TIDMMIK
MEIKLES LIMITED
ABRIDGED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2015
CHAIRMAN'S STATEMENT
I have pleasure in presenting the report for the financial year ended 31 March
2015.
Meikles Limited comprises six operating segments as follows:
Hospitality
Stores
Supermarkets
Agriculture
Financial Services
Guard Services
Turnover for the Group increased by 8%. All segments contributed to the
increase except for Agriculture, which was adversely affected by the decrease
in world tea commodity prices. The increased turnover suggests growth in market
share, a key objective that is expected to continue in the 2016 financial year,
particularly in the retail segments.
Renovations to and the expansion of Group properties and operations increased
depreciation costs. In addition, employee costs relative to turnover increased
due to the need to employ personnel and develop their skills prior to their
ultimate placement.
Interest charges remain at unacceptable levels, and reducing them will depend
on the timing of the recovery of the outstanding RBZ debt.
The Group experienced currency exchange losses on its investment in South
Africa due to the devaluation of the South African rand against the US dollar.
The Stores and Meikles Mega Market incurred substantial restructuring
expenditure including regrettable - but necessary - reductions in employee
numbers. This was partly a result of the Group being unable to access the debt
due by the RBZ within the expected time frame, which meant the segment was
unable to secure adequate investment in inventory and the resultant momentum.
The Group expects to progressively overcome this problem in the forthcoming
financial year, and believes Stores and Meikles Mega Market are poised for
substantial expansion and a return to profitability.
BALANCES DUE BY THE RESERVE BANK OF ZIMBABWE (RBZ)
There has been public debate around the amounts due from the RBZ to the
Company, and its ultimate settlement.
Full disclosure of the implications of this matter is made in notes 4 and 5 of
the abridged financial results.
The Company has recovered a significant portion of the original debt owed by
the RBZ as a result of the tireless efforts of the Company's executives in
enforcing/implementing/pursuing the agreements reached with the RBZ.
Negotiations have been and will continue to be both difficult and sensitive.
The outcome cannot be predicted with certainty even when the law appears to
present a clear resolution. To alleviate suggestions that Company officials
mislead Shareholders and others on the recoverability of sums due and inflate
financials accordingly, it has been decided to account for each receivable only
as and when it is received ,or as and when receipt is confidently assured .
MENTOR AFRICA LIMITED
The intrinsic value of Mentor Africa - expressed in South African rand -
continued to increase.
The devaluation of the South African rand against the US dollar over the past
year was expected and noted in the 2014 Annual Report. As a result of the South
African rand devaluation and the dividend referred to below, the carrying value
of the Group's investment in Mentor Africa (denominated in US$) has been
written down in the current year by US$4.7 million to US$22.9 million. Further
deterioration in the value of the South African rand against the US dollar may
continue in the future, in common with other emerging market currencies.
On 30 March 2015, Mentor Africa declared a dividend of ZAR49.5 million (before
South African dividend withholding taxes) to its shareholders. The Group's
share of this dividend, being ZAR17.3 million (US$1.4 million) before tax, is
included in the Statement of Profit or Loss and Other Comprehensive Income for
the financial year ended 31 March 2015 after deducting the associated
withholding tax. The gross dividend represents a dividend yield of
approximately 6%.
MEIKLES FOUNDATION
Meikles Foundation was born out of a recognition of the need to connect with
our communities. Our initial efforts focused on educational, dance, music,
theatre and other community projects, such as a knitting programme in
Kuwadzana, Hatcliffe Extension, and in the prisons. In Hatcliffe Extension we
are also supporting an innovative school started by Hatcliffe residents aimed
at ensuring that the children of third-generation squatters become enrolled in
the school system. We are involved in a very successful early reading
programme, and numerous other initiatives.
Our biggest and proudest drive, however, is a job-creation programme that aims
to create sustainable businesses in the communities that we serve. Our
footprint means that the Company reaches far and wide and we believe that by
working with these communities, we can effect positive transformation.
HOSPITALITY
The Group had high expectations for the financial year ended 31 March 2015,
based on the successful completion of the first phase of refurbishments at the
Meikles Hotel and The Victoria Falls Hotel. Phase two of the refurbishment of
The Victoria Falls Hotel will start in the second half of the 2015 calendar
year and should be completed by July 2016.
Trading during the financial year was satisfactory. Revenue was US$16.4 million
(2014: US$15.6 million) up 5% over the previous financial year. This increase
was assisted by a 13% rise in food revenue at Meikles Hotel and a 15% growth in
Revenue per Available Room (RevPAR) at The Victoria Falls Hotel.
EBITDA for the year was US$1.9 million (2014: US$1.3 million) reflecting a 57%
increase on the previous financial year and is testimony to the resilience of
Group operations.
These results were achieved despite serious obstacles. First, and now largely
out of the public eye, the outbreak of Ebola in West Africa created a negative
perception in the minds of tourists looking to Africa as a destination,
including destinations thousands of miles from the nearest infected countries
such as ourselves and the rest of Southern Africa.
Second, more than 75% of our hotel guests are foreign visitors and the
introduction in January 2015 of valued added tax (VAT) at the standard rate of
15% on accommodation charged to foreigners further hindered revenue growth. The
introduction of VAT could not immediately be passed onto guests in full given
the weak demand.
The introduction of VAT has effectively made Zimbabwe an expensive destination,
and the South African market, given the depreciating rand, was significantly
affected. This has impacted negatively on occupancy growth in the last quarter
of the financial year.
The hotels remain members of the Leading Hotels of the World and have kept
their place as market leaders in Zimbabwe in terms of standard of products and
services.
In November 2015 Meikles Hotel will celebrate its 100th birthday, marking a
century of delivering hospitality excellence in Zimbabwe.
STORES - MEIKLES MEGA MARKET AND MEIKLES STORES
The segment's revenue for the financial year ended 31 March 2015 was US$17.3
million [2014: US$14.5 million]. Total operating costs increased by 10%, mainly
due to occupancy costs for new stores and staff rationalisation. EBITDA loss
was US$5.7 million [2014: loss of US$2.5 million].
Cost containment remained a priority with measures being implemented to reduce
costs, and improve profitability and overall operational efficiencies. As part
of this, a staff rationalisation exercise was concluded in March 2015 to ensure
uniform and appropriate levels of staff in each unit. The exercise yielded a
22% savings on employee costs.
Stocking has improved with the increased availability of funding and will
continue with the introduction of direct importation of Key Value Items (KVIs).
This is expected to generate significant cost savings and improve trading
margins in the financial year ending 31 March 2016.
Two Meikles Stores will be opened in Gweru and in Harare. In addition, the
units in Bulawayo and Mutare are being redesigned to accommodate both the
Stores and Meikles Mega Market divisions in the space currently occupied by
Stores alone.
Meikles Stores Masvingo was reopened with reduced trading space and with
overheads realigned.
In a new development, Stores plans to launch a concept store - The M Store - in
the 2016 financial year. The M Store, which will sell clothing, will trade on a
cash basis and target the less affluent consumer segment of the market.
Three additional Meikles Mega Market branches were opened on Robert Mugabe
Avenue and Rezende Street in Harare, and in Masvingo CBD respectively. The
fifth and sixth Meikles Mega Market branches have been opened in Mabvuku in
Harare and Gweru in the first quarter of the 2016 financial year.
Work is already in progress at additional Meikles Mega Market sites such as
Graniteside in Harare, and Meikles Mega Market plans to open an additional five
branches in other city centres around Zimbabwe, including Kwekwe, Kadoma,
Chinhoyi, Bindura, and Chitungwiza.
Meikles Mega Market is actively exploring additional sites in high-density
areas in and around Harare. The locations will use a low-overhead model
characterised by modest rentals, limited but high volume KVIs offering and a
minimal staff complement. This will enable Meikles Mega Market to supply
product directly to the large numbers of underserved customers in these areas
of the country.
Despite funding constraints arising from on-going issues relating to balances
due from the Reserve Bank of Zimbabwe, which compromised the operations and
restricted growth during the financial year, the segment expects substantial
progress beginning in the second quarter of the 2016 financial year. This will
include adequate levels of funding for appropriate stock holding and the
expansion of Meikles Mega Market units. With the expanded footprint and
realigned overheads, the segment is expected to return to profitability by the
third quarter of the 2016 financial year.
The segment continues to strengthen its market position by offering the lowest
prices and more direct access to consumers. The segment foresees strong growth
in market share through continued geographic expansion and the rollout of
marketing strategies aimed at increasing brand visibility and the customer
value proposition.
SUPERMARKETS - TRADING AS TM AND PICK N PAY
The company achieved turnover of US$360 million [2014: US$333.9 million] for
the financial year ended 31 March 2015, an increase of 7.9% despite a negative
rate of inflation in supermarket-related trading for the same period. Gross
profit increased by 8.5% to US$64 million [2014: US$59 million]. The growth
indicates an increase in market share.
The footprint into our shops increased year-on-year by 11.29%. Investment in
replacement and expansion projects has been viewed favourably by the consumers,
reflected in individual branch sales growth ranging between 25% to more than
100%, depending on the location.
Trading during the year was affected by the closure of one of the Chinhoyi
branches for 101 days due to a fire and the closing of Kwekwe for 84 days for
refurbishments. Other branches such as Orr Street in Harare, Kadoma, Hyper in
Bulawayo, and Bindura were refurbished but remained open to minimize the loss
on sales. The Chivhu store was opened during the period under review.
The upgrade of our flagship Borrowdale store and the surrounds into what will
be Harare's premier retail centre is now on track and will be concluded by
October 2016. In addition, three major stores are expected to open during the
2016 financial year, and an additional US$6.5 million has been budgeted for
refurbishments across the branch network.
The funding of the new stores and refurbishments was provided by the term loan
previously disclosed to shareholders, which is presently being redeemed over
the term of the loan from trading income and cash flows.
AGRICULTURE
Tanganda has been developing all available land on the estates and has now
reached maximum land utilisation. To expand operations, alternative, available
and suitable land is being pursued.
Tanganda has been awarded the Rain Forest Alliance Certificate, an important
international accreditation, which has contributed significantly to the ability
to move bulk tea into the market. The certification has given the company
access to some of the largest international tea traders and has yielded a 7%
increase on the bulk tea price during the month of March 2015, which augers
well for the future. Tanganda believes this accreditation will go a long way
towards softening the blow experienced by the decreased world tea price, which
was largely due to Kenyan surplus on the market, and ensuring Tanganda bulk tea
commands a strong price on world markets.
Tanganda's revenue for the financial year ended 31 March 2015 was US$21.1
million [2014: US$22.6 million].
Challenging weather patterns during the year saw a reduction in the volume of
bulk tea produced over the prior year. Bulk tea production to 31 March 2015 was
8 609 tonnes, 4% below the expected 9 000 tonnes.
The cost of made tea is in line with expectation, with stringent cost controls.
Tanganda is encouraged by the new crops of coffee, avocados and macadamias. The
selling prices are good and the crop quality is excellent. This year coffee
yielded 280 tonnes, avocados 180 tonnes, and macadamias 200 tonnes of nut in
the shell. Tanganda expects a progressive maturity of coffee by 2018, avocados
by 2019, and macadamias by 2020, and yields will increase exponentially.
Application has been made for Global GAP Certification for the avocado crops.
Tanganda has installed state-of-the-art packaging machinery, which will improve
quality and reduce costs. As packed tea offers a higher margin, this will help
achieve Tanganda's objective of increasing the ratio of packed to bulk tea from
25:75 to 50:50. Tanganda's intention is to grow market share through concerted
commercial efforts in South Africa in particular, as well as other SADC
countries with the potential for expansion across the region being actively
explored.
MEIKLES FINANCIAL SERVICES
Meikles Financial Services(MFS) was created to provide financial services to
our customers who shop at any of the stores and supermarkets within the Meikles
Group. The Group's aim is to attract customers by offering financial services
with the advantage of the Group's nationwide presence and extended opening
hours.
MFS, at the time of the writing of this Statement, has completed its roll-out
across Harare and offers a wide range of financial services, including:
* Agency banking on behalf of multiple major Zimbabwean banks. There has been
a growing trend by retail banks to move into agency banking thereby
increasing their presence while reducing the costs associated with branch
management.
* Cash-out services in partnership with several International Money Transfer
Operators. Money sent home by the Zimbabweans in the Diaspora contributes a
significant amount to the nation's GDP.
* Bill payment services for companies and utilities such as ZESA, City of
Harare, and DStv.
MFS's core product, expected to be live in July of 2015, is a revolutionary
"lite" banking solution through a debit card - MyCash - that creates a
transactional account, similar to a current account, that is linked to a
customer's cell phone. This account will enable the holder to perform a range
of banking transactions, including balance enquiries, air-time purchases,
bill-payments, shopping at any Zimswitch enabled Point of Sale (POS) device,
and cash withdrawals from any Zimswitch enabled ATM. The holder will be able to
send money to other MyCash cardholders as well as any Zimswitch enabled bank
account.
A Loyalty programme will be attached to MyCash, to encourage shoppers to use
the card in any supermarket or store within the Meikles Group. This will also
give Meikles best in class consumer analytics capabilities for more effective,
targeted marketing in the future.
The Sponsor Bank for MyCash is the People's Own Savings Bank (POSB). Agency
Banking Agreements have been signed with four retail banks - CABS, CBZ, FBC and
ZB, and others are under negotiation.
MFS has built vibrant, colourfully branded banking kiosks, in all Harare-based
supermarkets and stores within the Group. Nationwide roll-out will be
completed by the end of October 2015.
MFS is expected to become a significant source of revenue growth for the Group
in the 2016 financial year.
MEIKLES GUARD SERVICES
Meikles Guard Services' objective for the financial year ended 31 March 2015
was to expand the number of contracts from outside the Group and a large part
of this objective was fulfilled. Security tenders have been lodged for
embassies, financial institutions, as well as several entities in the
commercial sector. In addition, outside parties have expressed interest in
having their own staff attending the Meikles Guard Services training courses.
MINING
Meikles Limited, in conjunction with its partners, has been both exploring and
identifying mining opportunities in Zimbabwe. Efforts in this regard are
ongoing.
GOVERNANCE
Meikles Limited continues to promote good governance across all subsidiaries.
This was reflected when the Company won an international "Best Corporate
Governance in Zimbabwe" Award from the London-based Capital Finance
International. The Award is globally recognised and previous winners include
Morgan Stanley, Emirates Airlines, Exxon Mobile, and ABSA Bank.
Meikles has also been selected for Africa in the World Economic Forum's "Global
Growth Companies of 2015". This annual award is bestowed on a handful of
companies and is based on the criteria of continued and sustainable growth in
their market, influence in their industry, national or regional context, an
executive management team that displays visionary leadership, and their
commitment as a corporate citizen to positively influence the societies and
regions in which they operate. The regional winners from across the world will
meet in China in September of 2015 where a global winner will be announced. In
addition Meikles Limited was invited to join the World Economic Forum. Meikles
is the first company in Zimbabwe to ever receive such an invitation.
Reference has been made to the possible restructuring of certain subsidiaries
within the Group. If implemented, this will require further additions to the
Board of Directors in order to ensure appropriate governance. The Group,
therefore, expects to appoint an additional independent non-executive director,
in addition to Mr James A. Mushore, who was appointed to the Board on 30 April
2015. This will bring the number of independent non-executive directors to
three, a collective majority on the board.
OUTLOOK
Given local and regional opportunities, the possibility of restructuring
certain subsidiaries in the future cannot be ruled out. Hospitality is looking
at ventures in Zimbabwe and within the region. Recently, the Group was invited
by the government of the Democratic Republic of Congo (DRC) to discuss
potential investment and cooperation opportunities between DRC and Meikles
Limited in the areas of agriculture, hospitality and retail.
It is important to note that subsequent to 31 March 2015, the Company has sold,
or is about to enter into agreements to sell, Treasury Bills to the nominal
value of US$37.6 million and will then have no further Treasury Bills to sell.
The Company is confident that it will receive value for the remaining debt due
by the RBZ, which, in the Company's opinion, amounted to US$46.2 million at 31
March 2015. The particularities, however, of the provision for the sums owed
by the RBZ (as explained in notes 4 and 5 of the abridged financial results)
reflect the truly unique circumstances under which Meikles Limited finds itself
currently.
International Financial Reporting Standards (IFRS), to which Meikles is bound,
in their crafting never envisaged a debt recovery process as dynamic and
prolonged as the one we find ourselves in and require a line in the sand to be
drawn on paper that, in the view of Meikles Limited, does not reflect reality
but which must be adhered to for reporting purposes. Commonly accepted audit
procedures also left our Auditors constrained as to the process that must be
followed, resulting in the provision of US$14.7million as well as a recognition
of the realized and unrealized losses of US$9 million and US$12.5 million
respectively. Shareholders are once more referred to comments made in this
statement under the heading Balances due by the RBZ.
DIVIDEND
The Board approved an interim dividend of US2 cents per share on 23 December
2014. The Board has not approved a final dividend, making the total dividend
for the year US2 cents per share.
APPRECIATION
I would like to extend my appreciation to our customers for their continued
support and to our shareholders and regulatory authorities for their support
and guidance. I would also like to extend my thanks and appreciation to fellow
Board members, management and staff for their dedication and commitment.
JRT Moxon
Executive Chairman
29 June 2015
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2015
31 March 2015 31 March 2014
US$ 000 US$ 000
Revenue 413,349 384,308
Net operating costs (423,723) (385,227)
Operating loss (10,374) (919)
Investment income 4,546 42,115
Finance costs (12,527) (10,462)
Impairment of investment in Mentor Africa Limited (4,726) -
Net exchange gains 329 207
Loss recognised on discounting Treasury Bills (9,019) -
Provision for discount on RBZ balances (14,705) -
Fair value adjustments on biological assets 8,590 6,558
(Loss) / profit before tax (37,886) 37,499
Income tax credit / (expense) 3,400 (320)
(Loss) / profit for the year (34,486) 37,179
Other comprehensive loss, net of tax
Items that may be reclassified subsequently to profit or
loss:
Fair value loss on available-for-sale financial assets (12,472) -
Other comprehensive loss for the year, net of tax (12,472) -
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE YEAR (46,958) 37,179
(Loss) / profit for the year attributable to:
Owners of the parent (34,445) 34,427
Non-controlling interests (41) 2,752
(34,486) 37,179
Total comprehensive (loss) / income attributable to:
Owners of the parent (46,917) 34,427
Non-controlling interests (41) 2,752
(46,958) 37,179
(Loss) / earnings per share (cents)
Basic (13.57) 13.56
Diluted (12.60) 12.59
Headline loss per share (cents) (4.38) (1.64)
Diluted headline loss per share (cents) (4.07) (1.52)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2015
31 March 2015 31 March 2014
US$ 000 US$ 000
ASSETS
Non-current assets
Property, plant and equipment 125,145 109,624
Investment property 249 250
Investment in Mentor Africa 22,931 27,657
Limited
Biological assets 41,083 30,156
Intangible assets 124 1,528
Other financial assets 12,246 12,760
Balances with Reserve Bank of - 90,861
Zimbabwe
Deferred tax 4,201 2,674
Total non-current assets 205,979 275,510
Current assets
Balances with Reserve Bank of 7,229 -
Zimbabwe
Treasury Bills 22,942 -
Inventories 35,626 36,631
Trade and other receivables 19,893 16,171
Other financial assets 4,093 3,551
Cash and bank balances 8,883 22,952
Total current assets 98,666 79,305
Total assets 304,645 354,815
EQUITY AND LIABILITIES
Capital and reserves
Share capital 2,538 2,538
Share premium 1,316 1,316
Other reserves 87 12,559
Retained earnings 115,934 155,455
Equity attributable to equity 119,875 171,868
holders of the parent
Non-controlling interests 17,281 14,222
Total equity 137,156 186,090
Non-current liabilities
Borrowings 24,402 37,264
Deferred tax 12,508 14,519
Total non-current liabilities 36,910 51,783
Current liabilities
Trade and other payables 60,397 47,293
Borrowings 70,182 69,649
Total current liabilities 130,579 116,942
Total liabilities 167,489 168,725
Total equity and liabilities 304,645 354,815
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015
Share Share Other Retained Attributable Non Total
capital premium reserves earnings to owners of controlling
parent interests
US$ 000 US$ US$ 000 US$ 000 US$ 000 US$ 000 US$ 000
000
2015
Balance at 1 April 2014 2,538 1,316 12,559 155,455 171,868 14,222 186,090
Loss for the year - - - (34,445) (34,445) (41) (34,486)
Dividend - - - (5,076) (5,076) - (5,076)
Other comprehensive - - (12,472) - (12,472) - (12,472)
loss for the year
Non-controlling - - - - 3,100 3,100
interests arising from -
Mopani Property
Development (Private)
Limited
Balance at 31 March 2,538 1,316 87 115,934 119,875 17,281 137,156
2015
2014
Balance at 1 April 2013 2,538 1,316 12,559 121,028 137,441 10,990 148,431
Profit for the year - - - 34,427 34,427 2,752 37,179
Non-controlling - - - - 147 147
interests arising from -
Meikles Centar Mining
(Private) Limited
Non-controlling - - - - 333 333
interests arising from -
Kearsely Investments
(Private) Limited
Balance at 31 March 2,538 1,316 12,559 155,455 171,868 14,222 186,090
2014
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2015
31 March 2015 31 March
2014
US$ 000 US$ 000
Cash flows from operating activities
(Loss) / profit before tax (37,886) 37,499
Adjustments for:
- Depreciation and impairment of property, plant and 9,454 6,774
equipment and investment property
- Net interest 9,199 (31,653)
* Dividend income (1,217) -
- Net exchange gains (329) (207)
- Impairment of investment in Mentor Africa Limited 4,726 -
- Fair value adjustments on biological assets (8,590) (6,558)
* Loss recognised on discounting Treasury Bills 9,019 -
* Provision for discount on RBZ balances 14,705 -
- Loss on disposal of property, plant and equipment 230 77
* Impairment of intangible assets 1,404 1,997
* Impairment of investment in Afrasia Zimbabwe 152 -
Holdings Limited
Operating cash flow before working capital changes 867 7,929
Decrease in inventories 1,005 77
Decrease in trade and other receivables 396 994
Increase / (decrease) in trade and other payables 10,139 (8,415)
Cash generated from operations 12,407 585
Income taxes paid (225) (924)
Net cash generated from / (used in) operating 12,182 (339)
activities
Cash flows from investing activities
Payment for property, plant and equipment (25,319) (17,441)
Proceeds from disposal of property, plant and 158 330
equipment
Proceeds from sale of Treasury Bills 24,128 -
Increase in intangible assets - (1,071)
Net movement in service assets (43) (214)
Net movement in other investments 255 (1,855)
Net expenditure on biological assets (2,337) (2,077)
Investment income 590 820
Net cash used in investing activities (2,568) (21,508)
Cash flows from financing activities
Net (decrease) / increase in interest bearing (12,329) 40,644
borrowings
Proceeds on disposal of partial interest in a 3,100 147
subsidiary without loss of control
Finance costs (12,527) (10,462)
Dividend paid - ordinary shareholders (2,138) -
Net cash (used in) / generated from financing (23,894) 30,329
activities
Net (decrease) / increase in cash and bank balances (14,280) 8,482
Cash and bank balances at the beginning of the year 22,952 14,198
Net effect of exchange rate changes on cash and bank 211 272
balances
Cash and bank balances at the end of the year 8,883 22,952
NOTES TO THE ABRIDGED AUDITED FINANCIAL STATEMENTS
1. Basis of preparation
The abridged 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 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 results have been audited by Deloitte
& Touche, whose unqualified report is available for inspection at the
registered office of the Company.
3. Accounting policies
Accounting policies and methods of computation applied in the preparation of
these abridged financial statements are consistent, in all material respects,
with those used in the prior year with no significant impact arising from new
and revised International Financial Reporting Standards (IFRSs) applicable for
the year ended 31 March 2015.
4. Balance with the Reserve Bank of Zimbabwe
The movement in the balance with the RBZ from 1 April 2014 to 31 March 2015,
and the outstanding balance still owed by the RBZ to the Company at 31 March
2015, are analysed below:
Group and
Company
31 March 2015
Note US$ 000
Balance at 31 March 2014 90,861
Nominal value of Treasury Bills received i (71,156)
Provision for settlement discount (14,705)
Interest iii 2,229
Balance at 31 March 2015 7,229
Analysis of balance at 31 March 2015
Amount due in cash on 31 March 2015 ii 5,000
Interest iii 2,229
Balance at 31 March 2015 7,229
Notes:
i. The market value of the Treasury Bills received by the Company from the RBZ
is US$47.1 million and the basis of calculating the market value of the
Treasury Bills is set out in note 5.
ii. In terms of a written undertaking from the RBZ in December 2014, the amount
of US$5 million was due and payable in cash by 31 March 2015. To date this
amount has not been received.
iii. The interest was received as part of the Treasury Bills issued on 7
April 2015. Refer to note 5.
5. Treasury Bills
In part-settlement of the amount owed by the RBZ to the Company (see note 4),
the RBZ delivered Treasury Bills with a market value of US$47.1 million to the
Company during the year. Details of the movement in these Treasury Bills are as
follows:
Group and Group and
Company Company
31 March 2015 31 March 2015
US$ 000 US$ 000
Fair (Market) Nominal value
value
Treasury Bills received during the year 47,084 71,156
Treasury Bills disposed during the year (27,166) (36,185)
Treasury Bills on hand at 31 March 2015 19,918 34,971
Accrued interest 3,024 443
Balance at 31 March 2015 22,942 35,414
The Treasury Bills have been designated as "available-for-sale" (AFS) financial
assets and were initially recognised/measured at fair (market) value. The fair
(market) value of the Treasury Bills on initial recognition, and at 31 March
2015, was calculated based on a yield to maturity of 17%. This yield to
maturity was determined with reference to the percentage discount to the
nominal value of the Treasury Bills at which the Company has been able to sell
certain of the Treasury Bills in the open market during the financial year.
Interest income on the Treasury Bills is recognised using the effective
interest rate method and is included in "Investment income" in the Statement of
Profit or Loss and Other Comprehensive Income.
Treasury Bills with a nominal value of US$14.7 million were pledged as security
to loans with a carrying value of US$16.2 million.
Treasury Bills issued by the Reserve Bank of Zimbabwe held at 31 March 2015:
Group and Group and
Company Company
31 March 31 March
2015 2014
At fair (market) value US$ 000 US$ 000
Treasury Bills maturing on 11 June 2018 with a 10,922 -
coupon rate of 2%
Treasury Bills maturing on 10 June 2019 with a 8,375 -
coupon rate of 2%
Treasury Bills maturing on 23 December 2016 with a 3,645 -
coupon rate of 5%
22,942 -
The salient terms of the Treasury Bills held at 31 March 2015 are as follows:
Treasury Bill number ZTB1461201411A ZTB182620140610B ZTB73120141223B
Issue date 11/06/2014 10/06/2014 23/12/2014
Redemption date 11/06/2018 10/06/2019 23/12/2016
Nominal value (US$ 000) 14,363 4,292
16,549
Coupon 2.0% 2.0% 5.0%
Coupon payment dates 11 June and 11 10 June and 10 23 June and 23
December December December
Fair value (US$ 000) 10,922 8,375 3,645
Subsequent to 31 March 2015:
* Treasury Bills ZTB1461201411A and ZTB182620140610B with a total value of
$31.1 million were replaced by the RBZ with new Treasury Bills with a total
nominal value of US$33.3 million. The incremental nominal amount of US$2.2
million was in relation to interest.
The new Treasury Bills have coupon rates of 3% and 5% and redemption dates
ranging between 10 June 2015 and 30 April 2017. The increase in market value to
the Company as a result of the replacement of these Treasury Bills is US$7.3
million.
* The Company has continued to dispose of Treasury Bills in the open market
where opportunities to do so arise. These disposals have been concluded at
similar discounts to the nominal value of the Treasury Bills as the
discounts on the disposal of Treasury Bills which were concluded during the
year ended 31 March 2015.
6. Segment information
31 March 2015 31 March 2014
US$ 000 US$ 000
Revenue
Supermarkets 360,328 333,907
Hotels 16,398 15,583
Agriculture 21,091 22,622
Departmental stores 7,035 12,462
Wholesaling 10,308 2,031
Corporate* (1,811) (2,297)
413,349 384,308
EBITDA
Supermarkets 9,307 10,958
Hotels 1,992 1,269
Agriculture (104) 2,915
Departmental stores (3,311) (2,145)
Wholesaling (2,415) (440)
Corporate* (4,985) (4,705)
484 7,852
The EBITDA figures are before Group management fees.
Segment assets
Supermarkets 83,464 80,179
Hotels 49,216 50,720
Agriculture 75,270 64,817
Departmental stores 30,516 32,587
Wholesaling 2,048 739
Corporate* 64,131 125,773
304,645 354,815
Segment liabilities
Supermarkets 49,524 51,880
Hotels 20,922 20,556
Agriculture 33,933 38,601
Departmental stores 16,533 21,906
Wholesaling 3,542 1,078
Corporate* 43,035 34,704
167,489 168,725
*Intercompany transactions and balances have been eliminated from the corporate
amounts. Corporate also includes other subsidiaries that are immaterial to
warrant separate disclosure.
31 March 2015 31 March 2014
US$ 000 US$ 000
7. Depreciation, amortisation and impairment
Depreciation of property plant and equipment 8,858 6,495
Impairment of property, plant and equipment 595 275
Depreciation of investment property 1 4
Impairment of investment in Mentor Africa Limited 4,726
Impairment of intangible assets 1,404 1,997
Impairment of investment in Afrasia Zimbabwe Holdings 152 -
Limited
15,736 8,771
8. Non-trading income
Net investment revenue 4,546 42,115
Fair value adjustments on biological assets 8,590 6,558
Net exchange gains 329 207
13,465 48,880
Net investment revenue includes US$2.2 million earned
on the deposit at the RBZ and US$1.2 dividend
receivable from Mentor Africa Limited.
9. Net borrowings
Non-current borrowings 24,402 37,264
Current borrowings 70,182 69,649
Total borrowings 94,584 106,913
Cash and cash equivalents (8,883) (22,952)
Net borrowings 85,701 83,961
The increase in borrowings was applied towards retail expansion, store and
hotel refurbishment, plantation development and working capital.
10. Other information
Depreciation and impairment - property, plant and 9,454 6,774
equipment
Capital commitments authorised by the Directors but not 9,899 14,128
contracted
Group's share of capital commitments of joint operation 120 53
11. Events after reporting date
Except as highlighted in note 5, there have been no other significant events
after the reporting date at the time of issuing this report.
Website : www.meiklesinvestor.com
END
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