 31). The
potential ordinary shares associated with the bond issue are
considered anti-dilutive as their conversion to ordinary shares
would increase earnings per share from continuing operations. The
weighted average number of ordinary shares has therefore not been
adjusted in respect of the potential ordinary shares associated
with the bond issue.
Earnings per share
Year ended 15 months ended
31 December 31 December 2011
2012
----------------------------------- ------------- ------------------
(Loss)/earnings per share (0.11p) 0.49p
(Loss)/Diluted earnings per share (0.11p) 0.48p
----------------------------------- ------------- ------------------
14. Intangible assets
Development Customer Intellectual Contractual
Goodwill costs Franchises relationships Brands property rights Licenses Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
COST
Balance at 1
October
2010 16.1 - 1.7 3.4 1.0 0.1 - 0.2 22.5
Additions - 0.2 - - 0.4 - 4.5 - 5.1
Acquired
through
business
combinations 2.5 - - 3.6 - - 11.8 - 17.9
Effect of
movements in
foreign
exchange
rates (0.2) - - (0.1) - - (0.9) - (1.2)
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
BALANCE AT 31
DECEMBER
2011 18.4 0.2 1.7 6.9 1.4 0.1 15.4 0.2 44.3
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
Balance at 1
January
2012 18.4 0.2 1.7 6.9 1.4 0.1 15.4 0.2 44.3
Additions - 0.2 - - - - - 0.2 0.4
Acquired
through
business
combinations - - 1.2 - - - - - 1.2
Transfer of
subsidiary
to jointly
controlled
entity (0.1) - - - - (0.1) (4.4) (0.2) (4.8)
Effect of
movements in
foreign
exchange
rates (0.2) - - (0.1) - - (1.1) - (1.4)
Transfer to
discontinued
operations (0.6) - - - - - - - (0.6)
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
BALANCE AT 31
DECEMBER
2012 17.5 0.4 2.9 6.8 1.4 - 9.9 0.2 39.1
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
AMORTISATION
AND
IMPAIRMENT
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
Balance at 1
October
2010 0.6 - 0.2 0.7 0.8 - - 0.2 2.5
Amortisation
for the
period - - 0.3 0.7 0.3 0.1 0.7 - 2.1
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
BALANCE AT 31
DECEMBER
2011 0.6 - 0.5 1.4 1.1 0.1 0.7 0.2 4.6
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
Balance at 1
January
2012 0.6 - 0.5 1.4 1.1 0.1 0.7 0.2 4.6
Amortisation
for the
year - - 0.4 0.7 0.1 - 1.0 - 2.2
Transfer of
subsidiary
to jointly
controlled
entity - - - - - (0.1) (1.0) (0.2) (1.3)
Effect of
movements in
foreign
exchange
rates - - - - - - (0.1) - (0.1)
Transfer to
discontinued
operations (0.6) - - - - - - (0.6)
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
BALANCE AT 31
DECEMBER
2012 - - 0.9 2.1 1.2 - 0.6 - 4.8
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
CARRYING
AMOUNTS
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
At 1 October
2010 15.5 - 1.5 2.7 0.2 0.1 - - 20.0
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
At 31
December
2011 17.8 0.2 1.2 5.5 0.3 - 14.7 - 39.7
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
AT 31
December
2012 17.5 0.4 2.0 4.7 0.2 - 9.3 0.2 34.3
-------------- --------- ------------ ----------- -------------- ------- ------------- ------------ --------- --------
Amortisation and impairment charge
The amortisation and impairment charge is recognised in the
operating costs line of the income statement.
Goodwill acquired in a business combination is allocated at
acquisition to the cash generating units (CGUs) that are expected
to benefit from that business combination. The carrying amount of
goodwill had been allocated as follows:
2012 2011
Primary Reporting CGU GBPm GBPm
Segment
------------------- ----------------------------------- ------------ -----
AGRIBUSINESS Rollex (Pty) Limited 7.9 7.7
Trak Auto Lda 0.8 0.8
Oceanfresh Seafoods (Pty) Limited 0.5 0.5
Lonrho Logistics (Pty) Limited 1.5 1.9
------------------------------------------------------- ------------ -----
10.7 10.9
------------------------------------------------------- ------------ -----
INFRASTRUCTURE Luba Freeport Limited 3.5 3.4
KwikBuild Corporation Limited 2.7 2.8
------------------------------------------------------- ------------ -----
6.2 6.2
------------------------------------------------------- ------------ -----
TRANSPORTATION Five Forty Aviation Limited - 0.1
------------------- ----------------------------------- ------------ -----
- 0.1
------------------------------------------------------- ------------ -----
SUPPORT SERVICES Global Horizons Limited 0.6 0.6
------------------- ----------------------------------- ------------ -----
0.6 0.6
------------------------------------------------------- ------------ -----
TOTAL 17.5 17.8
-------------------------------------------------------- ------------ -----
At 31 December 2012 the Directors have reconsidered the economic
lives attributed to these assets and consider they remain
appropriate. No cash generating unit is considered to have any
individual significant amount of goodwill.
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 three year business plan which are approved by the Board.
The Directors considers cashflow for a five year period as well a
terminal value in the sixth year 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 rate determined for each
individual company considering historic and future compounded
annual growth rates. The growth rates used for the year 4 and 5
forecast within Agribusiness are Rollex (Pty) Limited 4% (2011:
12%), Trak Auto Lda 10% (2011: 12%), Oceanfresh Seafoods (Pty)
Limited 5% (2011: 12%), Lonrho Logistics (Pty) Limited 6% (2011:
12%); Infrastructure, Luba Freeport Limited 8% (2011: 10%) and
KwikBuild Corporation Limited 16% (2011: 20%); and Support Services
being Global Horizons Limited 6% (2011: 12%). The only exceptions
are for Luba Freeport Limited, reflecting the significant capital
investments in the project and the length of the remaining
operating concession (16 years), the Directors have extended the 3
year forecast approved by the Board to reflect the remaining life
of the concession in determining value in use. For KwikBuild
Corporation, reflecting the challenges faced in delivering certain
contracts, the directors have adjusted the 3 year forecast approved
by the Board to reflect latest management expectations. The
directors are satisfied that, based on these revised forecasts,
sufficient headroom exists for no impairment to be required as at
31 December 2012. This will be revisited in future years when an
impairment charge may be required if the planned improvements to
this business do not materialise. The pre-tax rates used to
discount the forecast cash flows within Agribusiness are Rollex
(Pty) Limited 13% (2011: 12%), Trak Auto Lda 15% (2011: 12%),
Oceanfresh Seafoods (Pty) Limited 13% (2011: 12%), Lonrho Logistics
(Pty) Limited 13% (2011: 12%); Infrastructure, Luba Freeport
Limited 13% (2011: 10%) and KwikBuild Corporation Limited 15%
(2011: 20%); and Support Services being Global Horizons Limited 15%
(2011: 12%).
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.
Other than as noted above, 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. The Directors' do not consider there to be any indicators of
impairment on the other intangible assets.
15. Property, plant and equipment
Long Short
leasehold leasehold
land land Plant Fixtures
and and and and
buildings buildings machinery fittings Aircraft Total
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------ ---------------- ---------------- -------------- -------------- --------------
COST
Balance at 1 October 2010 40.9 63.6 12.1 6.0 5.5 128.1
Additions 1.2 2.8 8.0 1.7 29.7 43.4
Business combinations 10.6 2.0 0.9 0.7 - 14.2
Revaluations 6.6 0.1 - - - 6.7
Disposals (0.2) - (0.8) (0.1) (2.1) (3.2)
Effect of movements in
foreign
exchange 1.9 1.0 (0.4) 1.3 1.0 4.8
--------------------------- ------------ ---------------- ---------------- -------------- -------------- --------------
BALANCE AT 31 DECEMBER
2011 61.0 69.5 19.8 9.6 34.1 194.0
--------------------------- ------------ ---------------- ---------------- -------------- -------------- --------------
Balance at 1 January 2012 61.0 69.5 19.8 9.6 34.1 194.0
Additions(*) 0.2 4.8 5.9 3.1 0.3 14.3
Revaluations 2.3 - - - - 2.3
Disposals (0.1) (0.3) (1.1) (0.2) (3.3) (5.0)
Elimination of subsidiary to jointly controlled entity
- - (1.2) (1.7) (30.6) (33.5)
Transfer between asset class - - 0.6 (0.6) - -
Effect of movements in foreign exchange (5.4) (3.3)
(1.7) (1.0) (0.5) (11.9)
--------------------------------------------------------------------------------------------- -------------- --------------
BALANCE AT 31 DECEMBER 2012 58.0 70.7 22.3 9.2 - 160.2
--------------------------------------------------------------------------------------------- -------------- --------------
DEPRECIATION AND IMPAIRMENT LOSSES
Balance at 1 October 2010 0.8 9.4 5.8 1.9 1.0 18.9
Depreciation charge for
the
period 0.2 4.2 3.1 1.6 0.8 9.9
Eliminated on revaluation (0.4) (0.1) - - - (0.5)
Disposals - - (0.7) - (0.3) (1.0)
Effect of movements in
foreign
exchange 0.1 0.3 (0.3) 0.4 - 0.5
--------------------------- ------------ ---------------- ---------------- -------------- -------------- --------------
BALANCE AT 31 DECEMBER
2011 0.7 13.8 7.9 3.9 1.5 27.8
--------------------------- ------------ ---------------- ---------------- -------------- -------------- --------------
Balance at 1 January 2012 0.7 13.8 7.9 3.9 1.5 27.8
Depreciation charge for the year 0.3 3.7 3.2 1.5 0.9 9.6
Eliminated on revaluation (0.2) - - - - (0.2)
Disposals (0.1) (0.2) (0.7) (0.1) (0.9) (2.0)
Elimination of subsidiary
to jointly controlled
entity - - (0.4) (0.9) (1.5) (2.8)
Effect of movements in foreign exchange - (0.8) (1.2)
(0.2) - (2.2)
--------------------------------------------------------------------------------------------- -------------- --------------
BALANCE AT 31 DECEMBER 2012 0.7 16.5 8.8 4.2 - 30.2
--------------------------------------------------------------------------------------------- -------------- --------------
CARRYING AMOUNTS
At 1 October 2010 40.1 54.2 6.3 4.1 4.5 109.2
-------------------------- ------------- ---------------- ---------------- -------------- -------------- --------------
At 31 December 2011 60.3 55.7 11.9 5.7 32.6 166.2
-------------------------- ------------- ---------------- ---------------- -------------- -------------- --------------
At 31 December 2012 57.3 54.2 13.5 5.0 - 130.0
-------------------------- ------------- ---------------- ---------------- -------------- -------------- --------------
(* Additions of GBP14.3m
include GBP1.7m for non
cash items.)
In the current period, the Company had fixed assets brought
forward with a net book value of GBP0.4m (2011: GBP0.4m). During
the period, the Company acquired fixed assets for GBP0.1m (2011:
GBP0.1m). The depreciation charge for the period was GBP0.2m (2011:
GBP0.1m). The net book value as at 31 December 2012 was GBP0.3m
(2011: GBP0.4m). These fixed assets relate to fixtures and
fittings.
Leased plant and machinery and aircraft
At 31 December 2012, the net carrying amount of leased assets
was GBP4.0m (2011: GBP25.1m). See note 25 for details of the lease
obligations.
Long leasehold land and buildings
In 2010 GBP25.5m of long leasehold land and buildings were
recognised in relation to the valuation of the land assigned under
the
concession agreement from GEPetrol, following the completion of
Phase 1 development at Luba Freeport and capitalisation of
Lonrho loans. The value had not previously been recognised as
assignment and availability of the land was effectively
established
following Phase 1 development completion. Depreciation has not
yet commenced on this asset as it has yet to be put into
service.
Long leasehold land and buildings relating to Hotel Cardoso SARL
were revalued in December 2012 by SC Property Valuation
Services CC, independent valuers, on the basis of the profit
method of valuation. The valuations conform to International
Valuation Standards and were based on historical feasabilities
and comparative market information reflecting the current
demand for hotels in the relevant cities. A revaluation gain of
GBP2.5m has arisen on Hotel Cardoso.
On 31 December 2012, had revalued long leasehold land and
buildings been carried at historical cost less accumulated
depreciation, their carrying amount would be approximately GBP0.6m
(2011: GBP0.8m). The revaluation surplus is disclosed in note 24.
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 GBP2.6m (2011: GBP1.6m) which
are not depreciated until they are brought into use. Assets of
GBPnil (2011: GBPnil) were brought into use in the period.
Capital commitments
Details of capital commitments in relation to property, plant
and equipment are disclosed in note 33.
Borrowing costs
The amount of borrowing costs in respect of interest capitalised
during the year was GBPnil (2011: GBPnil) and has been included
within long leasehold land and buildings.
16. Biological assets
Stone fruit
orchards Blueberries Livestock Total
GBPm GBPm GBPm GBPm
------------------------------------ --------------------------- ------------------ ------------------- -----------
Balance at 1 January 2012 32.8 0.9 0.1 33.8
Transfer to inventory (0.2) - - (0.2)
Due to physical changes - 2.6 - 2.6
Changes in assumption: reduction in farming costs
1.4 - - 1.4
Changes in assumption: reduction in WACC 5.2 0.2 - 5.4
Changes in assumption: reduction in stone fruit yields (4.4) -
- (4.4)
Discount unwinding 3.9 0.3 - 4.2
Foreign exchange movements (2.3) (0.1) - (2.4)
------------------------------------ --------------------------- ------------------ ------------------- -----------
31 December 2012 3 6.4 3.9 0.1 40.4
------------------------------------------------------------------------------------- ------------------- -----------
The Group has a 200 hectare fruit orchard that grows a range of
stone fruits, primarily peaches (188 hectares), and blueberry
bushes (12 hectares) which are part of a longer term farming
operation. The stone fruit orchard was planted in 3 Phases (Phase
1, Phase 2 and Phase 3) over the period 2009 to 2011. The stone
fruit trees take an average of 5 years to become fully mature to
give maximum yields and have on average 15 years of minimum
productive life cycle thereafter. The blueberry bushes plantation
was also planted in 3 Phases (Phase 1, Phase 2 and Phase 3) over
the period 2010 to 2012. The blueberry bushes take an average of 3
years to become fully mature to give maximum yields and have on
average 10 to 12 years of minimum productive life cycle thereafter.
In the initial one to two years of life, the fair value of the
plantation cycle is not considered material due to the risks
attached to the startup operations.
Under IAS 41, Biological Assets are required to be accounted for
at fair value less costs to sell. Fair value less cost to sell is
determined by reference to the net present value of the biological
asset at the reporting date. The calculation of the stone fruit and
blueberries is based upon the expected life of the trees and bushes
and the anticipated yield of each tree and bush per year of life.
These yields are multiplied by the anticipated selling price of
each variety of stone fruit and blueberry based on the current
market price. Market price can be volatile depending on the date of
harvest which can affect the quality of the product. Management has
sought to use prices that are considered conservative with regards
to long term market trends.
Associated farming costs and cost of sales of the farm are then
deducted from the forecast income to give a net income for each of
the years of production of the peaches and blueberries. The net
income is discounted at 12.70% (2011: 14.86%) being the group
weighted average cost of capital of 8.7% (2011: 10.86%) plus 4% as
a farming industry risk factor. The movement in fair value arising
on foreign exchange is taken to reserves (GBP2.4m), the transfer to
inventory is taken to the balance sheet (GBP0.2m) and the remaining
net movement is taken to the income statement (GBP9.2m).
The change in discount rate to 12.70% (2011: 14.86%) has
resulted in a fair value increase of GBP5.4m (stone fruit GBP5.2m,
blueberries GBP0.2m).
As the biological asset matures the discount rate unwinds year
on year to give a movement in the fair value. Both fair value gains
and losses are taken to the income statement for the relevant year
and disclosed as other operating income or other operating costs as
required by IAS 41. The unwinding of the discount rate has led to a
fair value gain of GBP4.2m (stone fruit GBP3.9m, blueberries
GBP0.3m).
The base currency for the fair value calculations is the South
African Rand as the market price for peaches and blueberries is
determined in that currency and the biological asset is held in a
Rand functional currency entity. Each year after initial
recognition there will be a foreign exchange movement on the
opening fair value. The exchange rate used on 31 December 2012 is
13.6859 (Rand to the Pound) (2011: 12.5437). This has resulted in a
negative movement on opening fair value of GBP2.4m arising on
foreign exchange (stone fruit GBP2.3m, blueberries GBP0.1m).
At the point of harvest, the harvested fruits will be
transferred to inventory and accounted for under IAS 2 - Inventory.
In the current period the stone fruit harvest amounted to GBP0.2m
(2011: GBP0.1m).
The Group has used a third party to assist in its assessment of
future yields for the biological assets.
In 2012, the life cycle for Phases 1, 2 and 3 progressed to
reach a point where Phase 1 (48 hectares) is due to yield in full
in 2013, Phase 2 (92 hectares) is due to yield at approximately 67%
in 2013 and Phase 3 (48 hectares) is due to yield at approximately
30% in 2013. Long term yield forecasts were revised down in the
current year by 11%. This resulted in a net fair value loss of
GBP4.4m.
In 2012, a phase 2 and phase 3 planting program of blueberry
bushes has been completed. The value of these bushes recognised at
31 December 2012 is GBP2.6m (Phase 1 GBP0.2m, Phase 2 and 3
GBP2.4m).
As the orchard matures the associated costs of farming also
become more stable and combined with savings generated from
improved efficiencies of scale and better use of technology this
has resulted in a further increase in fair value of the total
orchard of GBP1.4m for the period. The orchard is part of a larger
farming operation incorporating the growing of cash crops which
have further reduced the farming costs directly associated to the
stone fruit orchard.
Over the life of the orchard, the fair value will be affected
each year by the unwinding of the discount factors and this figure
is an increase in value of GBP4.2m for the current period (2011:
GBP0.5m).
Sensitivities over critical assumptions are included here: A 1%
change in discount rate would affect the value by GBP2.7m; a 10%
change in harvested yields would alter the valuation by GBP3.8m;
and a 10% change in market prices would impact the valuation by
GBP4.9m.
The Directors note that there is significant estimation and
judgment 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 31 December 2012 stone fruit trees comprised approximately
177,300 peach trees and 31,800 blueberry bushes (2011: 181,000
peach trees and 12,700 blueberry bushes) which range from newly
established trees to plantations that are 3 years old and are
producing fruit for current harvest.
At 31 December 2012 livestock comprised 153 cattle, of which nil
(2011: nil) are less than one year old and considered to be
immature assets. During the year the Group did not sell any
cattle.
17. Investments in subsidiaries
The principal investment by the Company is 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 36.
18.
Investments in
associates
Group Company
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
------------------------------------------------------------------------------------- --------------------------- ------ ------ ------
At 1 January 2012/ 1 October 2010 6.9 10.3 5.9 7.7
Additions to associate - 2.5 - 1.2
Share of (loss) after taxation - associates (2.6) (1.6) - -
Provisions in the year/period (2.0) (4.3) (4.6) (3.0)
Disposals (2.3) - (1.3) -
AT 31 DECEMBER - 6.9 - 5.9
------------------------------------------------------------------------------------- --------------------------- ------ ------ ------
Disposal of associates
During the year, the Company disposed of its interest in Cambria
Africa Plc (formally LonZim Plc). In addition the Group
disposed
of its interest in Lucapo Diamond Company Limited (formally
Lonrho Mining Limited). The share of results of associates on
the
income statement includes the trading results for the period
when the Group had significant influence, as well as the
profit/loss
on disposal.
Cambria Africa Plc Lucapo Diamond Co Total
GBPm GBPm GBPm
Carrying value at 1 January 2012 5.9 1.0 6.9
Share of losses recognised
in year (4.6) - (4.6)
---------------------------------- ------ ---- ------
Net book value at date
of disposal 1.3 1.0 2.3
Sale proceeds 1.1 1.4 2.5
---------------------------------- ------ ---- ------
(Loss) /gain on disposal (0.2) 0.4 0.2
---------------------------------- ------ ---- ------
The Group had the following investments in associates at the
2011 reporting date. The Group has no interest in associates at
31
December 2012.
Ownership of ordinary
Country share capital
2012 2011
------------------------------------------ ------------- ---------- ------------
Associates
Cambria Africa Plc (formally LonZim
Plc) Isle of Man 0% 22.92%
Lucapo Diamond Company Limited (formally
Lonrho Mining Ltd) Australia 0% 13.96%
------------------------------------------ ------------- ---------- ------------
19. Investments in jointly controlled entity and other
Investments
Investments in jointly controlled entity
2012 2011
GBPm GBPm
------------------------------------------- ------- -----
At 1 January 2012 / 1 October 2010 - -
Transfer from subsidiary (note 11) 55.7 -
Share of loss for the period (10.6) -
Impairment of investment in jointly -
controlled entity (7.7)
AT 31 DECEMBER 37.4 -
------------------------------------------- ------- -----
The investment in jointly controlled entity represents the Group's interest in Fastjet Plc.
Fastjet Plc
The market value of the Group's investment in Fastjet Plc at 31 December 2012 was GBP44.4m
(31 December 2011: GBPnil) with a book value of GBP37.4m (31 December 2011: GBPnil). At 27
March 2013, the market value of the Group's investment in Fastjet Plc was GBP28.4m. FastJet
Plc has not released its audited results for the period to 31 December 2012 at the date of
this report and accordingly the Directors have included an estimate of the Group's share of
the results of FastJet Plc for the period from 29 June 2012 to 31 December 2012. This estimate
has been derived from management accounts of FastJet Plc updated to include an overlay for
appropriate IFRS adjustments. This process includes the application of judgements and assumptions
but the directors consider the amounts disclosed to be materially accurate. Whilst there were
no individually significant estimates used in this process it is possible that the reported
result of Fastjet will differ from those assumed.
The carrying amount of jointly controlled entities are assessed at each reporting date to
determine whether there is any objective evidence that it is impaired and if any such indication
exists, an impairment charge is recorded in the income statement. Due to current market conditions
experienced by FastJet Plc, an impairment review has been carried out which resulted in an
impairment charge being recorded in the income statement of GBP7.7m.
Summary of financial information on jointly controlled entity
Assets Liabilities Equity Revenues for Loss for
the period the period
GBPm GBPm GBPm GBPm GBPm
2012
-------------------------------------------- --------------- ------- -------- -------
100.8 (50.9) 49.9 21.7 (17.0)
--------------------------------- -------- --------------- ------- -------- -------
Other Investments
2012 2011
GBPm GBPm
------------------------------------------------- ------ ------
At 1 January 2012 / 1 October 2010 1.7 0.6
Additions - 0.1
Fair value gain - 1.4
Impairment charge - (0.4)
Disposals (1.3) -
Elimination of subsidiary to jointly controlled -
entity (0.3)
AT 31 DECEMBER 0.1 1.7
------------------------------------------------- ------ ------
During the year the Group disposed of its interest in Southwest
Energy. The impact of this is shown below:
Southwest
Energy
2012
GBPm
---------------------------------- ----------
Carrying value at 1 January 2012 1.3
Sale proceeds 1.0
Loss on disposal (0.3)
---------------------------------- ----------
20. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Assets Liabilities
============================================= ============== ==============
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
--------------------------------------------- ------ ------ ------ ------
At 1 January 2012/1 October 2010 1.8 0.7 4.1 3.0
Origination of temporary timing differences 1.4 1.3 - -
Reversal of temporary timing differences (1.2) - (0.7) -
On acquisition of subsidiary - - 0.3 0.8
Disposals - - (0.1) -
Elimination of subsidiary to jointly
controlled entity - - (0.2) -
Exchange differences - (0.2) (0.1) 0.3
---------------------------------------------- ------ ------ ------ ------
AT 31 DECEMBER 2.0 1.8 3.3 4.1
---------------------------------------------- ------ ------ ------ ------
The deferred tax liability at 1 January 2012 and 1 October 2010
related to the revaluation of property, plant and equipment and
deferred tax liabilities recognised on acquired intangibles.
There have been no deferred tax assets and liabilities off-set
in the current or preceding period.
The deferred tax asset relates to previous trading losses in
certain Group companies. The asset will be recoverable in future
periods, which is supported by the future cashflows of the relevant
businesses. There are no expiry dates on the carry forward of
losses.
21. Inventories
2012 2011
GBPm GBPm
=============================== ===== =====
Raw materials and consumables 2.4 3.7
Finished goods 20.7 16.4
=============================== =====
23.1 20.1
22. Trade and other receivables
Group Company
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
======
Amounts receivable from the sale of goods
and services 27.3 28.3 - -
Amounts due from associates - 0.1 - -
Other receivables 11.2 12.7 0.6 0.1
Prepayments and accrued income 5.7 7.7 0.9 0.8
Amounts owed by Group undertakings - - 146.0 127.3
======
44.2 48.8 147.5 128.2
The average credit period taken on sales of goods and services
is 50 days (2011: 56 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.
2012 2011
Movement in the allowance for doubtful debts GBPm GBPm
====== ======
At 1 January 2012 / 1 October 2010 1.0 0.9
Increase in allowance recognised in the income
statement 0.5 0.5
Utilised (0.2) (0.4)
Elimination of subsidiary to jointly controlled
entity (0.1) -
AT 31 DECEMBER 1.2 1.0
====== ======
Refer to note 31 for further information on credit risk
management.
23. Cash at bank
2012 2011
GBPm GBPm
==================================================== ===== ======
Bank balances 13.8 9.5
Bank overdrafts (5.9) (12.2)
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH
FLOWS 7.9 (2.7)
==================================================== ===== ======
The Company had a bank overdraft of GBP1m at 31 December 2012
(2011: bank overdraft of GBP0.7m).
Included in Cash at bank of GBP17.0m (2011 GBP12.7m) as
presented in the Statement of financial position is GBP3.2m (2011:
GBP3.2m) subject to restrictions on use that means it is not freely
available and accordingly does not represent cash and cash
equivalents.
24. Capital and reserves
Group reconciliation of movement in capital and reserves
Attributable to equity holders of the parent
Share Non
Share Share Translation option Revaluation Retained Other controlling Total
capital premium reserve reserve reserve earnings reserves Total interest equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October
2010 11.7 138.0 (8.7) 4.7 3.3 (36.1) (5.5) 107.4 20.3 127.7
Share capital
issued 1.2 - - - - - 17.7 18.9 - 18.9
Share based
payment
charge - - - 0.7 - - - 0.7 - 0.7
Share options
exercised 0.1 0.6 - - - - - 0.7 - 0.7
Costs associated
with share
issues - (0.4) - - - - - (0.4) - (0.4)
Non-controlling
interest
dividends - - - - - - - - (0.2) (0.2)
Profit/(loss)
for the period - - - - - 6.0 - 6.0 (5.5) 0.5
Subsidiaries
acquired - - - - - - - - 2.2 2.2
Subsidiaries
disposed - - - - - - - - (0.2) (0.2)
Transfer between
accounts - - - - (0.1) 0.1 - - - -
Revaluation of
property, plant
& equipment - - - - 4.2 - - 4.2 3.0 7.2
Non-controlling
interest put
option - - - - - - (2.3) (2.3) - (2.3)
Capital element
of Convertible
Bond - - - - - - 1.1 1.1 - 1.1
Elimination of
non-controlling
interest - - - - - (0.6) - (0.6) 0.6 -
Foreign exchange
translation - - (1.7) - 1.7 (0.5) - (0.5) 0.3 (0.2)
AT 31 DECEMBER
2011 13.0 138.2 (10.4) 5.4 9.1 (31.1) 11.0 135.2 20.5 155.7
At 1 January
2012 13.0 138.2 (10.4) 5.4 9.1 (31.1) 11.0 135.2 20.5 155.7
Share capital
issued(*) 2.7 - - - - - 20.4 23.1 - 23.1
Share based
payment
charge 0.1 0.8 - 1.4 - - - 2.3 - 2.3
Provision for
warrants - - - 1.0 - - - 1.0 - 1.0
Share options
exercised 0.2 0.9 - - - - - 1.1 - 1.1
Shares issued
in relation to
earn-out
agreement - 0.4 - - - - - 0.4 - 0.4
Non-controlling
interest
dividends - - - - - - - - (0.2) (0.2)
Loss for the year - - - - - (1.7) - (1.7) (4.3) (6.0)
Elimination of
subsidiary
to jointly controlled
entity _ _ 0.5 _ _ _ _ 0.5 8.6 9.1
Revaluation of
property,
plant & equipment - - - - 1.5 - - 1.5 1.0 2.5
Foreign exchange
translation - - (10.8) - (1.6) (0.5) - (12.9) (1.9) (14.8)
AT DECEMBER 2012 16.0 140.3 (20.7) 7.8 9.0 (33.3) 31.4 150.5 23.7 174.2
*Share capital issued proceeds of GBP24.1m less non cash costs
of GBP1.0m
Share capital and share premium Ordinary shares
In millions of 1p shares 2012 2011
On issue at 1 January 2012 / 1 October 2010 1,298.6 1,171.8
Issued for cash 269.5 118.0
Shares issued to former director 8.2 -
Shares issued in relation to earn-out agreement 4.3 -
Exercise of share options 16.7 8.8
ON ISSUE AT 31 DECEMBER - FULLY PAID 1,597.3 1,298.6
On 3 January 2012, 269.5m new ordinary shares of 1p each were
issued by a placing of shares at 10.0p per share. The placing
structure utilised attracted merger relief under Section 612 of the
Companies Act 2006, resulting in a net credit to a merger reserve
of GBP20.4m. Subsequent internal transactions required to complete
the placing structure have resulted in this becoming
distributable.
On 20 May 2011, 118.0m new ordinary shares of 1p each were
issued by a placing of shares at 16.5p per share. The placing
structure utilised attracted merger relief under Section 612 of the
Companies Act 2006, resulting in a net credit to a merger reserve
of GBP17.7m. Subsequent internal transactions required to complete
the placing structure have resulted in this becoming
distributable.
The costs of share issues of GBPnil have been deducted from the
share premium account (2011: GBP0.4m).
On 13 September 2012, 8.2m ordinary shares of 1p were issued to
a former director, David Lenigas (see Remuneration Report). The
share price at that date was 10.3p. The cost of this award has been
recognised in the income statement and then transferred to share
capital and share premium.
On 3 November 2012, 4.3m ordinary shares of 1p were issued in
relation to the earn-out agreement with Trak Auto LDA. The share
price at that was 11.2p.
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.
Company reconciliation of movement in capital and reserves
Share Share Share Other Retained
capital premium option reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
At 1 October 2010 11.7 138.0 4.7 - (31.4) 123.0
Share capital issued 1.2 - - 17.7 - 18.9
Share options issued - - 0.7 - - 0.7
Share options exercised 0.1 0.6 - - - 0.7
Costs associated with share issues - (0.4) - - - (0.4)
Loss for the period - - - - (17.3) (17.3)
-------- -------- -------
AT 31 DECEMBER 2011 13.0 138.2 5.4 17.7 (48.7) 125.6
-------- -------- -------
At 1 January 2012 13.0 138.2 5.4 17.7 (48.7) 125.6
Share capital issued 2.7 - - 20.4 - 23.1
Share based payment charge 0.1 0.8 1.4 - - 2.3
Provision for warrants - - 1.0 - - 1.0
Share options exercised 0.2 0.9 - - - 1.1
Shares issued in relation to
earn out agreement - 0.4 - - - 0.4
Loss for the year - - - - (21.6) (21.6)
-------- -------
AT 31 DECEMBER 2012 16.0 140.3 7.8 38.1 (70.3) 131.9
-------- -------- -------
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 15).
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 27).
25. 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 31.
2012 2011
GBPm GBPm
NON-CURRENT LIABILITIES
Finance lease liabilities 1.3 18.6
Bank loans 25.2 27.9
Debt related derivative financial instruments 0.1 -
Convertible bond 43.0 44.4
Shareholder loans 3.2 3.6
Other loans 4.8 0.8
77.6 95.3
CURRENT LIABILITIES
Finance lease liabilities 1.2 4.9
Bank loans 22.0 2.9
Shareholder loans 0.2 -
Other loans 0.7 0.1
Bank overdrafts 5.9 12.2
30.0 20.1
At the reporting date the Company had interest bearing loans of
GBPnil (2011: GBPnil).
Finance leases
Finance lease liabilities are payable as follows:
2012 2011
Future Present Future Present
value value
minimum of minimum minimum of minimum
lease lease lease lease
payments Interest payments payments Interest payments
GBPm GBPm GBPm GBPm GBPm GBPm
Less than one year 1.3 (0.1) 1.2 6.4 (1.5) 4.9
Between one and five
years 1.4 (0.1) 1.3 13.6 (4.8) 8.8
More than 5 years - - - 11.6 (1.8) 9.8
---------
2.7 (0.2) 2.5 31.6 (8.1) 23.5
---------
Interest is payable on the leases within a range of 7.8% to 25%
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:
2012 2011
GBPm GBPm
South African Rand 3.8 5.7
Central African Franc - 0.3
US Dollar 0.1 5.5
Sterling 1.0 0.7
Mozambique Metical 0.6 -
Tanzanian Shilling 0.2 -
Botswana Pula 0.2 -
5.9 12.2
The weighted average interest rates paid were 8.9% (2011:
10%).
The Company overdraft of GBP1.0m (2011 GBP0.7m) was denominated
in sterling.
26. Shareholder loans
2012 2011
GBPm GBPm
Shareholder loans 3.4 3.6
3.4 3.6
27. Share options
At 31 December 2012 there were 97,250,000 (31 December 2011:
119,510,000) share options in issue with an average exercise price
of 16.28p (2011: 15.73p). No share options were granted or
re-priced in the current period.
The following share options were outstanding as at 31 December
2012:
Market
price
per
Number share
of at
share Exercise Period during date of
options
Name Date granted granted Price which exercisable modification
Emma Priestley 13.01.2009 1,000,000 6.5p 13.01.2009-12.01.2014 5.8p
Geoffrey White 13.01.2009 2,000,000 6.5p 13.01.2009-12.01.2014 5.8p
David Armstrong 13.01.2009 1,000,000 6.5p 13.01.2009-12.01.2014 5.8p
Other employees and
consultants 13.01.2009 1,750,000 6.5p 13.01.2009-12.01.2014 5.8p
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
consultants 01.04.2010 5,500,000 13.75p 01.04.2010-31.03.2015 12.5p
David Lenigas 04.08.2011 3,333,333 18.4p 04.08.2012-03.08.2016 16.75p
David Lenigas 04.08.2011 3,333,333 22p 04.08.2013-03.08.2016 16.75p
David Lenigas 04.08.2011 3,333,334 25p 04.08.2014-03.08.2016 16.75p
Geoffrey White 04.08.2011 3,333,333 18.4p 04.08.2012-03.08.2016 16.75p
Geoffrey White 04.08.2011 3,333,333 22p 04.08.2013-03.08.2016 16.75p
Geoffrey White 04.08.2011 3,333,334 25p 04.08.2014-03.08.2016 16.75p
David Armstrong 04.08.2011 2,000,000 18.4p 04.08.2012-03.08.2016 16.75p
David Armstrong 04.08.2011 2,000,000 22p 04.08.2013-03.08.2016 16.75p
David Armstrong 04.08.2011 2,000,000 25p 04.08.2014-03.08.2016 16.75p
Other employees and
consultants 04.08.2011 2,000,000 18.4p 04.08.2012-03.08.2016 16.75p
Other employees and
consultants 04.08.2011 2,000,000 22p 04.08.2013-03.08.2016 16.75p
Other employees and
consultants 04.08.2011 2,000,000 25p 04.08.2014-03.08.2016 16.75p
Other employees and
consultants 04.08.2011 6,500,000 18.4p 04.08.2014-03.08.2016 16.75p
Total options in issue 97,250,000
The following share options were exercised during the
period:
Number Share Pre tax
of Price gain at
share At date Exercise Date of date of
options of exercise
Name Date granted exercised exercise price exercise GBP
Emma Priestley 30.04.2007 1,250,000 8.36p 6.5p 21.06.2012 23,250
Jean Ellis 20.07.2007 350,000 8.36p 6.5p 21.06.2012 6,510
Jean Ellis 13.01.2009 500,000 8.36p 6.5p 21.06.2012 9,300
David Lenigas (former
director) 13.01.2009 2,500,000 9.98p 6.5p 11.10.2012 87,000
David Lenigas (former
director) 30.04.2007 3,750,000 10.25p 6.5p 21.09.2012 140,625
David Lenigas (former
director) 20.07.2007 1,615,000 10.25p 6.5p 21.09.2012 60,563
Emma Priestley 20.07.2007 1,065,000 9.16p 6.5p 25.09.2012 28,329
Geoffrey White 30.04.2007 2,500,000 8.85p 6.5p 26.09.2012 58,750
Geoffrey White 20.07.2007 1,065,000 8.85p 6.5p 26.09.2012 25,028
Other employees and consultants 30.04.2007 875,000 11.25p 6.5p 24.04.2012 41,563
Other employees and consultants 30.04.2007 850,000 8.36p 6.5p 21.06.2012 15,810
Other employees and consultants 20.07.2007 350,000 8.36p 6.5p 21.06.2012 6,510
16,670,000
The number of shares exercised in the table above is 5,590,000
less than the number of share options granted at the respective
grant date due to share options lapsed and forfeited. GBP1.1m was
received from the exercise of the above share options.
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 spread over the
remaining vesting period. The fair value of the options granted has
been estimated at the date of grant using the Black-Scholes
option-pricing model.
Date of Grant
04.08.2011 04.08.2011 04.08.2011
Share price 16.75p 16.75p 16.75p
Exercise price 18.4p 22.0p 25.0p
Expected volatility 48.00% 56.00% 85.00%
Expected life 5 years 5 years 5 years
Expected dividends 0 0 0
Risk-free interest rate 1.46% 1.46% 1.46%
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 issued prior to 1 October 2010, vested at the
date of grant and the basis of settlement is in shares of the
Company.
Long Term Incentive Plan:
On 13 September 2012, 10,491,100 potential ordinary shares were
awarded to two directors in accordance with a long term incentive
plan.
The awards will be subject to a performance target based on the
Company's Total Shareholder Return (TSR). An initial comparator
index of 27 companies has been chosen from the FTSE Small Cap
Support Services Index, the FTSE Food Producers Index and the FTSE
350 Food Processors Index. 25 per cent of the shares subject to an
award would vest if Lonrho's TSR over the period from date of grant
to vesting date was in the top half of the relative comparator
index and 100 per cent of the shares would vest if it was in the
top quartile of the same index.
The Remuneration Committee may amend, vary or waive a
performance target if events have occurred which cause the
Remuneration Committee to consider that it has become unfair or
impractical.
Where an award vests before the intended vesting date in
circumstances where the performance target cannot be measured in
the manner originally intended, the Remuneration Committee will
determine the extent to which the award vests by reference to the
Company's performance over the period from the date the award was
granted to the date of vesting, having such regard to the
performance target as it considers appropriate.
The income statement charge in 2012 for potential shares awarded
under the long term incentive plan was not significant (less than
GBP0.1m). Refer to remuneration report for further details.
28. Trade and other payables
Group Company
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
Trade payables 22.6 30.0 0.6 0.8
Amounts owed to Group undertakings - - 45.2 38.0
Indirect tax and social security liabilities 0.8 0.5 0.1 0.1
Deferred income 4.2 1.4 - -
Non-trade payables and accrued expenses 13.9 23.9 0.6 0.8
41.5 55.8 46.5 39.7
Group Company
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
Analysed as:
Current liabilities 37.2 39.7 1.3 1.7
Non-current liabilities 4.3 16.1 45.1 38.0
41.5 55.8 46.4 39.7
Trade payables principally comprise outstanding amounts for
trade purchases and on-going costs. The average credit period taken
for trade purchases is 59 days (2011: 85 days). The Directors
consider that the carrying amount of trade and other payables
approximates to their fair value.
29. Provisions
As at 31 December 2012, the Group had provisions of GBP1.5m
being liabilities recognised as part of the Fastjet transaction.
The Board expects this to be utilised within 1-5 years (Note
11).
30. Notes to the statements of cash flows
Group Company
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
Depreciation of property, plant and equipment 9.6 9.9 0.2 0.2
Amortisation of intangible assets 2.2 2.1 - -
Impairment of investment - - 4.6 -
Impairment of jointly controlled entity 7.7 - - -
Loss on other investments 0.3 (1.0) 0.2 -
Contribution of subsidiary to jointly controlled
entity (33.5) - - -
Foreign exchange (gain)/loss (1.2) 1.1 (1.7) 1.0
Share based payment charge 2.3 0.7 2.3 0.7
Finance income (0.7) (0.8) - (0.1)
Finance expense 11.0 9.1 8.4 -
Profit on disposal of subsidiary - (0.5) - -
Share of results of associates 4.4 5.9 - 3.0
Share of loss of jointly controlled entity 10.6 - - -
Loss on sale of property, plant and equipment 0.4 - - -
Gain arising on fair valuation of biological
assets (9.2) (27.4) - -
Gain on acquisitions - (15.8) - -
Revenue in respect of barter transactions (1.7) - - -
Income tax (credit)/expense (0.3) 0.3 - 0.1
ADJUSTMENTS TO LOSS/PROFIT FOR THE YEAR/PERIOD 1.9 (16.4) 14.0 4.9
31. Financial instruments
The Company has no financial assets apart from the Trade and
other receivables and amounts owed by Group undertakings included
within note 22. 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 reporting
date.
Exposure to credit, liquidity, interest rate, market and foreign
currency risks arise 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 reporting date. 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 reporting date,
there were no significant credit risks. The maximum exposure to
credit risk on customers at the reporting date was GBP38.5m being
the total of the carrying amount of trade and other receivables as
shown in the table below:
2012 2011
GBPm GBPm
Cash at bank 17.0 12.7
Trade receivables 27.3 28.3
Other receivables 11.2 12.8
55.5 53.8
The ageing of trade receivables at the reporting date was:
2012 2011
GBPm GBPm
Not due 12.7 15.6
Past due 0-30 days 6.8 5.3
Past due 31-60 days 2.8 2.2
More than 60 days past due 5.0 5.2
27.3 28.3
The movement on the provision for doubtful debts is disclosed in
note 22. The provision at the reporting date of GBP1.2m (2011:
GBP1.0m) 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 receivables by
geographic region was:
2012 2011
GBPm GBPm
West Africa 2.3 1.9
Southern Africa 21.2 21.3
East Africa 0.5 4.4
Europe 1.0 0.7
North America 0.6 -
Rest of the World 1.7 -
27.3 28.3
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 Group had undrawn facilities in respect of uncommitted bank
overdraft of GBP7.3m at 31 December 2012 (2011: GBP26.1 m).
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the effect of netting agreements:
2012
Carrying Contractual 1 year 1 to 2 to 5 years
Amount cash flows or less <2 years <5 years and over
GBPm GBPm GBPm GBPm GBPm GBPm
Bank overdrafts 5.9 5.9 5.9 - - -
Trade and other payables 41.5 41.5 37.2 3.2 1.1 -
Bank loans 47.2 52.7 24.6 10.6 15.5 2.0
Debt-related derivative financial instruments 0.1 0.1 - 0.1 - -
Finance leases 2.5 2.7 1.3 0.8 0.6 -
Shareholder loans 3.4 5.4 0.6 0.2 0.6 4.0
Convertible bond 43.0 55.0 3.0 3.0 49.0 -
Other loans 5.5 8.3 1.0 2.9 0.8 3.6
149.1 171.6 73.6 20.8 67.6 9.6
2011
Carrying Contractual 1 year 1 to 2 to 5 years
amount cash or <2 <5 and
GBPm flows less years years over
GBPm GBPm GBPm GBPm GBPm
Bank overdrafts 12.2 12.2 12.2 - - -
Trade and other payables 55.8 55.8 39.6 13.7 2.5 -
Bank loans 30.8 37.2 6.3 11.0 19.9 -
Finance leases 23.5 31.6 6.4 5.0 8.6 11.6
Shareholder loans 3.6 3.8 0.1 0.3 0.2 3.2
Convertible Bond 44.4 57.1 3.2 3.2 50.7 -
Other loans 0.9 0.9 0.1 0.8 - -
171.2 198.6 67.9 34.0 81.9 14.8
Convertible Bond
On 15 October 2010, LAH Jersey Limited, a wholly-owned
subsidiary company incorporated in Jersey, completed the offering
of US$70m 7.0% Guaranteed Convertible Bonds due 2015, convertible
into preference shares of LAH Jersey Limited at
the holder's option, immediately exchangeable for Ordinary
Shares of, and unconditionally and irrevocably guaranteed by,
Lonrho plc.
The Bonds are convertible into Ordinary Shares of Lonrho plc at
an exchange price of 15.59p and at fixed exchange rate at any time
from 1 November 2010 to 8 October 2015, or, if the bonds shall have
been called for redemption by LAH Jersey Limited before 15 October
2015, the close of business on the day which is seven days before
the date fixed for redemption. Each US$10,000 principal amount of
bonds will entitle the holder to convert into a US$10,000 paid-up
value of preference shares of LAH Jersey Limited. Upon a change of
control the Bonds may be redeemed at the holder's option at their
early redemption amount (together with accrued interest), to the
date fixed for redemption.The Group is therefore exposed to market
risk in relation to the convertible bond.
If the conversion option is not exercised, the unsecured
Convertible Bonds will be redeemed on 15 October 2015 at a
redemption price equivalent to 106.0031% of their principal
amount.
The net proceeds received from the issue of the Convertible
Bonds have been split between the debt component and an embedded
derivative component. This embedded derivative component represents
the fair value of the equity conversion call option held by the
bondholders.
The interest charged for the year is calculated by applying an
effective interest rate of 8.2%. This includes a coupon interest
rate of 7.0% per annum. The Directors estimate the fair value of
the liability component of the 7.0% convertible US Dollar Bonds
2015 at 31 December 2012 to be approximately GBP38.7m. This fair
value has been determined by reference to the market price at
31 December 2012.
In respect of income-earning financial assets and
interest-bearing financial liabilities, the following table
indicates their effective interest rates at the reporting date and
the periods in which they re-price.
2012
Effective
interest 1 year 1-2 2-5 5 years
rate Total or years years and
less over
% GBPm GBPm GBPm GBPm GBPm
Cash at bank 0.2% 17.0 17.0 - - -
Loans 7.3% (56.1) (23.5) (2.7) (24.5) (5.4)
Finance lease liabilities 10.3% (2.5) (2.5) - - -
Convertible Bond 8.2% (43.0) - - (43.0) -
Bank overdrafts 8.9% (5.9) (5.9) - - -
(90.5) (14.9) (2.7) (67.5) (5.4)
2011
Effective
interest 1 year 1-2 2-5 5 years
rate Total or less years years and over
% GBPm GBPm GBPm GBPm GBPm
Cash at bank 1.0% 12.7 12.7 - - -
Loans 7.8% (35.3) (31.5) (0.3) (0.2) (3.3)
Finance lease liabilities 8.8% (23.5) (4.9) (5.0) (8.6) (5.0)
Convertible Bond 8.25% (44.4) - - (44.4) -
Bank overdrafts 9.5% (12.2) (12.2) - - -
(102.7) (35.9) (5.3) (53.2) (8.3)
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 and Central African Franc, South Sudanese Pound,
Tanzanian Shilling, Botswana Pula, and Namibian Dollar.
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
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
US Dollar (51.5) (77.8) 61.4 52.4
South African Rand (8.8) (7.9) 31.2 (3.9)
Mozambique Metical 0.6 1.8 32.1 26.7
Kenyan Shillings (0.9) (1.0) 7.3 2.5
Central African Franc (11.3) (12.3) (11.3) (12.3)
South Sudanese Pound - - 1.4 (0.8)
Zambian Kwacha - 0.3 - -
Tanzanian Shilling (0.4) - (0.3) -
Botswana Pula (3.6) - (1.3) -
Namibian Dollar 0.1 - - -
75.8 (96.9) 120.5 64.6
The following significant exchange rates applied during the
year:
Average Rate Closing Rate
2012 2011 2012 2011
GBPm GBPm GBPm GBPm
US Dollar 1.58 1.56 1.62 1.55
South African Rand 12.99 12.74 13.69 12.54
Mozambique Metical 44.28 41.32 47.57 40.95
Kenyan Shilling 131.85 133.35 138.26 129.21
Central African Franc 797.17 760.29 800.23 768.48
The Company does not have any exposure to foreign currencies at
the reporting date (2011: GBPnil).
Foreign currency sensitivity analysis
A 10% strengthening of the UK sterling against the following
currencies at 31 December would have increased/ (decreased) equity
and profit or loss by the amounts shown below. This analysis
assumes that all other variables remain constant.
2012 2011
Equity Profit/(loss) Equity Profit/(loss)
GBPm GBPm GBPm GBPm
US Dollar (5.6) (0.1) (4.8) 1.4
South African Rand (2.8) (0.5) 0.4 -
Mozambique Metical (2.9) (0.1) (2.4) (0.2)
Kenyan Shilling (0.7) - (0.2) -
Central African Franc 1.0 0.1 1.1 0.1
South Sudanese Pound (0.1) (0.2) - -
Botswana Pula 0.1 0.1 - -
A 10% weakening of UK sterling against the above currencies at
31 December 2012 and 31 December 2011 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 Group is exposed to interest rate changes on its floating
rate borrowings, arising principally from changes in borrowing
rates in US Dollars, South African Rand, Central African Franc,
Kenyan Shilling, Mozambique Metical and Sterling.
The Group's manages interest rate risk by issuing a combination
of fixed and floating rate debt instruments, and through the use of
derivative instruments (interest rate swaps). At 31 December 2012,
the Group had 72% (2011: 57%) of fixed rate debt and 28% (2011:
43%) of floating rate debt based on a gross debt of GBP108.8m
(2011: GBP115.4m).
The fair value of derivative instrument liabilities at 31
December 2012 was GBP0.1m (2011: nil).
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 non-controlling 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. Historically this has been achieved through
capital raises, but as the Group has developed funding has been
raised through a mix of debt and equity.
The Group considers shareholders funds plus long term debt to
represent capital as defined by IAS 1. The Group currently has no
target debt to equity funding range.
The Directors keep under review the capital structure of the
Group, with the objective of adopting a progressive, prudent
dividend policy once the Company has sufficient distributable
reserves and has achieved a level of sustained profitability,
taking into account the Group's financial position, underlying
earnings and cash flows, the resources required for the Group's
development and the prevailing market outlook.
Fair values
The fair value of a financial instrument is the price at which
one party would assume the rights and/or duties of another party.
The following summarises the major methods and assumptions used in
estimating the fair values of financial instruments at the balance
sheet date.
a) Investment in jointly controlled entity
Fair value is calculated with reference to the quoted price
(unadjusted) of the instrument in an active market.
b) 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.
c) 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 changes in interest
rates.
d) Loans and borrowings
Fair value is calculated based on discounted expected future
principal and interest cash flows.
e) Convertible bond
Fair value is calculated with reference to the quoted price
(unadjusted) of the instrument in an active market.
f) Debt-related derivative financial instruments
The fair value is calculated by discounting expected future cash
flows and translating at the appropriate balance sheet rates.
The following table compares the estimated fair values of
certain financial assets and liabilities to their carrying values
at the balance sheet date.
2012 2011
Net carrying Estimated Net carrying Estimated
amount fair value amount fair value
GBPm GBPm GBPm GBPm
NON-CURRENT ASSETS
Investment in jointly controlled
entity 37.4 44.4 - -
CURRENT ASSETS
Trade and other receivables 44.2 44.2 48.8 48.8
Cash at bank 17.0 17.0 12.7 12.7
NON-CURRENT LIABILITIES
Finance lease liabilities (1.3) (1.3) (18.6) (18.6)
Loans and Borrowings (33.3) (32.5) (32.3) (28.5)
Debt-related derivative financial
instruments (0.1) (0.1) - -
Convertible bond (43.0) (38.7) (44.4) (38.1)
Trade and other payables (4.3) (3.7) (16.1) (13.9)
CURRENT LIABILITIES
Finance lease liabilities (1.2) (1.2) (4.9) (4.9)
Loans and Borrowings (22.9) (25.3) (3.0) (6.2)
Bank overdrafts (5.9) (5.9) (12.2) (12.2)
Trade and other payables (37.2) (37.2) (39.7) (39.7)
The estimated fair values of the remaining financial assets and
liabilities are consistent with their carrying values at the
balance sheet date
Fair value measurement hierarchy
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).
The following table presents the Group's assets and liabilities
that are measured at fair value.
2012 2011
Level 1 Level Total Level Level Total
2 1 2
GBPm GBPm GBPm GBPm GBPm GBPm
LIABILITIES
Debt-related derivative
financial instruments - 0.1 0.1 - - -
------
- 0.1 0.1 - - -
------
32. Operating leases
At the reporting date, the Group had outstanding commitments for
future minimum lease payments under non-cancellable operating
leases, which fall due as follows:
Aircraft Property Equipment Total
==================
2012 2011 2012 2011 2012 2011 2012 2011
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
============ =====
Less than one year - 2.3 2.7 1.7 0.2 0.1 2.9 4.1
Between one and five
years - 3.0 12.4 8.7 0.2 0.2 12.6 11.9
Over five years - - 13.5 - - - 13.5 -
----
- 5.3 28.6 10.4 0.4 0.3 29.0 16.0
Included in the above are property leases of the Company
amounting to GBP0.4m (2011: GBP0.4m) less than 1 year and GBP1.3m
(2011: GBP1.7 m) between one and five years.
All leases are on standard market terms with no amounts of
variable lease payments.
33. Capital commitments
Other capital commitments of GBPnil will be paid within the next
financial year (2011: GBP0.2m). The Company had no capital
commitments at 31 December 2012 (2011: GBPnil).
34. Contingent liabilities
There were no contingent liabilities at the reporting date
(2011:none), 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 or
joint ventures and has no contingent liabilities in respect of its
associates and joint ventures. The Directors do not consider that
any of the Group's associates or joint ventures have material
contingent liabilities.
35. Related parties
The Group has a related party relationship with its subsidiaries
(see note 36), associates and jointly controlled entity's (see note
18 and 19), 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 reporting date Lonrho Africa (Holdings) Limited owed the
Company GBP144.2m (2011: GBP127.3m). 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.
Other amounts owed by Group undertakings at the reporting date
were Lonrho Projects South Africa (Pty) Limited GBP0.1m (2011:
GBPnil), Lonrho Hotels Management Services Limited GBP0.1m (2011:
GBPnil), Lonrho Agribusiness Limited GBP0.3m (2011: nil) and Lonrho
Support Services Limited GBP1.6m (2011: GBPnil).
At the reporting date the Company owed Lonrho Africa Holdings
(Jersey) Limited GBP44.8m (2011: GBP37.2m), Lonrho Agribusiness
Limited GBP0.8m (2011: nil), Lonrho Africa (Holdings) Limited
GBPnil (2011: GBP0.3m), and Eatec Limited GBP0.4m (2011:
GBP0.4m).
Transactions with associates
Cambria Africa Plc (formally LonZim Plc)
During the period Lonrho disposed of its entire holding in
Cambria Africa Plc (formally Lonzim Plc).
The final disposal took place on 12 September 2012. At 31
December 2012, the Company owned 22.92% of Cambria Africa Plc and
therefore is deemed to have exerted significant influence over the
company during the year and up to the point of disposal. During the
period the Company charged GBP0.3m (2011: GBP0.7m) to Cambria
Africa Plc as a management charge. At the reporting date GBP0.3m
was due from Cambria Africa Plc (2011: GBPnil).
During the year, Lonrho Hotels charged GBP0.1m to the Leopard
Rock Hotel Company (Pty) Limited (2011: GBP0.1m), a Cambria Africa
Plc company, in relation to management fees. At the reporting date
GBP0.1m remained outstanding (2011: GBP0.1m).
On 1 July 2009 Cambria Africa Plc acquired an aircraft from
Lonrho Air Three (BVI) Limited, a subsidiary of Lonrho Plc, for a
total of US$4.3m (GBP2.6m). The aircraft is leased to Five Forty
Aviation Limited (which was a Lonrho subsidiary until 29 June
2012). Total amounts charged under this arrangement during the year
until 29 June 2012 were GBP0.2m (period ending 31 December 2011:
GBP0.4m).
Cambria Africa Plc also leased one aircraft to Fly 540 Uganda,
which was a Lonrho subsidiary for part of the year (refer note 8),
on industry standard operating lease terms. Total amounts charged
under this arrangement during the year until 29 June 2012 were
GBP0.1m (period ending 31 December 2011: GBP0.3m).
During the period ended 31 December 2011 Cambria Africa Plc
leased a further aircraft to Fly540 Uganda on industry standard
operating lease terms, however this lease arrangement came to an
end in February 2011. Total amounts charged under this arrangement
in the period to 31 December 2011 were GBP0.1m.
On 30 September 2011 Lonrho Hotels (Holdings) Limited acquired
an 80% interest from Cambria Africa Plc in the share capital of
Aldeamento Turistico de Macuti S.A.R.L. (details provided in Note
7b). During the year up to the point at which Cambria Africa Plc
was no longer a related party, Lonrho Hotels (Holdings) Limited
made deferred consideration, interest and loan payments to Cambria
Africa Plc in respect of this acquisition totaling GBP1.0m
(2011:GBP0.2m). At the date of disposal GBP2.4m (2011: GBP3.1m) of
deferred consideration and GBP0.3m (2011: GBP0.6m) of loans were
payable by Lonrho Hotels (Holdings) Limited to Cambria Africa
Plc.
Investments
Swissta DRC SPRL
The Group holds 20% of Swissta DRC SPRL. At the reporting date
GBP0.1m (2011: GBP0.1m) was due from Swissta DRC SPRL as a result
of a short term non-interest bearing loan.
Arlington Associates International Limited
The Group recognised management fee income from Arlington
Associates International Limited of GBP1.0m (2011: GBPnil), which
was outstanding at the reporting date.
Transactions with key management personnel
Key management personnel are considered to be the Company's
Directors.
During the period GBP0.04m (2011: GBP0.04m) was charged to the
Group by DSG Chartered Accountants. Jean Ellis, non-executive
Director, is a partner in this firm.
The key management personnel compensations are as follows:
15 months
ended
Year ended
31 December 31 December
2012 2011
GBPm GBPm
Short-term employee benefits 2.6 4.0
Post-employment benefits 0.3 0.2
Gain on share options exercised 0.4 0.5
Payment in lieu of notice and other benefits 0.8 -
4.1 4.7
Total remuneration is included in "staff costs" (see note
9).
36. Group entities
Principal subsidiaries
Ownership interest
Country of incorporation 2012 2011
Luba Freeport Limited Jersey 63% 63%
Sociedade Comercial Bytes & Pieces
Limitada Mozambique 65% 65%
Hotel Cardoso SARL Mozambique 59.04% 59.04%
Lonrho Africa (Holdings) Limited* UK 100% 100%
Rollex (Pty) Limited South Africa 100% 100%
e-Kwikbuild Housing Company (Pty)
Limited South Africa 35.91% 35.91%
Trak Auto Lda Mozambique 100% 100%
Oceanfresh Seafoods (Pty) Limited South Africa 51% 51%
Indigo Bay Seafoods Incorporated USA 51% 51%
Protea Seafoods Mauritius Mauritius 51% 51%
Fresh Direct Limited British Virgin Islands 100% 100%
Democratic Republic
Grand Karavia SPRL of Congo 50% 50%
Lonrho Agribusiness (BVI) Limited British Virgin Islands 100% 100%
Aldeamento Turistico de Macuti
SARL Mozambique 80% 80%
LonAgro Equipamentos Agricolas
Limitada Angola 51% 51%
Lonrho Logistics (Pty) Limited South Africa 100% 100%
Fish On Line (Pty) Limited South Africa 68% 51%
Global Horizons Limited Isle of Man 100% 100%
Africa Expeditions Limited Kenya 95% 95%
Sportsgear Investments (Private)
Limited Zimbabwe 100% 100%
Burp Track Investments (Private)
Limited Zimbabwe 100% 100%
Crosshairs Point (Private) Limited Zimbabwe 100% 100%
Yuagong (Pty) Limited Botswana 100% 100%
Lonrho Support Services Limited* UK 100% 100%
LAH Jersey Limited* Jersey 100% 100%
* 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.
A full list of Group companies will be included in the annual
return registered with Companies House.
Although the Group owns less than half, or half, of the voting
power of 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 those companies and
hence the Group consolidates its investment in these companies.
Exchange control procedures exist in Mozambique, Angola,
Zimbabwe, Democratic Republic of Congo and South Africa which place
restrictions on repatriation of cash to the Group.
37. Events after the reporting date
On 9 January 2013, the Company granted options over 484,612
ordinary shares of 1p each in the Company, exercisable on 1st
February 2016 in accordance with the rules of the Lonrho Sharesave
Scheme at 7.8p per share.
On 18 January 2013, the Company granted options over 2,000,000
ordinary shares of 1p each in the Company under the Lonrho
Unapproved Share Option Plan exercisable at 9.252p per share. The
options have a two year vesting period and a four year exercise
period from date of grant.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FMGZFDRMGFZG
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