Trading Update for the Quarter Ended 31 March 2010

RNS Number : 2215L

Lonrho PLC

04 May 2010

 

4th May 2010

 

These results (and comparative figures included therein) do not form audited accounts nor have 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")

Trading Update for the Quarter Ended 31 March 2010

 

 

"Lonrho reports strong year on year growth of 25.4% and positive EBITDA of £4.0m for second quarter"

 

Lonrho Plc (AIM:LONR) today announces its unaudited second quarter trading results for the three months to 31 March 2010. The Company has performed on target and delivered strong growth across all of its divisions.

 

Highlights for the second quarter include:

 

·; Turnover from operations for the quarter increased 25.4% on a reported basis and 25.2% on a comparable currency basis to reach £24.5m. Growth of the turnover in the second quarter has been driven by consistent organic growth from existing operations.

 

·; Turnover from operations for the first six months to 31 March 2010 increased 13.9% compared to the same period in the previous year and 23.5% on a comparable currency basis to reach £47.3m.

 

·; EBITDA in the second quarter was a profit of £4.0m, compared with a loss of £2.7m in the same quarter in the prior year, reflecting both the improvement of gross margins and increased turnover across the businesses.

 

·; EBITDA for the year to date was a profit of £2.8m, compared with a profit of £1.9m in the same period in the prior year.

 

·; Profit before tax for the quarter ended 31 March 2010 was £1.8m compared to £2.2m in the previous year. For the six months ended 31 March 2010 the Company reported a loss before tax of £1.5m compared to a profit of £0.6m for the same period last year. However, after eliminating exceptional gains in the prior year of £2.3m (in respect of the closure of SAILS) and a difference in exchange movements of £0.6m, trading profits showed an improvement of £0.8m.

 

·; Net assets at the end of the period stood at £101.3m.

 

·; The Company held cash balances of £17.1m at 31 March 2010.

 

·; The Company's share price has risen 55.5% between 1st October 2009, the beginning of the financial year, and 31 March 2010.

 

 

 

Operational Highlights

 

The second quarter has seen continued performance and delivery in the Group's core businesses. The Group's core markets are continuing to expand and grow across the Continent and during April significant new projects previously under development have reached fruition, namely :

 

·; The Karavia Hotel received its first commercial guests. The Hotel is to be formally inaugurated by the Government of the Democratic Republic of the Congo as part of the 50th Anniversary Independence celebrations on June 5th.

 

·; Fly540 delivered its first aircraft to Angola. Commercial operations will commence in May.

 

·; John Deere Angola received its first substantial order in March 2010.

 

These new businesses commencing operations will help to drive the Company forward and deliver its targets for growth and development.

 

All five divisions (Infrastructure, Agribusiness, Regional Transportation, Support Services and Hotels) have shown strong turnover growth in their operations ranging between 16% in Agribusiness to 108% in the Hotel division and averaging 25% across the Group.

 

Agribusiness

·; Rollex SA (Pty) Limited (51% holding) remains the central platform within Lonrho's Agribusiness division. Second quarter sales increased 16% compared to the same period in the previous year and 15% on a comparable currency basis.

·; The second quarter has seen a steady increase in air freighted goods rising by 10% per month between the beginning and end of the quarter. Turnover has improved steadily over the quarter in line with the increase in air freighted goods.

·; Rollex has successfully increased volumes of fish exports from Namibia to Europe by 12.6% against the same period in the previous year. The general cargo division which exports dry goods by both air and sea globally has reported an increase in volumes of 56.7% against the same period last year.

·; Lonagro (John Deere Angola - 51% holding) received its first substantial order at the end of March for delivery in April 2010. The construction of the new showroom, maintenance facility, training centre and stores at Katete is progressing well and is due for completion by the end of June 2010.

·; On 18 February the Company announced the acquisition of a 100% stake in Trak Auto Lda which owns the exclusive dealerships for John Deere and Komatsu in Mozambique. The acquisition was completed on 8 April 2010. With pre-acquisition turnover of approximately US$10m per annum and gross profits of US$1.4m, Lonrho is looking to build revenues and profits substantially over the coming years in the strongly expanding Mozambique market.

 

Infrastructure : Luba Freeport

·; Revenue for the quarter at Luba Freeport (63% holding) has increased by 44% against the previous year. This encouraging increase is stimulated by existing tenants and the arrival of new tenants including Noble Energy, whose facility was completed as scheduled in January.

·; The Company strategy of improving margins has been successful and resulted in gross margins this quarter at Luba Freeport increasing by 8% compared to the previous year.

·; The number of liner and tanker calls to Luba Freeport has seen a significant increase compared to the previous year and the second quarter saw the largest number of vessel calls in the port's history. This is due to the demand for materials and supplies required to support new drilling programmes that have been initiated by Amerada Hess, ExxonMobil and Noble Energy.

·; New tenants in the process of moving to Luba before the end of the year include Tenaris, a major pipe casing supplier, and Asia Malabo, a ship chandler, further adding to the range of services provided by the port to the oil industry in the Gulf of Guinea.

 

Infrastructure : Kwikbuild

 

·; Turnover at e-Kwikbuild increased 71% in the quarter from the same period in the previous year and 31% on a comparable currency basis.

 

·; e-Kwikbuild has strengthened the management team by the appointment of two highly experienced business development managers, one covering the export market and the other covering the local market in South Africa. These additions will ensure improved service levels to the existing client base and develop new market opportunities for growth.

 

·; Requests for quotes and tenders have increased sevenfold compared to the same period last year. e-Kwikbuild is a preferred supplier on a number of South African Government tenders which are expected to be awarded in the final half of the current year.

 

Hotels

 

 

·; Hotel Cardoso in Mozambique (59% holding + Management Contract) delivered occupancy levels for the quarter of 74.3%. Occupancy in same period last year was 77.7% during the refurbishment of the hotel. There are 24% more rooms available now than last year. Occupancy rates peaked in March at 86% compared with 83% in the previous year. Average room rates for the month of March improved to US$120 per night compared with a room rate of US$83 per night in March 2009. Average room rates for the 6 months to 31 March 2010 have increased to US$109 per night compared to US$80 for the same period last year.

 

·; Turnover at the Cardoso increased 81% on the same period in prior year and 63% on a comparable currency basis

 

·; Hotel Grand Karavia in Lubumbashi, DRC (50% holding + Management Contract) has completed its US$20m refurbishment programme and the first commercial guests stayed in April. The hotel is scheduled to be fully operational in May 2010 providing 216 rooms and suites of the only international standard accommodation in Lubumbashi, the centre of the burgeoning copperbelt of the DRC.

 

·; Lonrho Hotels' central reservations system now provides the ability for guests to reserve rooms online.

 

 

Transport

 

·; Lonrho Aviation saw turnover increase by 22% compared to the same quarter last year and 24% on a comparable currency basis.

·; Fly540 Angola took delivery of its first aircraft on 29th April 2010. Commercial operations will commence in May 2010 with the network coverage increasing as further aircraft arrive.

·; Ghana, the planned third Fly540 hub, is also gearing up to launch operations mid 2010. Local infrastructure is complete, staff has been recruited and training is ongoing.

·; Fly 540 Kenya has taken delivery of its first CRJ regional jet which will be used for longer distance regional routes not suitable for turboprops of more than 1.5 hours complementing the existing fleet of turboprop aircraft. The introduction of the jet to the fleet is an important step in the expansion of the airline and the delivery of the connectivity between the three Fly540 hubs (Kenya, Angola, and Ghana) to deliver a pan-African integrated operation.

·; Fly 540 Kenya started flights to Burundi in the second quarter.

 

Support Services

 

·; Bytes & Pieces (65% holding) has seen revenues grow this quarter by 10% when compared with the same period last year and 32% on a comparable currency basis.

·; During the quarter Bytes & Pieces successfully completed full IT infrastructure implementation for Riversdale Mining Limited and Global Alliance insurance company. Bytes & Pieces is installing Avaya VoIP for an additional two branches for FNB bank in Mozambique. Bytes & Pieces has also signed seven Microsoft Enterprise agreements in the quarter with companies in Mozambique. It is this solid client base and expanding product range that allows Bytes & Pieces to continue its steady growth.

 

·; Lonrho IT (CES Zambia - 50% holding + Board Control) continues to exceed expectations and remains on track to achieve US$1m turnover in the first 12 months of operation. The list of clients continues to grow with the addition of International Commercial Bank, Zambian Breweries, KPMG and PWC. The company is now a registered supplier to several international banks within Zambia and is involved in tender processes for contracts totaling US$1.6m spread across a number of sectors.

 

·; Lonrho IT (CES - 50% holding + Board Control) continues to grow its operations. CES has been awarded a contract for Avaya VoIP installation for African Banking Corporation's head office in Botswana and is presently installing the network infrastructure for Cross Border Road Transport Agency in Johannesburg.

 

·; Lonrho IT (IndIT - 50% holding + Board Control) is supplying Nexans cable for the new Vodacom head office in Maputo, Mozambique. Indit has also been awarded distribution rights for South Africa by Cyberoam for their Unified Threat Management Firewalls.

 

·; Lonrho Projects SA Pty (70% holding) has commenced its first projects in the second quarter and produced its first revenue. Revenue is expected to be in line with first year targets and the groundwork undertaken during the past year can be seen to be delivering real progress.

 

·; Lonrho Water continues to develop its bottled water projects in Mozambique, DRC and Angola. The new water purification solutions division is tendering for sizeable municipal contracts and attracting significant interest in the new Lonrho bespoke containerised potable water plants.

 

LonZim Plc

 

·; Lonrho has a 24.61% shareholding in LonZim (AIM:LZM).

·; On 26 January 2010, LonZim announced its results for the year ended 31 August 2009, reporting a turnover of £2.6m and profit after tax of £0.9m.

 

Lonrho Mining Limited

 

·; Lonrho has a 15.04% shareholding in Lonrho Mining (ASX:LOM).

·; Following a successful rights issue in December 2009 Lonrho Mining has implemented its 2010 exploration programme in the company's highly prospective Lulo diamond concession in Angola. The programme will define and sample 40 of the 217 kimberlite pipes highlighted by the radiometric survey carried out by the company in 2008

·; The proposed exploration programme is expected to identify significant primary (kimberlitic) and secondary (alluvial) diamond deposits during the current calendar year. Lonrho Mining anticipates being in a position to take full advantage of the increase in diamond prices predicted for 2012 and beyond.

Audited results and Annual General Meeting

 

During the quarter the Company released its audited accounts for the year ended 30 September 2009 showing turnover of £90.9m and a loss before tax of £4.5m which was exactly in line with the fourth quarter trading update issued in November 2009.

 

The Company held its Annual General Meeting on 31 March 2010 at which all resolutions put to shareholders were duly passed.

 

 

Current Trading and Future Outlook

 

Each of the Company's businesses continued to perform to expectations during the first half of the year and grew their core operations whilst achieving the strategic objective to improve margins.

 

The second half of 2010 will see new operations adding to turnover and profitability for the Group: the Karavia Hotel in Lubumbashi, 540 Angola and Ghana and Lonrho Agribusiness incorporating the John Deere and Komatsu operations in Mozambique through the acquisition of Trak Auto Lda.

 

It is intended that the next quarterly update for the Company will be released in July 2010.

 

 

David Lenigas, Lonrho's Executive Chairman commented:

 

"The 25% increase in revenue delivered this quarter demonstrates that Lonrho is on track to meet its ambitious growth and margin targets for the year. This success emanates from careful planning, a focus on quality operations, reliability and the professional standards set by the Lonrho management teams.

 

Lonrho has £17.1m in cash and has solid, performing businesses in strategic sectors which are well positioned to benefit from, and help deliver, the emerging economies in Africa. We continue to see the provision of services to the oil, agriculture and mineral industries as the core economic drivers for emerging Africa. Lonrho's operations remain aligned with the countries growing with the boom in these sectors.

 

I am particularly excited about the expansion of Fly 540, the opening of the Hotel Karavia in Lubumbashi and the John Deere distributorships for Angola and Mozambique. Each is a commercial milestone in the development of the Company. These new operations complement our existing businesses and will further enhance Lonrho's reputation for delivery in our specific market sectors."

 

 

LONRHO GROUP

GROUP TURNOVER

1 JANUARY to 31 MARCH 2010

£'000s

	TURNOVER on a reported basis
	3 months to 31 March 2010	3 months to 31 March 2009	Variance	Var %
Agribusiness
Rollex	12,386	10,670	1,716	16.1%
Transport
540 Group	4,641	3,807	834	21.9%
Support Services
Bytes & Pieces	1,802	1,642	160	9.7%
Other	655	298	357	119.8%
Infrastructure
Luba Freeport	2,960	2,052	908	44.2%
e-Kwikbuild	814	476	338	71.0%
Hotels
Hotel Cardoso	1,110	612	498	81.4%
Other	162	0	162	N/A
Continuing operations	24,530	19,557	4,973	25.4%
Shipping -Discontinued	0	0	0	N/A
Total Turnover	24,530	19,557	4,973	25.4%

 

 

	TURNOVER in comparable currency
	3 months to 31 March 2010	3 months to 31 March 2009	Variance	Var %
Agribusiness
Rollex	12,386	10,800	1,586	14.7%
Transport
540 Group	4,641	3,728	913	24.5%
Support Services
Bytes & Pieces	1,802	1,370	432	31.5%
Other	655	579	76	13.1%
Infrastructure
Luba Freeport	2,960	1,984	976	49.2%
e-Kwikbuild	814	622	192	30.9%
Hotels
Hotel Cardoso	1,110	511	599	117.2%
Other	162	0	162	N/A
Continuing operations	24,530	19,594	4,936	25.2%
Shipping -Discontinued	0	0	0	N/A
Total Turnover	24,530	19,594	4,936	25.2%

 

 

 

 

LONRHO GROUP

GROUP TURNOVER

SIX MONTHS to 31 MARCH 2010

£'000s

	TURNOVER on a reported basis
	6 months to 31 March 2010	6 months to 31 March 2009	Variance	Var %
Agribusiness
Rollex	23,897	22,859	1,038	4.5%
Transport
540 Group	9,818	8,013	1,805	22.5%
Support Services
Bytes & Pieces	3,374	3,567	(193)	(5.4%)
Other	1,459	736	723	98.2%
Infrastructure
Luba Freeport	4,984	4,163	821	19.7%
e-Kwikbuild	1,388	853	535	62.7%
Hotels
Hotel Cardoso	2,080	1,312	768	58.5%
Other	281	0	281	N/A
Continuing operations	47,281	41,503	5,778	13.9%
Shipping -Discontinued	0	1,187	-1,187	-100%
Total Turnover	47,281	42,690	4,591	10.8%

 

 

	TURNOVER in comparable currency
	6 months to 31 March 2010	6 months to 31 March 2009	Variance	Var %
Agribusiness
Rollex	23,897	20,924	2,973	14.2%
Transport
540 Group	9,818	7,406	2,412	32.6%
Support Services
Bytes & Pieces	3,374	2,873	501	17.4%
Other	1,459	1,145	314	27.4%
Infrastructure
Luba Freeport	4,984	3,850	1,134	29.5%
e-Kwikbuild	1,388	1,035	353	34.1%
Hotels
Hotel Cardoso	2,080	1,057	1,023	96.8%
Other	281	0	281	N/A
Continuing operations	47,281	38,290	8,991	23.5%
Shipping -Discontinued	0	1,187	-1,187	-100%
Total Turnover	47,281	39,477	7,804	19.8%

 

 

 

 

Enquiries

 

Lonrho Plc
David Lenigas, Executive Chairman	+44 (0)20 7016 5105
Geoffrey White, Chief Executive Officer	+44 (0)20 7016 5105
David Armstrong, Finance Director	+44 (0)20 7016 5105
Pelham Bell Pottinger
Charles Vivian	+44 (0) 20 7337 1538
	+44 (0) 7977 297903
James MacFarlane	+44 (0) 20 7337 1527
	+44 (0) 7841 672831
Klara Kaczmarek	+44 (0) 207337 1524
	+44 (0) 7912 539 973
Beaumont Cornish Limited (Nomad)
Rosalind Hill Abrahams	+44 (0) 20 7628 3396
Roland Cornish	+44 (0) 20 7628 3396

 

 

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