REG - Cambria Africa PLC - Audited FY 2021 Results
31/03/2022 16:30
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RNS Number : 8332G Cambria Africa PLC 31 March 2022
Cambria Africa Plc
("Cambria" or the "Company")
Audited FY 2021 Results ("the Results"):
Earnings per Share of 0.02 US cents and NAV of 1.16 US cents (0.89p GBP)
Cambria Africa Plc (AIM: CMB) ("Cambria" or the "Company") announces its
audited results for the year ended 31 August 2021 ("FY 2021"). Audited
Financial Statements are available on the Company's website
(www.cambriaafrica.com (http://www.cambriaafrica.com) ) and will be sent to
shareholders tomorrow.
Profit Attributable to Cambria Shareholders of $82,000 (0.02 US cents per
share) was recorded for FY 2021. The Company's subsidiaries in Zimbabwe
continued to operate above breakeven in both EBITDA and accounting profit
despite shrinkage in its revenue footprint by 8% from US $1.32 million in 2020
to US $1.22 million in 2021. Based on the current trajectory, the Company's
subsidiaries are expected to continue reporting at breakeven levels in FY
2022. The Company's FY 2021 consolidated profits stem mainly from Payserv
revenues of US$1.13 million. Net Asset Value (NAV) fell by 1.63% from US
$6.42 million in FY 2020 to $6.32 million FY 2021 (1.16 US cents per share).
The reduction in NAV was attributable in part to a $200,000 downward
adjustment in the valuation of its commercial property conducted by Hollands
Harare Estate Agents (Hollands). The Company's property was valued by Hollands
at $2.3 million as of January 2022.
NAV was further impacted by the change in the closing value of the Company's
Old Mutual Limited shares on the Johannesburg Stock Exchange (JSE) compared to
the last closing price on the Zimbabwe Stock Exchange (ZSE).
In its efforts to realize its NAV, the Company is actively pursuing avenues to
sell its property and its indirect interest in Radar Holdings Limited
("Radar") shares. While we believe there is firm interest in our investment,
the Company will only sell such investments if it can achieve value at the
holding level.
FY 2021 Results highlights:
12 Months Ended 31 August (US$'000) 2021 2020 Change
Group:
- Revenue 1,216 1,319 (8%)
- Operating Costs 838 845 1%
- Consolidated EBITDA (before exceptional items) 369 160 131%
- Consolidated Profit/(Loss) after tax 181 (470) 139%
- Profit/(Loss) after tax attributable to shareholders (excluding minorities) 82 (408) 120%
- Central costs 151 224 33%
- Earnings/(Loss) per share - cents 0.02 (0.07) 120%
- Net Asset Value (NAV) (Attributable to shareholders excluding minorities) 6,317 6,423 (2%)
- NAV per share - cents 1.16 1.18 (2%)
Weighted average shares in issue ('000) 544,576 544,576 -
Shares in issue at year-end ('000) 544,576 544,576 -
Divisional:
- Payserv - consolidated profit after tax ("PAT") 652 34 1,818%
- Payserv - consolidated EBITDA 484 (103) 568%
- Millchem - EBITDA 11 140 (92%)
Group Highlights:
· NAV decreased by 1.63% from US $6.42 million (1.18 US cents per
share) to US $6.32 million (1.16 US cents per share).
· Group Finance costs dropped by 63% to $22,000 in FY 2021 from
$60,000 in FY 2020 after rising 17.6% from $51,000 in FY 2019. Finance costs
are expected to decrease significantly in FY 2022.
· Revenues declined by 8% to $1.22 million while operating costs
declined by 0.8% to $838,000. As a result of careful cost management, such as
line item cost control and orderly reductions in staffing, the Company has
managed to avoid significant losses from the shrinkage of its revenue as a
consequence of the impact of the COVID-19 pandemic and its inability to regain
traction for its bulk payment and clearing software for banks.
· Cambria's Attributable PAT was positive at $82,000 (0.02 cents
per share) as operations edged above breakeven. Central Costs associated with
listing and interest expense dropped by 33% to $151,000 from $224,000. The
balance of Central Costs was associated with hyperinflationary adjustments,
foreign currency translation and the loss of value in the shares of Old Mutual
Limited.
· Consolidated EBITDA before fair value adjustments to investments
and marketable securities increased by 131% to $369,000 from $160,000 in FY
2020. FY 2020 EBITDA was negatively impacted by the fair value adjustment of
the Company's indirect holding of Radar Holdings Limited shares from 40 US
cents to 35 US cents.
· Cambria's central costs dropped by 33% to $151,000 in FY 2021.
Cambria's CEO and Directors continued to render their services to Cambria
without compensation during FY 2021.
· The Statement of Comprehensive Income includes a small foreign
currency translation adjustment (loss) of $4,000 attributable to Cambria.
Divisional Highlights:
· Tradanet (Pvt) Ltd, Paynet Zimbabwe's 51% held subsidiary,
continued to provide loan management services to Central African Building
Society (CABS), the country's largest building society. The continued
devaluation of the country's currency led to a slight increase in salary-based
loans.
· Autopay, Paynet Zimbabwe's payroll processing division, saw an
increase in its revenue base due to a new management team with extensive
payroll experience and established an independent contract relationship with
payroll managers on a pure profit share basis.
· Millchem, through its partnership with Merken (Pvt) Ltd. still
sees profitability, though diminishing, in the sanitizer sector.
Net Equity (Net Asset Value):
Components of Loss to NAV in 2021
The Group reported a slight drop of $106,000 in NAV to $6.32 million (1.16 US
cents per share) in August 2021, compared to $6.42 million (1.18 US cents per
share) at 31 August 2020. This marginal decrease was caused by the following
material factors:
· Downward adjustment of $200,000 in the valuation of Company's Mt.
Pleasant Business Park commercial property by Hollands from $2.5 million to
$2.3 million. Hollands cited business and economic conditions for the change
in their valuation.
· Reduction of $16,000 in the carrying value of Old Mutual Limited
shares which were suspended from trading on the Zimbabwe Stock Exchange (ZSE)
on 31 July 2020.
· Foreign Currency Translation loss of $4,000 from the
deterioration of the official bank rate from ZWL 83.4/USD on 31 August 2020 to
85.91/USD on 31 August 2021. The foreign currency translation loss was nominal
in FY 2021 due to less cash held in Zimbabwe dollars compared to FY 2020.
Components of NAV at 31 August 2021
The Group NAV of $6.32 million as at the end of FY 2021 consists of the
following tangible and intangible assets:
Building and properties valued at $2.3 million - This number, down $200,000
from the prior valuation, was prepared by Hollands Harare Estate Agents in
February 2022. Holland conducted the previous valuations of this prominently
located commercial office space and its equally well-positioned vacant plot in
Harare's Mount Pleasant Business Park.
Indirect shareholding of 9.74% of Radar Holdings Limited - (4.98 million
shares) valued at US $1.743 million (net of minority interests) based on 35 US
cents per equivalent Radar share.
USD Cash and Cash Equivalents - US dollar cash net of liabilities Zimbabwe
totalled $1.34 million at the end of FY 2021.
Old Mutual Limited shares - the Company holds 204,047 Old Mutual Limited
common shares that were suspended on the Zimbabwe Stock Exchange (ZSE) on 31
July 2020 and valued on its FY 2021 Statement of Financial Position at US
$184,000 based on the closing price of Old Mutual Limited on the JSE at year
end. The value of Old Mutual shares closed at US $196,000 on the JSE on 29
March 2022.
Goodwill - The Company has a goodwill value of $717,000 on its Statement of
Financial Position. The Company believes this is a fair assessment of its
intangible assets. Despite the shrinkage of Paynet's operations, it continues
to maintain turnaround opportunities particularly in Tradanet and Autopay as
real salaries catch up with inflation. The Company continues to believe that
the Paynet's intellectual property has value and the amalgamation of the above
should exceed the book value of its goodwill.
The Company therefore believes its tangible, intangible and realizable NAV are
not subject to significant negative shocks and will probably benefit from any
positive events.
Chief Executive's Report
Cambria Africa earned 0.02 US cents per share during the 2021 financial year
compared to a loss of 0.07 US cents per share in the 2020 financial year. The
Company continues to rationalise its operations by reducing staff costs and
ensuring a more effective model to realise earnings from its intellectual
property and cash holdings.
At this point in time, the Company's investment attraction is realizable NAV
within the constructs of Zimbabwe's current economic policy and its
outlook. It is important to consider the components of NAV and efforts of
the Company to ensure that any disposal is realized at the holding level.
The Company's investment in Zimbabwe since its establishment has been over
$100 million. Almost $6 million of this investment was my direct
contribution to this investment since taking the helm of Cambria when it was
at the brink of bankruptcy.
Strategy
The strategic goals of the Company have been and continue to be:
· Conserving cash resources of US$1.65 million as at 31 August
2021 (US$1.56 million at 28 Feb 2022)
· Realizing value for US $1.35 million held by the Reserve Bank of
Zimbabwe (RBZ) as "Legacy Debts" or "Blocked Funds" and owed to the Company.
This asset has been depreciated in our accounts to the official value until
such time as the RBZ honours this commitment. Therefore its contribution to
NAV is practically zero but remains a legal obligation of the RBZ to Cambria
Africa plc.
· Achieving value for US $196,000 of Old Mutual shares (based on
JSE closing price on 29 March 2022) through repatriation of these shares to
the South African register.
· Maximizing value at the holding level for disposals of about $4
million in marketable securities and property.
· Achieving value for the Company's intellectual property both in
current and future operations.
NAV Discussion
As announced, despite the turnaround in earnings, NAV declined by US$106,000
from 1.18 US cents per share to 1.16 US cents per share. I would like to
further discuss and analyse the components of Cambria's realizable NAV at the
holding level.
Commercial Property - One component of this drop was the change in Hollands
Harare Estate Agents valuation of our prominently located Mt. Pleasant
Business Park Commercial Property from $2.5 million in FY 2020 to $2.3 million
as of January 2022. I believe this is a conservative valuation.
Old Mutual Shares - NAV, was marginally impacted by the change in the closing
value of the Company's Old Mutual Limited shares on the JSE compared to the
last closing price on the Zimbabwe Stock Exchange (ZSE). On 31 July 2020, the
ZSE, under pressure from the government of Zimbabwe, halted trading in dual
listed shares. In March 2020, the Government of Zimbabwe had already blocked
the fungibility of dual listed in either direction and applied this rule to
foreign and local investors alike, regardless of the Exchange where the shares
were originally purchased. The suspension of fungibility was extended for 12
months to March 2022 and will likely be extended again by the Government of
Zimbabwe.
We continue to appeal to the Government of Zimbabwe to allow repatriation of
Old Mutual shares by foreign investors to the foreign exchange where the
shares were originally purchased before transfer to the Zimbabwe register. Old
Mutual shares have an intrinsic international value and we will continue to
work towards achieving this value despite not being able to hedge the market
value of the shares.
Radar Holdings Limited - Another component of the Company NAV is its indirect
shareholding in Radar having failed in our bid to exercise constructive
control. The Company is actively pursuing avenues to sell its interest in
Radar. If successful, such a sale will earn the Company about $1.7 million
less costs. The Company will only sell its investment if it can achieve value
at the holding level. The investment is robust and if a sale is not
achievable in this fiscal year, the Company is confident that the holding will
preserve its value.
Goodwill - Another component of NAV is the Company's goodwill (intellectual
property). Currently, intellectual property is driving the earnings in
Tradanet - the largest contributor to the Company's earnings. This 51% owned
subsidiary of Paynet processes microloans on behalf of CABS, Zimbabwe's
largest Building Society. At their peak in in 2019, these microloans
comprised about a third of the bank's assets and the Directors believe that a
return to those levels is fully conceivable.
Almost three years has passed since banks collectively blocked the use of
Paynet's payment technology, claiming varying levels of ability to pay in
foreign currency and immediate availability of locally priced solutions.
Recently, Paynet's technology has been displaced at least in part by ZeePay.
ZeePay's payment technology is operated by ZimSwitch and developed by
Bankserv. ZimSwitch, which is headed by Cyril Nyatanza (formerly
Bankserv's Business Development manager), now effectively controls 99% of
national payment in Zimbabwe
The Company understands that ZeePay is charging banks 16 US cents in foreign
currency, which is the same price banks collectively refused to pay Payserv
Africa in 2019. Transaction costs for the consumer have catapulted by
several hundred percent since the banking fraternity ousted Paynet from
competition. The Company believes that its technology, which processed close
to 25 million transactions annually before June 2019 with revenues of over $7
million, remains the most cost-effective solution for the banking industry and
would promote competition. Moreover, in its agreement with the RBZ Governor in
2019, Paynet had committed to repatriate 70% of its transaction revenue to
Zimbabwe. The Board of Paynet approved licensing an unlabelled version of
the product if favourable transaction terms can be established with a
reputable licensor.
Continuing Operations
Tradanet - As mentioned in the discussion of our goodwill above, Tradanet, the
51%-owned subsidiary of Paynet Zimbabwe, is now the company's most profitable
operation. With the impact of Zimbabwe dollar inflation, this saw a rise in
the loan book administered by the business. However, this is watered down in
real US dollar value terms. The value of the Zimbabwe dollar to the US dollar
fell by 2% since the prior trading year according to the official foreign
currency auction. The RBZ auction rate however belies the significant rate of
inflation and the concomitant decline in the purchasing power of the Zimbabwe
Dollar. Cambria applies hyperinflationary accounting rules which are meant
to adjust for such idiosyncrasies.
Autopay - The company's payroll operation saw its revenues decline as Paywell
granted non-exclusive licenses to multiple competitors in the market including
former employees. During the year, the company reached a management agreement
with Propay (Pvt) Ltd and established former account executives as independent
contractors. This has resulted in cost containment and aligned the incentives
of the payroll executives to that of Autopay.
Millchem - Millchem remains with its sanitizer business. The sanitiser market
has been characterized by many small players and competition which drove
prices down and sadly the quality and reliability of the competing products..
Our joint venture with Merken (Pvt) Ltd in the production of sanitizer
products remains cash flow positive, but will likely wind down by the end of
this fiscal year if demand does not improve.
Cambria's Board of Directors and I have continued to serve the Company without
compensation since 2015, fighting to return value to shareholders. Despite
the unfavourable economic factors leading to the abandonment of parity to the
US dollar and its huge impact on the Company, we hold on jealously to our
cash, our liabilities are negligible, and our remaining operations are
profitable. We still see value in our listing, having disposed of most of the
Company's depreciating assets and used the proceeds to bring remaining
liabilities down to their current negligible values.
We remain cautiously optimistic about achieving full value for the Company's
assets beyond its NAV. At this point in time, we hope to increase shareholder
value through appreciation of the Company's share price to reflect at the very
least, net equity per share. This would bring our market valuation closer to
the Company's current NAV of 1.16 US cents per share which is 3.5 times the
closing price of 0.36 US cents per share (£0.275) on 28 March 2022.
Samir Shasha
Chief Executive Officer
31 March 2022
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
Contacts
Cambria Africa Plc www.cambriaafrica.com (http://www.cambriaafrica.com)
Samir Shasha +44 (0)20 3287 8814
WH Ireland Limited https://www.whirelandplc.com/ (https://www.whirelandplc.com/)
James Joyce / Ben Good +44 (0) 20 7220 1666
Cambria Africa Plc
Audited consolidated income statement
For the year ended 31 August 2021
Audited Audited
31-Aug-21 31-Aug-20 US$'000
US$'000
Revenue 1,216 1,319
Cost of sales (138) (519)
Gross profit 1,078 800
Operating costs (838) (845)
Other income 79 55
Exceptionals (21) (375)
Operating Profit / (Loss) 298 (365)
Finance income - 1
Finance costs (22) (60)
Net finance costs (22) (59)
Profit/(Loss) before tax 276 (424)
Income tax (95) (46)
Profit/(Loss) for the year 181 (470)
Attributable to:
Owners of the company 82 (408)
Non-controlling Interests 99 (62)
Profit/(Loss) for the year 181 (470)
Earnings/(Loss) per share
Basic and diluted earnings/(loss) per share (cents) 0.02c (0.07c)
Earnings/(Loss) per share - continuing operations
Basic and diluted earnings/(loss) per share (cents) 0.02c (0.07c)
Weighted average number of shares 544,576 544,576
Cambria Africa Plc
Audited consolidated statement of comprehensive income
For the year ended 31 August 2021
Audited Audited
31-Aug-21 31-Aug-20
US$'000 US$'000
181 (470)
Profit/(Loss) for the year
Other comprehensive income
Items that will not be reclassified to Statement of Profit or Loss:
Increase in investment in subsidiary - impact on equity - (74)
Foreign currency translation differences for overseas operations (4) (511)
Total comprehensive profit/(loss) for the year 177 (1,055)
Attributable to:
Owners of the company 78 (993)
Non-controlling interest 99 (62)
Total comprehensive profit/(loss) for the year 177 (1,055)
Cambria Africa Plc
Audited consolidated statement of changes in equity
For the year ended 31 August 2021
US$000 Share Capital Share premium Revaluation reserve Foreign exchange reserve Accumulated losses NDR Total Non-Controlling interests Total
Balance at 1 September 2020 77 88,459 - (10,736) (73,748) 2,371 6,423 496 6,919
Profit for the year - - - - 82 - 82 99 181
Increase in investment in subsidiary -
Revaluation of investment property held at fair value (190) (190) (190)
Foreign currency translation differences
for overseas operations - - - (4) - - (4) - (4)
Foreign currency translation differences for overseas operations - NCI
- - - 6 - 6 (6) -
Total comprehensive income for the year 77 88,459 (190) (10,734) (73,666) 2,371 6,317 589 6,906
Contributions by/distributions to owners of
the Company recognised directly in equity
Dividends paid to minorities - - - - - - - (112) (112)
Total contributions by and distributions to owners of the Company
- - - - - - - (112) (112)
Balance at 31 August 2021 77 88,459 - (10,734) (73,666) 2,371 6,317 477 6,794
US$000 Share Capital Share premium Revaluation reserve Foreign exchange reserve Accumulated losses NDR Total Non-Controlling interests Total
Balance at 1 September 2019 77 88,459 - (10,251) (73,266) 2,371 7,390 747 8,137
Loss for the year - - - - (408) - (408) (62) (470)
Increase in investment in subsidiaries - - - - (74) - (74) (137) (211)
Foreign currency translation differences for overseas operations - - - (511) - - (511) - (511)
Foreign currency translation differences for overseas operations - (NCI)
- - - 26 - 26 (26) -
Total comprehensive profit for the year 77 88,459 - (485) (482) 2,371 (967) (225) (1,192)
Contributions by/distributions to owners of the Company recognised directly in
equity
Dividends paid to minorities - - - - - - - (26) (26)
Total contributions by and distributions to owners of the Company
- - - - - - - (123) (123)
Balance at 31 August 2020 77 88,459 - (10,736) (73,748) 2,371 6,423 496 6,919
Cambria Africa Plc
Audited consolidated statement of financial position
As at 31 August 2021
Audited Group Audited Group
31-Aug-21 US$'000
31-Aug-20 US$'000
Property, plant and equipment 2,317 2,604
Goodwill 717 717
Intangible assets 1 1
Investments in subsidiaries and investments at fair value 2,228 2,228
Financial assets at fair value through profit and loss 184 201
Total non-current assets 5,447 5,751
Inventories 158 102
Financial assets at fair value through profit and loss 75 16
Trade and other receivables 155 151
Cash and cash equivalents 1,656 1,896
Total current assets 2,044 2,165
Total assets 7,491 7,916
Equity
Issued share capital 77 77
Share premium account 88,459 88,459
Revaluation reserve (190) -
Foreign exchange reserve (10,734) (10,736)
Non-distributable reserves 2,371 2,371
Accumulated losses (73,666) (73,748)
Equity attributable to owners of the company 6,317 6,423
Non-controlling interests 477 496
Total equity 6,794 6,919
Liabilities
Loans and bborrowings - -
Trade and other payables 90 22
Provisions - 1
Deferred tax liabilities 189 193
Total non-current liabilities 279 216
Current tax liabilities 107 38
Loans and borrowings 101 509
Trade and other payables 210 234
Total current liabilities 418 781
Total liabilities 697 997
Total equity and liabilities 7,491 7,916
Cambria Africa Plc
Audited consolidated statement of cash flows
As at 31 August 2021
Audited 31-Aug-21 US$'000 Audited 31-Aug-20 US$'000
Cash generated from operations 294 605
Taxation (paid) (31) (43)
Cash generated from operating activities 263 562
Cash flows from investing activities 144
Proceeds on disposal of property, plant and equipment 37
Purchase of property, plant and equipment - -
Net proceeds from marketable securities - 226
Other investing activities (210) (210)
Interest received - 1
Net cash (utilized in)/ generated investing activities (66) 54
Cash flows from financing activities (112)
Dividends paid to non-controlling interests (26)
Interest paid (22) (60)
Proceeds from issue of share capital - -
Loans repaid (299) (88)
Proceeds from drawdown of loans - 45
Net cash (utilized) by financing activities (433) (129)
(236)
Net (decrease)/ increase in cash and cash equivalents 487
Cash and cash equivalents at the beginning of the Period 1,896 1,920
Foreign exchange (4) (511)
Net cash and cash equivalents at 31 August 1,656 1,896
1,656
Cash and cash equivalents as above comprise the following
Cash and cash equivalents attributable to continuing operations 1,896
Net cash and cash equivalents at 31 August 1,656 1,896
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