MEIKLES
LIMITED
ABRIDGED UNAUDITED
FINANCIAL RESULTS FOR THE SIX MONTHS ENDED
30 SEPTEMBER 2015
CHAIRMAN’S STATEMENT
Group Overview
Group turnover for the six month period to 30
September increased by 15% relative to the previous period.
The contribution to turnover by the different segments of the Group
is set out in Note 6.
Operating income increased by 18% relative to the previous
period.
Whilst operating expenses excluding depreciation have increased
by 3%, they have reduced to 20% of turnover from 22% recorded in
the comparative period. The increase in operating expenses was
caused by a growth in rents payable to third parties as a result of
growth in turnover and by a growth in utility connected
expenditures. Other costs, including employment costs, were static.
There has been a combination of employment cost reductions in
segments of the Group and the creation of further employment
opportunities from growth projects in the Group.
EBITDA increased by $6.4m relative to
the previous period. The contribution to EBITDA by the different
segments of the group are set out in Note 6.
Interest payable decreased by 14% mainly due to the reduced
borrowings. Interest received decreased by 41%, as a result of
reduced interest receivable on outstanding balances due from
the Reserve Bank of Zimbabwe. Net
interest payable increased by 12% to $3.7 million.
Fair value gains on biological assets reduced from $3.6 million to $0.66
million. Shareholders are reminded that these sums are
non-cash flow in nature.
The movements relative to the Balance with the Reserve Bank of
Zimbabwe and Treasury Bills are
detailed in Notes 4 and 5.
Group net borrowings are detailed in Note 7. Shareholders will
observe that net borrowings have decreased by approximately
$22 million over the six month
period.
Negotiations on further sums considered due from the Reserve
Bank of Zimbabwe as disclosed in
the 31 March 2015 annual report are
in progress. It is expected that this matter will be
finalised very shortly and Shareholders will be advised
further at the appropriate time. Any resultant adjustment to the
financial results will be disclosed to Shareholders and will be
included in the results of the second half of the current financial
year.
With the exception of trade and other receivables which reflect
a positive reduction for the period, other balance sheet items
remained substantially unchanged in total. Segment assets and
liabilities are disclosed in Note 6.
Segment Commentary
TM Supermarkets trading as TM and
PnP
Two new supermarkets were opened in Harare (Avondale and city centre) during the
period to 30 September but neither was operating for the
entire period. Other supermarkets were refurbished and this process
is continuing into the second half of the year.
Turnover increased by 17% and operating income expressed as a
percentage of turnover increased from 18% to 19.5%.
Expenses expressed as a percentage of turnover decreased marginally
from 16.5% to 16%.
Stock turns improved from 7.1 to 8.7 times.
TM is well positioned to redeem its term borrowings on
schedule and these will be repaid progressively over the next
twelve months.
A major shopping centre development in Borrowdale in which
TM is a participant will commence shortly.
It is pleasing to note that TM does provide opportunities for
further employment in Zimbabwe and
in this context it is an important contributor to the economy.
On the 24 November 2015, The
Confederation of Zimbabwe Retailers presented TM PnP Supermarkets
with a number of awards, including ‘Supermarket of the Year –
Consumer’s Choice’ and ‘Best Retailer – Environmental
Management’.
Stores – Meikles Stores and Meikles Mega Market
The two divisions have not made a positive contribution to
EBITDA in the six month period, but they have achieved
substantial financial improvement and have performed in accordance
with expectations. Shareholders have been advised that these
divisions will not make a loss in the second half of the year. This
remains appropriate.
The Confederation of Zimbabwe Retailers presented Barbours
Department Store with the ‘Clothing Retailer of the Year’ award on
24 November 2015.
Tanganda
Tanganda has been adversely affected in the period to 30
September by a decrease in international bulk tea prices.
Average prices fell to $1.28/kg from
$1.32/kg for the comparative period.
It is expected that average bulk tea prices will increase over the
forthcoming period but will not yet reach the favourable levels
realised in the 2014 financial year.
Tanganda needs another two rainy seasons including the
forthcoming season to realize a material contribution from its
diversification programme. This programme does encapsulate the
future of Tanganda, as a major contributor to the agricultural
sector of the economy.
The new packing machines are in operation in Mutare, and there
is greater mechanisation on the estates. The cost of producing both
bulk and packed tea has reduced, with considerable benefit to the
company.
There may be uncertainty concerning the expectations of rains in
the forthcoming season. Tanganda has implemented an appropriate
defensive strategy.
On 8 October 2015, Zimtrade
presented Tanganda with the ‘Zimtrade 2014 Best Exporter of the
Year Award – Processed Food Sector’.
Hospitality
The two hotels in Zimbabwe have
been affected by the new value added tax, which has had a material
effect on revenue, as the value added tax could not be passed on to
guests in full. The South African visa requirements have also had a
negative effect on tourist arrivals.
Occupancies in Harare have shown a
modest increase, while those at Victoria Falls have declined.
Expenditures in both hotels have decreased.
The next phase of renovation at Victoria Falls will begin early in
2016. The hotel will be in a strong position to defend
its competitive position.
Meikles Hotel was presented with the ‘2015 Best City Hotel’
award by Association of Zimbabwe Travel Agents (AZTA) in
September 2015 for the
23rd consecutive year. The Victoria Falls Hotel was
voted the ‘4th Best Resort in Africa & Middle
East 2015’ by the Travel and Leisure magazine.
Outlook
The different segments of the Group are expected to continue to
enhance their performance. Growth associated with a number of
projects underway in segments of the Group are substantial and will
provide a platform for further growth in earnings. There may be
uncertainties relating to the weather and to the operating
environment in general.
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.
JRT Moxon
Executive Chairman
24 November 2015
CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS
ENDED 30 SEPTEMBER 2015 |
|
|
|
Unaudited |
Unaudited |
|
30
September 2015 |
30
September 2014 |
|
US$
000 |
US$
000 |
|
|
|
Revenue |
225,690 |
196,254 |
Net operating
costs |
(225,241) |
(202,191) |
|
|
|
Operating profit /
(loss) |
449 |
(5,937) |
Investment income |
1,783 |
3,047 |
Finance costs |
(5,446) |
(6,329) |
Net exchange
difference |
(177) |
21 |
Loss recognised on
disposal of Treasury Bills |
(4,009) |
- |
Fair value loss on
disposal of available-for-sale financial assets |
(3,691) |
- |
Fair value adjustments
on biological assets |
657 |
3,646 |
Loss before
tax |
(10,434) |
(5,552) |
Income tax (expense) /
credit |
(373) |
2,734 |
Loss for the
period |
(10,807) |
(2,818) |
|
|
|
Other comprehensive
income, net of tax |
|
|
Items that may be
reclassified subsequently to profit or loss: |
|
|
Fair value gain on
available-for-sale financial assets |
10,722 |
- |
Other comprehensive
income for the period, net of tax |
10,722 |
- |
|
|
|
TOTAL COMPREHENSIVE
LOSS FOR THE PERIOD |
(85) |
(2,818) |
|
|
|
(Loss) / income for
the period attributable to: |
|
|
Owners of the parent |
(12,179) |
(1,976) |
Non-controlling interests |
1,372 |
(842) |
|
(10,807) |
(2,818) |
Total comprehensive
(loss) / income attributable to: |
|
|
Owners of the parent |
(1,457) |
(1,976) |
Non-controlling interests |
1,372 |
(842) |
|
(85) |
(2,818) |
Loss per share
(cents) |
|
|
Basic |
(4.80) |
(0.78) |
|
|
|
Diluted |
(4.46) |
(0.72) |
|
|
|
Headline loss per
share (cents) |
(2.29) |
(1.70) |
|
|
|
Diluted headline
loss per share (cents) |
(2.13) |
(1.58) |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 SEPTEMBER
2015 |
|
|
|
|
|
Unaudited |
Audited |
|
|
30
September 2015 |
31 March
2015 |
|
|
US$
000 |
US$
000 |
ASSETS |
|
|
|
Non-current
assets |
|
|
|
Property, plant and
equipment |
|
124,866 |
125,145 |
Investment
property |
|
248 |
249 |
Investment in Mentor
Africa Limited |
|
22,931 |
22,931 |
Biological assets |
|
42,834 |
41,083 |
Intangible assets |
|
124 |
124 |
Other financial
assets |
|
12,088 |
12,246 |
Deferred tax |
|
4,617 |
4,201 |
Total non-current
assets |
|
207,708 |
205,979 |
|
|
|
|
Current
assets |
|
|
|
Balances with Reserve
Bank of Zimbabwe |
|
- |
7,229 |
Treasury Bills |
|
11,727 |
22,942 |
Inventories |
|
36,902 |
35,626 |
Trade and other
receivables |
|
13,058 |
19,893 |
Other financial
assets |
|
4,192 |
4,093 |
Cash and bank
balances |
|
16,188 |
8,883 |
Total current
assets |
|
82,067 |
98,666 |
|
|
|
|
Total
assets |
|
289,775 |
304,645 |
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
Capital and
reserves |
|
|
|
Share capital |
|
2,538 |
2,538 |
Share premium |
|
1,316 |
1,316 |
Other reserves |
|
10,808 |
87 |
Retained earnings |
|
103,755 |
115,934 |
Equity attributable to
equity holders of the parent |
|
118,417 |
119,875 |
Non-controlling
interests |
|
18,710 |
17,281 |
Total
equity |
|
137,127 |
137,156 |
|
|
|
|
Non-current
liabilities |
|
|
|
Borrowings |
|
15,998 |
24,402 |
Deferred tax |
|
13,215 |
12,508 |
Total non-current
liabilities |
|
29,213 |
36,910 |
|
|
|
|
Current
liabilities |
|
|
|
Trade and other
payables |
|
59,955 |
60,397 |
Borrowings |
|
63,480 |
70,182 |
Total current
liabilities |
|
123,435 |
130,579 |
|
|
|
|
Total liabilities |
|
152,648 |
167,489 |
|
|
|
|
Total equity and
liabilities |
|
289,775 |
304,645 |
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
|
Share
capital |
Share
premium |
Non
distributable reserves |
Investments revaluation |
|
US$ 000 |
US$ 000 |
US$ 000 |
US$ 000 |
2015 –
unaudited |
|
|
|
|
Balance at 1 April
2015 |
2,538 |
1,316 |
12,559 |
(12,472) |
Loss for the
period |
- |
- |
- |
- |
Other comprehensive
income for the period |
- |
- |
- |
10,721 |
Funding from
non-controlling interests -Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
Balance at 30
September 2015 |
2,538 |
1,316 |
12,559 |
(1,751) |
2014
–unaudited |
|
|
|
|
Balance at 1 April
2014 |
2,538 |
1,316 |
12,559 |
12,559 |
Loss for the
period |
- |
- |
- |
- |
Balance at 30
September 2014 |
2,538 |
1,316 |
12,559 |
12,559 |
|
Retained earnings |
Attributable to owners of parent |
Non
controlling
interests |
Total |
|
US$ 000 |
US$ 000 |
US$ 000 |
US$ 000 |
2015 -
unaudited |
|
|
|
|
Balance at 1 April
2015 |
115,934 |
119,875 |
17,281 |
137,156 |
Loss for the
period |
(12,179) |
(12,179) |
1,372 |
(10,807) |
Other comprehensive
income for the period |
- |
10,721 |
- |
10,721 |
Funding from
non-controlling interests -Mopani Property Development (Private)
Limited |
- |
- |
57 |
57 |
Balance at 30
September 2015 |
103,755 |
118,417 |
18,710 |
137,127 |
2014
-unaudited |
|
|
|
|
Balance at 1 April
2014 |
155,455 |
171,868 |
14,222 |
186,090 |
Loss for the
period |
(1,976) |
(1,976) |
(842) |
(2,818) |
Balance at 30
September 2014 |
153,479 |
169,892 |
13,380 |
183,272 |
CONSOLIDATED STATEMENT OF CASH FLOWS |
|
|
|
FOR THE SIX
MONTHS ENDED 30 SEPTEMBER 2015 |
|
|
|
|
|
Unaudited |
Unaudited |
|
|
30
September 2015 |
30
September 2014 |
|
|
US$ 000 |
US$
000 |
|
|
|
|
Cash flows from
operating activities |
|
|
|
Loss before tax |
|
(10,434) |
(5,552) |
Adjustments for: |
|
|
|
- Depreciation and
impairment of property, plant and equipment and investment
property |
|
4,541 |
4,402 |
- Net interest |
|
3,663 |
3,282 |
- Net exchange
difference |
|
177 |
(21) |
- Fair value
adjustments on biological assets |
|
(657) |
(3,646) |
- Loss recognised on discounting Treasury Bills
|
|
4,009 |
- |
- Fair value loss on disposal of available-for-sale
financial assets
|
|
3,691 |
- |
- Loss on disposal of
property, plant and equipment |
|
23 |
168 |
Operating cash flow
before working capital changes |
|
5,013 |
(1,367) |
Increase in
inventories |
|
(1,277) |
(2,317) |
Decrease in trade and
other receivables |
|
6,654 |
192 |
(Decrease) / increase
in trade and other payables |
|
(417) |
2,799 |
Cash generated from
/ (used in) operations |
|
9,973 |
(693) |
Income taxes paid |
|
(86) |
(105) |
Net cash generated
from / (used in) operating activities |
|
9,887 |
(798) |
|
|
|
|
Cash flows from
investing activities |
|
|
|
Payment for property,
plant and equipment |
|
(4,316) |
(13,763) |
Proceeds from disposal
of property, plant and equipment |
|
30 |
63 |
Proceeds from sale of
Treasury Bills |
|
22,951 |
11,418 |
Net movement in
other investments |
|
61 |
(61) |
Net expenditure on
biological assets |
|
(1,098) |
(921) |
Investment income |
|
297 |
457 |
Net cash generated
from / (used in) investing activities |
|
17,925 |
(2,807) |
|
|
|
|
Cash flows from
financing activities |
|
|
|
Net decrease in
interest bearing borrowings |
|
(15,106) |
(6,803) |
Proceeds on disposal
of partial interest in a subsidiary without loss of control |
|
57 |
- |
Finance costs |
|
(5,446) |
(6,330) |
Net cash used in
financing activities |
|
(20,495) |
(13,133) |
|
|
|
|
Net increase /
(decrease) in cash and bank balances |
|
7,317 |
(16,738) |
Cash and bank balances
at the beginning of the period |
|
8,883 |
22,952 |
Net effect of exchange
rate changes on cash and bank balances |
|
(12) |
(7) |
Cash and bank
balances at the end of the period |
|
16,188 |
6,207 |
NOTES TO THE ABRIDGED UNAUDITED FINANCIAL STATEMENTS
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 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 for the year ended 31 March
2015.
2. Currency of reporting
The abridged unaudited financial results are presented in
United States dollars which is the
functional currency of the Group.
3. Accounting policies
Accounting policies and methods of computation applied in the
preparation of these abridged unaudited financial statements are
consistent, in all material respects, with those applied in the
preparation of the Group’s annual financial statements for the year
ended 31 March 2015, with no
significant impact arising from subsequent new and revised
International Financial Reporting Standards (IFRSs).
4. Balance with the Reserve Bank of Zimbabwe
The movement in the balance with the RBZ from 1 April 2015 to 30
September 2015 is analysed below:
|
|
Unaudited |
Audited |
|
|
30 September
2015 |
31 March 2015 |
|
Note |
US$ 000 |
US$ 000 |
|
|
|
|
Balance at beginning of period |
|
7,229 |
90,861 |
Nominal value of Treasury Bills
received |
i |
(8,729) |
(71,156) |
Provision for settlement
discount |
|
- |
(14,705) |
Interest |
|
1,500 |
2,229 |
Balance at end of period |
|
- |
7,229 |
|
|
|
|
Analysis of balance |
|
|
|
Amount due in cash on 31 March
2015 |
ii |
- |
5,000 |
Interest |
|
- |
2,229 |
Balance at end of
period |
|
- |
7,229 |
Notes:
- The fair value of the Treasury Bills received by the Company
from the RBZ is US$7.6 million and
the basis of calculating the fair value of the Treasury Bills is
set out in note 5.
- The amount of US$5 million which was due and payable in
cash by 31 March 2015 was received in
the form of Treasury Bills with a nominal value of $6.5 million on 31 August
2015.
5. Treasury Bills
Details of the movement in the Treasury Bills are as
follows:
|
|
Unaudited |
Audited |
|
|
30
September 2015 |
31 March
2015 |
|
|
US$
000 |
US$
000 |
At fair
value: |
|
|
|
Balance at the
beginning of the period |
|
22,942 |
- |
Treasury Bills
received during the period |
|
7,611 |
47,084 |
Treasury Bills
disposed during the period |
|
(26,960) |
(27,166) |
Fair value
adjustments |
|
6,648 |
- |
Treasury Bills on hand
at 30 September 2015 |
|
10,241 |
19,918 |
Accrued interest |
|
1,486 |
3,024 |
Balance at 30
September 2015 |
|
11,727 |
22,942 |
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 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.
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$13.1 million are pledged as security for
loans.
Treasury Bills issued by the Reserve Bank of Zimbabwe held at 30
September 2015:
|
|
Unaudited |
Audited |
|
|
30 September
2015 |
31 March 2015 |
At fair (market) value |
|
US$ 000 |
US$ 000 |
Treasury Bills maturing on 10 April
2017 with a coupon rate of 5% |
|
11,727 |
- |
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 |
|
|
11,727 |
22,942 |
The Treasury Bill number ZTB73120150410Z on hand at
30 September 2015 was re-issued on 10
April 2015 with a nominal value of $31,886,811. This Treasury Bill was partially
disposed during the period and the nominal value on hand
at the reporting date was $13.1
million. The coupon payment dates are 10
April and 10 October.
6. Segment information
|
Unaudited |
Unaudited |
|
|
30
September 2015 |
30 September 2014 |
|
|
US$
000 |
US$ 000 |
|
Revenue |
|
|
|
Supermarkets |
196,731 |
167,995 |
|
Hotels |
8,267 |
8,814 |
|
Agriculture |
11,193 |
11,135 |
|
Departmental
stores |
3,103 |
3,773 |
|
Wholesaling |
7,230 |
5,395 |
|
Corporate* |
(834) |
(858) |
|
|
225,690 |
196,254 |
|
EBITDA |
|
|
|
Supermarkets |
6,963 |
3,182 |
|
Hotels |
1,189 |
1,396 |
|
Agriculture |
(292) |
(878) |
|
Departmental
stores |
(570) |
(1,957) |
|
Wholesaling |
(874) |
(1,049) |
|
Corporate* |
(1,425) |
(2,228) |
|
|
4,991 |
(1,534) |
|
The EBITDA figures are
before Group management fees. |
|
|
|
|
Unaudited |
Audited |
|
30 September 2015 |
31 March 2015 |
|
US$ 000 |
US$ 000 |
|
|
|
|
Segment
assets |
|
|
|
Supermarkets |
87,644 |
83,464 |
|
Hotels |
49,200 |
49,216 |
|
Agriculture |
74,077 |
75,270 |
|
Departmental
stores |
31,045 |
30,516 |
|
Wholesaling |
3,844 |
2,048 |
|
Corporate* |
43,965 |
64,131 |
|
|
289,775 |
304,645 |
|
Segment
liabilities |
|
|
|
Supermarkets |
50,826 |
49,524 |
|
Hotels |
21,473 |
20,922 |
|
Agriculture |
30,736 |
33,933 |
|
Departmental
stores |
15,938 |
16,533 |
|
Wholesaling |
4,352 |
3,542 |
|
Corporate* |
29,323 |
43,035 |
|
|
152,648 |
167,489 |
|
*Intercompany transactions and balances have been eliminated from
the corporate amounts. Corporate also includes other subsidiaries
that are immaterial to warrant separate disclosure |
|
|
|
7. Net
borrowings |
|
|
|
Non-current
borrowings |
15,998 |
24,402 |
|
Current
borrowings |
63,480 |
70,182 |
|
Total borrowings |
79,478 |
94,584 |
|
Cash and cash
equivalents |
(16,188) |
(8,883) |
|
Net borrowings |
63,290 |
85,701 |
|
|
|
|
|
|
The weighted average capitalisation rate on funds borrowed was
11.81% (2014: 12.61%) per annum. The borrowings are secured by
freehold land and buildings with a carrying value of $61.8 million, Treasury Bills with a nominal
value of $13.1 million, inventory
worth $6.5 million, trade receivables
amounting to $4.7 million, negative
pledge over assets for borrowings worth $4.4
million and unlimited cross company guarantees on
borrowings amounting to $24.5
million.
|
Unaudited |
Unaudited |
|
30 September
2015 |
30 September 2014 |
|
US$ 000 |
US$ 000 |
8. Depreciation, amortisation and
impairment |
|
|
Depreciation of property plant and
equipment |
4,417 |
4,324 |
Impairment of property, plant and
equipment |
123 |
77 |
Depreciation of investment
property |
1 |
1 |
|
|
|
9. Other information |
|
|
Capital commitments authorised by
the Directors but not contracted |
11,880 |
14,128 |
Group’s share of capital commitments
of joint operation |
- |
53 |
10. Events after reporting date
There have been no significant events after the reporting date at
the time of issuing this report. |
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