Interim Results

Meikles Africa Ld 22 November 2004 Meikles Africa Limited UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004 Financial Highlights - Financial Highlights - Inflation Adjusted Historical Cost • Net turnover of $761.0 billion, • Net turnover of $657.1 billion, (2003 $644.8 billion) (2003 $126.5 billion) • Operating loss of $64.1 billion, • Operating profit of $27.5 billion, (2003 $47.9 billion) (2003 $19.3 billion) • Exchange loss of $16 billion, • Exchange gain of $58.6 billion, (2003 gain of $291.1 billion) (2003 $59.5 billion) • Share of associates $22.1 billion • Share of associates of $22.1 (2003 $21.5 billion) billion (2003 $3.3 billion) • Attributable loss of $57.5 billion, • Attributable profit of $75.3 (2003 $16.1 billion) billion, (2003 $83.6 billion) • Headline loss per share of $337.16 • Headline profit per share of (2003 $36.85) $458.50 (2003 - $512.85) • Interim dividend of $50.00 • Interim dividend of $50.00 (2003 $87.90) (2003 $25.00) • Net cash and cash equivalents of • Net cash and cash equivalents of $138 billion, (2003 $53 billion) $138 billion (2003 $15 billion) ________________________________________________________________________________ Average year on year inflation for the period - 355% Year on year inflation at 30 September 2004 - 251% Movement in foreign exchange rates since 31st March 2004 - 28% Increase in consumer price index since 31st March 2004 - 48% ________________________________________________________________________________ CHAIRMAN'S STATEMENT Unless otherwise stated, comments are in respect of historical cost figures. Turnover for the half year to 30 September 2004 was $657.1 billion, an increase of 420% against average inflation for the period of 355%. Attributable profit was $75.3 billion compared to $83.6 billion last year. Factors affecting the operating results were reduced gross margins as inflation dropped, and the continuing rise above inflation of operating expenses such as utilities and wages. Interest rates remained high and the Supermarkets and Retail division focused on improving liquidity by reducing stock levels. The managed exchange rate has resulted in lower than anticipated exchange gains on the Group's foreign assets and has reduced turnover. TM SUPERMARKETS Net turnover in TM increased by 480% from $89.2 billion to $518.1 billion. The impact of shrinkage, lower inflation and sales mix have combined to reduce margins. Lower disposable income has increased demand for basic commodities such as sugar, mealie meal and cooking oil and this has resulted in lower margins, although better supply of these products has maintained sales growth. There has been real growth in bakery turnover although the margin has been affected by a move away from confectionery products to the basic loaf which has been maintained at a competitive price. Despite these factors, TM turned in a good performance at the operating profit level compared to the previous year. More effective working capital management has resulted in a substantial improvement in interest income. A major refurbishment at Avondale TM will be finished by the end of November, in time for Christmas. Further refurbishments will be undertaken during the rest of the year. RETAIL DIVISION Net turnover increased by 316% from $22.8 billion to $94.9 billion. Gross margins have been affected by the successful clearance sales which were necessary to reduce stock levels and improve liquidity. Stocks are now at planned levels and ranges are in place for Christmas. The division has concentrated on cutting costs, improving procurement and adjusting to higher interest rates. The credit operation of the division has been well managed, and Meikles Financial Services has made a significant contribution to profits. HOTEL DIVISION Zimbabwe Although Zimbabwe tourism and business arrivals continue to suffer from the poor image of the country, both hotels have remained cash positive and made a contribution to profits during a quiet first half of the year. Occupancies have averaged 21.6% for the period but have shown signs of improvement from August. South Africa The Cape Grace has achieved turnover growth in rand terms over the same period last year reflecting steady occupancies and a higher room rate despite the strong rand. The hotel continues to achieve the highest average room rate and the highest revenue per available room in the Cape, and has won further awards this half year both for the hotel itself and for 'one.waterfront', the hotel restaurant. Forward bookings for the season are strong and should result in a good profit contribution for the year. SOCIAL RESPONSIBILITY The Group has acknowledged its social responsibility to the community by making donations of food vouchers and cash to the value of $300 million in the 6 months under review, with particular focus on old age homes. RESULTS - INFLATION ADJUSTED The impact of the Reserve Bank of Zimbabwe monetary policy is clearly noticed in the inflation adjusted accounts. One of the objectives of the policy is to reduce inflation and interest rates, and to stabilise exchange rates. Interest rates remain negative although the gap is closing, and the exchange rate movement is less than inflation. These factors distort the presentation of the inflation adjusted figures and reflect the difficulties being experienced by exporters. The Group falls into this category of business through export earnings from hotel operations and its foreign denominated investments. STRATEGY The proposed merger between Rebserve and Mvela Holdings in South Africa is still subject to the satisfactory conclusion of various conditions precedent. Once these issues have been resolved, we will be in a better position to determine our future participation in New Mvela. INTERIM DIVIDEND ANNOUNCEMENT On the 18 November 2004, the Board approved an interim dividend Number 70 of $50.00 per share on 163,656,787 shares payable to members registered in the books of the Company at the close of business on 10th December 2004. The Transfer Books and Register of Members will be closed from 13th December 2004 to 24th December 2004. Dividend cheques will be mailed to shareholders on or about 28th December 2004. 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 18 November 2004 CONSOLIDATED INCOME STATEMENT For the six months ended 30 September 2004 INFLATION ADJUSTED HISTORICAL COST Unaudited Unaudited Unaudited Unaudited (all amounts in millions of dollars) 6 months to 6 months to 6 months to 6 months to 30 Sept 30 Sept 30 Sept 30 Sept 2004 2003 2004 2003 ___________________________________________________________________________________________________________________ Turnover 761,035 644,834 657,081 126,468 Cost of sales (656,032) (556,210) (492,000) (82,938) ___________________________________________________________________________________________________________________ Gross profit 105,003 88,624 165,081 43,530 Operating expenses (173,675) (143,357) (141,528) (25,665) Other income 4,534 6,816 3,962 1,422 ___________________________________________________________________________________________________________________ Operating (loss) / profit (64,138) (47,917) 27,515 19,287 Net interest (22,793) (18,220) (18,610) (3,846) Net exchange (loss) / gain (15,957) 291,059 58,591 59,541 (Decrease) / increase in value of quoted (1,067) 51,749 9,842 19,466 investment Share of result of associates 22,064 21,471 22,126 3,260 Fair value adjustment on associate - (4,788) - - Net monetary gain / (loss) 29,603 (252,374) - - ___________________________________________________________________________________________________________________ (Loss) / profit before taxation (52,288) 40,980 99,464 97,708 Taxation (2,332) (47,295) (17,975) (11,972) ___________________________________________________________________________________________________________________ (Loss) / profit after taxation (54,620) (6,315) 81,489 85,736 Minority interest (2,902) (9,822) (6,140) (2,176) ___________________________________________________________________________________________________________________ Net (loss) / profit attributable to shareholders (57,522) (16,137) 75,349 83,560 Basic (loss) / earnings per share ($) (351.47) (99.14) 460.41 513.35 IIMR Headline (loss) / earnings per share ($) (337.16) (36.85) 458.50 512.85 CONSOLIDATED BALANCE SHEET At 30 September 2004 ________________________________________________________________________________________________________________ INFLATION ADJUSTED HISTORICAL COST Unaudited Audited Unaudited Audited at at at at 30 Sept 2004 31 March 2004 30 Sept 2004 31 March 2004 ________________________________________________________________________________________________________________ ASSETS Non-current assets 497,858 520,837 189,356 142,308 Current assets 527,482 606,879 512,494 388,622 ________________________________________________________________________________________________________________ Total assets 1,025,340 1,127,716 701,850 530,930 ________________________________________________________________________________________________________________ EQUITY AND LIABILITIES Capital and reserves 567,436 629,988 323,589 253,112 Minority interest 23,795 20,893 9,470 3,330 Non-current liabilities 253,312 298,085 187,994 153,754 Current liabilities 180,797 178,750 180,797 120,734 ________________________________________________________________________________________________________________ Total equity and liabilities 1,025,340 1,127,716 701,850 530,930 ________________________________________________________________________________________________________________ CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 September 2004 INFLATION ADJUSTED -Unaudited ___________________________________________________________________________________________________________________ Retained Non- Earnings and Share Share Distributable Shareholders Capital Premium Reserves for Dividend Total ___________________________________________________________________________________________________________________ Balance at 1 April 2004 5,472 389,254 213,978 21,284 629,988 Net loss attributable to - - - (57,522) (57,522) shareholders Translation of foreign entity - - - 4,660 - 4,660 Cape Grace Hotel Dividend for 2004 - final - - - (9,690) (9,690) ___________________________________________________________________________________________________________________ Balance at 30 September 2004 5,472 389,254 218,638 (45,928) 567,436 Balance at 1 April 2003 5,472 388,925 149,811 255,503 799,711 Net loss attributable to - - - (16,137) (16,137) shareholders Translation of foreign entity - - - 45,226 - 45,226 Cape Grace Hotel Share options exercised - 70 - - 70 Dividend for 2003 - final - - - (19,144) (19,144) ___________________________________________________________________________________________________________________ Balance at 30 September 2003 5,472 388,995 195,037 220,222 809,726 ___________________________________________________________________________________________________________________ HISTORICAL COST - Unaudited ___________________________________________________________________________________________________________________ Retained Non- Earnings and Share Share Distributable Shareholders Capital Premium Reserves for Dividend Total ___________________________________________________________________________________________________________________ Balance at 1 April 2004 16 5,356 16,853 230,887 253,112 Net profit attributable to - - - 75,349 75,349 shareholders Translation of foreign entity - - - 1,670 - 1,670 Cape Grace Hotel Dividend for 2004 - final - - - (6,542) (6,542) ___________________________________________________________________________________________________________________ 16 5,356 18,523 299,694 323,589 ___________________________________________________________________________________________________________________ Balance at 30 September 2004 Balance at 1 April 2003 16 5,305 505 51,112 56,938 Net profit attributable to - - - 83,560 83,560 shareholders Translation of foreign entity - - - 10,268 - 10,268 Cape Grace Hotel Share options exercised - 24 - - 24 Dividend for 2003 - final - - - (1,890) (1,890) ___________________________________________________________________________________________________________________ Balance at 30 September 2003 16 5,329 10,773 132,782 148,900 ___________________________________________________________________________________________________________________ CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 September 2004 ______________________________________________________________________________________________________________________ INFLATION ADJUSTED HISTORICAL COST Unaudited Unaudited Unaudited Unaudited 6 months to 6 months to 6 months to 6 months to 30 Sept 30 Sept 30 Sept 30 Sept 2004 2003 2004 2003 Cash flows from operating activities (Loss) / profit before taxation (52,288) 40,980 99,464 97,708 Adjustment for: Non-operating cash flow 38,605 (272,287) (40,396) (55,994) Non-cash items 644 (5,142) (30,565) (11,123) ______________________________________________________________________________________________________________________ Operating cash flow before working capital changes (13,039) (236,449) 28,503 30,591 Generated from /(used in) working capital changes 59,123 (31,001) 17,136 (13,176) ______________________________________________________________________________________________________________________ Operating cash flow 46,084 (267,450) 45,639 17,415 Income tax paid (7,983) (35,659) (836) (2,474) ______________________________________________________________________________________________________________________ Net cash generated from / (used in) operating 38,101 (303,109) 44,803 14,941 activities ______________________________________________________________________________________________________________________ Net cash used in investing activities (2,264) (12,177) (8,906) (2,470) ______________________________________________________________________________________________________________________ Net cash used in financing activities (77,499) (73,965) (35,770) (1,178) ______________________________________________________________________________________________________________________ Net effect of exchange rate changes on cash and cash equivalents (15,957) 291,059 58,591 59,541 ______________________________________________________________________________________________________________________ Net (decrease) / increase in cash and cash (57,619) (98,192) 58,718 70,834 equivalents Cash and cash equivalents at 31 March 2004 358,441 531,902 242,104 52,544 ______________________________________________________________________________________________________________________ Cash and cash equivalents at 30 September 2004 300,822 433,710 300,822 123,378 ______________________________________________________________________________________________________________________ ______________________________________________________________________________________________________________________ Turnover Hotel 51,674 72,865 44,117 14,425 Supermarkets 599,214 457,241 518,079 89,248 Retail 110,147 114,728 94,885 22,795 ______________________________________________________________________________________________________________________ 761,035 644,834 657,081 126,468 ______________________________________________________________________________________________________________________ Operating (loss) / profit Hotel (5,539) (6,955) 815 684 Supermarkets (14,575) (34,632) 20,119 11,620 Retail (36,923) (92) 8,023 7,196 Corporate and other (7,101) (6,238) (1,442) (213) ______________________________________________________________________________________________________________________ (64,138) (47,917) 27,515 19,287 ______________________________________________________________________________________________________________________ Total assets Hotel 295,160 571,600 145,980 125,768 Supermarkets 227,283 236,955 161,309 43,376 Retail 209,237 276,239 123,806 46,118 Corporate and other 293,660 477,134 270,755 117,303 ______________________________________________________________________________________________________________________ 1,025,340 1,561,928 701,850 332,565 ______________________________________________________________________________________________________________________ SUPLEMENTARY INFORMATION ______________________________________________________________________________________________________________________ Capital expenditure 7,225 31,856 6,594 5,275 Depreciation 8,727 13,963 4,263 1,413 Accounting policies The accounting policies are the same as those used in preparing the 31st March 2004 annual financial statements. Note to inflation adjusted financial statements The consumer price indices used to restate the financial statements at 30 September 2004 are as follows: 30 September 2003 13,099.4 31 March 2004 31,102.7 30 September 2004 46,048.2 For further information contact either: Zimbabwe Christopher Parvin +263-4-252068/78 Roy Franklin +263-4-252068/78 Bryan Thorn +263-4-252068/78 United Kingdom Corinna Dorward +44-20-7-4572020 Directors: JRT Moxon (Chairman), ACL Parvin (Chief Executive) MA Masunda , DE Stephens, CB Thorn, , MS Wilson Website address http://www.meiklesafrica.com -------------------------------------------------------------------------------- This information is provided by RNS The company news service from the London Stock Exchange

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