Interim Results

Meikles Africa Ld 23 November 2005 UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 Financial Highlights-Inflation Adjusted Financial Highlights-Historical Cost • Net turnover of $4,213.2 billion, • Net turnover of $2,522.1 billion, (2004 - $3,499.6 billion) (2004 - $657.1 billion) • Operating profit after net • Operating profit of $354 billion, monetary gain of $531.5 billion, (2004 - $27.5 billion) (2004 - loss of $113.9 billion) • Exchange gain of $279.6 billion, • Exchange gain of $835.6 billion, (2004 - exchange loss $73.4 billion) (2004 - $58.6 billion) • Attributable profit of $577 • Attributable profit of billion, (2004 - loss of $1,073.3billion, (2004 - $280.9 billion) $75.3 billion) • Headline earnings per share of • Headline profit per share $3,766.58 (2004 - loss of of $6,566.5 (2004 - $458.5) $1,650.40) • Interim dividend of $375 • Interim dividend of $375 (2004 - $230) (2004 - $50) Average year on year inflation for the period - 229% Year on year inflation at 30 th September 2005 - 360% Movement in foreign exchange rates since 31st March 2005 - 328% Increase in consumer price index since 31st March 2005 - 205% COMMENTARY The six months period under review has seen major fluctuations in the economic environment. Year on year inflation declined at the start and escalated sharply towards the end of the period, reaching 360% with an overall average of 229%. Exchange rate movement has not consistently kept pace with inflation and efforts to maintain real interest rates have created difficult conditions in which to sustain viable levels of working capital and investment in the commercial and industrial sector. Shortage of foreign currency continues to challenge businesses. Focus in our Group has been on maintaining margins, ensuring appropriate stock replacement and levels of investment in stock, controlling shrinkage in the retail divisions and managing working capital to avoid high interest costs on borrowings. Local borrowings were kept to a minimum resulting in net investment income of $32.2 billion. Turnover for the half year to 30 September 2005 was $2,522 billion, an increase of 284% on the same period in the prior year and against average inflation of 229%. In the retail sector, competitive pricing resulted in strong demand for merchandise and ensured a gain in market share. The hotel division benefited from the movement in exchange rates. Occupancies were up in the Cape Grace Hotel and Victoria Falls Hotel but slightly down in Meikles Hotel. Operating profit for the Group was $354 billion compared to $27.5 billion in the same period last year, a reflection of improved margins and cost control. Exchange gains of $835.6 billion and the increase in value of quoted investment of $115.7 billion are largely the result of the movement in the auction exchange rate from Z$6 082 to Z$26 000 against the US$. The introduction in October 2005 of an exchange rate mechanism more aligned to market forces will result in significant gains in the second half of the year. OPERATIONS TM Supermarkets • Net turnover increased by 303% from $518 billion to $2 086 billion. • Operating profit grew from $20.1 billion to $252.8 billion. • Shrinkage was controlled. • Gross margins were managed to ensure cash availability to replace stock at acceptable trading levels. • Investment income increased from $13.0 billion to $69.2 billion. • Profit after taxation increased from $24.5 billion to $222.5 billion. • A number of opportunities to open new branches are being pursued. Retail Division • Net turnover increased by 207% from $94.8 billion to $291.5 billion. • Shrinkage was controlled and gross margins were managed to ensure cash availability to replace stock. • Operating profit grew from $8.0 billion to $82.2 billion. • Stock turns remained constant at four times. • Finance cost reduced from $18.3 billion to $5.1 billion. Hotels • Turnover increased by 226% from $44.1 billion to $144 billion. • Operating profit increased from $815 million to $23.1 billion. • Operating profit before group charges for the Zimbabwe Hotels increased from $5.3 billion to $15.5 billion. • Operating profit before group charges for the Cape Grace Hotel was $15.3 billion compared to a profit of $0,2 billion. Investments Meikles Africa's investment in the Mvelaphanda Group has made a useful contribution to profit. Further initiatives have been identified and are being pursued. Outlook The economic environment will continue to present challenges. The two retail operations within Zimbabwe are well placed to adjust to market changes. The Zimbabwe Hotels are expected to continue to be net generators of cash and, in addition, the Victoria Falls Hotel is showing encouraging signs in occupancy growth. The Cape Grace Hotel should benefit from positive trends in the second half of the year, and the movement in exchange rate will significantly enhance its contribution to group profits. Kingdom Financial Holdings should produce improved results in the second half of the year. As the new exchange rate mechanism on the interbank market settles down and exchange rates move in line with inflation, the Group's foreign assets in terms of valuation and contribution to profit, will be significant. INTERIM DIVIDEND ANNOUNCEMENT On 22nd November 2005 the Board approved an interim dividend Number 72 of $375 per share on 163,656,787 shares payable to members registered in the books of the Company at the close of business on 9th December 2005. The transfer books and Register of Members will be closed from 12th December 2005 to 16th December 2005. Dividend cheques will be mailed to shareholders on or about 19th December 2005. 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 Secretary 22 November 2005. CONSOLIDATED INCOME STATEMENT For the six months ended 30 September 2005 HISTORICAL COST Unaudited Unaudited (all amounts in millions of dollars) 6 months to 6 months to 30 Sept 2005 30 Sept 2004 ________________________________________________________________________________________________________ Turnover 2,522,085 657,081 Cost of sales (1,726,011) (492,000) ________________________________________________________________________________________________________ Gross profit 796,074 165,081 Operating expenses (458,609) (141,528) Other income 16,536 3,962 ________________________________________________________________________________________________________ Operating profit 354,001 27,515 Investment income 60,751 14,635 Finance costs (28,501) (33,245) Net exchange gain 835,626 58,591 Increase in value of quoted investment 115,694 9,842 Net share of result of associates 11,857 14,733 Loss on sale of investments (504) - ________________________________________________________________________________________________________ Profit before taxation 1,348,924 92,071 Taxation (219,969) (10,582) ________________________________________________________________________________________________________ Profit after taxation 1,128,955 81,489 Minority interest (55,634) (6,140) ________________________________________________________________________________________________________ Net profit attributable to shareholders 1,073,321 75,349 ________________________________________________________________________________________________________ Basic earnings per share ($) 6,558.37 460.41 IIMR Headline earnings per share ($) 6,566.51 458.50 CONSOLIDATED BALANCE SHEET At 30 September 2005 HISTORICAL COST Unaudited Audited (all amounts in millions of dollars) At At 30 Sept 2005 31 March 2005 ________________________________________________________________________________________________________ ASSETS Non-current assets 1,150,707 301,048 Current assets 2,094,067 651,191 ________________________________________________________________________________________________________ Total assets 3,244,774 952,239 ________________________________________________________________________________________________________ EQUITY AND LIABILITIES Capital and reserves 1,645,632 419,842 Minority interest 22,572 8,663 Non-current liabilities 511,697 143,112 Current liabilities 1,064,873 380,622 ________________________________________________________________________________________________________ Total equity and liabilities 3,244,774 952,239 ________________________________________________________________________________________________________ CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 September 2005 HISTORICAL COST - Unaudited ______________________________________________________________________________________________________________________ Share Share Non- Retained Attributable Minority Total Capital Premium Distributable Earnings and To Parent Interest Equity Reserves Shareholders Shareholders For Dividend ______________________________________________________________________________________________________________________ Balance at 1 April 2005 16 5,356 16,690 397,780 419,842 8,663 428,505 Profit for the period - - - 1,073,321 1,073,321 55,634 1,128,955 Translation of foreign entity - Cape - - 178,630 - 178,630 - 178,630 Grace Hotel Share of reserves of associate - - (1,615) - (1,615) - (1,615) Dividend for 2005 - final - - - (24,546) (24,546) - (24,546) Interim dividend 2006 - - - - - (41,725) (41,725) ______________________________________________________________________________________________________________________ Balance at 30 September 2005 16 5,356 193,705 1,446,555 1,645,632 22,572 1,668,204 ______________________________________________________________________________________________________________________ Balance at 1 April 2004 16 5,356 16,853 230,887 253,112 3,330 256,442 Profit for the period - - - 75,349 75,349 6,140 81,489 Translation of foreign entity - Cape - - 1,670 - 1,670 - 1,670 Grace Hotel Dividend for 2004 - final - - - (6,542) (6,542) - (6,542) ______________________________________________________________________________________________________________________ Balance at 30 September 2004 16 5,356 18,523 299,694 323,589 9,470 333,059 ______________________________________________________________________________________________________________________ CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 September 2005 HISTORICAL COST Unaudited Unaudited (all amounts in millions of dollars) 6 months to 6 months to 30 Sept 2005 30 Sept 2004 _____________________________________________________________________________________________________ Cash flows from operating activities Profit before taxation 1,348,924 92,071 Adjustment for: Non-operating cash flow (879,732) (40,396) Non-cash items (106,970) (20,232) _____________________________________________________________________________________________________ Operating cash flow before working capital changes 362,222 31,443 (Used in) / generated from working capital changes (341,550) 17,136 _____________________________________________________________________________________________________ Operating cash flow 20,672 48,579 Income tax paid (21,003) (836) _____________________________________________________________________________________________________ Net cash (used in) / generated from operating (331) 47,743 activities _____________________________________________________________________________________________________ Net cash used in investing activities (93,154) (8,906) _____________________________________________________________________________________________________ Net cash generated from / (used in) financing 37,114 (35,770) activities _____________________________________________________________________________________________________ Net effect of exchange rate changes on cash and cash equivalents 835,626 58,591 Translation of foreign entity (105,373) (2,940) _____________________________________________________________________________________________________ Net increase in cash and cash equivalents 673,882 58,718 Cash and cash equivalents at 31 March 2005 376,150 242,104 _____________________________________________________________________________________________________ Cash and cash equivalents at 30 September 2005 1,050,032 300,822 _____________________________________________________________________________________________________ SEGMENT INFORMATION HISTORICAL COST Unaudited Unaudited (all amounts in millions of dollars) 6 months to 6 months to 30 Sept 2005 30 Sept 2004 _____________________________________________________________________________________________________ Turnover Hotels 144,032 44,117 Supermarkets 2,086,578 518,079 Retail 291,475 94,885 _____________________________________________________________________________________________________ 2,522,085 657,081 _____________________________________________________________________________________________________ Operating (loss)/ profit after net monetary gain Hotels 23,135 815 Supermarkets 252,775 20,119 Retail 82,173 8,023 Corporate and other (4,082) (1,442) _____________________________________________________________________________________________________ 354,001 27,515 _____________________________________________________________________________________________________ Total assets Hotels 713,611 145,980 Supermarkets 1,007,040 161,309 Retail 359,811 123,806 Corporate and other 1,164,312 270,755 _____________________________________________________________________________________________________ 3,244,774 701,850 _____________________________________________________________________________________________________ SUPPLEMENTARY INFORMATION _____________________________________________________________________________________________________ Capital expenditure 38,498 6,594 Depreciation 7,392 4,263 Capital commitments Authorised but not yet contracted for 75,801 12,742 CONSOLIDATED INCOME STATEMENT For the six months ended 30 September 2005 INFLATION ADJUSTED Unaudited Unaudited (all amounts in millions of dollars) 6 months to 6 months to 30 Sept 2005 30 Sept 2004 Restated _________________________________________________________________________________________________________ Turnover 4,213,191 3,499,597 Cost of sales (3,496,302) (3,016,744) _________________________________________________________________________________________________________ Gross profit 716,889 482,853 Operating expenses (791,146) (798,639) Other income 46,876 20,849 _________________________________________________________________________________________________________ Operating loss (27,381) (294,937) Net monetary gain 558,918 180,949 _________________________________________________________________________________________________________ Operating profit / (loss) after net monetary gain 531,537 (113,988) Investment income 94,957 78,344 Finance costs (49,844) (183,157) Net exchange gain / (loss) 279,616 (73,378) Increase / (decrease) in value of quoted investment 58,120 (4,907) Impairment of other investments (26,877) (40,586) Net share of result of associates (14,757) 45,304 Loss on sale of investments (22,900) - _________________________________________________________________________________________________________ Profit / (loss) before taxation 849,852 (292,368) Taxation (205,331) 24,832 _________________________________________________________________________________________________________ Profit / (loss) after taxation 644,521 (267,536) Minority interest (67,474) (13,345) _________________________________________________________________________________________________________ Net profit / (loss) attributable to shareholders 577,047 (280,881) _________________________________________________________________________________________________________ Basic earnings / (loss) per share ($) 3,525.95 (1,716.24) IIMR Headline earnings / (loss) per share ($) 3,766.58 (1,650.40) Net monetary gain Gross monetary loss (1,032,557) (89,832) Add: historic exchange gains restated 1,311,859 344,159 Transfer to net exchange gains 279,616 (73,378) _________________________________________________________________________________________________________ Net monetary gain 558,918 180,949 _________________________________________________________________________________________________________ CONSOLIDATED BALANCE SHEET At 30 September 2005 INFLATION ADJUSTED Unaudited Audited (all amounts in millions of dollars) At At 30 Sept 2005 31 March 2005 Restated ________________________________________________________________________________________________________ ASSETS Non-current assets 2,656,538 2,184,106 Current assets 2,310,673 2,046,614 ________________________________________________________________________________________________________ Total assets 4,967,211 4,230,720 ________________________________________________________________________________________________________ EQUITY AND LIABILITIES Capital and reserves 2,970,583 2,287,110 Minority interest 97,289 71,540 Non-current liabilities 834,466 713,685 Current liabilities 1,064,873 1,158,385 ________________________________________________________________________________________________________ Total equity and liabilities 4,967,211 4,230,720 ________________________________________________________________________________________________________ CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 September 2005 INFLATION ADJUSTED -Unaudited _______________________________________________________________________________________________________________________ Share Share Non- Retained Attributable Minority Total (all amounts in millions of dollars) Capital Premium Distributable Earnings and To Parent Interest Equity Reserves Shareholders Shareholders For Dividend _______________________________________________________________________________________________________________________ Balance at 1 April 2005 25,163 1,789,973 88,059 383,915 2,287,110 71,540 2,358,650 Profit for the period - - - 577,047 577,047 67,474 644,521 Translation of foreign entity - Cape - - 186,553 - 186,553 - 186,553 Grace Hotel Share of reserves of associate - - 2,088 - 2,088 - 2,088 Share of prior year adjustment of - - - (7,504) (7,504) - (7,504) associate's retained income Dividend for 2005 - final - - - (74,711) (74,711) - (74,711) Interim Dividend 2006 - - - - - (41,725) (41,725) _______________________________________________________________________________________________________________________ Balance at 30 September 2005 25,163 1,789,973 276,700 878,747 2,970,583 97,289 3,067,872 _______________________________________________________________________________________________________________________ Balance at 1 April 2004 - restated 25,163 1,789,973 354,336 727,509 2,896,981 96,076 2,993,057 (Loss) / profit for the period - - - - (280,881) (280,881) 13,345 (267,536) restated Translation of foreign entity - Cape - - 37,797 - 37,797 - 37,797 Grace Hotel Dividend for 2004 - final - - - (44,559) (44,559) - (44,559) _______________________________________________________________________________________________________________________ Balance at 30 September 2004 - 25,163 1,789,973 392,133 402,069 2,609,338 109,421 2,718,759 restated _______________________________________________________________________________________________________________________ CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 September 2005 INFLATION ADJUSTED Unaudited Unaudited (all amounts in millions of dollars) 6 months to 6 months to 30 Sept 2005 30 Sept 2004 Restated _____________________________________________________________________________________________________ Cash flows from operating activities Profit / (loss) before taxation 849,852 (292,368) Adjustment for: Non-operating cash flow (309,972) 132,887 Non-cash items 23,004 96,398 _____________________________________________________________________________________________________ Operating cash flow before working capital changes 562,884 (63,083) (Used in) / generated from working capital changes (548,575) 271,875 _____________________________________________________________________________________________________ Operating cash flow 14,309 208,792 Income tax paid (170,423) (36,710) _____________________________________________________________________________________________________ Net cash (used in) / generated from operating (156,114) 172,082 activities _____________________________________________________________________________________________________ Net cash used in investing activities (242,339) (71,598) _____________________________________________________________________________________________________ Net cash generated from / (used in) financing 166,254 (356,377) activities Net effect of exchange rate changes on cash and cash equivalents 279,616 (73,378) Translation of foreign entity (142,159) 64,311 _____________________________________________________________________________________________________ Net decrease in cash and cash equivalents (94,742) (264,960) Cash and cash equivalents at 31 March 2005 1,144,774 1,648,280 _____________________________________________________________________________________________________ Cash and cash equivalents at 30 September 2005 1,050,032 1,383,320 _____________________________________________________________________________________________________ SEGMENT INFORMATION INFLATION ADJUSTED Unaudited Unaudited (all amounts in millions of dollars) 6 months to 6 months to 30 Sept 2005 30 Sept 2004 ____________________________________________________________________________________________________ Turnover Hotels 221,565 237,621 Supermarkets 3,478,566 2,755,468 Retail 513,060 506,508 ____________________________________________________________________________________________________ 4,213,191 3,499,597 ____________________________________________________________________________________________________ Operating (loss) / profit after net monetary gain Hotels (25,204) (91,715) Supermarkets 206,880 60,465 Retail 205,020 198,198 Corporate and other 144,841 (280,936) ____________________________________________________________________________________________________ 531,537 (113,988) ____________________________________________________________________________________________________ Total assets Hotels 1,370,630 1,357,285 Supermarkets 1,333,657 1,045,154 Retail 812,446 962,170 Corporate and other 1,450,478 1,350,387 ____________________________________________________________________________________________________ 4,967,211 4,714,996 ____________________________________________________________________________________________________ SUPPLEMENTARY INFORMATION ____________________________________________________________________________________________________ Capital expenditure 78,994 33,227 Depreciation 14,867 40,131 Capital commitments Authorised but not yet contracted for 75,801 40,692 Accounting policies The International Accounting Standards Board has released a number of new accounting standards and made amendments to existing standards. The impact of these changes has been assessed and applied but the financial effect for the period is not material. The inflation adjusted financial statements reflect a change in accounting for the effect of the restatement of the foreign entities' income statements in terms of IAS 29, and the restatement of the historical movements in the foreign currency translation reserve (FCTR), in line with preferred treatment after further interpretation of IAS 29. The effect of the income statement restatement is now taken against FCTR and not monetary adjustment as in the past. Previously the FCTR was restated from the month in which it was generated. These changes have the effect of reallocating amounts between the FCTR and retained income. The effect of these changes is to reduce the prior period inflation adjusted profit by $16.4 billion and to increase the opening retained income by $629,5 billion, the corresponding balance sheet adjustment being to FCTR. Note to inflation adjusted financial statements The consumer price indices used to restate the financial statements at 30 September 2005 are as follows: 30 September 2004 46,048.2 31 March 2005 69,577.2 30 September 2005 211,751.3 For further information contact either: Zimbabwe Bryan Thorn +263-4-252068/78 Roy Franklin +263-4-252068/78 Directors: JRT Moxon (Chairman), MA Masunda, DE Stephens, CB Thorn, MS Wilson, DW Mills All current financial, operational and structural information on Meikles Africa Limited can be obtained by visiting Meikles Africa Limited's website at http:// www.meiklesafrica.co.zw. This information is provided by RNS The company news service from the London Stock Exchange

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