CHAIRMAN'S UPDATE
Shareholders are informed that the Zimbabwe Stock Exchange,("ZSE") have
requested the Company to advise Shareholders more fully on matters relevant to
the funds held by the Company on deposit at the Reserve Bank of Zimbabwe
("RBZ"). Meikles Limited has received conflicting advice from the ZSE and, as a
result, considers an update to the community at large to be appropriate, rather
than a statement to Shareholders.
Observers will have noted the increase in the value of funds on deposit as set
out in the Group's audited financials for the year ended 31 March 2014 and the
unaudited mid-year financials for the financial year ended 31 March 2015.
Shareholders have been advised on several occasions on how these sums have been
calculated and, indeed, the terms negotiated with the relevant authorities in
mid 2013. The calculation is simply eight per cent (8%) compound interest on
the capital on deposit, to be accrued until repayment is effected. It is known
that this is, in itself, a compromise by the Company as other creditors have
been given up to twelve per cent (12%). This includes a bank in which the Group
was previously a shareholder, so that the status on interest granted to others
is known to the Company. This fact is brought to the attention of observers, so
that they are in a position to appreciate that the Company has been flexible in
its position in order to achieve progress in the negotiations. It should be
understood that the Company is the largest indigenous corporate creditor of the
RBZ. Negotiations have been conducted in a fair and arm's length manner and due
to the fact that the quantum is so substantial, negotiations are being
conducted with mutual respect between the parties.
The deposit, together with interest, represents a very substantial asset to the
Group. The recognition of the sum owed to the Company is the result of some
years of negotiation and the Company's management deserves recognition for this
achievement. The community should be alive to the fact that the entire Group
has gained in morale and commitment as a result of continuous progress on the
recovery of funds from the RBZ.
Over this period the Group has been aware that most observers in the community
have tended to be pessimistic with regard to the chances of recovery of these
funds. Indeed those involved in the negotiations have received little support
or encouragement from investors, analysts, brokers, or the community at large
in its endeavour to recover funds. The Company has generally received
expressions of doubt that any recovery will be successful. The doubt is still
prevalent in the business community and the Group as a whole has witnessed this
attitude with regret because it has not assisted the Company's negotiating
stance or strength in negotiation.
As stated to Shareholders recently a substantial part of funds due and
anticipated have been committed to the Group by the present management of the
RBZ. For the benefit of the skeptics this has been committed in writing.
Performance is in progress, but timelines committed to by the RBZ, have not
been completely adhered to.
The ultimate value of the funds which have largely, but not entirely, been
committed in the form of Treasury Bills ("TB's") is still unknown. The greater
number of these TB's which are about to be issued with satisfactory terms are
still to be received by the Company and are still to be placed in the market.
The Company is of the opinion that it cannot predict matters pertaining to the
receipt, or value of the funds, with precision.
For reasons now outlined, progress is not to be negotiated in the public
domain. It is firmly believed that negotiations debated in public will not be
in the best interest of stakeholders. This view is held by other participants
in the negotiating process. The Company is not alone in expressing this
opinion. Observers are asked to understand this negotiating stance. It is not
understood by the ZSE, which remains a point of disagreement between the
Company and the ZSE, but it appears that the ZSE is isolated in this belief,
certainly as far as the parties to the negotiations are concerned.
The Company would have welcomed some encouragement from the investing community
and others during 2012, 2013, 2014 and 2015 to date. The Company considers it
possible that the authorities may also have welcomed recognition of their
efforts to resolve these financial issues, but this has not materialized.
Instead, the Company is aware from statements made at its own Annual General
Meeting, from press articles in both Zimbabwe and South Africa and from the
Company's general intelligence systems that there are individuals who are
working against the Company's interests. These efforts that began in October
2014 overtly, but earlier in practice, are a concerted effort by individuals,
including at least one Member of Parliament, some but certainly not all
ex-employees who are unhappy following their removal from office, which in fact
was well deserved, and now more recently the ZSE, to disrupt negotiations on
the settlement of sums due to the Company, the placing of TB's on the market
and generally to damage the Company's reputation and well being. The result has
been damaging. Observers will already be aware of the overt damage done. Many
observers have witnessed events or read articles in the media, but not
necessarily the considerable covert damage.
Shareholders in general should note that there are a large number of extremely
loyal individuals amongst ex-employees who have retired or have left the Group
for various reasons. The Group is grateful for their continued support. They
should not be confused with those ex-employees who are determined to damage the
Group and its stakeholders. Similarly, the Company is aware and observers
should know that there are individuals in the business environment and
community at large who for various reasons do not want the Company to receive
its dues from the RBZ, or realize appropriate value from the funds, as they
become available.
There has been a delay of some months in the receipt of funds due. This
delay has been caused, largely in the opinion of those involved in the
negotiating process, by the activities of those mentioned above. The community
is assured that the delay is to be overcome. In the meantime the delay has
resulted in further damage to the Group as a whole, both in the final quantum
of funds to be received and just as importantly a delay in the implementation
of the Group's operating strategy. This strategy, together with strategic plans
for the enhancement of Group values, has been disclosed to all stakeholders.
Implications arising from the delay will only become apparent in their severity
in future months and will, where necessary, be communicated to the public.
On a positive note, it can now be disclosed that arrangements finalized with
the RBZ will secure the implementation, although delayed, of a substantial part
of Group operating strategic objectives. The implementation of the strategic
plans for the enhancement of Shareholder values are of necessity delayed, but
will resume as soon as the Company's forward direction from a Shareholder
perspective has been determined.
The Company has recently made an effort to interact and perhaps reconcile with
the ZSE. However, it would appear that such an effort is futile. The Company
representatives who met with the ZSE regrettably found that there may initially
have been some common ground but subsequent inconsistencies from within the ZSE
have placed doubt on this process. It is now appropriate that the
Company proceed with litigation. The Company is the plaintiff and is demanding
substantial damages from the ZSE, and certain of its officers in their personal
capacities. Shareholders will be kept advised of progress.
The Company will now consider how best to advance the Group's interests in the
best possible manner and which may perhaps be outside the framework of the ZSE.
The Company will examine and move towards implementation of methods aimed at
ensuring the financial wellbeing of Shareholders in their capacity as owners of
shares in the Company. The Company will keep Shareholders advised of
developments.
The Company hereby expresses its appreciation to the RBZ and to all those who
have facilitated progress in the realization of value to a very important
Company asset, namely the deposit with the RBZ.
Despite continued and some very personal attacks on the Company and its
offices, observers may be interested to know that a highly regarded
international organization has shortlisted the company for an award for the
best Corporate Governance in Zimbabwe.
J R T MOXON
EXECUTIVE CHAIRMAN