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Meikles Africa Ld (MIK)

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Tuesday 01 June, 2004

Meikles Africa Ld

Final Results

Meikles Africa Ld
01 June 2004

Meikles Africa Limited


                                                Salient features

    •         Turnover of $528 billion up 605%, (2003 - $74.9 billion)

    •         Operating profit of $83.9 billion, (2003 - $13.9 billion).

    •         Exchange gains of $145 billion, (2003 - $37.0 billion).

    •         Attributable profit of $186 billion, (2003 - -$43.5 billion).

    •         Final dividend of $ 40.00.


Dear Shareholder

I am pleased to present the results for your Group for the year ended 31st March
2004, which reflect a good performance despite the unpredictable and turbulent
business environment experienced, particularly during the latter part of the
year.  The volatile rates of interest, which varied between 40% in April and
1000% in December, presented severe challenges for the Group and most companies.
It is vital for a vibrant and successful commercial sector that interest rates
become more predictable and stable in the months ahead.  Official inflation
reached a peak of 623% year on year in December 2003 before easing to 584% at
the year end.  Exchange rates weakened, culminating in a rate of Z$4 382 = US$1
at the year end. The introduction of the foreign exchange auction system has
brought some stability to the foreign exchange market although the rate remains
unattractive to the Group, as well as exporters and other potential earners of
foreign currency.


Group turnover of $528 billion excluding Sales Tax/VAT is 605% up on the
previous year whilst operating profit of $83.9 billion has grown by 505%.  This
compares with average inflation of 523% for the year.  Operational profit for TM
Supermarkets and the Retail Division exceeded average inflation for the year
whilst the Hotel Division understandably fell short.

Attributable profit was $186 billion, including exchange gains of Z$145 billion,
and a net interest charge of $28.6 billion resulting mainly from high
stockholdings and the dramatic increases in interest rates in the period
December 2003 to March 2004. The recorded exchange gains of $145 billion for the
cash held offshore and at the Reserve Bank of Zimbabwe were lower than
anticipated due to the Zimbabwe dollar exchange rate. Management in TM
Supermarkets and the Retail Division responded to the crisis quickly by
accelerating sales efforts to reduce stock levels and working capital
requirements, thus avoiding a potentially damaging situation largely caused by
the variable rates of interest.


TM Supermarkets (Pvt) Ltd

•          Turnover increased by 664% with a growth in net sales from $49.6
billion to $379 billion.

•          Operating profit grew by 561% from $6.3 billion to $41.7 billion.

TM performed admirably over the year increasing market share and achieving net
sales well in excess of average inflation.  TM's competitive pricing strategy
was used as an aggressive marketing tool to increase market share but this did
result in reduced margins.  In the latter part of the year, settlement discounts
were reduced and mark-downs associated with the realignment of the exchange rate
also increased pressure on margins.  Cash shortages in the economy reduced
retail spending and placed an unwelcome burden on store managers who were
required to deal with the money supply irregularities.

High stocking levels for the Christmas period and more rigorous supplier credit
terms caused some liquidity problems in December and January.  However TM
emerged from this period leaner and more focused with improved stock turns and
cash generation.  Despite the various challenges faced during the year,
shrinkage was contained to 0.6% of turnover.  Expenses expressed as a percentage
of turnover were contained at 10.3% (2003: 10.3%).

Retail Division

•          Turnover increased by 551% from $13 billion to $84.6 billion.

•          Operating profit grew by 694% from $3.1 billion to $24.6 billion.

The division's results were adversely affected by the high cost of financing
stock.  The tendency in Zimbabwe, with inflation spiralling out of control, was
generally to convert currency to goods as a hedge against inflation.  The
manufacturing and distributive industry planned accordingly, and with cheap
money available, committed to holding higher stock levels. This strategy was
fuelled by the strong demand which was anticipated for consumer goods, boosted
by family remittances from abroad, wage settlements and large bonuses.  However,
the dramatic increases in utility charges, rents and rates diluted the expected
purchasing power whilst sharp rises in interest rates encouraged saving.  The
combination of softening aggregate demand, and the appreciating market value of
the Zimbabwe dollar inevitably led to a higher carrying cost of stock.

The division reacted promptly to this crisis.  Promotional activity was
increased and procurement curtailed, which is resulting in a disciplined return
to traditional stock levels.  With inflation set to continue it is felt that
current ranges of product will represent good value in the months ahead.
Customer credit terms were tightened reflecting rising interest rates but in
spite of this, credit sales remained at 56% of total sales.

Clicks traded strongly throughout the year and is now responsible for the
procurement and supply of non-pharmaceutical products for Medix Pharmacies.
Eight Medix Pharmacies were refurbished during the year and this division is now
better placed to increase its contribution to Group profit.


•          Turnover increased by 420% from $12.3 billion to $64.0 billion.

•          Operating profit grew by 289% from $4.7 billion to $18.3 billion.

The operations of the two Zimbabwe hotels were affected by low occupancies
largely driven by the poor investment climate, negative publicity and a number
of official and unofficial travel warnings.  The ability of the Victoria Falls
Hotel to maintain its US Dollar average room rate has to some extent offset the
impact of low occupancies.  Meikles Hotel has remained the favoured five star
hotel in Harare for business visitors and for small conferences.  Whilst we are
continuing with our policy of maintaining high standards and continually
improving the product, we have become more aggressive on pricing in order to
further penetrate the diminished market.  The Victoria Falls Hotel celebrates
its 100th  Anniversary this year and continues to live up to its reputation as
'The Grand Old Lady' of the region.

The Cape Grace Hotel did not repeat the good results of last year although its
performance was not out of line with the general trend in top end South African
tourism.  Despite this the hotel again achieved the highest average room rate
and the highest revenue per available room in the Cape region.  Although
occupancies have dropped by some 15 percentage points over last year, the hotel
continues to attract the top end of the tourist market. The appreciating Rand
meant that room rates were 12% more expensive than last year for the US
Dollar-paying tourist.  Other important factors in the fall off in occupancies
have been the war in Iraq and the SARS virus which have deterred many Americans
and Europeans from travelling.  Our product remains in excellent condition and
has a strong, young, innovative team running it.


Kingdom performed well for the year to December 2003 and for the first two
months of 2004, and emerged as a stronger bank following the December/January
interest rate turmoil.  The conservative lending policies ensured a more
consistent performance and enabled Kingdom to remain liquid during the interest
rate fluctuations.  Regrettably, the economic downturn has necessitated the
closure of some smaller branches including two in the Group's retail outlets.


Shareholders are aware that the Company has a shareholding in Rebserve Holdings
Limited, a company quoted on the JSE Securities Exchange.

Rebserve and Mvelaphanda Holdings (Proprietary) Limited have issued a joint
announcement regarding the creation of 'South Africa's pre-eminent
black-controlled, owned and managed diversified industrial group' by a proposed
merger of Mvela Holdings and Rebserve.

Mvela Holdings presently holds investments in a range of companies covering
primarily mining and resources, financial services, property, healthcare,
information technology, telecommunications and general industrial sectors.  The
New Mvela is expected to benefit from strong deal flow and significant
empowerment opportunities.  Rebserve will change its name to Mvelaphanda Group
Limited with Tokyo Sexwale as Executive Chairman.

In line with our strategy to enhance our external earnings, Meikles Africa has
received Reserve Bank approval to increase its participation in Rebserve and
hence the New Mvela Group.


During the last few years the aged have suffered severely as a result of the
hyperinflation which the country is experiencing.  The Company, in conjunction
with other parts of the wider Meikles Group, supplemented our normal charitable
programmes by arranging a specific fund to help the aged.   Together we have
distributed over the last 6 months a total of $190 million to 46 homes for the
aged, and where possible we will continue to assist deserving causes on an
increasing basis.  In these difficult times we believe it is important not to
forget those in need.

In addition, the plight of elephants in the Hwange National Park was brought to
our attention and we have provided equipment to supply water which we understand
has saved the lives of hundreds of elephants as well as other game.


The inflation adjusted financial statements, including the comparative figures,
are stated in terms of current Zimbabwe dollars at the balance sheet date, using
the Consumer Price Index for Zimbabwe, supplied by the Central Statistics

In an inflationary environment, it is expected that there would be a correlation
between inflation, interest rates and foreign currency exchange rates.  In
Zimbabwe this correlation does not exist at present and this results in a
distortion of the inflation-adjusted figures.  Normal market forces would be
expected to determine foreign currency exchange rates, and interest rates would
reflect consistent real rates of return and a connected relationship when
measured against inflation.  Since these conditions have not existed the
interpretation of the results needs to recognise these matters.  The inflation
adjusted information is reviewed by management and action taken where


I would like to thank my fellow directors for their contributions during the
year.  Martin Cameron retired as a non-executive Director during 2003 after many
years of loyal service. We wish him well in his retirement.  I welcome Bryan
Thorn to the Board as Executive Director (Finance and Administration) with
effect from  1 June 2004.

I would like to pay particular tribute to our management and staff who worked
tirelessly and faithfully during the year, under very trying circumstances, to
produce these results.




On the 28 May 2004, the Board approved a final dividend Number 69 of $40.00 per
share on 163,656,787 shares payable to members registered in the books of the
Company at the close of business on 30 July 2004.  The Transfer Books and
Register of Members will be closed from 30 July 2004 to 16 August 2004.
Dividend cheques will be mailed to shareholders on or about 16 August 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

Company Secretary

28 May 2004

All current financial, operational and structural information on Meikles Africa
Limited can be obtained by visiting Meikles Africa's website at :http:/

Directors : J R T Moxon (Chairman), A C L Parvin (Chief Executive), M V Cameron
(resigned 13 November 2003), M A Masunda, D E Stephens, M S Wilson.

For the year ended 31 March 2004

                                                      INFLATION ADJUSTED                    HISTORICAL COST
                                                        Audited Audited                       Audited Audited
                                                     Year ended  Year ended                Year ended   Year ended
                                                       31 March  31 March               31 March 2004     31 March
                                                           2004    2003                                       2003
                                                                   Restated                               Restated

Revenue                                                 938,086     836,680                   527,876       74,853

Cost of sales                                         (833,991)   (643,202)                 (342,884)     (46,092)

Gross profit                                            104,095     193,478                   184,992       28,761

Operating expenses                                    (215,254)   (177,527)                 (105,809)     (15,244)
Other income                                              8,937       5,320                     4,758          361
Operating (loss)/profit                               (102,222)      21,271                    83,941       13,878

Net interest                                           (44,505)    (18,536)                  (28,637)      (1,542)

Net exchange (losses)/gains                            (93,222)     176,408                   145,367       36,960

Increase/(decrease) in value of quoted investment         5,442        (55)                    20,179        1,752

Net share of result of associate                         39,304      15,412                    10,456        1,253

Fair value adjustment on associate                            -    (17,394)                         -            -
Net monetary gain                                        79,672      43,291                         -            -

(Loss)/profit before taxation                         (115,531)     220,397                   231,306       52,301

Taxation                                               (13,915)    (63,998)                  (37,732)      (7,598)

(Loss)/profit after taxation                          (129,446)     156,399                   193,574       44,703

Minority interest                                       (8,098)     (9,648)                   (7,839)      (1,173)

Net (loss)/profit attributable to shareholders        (137,544)     146,751                   185,735       43,530

Basic (loss)/earnings per share ($) (2003:             (843.92)      943.98                  1,139.60       277.34

IIMR Headline (loss)/earnings per share ($) (2003:     (797.81)      894.73                  1,139.23       278.08

Net monetary gain

Gross monetary loss                                    (312,502)   (133,192)                        -            -
Less: transfer to net exchange (losses)/gains           392,174)     176,483                        -            -

Net monetary gain                                         79,672      43,291                        -            -

The monetary loss arising from holding bank balances denominated in foreign
currency has been transferred to net exchange (losses)/gains, as the Directors
believe this disclosure to be more helpful.

Change in accounting policy: the Directors decided to change the accounting
policy relating to the treatment of fair value adjustments to the carrying value
of investments. These adjustments were previously shown in the Statement of
Recognised Gains and Losses but are now recorded in the Income Statement. The
comparatives have been restated.

At 31 March 2004

                                                      INFLATION ADJUSTED                       HISTORICAL COST
                                                      Audited              Audited            Audited           Audited
                                                           At                   At                 At                At
                                               31 March 2004       31 March 2003        31 March 2004     31 March 2003
                                                                          Restated                             Restated


Non-current assets                                    351,793              350,314            142,308            23,879
Current assets                                        409,909              536,792            388,622            75,754
Total assets                                          761,702              887,106            530,930            99,633

Capital and reserves                                  425,518              540,026            253,112            56,938
Minority interest                                      14,112               13,415              3,330               486
Non-current liabilities                               201,338              221,750            153,754            25,841
Current liabilities                                   120,734              111,915            120,734            16,368
Total equity and liabilities                          761,702              887,106            530,930            99,633


For the year ended 31 March 2004
                                                             Share     Share            Non-       Retained       Total
                                                           Capital   Premium   Distributable   Earnings and
                                                                                    Reserves   Shareholders
                                                                                               for Dividend
Balance at 1 April 2003                                      3,696   262,693         101,190        172,447     540,026
Net loss attributable to shareholders                            -         -               -      (137,544)   (137,544)
Cape Grace Hotel - translation of foreign entity                 -         -          40,130              -      40,130
Share of reserves of associate                                   -         -           3,209              -       3,209
Share options exercised                                          -       224               -              -         224
Dividend for 2003 - final                                        -         -               -       (12,800)    (12,800)
Dividend for 2004 - interim                                      -         -               -        (7,727)     (7,727)

Balance at 31 March 2004                                     3,696   262,917         144,529         14,376     425,518

Balance at 1 April 2002                                      3,696   232,916          55,844         44,518     336,974
Net profit attributable to shareholders (restated)               -         -               -        146,751     146,751
Cape Grace Hotel - translation of foreign entity                 -         -          42,105              -      42,105
Share of prior year adjustment in associate retained             -         -               -          (554)       (554)
Share of reserves of associate                                   -         -           3,241              -       3,241
Share options exercised                                          -    29,777               -              -      29,777
Dividend for 2002 - final                                        -         -               -       (11,055)    (11,055)
Dividend for 2003 - interim                                      -         -               -        (7,213)     (7,213)
Balance at 31 March 2003                                     3,696   262,693         101,190        172,447     540,026

                                                             Share     Share            Non-       Retained       Total
                                                           Capital   Premium   Distributable   Earnings and
                                                                                    Reserves   Shareholders
                                                                                               for Dividend
Balance at 1 April 2003                                         16     5,305             505         51,112      56,938
Net profit attributable to shareholders                          -         -               -        185,735     185,735
Cape Grace Hotel - translation of foreign entity                 -         -          14,476              -      14,476
Share of reserves of associate                                   -         -           1,872              -       1,872
Share options exercised                                          -        51               -              -          51
Dividend for 2003 - final                                        -         -               -        (1,872)     (1,872)
Dividend for 2004 - interim                                      -         -               -        (4,088)     (4,088)
                                                                16     5,356          16,853        230,887     253,112

Balance at 31 March 2004

Balance at 1 April 2002                                         16       991             627          8,796      10,430
Net profit attributable to shareholders (restated)               -         -               -         43,530      43,530
Cape Grace Hotel - translation of foreign entity                 -         -            (35)              -        (35)
Share of prior year adjustment in associate retained             -         -               -           (13)        (13)
Share of reserves of associate                                   -         -            (87)              -        (87)
Share options exercised                                          -     4,314               -              -       4,314
Dividend for 2002 - final                                        -         -               -          (493)       (493)
Dividend for 2003 - interim                                      -         -               -          (708)       (708)
Balance at 31 March 2003                                        16     5,305             505         51,112      56,938

For the year ended 31 March 2004
                                                                  INFLATION ADJUSTED                HISTORICAL COST
                                                                 Audited Audited                    Audited Audited
                                                              Year ended  Year ended             Year ended   Year ended
                                                             31 March       31 March           31 March         31 March
                                                             2004              2003            2004                 2003

Cash flows from operating activities

(Loss)/profit before taxation                                  (115,531)     220,397                231,306       52,301
Adjustments for:
  Non-operating cash flow                                        136,974   (157,961)              (117,283)     (35,425)
  Non-cash items                                                  26,451      59,868               (10,944)      (2,414)

Operating cash flow before working capital                        47,894     122,304                103,079       14,462
Generated from/(used in) working capital                           6,467    (48,771)               (42,610)      (9,143)
Operating cash flow                                               54,361      73,533                 60,469        5,319
Income tax paid                                                 (14,023)     (9,176)                (7,616)        (556)
Net cash generated from operating                                 40,338      64,357                 52,853        4,763

Net cash generated from/ (used in)                                38,409    (20,438)
investing activities
                                                                                                      3,087      (1,410)

Net cash (used in)/generated from                              (102,693)    (13,935)               (11,748)        5,415
financing activities

Net effect of exchange rate changes
on cash and cash equivalents                                    (93,222)     176,408                145,367       36,960

Net (decrease)/increase in cash and cash                       (117,168)     206,392                189,559       45,728

Cash and cash equivalents at 31 March 2003                       359,272     152,880                 52,545        6,817

Cash and cash equivalents at 31 March 2004                       242,104     359,272                242,104       52,545

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

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