MEIKLES
LIMITED
ABRIDGED UNAUDITED
FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019
CHAIRMAN’S STATEMENT
Group leadership
The Chairman’s Report for the financial year ended 31 March 2019, referred to a planned
reconstruction in the Group activities and possible changes, where
necessary, to the complement of Group and Segmental Boards of
Directors and the provision of additional management skills. To
this end, the board is currently addressing the issue of succession
in executive management and the appointment of additional
independent non-executive directors. The Company will make an
announcement on these developments shortly.
Group Strategy
The planned sale of Meikles Hotel, has been approved by
Shareholders but is still subject to the Reserve Bank of
Zimbabwe approval, will, if
approved, provide financial strength for the planned strategy and
unlock an ability to process the developments set out in this
report.
Group export oriented projects are now being implemented,
but they do and will require additional borrowings, which is
not considered desirable. The sale of the hotel will avoid the
necessity to borrow for these projects and proceeds from the sale
are expected to be introduced into Group segments, when payments
are specifically required for the benefit of the projects.
The Mentor Shareholders agree that a re-examination of strategies
and an enhancement of shareholder expectations is required. This
process is currently being pursued and will be pursued with greater
vigour in the New Year.
In general, the Board will continue to adopt a positive trading
strategy and will continue with expansion projects that are
expected to enhance profitability and cash flows, but with a risk
aversion to financial exposure, especially borrowings.
Financial results overview – commentary based on
Historical cost accounts
The Group fared well in a turbulent economic environment
characterised by drought, high inflation affecting disposable
incomes and foreign currency shortages resulting in intermittent
supply of electricity and fuel.
Group earnings before interest, tax, depreciation and amortisation
(“EBITDA”) for the period from continuing operations amounted to
ZWL223.5 million (previous year: ZWL31.8 million).
Group profit after taxation from continuing operations was ZWL158.5
million (previous year: ZWL16.1 million).
Group comprehensive income amounted to ZWL 336.4 million and is
entirely due to uplift of foreign assets from the exchange rate at
the end of March 2019 (ZWL3.01:US$)
to closing exchange rate at 30 September
2019 (ZWL15.20:US$).
Group net cash balance after deducting Group bank borrowings
amounted to ZWL73.4 million (Previous year: net borrowings of
ZWL30.8 million). The Group aims to expunge bank loans at the
holding Company and Department Stores from operating cash flows
before March 2020.
TM Supermarkets
trading as TM and PnP
Revenue for the period was ZWL940.9 million (Previous year:
ZWL305.6 million). The increase in revenue was due to inflation.
Units sold declined by 22.0% during the period under review due to
shrinking disposable incomes. Despite tough trading conditions,
specifically supply challenges, the level of stocking in the stores
is satisfactory.
EBITDA for the period amounted to ZWL125.9 million, up 477% from
ZWL21.8 million achieved the previous year. Profit after tax was
ZWL50.8 million (previous year: ZWL16.8 million). Profit after tax
was after deducting ZWL54.6 million exchange losses primarily
arising from a foreign currency denominated balance owed to Pick n
Pay South Africa for merchandise supplied during the multi-currency
period. At the end of November 2019,
the balance had been reduced to ZAR 29.0
million from ZAR 100.4 million
at the beginning of April 2019. Our
target is to expunge foreign currency denominated liabilities
before March 2020 and eliminate
recurrence of exchange losses going forward.
Major renovation works at the Marondera Mall have been completed.
The complex was opened at the end of November 2019. Five branches were refurbished
during the period under review. Two new stores are expected to be
opened in the first quarter of year 2020. During the period under
review, TM Supermarkets was conferred with “Retail Supermarkets
Sector Winner for Superbrand 2019” by Marketers Association of
Zimbabwe and “Wholesale and retail
sector Highest Dollar Value Contributor” for Greater Harare region by Zimbabwe Revenue
Authority (ZIMRA)
Tanganda
Revenue grew to ZWL104.3 million from ZWL15.7 million achieved
during the six months ended 30 September
2018. Bulk tea export sales of 3 669 tonnes were slightly
ahead of 3 638 tonnes sold in the comparative period last year.
Average international bulk tea export price for the period
retreated to US$1.47/kg from
US$1.68/kg in the six months period
to 30 September 2018. Bulk tea
production for the period declined by 25% primarily due to the
drought and worsened by the inability to irrigate as well as
reduced tea factories operating hours because of intermittent
electricity supply. Volume of tea and coffee sales to the domestic
market reduced by 25% due to diminishing disposable
incomes.
The volume of Macadamia production grew significantly by 234%
from 233 tonnes in prior year to 779 tonnes. At 30 September 2019, 463 tonnes of the top graded
crop had been sold at an average price of US$5.04 per kilogram compared to 374 tonnes sold
in prior year at US$5.07 per
kilogram.
The volume of avocado production grew by 44% from 1 371 tonnes
in previous period to 1 908 tonnes in the period to September 2019. Average price of US$1.62/kg was 60% above US$1.01/kg realised in the previous period.
Despite the adverse effects of two hailstorms and Cyclone Idai on
the Avocado crop, high world market price this season compensated
for low crop grade.
EBITDA for six months ended 30 September
2019 grew to ZWL96.8 million from ZWL8.4 million generated
during the comparable period. Profit after tax grew to ZWL110.3
million from ZWL5.7 million in the previous year. Installation of
micro-jet irrigation equipment was completed at two of the estates.
The current focus is on building internal power generation capacity
and work on 1.8 Mega Watt solar farm
at Ratelshoek, our biggest estate, will commence before end of
March 2020. Similar projects will be
rolled out to the remaining four estates.
Tanganda’s contribution to foreign currency generation was
recognised by Zimbabwe National Chamber of Commerce (ZNCC) as the
segment was awarded “2018 Most Improved Exporter Award –
Agriculture” in June 2019.
Hospitality –
Continuing operations
Revenue grew to ZWL33.1 million from ZWL4.4 million achieved
during same period last year. Revenue per available room “RevPAR”
retreated by 1% in US$ terms to US$194. Room occupancy declined to 67.70% from
72.56% whilst the average daily rate grew by 5% to US$287.
EBITDA grew to ZWL14.0 million from ZWL2.5 million in the
previous year. Profit after tax for the six month’s period was
ZWL26.2 million (previous year: ZWL1.8 million).
Three mock up rooms for Refurbishment works at The Victoria
Falls Hotel were completed in October
2019. The roll out of the refurbishment is scheduled to
commence in January 2020.
Discontinued operations
Meikles Hotel was classified as held for sale at 31 March 2019. Revenue for the period grew to
ZWL31.8 million. (Previous year: ZWL6.0 million) Room occupancy for
the period under review retreated to 38% from 45% in the
comparative period of the previous year. RevPAR for the period
declined to US$56 from US$61. EBITDA grew to ZWL10.7 million from ZWL0.9
million in the previous year.
As stated in the Chairman statement accompanying the Group
financial results for the year ended 31
March 2019, all branches of department stores were closed at
the end of June 2019. Consequently,
operating results up to the date of closure and assets of the
department stores were reclassified to discontinued operations.
Clearance sales for stocks on hand at closure of branches were held
in October and November 2019. The
assets are being disposed through auction houses. Revenue for the
period was ZWL0.6 million. (Previous year: ZWL0.4 million). Loss
before interest, tax, depreciation and amortisation was ZWL2.1
million (Previous year: ZWL1.8 million).
Outlook
The Group is well placed to take advantage of opportunities that
may arise as it has a reasonable mix of foreign currency
denominated earnings to support its strategies. Trading during the
first two months of the second half of the Group’s financial year
reflects the same trends witnessed during the first half. The Group
requires capital to build internal power generation capacity to
ensure agricultural export operations run smoothly through having
access to power supply at critical times of crop development and
processing. The proceeds from the proposed disposal of Meikles
Hotel will assist the Group to promptly construct the power
generation plants.
Dividend
The directors are cognisant of the need for frequent dividend
distributions due to high inflation prevailing in the operating
environment and in this regard a declaration will be announced
before end of the financial year.
Appreciation
I would like to extend my appreciation to our customers,
suppliers, shareholders and regulatory authorities for their
continued support. I also extend my appreciation to my fellow
Directors, and to management and staff for their dedication and
commitment.
JRT Moxon
Executive Chairman
16 December 2019
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2019 |
|
|
|
|
|
|
|
INFLATION ADJUSTED |
HISTORICAL COST |
|
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
|
30 Sep
2019 |
30 Sep
2018 |
30 Sep
2019 |
30 Sep
2018 |
|
|
ZWL
000 |
ZWL
000 |
ZWL
000 |
ZWL
000 |
CONTINUING
OPERATIONS |
|
|
|
|
|
Revenue |
|
1,599,678 |
1,469,841 |
1,074,373 |
324,449 |
Net operating
costs |
|
(1,455,968) |
(1,352,019) |
(862,060) |
(298,439) |
|
|
|
|
|
|
Operating
profit |
|
143,710 |
117,822 |
212,313 |
26,010 |
|
|
|
|
|
|
Investment income |
|
70 |
88 |
44 |
19 |
Finance costs |
|
(9,955) |
(19,455) |
(5,670) |
(4,295) |
Net exchange (losses)
/ gains |
|
(14,693) |
5,292 |
3,231 |
1,168 |
Fair value adjustments
on biological assets |
|
(7,194) |
354 |
(6,901) |
78 |
Net monetary gain |
|
169,978 |
- |
- |
- |
Profit before
tax |
|
281,916 |
104,101 |
203,017 |
22,980 |
Income tax
expense |
|
(47,354) |
(31,180) |
(44,482) |
(6,883) |
Profit for the
period from continuing operations |
|
234,562 |
72,921 |
158,535 |
16,097 |
|
|
|
|
|
|
DISCONTINUED
OPERATION |
|
|
|
|
|
Profit / (loss) for
the period from discontinued operation |
|
43,202 |
(3,466) |
1,548 |
(765) |
|
|
|
|
|
|
Profit for the
period |
|
277,764 |
69,455 |
160,083 |
15,332 |
|
|
|
|
|
|
Other comprehensive
income, net of tax |
|
|
|
|
|
Items that may be
reclassified subsequently to profit or loss: |
|
|
|
|
|
Exchange gains and monetary adjustments on transaltion
of foreign entity
Income tax relating to items that may be reclassified
subsequently to profit or loss |
|
31,156
- |
-
- |
336,380
- |
-
- |
Other comprehensive
income for the period, net of tax |
|
31,156 |
- |
336,380 |
- |
|
|
|
|
|
|
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD |
|
308,920 |
69,455 |
496,463 |
15,332 |
|
|
|
|
|
|
Profit for the
period attributable to: |
|
|
|
|
|
Owners of the parent |
|
222,704 |
38,596 |
134,983 |
8,520 |
Non-controlling interests |
|
55,060 |
30,859 |
25,100 |
6,812 |
|
|
277,764 |
69,455 |
160,083 |
15,332 |
Total comprehensive
income is attributable to: |
|
|
|
|
|
Owners of the parent |
|
253,860 |
38,596 |
471,363 |
8,520 |
Non-controlling interests |
|
55,060 |
30,859 |
25,100 |
6,812 |
|
|
308,920 |
69,455 |
496,463 |
15,332 |
Earnings per share (cents) |
|
|
|
|
|
Basic earnings per
share from continuing and discontinued operations |
|
86.85 |
15.07 |
51.70 |
3.33 |
Basic earnings per
share from continuing operations |
|
70.00 |
16.42 |
51.11 |
3.63 |
|
|
|
|
|
|
Diluted earnings per
share from continuing and discontinued operations |
|
81.38 |
14.10 |
48.51 |
3.12 |
Diluted earnings per
share from continuing operations |
|
65.59 |
15.37 |
47.95 |
3.40 |
|
|
|
|
|
|
Headline earnings per
share from continuing and discontinued operations |
|
87.92 |
15.68 |
51.77 |
3.46 |
Headline earnings per
share from continuing operations |
|
70.71 |
15.68 |
48.43 |
3.76 |
|
|
|
|
|
|
Diluted headline
earnings per share from continuing and discontinued operations |
|
82.39 |
14.68 |
48.57 |
3.24 |
Diluted headline
earnings per share from continuing operations |
|
66.27 |
14.68 |
45.44 |
3.52 |
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30
SEPTEMBER 2019
|
|
INFLATION ADJUSTED |
HISTORICAL COST |
|
|
Unaudited |
Unaudited |
Unaudited |
Audited |
|
|
30 Sep
2019 |
31 Mar
2019 |
30 Sep
2019 |
31 Mar
2019 |
|
|
ZWL
000 |
ZWL
000 |
ZWL
000 |
ZWL
000 |
ASSETS |
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
Property, plant and
equipment |
|
875,145 |
751,027 |
256,761 |
172,267 |
Investment
property |
|
1,063 |
1,067 |
233 |
236 |
Right of use
assets |
|
58,540 |
- |
58,445 |
- |
Investment in Mentor
Africa (Pty) Limited |
|
256,215 |
141,240 |
256,215 |
50,778 |
Biological assets |
|
13,514 |
10,349 |
6,069 |
2,905 |
Intangible assets |
|
562 |
562 |
124 |
124 |
Investments other |
|
160,460 |
88,618 |
160,185 |
31,847 |
Deferred tax |
|
50,279 |
22,049 |
29,931 |
9,111 |
Total non-current
assets |
|
1,415,778 |
1,014,912 |
767,963 |
267,268 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
Inventories |
|
266,849 |
290,685 |
231,621 |
100,163 |
Trade and other
receivables |
|
134,441 |
113,661 |
121,059 |
40,471 |
Biological assets –
produce on bearer plants |
|
- |
36,007 |
- |
11,178 |
Other financial
assets |
|
1 |
25 |
1 |
9 |
Cash and bank
balances |
|
133,733 |
91,807 |
133,733 |
33,006 |
Non-current assets
held for sale |
|
137,504 |
136,492 |
30,653 |
30,032 |
Total current
assets |
|
672,528 |
668,677 |
517,067 |
214,859 |
|
|
|
|
|
|
Total
assets |
|
2,088,306 |
1,683,589 |
1,285,030 |
482,127 |
|
|
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
|
|
Capital and
reserves |
|
|
|
|
|
Share capital |
|
11
765 |
11,765 |
2,611 |
2,611 |
Share premium |
|
13,486 |
13,486 |
3,925 |
3,925 |
Other reserves |
|
380,648 |
157,999 |
376,309 |
64,929 |
Retained earnings |
|
815,415 |
621,952 |
271,873 |
131,914 |
Equity attributable to
equity holders of the parent |
|
1,221,314 |
805,202 |
654,718 |
203,379 |
Non-controlling
interests |
|
234,203 |
205,921 |
80,289 |
48,999 |
Total equity |
|
1,455,517 |
1,011,123 |
735,007 |
252,378 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
Borrowings |
|
13,936 |
34,058 |
13,936 |
12,244 |
Lease liabilities |
|
48,112 |
- |
48,112 |
- |
Deferred tax |
|
118,955 |
104,507 |
36,260 |
25,617 |
Total non-current
liabilities |
|
181,003 |
138,565 |
98,308 |
37,861 |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
Trade and other
payables |
|
394,982 |
387,890 |
394,911 |
140,368 |
Borrowings |
|
46,376 |
143,303 |
46,376 |
51,520 |
Lease liabilities |
|
10,428 |
2,708 |
10,428 |
- |
Total current
liabilities |
|
451,786 |
533,901 |
451,715 |
191,888 |
|
|
|
|
|
|
Total liabilities |
|
632,789 |
672,466 |
550,023 |
229,749 |
|
|
|
|
|
|
Total equity and
liabilities |
|
2,088,306 |
1,683,589 |
1,285,030 |
482,127 |
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019
|
|
|
|
|
|
|
|
INFLATION
ADJUSTED |
|
|
|
|
|
|
|
|
Share
capital |
Share
premium |
Other reserves |
Retained earnings |
Attributable to owners of parent |
Non-controlling
interests |
Total |
|
ZWL 000 |
ZWL 000 |
ZWL
000 |
ZWL
000 |
ZWL 000 |
ZWL 000 |
ZWL 000 |
2019 –
Unaudited |
|
|
|
|
|
|
|
Balance at 1 April
2019 |
11,765 |
13,486 |
374,492 |
587,735 |
987,478 |
172,953 |
1,160,431 |
Profit for the
period |
- |
- |
- |
222,704 |
222,704 |
55,060 |
277,764 |
Transfer from
non-distributable reserves |
- |
- |
(25,000) |
25,000 |
- |
- |
- |
Other comprehensive
income for the period |
- |
- |
31,156 |
- |
31,156 |
- |
31,156 |
Dividend paid –
ordinary shareholders |
- |
- |
- |
(20,024) |
(20,024) |
- |
(20,024) |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
- |
6,190 |
6,190 |
Balance at 30
September 2019 |
11,765 |
13,486 |
380,648 |
815,415 |
1,221,314 |
234,203 |
1,455,517 |
|
|
|
|
|
|
|
|
2018 –
Unaudited |
|
|
|
|
|
|
|
Balance at 1 April
2018 |
11,607 |
6,655 |
56,896 |
375,351 |
450,509 |
164,181 |
614,690 |
Profit for the
period |
- |
- |
- |
38,596 |
38,596 |
30,859 |
69,455 |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
- |
(1,210) |
(1,210) |
Balance at 30
September 2018 |
11,607 |
6,655 |
56,896 |
413,947 |
489,105 |
193,830 |
682,935 |
|
Share
capital |
Share
premium |
Other reserves |
Retained earnings |
Attributable to owners of parent |
Non-controlling
interests |
Total |
|
ZWL 000 |
ZWL 000 |
ZWL
000 |
ZWL
000 |
ZWL 000 |
ZWL 000 |
ZWL 000 |
2019 -
Unaudited |
|
|
|
|
|
|
|
Balance at 1 April
2019 |
2,611 |
3,925 |
64,929 |
131,914 |
203,379 |
48,999 |
252,378 |
Profit for the
period |
- |
- |
- |
134,983 |
134,983 |
25,100 |
160,083 |
Transfer from
non-distributable reserves |
- |
- |
(25,000) |
25,000 |
- |
- |
- |
Other comprehensive
income for the period |
- |
- |
336,380 |
- |
336,380 |
- |
336,380 |
Dividend paid –
ordinary shareholders |
- |
- |
- |
(20,024) |
(20,024) |
- |
(20,024) |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
- |
6,190 |
6,190 |
Balance at 30
September 2019 |
2,611 |
3,925 |
376,309 |
271,873 |
654,718 |
80,289 |
735,007 |
|
|
|
|
|
|
|
|
2018 –
Unaudited |
|
|
|
|
|
|
|
Balance at 1 April
2018 |
2,562 |
1,469 |
12,559 |
82,854 |
99,444 |
36,241 |
135,685 |
Profit for the
period |
- |
- |
- |
8,520 |
8,520 |
6,812 |
15,332 |
Other comprehensive
income for the period |
- |
- |
- |
- |
- |
- |
- |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
- |
(267) |
(267) |
Balance at 30
September 2018 |
2,562 |
1,469 |
12,559 |
91,374 |
107,964 |
42,786 |
150,750 |
HISTORICAL COST
|
CONSOLIDATED STATEMENT OF CASHFLOWS |
|
|
|
|
|
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2019 |
|
|
|
|
|
|
INFLATION ADJUSTED |
HISTORICAL COST |
|
|
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
|
30 Sep
2019 |
30 Sep 2018 |
30 Sep
2019 |
30 Sep 2018 |
|
|
ZWL 000 |
ZWL 000 |
ZWL 000 |
ZWL 000 |
|
CONTINUING AND DISCONTINUED OPERATIONS |
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
Profit
before tax – continuing operations |
281,916 |
104,101 |
203,017 |
22,980 |
|
Profit /
(loss) before tax – discontinued operations |
42,802 |
(5,350) |
1,548 |
(1,182) |
|
|
324,718 |
98,751 |
204,565 |
21,798 |
|
Adjustments for: |
|
|
|
|
|
-
Depreciation and impairment of property, plant and equipment and
investment property |
18,617 |
29,768 |
9,934 |
6,571 |
|
- Net
interest |
10,742 |
19,892 |
5,626 |
4,391 |
|
- Net
exchange losses / (gains) |
18,861 |
(5,269) |
1,711 |
(1,163) |
|
- Right of
use assets and lease liabilities |
5,014 |
- |
96 |
- |
|
- Fair
value adjustments on biological assets |
7,194 |
(353) |
6,901 |
(78) |
|
- (Profit)
/ loss on disposal of property, plant and equipment |
(1,231) |
376 |
(1,048) |
83 |
|
Operating
cash flow before working capital changes |
383,915 |
143,165 |
227,785 |
31,602 |
|
|
|
|
|
|
|
Decrease /
(increase) in inventories |
23,836 |
(15,648) |
(131,459) |
(3,454) |
|
(Increase)
/ decrease in trade and other receivables |
16,057 |
7,461 |
(21,949) |
1,647 |
|
(Decrease)
/ increase in trade and other payables |
(29,612) |
69,526 |
171,767 |
15,347 |
|
Cash
generated from operations |
394,196 |
204,504 |
246,144 |
45,142 |
|
Income
taxes paid |
(32,810) |
(17,432) |
(34,624) |
(3,848) |
|
Net
cash generated from operating activities |
361,386 |
187,072 |
211,520 |
41,294 |
|
|
|
|
|
|
|
Cash
flows from investing activities |
|
|
|
|
|
Payment
for property, plant and equipment |
(143,816) |
(66,196) |
(95,100) |
(14,612) |
|
Proceeds
from disposal of property, plant and equipment |
1,462 |
725 |
1,220 |
160 |
|
Net
movement in service assets |
(157) |
(118) |
(115) |
(26) |
|
Net
movement in other investments |
22 |
236 |
37 |
52 |
|
Net
movement in biological assets |
(78) |
1,350 |
820 |
298 |
|
Investment
income |
132 |
82 |
44 |
18 |
|
Net
cash used in investing activities |
(142,435) |
(63,921) |
(93,094) |
(14,110) |
|
|
|
|
|
|
|
Cash
flows from financing activities |
|
|
|
|
|
Net
(decrease) / increase in interest bearing borrowings |
(3,453) |
(13,636) |
(3,453) |
(3,010) |
|
Non-controlling interests arising from Mopani Property Development
(Private)
Limited |
6,190 |
(1,205) |
6,190 |
(267) |
|
Finance
costs |
(10,873) |
(19,988) |
(5,670) |
(4,412) |
|
Dividend
paid – ordinary shareholders |
(20,024) |
- |
(20,024) |
- |
|
Net
cash used in financing activities |
(28,160) |
(34,829) |
(22,957) |
(7,689) |
|
|
|
|
|
|
|
Net
increase in cash and bank balances |
190,791 |
88,322 |
95,469 |
19,495 |
|
Cash and
bank balances at the beginning of the period |
91,807 |
154,822 |
33,006 |
34,175 |
|
Translation of foreign entity |
(96,691) |
- |
2,577 |
- |
|
Net effect
of exchange rate changes on cash and bank balances |
(52,174) |
5,319 |
2,681 |
1,175 |
|
Cash
and bank balances at the end of the period |
133,733 |
248,463 |
133,733 |
54,845 |
|
|
|
|
|
|
|
|
|
NOTES TO THE ABRIDGED UNAUDITED FINANCIAL RESULTS
1. Basis of preparation
The abridged unaudited financial results 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. The historical costs have been adjusted for
the effects of applying International Accounting Standard (“IAS”)
29 – ‘Financial Reporting in Hyperinflationary economies’ . Refer
to note 2.2 for further details.
These abridged financial results are presented in Zimbabwe dollars (ZWL), which is the Group’s
functional and presentation currency, refer to note 2.1 for further
details. These abridged unaudited financial results should be read
in conjunction with the Group’s annual report for the full year to
31 March 2019.
2. Accounting policies
Accounting policies and methods of computation applied in the
preparation of these abridged unaudited financial results are
consistent, in all material respects, with those used in the prior
year, except for the effects of new IFRS 16 - Leases, which
became effective in the current year.
2.1 Functional and presenation
currency
The Group and its subsidiaries’ changed their functional and
presentation currency from the to the Zimbabwe dollar (“ZWL”) in the prior year.
This followed the issuance of the Monetary Policy Statement (“MPS”)
by the country’s central bank, the Reserve Bank of Zimbabwe (“RBZ”) and Statutory
Instrument (S.I.) 33 of 2019 which was promulgated soon after,
giving effect and guidelines to the new currency.
2.2 Hyperinflation
On 11 October 2019, the Public
Accountants and Auditors Board (“PAAB”) issued a pronouncement on
the application of IAS 29. The pronouncement requires that entities
operating in Zimbabwe with
financial periods ending on or after 1 July
2019, prepare and present financial statements in-line with
the requirements of IAS 29.
The Directors have made appropriate adjustments to reflect the
changes in the general purchasing power on the Zimbabwe dollar and for the purposes of fair
presentation in accordance with IAS 29, these changes have been
made on the historical cost financial information. Various
assumptions have been made, with the significant assumption being
the use of the consumer price indices (“CPI”), for the various
years. This was due to the limitation of data available resulting
in default to the CPI.
The source of the price indices used was the Reserve Bank of
Zimbabwe website. Below are the
indices and adjustment factors used up to 30
September 2019:
|
|
|
Indices |
Adjustment Factor |
CPI as at 30 September
2019 |
|
|
290.4 |
1.00 |
CPI as at 31 March
2019 |
|
|
104.4 |
2.78 |
CPI as at 30 September
2018 |
|
|
64.1 |
4.53 |
|
|
|
|
|
Average CPI 2019 |
|
|
161.7 |
|
Average CPI 2018 |
|
|
67.6 |
|
3. Going concern
The Directors assess the ability of the Group to continue in
operational existence in the foreseeable future at each reporting
date. As at 30 September 2019, the
Directors have assessed the Group’s ability to continue operating
as a going concern and believe that the preparation of these
unaudited financial results on a going concern basis is still
appropriate.
4. Segment information
|
INFLATION ADJUSTED |
HISTORICAL COST |
|
Unaudited |
Unaudited |
Unaudited |
Unaudited |
|
30 Sep
2019 |
30 Sep
2018 |
30 Sep
2019 |
30 Sep
2018 |
|
ZWL
000 |
ZWL
000 |
ZWL
000 |
ZWL
000 |
Revenue –
continuing operations |
|
|
|
|
Supermarkets |
1,416,470 |
1,384,173 |
940,930 |
305,557 |
Agriculture |
145,038 |
70,972 |
104,271 |
15,667 |
Hotels |
45,976 |
19,828 |
33,116 |
4,377 |
Departmental
stores# |
- |
- |
- |
- |
Corporate* |
(7,806) |
(5,132) |
(3,944) |
(1,152) |
|
1,599,678 |
1,469,841 |
1,074,373 |
324,449 |
|
|
|
|
|
|
|
|
|
|
NOTES
TO THE ABRIDGED UNAUDITED FINANCIAL RESULTS |
|
|
|
|
INFLATION ADJUSTED |
HISTORICAL COST |
|
Unaudited |
Unaudited |
Unaudited |
Audited |
|
30 Sep
2019 |
30 Sep
2018 |
30 Sep
2019 |
31 Sep
2018 |
|
ZWL
000 |
ZWL
000 |
ZWL
000 |
ZWL
000 |
EBITDA – continuing
operations |
|
|
|
|
Supermarkets |
67,811 |
98,605 |
125,878 |
21,767 |
Agriculture |
83,381 |
37,993 |
96,776 |
8,387 |
Hotels |
20,669 |
11,271 |
13,994 |
2,488 |
Departmental
stores# |
- |
- |
- |
- |
Corporate* |
(10,314) |
(3,674) |
(13,174) |
(811) |
|
161,547 |
144,195 |
223,474 |
31,831 |
|
INFLATION ADJUSTED |
HISTORICAL COST |
|
Unaudited |
Unaudited |
Unaudited |
Audited |
|
30 Sep
2019 |
31 Mar
2019 |
30 Sep
2019 |
31 Mar
2019 |
Segment
assets |
ZWL
000 |
ZWL
000 |
ZWL
000 |
ZWL
000 |
|
|
|
|
|
Supermarkets |
869,296 |
702,187 |
510,883 |
204,081 |
Agriculture |
504,708 |
454,800 |
254,086 |
120,763 |
Hotels |
256,677 |
226,657 |
107,453 |
54,930 |
Departmental
stores |
106,207 |
93,345 |
19,824 |
20,285 |
Corporate* |
351,418 |
206,600 |
392,784 |
82,068 |
|
2,088,306 |
1,683,589 |
1,285,030 |
482,127 |
Segment
liabilities |
|
|
|
|
Supermarkets |
357,925 |
300,715 |
357,925 |
108,112 |
Agriculture |
119,007 |
139,521 |
56,394 |
33,385 |
Hotels |
81,532 |
83,412 |
56,170 |
26,761 |
Departmental
stores |
20,238 |
50,504 |
23,611 |
18,102 |
Corporate* |
54,087 |
98,314 |
55,923 |
43,389 |
|
632,789 |
672,466 |
550,023 |
229,749 |
*Intercompany transactions and balances have been eliminated from
the corporate amounts. Corporate also includes other subsidiaries
that are immaterial to warrant separate disclosure.
#Department stores was reclassified to discontinued operations in
the current year.
The EBITDA figures are before Group management fees.
4.1 Discontinued operations |
Meikles Hotel
The Directors of the Company resolved to dispose of the entire
Meikles Hotel property, plant and equipment. Meikles Hotel is a
division within the Group’s hospitality segment, Meikles
Hospitality (Private) Limited. As at the interim reporting date,
sale agreements had been concluded in principle subject to approval
by shareholders of the Company and regulatory authorities. The
expected proceeds of sale exceed the carrying amount of the related
net assets and, accordingly, no impairment losses were recognised.
The assets to be disposed have been classified as held for sale on
the consolidated statement of financial position.
Departments Stores
As at 30 June 2019 all the
remaining branches of Department Stores were closed. Meikles
Limited has committed to pay off the company’s remaining
outstanding creditors. The operations have been classified as
discontinued in these abridged financial results.
The prior year comparative financial information from
discontinued operations has been re-presented to include the
operation classified as discontinued in the current period.
NOTES TO THE ABRIDGED UNAUDITED FINANCIAL RESULTS
|
INFLATION ADJUSTED |
HISTORICAL COST |
|
Unaudited |
Unaudited |
Unaudited |
Audited |
|
30 Sep 2019 |
31 Mar 2019 |
30 Sep 2019 |
31 Mar 2019 |
5. Other information |
ZWL 000 |
ZWL 000 |
ZWL 000 |
ZWL 000 |
Capital commitments authorised but
not contracted for |
330,364 |
330,364 |
118,836 |
118,836 |
Group’s share of capital commitments
of joint operation |
33,891 |
33,891 |
12,191 |
12,191 |
|
|
|
|
|
6. Net borrowings |
|
|
|
|
Non-current borrowings |
13,936 |
34,058 |
13,936 |
12,244 |
Current borrowings |
46,376 |
143,303 |
46,376 |
51,520 |
Total borrowings |
60,312 |
177,361 |
60,312 |
63,764 |
Cash and cash equivalents |
(133,733) |
(91,807) |
(133,733) |
(33,006) |
Net borrowings |
(73,421) |
85,554 |
(73,421) |
30,758 |
|
|
|
|
|
Comprising: |
|
|
|
|
Secured |
49,697 |
157,506 |
49,697 |
56,622 |
Unsecured |
10,615 |
19,855 |
10,615 |
7,142 |
|
60,312 |
177,361 |
60,312 |
63,764 |
|
|
|
|
|
6.1 Breach of loan
covenants |
|
|
|
|
During the course of the financial year, the Group was in
default on some of its loan covenants with lenders. These defaults
arose as a result financial difficulties facing the Department
Stores. The affected lenders had called on the loans but the Group
managed to renegotiate new payment agreements with these lenders.
The Group has managed to settle some of the loans in full
subsequent to the interim reporting date and continues to service
the outstanding loans on a monthly basis.
Meikles Limited Website :
www.meiklesltd.com