RNS Number:5273L
Meikles Africa Ld
27 May 2003
MEIKLES AFRICA LIMITED
PRELIMINARY RESULTS ANNOUNCEMENT - 31 MARCH 2003
Meikles Africa Limited, the Southern African hotel and retail group, which is
listed on the Zimbabwe and London Stock Exchanges, announces preliminary results
for the year ended 31st March 2003.
Financial Highlights - Inflation Adjusted
* Turnover of $122.4 billion up 32%.
* Operating profit of $3.1 billion compared to a loss of $877 million last
year
* Exchange gains of $51.6 billion compared to $20.0 billion last year.
* Attributable profit of $24.0 billion compared to $7.0 billion last year.
* Final dividend of $11.50.
Financial Highlights - Historical
* Turnover of $74.9 billion up 255%
* Operating profit of $13.9 billion compared to $2.3 billion last year.
* Exchange gains of $37.0 billion compared to $4.3 billion last year.
* Attributable profit of $42.1 billion compared to $5.9 billion last year.
CHAIRMAN'S STATEMENT
I am pleased to report a very satisfactory set of results which have been
achieved under challenging economic and political conditions.
Buoyant retail demand continued throughout the year as consumers showed
preference for assets over cash in the inflationary environment. Our deliberate
policy shift towards holding more stocks enabled both retail divisions to take
full advantage of the strong demand trends. Well established relationships with
the major suppliers also enabled our supermarkets to obtain supplies as
shortages began to take their toll. As a result, both retail divisions improved
their volume and market share during the year.
Local hotel operations suffered from the international image of Zimbabwe,
although judicious room rate management and our good reputation for quality
ensured that both hotels remained profitable. The outstanding performance of
the Cape Grace Hotel vindicates our policy of regional investment, particularly
in tourism. It is this diversification and the strong management base of the
Group that enables me to report the sound results achieved this year.
It is pleasing to note that recent moves by the Ministry of Finance and Economic
Development and the Reserve Bank to curb the parallel foreign currency market by
offering export supplement rates of Z$800 to the US Dollar, has had some impact
on the inflow of foreign currency. However, further complementary measures will
need to be taken before a return to economic stability can be anticipated.
RESULTS
The Group was able to achieve on an historical basis, turnover growth of 255%
and growth in operating profit of 505%.
Net interest payable of $1.5 billion is covered nine times by operating profit,
and compares favourably to exchange gains of $37 billion.
The Group's share of Kingdom Financial Holdings result of $1.3 billion is up on
the prior year figure of $586 million.
Headline earnings per share increased by 597% on an historical basis, and by
175% on an inflation adjusted basis.
OPERATIONS - HISTORICAL COST
TM Supermarkets
* Turnover increased by 217% from $15.6 billion to $49.6 billion
* Operating profit grew by 385% from $1.3 billion to $6.3 billion
In spite of accelerating inflation during the year, TM achieved sales growth in
excess of the official average inflation rate. Margins were threatened by the
imposition of price controls on a wide range of basic commodities, and the high
acquisition costs of imported product. Careful management and a strategic policy
of holding higher inventories enabled the business to generate margins
acceptable in the current environment. Labour unrest and social disruptions at
various times during the year called for exceptional store management skills,
and our managers are to be congratulated on their performance.
Retail
* Turnover increased by 289% from $3.3 billion to $13 billion.
* Operating profit increased by 509% from $522 million to $3.2 billion.
Stores experienced real growth in turnover as consumer preference for converting
cash into hard assets continued. Strategic buying of popular imported lines,
such as footwear, clothing, children's wear, toys and household goods, whenever
foreign currency could be acquired, enabled the Department Stores to remain well
stocked through most of the year. Furniture and appliance sales were strong and
cosmetics showed good growth despite a shortage of locally supplied products.
Medix, in its first full year of operation in the Group, has proved to be
profitable and the synergies arising from the association with Clicks are
becoming apparent. The Clicks chain achieved good growth, with a particularly
strong demand for products imported from Clicks South Africa, and good
performances from units in low density areas.
Hotels
* Turnover increased by 482% from $2.1 billion to $12.3 billion.
* Operating profit increased by 798% from $518 million to $4.7 billion.
Zimbabwe
Both Zimbabwe hotels were severely affected by low occupancies as a result of
the country's image. Despite this, good average room rates and tight cost
controls enabled both units to remain profitable. The emphasis on service
delivery enabled the hotels to maintain their high performance ratings with
Leading Hotels of the World.
South Africa
An excellent season in Cape Town saw the Cape Grace performing very well, with
both room rate and occupancy well above expectations. Improvements to the hotel
included the opening of a business centre. Approval was granted for the
building of a Spa which will be opened in October 2003. The International
Conference Centre which will open this year is expected to impact positively on
the hotel in the second half of the year.
KINGDOM FINANCIAL HOLDINGS
Kingdom continues to make progress with its retail bank and a further three
branches were added this year. A total of fourteen branches are currently
operating of which five are in or adjacent to Group operations. We support
Kingdom's strategy and invested a further Z$380 million by fully taking up our
share of the Rights Issue in December 2002.
STRATEGY
During the course of the year shareholders passed an ordinary resolution to
place 15 million unissued shares under the control of the Directors, as part of
our strategy to incentivise and retain a broad cross section of the company's
managerial employees. A total of 413 senior, middle and junior management
employees were invited to purchase 4 783 882 Meikles Africa shares through the
share purchase schemes.
The integration of Medix and Clicks continues and we expect to roll out 5 new
stores during next year. The Group has aligned itself to the vision of the
Department of Pharmacy at the University in creating strong strategic
partnerships with the practising profession. In this regard it has committed to
funding 18 bursaries at the University as well as supporting a new post of
Co-ordinator of Pharmacy Practice. Supermarket and Retail division expansion
will continue as suitable opportunities arise. Our Hotel division has been
selected as the preferred partner for a new hotel project in Franschhoek South
Africa, and we are in the process of negotiating the terms of our participation.
The Group has received approval to invest a substantial part of its US dollars,
currently held in the Reserve Bank of Zimbabwe, in an investment opportunity in
South Africa. Negotiations are underway with prospective partners but have not
been concluded, and as such it would be wholly inappropriate to be more
specific. Shareholders will be fully informed as required.
I would like to thank my fellow Directors for their contribution during the year
and pay particular tribute to all management and staff who have performed
admirably under testing circumstances. The Group owes much to their dedication
and professionalism.
FINAL DIVIDEND ANNOUNCEMENT
On the 22nd May 2003, the Board approved a final dividend Number 67 of $11.50
per share on 162,782,187 shares payable to members registered in the books of
the company at the close of business on 20th June 2003. The Transfer Books and
Register of Members will be closed from 21st June 2003 to 6th July 2003.
Dividend cheques will be mailed to shareholders on or about 7th July 2003. The
dividends payable to non-resident shareholders will be paid in accordance with
Exchange Control Regulations. Shareholders' withholding tax will be deducted
where applicable.
By order of the Board
A.P. LANE-MITCHELL
Company Secretary
22 May 2003
All current financial, operational and structural information on Meikles Africa
Limited can be obtained by visiting Meikles Africa Limited's website at :http:/
www.meiklesafrica.co.zw
Directors : J R T Moxon (Chairman), A C L Parvin (Chief Executive), D E
Stephens, M A Masunda, M V Cameron, M S Wilson
Enquiries:
Meikles Africa +263 4 252068
Chris Parvin, Chief Executive
College Hill +44 20 7457 2020
Corinna Dorward
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2003
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
(all amounts in millions of dollars) Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March 2002
2003 2002 2003
Turnover 122,368 92,808 74,853 21,096
Cost of sales (94,071) (71,935) (46,092) (14,551)
Gross profit 28,297 20,873 28,761 6,545
Operating expenses (25,964) (23,479) (15,244) (4,547)
Other income 778 1,729 361 296
Operating profit/(loss) 3,111 (877) 13,878 2,294
Net interest (2,711) (922) (1,542) (188)
Exchange gains 51,612 19,962 36,960 4,329
Share of result of associate 2,254 3,723 1,253 586
Net monetary loss (19,480) (10,114) - -
Profit before taxation 34,786 11,772 50,549 7,021
Taxation (9,341) (3,838) (7,255) (841)
Profit after taxation 25,445 7,934 43,294 6,180
Minority interest (1,411) (905) (1,173) (235)
Net profit attributable to shareholders 24,034 7,029 42,121 5,945
Basic earnings per share ($) 153.12 45.16 268.36 38.20
IIMR Headline earnings per share ($) 161.84 58.87 269.10 38.59
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 March 2003
Net profit for the year attributable to 24,034 7,029 42,121 5,945
shareholders
Net gains not recognised in the income statement
- Fair value adjustment on associate (2,544) - - -
- (Decrease)/increase in value of quoted (8) 2,503 1,752 336
investments
- Deferred capital gains tax (19) 85 (343) (63)
Total recognised gains and losses 21,463 9,617 43,530 6,218
CONSOLIDATED BALANCE SHEET
At 31 March 2003
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
at at at at
31 March 31 March 31 March 31 March
2003 2002 2003 2002
ASSETS
Non-current assets 51,235 48,657 23,879 8,903
Current assets 78,508 38,985 75,754 11,523
Total assets 129,743 87,642 99,633 20,426
EQUITY AND LIABILITIES
Capital and reserves 79,000 49,284 56,957 10,430
Minority interest 1,962 1,499 486 159
Non-current liabilities 32,432 22,290 25,841 5,395
Current liabilities 16,349 14,569 16,349 4,442
Total equity and liabilities 129,743 87,642 99,633 20,426
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2003
INFLATION ADJUSTED -Audited
Share Share Non- Retained Total
Capital Premium Distributable Earnings and
Reserves Shareholders
for Dividend
Balance at 1 April 2002 541 34,065 8,167 6,511 49,284
Net profit attributable to - - - 24,034 24,034
shareholders
Net loss not recognised in income
statement:
-Fair value adjustment on - - - (2,544) (2,544)
associate
-Decrease in valuation of quoted - - - (27) (27)
investments
Cape Grace Hotel - - 6,158 - 6,158
Share options exercised - 4,355 - - 4,355
Share of prior year adjustment in - - - (81) (81)
associate retained income
Share of reserves of associate - - 474 - 474
Dividend for 2002 - final - - - (1,617) (1,617)
Dividend for 2003 - interim - - - (1,036) (1,036)
Balance at 31 March 2003 541 38,420 14,799 25,240 79,000
Balance at 1 April 2001 538 33,783 6,530 (659) 40,192
Net profit attributable to - - - 7,029 7,029
shareholders
Net gains not recognised in
income statement:
-Increase in valuation of quoted - - - 2,588 2,588
investments
Cape Grace Hotel - - 1,637 - 1,637
Share options exercised 3 282 - - 285
Dividend for 2001 - final - - - (1,620) (1,620)
Dividend for 2002 - interim - - - (827) (827)
Balance at 31 March 2002 541 34,065 8,167 6,511 49,284
HISTORICAL COST - Audited
Share Share Non- Retained Total
Capital Premium Distributable Earnings and
Reserves Shareholders
for Dividend
Balance at 1 April 2002 16 991 627 8,796 10,430
Net profit attributable to - - - 42,121 42,121
shareholders
Net gains not recognised in
income statement:
-Increase in valuation of quoted - - - 1,409 1,409
investments
Cape Grace Hotel - - (35) - (35)
Share options exercised - 4,314 - - 4,314
Share of prior year adjustment in - - - (13) (13)
associate retained income
Share of reserves of associate - - (87) - (87)
Dividend for 2002 - final - - - (493) (493)
Dividend for 2003 - interim - - - (689) (689)
16 5,305 505 51,131 56,957
Balance at 31 March 2003
Balance at 1 April 2001 15 928 262 3,006 4,211
Net profit attributable to - - - 5,945 5,945
shareholders
Net gains not recognised in
income statement:
-Increase in valuation of quoted - - - 273 273
investments
Cape Grace Hotel - - 365 - 365
Share options exercised 1 63 - - 64
Dividend for 2001 - final - - - (232) (232)
Dividend for 2002 - interim - - - (196) (196)
Balance at 31 March 2002 16 991 627 8,796 10,430
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2003
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
Year ended Year ended Year ended Year ended
31 March 2003 31 March 2002 31 March 31 March
2003 2002
Cash flows from operating activities
Profit before taxation 34,786 11,772 50,549 7,021
Adjustment for:
Non-operating cash flow (48,760) (5,163) (35,457) (4,165)
Non-cash items 6,050 (18,567) (630) (181)
Operating cash flow before working capital (7,924) (11,958) 14,462 2,675
changes
Used in working capital changes (7,133) (305) (9,143) (979)
Operating cash flow (15,057) (12,263) 5,319 1,696
Income tax paid (1,342) (1,584) (556) (197)
Net cash (used in)/ generated from (16,399) (13,847) 4,763 1,499
operating activities
Net cash (used in)/generated from investing (2,989) 1,711 (1,410) (1,371)
activities
Net cash (used in)/generated from financing (2,038) (9,239) 5,415 (1,053)
activities
Net effect of exchange rate changes
on cash and cash equivalents 51,612 19,962 36,960 4,329
Net increase/(decrease) in cash and cash 30,186 (1,413) 45,728 3,404
equivalents
Cash and cash equivalents at 31 March 2002 22,359 23,622 6,817 3,376
Cash acquired with Cape Grace Hotel and - 150 - 37
Medix Limited
Cash and cash equivalents at 31 March 2003 52,545 22,359 52,545 6,817
This information is provided by RNS
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