Final Results
Meikles Africa Ld
13 May 2002
MEIKLES AFRICA LIMITED
PRELIMINARY ANNOUNCEMENT - 31 MARCH 2002
Financial Highlights - Inflation Adjusted Financial Highlights - Historical
• Turnover of $28 billion up 14%. • Turnover of $21 billion up 123%
• Net Interest payable has decreased by $1,5 billion. • Operating profit of $2,3 billion compared to a
profit of $951 million last year.
• Exchange gains of $6 billion compared to $3 billion
last year. • Exchange gains of $4 billion compared to $1 billion
last year.
• Attributable profit of $2,143 million up 277%
compared to a profit of $569 million last year. • Attributable profit of $5,9 billion compared to a
profit of $1,4 billion last year
• Final dividend of 315 cents
CHAIRMAN'S STATEMENT
Your Group has produced a commendable set of results for the year despite severe
operating conditions, which saw the viability of many companies threatened. It
is pleasing to be able to report a 326% increase in attributable earnings on an
historical cost basis and a 277% increase in attributable profits on an
inflation adjusted basis. The objectives of ensuring that turnover and profit
growth exceeded inflation, and of growing the size of the Group both organically
and by acquisition were achieved.
Your Board has declared a final dividend of $3.15 which, together with the
interim dividend of $1.25, makes a total of $4.40 for the year, an increase of
100% over that for the prior year.
In accordance with International Accounting Standards Meikles, Africa Limited is
required to publish inflation adjusted accounts. The historical accounts are
shown as supplementary information.
HISTORICAL COST ACCOUNTS
Group turnover increased by 123% to $21.1 billion and operating profit increased
by 141% to $2.29 billion, both figures exceeding the year on year average
official inflation figure of 91.6% by a considerable margin.
Exchange gains of $4.3 billion, a decline in net interest payable of $484
million, and our share of Kingdom profits of $586 million result in an increase
in profit before taxation from $1.6 billion to $7 billion. At the attributable
level, headline earnings per share have shown significant growth from $9.64 to
$38.59.
OPERATIONS
TM Supermarkets
• Turnover increased by 117% from $7.2 billion to $15.6 billion
• Operating profit grew by 155% to $1.3 billion from $510 million
Official inflation for the year to March 2002 was 91.6% and the turnover growth
of 117% reflects the growth in our market share. Stocks of high value imported
items were increased selectively to ensure the consistent availability of a good
range of products. Overall expenses have increased by 115% although a number of
fixed and variable operating costs such as utilities, wrapping, employee costs
and equipment maintenance reflect much higher percentage increases.
One new supermarket at Zengeza was opened in July 2001, and the flagship branch
at Borrowdale reopened in December 2001. Borrowdale has received a very
enthusiastic reception from the consumers in the area and sales are higher than
expected. A new supermarket will open in Chadcombe in May 2002 and the division
continues to explore further opportunities.
Retail
• Turnover rose 120% from $1.5 billion to $3.3 billion.
• Operating profit rose by 31% from $399 million to $522 million.
The debtors book is now owned by Meikles Financial Services with the
shareholding split between Kingdom Financial Holdings (51%) and Meikles (49%).
The sale of the debtors book to MFS, including the debtors income has distorted
the comparison of operating profit year on year. If a like on like comparison of
results was to be made, the operating profit in the Retail Division would show
growth in the order of 356%. Our Retail Division continues to manage all aspects
of its credit operations on behalf of Kingdom.
After a fairly slow start to the year, retail division sales were enhanced by
strategic purchases commencing at the end of the second quarter and the improved
trend continued strongly for the rest of the year. Strong growth was recorded in
clothing, footwear, cosmetics and accessories. The ratio of cash to credit sales
improved, and debt collection and bad debts written off were well within budget
and similar to the previous year. Clicks results benefitted from the new outlets
opened in Bulawayo and Gweru. In line with trends in South Africa, a partnership
between the Clicks Health and Beauty chain and Medix Pharmacies was formed
towards the end of the year and trading commenced in two stores. After assessing
their performances, the Group has taken a significant stake in Medix in order to
provide finance for the future expansion of that company.
Hotels
• Turnover increased by 164% from $795 million to $2.1 billion.
• Operating Profit increased by 325% from $122 million to $518 million.
Turnover in the Zimbabwe hotels benefitted as a result of the implementation of
the tourism rate of exchange for the Zimbabwe dollar. However average
occupancies remained depressed at 31.8% for Meikles Hotel (2001: 38.4%), and
34.2% for Victoria Falls Hotel (2001: 32.3%). Tourism has been badly affected by
the international perception of the country and recently by the strong travel
warnings issued by various governments advising against travel to Zimbabwe. Both
hotels remained profitable during the year and Victoria Falls Hotel has
maintained a high average room rate despite the low occupancies.
The remaining 50% of the Cape Grace Hotel was purchased on 1 December 2001 and
full ownership of the hotel is reflected in the accounts for the peak four
months of trading to 31 March 2002. The hotel has had an excellent year with
turnover growth reflecting high occupancies of 62% for the year (2001: 54%) and
a much improved room rate. The Cape Grace continues to achieve the highest
average room rate in the five-star market in Cape Town, with an increasing
market share. The proportion of full rate business increased during the year
partly because of the membership of Leading Small Hotels of the World, and also
because of the impact of the publicity generated by the Conde Nast Traveller
'Best Hotel in the World' award last year.
The Cape Grace Hotel was also voted Best Hotel in Africa and the Middle East for
2001 and Meikles Hotel and Victoria Falls Hotel both won awards.
Kingdom Financial Holdings
Kingdom continues to make progress with its retail bank and a further 3 branches
being added this year. A total of 14 branches are currently operating of which 5
are in or adjacent to Group operations. We fully support Kingdom's regional
initiative covering the investments in Botswana, Zambia and Malawi.
INFLATION ADJUSTED ACCOUNTS
Headline earnings per share of $17.95 (2001: $5.48) reflect the Group's growth
in earnings in the current year.
Although the Group has achieved an increase in turnover of 13.6% to $28.3
billion, there is an operating loss for the year of $267 million compared to a
profit of $475 million in the prior year. The debtors book was transferred to
Meikles Financial Services on 1 August 2001 and the related income now accrues
to that Company. As a result there has been a decline in operating profit of
$936 million. Net interest payable has decreased by $1.5 billion, while the net
exchange gains have increased by $3 billion.
Included in profit before taxation is $1.1 billion, which represents our 25%
interest in Kingdom Financial Holdings.
STRATEGY
We will continue to look for opportunities for growth in both retail divisions
and to concentrate on successfully managing our operations. Our goal is to
consolidate our position as the major supermarket and retail business in
Zimbabwe, offering a wide range of products at competitive prices with a high
standard of service. We are exploring a number of new supermarket opportunities
in Zimbabwe and expect to open at least two supermarkets in the coming year.
Regional supermarket development has become less attractive and is unlikely to
be pursued in the near future. The successful acquisition of the other half of
the Cape Grace will lead to additional growth in our earnings in South Africa.
I would like to thank my fellow Directors and to congratulate Management and
Staff on a job well done during the past year.
JOHN MOXON
CHAIRMAN
Enquiries:
Meikles Africa Tel: +263 4 252068
Chris Parvin, Chief Executive
College Hill Tel: +44 (0)20 7457 2020
Corinna Dorward Email: corinna.dorward@collegehill.com
FINAL DIVIDEND ANNOUNCEMENT
On the 9th May 2002, the Board approved a final dividend Number 65 of 315 cents
per share on 156,419,087 shares payable to members registered in the books of
the company at the close of business on 28th June 2002. The Transfer Books and
Register of Members will be closed from 29th June 2002 to 14th July 2002.
Dividend cheques will be mailed to shareholders on or about 15th July 2002. 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
9 May 2002
All current financial, operational and structural information on Meikles Africa
Limited can be obtained as changes in these areas occur by visiting Meikles
Africa's website at: http:/www.meiklesafrica.co.zw
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2002
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
(all amounts in millions Year ended Year ended Year ended Year ended
of dollars) 31 March 2002 31 March 2001 31 March 2002 31 March 2001
Turnover 28,296 24,905 21,096 9,451
Cost of sales (21,932) (19,345) (14,551) (6,865)
Gross Profit 6,364 5,560 6,545 2,586
Operating expenses (7,158) (6,375) (4,547) (2,159)
Other income 527 1,290 296 524
Operating (loss)/profit (267) 475 2,294 951
Net interest (281) (1,785) (188) (672)
Exchange gains 6,086 3,034 4,329 1,138
Share of result of 1,135 250 586 200
associate
Net monetary loss (3,084) (1,237) - -
Profit before taxation 3,589 737 7,021 1,617
Taxation (1,170) 51 (841) (108)
Profit after taxation 2,419 788 6,180 1,509
Minority interest (276) (219) (235) (112)
Net profit attributable 2,143 569 5,945 1,397
to shareholders
Basic earnings per share ($) 13,77 3,71 38,20 9,12
IIMR Headline earnings 17,95 5,48 38,59 9,64
per share ($)
CONSOLIDATED STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
For the year ended 31 March 2002
Net profit for the year attributable
to shareholders 2,143 569 5,945 1,397
Net gains not recognised in
the income statement
- Increase / (decrease) in value of
quoted investments 763 (7) 336 (3)
- Capital gains deferred tax 26 99 (63) 1
Total recognised gains and losses 2,932 661 6,218 1,395
CONSOLIDATED BALANCE SHEET
At 31 March 2002
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
at at at at
31 March 2002 31 March 2001 31 March 2002 31 March 2001
ASSETS
Non-current assets 14,835 11,662 8,903 3,393
Current assets 11,886 11,171 11,523 5,125
Total assets 26,721 22,833 20,426 8,518
EQUITY AND LIABILITIES
Capital and reserves 15,026 12,254 10,430 4,211
Minority interest 457 323 159 67
Non-current liabilities 6,796 7,189 5,395 2,802
Current liabilities 4,442 3,067 4,442 1,438
Total equity and liabilities 26,721 22,833 20,426 8,518
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2002
INFLATION ADJUSTED -Audited
Share Share Non- Retained Total
Capital Premium Distributable Earnings and
Reserves Shareholders
for Dividend
Balance at 1 April 2001 164 10,300 1,991 (201) 12,254
Net gains not recognised in income statement:
-Increase in valuation of quoted investments - - - 789 789
Currency translation difference for Cape - - 499 - 499
Grace Hotel
Share options exercised 1 86 - - 87
Net profit - - - 2,143 2,143
Dividend for 2001 - final - - - (494) (494)
Dividend for 2002 - interim - - - (252) (252)
Balance at 31 March 2002 165 10,386 2,490 1,985 15,026
Balance at 1 April 2000 163 10,223 1,724 (81) 12,029
Net gains not recognised in income statement:
-Increase in valuation of quoted investments - - - 92 92
Currency translation difference for Cape - - 267 - 267
Grace Hotel
Share options exercised 1 77 - - 78
Net profit - - - 569 569
Dividend for 2000 - final - - - (507) (507)
Dividend for 2001 - interim - - - (274) (274)
Balance at 31 March 2001 164 10,300 1,991 (201) 12,254
HISTORICAL COST - Audited
Share Share Non- Retained Total
Capital Premium distributable Earnings and
Reserves Shareholders
for Dividend
Balance at 1 April 2001 15 928 262 3,006 4,211
Net gains not recognised in income statement:
-Increase in valuation of quoted investments - - - 273 273
Currency translation difference for Cape - - 365 - 365
Grace Hotel
Share options exercised 1 63 - - 64
Net profit - - - 5,945 5,945
Dividend for 2001 - final - - - (232) (232)
Dividend for 2002 - interim - - - (196) (196)
Balance at 31 March 2002 16 991 627 8,796 10,430
Balance at 1 April 2000 15 896 145 1,871 2,927
Net gains not recognised in income statement:
-Decrease in valuation of quoted investments - - - (2) (2)
Currency translation difference for Cape - - 117 - 117
Grace Hotel
Share options exercised - 32 - - 32
Net profit - - - 1,397 1,397
Dividend for 2000 - final - - - - (153) (153)
Dividend for 2001 - interim - - - (107) (107)
Balance at 31 March 2001 15 928 262 3,006 4,211
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 March 2002
INFLATION ADJUSTED HISTORICAL COST
Audited Audited Audited Audited
Year ended Year ended Year ended Year ended
31 March 2002 31 March 2001 31 March 2002 31 March 2001
Cash flows from operating activities
Profit before taxation 3,589 737 7,021 1,617
Adjustment for:
Non-operating cash flow (5,661) (1,160) (4,165) (466)
Non-cash items (1,574) 908 (181) 62
Operating cash flow before working (3,646) 485 2,675 1,213
capital changes
(Used in)/generated from working capital (93) 404 (979) (72)
changes
Operating cash flow (3,739) 889 1,696 1,141
Income tax paid (483) (360) (197) (101)
Net cash generated from operating (4,222) 529 1,499 1,040
activities
Net cash generated from/(used in) 522 350 (1,371) (392)
investing activities
Net cash used in financing activities (2,817) (3,180) (1,053) (356)
Net effect of exchange rate changes
on cash and cash equivalents 6,086 3,034 4,329 1,138
Net (decrease)/ increase in cash and (431) 733 3,404 1,430
cash equivalents
Cash and cash equivalents at 31 March 2001 7,202 6,469 3,376 1,946
Cash acquired with Cape Grace Hotel and 46 - 37 -
Medix Limited
Cash and cash equivalents at 31 March 2002 6,817 7,202 6,817 3,376
Segmental Analysis
INFLATION ADJUSTED
Year ended 31 March 2002
(all amounts in millions of dollars) Hotels Supermarkets Retail Corporate Group
Turnover 2,708 21,139 4,449 - 28,296
Operating profit 34 (61) (390) 150 (267)
Net Interest (281)
Net exchange gain 6,086
Share of result of associate 1,135
Monetary loss (3,084)
Taxation (1,170)
Minority interest (276)
Attributable profit 2,143
Segment assets 9,411 5,984 2,874 8,452 26,721
Segment liabilities 6,417 4,286 3,554 (3,019) 11,238
Capital expenditure 1,846 865 222 37 2,970
Depreciation and amortisation 728 318 281 (199) 1,128
Year ended 31 March 2001
Turnover 2,054 18,915 3,936 - 24,905
Operating profit 127 446 116 (214) 475
Net interest 1,785
Net exchange gain 3,034
Share of result of associate 250
Monetary loss (1,237)
Taxation 51
Minority interest (219)
Attributable profit 569
Segment assets 6,058 4,516 3,323 8,936 22,833
Segment liabilities 4,425 4,417 6,361 (4,947) 10,256
Capital expenditure 259 473 197 35 964
Depreciation and amortisation 317 290 480 123 1,210
Segmental Analysis
HISTORICAL COST
Year ended 31 March 2002
(all amounts in millions of dollars) Hotels Supermarkets Retail Corporate Group
Turnover 2,113 15,649 3,334 - 21,096
Operating profit 518 1,301 522 (47) 2,294
Net interest (188)
Net exchange gain 4,329
Share of result in associate 586
Taxation (841)
Minority interest (235)
Attributable profit 5,945
Segmental assets 7,136 4,480 3,339 5,471 20,426
Segment liabilities 6,249 3,797 2,744 (2,953) 9,837
Capital expenditure 130 617 157 32 936
Depreciation and amortisation 160 68 53 6 287
Year ended 31 March 2001
Turnover 795 7,173 1,483 - 9,451
Operating profit 122 510 399 (80) 951
Net in interest (672)
Net exchange gain 1,138
Share of result in associate 201
Taxation (108)
Minority interest (113)
Attributable profit 1,397
Segment assets 2,192 2,038 2,140 2,147 8,518
Segment liabilities 1,063 1,769 1,567 (159) 4,240
Capital expenditure and goodwill 114 178 67 13 372
Depreciation and amortisation 69 40 42 58 209
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