Half-yearly Report

MEIKLES LIMITED ABRIDGED UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 CHAIRMAN'S STATEMENT It gives me great pleasure to comment on the Group performance for the six months ended 30 September 2013. Although the current economic climate is challenging, we believe that we are well placed to take advantage of an economic recovery. Review of operations Group results for the six months under review were enhanced by non-trading income. This income is largely investment income and is more substantial than that received in the half year to 30 September 2012. However, fair value gains on biological assets were lower than the comparative period. Operating results were affected by slow growth in the retail divisions as demand softened. Trading in the three months to the end of June 2013 was more satisfactory than the subsequent period to the end of September 2013, which has seen deterioration in trade in the formal market. Revenues for the current period were marginally up on prior period. Improved earnings in Tanganda, and to a lesser extent the hotels, were off-set by lower profits in the retail divisions. Depreciation increased due to the substantial renovation and expansion projects implemented by the Group. Interest costs were higher due to increased borrowings to fund the renovation and expansion projects. Working capital was actively managed following improved controls on stocks, debtors and creditors. There has been further rationalization of the departmental stores together with a drive to create greater values in our properties. A new addition to the stores is to be launched, named Meikles Mega Market ("MMM"). This new concept will service and support the lower end of the market. The first unit will be launched in Harare in early December 2013 and will be extended to other locations next year. TM Supermarkets are now well advanced in their renovation initiatives and further branch expansion is under way. The substantial funding requirements were recently put in place. Funds held on deposit at the Reserve Bank of Zimbabwe There are indications that a solution to our long standing deposit at the Reserve Bank of Zimbabwe ("RBZ") may be forth coming shortly. When this solution is achieved, the Group expects to retire all local short term borrowings, and if necessary assist Group companies with the redemption of term loans on due date. The Group will also be in a position to provide funding for further working capital in the Group divisions. There will be funding available to support the Employee Share Schemes, which are an important part of the Group's indigenization processes. Due to liquidity constraints, capital expenditure and working capital requirements, the Group is unable to pay an interim dividend. However, on repayment of the RBZ deposit there should be sufficient capacity to resume the payment of dividends. A solution to this outstanding issue is undoubtedly the most important matter for all stakeholders in the Group and has been the single largest impediment to growth and stability. Outlook The second six months of the financial year will continue to be dominated by growth in non-trading income, primarily investment income. There are anticipated gains in investments that will be accounted for in the year end financials. These gains may include the South African interests, where the Group has substantial performance expectations, and a first contribution from the Group's mining activities. In the short term, it is expected that the retail divisions will continue to encounter demanding environmental challenges particularly tight market liquidity conditions and low disposable incomes. However, TM Supermarkets will look to benefit from the renovation of its units and the expansion of its branch network, which is gaining momentum. The new stores concept is expected to provide a good addition to the Group's overall retail activities. Tanganda has had an excellent start to the agricultural growing season and the weather forecast for the remainder of the season is positive. The newly renovated Meikles Hotel, together with the renovation of the Victoria Falls Hotel will provide a better performance platform for the hospitality division. JRT Moxon Chairman 28 November 2013 MEIKLES LIMITED ABRIDGED UNAUDITED FINANCIAL STATEMENTSFOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 6 months to 6 months to 30 September 30 September 2013 2012 US$ 000 US$ 000 CONTINUING OPERATIONS Revenue 190,291 189,491 Earnings before interest, taxation, depreciation 1,459 2,278 and amortisation Depreciation, amortisation and impairment (2,861) (2,267) Non-trading income 42,677 3,073 Finance costs (4,070) (3,241) Profit / (loss) before tax 37,205 (157) Income tax credit / (expense) 326 (249) Profit /(loss) for the period from continuing 37,531 (406) operations DISCONTINUED OPERATIONS Profit for the period from discontinued - 1,173 operations PROFIT FOR THE PERIOD 37,531 767 TOTAL COMPREHENSIVE PROFIT FOR THE PERIOD 37,531 767 Profit / (loss) attributable to: Owners of the parent 36,458 (666) Non-controlling interests 1,073 1,433 37,531 767 Total comprehensive profit / (loss) attributable to: Owners of the parent 36,458 (666) Non-controlling interests 1,073 1,433 37,531 767 Earnings / (loss) per share - cents Basic 14.37 (0.26) Continuing operations 14.37 (0.72) Discontinued operations - 0.46 Diluted 13.53 (0.25) Continuing operations 13.53 (0.68) Discontinued operations - 0.44 Headline earnings / (loss) per share - cents (1.96) (0.71) Continuing operations (1.96) (0.71) Discontinued operations - - Diluted headline earnings / (loss) per share - (1.85) (0.67) cents Continuing operations (1.85) (0.67) Discontinued operations - - UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2013 Unaudited Audited 30 September 31 March 2013 2013 US$ 000 US$ 000 ASSETS Non-current assets Property, plant and equipment 105,492 99,063 Investment property 252 254 Investment in Mentor Africa Limited 27,657 27,657 Biological assets 23,193 21,521 Intangible assets 124 2,204 Other financial assets 12,735 12,693 Balances with Reserve Bank of Zimbabwe 87,271 40,514 Deferred tax 2,135 1,997 Total non-current assets 258,859 205,903 Current assets Inventories 36,427 36,708 Trade and other receivables 11,880 17,283 Other financial assets 2,766 1,405 Cash and bank balances 6,945 14,198 Total current assets 58,018 69,594 Total assets 316,877 275,497 EQUITY AND LIABILITIES Capital and reserves Share capital 2,538 2,538 Share premium 1,316 1,316 Non-distributable reserves 12,559 12,559 Retained earnings 157,486 121,028 Equity attributable to equity holders of the 173,899 137,441 parent Non-controlling interests 12,063 10,990 Total equity 185,962 148,431 Non-current liabilities Borrowings 22,060 7,417 Other liabilities 17,243 14,534 Total non-current liabilities 39,303 21,951 Current liabilities Trade and other payables 41,566 46,263 Short term borrowings 50,046 58,852 Total current liabilities 91,612 105,115 Total liabilities 130,915 127,066 Total equity and liabilities 316,877 275,497 UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 Share Share Non-distributable Retained Disposal Attributable Non- Total capital premium reserves earnings group to owners of controlling capital parent interests and reserves US$ 000 US$000 US$000 US$000 US$000 US$000 US$ 000 US$000 30 September 2013 Balance 2,538 1,316 12,559 121,028 - 137,441 10,990 148,431 at 1 April 2013 Profit - - - 36,458 - 36,458 1,073 37,531 for the period Balance 2,538 1,316 12,559 157,486 - 173,899 12,063 185,962 at 30 September 2013 30 September 2012 Balance 2,538 1,316 6,233 104,581 19,644 134,312 7,495 141,807 at 1 April 2012 (Loss) / - - - (666) - (666) 1,433 767 profit for the period Transfer - - 6,326 13,318 (19,644) - - - on sale of disposal group Balance 2,538 1,316 12,559 117,233 - 133,646 8,928 142,574 at 30 September 2012 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 30 September 30 September 2013 2012 US$ 000 US$ 000 CONTINUING AND DISCONTINUED OPERATIONS Cash flows from operating activities Operating cash flow before working capital 1,462 2,318 changes Decrease / (increase) in inventories 281 (5,070) Decrease / (increase) in trade and other 5,352 (405) receivables (Decrease) / increase in trade and other (4,482) 12,408 payables Cash generated from operations 2,613 9,251 Income taxes paid (422) (127) Net cash generated from operating activities 2,191 9,124 Cash flows from investing activities Payment for property, plant and equipment (10,211) (9,294) Proceeds from disposal of property, plant and 119 69 equipment Increase in intangible assets - (1,640) Net movement in service assets (14) (102) Payment for other investments (1,403) (90) Investment income 320 180 Net cash used in investing activities (11,189) (10,877) Cash flows from financing activities Proceeds from interest bearing borrowings 5,837 5,138 Finance costs (4,070) (3,241) Net cash generated from financing activities 1,767 1,897 Net (decrease) / increase in cash and bank (7,231) 144 balances Cash and bank balances at 1 April 14,198 8,427 Net effect of exchange rate changes on cash and (22) (183) bank balances Cash and bank balances at 30 September 6,945 8,388 NOTES TO THE ABRIDGED UNAUDITED FINANCIAL STATEMENTS 1. Basis of preparation The abridged unaudited 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 unaudited financial statements have been prepared in conformity with International Financial Reporting Standards (IFRS). These abridged unaudited financial statements 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 for the year ended 31 March 2013. 3. Accounting policies The Group's interim abridged unaudited financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting. Accounting policies and methods of computation applied in the preparation of these abridged unaudited financial statements are consistent, in all material respects, with those applied in the preparation of the Group's annual financial statements for the year ended 31 March 2013 with no significant impact arising from new and revised International Financial Reporting Standards (IFRS). 4. Segment information Unaudited Unaudited 30 September 30 September 2013 2012 US$ 000 US$ 000 Revenue Continuing operations Supermarkets 166,032 163,769 Hotels 7,767 7,710 Agriculture 10,916 10,597 Stores 6,499 8,558 Intra-group sales (923) (1,143) 190,291 189,491 EBITDA Continuing operations Supermarkets 4,099 5,211 Hotels 473 448 Agriculture 340 (1,359) Stores (1,119) (568) Corporate* (2,334) (1,454) 1,459 2,278 Unaudited Audited 30 September 31 March 2013 2013 US$ 000 US$ 000 Segment assets Supermarkets 58,325 60,943 Hotels 51,665 47,719 Agriculture 52,426 52,852 Stores 34,116 37,408 Corporate* 120,345 76,575 316,877 275,497 Segment liabilities Supermarkets 33,708 38,516 Hotels 20,781 16,421 Agriculture 30,223 29,631 Stores 14,771 36,890 Corporate* 31,432 5,608 130,915 127,066 *Intercompany transactions and balances have been eliminated from the corporate amounts. Corporate also includes other subsidiaries that are not allocated to a reportable segment. 5. Non-trading income Unaudited Unaudited 30 September 30 September 2013 2012 US$ 000 US$ 000 Non-trading income comprises: Investment revenue 43,754 1,130 Fair value adjustments (1,219) 2,126 Net exchange gains / (losses) 142 (183) 42,677 3,073 Included in investment revenue is interest accrued on the funds on deposit at the RBZ. 6. Other information Capital commitments authorised by the Directors but 16,298 12,721 not contracted Group's share of capital commitments of joint 182 1,500 venture For further information contact Onias Makamba on omakamba@meikleslimited.co.zw or +263-4-252068/70.

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