Abridged Audited Results for the year ended 31 ...

MEIKLES LIMITED

ABRIDGED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2015

CHAIRMAN’S STATEMENT

I have pleasure in presenting the report for the financial year ended 31 March 2015.

Meikles Limited comprises six operating segments as follows:

Hospitality
Stores
Supermarkets
Agriculture
Financial Services
Guard Services

Turnover for the Group increased by 8%. All segments contributed to the increase except for Agriculture, which was adversely affected by the decrease in world tea commodity prices. The increased turnover suggests growth in market share, a key objective that is expected to continue in the 2016 financial year, particularly in the retail segments.

Renovations to and the expansion of Group properties and operations increased depreciation costs. In addition, employee costs relative to turnover increased due to the need to employ personnel and develop their skills prior to their ultimate placement.

Interest charges remain at unacceptable levels, and reducing them will depend on the timing of the recovery of the outstanding RBZ debt.

The Group experienced currency exchange losses on its investment in South Africa due to the devaluation of the South African rand against the US dollar.

The Stores and Meikles Mega Market incurred substantial restructuring expenditure including regrettable - but necessary - reductions in employee numbers. This was partly a result of the Group being unable to access the debt due by the RBZ within the expected time frame, which meant the segment was unable to secure adequate investment in inventory and the resultant momentum. The Group expects to progressively overcome this problem in the forthcoming financial year, and believes Stores and Meikles Mega Market are poised for substantial expansion and a return to profitability.

BALANCES DUE BY THE RESERVE BANK OF ZIMBABWE (RBZ)

There has been public debate around the amounts due from the RBZ to the Company, and its ultimate settlement.

Full disclosure of the implications of this matter is made in notes 4 and 5 of the abridged financial results.

The Company has recovered a significant portion of the original debt owed by the RBZ as a result of the tireless efforts of the Company’s executives in enforcing/implementing/pursuing the agreements reached with the RBZ.

Negotiations have been and will continue to be both difficult and sensitive. The outcome  cannot be predicted with certainty even  when the law appears to present a clear resolution. To alleviate suggestions that Company officials mislead Shareholders and others on the recoverability of sums due and inflate financials accordingly, it has been decided to account for each receivable only as and when it is received ,or as and when receipt is confidently assured .

MENTOR AFRICA LIMITED

The intrinsic value of Mentor Africa - expressed in South African rand - continued to increase.

The devaluation of the South African rand against the US dollar over the past year was expected and noted in the 2014 Annual Report. As a result of the South African rand devaluation and the dividend referred to below, the carrying value of the Group’s investment in Mentor Africa (denominated in US$) has been written down in the current year by US$4.7 million to US$22.9 million. Further deterioration in the value of the South African rand against the US dollar may continue in the future, in common with other emerging market currencies.

On 30 March 2015, Mentor Africa declared a dividend of ZAR49.5 million (before South African dividend withholding taxes) to its shareholders. The Group’s share of this dividend, being ZAR17.3 million (US$1.4 million) before tax, is included in the Statement of Profit or Loss and Other Comprehensive Income for the financial year ended 31 March 2015 after deducting the associated withholding tax. The gross dividend represents a dividend yield of approximately 6%.

MEIKLES FOUNDATION

Meikles Foundation was born out of a recognition of the need to connect with our communities. Our initial efforts focused on educational, dance, music, theatre and other community projects, such as a knitting programme in Kuwadzana, Hatcliffe Extension, and in the prisons. In Hatcliffe Extension we are also supporting an innovative school started by Hatcliffe residents aimed at ensuring that the children of third-generation squatters become enrolled in the school system. We are involved in a very successful early reading programme, and numerous other initiatives.

Our biggest and proudest drive, however, is a job-creation programme that aims to create sustainable businesses in the communities that we serve. Our footprint means that the Company reaches far and wide and we believe that by working with these communities, we can effect positive transformation.

HOSPITALITY

The Group had high expectations for the financial year ended 31 March 2015, based on the successful completion of the first phase of refurbishments at the Meikles Hotel and The Victoria Falls Hotel. Phase two of the refurbishment of The Victoria Falls Hotel will start in the second half of the 2015 calendar year and should be completed by July 2016.

Trading during the financial year was satisfactory. Revenue was US$16.4 million (2014: US$15.6 million) up 5% over the previous financial year. This increase was assisted by a 13% rise in food revenue at Meikles Hotel and a 15% growth in Revenue per Available Room (RevPAR) at The Victoria Falls Hotel.

EBITDA for the year was US$1.9 million (2014: US$1.3 million) reflecting a 57% increase on the previous financial year and is testimony to the resilience of Group operations.

These results were achieved despite serious obstacles. First, and now largely out of the public eye, the outbreak of Ebola in West Africa created a negative perception in the minds of tourists looking to Africa as a destination, including destinations thousands of miles from the nearest infected countries such as ourselves and the rest of Southern Africa.

Second, more than 75% of our hotel guests are foreign visitors and the introduction in January 2015 of valued added tax (VAT) at the standard rate of 15% on accommodation charged to foreigners further hindered revenue growth. The introduction of VAT could not immediately be passed onto guests in full given the weak demand.

The introduction of VAT has effectively made Zimbabwe an expensive destination, and the South African market, given the depreciating rand, was significantly affected. This has impacted negatively on occupancy growth in the last quarter of the financial year.

The hotels remain members of the Leading Hotels of the World and have kept their place as market leaders in Zimbabwe in terms of standard of products and services.

In November 2015 Meikles Hotel will celebrate its 100th birthday, marking a century of delivering hospitality excellence in Zimbabwe.

STORES — MEIKLES MEGA MARKET AND MEIKLES STORES

The segment’s revenue for the financial year ended 31 March 2015 was US$17.3 million [2014: US$14.5 million]. Total operating costs increased by 10%, mainly due to occupancy costs for new stores and staff rationalisation. EBITDA loss was US$5.7 million [2014: loss of US$2.5 million].

Cost containment remained a priority with measures being implemented to reduce costs, and improve profitability and overall operational efficiencies. As part of this, a staff rationalisation exercise was concluded in March 2015 to ensure uniform and appropriate levels of staff in each unit. The exercise yielded a 22% savings on employee costs.

Stocking has improved with the increased availability of funding and will continue with the introduction of direct importation of Key Value Items (KVIs). This is expected to generate significant cost savings and improve trading margins in the financial year ending 31 March 2016.

Two Meikles Stores will be opened in Gweru and in Harare. In addition, the units in Bulawayo and Mutare are being redesigned to accommodate both the Stores and Meikles Mega Market divisions in the space currently occupied by Stores alone.

Meikles Stores Masvingo was reopened with reduced trading space and with overheads realigned.

In a new development, Stores plans to launch a concept store - The M Store - in the 2016 financial year. The M Store, which will sell clothing, will trade on a cash basis and target the less affluent consumer segment of the market.

Three additional Meikles Mega Market branches were opened on Robert Mugabe Avenue and Rezende Street in Harare, and in Masvingo CBD respectively. The fifth and sixth Meikles Mega Market branches have been opened in Mabvuku in Harare and Gweru in the first quarter of the 2016 financial year.

Work is already in progress at additional Meikles Mega Market sites such as Graniteside in Harare, and Meikles Mega Market plans to open an additional five branches in other city centres around Zimbabwe, including Kwekwe, Kadoma, Chinhoyi, Bindura, and Chitungwiza.

Meikles Mega Market is actively exploring additional sites in high-density areas in and around Harare. The locations will use a low-overhead model characterised by modest rentals, limited but high volume KVIs offering and a minimal staff complement. This will enable Meikles Mega Market to supply product directly to the large numbers of underserved customers in these areas of the country.

Despite funding constraints arising from on-going issues relating to balances due from the Reserve Bank of Zimbabwe, which compromised the operations and restricted growth during the financial year, the segment expects substantial progress beginning in the second quarter of the 2016 financial year. This will include adequate levels of funding for appropriate stock holding and the expansion of Meikles Mega Market units. With the expanded footprint and realigned overheads, the segment is expected to return to profitability by the third quarter of the 2016 financial year.

The segment continues to strengthen its market position by offering the lowest prices and more direct access to consumers.  The segment foresees strong growth in market share through continued geographic expansion and the rollout of marketing strategies aimed at increasing brand visibility and the customer value proposition.

SUPERMARKETS – TRADING AS TM AND PICK N PAY

The company achieved turnover of US$360 million [2014: US$333.9 million] for the financial year ended 31 March 2015, an increase of 7.9% despite a negative rate of inflation in supermarket-related trading for the same period. Gross profit increased by 8.5% to US$64 million [2014: US$59 million]. The growth indicates an increase in market share.

The footprint into our shops increased year-on-year by 11.29%. Investment in replacement and expansion projects has been viewed favourably by the consumers, reflected in individual branch sales growth ranging between 25% to more than 100%, depending on the location.

Trading during the year was affected by the closure of one of the Chinhoyi branches for 101 days due to a fire and the closing of Kwekwe for 84 days for refurbishments. Other branches such as Orr Street in Harare, Kadoma, Hyper in Bulawayo, and Bindura were refurbished but remained open to minimize the loss on sales. The Chivhu store was opened during the period under review.

The upgrade of our flagship Borrowdale store and the surrounds into what will be Harare’s premier retail centre is now on track and will be concluded by October 2016. In addition, three major stores are expected to open during the 2016 financial year, and an additional US$6.5 million has been budgeted for refurbishments across the branch network.

The funding of the new stores and refurbishments was provided by the term loan previously disclosed to shareholders, which is presently being redeemed over the term of the loan from trading income and cash flows.

AGRICULTURE

Tanganda has been developing all available land on the estates and has now reached maximum land utilisation. To expand operations, alternative, available and suitable land is being pursued.

Tanganda has been awarded the Rain Forest Alliance Certificate, an important international accreditation, which has contributed significantly to the ability to move bulk tea into the market. The certification has given the company access to some of the largest international tea traders and has yielded a 7% increase on the bulk tea price during the month of March 2015, which augers well for the future. Tanganda believes this accreditation will go a long way towards softening the blow experienced by the decreased world tea price, which was largely due to Kenyan surplus on the market, and ensuring Tanganda bulk tea commands a strong price on world markets.

Tanganda’s revenue for the financial year ended 31 March 2015 was US$21.1 million [2014: US$22.6 million].

Challenging weather patterns during the year saw a reduction in the volume of bulk tea produced over the prior year. Bulk tea production to 31 March 2015 was 8 609 tonnes, 4% below the expected 9 000 tonnes.

The cost of made tea is in line with expectation, with stringent cost controls.

Tanganda is encouraged by the new crops of coffee, avocados and macadamias. The selling prices are good and the crop quality is excellent. This year coffee yielded 280 tonnes, avocados 180 tonnes, and macadamias 200 tonnes of nut in the shell. Tanganda expects a progressive maturity of coffee by 2018, avocados by 2019, and macadamias by 2020, and yields will increase exponentially. Application has been made for Global GAP Certification for the avocado crops.

Tanganda has installed state-of-the-art packaging machinery, which will improve quality and reduce costs. As packed tea offers a higher margin, this will help achieve Tanganda’s objective of increasing the ratio of packed to bulk tea from 25:75 to 50:50. Tanganda’s intention is to grow market share through concerted commercial efforts in South Africa in particular, as well as other SADC countries with the potential for expansion across the region being actively explored.

MEIKLES FINANCIAL SERVICES

Meikles Financial Services(MFS) was created to provide financial services to our customers who shop at any of the stores and supermarkets within the Meikles Group. The Group’s aim is to attract customers by offering financial services with the advantage of the Group’s nationwide presence and extended opening hours.

MFS, at the time of the writing of this Statement, has completed its roll-out across Harare and offers a wide range of financial services, including:

• Agency banking on behalf of multiple major Zimbabwean banks. There has been a growing trend by retail banks to move into agency banking thereby increasing their presence while reducing the costs associated with branch management.
• Cash-out services in partnership with several International Money Transfer Operators. Money sent home by the Zimbabweans in the Diaspora contributes a significant amount to the nation’s GDP.
• Bill payment services for companies and utilities such as ZESA, City of Harare, and DStv.

MFS’s core product, expected to be live in July of 2015, is a revolutionary “lite” banking solution through a debit card - MyCash - that creates a transactional account, similar to a current account, that is linked to a customer’s cell phone.  This account will enable the holder to perform a range of banking transactions, including balance enquiries, air-time purchases, bill-payments, shopping at any Zimswitch enabled Point of Sale (POS) device, and cash withdrawals from any Zimswitch enabled ATM. The holder will be able to send money to other MyCash cardholders as well as any Zimswitch enabled bank account.

A Loyalty programme will be attached to MyCash, to encourage shoppers to use the card in any supermarket or store within the Meikles Group.  This will also give Meikles best in class consumer analytics capabilities for more effective, targeted marketing in the future.

The Sponsor Bank for MyCash is the People’s Own Savings Bank (POSB). Agency Banking Agreements have been signed with four retail banks – CABS, CBZ, FBC and ZB, and others are under negotiation.

MFS has built vibrant, colourfully branded banking kiosks, in all Harare-based supermarkets and stores within the Group.  Nationwide roll-out will be completed by the end of October 2015.

MFS is expected to become a significant source of revenue growth for the Group in the 2016 financial year.

MEIKLES GUARD SERVICES

Meikles Guard Services’ objective for the financial year ended 31 March 2015 was to expand the number of contracts from outside the Group and a large part of this objective was fulfilled. Security tenders have been lodged for embassies, financial institutions, as well as several entities in the commercial sector. In addition, outside parties have expressed interest in having their own staff attending the Meikles Guard Services training courses.

MINING

Meikles Limited, in conjunction with its partners, has been both exploring and identifying mining opportunities in Zimbabwe.  Efforts in this regard are ongoing.

GOVERNANCE

Meikles Limited continues to promote good governance across all subsidiaries. This was reflected when the Company won an international “Best Corporate Governance in Zimbabwe” Award from the London-based Capital Finance International. The Award is globally recognised and previous winners include Morgan Stanley, Emirates Airlines, Exxon Mobile, and ABSA Bank.

Meikles has also been selected for Africa in the World Economic Forum’s “Global Growth Companies of 2015”. This annual award is bestowed on a handful of companies and is based on the criteria of continued and sustainable growth in their market, influence in their industry, national or regional context, an executive management team that displays visionary leadership, and their commitment as a corporate citizen to positively influence the societies and regions in which they operate. The regional winners from across the world will meet in China in September of 2015 where a global winner will be announced.  In addition Meikles Limited was invited to join the World Economic Forum.  Meikles is the first company in Zimbabwe to ever receive such an invitation.

Reference has been made to the possible restructuring of certain subsidiaries within the Group. If implemented, this will require further additions to the Board of Directors in order to ensure appropriate governance. The Group, therefore, expects to appoint an additional independent non-executive director, in addition to Mr James A. Mushore, who was appointed to the Board on 30 April 2015. This will bring the number of independent non-executive directors to three, a collective majority on the board.

OUTLOOK

Given local and regional opportunities, the possibility of restructuring certain subsidiaries in the future cannot be ruled out. Hospitality is looking at ventures in Zimbabwe and within the region. Recently, the Group was invited by the government of the Democratic Republic of Congo (DRC) to discuss potential investment and cooperation opportunities between DRC and Meikles Limited in the areas of agriculture, hospitality and retail.

It is important to note that subsequent to 31 March 2015, the Company has sold, or is about to enter into agreements to sell, Treasury Bills to the nominal value of US$37.6 million and will then have no further Treasury Bills to sell. The Company is confident that it will receive value for the remaining debt due by the RBZ, which, in the Company’s opinion, amounted to US$46.2 million at 31 March 2015.  The particularities, however, of the provision for the sums owed by the RBZ (as explained in notes 4 and 5 of the abridged financial results) reflect the truly unique circumstances under which Meikles Limited finds itself currently.

International Financial Reporting Standards (IFRS), to which Meikles is bound, in their crafting never envisaged a debt recovery process as dynamic and prolonged as the one we find ourselves in and require a line in the sand to be drawn on paper that, in the view of Meikles Limited, does not reflect reality but which must be adhered to for reporting purposes.  Commonly accepted audit procedures also left our Auditors constrained as to the process that must be followed, resulting in the provision of US$14.7million as well as a recognition of the realized and unrealized losses of US$9 million and US$12.5 million respectively. Shareholders are once more referred to comments made in this statement under the heading Balances due by the RBZ.

DIVIDEND

The Board approved an interim dividend of US2 cents per share on 23 December 2014. The Board has not approved a final dividend, making the total dividend for the year US2 cents per share.

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

29 June 2015

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2015
	31 March 2015	31 March 2014
	US$ 000	US$ 000
Revenue	413,349	384,308
Net operating costs	(423,723)	(385,227)
Operating loss	(10,374)	(919)
Investment income	4,546	42,115
Finance costs	(12,527)	(10,462)
Impairment of investment in Mentor Africa Limited	(4,726)	-
Net exchange gains	329	207
Loss recognised on discounting Treasury Bills	(9,019)	-
Provision for  discount on RBZ balances	(14,705)	-
Fair value adjustments on biological assets	8,590	6,558
(Loss) / profit before tax	(37,886)	37,499
Income tax credit / (expense)	3,400	(320)
(Loss) / profit for the year	(34,486)	37,179
Other comprehensive loss, net of tax
Items that may be reclassified subsequently to profit or loss:
Fair value loss on available-for-sale financial assets	(12,472)	-
Other comprehensive loss for the year, net of tax	(12,472)	-
TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE YEAR	(46,958)	37,179
(Loss) / profit for the year attributable to:
Owners of the parent	(34,445)	34,427
Non-controlling interests	(41)	2,752
	(34,486)	37,179
Total comprehensive (loss) / income attributable to:
Owners of the parent	(46,917)	34,427
Non-controlling interests	(41)	2,752
	(46,958)	37,179
(Loss) / earnings per share (cents)
Basic	(13.57)	13.56
Diluted	(12.60)	12.59
Headline loss per share (cents)	(4.38)	(1.64)
Diluted headline loss per share (cents)	(4.07)	(1.52)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 MARCH 2015
		31 March 2015	31 March 2014
		US$ 000	US$ 000
ASSETS
Non-current assets
Property, plant and equipment		125,145	109,624
Investment property		249	250
Investment in Mentor Africa Limited		22,931	27,657
Biological assets		41,083	30,156
Intangible assets		124	1,528
Other financial assets		12,246	12,760
Balances with Reserve Bank of Zimbabwe		-	90,861
Deferred tax		4,201	2,674
Total non-current assets		205,979	275,510
Current assets
Balances with Reserve Bank of Zimbabwe		7,229	-
Treasury Bills		22,942	-
Inventories		35,626	36,631
Trade and other receivables		19,893	16,171
Other financial assets		4,093	3,551
Cash and bank balances		8,883	22,952
Total current assets		98,666	79,305
Total assets		304,645	354,815
EQUITY AND LIABILITIES
Capital and reserves
Share capital		2,538	2,538
Share premium		1,316	1,316
Other reserves		87	12,559
Retained earnings		115,934	155,455
Equity attributable to equity holders of the parent		119,875	171,868
Non-controlling interests		17,281	14,222
Total  equity		137,156	186,090
Non-current liabilities
Borrowings		24,402	37,264
Deferred tax		12,508	14,519
Total non-current liabilities		36,910	51,783
Current liabilities
Trade and other payables		60,397	47,293
Borrowings		70,182	69,649
Total current liabilities		130,579	116,942
Total liabilities		167,489	168,725
Total equity and liabilities		304,645	354,815

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2015

	Share capital	Share premium	Other reserves	Retained earnings	Attributable  to owners of parent	Non controlling interests	Total
	US$ 000	US$ 000	US$ 000	US$ 000	US$ 000	US$ 000	US$ 000
2015
Balance at 1 April 2014	2,538	1,316	12,559	155,455	171,868	14,222	186,090
Loss for the year	-	-	-	(34,445)	(34,445)	(41)	(34,486)
Dividend	-	-	-	(5,076)	(5,076)	-	(5,076)
Other comprehensive loss for the year	-	-	(12,472)	-	(12,472)	-	(12,472)
Non-controlling interests arising from Mopani Property Development (Private) Limited	-	-	-	-	-	3,100	3,100
Balance at 31 March 2015	2,538	1,316	87	115,934	119,875	17,281	137,156
2014
Balance at 1 April 2013	2,538	1,316	12,559	121,028	137,441	10,990	148,431
Profit for the year	-	-	-	34,427	34,427	2,752	37,179
Non-controlling interests arising from Meikles Centar Mining (Private) Limited	-		-	-	-	147	147
Non-controlling interests arising from Kearsely Investments (Private) Limited	-		-	-	-	333	333
Balance at 31 March 2014	2,538	1,316	12,559	155,455	171,868	14,222	186,090

CONSOLIDATED STATEMENT OF CASH  FLOWS
FOR THE YEAR ENDED 31 MARCH 2015
		31 March 2015	31 March 2014
		US$ 000	US$ 000
Cash flows from operating activities
(Loss) / profit  before tax		(37,886)	37,499
Adjustments for:
- Depreciation and impairment of property, plant and equipment and investment property		9,454	6,774
- Net interest		9,199	(31,653)
Dividend income		(1,217)	-
- Net exchange gains		(329)	(207)
- Impairment of investment in Mentor Africa Limited		4,726	-
- Fair value adjustments on biological assets		(8,590)	(6,558)
Loss recognised on discounting Treasury Bills		9,019	-
Provision for discount on RBZ balances		14,705	-
- Loss on disposal of property, plant and equipment		230	77
Impairment of intangible assets		1,404	1,997
Impairment of investment in Afrasia Zimbabwe Holdings Limited		152	-
Operating cash flow before working capital changes		867	7,929
Decrease in inventories		1,005	77
Decrease in trade and other receivables		396	994
Increase / (decrease) in trade and other payables		10,139	(8,415)
Cash generated from operations		12,407	585
Income taxes paid		(225)	(924)
Net cash generated from / (used in) operating activities		12,182	(339)
Cash flows from investing activities
Payment for property, plant and equipment		(25,319)	(17,441)
Proceeds from disposal of property, plant and equipment		158	330
Proceeds from sale of Treasury Bills		24,128	-
Increase in intangible assets		-	(1,071)
Net movement in service assets		(43)	(214)
Net movement in other  investments		255	(1,855)
Net expenditure on biological assets		(2,337)	(2,077)
Investment income		590	820
Net cash used in investing activities		(2,568)	(21,508)
Cash flows from financing activities
Net (decrease) /  increase in interest bearing borrowings		(12,329)	40,644
Proceeds on disposal of partial interest in a subsidiary without loss of control		3,100	147
Finance costs		(12,527)	(10,462)
Dividend paid – ordinary shareholders		(2,138)	-
Net cash (used in) / generated from financing activities		(23,894)	30,329
Net  (decrease) / increase in cash and bank balances		(14,280)	8,482
Cash and bank balances at the beginning of the year		22,952	14,198
Net effect of exchange rate changes on cash and bank balances		211	272
Cash and bank balances at the end of the year		8,883	22,952

NOTES TO THE ABRIDGED AUDITED FINANCIAL STATEMENTS

1. Basis of preparation

The abridged 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 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 results have been audited by Deloitte & Touche, whose unqualified report is available for inspection at the registered office of the Company.

3. Accounting policies

Accounting policies and methods of computation applied in the preparation of these abridged financial statements are consistent, in all material respects, with those used in the prior year with no significant impact arising from new and revised International Financial Reporting Standards (IFRSs) applicable for the year ended 31 March 2015.

4. Balance with the Reserve Bank of Zimbabwe

The movement in the balance with the RBZ from 1 April 2014 to 31 March 2015, and the outstanding balance still owed by the RBZ to the Company at 31 March 2015, are analysed below:

		Group and Company
		31 March 2015
	Note	US$ 000
Balance at 31 March 2014		90,861
Nominal value of Treasury Bills received	i	(71,156)
Provision for settlement discount		(14,705)
Interest	iii	2,229
Balance at 31 March 2015		7,229
Analysis of balance at 31 March 2015
Amount due in cash on 31 March 2015	ii	5,000
Interest	iii	2,229
Balance at 31 March 2015		7,229

Notes:

1. The market value of the Treasury Bills received by the Company from the RBZ is US$47.1 million and the basis of calculating the market value of the Treasury Bills is set out in note 5.
2. In terms of a written undertaking from the RBZ in December 2014, the amount of US$5 million was due and payable in cash by 31 March 2015. To date this amount has not been received.
3. The interest was received as part of  the Treasury Bills  issued on 7 April 2015. Refer to note 5.

5. Treasury Bills

In part-settlement of the amount owed by the RBZ to the Company (see note 4), the RBZ delivered Treasury Bills with a market value of US$47.1 million to the Company during the year. Details of the movement in these Treasury Bills are as follows:

		Group and Company	Group and Company
		31 March 2015	31 March 2015
		US$ 000	US$ 000
		Fair (Market) value	Nominal value
Treasury Bills received during the year		47,084	71,156
Treasury Bills disposed during the year		(27,166)	(36,185)
Treasury Bills on hand at 31 March 2015		19,918	34,971
Accrued interest		3,024	443
Balance at 31 March 2015		22,942	35,414

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 2015, 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 financial year.

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.

Treasury Bills with a nominal value of US$14.7 million were pledged as security to loans with a carrying value of US$16.2 million.

Treasury Bills issued by the Reserve Bank of Zimbabwe held at 31 March 2015:

		Group and Company	Group and Company
		31 March 2015	31 March 2014
At fair (market) value		US$ 000	US$ 000
Treasury Bills maturing on 11 June 2018 with a coupon rate of 2%		10,922	-
Treasury Bills maturing on 10 June 2019 with a coupon rate of 2%		8,375	-
Treasury Bills maturing on 23 December 2016 with a coupon rate of 5%		3,645	-
		22,942	-

The salient terms of the Treasury Bills held at 31 March 2015 are as follows:

Treasury Bill number	ZTB1461201411A	ZTB182620140610B	ZTB73120141223B
Issue date	11/06/2014	10/06/2014	23/12/2014
Redemption date	11/06/2018	10/06/2019	23/12/2016
Nominal value (US$ 000)	16,549	14,363	4,292
Coupon	2.0%	2.0%	5.0%
Coupon payment dates	11 June and 11 December	10 June and 10 December	23 June and 23 December
Fair value (US$ 000)	10,922	8,375	3,645

Subsequent to 31 March 2015:

• Treasury Bills ZTB1461201411A and ZTB182620140610B with a total value of $31.1 million were replaced by the RBZ with new Treasury Bills with a total nominal value of US$33.3 million. The incremental nominal amount of US$2.2 million was in relation to interest.

The new Treasury Bills have coupon rates of 3% and 5% and redemption dates ranging between 10 June 2015 and 30 April 2017. The increase in market value to the Company as a result of the replacement of these Treasury Bills is US$7.3 million.

• The Company has continued to dispose of Treasury Bills in the open market where opportunities to do so arise. These disposals have been concluded at similar discounts to the nominal value of the Treasury Bills as the discounts on the disposal of Treasury Bills which were concluded during the year ended 31 March 2015.

6. Segment information

	31 March 2015	31 March 2014
	US$ 000	US$ 000
Revenue
Supermarkets	360,328	333,907
Hotels	16,398	15,583
Agriculture	21,091	22,622
Departmental stores	7,035	12,462
Wholesaling	10,308	2,031
Corporate*	(1,811)	(2,297)
	413,349	384,308
EBITDA
Supermarkets	9,307	10,958
Hotels	1,992	1,269
Agriculture	(104)	2,915
Departmental stores	(3,311)	(2,145)
Wholesaling	(2,415)	(440)
Corporate*	(4,985)	(4,705)
	484	7,852
The EBITDA figures are before Group management fees.
Segment assets
Supermarkets	83,464	80,179
Hotels	49,216	50,720
Agriculture	75,270	64,817
Departmental stores	30,516	32,587
Wholesaling	2,048	739
Corporate*	64,131	125,773
	304,645	354,815
Segment liabilities
Supermarkets	49,524	51,880
Hotels	20,922	20,556
Agriculture	33,933	38,601
Departmental stores	16,533	21,906
Wholesaling	3,542	1,078
Corporate*	43,035	34,704
	167,489	168,725

*Intercompany transactions and balances have been eliminated from the corporate amounts. Corporate also includes other subsidiaries that are immaterial to warrant separate disclosure.

	31 March 2015	31 March 2014
	US$ 000	US$ 000
7. Depreciation, amortisation and impairment
Depreciation of property plant and equipment	8,858	6,495
Impairment of property, plant and equipment	595	275
Depreciation of investment property	1	4
Impairment of investment in Mentor Africa Limited	4,726
Impairment of intangible assets	1,404	1,997
Impairment of investment in Afrasia Zimbabwe Holdings Limited	152	-
	15,736	8,771
8. Non-trading income
Net investment revenue	4,546	42,115
Fair value adjustments on biological assets	8,590	6,558
Net exchange gains	329	207
	13,465	48,880
Net investment revenue includes US$2.2 million earned on the deposit at the RBZ and US$1.2 dividend receivable from Mentor Africa Limited.
9. Net borrowings
Non-current borrowings	24,402	37,264
Current borrowings	70,182	69,649
Total borrowings	94,584	106,913
Cash and cash equivalents	(8,883)	(22,952)
Net borrowings	85,701	83,961
The increase in borrowings was applied towards retail expansion, store and hotel refurbishment, plantation development and working capital.

10. Other information
Depreciation and impairment – property, plant and equipment	9,454	6,774
Capital commitments authorised by the Directors but not contracted	9,899	14,128
Group’s share of capital commitments of joint operation	120	53
11. Events after reporting date Except as highlighted in note 5, there have been no other significant events after the reporting date at the time of issuing this report.

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