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 Limited |
|
22,931 |
27,657 |
Biological assets |
|
41,083 |
30,156 |
Intangible assets |
|
124 |
1,528 |
Other financial
assets |
|
12,246 |
12,760 |
Balances with Reserve
Bank of Zimbabwe |
|
- |
90,861 |
Deferred tax |
|
4,201 |
2,674 |
Total non-current
assets |
|
205,979 |
275,510 |
|
|
|
|
Current
assets |
|
|
|
Balances with Reserve
Bank of Zimbabwe |
|
7,229 |
- |
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 holders of the parent |
|
119,875 |
171,868 |
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
capital |
Share
premium |
Other
reserves |
Retained earnings |
Attributable to owners of parent |
Non
controlling
interests |
Total |
|
US$
000 |
US$ 000 |
US$ 000 |
US$ 000 |
US$ 000 |
US$ 000 |
US$ 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
loss for the year |
- |
- |
(12,472) |
- |
(12,472) |
- |
(12,472) |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
- |
3,100 |
3,100 |
Balance at 31 March
2015 |
2,538 |
1,316 |
87 |
115,934 |
119,875 |
17,281 |
137,156 |
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
interests arising from Meikles Centar Mining (Private) Limited |
- |
- |
- |
- |
- |
147 |
147 |
Non-controlling
interests arising from Kearsely Investments (Private) Limited |
- |
- |
- |
- |
- |
333 |
333 |
Balance at 31 March
2014 |
2,538 |
1,316 |
12,559 |
155,455 |
171,868 |
14,222 |
186,090 |
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 equipment and investment
property |
|
9,454 |
6,774 |
- Net interest |
|
9,199 |
(31,653) |
|
|
(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 Holdings
Limited
|
|
152 |
- |
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 activities |
|
12,182 |
(339) |
|
|
|
|
Cash flows from
investing activities |
|
|
|
Payment for property,
plant and equipment |
|
(25,319) |
(17,441) |
Proceeds from disposal
of property, plant and equipment |
|
158 |
330 |
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 borrowings |
|
(12,329) |
40,644 |
Proceeds on disposal
of partial interest in a subsidiary without loss of control |
|
3,100 |
147 |
Finance costs |
|
(12,527) |
(10,462) |
Dividend paid –
ordinary shareholders |
|
(2,138) |
- |
Net cash (used in)
/ generated from financing activities |
|
(23,894) |
30,329 |
|
|
|
|
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 balances |
|
211 |
272 |
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:
- 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.
- 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.
- 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$47.1 million to the Company
during the year. Details of the movement in these Treasury Bills
are as follows:
|
|
Group
and Company |
Group
and Company |
|
|
31
March 2015 |
31
March 2015 |
|
|
US$
000 |
US$
000 |
|
|
Fair
(Market) value |
Nominal 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$16.2
million.
Treasury Bills issued by the Reserve Bank of Zimbabwe held at 31
March 2015:
|
|
Group and
Company |
Group and Company |
|
|
31 March
2015 |
31 March 2014 |
At fair (market) value |
|
US$ 000 |
US$ 000 |
Treasury Bills maturing on 11 June
2018 with a coupon rate of 2% |
|
10,922 |
- |
Treasury Bills maturing on 10 June
2019 with a coupon rate of 2% |
|
8,375 |
- |
Treasury Bills maturing on 23
December 2016 with a coupon rate of 5% |
|
3,645 |
- |
|
|
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) |
16,549 |
14,363 |
4,292 |
Coupon |
2.0% |
2.0% |
5.0% |
Coupon payment dates |
11 June and 11
December |
10 June and 10
December |
23 June and 23
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 Limited |
152 |
- |
|
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 equipment |
9,454 |
6,774 |
Capital commitments authorised by
the Directors but not contracted |
9,899 |
14,128 |
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