Half-yearly Report

MEIKLES LIMITED ABRIDGED UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 CHAIRMAN'S STATEMENT It gives me great pleasure to comment on the Group performance for the sixmonths ended 30 September 2013. Although the current economic climate ischallenging, we believe that we are well placed to take advantage of aneconomic recovery. Review of operations Group results for the six months under review were enhanced by non-tradingincome. This income is largely investment income and is more substantial thanthat received in the half year to 30 September 2012. However, fair value gainson biological assets were lower than the comparative period. Operating results were affected by slow growth in the retail divisions asdemand softened. Trading in the three months to the end of June 2013 was moresatisfactory than the subsequent period to the end of September 2013, which hasseen deterioration in trade in the formal market. Revenues for the currentperiod were marginally up on prior period. Improved earnings in Tanganda, andto a lesser extent the hotels, were off-set by lower profits in the retaildivisions. Depreciation increased due to the substantial renovation and expansion projectsimplemented by the Group. Interest costs were higher due to increased borrowings to fund the renovationand expansion projects. Working capital was actively managed following improvedcontrols on stocks, debtors and creditors. There has been further rationalization of the departmental stores together witha drive to create greater values in our properties. A new addition to thestores is to be launched, named Meikles Mega Market ("MMM"). This new conceptwill service and support the lower end of the market. The first unit will belaunched in Harare in early December 2013 and will be extended to otherlocations next year. TM Supermarkets are now well advanced in their renovation initiatives andfurther branch expansion is under way. The substantial funding requirementswere recently put in place. Funds held on deposit at the Reserve Bank of Zimbabwe There are indications that a solution to our long standing deposit at theReserve Bank of Zimbabwe ("RBZ") may be forth coming shortly. When thissolution is achieved, the Group expects to retire all local short termborrowings, and if necessary assist Group companies with the redemption of termloans on due date. The Group will also be in a position to provide funding forfurther working capital in the Group divisions. There will be funding availableto support the Employee Share Schemes, which are an important part of theGroup's indigenization processes. Due to liquidity constraints, capitalexpenditure and working capital requirements, the Group is unable to pay aninterim dividend. However, on repayment of the RBZ deposit there should besufficient capacity to resume the payment of dividends. A solution to thisoutstanding issue is undoubtedly the most important matter for all stakeholdersin the Group and has been the single largest impediment to growth andstability. Outlook The second six months of the financial year will continue to be dominated bygrowth in non-trading income, primarily investment income. There areanticipated gains in investments that will be accounted for in the year endfinancials. These gains may include the South African interests, where theGroup has substantial performance expectations, and a first contribution fromthe Group's mining activities. In the short term, it is expected that the retail divisions will continue toencounter demanding environmental challenges particularly tight marketliquidity conditions and low disposable incomes. However, TM Supermarkets willlook to benefit from the renovation of its units and the expansion of itsbranch network, which is gaining momentum. The new stores concept is expected to provide a good addition to the Group'soverall retail activities. Tanganda has had an excellent start to theagricultural growing season and the weather forecast for the remainder of theseason is positive. The newly renovated Meikles Hotel, together with therenovation of the Victoria Falls Hotel will provide a better performanceplatform for the hospitality division. JRT Moxon Chairman 28 November 2013 MEIKLES LIMITED ABRIDGED UNAUDITED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVEINCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 6 months to 6 months to 30 September 30 September 2013 2012 US$ 000 US$ 000 CONTINUING OPERATIONS Revenue 190,291 189,491 Earnings before interest, taxation, depreciation 1,459 2,278and amortisation Depreciation, amortisation and impairment (2,861) (2,267) Non-trading income 42,677 3,073 Finance costs (4,070) (3,241) Profit / (loss) before tax 37,205 (157) Income tax credit / (expense) 326 (249) Profit /(loss) for the period from continuing 37,531 (406)operations DISCONTINUED OPERATIONS Profit for the period from discontinued - 1,173operations PROFIT FOR THE PERIOD 37,531 767 TOTAL COMPREHENSIVE PROFIT FOR THE PERIOD 37,531 767 Profit / (loss) attributable to: Owners of the parent 36,458 (666) Non-controlling interests 1,073 1,433 37,531 767 Total comprehensive profit / (loss) attributableto: Owners of the parent 36,458 (666) Non-controlling interests 1,073 1,433 37,531 767 Earnings / (loss) per share - cents Basic 14.37 (0.26) Continuing operations 14.37 (0.72) Discontinued operations - 0.46 Diluted 13.53 (0.25) Continuing operations 13.53 (0.68) Discontinued operations - 0.44 Headline earnings / (loss) per share - cents (1.96) (0.71) Continuing operations (1.96) (0.71) Discontinued operations - - Diluted headline earnings / (loss) per share - (1.85) (0.67)cents Continuing operations (1.85) (0.67) Discontinued operations - - UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2013 Unaudited Audited 30 September 31 March 2013 2013 US$ 000 US$ 000 ASSETS Non-current assets Property, plant and equipment 105,492 99,063 Investment property 252 254 Investment in Mentor Africa Limited 27,657 27,657 Biological assets 23,193 21,521 Intangible assets 124 2,204 Other financial assets 12,735 12,693 Balances with Reserve Bank of Zimbabwe 87,271 40,514 Deferred tax 2,135 1,997 Total non-current assets 258,859 205,903 Current assets Inventories 36,427 36,708 Trade and other receivables 11,880 17,283 Other financial assets 2,766 1,405 Cash and bank balances 6,945 14,198 Total current assets 58,018 69,594 Total assets 316,877 275,497 EQUITY AND LIABILITIES Capital and reserves Share capital 2,538 2,538 Share premium 1,316 1,316 Non-distributable reserves 12,559 12,559 Retained earnings 157,486 121,028 Equity attributable to equity holders of the 173,899 137,441parent Non-controlling interests 12,063 10,990 Total equity 185,962 148,431 Non-current liabilities Borrowings 22,060 7,417 Other liabilities 17,243 14,534 Total non-current liabilities 39,303 21,951 Current liabilities Trade and other payables 41,566 46,263 Short term borrowings 50,046 58,852 Total current liabilities 91,612 105,115 Total liabilities 130,915 127,066 Total equity and liabilities 316,877 275,497 UNAUDITED CONSOLIDATEDSTATEMENT OF CHANGES INEQUITY FOR THE SIX MONTHS ENDED30 SEPTEMBER 2013 Share Share Non-distributable Retained Disposal Attributable Non- Total capital premium reserves earnings group to owners of controlling capital parent interests and reserves US$ 000 US$000 US$000 US$000 US$000 US$000 US$ 000 US$000 30September2013 Balance 2,538 1,316 12,559 121,028 - 137,441 10,990 148,431at 1April2013 Profit - - - 36,458 - 36,458 1,073 37,531for theperiod Balance 2,538 1,316 12,559 157,486 - 173,899 12,063 185,962at 30September2013 30September2012 Balance 2,538 1,316 6,233 104,581 19,644 134,312 7,495 141,807at 1April2012 (Loss) / - - - (666) - (666) 1,433 767profitfor theperiod Transfer - - 6,326 13,318 (19,644) - - -on saleofdisposalgroup Balance 2,538 1,316 12,559 117,233 - 133,646 8,928 142,574at 30September2012 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 30 September 30 September 2013 2012 US$ 000 US$ 000 CONTINUING AND DISCONTINUED OPERATIONS Cash flows from operating activities Operating cash flow before working capital 1,462 2,318changes Decrease / (increase) in inventories 281 (5,070) Decrease / (increase) in trade and other 5,352 (405)receivables (Decrease) / increase in trade and other (4,482) 12,408payables Cash generated from operations 2,613 9,251 Income taxes paid (422) (127) Net cash generated from operating activities 2,191 9,124 Cash flows from investing activities Payment for property, plant and equipment (10,211) (9,294) Proceeds from disposal of property, plant and 119 69equipment Increase in intangible assets - (1,640) Net movement in service assets (14) (102) Payment for other investments (1,403) (90) Investment income 320 180 Net cash used in investing activities (11,189) (10,877) Cash flows from financing activities Proceeds from interest bearing borrowings 5,837 5,138 Finance costs (4,070) (3,241) Net cash generated from financing activities 1,767 1,897 Net (decrease) / increase in cash and bank (7,231) 144balances Cash and bank balances at 1 April 14,198 8,427 Net effect of exchange rate changes on cash and (22) (183)bank balances Cash and bank balances at 30 September 6,945 8,388 NOTES TO THE ABRIDGED UNAUDITED FINANCIAL STATEMENTS 1. Basis of preparation The abridged unaudited financial statements are prepared from statutory recordsthat are maintained under the historical cost basis except for biologicalassets and certain financial instruments which are measured at fair value.Historical cost is generally based on the fair value of the consideration givenin exchange for assets. 2. Statement of compliance The Group's abridged unaudited financial statements have been prepared inconformity with International Financial Reporting Standards (IFRS). Theseabridged unaudited financial statements do not include all information anddisclosures required to fully comply with IFRS and should be read inconjunction with the Group's annual report for the year ended 31 March 2013. 3. Accounting policies The Group's interim abridged unaudited financial statements have been preparedin accordance with IAS 34 - Interim Financial Reporting. Accounting policiesand methods of computation applied in the preparation of these abridgedunaudited financial statements are consistent, in all material respects, withthose applied in the preparation of the Group's annual financial statements forthe year ended 31 March 2013 with no significant impact arising from new andrevised International Financial Reporting Standards (IFRS). 4. Segment information Unaudited Unaudited 30 September 30 September 2013 2012 US$ 000 US$ 000 Revenue Continuing operations Supermarkets 166,032 163,769 Hotels 7,767 7,710 Agriculture 10,916 10,597 Stores 6,499 8,558 Intra-group sales (923) (1,143) 190,291 189,491 EBITDA Continuing operations Supermarkets 4,099 5,211 Hotels 473 448 Agriculture 340 (1,359) Stores (1,119) (568) Corporate* (2,334) (1,454) 1,459 2,278 Unaudited Audited 30 September 31 March 2013 2013 US$ 000 US$ 000 Segment assets Supermarkets 58,325 60,943 Hotels 51,665 47,719 Agriculture 52,426 52,852 Stores 34,116 37,408 Corporate* 120,345 76,575 316,877 275,497 Segment liabilities Supermarkets 33,708 38,516 Hotels 20,781 16,421 Agriculture 30,223 29,631 Stores 14,771 36,890 Corporate* 31,432 5,608 130,915 127,066 *Intercompany transactions and balances have been eliminated from the corporateamounts. Corporate also includes other subsidiaries that are not allocated to areportable segment. 5. Non-trading income Unaudited Unaudited 30 September 30 September 2013 2012 US$ 000 US$ 000 Non-trading income comprises: Investment revenue 43,754 1,130 Fair value adjustments (1,219) 2,126 Net exchange gains / (losses) 142 (183) 42,677 3,073 Included in investment revenue is interest accrued on the funds on deposit atthe RBZ. 6. Other information Capital commitments authorised by the Directors but 16,298 12,721not contracted Group's share of capital commitments of joint 182 1,500venture For further information contact Onias Makamba on [email protected] +263-4-252068/70.