RNS Number:6306Q
Meikles Africa Ld
25 March 2008
AUDITED RESULTS FOR THE 9 MONTHS TO 31 DECEMBER 2007
SALIENT FEATURES
References are to historical information
Net turnover
$43,1 trillion
Operating profit
$11,9 trillion
Attributable profit
Increased to $246,4 trillion
Cash generated and funds available
Funds generated from operations were $16,4 trillion
Funds on hand amount to $339,3 trillion
References are to inflation adjusted information
Net turnover
$275,1 trillion
Operating profit
$9,5 trillion
Attributable loss
$4,7 trillion
Cash generated and funds available
Funds generated from operations were $50,4 trillion
Funds on hand amount to $339,3 trillion
OVERVIEW
With the merger of Meikles Africa, Kingdom Financial Holdings (KFHL), Tanganda
Tea Company (TTC) and Cotton Printers (CP) having been satisfactorily concluded,
the year-end of the Group has changed to 31 December and the published results
reflect the status of the Kingdom Meikles Africa (KMAL) Group at 31 December
2007, being the effective date of the merger. The Group income statement
therefore presents the results for the former Meikles Africa Group while the
balance sheet reflects the position of the merged Group taking into account
shares issued to the shareholders of KFHL, TTC and CP. However for information
purposes an indicative segmental income statement has been presented which
reflects results for 2007 as if the merger had been in place for the twelve
months.
The KMAL Group has significant foreign operations and realises export proceeds
from local operations accounting for the required disclosure which fairly
presents value to all stakeholders. Accordingly funds from operations of
entities that generate foreign currency are translated at a fair investment
rate. This policy is consistent with that applied in the previous year.
The nine month period under review has seen an economy where official inflation,
interest rates and foreign exchange rates have not maintained relative
consistency and therefore reflects anomalies when measuring performance. In
addition, since July 2007, when new pricing mechanisms were introduced, all
businesses have operated under extremely difficult conditions. Supply of stock,
pricing and terms of trade have put pressure on margins and cash generation to
replace stock, when available. Dialogue continues with authorities to promote
pricing mechanisms which will result in sustainability for stakeholders.
Performance of the former Meikles Africa Group has therefore been supported by
foreign operations and the quality of foreign assets, reflecting the strength of
the Group's ability to withstand the volatility of the local environment. Other
sectors of Kingdom Meikles Africa bring to the Group contributions to the
balance sheet that reflect strength from Kingdom Financial Holdings, a solid
infrastructural base from Tanganda Tea Company and facilities at Cotton Printers
which, when utilised to better capacity, will provide increased foreign currency
inflows. Plans are progressing to enhance synergies, energise operations and
create opportunities which leverage off the strength of the Group. Main
features of the operations incorporated in the income statement for the period
to 31 December 2007 are as follows. (Reference to comparatives is for the nine
month period to 31 December 2006.)
Hotels
In inflation adjusted terms turnover increased by 1729% to $107 trillion and
operating profit increased to $23 trillion.
* All units achieved occupancy growth which was an overall increase of 28%
for the period;
* Leading Hotels of the World recently visited Meikles and Victoria Falls
Hotel and both achieved pleasing results;
* Stock procurement has been managed under difficult conditions;
* Upgrade of the Victoria Falls in public areas and facilities is nearing
completion;
* The refashioning of the Cape Grace will commence shortly and will spread
over two financial periods;
* A major maintenance programme at Meikles has commenced in anticipation of
an upturn in business;
* Overheads have been controlled although there have been instances where
utility costs have increased faster than revenue;
Retail
In inflation adjusted terms turnover increased by 41% to $169 trillion and there
was an operating loss of $11 trillion.
* Retail increase in turnover has been less than inflation because of volume
decrease and pricing;
* Procurement of stock to appropriate levels has been extremely difficult
because of pricing and availability;
* Margins have not kept pace with inflation thereby inhibiting cash flow
generation;
* Some success was achieved in the securing of BACOSSI funding;
* Recapitalisation is planned provided the protection of stock values can be
assured;
* Three new TM projects are at an advanced stage of completion;
* Department Stores credit sales through Meikles Financial Services ceased in
July;
* Plans are advancing for a greater ratio of quality food, confectionery and
produce in the department stores;
* A regional presence using franchise options is being pursued;
* Toll manufacturing and assembly are to be investigated with a view to ensuring
better supply and enhanced differentiation;
Corporate
Exchange gains reflect the uplift in foreign funds in Zimbabwe dollar terms with
the inflation adjusted financial statements showing the position after taking
into account movement in the CPI index.
The merger
The merger transaction saw the issue of seventy eight million shares to the
shareholders of Kingdom Financial Holdings (excluding Meikles Africa), Tanganda
Tea Company and Cotton Printers. The price was $8,5 million a share, being the
Meikles Africa share price at 31 December 2007. The issue value was compared to
the net assets of the acquired companies resulting in goodwill of $614 trillion
in historic terms.
Outlook
The merged Group is taking advantage of synergies and resources across the
entities in areas of treasury, foreign currency utilisation, toll manufacturing
and property letting. Strategies are being formalised that leverage off the
strength of the Group balance sheet. These will focus on capital preservation
and financial growth in the case of Kingdom Financial Holdings; refurbishing and
upgrade of the hotels division; increasing tea production through mechanisation
and expansion of agricultural activities; recapitalising the retail division and
revising procurement plans; refurbishing textile machinery to increase
throughput especially for yarn exports. Where product and capacity exist, the
Group will focus on export earnings growth. External investments will continue
to develop where opportunities arise but in the meantime the Group is launching
capital raising programmes which will provide inflows for local working capital
and provide funds for regional expansion. We have realised our investment in
Mvelaphanda favourably. Kingdom Meikles Africa has entered into an option
agreement, which might include an exchange of assets, to invest in Mentor
Africa, a new Pan regional, sub Saharan investment company, subject to all
regulatory approvals. Mentor Africa is headed by Mr. Stephen Levenberg and Mr.
Brett Till former Chief Executive Officer and Financial Director, respectively,
of Mvelaphanda. The post Mvelaphanda investment potentials will see the Group
expanding into the sub Saharan region in areas which might include natural
resources, telecommunications and hospitality. These plans are expected to
materialise within the current financial year.
Social responsibility
The Group continues to be mindful of the plight of the aged and other vulnerable
groups. Shortages and non-availability of basic commodities and services have
compounded the hardships endured by those who have least. In an effort to
assist in the welfare of our country's senior citizens the Group contributes to
homes and institutions across Zimbabwe.
J. R. T. MOXON
CHAIRMAN
Dividend announcement
The Board has resolved to pass a final dividend for the period ended 31 December
2007 but will consider declaring an interim dividend for the 2008 financial year
in the near future.
By order of the Board
A.P. LANE-MITCHELL
SECRETARY
20 March 2008
AUDITED CONSOLIDATED INCOME STATEMENT
For the 9 months to 31 December 2007
INFLATION ADJUSTED HISTORICAL COST
(all amounts in billions of dollars) 9 months to 12 months to 9 months to 12 months to
31 December 31 March 31 December 31 March
2007 2007 2007 2007
Revenue 275,110 210,156 43,108 357
Operating (loss) / profit before monetary
adjustment and exchange gains (20,947) (9,269) 6,932 80
Net monetary gain from operating activities 19,130 24,844 - -
Exchange gains on net current assets 11,277 10,748 4,943 47
Operating profit 9,460 26,323 11,875 127
Investment income 13,958 6,686 1,832 15
Finance costs (1,463) (2,564) (471) (5)
Net exchange gains on foreign funds 15,278 186,947 253,362 1,018
(Decrease) / increase in value of quoted
investment (16,316) 29,241 4 148
Net monetary (loss) / gain from financing
activities (43,805) 17,849 - -
Share of profit of associates 16,355 2,239 8,978 7
(Loss) / profit before taxation (6,533) 266,721 275,580 1,310
Income tax credit / (expense) 726 (35,779) (28,928) (169)
(Loss) / profit for the period (5,807) 230,942 246,652 1,141
Attributable to:
Equity holders of the parent (4,668) 229,073 246,376 1,132
Minority interest (1,139) 1,869 276 9
(5,807) 230,942 246,652 1,141
Basic (loss) / earnings per share ($) (28,461) 1,399,716 1,502,184 6,917
IIMR Headline (loss) / earnings per share ($) (35,443) 1,399,160 1,501,928 6,911
Weighted average number of shares 164,011,873 163,656,787 164,011,873 163,656,787
AUDITED CONSOLIDATED BALANCE SHEET
At 31 December 2007
INFLATION ADJUSTED HISTORICAL COST
(all amounts in billions of dollars) At At At At
31 December 31 March 31 December 31 March
2007 2007 2007 2007
ASSETS
Property, plant & equipment 177,379 99,825 120,942 372
Investment property 3,542 - 3,542 -
Biological assets 4,222 - 4,222 -
Investment in associates 21,450 8,509 6,231 9
Financial assets - non-banking 108,338 106,329 108,245 483
Goodwill 587,500 5,476 613,686 -
Other intangible assets 87 - 87 -
Current assets banking
Balances with banks and cash 144,583 - 144,583 -
Financial assets at fair value
through profit and loss 39,071 - 39,071 -
Advances and other accounts 16,773 - 16,773 -
Available for sale 7,387 - 6,805 -
Acceptances 68 - 68 -
Current assets non-banking 231,678 237,484 224,011 1,057
Total assets 1,342,078 457,623 1,288,266 1,921
EQUITY AND LIABILITIES
Attributable to equity holders of the
parent 1,017,434 305,547 983,295 1,266
Minority interest 2,313 3,452 285 9
Deferred tax 47,717 30,172 30,072 107
Other non-current liabilities 52,687 36,215 52,687 165
Current liabilities banking
Financial liabilities at fair
value through profit and loss 20,503 - 20,503 -
Customer deposits 139,231 - 139,231 -
Acceptances 68 - 68 -
Other current liabilities 14,889 - 14,889 -
Current liabilities non- banking 47,236 82,237 47,236 374
Total equity and liabilities 1,342,078 457,623 1,288,266 1,921
AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 9 months to 31 December 2007
INFLATION ADJUSTED HISTORICAL COST
(all amounts in billions of dollars) 9 months to 12 months to 9 months to 12 months to
31 31 March 31 December 31 March
December 2007 2007 2007 2007
(Loss) / profit for the period (4,668) 229,073 246,376 1,132
Share premium on issue of shares 664,683 - 663,979 -
Share issue expenses (5,221) - (5,220) -
Share based payments 4,515 - 4,515 -
Translation of foreign entity 45,913 26,503 66,702 128
Share of reserves of associate 8,543 1,388 5,704 2
Dividend - prior year final (1,878) (1,068) (27) -
Dividend - current year interim - (1,035) - (1)
Attributable to equity holders of parent 711,887 254,861 982,029 1,261
Minorities (1,139) 1,303 276 8
Shareholders' equity at the beginning of
the period 308,999 52,835 1,275 6
Shareholders' equity at the end of the 9
months period 1,019,747 308,999 983,580 1,275
AUDITED CONSOLIDATED CASH FLOW STATEMENT
For the 9 months to 31 December 2007
INFLATION ADJUSTED HISTORICAL COST
(all amounts in billions of dollars) 9 months to 12 months to 9 months to 12 months to
31 December 31 March 31 December 31 March
2007 2007 2007 2007
Cash flows from operating activities
(Loss) / profit before taxation (6,533) 266,721 275,580 1,310
Adjustments for:
Non-operating cash flow (55,309) (204,113) (259,708) (1,083)
Non-cash items 100,622 (17,463) (7,552) (143)
Operating cash flow before working capital changes 38,780 45,145 8,320 84
Working capital changes 11,586 1,058 8,120 3
Cash generated from operations 50,366 46,203 16,440 87
Income taxes paid (5,136) (3,687) (60) (5)
Net cash generated from operating activities 45,230 42,516 16,380 82
Net cash generated from / (used in) investing
activities 172,542 (2,273) 143,493 (7)
Net cash used in financing activities (16,382) (5,354) (28,534) -
Net increase in cash and cash equivalents 201,390 34,889 131,339 75
Cash and cash equivalents at the beginning of the
period 180,096 21,802 819 4
Net effect of exchange rate changes on cash and cash
equivalents (1,626) 124,844 253,102 734
Translation of foreign entity (40,547) (1,439) (45,947) 6
Cash and cash equivalents at the end of the 9 months
period 339,313 180,096 339,313 819
AUDITED SEGMENT INFORMATION
INFLATION ADJUSTED HISTORICAL COST
(all amounts in billions of dollars) 9 months to 12 months to 9 months to 12 months to
31 December 31 March 30 December 31 March
2007 2007 2007 2007
Revenue
Retail 168,561 175,157 20,869 73
Hotels 106,549 34,999 22,239 284
275,110 210,156 43,108 357
Operating (loss) / profit after
monetary adjustment and exchange
gains
Retail (10,874) 10,521 2,627 60
Hotels 23,378 12,984 9,781 52
Corporate (3,044) 2,818 (533) 15
9,460 26,323 11,875 127
Segment assets
Retail 33,475 65,680 15,985 229
Hotels 149,531 126,450 136,442 545
Banking 267,832 - 230,718 -
Agriculture 24,756 - 22,588 -
Corporate & Other 866,484 265,493 882,533 1,147
1,342,078 457,623 1,288,266 1,921
SUPPLEMENTARY INFORMATION INFLATION ADJUSTED HISTORICAL COST
(all amounts in billions of dollars) 9 months to 12 months to 9 months to 12 months to
31 December 31 March 31 December 31 March
2007 2007 2007 2007
Capital expenditure 6,618 7,894 2,789 23
Capital commitments authorised but not yet
contracted for 136,362 85,760 136,362 390
Depreciation 7,727 4,435 1,431 5
Market value of investments
- Associate - Kingdom Financial Holdings
Limited - 20,822 - 95
- Investment - Mvelaphanda Group - 32,528 - 148
Borrowings 17,854 16,723 17,854 76
The information below is segment information for the period ended 31 December
2007 assuming the merger had been effective from 1 January 2007
INDICATIVE SEGMENT INFORMATION
INFLATION ADJUSTED HISTORICAL COST
(all amounts in billions of dollars) 12 months to 12 months to
31 December 2007 31 December 2007
Revenue
Banking 85,700 12,120
Retail 224,451 21,060
Hotels 135,722 22,308
Agriculture 28,055 1,405
Textiles 485 23
474,413 56,916
Operating profit / (loss) after
monetary adjustment and exchange
gains
Banking 55,645 31,025
Retail (3,220) 2,673
Hotels 27,866 9,831
Agriculture 1,060 4,972
Textiles (223) 116
81,128 48,617
Accounting policies
Accounting policies are consistent with those used in the previous year.
Note to inflation adjusted financial statements
The consumer price indices used to restate the financial statements at 31
December 2007 are as follows:
31 March 2006 765,209.4
31 March 2007 16,221,182.2
31 December 2007 3,564,825,238.9
For further information contact:
Zimbabwe Bryan Thorn +263-4-252068/78
This information is provided by RNS
The company news service from the London Stock Exchange
END
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