MEIKLES LIMITED
ABRIDGED UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014
CHAIRMAN'S REPORT
The requirements for disclosure to Shareholders are set out in this report.
Shareholders are invited to examine the disclosures.
Group trading was generally within the control of management, with the
exception of Tanganda, where despite an excellent volume of tea produced in the
past season, the company suffered from a fall in international tea prices of
24%, relative to the average achieved in the previous year. Depreciation went
up by 53% to $4.4 million, while occupancy costs and employee costs have
increased by 11% to $10 million and 7% to $23.2 million respectively. These
increases are due to the substantial Group expansion and renovation projects
that have been undertaken in all divisions. The Group has not yet had an
opportunity to benefit fully from these projects. The turnover for the quarter
to September however has exceeded that of the quarter to June by 6%, the main
drivers being TM Supermarkets that grew by 8%, hotels by 36% and Mega Mart by
21%. Stores declined by 38%, but this decline was largely expected due to
rationalization undertaken by the division. Tanganda reduced by 22% relative to
the previous year. TM Supermarkets have traded in two new supermarkets for part
of this period, but have also ceased operating in one supermarket following a
dispute with the owner of the premises.
Year on year turnover for the six months, although not strictly comparable with
the previous period, did increase by 3.1%, with positive contributions to
growth from all divisions other than Stores.
Shareholders will note that total borrowings reduced by US$6.8 million, but
will also note that cash balances reduced. The reduction in cash balances was
mostly due to TM Supermarkets expenditure relating to renovations and
expansion.
Outlook
Shareholders will be pleased to learn that October turnover in TM Supermarkets
relative to the previous financial year, grew by over 11% and that November is
expected to exceed this rate of growth in comparison with November of the
previous year. Hotels grew by 4% in October relative to the previous year.
Combined Retail division turnover does not have comparative figures for the
previous financial year, but Mega Mart continues to grow month on month.
Tanganda is beginning to benefit following the very recent commissioning of new
packing machinery and Shareholders are advised that acceptance by the
International market of the first coffee crop following plantation development
in recent years has been very encouraging.
The Group Guard Service division continues to grow.
Approvals have now been received from the Reserve Bank of Zimbabwe and the
Ministry of Youth, Indigenisation and Economic Empowerment for the
participation of our foreign partners in gold mining in the Matabeleland area.
It is expected that agreements will be finalised in the foreseeable future with
our partners, so that this division will progress as outlined to Shareholders
in previous releases and reports. Shareholders will be advised of developments
as they progress.
Shareholder developments
Shareholders are invited to revisit recent releases made public on 2 October
and 14 October. These releases set out objectives for the way forward for the
Group. Shareholders should note that settlement processes with the RBZ,
although positive, have taken and will take longer to complete in terms of
final implementation. However, the dynamics of the Group and its finances are
well underway as set out in the recent releases.
The Board is mindful that along with changes in the Group's structure there
will be a need for additional Board appointments and for the provision of
further expertise. However, the Board is aware that Shareholder participation
by way of ownership of shares in the Company has remained relatively unchanged
in terms of the composition of the share register. Changes in ownership of
shares may tend to be more dynamic in the future and appointments, both
executive and non-executive will best respond to requirements as these dynamics
unfold.
The Board has recognised publicly, the patience exercised by Shareholders over
recent periods. It is appropriate to provide a return to Shareholders.
Accordingly, the Board will declare a Dividend of 2 (two) cents per share
amounting to $5.1 million out of the 31 March 2014 retained earnings. The
formal declaration of the Dividend is expected to be announced during December
2014.
JRT Moxon
Executive Chairman
25 November 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 3O SEPTEMBER 2014 Unaudited Unaudited
30 September 30 September
2014 2013
US$ 000 US$ 000
Revenue 196,254 190,291
EBITDA (1,534) 1,459
Depreciation, amortisation and impairment (4,402) (4,858)
Non-trading income 6,714 44,674
Finance costs (6,330) (4,070)
(Loss) / profit before tax (5,552) 37,205
Income tax credit 2,734 326
(LOSS) / PROFIT FOR THE PERIOD (2,818) 37,531
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD (2,818) 37,531
(loss) / profit for the period attributable to:
Owners of the parent (1,976) 36,458
Non-controlling interests (842) 1,073
(2,818) 37,531
Total comprehensive (loss) / income attributable to:
Owners of the parent (1,976) 36,458
Non-controlling interests (842) 1,073
(2,818) 37,531
(Loss) / earnings per share (cents)
Basic (0.78) 14.37
Diluted (0.72) 13.53
Headline loss per share (cents) (1.70) (1.96)
Diluted headline loss per share (cents) (1.58) (1.85)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2014
Unaudited Audited
30 September 31 March
2014 2014
US$ 000 US$ 000
ASSETS
Non-current assets
Property, plant and equipment 118,755 109,624
Investment property 249 250
Investment in Mentor Africa Limited 27,657 27,657
Biological assets 34,724 30,156
Intangible assets 1,528 1,528
Other financial assets 12,574 12,760
Balances with Reserve Bank of Zimbabwe 43,738 90,861
Deferred tax 4,977 2,674
Total non-current assets 244,202 275,510
Current assets
Inventories 38,949 36,631
Trade and other receivables 15,964 16,171
Other financial assets 3,797 3,551
Treasury Bills 38,431 -
Cash and bank balances 6,207 22,952
Total current assets 103,348 79,305
Total assets 347,550 354,815
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 153,479 155,455
Equity attributable to equity holders of the parent 169,892 171,868
Non-controlling interests 13,380 14,222
Total equity 183,272 186,090
Non-current liabilities
Borrowings 33,750 37,264
Deferred tax 14,062 14,519
Total non-current liabilities 47,812 51,783
Current liabilities
Trade and other payables 50,106 47,293
Borrowings 66,360 69,649
Total current liabilities 116,466 116,942
Total liabilities 164,278 168,725
Total equity and liabilities 347,550 354,815
CONSOLIDATED
STATEMENT OF
CHANGES IN EQUITY
FOR THE SIX MONTHS
ENDED 30 SEPTEMBER
2014
Share Share Non-distributable Retained Attributable Non Total
capital premium reserves earnings to owners of controlling
parent interests
US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000
2014 - unaudited
Balance at 1 April 2,538 1,316 12,559 155,455 171,868 14,222 186,090
2014
Loss for the period - - - (1,976) (1,976) (842) (2,818)
Balance at 30 2,538 1,316 12,559 153,479 169,892 13,380 183,272
September 2014
2013 - unaudited
Balance at 1 April 2,538 1,316 12,559 121,028 137,441 10,990 148,431
2013
Profit for the - - 36,458 36,458 1,073 37,531
period
Balance at 30 2,538 1,316 12,559 157,486 173,899 12,063 185,962
September 2013
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER
2014
Unaudited Unaudited
30 September 30 September
2014 2013
US$ 000 US$ 000
Cash flows from operating activities
(loss) / profit before tax (5,552) 37,205
Adjustments for:
- Depreciation and impairment of 4,402 2,861
property, plant and equipment
- Net interest 3,282 (39,684)
- Net exchange gains (21) (142)
- Fair value adjustments (3,646) (778)
- Loss on disposal of property, plant 168 3
and equipment
* Impairment of intangible assets - 1,997
Operating cash flow before working (1,367) 1,462
capital changes
(Increase) / decrease in inventories (2,317) 281
Decrease in trade and other receivables 192 5,352
Increase / (decrease) in trade and other 2,799 (4,482)
payables
Cash generated from operations (693) 2,613
Income taxes paid (105) (422)
Net cash generated from operating (798) 2,191
activities
Cash flows from investing activities
Payment for property, plant and (13,763) (9,329)
equipment
Proceeds from disposal of property, 63 119
plant and equipment
Proceeds from sale of Treasury Bills 11,418 -
Payment for other investments (61) (1,403)
Net expenditure on biological assets (921) (896)
Investment income 457 320
Net cash used in investing activities (2,807) (11,189)
Cash flows from financing activities
Net (decrease) / increase in interest (6,803) 5,837
bearing borrowings
Finance costs (6,330) (4,070)
Net cash (used in) / generated from (13,133) 1,767
financing activities
Net decrease in cash and bank balances (16,738) (7,231)
Cash and bank balances at the beginning 22,952 14,198
of the period
Net effect of exchange rate changes on (7) (22)
cash and bank balances
Cash and bank balances at the end of the 6,207 6,945
period
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 results have been extracted from
financial statements prepared in accordance with International Financial
Reporting Standards and the Companies Act (Chapter 24.03) and relevant
statutory instruments (SI33/99 and SI62/96). 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 2014.
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 2014, with no significant impact arising from new and
revised International Financial Reporting Standards (IFRSs).
4. Critical accounting judgements and key sources of estimation uncertainty
The balances with the Reserve Bank of Zimbabwe and the terms of the Treasury
Bills on hand are currently the subject of discussions. The outcome of these
discussions will influence the final amount to be issued as Treasury Bills and
the terms thereof, which may have an effect on the amounts recognised in these
financial statements.
5. Segment information
Unaudited Unaudited
30 September 30 September
2014 2013
US$ 000 US$ 000
Revenue
Supermarkets 167,995 166,032
Hotels 8,814 7,767
Agriculture 11,135 10,916
Stores 3,773 6,499
Corporate* 4,537 (923)
196,254 190,291
EBITDA
Supermarkets 3,182 4,099
Hotels 1,396 473
Agriculture (878) 340
Stores (1,957) (1,119)
Corporate* (3,277) (2,334)
(1,534) 1,459
The EBITDA figures are before Group management fees.
Unaudited Audited
30 September 31 March
2014 2014
US$ 000 US$ 000
Segment assets
Supermarkets 77,635 80,918
Hotels 50,154 50,720
Agriculture 67,837 64,817
Stores 24,979 32,587
Corporate* 126,945 125,773
347,550 354,815
Segment liabilities
Supermarkets 49,108 51,880
Hotels 20,592 20,556
Agriculture 41,707 38,601
Stores 14,960 21,906
Corporate* 37,911 35,782
164,278 168,725
*Intercompany transactions and balances have been eliminated from the corporate
amounts.
Corporate also includes other subsidiaries that are immaterial to warrant
separate disclosure.
Inter-segment sales amounted to $1,673,114 (2013: $1,342,640).
Unaudited Audited
30 September 31 March
2014 2014
US$ 000 US$ 000
6. Net borrowings
Non-current borrowings 33,750 37,264
Current borrowings 66,360 69,649
Total borrowings 100,110 106,913
Cash and cash equivalents (6,207) (22,952)
Net borrowings 93,903 83,961
Unaudited Unaudited
30 September 30 September
2014 2013
US$ 000 US$ 000
7. Depreciation, amortisation and impairment
Depreciation of property plant and equipment 4,324 2,796
Impairment of property, plant and equipment 77 63
Depreciation of investment property 1 2
Impairment of intangible assets - 1,997
4,402 4,858
8. Non-trading income
Net investment revenue 3,047 43,754
Fair value adjustments on biological assets 3,646 778
Net exchange gains 21 142
6,714 44,674
Net investment revenue includes $2,6 million (2013: $43.4 million) earned on
the deposit at
RBZ. The 2013 amount incorporates the impact of interest negotiations.
9. Other information
Depreciation and impairment - property, plant and 4,402 2,861
equipment
Capital expenditure 13,763 9,329
Capital commitments authorised by the Directors but 9,899 16,298
not contracted
Group's share of capital commitments of joint 120 182
operation
10. Contingent liabilities
There is no material financial impact arising from events that occurred since
the publication of the last annual financial statements.
11. Treasury Bills
The Treasury Bills were issued by the Government of Zimbabwe on 11 June 2014,
with a coupon rate of 2% payable bi-annually. The Treasury Bills on hand are
split equally between tenures of 4 years and 5 years.
12. Events after reporting date
There have been no significant events after the reporting date at the time of
issuing this report.