Lusaka Businessman Lawrence Sikutwa has reacted to an exposé carried by Lusaka Times on the dissolution of his LSA Group of Companies stating that the Group is still intact with no plans of dissolution.

In a statement released late on Friday, Dr Sikutwa maintained that the LSA Group is still intact and that there no plans to dissolve it adding that it shall remain a flagship investment company in Zambia.

He stated that the article regarding the dissolution of the company is factually incorrect and refuted the assertions.

Dr Sikutwa however admitted that some subsidiaries under the Madison Finance Group are facing some challenges but said plans are underway to resolve the challenges.

He admitted that it was resolved that the shared services that were provided by the LSA Group to Madison Financial Services be stopped following the restructuring and rationalization of the Group on May 1st 2020.

“I do admit that some subsidiaries in the MFS Group face some challenges brought about by a number of reasons including the widely reported situation in Madison Asset Management Company (MAMCO). Rest assured that the said challenges are firmly being addressed so that they are resolved to ensure the businesses adapt, restructure and continue to thrive in the new normal,” Dr Sikutwa stated.

“In this regard, efforts include, capital raising, seeking new partners and rebuilding trust. Corporates do face up and down business and we are no different but it would not be appropriate to delve into operational matters of the MFS subsidiaries suffice to state that all stakeholders involved are working together to ensure that the challenges are overcome.”

Dr Sikutwa said he is confident that with the support of the general public, the government and relevant stakeholders, Madison will forge ahead and remain a successful indigenous Zambian group.

Below is the Full Press Statement

LSA Group of Companies Solid

There has been an article in the Lusaka Times an online publication dated 15th May, 2020 which went viral, captioned “Lawrence Sikutwa dissolves LSA Group as the financial situation worsens at Madison”. The said article states that I have dissolved the LSA Group of Companies for reasons stated therein. I wish to inform the public and concerned stakeholders that the article is factually incorrect and I take this opportunity to refute the assertions and advise that the Group is intact and not under any consideration for dissolution.

Let me clarify that Lawrence Sikutwa and Associates Limited (LSA) is a Company that has investments in a number of entities in various sectors of the economy. Among them, LSA is the largest investor in Madison Financial Services Plc (MFS) a company which is publicly traded on the Lusaka Stock Exchange (LuSE). It is therefore inconceivable that LSA would dissolve when it has a significant stake in the only indigenous financial services group in Zambia.

MFS Plc is the holding company of the Madison brand which has a number of businesses in the financial services sector including Madison Life Insurance Company Ltd (MLife) and Madison General Insurance Company Ltd (MGen). The subsidiary companies of MFS are independent of each other and are run as such save for the fact that they have a common shareholder, MFS. Before the Madison Group went public in 2014 LSA offered shared services to its subsidiaries and continued to do so thereafter. However, in 2019 MFS resolved that the shared services to the subsidiaries would be provided by MFS hence the restructuring and rationalisation which occurred at LSA resulting in shared services being provided by MFS effective 1st May 2020. MFS employs about one thousand (1000) people.

I do admit that some subsidiaries in the MFS Group face some challenges brought about by a number of reasons including the widely reported situation in Madison Asset Management Company Ltd (MAMCo). Rest assured that the said challenges are firmly being addressed so that they are resolved to ensure that the businesses adapt, restructure and continue to thrive in the new normal. In this regard, efforts include; capital raising, seeking new partners and rebuilding trust. Corporates do face up and down business cycles and we are no different but it would not be appropriate to delve into operational matters of the MFS subsidiaries suffice to state that all stakeholders involved are working together to ensure that the challenges are overcome.

I am confident that with the support of the general public, the Government and relevant stakeholders, Madison will forge ahead and remain a successful indigenous Zambian Group and that “Madison”, a proudly Zambian brand, shall continue to be a market leader competing favourably amongst internationally affiliated peers in the financial services sector. I, therefore, look forward to our valued customers; business partners and stakeholders continuing to support us as we strive to push forward the economic development agenda of Zambia.

In ending, I categorically state that there are no plans to dissolve LSA, it shall remain a flagship investment company in Zambia.

Lawrence S. Sikutwa (Dr)
EXECUTIVE GROUP CHAIRMAN

15th May, 2020

However, highly placed company sources have maintained that LSA Group has ceased to exist and all employees who were under it have either been infused into other Madison companies or have been laid off.

They have since urged Dr Sikutwa to come truthful and not hide behind the difficult nature of the business units.

“As we speak, the workers working for LSA have been taken over by other Madison companies while some have been laid off. We ask him to refute that fact also,” the sources said.

The government and the United Nations have launched a joint appeal to raise about 132.9 million United States Dollars towards the fight against Covid-19. Vice President Inonge Wina says the resources will be used in tackling health emergencies, provision of economic recovery responses, and promoting disaster risk management in the country, among others.

Mrs. Wina says the fight against the Covid-19 requires the support of everyone hence the decision of Government and the United Nations to appeal to well-wishers. She says the government does not have enough resources because the requirement in the Covid-19 contingency plan needs local and international support.

Meanwhile, Mrs. Wina has urged stakeholders not to forget the victims of floods and drought as they fight the Coronavirus pandemic. She said the government has a humanitarian response program targeting two point three million people affected by floods and drought.

Mrs. Wina said the rate of recovery post-COVID-19 may be slow for several families that have been suffering because of drought and floods in different parts of the country. The Vice President said this today during the launch of the International Appeal for Assistance in combating the spread of the Covid-19 in Zambia. During the same function, the Vice President also launched the COVID -19 Contingency and Response Plan.

Speaking at the same event Finance Minister Bwalya Ngandu said the country’s economy will record a negative growth this year. Dr. Ngandu said the government will record reduced revenue because most sectors of the economy have been affected by the Covid-19. He said this will, in turn, affect the government’s ability to look after the poor people that depend on social cash transfer.

And, United Nations Resident Coordinator Coumba Mar Gadio praised the government for the measures it has put in place to fight the pandemic. Earlier, Health Minister Chitalu Chilufya said the pandemic has affected the normal way of doing things.

Lusaka businessman Lawrence Sikutwa has dissolved Lawrence Sikutwa and Associates Group of Companies, a conglomerate of companies named after him where was Group Chairman.

And Madison Life has stopped paying of Commissions to all its Sales Staff on non-remitted premiums as a cost saving measure to protect the wellbeing of Mlife.

The LSA Group founded in 1995 was an indigenous conglomerate with interests in both life and general insurance, asset management including pension fund management, unit trusts, and stock broking and property development and business advisory services as well as tourism.

Mr Sikutwa dissolved LSA Group at the beginning of May in order to restrategize and protect the other units in the business after struggling to service a number of personal loans he acquired.
Highly placed company sources indicated that by dissolving LSA Group, Mr Sikutwa hopes that separate units will have a higher chance of staying afloat and not suffering contagion.

Late last year, Investrust Bank sued Mr Sikutwa in his personal capacity, his tourism company Amalgamated Tourism Investments and LSA Group for failing to service K11.6 million in unpaid mortgage.

Early in January 2020, Cavmont also sued Mr Sikutwa over a US$240,000 loan forcing the Securities and Exchange Commission to take temporal possession of the affairs of Madison Asset Management Company Limited (MAMCO).

An audit conducted by KPMG Zambia dated September 30th 2019 showed that Group accounts are in red and that the shareholder, Madison Financial Services Plc, has shown commitment and played a significant role in the recapitalisation of the business operations of Madison Asset Management Company Limited (MAMCO).

But the board said liquidation was not in the interest of all stakeholders.

“Due to the following factors, the company has experienced challenges since 2017 which have led to losses: (a) the general economic environment was affected as a result of elections that have a tendency to slow down the economy due to the uncertainty they created; (b) increased interest rates; (c) Stiff competition from deposit-taking microfinance companies offering higher yields on the market reducing margins on the FIF; (d) Slowdown in the economy affecting the housing sales and reducing the yield on assets and therefore the cost of borrowing significantly higher than the return earned on the assets; (e) Illiquid property portfolio that cannot be easily disposed making it difficult to take opportunities on the market from the higher attractive rates; (f) fluctuating exchange rates that affected the cost of borrowing; and (g) The Securities and Exchange Commission (SEC) has deemed the product illegal hence the urgent need to unwind the fund. However, the fund had significant asset- liability mismatch that requires to be wound down over a period of time,” the report reads.

“Realising the seriousness of the financial position of the Company and the risk of liquidation, the Shareholders and the Board have considered a number of options in the last twelve months and decided that liquidation was not in the best interest of all the stakeholders because the reasons that led to the company being in this position could be addressed by restructuring the operations of the company. In that respect, they have taken the following steps: The Board has engaged the Shareholders of Madison Financial Services Plc to assist in the recapitalisation of the business of the Company. The company has received ZMW 16,100,000.00 and a further ZMW 60,000,000.00 is set to be remitted by 30th June 2020. A number of assets amounting to ZMW 143,774,524.00 and attributable to the FIF have been earmarked for disposal. The company is also making all efforts to ensure it remains a going concern. By initiating the Scheme of Arrangements, this process will ensure that all the assets are distributed fairly and in a way that maximises the return to all the Creditors equitably. The company has taken cost rationalisation measures, including closure of the town office and relocation of the Kitwe branch office to a cheaper location. Staff restructuring has also been done to reduce the staff numbers. The company has put on hold all budgeted capital expenditure items…Despite the cash flow challenges, the Company and its management have worked hard to transform the business and Company, into a well-known brand in the Zambian financial sector.”

And in a circular from Madison Life Managing Director Agnes Chakonta, the company announced that it will no longer pay advances and Commissions on non-remitted premiums.

The company said it is making frantic efforts to collect premiums which have not been serviced from Government through PMEC and from Konkola Copper Mines(KCM).