Lonrho Regulatory News (LONR)

27 May 2009 07:00



27 May 2009

LonZim Plc

("LonZim" or the "Company")

Interim Results 2009

LonZim Plc (AIM: LZM), an investment company focussed on Zimbabwe, is pleased to announce its interim results for the period from 1 September 2008 to 28 February 2009. 

David Lenigas, Executive Chairman of LonZim commented:

"We are extremely pleased with the progress made by the Company during the period to 28 February 2009. The results showing a loss of £746,000 reflect that the Company has continued to deliver on its mandate to identify key investment opportunities in strategic sectors in Zimbabwe. These will position the Company to grow and expand in the event of an economic recovery. We remain confident that our chosen sectors demonstrate considerable potential to create value for shareholders as well as benefit the people of Zimbabwe as change occurs."

"Recently we have seen some very positive progress made in Zimbabwe as international support for the country grows. We are positive that the investment potential in Zimbabwe remains strong and that Zimbabwe has a very bright future as it looks to re-establish its presence as one of the major economies on the African continent."

Enquiries

The interim report and financial statements are being posted to shareholders and will be published on the Company's website (www.lonzim.co.uk) today.

Chief Executive Officer's Statement

Zimbabwe has seen a difficult six months and both the economic and political environment have been challenging. However, significant progress has been made since the period end and there is optimism that Zimbabwe has entered a period of consolidation and the economic decline of a country, once so successful, is coming to an end. 

The Government of National Unity was formed on 5 February 2009 and the coalition, although fractious, is a positive step forward and has created a platform capable of change and development.

The economy has now formally become US dollar based. This has brought significant stability to the business environment and sets the stage for normal business practices to be reintroduced and for commerce to be able to move forward. However, a lack of foreign currency exchange still remains a major economic issue. 

The Zimbabwe stock exchange resumed trading on the 25 February 2009.

US dollarisation has curbed the recent rampant hyperinflation and January inflation was reported as 2.3% with deflation of 3.4% in February. This introduces new challenges for the economy as it enters a period of realignment and adjustment.

In excess of US$1 billion has now been structured by SADC and other bodies to stimulate recovery.

Results for the period:

The loss for the period of £746,000 (£716,000 for the 7 month period to 31 May 2008) reflects the ongoing development of the Group's investments and is in line with expectations.

LonZim continues to focus on commercial opportunities in Zimbabwe and the Beira corridor and looks to invest in industries that the Board believes will show strong and speedy recovery when Zimbabwe begins economic growth.

The historic investments made by LonZim in Zimbabwe continue to trade in the difficult economic environment. The focus for each company has been to retain quality staff and the capabilities necessary to grow and gain market share as and when Zimbabwe recovers. Each is well positioned to do so, and with LonZim backing, the portfolio of investments is strategically placed to be able to benefit from the recovery.

During the period: 

Aldeamento Turistico de Macuti, SARL 

The design and feasibility study for the 300,000m2 site acquired for development in Beira, Mozambique, (known as the 'coast of Zimbabwe') has been completed. This key site in Beira will be developed to contain a beach front hotel, beach club and sports facilities, retail mall, office complex and conference centre. This seaside site will also sell housing on a 1.5km beach front residential area adjacent to the hotel. 

Paynet Limited (''Paynet'')

LonZim completed the acquisition of 100% of Paynet in October 2008, announced in March 2008, for US$3.19 million (£2.03 million). The purchase included a newly built commercial property valued provisionally at US$1.0 million (£0.66 million). Paynet provides an electronic funds transfer (EFT) system for sixteen banks in Zimbabwe and over one thousand of the largest Zimbabwean corporate clients.

Paynet automates company bulk payment transactions to corresponding banks and includes the largest private sector outsourced salary bureau utilised by the majority of large corporations in Zimbabwe for payments of electronic payrolls.

ForgetMeNot Africa Limited ("FMN Africa'')

LonZim has taken up an option to acquire a 51% stake of FMN Africa which provides a 'message optimiser' application for mobile phones for the sum of US$0.58 million (£0.35 million), with a further payment related to the growth of the business of US$1.0 million (£0.66 million). This system provides a unique two-way SMS - SMS instant messaging and email technology platform whereby emails and interactive messages can be received and sent on a basic mobile phone. The system does not require a G3 capability.

Telecom company Econet Lesotho has already instigated a new trial for the service and negotiations continue to launch this exciting product across a range of telecom users in Zimbabwe and the surrounding countries.

Fly540

LonZim has allocated funding to establish a franchise in Zimbabwe of Lonrho's regional aviation company, Fly540, and is working to obtain the necessary flying permissions and Air Operators Certificate to start a domestic and regional focused airline for both passenger and freight operations. 

Post period end transactions

Medalspot (Pvt) Limited ("Medalspot")

In January 2009 LonZim purchased 100% of Medalspot from the Kingdom Banking Group for US$0.95 million (£0.64 million).

Medalspot owns two, combined, industrial properties in Harare which are currently rented to Celsys (LonZim 60% holding). The property is 6,600m2 providing 2,650m2 of office and factory space. 

Leopard Rock Hotel Company (Pvt) Limited ("Leopard Rock Hotel")

In April 2009, Lonzim, acquired 100% of the iconic Leopard Rock Hotel in Vumba in the Eastern Highlands of Zimbabwe for US$8.5 million (£5.8 million). This was historically one of the great African destination hotels and LonZim believes the opportunity to develop the hotel to once again become a prominent destination for African tourism is significant. Since its acquisition, LonZim has had the hotel's 18 hole golf course classified as a PGA excellence course, and has commenced a major refurbishment programme to bring it back up to international standards.

Ongoing due diligence is in process on a strong pipeline of further acquisitions.

LonZim remains the only company on the London Stock Exchange (AIM) that is solely focused on investing in the economic recovery of Zimbabwe. The Board continues to believe that Zimbabwe will become, once again, one of the leading economic drivers in Africa in the medium term and that the commercial opportunities to partake and invest in Zimbabwe's eventual recovery are significant.

Geoffrey WhiteDirector and Chief Executive Officer27 May 2009

  LonZim Plc

Consolidated interim income statement

LonZim Plc

Consolidated interim balance sheet

As at 28 February 2009

LonZim Plc

Consolidated interim statement of recognised income and expense

For the six months ended 28 February 2009

LonZim Plc

Consolidated interim statement of cash flows

   Note of Preparation 

These interim financial statements for the period ended 28 February 2009, which are neither audited or reviewed have been prepared on a basis consistent with International Financial Reporting Standards ("IFRS") and do not comprise full accounts within the meaning of S240 of the Companies Act 1985.

This unaudited interim report does not comprise the Group's statutory accounts. The financial information in respect of the period ended 31 August 2008 is extracted from the statutory accounts for this period. The auditor's report on these accounts was unqualified.

Basic and diluted earnings per share are arrived at by dividing the loss for the period by the average number of shares in issue during the period. 

  Directors

David Lenigas Chairman

Geoffrey White Director & Chief Executive Officer

Jean Ellis  Finance Director

Emma Priestley Executive Director

Paul Turner Non-Executive Director

Paul Heber Non-Executive Director

Corporate Information