Results for the full year ending 31 August 2015

RNS Number : 5271Q

Cambria Africa PLC

29 February 2016

 

Cambria Africa Plc

("Cambria" or the "Company")

Results for the full year ending 31 August 2015

Cambria Africa Plc (AIM:CMB) announces its full year results for the year ending 31 August 2015.

The audited Financial Statements will be made available on the Company's website (www.cambriaafrica.com) immediately following the release of this announcement and will be sent to shareholders tomorrow.

All references to continuing operations relate to the Group's Payserv Africa and Millchem Holdings investments and head office activities.

Key events for the 2015 financial year were:

·      On 21 October 2014 the Group disposed of its 100% shareholding in Lonzim Hotel Holdings Limited ("the Leopard Rock Hotel Group"), the owner of the Leopard Rock Hotel and related entities, for a total consideration of $2.5 million. The net asset value of the Leopard Rock Hotel Group had been impaired in the prior year by $8.9 million to reflect its net realisable value of $2.5 million at that date.

·      On 3 September 2015, in the post balance sheet period, the Company entered into a Settlement Agreement with Lonrho Limited relating to the Company's Jet Claims in terms of which Cambria received $4,752,000 in full and final settlement of the Jet Claims.

·      The Company's remaining assets are Payserv Africa ("Payserv") and Millchem Holdings ("Millchem") and the board is of the view that these two assets provide significant value creation opportunities to Cambria and its shareholders.

·      The executive team continues its focus on:

o  Rationalising and simplifying the head office function and central overheads. Significant progress has been made in reducing overheads, the full benefit of which will reflect in the next reporting period;

o  Restoring the momentum lost in Millchem by re-establishing key supplier and customer relationships. Loss making subsidiaries, Millchem Zambia and Millchem Malawi have been discontinued after the financial year end, with focus restored on Millchem Zimbabwe, Millchem's core operating entity;

o  Supporting the Payserv management team to continue the good growth in its core markets through an expanded service offering.  Payserv Zambia is making progress towards achieving its maiden profits; and

o  Enhancing the value of Payserv by replicating its successful technology platforms, products and services in the rest of Sub-Saharan Africa.

Results summary:

·      During the year ended 31 August 2015, Payserv and Millchem combined, grew revenues and gross profit by 10% and 12% year-on-year, respectively.

·      Cambria's central costs were reduced by 32% when compared to the equivalent period last year. As noted above, a further cost reduction has been implemented, the annualised result of which will reflect substantially in the next reporting period.

·      Including the net Jet Claim litigation settlement proceeds of $3.47 million, Cambria's EBITDA from continuing operations for the year ended 31 August 2015 was $1.65 million compared to an EBITDA loss of $3.75 million for the 2014 financial year.

·      The Group recorded a profit from continuing operations of $0.55 million for the year ended 31 August 2015 (2014 loss of $5.7 million).

Consilium dispute

The Consilium dispute arose over the validity of CCRMF's attempt to accelerate the repayment of the loans provided to the Company by Consilium Corporate Recovery Master Fund ("CCRMF" or "Consilium") as a result of the subscription by Ventures Africa Limited ("VAL") in Cambria in April 2015.  On 13 April 2015, Cambria shareholders approved the subscription by VAL of 107,000,000 ordinary shares in the Company which resulted in VAL owning 50.55% of Cambria. CCRMF and related parties hold 14.9% of Cambria's shares.

Cambria announced on 26 October 2015 that it received a statutory demand in the Isle of Man in which CCRMF had formally demanded repayment of the loans. In response to the statutory demand, the Company submitted that there was a genuine and substantial dispute as to whether the debt was then payable and that any future presentation of a winding up petition would constitute an abuse of the Court's process.

CCRMF withdrew their statutory demand in response to Cambria's application for an injunction. In addition, CCRMF was ordered by the High Court of Justice of the Isle of Man to pay the Company's costs of and incidentals to the Statutory Demand claim on a standard basis.

On 9 June 2015, Cambria announced the provision of a standby facility of $1.12m made available by VAL to the Company which was to be used as security for costs in relation to the now settled litigation against Lonrho. Pending the resolution of the dispute with CCRMF, as a consequence of which CCRMF has converted their floating charge on Cambria's assets, particularly the Company's primary bank accounts, the Lonrho settlement as well as the shares of Lonzim Holdings Limited, the Company is relying on this standby facility to fund its day-to-day operations.

Cambria continues to strongly dispute CCRMF's claim that there has been an event of default that entitles Consilium to accelerate repayment of the loans and maintains that the due date of the loans as disclosed in its audited financial statements and as defined in the loan agreements, as amended, is 30 April 2016.

CCRMF and Cambria have agreed to the litigation arising from the dispute being stayed until 30 April 2016.  Cambria however continues to diligently investigate all the claims it may have against CCRMF and the former CEO and Chairman of Cambria, both also directors of Consilium.

Audit opinion

The Company's auditors, Baker Tilly Isle of Man LLC, have issued their opinion on the Group's financial statements for the year ended 31 August 2015. The audit was conducted in accordance with International Standards On Auditing (UK and Ireland). They have issued an unmodified audit opinion.

The Group, which at 31 August 2015 had net current liabilities of $2.35 million, has significant external borrowings which mature during 2016. $5.1 million is due for repayment on 30 April 2016 and a further $2 million is due for repayment in July 2016. Although the directors are taking steps to refinance these loans, material uncertainty exists which may cast significant doubt about the Group's ability to continue as a going concern. Whilst the full year results for the year ended 31 August 2015 have been prepared on the going concern basis, the audit opinion contains an emphasis of matter regarding the existence of the material uncertainty.

Working Capital and Going Concern

At the date of this announcement the Company has $3.2 million after costs from the Jet Claims settlement proceeds and approximately $0.5 million is held by operating subsidiaries.

The board of directors have considered the intrinsic value of Cambria's subsidiaries and is confident that it substantially exceeds the Group's liabilities.  Although uncertainty exists regarding the re-financing of the Group's liabilities, the board is of the opinion that the Group's financial statements have been appropriately prepared on the going concern basis and that it will be able to cover the contractual debt obligations before they become due.

Changes to the board

The following changes to the board of directors occurred during the financial period under review and up to the date of this report:

Director resignations:

Name	Previous-position/designation	Date
Paul Turner	Non-executive director	6  May 2015
Edzo Wisman	CEO	13 July 2015
Ian Perkins	Chairman and non-executive director	14 July 2015

Director appointments:

Name	Position/designation	Date
Samir Shasha	CEO	5 June 2015
Josephine Petra Watenphul	CFO	17 June 2015
Dipak Champaklal Pandya	Non-executive director	26 June 2015
Paul Turner	Chairman and non-executive director	8 July 2015

About Cambria Africa Plc

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

Contacts
Cambria Africa Plc	www.cambriaafrica.com
Samir Shasha	[phone]
Josie Watenphul	[phone]
WH Ireland Limited	www.wh-ireland.co.uk
James Joyce / Mark Leonard	[phone]

Chief Executive's Review

Introduction

The first 6 months since having assumed the CEO role with effect from 3 August 2015, have been largely overshadowed by the unexpected Consilium dispute. Considerable time, cost and energy have been invested in defending the Consilium claims and in uncovering the true state of affairs in which Cambria was left by the previous executive management.

With a significant cash equity investment through VAL's subscription in April 2015, my interests as CEO are aligned with that of shareholders.  Shareholders of Cambria have suffered a tremendous loss of value in their investment in the Company. It is my aim to guide the Group back to profitability and restore shareholder value.

Notwithstanding the significant distraction caused by the above, Cambria has continued its restructuring whereby the Company's central overheads have been reduced to be fit-for-purpose. In addition, the Group's financial position has been substantially strengthened following the settlement of the legal dispute with Lonrho.

During the 2015 financial year, revenues and gross profit of the continuing operations of Cambria, Payserv and Millchem, were $10.3 million (2014: $9.4 million) and $5.6 million (2014: $5.0 million) representing an increase of 10% and 12% respectively compared to the fiscal year 2014. 

Including the net Jet Claim litigation settlement proceeds of $3.47 million, Cambria's EBITDA from continuing operations for 2015 was $1.65 million, compared to the prior year's EBITDA loss from continuing operations of $3.75 million.  

The Group profit for the year is $0.55 million for continuing operations. Cambria's earnings per share for the financial year was 0.1c per share, compared to a loss of 19.5c per share for the same period last year.

Results for the Period

Consolidated results

Payserv and Millchem jointly had an aggregated performance as follows:

(US$ '000)	2015	2014	Growth
Revenues	10 306	9 405	10%
Gross profit	5 637	5 017	12%
Gross margin	55%	53%	4%
SG&A	(5 365)	(5 650)	(5%)
EBITDA	272	(633)	>(100%)
EBITDA margin	3%	(7%)	>(100%)

The following factors had a significant impact on financial performance:

·      EBITDA for 2014 was impacted by once-off costs of $0.7 million incurred on investigating the acquisition of CelPay Zambia which was not concluded following the discovery of a significant deterioration in the financial position of CelPay Zambia;

·      EBITDA for 2015 continued to be effected by Payserv's investment in expanding its presence and offering in Zambia, the costs of which are expensed in full; and

·      Challenges experienced by Millchem Zambia and Millchem Malawi in the ramp up of these subsidiaries to full trading capacity. Investment in these territories has been discontinued in the post balance sheet period to refocus operations and investment in Millchem's core Zimbabwe market.

Payserv Africa

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

(US$ '000)	2015	2014	Growth
Revenues	5 012	4 594	9%
Gross profit	4 745	4 196	13%
Gross margin	95%	91%	4%
SG&A	(3 519)	(3 871)	(9%)
EBITDA	1 226	325	>100%
EBITDA margin	24%	7%	>100%

Paynet provides Electronic Data Interchange (EDI) services to all the banks and building societies in Zimbabwe, as well as to over 1,500 corporates. Paynet processed 17.3 million transactions (2014: 16.4 million) during the period under review, a 5.5% increase.

Autopay provides payroll services to more than 150 customers and processed over 345 000 pay slips (2014: 313 000) during the period under review, a 10% increase. 

Tradanet processed approximately 134,000 (2014: 121,000) loans during the period, representing a value of $176 million (2014: $154 million), an 11% increase and a 14% increase respectively.

During the year under review, Payserv continued to invest 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 year under review. 

The previous reporting period included an exceptional item of $0.7 million attributable to the write-off of transaction costs related to CelPay Zambia discussed above.

Millchem Holdings

Millchem is a value-added chemicals distributor with a leading market position in Zimbabwe.   

US$ '000	2015	2014	Growth
Revenues	5 294	4 811	10%
Gross profit	892	821	9%
Gross margin	17%	17%	-
SG&A	(1 846)	(1 779)	(4%)
EBITDA	(954)	(958)	-
EBITDA margin	(18%)	(20%)	(10%)

Despite the challenging and uncertain business environment during the year, Millchem grew revenues by 10%.

Overheads were negatively impacted by the expansion and investment in establishing Millchem Zambia and Millchem Malawi under the Group's previous management. After the year-end, Millchem Malawi has been closed while Millchem Zambia has been disposed of.

Establishing Millchem as a profitable unit continues to be an important priority. The key focus areas are:

o Strengthening the executive leadership team following departure of senior executives;

o Rebuilding relationships with key customers;

o Re-establishing credit lines with key suppliers; and

o Streamlining overheads and trading efficiencies.

Central costs

Cambria incurred $2.0 million in central costs for the period under review, compared to $3.1 million in the prior year, a reduction of 32%.

Included in the above are salaries and benefits paid to the Company's previous CEO and Chairman, Messrs E Wisman and I Perkins of $0.4 million and $0.2 million, respectively. These amounts include once-off "change in control" payments amounting to $0.2 million.

Current total central costs have been reduced to an estimated normalised annual cost of $0.3 million (excluding once-off costs legal costs) from US3.1 million before VAL's investment.

As the new CEO of Cambria, I will continue not to collect compensation including benefits until such time as the cash flow from the Company's underlying operations supports it. Similarly, my fellow directors have not received any compensation or benefits since VAL's investment.

Tradanet

The Company is defending a claim brought  by the minority shareholder in Tradanet, Ottonby Trading (Private) Limited, relating to its right to acquire Payserv's 51% share in Tradanet, allegedly triggered by the change in control of Cambria as a result of VAL's subscription in April 2015. The Company's legal advisers, having considered the terms of the related shareholders agreement, are confident that the claim will be unsuccessful.  The parties have agreed to follow an arbitration process to resolve this dispute, which is expected to be completed shortly.

Events following the end of the period under review

Sale of Millchem Zambia

Millchem has agreed to the sale of the Zambian operations for net asset value of $46 000, with effect from 1 September 2015.  The rights to the name "Millchem Zambia" are not included in the sale.

Settlement with Lonrho

On 3 September 2015, the Company concluded a settlement agreement with Lonrho with respect to the Jet claims and counterclaims between the parties, in terms of which the Company received US$4.752 million in full and final settlement of the claims. After outstanding litigation and other associated costs, the net proceeds were US$3.47 million.

Strategy going forward and closing

The Company is now focused on creating value for shareholders through its investments in Millchem and Payserv. In addition, the Board is in the process of formulating its investment strategy to implement strategic value-creating acquisitions as appropriate opportunities arise. We will continue to focus on Zimbabwe, which we believe provides the best opportunity for successful investment and growth in the short to medium term.

Mr Samir Shasha

Chief Executive Officer

29 February 2016

Cambria Africa Plc

Audited consolidated income statement

For the year ended 31 August 2015

		31-Aug-15		31-Aug-14
		US$'000		US$'000
Revenue		10 306		9 405
Cost of sales		(4 670)		(4 388)
Gross profit		5 636		5 017
Operating costs		(7 766)		(8 513)
Other income		7		17
Net proceeds on liltigation settlement		3 474		-
Profit/(loss) on disposal and impairment of assets		199		(774)
Operating profit/( loss)		1 550		(4 253)
Finance income		10		21
Finance costs		(740)		(1 128)
Net finance costs		(730)		(1 107)
Profit/(loss) before tax		820		(5 360)
Income tax		(271)		(319)
Profit/(loss) for the period from continuing operations		549		(5 679)
Discontinued operations:
Profit/(loss) for the year from discontinued operations, net of tax		(94)		(10 166)
Profit/(loss) for the year		455		(15 845)
Attributable to:
Owners of the company		164		(16 138)
Non-controlling Interests		291		293
Profit/(loss) for the year		457		(15 845)
Earnings per share
Basic and diluted earnings/(loss per) share (cents)		0.1c		(19.5c)
Earnings per share-continuing operations
Basic and diluted earnings/(loss) per share (cents)		0.2c		(7.2c)

Cambria Africa Plc

Audited consolidated statement of comprehensive income

For the year ended 31 August 2015

		31-Aug-15		31-Aug-14
		US$'000		USS'000
Profit/(loss) for the year		455		(15 845)
Other comprehensive income
Items that will not be reclassified to income statement:
Foreign currency translation differences for overseas operations		97		12
Total comprehensive profit/(loss) for the year		552		(15 833)
Attributable to:
Owners		261		(16 126)
Non-controlling interests		291		293
Total comprehensive profit/(loss) for the year		552		(15 833)

Cambria Africa Plc

Audited consolidated statement of changes in equity

For the year ended 31 August 2015

US$'000		Share Capital	Share Premium	Revaluation Reserve	Foreign Exchange Reserve	Share Based Payment Reserve	Retained Earnings	Non-distributable Reserve	Total	Non-controlling Interest	Total
Balance at 31 August 2013		12	78 798	77	(10 641)	86	(59 752)	2 241	10 821	(80)	10 741
(Loss)/profit for the period		-	-	-	-	-	(16 138)	-	(16 138)	293	(15 845)
Foreign currency translation differences for overseas operations		-	-	-	12	-	-	-	12	-	12
Total comprehensive loss for the year		-	-	-	12	-	(16 138)	-	(16 126)	293	(15 833)
Contributions by/distributions to owners of the Company recognised directly in equity
Deferred tax adjustment		-	-	361	-	-	-	-	361	-	361
Dividends paid		-	-	-	-	-	-	-	-	(204)	(204)
Issue of ordinary shares (net of share issue costs)		6	3 689	-	-	-	-	-	3 695	-	3 695
Total contributions by and distributions		6	3 689	361	-	-	-	-	4 056	(204)	3 852
Balance at 31 August 2014		18	82 487	438	(10 629)	86	(75 890)	2 241	(1 249)	9	(1 240)
Balance at 31 August 2014		18	82 487	438	(10 629)	86	(75 890)	2 241	(1 249)	9	(1 240)
(Loss)/profit for the period		-	-	-	-	-	164	-	164	291	455
Foreign currency translation differences for overseas operations		-	-	-	97	-	-	-	97	-	97
Total comprehensive profit for the year		-	-	-	97	-	164	-	261	291	552
Contributions by/distributions to owners of the Company recognised directly in equity
Deferred tax adjustment		-	-	-	-	-	-	-	-	-	-
Disposal of entity		-	-	-	-	-	341	(341)	-	-	-
Dividends paid		-	-	-	-	-	-	-	-	(235)	(235)
Issue of ordinary shares (net of share issue costs)		15	1 463	-	-	-	-	-	1 479	-	1 479
Total contributions by and distributions		15	1 463	-	-	-	341	(341)	1 479	(235)	1 244
Balance at 31 August 2015		34	83 950	438	(10 532)	86	(75 385)	1 900	491	65	556

Cambria Africa Plc

Audited consolidated and company statements of financial position

As at 31 August 2015                    

		Group	Company		Group	Company
		31-Aug-15	31-Aug-15		31-Aug-14	31-Aug-14
		US$'000	US$'000		US$'000	US$'000
Property, plant and equipment		2 594	-		2 705	18
Goodwill		717	-		717	-
Intangible assets		2	-		14	-
Investment in subsidiaries		-	-		-	-
Total non-current assets		3 313	-		3 436	18
Inventories		761	-		1 385	-
Financial assets at fair value through profit and loss		50	-		66	-
Trade and other receivables		5 993	8 383		1 408	12 378
Cash and cash equivalents		645	50		405	38
Assets held for sale		-	-		6 469	-
Total current assets		7 449	8 433		9 733	12 416
Total assets		10 762	8 433		13 169	12 434
Equity
Issued share capital		34	34		18	18
Share premium account		83 950	83 950		82 487	82 487
Revaluation reserve		438	-		438	-
Share based payment reserve		86	86		86	86
Foreign exchange reserve		(10 532)	(13 186)		(10 629)	(13 186)
Non distributable reserves		1 900	-		2 241	-
Retained losses		(75 385)	(70 270)		(75 890)	(65 055)
Equity attributable to owners of the company		491	614		(1 249)	4 350
Non-controlling interests		65	-		9	-
Total equity		556	614		(1 240)	4 350
Liabilities
Loans and borrowing		-	-		6 685	4 685
Trade and other payables		45	-		60	-
Provisions		183	-		182	-
Deferred tax liabilities		177	-		178	-
Total non-current liabilities		405	-		7 105	4 685
Current tax liabilities		200	-		269	-
Loans and borrowings		6 872	4 812		345	249
Obligations under finance leases		5	-		3	-
Trade and other payables		2 724	3 007		2 865	3 150
Liabilities held for sale		-	-		3 822	-
Total current liabilities		9 801	7 819		7 304	3 399
Total liabilities		10 206	7 819		14 410	8 084
Total equity and liabilities		10 762	8 433		13 169	12 434

Cambria Africa Plc

Audited consolidated statement of cash flows

For the year ended 31 August 2015        

		31-Aug-15		31-Aug-14
		USS'000		USS'000
Cash used in operations		(2 590)		(3 647)
Taxation paid		(342)		(287)
Cash used for operating activities		(2 932)		(3 934)
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment		126		673
Purchase of property, plant and equipment		(88)		(169)
Proceeds on disposal of subsidiary		2 445		-
Other investing activities		-		(349)
Interest received		10		21
Net cash from investing activities		2 493		176
Cashflows from financing activities
Dividends paid to non-controlling interests		(235)		(204)
Interest paid		(363)		(1 174)
Proceeds from issue of share capital		1 479		3 694
Loans repaid		(595)		(187)
Proceeds from drawdown of loans		62		530
Net cash from financing activities		348		2 659
Net (decrease)/increase in cash and cash equivalents		(91)		(1 099)
Cash and cash equivalents at 1 September		639		1 738
Foreign exchange		97		-
Net cash and cash equivalents at 31 August		645		639

 

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