eBusiness Weekly
Nelson Gahadza
Zimbabwe-focused investment firm, Cambria Africa (Cambria), says it believes its shares are currently trading at a discount of at least 67 percent on the London Stock Exchange (LSE) but is optimistic of achieving full value for its assets.
Cambria in a trading statement for FY 2021 said it remains cautiously optimistic about achieving full value for the company’s assets even beyond its net assets value (NAV).
‘‘At this point in time, we feel it is still possible to increase shareholder wealth through appreciation of the company’s share price to reflect, at the very least, its net equity, which for all intents and purposes is debt free.
‘‘This should bring the market valuation as of February 28, 2022 of 0,3752 US cents per share closer to the company’s current net asset value of 1,15 US cents per share, a three-fold difference,” it said.
Cambria’s investments in Zimbabwe are the Payserv Group and Millchem. The Payserv Group is Zimbabwe’s leading provider of Payments and Business Process Outsourcing services targeted at financial and related sectors. The group comprises four business units, Paynet Zimbabwe, AutoPay, Loanserv and Softserv.
Millchem is amongst Zimbabwe’s leading distributors of industrial solvents and metal treatment products.
The company was established in 1986 as Millpal and re-branded to Millchem in 2011.
The investment focused firm said it remains poised to take advantage of a turnaround in the economy through the stabilisation of market-driven policies, which may yet take hold in Zimbabwe.
“Until such time, we will pursue various strategies to maintain and improve shareholder value,” it said.
In the update, the company noted that its strategic goals in FY 2021 will be conserving cash resources of US$1,65 million, achieving value for US $1,35 million held by the Reserve Bank of Zimbabwe (RBZ) as ‘‘Legacy Debts’’ or ‘‘Blocked Funds’’.
“This asset has been deprecated in our accounts to the official value until such time as the RBZ honours this commitment,” the company said.
The company also aims to achieve value for US $175,000 of Old Mutual shares at the current JSE market value through repatriation of these shares to the Johannesburg register where they were transferred from to the Zimbabwe Stock Exchange (ZSE).
It said this transfer was in reliance on fungibility of dual listed shares. However, fungibility of multi-listed shares has been withdrawn by action of the Zimbabwe government and acquiescence of Old Mutual plc and the shares continue to be suspended on the Zimbabwe Stock Exchange (ZSE).
According to the update, Cambria earned 0.03 US cents per share during FY 2021 compared to a loss of 0.07 cents share in FY 2020.
The company said despite the turnaround in earnings, NAV declined by US $79,000 from 1.18 US cents to 1.16 US cents per share.
“The decline despite the earnings contribution was due to a market valuation drop of $200,000 for the company’s business property from US $2,3 million to US $2,1 million according to a valuation report by Hollands conducted on the 27th of January 2022,” the company said.
It noted that as at 28 February 2022, total cash on hand is US$1,5 million including $1,330 million in Cambria’s accounts outside Zimbabwe.
The company said it will continue to rationalise its operations by reducing staff costs and overheads — and maximising the value to shareholders from the remaining hard assets, intellectual property, and cash.
Tradanet, a 51 percent owned subsidiary of Paynet Zimbabwe, which processes microloans for CABS ,Zimbabwe’s largest building society, is the company’s most profitable operation and the turnaround is attributable to loan values and salaries catching up with inflation.
Autopay — the Company’s Payroll operation saw its revenues decline as Paywell granted non-exclusive licenses to multiple competitors including former employees.
During the Fiscal Year 2021, the company reached a management agreement with Propay (Pvt) Ltd and established former account executives as independent contractors.
“This has resulted in significant cost containment and aligning the incentives of Payroll executives with that of Autopay.”
Millchem’s remaining business, the production of sanitisers and disinfectants, traded marginally positive.
Cambria said the sector has been characterised by significant competition and ease of entry by multiple small players in the chemicals industry.
“With the lower disposable income of the general population, high quality sanitisers have lost market share.
‘‘Our joint venture with Merken (Pvt) Ltd remains cash flow positive, but will likely wind down by the end of this Fiscal Year if demand does not improve,” it said.
