CAMBRIA AFRICA PLC
ANNUAL REPORT
2019
Committed to relentlessly
increasing shareholder value.
Table of Contents
Results for the year
Chief Executive Officer’s Statement
Directors
Directors’ Responsibilities Statement
Directors’ Report
1 to 7
8 to 9
10
11
12 to 18
Report of the Independent Auditors, Baker Tilly Isle of Man LLC
19 to 21
Consolidated and Company Income Statement
22 to 23
Consolidated and Company Statement of Comprehensive Income
24
Consolidated and Company Statement of Changes in Equity
25 to 26
Consolidated and Company Statement of Financial Position
27
Consolidated and Company Statement of Cash Flows
Notes to the Financial Statements
Corporate information
Shareholder information
28 to 29
30 to 67
68
69
Cambria Africa Plc (AIM: CMB), is an AIM listed investment company holding controlling interests and active management
control in companies well-positioned to benefit from a turnaround and modernisation of Zimbabwe’s economy. Its
wholly owned operations in Zimbabwe are:
About Cambria Africa Plc:
•
Payserv Africa, a FinTech company with $4 million in revenues in FY 2019. Payserv’s Paynet Zimbabwe subsidiary has
a proven track record of offering secure transactions to financial institutions and MNO’s. Paynet also cuts a wide
swath in Zimbabwe’s payroll management and consumer loan processing markets. Payserv’s objective is to leverage
its technology platforms to exploit opportunities which arise from FinTech disruptions.
• Millchem Zimbabwe is a value-added chemicals distributor with $1.04 million in revenues for FY 2019. The company
is currently focused on ethanol-based solvents due to the significant local availability of ethanol. Millchem continues
to trade profitability following the successful implementation of Cambria’s turnaround program.
The Company achieved Consolidated Profit After Tax of $1.66 million for FY 2019. These profits were almost entirely
Results for the year
attributable to the first half of FY 2019. The company basically broke even in the second half of FY 2019. Second half
results were impacted by:
•
•
Introduction of a local currency for the first time since 2009 to replace the US dollar. Subsequently all accounts,
contracts, assets and liabilities denominated in US Dollars were by legislation deemed to be at parity to the new
currency (ZWL). The new currency opened at ZWL 2.5: US $1.0 (current interbank rate at ZWL 17.5: US $1.0),
The suspension by Paynet Zimbabwe of its services to Bank customers in June 2019 following their refusal to settle
invoices in their contractual currency of US Dollars. Banks have subsequently refused to transact with Paynet despite
the lack of a credible replacement for its services.
In response, the Company adopted a defensive approach in the second half by reducing expenses, hedging its assets
and cashflow and minimising its cost of capital. The Company’s focus on preserving its Statement of Financial Position
resulted in a 28% increase in Net Asset Value (NAV) per share to 1.36 US cents (1.05p) in FY 2019 from 1.06 US cents
(0.82p) in FY 2018.
The Company basically achieved breakeven in the second half despite an 86% drop in revenues to $609,000 from $4.39
million in the first half of FY 2019, with operating costs reducing by 57% to $615,000 from $1.43 million in the first half
of FY 2019 (first half figures extracted from unaudited interim results).
The Company achieved Earnings Per Share (EPS) of 0.26 US cents. Our year end procedures revealed an error in the
Interim Reported EPS which should have been reported at 0.24 US cents per share instead of 0.27 US cents per share
reported for the six months ended 28 February 2019.
1
[ANNUAL REPORT 2019] FY 2019 RESULTS HIGHLIGHTS:
12 MONTHS (US$ ’000)
Group:
- Revenue
- Operating Costs
- Consolidated EBITDA
- Consolidated Profit after tax (“PAT”)
- PAT attributable to shareholders (excluding minority interest)
- Central costs
- EPS - cents
- Net Asset Value (NAV)
- NAV per share - cents
2019
4,996
2,155
2,047
1,662
1,405
216
0.26
7,390
1.36
2018
9,441
3,997
3,459
2,244
1,897
185
0.50
5,755
1.06
Weighted average shares in issue (‘000)
Shares in issue at year-end (‘000)
544,576
544,576
379,486
544,576
Divisional:
- Payserv – consolidated profit after tax (“PAT”)
- Payserv – consolidated EBITDA
- Millchem - EBITDA
Group:
1,702
2,030
198
2,336
3,320
240
CHANGE
( 47% )
( 46% )
(41% )
( 26% )
( 26% )
17%
( 48% )
28%
28%
44%
-
( 27% )
( 39% )
( 18% )
• Net Equity (NAV) increased by $1.63 million (28%) to $7.39 million from $5.76 million at 31 August 2018. NAV per
share increased by 28% from 1.06 US cents (81p) in FY 2018 to 1.36 US cents (1.05p) in FY 2019 demonstrating the
success of the Company’s strategy to preserve shareholder equity and to hedge its Statement of Financial Position
assets against currency disruptions in Zimbabwe.
• Group finance costs fell 80% to $51,000 from $252,000 in FY 2018 after the partial conversion of Venture Africa
Limited’s (VAL) loans implemented in July 2018. Consolidated debt decreased to $552,000 from $619,000 at the end
of FY 2018. Consolidated debt has decreased by $2.77 million from $3.33 million at the end of FY 2017.
•
•
•
•
•
•
Consolidated operating costs decreased 46% to $2.2 million from $3.99 million following drastic cost saving measures
introduced by the Group.
Cambria’s Consolidated PAT decreased 26% to $1.66 million from $2.24 million in FY 2018, mainly as a result of the
suspension of Paynet’s operations on 10 June 2019 and the impact of ZWL devaluation since 22 February 2019 on
local operations.
Earnings Per Share (EPS) decreased by 48% to 0.26 US Cents from 0.50 US Cents in FY 2018 as result of the decrease
in PAT and a 44% increase in weighted average shares in issue to 544.6 million from 379.5 million at the end of FY
2018.
Consolidated EBITDA decreased 41% to $2.05 million from $3.46 million in FY 2018.
Cambria’s central costs increased by $31,000 to $216,000 from $185,000 in FY 2018. Cambria’s CEO and Directors
rendered services to Cambria without compensation during FY 2019.
The Statement of Comprehensive Income includes a foreign currency translation adjustment (profit) of $251,000
attributable to Cambria.
2
[ANNUAL REPORT 2019] Divisional:
•
The suspension by Paynet Zimbabwe of its services to Bank customers following their refusal to settle invoices in
the contractual currency of US Dollars and the disruptions caused by the new currency introduced in Zimbabwe,
significantly impacted Payserv’s results with a:
– 48% decrease in revenues to $3.96 million from $7.57 million,
– 39% decrease in consolidated EBITDA to $2.03 million from $3.32 million,
– 40% decrease in PBT to $1.85 million from $3.1 million,
– 27% decrease in consolidated PAT to $1.7 million from $2.34 million.
• Despite the significant macro-economic challenges, Millchem demonstrated resilience maintaining profitability and
reporting:
– $1.04 million in revenues, a reduction of 45%,
– 36% gross profit margin, a 7% improvement from 29% gross profit margin in FY 2018 demonstrating the results
of the Company’s strategy to focus on a more profitable product mix,
– 18% decrease in EBITDA to $198,000 from $240,000 in FY 2018,
– 43% reduction in overheads to $171,000 from $300,000 in FY 2018,
– 15% decrease in PAT to $184,000 from $217,000 in FY 2018.
Cambria proactively engaged in strategies to preserve shareholder value and strengthen its Statement of Financial Position.
Net Asset Value (NAV):
The Company reported audited NAV at 31 August 2019 of $7.39 million (1.36 US cents per share), an increase of $1.63
million (0.30 US cents per share) compared to $5.76 million (1.06 US cents per share) in FY 2018. NAV is underpinned by
the following material components:
-
-
-
-
-
Investment Property at fair value of $2.5 million included in property, plant and equipment,
Investment in Radar at $1.84 million (net of minority interests),
Listed Marketable Securities at fair value of $496,000,
Cash and cash equivalents of $1.92 million, of which $900,000 was held outside Zimbabwe at 31 August 2019
and the balance covered by the RBZ’s commitment to honour Paynet Zimbabwe’s Legacy Foreign Debt at
ZWL1.00:USD1.00. Subsequent to the end of FY 2019, the RBZ has transferred $600,000 of these funds to
Payserv Africa in Mauritius,
Liabilities include Loans and Borrowings of $552,000 of which $443,000 is owed to Cambria’s majority shareholder, VAL.
In December 2018, the Company’s wholly owned subsidiary Paynet Zimbabwe (Pvt) Ltd (“Paynet), deployed an additional
Radar:
$400,000 to increase its effective interest in Radar Holdings Limited (Radar) to 8.98% from 7.83%. The Radar investment is
held through Paynet’s 72.07% (FY 2018: 62.84%) interest in AF Philip & Company (Pvt) Ltd (AF Philip). AF Philip holds a 15.65%
interest in Hinshaw (Pvt) Ltd (Hinshaw) which, through its wholly owned subsidiaries, holds a 79.65% interest in Radar.
AF Philip is consolidated into Cambria’s Statement of Financial Position with the Radar investment reflected at a fair
value of $2.55 million ($1.84 million after minority interests) translating into 40 US cents per Radar share. The Board
considers the carrying value of 40 US cents per Radar share a reasonable reflection of the investment’s fair value. The fair
value of the Radar investment is underpinned by its Net Asset Value per share of 58 US cent reported in its most recent
published financial statements.
Cambria remains desirous of increasing its investment in Radar and Paynet will continue to rely on the pre-emptive
rights of AF Philip to increase its shareholding in Hinshaw.
3
[ANNUAL REPORT 2019]
Payserv Africa Group
Divisional Review
Revenues
(US$ ’000)
Gross profit
Gross margin
Overheads
EBITDA
Profit before interest and tax
Interest
Profit before tax
Profit after tax
PAT (excluding minority interests)
3,957
2019
3,644
92%
( 1,614 )
2,030
1,849
3
1,852
1,702
1,445
7,565
2018
6,900
91%
( 3,580 )
3,320
3,132
( 27 )
3,105
2,336
1,986
( 48% )
CHANGE
( 47% )
1%
( 55% )
( 39% )
( 41% )
$30
( 40% )
( 27% )
( 27% )
Payserv’s revenues decreased by 48% to $3.96 million from $7.57 million in FY 2018 as a result of the suspension of
Paynet’s services and the currency translation impact in the second half of FY 2019. Consolidated EBITDA decreased
by 39% to $2.03 million from $3.32 million in FY 2018. PBT decreased by 40% to $1.85 million from $3.1 million and
consolidated PAT decreased by 27% to $1.70 million from $2.34 million in FY 2018.
Following the tumultuous events in the second half of FY 2019, Payserv is in the process of repositioning itself by
focusing on the identification of replacement revenue streams for its existing technologies, containing its overheads and
restarting its strategy of developing new FinTech initiatives using its current and new technologies.
Payserv achieved PAT of $211,000 in the second half of FY 2019.
Paynet Zimbabwe
Paynet Zimbabwe suspended its services to Zimbabwe’s Banks on 10 June 2019 resulting in a significant reduction in
operational activity. Accordingly, the number of transactions facilitated by Paynet in FY 2019 decreased by 33% to 18.6
million from 27.7 million transactions in FY 2018. No transactions are currently being processed for Paynet’s historic
portfolio of bank clients.
As part of its strategy to find replacement revenue streams, Paynet Zimbabwe concluded a fee-sharing arrangement
with EcoCash Zimbabwe for the use of bulk payment software developed by Payserv Africa. The software is used
by merchants using EcoCash to distribute salaries and initiate payments to other merchants. EcoCash is Zimbabwe’s
dominant mobile payments operator.
Our partnership with Ecocash is gaining traction with 136,000 transactions with an aggregate value of ZWL 60 million processed
since its inception on 19 June 2019. Paynet is entitled to a percentage revenue share translating to average revenue per
transaction of ZWL5.00 to ZWL10.00 from transactions processed through its technology on the Ecocash platform.
4
[ANNUAL REPORT 2019] Autopay Zimbabwe
Autopay is a leading payroll management business offering 1) a full-service Payroll Bureau; 2) Software and licensing of
payroll and HR Products to major corporates and; 3) Online SME payroll processing.
Autopay continues to trade profitably in local currency and managed to increase its prices to absorb some of the negative
currency fluctuations. It also continues the realignment of its strategy to increase its penetration into the SME market.
Despite the increase in prices, it reported a 32% decrease in gross profit. The number of payslips processed increased
5.2% to 382,000 from 363,000 in FY 2018. Autopay’s payment bureau processed 395,000 transactions, in line with that
processed in FY 2018.
Subsequent to the end of FY 2019 Autopay became aware that Paywell SA, the owner of the payroll software licensed
to Autopay in terms of an Exclusive Agency Agreement, has been targeting the Zimbabwe market, through distribution
channels other than Autopay. Following a legal dispute raised by Autopay, Paywell SA gave notice to cancel its agency
agreement with Autopay with effect from July 2020. In accordance with its Paywell Software License Agreement,
Autopay’s Paywell licenses will continue to be active for 12 months until end December 2020. The Company views these
events as an opportunity to migrate its significant client base to improved payroll software platforms. The Company has
commenced the process of engaging alternative software providers in addition to evaluating the merits of developing a
proprietary payroll software solution.
Tradanet (51% owned)
Tradanet provides customised loan processing and management software for Zimbabwe’s largest Building Society CABS.
It also provides hosted loan management solutions for emerging microfinance entities.
The introduction of the new functional currency had a significant impact on Tradanet with loan volumes decreasing to
ZWL96.1 million (US $9 million) from US $125 million in FY 2018. Tradanet’s loan book also decreased drastically totalling
ZWL186 million ($17.4 million) at the end of FY 2019 vs US $178 million at the end of FY 2018.
Similar to the Company’s other divisions, Tradanet adopted a defensive approach in the second half of FY 2019 aimed
at ensuring breakeven and re-establishing a base from which to grow. It will aim to increase its revenues through pricing
adjustments to reflect the inflationary pressures in Zimbabwe and the introduction of new products which include:
•
Flexicredit Hybrid – a product directed at employees of larger publicly held corporates which can be evaluated by
reliance on publicly disclosed information.
•
Insurance Premium Financing.
• Automobile ownership financing.
Millchem Zimbabwe
Revenues
(US$ ’000)
Gross profit
Gross margin
Overheads
EBITDA
Profit/(loss) after tax
5
1,039
2019
369
36%
( 171 )
198
184
1,876
2018
( 45% )
GROWTH
540
29%
( 300 )
240
217
( 32% )
7%
( 43% )
( 18% )
( 15% )
[ANNUAL REPORT 2019] Millchem recorded a 15% decrease in after-tax profit to $184,000 from $217,000 for FY 2018 on the back of:
•
•
•
•
$1.04 million in revenues, a reduction of 45%,
36% gross profit margin, a 7% improvement from 29% gross profit margin in FY 2018,
18% decrease in EBITDA to $198,000 from $240,000 in FY 2018,
43% reduction in overheads to $171,000 from $300,000 in FY 2018.
Millchem’s after tax profit for the second half of FY 2019 came in at $67,000 with the majority of the $184,000 reported
PAT attributable to the first half of FY 2019.
The Consolidated Financial Statements are presented in US Dollars (USD), the Group’s presentational currency. With
Basis of Presentation and Foreign Currency Translation
effect from 22 February 2019, all its Zimbabwe subsidiaries have adopted the US Dollar as presentation currency
with Zimbabwe ‘s Dollar (ZWL) as the functional currency. In translating the results of its Zimbabwe subsidiaries from
functional (ZWL) to presentation currency (USD), the Company applied IAS 21 – Effects of Changes in Foreign Exchange
Rates and IAS 29 – Financial Reporting in Hyperinflationary Economies. In addition, it complied with local laws and
regulations with emphasis on Statutory Instrument 33 of 2019, the Monetary Policy Statement of 20 February 2019 and
Public Accountants and Auditors Board (PAAB) guidance of 21 March 2019.
Up to 22 February 2019, all cumulative income statement transactions, assets, liabilities and equity balances were
translated at ZWL1.00:USD1.00 and any local transactions thereafter treated as ZWL transactions. For the Company’s
USD reporting purposes, transactions up to 22 February 2019 were maintained in USD. All ZWL transactions after 22
February 2019 were adjusted for Hyperinflationary conditions in accordance with IAS 29 before translation at the official
interbank rate at the 31 August 2019. At 31 August 2019, all monetary ZWL asset and liability balances of its Zimbabwe
subsidiaries were converted at the closing interbank rate with the exception of $1.2 million in monetary assets covered
by the Reserve Bank of Zimbabwe (RBZ)’s commitment to honour “Legacy Foreign Debts” originating before 22
February 2019 at parity. Non-monetary assets were recorded at their original historical USD cost after considering
the applicable provisions of IAS 29. Net monetary gains or losses were not material and have been included directly in
reserves. Resultant foreign exchange translation differences were accounted for through the foreign currency translation
reserve in the Statement of Other Comprehensive Income reflecting a foreign currency translation adjustment (profit)
of $251,000 attributable to Cambria.
The interbank rate has decreased from ZWL2.50:USD1:00 at the end of the Company’s Interim Reporting Period (28 February
2019) to ZWL10.71:USD1:00 at 31 August 2019. At this writing, the interbank rate stands at ZWL 17.50 against the US dollar.
Legacy loans/ Blocked Funds allocated by RBZ
Subsequent Events
Governor John P. Mangudya of the RBZ has allocated at parity (ZWL$1.00:USD$1.00) the sum of $600,000 of $1.2 million
owed by Paynet Zimbabwe to Payserv Africa Limited, our wholly owned subsidiary in Mauritius.
Relying on the Governor’s written commitment, in its Interim Results published on 31 May 2019, the Company announced
that the RBZ would expunge Paynet Zimbabwe’s obligations to Payserv Africa by mid-September 2019. While the
commitment by the Governor to expunge the full amount of legacy debts by mid-September has been met with delays,
we believe that he has shown tangible good faith in fulfilling his promises in this regard. Citing Zimbabwe’s poor tobacco
receipts, Governor Mangudya rescheduled his commitment to mid-October. On his behalf, Deputy Director of Financial
Markets Ernest Matiza, then committed to weekly allocations of US $100,000 starting in the week of 30 September. To
date, Paynet Zimbabwe has been able to confirm 6 of the twelve allocations which have come due. Paynet Zimbabwe
continues to constructively engage the RBZ on this matter.
6
[ANNUAL REPORT 2019] Exception to summons against BAZ upheld
Legal Updates
Cambria announced on 18 November 2019, in relation to Payserv Africa’s summons seeking damages of $100 million
from Bankers Association of Zimbabwe (BAZ), that the Exception filed by BAZ has been upheld by Justice Mushore
and Payserv Africa’s lawsuit has been dismissed with Payserv Africa liable for BAZ’s legal costs. Through its Payserv
subsidiaries, the Company is seeking Senior Counsels advice on the merits of reissuing summons against the BAZ and/or
individual banks. The Company is also seeking advice on the merits of invoking the Doctrine of Effect to claim jurisdiction
against certain banks in South Africa and the European Union.
Arbitration relating to Radar Share Offer
The Arbitration proceedings related to the purchase of additional shares in Radar through Hinshaw has been finalised.
The Arbitrator has made an award in favour of the defendants and on advice from its Legal Counsel, Cambria will not
seek to set the ruling aside.
In terms of the Arbitration proceedings the Company sought, through Paynet Zimbabwe, to enforce its pre-emptive
rights to purchase a further 20% of shares in Hinshaw, which has a 79.65% shareholding in Radar. The Arbitrator ruled
that Paynet Zimbabwe’s pre-emptive rights were not triggered since in his opinion, no irrevocable offer had been made
by Caulicle Investments (Pvt) Ltd, a 20% shareholder of Hinshaw, to sell its Hinshaw shares.
The Cambria board remains unchanged.
Changes to the board:
7
[ANNUAL REPORT 2019] In very simple terms, I failed to fully avert the impact of de-dollarization on Cambria (sudden devaluation and
hyperinflation). Zimbabwe has introduced a currency which forced the conversion of US dollar contracts into a currency
which has dropped from parity to the US dollar (1:1) to an official interbank rate of ZWL 17.50 to US $1.00 at the date of
this report. Parallel market rates are reported at ZWL 28: US $1.
Chief Executive Officer’s Statement
The government has legislated that all local contracts, assets, and liabilities in US dollars would be at parity – effectively a
retroactive devaluation. For example, if a company owed the bank US $10 million, today it would owe ZWL 10 million or
US $574,000 at the official rate and less than $400,000 at the parallel rate. This created obvious winners and losers. We
realized immediately that unless we maintain the real value of our service, we would be losers either way. The banks,
working in concert through the Interbank Operations Committee (IOC) of the Bankers Association of Zimbabwe blocked
this attempt, claimed they had an alternative, and have effectively embargoed our services as an industry.
Despite triumphant proclamations to the contrary, seven months down the line the only encrypted, interbank bulk
payment and clearing solution remains Paynet. Today, the only client for this service is EcoCash, which is using the
competitive advantage of the Paynet solution to make inroads into bulk salary and merchant payments.
Those who hoped to celebrate our demise, are yet to see their goals realized. We have had our armour pierced but it
remains intact and we continue to compete and re-invent ourselves.
•
•
•
Paynet has concluded a service agreement with EcoCash, the country’s largest mobile payments operator, developing
state of the art solutions for bulk payments of salaries and supplier payments. We expect to grow with EcoCash as
it continues to disrupt traditional banking services. Risks to this strategy include attempts by traditional players to
retard the entry of EcoCash into the salary and merchant payments space.
Through Tradanet, we continue to provide consumer loan processing services to CABS – Zimbabwe’s largest building
society owned by Old Mutual. Whilst our revenues and earnings are negligible, any turnaround in consumer buying
power will have a direct positive impact on our earnings.
Through AutoPay we continue to provide full-service payroll processing for the largest companies in Zimbabwe. We
have now expressed our charges as a percentage of the payroll, to reduce the impact of inflation and devaluation
on the revenue stream.
The February Monetary Policy Statement allowed for registration of “Legacy Debts” to be provisioned for at parity to the
Legacy Debts:
US dollar. Governor John P. Mangudya of the RBZ has allocated at parity (ZWL$1.00: USD$1.00) the sum of $600,000 of
$1.2 million owed by Paynet Zimbabwe to Payserv Africa Limited, our wholly owned subsidiary in Mauritius.
Relying on the Governor’s written commitment, in its Interim Results published on 31 May 2019, the Company
announced that the RBZ would expunge Paynet Zimbabwe’s obligations to Payserv Africa by mid-September 2019. While
the commitment by the Governor to expunge the full amount of Legacy Debts by mid-September has been met with
delays, we believe that he has shown tangible good faith in fulfilling his promises in this regard. Citing Zimbabwe’s poor
tobacco receipts, Governor Mangudya rescheduled his commitment to mid-October. On his behalf, Deputy Director
of Financial Markets Ernest Matiza, then committed to weekly allocations of US $100,000 starting in the week of 30
September. To date, Paynet Zimbabwe has been able to confirm 6 of the thirteen allocations which have come due.
Paynet Zimbabwe continues to constructively engage the RBZ on this matter.
8
[ANNUAL REPORT 2019] Despite heralding an era of market determined exchange rates, foreign exchange remains in short supply due to the
Outlook:
disparity between what is effectively an official rate and the market rate.
As long as Zimbabwe is unable to allow market forces to determine optimal economic allocation, foreign direct
investment will elude most sectors of the economy which are not export oriented. To the extent that we have cash
resources outside of Zimbabwe, and assets which have a market value, we have our defences.
We continue to develop financial technologies which are designed to ease mobile payments. Our revenue sharing
model with EcoCash, protects us to some degree from inflation and devaluation. However, until there is a realistic
market translation of ZWL income into repatriated US dollars earnings, the resultant earnings will remain exposed to
currency devaluation.
On the other hand, Zimbabwe still presents an unparalleled opportunity if economic policies become aligned with free
market economics and the country prioritises entry into a customs union with South Africa, Botswana, Lesotho, Nambia,
and Swaziland.
What we do with our internal cash resources is limited to keeping our operations which are all locally profitable afloat
and prepared for a turnaround. What we do with our external cash resources is to decide whether to pursue and fund
legal avenues for redress or to make investments in areas we find value – one such investment being Radar Holdings.
The circumstances in Zimbabwe are quite fluid. Economic policies have proven to be unpredictable if not counterintuitive.
With each new policy, the Company has to adjust its outlook and strategy. At the end of the first six months of our fiscal
year, we had continued a string of record earnings, contained costs and brought profitability to Cambria for the first time.
I believe that is an indication that the policies we pursued were sound and our understanding of this economy enabled
me to navigate the company into profitability. The Company has survived what I believe was a chaotic departure from
prudent economic policies, and it has done so with a significant net asset base. The Company is positioned to benefit
from a return to a path of economic prudence and take advantage of opportunities created by the current displacements
in Zimbabwe’s economy.
SAMIR SHASHA
CHIEF EXECUTIVE OFFICER
28 FEBRUARY 2020
9
[ANNUAL REPORT 2019] NON-EXECUTIVE CHAIRMAN
Directors
Paul Turner, 73
Paul Turner is a Chartered Accountant and past President of the Institute of Chartered Accountants of Zimbabwe. He is
a highly respected and knowledgeable member of the Zimbabwean business community. He was a partner at Ernst &
Young in Harare, Zimbabwe, for over thirty years. His past roles bring an unparalleled level of experience in the structure
and operation of businesses in Zimbabwe in general, and also valuable insights and experience in corporate governance,
financial and statutory reporting. Initially appointed to the Cambria board on 1 July 2008, he was appointed as Chairman
on 8 July 2015.
CHIEF EXECUTIVE OFFICER
Samir Shasha, 59
Samir Shasha started his involvement in Southern Africa with supplying and leasing trucks for the operations 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 first time. In 2002, S. Shasha & Associates purchased Zimbabwe Online, an
Internet Service Provider in Zimbabwe, and took on the role of CEO until 2006. The company was sold to Liquid Telecom
in 2012. Mr. Shasha received his bachelor’s degree from Vassar College with Honours in Economics in 1981. Mr. Shasha
brings a wealth of experience to the Board. His skills encompass operational and strategic management experience
at executive level with a successful track-record in optimal capital allocation in Zimbabwe and Southern Africa, with
experience of operating in the dynamic environment presented by the Zimbabwe economy. 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.
NON-EXECUTIVE DIRECTOR
Josephine Petra Watenphul, 39
Josephine Watenphul is a qualified 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, Josephine was appointed Group CFO, a position which she held until May
2015. During her tenure at UCS, which was later renamed Capitaleye Investments upon delisting in October 2011,
Josephine assisted in various corporate actions and restructurings. Josephine’s experience allows her to provide the
Board with guidance and input on financial reporting, strategy, corporate governance and corporate transactions in a
listed company environment. She was appointed to the Cambria board on 17 June 2015.
NON-EXECUTIVE DIRECTOR
Dipak Champaklal Pandya, 61
Dipak Pandya is a Chartered Accountant and has, since March 2009, been the financial controller at Strauss Logistics
Limited, a fuel trading and distribution company active in central and Southern Africa. Prior to this, Dipak was the financial
controller at Playwize Plc, a computer software development company. Dipak brings extensive financial management
and strategic skills to the Board, with an intimate knowledge of the Zimbabwe market and experience in operating
business in Southern Africa. He was appointed to the Cambria board on 26 June 2015.
No change to the board of directors has occurred during the financial period under review and up to the date of this report.
Changes to the Board
10
[ANNUAL REPORT 2019] Directors’ Responsibility Statement in Respect of the Directors’ Report
Company law requires the Directors to maintain financial records that are sufficient to show and explain the Group’s
and the Financial Statements.
transactions and will, at any time, enable the financial position of the Group to be determined with reasonable
accuracy. The Directors have elected to prepare the Group and Parent Company financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union.
The Group and Parent Company financial statements are required to give a true and fair view of the state of affairs of the
Group and Parent Company and of the profit or loss of the Group for that period.
In preparing these financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
•
•
state whether they have been prepared in accordance with International Financial Reporting Standards as adopted
by the European Union; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
and Parent Company will continue in business.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Group
and Parent Company’s transactions and disclose with reasonable accuracy at any time its financial position. They have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company’s website. Legislation governing the preparation and dissemination of financial statements may differ from
one jurisdiction to another.
11
[ANNUAL REPORT 2019] For the Year Ended 31 August 2019
The Directors of Cambria Africa Plc (the “Company”) and its subsidiaries (together the “Group”) submit their report, together
with the audited financial statements for the year ended 31 August 2019.
Directors’ Report
During the year, the Group was an investment company with a portfolio of investments in Zimbabwe.
Principal activities
The Company’s investment objective is to provide Shareholders with long term capital appreciation.
Investing policy
While the Company does not have a particular sectoral focus, utilising the investment skills of the Directors and their advisors,
the Company seeks to identify individual companies in sectors best positioned to benefit should there be radical improvements
in Zimbabwe’s economy. The Company may make investments in the tourism, accommodation, infrastructure, transport,
commercial and residential property, technology, communications, manufacturing, retail, services, leisure, agricultural and
natural resources sectors. The Company may also make investments in businesses outside Zimbabwe and the countries
surrounding Zimbabwe as well as the remainder of Sub-Saharan Africa, that have a significant exposure to assets, businesses
or operations within the defined region. The Company will only be able to achieve its investment objective in the event the
Zimbabwean economy radically improves.
Whilst there will not be any limit on the number or size of investments the Company can make in any sector, the Directors
seek to diversify the Company’s investments across various sectors in order to mitigate risk and to avoid concentrating the
portfolio in any single sector.
The Company’s interest in a proposed investment or acquisition may range from a minority position to full ownership. The
Company intends to actively manage the operations of the companies it has invested in. Wherever possible the Company will
seek to achieve Board control or financial control of its portfolio companies. Indigenisation legislation within Zimbabwe may,
however, prevent the Company from acquiring or maintaining a majority control in a Zimbabwean business.
The Directors believe that through their individual and collective experience of investing and managing acquisitions and
disposals in Africa, they have the necessary skills to manage the Company and to source deal flow. 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 financial and legal advisors.
The Company’s investment strategy is dependent upon future radical improvement in the economy of Zimbabwe and
expansion into the immediate region. It is therefore possible that a significant period of time may elapse before an investment
by the Company will produce any returns and there is no guarantee that the economy in Zimbabwe will improve.
The Company Directors will comply as a matter of policy with the US Office of Foreign Assets Control and the European Union
Council Regulation (EC) No. 314/2004 regulations.
The Group made a consolidated profit after tax, discontinued operations and minorities of $1,405,000 (FY2018: $1,897,000)
Results
during the year and this has been set against reserves.
There were no changes to the Company’s share capital and share premium during the financial year. Full details on share
Share capital
capital and share premium are contained in note 21 to the financial statements.
12
[ANNUAL REPORT 2019] Between 1 September 2018 and 31 August 2019, the share price varied between a closing high of 1.63p and a low of 0.45p
Share price performance
(2018: high of 1.30p and low of 1.03p). At 31 August 2019 the market price of the shares at close of business was 0.45p
(2018:1.03p) whilst on 19 February 2020 the mid-price of the share was 0.32p.
The Directors have been advised of the following shareholdings at 19 February 2020 of holding 2.5 per cent or more of the
Substantial shareholdings
Company’s issued share capital:
Ventures Africa Ltd*
Hargreaves Lansdown (Nominees) Ltd
Luna Nominees Ltd
Consilium Investment Management LLC
NUMBER OF
377,000,000
SHARES
17,492,892
15,533,020
13,608,854
PERCENTAGE OF
69.2%
ISSUED CAPITAL
3.2%
2.9%
2.5%
*Ventures Africa Limited is beneficially owned by S Shasha, a director and the CEO of the Company
Biographical details of all Directors as well as the dates of appointment and resignation (if applicable) are set out on page 10.
Directors
The Directors who were in office at the beginning and end of the current financial year had the following interests in the
Directors’ share interests
shares of the Company:
DIRECTORS
Samir Shasha*
Josephine Watenphul
Dipak Pandya
Paul Turner
Total
*Held indirectly through Ventures Africa Limited
AT 31.08.19
377,000,000
NO. OF SHARES
2,500,000
1,000,000
1,000,000
381,500,000
AT 31.08.18
377,000,000
NO. OF SHARES
2,500,000
1,000,000
1,000,000
381,500,000
All of the above interests are recorded in the Company’s Register of Directors’ Share and Debenture Interests. No Director has
a beneficial interest in the shares or debentures of any of the Company’s subsidiary undertakings.
Baker Tilly Isle of Man LLC continues to be the appointed auditors.
Auditors
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company’s Auditors are unaware and each Director has taken all the steps
that they ought to have taken as a Director to make themselves aware of any relevant audit information and to establish that
the Company’s Auditors are aware of that information.
Details of significant events since the reporting date are contained in note 34 to the financial statements.
Post statement of financial position events
13
[ANNUAL REPORT 2019]
As a listed company traded on the AIM market of the London Stock Exchange (“LSE”) we recognise the importance of sound
Statement of Compliance with the QCA Corporate Governance Code
Corporate Governance throughout our Group. It is the Board’s responsibility to ensure that Cambria is managed for the long-
term benefit of all stakeholders, with effective and efficient decision-making. Corporate Governance is an important part of
this, reducing risk and adding value to our investments, shareholders and other stakeholders.
In my capacity as Chairman, I have ultimate responsibility for ensuring the Board adopts and implements a recognised Corporate
Governance Code in compliance with the AIM Rules requiring all AIM-listed companies to adopt such a Code. The Board has
committed to the adoption of, and working to, the Quoted Companies Alliance (QCA) Corporate Governance Code 2018.
The Chief Executive Officer (CEO) has responsibility for the implementation of governance throughout our organisation,
commensurate with our size of business and scope of operations.
The QCA Corporate Governance Code 2018 has ten key principles and we set out below how we apply those principles to
our business.
Principle 1: Establish a strategy and business model which promotes
Cambria is a long-term active investment company holding investments in Zimbabwe. We currently own two core subsidiaries,
long-term value for shareholders
Payserv and Millchem. The Company is one of a few AIM listed companies which allows investors to participate in Zimbabwe’s
unique potential.
Our Board is committed to the creation of long-term shareholder value through our investments and being actively involved in
developing investee strategy, optimising their operations and growing their businesses. We adopt a prudent and conservative
investment philosophy, balancing expecting returns in the context of identifiable risks.
Our focus on Zimbabwe stems from our belief that Zimbabwe will provide a growing market for our current investments and
opportunities which the management team is uniquely positioned to identify and act on.
Principle 2: Seek to understand and meet shareholder needs and
The Board is committed to maintaining good communications and having constructive dialogue with both its institutional and
expectations
private shareholders. Shareholders are kept informed though our public announcements and corporate website.
The Company website also allows shareholders and prospective shareholders to register for automatic news alerts for
regulatory announcements.
In addition to the above, the Board encourages direct engagement from our shareholders with our most senior Executives
including our CEO, with his direct contact details provided on our website and all company announcements. This is in line with
our strategy of shortening the communication distance between Executives and Shareholders.
Principle 3: Take into account wider stakeholder and social
The Board recognises that the Company’s continued growth and long-term success are reliant on its relations with its
responsibilities and their implications for long-term success
stakeholders, both internal (employees and shareholders) and external (customers, service providers, suppliers and advisors).
14
[ANNUAL REPORT 2019]
The Group’s employees are considered key in delivering successful growth and as such the Company fosters an open dialogue
throughout its workforce. The Company endeavours to keep its workforce informed on the Company’s progress.
The Company also maintains regular dialogue with its external stakeholders particularly its clients and customers which help
drive business development. The Company works closely with its advisors to ensure it operates in conformity of its listing and
other regulations in the UK, as well as the social and legal, requirements of Zimbabwe. Our clients and customers are our most
important stakeholders and understanding their needs is a crucial element to the growth and long-term success of the Company.
Engaging with our stakeholders strengthens our relationships and helps us make better business decisions to deliver on
our commitments.
Principle 4: Embed effective risk management, considering both
AUDIT, RISK AND INTERNAL CONTROLS
opportunities and threats, throughout the organisation
FINANCIAL CONTROLS
The Company has an established framework of internal financial controls, the effectiveness of which is regularly reviewed by
the Board in light of an ongoing assessment of significant risks facing the Company.
•
•
The Board is responsible for reviewing and approving overall Company strategy, approving operating and capital
budgets, and for determining the financial structure of the Company including treasury, tax and dividend policy.
There are comprehensive procedures for budgeting and planning, for monitoring and reporting to the Board
business performance against those budgets, and for forecasting expected performance over the remainder of
the financial period. These cover profits, cash flows, capital expenditure and balance sheets. Monthly results are
reported against budget and compared with the prior year, and forecasts for the current financial year are regularly
revised in light of actual performance.
•
The Company has a consistent system of prior appraisal for investments, overseen by the Board and CEO, with
defined financial controls and procedures with which each business area is required to comply.
NON-FINANCIAL CONTROLS
The Board recognises that maintaining sound controls and discipline is critical to managing the downside risks to our strategy.
The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its effectiveness. However,
any such system of internal control can provide only reasonable, but not absolute, assurance against material misstatement
or loss. The Board considers that the internal controls in place are appropriate for the size, complexity and risk profile of the
Group. The principal elements of the Group’s internal control system include:
•
Close management of the day-to-day activities of the Group by Executive Management.
• An organisational structure with defined levels of responsibility, which promotes entrepreneurial decision-making
and rapid implementation while minimising risks.
• A comprehensive annual budgeting process approved by the Board.
• Detailed monthly reporting of performance against budget.
•
Central control over key areas such as capital expenditure authorisation and banking facilities.
The Group continuously reviews its system of internal control to ensure compliance with best practice, while also having regard to its
size and the resources available. As part of the Group’s review a number of non-financial controls covering areas such as regulatory
compliance, business integrity, health and safety, risk management, business continuity and corporate social responsibility
(including ethical trading, supplier standards, environmental concerns and employment diversity) have been assessed.
15
[ANNUAL REPORT 2019] Principle 5: Maintaining the Board as a well-functioning, balanced
The Board comprises the CEO and three Non-Executive Directors, including the Non-Executive Chairman. The Board will
team led by the Chair
meet periodically or at any other deemed time necessary for the good management of the business and at a location agreed
between the Board members.
The Non-Executive Directors, Paul Turner, Dipak Pandya and Josephine Watenphul, are all considered independent directors
notwithstanding Paul Turner’s length of service and role as Chairman.
The Board is satisfied that it has a suitable balance between independence on the one hand, and knowledge of the Company
on the other, to enable it to discharge its duties and responsibilities effectively. All Directors are encouraged to use their
independent judgement and to challenge all matters, whether strategic or operational.
DIRECTORS’ CONFLICT OF INTEREST
The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other
commitments and interests of its Directors, and changes to these commitments and interests are reported to and, where
appropriate, agreed with the rest of the Board.
Principle 6: Ensure that between them the Directors have the
The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience, including
necessary up-to-date experience, skills and capabilities
in the areas of fin-tech, information technology, distribution, finance, business development, trading, and marketing. All
Directors receive regular and timely information on the Group’s operational and financial performance. Relevant information
is circulated to the Directors in advance of meetings. The business reports monthly on its subsidiaries’ performance against
their agreed budgets, and the CEO reviews the monthly reports on performance and any significant variances are reviewed.
All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the
Company’s expense.
Principle 7: Evaluate Board performance based on clear and relevant
The Board considers evaluation of its performance and individual directors to be an integral part of Corporate Governance
objectives, seeking continuous improvement
to ensure it has the necessary skills, experience and abilities to fulfil its responsibilities. The goal of the Board evaluation
process is to identify and address opportunities for improving the performance of the board and to solicit honest, genuine
and constructive feedback.
The Board considers the evaluation process is best carried out internally given the Company’s current size.
The internal evaluation process includes the following aspects which are subject to review annually or as required by circumstances:
a) Board Evaluation
• Board composition in terms of skills, experience and balance
• Board cohesion
• Board operational effectiveness and decision making
• Board meetings conduct and content and quality of information
•
•
The Board’s engagement with shareholders and other stakeholders
The corporate vision and business plan
16
[ANNUAL REPORT 2019] Individual Director Evaluation
b)
Executive Director performance in executive role
•
•
Executive Director performance and contribution to the Board
• Non-Executive Director performance and contribution to the Board
• Non-Executive Director’s independence and time served
• All Directors’ attendance at Board and Committee meetings
The Board will, as a whole or in part as appropriate, undertake the evaluation process aided by the Chairman, CEO and Non-
Executive Directors. The Chairman is responsible in ensuring the evaluation process is ‘fit for purpose’, as well as dealing
with matters raised during the process. The Chairman will keep under review the frequency, scope and mechanisms for the
evaluation process and amend the process as required.
Where deficiencies are identified these will be addressed in a constructive manner. The evaluation process will be focused on
the improvement of Board performance, through open and constructive dialogue and the development and implementation
of action plans.
Succession planning is a vital task for boards and the management of succession planning represents a key measure of the
effectiveness of the Board.
Principle 8: Promote a culture that is based on ethical values and
The Board recognises that a corporate culture based on sound ethical values and behaviours is an asset and a likely competitive
behaviours
advantage. The Board aims to lead by example and do what is in the best interests of the Company.
Conducting its business in an ethical, professional and responsible manner, treating our employees, clients, suppliers and
business partners with equal courtesy and respect at all times, are non-negotiables adopted by the Board and visible in the
actions and decisions of the CEO and the rest of the management team. It is a key element in every aspect of the Group’s
businesses, including recruitment, nominations, training and engagement. The Group’s performance and reward system
endorses the desired ethical behaviours across the Company.
Principle 9: Maintain governance structures and processes that are fit
The Board is responsible for the long-term success of the Company. The Board is intimately involved in all material decisions
for purpose and support good decision-making by the Board
of the Company and its subsidiaries. It is responsible for overall Group and subsidiary strategy, approval of major investments;
approval of the annual and interim results; annual budgets; dividend policy, and Board structure. It monitors the exposure to
key business risks and reviews the strategic direction of all subsidiaries, their annual budgets and their performance in relation
to those budgets. There is a clear division of responsibility at the head of the Company. The Chairman is responsible for running
the business of the Board and for ensuring appropriate strategic focus and direction. The CEO is responsible for proposing the
strategic focus to the Board, implementing it once it has been approved and overseeing the management of the Company.
The CEO is responsible for formulation of the proposed strategic focus for submission to the Board, the day-to-day management
of the Group’s businesses and its overall trading, operational and financial performance in fulfilment of that strategy, as well
as plans and budgets approved by the Board of Directors. He also manages and oversees key risks, management development
and corporate responsibility programmes. The controls applied in respect of financial and non-financial matters are set out
earlier in this document, and the effectiveness of these controls is regularly reported to the Board.
17
[ANNUAL REPORT 2019] Principle 10: Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and other
The Board is committed to maintaining good communication and having constructive dialogue with all of its stakeholders,
relevant stakeholders
including shareholders, providing them with access to information to enable them to come to informed decisions about the
Company.
The Investor Relations section of the Company’s website provides all required regulatory information as well as additional
information shareholders may find helpful including: information on Board Members, Advisors and Significant Shareholdings,
a historical list of the Company’s Announcements, Corporate Governance information, the Company’s publications including
historic Annual Reports and Notices of General Meetings, together with Share Price information and interactive Charting
facilities to assist shareholders analyse performance.
Results of shareholder meetings and details of votes cast will be publicly announced through the regulatory system and
displayed on the Company’s website with suitable explanations of any actions undertaken as a result of any significant votes
against resolutions.
Given the size of the Company, separate Audit committee meetings have not been held and an Audit committee or similar
report was not produced. Instead the related issues were dealt with by the Company’s Board. Since, the Directors did not
receive any Remuneration during the year, no Remuneration Committee meeting was held and no Directors’ Remuneration
report was applicable.
ON BEHALF OF THE BOARD.
PAUL TURNER
CHAIRMAN
28 FEBRUARY 2020
18
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Report of the Independent Auditors
Report of the Independent Auditors, Baker Tilly Isle of Man LLC, to the
OPINION
members of Cambria Africa Plc
We have audited the financial statements of Cambria Africa Plc (the ‘Parent company’) and its subsidiaries (the ‘Group’)
for the year ended 31 August 2019 which comprise the Consolidated and Company Income Statements, the Consolidated
and Company Statements of Comprehensive Income, the Consolidated and Company Statements of Changes in Equity, the
Consolidated and Company Statements of Financial Position, the Consolidated and Company Statements of Cash Flows and
related notes to the financial statements, including a summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs)
as adopted by the European Union.
In our opinion the financial statements:
•
give a true and fair view of the state of the Group’s and the Parent Company’s affairs as at 31 August 2019, and of
the profit for the year then ended; and
•
have been properly prepared in accordance with IFRSs as adopted by the European Union.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial
statements’ section of our report. We are independent of the group in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
EMPHASIS OF MATTER
We draw attention to the “Functional and Presentational Currency and the effect of Hyperinflation” section of Note 2 of the
financial statements which describes the effects of the change in functional currency of a number of the Group entities and
the subsequent hyperinflationary conditions which have prevailed during the second half of the financial year.
Our opinion is not modified in relation to these matters.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group’s or the Parent Company’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
19
[ANNUAL REPORT 2019] OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the
annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of our knowledge and understanding of the Group and Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Chief Executive Officer’s Statement and the
directors’ report.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ Responsibilities Statement set out on page 11, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
20
[ANNUAL REPORT 2019] As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
•
•
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group of the Parent Company to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with the terms of our engagement letter
dated 9 January 2018. Our audit work has been undertaken so that we might state to the Company’s members those matters
we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
BAKER TILLY ISLE OF MAN LLC,
CHARTERED ACCOUNTANTS,
P O BOX 95
2A LORD STREET DOUGLAS
ISLE OF MAN IM99 1HP
28 FEBRUARY 2020
21
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Consolidated Income Statement
Revenue
Cost of sales
Gross profit
Operating costs
Other income
Exceptionals
Operating profit
Finance income
Finance costs
Net finance costs
Profit before tax
Income tax
Profit for the period from continuing operations
Discontinued operations
Profit for the year from discontinued operations, net of tax
Profit for the year
Attributable to:
Owners of the company
Non-controlling Interests
Profit for the year
Earnings per share - all operations
Basic and diluted earnings per share (cents)
Earnings per share - continuing operations
Basic and diluted earnings per share (cents)
Earnings per share - discontinued operations
Basic and diluted earnings per share (cents)
5
NOTE
6
6
8
8
9
5
11
11
11
GROUP 2019 GROUP 2018
TOTAL
9,441
US$’000
( 2,001 )
TOTAL
4,996
US$’000
( 983 )
4,013
( 2,155 )
7,440
( 3,997 )
66
( 72 )
1,852
11
( 51 )
( 40 )
1,812
( 150 )
1,662
-
1,662
-
1,405
257
1,662
70
( 264 )
3,249
23
( 252 )
( 229 )
3,020
( 776 )
2,244
3
2,247
1,897
350
2,247
0.26c
0.50c
0.26c
0.50c
-
0.00c
The notes on pages 30 to 67 are an integral part of these consolidated financial statements.
22
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Company Income Statement
Revenue
Cost of sales
Gross profit
Operating costs
Other income
Exceptionals
Operating profit / (loss)
Finance income
Finance costs
Net finance costs
Profit/ (loss) before tax
Income tax
Profit / (loss) for the period from continuing operations
Discontinued operations
Profit /(loss) for the year from discontinued operations, net of tax
Profit / (loss) for the year
Attributable to:
Owners of the company
Non-controlling Interests
Profit / (loss) for the year
Profit / (loss) per share - all operations
Basic and diluted profit / loss per share (cents)
Profit /(loss) per share - continuing operations
Basic and diluted profit / loss per share (cents)
Profit /(loss) per share - discontinued operations
Basic and diluted profit / loss per share (cents)
3(c)
COMPANY 2019 COMPANY 2018
TOTAL
-
US$’000
-
TOTAL
72
US$’000
-
72
( 207 )
35
683
583
-
( 43 )
( 43 )
540
-
540
-
540
540
-
540
-
( 184 )
19
17
( 148 )
-
( 201 )
( 201 )
( 349 )
-
( 349 )
-
( 349 )
( 349 )
-
( 349 )
0.10c
( 0.04c )
0.10c
( 0.04c )
-
-
The notes on pages 30 to 67 are an integral part of these consolidated financial statements.
23
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Consolidated & Company Statements of
Comprehensive Income
Consolidated
Profit for the year
Other comprehensive income
Items that will not be reclassified to income statement:
Revaluation of property
Related deferred tax adjustment
Increase in investment in subsidiary – impact on equity
Foreign currency translation differences for overseas operations
Total comprehensive profit for the year
Attributable to:
Owners of the company
Non-controlling interest
Total comprehensive profit for the year
Company
Profit /(loss) for the year
Other comprehensive income
Items that will not be reclassified to income statement:
Foreign currency translation differences for overseas operations
Total comprehensive profit / (loss) for the year
Attributable to:
Owners of the company
Non-controlling interest
Total comprehensive profit / (loss) for the year
GROUP 2019 GROUP 2018
2,247
US$’000
1,662
US$’000
-
-
( 164 )
251
1,749
1,492
257
1,749
200
( 36 )
-
3
2,414
2,064
350
2,414
COMPANY 2019 COMPANY 2018
( 349 )
US$’000
540
US$’000
-
540
540
-
540
-
( 349 )
( 349 )
-
( 349 )
The notes on pages 30 to 67 are an integral part of these consolidated financial statements.
24
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Consolidated Statement of Changes
in Equity
RE-VALUA-
SHARE
CAPITAL
SHARE
PREMIUM
FOREIGN
TION EXCHANGE
RESERVE
RESERVE
RETAINED
EARNINGS
NDR
TOTAL
NON-CON
TROLLING
INTERESTS
TOTAL
Balance at 1 September 2017
Profit for the period
Revaluation of property
Related deferred tax adjustment
Foreign currency translation
differences for overseas operations
Total comprehensive profit for the year
Contributions by/distributions
to owners of the Company
recognised directly in equity
Deferred tax adjustment
Issue of ordinary shares (net of share
issue costs)
Transfers between reserves
Dividends paid to minorities
NCI on purchase of A F Philip & Company
Total contributions by and distributions
to owners of the Company
Balance at 31 August 2018
Balance at 1 September 2018
Profit for the period
Increase in investment in subsidiary -
impact on equity
Transfer between reserves –
IAS 29 application
Foreign currency translation differences
for overseas operations
Foreign currency translation differences
for overseas operations - NCI
Total comprehensive profit for the year
Contributions by/distributions to owners of
the Company recognised directly in equity
Dividends paid to minorities
Total contributions by and distributions
to owners of the Company
51
994
( 76,558 )
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
2,247
( 10,627 )
85,686
1,905
1,897
1,897
350
895
438
99
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26
2,773
-
-
-
-
-
-
26
77
2,773
88,459
200
( 36 )
-
164
-
-
-
-
-
-
-
-
3
3
-
-
-
-
-
1,897
( 3 )
-
-
-
-
-
-
-
( 21 )
( 445 )
466
-
-
-
-
-
-
( 21 )
( 448 )
466
602
( 10,645 )
( 75,109 )
2,371
200
( 36 )
3
-
-
-
200
( 36 )
3
2,064
350
2,414
( 3 )
2,799
-
-
-
-
-
-
( 3 )
2,799
-
( 405 )
( 405 )
947
947
2,796
5,755
542
991
3,338
6,746
SHARE
CAPITAL
SHARE
PREMIUM
RE-VALUA-
FOREIGN
TION EXCHANGE
RESERVE
RESERVE
RETAINED
EARNINGS
NDR
TOTAL
NON-CON
TROLLING
INTERESTS
TOTAL
77
6,746
( 75,109 )
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
1,662
( 10,645 )
88,459
2,371
5,755
1,405
1,405
602
257
991
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
( 602 )
-
-
( 602 )
-
-
-
-
-
251
143
394
-
-
( 164 )
602
-
-
1,843
-
-
-
-
-
-
-
-
-
( 164 )
( 235 )
( 399 )
-
251
-
-
-
251
143
1,635
( 143 )
( 121 )
-
1,514
-
-
( 123 )
( 123 )
( 123 )
( 123 )
( 10,251 )
( 73,266 )
2,371
7,390
747
8,137
Balance at 31 August 2019
77
88,459
The notes on pages 30 to 67 are an integral part of these consolidated financial statements.
25
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Company Statement of Changes
in Equity
Balance at 1 September 2017
Loss for the year
Total comprehensive loss for the year
Contributions by and distributions to owners
of the Company recognised directly in equity
Issue of ordinary shares (net of share issue costs)
Total contributions by and distributions to owners
of the Company
Balance at 31 August 2018
Balance at 1 September 2018
Profit for the year
Total comprehensive profit for the year
Balance at 31 August 2019
SHARE
CAPITAL
51
US$’000
-
-
26
26
77
SHARE
CAPITAL
77
US$’000
-
-
77
SHARE
PREMIUM
85,686
US$’000
-
-
2,773
2,773
88,459
FOREIGN
EXCHANGE
RESERVE
( 13,186 )
US$’000
-
-
-
-
RETAINED
EARNINGS
( 73,243 )
US$’000
( 349 )
( 349 )
-
-
( 13,186 )
( 73,592 )
SHARE
PREMIUM
88,459
US$’000
-
-
FOREIGN
EXCHANGE
RESERVE
( 13,186 )
US$’000
-
-
RETAINED
EARNINGS
( 73,592 )
US$’000
540
540
88,459
( 13,186 )
( 73,052 )
TOTAL
EQUITY
( 692 )
US$’000
( 349 )
( 349 )
2,799
2,799
1,758
TOTAL
EQUITY
1,758
US$’000
540
540
2,298
The notes on pages 30 to 67 are an integral part of these consolidated financial statements.
26
[ANNUAL REPORT 2019]
As at 31 August 2019
Consolidated and Company Statement of
Financial Position
Property, plant and equipment
Goodwill
Intangible assets
Investments in subsidiaries and associates
Total non-current assets
Inventories
Financial assets at fair value through profit and loss
Trade and other receivables
Cash and cash equivalents
Assets for discontinued operation
Total current assets
Total assets
Equity
Issued share capital
Share premium account
Revaluation reserve
Foreign exchange reserve
Non-distributable reserves
Retained losses
Equity attributable to owners of the company
Non-controlling interests
Total equity
Liabilities
Loans and Borrowings
Trade and other payables
Provisions
Deferred tax liabilities
Total non-current liabilities
Current tax liabilities
Loans and borrowings
Trade and other payables
Liabilities for discontinued operation
Total current liabilities
Total liabilities
Total equity and liabilities
12
NOTES
13
14
15
16
17
18
19
5,10
21
21
20
20
20
23
23
24
25
27
26
27
5,10
GROUP
2019
2,757
US$’000
717
COMPANY
2019
-
US$’000
-
GROUP
2018
2,943
US$’000
717
2
2,546
6,022
286
496
481
1,920
-
3,183
9,205
77
88,459
-
-
-
-
-
478
3,095
447
-
4,020
4,020
77
88,459
-
16
2,546
6,222
243
131
843
3,259
1
4,477
10,699
77
88,459
602
COMPANY
2018
-
US$’000
-
-
-
-
-
-
3,380
758
-
4,138
4,138
77
88,459
-
(10,251)
(13,186)
(10,645)
(13,186)
2,371
-
2,371
-
(73,266)
(73,052)
(75,109)
(73,592)
7,390
747
8,137
49
18
8
204
279
24
503
262
-
789
1,068
9,205
2,298
-
2,298
-
-
-
-
-
-
443
1,279
-
1,722
1,722
4,020
5,755
991
6,746
-
120
188
223
531
477
619
2,303
23
3,422
3,953
10,699
1,758
-
1,758
-
-
-
-
-
-
413
1,967
-
2,380
2,380
4,138
These financial statements were approved by the Board of Directors and authorised for issue on 28 February 2020. They were signed on their behalf by:
MR. S SHASHA
EXECUTIVE DIRECTOR
The notes on pages 30 to 67 are an integral part of these consolidated financial statements.
27
[ANNUAL REPORT 2019]
As at 31 August 2019
Consolidated Statement of Cash Flows
Cash generated from operations
Taxation paid
Cash (used in)/ generated from operating activities
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment
Purchase of property, plant and equipment
Other investing activities
Interest received
Net cash (used in) investing activities
Cash flows from financing activities
Dividends paid to non-controlling interests
Interest paid
Proceeds from issue of share capital
Loans repaid
Proceeds from drawdown of loans
Net cash (utilised) by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the Period
Foreign exchange
Net cash and cash equivalents at 31 August
Cash and cash equivalents as above comprise the following
Cash and cash equivalents attributable to continuing operations
Net cash and cash equivalents at 31 August
28
NOTES
23,26
23,26
19
19
GROUP
2019
70
US$’000
( 621 )
( 551 )
53
( 18 )
( 844 )
11
( 798 )
( 123 )
( 51 )
-
( 277 )
210
( 241 )
( 1,590 )
3,259
251
1,920
1,920
1,920
GROUP
2018
5,270
US$’000
( 693 )
4,577
36
( 213 )
( 1,600 )
23
( 1,754 )
( 405 )
( 51 )
2,731
( 2,945 )
37
( 633 )
2,190
1,069
-
3,259
3,259
3,259
The notes on pages 30 to 67 are an integral part of these consolidated financial statements.
28
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Company Statement of Cash Flows
Cash generated from operations
Taxation paid
Cash generated from operating activities
Cash flows from investing activities
Other investing activities
Net cash (used in) investing activities
Cash flows from financing activities
Interest paid
Proceeds from issue of share capital
Loans repaid
Net cash (utilised)/generated by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the Period
Foreign exchange
Net cash and cash equivalents at 31 August
Cash and cash equivalents as above comprise the following
Cash and cash equivalents attributable to continuing operations
Net cash and cash equivalents at 31 August
28
NOTES
23,26
19
19
COMPANY
2019
145
US$’000
-
COMPANY
2018
163
US$’000
-
145
163
( 443 )
( 443 )
-
-
( 13 )
( 13 )
( 311 )
758
-
447
447
447
-
-
( 201 )
2,731
( 2,078 )
452
615
143
-
758
758
758
The notes on pages 30 to 67 are an integral part of these consolidated financial statements.
29
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
Cambria Africa Plc (the “Company”) is a public limited company listed on the Alternative Investment Market (AIM) and
1. Reporting entity
incorporated in the Isle of Man under the Companies Act 2006. The consolidated financial statements of the Group for the
year ended 31 August 2019 comprise the Company and its subsidiaries (together referred to as the “Group” and individually
as “Group entities”).
The majority shareholder is Ventures Africa Limited, the ultimate controlling entity is S Shasha and Associates and the ultimate
beneficial owner Mr. S Shasha.
The financial statements were authorised for issue by the Directors on 28 February 2020.
STATEMENT OF COMPLIANCE
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the E.U, and the Isle of Man Companies Act 2006.
ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)
STANDARDS ADOPTED IN THE CURRENT PERIOD
In the current year, the Group has adopted revised Standards, Amendments and Interpretations issued by the International
Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB
that were relevant to its operations. The accounting policies adopted are consistent with those of the previous year.
New and revised Standards and Interpretations adopted in this period are summarised as follows:
STANDARD/
INTERPRETATION
IFRS 2
Share-based Payment - Amendments to clarify the classification and measurement of
share-based payment transactions
ISSUED
Jun-16
EFFECTIVE
DATE
1-Jan-18
IFRS 4
IFRS 9
IFRS 15
IFRS 15
IFRS 15
IAS 28
Insurance Contracts - Amendments regarding the interaction of IFRS 4 and IFRS 9
Sep-16
1-Jan-18
Financial Instruments - Finalised version, incorporating requirements for classification and
measurement, impairment, general hedge accounting and derecognition. Amendments regarding
the interaction of IFRS 4 and IFRS 9
Jul-14
1-Jan-18
Revenue from Contracts with Customers - Original Issue
May-14
1-Jan-18
Revenue from Contracts with Customers - Amendments to defer the effective date to 1 January 2018
Sep-15
1-Jan-18
Revenue from Contracts with Customers - Clarifications to IFRS 15
Investments in Associates and Joint Ventures - Amendments resulting from Annual Improvements
2014-2016 Cycle (clarifying certain fair value measurements)
Apr-16
1-Jan-18
Dec-16
1-Jan-18
IAS 40
Investment Property - Amendments to clarify transfers or property to, or from, investment property
Dec-16
1-Jan-18
30
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
NEW AND AMENDED STANDARDS EFFECTIVE FOR FUTURE PERIODS
Notes to the Financial Statements
The following standards and interpretations were in issue but not yet effective and were not applied in these financial statements.
STANDARD/
INTERPRETATION
IFRS 3
Business Combinations - Amendments resulting from Annual Improvements 2015–2017 Cycle
(remeasurement of previously held interest)
Business Combinations - Amendments to clarify the definition of a business
Financial Instruments: Disclosures - Amendments regarding pre-replacement issues in the context
of the IBOR reform
ISSUED
Dec-17
Oct-18
Sep-19
EFFECTIVE DATE
1-Jan-19
1-Jan-20
1-Jan-20
Financial Instruments - Amendments regarding prepayment features with negative compensation
and modifications of financial liabilities
Oct-17
1-Jan-19
Financial Instruments - Amendments regarding pre-replacement issues in the context of the
IBOR reform
Sep-19
1-Jan-20
Joint Arrangements - Amendments resulting from Annual Improvements 2015–2017 Cycle
(remeasurement of previously held interest)
Dec-17
1-Jan-19
Leases - Original issue
Insurance Contracts - Original Issue
Presentation of Financial Statements - Amendments regarding the definition of material
Accounting Policies, Changes in Accounting Estimates and Errors - Amendments regarding the
definition of material
Jan-16
May-17
Oct-18
Oct-18
1-Jan-19
1-Jan-21
1-Jan-20
1-Jan-20
Income Taxes - Amendments resulting from Annual Improvements 2015–2017 Cycle (income tax
consequences of dividends)
Dec-17
1-Jan-19
Employee Benefits - Amendments regarding plan amendments, curtailments or settlements
Borrowing Costs - Amendments resulting from Annual Improvements 2015–2017 Cycle (borrowing
costs eligible for capitalisation)
Feb-18
Dec-17
1-Jan-19
1-Jan-19
Investments in Associates and Joint Ventures - Amendments regarding long-term interests in
associates and joint ventures
Oct-17
1-Jan-19
Financial Instruments: Recognition and Measurement - Amendments to permit an entity to
elect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedge of
the interest rate exposure of a portion of a portfolio of financial assets or financial liabilities when
IFRS 9 is applied, and to extend the fair value option to certain contracts that meet the ‘own use’
scope exception
Nov-13
1-Jan-19
IFRS 3
IFRS 7
IFRS 9
IFRS 9
IFRS 11
IFRS 16
IFRS 17
IAS 1
IAS 8
IAS 12
IAS 19
IAS 23
IAS 28
IAS 39
IAS 39
Financial Instruments - Amendments regarding pre-replacement issues in the context of the
IBOR reform
Sep-19
1-Jan-20
It is not anticipated that the adoption of these standards in future periods will have a material impact upon the financial statements.
31
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
BASIS OF MEASUREMENT
Notes to the Financial Statements
The consolidated financial statements have been prepared on the historical cost basis except for the following:
•
land and buildings measured at revalued amounts.
FUNCTIONAL AND PRESENTATIONAL CURRENCY AND THE EFFECT OF HYPERINFLATION
During the year ended 31 August 2019, the Group’s Zimbabwean entities experienced a change in functional currency from
USD to ZWL with effect from 22 February 2019.
The assessment of change in functional currency included consideration of whether the various modes of settlement may
represent different forms of currency. In doing so, management considered parameters set in IAS 21 as follows:
•
•
•
•
•
The currency that mainly influences the sales prices for goods and services,
The currency of competitive forces and regulations that mainly determines the sales prices of goods and services,
The currency that mainly influences labour, material and other costs of providing goods and services (normally the
currency in which such costs are denoted and settled),
The currency in which funds from financing activities are generated, and
The currency in which receipts from operating activities are usually retained.
Since 2009, Zimbabwe has been under a multi-currency system, under which the USD has emerged as the currency of
reference for business and government. New legislation was promulgated in the form of Statutory Instruments 133 of 2016
and 122a of 2017 which prescribed bond notes and coins issued by the Reserve Bank of Zimbabwe as legal tender with a 1:1
parity with the USD. With the acute shortage of USD cash and other foreign currencies in the country, increases in the utilisation
of different modes of payment for goods and services such as settlement via the Real Time Gross Settlement (RTGS) system
overseen by the Reserve Bank of Zimbabwe (RBZ), Point of sale machines (POS) and mobile money platforms, were observed.
In October 2018 the Central Bank through the Exchange Control directive RT120 introduced the separation of bank accounts
into Nostro foreign currency account (herein referred as Nostro) and the existing foreign currency accounts for domestic
purposes. These Nostro accounts are held with financial institutions operating in Zimbabwe in which money in the form of
foreign currency is deposited from offshore or domestic sources. The separation of the pre-existing FCA and Nostro accounts
suggests that in substance the values were not equal. Since the 1st of October 2018, Zimbabwe witnessed significant changes
in the economy, with the economy being characterized by a highly inflationary environment. Whereas the official position from
Government was that the Bond note and RTGS balances had a value of 1:1 to the United States of America Dollar, the foreign
exchange premiums on the parallel market ranged between 1.40 to 4.0 during the reporting period to end of February 2019.
The Group has complied with the local laws and regulations with emphasis on Statutory Instrument 33 of 2019, the Monetary
Policy Statement of 20 February 2019 and PAAB guidance of 21 March 2019 which stated that the exchange rate between the
USD and ZWL balances (including bond notes) was 1:1 as at 22 February 2019.
The Consolidated Financial Statements are presented in US Dollars (USD), the Group’s presentational currency. With effect
from 22 February 2019, all its Zimbabwe subsidiaries have adopted the US Dollar as presentational currency with Zimbabwe‘s
Dollar (ZWL) as the functional currency.
32
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
Up to 22 February 2019, all cumulative income statement transactions, assets, liabilities and equity balances were translated
at ZWL1.00:USD1.00 and any local transactions thereafter treated as ZWL transactions. For the Company’s USD reporting
purposes, transactions up to 22 February 2019 were maintained in USD. In accordance with guidance issued by the PAAB
of Zimbabwe, the country is a hyperinflatory economy effecting reporting periods ending after 01 July 2019. Accordingly, all
ZWL transactions after 22 February 2019 were first adjusted for Hyperinflationary conditions in terms of IAS 29 using historic
cost basis and official inflation price indexes published by the Reserve Bank of Zimbabwe, before translation at the official
interbank rate at the financial year end. The net monetary gain/loss was not material and is included directly in reserves.
At 31 August 2019, all monetary ZWL asset and liability balances of its Zimbabwe subsidiaries were converted at the closing
interbank rate with the exception of $1.2 million in monetary assets covered by the Reserve Bank of Zimbabwe (RBZ)’s
commitment to honour “Legacy Foreign Debts” originating before 22 February 2019 at parity. Non-monetary assets were
recorded in accordance with the provisions of IAS 29 before conversion at the year-end rate in accordance with paragraphs 42
and 43 of IAS 21. The Statement of Financial Position was unaffected by IAS 29. Resultant foreign exchange translation differences
were accounted for through the foreign currency translation reserve in the Statement of Other Comprehensive Income.
USE OF ESTIMATES AND JUDGEMENTS
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions 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 liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future
periods if the revision affects both current and future periods.
Information about critical judgements in applying accounting policies and assumptions and estimation uncertainties that have
the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes:
• Note 13 – Goodwill
• Note 12 – Property, plant and equipment
• Note 24 – Provisions
By their nature, these estimates and assumptions are subject to an inherent measurement of uncertainty and the effect on
the Group’s financial statements of changes in estimates in future periods could be significant.
GOING CONCERN
The significant events impacting the Zimbabwe economy and the Group’s businesses saw the Group adopt a defensive
approach by reducing expenses, hedging its assets and cashflow and minimising its cost of capital.
Defensive measures have put the Group into a breakeven position despite a 47% drop in revenues to $5.0 million from $9.44
million in FY 2018, with operating costs reducing by 46% to $2.16 million from $3.99 million.
The Group’s focus on preserving its balance sheet resulted in a 28% increase in Net Equity (NAV) increasing by $1.63 million to
$7.39 million from $5.76 million at 31 August 2018. Liabilities include Loans and Borrowings of $552,000 of which $443,000
is owed to Cambria’s majority shareholder, VAL which is beneficially owned by the Group CEO . The vast majority of the
Company’s assets ($7.6 million out of $9.2 million) are represented by tangible assets in the form of Investment Property, AF
Philip’s Investment in Radar Holdings Ltd, Listed Securities and US Dollar cash and equivalents. These assets tend to retain
their value in real US Dollar terms. The Group held cash of $1.92 million at 31 August 2019. At the date of this report $1.4 million
cash is held outside Zimbabwe.
33
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
Despite the suspension of Paynet’s services to banks, the Company’s operating subsidiaries continue to trade profitably in
local currency, albeit at significantly reduced levels in comparison to prior years. Autopay has a significant client base and
reach in the market and strategies are being explored to grow this.
Overheads have been reduced in response to the challenges and new revenue streams are being explored of which the
EcoCash relationship is an example. Millchem Zimbabwe continues to trade profitably in local currency.
The Board has considered the cash flow forecasts for the ensuing 12 months including the maturity profile of its contractual debt
obligations. Considering the quality of the Group’s Statement of Financial Position, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.
The Group’s business activities and financial performance are set out in the Chief Executive’s Review on pages 8 to 9. In
addition, note 29 to the financial statements includes the Group’s objectives, policies and processes for managing its capital;
its financial risk management objectives; details of its financial instruments and its exposure to credit and liquidity risk.
The following accounting policies have been applied consistently by the Group.
3. Significant accounting policies
(A) BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial statements of the Company and Group entities controlled by
the Company (its subsidiaries). Control is achieved where the Company is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control commenced until
the date that control ceases.
The interest of non-controlling shareholders is stated at their proportion of the fair values of the assets and liabilities
recognised. 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 deficit balance.
The results of entities acquired or disposed of during the year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal as appropriate. Where necessary, the financial statements
of the subsidiaries are adjusted to conform to the Group’s accounting policies. All intra-group transactions, balances, income
and expenses are eliminated on consolidation.
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the
BUSINESS COMBINATIONS
aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed, and equity instruments issued
by the Group in exchange for control of the acquiree. Acquisition related costs are expensed as incurred unless they relate to
the cost of issuing debt or equity securities. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3 are recognised at their fair values at the acquisition date, except for non-current assets
that are classified as held for sale in accordance with IFRS 5, which are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset at the date that control is assumed (the acquisition date) and initially
measured at cost, being the excess of the cost of the business combination over the Group’s interest in the fair value of the
identifiable assets, liabilities and contingent liabilities recognised.
34
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
liabilities exceeds the cost of the business combination, the excess is recognised immediately in the income statement.
The interest of non-controlling shareholders in the acquiree is initially measured at the non-controlling interests’ proportion
of the net fair value of the assets, liabilities and contingent liabilities recognised.
(B) INTANGIBLE ASSETS
Goodwill arising on consolidation is recognised as an asset.
GOODWILL
Following initial recognition, goodwill is subject to impairment reviews, at least annually, and measured at cost less
accumulated impairment losses. The recoverable amount is estimated at each reporting date.
Any impairment loss is recognised immediately in the income statement and is not subsequently reversed when the carrying
amount of the asset exceeds its recoverable amount.
Any impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of any
goodwill allocated to cash-generating units (groups of units) and then to reduce the carrying amount of other assets in the
unit (groups of units) on a pro rata basis.
On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the gain or loss on disposal.
Other intangible assets are measured initially at cost and are amortised on a straight-line basis over their estimated useful
OTHER INTANGIBLE ASSETS
lives. The carrying amount is reduced by any provision for impairment where necessary.
On a business combination, as well as recording separable intangible assets already recognised in the statement of financial
position of the acquired entity at their fair value, identifiable intangible assets that are separable or arise from contractual or
other legal rights are also included in the acquisition statement of financial position at fair value.
Amortisation of intangible assets, disclosed under operating costs in note 6, is charged over their useful economic life, as follows:
Software licenses
3 years
(C) FOREIGN CURRENCIES
The Consolidated Financial Statements are presented in US Dollars (USD), the Group’s presentation currency. With effect from
22 February 2019, all its Zimbabwe subsidiaries have adopted the US Dollar as presentation currency with Zimbabwe ‘s Dollar
(ZWL) as the functional currency.
In preparing the financial statements of the individual Group entities, transactions denominated in foreign currencies are
translated into the respective functional currency of the individual Group entities using the exchange rates prevailing at the
dates of transactions.
Non-monetary assets and liabilities are translated at the historic rate. Monetary assets and liabilities denominated in foreign
currencies are translated into the presentation currency at the interbank rate of exchange ruling at the reporting date.
35
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
Exchange differences arising on the settlement of monetary items are included in the income statement for the year, as
either finance income, finance costs or exceptionals depending on whether foreign currency movements are in a net gain
or net loss position.
For the purpose of presenting consolidated financial statements, the assets and liabilities and results of the Group’s foreign
operations are translated from their functional currency to presentation currency, as disclosed in note 2.
(D) TAXATION
The tax expense represents the sum of current and deferred tax.
Current tax is based on taxable profit for the period for the Group. Taxable profit differs from net profit in the income statement
CURRENT TAXATION
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
DEFERRED TAXATION
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and
is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on the investments in subsidiaries and
associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset is
realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited to
equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are off set when there is a legally enforceable right to set off current tax assets against
current tax liabilities, when they relate to income taxes levied by the same taxation authority and the Group intends to settle
its current tax assets and liabilities on a net basis.
(E) INVESTMENTS IN SUBSIDIARIES
Investments in subsidiary undertakings are carried at cost with annual reviews undertaken for impairment.
(F) OTHER INVESTMENTS
Other asset investments are stated at fair value, adjusted for impairment losses.
36
[ANNUAL REPORT 2019] For the year ended 31 August 2019
(G) PROPERTY, PLANT AND EQUIPMENT
Notes to the Financial Statements
Land and buildings are stated at their revalued amounts, being the fair value at the date of revaluation, less any impairment
losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from
that which would be determined using fair values at the reporting date.
Any revaluation increase arising on the revaluation of such assets is credited to the revaluation reserve, except to the extent
that it reverses a revaluation decrease for the same asset previously recognised as an expense, in which case the increase is
credited to the income statement to the extent of the decrease previously charged. A decrease in carrying amount arising on
the revaluation of such asset is charged as an expense to the extent that it exceeds the balance, if any, held in the revaluation
reserve relating to a previous revaluation of that asset. Depreciation on revalued assets is charged to the income statement.
On subsequent sale or retirement of a revalued asset, the attributable revaluation surplus remaining is transferred directly
to retained earnings.
Depreciation is charged straight line so as to write off the cost or valuation of assets, other than land and buildings, over their
estimated useful lives. The annual depreciation rates used for this purpose are:
Plant and machinery
Motor vehicles
10%
25%
Fixtures and fittings
10% - 15%
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in the income statement for the year.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or where
shorter, over the relevant lease term. No depreciation is provided on land and buildings.
Property, plant and equipment identified for disposal are reclassified as assets held for resale.
(H) IMPAIRMENT OF ASSETS EXCLUDING GOODWILL
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of any impairment loss. Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value and the risks specific to the asset for which the estimates of future cash flows
have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an
expense immediately, unless the relevant asset is carried at a revalued amount in which case the reversal of the impairment
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a
revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
37
[ANNUAL REPORT 2019] For the year ended 31 August 2019
(I) FINANCIAL INSTRUMENTS
Notes to the Financial Statements
Non-derivative financial instruments comprise investments in equity, trade and other receivables, cash and cash equivalents,
loans and borrowings and trade and other payables. Financial assets and financial liabilities are recognised in the Group’s
statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
(A) CLASSIFICATION AND MEASUREMENT
ADOPTION OF IFRS 9
The Group has assessed the classification of financial instruments as at the date of initial application and has applied such
classification retrospectively. Based on that assessment:
• All financial assets previously held at fair value continue to be measured at fair value.
•
•
Financial assets previously classified as loans and receivables are held to collect contractual cash flows and give rise to
cash flows representing solely payments of principal and interest. Thus, such instruments continue to be measured at
amortised cost under IFRS 9.
The classification of financial liabilities under IFRS 9 remains broadly the same as under IAS 39. The main impact on
measurement from the classification of liabilities under IFRS 9 relates to the element of gains or losses for financial
liabilities designated as at fair value through profit or loss attributable to changes in credit risk. IFRS 9 requires that
such element can be recognised in other comprehensive income (OCI), unless this treatment creates or enlarges an
accounting mismatch in profit or loss, in which case, all gains and losses on that liability (including the effects of changes
in credit risk) should be presented in profit or loss. The Group has not designated any financial liabilities at fair value
through profit or loss, therefore, this requirement has not had an impact on the Group.
(B) IMPAIRMENT
IFRS 9 requires the Group to record expected credit losses (ECLs) on all of its debt securities, loans and trade receivables,
either on a 12-month or lifetime basis. Given the limited exposure of the Group to credit risk, this amendment has not had a
material impact on the financial statements. The Group only holds trade receivables with no financing component and that
have no maturities less than 12 months at amortised cost.
Financial assets carried at fair value continue to be considered for impairment at the reporting date.
(C) HEDGE ACCOUNTING
The Group has not applied hedge accounting under IAS 39 nor will it apply hedge accounting under IFRS 9.
IMPACT OF ADOPTION OF IFRS 9
ORIGINAL
CLASSIFICATION
UNDER IAS 39
NEW
CLASSIFICATION
UNDER IFRS 9
ORIGINAL CARRYING
AMOUNT UNDER IAS
39 AT 31 AUGUST 2018
Financial assets
Other investments
Trade and other receivables
Cash and cash equivalents
Total financial assets
Financial liabilities
Loans and borrowings
Trade and other payables
Total financial liabilities
Financial assets at fair value
through profit and loss
Financial assets at fair value
through profit and loss
Loans and receivables
Loans and receivables
Amortised cost
Amortised cost
Loans and receivables
Loans and receivables
Amortised cost
Amortised cost
US$’000
131
843
3,259
4,233
619
2,423
3,042
NEW CARRYING
AMOUNT UNDER
IFRS 9 AT 1
SEPTEMBER 2018
US$’000
131
843
3,259
4,233
619
2,423
3,042
38
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
In line with the characteristics of the Group’s financial instruments as well as its approach to their management, the Group
neither revoked nor made any new designations on the date of initial application. IFRS 9 has not resulted in changes in the
carrying amount of the Group’s financial instruments due to changes in measurement categories. All financial assets that
were classified as loans and receivables and measured at amortised cost continue to be. Trade Receivable in excess of 120
days are fully provided for.
There will be no impact on the Group’s accounting for financial liabilities that are designated at fair value through profit or
loss as the Group does not have any such liabilities.
Overall, there has been no material impact.
Cash and cash equivalents comprise cash in hand and demand deposits and other short term highly liquid investments that
CASH AND CASH EQUIVALENTS
are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Bank overdrafts
that are repayable on demand and form an integral part of the Group’s cash management are included as a component of
cash and cash equivalents for the purpose of the statement of cash flows.
Trade receivables are initially measured at fair value and are subsequently measured at amortised cost using the effective
TRADE RECEIVABLES
interest rate method. Appropriate allowances for estimated recoverable amounts are recognised in profit or loss when there
is objective evidence the asset is impaired.
Trade payables are initially measured at fair value and are subsequently measured at amortised cost using the effective
TRADE PAYABLES
interest rate method.
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
FINANCIAL LIABILITIES
The Board’s objective, following the poor results of the last few years, is to restore and rebuild the group’s capital base to
CAPITAL MANAGEMENT
maintain investor, creditor and market confidence and to sustain future development of the business.
Interest bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges,
BANK BORROWINGS
including premiums payable on settlement or redemption and direct issue costs, are accounted for on an amortised cost basis
to the income statement using the effective interest method and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they arise.
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
EQUITY INSTRUMENTS
(J) INVENTORIES
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and where applicable
direct expenditure and attributable overheads that have been incurred in bringing the inventories to their present location
and condition. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to
be incurred in marketing, selling and distribution.
39
[ANNUAL REPORT 2019] For the year ended 31 August 2019
(K) SHARE BASED PAYMENTS
Notes to the Financial Statements
The Group provides benefits to certain employees (including senior executives) of the Group in the form of share-based
payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The
cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined by using a Black-Scholes model. The dilutive effect, if any,
of outstanding options is reflected as additional share dilution in the computation of earnings per share.
The grant date fair value of options granted to employees is recognised as an employee expense with a corresponding
increase in equity over the period the employees become unconditionally entitled to the options.
(L) INTEREST-BEARING BORROWINGS
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value
being recognised in the income statement over the period of the borrowings on an effective interest basis.
(M) PROVISIONS
A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation
as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If
the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
(N) REVENUE RECOGNITION
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It
replaces IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. Under IFRS 15, revenue is recognised
when a customer obtains control of the goods and services. Determining the timing of the transfer of control at a point in
time or over time requires judgement.
IFRS 15 provides a single, principles based, five-step model to be applied to all contracts with customers.
The five steps in the model are as follows:
•
•
Identify the contract with the customer;
Identify the performance obligations in the contract;
• Determine the transaction price;
• Allocate the transaction price to the performance obligations in the contracts; and
•
Recognise revenue when (or as) the entity satisfies a performance obligation.
Applying the five-step model:
Revenue generated from contracts with Fintech customers:
•
•
•
Contracts are in place with all customers using the payment platform, loan processing, or payroll services.
The Group provides services for the provision of electronic payments, loan processing and payroll administration.
The transaction price is as stipulated in the contract with the customer. It is stated at a price per transaction processed
that varies based upon the volume or value of transactions processed.
40
[ANNUAL REPORT 2019] For the year ended 31 August 2019
• Monthly invoices are raised based on the total number or value of transactions processed by the financial institutions or
Notes to the Financial Statements
other customers in that given month.
•
The Group recognises revenue as and when it becomes due, pursuant to the agreements.
When there are variations in contract work, claims or incentive payments revenue is recognised to the extent that it is
probable that they will result in revenue and they are capable of being reliably measured.
The Group does not have any revenue from contracts that is recognised over a period of time as such no disaggregation is
made regarding the timing of revenue in the notes to these financial statements.
Revenue from the sale of goods is recognised when all the following conditions have been satisfied:
•
•
•
•
•
the group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the group; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for
goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax.
Interest is recognised, in profit or loss, using the effective interest rate method.
There has been no impact on the Groups accounting for revenue following the introduction of IFRS 15 during the year.
(O) LEASES
Leases are classified according to the substance of the transaction. A lease that transfers substantially all the risks and rewards
of ownership to the lessee is classified as a finance lease. All other leases are classified as operating leases.
Finance leases are capitalised at their fair value or, if lower, at the present value of the minimum lease payments, each deter-
FINANCE LEASES
mined at the inception of the lease. The corresponding liability is shown as a finance lease obligation to the lessor. Leasing
repayments comprise both a capital and finance element. The finance element is written off to the income statement so as to
produce an approximately constant periodic rate of charge on the outstanding obligations. Such assets are depreciated over
the shorter of their estimated useful lives and the period of the lease.
Operating lease rentals are charged to the income statement on a straight-line basis over the period of the lease.
OPERATING LEASES
(P) EARNINGS / (LOSS) PER SHARE
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 dilutive effect of potential ordinary shares.
41
[ANNUAL REPORT 2019] For the year ended 31 August 2019
(Q) SEGMENT REPORTING
Notes to the Financial Statements
A segment is a distinguishable component of the Group that is engaged either in providing products or services (business
segment), or in providing products or services within a particular economic environment (geographical segment), which is
subject to risks and rewards that are different from those of other segments.
(R) ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale or held-for-distribution
ASSETS HELD FOR SALE
if it is highly probable that they will be recovered primarily through sale or distribution rather than through continuing use.
Immediately before classification as held-for-sale or held-for-distribution, the assets, or components of a disposal group, are
remeasured in accordance with the Group’s other accounting policies.
Thereafter, generally the assets, or disposal group, are measured at the lower of their carrying amount and fair value less costs
to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on
a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets,
investment property or biological assets, which continue to be measured in accordance with the Group’s other accounting
policies. Impairment losses on initial classification as held-for-sale or held-for-distribution and subsequent gains and losses on
re-measurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
Once classified as held-for-sale or held-for-distribution, intangible assets and property, plant and equipment are no longer
amortised or depreciated, and any equity-accounted investee is no longer equity accounted.
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly
DISCONTINUED OPERATIONS
distinguished from the rest of the Group and which:
•
•
•
represents a separate major line of business or geographical area of operations;
is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs on disposal or when the operation meets the criteria to be classified as
held- for-sale, if earlier.
When an operation is classified as a discontinued operation, the comparative statement of comprehensive income is
represented as if the operation had been discontinued from the start of the comparative year.
42
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and
4. Determination of fair values
non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based
on the following methods. Where applicable, further information about the assumptions made in determining fair values is
disclosed in the notes specific to that asset or liability.
INVENTORIES
The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the
ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the
effort required to complete and sell the inventories.
EQUITY AND DEBT SECURITIES
The fair values of investments for equity and debt securities are determined with reference to their quoted closing bid price
at the measurement date. Subsequent to initial recognition, the fair values of held-to-maturity investments are determined
for disclosure purposes only.
TRADE AND OTHER RECEIVABLES
The fair values of trade and other receivables are estimated at the present value of future cash flows, discounted at the
market rate of interest at the measurement date. Short-term receivables with no stated interest rate are measured at the
original invoice amount if the effect of discounting is immaterial. Fair value is determined at initial recognition and, for
disclosure purposes, at each annual reporting date.
PROPERTY, PLANT AND EQUIPMENT
The fair value of property, plant and equipment recognised as a result of a business combination is the estimated amount
for which property could be exchanged on the acquisition date between a willing buyer and a willing seller in an arm’s
length transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of
plant, equipment, fixtures and fittings is based on the market approach and cost approaches using quoted market prices for
similar items when available and depreciated replacement cost when appropriate. Depreciated replacement cost reflects
adjustments for physical deterioration as well as functional and economic obsolescence.
INVESTMENT PROPERTY
An external independent valuation company having appropriate recognised professional qualifications and recent experience
in the location and category of property being valued, values the Group’s property. The fair values are based on market values,
being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and
a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably.
In the absence of current prices in an active market, the valuations are prepared by considering the estimated rental value
of the property. A market yield is applied to the estimated rental value to arrive at the gross property valuation. When actual
rents differ materially from the estimated rental value, adjustments are made to reflect actual rents. Although external
valuations are obtained, the Directors also review the valuations and may determine the need for impairment for the financial
statements given their own knowledge of the properties and in particular where there has been interest from third parties in
purchasing the properties, the Directors may refer to amounts offered for purchase.
43
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
Segment information is presented in respect of the Group’s business segments based on the Group’s management and internal
5. Segment reporting
reporting structure. The results of the business segments are reviewed regularly by the Group’s CEO to make decisions about
resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.
Inter-segment pricing is determined on an arm’s length basis and inter-segment revenue is eliminated.
Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items mainly interest-bearing loans, borrowings and expenses, and corporate
assets and expenses primarily relating to Company’s head office.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used
for more than one period.
GEOGRAPHICAL SEGMENTS
Fintech and industrial chemicals, now operate solely in Zimbabwe. Separate geographical analysis is therefore not presented.
BUSINESS SEGMENTS
For management purposes, continuing operations are organised into three main business segments:
•
•
Fintech - includes payments systems and business process outsourcing and payroll services;
Industrial chemicals - includes the manufacture and distribution of industrial solvents and mining chemicals;
• Head office.
In addition, the following segment is reported separately as a discontinued operation in respect of the 2018 financial year:
Payserv Zambia Limited, previously in the Fintech segment.
44
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
CONTINUING OPERATIONS – CURRENT PERIOD
5. Segment reporting
Revenue
FOR THE YEAR ENDED 31 AUGUST 2019
Inter-segment revenue
Revenue from external customers
Cost of sales to external customers
Gross profit
Operating costs
Other operating income
Impairment of assets
Depreciation
Amortisation
Operating profit / (loss) for the year
Finance income
Finance expense
Income tax expense
Profit / (loss) for the year
EBITDA *
CONTINUING OPERATIONS – PRIOR PERIOD
Revenue
FOR THE YEAR ENDED 31 AUGUST 2018
Inter-segment revenue
Revenue from external customers
Cost of sales to external customers
Gross profit
Operating costs
Other operating income
Impairment of assets
Depreciation
Amortisation
Operating profit / (loss) for the year
Finance income
Finance expense
Income tax expense
Profit / (loss) for the year
EBITDA *
INDUSTRIAL
CHEMICALS
1,039
US$’000
-
FINTECH
3,957
US$’000
-
HEAD
OFFICE
72
US$’000
( 72 )
1,039
( 670 )
369
( 189 )
10
-
( 6 )
-
184
-
-
-
184
198
INDUSTRIAL
CHEMICALS
1,876
US$’000
-
1,876
( 1,336 )
540
( 328 )
45
( 25 )
( 14 )
-
218
-
( 1 )
-
217
240
3,957
( 313 )
3,644
( 1,635 )
21
-
( 167 )
( 14 )
1,849
11
( 8 )
( 150 )
1,702
2,030
FINTECH
7,565
US$’000
-
7,565
( 665 )
6,900
( 3,539 )
6
-
( 174 )
( 14 )
3,179
23
( 50 )
( 769 )
2,383
3,367
-
-
-
( 216 )
35
-
-
-
( 181 )
-
( 43 )
-
( 224 )
( 181 )
HEAD
OFFICE
-
US$’000
-
-
-
-
( 185 )
19
18
-
-
( 148 )
-
( 201 )
( 7 )
( 356 )
( 148 )
TOTAL
5,068
US$’000
( 72 )
4,996
( 983 )
4,013
( 2,040 )
66
-
( 173 )
( 14 )
1,852
11
( 51 )
( 150 )
1,662
2,047
TOTAL
9,441
US$’000
-
9,441
( 2,001 )
7,440
( 4,052 )
70
( 7 )
( 188 )
( 14 )
3,249
23
( 252 )
( 776 )
2,244
3,459
* Earnings before Interest, Taxation, Depreciation and Amortisation. Adjusted for depreciation that is included in cost of sales
45
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
DISCONTINUED OPERATIONS
5. Segment reporting (continued)
There were no discontinued operations in the current period. In the prior year $3,000 in Exchange differences were recognised
in relation to the discontinued Fintech operations in Zambia.
CONTINUING OPERATIONS - SEGMENT ASSETS & LIABILITIES
Segment assets
FOR THE YEAR ENDED 31 AUGUST 2019
Segment liabilities
Capital expenditure
Segment assets
FOR THE YEAR ENDED 31 AUGUST 2018
Segment liabilities
Capital expenditure
INDUSTRIAL
CHEMICALS
375
US$’000
11
14
FINTECH
5,394
US$’000
345
4
INDUSTRIAL
CHEMICALS
545
US$’000
95
8
FINTECH
6,878
US$’000
3,168
205
HEAD
OFFICE
3,436
US$’000
712
-
HEAD
OFFICE
3,275
US$’000
667
-
TOTAL
9,205
US$’000
1,068
18
TOTAL
10,698
US$’000
3,930
213
ASSETS AND LIABILITIES HELD FOR SALE
There are no assets or liabilities held for sale at 31 August 2019. In the prior year the Group held plant and equipment of $1,000
and trade and other liabilities of $23,000 related to discontinued Fintech operations in Zambia.
46
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
6. Group net operating costs
Cost of sales
Administrative expenses
Net operating costs
2019
983
US$’000
2,155
3,138
2018
2,001
US$’000
3,997
5,998
Administrative expenses include management related overheads for continuing operations and head office.
Operating costs include, inter alia:
Depreciation of property, plant and equipment
Depreciation of property plant and equipment in cost of sales
Amortisation
Operating lease rentals:
Land and buildings
Personnel expenses
Auditors remuneration
Fees Payable to the Group Auditors for:
NOTE
2019
US$’000
2018
US$’000
173
8
14
74
979
187
8
14
134
2,509
7
Current year audit of the Group’s financial statements
36
42
The aggregate remuneration comprised (including Executive Directors):
7. Personnel expenses
Wages and salaries
Compulsory social security contributions
Total personnel expenses
REMUNERATION OF GROUP EXECUTIVE DIRECTORS
Please see Directors’ emoluments note 33.
PENSION FUNDS
2019
967
US$’000
12
979
2018
2,485
US$’000
24
2,509
The group provides for pensions on the retirement of employees by means of the compulsory Zimbabwean National
Social Security Authority (NSSA) fund and the Cambria Staff Pension fund administered on our behalf by Old Mutual.
Contributions for the year were as follows:
NSSA
2019
Cambria Staff Pension Fund
Total
COMPANY
6
US$’000
19
EMPLOYEES
6
US$’000
19
25
25
TOTAL
12
US$’000
38
50
The average number of employees (including Executive Directors) in continuing operations was:
Fintech
Industrial chemicals
Head Office
Total
47
2019
62
NUMBER
10
2018
73
NUMBER
10
2
74
2
85
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
8. Net finance costs
Recognised in income statement:
Bank interest receivable
Finance income
Bank interest payable
Loan interest payable
Finance costs
Net finance costs
9. Taxation
Income tax recognised in the income statement
Current tax expense
Current period
Deferred tax expense
Origination and reversal of temporary differences
Total income tax charge in income statement
RECONCILIATION OF EFFECTIVE TAX RATE
Profit before tax
Income tax using the Zimbabwean corporation tax rate 25.75% (2018: 25.75%)
Net losses where no group relief is available
Total income tax charge in income statement
DEFERRED TAX
Relating to temporary tax differences in subsidiaries
Total
2019
US$’000
11
2018
US$’000
23
11
-
( 51 )
( 51 )
( 40 )
23
( 1 )
( 251 )
( 252 )
( 229 )
2019
2018
US$’000
US$’000
169
( 19 )
150
773
3
776
2019
1,812
US$’000
2018
3,020
US$’000
467
(317)
150
778
(2)
776
2019
(19)
US$’000
(19)
2018
3
US$’000
3
Corporation tax for Zimbabwean entities is calculated at 25.75% (2018: 25.75%) of the estimated assessable profit for
the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
Deferred tax assets are only recognised to the extent that there are available & offsetting deferred tax liabilities, unless
the entity is reasonably assured of earning sufficient future profits to offset against any future tax liabilities.
48
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
The following entities were reclassified as held for disposal in the 2017 financial year, with relevant numbers of what
10. Disposals and discontinued operations
remained in FY 2018 disclosed in note 5.
Payserv Zambia Limited, a subsidiary of Payserv Africa Limited
•
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Net cash (used in) operating activities
Net cash used in investing activities
Net cash generated from financing activities
Net cash flows for the year
Cash and cash equivalents held for sale
ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS:
Property, plant and equipment
Trade and other receivables
Total assets of discontinued subsidiary
Trade and other payables
Provisions
Total liabilities of discontinued subsidiary
Cash and cash equivalents
FINTECH
2019
US$’000
-
-
-
-
-
FINTECH
2018
US$’000
(24)
-
-
(24)
-
FINTECH
2019
-
US$’000
-
FINTECH
2018
1
US$’000
-
-
-
-
-
-
1
23
-
23
-
The calculation of basic and diluted earnings per share at 31 August 2019 has been based on the earnings attributable to ordinary
11. Earnings per share
shareholders for continuing and discontinued operations at the weighted average of ordinary shares outstanding during the
period as detailed in the table below:
EARNINGS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS
Earnings for the purposes of basic earnings and dilutive per share being
net earnings attributable to equity holders of the parent
- continuing operations
- discontinued operations
2019
EARNINGS
PER SHARE
US$’CENTS
0.26
0.26
-
2018
EARNINGS
PER SHARE
US$’CENTS
0.50
0.50
0.00
2019
US$’000
1,405
1,405
-
2018
US$’000
1,897
1,894
3
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES
Weighted average number of ordinary shares for the purposes of calculating
basic and dilutive earnings per share
Actual number of shares outstanding at the end of the period
NOTE
21
2019
000’S
544,576
544,576
2018
000’S
379,486
544,576
49
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
2019 GROUP
12. Property, plant and equipment
FREEHOLD
LAND &
BUILDINGS
US$’000
2,517
Cost or valuation
At 1 September 2018
PLANT &
MACHINERY
US$’000
80
MOTOR
VEHICLES
US$’000
591
FURNITURE
FIXTURES &
FITTINGS
US$’000
1,278
Additions in year
Revaluations
Disposals in year
Balance at 31 August 2019
Accumulated depreciation
At 1 September 2018
Disposals in year
Depreciation charge for the year
Balance at 31 August 2019
Carrying amounts
At 31 August 2019
At 31 August 2018
2018 GROUP
Cost or valuation
At 1 September 2017
Additions in year
Revaluations
Disposals in year
Balance at 31 August 2018
Accumulated depreciation
At 1 September 2017
Disposals in year
Depreciation charge for the year
Balance at 31 August 2018
Carrying amounts
At 31 August 2018
At 31 August 2017
VALUATIONS
-
-
-
2,517
( 34 )
-
( 1 )
( 35 )
2,482
2,483
14
-
( 3 )
91
( 65 )
3
( 15 )
( 77 )
14
15
-
-
( 86 )
505
( 398 )
64
( 83 )
( 417 )
88
193
4
-
( 7 )
1,275
( 1,026 )
6
( 82 )
( 1,102 )
173
252
FREEHOLD
LAND &
BUILDINGS
US$’000
2,317
PLANT &
MACHINERY
US$’000
77
MOTOR
VEHICLES
US$’000
686
FURNITURE
FIXTURES &
FITTINGS
US$’000
1,075
-
200
-
2,517
( 34 )
-
-
( 34 )
2,483
2,283
8
-
( 5 )
80
( 61 )
2
( 6 )
( 65 )
15
16
2
-
( 97 )
591
( 392 )
98
( 104 )
( 398 )
193
294
203
-
-
1,278
( 941 )
-
( 85 )
( 1,026 )
252
134
TOTAL
US$’000
4,466
18
-
( 96 )
4,388
( 1,523 )
73
( 181 )
( 1,631 )
2,757
2,943
TOTAL
US$’000
4,155
213
200
( 102 )
4,466
( 1,428 )
100
( 195 )
( 1,523 )
2,943
2,727
An external, professional and independent valuer with appropriate and recognised qualifications, Hollands Estate Agents
LE HAR (PRIVATE) LIMITED – PROPERTY
Harare (‘Hollands’) carried out a valuation of the freehold land and buildings as at 31 August 2019 with reference to
observed market evidence. The directors having considered the Hollands report consider this value to be an accurate
reflection of the fair value at 31 August 2019 being US$2.5 million (2018: US$2.5 million). The Directors consider the fair
value at the reporting date to not be materially different from the carrying value.
50
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
As at 31 August 2019, the consolidated statement of financial position included goodwill of US$717,000 (2018:
13. Goodwill
US$717,000). Goodwill is allocated to the Group’s cash-generating units (“CGUs”), or groups of cash-generating units,
that are expected to benefit from the synergies of the business combination that gave rise to the goodwill as follows:
Payserv Africa Limited
Total
COST AT
CARRYING
VALUE AT
ORIGINAL 1 SEPTEMBER 1 SEPTEMBER ACCELERATED
WRITE-OFF
-
US$’000
-
COST
717
US$’000
717
2018
717
US$’000
717
2018
717
US$’000
717
CARRYING
VALUE AT
31 AUGUST
2019
717
US$’000
717
ESTIMATES AND JUDGEMENTS
The following assumptions are held in the assessment on the impairment or otherwise of goodwill:
a. Growth rates are based on a range of growth rates that reflect the products, industries and countries in which the
relevant CGU or group of CGUs operate. Growth rates have been calculated based on management’s expected forecast
volumes and cash generation in place at the date of this report and taking factors existing at that date into consideration.
b. The key assumptions on which the cash flow projections for the most recent forecast are based relate to discount
rates, growth rates, expected changes in selling prices and direct costs.
c. The cash flow projections have been discounted using rates based on the Group’s pre-tax weighted average cost of
capital. The rate used was 15%.
d. The growth rates applied in the value in use calculations for goodwill allocated to each of the CGUs or groups of
CGUs that is significant to the total carrying amount of goodwill were in a range between 0% and 5%.
e. Changes in selling price and direct costs are based on past results and expectations of future changes in the market.
In respect of the value in use calculations, cash flows have been considered for both the conservative and the full
f.
forecast potential of future cash-flows with no impact to the valuation of goodwill.
IMPAIRMENT LOSS
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.
The Directors believe that the value of the Group’s investments significantly exceeds the reported value thereof and that
the respective book values do not adequately reflect 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.
51
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
14.
Intangible assets
Payserv software licenses
Total
AMORTISATION
ORIGINAL
COST
1,538
US$’000
1,538
NET BOOK
VALUE AT
1 SEPTEMBER
2018
16
US$’000
16
ADDITIONS
-
US$’000
-
DISPOSALS AMORTISATION
( 14 )
US$’000
( 14 )
-
US$’000
-
CLOSING
BALANCE AT
31 AUGUST
2019
2
US$’000
2
The amortisation charge is recognised within operating expenses (note 6) in the income statement. The Group tests other
intangible assets for impairment if there are indications that they might be impaired.
The amortisation periods for intangible assets are:
Software licenses
3 years
The Company has investments in the following subsidiaries which principally affect the profits and/or net assets of the Company.
15.
The direct investments in subsidiaries held by the Company are stated at cost. These are subject to impairment testing.
Investments in subsidiaries and associates
CONTINUING OPERATIONS
A F Philip & Company (Pvt) Limited
African Solutions Limited
Autopay (Pvt) Limited
Gardoserve (Pvt) Limited
Le Har (Pvt) Limited
LonZim Enterprises Limited
LonZim Holdings Limited +
Millchem Holdings Limited
Para Meter Computers (Pvt) Limited
Paynet Zimbabwe (Pvt) Limited
Payserv (Pvt) Limited
Payserv Africa Limited
Payserv Zimbabwe (Pvt) Limited
Quintech Investments (Pvt) Limited
Tradanet (Pvt) Limited
Yellowwood Projects (Pvt) Limited
+ Held directly by Cambria Africa Plc.
COUNTRY OF INCORPORATION
Zimbabwe
Mauritius
Zimbabwe
Zimbabwe
Zimbabwe
United Kingdom
Isle of Man
Isle of Man
Zimbabwe
Zimbabwe
Zimbabwe
Mauritius
Zimbabwe
Zimbabwe
Zimbabwe
Zimbabwe
OWNERSHIP INTEREST
62.84%
72.07%
2018
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51.0%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51.0%
100%
52
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
Investments in subsidiaries and associates (continued)
15.
Ottonby Trading (Pvt) Ltd (address: Northridge Park, Northend Close, Harare, Zimbabwe) holds a 49% interest in Tradanet
NON-CONTROLLING INTERESTS (“NCI”) - TRADANET
(Pvt) Ltd. Tradanet’s salient financial information is as follows:-
Profit attributable to NCI
Dividends paid to NCI
Accumulated NCI at year end
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Cash flow from operations
Cash utilised in investing activities
Cash utilised in financing activities (including dividends)
Cash and cash equivalents
2019
257
US$’000
( 123 )
2018
350
US$’000
( 405 )
36
44
66
-
37
79
( 1 )
( 256 )
41
44
80
294
2
279
812
( 46 )
( 819 )
219
In February 2019, the Group increased its investment in A F Philip and Company (Pvt) Limited (A F Philip) to a 72.07%
NON-CONTROLLING INTERESTS (“NCI”) – A F PHILIP & COMPANY
shareholding from 62.84% at 31 August 2018. This investment was implemented through the subscription of additional
shares in the issued share capital of A F Philip against a subscription consideration of $400,000. Through a network of
associated companies, the investment in A F Philip gives the Group an effective interest in 4,587,986 shares in Radar
Holdings Limited (Radar), or 8.98% (FY 2018: 7.83%) of Radar’s total issued shares. The Group also has the right to
nominate a director onto the Radar Board.
Radar is a public but unlisted company incorporated in Zimbabwe and has interests in brick manufacturing through
Macdonald bricks and is the owner of prime development land as well as a portfolio of residential properties. Radar’s
most recent published audited consolidated results for the 12 month period ended 30 June 2019 reported Revenues of
ZWL13.1 million ($2 million), a Profit After Tax of ZWL77.2 million ($11.8 million), mostly attributable to the revaluation
of its investment properties, and Net Asset Value (NAV) of ZWL192.9 million ($ 29.5 million). NAV per share equaled
ZWL378 cents (58 US cents). The Group’s investment in Radar is carried at an effective value of 40 US cents per share
which the Board considers fair and reasonable given the NAV of Radar, underpinned by its portfolio of assets. This results
in an investment valued at $2.5 m (2018: $2.5 m) being recognised in the considerated Statement of Financial Position.
Constold (Pvt) Ltd (address: 4th floor, Tanganyika House, 3rd Street, Harare, Zimbabwe) holds a 27.93% (FY 2018: 37.16%)
interest in A F Philip. A F Philip’s salient financial information is as follows:-
Profit attributable to NCI
Dividends paid to NCI
Accumulated NCI at year end
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Cash flow from operations
Cash utilised in investing activities
Cash utilised in financing activities (including dividends)
Cash and cash equivalents
53
2019
-
US$’000
-
711
2,546
-
-
-
-
-
-
-
2018
-
US$’000
-
947
2,546
1,600
-
( 1,600 )
-
-
-
1,600
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
16.
Inventory
Raw materials and consumables
Goods in transit
Finished goods
Inventories (write downs)
17.
Financial assets at fair value through profit or loss
Quoted investments
Total
Balance at 1 September
QUOTED INVESTMENTS PORTFOLIO:
Acquired during the year
Disposed during the year
(Loss)/ gain on fair valuation during the year
Balance at end of the year
Quoted Investments consists of:
GROUP 2019 GROUP 2018
28
US$’000
75
3
US$’000
188
207
398
( 112 )
286
238
341
( 98 )
243
GROUP 2019 GROUP 2018
131
US$’000
131
496
US$’000
496
GROUP 2019 GROUP 2018
86
US$’000
-
131
US$’000
443
-
( 78 )
496
-
45
131
-
-
Listed Old Mutual Ltd shares held by the Company at fair value of $478,000 on 31 August 2019. The Company
acquired these shares for a total consideration of $443,000 during FY 2019 resulting in a fair value gain through
profit and loss of $35,000. These shares are held for the Company’s own account.
A portfolio of $18,000 worth of listed shares managed by an asset management company who makes all the decisions
regarding the sale and purchase of these listed shares. This investment is also held at fair value with a fair value loss of
$113,000 during FY 2019. The portfolio, which was purchased in ‘payment’ of a trade vendor liability which could not be
settled due to Zimbabwe foreign currency constraints at the time, is callable at the option of the vendor. See note 23.
18.
Trade and other receivables
Amounts owed by Group undertakings
Trade receivables
Other receivables
Prepayments and accrued income
Total
No interest is charged on receivables.
GROUP
2019
-
US$’000
386
95
-
481
COMPANY
2019
3,083
US$’000
-
12
-
3,095
GROUP
2018
-
US$’000
801
42
-
843
COMPANY
2018
3,364
US$’000
-
16
-
3,380
54
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
Trade and other receivables (continued)
The Directors consider the carrying amount of trade and other receivables approximates their fair value. In determining the
18.
recoverability of the trade receivable, the Group considers any change in the credit quality of trade receivables from the
date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer base
being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the
allowance for doubtful debts.
CREDIT RISK
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the statement of financial
position are net of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss
event which, based on previous experience, is evidence of a reduction in the recoverability of the cashflows.
19.
Cash and cash equivalents
Bank balances
Bank overdrafts
Net cash and cash equivalents in statement of financial position
GROUP
2019
1,920
US$’000
-
1,920
COMPANY
2019
447
US$’000
-
447
GROUP
2018
3,259
US$’000
-
3,259
COMPANY
2018
758
US$’000
-
758
Included in cash and cash equivalents is $900,000 which was held outside Zimbabwe at 31 August 2019 and a balance
of $1.0 million representing ZWL amounts covered by the RBZ’s commitment to honour Paynet Zimbabwe’s Legacy
Foreign Debt at ZWL1.00:USD1.00. Subsequent to the end of FY 2019, the RBZ has transferred $600,000 of these funds
to Payserv Africa in Mauritius.
Capital and reserves
REVALUATION RESERVE
20.
The revaluation reserve relates to property, plant and equipment which has been revalued in the Zimbabwean subsidiaries
Payserv Zimbabwe (Private) Limited and Le-Har (Private) Limited. In accordance with IAS 29, these reserves were re-allocated
to retained earnings during FY 2019.
FOREIGN EXCHANGE RESERVE
This reserve arises on translation of subsidiary entities where their functional currency is not United States Dollars, the
presentational currency of the Group. The Company foreign exchange currency reserve relates to the translation of net assets
due to a change in the functional currency of the Company from Pounds Sterling to United States Dollars as at 1 September 2011.
NON-DISTRIBUTABLE RESERVE
The non-distributable reserve arises on the restatement of the assets and liabilities on dollarisation in Zimbabwe. Amounts
held within this reserve are ring fenced from retained earnings. Distributions can only be made from retained earnings
and not from the non-distributable reserve. Amounts transferred to the non-distributable reserve are determined by the
directors as necessary, unless specifically required to do so as part of any financing arrangements
55
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
21.
Share capital & share premium
Issued and fully paid
At 1 September
Issued in period
At 31 August
ORDINARY SHARES 2019
ORDINARY SHARES 2018
SHARE
CAPITAL
US$’000
77
-
77
SHARE
PREMIUM
US$’000
88,459
-
88,459
NUMBER
544,575,605
-
544,575,605
SHARE
CAPITAL
US$’000
51
26
77
SHARE
PREMIUM
US$’000
85,686
2,773
88,459
NUMBER
348,839,012
195,736,593
544,575,605
All shares issued are classed as Ordinary Shares with a par value of 0.01 pence each and are all ranked equally. There are no
other classes of shares in issue. No warrants were granted during the current financial year and no warrants are outstanding.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.
The Directors are authorised in any period between consecutive annual general meetings, or consecutive 12-month periods,
to allot any number of ordinary shares on such terms as they shall, in their discretion, determine up to such maximum
number as represents 50 per cent of the issued share capital at the beginning of such period. Further ordinary shares may
also be allotted on terms determined by the Directors but subject to the pre-emption rights prescribed by Section 36 of the
Isle of Man Companies Act 2006.
SHARE PREMIUM
The share premium represents the value of the premium arising on shares issued as follows:
16 July 2018
190,736,593 ordinary shares at a price of 1.0p per share (US$ 2,706,084)
22 February 2017
140,918,606 ordinary shares at a price of 1.0p per share (US$ 1,736,223).
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 settlement of expenses and liabilities).
1 October 2012
8,615,115 ordinary shares at a price of 10p per share (US$1,400,000).
16 September 2011 3,988,439 ordinary shares at a price of 23p per share (US$1,448,000).
10 December 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 December 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 July 2009
Cost of purchasing and cancelling 4,374,000 shares at 30.5p per share (US$2,174,000).
11 December 2007
36,450,000 ordinary shares at a price of 100p per share net of issue costs of £2,753,000
(US$68,659,000).
56
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
All share options issued in prior years have now expired and were not exercised.
22.
Share options
23.
Loans and borrowings - long term
CABS Loan - long term portion
Other trade payables
Total
GROUP
2019
49
US$’000
18
67
COMPANY
2019
-
US$’000
-
-
GROUP
2018
-
US$’000
120
120
COMPANY
2018
-
US$’000
-
-
The Company previously 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”). This original CABS Loan bore interest at 9% per annum with an annual renewal fee of 1% and was subject
to an establishment fee of 2%. The original CABS loan was repayable over 24 months, the last instalment being due in
December 2018. Paynet renewed the CABS facility on 6 May 2019. The renewed CABS facility of ZWL 2.4 million bears
interest at 9.5% per annum and is repayable over 24 equal monthly instalments. Subsequent to the end of the financial
year and with effect from 1 September 2019, CABS increased the interest rate to 28% per annum. As security, a mortgage
has been registered in favour of CABS over one of two properties owned by Le Har (Pvt) Ltd, a wholly owned subsidiary
of the Company. The remaining property owned by Le Har remains unencumbered.
Other non-current trade payables are in respect of historic Paywell software license fees within the Payserv Group. A
portion of this which could not be remitted due to Zimbabwean foreign currency constraints at the time, was invested in
a portfolio of quoted shares, currently valued at $18,000 as disclosed in note 17.
24.
Provisions
Provisions
Total
GROUP
2019
8
US$’000
8
COMPANY
2019
-
US$’000
-
GROUP
2018
188
US$’000
188
COMPANY
2018
-
US$’000
-
Provisions at 31 August 2019 are in respect of the maximum Leave Pay and Retirement Gratuities which may become
payable by individual companies to employees on termination of their employment.
57
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
RECOGNISED DEFERRED LIABILITY
25.
Deferred tax liability
The following are the major deferred tax liabilities recognised by the Group and movements thereon during the current year.
GROUP
At 1 September
Recognised directly in reserves
Other movements
At 31 August
2019
ACCELERATED TAX
DEPRECIATION
223
US$’000
(19)
-
204
2018
TOTAL
223
US$’000
(19)
-
204
ACCELERATED TAX
DEPRECIATION
184
US$’000
36
3
223
TOTAL
184
US$’000
36
3
223
Deferred tax assets off set against deferred tax liabilities in the period were US$ nil (2018: US$ nil).
26.
Loans and borrowings - short term
VAL Bridging Loan
CABS Loan - short term portion (see note 23)
Total
GROUP
2019
443
US$’000
60
503
COMPANY
2019
443
US$’000
-
443
GROUP
2018
413
US$’000
206
619
COMPANY
2018
413
US$’000
-
413
The VAL Bridging Facility is owed to Ventures Africa Ltd (VAL), the majority shareholder of the Company and the ultimate
beneficial owner of which is Mr Samir Shasha, the CEO of the Company. It carries interest of 10% per annum and is to be
settled as soon as alternative funding becomes available to Payserv and/or its subsidiaries, with early repayment, at the
election of VAL should a significant liquidity event occur.
27.
Trade and other payables
Trade payables
Non-trade payables and accrued expenses
Total
Current tax liability
Total
GROUP
2019
34
US$’000
228
262
24
286
COMPANY
2019
33
US$’000
1,246
1,279
-
1,279
GROUP
2018
54
US$’000
2,249
2,303
477
2,780
COMPANY
2018
15
US$’000
1,952
1,967
-
1,967
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.
58
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
28. Notes to the statement of cash flows – Consolidated & Company
Profit for the year
Adjusted for *:
Amortisation of intangible assets
Depreciation of property, plant and equipment
Profit on sale of property, plant and equipment
Valuation adjustments to inventories, receivables and other assets
Finance income
Finance costs
Share based payment charge
(Decrease)/increase in provisions
Income tax charge
Operating cash flows before movements in working capital
(Increase) in inventories
Decrease in trade and other receivables
(Decrease) / increase in trade and other payables
Cash generated from operations
* All amounts include both continuing and discontinued operations.
Profit / (loss) for the year
Adjusted for:
Finance income
Finance costs
Valuation adjustments to inventories, receivables and other assets
Share based payment (credit)
Operating cash flows before movements in working capital
Decrease in trade and other receivables
(Decrease) in trade and other payables
Cash generated from operations
GROUP 2019 GROUP 2018
2,247
US$’000
1,662
US$’000
14
181
( 28 )
78
( 11 )
51
-
( 180 )
150
1,917
( 43 )
362
( 2,166 )
70
14
195
( 33 )
( 45 )
( 23 )
252
68
3
776
3,454
( 10 )
887
939
5,270
COMPANY
2019
540
US$’000
COMPANY
2018
(349)
US$’000
-
43
(35)
-
548
285
(688)
145
-
201
-
68
(80)
942
(699)
163
59
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
The Group has exposure to the following risks from its use of financial instruments:
29. Financial instruments
a. credit risk
b.
c. market risk (comprises: foreign currency risk and interest rate risk)
liquidity risk
This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies
and processes for measuring and managing risk, and the Group’s management of capital. Further quantitative disclosures
are included throughout these consolidated financial statements. The Board of Directors has overall responsibility for
the establishment and oversight of the Group’s risk management framework.
RISK MANAGEMENT FRAMEWORK
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. The Group’s risk management policies
are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to
monitor risks and adherence to limits.
CREDIT RISK MANAGEMENT
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient
collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and
the credit ratings of its counterparties are regularly monitored and the aggregate value of transactions concluded is
spread amongst approved counterparties.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas.
Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit
guarantee insurance cover is purchased. The Group does not have any significant credit risk exposure to any single
counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds and derivative
financial instruments is limited because the counterparties are banks with high credit ratings assigned by international
credit rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents
the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained. At the
reporting date, there were no significant credit risks.
60
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
EXPOSURE TO CREDIT RISK
29. Financial instruments (continued)
The carrying amount of financial assets represents the maximum credit exposure. Therefore, the Group and Company’s
maximum exposure to credit risk at the reporting date, being the total of the carrying amount of financial assets,
excluding equity investments, is shown in the table below.
Cash and cash equivalents
Trade and other receivables
Amounts owed by group undertakings
Other investments
Total
19
NOTE
18
18
17
GROUP
2019
1,920
US$’000
481
-
496
2,897
COMPANY
2019
447
US$’000
12
3,083
478
4,020
GROUP
2018
3,259
US$’000
843
-
131
4,233
COMPANY
2018
758
US$’000
16
3,364
-
4,138
The maximum exposure to credit risk for financial assets at the reporting date by geographic region was:
United Kingdom
Zimbabwe
Mauritius
Total
GROUP
2019
955
US$’000
1,473
469
2,897
COMPANY
2019
459
US$’000
3,561
-
4,020
GROUP
2018
774
US$’000
3,147
312
4,233
COMPANY
2018
774
US$’000
3,364
-
4,138
The maximum exposure to credit risk for trade and other receivables at the reporting date by type of counterparty was:
Trade customers and other receivables
Amounts owed by Group undertakings
Total
GROUP
2019
481
US$’000
-
481
COMPANY
2019
12
US$’000
3,083
3,095
GROUP
2018
843
US$’000
-
843
COMPANY
2018
16
US$’000
3,364
3,380
The ageing of trade and other receivables at the reporting date was as follows:
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
2019
403
US$’000
65
IMPAIRMENT
2019
-
US$’000
( 6 )
8
2
2
12
492
( 2 )
( 1 )
( 2 )
-
( 11 )
TOTAL
2019
403
US$’000
59
6
1
-
12
481
Based on the Group’s monitoring of customer credit risk, the Group believes that no further impairment allowance is
necessary in respect of trade receivables not past due.
61
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
LIQUIDITY RISK MANAGEMENT
29. Financial instruments (continued)
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash and other financial assets.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and
liquidity management requirements.
The board manages liquidity risk by raising adequate reserves, banking facilities and reserve borrowing facilities and by
regularly monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The following are the contractual, undiscounted maturities of financial liabilities, including estimated interest payments and
excluding the effect of netting arrangements:
GROUP
CONTRACTUAL CASH FLOWS 2019
CONTRACTUAL CASH FLOWS 2018
Trade and other payables
Loans and borrowings
Total
CARRYING
AMOUNT
304
US$’000
552
856
1 YEAR
OR LESS
286
US$’000
563
849
2 TO <5
YEARS
18
US$’000
80
98
CARRYING
AMOUNT
2,423
US$’000
619
3,042
1 YEAR
OR LESS
2,423
US$’000
674
3,097
2 TO <5
YEARS
-
US$’000
-
-
COMPANY
CONTRACTUAL CASH FLOWS 2019
CONTRACTUAL CASH FLOWS 2018
Trade and other payables
Loans and borrowings
Total
CARRYING
AMOUNT
1,279
US$’000
443
1,722
1 YEAR
OR LESS
1,279
US$’000
488
1,767
2 TO <5
YEARS
-
US$’000
-
CARRYING
AMOUNT
1,967
US$’000
413
-
2,380
1 YEAR
OR LESS
1,967
US$’000
450
2,417
2 TO <5
YEARS
-
US$’000
-
-
FOREIGN CURRENCY RISK MANAGEMENT
The Group is exposed to foreign currency risk on sales, purchases and borrowings that are denominated in a currency other
than United States Dollars. The currency giving rise to this risk is primarily the Zimbabwe Dollar (ZWL), since its adoption as
the functional currency in the Zimbabwe entities since 22 February 2019, and to a lesser extend Pound Sterling in which some
of the Group’s central overheads are denominated. In respect of other monetary assets and liabilities held in currencies other
than United States Dollars, the Group ensures that the net exposure is kept to an acceptable level, and actively monitors the
exchange rate market to ensure the net equity in its balance sheet is preserved as much as possible. The following significant
exchange rates applied during the year:
Zimbabwe Dollar (ZWL)
Pounds Sterling (GBP)
Euro (EUR)
South African Rand ( ZAR)
Zambian Kwacha (ZMW)
AVERAGE REPORTING DATE
SPOT RATE
10.71
2019
0.82
RATE
5.59
2019
0.76
AVERAGE REPORTING DATE
SPOT RATE
N/A
2018
0.77
RATE
N/A
2018
0.74
0.88
14.97
N/A
0.91
15.24
N/A
0.84
12.97
9.89
0.86
14.69
10.23
62
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
The Group does not account for any fixed rate financial assets or liabilities at fair value through profit or loss. At the reporting
29. Financial instruments (continued)
date the interest rate profile of the Group’s interest-bearing financial instruments was as follows:
FIXED RATE INSTRUMENTS
CARRYING VALUE
Financial assets
Financial liabilities
Total
VARIABLE RATE INSTRUMENTS
Financial assets
Financial liabilities
Total
SENSITIVITY ANALYSIS
2019
US$’000
-
( 552 )
( 552 )
1,920
-
1,920
2018
US$’000
-
( 619 )
( 619 )
3,259
-
3,259
In managing foreign currency risks the Group aims to reduce the impact of short and long-term fluctuations on the
Group’s earnings. A 10 percent strengthening/weakening of the listed currencies against the USD at 31 August 2019
would have increased / (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that
all other variables, in particular interest rates, remain constant and ignores any impact of Legacy Debt’s registered with
the RBZ at ZWL1.00:USD1:00 which would help to absorb the impact of movements in the ZWL. It also ignores the
possible impact on forecast sales and purchases.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date and their sensitivity is as follows:
31 AUGUST 2019
Zimbabwe Dollar (ZWL)*
Pounds Sterling (GBP)
31 AUGUST 2018
Pounds Sterling (GBP)
Zambian Kwacha (ZMW)
EXPOSURE IN
FINANCIAL
STATEMENT
POSITION
US$’000
1,161
STRENGTHENING
CURRENCY
US$’000
129
WEAKENING
CURRENCY
US$’000
( 106 )
( 39 )
( 4 )
523
( 23 )
( 37 )
-
4
37
-
* Excluding the impact of Legacy Debt’s registered with the RBZ at ZWL1.00:USD1.00 which acts as a hedge against currency fluctuations.
INTEREST RATE RISK MANAGEMENT
The Company does not believe it faces significant risk from its interest rate exposure. The rates of interest it is exposed to
may, and will likely change in respect of the facility from Central African Building Society (CABS) Zimbabwe due to inflationary
pressures but at 31 August 2019, the facility has been reduced to $109,000 to minimize and manage this exposure.
Currently the Company has only two lenders, CABS and Ventures Africa Limited (VAL) which holds 69.2% of the Company’s
equity. As a percent of total borrowings, 80% is represented by VAL ($443,000) and 20% by CABS ($109,000) with a
weighted average interest cost of 9.9%.
63
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
As a related party, VAL has established interest rates at the same levels which its funding was used to displace former
29. Financial instruments (continued)
lenders and maintained parity with rates which the Company has been able to obtain funding at in Zimbabwe. However,
VAL does not charge the Company establishment fees or anniversary fees. VAL has actively converted debt to equity to assist
the company in reducing its interest rate exposure and has announced its intention for further debt to equity conversions.
CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business. Capital consists of ordinary shares, retained earnings and non-controlling
interests of the Group. The Board of Directors monitors the return on capital, which the Group defines as net operating
income divided by total shareholders’ equity, excluding non-redeemable preference shares and non-controlling interests.
The Board of Directors also monitors the level of dividends to ordinary shareholders.
The Board seeks to maintain a balance between higher returns that might be possible with high levels of borrowings and
the advantages and security afforded by a sound capital position.
FAIR VALUES
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial
position are as follows:
Cash and cash equivalents
GROUP
Trade and other receivables
Quoted investment portfolio
Trade and other payables
Loans and borrowings
Total
Cash and cash equivalents
GROUP
Trade and other receivables
Quoted investment portfolio
Trade and other payables
Loans and borrowings
Total
Level 3
HIERARCHY
Level 3
Level 1
Level 3
Level 3
Level 3
HIERARCHY
Level 3
Level 1
Level 3
Level 3
CARRYING
AMOUNT
2019
1,920
US$’000
481
496
( 304 )
( 552 )
2,041
CARRYING
AMOUNT
2018
3,259
US$’000
843
131
( 2,326 )
( 619 )
1,288
FAIR VALUE
2019
1,920
US$’000
481
496
( 304 )
( 552 )
2,041
FAIR VALUE
2018
3,259
US$’000
843
131
( 2,326 )
( 619 )
1,288
64
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
29.
Financial instruments (continued)
Cash and cash equivalents
COMPANY
Trade and other receivables
Quoted investment portfolio
Trade and other payables
Loans and borrowings
Total
Cash and cash equivalents
COMPANY
Trade and other receivables
Trade and other payables
Loans and borrowings
Total
Level 3
HIERARCHY
Level 3
Level 1
Level 3
Level 3
Level 3
HIERARCHY
Level 3
Level 3
Level 3
CARRYING
AMOUNT
2019
447
US$’000
3,095
478
( 1,279 )
( 443 )
2,298
CARRYING
AMOUNT
2018
758
US$’000
3,380
( 1,967 )
( 413 )
1,758
FAIR VALUE
2019
447
US$’000
3,095
478
( 1,279 )
( 443 )
2,298
FAIR VALUE
2018
758
US$’000
3,380
( 1,967 )
( 413 )
1,758
THE FAIR VALUE OF ASSETS AND LIABILITIES CAN BE CLASSED IN THREE LEVELS.
Level 1 Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 Fair values measured using inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 Fair values measured using inputs for the asset or liability that are not based on observable market data (i.e.
unobservable inputs).
ESTIMATION OF FAIR VALUES
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments
reflected in the above table.
CASH AND CASH EQUIVALENTS
Fair value approximates its carrying amount largely due to the short-term maturities of this instrument.
LOANS AND BORROWINGS
Fair value has been derived from discounting future cash flows at the cost of debt.
TRADE RECEIVABLES AND PAYABLES
For receivables and payables with a remaining life of less than one year, the notional amount is deemed to reflect the fair value.
QUOTED INVESTMENT PORTFOLIO
Fair value has been derived from quoted prices.
65
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
Notes to the Financial Statements
LEASES AS LESSEE
30. Operating leases
At the reporting date, the Group had the following outstanding annual commitments for future minimum lease pay-
ments under non-cancellable operating leases:
Operating lease commitments
Payable in next 12 months
Payable in 1 to 5 years
Payable thereafter (> 5 years)
Total
US$’000
64
3
-
67
During the year ended 31 August 2019, US$74,000 (2018: US$134,000) was recognised as an expense in the income
statement in respect of operating leases. Operating lease payments represents rentals payable by the Group for certain
of its properties. Leases are negotiated for a minimum term of 1 year and rentals are fixed for the period.
The capital commitments at 31 August 2019 were US$ nil (2018: US$ nil).
31. Capital commitments
The Group had no outstanding contingent liabilities at the end of the period.
32. Contingent liabilities
IDENTITY OF RELATED PARTIES
33. Related parties
The Group has a related party relationship with its subsidiaries (see note 15) and with its Directors and executive officers.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolida-
tion and there is no requirement for them to be disclosed in this note.
GROUP AND COMPANY
Other than $14,000 due to Mr. Samir Shasha in respect of an expense reimbursement, no amounts were due to Directors at 31
August 2019 in respect of Directors fees or otherwise, nor had any Directors fees been paid in the year under review.
VAL is the controlling shareholder of Cambria with a 69.2% interest as at 31 August 2019. Mr. Samir Shasha is the ultimate 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 Bridging
Facility as set out in note 26. Interest accrued during the period amounted to US$43,000 in respect of the VAL Bridging Facility.
TRANSACTIONS WITH SUBSIDIARY ENTITIES WITHIN THE GROUP
Paynet Zimbabwe (Private) Limited (“Paynet”), a 100% subsidiary of the Group provides services including payroll pro-
cessing, software licensing and training to fellow subsidiaries which amounted to US$1,000 (2018: US$1,000).
Paynet rents its offices in Mount Pleasant, Harare from Le-Har (Pvt) Ltd, a 100% subsidiary of the Group. The lease rent-
als for the year amounted to $28,000 (2018: $47,000). Paynet was also charged a management fee of $72,000 (2018:
$nil) by the holding company Cambria. Payserv Africa Limited charges license fees to Paynet for the use of its Transwitch
software which amounted to $924,000 (2018: $561,000) and African Solutions Limited charges Paynet payroll license
fees which amounted to $152,093 (2018: $120,000).
66
[ANNUAL REPORT 2019] For the year ended 31 August 2019
Notes to the Financial Statements
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
33. Related parties (continued)
Key management personnel are the holding Company Directors and executive officers. None of the current active
directors received any remuneration during the financial year.
Total remuneration is included in “personnel expenses” (see note 7).
S Shasha
P Turner
JP Watenphul
DC Pandya
Total
TOTAL
2019
-
US$000
-
-
-
-
TOTAL
2018
-
US$000
14
33
14
61
The expense for FY 2018 arose from the issue of 4,500,000 shares to Directors. The fair value at the grant date of the
reward given, for the purposes of IFRS 2: Share-Based Payment, was determined with reference to the average closing
share price of the company over the 12 months preceeding the issue date being 22 May 2018 and expensed as Directors
Remuneration for the year ended 31 August 2018.
LEGACY LOANS/ BLOCKED FUNDS ALLOCATED BY RBZ
34. Events after the reporting date
Governor John P. Mangudya of the RBZ has to the date of this report allocated at parity (ZWL$1.00:USD$1.00) the sum of
$600,000 of $1.2 million owed by Paynet Zimbabwe to Payserv Africa Limited, our wholly owned subsidiary in Mauritius.
Relying on the Governor’s written commitment, in its Interim Results published on 31 May 2019, the Company
announced that the RBZ would expunge Paynet Zimbabwe’s obligations to Payserv Africa by mid-September 2019. While
the commitment by the Governor to expunge the full amount of legacy debts by mid-September has been met with
delays, we believe that he has shown tangible good faith in fulfilling his promises in this regard. Citing Zimbabwe’s
poor tobacco receipts, Governor Mangudya rescheduled his commitment. On his behalf, Deputy Director of Financial
Markets Ernest Matiza, then committed to weekly allocations of US $100,000 starting in the week of 30 September. To
date, Paynet Zimbabwe has been able to confirm 6 of the thirteen allocations which have come due. Paynet Zimbabwe
continues to constructively engage the RBZ on this matter.
EXCEPTION TO SUMMONS AGAINST BAZ UPHELD
Cambria announced on 18 November 2019, in relation to Payserv Africa’s summons seeking damages of $100 million
from Bankers Association of Zimbabwe (BAZ), that the Exception filed by BAZ has been upheld by Justice Mushore and
Payserv Africa’s lawsuit has been dismissed with Payserv Africa liable for BAZ’s legal costs.
ARBITRATION RELATING TO RADAR SHARE OFFER
The Arbitration proceedings related to the purchase of additional shares in Radar through Hinshaw, and referred to in
the Interim Results released on 31 May 2019, has been finalised. The Arbitrator has made an award in favour of the
defendants and on advice from its Legal Counsel, Cambria will not seek to set the ruling aside.
In terms of the Arbitration proceedings the Company sought, through Paynet Zimbabwe, to enforce its pre-emptive
rights to purchase a further 20% of shares in Hinshaw, which has a 79.65% shareholding in Radar. The Arbitrator ruled
that Paynet Zimbabwe’s pre-emptive rights were not triggered since in his opinion, no irrevocable offer had been made
by Caulicle Investments (Pvt) Ltd, a 20% shareholder of Hinshaw, to sell its Hinshaw shares.
67
[ANNUAL REPORT 2019]
For the year ended 31 August 2019
REGISTERED OFFICE AND AGENT
Corporate Information
Peregrine Corporate Services Limited
Burleigh Manor,
Peel Road , Douglas
Isle of Man
IM1 5EP
Tel: +44 (0) 1624 626586
NOMINATED ADVISOR AND JOINT BROKER
WH Ireland Limited
24 Martin Lane , London
England
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
REGISTRARS
Neville Registrars Limited
Neville House,
18 Laurel Lane , Halesowen
England
BD63 3DA
Tel: +44 (0) 12 1585 1131
PRINCIPAL GROUP BANKERS
4th Floor Barclays House
Victoria Street, Douglas
Isle of Man
IM1 2LF
Tel: +44 (0) 16 2468 4684
68
[ANNUAL REPORT 2019] For the year ended 31 August 2019
ANALYSIS OF ORDINARY SHAREHOLDINGS AS AT 19 FEBRUARY 2020
Shareholder Information
Note: the shareholding analysis has been performed on 19 February 2020 incorporating changes since the year end
of 31 August 2019.
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 - 250,000,000
Total
REGISTRARS
NUMBER OF
HOLDERS
81
% OF TOTAL
HOLDERS
43.78%
NUMBER OF
SHARES
21,167,536
104
185
56.22%
523,408,069
100.00%
544,575,605
% OF TOTAL
SHARES
3.89%
96.11%
100.00%
51
42
43
41
7
1
27.73%
22.65%
23.19%
22.11%
3.78%
0.54%
110,498
956,845
9,051,036
72,775,887
84,681,339
377,000,000
0.02%
0.18%
1.66%
13.36%
15.55%
69.23%
185
100.00%
544,575,605
100.00%
All administrative enquiries relating to shareholdings, such as queries concerning dividend payments, notification of
change of address or the loss of a share certificate, should be addressed to the Company’s registrars.
UNSOLICITED MAIL
As the Company’s share register is, by law, open to public inspection, shareholders may receive unsolicited mail from
organisations that use it as a mailing list. Shareholders wishing to limit the amount of such mail should write to the
Mailing Preference Society, Freepost 29 Lon20771, London W1E 0ZT.
69
[ANNUAL REPORT 2019]
Cambria Africa Plc
Burleigh Manor,
Peel Road, Douglas,
Isle of Man
Im1 5EP
(Registration Number: 001773V)
Tel: +44 (0) 203 287 8814
www.cambriaafrica.com
info@cambriaafrica.com