Chairman's Views

MEIKLES LIMITED | Chairman's Views The Chairman of Meikles Limited ("Meikles") expressed recently his views onevents that have, and continue to have, an effect on the Group. These views arenow further updated. This is not a Statement to Shareholders, but it is anattempt to place matters in a proper context to anyone who is interested in theprogress of the Group, its employees, its shareholders and other stakeholders. The Chairman has been closely involved personally and through the efforts oflawyers and others to secure the return to Meikles of its deposit held by theReserve Bank of Zimbabwe ("RBZ"). His involvement over time in this effort hasbeen very intense.The sum on deposit with the RBZ was placed with the Bankunder duress in 1998 and the funds are on deposit and are subject to call byMeikles. The origin of the funds has been clearly communicated to stakeholdersin a variety of communications. Suffice to reiterate that these funds arosefrom the proceeds of foreign investment received in Zimbabwe in what was, atthe time, believed to be the largest single foreign investment of new fundsinto Zimbabwe on the Zimbabwe Stock Exchange ("ZSE"). These funds are thereforeunique relative to other debts or deposits that the RBZ has on its books. The RBZ has, for a long period, been a delinquent debtor to Meikles as it hasfailed to perform in terms of returning the funds owing to Meikles despitedemands appropriate to the return of a call deposit. In 2013 Meikles, represented by its Chairman and its Company Lawyer, MrSternford Moyo, a Senior Partner in the Law Firm Scanlen and Holderness, met atthe RBZ with the then Governor, Dr Gono, and an official of the bank, MrSaburi. The purpose of the meeting was to agree the methodology of calculatingthe quantum of sums due to Meikles. Agreement was reached. The sum due toMeikles was to be calculated by accruing interest to the capital sumoutstanding from time to time at a rate of 8 per cent per annum compoundedback-dated to the date when the deposit was made. This arrangement althoughaccepted by Meikles in fact accrues interest to Meikles at a lesser rate thanthe cost of borrowing to the Company. A calculation of the sum, together with documentation from the Chairman, MrSternford Moyo and Dr Gono, all of which are substantive at law, served tosatisfy Directors and External Auditors, who were all involved in thefinalization of the Group financials for the year ended 31 March 2014, that thefinancials were prepared on an accurate basis. The sum due to Meikles hadindeed increased to US$90 million due to the agreement on interest referred toabove. It is stated that this is a simple mathematical calculation, not afabrication. In recent weeks the Member of Parliament for Bikita West, Dr Kereke, a manunknown to Meikles and who has never had any interaction with Meikles, saw fitto publicly accuse Meikles and, by default, all those mentioned above as guiltyof fraud due to his personal but uninformed opinion of the Group financials. In October 2014 another Member of Parliament, in this instance the Member ofBulawayo South, Mr Cross, who is a Shareholder of Meikles, addressedShareholders who attended the Meikles Annual General Meeting. He proceeded toadvise Shareholders of matters that had taken place and decisions made by aParliamentary Committee of which he is a member, despite a general belief thatonly confidential deliberations take place in this Committee. He hasunderstandably been reported to the Speaker of Parliament and as a result hemay have abused Parliamentary privilege. Mr Cross referred to the sum due toMeikles by the RBZ and advised Shareholders not to count their chickens. SomeShareholders thought he was making reference to the sale of chickens in thesupermarkets and others thought the Group had embarked on a chicken farmingproject. In fact it is an expression in the English language, do not count yourchickens before they hatch and Mr Cross was conveying the message thatGovernment, with his participation, were not going to pay to Meikles the fullsum agreed upon in negotiations. In other words he was suggesting there was tobe reneging on commitments made in good faith We now know that the Securities and Exchange Commission initiated a processwhich culminated in the ZSE suspending trading in Meikles shares, presumablybecause they place credibility in the statements of the two individualsreferred to above. This being of more importance to these two institutions thanthe discussions held with the ZSE and Meikles towards the end of 2014 whichwere positive in their entirety. During this meeting the Chairman of the ZSEraised various issues of mutual concern to the two parties and these wereconcluded satisfactorily. Irresponsible reference has been made in public to a so called lack ofCorporate Governance in Meikles. The comments being focused on the relativelysmall number of Directors on the Meikles Board and by the presence of anExecutive Chairman which is not appreciated in Zimbabwe, but seems to beacceptable on the New York Stock Exchange, the world's largest stock exchange.The discussions held with the ZSE towards the end of last year, in fact,reached an amicable agreement including timing of when and how these issueswould be resolved in conjunction with some very substantial investmentstrategies that the Group planned to implement, which include a restructuringof the Board of Directors. The action of the ZSE has now possibly put thisreconstruction on hold for the time being. The latest action of the ZSE was implemented without any interaction withMeikles and does not comply with its own rules of engagement. There is now uncertainty as to whether the Group's planned strategy will befeasible and, if so, when. The ZSE, the detractors mentioned above and perhapsothers have put in question an entire investment strategy for this Group andperhaps for others who are interested in furthering the economic interests ofZimbabwe. Meikles will be addressing the implications of the suspension, themanner in which it has been implemented and whether there is any purpose to alisting on the ZSE. Much debate will be necessitated with potential investorsto determine their attitude to these matters. To clarify the current position, the RBZ has recently committed US$76 millionof treasury bills and other payments in writing, but they have not yet beenreceived in full by the Company. The interest rates and tenure are compatiblewith treasury bill issues on the African continent outside of South Africa. Theacceptance to the market of the Zimbabwe treasury bills will depend on theircredibility and all Zimbabwe should be motivated to witness their success, eventhe detractors mentioned above, as this is in the best interest of the nation.There is still more negotiation to come on interest and possibly discountimplications. The Group has no intention of negotiating in the public domainand will not do so. These matters are sensitive. There is also a debtor relatedto this matter from which the Group also seeks a recovery. All in all, theGroup is within 90 per cent of achieving its targeted receipt. Put differentlythe outstanding sum to be negotiated represents less than five per cent ofGroup gross assets. It is interesting to note that based on the agreementnegotiated in good faith, the sum due to Meikles is now in excess of US$90million due to interest accruing from the passage of time. Noise made by thedetractors has not been helpful to the conclusion of this matter. It is recorded that schedules presented to Parliament on the extent of RBZ'sindebtedness to third parties, is completely inaccurate insofar as the sumowing to Meikles is concerned. This comment is made in the knowledge thatwhoever was responsible for advising Parliament of the sum due to Meiklesfailed to provide Parliament with an accurate position on the matter. The sum finalized to date will ensure that all short term borrowings in Meiklesas a Company will be eliminated or matched with an appropriate deposit.However, the strategy announced to Shareholders, of which the ZSE Committee isfully aware and which was aimed at further expansion in the subsidiaries, thecreation of further Shareholder value, the introduction of more investorcapital and possibly to even list one subsidiary on the ZSE, are on hold forthe time being, due to present uncertainty created by the detractors. Thisstrategy would have been beneficial to anyone interested in ensuring thewell-being of Meikles in Zimbabwe and in ensuring the success of the economicfuture of the nation. There are now too many bees swarming around the Meikles honeypot. Some of themhave negative agendas, which in the end will only damage Meikles, theSecurities and Exchange Commission, the ZSE, certain individuals and above allZimbabwe as a nation in its search for further investment.

JRT MOXON