Results for the full year ending 31 August 2013

RNS Number : 0463B

Cambria Africa PLC

27 February 2014

 



Cambria Africa Plc

("Cambria" or the "Company")

Results for the full year ending 31 August 2013

Cambria Africa Plc (AIM:CMB) is pleased to announce its full year results for the year ending 31 August 2013.

The audited Financial Statements will be made available shortly on the Company's website and are being sent to shareholders today.

All references to continuing operations relate to the Group's Payserv Africa and Millchem Holdings investments and head office activities. 2012 and any prior years comparative figures have been restated to reflect this definition of continuing vs discontinued operations.

Highlights for the year are as follows:

·      Cambria continues the disposal of its remaining non-core assets, completion of which will mark the re-alignment away from multiple investments operating in a single country, to a select number of investments operating regionally. It is the Board's conviction this strategy marks the best route towards maximising shareholder value and ensuring continued future growth

·      As a result of this strategy, the Company is now solely focused on Payserv Africa (Payserv) and Millchem Holdings (Millchem), growing their scale and scope, and pursuing their regionalisation

·      A multi-year, regional and product roll-out strategy for both Millchem and Payserv has been developed and Cambria is excited about the return prospects offered by these two investments

o  Initial steps have successfully been made. Millchem now has a warehouse and offices in Zambia, where it is commencing operations, and is opening the same in in Malawi. Payserv has received its National Payments Licence in Zambia, signed its first customers and is processing payments

o  Cambria anticipates growth for both investments and may make smaller acquisitions to accelerate their regionalisation strategy

·      During the year ended 31 August 2013, Payserv Africa and Millchem Holdings combined, organically grew revenues and gross profit by 10% and 6% year-on-year, respectively

·      Cambria's central costs were reduced by 54% when compared to the equivalent period last year

·      Cambria's EBITDA loss from continuing operations for the year ended 31 August 2013 was US$3.6 million, a 52% reduction when compared to last year

·      The Group recorded a loss from continuing operations of $5.0 million for the year ended 31 August 2013. Discontinued operations, including write downs of property and assets, generated a loss of US$6.9 million

About Cambria Africa Plc

Cambria Africa Plc, quoted on the AIM market of the London Stock Exchange, is a long term, active investment company, building a portfolio of investments primarily in Southern Africa.

Contacts
Cambria Africa Plc	www.cambriaafrica.com
Ian Perkins	[phone]
Edzo Wisman	[phone]
WH Ireland Limited	www.wh-ireland.co.uk
James Joyce / Nick Field	[phone]
Peterhouse Corporate Finance Limited	www.pcorpfin.com
Charles Goodfellow / Duncan Vasey	[phone]

Chief Executive's Review

Introduction

During the period under review revenues and gross profit of the continuing operations of Cambria, being the Payserv and Millchem investments, were US$8.5 million (2012: US$7.7 million) and US$4.6 million (2012: US$4.3 million) respectively, representing corresponding increases of 10% and 6% to the equivalent prior period. 

There was a slowdown in the rate of growth when compared to last year (when, for example, revenues grew 64% year-on-year) which can largely be attributed to a high level of uncertainty in the business environment during the second half of the financial year in Zimbabwe as a result of the elections, which, irrespective of country, always negatively impact economies. During this election year, Zimbabwe experienced periods of liquidity shortages, resulting in cautious consumer spending which directly contracted growth within our portfolio. This slowdown continues to impact current performance of our investments.  

Our pursuit of scale for both Payserv and Millchem, together with the prudent strategy to regionalise, has meant Cambria continued to invest for the future throughout this period.  We are confident that the positive impact of regional expansion into Zambia (and subsequent entry into Malawi for Millchem), together with the launch of various new products, will yield results in the coming periods.

Cambria's EBITDA loss for the period for continuing operations for the year ended 2013 was US$3.6 million, a 52% reduction when compared to last year. The Group loss for the year is $5.0 million for continuing operations. Discontinued operations, including write downs, generated a loss of US$6.9 million. Cambria's loss per share for the year was 18.4c, compared to 47.1c for the same period last year representing a decrease in loss per share of 61%.

On 1 October 2012 the Company raised US$1.4 million gross by way of a placing with institutions of 8,615,115 new ordinary par value shares of £0.0001 each at 10p per share. 

Results for the Period

Consolidated results

Payserv Africa and Millchem Holdings jointly had a consolidated performance as follows:

(US$ '000)	2013	2012	Growth
Revenues	8,487	7,721	10%
Gross profit	4,581	4,326	6%
Gross margin	54%	56%	(4)%
SG&A	(4,209)	(3,194)	32%
EBITDA	372	1,132	(67)%
EBITDA margin	4%	15%	(70)%

The decrease in EBITDA can be attributed to three factors: (i) Significant investments made by Payserv into new products as well as product upgrades, with the associated costs expensed rather than capitalised; (ii) investments into regional expansion pursued by both Payserv and Millchem; and, (iii) an unforeseeable and unavoidable US$294 thousand multi-year VAT liability related to Tradanet, accounting for 40% of the decrease in combined EBITDA for the year.

As Cambria continues to actively pursue scale and scope through regional expansion and development of new products it will continue to expense rather than capitalise these investments.  This will continue to impact EBITDA performance in the coming periods.

Payserv Africa

Payserv provides EDI switching services (Paynet), 'payslip' processing (Autopay), and payroll based microfinance loan processing (Tradanet).

(US$ '000)	2013	2012	Growth
Revenues	4,164	3,951	5%
Gross profit	3,811	3,614	5%
Gross margin	91%	91%	-%
SG&A	(3,369)	(2,274)	48%
EBITDA	442	1,340	(67)%
EBITDA margin	11%	34%	(69)%

Paynet provided Electronic Data Interchange (EDI) services to all 22 banks and building societies in Zimbabwe, as well as to over 1,500 corporates. Paynet processed 15.2 million transactions (2012: 12.3 million) during the period under review, a 24% increase.

Autopay, provided payroll services to 150 customers, processed over 303 thousand pay slips (2012: 286 thousand) during the period under review, a 6% increase. 

Tradanet processed approximately 66,000 (2012: 55,000) loans during the period, representing a value of US$131 million (2012: US$140 million), a 19% increase and a 6% decrease respectively. At the end of the period the loan book under management stood at US$110 million (2012: US$100 million), an increase of 10%.

Over the period, Payserv has invested significantly into product upgrades, new offerings, entry into the Zambian market, as well as exploration of other geographic markets. These investments have not been capitalised and have therefore directly impacted the income statement during the period under review. 

New Paynet products recently launched include, among others, eSchedules and PayZIMRA. It is also launching PayFT, a joint venture with South African based BankServ. Geographically, Paynet has established a presence in Zambia, received its Zambian National Payments Licence during December 2013, signed its first customers in that country, and has commenced processing payments. Moreover, Autopay now has a presence in Zambia as well, processed its first payslips in Uganda, and reached agreement with a trial customer regarding processing payslips in Botswana.

The bottom line effect of these investments should come through in the coming periods through enhanced revenue growth as well as diversification of revenue streams.  

There was an exceptional item of a US$294,000 adjustment to Payserv (and group) EBITDA resulting from  a multi-year VAT liability related to Tradanet dating back to March 2010 that was charged in one tranche during 2013.

Millchem Holdings

Millchem is a value-added chemicals distributor with leading market positions in Zimbabwe. It recently established a presence in Zambia, and is working towards a presence in Malawi. 

US$ '000	2013	2012	Growth
Revenues	4,323	3,770	15%
Gross profit	770	712	8%
Gross margin	18%	19%	-6%
SG&A	(840)	(920)	-9%
EBITDA	(70)	(208)	66%
EBITDA margin	(2)%	(6)%	71%

In general, chemicals distribution tends to outpace economic growth, but it also tends to shrink faster when an economy stagnates. Millchem was thus strongly affected by the uncertain business environment during the year. During some weeks over the period it was generating 50% less gross profit when compared to equivalent weeks during the prior year. Importantly, despite decreased revenue Millchem did not lose market share or customers over the period, in fact new customers were added as competitors were struggling.

Despite the challenging environment in Zimbabwe, the Millchem team, under new leadership after the appointment of Matthijs Mulder as the CEO of Millchem Holdings, remained focused on the long term and continued to launch new products as intended, opened up a branch in Bulawayo, opened up warehouse space and offices in Zambia, made its first steps towards opening of a warehouse and offices in Malawi, established buying entities in the Netherlands and South Africa, and was able to add relationships with various attractive new suppliers (e.g. BASF, ENI (Cent-Lube), Sasol and others).  Moreover, in addition to the NACD, Millchem Africa is now also a member of the FECC, as it seeks to position itself as a Responsible Distributor in this territory.

Alongside a new CEO, Millchem also appointed two Non-Executive Directors to the Millchem Board. Bernard West and David Edgington, who jointly bring over 80 years of chemicals industry experience, as well as extensive industry relationships.

Discontinued operations, other and central costs

Celsys Limited

The Company sold its investment in Blueberry International Ltd on 25 July 2013 for US$1. This sale included, among others, a 60% stake in Celsys Limited. During the period, Celsys generated US$1.8 million in sales and negative US$2.5 million EBITDA, excluding certain write backs related to intercompany balances. Including write backs Celsys generated US$0.5 million of EBITDA losses.

The Leopard Rock Hotel Group

During the period under review, the Leopard Rock Hotel was classified by Cambria as held for sale. During the period, the Leopard Rock Hotel Group generated US$2.3 million in sales and negative US$669 thousand in EBITDA, before write downs recognised in the income statement of US$2.8 million.

LonZim Air (B.V.I.) Limited

Through LonZim Air (BVI) Limited Cambria previously owned three aircraft. Over the years a number of disputes arose in relation to these aircraft and certain associated contracts. At this point, in summary, Cambria will pursue recovery of claims related to these disputes that are now estimated to be in excess of US$10 million. These amounts relate to, inter alia, maintenance reserve and lease charges and related contractual interest, payment of insurance proceeds, deterioration in market value of the aircraft, and the significantly lower amount the Company was able to obtain through a sale, due to the poor condition the aircraft were found to be in. LonZim Air incurred US$205 thousand in operating losses for the period under review, largely related to extra-ordinary legal expenses related to the above mentioned claims.

Settlement with Lonrho

On 19 July 2013 Cambria reached final settlement with Lonrho Plc with regards to all on-going disputes, other than claims related to three aircraft previously owned by Cambria and leased to subsidiaries of Lonrho. As a result of this settlement, Cambria received from Lonrho US$2.7 million. The settlement agreed related to, among others, the Aldeamento Turistico de Macuti, S.A.R.L loan, the Churchill Estates (1995) (Private) Limited loan, the Lonrho Management Services Agreement, and the Hotel Refurbishment and Management Agreement.    

Central costs

Cambria incurred US$4.0 million in central EBITDA costs for the period under review, compared to US$8.6 million last year, a reduction of 54%. 

Events following the end of the period under review

On 19February 2014, Cambria announced that approximately US$4 million (before expenses) or UK£2.4 million, has been raised by placing with new and existing institutional and other investors of 32,406,139 new ordinary shares in the Company.

The placing price was 7.5 pence per Ordinary Share being a 9.6% discount to the 30-day volume weighted average market price on 10 February 2014.

The placing will provide working capital to support the Company's expansion strategy for Millchem and Payserv as outlined below.

Strategy going forward

Cambria is continuing the disposal of its remaining non-core assets, completion of which will mark the re-alignment away from multiple investments operating in a single country, to a select number of investments operating regionally. It is the Board's conviction this strategy marks the best route towards maximising shareholder value and ensuring continued future growth.

As a result of this strategy, the Company is now solely focused on Payserv and Millchem, growing their scale and scope, as well as, importantly, their regionalisation. 

A multi-year, regional and product roll-out strategy for both Millchem and Payserv has been developed and Cambria is excited about the growth and return prospects of the two investments. 

Initial steps in the regional expansion have been made successfully. For example, Millchem now has warehouse and offices in Zambia, has commenced operations there, and is in the process of opening the same in Malawi. In Zambia, Payserv has received its National Payment Licence, signed on its first customers, and commenced the processing of payments.

In the coming years, both Millchem and Payserv will continue to expand in additional geographies in a careful and coordinated manner. Moreover, Cambria anticipates growth for both investments will include smaller acquisitions, which may or may not be made using Cambria shares.

The Company requires funds for the expansion of Millchem and Payserv, as well as for the Group's working capital. The Company is reviewing its options regarding funding in this regard and this may include funds realised from the disposal of its non-core operations and assets as well as the raising of additional equity or debt capital.

In closing

Cambria has had a year of transition, which has seen the end of ongoing legal disputes and completion of the strategy to focus on companies that can effectively pursue growth and scale through regionalisation. We have significantly reduced operating costs, including central costs, streamlined our business model, and significantly invested into new products and into new markets. We close out the financial year with a platform of two very strong companies, which have made significant progress in their product rollout and regional strategy, and which have a clear strategy for the next few years.

Implementing this strategy over the last 18 months came with difficult choices for Cambria's Board. However, having brought Cambria to where it is now, the Board's conviction is stronger than ever that our current portfolio and focus marks the best route forward towards maximising shareholder value. 

Edzo Wisman

Chief Executive Officer

27^th February 2014

Cambria Africa Plc

Audited consolidated income statement

For the year ended 31 August 2013

			2013 Total	*Restated 20112 Total
			US $000	US $000
Revenue			8,487	7,721
Cost of sales			(3,906)	(3,395)
Gross profit			4,581	4,326
Operating costs			(8,647)	(9,434)
Other income			289	-
Accelerated write-off of intangibles and goodwill impairment			-	(2,475)
Net losses on disposal of investments and impairment of assets			(348)	(451)
Operating loss			(4,125)	(8,034)
Finance income			282	312
Finance costs			(967)	(545)
Net finance costs			(685)	(233)
Loss before tax			(4,810)	(8,267)
Income tax			(204)	(349)
Loss for the period from continuing operations			(5,014)	(8,616)
Discontinued operations
Loss for the year from discontinued operations, net of tax			(6,890)	(17,072)
Loss for the year			(11,904)	(25,688)
Attributable to:
Owners of the Company			(12,048)	(27,271)
Non-controlling interests			144	1,583
Loss for the year			(11,904)	(25,688)
Earnings per share
Basic and diluted loss per share (cents)			(18.4c)	(47.1c)
Earnings per share - continuing operations
Basic and diluted loss per share (cents)			(7.6c)	(18.6c)

*Amounts have been restated due to reclassification of certain entities to discontinued operations.

Cambria Africa Plc

Audited consolidated statement of comprehensive income

For the year ended 31 August 2013

                                                                                                                                                                      *Restated                  

			2013	2012
			US $000	US $000
Loss for the year			(11,904)	(25,688)
Other comprehensive income
Items that will never be reclassified to income statement:
Revaluation of property, plant and equipment			422	273
Related deferred tax adjustment			(110)	(2,839)
Impairment of previously revalued land and buildings in disposal group classified as held for sale			(1,873)	-
Shareholder loans provided for in the prior year			(392)	-
Items that are or may be reclassified to income statement:
Foreign currency translation differences for overseas operations			(1)	(1,601)
Total comprehensive loss for the year			(13,858)	(29,855)
Attributable to:
Owners of the Company			(14,002)	(31,438)
Non-controlling interests			144	1,583
Total comprehensive loss for the year			(13,858)	(29,855)

* Amounts have been restated due to reclassification of certain entities to discontinued operations.

Cambria Africa Plc

Audited consolidated statement of changes in equity

For the year ended 31 August 2013

		Attributable to owners of the Company
		Share Capital	Share premium	Re-valuation reserve	Foreign exchange reserve	Share based payment reserve	Retained earnings	NDR	Total	Non-control- ling interests	Total Equity
		US $000	US $000	US $000	US $000	US $000	US $000	US $000	US $000	US $000	US $000
Balance at 31 August 2012		11	77,399	3,124	(10,629)	355	(47,312)	2,128	25,076	(1,785)	23,291
Loss for the year		-	-	-	-	-	(12,048)	-	(12,048)	144	(11,904)
Adjustment to opening reserves in respect of shareholders loans		-	-	-	-	-	(392)	-	(392)	-	(392)
Revaluation of property		-	-	422	-	-	-	-	422	-	422
Deferred tax adjustment		-	-	(110)	-	-	-	-	(110)	-	(110)
Impairment of (previously revalued) land and buildings in a disposal group classified as held for sale		-	-	(1,873)	-	-	-	-	(1,873)	-	(1,873)
Foreign currency translation differences for overseas operations		-	-	-	(1)	-	-	-	(1)	-	(1)
Total comprehensive income for the year		-	-	(1,561)	(1)	-	(12,440)	-	(14,002)	144	(13,858)
Contributions by and distributions to owners of the Company  recognised directly in equity
Reclassification of reserves		-	-	(621)	-	-	-	621	-	-	-
Disposal of business		-	-	(865)	(11)	-	-	(508)	(1,384)	1,808	424
Dividends paid		-	-	-	-	-	-	-	-	(247)	(247)
Issue of ordinary shares		1	1,399	-	-	-	-	-	1,400	-	1,400
Share based payment transactions		-	-	-	-	(269)	-	-	(269)	-	(269)
Total contributions by and distributions to owners of the Company		1	1,399	(1,486)	(11)	(269)	-	113	(253)	1,561	1,308
Balance at 31 August 2013		12	78,798	77	(10,641)	86	(59,752)	2,241	10,821	(80)	10,741

Cambria Africa Plc

Audited consolidated and company statements of financial position

As at 31 August 2013               

                                                                                                                                        *Restated    *Restated

			Group 2013	Company 2013	Group 2012	Company 2012
			US $000	US $000	US $000	US $000
Assets
Property, plant and equipment			2,881	56	25,250	97
Biological assets			-	-	83	-
Goodwill			717	-	717	-
Intangible assets			179	-	1,551	-
Long-term receivables			361	-	3,229	3,229
Total non-current assets			4,138	56	30,830	3,326
Inventories			925	-	936	-
Financial assets at fair value through profit or loss			58	-	42	-
Trade and other receivables			814	25,648	2,625	24,668
Cash and cash equivalents			2,136	1,210	468	178
Assets held for sale			16,164	-	361	-
Total current assets			20,097	26,858	4,432	24,846
Total assets			24,235	26,914	35,262	28,172
Equity
Issued share capital			12	12	11	11
Share premium account			78,798	78,798	77,399	77,399
Revaluation reserve			77	-	3,124	-
Share based payment reserve			86	86	355	355
Foreign exchange reserve			(10,641)	(13,186)	(10,629)	(13,186)
Non-distributable reserves			2,241	-	2,128	-
Retained losses			(59,752)	(45,530)	(47,312)	(40,907)
Equity attributable to owners of the Company			10,821	20,180	25,076	23,672
Non-controlling interests			(80)	-	(1,785)	-
Total equity			10,741	20,180	23,291	23,672
Liabilities
Loans and borrowings			6,553	4,500	2,054	2,000
Provisions			203	29	161	-
Deferred tax liabilities			553	-	4,108	-
Total non-current liabilities			7,309	4,529	6,323	2,000
Bank overdrafts			398	-	337	-
Current tax liabilities			187	-	284	-
Loans and borrowings			94	-	1,692	1,250
Trade and other payables			1,322	2,205	2,825	1,250
Liabilities held for sale			4,184	-	510	-
Total current liabilities			6,185	2,205	5,648	2,500
Total liabilities			13,494	6,734	11,971	4,500
Total equity and liabilities			24,235	26,914	35,262	28,172

* Amounts have been restated due to reclassification of certain entities to discontinued operations.

Cambria Africa Plc

Audited consolidated statement of cash flows

For the year ended 31 August 2013     

			2013		2012
			US $000		US $000
Cash used in operations			(1,379)		(7,934)
Tax paid			(335)		(509)
Net cash used in operating activities			(1,714)		(8,443)
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment			20		312
Purchase of property, plant and equipment			(400)		(1,473)
Other investing activities			(361)		-
Proceeds from sale of investments			-		1,197
Write down of investments			-		4,418
Interest received			282		326
Net cash used in investing activities			(459)		4,780
Cash flows from financing activities
Dividends paid to non-controlling interests			(247)		(323)
Interest paid			(967)		(707)
Proceeds from the issue of share capital			1,400		1,546
Proceeds from the drawdown of loans			3,594		2,249
Net cash from financing activities			3,780		2,765
Net increase/(decrease) in cash and cash equivalents			1,607		(898)
Cash and cash equivalents at 1 September			131		1,029
Foreign exchange movements			-		-
Cash and cash equivalents at 31 August			1,738		131

Cash and cash equivalents as above comprise the following:
Cash and cash equivalents			2,136		468
Bank overdraft			(398)		(337)
Cash and cash equivalents at 31 August			1,738		131

 

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