Acquisition of Paynet Limited

5 Mar 2008 07:01

LonZim PLC05 March 2008 5 March 2008 LonZim Plc LonZim acquires Paynet Limited LonZim Plc ("LonZim" or the "Company"), which has been established for theprincipal purpose of making investments in Zimbabwe and the Beira corridor inMozambique, is pleased to announce that it has signed an agreement to acquire a100 per cent. shareholding in Paynet Limited, which in turn is the beneficiaryof Lanuarna Trust Zimbabwe ("Lanuarna"). The consideration is US$3,187,000, which LonZim will pay in cash out of its ownresources. Included in the acquisition is the newly built, modern commercialproperty in Harare from which Paynet Zimbabwe operates, valued at US$1,025,000,and other fixed and current assets valued at $371,500. Based on the Zimbabwe Dollar monthly earnings for Lanuarna for 2007, convertedto US Dollar figures using the Old Mutual Implied Rate, the profit before taxfor 2007, after removing non-realised exchange rate losses and non-recurringexpenses, was US$569,000, giving a PBT multiple of 3.15. Lanuarna wholly owns three operating companies in Zimbabwe - Paynet Zimbabwe,Paywell and Autopay - and holds 100 per cent of the property holding company, LeHar. It also has a 51 per cent stake in a joint venture company, Tradanet. Lanuarna has been established and successfully operating in Zimbabwe for tenyears and has experienced growth in its core businesses in the past four years,despite the current economic situation. The Paynet Zimbabwe system is an Electronic Funds Transfer (EFT) system thatautomates the process of companies transmitting bulk payment instructions totheir corresponding banks and financial institutions such as salary transfers,supplier/trade payments and direct debits. This creates a cost-effective andefficient means of transferring funds that is advantageous to both the companyand the bank, which has contributed greatly to the rapid success of PaynetZimbabwe in the past few years, particularly as more basic manual fund transfermethods have become more expensive and error-ridden. In addition to the provision of software systems Paynet Zimbabwe provides acomplete outsourced service to its clients for the management of the systems andfor providing all training and ongoing technical support to corporate users. AutoPay is Zimbabwe's largest private sector outsourced salary bureau,processing salaries for corporate clients across Zimbabwe. Apart from simplycalculating and processing salaries, Autopay provides a complete end-to-endservice for managing salary payments, third party payroll creditors, submissionof statutory returns, medical aid returns, pension payments, printing of payslips and production of hard and soft copy accounting reports. Paywell in Zimbabwe is an agent for the Paywell payroll system, licensed out ofSouth Africa. Paywell sells and supports the payroll software to Zimbabwe'slargest companies. The company offers both support and training to users eitherthrough its own in-house staff or through a number of consultants that have thenecessary skills. Tradanet is a 51% owned joint venture company with Ottonby (Pvt) Ltd. Tradanetprovides a service for client employees to access small loans at reducedinterest rates from the Central Africa Building Society. Le Har is a property owning company and holds the title deeds for the modern andup-market Lanuarna offices in the Mt Pleasant Business Park. David Lenigas, Executive Chairman of LonZim, commented: "The purchase of Paynet, strategically complements LonZim's previous investmentin the Zimbabwean publicly listed company Celsys. These are businesses that arealready successful in the current economic environment, demonstrating theirstrength and potential, and are incredibly well positioned to benefitsignificantly from an economic upturn in Zimbabwe. With low overheads and astrong and established client base we believe that the acquisition addsconsiderable value to the growing LonZim portfolio of companies and we lookforward to building the LonZim stable of financial companies in this excitingmarket." It should be noted that the figures used in this announcement have been derivedfrom Zimbabwe Dollar based accounts; Lanuarna operates in a hyper-inflationaryenvironment subject to exchange rate fluctuations making its financialstatements (and those of its subsidiaries) and conversion to US Dollar figuresopen to wide differences in interpretation. In an effort to quantify thetransaction values, Ernst & Young Zimbabwe have calculated a US Dollar earningsfigure for Lanuarna by converting the Zimbabwe Dollar monthly earnings figuresfor 2007 to US Dollar figures using the Old Mutual Implied Rate. ENQUIRIES Lonrho Plc +44 (0)20 7016 5105 David Lenigas, Executive Chairman +44 (0)7881 825 378Geoffrey White, Chief Executive Officer +44 (0)7717 307 308Emma Priestley, Executive Director +44 (0)7867 785 177 Pelham PRCharles Vivian +44 (0) 20 7743 6672 +44 (0) 7977 297903James MacFarlane +44 (0) 20 7743 6375 +44 (0) 7841 672831 Collins Stewart Europe: NOMADHelen Goldsmith +44 (0) 20 7523 8350 NOTES TO EDITORS About LONZIM: LonZim Plc ("LonZim") is a company focused on developing and acquiring businessopportunities primarily in Zimbabwe and the region of Mozambique known as theBeira Corridor, which links Zimbabwe to the coast. LonZim was listed on the AIMmarket of the London Stock Exchange on 11th December 2007 after raising £29.16million. LonZim is 20 per cent. owned and managed by Lonrho Plc (AIM: LONR) acompany strategically focused on the development of business opportunities ininfrastructure, transportation, support services and natural resourcesthroughout Africa. Since listing in December 2007, LonZim has invested in or acquired control of: Celsys Limited www.celsys.co.zwGardoserve (Private) Ltd t/a Millpal Chemicals Aldeamento Turistico de Macuti, SARL., a company owning land in central Beira onthe Mozambique coast This information is provided by RNS The company news service from the London Stock Exchange