Cambria Africa plc
Annual Report 2013

Plain-text annual report

Chief Executive Officer’s Statement Directors Statement of Directors’ Responsibilities Directors’ Report Report of the Independent Auditors, KPMG Audit LLC, to the members of Cambria Africa Plc. Consolidated Income Statement Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated and Company Statement of Financial Position Consolidated Statement of Cash Flows Notes to the Financial Statements Corporate information Shareholder information Annual Report 2013 Table of Contents 4 8 9 10 14 16 17 18 20 21 22-66 67 68 Chief Executive Officer’s Statement EDZO WISMAN 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. 10% 6% (4%) 32% pursued by both Payserv and Millchem; and (iii) an unforesee- able and unavoidable US$294 thousand multi-year VAT liability related to Tradanet, accounting for 40% of the decrease in com- bined EBITDA for the year. (US$ THOUSANDS) 2013 2012 GROWTH Revenues Gross profit 8,487 7,721 4,581 4,326 Gross margin 54% 56% SG&A EBITDA (4,209) (3,194) 372 1,132 (67%) EBITDA margin 4% 15% (70%) As Cambria continues to actively pursue scale and scope though 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 provides EDI switching services (Paynet), Payserv Africa ‘payslip’ processing (Autopay) and payroll based micro-finance loan processing (Tradanet). (US$ THOUSANDS) 2013 2012 GROWTH Revenues Gross profit 4,164 3,951 3,811 3,614 Gross margin 91% 91% SG&A EBITDA EBITDA Margin (3,369) (2,274) 442 1,340 11% 34% 5% 5% - (48%) (67%) (69%) There was a slowdown in the rate of growth when compared to last year (when, for example, revenues grew 64% year-on- year in those businesses) 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 experi- enced periods of liquidity shortages, resulting in cautious con- sumer spending which directly contracted growth in our portfo- lio. 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 re- sults in the coming periods. Cambria’s EBITDA loss for the period for continuing operations was US$3,6 million, a 52% reduction when compared to last year. The Group loss for the year is US$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. Operational Review Main Investments CONSOLIDATED RESULTS Cambria’s two key investments consist of Payserv Af- rica and Millchem Holdings. These investments joint- ly had a consolidated performance as shown in the table following: The decrease in EBITDA shown therein can be attributed to three factors: (i) significant investments made by Payserv into new product upgrades, with the associated costs expensed rather than capitalised; (ii) investments into regional expansion PAGE 4 CAMBRIA AFRICA PLCEdzo Wisman Chief Executive Officer’s Statement Paynet provided Electronic Data Interchange (EDI) services to Payserv Africa (continued) all 22 banks and building societies in Zimbabwe, as well as to over 1,500 corporates. Paynet processed 15.2 million transac- tions (2012: 12.3 million) during the period under review, a 24% increase. Millchem is a value-added chemicals distributor with Millchem Holdings leading market positions in Zimbabwe. It recently es- tablished a presence in Zambia, and is working to- wards a presence in Malawi. Autopay provided payroll services to 150 customers, processed over 303 thousand payslips (2012: 286 thousand) during the pe- riod under review, a 6% increase. Tradanet processed 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 Zam- bian National Payments Licence during December 2013, signed its first customers in that country and has commenced process- ing payments. Moreover, Autopay now has a presence in Zam- bia 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$294 thousand adjust- ment to Payserv (and Group) EBITDA related to a multi-year VAT liability related to Tradanet dating back to March 2010 that was charged in one tranche during 2013. (US$ MILLIONS) 2013 2012 GROWTH Revenues Gross profit Gross margin SG&A EBITDA EBITDA margin 4,323 3,770 770 712 18% 19% (840) (920) (70) (208) (2%) (6%) 15% 8% (6%) (9%) 66% 71% In general, chemicals distribution tends to outpace econom- ic 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 com- pared 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 add- ed as competitors were struggling. Despite the challenging environment in Zimbabwe, the Mill- chem 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 prod- ucts as intended, opened up a branch in Bulawayo, opened up warehouse space and offices in Zambia, made its first steps to- wards opening a warehouse and offices in Malawi, established buying entities in the in the Netherlands and South Africa, and was able to add relationships with a number of attractive new suppliers (e.g. BASF, ENI (Cent-Lube), Sasol). Moreover, in addi- tion 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. Investments required for this geographic expan- sion have not been capitalised. Alongside a new CEO, Millchem also appointed two Non-Exec- utive 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. PAGE 5 FINANCIAL REPORT 2013Edzo Wisman Chief Executive Officer’s Statement Discontinued operations, other and cen- tral 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 in EBITDA, excluding certain write-backs related to inter-company balanc- es. 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 re- lation to these aircraft and certain associated contracts. At this point, in summary, Cambria will pursue recovery of claims relat- ed 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, pay- ment 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. 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 EQUITY PLACEMENT On 19 February 2014, Cambria announced that approximate- ly US$4 million (before expenses), or UK£2.4 million, has been raised by a 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 Compa- ny’s expansion strategy for Millchem and Payserv as outlined below. Cambria is continuing the disposal of its remaining non-core as- Strategy going forward sets, 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 maximis- ing shareholder value and ensuring continued future growth. LonZim Air incurred US$205 thousand in operating losses for the period under review, largely related to extraordinary legal expenses related to the above mentioned claims. 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. SETTLEMENT WITH LONRHO On 19 July 2013 Cambria reached final settlement with Lonrho Plc with regards to all on-going disputes, other than claims re- lated 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. A multi-year, regional and product roll-out strategy for both Millchem and Payserv has been developed and Cambria is ex- cited about the growth and return prospects of the two invest- ments. Initial steps in the regional expansion have been made success- fully. 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. PAGE 6 CAMBRIA AFRICA PLCEdzo Wisman Chief Executive Officer’s Statement In the coming years, both Millchem and Payserv will continue to Strategy going forward (continued) expand in additional geographies in a careful and coordinated manner. Moreover, Cambria anticipates growth for both invest- ments 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 Compa- ny 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. Cambria has had a year of transition, which has seen the end In closing of many ongoing legal disputes and completion of the strate- gy to focus on companies that can effectively pursue growth and scale through regionalisation. We have significantly re- duced 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 sig- nificant progress in their product rollout and regional strat- egy, 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 stron- ger than ever that our current portfolio and focus marks the best route forward towards maximising shareholder value. EDZO WISMAN CHIEF EXECUTIVE OFFICER 26 FEBRUARY 2014 PAGE 7 FINANCIAL REPORT 2013Itai Mazaiwana, 53 NON-EXECUTIVE DIRECTOR Itai Mazaiwana started his career in research and educa- tion at the Institute of Mining Research at the University of Zimbabwe as an Analytical Geochemist. During his subsequent career in the private sector, Itai held senior positions in the mining and chemicals industries at ZIS- CO Steel, Anacal Laboratory, Ardington Exploration, and Polokwane Chemicals (South Africa). Itai is currently a direc- tor of Jeune Zimbabwe, Mining and Infrastructure Develop- ment Corporation, a joint venture between Jeune and the Government Energy Resources, a consortium of European and Zimbabwe- an engineers and scientists developing a 2000MW power station. In recent years, Itai has acted as a technical ad- viser to Orange Advisory Alliance (South Africa), Line- band/Scores Mining, and New Frontier Partners Zimba- bwe. The latter organisation promotes local participation in Zimbabwe’s mining and energy sectors. Itai holds a BSc in Chemistry and Geology and a MSc in Analytical Chemistry, both from the University of Zimbabwe. He has published a number of papers on low level detection of gold. Appointed 24 February 2012. Pan-African Zimbabwe and of Fred Jones, 44 NON-EXECUTIVE DIRECTOR Fred Jones is the Chairman of Jutland Group, a private Hong Kong based investment management and commod- ity firm which he founded in 2006 to manage portfolios of foreign exchange, precious metals and international debt. International, a commodity Fred also founded Jaramcor supply-chain manager and supplier of pulp/paper, chem- icals and agricultural products. He was previously Vice President, Private Client Services, at Bear Stearns Global Wealth Management. Fred was also with the International Private Cli- ent Group of Merrill Lynch. He holds a BSc in Accountancy and an MBA in Finance from Florida A&M University. Appointed 24 February 2012. The following Directors resigned on the date shown during the period under review and up to the date of report. Paul Heber Non-Executive Director 10 December 2012 Tania Sanders Chief Financial Officer 30 November 2013 Directors Ian Perkins, 64 EXECUTIVE CHAIRMAN Ian Perkins has over 40 years of London City experience. Un- til 1991 he was at James Capel & Co. where he was a Direc- tor and Head of Fixed Income. Between 1991 and 1996, Ian was Director and later Chief Executive Officer (CEO) of listed bank King & Shaxson Holdings plc. When Ger- rard Group acquired King & Shaxson in 1996, Ian became a Director of Gerrard Group plc and Chairman of the Ger- rard & King Bank. Following Gerrard Group’s takeover by the Old Mutual Group in 2000, he became a Director of Old Mutual Financial Services Plc, and the CEO and later Chairman of GNI Limited until 2003. Thereafter until 2010, Ian was Chairman of fixed income and inter-dealer broking firm King & Shaxson Limited. Appointed 24 February 2012. Edzo Wisman, 40 CHIEF EXECUTIVE OFFICER Prior to joining the Company in 2010, Edzo Wisman was Manag- ing Director of Stuart Lammert & Co., a Toronto and New York based corporate advisory firm that he founded in 2003. Prior to that, Edzo was a Vice President, Investment Banking with Toronto based CCFL Advisory Services. Previously, he was with Wilshire Associates, first with the consultancy practice in Am- sterdam servicing some of Europe’s largest institutional inves- tors and then with the Private Markets Group at Wilshire’s San- ta Monica, California headquarters, seeking opportunities in the leveraged buyout markets. Edzo has also worked with the in- vestment department of the pension funds of KLM Royal Dutch Airlines. He holds a Doctorandus degree in Business Economics from the University of Groningen. He has published a number of papers on the buyout markets and corporate governance is- sues. Appointed 24 February 2012. Paul Turner, 67 NON-EXECUTIVE DIRECTOR AND DEPUTY CHAIR- MANPaul Turner is a Chartered Accountant and past President of the Institute of Chartered Accountants of Zimbabwe. He is a highly respected and knowledgeable member of the Zimbabwean business community. He was a partner at Ernst & Young in Harare, Zimbabwe, for over thirty years and brings an unparalleled level of experience in the structure and operation of businesses in Zimbabwe. Appointed 1 July 2008. PAGE 8 CAMBRIA AFRICA PLC Cambria Directors Directors’ Responsibility Statement in Respect of the Directors’ Report and the The Directors are responsible for preparing the Directors’ Re- Financial Statements. port and the financial statements in accordance with applicable law and regulations. The Directors have elected to prepare the Group and Parent Company financial statements in accordance with International Financial Reporting Standards as adopted by the European Union. The Directors are responsible for keeping proper account- ing records that are sufficient to show and explain the Parent Company’s transactions and disclose with reasonable accuracy at any time its financial position. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation governing the preparation and dissemination of financial statements may differ from one jurisdiction to another. The Group and Parent Company financial statements are re- quired to give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are re- quired to: • • • select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether they have been prepared in accordance with International Financial Reporting Standards as ad- opted by the European Union; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business. PAGE 9 FINANCIAL REPORT 2013FOR THE YEAR ENDED 31 AUGUST 2013 The Directors of Cambria Africa Plc (the “Company”) and its subsidiaries (together the “Group”) sub- mit their report, together with the audited financial statements for the year ended 31 August 2013. Directors’ Report During the year, the Group was an investment company with Principal activities a portfolio of investments in Zimbabwe, countries surrounding Zimbabwe, as well as the remainder of Sub-Saharan Africa, with a bias towards Southern and Eastern Africa. The Company’s investment objective is to provide Shareholders Investment Strategy with long term capital appreciation. While the Company does not have a particular sectoral focus, utilising the investment skills of the Directors and their advisors, the Company seeks to identify individual companies in sectors best positioned to benefit should there be radical improvements in Zimbabwe’s economy. The Company may make investments in the tourism, accommodation, infrastructure, transport, com- mercial and residential property, technology, communications, manufacturing, retail, services, leisure, agricultural and natural resources sectors. The Company may also make investments in businesses outside Zimbabwe and the countries surrounding Zimbabwe as well as the remainder of Sub-Saharan Africa, that have a significant exposure to assets, businesses or operations within the defined region. The Company will only be able to achieve its investment objective in the event the Zimbabwean economy radically improves. Whilst there will not be any limit on the number or size of in- vestments the Company can make in any sector, the Directors seek to diversify the Company’s investments across various sectors in order to mitigate risk and to avoid concentrating the portfolio in any single sector. The Company’s interest in a proposed investment or acquisi- tion may range from a minority position to full ownership. The Company intends, in any event, to actively manage the oper- ations of the companies it has invested in. Wherever possible the Company will seek to achieve Board control or financial con- trol of its portfolio companies. Indigenisation legislation within Zimbabwe may, however, prevent the Company from acquiring or maintaining a majority shareholder control in a Zimbabwean business. The Directors believe that through their individual and collec- tive experience of investing and managing acquisitions and dis- posals in Africa, they have the necessary skills to manage the Company and to source deal flow. Prior to any investment deci- sions being taken by the Board of the Company, a thorough due diligence process is undertaken by the Company’s appointed specialist financial and legal advisors. The Company’s investment strategy is dependent upon future radical improvement in the economy of Zimbabwe and expan- sion into the immediate region. It is therefore possible that a significant period of time may elapse before an investment by the Company will produce any returns and there is no guaran- tee that the economy in Zimbabwe will improve. Accordingly, the Company may not be able to make any profits and may in- cur losses. The Directors intend to seek the consent of the Shareholders for the investment policy on an annual basis. The Company Direc- tors will comply as a matter of policy with the US Office of For- eign Assets Control and the European Union Council Regulation (EC) No. 314/2004 regulations. The Group made a consolidated loss after non-controlling interests Results of US$12,048 thousand (2012: loss US$27,271 thousand) during the year and this has been set against reserves. The Chief Executive’s review of operations contains information Business review and development on developments during the year and key potential future de- velopments. The requirements of the enhanced business review in relation to strategy and progress thereon are contained in the Chief Ex- ecutive’s review of operations. The principal risks and uncertainties relate to the revenue gen- eration in the Group’s businesses which, being located in Africa, are subject to respective government policies, political stability, general economic conditions in the relevant country and expo- sure to foreign currency movements. The Group monitors cash flow as one of its primary key perfor- mance indicators. Given current global financial conditions, as PAGE 10 CAMBRIA AFRICA PLCBusiness review and development (con- well as current developments in Zimbabwe, the Directors are tinued) carefully monitoring cash resources within the Group and have instigated a number of initiatives to ensure funding will be avail- able to meet obligations as they fall due and for planned proj- ects and ongoing working capital support for its investments. If such funding cannot be secured, the projects will be delayed or cancelled to ensure that the Group can manage its cash re- sources for the foreseeable future and accordingly the financial statements have been prepared on a going concern basis. The Group also uses a number of other key performance indi- cators which are measured at different tiers in the operation. At the top level, the Group tracks revenues, gross profit, EBITDA, cash generation and performance against budget. The Directors mitigate risk by proper evaluation of every invest- ment that is made and have therefore developed a risk analysis reporting procedure, which links into the Company’s Corporate Governance procedures. Further information regarding the Group’s policies and expo- sure to financial risk can be found in note 32 to the financial statements. The Directors do not recommend the payment of a dividend Dividends (2012: US$nil). On 1 October 2012, the Company announced that it had raised Share capital US$1,400 thousand (£860 thousand) by way of a placing of 8,615,115 new ordinary shares at 10p per share, resulting in the issued share capital of the Company increasing to 66,749,023 ordinary shares. Details of significant events since the reporting date are con- Post balance sheet events tained in note 40 to the financial statements. For the year ended 31 August 2013 Directors’ Report Corporate Governance COMPLIANCE WITH THE UK CORPORATE GOVER- NANCE CODE The Directors recognise the value of the UK Corporate Gover- nance Code (formerly the Combined Code on Corporate Gov- ernance) and, whilst under AIM rules full compliance is not required, the Directors have considered the recommendations and applicability in respect of the Company insofar as is practi- cable and appropriate for a public company of its size. BOARD OF DIRECTORS Following the Annual General meeting on 22 April 2013, the Board of Directors comprised of two Executive Directors, and four Non-Executive Directors, one of whom is the Chairman. Paul Heber resigned as a Non-Executive Director on 10 Decem- ber 2012. Tania Sanders resigned as an Executive Director on 30 November 2013. The Directors are of the opinion that the Board comprises a suit- able balance to enable the recommendations of the Code to be implemented to an appropriate level. The Board, through the Chairman and Chief Executive Officer in particular, maintains regular contact with its advisors, and institutional investors in order to ensure that the Board develops an understanding of the views of the major shareholders of the Company. The Board is responsible for formulating, reviewing and approv- ing the Company’s strategy, financial activities and operating performance. Day to day management is devolved to the exec- utive management who are charged with consulting the Board on all significant financial and operational matters. Consequent- ly, decisions are made promptly following consultation amongst the Directors and managers concerned, where necessary and appropriate. All necessary information is supplied to the Directors on a time- ly basis to enable them to discharge their duties effectively and all Directors have access to independent professional advice at the Company’s expense, as and when required. The Chairman is available to meet with institutional sharehold- ers to discuss any issues and concerns regarding the Group’s governance. The Non-Executive Directors can also attend meet- ings with major shareholders, if requested. The participation of both private and institutional investors at the Annual General Meeting is welcomed by the Board. PAGE 11 FINANCIAL REPORT 2013For the year ended 31 August 2013 Directors’ Report Corporate Governance (continued) INTERNAL CONTROLS The Directors acknowledge their responsibility for the Com- pany’s and the Group’s systems of internal control, which are designed to safeguard the assets of the Group and ensure the reliability of financial information for both internal use and external publication. Overall control is ensured by a regular detailed reporting system covering the state of the Group’s financial affairs. The Board has implemented procedures for identifying, evaluating and managing the significant risks that face the Group. Any system of internal control can provide only reasonable, and not absolute, assurance that material financial irregularities will be detected or that the risk of failure to achieve business objec- tives is eliminated. COMMITTEES The Board has devolved duties to the following committees: AUDIT COMMITTEE The role of the Audit Committee is to oversee the nature and scope of the annual audit, management’s reporting on inter- nal accounting standards and practices, financial information and accounting systems and procedures and the Company’s fi- nancial reporting statements. The Audit Committee’s primary objectives include assisting the Directors in meeting their re- sponsibilities in respect of the Company’s continuous financial disclosure obligations and overseeing the work of the Compa- ny’s external auditors. The Audit Committee comprises Paul Turner (Chairman), Ian Perkins and Fred Jones. REMUNERATION COMMITTEE The Remuneration Committee makes recommendations to the Board on the remuneration policy that applies to Executive Di- rectors and senior employees. Subsequent to the resignation of Paul Heber, Paul Turner was appointed to the Remuneration Committee. The Remuneration Committee comprises Ian Perkins (Chairman), Fred Jones and Paul Turner. is responsible for NOMINATION COMMITTEE The Nomination Committee identify- ing candidates to fill vacancies on the Board, as and when they arise, and nominate them for approval by the Board. The Nomination Committee comprises Paul Turner (Chairman), Edzo Wisman and Itai Mazaiwana. CORPORATE GOVERNANCE COMMITTEE The Corporate Governance Committee is responsible for en- suring proper corporate governance of the Company and is au- thorised by the Board to undertake regular reviews of external issues which have the potential for serious impact on the Com- pany’s business, and to have the oversight of social, environ- mental and reputational management of the Company. Subsequent to the resignation of Paul Heber, Itai Mazaiwana was appointed to the Corporate Governance Committee. The Corporate Governance Committee comprises Edzo Wisman (Chairman), Fred Jones and Itai Mazaiwana. The Directors have been advised of the following shareholdings Declared substantial shareholdings at 18 February 2014 3 per cent or more of the Company’s issued share capital: NUMBER OF SHARES PERCENT- AGE OF THE ISSUED CAPITAL Russell Investments Ltd 14,252,663 21.35% Jutland Capital Management Ltd Consilium Emerging Market Absolute Return Masters Fund Ltd Contrarian Capital Manage- ment 10,102,352 15.13% 6,629,132 9.93% 4,860,000 7.28% Biographical details of all Directors as well dates of appoint- Directors ment and resignation are set out on page 8. PAGE 12 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Directors’ Report The Directors’ interests in the shares of the Company at the be- Directors’ share interests ginning and end of the year were as follows: The Company has Directors’ and Officers’ liability insurance cov- Insurance er in place for Group Directors. DIRECTORS AT 18.02.14 NO. OF SHARES AT 31.08.13 NO. OF SHARES AT 31.08.12 NO. OF SHARES Ian Perkins 880,250 880,250 265,000 Edzo Wisman 615,250 615,250 Itai Mazaiwana Tania Sanders* Nil n/a Nil 92,280 Fred Jones 615,250 615,250 Nil Nil Nil Nil Paul Heber * Paul Turner n/a Nil n/a Nil 350,000 Nil Total 2,110,750 2,203,030 615,000 Between 1 September 2012 and 31 August 2013 the share price Share price performance varied between a high of 11.0p and a low of 8.13p. At 31 August 2013 the mid-market price of the shares at close of business was 8.25p (2012: 9.90p). On 18 February 2014 the mid-market price of the shares was 7.5p. The Group does not follow any code or standard with regard Payment to suppliers to the payment of its suppliers. The Group’s policy is to agree terms and conditions with suppliers in advance; payment is then made in accordance with the agreement provided the supplier has met the terms and conditions. Amounts due to suppliers at the reporting date are contained in note 30. * Paul Heber and Tania Sanders resigned as Directors on 10 December 2012 and 30 November 2013 respectively. Share options held by the Directors are detailed in note 25 of the financial statements All of the above interests are recorded in the Company’s Regis- ter of Directors’ Share and Debenture Interests. No Director has a beneficial interest in the shares or debentures of any of the Company’s subsidiary undertakings. A resolution to re-appoint KPMG Audit LLC and to authorise the Auditors Directors to fix their remuneration will be proposed at the An- nual General Meeting. The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s Auditors are unaware; and each Director has taken all the steps that he/she ought to have taken as a Director to make himself/ herself aware of any relevant audit information and to establish that the Company’s Auditors are aware of that information. The Company has in place an Anti-Corruption and Bribery Policy Anti-Corruption and Bribery Policy which has been adopted by the Company across all divisions of the Group. The Board has overall responsibility for ensuring compliance by Directors, employees and other persons associ- ated with the Group with applicable legal and ethical obliga- tions. The Company’s Chief Executive Officer has primary and day-to-day responsibility for implementation of the policy. Management at all levels of the Group are responsible for en- suring those reporting to them are made aware of, and under- stand, the policy. The policy gives guidance on risk identification and the procedures to follow where a risk is identified, together with clear guidelines on gifts, entertainment and donations. The notice of meeting, together with a form of proxy, will be Annual General Meeting sent out separately at a later date. ON BEHALF OF THE BOARD. PAUL TURNER DEPUTY CHAIRMAN 26 FEBRUARY 2014 PAGE 13 FINANCIAL REPORT 2013For the year ended 31 August 2013 Report of the Independent Auditors Report of the Independent Auditors, KPMG Audit LLC, to the members of Cambria Africa Plc We have audited the Group and Parent Company financial Statements (the “financial statements”) of Cambria Africa Plc for the year ended 31 August 2013 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated and Company Statements of Financial Position, the Consolidated Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs). This report is made solely to the Company’s members, as a body. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. As explained more fully in the Directors’ Responsibilities Statement set out on page 9, the Directors are responsible for the prepa- Respective responsibilities of Directors and Auditor ration of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable Scope of the audit of the financial statements assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presen- tation of the financial statements. In forming our opinion on the financial statements, which is not modified, we have considered the fair value of properties as dis- Emphasis of matter closed in note 4. An impairment has been made against land and buildings within Leopard Rock Hotel Company (Private) Limited and Eastinteg Investments (Private) Limited. This impairment is based on a valuation commissioned by the Directors in conjunction with the marketing of the properties for sale. Whilst the Directors believe that this valuation provides an appropriate indication of the value of the properties in the current market, it should be noted that it does not constitute a formal valuation prepared in accordance with standard RICS methodology, and the actual proceeds realised on a successfully concluded sale transaction may vary materially from the amount at which the properties are stated in the Financial Statements. PAGE 14 CAMBRIA AFRICA PLCReport of the Independent Auditors, KPMG Audit LLC, to the members of Cambria Africa Plc (contin- ued) In our opinion the financial statements: Opinion on the financial statements • • give a true and fair view of the state of the Group and Parent Company’s affairs as at 31 August 2013 and of the Group’s loss for the year then ended; and have been properly prepared in accordance with IFRS. KPMG AUDIT LLC CHARTERED ACCOUNTANTS HERITAGE COURT 41 ATHOL STREET DOUGLAS ISLE OF MAN IM99 1HN 26 FEBRUARY 2014 PAGE 15 FINANCIAL REPORT 2013For the year ended 31 August 2013 Consolidated Income Statement Revenue Cost of sales Gross profit Operating costs Other income Accelerated write-off of intangibles and goodwill Impairment Net losses on disposal on investments and impairment of assets Operating loss Finance income Finance costs Net finance costs Loss before tax Income tax Loss for the period from continuing operations Discontinued operations Loss for the year from discontinued operations, net of tax Loss for the year Attributable to: Owners of the company Non-controlling Interests Loss for the year Earnings per share - all operations Basic and diluted loss per share (Cents) Earnings per share-continuing operations Basic and diluted loss per share (Cents) NOTE 5 7 7 15/16 9 9 10 5/11 12 12 2013 TOTAL US$’000 8,487 (3,906) 4,581 (8,647) 289 - (348) (4,125) 282 (967) (685) (4,810) (204) (5,014) (6,890) (11,904) (12,048) 144 (11,904) (18.4c) (7.6c) * Restated 2012 TOTAL US$’000 7,721 (3,395) 4,326 (9,434) - (2,475) (451) (8,034) 312 (545) (233) (8,267) (349) (8,616) (17,072) (25,688) (27,271) 1,583 (25,688) (47.1c) (18.6c) The notes on pages 22 to 66 are an integral part of these consolidated financial statements. *Amounts have been restated due to reclassification of certain entities to discontinued operations. (See note 2) PAGE 16 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Consolidated Statement of Comprehensive Income *Restated 2012 2013 Loss for the year Other comprehensive income Items that will never be reclassified to income statement: Revaluation of property, plant and equipment Related deferred tax adjustment Impairment of previously revalued land and buildings in disposal group classified as held for sale Shareholder loans provided for in the prior year Items that are or may be reclassified to income statement: Foreign currency translation differences for overseas operations Total comprehensive loss for the year Attributable to: Owners of the company Non-controlling interest Total comprehensive loss for the year US$’000 (11,904) 422 (110) (1,873) (392) (1) (13,858) (14,002) 144 (13,858) US$’000 (25,688) 273 (2,839) - - (1,601) (29,855) (31,438) 1,583 (29,855) The notes on pages 22 to 66 are an integral part of these consolidated financial statements *Amounts have been restated due to reclassification of certain entities to discontinued operations (see note 2). PAGE 17 FINANCIAL REPORT 2013For the year ended 31 August 2013 Consolidated Statement of Changes in Equity ATTRIBUTABLE TO OWNERS OF THE COMPANY SHARE CAPITAL SHARE PREMIUM RE- VALUA- TION RESERVE FOREIGN EXCHANGE RESERVE SHARE BASED PAYMENT RESERVE RETAINED EARNINGS NDR TOTAL NON- CON- TROLLING INTERESTS TOTAL EQUITY US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Balance at 31 August 2012 11 77,399 3,124 (10,629) 355 (47,312) 2,128 25,076 (1,785) 23,291 Loss for the year Adjustment to opening reserves in respect of share- holder loans Revaluation of property Deferred tax adjustment Impairment of (previously revalued) land and buildings in a disposal group classified as held for sale. Foreign currency translation differences for overseas operations Total comprehensive loss for the year Contributions by and dis- tributions to owners of the Company recognised directly in equity Reclassification of reserves Disposal of business Dividends paid Issue of ordinary shares Share based payment release Total contributions by and distributions to owners of the Company - - - - - - - - - - 1 - 1 - - - - - - - - - - 1,399 - - - 422 (110) (1,873) - (1,561) (621) (865) - - - - - - - - (1) (1) - (11) - - - - - - - - - - - - - - (269) 1,399 (1,486) (11) (269) (12,048) (392) - - - - (12,440) - - - - - - - (12,048) 144 (11,904) (392) 422 (110) (1,873) (1) - - - - - (392) 422 (110) (1,873) (1) (14,002) 144 (13,858) - - - - - - 621 - (508) (1,384) - - - - 1,400 (269) - 1,808 (247) - - - 424 (247) 1,400 (269) 113 (253) 1,561 1,308 Balance at 31 August 2013 12 78,798 77 (10,641) 86 (59,752) 2,241 10,821 (80) 10,741 The notes on pages 22 to 66 are an integral part of these consolidated financial statements PAGE 18 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Consolidated Statement of Changes in Equity ATTRIBUTABLE TO OWNERS OF THE COMPANY SHARE CAPITAL SHARE PREMIUM RE- VALUA- TION RESERVE FOREIGN EXCHANGE RESERVE SHARE BASED PAYMENT RESERVE RETAINED EARNINGS NDR TOTAL NON- CON- TRIBUTE INTERESTS TOTAL EQUITY US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Balance at 31 August 2011 10 75,854 6,327 (12,276) 270 (20,676) 3,044 52,553 (492) 52,061 Loss for the year Revaluation of property Deferred tax adjustment Foreign currency translation differences for overseas operations Total comprehensive loss for the year Contributions by and dis- tributions to owners of the Company recognised directly in equity Reclassification of reserves Dividends paid Issue of ordinary shares Share based payment transactions Total contributions by and distributions to owners of the Company - - - - - - - 1 - 1 - - - - - - - 1,545 - - 273 (2,839) - - - (394) 1,626 (2,960) 1,626 (243) 21 - - - - - - 1,545 (243) 21 - - - - - - - - 85 85 (27,271) - - (2,833) (30,104) - - - - - (27,271) 1,583 (25,688) 273 (2,839) (1,601) - - - 273 (2,839) (1,601) (31,438) 1,583 (29,855) 3,468 (916) 2,330 (2,330) - - - - - - - (546) 1,546 85 - - - (546) 1,546 85 3,468 (916) 3,961 (2,876) 1,085 Balance at 31 August 2012 11 77,399 3,124 (10,629) 355 (47,312) 2,128 25,076 (1,785) 23,291 The notes on pages 22 to 66 are an integral part of these consolidated financial statements. PAGE 19 FINANCIAL REPORT 2013As at 31 August 2013 Consolidated and Company Statement of Financial Position NOTES COMPANY 2013 GROUP 2013 GROUP 2012 COMPANY 2012 US$’000 US$’000 US$’000 US$’000 Assets Property, plant and equipment Biological assets Goodwill Intangible assets Longterm receivables Total non-current assets Inventories Financial assets at fair value through profit or loss Trade and other receivables Cash and cash equivalents Assets held for sale Total current assets Total assets Equity Issued share capital Share premium account Revaluation reserve Share based payment reserve Foreign exchange reserve Non distributable reserves Retained losses Equity attributable to owners of company Non-controlling interests Total equity Liabilities Loans and borrowing Provisions Deferred tax liabilities Total non-current liabilities Bank overdraft Current tax liabilities Loans and borrowings Trade and other payables Liabilities held for sale Total current liabilities Total liabilities Total equity and liabilities 13 15 16 17 19 20 21 22 5 23,24 23,24 23,24 23,24,25 23 23 23 26 27 28 22 29 30 11 2,881 - 717 179 361 4,138 925 58 814 2,136 16,164 20,097 24,235 12 78,798 77 86 (10,641) 2,241 (59,752) 10,821 (80) 10,741 6,553 203 553 7,309 398 187 94 1,322 4,184 6,185 13,494 24,235 56 - - - - 56 - - 25,648 1,210 - 26,858 26,914 12 78,798 - 86 (13,186) - (45,530) 20,180 - 20,180 4,500 29 - 4,529 - - - 2,205 - 2,205 6,734 26,914 25,250 83 717 1,551 3,229 30,830 936 42 2,625 468 361 4,432 35,262 11 77,399 3,124 355 (10,629) 2,128 (47,312) 25,076 (1,785) 23,291 2,054 161 4,108 6,323 337 284 1,692 2,825 510 5,648 11,971 35,262 97 - - - 3,229 3,326 - - 24,668 178 - 24,846 28,172 11 77,399 - 355 (13,186) - (40,907) 23,672 - 23,672 2,000 - - 2,000 - - 1,250 1,250 - 2,500 4,500 28,172 These financial statements were approved by the Board of Directors and authorised for issue on 26 February 2014. They were signed on their behalf by: EDZO WISMAN EXECUTIVE DIRECTOR The notes on pages 22 to 66 are an integral part of these consolidated financial statements. PAGE 20 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Consolidated Statement of Cash Flows * Restated GROUP 2012 GROUP 2013 NOTES Cash used in operations Taxation paid Cash used in operating activities Cash flows from investing activities Proceeds on disposal of property, plant and equipment Purchase of property, plant and equipment Other investing activities Proceeds from the sale of investments Write down of investments Interest received Net cash generated by investing activities Cash flows from financing activities Dividends paid to non-controlling interests Interest paid Proceeds from issue of share capital Proceeds from drawdown of loans Net cash generated by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 September Net cash and cash equivalents at 31 August Cash and cash equivalents as above comprise the following: Cash and cash equivalents Bank overdraft Net cash and cash equivalents at 31 August 31 18 23 26 22 22 US$’000 (1,379) (335) (1,714) 20 (400) (361) - 282 (459) (247) (967) 1,400 3,594 3,780 1,607 131 1,738 2,136 (398) 1,738 US$’000 (7,934) (509) (8,443) 312 (1,473) - 1,197 4,418 326 4,780 (323) (707) 1,546 2,249 2,765 (898) 1,029 131 468 (337) 131 *Amounts have been restated due to reclassification of certain entities to discontinued operations (see note 2). The notes on pages 22 to 66 are an integral part of these consolidated financial statements. PAGE 21 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements Cambria Africa Plc (the “Company”) is a public limited company 1. Reporting entity listed in the Alternative Investment Market (AIM) and incorpo- rated in the Isle of Man under the Companies Act 2006. The consolidated financial statements of the Group for the year ended 31 August 2013 comprise the Company and its subsid- iaries (together referred to as the “Group” and individually as “Group entities”). The financial statements were authorised for issue by the Direc- tors on 26 February 2014. 2. Basis of preparation STATEMENT OF COMPLIANCE The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the E.U. On publishing the Company statement of financial position here together with the Group financial statements, the Company complies with the Isle of Man Companies Act 2006 under which there is no requirement to present a company statement of comprehensive income in consolidated financial statements. NEW AND AMENDED STANDARDS EFFECTIVE FOR FUTURE PERIODS At the date of authorisation of these financial statements, the following standards and interpretations were in issue but not yet effective and were not applied in these financial statements. STANDARD/INTERPRETATION EU EFFECTIVE DATE FOR ANNUAL PERIODS BEGIN- NING ON OR AFTER IFRS 1 IFRS 7 IFRS 10 IFRS 11 IFRS 12 Amendment - govern- ment loans Amendment - offsetting financial assets and liabilities Consolidated financial statements 1 January 2013 1 January 2013 1 January 2013 Joint arrangements 1 January 2013 Disclosure of interests with other entities IAS 28 (R) Investments in associates and joint ventures (2011) Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities 1 January 2013 1 January 2013 1 January 2013 RESTATEMENT OF COMPARATIVE NUMBERS During the period, the Group reclassified certain items as dis- continued and/or held for sale. Accordingly the information for the prior period is restated such that comparative information given in respect of discontinued and continuing operations is consistent in each period. IFRS 13 Fair Value Measurement 1 January 2014 Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities 1 January 2014 IFRS 9 Financial Instruments 1 January 2015 NEW AND AMENDED STANDARDS ADOPTED IN THE CURRENT PERIOD The amendment to IAS1 ‘Presentation of Financial Statements’ was adopted in the current period. It requires changes to the presentation of other comprehensive income on the basis of whether or not the respective items will be reclassified subse- quently to profit and loss. BASIS OF MEASUREMENT The consolidated financial statements have been prepared on the historical cost basis except for the following: • biological assets measured at fair value less cost to sell; • • land, buildings and plant and equipment measured at revalued amounts. Share-based payments measured at fair value. PAGE 22 CAMBRIA AFRICA PLC2. Basis of preparation (continued) FUNCTIONAL AND PRESENTATION CURRENCY The consolidated financial statements are presented in United States Dollars, which, with effect from 1 September 2011, is the Company’s functional currency. The change in presentational currency made at 1 September 2011 was to better reflect the Group’s business activities since cash flows and economic re- turns are principally denominated in United States Dollars. For the year ended 31 August 2013 Notes to the Financial Statements GOING CONCERN The Group’s business activities and financial performance are set out in the Chief Executive’s Review on pages 2 to 8. In ad- dition, note 32 to the financial statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial in- struments and its exposure to credit and liquidity risk. The Group has completed a successful equity placement after the reporting date (see note 40) which has secured further working capital support in the region of US$4m USE OF ESTIMATES AND JUDGEMENTS The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and re- ported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on histori- cal experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The Group has access to sufficient financial resources for its needs. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current economic outlook. After making enquiries, the Directors have a reasonable ex- pectation that the Company and the Group have adequate re- sources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision af- fects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Information about critical judgements in applying accounting policies and assumptions and estimation uncertainties that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the follow- ing notes: • Note 14 – Biological assets • Note 15 – Goodwill • Note 13 – Property, plant and equipment • Note 27 – Provisions By their nature, these estimates and assumptions are subject to an inherent measurement of uncertainty and the effect on the Group’s financial statements of changes in estimates in future periods could be significant. The following accounting policies have been applied consistent- 3. Significant accounting policies ly by the Group. (A) BASIS OF CONSOLIDATION The consolidated financial statements incorporate the financial statements of the Company and Group entities controlled by the Company (its subsidiaries). Control is achieved where the Company has both power and variable returns to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial state- ments from the date that control commenced until the date that control ceases. The interest of non-controlling shareholders is stated at the their proportion of the fair values of the assets and liabilities recognised. Subsequently, losses applicable to the non-con- trolling interests are allocated against their interests even if doing so causes the non-controlling interests to have a deficit balance. PAGE 23 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 3. Significant accounting policies (con- tinued) (A) BASIS OF CONSOLIDATION (CONTINUED) The results of entities acquired or disposed of during the year are included in the consolidated income statement from the ef- fective date of acquisition or up to the effective date of dispos- al as appropriate. Where necessary, the financial statements of the subsidiaries are adjusted to conform to the Group’s ac- counting policies. All intra-group transactions, balances, income and expenses are eliminated on consolidation. BUSINESS COMBINATIONS The acquisition of subsidiaries is accounted for using the acqui- sition method. The cost of the acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition related costs are expensed as incurred unless they relate to the cost of issuing debt or equity securities. The ac- quiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are rec- ognised at their fair values at the acquisition date, except for non-current assets that are classified as held for sale in accor- dance with IFRS 5, which are recognised and measured at fair value less costs to sell. (B) INTANGIBLE ASSETS GOODWILL Goodwill arising on consolidations is recognised as an asset. Following initial recognition, goodwill is subject to impairment reviews, at least annually, and measured at cost less accumulat- ed impairment losses. The recoverable amount is estimated at each reporting date. Any impairment loss is recognised immediately in the income statement and is not subsequently reversed when the carrying amount of the asset exceeds its recoverable amount. Any impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to cash-generating units (groups of units) and then to reduce the carrying amount of other assets in the unit (groups of units) on a pro rata basis. On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the gain or loss on disposal. OTHER INTANGIBLE ASSETS Other intangible assets are measured initially at cost and are amortised on a straight-line basis over their estimated useful lives. The carrying amount is reduced by any provision for im- pairment where necessary. Goodwill arising on acquisition is recognised as an asset at the date that control is assumed (the acquisition date) and initial- ly measured at cost, being the excess of the cost of the busi- ness combination over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities rec- ognised. On a business combination, as well as recording separable in- tangible assets already recognised in the statement of financial position of the acquired entity at their fair value, identifiable intangible assets that are separable or arise from contractual or other legal rights are also included in the acquisition statement of financial position at fair value. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the ex- cess is recognised immediately in the income statement. The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling interests’ proportion of the net fair value of the assets, liabilities and contingent lia- bilities recognised. Amortisation of intangible assets is charged over their useful economic life, as follows:- Licences Brand name 5-6 years 7 years (C) FOREIGN CURRENCIES The individual financial statements of each Group entity are presented in the currency of the primary economic environ- ment in which it operates (its functional currency). PAGE 24 CAMBRIA AFRICA PLC3. Significant accounting policies (con- tinued) (C) FOREIGN CURRENCIES (CONTINUED) For the purpose of the consolidated financial statements, the results and financial position of each of the Group entities are expressed in United States Dollars, which is the functional cur- rency of the Company, and the presentational currency for the consolidated financial statements. In preparing the financial statements of the individual Group entities, transactions denominated in foreign currencies are translated into the respective functional currency of the Group entities using the exchange rates prevailing at the dates of transactions. Non-monetary assets and liabilities are translated at the histor- ic rate. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the rates of exchange ruling at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional cur- rency at the exchange rate at the date that the fair value was determined. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement for the year, as either finance income or finance costs depending on whether foreign currency move- ments are in a net gain or net loss position. Exchange differences arising on the retranslation of non-mone- tary items earned at fair value are included within the income statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-mon- etary items, any exchange component of that gain or loss is also recognised directly in other comprehensive income. For the purpose of presenting consolidated financial state- ments, the assets and liabilities of the Group’s foreign opera- tions are translated at exchange rates prevailing at the report- ing date. Income and expenses are translated at the average exchange rates for the period, unless exchange rates fluctuate so as to have a material impact on the financial statements during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other For the year ended 31 August 2013 Notes to the Financial Statements comprehensive income and are transferred to the Group’s for- eign currency translation reserve within equity. Such translation is recognised as income or as expenses in the period in which the operation is disposed of. (D) TAXATION The tax expense represents the sum of current and deferred tax. CURRENT TAXATION Current tax is based on taxable profit for the period for the Group. Taxable profit differs from net profit in the income state- ment because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been en- acted or substantively enacted by the reporting date. DEFERRED TAXATION Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabili- ties in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable tempo- rary differences arising on the investments in subsidiaries and associates, except where the Group is able to control the re- versal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is re- alised. Deferred tax is charged or credited in the income state- ment, except when it relates to items charged or credited to eq- uity, in which case the deferred tax is also dealt with in equity. PAGE 25 FINANCIAL REPORT 2013The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement for the year. Assets held under finance leases are depreciated over their ex- pected useful lives on the same basis as owned assets, or where shorter, over the relevant lease term. No depreciation is provid- ed on freehold land. Property, plant and equipment identified for disposal are re- classified as assets held for resale. (G) BIOLOGICAL ASSETS Biological assets which consist of living animals (game) are mea- sured on initial recognition and at subsequent reporting dates at fair value less estimated costs to sell, unless fair value cannot be reliably measured. All costs related to biological assets that are measured at fair value are recognised as expenses when incurred, other than costs to purchase biological assets. (H) IMPAIRMENT OF ASSETS EXCLUDING GOODWILL At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair val- ue less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value and the risks specific to the as- set for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount in which case the reversal of the impairment loss is treated as a revaluation decrease. For the year ended 31 August 2013 Notes to the Financial Statements 3. Significant accounting policies (con- Deferred tax assets and liabilities are off set when there is a tinued) legally enforceable right to set off current tax assets against cur- rent tax liabilities, when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. (E) OTHER INVESTMENTS Other asset investments are stated at fair value, adjusted for impairment losses. (F) PROPERTY, PLANT AND EQUIPMENT Long leasehold land and buildings, plant and machinery, mo- tor vehicles and fixtures and fittings are stated at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent ac- cumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not dif- fer materially from that which would be determined using fair values at the reporting date. Any revaluation increase arising on the revaluation of such as- sets is credited to the revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset pre- viously recognised as an expense, in which case the increase is credited to the income statement to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such asset is charged as an expense to the extent that it exceeds the balance, if any, held in the revaluation reserve relating to a previous revaluation of that asset. Depre- ciation on revalued assets is charged to the income statement. On subsequent sale or retirement of a revalued asset, the at- tributable revaluation surplus remaining is transferred directly to retained earnings. Depreciation is charged straight line so as to write off the cost or valuation of assets, other than land, over their estimated useful lives. The annual rates used for this purpose are: 2% 10% 15%-25% 15%-25% Freehold buildings Plant and machinery Motor vehicles Fixtures and fittings PAGE 26 CAMBRIA AFRICA PLC3. Significant accounting policies (con- tinued) (H) IMPAIRMENT OF ASSETS EXCLUDING GOODWILL (CONTINUED) Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the in- creased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. (I) FINANCIAL INSTRUMENTS Non-derivative financial instruments comprise investments in equity, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a par- ty to the contractual provisions of the instrument. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash in hand and demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are sub- ject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. TRADE RECEIVABLES Trade receivables are initially measured at fair value and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated re- coverable amounts are recognised in profit or loss when there is objective evidence the asset is impaired. TRADE PAYABLES Trade payables are initially measured at fair value and are sub- sequently measured at amortised cost using the effective inter- est rate method. For the year ended 31 August 2013 Notes to the Financial Statements FINANCIAL LIABILITIES Financial liabilities are classified according to the substance of the contractual arrangements entered into. CAPITAL MANAGEMENT The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sus- tain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders’ equity, exclud- ing non-controlling interests. BANK BORROWINGS Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, in- cluding premiums payable on settlement or redemption and di- rect issue costs, are accounted for on an amortised cost basis to the income statement using the effective interest method and are added to the carrying amount of the instrument to the ex- tent that they are not settled in the period in which they arise. EQUITY INSTRUMENTS Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. (J) INVENTORIES Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable di- rect expenditure and attributable overheads that have been in- curred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be in- curred in marketing, selling and distribution. (K) SHARE BASED PAYMENTS The Group provides benefits to certain employees (including senior executives) of the Group in the form of share based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instru- ments at the date at which they are granted. The fair value is determined by using a Black-Scholes model. The dilutive effect, if any, of outstanding options is reflected as additional share di- lution in the computation of earnings per share. PAGE 27 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 3. Significant accounting policies (con- tinued) (K) SHARE BASED PAYMENTS (CONTINUED) The grant date fair value of options granted to employees is rec- ognised as an employee expense with a corresponding increase in equity over the period the employees become uncondition- ally entitled to the options. (L) INTEREST-BEARING BORROWINGS Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recog- nition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the bor- rowings on an effective interest basis. (M) DIVIDENDS Interim dividends are recognised as a liability in the period in which they are proposed and declared. Final dividends are rec- ognised when approved by the shareholders. (N) PROVISIONS A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. (O) REVENUE RECOGNITION Revenue is derived from the sale of goods and services and is measured at the fair value of consideration received or receiv- able after deducting discounts, volume rebates, value-added tax and other sales taxes. A sale of goods and services is rec- ognised when recovery of the consideration is probable, there is no continuing management involvement with the goods and services and the amount of revenue can be measured reliably. A sale of goods is recognised when the significant risks and re- wards of ownership have passed to the buyer, the associated costs and possible return of goods can be estimated reliably. This is when title and insurance risk have passed to the custom- er and the goods have been delivered to a contractually agreed location. A sale of services is recognised when the service has been rendered. (P) LEASES Leases are classified according to the substance of the transac- tion. A lease that transfers substantially all the risks and rewards of ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases. FINANCE LEASES Finance leases are capitalised at their fair value or, if lower, at the present value of the minimum lease payments, each deter- mined at the inception of the lease. The corresponding liabili- ty is shown as a finance lease obligation to the lessor. Leasing repayments comprise both a capital and finance element. The finance element is written off to the income statement so as to produce an approximately constant periodic rate of charge on the outstanding obligations. Such assets are depreciated over the shorter of their estimated useful lives and the period of the lease. OPERATING LEASES Operating lease rentals are charged to the income statement on a straight line basis over the period of the lease. (Q) BORROWING COST Borrowing costs directly attributable to the acquisition, con- struction or production of a qualifying asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their ex- penditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the income statement in the period in which they are incurred. (R) LOSS PER SHARE Basic loss per share is calculated based on the weighted average number of ordinary shares outstanding during the year. Diluted loss per share is based upon the weighted average number of shares in issue throughout the year, adjusted for the dilutive effect of potential ordinary shares. The only potential ordinary shares in issue are employee share options. PAGE 28 CAMBRIA AFRICA PLC3. Significant accounting policies (con- tinued) (S) NON-CURRENT ASSETS HELD FOR SALE Non-current assets that are expected to be recovered primarily through sale or distribution rather than through continuing use are classified as held for sale, measured at the lower of carry- ing amount and fair value less costs to sell. Immediately before reclassification as held for sale, the assets are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and subsequent gains and losses on re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. (T) SEGMENT REPORTING A segment is a distinguishable component of the Group that is engaged either in providing products or services (business seg- ment), or in providing products or services within a particular economic environment (geographical segment), which is sub- ject to risks and rewards that are different from those of other segments. (U) ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS ASSETS HELD FOR SALE Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale or held-for-distribu- tion if it is highly probable that they will be recovered primarily through sale or distribution rather than through continuing use. Immediately before classification as held-for-sale or held-for-dis- tribution, the assets, or components of a disposal group, are remeasured in accordance with the Group’s other accounting policies. Thereafter, generally the assets, or disposal group, are mea- sured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allo- cated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property or biological assets, which continue to be measured in accordance with the Group’s other accounting policies. Impairment losses on initial classification as For the year ended 31 August 2013 Notes to the Financial Statements held-for-sale or held-for-distribution and subsequent gains and losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss. Once classified as held-for-sale or held-for-distribution, intan- gible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted. DISCONTINUED OPERATIONS A discontinued operation is a component of the Group’s busi- ness, the operations and cash flows of which can be clearly dis- tinguished from the rest of the Group and which: • • • represents a separate major line of business or geo- graphical area of operations; is part of a single co-ordinated plan to dispose of a sep- arate major line of business or geographical area of op- erations; or is a subsidiary acquired exclusively with a view to re- sale. Classification as a discontinued operation occurs on disposal or when the operation meets the criteria to be classified as held- for-sale, if earlier. When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is re-present- ed as if the operation had been discontinued from the start of the comparative year. A number of the Group’s accounting policies and disclosures 4. Determination of fair values require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been deter- mined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is dis- closed in the notes specific to that asset or liability. INVENTORIES The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordi- nary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories. PAGE 29 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 4. Determination of fair values (contin- ued) EQUITY AND DEBT SECURITIES The fair values of investments for equity and debt securities are determined with reference to their quoted closing bid price at the measurement date. Subsequent to initial recognition, the fair values of held-to-maturity investments are determined for disclosure purposes only. al value to arrive at the gross property valuation. When actual rents differ materially from the estimated rental value, adjust- ments are made to reflect actual rents. Due to the unique nature of a number of properties within the Group’s portfolio, external valuations are obtained, however the Directors also review the valuations and may determine the need for impairment for the financial statements given their own knowledge of the properties and in particular where there has been interest from third parties in purchasing the proper- ties, the Directors may refer to amounts offered for purchase. TRADE AND OTHER RECEIVABLES The fair values of trade and other receivables are estimated at the present value of future cash flows, discounted at the mar- ket rate of interest at the measurement date. Short-term receiv- ables with no stated interest rate are measured at the original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for disclosure purposes, at each annual reporting date. PROPERTY, PLANT AND EQUIPMENT The fair value of property, plant and equipment recognised as a result of a business combination is the estimated amount for which property could be exchanged on the acquisition date be- tween a willing buyer and a willing seller in an arm’s length trans- action after proper marketing wherein the parties had each act- ed knowledgeably. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach and cost approaches using quoted market prices for similar items when available and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence. Segment information is presented in respect of the Group’s 5. Segment reporting business segments based on the Group’s management and in- ternal reporting structure. The results of the business segments are reviewed regularly by the Group’s CEO to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available. Inter-segment pricing is determined on an arm’s length basis and inter-segment revenue is eliminated. Segment results that are reported to the CEO include items di- rectly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly inter- est-bearing loans, borrowings and expenses, and corporate as- sets and expenses primarily relating to Company’s head office. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period. INVESTMENT PROPERTY An external independent valuation company having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values the Group’s property portfolio. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowl- edgeably. In the absence of current prices in an active market, the valua- tions are prepared by considering the estimated rental value of the property. A market yield is applied to the estimated rent- GEOGRAPHICAL SEGMENTS Support services and industrial chemicals operate primarily in Zimbabwe, with start up operations commencing in the period under review in bordering countries in Sub-Saharan Africa. Sep- arate geographical analysis is therefore not presented. BUSINESS SEGMENTS For management purposes, continuing operations are organ- ised into two main business segments. • Outsource and IT services - includes payments and busi- ness process outsourcing and payroll services • Industrial chemicals - includes the manufacture and dis- tribution of industrial solvents and mining chemicals PAGE 30 CAMBRIA AFRICA PLC5. Segment reporting (continued) CONTINUING OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2013 INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 US$’000 For the year ended 31 August 2013 Notes to the Financial Statements TOTAL US$’000 8,509 (22) 8,487 (3,906) 4,581 (7,817) (348) (249) (292) 4,186 (22) 4,164 (353) 3,811 - - - - - (3,369) (3,212) (740) (48) - - (164) (291) (13) 84 (120) (204) (253) 442 (4,000) (4,125) 196 (755) - (4,559) (3,952) 282 (967) (204) (5,014) * (3,580) 4,323 - 4,323 (3,553) 770 (1,236) 392 (37) (1) (112) 2 (92) - (202) * (70) INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 US$’000 Restated TOTAL US$’000 3,770 - 3,770 (3,058) 712 (920) - - (36) - (244) - (34) - (278) * (208) 3,971 (20) 3,951 (337) 3,614 (2,266) (8) - (215) (30) 1,095 8 - (349) 754 1,340 - - - - - (5,711) (2,467) (451) (89) - 7,741 (20) 7,721 (3,395) 4,326 (8,897) (2,475) (451) (340) (30) (8,718) (7,867) 304 (511) - (8,925) (8,629) 312 (545) (349) (8,449) * (7,497) Revenue Inter-segment revenue Revenue from external customers Cost of sales to external customers Gross profit Operating costs Impairment of assets Depreciation Amortisation Operating loss for the year Finance income Finance expense Income tax expense Loss for the year EBITDA * CONTINUING OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2012 Revenue Inter segment revenue Revenue from external customers Cost of sales to external customers Gross profit Operating costs Impairment of intangibles and goodwill Impairment of assets Depreciation Amortisation Operating (loss)/profit Finance income Finance expense Income tax expense (Loss)/profit for the year EBITDA * * Earnings Before Interest, Taxation, Depreciation and Amortisation. Adjusted for depreciation included in cost of sales 2012 amounts have been restated due to reclassification of certain entities to discontinued operations (see note 2). PAGE 31 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 5. Segment reporting (continued) DISCONTINUED OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2013 HOTELS US$’000 AVIATION US$’000 PRINTING US$’000 OUTSOURCE AND IT SERVICES US$’000 Revenue Inter segment revenue Revenue from external customers Cost of sales to external customers Gross profit Operating costs (Impairment)/write-back of PPE and receivables Impairment of intangibles Depreciation Amortisation Operating (loss)/profit Finance income Finance expense Income tax credit/(expense) (Loss)/profit for the year EBITDA* DISCONTINUED OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2012 Revenue Inter segment revenue Revenue from external customers Cost of sales to external customers Gross profit/(loss) Operating costs Accelerated write-off of intangibles Impairment of assets Other material non-cash items Depreciation Amortisation Operating loss Finance Income Finance Cost Income tax credit/(expense) Loss for the year EBITDA* 2,257 (4) 2,253 (505) 1,748 (2,317) (2,084) (825) (574) (347) (4,399) - (81) 212 (4,268) (3,487) HOTELS US$’000 2,462 (12) 2,450 (556) 1,894 (2,400) - - - (620) (313) (1,439) - (89) 200 (1,328) (506) - - - - - (205) - - - - 1,807 (51) 1,756 (1,115) 641 (5,241) 2,081 - (33) (2) (205) (2,554) - - - (205) (205) - (13) (34) (2,601) (2,519) 653 (2) 651 (531) 120 (281) 362 - (11) (5) 185 1 (2) - 184 201 TOTAL US$’000 4,717 (57) 4,660 (2,151) 2,509 (8,044) 359 (825) (618) (354) (6,973) 1 (96) 178 (6,890) (6,001) AVIATION US$’000 PRINTING US$’000 OUTSOURCE AND IT SERVICES US$’000 Restated TOTAL US$’000 345 - 345 - 345 (987) - (3,223) - (254) - (4,119) - - - (4,119) (3,865) 1,864 (47) 1,817 (1,249) 568 (1,190) (6,779) (296) - (236) - 866 (113) 753 (1,017) (264) (238) (1,371) - (601) (17) (961) 5,537 (172) 5,365 (2,822) 2,543 (4,815) (8,150) (3,519) (601) (1,127) (1,274) (7,933) (3,452) (16,943) - (40) (347) (8,320) (7,697) - - (20) (3,472) (2,474) - (129) (167) (17,239) (14,542) * Earnings Before Interest, Taxation, Depreciation and Amortisation. 2012 amounts have been restated due to reclassification of certain entities to discontinued operations (see note 2). PAGE 32 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements As detailed in note 2, the Group has reclassified certain items as discontinued. Accordingly the information for the prior period has 5. Segment reporting (continued) been restated such that comparative information given in respect of discontinued and continuing operations is consistent in each period. The tables below provide the comparative information as previously published to assist users in assessing the impact of the restatement on the published results of the prior year. (as previously stated) INDUSTRIAL CHEMICALS US$’000 PRINTING US$’000 OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 FOR THE YEAR ENDED CONTINUING OPERATIONS 31 AUGUST 2012 Revenue Inter segment revenue Revenue from external customers Cost of sales to external customers Gross Profit Operating costs Accelerated write-off of intangibles and goodwill impairment Impairment of assets Depreciation Amortisation Operating (loss)/profit Finance income Finance expense Income tax credit/(expense) (Loss)/profit for the year EBITDA * HOTELS US$’000 2,462 (12) 2,450 (556) 1,894 (2,068) - - (620) (313) (1,107) - (13) 200 (920) (174) 3,770 - 3,770 (3,058) 712 (920) - - (36) - (244) - (34) - (278) * (204) 1,864 (47) 1,817 (1,249) 568 (1,347) - - (236) - (1,015) - (10) (381) (1,406) * (647) TOTAL US$’000 12,067 (79) 11,988 (5,200) 6,788 3,971 (20) 3,951 (337) 3,614 - - - - - (1,448) (5,836) (11,619) (788) - (215) (30) 1,133 7 - (195) 945 2,166 (9,830) (1,621) (89) - (10,618) (1,621) (1,196) (343) (17,376) (18,609) 318 (630) (120) (17,808) (5 836) 325 (687) (496) (19,467) * (4,695) FOR THE YEAR ENDED DISCONTINUED OPERATIONS 31 AUGUST 2012 (as previously stated) AVIATION US$’000 OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 Revenue Inter segment revenue Revenue from external customers Cost of sales to external customers Gross profit/(loss) Operating costs Impairment of assets Other material non-cash items Depreciation Amortisation Operating loss Finance cost Loss for the year EBITDA 345 - 345 - 345 (987) (3,223) - (254) - (4,119) - (4,119) (3,865) 866 (113) 753 (1,017) (264) (239) - (483) (17) (961) (1,964) (20) (1,984) (986) - - - - - - - (118) - - (118) - (118) (118) * Earnings Before Interest, Taxation, Depreciation and Amortisation. Adjusted for depreciation included in cost of sales. TOTAL US$’000 1,211 (113) 1,098 (1,017) 81 (1,226) (3,223) (601) (271) (961) (6,201) (20) (6,221) (4,969) PAGE 33 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 5. Segment reporting (continued) CONTINUING OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2013 Segment assets Segment liabilities Capital expenditure FOR THE YEAR ENDED 31 AUGUST 2012 Segment assets Segment liabilities Capital expenditure ASSETS AND LIABILITIES HELD FOR SALE FOR THE YEAR ENDED 31 AUGUST 2013 NOTE 14 Property, plant and equipment Biological assets Inventories Trade and other receivables Cash and cash equivalents Total assets held for sale Trade and other payables Provisions Deferred tax liabilities Total liabilities held for sale Net assets of disposal groups held for sale AVIATION US$,000 - - - - - - - - - - - INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 1,961 766 26 US$’000 US$’000 4,850 3,454 265 1,297 5,127 38 INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 2,824 1,121 137 6,014 4,500 57 US$’000 1,522 508 95 HOTELS US$’000 14,764 67 135 75 110 PRINTING US$’000 1,000 - - 13 - 15,151 1,013 790 60 3,301 4,151 33 - - 33 11,000 980 OUTSOURCE AND IT SERVICES US$’000 - - - - - - - - - - - TOTAL US$’000 8,108 9,347 329 Restated TOTAL US$’000 10,360 6,129 289 TOTAL US$’000 15,764 67 135 88 110 16,164 823 60 3,301 4,184 11,980 At 31 August 2013, the Group considered its Hotel and the remaining assets of its printing division as being held for sale. They are therefore presented within discontinued operations. Income and expenses of discontinued operations are reported sep- arately from those of continuing operations in 2013 and 2012 income and expense comparatives have been restated accord- ingly. Held for sale assets are stated at their expected proceeds less costs to sell; previously revalued land and building as- sets, and hotel intangible assets have been impaired to bring the held for sale disposal groups to their held for sale valuation. PAGE 34 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements 5. Segment reporting (continued) (as previously stated) CONTINUING OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2012 For the year ended 31 August 2012 Segment assets Segment liabilities INDUSTRIAL CHEMICALS PRINTING OUTSOURCE AND IT SER- VICES HEAD OFFICE US$’000 US$’000 US$’000 US$’000 1,522 508 4,381 725 4,889 1,121 3,488 4,529 HOTELS US$’000 21,498 4,818 (as previously stated) DISCONTINUED OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2012 For the year ended 31 August 2012 Segment assets Segment liabilities HOTELS US$’000 AVIATION US$’000 OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 - - 222 (1) 139 (509) - - TOTAL US$’000 35,778 11,701 TOTAL US$’000 361 (510) 6. Acquisition and incorporation of subsidiaries PAYSERV ZAMBIA LIMITED On 6 December 2012, the group incorporated a new entity, Payserv Zambia Limited and subscribed for 100% of the issued shares and voting interests in the company for a total consideration of US$ 20 thousand (ZMW 100 thousand). This investment facilitates the Group’s entry into the Zambian market with its EDI (electronic data interchange) switching technology as well as making its other outsourcing products available. MILLCHEM ZAMBIA LIMITED On 22 July 2013, the Group incorporated a new entity Millchem Zambia Limited and subscribed for 100% of the shares and voting interests in the company for a total consideration of US$ 98 thousand, (ZMW 543 thousand). MSA CHEMICALS (PROPRIETARY) LIMITED On 3 June 2013, the Group incorporated a new entity Millchem South Africa (Pty) Limited and subscribed for 100% of the shares and voting interests in the company for a total consideration of US$ nil. MSA SOURCING B.V. On 4 October 2013, the Group incorporated a new entity MSA Sourcing B.V and subscribed for 100% of the shares and voting in- terests in the company for a total consideration of US$ 272 thousand,(EUR 200 thousand). Post-acquisition and incorporation to 31 August 2013, the new subsidiaries, in total, contributed US$ nil to revenue and losses relating to start-up costs of US$ 146 thousand to the Group’s results. PAGE 35 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 7. Group net operating costs Cost of sales Administrative expenses Net operating costs Administrative expenses include management related overheads for operations and head office. Operating costs include: Depreciation of property, plant and equipment Depreciation of property plant and equipment in cost of sales Amortisation Operating lease rentals: Land and buildings Personnel expenses Gain/(loss) on investments Auditors remuneration Fees Payable to the Company Auditors for: Current year audit of the Group’s financial statements Prior year audit of the Group’s financial statements Current year audit of the Company’s subsidiaries pursuant to legislation Prior year audit of the Company’s subsidiaries pursuant to legislation Total audit fees The aggregate remuneration comprised (including Executive Directors): 8. Personnel expenses Wages and salaries Compulsory social security contributions Total personnel expenses Of which: Remuneration of Group Executive Directors Directors’ emoluments (see note 39) The average number of employees (including Executive Directors) in continuing operations was: Outsource and IT services Industrial chemicals Head Office Total PAGE 36 2013 US$’000 3,906 8,647 12,553 Restated 2012 US$’000 3,395 9,434 13,429 2013 US$’000 Restated 2012 US$’000 249 4 291 253 3,718 4 113 115 65 31 324 339 4 1,553 214 2,695 (7) 188 - 83 - 271 2013 US$’000 3,644 74 3,718 Restated 2012 US$’000 2,635 60 2,695 1,836 1,401 2013 Number 59 24 10 93 Restated 2012 Number 60 24 9 93 CAMBRIA AFRICA PLC9. Net finance (costs)/income Recognised in income statement: Bank interest receivable Loan interest receivable Finance income Bank interest payable Loan interest payables Finance costs Net finance costs 10. Taxation Income tax recognised in the income statement Current tax expense Current period Deferred tax credit Origination and reversal of temporary differences Total income tax charge in income statement RECONCILIATION OF EFFECTIVE TAX RATE Loss before tax Income tax using the Zimbabwean corporation tax rate 25.75% (2012: 25.75%) Net losses where no group relief is available Total income tax charge in income statement DEFERRED TAX Relating to losses in subsidiaries For the year ended 31 August 2013 Notes to the Financial Statements 2013 US$’000 Restated 2012 US$’000 9 273 282 (212) (755) (967) (685) 8 304 312 (216) (329) (545) (233) 2013 US$’000 Restated 2012 US$’000 216 (12) 204 2013 US$000 (4,810) (1,239) 1,443 204 2013 US$’000 (12) (12) 388 (39) 349 Restated 2012 US$000 (8,267) (2,129) 2,478 349 Restated 2012 US$’000 (38) (38) Corporation tax is calculated as 25.75% (2012: 25.75%) of the estimated assessable loss for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions. Deferred tax assets are only recognised to the extent that there are available offsetting deferred tax liabilities, unless the entity is reasonably assured of earning sufficient future profits to offset against any future tax liabilities. PAGE 37 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements During the year, the Group sold its investments in the following entities (see note 18), which were disclosed as discontinuing op- 11. Disposals and discontinued operations erations in 2012. • Forgot Me Not Africa (BVI) Limited (FMNA) • Diospyros Investments (Pvt) Limited (trading as “CES Zimbabwe”) On 24 July 2013, the Group sold its investment in the following entity (see note 18), which was not held for sale and disclosed as a continuing operation in the prior period. • Blueberry International Services Ltd The following entities were reclassified as held for disposal in the period under review. As discussed in note 2 and note 5, the com- paratives for the period ended 31 August 2012 are accordingly restated. • Southern Africa Management Services (SAMS) • Medalspot Enterprises (Private) Limited • LonZim Hotels Limited and its subsidiaries The financial effect of these discontinued operations on the profit or loss and financial position is shown in the operating segment disclosures in note 5. CASH FLOWS FROM (USED IN) DISCONTINUED OPERATIONS Net cash used in operating activities Net cash (used in)/generated by investing activities Net cash generated by generated by financing activities Net cash flows for the year Cash and cash equivalents held for sale Net cash (outflow)/inflow 2013 US$’000 (6,894) (69) 5,521 (1,442) 110 (1,332) Restated 2012 US$’000 (2,504) 1,306 898 (300) (3) (303) PAGE 38 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements The calculation of basic and diluted earnings per share at 31 August 2013 was based on the profit attributable to ordinary share- 12. Loss per share holders for continuing and discontinued operations at a weighted average number of ordinary shares outstanding during the period as detailed in the table below: LOSS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS Loss for the purposes of basic loss and dilutive per share being net loss attributable to equity holders of the parent* Loss for the purposes of basic loss and dilutive per share being net loss attributable to equity holders of the parent 2013 EARNINGS PER SHARE US$’CENTS 2013 US$’000 Restated 2012 EARNINGS PER SHARE US$’CENTS Restated 2012 US$’000 (18.4) (12,048) (47.1) (27,271) - continuing operations - discontinued operations (7.6) (10.8) (5,158) (6,890) (17.6) (28.5) (10,199) (17,072) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES Weighted average number of ordinary shares for the purposes of basic and dilutive loss per share for all calculations* NOTE 2013 000’S 2012 000’S 65,419 57,959 Actual number of shares outstanding at the end of the period 24 66,749 58,134 *In the current and prior year the effect of the share options (note 25) were anti-dilutive as the share options were, at all times, priced above the trading value of the shares. PAGE 39 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 13. Property, plant and equipment 2013 GROUP FREEHOLD LAND & BUILDINGS US$’000 PLANT & MACHINERY US$’000 MOTOR VEHICLES US$’000 FURNITURE FIXTURES & FITTINGS US$’000 TOTAL US$’000 27,315 400 (186) (1,824) (838) (76) (20,671) 4,120 73 588 116 (1,018) 15 1,052 (1,239) 2,881 25,250 TOTAL US$’000 33,949 1,473 (8,315) 273 (65) 27,315 22,258 14 - (207) (838) - (18,923) 2,304 (132) - 84 116 (398) - 327 (3) 2,301 22,126 1,435 15 (55) (1,324) - - - 71 (254) 16 324 - (122) - - (36) 35 1,181 918 260 (108) (84) - - (185) 801 2,704 111 (23) (209) - (76) (1,563) 944 45 51 - (188) - 147 (449) 352 414 12 129 - (310) 15 578 (751) 193 1,529 (504) (1,175) (2,065) FREEHOLD LAND & BUILDINGS US$’000 LONG LEASE- HOLD LAND & BUILDINGS US$’000 PLANT & MACHINERY US$’000 MOTOR VEHICLES US$’000 FURNITURE FIXTURES & FITTINGS US$’000 21,258 727 - 273 - 22,258 (103) - 363 (392) - (132) 22,126 21,155 8,005 2 (8,005) - (2) - - - - - - - - 8,005 1,329 209 (103) - - 1,435 754 175 (11) - - 918 2,603 360 (196) - (63) 2,704 (118) (295) (739) (1,255) - - (136) - (254) 1,181 1,211 9 - (218) - (504) 414 459 11 - (471) 24 (1,175) 1,529 1,864 20 363 (1,217) 24 (2,065) 25,250 32,694 Cost or valuation At 1 September 2012 Additions in year Disposals in year Sale of subsidiary Revaluation Transfer to intangible assets Transferred to held for sale Balance at 31 August 2013 Accumulated depreciation At 1 September 2012 Disposals in year Sale of subsidiary Depreciation written back on revaluation Depreciation charge for the year Transfer to intangible assets Transferred to held for sale Balance at 31 August 2013 Carrying amounts At 31 August 2013 At 31 August 2012 2012 GROUP Cost or valuation At 1 September 2011 Additions in year Disposals in year Revaluation Transferred to assets held for sale Balance at 31 August 2012 Accumulated depreciation At 1 September 2011 Disposals in year Depreciation written back on revaluation Depreciation on charge for the year Transferred to assets held for sale Balance at 31 August 2012 Carrying amounts At 31 August 2012 At 31 August 2011 PAGE 40 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements 13. Property, plant and equipment (continued) Valuations LE HAR (PRIVATE) LIMITED REVALUATION – PROPERTY An external, professional and independent valuer with appropriate and recognised qualifications, T.W.R.E Zimbabwe (Pvt) Limited, carried out a valuation of the freehold land and buildings as at 31 August 2013. Fair value at 31 August 2013 of US$2,300 thousand (2012: US$1,900 thousand) was made by reference to observable market evidence. The Directors consider the fair value at the reporting date to not be materially different from the carrying value. The change in the fair value of the property has been recorded in the revaluation reserve. Valuations within discontinued operations LEOPARD ROCK HOTEL COMPANY (PRIVATE) LIMITED* REVALUATION – LAND AND BUILDINGS An external, professional and independent valuer with appropriate and recognised qualifications, C K Hollands, carried out a val- uation of the land and buildings as at 31 August 2013 in accordance with the C K Hollands Valuation Manual and the Real Estate Institute of Zimbabwe Standards. Fair value at 31 August 2013 of US$18,500 thousand (2012: US$18,500 thousand) was made by reference to observable market evidence with adjustments made for: - Age of the property - Aesthetic quality and accommodation offered - State of repair and maintenance and quality of fixture and fittings - Location and size of land. In considering the estimated valuation, and the useful lives of the assets and their estimated residual values, the directors deter- mined that in accordance with prior year, a more prudent assessment of fair value should include a set-off in respect of the net book value of the refurbishment completed in 2010. Additionally the adjustment to fair value representing depreciation charged in the period under review was not reflected. The net effect is that land and buildings are recorded at US$16,996 thousand. EASTINTEG INVESTMENTS (PRIVATE) LIMITED * REVALUATION – LAND AND BUILDINGS An external, professional and independent valuer with appropriate and recognised qualifications, C K Hollands, carried out a val- uation of the land and buildings as at 31 August 2013 in accordance with the C K Hollands Valuation Manual and the Real Estate Institute of Zimbabwe Standards. Fair value at 31 August 2013 of US$600 thousand (2012: not applicable) was made by reference to observable market evidence with adjustments made for: - Age of the property - Aesthetic quality and accommodation offered - State of repair and maintenance and quality of fixture and fittings - Location and size of land. *The land and buildings held by the Leopard Rock Hotel Company (Private) Limited and by Eastinteg Investments (Private) Limited form part of the Hotel disposal group held for sale at the year end. The whole disposal group has been impaired to bring its car- rying value down to its expected realisable value and US$3,855 thousand of this has been allocated to land and buildings of which US$1,982 thousand was charged through the income statement and US$1,873 thousand via the revaluation reserve. PAGE 41 FINANCIAL REPORT 2013 For the year ended 31 August 2013 Notes to the Financial Statements 13. Property, plant and equipment (continued) Both the Leopard Rock Hotel and Eastinteg land and buildings are included in the Hotel held for sale disposal group. As such, in Valuations within discontinued operations (continued) addition to the valuations noted above, the disposal as a group has been considered for an impairment in assessing its expected net disposal proceeds. The impairment assessed has been allocated to land and buildings after extinguishment of all intangible assets in the disposal group (see note 5). MEDALSPOT ENTERPRISES (PRIVATE) LIMITED REVALUATION – LAND AND BUILDINGS An external, professional and independent valuer with appropriate and recognised qualifications T.W.R.E Zimbabwe (Pvt) Limited carried out a valuation of the property as at 31 August 2013. Fair value at 31 August 2013 US$2,200 thousand (2012: US$2,200 thousand) was made by reference to observable market evidence. In assessing the valuation, the Directors also considered the intention to dispose of the asset in the short term. An appropriate fair value at 31 August 2013 is deemed to be US$1,000 thousand. The change in the fair value of the property has been recorded in the revaluation reserve to the full extent available and thereafter in the available non-distributable reserve which arose at dol- larisation. Included in discontinued operations are biological assets as detailed below. 14. Biological assets Balance at 1 September Acquired during the year Increase/(decrease) due to births/(deaths) Loss on fair valuation during the year Total GROUP 2013 GROUP 2012 US$’000 US$’000 83 - 2 (18) 67 82 3 (2) - 83 Biological assets which consist of 276 (2012: 267) living animals for game viewing at the Leopard Rock Hotel are valued with the assistance of African Wildlife Management and Conservation and their values are deemed as acceptable. As at 31 August 2013, the consolidated statement of financial position included goodwill of US$717 thousand (2012: US$717 thou- 15. Goodwill sand). Goodwill is allocated to the Group’s cash-generating units (“CGUs”), or groups of cash-generating units, that are expected to benefit from the synergies of the business combination that gave rise to the goodwill as follows: CASH GENERATING UNIT (CGU) ORIGINAL COST COST AT 1 SEPTEMBER 2012 CARRYING VALUE AT 1 SEPTEMBER 2012 ACCELERATED WRITE-OFF CARRYING VALUE AT 31 AUGUST 2013 Paynet Limited Total US$’000 US$’000 US$’000 US$’000 US$’000 717 717 717 717 717 717 - - 717 717 PAGE 42 CAMBRIA AFRICA PLC For the year ended 31 August 2013 Notes to the Financial Statements 15. Goodwill (continued) ESTIMATES AND JUDGEMENTS The following assumptions are held in the assessment on the impairment or otherwise of goodwill: • Growth rates are based on a range of growth rates that reflect the products, industries and countries in which the relevant CGU or group of CGUs operate. Growth rates have been calculated based on management’s expected forecast volumes and market share increases on normalisation of the Zimbabwean economy. • • • • • The key assumptions on which the cash flow projections for the most recent forecast are based relate to discount rates, growth rates, expected changes in selling prices and direct costs. The cash flow projections have been discounted using rates based on the Group’s pre-tax weighted average cost of capital. The rate used was 15%. The growth rates applied in the value in use calculations for goodwill allocated to each of the CGUs or groups of CGUs that is significant to the total carrying amount of goodwill were in a range between 0% and 5%. Changes in selling price and direct costs are based on past results and expectations of future changes in the market. In respect of the value in use calculations, cash flows have been considered for both the conservative and the full forecast potential of future cash-flows with no impact to the valuation of goodwill. IMPAIRMENT LOSS The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The Directors believe that the value of the Group’s investments are long term and will only be realised on the full recovery of the Zimbabwean economy. The Directors do not believe any further impairment to goodwill is necessary in the current period. 16. Intangible assets ORIGINAL COST US$’000 NET BOOK VALUE AT 1 SEPTEMBER 2012 US$’000 RECLASSIFIED FROM TANGIBLE ASSETS AMORTISATION US$’000 RECLASSIFIED AS HELD FOR SALE (NOTE 5) US$’000 CLOSING BALANCE AT 31 AUGUST 2013 US$’000 Payserv software licences Leopard Rock Hotel brand name Leopard Rock Hotel casino licence Leopard Rock Hotel software Total 1,425 1,129 1,000 76 3,630 447 758 346 - 1,551 - - - 61 61 (268) (115) (198) (27) (608) - (643) (148) (34) (825) 179 - - 179 AMORTISATION The amortisation charge is recognised within administration expenses (note 7) in the income statement. The remaining amortisa- tion period at 31 August 2013 is 9-67 months for other intangibles. The Group tests other intangible assets for impairment if there are indications that they might be impaired. The amortisation periods for other intangible assets are: Software licences Brand names Casino licence 3-6 years 9 years 6 years PAGE 43 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 17. Long-term receivables Celpay International BV receivable ATDM sale proceeds ATDM Shareholder loan account ForgetMe Not Africa (BVI) Limited sale proceeds Provision against sale proceeds Total Celpay International BV GROUP 2013 US$’000 COMPANY 2013 US$’000 GROUP 2012 US$’000 COMPANY 2012 US$’000 361 - - 250 (250) 361 - - - - - - - 3,145 84 - - 3,229 - 3,145 84 - - 3,229 On 29 April 2013, the Group entered into a memorandum of understanding with Celpay International BV (“Celpay”), whereby Paynet Limited agreed inter alia to provide working capital funding, while carrying out due diligence on the company, which capital would be repayable to Paynet Limited, either on termination of the contract or through a change in shareholding of Celpay. ATDM The proceeds on sale of shares of Aldeamento Turistico de Macuti SARL (“ATDM”) on 30 September 2011 were receivable over a period of 60 months. The Group’s Loan to ATDM at the date of sale, was repayable over a period of 24 months. On 18 July 2013, the company entered into a Settlement Agreement with Lonrho Plc, whereby Cambria Africa Plc received US$2,665 thousand, which included inter alia the settlement of the outstanding balances related to the proceeds on sale of ATDM and the ATDM shareholder loan. The Group loss on settlement of the loan balances was US$309 thousand. ForgetMeNot Africa (BVI) The proceeds on sale of shares of ForgetMeNot Africa (BVI) Limited on 14 February 2013, are receivable based on various defined milestones but no later than the second anniversary of the agreement. Given the nature of the defined milestones and extended period permitted until settlement, the Directors determined that it would be appropriate to provide fully against the receivable. PAGE 44 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements The Company has investments in the following subsidiaries which principally affected the profits or net assets of the Company. 18. Investments in subsidiaries and associates The direct investments in subsidiaries held by the Company are stated at cost. This is subject to impairment testing. CONTINUING OPERATIONS COUNTRY OF INCORPORATION OWNERSHIP INTEREST African Solutions Limited Autopay (Pvt) Limited Gardoserve (Pvt) Limited Le Har (Pvt) Limited LonZim Enterprises Limited LonZim Holdings Limited + Millchem Africa Limited Millchem Holdings Limited * Millchem Zambia Limited MSA Chemicals (Pty) Limited MSA Sourcing BV Para Meter Computers (Pvt) Limited Paynet Limited Paynet Zimbabwe (Pvt) Limited Payserv (Pvt) Limited Payserv Zimbabwe (Pvt) Limited ** Payserv Zambia Limited Tradanet (Pvt) Limited Yellowwood Projects (Pvt) Limited + Held directly by Cambria Africa Plc. * Previously LonZim Properties Limited ** Previously Lanuarna Enterprises (Private) Limited Mauritius Zimbabwe Zimbabwe Zimbabwe United Kingdom Isle of Man Isle of Man Isle of Man Zambia South Africa Netherlands Zimbabwe Mauritius Zimbabwe Zimbabwe Zimbabwe Zambia Zimbabwe Zimbabwe 2013 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 100% 2012 100% 100% 100% 100% 100% 100% 0% 100% 0% 0% 0% 100% 100% 100% 0% 100% 0% 51% 100% PAGE 45 FINANCIAL REPORT 2013 For the year ended 31 August 2013 Notes to the Financial Statements 18. Investments in subsidiaries and associates (continued) DISCONTINUED OPERATIONS COUNTRY OF INCORPORATION OWNERSHIP INTEREST British Virgin Islands British Virgin Islands Zimbabwe Zimbabwe Zimbabwe Zimbabwe British Virgin Islands Nigeria Zimbabwe Zimbabwe British Virgin Islands British Virgin Islands Isle of Man Netherlands United Kingdom Zimbabwe Zimbabwe South Africa Zimbabwe South Africa Zimbabwe Zimbabwe Mauritius United Kingdom South Africa 2013 0% 0% 0% 100% 0% 100% 0% 0% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 0% 100% 100% 0% 100% 0% 100% 2012 100% 100% 60% 100% 100% 100% 51% 51% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 100% 100% 0% 100% 100% 100% 100% GROUP 2013 GROUP 2012 US$’000 US$’000 361 - 25 539 925 462 6 129 339 936 Blueberry International Services Limited # Blueberry Print (Zambia) Limited # Celsys Limited # Chenyakwaremba Farm (Pvt) Limited ++ Diospyros Investments (Pvt) Limited # Eastinteg Investments (Pvt) Ltd ++ ForgetMeNot Africa (BVI) Limited # ForgetMeNot Nigeria Limited # Leopard Rock Hotel Company (Pvt) Limited ++ Linus Business Options (Pvt) Limited ++ LonZim Agribusiness (BVI) Limited ++ LonZim Air (BVI) Limited LonZim Hotels Limited ++ Lyons Africa Holdings BV ++ Lyons Africa Holdings Limited ++ Medalspot Enterprises (Pvt) Limited ++ Morningdale Properties Limited ++ Panafmed (Pty) Limited Peak Mine (Pvt) Limited # Quickvest525 (Pty) Limited Quintech Investments (Pvt) Limited Rex Mining Holdings (Pvt) Limited # Southern Africa Management Services Limited Wardlaw (1989) Limited # W S Foods (Pty) Limited ++ ++ Held for Sale # Subsidiaries disposed in the year 19. Inventory Raw materials and consumables Work in progress Goods in transit Finished goods Total PAGE 46 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements 20. Financial assets at fair value through profit or loss CONTINUING OPERATIONS Quoted investments portfolio Total QUOTED INVESTMENTS PORTFOLIO: Balance at 1 September Acquired during the year Disposed during the year Gain/(loss) on fair valuation during the year At end of the year GROUP 2013 GROUP 2012 US$’000 US$’000 58 58 42 42 GROUP 2013 GROUP 2012 US$’000 US$’000 42 2 (5) 19 58 49 3 (3) (7) 42 The portfolio is managed by an asset management company who makes the decisions regarding the sale and purchase of shares. This investment is held at fair value. The portfolio, which was purchased in “payment” of a trade vendor liability which could not be settled due to exchange control regulations, is callable at the option of the vendor. See note 26. 21. Trade and other receivables Amounts owed by Group undertakings Trade receivables Other receivables ATDM sale proceeds – current portion ATDM shareholder loan account – current portion Prepayments and accrued income Total NOTE 17 17 GROUP 2013 US$’000 - 619 80 - - 115 814 COMPANY 2013 US$’000 25,617 - - - - 31 25,648 GROUP 2012 US$’000 - 960 89 1,020 280 276 2,625 COMPANY 2012 US$’000 23,291 - 77 1,020 280 - 24,668 The average credit period taken on sales of goods is 45 days. No interest is charged on receivables. The Directors consider the carrying amount of trade and other receivables approximates their fair value. In determining the re- coverability of the trade receivable, the Group considers any change in the credit quality of trade receivables from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance for doubt- ful debts. CREDIT RISK The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial posi- tion are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cashflows. PAGE 47 FINANCIAL REPORT 2013 For the year ended 31 August 2013 Notes to the Financial Statements 22. Cash and cash equivalents Bank balances Bank overdrafts Net cash and cash equivalents Net cash included in held for sale Total cash and cash equivalents in statement of financial position GROUP 2013 US$’000 2,136 (398) 1,738 110 1,838 COMPANY 2013 US$’000 GROUP 2012 US$’000 COMPANY 2012 US$’000 1,210 - 1,210 - 1,210 468 (337) 131 32 163 178 - 178 - 178 23. Capital and reserves REVALUATION RESERVE The revaluation reserve relates to property, plant and equipment which has been revalued in the Zimbabwean subsidiary Payserv Zimbabwe (Private) Limited (“Payserv”) and Le Har (Private) Limited, which holds the property from which Payserv operates. FOREIGN EXCHANGE RESERVE This reserve arises on translation of subsidiary entities where their functional currency is not United States Dollars, the presen- tational currency of the Group. The Company foreign exchange currency reserve relates to the translation of net assets due to a change in the functional currency of the Company from Pounds Sterling to United States Dollars as at 1 September 2011. SHARE BASED PAYMENT RESERVE The share based payment reserve comprises of the charges arising from the calculation of the share based payment posted to the income statement in 2008 and 2012, and partially released on expiration of options never exercised, in 2013, restated to US$ at closing rates (see note 25). NON DISTRIBUTABLE RESERVE The non distributable reserve arises on the restatement of the assets and liabilities on dollarisation in Zimbabwe. Amounts held within this reserve are ring fenced from retained earnings. Distributions can only be made from retained earnings and not from the non distributable reserve. Amounts transferred to the non distributable reserve are determined by the directors as necessary, unless specifically required to do so as part of any financing arrangements. PAGE 48 CAMBRIA AFRICA PLC24. Share capital & share premium Authorised Ordinary £0.0001 shares Issued fully paid At 1 September 2012 Issued in period At 31 August 2013 For the year ended 31 August 2013 Notes to the Financial Statements ORDINARY SHARES 2013 ORDINARY SHARES 2012 NUMBER US$’000 NUMBER US$’000 66,749,023 58,133,908 8,615,115 66,749,023 12 11 1 12 58,133,908 54,145,469 3,988,439 58,133,908 10 10 1 11 The Group has also issued share options (see note 25). At 31 August 2013, 1,000,000 shares were held in reserve to issue in the event that these options are exercised. At 10 December 2012, 500,000 utilised share options expired and were not renewed. The following warrants over the ordinary shares of the Company were granted in the period. HOLDER DATE OF GRANT GRANTED WARRANT PRICE NUMBER OF WARRANTS PERIOD DURING WHICH EXERCISABLE MARKET PRICE PER SHARE AT DATE OF GRANT Consilium Corporate Recovery Master Fund Limited Consilium Corporate Recovery Master Fund Limited 18.02.2013 3,000,000 13p 06.12.2012 - 06.12.2015 18.02.2013 5,000,000 13p 18.02.2013 - 18.02.2016 10.25p 9.63p The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets. The Directors are authorised in any period between consecutive annual general meetings, to allot any number of ordinary shares on such terms as they shall, in their discretion, determine up to such maximum number as represents 50 per cent of the issued share capital at the beginning of such period. Further ordinary shares may be allotted on terms determined by the Directors but subject to the pre-emption rights prescribed by Section 36 of the Isle of Man Companies Act 2006. SHARE PREMIUM The share premium represents the value of the premium arising on shares issued as follows: 1 Oct 2012 8,615,115 ordinary shares at a price of 10p (US$1,400 thousand) per share. 16 Sep 2011 3,988,439 ordinary shares at a price of 23p (US$1,448 thousand) per share net of issue costs of nil. 10 Dec 2010 17,813,944 ordinary shares at a price of 28p per share net of issue costs of £143 thousand (US$7,646 thou- sand). 9 Dec 2009 4,255,525 ordinary shares at a price of 27.5p per share net of issue costs of £58 thousand (US$1,820 thou- sand). 14 Jul 2009 Cost of purchasing and cancelling 4,374,000 shares at 30.5p per share (US$2,174 thousand). 11 Dec 2007 36,450,000 ordinary shares at a price of 100p per share net of issue costs of £2,753 thousand (US$68,659 thousand). PAGE 49 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements The following share options over ordinary shares were granted under an Unapproved Share Option scheme: 25. Share options NAME Edzo Wisman Edzo Wisman Total DATE OF GRANT 10.03.2011 10.03.2011 OPTIONS EXPIRED IN THE PERIOD NUMBER OF SHARE OPTIONS GRANTED 500,000 500,000 1,000,000 EXERCISE PRICE PERIOD DURING WHICH EXERCIS- ABLE 30p 30p 01.07.2011 – 30.06.2016 01.07.2012 – 30.06.2017 MARKET PRICE PER SHARE AT DATE OF GRANT 21.75p 21.75p Paul Heber 11.12.2007 500,000 150p 11.12.2007 - 10.12.2012 100p In accordance with IFRS 2 ‘Share-based payments’ the equity settled share options granted have been measured at fair value and recognised as an expense in the income statement with a corresponding increase in equity (other reserves). The fair value of the options granted has been estimated at the date of grant using the Black-Scholes option pricing model. The estimated value of the options granted on 11 December 2007 was £165 thousand (US$270 thousand). The estimated value of the options granted on 10 March 2011 was £53 thousand (US$85 thousand). Options may be exercised in whole or in part until the expiry of the exercise period. Holders of the options are entitled to receive notice of certain proposed transactions or events of the Company which may dilute or otherwise affect their options, and may exercise or be deemed to have exercised their options prior to the occurrence thereof. The Company shall keep available sufficient authorised but unissued share capital to satisfy the exercise of the options. Ordinary Shares issued pursuant to an exercise of the options shall rank pari passu in all respects with the Company’s existing Ordinary Shares save as regards any rights attaching by reference to a record date prior to the receipt by the Company of the notice of exercise of options. The Company shall apply to admit to trading on AIM the Ordinary Shares issued pursuant to the exercise of options. The following assumptions have been used: Number of shares Share price at vesting date (Date of Grant) Exercise price Expected volatility Expected life Expected dividends Risk-free interest rate DATE GRANT 10 MARCH 2011 DATE OF GRANT 10 MARCH 2011 DATE OF GRANT 11 DECEMBER 2007 500,000 21.75p 30p 30.2% 5.4 years 0.00% 5.00% 500,000 21.75p 30p 30.2% 6.4 years 0.00% 5.00% 500,000 100p 150p 44.0% 5.0 years 0.00% 5.00% Volatility has been calculated by reference to industry indices at vesting dates. All share options vested at date of grant and the basis of settlement is in shares of the company. Share options which expired on 10 December 2012, expired without being renewed. PAGE 50 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements The number and weighted average exercise price of share options are as follows: 25. Share options (continued) Exercisable at 1 September 2012 Outstanding at 31 August 2013 Exercisable at 31 August 2013 WEIGHTED AVERAGE EXERCISE PRICE PENCE NUMBER OF OPTIONS 70 30 30 1,500,000 1,000,000 1,000,000 The Directors are authorised to grant options over the Ordinary Shares on such terms as they shall in their discretion determine up to such maximum number as represents 10 per cent of the number of Ordinary Shares as was in issue at the date of the Company’s most recent annual general meeting. 66,749,023 Ordinary Shares were in issue at the annual general meeting of 22 April 2013. 26. Loans and borrowings - long term GROUP 2013 US$’000 Consilium facility Nurture Paynet Other trade payables Total 4,500 2,000 53 6,553 COMPANY 2013 US$’000 4,500 - - 4,500 GROUP 2012 US$’000 2,000 - 54 2,054 COMPANY 2012 US$’000 2,000 - - 2,000 The 2012 long term payables are in respect of a secured loan facility agreement which the Company entered into on 9 March 2012, with Consilium Corporate Recovery Master Fund Ltd for US$2,000 thousand. On the same date, the Company entered into a short term secured loan facility agreement with Consilium Emerging Markets Absolute Return Master Fund Ltd for US$1,000 thousand respectively (“Consilium”). Both these loans were secured by a fixed and floating charge over the assets of the Group. On 6 December 2012, the Company entered an agreement with Consilium to extend the maturity of the short term facility to 8 March 2014. Consilium simultaneously agreed to lift the general charge over the assets of the Group for 3,000,000 warrants over the ordinary shares of the company as disclosed in note 24. On 18 February 2013, the Company entered into a further secured loan agreement with Consilium for US$1,500 thousand for 5,000,000 warrants, as disclosed in note 24 and a first fixed charge over the assets of LonZim Hotels Limited. This facility expires in tandem with all the Consilium debt on 8 March 2014. The total Consilium facility carries a 15% annualised interest rate and fees as follows: 2% drawdown fee, 2% first anniversary fee and 2% repayment charge. On 1 May 2013, the Company extended the maturity of it debt facility with Consilium to 30 April 2016. In the event of default, Consilium shall have the option to convert all, or any portion of the outstanding indebtedness at the time of default into shares in Cambria at a 15% discount to the share price at the date of the facility agreements. The option price is 14.05p. The Consilium Corporate Recovery Master Fund Ltd and Consilium Emerging Markets Absolute Master Fund Ltd share the same investment manager as Consilium Emerging Markets Absolute Return Master Fund Ltd, a substantial shareholder of Cambria, and the transactions are therefore deemed a related party transaction for the purpose of the AIM Rules for Companies. PAGE 51 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements On 8 May 2013, the Company executed agreements with Cerulean (Mauritius) PCC, (“Nisela”) a special purpose vehicle created 26. Loans and Borrowings - longterm (continued) by a subsidiary of Nisela Capital relating to the placement of US$2,000 thousand secured, convertible debt into Paynet Limited, its investee company. The conversion feature with the debt represents and embedded derivative for accounting purposes. Included within the loan balance above is an amount of $91 thousand representing the value of the conversion feature. The Nisela secured loan facility carries 2% drawdown fee, a 15% coupon, matures on 17 July 2016, and is convertible into 21.3% of Paynet Limited’s ordinary share capital at the option of the lender at any time between 17 July 2014 and 12 July 2016. The loan facility is immediately convertible if there is a change in control in the shareholders or Board of Directors of the beneficial owners of Paynet Limited or if there is an initial public offering of the ordinary shares in Paynet Limited on a securities exchange. The Nisela facility is secured over the property held by Le Har (Private) Ltd and by the cession of the entire portfolio of Paynet Limited’s trade debtors as existed at the date of the agreement and in the future. Other non-current trade payables are in respect of historic Paywell software licence fees with the Payserv Group, which could not be remitted due to Zimbabwe Exchange Regulations. The amounts due were invested in a listed portfolio (see note 20). 27. Provisions Provisions Total GROUP 2013 US$’000 203 203 COMPANY 2013 US$’000 29 29 GROUP 2012 US$’000 161 161 COMPANY 2012 US$’000 - - Provisions at 31 August 2013, are in respect of the maximum Leave Pay and Retirement Gratuity, which may become payable by individual companies on termination of employment. 28. Deferred tax liability RECOGNISED DEFERRED LIABILITY The following are the major deferred tax liabilities recognised by the Group and movements thereon during the current year. GROUP At 1 September Recognised directly in reserves Other movements Disposal of subsidiaries Transfer to held for sale disposal group At 31 August 2013 ACCELERATED TAX DEPRECIATION US$’000 2012 TOTAL US$’000 ACCELERATED TAX DEPRECIATION US$’000 4,108 (111) (12) (131) (3,301) 553 4,108 (111) (12) (131) (3,301) 553 TOTAL US$’000 1,269 2,839 - - - 1,269 2,839 - - - 4,108 4,108 Deferred tax assets off set against deferred tax liabilities in the period were US$ nil (2012:US$44 thousand). PAGE 52 CAMBRIA AFRICA PLC 29. Loans and borrowings - short term Consilium Purchase of the castle at Leopard Rock Hotel Finance Leases Total For the year ended 31 August 2013 Notes to the Financial Statements GROUP 2013 US$’000 COMPANY 2013 US$’000 - - 94 94 - - - - GROUP 2012 US$’000 1,250 442 - 1,692 COMPANY 2012 US$’000 1,250 - - 1,250 The short term loans and borrowings in the prior year were in respect of secured loan facility agreements which the Company entered into on 9 March 2012 and 9 October 2012 (as a rollover of an existing facility) with Consilium as discussed in note 26. On 6 December 2012, the loan facilities were extended until 8 March 2014 and thus moved to long term borrowings discussed in note 26. 30. Trade and other payables Trade payables Non trade payables and accrued expenses Total Current tax liability Total GROUP 2013 US$’000 861 461 1,322 187 1,509 COMPANY 2013 US$’000 - 2,205 2,205 - 2,204 GROUP 2012 US$’000 1,534 1,291 2,825 284 3,109 COMPANY 2012 US$’000 - 1,250 1,250 - 1,250 Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going costs. The average cred- it period taken for trade purposes is 45 days. The Directors consider that the carrying amount of trade payables approximates to their fair value. PAGE 53 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 31. Notes to the statement of cash flows Loss for the year GROUP 2013 US$’000 (11,904) GROUP 2012 US$’000 (25,688) Adjusted for *: Amortisation of intangible assets Impairment of goodwill Impairment of held for sale assets Depreciation of property, plant and equipment Loss on sale of property, plant and equipment Impairment of current assets Valuation adjustments to inventories, receivables and other assets Fair value adjustment of intangibles Gain on write-off of non Group shareholder loan Loss on disposal of subsidiaries Finance income Finance costs Share based payment reserve Increase/(decrease) in provisions Income tax charge Foreign exchange Operating cash flows before movements in working capital Increase in inventories Decrease/(increase) in trade and other receivables Decrease in trade and other payables Decrease/(increase) in long term receivables Cash used in operations 608 - 2,807 871 93 626 49 - - 1,823 (283) 1,063 (269) 102 204 - (4,210) (329) 308 (850) 3,702 (1,379) 2,019 7,363 - 1,217 3,243 3,301 7 3,428 (863) - (312) 674 85 (889) 496 11 (5,908) (204) (1,751) (71) - (7,934) * All amounts include both continuing and discontinued. Cash flows for discontinued operations are given in note 11. The Group has exposure to the following risks from its use of financial instruments: 32. Financial instruments • • credit risk liquidity risk • market risk (comprises: foreign currency risk and interest rate risk) This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and pro- cesses for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. RISK MANAGEMENT FRAMEWORK The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. PAGE 54 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements 32. Financial instruments (continued) CREDIT RISK MANAGEMENT Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are regularly monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. The Group does not have any significant credit risk exposure to any single counterparty or any group of coun- terparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit- ratings assigned by international credit rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. At the reporting date, there were no significant credit risks. EXPOSURE TO CREDIT RISK The carrying amount of financial assets represents the maximum credit exposure. Therefore, the Group and Company’s maximum exposure to credit risk at the reporting date, being the total of the carrying amount of financial assets, excluding equity invest- ments is shown in the table below. Cash and cash equivalents Trade and other receivables Shareholder loan receivables Other investments Total NOTE 22 5,17,21 21 20 GROUP 2013 US$’000 1,838 1,263 - 58 3,159 COMPANY 2013 US$’000 1,210 31 25,617 - 26,858 GROUP 2012 US$’000 131 5,579 - 42 5,752 The maximum exposure to credit risk for trade and other receivables at the reporting date by geographic region was: United Kingdom Southern Africa Mauritius Europe Total GROUP 2013 US$’000 31 1,229 - 3 COMPANY 2013 US$’000 24,760 818 67 3 1,263 25,648 GROUP 2012 US$’000 4,529 - 1,050 - 5,579 COMPANY 2012 US$’000 178 4,606 23,291 - 28,075 COMPANY 2012 US$’000 27,897 - - - 27,897 PAGE 55 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements The maximum exposure to credit risk for trade and other receivables (excluding trade creditors which are linked to listed invest- 32. Financial instruments (continued) ments per contract with the supplier - see note 20 US$58 thousand (2012: US$42 thousand)) at the reporting date by type of counterparty was: Trade customers Sale of investment proceeds (note 17 and 21) Amounts owed by Group undertakings Total GROSS 2013 US$’000 902 361 - 1,263 COMPANY 2013 US$’000 31 - 25,617 25,648 GROUP 2012 US$’000 1,050 4,529 - 5,579 COMPANY 2012 US$’000 77 4,529 23,291 27,897 The ageing of trade and other receivables at the reporting date was: GROUP GROSS 2013 US$’000 IMPAIRMENT 2013 US$’000 TOTAL 2013 US$’000 Neither past nor impaired Past due 1-30 days Past due 31-60 days Past due 61-90 days Past due 91-days + Total 564 572 84 71 54 1,345 - (19) - (9) (54) (82) 564 553 84 62 - GROSS 2013 US$’000 25,617 31 - - - COMPANY IMPAIRMENT 2013 US$’000 - - - - - - TOTAL 2013 US$’000 25,617 31 - - - 25,648 1,263 25,648 Based on the Group’s monitoring of customer credit risk, the Group believes that no further impairment allowance is necessary in respect of trade receivables not past due. LIQUIDITY RISK MANAGEMENT Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash and another financial asset. Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by regularly monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. PAGE 56 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements 32. Financial instruments (continued) LIQUIDITY RISK MANAGEMENT (CONTINUED) The following are the contractual, undiscounted maturities of financial liabilities, including estimated interest payments and ex- cluding the effect of netting arrangements: GROUP CONTRACTUAL CASH FLOWS 2013 CONTRACTUAL CASH FLOWS 2012 Bank overdrafts Trade and other payables Loans and borrowings Total CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 398 1,546 6,647 8,591 398 1,546 1,082 3,026 2 TO < 5 YEARS US$’000 - - 5,565 5,565 CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 1 TO < 5 YEARS US$’000 337 2,825 3,746 6,908 337 2,825 1,692 4,854 - - 2,054 2,054 COMPANY CONTRACTUAL CASH FLOWS 2013 CONTRACTUAL CASH FLOWS 2012 Trade and other payables Shareholder loan payables Loans and borrowings (note 27) Total CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 598 1,607 4,500 6,705 598 1,607 666 2,871 2 TO < 5 YEARS US$’000 - - 3,834 3,834 CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 1 TO < 5 YEARS US$’000 1,250 - 3,250 4,500 1,250 - 1,250 2,500 - - 2,000 2,000 As disclosed in note 26 the loans and borrowings amounts due to Consilium are secured by a fixed and floating charge over the assets of the Group. In the event of default, Consilium shall have the option to convert all, or any portion of the outstanding in- debtedness at the time of default into shares in Cambria at a 15% discount to the share price at the date of the facility agreements. The effective option price is £14.05p. It is not expected that the cash flows included in the maturity analysis will occur significantly earlier, or at significantly different amounts. FOREIGN CURRENCY RISK MANAGEMENT The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than United States Dollars. The currencies giving rise to this risk are primarily the Pound Sterling, Euro , Zambian Kwacha, and the South African Rand. In respect of other monetary assets and liabilities held in currencies other than United States Dollars, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. The following significant exchange rates applied during the year: Pounds Sterling (GBP) Euro (EUR) Zambian Kwacha (ZMW) South African Rand ( ZAR) AVERAGE RATE 2013 REPORTING DATE SPOT RATE 2013 AVERAGE RATE 2012 REPORTING DATE SPOT RATE 2012 0.64 0.76 5.14 9.11 0.65 0.76 5.35 8.99 0.64 0.77 - 8.31 0.63 0.80 - 8.43 PAGE 57 FINANCIAL REPORT 2013 For the year ended 31 August 2013 Notes to the Financial Statements 32. Financial instruments (continued) FOREIGN CURRENCY RISK MANAGEMENT (CONTINUED) With effect from 1 January 2013, the Zambian Kwacha was re-denominated by dividing the currency denomination by one thou- sand units. The currency ticker was amended to ZMW. The Group had no exposure to the Zambian Kwacha (ZMK) in the prior period. The Company does not have any exposure to currency forward exchange contracts at the reporting date (2012: US$nil). SENSITIVITY ANALYSIS In managing foreign currency risks the Group aims to reduce the impact of short and long-term fluctuations on the Group’s earn- ings. A 10 percent strengthening/weakening of the listed currencies against the USD at 31 August 2013 would have increased (de- creased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. This analysis is performed on the same basis for 2012 and assumes that all other variables remain the same. The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date and their sensitivity is as follows: 31 AUGUST 2013 Pounds Sterling (GBP) Euro (EUR) South African Rand (ZAR) Zambian Kwacha (ZMW) 31 AUGUST 2012 Pounds Sterling (GBP) Euro (EUR) South African Rand (ZAR) EXPOSURE IN FINANCIAL STATE- MENT POSITION US$’000 STRENGTHENING PROFIT OR LOSS US$’000 WEAKENING PROFIT OR LOSS US$,000 (290) 13 (53) 22 (723) (438) 51 17 (1) 1 - 42 32 - (17) 1 (1) - (42) (32) - INTEREST RATE RISK MANAGEMENT Due to the liquidity constraints in the Zimbabwean economy, the consequential interest rate risk the Group would be subject to if it relied solely on short term Zimbabwean sourced borrowings, would be marked. The Group has, where possible, secured one year fixed interest rate overdraft and loan agreements with its bankers in Zimbabwe and has subsequent to year end, engaged with ZETREF (Zimbabwe Economic and Trade Revival Facility) to provide longterm funding at rates linked to Libor, but significantly discounted to that available directly from the Zimbabwean Banks. Additionally, the Company has, mitigated its interest rate risk, by entering into a number of long term, offshore facility agreements with fixed rates of interest. PAGE 58 CAMBRIA AFRICA PLC For the year ended 31 August 2013 Notes to the Financial Statements The Group does not account for any fixed rate financial assets or liabilities at fair value through profit or loss. At the reporting 32. Financial instruments (continued) date the interest rate profile of the Group’s interest bearing financial instruments was as follows : CARRYING VALUE FIXED RATE INSTRUMENTS Financial assets Financial liabilities Total VARIABLE RATE INSTRUMENTS Financial assets Financial liabilities Total 2013 US$’000 - (6,594) (6,594) 2,136 (398) 1,738 Restated 2012 US$,000 4,529 (3,250) (1,279) 359 (199) 160 CAPITAL MANAGEMENT The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of ordinary shares, retained earnings and non-controlling interests of the Group. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders’ equity, excluding non-redeemable preference shares and non-controlling interests. The Board of Directors also mon- itors the level of dividends to ordinary shareholders. Currently management is discussing alternatives for extending the Group’s share option programme beyond key management and other senior employees. No decisions have been made. The Board seeks to maintain a balance between higher returns that might be possible with high levels of borrowings and the ad- vantages and security afforded by a sound capital position. The Group’s target is to achieve a long term return on capital above 20%. In 2013 the return was (13%), (2012: (64%)). In comparison the weighted average interest expense on interest bearing bor- rowings (excluding liabilities with imputed interest) was 15% (2012: 17%). PAGE 59 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 32. Financial instruments (continued) FAIR VALUES The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position are as follows: LOANS AND RECEIVABLES 2013 US$’000 CARRYING AMOUNT 2013 US$’000 FAIR VALUE 2013 US$’000 1,738 12,724 58 (1,546) (6,647) 6,327 1,738 12,724 58 (1,546) (6,647) 6,327 1,738 12,724 58 (1,546) (6,647) 6,327 LOANS AND RECEIVABLES 2012 US$’000 CARRYING AMOUNT 2012 US$’000 FAIR VALUE 2012 US$’000 131 5,579 42 (2,825) (3,746) (819) 131 5,579 42 (2,825) (3,746) (819) 131 5,579 42 (2,825) (3,746) (819) LOANS AND RECEIVABLES 2013 US$’000 CARRYING AMOUNT 2013 US$’000 FAIR VALUE 2013 US$’000 1,210 25,648 (2,205) (4,500) 20,153 1,210 25,648 (2,205) (4,500) 20,153 1,210 25,648 (2,205) (4,500) 20,153 LOANS AND RECEIVABLES 2012 US$’000 CARRYING AMOUNT 2012 US$’000 FAIR VALUE 2012 US$’000 178 27,897 (1,250) (3,250) 23,575 178 27,897 (1,250) (3,250) 23,575 178 27,897 (1,250) (3,250) 23,575 GROUP Cash and cash equivalents (net of bank overdraft) Trade and other receivables Other investments Trade and other payables Loans and borrowings Total GROUP Cash and cash equivalents (net of bank overdraft) Trade and other receivables Other investments Trade and other payables Loans and borrowings Total COMPANY Cash and cash equivalents (net of bank overdraft) Trade and other receivables Trade and other payables Loans and borrowings Total COMPANY Cash and cash equivalents (net of bank overdraft) Trade and other receivables Trade and other payables Loans and borrowings Total PAGE 60 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements 32. Financial instruments (continued) THE FAIR VALUE OF ASSETS AND LIABILITIES CAN BE CLASSED IN THREE LEVELS. Level 1 Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 Level 3 Fair values measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Fair values measured using inputs for the asset or liability that are not based on observable market data (i.e. unob- servable inputs). As at 31 August 2013, the Group holds the following investment at fair value: GROUP Quoted investments portfolio Total GROUP Quoted investments portfolio Total LEVEL 1 2013 US$’000 58 58 LEVEL 1 2012 US$’000 42 42 LEVEL 2 2013 US$’000 - - LEVEL 2 2012 US$’000 - - LEVEL 3 2013 US$’000 - - LEVEL 3 2012 US$’000 - - TOTAL 2013 US$’000 58 58 Restated TOTAL 2012 US$’000 42 42 ESTIMATION OF FAIR VALUES The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflect- ed in the above table. CASH AND CASH EQUIVALENTS (NET OF BANK OVERDRAFT) Fair value approximates its carrying amount largely due to the short-term maturities of this instrument. LOANS AND BORROWINGS Fair value has been derived from quoted prices. TRADE RECEIVABLES AND PAYABLES For receivables and payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value. LOANS AND BORROWINGS Fair value has been derived from quoted prices. PAGE 61 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 32. Financial instruments (continued) OTHER INVESTMENTS Fair value has been derived from quoted prices. 33. Operating leases LEASES AS LESSEE At the reporting date, the Group had US$nil (2012: US$ nil) out- standing annual commitments for future minimum lease pay- ments under non-cancellable operating leases. During the year ended 31 August 2013, US$253 thousand (2012: US$214 thousand, as restated) was recognised as an expense in the income statement in respect of operating leases. Operating lease payments represents rentals payable by the Group for cer- tain of its properties. Leases are negotiated for a minimum term of 1 year and rentals are fixed for the period. LEASES AS LESSOR At the reporting date, the Group had US$15 thousand (2012: US$nil) outstanding annual commitments for future minimum lease receipts under operating leases. These were not non-can- cellable leases and amounts are receivable to 31 December 2013. During the year ended 31 August 2013, US$3 thousand (2012: US$nil, as restated) was received under lease agree- ments. 34. Finance leases CREDFIN LOAN Minimum lease payments Finance cost Present value GROUP 2013 GROUP 2012 US$’000 US$’000 122 (28) 94 - - The above current financial liability, measure at amortised cost is secured by a finance lease agreement in respect of motor ve- hicles. Ownership will transfer to Paynet Zimbabwe (Pvt) Ltd, after payment of the nominal amount. Interest is charged at 28.27% per annum for one agreement and 25.7% for the other. The amount is included in current trade and other payables. 35. Income statement of Cambria Africa There is no requirement under the Isle of Man Companies Act Plc 2006 to present a company income statement. The loss for the year to 31 August 2013 was US$4,662 thousand (2012: US$22,587 thousand). The capital commitments at 31 August 2013 totalled US$nil 36. Capital commitments (2012: US$nil). On 1 February 2013, the Company renewed an unsecured Deed of 37. Guarantees Guarantee with MEKZ Limited for US$355 thousand, which expires on 30 June 2014. The Guarantee is in respect of the credit facility which is provided to Gardoserve (Pvt) Limited, a Group company. 38. Contingent liabilities and assets CONTINGENT LIABILITIES Tradanet (Private) Limited (“Tradanet”), a 51% subsidiary of the Group, has formally appealed against the decision of the Commissioner General of the Zimbabwe Revenue Authority (“ZIMRA”) to levy penalty interest of US$53 thousand relating to the payment of a Value Added Tax (“VAT”) liability. During the period, ZIMRA re-assessed the tax status of Tradanet, and determined that the entity should have been registered for VAT, having initially declined registration. Due to the circumstances, the potential 100% penalties were waived in full by ZIMRA. The historic VAT liability of US$294 thousand has been charged to income in the period under review. On 30 July 2013, the Group, pursuant to its disposal of Blue- berry International Limited, (“Blueberry”), provided warranties to the Purchaser, relating to the disclosure of assets and liabili- ties and certain representations made during the sale process. These warranties remain in force and effect until 30 September 2014 in respect of a General Warranty Claim and 30 Septem- ber 2015, for a Fundamental Warranty Claim. The liability of the Group in respect of the aggregate of all warranty claims shall not be less than US$25 thousand for a single claim and US$50 thousand in aggregate and all claims shall not in total exceed US$1,000 thousand. To the date of the report, no formal war- ranty claim has been lodged by the Purchaser. PAGE 62 CAMBRIA AFRICA PLC38. Contingent liabilities and assets (continued) CONTINGENT LIABILITIES (CONTINUED) At the balance sheet date, the Leopard Rock Hotel Company (Pvt) Ltd, a Group company, had eleven open labour cases with the courts. Total exposure for unprovided settlement amounts is not anticipated to exceed US$25 thousand. On 26 August 2011, the Group, pursuant to its disposal of Sol Aviation (Pvt) Ltd, (“Sol Aviation”) entered into a Memorandum of Understanding with the purchaser, whereby the purchaser would be fully indemnified in respect of any claim, made ei- ther by Royal Khmer Airlines International (Pte) Limited (“Royal Khmer”) or Fly540 Aviation Limited (“Fly540”) pursuant to the Memorandum of Understanding entered into by Sol Aviation and Royal Khmer and a licence agreement entered into between Sol Aviation and Fly540. To the date of this report no claims have been lodged under this indemnity against the Group. On 16 August 2012, the Group, pursuant to its disposal of the scrap remains of the aircraft owned by LonZim Air (BVI) Limited, indemnified the purchaser, against any claims or costs arising in connection with any claim made by 540 (Uganda) Limited against Lonzim Air (BVI) Limited to a maximum value of US$50 thousand. For the year ended 31 August 2013 Notes to the Financial Statements 39. Related parties IDENTITY OF RELATED PARTIES The Group has a related party relationship with its subsidiaries (see note 18), and with its Directors and executive officers. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. All related party transactions are conducted on terms equivalent to arms length transactions. GROUP AND COMPANY TRANSACTIONS WITH ENTITIES WITH SIGNIFICANT INFLUENCE OVER THE ENTITY At the date of listing on AIM, 11 December 2007, the Company issued shares to the value of US$14,854 thousand (£7,290 thou- sand) to Lonrho Plc in exchange for Lonrho Plc entering into a non-compete agreement. The agreement covered a period of five and a half years and had been initially recognised as an in- tangible asset with a valuation of US$14,854 thousand (£7,290 thousand). The book value of this intangible asset which was being amortised over the period of the agreement, was fully written off in the prior period. There are no other known contingent liabilities at the balance sheet date. On 12 September 2012, the company was advised that Lonrho Plc had disposed of its 22% shareholding in the Company to an interest of less than 3%, the minimum notification threshold. CONTINGENT ASSETS At the balance sheet date, the Company has the following con- tingent assets: LONZIM AIR (B.V.I.) LIMITED Cambria owned two aircraft through its subsidiary LonZim Air (B.V.I.) Limited, a Fokker F27-500 Cargo (F27) and an ATR 42-320 (ATR). The F27 was leased to 540 (Uganda) Limited in Septem- ber 2008 and the ATR was leased to Five Forty Aviation Limited in July 2009, (both entities collectively “540”). A third aircraft leased by 540 was destroyed in an accident in January 2011. Cambria considers that substantial sums are due from 540 which relate to, inter alia, maintenance reserve and lease charges, re- lated contractual interest payment of insurance proceeds, the 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. On 18 July 2013, the Company entered into a Settlement Agree- ment with Lonrho Plc, whereby Cambria Africa Plc received US$2,665 thousand, in settlement of various claims and receiv- ables balances which included, inter alia, extinguishment of outstanding balances related to the sale of ATDM (note 17), the Churchill Estates receivable, which the group had fully provided for in the prior year, claims related to the Management Services and Continuing Relationship Agreement between the Company and Lonrho Plc, claims relating to the Hotel Refurbishment and Management Agreement between LonZim Hotels Limited and Lonrho Hotels Management Services (BVI) Limited (“LHMS”) (“Hotel Management Agreement”), the early termination of the Hotel Management Agreement, and other claims between the Company and its subsidiaries and Lonrho Plc Group companies. The Group loss on the settlement agreement, before amounts provided for in the prior period was US$348 thousand. PAGE 63 FINANCIAL REPORT 2013For the year ended 31 August 2013 Notes to the Financial Statements 39. Related parties (continued) TRANSACTIONS WITH ENTITIES WITH SIGNIFICANT INFLUENCE OVER THE ENTITY (CONTINUED) During the period up to 18 July 2013, LHMS, a subsidiary of Lon- rho Plc provided Management Services to Leopard Rock Hotel Company (Pvt) Ltd (the “Hotel”), a Group company, under con- tract, fees for which are determined as a percentage of Turnover and Operating Profit. Subsequent to the Settlement Agreement entered into with Lonrho Plc and the Company, management fees for the year were US$89 thousand (2012: US$187 thou- sand). Other recharges from LHMS to the Hotel amounted to US$1 thousand (2012: US$85 thousand). At 31 August 2013, the amount payable to LHMS was US$nil (2012: US$221 thousand). The gain on write-off the management fees and recharges relat- ing to the prior year US$282 thousand, and other Lonrho debt- ors US$33 thousand. During the period Itai Mazaiwana, a director of the Compa- ny, provided additional consultancy services to the Company amounting to US$13 thousand (2012: US$44 thousand) At 31 August 2013, the amount payable to Itai Mazaiwana was US$nil (2012: US$14 thousand). During the period Paul Heber, a director of the Company until 10 December 2012, provided additional consultancy services to the Company amounting to US$11 thousand (2012: US$nil) At 31 August 2012, the amount payable to Paul Heber was US$nil (2012: US$nil) At 31 August 2012, the following amounts were payable to Di- rectors in respect of Directors fees : Edzo Wisman US$13 thou- sand (2012: US$88 thousand), Tania Sanders US$11 thousand (2012: US$nil), Ian Perkins US$nil (2012: US$81 thousand). Rollex (Private) Limited (“Rollex”), a subsidiary of Lonrho Plc, provided freight services and delivery of provisions to the Hotel. Total purchases for the year ended 31 August 2013 was US$23 thousand (2012: US$21 thousand). At 31 August 2012, the amount payable to Rollex was US$nil thousand (2012: US$23 thousand). On 14 February 2013,FMNA was sold to ForgetMeNot Software Limited (“FMNS”), the 49% shareholder in FMNA (see notes 11 and 18). During the period up to 14 February, FMNS provided services and processed recharges to FMNA in the period totalling US$3 thousand (2012: US$191 thousand). Global Horizons Ltd T/A as AFEX, a subsidiary of Lonrho Plc, pro- vided satellite landing rights to the Hotel for the provision of its Internet Services. Total purchases for the year ended 31 August 2013 was US$31 thousand (2012: US$58 thousand). At 31 Au- gust 2012, the amount payable to AFEX was US$ nil (2012: US$5 thousand). FMN Research Limited (“FMNR”) (a company controlled by Mr J George, the Chief Executive Office and Managing Director of FMNA), provided services up to 14 February 2013 totalling US$74 thousand (2012: US$218 thousand). The services provid- ed by FMNR included technical support and software enhance- ments for FMNA customers, and marketing support. Diospyros Investments (Pvt) Limited, trading as CES Zimbabwe has a franchise agreement with Complete Enterprise Solutions Mauritius (“CES Mauritius”), a Lonrho Plc group company for the use of its proprietary interest trademarks and brand names, business model and management expertise. Under the agree- ment CES Mauritius also provided working capital support to CES Zimbabwe. During the period, under review, CES Zimbabwe paid service charges of US$nil thousand (2012: US$38 thou- sand). Other interest recharges amounted to US$nil (2012: US$16 thousand). At 31 August 2012, the amount payable to CES Mauritius was US$nil (2012: US$255 thousand). At 31 Au- gust 2013 CES Zimbabwe was disposed for US$ nil (see note 11 and 18). Lonrho Africa Holdings Limited (“LAHL”), a subsidiary of Lonrho Plc, provided services to FMNA in the period for US$nil (2012: US$17 thousand). During the period the Company entered into a number of trans- actions with The Consilium Corporate Recovery Master Fund Ltd, the Consilium Emerging Markets Absolute Return Mas- ter Fund Ltd (jointly “Consilium”) a substantial shareholder of Cambria. Loan funding received during the period amounted to US$1,500 thousand (2012: US$3,250 thousand). Interest and Fees paid during the period amounted to US$755 thousand (2012: US$240 thousand) (see notes 24 and 26). PAGE 64 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Notes to the Financial Statements Paynet Zimbabwe (Private) Limited (“Paynet Zimbabwe”) Paynet Zimbabwe, a 100% subsidiary of the Group provides ser- vices including payroll processing, software licensing, training and utility and property sublets to fellow subsidiaries which amounted to US$21 thousand (2012: US$20 thousand). All charges were at market value, arms length rates. Up until 5 September 2013, Paynet Zimbabwe provided hard- ware hosting services to Celsys Limited on a no charge basis. The estimated market value of the hosting services provided for the period under review was US$4 thousand (2012: US$4 thousand). Paynet Zimbabwe holds a licence to use, sell and develop soft- ware owned by Paynet Limited and uses the Paywell software through a licence with fellow subsidiary African Solutions Limit- ed. Total licence fees paid in the period were US$772 thousand (2012: US$614 thousand). TRANSACTIONS WITH KEY MANAGEMENT PERSON- NELKey management personnel are the holding Company Directors and executive officers. Edzo Wisman an Executive Director, par- ticipates in the share option scheme. Other Directors and key personnel are eligible to participate in the share option scheme (see note 25). Total remuneration is included in “personnel ex- penses” (see note 8). Directors Executive officers YEAR ENDED 31 AUGUST 2013 US$’000 YEAR ENDED 31 AUGUST 2012 US$’000 783 1,053 751 847 39. Related parties (continued) TRANSACTIONS WITH ENTITIES WITH SIGNIFICANT INFLUENCE OVER THE ENTITY (CONTINUED) On 1 October 2012, Consilium participated in the Company’s equity placement, for US$375 thousand, purchasing 2,308,000 shares at 10p per share for total value US$375 thousand. TRANSACTIONS WITH SUBSIDIARY ENTITIES WITHIN THE GROUP Celsys Limited Celsys Limited, was until 31 July 2013, a 60% held subsidiary of the Group and provided printing services to Group Companies of US$16 thousand (2012: US$12 thousand). All charges were at market value, arms length rates. Leopard Rock Hotel Company (Private) Limited (“LRH”) LRH, a 100% subsidiary of the Group, provided hospitality ser- vices to the Group amounting to US$4 thousand (2012: US$12 thousand). All charges were at market value, arms length rates. Hospitality services provided to employees and individuals with significant influence over the entity amounted to US$2 thou- sand. The market value of such related party services provided was US$3 thousand (2012: US$2 thousand, and US$2 thousand respectively). In the prior year, LRH provided short term bridge financing to Gardoserve (Pvt) Ltd which reached a maximum amount of US$130 thousand, over a period of 6 months from 1 December 2012 at an interest rate of 23% per annum. Interest paid on this funding was US$ nil (2012: US$ 7,674). No balances remained outstanding at year end (2012: US$ nil). Diospyros Investments (Private) Limited – T/A CES Zimbabwe (“CES”) CES was until 31 August 2013, a 100% subsidiary of the Group. CES provided IT hardware and IT maintenance services to Group companies amounting to US$25 thousand (2012: US$113 thou- sand. Group companies enjoyed a 5% discount to the market price on all hardware and paid arms length prices for IT main- tenance services. PAGE 65 FINANCIAL REPORT 2013 TOTAL 2013 US$000 TOTAL 2012 US$000 317 237 120 50 38 15 6 - - - - - - 783 239 83 80 200 19 - 68 19 9 9 9 9 7 751 For the year ended 31 August 2013 Notes to the Financial Statements 39. Related parties (continued) DIRECTOR’S REMUNERATION E Wisman T Sanders I Perkins P Turner I Mazaiwana F Jones P Heber J Ellis D Lenigas G White D Armstrong E Priestley C Orr-Ewing Total 40. Events after the reporting date Gardoserve (Private) Limited On 13 September 2013, FBC Bank Limited, of Zimbabwe sub- stituted a portion of Gardoserve (Private) Limited’s working capital overdraft facility for funds amounting to US$300 thou- sand, to be provided by Zimbabwe Economic and Trade Revival Facility (ZETREF). The Government of Zimbabwe provides 30% of the capital funding of ZETREF operations. The facility incurs interest at Libor for 3 months deposit plus 8% per annum, and is renewable on 21 August 2014. Equity Placement On 19 February 2014, Cambria announced that approximate- ly US$4 million (before expenses), or UK£2.4 million, has been raised by a 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 Com- pany’s expansion strategy for Millchem and Payserv as in the Chief Executive’s Report. PAGE 66 CAMBRIA AFRICA PLCFor the year ended 31 August 2013 Corporate Information COMPANY SECRETARY AND CONTACT DETAILS Northern Wychwood Limited 1st Floor, Exchange House 54-58 Athol Street Douglas Isle of Man IM99 1JD Tel: +44 (0) 1624 678259 AUDITORS KPMG Audit LLC Heritage Court 41 Athol Street Douglas Isle of Man IM99 1HN Tel: +44 (0) 1624 681000 REGISTRARS Capita Registrars (Isle of Man) Limited 3rd Floor Exchange House Clinch’s House Lord Street Douglas Isle of Man IM99 1RZ Tel: +44 (0) 1624 641560 PRINCIPAL GROUP BANKERS Barclays Corporate Level 27, 1 Churchill Place Canary Wharf London E14 5HP Tel: +44 (0) 20 7116 1000 REGISTERED OFFICE AND AGENT Appleby Trust (Isle of Man) Limited 33-37 Athol Street Douglas Isle of Man IM1 1LB Tel: +44 (0) 1624 647647 NOMINATED ADVISOR AND BROKER WH Ireland Limited 24 Martin Lane London EC4R 0DR Tel: +44 (0) 20 7220 1666 PAGE 67 FINANCIAL REPORT 2013For the year ended 31 August 2013 Shareholder Information Analysis of ordinary shareholdings as at 18 February 2014 Category of shareholder Private shareholder 31.73 79 NUMBER OF HOLDERS % OF TOTAL HOLDERS NUMBER OF SHARES % OF TOTAL SHARES Banks, nominees and other corporate bodies Total Shareholding range 1 – 5,000 5,001 – 50,000 50,001 – 100,000 100,001 – 500,000 500,001 – 1,000,000 1,000,001 – 5,000,000 5,000,001 –10,000,000 10,000,001 – 50,000,000 Total 170 249 92 75 29 31 10 9 2 1 249 68.27 100% 36.95 30.12 11.65 12.45 4.02 3.61 0.80 0.40 100% 2,184,165 64,564,858 66,749,023 228,848 1,404,771 2,218,701 8,561,337 7,578,121 19,197,742 13,306,840 14,252,663 66,749,023 3.27 96.73 100% 0.35 2.10 3.32 12.83 11.35 28.76 19.94 21.35 100% REGISTRARS All administrative enquiries relating to shareholdings, such as queries concerning dividend payments, notification of change of address or the loss of a share certificate, should be addressed to the Company’s registrars. UNSOLICITED MAIL As the Company’s share register is, by law, open to public inspection, shareholders may receive unsolicited mail from organisations that use it as a mailing list. Shareholders wishing to limit the amount of such mail should write to the Mailing Preference Society, Freepost 29 Lon20771, London W1E 0ZT. PAGE 68 CAMBRIA AFRICA PLCCambria Africa Plc 1 Berkeley Street Mayfair London WIJ 8DJ Tel: +44 (0) 20 3402 2366 Fax: +44 (0) 20 3402 2367 info@cambriaafrica.com www.cambriaafrica.com 

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