MEIKLES
LIMITED
ABRIDGED UNAUDITED RESULTS FOR THE SIX
MONTHS ENDED 30 SEPTEMBER 2018
CHAIRMAN’S STATEMENT
Group Financial Review
Group revenue for the half year ended 30 September
2018 grew by 30% to US$330.8
million from US$254.0 million
in the comparable period. The contribution to revenue by the
different segments of the Group is set out in Note 4.
Earnings before interest, tax, depreciation and amortisation
“EBITDA” for the period rose by 107% to US$31.5 million from the previous year’s result
of US$15.2 million. The contribution
to EBITDA by the different segments of the Group is set out in Note
4.
Profit after tax grew by 464% to US$15.3
million from US$2.7 million
achieved the previous year. Profit after tax for the six
month period ended 30 September 2018
had surpassed the result for the full financial year ended
31 March 2018 of US$7.7 million by 99%.
Progress is being made in raising long term finance. On
completion, short term loans and overdue current liabilities will
be paid off.
Segment Commentary
TM Supermarkets
trading as TM and PnP
Revenue for the period amounted to US$305.6 million, a growth of 32% from
US$232.0 million in the previous
year. The rise in revenue was underpinned by a considerable growth
in the number of units sold.
EBITDA for the period grew by 65% to US$21.8 million. Profit after tax grew by 106% to
US$13.9 million from US$6.7 million in the previous year.
Refurbishment works are in progress at five branches with
completion expected before the commencement of the festive
season.
Tanganda
Revenue grew by 21% to US$15.7
million from US$12.9 million
achieved during the six months ended 30
September 2017. Average international bulk tea export price
for the period was US$1.68/kg
compared to US$1.65/kg in the six
months period to 30 September 2017.
Bulk tea production of 3 886 tonnes grew by 26% from 3 077 tonnes
produced in the comparative prior year period.
The volume of Macadamia nuts sales grew by 70% to 374 tonnes.
Average price of US$4.82/kg was 16%
above US$4.14/kg realised in the
previous period. Avocadoes’ results will be reflected in the
second half of the year.
EBITDA for six months ended 30 September
2018 grew by 181% to US$8.4
million from US$3.0 million
generated during the comparable period. Profit after tax grew to
US$5.6 million from US$0.6 million in the previous year.
Hospitality
Revenue grew by 19% to US$10.3
million from US$8.7 million
achieved during same period last year. At Meikles Hotel revenue per
available room “RevPAR” rose by 35% underpinned by growth of both
room occupancy and average room rate. The Victoria Falls Hotel
RevPAR grew to US$198 from
US$188 achieved the previous
year.
EBITDA grew by 60% to US$3.4
million from US$2.1 million in
the previous year. Profit after tax from continuing operations for
the six month’s period was US$1.4
million, a growth of 175% above the previous year.
Refurbishment works at The Victoria Falls Hotel will commence
during the last quarter of our financial year.
Meikles Stores
Meikles Mega Market operations closed during the period under
review due to working capital constraints. EBITDA for the period
was a loss of US$1.2 million compared
with a loss of US$1.8 million in the
previous year. Funding arrangements for working capital
requirements are being secured and new store models are being
developed.
Amount owed by Government
The Company reaffirms the position as set out in the 2018 Annual
Report. There are expectations that final written agreements
on this matter will be concluded very shortly.
Outlook
The trend of greatly increased profit earned in the first six
months of the current financial year has continued into the first
period of the second six months.
Dividend
In view of the profit for the six month’s period ended
30 September 2018 and the ongoing
restructuring of short term loans, the board declared an interim
dividend of US$0.012 per share
payable either as scrip or cash. The total dividend will amount to
approximately US$3.1 million. A full
dividend announcement will be published separately in due
course.
Appreciation
I would like to extend my appreciation to our customers,
suppliers, shareholders and regulatory authorities for their
continued support. I would also like to extend my appreciation to
my fellow Directors, and to management and staff for their
dedication and commitment.
JRT Moxon
Executive Chairman
13 November 2018
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2018 |
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
30 Sep
2018 |
30 Sep 2017 |
31 March 2018 |
|
|
US$
000 |
US$
000 |
US$
000 |
CONTINUING OPERATIONS |
|
|
|
|
Revenue |
|
330,830 |
253,989 |
534,930 |
Net operating
costs |
|
(305,881) |
(245,151) |
(508,197) |
|
|
|
|
|
Operating
profit |
|
24,949 |
8,838 |
26,733 |
|
|
|
|
|
Investment income |
|
20 |
34 |
271 |
Finance costs |
|
(4,412) |
(3,440) |
(8,640) |
Net exchange gains /
(losses) |
|
1,163 |
(37) |
(468) |
Loss recognised on
discounting Treasury Bills |
|
- |
(6) |
(6) |
Fair value adjustments
on biological assets |
|
78 |
- |
1,336 |
Profit before
tax |
|
21,798 |
5,389 |
19,226 |
Income tax
expense |
|
(6,466) |
(2,672) |
(11,533) |
Profit for the
period from continuing operations |
|
15,332 |
2,717 |
7,693 |
|
|
|
|
|
DISCONTINUED
OPERATION |
|
|
|
|
Profit for the period
from discontinued operation |
|
- |
554 |
501 |
|
|
|
|
|
Profit for the
period |
|
15,332 |
3,271 |
8,194 |
|
|
|
|
|
Other comprehensive
income, 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 |
47 |
Other comprehensive
income for the period, net of tax |
|
- |
47 |
47 |
|
|
|
|
|
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD |
|
15,332 |
3,318 |
8,241 |
|
|
|
|
|
Profit for the
period attributable to: |
|
|
|
|
Owners of the parent |
|
8,520 |
(41) |
(829) |
Non-controlling interests |
|
6,812 |
3,312 |
9,023 |
|
|
15,332 |
3,271 |
8,194 |
Total comprehensive
income is attributable to: |
|
|
|
|
Owners of the parent |
|
8,520 |
6 |
(782) |
Non-controlling interests |
|
6,812 |
3,312 |
9,023 |
|
|
15,332 |
3,318 |
8,241 |
|
|
|
|
|
Earnings / (loss)
per share (cents) |
|
|
|
|
Basic |
|
3.33 |
(0.02) |
(0.32) |
|
|
|
|
|
Diluted |
|
3.12 |
(0.01) |
(0.31) |
|
|
|
|
|
Headline earnings /
loss per share (cents) |
|
3.46 |
(0.29) |
0.08 |
|
|
|
|
|
Diluted headline
earnings / loss per share (cents) |
|
3.24 |
(0.27) |
0.08 |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30
SEPTEMBER 2018
|
|
Unaudited |
Unaudited |
Audited |
|
|
30 Sep
2018 |
30 Sep 2017 |
31 March 2018 |
|
|
US$
000 |
US$
000 |
US$
000 |
ASSETS |
|
|
|
|
Non-current
assets |
|
|
|
|
Property, plant and
equipment |
|
183,094 |
173,253 |
175,267 |
Investment
property |
|
237 |
241 |
239 |
Investment in Mentor
Africa Limited |
|
20,046 |
20,046 |
20,046 |
Biological assets |
|
1,407 |
1,262 |
1,299 |
Intangible assets |
|
124 |
124 |
124 |
Other financial
assets |
|
11,803 |
11,823 |
11,815 |
Deferred tax |
|
264 |
3,859 |
121 |
Total non-current
assets |
|
216,975 |
210,608 |
208,911 |
|
|
|
|
|
Current
assets |
|
|
|
|
Inventories |
|
47,324 |
30,710 |
43,870 |
Trade and other
receivables |
|
15,679 |
16,639 |
17,341 |
Biological assets –
produce on bearer plants |
|
2,482 |
1,195 |
2,810 |
Other financial
assets |
|
3,346 |
3,419 |
3,383 |
Cash and bank
balances |
|
54,845 |
27,552 |
34,175 |
Total current
assets |
|
123,676 |
79,515 |
101,579 |
|
|
|
|
|
Total
assets |
|
340,651 |
290,123 |
310,490 |
|
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
|
Capital and
reserves |
|
|
|
|
Share capital |
|
2,562 |
2,538 |
2,562 |
Share premium |
|
1,469 |
1,316 |
1,469 |
Other reserves |
|
12,559 |
12,559 |
12,559 |
Retained earnings |
|
91,374 |
83,642 |
82,854 |
Equity attributable to
equity holders of the parent |
|
107,963 |
100,055 |
99,444 |
Non-controlling
interests |
|
42,786 |
30,188 |
36,241 |
Total
equity |
|
150,750 |
130,243 |
135,685 |
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Borrowings |
|
13,455 |
15,446 |
17,309 |
Deferred tax |
|
21,311 |
18,551 |
19,189 |
Total non-current
liabilities |
|
34,766 |
33,997 |
36,498 |
|
|
|
|
|
Current
liabilities |
|
|
|
|
Trade and other
payables |
|
98,318 |
75,067 |
82,334 |
Borrowings |
|
56,817 |
50,816 |
55,973 |
Total current
liabilities |
|
155,135 |
125,883 |
138,307 |
|
|
|
|
|
Total liabilities |
|
189,901 |
159,880 |
174,805 |
|
|
|
|
|
Total equity and
liabilities |
|
340,651 |
290,123 |
310,490 |
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2018
|
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 |
2018 - Unaudited |
|
|
|
|
|
|
|
Balance at 1 April 2018 |
2,562 |
1,469 |
12,559 |
82,854 |
99,444 |
36,241 |
135,685 |
(Loss)
/ 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 |
|
|
|
|
|
|
|
|
2017 - Unaudited |
|
|
|
|
|
|
|
Balance at 1 April 2017 |
2,538 |
1,316 |
12,512 |
83,683 |
100,049 |
28,591 |
128,640 |
(Loss)
/ profit for the period |
- |
- |
- |
(41) |
(41) |
3,312 |
3,271 |
Other
comprehensive income for the period |
- |
- |
47 |
- |
47 |
- |
47 |
Non-controlling interests arising from Mopani Property Development
(Private) Limited |
- |
- |
- |
- |
- |
(1,715) |
(1,715) |
Balance at 30 September 2017 |
2,538 |
1,316 |
12,559 |
83,642 |
100,055 |
30,188 |
130,243 |
CONSOLIDATED STATEMENT OF CASHFLOWS |
|
|
|
|
FOR
THE SIX MONTHS ENDED 30 SEPTEMBER 2018 |
|
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
30 Sep 2018 |
30 Sep 2017 |
31 March
2018 |
CONTINUING AND DISCONTINUED OPERATIONS |
|
US$ 000 |
US$
000 |
US$
000 |
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
Profit
before tax |
|
21,798 |
5,943 |
19,226 |
Adjustments for: |
|
|
|
|
-
Depreciation and impairment of property, plant and equipment and
investment property |
|
6,571 |
6,658 |
13,311 |
- Net
interest |
|
4,391 |
3,399 |
8,415 |
-
Dividend income |
|
- |
- |
(53) |
- Net
exchange (gains) / losses |
|
(1,163) |
37 |
468 |
-
Profit on disposal of subsidiary |
|
- |
(768) |
(768) |
- Fair
value adjustments on biological assets |
|
(78) |
- |
(1,336) |
- Loss
recognised on discounting Treasury Bills |
|
- |
6 |
6 |
- Loss
on disposal of property, plant and equipment |
|
83 |
176 |
1,545 |
Operating cash flow before working capital changes |
|
31,602 |
15,451 |
41,368 |
|
|
|
|
|
(Increase)/decrease in inventories |
|
(3,454) |
3,757 |
(9,403) |
Decrease / (increase) in trade and other receivables |
|
1,647 |
(2,963) |
(3,627) |
Increase in trade and other payables |
|
15,347 |
4,289 |
11,895 |
Cash generated from operations |
|
45,142 |
20,534 |
40,233 |
Income
taxes paid |
|
(3,848) |
(1,567) |
(6,447) |
Net
cash generated from operating activities |
|
41,294 |
18,967 |
33,786 |
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
Payment for property, plant and equipment |
|
(14,612) |
(7,465) |
(17,717) |
Proceeds from disposal of property, plant and equipment |
|
160 |
117 |
350 |
Proceeds from sale of Treasury Bills and coupon interest |
|
- |
3,075 |
3,075 |
Net
movement in service assets |
|
(26) |
(73) |
(89) |
Net
movement in other investments |
|
52 |
816 |
847 |
Net
movement in biological assets |
|
298 |
557 |
241 |
Net
cash inflow on disposal of subsidiary |
|
- |
1,060 |
1,060 |
Investment income |
|
18 |
12 |
208 |
Net
cash used in investing activities |
|
(14,110) |
(1,901) |
(12,025) |
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
Net
(decrease) / increase in interest bearing borrowings |
|
(3,010) |
45 |
7,064 |
Non-controlling interests arising from Mopani Property Development
(Private)
Limited |
|
(267) |
- |
519 |
Finance costs |
|
(4,412) |
(3,444) |
(8,640) |
Dividend paid – minority shareholders |
|
- |
(1,715) |
(1,715) |
Net
cash used in financing activities |
|
(7,689) |
(5,114) |
(2,772) |
|
|
|
|
|
Net
increase in cash and bank balances |
|
19,495 |
11,952 |
18,989 |
Cash
and bank balances at the beginning of the period |
|
34,175 |
15,637 |
15,637 |
Net
effect of exchange rate changes on cash and bank balances |
|
1,175 |
(37) |
(451) |
Cash and bank balances at the end of the period |
|
54,845 |
27,552 |
34,175 |
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 financial results are presented
in United States of America
dollars (US$), which is the Group’s functional currency. In the
current environment the determination of functional currency is a
significant judgement area. These abridged unaudited financial
results do not fully comply with IFRS and should be read in
conjunction with the Group’s annual report for the full year to
31 March 2018.
2. Accounting policies
Accounting policies and methods of computation applied in the
preparation of these abridged unaudited financial results are
consistent, in all material respects, with those used in the prior
year. The effects of IFRS 9 and IFRS 15, effective in the current
year shall be included in the full year results to 31 March 2019
3. Going concern
The Directors assess the ability of the Group to continue in
operational existence in the foreseeable future at each reporting
date. As at 30 September 2018, the
Directors have assessed the Group’s ability to continue operating
as a going concern and believe that the preparation of these
unaudited financial results on a going concern basis is still
appropriate.
4. Segment information
|
Unaudited |
Unaudited |
Audited |
|
30 Sep
2018 |
30 Sep
2017 |
31 March
2018 |
|
US$
000 |
US$
000 |
US$
000 |
Revenue |
|
|
|
Supermarkets |
305,557 |
231,973 |
487,822 |
Agriculture |
15,667 |
12,927 |
28,847 |
Hotels |
10,343 |
8,685 |
17,646 |
Departmental
stores |
415 |
1,040 |
1,881 |
Wholesaling |
- |
89 |
224 |
Corporate* |
(1,152) |
(725) |
(1,490) |
|
330,830 |
253,989 |
534,930 |
EBITDA |
|
|
|
Supermarkets |
21,767 |
13,229 |
34,514 |
Agriculture |
8,387 |
2,980 |
10,289 |
Hotels |
3,363 |
2,101 |
4,063 |
Departmental
stores |
(1,188) |
(825) |
(2,218) |
Wholesaling |
- |
(948) |
(1,998) |
Corporate* |
(811) |
(1,277) |
(3,570) |
|
31,518 |
15,260 |
41,080 |
Segment
assets |
|
|
|
Supermarkets |
154,656 |
108,937 |
126,701 |
Agriculture |
89,283 |
76,451 |
85,582 |
Hotels |
46,917 |
46,467 |
46,966 |
Departmental
stores |
22,598 |
26,473 |
23,446 |
Wholesaling |
- |
4,988 |
1,071 |
Corporate* |
27,197 |
26,807 |
26,724 |
|
340,651 |
290,123 |
310,490 |
Segment
liabilities |
|
|
|
Supermarkets |
70,493 |
50,479 |
56,148 |
Agriculture |
30,778 |
29,557 |
32,779 |
Hotels |
22,020 |
22,263 |
23,515 |
Departmental
stores |
28,631 |
18,108 |
18,999 |
Wholesaling |
- |
10,237 |
10,032 |
Corporate* |
37,979 |
29,236 |
33,332 |
|
189,901 |
159,880 |
174,805 |
*Intercompany transactions and balances have been eliminated from
the corporate amounts. Corporate also includes other subsidiaries
that are immaterial to warrant separate disclosure.
The EBITDA figures are before Group management fees. |
NOTES TO THE ABRIDGED UNAUDITED
FINANCIAL RESULTS
|
Unaudited |
Unaudited |
Audited |
|
30 Sep 2018 |
30 Sep 2017 |
31 March 2018 |
5. Other information |
US$ 000 |
US$ 000 |
US$ 000 |
Capital commitments authorised but
not contracted for |
8,971 |
3,000 |
23,583 |
Group’s share of capital commitments
of joint operation |
3,000 |
3,000 |
3,000 |
|
|
|
|
6. Net borrowings |
|
|
|
Non-current borrowings |
13,455 |
15,446 |
17,309 |
Current borrowings |
56,817 |
50,816 |
55,973 |
Total borrowings |
70,272 |
66,262 |
73,282 |
Cash and cash equivalents |
(54,845) |
(27,552) |
(34,175) |
Net borrowings |
15,427 |
38,710 |
39,107 |
|
|
|
|
Comprising: |
|
|
|
Secured |
64,627 |
55,453 |
57,505 |
Unsecured |
5,645 |
10,809 |
15,777 |
|
70,272 |
66,262 |
73,282 |
|
|
|
|
The weighted average cost of borrowings for the period was
13.86% per annum (31 March 2018:
13.39% per annum).
- US$1.8 million (31 March 2018: US$1.8
million) worth of borrowings are secured by
inventories.
- US$4.2 million (31 March 2018: US$4.1
million) worth of borrowings are secured by
receivables.
- US$19.3 million (31 March 2018: US$22.2
million) worth of borrowings are secured by a negative
pledge over assets.
- US$6.3 million (31 March 2018: US$27.8
million) worth of borrowings are secured by mortgage bonds
over freehold land and buildings with a carrying amount of
US$43.4 million (31 March 2018: US$45.6
million).
The Group has issued cross company guarantees worth US$53.1 million (31 March
2018: US$42.1 million) for
Group borrowing facilities.
6.2 Breach of loan
covenants
During the current period, the Group was in default on some of
its loan covenants with financial institutions. Details of loans in
default as at 30 September 2018 are
as follows:
- S$17.1 million (31 March 2018: US$16.1
million) secured borrowing, carrying interest at 12% p.a.
The loan is currently on overdraft and fundraising activities to
mobillise long term finance to expunge all short term loans are
underway.
- US$2.5 million (31 March 2018: US$2.4
million) secured borrowing, carrying interest at 11% p.a.
The loan expired on 30 September
2018.
- US$2.8 million (31 March 2018: US$3.7
million) unsecured borrowing, carrying interest at 11% p.a.
The loan expired on 31 May 2018.
- US$10.6 million (31 March 2018: US$9.4
million) unsecured borrowing, carrying interest at 24% p.a.
The loan expired on 30 June
2018.
- Loan instalments and interest amounting to US$1.3 million (31 March
2018: US$1.1 million) were in
arrears as at 30 September 2018 for a
loan of US$1.7 million (31 March 2018: US$2.7
million) expiring on 31 January
2019.
- Loan instalments amounting to US$180,000 (31 March
2018: US$373,000) were in
arrears as at 30 September 2018 for a
loan of US$4.0 million (31 March 2018: US$4.7
million) expiring on 31 July
2021.
- US$4.9 million (31 March 2018: US$4.6
million) unsecured borrowing, carrying interest at 18% p.a.
The loan expired on 31 October 2017
and is now subject of litigation.
- US$468,500 (31 March 2018: US$432,678) unsecured borrowing, carrying
interest at 15% p.a. The loan expired on 23
July 2017 and is now subject of litigation.
Meikles Limited Website :
http://www.meiklesltd.com/