REG - Cambria Africa PLC - Corporate Update

Cambria AfricaAnnouncement

11/10/2018 09:00

RNS Number : 7208D
Cambria Africa PLC
11 October 2018
 


Cambria Africa Plc
("Cambria" or the "Company")
 
Cambria Reacts to Parallel Market Developments in Zimbabwe
 
 
A number of events have occurred in Zimbabwe which may negatively impact Cambria's future earnings.  The Reserve Bank of Zimbabwe has assured the public that the multi-currency system remains in place and that funds in bank accounts remain equivalent to US dollars.  However, the parallel market is reflecting significant premiums to this rate - rumoured as high as 500%. We cannot say with certainty what the impact will be on Cambria going forward but to date our Zimbabwe investments have been able to fund their foreign obligations at one to one to the US dollar.
 
Payserv Zimbabwe has been able to remit license fees and loan repayments to Payserv Africa.  The latest payment of US$38,000 was remitted this week.  Payserv Africa holds a US dollar balance in excess of US$400,000.
 
Millchem Zimbabwe repaid Cambria Africa Zimbabwe US$500,000, before the end of the Fiscal Year.  This in turn enabled Cambria Africa Zimbabwe to repay Paynet Zimbabwe US$500,000 strengthening the balance sheet of these subsidiaries.
 
Paynet Zimbabwe invested US$1.6 million on 30 August 2018 to acquire a 7.83% beneficial ownership in Radar Holdings Ltd, an unlisted public company in Zimbabwe.  Radar is literally a "brick and mortar" company owning a brick manufacturing plant and real estate holdings, providing a hedge against the possible deterioration in the purchasing power of cash and cash-equivalents in Zimbabwe.
 
At present, subsidiary cash positions in Zimbabwe are equally balanced with liabilities to entities in Zimbabwe.  
 
Some of the funds in Paynet Zimbabwe have been utilised to implement a restructuring during July 2018. This process entailed making certain administrative executives redundant resulting in minimum savings of $400,000 per annum.  These savings are being invested in recruiting technical staff and developers to improve Paynet's response to its customers' needs.
 
Paynet Zimbabwe, Tradanet, and Millchem have all prepaid October 2018 salaries to cushion their employees from price hikes.
 
Whilst we hope that our bankers and the Reserve Bank of Zimbabwe will continue to facilitate the external payments for imports to Millchem, Payserv  license fees and repayment of external loans for Paynet Zimbabwe, we cannot accurately predict the impact of these significant parallel market developments on our operations and earnings.  
 
It is important to note that our auditors have to date taken the position that our earnings, assets and liabilities are fairly presented in US dollars. Even if this reporting regime continues, we can assume there will be significant pressure on overhead costs in the Zimbabwe subsidiaries and central Zimbabwe expenses.
 
We believe that once the situation stabilises, we should be able to achieve commensurate increases in revenue through consultation with our customers.  However it is incumbent on  us to communicate to shareholders the risks faced by the Company and the mitigations being implemented by management to hedge against a possible impairment of our assets.
 
The Company remains with significant cash resources of almost US$1.2 million and low central costs placing it in an enviable position to take advantage of further acquisition opportunities in Zimbabwe which it has been actively pursuing.  The Company remains confident that Zimbabwe has the best investment horizon of any country in Southern Africa.
 
 
 



Contacts


















Cambria Africa Plc:


www.cambriaafrica.com




Samir Shasha


+44 (0) 207 669 0115




Email:


info@cambriaafrica.com














WH Ireland Limited:


www.wh-ireland.co.uk




James Joyce / Chris Viggor


+44 (0) 20 7220 1666



 
 




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