Cambria Africa Plc

("Cambria" or the "Company")

Interim Results (the "Results") 

EPS of 0.01 US cents and NAV 1.06 US cents

For the 6 Months ended 28 February 2023

Cambria Africa PLC (AIM:CMB) ("Cambria" or the "Company") is pleased to announce its interim results for the six months ended 28 February 2023 (the "Period"). A copy of this announcement is available on the Company's website (www.cambriaafrica.com). With the publishing of the Group`s FY 2022 and HY 2023 results, the suspension of the Company`s shares on the AIM is expected to be lifted at 7.30am on 15 September 2023.

Profit after tax decreased by 59% to US$99,000 for the 6 months ended 28 February 2023 compared to $240,000 achieved in the same period in 2022. This was due to a decline in revenue and earnings contributions from Tradanet. Tradanet`s performance was impacted by the slower growth in the US dollar value of its loan processing portfolio which value slowed as a consequence of inflation and the devaluation of Zimbabwe's currency (ZWL). Tradanet's revenues were further adversely impacted by liquidity constraints in the banking sector. Autopay also experienced a decline in the real value of its Payroll processing revenues caused by the depreciation of ZWL relative to the US dollar.

The Group's Net asset value of $5.76 million remained in line with the audited NAV reported for the financial year ended

31 August 2022 of $5.75 million.  

Group Highlights HY 2023:

·      Net Equity (NAV) decreased by 9% from US $6.313 million (1.16 US cents per share) in HY 2022 to $5.763 million (1.06 US cents per share) in HY 2023.

·      Group revenue decreased by 38% compared to the prior period from $724,000 to $451,000. This is mainly due to Tradanet revenues decreasing as a result of declining loan advances by CABS in United States dollar terms during the period.

·    Consolidated EBITDA was 57% lower in HY 2023 at $128,000 compared to $299,000 in HY 2022.   

Net Equity (Net Asset Value)

The company's net asset value reduced by 9% from $6.313 million at HY 2022 to $5.763 million at HY 2023. The HY2023 NAV corresponds with the audited NAV at 31 August 2022 of $5,75 million.

Components of NAV at 28 February 2023

The Group NAV of $5.763 million as at the end of HY 2023 consists of the following tangible and intangible assets:

Building and properties valued at $2.3 million - The valuation was prepared by Hollands Harare Estate Agents in January 2022. Holland conducted the previous valuations of the prominently located commercial office space and its equally well-positioned vacant plot in Harare's Mount Pleasant Business Park.

Investment in Radar Holdings Limited  - 9.74% or 4.98 million shares valued at US $1.743 million (net of minority interests) based on 35 US cents per equivalent Radar share. In the post balance sheet period, the Company conditionally agreed to sell its 78.2% shareholding in A.F. Philips (Pvt) Ltd ("AFP") for a sum of US $1.743 million (35 US cents per equivalent Radar Share) in cash. The sale is subject to conditions precedent which the Company has reasonable cause to believe will be met and that the full purchase price will be realized at the holding Company level.

USD Cash and Cash Equivalents - US dollar cash totalling $1.36 million. 

Old Mutual and Nedbank 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 2022 Statement of Financial Position at US $122,820 based on the closing price of Old Mutual Limited on the Johannesburg Stock Exchange at the year end.  By way of an unbundling by Old Mutual in November 2021, the company received 2,692 Nedbank shares, which are retained in Zimbabwe. The total value of this portfolio was $168,120 based on the Johannesburg Stock Exchange (JSE) closing price`s as at 11 September 2023.

Goodwill - The Company has a goodwill value of $717,000 on its Statement of Financial Position relating to its investment in the Payserv group of Companies.  The Company believes this is a fair assessment of the intangible asset despite the impact of the decisions made by Zimbabwe`s banking institutions against using its payment platforms. Turnaround opportunities are being explored and are more recently evidenced by the granting to Multi-Pay Solutions (Pvt) Ltd (Multi-Pay Solutions) the exclusive rights to use, distribute, and operate Paynet Software in the Southern African Development Community (SADC). Payserv Africa will continue to operate Paynet outside of the SADC. Tradanet, in which the Company holds an effective 51% interest, is the largest contributor to the Company's earnings. Tradanet processes microloans on behalf of CABS, Zimbabwe's largest Building Society.  At their peak in 2019, these microloans comprised about a third of the banks assets and the Directors believe that a return to those levels is fully conceivable. Accordingly, the Company continues to believe that Payserv's intellectual property value and the amalgamation of the above exceeds the book value of the goodwill.

Chief Executive's Report

The Company has released its Annual Report for the financial year ended 31 August 2022 simultaneously with its 2023 half year results.  As covered in my CEO report attached to the audited year end results, Cambria's story is now focused on realizing its NAV. Investors might find value in examining our estimate of realizable NAV at US $7.5 million (1.4 US cents per share). Our estimate draws from the following actual and anticipated components:

·      Cash: As at the half year ended 2023, the Group held cash reserves of US$1.36 million. As at 31 August 2023, in addition to  Zimbabwe-held US dollar-denominated cash, shares and gold coins , the Company holds a Fixed Deposit of $1.4 million in Mauritius, yielding 5% per annum.

·      Commercial Property: This is represented by the prominently located Mt. Pleasant Business Park Commercial Property valued annually by Hollands Harare Estate Agents at $2.3 million.

·      Recovery of Legacy Debts: The Company is actively pursuing the recovery of "Legacy Debts" or "Blocked Funds" owed by our Zimbabwe subsidiaries to the holding companies. As at 31 August 2023, we've successfully recovered US$407,350, leaving an outstanding balance of $1.2 million held by the Ministry of Finance. These funds, initially held by the Reserve Bank in ZWL on a one-to-one basis with the USD, were marked down to a negligible value in our FY 2021 accounts based on the official exchange rate. However, post FY 2022, the Ministry of Finance began repaying these debts and assures us of the balance, as funds become available. As a result, our NAV after the financial year end will see an increase, accounting for the recovered debts.

·      Listed Portfolio Value: We aim to realise the value of the 204,047 Old Mutual shares and 2,692 Nedbank shares by transferring these shares to the South African register.  The total value of this portfolio was $155,132 based on JSE closing prices on 28 August 2023 and $168,120 as at 11 September 2023.

·      Sale of Radar equivalent shares: At the holding Company level, we will, realise $1.743 million from the sale of our indirect stake in Radar, subject to fulfilment of the outstanding conditions precedent to the agreement of sale.

·      Intellectual Property Value: The Board is committed to deriving maximum value from our intellectual property, both in our current operations and future endeavours. The Company's Statement of Financial Position lists a goodwill value of $717,000. Our assessment is that this represents the baseline value of the Company's intellectual property, considering Tradanet's historical profitability and Paynet's potential profits from its proposed agreement with Multi-Pay.

These estimates, culminating in a projected NAV of US $7.5 million, come with the following considerations:

1.     Maintenance of stable commercial real estate prices in Harare and successful sales realization at the holding Company level.

2.     Successful completion of the Radar Sale agreement.

3.     Repayment of US $1.2 million in Legacy Debts.

4.     Effective utilization of intellectual properties for profit.

5.     The resumption of fungibility of dual-listed shares.

We remain cautiously optimistic about achieving full value for the Company's assets beyond its NAV. While we still see value in our listing, the Board is considering whether to maintain its listing. With the publishing of the Group`s FY 2022 and HY 2023 results, the suspension of the Company`s shares on the AIM will be lifted. This should enable shareholders to trade with a comprehensive understanding of the investment landscape confronting Cambria. At the time of suspension, Cambria shares were valued at 0.027p, contrasting with a book NAV of 0.084p and our estimate of 1.35 US cents per share or 1.04p per share. Shareholders must determine whether the market has aptly gauged the discount to the Company's book NAV and management's estimates of realizable NAV, which we are committed to achieving.

Samir Shasha

12 September 2023

Cambria Africa Plc

Interim consolidated income statement

For the six month period ended 28 February 2023