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1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2015 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015 CHAIRMAN’S STATEMENT Group Overview Group turnover for the six month period to 30 September increased by 15% relative to the previous period. The contribution to turnover by the different segments of the Group is set out in Note 6. Operating income increased by 18% relative to the previous period. Whilst operating expenses excluding depreciation have increased by 3%, they have reduced to 20% of turnover from 22% recorded in the comparative period. The increase in operating expenses was caused by a growth in rents payable to third parties as a result of growth in turnover and by a growth in utility connected expenditures. Other costs, including employment costs, were static. There has been a combination of employment cost reductions in segments of the Group and the creation of further employment opportunities from growth projects in the Group. EBITDA increased by $6.4m relative to the previous period. The contribution to EBITDA by the different segments of the group are set out in Note 6. Interest payable decreased by 14% mainly due to the reduced borrowings. Interest received decreased by 41%, as a result of reduced interest receivable on outstanding balances due from the Reserve Bank of Zimbabwe. Net interest payable increased by 12% to $3.7 million. Fair value gains on biological assets reduced from $3.6 million to $0.66 million. Shareholders are reminded that these sums are non-cash flow in nature. The movements relative to the Balance with the Reserve Bank of Zimbabwe and Treasury Bills are detailed in Notes 4 and 5. Group net borrowings are detailed in Note 7. Shareholders will observe that net borrowings have decreased by approximately $22 million over the six month period. Negotiations on further sums considered due from the Reserve Bank of Zimbabwe as disclosed in the 31 March 2015 annual report are in progress. It is expected that this matter will be finalised very shortly and Shareholders will be advised further at the appropriate time. Any resultant adjustment to the financial results will be disclosed to Shareholders and will be included in the results of the second half of the current financial year. With the exception of trade and other receivables which reflect a positive reduction for the period, other balance sheet items remained substantially unchanged in total. Segment assets and liabilities are disclosed in Note 6. Segment Commentary TM Supermarkets trading as TM and PnP Two new supermarkets were opened in Harare (Avondale and city centre) during the period to 30 September but neither was operating for the entire period. Other supermarkets were refurbished and this process is continuing into the second half of the year. Turnover increased by 17% and operating income expressed as a percentage of turnover increased from 18% to 19.5%. Expenses expressed as a percentage of turnover decreased marginally from 16.5% to 16%. Stock turns improved from 7.1 to 8.7 times. TM is well positioned to redeem its term borrowings on schedule and these will be repaid progressively over the next twelve months. A major shopping centre development in Borrowdale in which TM is a participant will commence shortly. It is pleasing to note that TM does provide opportunities for further employment in Zimbabwe and in this context it is an important contributor to the economy. On 24 November 2015, the Confederation of Zimbabwe Retailers presented TM PnP with a number of awards, including ‘Supermarket of the Year - Consumer’s Choice’ and ‘Best Retailer - Environmental Management’. Stores - Meikles Stores and Meikles Mega Market The two divisions have not made a positive contribution to EBITDA in the six month period, but they have achieved some financial improvement and have performed in accordance with expectations. Shareholders have been advised that these divisions will not make a loss in the second half of the year. This remains appropriate. The Confederation of Zimbabwe Retailers presented Barbours Department Store with the ‘Clothing Retailer of the Year’ award on 24 November 2015. Tanganda Tanganda has been adversely affected in the period to 30 September by a decrease in international bulk tea prices. Average prices fell to $1.28/kg from $1.32/kg for the comparative period. It is expected that average bulk tea prices will increase over the forthcoming period but will not yet reach the favourable levels realised in the 2014 financial year. Tanganda needs another two rainy seasons including the forthcoming season to realize a material contribution from its diversification programme. This programme does encapsulate the future of Tanganda, as a major contributor to the agricultural sector of the economy. The new packing machines are in operation in Mutare, and there is greater mechanisation on the estates. The cost of producing both bulk and packed tea has reduced, with considerable benefit to the company. There may be uncertainty concerning the expectations of rains in the forthcoming season. Tanganda has implemented an appropriate defensive strategy. On 8 October 2015, Zimtrade presented Tanganda with the ‘Zimtrade 2014 - Best Exporter of the Year Award - Processed Food Sector’. Hospitality The two hotels in Zimbabwe have been affected by the new value added tax, which has had a material effect on revenue, as the value added tax could not be passed on to guests in full. The South African visa requirements have also had a negative effect on tourist arrivals. Occupancies in Harare have shown a modest increase, while those at Victoria Falls have declined. Expenditures in both hotels have decreased. The next phase of renovation at Victoria Falls will begin early in 2016. The hotel will be in a strong position to defend its competitive position. Meikles Hotel was presented with the ‘2015 Best City Hotel’ award by the Association of Zimbabwe Travel Agents rd th (AZTA) in September 2015 for the 23 consecutive year. The Victoria Falls Hotel was voted the ‘4 Best Resort in Africa and Middle East 2015’ by the Travel and Leisure magazine. Outlook The different segments of the Group are expected to continue to enhance their performance. Growth associated with a number of projects underway in segments of the Group are substantial and will provide a platform for further growth in earnings. There may be uncertainties relating to the weather and to the operating environment in general. The Group expects to reach a satisfactory conclusion with regard to the sums due from the Reserve Bank of Zimbabwe. Appreciation I would like to extend my appreciation to our customers, suppliers, shareholders and regulatory authorities for their continued support. I would also like to extend my appreciation to my fellow Directors, and to management and staff for their dedication and commitment. Dividend The Board has not declared an interim dividend. JRT Moxon Executive Chairman 24 November 2015 Revenue Net operating costs Operating profit / (loss) Investment income Finance costs Net exchange difference Loss recognised on disposal of Treasury Bills Fair value loss on disposal of available-for-sale financial assets Fair value adjustments on biological assets Loss before tax Income tax (expense) / credit Loss for the period Other comprehensive income, net of tax Items that may be reclassified subsequently to profit or loss: Fair value gain on available-for-sale financial assets Other comprehensive income for the period, net of tax TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (Loss) / income for the period attributable to: Owners of the parent Non-controlling interests Total comprehensive (loss) / income attributable to: Owners of the parent Non-controlling interests Loss per share (cents) Basic Diluted Headline loss per share (cents) Diluted headline loss per share (cents) ASSETS Non-current assets Property, plant and equipment Investment property Investment in Mentor Africa Limited Biological assets Intangible assets Other financial assets Deferred tax Total non-current assets Current assets Balances with Reserve Bank of Zimbabwe Treasury Bills Inventories Trade and other receivables Other financial assets Cash and bank balances Total current assets Total assets EQUITY AND LIABILITIES Capital and reserves Share capital Share premium Other reserves Retained earnings Equity attributable to equity holders of the parent Non-controlling interests Total equity Non-current liabilities Borrowings Deferred tax Total non-current liabilities Current liabilities Trade and other payables Borrowings Total current liabilities Total liabilities Total equity and liabilities Unaudited 30 Sep 2015 US$ 000 124,866 248 22,931 42,834 124 12,088 4,617 207,708 - 11,727 36,902 13,058 4,192 16,188 82,067 289,775 2,538 1,316 10,808 103,755 118,417 18,710 137,127 15,998 13,215 29,213 59,955 63,480 123,435 152,648 289,775 Audited 31 Mar 2015 US$ 000 125,145 249 22,931 41,083 124 12,246 4,201 205,979 7,229 22,942 35,626 19,893 4,093 8,883 98,666 304,645 2,538 1,316 87 115,934 119,875 17,281 137,156 24,402 12,508 36,910 60,397 70,182 130,579 167,489 304,645 ABRIDGED UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015 Unaudited 30 Sep 2015 US$ 000 225,690 (225,241) 449 1,783 (5,446) (177) (4,009) (3,691) 657 (10,434) (373) (10,807) 10,722 10,722 (85) (12,179) 1,372 (10,807) (1,457) 1,372 (85) (4.80) (4.46) (2.29) (2.13) Unaudited 30 Sep 2014 US$ 000 196,254 (202,191) (5,937) 3,047 (6,329) 21 - - 3,646 (5,552) 2,734 (2,818) - - (2,818) (1,976) (842) (2,818) (1,976) (842) (2,818) (0.78) (0.72) (1.70) (1.58)
