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    MIK   ZW0009012114

MEIKLES LIMITED

(MIK)
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Meikles : Ld - Reviewed Condensed Financial Statements to 30 Sept 2020

11/26/2020 | 03:55am EDT

MEIKLES LIMITED

REVIEWED CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED

30 SEPTEMBER 2020

CHAIRMAN’S STATEMENT

Operating environment

The trading environment during the period under review remained turbulent and was exacerbated by the effects of the COVID-19 pandemic. 

The effects of COVID-19 on the Group’s operations were mitigated by various measures implemented by the Government and the Group. Both Agriculture and Supermarkets segments were designated essential services and continued operating during the lockdown period albeit at reduced daily trading hours. Consequently, sales volumes declined during the period under review compared to the same period of the previous financial year. The hospitality segment’s operations were closed for the entire six months under review.

Group Financial Overview

The Group remains in a sound financial position with cash in hand substantially exceeding borrowings. The Board plans to maintain this cash positive position for the foreseeable future.

Group expansion and renovation projects completed and initiated during the period under review are estimated at ZWL 2 billion. The return on these projects will benefit the Group, partly in the current financial year and partly in the following year.

The Group strategy is based on an enhancement over time of its different segments and on a fair distribution by way of dividend to its shareholders.

Shareholders are being asked to approve a share buyback scheme at the upcoming Annual General Meeting, but implementation will be guided largely by expected receipt of funds on deposit with Government. Shareholders are advised that negotiations leading to the receipt of these funds are progressing with some traction.

Group Financial Performance

The Group fared well against the impediments brought about by the COVID-19 pandemic.

Inflation adjusted Group revenue of ZWL 11.2 billion retreated by 8% compared to the same period of the previous year due to COVID-19 induced decline in sales volumes across the Group’s operations.

In historical cost terms, Group revenue grew by 683% to ZWL 8.4 billion (Previous year: ZWL 1.1 billion) reflecting the effect of inflation driven price increases and exchange rate movement on local and export sales respectively.

Group operating profit from continuing operations for the period in inflation adjusted terms was ZWL 660.4 million (previous year: ZWL 1.1 billion).

Group operating profit for the period in historical cost terms grew by 682% to ZWL 1.7 billion from ZWL 212.3 million in the same period of previous year.

Inflation adjusted Group Profit after tax of ZWL 189 million (Previous period: ZWL 2.1 billion) was impacted adversely by the monetary loss of ZWL 1.1 billion arising from the US$ denominated bank and receivable balances.

Group Profit after tax for the six month period, amounted to ZWL 1.9 billion expressed in terms of historical cost (Previous year: ZWL 160.1 million), an increase of 1087% boosted by exchange gains. 

Group net current assets denominated in foreign currency on 30 September 2020 were US$ 18.7 million.  The Group’s statement of financial position remains strong despite COVID-19 disruptions during the period under review. 

TM Supermarkets trading as TM and PnP

Revenue for the period was ZWL 10.0 billion in inflation adjusted terms (Previous period: ZWL 10.8 billion). Units sold declined by 31% during the period under review due to COVID-19 restrictions and shrinking disposable incomes. The segment lost trading days as seven branches closed for days for disinfection purposes following COVID-19 cases.

Operating profit for the period amounted to ZWL 306.1 million in inflation adjusted terms, compared to ZWL 411.7 million achieved in the previous period. 

In historical cost terms the operating profit for the period amounted to ZWL 1.1 billion up from ZWL 114.8 million in the previous period.

Despite constraints brought about by COVID-19, the segment opened a new store in Aspindale, Harare in July 2020. Work is at an advanced stage for another new branch in Harare that should be opened before the end of December 2020. The store in Hwange was closed for major renovations and will reopen before the end of December 2020 under the Pick n Pay brand.

Tanganda

Revenue of ZWL 935 million in inflation adjusted terms was 15% lower than ZWL 1.1 billion achieved during the six months ended 30 September 2019.

Operating profit in inflation adjusted terms was ZWL 402.9 million compared with ZWL 604.5 million in the previous period. In the past season all crops were affected by lack of rain and power.

Operating profit in historical cost terms was ZWL 573.6 million (previous period ZWL 95.4 million).

Bulk tea export sales of 3 282 tonnes were 11% lower than 3 669 tonnes sold in the comparative period last year. Average international bulk tea export price for the period retreated to US$1.35/kg from US$1.47/kg in the six months’ period to 30 September 2019. Bulk tea production for the period declined by 17% primarily due to adverse weather. Packed tea sales volumes grew by 14%. 

The volume of Macadamia production declined by 37% from 854 tonnes in prior year season down to 537 tonnes attributed to the drought and failure to irrigate crops due to power losses. The average price of primary grades of US$5.37 was 8% firmer than in the prior period.

The volume of avocado export sales grew by 15% to 1671 tonnes from 1 450 tonnes in the comparative period. However, due to the lockdowns in Europe that resulted in massive closure of restaurants and hotels, the avocado average selling price declined by 37% from US$1.62/kg in the half year ended 30 September 2019 down to US$1.02/kg for six months ended 30 September 2020. 

The construction of the 1.8 Mega Watt solar farm at Ratelshoek, Chipinge was completed in September 2020. The plant is now supplying power for irrigation and acting as a standby source of power for the factory, supported by diesel generators when power supply from the National grid is interrupted. During the current power outages 70% diesel savings have been realised when compared with prior year usage. Two more solar power plants are under construction at Tingamira and Jersey estates and are scheduled for completion by January 2021.

Tanganda’s contribution to foreign currency generation was recognised by Zimtrade as the segment was awarded ‘Processed Foods - exporter of the year award 2019’. 

Hospitality

The segment’s operations in Victoria Falls were affected for the entire period under review as international tourism and travel was disrupted by the COVID-19 pandemic. The hotel reopened on 1 November 2020. Our current focus is on the refurbishment roll out that is scheduled to commence at the beginning of 2021.

Operating profit in inflation adjusted terms was ZWL 33.3 million compared to the previous period of ZWL 154.2 million.

Properties

Plans to transform and reconfigure the Group’s properties have been finalised and roll out has commenced. Some of the properties will be disposed of and proceeds reinvested in strategic locations. 


Group leadership

Three independent non-executive directors were appointed to the main board on 31 July 2020 in line with the Companies and Other Business Entities Act and Zimbabwe Stock Exchange Listings Requirements.  Executive management structures are being reviewed ahead of the stepping down of the Executive Chairman from the executive role to become non-executive Chairman on 31 March 2020.


Outlook
The Group is well placed to take advantage of opportunities that may arise as it has substantial resources to support its strategies. To this end, capital projects across the subsidiaries will be completed as planned.

There are strong indications that the forthcoming agricultural season will be more positive than the previous two seasons, which augurs well for Tanganda. 

The COVID-19 induced decline in volumes experienced at TM Pick n Pay appears to have eased.

Corporate Social Responsibility

The Group supported the fight against COVID-19 through its subsidiaries and the Meikles Foundation.  Supermarket segment donated face masks to customers through the branch network and accelerated the distribution of food hampers as well as blankets to elderly homes and orphanages.  In addition, the segment partnered with Zimbabwe Broadcasting Corporation (ZBC) to raise awareness of the COVID-19 pandemic and recommended precautionary measures targeting both urban and rural communities.  Tanganda contributed to the construction of provincial and district COVID-19 isolation centres.  Meikles Foundation provided food stuffs to vulnerable members of society in Epworth.

Dividend

The Company intends to declare two interim dividends and a final dividend based on profits for the year. The first interim dividend declared is ZWL 42.5 cents per share amounting to ZWL 111.0 million which is the same as the final dividend in the previous year.


Appreciation

I would like to extend my appreciation to our customers, suppliers, shareholders, and regulatory authorities for their continued support. I extend also my appreciation to my fellow Directors, and to management and staff for their dedication and commitment.

JRT Moxon

Executive Chairman

25 November 2020

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
INFLATION ADJUSTED HISTORICAL COST*
Reviewed Unaudited Unaudited Unaudited
30 Sep 2020 30 Sep 2019 30 Sep 2020 30 Sep 2019
CONTINUING OPERATIONS  ZWL 000 ZWL 000 ZWL 000 ZWL 000
Revenue 11,218,926 12,147,997 8,411,317 1,074,373
Net operating costs (10,558,505) (11,056,642) (6,750,237) (862,060)
Operating profit 660,421 1,091,355 1,661,080 212,313
Investment income 5,150 532 841 44
Finance costs (121,556) (75,599) (101,374) (5,670)
Net exchange gains / (losses) 1,428,081 (111,581) 1,050,643 3,231
Fair value adjustments on biological assets (495,029) (54,631) (156,034) (6,901)
Net monetary (loss) / gain (684,721) 1,290,819 - -
Profit before tax 792,346 2,140,895 2,455,156 203,017
Income tax expense (603,914) (359,607) (523,569) (44,482)
Profit for the period from continuing operations 188,432 1,781,288 1,931,587 158,535
DISCONTINUED OPERATION
Profit / (loss) for the period from discontinued operation 906 328,077 (46,553) 1,548
Profit for the period 189,338 2,109,365 1,885,034 160,083
Other comprehensive income, net of tax
Items that may be reclassified subsequently to profit or loss:
    Exchange rate and monetary adjustments on translation of foreign operations 236,206 236,602 993,740 336,380
Other comprehensive income for the period, net of tax 236,206 236,602 993,740 336,380
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 425,544 2,345,967 2,878,774 496,463
Profit for the period attributable to:
     Owners of the parent 75,723 1,691,238 1,541,784 134,983
     Non-controlling interests 113,615 418,127 343,250 25,100
189,338 2,109,365 1,885,034 160,083
Total comprehensive income is attributable to:
     Owners of the parent 311,929 1,927,840 2,535,524 471,363
     Non-controlling interests 113,615 418,127 343,250 25,100
425,544 2,345,967 2,878,774 496,463
Earnings per share (cents)
Basic earnings per share from continuing and discontinued operations 29.01 647.82 590.58 51.70
Basic earnings per share from continuing operations 28.66 522.15 608.41 51.11
Diluted earnings per share from continuing and discontinued operations 27.21 607.73 554.03 48.51
Diluted earnings per share from continuing operations 26.88 489.84 570.76 47.95
Headline earnings per share from continuing and discontinued operations 28.75 648.01 589.96 51.77
Headline earnings per share from continuing operations 28.28 522.00 607.79 47.70
Diluted headline earnings per share from continuing and discontinued operations 26.98 607.91 553.45 48.57
Diluted headline earnings per share from continuing operations 26.53 489.70 570.18 44.75

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2020

INFLATION ADJUSTED HISTORICAL COST*
Reviewed Audited Unaudited Unaudited
30 Sep 2020 31 Mar 2020 30 Sep 2020 31 Mar 2020
ZWL 000 ZWL 000 ZWL 000 ZWL 000
ASSETS
Non-current assets
Property, plant and equipment 6,758,249 6,643,826 720,299 403,617
Investment property 7,904 7,993 228 231
Right of use assets 1,465,955 1,086,871 398,907 75,885
Investment in Mentor Africa (Pty) Limited 559,727 467,536 559,727 171,813
Biological assets 42,163 61,234 42,163 22,503
Intangible assets 4,272 4,272 124 124
Other financial assets 869,274 719,396 866,592 263,440
Deferred tax 353 189 78,029 20,637
Total non-current assets 9,707,897 8,991,317 2,666,069 958,250
Current assets
Inventories 2,246,657 2,109,719 2,007,275 565,008
Trade and other receivables 2,104,779 1,692,840 2,072,374 606,212
Biological assets – produce on bearer plants - 509,002 - 187,052
Other financial assets 6,009 9,641 6,009 3,543
Cash and bank balances 665,849 714,225 665,849 262,469
Non-current assets held for sale 13 1,055 6 9
Total current assets 5,023,307 5,036,482 4,751,513 1,624,293
Total assets 14,731,204 14,027,799 7,417,582 2,582,543
EQUITY AND LIABILITIES
Capital and reserves
Share capital 89,401 89,401 2,611 2,611
Share premium 111,561 111,561 3,925 3,925
Other reserves 148,464 (93,508) 1,389,511 395,603
Retained earnings 7,379,329 7,444,436 2,431,504 1,020,252
Equity attributable to equity holders of the parent 7,728,755 7,551,890 3,827,551 1,422,391
Non-controlling interests 2,376,786 2,272,661 512,215 177,063
Total equity 10,105,541 9,824,551 4,339,766 1,599,454
Non-current liabilities
Borrowings 81,269 79,771 81,269 29,314
Lease liabilities 450,318 248,613 450,318 91,527
Deferred tax 1,822,849 1,767,605 275,002 88,022
Total non-current liabilities 2,354,436 2,095,989 806,589 208,863
Current liabilities
Trade and other payables 2,091,814 2,004,900 2,091,814 736,775
Borrowings 153,518 83,779 153,518 30,788
Lease liabilities 25,895 18,580 25,895 6,663
Total current liabilities 2,271,227 2,107,259 2,271,227 774,226
Total liabilities 4,625,663 4,203,248 3,077,816 983,089
Total equity and liabilities 14,731,204 14,027,799 7,417,582 2,582,543

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020

INFLATION ADJUSTED
Share
capital
Share
premium

Other reserves

Investment revaluation
 ZWL 000  ZWL 000 ZWL 000 ZWL 000
2020 – Reviewed
Balance at 1 April 2020 89,401 111,561 788,663 (882,171)
Profit for the period - - - -
Restatement of property - - 5,766 -
Other comprehensive income for the period - - 236,206 -
Dividend paid – ordinary shareholders - - - -
Non-controlling interests arising from Mopani Property Development (Private) Limited -
-

-

-
Balance at 30 September 2020 89,401 111,561 1,030,635 (882,171)
2019 – Unaudited
Balance at 1 April 2019 89,344 102,416 2,168,566 165,078
Profit for the period - - - -
Transfer from non-distributable reserves - - (189,851) -
Other comprehensive income for the period - - 236,602 -
Dividend paid – ordinary shareholders - - - -
Non-controlling interests arising from Mopani Property Development (Private) Limited -
-

-

-
Balance at 30 September 2019 89,344 102,416 2,215,317 165,078

   

INFLATION ADJUSTED

Retained earnings
Attributable  to owners of parent Non-controlling
interests
Total
ZWL 000  ZWL 000  ZWL 000  ZWL 000
2020 – Reviewed
Balance at 1 April 2020 7,444,436 7,551,890 2,272,661 9,824,551
Profit for the period 75,723 75,723 113,615 189,338
Restatement of property - 5,766 - 5,766
Other comprehensive income for the period - 236,206 - 236,206
Dividend paid – ordinary shareholders (140,830) (140,830) (10,453) (151,283)
Non-controlling interests arising from Mopani Property Development (Private) Limited
-
- 963 963
Balance at 30 September 2020 7,379,329 7,728,755 2,376,786 10,105,541
2019 – Unaudited
Balance at 1 April 2019 4,463,277 6,988,681 1,313,409 8,302,090
Profit for the period 1,691,238 1,691,238 418,127 2,109,365
Transfer from non-distributable reserves 189,851 - - -
Other comprehensive income for the period - 236,602 - 236,602
Dividend paid – ordinary shareholders (152,060) (152,060) - (152,060)
Non-controlling interests arising from Mopani Property Development (Private) Limited
-
- 47,011 47,011
Balance at 30 September 2019 6,192,306 8,764,461 1,778,547 10,543,008

HISTORICAL COST*

Share
capital
Share
premium

Other reserves
Investment revaluation
 ZWL 000  ZWL 000 ZWL 000  ZWL 000 
2020 – Unaudited
Balance at 1 April 2020 2,611 3,925 654,854 (259,251)
Profit for the period - - - -
Restatement of property - - 168 -
Other comprehensive income for the period - - 993,740 -
Dividend paid – ordinary shareholders - - - -
Non-controlling interests arising from Mopani Property Development (Private) Limited -
-

-

-
Balance at 30 September 2020 2,611 3,925 1,648,762 (259,251)
2019 – Unaudited
Balance at 1 April 2019 2,611 3,925 74,529 (9,600)
Profit for the period - - - -
Transfer from non-distributable reserves - - (25,000) -
Other comprehensive income for the period - - 336,380 -
Dividend paid – ordinary shareholders - - - -
Non-controlling interests arising from Mopani Property Development (Private) Limited -
-

-

-
Balance at 30 September 2019 2,611 3,925 385,909 (9,600)

   


Retained earnings
Attributable  to owners of parent Non-controlling
interests
Total
ZWL 000  ZWL 000  ZWL 000  ZWL 000
2020 – Unaudited
Balance at 1 April 2020 1,020,252 1,422,391 177,063 1,599,454
Profit for the period 1,541,784 1,541,784 343,250 1,885,034
Restatement of property - 168 - 168
Other comprehensive income for the period - 993,740 - 993,740
Dividend paid – ordinary shareholders (130,532) (130,532) (8,729) (139,261)
Non-controlling interests arising from Mopani Property Development (Private) Limited
-
- 631 631
Balance at 30 September 2020 2,431,504 3,827,551 512,215 4,339,766
2019 – Unaudited
Balance at 1 April 2019 131,914 203,379 48,999 252,378
Profit for the period 134,983 134,983 25,100 160,083
Transfer from non-distributable reserves 25,000 - - -
Other comprehensive income for the period - 336,380 - 336,380
Dividend paid – ordinary shareholders (20,024) (20,024) - (20,024)
Non-controlling interests arising from Mopani Property Development (Private) Limited
-
- 6,190 6,190
Balance at 30 September 2019 271,873 654,718 80,289 735,007

   

CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
INFLATION ADJUSTED HISTORICAL COST*
Reviewed Unaudited Unaudited Unaudited
30 Sep 2020 30 Sep 2019 30 Sep 2020 30 Sep 2019
 ZWL 000   ZWL 000   ZWL 000   ZWL 000 
CONTINUING AND DISCONTINUED OPERATIONS

Cash flows from operating activities
Profit / (loss) before tax – continuing operations 792,346 2,140,895 2,455,156 203,017
                       – discontinued operations 906 325,040 (46,553) 1,548
793,252 2,465,935 2,408,603 204,565
Adjustments for:
- Depreciation and impairment of property, plant and equipment, investment property and right-of-use assets 323,995 141,378 49,161 9,934
- Net interest 120,487 81,575 103,706 5,626
- Net exchange (gains) / losses (1,376,887) 143,231 (1,012,668) 1,711
- Fair value adjustments on biological assets 495,029 54,631 156,034 6,901
- Profit on disposal of property, plant and equipment – continuing operations (1,734) (9,348) (1,785) (1,048)
- Profit on disposal of property, plant and equipment – discontinued operations (706) - (575) -
Operating cash flow before working capital changes 353,436 2,877,402 1,702,476 227,689
(Increase) / decrease in inventories (136,938) 181,011 (1,442,267) (131,459)
(Increase) / decrease in trade and other receivables (205,296) 121,937 (357,694) (21,949)
(Decrease) / increase in trade and other payables (170,011) (224,874) 1,061,915 171,767
Cash (used in) / generated from operations (158,809) 2,955,476 964,430 246,048
Income taxes paid (422,593) (249,160) (268,047) (34,624)
Net cash (used in) / generated from operating activities (581,402) 2,706,316 696,383 211,424
Cash flows from investing activities
Payment for property, plant and equipment (402,837) (1,092,143) (336,954) (95,100)
Proceeds from disposal of property, plant and equipment 2,530 11,102 2,363 1,220
Net movement in service assets 15 (1,192) 6 (115)
Net movement in other  investments (10,409) 167 (16,526) 37
Net movement in biological assets 33,044 (714) 11,357 820
Investment income 440 1,002 213 44
Net cash used in investing activities (377,217) (1,081,778) (339,541) (93,094)
Cash flows from financing activities
Net increase / (decrease) in interest bearing borrowings 71,238 (26,222) 174,685 (3,453)
Non-controlling interests arising from Mopani Property Development (Private) Limited 963 47,011 631 6,190
Finance costs (121,556) (82,570) (98,430) (5,670)
Lease movement 26,112 38,076 26,112 96
Dividend paid – ordinary shareholders (111,974) (152,063) (109,396) (20,024)
                       –minorities (10,453) - (8,729) -
Net cash used in financing activities (145,670) (175,768) (15,127) (22,861)
Net (decrease) / increase in cash and bank balances (1,104,289) 1,448,770 341,715 95,469
Cash and bank balances at the beginning of the period 714,225 697,185 262,469 33,,006
Translation of foreign entity (844,320) (734,274) 11,245 2,578
Restatement of property, plant and equipment 5,766 - 168 -
Net effect of exchange rate changes on cash and bank balances 1,290,654 (414,983) 50,252 2,680
Effects of inflation adjustments 603,813 18,747 - -
Cash and bank balances at the end of the period 665,849 1,015,445 665,849 133,733

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of preparation

The condensed consolidated financial statements are prepared from statutory records that are maintained under the historical cost basis except for biological assets and certain financial instruments which are measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The historical costs have been adjusted for the effects of applying International Accounting Standard (“IAS”) 29 – ‘Financial Reporting in Hyperinflationary Economies’ . Refer to note 2.3 for further details.

These condensed consolidated financial statements have been prepared in accordance with the International Accounting Standard (“IAS”) 34 Interim Financial Reporting and should be read in conjunction with the Group’s annual report for the full year to 31 March 2020.

These condensed consolidated financial statements have been prepared under the supervision of Thempson Muzvangwandoga CA (Z), the Group Chief Financial Officer, registered public accountant PAAB Number 2724.

2. Accounting policies

Accounting policies and methods of computation applied in the preparation of these condensed consolidated financial statements are consistent, in all material respects, with those used in the preparation of the annual report. New applicable standards and improvements which became effective in the current year have been complied with and have had no material impact on these condensed consolidated financial statements.

2.1 Functional and presentation currency

These condensed consolidated financial statements are presented in Zimbabwe dollars (ZWL), which is the Group’s functional and presentation currency. The ZWL was designated as the sole transactional, functional and reporting currency following the promulgation of Statutory Instrument 33 of 2019 dated 22 February 2019 and Statutory Instrument 142 of 2019 dated 24 June 2019.

2.2 Historical reporting*

Historical cost financial results are provided only as supplementary information. The primary financial statements are the inflation adjusted results. The auditor’s review conclusion relates only to the inflation adjusted financial results.

2.3 Hyperinflation 

On 11 October 2019, the Public Accountants and Auditors Board (“PAAB”) issued a pronouncement on the application of IAS 29. The pronouncement requires that entities operating in Zimbabwe with financial periods ending on or after 1 July 2019, prepare and present financial statements in line with the requirements of IAS 29.

The Directors have made appropriate adjustments to reflect the changes in the general purchasing power on the ZWL and for the purposes of fair presentation in accordance with IAS 29, these changes have been made on the historical cost financial information. Various assumptions have been made, with the significant assumption being the use of the consumer price indices (“CPI”), for the various years. Accordingly, the inflation adjusted condensed consolidated financial statements represent the primary financial results of the Group.

The source of the price indices used was the Reserve Bank of Zimbabwe website. Below are the indices and adjustment factors used up to 30 September 2020:


Indices
Adjustment Factor
CPI as at 30 September 2020 2,205.24 1.00
CPI as at 31 March 2020 810.40 2.72
CPI as at 30 September 2019 290.40 7.59
Average CPI 2020 1,630.69
Average CPI 2019 192.12

3. Going concern

The Directors assess the ability of the Group to continue in operational existence in the foreseeable future at each reporting date. As at 30 September 2020, the Directors have assessed the Group’s ability to continue operating as a going concern and believe that the preparation of these condensed consolidated financial statements on a going concern basis is still appropriate. 

The Group’s segments have put in place various measures to mitigate the adverse impact of the COVID-19 pandemic to the businesses. Apart from the hospitality segment, the rest of the Group’s segments are operating as they are classified as part of essential services. Whilst lockdown restrictions have been eased, customer spending is still to fully recover in the Group’s retail sector due to reduced disposable income. Gradual revenue growth is anticipated in the second half of the financial year.

The Victoria Falls Hotel, which closed at the end of March 2020, re-opened on the 1st of November 2020 following resumption of domestic and limited international flights after the Government of Zimbabwe eased restrictions in September 2020. However, revenue is still subdued as new cases of COVID-19 infections are on the rise in major source markets. The Cape Grace Hotel remains closed as South Africa still has stringent protocols for visitors entering the country from major tourist source markets.

Both the hospitality segment and the rest of the Group have sufficient cash resources to fund operations for a prolonged period of care and maintenance.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Segment information

INFLATION ADJUSTED HISTORICAL COST*
Reviewed Unaudited Unaudited Unaudited
30 Sep 2020 30 Sep 2019 30 Sep 2020 30 Sep 2019
Revenue – continuing operations ZWL 000 ZWL 000 ZWL 000 ZWL 000
Supermarkets 10,025,669 10,756,715 7,501,593 940,930
Agriculture 934,539 1,101,423 750,909 104,271
Hotels 290,340 349,143 180,790 33,116
Corporate* (31,622) (59,284) (21,975) (3,944)
11,218,926 12,147,997 8,411,317 1,074,373
Operating profit – continuing operations
Supermarkets 306,093 411,730 1,136,240 114,781
Agriculture 402,915 604,500 573,563 95,417
Hotels 33,297 154,212 52 14,985
Corporate* (81,884) (79,087) (48,775) (12,870)
660,421 1,091,355 1,661,080 212,313

INFLATION ADJUSTED
HISTORICAL COST*
Reviewed Audited Unaudited Unaudited
30 Sep 2020 31 Mar 2020 30 Sep 2020 31 Mar 2020
Segment assets ZWL 000 ZWL 000 ZWL 000 ZWL 000
Supermarkets 7,601,072 6,939,396 3,066,900 938,668
Agriculture 3,761,658 3,800,051 1,546,247 635,265
Hotels 1,729,233 1,867,962 1,321,930 547,585
Corporate* 1,639,241 1,420,390 1,482,505 461,025
14,731,204 14,027,799 7,417,582 2,582,543
Segment liabilities
Supermarkets 3,076,850 2,621,187 2,038,343 593,171
Agriculture 767,745 806,691 424,384 172,704
Hotels 495,881 404,922 490,197 143,733
Corporate* 285,187 370,448 124,892 73,481
4,625,663 4,203,248 3,077,816 983,089

   

*Included in the corporate revenue amount is an adjustment of ZWL 73.5 million (2019: ZWL 95.6 million); (Historical cost ZWL 55.5 million (2019: ZWL 7.2 million) against revenue in respect of inter-segment sales. Inter-company balances have been eliminated in the corporate amounts. Corporate also includes other operating segments that are immaterial to warrant separate disclosure.
5. Fair value measurement

5.1 Fair value hierarchy
IFRS 13 Fair Value Measurement specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;
• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.

5.2 Valuation of Investment Mentor Africa (Pty) Limited (“Mentor”)
The Group’s investment in Mentor Africa (Pty) Limited is carried at FVTOCI and is not held for trading. The investment is unlisted and there is no active market for similar or identical investments. In the absence of market activity and access to more observable level 1 or 2 inputs, the Group utilises level 3 inputs to determine fair value. Valuations are performed by an independent expert valuer, and in preparing such valuation, assumptions are made relating to future events and financial performance.

The investment is valued at a weighted average of three valuation methods, namely: the enterprise value (“EV”), price-to-book value (“PBV”) and the price-to-earnings value (“PE”). The significant unobservable inputs used in these valuations are the EV, PBV and PE proxy multiples obtained from comparable entities listed on the Johannesburg Stock Exchange. The applicable non-trading discount is applied to the proxy multiples to reflect the non-tradability of the Mentor shares as they are not listed on a stock exchange.

Fair valuations are performed annually at each financial year end, and hence no valuation has been done for these condensed consolidated financial statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair value measurement (continued)

5.3 Valuation of Biological assets

Biological assets comprise of gum and wattle plantations, livestock and produce growing on the bearer plants. The present value of expected net cash flows from plantations, discounted at a current market determined pre-tax rate, was used to determine fair value of timber plantations. The fair value for livestock was determined by reference to the market price and these valuations were carried out by a professional valuer not connected to the Group. Produce growing on bearer plants is measured at fair value less costs to sell with changes recognised in profit or loss as the produce grows.

Fair values of tea bushes on plantations, macadamia nuts on plantations, coffee beans on plantations and avocado fruit on plantations is determined using Level 1 inputs on the fair value hierarchy, whilst fair values for timber plantations and livestock is determined using level 3 inputs.

6. Discontinued operations

Greatermans Stores

The group exited the departmental stores segment during the first quarter of the previous financial year. The results of the departmental stores for the current year relate to winding down costs and proceeds from disposal of assets and are disclosed as discontinued operations in the current period.

7. Subsequent events

There were no siginificant events after the reporting date.

8. External Auditor’s Review Conclusion

These condensed consolidated financial statements for the six months ended 30 September 2020 have been reviewed by Deloitte & Touche (Chartered Accountants) Zimbabwe who indicate that nothing has come to their attention that causes them to believe that these inflation adjusted condensed consolidated financial statements are not prepared, in all material respects in accordance with IAS 34 and the requirements of the Zimbabwe Stock Exchange Listings Requirements.

The auditor’s review statement is available for inspection at the Company’s registered office and on the website.

Meikles Limited Website : www.meiklesltd.com

Notice to Shareholders

Dividend declaration

Notice is hereby given that the Board of Directors declared an Interim Dividend Number 83 of ZWL 42.5 per share payable out of the profits for the current financial year. The dividend will be payable on or about 18 December 2020. Disbursements to foreign shareholders is subject to Exchange Control Approval and payment guidelines for foreign payments. The timetable for the dividend payment is as follows: -

Action Date
Dividend announcement 25 November 2020
Last date to trade cum dividend 8 December 2020
Ex-dividend date 9 December 2020
Last record date 11 December 2020
Payment date 18 December 2020

Shareholders are encouraged to update their payment details through our transfer secretaries:

ZB Transfer Secretaries, 21 Natal Road, Belgravia, Harare Zimbabwe

PMberikwazvi@zb.co.zw

RMutakwa@zb.co.zw

By Order of the Board

T. Mpofu

Company Secretary

25 November 2020


© PRNewswire 2020
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