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Meikles Africa Ld (MIK)

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Tuesday 25 March, 2008

Meikles Africa Ld

Final Results

Meikles Africa Ld
25 March 2008




                                                         AUDITED RESULTS FOR THE 9 MONTHS TO 31 DECEMBER 2007


                                                 SALIENT FEATURES
                                     References are to historical information

                                                   Net turnover
                                                  $43,1 trillion

                                                 Operating profit
                                                  $11,9 trillion

                                               Attributable profit
                                           Increased to $246,4 trillion

                                        Cash generated and funds available
                               Funds generated from operations were $16,4 trillion
                                     Funds on hand amount to $339,3 trillion


                                 References are to inflation adjusted information
                                                   Net turnover
                                                  $275,1 trillion

                                                 Operating profit
                                                  $9,5 trillion

                                                Attributable loss
                                                   $4,7 trillion

                                        Cash generated and funds available
                               Funds generated from operations were $50,4 trillion
                                     Funds on hand amount to $339,3 trillion





OVERVIEW

With the merger of Meikles Africa, Kingdom Financial Holdings (KFHL), Tanganda
Tea Company (TTC) and Cotton Printers (CP) having been satisfactorily concluded,
the year-end of the Group has changed to 31 December and the published results
reflect the status of the Kingdom Meikles Africa (KMAL) Group at 31 December
2007, being the effective date of the merger.  The Group income statement
therefore presents the results for the former Meikles Africa Group while the
balance sheet reflects the position of the merged Group taking into account
shares issued to the shareholders of KFHL, TTC and CP.  However for information
purposes an indicative segmental income statement has been presented which
reflects results for 2007 as if the merger had been in place for the twelve
months.

The KMAL Group has significant foreign operations and realises export proceeds
from local operations accounting for the required disclosure which fairly
presents value to all stakeholders.  Accordingly funds from operations of
entities that generate foreign currency are translated at a fair investment
rate. This policy is consistent with that applied in the previous year.

The nine month period under review has seen an economy where official inflation,
interest rates and foreign exchange rates have not maintained relative
consistency and therefore reflects anomalies when measuring performance. In
addition, since July 2007, when new pricing mechanisms were introduced, all
businesses have operated under extremely difficult conditions.  Supply of stock,
pricing and terms of trade have put pressure on margins and cash generation to
replace stock, when available.  Dialogue continues with authorities to promote
pricing mechanisms which will result in sustainability for stakeholders.

Performance of the former Meikles Africa Group has therefore been supported by
foreign operations and the quality of foreign assets, reflecting the strength of
the Group's ability to withstand the volatility of the local environment.  Other
sectors of Kingdom Meikles Africa bring to the Group contributions to the
balance sheet that reflect strength from Kingdom Financial Holdings, a solid
infrastructural base from Tanganda Tea Company and facilities at Cotton Printers
which, when utilised to better capacity, will provide increased foreign currency
inflows.  Plans are progressing to enhance synergies, energise operations and
create opportunities which leverage off the strength of the Group.  Main
features of the operations incorporated in the income statement for the period
to 31 December 2007 are as follows.  (Reference to comparatives is for the nine
month period to 31 December 2006.)

Hotels
In inflation adjusted terms turnover increased by 1729% to $107 trillion and
operating profit increased to $23 trillion.
•  All units achieved occupancy growth which was an overall increase of 28%
for the period;
•  Leading Hotels of the World recently visited Meikles and Victoria Falls
Hotel and both achieved pleasing results;
•  Stock procurement has been managed under difficult conditions;
•  Upgrade of the Victoria Falls in public areas and facilities is nearing
completion;
•  The refashioning of the Cape Grace will commence shortly and will spread
over two financial periods;
•  A major maintenance programme at Meikles has commenced in anticipation of
an upturn in business;
•  Overheads have been controlled although there have been instances where
utility costs have increased faster than revenue;

Retail
In inflation adjusted terms turnover increased by 41% to $169 trillion and there
was an operating loss of $11 trillion.
•  Retail increase in turnover has been less than inflation because of volume
decrease and pricing;
• Procurement of stock to appropriate levels has been extremely difficult
because of pricing and availability;
•  Margins have not kept pace with inflation thereby inhibiting cash flow
generation;
•  Some success was achieved in the securing of BACOSSI funding;
•  Recapitalisation is planned provided the protection of stock values can be
assured;
•  Three new TM projects are at an advanced stage of completion;
•  Department Stores credit sales through Meikles Financial Services ceased in
July;
• Plans are advancing for a greater ratio of quality food, confectionery and
produce in the department stores;
•  A regional presence using franchise options is being pursued;
• Toll manufacturing and assembly are to be investigated with a view to ensuring 
better supply and enhanced differentiation;

Corporate

Exchange gains reflect the uplift in foreign funds in Zimbabwe dollar terms with
the inflation adjusted financial statements showing the position after taking
into account movement in the CPI index.

The merger

The merger transaction saw the issue of seventy eight million shares to the
shareholders of Kingdom Financial Holdings (excluding Meikles Africa), Tanganda
Tea Company and Cotton Printers.  The price was $8,5 million a share, being the
Meikles Africa share price at 31 December 2007.  The issue value was compared to
the net assets of the acquired companies resulting in goodwill of $614 trillion
in historic terms.

Outlook

The merged Group is taking advantage of synergies and resources across the
entities in areas of treasury, foreign currency utilisation, toll manufacturing
and property letting.  Strategies are being formalised that leverage off the
strength of the Group balance sheet.  These will focus on capital preservation
and financial growth in the case of Kingdom Financial Holdings; refurbishing and
upgrade of the hotels division;  increasing tea production through mechanisation
and expansion of agricultural activities; recapitalising the retail division and
revising procurement plans; refurbishing textile machinery to increase
throughput especially for yarn exports.  Where product and capacity exist, the
Group will focus on export earnings growth.  External investments will continue
to develop where opportunities arise but in the meantime the Group is launching
capital raising programmes which will provide inflows for local working capital
and provide funds for regional expansion.  We have realised our investment in
Mvelaphanda favourably. Kingdom Meikles Africa has entered into an option
agreement, which might include an exchange of assets, to invest in Mentor
Africa, a new Pan regional, sub Saharan investment company, subject to all
regulatory approvals. Mentor Africa is headed by Mr. Stephen Levenberg and Mr.
Brett Till former Chief Executive Officer and Financial Director, respectively,
of Mvelaphanda. The post Mvelaphanda investment potentials will see the Group
expanding into the sub Saharan region in areas which might include natural
resources, telecommunications and hospitality.  These plans are expected to
materialise within the current financial year.

Social responsibility

The Group continues to be mindful of the plight of the aged and other vulnerable
groups.  Shortages and non-availability of basic commodities and services have
compounded the hardships endured by those who have least.  In an effort to
assist in the welfare of our country's senior citizens the Group contributes to
homes and institutions across Zimbabwe.

J. R. T. MOXON
CHAIRMAN

Dividend announcement

The Board has resolved to pass a final dividend for the period ended 31 December
2007 but will consider declaring an interim dividend for the 2008 financial year
in the near future.

By order of the Board

A.P. LANE-MITCHELL
SECRETARY

20 March 2008


AUDITED CONSOLIDATED INCOME STATEMENT
For the 9 months to 31 December 2007

                                                        INFLATION ADJUSTED                HISTORICAL COST

(all amounts in billions of dollars)                      9 months to  12 months to    9 months to  12 months to
                                                          31 December      31 March    31 December      31 March
                                                                 2007          2007           2007          2007 


Revenue                                                       275,110       210,156         43,108           357
Operating (loss) / profit before monetary
adjustment and exchange gains                                (20,947)       (9,269)          6,932            80
Net monetary gain from operating activities                    19,130        24,844              -             -
Exchange gains on net current assets                           11,277        10,748          4,943            47
                                                                                          
Operating profit                                                9,460        26,323         11,875           127
Investment income                                              13,958         6,686          1,832            15
Finance costs                                                 (1,463)       (2,564)          (471)           (5)
Net exchange  gains on foreign funds                           15,278       186,947        253,362         1,018
(Decrease) / increase in value of quoted                     
investment                                                   (16,316)        29,241              4           148
Net monetary (loss) / gain from financing                    
activities                                                   (43,805)        17,849              -             -
Share of profit of associates                                  16,355         2,239          8,978             7
(Loss) / profit before taxation                               (6,533)       266,721        275,580         1,310

Income tax credit / (expense)                                     726      (35,779)       (28,928)         (169)

(Loss) / profit  for the period                               (5,807)       230,942        246,652         1,141
Attributable to:
Equity holders of the parent                                  (4,668)       229,073        246,376         1,132
Minority interest                                             (1,139)         1,869            276             9
                                                              (5,807)       230,942        246,652         1,141

Basic (loss) / earnings per share ($)                        (28,461)     1,399,716      1,502,184         6,917
IIMR Headline (loss) / earnings per share ($)                (35,443)     1,399,160      1,501,928         6,911
Weighted average number of shares                         164,011,873   163,656,787    164,011,873   163,656,787



AUDITED CONSOLIDATED BALANCE SHEET
At 31 December 2007

                                                INFLATION ADJUSTED                     HISTORICAL COST

(all amounts in billions of dollars)                   At              At                At                    At
                                              31 December        31 March       31 December              31 March
                                                     2007            2007              2007                  2007 

ASSETS
Property, plant & equipment                       177,379          99,825           120,942                   372
Investment property                                 3,542               -             3,542                     -
Biological assets                                   4,222               -             4,222                     -
Investment in associates                           21,450           8,509             6,231                     9
Financial assets - non-banking                    108,338         106,329           108,245                   483
Goodwill                                          587,500           5,476           613,686                     -
Other intangible assets                                87               -                87                     -
Current assets banking
      Balances with banks and cash                144,583               -           144,583                     -
      Financial assets at fair value
      through profit and loss                      39,071               -            39,071                     -
      Advances and other accounts                  16,773               -            16,773                     -
      Available for sale                            7,387               -             6,805                     -
      Acceptances                                      68               -                68                     -
Current assets non-banking                        231,678         237,484           224,011                 1,057
Total assets                                    1,342,078         457,623         1,288,266                 1,921

EQUITY AND LIABILITIES
Attributable to equity holders of the           
parent                                          1,017,434         305,547           983,295                 1,266
Minority interest                                   2,313           3,452               285                     9
Deferred tax                                       47,717          30,172            30,072                   107
Other non-current liabilities                      52,687          36,215            52,687                   165
Current liabilities banking
      Financial liabilities at fair
      value through profit and loss                20,503               -            20,503                     -
      Customer deposits                           139,231               -           139,231                     -
      Acceptances                                      68               -                68                     -
      Other current liabilities                    14,889               -            14,889                     -
Current liabilities non- banking                   47,236          82,237            47,236                   374
Total equity and liabilities                    1,342,078         457,623         1,288,266                 1,921



AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the 9 months to 31 December 2007

                                                         INFLATION ADJUSTED                       HISTORICAL COST

(all amounts in billions of dollars)                  9 months to    12 months to             9 months to   12 months to
                                                               31        31 March             31 December       31 March
                                                    December 2007            2007                    2007           2007


(Loss) / profit  for the period                           (4,668)         229,073                 246,376          1,132
Share premium on issue of shares                          664,683               -                 663,979              -
Share issue expenses                                      (5,221)               -                 (5,220)              -
Share based payments                                        4,515               -                   4,515              -
Translation of foreign entity                              45,913          26,503                  66,702            128
Share of reserves of associate                              8,543           1,388                   5,704              2
Dividend - prior year final                               (1,878)         (1,068)                    (27)              -
Dividend - current year interim                                 -         (1,035)                       -            (1)
Attributable to equity holders of parent                  711,887         254,861                 982,029          1,261
Minorities                                                (1,139)           1,303                     276              8
Shareholders' equity at the beginning of                  
the period                                                308,999          52,835                   1,275              6
Shareholders' equity at the end of the 9                
months period                                           1,019,747         308,999                 983,580          1,275

AUDITED CONSOLIDATED CASH FLOW STATEMENT
For the 9 months to 31 December 2007

                                                                 INFLATION ADJUSTED            HISTORICAL COST

(all amounts in billions of dollars)                       9 months to 12 months to    9 months to  12 months to 
                                                           31 December     31 March    31 December      31 March
                                                                  2007         2007           2007          2007

Cash flows from operating activities
(Loss) / profit  before taxation                               (6,533)      266,721        275,580         1,310
Adjustments for:
  Non-operating cash flow                                     (55,309)    (204,113)      (259,708)       (1,083)
  Non-cash items                                               100,622     (17,463)        (7,552)         (143)
Operating cash flow before working capital changes              38,780       45,145          8,320            84
Working capital changes                                         11,586        1,058          8,120             3
Cash generated from operations                                  50,366       46,203         16,440            87
Income taxes paid                                              (5,136)      (3,687)           (60)           (5)
Net cash generated from operating activities                    45,230       42,516         16,380            82

Net cash generated from / (used in) investing                  
activities                                                     172,542      (2,273)        143,493           (7)

Net cash used in financing activities                         (16,382)      (5,354)       (28,534)             -

Net  increase in cash and cash equivalents                     201,390       34,889        131,339            75

Cash and cash equivalents at the beginning of the              
period                                                         180,096       21,802            819             4

Net effect of exchange rate changes on cash and cash           
equivalents                                                    (1,626)      124,844        253,102           734
Translation of foreign entity                                 (40,547)      (1,439)       (45,947)             6

Cash and cash equivalents at the end of the 9 months           
period                                                         339,313      180,096        339,313           819



AUDITED SEGMENT INFORMATION                                                               

                                                  INFLATION ADJUSTED                       HISTORICAL COST

(all amounts in billions of dollars)         9 months to       12 months to         9 months to  12 months to
                                             31 December           31 March         30 December      31 March
                                                    2007               2007                2007          2007
Revenue
Retail                                           168,561            175,157              20,869            73
Hotels                                           106,549             34,999              22,239           284
                                                 275,110            210,156              43,108           357
Operating (loss) / profit  after
monetary adjustment and exchange
gains
Retail                                          (10,874)             10,521               2,627            60
Hotels                                            23,378             12,984               9,781            52
Corporate                                        (3,044)              2,818               (533)            15
                                                   9,460             26,323              11,875           127
Segment assets
Retail                                            33,475             65,680              15,985           229
Hotels                                           149,531            126,450             136,442           545
Banking                                          267,832                  -             230,718             -
Agriculture                                       24,756                  -              22,588             -
Corporate & Other                                866,484            265,493             882,533         1,147
                                               1,342,078            457,623           1,288,266         1,921



SUPPLEMENTARY INFORMATION                            INFLATION ADJUSTED                      HISTORICAL COST
(all amounts in billions of dollars)           9 months to      12 months to          9 months to  12 months to
                                               31 December          31 March          31 December      31 March
                                                      2007              2007                 2007          2007

Capital expenditure                                  6,618             7,894                 2,789           23
Capital commitments authorised but not yet
contracted for                                     136,362            85,760               136,362          390
Depreciation                                         7,727             4,435                 1,431            5
Market value of investments
       - Associate - Kingdom Financial Holdings          
Limited                                                  -            20,822                     -           95
       - Investment - Mvelaphanda Group                  -            32,528                     -          148
Borrowings                                          17,854            16,723                17,854           76



The information below is segment information for the period ended 31 December
2007 assuming the merger had been effective from 1 January 2007

INDICATIVE SEGMENT INFORMATION

                                          INFLATION ADJUSTED     HISTORICAL COST
(all amounts in billions of dollars)           12  months to        12 months to
                                         31 December    2007    31 December 2007
Revenue
Banking                                               85,700              12,120
Retail                                               224,451              21,060
Hotels                                               135,722              22,308
Agriculture                                           28,055               1,405
Textiles                                                 485                  23
                                                     474,413              56,916
Operating profit / (loss)  after
monetary adjustment and exchange
gains
Banking                                               55,645              31,025
Retail                                               (3,220)               2,673
Hotels                                                27,866               9,831
Agriculture                                            1,060               4,972
Textiles                                               (223)                 116
                                                      81,128              48,617

Accounting policies

Accounting policies are consistent with those used in the previous year.

Note to inflation adjusted financial statements

The consumer price indices used to restate the financial statements at 31
December 2007 are as follows:

31 March 2006                            765,209.4
31 March 2007                         16,221,182.2
31 December 2007                   3,564,825,238.9


For further information contact:

Zimbabwe                 Bryan Thorn +263-4-252068/78


                      This information is provided by RNS
            The company news service from the London Stock Exchange