Cambria Africa Plc

Interim Results (the "Results") 

EPS of 0.0084 US cents and NAV 1.16 US cents

For the 6 Months ended 28 February 2022

Cambria Africa Plc (AIM:CMB) ("Cambria", the "Company" or together with its subsidiaries the "Group") is pleased to announce its interim results for the six months ended 28 February 2022 (the "Period" or "H1 2022"). A copy of this announcement is available on the Company's website (www.cambriaafrica.com).

Profit after Tax increased by 158% to $245,000 for the Period compared to $95,000 achieved in the same period in 2021 ("H1 2021"). This was mostly due to increased revenue from Tradanet, the Company's 51% owned subsidiary.  Revenues rose to $540,000 in H1 2022 compared to $137,000 in H1 2021. The Company's Net Asset Value dropped 2% or $149,000 to $6.32 million (1.16 US cents per share) as at 28 February 2022 compared to H1 2021.

Excluding minority interests, Profit Attributable to Cambria Shareholders was $46,000 (0.01 US cents per share) for H1 2022, down from $72,000 in H1 2021. The Company's subsidiaries in Zimbabwe continued to operate above break-even; Millchem Zimbabwe's product sales in its joint venture with Merken, have slowed down significantly as predicted in prior communications.

Group Highlights H1 2022:

Net Asset Value ("NAV") decreased by 2% from $6.468 million (1.19 US cents per share) in H1 2021 to $6.319 million (1.16 US cents per share) in H1 2022.

l Group Finance costs decreased to $7,000 in H1 2022 compared to $13,000 in H1 2021. Finance costs will continue to fall as the Group's outstanding debt nears zero. Current debt owing to Ventures Africa Limited ("VAL") stands at $106,000 which will be repaid in full by the end of the 2022 financial year.

l Group revenue recovered by 38% compared to prior year. This is due to Tradanet revenue increasing significantly as loans advanced by Central Africa Building Society, a subsidiary of Old Mutual Zimbabwe, increased in line with inflationary pressures, leading to higher salaries in the market.

l Cambria's Profit After Tax increased 153%, driven by asset sales and above break-even operations, to $240,000 in H1 2022 compared to $95,000 in H1 2021.

l Consolidated EBITDA was 46% higher in H1 2022 at $299,000 compared to $205,000 in H1 2021.   

l Cambria's central costs decreased by 75% to $13,000 compared to $51,000 in H1 2021. Cambria's CEO and Directors continued to render services to Cambria without compensation during H1 2022.

l Foreign currency translation losses of $194,000 and losses attributable to hyperinflationary accounting in this period were due to the depreciation of the Zimbabwean currency against the US Dollar from ZWL83.89 to the US Dollar as at 28 February 2021 to ZWL124.02 as at 28 February 2022.

Net Asset Value

The Company's net asset value reduced by 2% from $6.468 million in H1 2021 to $6.313 million (1.19 US cents per share) in H1 2022. This was due to the downward revaluation of the Company's business premises by $200,000 during the 2021 year-end audit.

Components of NAV as at 28 February 2022

The Group's NAV of $6.313 million as at the end of H1 2022 consists of the following tangible and intangible assets:

Building and properties valued at $2.3 million - This valuation, down $200,000 from the prior valuation, was prepared by Hollands Harare Estate Agents ("Holland") in on the 27^th of January 2022. Holland also 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 Valued at $1.743 million (net of minority interests) or 35 US cents per share. 

USD Cash and Cash Equivalents of $1.4 million - Cash net of liabilities outside Zimbabwe totalled $1.4 million as at 27 May 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 Consolidated Statement of Financial Position at $184,000 based on the closing price of Old Mutual Limited on the Johannesburg Stock Exchange ("JSE") at year end. The value of Old Mutual shares closed at $163,342 on the JSE on 27 May 2022. 

Goodwill - The Company has a goodwill value of $717,000 as at 28 February 2022.  The Company believes this is a fair assessment of its intangible assets. Despite the shrinkage of Paynet's operations, Cambria 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.

Based on the above analysis, the Company believes its tangible, intangible and realizable NAV are not subject to significant negative shocks and may be the beneficiary of potential positive outcomes. 

Chief Executive's Report

The Company released its annual report for the financial year ended 31 August 2021 on the 31 of March 2022.  In the two months since that report, the most significant event subsequent has been a government pronouncement intended on halting inflation.  One measure, that of stopping all lending, was reversed soon after its intended implementation. Another measure was to bring convergence between the so-called "interbank rate" and the "auction rate" which are reference rates for the Reserve Bank of Zimbabwe's official exchange rates.  The net effect has been a doubling of the functional exchange rate to ZWL300 against the US dollar.  At this time, our best indication is that this rate still lags the parallel market rate by almost 30%.

The impact of these movements in the exchange rates should be taken into account when analyzing the Company's earnings in ZWL.  To the extent we can, we will be investing excess funds into a diversified portfolio on the Zimbabwe Stock Exchange to preserve value.  Regardless, we anticipate slower growth in the US dollar value of Tradanet's loan processing portfolio as a consequence of inflation and devaluation.  Similarly, we expect a decline in the real value of our Payroll processing revenues.  However, both operations should continue to trade at cashflow break-even levels. As mentioned in my CEO report at the end of FY2021, Cambria's story is now focused on realizing its NAV - which remains at 3.3x its trading price as of 27 May 2022.  I remain optimistic that this is a realistic and realizable goal.

Samir Shasha

30 May 2022