21st Feb 2005 07:00
Lonrho Africa PLC21 February 2005 For Immediate Release 21 February 2005 Lonrho Africa plc Preliminary Results for the year ended 30 September 2004 Chairman's Statement We have continued to follow our strategy of disposing of the businesses andassets in Africa. As you will see from the Operating Review, the results of thehotels in Kenya improved markedly during the year. We are proposing to demerge Lonrho Africa Trade & Finance Limited from theLonrho Africa Group by way of a scheme of arrangement and the listing on AIM ofits new holding company, Castle Acquisitions Plc. Bernard Asher stepped down as Chairman and as a Director on 31 May 2004 aftersix years service with the Group. The Board would like to thank him for hisimportant and valued contribution. Christopher MillsChairman18th February 2005 For further information please contact: Nadja Vetter, Cardew Group Tel: 020 7930 0777 Operating review Ranching The disposal of the Group's 100% interest in Ol Pejeta Ranching NetherlandsHoldings BV ("OPRNBV") for a cash consideration of US$14.75m (£8.2m) wascompleted in September 2004. OPRNBV is the owner of Ol Pejeta Ranching Limited("OPR") in Kenya, which includes Sweetwaters Tented Camp, which produced apre-tax loss of £85,000 in the year to 30 September 2003. At that date, the netasset value of OPR was £4.3m. The proceeds of sale were used to eliminate LonrhoAfrica's remaining net debt. Hotels The Hotels division broke even this year compared to an operating loss beforeexceptional items last year of £1.0m. Kenya The Kenyan Hotels returned an operating profit of £0.6m (2003 loss £0.6m) whichwas largely as a result of a 32% increase in rooms sold, driven by large scaleEuropean marketing both by the hotels and the Kenya Tourist Board. The growth iscontinuing in the new financial year, with a 38% growth in occupancies over theprevious year. The Kenya Tourist Industry has recently completed a sales drive with AmericanAgents and Operators in a bid to revive the American market to Kenya, whichtraditionally used to represent 40% of Lonrho Africa's business. The Norfolk Hotel has shown a marked improvement in its trading and businesshouse revenue has increased by 82% in the year. Rooms sold in the year increasedby 55%. The Kenyan hotels continue to attract Tourist Industry Awards and the NorfolkHotel celebrated its 100th Birthday in December 2004 to general acclaim from theTourism Industry. Ghana The Labadi Beach Hotel was sold in April 2004 for a cash consideration ofUS$5.4m (£3m). Mozambique Room occupancies continue to decline with a 9% drop in the year. Available roomsin Maputo continue to grow at 13%, whilst there was only a 4% gain in roomdemand. As a result all Maputo Hotels suffered a drop in room yield. Property The sale of a major part of the remaining agricultural land in Kenya, which wassigned in September 2003, has still to be completed. Efforts to sell the three remaining South African industrial properties continuewith the disposal since the year end of one property for a cash consideration ofR6.5m (£0.55m) and another for R8.75m (£0.75m). It is hoped that the thirdproperty will be sold later this year. Joint Venture The sale of the shareholding in Kariba Minerals Zambia, which was signed inFebruary 2002, was completed in May 2004 for a cash consideration of US$0.35m(£0.19m). Financial review Group performance The Group's only operation is Hotels. The decrease in turnover reflects the saleof the Hotel in Ghana. The operating loss incurred last year has beeneliminated. Profit on sale or termination of discontinued operations and other non operatingexceptional items amounted to £4.6m compared to £3.4m in 2003. Financing Cash balances and interest rate risks are managed centrally in the UK. Whereverpossible exposure to currencies other than sterling are covered to eliminate anyexchange risk. Cash is held in a number of currencies and includes £5.0m held in the UK. Foreign exchange exposure The Group's businesses maintain their accounting records in the currency of thecountry in which they operate. However, the Group's results and assets andliabilities are consolidated and reported to shareholders in sterling at yearend exchange rates, although results of operations disposed of during the yearare translated into sterling at the exchange rate at the date of disposal.Therefore, devaluation of local currencies during a financial year will have animpact on the profit or loss reported throughout the year as well as on theGroup's balance sheet. Dividend The Board has decided that it is not appropriate to declare a dividend. Annual General Meeting The Annual General Meeting will be held on Wednesday 16th March 2005 at 11.30am(or as soon thereafter as the Extraordinary General Meeting for the same dateand place shall have been concluded or adjourned) at The Pearce Room, BritanniaAdelphi Hotel, Ranelagh Place, Liverpool L3 5UL Consolidated profit and loss accountfor the year ended 30th September 2004 Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total 2004 2004 2004 2003 2003 2003 Note £m £m £m £m £m £m-------------------------------------------------------------------------------------------------------------TurnoverGroup 8.2 1.7 9.9 7.4 2.9 10.3Joint ventures - 0.2 0.2 - 0.5 0.5------------------------------------------------------------------------------------------------------------- 8.2 1.9 10.1 7.4 3.4 10.8-------------------------------------------------------------------------------------------------------------Group netoperating costs (8.8) (1.7) (10.5) (9.4) (2.8) (12.2) -------------------------------------------------------------------------------------------------------------Operating(loss)/profitGroup - beforeexceptionalitems (0.6) (0.6) (1.4) (0.1) (1.5) - exceptionalitems 1a - - (0.6) 0.2 (0.4) ----------------------------------------- --------------------------------------- (0.6) (0.6) (2.0) 0.1 (1.9) Joint ventures - - - 0.1 0.1 ----------------------------------------- --------------------------------------- Total operating(loss)/profit - beforeexceptionalitems (0.6) (0.6) (1.4) - (1.4) - exceptionalitems 1a - - (0.6) 0.2 (0.4) ----------------------------------------- --------------------------------------- (0.6) (0.6) (2.0) 0.2 (1.8) Non-operatingexceptionalitems 1b 4.6 3.4Net interestpayable - (0.2) -------------------------------------------------------------------------------------------------------------Profit beforetaxation 4.0 1.4Taxation (0.3) 0.2-------------------------------------------------------------------------------------------------------------Profit aftertaxation 3.7 1.6Minorityinterests 0.3 0.2-------------------------------------------------------------------------------------------------------------Profit for theyear 4.0 1.8Dividends to shareholders - --------------------------------------------------------------------------------------------------------------Retainedprofit for theyear 4.0 1.8-------------------------------------------------------------------------------------------------------------Profit pershare 2.5p 1.1p-------------------------------------------------------------------------------------------------------------Loss per sharebeforeexceptionalitems (0.4)p (0.7)p ------------------------------------------------------------------------------------------------------------- Note: The figures for 2003 have been restated to reflect operations that ceased during 2004 as discontinued. Balance sheetfor the year ended 30th September 2004 Group Company 2004 2003 2004 2003 Note £m £m £m £m--------------------------------------------------------------------------- Fixed assetsTangible 17.0 26.8 - -Investments: Joint ventures - 0.3 - -Other investments - - 46.2 58.3--------------------------------------------------------------------------- 17.0 27.1 46.2 58.3--------------------------------------------------------------------------- Current assetsStocks 1.2 1.9 - -Debtors: ----- -----Amounts falling duewithin one year 3.3 3.9 - -Amounts falling dueafter more than one year - 0.4 - - ----- ----- 3.3 4.3 - -Cash at bank 6.0 3.2 - ---------------------------------------------------------------------------- 10.5 9.4 - -Creditors: amountsfalling due within oneyear (3.0) (9.0) (38.4) (49.0)---------------------------------------------------------------------------Net currentassets/(liabilities) 7.5 0.4 (38.4) (49.0)---------------------------------------------------------------------------Total assets lesscurrent liabilities 24.5 27.5 7.8 9.3---------------------------------------------------------------------------Provisions forliabilities and charges (2.5) (4.8) (1.0) (2.8)---------------------------------------------------------------------------Net assets 22.0 22.7 6.8 6.5---------------------------------------------------------------------------Capital and reservesCalled up share capital 31.5 31.5 31.5 31.5Merger reserve 96.1 96.1 - -Revaluation reserve 7.4 13.1 - -Profit and loss account (115.6) (122.3) (24.7) (25.0)---------------------------------------------------------------------------Shareholders' funds(equity) 19.4 18.4 6.8 6.5Minority interests(equity) 2.6 4.3 - ---------------------------------------------------------------------------- 22.0 22.7 6.8 6.5--------------------------------------------------------------------------- These financial statements were approved by the Board of Directors on 18thFebruary 2005 and signed on its behalf by:M S Wilson Consolidated cash flow statementfor the year ended 30th September 2004 2004 2003 Note £m £m-------------------------------------------------------------------------Net cash flow from operating activities- continuing operations 0.1 (0.4)- discontinued operations (1.0) (0.9)------------------------------------------------------------------------- (0.9) (1.3)Returns on investments and servicing offinanceInterest- paid (0.2) (0.3)-------------------------------------------------------------------------Net cash outflow after returns on investmentsand servicing of finance (1.1) (1.6)-------------------------------------------------------------------------Tax paidOverseas (0.1) (0.4)-------------------------------------------------------------------------Net cash outflow before investing activitiesand financing (1.2) (2.0)Net capital (payments)/receipts (0.2) 0.6Net proceeds from disposal of subsidiaries 10.8 0.7-------------------------------------------------------------------------Increase/(decrease) in cash in the year 9.4 (0.7)------------------------------------------------------------------------- Statement of total recognised gains and lossesfor the year ended 30th September 2004 Group 2004 2003 Note £m £m-------------------------------------------------------------------------Profit for the year 4.0 1.8Exchange adjustments (3.0) (2.9)-------------------------------------------------------------------------Total recognised gains/(losses) relatingto the year 1.0 (1.1)Prior year adjustment (see page 7) - (7.7)-------------------------------------------------------------------------Total recognised gains/(losses) sincelast annual report 1.0 (8.8)------------------------------------------------------------------------- Reconciliation of movements in shareholders' fundsfor the year ended 30th September 2004 Group 2004 2003 Note £m £m-------------------------------------------------------------------------Recognised gains/(losses) relating tothe year 1.0 (1.1)-------------------------------------------------------------------------Net increase/(decrease) inshareholders' funds in the year 1.0 (1.1)At beginning of year (2003 originally£27.2m before deducting a prior yearadjustment of £7.7m) 18.4 19.5-------------------------------------------------------------------------At end of year 19.4 18.4------------------------------------------------------------------------- Note of historical cost profits and lossesfor the year ended 30th September 2004 Group 2004 2003 Note £m £m------------------------------------------------------------------------- Reported profit before taxation 4.0 1.4Difference between historical costdepreciation charge and the actualdepreciation charge calculated on therevalued amount 0.1 0.1Realisation of property revaluation gains 0.2 1.9-------------------------------------------------------------------------Historical cost profit before taxation 4.3 3.4-------------------------------------------------------------------------Historical cost profit after taxation andminority interests 4.3 3.8------------------------------------------------------------------------- Note: A prior year adjustment was made in 2002 of £7.7m relating to theimplementation of FRS17 Retirement Benefits. Notes to the financial statements 1(a) Operating exceptional items Continuing Discontinued Operating (loss)/profit Total operations operations Totalincludes the following 2004 2003 2003 2003exceptional items £m £m £m £m------------------------------------------------------------------------------- Reorganisationand rationalisationcosts - (0.6) 0.2 (0.4)-------------------------------------------------------------------------------Operating exceptional itemsanalysed by division are asfollows:Hotels - (0.8) - (0.8)Central - 0.2 0.2 0.4------------------------------------------------------------------------------- - (0.6) 0.2 (0.4)------------------------------------------------------------------------------- 1(b) Non-operating exceptional items 2004 2003 £m £m------------------------------------------------------------------------------Profit on disposal of subsidiaries:Motors - 0.3Hotels 1.3 -Agribusiness 3.7 -Exchange gains on discontinued activities 0.3 1.4(Charge)/recovery for disposal and closure costs (0.2) 1.7Recoverable surplus in the pension scheme writtenoff (note 2) (0.5) ------------------------------------------------------------------------------- 4.6 3.4------------------------------------------------------------------------------Non-operating exceptional items analysed by division are asfollows:Motors - 0.3Hotels 1.3 -Agribusiness 3.7 -Property - 1.6Central (0.4) 1.5------------------------------------------------------------------------------ 4.6 3.4------------------------------------------------------------------------------Profits 5.4 3.4Losses (0.8) ------------------------------------------------------------------------------- 4.6 3.4------------------------------------------------------------------------------ Notes to the financial statements (continued) 2. Pension costs The Group operates one defined benefit pension scheme in the United Kingdomwhich is a funded scheme; the assets are held separately from those of theGroup. There are a variety of small overseas schemes which are at differentstages of being wound up. The Group does not have any material post retirementbenefits other than these pension schemes. The charge for the overseas schemes was £0.1m (2003: £0.1m) resulting in a totalpension charge for the Group of £0.2m (2003: £0.2m). In respect of the overseasschemes, pension costs have been determined in accordance with the latestactuarial advice where practicable and otherwise in accordance with localregulations. The Group has adopted Financial Reporting Standard 17 (FRS17) RetirementBenefits. The contributions are determined by a qualified actuary on the basis oftriennial valuations using the attained age method. The most recent fullactuarial valuation was carried out at 30th September 2002 and showed that themarket value of the scheme's assets was £48.9m and that the surplus was £28.3m.The contributions of the UK employer and the employees will remain at nil. In order to comply with FRS17, the full actuarial valuation carried out at 30thSeptember 2002 has been updated to 30th September 2003 and 2004 by a qualifiedindependent actuary. The major assumptions used by the actuary under FRS17 were: 30th September 30th September 30th September 2004 2003 2002 £m £m £m ------------------------------------------------------------------------------- Rate of increase in salaries 4.40% 4.20% 3.75%Rate of increase in deferredpensions 2.90% 2.70% 2.25%Rate of increase of pensions in payment 2.90% 2.70% 2.25%Discount rate 5.50% 5.20% 5.50%Inflation assumption 2.90% 2.70% 2.25%------------------------------------------------------------------------------- 2. Pension costs (continued) The assets and actuarial liabilities in the scheme under FRS17 and the expectedrates of return were:- 30th September 30th September 30th September 2004 2003 2002 £m £m £m -------------------------------------------------------------------------------Corporate bonds and gilts 4.60% 43.5 4.60% 37.1 4.50% 24.7Equities - - - - 6.50% 0.1Cash 4.75% 0.7 3.50% 7.2 4.00% 24.1-------------------------------------------------------------------------------Total market value ofassets 44.2 44.3 48.9Actuarial value ofliabilities (16.7) (15.4) (13.7)-------------------------------------------------------------------------------Surplus in the scheme 27.5 28.9 35.2------------------------------------------------------------------------------- Further improvements in benefits costing £2.9m were made during the year. Duringthe previous year an additional 10% was granted to certain pensioners anddeferred pensioners at a cost of £5.9m. These past service costs have been metfrom the unrecognised surplus in the scheme. The actuarial value of theliabilities has increased at 30th September 2004 mainly because of theimprovements to benefits. An analysis of the amount recognised and of thedecrease in the surplus in the scheme is as follows:- 2004 2003 2002 £m £m £m--------------------------------------------------------------------------Actual return less expected return onscheme assets 1.2 1.1 (3.1)Gains/(losses) arising on schemeliabilities (0.2) 0.1 (2.4)Changes in assumptions underlying thepresent value of the scheme liabilities 0.3 (1.6) (1.1)Improvements in benefits (2.9) (5.9) -Net return on assets 0.2 0.1 0.2Current service cost (0.1) (0.1) (0.2)--------------------------------------------------------------------------Decrease in the surplus in the scheme (1.5) (6.3) (6.6)-------------------------------------------------------------------------- History of experiencegains and losses 2004 2004 2003 2003 2002 2002 % £m % £m % £m--------------------------------------------------------------------------Difference betweenthe expected andactual return onscheme assets 2.7 1.2 2.5 1.1 (6.3) (3.1)Experience gains andlosses on schemeliabilities 1.3 (0.2) (0.7) 0.1 (17.5) (2.4)Total amountrecognised instatement of totalrecognised gains andlosses - - - - 13.0 (1.8)-------------------------------------------------------------------------- The pension cost for the defined benefit scheme is an operating charge of £0.1m(2003 £0.1m), offset by a credit to finance income of £0.2m (2003 £0.1m). Thecredit to finance income represents the expected return on pension scheme assetsof £1.0m (2003 £0.8m) less the interest on pension scheme liabilities of £0.8m(2003 £0.7m). The recoverable surplus is restricted to the present value of anemployer contribution holiday. Notes to the financial statements (continued) 2. Pension costs (continued) Movement in recoverable surplus during the year 2004 2003 2002 £m £m £m-------------------------------------------------------------------------------Surplus at beginning of year 0.4 0.4 2.2Current service cost (0.1) (0.1) (0.2)Net return on assets 0.2 0.1 0.2Actuarial loss recognised in the statement of recognised gains and losses - - (1.8)Surplus written off as anon-operating exceptional item (0.5) - --------------------------------------------------------------------------------Surplus at end of year - 0.4 0.4-------------------------------------------------------------------------------Recoverable surplus in the scheme - 0.4 0.4Related deferred tax liability - (0.1) (0.1)-------------------------------------------------------------------------------Net pension asset after deferred tax liability - 0.3 0.3------------------------------------------------------------------------------- In previous years the Trustee has purchased annuities for the majority of thepensioners. Since the end of the financial year the Trustee has decided topurchase annuities for the remainder of the pensioners and this is likely to befinalised in February 2005. The cost of these annuities will be significantlygreater than the corresponding liabilities for FRS17 purposes and therefore thesurplus reported under FRS17 at 30th September 2005 will be correspondinglyreduced. The actuarial assumptions used for the full actuarial valuation are moreconservative than those used for FRS17 purposes and the surplus on the fullactuarial valuation will therefore be significantly less than the surplus of£27.5m disclosed for FRS17 purposes. Having had discussions with the Trustee andthe qualified independent actuary the directors believe that, on a basisconsistent with the full actuarial valuation at 30th September 2002, the surplusin the scheme would have been approximately £20m at 30th September 2004. This issignificantly less than the corresponding figure of £28.3m at 30th September2002 and this is mainly due to the cost of benefit improvements which have beenawarded under the scheme in the two previous years. Statutory information The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 30 September 2003 or 2004 but is derivedfrom those accounts. Statutory accounts for 2003 have been delivered to theregistrar of companies, and those for 2004 will be delivered following theCompany's Annual General Meeting. The auditors' report on the accounts for 2003was unqualified, although it draws attention to the uncertainties relating tothe preparation of the accounts on a going concern basis and the carrying valueof fixed assets; it did not contain a statement under section 237 (2)(inadequate accounting records or returns or accounts not agreeing with recordsand returns) or 237 (3) (failure to obtain necessary information andexplanations) of the Companies Act 1985. The auditors' report for 2004 wasunqualified, although it draws attention to the uncertainty over the carryingvalue of fixed assets. It did not contain a statement under sections 237 (2) or(3) of the Companies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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