Cambria Africa Regulatory News (CMB)

15 Oct 2009 07:00



15 October 2009 

LONZIM PLC

("LonZim" or the "Company")

LonZim Plc, the investment company focused on Zimbabwe : Market Update

LonZim plc ( AIM : LZM ) is pleased to provide an update on the status of its operations. Following the successful IPO in December 2007 at which the Company raised £ 28.7m for acquisition and investment into Zimbabwe, it has now completed seven significant transactions and built a portfolio of businesses in Zimbabwe that are well positioned to benefit from economic recovery. LonZim was created to establish a strong portfolio of businesses in Zimbabwe and the Beira corridor that geographically delivered a  London Stock Exchange quoted conglomerate soley focussed on Zimbabwe. 

LonZim believes that significant milestones have been passed to stimulate economic recovery in Zimbabwe :

Government of National Unity is established and operating

The country has formally accepted the US dollar as a currency

Hyperinflation has disappeared and the US dollarization has produced a stable economic platform for business

International institutions such as the IMF and the South African Development Community (SADC) are subscribing to debt relief and financial support to help stimulate and rebuild the economy.

The recent gradual return towards a normal economic environment provides a strong platform for LonZim's current investments to build market share and grow each business. To date, LonZim has invested 80% of funds raised in the following sectors :

Commercial property 8%

Hotels  38%

IT / telecoms / Printing 24%

Aviation 16%

Agriculture services 3%

Pharmaceutical Distribution 7%

Significant Discount

The current LonZim market capitalization stands at approximately a 62% discount to the acquisition cost for the portfolio of LonZim businesses. ( ignoring rises in Zimbabwean market values ).

The portfolio of LonZim investments is focused on market sectors that it is believed will recover quickly as the economic status quo in Zimbabwe normalises. LonZim purchases to date include :

Leopard Rock Hotel : 

Set in the beautiful Vumba mountains in the east of Zimbabwe, this iconic hotel was acquired for US$ 8.5m and is undergoing a US$ 1.7m refurbishment which is expected to be completed in March 2010. The hotel purchase included a world class golf course, recently awarded 'PGA Excellence' classification, and a 400 hectare game reserve. A feasibility study is under way to add further accommodation, a world class spa and upgrade the hotel to one of the premier locations in Africa. 

The Government of National Unity has identified the tourism sector as one for rapid recovery and has introduced tax exemptions on the import of materials for refurbishment and development of tourism projects. 

Aldamento Turistico de Macuti

Located on the coast at Beira, Mozambique, this 300,000m2 plot of prime development land was acquired for US$ 4.25m. Owned 79% by LonZim Plc and 21% by the Government of Mozambique, the site is adjacent to Beira town, known as the 'coast' of landlocked Zimbabwe. Historically the site had two large four star hotel properties that were popular destinations for Zimbabwean businessmen ( Beira is the nearest port to Zimbabwe ) and for Zimbabwean holidaymakers. LonZim intends to develop a new five star beach front hotel and bring third party developers for a retail shopping mall with offices. The site includes 1.5km of pristine beach front which is planned to be sold off plan and developed as high quality costal housing.

Paynet 

LonZim acquired Paynet for US$ 3.19m. The purchase price included the newly built commercial premises and offices in the prime Harare office area from which the company operates which was valued in excess of US$ 1m. 

Paynet provides the electronic funds transfer 'switch' services for 19 of the 21 banks in Zimbabwe, along with payroll services for major companies in Zimbabwe and a payroll bureau service. The company also provides microfinance loans to corporate employees on a salary deduction at source model.

Panafmed

LonZim invested US$ 2.3m for 51% of a new start up business that imports, wholesales and distributes pharmaceutical products in Zimbabwe. Panafmed has filled an essential market need supplying NGO's, private and public hospitals, clinics and pharmacies with quality products delivered via a professional, secure and chilled refrigerated logistics chain. 

Celsys 

Listed on the Zimbabwe Stock Exchange, Celsys Limited is a security printing, IT, promotions and telecommunications focused company. LonZim owns 60% of the company and the premises from which the company operates. Celsys is the country's largest producer of telephone scratch cards and has recently generated a unique promotion with Spar retailers and Coca Cola utilising secure promotional scratch cards. 

Celsys has also obtained the distribution rights for Diebold ATM's and is installing these state of the art ATM's in Kingdom bank branches along with 2,000 Point of Sale machines across the country.

Millpal Chemicals

Millpall is a leading market supplier of industrial chemicals. Utilising bespoke underground mixing and blending tanks located in Harare, the company provides chemicals to the leading companies in Zimbabwe. It also makes 'own brand' household and chemical cleaning products.

Fly540 Zimbabwe

Fly540 Zimbabwe is a regional aviation franchise operated under the Lonrho Fly540 pan African aviation franchise already successfully launched in East Africa. LonZim holds the rights to Fly540 Zimbabwe.

Fly540 Zimbabwe will provide domestic and regional aviation services to Zimbabwe. Operated from Harare, the airline will provide safe, reliable and punctual scheduled services to the local market. Good transportation infrastructure is essential to economic growth.

FMNA ( Africa )

LonZim has invested in an option to acquire 51% of FMNA ( Africa ). The company provides a unique software solution for mobile telephone handsets that facilitates two way instant messaging and email technology. This permits even the most basic mobile handset to be able to send and receive emails, secure messaging ( banking ) and other information services.

With a successful trial with Econet Lesotho and a subsequent full rollout, plans are under development following the stablisation of the US dollar economy for a significant trial with Econet Zimbabwe. A series of other African countries are also establishing trials for the FMNA technology.

Transaction Pipeline

Transactions in Zimbabwe are currently taking between six and eight months to complete from initial discussions. LonZim is currently reviewing a number of potential investment opportunities including:

The [acquisition] and development of a new five star hotel property located in the prime area of Harare to complement the current LonZim hotel portfolio at Beira and Mutare.

The proposed purchase of a large industrial warehousing complex in Harare.

The proposed  development of a new agri-processing facility in Harare

Expansion of the Leopard Rock hotel

New Directors Appointed

Two new Directors have recently been appointed to LonZim. 

David Armstrong, the Lonrho Plc Finance Director, has also assumed the role of Finance Director for LonZim Plc. David is an experienced finance director, with extensive knowledge of the African market, gained whilst the Commercial Director at Diageo Africa.

Colin Orr Ewing has been appointed as a non executive Director of the Company. Colin is highly experienced in the African resources sector and his career as an investment manager, initially with Shell Pension Fund and thereafter with a series of fund managers focused on Africa, brings a strong set of independent skills to the Board.

Enquiries