30th Mar 2006 07:02
Lonrho Africa PLC30 March 2006 For Immediate Release Lonrho Africa Plc ("Lonrho Africa", the "Company" or the "Group") Preliminary Results for the year ended 30 September 2005 Highlights • Successful demerger of Lonrho Africa Trade & Finance Limited • Disposal strategy almost completed following the sale of the Group's 100 per cent. interest in Lonrho Hotels Kenya BV • Strong cash position - £20 million cash in bank Recent Developments • Appointment of David Lenigas and Emma Priestley as Chief Executive and Executive Director respectively • Adoption of a new investment strategy - focused on natural resources and infrastructure projects in Africa • First investment under the new strategy committed to Brinkley Mining Plc David Lenigas, Lonrho Africa's Chief Executive, commented: "In the first set of results that the Company has announced since I assumed theposition of CEO, I am pleased to be able to report the achievement of somesignificant milestones in Lonrho Africa's history which include the successfulcompletion of the demerger, the disposal of the Group's interest in LonrhoHotels Kenya BV, and the delivery of a strong cash position. The adoption of thenew investment strategy, I believe, provides us with the flexibility to takeadvantage of exciting opportunities within Africa; Lonrho Africa's recentinvestment in Brinkley Mining Plc is illustrative of this. This new strategy isalready beginning to bear results and I believe the Company has a very excitingfuture ahead of it." For further information, please contact: Lonrho Africa Plc - David Lenigas / Emma Priestley T: +44 (0)20 7016 5100Strand Partners Ltd - Simon Raggett / Matthew Chandler T: +44 (0)20 7409 3494Cardew Group - Nadja Vetter / Emma Consett T: +44 (0)20 7930 0777 Chairman's statement The year ended 30th September 2005 was a period of further change for LonrhoAfrica. As set out previously, Lonrho Africa continued to pursue a strategy ofdisposing of its residual assets while continuing to seek opportunities tomaximise value for its shareholders. In April 2005, we successfully finalised the demerger of our shareholding inLonrho Africa Trade & Finance Limited by means of a Court approved Scheme ofArrangement to Castle Acquisitions Plc. At the year-end, our strategy of disposing of our hotels, property and othertrading assets in Africa was almost complete, with a small number of residualissues remaining to be resolved. Since the year-end, David Lenigas joined the Board as Chief Executive Officer on21st December 2005, followed by the appointment of Emma Priestley as anExecutive Director on 24th February 2006. Following David's appointment, theBoard held discussions with a number of Lonrho Africa's major shareholders anddecided to adopt a new investment strategy for the Group focusing on naturalresources and infrastructure projects in Africa, areas in which both David andEmma have considerable experience. The new investment strategy was approved byshareholders at an Extraordinary General Meeting held on 24th February 2006.Further details of the new investment strategy and the first investment under itare set out in the Chief Executive's statement. I would like to take this opportunity to formally welcome David and Emma to theBoard of Lonrho Africa. We are pleased to have been able to attract two peopleof such high calibre and expertise. David has a proven track record in buildingcompanies and extensive experience in the natural resources and infrastructuresectors across the world. Their considerable knowledge of the natural resourcessector will prove invaluable to the Company's ongoing growth strategy. Now that the position of the Group has stabilised and the Group has an excitingfuture, I believe that it is an appropriate time for me to step down as yourChairman and as a Director of the Company and I am delighted that David Lenigashas agreed to take my place as Chairman following the Annual General Meeting. I would also like to take this opportunity to thank everybody in the Group forall their support over the seven years that I have been a Director of theCompany. Christopher MillsChairman29th March 2006 Chief Executive's statement Since the end of the period under review, Lonrho Africa has made considerableprogress. Following the sale of the Hotels in Kenya, the Board continued to lookat opportunities to maximise shareholder value. Since my appointment on 21stDecember 2005, the Board held discussions with a number of Lonrho Africa's majorshareholders and concluded that it would be in shareholders' best interests touse the Group's strong cash position to re-establish a significant presence onthe African continent. In recent years, Africa has gained renewed momentum andattracted increasing investor interest. We feel that it is time for LonrhoAfrica to use its good name to make a difference to African business anddevelopment. The Board's intention is to focus on making investments in the natural resourcesand infrastructure sectors including the mining of advanced precious metals orbase metals and energy related projects such as uranium, oil and gas, anddownstream services to support these sectors. The Group will seek to acquire or make investments in either quoted or privatecompanies, partnerships, joint ventures or direct interests in projects. TheBoard would prefer that investments are initially represented by substantialshareholdings in investee companies to maximise the potential of returns toshareholders. However, investment opportunities will be considered on acase-by-case basis and minority interest investments will not be ruled out. Lonrho Africa's new investment strategy was approved at an Extraordinary GeneralMeeting held on 24th February 2006. Whilst the Group has now decided to retainits 59 per cent. shareholding in Hotel Cardoso SARL in Mozambique, it willcontinue to complete the disposal of its remaining industrial property in SouthAfrica. On 24th February 2006, Emma Priestley joined the Board from Ambrian Partners,the investment bank specialising in natural resources, where she worked as acorporate broker and adviser. Emma possesses a wealth of expertise in thenatural resources sector and I have every confidence that her considerableexperience will prove an invaluable asset to management's implementation of theGroup's ongoing growth strategy. On 14 March 2006, Lonrho Africa announced the first investment under its newinvesting strategy. The Group agreed to invest £5 million in Brinkley Mining Plc("Brinkley"), which has significant uranium and molybdenum prospects in theKaroo region of South Africa. Lonrho Africa has subscribed for 25 millionordinary shares at a price of 20 pence per share. This represents a 10 per cent.holding of Brinkley's issued share capital. Brinkley is seeking an admission onAIM during the first half of this year. The pre-IPO funding will assist inconfirming the resource potential of the Karoo assets and lead to a feasibilitystudy for the purposes of commissioning a viable uranium operation. This is the first investment made under my leadership, in line with LonrhoAfrica's new strategy. The Board believes that this investment offersconsiderable upside potential and is illustrative of the exciting opportunitiesavailable to us in Africa. We will continue to seek acquisitions or make investments in either quoted orprivate companies in the natural resources and infrastructure sectors. I am pleased to be taking on the role of Chairman following the conclusion ofthe Annual General Meeting and would like to thank Christopher Mills for all hishard work in the previous seven years as a Director, and latterly as Chairman,of Lonrho Africa. I thank Lonrho Africa's shareholders for their continued support and lookforward to the future with confidence. David LenigasChief Executive29th March 2006 Operating and financial review Lonrho Africa Trade & Finance Limited In February 2005, Castle Acquisitions Plc, an investment company, was formed tofacilitate the demerger of Lonrho Africa Trade & Finance Limited ("LATF"), awholly owned subsidiary of Lonrho Africa Plc. Castle Acquisitions Plc, now theparent company of LATF, was admitted to trading on AIM on 3rd May 2005. LATF operates a defined benefit pension scheme in the United Kingdom ("UKScheme"). The aim of the demerger was to unlock potential shareholder valueinherent within the UK Scheme and to make this potential asset more visible andattractive to prospective purchasers. Castle Acquisitions' primary objective isto acquire either a publicly traded company or a private company with attractivegrowth prospects and a sizeable UK workforce, as a means of introducing newmembers to the pension scheme operated by LATF, subject to the consent of theTrustee, and subsequently attempting to unlock the inherent value of the surplusof the pension scheme for the benefit of Castle Acquisitions' shareholders. On 22nd April 2005 the entire issued share capital of LATF was transferred byLonrho Africa, by means of a Court approved Scheme of Arrangement, to CastleAcquisitions, which allotted shares to qualifying shareholders in Lonrho Africaby way of consideration. At that date, the net assets of LATF were £1.6 million represented by cashbalances. A demerger dividend of £1.6 million is therefore deemed to have beenpaid by the Company which represents the value of the assets demerged. The share capital of the Company was reduced pursuant to a Court approved schemefor the reduction of capital under which the nominal value of each Lonrho Africashare was reduced from 20p to 1p. This resulted in £29.9 million being releasedto the profit and loss account of the Company thereby eliminating the deficit onthe profit and loss account and creating a surplus sufficient for the purposesof the Scheme of Arrangement. Hotels In May 2005 Lonrho Africa completed the disposal of the Group's 100 per cent.interest in Lonrho Hotels Kenya BV ("LHKBV") to a subsidiary of Kingdom HotelsInvestments. The cash consideration receivable on completion amounted, after anadjustment for working capital, to £15.6 million with a further £1 millionreceivable over the next 18 months. This is subject to any adjustment which mayarise in respect of warranty claims. LHKBV was the parent company of Lonrho Hotels Kenya Limited in Kenya, whichowned The Norfolk Hotel, The Mara Safari Club, 75 per cent. of the Mount KenyaSafari Club, and 59.67 per cent. of The Aberdare Country Club and The Ark. Property The sale of the major part of the agricultural land in Kenya was completed on17th June 2005 for a cash consideration of £1 million. Two of the three industrial properties in South Africa were sold during the yearfor R15.25 million (£1.3 million). Asset values In preparing the financial statements the Directors have reviewed the carryingvalues of fixed assets, and have made such adjustments as they considerreasonable and prudent. Results The profit for the year amounted to £2 million (2004: £4 million). An analysisof Group turnover and operating results by division are shown in the notes tothe financial statements. Group Performance The Group's only operation during the financial year under review was Hotels.The hotels in Kenya made an operating profit, up to the date of sale, of £0.9million. This is shown in the financial statements under DiscontinuedOperations. The Hotel Cardoso in Mozambique made an operating loss of £0.2million, of which the Group's share was £0.1 million. The profit on the sale of the hotels in Kenya and two of the industrialproperties in South Africa, less the related disposal costs and the cost of thedemerger of Lonrho Africa Trade & Finance Limited to Castle Acquisitions Plc,amounted to £1.7 million. Financing Cash balances and interest rate risks are managed centrally in the UK. Exposureto currencies other than sterling is covered to eliminate any exchange riskwherever possible. Cash at bank at the end of the year of £20.3 million includes £20.1 million heldin the UK. Dividend In line with previous years, the Directors do not propose to pay a dividend. 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. Annual General Meeting The Annual General Meeting of Lonrho Africa Plc will be held at the Hyde ParkSuite, The Thistle Marble Arch, Bryanston Street, London W1A 4UR at 2.30 p.m. onFriday, 28th April 2006. Consolidated profit and loss accountfor the year ended 30th September 2005 Continuing Discontinued Continuing Discontinued operations operations Total operations operations Total 2005 2005 2005 2004 2004 2004 Note £m £m £m £m £m £m------------------------- ---- -------- -------- -------- -------- -------- -------- TurnoverGroup 1.0 4.8 5.8 1.1 8.8 9.9Joint ventures - - - - 0.2 0.2------------------------- ---- -------- -------- -------- -------- -------- -------- 1.0 4.8 5.8 1.1 9.0 10.1------------------------- ---- -------- -------- -------- -------- -------- -------- Group netoperating costs (1.9) (3.9) (5.8) (2.0) (8.5) (10.5)------------------------- ---- -------- -------- -------- -------- -------- -------- Operating(loss)/profitGroup- before exceptionalitems (0.9) 0.9 - (0.9) 0.3 (0.6)Non-operating exceptionalitems 1 1.7 4.6Net finance income 0.5 -------------------------- ---- -------- -------- -------- -------- -------- -------- Profit before taxation 2.2 4.0Taxation (0.3) (0.3)------------------------- ---- -------- -------- -------- -------- -------- -------- Profit after taxation 1.9 3.7Minority interests 0.1 0.3------------------------- ---- -------- -------- -------- -------- -------- -------- Profit for the year 2.0 4.0Demerger dividend (1.6) -------------------------- ---- -------- -------- -------- -------- -------- -------- Retained profit for theyear 0.4 4.0------------------------- ---- -------- -------- -------- -------- -------- -------- Profit per share 1.3p 2.5p------------------------- ---- -------- -------- -------- -------- -------- -------- Profit/(loss) per sharebefore exceptionalitems 0.2p (0.4)p------------------------- ---- -------- -------- -------- -------- -------- -------- Note: The figures for 2004 have been restated to reflect operations that ceasedduring 2005 as discontinued. Balance sheetsas at 30th September 2005 Group Company 2005 2004 2005 2004 £m £m £m £m------------------------------ ------ ------ ------ ------Fixed assetsTangible 2.6 17.0 - -Investments:Other investments - - 31.5 46.2------------------------------ ------ ------ ------ ------ 2.6 17.0 31.5 46.2------------------------------ ------ ------ ------ ------Current assetsStocks 0.3 1.2 - -Debtors 1.8 3.3 - -Cash at bank 20.3 6.0 - ------------------------------- ------ ------ ------ ------ 22.4 10.5 - -Creditors: amounts falling duewithin one year (0.6) (3.0) (26.0) (38.4)------------------------------ ------ ------ ------ ------Net current assets/ (liabilities) 21.8 7.5 (26.0) (38.4)------------------------------ ------ ------ ------ ------Total assets less currentliabilities 24.4 24.5 5.5 7.8------------------------------ ------ ------ ------ ------Provisions for liabilities andcharges (2.5) (2.5) (2.1) (1.0)------------------------------ ------ ------ ------ ------Net assets 21.9 22.0 3.4 6.8------------------------------ ------ ------ ------ ------Capital and reservesCalled up share capital 1.6 31.5 1.6 31.5Merger reserve 96.1 96.1 - -Revaluation reserve 0.8 7.4 - -Profit and loss account (77.7) (115.6) 1.8 (24.7)------------------------------ ------ ------ ------ ------Shareholders' funds (equity) 20.8 19.4 3.4 6.8Minority interests (equity) 1.1 2.6 - ------------------------------- ------ ------ ------ ------ 21.9 22.0 3.4 6.8------------------------------ ------ ------ ------ ------ These financial statements were approved by the Board of Directors on 29th March2006 and signed on its behalf by: C H B Mills Consolidated cash flow statementfor the year ended 30th September 2005 2005 2004 £m £m------------------------------------------------ -------- -------- Net cash flow from operating activities- continuing operations (0.8) (0.7)- discontinued operations 3.1 (0.2)------------------------------------------------ -------- -------- 2.3 (0.9)Returns on investments and servicing of financeInterest- received 0.5 -- paid - (0.2)------------------------------------------------ -------- -------- Net cash inflow/(outflow) after returns oninvestments and servicing of finance 2.8 (1.1)------------------------------------------------ -------- -------- Tax paidOverseas (0.6) (0.1)------------------------------------------------ -------- -------- Net cash inflow/(outflow) before investingactivities and financing 2.2 (1.2)Purchase of tangible fixed assets (0.1) (0.2)Net proceeds from disposal of subsidiaries 13.7 10.8Demerger dividend (1.6) ------------------------------------------------- -------- -------- Increase in cash in the year 14.2 9.4------------------------------------------------ -------- -------- Statement of total recognised gains and lossesfor the year ended 30th September 2005 Group 2005 2004 £m £m------------------------------------------------ -------- -------- Profit for the year 2.0 4.0Decrease arising on revaluation of assets (0.1) -Exchange adjustments to net investments in overseas companies 1.1 (3.0)------------------------------------------------ -------- -------- Total recognised gains relating to the year 3.0 1.0------------------------------------------------ -------- -------- Total recognised gains since last annual report 3.0 1.0------------------------------------------------ -------- -------- Reconciliation of movements in shareholders' fundsfor the year ended 30th September 2005 Group 2005 2004 £m £m------------------------------------------------ -------- -------- Recognised gains relating to the year 3.0 1.0Demerger dividend (1.6) ------------------------------------------------- -------- -------- Net increase in shareholders' funds in the year 1.4 1.0At beginning of year 19.4 18.4------------------------------------------------ -------- -------- At end of year 20.8 19.4------------------------------------------------ -------- -------- Note of historical cost profits and lossesfor the year ended 30th September 2005 Group 2005 2004 £m £m------------------------------------------------ -------- -------- Reported profit before taxation 2.2 4.0Difference between historical cost depreciationcharge and the actual depreciation charge calculated on the revalued amount 0.1 0.1Realisation of property revaluation gains - 0.2------------------------------------------------ -------- -------- Historical cost profit before taxation 2.3 4.3------------------------------------------------ -------- -------- Historical cost profit after taxationand minority interests 2.1 4.3------------------------------------------------ -------- -------- Notes to the financial statements 1. Non-operating exceptional items 2005 2004 £m £m------------------------------------------------ -------- -------- Profit on disposal of subsidiaries:Hotels 2.7 1.3Agribusiness - 3.7Profit on sale of properties 0.5 -Profit on disposal of joint venture - 0.1Charge for disposal and closure costs (1.0) (0.3)Demerger costs (0.5) -Exchange gains on discontinued activities - 0.3Recoverable surplus in the pension scheme written off - (0.5)------------------------------------------------ -------- -------- 1.7 4.6------------------------------------------------ -------- -------- Non-operating exceptional items analysed by division are as follows:Hotels 2.7 1.3Agribusiness - 3.7 Properties 0.5 -Central (1.5) (0.4)------------------------------------------------ -------- -------- 1.7 4.6------------------------------------------------ -------- -------- Profits 3.2 5.4Losses (1.5) (0.8)------------------------------------------------ -------- -------- 1.7 4.6------------------------------------------------ -------- -------- Statutory information The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 30 September 2004 or 2005 but is derivedfrom those accounts. Statutory accounts for 2004 have been delivered to theregistrar of companies, and those for 2005 will be delivered following theCompany's Annual General Meeting. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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