MEIKLES LIMITED
ABRIDGED UNAUDITED FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER
2017
CHAIRMAN’S STATEMENT
Group Financial Review
Group revenue for the half year ended 30 September
2017 grew by 12% to US$254.0
million from US$225.9 million
in the previous year. The contribution to revenue by the different
segments of the Group is set out in Note 5.
EBITDA for the period grew by US$5.7
million or 60% from US$9.5
million in the previous year to US$15.3 million. The contribution to EBITDA by
the different segments of the Group is set out in Note 5.
Profit before tax from continuing operations was US$5.4 million compared with a loss of
US$0.7 million in the previous year.
Profit before tax for the six month period was above the result for
the full financial year ended 31 March
2017 of US$5.3 million.
The group disposed of its financial services operations on
31 August 2017. The group does
accommodate all financial services participants to ensure ease of
transacting for customers.
Segment Commentary
TM Supermarkets
trading as TM and PnP
Revenue for the period amounted to US$232.0 million, a growth of 15% from
US$202.0 million in the previous
year. The growth in revenue included a substantial increase in the
number of units sold.
EBITDA for the period grew by 38% to US$13.2 million. Profit before tax was at
US$9.1 million, a 49% growth from
US$6.1 million in the previous
year.
Refurbishment works are in progress at a number of branches with
completion expected before the commencement of the festive season.
Additional branches are soon to be opened and others are under
consideration in terms of forward planning
Tanganda
Revenue grew by 26% to US$12.9
million from US$10.2 million
achieved during the six months ended 30
September 2016. International bulk tea export prices
continued to firm to average US$1.65/kg in the six month’s period to
30 September 2017 compared with an
average of US$1.51 for the same
period last year. Bulk tea production of 3 077 tonnes was 37%
higher than 2 251 tonnes produced in the comparative prior year
period.
The average price on avocadoes of US$1.62/kg was 80% higher than the previous
season’s average price of US$0.90/kg
due to significant improvement in quality as the trees mature. 629
tonnes of avocadoes were exported compared to 127 tonnes in the
previous season.
Macadamia nuts sales of 192 tonnes for the six months to
September 2017 were 19% higher than
162 tonnes for the six months to September
2016. Average price of US$4.39/kg was 57% higher than US$2.80/kg realised in the previous period.
EBITDA was US$2.9 million during
the six months period ended 30 September
2017. This was a significant growth over US$1.4 million generated during the six months
ended 30 September 2016.
In September 2017, Tanganda
accessed the concessionary Reserve Bank of Zimbabwe’s export
finance facility which has assisted significantly in sourcing
inputs and retiring expensive debt. This development has placed
Tanganda in a sound financial position.
Hospitality
Revenue grew by 13% to US$8.7
million, with the growth primarily attributable to a surge
in tourist arrivals in Victoria
Falls. New airlines commenced flights to Victoria Falls during the period under review.
Room occupancy grew by 4.59 and 13.14 percentage points at Meikles
Hotel and Victoria Falls Hotel respectively. The average room rate
grew marginally at Victoria Falls Hotel. At Meikles Hotel the
average room rate declined by 7% as the mix of business during the
period was dominated by conference groups.
EBITDA for the period grew by 84% to US$2.1 million from US$1.1
million in the previous year. EBITDA for the six month’s
period was 16% above the result for the full financial year ended
31 March 2017.
The lease for the Victoria Falls Hotel was recently renewed.
Planning of the refurbishment of the hotel is at an advanced
stage.
Stores – Meikles
Stores and Meikles Mega Market
Seven outlets were closed during the period under review due to
working capital constraints. Savings were realised from various
cost control measures implemented during the period. EBITDA for the
period resulted in a loss of US$1.8
million compared with a loss of US$1.6
million in the previous year.
Funding arrangements for working capital requirements have very
recently been secured. The division will shortly be in a position
to trade in a normal fashion and the turnaround lead period to
profit is expected to be relatively short.
Amount owed by Government
Considerable progress has been made in our interaction with
Government towards the receipt of the funds that are due to the
Company from Government.
An agreement was due to be finalised immediately before the
release of our results for the period to 30
September 2017. It is now anticipated that recent events
will delay finalisation, but it is not expected that the outcome
will be compromised in any way.
Outlook
The Group is expected to increase its EBITDA performance during
the second half of the financial year. Strategies to reduce short
term borrowings further during the remaining months of the
financial year are in the process of being implemented.
Appreciation
I would like to extend my appreciation to our customers,
suppliers, shareholders and regulatory authorities for their
continued support. I would also like to extend my appreciation to
my fellow Directors, and to management and staff for their
dedication and commitment.
Dividend
The Board has not declared an interim dividend. However, it is
expected that following a conclusion of arrangements on the amount
owed by Government, it will be possible to consider the declaration
of an interim dividend.
JRT Moxon
Executive Chairman
14 November 2017
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2017 |
|
|
|
|
|
Unaudited |
Unaudited |
|
|
30 Sep
2017 |
30 Sep
2016 |
|
|
US$
000 |
US$
000 |
CONTINUING
OPERATIONS |
|
|
|
Revenue |
|
253,989 |
225,898 |
Net operating
costs |
|
(245,151) |
(222,255) |
|
|
|
|
Operating
profit |
|
8,838 |
3,643 |
|
|
|
|
Investment income |
|
34 |
723 |
Finance costs |
|
(3,440) |
(4,215) |
Net exchange (losses)
/ gains |
|
(37) |
7 |
Loss recognised on
discounting Treasury Bills |
|
(6) |
(774) |
Fair value adjustments
on biological assets |
|
- |
3 |
Profit / (loss)
before tax |
|
5,389 |
(613) |
Income tax
expense |
|
(2,672) |
(769) |
Profit / (loss) for
the period from continuing operations |
|
2,717 |
(1,382) |
|
|
|
|
DISCONTINUED
OPERATION |
|
|
|
Profit for the period
from discontinued operation |
|
554 |
(76) |
|
|
|
|
Profit / (loss) for
the period |
|
3,271 |
(1,458) |
|
|
|
|
Other comprehensive
income / (loss), net of tax |
|
|
|
Items that may be
reclassified subsequently to profit or loss: |
|
|
|
Reclassification
adjustment relating to available-for-sale financial assets disposed
of in the current period |
|
47 |
617 |
Other comprehensive
income for the period, net of tax |
|
47 |
617 |
|
|
|
|
TOTAL COMPREHENSIVE
INCOME / (LOSS) FOR THE PERIOD |
|
3,318 |
(841) |
|
|
|
|
(Loss) / profit for
the period attributable to: |
|
|
|
Owners of the parent |
|
(41) |
(3,655) |
Non-controlling interests |
|
3,312 |
2,197 |
|
|
3,271 |
(1,458) |
Total comprehensive
income / (loss) attributable to: |
|
|
|
Owners of the parent |
|
6 |
(3,038) |
Non-controlling interests |
|
3,312 |
2,197 |
|
|
3,318 |
(841) |
(Loss) / earnings
per share (cents) |
|
|
|
Basic |
|
(0.02) |
(1.44) |
Continuing operations |
|
(0.24) |
(1.41) |
Discontinued operations |
|
0.22 |
(0.03) |
|
|
|
|
Diluted |
|
(0.01) |
(1.34) |
Continuing operations |
|
(0.21) |
(1.31) |
Discontinued operations |
|
0.20 |
(0.03) |
|
|
|
|
Headline loss per
share (cents) |
|
(0.29) |
(1.12) |
Continuing operations |
|
(0.21) |
(1.09) |
Discontinued operations |
|
(0.08) |
(0.03) |
|
|
|
|
Diluted headline
loss per share (cents) |
|
(0.27) |
(1.04) |
Continuing operations |
|
(0.19) |
(1.01) |
Discontinued operations |
|
(0.08) |
(0.03) |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30
SEPTEMBER 2017
|
|
Unaudited |
Audited |
|
|
30 Sep
2017 |
31 March
2017 |
|
|
US$
000 |
US$
000 |
ASSETS |
|
|
|
Non-current
assets |
|
|
|
Property, plant and
equipment |
|
173,253 |
172,664 |
Investment
property |
|
241 |
243 |
Investment in Mentor
Africa Limited |
|
20,046 |
20,046 |
Biological assets |
|
1,262 |
1,147 |
Intangible assets |
|
124 |
124 |
Other financial
assets |
|
11,823 |
11,901 |
Deferred tax |
|
3,859 |
3,427 |
Total non-current
assets |
|
210,608 |
209,552 |
|
|
|
|
Current
assets |
|
|
|
Treasury Bills |
|
- |
3,024 |
Inventories |
|
30,710 |
34,467 |
Trade and other
receivables |
|
16,639 |
13,969 |
Biological assets –
produce on bearer plants |
|
1,195 |
1,867 |
Other financial
assets |
|
3,419 |
4,134 |
Cash and bank
balances |
|
27,552 |
15,637 |
Total current
assets |
|
79,515 |
73,098 |
|
|
|
|
Total
assets |
|
290,123 |
282,650 |
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
Capital and
reserves |
|
|
|
Share capital |
|
2,538 |
2,538 |
Share premium |
|
1,316 |
1,316 |
Other reserves |
|
12,559 |
12,512 |
Retained earnings |
|
83,642 |
83,683 |
Equity attributable to
equity holders of the parent |
|
100,055 |
100,049 |
Non-controlling
interests |
|
30,188 |
28,591 |
Total
equity |
|
130,243 |
128,640 |
|
|
|
|
Non-current
liabilities |
|
|
|
Borrowings |
|
15,446 |
9,241 |
Deferred tax |
|
18,551 |
17,637 |
Total non-current
liabilities |
|
33,997 |
26,878 |
|
|
|
|
Current
liabilities |
|
|
|
Trade and other
payables |
|
75,067 |
70,155 |
Borrowings |
|
50,816 |
56,977 |
Total current
liabilities |
|
125,883 |
127,132 |
|
|
|
|
Total liabilities |
|
159,880 |
154,010 |
|
|
|
|
Total equity and
liabilities |
|
290,123 |
282,650 |
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
|
Share
capital |
Share
premium |
Other reserves |
Retained earnings |
|
US$ 000 |
US$ 000 |
US$
000 |
US$
000 |
2017 -
Unaudited |
|
|
|
|
Balance at 1 April
2017 |
2,538 |
1,316 |
12,512 |
83,683 |
(Loss) / profit for
the period |
- |
- |
- |
(41) |
Other comprehensive
income for the period |
- |
- |
47 |
- |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
Balance at 30
September 2017 |
2,538 |
1,316 |
12,559 |
83,642 |
|
|
|
|
|
2016 -
Unaudited |
|
|
|
|
Balance at 1 April
2016 |
2,538 |
1,316 |
11,418 |
90,096 |
(Loss) / profit for
the period |
- |
- |
- |
(3,655) |
Other comprehensive
income for the period |
- |
- |
617 |
- |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
Balance at 30
September 2016 |
2,538 |
1,316 |
12,035 |
86,441 |
|
Attributable to owners of parent |
Non-controlling
interests |
Total |
|
US$ 000 |
US$ 000 |
US$ 000 |
2017 -
Unaudited |
|
|
|
Balance at 1 April
2017 |
100,049 |
28,591 |
128,640 |
(Loss) / profit for
the period |
(41) |
3,312 |
3,271 |
Other comprehensive
income for the period |
47 |
- |
47 |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
(1,715) |
(1,715) |
Balance at 30
September 2017 |
100,055 |
30,188 |
130,243 |
|
|
|
|
2016 -
Unaudited |
|
|
|
Balance at 1 April
2016 |
105,368 |
21,182 |
126,550 |
(Loss) / profit for
the period |
(3,655) |
2,197 |
(1,458) |
Other comprehensive
income for the period |
617 |
- |
617 |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
1,050 |
1,050 |
Balance at 30
September 2016 |
102,330 |
24,429 |
126,759 |
CONSOLIDATED
STATEMENT OF CASH FLOWS |
|
|
|
FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2017 |
|
|
|
|
|
Unaudited |
Unaudited |
|
|
30 Sep
2017 |
30 Sep
2016 |
CONTINUING AND
DISCONTINUED OPERATIONS |
|
US$ 000 |
US$
000 |
|
|
|
|
Cash flows from
operating activities |
|
|
|
Profit / (loss) before
tax |
|
5,943 |
(709) |
Adjustments for: |
|
|
|
- Depreciation and
impairment of property, plant and equipment and investment
property |
|
6,658 |
5,998 |
- Net interest |
|
3,399 |
3,502 |
- Net exchange losses
/ (gains) |
|
37 |
(7) |
- Profit on disposal
of subsidiary |
|
(768) |
- |
- Fair value
adjustments on biological assets |
|
- |
(3) |
- Loss recognised on
discounting Treasury Bills |
|
6 |
774 |
- Loss on disposal of
property, plant and equipment |
|
176 |
99 |
Operating cash flow
before working capital changes |
|
15,451 |
9,654 |
|
|
|
|
Decrease / (increase)
in inventories |
|
3,757 |
(557) |
(Increase) / decrease
in trade and other receivables |
|
(2,963) |
2,139 |
Increase in trade and
other payables |
|
4,289 |
5,850 |
Cash generated from
operations |
|
20,534 |
17,086 |
Income taxes paid |
|
(1,567) |
(794) |
Net cash generated
from operating activities |
|
18,967 |
16,292 |
|
|
|
|
Cash flows from
investing activities |
|
|
|
Payment for property,
plant and equipment |
|
(7,465) |
(6,317) |
Proceeds from disposal
of property, plant and equipment |
|
117 |
33 |
Proceeds from sale of
Treasury Bills and coupon interest |
|
3,075 |
1,950 |
Net movement in
service assets |
|
(73) |
27 |
Net movement in
other investments |
|
816 |
(378) |
Net movement in
biological assets |
|
557 |
(23) |
Net cash inflow on
disposal of subsidiary |
|
1,060 |
- |
Investment income |
|
12 |
33 |
Net cash used in
investing activities |
|
(1,901) |
(4,675) |
|
|
|
|
Cash flows from
financing activities |
|
|
|
Net decrease in
interest bearing borrowings |
|
45 |
(6,333) |
Proceeds on disposal
of partial interest in a subsidiary without loss of control |
|
- |
1,050 |
Finance costs |
|
(3,444) |
(4,227) |
Dividend paid –
minority shareholders |
|
(1,715) |
- |
Net cash used in
financing activities |
|
(5,114) |
(9,510) |
|
|
|
|
Net increase in cash
and bank balances |
|
11,952 |
2,107 |
Cash and bank balances
at the beginning of the period |
|
15,637 |
10,494 |
Net effect of exchange
rate changes on cash and bank balances |
|
(37) |
(54) |
Cash and bank
balances at the end of the period |
|
27,552 |
12,547 |
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. These abridged unaudited financial results do
not include all information and disclosures required to fully
comply with IFRS and should be read in conjunction with the Group’s
annual report per 31 March 2017.
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.
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 2017, 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. Treasury Bills
Below is an analysis of the movement in the Treasury Bills’
balance during the period:
|
|
Group
and Company |
Group
and Company |
Group and
Company |
Group and
Company |
|
|
30 Sep
2017 |
30 Sep
2017 |
31 March
2017 |
31 March
2017 |
|
|
US$
000 |
US$
000 |
US$
000 |
US$
000 |
|
|
Fair
(Market) value |
Nominal value |
Fair
(Market) value |
Nominal value |
Balance at the
beginning of the period |
|
3,024 |
3,071 |
11,106 |
12,247 |
Interest charge for
the period |
|
11 |
4 |
1,061 |
409 |
Coupon interest
received |
|
(75) |
(75) |
(551) |
(551) |
Treasury Bills
disposed /matured during the period |
|
(2,960) |
(3,000) |
(8,592) |
(9,034) |
Balance at the end of
the period |
|
- |
- |
3,024 |
3,071 |
|
|
|
|
|
|
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 each Statement of Financial Position
date, 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 preceding financial periods.
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.
5. Segment information
|
Unaudited |
Unaudited |
|
30 Sep
2017 |
30 Sep
2016 |
|
US$
000 |
US$
000 |
Revenue |
|
|
Supermarkets |
231,973 |
202,029 |
Agriculture |
12,927 |
10,223 |
Hotels |
8,685 |
7,688 |
Departmental
stores |
1,040 |
2,572 |
Wholesaling |
89 |
4,107 |
Corporate* |
(725) |
(721) |
|
253,989 |
225,898 |
EBITDA |
|
|
Supermarkets |
13,229 |
9,577 |
Agriculture |
2,980 |
1,444 |
Hotels |
2,101 |
1,140 |
Departmental
stores |
(825) |
(467) |
Wholesaling |
(948) |
(1,158) |
Corporate* |
(1,277) |
(982) |
|
15,260 |
9,554 |
The EBITDA figures are
before Group management fees. |
|
|
NOTES TO THE ABRIDGED UNAUDITED FINANCIAL RESULTS
5. Segment information (continued)
|
Unaudited |
Audited |
|
30 Sep
2017 |
31 March
2017 |
|
US$
000 |
US$
000 |
Segment
assets |
|
|
Supermarkets |
108,937 |
98,532 |
Agriculture |
76,451 |
76,038 |
Hotels |
46,467 |
46,460 |
Departmental
stores |
26,473 |
26,899 |
Wholesaling |
4,988 |
4,196 |
Corporate* |
26,807 |
30,525 |
|
290,123 |
282,650 |
Segment
liabilities |
|
|
Supermarkets |
50,479 |
43,314 |
Agriculture |
29,557 |
30,944 |
Hotels |
22,263 |
22,782 |
Departmental
stores |
18,108 |
17,286 |
Wholesaling |
10,237 |
8,690 |
Corporate* |
29,236 |
30,994 |
|
159,880 |
154,010 |
*Intercompany transactions and balances have been eliminated from
the corporate amounts. Corporate also includes other subsidiaries
that are immaterial to warrant separate disclosure. |
|
Unaudited |
Unaudited |
|
30 Sep 2017 |
30 Sep 2016 |
6. Other information |
US$ 000 |
US$ 000 |
Depreciation of property, plant and
equipment and investment property |
6,566 |
5,361 |
Impairment of property, plant and
equipment |
92 |
637 |
Capital commitments authorised by
the Directors but not contracted for |
- |
13,466 |
Group’s share of capital commitments
of joint operations |
3,000 |
2,641 |
|
Unaudited |
Audited |
|
30 Sep 2017 |
31 March 2017 |
|
US$ 000 |
US$ 000 |
7. Net borrowings |
|
|
Non-current borrowings |
15,446 |
9,241 |
Current borrowings |
50,816 |
56,977 |
Total borrowings |
66,262 |
66,218 |
Cash and cash equivalents |
(27,552) |
(15,637) |
Net borrowings |
38,710 |
50,581 |
|
|
|
Comprising: |
|
|
Secured |
55,453 |
55,773 |
Unsecured |
10,809 |
10,445 |
|
66,262 |
66,218 |
|
The
weighted average cost of borrowings for the year was 13.90% per
annum (31 March 2017: 13.63% per annum).
The Group has issued cross company guarantees worth US$35.2 million
(31 March 2017: US$29.8 million) for Group borrowing
facilities. |
NOTES TO THE ABRIDGED UNAUDITED
FINANCIAL RESULTS
8. Discontinued operation
On 31 August 2017, the Company
signed an agreement to dispose of Tuscarora Investments (Private)
Limited (trading as Meikles Financial Services), which carried out
the Group’s financial services operations. The proceeds of sale
exceeded the carrying amount of the related net assets and,
accordingly, no impairment losses were recognised. The disposal of
the financial services operations is consistent with the Group’s
long-term policy to focus its activities on its main segments,
namely retail, agriculture, hospitality, wholesaling and security
services. The results of the discontinued operations included in
profit for the period are as set out below. The comparative profit
and cash flows from discontinued operation have been re-presented
to include the operation classified as discontinued in the current
period.
|
Unaudited |
Unaudited |
|
30 Sep 2017 |
30 Sep 2016 |
|
US$ 000 |
US$ 000 |
Profit / (loss) for the period
from discontinued operation |
|
|
Net fees and commission income |
297 |
310 |
Net operating costs |
(518) |
(396) |
Operating loss |
(221) |
(86) |
Investment income |
11 |
2 |
Interest expense |
(4) |
(12) |
Loss before tax |
(214) |
(96) |
Income tax credit |
- |
20 |
Loss for the period |
(214) |
(76) |
Profit on disposal of operation |
768 |
- |
Profit / (loss) for the period
from discontinued operation |
554 |
(76) |
|
|
|
Cash flows from discontinued
operation |
|
|
Net cash outflows from operating
activities |
(98) |
(280) |
Net cash flows from investing
activities |
1 |
(33) |
Net cash inflows from financing
activities |
168 |
283 |
Net cash flows from discontinued
operation |
71 |
(30) |
|
|
|
|
|
|
|
|
Unaudited |
Analysis of assets and
liabilities over which control was lost |
|
30 Sep 2017 |
|
|
US$ 000 |
Current assets |
|
|
Cash and cash equivalents |
|
224 |
Other financial assets |
|
1,156 |
Trade and other receivables |
|
255 |
Inventory |
|
7 |
|
|
|
Non-current assets |
|
|
Property, plant and equipment |
|
197 |
Deferred tax asset |
|
216 |
|
|
|
Current liabilities |
|
|
Trade and other payables |
|
(1,763) |
|
|
|
Net assets disposed off |
|
292 |
|
|
|
Proceeds on disposal |
|
1,060 |
|
|
|
Profit on disposal of
operation |
|
768 |
|
|
|
Meikles Limited Website :
http://www.meiklesltd.com/