MEIKLES LIMITED
ABRIDGED UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2013
CHAIRMAN'S STATEMENT
It gives me great pleasure to comment on the Group performance for the six
months ended 30 September 2013. Although the current economic climate is
challenging, we believe that we are well placed to take advantage of an
economic recovery.
Review of operations
Group results for the six months under review were enhanced by non-trading
income. This income is largely investment income and is more substantial than
that received in the half year to 30 September 2012. However, fair value gains
on biological assets were lower than the comparative period.
Operating results were affected by slow growth in the retail divisions as
demand softened. Trading in the three months to the end of June 2013 was more
satisfactory than the subsequent period to the end of September 2013, which has
seen deterioration in trade in the formal market. Revenues for the current
period were marginally up on prior period. Improved earnings in Tanganda, and
to a lesser extent the hotels, were off-set by lower profits in the retail
divisions.
Depreciation increased due to the substantial renovation and expansion projects
implemented by the Group.
Interest costs were higher due to increased borrowings to fund the renovation
and expansion projects. Working capital was actively managed following improved
controls on stocks, debtors and creditors.
There has been further rationalization of the departmental stores together with
a drive to create greater values in our properties. A new addition to the
stores is to be launched, named Meikles Mega Market ("MMM"). This new concept
will service and support the lower end of the market. The first unit will be
launched in Harare in early December 2013 and will be extended to other
locations next year.
TM Supermarkets are now well advanced in their renovation initiatives and
further branch expansion is under way. The substantial funding requirements
were recently put in place.
Funds held on deposit at the Reserve Bank of Zimbabwe
There are indications that a solution to our long standing deposit at the
Reserve Bank of Zimbabwe ("RBZ") may be forth coming shortly. When this
solution is achieved, the Group expects to retire all local short term
borrowings, and if necessary assist Group companies with the redemption of term
loans on due date. The Group will also be in a position to provide funding for
further working capital in the Group divisions. There will be funding available
to support the Employee Share Schemes, which are an important part of the
Group's indigenization processes. Due to liquidity constraints, capital
expenditure and working capital requirements, the Group is unable to pay an
interim dividend. However, on repayment of the RBZ deposit there should be
sufficient capacity to resume the payment of dividends. A solution to this
outstanding issue is undoubtedly the most important matter for all stakeholders
in the Group and has been the single largest impediment to growth and
stability.
Outlook
The second six months of the financial year will continue to be dominated by
growth in non-trading income, primarily investment income. There are
anticipated gains in investments that will be accounted for in the year end
financials. These gains may include the South African interests, where the
Group has substantial performance expectations, and a first contribution from
the Group's mining activities.
In the short term, it is expected that the retail divisions will continue to
encounter demanding environmental challenges particularly tight market
liquidity conditions and low disposable incomes. However, TM Supermarkets will
look to benefit from the renovation of its units and the expansion of its
branch network, which is gaining momentum.
The new stores concept is expected to provide a good addition to the Group's
overall retail activities. Tanganda has had an excellent start to the
agricultural growing season and the weather forecast for the remainder of the
season is positive. The newly renovated Meikles Hotel, together with the
renovation of the Victoria Falls Hotel will provide a better performance
platform for the hospitality division.
JRT Moxon
Chairman
28 November 2013
MEIKLES LIMITED
ABRIDGED UNAUDITED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED
30 SEPTEMBER 2013
UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013
6 months to 6 months to
30 September 30 September
2013 2012
US$ 000 US$ 000
CONTINUING OPERATIONS
Revenue 190,291 189,491
Earnings before interest, taxation, depreciation 1,459 2,278
and amortisation
Depreciation, amortisation and impairment (2,861) (2,267)
Non-trading income 42,677 3,073
Finance costs (4,070) (3,241)
Profit / (loss) before tax 37,205 (157)
Income tax credit / (expense) 326 (249)
Profit /(loss) for the period from continuing 37,531 (406)
operations
DISCONTINUED OPERATIONS
Profit for the period from discontinued - 1,173
operations
PROFIT FOR THE PERIOD 37,531 767
TOTAL COMPREHENSIVE PROFIT FOR THE PERIOD 37,531 767
Profit / (loss) attributable to:
Owners of the parent 36,458 (666)
Non-controlling interests 1,073 1,433
37,531 767
Total comprehensive profit / (loss) attributable
to:
Owners of the parent 36,458 (666)
Non-controlling interests 1,073 1,433
37,531 767
Earnings / (loss) per share - cents
Basic 14.37 (0.26)
Continuing operations 14.37 (0.72)
Discontinued operations - 0.46
Diluted 13.53 (0.25)
Continuing operations 13.53 (0.68)
Discontinued operations - 0.44
Headline earnings / (loss) per share - cents (1.96) (0.71)
Continuing operations (1.96) (0.71)
Discontinued operations - -
Diluted headline earnings / (loss) per share - (1.85) (0.67)
cents
Continuing operations (1.85) (0.67)
Discontinued operations - -
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2013
Unaudited Audited
30 September 31 March
2013 2013
US$ 000 US$ 000
ASSETS
Non-current assets
Property, plant and equipment 105,492 99,063
Investment property 252 254
Investment in Mentor Africa Limited 27,657 27,657
Biological assets 23,193 21,521
Intangible assets 124 2,204
Other financial assets 12,735 12,693
Balances with Reserve Bank of Zimbabwe 87,271 40,514
Deferred tax 2,135 1,997
Total non-current assets 258,859 205,903
Current assets
Inventories 36,427 36,708
Trade and other receivables 11,880 17,283
Other financial assets 2,766 1,405
Cash and bank balances 6,945 14,198
Total current assets 58,018 69,594
Total assets 316,877 275,497
EQUITY AND LIABILITIES
Capital and reserves
Share capital 2,538 2,538
Share premium 1,316 1,316
Non-distributable reserves 12,559 12,559
Retained earnings 157,486 121,028
Equity attributable to equity holders of the 173,899 137,441
parent
Non-controlling interests 12,063 10,990
Total equity 185,962 148,431
Non-current liabilities
Borrowings 22,060 7,417
Other liabilities 17,243 14,534
Total non-current liabilities 39,303 21,951
Current liabilities
Trade and other payables 41,566 46,263
Short term borrowings 50,046 58,852
Total current liabilities 91,612 105,115
Total liabilities 130,915 127,066
Total equity and liabilities 316,877 275,497
UNAUDITED CONSOLIDATED
STATEMENT OF CHANGES IN
EQUITY
FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2013
Share Share Non-distributable Retained Disposal Attributable Non- Total
capital premium reserves earnings group to owners of controlling
capital parent interests
and
reserves
US$ 000 US$000 US$000 US$000 US$000 US$000 US$ 000 US$000
30
September
2013
Balance 2,538 1,316 12,559 121,028 - 137,441 10,990 148,431
at 1
April
2013
Profit - - - 36,458 - 36,458 1,073 37,531
for the
period
Balance 2,538 1,316 12,559 157,486 - 173,899 12,063 185,962
at 30
September
2013
30
September
2012
Balance 2,538 1,316 6,233 104,581 19,644 134,312 7,495 141,807
at 1
April
2012
(Loss) / - - - (666) - (666) 1,433 767
profit
for the
period
Transfer - - 6,326 13,318 (19,644) - - -
on sale
of
disposal
group
Balance 2,538 1,316 12,559 117,233 - 133,646 8,928 142,574
at 30
September
2012
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013
30 September 30 September
2013 2012
US$ 000 US$ 000
CONTINUING AND DISCONTINUED OPERATIONS
Cash flows from operating activities
Operating cash flow before working capital 1,462 2,318
changes
Decrease / (increase) in inventories 281 (5,070)
Decrease / (increase) in trade and other 5,352 (405)
receivables
(Decrease) / increase in trade and other (4,482) 12,408
payables
Cash generated from operations 2,613 9,251
Income taxes paid (422) (127)
Net cash generated from operating activities 2,191 9,124
Cash flows from investing activities
Payment for property, plant and equipment (10,211) (9,294)
Proceeds from disposal of property, plant and 119 69
equipment
Increase in intangible assets - (1,640)
Net movement in service assets (14) (102)
Payment for other investments (1,403) (90)
Investment income 320 180
Net cash used in investing activities (11,189) (10,877)
Cash flows from financing activities
Proceeds from interest bearing borrowings 5,837 5,138
Finance costs (4,070) (3,241)
Net cash generated from financing activities 1,767 1,897
Net (decrease) / increase in cash and bank (7,231) 144
balances
Cash and bank balances at 1 April 14,198 8,427
Net effect of exchange rate changes on cash and (22) (183)
bank balances
Cash and bank balances at 30 September 6,945 8,388
NOTES TO THE ABRIDGED UNAUDITED FINANCIAL STATEMENTS
1. Basis of preparation
The abridged unaudited financial statements are prepared from statutory records
that are maintained under the historical cost basis except for biological
assets and certain financial instruments which are measured at fair value.
Historical cost is generally based on the fair value of the consideration given
in exchange for assets.
2. Statement of compliance
The Group's abridged unaudited financial statements have been prepared in
conformity with International Financial Reporting Standards (IFRS). These
abridged unaudited financial statements do not include all information and
disclosures required to fully comply with IFRS and should be read in
conjunction with the Group's annual report for the year ended 31 March 2013.
3. Accounting policies
The Group's interim abridged unaudited financial statements have been prepared
in accordance with IAS 34 - Interim Financial Reporting. Accounting policies
and methods of computation applied in the preparation of these abridged
unaudited financial statements are consistent, in all material respects, with
those applied in the preparation of the Group's annual financial statements for
the year ended 31 March 2013 with no significant impact arising from new and
revised International Financial Reporting Standards (IFRS).
4. Segment information
Unaudited Unaudited
30 September 30 September
2013 2012
US$ 000 US$ 000
Revenue
Continuing operations
Supermarkets 166,032 163,769
Hotels 7,767 7,710
Agriculture 10,916 10,597
Stores 6,499 8,558
Intra-group sales (923) (1,143)
190,291 189,491
EBITDA
Continuing operations
Supermarkets 4,099 5,211
Hotels 473 448
Agriculture 340 (1,359)
Stores (1,119) (568)
Corporate* (2,334) (1,454)
1,459 2,278
Unaudited Audited
30 September 31 March
2013 2013
US$ 000 US$ 000
Segment assets
Supermarkets 58,325 60,943
Hotels 51,665 47,719
Agriculture 52,426 52,852
Stores 34,116 37,408
Corporate* 120,345 76,575
316,877 275,497
Segment liabilities
Supermarkets 33,708 38,516
Hotels 20,781 16,421
Agriculture 30,223 29,631
Stores 14,771 36,890
Corporate* 31,432 5,608
130,915 127,066
*Intercompany transactions and balances have been eliminated from the corporate
amounts. Corporate also includes other subsidiaries that are not allocated to a
reportable segment.
5. Non-trading income
Unaudited Unaudited
30 September 30 September
2013 2012
US$ 000 US$ 000
Non-trading income comprises:
Investment revenue 43,754 1,130
Fair value adjustments (1,219) 2,126
Net exchange gains / (losses) 142 (183)
42,677 3,073
Included in investment revenue is interest accrued on the funds on deposit at
the RBZ.
6. Other information
Capital commitments authorised by the Directors but 16,298 12,721
not contracted
Group's share of capital commitments of joint 182 1,500
venture
For further information contact Onias Makamba on omakamba@meikleslimited.co.zw
or +263-4-252068/70.