Trading and Legal Actions Update

RNS Number : 7196T

Cambria Africa PLC

18 November 2019

 

Cambria Africa Plc

("Cambria" or "the Company")

Trading and Legal Actions Update

The Company has finally had visibility on trading and a number of legal issues since its RNS of 6 August 2019 which it can now update shareholders on.  

Second Half Fiscal Year Results and Net Asset Value (NAV):

The Company expects to release Audited results by mid-February 2020. Operating profits in US dollars for the second half of the 2019 fiscal year did not meet management's worst expectations.  The rapidly depreciating exchange rate has rendered operating profits negligible, however the company continues to trade profitably in Zimbabwe dollars (ZWL) which has depreciated from an opening exchange rate to the US dollar of ZWL$2.50 in February 2019 to an interbank selling rate of over ZWL$17.00 - a 580% decline.  

Excluding any legal claims, unlisted securities, or time-indeterminate receivables from the Reserve Bank of Zimbabwe (RBZ), the Company currently holds US dollar assets totalling $6.8 million.  This includes cash assets of $1.3 million, expected short term RBZ receipts of $900,000, marketable securities of $630,000, real estate assets of $2.5 million, shares in Radar Holdings Ltd of $1.1 million and further tangible assets in inventory and fixed assets of $365,000.

The Company's liabilities stand at $520,000 of which $443,000 is due to Ventures Africa Limited, the majority shareholder of Cambria. The balance relates to ZWL obligations which at the current exchange rate totals $77,000.

Hence, the Company's realisable NAV is estimated by the Board at1.15 US Cents (0.89p) per share without attributing any value to the going concern operations of its subsidiaries or its technology.

Trading Updates

US $400,000 Legacy loans/ Blocked Funds allocated by RBZ 

Governor John P. Mangudya of the RBZ has allocated at parity (US$1: ZWL$1) the sum of US $400,000 of US $1.3 million owed by Paynet Zimbabwe to Payserv Africa Limited, our wholly owned subsidiary in Mauritius. While the commitment by the Governor to expunge the full amount of legacy debts by mid-September has been met with delays, we believe that he has shown tangible good faith in fulfilling his promises in this regard.

Relying on the Governor's written commitment, in its Interim Results published on 31 May 2019, the Company announced that the RBZ would expunge Paynet Zimbabwe's obligations to Payserv Africa by mid-September 2019. Citing Zimbabwe's poor tobacco receipts, Governor Mangudya rescheduled his commitment to mid-October.  On his behalf, Deputy Director of Financial Markets Ernest Matiza, then committed to weekly allocations of US $100,000 starting in the week of 30 September.  To date, Paynet Zimbabwe has been able to confirm four of the seven allocations which have come due.  Paynet Zimbabwe continues to constructively engage the RBZ on this matter.

 

EcoCash Commercial Agreement Reached

Paynet Zimbabwe has concluded a fee-sharing arrangement with EcoCash Zimbabwe for the use of bulk payment software developed by Payserv Africa.  The software will be used by merchants using EcoCash to distribute salaries and initiate payments to other merchants. EcoCash is Zimbabwe's dominant mobile payments operator.

Legal Updates

Exception to summons against BAZ upheld and case dismissed with costs

Further to our RNS announcement on 6 August 2019, relating to Payserv's summons seeking damages of $100 million from BAZ, the Company has been advised that the Exception filed by BAZ has been upheld by Justice Mushore and Payserv's lawsuit has been dismissed with Payserv liable for BAZ's legal costs.  Through its Payserv subsidiaries, the Company intends to reissue summons against the BAZ and/or individual banks as guided by its Senior Counsels. The detailed judgement is expected to be issued following the ruling. The Company is also considering invoking the Doctrine of Effect to claim jurisdiction against certain banks in South Africa and the European Union.

Arbitration related to share purchase in Radar Holdings Limited (Radar) through Hinshaw Investments (Pvt) Ltd (Hinshaw)

The Arbitration award remains outstanding with respect to the Company's action through Paynet Zimbabwe to enforce its minority rights to purchase a further 20% of shares in Hinshaw, which has a 79.65% shareholding in Radar. The Arbitrator had targeted 11 November 2019 for his ruling. The Company funded its acceptance of what it believes to be an irrevocable offer by Caulicle Investments (Pvt) Ltd, a 20% shareholder of Hinshaw, to sell its entire shareholding of Hinshaw shares.  If the award is in favour of the Company, Paynet Zimbabwe will control 24.9% of Radar indirectly through Hinshaw.  The Company continues to believe that Radar is well positioned as a defensive investment in Zimbabwe.

Summons to banks for Payment of outstanding fees to Payserv Africa and Paynet Zimbabwe

The Company believes that bank clients of Paynet Zimbabwe owe Payserv Africa and Paynet Zimbabwe over US $2.0 million in transaction fees (which have not been included in the NAV calculation above).  Its relevant subsidiaries are in discussion with counsel with respect to its recovery strategy.

Board and Executive Changes

The Company further announces that Mr Christian Beddies has resigned as CEO of Payserv Zimbabwe. He will remain a non-executive director of Payserv Zimbabwe Mr Samir Shasha, has been appointed the acting CEO. Mr Grant Flanagan has resigned from the Board of Tradanet as a result of conflicts arising from joining the Board of ZimSwitch.

Contacts
Cambria Africa Plc:	www.cambriaafrica.com
Samir Shasha	+44 (0)  20 3287 8814
WH Ireland Limited:	www.wh-ireland.co.uk
James Joyce / Matthew Chan	[phone]

 

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