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Meikles 2013 Annual report

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Meikles 2013 Annual report

Meikles 2013 Annual report

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    Meikles 2013 Annual report Meikles 2013 Annual report Document Transcript

    • 1Meikles Limited 2013 Annual Report CONTENTS Chairman’s Review 2 Corporate Governance 6 Report of the Directors 7 Directors’ Responsibility for Financial Reporting 8 Report of the Independent Auditors 9 Consolidated Statement of Profit or Loss and other Comprehensive Income 10 Consolidated Statement of Financial Position 11 Company Statement of Financial Position 12 Consolidated Statement of Changes in Equity 13 Company Statement of Changes in Equity 14 Consolidated Statement of Cash Flows 15 Notes to the Financial Statements 16 Key Performance Measures 64 Shareholder Information 65 Group Structure 66 Tax Issues and Share Prices 67 Corporate Information 68 Notice of Meeting 69 Form of Proxy 70 Instructions for Signing and Lodging Form of Proxy 71
    • 2 Meikles Limited 2013 Annual Report I am pleased to report that the Group has progressed significantly over the past financial year. A clear strategy is in place, which will enhance success in future years. This review will provide shareholders with an appreciation of the implications of our present inability to access our deposit at the Reserve Bank of Zimbabwe. This implication represents the most significant challenge to the well being of the Group and our ability to play a greater role in the economic future of the country. STRATEGIC INITIATIVES We outline below the status of various strategic initiatives that have been developed to grow the organisation. Mining Following the decision to enter the resources sector, a division, Meikles Resources, has been established to house the Group’s mining investments. The Group has obtained a special mining grant within the Midlands area of Zimbabwe. This grant allows the Group to prospect for various minerals, including iron ore and chrome. The Group also has opportunities relating to gold and tantalite. We plan to have at least one producing mine in operation in 2014. We have signed a memorandum of understanding, which will shortly become a full shareholders agreement, with a substantial technical partner to pursue these opportunities, including the provision of necessary capital, skills and expertise in mining. Anticipated funding for mining operations is expected to be substantial. The division will raise its own capital and will not be dependent on Group financial resources. Funds held on deposit at the Reserve Bank of Zimbabwe The funds on deposit with the Reserve Bank of Zimbabwe (RBZ) originated from the listing of the Group on both the Zimbabwe and London Stock Exchanges and the raising of funds from a number of substantial international investors for the benefit of the Group. These funds were remitted to Zimbabwe and ultimately placed on deposit with the RBZ at the insistence of the then Governor, the predecessor to the present Governor, to be used for Balance of Payments support. The Group has been provided with a deposit statement by the Reserve Bank in acknowledgement of the fact that the RBZ is indebted to the Group. This statement in common with banking practice is sent to the Group monthly. This is a US dollar deposit and the Group has been unable to access any of the funds since 2001. The Group has received promises of repayment from the RBZ, but to date nothing has materialised. These funds are required for Group purposes and Government is obliged to make them available. We have without success engaged both the RBZ and the Ministry of Finance in an attempt to negotiate an arrangement whereby access to these funds may be facilitated. In the circumstances, we deem it appropriate to further escalate our efforts to access these funds. Finance The decision revealed to stakeholders to fund projects largely with foreign term loans at lower rates of interest, together with shareholder funding where required, has been achieved. The renovation of Meikles Hotel, The Victoria Falls Hotel, the expansion of Tanganda and the renovation and expansion of TM Supermarkets have all been funded or are about to be funded in this manner. Over the term of the funding, loans will be repaid from relevant operations. The Group will retire all short term loans upon receipt of the funds held on deposit with the RBZ. Chairman’s Review
    • 3Meikles Limited 2013 Annual Report The recovery of funds held on deposit at the RBZ will remove the last major impediment to the shareholder value growing to a level which corresponds more closely to the current intrinsic value of the Group. Shareholders will understand from this review the extent of the adverse effects that the present inability to recover this deposit is causing the Group. The loss, being additional finance charges caused by the present inability to access the deposit from time of dollarisation to 31 March 2013, amounts to US$26 million. This is in addition to interest that has been credited by the RBZ but which has not been received by the Group. This outflow is the result of interest paid to third parties, which need not have been incurred. This sum added to the balance of the sum on deposit would total US$82 million and is more than sufficient to eliminate all short term borrowings in the group and leave a useful credit balance for Group investment purposes. It would also permit the payment of a dividend to shareholders, and facilitate other measures to enhance shareholder value. Properties The Group has a very significant property portfolio situated in all the major centres of Zimbabwe. Steps are currently underway to leverage this portfolio to unlock value and maximise returns and cash generation. This portfolio is currently valued in excess of $60 million and is anticipated to grow substantially in value. GROUP RESULTS The Group made a profit before taxation of US$7.8 million, compared to a loss of US$8.5 million in the previous year, an improvement of US$16.3 million. The profit after taxation was US$6.5 million compared to a loss of US$3.4 million in the previous year. Key benchmarks of turnover and margin resulted in improved gross profits, compared to the previous year. Increases in operating costs were contained at levels below growth in turnover. We continue to incur substantial interest costs, although these costs did not increase relative to the previous year. It is calculated that our inability to recover our deposit from the RBZ has resulted in the Group paying excessive interest costs of US$7 million during the year under review. It is anticipated that interest costs in the forthcoming financial year will be adversely affected by approximately US$8 million should we fail to recover the deposit. TM Supermarkets The company recorded an EBITDA of US$11.5 million, compared with US$5.2 million in the previous year. Four stores were completely refurbished. Two of these are branded Pick n Pay and two remained with the TM brand. They have all performed above expectations. A number of other stores received upgrades of various items of equipment, pending a full refurbishment. As expected, the partial refurbishments have also resulted in an increase in turnover and an improvement in gross margins. The potential for this company is substantial. Shareholders are to ensure that additional funding for store refurbishment and store expansion amounting to US$25 million, will be made available to TM Supermarkets. Thomas Meikle Stores The company recorded an EBITDA loss of US$1.3 million, compared to a loss of US$2.2 million in the previous year. The current economic environment dictates that priority is given to food, basic necessities and school fees, ahead of luxuries, as disposable incomes remain very low. There has been rationalisation, including the closure of nine Home and Beauty shops, which were operated by the Group. The deteriorating liquidity in the market has caused us to curtail credit. Funding limitations caused by our inability to access our deposit with the RBZ has caused difficulties in achieving appropriate stock levels. Chairman’s Review
    • 4 Meikles Limited 2013 Annual Report We plan to be more aggressive and provide better shopping environments and choices for our customers, but we can only do so if we are able to access our RBZ deposit. If we fail to secure our deposit a further downsizing and curtailment of resources allocated to the stores is anticipated. Meikles Hospitality The hotels achieved an EBITDA of US$612,000 compared to a loss of US$900,000 in the previous year. The refurbishment of the North Wing at Meikles Hotel commenced in April 2012 and will be completed in the next few months. This project has taken far longer to complete than anticipated. There have been various reasons for the delay, but shortage of funding at various times, but now rectified, has probably been the main reason for the delay. Once the redevelopment is complete, we shall have a world class product for our guests. The Victoria Falls Hotel revenues increased relative to the previous year, mainly due to improved room rates. Work to refashion 44 luxury suites and public areas has already started and is scheduled to be completed in time for the UNWTO Conference in August 2013. Both projects have involved local contractors. Work on the Hotel in Lusaka has been delayed. This delay emanated from the changes in the functional currency in Zambia which has moved to the use of the Zambian Kwacha, for local transactions. This has impacted on the feasibility of the project. However, it is expected that the project will commence in the near future. The Group will continue to seek expansion opportunities both in Zimbabwe and in the region. Meikles Hospitality is attractive to potential investors and has a good and solid future. Tanganda The company achieved an EBITDA of US$1.2 million compared to a loss of US$3.9 million in the previous year. Minimal rains were received in the winter of 2012 and certain tea areas were affected by frost. The dry spell continued up to the end of the 3rd quarter, but useful rains were received in the final quarter of the financial year. The delayed rains affected tea production which amounted to 7,500 tons compared to 8,500 tons in the previous year. This short-fall in production was mitigated by an increase in global tea prices on the back of increasing demand and an improved quality of teas from our estates. Investment in the coming year will focus on the replacement of the existing antiquated tea packaging plant with modern equipment. This new equipment will significantly improve the efficiency of production and quality of product. There are opportunities for increasing sales of packeted teas in the region. Water production and distribution increased by 51% to 3 million litres. The market will see increased availability of the product in the coming year. In addition to the existing 2,400 hectares of tea and in line with our diversification strategy, it is our intention to continue developing the plantations to 300 hectares of coffee, 425 hectares of avocados and 700 hectares of macadamias in the coming financial year. Tanganda continues to attract interest from potential investors and will have a good and solid future. Mentor Africa The Group acquired a direct shareholding in Mentor Africa, following the merger of the Cape Grace Hotel into Mentor Africa. The Group’s pro rata share of Mentor Africa investments was valued by the Directors at R241 million, representing an uplift of value in Rand terms, of 12%. Chairman’s Review
    • 5Meikles Limited 2013 Annual Report Due to the devaluation of the Rand, there was a 6% diminution in the US$ value when compared to the initial recognition in the Group’s financial records. The Group remains optimistic about prospects for its investment in Mentor Africa and expects the value of this investment to increase. dnata Catering Services, the Newrest Group and Mentor Africa recently announced the formation of a new, jointly-owned inflight catering services group in South Africa. A new company called “dnata Newrest” was formed by Wings Inflight Services, which was jointly owned by dnata and Mentor Africa, acquiring the inflight catering services business of Newrest First Catering in South Africa. The new entity, dnata Newrest RSA, will be owned and managed equally by dnata, Newrest and Mentor Africa. The transaction was implemented on 15 March 2013. Operationally, the new entity will be controlled by dnata and Newrest with their extensive worldwide experience in the inflight catering arena. dnata is a member of the Emirates Group and has interests in ground handling and inflight catering business in 38 countries across five continents. Newrest is the only major catering company active in all catering and related hospitality segments including airline catering, rail catering, contract catering, concession retail, buy-on-board, health care, education, and remote site and support services. The Cape Grace Hotel performed exceptionally well as a result of new operating strategies adopted and improved further on all recognised operating bench-marks. It was also voted the second best luxury/top hotel in the world by TripAdvisors in the 2013 Travellers Choice Awards, a proud achievement by the hotel management and staff. The hotel has won the Best City Hotel in Africa in the UltraTravel Awards. The hotel has also been voted number one in Africa by Celebrated Living, which is the magazine for American Airlines and was voted number two in the Travel and Leisure World’s best service for Africa and the Middle East. Mentor Africa is also invested in a leading provider in South Africa of energy efficient lighting solutions and products which continue to work with major mining, industrial and property groups in South Africa, and is expecting to participate in major contracts going forward. Meikles Guard Services The company was formed late in the financial year and its management brings to Zimbabwe 18 years of security services experience in the international arena. The company will provide security services to companies, embassies and nongovernmental organisations in addition to the security requirements of the Group. CONCLUSION The Group has made the positive steps outlined above through the dedicated efforts and commitment of the board, management and staff across all business units. The regulatory authorities are guiding us as we make the foray into new areas to expand our business. The shareholders whose support we always count on, can be assured that with the return to profitability of our Group, the future will improve. This coupled with the new ventures should lead to an increase in shareholder value in the near term. However, Group fortunes will be affected if the funds held on deposit at the RBZ are not made available. JRT Moxon Executive Chairman 3 June 2013 Chairman’s Review  
    • 6 Meikles Limited 2013 Annual Report DIRECTORATE J.R.T. Moxon Executive Chairman O. Makamba Executive Director Finance and Administration R. Chidembo • * Non-executive Director B. Chimhini Executive Director K. Ncube • * Executive Director (Non-Executive until 30 November 2012) M.L. Wood Executive Director • Member of the Audit Committee * Member of the Remuneration Committee The directorate is referred to in this annual report as the “Board” and as “Directors”. “Company” refers to Meikles Limited. On page 8 the Directors have acknowledged their responsibility for the financial statements. The structure of the Board and its standing committees is as follows: - The Board At 31 March 2013, the Board consisted of six members and met at least quarterly during the year. The key matters reserved for the decision of the Board are the Group strategy, acquisition and divestment policy, approval of the Group budget and major capital projects, and general treasury and risk management policies. Messrs R. Chidembo and M.L. Wood retire by rotation in terms of the Articles of Association, and being eligible, offer themselves for re-election. The Audit Committee The Audit Committee is chaired by Mr R. Chidembo and meets at least quarterly. Messrs J.R.T. Moxon, O. Makamba and M.L. Wood as well as the internal and external auditors attend these meetings by invitation. The Audit Committee reviews the Group’s interim and annual financial statements before submission to the Board for approval. Its objectives are to ensure that the Board is advised on all matters relating to corporate governance and the creation and maintenance of effective internal controls, as well as advising the Board and management on measures which ensure that respect for both regulatory issues and internal controls is demonstrated and stimulated. Accordingly, it reviews the effectiveness of the internal audit function, its programmes and reports, and also reviews all reports from the external auditors on accounting and internal control matters, and monitors action taken where necessary. The Audit Committee also recommends the appointment and fees of external auditors. The Remuneration Committee The Remuneration Committee is chaired by Mr K. Ncube and meets at least quarterly. The terms of reference of the Remuneration Committee are to determine the Group’s policy on the remuneration of senior executives. Subsidiaries The Group operates a decentralised subsidiary structure. Each significant subsidiary has a formal operating board with a clear definition of responsibility, which operates within well-defined policies. There is comprehensive financial reporting with actual results reported monthly against budget and prior year. Corporate Governance
    • 7Meikles Limited 2013 Annual Report Your Directors have pleasure in presenting their report and the audited financial statements of the Group for the year ended 31 March 2013. Principal activities The main activities of the Group are those of agriculture, hotels and retail trading. Retail trading includes department stores and supermarkets. The Group has resolved to enter the mining sector and has also formed a security guard services company. These operations were still at their infancy as at 31 March 2013 but are expected to grow in the future. Assets held for sale The disposal of the Cape Grace Hotel operations in South Africa was concluded during the year with an effective date of 1 April 2012. Details of the disposal are disclosed in notes 14, 15 and 37. Financial results The results for the year ended 31 March 2013 are set out in the attached financial statements. Share capital Details of the authorised and issued share capital are set out in note 26 to the financial statements. Directors and their interests The names of the Directors of the Company during the year are set out under the Corporate Governance section. As provided by the Companies’ Act (Chapter 24:03), the Directors are bound to declare at any time during the year, in writing, whether they have any interest in any contract of significance with the Company or any of its subsidiaries or joint venture. No Director confirmed having, during or at the end of the year, any material interest in any contract of significance in relation to the Group’s businesses except as disclosed in note 29. Executive Directors have employment contracts with the Company or its subsidiaries. The direct and indirect beneficial interests of the Directors in the shares of the Company are given in note 26 to the financial statements. Substantial shareholdings According to information received by the Directors, the following were the top ten shareholders of the Company as at 31 March 2013: Shareholder No. of shares % Gondor Capital Limited 120,355,076 47.42 Old Mutual Life Assurance Company Zimbabwe Limited 22,563,681 8.89 Clayway Investments (Private) Limited 12,812,381 5.05 Meikles Limited Employee Share Ownership Trust 8,418,510 3.32 Stanbic Nominees (Private) Limited 5,134,870 2.02 Datvest Nominees (Private) Limited 5,010,338 1.97 Zimcor Limited 4,310,557 1.70 Old Mutual Zimbabwe Limited 4,012,919 1.58 AATC 3,335,517 1.31 Meikles Consolidated Holdings (Private) Limited 2,789,470 1.10 Independent auditors Messrs. Deloitte & Touche offer themselves for re-election as auditors for the year ending 31 March 2014 and shareholders will be asked to reappoint them, and to approve their fees for the year ended 31 March 2013. J.R.T. Moxon Executive Chairman Harare, 3 June 2013 Report of the Directors  
    • 8 Meikles Limited 2013 Annual Report The Directors of the Company are responsible for the maintenance of adequate accounting records, and the preparation of financial statements for each financial year, that give a true and fair view of the state of affairs of the Company and the Group at the end of the financial year, and of the results and cash flows for that year. They are also required to select appropriate accounting policies, to safeguard the assets of the Company and the Group and to make reasonable and prudent judgements and estimates. Accounting policies, which follow International Financial Reporting Standards (IFRS), have been consistently applied, where practicable. Critical judgemental areas are disclosed in note 4 to the financial statements. The Directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the financial statements, and to safeguard, verify and maintain accountability of assets, and to prevent and detect material misstatements and losses. The systems are implemented and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the attention of the Directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review. The financial statements have been prepared in accordance with the accounting policies set out in the accounting policy notes. The Directors have reviewed the Group’s budgets and cash flow forecasts for the year to 31 March 2014 and, in light of this review and the current financial position, they are satisfied that the Group has access to adequate resources to continue in operational existence for the foreseeable future. However, the Directors believe that under the current economic environment a continuous assessment of the ability of the Group to continue to operate as a going concern will need to be performed. . J.R.T. Moxon O. Makamba Executive Chairman ExecutiveDirectorFinanceandAdministration Harare, 3 June 2013 Harare, 3 June 2013 Directors’ Responsibilty for Financial Reporting    
    • 9Meikles Limited 2013 Annual Report REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF MEIKLES LIMITED REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying Group financial statements for Meikles Limited, which comprise the consolidated statement of financial position as at 31 March 2013, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes set out on pages 10 to 63. Directors’ responsibility for the financial statements The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the Companies Act (Chapter 24:03) and relevant statutory instruments (SI 33/99 and SI 62/96). This responsibility includes; designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of Meikles Limited as at 31 March 2013, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on other legal and regulatory requirements In our opinion, the financial statements have, in all material respects, been properly prepared in compliance with the disclosure requirements of the Companies Act (Chapter 24:03) and the relevant statutory instruments (SI 33/99 and SI 62/96). Deloitte & Touche Chartered Accountants (Zimbabwe) Harare 3 June 2013 P O Box 267 Deloitte & Touche Harare Kenilworth Gardens Zimbabwe 1 Kenilworth Road Highlands Harare Tel: +263 (0)4 746248/54 +263 (0)4 746271/5 Fax: +263 (0)4 746255 www.deloitte.com
    • 10 Meikles Limited 2013 Annual Report Consolidated Statement of Profit or Loss and other Comprehensive Income For the year ended 31 March 2013 31 March 31 March 2013 2012 Notes US$ 000 US$ 000 CONTINUING OPERATIONS Revenue 5 391,328 354,102 Net operating costs 7 (386,262) (362,430) Operating profit / (loss) 5,066 (8,328) Investment income 12 2,244 2,011 Finance costs 12 (6,994) (7,126) Net exchange ( losses) / gains (340) 1,183 Fair value adjustments 7,828 3,792 Profit / (loss) before tax 7,804 (8,468) Income tax (expense) / credit 13 (2,442) 2,544 Profit /(loss) for the year from continuing operations 5,362 (5,924) DISCONTINUED OPERATIONS Profit for the period from discontinued operations 14 1,173 2,480 PROFIT / (LOSS) FOR THE YEAR 6,535 (3,444) Other comprehensive loss Items that will not be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations - (1,992) Other comprehensive loss for the year, net of tax - (1,992) TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE YEAR 6,535 (5,436) Profit / (loss) attributable to: Owners of the parent 3,084 (3,537) Non-controlling interests 3,451 93 6,535 (3,444) Total comprehensive profit / (loss) attributable to: Owners of the parent 3,084 (5,529) Non-controlling interests 3,451 93 6,535 (5,436) Earnings / (loss) per share - cents 16 Basic 1.21 (1.44) Continuing operations 0.75 (2.45) Discontinued operations 0.46 1.01 Diluted 1.15 (1.31) Continuing operations 0.71 (2.23) Discontinued operations 0.44 0.92 Headline earnings / (loss) per share - cents 16 0.86 (1.47) Continuing operations 0.86 (2.37) Discontinued operations - 0.90 Diluted headline earnings / (loss) per share - cents 16 0.81 (1.34) Continuing operations 0.81 (2.16) Discontinued operations - 0.82
    • 11Meikles Limited 2013 Annual Report 31 March 31 March 2013 2012 Notes US$ 000 US$ 000 Restated* ASSETS Non-current assets Property, plant and equipment 17 99,063 86,122 Investment property 18 254 43 Investment in Mentor Africa Limited 19 27,657 - Biological assets 20 21,521 11,770 Intangible assets 21 2,204 124 Other financial assets 22 12,693 18,370 Balances with Reserve Bank of Zimbabwe 23 40,514 38,627 Deferred tax 13 1,997 1,888 Total non-current assets 205,903 156,944 Current assets Inventories 24 36,708 36,666 Trade and other receivables 25 17,283 17,642 Other financial assets 22 1,405 1,085 Cash and bank balances 23 14,198 8,427 69,594 63,820 Assets held for sale 15 - 37,871 Total current assets 69,594 101,691 Total assets 275,497 258,635 EQUITY AND LIABILITIES Capital and reserves Share capital 26 2,538 2,538 Share premium 1,316 1,316 Non-distributable reserves 12,559 6,233 Retained earnings 121,028 104,626 Capital and reserves relating to assets classified as held for sale 15 - 19,644 Equity attributable to equity holders of the parent 137,441 134,357 Non-controlling interests 10,990 7,539 Total equity 148,431 141,896 Non-current liabilities Borrowings 27 7,417 4,786 Deferred tax 13 14,534 12,155 Total non-current liabilities 21,951 16,941 Current liabilities Trade and other payables 28 46,263 38,371 Borrowings 27 58,852 47,199 105,115 85,570 Liabilities relating to assets classified as held for sale 15 - 14,228 Total current liabilities 105,115 99,798 Total liabilities 127,066 116,739 Total equity and liabilities 275,497 258,635 * Refer to note 36 for details of the restatement. J.R.T. Moxon O. Makamba 3 June 2013 3 June 2013 Consolidated Statement of Financial Position As at 31 March 2013    
    • 12 Meikles Limited 2013 Annual Report Company Statement of Financial Position As at 31 March 2013 31 March 31 March 2013 2012 Notes US$ 000 US$ 000 ASSETS Non-current assets Property, plant and equipment 17 75 102 Investment in subsidiaries 22 74,129 74,129 Other financial assets 22 173 365 Balances with Reserve Bank of Zimbabwe 23 40,514 38,627 Total non-current assets 114,891 113,223 Current assets Inventories 24 4 4 Receivables 25 34,892 28,307 Other financial assets 22 1,177 281 Cash and bank balances 23 431 1,512 Total current assets 36,504 30,104 Total assets 151,395 143,327 EQUITY AND LIABILITIES Capital and reserves Share capital 26 2,538 2,538 Share premium 1,316 1,316 Non-distributable reserves 34,410 34,410 Retained earnings 94,688 94,233 Total equity 132,952 132,497 Non-current liabilities Borrowings 27 112 - Deferred tax 13 1,900 1,959 Total non-current liabilities 2,012 1,959 Current liabilities Trade and other payables 28 3,625 1,167 Borrowings 27 12,806 7,704 Total current liabilities 16,431 8,871 Total equity and liabilities 151,395 143,327 J.R.T. Moxon O. Makamba 3 June 2013 3 June 2013    
    • 13Meikles Limited 2013 Annual Report Disposal Non group Attributable Non Share Share distributable Retained capital and to owners controlling capital premium reserves earnings reserves of parent interests Total US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 2013 Balance at 1 April 2012 2,538 1,316 6,233 104,626 19,644 134,357 7,539 141,896 Profit for the year - - - 3,084 - 3,084 3,451 6,535 Transfer on disposal of assets classified as held for sale - - 6,326 13,318 (19,644) - - - Balance at 31 March 2013 2,538 1,316 12,559 121,028 - 137,441 10,990 148,431 2012 - restated Balance at 1 April 2011 as previously stated 2,454 - 2,627 111,207 18,083 134,371 764 135,135 Prior year adjustment – inventory valuation error - - - (1,719) - (1,719) (573) (2,292) Change in accounting policy – inventory valuation - - - 67 - 67 22 89 Balance at 1 April 2011 restated 2,454 - 2,627 109,555 18,083 132,719 213 132,932 (Loss) / profit for the year - - - (6,017) 2,480 (3,537) 93 (3,444) Change in ownership interests in a subsidiary without loss of control - - 4,679 1,256 - 5,935 7,065 13,000 Other comprehensive loss for the year - - (1,073) - (919) (1,992) - (1,992) Issue of shares for cash 84 1,316 - - - 1,400 - 1,400 Transfer on disinvestment of non controlling interest in a subsidiary - - - (168) - (168) 168 - Balance at 31 March 2012 restated 2,538 1,316 6,233 104,626 19,644 134,357 7,539 141,896 Refer to note 36 for details of the restatement. Consolidated Statement of Changes in Equity For the year ended 31 March 2013
    • 14 Meikles Limited 2013 Annual Report Non Share Share distributable Retained capital premium reserves earnings Total US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 2013 Balance at 1April 2012 2,538 1,316 34,410 94,233 132,497 Profit for the year - - - 455 455 Balance at 31 March 2013 2,538 1,316 34,410 94,688 132,952 2012 Balance at 1April 2011 2,454 - 30,304 98,631 131,389 Loss for the year - - - (292) (292) Issue of shares for cash 84 1,316 - - 1,400 Transfer to non-distributable reserves - - 4,106 (4,106) - Balance at 31 March 2012 2,538 1,316 34,410 94,233 132,497 Company Statement of Changes in Equity For the year ended 31 March 2013
    • 15Meikles Limited 2013 Annual Report 31 March 31 March 2013 2012 US$ 000 US$ 000 CONTINUING AND DISCONTINUED OPERATIONS Cash flows from operating activities Profit / (loss) before tax from continuing and discontinued operations 7,804 (5,616) Adjustments for: - Depreciation and impairment 4,901 4,834 - Net interest 4,750 6,371 - Net exchange losses / (gains) 340 (1,342) - Fair value adjustments (7,828) (3,681) - Loss / (profit) on disposal of property, plant and equipment 267 (69) Operating cash flow before working capital changes 10,234 497 (Increase) / decrease in inventories (42) 1,196 Increase in trade and other receivables (2,164) (3,252) Increase in trade and other payables 13,108 7,675 Cash generated from operations 21,136 6,116 Income taxes paid (172) (9) Net cash generated from operating activities 20,964 6,107 Cash flows from investing activities Payment for property, plant and equipment (18,299) (6,839) Proceeds from disposal of property, plant and equipment 188 1,503 Increase in intangible assets (2,080) - Net movement in service assets (209) (21) Payment for other investments (82) (250) Net expenditure on biological assets (1,923) (496) Net outflow on disposal of subsidiary (2,857) - Investment income 357 251 Net cash used in investing activities (24,905) (5,852) Cash flows from financing activities Change in ownership interests in a subsidiary without loss of control - 13,000 Net increase in interest bearing borrowings 14,284 6 Proceeds from issue of shares - 1,400 Finance costs (6,994) (8,454) Net cash generated from financing activities 7,290 5,952 Net increase in cash and bank balances 3,349 6,207 Cash and bank balances at the beginning of the year 11,284 4,785 Net effect of exchange rate changes on cash and bank balances (435) 606 Translation of foreign entities - (314) Cash and bank balances at the end of the year (note 23) 14,198 11,284 Consolidated Statement of Cash Flows For the year ended 31 March 2013
    • 16 Meikles Limited 2013 Annual Report 1. General information Meikles Limited, (the “Company”), is a limited company incorporated in Zimbabwe and is listed on the Zimbabwe and London Stock Exchanges. The address of the Company’s registered office and principal place of business is disclosed on page 68. The principal activity of the Company is investments holding. The principal activities of its subsidiaries are disclosed in note 22.2. The financial statements are presented in United States of America dollars (US$). 2 Application of new and revised International Financial Reporting Standards (IFRSs) 2.1 Amendments to IFRSs affecting amounts reported in the financial statements The following amendments to IFRSs have been applied in the current year and have affected the amounts reported in these financial statements. 2.1.1 Amendments to IFRSs affecting presentation and disclosure only Amendments to IAS 1 Presentation of Items of Other Comprehensive Income The Group has applied the amendments to IAS 1 Presentation of Items of Other Comprehensive Income in advance of the effective date (annual periods beginning on or after 1 July 2012). The amendments introduce new terminology for the statement of comprehensive income and income statement. Under the amendments to IAS 1, the ‘statement of comprehensive income’ is renamed the ‘statement of profit or loss and other comprehensive income’ and the ‘income statement’ is renamed the ‘statement of profit or loss’. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements. However, the amendments to IAS 1 require items of other comprehensive income to be grouped into two categories in the other comprehensive income section: (a) items that will not be reclassified subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive income is required to be allocated on the same basis – the amendments do not change the option to present items of other comprehensive income either before tax or net of tax. The amendments have been applied retrospectively, and hence the presentation of items of other comprehensive income has been modified to reflect the changes. Other than the above mentioned presentation changes, the application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income. 2.1.2 Amendments to IFRSs with no material effect on the consolidated financial statements Amendments to IFRS 7 Disclosures – Transfers of Financial Assets The Group has applied the amendments to IFRS 7 Disclosures – Transfers of Financial Assets in the current year. The amendments increase the disclosure requirements for transactions involving the transfer of financial assets in order to provide greater transparency around risk exposures when financial assets are transferred but the transferor retains some level of continuing exposure in the asset. The application has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements. Amendments to IAS 1 Presentation of Financial Statements (as part of the Annual Improvements to IFRSs 2009-2011 Cycle issued in May 2012) The Group has applied the amendments to IAS 1 as part of the Annual Improvements to IFRSs 2009-2011 Cycle in advance of the effective date (annual periods beginning on or after 1 January 2013). IAS 1 requires an entity that changes accounting policies retrospectively, or makes a retrospective restatement or reclassification to present a statement of financial position as at the beginning of the preceding period (third statement of financial position). Notes to the Financial Statements
    • 17Meikles Limited 2013 Annual Report Notes to the Financial Statements The amendments to IAS 1 clarify that an entity is required to present a third statement of financial position only when the retrospective application, restatement or reclassification has a material effect on the information in the third statement of financial position and that related notes are not required to accompany the third statement of financial position. In the current year, the Group identified an error in the valuation of trading inventory carried forward from 31 March 2011. The Group also changed the inventory valuation method for retail trading inventory from the retail method to weighted average cost. These changes have not resulted in a material effect on the information in the consolidated statement of financial position as at 1 April 2011. Refer to note 36 for details. In addition, the Group has applied the amendments to IAS 12 Deferred Tax: Recovery of Underlying Assets for the first time. The application has not resulted in a material effect on the information in the consolidated statement of financial position as at 1 April 2011. Refer to note 3.14.2 for further details. In accordance with the amendments to IAS 1, the Group has therefore not presented a third statement of financial position as at 1 April 2011.  2.2 New and revised IFRSs in issue but not yet effective The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective: IFRS 9 Financial Instruments 3 IFRS 10 Consolidated Financial Statements 1 IFRS 11 Joint Arrangements 1 IFRS 12 Disclosure of Interests in Other Entities 1 IFRS 13 Fair Value Measurement 1 Amendments to IFRS 7 Disclosures – Offsetting Financial Assets and Financial Liabilities1 Amendments to IFRS 9 and IFRS 7 Mandatory Effective Date of IFRS 9 and Transition Disclosures 3 Amendments to IFRS 10, IFRS 11 and IFRS 12 Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance 1 IAS 19 (as revised in 2011) Employee Benefits 1 IAS 27 (as revised in 2011) Separate Financial Statements 1 IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures 1 Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities 2 Amendments to IFRSs Annual Improvements to IFRSs 2009-2011 Cycle except for the amendment to IAS 1 (see note 2.1) 1 IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 1 1 Effective for annual periods beginning on or after 1 January 2013. 2 Effective for annual periods beginning on or after 1 January 2014. 3 Effective for annual periods beginning on or after 1 January 2015. Amendments to IFRS 7, IAS 19 (as revised in 2011), Amendments to IAS 32, Amendments to IFRSs and IFRIC 20 may not have any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements. New and revised Standards on consolidation, joint arrangements, associates and disclosures In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued, including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011).
    • 18 Meikles Limited 2013 Annual Report Key requirements of these five Standards are described below. IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financial statements. SIC-12 Consolidation – Special Purpose Entities will be withdrawn upon the effective date of IFRS 10. Under IFRS 10, there is only one basis for consolidation, that is, control. In addition, IFRS 10 includes a new definition of control that contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with the investee, and (c) the ability to use its power over the investee to affect the amount of the investor’s return. Extensive guidance has been added in IFRS 10 to deal with complex scenarios. IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint arrangement of which two or more parties have joint control should be classified. SIC-13 Jointly Controlled Entities – Non-monetary Contributions by Venturers will be withdrawn upon the effective date of IFRS 11. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast, under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly controlled operations. In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting, whereas jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting or proportional consolidation. IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive than those in the current standards. In June 2012, the amendments to IFRS 10, IFRS 11 and IFRS 12 were issued to clarify certain transitional guidance on the application of these IFRSs for the first time. These five standards together with the amendments regarding the transition guidance are effective for annual periods beginning on or after 1 January 2013, with earlier application permitted provided all of these standards are applied at the same time. The directors anticipate that the application of these five standards may have a significant impact on amounts reported in the consolidated financial statements. The application of IFRS 11 may change the classification and subsequent accounting of the Group’s investment in The Victoria Falls Hotel, which is classified as a jointly controlled entity under IAS 31 and has been accounted for using the proportionate consolidation method. The Directors will be carrying out an assessment to determine the appropriate classification and treatment of The Victoria Falls Hotel under IFRS 11 in the forthcoming financial year. Besides the investment in The Victoria Falls Hotel, the Group does not have any other interests in jointly controlled entities. IFRS 13 Fair Value Measurement IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The standard defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on the three-level fair value hierarchy currently required for financial instruments only under IFRS 7 Financial Instruments: Disclosures will be extended by IFRS 13 to cover all assets and liabilities within its scope. IFRS 13 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. Notes to the Financial Statements
    • 19Meikles Limited 2013 Annual Report The directors anticipate that the application of the new Standard may affect certain amounts reported in the financial statements and result in more extensive disclosures in the financial statements. 3. Significant accounting policies 3.1 Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and the Companies Act (Chapter 24.03) and relevant statutory instruments (SI33/99 and SI62/96). 3.2 Basis of preparation The 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 as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The Company statement of financial position, statement of changes in equity and other explanatory notes have been presented as supplementary information to ensure compliance with the requirements of the Companies Act (Chapter 24:03). The complete financial statements of the Company are presented separately. 3.3 Basis of consolidation The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Interests in jointly controlled entities are reported using proportionate consolidation. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Changes in the Group’s ownership interests in existing subsidiaries Changes in the Group’s ownership interestsin subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company. When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed of the relevant assets (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). Notes to the Financial Statements
    • 20 Meikles Limited 2013 Annual Report The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IAS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or a jointly controlled entity. 3.4 Business combinations Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition- related costs are generally recognised in profit or loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that: • deferred tax assets or liabilities and liabilities, or assets related to employee benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively; • liabilities or equity instruments related to share-based payment arrangements of the acquiree or share- based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payments at the acquisition date; and • assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard. Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non- controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognised amounts of the acquiree’s identifiable net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS. When the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’(which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Notes to the Financial Statements
    • 21Meikles Limited 2013 Annual Report Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates in accordance with IAS 39, or IAS 37 Provisions, Contingent Liabilities and Contingent Assets, as appropriate, with the corresponding gain or loss being recognised in profit or loss. When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date. 3.5 Goodwill Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see 3.4 above) less accumulated impairment losses, if any. For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash- generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss in the consolidated statement of profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods. On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. The Group’s policy for goodwill arising on the acquisition of an associate is described at note 3.6 below. 3.6 Investments in associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies and is usually evidenced in one or more of the following ways: • representation on the board of directors or equivalent governing body of the investee; • participation in policy making processes, including participation in the decisions about dividends or other distributions; • material transactions between the Group and the investee; • interchange of managerial personnel; or • the provision of essential technical information. Notes to the Financial Statements
    • 22 Meikles Limited 2013 Annual Report The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, an investment in an associate is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of an associate recognised at the date of acquisition is recognised as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss. The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment in an associate. When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases. Upon disposal of an associate that results in the Group losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with IAS 39. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when it loses significant influence over that associate. When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognised in the Group’ consolidated financial statements only to the extent of interests in the associate that are not related to the Group. 3.7 Interests in joint ventures A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control (i.e. when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control). When a group entity undertakes its activities under joint venture arrangements directly, the Group’s share of jointly controlled assets and any liabilities incurred jointly with other venturers are recognised in the financial statements of the relevant entity and classified according to their nature. Notes to the Financial Statements
    • 23Meikles Limited 2013 Annual Report Liabilities and expenses incurred directly in respect of interests in jointly controlled assets are accounted for on an accrual basis. Income from the sale or use of the Group’s share of the output of jointly controlled assets, and its share of joint venture expenses, are recognised when it is probable that the economic benefits associated with the transactions will flow to/from the Group and their amount can be measured reliably. Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The Group reports its interests in jointly controlled entities using proportionate consolidation, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non- current Assets Held for Sale and Discontinued Operations. The Group’s share of the assets, liabilities, income and expenses of jointly controlled entities is combined with the equivalent items in the consolidated financial statements on a line-by-line basis. Any goodwill arising on the acquisition of the Group’s interest in a jointly controlled entity is accounted for in accordance with the Group’s accounting policy for goodwill arising in a business combination (see 3.4 and 3.5 above). When a group entity transacts with its jointly controlled entity, profits and losses resulting from the transactions with the jointly controlled entity are recognised in the Group’ consolidated financial statements only to the extent of interests in the jointly controlled entity that are not related to the Group. 3.8 Non-current assets held for sale or distribution Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale or distribution transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale. Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. 3.9 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. 3.9.1 Sale of goods and services provided Revenue from the sale of goods and services is recognised when the goods are delivered and titles have passed, at which time all the following conditions are satisfied: • the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; • the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; • the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the Group; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably. Notes to the Financial Statements
    • 24 Meikles Limited 2013 Annual Report 3.9.2 Dividend and interest income Dividend income from investments is recognised when the shareholders’ right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably). Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition. 3.9.3 Rental income The Group’s policy for recognition of revenue from operating leases is described in policy note 3.10.1. 3.10 Leasing Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. 3.10.1 The Group as lessor Amounts due from lessees under finance leases are recognised as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. 3.10.2 The Group as lessee Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (see 3.12 below). Contingent rentals are recognised as expenses in the periods in which they are incurred. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. 3.11 Foreign currencies In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. Notes to the Financial Statements
    • 25Meikles Limited 2013 Annual Report At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non- monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for: • exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings; • exchange differences on transactions entered into in order to hedge certain foreign currency risks; and • exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into US$ using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate). On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a jointly controlled entity that includes a foreign operation, or disposal involving loss of significant influence over an associate that includes a foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the owners of the Company are reclassified to profit or loss. In addition, in relating to a partial disposal of a subsidiary that does not result in the Group losing control over a subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non- controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or jointly controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognised in other comprehensive income and accumulated in equity. 3.12 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Notes to the Financial Statements
    • 26 Meikles Limited 2013 Annual Report All other borrowing costs are recognised in profit or loss in the period in which they are incurred. 3.13 Retirement benefit costs The Group operates a Defined Contribution Plan for all eligible employees. The scheme is funded by payments from employees and from Group Companies, and the assets are held in various funds under the authority of the Trustees. The Group also participates in the National Social Security Authority Scheme (NSSA). Payments made to NSSA are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in a defined contribution retirement benefit plan. Contributions to the defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions. 3.14 Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. 3.14.1 Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the consolidated statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. 3.14.2 Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Notes to the Financial Statements
    • 27Meikles Limited 2013 Annual Report For the purposes of measuring deferred tax liabilities and deferred tax assets for investment properties that are measured using the fair value model, the carrying amounts of such properties are presumed to be recovered entirely through sale, unless the presumption is rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embodied in the investment property over time, rather than through sale. The Directors reviewed the Group’s investment property portfolios and concluded that the Group’s investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, the directors have determined that the ‘sale’ presumption set out in the amendments to IAS 12 is rebutted. As a result, there has been no change in the way that the Group recognises deferred taxes on investment properties. 3.14.3 Current and deferred tax for the year Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. 3.15 Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to its recoverable amount. Interest costs on borrowings to finance property expenditure during the course of construction are capitalised. Improvements to buildings are recognised whilst repairs and renewals are charged to the profit or loss when the expenditure is incurred. Gains and losses on the disposal of assets are determined by reference to their carrying amount and are taken into account in determining operating profit. Leased assets under a finance lease are initially measured at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to the asset. Service assets comprising cutlery, crockery, glassware, kitchen utensils and linen are not depreciated but the annual charge for usage is recognised in the statement of comprehensive income. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. Where parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment. Freehold land and capital work in progress are not depreciated. Depreciation on property, plant and equipment other than land and capital work in progress, is calculated on a straight line basis so as to write off the assets less their anticipated residual values, over their estimated useful lives. The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis. The estimated useful lives are as follows: Buildings 60 years Leasehold improvements the shorter of the useful life and the lease period Furniture and equipment 3 - 15 years Motor vehicles 3 - 5 years Notes to the Financial Statements
    • 28 Meikles Limited 2013 Annual Report Leasehold improvements are depreciated on a straight-line basis over the shorter of either the useful life or the lease term. Useful lives are determined by reference to similar owned assets. Where the operating lease has a renewal option, the renewal period is included in the depreciation time frame only if the renewal is reasonably assured. If there is no assurance of renewal, the leasehold improvements are depreciated over the original lease term only, if shorter than the useful life. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their relevant useful lives. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. 3.16 Investment property Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured at cost, including transaction costs, less accumulated depreciation and accumulated impairment losses. An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised. Investment property freehold buildings are depreciated on a straight line basis over the estimated economic useful life of 60 years. Land is not depreciated and is deemed to have an indefinite useful life. 3.17 Intangible assets 3.17.1 Intangible assets acquired separately These comprise of trademarks, which are valued at cost less accumulated impairment losses. These have an indefinite useful life and are therefore not amortised. The useful lives of intangible assets are reviewed at the end of each reporting period to determine whether events and circumstances continue to support an indefinite useful life assessment for these assets. 3.17.2 Internally-generated intangible assets - research and development expenditure Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated: • the technical feasibility of completing the intangible asset so that it will be available for use or sale; • the intention to complete the intangible asset and use or sell it; • the ability to use or sell the intangible asset; • how the intangible asset will generate probable future economic benefits; • the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and • the ability to measure reliably the expenditure attributable to the intangible asset during its development. Notes to the Financial Statements
    • 29Meikles Limited 2013 Annual Report The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. 3.17.3 Intangible assets acquired in a business combination Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. 3.17.4 Derecognition of intangible assets An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised. 3.18 Impairment of tangible and intangible assets other than goodwill At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified. Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the asset may be impaired. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. Notes to the Financial Statements
    • 30 Meikles Limited 2013 Annual Report 3.19 Biological assets The Group’s biological assets comprise tea, macadamia, avocado, coffee, timber plantations and livestock. Tea, macadamia, avocado, coffee and timber plantations as well as other crops are stated at their fair value less costs to sell, with any resultant gain or loss recognised in profit or loss. Where there are no market - determined prices for the plantations or produce to determine the fair value, the present value of expected net cash flows, discounted at a current market determined pre-tax rate, is used to determine fair value. Livestock is measured at fair value less costs to sell. Fair value is determined by professional valuers through reference to the current market prices. The tea bushes have indefinite useful lives and are therefore, not depreciated. The useful lives of tea bushes are reviewed at the end of each reporting period to determine whether events and circumstances continue to support an indefinite useful life assessment for these bushes. 3.20 Inventories Inventories are stated at the lower of cost and net realisable value. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Cost is calculated as follows: • Retail merchandise is valued on a weighted average basis. The inventories are then assessed for impairment based on the net realisable value. This represents a change in accounting policy. Refer to note 36 for details. • Consumables are valued at the lower of cost and net realisable value on a first-in-first-out basis. • Goods in transit are valued at actual cost. • All teas in bulk form, being agricultural produce, are valued at net realisable value less costs to sell. Realisable value represents the plantation producer prices since realised or estimated to be realised by the Group after taking account of expected selling and distribution expenses. • The cost of manufactured goods for resale includes the cost of the tea (as disclosed above, in the case of tea), the cost of packaging materials, direct labour and an appropriate proportion of factory overhead expenses. 3.21 Advance crop expenditure This reflects the policy of deferring certain costs, incurred on subsequent seasonal yields, to the statement of financial position for offset against revenues realised in matching periods. 3.22 Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. Notes to the Financial Statements
    • 31Meikles Limited 2013 Annual Report 3.22.1 Restructurings A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity. 3.22.2 Contingent liabilities acquired in a business combination Contingent liabilities acquired in a business combination are initially measured at fair value at the acquisition date. At the end of subsequent reporting periods, such contingent liabilities are measured at the higher of the amount that would be recognised in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation recognised in accordance with IAS 18 Revenue. 3.23 Financial instruments Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss. 3.24 Financial assets Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace. 3.24.1 Effective interest method The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL. 3.24.2 Financial assets at FVTPL Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. Notes to the Financial Statements
    • 32 Meikles Limited 2013 Annual Report A financial asset is classified as held for trading if: • it has been acquired principally for the purpose of selling it in the near term; or • on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or • it is a derivative that is not designated and effective as a hedging instrument. A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if: • such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or • the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or • it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL. Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘other gains and losses’ line item. 3.24.3 Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method less any impairment. 3.24.4 Available-for-sale financial assets (AFS financial assets) AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair value through profit or loss. Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency rates (see below), interest income calculated using the effective interest method and dividends on AFS equity investments are recognised in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. When the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated in investments revaluation reserve is reclassified to profit or loss. Dividends on AFS equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established. The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other foreign exchange gains and losses are recognised in other comprehensive income. AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are measured at cost less any identified impairment losses at the end of each reporting period. Notes to the Financial Statements
    • 33Meikles Limited 2013 Annual Report 3.24.5 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, bank balances and cash, and others) are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial. 3.24.6 Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected. For AFS equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. For all other financial assets, objective evidence of impairment could include: • significant financial difficulty of the issuer or counterparty; or • breach of contract, such as a default or delinquency in interest or principal payments; or • it becoming probable that the borrower will enter bankruptcy or financial re-organisation; or • the disappearance of an active market for that financial asset because of financial difficulties. For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit periods, as well as observable changes in national or local economic conditions that correlate with default on receivables. For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period. Notes to the Financial Statements
    • 34 Meikles Limited 2013 Annual Report For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss. 3.24.7 Derecognition of financial assets The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss. On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase part of a transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts. 3.25 Financial liabilities and equity instruments 3.25.1 Classification as debt or equity Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. 3.25.2 Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a group entity are recognised at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments. Notes to the Financial Statements
    • 35Meikles Limited 2013 Annual Report 3.25.3 Financial liabilities Financial liabilities are classified as either financial liabilities ‘at FVTPL’’ or ‘other financial liabilities’. 3.25.3.1 Financial liabilities at FVTPL Financial liabilities are classified as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as held for trading if: • it has been acquired principally for the purpose of repurchasing it in the near term; or • on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or • it is a derivative that is not designated and effective as a hedging instrument. A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if: • such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or • the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or • it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘other gains and losses’ line item. 3.25.3.2 Other financial liabilities Other financial liabilities (including borrowings) are subsequently measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. 3.25.3.3 Financial guarantee contracts A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument. Financial guarantee contracts issued by a group entity are initially measured at their fair values and, if not designated as at FVTPL, are subsequently measured at the higher of: • the amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and • the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the revenue recognition policies. Notes to the Financial Statements
    • 36 Meikles Limited 2013 Annual Report 3.25.3.4 Derecognition of financial liabilities The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. 3.26 Dividends payable Dividends on ordinary shares are recognised in the statement of changes in equity in the period in which they are declared. 3.27 Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held on call with banks and other short term highly liquid investments. Bank overdrafts are shown with borrowings. 3.28 Exploration and evaluation assets Exploration and evaluation assets arise from expenditures incurred by the Group in connection with the exploration for, and evaluation of, mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable. Exploration for, and evaluation of, mineral resources covers the search for mineral resources after the Group has obtained legal rights to explore in a specific area, as well as determining the technical feasibility and commercial viability of extracting the mineral resource. Excluded are expenditures incurred before exploring for, and evaluating, mineral resources, such as expenditures incurred before the entity has obtained the legal rights to explore a specific area. Also excluded are expenditures incurred after the entity has demonstrated the technical feasibility and commercial viability of extracting a mineral resource. Exploration and evaluation expenditures that are classified as assets include the acquisition of rights to explore; topographical, geological, geochemical and geophysical studies; and exploratory drilling. Expenditures incurred in relation to the development of mineral resources are not recognised as exploration and evaluation assets and are expensed. Obligations for removal and restoration costs are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Exploration and evaluation assets are measured at cost. They are classified as tangible or intangible according to the nature of the assets acquired. When the technical feasibility and commercial viability of extracting mineral resources has been demonstrated, exploration and evaluation assets are reclassified to other categories of assets in accordance with the Group’s accounting policies. Such assets are tested for impairment before reclassification. The exploration and evaluation assets are tested for impairment when facts and circumstances suggest that the carrying amounts may not be recovered. The impairment is measured, presented and disclosed according to IAS 36 Impairment of Assets, except that exploration and evaluation assets are allocated to cash- generating units or groups of cash-generating units either of which must be no larger than a segment. 4. Critical accounting judgements and key sources of estimation uncertainty In the application of the Group’s accounting policies, which are described in note 3, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Notes to the Financial Statements
    • 37Meikles Limited 2013 Annual Report The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. 4.1 Critical judgements in applying accounting policies The following are the critical judgements and estimations that the Directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements. Deferred taxation on investment properties In determining the Group’s deferred taxation on investment properties, the Directors have determined that the Group’s investment properties are held under a business model whose objective is to consume substantially all of the economic benefits embodied in the investment properties over time, rather than through sale. Therefore, the directors have determined that the ‘sale’ presumption set out in the amendments to IAS 12 is rebutted. As a result, there has been no change in the way that the Group recognises deferred taxes on investment properties. 4.2 Key sources of estimation uncertainty 4.2.1 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 31 March 2013, the Directors have assessed the Group’s ability to continue operating as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate. 4.2.2 Biological assets valuation Tea, macadamia avocado, coffee and timber plantations are stated at their fair value less costs to sell. The present value of expected net cash flows from plantations, discounted at a current market determined pre- tax rate of 14.15% per annum, was used to determine fair value. The pre tax rate is the average cost of borrowing for the loans with the longest tenure of 5 years for the agricultural segment. 4.2.3 Funds earmarked for investment - Gondor Capital Limited Certain provisions were made in the financial statements for the year ended 31 December 2008, at the instigation of the then Board of Directors. The resolution of the boardroom and shareholder disputes allowed the Group a recoverable sum of US$11,737,013 which was reinstated in the financial statements for the period ended 31 March 2011. The timing of future cash flows arising from these funds is yet to be determined. Refer to note 22. 4.2.4 Balances with the Reserve Bank of Zimbabwe The deposit with the Reserve Bank of Zimbabwe (RBZ) arose from proceeds from the Initial Public Offer undertaken by the Company. These funds were raised in international markets. The Company has not had access to these funds in cash and the timing of future cash flows is uncertain. These amounts are required to assist with the recapitalisation of the Group. The Directors are engaging the RBZ with a view to the establishment of an agreed drawdown on these funds. Refer to note 23. Notes to the Financial Statements
    • 38 Meikles Limited 2013 Annual Report 4.2.5 Useful lives and residual values of property, plant and equipment As described in note 3.15 above, the Group reviews the estimated useful lives and residual values of property, plant and equipment at the end of each reporting period. The remaining useful lives and residual values are reassessed based on business trends, technological developments, asset conditions and management’s future plans. The useful lives and residual values so determined involved the exercise of significant levels of judgement based on data that is not readily observable. 4.2.6 Mentor Africa Limited The Group has a 35% shareholding in Mentor Africa Limited, an unlisted entity. The valuation of the investment is based on parameters which vary with market conditions. For the year ended 31 March 2013, this investment was accounted for at cost as there was a wide range of possible fair value measurements and, in the view of the Directors, cost represented the best estimate of fair value within that range. 5. Revenue Revenue comprises the invoiced value of sales excluding value added tax and trade discounts. See note 6 for a detailed breakdown by operating segment. 6. Segment information For purposes of resource allocation and assessment of segment performance, the Group is organised into segments based on their operational activities and geographical location. The operating segments comprise hotels, retail and agriculture operations. The retail segment consists of the supermarkets on the one part and the department stores on the other and these two are evaluated independently. The Group is organised into two geographical segments, Zimbabwe and non Zimbabwe. The Cape Grace Hotel operations in South Africa were disposed of effective 1 April 2012. Notes to the Financial Statements
    • 39Meikles Limited 2013 Annual Report 6.1 Segment revenue and result Continuing and discontinued operations Supermarkets Hotels Agriculture Stores Corporate Group US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 31 March 2013 Sale of goods 335,909 5,647 24,176 18,489 *(2,088) 382,133 Sale of services - 9,195 - - - 9,195 Total revenue 335,909 14,842 24,176 18,489 (2,088) 391,328 Operating profit/ (loss) 9,852 59 974 (2,000) (3,819) 5,066 Investment income 111 35 17 17 2,064 2,244 Finance costs (608) (266) (2,074) (2,574) (1,472) (6,994) Net exchange (losses) / gains (33) (171) (13) 15 (138) (340) Fair value adjustments - - 7,828 - - 7,828 Income tax (expense) / credit (2,279) 267 (1,431) 771 230 (2,442) Controllable profit / (loss) for the year from continuing operations◊ 7,043 (76) 5,301 (3,771) (3,135) 5,362 Profit for the year from discontinued operations - 1,173 - - - 1,173 Consolidated profit / (loss) for the year 7,043 1,097 5,301 (3,771) (3,135) 6,535 31 March 2012 Sale of goods 296,403 6,403 19,978 24,061 *(1,737) 345,108 Sale of services - 8,994 - - - 8,994 Total revenue 296,403 15,397 19,978 24,061 (1,737) 354,102 Operating profit / (loss) 4,049 (916) (4,055) (2,949) (4,457) (8,328) Investment income 103 39 15 19 1,835 2,011 Finance costs (2,284) (200) (1,328) (2,036) (1,278) (7,126) Net exchange gains / (losses) 415 (98) - 7 859 1,183 Fair value adjustments - - 3,792 - - 3,792 Income tax (expense) / credit (584) 288 561 1,348 931 2,544 Controllable profit / (loss) for the year from continuing operations◊ 1,699 (887) (1,015) (3,611) (2,110) (5,924) Profit for the year from discontinued operations - 2,480 - - - 2,480 Consolidated profit / (loss) for the year 1,699 1,593 (1,015) (3,611) (2,110) (3,444) * The adjustment of US$2.1 million (2012: US$1.7 million) against revenue which appears under corporate is in respect of inter-segment sales. ◊ Controllable profit is before Group management fees. Notes to the Financial Statements
    • 40 Meikles Limited 2013 Annual Report 6.2 Segment assets and liabilities Continuing and discontinued operations Supermarkets Hotels Agriculture Stores Corporate* Group US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 31 March 2013 Segment assets – continuing operations 60,943 47,719 52,852 37,408 76,575 275,497 Consolidated segment assets 60,943 47,719 52,852 37,408 76,575 275,497 Segment liabilities – continuing operations (38,516) (16,421) (29,631) (36,890) (5,608) (127,066) Consolidated segment liabilities (38,516) (16,421) (29,631) (36,890) (5,608) (127,066) Capital expenditure – continuing operations 8,851 8,202 824 379 43 18,299 Depreciation and impairment – continuing operations (1,657) (556) (1,168) (1,364) (156) (4,901) 31 March 2012 Restated◊ Segment assets – continuing operations 47,556 29,878 43,004 41,544 58,782 220,764 Segment assets – discontinued operations - 40,280 - - (2,409) 37,871 Consolidated segment assets 47,556 70,158 43,004 41,544 56,373 258,635 Segment liabilities – continuing operations (32,173) (8,720) (19,538) (52,596) 10,516 (102,511) Segment liabilities – discontinued operations - (20,636) - - 6,408 (14,228) Consolidated segment liabilities (32,173) (29,356) (19,538) (52,596) 16,924 (116,739) Capital expenditure – continuing operations 2,401 1,703 2,169 275 12 6,560 Capital expenditure – discontinued operations - 279 - - - 279 Depreciation and impairment – continuing operations (1,105) (536) (2,056) (609) (528) (4,834) Depreciation – discontinued operations - (1,806) - - 1,806 - * Inter-company balances and transactions have been eliminated from the corporate amounts. Corporate also includes other operating segments that are not allocated to a reportable segment. ◊ Refer to note 36 for details of the restatement. The accounting policies of the reportable segments are the same as the Group’s accounting policies disclosed under significant accounting policies. 6.3. Geographical segments Continuing operations 31 March 2013 31 March 2012 Zimbabwe Non-Zimbabwe Zimbabwe Non-Zimbabwe US$ 000 US$ 000 US$ 000 US$ 000 Revenue 391,328 - 354,102 - Operating profit / (loss) 5,191 (125) (8,403) 75 Segment assets 236,101 39,396 185,958 34,806 Segment liabilities (97,532) (29,534) (78,933) (23,578) Notes to the Financial Statements
    • 41Meikles Limited 2013 Annual Report Continuing operations Group Group 31 March 2013 31 March 2012 Notes US$ 000 US$ 000 7. Net operating costs Net operating costs are arrived at after (charging) / crediting: Cost of sales (304,407) (280,620) Other income 8 3,714 4,420 Employee costs 9 (41,625) (39,038) Occupancy costs 10 (16,903) (15,992) Other operating costs 11 (27,041) (31,200) (386,262) (362,430) 8. Other income Trading income Net interest income on trade receivables 1,831 1,535 Rental income 639 751 Hotels ancillary services 420 702 Commission income 10 190 Supplier rebates 322 334 3,222 3,512 Non trading income (Loss) / profit on disposal of property, plant and equipment (267) 69 Sundry income 759 839 3,714 4,420 9. Employee costs Wages and salaries (33,882) (28,839) Social security costs (1,688) (1,444) Retirement benefits – defined contribution plan (4,817) (4,682) Compensation for loss of office (349) (2,713) Directors’ remuneration: - fees for services as Directors (35) (24) - remuneration for other services (772) (1,248) - pension costs (82) (88) (41,625) (39,038) 10. Occupancy costs Occupancy costs include: - operating lease rentals for property (6,996) (6,789) - electricity and water (5,676) (5,036) - rates (1,712) (1,748) -premises repairs and maintenance (1,105) (1,585) 11. Other operating costs Included in other operating costs are the following: Depreciation of property, plant and equipment (3,808) (3,082) Repairs and maintenance – other assets (3,230) (5,749) Selling and distribution costs (2,393) (3,504) Packaging and wrapping (2,035) (970) Transport and communication (1,721) (1,831) Marketing and advertising (1,569) (2,682) Security (1,532) (1,530) Legal and professional fees (1,109) (1,905) Printing and stationery (998) (1,054) Information and technology (991) (807) Insurance (554) (674) Auditors’ remuneration - current year fee (464) (439) Loss on disposal of biological assets (167) (234) Allowance for doubtful receivables (142) (1,391) Write off of other receivables and advances - (824) Impairment of property, plant and equipment (116) (898) Notes to the Financial Statements
    • 42 Meikles Limited 2013 Annual Report Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 12. Investment income / finance costs 12.1 Investment income Continuing operations Interest on bank deposits 1,934 1,826 Other 310 185 2,244 2,011 Included in interest on bank deposits is US$1.9 million (2012: US$1.8 million) earned on funds held at the Reserve Bank of Zimbabwe. Refer to notes 4.2.4 and 23 for further details. 12.2 Finance costs Continuing operations Comprising interest payable on: Long term borrowings (782) (257) Overdrafts and short term borrowings (6,100) (6,735) Other finance costs (112) (134) (6,994) (7,126) The weighted average capitalisation rate on funds borrowed was 13.64% per annum (2012: 14.66% per annum). 13. Income tax 13.1 Income tax recognised in profit / (loss) for the year Tax (expense) / credit comprising the following: Current tax expense in respect of the current year (167) (63) Deferred tax (expense) / credit relating to the origination and reversal of temporary differences (2,270) 2,609 Withholding tax on investment revenue (5) (2) Total tax (expense) /credit relating to continuing operations (2,442) 2,544 The (expense) / credit for the year can be reconciled to the accounting profit / (loss) as follows: Profit / (loss) before tax from continuing operations 7,804 (8,468) Income tax (expense) / credit calculated at 25.75% (2012: 25.75%) (2,009) 2,181 Effect of revenue that is exempt from income tax 4,851 1,742 Effect of expenses that are not deductible in determining taxable profit (5,913) (1,620) Effect of concessions (export market and plantation development) 617 235 Effect of revenue taxed at other rates 12 6 Income tax (expense) / credit recognised in profit/ (loss) for the year (2,442) 2,544 The income tax rate used for the 2013 reconciliation above is the corporate tax rate of 25.75% (31 March 2012: 25.75%), payable by corporate entities in Zimbabwe. The deferred tax rate used for 2014 is the corporate tax rate of 25.75%. 13.2 Income tax recognised in other comprehensive income Deferred tax Arising on income and expenses recognised in other comprehensive income: Translation of foreign operations - 245 Total income tax recognised in other comprehensive income - 245 Notes to the Financial Statements
    • 43Meikles Limited 2013 Annual Report 13.3 Deferred tax balances Group Continuing operations Beginning of Recognised in End of the year profit or loss the year US$ 000 US$ 000 US$ 000 The deferred tax balance is attributable to the following items: At 31 March 2013 Assessed losses (7,108) (2,187) (9,295) Property, plant and equipment 15,909 377 16,286 Biological assets 2,063 3,384 5,447 Exchange differences (396) 220 (176) Provisions 204 (401) (197) Receivables and prepayments 188 153 341 Other (824) 724 (100) Deferred capital gains tax on land 231 - 231 10,267 2,270 12,537 At 31 March 2012 - restated Assessed losses (5,993) (1,115) (7,108) Property, plant and equipment 16,463 (554) 15,909 Biological assets 2,414 (351) 2,063 Exchange differences 53 (449) ( 396) Provisions 300 (96) 204 Receivables and prepayments 171 17 188 Other 1 (61) (60) Other - prior year adjustment* (764) - (764) Deferred capital gains tax on land 231 - 231 12,876 (2,609) 10,267 Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Comprising: Deferred tax asset (1,997) (1,888) Deferred tax liability 14,534 12,155 12,537 10,267 Company Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Assessed loss (1,003) (704) Plant and equipment 11 14 Prepayments 17 36 Unrealised exchange differences - (262) (975) (916) Deferred capital gains tax on unlisted investments 2,875 2,875 1,900 1,959 * Refer to note 36 for details of the prior year adjustment. Notes to the Financial Statements
    • 44 Meikles Limited 2013 Annual Report 14. Discontinued operations Cape Grace Hotel operations in South Africa The disposal of the Cape Grace Hotel operations in South Africa was concluded during the year with an effective date of 1 April 2012 . Refer to note 37 for the analysis of assets and liabilities over which control was lost. Profit for the year from discontinued operations: 31 March 31 March 2013 2012 US$ 000 US$ 000 Revenue - 16,163 Other gains - 619 Total income - 16,782 Expenses* - (13,930) Profit before tax - 2,852 Income tax - (372) Profit for the year from discontinued operations - 2,480 Profit on disposal of subsidiaries (see note 37) 1,173 - Profit for the year from discontinued operations (attributable to owners of the parent) 1,173 2,480 Other comprehensive loss Exchange differences on translating foreign entities - (919) Other comprehensive loss for the year, net of tax - (919) Total comprehensive profit for the year 1,173 1,561 * The prior year expenses exclude depreciation expense of US$1,806,054 which was written back in line with the requirements of IFRS 5. Cash flows from discontinued operations Net cash flows from operating activities - (131) Net cash flows from investing activities - 128 Net cash flows from financing activities - 801 Net cash inflows - 798 15. Assets held for sale Assets Property, plant and equipment - 24,041 Other financial assets and investments - 3,755 Deferred taxation - 1,664 Goodwill - 4,092 Inventories - 419 Trade and other receivables - 1,043 Cash and bank balances - 2,857 Balances owed by Group entities - 2,409 Total assets held for sale - 40,280 Liabilities Borrowings - 2,222 Trade and other payables - 1,773 Other financial liabilities - 10,233 Balances owed to Group entities - 6,408 Total liabilities relating to assets held for sale - 20,636 Net assets held for sale - 19,644 Capital and reserves relating to assets held for sale - 19,644 The assets held for sale and the liabilities relating to assets held for sale shown on the consolidated statement of financial position are net of the group balances. Notes to the Financial Statements
    • 45Meikles Limited 2013 Annual Report 16. Earnings / (loss) per share The earnings / (loss) and weighted average number of ordinary shares used in the calculation of earnings / (loss) per share are as follows: Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Profit/(loss) for the year attributable to owners of the parent used in the calculation of total basic earnings/(loss) per share from continuing operations 1,911 (6,017) Add: Profit for the year from discontinued operations used in the calculation of basic earnings/(loss) per share from discontinued operations 1,173 2,480 Profit/(loss) used in the calculation of basic earnings/(loss) per share from continuing and discontinued operations 3,084 (3,537) Adjust for: Loss/(profit) on disposal on property, plant and equipment 267 (69) Profit on disposal of subsidiaries (1,173) - Headline earnings/(loss) 2,178 (3,606) Comprising: Continuing operations 2,178 (5,818) Discontinued operations - 2,212 2,178 (3,606) Weighted average number of ordinary shares for the purposes of basic earnings per share 253,793,301 245,374,791 Basic earnings/(loss) (cents per share) From continuing operations 0.75 (2.45) From discontinued operations 0.46 1.01 Total basic earnings / (loss) 1.21 (1.44) Basic headline earnings / (loss) (cents per share) From continuing operations 0.86 (2.37) From discontinued operations - 0.90 Total basic headline earnings / (loss) 0.86 (1.47) Weighted average number of ordinary shares for the purposes of basic earnings per share 253,793,301 245,374,791 Shares deemed to be issued to the Trust (refer to note 26) 15,581,490 24,000,000 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 269,374,791 269,374,791 Diluted earnings / (loss) (cents per share) From continuing operations 0.71 (2.23) From discontinued operations 0.44 0.92 Total diluted earnings / (loss) 1.15 (1.31) Diluted headline earnings / (loss) (cents per share) From continuing operations 0.81 (2.16) From discontinued operations - 0.82 Total diluted headline earnings / (loss) 0.81 (1.34) Notes to the Financial Statements
    • 46 Meikles Limited 2013 Annual Report 17. Property, plant and equipment Group Land and Leasehold Furniture & Motor Work in buildings improvements equipment vehicles progress Total US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 At 31 March 2013 Opening carrying value 64,348 1,437 16,911 1,441 1,985 86,122 Additions 394 2,505 6,493 69 8,838 18,299 Transfer to investment property (215) - - - - (215) Net movement in service assets - - 209 - - 209 Disposals – cost (50) - (563) (240) - (853) Disposals – accumulated depreciation 3 - 223 172 - 398 Impairment - - (116) - - (116) Depreciation (1,063) (243) (3,045) (430) - (4,781) Closing carrying value 63,417 3,699 20,112 1,012 10,823 99,063 At cost 68,464 4,243 30,464 1,597 10,823 115,591 Accumulated depreciation (3,452) (544) (9,550) (558) - (14,104) Accumulated impairment (1,595) - (802) (27) - (2,424) Carrying value at 31 March 2013 63,417 3,699 20,112 1,012 10,823 99,063 At 31 March 2012 Opening carrying value 64,985 1,191 17,154 950 - 84,280 Transfer from assets held for sale - - - 251 - 251 Additions 325 360 3,108 782 1,985 6,560 Net movement in service assets - - 21 - - 21 Disposals – cost - - (155) (1,129) - (1,284) Disposals – accumulated depreciation - - 49 1,079 - 1,128 Impairment (185) - (686) (27) - (898) Depreciation (777) (114) (2,580) (465) - (3,936) Closing carrying value 64,348 1,437 16,911 1,441 1,985 86,122 At cost 68,335 1,738 24,325 1,768 1,985 98,151 Accumulated depreciation (2,392) (301) (6,728) (300) - (9,721) Accumulated impairment (1,595) - (686) (27) - (2,308) Carrying value at 31 March 2012 64,348 1,437 16,911 1,441 1,985 86,122 A valuation of the Group’s land and buildings, other than those on the estates, was performed by independent valuers not connected to the Group to determine the market value at 31 March 2013. The Tanganda Tea Company land and buildings which are on the estates were valued by the Directors due to their specialised nature. The valuation, which conforms to International Valuation Standards, was determined by reference to market evidence on the transaction prices for similar properties. The valuation was used for impairment assessment. Assets pledged as security Freehold land and buildings with a carrying amount of US$32.6 million (2012: US$7.1 million) have been pledged to secure loans of the Group under mortgages (see note 27). The Group is not allowed to pledge these assets as security for other borrowings or sell them to another entity. Notes to the Financial Statements
    • 47Meikles Limited 2013 Annual Report 17. Property, plant and equipment (continued) Company Furniture & Motor Total equipment vehicles US$ 000 US$ 000 US$ 000 At 31 March 2013 Opening carrying value 77 25 102 Additions 8 - 8 Disposals (2) - (2) Disposals accumulated depreciation 1 - 1 Depreciation (23) (11) (34) Closing carrying value 61 14 75 At cost 260 76 336 Accumulated depreciation (199) (62) (261) Carrying value at 31 March 2013 61 14 75 At 31 March 2012 Opening carrying value 157 45 202 Additions 5 7 12 Disposals (2) (35) (37) Disposals accumulated depreciation - 35 35 Depreciation (83) (27) (110) Closing carrying value 77 25 102 At cost 254 76 330 Accumulated depreciation (177) (51) (228) Carrying value at 31 March 2012 77 25 102 18. Investment property Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Opening carrying value 43 44 Transfer from land and buildings 215 - Depreciation (4) (1) Closing carrying value 254 43 •  The carrying value of investment property was assessed for impairment at 31 March 2013 and no impairment was identified. • The Group owns the investment property through a subsidiary, TM Supermarkets (Private) Limited, as detailed below: - Stand number 32, Main Street, Chipinge at a carrying amount of US$42,500 (2012: US$43,268). - Stand number 8965, Machipisa, Highfield, Harare at a carrying amount of US$211,746. 19. Investment in Mentor Africa Limited The Group has a 35% interest in Mentor Africa Limited which has interests in hospitality, catering, financial services and efficient energy sectors, all in South Africa. Mentor Africa Limited (‘the investee’) has been accounted for as an investment as the Group does not have significant influence as defined under IAS 28 as follows: • the Group does not have representation on the board of the investee • there are no material transactions between the Group and the investee • there is no interchange of managerial personnel between the Group and the investee • there is no provision of essential technical information between the Group and the investee. The investment has been accounted for at cost as there is a wide range of possible fair value measurements and, in the view of the Directors, cost represents the best estimate of fair value within that range. Notes to the Financial Statements
    • 48 Meikles Limited 2013 Annual Report 20. Biological assets Group Tea Macadamia Timber Coffee Avocado plantations plantations plantations plantations plantations Livestock Total US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 At 31 March 2013 Opening carrying value 4,794 2,346 1,928 1,440 828 434 11,770 Additions - 737 54 497 919 - 2,207 Disposals - - (229) - - (55) (284) Fair value adjustments (754) 5,598 161 7 2,816 - 7,828 Closing carrying value 4,040 8,681 1,914 1,944 4,563 379 21,521 At 31 March 2012 Opening carrying value 4,007 1,315 1,865 - - 474 7,661 Additions - 303 19 309 123 - 754 Disposals - - (258) - - - (258) Fair value adjustments 966 728 302 1,131 705 (40) 3,792 Impairment (179) - - - - - (179) Closing carrying value 4,794 2,346 1,928 1,440 828 434 11,770 The Group is exposed to financial risks arising from changes in commodity prices. The Group does not anticipate that commodity prices will decline significantly in the foreseeable future and, therefore, has not entered into derivative or other contracts to manage the risk of a decline in commodity prices. The Group reviews its outlook for commodity prices regularly in considering the need for active financial risk management. The valuation of biological assets is exposed to changes in sensitive parameters such as the discount rate and the conversion rate of tea leaf to processed tea (outturn). A discount rate of 14.15% and a green leaf outturn ratio of 23% (or 4.3) were used for the valuation at year end. Below is an analysis of the degree of sensitivity of profit to a 1% point movement in the discount rate and outturn ratios. Discount rate sensitivity analysis At 13.15% At 15.15% US$ 000 US$ 000 Increase / (decrease) in profits 1,681 (1,512) Outturn ratio sensitivity analysis At 24% (or 4.2) At 22% (or 4.5) US$ 000 US$ 000 Increase / (decrease) in profits 1,871 (935) During the dry season the risk of damage from fire is significant. The Group reduces this risk in the best possible manner by implementing appropriate fire prevention measures such as clearing underbrush ahead of the dry season, constructing fire breaks and 24 hour surveillance. Climate and weather changes pose the risk of damage and affect productivity and quality. Nurseries and young plantations are covered in winter to minimise frost damage. Other mitigating measures include irrigating and other good agricultural practices such as pruning and fertilising depending on seasons. In addition, nurseries are insured. The Group has not obtained insurance coverage for the plantations as the premium will be excessive in relation to the expected losses. 21. Intangible assets Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Business development in mining projects 2,080 - Trade marks 124 124 2,204 124 Notes to the Financial Statements
    • 49Meikles Limited 2013 Annual Report 22. Other financial assets Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Opening carrying value (short term and long term portions) 19,455 16,600 Exchange differences - 737 Interest accrual 299 31 Additions 828 2,087 Disposals and repayments (6,484) - 14,098 19,455 Less: Short term portion in current assets (1,405) (1,085) Non-current closing carrying value 12,693 18,370 Comprising: Carried at amortised cost: Funds earmarked for investment – Gondor Capital Limited1 11,737 11,737 Funds earmarked for investment - Mentor Africa Limited - 5,440 Staff loans 1,024 1,258 Short term loan - Polyfoil Zimbabwe (Private) Limited - 281 Short term loan – Liftbrok Investments (Private) Limited 1,023 - Short term loan – Barkpest Investments (Private) Limited 154 - Short term loans – other entities - 579 Available for sale measured at cost less any identified impairment losses: Investment in unlisted securities 152 152 Carried at fair value through profit or loss (FVTPL): Investment in listed securities 8 8 14,098 19,455 Company Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Opening carrying amount 646 372 Additions 1,010 267 Interest accrued 182 32 Disposals and repayments (488) - Exchange difference on funds earmarked for investment - (24) Fair value adjustment - (1) Closing net carrying value 1,350 646 Less: Short term portion in current assets (1,177) (281) Non-current closing carrying value 173 365 Comprising Carried at amortised cost: Short term loan – Liftbrok Investments (Private) Limited 1,023 - Short term loan – Barkpest Investments (Private) Limited 154 - Funds earmarked for investment with Mentor Africa Limited - 188 Short term loan – Polyfoil Zimbabwe (Private) Limited - 281 Staff loans 13 17 Available for sale measured at cost less any identified impairment losses: Investment in unlisted securities 152 152 Carried at fair value through profit or loss (FVTPL): Investment in listed securities 8 8 1,350 646 1 Refer to note 4.2.3 for further details. Barkpest Investments (Private) Limited and Liftbrok Investments (Private) Limited are staff share purchase vehicles whose shareholders are certain key management personnel who include two Directors of the Company. The share purchase vehicles hold shares in the Company under the name “Barkpest Investments (Private) Limited”. The loans to these entities attract interest at 17% per annum and are payable on demand. Notes to the Financial Statements
    • 50 Meikles Limited 2013 Annual Report 22.1 Investment in subsidiaries Company Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Net carrying value 74,129 74,129 Comprising: Investment in Meikles Hospitality (Private) Limited 32,761 32,761 Investment in Greatermans (1979) (Private) Limited 16,620 16,620 Investment in TM Supermarkets (Private) Limited 3,977 3,977 Investment in Tanganda Tea Company Limited 20,771 20,771 74,129 74,129 Investments in Meikles Resources (Private) Limited and Meikles Guard Services (Private) Limited are not shown above due to rounding off. 22.2 Holdings in material subsidiary companies: Entity Holding Business Country of incorporation Meikles Hospitality (Private) Limited 100% Hotels Zimbabwe TM Supermarkets (Private) Limited 51% Retail Zimbabwe Greatermans (1979) (Private) Limited 100% Retail Zimbabwe Tanganda Tea Company Limited 100% Agriculture Zimbabwe Thomas Meikle Properties (Private) Limited 100% Property owning Zimbabwe Ninety Speke Avenue (Private) Limited 100% Property owning Zimbabwe Meikles Resources (Private) Limited 100% Mining Zimbabwe Meikles Guard Services (Private) Limited 100% Security services Zimbabwe Details of other subsidiary companies are disclosed in the Group structure on page 66.   22.3 Interest in joint venture: The Group has a 50% interest in a joint venture which operates The Victoria Falls Hotel in Zimbabwe. There has been no change in the Group’s ownership or voting interests in this joint venture since inception. The following amounts are included in the Group financial statements as a result of the proportionate consolidation of The Victoria Falls Hotel. 31 March 31 March 2013 2012 US$ 000 US$ 000 Non-current assets 2,416 1,536 Current assets 3,493 2,182 5,909 3,718 Current liabilities (1,860) (916) Net assets 4,049 2,802 Revenue 5,373 4,856 Operating profit 1,410 1,090 Profit for the period 1,246 1,011 Notes to the Financial Statements
    • 51Meikles Limited 2013 Annual Report The Victoria Falls Hotel is a defendant in a legal case involving 69 dismissed employees. The employees were dismissed following their involvement in an illegal industrial action. They have since challenged the dismissal through the courts. The Directors believe, based on legal advice, that the action can be successfully defended. The Group’s share of the estimated accrued benefits to the dismissed employees as at 31 March 2013 is $368,869 (2012: $243,884). There are no other contingent liabilities relating to the Group’s interest in the joint venture. The Victoria Falls Hotel partnership leases the property on an operating lease which is valid until 2021. The partnership has the first right to renew the lease at the end of this period for a further ten years. Lease payments are computed as 10% of the hotel’s revenue as defined in the lease agreement. Group Group 23. Cash and bank balances 31 March 31 March 2013 2012 US$ 000 US$ 000 Balances with the Reserve Bank of Zimbabwe* 40,514 38,627 Cash and other bank balances 14,198 8,427 54,712 47,054 Less: Non-current balances with Reserve Bank of Zimbabwe (40,514) (38,627) Current cash and bank balances disclosed in the consolidated statement of financial position 14,198 8,427 Add: Cash and bank balances relating to disposal group (note 15) - 2,857 Cash and cash equivalents disclosed in the consolidated statement of cash flows 14,198 11,284 * Refer note 4.2.4 for details. Company Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Balances with the Reserve Bank of Zimbabwe* 40,514 38,627 Cash and other bank balances 431 1,512 40,945 40,139 Less: Non-current balances with Reserve Bank of Zimbabwe (40,514) (38,627) Current cash and bank balances disclosed in the company statement of financial position 431 1,512 * Refer note 4.2.4 for details. Notes to the Financial Statements
    • 52 Meikles Limited 2013 Annual Report 24. Inventories Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Restated* Inventories comprise: Raw materials and consumables 5,283 5,721 Merchandise and manufactured goods 30,084 29,888 Work in progress 1,341 1,057 36,708 36,666 The cost of inventories recognised as an expense includes US$1.9 million (2012: US$2.4 million) in respect of write-offs of inventory due to shrinkage. Inventories worth US$4.2 million (2012: US$5.3 million) were pledged to secure borrowings of the Group (see note 27). *Refer to note 36 for details of the restatement. Company Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Consumables 4 4 25. Trade and other receivables Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Trade receivables 14,168 14,691 Allowance for doubtful receivables (2,131) (1,819) Net trade receivables 12,037 12,872 Advance crop expenditure 466 590 Other receivables and prepayments 4,780 4,180 17,283 17,642 • The average credit periods on sale of goods and services are as follows: - 180 days for revolving facilities and 365 days for fixed term facilities for department stores; - 45 days for hotels; and - 60 to 90 days for agriculture. For the department stores debtors, interest is charged on the balance outstanding at the end of the month. •  The Group has recognised allowances for doubtful debts against trade receivables, based on estimated irrecoverable amounts determined by reference to past default statistics, as follows: - for department stores - 100% of all instalments in arrears for 150 days and above; - for hotels - 100% of balances over 120 days and; specific balances in the 60 to 120 days; and - for agriculture - 100% of balances over 120 days and 50% of balances over 90 days. • The net movement in allowance for doubtful debts of US$312,000 comprises further impairment of US$690,000 and recoveries of US$378,000. • Overdue but not impaired amounts included above are US$1,045,000 (2012: US$1,557,000) in the 30 to 60 days category, US$551,000 (2012: US$552,000) in the 60 to 90 days category and US$345,000 (2012: US$623,000) over 90 days. No allowance for doubtful debts has been recognised because these amounts are still considered recoverable. •  Receivables amounting to US$7.8 million (2012: US$2.2 million) were pledged to secure borrowings of the Group (see note 27). Notes to the Financial Statements
    • 53Meikles Limited 2013 Annual Report 26. Share capital and Directors’ beneficial interests 26.1 Share capital Ordinary shares of US1 cent each: Group and Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Opening issued share capital 2,538 2,454 Issued to the Meikles Limited Employee Share Ownership Trust - 84 Closing issued share capital 2,538 2,538 Group and Company Number Number 31 March 31 March 2013 2012 Opening shares in issue 253,793,301 245,374,791 Issued to the Meikles Limited Employee Share Ownership Trust - 8,418,510 Closing shares in issue 253,793,301 253,793,301 Unissued 146,206,699 146,206,699 Authorised 400,000,000 400,000,000 Meikles Limited Employee Share Ownership Trust The Meikles Limited Employee Share Ownership Trust (the Trust) was established in August 2011 with the objective of empowering employees through their acquisition of a shareholding in Meikles Limited. A total of 24 million shares are available for acquisition by the Trust. The purchase consideration of the shares is calculated on the basis of the weighted average price of the Company’s shares over the thirty (30) days prior to the date of issue. The composition of the Trust participants is 95% workers and 5% management in compliance with the country’s indigenisation laws. The unissued shares are under the control of the shareholders, save for the 15,581,490 shares still to be issued to the Trust, which are under the control of the Directors. 26.2 Directors’ beneficial interests At 31 March 2013 the direct and indirect beneficial interests of the Directors in the ordinary shares of the Company are shown below: Fully paid ordinary shares 31 March 31 March 2013 2012 J.R.T. Moxon 26,852,741 26,141,997 R. Chidembo 1,641,370 1,312,537 B. Chimhini 811,477 611,293 O. Makamba 1,050,774 1,093,229 K. Ncube - - M.L. Wood 1,788,998 1,655,658 Mr J.R.T. Moxon is also a director of Gondor Capital Limited which has a 47.42% shareholding in the Company. Company Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Group balances 34,637 28,026 Other receivables 255 281 34,892 28,307 The group balances have no fixed repayment terms . The Directors consider that the carrying amount of trade and other receivables approximates their fair value. Notes to the Financial Statements
    • 54 Meikles Limited 2013 Annual Report 27. Borrowings Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Secured: Acceptance credits, loans and overdrafts 54,062 39,577 Unsecured: Acceptance credits, loans and overdrafts 12,207 12,408 66,269 51,985 Less: Portion repayable within 12 months (58,852) (47,199) Non-current portion 7,417 4,786 Due for repayment: On demand within one year 58,852 47,199 In second year 2,819 596 In third year 2,911 447 In fourth year 1,085 3,743 In fifth year 602 - 66,269 51,985 Company Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Secured: Acceptance credits, loans and overdrafts 1,498 - Unsecured: Acceptance credits, loans and overdrafts 11,420 7,704 12,918 7,704 Less portion repayable within 12 months (12,806) (7,704) Non-current portion 112 - Due for repayment: On demand and within one year 12,806 7,704 In second year 46 - In third year 52 - In fourth year 14 - 12,918 7,704 • US$4.2 million (2012: US$5.3 million) worth of the acceptance credits, loans and overdrafts are secured by inventories. • US$7.8 million (2012: US$2.2 million) worth of loans are secured by receivables. • US$9 million (2012: US$5.6 million) worth of loans are secured by a negative pledge over assets. • US$32.6 million (2012: US$7.1 million) in freehold land and buildings has been pledged as security for loans of: (i)US$3.9 million which bears interest at 12.75% per annum with final repayment on 30 August 2016; (ii)US$1.1 million which bears interest at 7.69% per annum with final repayment on 14 May 2014; (iii)US$3.1 million which bears interest at 8.46% per annum with final repayment on 31 August 2017; and (iv)US$2.0 million which bears interest at 8.51% per annum with final repayment on 4 September 2018 • The Group has issued cross guarantees worth US$25.9 million (2012: US$33 million)for Group borrowing facilities. • The Group has borrowing facilities in the name of the Company that are utilised by Group entities. The Company borrowings above exclude amounts that were drawn down by subsidiaries of US$29,263,000 (2012: US$29,862,000). These have been netted off amounts due from Group companies. Notes to the Financial Statements
    • 55Meikles Limited 2013 Annual Report 28. Trade and other payables Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Trade payables 35,282 29,399 Accruals 8,195 6,754 Other payables 2,786 2,218 46,263 38,371 • The credit period on purchases ranges from 7 to 45 days (2012: 7 to 45 days). Foreign suppliers are predominantly on prepayment or cash basis. Interest is charged by certain but not all suppliers on overdue payables. • Trade payables comprise amounts outstanding for trade purchases. The Directors consider that the carrying amount of trade payables approximates their fair values. Company Company 31 March 31 March 2013 2012 US$ 000 US$ 000 Group balances 2,593 327 Provisions and other payables 1,032 840 3,625 1,167 The group balances have no fixed repayment terms. 29. Related party balances and transactions and compensation of and loans to executive Directors and key management personnel Balances between the Company and its subsidiaries and joint venture, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below as well as in note 22. 29.1 Related party balances and transactions Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 The following balances were outstanding at the end of the reporting date: Meikles Consolidated Holdings (Private) Limited - current account (4) 3 Liftbrok Investments (Private) Limited 1,023 - Barkpest Investments (Private) Limited 154 - Polyfoil Zimbabwe (Private) Limited – trade payable (69) (33) Polyfoil Zimbabwe (Private) Limited – short term loan - 281 During the year, group entities entered into the following transactions with related parties that are not members of the Group: Cost recoveries - Meikles Consolidated Holdings (Private) Limited 30 55 Short term loan - Liftbrok Investments (Private) Limited 874 - Short term loan - Barkpest Investments (Private) Limited 136 - Interest receivable - Liftbrok Investments (Private) Limited 149 - Interest receivable - Barkpest Investments (Private) Limited 18 - Interest received - Polyfoil Zimbabwe (Private) Limited 14 31 Purchases - Polyfoil Zimbabwe (Private) Limited 798 1,028 Barkpest Investments (Private) Limited and Liftbrok Investments (Private) Limited are staff share purchase vehicles whose shareholders are certain key management personnel who include two Directors of the Company. The share purchase vehicles hold shares in the Company under the name “Barkpest Investments (Private) Limited”. The loans to these entities attract interest at 17% per annum and are payable on demand.  Meikles Consolidated Holdings (Private) Limited (MCH) is indirectly owned by shareholders who hold 47.42% (2012: 47.4%) of the Company’s issued shares. The current account is unsecured and has no fixed terms of repayment. Notes to the Financial Statements
    • 56 Meikles Limited 2013 Annual Report 32. Commitments Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Commitments for the acquisition of property, plant and equipment Authorised but not yet contracted for 25,613 22,813 Group’s share of capital commitments of joint venture 1,783 3,000 33. Retirement benefits The Meikle Group Pension Scheme All eligible employees in Zimbabwe contribute to an independently administered pension scheme. The scheme is based on a defined contribution plan. National Social Security Authority Scheme All eligible employees in Zimbabwe contribute to the National Social Security Authority Scheme (NSSA). NSSA is a defined benefit scheme promulgated under the National Social Security Authority Act 1989. The contribution rate is limited to specific contribution rates as legislated from time to time. The contribution rate is presently the lower of US$6 and 3% of pensionable emoluments per employee per month. Mr B.J. Beaumont, the former Group Chief Executive Officer (resigned with effect from 30 September 2011), has a significant interest in Polyfoil Zimbabwe (Private) Limited (Polyfoil). Purchases from Polyfoil were made at market prices. The trade payable balance due to Polyfoil is unsecured and will be settled in cash. 29.2 Compensation of and loans to executive Directors and key management personnel Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Continuing operations Short-term benefits 4,547 4,911 Post-employment benefits 428 436 Compensation for loss of office 349 2,713 Total 5,324 8,060 Loans to key management personnel 234 343 The short term benefits represent remuneration of executive Directors and other members of key management for continuing operations during the year. Loans to key management personnel worth $233,901 (2012: US$300,139) are in respect of the motor vehicles disposed by the Group in the 31 March 2011 financial year. Of this balance, US$21,270 (2012: US$26,445) is in respect of a Director of the Company. The motor vehicle loans attract interest at 10% per annum and are repayable over 5 years. 30. Borrowing powers In terms of the Company’s Articles of Association, the Directors shall not allow the borrowings of the Company to exceed at any time, twice the value of the funds attributable to the shareholders without the sanction of the Company in a general meeting. 31. Operating lease commitments The Group is a lessee for various properties under operating leases, the majority of which have revenue- based rentals. These rentals vary from 1% to 10% of revenue. In terms of the leases, the Group is required to pay property rates, insurance and maintenance costs. The operating leases are renewable on fixed dates. Notes to the Financial Statements
    • 57Meikles Limited 2013 Annual Report 34. Litigation and claims There are various pending labour related litigations and claims whose resolution the Directors are of the opinion will not have a significant bearing to the Group’s financial position. 35. Financial risk management The Group’s principal financial instruments comprise cash and bank balances, interest bearing borrowings, overdrafts and short term money market investments. The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has other various financial assets and liabilities such as trade receivables and trade payables which arise directly from its operations. The main categories of risk inherent in the business of the Group are: • Credit risk • Liquidity risk • Market risk • Climate and weather changes (refer to note 20 for details). The Group’s objective is to effectively manage each of the above risks associated with its financial instruments in order to limit the Group’s exposure, as far as possible, to any financial loss associated with these risks. The Board is ultimately responsible and accountable for ensuring that adequate procedures and processes are in place to identify, assess, manage, and monitor key business risks. The Audit Committee is responsible for developing and monitoring the Group’s risk management policies. The committee reports at least quarterly to the Board on its activities. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and Group’s activities. The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risk faced by the Group. The Committee is assisted in this regard by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee at least quarterly. The Group operates a central treasury function, the objective being to provide competitive funding costs and investment income as well as the monitoring of financial risk, under policies approved by the Board. The Group treasury activity, which operates in close co-operation with the Group’s operating units, is routinely reported to Executive Directors, and is subject to review by the external auditors. In accordance with Group policy, Group treasury does not engage in speculative activity. 35.1 Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group has adopted the policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the financial loss from defaults. Financial assets, which potentially subject the Group to concentrations of credit risk, consist principally of receivables and cash and cash equivalents. The carrying amounts of financial assets represents the maximum exposure. The maximum exposure to credit risk at 31 March 2013 was: Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Balance with the Reserve Bank of Zimbabwe (RBZ) (note 23) 40,514 38,627 Other financial assets (note 22) 14,098 19,455 Trade and other receivables 14,791 14,349 Cash and cash equivalents (note 23) 14,198 8,427 Notes to the Financial Statements
    • 58 Meikles Limited 2013 Annual Report Trade receivables are amounts owing by customers and are presented net of allowance for doubtful amounts. Trade receivables are unsecured. The total credit risk with respect to receivables is limited as a result of the dispersion amongst the individual debtors and across different geographical areas. Accordingly, the Group has no significant concentration of credit risk in respect of trade receivables. Refer to note 4.2.4 on the funds with the RBZ. The Group’s cash is placed with major banks of high credit standing and within specific guidelines laid down by the Group Treasury and approved by the Board. The Group does not consider there to be significant exposure to credit risk in respect of cash and cash equivalents. 35.2 Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations when they fall due. Ultimate responsibility for liquidity risk management rests with the Board. The Group’s approach to managing liquidity risk is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or risking damage to the Group’s reputation. Exposure to liquidity risk is managed through a diversity of funding sources and a spread of debt maturities. Adequate liquidity is further managed through the use of cash flow forecasts and by maintenance of adequate borrowing facilities. In terms of the Company’s Articles of Association, the Company’s borrowing powers are limited to twice the value of the funds attributable to the shareholders, unless sanctioned in a general meeting of the Company. Group Treasury maintains strict control over the acceptance and draw- down of any loan facility. On average, trade receivables are realised within 45 to 365 days. Trade payables are settled within 7 to 45 days. To the extent that the Group requires short-term funds, it utilises the banking facilities available. The following are the contractual maturities of financial liabilities, including accrued interest to 31 March 2013: Carrying Within 1 to amount 1 year 5 years US$ 000 US$ 000 US$ 000 Group – 31 March 2013 Secured acceptance credits and loans 54,062 46,645 7,417 Unsecured acceptance credits, loans and overdrafts 12,207 12,207 - Trade and other payables 46,263 46,263 - Total financial liabilities 112,532 105,115 7,417 Group – 31 March 2012 Secured acceptance credits and loans 39,577 34,791 4,786 Unsecured acceptance credits, loans and overdrafts 12,408 12,408 - Trade and other payables 38,371 38,371 - Total financial liabilities 90,356 85,570 4,786 35.3 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on the risk. Notes to the Financial Statements
    • 59Meikles Limited 2013 Annual Report Currency risk The Group undertakes transactions denominated in currencies other than its functional currency. Consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved parameters by liquidating foreign denominated cash balances at approved rates. With foreign suppliers on a prepayment or cash basis, exposure with respect to foreign payables is minimal. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at year end are as follows: Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Assets South African Rand 28,196 6,177 Euro 20 28 Botswana Pula 1 119 Australian Dollar 2 - British Pound 2 2 28,221 6,326 Liabilities South African Rand 277 596 As at 31 March 2013, if the US$ weakened or strengthened by 10% against all the above currencies with all other variables held constant, profit after tax for the year would have been US$1,919,986 (2012: US$400,858) higher or lower, mainly as a result of foreign exchange gains or losses on translation of foreign currency denominated trade and other receivables, trade and other payables, cash and bank balances and borrowings. The Group did not use forward foreign exchange contracts during the year under review and does not apply cash flow hedge accounting. Interest rate risk The Group manages the interest rate risk on long and short term borrowings by fixing the interest rate with the relevant financial institution wherever possible. Borrowings issued at variable interest rates expose the Group to cash flow interest risk whereas borrowings issued at fixed interest rates expose the Group to fair value interest risk. The Group’s significant interest bearing assets are the funds at the Reserve Bank of Zimbabwe, the department stores trade receivables and short term loans. Notes to the Financial Statements
    • 60 Meikles Limited 2013 Annual Report The effective rates on financial instruments are: With no fixed realisation Within 1 to Group – 31 March 2013 Weighted average period 1 year 5 years Total interest rate p.a US$ 000 US$ 000 US$ 000 US$ 000 Financial assets Balances with the Reserve Bank of Zimbabwe (note 23) 4.68% 40,514 - - 40,514 Trade receivables 48% - 5,540 - 5,540 Staff loans 10% - 228 796 1,024 Short term loan – Liftbrok Investments (Private) Limited 17% 1,023 - - 1,023 Short term loan – Barkpest Investments (Private) Limited 17% 154 - - 154 Total financial assets 41,691 5,768 796 48,255 Within 2 to Weighted average 1 year 5 years Total interest rate p.a US$ 000 US$ 000 US$ 000 Financial liabilities Acceptance credits and loans 12.61% 49,024 7,417 56,441 Bank overdrafts 12.28% 9,828 - 9,828 Total financial liabilities 58,852 7,417 66,269 With no fixed realisation Within 1 to 5 Group – 31 March 2012 Weighted average period 1 year years Total interest rate p.a US$ 000 US$ 000 US$ 000 US$ 000 Financial assets Balances with the Reserve Bank of Zimbabwe (note 23) 4.68% 38,627 - - 38,627 Trade receivables 48% - - 7,612 7,612 Staff loans 10% - 366 892 1,258 Short term investment – Polyfoil Zimbabwe (Private) Limited 17% - 281 - 281 Total financial assets 38,627 647 8,504 47,778 Within 2 to Weighted average 1 year 5 years Total interest rate p.a US$ 000 US$ 000 US$ 000 Financial liabilities Acceptance credits and loans 14.66% 34,791 4,786 39,577 Bank overdrafts 12.95% 12,408 - 12,408 Total financial liabilities 47,199 4,786 51,985 Market price The Group currently has no significant investments in equity securities and therefore has minimal exposure to market price risk. Fair value At 31 March 2013 the carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables approximate their fair values due to their short-term maturities. Trade receivables will mature within 45 to 365 days and payables will mature within 7 to 45 days. The fair value of loans, investments and interest bearing debt approximate their carrying value as disclosed on the statement of financial position. Notes to the Financial Statements
    • 61Meikles Limited 2013 Annual Report 35.4 Capital management The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to shareholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt (borrowings as detailed in note 27) and equity (comprising issued capital, reserves, retained earnings and non-controlling interests). Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. The Group reviews its capital structure periodically. As part of this review, the Group considers the cost of capital and the risks associated with each class of capital. The gearing ratio at the end of the reporting period was as follows: Group Group 31 March 31 March 2013 2012 US$ 000 US$ 000 Long term and short term debt 66,269 51,985 Total equity 148,431 141,896 Debt to equity ratio 44.65% 36.64% The Board considers working capital management critical to the business, and in so doing, manages the balance between current assets and current liabilities. Notes to the Financial Statements
    • 62 Meikles Limited 2013 Annual Report 36. Prior year adjustment and change in accounting policy 36.1 Prior year adjustment – inventory valuation error During the year, the Group identified an error in the valuation of the trading inventory at TM Supermarkets (Private) Limited, carried forward from 31 March 2011 financial year. The error had the effect of overstating inventory, retained earnings, non-controlling interests and deferred tax liability for the financial periods ended 31 March 2011 and 31 March 2012. 36.2 Change in accounting policy During the year, the valuation method for retail trading inventory was changed from retail method to weighted average cost method. Previously, retail merchandise was valued at selling price less an appropriate percentage to reduce the value to approximate cost, due allowance having been made for redundant, obsolete and spoiled inventories. Under the weighted average cost method, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of the period and the cost of similar items purchased during the period. The average is calculated as each delivery is received. The effect of the valuation error and change in accounting policy on the Group financial statements is summarised below. As previously Change in stated Valuation accounting Restated 31 March error policy 31 March 2011 2011 US$ 000 US$ 000 US$ 000 US$ 000 Effect on financial position Inventory 40,713 (3,087) 120 37,746 Retained earnings 111,207 (1,719) 67 109,555 Non-controlling interests 764 (573) 22 213 Deferred tax liability 15,996 (795) 31 15,232 (3,087) 120 Effect on statement of profit or loss and other comprehensive income Cost of sales (256,124) (3,087) 146 (259,065) Income tax credit 793 795 (38) 1,550 Decrease in profit for the period from continuing operations (2,292) 108 As previously Change in stated Valuation accounting Restated 31 March error policy 31 March 2012 2012 US$ 000 US$ 000 US$ 000 US$ 000 Effect on financial position Inventory 39,633 (3,087) 120 36,666 Retained earnings 105,750 (1,169) 45 104,626 Non-controlling interests 8,618 (1,123) 44 7,539 Deferred tax liability 12,919 (795) 31 12,155 (3,087) 120 The restatement has no effect on the result for the years ended 31 March 2012 and 31 March 2013. Notes to the Financial Statements
    • 63Meikles Limited 2013 Annual Report 37. Disposal of Cape Grace Hotel operations The disposal of the Cape Grace Hotel operations in South Africa was concluded during the year with the effective date of 1 April 2012 . Below is the analysis of assets and liabilities over which control was lost and the gain on disposal. 31 March 2012 US$ 000 Current assets Cash and cash equivalents 2,857 Trade and other receivables 3,452 Inventory 419 Other financial assets 111 6,839 Non-current assets Property, plant and equipment 24,041 Goodwill 4,092 Deferred taxation 1,664 Other financial assets 3,644 33,441 Total assets 40,280 Current liabilities Trade and other payables 8,181 8,181 Non - current liabilities Long term borrowings 2,222 Other financial liabilities 10,233 12,455 Total liabilities 20,636 Net assets disposed of 19,644 31 March 2013 US$ 000 Gain on disposal Net assets disposed of (19,644) Net amounts due from Mentor Africa Limited converted to equity in Mentor Africa Limited (6,840) Non cash consideration received – shares in Mentor Africa Limited 27,657 Gain on disposal 1,173 The gain on disposal is included in the profit for the year from discontinued operations (see note 14). 38. Exchange rates 31 March 31 March 2013 2012 Statement of financial position rate: South African Rand 9.2589 7.6962 British pound 1.5139 1.6018 Average transaction rate: South African Rand 8.5613 7.4396 British Pound 1.5798 1.5981 Notes to the Financial Statements
    • 64 Meikles Limited 2013 Annual Report 12 months 12 months 15 months ended ended ended 31 March 2013 31 March 2012 31 March 2011 Restated Continuing operations Gross margin (%) Gross profit Revenue 22.21% 20.75% 21.6% Net margin (%) Operating profit Revenue 1.29% (2.35%) (2.49%) Earnings before interest, taxes, EBITDA depreciation and amortization Revenue 2.31% (1.23%) (1.64%) Return on equity (%) Attributable earnings Average shareholders’ funds 0.33% (1.46%) 6.53% The EBITDA is before exchange differences and fair value adjustments. Key Performance Measures
    • 65Meikles Limited 2013 Annual Report HOLDERS SHARES Number % Number % Analysis of ordinary shareholdings at 31 March 2013 Type of holder Zimbabwe Register Individuals 10,122 75.30 24,993,999 9.85 Companies not subject to dividend tax 2,313 17.20 161,301,287 63.56 FCDA resident 60 0.45 2,031,766 0.80 Pension funds 236 1.76 22,487,855 8.86 Nominee companies 212 1.58 9,622,406 3.79 Non resident 39 0.29 5,553,548 2.19 Insurance companies 24 0.18 23,245,541 9.16 Totals for Zimbabwe 13,006 96.76 249,236,402 98.21 London Register Banks and nominee companies 15 0.11 553,723 0.22 Individuals 411 3.05 3,961,536 1.56 Other corporate bodies 9 0.07 40,662 0.01 Pension funds and investment trusts 1 0.01 978 - Totals for London 436 3.24 4,556,899 1.79 Totals for Zimbabwe and London 13,442 100.00 253,793,301 100.00 Size of holdings 1 – 5 000 12,652 94.12 3,683,500 1.45 5 001 – 10 000 247 1.84 1,754,575 0.69 10 001 – 50 000 325 2.42 7,316,930 2.88 50 001 – 100 000 92 0.68 6,337,497 2.50 100 001 – 500 000 92 0.68 18,846,238 7.43 Exceeding 500 000 34 0.26 215,854,561 85.05 Totals 13,442 100.00 253,793,301 100.00 Top ten shareholders No. of shares % At 31 March 2013 Gondor Capital Limited 120,355,076 47.42 Old Mutual Life Assurance Company Zimbabwe Limited 22,563,681 8.89 Clayway Investments (Private) Limited 12,812,381 5.05 Meikles Limited Employee Share Ownership Trust 8,418,510 3.32 Stanbic Nominees (Private) Limited 5,134,870 2.02 Datvest Nominees (Private) Limited 5,010,338 1.97 Zimcor Limited 4,310,557 1.70 Old Mutual Zimbabwe Limited 4,012,919 1.58 AATC 3,335,517 1.31 Meikles Consolidated Holdings (Private) Limited 2,789,470 1.10 188,743,319 74.36 Other 65,049,982 25.64 Total 253,793,301 100.00 At 31 March 2012 Gondor Capital Limited 120,355,076 47.42 Old Mutual Life Assurance Company Zimbabwe Limited 22,790,353 8.98 Clayway Investments (Private) Limited 12,612,381 4.97 Meikles Limited Employee Share Ownership Trust 8,418,510 3.32 Datvest Nominees (Private)Limited 5,634,024 2.22 Stanbic Nominees (Private) Limited 5,323,685 2.10 Zimcor Limited 3,653,167 1.44 Old Mutual Zimbabwe Limited 3,520,292 1.39 AATC 3,335,517 1.31 Mining Industry Pension Fund 2,248,902 0.89 187,891,907 74.04 Other 65,901,394 25.96 Total 253,793,301 100.00 Shareholder Information
    • 66 Meikles Limited 2013 Annual Report Group Structure Note : TM Supermarkets (Private) Limited has the following 100% owned subsidiaries : Are You Looking Investments (Private) Limited, Bushell Investments Services (Private) Limited, Cambuild Investments (Private) Limited, Kelview Investments (Private) Limited, Ebony Properties (Private) Limited, Mopani Property Development (Private) Limited, Osterland Investments (Private) Limited, Petria Properties (Private) Limited, Proposal Investments Services (Private) Limited, Ringsmoke Investment (Private) Limited and Strove Enterprises (Private) Limited. Pick n Pay Meikles Guard Services (Private) Limited Meikles Resources (Private) Limited Drillreel Investments (Private) Limited Isis Management Holdings Meikles Hotel (Private) Limited (dormant) Cape Grace Investments Limited Mentor Africa Limited Thomas Meikle Properties (Private) Limited Tingamira Tea Estates (Private) Limited Coffee & Tea Services (Private) Limited Meikles Credit Services (Private) Limited Tuscarora Investments (Private) Limited (dormant) Ninety Speke (Private) Limited Thomas Meikle Stores (Private) Limited t/a Meikles Financial Services (dormant) Stripwax Investments (Private) Limited (dormant) TM Supermarkets (Private) Limited See note below Greatermans Stores (1979) (Private) Limited (Department Stores) Tanganda Tea Company Limited Meikles Hospitality (Private) Limited (incorporating 50% partnership in the Victoria Falls Hotel) Meikles Limited 49% 51% 100% 100% 100% 100% 100% 100% 35% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
    • 67Meikles Limited 2013 Annual Report Zimbabwe Tax The following summary addresses the Zimbabwe tax consequences for investors who are not residents of Zimbabwe and who hold shares as capital assets. Dividend withholding tax Dividends payable to non-residents are subject to withholding tax of 10% for dividends from securities listed on the stock exchange and 15% in the case of any other dividends. Lesser rates apply where double taxation agreements exist. Dividends payable to corporate residents are not subject to withholding tax. Dividends payable to non-corporate residents are subject to withholding tax of 10% for securities listed on the Zimbabwe Stock Exchange and 15% in the case of any other dividends. Capital gains tax Sale of securities listed on the Zimbabwe Stock Exchange is subject to withholding tax of 1% of sale proceeds and is exempt from capital gains tax Dividend distribution In terms of Zimbabwe Exchange Control Regulations, distribution of retained earnings by way of dividends is restricted. The regulations provide that dividends may only be paid to non-resident shareholders with the specific approval of the Exchange Authority. Only after-tax revenue profits accruing during the financial year immediately preceding the application are remittable. Accordingly, profits accruing in financial years preceding the most recent year-end are effectively blocked. Approval of remittance is at the discretion of the Exchange Control Authorities. Withholding tax is payable thirty days after the declaration of the dividend, notwithstanding that an application for its remittance may be denied. Share prices The middle market prices of Meikles Limited shares on the Zimbabwe Stock Exchange during the course of the year were: 31 March 2012 14.1 cents 30 June 2012 16 cents 30 September 2012 16 cents 31 December 2012 15 cents 31 March 2013 21 cents Tax Issues and Share Prices
    • 68 Meikles Limited 2013 Annual Report Corporate Information Meikles Limited (Registration No. 1/37) Business Address and Registered Office: 6th Floor 99 Jason Moyo Avenue Harare Zimbabwe Telephone +263-4-252068-71 Telefax +263-4-252067 email: alanemitchell@meikleslimited.co.zw Zimbabwe Transfer Secretaries ZB Bank Limited First Floor ZB Centre Corner First Street / Kwame Nkrumah Ave P.O Box 2540 Harare Zimbabwe Telephone 263-4-759660/9, 263-4-2912729/20 email: rmutakwa@zb.co.zw London Transfer Secretaries Computershare Services PLC P.O. Box 82 The Pavilions Bridgwater Bristol BS99 7NH Telephone +44-870-702 0001 Telefax +44-870-703 0005 Bristol England Website: www.computershare.com London Secretaries PricewaterhouseCoopers Legal LLP 1 Embankment Place London WC2N 6DX Telephone + 44 -20-7213 2018 Telefax + 44-20-7213 8778 Website: www.pwclegal.co.uk Auditors Deloitte & Touche (Chartered Accountants) P.O. Box 267 Harare Zimbabwe Telephone +263-4-746248/54 email: deloitte@deloitte.co.zw Legal Practitioners Scanlen and Holderness P.O. Box 188 Harare Zimbabwe Telephone +263-4-799636/42 email: scanlen@mweb.co.zw Principal Bankers CABS Northend Close Northridge Park P.O. Box 2798 Harare Zimbabwe Telephone +263-4-252861 email: management@cabs.co.zw Standard Chartered Bank Zimbabwe Limited 2nd Floor Mutual Centre P.O. Box 373 Harare Zimbabwe Telephone +263-4-253801/8 email: contactus.zw@sc.com African Banking Corporation of Zimbabwe Limited Endeavour Crescent Mt Pleasant Business Park P.O. Box 2786 Harare Zimbabwe Telephone +263-4-338001/20 email: enquiries.mtpleasant@bancabc.com Company Secretary Andrew P Lane-Mitchell email: alanemitchell@meikleslimited.co.zw Executive Chairman John R T Moxon Executive Director Finance and Administration Onias Makamba email: omakamba@meikleslimited.co.zw Website Address www.meiklesinvestor.com
    • 69Meikles Limited 2013 Annual Report Notice is hereby given that the seventy-sixth ANNUAL GENERAL MEETING of the shareholders of Meikles Limited in respect of the period ended 31 March 2013 will be held in the Mirabelle, Ground Floor, Meikles Hotel, 3rd Street, Harare on 20 August 2013 at 08.30 am to conduct the following business: ORDINARY BUSINESS 1. To receive and adopt the Group Financial Statements for the year ended 31 March 2013 and the reports of the Directors and Auditors. 2. To consider the re-appointment of the following Director who retires by rotation and being eligible offers himself for re-election: Rugare Chidembo 3. To consider the re-appointment of the following Director who retires by rotation and being eligible offers himself for re-election: Mark Leonard Wood 4. To confirm Directors’ fees amounting to US$35 125 for the year ended 31 March 2013. 5. To appoint auditors for the year ending 31 March 2014 and to approve the Auditors’ fees of US$109 882 for the year ended 31 March 2013. Messrs Deloitte & Touche, auditors for the year ended 31 March 2013, have indicated their willingness to continue in office. 6. That 15 581 490 unissued shares of the Company be placed under the control of the Directors who shall have the authority to issue the shares to the Meikles Limited Employee Share Ownership Trust on such terms and conditions as they deem fit, provided that the shares shall be issued at a price calculated on the basis of the weighted average price of Meikles Limited shares over the thirty (30) days prior to the date of issue. SPECIAL BUSINESS 7. That the Company’s business shall now include mining resources. A P LANE-MITCHELL Secretary 3 June 2013 Notice of Meeting
    • 70 Meikles Limited 2013 Annual Report ______________________________________________________________________________________ I/We __________________________________________________________________________________ (Name/s in block letters) being a member of Meikles Limited, and entitled to _______________________________________________________________________votes hereby appoint __________________________________ of ____________________________________ ______________________________________________________________________________________ or failing him/her ________________________________ of _____________________________________ ______________________________________________________________________________________ or failing him/her the Chairman of the meeting as my/our proxy to attend and speak for me/us and on my/our behalf at the annual general meeting of the Company to be held in Harare on 20 August 2013 at 8:30 am and at any adjournment thereof and to vote or abstain from voting. Any member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies to attend, speak and vote in his stead. A proxy need not be a member of the Company. Every person present and entitled to vote at a general meeting shall, on a show of hands, have one vote only, but in the event of a poll, every share shall have one vote. Please read the notes appearing on the reverse hereof. Signed at _____________________________________ on __________________________________2013 Signature(s) ______________________________________________________________________________ Assisted by me ___________________________________________________________________________ Full name(s) of signatory/ies if signing in a representative capacity (see note 2) (please use block letters) Form of Proxy
    • 71Meikles Limited 2013 Annual Report 1. A deletion of any printed matter and the completion of any blank spaces need not be signed or initialled. Any alteration or correction must be initialled by the signatory/ies. 2. The Chairman shall be entitled to decline to accept the authority of a person signing the proxy form: (a) under a power of attorney (b) on behalf of a company unless that person’s power of attorney or authority is deposited at the offices of the Company’s Zimbabwe transfer secretaries or the London transfer secretaries not less than 48 hours before the meeting. 3. If two or more proxies attend the meeting then that person attending the meeting whose name appears first on the proxy form and whose name is not deleted, shall be regarded as the validly appointed proxy. 4. When there are joint holders of shares, any one holder may sign the form of proxy. In the case of joint holders, the senior who tenders a vote will be accepted to the exclusion of other joint holders. Seniority will be determined by the order in which names stand in the register of members. 5. The completion and lodging of this form of proxy will not preclude the member who grants this proxy form from attending the meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof should such member wish to do so. 6. In order to be effective, completed proxy forms must reach the Company’s Zimbabwe and London transfer secretaries not less than 48 hours before the time appointed for the holding of the meeting. 7. Please ensure that the name(s) of the member(s) on the form of proxy and the voting form are exactly the same as those on the share register. 8. Please be advised that the number of votes to which a member is entitled is determined by the number of shares recorded in the share register 48 hours before the time appointed for the holding of the meeting. Instructions for Signing and Lodging this Form of Proxy OFFICE OF THE LONDON TRANSFER SECRETARIES Computershare Services PLC P.O. Box 82 The Pavilions Bridgwater Bristol BS99 7NH Telephone +44-870-702 0001 Telefax +44-870-703 0005 Bristol England OFFICE OF THE ZIMBABWE TRANSFER SECRETARIES ZB Bank Limited First Floor ZB Centre Corner First Street / Kwame Nkrumah Ave P.O Box 2540 Harare Zimbabwe Telephone 263-4-759660/9 263-4-2912729/20
    • 72 Meikles Limited 2013 Annual Report Notes