Cambria Africa plc Annual Report 2014

Plain-text annual report

Cambria Africa Plc Annual report 2014 Table of Contents Annual Report 2014 Results for the year Chief Execu(cid:415) ve Oﬃ cer’s Statement Directors Statement of Directors’ Responsibili(cid:415) es Directors’ Report Report of the Independent Auditors, Baker Tilly Isle of Man 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 Posi(cid:415) on Consolidated Statement of Cash Flows Notes to the Financial Statements Corporate informa(cid:415) on Shareholder informa(cid:415) on 3 4 8 9 10 14 16 17 18 20 21 22 - 64 65 66 Results for the year Following the investment in the Company by Ventures Africa Limited (“VAL”) in April 2015 and the resultant changes to the board of directors, considerable (cid:415) me and resources have been invested in rescuing the ﬁ nancial repor(cid:415) ng func(cid:415) ons of the Company. The board is conﬁ dent that the previous factors causing delays in the publica(cid:415) ons of results have now been sa(cid:415) sfactorily addressed ensuring results will be published (cid:415) meously. All references to con(cid:415) nuing opera(cid:415) ons relate to the Group’s Payserv Africa (“Payserv”) and Millchem Holdings (“Millchem”) investments and head oﬃ ce ac(cid:415) vi(cid:415) es. Further enhancing the value of Payserv Africa by replica(cid:415) ng its successful technology pla(cid:414) orms, products and services in the rest of Sub-Saharan Africa. Key events for the 2014 ﬁ nancial year were: Results summary: During the year ended 31 August 2014, Payserv Africa and Millchem Holdings combined, grew revenues and gross proﬁ t by 11% and 10% year-on-year, respec(cid:415) vely. • The Payserv Africa results were severely impacted by a signiﬁ cant once-oﬀ loss (US$0.7 million) on the failed acquisi(cid:415) on of CelPay Zambia. • Cambria’s central costs were reduced by 22.5% when compared to the equivalent period last year. As noted above, a further cost reduc(cid:415) on has been implemented a(cid:332) er the ﬁ nancial year end. Cambria’s EBITDA loss from con(cid:415) nuing opera(cid:415) ons for the year ended 31 August 2014 was US$3.75 million (2013: US$3.58 million). The Group recorded a loss from con(cid:415) nuing opera(cid:415) ons of US$5.7 million for the year ended 31 August 2014. The loss from discon(cid:415) nued opera(cid:415) ons, including the loss on disposal of the Southerton property and the write down of the Company’s investment in the Hotel Group, totalled US$10.2 million. • On 8 May 2014, the Company disposed of the Southerton property, which was previously occupied by Celsys Limited, the Group’s previously owned prin(cid:415) ng business, for a total considera(cid:415) on of US$0.7 million (before costs and related taxes). The Southerton property had a carrying value of US$1 million as at the previous repor(cid:415) ng period; • On 21 October 2014, in the post balance sheet period, the group disposed of its 100% interest in Lonzim Hotel Holdings Limited (“the Leopard Rock Hotel Group”), the owner of the Leopard Rock Hotel and related en(cid:415) (cid:415) es, for a total considera(cid:415) on of US$2.5 million. Accordingly, the net asset value of the Leopard Rock Hotel Group has been impaired by US$8.9 million at 31 August 2014 to reﬂ ect this investment’s net realisable value of US$2.5 million. • Following the above disposals, the Company’s only remaining assets are Payserv and Millchem. • The board is of the view that the remaining assets provide signiﬁ cant value crea(cid:415) on opportuni(cid:415) es to Cambria and its shareholders. • We are now focussed on: • Ra(cid:415) onalising and simplifying the head oﬃ ce func(cid:415) on including head oﬃ ce roles, responsibili(cid:415) es and repor(cid:415) ng lines. An aggressive reduc(cid:415) on in overheads has been accelarated following the investment by VAL in April 2015; • Restoring the momentum lost in Millchem by re-establishing key supplier and customer rela(cid:415) onships and performing a cri(cid:415) cal ﬁ nancial and opera(cid:415) onal analysis of the underlying subsidiaries including Millchem Zambia; • Accelera(cid:415) ng the development of Payserv Zambia to achieve breakeven and proﬁ tability; and FINANCIAL REPORT 2014 PAGE 3 Chief Executive Of(cid:976)icer’s Statement Introduction Having been appointed a director in June 2015 and assuming the CEO role with eﬀ ect from 3 August 2015, this is my ﬁ rst report to shareholders albeit almost a full year a(cid:332) er the year under review. With a signiﬁ cant cash equity investment through VAL’s subscrip(cid:415) on in April 2015, my interests as CEO are completely aligned with that of shareholders. Shareholders of Cambria have suﬀ ered a tremendous loss of value in their investment in the Company. It is my aim to guide the Company back to proﬁ tability and restore shareholder value. Cambria has undergone a signiﬁ cant restructuring in the last few months; non-core assets have been disposed of and the Company’s central overheads have been signiﬁ cantly reduced to be ﬁ t-for-purpose. In addi(cid:415) on, the Group’s ﬁ nancial posi(cid:415) on has been signiﬁ cantly strengthened following the se(cid:425) lement of the legal dispute with Lonrho. Despite the diminished relevance of the historical results and management overhaul following VAL’s investment in April 2015, commentary on the results for the ﬁ scal year ended 31 August 2014 is provided. During the 2014 ﬁ scal year, revenues and gross proﬁ t of the con(cid:415) nuing opera(cid:415) ons of Cambria, Payserv and Millchem investments, were US$9.4 million (2013: US$8.5 million) and US$5.0 million (2013: US$4.6 million) an increase of 11% and 10% respec(cid:415) vely compared to the ﬁ scal year 2013. Cambria’s EBITDA loss from con(cid:415) nuing opera(cid:415) ons for the 2014 ﬁ nancial year was US$3.75 million, an increase of 4.8% from the prior year’s EBITDA loss from con(cid:415) nuing opera(cid:415) ons of US$3.58 million. The Group loss for the year is US$5.7 million for con(cid:415) nuing opera(cid:415) ons. Discon(cid:415) nued opera(cid:415) ons, including loss on disposal of property and write downs, was a loss of US$10.2 million. Cambria’s loss per share for the 2014 ﬁ nancial year 19.5c per share, compared to 18.4c per share for the same period last year, an increase of 6% in loss per share. Main Investments CONSOLIDATED RESULTS Cambria’s two key investments consist of Payserv and Millchem. These investments jointly had an aggregated performance as shown in the table following: (cid:904)US$ THOUSANDS(cid:905) 2014 2013 GROWTH 11% 10% (2%) 34% Revenues Gross proﬁ t 9,405 8,487 5,017 4,581 Gross margin 53% 54% SG&A EBITDA (5,650) (4,209) (633) 372 >(100%) EBITDA margin (7%) 4% >(100%) The following factors signiﬁ cantly impacted EBITDA during the year: • Once-oﬀ costs of US$0.7 million incurred on inves(cid:415) ga(cid:415) ng the acquisi(cid:415) on of CelPay Zambia which was not concluded following the discovery of a signiﬁ cant deteriora(cid:415) on in the ﬁ nancial posi(cid:415) on of CelPay Zambia; • Con(cid:415) nued investment in expanding its presence and oﬀ ering in Zambia by Payserv Africa, the costs of which are expensed in full; and Investment by Millchem in two new subsidiaries Millchem Zambia and Millchem Malawi and challenges experienced in the ramp up of these subsidiaries to full trading capacity. Investment in these terrotories have been suspended to refocus on opera(cid:415) ons in Millchem’s core Zimbabwe market. • . FINANCIAL REPORT 2014 PAGE 4 Chief Executive Of(cid:976)icer’s Statement Payserv Africa Millchem Holdings Payserv provides EDI switching services (Paynet), ‘payslip’ processing (Autopay) and payroll based micro-ﬁ nance loan processing (Tradanet). Millchem is a value-added chemicals distributor with a leading market posi(cid:415) on in Zimbabwe and a ﬂ edgling presence in Zambia and Malawi. (cid:904)US$ THOUSANDS(cid:905) 2014 2013 GROWTH (cid:904)US$ THOUSANDS(cid:905) 2014 2013 GROWTH Revenues Gross proﬁ t Gross margin SG&A EBITDA EBITDA Margin 4,594 4,164 10% Revenues 4,811 4,323 4,196 3,811 10% Gross proﬁ t 91% 91% - Gross margin 821 770 17% 18% 11% 7% (6%) (3,871) (3,369) 15% SG&A (1,779) (840) >100% 325 442 7% 11% (26%) (36%) EBITDA (958) (70) >(100%) EBITDA margin (20%) (2%) >(100%) Paynet provided Electronic Data Interchange (EDI) services to all the banks and building socie(cid:415) es in Zimbabwe, as well as to over 1,500 corporates. Paynet processed 16.4 million transac(cid:415) ons (2013: 15.2 million) during the period under review, a 7.9% increase. Despite the challenging and uncertain business environment during the year, Millchem managed to grow revenue by 11%. Overheads were nega(cid:415) vely impacted by the expansion and investment in establishing Millchem Zambia and Millchem Malawi. Millchem Malawi has been closed a(cid:332) er year end while Millchem Zambia is in the process of being disposed of. Autopay, provided payroll services to more than 150 customers, processed over 313 000 pay slips (2013: 303 000) during the period under review, a 3.3% increase. Establishing Millchem as a proﬁ table unit is an important priority. The key focus areas will be: • Strengthening the execu(cid:415) ve leadership team following departure of senior execu(cid:415) ves; • Rebuilding rela(cid:415) onships with key customers; • Re-establishing credit lines with key suppliers; and • Streamlining overheads and trading eﬃ ciencies. Tradanet processed approximately 121,000 (2013: 66,000) loans during the period, represen(cid:415) ng a value of US$154 million (2013: US$131 million), a 83.3% increase and a 17.5% increase respec(cid:415) vely. During the year under review, Payserv con(cid:415) nued to invest signiﬁ cantly into product upgrades, new oﬀ erings, entry into the Zambian market, as well as explora(cid:415) on of other geographic markets. These investments have not been capitalised and have therefore directly impacted the income statement during the year under review. There was an excep(cid:415) onal item of US$0.7 million included in the Payserv Africa results rela(cid:415) ng to the write-oﬀ of transac(cid:415) on costs and loans to CellPay Zambia discussed above. FINANCIAL REPORT 2014 PAGE 5 Chief Executive Of(cid:976)icer’s Statement Discontinued operations and central costs SOUTHERTON PROPERTY The Southerton property which was occupied by Celsys Limited, the group’s previously owned prin(cid:415) ng business, was disposed of on 8 May 2014 for a total considera(cid:415) on of US$0.7 million (before costs and related taxes). The Southerton property had a carrying value of US$1 million as at the previous ﬁ nancial year. LONZIM HOTELS LIMITED (cid:525)“THE LEOPARD ROCK HO(cid:487) TEL GROUP”(cid:526) The Leopard Rock Hotel Group has been classiﬁ ed by Cambria as held for sale during the past two ﬁ nancial years. During the 2014 ﬁ nancial year, the Leopard Rock Hotel Group generated US$2.0 million in revenue (2013: US$2.3 million) and loss before interest, tax, deprecia(cid:415) on and amor(cid:415) sa(cid:415) on of US$0.4 million (2013: US$0.7 million, before write downs recognised in the income statement of US$2.8 million). LONZIM AIR (cid:525)B.V.I(cid:526) LIMITED Through LonZim Air (BVI) Limited Cambria previously owned three aircra(cid:332) . Over the years a number of disputes arose in rela(cid:415) on to these aircra(cid:332) and certain associated contracts. Cambria has been con(cid:415) nuing to pursue recovery of claims related to these disputes. These amounts relate to, inter alia, maintenance reserve and lease charges and related contractual interest, payment of insurance proceeds, deteriora(cid:415) on in market value of the aircra(cid:332) , and the signiﬁ cantly lower amount the Company was able to obtain through a sale, due to the poor condi(cid:415) on the aircra(cid:332) were found to be in. LonZim Air incurred US$0.8 million in opera(cid:415) ng losses for the period under review, largely related to extra-ordinary legal expenses related to the above men(cid:415) oned claims. CENTRAL COSTS Cambria incurred US$3.1 million in central EBITDA costs for the period under review, compared to US$4.0 million last year, a reduc(cid:415) on of 22.5%. Included in the above are salaries and beneﬁ ts paid to the Company’s previous CEO and Chairman of US$0.54 million and US$0.13 million, respec(cid:415) vely. These amounts include, inter alia, a staﬀ loan of US$0.1 million the previous CEO which, in terms of his staﬀ loan agreement has been waived following the investment by VAL and the change of control in Cambria. Subsequent to year end and VAL’s investment, Mr Wisman and Mr Perkins received change in control payments amoun(cid:415) ng to US$185 500 in total. At the date of this report, Central EBITDA costs have been further reduced to an es(cid:415) mated annual cost of US$0.7 million from US$3.1 million before VAL’s investment. As new CEO, I will not be collec(cid:415) ng compensa(cid:415) on or other beneﬁ ts un(cid:415) l such (cid:415) me as the cash ﬂ ow from the Company’s underlying opera(cid:415) ons supports it. Events following the end of the period under review THE LEOPARD ROCK HOTEL GROUP On 21 October 2014 the Company entered into an agreement to dispose of its shares and loan claims in Lonzim Hotels Limited to VAL for a total considera(cid:415) on of US$2.5 million se(cid:425) led in cash. Lonzim Hotels Limited holds the Leopard Rock Hotel and related subsidiaries. VAL EQUITY PLACEMENT On 15 February 2015, the Company entered into a share subscrip(cid:415) on agreement in terms of which VAL agreed to subscribe and the Company agreed to issue, 107,000,000 ordinary shares of GBP0.0001 each at price of 0.85p per share (“the VAL subscrip(cid:415) on”). The proceeds from the VAL subscrip(cid:415) on had by 1 June 2015 been fully expended by the previous management to fund the head oﬃ ce and working capital requirements of the Group. CHEMICALS & MARKETING COMPANY LIMITED It was announced on 26 August 2013 that the Company had concluded the acquisi(cid:415) on of the en(cid:415) re issued share capital of Malawi chemical distributor Chemicals & Marke(cid:415) ng Company Limited (“C&M”) and that the related 5.5 million considera(cid:415) on shares (“considera(cid:415) on shares”) have been admi(cid:425) ed to lis(cid:415) ng on AIM. Subsequent to that announcement, and following a more in-depth understanding of the ﬁ nancial aﬀ airs of C&M, the Company and the C&M vendors entered into a Disengagement Agreement (dated 29 June 2015) in terms of which the par(cid:415) es agreed that the C&M acquisi(cid:415) on will be reversed and the par(cid:415) es be restored to their ini(cid:415) al posi(cid:415) ons. FINANCIAL REPORT 2014 PAGE 6 Chief Executive Of(cid:976)icer’s Statement Strategy going forward and closing The Company is being focused on crea(cid:415) ng value for shareholders through its investments in Millchem and Payserv. In addi(cid:415) on, the Board is in the process of formula(cid:415) ng its investment strategy to implement strategic value-crea(cid:415) ng acquisi(cid:415) ons as appropriate opportuni(cid:415) es arise. We will con(cid:415) nue to focus on Zimbabwe, which we believe provides the best opportunity for successful investment and growth in the short to medium term. SAMIR SHASHA CHIEF EXECUTIVE OFFICER 4 SEPTEMBER 2015 Events following the end of the period under review (continued) CHEMICALS & MARKETING COMPANY LIMITED (cid:525)CON(cid:487) TINUED(cid:526) The considera(cid:415) on shares, net of shares sold to sa(cid:415) sfy obliga(cid:415) ons to C&M, will be held as treasury shares. The Company’s subsidiary Millchem Holdings Limited (“MHL”), has provided guarantees to creditors of C&M to the value of US$0.6 million. C&M has undertaken to release MHL from these guarantees and indemniﬁ ed MHL for any poten(cid:415) al related loss. SALE OF MILLCHEM ZAMBIA Millchem Holdings has agreed in principle to the sale of the Zambian opera(cid:415) ons for net asset value es(cid:415) mated to be US$50 thousand. The rights to the name “Millchem Zambia” are not included in the sale. SETTLEMENT WITH LONRHO On 3 September 2015, the Company concluded a se(cid:425) lement agreement with Lonrho with respect to the Jet claims and counterclaims (“the claims”) between the par(cid:415) es, in terms of which the Company will receive US$4.752 million in full and ﬁ nal se(cid:425) lement of the claims. A(cid:332) er outstanding li(cid:415) ga(cid:415) on and other associated costs, the net proceeds is es(cid:415) mated to be US$3.5 million and will be applied to Cambria, and its subsidiaries’ working capital requirements and debt commitments. FINANCIAL REPORT 2014 PAGE 7 Directors Paul Turner, 68 NON(cid:487)EXECUTIVE CHAIRMAN Paul Turner is a Chartered Accountant and past President of the Ins(cid:415) tute 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 opera(cid:415) on of businesses in Zimbabwe. Ini(cid:415) ally appointed to the Cambria board on 1 July 2008, he was appointed as Chairman on 9 July 2015. Samir Shasha, 55 CHIEF EXECUTIVE OFFICER Samir Shasha started his involvement in Southern Africa with supplying and leasing trucks for the opera(cid:415) ons of a transport company focused on relief aid. In 1995 he established S. Shasha & Associates in Zimbabwe and introduced Freightliner Trucks in Southern Africa for the ﬁ rst (cid:415) me. In 2002, S. Shasha & Associates purchased Zimbabwe Online, an Internet Service Provider in Zimbabwe, and took on the role of CEO un(cid:415) l 2006. The company was sold to Liquid Telecom in 2012. Mr. Shasha received his Bachelors from Vassar College with Honors in Economics in 1981. Following Ventures Africa Limited’s investment in the Company in April 2015, Mr Shasha was appointed to the Cambria board on 3 June 2015 and as CEO on 3 August 2015. Josephine Petra Watenphul, 34 CHIEF FINANCIAL OFFICER Josephine Watenphul is a qualiﬁ ed Chartered Accountant (South Africa). She joined the UCS Group Limited (“UCS”), a Johannesburg-based investment holding company in technology and associated businesses listed on the Johannesburg Stock Exchange, in April 2004. In April 2009, Josie was appointed Group CFO, a posi(cid:415) on which she held un(cid:415) l May 2015. During her tenure at UCS, which was later renamed Capitaleye Investments upon delis(cid:415) ng in October 2011, Josie assisted in various corporate ac(cid:415) ons and restructurings. She was appointed to the Cambria board on 17 June 2015. Dipak Champaklal Pandya, 56 NON(cid:487)EXECUTIVE DIRECTOR Dipak Pandya is a Chartered Accountant and has since March 2009 been the ﬁ nancial controller at Strauss Logis(cid:415) cs Limited, a fuel trading and distribu(cid:415) on company ac(cid:415) ve in central and southern Africa. Prior to this, Dipak was the ﬁ nancial controller at Playwize Plc, a computer so(cid:332) ware development company. Dipak was appointed to the Cambria board on 26 June 2015. Changes to the board Director resigna(cid:415) ons: Name Ex-posi(cid:415) on/designa(cid:415) on Date Tania Sanders CFO 30 Nov 2013 Paul Turner Non-execu(cid:415) ve 6 May 2015 Edzo Wisman CEO Ian Perkins Chairman 13 July 2015 14 July 2015 Director appointments: Name Posi(cid:415) on/designa(cid:415) on Date Samir Shasha Josephine Petra Watenphul CEO CFO 3 June 2015 17 June 2015 Dipak Champaklal Pandya Non-execu(cid:415) ve director 26 June 2015 Paul Turner Chairman 9 July 2015 FINANCIAL REPORT 2014 PAGE 8 Directors’ Responsibility Statement in Respect of the Directors’ Report and the Financial Statements. Directors Cambria The Directors are responsible for keeping proper accoun(cid:415) ng records that are suﬃ cient to show and explain the Parent Company’s reasonable transac(cid:415) ons and disclose with accuracy at any (cid:415) me its ﬁ nancial posi(cid:415) on. 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 irregulari(cid:415) es. The Directors are responsible for the maintenance and integrity of the corporate and ﬁ nancial informa(cid:415) on included on the Company’s website. Legisla(cid:415) on governing the prepara(cid:415) on and dissemina(cid:415) on of ﬁ nancial statements may diﬀ er from one jurisdic(cid:415) on to another. The Directors are responsible for preparing the Directors’ Report and the ﬁ nancial statements in accordance with applicable law and regula(cid:415) ons. The Directors have elected to prepare the Group and Parent Company ﬁ nancial statements in accordance with Interna(cid:415) onal Financial Repor(cid:415) ng Standards as adopted by the European Union. The Group and Parent Company ﬁ nancial statements are required to give a true and fair view of the state of aﬀ airs of the Group and Parent Company and of the proﬁ t or loss of the Group for that period. In preparing these ﬁ nancial statements, the Directors are required to: • select suitable accoun(cid:415) ng policies and then apply them consistently; • make judgements and es(cid:415) mates that are reasonable and prudent; • • state whether they have been prepared in accordance with Interna(cid:415) onal Financial Repor(cid:415) ng Standards as adopted by the European Union; and prepare the ﬁ nancial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will con(cid:415) nue in business. FINANCIAL REPORT 2014 PAGE 9 Directors’ Report FOR THE YEAR ENDED 31 AUGUST 2014 The Directors of Cambria Africa Plc (the “Company”) and its subsidiaries (together the “Group”) submit their report, together with the audited ﬁ nancial statements for the year ended 31 August 2014. Principal activities During the year, the Group was an investment company with a por(cid:414) olio of investments in Zimbabwe, countries surrounding Zimbabwe, as well as the remainder of Sub-Saharan Africa, with a bias towards Southern and Eastern Africa. Investment Strategy The Company’s investment objec(cid:415) ve is to provide Shareholders with long term capital apprecia(cid:415) on. While the Company does not have a par(cid:415) cular sectoral focus, u(cid:415) lising the investment skills of the Directors and their advisors, the Company seeks to iden(cid:415) fy individual companies in sectors best posi(cid:415) oned to beneﬁ t should there be radical improvements in Zimbabwe’s economy. The Company may make investments in the tourism, accommoda(cid:415) on, infrastructure, transport, commercial and residen(cid:415) al property, technology, communica(cid:415) ons, 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 signiﬁ cant exposure to assets, businesses or opera(cid:415) ons within the deﬁ ned region. The Company will only be able to achieve its investment objec(cid:415) ve in the event the Zimbabwean economy radically improves. Whilst there will not be any limit on the number or size of investments the Company can make in any sector, the Directors seek to diversify the Company’s investments across various sectors in order to mi(cid:415) gate risk and to avoid concentra(cid:415) ng the por(cid:414) olio in any single sector. The Company’s interest in a proposed investment or acquisi(cid:415) on may range from a minority posi(cid:415) on to full ownership. The Company intends to ac(cid:415) vely manage the opera(cid:415) ons of the companies it has invested in. Wherever possible the Company will seek to achieve Board control or ﬁ nancial control of its por(cid:414) olio companies. legisla(cid:415) on within Zimbabwe may, however, prevent the Company from acquiring or maintaining a majority control in a Zimbabwean business. Indigenisa(cid:415) on The Directors believe that through their individual and collec(cid:415) ve experience of inves(cid:415) ng and managing acquisi(cid:415) ons and disposals in Africa, they have the necessary skills to manage the Company and to source deal ﬂ ow. Prior to any investment decisions being taken by the Board of the Company, a due diligence process is undertaken by the Company’s appointed specialist ﬁ nancial and legal advisors. investment strategy The Company’s is dependent upon future radical improvement in the economy of Zimbabwe and expansion into the immediate region. It is therefore possible that a signiﬁ cant period of (cid:415) me may elapse before an investment by the Company will produce any returns and there is no guarantee that the economy in Zimbabwe will improve. Accordingly, the Company may not be able to make any proﬁ ts and may incur losses. The Directors intend to seek the consent of the Shareholders for the investment policy on an annual basis. The Company Directors will comply as a ma(cid:425) er of policy with the US Oﬃ ce of Foreign Assets Control and the European Union Council Regula(cid:415) on (EC) No. 314/2004 regula(cid:415) ons. Results The Group made a consolidated loss a(cid:332) er non-controlling interests of US$16,138 thousand (2013: loss US$12,048 thousand) during the year and this has been set against reserves. Business review and development The Chief Execu(cid:415) ve’s review of opera(cid:415) ons contains informa(cid:415) on on developments during the year and key poten(cid:415) al future developments. The requirements of the enhanced business review in rela(cid:415) on to strategy and progress thereon are contained in the Chief Execu(cid:415) ve’s review of opera(cid:415) ons. The principal risks and uncertain(cid:415) es relate to the revenue genera(cid:415) on in the Group’s businesses which, being located in Africa, are subject to respec(cid:415) ve government policies, poli(cid:415) cal stability, general economic condi(cid:415) ons in the relevant country and exposure to foreign currency movements. The Group monitors cash ﬂ ow as one of its primary key performance indicators. Given current global ﬁ nancial condi(cid:415) ons, as FINANCIAL REPORT 2014 PAGE 10 Directors’ Report For the year ended 31 August 2014 Business review and development (con- tinued) well as current developments in Zimbabwe, the Directors are carefully monitoring cash resources within the Group and have ins(cid:415) gated a number of ini(cid:415) a(cid:415) ves to ensure funding will be available to meet obliga(cid:415) ons as they fall due and for planned projects 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 resources for the foreseeable future. The Group also uses a number of other key performance indicators which are measured at diﬀ erent (cid:415) ers in the opera(cid:415) on. At the top level, the Group tracks revenues, gross proﬁ t, EBITDA and cash genera(cid:415) on against budget. The Directors mi(cid:415) gate risk by evalua(cid:415) on of every investment that is made and have therefore developed a risk analysis repor(cid:415) ng procedure, which links into the Company’s Corporate Governance procedures. Further informa(cid:415) on regarding the Group’s policies and exposure to ﬁ nancial risk can be found in note 32 to the ﬁ nancial statements. Share capital Details of changes to the Company’s share capital and share premium during the ﬁ nancial year are contained in note 24 to the ﬁ nancial statements. Post statement of (cid:976)inancial position events Details of signiﬁ cant events since the repor(cid:415) ng date are contained in note 40 to the ﬁ nancial statements. Corporate Governance COMPLIANCE WITH THE UK CORPORATE GOVER(cid:487) NANCE CODE The Directors recognise the value of the UK Corporate Governance Code (formerly the Combined Code on Corporate Governance) and, whilst under AIM rules full compliance is not required, the Directors are considering the recommenda(cid:415) ons and applicability in respect of the Company insofar as is prac(cid:415) cable and appropriate for a public company of its size and will con(cid:415) nue to implement appropriate compliance measures. BOARD OF DIRECTORS At the date of this report the Board of Directors comprises of two Execu(cid:415) ve Directors, and two Non-Execu(cid:415) ve Directors, one of whom is the Chairman. The Directors are of the opinion that the Board comprises a suitable balance to enable the recommenda(cid:415) ons of the Code to be implemented to an appropriate level. The Board, through the Chairman and Chief Execu(cid:415) ve Oﬃ cer in par(cid:415) cular, maintains regular contact with its advisors, and ins(cid:415) tu(cid:415) onal 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 formula(cid:415) ng, reviewing and approving the Company’s strategy, ﬁ nancial ac(cid:415) vi(cid:415) es and opera(cid:415) ng performance. Day-to-day management is devolved to the execu(cid:415) ve management who are charged with consul(cid:415) ng the Board on all signiﬁ cant ﬁ nancial and opera(cid:415) onal ma(cid:425) ers. Consequently, decisions are made promptly following consulta(cid:415) on amongst the Directors and managers concerned, where necessary and appropriate. All necessary informa(cid:415) on is supplied to the Directors on a (cid:415) mely basis to enable them to discharge their du(cid:415) es eﬀ ec(cid:415) vely and all Directors have access to independent professional advice at the Company’s expense, as and when required. is available ins(cid:415) tu(cid:415) onal The Chairman shareholders to discuss any issues and concerns regarding the Group’s governance. The Non-Execu(cid:415) ve Directors can also a(cid:425) end mee(cid:415) ngs with major shareholders, if requested. to meet with The par(cid:415) cipa(cid:415) on of both private and ins(cid:415) tu(cid:415) onal investors at the Annual General Mee(cid:415) ng is welcomed by the Board. FINANCIAL REPORT 2014 PAGE 11 Directors’ Report For the year ended 31 August 2014 Corporate Governance (continued) NOMINATION COMMITTEE INTERNAL CONTROLS for the The Directors acknowledge their responsibility Company’s and the Group’s systems of internal control, which are designed to safeguard the assets of the Group and ensure the reliability of ﬁ nancial informa(cid:415) on for both internal use and external publica(cid:415) on. Overall control is ensured by a regular detailed repor(cid:415) ng system covering the state of the Group’s ﬁ nancial aﬀ airs. The Board has implemented procedures for iden(cid:415) fying, evalua(cid:415) ng and managing the signiﬁ cant risks that face the Group. Any system of internal control can provide only reasonable, and not absolute, assurance that material ﬁ nancial irregulari(cid:415) es will be detected or that the risk of failure to achieve business objec- (cid:415) ves is eliminated. The Nomina(cid:415) on Commi(cid:425) ee is responsible for iden(cid:415) fying candidates to ﬁ ll vacancies on the Board, as and when they arise, and nominate them for approval by the Board. The Nomina(cid:415) on Commi(cid:425) ee comprises Paul Turner (Chairman), Samir Shasha and Dipak Pandya. Declared substantial shareholdings The Directors have been advised of the following shareholdings at 30 June 2015 3 per cent or more of the Company’s issued share capital: NUMBER OF SHARES PERCENT(cid:883) AGE OF THE ISSUED CAPITAL COMMITTEES Ventures Africa Ltd* 107,000,000 50.55% A(cid:332) er year end and a(cid:332) er the VAL subscrip(cid:415) on, the Board has established the following commi(cid:425) ees: Consilium Fron(cid:415) er Equity Fund LP 14,741,456 7.73% Russell Investments Ltd 14,252,663 Jutland Capital Management Ltd 10,102,352 6.73% 4.77% Roald Sommersel 7,168,458 3.39% * Ventures Africa Limited is beneﬁ cially owned by Samir Shasha, director and CEO of the Company. Directors Biographical details of all Directors as well dates of appointment and resigna(cid:415) on are set out on page 6. AUDIT COMMITTEE The role of the Audit Commi(cid:425) ee is to oversee the nature and scope of the annual audit, management’s repor(cid:415) ng on internal accoun(cid:415) ng standards and prac(cid:415) ces, ﬁ nancial informa(cid:415) on and accoun(cid:415) ng systems and procedures and the Company’s repor(cid:415) ng statements. The Audit Commi(cid:425) ee’s ﬁ nancial primary objec(cid:415) ves include assis(cid:415) ng the Directors in mee(cid:415) ng their responsibili(cid:415) es in respect of the Company’s con(cid:415) nuous ﬁ nancial disclosure obliga(cid:415) ons and overseeing the work of the Company’s external auditors. The Audit Commi(cid:425) ee comprises Paul Turner (Chairman) and Dipak Pandya. REMUNERATION COMMITTEE The Remunera(cid:415) on Commi(cid:425) ee makes recommenda(cid:415) ons to the Board on the remunera(cid:415) on policy that applies to Execu(cid:415) ve Directors and senior employees. The Remunera(cid:415) on Commi(cid:425) ee comprises Dipak Pandya (Chairman) and Paul Turner. FINANCIAL REPORT 2014 PAGE 12 DIRECTORS Ian Perkins* Edzo Wisman* Itai Mazaiwana* Tania Sanders* Fred Jones* Paul Turner* Total Directors’ share interests The Directors’ who were in oﬃ ce at the beginning and end of the ﬁ nancial year, had the following interests in the shares of the Company: Directors’ Report For the year ended 31 August 2014 and dona(cid:415) ons. Insurance The Company has Directors’ and Oﬃ cers’ liability insurance cover in place for Group Directors. Share price performance Between 1 September 2013 and 31 August 2014 the share price varied between a high of 10.25p and a low of 5.00p. At 31 August 2014 the closing market price of the shares at close of business was 5.38p (2013: 8.25p). On 14 August 2015 the closing price of the shares was 0.82p. A resolu(cid:415) on to re-appoint Baker Tilly Isle of Man LLC and to authorise the Directors to ﬁ x their remunera(cid:415) on will be proposed at the Annual General Mee(cid:415) ng. The Directors who held oﬃ ce at the date of approval of this Directors’ Report conﬁ rm that, so far as they are each aware, there is no relevant audit informa(cid:415) on 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 informa(cid:415) on and to establish that the Company’s Auditors are aware of that informa(cid:415) on. AT 31.08.14 NO. OF SHARES AT 31.08.13 NO. OF SHARES 880,250 880,250 1,428,705 615,250 615,250 615,250 Nil Nil 2,203,030 2,203,030 Nil n/a Nil 92,280 Auditors * Tania Sanders and Paul Turner resigned as Directors on 10 December 2012 and 6 May 2015 respec(cid:415) vely. Itai Mazaiwana and Fred Jones resigned on 24 April 2015. Edzo Wisman and Ian Perkins resigned on 13 July 2015 and 14 July 2015 respec(cid:415) vely. Share op(cid:415) ons held by the Directors are detailed in note 25 of the ﬁ nancial statements Annual General Meeting The no(cid:415) ce of mee(cid:415) ng, together with a form of proxy, will be sent out separately at a later date. ON BEHALF OF THE BOARD. PAUL TURNER CHAIRMAN 4 SEPTEMBER 2015 All of the above interests are recorded in the Company’s Register of Directors’ Share and Debenture Interests. No Director has a beneﬁ cial interest in the shares or debentures of any of the Company’s subsidiary undertakings. Anti-Corruption and Bribery Policy The Company has in place an An(cid:415) -Corrup(cid:415) on 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 associated with the Group with applicable legal and ethical obliga(cid:415) ons. The Company’s Chief Execu(cid:415) ve Oﬃ cer has primary and day-to-day responsibility for implementa(cid:415) on of the policy. Management at all levels of the Group are responsible for ensuring those repor(cid:415) ng to them are made aware of, and understand, the policy. The policy gives guidance on risk iden(cid:415) ﬁ ca(cid:415) on and the procedures to follow where a risk is iden(cid:415) ﬁ ed, together with clear guidelines on gi(cid:332) s, entertainment FINANCIAL REPORT 2014 PAGE 13 Report of the Independent Auditors For the year ended 31 August 2014 Report of the Independent Auditors, Baker Tilly Isle of Man LLC, to the members of Cambria Africa Plc We have audited the Group and Parent Company ﬁ nancial Statements (the “ﬁ nancial statements”) of Cambria Africa Plc for the year ended 31 August 2014 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 Posi(cid:415) on, the Consolidated Statement of Cash Flows and the related notes. The ﬁ nancial repor(cid:415) ng framework that has been applied in their prepara(cid:415) on is applicable law and Interna(cid:415) onal Financial Repor(cid:415) ng Standards (IFRSs) as adopted by the European Union. 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 ma(cid:425) ers we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permi(cid:425) ed 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. Respective responsibilities of Directors and Auditor As explained more fully in the Directors’ Responsibili(cid:415) es Statement set out on page 9, the Directors are responsible for the prepa- ra(cid:415) on of ﬁ nancial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the ﬁ nancial statements in accordance with applicable law and Interna(cid:415) onal Standards on Audi(cid:415) ng (UK and Ireland). Those standards require us to comply with the Audi(cid:415) ng Prac(cid:415) ces Board’s Ethical Standards for Auditors. Scope of the audit of the (cid:976)inancial statements An audit involves obtaining evidence about the amounts and disclosures in the ﬁ nancial statements suﬃ cient to give reasonable assurance that the ﬁ nancial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accoun(cid:415) ng policies are appropriate to the Group’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of signiﬁ cant accoun(cid:415) ng es(cid:415) mates made by the Directors; and the overall presenta- (cid:415) on of the ﬁ nancial statements. In addi(cid:415) on, we read all the ﬁ nancial and non-ﬁ nancial informa(cid:415) on in the Directors Report to iden- (cid:415) fy material inconsistencies with the audited ﬁ nancial statements. If we become aware of any apparent material misstatements or inconsistencies we consider implica(cid:415) ons for our report. FINANCIAL REPORT 2014 PAGE 14 Report of the Independent Auditors, Baker Tilly Isle of Man LLC, to the members of Cambria Africa Plc (continued) Opinion on the (cid:976)inancial statements In our opinion the ﬁ nancial statements: • • give a true and fair view of the state of the Group and Parent Company’s aﬀ airs as at 31 August 2014 and of the Group’s loss for the year then ended; and have been properly prepared in accordance with IFRS as adopted by the European Union. Emphasis of matter In forming our opinion on the ﬁ nancial statements, which is not modiﬁ ed, we have considered the adequacy of the disclosure made in note 2 to the ﬁ nancial statements concerning the Group’s ability to con(cid:415) nue as a going concern. The group, which at 31 August 2014 has net liabili(cid:415) es of $1.24m and reported an opera(cid:415) ng loss of $4.25m for the year, has signiﬁ cant external bor- rowings which mature during 2016. $5.08m is due for repayment in April 2016 and a further $2.00m is due for repayment in July 2016. Although the directors are taking steps to reﬁ nance these loans , these circumstances, along with other ma(cid:425) ers set out in note 2 to the ﬁ nancial statements, indicate the existence of a material uncertainty which may cast signiﬁ cant doubt about the Group’s ability to con(cid:415) nue as a going concern. The ﬁ nancial statements do not include the adjustments that would result if the Group was unable to con(cid:415) nue as a going concern. Baker Tilly Isle of Man LLC Chartered Accountants 2a Lord Street Douglas Isle of Man IM99 1HP 4 September 2015 FINANCIAL REPORT 2014 PAGE 15 Consolidated Income Statement For the year ended 31 August 2014 Revenue Cost of sales Gross proﬁ t Opera(cid:415) ng costs Other income Net losses on disposal of investments and impairment of assets Opera(cid:415) ng loss Finance income Finance costs Net ﬁ nance costs Loss before tax Income tax Loss for the period from con(cid:415) nuing opera(cid:415) ons Discon(cid:415) nued opera(cid:415) ons Loss for the year from discon(cid:415) nued opera(cid:415) ons, net of tax Loss for the year A(cid:425) ributable to: Owners of the company Non-controlling Interests Loss for the year Earnings per share - all opera(cid:415) ons Basic and diluted loss per share (Cents) Earnings per share-con(cid:415) nuing opera(cid:415) ons Basic and diluted loss per share (Cents) NOTE 5 7 7 9 9 10 5/11 12 12 2014 TOTAL US$’000 9,405 (4,388) 5,017 (8,513) 17 (774) (4,253) 21 (1,128) (1,107) (5,360) (319) (5,679) (10,166) (15,845) (16,138) 293 (15,845) (19.5c) (7.2c) 2013 TOTAL US$’000 8,487 (3,906) 4,581 (8,647) 289 (348) (4,125) 282 (967) (685) (4,810) (204) (5,014) (6,890) (11,904) (12,048) 144 (11,904) (18.4c) (7.6c) The notes on pages 22 to 64 are an integral part of these consolidated ﬁ nancial statements. FINANCIAL REPORT 2014 PAGE 16 Consolidated Statement of Comprehensive Income For the year ended 31 August 2014 Loss for the year Other comprehensive income Revalua(cid:415) on of property, plant and equipment Related deferred tax adjustment Impairment of previously revalued land and buildings in disposal group classiﬁ ed as held for sale Shareholder loans provided for in the prior year Foreign currency transla(cid:415) on diﬀ erences for overseas opera(cid:415) ons Total comprehensive loss for the year A(cid:425) ributable to: Owners of the company Non-controlling interest Total comprehensive loss for the year 2014 US$’000 (15,845) - - - - 12 (15,833) (16,126) 293 (15,833) 2013 US$’000 (11,904) 422 (110) (1,873) (392) (1) (13,858) (14,002) 144 (13,858) The notes on pages 22 to 64 are an integral part of these consolidated ﬁ nancial statements FINANCIAL REPORT 2014 PAGE 17 Consolidated Statement of Changes in Equity For the year ended 31 August 2014 ATTRIBUTABLE TO OWNERS OF THE COMPANY SHARE CAPITAL SHARE PREMIUM RE(cid:883) VALUA(cid:883) TION RESERVE FOREIGN EXCHANGE RESERVE SHARE BASED PAYMENT RESERVE RETAINED EARNINGS NDR TOTAL NON(cid:883) CON(cid:883) TROLLING INTERESTS TOTAL EQUITY US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Balance at 31 August 2013 12 78,798 77 (10,641) 86 (59,752) 2,241 10,821 Loss for the year Deferred tax adjustment Foreign currency transla(cid:415) on diﬀ erences for overseas opera(cid:415) ons Total comprehensive loss for the year Contribu(cid:415) ons by and dis- tribu(cid:415) ons to owners of the Company recognised directly in equity Deferred tax adjustment Dividends paid Issue of ordinary shares Share based payment release Total contribu(cid:415) ons by and distribu(cid:415) ons to owners of the Company - - - - - - 6 - 6 - - - - - - 3,689 - - - - - 361 - - - 3,689 361 - - 12 12 - - - - - - - - - - - - - - (16,138) - - (16,138) - - - - - - - - - - - - - - (16,138) - 12 (80) 293 10,741 (15,845) - - - 12 (16,126) 293 (15,833) 361 - 3,695 - - (204) - - 361 (204) 3,695 - 4,056 (204) 3,852 Balance at 31 August 2014 18 82,487 438 (10,629) 86 (75,890) 2,241 (1,249) 9 (1,240) The notes on pages 22 to 64 are an integral part of these consolidated ﬁ nancial statements FINANCIAL REPORT 2014 PAGE 18 Consolidated Statement of Changes in Equity For the year ended 31 August 2014 ATTRIBUTABLE TO OWNERS OF THE COMPANY SHARE CAPITAL SHARE PREMIUM RE(cid:883) VALUA(cid:883) TION RESERVE FOREIGN EXCHANGE RESERVE SHARE BASED PAYMENT RESERVE RETAINED EARNINGS NDR TOTAL NON(cid:883) CON(cid:883) TROLLING INTERESTS TOTAL EQUITY US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Balance at 31 August 2012 11 77,399 3,124 (10,629) 355 (47,312) 2,128 25,076 (1,785) 23,291 Loss for the year Adjustment to opening reserves in respect of share- holder loans Revalua(cid:415) on of property Deferred tax adjustment Impairment of (previously revalued) land and buildings in a disposal group classiﬁ ed as held for sale. Foreign currency transla(cid:415) on diﬀ erences for overseas opera(cid:415) ons Total comprehensive loss for the year Contribu(cid:415) ons by and dis- tribu(cid:415) ons to owners of the Company recognised directly in equity Reclassiﬁ ca(cid:415) on of reserves Disposal of business Dividends paid Issue of ordinary shares Share based payment release Total contribu(cid:415) ons by and distribu(cid:415) ons to owners of the Company - - - - - - - - - - 1 - 1 - - - - - - - - - - 1,399 - - - 422 (110) (1,873) - (1,561) (621) (865) - - - - - - - - (1) (1) - (11) - - - - - - - - - - - - - - (269) 1,399 (1,486) (11) (269) (12,048) (392) - - - - (12,440) - - - - - - - (12,048) 144 (11,904) (392) 422 (110) (1,873) (1) - - - - - (392) 422 (110) (1,873) (1) (14,002) 144 (13,858) - - - - - - 621 - (508) (1,384) - - - - 1,400 (269) - 1,808 (247) - - - 424 (247) 1,400 (269) 113 (253) 1,561 1,308 Balance at 31 August 2013 12 78,798 77 (10,641) 86 (59,752) 2,241 10,821 (80) 10,741 The notes on pages 22 to 64 are an integral part of these consolidated ﬁ nancial statements FINANCIAL REPORT 2014 PAGE 19 Consolidated and Company Statement of Financial Position As at 31 August 2014 NOTES GROUP 2014 COMPANY 2014 GROUP 2013 COMPANY 2013 US$’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 proﬁ t 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 Revalua(cid:415) on reserve Share based payment reserve Foreign exchange reserve Non distributable reserves Retained losses Equity a(cid:425) ributable to owners of company Non-controlling interests Total equity Liabili(cid:415) es Loans and borrowing Provisions Deferred tax liabili(cid:415) es Total non-current liabili(cid:415) es Bank overdra(cid:332) Current tax liabili(cid:415) es Loans and borrowings Trade and other payables Liabili(cid:415) es held for sale Total current liabili(cid:415) es Total liabili(cid:415) es Total equity and liabili(cid:415) es 13 15 16 17 19 20 21 22 5 23,24 23,24 23,24 23,24,25 23 23 26 27 28 22 30 29 30 5 2,705 - 717 14 - 3,436 1,385 66 1,408 405 6,469 9,733 13,169 18 82,487 438 86 (10,629) 2,241 (75,890) (1,249) 9 (1,240) 6,745 182 178 7,105 - 269 348 2,865 3,822 7,304 14,409 13,169 18 - - - - 18 - - 12,378 38 - 12,416 12,434 18 82,487 - 86 (13,186) - (65,055) 4,350 - 4,350 4,685 - - 4,685 - - 249 3,150 - 3,399 8,084 12,434 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 These ﬁ nancial statements were approved by the Board of Directors and authorised for issue on 4 September 2015. They were signed on their behalf by: MR SAMIR SHASHA EXECUTIVE DIRECTOR The notes on pages 22 to 64 are an integral part of these consolidated ﬁ nancial statements. FINANCIAL REPORT 2014 PAGE 20 Cash used in opera(cid:415) ons Taxa(cid:415) on paid Cash used in opera(cid:415) ng ac(cid:415) vi(cid:415) es Cash ﬂ ows from inves(cid:415) ng ac(cid:415) vi(cid:415) es Proceeds on disposal of property, plant and equipment Purchase of property, plant and equipment Other inves(cid:415) ng ac(cid:415) vi(cid:415) es Interest received Net cash generated by inves(cid:415) ng ac(cid:415) vi(cid:415) es Cash ﬂ ows from ﬁ nancing ac(cid:415) vi(cid:415) es Dividends paid to non-controlling interests Interest paid Proceeds from issue of share capital Proceeds from drawdown of loans (net of repayments) Net cash generated by ﬁ nancing ac(cid:415) vi(cid:415) es 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 overdra(cid:332) Net cash and cash equivalents at 31 August Consolidated Statement of Cash Flows For the year ended 31 August 2014 NOTES GROUP 2014 GROUP 2013 31 24 26 22 22 US$’000 (3,647) (287) (3,934) 673 (169) (349) 21 176 (204) (1,174) 3,694 343 2,659 (1,099) 1,738 639 639 - 639 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 The notes on pages 22 to 64 are an integral part of these consolidated ﬁ nancial statements. FINANCIAL REPORT 2014 PAGE 21 Notes to the Financial Statements For the year ended 31 August 2014 1. Reporting entity Cambria Africa Plc (the “Company”) is a public limited company listed in the Alterna(cid:415) ve Investment Market (AIM) and incorpo- rated in the Isle of Man under the Companies Act 2006. The consolidated ﬁ nancial statements of the Group for the year ended 31 August 2014 comprise the Company and its subsid- iaries (together referred to as the “Group” and individually as “Group en(cid:415) (cid:415) es”). The ﬁ nancial statements were authorised for issue by the Direc- tors on 4 September 2015. 2. Basis of preparation STATEMENT OF COMPLIANCE The consolidated ﬁ nancial statements have been prepared in accordance with Interna(cid:415) onal Financial Repor(cid:415) ng Standards (IFRSs) as adopted by the E.U. On publishing the Company statement of ﬁ nancial posi(cid:415) on here together with the Group ﬁ nancial 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 ﬁ nancial statements. NEW AND AMENDED STANDARDS ADOPTED IN THE CURRENT PERIOD The amendment to IAS19 ‘Employee Beneﬁ ts’ was adopted in the current period with no changes to accoun(cid:415) ng policies or restatements required. In addi(cid:415) on IFRS 13 ‘Fair Value Measure- ment’ was adopted which requires addi(cid:415) onal disclosures to be made in respect of fair values applied by the en(cid:415) ty. IAS27 IAS 28 IAS 32 IAS 36 IAS 39 IFRS 10 IFRS 10 IFRS 11 IFRS 12 IFRS 12 NEW AND AMENDED STANDARDS EFFECTIVE FOR FUTURE PERIODS At the date of authorisa(cid:415) on of these ﬁ nancial statements, the following standards and interpreta(cid:415) ons were in issue but not yet eﬀ ec(cid:415) ve and were not applied in these ﬁ nancial statements. STANDARD/INTERPRETATION EU EFFECTIVE DATE FOR ANNUAL PERIODS BEGIN(cid:883) NING ON OR AFTER Separate ﬁ nancial state- ments (amended 2011) Investments in associates and joint ventures Amendment -oﬀ se(cid:427) ng ﬁ nancial assets and ﬁ nancial liabili(cid:415) es Amendment - recover- able amount disclosures for non-ﬁ nancial assets Amendment - nova(cid:415) on of deriva(cid:415) ves Consolidated ﬁ nancial statements Amendment - investment en(cid:415) (cid:415) es 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2014 Joint arrangements 1 January 2014 Disclosure of interests in other en(cid:415) (cid:415) es Amendment - investment en(cid:415) (cid:415) es IFRS 10-11-12 Transi(cid:415) on guidance (amendments) IFRIC 21 Levies Diverse IFRS Annual improvements IFRSs 2011-2013 BASIS OF MEASUREMENT 1 January 2014 1 January 2014 1 January 2014 1 January 2014 1 January 2015 The consolidated ﬁ nancial 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. FINANCIAL REPORT 2014 PAGE 22 Notes to the Financial Statements For the year ended 31 August 2014 2. Basis of preparation (continued) GOING CONCERN FUNCTIONAL AND PRESENTATION CURRENCY The consolidated ﬁ nancial statements are presented in United States Dollars, which, with eﬀ ect from 1 September 2011, is the Company’s func(cid:415) onal currency. The change in presenta(cid:415) onal currency made at 1 September 2011 was to be(cid:425) er reﬂ ect the Group’s business ac(cid:415) vi(cid:415) es since cash ﬂ ows and economic returns are principally denominated in United States Dollars. USE OF ESTIMATES AND JUDGEMENTS The prepara(cid:415) on of ﬁ nancial statements in conformity with IFRSs requires management to make judgements, es(cid:415) mates and assump(cid:415) ons that aﬀ ect the applica(cid:415) on of policies and reported amounts of assets and liabili(cid:415) es, income and expenses. The es(cid:415) mates and associated assump(cid:415) ons are based on historical 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 liabili(cid:415) es that are not readily apparent from other sources. Actual results may diﬀ er from these es(cid:415) mates. The es(cid:415) mates and underlying assump(cid:415) ons are reviewed on an ongoing basis. Revisions to accoun(cid:415) ng es(cid:415) mates are recognised in the period in which the es(cid:415) mate is revised if the revision aﬀ ects only that period, or in the period of the revision and future periods if the revision aﬀ ects both current and future periods. Informa(cid:415) on about cri(cid:415) cal judgements in applying accoun(cid:415) ng policies and assump(cid:415) ons and es(cid:415) ma(cid:415) on uncertain(cid:415) es that have the most signiﬁ cant eﬀ ect on the amounts recognised in the consolidated ﬁ nancial 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 es(cid:415) mates and assump(cid:415) ons are subject to an inherent measurement of uncertainty and the eﬀ ect on the Group’s ﬁ nancial statements of changes in es(cid:415) mates in future periods could be signiﬁ cant. The Group’s business ac(cid:415) vi(cid:415) es and ﬁ nancial performance are set out in the Chief Execu(cid:415) ve’s Review on pages 3 to 7. In ad- di(cid:415) on, note 32 to the ﬁ nancial statements includes the Group’s objec(cid:415) ves, policies and processes for managing its capital; its ﬁ nancial risk management objec(cid:415) ves; details of its ﬁ nancial in- struments and its exposure to credit and liquidity risk. The Board has considered the cash ﬂ ow forecasts for the en- suing 12 months including the maturity proﬁ le of its contrac- tual debt obliga(cid:415) ons. The Lonrho se(cid:425) lement has improved the Group’s cash posi(cid:415) on and the Board is conﬁ dent that it will have access to suﬃ cient ﬁ nancial resources for its immediate needs and will be able to reﬁ nance its contractual debt obliga(cid:415) ons. Further relevant informa(cid:415) on is available in notes 26, 32 and 40. A(cid:332) er making enquiries, the Directors have a reasonable ex- pecta(cid:415) on that the Company and the Group have adequate re- sources to con(cid:415) nue in opera(cid:415) onal existence for the foreseeable future. Accordingly, they con(cid:415) nue to adopt the going concern basis in preparing the annual report and ﬁ nancial statements. 3. Signi(cid:976)icant accounting policies The following accoun(cid:415) ng policies have been applied consistent- ly by the Group. (cid:525)A(cid:526) BASIS OF CONSOLIDATION The consolidated ﬁ nancial statements incorporate the ﬁ nancial statements of the Company and Group en(cid:415) (cid:415) es controlled by the Company (its subsidiaries). Control is achieved where the Company has both power and variable returns to govern the ﬁ nancial and opera(cid:415) ng policies of an investee en(cid:415) ty so as to obtain beneﬁ ts from its ac(cid:415) vi(cid:415) es. The ﬁ nancial statements of subsidiaries are included in the consolidated ﬁ nancial state- ments from the date that control commenced un(cid:415) l the date that control ceases. The interest of non-controlling shareholders is stated at the their propor(cid:415) on of the fair values of the assets and liabili(cid:415) es 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 deﬁ cit balance. FINANCIAL REPORT 2014 PAGE 23 Notes to the Financial Statements For the year ended 31 August 2014 3. Signi(cid:976)icant accounting policies (con- tinued) (cid:525)B(cid:526) INTANGIBLE ASSETS GOODWILL (cid:525)A(cid:526) BASIS OF CONSOLIDATION (cid:525)CONTINUED(cid:526) The results of en(cid:415) (cid:415) es acquired or disposed of during the year are included in the consolidated income statement from the ef- fec(cid:415) ve date of acquisi(cid:415) on or up to the eﬀ ec(cid:415) ve date of dispos- al as appropriate. Where necessary, the ﬁ nancial statements of the subsidiaries are adjusted to conform to the Group’s ac- coun(cid:415) ng policies. All intra-group transac(cid:415) ons, balances, income and expenses are eliminated on consolida(cid:415) on. BUSINESS COMBINATIONS The acquisi(cid:415) on of subsidiaries is accounted for using the acqui- si(cid:415) on method. The cost of the acquisi(cid:415) on is measured at the aggregate of the fair values at the date of exchange of assets given, liabili(cid:415) es incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisi(cid:415) on related costs are expensed as incurred unless they relate to the cost of issuing debt or equity securi(cid:415) es. The ac- quiree’s iden(cid:415) ﬁ able assets, liabili(cid:415) es and con(cid:415) ngent liabili(cid:415) es that meet the condi(cid:415) ons for recogni(cid:415) on under IFRS 3 are rec- ognised at their fair values at the acquisi(cid:415) on date, except for non-current assets that are classiﬁ ed as held for sale in accor- dance with IFRS 5, which are recognised and measured at fair value less costs to sell. Goodwill arising on consolida(cid:415) on is recognised as an asset. Following ini(cid:415) al recogni(cid:415) on, goodwill is subject to impairment reviews, at least annually, and measured at cost less accumulat- ed impairment losses. The recoverable amount is es(cid:415) mated at each repor(cid:415) ng 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 genera(cid:415) ng units are allocated ﬁ rst to reduce the carrying amount of any goodwill allocated to cash-genera(cid:415) ng 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 a(cid:425) ributable amount of goodwill is included in the determina(cid:415) on of the gain or loss on disposal. OTHER INTANGIBLE ASSETS Other intangible assets are measured ini(cid:415) ally at cost and are amor(cid:415) sed on a straight-line basis over their es(cid:415) mated useful lives. The carrying amount is reduced by any provision for im- pairment where necessary. Goodwill arising on acquisi(cid:415) on is recognised as an asset at the date that control is assumed (the acquisi(cid:415) on date) and ini(cid:415) al- ly measured at cost, being the excess of the cost of the busi- ness combina(cid:415) on over the Group’s interest in the fair value of the iden(cid:415) ﬁ able assets, liabili(cid:415) es and con(cid:415) ngent liabili(cid:415) es rec- ognised. On a business combina(cid:415) on, as well as recording separable in- tangible assets already recognised in the statement of ﬁ nancial posi(cid:415) on of the acquired en(cid:415) ty at their fair value, iden(cid:415) ﬁ able intangible assets that are separable or arise from contractual or other legal rights are also included in the acquisi(cid:415) on statement of ﬁ nancial posi(cid:415) on at fair value. If, a(cid:332) er reassessment, the Group’s interest in the net fair value of the acquiree’s iden(cid:415) ﬁ able assets, liabili(cid:415) es and con(cid:415) ngent liabili(cid:415) es exceeds the cost of the business combina(cid:415) on, the ex- cess is recognised immediately in the income statement. The interest of non-controlling shareholders in the acquiree is ini(cid:415) ally measured at the non-controlling interests’ propor(cid:415) on of the net fair value of the assets, liabili(cid:415) es and con(cid:415) ngent lia- bili(cid:415) es recognised. Amor(cid:415) sa(cid:415) on of intangible assets is charged over their useful economic life, as follows:- Licences Brand name 5-6 years 7 years (cid:525)C(cid:526) FOREIGN CURRENCIES The individual ﬁ nancial statements of each Group en(cid:415) ty are presented in the currency of the primary economic environ- ment in which it operates (its func(cid:415) onal currency). FINANCIAL REPORT 2014 PAGE 24 Notes to the Financial Statements For the year ended 31 August 2014 3. Signi(cid:976)icant accounting policies (con- tinued) comprehensive income and are transferred to the Group’s for- eign currency transla(cid:415) on reserve within equity. (cid:525)C(cid:526) FOREIGN CURRENCIES (cid:525)CONTINUED(cid:526) (cid:525)D(cid:526) TAXATION For the purpose of the consolidated ﬁ nancial statements, the results and ﬁ nancial posi(cid:415) on of each of the Group en(cid:415) (cid:415) es are expressed in United States Dollars, which is the func(cid:415) onal cur- rency of the Company, and the presenta(cid:415) onal currency for the consolidated ﬁ nancial statements. In preparing the ﬁ nancial statements of the individual Group en(cid:415) (cid:415) es, transac(cid:415) ons denominated in foreign currencies are translated into the respec(cid:415) ve func(cid:415) onal currency of the Group en(cid:415) (cid:415) es using the exchange rates prevailing at the dates of transac(cid:415) ons. Non-monetary assets and liabili(cid:415) es are translated at the histor- ic rate. Monetary assets and liabili(cid:415) es denominated in foreign currencies are translated into the func(cid:415) onal currency at the rates of exchange ruling at the repor(cid:415) ng date. Non-monetary assets and liabili(cid:415) es denominated in foreign currencies that are measured at fair value are retranslated to the func(cid:415) onal cur- rency at the exchange rate at the date that the fair value was determined. Exchange diﬀ erences arising on the se(cid:425) lement of monetary items, and on the retransla(cid:415) on of monetary items, are included in the income statement for the year, as either ﬁ nance income or ﬁ nance costs depending on whether foreign currency move- ments are in a net gain or net loss posi(cid:415) on. Exchange diﬀ erences arising on the retransla(cid:415) on of non-mone- tary items earned at fair value are included within the income statement for the period except for diﬀ erences arising on the retransla(cid:415) on 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 presen(cid:415) ng consolidated ﬁ nancial state- ments, the assets and liabili(cid:415) es of the Group’s foreign opera- (cid:415) ons 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 ﬂ uctuate so as to have a material impact on the ﬁ nancial statements during that period, in which case the exchange rates at the date of transac(cid:415) ons are used. Exchange diﬀ erences arising, if any, are recognised in other The tax expense represents the sum of current and deferred tax. CURRENT TAXATION Current tax is based on taxable proﬁ t for the period for the Group. Taxable proﬁ t diﬀ ers from net proﬁ t in the income state- ment because it excludes items of income or expense that are taxable or deduc(cid:415) ble in other years and it further excludes items that are never taxable or deduc(cid:415) ble. The Group’s liability for current tax is calculated using tax rates that have been en- acted or substan(cid:415) vely enacted by the repor(cid:415) ng date. DEFERRED TAXATION Deferred tax is the tax expected to be payable or recoverable on diﬀ erences between the carrying amounts of assets and liabili- (cid:415) es in the ﬁ nancial statements and the corresponding tax bases used in the computa(cid:415) on of taxable proﬁ t, and is accounted for using the balance sheet liability method. Deferred tax liabili(cid:415) es are generally recognised for all taxable temporary diﬀ erences and deferred tax assets are recognised to the extent that it is probable that taxable proﬁ ts will be available against which deduc(cid:415) ble temporary diﬀ erences can be u(cid:415) lised. Such assets and liabili(cid:415) es are not recognised if the temporary diﬀ erence arises from goodwill or from the ini(cid:415) al recogni(cid:415) on (other than in a business combina(cid:415) on) of other assets and liabili(cid:415) es in a transac(cid:415) on that aﬀ ects neither the tax proﬁ t nor the accoun(cid:415) ng proﬁ t. Deferred tax liabili(cid:415) es are recognised for taxable tempo- rary diﬀ erences arising on the investments in subsidiaries and associates, except where the Group is able to control the re- versal of the temporary diﬀ erence and it is probable that the temporary diﬀ erence will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each repor(cid:415) ng date and reduced to the extent that it is no longer probable that suﬃ cient taxable proﬁ ts 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 se(cid:425) led 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. FINANCIAL REPORT 2014 PAGE 25 Notes to the Financial Statements For the year ended 31 August 2014 3. Signi(cid:976)icant accounting policies (con- tinued) (cid:525)D(cid:526) TAXATION (cid:525)CONTINUED(cid:526) Deferred tax assets and liabili(cid:415) es are oﬀ set when there is a legally enforceable right to set oﬀ current tax assets against current tax liabili(cid:415) es, when they relate to income taxes levied by the same taxa(cid:415) on authority and the Group intends to se(cid:425) le its current tax assets and liabili(cid:415) es on a net basis. (cid:525)E(cid:526) OTHER INVESTMENTS Other asset investments are stated at fair value, adjusted for impairment losses. (cid:525)F(cid:526) PROPERTY, PLANT AND EQUIPMENT Long leasehold land and buildings, plant and machinery, mo- tor vehicles and ﬁ xtures and ﬁ (cid:427) ngs are stated at their revalued amounts, being the fair value at the date of revalua(cid:415) on, less any subsequent accumulated deprecia(cid:415) on and subsequent ac- cumulated impairment losses. Revalua(cid:415) ons are performed with suﬃ cient regularity such that the carrying amount does not dif- fer materially from that which would be determined using fair values at the repor(cid:415) ng date. Any revalua(cid:415) on increase arising on the revalua(cid:415) on of such as- sets is credited to the revalua(cid:415) on reserve, except to the extent that it reverses a revalua(cid:415) on 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 revalua(cid:415) on of such asset is charged as an expense to the extent that it exceeds the balance, if any, held in the revalua(cid:415) on reserve rela(cid:415) ng to a previous revalua(cid:415) on of that asset. Depre- cia(cid:415) on on revalued assets is charged to the income statement. On subsequent sale or re(cid:415) rement of a revalued asset, the at- tributable revalua(cid:415) on surplus remaining is transferred directly to retained earnings. Deprecia(cid:415) on is charged straight line so as to write oﬀ the cost or valua(cid:415) on of assets, other than land, over their es(cid:415) mated useful lives. The annual rates used for this purpose are: Freehold buildings Plant and machinery Motor vehicles 2% 10% 15%-25% Fixtures and ﬁ (cid:427) ngs 15%-25% The gain or loss arising on the disposal of an asset is determined as the diﬀ erence between the sales proceeds and the carrying amount of the asset and is recognised in the income statement for the year. Assets held under ﬁ nance 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 deprecia(cid:415) on is provid- ed on freehold land. Property, plant and equipment iden(cid:415) ﬁ ed for disposal are re- classiﬁ ed as assets held for resale. (cid:525)G(cid:526) BIOLOGICAL ASSETS Biological assets which consist of living animals (game) are mea- sured on ini(cid:415) al recogni(cid:415) on and at subsequent repor(cid:415) ng dates at fair value less es(cid:415) mated 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. (cid:525)H(cid:526) IMPAIRMENT OF ASSETS EXCLUDING GOODWILL At each repor(cid:415) ng date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indica(cid:415) on that those assets have suﬀ ered an impairment loss. If any such indica(cid:415) on exists, the recoverable amount of the asset is es(cid:415) mated in order to determine the extent of any impairment loss. Where the asset does not generate cash ﬂ ows that are independent from other assets, the Group es(cid:415) mates the recoverable amount of the cash-genera(cid:415) ng 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 es(cid:415) mated future cash ﬂ ows are discounted to their present value using a pre-tax discount rate that reﬂ ects current market assessments of the (cid:415) me value and the risks speciﬁ c to the as- set for which the es(cid:415) mates of future cash ﬂ ows have not been adjusted. If the recoverable amount of an asset (or cash-genera(cid:415) ng unit) is es(cid:415) mated to be less than its carrying amount, the carrying amount of the asset (or cash-genera(cid:415) ng 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 revalua(cid:415) on decrease. FINANCIAL REPORT 2014 PAGE 26 3. Signi(cid:976)icant accounting policies (con- tinued) (cid:525)H(cid:526) IMPAIRMENT OF ASSETS EXCLUDING GOODWILL (cid:525)CONTINUED(cid:526) Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-genera(cid:415) ng unit) is increased to the revised es(cid:415) mate 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-genera(cid:415) ng 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 revalua(cid:415) on increase. (cid:525)I(cid:526) FINANCIAL INSTRUMENTS Non-deriva(cid:415) ve ﬁ nancial instruments comprise investments in equity, trade and other receivables, cash and cash equivalents, loans and borrowings and trade and other payables. Financial assets and ﬁ nancial liabili(cid:415) es are recognised in the Group’s statement of ﬁ nancial posi(cid:415) on when the Group becomes a par- ty to the contractual provisions of the instrument. Notes to the Financial Statements For the year ended 31 August 2014 FINANCIAL LIABILITIES Financial liabili(cid:415) es are classiﬁ ed according to the substance of the contractual arrangements entered into. CAPITAL MANAGEMENT The new Board’s objec(cid:415) ve, following the poor results of the last few years, is to restore and rebuild the group’s capital base to maintain investor, creditor and market conﬁ dence and to sus- tain future development of the business. BANK BORROWINGS Interest bearing bank loans and overdra(cid:332) s are recorded at the proceeds received, net of direct issue costs. Finance charges, in- cluding premiums payable on se(cid:425) lement or redemp(cid:415) on and di- rect issue costs, are accounted for on an amor(cid:415) sed cost basis to the income statement using the eﬀ ec(cid:415) ve interest method and are added to the carrying amount of the instrument to the ex- tent that they are not se(cid:425) led 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. CASH AND CASH EQUIVALENTS (cid:525)J(cid:526) INVENTORIES Cash and cash equivalents comprise cash in hand and demand deposits and other short term highly liquid investments that are readily conver(cid:415) ble to a known amount of cash and are sub- ject to an insigniﬁ cant risk of changes in value. Bank overdra(cid:332) s 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 ﬂ ows. Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable di- rect expenditure and a(cid:425) ributable overheads that have been in- curred in bringing the inventories to their present loca(cid:415) on and condi(cid:415) on. Net realisable value represents the es(cid:415) mated selling price less all es(cid:415) mated costs of comple(cid:415) on and costs to be in- curred in marke(cid:415) ng, selling and distribu(cid:415) on. TRADE RECEIVABLES Trade receivables are ini(cid:415) ally measured at fair value and are subsequently measured at amor(cid:415) sed cost using the eﬀ ec(cid:415) ve interest rate method. Appropriate allowances for es(cid:415) mated re- coverable amounts are recognised in proﬁ t or loss when there is objec(cid:415) ve evidence the asset is impaired. TRADE PAYABLES Trade payables are ini(cid:415) ally measured at fair value and are sub- sequently measured at amor(cid:415) sed cost using the eﬀ ec(cid:415) ve inter- est rate method. (cid:525)K(cid:526) SHARE BASED PAYMENTS The Group provides beneﬁ ts to certain employees (including senior execu(cid:415) ves) of the Group in the form of share based payments, whereby employees render services in exchange for shares or rights over shares (equity-se(cid:425) led transac(cid:415) ons). The cost of these equity-se(cid:425) led transac(cid:415) ons 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 dilu(cid:415) ve eﬀ ect, if any, of outstanding op(cid:415) ons is reﬂ ected as addi(cid:415) onal share di- lu(cid:415) on in the computa(cid:415) on of earnings per share. FINANCIAL REPORT 2014 PAGE 27 Notes to the Financial Statements For the year ended 31 August 2014 3. Signi(cid:976)icant accounting policies (con- tinued) er and the goods have been delivered to a contractually agreed loca(cid:415) on. A sale of services is recognised when the service has been rendered. (cid:525)K(cid:526) SHARE BASED PAYMENTS (cid:525)CONTINUED(cid:526) (cid:525)P(cid:526) LEASES The grant date fair value of op(cid:415) ons granted to employees is rec- ognised as an employee expense with a corresponding increase in equity over the period the employees become uncondi(cid:415) on- ally en(cid:415) tled to the op(cid:415) ons. Leases are classiﬁ ed according to the substance of the transac- (cid:415) on. A lease that transfers substan(cid:415) ally all the risks and rewards of ownership to the lessee is classiﬁ ed as a ﬁ nance lease. All other leases are classiﬁ ed as opera(cid:415) ng leases. (cid:525)L(cid:526) INTEREST(cid:487)BEARING BORROWINGS FINANCE LEASES Interest-bearing borrowings are recognised ini(cid:415) ally at fair value less a(cid:425) ributable transac(cid:415) on costs. Subsequent to ini(cid:415) al recog- ni(cid:415) on, interest-bearing borrowings are stated at amor(cid:415) sed cost with any diﬀ erence between cost and redemp(cid:415) on value being recognised in the income statement over the period of the bor- rowings on an eﬀ ec(cid:415) ve interest basis. (cid:525)M(cid:526) 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. (cid:525)N(cid:526) PROVISIONS A provision is recognised in the statement of ﬁ nancial posi(cid:415) on when the Group has a present legal or construc(cid:415) ve obliga(cid:415) on as a result of a past event and it is probable that an ou(cid:414) low of economic beneﬁ ts will be required to se(cid:425) le the obliga(cid:415) on. If the eﬀ ect is material, provisions are determined by discoun(cid:415) ng the expected future cash ﬂ ows at a pre-tax rate that reﬂ ects current market assessments of the (cid:415) me value of money and, where appropriate, the risks speciﬁ c to the liability. (cid:525)O(cid:526) REVENUE RECOGNITION Revenue is derived from the sale of goods and services and is measured at the fair value of considera(cid:415) on received or receiv- able a(cid:332) er deduc(cid:415) ng discounts, volume rebates, value-added tax and other sales taxes. A sale of goods and services is rec- ognised when recovery of the considera(cid:415) on is probable, there is no con(cid:415) nuing management involvement with the goods and services and the amount of revenue can be measured reliably. A sale of goods is recognised when the signiﬁ cant risks and re- wards of ownership have passed to the buyer, the associated costs and possible return of goods can be es(cid:415) mated reliably. This is when (cid:415) tle and insurance risk have passed to the custom- 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 incep(cid:415) on of the lease. The corresponding liabili- ty is shown as a ﬁ nance lease obliga(cid:415) on to the lessor. Leasing repayments comprise both a capital and ﬁ nance element. The ﬁ nance element is wri(cid:425) en oﬀ to the income statement so as to produce an approximately constant periodic rate of charge on the outstanding obliga(cid:415) ons. Such assets are depreciated over the shorter of their es(cid:415) mated useful lives and the period of the lease. OPERATING LEASES Opera(cid:415) ng lease rentals are charged to the income statement on a straight line basis over the period of the lease. (cid:525)Q(cid:526) BORROWING COST Borrowing costs directly a(cid:425) ributable to the acquisi(cid:415) on, con- struc(cid:415) on or produc(cid:415) on of a qualifying asset, which are assets that necessarily take a substan(cid:415) al period of (cid:415) me to get ready for their intended use or sale, are added to the cost of those assets, un(cid:415) l such (cid:415) me as the assets are substan(cid:415) ally ready for their intended use or sale. Investment income earned on the temporary investment of speciﬁ c borrowings pending their ex- penditure on qualifying assets is deducted from the borrowing costs eligible for capitalisa(cid:415) on. All other borrowing costs are recognised in the income statement in the period in which they are incurred. (cid:525)R(cid:526) 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 dilu(cid:415) ve eﬀ ect of poten(cid:415) al ordinary shares. The only poten(cid:415) al ordinary shares in issue are employee share op(cid:415) ons. FINANCIAL REPORT 2014 PAGE 28 3. Signi(cid:976)icant accounting policies (con- tinued) (cid:525)S(cid:526) SEGMENT REPORTING A segment is a dis(cid:415) nguishable component of the Group that is engaged either in providing products or services (business seg- ment), or in providing products or services within a par(cid:415) cular economic environment (geographical segment), which is sub- ject to risks and rewards that are diﬀ erent from those of other segments. (cid:525)T(cid:526) ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS ASSETS HELD FOR SALE Notes to the Financial Statements For the year ended 31 August 2014 DISCONTINUED OPERATIONS A discon(cid:415) nued opera(cid:415) on is a component of the Group’s busi- ness, the opera(cid:415) ons and cash ﬂ ows of which can be clearly dis- (cid:415) nguished from the rest of the Group and which: • • • represents a separate major line of business or geo- graphical area of opera(cid:415) ons; is part of a single co-ordinated plan to dispose of a sep- arate major line of business or geographical area of op- era(cid:415) ons; or is a subsidiary acquired exclusively with a view to re- sale. Classiﬁ ca(cid:415) on as a discon(cid:415) nued opera(cid:415) on occurs on disposal or when the opera(cid:415) on meets the criteria to be classiﬁ ed as held- for-sale, if earlier. Non-current assets, or disposal groups comprising assets and liabili(cid:415) es, are classiﬁ ed as held-for-sale or held-for-distribu- (cid:415) on if it is highly probable that they will be recovered primarily through sale or distribu(cid:415) on rather than through con(cid:415) nuing use. When an opera(cid:415) on is classiﬁ ed as a discon(cid:415) nued opera(cid:415) on, the compara(cid:415) ve statement of comprehensive income is re-present- ed as if the opera(cid:415) on had been discon(cid:415) nued from the start of the compara(cid:415) ve year. Immediately before classiﬁ ca(cid:415) on as held-for-sale or held-for-dis- tribu(cid:415) on, the assets, or components of a disposal group, are remeasured in accordance with the Group’s other accoun(cid:415) ng policies. Therea(cid:332) er, 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 ﬁ rst to goodwill, and then to the remaining assets and liabili(cid:415) es on a pro rata basis, except that no loss is allocated to inventories, ﬁ nancial assets, deferred tax assets, employee beneﬁ t assets, investment property or biological assets, which con(cid:415) nue to be measured in accordance with the Group’s other accoun(cid:415) ng policies. Impairment losses on ini(cid:415) al classiﬁ ca(cid:415) on as held-for-sale or held-for-distribu(cid:415) on and subsequent gains and losses on remeasurement are recognised in proﬁ t or loss. Gains are not recognised in excess of any cumula(cid:415) ve impairment loss. Once classiﬁ ed as held-for-sale or held-for-distribu(cid:415) on, intan- gible assets and property, plant and equipment are no longer amor(cid:415) sed or depreciated, and any equity-accounted investee is no longer equity accounted. 4. Determination of fair values A number of the Group’s accoun(cid:415) ng policies and disclosures require the determina(cid:415) on of fair value, for both ﬁ nancial and non-ﬁ nancial assets and liabili(cid:415) es. Fair values have been deter- mined for measurement and/or disclosure purposes based on the following methods. Where applicable, further informa(cid:415) on about the assump(cid:415) ons made in determining fair values is dis- closed in the notes speciﬁ c to that asset or liability. INVENTORIES The fair value of inventories acquired in a business combina(cid:415) on is determined based on the es(cid:415) mated selling price in the ordi- nary course of business less the es(cid:415) mated costs of comple(cid:415) on and sale, and a reasonable proﬁ t margin based on the eﬀ ort required to complete and sell the inventories. EQUITY AND DEBT SECURITIES The fair values of investments for equity and debt securi(cid:415) es are determined with reference to their quoted closing bid price at the measurement date. Subsequent to ini(cid:415) al recogni(cid:415) on, the fair values of held-to-maturity investments are determined for disclosure purposes only. FINANCIAL REPORT 2014 PAGE 29 Notes to the Financial Statements For the year ended 31 August 2014 4. Determination of fair values (contin- ued) own knowledge of the proper(cid:415) es and in par(cid:415) cular where there has been interest from third par(cid:415) es in purchasing the proper- (cid:415) es, the Directors may refer to amounts oﬀ ered for purchase. TRADE AND OTHER RECEIVABLES 5. Segment reporting The fair values of trade and other receivables are es(cid:415) mated at the present value of future cash ﬂ ows, 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 eﬀ ect of discoun(cid:415) ng is immaterial. Fair value is determined at ini(cid:415) al recogni(cid:415) on and, for disclosure purposes, at each annual repor(cid:415) ng date. PROPERTY, PLANT AND EQUIPMENT The fair value of property, plant and equipment recognised as a result of a business combina(cid:415) on is the es(cid:415) mated amount for which property could be exchanged on the acquisi(cid:415) on date be- tween a willing buyer and a willing seller in an arm’s length trans- ac(cid:415) on a(cid:332) er proper marke(cid:415) ng wherein the par(cid:415) es had each act- ed knowledgeably. The fair value of items of plant, equipment, ﬁ xtures and ﬁ (cid:427) ngs 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 reﬂ ects adjustments for physical deteriora(cid:415) on as well as func(cid:415) onal and economic obsolescence. Segment informa(cid:415) on is presented in respect of the Group’s business segments based on the Group’s management and in- ternal repor(cid:415) ng 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 ﬁ nancial informa(cid:415) on 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 a(cid:425) ributable 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 rela(cid:415) ng to Company’s head oﬃ ce. 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 GEOGRAPHICAL SEGMENTS An external independent valua(cid:415) on company having appropriate recognised professional qualiﬁ ca(cid:415) ons and recent experience in the loca(cid:415) on and category of property being valued, values the Group’s property por(cid:414) olio. The fair values are based on market values, being the es(cid:415) mated amount for which a property could be exchanged on the date of the valua(cid:415) on between a willing buyer and a willing seller in an arm’s length transac(cid:415) on a(cid:332) er proper marke(cid:415) ng wherein the par(cid:415) es had each acted knowl- edgeably. Support services and industrial chemicals operate primarily in Zimbabwe, with industrial chemicals start up opera(cid:415) ons com- mencing in the period under review in bordering countries in Sub-Saharan Africa. Separate geographical analysis is therefore not presented. BUSINESS SEGMENTS For management purposes, con(cid:415) nuing opera(cid:415) ons are organ- ised into three main business segments. In the absence of current prices in an ac(cid:415) ve market, the valua- (cid:415) ons are prepared by considering the es(cid:415) mated rental value of the property. A market yield is applied to the es(cid:415) mated rent- al value to arrive at the gross property valua(cid:415) on. When actual rents diﬀ er materially from the es(cid:415) mated rental value, adjust- ments are made to reﬂ ect actual rents. • Outsource and IT services - includes payments and busi- ness process outsourcing and payroll services • Industrial chemicals - includes the manufacture and dis- tribu(cid:415) on of industrial solvents and mining chemicals • Head oﬃ ce Due to the unique nature of a number of proper(cid:415) es within the Group’s por(cid:414) olio, external valua(cid:415) ons are obtained, however the Directors also review the valua(cid:415) ons and may determine the need for impairment for the ﬁ nancial statements given their In addi(cid:415) on, the following segments are reported separately as discon(cid:415) nued opera(cid:415) ons: Hotels; Avia(cid:415) on; IT hardware and out- source service including pharmaceu(cid:415) cal outsourcing, and com- mercial prin(cid:415) ng. FINANCIAL REPORT 2014 PAGE 30 5. Segment reporting (continued) Notes to the Financial Statements For the year ended 31 August 2014 CONTINUING OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2014 Revenue Inter-segment revenue Revenue from external customers Cost of sales to external customers Gross proﬁ t Opera(cid:415) ng costs Other opera(cid:415) ng income Impairment of assets Deprecia(cid:415) on Amor(cid:415) sa(cid:415) on Opera(cid:415) ng loss for the year Finance income Finance expense Income tax expense Loss for the year EBITDA * CONTINUING OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2013 Revenue Inter-segment revenue Revenue from external customers Cost of sales to external customers Gross proﬁ t Opera(cid:415) ng costs Impairment of assets Deprecia(cid:415) on Amor(cid:415) sa(cid:415) on Opera(cid:415) ng loss for the year Finance income Finance expense Income tax expense Loss for the year EBITDA * TOTAL US$’000 9,420 (15) 9,405 (4,388) 5,017 (8,077) 16 (709) (297) (204) (4,254) 21 (1,127) (319) (5,679) (3,748) TOTAL US$’000 8,509 (22) 8,487 (3,906) 4,581 (7,817) (348) (249) (292) INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 US$’000 4,811 - 4,811 (3,990) 821 (1,786) 2 - (45) (1) (1,009) 9 (42) - (1,042) * (958) 4,609 (15) 4,594 (398) 4,196 - - - - - (3,176) (3,115) 14 (709) (175) (25) 125 13 (327) (317) (506) 325 - - (77) (178) (3,370) (1) (758) (2) (4,131) (3,115) INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 US$’000 4,323 - 4,323 (3,553) 770 (1,236) 392 (37) (1) (112) 2 (92) - (202) * (70) 4,186 (22) 4,164 (353) 3,811 - - - - - (3,369) (3,212) (740) (48) - - (164) (291) (13) 84 (120) (204) (253) 442 (4,000) (4,125) 196 (755) - (4,559) (3,952) 282 (967) (204) (5,014) (3,580) * Earnings Before Interest, Taxa(cid:415) on, Deprecia(cid:415) on and Amor(cid:415) sa(cid:415) on. Adjusted for deprecia(cid:415) on included in cost of sales FINANCIAL REPORT 2014 PAGE 31 Notes to the Financial Statements For the year ended 31 August 2014 5. Segment reporting (continued) DISCONTINUED OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2014 Revenue Inter segment revenue Revenue from external customers Cost of sales to external customers Gross proﬁ t Opera(cid:415) ng costs Other opera(cid:415) ng income (Impairment)/write-back of PPE and receivables Loss on disposal of property Deprecia(cid:415) on Amor(cid:415) sa(cid:415) on Opera(cid:415) ng (loss)/proﬁ t Finance income Finance expense Income tax credit/(expense) (Loss)/proﬁ t for the year EBITDA* DISCONTINUED OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2013 Revenue Inter segment revenue Revenue from external customers Cost of sales to external customers Gross proﬁ t Opera(cid:415) ng costs (Impairment)/write-back of PPE and receivables Impairment of intangibles Deprecia(cid:415) on Amor(cid:415) sa(cid:415) on Opera(cid:415) ng (loss)/proﬁ t Finance income Finance expense Income tax credit/(expense) (Loss)/proﬁ t for the year EBITDA* * Earnings Before Interest, Taxa(cid:415) on, Deprecia(cid:415) on and Amor(cid:415) sa(cid:415) on. AVIATION US$’000 PRINTING & PROPS OUTSOURCE AND IT SERVICES US$’000 US$’000 HOTELS US$’000 2,032 4 2,036 (488) 1,548 (1,983) 64 (8,818) - - - - - - - - (802) - - - - - 27 - 27 - 27 (14) 29 - (357) - - (9,189) (802) (315) - (46) 223 (9,012) (371) - - - (802) (802) - - (37) (352) (344) - - - - - - - - - - - - - - - - - HOTELS US$’000 AVIATION US$’000 PRINTING & PROPS OUTSOURCE AND IT SERVICES US$’000 US$’000 2,257 (4) 2,253 (505) 1,748 (2,317) (2,084) (825) (574) (347) (4,399) - (81) 212 (4,268) (3,487) - - - - - (205) - - - - 1,807 (51) 1,756 (1,115) 641 (5,241) 2,081 - (33) (2) (205) (2,554) - - - (205) (205) - (13) (34) (2,601) (2,519) 653 (2) 651 (531) 120 (281) 362 - (11) (5) 185 1 (2) - 184 201 TOTAL US$’000 2,059 4 2,063 (488) 1,575 (2,799) 93 (8,818) (357) - - (10,306) - (46) 186 (10,166) (1,488) TOTAL US$’000 4,717 (57) 4,660 (2,151) 2,509 (8,044) 359 (825) (618) (354) (6,973) 1 (96) 178 (6,890) (6,001) FINANCIAL REPORT 2014 PAGE 32 5. Segment reporting (continued) CONTINUING OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2014 Segment assets Segment liabili(cid:415) es Capital expenditure FOR THE YEAR ENDED 31 AUGUST 2013 Segment assets Segment liabili(cid:415) es Capital expenditure ASSETS AND LIABILITIES HELD FOR SALE FOR THE YEAR ENDED 31 AUGUST 2014 Property, plant and equipment Biological assets Inventories Trade and other receivables Cash and cash equivalents Total assets held for sale Trade and other payables and ST loan Provisions Deferred tax liabili(cid:415) es Total liabili(cid:415) es held for sale Net assets of disposal groups held for sale Notes to the Financial Statements For the year ended 31 August 2014 INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 US$’000 US$’000 2,528 1,037 99 930 2,916 40 3,242 6,635 9 INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 1,961 766 26 US$’000 US$’000 4,850 3,454 265 1,297 5,127 38 NOTE 14 HOTELS US$’000 5,973 69 125 65 55 6,287 582 127 3,078 3,787 2,500 PRINTING US$’000 - - - 3 179 182 35 - - 35 147 2,647 TOTAL US$’000 6,700 10,588 148 Restated TOTAL US$’000 8,108 9,347 329 TOTAL US$’000 5,973 69 125 68 234 6,469 617 127 3,078 3,822 At 31 August 2014, the Group considered its Hotel and the remaining assets of its prin(cid:415) ng and property division as being held for sale. They are therefore presented within discon(cid:415) nued opera(cid:415) ons. Income and expenses of discon(cid:415) nued opera(cid:415) ons are reported separately from those of con(cid:415) nuing opera(cid:415) ons in 2014 and 2013. Held for sale assets are stated at their expected proceeds less costs to sell; previously revalued land and building assets, and hotel intangible assets have been impaired to bring the held for sale disposal groups to their expected held for sale realisable value. The Group’s shares in Leopard Rock Hotel were disposed of subsequent to year end for $2.5 million. The value of the Group’s investment has been impaired to its realisible net asset value. FINANCIAL REPORT 2014 PAGE 33 Notes to the Financial Statements For the year ended 31 August 2014 5. Segment reporting (continued) ASSETS AND LIABILITIES HELD FOR SALE (cid:525)CONTINUED(cid:526) FOR THE YEAR ENDED 31 AUGUST 2013 Property, plant and equipment Biological assets Inventories Trade and other receivables and ST loan Cash and cash equivalents Total assets held for sale Trade and other payables Provisions Deferred tax liabili(cid:415) es Total liabili(cid:415) es held for sale NOTE 14 HOTELS US$’000 14,764 67 135 75 110 PRINTING US$’000 1,000 - - 13 - TOTAL US$’000 15,764 67 135 88 110 15,151 1,013 16,164 790 60 3,301 4,151 33 - - 33 823 60 3,301 4,184 Net assets of disposal groups held for sale 11,000 980 11,980 FINANCIAL REPORT 2014 PAGE 34 Notes to the Financial Statements For the year ended 31 August 2014 6. Acquisition and incorporation of subsidiaries MILLCHEM LILONGWE MALAWI LIMITED During the ﬁ nancial year (18 November 2013), the group incorporated a new en(cid:415) ty, Millchem Lilongwe Limited and subscribed for 100% of the issued shares and vo(cid:415) ng interests in the company for a total considera(cid:415) on of US$10 thousand. This investment facilitated the Group’s entry into the Malawi Chemicals distribu(cid:415) on market. Post-acquisi(cid:415) on and incorpora(cid:415) on to 31 August 2014, the new subsidiary, in total, contributed US$47.4 thousand to revenue and incurred a loss of US$14.7 thousand. 7. Group net operating costs Cost of sales Administra(cid:415) ve expenses Net opera(cid:415) ng costs Administra(cid:415) ve expenses include management related overheads for opera(cid:415) ons and head oﬃ ce. Opera(cid:415) ng costs include: Deprecia(cid:415) on of property, plant and equipment Deprecia(cid:415) on of property plant and equipment in cost of sales Amor(cid:415) sa(cid:415) on Opera(cid:415) ng lease rentals: Land and buildings Personnel expenses Gain/(loss) on investments Auditors remunera(cid:415) on Fees Payable to the Company Auditors for: Current year audit of the Group’s ﬁ nancial statements Prior year audit of the Group’s ﬁ nancial statements Current year audit of the Company’s subsidiaries pursuant to legisla(cid:415) on Prior year audit of the Company’s subsidiaries pursuant to legisla(cid:415) on Total audit fees 2014 US$’000 2013 US$’000 4,388 7,311 11,699 3,906 8,647 12,553 2014 US$’000 2013 US$’000 297 5 204 404 4,003 66 121 (36) - 31 116 249 4 291 253 3,718 4 113 115 65 31 324 FINANCIAL REPORT 2014 PAGE 35 Notes to the Financial Statements For the year ended 31 August 2014 8. Personnel expenses The aggregate remunera(cid:415) on comprised (including Execu(cid:415) ve Directors): Wages and salaries Compulsory social security contribu(cid:415) ons Total personnel expenses Of which: Remunera(cid:415) on of Group Execu(cid:415) ve Directors Directors’ emoluments (see note 39) The average number of employees (including Execu(cid:415) ve Directors) in con(cid:415) nuing opera(cid:415) ons was: Outsource and IT services Industrial chemicals Head Oﬃ ce Total 9. Net (cid:976)inance (costs)/income Recognised in income statement: Bank interest receivable Loan interest receivable Finance income Bank interest payable Loan interest payables Finance costs Net ﬁ nance costs 10. Taxation Income tax recognised in the income statement Current tax expense Current period Deferred tax credit Origina(cid:415) on and reversal of temporary diﬀ erences Total income tax charge in income statement 2014 US$’000 3,898 105 4,003 2013 US$’000 3,644 74 3,718 850 783 2014 Number 2013 Number 62 30 6 98 59 24 10 93 2014 US$’000 2013 US$’000 13 8 21 (43) (1,085) (1,128) (1,107) 9 273 282 (212) (755) (967) (685) 2014 US$’000 2013 US$’000 333 (14) 319 216 (12) 204 FINANCIAL REPORT 2014 PAGE 36 10. Taxation (continued) RECONCILIATION OF EFFECTIVE TAX RATE Loss before tax Income tax using the Zimbabwean corpora(cid:415) on tax rate 25.75% (2013: 25.75%) Net losses where no group relief is available Total income tax charge in income statement DEFERRED TAX Rela(cid:415) ng to losses in subsidiaries Notes to the Financial Statements For the year ended 31 August 2014 2014 US$000 2013 US$000 (5,360) (4,810) (1,380) 1,699 319 2014 US$’000 (14) (14) (1,239) 1,443 204 2013 US$’000 (12) (12) Corpora(cid:415) on tax is calculated as 25.75% (2013: 25.75%) of the es(cid:415) mated assessable loss for the year. Taxa(cid:415) on for other jurisdic(cid:415) ons is calculated at the rates prevailing in the respec(cid:415) ve jurisdic(cid:415) ons. Deferred tax assets are only recognised to the extent that there are available oﬀ se(cid:427) ng deferred tax liabili(cid:415) es, unless the en(cid:415) ty is reasonably assured of earning suﬃ cient future proﬁ ts to oﬀ set against any future tax liabili(cid:415) es. 11. Disposals and discontinued operations The following en(cid:415) (cid:415) es are classiﬁ ed as held for disposal: • Medalspot Enterprises (Private) Limited • • LonZim Hotels Limited and its subsidiaries Lonzim Air, to where the Group’s Lohnro li(cid:415) ga(cid:415) on expenditure is allocated The ﬁ nancial eﬀ ect of these discon(cid:415) nued opera(cid:415) ons on the proﬁ t or loss and ﬁ nancial posi(cid:415) on is shown in the opera(cid:415) ng segment disclosures in note 5. CASH FLOWS FROM (cid:525)USED IN(cid:526) DISCONTINUED OPERATIONS Net cash used in opera(cid:415) ng ac(cid:415) vi(cid:415) es Net cash (used in)/generated by inves(cid:415) ng ac(cid:415) vi(cid:415) es Net cash (used in)/generated by ﬁ nancing ac(cid:415) vi(cid:415) es Net cash ﬂ ows for the year Cash and cash equivalents held for sale 2014 US$’000 2013 US$’000 (386) 621 (111) 124 234 (6,894) (69) 5,521 (1,442) 110 FINANCIAL REPORT 2014 PAGE 37 Notes to the Financial Statements For the year ended 31 August 2014 12. Loss per share The calcula(cid:415) on of basic and diluted earnings per share at 31 August 2014 has been based on the loss a(cid:425) ributable to ordinary shareholders for con(cid:415) nuing and discon(cid:415) nued opera(cid:415) ons at a weighted average number of ordinary shares outstanding during the period as detailed in the table below: LOSS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS Loss for the purposes of basic loss and dilu(cid:415) ve per share being net loss a(cid:425) ributable to equity holders of the parent* Loss for the purposes of basic loss and dilu(cid:415) ve per share being net loss a(cid:425) ributable to equity holders of the parent 2014 EARNINGS PER SHARE US$’CENTS 2013 EARNINGS PER SHARE US$’CENTS 2014 US$’000 2013 US$’000 (19.5) (16,138) (18.4) (12,048) - con(cid:415) nuing opera(cid:415) ons - discon(cid:415) nued opera(cid:415) ons (7.2) (12.3) (5,972) (10,166) (7.6) (10.8) (5,158) (6,890) WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES Weighted average number of ordinary shares for the purposes of basic and dilu(cid:415) ve loss per share for all calcula(cid:415) ons* NOTE 2014 000’S 2013 000’S 82,707 65,419 Actual number of shares outstanding at the end of the period 24 99,155 66,749 *In the current and prior year the eﬀ ect of the share op(cid:415) ons (note 25) were an(cid:415) -dilu(cid:415) ve as the share op(cid:415) ons were, at all (cid:415) mes, priced above the trading value of the shares. FINANCIAL REPORT 2014 PAGE 38 13. Property, plant and equipment Notes to the Financial Statements For the year ended 31 August 2014 2014 GROUP Cost or valua(cid:415) on At 1 September 2013 Addi(cid:415) ons in year Disposals in year Revalua(cid:415) on Other Balance at 31 August 2014 Accumulated deprecia(cid:415) on At 1 September 2013 Addi(cid:415) ons in year Disposals in year Deprecia(cid:415) on charge for the year Revalua(cid:415) on Other Balance at 31 August 2014 Carrying amounts At 31 August 2014 At 31 August 2013 2013 GROUP Cost or valua(cid:415) on At 1 September 2012 Addi(cid:415) ons in year Disposals in year Sale of subsidiary Revalua(cid:415) on Transfer to intangible assets Transferred to held for sale Balance at 31 August 2013 Accumulated deprecia(cid:415) on At 1 September 2012 Disposals in year Sale of subsidiary Deprecia(cid:415) on wri(cid:425) en back on revalua(cid:415) on Deprecia(cid:415) on charge for the year Transfer to intangible assets Transferred to held for sale Balance at 31 August 2013 Carrying amounts At 31 August 2013 At 31 August 2012 FREEHOLD LAND & BUILDINGS US$’000 PLANT & MACHINERY US$’000 MOTOR VEHICLES US$’000 FURNITURE FIXTURES & FITTINGS US$’000 TOTAL US$’000 4,120 148 (100) (4) (7) 4,157 (1,239) (15) 89 (287) - - TOTAL US$’000 27,315 400 (186) (1,824) (838) (76) (20,671) 4,120 2,304 13 - - - 2,317 (3) - - (31) - - (34) 2,283 2,301 71 - - - - 71 (36) - - (5) - - 801 80 (88) (4) (7) 782 (449) (13) 80 (146) - - 944 55 (12) - - 987 (751) (2) 9 (105) - - (41) (528) (849) (1,452) 30 35 254 352 138 193 2,705 2,881 FREEHOLD LAND & BUILDINGS US$’000 PLANT & MACHINERY US$’000 MOTOR VEHICLES US$’000 FURNITURE FIXTURES & FITTINGS US$’000 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 (504) (1,175) (2,065) 45 51 - (188) - 147 (449) 352 414 12 129 - (310) 15 578 (751) 193 1,529 73 588 116 (1,018) 15 1,052 (1,239) 2,881 25,250 FINANCIAL REPORT 2014 PAGE 39 Notes to the Financial Statements For the year ended 31 August 2014 13. Property, plant and equipment (continued) Valuations LE HAR (cid:525)PRIVATE(cid:526) LIMITED VALUATION (cid:515) PROPERTY An external, professional and independent valuer with appropriate and recognised qualiﬁ ca(cid:415) ons, T.W.R.E Zimbabwe (Pvt) Limited, carried out a valua(cid:415) on of the freehold land and buildings as at 31 August 2013 with reference to observed market evidence. The directors considered this value to s(cid:415) ll be an accurate reﬂ ec(cid:415) on of the fair value at 31 August 2014 being US$2,300 thousand (2013: US$2, 300 thousand). The Directors consider the fair value at the repor(cid:415) ng date to not be materially diﬀ erent from the carrying value. Valuations within discontinued operations LEOPARD ROCK HOTEL COMPANY (cid:525)PRIVATE(cid:526) LIMITED AND EASTINTEG INVESTMENTS (cid:525)PRIVATE(cid:526) LIMITED IMPAIRMENT A(cid:332) er year end on 21 October 2014, the Group sold all its shares in Lonzim Hotels Ltd, which holds the en(cid:415) re issued share capital of Leopard Rock Hotel Company (Private) Limited and Eas(cid:415) nteg Investments (Private) Limited, for a total considera(cid:415) on of $2,500 thousand. The land and buildings held by the Leopard Rock Hotel Company (Private) Limited and by Eas(cid:415) nteg Investments (Private) Limited form part of the Hotel disposal group held for sale at the year end. This disposal group has been impaired to bring its carrying value down to its expected realisable value. 14. Biological assets Included in discon(cid:415) nued opera(cid:415) ons are biological assets as detailed below. Balance at 1 September Acquired during the year Increase/(decrease) due to births/(deaths) Loss on fair valua(cid:415) on during the year Total* *Included in Assets Held for Sale in the Statement of Financial Posi(cid:415) on. GROUP 2014 GROUP 2013 US$’000 US$’000 67 - 2 - 69 83 - 2 (18) 67 Biological assets which consist of 280 (2013: 276) living animals for game viewing at the Leopard Rock Hotel are valued with the assistance of African Wildlife Management and Conserva(cid:415) on and their values are deemed as acceptable. FINANCIAL REPORT 2014 PAGE 40 Notes to the Financial Statements For the year ended 31 August 2014 15. Goodwill As at 31 August 2014, the consolidated statement of ﬁ nancial posi(cid:415) on included goodwill of US$717 thousand (2013: US$717 thou- sand). Goodwill is allocated to the Group’s cash-genera(cid:415) ng units (“CGUs”), or groups of cash-genera(cid:415) ng units, that are expected to beneﬁ t from the synergies of the business combina(cid:415) on that gave rise to the goodwill as follows: CASH GENERATING UNIT (cid:904)CGU(cid:905) ORIGINAL COST COST AT 1 SEPTEMBER 2013 CARRYING VALUE AT 1 SEPTEMBER 2013 ACCELERATED WRITE(cid:883)OFF CARRYING VALUE AT 31 AUGUST 2014 Paynet Limited Total US$’000 US$’000 US$’000 US$’000 US$’000 717 717 717 717 717 717 - - 717 717 ESTIMATES AND JUDGEMENTS The following assump(cid:415) ons are held in the assessment on the impairment or otherwise of goodwill: • Growth rates are based on a range of growth rates that reﬂ ect 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 normalisa(cid:415) on of the Zimbabwean economy. • • • • • The key assump(cid:415) ons on which the cash ﬂ ow projec(cid:415) ons for the most recent forecast are based relate to discount rates, growth rates, expected changes in selling prices and direct costs. The cash ﬂ ow projec(cid:415) ons 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 calcula(cid:415) ons for goodwill allocated to each of the CGUs or groups of CGUs that is signiﬁ cant 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 expecta(cid:415) ons of future changes in the market. In respect of the value in use calcula(cid:415) ons, cash ﬂ ows have been considered for both the conserva(cid:415) ve and the full forecast poten(cid:415) al of future cash-ﬂ ows with no impact to the valua(cid:415) on of goodwill. IMPAIRMENT LOSS The Group tests goodwill annually for impairment, or more frequently if there are indica(cid:415) ons 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. FINANCIAL REPORT 2014 PAGE 41 Notes to the Financial Statements For the year ended 31 August 2014 16. Intangible assets NET BOOK VAL(cid:883) UE AT 1 SEPTEMBER 2013 US$’000 179 179 RECLASSIFIED FROM TANGIBLE ASSETS AMORTISATION US$’000 - - (165) (165) CLOSING BALANCE AT 31 AUGUST 2014 US$’000 14 14 ORIGINAL COST US$’000 1,425 1,425 Payserv so(cid:332) ware licences Total AMORTISATION The amor(cid:415) sa(cid:415) on charge is recognised within administra(cid:415) on expenses (note 7) in the income statement. The remaining amor(cid:415) - sa(cid:415) on period at 31 August 2014 was 6.5 months for other intangibles. The Group tests other intangible assets for impairment if there are indica(cid:415) ons that they might be impaired. The amor(cid:415) sa(cid:415) on periods for other intangible assets are: So(cid:332) ware licences 3-6 years 17. Long-term receivables Celpay Interna(cid:415) onal BV receivable Impairment of Celpay Interna(cid:415) onal BV receiv- able ForgetMe Not Africa (BVI) Limited sale proceeds Provision against sale proceeds Total Celpay Interna(cid:415) onal BV GROUP 2014 US$’000 COMPANY 2014 US$’000 GROUP 2013 US$’000 COMPANY 2013 US$’000 709 (709) 250 (250) - - - - - - 361 - 250 (250) 361 - - - - - On 29 April 2013, the Group entered into a memorandum of understanding with Celpay Interna(cid:415) onal 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 termina(cid:415) on of the contract or through a change in shareholding of Celpay. During the ﬁ nancial year a further $348 thousand was advanced to Celpay. The full amount was s impaired in the current ﬁ nancial year following a signiﬁ cant deteriora(cid:415) on in the ﬁ nancial aﬀ airs of Celpay leading to the withdrawal by the Company from the proposed acquisi(cid:415) on of Celpay. ForgetMeNot Africa (BVI) The proceeds on sale of shares of ForgetMeNot Africa (BVI) Limited on 14 February 2013, were receivable based on various de- ﬁ ned milestones but no later than the second anniversary of the agreement. Given that these milestones have not been achieved and the weak ﬁ nancial posi(cid:415) on of ForgetMeNot Africa (BVI) Limited, the Directors determined that it would be appropriate to provide fully against the receivable. FINANCIAL REPORT 2014 PAGE 42 Notes to the Financial Statements For the year ended 31 August 2014 18. Investments in subsidiaries and associates The Company has investments in the following subsidiaries which principally aﬀ ected the proﬁ ts or net assets of the Company. The direct investments in subsidiaries held by the Company are stated at cost. This is subject to impairment tes(cid:415) ng. CONTINUING OPERATIONS African Solu(cid:415) ons 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 MillChem (Lilongwe) Limited MSA Chemicals (Pty) Limited MSA Sourcing BV Para Meter Computers (Pvt) Limited Paynet Limited Paynet Zimbabwe (Pvt) Limited Payserv (Pvt) Limited Payserve Africa Limited (previously Paynet Limited) Payserv Zimbabwe (Pvt) Limited ** Payserv Zambia Limited Tradanet (Pvt) Limited Yellowwood Projects (Pvt) Limited + Held directly by Cambria Africa Plc. * Previously LonZim Proper(cid:415) es Limited ** Previously Lanuarna Enterprises (Private) Limited COUNTRY OF INCORPORATION OWNERSHIP INTEREST Mauri(cid:415) us Zimbabwe Zimbabwe Zimbabwe United Kingdom Isle of Man Isle of Man Isle of Man Zambia Malawi South Africa Netherlands Zimbabwe Mauri(cid:415) us Zimbabwe Zimbabwe Mauri(cid:415) us Zimbabwe Zambia Zimbabwe Zimbabwe 2014 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 100% 2013 100% 100% 100% 100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 100% FINANCIAL REPORT 2014 PAGE 43 Notes to the Financial Statements For the year ended 31 August 2014 18. Investments in subsidiaries and associates (continued) DISCONTINUED OPERATIONS COUNTRY OF INCORPORATION OWNERSHIP INTEREST Zimbabwe Zimbabwe Zimbabwe Zimbabwe Bri(cid:415) sh Virgin Islands Bri(cid:415) sh Virgin Islands Isle of Man Netherlands United Kingdom Zimbabwe Zimbabwe South Africa South Africa Zimbabwe Mauri(cid:415) us South Africa Chenyakwaremba Farm (Pvt) Limited ++ Eas(cid:415) nteg Investments (Pvt) Ltd ++ Leopard Rock Hotel Company (Pvt) Limited ++ Linus Business Op(cid:415) ons (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 Proper(cid:415) es Limited ++ Panafmed (Pty) Limited Quickvest525 (Pty) Limited Quintech Investments (Pvt) Limited Southern Africa Management Services Limited W S Foods (Pty) Limited ++ ++ Held for Sale 19. Inventory Raw materials and consumables Work in progress Goods in transit Finished goods Total 2014 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 100% 100% 100% 100% 2013 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 100% 100% 100% 100% GROUP 2014 GROUP 2013 US$’000 US$’000 213 - 453 719 1,385 361 - 25 539 925 FINANCIAL REPORT 2014 PAGE 44 Notes to the Financial Statements For the year ended 31 August 2014 20. Financial assets at fair value through pro(cid:976)it or loss CONTINUING OPERATIONS Quoted investments por(cid:414) olio Total QUOTED INVESTMENTS PORTFOLIO: Balance at 1 September Acquired during the year Disposed during the year Gain/(loss) on fair valua(cid:415) on during the year At end of the year GROUP 2014 GROUP 2013 US$’000 US$’000 66 66 58 58 GROUP 2014 GROUP 2013 US$’000 US$’000 58 - - 8 66 42 2 (5) 19 58 The por(cid:414) olio is managed by an asset management company who makes the decisions regarding the sale and purchase of shares. This investment is held at fair value. The por(cid:414) olio, which was purchased in “payment” of a trade vendor liability which could not be se(cid:425) led due to Zimbabwe foreign currency constraints at the (cid:415) me, is callable at the op(cid:415) on of the vendor. See note 26. 21. Trade and other receivables NOTE 17 17 GROUP 2014 US$’000 - 902 213 - - 293 1,408 COMPANY 2014 US$’000 12,181 - 110 - - 87 12,378 GROUP 2013 US$’000 - 619 80 - - 115 814 COMPANY 2013 US$’000 25,617 - - - - 31 25,648 Amounts owed by Group undertakings Trade receivables Other receivables ATDM sale proceeds – current por(cid:415) on ATDM shareholder loan account – current por(cid:415) on Prepayments and accrued income Total No interest is charged on receivables. The Directors consider the carrying amount of trade and other receivables approximates their fair value. In determining the re- coverability of the trade receivable, the Group considers any change in the credit quality of trade receivables from the date credit was ini(cid:415) ally granted up to the repor(cid:415) ng date. The concentra(cid:415) on of credit risk is limited due to the customer base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the allowance for doubt- ful debts. CREDIT RISK The Group’s credit risk is primarily a(cid:425) ributable to its trade receivables. The amounts presented in the statement of ﬁ nancial posi- (cid:415) on are net of allowances for doub(cid:414) ul receivables. An allowance for impairment is made where there is an iden(cid:415) ﬁ ed loss event which, based on previous experience, is evidence of a reduc(cid:415) on in the recoverability of the cashﬂ ows. FINANCIAL REPORT 2014 PAGE 45 Notes to the Financial Statements For the year ended 31 August 2014 22. Cash and cash equivalents Bank balances Bank overdra(cid:332) s Net cash and cash equivalents Net cash included in held for sale Total cash and cash equivalents in statement of ﬁ nancial posi(cid:415) on 23. Capital and reserves REVALUATION RESERVE GROUP 2014 US$’000 COMPANY 2014 US$’000 405 - 405 234 639 38 - 38 - 38 GROUP 2013 US$’000 2,136 (398) 1,738 110 1,838 COMPANY 2013 US$’000 1,210 - 1,210 - 1,210 The revalua(cid:415) on reserve relates to property, plant and equipment which has been revalued in the Zimbabwean subsidiary Payserv Zimbabwe (Private) Limited (“Payserv”) and Le Har (Private) Limited, which holds the property from which Payserv operates. FOREIGN EXCHANGE RESERVE This reserve arises on transla(cid:415) on of subsidiary en(cid:415) (cid:415) es where their func(cid:415) onal currency is not United States Dollars, the presen- ta(cid:415) onal currency of the Group. The Company foreign exchange currency reserve relates to the transla(cid:415) on of net assets due to a change in the func(cid:415) onal currency of the Company from Pounds Sterling to United States Dollars as at 1 September 2011. SHARE BASED PAYMENT RESERVE The share based payment reserve comprises of the charges arising from the calcula(cid:415) on of the share based payment posted to the income statement in 2008 and 2012, and par(cid:415) ally released on expira(cid:415) on of op(cid:415) ons never exercised, in 2013, restated to US$ at closing rates (see note 25). NON DISTRIBUTABLE RESERVE The non distributable reserve arises on the restatement of the assets and liabili(cid:415) es on dollarisa(cid:415) on in Zimbabwe. Amounts held within this reserve are ring fenced from retained earnings. Distribu(cid:415) ons 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 speciﬁ cally required to do so as part of any ﬁ nancing arrangements. FINANCIAL REPORT 2014 PAGE 46 24. Share capital & share premium Issued and fully paid At 1 September 2013 Issued in period At 31 August 2014 Notes to the Financial Statements For the year ended 31 August 2014 ORDINARY SHARES 2014 ORDINARY SHARES 2013 NUMBER US$’000 NUMBER US$’000 66,749,023 32,406,139 99,155,162 12 6 18 58,133,908 8,615,115 66,749,023 11 1 12 The Group has also issued share op(cid:415) ons (see note 25). At 31 August 2014, 1,000,000 shares were held in reserve to issue in the event that these op(cid:415) ons are exercised. At 10 December 2012, 500,000 u(cid:415) lised share op(cid:415) ons expired and were not renewed. No warrants were granted during the current ﬁ nancial year. The following warrants over the ordinary shares of the Company were granted in in the previous ﬁ nancial year ended 31 August 2013: 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 en(cid:415) tled to receive dividends as declared from (cid:415) me to (cid:415) me and are en(cid:415) tled to one vote per share at mee(cid:415) ngs of the Company. All shares rank equally with regard to the Company’s residual assets. The Directors are authorised in any period between consecu(cid:415) ve annual general mee(cid:415) ngs, to allot any number of ordinary shares on such terms as they shall, in their discre(cid:415) on, 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 allo(cid:425) ed on terms determined by the Directors but subject to the pre-emp(cid:415) on rights prescribed by Sec(cid:415) on 36 of the Isle of Man Companies Act 2006. FINANCIAL REPORT 2014 PAGE 47 Notes to the Financial Statements For the year ended 31 August 2014 24. Share capital & share premium (continued) SHARE PREMIUM The share premium represents the value of the premium arising on shares issued as follows: 6 March 2014 4,133,333 ordinary shares at a price of 7.5p per share (US$ 508 thousand). 4 March 2014 28,272,806 ordinary shares at a price of 7.5p per share (US$ 3,475 thousand). 1 Oct 2012 8,615,115 ordinary shares at a price of 10p per share (US$1,400 thousand). 16 Sep 2011 3,988,439 ordinary shares at a price of 23p per share (US$1,448 thousand). 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). FINANCIAL REPORT 2014 PAGE 48 Notes to the Financial Statements For the year ended 31 August 2014 25. Share options The following share op(cid:415) ons over ordinary shares have been granted over the last 5 years under an Unapproved Share Op(cid:415) on scheme: NAME Edzo Wisman Edzo Wisman Total DATE OF GRANT 10.03.2011 10.03.2011 OPTIONS EXPIRED IN THE PRIOR PERIOD NUMBER OF SHARE OPTIONS GRANTED 500,000 500,000 1,000,000 EXERCISE PRICE PERIOD DURING WHICH EXERCIS(cid:883) 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 se(cid:425) led share op(cid:415) ons granted have been measured (at the (cid:415) me of grant) 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 op(cid:415) ons granted has been es(cid:415) mated at the date of grant using the Black-Scholes op(cid:415) on pricing model. The es(cid:415) mated value of the op(cid:415) ons granted on 11 December 2007 was £165 thousand (US$270 thousand). The es(cid:415) mated value of the op(cid:415) ons granted on 10 March 2011 was £53 thousand (US$85 thousand). Op(cid:415) ons may be exercised in whole or in part un(cid:415) l the expiry of the exercise period. Holders of the op(cid:415) ons are en(cid:415) tled to receive no(cid:415) ce of certain proposed transac(cid:415) ons or events of the Company which may dilute or otherwise aﬀ ect their op(cid:415) ons, and may exercise or be deemed to have exercised their op(cid:415) ons prior to the occurrence thereof. The Company shall keep available suﬃ cient authorised but unissued share capital to sa(cid:415) sfy the exercise of the op(cid:415) ons. Ordinary Shares issued pursuant to an exercise of the op(cid:415) ons shall rank pari passu in all respects with the Company’s exis(cid:415) ng Ordinary Shares save as regards any rights a(cid:425) aching by reference to a record date prior to the receipt by the Company of the no(cid:415) ce of exercise of op(cid:415) ons. The Company shall apply to admit to trading on AIM the Ordinary Shares issued pursuant to the exercise of op(cid:415) ons. The following assump(cid:415) ons have been used at the date of grant: Number of shares Share price at ves(cid:415) ng date (Date of Grant) Exercise price Expected vola(cid:415) lity 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% Vola(cid:415) lity has been calculated by reference to industry indices at ves(cid:415) ng dates. All share op(cid:415) ons vested at date of grant and the basis of se(cid:425) lement is in shares of the company. Share op(cid:415) ons which expired on 10 December 2012, expired without being renewed. FINANCIAL REPORT 2014 PAGE 49 Notes to the Financial Statements For the year ended 31 August 2014 25. Share options (continued) The number and weighted average exercise price of share op(cid:415) ons are as follows: Outstanding and exercisable at 31 August 2013 Outstanding and exercisable at 31 August 2014 WEIGHTED AVERAGE EXERCISE PRICE PENCE 30 30 NUMBER OF OPTIONS 1,000,000 1,000,000 The Directors are authorised to grant op(cid:415) ons over the Ordinary Shares on such terms as they shall in their discre(cid:415) on 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 mee(cid:415) ng. 99,155,162 Ordinary Shares were in issue at the annual general mee(cid:415) ng of 23 April 2014. 26. Loans and borrowings - long term Consilium facility Nurture Paynet Other trade payables Total GROUP 2014 US$’000 4,685 2,000 60 6,745 COMPANY 2014 US$’000 4,685 - - 4,685 GROUP 2013 US$’000 4,500 2,000 53 6,553 COMPANY 2013 US$’000 4,500 - - 4,500 On 9 March 2012, the Company entered into a secured loan facility agreemen 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 respec(cid:415) vely (“Consilium”). Both these loans were secured by a ﬁ xed and ﬂ oa(cid:415) ng 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 li(cid:332) 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. 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% ﬁ rst anniversary fee and 2% repayment charge. It carried a 2% drawdown fee. On 1 May 2013, the Company and Consilium agreed to extend the maturity of the debt facility to 30 April 2016. The debt facility was further amended to allow, with eﬀ ect from 1 July 2014, for interest to be capi(cid:415) lized and, with eﬀ ect from 1 August 2014, for a reduc(cid:415) on in interest rate from 15% p.a to 8% p.a. In the event of default, Consilium shall have the op(cid:415) on to convert all, or any por(cid:415) on of the outstanding indebtedness at the (cid:415) me of default into shares in Cambria at a 15% discount to the share price at the date of the facility agreements. The op(cid:415) on price is 14.50p. 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 substan(cid:415) al shareholder of Cambria, and the transac(cid:415) ons are therefore deemed a related party transac(cid:415) on for the purpose of the AIM Rules for Companies. FINANCIAL REPORT 2014 PAGE 50 Notes to the Financial Statements For the year ended 31 August 2014 26. Loans and Borrowings - long term (continued) On 8 May 2013, the Company executed agreements with Cerulean (Mauri(cid:415) us) PCC, (“Nisela”) a special purpose vehicle created by a subsidiary of Nisela Capital rela(cid:415) ng to the placement of US$2,000 thousand secured, conver(cid:415) ble debt into Payserv Africa Limited (previously named Paynet Limited), its investee company. The conversion feature with the debt represents and embedded deriva(cid:415) ve for accoun(cid:415) ng purposes. Included within the loan balance above is an amount of $91 thousand represen(cid:415) ng the value of the conversion feature. The Nisela secured loan facility carries a 15% coupon, matures on 17 July 2016, and is conver(cid:415) ble into 21.3% of Payserv Africa Limited’s ordinary share capital at the op(cid:415) on of the lender at any (cid:415) me between 17 July 2014 and 12 July 2016. The loan facility is conver(cid:415) ble at the elec(cid:415) on of Nisela if there is a change in control in the shareholders or Board of Directors of the beneﬁ cial own- ers of Payserv Africa Limited or if there is an ini(cid:415) al public oﬀ ering of the ordinary shares in Payserv Africa Limited on a securi(cid:415) es exchange. The Nisela facility is secured over the shares in Le Har (Private) Ltd (which holds the property in Mount Pleasant, Harare) and by the cession of the en(cid:415) re por(cid:414) olio of Payserv Africa Limited’s trade debtors as existed at the date of the agreement and in the future. Other non-current trade payables are in respect of historic Paywell so(cid:332) ware licence fees with the Payserv Group, which could not be remi(cid:425) ed due to Zimbabwe foreign currency constraints at the (cid:415) me. The amounts due were invested in a listed por(cid:414) olio (see note 20). 27. Provisions Provisions Total GROUP 2014 US$’000 182 182 COMPANY 2014 US$’000 - - GROUP 2013 US$’000 203 203 COMPANY 2013 US$’000 29 29 Provisions at 31 August 2014, are in respect of the maximum Leave Pay and Re(cid:415) rement Gratuity, which may become payable by individual companies on termina(cid:415) on of employment. 28. Deferred tax liability RECOGNISED DEFERRED LIABILITY The following are the major deferred tax liabili(cid:415) es recognised by the Group and movements thereon during the current year. GROUP At 1 September Recognised directly in reserves Other movements Disposal of subsidiaries Transfer to held for sale disposal group At 31 August 2014 ACCELERATED TAX DEPRECIATION US$’000 2013 TOTAL US$’000 ACCELERATED TAX DEPRECIATION US$’000 553 (360) (15) - - 178 553 (360) (15) - - 178 4,108 (111) (12) (131) (3,301) 553 TOTAL US$’000 4,108 (111) (12) (131) (3,301) 553 Deferred tax assets oﬀ set against deferred tax liabili(cid:415) es in the period were US$ nil (2013:US$ nil). FINANCIAL REPORT 2014 PAGE 51 Notes to the Financial Statements For the year ended 31 August 2014 29. Loans and borrowings - short term ValueChem BV Loan from related par(cid:415) es: Edzo Wisman and Ian Perkins (directors) Finance Leases Total GROUP 2014 US$’000 COMPANY 2014 US$’000 GROUP 2013 US$’000 COMPANY 2013 US$’000 96 249 3 348 - 249 - 249 - - 94 94 - - - - On 27 May 2014, MillChem Holdings Limited entered into a Bridge Financing Agreement with ValuChem BV for a short term loan facility of up to $100 thousand. The balance at 31 August 2014 was $96 thousand, carries interest at 9% per annum and is repay- able within 180 days of drawdown. The ValueChem loan is unsecured. On 19 August 2014, Mr Ian Perkins and Mr Edzo Wisman advanced a US$ equivalent amount of US$ 249 thousand under a short term loan facility to the Company. The loan bears a ﬂ at cost of GBP of 1.3 thousand (US$ 2.2 thousand) and is repayable on 30 September 2014. Interest of 5% per month applies in the event of default. The loan is unsecured. 30. Trade and other payables Trade payables Non trade payables and accrued expenses Total Current tax liability Total GROUP 2014 US$’000 1,964 901 2,865 269 3,134 COMPANY 2014 US$’000 2,720 432 3,152 - 3,152 GROUP 2013 US$’000 861 461 1,322 187 1,509 COMPANY 2013 US$’000 - 2,205 2,205 - 2,205 Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going costs. The Directors consider that the carrying amount of trade payables approximates to their fair value. FINANCIAL REPORT 2014 PAGE 52 31. Notes to the statement of cash (cid:976)lows Loss for the year Amor(cid:415) sa(cid:415) on of intangible assets Impairment of goodwill Impairment of held for sale assets Deprecia(cid:415) on of property, plant and equipment Loss on sale of property, plant and equipment Impairment of long term receivables Impairment of current assets Valua(cid:415) on adjustments to inventories, receivables and other assets Loss on disposal of subsidiaries Finance income Finance costs Share based payment reserve Increase/(decrease) in provisions Income tax charge Foreign exchange Opera(cid:415) ng cash ﬂ ows 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 opera(cid:415) ons Notes to the Financial Statements For the year ended 31 August 2014 GROUP 2014 US$’000 (15,845) GROUP 2013 US$’000 (11,904) 204 - 8,818 302 339 709 - 84 - (21) 1,174 - 46 133 - (4,057) (450) (574) 1,434 - (3,647) 608 - 2,807 871 93 - 626 49 1,823 (283) 1,063 (269) 102 204 - (4,210) (329) 308 (850) 3,702 (1,379) * All amounts include both con(cid:415) nuing and discon(cid:415) nued. Cash ﬂ ows for discon(cid:415) nued opera(cid:415) ons are given in note 11. 32. Financial instruments The Group has exposure to the following risks from its use of ﬁ nancial instruments: • • credit risk liquidity risk • market risk (comprises: foreign currency risk and interest rate risk) This note presents informa(cid:415) on about the Group’s exposure to each of the above risks, the Group’s objec(cid:415) ves, policies and pro- cesses for measuring and managing risk, and the Group’s management of capital. Further quan(cid:415) ta(cid:415) ve disclosures are included throughout these consolidated ﬁ nancial 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 iden(cid:415) fy 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 iden(cid:415) fy and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. FINANCIAL REPORT 2014 PAGE 53 Notes to the Financial Statements For the year ended 31 August 2014 32. Financial instruments (continued) CREDIT RISK MANAGEMENT Credit risk refers to the risk that a counterparty will default on its contractual obliga(cid:415) ons resul(cid:415) ng in ﬁ nancial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterpar(cid:415) es and obtaining suﬃ cient collateral where appro- priate, as a means of mi(cid:415) ga(cid:415) ng the risk of ﬁ nancial loss from defaults. The Group’s exposure and the credit ra(cid:415) ngs of its counter- par(cid:415) es are regularly monitored and the aggregate value of transac(cid:415) ons concluded is spread amongst approved counterpar(cid:415) es. Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evalua(cid:415) on is performed on the ﬁ nancial condi(cid:415) on of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. The Group does not have any signiﬁ cant credit risk exposure to any single counterparty or any group of coun- terpar(cid:415) es having similar characteris(cid:415) cs. The credit risk on liquid funds and deriva(cid:415) ve ﬁ nancial instruments is limited because the counterpar(cid:415) es are banks with high credit- ra(cid:415) ngs assigned by interna(cid:415) onal credit ra(cid:415) ng agencies. The carrying amount of ﬁ nancial assets recorded in the ﬁ nancial 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 repor(cid:415) ng date, there were no signiﬁ cant credit risks. EXPOSURE TO CREDIT RISK The carrying amount of ﬁ nancial assets represents the maximum credit exposure. Therefore, the Group and Company’s maximum exposure to credit risk at the repor(cid:415) ng date, being the total of the carrying amount of ﬁ nancial 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 2014 US$’000 639 1,476 - 66 2,181 COMPANY 2014 US$’000 38 197 12,181 - 12,416 GROUP 2013 US$’000 1,838 1,263 - 58 3,159 The maximum exposure to credit risk for trade and other receivables at the repor(cid:415) ng date by geographic region was: United Kingdom Southern Africa Mauri(cid:415) us Europe Total GROUP 2014 US$’000 235 1,946 - - COMPANY 2014 US$’000 235 12,073 65 43 GROUP 2013 US$’000 31 1,229 - 3 2,181 12,416 1,263 25,648 COMPANY 2013 US$’000 1,210 31 25,617 - 26,858 COMPANY 2013 US$’000 24,760 818 67 3 FINANCIAL REPORT 2014 PAGE 54 Notes to the Financial Statements For the year ended 31 August 2014 32. Financial instruments (continued) The maximum exposure to credit risk for trade and other receivables (excluding trade creditors which are linked to listed invest- ments per contract with the supplier - see note 20 US$66 thousand (2013: US$58 thousand)) at the repor(cid:415) ng date by type of counterparty was: Trade customers and sundry receivables Sale of investment proceeds (note 17 and 21) Amounts owed by Group undertakings Total GROUP 2014 US$’000 1,408 - - 1,408 COMPANY 2014 US$’000 197 - 12,181 12,378 GROUP 2013 US$’000 902 361 - 1,263 COMPANY 2013 US$’000 31 - 25,617 25,648 The ageing of trade and other receivables at the repor(cid:415) ng date was: Neither past nor impaired Past due 1-30 days Past due 31-60 days Past due 61-90 days Past due 91-days + Total GROUP GROSS 2014 US$’000 IMPAIRMENT 2014 US$’000 1,096 274 43 30 33 1,476 - - (9) (26) (33) (68) TOTAL 2014 US$’000 1,096 274 34 4 - GROSS 2014 US$’000 12,378 - - - - 1,408 12,378 COMPANY IMPAIRMENT 2014 US$’000 - - - - - - TOTAL 2014 US$’000 12,378 - - - - 12,378 Based on the Group’s monitoring of customer credit risk, the Group believes that no further impairment allowance is necessary in respect of trade receivables not past due. LIQUIDITY RISK MANAGEMENT Liquidity risk is the risk that the Group will encounter diﬃ culty in mee(cid:415) ng the obliga(cid:415) ons associated with its ﬁ nancial liabili(cid:415) es that are se(cid:425) led by delivering cash and another ﬁ nancial asset. Ul(cid:415) mate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long term funding and liquidity management requirements. The new board plans to manage liquidity risk by raising adequate reserves, banking facili(cid:415) es and reserve borrowing facili(cid:415) es and by regularly monitoring forecast and actual cash ﬂ ows and matching the maturity proﬁ les of ﬁ nancial assets and liabili(cid:415) es. FINANCIAL REPORT 2014 PAGE 55 Notes to the Financial Statements For the year ended 31 August 2014 32. Financial instruments (continued) LIQUIDITY RISK MANAGEMENT (cid:525)CONTINUED(cid:526) The following are the contractual, undiscounted maturi(cid:415) es of ﬁ nancial liabili(cid:415) es, including es(cid:415) mated interest payments and ex- cluding the eﬀ ect of ne(cid:427) ng arrangements: GROUP CONTRACTUAL CASH FLOWS 2014 CONTRACTUAL CASH FLOWS 2013 Bank overdra(cid:332) s Trade and other payables Loans and borrowings Total CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 - 3,482 7,093 10,575 - 3,482 735 4,217 2 TO < 5 YEARS US$’000 - - 7,454 7,454 CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 1 TO < 5 YEARS US$’000 398 1,546 6,647 8,591 398 1,546 1,082 3,026 - - 5,565 5,565 COMPANY CONTRACTUAL CASH FLOWS 2014 CONTRACTUAL CASH FLOWS 2013 Trade and other payables Shareholder loan payables Loans and borrowings (note 26) Total CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 - 1,615 4,934 6,549 - 1,615 435 2,050 2 TO < 5 YEARS US$’000 - - 5,167 5,167 CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 1 TO < 5 YEARS US$’000 598 1,607 4,500 6,705 598 1,607 666 2,871 - - 3,834 3,834 As disclosed in note 26 the loans and borrowings amounts due to Consilium are secured by a ﬁ xed and ﬂ oa(cid:415) ng charge over the assets of the Group. In the event of default, Consilium shall have the op(cid:415) on to convert all, or any por(cid:415) on of the outstanding in- debtedness at the (cid:415) me of default into shares in Cambria at a 15% discount to the share price at the date of the facility agreements. The eﬀ ec(cid:415) ve op(cid:415) on price is 14.50p. It is not expected that the cash ﬂ ows included in the maturity analysis will occur signiﬁ cantly earlier, or at signiﬁ cantly diﬀ erent amounts. FOREIGN CURRENCY RISK MANAGEMENT The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than United States Dollars. The currencies giving rise to this risk are primarily the Pound Sterling, Euro , Zambian Kwacha, Malawian Kwacha and the South African Rand. In respect of other monetary assets and liabili(cid:415) es held in currencies other than United States Dollars, the Group ensures that the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances. The following signiﬁ cant exchange rates applied during the year: Pounds Sterling (GBP) Euro (EUR) Zambian Kwacha (ZMW) South African Rand ( ZAR) Malawian Kwacha (MWK) AVERAGE RATE 2014 REPORTING DATE SPOT RATE 2014 AVERAGE RATE 2013 REPORTING DATE SPOT RATE 2013 0.61 0.73 5.87 10.49 396.50 0.60 0.76 6.02 10.66 394.10 0.64 0.76 5.14 9.11 9.11 0.65 0.76 5.35 8.99 8.99 FINANCIAL REPORT 2014 PAGE 56 Notes to the Financial Statements For the year ended 31 August 2014 32. Financial instruments (continued) FOREIGN CURRENCY RISK MANAGEMENT (cid:525)CONTINUED(cid:526) The Company does not have any exposure to currency forward exchange contracts at the repor(cid:415) ng date (2013: US$nil). SENSITIVITY ANALYSIS In managing foreign currency risks the Group aims to reduce the impact of short and long-term ﬂ uctua(cid:415) ons on the Group’s earn- ings. A 10 percent strengthening/weakening of the listed currencies against the USD at 31 August 2014 would have increased (de- creased) equity and proﬁ t or loss by the amounts shown below. This analysis assumes that all other variables, in par(cid:415) cular interest rates, remain constant and ignores any impact of forecast sales and purchases. This analysis is performed on the same basis for 2013 and assumes that all other variables remain the same. The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabili(cid:415) es at the repor(cid:415) ng date and their sensi(cid:415) vity is as follows: 31 AUGUST 2014 Pounds Sterling (GBP) Euro (EUR) South African Rand (ZAR) Zambian Kwacha (ZMW) Malawian Kwacha (MWA) 31 AUGUST 2013 Pounds Sterling (GBP) Euro (EUR) South African Rand (ZAR) Zambian Kwacha (ZMW) EXPOSURE IN FINANCIAL STATE(cid:883) MENT POSITION US$’000 STRENGTHENING PROFIT OR LOSS US$’000 WEAKENING PROFIT OR LOSS US$’000 (1,769) (11) (55) 110 12 (290) 13 (53) 22 96 1 1 1 - 17 (1) 1 - (96) 1 1 1 - (17) 1 (1) - INTEREST RATE RISK MANAGEMENT Due to the liquidity constraints in the Zimbabwean economy, the consequen(cid:415) al interest rate risk the Group would be subject to if it relied solely on short term Zimbabwean sourced borrowings, would be marked. The Group has, where possible, secured one year ﬁ xed interest rate overdra(cid:332) and loan agreements with its bankers in Zimbabwe. Addi(cid:415) onally, the Company has, mi(cid:415) gated its interest rate risk, by entering into a number of long term, oﬀ shore facility agreements with ﬁ xed rates of interest. FINANCIAL REPORT 2014 PAGE 57 Notes to the Financial Statements For the year ended 31 August 2014 32. Financial instruments (continued) The Group does not account for any ﬁ xed rate ﬁ nancial assets or liabili(cid:415) es at fair value through proﬁ t or loss. At the repor(cid:415) ng date the interest rate proﬁ le of the Group’s interest bearing ﬁ nancial instruments was as follows : CARRYING VALUE FIXED RATE INSTRUMENTS Financial assets Financial liabili(cid:415) es Total VARIABLE RATE INSTRUMENTS Financial assets Financial liabili(cid:415) es Total CAPITAL MANAGEMENT 2014 US$’000 2013 US$’000 - (7,033) (7,033) 639 - 639 - (6,594) (6,594) 2,136 (398) 1,738 The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market conﬁ dence 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 deﬁ nes as net opera(cid:415) ng 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 alterna(cid:415) ves for extending the Group’s share op(cid:415) on 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 aﬀ orded by a sound capital posi(cid:415) on. The Group’s target is to achieve a long term return on capital above 20%. In 2014 the return was >(100%), (2013: (13%)). In comparison the weighted average interest expense on interest bearing borrowings (excluding liabili(cid:415) es with imputed interest) was 16.4% (2013: 15%). FINANCIAL REPORT 2014 PAGE 58 Notes to the Financial Statements For the year ended 31 August 2014 32. Financial instruments (continued) FAIR VALUES The fair values of ﬁ nancial assets and liabili(cid:415) es, together with the carrying amounts shown in the statement of ﬁ nancial posi(cid:415) on are as follows: GROUP Cash and cash equivalents (net of bank overdra(cid:332) ) Trade and other receivables Other investments Trade and other payables Loans and borrowings Total GROUP Cash and cash equivalents (net of bank overdra(cid:332) ) Trade and other receivables Other investments Trade and other payables Loans and borrowings Total COMPANY Cash and cash equivalents (net of bank overdra(cid:332) ) Trade and other receivables Trade and other payables Loans and borrowings Total COMPANY Cash and cash equivalents (net of bank overdra(cid:332) ) Trade and other receivables Trade and other payables Loans and borrowings Total LOANS AND RECEIVABLES 2014 US$’000 CARRYING AMOUNT 2014 US$’000 FAIR VALUE 2014 US$’000 639 1,476 66 (3,542) (7,033) (8,394) 639 1,476 66 (3,542) (7,033) (8,394) 639 1,476 66 (3,542) (7,033) (8,394) LOANS AND RECEIVABLES 2013 US$’000 CARRYING AMOUNT 2013 US$’000 FAIR VALUE 2013 US$’000 1,738 12,724 58 (1,546) (6,647) 6,327 1,738 12,724 58 (1,546) (6,647) 6,327 1,738 12,724 58 (1,546) (6,647) 6,327 LOANS AND RECEIVABLES 2014 US$’000 CARRYING AMOUNT 2014 US$’000 FAIR VALUE 2014 US$’000 38 12,378 (3,152) (4,934) 4,330 38 12,378 (3,152) (4,934) 4,330 38 12,378 (3,152) (4,934) 4,330 LOANS AND RECEIV(cid:883) ABLES 2013 US$’000 CARRYING AMOUNT 2013 US$’000 FAIR VALUE 2013 US$’000 1,210 25,648 (2,205) (4,500) 20,153 1,210 25,648 (2,205) (4,500) 20,153 1,210 25,648 (2,205) (4,500) 20,153 FINANCIAL REPORT 2014 PAGE 59 Notes to the Financial Statements For the year ended 31 August 2014 32. Financial instruments (continued) THE FAIR VALUE OF ASSETS AND LIABILITIES CAN BE CLASSED IN THREE LEVELS. Level 1 Fair values measured using quoted prices (unadjusted) in ac(cid:415) ve markets for iden(cid:415) cal assets or liabili(cid:415) es. Level 2 Level 3 Fair values measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Fair values measured using inputs for the asset or liability that are not based on observable market data (i.e. unob- servable inputs). As at 31 August 2014, the Group holds the following investment at fair value: GROUP Quoted investments por(cid:414) olio Total GROUP Quoted investments por(cid:414) olio Total ESTIMATION OF FAIR VALUES LEVEL 1 2014 US$’000 66 66 LEVEL 1 2013 US$’000 58 58 LEVEL 2 2014 US$’000 - - LEVEL 2 2013 US$’000 - - LEVEL 3 2014 US$’000 - - TOTAL 2014 US$’000 66 66 LEVEL 3 2013 US$’000 TOTAL 2013 US$’000 - - 58 58 The following summarises the major methods and assump(cid:415) ons used in es(cid:415) ma(cid:415) ng the fair values of ﬁ nancial instruments reﬂ ect- ed in the above table. CASH AND CASH EQUIVALENTS (cid:525)NET OF BANK OVERDRAFT(cid:526) Fair value approximates its carrying amount largely due to the short-term maturi(cid:415) es 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 no(cid:415) onal amount is deemed to reﬂ ect the fair value. LOANS AND BORROWINGS Fair value has been derived from quoted prices. OTHER INVESTMENTS Fair value has been derived from quoted prices. FINANCIAL REPORT 2014 PAGE 60 33. Operating leases LEASES AS LESSEE At the repor(cid:415) ng date, the Group had the following outstanding annual commitments for future minimum lease payments un- der non-cancellable opera(cid:415) ng leases: Notes to the Financial Statements For the year ended 31 August 2014 35. Income statement of Cambria Africa Plc There is no requirement under the Isle of Man Companies Act 2006 to present a company income statement. The loss for the year to 31 August 2014 was US$19,156 thousand (2013: US$4,662 thousand). Opera(cid:415) ng lease commitments US$’000 36. Capital commitments Payable in next 12 months Payable in 1 to 5 years Payable therea(cid:332) er (> 5 years) Total 143 80 - 223 During the year ended 31 August 2014, US$405 thousand (2013: US$253 thousand, as restated) was recognised as an expense in the income statement in respect of opera(cid:415) ng leases. Opera(cid:415) ng lease payments represents rentals payable by the Group for cer- tain of its proper(cid:415) es. Leases are nego(cid:415) ated for a minimum term of 1 year and rentals are ﬁ xed for the period. LEASES AS LESSOR At the repor(cid:415) ng date, the Group had US$nil (2013: US$15 thou- sand) outstanding annual commitments for future minimum lease receipts under opera(cid:415) ng leases. The amounts related to 2013 were not non-cancellable leases and amounts were re- ceivable to 31 December 2013. During the year ended 31 Au- gust 2014, US$27 thousand (2013: US$3 thousand as restated) was received under lease agreements. 34. Finance leases CREDFIN LOAN Minimum lease payments Finance cost Present value GROUP 2014 GROUP 2013 US$’000 US$’000 4 (1) 3 122 (28) 94 The above current ﬁ nancial liability, measured at amor(cid:415) sed cost is secured by a ﬁ nance lease agreement in respect of mo- tor vehicles. Ownership will transfer to Paynet Zimbabwe (Pvt) Ltd, a(cid:332) er payment of the nominal amount. Interest is charged at 28.27% per annum for one agreement and 25.7% for the other. The capital commitments at 31 August 2014 totalled US$nil (2013: US$nil). 37. Guarantees No guarantees were provided by the group at 31 August 2014 oth- er than those disclosed under note 40: post-balance sheet events. 38. Contingent liabilities and assets CONTINGENT LIABILITIES On 30 July 2013, the Group, pursuant to its disposal of Blue- berry Interna(cid:415) onal Limited, (“Blueberry”), provided warran(cid:415) es to the Purchaser, rela(cid:415) ng to the disclosure of assets and liabili- (cid:415) es and certain representa(cid:415) ons made during the sale process. These warran(cid:415) es remain in force and eﬀ ect un(cid:415) l 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. On 26 August 2011, the Group, pursuant to its disposal of Sol Avia(cid:415) on (Pvt) Ltd, (“Sol Avia(cid:415) on”) entered into a Memorandum of Understanding with the purchaser, whereby the purchaser would be fully indemniﬁ ed in respect of any claim, made ei- ther by Royal Khmer Airlines Interna(cid:415) onal (Pte) Limited (“Royal Khmer”) or Fly540 Avia(cid:415) on Limited (“Fly540”) pursuant to the Memorandum of Understanding entered into by Sol Avia(cid:415) on and Royal Khmer and a licence agreement entered into between Sol Avia(cid:415) on and Fly540. To the date of this report no claims have been lodged under this indemnity against the Group. FINANCIAL REPORT 2014 PAGE 61 Notes to the Financial Statements For the year ended 31 August 2014 38. Contingent liabilities and assets (continued) CONTINGENT LIABILITIES (cid:525)CONTINUED(cid:526) On 16 August 2012, the Group, pursuant to its disposal of the scrap remains of the aircra(cid:332) owned by LonZim Air (BVI) Limited, indemniﬁ ed the purchaser, against any claims or costs arising in connec(cid:415) on with any claim made by 540 (Uganda) Limited against Lonzim Air (BVI) Limited to a maximum value of US$50 thousand. On 21 October 2014, the Group, pursuant to its disposal of Lonzim Hotels Limited, provided warran(cid:415) es rela(cid:415) ng to ma(cid:425) ers fairly disclosed to the Purchaser in terms of the relevant sale and purchase agreement and the related disclosure le(cid:425) er and/ or due diligence data room. General warran(cid:415) es remain in force and eﬀ ect un(cid:415) l 31 August 2015 and Title warran(cid:415) es remain in force and eﬀ ect un(cid:415) l 21 October 2016. The liability of the Group in respect of the aggregate of all Title warran(cid:415) es shall not ex- ceed $2 000 thousand; and in respect of the aggregate of all General warran(cid:415) es, shall not exceed $350 thousand. The Group will have no liabiilty in respect of General warranty claims in ag- gregate less than $100 thousand and General warranty claims shall not be less than US$25 thousand for a single claim. To the date of the report, no formal warranty claim has been lodged by the Purchaser. 39. Related parties IDENTITY OF RELATED PARTIES The Group has a related party rela(cid:415) onship with its subsidiaries (see note 18), and with its Directors and execu(cid:415) ve oﬃ cers. Transac(cid:415) ons between the Company and its subsidiaries, which are related par(cid:415) es, have been eliminated on consolida(cid:415) on and are not disclosed in this note. All related party transac(cid:415) ons are conducted on terms equivalent to arms length transac(cid:415) ons. GROUP AND COMPANY TRANSACTIONS WITH ENTITIES WITH SIGNIFICANT INFLUENCE OVER THE ENTITY At the date of lis(cid:415) ng 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 ﬁ ve and a half years and had been ini(cid:415) ally recognised as an in- tangible asset with a valua(cid:415) on of US$14,854 thousand (£7,290 thousand). The book value of this intangible asset which was being amor(cid:415) sed over the period of the agreement, was fully wri(cid:425) en oﬀ in 2012. 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 no(cid:415) ﬁ ca(cid:415) on threshold. On 18 July 2013, the Company entered into a Se(cid:425) lement Agree- ment with Lonrho Plc, whereby Cambria Africa Plc received US$2,665 thousand, in se(cid:425) lement of various claims and re- ceivables balances, claims related to the Management Services and Con(cid:415) nuing Rela(cid:415) onship Agreement between the Company and Lonrho Plc, claims rela(cid:415) ng to the Hotel Refurbishment and Management Agreement between LonZim Hotels Limited and Lonrho Hotels Management Services (BVI) Limited (“LHMS”) (“Hotel Management Agreement”), the early termina(cid:415) on of the Hotel Management Agreement, and other claims between the Company and its subsidiaries and Lonrho Plc Group companies. The Group loss on the se(cid:425) lement agreement, before amounts provided for in the prior period was US$348 thousand. This amount was recognised in previous repor(cid:415) ng periods. FINANCIAL REPORT 2014 PAGE 62 Notes to the Financial Statements For the year ended 31 August 2014 39. Related parties (continued) 39. Related parties (continued) During the period Itai Mazaiwana, a director of the Compa- ny, provided addi(cid:415) onal consultancy services to the Company amoun(cid:415) ng to US$25 thousand (2013: US$13 thousand). At 31 August 2014, the amount payable to Itai Mazaiwana was US$1 thousand (2013: US$nil ). At 31 August 2014, the following amounts were payable to Directors in respect of Directors fees : Edzo Wisman US$45.6 thousand (2013: US$13 thousand), Ian Perkins US$13.5 thou- sand (2013: US$nil), Fred Jones $3.3 thousand (2013: US$ nil) and Paul Turner $8.3 thousand (2013: US$ nil). TRANSACTIONS WITH SUBSIDIARY ENTITIES WITHIN THE GROUP (cid:525)CONTINUED(cid:526) Paynet Zimbabwe (Private) Limited (“Paynet Zimbabwe”) Paynet Zimbabwe, a 100% subsidiary of the Group provides ser- vices including payroll processing, so(cid:332) ware licensing, training and u(cid:415) lity and property sublets to fellow subsidiaries which amounted to US$15 thousand (2013: US$21 thousand). All charges were at market value, arms length rates. Paynet Zimbabwe holds a licence to use, sell and develop so(cid:332) - ware owned by Paynet Limited and uses the Paywell so(cid:332) ware through a licence with fellow subsidiary African Solu(cid:415) ons Limit- ed. Total licence fees paid in the period were US$824 thousand (2013: US$772 thousand). MSA Sourcing BV MSA Sourcing BV acts as the sourcing agent for the MillCehm Group in respect of certain chemical supplies. Chemicals to the value of $922 thousand were so supplied to Millchem subsid- aires. Consilium through the Consilium Corporate Recovery Master Fund Ltd and the Consilium Emerging Markets Absolute Return Master Fund Ltd (jointly “Consilium”), is a substan(cid:415) al share- holders of Cambria. Consilium has provided loan funding to the Group (see note 26). Interest and Fees paid during the period amounted to US$758 thousand (2013: US$755 thousand). TRANSACTIONS WITH SUBSIDIARY ENTITIES WITHIN THE GROUP Leopard Rock Hotel Company (Private) Limited (“LRH”) LRH, a former 100% subsidiary of the Group, provided hospital- ity services to the Group amoun(cid:415) ng to US$4thousand (2013: US$4 thousand). All charges were at market value, arms length rates. Diospyros Investments (Private) Limited – T/A CES Zimbabwe (“CES”) CES was un(cid:415) l 31 August 2013, a 100% subsidiary of the Group. CES provided IT hardware and IT maintenance services to Group companies amoun(cid:415) ng to US$25 thousand in the year ended 31 August 2013. FINANCIAL REPORT 2014 PAGE 63 Notes to the Financial Statements For the year ended 31 August 2014 39. Related parties (continued) 40. Events after the reporting date TRANSACTIONS WITH KEY MANAGEMENT PERSON(cid:487) NEL (cid:525)CONTINUED(cid:526) Key management personnel are the holding Company Directors and execu(cid:415) ve oﬃ cers. Edzo Wisman a former Execu(cid:415) ve Direc- tor, par(cid:415) cipates in the share op(cid:415) on scheme. Other Directors and key personnel are eligible to par(cid:415) cipate in the share op(cid:415) on scheme (see note 25). Total remunera(cid:415) on is included in “personnel expenses” (see note 8). E Wisman T Sanders I Perkins P Turner I Mazaiwana F Jones P Heber Total TOTAL 2014 US$000 TOTAL 2013 US$000 495 89 133 50 63 20 - 850 317 237 120 50 38 15 6 783 Included in the above are salaries and beneﬁ ts paid to Mressrs. Wisman and Perkins the Company’s previous CEO and - Chair- man, of US$ 0.495 million and US$0.133 million, respec(cid:415) vely. These amounts included, inter alia, a staﬀ loan of US$0.1 million to Mr. Wisman which, in terms of his amended staﬀ loan agree- ment has been waived following the investment by VAL and the change of control in Cambria subsequent to the repor(cid:415) ng date (April 2015). Also, following the change of control, Messrs Wisman and Perkins received change in control payments com- bined amoun(cid:415) ng to US$185 500, which will be included in the ﬁ nancial results for the following year. On 19 August 2014, Messrs. Wisman and Perkins advanced a US$ equivalent amount of US$249 thousand under a short term loan facility to the Company. The loan bears a ﬂ at cost of GBP of 1.3 thousand (US$ 2.2 thousand) and is repayable on 30 Sep- tember 2014. Interest of 5% per month applies in the event of default. The loan is unsecured. Disposal of Lonzim Hotels Limited On 21 October 2014 the Company entered into agreement to dispose if its shares and claims in Lonzim Hotels Limited to Ventures Africa Investments Limited (“VAL”) for a total consid- era(cid:415) on of US$2,500 thousand se(cid:425) led in cash. Lonzim Hotels Limited holds the Leopard Rock Hotel and related subsidiaries. Cancellation of Chemicals & Marketing Compa- ny Limited (“C&M”) acquisition It was announced on 26 August 2013 that the Company had concluded the acquisi(cid:415) on of the en(cid:415) re issued share capital of Malawi chemical distributor Chemicals & Marke(cid:415) ng Company Limited (“C&M”) and that the related 5.5 million considera(cid:415) on shares (“considera(cid:415) on shares”) have been admi(cid:425) ed to lis(cid:415) ng on AIM. Subsequent to that announcement, and following a more in- depth understanding of the ﬁ nancial aﬀ airs of C&M, the Com- pany and the C&M vendors entered into a Disengagement Agreement (dated 29 June 2015) in terms of which the par(cid:415) es agreed that the C&M acquisi(cid:415) on will be reversed and the par- (cid:415) es be restored to their ini(cid:415) al posi(cid:415) ons. The considera(cid:415) on shares, net of shares sold to sa(cid:415) sfy obliga- (cid:415) ons to C&M, will be held as treasury shares. The Company’s subsidiary MillChem Holdings Limited (“MHL”), has provided guarantees to creditors of C&M to the value of $592 thousand. C&M has undertaken to release MHL from these guarantees and indemniﬁ ed MHL against any related loss VAL subscription On 15 February 2015, the Company entered into a share sub- scrip(cid:415) on agreement in terms of which VAL agreed to subscribe and the Company agreed to issue, 107,000,000 ordinary shares of GBP0.0001 each at price of 0.85p per share. Jet claims - settlement with Lonrho On 3 September 2015 the Company concluded a se(cid:425) lement agreement with Lonrho with respect to the Jetclaims and coun- terclaims (“the claims”) between the par(cid:415) es, in terms of which the Company will receive US$4.752 million in full and ﬁ nal set- tlement of the claims. A(cid:332) er outstanding li(cid:415) ga(cid:415) on and other as- sociated costs, the net proceeds is es(cid:415) mated to be US$3.5 mil- lion and will be applied to Cambria, and its subsidiaries’ working capital requirements and debt commitments. FINANCIAL REPORT 2014 PAGE 64 COMPANY SECRETARY AND CONTACT DETAILS AUDITORS Corporate Information For the year ended 31 August 2014 Northern Wychwood Limited 1st Floor, Exchange House 54-58 Athol Street Douglas Isle of Man IM99 1JD Tel: +44 (0) 1624 678259 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 Baker Tilly Isle of Man LLC 2a Lord Street Douglas Isle of Man IM99 1HP T: +44 (0) 1624 693900 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 Mar(cid:415) n Lane London EC4R 0DR Tel: +44 (0) 20 7220 1666 FINANCIAL REPORT 2014 PAGE 65 Shareholder Information For the year ended 31 August 2014 Analysis of ordinary shareholdings as at 3 July 2015 Note: the shareholding analysis has been performed on 3 July 2015, incorpora(cid:415) ng changes since the year end of 31 August 2014 Category of shareholder Private shareholder Banks, nominees and other corporate bodies Total Shareholding range 1 – 5,000 5,001 – 50,000 50,001 – 500,000 500,001 – 5,000,000 5,000,001 – 50,000,000 50,000,001 – 150,000,000 Total REGISTRARS NUMBER OF HOLDERS % OF TOTAL HOLDERS NUMBER OF SHARES % OF TOTAL SHARES 90 143 233 80 58 54 35 5 1 233 38.6% 61.4% 100.0% 34.3% 24.9% 23.2% 15.0% 2.1% 0.4% 100.0% 18,718 323 192,936,839 211,655 162 193 633 1 113 258 8 895 710 50 675 947 43 776 614 107 000 000 211 655 162 8.8% 91.2% 100.0% 0.1% 0.5% 4.2% 23.9% 20.7% 50.6% 100.0% All administra(cid:415) ve enquiries rela(cid:415) ng to shareholdings, such as queries concerning dividend payments, no(cid:415) ﬁ ca(cid:415) on of change of address or the loss of a share cer(cid:415) ﬁ cate, should be addressed to the Company’s registrars. UNSOLICITED MAIL As the Company’s share register is, by law, open to public inspec(cid:415) on, shareholders may receive unsolicited mail from organisa(cid:415) ons 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. FINANCIAL REPORT 2014 PAGE 66 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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