Third World Magic ?

Simworx

I think I’ve reached the age that I can now begin a blog by saying ‘when I was a lad’…. Not so long ago the third world was widely viewed as an immensely impoverished  place, full of people who could barely read, and starvation was a major issue.

When I was born in the mid 60s, the Chinese were just coming out of the Great Leap Forward in which tens of millions had died, and when I was a teenager Band Aid was flashing images of starving Ethiopians around the world. Many of the people in positions of power and influence in the UK are 40 or over and will have similar memories.

The programme on BBC2 last week ‘Don’t Panic – The Truth About Population’ was therefore eye opening. Whilst I think we all know that the world is a much better place now, some of the statistics on the programme were startling to me and to most of the people in the audience. Eighty percent of the world’s population can now read and write, only 1 billion people live below the poverty line out of a total of 7 billion, and the ‘Third World’ is rapidly disappearing.

Now is the time to lead UK companies overseas, to these new export markets whose populations are well educated and have real disposable income.

Simworx, one of our portfolio companies, has received a run of orders from countries that would have been considered ‘Third World’ in the past. The product they make is a luxury item used by the middle classes – it is a cinema with seats that move, combined with spectacular audio visual effects. Simworx’s product has been sold to customers in Vietnam, Indonesia, Columbia and Azerbaijan, to be installed into theme parks or indoor family entertainment centres which are being newly built. Family entertainment centres are not common in temperate ‘First World’ countries, but are rapidly expanding in the tropical climates of the ‘Third World’. They are indoor, air conditioned centres, often situated inside large shopping malls, and aimed at the emerging middle classes.

Simworx has also recently received an order from Merlin Entertainments, for a product to be supplied to a theme park in the UK. This is the first time Simworx has supplied Merlin, and I am curious to see what the prospects were for potential further orders from the second largest theme park operator in the world. Luckily there is a lot of publicly available information on Merlin, as it has just floated.

Although well known in the UK for its Alton Towers and Legoland sites, I was surprised to find that Merlin also owns 86 Midway Attractions venues. These Midway sites are smaller indoor entertainment centres, some operating under the Sea Life or Madame Tussauds banner, but others are Lego themed.

Merlin’s prospectus refers to its prospects overseas, and its plans to open six new Midway attractions each year. I think Merlin could do particularly well and follow the trend of successful UK service businesses that find ready export markets in the Middle and Far East. It will be interesting to see if Merlin can be transformed by some Third World magic. And I also hope that some of Merlin’s magic can rub off on Simworx.

Tony Stott

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