new annual report 2005 - sharedata · 2007. 7. 23. · the proﬁt for the year amounted to £2...

Annual Report 2005

Page

Chairman’s statement 1

Chief Executive’s statement 2

Operating and financial review 3

Directors 5

Directors’ responsibilities in respect of the preparation of financial statements 6

Report of the Directors 7

Report of the independent auditors to the members of Lonrho Africa Plc 10

Consolidated profit and loss account 11

Balance sheets 12

Consolidated cash flow statement 13

Statement of total recognised gains and losses 13

Reconciliation of movements in shareholders’ funds 14

Note of historical cost profits and losses 14

Principal accounting policies 15

Notes to the financial statements 17

Corporate information 30

Notice of Annual General Meeting 31

Shareholder information 34

Contents

Lonrho Africa Plc Report & Accounts 2005

The year ended 30 September 2005 was a period of further change for Lonrho Africa. As set out previously, Lonrho

Africa continued to pursue a strategy of disposing of its residual assets while continuing to seek opportunities to

maximise value for its shareholders.

In April 2005 we successfully finalised the demerger of our shareholding in Lonrho Africa Trade & Finance Limited by

means of a Court approved Scheme of Arrangement to Castle Acquisitions Plc.

At the year end, our strategy of disposing of our hotels, property and other trading assets in Africa was almost

complete, with a small number of residual issues remaining to be resolved.

Since the year-end, David Lenigas joined the Board as Chief Executive Officer on 21 December 2005, followed by the

appointment of Emma Priestley as an Executive Director on 24 February 2006. Following David’s appointment, the

Board held discussions with a number of Lonrho Africa’s major shareholders and decided to adopt a new investment

strategy for the Group focusing on natural resources and infrastructure projects in Africa, areas in which both David

and Emma have considerable experience. The new investment strategy was approved by shareholders at an

Extraordinary General Meeting held on 24 February 2006. Further details of the new investment strategy and the first

investment under it are set out in the Chief Executive’s statement.

I would like to take this opportunity to formally welcome David and Emma to the Board of Lonrho Africa. We are pleased

to have been able to attract two people of such high calibre and expertise. David has a proven track record in building

companies and extensive experience in the natural resources and infrastructure sectors across the world. Their

considerable knowledge of the natural resources sector will prove invaluable to the Company’s ongoing growth strategy.

Now that the position of the Group has stabilised and has an exciting future, I believe that it is an appropriate time for me

to step down as your Chairman and as a Director of the Company and I am delighted that David Lenigas has agreed to

take my place as Chairman following the Annual General Meeting.

I would also like to take this opportunity to thank everybody in the Group for all their support over the seven years that I

have been a Director of the Company.

Christopher Mills

Chairman

29 March 2006

1

Chairman’s statement


Since the end of the period under review Lonrho Africa has made considerable progress. Following the sale of the Hotels

in Kenya, the Board continued to look at opportunities to maximise shareholder value. Since my appointment on

21 December 2005, the Board held discussions with a number of Lonrho Africa’s major shareholders and concluded

that it would be in shareholders’ best interests to use the Group’s strong cash position to re-establish a significant

presence on the African continent. In recent years, Africa has gained renewed momentum and attracted increasing

investor interest. We feel that it is time for Lonrho Africa to use its good name to make a difference to African

business and development.

The Board’s intention is to focus on making investments in the natural resources and infrastructure sectors including the

mining of advanced precious metals or base metals and energy related projects such as uranium, oil and gas and

downstream services to support these sectors.

The Group will seek to acquire or make investments in either quoted or private companies, partnerships, joint ventures

or direct interests in projects. The Board would prefer that investments are initially represented by substantial

shareholdings in investee companies to maximise the potential of returns to shareholders. However, investment

opportunities will be considered on a case-by-case basis and minority interest investments will not be ruled out.

Lonrho Africa’s new investment strategy was approved at an Extraordinary General Meeting held on 24 February 2006.

Whilst the Group has now decided to retain its 59 per cent. shareholding in Hotel Cardoso SARL in Mozambique, it will

continue to complete the disposal of its remaining industrial property in South Africa.

On 24 February 2006 Emma Priestley joined the Board from Ambrian Partners, the investment bank specialising in

natural resources, where she worked as a corporate broker and adviser. Emma possesses a wealth of expertise in the

natural resources sector and I have every confidence that her considerable experience will prove an invaluable asset to

management’s implementation of the Group’s ongoing growth strategy.

On 14 March 2006 Lonrho Africa announced the first investment under its new investing strategy. The Group agreed to

invest £5 million in Brinkley Mining Plc (‘‘Brinkley’’), which has significant uranium and molybdenum prospects in the

Karoo region of South Africa. Lonrho Africa has subscribed for 25 million ordinary shares at a price of 20 pence per

share. This represents a 10 per cent. holding of Brinkley’s issued share capital. Brinkley is seeking an admission on

AIM during the first half of this year. The pre-IPO funding will assist in confirming the resource potential of the Karoo

assets and lead to a feasibility study for the purposes of commissioning a viable uranium operation.

This is the first investment made under my leadership, in line with Lonrho Africa’s new strategy. The Board believes that

this investment offers considerable upside potential and is illustrative of the exciting opportunities available to us in

Africa.

We will continue to seek acquisitions or make investments in either quoted or private companies in the natural resources

and infrastructure sectors.

I am pleased to be taking on the role of Chairman following the conclusion of the Annual General Meeting and would like

to thank Christopher Mills for all his hard work in the previous seven years as a Director, and latterly as Chairman, of

Lonrho Africa.

I thank Lonrho Africa’s shareholders for their continued support and look forward to the future with confidence.

David Lenigas

Chief Executive Officer

29 March 2006

2


Chief Executive’s statement

Lonrho Africa Trade & Finance LimitedIn February 2005, Castle Acquisitions Plc, an investment company, was formed to facilitate the demerger of Lonrho

Africa Trade & Finance Limited (‘‘LATF’’), a wholly owned subsidiary of Lonrho Africa Plc. Castle Acquisitions, now the

parent company of LATF, was admitted to trading on AIM on 3 May 2005.

LATF operates a defined benefit pension scheme in the United Kingdom (‘‘UK Scheme’’). The aim of the demerger was to

unlock potential shareholder value inherent within the UK Scheme and to make this potential asset more visible and

attractive to prospective purchasers. Castle Acquisitions’ primary objective is to acquire either a publicly traded

company or a private company with attractive growth prospects and a sizeable UK workforce, as a means of

introducing new members to the pension scheme operated by LATF, subject to the consent of the Trustee, and

subsequently attempting to unlock the inherent value of the surplus of the pension scheme for the benefit of Castle

Acquisitions’ shareholders.

On 22 April 2005 the entire issued share capital of LATF was transferred by Lonrho Africa, by means of a Court

approved Scheme of Arrangement, to Castle Acquisitions, which allotted shares to qualifying shareholders in Lonrho

Africa by way of consideration.

At that date, the net assets of LATF were £1.6 million represented by cash balances. A demerger dividend of £1.6

million is therefore deemed to have been paid by the Company which represents the value of the assets demerged.

The share capital of the Company was reduced pursuant to a Court approved scheme for the reduction of capital under

which the nominal value of each Lonrho Africa share was reduced from 20p to 1p. This resulted in £29.9 million being

released to the profit and loss account of the Company thereby eliminating the deficit on the profit and loss account and

creating a surplus sufficient for the purposes of the Scheme of Arrangement.

HotelsIn May 2005 Lonrho Africa completed the disposal of the Group’s 100 per cent. interest in Lonrho Hotels Kenya BV

(‘‘LHKBV’’) to a subsidiary of Kingdom Hotels Investments. The cash consideration receivable on completion amounted,

after an adjustment for working capital, to £15.6 million with a further £1 million receivable over the next 18 months.

This is subject to any adjustment which may arise in respect of warranty claims.

LHKBV was the parent company of Lonrho Hotels Kenya Limited in Kenya, which owned The Norfolk Hotel, The Mara

Safari Club, 75 per cent. of the Mount Kenya Safari Club, and 59.67 per cent. of The Aberdare Country Club and The

Ark.

PropertyThe sale of the major part of the agricultural land in Kenya was completed on 17 June 2005 for a cash consideration of

£1 million.

Two of the three industrial properties in South Africa were sold during the year for R15.25 million (£1.3 million).

Asset valuesIn preparing the financial statements the Directors have reviewed the carrying values of fixed assets, and have made

such adjustments as they consider reasonable and prudent.

ResultsThe profit for the year amounted to £2 million (2004: £4 million). An analysis of Group turnover and operating results by

division are shown in the notes to the financial statements.

3


Operating and financial review

Group performanceThe Group’s only operation during the financial year under review was Hotels. The hotels in Kenya made an operating

profit, up to the date of sale, of £0.9 million. This is shown in the financial statements under Discontinued Operations.

The Hotel Cardoso in Mozambique made an operating loss of £0.2 million, of which the Group’s share was £0.1 million.

The profit on the sale of the hotels in Kenya and two of the industrial properties in South Africa, less the related disposal

costs and the costs of the demerger of Lonrho Africa Trade & Finance Limited to Castle Acquisitions Plc, amounted to

£1.7 million.

FinancingCash balances and interest rate risks are managed centrally in the UK. Exposure to currencies other than sterling is

covered to eliminate any exchange risk wherever possible.

Cash at bank at the end of the year of £20.3 million includes £20.1 million held in the UK.

DividendIn line with previous years, the Directors do not propose to pay a dividend.

Foreign exchange exposureThe Group’s businesses maintain their accounting records in the currency of the country in which they operate. However,

the Group’s results and assets and liabilities are consolidated and reported to shareholders in sterling at year end

exchange rates, although results of operations disposed of during the year are translated into sterling at the exchange

rate at the date of disposal. Therefore, devaluation of local currencies during a financial year will have an impact on the

profit or loss reported throughout the year as well as on the Group’s balance sheet.

4


Operating and financial review continued

Christopher Mills* (53) (Non-executive Chairman)Christopher Mills is Chief Investment Officer of JO Hambro Capital Management Ltd., which he joined in 1993. He is Chief

Executive of North Atlantic Smaller Companies Investment Trust plc and American Opportunities Trust plc (United

Kingdom listed investment trusts) where he is responsible for their investment decisions. He is also a director of a

number of other companies.

David Lenigas (44) (Chief Executive Officer)David Lenigas moved from Australia three years ago to manage mining companies in London. He is currently a director

of Asia Energy PLC (a company he started in 2004), which is currently developing a US$1.1billion coal project in

Bangladesh, the Chairman of Mediterranean Oil and Gas PLC, which is Italy’s fourth largest gas producer, and is

Chairman of BDI Mining, which is Indonesia’s largest producer of gold and diamonds.

Emma Priestley (33) (Executive Director)Emma Priestley joined Lonrho Africa after working in investment banking for 5 years following a career as a mining

engineer. She has a background in mining and financial services having worked with consultants IMC Mackay &

Schnellmann, investment bank CSFB, advisers VSA Resources and most recently from Ambrian Partners, where she

worked as corporate broker and adviser.

Richard Wilkinson* (49) (Non-Executive Director)Richard Wilkinson is Chief Operating Officer of Sindicatum Carbon Capital Ltd. Prior to this he was Executive Deputy

Chairman of The African Lakes Corporation Plc and a partner of Blakeney Management. He was previously Managing

Director of Angel Train Contracts and a Director in the Principal Finance Group of investment bank Nomura

International plc.

Michael Wilson* (66) (Non-Executive Director)Michael Wilson was a partner and member of the partnership board of Coopers & Lybrand until 1995, prior to which he

had been a member of the partnership board of Deloitte Haskins & Sells. He has experience of sub-Saharan Africa

through his non-executive directorship of Meikles Africa Limited.

* Member of the Audit Committee and Remuneration Committee.

5


Directors

Company law requires the Directors to prepare financial statements for each financial year which give a true and fair

view of the state of affairs of the Company and the Group as at the end of the financial year and of the profit or loss

for that financial year. In preparing those financial statements, the Directors are required to:

. select suitable accounting policies and then apply them consistently;

. make judgements and estimates that are reasonable and prudent;

. state whether applicable accounting standards have been followed, subject to any material departures disclosed and

explained in the financial statements; and

. prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company

and Group will continue in business for the foreseeable future.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any

time the financial position of the Company and to enable them to ensure that the financial statements comply with the

Companies Act 1985. They have a general responsibility for taking such steps as are reasonably open to them to

safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

6


Directors’ responsibilities in respect of thepreparation of financial statements

The Directors of Lonrho Africa Plc submit their report, together with the audited financial statements for the year ended

30 September 2005.

Principal activitiesFollowing the disposal of its Kenyan hotels during the year, the Group’s principal activity is now the operation of a hotel in

Mozambique.

Business review and developmentThe Chairman’s statement, Chief Executive’s statement and Operating and Financial review contain information on

developments during the year, potential future developments and a review of the financial performance for the year.

DirectorsThe present Board of the Company is set out on page 5. All the Directors named were Directors throughout the year

with the exception of Mr D A Lenigas and Ms E K Priestley who were appointed on 21 December 2005 and 24 February

2006 respectively.

At the forthcoming Annual General Meeting, Mr R J Wilkinson will retire by rotation and Mr D A Lenigas and Ms E K

Priestley, having been appointed since the last Annual General Meeting, will also retire. Being eligible, they will offer

themselves for re-election. Biographical details of all Directors are set out on page 5.

During the year no Director has had a material interest in any contract of significance in relation to the Company’s

business.

Directors’ share interestsThe Directors at the year-end are set out below. All Directors served throughout the year unless otherwise indicated.

At

30.09.05

At

30.09.04

C H B Mills Nil Nil

R J Wilkinson 53,818 53,818

M S Wilson 450,000 450,000

All of the above interests are beneficial and recorded in the Company’s Register of Directors’ Share and Debenture

Interests. No Director has a beneficial interest in the shares or debentures of any of the Company’s subsidiary

undertakings. Neither Mr D A Lenigas nor Ms E K Priestley held any shares in the Company at the date of their

appointment. There have been no changes in Directors’ share interests since 30 September 2005 or the relevant

dates of appointment.7


Report of the Directorsfor the year ended 30 September 2005

Share optionsSince 30 September 2005, unapproved share options have been granted over ordinary shares as set out below. These

options are embodied in an individual contract between the Company and the individual and have been granted under

The Lonrho Africa Plc Unapproved Share Option Plan.

Granted Exercise Price Exercise Period

David Lenigas 3,500,000 17p Jan 2006 – Jan 2011

Substantial shareholdingsThe Directors have been advised of the following shareholdings at 28 March 2006 in 3 per cent. or more of the

Company’s issued share capital:

Number of

shares

Percentage of

the issued

capital

Blakeney General Partners III Limited 15,702,000 9.96

Blakeney General Partners IV Limited 8,740,000 5.55

Blakeney Investors 5,526,000 3.51

Peter Cundill & Associates (Bermuda) Ltd 13,350,000 8.47

North Atlantic Value LLP 8,030,000 5.10

Greenbelt Corp.,Greentree Partners, L.P., Greenway Partners, L.P., G K Duberstein and A D Kingsley 7,753,828 4.92

Share price performanceBetween 1 October 2004 and 30 September 2005 the share price in London varied between a high of 17.77p and a low

of 9.01p and in Johannesburg a high of Rand 200 and a low of Rand 119.86. At 30 September 2005, the mid-market

price of the shares was 13.25p in London and Rand 145 in Johannesburg.

Fixed assetsIt is Group policy to systematically revalue the land and buildings, taking account of the view of professional advisers in

accordance with the requirements of FRS 15 ‘‘Tangible Fixed Assets’’ and, where appropriate, to incorporate such

changes into the Group Accounts.

The details of the revaluation of fixed assets is shown in Note 10 to the Accounts. In the opinion of the Directors, there

was no significant difference between the market value and the book value of land and buildings.

8


Report of the Directors continuedfor the year ended 30 September 2005

Political and charitable donationsNo political or charitable donations have been made by the Group during the year.

Payment to suppliersThe Group does not follow any code or standard with regard to the payment of its suppliers. The Group’s policy is to

agree terms and conditions with suppliers in advance; payment is then made in accordance with the agreement provided

the supplier has met the terms and conditions.

City Code on Takeover and MergersThe Panel on Takeovers and Mergers confirmed that, at the date the Listing Particulars were issued, Lonrho Africa was

subject to the City Code on Takeovers and Mergers (the ‘‘Code’’). The Directors believe that, so as far as is practicable,

they have operated and will continue to operate the Group so that it will continue to be subject to the Code.

AuditorsA resolution to re-appoint KPMG Audit Plc and to authorise the Directors to fix their remuneration will be proposed at the

Annual General Meeting in accordance with section 384 of the Companies Act 1985.

Annual General MeetingThe Annual General Meeting will be held on Friday 28 April 2006 at 2.30 pm at the Hyde Park Suite, The Thistle Marble

Arch, Bryanston Street, London W1A 4UR.

The notice convening the meeting is set out on page 31. An explanation of the items of Special Business is also

contained therein.

By order of the Board

J H Hughes

Secretary

29 March 2006

9


Report of the Directors continuedfor the year ended 30 September 2005

We have audited the financial statements on pages 11 to 29.

This report is made solely to the company’s members, as a body, in accordance with section 235 of the Companies Act

1985. Our audit work has been undertaken so that we might state to the company’s members those matters we are

required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do

not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our

audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorsThe directors are responsible for preparing the Annual Report and, as described on page 6, the financial statements in

accordance with applicable United Kingdom law and accounting standards. Our responsibilities, as independent auditors,

are established in the United Kingdom by statute, the Auditing Practices Board and by our profession’s ethical guidance.

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared

in accordance with the Companies Act 1985. We also report to you if, in our opinion, the directors’ report is not

consistent with the financial statements, if the company has not kept proper accounting records, if we have not

received all the information and explanations we require for our audit, or if information specified by law regarding

directors’ remuneration and transactions with the group is not disclosed.

We read the other information contained in the Annual Report and consider whether it is consistent with the financial

statements. We consider the implications for our report if we become aware of any apparent misstatements or

material inconsistencies with the financial statements.

Basis of audit opinionWe conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes

examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also

includes an assessment of the significant estimates and judgements made by the directors in the preparation of the

financial statements, and of whether the accounting policies are appropriate to the group’s circumstances, consistently

applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary

in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from

material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated

the overall adequacy of the presentation of information in the financial statements.

OpinionIn our opinion the financial statements give a true and fair view of the state of affairs of the company and the Group as at

30th September 2005 and of the profit of the Group for the year then ended and have been properly prepared in

accordance with the Companies Act 1985.

KPMG Audit Plc

Chartered Accountants

Registered Auditor

Liverpool

29 March 2006

10


Report of the independent auditors to themembers of Lonrho Africa Plc

Note

Continuing

operations

2005

£m

Discontinued

operations

2005

£m

Total

2005

£m

Continuing

operations

2004

£m

Discontinued

operations

2004

£m

Total

2004

£m

Turnover

Group 1,2 1.0 4.8 5.8 1.1 8.8 9.9

Joint ventures – – – – 0.2 0.2

1.0 4.8 5.8 1.1 9.0 10.1

Group net operating costs 3 (1.9) (3.9) (5.8) (2.0) (8.5) (10.5)

Operating (loss)/profit 1,2

Group

– before exceptional items (0.9) 0.9 – (0.9) 0.3 (0.6)

Non-operating exceptional items 4 1.7 4.6

Net finance income 6 0.5 –

Profit before taxation 2.2 4.0

Taxation 7 (0.3) (0.3)

Profit after taxation 1.9 3.7

Minority interests 19 0.1 0.3

Profit for the year 18 2.0 4.0

Demerger dividend 8 (1.6) –

Retained profit for the year 0.4 4.0

Profit per share 9 1.3p 2.5p

Profit/(loss) per share

before exceptional items 9 0.2p (0.4)p

Note: The figures for 2004 have been restated to reflect operations that ceased during 2005 as discontinued.

11


Consolidated profit and loss accountfor the year ended 30th September 2005

Group Company

Note

2005

£m

2004

£m

2005

£m

2004

£m

Fixed assets

Tangible 10 2.6 17.0 – –

Investments:

Other investments 11 – – 31.5 46.2

2.6 17.0 31.5 46.2

Current assets

Stocks 12 0.3 1.2 – –

Debtors 13 1.8 3.3 – –

Cash at bank 20.3 6.0 – –

22.4 10.5 – –

Creditors: amounts falling due within one year 14 (0.6) (3.0) (26.0) (38.4)

Net current assets/(liabilities) 21.8 7.5 (26.0) (38.4)

Total assets less current liabilities 24.4 24.5 5.5 7.8

Provisions for liabilities and charges 16 (2.5) (2.5) (2.1) (1.0)

Net assets 21.9 22.0 3.4 6.8

Capital and reserves

Called up share capital 17 1.6 31.5 1.6 31.5

Merger reserve 18 96.1 96.1 – –

Revaluation reserve 18 0.8 7.4 – –

Profit and loss account 18 (77.7) (115.6) 1.8 (24.7)

Shareholders’ funds (equity) 20.8 19.4 3.4 6.8

Minority interests (equity) 19 1.1 2.6 – –

21.9 22.0 3.4 6.8

These financial statements were approved by the Board of Directors on 29 March 2006 and signed on its behalf by:

C H B Mills

12


Balance sheetsas at 30th September 2005

2005 2004

Note £m £m

Net cash flow from operating activities

– continuing operations 24 (0.8) (0.7)

– discontinued operations 24 3.1 (0.2)

2.3 (0.9)

Returns on investments and servicing of finance

Interest

– received 0.5 –

– paid – (0.2)

Net cash inflow/(outflow) after returns on investments and servicing of finance 2.8 (1.1)

Tax paid

Overseas (0.6) (0.1)

Net cash inflow/(outflow) before investing activities and financing 2.2 (1.2)

Purchase of tangible fixed assets (0.1) (0.2)

Net proceeds from disposal of subsidiaries 25 13.7 10.8

Demerger dividend (1.6) –

Increase in cash in the year 26 14.2 9.4

Statement of total recognised gains and lossesfor the year ended 30th September 2005

2005 2004

Group Note £m £m

Profit for the year 2.0 4.0

Decrease arising on revaluation of assets 10 (0.1) –

Exchange adjustments to net investments in overseas companies 18 1.1 (3.0)

Total recognised gains relating to the year 3.0 1.0

Total recognised gains since last annual report 3.0 1.0

13


Consolidated cash flow statementfor the year ended 30th September 2005

2005 2004

Group £m £m

Recognised gains relating to the year 3.0 1.0

Demerger dividend (1.6) –

Net increase in shareholders’ funds in the year 1.4 1.0

At beginning of year 19.4 18.4

At end of year 20.8 19.4

Note of historical cost profits and lossesfor the year ended 30th September 2005

2005 2004

Group Note £m £m

Reported profit before taxation 2.2 4.0

Difference between historical cost depreciation charge and the actual depreciation

charge calculated on the revalued amount 18 0.1 0.1

Realisation of property revaluation gains 18 – 0.2

Historical cost profit before taxation 2.3 4.3

Historical cost profit after taxation and minority interests 2.1 4.3

14


Reconciliation of movements in shareholders’ fundsfor the year ended 30th September 2005

Basis of accounting

The financial statements have been prepared on a going concern basis under the historical cost convention modified by

the revaluation of certain fixed assets and in accordance with applicable United Kingdom accounting standards and with

the requirements of the Companies Act 1985, except as explained below. The consolidated financial statements reflect

the results and financial position of the Company, its subsidiaries and its share of joint ventures.

The following principal accounting policies have been applied consistently in dealing with items which are considered

material in relation to the Group’s financial statements.

In accordance with an agreement dated 4th March 1998 between the Company and Lonrho Plc providing for the

demerger of the Lonrho Plc non-mining businesses in Africa and two related businesses in the UK, the whole of the

issued share capital of Lonrho Africa (Holdings) Limited (which owned all the businesses to be demerged) was

transferred to the Company. The consideration was satisfied by the transfer by the Company of 157,572,088 ordinary

shares of 20p each to the shareholders of Lonrho Plc.

The acquisition of Lonrho Africa (Holdings) Limited has been treated in accordance with the merger accounting principles

set out in Financial Reporting Standard 6 and Schedule 4(A) to the Companies Act 1985 as it constitutes a group

reorganisation. The accounts are therefore presented as if the demerged businesses had been owned and controlled

by the Company prior to the demerger.

A number of the companies owned by Lonrho Africa (Holdings) Limited had been transferred from fellow subsidiaries of

Lonrho Plc as part of the reorganisation prior to demerger. These transfers have also been treated in accordance with

merger accounting principles. However, certain of these transfers did not meet the detailed conditions for such

treatment laid down by Financial Reporting Standard 6 and Schedule 4(A) to the Companies Act 1985 in that the

consideration was not in the form of ordinary shares.

The Directors consider that this departure from the acquisition accounting treatment that the detailed conditions would

imply is necessary to present a true and fair view of the state of affairs and results of the Group for shareholders since

they have had a continuing interest in the Group’s businesses both before and after the demerger. In the opinion of the

Directors, it would be inappropriate to apply acquisition accounting in these circumstances (with consequent adjustments

to the fair values of the related assets and liabilities and the reflection only of the post reorganisation results in the Group

accounts) since the transfers did not entail an effective acquisition of any of the companies from the point of view of

Lonrho Plc, the Company or their shareholders. It is not practicable to estimate the effects of this departure since no

fair values have been computed for the assets and liabilities of the companies concerned.

As a result of the demerger of the Company from Lonrho Plc a merger reserve of £96.1 million was created which

represented the difference between the nominal value of the shares issued by Lonrho Africa Plc and the deemed value

of the investments it acquired from Lonrho Plc.

Acquisitions and disposals

The results of subsidiaries or joint ventures acquired or disposed of during the year are included from the date of

acquisition or to the date of sale. On the acquisition of a subsidiary or joint venture, fair values are attributed to the

separately identifiable assets and liabilities. On the disposal of a subsidiary or joint venture, the proceeds from

disposal less the net assets attributable to the Group at the date of disposal together with any goodwill (whether

capitalised or set off against reserves on acquisition) is shown as profit or loss on sale of operations.

Goodwill

Goodwill on acquisitions, representing the excess of the cost of the investment in a subsidiary or joint venture over the

fair value of its identifiable net assets at the date of acquisition, is capitalised and amortised over its useful economic

life. The useful economic life is separately determined on an acquisition by acquisition basis; however, it is generally not

expected to exceed five years.

15


Principal accounting policies

Foreign currencies

Transactions denominated in currencies other than the functional currency of an operation (‘‘foreign currency’’) are

recorded using the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign

currencies are translated into the functional currency at the balance sheet date using the exchange rate ruling at that

date and the gains and losses arising on retranslation are included in the profit and loss account.

On consolidation, the assets and liabilities, except those noted below, and the results for the year of overseas

subsidiaries and joint ventures are translated from their functional currencies into sterling using the exchange rates

ruling at the balance sheet date. The results for the year for overseas subsidiaries and joint ventures disposed of

during the year are translated from their functional currencies into sterling using the exchange rate ruling at the

disposal date. Exchange differences arising from the retranslation of the opening net assets of overseas subsidiaries

are disclosed as movements on reserves.

Revaluation of fixed assets

The Directors review systematically the value of land and buildings together with that plant, machinery and equipment

which is intrinsically part of the fabric of the Hotels, taking account of the advice of independent professional advisers,

and incorporate adjustments, where appropriate, into the Group accounts.

If the valuation is in excess of the net book value, the surplus is credited to the revaluation reserve. A deficit on valuation,

to the extent that it is considered to have been caused by a clear consumption of economic benefits, is charged to the

profit and loss account. Other deficits are taken to the revaluation reserve until the carrying amount of the asset reaches

its depreciated historical cost and thereafter are charged to the profit and loss account.

Depreciation

The cost or valuation of fixed assets is depreciated evenly over their estimated useful lives to their residual values.

Depreciation rates are determined in accordance with commercial practice for the industry concerned. Fixed assets

are depreciated as follows:

Freehold buildings 2 per cent. per annum

Leasehold land and buildings 2 per cent. – 5 per cent. per annum

Vehicles 15 per cent. – 25 per cent. per annum

Fixtures and fittings 15 per cent. – 25 per cent. per annum

No depreciation is provided on freehold land.

Leases

The cost of assets held under finance leases is capitalised and depreciated in the same manner as owned assets. The

finance cost is charged over the term of the lease and the capital element of future lease payments is included in

creditors. Rentals payable under operating leases are charged to profit and loss account on a straight line basis.

Turnover

Turnover represents sales of goods and services net of discounts and allowances and value added taxation and includes

commission earned.

Stock and work in progress

Stock and work in progress is stated at the lower of cost and net realisable value. Where relevant, cost includes all

direct expenditure and attributable overheads. Net realisable value is the price at which stock can be sold in the

normal course of business after allowing for the costs of realisation.

Deferred taxation

Deferred tax is recognised without discounting, in respect of all timing differences between the treatment of certain

items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date, except as

otherwise required by FRS19.

16


Principal accounting policies continued

1. Segmental analysis by division

Group Joint ventures Total

2005

£m

2004

£m

2005

£m

2004

£m

2005

£m

2004

£m

Turnover

Agribusiness – 0.5 – – – 0.5

Hotels 5.8 9.4 – – 5.8 9.4

Other – – – 0.2 – 0.2

5.8 9.9 – 0.2 5.8 10.1

Operating profit/(loss)

Agribusiness – – – – – –

Hotels 0.7 – – – 0.7 –

Central (0.7) (0.6) – – (0.7) (0.6)

– (0.6) – – – (0.6)

Net assets

Hotels 2.7 16.2 – – 2.7 16.2

Property 0.2 1.2 – – 0.2 1.2

Central (1.3) (1.4) – – (1.3) (1.4)

Total operating assets 1.6 16.0 – – 1.6 16.0

Cash at bank 20.3 6.0 – – 20.3 6.0

21.9 22.0 – – 21.9 22.0

17


Notes to the financial statements

2. Segmental analysis by region

Group Joint ventures Total

2005

£m

2004

£m

2005

£m

2004

£m

2005

£m

2004

£m

Turnover by origin

Southern Africa 1.0 1.1 – 0.2 1.0 1.3

East Africa 4.8 7.6 – – 4.8 7.6

West Africa – 1.2 – – – 1.2

5.8 9.9 – 0.2 5.8 10.1

Turnover by market

Southern Africa 1.0 1.1 – 0.2 1.0 1.3

East Africa 4.8 7.6 – – 4.8 7.6

West Africa – 1.2 – – – 1.2

5.8 9.9 – 0.2 5.8 10.1

Operating (loss)/profit

Southern Africa (0.2) (0.3) – – (0.2) (0.3)

East Africa 0.9 0.2 – – 0.9 0.2

West Africa – 0.1 – – – 0.1

Europe (0.7) (0.6) – – (0.7) (0.6)

– (0.6) – – – (0.6)

Net assets

Southern Africa 2.9 4.4 – – 2.9 4.4

East Africa – 13.3 – – – 13.3

Europe (1.3) (1.7) – – (1.3) (1.7)

Total operating assets 1.6 16.0 – – 1.6 16.0

Cash at bank 20.3 6.0 – – 20.3 6.0

21.9 22.0 – – 21.9 22.0

18


Notes to the financial statements continued

3. Group net operating costs

Continuing

operations

2005

£m

Discontinued

operations

2005

£m

Total

2005

£m

Continuing

operations

2004

£m

Discontinued

operations

2004

£m

Total

2004

£m

Cost of sales (0.5) (1.8) (2.3) (0.5) (3.8) (4.3)

Distribution costs – (0.2) (0.2) – (0.4) (0.4)

Administrative expenses (1.4) (1.9) (3.3) (1.5) (4.3) (5.8)

(1.9) (3.9) (5.8) (2.0) (8.5) (10.5)

Administrative expenses include management related overheads for operations and Head Office as well as other indirect

costs not directly related to operations.

Operating costs include:

Depreciation charges:

owned tangible assets (0.1) (0.3) (0.4) (0.8) (0.2) (1.0)

Auditors’ remuneration (0.1) – (0.1) (0.2) – (0.2)

Of the total auditors’ remuneration, £72,000 (2004: £80,000) relates to the Company.

4. Non-operating exceptional items

2005

£m

2004

£m

Profit on disposal of subsidiaries:

Hotels 2.7 1.3

Agribusiness – 3.7

Profit on sale of properties 0.5 –

Profit on disposal of joint venture – 0.1

Charge for disposal and closure costs (1.0) (0.3)

Demerger costs (0.5) –

Exchange gains on discontinued activities – 0.3

Recoverable surplus in the pension scheme written off – (0.5)

1.7 4.6

Non-operating exceptional items analysed by division are as follows:

Hotels 2.7 1.3

Agribusiness – 3.7

Properties 0.5 –

Central (1.5) (0.4)

1.7 4.6

Profits 3.2 5.4

Losses (1.5) (0.8)

1.7 4.6

19



5. Employees

An analysis of the average number of persons employed during the year by division and geographical area is given

below.

Continuing

operations

2005

£m

Discontinued

operations

2005

£m

Total

2005

£m

Continuing

operations

2004

£m

Discontinued

operations

2004

£m

Total

2004

£m

Agribusiness – – – – 237 237

Hotels 133 690 823 131 1,144 1,275

Central 5 – 5 6 – 6

138 690 828 137 1,381 1,518

Southern Africa 133 – 133 131 – 131

East Africa – 689 689 – 1,272 1,272

West Africa – – – – 108 108

Europe 5 1 6 6 1 7

138 690 828 137 1,381 1,518

The aggregate payroll cost was as follows:

2005

£m

2005

£m

2005

£m

2004

£m

2004

£m

2004

£m

Wages and salaries 0.7 1.5 2.2 0.8 2.7 3.5

Social security costs – – – – 0.1 0.1

Pension costs – 0.1 0.1 – 0.1 0.1

0.7 1.6 2.3 0.8 2.9 3.7

Remuneration of Directors

2005

£

2004

£

Directors’ emoluments 145,000 86,667

Amounts paid to third parties in respect of directors’ services (included in Directors’ emoluments above) 40,000 15,000

The emoluments of the highest paid Director, Mr M S Wilson, were £65,000 (2004: £30,000). During both this year and

the previous year Mr C H B Mills and Mr R J Wilkinson each waived fees of £15,000.

20



6. Net finance income

2005

£m

2004

£m

Interest payable:

On overdrafts – (0.2)

Interest receivable 0.5 –

Net interest receivable/(payable) 0.5 (0.2)

Other finance income:

Expected return on pension scheme assets – 1.0

Interest on pension scheme liabilities – (0.8)

Net finance income 0.5 –

7. Taxation

2005

£m

2004

£m

UK corporation tax – –

Overseas:

Charge for the year 0.3 0.3

Current tax charge for the year 0.3 0.3

Reconciliation of current tax charge:

2005

£m

2004

£m

Profit on ordinary activities before tax 2.2 4.0

Profit on ordinary activities before tax at the standard UK rate of corporation tax of 30% 0.7 1.2

Profit on sale of subsidiaries (0.6) (1.4)

Expenses not allowable for tax 0.1 0.1

Net losses where no group relief available 0.1 0.4

Actual current tax charge 0.3 0.3

8. Dividends

2005

£m

2004

£m

Demerger dividend 1.6 –

On 22nd April 2005 the Group demerged Lonrho Africa Trade & Finance Limited, whose only asset was cash of

£1.6 million and, subject to the Trustee’s approval, access to a surplus on a defined benefit pension scheme. The

dividend represents the realised net asset value of Lonrho Africa Trade & Finance Limited at the date of the demerger.

21



9. Profit/(loss) per share

2005

£m

2004

£m

Profit/(loss) for the financial year before exceptional items 0.3 (0.6)

Exceptional items 1.7 4.6

Profit for the financial year 2.0 4.0

Number of shares in issue 157.6m 157.6m

Profit/(loss) per share before exceptional items 0.2p (0.4)p

Profit per share 1.3p 2.5p

10. Tangible fixed assets

Land and

buildings

£m

Plant and

machinery

£m

Fixtures and

fittings

£m

Total

£m

Cost or valuation:

At 1st October 2004 16.7 0.1 4.5 21.3

Exchange adjustments 0.4 – 0.1 0.5

Additions – – 0.1 0.1

Reversal of revaluation (0.1) – – (0.1)

Disposal of subsidiaries (14.5) (0.1) (3.7) (18.3)

At 30th September 2005 2.5 – 1.0 3.5

Depreciation:

At 1st October 2004 0.9 0.1 3.3 4.3

Exchange adjustments 0.1 – 0.1 0.2

Disposal of subsidiaries (1.1) (0.1) (2.8) (4.0)

Charge for the year 0.1 – 0.3 0.4

At 30th September 2005 – – 0.9 0.9

Net book value:

At 30th September 2005 2.5 – 0.1 2.6

At 30th September 2004 15.8 – 1.2 17.0

In accordance with the Group accounting policies no depreciation has been provided on the following assets:

2005

£m

2004

£m

Land at valuation – 4.222



10. Tangible fixed assets (continued)

Land and

buildings

£m

Fixtures and

fittings

£m

Total

£m

Valuation – 2000 2.6 – 2.6

Reversal of revaluation (0.1) – (0.1)

Cost – 1.0 1.0

2.5 1.0 3.5

Depreciation:

Valuation – – –

Cost – 0.9 0.9

– 0.9 0.9

Historical cost of revalued assets

Cost 1.8 – 1.8

Depreciation – – –

1.8 – 1.8

The Directors have valued the following assets on an open market value for existing use, after taking account of the

advice of the independent professional advisers listed below:

Property valued Independent professional adviser Qualification

Properties in Mozambique (September 2000) Knight Frank International Property Consultants

The valuations prepared by the independent professional advisers have been made in accordance with the RICS

Statement of Asset Valuation Practice and Guidance Notes. Full valuations of land and buildings were undertaken as at

30th September 2000. The Directors have reviewed the carrying values of the revalued assets as at 30th September

2005 and made an impairment as necessary.

Where properties have not been revalued, the Directors have fully reviewed all carrying values and are satisfied that

valuations have not changed significantly.

11. Other investments

Company

Subsidiaries

£m

At 1st October 2004 46.2

Demerger in year (14.7)

At 30th September 2005 31.5

The investment in respect of Lonrho Africa (Holdings) Limited is stated at the nominal value of the shares issued, in

accordance with Section 131 and 133 of the Companies Act 1985. A list of principal subsidiaries is set out in note 29

of the accounts.

On 22 April 2005 the entire issued share capital of Lonrho Africa Trade & Finance Limited was transferred by Lonrho

Africa Plc, by means of a Court approved Scheme of Arrangement, to Castle Acquisitions Plc in consideration of the

allotment of new Castle shares to qualifying shareholders.

23



12. Stocks

2005

£m

2004

£m

Raw materials and consumables 0.1 0.2

Properties held for resale 0.2 1.0

0.3 1.2

13. Debtors

Group Company

2005

£m

2004

£m

2005

£m

2004

£m

Amounts falling due within one year:

Trade debtors 0.1 1.2 – –

Other debtors 1.6 2.0 – –

Prepayments and accrued income 0.1 0.1 – –

1.8 3.3 – –

14. Creditors: amounts falling due within one year

Group Company

2005

£m

2004

£m

2005

£m

2004

£m

Trade creditors 0.1 0.4 – –

Amounts due to subsidiaries – – 26.0 38.4

Corporate tax – 0.2 – –

Payments received on account – 0.1 – –

Indirect tax and social security liabilities – 0.1 – –

Other creditors – 0.1 – –

Accruals 0.5 2.1 – –

0.6 3.0 26.0 38.4

24



15. Financial assets

The financial assets of the Group are as follows:

2005

£m

2004

£m

Cash

Sterling Pounds 20.1 5.0

Kenya Pounds 0.2 0.9

Mozambique Metical – 0.1

20.3 6.0

Financial assets comprise cash earning interest at various rates set with reference to the prevailing LIBOR or equivalent

for the relevant country.

Currency risk

The table below shows the extent to which Group companies have monetary assets in currencies other than their

functional currency. Foreign exchange differences on retranslation of such assets and liabilities are taken to the profit

and loss account.

Net foreign currency monetary assets

US$

2005

£m

Other

2005

£m

Total

2005

£m

Functional currency of Group operations

Sterling Pounds 0.1 – 0.1

At 30th September 2005 0.1 – 0.1

Net foreign currency monetary assets

US$

2004

£m

Other

2004

£m

Total

2004

£m

Functional currency of Group operations

Sterling Pounds 0.2 0.2 0.4

Kenya Pounds 1.4 0.1 1.5

At 30th September 2004 1.6 0.3 1.9

25



16. Provisions for liabilities and charges

Deferred tax

£m

Other

provisions

£m

Group

£m

Company

Other

provisions

£m

At 1st October 2004 1.1 1.4 2.5 1.0

Movement during the year (1.1) 1.1 – 1.1

At 30th September 2005 – 2.5 2.5 2.1

The other provisions are in respect of third party claims against the Group.

Deferred taxation

The amounts provided for deferred taxation are set out below:

2005

£m

2004

£m

Excess of tax allowances over depreciation of tangible fixed assets – 1.1

Deferred tax in respect of the revaluation of fixed assets of £0.3 million (2004: £1.4 million) has not been provided in

accordance with the provisions of FRS19.

17. Share capital

Company

2005

£m

2004

£m

Authorised

300,000,000 ordinary shares of 1p each (2004: 300,000,000 ordinary shares of 20p each) 3.0 60.0

Allotted, called up and fully paid

157,572,088 ordinary shares of 1p each (2004: 157,572,088 ordinary shares of 20p each) 1.6 31.5

The share capital of the Company was reduced pursuant to a Court order dated 19 April 2005 under which the nominal

value of each Lonrho Africa share was reduced from 20p to 1p. This resulted in £29.9 million being released to the

profit and loss reserves of the Company (note 18).

26



18. Reserves

Group

Merger

reserve

£m

Revaluation

reserve

£m

Profit and

loss account

£m

At 1st October 2004 96.1 7.4 (115.6)

Profit for the financial year – – 2.0

Demerger dividend – – (1.6)

Exchange adjustments to net investment in overseas companies – 0.2 0.9

Reversal of revaluation of fixed assets – (0.1) –

Depreciation on revaluation surplus in excess of historical cost depreciation – (0.1) 0.1

Disposal of subsidiaries – (6.6) 6.6

Reserves created on share capital reduction (note 17) – – 29.9

At 30th September 2005 96.1 0.8 (77.7)

Merger reserves

As described on page 15, on the demerger of Lonrho Africa Plc from Lonrho Plc on 4th March 1998 a merger reserve

of £96.1million was created which represented the difference between the nominal value of the shares issued by Lonrho

Africa Plc and the deemed value of the investments it acquired from Lonrho Plc.

Company

Profit and

loss account

£m

At 1st October 2004 (24.7)

Loss for the financial year (3.4)

Reserves created on share capital reduction 29.9

At 30th September 2005 1.8

No separate profit and loss account is provided for the Company as permitted by Section 230 of the Companies Act

1985.

19. Minority interests

Note

2005

£m

2004

£m

At 1st October 2004 2.6 4.3

Exchange adjustments 0.1 (0.2)

Loss after taxation (0.1) (0.3)

Minority interests in subsidiaries sold 28 (1.5) (1.2)

At 30th September 2005 1.1 2.6

20. Contingent liabilities

The Group had no contingent liabilities as at 30th September 2005 and 30th September 2004.

21. Commitments

The Group had no commitments under either capital contracts or lease agreements at 30th September 2005 and

30th September 2004.

22. Related party transactions

There were no related party transactions during the year.

27



23. Post balance sheet events

There have been no significant events since the balance sheet date.

24. Net cash flow from operating activities

Continuing

operations

2005

£m

Discontinued

operations

2005

£m

Total

2005

£m

Continuing

operations

2004

£m

Discontinued

operations

2004

£m

Total

2004

£m

Operating (loss)/profit (0.9) 0.9 – (0.9) 0.3 (0.6)

Depreciation charge 0.1 0.3 0.4 0.2 0.6 0.8

Current cost of servicing pension – – – – 0.1 0.1

Decrease/(increase) in stocks – 0.1 0.1 – (0.1) (0.1)

Decrease/(increase) in debtors – 1.6 1.6 – (0.9) (0.9)

Increase/(decrease) in creditors – 0.2 0.2 – (0.2) (0.2)

(0.8) 3.1 2.3 (0.7) (0.2) (0.9)

25. Net proceeds from disposals of subsidiaries and joint ventures

Note

2005

£m

2004

£m

Sale of subsidiaries 28 15.2 10.5

Disposal and closure costs (1.0) –

Costs of demerger (0.5) –

Sale of joint ventures – 0.3

13.7 10.8

26. Reconciliation of net cash flow to movement in net cash

2005

£m

2004

£m

Increase in net cash in the year 14.2 9.4

Exchange rate movements 0.1 (0.2)

Movement in net cash 14.3 9.2

Balance at beginning of year 6.0 (3.2)

Net cash at the end of year 20.3 6.0

27. Analysis of net cash

1st October

2004

£m

Net

cash flows

£m

Disposal of

subsidiary

£m

Exchange

movement

£m

30th September

2005

£m

Cash 6.0 14.6 (0.4) 0.1 20.3

28



28. Sale of subsidiaries

Net assets sold Note

Subsidiaries

sold

£m

Tangible fixed assets 14.3

Stocks 0.3

Debtors 1.3

Cash at bank 0.4

Creditors (1.2)

Deferred tax (1.1)

14.0

Less: minority interests 19 (1.5)

Group’s share of net assets sold 12.5

Net cash consideration 15.6

Cash at bank (0.4)

25 15.2

29. Subsidiaries

The principal subsidiaries of Lonrho Africa Plc are set out below:

Country of incorporation

Direct and

beneficial interest

in ordinary share

capital as at

30th September

2005

%

Hotels

Hotel Cardoso SARL Mozambique 59

Property

Matrix Projects (Pty) Limited South Africa 100

29



Secretary and registered officeJ H Hughes

C/o DSG

Castle Chambers

43 Castle Street

Liverpool L2 9TL

Telephone 020 7016 5100

Telefax 020 7016 5104

e-mail: [email protected]

Registered in England

Number 2805337

RegistrarsLloyds TSB Registrars

The Causeway

Worthing

West Sussex

BN99 6DA

Telephone 0870 600 3970

AuditorsKPMG Audit Plc

8 Princes Parade

Liverpool

L3 1QH

South African transfer secretariesComputershare Investor Services 2004 (Pty) Ltd

PO Box 1053

Johannesburg 2000

South Africa

Telephone 011 370 5000

Telefax 011 370 5271/2

Principal group bankersBarclays Bank Plc

Standard Chartered Bank

Anglo Irish Bank Corporation plc

Nominated AdviserStrand Partners Limited

StockbrokersNumis Securities Ltd

Java Capital (Pty) Ltd

30


Corporate information

NOTICE IS HEREBY GIVEN that the next Annual General Meeting of Lonrho Africa Plc will be held at the Hyde Park Suite,

The Thistle Marble Arch, Bryanston Street, London W1A 4UR at 2.30 pm on Friday, 28 April 2006 for the following

purposes:

Ordinary Business:

1. To receive the Report of the Directors, the accounts for the year ended 30 September 2005, and the auditors’

report thereon.

2. To re-elect Mr D A Lenigas, who has been appointed by the Board since the last Annual General Meeting, as a

Director.

3. To re-elect Ms E K Priestley, who has been appointed by the Board since the last Annual General Meeting, as a

Director.

4. To re-elect Mr R J Wilkinson, who retires by rotation, as a Director.

5. To re-appoint KPMG Audit Plc as auditors of the Company to hold office from the conclusion of the meeting until the

conclusion of the next general meeting of the Company at which financial statements are laid before the Company

and to authorise the Directors to agree their remuneration.

Special Business:

6. To consider, and if thought fit, to pass the following ordinary resolution:

That, pursuant to section 80 of the Companies Act 1985 (the ‘‘Act’’) and in substitution for all existing authorities

under that section, the Directors be and are generally and unconditionally authorised to exercise all powers of the

Company to allot relevant securities (within the meaning of section 80 of the Act) up to an aggregate nominal

amount of £700,000, provided that (unless previously revoked, varied or renewed) this authority shall expire at the

conclusion of the next Annual General Meeting of the Company save that the Company may make an offer or

agreement before the expiry of this authority which would or might require relevant securities to be allotted after

such expiry and the Directors may allot relevant securities pursuant to any such offer or agreement as if the

authority conferred by this resolution had not expired.

7. To consider, and if thought fit, to pass the following special resolution:

That, subject to the passing of resolution 6, pursuant to section 95 of the Act and in substitution for all existing

authorities under that section, the Directors be and are generally empowered to allot equity securities (within the

meaning of section 94(2) of the Act) for cash pursuant to the authority conferred by resolution 6 as if

section 89(1) of the Act did not apply to any such allotment, provided that this power shall be limited to:

7.1 the allotment of equity securities in connection with an offer (whether by way of a rights issue, open offer or

otherwise) to holders of ordinary shares in the capital of the Company in proportion (as nearly as practicable)

to the respective numbers of ordinary shares held by them, subject to such exclusions or other arrangements

as the Directors may deem necessary or expedient in relation to fractional entitlements or any legal or practical

problems under the laws of any territory or the requirements of any regulatory body or stock exchange;

7.2 the allotment of equity securities for cash (otherwise than pursuant to paragraph 7.1 above) up to an aggregate

nominal amount of £700,000.

and (unless previously revoked, varied or renewed) shall expire at the conclusion of the next Annual General Meeting

of the Company save that the Company may make an offer or agreement before the expiry of this power which

would or might require equity securities to be allotted for cash after such expiry and the Directors may allot equity

securities for cash pursuant to any such offer or agreement as if the power conferred by this resolution had not

expired.

31


Notice of Annual General Meeting

8. To consider, and if thought fit, to pass the following special resolution:

That the Board be authorised to adopt one or more discretionary bonus schemes or long-term incentive plans

(‘‘Schemes’’) pursuant to which Directors, employees and/or consultants may be allocated shares or options to

acquire shares (by subscription or purchase) at a price that may be less than the market value at the time of

grant, including nil cost options, restricted share allocations and/or cash bonuses with the right to acquire shares

at par value:

8.1 in each case based on performance relating to shareholder value, such awards to be subject to approval by the

Remuneration Committee of the Board; and

8.2 so that the total number of shares issued or issuable pursuant to such Schemes, when added to the number of

awards made under any other plan or plans adopted by the Company which provides for the acquisition of, or

subscription for, shares by or on behalf of Directors, employees or consultants of the Company or any member

of the Lonrho Africa Plc Group (excluding options granted from time to time under existing approved or

unapproved share option schemes) shall not exceed 10 per cent of the Company’s shares in issue from time

to time (excluding any Treasury Shares and excluding any awards that have lapsed or been released) but limited

in any one year to 4 per cent. of the Company’s shares in issue (and the limits on the total number of options

granted from time to time under existing approved and unapproved share option schemes of the Company shall

be amended so far as possible to exclude from such limits the number of shares issued or issuable under the

new Schemes entered into pursuant to this resolution).

By order of the Board

J H Hughes

Secretary

29 March 2006

Registered office:

C/o DSG

Castle Chambers

Castle Street

Liverpool

L2 9TL

Registered no. 2805337

Notes:

1. A member entitled to attend and vote at the above meeting is entitled to appoint one or more proxies to attend and vote in his place.

A proxy need not be a member of the Company, but is not entitled to vote except on a poll. A form of proxy is enclosed for use at this meeting.

2. To be valid, a completed form of proxy, together with a power of attorney or other authority, if any, under which it is signed (or a notarially certifiedcopy thereof), must be deposited at the offices of the Company’s registrars, Lloyds TSB Registrars, The Causeway, Worthing, West SussexBN99 6AZ or Computershare Investor Services 2004 (Pty) Limited, postal address PO Box 61763, Marshalltown 2107, South Africa, not less than48 hours before the time set for the meeting or adjourned meeting (as the case may be).

In respect of South African shareholders, forms of proxy must only be filled in by certificated shareholders or own name dematerialised shareholders.Dematerialised shareholders in South Africa who are not own name dematerialised shareholders must follow the instructions set out in note 6 below.

3. Completion and return of a form of proxy will not prevent a shareholder from subsequently attending and voting in person at the Annual GeneralMeeting.

4. In the case of joint holders of shares, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion ofthe other joint holder(s) and for this purpose seniority will be determined by the order in which the names stand in the register of members of theCompany in respect of the relevant joint holding.

5. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those shareholders registered in theRegister of Members of the Company as at 6.00 pm on 26th April 2006, or in the event that the meeting is adjourned, in the Register of Members asat 6.00 pm on the day that is two days prior to any adjourned meeting, shall be entitled to attend or vote at the meeting in respect of the number ofshares registered in their name at the relevant time. Changes to entries on the Register of Members after 6.00 pm on 26th April 2006 or, in theevent that the meeting is adjourned, 6.00 pm on the day that is two days prior to the day of any adjourned meeting, shall be disregarded indetermining the rights of any person to attend or vote at the meeting.

6. Dematerialised shareholders in South Africa who are not own name dematerialised shareholders and who wish to attend the Annual General Meetingshould instruct their CSDP or broker to issue them with the necessary authority to attend the meeting in person, in the manner stipulated in the

32


Notice of Annual General Meeting continued

custody agreement governing the relationship between such shareholders and their CSDP or broker. These instructions must be provided to theCSDP or broker by the cut-off time and date advised by the CSDP or broker for instructions of this nature.

Dematerialised shareholders in South Africa who are not own name dematerialised shareholders and who cannot attend but who wish to vote at theAnnual General Meeting should provide their CSDP or broker with their voting instructions, in the manner stipulated in the custody agreementgoverning the relationship between such shareholders and their CSDP or broker. These instructions must be provided to the CSDP or broker bythe cut-off time and date advised by the CSDP or broker for instructions of this nature.

7. Resolutions Nos. 6 and 7 – Authority to allot shares/Disapplication of pre-emption rights

The Companies Act 1985 provides that Directors shall only allot unissued shares with the authority of shareholders in general meetings. The previousauthority given to the Directors to allot (or issue) unissued shares pursuant to Section 80 of the Companies Act 1985 expired in 2004.

Resolution 6 will be proposed as an ordinary resolution for the renewal of the Directors’ general authority to issue relevant securities up to anaggregate nominal amount of £700,000 representing approximately 44 per cent. of the current issued share capital of the Company. TheDirectors have no present intention of exercising this authority, save to satisfy the exercise of any options which may have been issued by theCompany in accordance with their terms, but will keep the matter under review.

The Companies Act 1985 also provides that any allotment of new shares for cash must be made pro rata to individual shareholders’ holdings unlesssuch provisions are disapplied under Section 95 of the Companies Act 1985. The previous authority given to the Directors to allot shares for cashpursuant to Section 95 of the Companies Act 1985 expired in 2004.

Resolution 7 will be proposed as a special resolution for the renewal of the Directors’ authority to allot equity securities for cash, without first offeringthem to shareholders pro rata to their holdings. This authority disapplies existing shareholders’ rights of pre-emption on an issue of the shares of theCompany made by way of rights and authorises other allotments of up to a maximum aggregate nominal amount of £700,000, representingapproximately 44 per cent. of the current issued ordinary share capital of the Company. The Directors have no present intention of exercising thisauthority but will keep the matter under review.

The authorities granted under resolutions 6 and 7 will expire at the next Annual General Meeting.

The Directors require the above authorities, which are in excess of the recommendations of the Association of British Insurers, in order to provideflexibility in the pursuit of the recently endorsed investment strategy.

8. Resolution No. 8 – Share Bonus and Long Term Incentive Plan (‘‘LTIP’’)

Resolution 8 will be proposed as a special resolution and seeks the approval of the adoption of bonus awards of shares (or of cash to purchaseshares) including the use of LTIPs allocating shares for Directors, employees and consultants. In each case such awards would be subject to theapproval of the Remuneration Committee of the Board.

In each case the awards will be based on performance in terms of shareholder value. However, as the Company is at an early stage of embarking onits new investment strategy recently approved by shareholders, it is not possible to seek approval for a specific scheme. The Board considers itnecessary and desirable to introduce one or more schemes during the course of the coming year when it is important to attract individuals fromindustry and the banking fraternity and to motivate these and other key individuals who will be implementing the new strategy and to align theirinterests with those of shareholders.

In finalising the form of scheme the Remuneration Committee will have regard to prevailing taxation and accounting issues. When schemes areimplemented an appropriate announcement will be made to shareholders.

9. Recommendation

The Directors believe that the passing of all resolutions will be in the best interests of the Company and its shareholders as a whole and areunanimous in recommending that shareholders vote in favour of them. All the votes attaching to the shares in which they are interested (totallingsome 503,818 shares which represent some 0.32 per cent. of the Company’s issued share capital) will be cast in favour.

33


Notice of Annual General Meeting continued

Analysis of ordinary shareholdings at 28 February 2006

Number of

holders

% of

total

holders

Number

of shares

% of

total

shares

United Kingdom Register

Category of shareholder

Individuals 19,497 91.50 16,749,564 10.63

Banks, nominees and other corporate bodies 811 3.80 140,355,535 89.07

20,308 95.30 157,105,099 99.70

Branch Register

Category of shareholder

Individuals 857 4.02 206,239 0.13

Banks, nominees and other corporate bodies 144 0.68 260,750 0.17

1,001 4.70 466,989 0.30

Both Registers

Shareholding range

1 – 500 15,153 71.11 2,419,582 1.53

501 – 1,000 2,875 13.49 2,028,053 1.29

1,001 – 5,000 2,641 12.40 5,263,784 3.34

5,001 – 50,000 516 2.42 7,246,642 4.60

50,001 – 100,000 34 0.16 2,520,005 1.60

100,001 – 500,000 54 0.25 13,608,387 8.64

500,001 – 1,000,000 10 0.05 7,563,369 4.80

1,000,001 and over 26 0.12 116,922,266 74.20

21,309 100.00 157,572,088 100.00

34


Shareholder information

Capital gains tax base cost of shares at demerger

For capital gains tax purposes, shareholders disposing of shares in either Lonrho Africa Plc or Lonmin Plc after 7th May

1998, who held shares prior to that date, should apportion the base cost of their original Lonmin Plc shares between the

two companies. Based on the closing share prices on 7th May 1998 of Lonrho Africa Plc and Lonmin Plc this

apportionment would be 19.502 per cent. for Lonrho Africa Plc and 80.498 per cent. for Lonmin Plc.

For capital gains tax purposes, shareholders disposing of shares in either Castle Acquisitions Plc or Lonrho Africa Plc

after 3rd May 2005, who held shares prior to that date, should apportion the base cost of their original Lonrho Africa Plc

shares between the two companies. Based on the closing share prices on 3rd May 2005 of Castle Acquisitions Plc and

Lonrho Africa Plc this apportionment would be 18.1667 per cent. for Castle Acquisitions Plc and 81.8333 per cent. for

Lonrho Africa Plc.

Registrars

All administrative enquiries relating to shareholdings, such as queries concerning dividend payments, notification of

change of address or the loss of a share certificate, should be addressed to the Company’s registrars.

Any United Kingdom shareholder wishing dividends to be paid directly into a bank or building society, with the tax

voucher being sent directly to the shareholder’s registered address, should contact the registrar for a dividend

mandate form.

Free share sale facility

The Company welcomes shareholders regardless of the size of their holding. However, it recognises the often

disproportionate cost to smaller shareholders of disposing of their investments. In view of this the Company has

arranged for its Registrars to offer a share sale service free of charge to investors with a holding of 1,000 shares or

less. Details of the service can be obtained by telephoning Lloyds TSB Registrars on +44 (0) 870 600 3970, or

Computershare Investor Services Limited on (011) 370 5198.

ShareGift

Lonrho Africa supports ShareGift, the share donation charity (registered charity 1052686) which accepts donations of

shares which would otherwise be uneconomic to sell, collects them into holdings that are large enough to sell and uses

the proceeds for the benefit of UK Charities. ShareGift has given millions of pounds to hundreds of different charities

since it was launched in 1996. Donating shares to charity in this way gives rise neither to a gain nor a loss for Capital

Gains Tax purposes.

Shareholders who wish to donate shares in this way can contact Lloyds TSB Registrars (telephone +44 (0) 870 606

3021) or, for further information, ShareGift (The Orr Mackintosh Foundation), www.ShareGift.org or telephone

+44 (0) 207 828 1151.

Unsolicited mail

As the Company’s share register is, by law, open to public inspection, shareholders may receive unsolicited mail from

organisations that use it as a mailing list. Shareholders wishing to limit the amount of such mail should write to the

Mailing Preference Society, Freepost 22, London W1E 7EZ.

35


Shareholder information continued

Printed by greenaways, a member of the ormolu group. 162501

Registered office

C/o DSG

Castle Chambers

43 Castle Street,

Liverpool L2 9TL

new annual report 2005 - sharedata · 2007. 7. 23. · the proﬁt for the year amounted to £2...

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