CMB Cambria Africa Plc

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain

27 August 2024

Cambria Africa Plc

("Cambria" or the "Company")

Intended Distribution and Delisting Proposal

Cambria Africa Plc (AIM:CMB), announces that it intends to return up to US$ 0.01 (1 US cent or 0.77 pence) per Ordinary Share to shareholders. Cambria has been suspended since 1 March 2024. On 29 February 2024, being the last trading day prior to its suspension, Cambria shares closed at 0.225p. Under AIM Rules 18 and 19, Cambria remains suspended for failure to release its audited results for Fiscal Year ended 31 August 2023 and interim results for the six-month period ended 29 February 2024 (together, the "Results").

The Board has undertaken a review of the Company`s position and future prospects including the benefits and drawbacks to the Company retaining its admission on AIM. The Board has concluded that a cancellation of its ordinary shares to trading on AIM ("Cancellation") is in the best interests of the Company and its Shareholders as a whole.  As a result the Board anticipates issuing a circular and convening a general meeting in the next couple of weeks to seek shareholder approval for the proposed Cancellation. The resolution to approve the Cancellation requires the approval of 75% of votes cast in person or by proxy at a general meeting. Samir Shasha, the ultimate beneficial owner of 69.2% of Cambria's issued share capital has recused himself from voting in favor of the Cancellation. The Board expects to publish its Results on or around 30 September 2024 to enable shareholders an opportunity to trade their shares on AIM prior to Cancellation.

Intended Distribution

The Company intends to return up to US$ 5.4 Million (US¢ 1.00 per share or c.0.76 pence) to shareholders in two tranches, as it receives the expected payments at the holding level. The final distribution will be determined by the proposed sale of assets as outlined below and there can be no guarantee of the proceeds to be received or that they will all be realised.

The first tranche of US$ 3.1 Million (US¢ 0.57 per share or c.0.43 pence) consisting of US$ 2.1 Million on Fixed Deposit and the US$1 million balance due from the sale of Radar shares expected to be received in mid-September 2024. Cambria has earned an average of 4.6% per annum on cash held in Fixed Deposits at the holding level.

The second tranche of $2.3 million (US¢ 0.42 per share or c.0.32 pence) after the expected sale of the Company's real estate holding company, Lonzim Holdings Limited. The Company has received multiple offers for Lonzim Holdings Limited, but a transaction has yet to be finalized. Beyond the first tranche there can be no guarantee of the proceeds to be received or that they will be realized.

Cambria is carefully considering the most effective and tax-efficient method to return capital to shareholders, whether through distribution or redemption, while fully complying with the Isle of Man Companies Act 2006 and the Memorandum and Articles of Association (MOA). Once the Board has decided on the distribution method, the Company will advise shareholders accordingly and may put to vote an amendment to its MOA during the general meeting of shareholders.

Financial Update

To best understand the Company's financial position, assets and cash flow must be viewed separately - those held outside Zimbabwe (at the holding level) and those within Zimbabwe. 

Outside Zimbabwe, as of the date of this announcement, the Company holds

1.   Cash and cash equivalents of US$ 3.3 million.

2.   Property assets of US$ 2.5 million

Inside Zimbabwe, the Company holds assets equivalent to US$ 2.67 million with various degrees of certainty as to their realizable value. While the Company is cash flow positive in Zimbabwe, its earnings from loan management and payroll operations have been significantly impacted by the depreciation of the Zimbabwean currency.

The Company has strived to invest earnings and asset proceeds as best it can to shield them from the impact of inflation and currency depreciation. Currently, its holding of Nedbank, Delta, and Old Mutual Shares are paying dividends in USD denominated currency. The salient assets in Zimbabwe consist of the following.

1.   Cash and Cash equivalents - US$140,000

a.   US Denominated Accounts (NOSTRO) - US$ 97,000

b.   ZiG Denominated Accounts - $4,000 (at official rates)

c.   15 x1 oz Gold Coins - $39,105 (Selling Price Mosi Oa Tunya $2,607/Oz)

2.   Shares and Securities US$ 335,000

a.   204,000 Old Mutual Shares - $141,000 (JSE closing 23 August)

b.   2,692 Nedbank Shares - $80,000 (JSE closing 23 August)

c.   Paynet Imara-Managed Share funds  - $40,000 (end July - ZiG denominated shares at official rate)

d.   74,000 Delta Shares - $74,000 (closing 23 August at official rate)

3.   US$ 1,212,297 in Legacy debts due from deposits at USD 1: ZWL 1  held the by Ministry of Finance /Reserve Bank against registered loans to be repaid by Cambria Africa in Zimbabwe and Millchem.  The Company is negotiating for 30% of the amount to be remitted on agreement and the balance through a 3-year zero-coupon bond.

Goodwill. The Company has a recorded goodwill value of US$700,000 on its books.  The Company has offered to sell Payserv Africa which holds the intellectual property of Paynet Software and 51% of Tradanet for US$ 1 million. This offer remains in discussion.

Based on the above, we expect liquid assets at the holding level of US$ 5.8 million which we intend to distribute to shareholders as soon as possible.

$475,000 in liquid assets in Zimbabwe has been accounted for at 1:1 exchange rate for US-denominated assets and at the official exchange rate for assets denominated in Zimbabwe's currency (ZWG or ZiG).  The official rate for the ZiG is at an estimated 30% premium to market rates.  Of this amount, in the short term, the repatriation of Old Mutual and Nedbank shares totaling US$ 220,000 are the most likely possibilities.

Legacy debts have been depreciated to zero in accordance with accounting principles, and any recovery will only be recognized upon payment or issuance of a zero-coupon bond.   If the Company succeeds in its negotiations $360,000 (about 30%) will be paid upfront and the balance will be in the form of a zero-Coupon bond which may or may not be a negotiable (discountable) instrument.

Proposed cancellation of admission to trading on AIM of the Ordinary Shares

The Board has undertaken a review of the Company`s position and future prospects including the benefits and drawbacks to the Company retaining its admission on AIM. The Board has concluded that it should recommend to Shareholders that a Cancellation is in the best interests of the Company and its Shareholders. In reaching this conclusion, the Board has considered the following key factors:

·     Permanent cost savings to be achieved by the Cancellation;

·     Discount to NAV of the Company's  share price. As at 29 February 2024 (being the last trading day prior to its suspension) the Company's share price was 0.225  pence per Ordinary Share, compared with an unaudited liquid NAV of 0.77 pence (as at 23 August 2024) and a potential recovery of 0.38 pence from illiquid assets (as at 23 August 2024).

·     The free float of the Company is only c.30%, resulting in low trading volumes and significant illiquidity, preventing Shareholders from achieving the best value for their shares.

·     The Company has not utilised its admission on AIM to raise fresh capital or issue paper consideration to fund acquisitions since 2018.

·     The administrative, legal, and regulatory burden associated with maintaining the Company's admission to trading on AIM is, in the Directors' opinion, disproportionate to the benefits.

Under the AIM Rules, it is a requirement that a cancellation is approved by not less than 75 per cent of the votes cast, whether in person or by proxy in general meeting of shareholders.  Samir Shasha, the CEO, who is beneficially interested in 69.2% of the Company's issued share capital via Encyclia Logistics Limited, will recuse himself from voting in favor of delisting at the General Meeting.

The Board anticipates issuing a circular and convening a general meeting in the next couple of weeks to seek shareholder approval for the proposed Cancellation. The general meeting is expected to be convened for mid-September 2024. If approved, the Cancellation would take place in mid-October 2024. As set out above, the Company expects to publish its Results on or around 30 September 2024, which will lift the suspension of trading. This will provide shareholders with an opportunity to trade their shares on AIM before the Cancellation becomes effective.

The Company also notes the announcement made by WH Ireland Group Plc ("WHIG") on 15 July 2024, confirming that following the sale of its capital markets division WHIG's subsidiary, WH Ireland Limited, the Company's Nominated Adviser, will cease to act as a Nominated Adviser with effect from 14 October 2024.

In the event shareholders vote against the Cancellation, the Company will need to appoint a new Nominated Adviser before 7.00am on 14 October 2024, in the event that it has not appointed a new Nominated Adviser by this date the Company's admission to AIM will be immediately suspended until such time as a new Nominated Adviser has been appointed. If a new Nominated Adviser has not been appointed by 7.00am on 14 November 2024, the Company's admission to AIM will be cancelled pursuant to Rule 1 of the AIM Rules for Companies.