27th Jul 2009 07:00
27th July 2009
LONRHO PLC
("Lonrho" or the "Company")
Trading Update for the Quarter Ended 30 June 2009
"Lonrho Reports 16% Increase In Like-for-like Turnover For The Quarter And Strong Continued Growth In Its Core Activities
Lonrho PLC (AIM: LONR) today announces its unaudited trading update for the third quarter ended 30 June 2009 ("Third Quarter").
These results (and comparative figures included therein) do not form audited accounts nor have been extracted from audited accounts. The comparative figures used are year on year due to the influence of seasonality within the different businesses in the group.
Third Quarter Results
The third quarter of 2008/09 has seen continued growth in the Group's core businesses, despite depressed global markets. The Company's strategy of operating in five key industrial sectors inextricably linked to the growth of Africa (Transportation, Infrastructure, Agriculture, Support Services and Hotels) with operations in seventeen countries across Africa is demonstrably successful and mitigates commercial risk.
These businesses are proving their commercial viability and are well positioned for further expansion across the Continent.
Highlights for the quarter include:
Third Quarter turnover of continuing operations was £18.5m. This represents a significant increase of 226% on a reported basis, and 16% increase on a like for like basis against the prior year. The third quarter is traditionally the Company's slowest in trading terms due to seasonal effects.
Year to date turnover for the first nine months was £60.0m, this is an increase of 257% on a reported basis against the previous year and 44% increase on a like for like basis.
Net assets decreased to £82.6m from £86.1m at 31 March 2009.
The Company has recognised foreign exchange gains of £6.1m in respect of the half year to 31 March 2009. As at 30 June 2009 the Company had unrecognised foreign exchange losses of £3.1m.
Loss before tax for the first nine months on a reported basis was a loss of £3.9m compared to a loss of £15.9m in the previous year.
EBITDA in the Third Quarter was a loss of £2.4m, compared to a loss of £8.8m in the prior year on a reported basis.
Sterling has been subject to significant currency fluctuation against the US Dollar and the South African Rand during the current quarter. Sterling and the South African Rand strengthened by 14.9% and 18.8% respectively against the US dollar. Lonrho's turnover is predominantly reported in US Dollars and thus these currency movements have had a negative impact on the Sterling results.
Operational Highlights
Agribusiness
Rollex SA (51% holding), continues to be the central platform within Lonrho Agriculture's logistical division and like for like third quarter sales were up 10% year on year. The Rollex strategic focus remains the vertical integration of the African agriculture market, taking produce from the field, processing and packaging it and delivering it to retailers within Africa and internationally. Lonrho believes this sector will continue to grow in importance and value as agriculture across Africa develops.
Rollex has increased supply volumes to two large domestic supermarkets in South Africa, Pick n Pay and Spar. Volumes supplied to Pick n Pay and Spar increased 45% from the previous quarter. Exports to Europe are being affected by a decreased demand for fruit and vegetables as a result of global trading conditions. However it is expected that this decline will be offset by the opening of new distribution channels currently being established into the Middle East and Ireland and expanding the client base for the company in Europe.
The newly opened Namibian fish processing and packing cold store benefited during the current quarter from a highly successful Tuna season in May enabling fishing operators to catch their full quotas. This delivered significant growth in the export business to Europe.
Rollex Freight and Rollex Cargo continue to grow their businesses maximising the back load efficiencies for the trucking fleet used for collecting agricultural produce across southern Africa.
Building work continues on the John Deere distributorship for Angola (51% holding). Located in Catete, in the Bengo Province, the new facility will include not only John Deere showrooms, but state of the art maintenance facilities, spare part warehousing and a training facility for agricultural mechanics. The launch of John Deere Angola was timed to coincide with the Angolan National Agricultural Fair (FILPA) on the 14 July 2009. The Lonrho John Deere stand attracted great interest and significant sales enquiries. First tractor orders are due to be delivered during the next quarter and the formal inauguration of the new facility will be during the fourth quarter. Agricultural development remains a primary Angolan Government objective with significant financial incentives being made available.
Transport
Lonrho's pan African aviation company, Fly540, has continued to build on its reputation for reliability, safety and punctuality. Currently flying into 4 countries in East Africa, Fly540 has expanded its network operations in Angola, Ghana, Tanzania and Zimbabwe. Fly540 remains focused on delivering the first international standard pan-African airline that provides quality regional distribution for international carriers flying into Africa and the ability for passengers in Africa to travel regionally, north to south and east to west.
Significant process has been made on establishing the three strategic hubs that will provide the backbone of the Fly540 pan African network, Kenya (established 2006 and now serving east Africa) Angola and Ghana.
540 Angola (60% holding), has during the quarter to 30th June 2009 received an Air Services Licence (ASL) The ASL comes after a period of six months of preparation, training, office development, systems implementation and completion of the approvals for Fly540 to operate in Angola. The ASL is currently being converted to an Air Operators Certificate (AOC) that will permit flight operations to commence during Quarter 4. Initial destinations for Fly540 Angola will include the major centres of Cabinda, Luanda, Soyo, Benguela, Huambo, and Malanje and grow to fifteen domestic destinations. Operations are centred out of Cabinda, (the centre of the oil industry) and Luanda. Lonrho will initially deploy two new ATR72 aircraft to Angola to establish the primary routes
Fly 540 Ghana (60% holding), is progressing on the application for an Air Services Licence (ASL) and the ASL is expected to be received during quarter 4. Fly540 Ghana will be launched following the commencement of operations in Angola, delivering all three of Fly540's strategic hubs across the Continent, Kenya, Angola and Ghana by year end.
Fly 540 Tanzania (90% holding), has received its Air Operators Certificate (A.O.C) and successfully commenced operations in July 2009.
Fly 540 Zimbabwe (a LonZim company), is to commence operations in September 2009. Lonzim Air, a wholly owned subsidiary of Lonzim plc, has purchased one ATR 42 turbo prop from the Lonrho Aviation Fleet for $4.3 million to facilitate passenger operations in Zimbabwe. Fly 540 will earn a license fee of 2.5% of gross turnover and a monthly management fee of US$ 35,000 for managerial services to Fly 540 Zimbabwe.
540 Kenya (49% holding), despite lower tourist numbers the business continues to operate profitably as a result of increased local demand, with almost 49,000 passengers carried during this quarter which is an increase of 39% against the same period in the previous year. Revenue this quarter has grown by 51% compared to the prior year. Advance bookings for the high season July-August are very encouraging, (July estimated at over 20,000 pax) together with a number of routes in the peak December period already being 100% sold out at full fare values. The new Nairobi to Mwanza route is to commence scheduled operations during quarter 4.
Support Services
Bytes & Pieces (65% holding), continues to grow as a result of expanding business to existing clients as the market benefits from the continued rejuvenation of Mozambique. Revenue has grown this quarter by 38% compared with the same period last year.
During the current quarter Bytes and Pieces has been upgraded by Microsoft to an Enterprise Software Advisor (ESA) for support in the licensing of Microsoft Enterprise Agreements in Mozambique. This provides significant further opportunities and complements the existing Dell, HP, CISCO and Tata IT agreements.
Lonrho IT (CES, 50% holding), continues to grow its operations in Southern Africa. In South Africa the Johannesburg and Nelspruit offices continue to grow and the newly opened Zambian offices are performing ahead of budget. Plans continue to take CES into the expanding Angolan market where the company can utilise its in-house Portuguese workforce to gain a competitive advantage.
Infrastructure
At Luba Freeport (63% holding), preparations continue for the arrival of new tenant Noble Energy which will also attract other customers to the port. Negotiations are at an advanced level for further new clients to consolidate their current operations and to utilise the port as a central operational base for the Gulf of Guinea. Revenue has increased by 12% on a reported quarterly basis against the previous year. Costs continue to be kept below budget.
There has been a three month manufacturer delay with the delivery of the new fixed container scanner which is now due to arrive in the fourth quarter. When operational, the scanner will provide the foremost security service in Equatorial Guinea and be a major asset for the port.
Luba is in negotiations with CCEI bank for a US$ 20 million stand alone credit facility to the port to facilitate the further development of infrastructure and facilities for the continued growth of the port secured against the ports existing assets.
Kwikbuild Corporation Limited (62% holding) and the South African subsidiary e-Kwikbuild (51% holding) has reported that turnover has been materially lower than expectations for the quarter. Current revenues are primarily generated from the South African Government (e.g. Classrooms, clinics, offices) and for the three months prior to the elections held on the 22nd April 2009 and since, the Government order process practically stopped functioning. As a result, during the quarter, Kwikbuild has built inventory levels to meet significant contracts that are expected to be released during the fourth quarter as the new Government moves forward.
Hotels
At the Hotel Cardoso in Mozambique (59% holding + Management Contract), Occupancy continues in line with expectations and exceeded 80% during June with an average room rate of US$100 per night compared with a room rate of US$66 per night in June 2008. The newly refurbished restaurant and park have firmly re-established the Hotel Cardoso at the premier end of the Maputo hotel market.
Hotel Grand Karavia in Lubumbashi, DRC, (50% holding + Management Contract) continues on schedule with its US$20m refurbishment. The hotel is scheduled to re-open in autumn of 2009 and will provide the only quality accommodation in Lubumbashi. The copper belt of the DRC has seen improved economic activity with mines that had gone on care and maintenance recommencing production as commodity prices rise - the copper price has risen by over 25% during the quarter and the mining industry reported US$ 10 billion FDI into the DRC copper belt is demonstrably back on track.
Other
Lonzim PLC, (LonZim) in which Lonrho has a 24.53%shareholding, has previously announced that AMB Capital (Ireland) Limited ("AMB"), a company that as at 30 June 2009 had acquired 22.12% of Lonzim acting in concert with Damille Partners (Damille) who had acquired 6.7% of LonZim, had requisitioned an Extraordinary General Meeting ("EGM") of its shareholders to remove the executive board of LonZim, appoint new Executive Directors and dispose of the Company's assets. The EGM has been convened for 30th July 2009. Subsequent to the requisition of the EGM, AMB has sold the majority of its stake in LonZim as has Damille.
At the beginning of July 2009 Lonzim Plc announced that it is to commence operations for a Fly540 airline based in Zimbabwe to service both the domestic and regional markets and emerging local and connecting traffic. Flights are scheduled to start from September 2009.
Current Trading and Future Outlook
Each of the Company's core businesses continued to perform to expectations during the third quarter. The impact of the global recession on the African continent is less severe and the majority of economic forecasts expect sub Saharan growth in GDP to continue in 2009 albeit at a slower rate.
The Lonrho strategy has proven to be resilient and the company focuses on the industry sectors and specific countries which it believes will continue to provide the strongest growth in Africa.
The fourth quarter is set to be positive for the group with 540 Angola commencing flight operations, 540 Ghana's establishment, Rollex's continued expansion and the addition of major new clients to Luba. However trading conditions remain challenging as a result of the global economic climate and fluctuations in the currency markets.
It is intended that the next quarterly update for the company will be released in October 2009.
David Lenigas, Lonrho's Executive Chairman commented:
"Lonrho has once again been able to deliver solid financial results, with revenues increasing 16% on a like for like basis against the same period last year. The company has built a solid commercial foundation across Africa in the key strategic sectors inherent to Africa's economic development.
"Our investment philosophy of five strategic industries operating in seventeen countries is a sound approach to the emerging African market. We remain extremely positive about Lonrho's prospects in our chosen countries of operation and specific market sectors across Africa."
LONRHO GROUP
GROUP TURNOVER
1 APRIL to 30 JUNE 2009
£'000S
|
TURNOVER on a reported basis |
||||
|
3 Months to 30 JUNE 2009
|
3 Months to 30 JUNE 2008 |
Variance |
Var % |
|
|
Agri Processing |
||||
|
Rollex |
9,845 |
0 |
9,845 |
100% |
|
Transport |
||||
|
540 Group |
3,882 |
2,235 |
1,647 |
74% |
|
Support Services |
||||
|
Bytes & Pieces |
1,574 |
1,140 |
433 |
38% |
|
Other |
382 |
184 |
198 |
108% |
|
Infrastructure |
||||
|
Luba Freeport |
1,861 |
1,660 |
201 |
12% |
|
E-Kwikbuild |
106 |
0 |
106 |
100% |
|
Hotels |
||||
|
Hotel Cardoso |
861 |
460 |
401 |
87% |
|
Continuing operations |
18,510 |
5,678 |
12,832 |
226% |
|
Shipping -Discontinued |
||||
|
SAILS |
0 |
6,966 |
(6,966) |
-100% |
|
Discontinued operations |
0 |
6,966 |
(6,9660) |
-100% |
|
Total Turnover |
18,510 |
12,645 |
5,865 |
46% |
|
LIKE FOR LIKE TURNOVER* |
||||
|
3 Months to 30 JUNE 2009 |
3 Months to 30 JUNE 2008
|
Variance |
Var % |
|
|
Agri Processing |
||||
|
Rollex |
9,845 |
8,978 |
867 |
10% |
|
Transport |
||||
|
540 Group |
3,882 |
2,235 |
1,647 |
74% |
|
Support Services |
||||
|
Bytes & Pieces |
1,574 |
1,140 |
433 |
38% |
|
Other |
382 |
184 |
198 |
108% |
|
Infrastructure |
||||
|
Luba Freeport |
1,861 |
1,660 |
201 |
12% |
|
E-Kwikbuild |
106 |
1,316 |
(1,210) |
-92% |
|
Hotels |
||||
|
Hotel Cardoso |
861 |
460 |
401 |
87% |
|
Continuing operations |
18,510 |
15,973 |
2,537 |
16% |
|
Shipping -Discontinued |
||||
|
SAILS |
0 |
6,966 |
(6,966) |
-100% |
|
Discontinued operations |
0 |
6,966 |
(6,9660) |
-100% |
|
Total Turnover |
18,510 |
22,939 |
(4,429) |
-19% |
* Including Rollex and E-Kwikbuild and removal of Sails from 2008 results
Results sourced from June 2009 management accounts
LONRHO GROUP
GROUP TURNOVER
NINE MONTHS to 30 JUNE 2009
£'000S
|
TURNOVER on a reported basis |
||||
|
9 Months to 30 JUNE 2009
|
9 Months to 30 JUNE 2008 |
Variance |
Var% |
|
|
Agri Processing |
||||
|
Rollex |
32,704 |
0 |
32,704 |
100% |
|
Transport |
||||
|
540 Group |
11,895 |
5,860 |
6,035 |
103% |
|
Support Services |
||||
|
Bytes & Pieces |
5,141 |
3,889 |
1,251 |
32% |
|
Other |
1,118 |
587 |
531 |
90% |
|
Infrastructure |
||||
|
Luba Freeport |
6,024 |
5,159 |
865 |
17% |
|
E-Kwikbuild |
959 |
0 |
959 |
100% |
|
Hotels |
||||
|
Hotel Cardoso |
2,173 |
1,318 |
855 |
65% |
|
Continuing operations |
60,013 |
16,813 |
43,200 |
257% |
|
Shipping -Discontinued |
||||
|
SAILS |
1,187 |
14,354 |
(13,167) |
-92% |
|
Discontinued operations |
1,187 |
14,354 |
(13,167) |
-92% |
|
Total Turnover |
61,200 |
31,167 |
30,033 |
96% |
|
LIKE FOR LIKE TURNOVER* |
||||
|
9 Months to 30 JUNE 2009 |
9 Months to 30 JUNE 2008 |
Variance |
Var% |
|
|
Agri Processing |
||||
|
Rollex |
32,704 |
22,786 |
9,918 |
44% |
|
Transport |
||||
|
540 Group |
11,895 |
5,860 |
6,035 |
103% |
|
Support Services |
||||
|
Bytes & Pieces |
5,141 |
3,889 |
1,251 |
32% |
|
Other |
1,118 |
587 |
531 |
90% |
|
Infrastructure |
||||
|
Luba Freeport |
6,024 |
5,159 |
865 |
17% |
|
E-Kwikbuild |
959 |
2,071 |
(1,112) |
-54% |
|
Hotels |
||||
|
Hotel Cardoso |
2,173 |
1,318 |
855 |
65% |
|
Continuing operations |
60,013 |
41,670 |
18,343 |
44% |
|
Shipping -Discontinued |
||||
|
SAILS |
1,187 |
14,354 |
(13,167) |
-92% |
|
Discontinued operations |
1,187 |
14,354 |
(13,167) |
-92% |
|
Total Turnover |
61,200 |
56,024 |
5,176 |
9% |
* Including Rollex and E-Kwikbuild and removal of Sails from 2008 results
Results sourced from June 2009 management accounts
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 PR |
|
|
Charles Vivian |
+44 (0) 20 7337 1538 |
|
|
+44 (0) 7977 297903 |
|
James MacFarlane |
+44 (0) 20 7337 1527 |
|
|
+44 (0) 7841 672831 |
|
|
|
|
Beaumont Cornish Limited (Nomad) |
|
|
Rosalind Hill Abrahams |
+44 (0) 20 7628 3396 |
|
Roland Cornish |
+44 (0) 20 7628 3396 |
Related Shares:
Lonrho