MEIKLES LIMITED
ABRIDGED AUDITED FINANCIAL RESULTS FOR
THE YEAR ENDED 31 MARCH 2017
CHAIRMAN’S STATEMENT
It gives me pleasure to present the Chairman's Report for the
year ended 31 March 2017.
AMOUNT OWED TO THE COMPANY BY
GOVERNMENT
Your Chairman and colleagues visited the Minister of Finance and
his colleagues on two occasions. The Governor of the Reserve Bank
of Zimbabwe was present at the
first of the two meetings. The basis for an agreement between the
Company and the Government of Zimbabwe was reached. Since then officials
representing the Government and the Company have met to conclude
the quantification of sums due following the agreement and to agree
on the method of payment and timing thereof. The sum due to the
Company together with accrued interest amounted to US$42.6 million as at 30
September 2016. This sum has not been included in the
audited financial statements.
Although the basis of the agreement has been reached, Government
has not as yet completed the necessary documentation to conclude
the formalities relevant to the agreement.
OFFER BY ALBWARDY INVESTMENTS
Shareholders are aware of the Cautionary releases relating to
the approach to the Company and its Shareholders by Albwardy
Investments. Further Cautionary statements will be released as
necessary, to ensure that Shareholders are appropriately informed
of developments.
REVIEW OF PERFORMANCE
Meikles Limited comprises six operating segments as follows:
Supermarkets;
Agriculture;
Hospitality;
Stores (incorporating Department Stores and Wholesaling);
Financial Services;
Security Services.
Group Financial Results
The Group’s financial results for the year ended 31 March 2017, reflect the resilience of some of
the Group’s operations to the persistent decline in economic
activity in the country. Group revenue for the year amounted to
US$457.6 million (2016: US$453.6 million), boosted by an exceptional
performance by the Supermarkets segment. Revenue for the
Supermarkets grew by 5% defying the negative effect of depressed
consumer demand that prevailed during the entire financial year.
Revenue for the other segments declined due to adverse trading
conditions.
Expenditure was tightly controlled at all segments and
significant ground was covered in reducing operating costs during
the period. Net operating costs declined by 2% relative to the
previous financial year, translating to a net US$7.8 million reduction in costs, despite an
increase in rentals paid by Supermarkets following expansion. The
initiatives on cost reduction have positioned the Group for leaner
times the country is experiencing with declining revenue being the
norm.
The Group achieved a strong EBITDA growth, a pleasing result
achieved under tough trading conditions. EBITDA increased by
US$12.6 million or 104% from
US$12.2 million to US$24.8 million. The contribution by each
material segment to the Group’s EBITDA is set out in the notes to
these abridged audited financial statements.
Profit before tax for the year came in at US$5.3 million recovering from a US$17.8 million loss in previous year. The
turnaround was achieved primarily due to strong EBITDA growth
assisted by absence of impairment charges on investment in Mentor
Africa Limited as well as reduced losses on discounting Treasury
Bills.
Group borrowings at 31 March 2017,
stood at US$66.2 million and were
US$11.8 million lower than the level
of US$78.0 million at 31 March 2016. Consequently interest paid for the
year ended 31 March 2017, fell by 13%
to US$9.2 million. The restructuring
of short term loans to medium term facilities is in progress.
The Group adopted changes in accounting for bearer plants as per
the amendments to International Accounting Standards 16 and 41
effective for financial periods beginning 1
January 2016. Consequently tea bushes, coffee bushes,
macadamia trees and avocado trees are now being carried at cost and
depreciated over their productive lives. Prior year comparative
figures have been restated as a result. The effect of the
restatement on prior year comparative figures is disclosed in note
9 of these abridged financial statements.
Supermarkets – trading as TM and Pick
n Pay
The segment had an eventful financial year with the climax being
the reopening of the refurbished and rebranded flagship branch at
Village Walk in Borrowdale. Despite the biggest branch TM
Borrowdale operating under renovations for a greater part of the
financial year, the segment achieved yet another set of exceptional
results for the financial year ended 31
March 2017. Revenue for the year grew by 5% to US$414.0 million relative to the prior year. The
segment has achieved revenue growth year on year since 2013,
spurred by branch network expansion and upgrades.
Gross profit margin for the year improved by 2 percentage points
due to improved efficiency in procurement coupled with reduction in
wastage and shrinkage. The investment in equipment upgrades, mainly
refrigeration, has had a significant impact in reducing
wastage.
Operating costs grew by 7% due to incremental costs of new
branches as well as increased depreciation on new equipment. EBITDA
for the year grew by 50% to US$23.8
million (2016: US$15.9
million).
CHAIRMAN’S STATEMENT (continued)
The segment is now ungeared following the payment of the last
installment in October 2016 of the
US$25 million loan taken to expand
and upgrade the branch network. The segment is now capable of
funding expansion and upgrades from operating cash flows. Two new
branches are at an advanced stage of development. These branches
are expected to commence trading during the second half of this
financial year.
Agriculture
The segment generated EBITDA of US$6.1
million during the year ended 31
March 2017, compared to just US$255,000 in prior year marking a historic
turnaround in the viability of the business. Revenue went down by
6% to US$21.2 million (2016:
US$22.4 million). The decline in
revenue was due to a 20% fall in tonnage of bulk tea exports. Prior
year’s tonnage of bulk tea exports was higher due to build-up of
stocks during the period from December
2014 to March 2015, when
exports were on hold pending the granting of the Rainforest
Alliance certification.
International bulk tea export prices were firmer throughout the
year averaging US$1.55 / kg in the 12
month’s period to 31 March 2017,
compared with average of US$1.37 / kg
in the prior year. The segment experienced record heat and
evaporation in the Chipinge District in September and October 2016. Fortunately after a disastrous
start to the season, meaningful rainfall averaging 1 400 mm fell
from November 2016 to March 2017 covering all estates. The ultimate
production of 8 103 tonnes of made tea was 12% above prior year of
7 261 tonnes.
New crops are progressing well and some 4 year old macadamia nut
fields will yield an average of 400 kgs per hectare in the coming
financial year. The average price of macadamia nuts of US$2.99 / kg was 19 US cents higher than the
prior year. The average coffee export price was US$3.20 / kg. AAA grades fetched between
US$4.60 / kg and US$5.00 / kg. The segment installed the second
line of a four lane sizing machine in the avocado pack house ahead
of the harvesting and toll processing period of April to
June 2017.
The segment benefited from the Reserve Bank of Zimbabwe’s 5% export
incentive which boosted our exports of packed tea into the
region.
Tingamira water sold in the year to March
2017 was 2.4 million litres. The brand has firmly
established itself in the market as a premium brand for those
customers who prefer to ‘drink from a trusted source’.
The Rainforest Alliance (Sustainable Agriculture), International
Standards Organization (ISO - on packed tea), GlobalGAP (on
avocadoes) and Standards Association of Zimbabwe (SAZ on bottled spring water) are all
in place making our products acceptable worldwide.
Hospitality
The segment’s revenue for the year of US$14.7 million (2016: US$15.8 million) declined by 7% relative to the
previous year, weighed down by the fall in room occupancy and
average room rates in Harare.
Trading results at Meikles Hotel reflected the deepening economic
challenges the country is facing. Room occupancy reduced by 3.41
percentage points and the average daily rate retreated by 13%.
Consequently revenue per available room for the year reduced by
20%.
The rebound in international tourist arrivals in Victoria Falls assisted in containing the
decline in the segment’s revenue to a single digit rate. Room
occupancy at The Victoria Falls Hotel grew by 2.31 percentage
points to 55.02% (2016: 52.71%). The average daily rate increased
by 4% and combined with occupancy growth resulted in increased
revenue per available room by 8%.
Operating costs for the year reduced by 8%. At Meikles Hotel,
operating costs decreased by 12% reflecting the combined effect of
reduced room occupancy and cost reduction initiatives implemented
by management. EBITDA for the year was US$1.8 million (2016: US$1.7 million), savings on operating costs
offsetting the decline in revenue growth.
Recently, The Victoria Falls Hotel Partnership renegotiated the
extension of the lease of the The Victoria Falls Hotel for a longer
tenure. Preparatory work for the second phase of
refurbishment of the hotel is underway with the works expected to
commence before the end of this financial year.
Stores
The segment’s revenue for the financial year ended 31 March 2017 was US$9.0
million (2016: US$22.2
million), reflecting a decrease of 59% over last year. The
absence of trading stock following various constraints on foreign
and local payments had a negative impact on the business in the
last quarter of the financial year. The number of trading units
(wholesaling) were reduced from 9 to 5 in view of working capital
constraints. Leases were exited in unprofitable and high overhead
stores resulting in staff cost reduction and significant savings on
occupancy costs. The business has now been realigned and focused in
a way that has positioned it for future growth.
New stores were opened in strategic locations. These stores are
performing above expectations. Total operating expenses decreased
by 9% over the year. EBITDA loss was US$4.1
million (2016: loss of US$2.5
million).
Further development plans and store roll-outs are in progress.
Four new stores will be opened in the first quarter of the 2018
financial year, two stores in Bulawayo, an M-store at Bradfield and
a Meikles Mega Store adjacent to Meikles Bulawayo and two Meikles
Mega Stores in Kwekwe and Mutare. The key strategy is to open new
stores in Group owned premises and strategic locations.
The new REACTS point of sale and back office system which was
fully implemented in all Meikles Mega Market outlets is providing
information to effectively deal with pricing, unit stock control
and accurate sales data.
Customer credit terms continued to be tightened but in spite of
this credit sales were 58% (2016: 69%) of sales for the department
stores. The collection rate on trade debtors improved to 25% (2016:
23%). However, the bad debt write–off increased to 4.5% (2016:
2.2%), being a reflection on the lack of disposable income and
uncertain pay days among other factors. Consequently customers’
arrears increased to 19% (2016: 14%) in the period under review. As
at 31 March 2017 there were 29,612
active customers.
CHAIRMAN’S STATEMENT (continued)
Although the segment still has legacy issues surrounding certain
merchandise which can only be sold at reduced margins, the segment
expects substantial growth in the second quarter of the 2018
financial year, if the planned new stores are opened and adequate
funding for stock and working capital is secured. The segment is
expected to return to profitability by the end of the second
quarter of 2018 financial year. The full potential of the segment
will be achieved in the third quarter.
Financial Services
Meikles Financial Services (MFS) faced a mixed trading year to
31 March 2017. The highlight for the
year was the rapid uptake of the MyCash Card, the low-cost,
multi-featured bank account which was launched in early 2016. At
31 March 2017, there were in excess
of 150,000 account holders covering all demographic groups. We
expect this level of growth to continue throughout 2017 and
beyond.
On the negative side, the cash shortages that have prevailed in
Zimbabwe over the past year have
led to a significant decline in acquirer revenues. This has
impacted our efforts to extend our presence across
Zimbabwe. Despite this, MFS opened a further 4 kiosks in TM
Pick n Pay Supermarkets bringing the total to 45 at 31 March 2017.
MFS continues to adapt to the changing environment and we remain
confident that the company will become a major player in the field
of Financial Services.
Security Services
Meikles Guard Services (MGS) continued to expand its customer
base outside the Group companies and secured twenty three
additional posts during the period under review. The total number
of posts at 31 March 2017 stood at
268, of which 220 were posts within the Group and 48 posts were
from organisations outside the Group. We await the awarding of
security tenders that MGS was recently invited to submit. The
tenders lodged are for various organisations including embassies,
corporates and financial institutions.
MENTOR AFRICA LIMITED
The value of the Group’s investment in Mentor Africa Limited
(“Mentor”) remained at the same level as last year in South African
Rand terms. In US$ terms the value increased by US$2.1 million due to the South African Rand
being 10% firmer against the US$ at 31 March
2017, relative to last year. The increase in value is not
reflected in the financial statements as IFRS does not permit the
upward revaluation of investment balances accounted for at cost
less impairment losses. A dividend of ZAR16.6 million was received from the investment
(2016: ZAR18.4 million). It should be
noted that Mentor changed its financial year end to 31 December.
The dividend received above was declared based on financial results
for a nine months trading period.
MEIKLES FOUNDATION
The financial year ended 31 March
2017, saw an end to a particularly challenging year for the
Meikles Foundation with dwindling direct financial support for
projects from the Meikles Group.
The Foundation had to re-think its modus operandi, to be able to
continue to function and contribute to the society of
Zimbabwe. We are proud to report that in this harsh economic
climate, the Foundation’s philanthropic contribution was in the
region of US$120,000, the majority of
which was ‘in-kind’ contributions and donations. A significant
portion of the ‘in-kind’ donations were through assistance from the
Meikles Group where the Foundation identified under-utilised assets
and ‘on-gifted’ their use to various groups and organisations. The
Foundation, with its network played a key role in linking,
negotiating, sourcing goods and services from within the Meikles
Group, other corporates in Zimbabwe, NGO’s and the diplomatic corps.
Key achievements were the donating of space to the dance troupe
Nhaka Tumbuka in Speke Avenue and the re-utilising of space for the
dance school Afrikera Arts Studio - the Hub along Robert Mugabe
street where fifteen prospective students from the city surrounds
have the opportunity to study dance, as well as business management
for three years and graduate with an internationally recognised
diploma. Africalia and the Meikles Foundation fund this project.
The Foundation also funded both KidzCan and Island Hospice &
Healthcare for medication, supplementary feeding programmes,
funding for small agricultural projects aimed at
self-sustainability and emergency funding for destitute and
abandoned babies and displaced families.
Moving forward, the focus of the Meikles Foundation for the
upcoming financial year is to continue to strengthen partnerships
with the Meikles Group as well as the donating society, and to
streamline projects commitments whilst being ever mindful of the
volatile, uncertain, complex and ambiguous environment in which it
operates.
Planned projects include partnering with TM Pick n Pay Annual
Golf Day, a retreat home for children recovering from cancer
treatment and always, wherever possible ad-hoc assistance for the
vulnerable.
OUTLOOK
The new financial year began following above normal rainfall and
a rebound of mineral prices on the international market. Strong
marketing of the Group’s brands continue to be a key focus area
across all the segments. Initiatives to reduce operating costs
further continue in all segments. The restructuring of the Group’s
debt will be completed during the course of the financial
year. Efforts to date in this regard are resulting in
success.
DIVIDEND
The Board resolved not to declare a dividend for the year.
CHAIRMAN’S STATEMENT (continued)
APPRECIATION
I would like to extend my appreciation to our customers for
their continued support and to our shareholders and regulatory
authorities for their support and guidance. I would also like to
extend my thanks and appreciation to fellow Board members,
management and staff for their dedication and commitment.
JRT Moxon
Executive Chairman
31 May 2017
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2017
|
|
|
|
|
|
|
Restated |
|
|
31
March 2017 |
31 March
2016 |
|
|
US$
000 |
US$
000 |
|
|
|
|
Revenue |
|
457,626 |
453,648 |
Net operating
costs |
|
(444,452) |
(452,260) |
|
|
|
|
Operating
profit |
|
13,174 |
1,388 |
Investment income |
|
2,134 |
3,628 |
Finance costs |
|
(9,163) |
(10,516) |
Impairment of
investment in Mentor Africa Limited |
|
- |
(2,885) |
Net exchange
losses |
|
(161) |
(274) |
Loss recognised on
discounting Treasury Bills |
|
(1,429) |
(8,628) |
Fair value adjustments
on biological assets |
|
789 |
(528) |
Profit / (loss)
before tax |
|
5,344 |
(17,815) |
Income tax
expense |
|
(6,090) |
(4,860) |
Loss for the
year |
|
(746) |
(22,675) |
|
|
|
|
Other comprehensive
income, net of tax |
|
|
|
Items that may be
reclassified subsequently to profit or loss: |
|
|
|
Reclassification
adjustment relating to available-for-sale financial assets disposed
of in the current year |
|
441 |
4,471 |
Fair value gain on available-for-sale financial assets |
|
653 |
6,860 |
Other comprehensive
income for the period, net of tax |
|
1,094 |
11,331 |
|
|
|
|
TOTAL COMPREHENSIVE
INCOME / (LOSS) FOR THE YEAR |
|
348 |
(11,344) |
|
|
|
|
(Loss) / profit for
the year attributable to: |
|
|
|
Owners of the parent |
|
(6,719) |
(26,045) |
Non-controlling interests |
|
5,973 |
3,370 |
|
|
(746) |
(22,675) |
Total comprehensive
(loss) / income attributable to: |
|
|
|
Owners of the parent |
|
(5,625) |
(14,714) |
Non-controlling interests |
|
5,973 |
3,370 |
|
|
348 |
(11,344) |
Loss per share
(cents) |
|
|
|
Basic |
|
(2.65) |
(10.26) |
|
|
|
|
Diluted |
|
(2.46) |
(9.53) |
|
|
|
|
Headline loss per
share (cents) |
|
(2.00) |
(7.68) |
|
|
|
|
Diluted headline
loss per share (cents) |
|
(1.86) |
(7.13) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31
MARCH 2017
|
|
|
Restated |
Restated |
|
|
31
March 2017 |
31 March
2016 |
1 April
2015 |
|
|
US$
000 |
US$
000 |
US$
000 |
ASSETS |
|
|
|
|
Non-current
assets |
|
|
|
|
Property, plant and
equipment |
|
172,664 |
170,454 |
164,601 |
Investment
property |
|
243 |
248 |
249 |
Investment in Mentor
Africa Limited |
|
20,046 |
20,046 |
22,931 |
Biological assets |
|
1,147 |
1,227 |
1,624 |
Intangible assets |
|
124 |
124 |
124 |
Other financial
assets |
|
11,901 |
12,004 |
12,246 |
Deferred tax |
|
3,427 |
3,480 |
4,201 |
Total non-current
assets |
|
209,552 |
207,583 |
205,976 |
|
|
|
|
|
Current
assets |
|
|
|
|
Balances with Reserve
Bank of Zimbabwe |
|
- |
- |
7,229 |
Treasury Bills |
|
3,024 |
11,106 |
22,942 |
Inventories |
|
34,467 |
33,391 |
35,626 |
Trade and other
receivables |
|
13,969 |
14,248 |
19,645 |
Biological assets –
produce on bearer plants |
|
1,867 |
791 |
764 |
Other financial
assets |
|
4,134 |
3,493 |
4,093 |
Cash and bank
balances |
|
15,637 |
10,494 |
8,883 |
Total current
assets |
|
73,098 |
73,523 |
99,182 |
|
|
|
|
|
Total
assets |
|
282,650 |
281,106 |
305,158 |
|
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
|
Capital and
reserves |
|
|
|
|
Share capital |
|
2,538 |
2,538 |
2,538 |
Share premium |
|
1,316 |
1,316 |
1,316 |
Other reserves |
|
12,512 |
11,418 |
87 |
Retained earnings |
|
83,683 |
90,402 |
116,447 |
Equity attributable to
equity holders of the parent |
|
100,049 |
105,674 |
120,388 |
Non-controlling
interests |
|
28,591 |
21,182 |
17,281 |
Total
equity |
|
128,640 |
126,856 |
137,669 |
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
Borrowings |
|
9,241 |
11,063 |
24,402 |
Deferred tax |
|
17,637 |
15,587 |
12,508 |
Total non-current
liabilities |
|
26,878 |
26,650 |
36,910 |
|
|
|
|
|
Current
liabilities |
|
|
|
|
Trade and other
payables |
|
70,155 |
60,700 |
60,397 |
Borrowings |
|
56,977 |
66,900 |
70,182 |
Total current
liabilities |
|
127,132 |
127,600 |
130,579 |
|
|
|
|
|
Total liabilities |
|
154,010 |
154,250 |
167,489 |
|
|
|
|
|
Total equity and
liabilities |
|
282,650 |
281,106 |
305,158 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2017
|
Share
capital |
Share
premium |
Other reserves |
Retained earnings |
|
US$ 000 |
US$ 000 |
US$
000 |
US$
000 |
2017 |
|
|
|
|
Balance at 1 April
2016 – as previously stated |
2,538 |
1,316 |
11,418 |
93,222 |
Prior year
adjustment |
- |
- |
- |
(2,820) |
Balance at 1 April
2016 – restated |
2,538 |
1,316 |
11,418 |
90,402 |
(Loss) / profit for
the year |
- |
- |
- |
(6,719) |
Other comprehensive
income for the year |
- |
- |
1,094 |
- |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
Balance at 31 March
2017 |
2,538 |
1,316 |
12,512 |
83,683 |
|
|
|
|
|
2016 -
restated |
|
|
|
|
Balance at 1 April
2015 – as previously stated |
2,538 |
1,316 |
87 |
115,934 |
Prior year
adjustment |
- |
- |
- |
513 |
Balance at 1 April
2015 - restated |
2,538 |
1,316 |
87 |
116,447 |
(Loss) / profit for
the year |
- |
- |
- |
(26,045) |
Other comprehensive
income for the year |
- |
- |
11,331 |
- |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
- |
- |
- |
Balance at 31 March
2016 - restated |
2,538 |
1,316 |
11,418 |
90,402 |
|
Attributable to owners of parent |
Non-controlling
interests |
Total |
|
US$ 000 |
US$ 000 |
US$ 000 |
2017 |
|
|
|
Balance at 1 April
2016 – as previously stated |
108,494 |
21,182 |
129,676 |
Prior year
adjustment |
(2,820) |
- |
(2,820) |
Balance at 1 April
2016 – restated |
105,674 |
21,182 |
126,856 |
(Loss) / profit for
the year |
(6,719) |
5,973 |
(746) |
Other comprehensive
income for the year |
1,094 |
- |
1,094 |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
1,436 |
1,436 |
Balance at 31 March
2017 |
100,049 |
28,591 |
128,640 |
|
|
|
|
2016 -
restated |
|
|
|
Balance at 1 April
2015 – as previously stated |
119,875 |
17,281 |
137,156 |
Prior year
adjustment |
513 |
- |
513 |
Balance at 1 April
2015 - restated |
120,388 |
17,281 |
137,669 |
(Loss) / profit for
the year |
(26,045) |
3,370 |
(22,675) |
Other comprehensive
income for the year |
11,331 |
- |
11,331 |
Non-controlling
interests arising from Mopani Property Development (Private)
Limited |
- |
531 |
531 |
Balance at 31 March
2016 - restated |
105,674 |
21,182 |
126,856 |
CONSOLIDATED
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 MARCH
2017 |
|
|
|
|
|
|
|
|
|
|
Restated |
|
|
31
March 2017 |
31 March
2016 |
|
|
US$ 000 |
US$
000 |
|
|
|
|
Cash flows from
operating activities |
|
|
|
Profit / (loss) before
tax |
|
5,344 |
(17,815) |
Adjustments for: |
|
|
|
- Depreciation and
impairment of property, plant and equipment and investment
property |
|
11,801 |
10,170 |
- Net interest |
|
8,022 |
7,927 |
- Dividend income |
|
(992) |
(1,039) |
- Net exchange
losses |
|
161 |
274 |
- Impairment of
investment in Mentor Africa Limited |
|
- |
2,885 |
- Fair value
adjustments on biological assets |
|
(789) |
528 |
Loss recognised on
discounting Treasury Bills |
|
1,429 |
8,628 |
- Loss / (profit) on
disposal of property, plant and equipment |
|
123 |
(25) |
Operating cash flow
before working capital changes |
|
25,099 |
11,533 |
|
|
|
|
Decrease in
inventories |
|
(1,076) |
2,235 |
Decrease in trade and
other receivables |
|
1,317 |
6,137 |
Increase in trade and
other payables |
|
8,986 |
1,246 |
Cash generated from
operations |
|
34,326 |
21,151 |
Income taxes paid |
|
(3,520) |
(915) |
Net cash generated
from operating activities |
|
30,806 |
20,236 |
|
|
|
|
Cash flows from
investing activities |
|
|
|
Payment for property,
plant and equipment |
|
(14,229) |
(16,831) |
Proceeds from disposal
of property, plant and equipment |
|
230 |
203 |
Proceeds from sale of
Treasury Bills and coupon interest |
|
8,809 |
24,164 |
Net movement in
service assets |
|
37 |
630 |
Net movement in
other investments |
|
(515) |
885 |
Net expenditure on
biological assets |
|
(374) |
(158) |
Investment income |
|
56 |
152 |
Net cash (used in)
/ generated from investing activities |
|
(5,986) |
9,045 |
|
|
|
|
Cash flows from
financing activities |
|
|
|
Net decrease in
interest bearing borrowings |
|
(11,745) |
(16,621) |
Proceeds on disposal
of partial interest in a subsidiary without loss of control |
|
1,436 |
531 |
Finance costs |
|
(9,163) |
(10,516) |
Dividend paid –
ordinary shareholders |
|
- |
(1,063) |
Net cash used in
financing activities |
|
(19,472) |
(27,669) |
|
|
|
|
Net increase in cash
and bank balances |
|
5,348 |
1,612 |
Cash and bank balances
at the beginning of the year |
|
10,494 |
8,883 |
Net effect of exchange
rate changes on cash and bank balances |
|
(205) |
(1) |
Cash and bank
balances at the end of the year |
|
15,637 |
10,494 |
NOTES TO THE ABRIDGED AUDITED FINANCIAL STATEMENTS
1. Basis of preparation
The abridged audited financial statements 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.
2. Statement of compliance
The Group’s abridged audited financial results have been
extracted from financial statements prepared in accordance with
International Financial Reporting Standards and the Companies Act
(Chapter 24.03) and relevant statutory instruments (SI33/99 and
SI62/96). These abridged financial results should be read in
conjunction with the complete set of financial statements for the
year ended 31 March 2017 which have
been audited by Deloitte & Touche Chartered Accountants
(Zimbabwe) and an unmodified audit
opinion issued thereon. The auditors have included a section on key
audit matters. The key audit matters were on material uncertainty
related to going concern, valuation of biological assets and
contingent assets and liabilities. The auditor’s report is
available for inspection at the Company’s registered address.
3. Accounting policies
Accounting policies and methods of computation applied in the
preparation of these abridged audited financial statements are
consistent, in all material respects, with those used in the prior
year, except for the effect of the newly revised International
Financial Reporting Standards (IFRSs) on Agriculture: Bearer
Plants (Amendements to IAS 16 and IAS 41). Please refer to note
9 for more details.
4. Going concern
The Directors assess the ability of the Group to continue in
operational existence in the foreseeable future at each reporting
date. As at 31 March 2017, the
Directors have assessed the Group’s ability to continue operating
as a going concern and believe that the preparation of these
audited financial statements on a going concern basis is still
appropriate.
5. Treasury Bills
Below is an analysis of the movement in the Treasury Bills’
balance during the year:
|
|
Group
and Company |
Group
and Company |
Group
and Company |
Group
and Company |
|
|
31
March 2017 |
31
March 2017 |
31 March
2016 |
31 March
2016 |
|
|
US$
000 |
US$
000 |
US$
000 |
US$
000 |
|
|
Fair
(Market) value |
Nominal value |
Fair
(Market) value |
Nominal value |
Balance at the
beginning of the year |
|
11,106 |
12,247 |
22,942 |
35,414 |
Treasury Bills
received during the year |
|
- |
- |
5,769 |
6,500 |
Gain on replacement of
Treasury Bills |
|
- |
- |
8,320 |
2,229 |
Interest for the
year |
|
1,061 |
409 |
2,396 |
940 |
Coupon interest
received |
|
(551) |
(551) |
(330) |
(330) |
Treasury Bills
disposed during the year |
|
(8,592) |
(9,034) |
(27,991) |
(32,506) |
Balance at the end of
the year |
|
3,024 |
3,071 |
11,106 |
12,247 |
|
|
|
|
|
|
Analysis of
balance |
|
|
|
|
|
Treasury bills on hand
at end of the year |
|
2,480 |
3,000 |
9,889 |
11,964 |
Accrued interest |
|
544 |
71 |
1,217 |
283 |
Balance at the end of
the year |
|
3,024 |
3,071 |
11,106 |
12,247 |
The 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, and at 31 March
2017, 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 during the preceding and current financial
years.
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. At 31 March 2017, Treasury
Bills with a nominal value of US$3.1million (2016: US$12.2 million) were pledged as security for
loans with a carrying value of US$3.6
million (2016: US$14.1
million).
Treasury Bills issued by the Reserve Bank of Zimbabwe held at 31
March 2017:
|
|
Group and
Company |
Group and Company |
|
|
31 March
2017 |
31 March 2016 |
|
|
US$ 000 |
US$ 000 |
At fair (market) value |
|
|
|
Treasury Bills maturing on 10 April
2017 with a coupon rate of 5% |
|
3,024 |
11,106 |
|
|
3,024 |
11,106 |
NOTES TO THE ABRIDGED AUDITED FINANCIAL STATEMENTS
5. Treasury Bills (continued)
The salient terms of the Treasury Bills held at 31 March 2017 are as follows:
Treasury Bill number |
|
ZTB73120150410Z |
Issue date |
|
10/04/2015 |
Redemption date |
|
10/04/2017 |
Nominal value - including accrued
interest (US$ 000) |
|
3,071 |
Coupon |
|
5.0% |
Coupon payment dates |
|
10 April and 10
October |
Fair value - including accrued
interest (US$ 000) |
|
3,024 |
6. Segment information
|
|
Restated |
|
31
March 2017 |
31 March
2016 |
|
US$
000 |
US$
000 |
Revenue |
|
|
Supermarkets |
413,997 |
395,297 |
Hotels |
14,667 |
15,812 |
Agriculture |
21,173 |
22,412 |
Departmental
stores |
4,640 |
6,465 |
Wholesaling |
4,432 |
15,740 |
Corporate* |
(1,283) |
(2,078) |
|
457,626 |
453,648 |
EBITDA |
|
|
Supermarkets |
23,807 |
15,911 |
Hotels |
1,814 |
1,699 |
Agriculture |
6,096 |
255 |
Departmental
stores |
(1,333) |
(186) |
Wholesaling |
(2,797) |
(2,326) |
Corporate* |
(2,779) |
(3,152) |
|
24,808 |
12,201 |
The EBITDA figures are
before Group management fees. |
|
|
|
|
|
|
|
Restated |
|
31
March 2017 |
31 March
2016 |
|
US$
000 |
US$
000 |
Segment
assets |
|
|
Supermarkets |
98,532 |
88,113 |
Hotels |
46,460 |
47,557 |
Agriculture |
76,038 |
74,254 |
Departmental
stores |
26,899 |
30,015 |
Wholesaling |
4,196 |
4,268 |
Corporate* |
30,525 |
36,899 |
|
282,650 |
281,106 |
Segment
liabilities |
|
|
Supermarkets |
43,314 |
46,716 |
Hotels |
22,782 |
22,887 |
Agriculture |
30,944 |
32,552 |
Departmental
stores |
17,286 |
16,984 |
Wholesaling |
8,690 |
6,049 |
Corporate* |
30,994 |
29,062 |
|
154,010 |
154,250 |
*Intercompany transactions and balances have been eliminated from
the corporate amounts. Corporate also includes other subsidiaries
that are immaterial to warrant separate disclosure. |
|
|
Restated |
|
31 March
2017 |
31 March 2016 |
7. Other information |
US$ 000 |
US$ 000 |
Depreciation of property, plant and
equipment and investment property |
10,653 |
9,826 |
Impairment of property, plant and
equipment |
1,148 |
343 |
Capital commitments authorised by
the Directors but not contracted for |
13,500 |
19,715 |
Group’s share of capital commitments
of joint operations |
- |
2,651 |
NOTES TO THE ABRIDGED AUDITED
FINANCIAL STATEMENTS
|
|
Restated |
|
31 March
2017 |
31 March 2016 |
|
US$ 000 |
US$ 000 |
8. Net borrowings |
|
|
Non-current borrowings |
9,241 |
11,063 |
Current borrowings |
56,977 |
66,900 |
Total borrowings |
66,218 |
77,963 |
Cash and cash equivalents |
(15,637) |
(10,494) |
Net borrowings |
50,581 |
67,469 |
|
|
|
Comprising: |
|
|
Secured |
55,773 |
68,454 |
Unsecured |
10,445 |
9,509 |
|
66,218 |
77,963 |
The
weighted average cost of borrowings for the year was 13.63% per
annum (2016: 11.48% per annum).
The Group has issued cross company guarantees worth US$29.8 million
(2016: US$36.9 million) for Group borrowing facilities. |
9. Prior year adjustment - change in accounting policy for
bearer plants (Amendments to IAS 16 And IAS 41
Agriculture: Bearer Plants)
The Group has applied the above amendments for the first time in
the current year. The amendments define a bearer plant and require
biological assets that meet the definition of a bearer plant to be
accounted for as property, plant and equipment in accordance with
IAS 16, instead of IAS 41. The produce growing on bearer plants
continues to be accounted for in accordance with IAS 41.
The application of these amendments has had a material impact on
the Group’s consolidated financial statements, as the Group is
engaged in agricultural activities through one of its subsidiaries,
Tanganda Tea Company Limited. Retrospective adjustments have been
made to the financial statements with effect from 1 April 2015, the beginning of the earliest
period presented, as required by the transitional provisions of
these amendments.
The Group has elected to measure bearer plants at their fair
value at the beginning of the earliest period presented,
1 April 2015, and have used that fair
value as the deemed cost of the bearer plants as at that date.
Adjustments were made to opening retained earnings at 1 April 2015 for the fair value differences on
the produce growing on the bearer plants.
The effect of the restatement to the March 2016 consolidated financial statements is
as summarised below:
|
|
Group |
|
|
31 March
2016 |
Effect on the consolidated
statement of profit or loss and other comprehensive income |
|
US$ 000 |
Increase in net operating costs
(depreciation) |
|
(664) |
Decrease in fair value gain on
biological assets |
|
(3,118) |
Decrease in deferred tax
expense |
|
449 |
Decrease in profit |
|
(3,333) |
|
|
|
Decrease in basic loss per
share |
|
(1.31) |
Decrease in diluted loss per
share |
|
(1.22) |
Decrease in headline loss per
share |
|
(1.29) |
Decrease in diluted headline loss
per share |
|
(1.20) |
|
|
|
Effect on the consolidated
statement of financial position |
|
|
Increase in property, plant and
equipment |
|
41,021 |
Decrease in biological assets |
|
(43,927) |
Decrease in trade and other
receivables |
|
(363) |
Decrease in deferred tax
liability |
|
449 |
Decrease in equity |
|
(2,820) |
|
|
|
Effect on opening retained
earnings (1 April 2015) |
|
|
Increase in opening retained
earnings |
|
513 |
Meikles Limited Website :
http://www.meiklesltd.com/