Final Results
Meikles Africa Ld
31 May 2005
MEIKLES AFRICA LIMITED
PRELIMINARY ANNOUNCEMENT - 31 MARCH 2005
Salient features (historical cost)
Turnover
$1 861 billion up 252%, (2004 - $528 billion)
Operating profit
Year on year up 103%
Exchange gains
$86 billion, (2004 - $145 billion)
Attributable profit excl exchange gains and foreign investments
$86 billion up 197%, (2004 - $29 billion)
Cash generated from operations
$275 billion, (2004 -$60 billion)
Final dividend
of $150.00
COMMENTARY (HISTORICAL COST)
I am pleased to present the results of the Group for the year ended 31 March
2005. The Group's operations within Zimbabwe achieved a significant growth in
profit, while foreign operations and investments were affected adversely by the
disparity of inflation and the foreign currency auction rate. With average
inflation for the year at 195% the Zimbabwe dollar on the auction system
depreciated against the US dollar during the year by 39%. This has caused the
adverse trend in profits of our foreign operations and investments.
The business objective within Zimbabwe has been the consolidation of existing
businesses, management of working capital and the attainment of significant
positive cash flows. These objectives have been achieved.
Results - Historical Cost
Group turnover for the year of $1 861 billion, excluding VAT, is 252% up on the
previous year, whilst the operating profit has grown by 103% to $171 billion.
This result is emphasised by a significant growth in turnover and operating
profit in the second half of the year and more specifically in the last quarter,
where operating profit of $91 billion was 316% up on the previous year's last
quarter.
At the beginning of the year the challenges were to deal with the effects of
anti inflation measures which, although positive in terms of the overall
economic reform programme, required the retail sector to take stern measures to
ensure financial stability. The second half of the year consolidated initial
progress made and placed the Group in a strong position to manage an improved
trading environment.
Net finance cost was down on the previous year with a significant reduction
reflected in the second half of the year as rates eased and as Group operating
cash flows grew markedly to $275 billion compared to $60 billion during the
previous year. The share of result of the associates was 117% up on the prior
year. Meikles Financial Services performed well but the results of Kingdom
Financial Holdings reflect the extremely difficult environment the Kingdom Group
had to endure in the final quarter of its financial year.
Exchange gains of $86 billion in our foreign investments compare with $145
billion in the previous year. Figures are based on the auction rate of ZW$6 082
to US$1. Profits attributable to shareholders at $181 billion are slightly down
on the previous year at $186 billion. An analysis of this shows a substantial
increase in profits from Zimbabwe operations particularly in the second half of
the year and an effective decrease, in real terms, in the value of foreign
investments and operations caused by the disparity of the auction exchange rate
movement to local inflation.
The directors consider it appropriate to increase the dividend in line with
inflation and a final dividend of $150 per share has been declared taking the
total for the year to $200 per share (2004 $65 per share).
Operations
TM Supermarkets (Private) Limited
• Net turnover increased by 285% from $379 billion to $1 459
billion.
• Operating profit grew by 164% to $110 billion.
• Net interest income grew to $37 billion (previous year $2
billion).
• Profit after tax of $103 billion is 239% up on the
previous year.
• Shrinkage was controlled at 1.1% of sales.
• Stockturns improved from 6.7 times to 11.6 times.
Retail Division
• Net turnover increased by 229% from $85 billion to $279
billion.
• Operating profit inclusive of our share of Meikles
Financial Services grew by 133% from $27 billion to $63 billion.
• Stockturns improved from 2 times to 4.4 times.
• Turnover increased markedly towards the end of the
financial year.
• Meikles Financial Services performed well, funding 55% -
60% of sales.
Hotels
• Turnover increased by 92% from $64 billion to $123
billion.
• Operating profit grew by 29% from $18 billion to $24
billion.
• Operating profit for the Zimbabwe hotels was 150% up on
the previous year at $4 billion.
• Occupancies in the Zimbabwe hotels and Cape Grace have
improved.
• Operating profit for the Cape Grace was 21% up on the
previous year at $20 billion.
• Disparity of the exchange rate resulted in operating
profit growth lower than inflation.
Kingdom Financial Holdings
• Meikles Africa has increased its shareholding in Kingdom
Financial Holdings from 25% to 33% after the rights issue. As the single
largest shareholder in Kingdom, Meikles Africa along with other major
shareholders, is in a position to influence the performance of the Kingdom
group.
Social Responsibility
The Meikle Group continues to support old age homes as a major charitable
programme and has disbursed a total of $578 million to 46 homes for the aged
during the course of the year.
Outlook
We believe that the two retail operations within Zimbabwe will at least perform
in line with inflation.
The Zimbabwe based hotels will achieve growth, but occupancies are likely to
remain at low levels. In Rand terms, the Cape Grace Hotel is expected to
perform better than South African inflation.
Cash generation within Zimbabwe will be considerable in the coming year. The
Group is likely to end the forthcoming year with significant cash balances and
the net interest expense incurred in the year under review will become net
interest earned.
As the national economic recovery plan progresses, it is to be expected that the
country will move towards an exchange rate that will match movements in
inflation and interest rates. If this occurs, the Group's foreign assets in
terms of valuation and contribution to profit, will benefit accordingly. In
addition the Group's relationship with Mvelaphanda Group has identified new
opportunities, which will result in the enhancement of the Group's investments.
JOHN MOXON
CHAIRMAN
FINAL DIVIDEND ANNOUNCEMENT
On the 26 May 2005, the Board approved a final dividend Number 71 of $150 per
share on 163,656,787 shares payable to members registered in the books of the
Company at the close of business on 29 July 2005. The Transfer Books and
Register of Members will be closed from 29 July 2005 to 15 August 2005.
Dividend cheques will be mailed to shareholders on or about 15 August 2005. 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
26 May 2005
All current financial, operational and structural information on Meikles Africa
Limited can be obtained by visiting Meikles Africa Limited website at :http:/
www.meiklesafrica.co.zw
Directors : J R T Moxon (Chairman), M A Masunda, D W Mills, (effective 22
February 2005) D E Stephens, C B Thorn, M S Wilson.
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2005
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
(all amounts in millions of dollars) Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March
2005 2004 2005 2004
Revenue 2,533,300 2,098,512 1,860,547 527,876
Cost of sales (2,069,850) (1,865,650) (1,354,941) (342,884)
Gross profit 463,450 232,862 505,606 184,992
Operating expenses (545,501) (481,528) (349,794) (105,809)
Other income 19,832 19,992 14,868 4,758
Operating (loss)/profit (62,219) (228,674) 170,680 83,941
Net finance cost (43,605) (99,558) (24,872) (28,637)
Net exchange (losses)/gains (159,367) (208,539) 86,083 145,367
Fair value adjustment on investment property 6,151 - 6,163 -
(Decrease)/increase in value of quoted investment (22,612) 12,174 5,472 20,179
Share of result of associates 33,027 87,924 22,696 10,456
Impairment of other investments (16,090) - - -
Net monetary gain 115,584 178,227 - -
(Loss)/profit before taxation (149,131) (258,446) 266,222 231,306
Taxation (15,419) (31,128) (59,945) (37,732)
(Loss)/profit after taxation (164,550) (289,574) 206,277 193,574
Minority interest (13,713) (18,115) (24,807) (7,839)
Net (loss)/profit attributable to shareholders (178,263) (307,689) 181,470 185,735
Basic (loss)/earnings per share ($) (1,089.25) (1,887.86) 1,108.84 1,139.60
IIMR Headline (loss)/earnings per share ($) (982.41) (1,784.71) 1,107.98 1,139.23
Net monetary gain
Gross monetary gain/(loss) 132,342 (281,995) - -
Add: historic exchange gains restated 142,609 668,761 - -
Less: transfer to net exchange gains and change in
value of quoted investment
(159,367) (208,539) - -
Net monetary gain 115,584 178,227 - -
CONSOLIDATED BALANCE SHEET
At 31 March 2005
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
At At At At
31 March 2005 31 March 2004 31 March 31 March 2004
2005
ASSETS
Non-current assets 717,653 786,966 301,048 142,308
Current assets 672,476 916,972 651,191 388,622
Total assets 1,390,129 1,703,938 952,239 530,930
EQUITY AND LIABILITIES
Capital and reserves 751,498 951,890 419,842 253,112
Minority interest 23,506 31,569 8,663 3,330
Non-current liabilities 234,503 450,396 143,112 153,754
Current liabilities 380,622 270,083 380,622 120,734
Total equity and liabilities 1,390,129 1,703,938 952,239 530,930
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2005
INFLATION ADJUSTED - Audited
Share Share Non- (Accumulated Total
Loss)/
Capital Premium Distributable
Reserves Retained
Earnings and
Shareholders
for Dividend
Balance at 1 April 2004 8,268 588,149 323,314 32,159 951,890
Net loss attributable to shareholders - - - (178,263) (178,263)
Cape Grace Hotel - translation of foreign entity - - 7,817 - 7,817
Share of reserves of associate - - (4,880) - (4,880)
Negative goodwill arising from reverse acquisition on - - (87,765) 87,765 -
initial listing
Dividend for 2004 - final - - - (14,646) (14,646)
Dividend for 2005 - interim - - - (10,420) (10,420)
Balance at 31 March 2005 8,268 588,149 238,486 (83,405) 751,498
Balance at 1 April 2003 8,268 587,648 226,364 385,766 1,208,046
Net loss attributable to shareholders - - - (307,689) (307,689)
Cape Grace Hotel - translation of foreign entity - - 89,771 - 89,771
Share of reserves of associate - - 7,179 - 7,179
Share options exercised - 501 - - 501
Dividend for 2003 - final - - - (28,633) (28,633)
Dividend for 2004 - interim - - - (17,285) (17,285)
Balance at 31 March 2004 8,268 588,149 323,314 32,159 951,890
HISTORICAL COST - Audited
Share Share Non- Retained Total
Capital Premium Distributable Earnings and
Reserves Shareholders
for Dividend
Balance at 1 April 2004 16 5,356 16,853 230,887 253,112
Net profit attributable to shareholders - - - 181,470 181,470
Cape Grace Hotel - translation of foreign entity - - 1,142 - 1,142
Share of reserves of associate - - (1,152) - (1,152)
Negative goodwill arising from reverse acquisition on - - (153) 153 -
initial listing
Dividend for 2004 - final - - - (6,546) (6,546)
Dividend for 2005 - interim - - - (8,184) (8,184)
16 5,356 16,690 397,780 419,842
Balance at 31 March 2005
Balance at 1 April 2003 16 5,305 505 51,112 56,938
Net profit attributable to shareholders - - - 185,735 185,735
Cape Grace Hotel - translation of foreign entity - - 14,476 - 14,476
Share of reserves of associate - - 1,872 - 1,872
Share options exercised - 51 - - 51
Dividend for 2003 - final - - - (1,872) (1,872)
Dividend for 2004 - interim - - - (4,088) (4,088)
Balance at 31 March 2004 16 5,356 16,853 230,887 253,112
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2005
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
Year ended Year ended Year ended Year ended
31 March 31 March 31 March 31 March 2004
2005 2004 2005
Cash flows from operating activities
(Loss)/profit before taxation (149,131) (258,446) 266,222 231,306
Adjustments for:
Non-operating cash flow 197,356 306,404 (65,792) (117,283)
Non-cash items 72,799 59,182 (30,873) (10,944)
Operating cash flow before working capital 121,024 107,140 169,557 103,079
changes
Generated from/(used in) working capital 187,436 14,467 105,791 (42,610)
changes
Operating cash flow 308,460 121,607 275,348 60,469
Income tax paid (37,021) (31,370) (16,127) (7,616)
Net cash generated from operating 271,439 90,237 259,221 52,853
activities
Net cash generated from/ (used in) 5,759 85,921
investing activities
(41,330) 3,087
Net cash used in financing activities (283,271) (229,726) (169,928) (11,748)
Net effect of exchange rate changes
on cash and cash equivalents (159,367) (208,539) 86,083 145,367
Net (decrease)/increase in cash and cash (165,440) (262,107) 134,046 189,559
equivalents
Cash and cash equivalents at 31 March 2004 541,590 803,697 242,104 52,545
Cash and cash equivalents at 31 March 2005 376,150 541,590 376,150 242,104
SUPPLEMENTARY INFORMATION
Capital expenditure 24,289 43,692 19,336 11,824
Capital commitments authorized but not yet 78,433 65,770 78,433 29,401
contracted for
Depreciation 47,710 65,385 9,298 5,262
Guarantees 19,462 19,462 19,462 14,022
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