Final Results
Meikles Africa Ld
30 May 2006
AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2006
SALIENT FEATURES
References are to historical information
Net turnover
Increased by 555% to $12,2 trillion
Operating profit
Increased by 1023% to $1,9 trillion
Attributable profit
Increased to $5,7 trillion
Exchange gains
$4,2 trillion compared to $86 billion in the previous year
Investment income and quoted investments
Income and increase in value, up by 1581% to $992 billion
Dividend per share
At $2,375 per share, the dividend is up 1087% on the prior year.
The final dividend of $2,000 per share amounts to $327 billion
Cash generated and funds available
Funds generated from operations were $1,1 trillion (2005: $281 billion)
Funds on hand amount to $4,3 trillion
COMMENTARY
Meikles Africa set out an ambitious five-part strategy for the year ended 31
March 2006 and each division has delivered results that exceeded expectations.
The strategy enabled operations to retain focus and consistency in our ever
changing environment. Each division was encouraged to adapt to opportunities
within the framework.
The following goals, which ensured operating profit in excess of inflation, were
pursued;
• That a greater share of a diminishing market be secured.
• That no compromise be made in the procurement of sufficient
inventory.
• That working capital management responded rapidly to interest and
exchange rate movements.
• That store upgrades and TM expansion projects be pursued vigorously.
• That Meikles Africa Hotels maintained standards commensurate with
Leading Hotels of the World.
Meikles Africa is pleased to report that the results for the year reflect a
performance that not only shows financial growth in all divisions but a solid
realisation of potential relative to competitors.
The inflation adjusted financial statements show real growth in turnover and
operating profit after the net monetary gain, confirming the strength of trading
and management of costs. The balance sheet also reflects a significant growth
in equity matched by the enhancement of the net asset value of the Group.
Operations
TM Supermarkets (Private) Limited
• Net turnover grew by 576% to $9,8 trillion.
• Operating profit increased by 1034% to $1,2 trillion.
• Investment income increased by 850% to $365 billion.
• Profit before tax was $1,6 trillion, a 997% increase on prior year.
• Market shift in sales mix to basic product lines was successfully
managed.
• Shrinkage was satisfactorily contained.
• A new unit was opened in Chikanga, Mutare in March 2006.
Contractors are on site in Kariba and the finalisation of leases is at
an advanced stage for three new outlets.
Department Stores
• The results, excluding Medix, reflect an increase in turnover of 376%
to $1,1 trillion and an increase in profit before tax of 681%
to $253 billion.
• Stock turns were 3,8 against 2,9 last year.
• Managing stock has required a policy of replacement pricing whilst
retaining a competitive edge.
• The new 'Storeline' Point of Sale system, which is 75% complete, will
assist in providing information to more effectively deal with pricing,
unit stock control and sales data.
Hotels
• Turnover increased by 865% to $1,2 trillion.
• Profit before tax for the division at $366 billion was up 1730% on the
prior year.
• Profit before tax for the Zimbabwe Hotels at $107 billion was 1598% up
on the prior year.
• At the Cape Grace, profit before tax at $259 billion was up 1972% on
the prior year - an increase of 24% in South African Rand terms.
• Tight cost control and the movement of the exchange rate contributed
to the good results for the division.
• Occupancy at Victoria Falls Hotel increased by three percentage points
while that at the Meikles Hotel decreased by the same figure.
• Occupancy at the Cape Grace grew by seven percentage points.
• The hotels were cash sufficient with all planned capital expenditure
being financed from operating cash flow.
• Meikles Africa Hotels continued to dominate local and South African
awards for quality service and product.
Group Investments
• Mvelaphanda showed positive growth of more than 40% in the Rand share
price and gains arising from exchange rate movement.
• Plans to achieve a larger strategic alignment with Mvelaphanda
Holdings are progressing.
• Exchange gains amounted to $4,2 trillion on foreign funds.
• The Group's share of the results of Kingdom Financial Holdings was
$60 billion, compared to $1,2 billion in the prior year.
• Meikles Africa, together with Econet, will underwrite the Kingdom
rights issue of $1,5 trillion in June 2006.
Social Responsibility
The Group's main focus is to continue supporting the aged. To this end the
Group is currently donating in excess of $500 million per month and this will be
increased at least in line with inflation.
Conclusion
The Meikles Africa Group performed well in areas under its control during the
year. If exchange rate movement had been allowed to track inflation in the last
quarter, there would have been substantial enhancement in profit over that
achieved. The Group has advanced its competitive edge and it is expected that
this will be maintained in the coming year as evidenced in results so far. The
balance sheet strength will ensure that the Group is well poised to manage the
economic environment
JOHN MOXON
CHAIRMAN
FINAL DIVIDEND ANNOUNCEMENT
On the 24th of May 2006, the Board approved a final dividend Number 73 of $2,000
per share on 163,656,787 shares payable to members registered in the books of
the Company at the close of business on 16 June 2006. The Transfer Books and
Register of Members will be closed from 19 June 2006 to 3 July 2006. Dividend
cheques will be mailed to shareholders on or about 3 July 2006. The dividends
payable to non-resident shareholders will be paid in accordance with Exchange
Control Regulations. Shareholders' withholding tax will be deducted where
applicable.
By order of the Board
A.P. LANE-MITCHELL
Company Secretary
24 May 2006
All current financial, operational and structural information on Meikles Africa
Limited can be obtained by visiting Meikles Africa Limited's website at :http:/
www.meiklesafrica.co.zw
Directors : J R T Moxon (Chairman), M A Masunda, D W Mills, D E Stephens, C B
Thorn, M S Wilson.
AUDITED CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2006
INFLATION ADJUSTED HISTORICAL COST
Restated
(all amounts in millions of dollars) Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2006 2005 2006 2005
Revenue 29,257,522 25,676,616 12,190,889 1,860,547
Operating (loss) / profit (922,802) (630,630) 1,916,362 170,680
Net monetary gain 2,854,702 1,277,860 - -
Operating profit after net monetary gain 1,931,900 647,230 1,916,362 170,680
Investment Income 734,935 707,113 361,924 53,607
Finance costs (318,299) (1,149,077) (105,478) (78,479)
Net exchange gains 1,744,151 (1,615,286) 4,230,581 86,083
Fair value adjustment on investment property - 62,344 - 6,163
Increase / (decrease) in value of quoted investment 373,304 (229,187) 630,701 5,472
Net share of result of associates (192,426) 31,218 79,235 15,223
Loss on disposal of subsidiaries (77,892) - (666) -
Profit / (loss) before taxation 4,195,673 (1,545,645) 7,112,659 258,749
Taxation (948,112) (95,173) (1,127,913) (52,472)
Profit / (loss) for the year 3,247,561 (1,640,818) 5,984,746 206,277
Attributable to:
Equity holders of the parent 2,919,365 (1,779,808) 5,706,027 181,470
Minority interest 328,196 138,990 278,719 24,807
3,247,561 (1,640,818) 5,984,746 206,277
Basic earnings / (loss) per share ($) 17,838 (10,875) 34,866 1,109
IIMR Headline earnings / (loss) per share ($) 17,956 (9,792) 34,796 1,108
AUDITED CONSOLIDATED BALANCE SHEET
At 31 March 2006
INFLATION ADJUSTED HISTORICAL COST
Restated
(all amounts in millions of At At At At
dollars)
31 March 31 March 31 March 31 March
2006 2005 2006 2005
ASSETS
Property, plant & equipment 5,218,740 4,349,669 2,180,780 146,011
Investments-quoted 1,248,080 941,867 773,273 72,324
Investments-unquoted 1,543,105 899,059 1,469,240 81,130
Other non-current assets 1,083,277 1,083,277 1,583 1,583
Current assets 8,663,570 6,815,974 8,192,991 651,191
Total assets 17,756,772 14,089,846 12,617,867 952,239
EQUITY AND LIABILITIES
Attributable to equity
holders of the parent
10,686,552 7,616,912 6,715,454 419,842
Minority interest 425,062 238,248 245,657 8,663
Deferred taxation 1,603,446 1,220,515 615,044 29,027
Other non-current 1,033,814 1,156,324 1,033,814 114,085
liabilities
Current liabilities 4,007,898 3,857,847 4,007,898 380,622
Total equity and liabilities 17,756,772 14,089,846 12,617,867 952,239
AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2006
INFLATION ADJUSTED HISTORICAL COST
Restated
(all amounts in millions of dollars) Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2006 2005 2006 2005
Profit / (loss) for the year 2,919,365 (1,779,808) 5,706,027 181,470
Cape Grace Hotel - translation of 469,496 52,229 664,905 1,142
foreign entity
Share of reserves of associate 44,554 (49,462) 12,725 (1,152)
Share of prior year adjustment of 16,548 - (2,125) -
associates' reserves
Dividend - prior year final (248,820) (148,447) (24,549) (6,546)
Dividend-current year interim (131,503) (105,613) (61,371) (8,184)
Attributable to equity holders of parent 3,069,640 (2,031,101) 6,295,612 166,730
Minorities 186,814 (81,724) 236,994 5,333
Shareholders' equity at the beginning of 7,855,160 9,967,985 428,505 256,442
the year
Shareholders' equity at the end of the 11,111,614 7,855,160 6,961,111 428,505
year
AUDITED CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2006
INFLATION ADJUSTED HISTORICAL COST
Restated
(all amounts in millions of dollars) Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2006 2005 2006 2005
Cash flows from operating activities
Profit / (loss) before taxation 4,195,673 (1,545,645) 7,112,659 258,749
Adjustments for:
Non-operating cash flow (1,979,088) 1,969,110 (4,571,268) (58,319)
Non-cash items 685,035 990,718 (580,879) (25,173)
Operating cash flow before working capital changes 2,901,620 1,414,183 1,960,512 175,257
(Used in) / generated from working capital changes (1,328,717) 1,899,786 (864,813) 105,791
Cash generated from operations 1,572,903 3,313,969 1,095,699 281,048
Taxation paid (749,362) (375,232) (97,474) (16,127)
Net cash generated from operating activities 823,541 2,938,737 998,225 264,921
Net cash used in investing activities (143,145) (184,053) (318,350) (41,330)
Net cash used in financing activities (2,585,794) (2,871,133) (312,948) (169,928)
Net (decrease) / increase in cash and cash equivalents (1,905,398) (116,449) 366,927 53,663
Cash and cash equivalents at beginning of year 3,812,521 5,489,361 376,150 242,104
Net effect of exchange rate changes on cash and cash 1,744,151 (1,615,286) 4,230,581 86,083
equivalents
Translation of foreign entity 661,683 54,895 (660,701) (5,700)
Cash and cash equivalents at end of year 4,312,957 3,812,521 4,312,957 376,150
AUDITED SEGMENT INFORMATION
INFLATION ADJUSTED HISTORICAL COST
Restated
(all amounts in millions of Year ended Year ended Year ended Year ended
dollars) 31 March 2006 31 March 2005 31 March 2006 31 March 2005
Revenue
Hotels 2,393,665 1,708,970 1,183,981 122,582
Supermarkets 23,793,040 20,135,695 9,858,031 1,459,241
Retail 3,070,817 3,831,951 1,148,877 278,724
29,257,522 25,676,616 12,190,889 1,860,547
Operating profit / (loss) after
monetary adjustment
Hotels 495,978 (32,485) 348,369 23,633
Supermarkets 1,117,398 773,897 1,248,707 110,069
Retail 475,450 (1,385,370) 317,020 42,732
Corporate (156,926) 1,291,188 2,266 (5,754)
1,931,900 647,230 1,916,362 170,680
Segment assets
Hotels 5,155,701 4,042,580 2,959,270 184,215
Supermarkets 4,812,048 4,557,551 3,774,278 360,685
Retail 2,349,040 2,986,578 1,078,151 190,978
Corporate 5,439,983 2,503,137 4,806,168 216,361
17,756,772 14,089,846 12,617,867 952,239
SUPPLEMENTARY INFORMATION INFLATION ADJUSTED HISTORICAL COST
(all amounts in millions of dollars)
Capital expenditure 463,588 246,184 255,783 19,336
Capital commitments authorized but not yet 2,778,059 794,969 2,778,059 78,433
contracted for
Depreciation 357,974 483,571 60,650 9,298
Market value of investments
- Associate - Kingdom Financial Holdings 270,045 669,054 270,045 66,010
Limited
- Investment - Mvelaphanda Group 658,876 285,572 658,876 28,175
Interest bearing borrowings 1,417,400 1,776,939 1,417,400 175,316
Guarantees 557,445 197,260 557,445 19,462
Accounting policies
The International Accounting Standards Board has released a number of new
accounting standards and made amendments to existing standards. The impact of
these changes has been assessed and applied.
The inflation adjusted financial statements reflect a change in accounting for
the effect of the restatement of the foreign entities' income statements in
terms of IAS 29, and the restatement of the historical movements in the foreign
currency translation reserve (FCTR), in line with preferred treatment after
further interpretation of IAS 29 (Financial Reporting in Hyperinflationary
Economies) and IAS 21 (Revised) The Effect of Changes in Foreign Exchange Rates.
The effect of the income statement restatement is now taken against FCTR and not
monetary adjustment as in the past. Previously the FCTR was restated from the
month in which it was generated. These changes have the effect of reallocating
amounts between the FCTR and retained income. The effect of these changes is to
reduce the prior period inflation adjusted loss by $27 billion and to increase
the opening retained income at 1 April 2004 by $2,096 billion, the corresponding
balance sheet adjustment being to FCTR.
Note to inflation adjusted financial statements
The consumer price indices used to restate the financial statements at 31 March
2006 are as follows:
31 March 2006 705,209.4
31 March 2005 69,577.2
31 March 2004 31,102.7
For further information contact either:
Zimbabwe Bryan Thorn +263-4-252068/78
Roy Franklin +263-4-252068/78
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