Cambria Africa plc Annual Report 2016

Plain-text annual report

Cambria Africa Plc Annual report 2016 Table of Contents Annual Report 2016 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 5 9 10 11 15 17 18 19 21 22 23 - 62 63 64 Results for the year Cambria Africa PLC (AIM:CMB) (“Cambria” or the “Company”) is pleased to announce its audited results for the year ending 31 August 2016 and provide a trading update. Audited Financial Statements are available on the Company’s website (www.cambriaafrica.com) and will be sent to shareholders on Monday. Results highlights: from con(cid:415) nuing opera(cid:415) ons by $2.16 million to a loss of $740,000. • Cambria’s EBITDA from con(cid:415) nuing opera(cid:415) ons increased by $2.16 million to $430,000 from a loss of $1.73 million in FY 2015. Trading update: • Excluding legal costs, EBITDA from con(cid:415) nuing opera(cid:415) ons increased by almost $3 million to $1.24 million from a loss of $1.73 million in FY 2015. • Cambria’s cash ﬂ ow from opera(cid:415) ons increased by $6.56 million to $3.63 million from a net cash ou(cid:414) low of $2.93 million in FY 2015. • Cambria slashed central costs by almost half to $1.1 million from $2.0 million in FY 2015 (down 45%). • legal costs of $820,000, central overheads Excluding decreased by 86% to $280,000 from $2 million in FY 2015. • Cambria reduced consolidated borrowings to $4.4 million from $7 million in FY 2015, a 37% decrease. Post-VAL Loan Conversion (discussed under Subsequent Events below) borrowings will drop to $2.9 million, a 59% decrease from FY 2015 levels. • • $390,000 in annual interest savings is expected from the reduc(cid:415) on in borrowings and the VAL Loan Conversion. Compared to FY 2015, which reﬂ ects a full year of interest costs on previous borrowings, the annual interest savings will be $480,000. Payserv, Cambria’s largest subsidiary by revenue and proﬁ t, achieved a 100% increase in proﬁ t a(cid:332) er tax (“PAT”) to $1.0 million. Excluding minority interest, PAT increased by 248% to $740,000. Revenues for the period increased 7% to $5.36 million. Consolidated EBITDA increased by 43.1% to $1.76 million. A(cid:332) er Fiscal Year-End 2016, unaudited management accounts for the 4 months ended 31 December 2016 reﬂ ect an accelera(cid:415) on of the performance gains achieved in FY 2016. In comparison to the same period in FY 2016, the salient results are as follows: Payserv: PBT increased by 131% to $660,000 from $286,000, • EBITDA increased by 51.8% to $850,000 from $560,000, • • Revenues increased by 23.4% to $2.16 million from $1.75 million, Paynet’s EDI volumes up by 46.3%, Tradanet loan volumes down 35.4%. • • The signiﬁ cant increase in EDI volumes is believed to be at- tributable to an increase in electronic payments as a result of the cash shortages in Zimbabwe and mul(cid:415) ple salary payments during the same month by employers. Tradanet loans fell as a result of a temporary discon(cid:415) nua(cid:415) on in the credit partner loan program. This program is expected to be reinstated in early 2017 and will result in a restora(cid:415) on of loans to FY 2016 levels. Although the current record EDI volumes may abate in future should current condi(cid:415) ons change, Paynet’s management expects nor- malisa(cid:415) on of Tradanet loan volumes to mi(cid:415) gate such reduc(cid:415) on. Millchem: • Revenues ﬂ at at $1.2 million, • EBITDA loss further reduced by 30% to $38,000 from a loss of $55,000, Pre-tax loss reduced by 27.7% to $47,000 from a loss of $65,000. • • Millchem pared its EBITDA loss by 76% to $230,000 in FY Central: 2016 from $950,000 in FY 2015. • Excluding legal expenses of $820,000, Cambria achieved a consolidated proﬁ t of $70,000 from con(cid:415) nuing opera(cid:415) ons compared to a loss of $2.9 million in FY 2015. Including legal expenses, Cambria reduced its consolidated loss • Central costs, excluding legal expenses, con(cid:415) nue to track the improved levels reported in FY 2016. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 3 Results for the year Subsequent events: About Cambria Africa Plc: Subsequent to the end of the Financial Year notable ﬁ nancial changes include: Cambria Africa Plc, quoted on the AIM market of the London Stock Exchange, is a long-term, ac(cid:415) ve investment company, inves(cid:415) ng primarily in Zimbabwe. • Open Oﬀ er: Open Oﬀ er to Cambria shareholders at 1p per share, enabling Cambria shareholders the opportunity to match the terms of VAL’s Loan Conversion (discussed below). The Open Oﬀ er is currently due to expire on Wednesday, 1 February 2017. The Board is considering extending this deadline to allow shareholders to consider audited FY 2016 results and the Trading update in their investment decisions, and will announce any extension. • VAL Loan Conversion: Conversion of £1.25 million of VAL’s loan at 1p per share into 125 million Cambria ordinary shares will increase net equity by $1.55 million and equity per share by 0.46 US cents per share (0.36 UK pence) and will reduce annual interest costs by $130,000. • Increased Net Equity: Following the VAL Loan Conversion, Cambria’s net equity per share will approximate 0.31 U.S. cents. Despite the increase, this number, in the opinion of the Directors, signiﬁ cantly underes(cid:415) mates the fair value of the company’s investments and proprietary technologies. By way of illustra(cid:415) on, the balance sheet only reﬂ ects the goodwill a(cid:425) ributable to Payserv which is carried at $720,000 – less than half its consolidated EBITDA of $1.76 million for FY 2016. • New Loan Facili(cid:415) es: A $1.2 million loan facility was established by Paynet Zimbabwe (Pvt) Limited with Central Africa Building Society (CABS) of which $1.0 million has been accessed to date. • $1.8 million Counterclaim against Consilium and Security for Costs: In respect of Cambria’s $1.8 million counterclaim against Consilium in the English courts, the company has lodged security for costs of £380,000 and paid a related costs order of £30,000. Changes to the board: The Company’s Board of Directors remains unchanged. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 4 Chief Executive Of(cid:976)icer’s Statement Introduction I am pleased to report a signiﬁ cant improvement in our results and ﬁ nancial posi(cid:415) on. Despite the con(cid:415) n- ued distrac(cid:415) ons of the Consilium dispute, we have started to see the posi(cid:415) ve results from the eﬀ orts in- vested by the new management of the Company. In fact, the improvements are drama(cid:415) c: • Cambria’s EBITDA from con(cid:415) nuing opera(cid:415) ons increased by $2.16 million to $430,000 from a loss of $1.73 million in FY 2015. • Excluding legal costs, EBITDA from con(cid:415) nuing oper- a(cid:415) ons increased by almost $3 million to $1.24 million from a loss of $1.73 million in FY 2015. • Cambria’s cash ﬂ ow from opera(cid:415) ons in FY 2016 in- creased by $6.56 million to $3.63 million from a net cash ou(cid:414) low of $2.93 million in FY 2015. • Cambria reduced central costs by almost half to $1.1 mil- lion from $2.0 million last year in FY 2015 (down 45%). The (cid:415) mely repayment of $5 million to Consilium and $2 million to Nurture towards the end of FY 2016 removed a signiﬁ cant ﬁ - nancial burden and risk to the Company. Cambria and Payserv’s internal resources of almost $4 million substan(cid:415) ally contributed to this repayment. The balance was reﬁ nanced by a VAL Loan of $1.78 million and a revolving VAL Bridging Facility of $1.45 mil- lion. The VAL Bridging Facility has been reduced to $700,000 by accessing a $1.2 million credit line granted to Paynet Zimbabwe by a local bank (CABS).. A(cid:332) er the end of the ﬁ nancial year, the Company’s balance sheet will be further strengthened by the conversion of $1.55 million of VAL Loans into 125 million Cambria ordinary shares at 1p per share. Shareholders have been given the right to match this investment and avoid dilu(cid:415) on through an Open Oﬀ er due to ex- pire on 1 February 2017. As the ul(cid:415) mate beneﬁ cial owner of VAL, these loans and conversion are a strong expression of my conﬁ dence in the future of Cambria. Following the VAL Loan Conversion, borrowings will be cut by half to $2.9 million from $7.0 million prior to repayment of the Consilium ($5 million) and Nurture ($2 million) loans in May and July 2016, respec(cid:415) vely. The reduced borrowings will result in annual interest savings of $480,000 compared to the cost of a full year of servicing the Consilium and Nurture debts. Given the unique posi(cid:415) oning of Payserv and its technology plat- forms in Zimbabwe and the sharp reduc(cid:415) on central and operat- ing company costs, Cambria is poised for con(cid:415) nued proﬁ tability despite of, and possibly because of, the economic challenges faced by Zimbabwe. Legal expenses The Board believes that adjus(cid:415) ng for legal fees associated with the Consilium dispute will provide shareholders with a more accurate reﬂ ec(cid:415) on of the Group’s opera(cid:415) ng performance, its turnaround and improved cash genera(cid:415) on. The current state of the li(cid:415) ga(cid:415) on to which these expenses relate, is discussed under “Consilium Dispute” below. Operating Results For the Year Consolidated results: Cambria’s Cash ﬂ ow from opera(cid:415) ons was $3.63 million com- pared to a net cash ou(cid:414) low of $2.93 million in FY 2015. Excluding legal expenses, the Company achieved a consolidated proﬁ t from con(cid:415) nuing opera(cid:415) ons of $70,000. Including legal expenses of $820,000 Cambria’s improved opera(cid:415) ng perfor- mance more than halved its consolidated loss from con(cid:415) nuing opera(cid:415) ons to $740,000 from a loss of $2.9 million in FY 2015. Cambria’s EBITDA from con(cid:415) nuing opera(cid:415) ons increased by $2.16 million to $430,000 from a loss of $1.73 million in FY 2015. Excluding legal costs, EBITDA from con(cid:415) nuing opera(cid:415) ons in- creased by almost $3 million to $1.24 million from a loss of $1.73 million in FY 2015. We cut central costs by almost half to $1.1 million from $2.0 million in 2015 and by two thirds from $3.1 million in FY 2015. Excluding legal costs of $820,000, central overheads decreased by 86% to $280,000. We are commi(cid:425) ed to remaining diligent in containing central costs. As the CEO of Cambria, I have not collected any compensa(cid:415) on nor beneﬁ ts and will not do so un(cid:415) l the cash ﬂ ow from the Company’s underlying investments supports it. Similarly, since their appointment, my fellow directors have served the compa- ny without compensa(cid:415) on or beneﬁ ts CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 5 Chief Executive Of(cid:976)icer’s Statement Opera(cid:415) ng Division Results: Payserv’s cconsolidated EBITDA increased by 43.1% to $1.76 million from $1.23 million in FY 2015 while PBT increased by 81.8% to $1.4 million from $770,000 in FY 2015. PBT excluding minority interests increased by 186% to $1.06 million from $370,000 in FY 2015. This stellar performance was achieved on the back of only a 7% increase in revenues to $5.36 million from $5.01 million in FY 2015. A(cid:332) er Fiscal Year-End 2016, unaudited Year-to-Date (YTD) management accounts conﬁ rm the con(cid:415) nuing trend of proﬁ tability at Payserv. For the four months ended 31 December 2016 PBT increased by 131% to $660,000 and EBIDTA increased by 51.8% to $850,000 compared to the same period in FY 2016. Payserv achieved these stellar results on the back of a 23.4% increase in revenues and despite a decline of 35.5% in Tradanet loan volumes. It is expected that Payserv will be able to capitalise on several growth opportuni(cid:415) es in the ensuing ﬁ nancial years, including: • Applica(cid:415) on of its technology pla(cid:414) orm in the consumer market where it has a very small market share com- pared to its 95% plus share of the corporate and inter- bank payments market; • Acquiring a money-transfer license and introduc(cid:415) on of innova(cid:415) ve money-transfer facili(cid:415) es through its technol- ogy pla(cid:414) orm; • Increasing Tradanet revenues, which are currently de- rived from processing payroll-based loans originated through an exclusive rela(cid:415) onship with the Central Af- rican Banking Society (CABS) through direct origina(cid:415) on on behalf of CABS, selling of insurance products, and at- risk microﬁ nance loans with high margins and risk-mi(cid:415) - gated by access to payroll deduc(cid:415) on. Divisional Review Payserv Africa Payserv provides EDI switching services (Paynet), ‘payslip’ processing (Autopay) and payroll based micro-ﬁ nance loan processing (Tradanet). (cid:904)US$ THOUSANDS(cid:905) 2016 2015 GROWTH Revenues Gross proﬁ t 5,360 5,012 5,065 4,745 7.0% 6.7% Gross margin 94% 95% (1.1%) Overheads (3,307) (3,519) (6%) EBITDA 1,758 1,226 43.3% Proﬁ t before interest and tax 1,653 1,072 54.2% Interest (250) (300) (16.7%) Proﬁ t before tax (“PBT”) 1,403 772 81.7% Minority interests in PBT (358) (406) (11.8%) PBT (excluding minority interests) 1,055 366 188.2% Proﬁ t a(cid:332) er tax (“PAT”) 1,007 504 99.8% PAT (excluding minority interests) 741 213 247.8% Millchem reported posi(cid:415) ve cash ﬂ ow from opera(cid:415) ons as a result of a signiﬁ cant improvement in the management of inventory and trade receivables. Millchem’s EBITDA loss improved by 75.8% to a loss of $230,000 from an EBITDA loss of $950,000 in FY 2015, while its loss before tax improved by 74.5% to a loss of $260,000 from a loss of $1.02 million in 2015. The reduc(cid:415) on in losses is also a(cid:425) ributable to discon(cid:415) nuing of unproﬁ table opera(cid:415) ons in Malawi and Zambia. As a result of these closures, revenue decreased by 39.7% to $3.19 million from $5.29 million in FY 2015. It is expected that Millchem will pursue a number of strategic partnerships within the Zimbabwe market to mi(cid:415) gate the scarcity of currency alloca(cid:415) on for raw material imports. Paynet provides Electronic Data Interchange (EDI) services to all the banks and building socie(cid:415) es in Zimbabwe, as well as to over 1,500 corporate clients. Paynet processed 19.2 million transac(cid:415) ons (2015: 17.3 million) during the period under review, an 11% increase. Electronic transfers have become a preferred payment method in Zimbabwe as a result of the local cash shortages. Autopay provides payroll services to more than 150 customers and processed approximately 330,000 pay slips (2015: 345,000) during the period under review, a decrease of 4.3%. The decrease was mainly caused by a general downsizing of payroll sizes in Zimbabwe and a reduc(cid:415) on in employment levels. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 6 Chief Executive Of(cid:976)icer’s Statement Autopay managed to oﬀ set the full impact of this with the addi(cid:415) on of new clients. Despite the improved performance, restoring Millchem Zim- babwe (the only remaining Millchem opera(cid:415) ng subsidiary) to proﬁ tability is a key focus for the execu(cid:415) ve team. Tradanet processed approximately 78,000 (2015: 134,000) loans during the period, represen(cid:415) ng a value of $143 million (2015: $176 million), a decrease of 42% and 18.8% respec(cid:415) vely. Central costs At the end of the period the loan book under management stood at $124 million (2015: $139 million), a decrease of 10.8%. During the year under review, Payserv con(cid:415) nued to invest in its entry into the Zambian market which generated an EBITDA loss of $205,000 (FY 2015: $271,000). This investment has not been capitalised and has therefore directly impacted the income statement during the year under review. The Board is in the process of reviewing the con(cid:415) nua(cid:415) on of this investment against prospects for proﬁ tability. Payserv’s board has concluded that as of December 2016 it will not con(cid:415) nue to subsidize the Zambian opera(cid:415) on and it will have to reach proﬁ tability on its own merits. As expenses related to the Zambian opera(cid:415) on were not capitalized, a discon(cid:415) nua(cid:415) on of this opera(cid:415) on is not expected to impact Payserv’s proﬁ tability. Millchem Holdings Millchem is a value-added chemicals distributor in Zimbabwe. (cid:904)US$ THOUSANDS(cid:905) 2016 2015 GROWTH Revenues Gross proﬁ t 3,193 5,294 (39.7%) 525 892 (41.1%) Gross margin 16.4% 16.8% (2.3%) SG&A EBITDA (758) (1,846) (58.9%) (233) (954) (75.6%) Loss before tax (264) (1,020) (74.1%) The decrease in revenue and gross proﬁ t is a result of the dis- con(cid:415) nuance of unproﬁ table subsidiaries Millchem Zambia and Millchem Malawi. Despite the reduc(cid:415) on in revenue and gross proﬁ t, EBITDA improved by 74.1% as a result of the signiﬁ cant reduc(cid:415) on in overheads caused by the closure of these two op- era(cid:415) ons. Cambria’s central costs decreased by 45% to $1.1 million from $2.0 million in the previous year. Excluding legal costs incurred to defend Consilium’s claims and a(cid:425) empts to liquidate Cambria which cost $820,000, central overheads decreased by 86% to $280,000 from $2.0 million in FY 2015. Events subsequent to FY 2016 VAL LOAN CONVERSION AND OPEN OFFER On 14 December 2016 the Company extended an Open Oﬀ er for up to 125 million new ordinary shares to the remaining Cambria shareholders on terms equal to that of the VAL Loan Conversion explained below (“Open Oﬀ er”). This Open Oﬀ er is intended to give shareholders an opportunity to avoid dilu(cid:415) on and par(cid:415) cipate in the company’s equity in an orderly fashion and at a ﬁ xed price of 1p per share. On 28 November 2016, the Company announced that it reached an agreement with VAL regarding the conversion of £1.25 million or approximately $1.55 million of its loans to Cambria into 125 million ordinary shares of Cambria, or at 1p per share. The price of the VAL Loan Conversion was set at 1p per Cambria share (“the Issue Price”), represen(cid:415) ng a premium of 11% to the 10 day volume weighted average price of 0.90p for the 10 days up to 24 November 2016. Shareholders have concomitantly received an Open Oﬀ er to subscribe for shares in equal propor(cid:415) on to their holdings and can simultaneously apply for a further alloca(cid:415) on to the extent that other shareholders don’t par(cid:415) cipate. The VAL Loan Conversion will signiﬁ cantly strengthen Cambria’s balance sheet and further aligns my interests with that of fellow Cambria shareholders. The Board believes that the Issue Price for the conversion and the Open Oﬀ er is underpinned by the value of Cambria’s underlying subsidiaries. It will also result in less dilu(cid:415) on for Shareholders at any level of the Open Oﬀ er par(cid:415) cipa(cid:415) on. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 7 Chief Executive Of(cid:976)icer’s Statement is open for acceptance un(cid:415) l Currently the Open Oﬀ er Wednesday, 1 February 2017. This deadline may be extended to give shareholders a chance to consider the impact of these results on their investment decision. Open Oﬀ er proceeds will be u(cid:415) lised to further strengthen the balance sheet and fund growth in Cambria’s core subsidiaries in Zimbabwe. The Company intends to issue the shares in rela(cid:415) on to the VAL Loan Conversion together with the issue of shares as a result of the Open Oﬀ er. nied access to the Lonrho se(cid:425) lement funds and suﬀ ered great- ly from its inability to access these funds or even reﬁ nance its obliga(cid:415) ons. Consilium endeavoured to control these ac(cid:415) vi(cid:415) es in reliance on the contractual terms of the CFA and related De- benture which were put in place by the previous CEO, Edzo Wis- man. Edzo Wisman and Ian Perkins were appointed as directors of Consilium in December 2014 and February 2012 respec(cid:415) ve- ly – the very company which tried to damage Cambria by pre- maturely and unlawfully demanding repayment of its debt and seeking to wind up the Company. The legal fees rela(cid:415) ng to defending Cambria from Consilium’s claims and ac(cid:415) ons and pursuing the consequent counterclaim, amounted to $820,000 in FY 2016. Subsequent to the repay- ment of its loan in full and on (cid:415) me, Consilium amended its claim in the English Courts to claim that it is en(cid:415) tled to be indemniﬁ ed for what we believe to be the unreasonable and unnecessary costs associated with the premature and predatory a(cid:425) empts to be repaid over six months before the loans were due and ap- propriate the proceeds of the Lonrho se(cid:425) lement. Cambria has counterclaimed for a total of $1.8 million against Consilium for losses and legal fees it has incurred as a result. With respect to this counterclaim in December 2016 the Com- pany lodged security for costs of £380,000 and was ordered to pay costs of £30,000 to Consilium. Acquisition strategy The Board will con(cid:415) nue its search for appropriate value-cre- a(cid:415) ng acquisi(cid:415) on opportuni(cid:415) es primarily through the use of equity subscrip(cid:415) ons. We will con(cid:415) nue to focus on Zimba- bwe, which we believe provides the best opportunity for suc- cessful investment and growth in the short- to medium-term. SAMIR SHASHA CHIEF EXECUTIVE OFFICER 27 JANUARY 2017 NEW CABS LOAN The Company announced on 18 October 2016 the conclusion by Payserv’s wholly owned subsidiary Paynet, of a $1.2 million loan facility agreement with CABS. The CABS Loan bears inter- est at 11% per annum, an annual renewal fee of 1%, and is sub- ject to an establishment fee of 2%. The loan is repayable over 24 months. As security, a mortgage has been registered in favour of CABS over one of two proper(cid:415) es owned by Le Har (Pvt) Ltd, a wholly owned subsidiary of the Company. The remaining prop- erty remains unencumbered. CONSILIUM DISPUTE Shortly a(cid:332) er I was named the CEO of Cambria and appointed to the Board in July 2015, we reached a substan(cid:415) ve se(cid:425) le- ment with Lonrho for $4.752 million of which approximately $900,000 was paid to outstanding legal fees which the previous management had le(cid:332) unpaid. A further $500,000 was paid for consultancy, accoun(cid:415) ng and other expenses. Immediately therea(cid:332) er, I was stunned that Consilium Corpo- rate Recovery Master Fund (“Consilium”) claimed in September 2015 that the change of control as a result of VAL’s subscrip- (cid:415) on cons(cid:415) tuted an event of default under the Credit Facility Agreement (CFA) between Cambria and Consilium. Consilium’s management had been closely involved in procuring VAL’s in- vestment in Cambria in April 2015 and nego(cid:415) a(cid:415) ng the terms upon which VAL would support the Lonrho li(cid:415) ga(cid:415) on, I note that on 26 March 2015, Cambria’s then Chairman and concurrently a Director of Consilium, Ian Perkins, issued a le(cid:425) er which ac- companied a circular to shareholders. Neither the le(cid:425) er nor the circular contained any reference to the change of control provi- sions or the associated risks when recommending the approval of the proposed share subscrip(cid:415) on by VAL. Consilium also sought unsuccessfully to wind-up Cambria in Isle of Man Courts in an a(cid:425) empt to recover its loan, to the detri- ment of the Company and all its shareholders. As a result of Consilium’s ac(cid:415) ons, Cambria was, amongst other ma(cid:425) ers, de- CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 8 Paul Turner, 70 NON(cid:487)EXECUTIVE CHAIRMAN Dipak Champaklal Pandya, 58 NON(cid:487)EXECUTIVE DIRECTOR Directors 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 The board remains unchanged. Mrs Josie Watenphul is ac(cid:415) ng as non-execu(cid:415) ve director only as per the announcement on 2 March 2016. No other changes to the board of directors occurred during the ﬁ nancial period under review and up to the date of this report. 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 8 July 2015. Samir Shasha, 56 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 5 June 2015 and as CEO on 3 August 2015. Josephine Petra Watenphul, 36 NON(cid:487)EXECUTIVE DIRECTOR 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 9 Directors Cambria Directors’ Responsibility Statement in Respect of the Directors’ Report and the Financial Statements. The Directors are responsible for keeping proper accoun(cid:415) ng records that are suﬃ cient to show and explain the Group and Parent Company’s transac(cid:415) ons and disclose with reasonable 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 10 Directors’ Report FOR THE YEAR ENDED 31 AUGUST 2016 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 2016. Principal activities During the year, the Group was an investment company with a por(cid:414) olio of investments in Zimbabwe. Investing policy 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 is dependent upon The Company’s 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. 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 of US$744,000 (2015: proﬁ t US$455,000) 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 indicators. Given current global ﬁ nancial performance condi(cid:415) ons, as 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 11 Directors’ Report For the year ended 31 August 2016 Business review and development (con- tinued) 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 of the underlying subsidiaries. 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. informa(cid:415) on regarding the Group’s policies and Further exposure to ﬁ nancial risk can be found in note 29 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 21 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 37 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 one Execu(cid:415) ve Director, and three 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 Group. The Board is responsible for formula(cid:415) ng, reviewing and approving the Group’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 The Chairman ins(cid:415) tu(cid:415) onal 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 12 Directors’ Report For the year ended 31 August 2016 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 will be 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 will comprise Paul Turner (Chairman), Samir Shasha and Dipak Pandya. Substantial shareholdings The Directors have been advised of the following shareholdings at 13 January 2017 of 3 per cent or more of the Company’s is- sued share capital: NUMBER OF SHARES PERCENT(cid:883) AGE OF THE ISSUED CAPITAL COMMITTEES Ventures Africa Ltd* 107,000,000 50.55% The Board is in the process of establishing the following com- mi(cid:425) ees: Consilium Investment Man- agement LLC 16,262,798 7.68% Russell Investments Ltd 14,252,663 Roald Sommersel 7,168,458 6.73% 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 (if applicable) are set out on page 9. AUDIT COMMITTEE The role of the Audit Commi(cid:425) ee will be 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 ﬁ nancial repor(cid:415) ng statements. The Audit Commi(cid:425) ee’s primary objec(cid:415) ves will 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 will comprise Paul Turner (Chairman) and Dipak Pandya. REMUNERATION COMMITTEE The Remunera(cid:415) on Commi(cid:425) ee will make 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 will comprise Dipak Pandya (Chairman) and Paul Turner. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 13 Directors’ Report For the year ended 31 August 2016 Directors’ share interests Share price performance Between 1 September 2015 and 31 August 2016 the share price varied between a closing high of 1.64p and a low of 0.35p. At 31 August 2016 the closing market price of the shares at close of business was 0.63p (2015: 0.825p). On 24 January 2017 the mid price of the shares was marked at 1p. Auditors 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. ON BEHALF OF THE BOARD. JOSIE WATENPHUL NON(cid:487)EXECUTIVE DIRECTOR 27 JANUARY 2017 The Directors’ who were in oﬃ ce at the beginning and end of the current ﬁ nancial year, had the following interests in the shares of the Company: DIRECTORS AT 31.08.16 NO. OF SHARES AT 31.08.15 NO. OF SHARES Samir Shasha* 107,000,000 107,000,000 Josephine Watenphul Dipak Pandya Paul Turner Total - - - - - - 107,000,000 107,000,000 * Held indirectly through Ventures Africa Limited. Share op(cid:415) ons held by the previous Directors are detailed in note 22 of the ﬁ nancial statements 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 and dona(cid:415) ons. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 14 Report of the Independent Auditors For the year ended 31 August 2016 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 Financial Statements (the “ﬁ nancial statements”) of Cambria Africa Plc for the year ended 31 August 2016 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 10, 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 presen- ta(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 and to iden(cid:415) fy any informa(cid:415) on that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit . If we become aware of any apparent material misstatements or inconsistencies we consider implica(cid:415) ons for our report. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 15 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 2016 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. Baker Tilly Isle of Man LLC Chartered Accountants 2a Lord Street Douglas Isle of Man IM99 1HP 27 January 2017 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 16 Consolidated Income Statement For the year ended 31 August 2016 Revenue Cost of sales Gross proﬁ t Opera(cid:415) ng costs Other income Net proﬁ ts on disposal of investments and impairment of assets Opera(cid:415) ng proﬁ t/(loss) Finance income Finance costs Net ﬁ nance costs Loss before tax Income tax NOTE 5 6 6 8 8 9 Loss for the period from con(cid:415) nuing opera(cid:415) ons Discon(cid:415) nued opera(cid:415) ons Proﬁ t for the year from discon(cid:415) nued opera(cid:415) ons, net of tax 5/10 (Loss)/proﬁ t for the year A(cid:425) ributable to: Owners of the company Non-controlling Interests (Loss)/proﬁ t for the year (Loss)/earnings per share - all opera(cid:415) ons Basic and diluted (loss)/proﬁ t per share (Cents) Loss per share-con(cid:415) nuing opera(cid:415) ons Basic and diluted loss per share (Cents) 11 11 2016 TOTAL US$’000 8,552 (2,962) 5,590 (5,302) - 5 293 16 (657) (641) (348) (396) (744) - (744) (1,010) 266 (744) (0.5c) (0.5c) *Restated 2015 TOTAL US$’000 10,306 (4,670) 5,636 (7,766) 7 199 (1,924) 10 (740) (730) (2,654) (271) (2,925) 3,380 455 164 291 455 0.1c (2.3c) The notes on pages 23 to 62 are an integral part of these consolidated ﬁ nancial statements. *Amounts have been restated due to reclassiﬁ ca(cid:415) on of net li(cid:415) ga(cid:415) on se(cid:425) lement proceeds to discon(cid:415) nued opera(cid:415) ons. (See note 2) CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 17 Consolidated Statement of Comprehensive Income For the year ended 31 August 2016 (Loss)/proﬁ t for the year Other comprehensive income Foreign currency transla(cid:415) on diﬀ erences for overseas opera(cid:415) ons Total comprehensive (loss)/proﬁ t for the year A(cid:425) ributable to: Owners of the company Non-controlling interest Total comprehensive (loss)/proﬁ t for the year 2016 US$’000 (744) 9 (735) (1,001) 266 (735) *Restated 2015 US$’000 455 97 552 261 291 552 The notes on pages 23 to 62 are an integral part of these consolidated ﬁ nancial statements. *Amounts have been restated due to reclassiﬁ ca(cid:415) on of net li(cid:415) ga(cid:415) on se(cid:425) lement proceeds to discon(cid:415) nued opera(cid:415) ons. (See note 2) CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 18 Consolidated Statement of Changes in Equity For the year ended 31 August 2016 ATTRIBUTABLE TO OWNERS OF THE COMPANY SHARE CAPITAL SHARE PREMIUM RE(cid:883) VALUA(cid:883) TION RESERVE FOREIGN EXCHANGE RESERVE SHARE BASED PAYMENT RESERVE RETAINED EARNINGS NDR TOTAL NON(cid:883) CON(cid:883) TROLLING INTERESTS TOTAL EQUITY US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Balance at 1 September 34 83,950 438 (10,532) 86 (75,385) 1,900 491 (Loss)/proﬁ t for the year Foreign currency transla(cid:415) on diﬀ erences for overseas opera(cid:415) ons Total comprehensive proﬁ t for the year Contribu(cid:415) ons by and dis- tribu(cid:415) ons to owners of the Company recognised directly in equity Disposal of subsidiary Expiry of share op(cid:415) ons Dividends paid Total contribu(cid:415) ons by and distribu(cid:415) ons to owners of the Company - - - - - - - - - - - - - - - - - - - - - - 9 9 (105) - - (105) - - - - (43) - (43) (1,010) - (1,010) 105 43 - 148 - - - - - - - (1,010) 9 65 266 - 556 (744) 9 (1,001) 266 (735) - - - - - - - (335) (335) (335) (335) Balance at 31 August 2016 34 83,950 438 (10,628) 43 (76,247) 1,900 (510) (4) (514) The notes on pages 23 to 62 are an integral part of these consolidated ﬁ nancial statements CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 19 Consolidated Statement of Changes in Equity For the year ended 31 August 2016 ATTRIBUTABLE TO OWNERS OF THE COMPANY SHARE CAPITAL SHARE PREMIUM RE(cid:883) VALUA(cid:883) TION RESERVE FOREIGN EXCHANGE RESERVE SHARE BASED PAYMENT RESERVE RETAINED EARNINGS NDR TOTAL NON(cid:883) CON(cid:883) TROLLING INTERESTS TOTAL EQUITY US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 Balance at 1 September 18 82,487 438 (10,629) 86 (75,890) 2,241 (1,249) Proﬁ t for the year Foreign currency transla(cid:415) on diﬀ erences for overseas opera(cid:415) ons Total comprehensive proﬁ t for the year Contribu(cid:415) ons by and dis- tribu(cid:415) ons to owners of the Company recognised directly in equity Disposal of subsidiary Dividends paid Issue of ordinary shares Total contribu(cid:415) ons by and distribu(cid:415) ons to owners of the Company Balance at 31 August 2015 - - - - - 15 15 34 - - - - - 1,463 1,463 - - - - - - - - 97 97 - - - - - - - - - - - 164 - 164 - - - 9 291 - (1,240) 455 97 164 97 261 291 552 341 (341) - - - - - - 1,479 - (235) - - (235) 1,479 341 (341) 1,479 (235) 1,244 83,950 438 (10,532) 86 (75,385) 1,900 491 65 556 The notes on pages 23 to 62 are an integral part of these consolidated ﬁ nancial statements CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 20 Consolidated and Company Statement of Financial Position As at 31 August 2016 NOTES GROUP 2016 COMPANY 2016 GROUP 2015 COMPANY 2015 US$’000 US$’000 US$’000 US$’000 Assets Property, plant and equipment Goodwill Intangible assets Investment in subsidiaries Total non-current assets Inventories Financial assets at fair value through proﬁ t or loss Trade and other receivables Cash and cash equivalents Discon(cid:415) nued opera(cid:415) on (Li(cid:415) ga(cid:415) on se(cid:425) lement) 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 Current tax liabili(cid:415) es Loans and borrowings Trade and other payables Discon(cid:415) nued opera(cid:415) on (Li(cid:415) ga(cid:415) on se(cid:425) lement) Total current liabili(cid:415) es Total liabili(cid:415) es Total equity and liabili(cid:415) es 12 13 14 15 16 17 18 19 5 20,21 20,21 20,21 20,21,22 20 20 23 24 25 27 23,26 27 5 2,594 717 39 - 3,350 407 40 1,311 701 - 2,459 5,809 34 83,950 438 43 (10,628) 1,900 (76,247) (510) (4) (514) 2,965 207 152 3,324 308 1,469 1,222 - 2,999 6,323 5,809 - - - - - - - 6,374 - - 6,374 6,374 34 83,950 - 43 (13,186) - (71,765) (924) - (924) 2,929 - - 2,929 - 1,469 2,900 - 4,369 7,298 6,374 2,594 717 2 - 3,313 761 50 1,241 645 4,752 7,449 10,762 34 83,950 438 86 (10,532) 1,900 (75,385) 491 65 556 45 183 177 405 200 6,877 1,446 1,278 9,801 10,206 10,762 - - - - - - - 8,383 50 8,433 8,433 34 83,950 - 86 (13,186) - (70,270) 614 - 614 - - - - - 4,812 3,007 7,819 7,819 8,433 These ﬁ nancial statements were approved by the Board of Directors and authorised for issue on 27 January 2017. They were signed on their behalf by: MR SAMIR SHASHA EXECUTIVE DIRECTOR The notes on pages 23 to 62 are an integral part of these consolidated ﬁ nancial statements. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 21 Consolidated Statement of Cash Flows For the year ended 31 August 2016 NOTES GROUP 2016 GROUP 2015 Cash generated from/(used) in opera(cid:415) ons* 28 Taxa(cid:415) on paid Cash generated from/(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 Proceeds on disposal of subsidiary Other inves(cid:415) ng ac(cid:415) vi(cid:415) es Interest received Net cash (used)/from 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 Loans repaid Proceeds from drawdown of loans Net cash (u(cid:415) lised)/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 Foreign exchange 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 23/26 23/26 19 19 US$’000 3,944 (313) 3,631 20 (170) 60 (39) 16 (113) (335) (267) - (7,146) 4,277 (3,471) 47 645 9 701 701 - 701 US$’000 (2,590) (342) (2,932) 126 (88) 2,445 - 10 2,493 (235) (363) 1,479 (595) 62 348 (91) 639 97 645 645 - 645 * All amounts include both con(cid:415) nuing and discon(cid:415) nued opera(cid:415) ons. Cash ﬂ ow from discon(cid:415) nued opera(cid:415) ons are set out in note 10, the eﬀ ect of which was $3.4 million inﬂ ow in 2016 and $1.03 million u(cid:415) lised in 2015. The notes on pages 23 to 62 are an integral part of these consolidated ﬁ nancial statements. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 22 Notes to the Financial Statements For the year ended 31 August 2016 1. Reporting entity the amounts reported for the current or prior periods: Cambria Africa Plc (the “Company”) is a public limited compa- ny listed on the Alterna(cid:415) ve Investment Market (AIM) and in- corporated in the Isle of Man under the Companies Act 2006. The consolidated ﬁ nancial statements of the Group for the year ended 31 August 2016 comprise the Company and its subsid- iaries (together referred to as the “Group” and individually as “Group en(cid:415) (cid:415) es”). The majority shareholder is Ventures Africa Limited and the ul- (cid:415) mate controlling en(cid:415) ty is S Shasha and Associates. The ﬁ nancial statements were authorised for issue by the Direc- tors on 27 January 2017. 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 only statement of comprehensive income in consolidated ﬁ nancial statements. RESTATEMENT OF COMPARATIVE NUMBERS During the period, the Group reclassiﬁ ed the net li(cid:415) ga(cid:415) on pro- ceeds rela(cid:415) ng to its Jet Claims (2015) as a discon(cid:415) nued oper- a(cid:415) on. The board is of the opinion that the Jet Claims relate to the Group’s discon(cid:415) nued Air Business, a dis(cid:415) nct business that was reported on separately and discon(cid:415) nued. Accordingly the informa(cid:415) on for the prior period has been restated such that compara(cid:415) ve informa(cid:415) on given in respect of discon(cid:415) nued and con(cid:415) nuing opera(cid:415) ons is consistent in each period. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (cid:525)“IFRS”(cid:526) In the current year, the applica(cid:415) on of the following new and revised standards and interpreta(cid:415) ons issued by the Interna(cid:415) on- al Accoun(cid:415) ng Standards Board (“IASB”) and the Interna(cid:415) onal Financial Repor(cid:415) ng Interpreta(cid:415) ons Commi(cid:425) ee (“IFRIC”) of the IASB became mandatory. The adop(cid:415) on of these new and revised standards and interpreta(cid:415) ons has not resulted in any changes to the Company’s accoun(cid:415) ng policies that would aﬀ ect Various IFRS: Amendments resul(cid:415) ng from Annual Improve- ments 2010-2012 Cycle (deﬁ ni(cid:415) on of ‘ves(cid:415) ng condi(cid:415) on’) Eﬀ ec- (cid:415) ve in the EU for annual periods beginning on or a(cid:332) er 1 Febru- ary 2015. Amendments resul(cid:415) ng from Annual Improvements 2011-2013 Cycle (scope excep(cid:415) on for joint ventures) Eﬀ ec(cid:415) ve in the EU for annual periods beginning on or a(cid:332) er 1 January 2015. IFRS 10 Consolidated Financial Statements: Amendments defer- ring the eﬀ ec(cid:415) ve date of the September 2014 amendments - Eﬀ ec(cid:415) ve immediately. IAS 19 Employee Beneﬁ ts: Amended to clarify the requirements that relate to how contribu(cid:415) ons from employees or third par- (cid:415) es that are linked to service should be a(cid:425) ributed to periods of service - Eﬀ ec(cid:415) ve for annual periods beginning on or a(cid:332) er 1 February 2015. IAS 28 Investments in Associates and Joint Ventures: Amend- ments deferring the eﬀ ec(cid:415) ve date of the September 2014 amendments – Eﬀ ec(cid:415) ve immediately. The following standards, amendments and interpreta(cid:415) ons have been issued but are not eﬀ ec(cid:415) ve for the period commencing 1 September 2015 and have not been early adopted by the com- pany. Various IFRS: Amendments resul(cid:415) ng from September 2014 An- nual Improvements to IFRSs - Eﬀ ec(cid:415) ve for annual periods begin- ning on or a(cid:332) er 1 January 2016. IFRS 7 Financial Instruments: Disclosures: Addi(cid:415) onal hedge ac- coun(cid:415) ng disclosures (and consequen(cid:415) al amendments) result- ing from the introduc(cid:415) on of the hedge accoun(cid:415) ng chapter in IFRS 9 - Applies when IFRS 9 is applied. IFRS 9 Financial Instruments: Finalised version, incorpora(cid:415) ng requirements for classiﬁ ca(cid:415) on and measurement, impairment, general hedge accoun(cid:415) ng and de-recogni(cid:415) on - Eﬀ ec(cid:415) ve for an- nual periods beginning on or a(cid:332) er 1 January 2018. IFRS 10 Consolidated Financial Statements: Amendments re- garding the sale or contribu(cid:415) on of assets between an investor and its associate or joint venture - deferred indeﬁ nitely (see be- low). CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 23 Notes to the Financial Statements For the year ended 31 August 2016 2. Basis of preparation (continued) BASIS OF MEASUREMENT ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (cid:525)“IFRS”(cid:526) (cid:525)CON(cid:487) TINUED(cid:526) Amendments regarding the applica(cid:415) on of the consolida(cid:415) on ex- cep(cid:415) on – Eﬀ ec(cid:415) ve from annual periods beginning on or a(cid:332) er 1 January 2016. The consolidated ﬁ nancial statements have been prepared on the historical cost basis except for the following: • • land and buildings measured at revalued amounts. share-based payments measured at fair value. FUNCTIONAL AND PRESENTATION CURRENCY IFRS 11 Joint Arrangements: Amendments regarding the ac- coun(cid:415) ng for acquisi(cid:415) ons of an interest in a joint opera(cid:415) on - Ef- fec(cid:415) ve for annual periods beginning on or a(cid:332) er 1 January 2016. The consolidated ﬁ nancial statements are presented in United States Dollars, which is the Group’s presenta(cid:415) onal currency and the Company’s func(cid:415) onal currency. IFRS 15 Revenue from Contracts with Customers: Original issue - Applies to an en(cid:415) ty’s ﬁ rst annual IFRS ﬁ nancial statements for a period beginning on or a(cid:332) er 1 January 2017. Amendments to defer to the eﬀ ec(cid:415) ve date to 1 January 2018 Eﬀ ec(cid:415) ve from annual periods beginning on or a(cid:332) er 1 January 2018. Clariﬁ ca(cid:415) ons to IFRS 15 - Annual periods beginning on or a(cid:332) er 1 January 2018. Currently not yet endorsed for use in the EU. IFRS 16 Leases: Original Issue - Eﬀ ec(cid:415) ve in annual periods begin- ning on or a(cid:332) er 1 January 2019. IAS 1 Presenta(cid:415) on of Financial Statements: Amendments result- ing from the disclosure ini(cid:415) a(cid:415) ve - Eﬀ ec(cid:415) ve from annual periods beginning on or a(cid:332) er 1 January 2016. IAS 7 Statement of Cash Flows: Amendments as result of the Disclosure ini(cid:415) a(cid:415) ve - Eﬀ ec(cid:415) ve from annual periods beginning on or a(cid:332) er 1 January 2017. IAS 12 Income Taxes: Amendments regarding the recogni(cid:415) on of deferred tax assets for unrealised losses - Eﬀ ec(cid:415) ve from annual periods beginning on or a(cid:332) er 1 January 2017. 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: IAS 16 Property, Plant and Equipment: Amendments regarding the clariﬁ ca(cid:415) on of acceptable methods of deprecia(cid:415) on and am- or(cid:415) sa(cid:415) on - Eﬀ ec(cid:415) ve from annual periods beginning on or a(cid:332) er 1 January 2016. • Note 13 – Goodwill • Note 12 – Property, plant and equipment • Note 24 – Provisions IAS 38 Intangible Assets: Amendments regarding the clariﬁ ca- (cid:415) on of acceptable methods of deprecia(cid:415) on and amor(cid:415) sa(cid:415) on - Eﬀ ec(cid:415) ve in annual periods beginning on or a(cid:332) er 1 January 2016 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 24 Notes to the Financial Statements For the year ended 31 August 2016 2. Basis of preparation (continued) USE OF ESTIMATES AND JUDGEMENTS (cid:525)CONTINUED(cid:526) 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. GOING CONCERN 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 8. In ad- di(cid:415) on, note 29 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 nan- cial instruments 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 ﬁ nancial posi(cid:415) on of the Group has improved signiﬁ cantly as a result of the se(cid:425) lement of the Con- silium and Nurture Loans. The VAL Loan Conversion, in terms of which VAL converts £ 1.25 million (approximately $1.55 million) of its loans into equity, has been agreed subsequent to the end of the ﬁ nancial year. As a result of the VAL Loan Conversion and the above debt se(cid:425) lements, group debt will be reduced to $2.9 million from $6.9 million at the end of the previous ﬁ nancial year. 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. 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 25 Notes to the Financial Statements For the year ended 31 August 2016 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 is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to aﬀ ect those returns through its power over the investee. The ﬁ nancial state- ments of subsidiaries are included in the consolidated ﬁ nancial statements from the date that control commenced un(cid:415) l the date that control ceases. The interest of non-controlling shareholders is stated at their propor(cid:415) on of the fair values of the assets and liabili(cid:415) es rec- ognised. Subsequently, losses applicable to the non-controlling interests are allocated against their interests even if doing so causes the non-controlling interests to have a deﬁ cit balance. 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 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. 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. (cid:525)B(cid:526) INTANGIBLE ASSETS GOODWILL 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. 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 26 Notes to the Financial Statements For the year ended 31 August 2016 3. Signi(cid:976)icant accounting policies (con- tinued) etary items, any exchange component of that gain or loss is also recognised directly in other comprehensive income. (cid:525)B(cid:526) INTANGIBLE ASSETS (cid:525)CONTINUED(cid:526) Amor(cid:415) sa(cid:415) on of intangible assets, disclosed under opera(cid:415) ng costs and in note 6, is charged over their useful economic life, as follows:- So(cid:332) ware licences 3-6 years (cid:525)C(cid:526) FOREIGN CURRENCIES 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 comprehensive income and are transferred to the Group’s for- eign currency transla(cid:415) on reserve within equity. 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). (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- 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 account- ing proﬁ t. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 27 Notes to the Financial Statements For the year ended 31 August 2016 3. Signi(cid:976)icant accounting policies (con- tinued) (cid:525)D(cid:526) TAXATION (cid:525)CONTINUED(cid:526) Deferred tax liabili(cid:415) es are recognised for taxable temporary dif- ferences arising on the investments in subsidiaries and associ- ates, except where the Group is able to control the reversal 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. 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) INVESTMENTS IN SUBSIDIARIES Investments in subsidiary undertakings are carried at cost with annual reviews undertaken for impairment. (cid:525)F(cid:526) OTHER INVESTMENTS 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 and buildings, over their es(cid:415) mated useful lives. The annual deprecia(cid:415) on rates used for this purpose are: Freehold buildings Plant and machinery Motor vehicles Fixtures and ﬁ (cid:427) ngs 2% 10% 15%-25% 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 land and buildings. Property, plant and equipment iden(cid:415) ﬁ ed for disposal are reclas- siﬁ ed as assets held for resale. Other asset investments are stated at fair value, adjusted for impairment losses. (cid:525)H(cid:526) IMPAIRMENT OF ASSETS EXCLUDING GOODWILL (cid:525)G(cid:526) PROPERTY, PLANT AND EQUIPMENT Land and buildings are stated at their revalued amounts, being the fair value at the date of revalua(cid:415) on, less any impairment losses. Revalua(cid:415) ons are performed with suﬃ cient regularity such that the carrying amount does not diﬀ er materially from that which would be determined using fair values at the report- ing 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 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 im- pairment 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 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 28 Notes to the Financial Statements For the year ended 31 August 2016 3. Signi(cid:976)icant accounting policies (con- tinued) and cash equivalents for the purpose of the statement of cash ﬂ ows. (cid:525)H(cid:526) IMPAIRMENT OF ASSETS EXCLUDING GOODWILL 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. 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. (cid:525)CONTINUED(cid:526) 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. 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. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash in hand and demand deposits and other short term highly liquid investments that are readily 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 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 29 Notes to the Financial Statements For the year ended 31 August 2016 3. Signi(cid:976)icant accounting policies (con- tinued) (cid:525)J(cid:526) INVENTORIES 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. (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- (cid:525)N(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- 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)O(cid:526) LEASES 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. lu(cid:415) on in the computa(cid:415) on of earnings per share. FINANCE 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. (cid:525)L(cid:526) INTEREST(cid:487)BEARING BORROWINGS 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. 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 (cid:525)M(cid:526) PROVISIONS Opera(cid:415) ng lease rentals are charged to the income statement on a straight line basis over the period of the lease. 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 30 Notes to the Financial Statements For the year ended 31 August 2016 3. Signi(cid:976)icant accounting policies (con- tinued) (cid:525)P(cid:526) EARNINGS/(cid:525)LOSS(cid:526) PER SHARE 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. 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. 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. Basic earnings/(loss) per share is calculated based on the weighted average number of ordinary shares outstanding during the year. Diluted earnings/(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. (cid:525)Q(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)R(cid:526) ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS ASSETS HELD FOR SALE 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. 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 31 Notes to the Financial Statements For the year ended 31 August 2016 4. Determination of fair values INVESTMENT PROPERTY 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. TRADE AND OTHER RECEIVABLES 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. 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. 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. 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 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. 5. Segment reporting 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 32 Notes to the Financial Statements For the year ended 31 August 2016 5. Segment reporting (continued) GEOGRAPHICAL SEGMENTS 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. • 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 In addi(cid:415) on, the following segments are reported separately as discon(cid:415) nued opera(cid:415) ons in respect of the 2015 ﬁ nancial year: net li(cid:415) ga(cid:415) on se(cid:425) lement proceeds rela(cid:415) ng to the Group’s Jet claims from its discon(cid:415) nued Air Business and the Group’s Hotel business which was sold in the previous ﬁ nancial year. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 33 Notes to the Financial Statements For the year ended 31 August 2016 5. Segment reporting (continued) CONTINUING OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2016 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 proﬁ t/(loss) for the year Finance income Finance expense Income tax expense (Loss)/proﬁ t for the year EBITDA * CONTINUING OPERATIONS INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 3,192 - 3,192 (2,667) 525 (766) - - (22) (1) (264) 1 (2) - (265) (234) US$’000 US$’000 5,363 (3) 5,360 (295) 5,065 - - - - - (3,308) (1,096) 1 - (104) (1) 1,653 15 (265) (396) 1,007 1,758 - - - - (1,096) - (390) - (1,486) (1,096) FOR THE YEAR ENDED 31 AUGUST 2015 INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE LITIGATION SETTLEMENT 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)/proﬁ t for the year Finance income Finance expense Income tax expense (Loss)/proﬁ t for the year EBITDA * US$’000 5,294 - 5,294 (4,402) 892 (1,852) - - (50) (1) (1,011) 1 (9) - (1,019) (954) US$’000 US$’000 US$’000 5,021 (9) 5,012 (268) 4,744 - - - - - (3,525) (2,000) 7 - (146) (11) 1,069 9 (306) (269) 503 1,226 - - 18 - (1,982) - (425) (2) (2,409) (2,000) - - - - - - - - - - - - - - - - * 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 TOTAL US$’000 8,555 (3) 8,552 (2,962) 5,590 (5,170) 1 - (126) (2) 293 16 (657) (396) (744) 428 *Restated TOTAL US$’000 10,315 (9) 10,306 (4,670) 5,636 (7,377) 7 - (178) (12) (1,924) 10 (740) (271) (2,925) (1,728) CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 34 5. Segment reporting (continued) DISCONTINUED OPERATIONS FOR THE YEAR ENDED 31 AUGUST 2015 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 proﬁ t/(loss) Finance income Finance expense Income tax credit/(expense) Proﬁ t/(loss) for the year EBITDA* CONTINUING OPERATIONS (cid:525)AS PREVIOUSLY STATED(cid:526) Notes to the Financial Statements For the year ended 31 August 2016 HOTELS US$’000 LITIGATION SETTLEMENT US$’000 *Restated TOTAL US$’000 276 - 276 (70) 206 - - - - - (1,278) 4,752 (1,578) 4,752 - - - - - - 276 - 276 (70) 206 (300) - - - - (94) 3,474 3,380 - - - (94) (94) 3,474 3,474 FOR THE YEAR ENDED 31 AUGUST 2015 Revenue Inter-segment revenue Revenue from external customers Cost of sales to external customers Gross proﬁ t Opera(cid:415) ng costs Other opera(cid:415) ng income Impairment of assets Deprecia(cid:415) on Amor(cid:415) sa(cid:415) on Opera(cid:415) ng proﬁ t/(loss) for the year Finance income Finance expense Income tax expense Proﬁ t/(loss) for the year EBITDA * INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE LITIGATION SETTLEMENT US$’000 US$’000 US$’000 US$’000 5,294 - 5,294 (4,402) 892 (1,852) - - (50) (1) (1,011) 1 (9) - (1,019) * (954) 5,021 (9) 5,012 (268) 4,744 - - - - - (3,525) (2,000) - - - - - (1,278) 4,752 - - - - - 18 - (1,982) 3,474 - (425) (2) (2,409) (2,000) - - - 3,474 3,474 7 - (146) (11) 1,069 9 (306) (269) 503 1,226 * Earnings Before Interest, Taxa(cid:415) on, Deprecia(cid:415) on and Amor(cid:415) sa(cid:415) on. Adjusted for deprecia(cid:415) on included in cost of sales CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 35 - - - 3,380 3,380 TOTAL US$’000 10,315 (9) 10,306 (4,670) 5,636 (8,655) 4,759 - (178) (12) 1,550 10 (740) (271) 549 1,746 Notes to the Financial Statements For the year ended 31 August 2016 5. Segment reporting (continued) DISCONTINUED OPERATIONS (cid:525)AS PREVIOUSLY STATED(cid:526) FOR THE YEAR ENDED 31 AUGUST 2015 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 Finance income Finance expense Income tax credit/(expense) Loss for the year EBITDA* HOTELS US$’000 AVIATION US$’000 PRINTING & PROPS LITIGATION SETTLEMENT US$’000 US$’000 TOTAL US$’000 276 - 276 (70) 206 (300) - - - - - (94) - - - (94) (94) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 276 - 276 (70) 206 (300) - - - - - (94) - - - (94) (94) CONTINUING OPERATIONS (cid:487) SEGMENT ASSET & LIABILITIES FOR THE YEAR ENDED 31 AUGUST 2016 Segment assets Segment liabili(cid:415) es Capital expenditure FOR THE YEAR ENDED 31 AUGUST 2015 Segment assets Segment liabili(cid:415) es Capital expenditure INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES US$’000 1,181 306 17 US$’000 2,122 997 154 HEAD OFFICE US$’000 2,506 5,020 - INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 1,758 641 37 US$’000 US$’000 1,074 2,797 71 3,178 5,490 - TOTAL US$’000 5,809 6,323 171 *Restated TOTAL US$’000 6,010 8,928 108 * Earnings Before Interest, Taxa(cid:415) on, Deprecia(cid:415) on and Amor(cid:415) sa(cid:415) on. Adjusted for deprecia(cid:415) on included in cost of sales CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 36 Notes to the Financial Statements For the year ended 31 August 2016 5. Segment reporting (continued) CONTINUING OPERATIONS (cid:487) SEGMENT ASSET & LIABILITIES (cid:525)AS PREVIOUSLY STATED(cid:526) FOR THE YEAR ENDED 31 AUGUST 2015 Segment assets Segment liabili(cid:415) es Capital expenditure ASSETS AND LIABILITIES HELD FOR SALE INDUSTRIAL CHEMICALS OUTSOURCE AND IT SERVICES HEAD OFFICE US$’000 1,758 641 37 US$’000 US$’000 1,074 2,797 71 7,930 6,768 - TOTAL US$’000 10,762 10,206 108 *Restated TOTAL US$’000 - - - 4,752 - 4,752 LITIGATION SETTLEMENT US$’000 - - - 4,752 - 4,752 1,278 1,278 - - - - 1,278 1,278 3,474 3,474 FOR THE YEAR ENDED 31 AUGUST 2015 Property, plant and equipment Biological assets Inventories Trade and other receivables Cash and cash equivalents Total assets held for sale Trade and other payables Provisions Deferred tax liabili(cid:415) es Total liabili(cid:415) es held for sale Net assets of disposal groups held for sale ASSETS AND LIABILITIES HELD FOR SALE (cid:525)AS PREVIOUSLY STATED(cid:526) No amounts were included in Assets and Liabili(cid:415) es held for sale in the prior year before the reclassiﬁ ca(cid:415) on of the net Li(cid:415) ga(cid:415) on Se(cid:425) lement proceeds as discon(cid:415) nued opera(cid:415) ons in the curent year, requiring the restatement above. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 37 Notes to the Financial Statements For the year ended 31 August 2016 6. Group net operating costs Cost of sales Administra(cid:415) ve expenses Net opera(cid:415) ng costs 2016 US$’000 2015 US$’000 2,962 5,162 8,124 4,670 7,397 12,067 Administra(cid:415) ve expenses include management related overheads for opera(cid:415) ons and head oﬃ ce. NOTE 2016 US$’000 2015 US$’000 Opera(cid:415) ng costs include, inter alia: Deprecia(cid:415) on of property, plant and equipment Deprecia(cid:415) on of property plant and equipment in cost of sales Amor(cid:415) sa(cid:415) on Opera(cid:415) ng lease rentals: Land and buildings Personnel expenses Gain on investments and subsidiaries disposed of Auditors remunera(cid:415) on Fees Payable to the Company Auditors for: Current year audit of the Group’s ﬁ nancial statements Prior year audit of the Group’s ﬁ nancial statements Total audit fees 7. Personnel expenses 7 The aggregate remunera(cid:415) on comprised (including Execu(cid:415) ve Directors): Wages and salaries Compulsory social security contribu(cid:415) ons Total personnel expenses Of which: Remunera(cid:415) on of Group Execu(cid:415) ve Directors and Key Personnel Directors’ and key personnels’ emoluments (see note 36) The average number of employees (including Execu(cid:415) ve Directors) in con(cid:415) nuing opera(cid:415) ons was: Outsource and IT services Industrial chemicals Head Oﬃ ce Total 125 7 2 191 2,567 94 98 - 98 177 7 12 305 4,052 94 75 4 79 2016 US$’000 2,407 160 2,567 2015 US$’000 3,908 144 4,052 - 755 2016 Number 2015 Number 60 24 3 87 60 25 3 88 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 38 8. Net (cid:976)inance (costs)/income Recognised in income statement: Bank interest receivable Loan interest receivable Finance income Bank interest payable Loan interest payable Finance costs Net ﬁ nance costs 9. Taxation Income tax recognised in the income statement Current tax expense Current period Deferred tax credit Origina(cid:415) on and reversal of temporary diﬀ erences Total income tax charge in income statement RECONCILIATION OF EFFECTIVE TAX RATE Proﬁ t/(loss) before tax Income tax using the Zimbabwean corpora(cid:415) on tax rate 25.75% (2015: 25.75%) Net losses where no group relief is available Total income tax charge in income statement DEFERRED TAX Rela(cid:415) ng to temporary tax diﬀ erences in subsidiaries Total Notes to the Financial Statements For the year ended 31 August 2016 2016 US$’000 2015 US$’000 16 - 16 - (657) (657) (641) 9 1 10 - (740) (740) (730) 2016 US$’000 2015 US$’000 420 (24) 396 273 (2) 271 2016 US$000 2015 US$000 (348) (90) 486 396 820 211 60 271 2016 US$’000 (24) (24) 2015 US$’000 (2) (2) Corpora(cid:415) on tax is calculated as 25.75% (2015: 25.75%) of the es(cid:415) mated assessable proﬁ t 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 39 Notes to the Financial Statements For the year ended 31 August 2016 10. Disposals and discontinued operations The following en(cid:415) (cid:415) es were classiﬁ ed as held for disposal in the previous (2015) ﬁ nancial year: • LonZim Hotels Limited and its subsidiaries The following en(cid:415) (cid:415) es were reclassiﬁ ed as held for disposal in the period under review. As discussed in note 2 and note 5, the com- para(cid:415) ves for the period ended 31 August 2015 are accordingly restated. • Li(cid:415) ga(cid:415) on Se(cid:425) lement proceeds on the Group’s Jet Claims. The Jet Claims relate to the Group’s Air Business, a dis(cid:415) nct busi- ness that was reported on separately and discon(cid:415) nued. 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 in respect of the 2015 ﬁ nancial year. CASH FLOWS FROM/(cid:525)USED IN(cid:526) DISCONTINUED OPERATIONS Net cash generated by/(used in) opera(cid:415) ng ac(cid:415) vi(cid:415) es Net cash used in inves(cid:415) ng ac(cid:415) vi(cid:415) es Net cash used in ﬁ nancing ac(cid:415) vi(cid:415) es Net cash ﬂ ows for the year Cash and cash equivalents held for sale ASSETS AND LIABILITIES OF SUBSIDIARY DISPOSED OF DURING THE 2015 YEAR: Property, plant and equipment Biological assets Inventories Trade and other receivables Total assets of disposal subsidiary Trade and other payables and ST loan Provisions Deferred tax liabili(cid:415) es Total liabili(cid:415) es of disposal subsidiary Cash and cash equivalents 2016 US$’000 3,474 - - 3,474 - *Restated 2015 US$’000 (929) (55) (52) (1,036) - HOTELS US$’000 5,973 69 125 65 6,232 582 127 3,078 3,787 55 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 40 Notes to the Financial Statements For the year ended 31 August 2016 11. (Loss)/earnings per share The calcula(cid:415) on of basic and diluted (loss)/earnings per share at 31 August 2016 has been based on the (loss)/proﬁ t 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 2016 EARNINGS PER SHARE US$’CENTS *Restated 2015 EARNINGS PER SHARE US$’CENTS 2016 US$’000 *Restated 2015 US$’000 (0.5) (1,010) 0.1 164 (Loss)/proﬁ t for the purposes of basic (loss)/earnings and dilu(cid:415) ve per share being net (loss)/proﬁ t a(cid:425) ributable to equity holders of the parent* (Loss)/proﬁ t for the purposes of basic (loss)/earnings and dilu(cid:415) ve per share being net (loss)/proﬁ t a(cid:425) ributable to equity holders of the parent - con(cid:415) nuing opera(cid:415) ons - discon(cid:415) nued opera(cid:415) ons (0.5) - (1,010) - (2.3) 2.4 (3,216) 3,380 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 2016 000’S 2015 000’S 141,518 141,518 Actual number of shares outstanding at the end of the period 21 207,920 207,920 *In the current and prior year the eﬀ ect of the share op(cid:415) ons (note 22) 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. 12. Property, plant and equipment 2016 GROUP Cost or valua(cid:415) on At 1 September 2015 Addi(cid:415) ons in year Disposals in year Balance at 31 August 2016 Accumulated deprecia(cid:415) on At 1 September 2015 Disposals in year Deprecia(cid:415) on charge for the year Balance at 31 August 2016 Carrying amounts At 31 August 2016 At 31 August 2015 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 FREEHOLD LAND & BUILDINGS US$’000 PLANT & MACHINERY US$’000 MOTOR VEHICLES US$’000 FURNITURE FIXTURES & FITTINGS US$’000 2,317 - - 2,317 (34) - - (34) 2,283 2,283 76 2 (1) 77 (49) - (6) (55) 22 27 580 105 (159) 526 (412) 129 (88) (371) 155 168 988 62 (10) 1,040 (872) 4 (38) (906) 134 116 TOTAL US$’000 3,961 169 (170) 3,960 (1,367) 133 (132) (1,366) 2,594 2,594 PAGE 41 Notes to the Financial Statements For the year ended 31 August 2016 12. Property, plant and equipment (continued) 2015 GROUP Cost or valua(cid:415) on At 1 September 2014 Addi(cid:415) ons in year Disposals in year Balance at 31 August 2015 Accumulated deprecia(cid:415) on At 1 September 2014 Disposals in year Deprecia(cid:415) on charge for the year Balance at 31 August 2015 Carrying amounts At 31 August 2015 At 31 August 2014 2016 COMPANY Cost or valua(cid:415) on At 1 September 2015 Addi(cid:415) ons in year Disposals in year Balance at 31 August 2016 Accumulated deprecia(cid:415) on At 1 September 2015 Addi(cid:415) ons in year Disposals in year Deprecia(cid:415) on charge for the year Balance at 31 August 2016 Carrying amounts At 31 August 2016 At 31 August 2015 FREEHOLD LAND & BUILDINGS US$’000 PLANT & MACHINERY US$’000 MOTOR VEHICLES US$’000 FURNITURE FIXTURES & FITTINGS US$’000 2,317 - - 2,317 (34) - - (34) 2,283 2,283 71 6 (1) 76 (41) 1 (9) (49) 27 30 782 48 (250) 580 (528) 236 (120) (412) 168 254 987 34 (33) 988 (849) 32 (55) (872) 116 138 FREEHOLD LAND & BUILDINGS US$’000 PLANT & MACHINERY US$’000 MOTOR VEHICLES US$’000 FURNITURE FIXTURES & FITTINGS US$’000 TOTAL US$’000 4,157 88 (284) 3,961 (1,452) 269 (184) (1,367) 2,594 2,705 TOTAL US$’000 10 - - 10 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10 - - 10 (10) (10) - - - - - - (10) (10) - - - - CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 42 12. Property, plant and equipment (continued) Notes to the Financial Statements For the year ended 31 August 2016 FREEHOLD LAND & BUILDINGS US$’000 PLANT & MACHINERY US$’000 MOTOR VEHICLES US$’000 FURNITURE FIXTURES & FITTINGS US$’000 TOTAL US$’000 - - - - - - - - - - - - - - - - - - - - - - 212 - (212) - (200) 207 (7) - - 12 43 - (33) 10 (37) 31 (4) (10) - 6 255 - (245) 10 (237) 238 (12) (10) - 18 2015 COMPANY Cost or valua(cid:415) on At 1 September 2014 Addi(cid:415) ons in year Disposals in year Balance at 31 August 2015 Accumulated deprecia(cid:415) on At 1 September 2014 Addi(cid:415) ons in year Disposals in year Deprecia(cid:415) on charge for the year Balance at 31 August 2015 Carrying amounts At 31 August 2015 At 31 August 2014 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) Limit- ed (“TWRE”) carried out a valua(cid:415) on of the freehold land and buildings as at 31 August 2013 with reference to observed market evidence. TWRE performed a desktop update of their valua(cid:415) on as at 31 August 2016. The directors having considered the TWRE updated report, consider this value to s(cid:415) ll be an accurate reﬂ ec(cid:415) on of the fair value at 31 August 2016 being US$2.3 million (2015: US$2.3 million). The Directors consider the fair value at the repor(cid:415) ng date to not be materially diﬀ erent from the carrying value. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 43 Notes to the Financial Statements For the year ended 31 August 2016 13. Goodwill As at 31 August 2016, the consolidated statement of ﬁ nancial posi(cid:415) on included goodwill of US$717,000 (2015: US$717,000). Goodwill is allocated to the Group’s cash-genera(cid:415) ng units (“CGUs”), or groups of cash-genera(cid:415) ng units, that are expected to ben- eﬁ t from the synergies of the business combina(cid:415) on that gave rise to the goodwill as follows: CASH GENERATING UNIT (cid:904)CGU(cid:905) ORIGINAL COST COST AT 1 SEPTEMBER 2015 CARRYING VALUE AT 1 SEPTEMBER 2015 ACCELERATED WRITE(cid:883)OFF CARRYING VALUE AT 31 AUGUST 2016 Paynet Limited Total US$’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 cash genera(cid:415) on in place at the date of this report and taking factors exis(cid:415) ng at that date into considerra(cid:415) on. • • • • • 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 signiﬁ cantly exceed the reported value thereof and that the re- spec(cid:415) ve book values do not adequately reﬂ ect the value of the Group’s investments and proprietary technologies. The Directors do not believe any impairment to goodwill is necessary in the current period. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 44 Notes to the Financial Statements For the year ended 31 August 2016 14. Intangible assets Payserv so(cid:332) ware licences Total AMORTISATION NET BOOK VAL(cid:883) UE AT 1 SEPTEMBER 2015 US$’000 ADDITIONS DISPOSALS AMORTISATION US$’000 2 2 40 40 (1) (1) (2) (2) CLOSING BALANCE AT 31 AUGUST 2016 US$’000 39 39 ORIGINAL COST US$’000 1,465 1,465 The amor(cid:415) sa(cid:415) on charge is recognised within opera(cid:415) ng expenses (note 6) in the income statement. The Group tests other intangi- ble 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 intangible assets are: So(cid:332) ware licences 3-6 years 15. Investments in subsidiaries and associates The Company has investments in the following subsidiaries which principally aﬀ ect the proﬁ ts and/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. 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 2016 100% 100% 100% 100% 100% 100% - 100% - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 100% 2015 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 51% 100% CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 45 Notes to the Financial Statements For the year ended 31 August 2016 15. Investments in subsidiaries and associates (continued) NON(cid:487)CONTROLLING INTERESTS (cid:525)“NCI”(cid:526) O(cid:425) onby Trading (Pvt) Ltd (address: CABSA Head Oﬃ ce, Northridge Park, Harare) holds a 49% interest in Tradanet (Pvt) Ltd. Tra- danet salient ﬁ nancial informa(cid:415) on: Proﬁ t a(cid:425) ributable to NCI Dividends paid to NCI Accumulated NCI at year end Non-current assets Current assets Non-current liabili(cid:415) es Current liabili(cid:415) es Cash ﬂ ow from opera(cid:415) ons Cash u(cid:415) lised in inves(cid:415) ng ac(cid:415) vi(cid:415) es Cash u(cid:415) lised in ﬁ nancing ac(cid:415) vi(cid:415) es (including dividends) Cash and cash equivalents 16. Inventory Raw materials and consumables Goods in transit Finished goods Total 2016 US$’000 266 (335) (4) 44 208 1 261 549 (8) (674) 178 2015 US$’000 291 (235) 65 54 387 16 291 701 (54) (507) 311 GROUP 2016 GROUP 2015 US$’000 US$’000 192 5 210 407 222 36 503 761 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 46 17. Financial assets at fair value through pro(cid:976)it or loss Notes to the Financial Statements For the year ended 31 August 2016 Quoted investments por(cid:414) olio Total QUOTED INVESTMENTS PORTFOLIO: Balance at 1 September Acquired during the year Disposed during the year Loss on fair valua(cid:415) on during the year At end of the year GROUP 2016 GROUP 2015 US$’000 US$’000 40 40 50 50 GROUP 2016 GROUP 2015 US$’000 US$’000 50 - - (10) 40 66 - - (16) 50 The por(cid:414) olio is managed by an asset management company who makes the decisions regarding the sale and purchase of listed 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 23. 18. Trade and other receivables Amounts owed by Group undertakings Trade receivables Other receivables Prepayments and accrued income Total No interest is charged on receivables. GROUP 2016 US$’000 - 898 339 74 1,311 COMPANY 2016 US$’000 6,168 - 206 - 6,374 GROUP 2015 US$’000 - 933 169 139 1,241 COMPANY 2015 US$’000 8,273 - 110 - 8,383 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 47 Notes to the Financial Statements For the year ended 31 August 2016 19. 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 20. Capital and reserves REVALUATION RESERVE GROUP 2016 US$’000 COMPANY 2016 US$’000 GROUP 2015 US$’000 COMPANY 2015 US$’000 701 - 701 - 701 - - - - - 645 - 645 - 645 50 - 50 - 50 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 and 2016, restated to US$ at closing rates. 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 48 21. Share capital & share premium Issued and fully paid At 1 September 2015 Issued in period At 31 August 2016 Notes to the Financial Statements For the year ended 31 August 2016 ORDINARY SHARES 2016 ORDINARY SHARES 2015 NUMBER US$’000 NUMBER US$’000 207,920,406 - 207,920,406 34 - 34 99,155,162 108,765,244 207,920,406 18 16 34 No warrants were granted during the current ﬁ nancial year and no warrants are outstanding. 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, or consecu(cid:415) ve 12 month periods, 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 also 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. SHARE PREMIUM The share premium represents the value of the premium arising on shares issued as follows: 17 April 2015 107,000,000 ordinary shares at a price of 0.85p per share (US$1,337,000) 6 March 2014 4,133,333 ordinary shares at a price of 7.5p per share (US$508,000). 4 March 2014 28,272,806 ordinary shares at a price of 7.5p per share (US$3,475,000 of which US$ 719,000 related to se(cid:425) le- ment of expenses and liabili(cid:415) es). 1 Oct 2012 8,615,115 ordinary shares at a price of 10p per share (US$1,400,000). 16 Sep 2011 3,988,439 ordinary shares at a price of 23p per share (US$1,448,000). 10 Dec 2010 17,813,944 ordinary shares at a price of 28p per share net of issue costs of £143,000 (US$7,646,000). 9 Dec 2009 4,255,525 ordinary shares at a price of 27.5p per share net of issue costs of £58,000 (US$1,820,000). 14 Jul 2009 Cost of purchasing and cancelling 4,374,000 shares at 30.5p per share (US$2,174,000). 11 Dec 2007 36,450,000 ordinary shares at a price of 100p per share net of issue costs of £2,753,000 (US$68,659,000). CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 49 Notes to the Financial Statements For the year ended 31 August 2016 22. 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 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 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 10 March 2011 was £53,000 (US$85,000). 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 ex- ercise or be deemed to have exercised their op(cid:415) ons prior to the occurrence thereof. 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 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% 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. The number and weighted average exercise price of share op(cid:415) ons are as follows: Outstanding and exercisable at 31 August 2015 Outstanding and exercisable at 31 August 2016 WEIGHTED AVERAGE EXERCISE PRICE PENCE 30 30 NUMBER OF OPTIONS 1,000,000 500,000 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 in issue. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 50 Notes to the Financial Statements For the year ended 31 August 2016 23. Loans and borrowings - long term VAL Loan Other trade payables Total GROUP 2016 US$’000 2,929 36 2,965 COMPANY 2016 US$’000 2,929 - 2,929 GROUP 2015 US$’000 - 45 45 COMPANY 2015 US$’000 - - - The VAL Loan carries interest at 8% per annum retrospec(cid:415) vely from the incep(cid:415) on thereof. It is repayable a(cid:332) er three years on 30 November 2019 with early repayment at the elec(cid:415) on of VAL, from any proceeds realised from a Liquidity Event. A Liquidity Event shall comprise: a) the sale, whether partly or in full, of Cambria’s investments and/or b) the proceeds realised from the se(cid:425) lement of or an award of, the Company’s US$ 1.8 million counterclaim against Consilium. The VAL Loan is secured through a pledge and cession over the Company’s shares in its subsidiaries. Subsequent to the end of the ﬁ nancial year, the Company announced the VAL Loan Conversion in terms of which VAL agreed to convert £1.25 million (approximately $1.55 million) of the VAL Loan into 125 million ordinary shares at 1.00p per shares. As a result of the VAL Loan Conversion, the balance of the VAL Loan has been reduced to $1.38 million. Other non-current trade payables are in respect of historic Paywell so(cid:332) ware licence fees with the Payserv Group, which could not be remi(cid:425) ed due to Zimbabwe foreign currency constraints at the (cid:415) me. The amounts due were invested in a listed por(cid:414) olio (see note 17). 24. Provisions Provisions Total GROUP 2016 US$’000 207 207 COMPANY 2016 US$’000 - - GROUP 2015 US$’000 183 183 COMPANY 2015 US$’000 - - Provisions at 31 August 2016, are in respect of the maximum Leave Pay and Re(cid:415) rement Gratuity, which may become payable by individual companies on termina(cid:415) on of employment. 25. Deferred tax liability RECOGNISED DEFERRED LIABILITY The following are the major deferred tax liabili(cid:415) es recognised by the Group and movements thereon during the current year. GROUP At 1 September Recognised directly in reserves Other movements At 31 August 2016 ACCELERATED TAX DEPRECIATION US$’000 2015 TOTAL US$’000 ACCELERATED TAX DEPRECIATION US$’000 177 - (25) 152 177 - (25) 152 178 - (1) 177 TOTAL US$’000 178 - (1) 177 Deferred tax assets oﬀ set against deferred tax liabili(cid:415) es in the period were US$ nil (2015:US$ nil). CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 51 Notes to the Financial Statements For the year ended 31 August 2016 26. Loans and borrowings - short term Consilium Loan Nurture Loan VAL Bridging Loan VAL Short Term Loan Finance Leases Total GROUP 2016 US$’000 COMPANY 2016 US$’000 GROUP 2015 US$’000 - - - - 1,469 1,469 - - - - 4,812 2,000 - 60 5 COMPANY 2015 US$’000 4,812 - - - - 1,469 1,469 6,877 4,812 The Consilium loan carried interest at 8% per annum with eﬀ ect from 1 August 2014 and at 15% per annum before that date. These loans were secured by a ﬁ xed and ﬂ oa(cid:415) ng charge over the assets of the Group. The Nurture loan carried interest at 15% per annum and was secured over the shares in Le Har (Private) Ltd (which holds the prop- erty 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. The Consilium and Nurture Loans were se(cid:425) led on 3 May 2016 and 21 July 2016, respec(cid:415) vely in accordancy with the terms of the related loan agreements. The se(cid:425) lement of the Consilium Loan was funded from the Company’s cash resources (approximately $3.29 million), while the remainder ($1.78 million) was made available with the assistance of VAL (see VAL Loan under note 23). The se(cid:425) lement of the Nurture Loan was funded u(cid:415) lising Payserv cash resources and the VAL Bridging Facility. The VAL Bridging Facility is unsecured and func(cid:415) ons as a line of credit available to Cambria. The interest rate payable on the VAL Bridging Facility mirrors that of the CABS Loan referred to below. The Company announced on 18 October 2016 that Payserv’s wholly owned subsidiary, Paynet Zimbabwe Pvt Limited (“Paynet”), successfully concluded a $1.2 million loan facility agreement with Central Africa Building Society (“CABS Loan”). The CABS Loan bears interest at 11% per annum, an annual renewal fee of 1%, and is subject to an establishment fee of 2%. The loan is repayable over 24 months. As security, a mortgage has been registered in favour of CABS over one of two proper(cid:415) es owned by Le Har (Pvt) Ltd, a wholly owned subsidiary of the Company. The remaining property remains unencumbered. The CABS Loan will be used by Paynet to repay in part its license fee and loan obliga(cid:415) ons to Payserv. Payserv would in turn use the funds to se(cid:425) le the remaining por(cid:415) on of the VAL Bridging Facility, if considered appropriate. 27. Trade and other payables Trade payables Non trade payables and accrued expenses Total Current tax liability Total GROUP 2016 US$’000 693 529 1,222 308 1,530 COMPANY 2016 US$’000 472 2,428 2,900 - 2,900 GROUP 2015 US$’000 381 1,065 1,446 200 1,646 COMPANY 2015 US$’000 1,230 1,777 3,007 - 3,007 Trade payables and accruals principally comprise amounts outstanding for trade purchases and on-going costs. The Directors consider that the carrying amount of trade payables approximates to their fair value. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 52 28. Notes to the statement of cash (cid:976)lows (Loss)/proﬁ t for the year Amor(cid:415) sa(cid:415) on of intangible assets Deprecia(cid:415) on of property, plant and equipment Loss/(Proﬁ t) on sale of property, plant and equipment Valua(cid:415) on adjustments to inventories, receivables and other assets Finance income Finance costs Increase in provisions Income tax charge Opera(cid:415) ng cash ﬂ ows before movements in working capital Decrease in inventories Decrease/(Increase) in trade and other receivables Decrease in trade and other payables Cash generated from/(used) in opera(cid:415) ons * All amounts include both con(cid:415) nuing and discon(cid:415) nued opera(cid:415) ons. Notes to the Financial Statements For the year ended 31 August 2016 GROUP 2016 US$’000 (744) 2 132 4 1 (16) 657 25 396 457 305 4,623 (1,441) 3,944 GROUP 2015 US$’000 455 12 183 (109) 2 (10) 740 1 271 1,545 624 (4,581) (178) (2,590) 29. 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 53 Notes to the Financial Statements For the year ended 31 August 2016 29. 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 Amounts owed by group undertakings Other investments Total NOTE 19 18 18 17 GROUP 2016 US$’000 701 1,311 - 40 2,052 COMPANY 2016 US$’000 - 206 6,168 - 6,374 GROUP 2015 US$’000 645 1,241 - 50 1,936 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 2016 US$’000 206 1,846 - - 2,052 COMPANY 2016 US$’000 206 4,585 1,583 - 6,374 GROUP 2015 US$’000 160 1,673 60 43 1,936 COMPANY 2015 US$’000 50 110 8,273 - 8,433 COMPANY 2015 US$’000 160 8,170 60 43 8,433 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 54 Notes to the Financial Statements For the year ended 31 August 2016 29. 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 17 US$40,000 (2015: US$50,000)) at the repor(cid:415) ng date by type of counterparty was: Trade customers and other receivables Amounts owed by Group undertakings Total GROUP 2016 US$’000 1,311 - 1,311 COMPANY 2016 US$’000 206 6,168 6,374 The ageing of trade and other receivables at the repor(cid:415) ng date was: COMPANY 2015 US$’000 110 8,273 8,383 GROUP 2015 US$’000 1,241 - 1,241 GROUP Neither past nor impaired Past due 1-30 days Past due 31-60 days Past due 61-90 days Past due 91-days + Other receivables Total GROSS 2016 US$’000 IMPAIRMENT 2016 US$’000 TOTAL 2016 US$’000 650 165 52 13 137 412 - (2) (4) (13) (99) - 1,429 (118) 650 163 48 - 38 412 1,311 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 55 Notes to the Financial Statements For the year ended 31 August 2016 29. 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 2016 CONTRACTUAL CASH FLOWS 2015 Trade and other payables Loans and borrowings Total CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 1,222 4,809 6,031 1,222 1,645 2,867 2 TO < 5 YEARS US$’000 - 3,163 3,163 CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 2 TO < 5 YEARS US$’000 1,446 6,872 8,318 1,446 7,490 8,936 - - - COMPANY CONTRACTUAL CASH FLOWS 2016 CONTRACTUAL CASH FLOWS 2015 Trade and other payables Loans and borrowings Total CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 2,900 4,809 7,709 2,900 1,645 4,545 2 TO < 5 YEARS US$’000 - 3,163 3,163 CARRYING AMOUNT US$’000 1 YEAR OR LESS US$’000 2 TO < 5 YEARS US$’000 3,007 4,812 7,819 3,007 5,167 8,174 - - - 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 2016 REPORTING DATE SPOT RATE 2016 AVERAGE RATE 2015 REPORTING DATE SPOT RATE 2015 0.70 0.90 14.79 10.85 666.36 0.76 0.90 14.67 9.52 721.75 0.64 0.86 11.77 7.01 454.29 0.65 0.89 13.31 8.64 556.19 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 56 Notes to the Financial Statements For the year ended 31 August 2016 29. 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 Trade and other receivables Quoted investment por(cid:414) olio Trade and other payables Loans and borrowings Total GROUP Cash and cash equivalents Trade and other receivables Quoted investment por(cid:414) olio Trade and other payables Loans and borrowings Total COMPANY Cash and cash equivalents Trade and other receivables Trade and other payables Loans and borrowings Total COMPANY Cash and cash equivalents Trade and other receivables Trade and other payables Loans and borrowings Total HIERARCHY Level 3 Level 3 Level 1 Level 3 Level 3 CARRYING AMOUNT 2016 US$’000 FAIR VALUE 2016 US$’000 701 1,311 40 (1,222) (4,398) (3,568) 701 1,311 40 (1,222) (4,398) (3,568) CARRYING AMOUNT 2015 US$’000 FAIR VALUE 2015 US$’000 645 1,241 50 (1,446) (6,877) (6,387) 645 1,241 50 (1,446) (6,877) (6,387) CARRYING AMOUNT 2016 US$’000 FAIR VALUE 2016 US$’000 - 6,374 (2,900) (4,398) (924) - 6,374 (2,900) (4,398) (924) CARRYING AMOUNT 2015 US$’000 FAIR VALUE 2015 US$’000 50 8,383 (3,007) (4,812) 614 50 8,383 (3,007) (4,812) 614 Level 3 Level 3 Level 1 Level 3 Level 3 Level 3 Level 3 Level 3 Level 3 Level 3 Level 3 Level 3 Level 3 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 57 Notes to the Financial Statements For the year ended 31 August 2016 29. 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). ESTIMATION OF FAIR VALUES 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 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 discoun(cid:415) ng future cash ﬂ ows at the cost of debt. 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. QUOTED INVESTMENT PORTFOLIO Fair value has been derived from quoted prices. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 58 30. 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 2016 32. Statement of comprehensive income of Cambria Africa Plc There is no requirement under the Isle of Man Companies Act 2006 to present a company only statement of comprehensive income. The loss for the year to 31 August 2016 was US$1.54 million (2015: US$5.2 million). Opera(cid:415) ng lease commitments US$’000 33. Capital commitments Payable in next 12 months Payable in 1 to 5 years Payable therea(cid:332) er (> 5 years) Total 64 138 - 202 During the year ended 31 August 2016, US$191,000 (2015: US$305,000) was recognised as an expense in the income state- ment in respect of opera(cid:415) ng leases. Opera(cid:415) ng lease payments represents rentals payable by the Group for certain of its prop- er(cid:415) es. Leases are nego(cid:415) ated for a minimum term of 1 year and rentals are ﬁ xed for the period. 31. Finance leases CREDFIN LOAN Minimum lease payments Finance cost Present value GROUP 2016 GROUP 2015 US$’000 US$’000 - - - 6 (1) 5 The above ﬁ nance lease, measured at amor(cid:415) sed cost was secured by a ﬁ nance lease agreement in respect of motor vehi- cles. It was se(cid:425) led during the current ﬁ nancial year and owner- ship transferred to Paynet Zimbabwe (Pvt) Ltd, a(cid:332) er payment of the nominal amount. Interest ranged between 28.27% and 25.7% per annum. The capital commitments at 31 August 2016 totalled US$nil (2015: US$nil). 34. Guarantees Chemicals & Marketing Company Limited (“C&M”) 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 Company’s subsidiary MillChem Holdings Limited (“MHL”), has provided guarantees to creditors of C&M to the value of $592,000. C&M has undertaken to release MHL from these guarantees and indemniﬁ ed MHL against any related loss. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 59 Notes to the Financial Statements For the year ended 31 August 2016 35. Contingent liabilities and assets CONTINGENT LIABILITIES (cid:487) CONSILIUM DISPUTE The Company announced on 3 May 2016, that the Board has given instruc(cid:415) on to eﬀ ect payment in sa(cid:415) sfac(cid:415) on of the sums owed to Consilium which fell due for payment on that day, in a total amount of $5.07 million. Of this sum, approximately $3.29 million was paid by Cambria; while the remainder ($1.78 mil- lion) was made available with the assistance of VAL (see VAL Loan, note 23). Despite repaying the loan in full, Consilium on 10 June 2016 amended its original claim to include a claim for all costs and expenses it incurred in rela(cid:415) on to the above in the amount of £227,000 which the Company is vigorously defending on advice from its legal advisers. The Company announced on 18 July 2016 that it has ﬁ led an Amended Defence and Counterclaim against Consilium in the Commercial Court. The Company’s Counterclaims total $1.84 million which have been based on the substan(cid:415) ve losses suf- fered by the Company as a result of Consilium’s ac(cid:415) ons. On 20 December 2016, the High Court ordered Cambria to post security for costs of £380,000 and ordered it to pay costs of £30,000 to Consilium. The security was paid into court as in- structed and will be held pending determina(cid:415) on of Cambria’s counterclaims. The Company’s board was disappointed with the ruling which was made notwithstanding an opinion by the company’s auditors, Baker Tilly Isle of Man LLC, that “Cambria would be able to meet costs of £425,000 should they become payable.” However, the obliga(cid:415) ons of this ruling have been met allowing the Company to proceed with its counterclaim against Consilium. CONTINGENT LIABILITIES (cid:487) OTHER 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. 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. To the date of this report no claims have been lodged under this indemnity against the Group. 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. 36. Related parties IDENTITY OF RELATED PARTIES The Group has a related party rela(cid:415) onship with its subsidiaries (see note 15), 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 there is no requirement for them to be disclosed in this note. GROUP AND COMPANY At 31 August 2016, no amounts were due to Directors in respect of Directors fees, nor had any been paid in the year under re- view. VAL is the controlling shareholder of Cambria with a 50.55% in- terest as at 31 August 2016. Mr Samir Shasha is the ul(cid:415) mate beneﬁ cial owner of VAL and the CEO and Director of Cambria. VAL has provided loan funding to Cambria in the form of the VAL Loan and the VAL Bridging Facility as set out in notes 23 and 26 respec(cid:415) vely. Interest accrued during the period amounted to US$102,000 in respect of the VAL Loan and $20,000 in respect of the VAL Bridging Facility. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 60 36. Related parties (continued) 37. Events after the reporting date Notes to the Financial Statements For the year ended 31 August 2016 GROUP AND COMPANY (cid:525)CONTINUED(cid:526) 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- holder of Cambria. Consilium has provided loan funding to the Group which has been se(cid:425) led. Interest and Fees accrued during the period amounted to US$268,000 (2015: US$425,000). TRANSACTIONS WITH SUBSIDIARY ENTITIES WITHIN THE GROUP Paynet Zimbabwe (Private) Limited (“Paynet”), a 100% subsid- iary of the Group provides services including payroll process- ing, so(cid:332) ware licensing, training and u(cid:415) lity and property sub- lets to fellow subsidiaries which amounted to US$3,000 (2015: US$9,000). All charges were at market value, arms length rates. TRANSACTIONS WITH KEY MANAGEMENT PERSON(cid:487) NEL Key management personnel are the holding Company Directors and execu(cid:415) ve oﬃ cers. None of the current ac(cid:415) ve directors re- ceived any remunera(cid:415) on during the ﬁ nancial year. Total remunera(cid:415) on is included in “personnel expenses” (see note 7). S Shasha P Turner JP Watenphul DC Pandya E Wisman I Perkins I Mazaiwana F Jones R Wells Total TOTAL 2016 US$000 TOTAL 2015 US$000 - - - - - - - - - - - 34 - - 438 177 32 13 61 755 New CABS Loan The Company announced on 18 October 2016 that Paynet, suc- cessfully concluded a $1.2 million loan facility agreement with Central Africa Building Society (“CABS Loan”). The CABS Loan bears interest at 11% per annum, an annual renewal fee of 1%, and is subject to an establishment fee of 2%. The loan is repay- able over 24 months. As security, a mortgage has been regis- tered in favour of CABS over one of two proper(cid:415) es owned by Le Har (Pvt) Ltd, a wholly owned subsidiary of the Company. The remaining property remains unencumbered. The CABS Loan will be used by Paynet to repay in part its license fee and loan obliga(cid:415) ons to Payserv. Payserv would in turn use the funds to se(cid:425) le the remaining por(cid:415) on of the VAL Bridging Facility if considered appropriate in the context of the Group’s working capital requirements. Consilium dispute On 20 December 2016, the High Court ordered Cambria to post security for costs of £380,000 and ordered it to pay costs of £30,000 to Consilium. The security was paid as ordered and will be held pending determina(cid:415) on of Cambria’s counterclaims. The Company’s board was disappointed with the ruling which was made notwithstanding an opinion by the company’s auditors, Baker Tilly Isle of Man LLC, that “Cambria would be able to meet costs of £425,000 should they become payable.” However, the obliga(cid:415) ons of this ruling have been met allowing the Compa- ny to proceed with its counterclaim against Consilium (also see note 35). VAL Loan Conversion and Open Offer On 28 November 2016, the Company announced that it has reached agreement with VAL regarding the conversion into Cambria ordinary shares of £1.25 million or approximately $1.55 million of its loans to Cambria (“the VAL Loan Conversion”). The VAL Loan Conversion will signiﬁ cantly strengthen Cambria’s balance sheet and will further align the interests of its CEO, Mr Samir Shasha, with that of Cambria shareholders. The price of the VAL Loan Conversion was set at 1.00p per Cambria share (“the Conversion Price”), represen(cid:415) ng a premium of 11% to the 10 day volume weighted average price of 0.90p for the 10 days up to 24 November 2016. VAL will receive 125 million ordinary shares in Cambria in return for its £1.25 million VAL Loan Con- version. A(cid:332) er the VAL Loan Conversion, the Company’s total debt obliga(cid:415) on will fall 34% from $4.4 million to $2.9 million. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 61 Notes to the Financial Statements For the year ended 31 August 2016 37. Events after the reporting date (con- tinued) . VAL Loan Conversion and Open Offer (contin- ued) The Company also extended an Open Oﬀ er of up to 125 million new ordinary shares to the remaining Cambria shareholders on terms equal to that of the VAL Loan Conversion (“Open Oﬀ er”). The Open Oﬀ er is open for acceptance un(cid:415) l Wednesday, 1 Feb- ruary 2017 (“Open Oﬀ er Closing Date”). Open Oﬀ er proceeds will be u(cid:415) lised to fund growth in Cambria’s core subsidiaries in Zimbabwe. The shares to be issued in terms of the the VAL Loan Conver- sion and the Open Oﬀ er will be issued following the Open Oﬀ er Closing Date. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 62 REGISTERED OFFICE AND AGENT REGISTRARS Corporate Information For the year ended 31 August 2016 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 Peregrine Corporate Services Limited Burleigh Manor Peel Road Douglas Isle of Man IM1 5EP Tel: +44 (0) 1624 626586 NOMINATED ADVISOR AND BROKER WH Ireland Limited 24 Mar(cid:415) n Lane London EC4R 0DR Tel: +44 (0) 20 7220 1666 AUDITORS Baker Tilly Isle of Man LLC 2a Lord Street Douglas Isle of Man IM99 1HP T: +44 (0) 1624 693900 CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 63 Shareholder Information For the year ended 31 August 2016 Analysis of ordinary shareholdings as at 13 January 2017 Note: the shareholding analysis has been performed on 13 January 2017 incorpora(cid:415) ng changes since the year end of 31 August 2016 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 91 132 223 76 53 53 36 4 1 223 40.8% 59.2% 100.0% 34.1% 23.8% 23.8% 16.1% 1.8% 0.4% 100.0% 20 706 232 190 948 930 211 655 162 181 002 1 085 866 9 704 725 56 065 948 37 617 621 107 000 000 211 655 162 9.8% 90.2% 100.0% 0.1% 0.5% 4.6% 26.4% 17.8% 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. CAMBRIA AFRICA PLC FINANCIAL REPORT 2016 PAGE 64 Cambria Africa Plc Burleigh Manor Peel Road Douglas IM1 5EP Tel: +44 (0) 203 287 8814 info@cambriaafrica.com www.cambriaafrica.com

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