Final Results - Year Ended 31 March 2000
Meikles Africa Ld
15 May 2000
MEIKLES AFRICA LIMITED
Preliminary results for the year ended 31st March 2000
Meikles Africa Limited ('Meikles Africa'), the Southern
African based hotel and retail group, which floated on the
Zimbabwe and London Stock Exchanges in 1996, announces a good
operating performance for the year ended 31st March 2000.
* Turnover of Z$661m up by 59%
* Operating income of Z$790m up 53%
* Attributable earnings show impact of interest and non-
cash items including a Z$9m exchange loss compared with
exchange gains of Z$974m last year and a decline in the
company's quoted investments
* IIMR Headline earnings per share at 162 cents (1999: 992
cents).
* Operating cash flow per share of 607 cents, up from 460
cents
Chris Parvin, Chief Executive, commented:
'These are steady operating results, in a difficult
environment. We are confident that the businesses are well
positioned for the challenging year ahead. We are actively
looking to extend our hotel expertise regionally and we
continue to pursue local growth opportunities.'
15 May 2000
Enquiries:
Meikles Africa Tel: + 263 4 252 068
Chris Parvin, Chief Executive
Charles Golding, Finance Director
College Hill Tel: +20 7457 2020
Mark Garraway
Corinna Dorward
CHAIRMAN'S STATEMENT
Dear Shareholders,
It is particularly pleasing to report that the Group has
produced good operating results for the year ending 31 March
2000 and the Board is recommending the payment of a final
dividend of $1.00 per share making a total of $1.70 per share
for the year(1999 : $1.40), reflecting the strong operating
performance and resilience of the Group.
Turnover has grown by 59% to $6,661 million which is ahead of
the official inflation rate of 51%. Operating profit improved
by 53% to $790 million from $517 million. At the attributable
level, headline earnings show the impact of two major non-cash
items a small exchange loss of $9 million (1999 Exchange gain
: $974 million) and a decline in the value of the Group's
quoted investments of $136 million (1999 increase : $328
million). Furthermore high local interest rates and an
increased level of borrowings resulted in net interest charges
of $294 million (1999 : $90 million). The Group continues to
review its financing options. The combined effect of these
items resulted in a fall in headline earnings per share to 162
cents (1999 earnings per share : 992 cents) although operating
cashflow earnings per share show good growth from 460 cents to
629 cents.
The Group will be adopting hyper inflation accounting to
comply with International Accounting Standards and Zimbabwe
Stock Exchange requirements for the forthcoming financial
year.
OPERATIONS
Supermarkets contributed 72% to Group turnover and remained
the largest profit earner in the Group. Turnover was 64%
greater than last year at Z$4,812 million, as compared to
$2,937 million last year, well in excess of inflation
indicating real growth, and the relative insulation that
efficient food retailing provides from economic cycles.
During the course of the year one new supermarket was opened
at Mukoba in Gweru, although work on a further five is at an
advanced stage. The range of own brand products was increased
to 72 lines and now constitutes over 5% of total turnover.
Tighter stock loss control resulted in significantly improved
margins in all sections. TM has maintained its reputation
with the price conscious shopper and has increased market
share in a static market.
The Retail Division which includes the Department Stores and
Clicks and Diskom chain, finished the year with an overall
turnover gain of 48% to Z$1,197 million from Z$806 million
last year despite poor trading in December. At an operating
profit level the division contributed Z$237 million up from
Z$127 million last year. Much of the improvement has been due
to our ability to offer credit, and to manage this
successfully, with no deterioration in quality of our debtors.
In the latter half of the year the turnover trend in the
higher priced items declined particularly over the Christmas
period where sales of major household items were lower than
anticipated. The result has been that stocks were higher than
planned at the year end. Measures have been taken to further
improve the management of working capital.
The Clicks and Diskom Chain continues to expand and there are
now 9 Clicks and 4 Diskom stores. Clicks and Diskom now
contribute $235 million to Group revenues showing a healthy
growth of 67% compared to last year. The Flame Diner fast
food chain was sold during the year at a profit and certain
Black Steer/Bulldogs Pubs have been sold, while those
remaining have been absorbed in to the respective department
stores.
Despite the fact that the Hotel Division has suffered most
from the economic downturn, I am pleased to report that
operating profit improved from Z$210 million last year to
Z$224 million. Turnover also improved from Z$450 million to
Z$651 million this year. Room occupancy declined to 56% (1999
: 59%) at Meikles Hotel, and the Victoria Falls Hotel to 49%
(1999 : 67%). Although revenues year on year grew by only
18.5% and 14.5% respectively this was a creditable performance
in view of the downturn in occupancies. As nearly all revenue
from both hotels is priced in US dollars the static exchange
rate in an inflationary environment reduced margins. Operating
profits were only slightly improved compared to last year.
The strategy of providing premium priced quality accommodation
has paid off particularly at Victoria Falls Hotel where the
average room rate has to some extent offset the fall in
occupancy levels. The Cape Grace made a positive contribution
to divisional results in the latter half of the year.
On 1st October 1999 fifty percent of the Cape Grace Hotel was
acquired at a cost of US$5,3 million paid immediately, with a
further US$7,5m having been approved by Exchange Control
Authorities for remittance during the forthcoming year. The
Cape Grace is one of the finest five star luxury hotels in
Cape Town which is reflected in its premium average room rate
of US$220 and a room occupancy rate of 62% over the six months
to date.
We finalised negotiations with Kingdom Financial Holdings
Limited, a Financial Services group listed on the Zimbabwe
Stock Exchange and on 31st December 1999 subscribed for 74.4
million shares at a cost of Z$266 million. This gives Meikles
a 25% stake in the enlarged share capital of Kingdom. The
price was $3.50 per share with a further $0.50 per share
payable together with interest, dependent on results in the
year to 31st December 2000. The stake in Kingdom has been
acquired with a view to enhancing their development of retail
banking services, and our participation will involve the
better utilisation of our company revenues such as the
Department Stores debtors book and the distribution network.
We are confident that the management team of Kingdom are well
equipped to handle the rapid development of the retail bank.
STRATEGY
Meikles strategy for pursuing local and regional growth
opportunities remains unchanged. In particular, we intend to
extend the Group's high quality hotel operations and
experience in the tourism sector to take advantage of the
'tourist circuit' in Southern Africa.
The Hotel Division will continue to enhance the quality
product offered to our discerning customer base. During the
coming year, we expect to improve direct access to the
independent traveller through traditional marketing methods
such as Leading Hotels of the World, as well as the use of
internet and electronic media. We will continue to explore
regional opportunities in the tourism sector and during the
course of the year we expect to announce specific investments.
Expansion of the supermarket operations in conjunction with
our strategic partner Pick 'n' Pay will continue with a
further five outlets planned to open in the near future. We
will continue to improve the ambience of the Department
Stores, and we plan to open further Clicks and Diskom
outlets.
Trading and the environment at the start of the year have been
depressed and current circumstances make forecasting
performance difficult. However, Meikles Africa is well
positioned and financially well equipped to meet the
challenges of the coming year and the Board views the future
with confidence.
I would like to thank my fellow Directors and to congratulate
Management and Staff on a job well done during the past year.
Godfrey Gomwe resigned as a Director of the Company during the
year and I would like to thank him for his valuable
contribution whilst he served on the Board and wish him well
for the future.
JOHN MOXON
CHAIRMAN
DIVIDEND ANNOUNCEMENT
On 12th May 2000, the Board approved a final dividend number
61 of 100 cents per share on 152,915,305 shares payable to
members registered in the books of the Company at the close of
business on Friday, 23rd June 2000. The Transfer Books and
Register of Members will be closed from 26th June to 10th July
2000. The dividends payable to non-resident shareholders will
be paid in accordance with Exchange Control Regulations.
Shareholders' withholding tax will be deducted where
applicable.
The Annual General Meeting of the Company will be held in
Harare on 2nd August 2000, details of which will be provided
in the Annual Report.
By order of the Board
A.P. LANE-MITCHELL
Company Secretary
12 May 2000
CONSOLIDATED INCOME STATEMENT
For the year ended 31 March 2000
Notes
2000 1999
Z$000 Z$000
Turnover 6,660,524 4,193,467
Cost of Sales (4,782,446) (3,021,749)
Gross Profit 1,878,078 1,171,718
Other income 305,275 161,668
Employee costs (590,261) (350,522)
Occupancy costs (168,278) (105,787)
Other operating costs (635,146) (359,783)
Operating profit 789,668 517,294
Finance (costs)/income (438,237) 1,211,666
Net Interest 2 (293,769) (89,968)
Net exchange (loss)/gains (8,627) 973,936
(Decrease)/increase in value of
quoted investments (135,841) 327,698
Profit before taxation 351,431 1,728,960
Taxation (51,692) (193,440)
Profit after taxation 299,739 1,535,520
Minority interest (76,024) (37,860)
Net profit for the year
attributable
to shareholders 223,715 1,497,660
Retained earnings brought 1,753,639 470,032
forward
Dividends (259,942) (214,053)
Retained earnings carried 1,717,412 1,753,639
forward
Earnings per share - basic 3 146 980
(cents)
IIMR Headline earnings per
share
(cents) 3 162 992
Operating cash flow per share 607 460
CONSOLIDATED BALANCE SHEET
As at 31st March 2000
2000 1999
Z$000 Z$000
ASSETS
Non-current assets
Property, plant and 1,190,159 671,311
equipment
Investments 696,344 560,551
Goodwill 504,938 417,779
Long term debtors 215,761 166,762
2,607,202 1,816,403
Current assets
Stocks 789,798 513,622
Debtors and prepayments 604,259 372,071
Cash and cash equivalents 1,947,005 1,962,236
3,341,062 2,847,929
Total assets 5,948,264 4,664,332
EQUITY AND LIABILITIES
Capital and reserves
Equity capital 15,291 15,289
Non-distributable 1,040,724 1,048,368
reserves
Retained earnings 1,717,412 1,753,639
Shareholders for dividend 152,915 152,895
2,926,342 2,970,191
Minority interest 38,960 19,961
Non-current liabilities
Interest bearing 1,560,398 574,260
borrowings
Deferred tax 208,219 297,574
Other financial 25,520 7,331
liabilities
1,794,137 879,165
Current liabilities
Creditors 1,016,383 672,602
Interest bearing 48,127 62,705
borrowings
Other financial 124,315 59,708
liabilities
1,188,825 795,015
Total equity and 5,948,264 4,664,332
liabilities
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31st March 2000
2000 1999
Notes Z$000 Z$000
Cash flows from operating activities
Operating cash flow before working
capital changes 4 894,672 591,240
Net cash generated from working
capital changes 5 32,887 112,325
Operating cash flow 927,559 703,565
Income tax paid (71,608) (47,135)
Net cash generated from operating
activities 855,951 656,430
Cash flows from investing activities
Purchase of 50% of joint venture in
Cape Grace Hotel (205,225) -
Purchase of 25% of Kingdom Financial
Holdings Limited (266,039) -
Purchase of 50% joint venture in
Victoria Falls Hotel - (377,306)
Purchase of investments (110) -
Expenditure on property, plant and
equipment - expansion (81,361) (48,263)
Expenditure on property, plant and
equipment - replacement (162,766) (144,847)
Proceeds from disposal of property,
plant and equipment 14,743 3,924
Dividends received 48 5,209
Increase in interest-bearing debtors
(284,610) (164,069)
Interest received 207,637 114,077
Net cash used in investing (777,683) (611,275)
activities
Cash flows from financing activities
Proceeds from interest bearing 793,123 496,117
borrowings
Repayment of interest bearing (111,433) (32,312)
borrowings
Interest paid (472,805) (204,045)
Issue of ordinary shares 560 -
Dividends paid - Ordinary (259,922) (114,671)
shareholders
- (43,649) (18,316)
Minorities
Net cash (used in)/generated from
financing activities (94,126) 126,773
Net effect of exchange rate changes (9,425) 969,051
on cash and Equivalents
Net (decrease)/increase in cash and
cash equivalents (25,283) 1,140,979
Cash and cash equivalents at 31 1,962,236 821,257
March 1999
Cash acquired with joint venture 10,052 -
Cash and cash equivalents at 31 1,947,005 1,962,236
March 2000
STATEMENT OF CONSOLIDATED CHANGES IN EQUITY
For the year ended 31 March 2000
Share Share Non- Retained Total
capita premium distribut earnings
l able and
reserves sharehol
ders for
dividend
Balance at 1 April
1998
- as previously
reported 15,289 894,975 153,393 465,513 1,529,170
- deferred - - - (161,115) (161,115)
taxation
- quoted - - - 219,147 219,147
investments
- as restated 15,289 894,975 153,393 523,545 1,587,202
Net profit - - - 1,497,660 1,497,660
Dividend for 1998
- final - - - (53,513) 53,513)
Dividend for 1999
- interim - - - (61,158) 61,158)
Balance at 31 15,289 894,975 153,393 1,906,534 2,970,191
March 1999
Balance at 1 April
1999 15,289 894,975 153,393 1,906,534 2,970,191
Currency
translation
difference
for Cape Grace - - (8,202) - (8,202)
Hotel
Share options
exercised 2 558 - - 560
Net profit - - - 223,715 223,715
Dividend for 2000
- final - - - (152,895) (152,895)
Dividend for 2000
- interim - - - (107,027) (107,027)
Balance at 31 15,291 895,533 145,191 1,870,327 2,926,340
March 2000
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
The accounting policies are the same as those used in the 31
March 1999 Annual Financial Statements, and no adjustment has
been made for the effects of hyperinflation.
2. Net Interest
2000 1999
Z$000 Z$000
Interest receivable 207,637 114,077
Interest payable:
Long term borrowings (418,638) (195,459)
Overdrafts and short term borrowings
(15,065) (5,586)
Finance lease (11,580) -
Related parties (56,123) (3,000)
(501,406) (204,045)
(293,769) (89,968)
3. Earnings per share
Basic earnings per share:
Basic earnings per share have been calculated by dividing the
net profit for the year attributable to shareholders by the
number of shares in issue of 152,915,305 (1999 - 152,895,305).
2000 1999
Z$000 Z$000
IIMR Headline earnings per
share:
Net profit for the year 223,715 1,497,660
attributable to shareholders
Amortisation of goodwill 22,275 16,107
Loss/(profit) on disposal of
fixed assets 2,432 2,528
248,422 1,516,295
Number of shares in issue 152,915,305 152,895,305
4. Cash flows from operating activities
2000 1999
Z$000 Z$000
Profit before taxation 351,431 1,728,960
Adjustments for:
Amortisation of goodwill 22,275 16,107
Depreciation 85,635 55,635
Finance cost/(income) 438,237 (1,211,666)
Dividends received (48) (5,209)
Scrip dividend received (4,674) -
Realised exchange gains - 4,885
Translation of foreign (598) -
joint venture
Profit on sale of shares (18) -
Loss on disposal 2,432 2,528
of fixed assets
Operating cash flow before 894,672 591,240
working capital changes
5. Cash generated from working capital changes
2000 1999
Increase in stocks (274,071) (110,205)
Decrease/(Increase) in non- 74,954 (18,060)
interest bearing debtors
Increase in creditors 232,004 240,590
Net cash generated from working 32,887 112,325
capital changes
6. Segmental information
Year ended 31 March 2000
Hotels Supermarkets Retail Corporate Group
Turnover 651,248 4,812,221 1,197,055 - 6,660,524
Operating profit 223,812 348,779 236,685 (19,608) 789,668
Finance costs (438,237)
Taxation (51,692)
Minority (76,024)
interest
Attributable 223,715
profit
Segment assets 1,689,860 1,086,280 1,891,920 1,280,204 5,948,264
Segment 637,818 910,953 641,953 792,238 2,982,962
liabilities
Capital
expenditure
And goodwill 267,991 103,402 70,287 7,672 449,352
Depreciation and 46,130 26,870 32,629 2,281 107,910
amortisation
Year ended 31 March 1999
Hotels Supermarkets Retail Corporate Group
Turnover 449,951 2,937,224 806,292 - 4,193,467
Operating profit 210,284 187,261 127,412 (7,663) 517,294
Finance income 1,211,666
Taxation (193,440)
Minority (37,860)
interest
Attributable 1,497,660
profit
Segment assets 946,118 648,589 829,027 2,240,598 4,664,332
Segment 278,569 568,235 308,465 518,911 1,674,180
liabilities
Capital
expenditure
And goodwill 439,379 72,572 45,834 5,481 563,266
Depreciation and 25,352 17,822 24,023 4,545 71,742
amortisation
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