Final Results

RNS Number : 7615P

Kingdom Meikles Limited

30 March 2009

KINGDOM MEIKLES LIMITED

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008

SALIENT FEATURES

References are to Zimbabwe dollars (quintillions)

Revenue

$237,378

Operating profit

$980,479

Attributable profit

$1,279,000

Cash generated and funds available

Funds generated from operations were $3,303

Funds on hand amount to $1,762,071

References are to unaudited United States Dollars ( in full)

Revenue

$55,762,864

Operating profit

$10,225,863

Attributable loss

$127,484,452

Cash generated and funds available

Funds generated from operations were $13,072,707

Funds on hand amount to $50,398,987

Chairman's Statement

The results of Kingdom Meikles Limited (KML) for the year ended 31 December 2008 are presented during extremely trying times externally and internally for the Group in its inaugural year as a merged entity. The business environment in 2008 was characterised by unprecedented socio-economic and political developments in Zimbabwe where most of the Group's subsidiaries are located. The Zimbabwe economy was bedevilled by the use of multi-currencies, world-record hyper-inflation figures, multiple exchange rates and currency debasing, to mention a few. On the other hand, the world economy experienced an astonishing global melt-down triggered by the US and UK mortgage and banking crises which had a drag on regional economies of South Africa, Malawi and Botswana, where KML has subsidiary and associate companies.

The financial information is in historical cost and is presented solely to meet statutory requirements. Inflation-adjusted figures are not available because of the lack of Consumer Price Indices (CPI) information but, in any case, the validity of such presentations and what can be drawn from the financials has no real meaning. Due to the usage of multi-currencies in our trading, the volatile exchange rate experienced in Zimbabwe and the resultant accounting complexities, our auditors' opinion on the historical cost financial statements is qualified on the basis that this information does not present a true and fair view of the financial status of the Group. The Institute of Chartered Accountants of Zimbabwe, along with the Zimbabwe Stock Exchange, have provided guidelines to all preparers as to the content of the accounting qualification and these have been incorporated in the final presentation of the financial statements of the Group. With the introduction of FOLIWARS trading (retailing licences to trade in foreign currency) combined with other direct export related Group operations, the shift during the latter part of the year was towards the US Dollar as a functional currency for operations, excluding the Kingdom Financial Holdings Limited Group. The Board has taken a view that exchange rates applied to our accounts enable fair presentation at the appropriate time and US Dollar financial statements have thus been presented as supplementary information for the benefit of shareholders.

Key features of operations (any reference to amounts is in respect of US Dollar figures)

Operating profit for the Group amounted to US$10,2 million compared with US$20,6 million for the prior year. Operations were affected by the hostile business environment, aggravated in the last quarter by the dispute between significant shareholders.

Corporate

There is dispute over the status of funds amounting to US$22,0 million (the funds 'earmarked for investment') held with Coolbay Investments (Pty) Ltd (Coolbay), US$17, 8 million and Mentor Holdings Limited (Mentor), US$4,2 million, in South Africa. Neither the Board nor the Group's auditors have been able to obtain satisfactory evidence that the funds exist in tangible forms in respect of Coolbay. In the circumstances, a full provision has been made for the sum of US$17,8 million in respect of the capital and interest. Confirmation has been received by the external auditors that the US$4,2 million held by Mentor is recoverable in a form other than cash. Satisfactory confirmation of the existence of the funds was provided by Coolbay and Mentor in the prior year. The US$22,0 million is the subject of current litigation in South Africa for the recovery of the full value and the Directors are pursuing all means to minimise the risk of permanent loss in value to shareholders. So far as concerns the Mentor funds, the litigation claim is on the basis of recoverability of the cash on terms that are acceptable to the Directors.

The measurement of goodwill, which originates from the merger last year and the acquisition of the Cape Grace, has been reviewed at 31 December 2008. At 31 December 2007 the carrying value was US$131,3 million being the translation from Zimbabwe dollars at the exchange rate at 31 December 2007. During 2008 the economy became stressed and the view taken at the time of the merger has changed. These factors together with the current uncertainty about the future, makes it necessary to examine the carrying value of this intangible asset. Accordingly, an impairment of US$127,2 million has been made. The remaining balance of US$4,1 million is in respect of the Cape Grace Hotel, which was impaired from US$9,4 million.

KML is now integrated as one entity with broad operating policies, standards, structures and systems. Synergistic benefits were obtained in pooled treasury services, financial structures and shared technologies and infrastructure. A job grading exercise throughout the Group has now been completed. In addition, merged facilities with critical mass in the pension fund and private medical aid services have been obtained. The Group's balance sheet strength and enhanced investor relations profile enabled borrowing facilities with local banks and international development financial institutions throughout the year. KML successfully re-negotiated a term sheet for the Group's US$34 million resources at the Reserve Bank of Zimbabwe (RBZ) and capitalised the Zimbabwe financial services subsidiaries to the tune of US$22,5 million. Regrettably, the Group has not yet made any progress in accessing a further US22,0 million which was lodged with Coolbay and Mentor, at significant opportunity cost.

Kingdom Financial Holdings Limited

Operating profit decreased from US$8,2 million in 2007 to US$6,5 million in 2008.
Customer deposits increased by 71% from US$10,2 million in 2007 to US$17,4 million in 2008.
Loans and advances as a percentage of total assets were constant for both years at 8%.
Non-interest income to total income increased from 10% in 2007 to 60% in 2008.
Prior to mid November 2008 the Group had achieved organic growth across core businesses.
For November and December 2008 the Group did not record any meaningful income from its core business.
The Group met the new Reserve Bank of Zimbabwe (RBZ) capitalisation rules with the transfer of US$22,5 million of KML's funds held with the RBZ.
Kingdom Bank Limited successfully upgraded its Globus Banking system and introduced POS devices in some major retail outlets in Zimbabwe with encouraging results.

Meikles Africa Hotels

Operating profit was US$5,4 million (2007 - US$7,7 million).
Group occupancy decreased from 43% in 2007 to 41% with the major decrease coming from Victoria Falls Hotel (45% to 38%).
Victoria Falls Hotel was affected by the global economic slowdown, particularly in the USA and travel warnings to Zimbabwe.
Meikles Hotel was slightly up (30% to 31%) on prior year and the Cape Grace Hotel slightly down (74% to 70%).
Presidential and Government elections during the year contributed to Meikles Hotel maintaining prior year occupancies.
The refashioning programme of all rooms and public areas at the Cape Grace was completed at a cost of US$6 million (R60 million). Occupancy was affected adversely during the programme.

Tanganda Tea Company Limited

Operating profit was US$4,2 million compared to US$7,2 million for the prior year.
Bulk tea production of 5124 tonnes was 23% down on the prior year. Poor rains in November and December 2008 affected production at the beginning of the season.
Export Sales of bulk tea were 4233 tonnes for 2008 compared with 4162 tonnes for 2007.
Domestic beverage volumes were 1159 tonnes compared to 2363 tonnes last year, largely a result of the change in trading terms between suppliers and retailers, as well as erratic supplies of packaging material. Export sales of 209 tonnes were in line with last year.
The capital expenditure programme totalling US$1,5m for mechanisation of plucking was completed during the year and this is beginning to improve yields.
Both the quality and the prices of tea have improved in 2009.

Retail

The division recorded an operating loss of US$5,1 million compared with a loss of US$3,9 million for 2007.
Lack of stock and the inability to source working capital cost-effectively severely constrained cash flows and profitability during the year.
Terms of trade moved more to consignment stock transactions particularly for Department Stores.
Security of tenure in key branches was maintained whilst three leases expired and were not renewed.
Department Stores closed seven marginal Meikles and Clicks branches countrywide and opened a Barbours branch at Borrowdale Village, while two new TM Supermarkets, in Bulawayo and Victoria Falls respectively, will be opened in the second quarter of 2009.
Due to lack of access to some of the Group's own capital of US$22,0 million, the retail division officially commenced trading in forex on 1 December 2008 with meagre forex resources.
On 30 December 2008, the flagship and restocked TM Supermarket at Borrowdale Village experienced a fire which destroyed the electrical wiring and parts of the roof of the building. Very little stock was lost but trading ceased from that outlet. Repairs are estimated at about US$500 000 and the branch will be restored within the next couple of months.
Since the introduction of FOLIWARS licences in October 2008, with effect from 1 December 2008 Pick 'n Pay have supported TM Supermarkets with stock.
TM Supermarkets (Pvt) Ltd was specified by the Minister of State on 16 January 2009 following investigations into the affairs of KML. KML has appealed against this specification.
POS services linking with Kingdom Bank have been installed in major branches.
The short term emphasis is on stock holding that will turn quickly.

Cotton Printers

Operating profit was US$334 000 compared with a profit of US$1,2 million for the prior year.
The focus has been on yarn production with the weaving factory non-operational. The future viability of weaving is under review.
Yarn production did not meet targets because of erratic lint supply and difficulties in meeting seasonal funding requirements. However, the position has improved in the new financial year.
Facilities of US$1 million are being sought to restore machinery and increase capacity to supply regional markets.

Board, Shareholder and Litigation issues

Shareholders will recall that on 22 September 2008, a notice ('the Notice') requesting an Extraordinary General Meeting (EGM) was issued by the 'convening Shareholders' led by the former Chairman, Mr J. R. T. Moxon, who sought to reconstitute the Board of Directors of KML.

Prior to the issuance of the Notice, in March 2008 a call and put option agreement ('the option agreement') for the sale of the Cape Grace Hotel was entered into between KML and Cape Grace Hotel Limited (CGHL), (a wholly owned KML subsidiary incorporated in the British Virgin Islands, which in turn wholly owns the South African Cape Grace Group of Companies, including the Cape Grace Hotel) on the one hand, and Mentor Africa Limited, on the other. In August 2008 'long form' agreements of this option agreement were prepared. Also, in August 2008, without the authority of the Board, Mr Moxon signed these 'long form' agreements. The former Chairman then sought to have his action ratified by the Board as he believed it was in the interests of the Group, since he felt that there was a breakdown in trust between management and Mentor Africa on the transaction. He was also concerned that Mentor Africa might litigate if the agreements were not ratified. He believed it was not in the interests of the Group to be involved in any litigation as it could potentially lead to financial prejudice and a loss of reputation to the Group. The Board did not ratify the signing of the 'long form' agreements as it was of the view that certain issues which included an independent valuation of the Cape Grace Hotel and compliance with all regulatory issues, including RBZ exchange control and Zimbabwe Stock Exchange (ZSE) requirements, had to be addressed and resolved first before there could be ratification.

It has subsequently become clear that central to the alleged discord in the Notice to Shareholders is the failure by the Board to ratify Mr Moxon's signing of the 'long form' agreements and the request by management for the repayment of the monies deposited with Mentor. Management had requested the repayment of these funds in July 2008, as the Group urgently needed the funds to recapitalise its businesses, particularly the restocking of its retail operations. Such request came after the Group was unable to raise US Dollar finance for operations from a private placement with international investors, due to the then political and economic uncertainty in Zimbabwe. Such private placement was attempted both before and after the 2008 March elections.

Following the issuance of the Notice, a Board Meeting was convened at the end of September 2008, to discuss the Company's response to the convening shareholders notice for the EGM, as Mr Moxon had given the Board no prior notice that the Notice was to be issued. At such meeting Mr Moxon was appraised of the potentially cataclysmic consequences if he proceeded with the action detailed in the Notice and instead, he was urged to negotiate an amicable settlement with the parties he was at loggerheads with, principally the Group Chief Executive Officer (GCEO) Mr N. M. K. Chanakira. At this meeting a motion was moved for Mr Moxon to step down as Chairman and which motion was passed. The Board members then nominated me as Acting Chairman until the EGM. At the Board meeting held on 1 November 2008, my mandate was extended.

Following this very public spat, Mr Chanakira saw fit to make a formal report of externalisation of funds and exchange control issues concerning Mr Moxon and Coolbay Investments (Pty) Ltd. Subsequently a court action was instituted in the High Court by African First Renaissance Corporation Ltd against both the convening shareholders and KML. After hearing the matter, the High Court ruled that the Notice issued by the Convening Shareholders was not done in accordance with the law and accordingly was of no force or effect. In the circumstances the EGM was not held. The convening shareholders for the EGM have lodged an appeal against this ruling which is still to be heard by the Courts.

Numerous Board and informal meetings have been held since October 2008 in an endeavour to resolve the impasse between the former Chairman and the GCEO and their respective shareholder groups. Through time, it became increasingly clear that there were material issues surrounding the Group's funds 'earmarked for investment', which management and the Board were not aware of together with issues of detail in respect of the Cape Grace transaction which the Board believed were not in the best interests of KML and which came to the Board's attention subsequent to the signing of the option agreement.

The Board has focused its attention on running the business affairs of KML in the best interests of all shareholders as a bank holding company and listed entity.

KML has been the subject of intensive investigations by the RBZ, Zimbabwe Republic Police (ZRP), and enquiries from the Anti-Corruption Commission, Ministry of Industry and International Trade and the Ministry of Indigenisation. It is appreciated that the longer they drag on the more difficult it will become for all shareholders to maintain value and for stakeholder relationships to continue with the business confidence that has existed. Efforts continue to try and resolve the issues.

Audit Opinion on Statutory Financial Statements

Reference is made above to the auditors' opinion on the statutory financial statements because of the current problems in the accounting environment. In addition to these, there are specific issues relating to the Group which the auditors have been unable to satisfy themselves on as to fair presentation.

At the balance sheet date material amounts receivable from related parties and the shareholding of the Cape Grace Hotel were the subject of dispute or litigation. Provision has been made in respect of the uncertainty of the carrying value of any investment purportedly made from funds, that were held by Coolbay, but confirmation has been received that the funds held by Mentor are recoverable in a form other than cash, this itself being the subject of litigation between KML and Mentor. The option agreement for the sale of Cape Grace Hotel could also be the subject of litigation. KML has separately disclosed the carrying value of the Cape Grace Hotel as a disposal group.

The auditors of Cape Grace Investments (Pty) Ltd (CGI), which is associated with the Cape Grace Hotel and which ultimately owns the rights to the head lease of the Cape Grace, will issue a qualified opinion on CGI as shares representing 26% of its issued share capital were allotted to a third party, the Prelude Trust, in February 2008, in contravention of the South African Companies Act as the consideration price of R13 million has not been paid. This matter is connected with the alleged Cape Grace Hotel transaction.

Because the satisfactory conclusion of the matters referred to above is uncertain, the auditors have not been able to obtain sufficient audit evidence to provide a basis for an audit opinion. Accordingly, they do not express an opinion on the financial statements.

Way forward

Although the plans for the future of the Group depend to a major extent on the recovery of foreign funds and the resolution of the current shareholder dispute, operations on the ground will continue in order to enhance the Group's viability and sustainability.
The financial services Group is adapting to changing markets which include leveraging off foreign currency capacity in both the private and public sectors.
Our Hotel Group is gearing itself for an upturn in the hospitality industry through product enhancement for its local operations.
The agriculture division will see improved production from the mechanisation programme and will continue to examine the potential of agricultural projects in the region.
On the trading front in Zimbabwe, the transitional period of the mix in local currency and US Dollars ceased from 1 February 2009 with full Dollarisation and henceforth, the Group will focus on US Dollar accounting.
KML's retail division is expected to continue to regain lost ground through revamped business strategies, a new executive team, better terms of credit and improved output from local manufacturers.
The textiles business will focus on regional yarn supply as demand for its product increases.

The Group has the backing of an asset base to implement these strategies and to continue as a going concern, but all these plans are dependent on a return to a normal business environment, which includes a resolution of the previously mentioned issues.

Conclusion

The trading environment has stretched the loyalty and resilience of management and staff to extreme limits. During the year Michael Wilson and Dave Mills retired as Directors. The Board thanks them for their contributions. I thank my fellow Directors for their respective valuable contributions and sound advice. I wish to pay particular tribute to all management and staff who have performed admirably, in spite of the odds which were heavily stacked against them.

M. A. Masunda

CHAIRMAN

27 March 2009

CONSOLIDATED INCOME STATEMENT - ZIMBABWE DOLLARS

For the year ended 31 December 2008


(all amounts in quintillions of Zimbabwe dollars)
				31 December 2008


Revenue				237,378
Operating profit before exchange losses				982,423
Exchange losses on net current assets				(1,944)
Operating profit				980,479
Investment income				11,967
Finance costs				(1,318)
Net exchange gains on foreign funds				1,185,308
Provision for funds earmarked for investment				(623,877)
Share of profit of associate				7,896
Profit before taxation				1,560,455

Income tax expense				(284,708)

Profit for the year				1,275,747
Attributable to:
Equity holders of the parent				1,279,000
Minority interest				(3,253)
				1,275,747

Basic earnings per share				0.01
IIMR Headline earnings per share				0.01
Weighted average number of shares				243,857,762

CONSOLIDATED BALANCE SHEET - ZIMBABWE DOLLARS

At 31 December 2008


(all amounts in quintillions of Zimbabwe dollars)
					31 December 2008

ASSETS
Non-current assets
Property, plant and equipment - banking					47
Property, plant and equipment - non -banking					1,148
Investment property - banking					10,028
Biological assets					43,506
Investment in associate - banking					35,908
Financial assets - non-banking					154,729
Other intangible assets					1
Balances with the Reserve Bank of Zimbabwe - non-banking					418,609
Current assets - banking
Balances with banks and cash					455,801
Balances with the Reserve Bank of Zimbabwe					832,322
Financial assets at fair value through profit and loss					1,412
Advances and other accounts					183,168
Available for sale					4,252
Current assets - non-banking					259,788
Disposal group assets					810,649
Total assets					3,211,368

EQUITY AND LIABILITIES
Attributable to equity holders of the parent					1,512,168
Amounts in equity relating to disposal group					217,454
Minority interest					(3,253)
Deferred tax					249,729
Other non-current liabilities					7,426
Current liabilities - banking
Financial liabilities at fair value through profit and loss					15,484
Customer deposits					609,864
Other current liabilities					29,142
Current liabilities- non-banking					13,409
Liabilities directly associated with disposal group					559,945
Total equity and liabilities					3,211,368

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - ZIMBABWE DOLLARS

For the year ended 31 December 2008

(all amounts in quintillions of Zimbabwe dollars)
							31 December 2008

Profit for the year							1,279,000
Translation of foreign entity							447,684
Available for sale							2,938
Attributable to equity holders of parent							1,729,622
Minorities							(3,253)
Shareholders' equity at the end of the year							1,726,369

CONSOLIDATED CASH FLOW STATEMENT- ZIMBABWE DOLLARS

For the year ended 31 December 2008



(all amounts in quintillions of Zimbabwe dollars)
				31 December 2008
Cash flows from operating activities
Profit before taxation				1,560,455
Adjustments for:
Non-operating cash flow				(1,339,196)
Non-cash items				(10,649)
Operating cash flow before working capital changes				210,610
Working capital changes				(207,307)
Cash generated from operations				3,303
Income taxes paid				(4,181)
Net cash used in operating activities				(878)

Net cash used in investing activities				(250,347)

Net cash generated from financing activities				62,221

Net decrease in cash and cash equivalents				(189,004)

Cash and cash equivalents at the beginning of the year				-
Net effect of exchange rate changes on cash and cash equivalents				2,942,039

Translation of foreign entity				(990,964)

Cash and cash equivalents at the end of the year				1,762,071

SEGMENT INFORMATION - ZIMBABWE DOLLARS

For the year ended 31 December 2008


(all amounts in quintillions of Zimbabwe dollars)
				31 December 2008
Revenue
Banking				10,363
Retail				67,450
Hotels				130,247
Agriculture				28,672
Textiles				646
				237,378
Operating profit
Banking				911,509
Retail				5,583
Hotels				21,899
Agriculture				65,740
Textiles				(1,315)
Corporate				(22,937)
				980,479
Segment assets
Banking				1,814,527
Retail				80,658
Hotels				925,094
Agriculture				85,585
Textiles				5,574
Corporate				299,930
				3,211,368

SUPPLEMENTARY INFORMATION For the year ended 31 December 2008
(all amounts in quintillions of Zimbabwe dollars)
				31 December 2008

Capital expenditure				256,995
Capital commitments authorised but not yet contracted for				553,689
Depreciation and impairment				8,972
Borrowings				149,548

UNAUDITED CONSOLIDATED INCOME STATEMENT - US DOLLARS

For the year ended 31 December 2008

FOR CONVENIENCE PURPOSES ONLY


(all amounts in full)
	31 December 2008	31 December 2007
	USD	USD

Revenue	55,762,864	90,779,848
Operating profit	10,225,863	20,577,562
Investment income	6,795,701	36,114
Finance costs	(1,302,042)	(9,266)
Exchange gains and translation adjustments	2,119,531	6,462,838
Increase in value of quoted investments	5,778	280,995
Share of profit of associate	245,099	10,493
Goodwill impairment	(127,178,851)	-
Provision for funds earmarked for investment	(17,825,063)	-
(Loss) / profit before taxation	(126,913,984)	27,358,736

Income tax (expense)/credit	(742,192)	247,753

(Loss) / profit for the year	(127,656,176)	27,606,489
Attributable to:
Equity holders of the parent	(127,484,452)	27,670,883
Minority interest	(171,724)	(64,394)
	(127,656,176)	27,606,489

Basic (loss) / earnings per share (cents)	(52.28)	11.42
IIMR Headline earnings per share (cents)	7.28	11.42
Weighted average number of shares	243,857,762	242,301,554

UNAUDITED CONSOLIDATED BALANCE SHEET - US DOLLARS

At 31 December 2008

FOR CONVENIENCE PURPOSES ONLY


(all amounts in full)
	31 December 2008	31 December 2007
	USD	USD
ASSETS
Non-current assets
Property, plant and equipment - banking	11,237,521	2,710,649
Property, plant and equipment - non-banking	70,245,424	60,402,159
Investment property	286,500	703,615
Biological assets	4,857,050	3,357,438
Investment in associate - banking	1,025,927	91,047
Financial assets - non-banking	4,404,946	21,513,062
Goodwill	-	131,270,859
Other intangible assets	268,579	205,689
Balances with the Reserve Bank of Zimbabwe - non-banking	11,960,252	29,951,676
Current assets - banking
Balances with banks and cash	13,022,886	4,742,682
Balances with the Reserve Bank of Zimbabwe	23,780,635	-
Financial assets at fair value through profit and loss	631,381	9,113,160
Advances and other accounts	5,233,368	3,317,635
Available for sale	121,508	-
Acceptances	-	13,452
Current assets non-banking	10,881,254	17,779,552
Disposal group assets
Other assets	25,748,996	-
Goodwill	4,092,008	-
Total assets	187,798,235	285,172,675

EQUITY AND LIABILITIES
Attributable to equity holders of the parent	123,678,525	234,718,187
Amounts in equity relating to disposal group	6,384,502	-
Minority interest	1,661,070	459,612
Deferred tax	20,546,415	16,401,348
Other non-current liabilities	212,184	10,465,772
Current liabilities - banking
Customer deposits	17,424,673	10,217,658
Other current liabilities	1,246,523	2,330,551
Current liabilities- non-banking	817,455	10,579,547
Liabilities directly associated with disposal group	15,826,888	-
Total equity and liabilities	187,798,235	285,172,675

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - US DOLLARS

For the year ended 31 December 2008

FOR CONVENIENCE PURPOSES ONLY

(all amounts in full)
							31 December 2008
							USD

Loss for the year attributable to equity holders of the parent							(127,484,452)
Translation of foreign entity							(1,244,138)
Property revaluation							24,156,867
Shares issued to staff share purchase scheme							781,803
Scrip dividend - 2008							4,494
Available for sale							(849,884)
Other reserves							(19,850)
Attributable to equity holders of parent							(104,655,160)
Minorities							1,201,458
Shareholders' equity at the beginning of the year							235,177,799
Shareholders' equity at the end of the year							131,724,097

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT - US DOLLARS

For the year ended 31 December 2008

FOR CONVENIENCE PURPOSES ONLY


(all amounts in full)
			31 December 2008
			USD
Cash flows from operating activities
Loss before taxation			(126,913,984)
Adjustments for:
Non-operating cash flow			(5,341,818)
Non-cash items			136,135,118
Operating cash flow before working capital changes			3,879,316
Working capital changes			9,193,391
Cash generated from operations			13,072,707
Income taxes paid			(276,880)
Net cash generated from operating activities			12,795,827

Net cash used in investing activities			(6,852,241)

Net cash used in financing activities			(3,085,228)

Net increase in cash and cash equivalents			2,858,358

Cash and cash equivalents at the beginning of the year			44,935,726

Translation of foreign entity			2,604,903

Cash and cash equivalents at the end of the year			50,398,987

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT - US DOLLARS

For the year ended 31 December 2008

FOR CONVENIENCE PURPOSES ONLY

	ALTERNATIVE 1
(all amounts in full)
		31 December 2008
		USD
Cash flows from operating activities
Loss before taxation		(126,913,984)
Adjustments for:
Non-operating cash flow		(5,341,818)
Non-cash items		136,135,118
Operating cash flow before working capital changes		3,879,316
Working capital changes		9,193,391
Cash generated from operations		13,072,707
Income taxes paid		(276,880)
Net cash generated from operating activities		12,795,827

Net cash used in investing activities		(11,360,818)

Net cash used in financing activities		(3,085,229)

Net decrease in cash and cash equivalents		(1,650,220)

Cash and cash equivalents at the beginning of the year		14,984,050
Transfer from non-current bank balances		22,500,000
Translation of foreign entity		2,604,903

Cash and cash equivalents at the end of the year		38,438,733

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT - US DOLLARS

For the year ended 31 December 2008

FOR CONVENIENCE PURPOSES ONLY

	ALTERNATIVE 2
(all amounts in full)
		31 December 2008
		USD
Cash flows from operating activities
Loss before taxation		(126,913,984)
Adjustments for:
Non-operating cash flow		(5,341,818)
Non-cash items		136,135,118
Operating cash flow before working capital changes		3,879,316
Working capital changes		9,193,391
Cash generated from operations		13,072,707
Income taxes paid		(276,880)
Net cash generated from operating activities		12,795,827

Net cash used in investing activities		(11,360,818)

Net cash used in financing activities		(3,085,229)

Net increase in cash and cash equivalents		(1,650,220)

Cash and cash equivalents at the beginning of the year		37,484,050

Translation of foreign entity		2,604,903

Cash and cash equivalents at the end of the year		38,438,733

UNAUDITED CONSOLIDATED SEGMENT INFORMATION - US DOLLARS

At 31 December 2008

FOR CONVENIENCE PURPOSES ONLY


(all amounts in full)
	31 December 2008	31 December 2007
	USD	USD
Revenue
Banking	4,600,281	13,503,819
Retail	19,902,306	34,877,191
Hotels	22,613,299	24,176,891
Agriculture	8,014,138	11,234,910
Textiles	632,840	6,987,037
	55,762,864	90,779,848
Operating profit
Banking	6,539,409	8,247,754
Retail	(5,076,823)	(3,944,465)
Hotels	5,361,645	7,736,510
Agriculture	4,159,407	7,247,194
Textiles	334,071	1,262,749
Corporate	(1,091,846)	27,820
	10,225,863	20,577,562
Segments assets
Banking	56,289,778	20,692,240
Retail	37,474,391	30,545,047
Hotels	61,793,783	53,862,794
Agriculture	18,049,357	15,064,974
Textiles	5,529,084	4,771,901
Corporate	8,661,842	160,235,719
	187,798,235	285,172,675

UNAUDITED SUPPLEMENTARY INFORMATION - US DOLLARS

FOR CONVENIENCE PURPOSES ONLY


(all amounts in full)
	31 December 2008
	USD

Capital expenditure	12,124,210
Capital commitments authorised but not yet contracted for	15,819,687
Depreciation and impairment	130,501,214
Borrowings	10,868,740

Notes to the consolidated financial statements

1. Accounting policies

Accounting policies for the statutory financial statements are consistent with those used in the previous year. In the case of the US Dollar financial statements property has been adjusted to market value.

2. Comparatives

No comparatives are reflected for the Zimbabwe dollar figures as the 31 December 2007 figures are now insignificant due to currency revaluations.

The US Dollar comparative income statement includes pre-merger results for all entities to reflect a more meaningful comparison of operations.

3. IAS 29 - Financial Reporting in Hyperinflationary Economies

As at the date of this publication, the Consumer Price Indices from August 2008 have not been published. Therefore IAS 29 restated financial statements could not be produced and the audit report will be qualified for this non-compliance.

4. IAS 21 - The Effects of Changes in Foreign Exchange Rates

All foreign currency denominated transactions carried out during the year were translated to the reporting currency (Zimbabwe Dollar) by applying the average of the lower of the Old Mutual Implied Rate (OMIR) and the Real Time Gross Settlement System Rate (RTGS Rate) in the month in which the transactions occurred. From 17 November 2008 until 31 December 2008, the OMIR was no longer reflective of fair value as there was no actual trade on the Zimbabwe Stock Exchange and therefore the RTGS rate was adopted as the fair rate for translation purposes from that date. The average monthly rates varied significantly and the closing rate was $35 quadrillion to 1 USD.

5. Disposal group

Comprising:

	ZWD Quintillions 31 December 2008	USD 31 December 2008
Disposal group assets
Cape Grace Hotel	777,399	26,303,398
Cotton Printers Weaving Division property, plant and equipment	-	2,587,606
Kingdom Financial Holdings property	33,250	950,000
	810,649	29,841,004
Amounts in equity relating to disposal group
Cape Grace Hotel	217,454	6,384,502
	217,454	6,384,502

Liabilities directly associated with disposal group
Cape Grace Hotel	559,945	15,826,888
	559,945	15,826,888