Chairman's Update

CHAIRMAN'S UPDATE Shareholders are informed that the Zimbabwe Stock Exchange,("ZSE") haverequested the Company to advise Shareholders more fully on matters relevant tothe funds held by the Company on deposit at the Reserve Bank of Zimbabwe("RBZ"). Meikles Limited has received conflicting advice from the ZSE and, as aresult, considers an update to the community at large to be appropriate, ratherthan a statement to Shareholders. Observers will have noted the increase in the value of funds on deposit as setout in the Group's audited financials for the year ended 31 March 2014 and theunaudited mid-year financials for the financial year ended 31 March 2015.Shareholders have been advised on several occasions on how these sums have beencalculated and, indeed, the terms negotiated with the relevant authorities inmid 2013. The calculation is simply eight per cent (8%) compound interest onthe capital on deposit, to be accrued until repayment is effected. It is knownthat this is, in itself, a compromise by the Company as other creditors havebeen given up to twelve per cent (12%). This includes a bank in which the Groupwas previously a shareholder, so that the status on interest granted to othersis known to the Company. This fact is brought to the attention of observers, sothat they are in a position to appreciate that the Company has been flexible inits position in order to achieve progress in the negotiations. It should beunderstood that the Company is the largest indigenous corporate creditor of theRBZ. Negotiations have been conducted in a fair and arm's length manner and dueto the fact that the quantum is so substantial, negotiations are beingconducted with mutual respect between the parties. The deposit, together with interest, represents a very substantial asset to theGroup. The recognition of the sum owed to the Company is the result of someyears of negotiation and the Company's management deserves recognition for thisachievement. The community should be alive to the fact that the entire Grouphas gained in morale and commitment as a result of continuous progress on therecovery of funds from the RBZ. Over this period the Group has been aware that most observers in the communityhave tended to be pessimistic with regard to the chances of recovery of thesefunds. Indeed those involved in the negotiations have received little supportor encouragement from investors, analysts, brokers, or the community at largein its endeavour to recover funds. The Company has generally receivedexpressions of doubt that any recovery will be successful. The doubt is stillprevalent in the business community and the Group as a whole has witnessed thisattitude with regret because it has not assisted the Company's negotiatingstance or strength in negotiation. As stated to Shareholders recently a substantial part of funds due andanticipated have been committed to the Group by the present management of theRBZ. For the benefit of the skeptics this has been committed in writing.Performance is in progress, but timelines committed to by the RBZ, have notbeen completely adhered to. The ultimate value of the funds which have largely, but not entirely, beencommitted in the form of Treasury Bills ("TB's") is still unknown. The greaternumber of these TB's which are about to be issued with satisfactory terms arestill to be received by the Company and are still to be placed in the market.The Company is of the opinion that it cannot predict matters pertaining to thereceipt, or value of the funds, with precision. For reasons now outlined, progress is not to be negotiated in the publicdomain. It is firmly believed that negotiations debated in public will not bein the best interest of stakeholders. This view is held by other participantsin the negotiating process. The Company is not alone in expressing thisopinion. Observers are asked to understand this negotiating stance. It is notunderstood by the ZSE, which remains a point of disagreement between theCompany and the ZSE, but it appears that the ZSE is isolated in this belief,certainly as far as the parties to the negotiations are concerned. The Company would have welcomed some encouragement from the investing communityand others during 2012, 2013, 2014 and 2015 to date. The Company considers itpossible that the authorities may also have welcomed recognition of theirefforts to resolve these financial issues, but this has not materialized.Instead, the Company is aware from statements made at its own Annual GeneralMeeting, from press articles in both Zimbabwe and South Africa and from theCompany's general intelligence systems that there are individuals who areworking against the Company's interests. These efforts that began in October2014 overtly, but earlier in practice, are a concerted effort by individuals,including at least one Member of Parliament, some but certainly not allex-employees who are unhappy following their removal from office, which in factwas well deserved, and now more recently the ZSE, to disrupt negotiations onthe settlement of sums due to the Company, the placing of TB's on the marketand generally to damage the Company's reputation and well being. The result hasbeen damaging. Observers will already be aware of the overt damage done. Manyobservers have witnessed events or read articles in the media, but notnecessarily the considerable covert damage. Shareholders in general should note that there are a large number of extremelyloyal individuals amongst ex-employees who have retired or have left the Groupfor various reasons. The Group is grateful for their continued support. Theyshould not be confused with those ex-employees who are determined to damage theGroup and its stakeholders. Similarly, the Company is aware and observersshould know that there are individuals in the business environment andcommunity at large who for various reasons do not want the Company to receiveits dues from the RBZ, or realize appropriate value from the funds, as theybecome available. There has been a delay of some months in the receipt of funds due. Thisdelay has been caused, largely in the opinion of those involved in thenegotiating process, by the activities of those mentioned above. The communityis assured that the delay is to be overcome. In the meantime the delay hasresulted in further damage to the Group as a whole, both in the final quantumof funds to be received and just as importantly a delay in the implementationof the Group's operating strategy. This strategy, together with strategic plansfor the enhancement of Group values, has been disclosed to all stakeholders.Implications arising from the delay will only become apparent in their severityin future months and will, where necessary, be communicated to the public. On a positive note, it can now be disclosed that arrangements finalized withthe RBZ will secure the implementation, although delayed, of a substantial partof Group operating strategic objectives. The implementation of the strategicplans for the enhancement of Shareholder values are of necessity delayed, butwill resume as soon as the Company's forward direction from a Shareholderperspective has been determined. The Company has recently made an effort to interact and perhaps reconcile withthe ZSE. However, it would appear that such an effort is futile. The Companyrepresentatives who met with the ZSE regrettably found that there may initiallyhave been some common ground but subsequent inconsistencies from within the ZSEhave placed doubt on this process. It is now appropriate that theCompany proceed with litigation. The Company is the plaintiff and is demandingsubstantial damages from the ZSE, and certain of its officers in their personalcapacities. Shareholders will be kept advised of progress. The Company will now consider how best to advance the Group's interests in thebest possible manner and which may perhaps be outside the framework of the ZSE.The Company will examine and move towards implementation of methods aimed atensuring the financial wellbeing of Shareholders in their capacity as owners ofshares in the Company. The Company will keep Shareholders advised ofdevelopments. The Company hereby expresses its appreciation to the RBZ and to all those whohave facilitated progress in the realization of value to a very importantCompany asset, namely the deposit with the RBZ. Despite continued and some very personal attacks on the Company and itsoffices, observers may be interested to know that a highly regardedinternational organization has shortlisted the company for an award for thebest Corporate Governance in Zimbabwe. J R T MOXON

EXECUTIVE CHAIRMAN