RNS No 9790u
MEIKLES AFRICA LIMITED
11 May 1999
MEIKLES AFRICA LIMITED
Preliminary Results for the year ended 31 March 1999
Meikles Africa Limited ('Meikles Africa') the Zimbabwe-
based hotel and retail group which floated on the Zimbabwe
and London Stock Exchanges in 1996, announces preliminary
results for the year ended 31 March 1999
* Group turnover of Z$4,193m (1998: Z$2,826m), up 48%
* Operating profit of Z$517m (1998: Z$250m), up 107%
* Attributable profit of Z$1,498m (1998: Z$533m), up
181%
* Headline earnings per share of 992 cents (1998: 350
cents), up 183%
* Operating cash flow of Z$751 million (1998: Z$189m),
up 297%
* Operating cash flow per share 491 cents (1998: 123
cents)
* Final dividend 100 cents (interim 40 cents)
John Moxon, Chairman, commented:
'We are delighted to report an outstanding performance and
high levels of growth in our businesses despite the
unfavourable economic environment in Zimbabwe. With a
strong balance sheet, we are actively pursuing regional
investment opportunities and are strategically well
positioned to continue to grow our existing businesses.'
11 May 1999
Enquiries:
Meikles Africa Tel: (+263 4) 730 611/6
John Moxon, Executive Chairman
College Hill Tel: (+44 171) 457 2020
Nicholas Williams
Corinna Dorward
Chairman's statement
Dear Shareholders,
Towards the end of March 1999, as it was apparent that the
Group was about to complete an exceptional year, it was
felt appropriate to advise shareholders to that effect. I
am pleased to report that our expectations have been
fulfilled.
Financial Results
Turnover was 48% up on 1998 and operating profit exceeded
last year by 107%. Net profit attributable to
shareholders increased from Z$533 million to Z$1,498
million and headline earnings improved by 178% to Z$1,516
million. Trading has been strong in all divisions.
An interim dividend of Z$0,40 per share was paid in
December 1998 and the Board is now recommending a final
dividend of Z$1.00 per share bringing the total dividend
for the year to Z$1.40, compared to Z$0.65 last year.
These total dividends reflect a 10% increase relative to
the previous year, expressed in U.S. dollar terms.
Income earned from finance activities amounted to Z$1,212
million and includes the increase in the market value of
the Group's investments and in the value of our US$ funds
deposited with the Reserve Bank of Zimbabwe.
I should draw your attention to the changes we have made
to the accounting policies in respect of deferred taxation
and quoted investments so as to comply with two more new
International Accounting Standards which have resulted in
a restatement of the prior years' results; these are fully
explained in the notes to the accounts.
Operations
Our results are particularly pleasing as they arose in a
poor economic environment during 1998. Gross domestic
product grew in the region of 1%, with growth subdued in
all main sectors of the economy. Difficult trading
conditions prevailed with high interest rates and
significant depreciation of the Zimbabwe dollar.
Inflation during the year was approximately 37% and
reached 52% in March 1999. Delays in the disbursement of
financial support from the IMF and concerns about the land
reform programme all contributed to a lack of confidence
and diminished investment.
Our strategy in Zimbabwe is to concentrate on businesses
in our areas of competence that contribute meaningfully to
the Group. On the strength of our results we will
continue to expand our present businesses which we
consider to be the best in their fields. In this way we
will continue to attract the best people, thereby
maintaining our position and enhancing shareholder value.
On 1 August 1998 the Group acquired a 50% interest in the
business of The Victoria Falls Hotel which is a hard
currency earning business which has performed well. It
has achieved the distinction of being voted the third best
foreign hotel in the world by readers of the Daily
Telegraph in the United Kingdom. Its excellence will be
further enhanced by the ongoing ISO9002 Quality Assurance
Programme. The Meikles Hotel was voted fourth in the same
category. Meikles Hotel turnover increased by 64% over
the previous year and our share of the Harare market was
maintained.
The Group's two hotels complement each other in that both
operations attract the top strata of international
travellers in the corporate and tourist market segments.
The opportunity now exists to promote and package the two
hotels through their membership of the 'Leading Hotels of
the World'.
The TM Supermarket Division had a good year with sales
growth of 42%. In common with the Retail Division sales
accelerated with inflation in the second half of the year
recording real growth for the full year. Efforts to
acquire new sites were frustrated by a diminishing
appetite from financial institutions for the funding of
new developments. Certain local authorities delayed
approval for projects which would have benefited the
community as well as provided employment. As a result
only three new sites were opened which is less than
anticipated at the beginning of the year. The decision to
proceed with our own house-brand label has been very
successful and the range of products in this category has
expanded substantially.
The Retail Division came in with a 40% sales growth over
the previous year. The Department Stores finished 32% up
while the Clicks/Diskom chain achieved growth of 97%. As
a result of our keener focus it became evident during the
year that The Food Franchise Chain was not playing a
meaningful role and a decision was taken to exit from the
business. Elements will be sold while in-store units have
been absorbed into the department store operations. It is
anticipated that no significant closure costs will be
incurred.
Outlook
Good rains materialised in the northern half of the
country and it is hoped that quality cash crops have been
produced, as well as sufficient maize to carry Zimbabwe
through the dry season. A further round of wage awards
and the demutualisation of the Old Mutual, should create
more disposable income in the hands of the consumer to
enable us to expect substantial growth in sales in the
Supermarkets and Retail divisions. As the economic
situation improves business and tourist arrivals will
benefit the Hotels Division. Both Hotels operate on US$
based rates and therefore maintain a hedge against
currency depreciation.
In the local environment, we will actively pursue
opportunities for both organic and acquisitive expansion
in our Supermarkets and Retail Divisions. We will
continue to fund any local initiatives with local
resources. Together with strategic partners, we shall
continue to seek an appropriate opening into financial
services which will enable us to develop the customer
services which have proved to be successful in retail
organisations internationally. We shall continue to
negotiate for the acquisition of the Victoria Falls Hotel
property.
The Group has been actively pursuing regional
opportunities to invest its US$45 million. In conjunction
with strategic partners we are seeking investments in
activities with a similar focus to ours that can benefit
our Zimbabwe operations and which have potential for
significant capital growth in US dollar terms.
It remains for me to congratulate management and staff on
a successful year and to record my appreciation for their
efforts throughout the year.
John Moxon
Executive Chairman
Meikles Africa Limited
7 May 1999
DIVIDEND ANNOUNCEMENT
On 7 May 1999, the Board approved a final dividend number
59 of 100 cents per share on 152,895,305 shares payable to
members registered in the books of the Company at the
close of business on Friday 2 July 1999. The Transfer
Books and Register of Members will be closed from 3 to 18
July 1999. Dividend cheques will be mailed to
shareholders on or about 19 July 1999. The dividends
payable to non-resident shareholders will be paid in
accordance with Exchange Control Regulations.
Shareholders' withholding tax will be deducted where
applicable.
The Annual General Meeting of the Company will be held in
Harare on 4 August 1999, details of which will be provided
in the Annual Report
By order of the Board
A.P. LANE-MITCHELL
Company Secretary
7 May 1999
Consolidated Income Statement
for the year ended 31 March 1999
The audited results of the Meikles Africa Group of
Companies in respect of the year ended 31 March 1999 are
as follows:
(Restated)
Notes 1999 1998
Z$000 Z$000
Turnover 4,193,467 2,826,344
Gross profit 1,171,718 682,631
Other income 161,668 84,979
Operating expenses (816,092) (517,436)
Operating Profit 517,294 250,174
Finance income (2) 1,211,666 388,887
Profit before taxation 1,728,960 639,061
Taxation (193,440) (83,041)
Profit after taxation 1,535,520 556,020
Minority interest (37,860) (23,001)
Net profit for the year attributable 1,497,660 533,019
to shareholders
Dividends (214,053) (99,382)
Transferred to retained earnings 1,283,607 433,637
Earnings per share - basic (cents) (3) 980 349
IIMR Headline earnings per share (3) 992 350
(cents)
Balance Sheets
at 31 March 1999
Group
(Restated)
1999 1998
Z$000 Z$000
ASSETS
Non-current assets
Property, plant and 671,311 543,485
equipment
Investments 560,551 232,853
Goodwill 417,779 60,534
Long term debtors 144,895 115,112
1,794,536 951,984
Current assets
Stocks 513,622 403,417
Debtors and prepayments 441,575 241,592
Cash and cash equivalents 1,962,236 821,257
2,917,433 1,466,266
Total assets 4,711,969 2,418,250
EQUITY AND LIABILITIES
Capital and reserves
Equity capital 15,289 15,289
Non-distributable 1,048,368 1,048,368
reserves
Retained earnings 1,753,639 470,032
2,817,296 1,533,689
Minority interest 19,961 10,496
Non-current liabilities
Interest bearing borrowings 574,260 133,935
Deferred tax 297,574 166,691
Other financial liabilities 7,331 6,051
879,165 306,677
Current liabilities
Creditors 720,239 439,162
Interest bearing borrowings 62,705 39,225
Proposed final dividend 152,895 53,513
Other financial liabilities 59,708 35,488
995,547 567,388
Total equity and liabilities 4,711,969 2,418,250
Consolidated Cash Flow Statement
for the year ended 31 March 1999
(Restated)
1999 1998
Z$000 Z$000
Cash flows from operating activities
Profit before taxation 1,728,960 639,061
Adjustment for:
non-operating cash flow (884,292) (234,829)
non-cash items (253,428) (111,181)
Operating cash flow before working 591,240 293,051
capital changes
Generated from/(used in) working 159,962 (104,324)
capital changes
Operating cash flow 751,202 188,727
Income tax paid (47,135) (24,511)
Net cash generated from operating 704,067 164,216
activities
Net cash used in investing (658,912) (194,072)
activities
Net cash generated from/(used in) 126,773 (139,678)
financing activities
Net effect of exchange rate changes
on cash and cash equivalents 969,051 203,841
Net increase in cash and cash 1,140,979 34,307
equivalents
Cash and cash equivalents at 31 821,257 786,950
March 1998
Cash and cash equivalents at 31 1,962,236 821,257
March 1999
NOTES
1. Accounting policies
The accounting policies are the same as those used in the
31 March 1998 Financial Statements, except in relation to
quoted investments and deferred taxation which have been
changed with effect from 1 April 1998. Comparative
figures have been restated to reflect these changes.
In prior years, quoted investments were carried at cost
with the market value shown by way of note. In conformity
with the new International Accounting Standards on
Financial Instruments: Disclosure and Presentation (IAS
32) and Recognition and Measurement (IAS 39) the Group's
quoted investments are now included in the balance sheet
at fair value with the corresponding change in value
reported in the income statement. The effect of this
change is to increase investments and retained earnings at
1 April 1998 by Z$219,147,000 and 1 April 1997 by
Z$61,142,000.
In prior periods, deferred income tax was provided for on
a partial basis but the Group now provides for deferred
income and capital gains tax on a comprehensive basis in
conformity with IAS 12 (revised). The effect of this
change is to increase non-current liabilities by
Z$166,691,000 and Z$133,772,000 at 1 April 1998 and 1
April 1997 respectively. Retained earnings and minority
interest at 1 April 1998 have been reduced by
Z$161,115,000 and Z$5,576,000 and at 1 April 1997 by
Z$128,513,000 and Z$5,259,000 respectively.
As regards deferred income tax the principal temporary
differences arise from depreciation and capital allowances
on property, plant and equipment, and tax losses carried
forward while the deferred capital gains tax is in respect
of the revaluation of externally quoted investments.
Deferred tax assets relating to the carry forward of
unused tax losses are recognised to the extent that it is
probable that future taxable profit will be available
against which unused tax losses can be utilised.
2. Finance Income
Group
(Restated)
1999 1998
Z$000 Z$000
Interest receivable:
Related parties - 3,783
Third parties 114,077 60,361
114,077 64,144
Net exchange gains 973,936 203,841
Increase in value of quoted 327,698 158,005
investments
Interest payable:
Long term borrowings (195,459) (34,243)
Overdrafts and short term (5,586) (1,256)
borrowings
Related parties (3,000) (1,604)
(204,045) (37,103)
1,211,666 388,887
3. Earnings per share
Basic earnings per share
Basic earnings per share have been calculated by dividing
the net profit for the year attributable to shareholders
by the number of shares in issue of 152,895,305
(1998:152,895,305).
A calculation of diluted earnings per share has not been
shown as the difference to basic earnings per share is
insignificant.
Group
IIMR Headline earnings per share (Restated)
1999 1998
Z$000 Z$000
Z$000
Net profit for the year 1,497,660 533,019
attributable to shareholders
Amortisation of goodwill 16,107 3,272
Loss/(profit) on disposal of 2,528 (719)
fixed assets
1,516,295 535,572
Number of shares in issue 152,895,305 152,895,305
Basic and headline earnings per share for 1998 have been
restated to take into account the effect of the changes in
accounting policies.
4. Segmental Analysis
Year ended 31 March Hotels Supermarkets Retail Corporate Group
1999
Turnover 449,951 2,937,224 806,292 - 4,193,46
Operating profit 210,284 187,261 127,412 (7,663) 517,294
Finance income 1,211,666
Taxation (193,440)
Minority interest (37,860)
Attributable profit 1,497,660
Segment assets 950,073 648,589 876,664 2,336,643 4,711,969
Segment 278,569 568,235 356,102 671,806 1,874,712
liabilities
Capital
expenditure and 428,382 72,572 45,834 20,432 567,220
goodwill
Depreciation and
amortisation 25,352 17,822 24,023 4,545 71,742
Year ended 31 March Hotels Supermarkets Retail Corporate Group
Turnover 188,264 2,063,262 574,818 - 2,826,3
Operating profit 74,558 119,732 62,102 (6,218) 250,174
Finance income 388,887
Taxation (83,041)
Minority interest (23,001)
Attributable 533,019
profit
Segment assets 355,214 401,712 725,404 935,920 2,418,250
Segment 104,856 331,525 160,512 277,172 874,065
liabilities
Capital
expenditure and 54,149 62,906 51,921 244 169,220
goodwill
Depreciation and
amortisation 9,123 14,531 19,282 4,607 47,543
END
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