MEIKLES LIMITED
ABRIDGED UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
CHAIRMAN’S STATEMENT
Group Financial Review
Group revenue for the half year ended 30 September 2017 grew by 12% to US$254.0 million from US$225.9 million in the previous year. The contribution to revenue by the different segments of the Group is set out in Note 5.
EBITDA for the period grew by US$5.7 million or 60% from US$9.5 million in the previous year to US$15.3 million. The contribution to EBITDA by the different segments of the Group is set out in Note 5.
Profit before tax from continuing operations was US$5.4 million compared with a loss of US$0.7 million in the previous year. Profit before tax for the six month period was above the result for the full financial year ended 31 March 2017 of US$5.3 million.
The group disposed of its financial services operations on 31 August 2017. The group does accommodate all financial services participants to ensure ease of transacting for customers.
Segment Commentary
TM Supermarkets trading as TM and PnP
Revenue for the period amounted to US$232.0 million, a growth of 15% from US$202.0 million in the previous year. The growth in revenue included a substantial increase in the number of units sold.
EBITDA for the period grew by 38% to US$13.2 million. Profit before tax was at US$9.1 million, a 49% growth from US$6.1 million in the previous year.
Refurbishment works are in progress at a number of branches with completion expected before the commencement of the festive season. Additional branches are soon to be opened and others are under consideration in terms of forward planning
Tanganda
Revenue grew by 26% to US$12.9 million from US$10.2 million achieved during the six months ended 30 September 2016. International bulk tea export prices continued to firm to average US$1.65/kg in the six month’s period to 30 September 2017 compared with an average of US$1.51 for the same period last year. Bulk tea production of 3 077 tonnes was 37% higher than 2 251 tonnes produced in the comparative prior year period.
The average price on avocadoes of US$1.62/kg was 80% higher than the previous season’s average price of US$0.90/kg due to significant improvement in quality as the trees mature. 629 tonnes of avocadoes were exported compared to 127 tonnes in the previous season.
Macadamia nuts sales of 192 tonnes for the six months to September 2017 were 19% higher than 162 tonnes for the six months to September 2016. Average price of US$4.39/kg was 57% higher than US$2.80/kg realised in the previous period.
EBITDA was US$2.9 million during the six months period ended 30 September 2017. This was a significant growth over US$1.4 million generated during the six months ended 30 September 2016.
In September 2017, Tanganda accessed the concessionary Reserve Bank of Zimbabwe’s export finance facility which has assisted significantly in sourcing inputs and retiring expensive debt. This development has placed Tanganda in a sound financial position.
Hospitality
Revenue grew by 13% to US$8.7 million, with the growth primarily attributable to a surge in tourist arrivals in Victoria Falls. New airlines commenced flights to Victoria Falls during the period under review. Room occupancy grew by 4.59 and 13.14 percentage points at Meikles Hotel and Victoria Falls Hotel respectively. The average room rate grew marginally at Victoria Falls Hotel. At Meikles Hotel the average room rate declined by 7% as the mix of business during the period was dominated by conference groups.
EBITDA for the period grew by 84% to US$2.1 million from US$1.1 million in the previous year. EBITDA for the six month’s period was 16% above the result for the full financial year ended 31 March 2017.
The lease for the Victoria Falls Hotel was recently renewed. Planning of the refurbishment of the hotel is at an advanced stage.
Stores – Meikles Stores and Meikles Mega Market
Seven outlets were closed during the period under review due to working capital constraints. Savings were realised from various cost control measures implemented during the period. EBITDA for the period resulted in a loss of US$1.8 million compared with a loss of US$1.6 million in the previous year.
Funding arrangements for working capital requirements have very recently been secured. The division will shortly be in a position to trade in a normal fashion and the turnaround lead period to profit is expected to be relatively short.
Amount owed by Government
Considerable progress has been made in our interaction with Government towards the receipt of the funds that are due to the Company from Government.
An agreement was due to be finalised immediately before the release of our results for the period to 30 September 2017. It is now anticipated that recent events will delay finalisation, but it is not expected that the outcome will be compromised in any way.
Outlook
The Group is expected to increase its EBITDA performance during the second half of the financial year. Strategies to reduce short term borrowings further during the remaining months of the financial year are in the process of being implemented.
Appreciation
I would like to extend my appreciation to our customers, suppliers, shareholders and regulatory authorities for their continued support. I would also like to extend my appreciation to my fellow Directors, and to management and staff for their dedication and commitment.
Dividend
The Board has not declared an interim dividend. However, it is expected that following a conclusion of arrangements on the amount owed by Government, it will be possible to consider the declaration of an interim dividend.
JRT Moxon
Executive Chairman
14 November 2017
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 | |||
Unaudited | Unaudited | ||
30 Sep 2017 | 30 Sep 2016 | ||
US$ 000 | US$ 000 | ||
CONTINUING OPERATIONS | |||
Revenue | 253,989 | 225,898 | |
Net operating costs | (245,151) | (222,255) | |
Operating profit | 8,838 | 3,643 | |
Investment income | 34 | 723 | |
Finance costs | (3,440) | (4,215) | |
Net exchange (losses) / gains | (37) | 7 | |
Loss recognised on discounting Treasury Bills | (6) | (774) | |
Fair value adjustments on biological assets | - | 3 | |
Profit / (loss) before tax | 5,389 | (613) | |
Income tax expense | (2,672) | (769) | |
Profit / (loss) for the period from continuing operations | 2,717 | (1,382) | |
DISCONTINUED OPERATION | |||
Profit for the period from discontinued operation | 554 | (76) | |
Profit / (loss) for the period | 3,271 | (1,458) | |
Other comprehensive income / (loss), 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 period | 47 |
617 |
|
Other comprehensive income for the period, net of tax | 47 | 617 | |
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD | 3,318 | (841) | |
(Loss) / profit for the period attributable to: | |||
Owners of the parent | (41) | (3,655) | |
Non-controlling interests | 3,312 | 2,197 | |
3,271 | (1,458) | ||
Total comprehensive income / (loss) attributable to: | |||
Owners of the parent | 6 | (3,038) | |
Non-controlling interests | 3,312 | 2,197 | |
3,318 | (841) | ||
(Loss) / earnings per share (cents) | |||
Basic | (0.02) | (1.44) | |
Continuing operations | (0.24) | (1.41) | |
Discontinued operations | 0.22 | (0.03) | |
Diluted | (0.01) | (1.34) | |
Continuing operations | (0.21) | (1.31) | |
Discontinued operations | 0.20 | (0.03) | |
Headline loss per share (cents) | (0.29) | (1.12) | |
Continuing operations | (0.21) | (1.09) | |
Discontinued operations | (0.08) | (0.03) | |
Diluted headline loss per share (cents) | (0.27) | (1.04) | |
Continuing operations | (0.19) | (1.01) | |
Discontinued operations | (0.08) | (0.03) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2017
Unaudited | Audited | ||
30 Sep 2017 | 31 March 2017 | ||
US$ 000 | US$ 000 | ||
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 173,253 | 172,664 | |
Investment property | 241 | 243 | |
Investment in Mentor Africa Limited | 20,046 | 20,046 | |
Biological assets | 1,262 | 1,147 | |
Intangible assets | 124 | 124 | |
Other financial assets | 11,823 | 11,901 | |
Deferred tax | 3,859 | 3,427 | |
Total non-current assets | 210,608 | 209,552 | |
Current assets | |||
Treasury Bills | - | 3,024 | |
Inventories | 30,710 | 34,467 | |
Trade and other receivables | 16,639 | 13,969 | |
Biological assets – produce on bearer plants | 1,195 | 1,867 | |
Other financial assets | 3,419 | 4,134 | |
Cash and bank balances | 27,552 | 15,637 | |
Total current assets | 79,515 | 73,098 | |
Total assets | 290,123 | 282,650 | |
EQUITY AND LIABILITIES | |||
Capital and reserves | |||
Share capital | 2,538 | 2,538 | |
Share premium | 1,316 | 1,316 | |
Other reserves | 12,559 | 12,512 | |
Retained earnings | 83,642 | 83,683 | |
Equity attributable to equity holders of the parent | 100,055 | 100,049 | |
Non-controlling interests | 30,188 | 28,591 | |
Total equity | 130,243 | 128,640 | |
Non-current liabilities | |||
Borrowings | 15,446 | 9,241 | |
Deferred tax | 18,551 | 17,637 | |
Total non-current liabilities | 33,997 | 26,878 | |
Current liabilities | |||
Trade and other payables | 75,067 | 70,155 | |
Borrowings | 50,816 | 56,977 | |
Total current liabilities | 125,883 | 127,132 | |
Total liabilities | 159,880 | 154,010 | |
Total equity and liabilities | 290,123 | 282,650 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
Share capital |
Share premium |
Other reserves |
Retained earnings |
|
US$ 000 | US$ 000 | US$ 000 | US$ 000 | |
2017 - Unaudited | ||||
Balance at 1 April 2017 | 2,538 | 1,316 | 12,512 | 83,683 |
(Loss) / profit for the period | - | - | - | (41) |
Other comprehensive income for the period | - | - | 47 | - |
Non-controlling interests arising from Mopani Property Development (Private) Limited | - | - |
- |
- |
Balance at 30 September 2017 | 2,538 | 1,316 | 12,559 | 83,642 |
2016 - Unaudited | ||||
Balance at 1 April 2016 | 2,538 | 1,316 | 11,418 | 90,096 |
(Loss) / profit for the period | - | - | - | (3,655) |
Other comprehensive income for the period | - | - | 617 | - |
Non-controlling interests arising from Mopani Property Development (Private) Limited | - | |||
Balance at 30 September 2016 | 2,538 | 1,316 | 12,035 | 86,441 |
Attributable to owners of parent | Non-controlling interests |
Total | |
US$ 000 | US$ 000 | US$ 000 | |
2017 - Unaudited | |||
Balance at 1 April 2017 | 100,049 | 28,591 | 128,640 |
(Loss) / profit for the period | (41) | 3,312 | 3,271 |
Other comprehensive income for the period | 47 | - | 47 |
Non-controlling interests arising from Mopani Property Development (Private) Limited | - | (1,715) | (1,715) |
Balance at 30 September 2017 | 100,055 | 30,188 | 130,243 |
2016 - Unaudited | |||
Balance at 1 April 2016 | 105,368 | 21,182 | 126,550 |
(Loss) / profit for the period | (3,655) | 2,197 | (1,458) |
Other comprehensive income for the period | 617 | - | 617 |
Non-controlling interests arising from Mopani Property Development (Private) Limited | - | 1,050 | 1,050 |
Balance at 30 September 2016 | 102,330 | 24,429 | 126,759 |
CONSOLIDATED STATEMENT OF CASH FLOWS | |||
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017 | |||
Unaudited | Unaudited | ||
30 Sep 2017 | 30 Sep 2016 | ||
CONTINUING AND DISCONTINUED OPERATIONS | US$ 000 | US$ 000 | |
Cash flows from operating activities | |||
Profit / (loss) before tax | 5,943 | (709) | |
Adjustments for: | |||
- Depreciation and impairment of property, plant and equipment and investment property | 6,658 | 5,998 | |
- Net interest | 3,399 | 3,502 | |
- Net exchange losses / (gains) | 37 | (7) | |
- Profit on disposal of subsidiary | (768) | - | |
- Fair value adjustments on biological assets | - | (3) | |
- Loss recognised on discounting Treasury Bills | 6 | 774 | |
- Loss on disposal of property, plant and equipment | 176 | 99 | |
Operating cash flow before working capital changes | 15,451 | 9,654 | |
Decrease / (increase) in inventories | 3,757 | (557) | |
(Increase) / decrease in trade and other receivables | (2,963) | 2,139 | |
Increase in trade and other payables | 4,289 | 5,850 | |
Cash generated from operations | 20,534 | 17,086 | |
Income taxes paid | (1,567) | (794) | |
Net cash generated from operating activities | 18,967 | 16,292 | |
Cash flows from investing activities | |||
Payment for property, plant and equipment | (7,465) | (6,317) | |
Proceeds from disposal of property, plant and equipment | 117 | 33 | |
Proceeds from sale of Treasury Bills and coupon interest | 3,075 | 1,950 | |
Net movement in service assets | (73) | 27 | |
Net movement in other investments | 816 | (378) | |
Net movement in biological assets | 557 | (23) | |
Net cash inflow on disposal of subsidiary | 1,060 | - | |
Investment income | 12 | 33 | |
Net cash used in investing activities | (1,901) | (4,675) | |
Cash flows from financing activities | |||
Net decrease in interest bearing borrowings | 45 | (6,333) | |
Proceeds on disposal of partial interest in a subsidiary without loss of control | - | 1,050 | |
Finance costs | (3,444) | (4,227) | |
Dividend paid – minority shareholders | (1,715) | - | |
Net cash used in financing activities | (5,114) | (9,510) | |
Net increase in cash and bank balances | 11,952 | 2,107 | |
Cash and bank balances at the beginning of the period | 15,637 | 10,494 | |
Net effect of exchange rate changes on cash and bank balances | (37) | (54) | |
Cash and bank balances at the end of the period | 27,552 | 12,547 |
NOTES TO THE ABRIDGED UNAUDITED FINANCIAL RESULTS
1. Basis of preparation
The abridged unaudited financial results 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. These abridged unaudited financial results do not include all information and disclosures required to fully comply with IFRS and should be read in conjunction with the Group’s annual report per 31 March 2017.
2. Accounting policies
Accounting policies and methods of computation applied in the preparation of these abridged unaudited financial results are consistent, in all material respects, with those used in the prior year.
3. 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 30 September 2017, the Directors have assessed the Group’s ability to continue operating as a going concern and believe that the preparation of these unaudited financial results on a going concern basis is still appropriate.
4. Treasury Bills
Below is an analysis of the movement in the Treasury Bills’ balance during the period:
Group and Company | Group and Company | Group and Company | Group and Company | ||
30 Sep 2017 | 30 Sep 2017 | 31 March 2017 | 31 March 2017 | ||
US$ 000 | US$ 000 | US$ 000 | US$ 000 | ||
Fair (Market) value | Nominal value |
Fair (Market) value | Nominal value |
||
Balance at the beginning of the period | 3,024 | 3,071 | 11,106 | 12,247 | |
Interest charge for the period | 11 | 4 | 1,061 | 409 | |
Coupon interest received | (75) | (75) | (551) | (551) | |
Treasury Bills disposed /matured during the period | (2,960) | (3,000) | (8,592) | (9,034) | |
Balance at the end of the period | - | - | 3,024 | 3,071 | |
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 each Statement of Financial Position date, 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 financial periods.
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.
5. Segment information
Unaudited | Unaudited | |
30 Sep 2017 | 30 Sep 2016 | |
US$ 000 | US$ 000 | |
Revenue | ||
Supermarkets | 231,973 | 202,029 |
Agriculture | 12,927 | 10,223 |
Hotels | 8,685 | 7,688 |
Departmental stores | 1,040 | 2,572 |
Wholesaling | 89 | 4,107 |
Corporate* | (725) | (721) |
253,989 | 225,898 | |
EBITDA | ||
Supermarkets | 13,229 | 9,577 |
Agriculture | 2,980 | 1,444 |
Hotels | 2,101 | 1,140 |
Departmental stores | (825) | (467) |
Wholesaling | (948) | (1,158) |
Corporate* | (1,277) | (982) |
15,260 | 9,554 | |
The EBITDA figures are before Group management fees. |
NOTES TO THE ABRIDGED UNAUDITED FINANCIAL RESULTS
5. Segment information (continued)
Unaudited | Audited | |
30 Sep 2017 | 31 March 2017 | |
US$ 000 | US$ 000 | |
Segment assets | ||
Supermarkets | 108,937 | 98,532 |
Agriculture | 76,451 | 76,038 |
Hotels | 46,467 | 46,460 |
Departmental stores | 26,473 | 26,899 |
Wholesaling | 4,988 | 4,196 |
Corporate* | 26,807 | 30,525 |
290,123 | 282,650 | |
Segment liabilities | ||
Supermarkets | 50,479 | 43,314 |
Agriculture | 29,557 | 30,944 |
Hotels | 22,263 | 22,782 |
Departmental stores | 18,108 | 17,286 |
Wholesaling | 10,237 | 8,690 |
Corporate* | 29,236 | 30,994 |
159,880 | 154,010 | |
*Intercompany transactions and balances have been eliminated from the corporate amounts. Corporate also includes other subsidiaries that are immaterial to warrant separate disclosure. |
Unaudited | Unaudited | |
30 Sep 2017 | 30 Sep 2016 | |
6. Other information | US$ 000 | US$ 000 |
Depreciation of property, plant and equipment and investment property | 6,566 | 5,361 |
Impairment of property, plant and equipment | 92 | 637 |
Capital commitments authorised by the Directors but not contracted for | - | 13,466 |
Group’s share of capital commitments of joint operations | 3,000 | 2,641 |
Unaudited | Audited | |
30 Sep 2017 | 31 March 2017 | |
US$ 000 | US$ 000 | |
7. Net borrowings | ||
Non-current borrowings | 15,446 | 9,241 |
Current borrowings | 50,816 | 56,977 |
Total borrowings | 66,262 | 66,218 |
Cash and cash equivalents | (27,552) | (15,637) |
Net borrowings | 38,710 | 50,581 |
Comprising: | ||
Secured | 55,453 | 55,773 |
Unsecured | 10,809 | 10,445 |
66,262 | 66,218 | |
The weighted average cost of borrowings for the year was 13.90% per annum (31 March 2017: 13.63% per annum). The Group has issued cross company guarantees worth US$35.2 million (31 March 2017: US$29.8 million) for Group borrowing facilities. |
NOTES TO THE ABRIDGED UNAUDITED FINANCIAL RESULTS
8. Discontinued operation
On 31 August 2017, the Company signed an agreement to dispose of Tuscarora Investments (Private) Limited (trading as Meikles Financial Services), which carried out the Group’s financial services operations. The proceeds of sale exceeded the carrying amount of the related net assets and, accordingly, no impairment losses were recognised. The disposal of the financial services operations is consistent with the Group’s long-term policy to focus its activities on its main segments, namely retail, agriculture, hospitality, wholesaling and security services. The results of the discontinued operations included in profit for the period are as set out below. The comparative profit and cash flows from discontinued operation have been re-presented to include the operation classified as discontinued in the current period.
Unaudited | Unaudited | |
30 Sep 2017 | 30 Sep 2016 | |
US$ 000 | US$ 000 | |
Profit / (loss) for the period from discontinued operation | ||
Net fees and commission income | 297 | 310 |
Net operating costs | (518) | (396) |
Operating loss | (221) | (86) |
Investment income | 11 | 2 |
Interest expense | (4) | (12) |
Loss before tax | (214) | (96) |
Income tax credit | - | 20 |
Loss for the period | (214) | (76) |
Profit on disposal of operation | 768 | - |
Profit / (loss) for the period from discontinued operation | 554 | (76) |
Cash flows from discontinued operation | ||
Net cash outflows from operating activities | (98) | (280) |
Net cash flows from investing activities | 1 | (33) |
Net cash inflows from financing activities | 168 | 283 |
Net cash flows from discontinued operation | 71 | (30) |
Unaudited | ||
Analysis of assets and liabilities over which control was lost | 30 Sep 2017 | |
US$ 000 | ||
Current assets | ||
Cash and cash equivalents | 224 | |
Other financial assets | 1,156 | |
Trade and other receivables | 255 | |
Inventory | 7 | |
Non-current assets | ||
Property, plant and equipment | 197 | |
Deferred tax asset | 216 | |
Current liabilities | ||
Trade and other payables | (1,763) | |
Net assets disposed off | 292 | |
Proceeds on disposal | 1,060 | |
Profit on disposal of operation | 768 | |
Meikles Limited Website : http://www.meiklesltd.com/