Ambrian shares drop on interim numbers

Ambrian announced its unaudited consolidated results for the six months to 30 June on Friday, with a loss before tax and impairment charge of $3.58m, narrowing year-on-year from $8.78m.

The board of the AIM-traded firm said that reflected a “continuous challenging trading environment”, partly offset by the group's efforts to de-risk the trading and logistics business.

During the period, Ambrian said the final deferred consideration was paid for the business combination with Consolidated General Minerals.

It did report an impairment charge of $13.7m relating to the investment in Mozambique, with the board blaming “poor economic conditions” and an uncertain outlook combined with a sharp depreciation of the local currency.

Total equity at period end was $41.53m, down from $53.43m, with the decrease attributable to the impairment charge and the loss for the half.

Net asset value attributable to owners of the parent on 30 June was $36.52m, down from $46.24m, equivalent to 15.42 US cents per share, compared to 9.53 cents year-on-year.

Ambrian did report that structural deficiencies had been identified in the clinker bay building at Cimentos da Beira, and the group was considering various actions against the contractors involved in the design and construction of the building to cover any remedial costs or consequential losses.

Cimentos da Beira was also in “advanced negotiations” with its term loan lender, the Industrial Development Corporation of South Africa, to vary certain terms of its loan agreements.

“We have been pleased with the technical performance of the cement plant in its first seven months of operation,” said non-executive chairman Martin Abbott.

“The plant is producing quality cement products which are proving to be in demand but, similarly to most of the continent's economies, the overall economic climate in Mozambique is challenging and affecting our short term goals.

“However, we continue to believe in the long term GDP growth in Mozambique and the likely significant increase in per capita cement consumption driven by the current housing deficit and ambitious infrastructure plans.”

Abbott said with regards to the company’s metal activities, there have been signs that strategic changes implemented at the end of 2015 are taking effect in reducing cash utilisation and financing costs of inventories.

“However we recognise that achieving a base load has been particularly challenging in the current economic environment and will adapt our structures accordingly,” he explained.

“We continuously review our business model with a view to reduce its risk profile and earnings volatility.”

At 1125 BST, shares in Ambrian were down 12% to 2.31p.