LONRHO on Friday reported strong revenue growth and improved margins in its interim results to June, having repositioned itself as an agriculture and logistics company focused on Africa.
The group said this followed the "successful" spin-off and London AIM-listing of its aviation division as FastJet, a standalone company it is building into "the low-cost airline for Africa".
Sir Stelios Haji-Ioannou, founder and major shareholder of UK-based low-cost airline easyJet, is also a shareholder in FastJet and is introducing a "new, world-class" management team to launch operations from about April next year.
Lonrho paid a consideration of £55.1m in FastJet shares, giving it an initial 73.7% stake in the aviation company.
Since then, FastJet has raised £5.5m of new equity, diluting Lonrho’s holding to 67.8%.
"Lonrho continues to deliver strong growth in revenues and margins in its core business divisions, and is continuing to see the growth convert into operating profitability as planned," David Lenigas, executive chairman, said on Friday.
He said the group was now able to focus on its core businesses in agriculture and logistics, which were well aligned with the economic drivers of "emerging Africa".
Revenue rose 79.2% from £68.6m to £122.9m, a like-for-like increase of 29.1%.
Like-for-like sales is a method of valuation that tries to exclude activities such as expansion or acquisition that enlarge a company's sales.
Lonrho also counted an exceptional gain of £33.9m by taking account of FastJet as a jointly controlled entity.
Gross margin for the period was 25.6%, having increased 3.6% on a like-for-like basis.
The group’s net assets at the end of June stood at £209.8m, from £155.7m at the end of December last year. Lonrho also says it reduced net debt in the first half by 23%, to £78.7m.
The company said its oil services business delivered one of the strongest margins within the group, garnering revenues mainly from large "blue-chip" oil supply and service companies operating globally.
It also said its e-Kwikbuild manufacturing plant in Cape Town was now fully commissioned and would service demand for prefabricated buildings in Africa.
Lonrho’s hotels division won a hotel management contract in the Democratic Republic of Congo and a lease contract in Botswana.
Its first easyHotel is expected to open in Johannesburg by the end of the year.
Lonrho said it remained its intention to introduce a dividend policy by next year.
allixm@bdfm.co.za
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