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Lonrho - diverse and delivering

TIP UPDATE: Lonrho's diverse activities continues to do well
March 3, 2010
by LiM

African conglomerate Lonrho continues to grow strongly across its divisions. Turnover rose 266 per cent on a like-for-like basis and, following share placings late last year that raised £25m, the group is now well financed to continue its growth

IC TIP: Buy at 12p

Sales in the Rollex food distribution business were 49 per cent higher. Rollex processes and packs fruit, vegetables, meat and fish for distribution to southern African customers and for global export to customers including Tesco, Sainsbury and Marks & Spencer. Building work continues on the John Deere agricultural equipment distributorship in Angola, which should benefit from $2bn (£1.2bn) of planned government investment in agriculture, of which $350m is expected to be made available to help native farmers purchase equipment.

The airline Fly540 is also doing nicely. The east African hub based in Nairobi, Kenya is now fully operational and carried 215,735 passengers in the year (2008: 171,160). Fly540 Angola is expected to begin flights in the next two months and Fly540 Ghana by the middle of the year. Fly540 Zimbabwe, owned by associate company LonZim, also plans to begin operations during 2010.

Revenue grew 9 per cent at the Luba oil services port in the Gulf of Guinea and Lonrho is seeing strong signs of first-half growth as several tenants start drilling programmes. So far, there are no updated City forecasts for the year's profits.

LONRHO (LONR)
ORD PRICE:12pMARKET VALUE:£127m
TOUCH:12-12.25p12-MONTH HIGH:14pLOW: 1.94p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:10p*NET DEBT:14%†

Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20063.0-0.1-0.10nil
200711.0-18.0-6.10nil
200824.5-6.4-1.50nil
200989.7-5.9-1.06nil
% change+266---

*Includes intangible assets of £17.6m, or 2p a share

†Before Dec 2009 placings

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