Q4 Trading Update

2nd November 2010 

These results (and comparative figures included therein) do not form audited accounts nor have they been extracted from audited accounts. The results disclosed in this trading update may potentially be subject to adjustments during the year-end audit in respect of goodwill valuations and other minor items. The comparative figures used are year on year due to the influence of seasonality within the different businesses in the group.

LONRHO PLC

("Lonrho" or the "Company" or the "Group")

Lonrho reports strong growth with £33.6m turnover and a £2.9m profit for the 4th Quarter

Lonrho Plc (AIM:LONR) today announces its unaudited results for the fourth quarter and the full year to 30 September 2010. The year has seen strong growth in the existing business and Lonrho make several complementary strategic acquisitions to further develop its core divisions. During the final quarter of the financial year, the Company has generated £33.6m of turnover and a profit before tax of £2.9m.

On 8 October the Company announced both the launch and completion of a US$60m Convertible Bond offering, with a US$10m overallotment. The bond issue was significantly oversubscribed and the US$70m bond was approved at a shareholder meeting on the 29th October 2010. The primary use of the proceeds will be to restructure existing expensive debt and provide capital for the fish and agricultural division to maximise current opportunities.

Financial highlights for the quarter and year include:

·; Group turnover from continuing operations in the quarter, at £33.6m, has increased 13% ahead of the same quarter in the prior year.

·; Full year, turnover has increased by 20% to £107.7m.

·; In the final quarter of 2010 the Group has achieved EBITDA of £5.1m. This brings the full year figure to £9.4m, a £7.2m increase on 2009.

·; Profit before tax for the quarter was £2.9m, compared to a £0.6m loss in the final quarter of the previous financial year.

·; Full year profit before tax stands at £0.5m, compared with a loss of £4.5m for the financial year to 30th September 2009.

·; Net Assets at the year end stood at £100.3m, compared with £101.9m as at 30th June 2010.

·; Cash balances in the Group at year end were £7.7m.

·; Company market capitalisation was £128.9m at 30th September 2010. By 1st November 2010 this had risen to over £200m.

Operational highlights for the quarter include:

·; Following an eight month in store trial, Oceanfresh, the Lonrho Agricultural division fish distributor has commenced sales of Oceanfresh branded wild caught, sustainably sourced, frozen hake fillets into the major US retailer Costco. The initial range being supplied to Costco has already grown with the addition of Oceanfresh Magic Kiddies Fish Fingers and four other lines to be delivered into the Costco range shortly. Oceanfresh is implementing a roll out plan with Costco to enter all the stores which Costco operates throughout the US and UK.

·; During the quarter, Lonrho completed the purchase of the remaining 49% of Fresh Direct. The business has volume production agreements on 200 hectares of commercial farmland and as a result of agreed planting programmes, the Lonrho Agriculture division has installed irrigation equipment and planted over 120,000 fruit trees during the year. These will be delivering volume commercial crops during the coming financial year and have already started yielding fruit for Tesco, Sainsbury's and Waitrose in the UK.

·; A contract from Xstrata Mining for Lonrho to establish a community based commercial farming and agri-processing project site is a template project that has significant future potential. Directly aligned with President Zuma's Comprehensive Rural Development Programme (CRDP) the project, funded by Xstrata, will develop community based viable standard farms that act as cooperatives and through the existing Lonrho agri-logistics cold chain have access to both domestic and international commercial markets.

·; Tenaris, a world leading supplier of pipes, tubular products and related services, has become a large client at Luba Freeport during the quarter. The arrival of Tenaris, plus that of Noble Energy and Dickerman, re-enforces Luba's position as the premier oil services port in the region and will continue to drive growth for 2011.

·; Lonrho has strengthened management during the quarter with the appointment of Kiran Morzaria as a non-executive director on the Board of Lonrho, Ewan Cameron as CEO of the Lonrho Hotel division and Roger Stringer as Commercial Director at Kwikbuild.

Divisional Highlights:

Agribusiness

The integration and growth of Oceanfresh, the Lonrho fish distributer, has worked well having strong synergies with the existing Lonrho cold store and processing capabilities. The increasing demand for wild caught, sustainably sourced fish from Southern Africa is a strong growth opportunity.

·; Agribusiness divisional turnover for the quarter increased 28% to £17.7m bringing turnover for the full year to £55.3m, an increase of 19%.

·; A contract from Xstrata Mining for Lonrho to establish a community based commercial farming and agri-processing project site is a template project that has significant future potential. The project is directly aligned with President Zuma's Comprehensive Rural Development Programme (CRDP) and the Government Rural Development and Land Reform plans. The project, funded by Xstrata as part of their Social and Labour Plan will develop community based viable standard farms that act as cooperatives and through the existing Lonrho agri-logistics cold chain have access to both domestic and international commercial markets.

·; Export freight tonnages of fruit and vegetables by Rollex during the quarter rose by 27% compared to the same quarter in the prior year to nearly 4,800 tonnes, an increase of 29% on the previous quarter. This was partially offset by lower domestic volumes within South Africa and reduced volumes of general cargo travelling northbound from Johannesburg. The exceptional strength of the Rand (13% stronger year on year) also impacted on reported sterling figures which fell by 5.9%,

·; As mandated at the start of the year, Rollex has concentrated on improving margins by increasing processing efficiencies, rationalising costs where possible and negotiating better terms from customers. The success in this strategy can be measured in the gross margin which for the quarter stands at 15.4%, compared to 13.0% in the prior year.

·; During the quarter, Oceanfresh Seafoods (51% holding) has commenced delivery of product to Costco in the US. After an initial eight month evaluation period, Oceanfresh is now supplying Costco with Hake fillets throughout the Los Angeles, San Diego and Texas regions with a phased rollout starting in the Chicago and the Northwest regions and building to all stores by mid 2011.

·; Following on from the success of the Hake fillet product, Costco has now agreed to add two further lines commencing delivery by early 2011 including Oceanfresh Kiddies Magic Fish Fingers before Christmas and the Oceanfresh Hake Light launching in the 1st week of January 2011. Costco has now approved six separate Oceanfresh lines.

·; As well as success in export markets, Oceanfresh has been thriving in the domestic South African market. Checkers have recently awarded Oceanfresh the title of 'supplier of the year' and added a further 2 new Oceanfresh deli items to their buying list. Shoprite has become a new customer for Oceanfresh joining the other South African retail chains.

·; On 28 August, Lonrho completed the acquisition of the remaining 49% minority interest in Fresh Direct. The consideration was settled by the issue of 78,221,479 new ordinary shares at a price of 10.98p, a total purchase price of £8.58m.

·; Lonrho Agricultural division has now installed irrigation facilities on 200 hectares of farmland and has, to date, planted 122 hectares with 120,000 fruit trees and more than 10,000 blueberry bushes. The remaining 78 hectares are due to be planted in the coming financial year taking the total number of plants to over 200,000. The first crop has begun harvesting with peaches being sent to Tesco, Sainsbury's and Waitrose in the UK.

·; During the quarter, Trak-Auto (100% holding) has started to supply highly competitively priced John Deere tractors manufactured in their Indian factory to the Mozambique market. Trak-Auto is seeing strong growth in the local market and increasing margins. On the back of the continued success of selling John Deere units, Trak-Auto has generated growth in its parts and servicing business, adding a strong continuing turnover stream in spares and service.

Transport

The transport division has seen another strong quarter with load factors increasing 19% on the prior year. The division is well placed for growth in the coming financial year with the launch of the Angola and Ghana hubs completing the core pan-African network.

·; Fourth quarter turnover in the transport division was £6.7m, taking the full year figure to £21.3m. After adjusting the prior year for £2.6m of exceptional revenue from the sale of aircraft, this equates to an annual increase of 14%.

·; Fly540 Angola, after a long drawn out bureaucratic process, is ready to commence commercial operations. The operations have undergone an extensive ICAO audit and Fly540 Angola will be the only private sector airline in Angola that is ICAO registered. The Angolan regional and domestic market remains significantly under serviced and the demand for Fly540 Angola is evident at all levels.

·; Fly540 Uganda (100% holding) during the quarter signed an agreement with Chapman Freeborn, the world leading air charter service company. This joint venture will help to expand the capabilities of Fly540 Uganda and add further clients to the Fly540 Group through the association with Chapman Freeborn.

·; Fly540 Kenya (49% holding + board control) has commenced flying the Nairobi to Dar es Salaam route during the quarter. The route has helped to increase passenger numbers on the airline and increased profitability. Additionally, the airline will begin servicing coastal routes to Ukunda and Diani in November of 2010 to give Fly540 an even more comprehensive portfolio of routes.

·; The Fly540 group has signed operating lease agreements for 2 additional CRJ regional jet aircraft which will be added to the fleet in Kenya and Tanzania (90% holding). The additional capacity that these aircraft add will allow the group to increase passenger numbers and profitability in 2011.

Infrastructure

Luba Freeport and Kwikbuild have finished the year with very strong performance significantly increasing turnover in comparison to Q4 2009. The Infrastructure divisional turnover has increased 49% from the same quarter last year, with new clients at Luba and projects with the Department of Health and Western Cape Department for Education at Kwikbuild helping to fuel the growth.

·; For the final quarter of 2010, Luba Freeport recorded turnover of £2.7m, a 39% increase compared to the same quarter in the prior year. The continuing growth in quality of services provided by the port has meant that annual turnover has grown to £11.0m, up from £8.0m in the prior year.

·; During the quarter, Luba Freeport (63% holding) has added 2 further clients to an already strong client list, Tenaris and Dickerman.

·; Tenaris is a world leading supplier of pipes, tubular products and related services for the world's energy industry and will provide products and services to the oil companies operating from Luba Freeport and in the Gulf of Guinea from their new logistics facility at Luba.

·; The fourth quarter has also seen Dickerman added to the service providers at Luba. Dickerman has been one of the world leaders in surface preparation and coating activities both offshore and onshore for 30 years. Their move to Luba further extends the servicing capability of the port and further advances the objective for Luba to be the one stop shop for all oil companies in the region.

·; Kwikbuild has added £0.7m to turnover in the final quarter compared to £0.3m in the prior year, a £0.4m increase. Annual turnover of £3m is more than twice the £1.3m achieved in 2009, with a strong order book entering the new year.

·; During the quarter, e-Kwikbuild (51% holding) has delivered a medical laboratory in Kwa Zulu Natal for the Department of Health. The Laboratory has been well received to the extent that Kwikbuild has since received an order for a Tuberculosis testing laboratory in Somerset West. This is a pilot unit for the national rollout of these Laboratories. The programme is part of a drive to try and stem the expansion of TB and to treat the 10 million sufferers of the disease in South Africa.

Hotels

The hotel division has had a steady quarter. The Hotel Cardoso continues to perform well in the Maputo marketplace with the Grand Karavia business building month on month since the formal opening by President Kabila.

·; The hotel division, driven by the continued strong performance of the Cardoso and the opening of the Grand Karavia, has increased quarterly turnover to £2.1m from £1.3m in the prior year, a 68% increase. In the twelve months to September 2010 the total turnover generated in the hotels division stood at £5.9m, 71% higher than the £3.4m in 2009.

·; During the quarter, given the growth opportunities for the division, a new CEO for Lonrho Hotels has been recruited to the team. Ewan Cameron, who joins having worked with some of the world's strongest hotel brands, (InterContinental, Holiday Inn, LeMeridian, Grosvenor House and Crowne Plaza) will manage the growth of the Lonrho hotels division as the portfolio of properties increases through a combination of new acquisitions, redevelopments and further management contracts.

·; The Cardoso hotel (59% holding + Management Contract) continues to deliver strong performance. Both occupancy and room rates have been impressive in the final quarter of the year. Occupancy continues to remain around 80% with room rates having increased 24% on the prior year.

·; Food and beverage sales at the Cardoso have also been strong. With the new Fiamma restaurant and conference centre, the hotel has been able to tap into the conference market in Maputo and prove its ability to hold exceptional events.

·; The Grand Karavia hotel (50% holding + Management Contract) is now fully operational. During the quarter the hotel has hosted a number of large functions which have helped to prove the hotels capability to hold such events and also helped to raise the profile of the hotel amongst businesses in the area. The mining sector in Lubumbashi is seeing a resurgence of confidence driven by Freeport McMorran, the single largest project, settling the terms of its mining licence in October.

·; The Leopard Rock hotel (Management Contract) has continued to attract conferences, tourists and golfers to the superb resort and golf course. Having completed the refurbishment program, the resort is seeing growing occupancy levels. The resort is in the process of organising a Pro-Am event which will attract some of the top South African PGA professionals to be held early in 2011.

Support Services

Thanks to project wins for Bytes & Pieces at Riversdale and Tribunal Adminstrativo, as well as the continued growth of IndIT and the CES businesses, the support services division has recorded its strongest quarter to date.

·; The support services division has in the final quarter of 2010 achieved a record turnover figure of £3.6m. This result is 27% higher than the same quarter in the prior year, with annual turnover increasing 22% in the division to £11.1m.

·; Bytes & Pieces, Mozambique's largest IT services company, saw fourth quarter turnover increase 43% on the same quarter in the prior year, recording its best ever quarterly turnover thanks to large project wins.

·; Bytes & Pieces (65% holding) have won the tender to implement the IT infrastructure for Riversdale Mozambique (a coal mining operation in Tete, Mozambique). The solution involved implementation of a turnkey solution over three sites, supplying, installing and configuring of the Riversdale servers, storage and workstations. Bytes & Pieces also won the Managed Services contract for Riversdale IT and continues to provide ongoing support and service. This contract is worth US$120,000 to Bytes & Pieces per annum..

·; Tribunal Adminstrativo, the organization which handles contracts for the Government of Mozambique has awarded Bytes & Pieces the contract for the installation of their Wide Area Network (WAN). The project involves designing and implementing the IT network infrastructure, WAN optimization and post-installation services. This contract is valued at US$600,000.

·; CES Zambia (50% holding) have achieved sales 20% ahead of budget in the year. Having started trading in the current financial year, the business has managed to build a significant blue chip customer base and achieved sales in excess of US$1.2m.

·; During the quarter, IndIT (45% holding + board control) has seen strong sales progress in sales of Cyberoam products. IndIT is the sole distributor of Cyberoam, a comprehensive network security product, in South Africa, and has additionally held certification training for re-sellers.

·; IndIT has successfully launched its new website. Including regularly updated downloadable guides and product data it has lead to increased contact with customers resulting in increased sales.

Outlook

Lonrho has reached an important point in its development. Having moved into profitability for the financial year and following on from its successful bond issue, the Company is in a position of strength entering the new financial year to deliver further growth. The opportunities now being implemented by Oceanfresh in the US and the imminent launch of Fly540 Angola and Ghana, the recent opening of new hotels, new clients arriving at Luba and the continued growth of the African economy mean the Group is well positioned to deliver substantial growth.

David Lenigas, Lonrho's Executive Chairman commented:

"The solid foundations of the business are in place and performing well and Lonrho is now seeing profits emanating from its investments. The beneficial financial results from the capital expenditure into our core divisions are becoming more and more evident.

This will be a continuing trend as further investment that has been made during the past year comes online and contributes to results. The capital expenditure programmes at Fly540 Angola, John Deere Angola, the Karavia hotel, Luba Freeport and Lonrho Agriculture are practically complete and these businesses will be delivering additional growth for Lonrho during the coming financial year.

Management teams have been strengthened to support the forecasted growth in the coming twelve months and the Company remains focused on its five core divisions : agriculture, infrastructure, transport, hotels and support services and continues to operate in seventeen countries thus de-risking the Company's operations geographically.

Lonrho is one of the first UK mid-caps to successfully place a convertible bond (US$ 70m) since the financial crisis. The demand for the bond from existing stakeholders and other institutional investors emphasises the growing confidence in the Lonrho business as well as in Africa as an emerging market."

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