MIK Meikles Limited

 
TIDMMIK 
 
Interim Management Statement and results of the 74th Annual General Meeting and 
Extra-ordinary General Meeting of 18 August 2011 
 
19 August 2011 
 
Group overview 
 
The attainment of full indigenisation status and the raising of equity and debt 
financing to both re-financing the Group's subsidiaries and to invest into new 
projects are the current pillars upon which the Group expects to add 
shareholder value in future. 
 
The Meikles Group currently requires working capital of US$61m of which a 
minimum of US$13m will be direct investment into TM Supermarkets by Pick n Pay 
.The Group is looking to raise a further US$90m for new projects. 
 
The Group's initiatives are aimed at attracting strategic partners, skills and 
capital in a manner that will stimulate investment and employment creation in 
Zimbabwe.These expansion and restructuring initiatives preclude the payment of 
dividends in the near future. The Group's strategies will not involve a rights 
offer at the holding company level. 
 
All of the negative legacy issues affecting the Group have been satisfactorily 
concluded from a legal and regulatory perspective with no adverse consequences 
to the Group. 
 
Results of the 74thAnnual General Meeting 
 
The seventy-fourth annual general meeting of the shareholders of Meikles 
Limited in respect of the period ended 31 March 2011, held in the Stewart Room 
First Floor, Meikles Hotel, 3rd Street, Harare on 18 August 2011 at 8.15 am 
conducted the following business: 
 
 1. The Group Financial Statements and the reports of the Directors and 
    Auditors were received and adopted for the period ended 31 March 2011. 
 
 2. Mr. J. R. T. Moxon, appointed as a Director with effect from 16 June 2011 
    retired, offered himself for re-election and was re-appointed. 
 
 3. Mr. M. L. Wood appointed as a Director with effect from 5 July 2010 
    retired, offered himself for re-election and was re-appointed. 
 
 4. Mr B. J. Beaumont retired by rotation and being eligible offered himself 
    for re-election and was duly appointed 
 
 5. Mr K. Ncube retired by rotation and being eligible offered himself for 
    re-election and was duly appointed 
 
 6. Mr R. Chidembo retired by rotation and being eligible offered himself for 
    re-election and was duly appointed 
 
 7. Directors' fees amounting to US$25,530 for the period ended 31 March 2011 
    were confirmed. 
 
 8. Messrs Deloitte & Touché, auditors for the period ended 31 March 2011, 
    indicated their willingness to continue in office and were re-appointed for 
    the year ending 31 March 2012. Auditors' fees of US$115,000 for the period 
    ended 31 March 2011 were approved. 
 
Following the Annual General Meeting of 18 August 2011 your Board members are 
 
John Ralph Thomas Moxon - Executive Chairman 
 
Brendan John Beaumont - Chief Executive 
 
Onias Makamba - Finance Director 
 
Mark Leonard Wood - Executive Director 
 
Bisset Chimhini (representing the Meikles Limited Employees Share Ownership 
Trust) 
 
Rugare Chidembo - Non Executive Director 
 
Kazilek Ncube - Non Executive Director 
 
Results of the Extra-Ordinary General Meeting 18 August 2011 
 
Meikles shareholders approved the establishment of the Meikles Limited 
Employees Share Ownership Trust where 24 000 000 unissued ordinary shares of 
the Company were placed under the control of the Directors, who have the 
authority to issue the shares on such terms and conditions as they deem fit, at 
a price calculated on the basis of the weighted average price of the Company's 
shares over the thirty (30) days prior to the date of issue. 
 
Indigenisation 
 
In accordance with the requirements of the Indigenisation Act, the Company 
lodged its application with the Ministry of Indigenisation for their 
consideration. The parameters within which full compliance is to be achieved 
have been agreed with the Ministry and are now are in the process of being 
implemented. The establishment of the Meikles Limited Employees Share Ownership 
Trust is one of the parameters and this has now been established through the 
passing of the special resolution at the EGM on 18 August 2011.The other 
parameters are in the process of being implemented and full indigenisation 
status is considered imminent. 
 
Pick `n Pay investment into TM Supermarkets 
 
The regulatory approvals for Pick `n Pay's US$13m investment in TM Supermarkets 
are close to being received .Their receipt will see the implementation of plans 
to roll out new branded Pick `n Pay stores , the re-branding of selected 
existing outlets and the refurbishment of some stores . Pick `n Pay's 
investment in TM Supermarkets will also provide additional empowerment 
opportunities and enhance our efforts in returning TM Supermarkets to the 
status of being Zimbabwe's largest and most profitable supermarket chain. 
 
Cape Grace Hotel and Mentor Holdings 
 
All necessary approvals have been received for the exchange of the Group's 
investment in Cape Grace Hotel, for equity in Mentor Holdings. Mentor Holdings 
is a significant private equity group being established to invest in Africa and 
emerging markets. The value of the Cape Grace for the purposes of this 
transaction is US$30m. Further announcements will be made in due course. 
 
Trading update for the quarter ended 30 June 2011 
 
TM SUPERMARKETS 
 
  * Turnover up 27% to $ 62 million, marginally below set targets. 
 
  * Gross margin after shrinkage was 17.3% in comparison to 17% in the prior 
    period. 
 
Despite active competitor marketing initiatives, TM Supermarkets has 
successfully defended its market share and is currently focusing on improving 
margins. We are in the process of renovating TM Supermarket's Kamfinsa branch 
which should be re-opened by December 2011 as a Pick n' Pay outlet. In 
addition, a 25,000m² supermarket and distribution centre will be developed on 
the leased former Msasa Jaggers site. Rental agreements for two additional 
locations for expansion have been secured. 
 
TM's outlook is positive and we are committed to re-establish TM as the 
dominant supermarket chain in Zimbabwe. 
 
THE HOTEL GROUP 
 
Occupancy Occupancy ADR Revenue growth 
 
1st Q 2011 1st Q 2010 1st Q 2011 vs 1st Q 2010 
 
  * Meikles 59% 32% US$107 35% 
 
  * Victoria Falls Hotel 49% 36% US$154 115% 
 
  * Cape Grace Hotel 63% 55% ZAR 2726 (2%) 
 
Renovations for the Meikles Hotel North Wing have started following completion 
of the processes associated with the draw down of the PTA bank US$6m loan for 
this purpose. 
 
The Victoria Falls Hotel daily room rates improved to $154 from $137in the 
comparative period. 
 
The Cape Grace Hotel occupancies increased to 63% from 55% in the comparative 
period however average daily room rates were lower at R2,726 compared to R3,699 
for the comparable prior period. The rate is lower for the comparative period 
but is satisfactory for the current market conditions. The CGH's forecast 
occupancies are higher than the previous periods and the hotel is expected to 
maintain a steady, yet dominant position. 
 
Outlook for Zimbabwean hotels is positive given increased tourism activity and 
traffic in the Victoria Falls area and Harare respectively. 
 
TM STORES 
 
  * Revenues up 105% to$ 5.8 million 
 
  * Credit has continued to grow subsequent to our 31 March year end and the 
    value of credit extended now stands at $7 million from $5 million in the 
    comparable period. 
 
The number of our credit accounts increased to 34 000 at 30 June 2011 from 26 
000 at 31 March 2011 and our target remains to grow this book to over 80,000 
active customers by 2013. 
 
The Group is mobilizing long term funding through our finance partners to allow 
credit to be extended for longer periods of up to 2 years from the current 6 
month level. 
 
Limited disposable incomes still constrain this sector in our targeted market 
segments however, the situation is continuously improving and the recent 
increase in civil servants salaries, though small, is expected to stimulate 
spend. 
 
Finance costs will weigh down TM Stores' overall performance in the short-term 
but recapitalization of this division is expected to have a positive impact on 
performance in the medium term. 
 
TANGANDA TEA COMPANY 
 
  * Revenues for the quarter were US$5.4 million, 17% ahead of comparative 
    prior year period 
 
  * Bulk tea production was 1,858 tons versus 1,793 tons in 2010 
 
  * Beverage sales were 723 tons (2010: 610 tons) 19% up 
 
Tea prices improved by 5% due to the improved tea quality however, cost of 
production for both bulk tea and beverages were higher than expected due to the 
higher costs of power, labour, fertilizer and other inputs. The cost of labour 
in particular remains a significant challenge and discussions with the relevant 
authorities for a sustainable wage are being progressed. 
 
New water bottling plant is in transit and once installed in the third quarter 
will increase production to 5.2m litres from the current 1.8m litre capacity 
per annum. 120 hectares of macadamia are now planted of which 90 hectares are 
in production and 70 hectares of our target 120 hectares of avocados have been 
planted so far. 
 
The outlook for bulk tea production is positive and we expect to produce over 
9,000 tons in the current financial year.Tanganda's immediate focus is to 
maximize the production and distribution of packed tea locally and in the 
region. 
 
Group outlook 
 
The Group focus is to return to profitability through increasing both revenues 
and operating margins and on raising capital. 
 
 
END 
 

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