Final results for 15 months to 31 December 2011

4 April 2012

Lonrho Plc

("Lonrho" or "the Company")

Lonrho reports strong revenue and profit growth for 2011 and 67% growth in revenues for final quarter

Lonrho, the conglomerate aligned with the growth of Africa, announces its results for the final quarter and the 15 month period ended 31 December 2011.

Financial Highlights for the three months to 31 December 2011:

·; Revenue in the quarter for continuing operations of £46.1 million, a 67% increase from the same quarter in the prior year (2010: £27.5 million). For the 15 months, revenue from continuing operations was £188.4 million, up from £107.4 million in the 12 months to September 2010. Discontinued operations (airfreight business) accounted for £nil in the quarter and £0.2 million in the 15 months to December 2011.

·; Growth has been experienced across each of the Company's operating divisions and gross margin across the Group has risen by 0.6% on an adjusted like-for-like basis.

·; Net Operating Profit* in the Group for the quarter was £0.7 million on continuing operations, compared to a £3.0 million loss in the same period in the prior year. For the 15 month period the net operating profit was £6.8 million, up from a break even position in the 12 months to September 2010.

·; The Group reported an impairment charge of £4.3 million on the carrying value of its investment in Lonrho Mining Limited, its ASX listed mining associate, due to the fall in its share price from AUD 0.043 to AUD 0.007. After this charge, the Group made a loss before tax for the quarter of £2.8 million and for the 15 month period, profit before tax on continuing operations was £1.9 million.

·; Net assets at 31 December 2011 stood at £155.7 million. At 30 September 2011 the comparative figure was £151.6 million and at 30 September 2010 was £127.7 million.

·; Cash balances held at 31 December 2011 totalled £12.7 million, compared to £14.6 million at 30 September 2011 and £7.8 million at 30 September 2010.

The final quarter of the lengthened fifteen month financial year has seen the Group progress on its strong performance to date:

·; Oceanfresh has made significant progress into the USA market where sales have proven that strong demand exists for Oceanfresh products.

·; Fresh Direct commenced delivery of a strawberry programme for Pic'n'Pay during the quarter, representing the vast majority of the supermarket's South African supply during the season. Volumes in December reached 15 tonnes per week and continued to increase into the New Year with a total of 900 tonnes scheduled to be delivered over the agreed 8 month programme.

·; Trak-Auto (the John Deere franchise in Mozambique) had a slow quarter in terms of new tractor sales but parts and service revenues remained strong and a new branch was opened in Tete to meet increasing demand from the North of Mozambique.

·; Biological asset gains, primarily on the Company's stone fruit plantations, in the quarter were £10.4 million reflecting good yields in the autumn harvest, reduced farming costs and a foreign exchange gain of £0.5 million.

·; e-Kwikbuild had a quiet quarter with reported revenue of £0.9 million and stock/ work-in-progress write-off of £0.5m. However, 2012 has started very strongly with the award of a contract to supply 116 schools in the Eastern Cape. The work will include supplying 398 classrooms and 8 laboratories in a deal valued at R123 million to be delivered over the next two quarters.

·; Luba Freeport, the oil logistics terminal, saw a significant increase in drilling and exploration activity in the Gulf of Guinea, with a related rise in the number of vessel movements at the port. Vessel movements increased 43% quarter-on-quarter, helping to boost revenues, which increased 22% on the same quarter in the prior year.

·; AFEX Group signed an initial 12 month contract with Tullow Oil which commenced during the period. The contract will service 160 clients and 40 AFEX staff will be based at the company's camp in Lokichar, Northern Kenya.

·; Fly540 began flights in Ghana between 4 domestic destinations (Accra, Kumasi, Tamale and Takoradi), completing the third strategic hub to the network. The airline also enjoyed a strong Christmas period flying a total of 58,619 passengers in December. Passenger numbers continue to grow on all routes.

·; The AIM quoted investment shell, Rubicon Diversified Investments Plc, announced the appointment of the Lonrho Executive Chairman and CEO to the Rubicon Board in December 2011, and later announced that it is in discussions with Lonrho to reverse Fly540 into Rubicon, change its name to FastJet.com and bring easyGroup, it's founder Sir Stelios Haji-Iannou and a very senior aviation management team, into Rubicon to develop the Fly540 platform. In November 2011, Lonrho subscribed for 9,500,000 new ordinary shares at 1 pence each. Following this and Rubicon's subsequent placing in December 2011 to raise £9.0 million, Lonrho holds a 3.2% stake in Rubicon.

Lonrho Plc announced in the quarter its intention to conduct an equity raise for £26.9 million, which was completed post year end. The Company received valid acceptances in respect of 22,534,994 New Ordinary Shares from Qualifying Shareholders, representing approximately 20.8 per cent of the New Ordinary Shares offered under the Open Offer. A total of 269,498,795 shares were issued at an issue price of 10 pence per New Ordinary Share.

The Group has started 2012 encouragingly, with important new business wins across all divisions.

David Lenigas, Lonrho's Executive Chairman, commented:

"Lonrho has made good progress during the period to the end of 2011. Financial performance in the final quarter of the year has been very encouraging and gives confidence moving into 2012. Having completed the Company's strategic investment programme, each operating division is well aligned to service the expansion in demand from the growth in emerging Africa and now has the necessary infrastructure and platforms in place to deliver strong growth and improved margins for 2012 and beyond."

* Net Operating Profit is defined as profit before tax for the period (from continuing operations) excluding the share of the results of associates and other movements in the carrying value of associates and investments

**Adjusted like-for-like figures compare Group businesses held at 31 December 2011 as if they had been owned from 1 January 2010 and include acquisitions based on unaudited management accounts, excludes start-up businesses trading for less than 12 months and is adjusted to constant currency

ENDS

Statutory accounts

The financial information set out in this announcement does not constitute the Company's statutory accounts for the 15 month period ended 31 December 2011 or the year ended 30 September 2010. The financial information for the year ended 30 September 2010 is derived from the statutory accounts for that year. The audit of statutory accounts for the 15 month period ended 31 December 2011 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

Lonrho has made solid progress during the period to the end of 2011 and I am pleased to report strong performances across the majority of Lonrho's operating divisions in Africa.

With gross revenues for the Group of £188.4 million, and net operating profit of £6.8million for the 15 month ended period 31 December 2011, the Board of Directors' focus for 2012 will be to optimize profits, whilst continuing to grow the Company's core businesses. Lonrho's Agribusiness division now represents over 50% of Lonrho's entire business and I would expect to see this division's percentage of Lonrho's total business grow steadily over the coming years.

Investing in Africa has its own unique challenges, particularly with respect to timely delivery of projects, but I feel confident that, having largely completed the Company's investment programmes, Lonrho is now well positioned to deliver strong growth for 2012 and beyond.

As a result of the Group's increasing profit expectations over the coming years, the Board of Directors intends to introduce a dividend policy for the Company to be made public during 2012 and implemented in 2013.

2011 also saw Lonrho move from the London AIM exchange to the premium list on the main market of the London Stock Exchange ("LSE"). As a result of this move, Lonrho strengthened its Board with the appointment of Sir Richard Needham as an Independent Non-Executive Director, and Ambassador Frances Cook stepped up to become Senior Independent Director.

As a Board, we are responsible to the Company's shareholders for delivering shareholder value sustainably over the long term through effective management and good governance. We believe that a robust discussion focused on the critical strategic issues and risks is key to achieving these aims and we are fortunate to have Non - Executive Directors with extensive industry and international experience who can actively contribute to this debate. The Board also seeks to develop and maintain a good understanding of the Company's operations by conducting site visits each year.

Lonrho's compliance with the UK Corporate Governance Code is described more fully in the Corporate Governance section of the annual report.

Lonrho's success this year is based around excellent management teams, which have a clear understanding of our markets, and the respect in Africa for the unique Lonrho brand name. This is combined with the deliberate positioning of each Lonrho division to be able to assist and benefit from the growth of Africa as an emerging market.

Africa has changed fundamentally in the last decade. It is by no means perfect, but it is no longer the "Dark Continent of old". Governance, political reform, education and historic debt restructuring has allowed Africa to progress to a point where it is now a vibrant, rapidly developing emerging market.

Significantly the general public perception of Africa is, in Lonrho's opinion, at least ten years behind the reality on the ground. Within Africa today you find a dynamic and expanding commercial market full of opportunity. This is, at last being recognised by investors. From a low base, the rate of growth across the Continent is building quickly. Less than 1% of global investment was into Africa in 2000, in 2011 that figure has risen to 4.5% and is continuing to rise.

One of the clear drivers of change is that the World is beginning to realise that global growth and food supply are dependent on Africa as an integral part of the World economy. For the first time, analysts and business leaders are talking about 'essential Africa' and are agreeing that Africa will play a fundamental and important role in the global economy moving forward.

The economic opportunity of Africa is driven by a population of one billion people and its land and natural resources, containing 60% of the World's arable land, with abundant sunlight, ample natural water from rainfall and highly competitive labour rates, and, potentially, holding a significant proportion of the World's oil and gas and mineral reserves.

As a result of these fundamental basic economic drivers, seven of the top ten fastest growing economies globally are now within Africa. The growing economic development across the Continent is creating a burgeoning middle class, with forecast consumer spending within the next ten years rising to over US$ 1.6 trillion per annum.

The relevance of this opportunity and economic development to Lonrho is that, over the past four years, Lonrho has deliberately and strategically aligned its core businesses to service and interact with these growth drivers for Africa.

This year should prove to be an exciting year for Lonrho. To this extent, I would like to thank you, the shareholder, for your support of the Board of Directors, as well as the Company's senior management and all of its employees, sub-contractors, and consultants, who are working diligently to make Lonrho a positive economic force in Africa.

David Lenigas

Executive Chairman

3 April 2012

Chief Executive Officer's Statement

Lonrho has developed significantly over the past four years and 2011 sees the culmination of the investment programme and the completion of this stage of the roll-out of the Group's business strategy.

Lonrho has now positioned itself well, with a group of operating divisions directly related to supporting the requirements needed for African growth. The Group is operating in markets that are typically growing five to six per cent per year and the Group expects these markets to continue growing for the coming decade.

The focus during 2011 was to continue to develop and build each division's infrastructure. Within each sector of the Group's operations there is now critical mass and Lonrho is a major participant in the markets where it operates. Acquisitions during the year and further investment in new facilities have delivered on this plan.

Excellent, well motivated, management teams are essential for any growing company, especially one in an emerging market environment where there are exceptional challenges. Lonrho has developed a senior divisional management team across each of its divisions that add real value with their experience of Africa and specific industries.

The end of 2011 sees these platforms in place and the Group is in a good position to deliver strong and sustainable growth moving forward.

With the Company's upgrade to the premium section of the main market of the LSE, we have seen new, strong, institutional shareholders join the share register of Lonrho which underlines our belief that the Company is increasingly identified as a proxy for African growth.

Agribusiness

The agribusiness division has grown to become the largest part of Lonrho's business, accounting for over half of Group revenues in 2011. This division is focused on the vertical integration of the agriculture and agri-logistics supply and delivery chain. The strategy continues to be to develop the capability to take fruit, vegetables, fish, crustacea and meat production from Sub-Saharan Africa, whether produced by Lonrho or others, and seamlessly deliver it to global supermarkets. The Group has now become one of Sub-Saharan Africa's market leaders in this sector and Lonrho sees significant further growth opportunities in this market.

The exclusive John Deere equipment distributorships in Mozambique and Angola are building strong customer allegiance and increasing market share as Lonrho's reputation for service, support and spares availability increases.

Transportation

The transportation division, Fly540, is a regional airline that provides scheduled, punctual and reliable passenger flights within Africa, delivering regional distribution to an international standard. 2011 saw the completion of the three hub strategy for the airline with hubs now operational in Kenya, Angola and Ghana. This establishes Fly540 as the first private sector carrier in Africa with a true pan-African network. Having completed the base network during the year, Fly540 is now reviewing the opportunities for growth and expansion in conjunction with major corporations within the aviation sector.

Infrastructure

Within the infrastructure division, Lonrho saw the oil logistics business, Luba Freeport, report a steady year in 2011. Due to global economic concerns, several proposed drilling projects in the waters of the Gulf of Guinea were delayed, therefore growth at the port during the period was slower than anticipated. However, 2012 has substantially more activity confirmed including programmes that were scheduled for 2011, but delayed, plus those scheduled for 2012.

The prefabricated building business, e-Kwikbuild, saw strong revenue growth during the period and the strategy of targeting the private sector rather than purely Government contracts has been implemented successfully.

Hotels

The hotels division has had a year of consolidation of its existing properties and has strengthened the management team in preparation for further growth. The strategy remains to utilise the Lonrho brand name, and the quality of our existing portfolio of hotels to attract new management agreements for the division. Post year end, a management agreement was entered into for the Grand Hotel in Kinshasa in the DRC.

During the year, a master franchise agreement was signed with easyHotel to develop a chain of budget hotels across Africa. These will offer budget price accommodation whilst offering a safe, clean, quality environment with wifi access for guests. It is planned to open fifty hotels within the next three years, providing a consistent budget brand across Africa.

Support Services

The support services division continued to build with a very successful year from Lonrho IT. The division was strengthened by the acquisition of AFEX, a logistics and camp business based in Kenya that operates in South Sudan, Uganda and Tanzania supporting natural resource and NGO and USAID projects. AFEX provides a platform for accessing new business opportunities as South Sudan develops.

Outlook

Africa is seeing rapid development as an emerging market and this is creating a significant and growing consumer demand. Lonrho's core businesses are directly aligned with the growth drivers of the African economy. The foundations of each divisional business are now in place for Lonrho to deliver on these growth opportunities.

Geoffrey White

Chief Executive Officer

3 April 2012

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 judgments and estimates that are reasonable and prudent;

·; state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and 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.

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.

Consolidated income statement

For the 15 months ended 31 December 2011 and 12 months ended 30 September 2010

The notes to the financial statements are an integral part of these financial statements.

Consolidated and Company statements of comprehensive

income

For the 15 months ended 31 December 2011 and 12 months ended 30 September 2010

Consolidated and Company statement of changes in equity

For the 15 months ended 31 December 2011 and 12 months ended 30 September 2010

The Company had total equity brought forward of £123.0m (2010: £93.9m), and during the period issued shares of £18.9m (2010: £37.0m) with share options of £0.7m (2010: £2.2m), share options exercised of £0.7m (2010: £nil), costs associated with share issues of £0.4m (2010: £nil) and a loss for the period of £17.3m (2010: £10.1m) resulting in total equity carried forward of £125.6m (2010: £123.0m).

(¹) The transfer represents the amount of losses previously not allocated to non-controlling interests now allocated following additional capital contributions by the non-controlling interests.

(2) 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 2011 and 30 September 2010

The notes to the financial statements are an integral part of these financial statements.

These financial statements were approved by the Board of Directors and authorised for issue on 3 April 2012. They were signed on its behalf by:

David Lenigas Director

Consolidated and Company statements of cash flows

For the 15 months ended 31 December 2011 and 12 months ended 30 September 2010

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 15 months period ended 31 December 2011 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in associates and jointly controlled entities.

The financial statements were authorised for issue by the Directors on 3 April 2012.

The Company changed its financial year end from 30 September to 31 December annually with effect from the current financial period ended 31 December 2011. Accordingly the current period information is for the 15 month period to 31 December 2011 with the comparatives for the year ended 30 September 2010.

2 Basis of preparation

Statement of compliance

Both the parent Company and the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (Adopted IFRS). On publishing the parent Company financial statements here together with the Group financial statements, the Company is taking advantage of the exemption in section 408(4) of the Companies Act 2006 not to present its individual income statement and related notes that form a part of these approved financial statements. The loss of the Company is disclosed in note 23 to the accounts.

Going concern

Although the current ongoing economic conditions create uncertainty, the Group's forecasts and projections, taking account of reasonable possible changes in trading performance, together with mitigation actions that are within management's control show that the Group is expected to be able to operate within the level and covenant conditions 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. As described in Note 35, the Group raised £26.9m in January 2012 through the placing of shares.

Following the capital raise and review of ongoing 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 £0.1 million.

Basis of measurement

The financial statements have been prepared on the historical cost basis except for the revaluation of certain long leasehold properties, and the recognition of available-for-sale financial assets at fair value.

The accounting policies set out in these financial statements have been applied consistently to all periods presented. A number of new accounting standards, amendments to standards and interpretations are effective for periods beginning on or after 1 October 2010 but do not have a significant effect on the consolidated financial statements of the Group.

The following standards are issued but not yet effective, and have not been applied to these financial statements. The impact of these is not expected to be material;

·; Transfers of Financial Assets (Amendments to IFRS 7)

·; Deferred Tax: Recovery of Underlying Assets (Amendments to IAS 12)

·; Presentation of Items of Other Comprehensive Income (Amendments to IAS 1)

·; IFRS 10: Consolidated Financial Statements

·; IFRS 11: Joint Arrangements

·; IFRS 12: Disclosure of Interests in Other Entities

·; IFRS 13: Fair Value Measurement

·; IAS 19: Employee Benefits (amended 2011)

·; IAS 27: Separate Financial Statements (2011)

·; IAS 28: Investments in Associates and Joint Ventures (2011)

·; IFRIC 20: Stripping Costs in the Production of a Surface Mine

·; Government Loans (amendments to IAS 1)

·; Disclosures: Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)

·; Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32)

·; IFRS 9: Financial Instruments

2 Basis of preparation (continued)

Use of estimates and judgements

The preparation of financial statements in conformity with Adopted IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Estimates made by management in the application of Adopted IFRS that have significant effect on the financial statements with a significant risk of material adjustment in the next year are discussed in the following notes:

·; valuation of intangible assets and the level of negative goodwill arising and resulting in the gain on acquisitions (notes 7 and 13)

·; valuation of associates and joint ventures (note 17)

·; valuation of biological assets (note 15)

Judgements made by management in the application of Adopted IFRS that have significant effect on the financial statements are:

·; the determination of the functional currencies of subsidiaries (see below)

·; the determination of the accounting treatment in respect of the acquisition of investments as either associates, joint ventures or subsidiaries (note 3(a))

·; the determination whether certain transactions represent business combinations (note 7)

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 and Joint Ventures

An associate is an entity in which the Group has the ability to exercise significant influence but not control over the financial and operating policies. A joint venture is an entity where the Group jointly controls its financial and operating policy together with other parties. Associates are accounted for using the equity method and are initially measured at cost as adjusted by post- acquisition changes in the Group's share of the net assets of the associate, less any impairment of the individual investments, from the date that significant influence commences until the date it ceases.

Losses of the associates in excess of the Group's interest in those associates are not recognised except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of its investee. The Group's investment includes goodwill identified on acquisition, net of any impairment losses. Any excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition is recognised as goodwill. Any deficiency of the cost of acquisition below the Group's share of the fair values of the identifiable net assets of the associate at the date of acquisition (i.e. discount on acquisition) is credited to the income statement in the period of acquisition.

The Company records interests in associate and joint ventures initially at cost and thereafter at cost less provisions for impairment.

Business combinations

The acquisition of subsidiaries and businesses is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date, except for non-current assets that are classified as held for sale in accordance with IFRS 5, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is initially measured at cost, being the excess of the fair value of the considerationover 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.

3 Significant accounting policies (continued)

(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

Costsdirectly 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. These costs have been expensed in prior years 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 ratesare 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.

3 Significant accounting policies (continued)

(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.

3 Significant accounting policies (continued)

(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

Aircraft 5%-6.67% of cost

Fixtures and fittings 15%-25 % of cost

The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement for the period.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or where shorter, over the relevant lease term.

In respect of aircraft, subsequent costs incurred which lend enhancement to future periods such as long term scheduled maintenance and major overhaul of aircraft and engines are capitalised and amortised over the length of the period benefiting from those enhancements. All other costs relating to maintenance are charged to the income statement as incurred.

(g) Biological assets

Certain Group subsidiaries involved in the production of fresh produce recognize biological assets, which includes agricultural produce due for harvest on fruit plantations. 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 asset of the reporting date. Biological assets are stated at fair value less estimated point of sale costs, with any resultant gain or loss recognized in the income statement. The valuation of the fruit plantations is based on discounted cashflow models whereby the fair value of the assets is calculated using cashflows for continuous operations taking into account growth and yield potential.

When the fruit 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.

3 Significant accounting policies (continued)

(h) Impairment of assets excluding goodwill, inventories and deferred tax assets (continued)

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 29). 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.

Capital management

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders' equity, excluding minority interests.

(j) 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.

3 Significant accounting policies (continued)

(k) 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.

(l) 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.

(m) Dividends

Interim dividends are recognised when paid and final dividends are recognised as liabilities in the period in which they are approved by shareholders.

(n) 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.

(o) Revenue recognition

Revenue, for the other major segments not detailed below, is derived from the sale of goods and services and is measured at the fair value of consideration received or receivable, after deducting discounts, volume rebates, value-added tax and other sales taxes. A sale of goods and services is recognised when recovery of the consideration is probable, there is no continuing management involvement with the goods and services and the amount of revenue can be measured reliably.

A sale of goods is recognised when the significant risks and rewards of ownership have passed to the buyer, the associated costs and possible return of goods can be estimated reliably. This is when title and insurance risk have passed to the customer and the goods have been delivered to a contractually agreed location.

A sale of services is recognised when the service has been rendered.

Aircraft division

Revenue for the aircraft division comprises the invoiced value of airline services, net of passenger taxes, discounts, plus ancillary revenue. Revenue from the sale of flight seats (passenger revenue) is recognised in the period in which the service is provided. Unearned revenue represents flight seats sold but not yet flown and is included within deferred income.

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 handling, towage, pilotage, conservancy services and port related rental income. Such revenue is recorded once the service has been provided.

Agribusiness division

Support services division

3 Significant accounting policies (continued)

(p) 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.

(q) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the income statement in the period in which they are incurred.

(r) 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.

(s) Reportable Segments

Segments are determined to be the lowest operational segment that the Chief Operating Decision Maker ("CODM") evaluates the result of the segment and allocates resources to that segment. This is based on the Group's internal organization and the financial information provided to the CODM.

(t) Assets and liabilities classified as held for sale

Non-current assets (or disposal groups comprising assets and liabilities) that are expected to be recovered primarily through sale rather than through continuing use are classified as held for sale. Immediately before classification as held for sale, the assets (or components of a disposal group) are remeasured in accordance with the Group's accounting policies. Thereafter generally the assets (or disposal group) are measured at the lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first is allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets and deferred tax assets, which continue to be measured in accordance with the Group's accounting policies. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognised in the income statement. Gains are not recognised in excess of any cumulative impairment loss.

3 Significant accounting policies (continued)

(u) 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.

4 Segment reporting

The "Chief Operating Decision Maker" (CODM) is deemed to be the Executive Committee who monitor the results of the business segments to assess performance and make decisions about the allocation of revenues. Segment performance is evaluated on both revenue and operating profit/(loss).

Segment results, assets and liabilities include items directly attributable to a segment as well as those that 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 five continuing reportable segments which are organized around the basis of products and services which they provide:

·; Agribusiness

·; Infrastructure

·; Transportation

·; Support services

·; Hotels

The Group has not aggregated any operating segment in arriving at this analysis.

Geographical analysis

All of the segments operate in various parts of Africa, Europe and Americas.

Business segments

 4 Segment reporting (continued)

Business segments

4 Segment reporting (continued)

Geographical analysis

5 Revenue

6 Group net operating costs

Auditors remuneration

* Other fees payable: other fees relating to listing and share issues during the period.

7 Acquisition of subsidiaries

7a Acquisition of subsidiaries in the current 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 (£1.9m). Further payments of up to US$5m (£3.1m) 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:

The transaction costs incurred to acquire the company were £0.1m 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.

AFEX contributed £8.4m to the Group's revenue and £0.7m profit to the Group's profit before tax for the period between the date of acquisition and the reporting date.

7 Acquisition of subsidiaries (continued)

7a Acquisition of subsidiaries in the current period (continued)

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 £0.3m.

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 ZAR 35.0m (£3.0m).

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:

The transaction costs incurred to acquire the company were £0.1m 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 £2.3 m allowing for the effect of discounting. The corresponding entry has been recorded as a debit to other reserves.

Fish On Line (Pty) Limited contributed £5.8m to the Group's revenue and £0.1m loss to the Group's profit before tax for the period between the date of acquisition and the reporting date.

7 Acquisition of subsidiaries (continued)

7a Acquisition of subsidiaries in the current period (continued)

GRINDROD PCA

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 (£4.6m).

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:

The transaction costs incurred to acquire the company were £0.1m 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.

Grindrod PCA contributed £17.2m to the Group's revenue and £0.2m profit to the Group's profit before tax for the period between the date of acquisition and the reporting date.

7 Acquisition of subsidiaries (continued)

7a Acquisition of subsidiaries in the current period (continued)

ALDEAMENTO TURISTICO DE MACUTI SARLI "ATDM"

On 30 September 2011, the Group acquired 80% of the issued share capital of ATdM from Lonzim Plc for US$5.1m (£3.4m), 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 (£1.7m), the fair value of which has been determined at £1.2m.

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:

The transaction costs incurred to acquire the company were £0.1m 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 £4.0m is presented within operating income within the income statement.

ATdM contributed £nil to the Group's revenue and £nil profit to the Group's profit before tax for the period between the date of acquisition, and the reporting date.

7 Acquisition of subsidiaries (continued)

7a Acquisition of subsidiaries in the current 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:

The transaction costs incurred to acquire the company were £0.1m 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 £11.8m benefit arising from the negative goodwill is presented within operating income within the income statement.

Home Farms contributed £1.0m to the Group's revenue and £0.5m loss to the Group's profit before tax for the period between the date of acquisition and the reporting date.

7 Acquisition of subsidiaries (continued)

7b Acquisition of subsidiaries in the prior year

TRAK AUTO

On 8 April 2010, the Group acquired 100% of the issued share capital of Trak Auto Lda for an initial consideration of US$2 m (£1.3 m). Further payments of US$1 m (£0.6 m) a year for three years will be payable upon the meeting of growth targets. Trak Auto Lda holds the exclusive John Deere and Komatsu dealership agreements for Mozambique and is involved in the sale and after-sale service of these vehicles. 

The transaction has been accounted for by the purchase method of accounting. The fair value of the net assets at 8 April 2010 is set out below:

The transaction costs incurred to acquire the company were £0.1 m and have been expensed in the income statement.

The goodwill arising on the acquisition of Trak Auto Lda is attributable to the anticipated profitability of the distribution of the company's services and products to new customers.

Trak Auto Lda contributed £3.5 m to revenue and £0.8 m profit to the Group's profit before tax for the period between the date of acquisition and 30 September2010.

The Group has not made any adjustment to the purchase accounting in the current period.

7 Acquisition of subsidiaries (continued)

7b Acquisition of subsidiaries in the prior year (continued)

OCEANFRESH

On 7 June 2010, the Group acquired 51.0% of the issued share capital of Oceanfresh Seafood (Pty) Limited for a consideration of R3.8 m (£0.3 m) including R0.8 m (£0.1 m) related to the subscription of shares with the proceeds retained in Oceanfresh Seafood (Pty) Limited. An additional working capital injection of R7.7 m (£0.7 m) was provided by way of an interest bearing loan. OceanfreshSeafood (Pty) Limited is a supplier of frozen fish and crustaceans from Mozambique with customers across South Africa and also in the United States.

The transaction has been accounted for by the purchase method of accounting. The fair value of the net assets at 7 June 2010 is set out below:

The transaction costs incurred to acquire the company were £0.1 m and have been expensed in the income statement.

The goodwill arising on the acquisition of Oceanfresh Seafood (Pty) Limited is attributable to the anticipated profitability of the distribution of the company's services and products to new customers.

Oceanfresh Seafood (Pty) Limited contributed £2.3 m to revenue and £0.2 m loss to the Group's profit before tax for the period between the date of acquisition and 30 September 2010.

The Group has not made any adjustment to the purchase accounting in the current period.

8 Discontinued operations FLY 540 Uganda

Following a review by the Board in December 2011, the Group decided not to continue to support air freight operations of Fly 540 Uganda Ltd, which consequently ceased trading. Costs of discontinuing the operation were less than £0.1m. The comparatives have been represented accordingly.

Net cash used in operating activities (1.7) (1.2)

Net cash from financing activities 1.9 0.8