RNS Number:5184U
Meikles Africa Ld
23 November 2005
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005
Financial Highlights-Inflation Adjusted Financial Highlights-Historical Cost
* Net turnover of $4,213.2 billion, * Net turnover of $2,522.1 billion,
(2004 - $3,499.6 billion) (2004 - $657.1 billion)
* Operating profit after net * Operating profit of $354 billion,
monetary gain of $531.5 billion, (2004 - $27.5 billion)
(2004 - loss of $113.9 billion)
* Exchange gain of $279.6 billion, * Exchange gain of $835.6 billion,
(2004 - exchange loss $73.4 billion) (2004 - $58.6 billion)
* Attributable profit of $577 * Attributable profit of
billion, (2004 - loss of $1,073.3billion, (2004 -
$280.9 billion) $75.3 billion)
* Headline earnings per share of * Headline profit per share
$3,766.58 (2004 - loss of of $6,566.5 (2004 - $458.5)
$1,650.40)
* Interim dividend of $375 * Interim dividend of $375
(2004 - $230) (2004 - $50)
Average year on year inflation for the period - 229%
Year on year inflation at 30 th September 2005 - 360%
Movement in foreign exchange rates since 31st March 2005 - 328%
Increase in consumer price index since 31st March 2005 - 205%
COMMENTARY
The six months period under review has seen major fluctuations in the economic
environment. Year on year inflation declined at the start and escalated sharply
towards the end of the period, reaching 360% with an overall average of 229%.
Exchange rate movement has not consistently kept pace with inflation and efforts
to maintain real interest rates have created difficult conditions in which to
sustain viable levels of working capital and investment in the commercial and
industrial sector. Shortage of foreign currency continues to challenge
businesses.
Focus in our Group has been on maintaining margins, ensuring appropriate stock
replacement and levels of investment in stock, controlling shrinkage in the
retail divisions and managing working capital to avoid high interest costs on
borrowings. Local borrowings were kept to a minimum resulting in net investment
income of $32.2 billion.
Turnover for the half year to 30 September 2005 was $2,522 billion, an increase
of 284% on the same period in the prior year and against average inflation of
229%. In the retail sector, competitive pricing resulted in strong demand for
merchandise and ensured a gain in market share. The hotel division benefited
from the movement in exchange rates. Occupancies were up in the Cape Grace Hotel
and Victoria Falls Hotel but slightly down in Meikles Hotel.
Operating profit for the Group was $354 billion compared to $27.5 billion in the
same period last year, a reflection of improved margins and cost control.
Exchange gains of $835.6 billion and the increase in value of quoted investment
of $115.7 billion are largely the result of the movement in the auction exchange
rate from Z$6 082 to Z$26 000 against the US$. The introduction in October 2005
of an exchange rate mechanism more aligned to market forces will result in
significant gains in the second half of the year.
OPERATIONS
TM Supermarkets
* Net turnover increased by 303% from $518 billion to $2 086 billion.
* Operating profit grew from $20.1 billion to $252.8 billion.
* Shrinkage was controlled.
* Gross margins were managed to ensure cash availability to replace stock at
acceptable trading levels.
* Investment income increased from $13.0 billion to $69.2 billion.
* Profit after taxation increased from $24.5 billion to $222.5 billion.
* A number of opportunities to open new branches are being pursued.
Retail Division
* Net turnover increased by 207% from $94.8 billion to $291.5 billion.
* Shrinkage was controlled and gross margins were managed to ensure cash
availability to replace stock.
* Operating profit grew from $8.0 billion to $82.2 billion.
* Stock turns remained constant at four times.
* Finance cost reduced from $18.3 billion to $5.1 billion.
Hotels
* Turnover increased by 226% from $44.1 billion to $144 billion.
* Operating profit increased from $815 million to $23.1 billion.
* Operating profit before group charges for the Zimbabwe Hotels increased
from $5.3 billion to $15.5 billion.
* Operating profit before group charges for the Cape Grace Hotel was
$15.3 billion compared to a profit of $0,2 billion.
Investments
Meikles Africa's investment in the Mvelaphanda Group has made a useful
contribution to profit. Further initiatives have been identified and are being
pursued.
Outlook
The economic environment will continue to present challenges. The two retail
operations within Zimbabwe are well placed to adjust to market changes. The
Zimbabwe Hotels are expected to continue to be net generators of cash and, in
addition, the Victoria Falls Hotel is showing encouraging signs in occupancy
growth. The Cape Grace Hotel should benefit from positive trends in the second
half of the year, and the movement in exchange rate will significantly enhance
its contribution to group profits. Kingdom Financial Holdings should produce
improved results in the second half of the year.
As the new exchange rate mechanism on the interbank market settles down and
exchange rates move in line with inflation, the Group's foreign assets in terms
of valuation and contribution to profit, will be significant.
INTERIM DIVIDEND ANNOUNCEMENT
On 22nd November 2005 the Board approved an interim dividend Number 72 of $375
per share on 163,656,787 shares payable to members registered in the books of
the Company at the close of business on 9th December 2005. The transfer books
and Register of Members will be closed from 12th December 2005 to 16th December
2005. Dividend cheques will be mailed to shareholders on or about 19th December
2005. The dividends payable to non-resident shareholders will be paid in
accordance with Exchange Control Regulations. Shareholders' withholding tax
will be deducted where applicable.
By order of the Board
A.P. LANE-MITCHELL
Secretary
22 November 2005.
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2005
HISTORICAL COST
Unaudited Unaudited
(all amounts in millions of dollars) 6 months to 6 months to
30 Sept 2005 30 Sept 2004
________________________________________________________________________________________________________
Turnover 2,522,085 657,081
Cost of sales (1,726,011) (492,000)
________________________________________________________________________________________________________
Gross profit 796,074 165,081
Operating expenses (458,609) (141,528)
Other income 16,536 3,962
________________________________________________________________________________________________________
Operating profit 354,001 27,515
Investment income 60,751 14,635
Finance costs (28,501) (33,245)
Net exchange gain 835,626 58,591
Increase in value of quoted investment 115,694 9,842
Net share of result of associates 11,857 14,733
Loss on sale of investments (504) -
________________________________________________________________________________________________________
Profit before taxation 1,348,924 92,071
Taxation (219,969) (10,582)
________________________________________________________________________________________________________
Profit after taxation 1,128,955 81,489
Minority interest (55,634) (6,140)
________________________________________________________________________________________________________
Net profit attributable to shareholders 1,073,321 75,349
________________________________________________________________________________________________________
Basic earnings per share ($) 6,558.37 460.41
IIMR Headline earnings per share ($) 6,566.51 458.50
CONSOLIDATED BALANCE SHEET
At 30 September 2005
HISTORICAL COST
Unaudited Audited
(all amounts in millions of dollars) At At
30 Sept 2005 31 March 2005
________________________________________________________________________________________________________
ASSETS
Non-current assets 1,150,707 301,048
Current assets 2,094,067 651,191
________________________________________________________________________________________________________
Total assets 3,244,774 952,239
________________________________________________________________________________________________________
EQUITY AND LIABILITIES
Capital and reserves 1,645,632 419,842
Minority interest 22,572 8,663
Non-current liabilities 511,697 143,112
Current liabilities 1,064,873 380,622
________________________________________________________________________________________________________
Total equity and liabilities 3,244,774 952,239
________________________________________________________________________________________________________
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2005
HISTORICAL COST - Unaudited
______________________________________________________________________________________________________________________
Share Share Non- Retained Attributable Minority Total
Capital Premium Distributable Earnings and To Parent Interest Equity
Reserves Shareholders Shareholders
For Dividend
______________________________________________________________________________________________________________________
Balance at 1 April 2005 16 5,356 16,690 397,780 419,842 8,663 428,505
Profit for the period - - - 1,073,321 1,073,321 55,634 1,128,955
Translation of foreign entity - Cape - - 178,630 - 178,630 - 178,630
Grace Hotel
Share of reserves of associate - - (1,615) - (1,615) - (1,615)
Dividend for 2005 - final - - - (24,546) (24,546) - (24,546)
Interim dividend 2006 - - - - - (41,725) (41,725)
______________________________________________________________________________________________________________________
Balance at 30 September 2005 16 5,356 193,705 1,446,555 1,645,632 22,572 1,668,204
______________________________________________________________________________________________________________________
Balance at 1 April 2004 16 5,356 16,853 230,887 253,112 3,330 256,442
Profit for the period - - - 75,349 75,349 6,140 81,489
Translation of foreign entity - Cape - - 1,670 - 1,670 - 1,670
Grace Hotel
Dividend for 2004 - final - - - (6,542) (6,542) - (6,542)
______________________________________________________________________________________________________________________
Balance at 30 September 2004 16 5,356 18,523 299,694 323,589 9,470 333,059
______________________________________________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2005
HISTORICAL COST
Unaudited Unaudited
(all amounts in millions of dollars) 6 months to 6 months to
30 Sept 2005 30 Sept 2004
_____________________________________________________________________________________________________
Cash flows from operating activities
Profit before taxation 1,348,924 92,071
Adjustment for:
Non-operating cash flow (879,732) (40,396)
Non-cash items (106,970) (20,232)
_____________________________________________________________________________________________________
Operating cash flow before working capital changes 362,222 31,443
(Used in) / generated from working capital changes (341,550) 17,136
_____________________________________________________________________________________________________
Operating cash flow 20,672 48,579
Income tax paid (21,003) (836)
_____________________________________________________________________________________________________
Net cash (used in) / generated from operating (331) 47,743
activities
_____________________________________________________________________________________________________
Net cash used in investing activities (93,154) (8,906)
_____________________________________________________________________________________________________
Net cash generated from / (used in) financing 37,114 (35,770)
activities
_____________________________________________________________________________________________________
Net effect of exchange rate changes on cash and cash
equivalents 835,626 58,591
Translation of foreign entity (105,373) (2,940)
_____________________________________________________________________________________________________
Net increase in cash and cash equivalents 673,882 58,718
Cash and cash equivalents at 31 March 2005 376,150 242,104
_____________________________________________________________________________________________________
Cash and cash equivalents at 30 September 2005 1,050,032 300,822
_____________________________________________________________________________________________________
SEGMENT INFORMATION
HISTORICAL COST
Unaudited Unaudited
(all amounts in millions of dollars) 6 months to 6 months to
30 Sept 2005 30 Sept 2004
_____________________________________________________________________________________________________
Turnover
Hotels 144,032 44,117
Supermarkets 2,086,578 518,079
Retail 291,475 94,885
_____________________________________________________________________________________________________
2,522,085 657,081
_____________________________________________________________________________________________________
Operating (loss)/ profit after net monetary gain
Hotels 23,135 815
Supermarkets 252,775 20,119
Retail 82,173 8,023
Corporate and other (4,082) (1,442)
_____________________________________________________________________________________________________
354,001 27,515
_____________________________________________________________________________________________________
Total assets
Hotels 713,611 145,980
Supermarkets 1,007,040 161,309
Retail 359,811 123,806
Corporate and other 1,164,312 270,755
_____________________________________________________________________________________________________
3,244,774 701,850
_____________________________________________________________________________________________________
SUPPLEMENTARY INFORMATION
_____________________________________________________________________________________________________
Capital expenditure 38,498 6,594
Depreciation 7,392 4,263
Capital commitments
Authorised but not yet contracted for 75,801 12,742
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 September 2005
INFLATION ADJUSTED
Unaudited Unaudited
(all amounts in millions of dollars) 6 months to 6 months to
30 Sept 2005 30 Sept 2004
Restated
_________________________________________________________________________________________________________
Turnover 4,213,191 3,499,597
Cost of sales (3,496,302) (3,016,744)
_________________________________________________________________________________________________________
Gross profit 716,889 482,853
Operating expenses (791,146) (798,639)
Other income 46,876 20,849
_________________________________________________________________________________________________________
Operating loss (27,381) (294,937)
Net monetary gain 558,918 180,949
_________________________________________________________________________________________________________
Operating profit / (loss) after net monetary gain 531,537 (113,988)
Investment income 94,957 78,344
Finance costs (49,844) (183,157)
Net exchange gain / (loss) 279,616 (73,378)
Increase / (decrease) in value of quoted investment 58,120 (4,907)
Impairment of other investments (26,877) (40,586)
Net share of result of associates (14,757) 45,304
Loss on sale of investments (22,900) -
_________________________________________________________________________________________________________
Profit / (loss) before taxation 849,852 (292,368)
Taxation (205,331) 24,832
_________________________________________________________________________________________________________
Profit / (loss) after taxation 644,521 (267,536)
Minority interest (67,474) (13,345)
_________________________________________________________________________________________________________
Net profit / (loss) attributable to shareholders 577,047 (280,881)
_________________________________________________________________________________________________________
Basic earnings / (loss) per share ($) 3,525.95 (1,716.24)
IIMR Headline earnings / (loss) per share ($) 3,766.58 (1,650.40)
Net monetary gain
Gross monetary loss (1,032,557) (89,832)
Add: historic exchange gains restated 1,311,859 344,159
Transfer to net exchange gains 279,616 (73,378)
_________________________________________________________________________________________________________
Net monetary gain 558,918 180,949
_________________________________________________________________________________________________________
CONSOLIDATED BALANCE SHEET
At 30 September 2005
INFLATION ADJUSTED
Unaudited Audited
(all amounts in millions of dollars) At At
30 Sept 2005 31 March 2005
Restated
________________________________________________________________________________________________________
ASSETS
Non-current assets 2,656,538 2,184,106
Current assets 2,310,673 2,046,614
________________________________________________________________________________________________________
Total assets 4,967,211 4,230,720
________________________________________________________________________________________________________
EQUITY AND LIABILITIES
Capital and reserves 2,970,583 2,287,110
Minority interest 97,289 71,540
Non-current liabilities 834,466 713,685
Current liabilities 1,064,873 1,158,385
________________________________________________________________________________________________________
Total equity and liabilities 4,967,211 4,230,720
________________________________________________________________________________________________________
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2005
INFLATION ADJUSTED -Unaudited
_______________________________________________________________________________________________________________________
Share Share Non- Retained Attributable Minority Total
(all amounts in millions of dollars) Capital Premium Distributable Earnings and To Parent Interest Equity
Reserves Shareholders Shareholders
For Dividend
_______________________________________________________________________________________________________________________
Balance at 1 April 2005 25,163 1,789,973 88,059 383,915 2,287,110 71,540 2,358,650
Profit for the period - - - 577,047 577,047 67,474 644,521
Translation of foreign entity - Cape - - 186,553 - 186,553 - 186,553
Grace Hotel
Share of reserves of associate - - 2,088 - 2,088 - 2,088
Share of prior year adjustment of - - - (7,504) (7,504) - (7,504)
associate's retained income
Dividend for 2005 - final - - - (74,711) (74,711) - (74,711)
Interim Dividend 2006 - - - - - (41,725) (41,725)
_______________________________________________________________________________________________________________________
Balance at 30 September 2005 25,163 1,789,973 276,700 878,747 2,970,583 97,289 3,067,872
_______________________________________________________________________________________________________________________
Balance at 1 April 2004 - restated 25,163 1,789,973 354,336 727,509 2,896,981 96,076 2,993,057
(Loss) / profit for the period - - - - (280,881) (280,881) 13,345 (267,536)
restated
Translation of foreign entity - Cape - - 37,797 - 37,797 - 37,797
Grace Hotel
Dividend for 2004 - final - - - (44,559) (44,559) - (44,559)
_______________________________________________________________________________________________________________________
Balance at 30 September 2004 - 25,163 1,789,973 392,133 402,069 2,609,338 109,421 2,718,759
restated
_______________________________________________________________________________________________________________________
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 September 2005
INFLATION ADJUSTED
Unaudited Unaudited
(all amounts in millions of dollars) 6 months to 6 months to
30 Sept 2005 30 Sept 2004
Restated
_____________________________________________________________________________________________________
Cash flows from operating activities
Profit / (loss) before taxation 849,852 (292,368)
Adjustment for:
Non-operating cash flow (309,972) 132,887
Non-cash items 23,004 96,398
_____________________________________________________________________________________________________
Operating cash flow before working capital changes 562,884 (63,083)
(Used in) / generated from working capital changes (548,575) 271,875
_____________________________________________________________________________________________________
Operating cash flow 14,309 208,792
Income tax paid (170,423) (36,710)
_____________________________________________________________________________________________________
Net cash (used in) / generated from operating (156,114) 172,082
activities
_____________________________________________________________________________________________________
Net cash used in investing activities (242,339) (71,598)
_____________________________________________________________________________________________________
Net cash generated from / (used in) financing 166,254 (356,377)
activities
Net effect of exchange rate changes on cash and cash
equivalents 279,616 (73,378)
Translation of foreign entity (142,159) 64,311
_____________________________________________________________________________________________________
Net decrease in cash and cash equivalents (94,742) (264,960)
Cash and cash equivalents at 31 March 2005 1,144,774 1,648,280
_____________________________________________________________________________________________________
Cash and cash equivalents at 30 September 2005 1,050,032 1,383,320
_____________________________________________________________________________________________________
SEGMENT INFORMATION
INFLATION ADJUSTED
Unaudited Unaudited
(all amounts in millions of dollars) 6 months to 6 months to
30 Sept 2005 30 Sept 2004
____________________________________________________________________________________________________
Turnover
Hotels 221,565 237,621
Supermarkets 3,478,566 2,755,468
Retail 513,060 506,508
____________________________________________________________________________________________________
4,213,191 3,499,597
____________________________________________________________________________________________________
Operating (loss) / profit after net monetary gain
Hotels (25,204) (91,715)
Supermarkets 206,880 60,465
Retail 205,020 198,198
Corporate and other 144,841 (280,936)
____________________________________________________________________________________________________
531,537 (113,988)
____________________________________________________________________________________________________
Total assets
Hotels 1,370,630 1,357,285
Supermarkets 1,333,657 1,045,154
Retail 812,446 962,170
Corporate and other 1,450,478 1,350,387
____________________________________________________________________________________________________
4,967,211 4,714,996
____________________________________________________________________________________________________
SUPPLEMENTARY INFORMATION
____________________________________________________________________________________________________
Capital expenditure 78,994 33,227
Depreciation 14,867 40,131
Capital commitments
Authorised but not yet contracted for 75,801 40,692
Accounting policies
The International Accounting Standards Board has released a number of new
accounting standards and made amendments to existing standards. The impact of
these changes has been assessed and applied but the financial effect for the
period is not material.
The inflation adjusted financial statements reflect a change in accounting for
the effect of the restatement of the foreign entities' income statements in
terms of IAS 29, and the restatement of the historical movements in the foreign
currency translation reserve (FCTR), in line with preferred treatment after
further interpretation of IAS 29.
The effect of the income statement restatement is now taken against FCTR and not
monetary adjustment as in the past. Previously the FCTR was restated from the
month in which it was generated. These changes have the effect of reallocating
amounts between the FCTR and retained income. The effect of these changes is to
reduce the prior period inflation adjusted profit by $16.4 billion and to
increase the opening retained income by $629,5 billion, the corresponding
balance sheet adjustment being to FCTR.
Note to inflation adjusted financial statements
The consumer price indices used to restate the financial statements at 30
September 2005 are as follows:
30 September 2004 46,048.2
31 March 2005 69,577.2
30 September 2005 211,751.3
For further information contact either:
Zimbabwe Bryan Thorn +263-4-252068/78
Roy Franklin +263-4-252068/78
Directors: JRT Moxon (Chairman), MA Masunda, DE Stephens,
CB Thorn, MS Wilson, DW Mills
All current financial, operational and structural information on Meikles Africa
Limited can be obtained by visiting Meikles Africa Limited's website at http://
www.meiklesafrica.co.zw.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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