Meikles Limited 2014 annual report

2 0 1 4Annual Report

Chairman’s Statement 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 74

Shareholder Information 75

Group Structure 76

Tax Issues and Share Prices 77

Corporate Information 78

Notice of Meeting 79

Form of Proxy 80

Instructions for Signing and Lodging Form of Proxy 81

Contents2 0 1 4 A n n u A l R e p o R t

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I have pleasure to present the report for the financial year ended 31 March 2014.

FINANCE

Funds on deposit with the Reserve Bank of Zimbabwe

have increased to US$90.8 million as a result of

interest negotiations. We are in receipt of Treasury

Bills of US$49.6 million and have been advised by

the relevant authorities that upon completion of their

required processes, Treasury Bills of similar terms to

those already in our possession will be issued for the

balance. The Company has been testing its ability to

market the Bills in the local market. Efforts to date

have focused largely on local banks. Some significant

success has materialised from these efforts. Foreign

banks operating in Zimbabwe have failed so far to

demonstrate an appetite for the Bills.

There has been positive interaction with local financial

institutions outside of banks. These institutions are

likely to have a longer investment time frame capacity

than banks. This interaction is progressing and subject

to some revision of the terms of the Treasury Bills,

success looks possible. The Company has very

recently been approached by a foreign corporate who

has expressed the opinion that foreign institutions may

have an appetite for the Treasury Bills. This approach

is also to be progressed. It is too soon to assess the

merits of this possibility.

Discussions with the authorities continue on an

amicable basis with a view to ensuring that the Treasury

Bills are on terms that will be acceptable in the market.

Developments suggest satisfactory progress on this

initiative, which is expected to be concluded shortly.

Shareholders and other stakeholders are invited to

compare the Group’s net borrowings position to funds

held on deposit with the RBZ as at the end of March

2014 as disclosed in the financials. It will be seen that

following receipt of these funds the Group may have

no net borrowings, a strong platform for the future.

As disclosed to shareholders in previous releases,

the Group will maintain its foreign and local term

borrowings and redeem them on due date in terms

of contractual obligations. As a result, the Group will

have substantial excess funds available for expansion,

working capital, and an appropriate distribution to

shareholders on realisation of the RBZ deposit.

We are pleased with the progress on securing access to

our funds and this development is exciting for the entire

Group. The receipt has potential to make a substantial

contribution to the Nation, both through the Group’s

own activities and the corporate social responsibility

programs through The Meikles Foundation where

substantial activities are underway for the benefit of

the community. In addition, our youth empowerment

plan with the Ministry of Youth, Empowerment and

Indigenisation has been approved.

TRADING AND OPERATIONS

Group

Group revenues were 1.8% below those achieved in

the prior year due to lower turnovers in the retail and

agricultural sectors of our operations. Operating costs

were 1.7% ahead of those incurred in the prior year.

Finance costs increased. Borrowings increased to fund

expansion and refurbishments in the supermarkets,

refurbishment of the hotels and substantial plantation

development.

Chairman’s Statement

Mining, agriculture, tourism and retail are viewed as substantial participants in the future growth and wellbeing of the economy.

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TM Supermarkets

Turnover for the year was $334 million (2013: $336

million). The customer count throughout our store

footprint increased by 8% compared to the prior

year. The average cost of product to the consumer

declined. EBIDTA reduced to $11.0 million (2013:

$11.6 million). Margins were similar to those of the

prior year.

The store portfolio increased from 49 at 31 March

2013 to 53 branches as at 31 March 2014. The

company secured four new sites in prominent areas

in the second half of the year and their impact on

turnover and profitability will be felt in the ensuing

financial periods. The new stores increased our trading

area by 10% to 55,000 square meters. Post the end

of the financial year, five additional new sites have

been secured for development in the 2015 and 2016

financial years, with potential of increasing the trading

space by more than 18%.

The refurbishment programme is progressing as

planned. As at 31 March 2014, five branches had been

fully refurbished whilst eight stores are currently being

refashioned and are at different stages of completion.

Meikles Mega Market

The division started operating in December 2013.

From its single store, it contributed just over $2

million in turnover in the period to 31 March 2014.

We achieved an average of 20% compound monthly

growth in turnover from the launch date. The store

portfolio is being expanded and post the end of the

financial year, an additional store was opened whilst

plans are being progressed to open at least four new

stores by the end of the 2015 financial year.

Meikles Stores

We have made progress in restructuring the

departmental stores. The trading area was significantly

reduced through reallocation of the space to high

growth areas of the Group and aligned to current

trading performance and outlook. The departmental

stores operated from twelve (12) sites in the 2013

financial year and these were reduced to five (5) by 31

March 2014.

The turnover for the year was $12.5 million (2013:

$18.5 million) and the reduction was through a

combination of factors including the reduced store

footprint and limited access to credit.

EBIDTA was a loss of $2.1 million (2013: loss of $1.3

million). The overhead structure is being realigned to

the reduced number of stores. There will be minimal

job losses in this process as we are able to accommodate

most of the affected staff in the growing areas of the

Group and we believe the remaining stores will be

sustainable with a lean overhead structure.

The Stores are to relinquish the basement and ground

floors of Greatermans in favour of a new Pick n

Pay supermarket, which is to open in October 2014.

This development may not necessarily result in the

termination of Greatermans as a trading entity, but

will result in a strong retail solution for the Group in a

good location in Harare.

Hotels

The hospitality sector continues to improve. The

country’s image and perceptions have to a large extent

been corrected and our commendations go to the

Government and the line Ministry for positively driving

this agenda. The country has benefited from hosting

the UNWTO General Assembly in August 2013. We

witnessed increased traffic in the tourist resort areas

while the city bound travellers were limited in line with

the subdued business climate.

Meikles Hotel was refurbished throughout the

Chairman’s Statement continued

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year as was the Victoria Falls Hotel. The results for

the year were not influenced substantially by the

refurbishments, as these were not in place for the full

year. EBIDTA was $1.3 million compared to $612,000

in the prior year. The revenues for the Hotels at $15.6

million were 5% higher than those recorded in the

2013 financial year. The REVPARs at the Meikles

Hotel and the Victoria Falls Hotel increased by 2% and

15% respectively. We attribute this to the high quality

of our product offering following the refurbishments

and the positive sentiments on the country.

Tanganda Tea Company

EBITDA increased by 36% to $2.9 million. The

revenues for the year at $22.6 million were down 6%

on the prior year.

The plantation development embarked on in 2011

progressed successfully and is nearing completion.

An additional 143ha of coffee, 185ha of avocadoes,

164ha of macadamia and 108ha of timber were added

during the year. The company had 268ha, 375ha,

663ha, 2372ha and 1415ha of coffee, avocadoes,

macadamia, tea and timber plantations respectively as

at 31 March 2014.

Bulk tea production increased by 30% to 9,700 tons.

The fertilisation and liming programmes undertaken

in previous periods coupled with favourable weather

conditions account for the high bulk tea production.

However, due to the oversupply of tea from Kenya,

the bulk tea prices declined by 8% compared to prior

year. We have continued to mechanise tea plucking and

this resulted in a decrease in the cost of production

of bulk tea by 24% albeit also aided by the increased

production volumes.

Packeted tea production was at 2,044 tons, similar

to the 2,093 tons produced in the prior year as there

was suppressed demand in the local market, whilst

the regional markets, particularly Zambia, showed

growth. Subsequent to year end, we have replaced

our packaging machines with a state of the art high

capacity plant that will allow us to increase production

at standard costs, ensuring continuity of supply of a

quality product at competitive prices. Our Tingamira

water production increased by 44% compared to prior

year and water sales volumes continue on an upward

trend.

Mining

Meikles Centar Mining (“MCM”) is currently in the

process of acquiring a 51% shareholding in a group of

gold mines in the Matabeleland area for a consideration

of US$3 million. We await regulatory approval for the

transaction to be concluded.

MCM has purchased 75% equity in a company that

owns a number of chrome claims on the Great Dyke.

Proposals have been submitted to the Ministry of

Mines related to a significant chrome related project,

which include construction of a smelter to beneficiate

both lumpy and alluvial ore. The project will cost in

excess of $100 million.

The Group carried out limited exploration on an iron

ore claim and the results were positive. Further tests

are required to determine the full extent and quality of

the ore reserves.

The Group looks to its strategic partners to provide

finance and mining skills. Mining is a diversification

into an area of substantial growth potential in

Zimbabwe.

Mentor

The value of the Group’s investment in Mentor has

increased by twenty percent expressed in terms of

South African rand, but is static in terms of United

States dollars.


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Mentor and other financiers are involved in

negotiations relating to a new project, which is at an

advanced stage, but has not yet been consummated.

It is expected that this project, if consummated

successfully, will have a material impact on forward

values of the Mentor Group.

MANAGEMENT

The Group is committed to maintaining the highest

standards of Corporate Governance in all of its

operations. Consequently the Group has embarked

on a comprehensive anti-corruption programme

whose implementation has already commenced.

Pursuant to this programme the Group intends to

introduce robust procurement systems to ensure that

goods and services procured by the Group are of the

highest standard and of the best value. In line with

the anti-corruption drive the Group has put in place

a number of anti-corruption initiatives which include

the establishment of an anti-corruption desk in the

Chairman’s office to deal specifically with cases of

reported corruption.

OUTLOOK

There are stresses in the economy, but the Group

sees these as challenges that are there to be overcome.

Once the matters highlighted in this statement under

Finance have been fully achieved, placing the Group

in a strong financial position, the Group will accelerate

its participation in the economy for the benefit of

all Stakeholders. Success achieved very recently in

implementing a significant part of our financial

objectives provides the Group with resources that will

enable it to launch the first phase of planned initiatives,

with immediate effect. Mining, agriculture, tourism

and retail are viewed as substantial participants in the

future growth and wellbeing of the economy. The

Group is focused on these four areas of endeavour.


It is believed that the full implications set out above

under Finance will be implemented in time to benefit

the entirety of the second half of the forthcoming

financial year. Interest costs will reduce, but most

importantly the Group will have the financial flexibility

to pursue strategies that will enhance shareholder

value. Inter-group funding and guarantees have

precluded any constructive initiative in this respect

over the period since dollarisation. Parts of the Group

have expanded and progressed during this period and

other parts have been restrained through a lack of

resources. It is now possible to focus aggressively on

excellence, motivation and an enhancement of values.

Dividend payments will also be possible in the second

half of the year. Shareholder patience over the past

years is recognised and will be rewarded.

APPRECIATION

I would like to express my appreciation to our

customers who continue to support us in this

increasingly difficult environment. I would also like

to thank my fellow Board members, management and

staff for the steadfast commitment and dedication.

JRT Moxon

Executive Chairman

13 August 2014

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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

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 2014, 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 J.R.T Moxon and K. Ncube 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. 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,

and operates within well-defined policies. There is

comprehensive financial reporting with actual results

reported monthly against budget and prior year.

Corporate Governance

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Your Directors have pleasure in presenting their report and the audited financial statements of the Group for the year ended 31 March 2014.

Principal activities The main activities of the Group are those of agriculture, hotels, wholesaling and retail trading. Retail trading includes department stores and supermarkets. The security guard services operations, whose main customers are other Group entities, have shown modest growth during the year and are on a trajectory. The mining entities have not yet started operations.

Financial resultsThe results for the year ended 31 March 2014 are set out in the attached financial statements.

Share capitalDetails of the authorised and issued share capital are set out in note 25 to the financial statements.

Substantial shareholdingsAccording to information received by the Directors, the following were the top ten shareholders of the Company as at 31 March 2014:

Shareholder No. of shares %

Gondor Capital Limited 120,355,076 47.42Old Mutual Life Assurance Company Zimbabwe Limited 17,814,627 7.02Clayway Investments (Private) Limited 12,812,381 5.05Meikles Limited Employee Share Ownership Trust 8,418,510 3.32Stanbic Nominees (Private) Limited 5,282,918 2.08Windward Capital (Pty) Ltd 5,199,856 2.05Old Mutual Zimbabwe Limited 3,911,688 1.54Meikles Consolidated Holdings (Private) Limited 3,850,964 1.52Datvest Nominees (Private) Limited 3,584,371 1.41Willoughby’s Consolidated Plc 3,499,938 1.38

Independent auditorsMessrs. Deloitte & Touche offer themselves for re-election as auditors for the year ending 31 March 2015 and shareholders will be asked to reappoint them, and to approve their fees for the year ended 31 March 2014.

J.R.T. Moxon Executive ChairmanHarare, 13 August 2014

Report of the DirectorsDirectors and their interestsThe 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 28. 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 25 to the financial statements.

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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 2015

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 Executive Director

Finance and

Administration

Harare, 13 August 2014 Harare, 13 August 2014

Directors’ Responsibility for Financial Reporting

2 0 1 4 A n n u A l R e p o R t

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REPORT OF THE INDEPENDENT AUDITORSTO 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 2014, 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 73.

Directors’ responsibility for the financial statementsThe 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 responsibilityOur 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.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of Meikles Limited as at 31 March 2014, and 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 requirementsIn 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 & ToucheChartered Accountants (Zimbabwe)Harare13 August 2014

P O Box 267 Deloitte & ToucheHarare West BlockZimbabwe BorrowdaleOfficePark Borrowdale Road Harare

Tel: +263 (0)4 852120-22 +263 (0)4 852124-29 Fax: +263 (0)4 852130 www.deloitte.com

2 0 1 4 A n n u A l R e p o R t

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31 March 2014 31 March 2013 Notes US$ 000 US$ 000 CONTINUING OPERATIONS Revenue 5 384,308 391,328Net operating costs 7 (385,227) (386,262) Operating (loss) / profit (919) 5,066Investment income 12 42,115 2,244Finance costs 12 (10,462) (6,994)Net exchange gains / (losses) 207 (340)Fair value adjustments 6,558 7,828Profit before tax 37,499 7,804Income tax expense 13 (320) (2,442)Profit for the year from continuing operations 37,179 5,362 DISCONTINUED OPERATIONS Profit for the period from discontinued operations 14 - 1,173 PROFIT FOR THE YEAR 37,179 6,535 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 37,179 6,535 Profit for the year attributable to: Owners of the parent 34,427 3,084 Non-controlling interests 2,752 3,451 37,179 6,535Total comprehensive income attributable to: Owners of the parent 34,427 3,084 Non-controlling interests 2,752 3,451 37,179 6,535Earnings per share (cents) 15 Basic 13.56 1.21Continuing operations 13.56 0.75Discontinued operations - 0.46 Diluted 12.59 1.15Continuing operations 12.59 0.71Discontinued operations - 0.44 Headline (loss) / earnings per share - continuingoperations (cents) 15 (1.64) 0.16 Diluted headline (loss) / earnings per share - continuingoperations (cents) 15 (1.52) 0.81

Consolidated Statement of Profit or Loss and other Comprehensive IncomeFor the Year Ended 31 March 2014

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31 March 2014 31 March 2013 Notes US$ 000 US$ 000 ASSETS Non-current assets Property, plant and equipment 16 109,624 99,063Investment property 17 250 254Investment in Mentor Africa Limited 18 27,657 27,657Biological assets 19 30,156 21,521Intangible assets 20 1,528 2,204Other financial assets 21 12,760 12,693Balances with Reserve Bank of Zimbabwe 22 90,861 40,514Deferred tax 13 2,674 1,997Total non-current assets 275,510 205,903 Current assets Inventories 23 36,631 36,708Trade and other receivables 24 16,171 17,283Other financial assets 21 3,551 1,405Cash and bank balances 22 22,952 14,198 Total current assets 79,305 69,594 Total assets 354,815 275,497

EQUITY AND LIABILITIES Capital and reserves Share capital 25 2,538 2,538Share premium 1,316 1,316Non-distributable reserves 12,559 12,559Retained earnings 155,455 121,028Equity attributable to equity holders of the parent 171,868 137,441Non-controlling interests 14,222 10,990Total equity 186,090 148,431 Non-current liabilities Borrowings 26 37,264 7,417Deferred tax 13 14,519 14,534Total non-current liabilities 51,783 21,951 Current liabilities Trade and other payables 27 47,293 46,263Borrowings 26 69,649 58,852Total current liabilities 116,942 105,115 Total liabilities 168,725 127,066 Total equity and liabilities 354,815 275,497

J.R.T. Moxon O. Makamba13 August 2014 13 August 2014

Consolidated Statement of Financial PositionAs at 31 March 2014

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31 March 2014 31 March 2013 Notes US$ 000 US$ 000ASSETS Non-current assets Property, plant and equipment 16 43 75Investment in subsidiaries 21 88,806 74,129Other financial assets 21 159 173Balances with Reserve Bank of Zimbabwe 22 90,861 40,514Total non-current assets 179,869 114,891 Current assets Inventories 23 3 4Receivables 24 37,511 34,892Other financial assets 21 2,995 1,177Cash and bank balances 22 313 431Total current assets 40,822 36,504 Total assets 220,691 151,395 EQUITY AND LIABILITIES Capital and reserves Share capital 25 2,538 2,538Share premium 1,316 1,316Non-distributable reserves 34,410 34,410Retained earnings 131,720 94,688Total equity 169,984 132,952 Non-current liabilities Borrowings 26 108 112Deferred tax 13 664 1,900Total non-current liabilities 772 2,012 Current liabilities Trade and other payables 27 13,014 3,625Borrowings 26 36,921 12,806Total current liabilities 49,935 16,431 Total equity and liabilities 220,691 151,395

J.R.T. Moxon O. Makamba13 August 2014 13 August 2014

Company Statement of Financial PositionAs at 31 March 2014

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Disposal

Non- group Attributable Non-

Share Share distributable Retained capital and to owners of controlling

capital premium reserves earnings reserves parent interests Total

US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000

2014 Balance at 1 April 2013 2,538 1,316 12,559 121,028 - 137,441 10,990 148,431Profit for the year - - - 34,427 - 34,427 2,752 37,179Non-controlling interestsarising from Meikles CentarMining (Private) Limited - - - - - - 147 147Non-controlling interestsarising from KearselyInvestments (Private) Limited - - - - - - 333 333Balance at 31 March 2014 2,538 1,316 12,559 155,455 - 171,868 14,222 186,090 2013 Balance at 1 April 2012 2,538 1,316 6,233 104,626 19,644 134,357 7,539 141,896Profit for the year - - - 3,084 - 3,084 3,451 6,535Transfer on disposal ofassets classifiedas 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

Consolidated Statement of Changes in EquityFor the Year Ended 31 March 2014

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Non- Share Share distributable Retained capital premium reserves earnings Total US$ 000 US$ 000 US$ 000 US$ 000 US$ 0002014 Balance at 1April 2013 2,538 1,316 34,410 94,688 132,952Profit for the year - - - 37,032 37,032Balance at 31 March 2014 2,538 1,316 34,410 131,720 169,984 2013 Balance at 1April 2012 2,538 1,316 34,410 94,233 132,497Profit for the year - - - 455 455Balance at 31 March 2013 2,538 1,316 34,410 94,688 132,952

Company Statement of Changes in EquityFor the Year Ended 31 March 2014

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31 March 2014 31 March 2013CONTINUING AND DISCONTINUED OPERATIONS US$ 000 US$ 000 Cash flows from operating activities Profit before tax 37,499 7,804Adjustments for: - Depreciation and impairment of property, plant and equipment 6,774 4,901- Net interest (31,653) 4,750- Net exchange (gains) / losses (207) 340- Fair value adjustments on biological assets (6,558) (7,828)- Loss on disposal of property, plant and equipment 77 267-Impairment of intangible assets 1,997 -Operating cash flow before working capital changes 7,929 10,234Decrease / (increase) in inventories 77 (42)Decrease / (increase) in trade and other receivables 994 (2,164)(Decrease) / increase in trade and other payables (8,415) 13,108Cash generated from operations 585 21,136Income taxes paid (924) (172)Net cash (used in) / generated from operating activities (339) 20,964 Cash flows from investing activities Payment for property, plant and equipment (17,441) (18,299)Proceeds from disposal of property, plant and equipment 330 188Increase in intangible assets (1,071) (2,080)Net movement in service assets (214) (209)Payment for other investments (1,855) (82)Net expenditure on biological assets (2,077) (1,923)Net outflow on disposal of subsidiary - (2,857)Investment income 820 357Net cash used in investing activities (21,508) (24,905) Cash flows from financing activities Net increase in interest bearing borrowings 40,644 14,284Proceeds on disposal of partial interest in a subsidiarywithout loss of control 147 -Finance costs (10,462) (6,994)Net cash generated from financing activities 30,329 7,290 Net increase in cash and bank balances 8,482 3,349Cash and bank balances at the beginning of the year 14,198 11,284Net effect of exchange rate changes on cash and bank balances 272 (435)Cash and bank balances at the end of the year (note 22) 22,952 14,198

Consolidated Statement of Cash FlowsFor the Year Ended 31 March 2014

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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 78. The principal activity of the Company

is investments holding and the principal activities

of its subsidiaries are disclosed in note 21.2.

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 New and revised IFRSs affecting amounts

reported and/or disclosures in the financial

statements

In the current year, the Group has applied a

number of new and revised IFRSs issued by

the International Accounting Standards Board

(IASB) that are mandatorily effective for an

accounting period that begins on or after 1

January 2013.

Amendments to IFRS 7 Disclosures – Offsetting

Financial Assets and Financial Liabilities

The Group has applied the amendments to

IFRS 7 Disclosures – Offsetting Financial Assets and

Financial Liabilities for the first time in the current

year. The amendments to IFRS 7 require entities

to disclose information about rights of offset and

related arrangements (such as collateral posting

requirements) for financial instruments under

an enforceable master netting arrangement or

similar arrangement. The amendments have been

applied retrospectively.

The application of the amendments has had

no material impact on the disclosures or the

amounts recognised in the consolidated financial

statement as the Group has no intention to settle

financial instruments on a net basis or realise the

assets and settle the liabilities simultaneously.

New and revised Standards on

consolidation, joint arrangements,

associates and disclosures

In May 2011, a package of five standards on

consolidations, joint arrangements, associates

and disclosures was issued comprising IFRS 10

Consolidated Financial Statements, IFRS 11 Joint

Arrangements, IFRS 12 Disclosure of Interests in

Other Entities, IAS 27 (as revised in 2011) Separate

Financial Statements and IAS 28 (as revised in

2011) Investments in Associates and Joint Ventures.

Subsequent to the issue of these standards,

amendments to IFRS 10, IFRS 11 and IFRS 12

were issued to clarify certain transitional guidance

on the first time application of the standards.

In the current year, the Group has applied for

the first time IFRS 10, IFRS 11, IFRS 12 and

IAS 27 (as revised in 2011), IAS 28 (as revised in

2011) together with the amendments to IFRS 10,

IFRS 11 and IFRS 12 regarding the transitional

guidance.

The impact of the application of these standards

is set out below.

Impact of the application of IFRS 10

IFRS 10 replaces the parts of IAS 27 Consolidated

and Separate Financial Statements that deal with

consolidated financial statements and SIC-

12 Consolidation – Special Purpose Entities. IFRS

10 changes the definition of control such

that an investor has control over an investee

Notes to the Financial Statements

2 0 1 4 A n n u A l R e p o R t

17

when a) it has power over the investee, b) it is

exposed, or has rights, to variable returns from

its involvement with the investee and c) has the

ability to use its power to affect its returns. All

three of these criteria must be met for an investor

to have control over an investee. Previously,

control was defined as the power to govern the

financial and operating policies of an entity so as

to obtain benefits from its activities. Additional

guidance has been included in IFRS 10 to explain

when an investor has control over an investee.

Some guidance included in IFRS 10 that deals

with whether or not an investor that owns less

than 50% of the voting rights in an investee

has control over the investee is relevant to the

Group.


IFRS 11 replaces IAS 31 Interests in Joint

Ventures, and the guidance contained in a related

interpretation, SIC-13 Jointly Controlled Entities –

Non-Monetary Contributions by Venturers, has been

incorporated in IAS 28 (as revised in 2011). IFRS

11 deals with how a joint arrangement of which

two or more parties have joint control should

be classified and accounted for. Under IFRS 11,

there are only two types of joint arrangements

– joint operations and joint ventures. The

classification of joint arrangements under

IFRS 11 is determined based on the rights and

obligations of parties to the joint arrangements

by considering the structure, the legal form of

the arrangements, the contractual terms agreed

by the parties to the arrangement, and, when

relevant, other facts and circumstances. A joint

operation is a joint arrangement whereby the

parties that have joint control of the arrangement

(i.e. joint operators) have rights to the assets,

and obligations for the liabilities, relating to

the arrangement. A joint venture is a joint

arrangement whereby the parties that have joint

control of the arrangement (i.e. joint venturers)

have rights to the net assets of the arrangement.

Previously, IAS 31 contemplated three types of

joint arrangements – jointly controlled entities,

jointly controlled operations and jointly controlled

assets. The classification of joint arrangements

under IAS 31 was primarily determined based

on the legal form of the arrangement (e.g. a

joint arrangement that was established through

a separate entity was accounted for as a jointly

controlled entity).

The initial and subsequent accounting of joint

ventures and joint operations is different.

Investments in joint ventures are accounted

for using the equity method (proportionate

consolidation is no longer allowed). Investments

in joint operations are accounted for such

that each joint operator recognises its assets

(including its share of any assets jointly held),

its liabilities (including its share of any liabilities

incurred jointly), its revenue (including its share

of revenue from the sale of the output by the

joint operation) and its expenses (including its

share of any expenses incurred jointly).

Each joint operator accounts for the assets and

liabilities, as well as revenues and expenses,

relating to its interest in the joint operation in

accordance with the applicable Standards.

The Directors reviewed and assessed the

classification of the Group’s investments in joint

arrangements in accordance with the requirements

of IFRS 11. The directors concluded that the

Group’s investment in The Victoria Falls Hotel,

which was classified as a joint venture under IAS

31 and was accounted for using the proportionate

consolidation method, should be classified as a

Notes to the Financial Statements continued

2 0 1 4 A n n u A l R e p o R t

18

joint operation under IFRS 11, with the Group

accounting for its assets, its liabilities, its income

and its expenses.


IFRS 12 is a new disclosure standard and is

applicable to entities that have interests in

subsidiaries, joint arrangements, associates and/

or unconsolidated structured entities. In general,

the application of IFRS 12 has resulted in more

extensive disclosures in the consolidated financial

statements.

IFRS 13 Fair Value Measurement

The Group has applied IFRS 13 for the first time

in the current year. IFRS 13 establishes a single

source of guidance for fair value measurements

and disclosures about fair value measurements.

The scope of IFRS 13 is broad; the fair value

measurement requirements of IFRS 13 apply

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 for share-based payment transactions

that are within the scope of IFRS 2 Share-based

Payments, leasing transactions that are within the

scope of IAS 17 Leases, and measurements that

have some similarities to fair value but are not fair

value (e.g. net realisable value for the purposes

of measuring inventories or value in use for

impairment assessment purposes).

IFRS 13 defines fair value as the price that

would be received to sell an asset or paid to

transfer a liability in an orderly transaction in

the principal (or most advantageous) market at

the measurement date under current market

conditions. Fair value under IFRS 13 is an exit

price regardless of whether that price is directly

observable or estimated using another valuation

technique. Also, IFRS 13 includes extensive

disclosure requirements.

IFRS 13 requires prospective application from

1 January 2013. In addition, specific transitional

provisions were given to entities such that they

need not apply the disclosure requirements set

out in the Standard in comparative information

provided for periods before the initial application

of the Standard. In accordance with these

transitional provisions, the Group has not made

any new disclosures required by IFRS 13 for

the 2013 comparative period (please see notes

19 and 34 for the disclosures). Other than the

additional disclosures, the application of IFRS

13 has not had any material impact on the

amounts recognised in the consolidated financial

statements.

IAS19EmployeeBenefits(asrevisedin2011)

IAS 19 (as revised in 2011) changes the accounting

for defined benefit plans and termination benefits.

The Group operates a defined contribution plan.

Consequently, the changes have not had a material

impact on the consolidated financial statements.

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 Instruments2

Amendments to Mandatory Effective Date

IFRS 9 and IFRS 7 of IFRS 9 and Transition

Disclosures2

Amendments to IFRS 10, Investment Entities1

IFRS 12 and IAS 27

Amendments to IAS 32 Offsetting Financial Assets and

Financial Liabilities1


2 0 1 4 A n n u A l R e p o R t

19

1 Effective for annual periods beginning on or

after 1 January 2014, with earlier application

permitted.

2 Effective for annual periods beginning on or

after 1 January 2015, with earlier application

permitted.

IFRS 9 Financial Instruments

IFRS 9, issued in November 2009, introduced

new requirements for the classification and

measurement of financial assets. IFRS 9 was

amended in October 2010 to include requirements

for the classification and measurement of

financial liabilities and for derecognition.

Key requirements of IFRS 9:

• All recognised financial assets that are within

the scope of IAS 39 Financial Instruments:

Recognition and Measurement are required to be

subsequently measured at amortised cost or

fair value. Specifically, debt investments that are

held within a business model whose objective

is to collect the contractual cash flows, and

that have contractual cash flows that are solely

payments of principal and interest on the

principal outstanding are generally measured

at amortised cost at the end of subsequent

accounting periods. All other debt investments

and equity investments are measured at their

fair value at the end of subsequent accounting

periods. In addition, under IFRS 9, entities

may make an irrevocable election to present

subsequent changes in the fair value of an

equity investment (that is not held for trading)

in other comprehensive income, with only

dividend income generally recognised in profit

or loss.

• With regard to the measurement of financial

liabilities designated as at fair value through

profit or loss, IFRS 9 requires that the amount

of change in the fair value of the financial

liability that is attributable to changes in the

credit risk of that liability is presented in other

comprehensive income, unless the recognition

of the effects of changes in the liability’s credit

risk in other comprehensive income would

create or enlarge an accounting mismatch in

profit or loss. Changes in fair value attributable

to a financial liability’s credit risk are not

subsequently reclassified to profit or loss.

Under IAS 39, the entire amount of the

change in the fair value of the financial liability

designated as fair value through profit or loss is

presented in profit or loss.

The Directors anticipate that the application of

IFRS 9 in the future may have a significant impact

on amounts reported in respect of the Group’s

financial assets and financial liabilities. However,

it is not practicable to provide a reasonable

estimate of the effect of IFRS 9 until a detailed

review has been completed.

Amendments to IFRS 10, IFRS 12 and IAS 27

Investment Entities

The amendments to IFRS 10 define an

investment entity and require a reporting entity

that meets the definition of an investment entity

not to consolidate its subsidiaries but instead

to measure its subsidiaries at fair value through

profit or loss in its consolidated and separate

financial statements.

To qualify as an investment entity, a reporting

entity is required to:

• Obtain funds from one or more investors

for the purpose of providing them with

professional investment management services.

• Commit to its investor(s) that its business


2 0 1 4 A n n u A l R e p o R t

20

purpose is to invest funds solely for returns

from capital appreciation, investment income,

or both.

• Measure and evaluate performance of

substantially all of its investments on a fair

value basis.

Consequential amendments have been made to

IFRS 12 and IAS 27 to introduce new disclosure

requirements for investment entities.

The Directors do not anticipate that the

investment entities amendments will have any

effect on the Group’s consolidated financial

statements as the Company is not an investment

entity.

Amendments to IAS 32 Offsetting Financial Assets and

Financial Liabilities

The amendments to IAS 32 clarify the

requirements relating to the offset of financial

assets and financial liabilities. Specifically, the

amendments clarify the meaning of ‘currently

has a legally enforceable right of set-off ’ and

‘simultaneous realisation and settlement’.

The Directors do not anticipate that the

application of these amendments to IAS 32

will have a significant impact on the Group’s

consolidated financial statements as the Group

has no intention to settle financial instruments

on a net basis or realise the assets and settle the

liabilities simultaneously at present.

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.

Fair value is the price that would be received to

sell an asset or paid to transfer a liability in an

orderly transaction between market participants

at the measurement date, regardless of whether

that price is directly observable or estimated

using another valuation technique. In estimating

the fair value of an asset or a liability, the Group

takes into account the characteristics of the asset

or liability if market participants would take those

characteristics into account when pricing the asset

or liability at the measurement date. Fair value for

measurement and/or disclosure purposes in these

consolidated financial statements is determined

on such a basis, except for share-based payment

transactions that are within the scope of IFRS

2, leasing transactions that are within the scope

of IAS 17, and measurements that have some

similarities to fair value but are not fair value,

such as net realisable value in IAS 2 or value in

use in IAS 36.

In addition, for financial reporting purposes and

in accordance with the guidance provided by

IFRS 13, fair value measurements are categorised

into Level 1, 2 or 3 based on the degree to which

the inputs to the fair value measurements are

observable and the significance of the inputs to


2 0 1 4 A n n u A l R e p o R t

21

the fair value measurement in its entirety, which

are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in

active markets for identical assets or liabilities

that the entity can access at the measurement

date;

• Level 2 inputs are inputs, other than quoted

prices included within Level 1, that are

observable for the asset or liability, either

directly or indirectly; and

• Level 3 inputs are unobservable inputs for the

asset or liability.

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.

The principal accounting policies are set out

below.

3.3 Basis of consolidation

The consolidated financial statements incorporate

the financial statements of the Company and

entities controlled by the Company and its

subsidiaries. Control is achieved when the

Company:

• has power over the investee;

• is exposed, or has rights, to variable returns

from its involvement with the investee; and

• has the ability to use its power to affect its

returns.

The Company reassesses whether or not it

controls an investee if facts and circumstances

indicate that there are changes to one or more of

the three elements of control listed above.

When the Company has less than a majority of

the voting rights of an investee, it has power

over the investee when the voting rights are

sufficient to give it the practical ability to direct

the relevant activities of the investee unilaterally.

The Company considers all relevant facts and

circumstances in assessing whether or not the

Company’s voting rights in an investee are

sufficient to give it power, including:

• the size of the Company’s holding of voting

rights relative to the size and dispersion of

holdings of the other vote holders;

• potential voting rights held by the Company,

other vote holders or other parties;

• rights arising from other contractual

arrangements; and

• any additional facts and circumstances that

indicate that the Company has, or does not

have, the current ability to direct the relevant

activities at the time that decisions need to be

made, including voting patterns at previous

shareholders’ meetings.

Consolidation of a subsidiary begins when the

Company obtains control over the subsidiary and

ceases when the Company loses control of the

subsidiary. Specifically, income and expenses of

a subsidiary acquired or disposed of during the

year are included in the consolidated statement of

profit or loss and other comprehensive income

from the date the Company gains control until

the date when the Company ceases to control the

subsidiary.

Profit or loss and each component of other

comprehensive income are attributed to the

owners of the Company and to the non-

controlling interests. Total comprehensive income


2 0 1 4 A n n u A l R e p o R t

22

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.

When necessary, adjustments are made to the

financial statements of subsidiaries to bring their

accounting policies into line with the Group’s

accounting policies.

All intragroup assets and liabilities, equity, income,

expenses and cash flows relating to transactions

between members of the Group are eliminated in

full on consolidation.

3.3.1 Changes in the Group’s ownership interests

in existing subsidiaries

Changes in the Group’s ownership interests

in subsidiaries that do not result in the Group

losing control over the subsidiaries 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,

a gain or loss is recognised in profit or loss and

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. All amounts previously recognised in

other comprehensive income in relation to that

subsidiary are accounted for as if the Group had

directly disposed of the related assets or liabilities

of the subsidiary (i.e. reclassified to profit or loss

or transferred to another category of equity as

specified/permitted by applicable IFRSs). 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, when

applicable, the cost on initial recognition of an

investment in an associate or a joint venture.

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 assets

or liabilities related to employee benefit

arrangements are recognised and measured in

accordance with IAS 12 Income Taxes and IAS

19 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 at the

acquisition date; and


2 0 1 4 A n n u A l R e p o R t

23

• 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. 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 its acquisition-

date fair value 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

recognized in other comprehensive income are

reclassified to profit or loss where such treatment

would be appropriate if that interest were

disposed of.


2 0 1 4 A n n u A l R e p o R t

24

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 note 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 an 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. 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 in note

3.6 below.

3.6 Investments in associates and joint ventures

An associate is an entity over which the Group

has significant influence. 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.

A joint venture is a joint arrangement whereby

the parties that have joint control of the

arrangement have rights to the net assets of

the joint arrangement. Joint control is the

contractually agreed sharing of control of an

arrangement, which exists only when decisions

about the relevant activities require unanimous

consent of the parties sharing control.

The results and assets and liabilities of associates

or joint ventures are accounted for using the

equity method of accounting, except when the

investment, or a portion thereof, is classified as

held for sale, in which case it is accounted for

in accordance with IFRS 5. Under the equity

method, an investment in an associate or a joint

venture 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 or joint venture.

When the Group’s share of losses of an associate

or a joint venture exceeds the Group’s interest in

that associate or joint venture (which includes any


2 0 1 4 A n n u A l R e p o R t

25

long-term interests that, in substance, form part

of the Group’s net investment in the associate

or joint venture), 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 or joint venture.

An investment in an associate or a joint venture

is accounted for using the equity method from

the date on which the investee becomes an

associate or a joint venture. On acquisition of

the investment in an associate or a joint venture,

any excess of the cost of the investment over

the Group’s share of the net fair value of the

identifiable assets and liabilities of the investee

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 and liabilities over

the cost of the investment, after reassessment,

is recognised immediately in profit or loss in the

period in which the investment is acquired.

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 or a joint venture.

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.

The Group discontinues the use of the equity

method from the date when the investment ceases

to be an associate or a joint venture, or when the

investment is classified as held for sale. When the

Group retains an interest in the former associate

or joint venture and the retained interest is a

financial asset, the Group measures the retained

interest at fair value at that date and the fair value

is regarded as its fair value on initial recognition

in accordance with IAS 39. The difference

between the carrying amount of the associate or

joint venture at the date the equity method was

discontinued, and the fair value of any retained

interest and any proceeds from disposing of a

part interest in the associate or joint venture is

included in the determination of the gain or loss

on disposal of the associate or joint venture. In

addition, the Group accounts for all amounts

previously recognised in other comprehensive

income in relation to that associate or joint venture

on the same basis as would be required if that

associate or joint venture had directly disposed

of the related assets or liabilities. Therefore, if

a gain or loss previously recognised in other

comprehensive income by that associate or joint

venture 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 the equity method is discontinued.

The Group continues to use the equity method

when an investment in an associate becomes an

investment in a joint venture or an investment

in a joint venture becomes an investment in an

associate. There is no remeasurement to fair

value upon such changes in ownership interests.


2 0 1 4 A n n u A l R e p o R t

26

When the Group reduces its ownership interest

in an associate or a joint venture but the Group

continues to use the equity method, the Group

reclassifies to profit or loss the proportion of the

gain or loss that had previously been recognised

in other comprehensive income relating to that

reduction in ownership interest if that gain or

loss would be reclassified to profit or loss on the

disposal of the related assets or liabilities.

When a group entity transacts with an associate

or a joint venture of the Group, profits and

losses resulting from the transactions with the

associate or joint venture are recognised in the

Group’s consolidated financial statements only to

the extent of interests in the associate or joint

venture that are not related to the Group.

3.7 Interests in joint operations

A joint operation is a joint arrangement

whereby the parties that have joint control of

the arrangement have rights to the assets, and

obligations for the liabilities, relating to the

arrangement. Joint control is the contractually

agreed sharing of control of an arrangement,

which exists only when decisions about the

relevant activities require unanimous consent of

the parties sharing control.

When a group entity undertakes its activities

under joint operations, the Group as a joint

operator recognises in relation to its interest in a

joint operation:

• Its assets, including its share of any assets held

jointly.

• Its liabilities, including its share of any liabilities

incurred jointly.

• Its revenue from the sale of its share of the

output arising from the joint operation.

• Its share of the revenue from the sale of the

output by the joint operation.

• Its expenses, including its share of any expenses

incurred jointly.

The Group accounts for the assets, liabilities,

revenues and expenses relating to its interest in

a joint operation in accordance with the IFRSs

applicable to the particular assets, liabilities,

revenues and expenses.

When a group entity transacts with a joint

operation in which a group entity is a joint

operator (such as a sale or contribution of assets),

the Group is considered to be conducting the

transaction with the other parties to the joint

operation, and gains and losses resulting from

the transactions are recognised in the Group’s

consolidated financial statements only to the

extent of other parties’ interests in the joint

operation.

When a group entity transacts with a joint

operation in which a group entity is a joint

operator (such as a purchase of assets), the

Group does not recognise its share of the gains

and losses until it resells those assets to a third

party.

3.8 Non-current assets held for sale

Non-current assets and disposal groups are

classified as held for sale if their carrying amount

will be recovered principally through a sale

transaction rather than through continuing use.

This condition is regarded as met only when the

asset (or disposal group) is available for immediate

sale in its present condition subject only to terms

that are usual and customary for sales of such

asset (or disposal group) and its sale is highly

probable. Management must be committed to

the sale, which should be expected to qualify for


2 0 1 4 A n n u A l R e p o R t

27

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.

When the Group is committed to a sale plan

involving disposal of an investment, or a portion

of an investment, in an associate or joint venture,

the investment or the portion of the investment

that will be disposed of is classified as held for

sale when the criteria described above are met,

and the Group discontinues the use of the equity

method in relation to the portion that is classified

as held for sale. Any retained portion of an

investment in an associate or a joint venture that

has not been classified as held for sale continues

to be accounted for using the equity method. The

Group discontinues the use of the equity method

at the time of disposal when the disposal results

in the Group losing significant influence over the

associate or joint venture.

After the disposal takes place, the Group

accounts for any retained interest in the associate

or joint venture in accordance with IAS 39 unless

the retained interest continues to be an associate

or a joint venture, in which case the Group uses

the equity method (see the accounting policy

regarding investments in associates or joint

ventures above).

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

Revenue from the sale of goods 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.

• The costs incurred or to be incurred in respect

of the transaction can be measured reliably.

3.9.2 Revenue from services rendered

Revenue from services rendered is recognised in

the accounting period in which the services are

rendered, by reference to stage of completion of

the specific transaction and assessed on the basis

of the actual service provided as a proportion of

the total services to be provided.

3.9.3 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


2 0 1 4 A n n u A l R e p o R t

28

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.

3.9.4 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


2 0 1 4 A n n u A l R e p o R t

29

of the time pattern in which economic benefits

from the leased asset are consumed.

3.11 Foreign currencies

In preparing the financial statements of

each individual group entity, 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. 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 purposes of presenting these 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 (and 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, or a partial disposal of an interest in a

joint arrangement or an associate that includes a

foreign operation of which the retained interest

becomes a financial asset), all of the exchange

differences accumulated in equity in respect of

that operation attributable to the owners of the

Company are reclassified to profit or loss.

In addition, in relation to a partial disposal of

a subsidiary that includes a foreign operation

that does not result in the Group losing control

over the 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

joint arrangements 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 to


2 0 1 4 A n n u A l R e p o R t

30

identifiable assets acquired and liabilities assumed

through 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.

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.

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 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. In

addition, deferred tax liabilities are not recognised

if the temporary difference arises from the initial

recognition of goodwill.


2 0 1 4 A n n u A l R e p o R t

31

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 liabilities and assets 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.

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. Historical cost includes

expenditure that is directly attributable to the

acquisition of the items. Subsequent costs

are included in the asset’s carrying amount or

recognised as a separate asset, as appropriate, only

when it is probable that future economic benefits


2 0 1 4 A n n u A l R e p o R t

32

associated with the item will flow to the Group

and the cost of the item can be measured reliably.

The carrying amount of the replaced part is

derecognised. All other repairs and maintenance

are charged to profit or loss during the financial

period in which they are incurred.

Properties in the course of construction for

production, supply or administrative purposes are

carried at cost, less any recognised impairment

loss. Cost includes professional fees and, for

qualifying assets, borrowing costs capitalised in

accordance with the Group’s accounting policy.

Such properties are classified to the appropriate

categories of property, plant and equipment

when completed and ready for intended use.

Depreciation of these assets, on the same basis

as other property assets, commences when the

assets are ready for their intended use.

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 profit or loss.

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.

Land and capital work in progress are not

depreciated. Depreciation on other assets is

calculated on a straight line basis so as to write

off the assets less their anticipated residual values,

over their estimated useful lives as follows:

Buildings - 60 years

Leasehold improvements - shorter of the useful life

and the lease period

Furniture and equipment - 3 to 15 years

Motor vehicles - 3 to 10 years

The estimated useful lives, residual values and

depreciation methods are reviewed at the end

of each reporting period, with the effect of

any changes in estimate accounted for on a

prospective basis.

An asset’s carrying amount is written down

immediately to its recoverable amount if the

asset’s carrying amount is greater than its

estimated recoverable amount.

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.


2 0 1 4 A n n u A l R e p o R t

33

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 assets3.17.1 Intangible assets acquired separately

These comprise of trademarks, which are valued

at historical cost less accumulated impairment

losses. Trademarks 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.

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.


2 0 1 4 A n n u A l R e p o R t

34

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 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.

3.19 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


2 0 1 4 A n n u A l R e p o R t

35

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 of disposal 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.

3.20 Biological assets

The Group’s biological assets comprise tea,

macadamia, avocado, coffee, timber plantations

and livestock.

The present value of expected net cash flows,

discounted at a current market determined pre-

tax rate over the assets’ expected useful lives, is

used to determine fair value, with any resultant

gain or loss recognised in profit or loss. The

expected useful lives are detailed below. Areas are

included in the valuation once they are planted.

Livestock is measured at fair value less costs to

sell. Fair value is determined by professional

valuers through reference to the current market

prices.

Avocado and macadamia bushes have expected

useful lives of 20 years, while coffee bushes and

timber have expected useful lives of 7 years. The

tea bushes have indefinite useful lives but useful

life of 20 years is used in discounting expected

net cash flows. The useful lives are reviewed at

the end of each reporting period to determine

whether events and circumstances continue to

support these useful lives.

3.21 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.


2 0 1 4 A n n u A l R e p o R t

36

Costs of inventories are determined as follows:

• Retail merchandise is valued on a weighted

average basis. The inventories are then assessed

for impairment based on the net realisable

value.

• 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 raw materials (as disclosed

above, in the case of tea), the cost of packaging

materials, direct labour and an appropriate

proportion of factory overhead expenses.

3.22 Advance crop expenditure

Certain costs are incurred on seasonal yields

that will be realised in a subsequent reporting

period. These costs are deferred to the statement

of financial position for offset against revenues

realised in matching periods.

3.23 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.

3.23.1 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.

3.23.2 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.


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3.24 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.

3.24.1 Offsetting financial instruments

Financial assets and liabilities are offset and the

net amount reported in the balance sheet when

there is a legally enforceable right to offset the

recognised amounts and there is an intention to

settle on a net basis or realise the asset and settle

the liability simultaneously.

3.25 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.

3.25.1 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.

3.25.2 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.

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:


2 0 1 4 A n n u A l R e p o R t

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• 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. Fair value is determined in a manner

described in note 34.

3.25.3 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.

3.25.4 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.

The Group has some unlisted shares that are not

traded in an active market but are also classified

as AFS financial assets and stated at fair value at

the end of each reporting period where fair value

can be reliably measured. Fair value is determined

in the manner described in note 34.

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 AFS financial assets are


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.


2 0 1 4 A n n u A l R e p o R t

39

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.

3.25.5 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) 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.

3.25.6 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


2 0 1 4 A n n u A l R e p o R t

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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.

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


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.

3.25.7 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


2 0 1 4 A n n u A l R e p o R t

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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.

3.26 Financial liabilities and equity instruments

3.26.1 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.

3.26.2 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.

3.26.3 Financial liabilities

Financial liabilities are classified as either financial

liabilities ‘at FVTPL’’ or ‘other financial liabilities’.

3.26.3.1 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

permits the entire combined contract 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. Fair value is determined in the

manner described in note 34.

3.26.3.2 Other financial liabilities

Other financial liabilities (including borrowings

and trade and other payables) 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


2 0 1 4 A n n u A l R e p o R t

42

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.

3.26.3.3 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, and

• the amount initially recognised less, where

appropriate, cumulative amortisation

recognised in accordance with the revenue

recognition policies.

3.26.3.4 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.

3.27 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.

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.

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,

apart from those involving estimation, 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.

4.1.1 Mentor Africa Limited

On 1 April 2012, the Group acquired a 35%

shareholding in Mentor Africa Limited, an


2 0 1 4 A n n u A l R e p o R t

43

unlisted entity with operations in South Africa.

The Directors made an assessment as at the date

of initial application of IFRS 10 (i.e. 1 January

2013) as to whether or not the Group has control

over Mentor Africa Limited in accordance with

the new definition of control and the related

guidance set out in IFRS 10. The Directors

concluded that it has had no control over Mentor

Africa Limited since acquisition on 1 April 2012.

The investment is carried at cost and assessed for

impairment at each reporting date on the basis of

a range of valuations performed by the directors

of Mentor Africa Limited and assessed for

reasonableness by the Directors. No impairment

was identified as at 31 March 2014.

4.1.2 Deferred taxation on investment properties

In determining the Group’s deferred taxation

on investment properties, the Directors have

reviewed the Group’s investment properties 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,

in determining the Group’s deferred taxation

on investment properties, 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 2014, 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

The fair value of biological assets is determined

based, among other estimates, on growth

potential, harvesting, price development and

discount rate. Changes in any estimates could lead

to recognition of significant fair value changes in

profit or loss.

The key assumptions underlying the valuation

of the biological assets are set out in note 19.

The assumptions are reviewed at least annually.

Sensitivity analysis on the impact of a variation in

the discount rate and the conversion rate of tea

(outturn ratio) used in the valuation is also shown

in note 19.

The Group’s agricultural operations are subject

to the usual agricultural hazards such as fire,

wind, insects and other natural phenomena/

occurrences. Management considers adequate

preventive measures are in place. Forces of

nature such as temperature and rainfall may also

affect yields. Nevertheless, unexpected factors

affecting harvestable agricultural produce may

result in re-measurement or changes in harvests

in future accounting periods.

4.2.3 Funds earmarked for investment – Gondor

Capital Limited

The funds earmarked for future investment

are currently held by Gondor Capital Limited,

a shareholder entity. The timing of future

cash flows arising from the funds is yet to be

determined. Refer to note 21.


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4.2.4 Balances with the Reserve Bank of Zimbabwe

With regards to the balance of $90.8 million

held with the Reserve Bank of Zimbabwe as at

31 March 2014, the Company received Treasury

Bills subsequent to year end, amounting to $49.6

million. With respect to the residual balance

which pertains to interest, the Board is satisfied

with the basis of calculation of this amount

and recognition and disclosure in the financial

statements. The Board has performed adequate

due diligence with respect to the matter and is

satisfied that no adjustment is required in the

period to 31 March 2014 or subsequent to that

date, and that the amounts are fully recoverable.

Refer to note 36.

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 Fair value measurements and valuation processes

Some of the Group’s assets and liabilities are

measured at fair value for financial reporting

purposes. In estimating the fair value of an asset

or a liability, the Group uses market-observable

data to the extent it is available. Where Level 1

inputs are not available, the Group uses Level 2

inputs to perform the valuation. Refer to note

3.2 for descriptions of Level 1 and 2 inputs.

For livestock, the Group engages third party

qualified valuers to perform the valuation. Where

appropriate, the Group works closely with

the qualified external valuers to establish the

appropriate valuation techniques and inputs to

the model.

Information about the valuation techniques

and inputs used in determining the fair value of

various assets and liabilities are disclosed in notes

19 and 34.

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,

agriculture, retail, wholesale trading and security

guard operations. The retail segment consists

of the supermarkets and department stores and

these are evaluated independently. Wholesale

trading and security guard operations are still

immaterial to warrant separate disclosure

The Group is organised into two geographical

segments, Zimbabwe and non-Zimbabwe.


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6.1 Segment revenue and result Department

Supermarkets Hotels Agriculture stores Corporate Group

US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 31 March 2014 Sale of goods 333,907 5,778 22,622 12,462 *(266) 374,503 Sale of services - 9,805 - - - 9,805 Total revenue 333,907 15,583 22,622 12,462 (266) 384,308 Operating profit/(loss) 8,114 173 1,398 (2,632) (7,972) (919) Investment income 719 24 30 13 41,329 42,115 Finance costs (1,342) (1,000) (2,955) (709) (4,456) (10,462) Net exchange gains/(losses) 345 (155) (24) 42 (1) 207 Fair value adjustments - - 6,558 - - 6,558 Income tax (expense)/credit (1,963) 663 (1,173) 457 1,696 (320) Profit/(loss) for the year◊ 5,873 (295) 3,834 (2,829) 30,596 37,179 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) 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 Profit / (loss) for the year 7,043 1,097 5,301 (3,771) (3,135) 6,535

Intercompany transactions have been eliminated from the corporate amounts. Corporate also includes other operating segments that are immaterial to warrant separate disclosure.

*Included in the corporate revenue amount is an adjustment of US$2.3 million (2013: US$2.1 million) against revenue in respect of inter-segment sales.

◊Profit for the year for the operating segments is before Group management fees.


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6.2 Segment assets and liabilities Department

Supermarkets Hotels Agriculture stores Corporate Group

US$ 000 US$ 000 US$ 000 US$ 000 US$ 000 US$ 000

31 March 2014 Segment assets 80,179 50,720 64,817 32,587 126,512 354,815 Segment liabilities (51,880) (20,556) (38,601) (21,906) (35,782) (168,725) Capital expenditure 9,385 3,950 3,838 15 253 17,441 Depreciation and impairment (2,840) (1,096) (1,517) (1,237) (84) (6,774) 31 March 2013 Segment assets 60,943 47,719 52,852 37,408 76,575 275,497 Segment liabilities (38,516) (16,421) (29,631) (36,890) (5,608) (127,066) Capital expenditure 8,851 8,202 824 379 43 18,299 Depreciation and impairment (1,657) (556) (1,168) (1,364) (156) (4,901)

*Inter-company balances have been eliminated from the corporate amounts. Corporate also includes other operating segments that are immaterial to warrant separate disclosure.

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 31 March 2014 31 March 2013

Zimbabwe Non-Zimbabwe Zimbabwe Non-Zimbabwe

US$ 000 US$ 000 US$ 000 US$ 000

Revenue 384,308 - 391,328 - Operating (loss) / profit (922) 3 5,191 (125) Segment assets 315,419 39,396 236,101 39,396 Segment liabilities (168,725) - (127,066) -


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Group Group 31 March 2014 31 March 2013 Notes US$ 000 US$ 0007. Net operating costs Net operating costs are arrived at after (charging) / crediting: Cost of sales (300,513) (304,407) Other income 8 4,295 3,714 Employee costs 9 (42,385) (41,625) Occupancy costs 10 (18,756) (16,903) Other operating costs 11 (27,868) (27,041) (385,227) (386,262)8. Other income Trading income: Net interest income on trade receivables 1,123 1,831 Rental income 935 639 Hotels ancillary services 364 420 Commission income 425 10 Supplier rebates 516 322 3,363 3,222 Non trading income: Loss on disposal of property, plant and equipment (77) (267) Sundry income 1,009 759 4,295 3,714

9. Employee costs Wages and salaries (34,155) (33,882) Social security costs (2,307) (1,688) Retirement benefits – defined contribution plan (4,993) (4,817) Compensation for loss of office - (349) Directors’ remuneration: - fees for services as Directors (17) (35) - remuneration for other services (818) (772) - pension costs (95) (82) (42,385) (41,625)10. Occupancy costs Occupancy costs include: - operating lease rentals for property (7,663) (6,996) - electricity and water (6,423) (5,676) - rates (1,835) (1,712) - premises repairs and maintenance (925) (1,105) - other (1,910) (1,414) (18,756) (16,903)


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Group Group 31 March 2014 31 March 2013 US$ 000 US$ 00011. Other operating costs Included in other operating costs are the following: Depreciation of plant and equipment (4,574) (3,475) Repairs and maintenance – other assets (2,906) (3,230) Selling and distribution costs (2,764) (2,393) Legal and professional fees (2,044) (1,109) Impairment of intangible assets (1,997) - Transport and communication (1,553) (1,721) Information and technology (1,312) (991) Marketing and advertising (1,258) (1,569) Printing and stationery (1,133) (998) Security (649) (1,532) Insurance (637) (554) Packaging and wrapping (568) (2,035) Auditors’ remuneration - current year fee (449) (464) Impairment of property, plant and equipment (275) (116) Allowance for doubtful receivables (170) (142) Loss on disposal of biological assets (52) (167) Other (5,527) (6,545) (27,868) (27,041) 12. Investment income / finance costs 12.1 Investment income Interest on bank deposits 41,102 1,934 Other 1,013 310 42,115 2,244

Included in interest on bank deposits is a net interest amount of US$40.9 million (2013: US$1.9 million) earned on funds held at the Reserve Bank of Zimbabwe. The significant increase in interest in the current year is as a result of interest rate negotiations with the Reserve Bank of Zimbabwe. Refer to notes 4.2.4, 22 and 36 for further details. 12.2 Finance costs Comprising interest payable on: Long term borrowings (1,421) (782) Overdrafts and short term borrowings (8,990) (6,100) Other finance costs (51) (112) (10,462) (6,994)

The weighted average capitalisation rate on funds borrowed was 11.86% per annum (2013: 13.64% per annum).


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Group Group 31 March 2014 31 March 2013 US$ 000 US$ 00013. Income tax 13.1 Income tax recognised in profit for the year Tax expense comprises the following: Current tax expense in respect of the current year (963) (167) Deferred tax credit / (expense) relating to the origination and reversal of temporary differences 692 (2,270) Withholding tax on investment revenue (49) (5) Total tax expense relating to continuing operations (320) (2,442) The expense for the year can be reconciled to the accounting profit as follows: Profit before tax from continuing operations 37,499 7,804 Income tax expense calculated at 25.75% (2013: 25.75%) (9,656) (2,009) Effect of revenue that is exempt from income tax 10,750 4,851 Effect of expenses that are not deductible in determining taxable profit (1,573) (1,029)) Effect of concessions (export market and plantation development) 625 617 Effect of revenue taxed at other rates 174 12 Income tax expense recognised in profit for the year 320 2,442 The income tax rate used for the 2014 reconciliation above is the corporate tax rate of 25.75% (31 March

2013: 25.75%), payable by corporate entities in Zimbabwe. The deferred tax rate used is the corporate tax rate of 25.75%.

13.2 Deferred tax balances Group 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 2014 Assessed losses (9,295) (3,692) (12,987) Property, plant and equipment 16,286 781 17,067 Biological assets 5,447 2,238 7,685 Exchange differences (176) 6 (170) Provisions (197) 29 (168) Receivables and prepayments 341 (80) 261 Other (100) 26 (74) Deferred capital gains tax on land 231 - 231 12,537 (692) 11,845


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Group Beginning of Recognised in End of the year profit or loss the year US$ 000 US$ 000 US$ 000 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

Group Group 31 March 2014 31 March 2013 US$ 000 US$ 000 Comprising: Deferred tax asset (2,674) (1,997) Deferred tax liability 14,519 14,534 11,845 12,537 Company Company 31 March 2014 31 March 2013 US$ 000 US$ 000

Assessed loss (2,240) (1,003) Plant and equipment 9 11 Prepayments 20 17 (2,211) (975) Deferred capital gains tax on unlisted investments 2,875 2,875 664 1,900

14. Discontinued operations Cape Grace Hotel operations in South Africa As reported in the 2013 annual report, the disposal of the Cape Grace Hotel operations in South Africa

was concluded with an effective date of 1 April 2012 .

Profit for the year from discontinued operations: Group Group 31 March 2014 31 March 2013 US$ 000 US$ 000

Profit on disposal of subsidiaries - 1,173 Profit for the year from discontinued operations (attributable to owners of the parent) - 1,173


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15. Earnings per share The earnings and weighted average number of ordinary shares used in the calculation of earnings per share

are as follows: Group Group 31 March 2014 31 March 2013 US$ 000 US$ 000 Profit for the year attributable to owners of the parent used in the calculation of total basic earnings per share from continuing operations 34,427 1,911 Add: Profit for the year from discontinued operations used in the calculation of basic earnings per share from discontinued operations - 1,173 Profit used in the calculation of basic earnings per share from continuing and discontinued operations 34,427 3,084 Adjust for: Interest earned on funds held at the Reserve Bank of Zimbabwe (40,938) (1,886) Impairment of intangible assets 1,997 - Impairment of property, plant and equipment 275 116 Loss on disposal of property, plant and equipment 77 267 Profit on disposal of subsidiaries - (1,173) Headline (loss) / earnings (4,162) 408 Comprising: Continuing operations (4,162) 408 Weighted average number of ordinary shares for the purposes of basic earnings per share 253,793,301 253,793,301 Basic earnings per share (cents) From continuing operations 13.56 0.75 From discontinued operations - 0.46 Total basic earning 13.56 1.21 Basic headline (loss) / earnings per share (cents) From continuing operations (1.64) 0.16 Diluted earnings per share (cents) From continuing operations 12.59 0.71 From discontinued operations - 0.44 Total diluted earnings 12.59 1.15 Diluted headline (loss) / earnings per share (cents) From continuing operations (1.52) 0.81

Weighted average number of ordinary shares for the purposes of basic earnings per share 253,793,301 253,793,301 Shares deemed to be issued to the Trust (refer to note 25) 19,581,490 15,581,490 Weighted average number of ordinary shares used in the calculation of diluted earnings per share 273,374,791 269,374,791


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16. Property, plant and equipment Group Land & 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 2014 Opening carrying value 63,417 3,699 20,112 1,012 10,823 99,063 Additions 5,740 4,430 13,544 1,199 (7,472) 17,441 Transfer from business development in mining projects - - - 83 - 83 Net movement in service assets - - 214 - - 214 Disposals – cost - - (1,378) (438) - (1,816) Disposals – accumulated depreciation - - 1,118 291 - 1,409 Impairment - (105) (170) - - (275) Depreciation (1,383) (538) (4,134) (440) - (6,495) Closing carrying value 67,774 7,486 29,306 1,707 3,351 109,624 At cost 74,204 8,673 42,844 2,441 3,351 131,513 Accumulated depreciation (4,835) (1,082) (12,566) (707) - (19,10) Accumulated impairment (1,595) (105) (972) (27) - (2,699) Closing carrying value 67,774 7,486 29,306 1,707 3,351 109,624 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) Closing carrying value 63,417 3,699 20,112 1,012 10,823 99,063 A valuation of the Group’s freehold 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 valuation, which conforms to International Valuation Standards, was determined by reference to market evidence on the transaction prices for similar properties. Based on an assessment by the Directors, there were no significant changes in the market value at 31 March 2014. The Tanganda Tea Company land and buildings which are on the estates were valued by the Directors due to their specialised nature. The valuation was used for impairment assessment and no impairment was identified.

Assets pledged as security Freehold land and buildings with a carrying amount of US$57.4 million (2013: US$32.6 million) have been

pledged to secure loans of the Group under mortgages (see note 26). The Group is not allowed to pledge these assets as security for other borrowings or sell them to another entity.


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Company Furniture & Motor equipment vehicles Total US$ 000 US$ 000 US$ 000 At 31 March 2014 Opening carrying value 61 14 75 Additions 2 62 64 Disposals (3) (66) (69) Disposals accumulated depreciation 3 11 14 Depreciation (24) (17) (41) Closing carrying value 39 4 43 At cost 259 72 331 Accumulated depreciation (220) (68) (288) Closing carrying value 39 4 43 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) Closing carrying value 61 14 75

Group Group 31 March 2014 31 March 2013 US$ 000 US$ 00017. Investment property Opening carrying value 254 43 Transfer from land and buildings - 215 Depreciation (4) (4) Closing carrying value 250 254

• The carrying value of investment property was assessed for impairment at 31 March 2014 and no impairment was identified.

• The Group owns the investment property through a subsidiary, TM Supermarkets (Private) Limited, as follows:

-Stand number 32, Main Street, Chipinge at a carrying amount of US$41,732 (2013: US$42,500). - Stand number 8965, Machipisa, Highfield, Harare at a carrying amount of US$208,050 (2013: US$211,746).


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18. 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.

In addition, the Group does not have control over Mentor Africa Limited in line with the guidance set out in IFRS 10 as follows:

• the Group does not have power over the investee • the Group does not have exposure or rights to variable returns from its involvement with the investee • the Group does not have the ability to use its power over the investee to affect the amount of the

investee’s returns.

The investment has been accounted for at cost in line with the Group’s accounting policy and was assessed for impairment based on a range of valuations performed by the directors of Mentor Africa Limited and assessed for reasonableness by the Directors. No impairment was identified as at the reporting date.

19. Biological assets Non-current biological assets comprise plantation bearer assets and livestock. The present value of expected

net cash flows from plantations, discounted at a current market determined pre-tax rate of 14.49% per annum, was used to determine fair value. The pre tax rate is the average cost of borrowing for the agricultural segment. Livestock were valued by professional valuers not connected to the Group, through reference to current market prices.

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 2014 Opening carrying value 4,040 8,681 1,914 1,944 4,563 379 21,521 Additions - 1,270 55 266 656 52 2,299 Disposals - - (222) - - - (222) Fair value adjustments 559 1,937 (350) 295 4,208 (91) 6,558 Closing carrying value 4,599 11,888 1,397 2,505 9,427 340 30,156 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


2 0 1 4 A n n u A l R e p o R t

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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 14.49% (2013: 14.15%) and a green leaf outturn ratio of 23% or 4.3 (2013: 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.

31 March 2014 31 March 2013 At 13.49% At 15.49% At 13.15% At 15.15% US$ 000 US$ 000 US$ 000 US$ 000Discount rate sensitivity analysis Increase / (decrease) in profits 299 (271) 1,681 (1,512)

At 24% At 22% At 24% At 22% (or 4.12) (or 4.49) (or 4.12) (or 4.49) US$ 000 US$ 000 US$ 000 US$ 000Outturn ratio sensitivity analysis Increase / (decrease) in profits 1,601 (1,469) 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 irrigation and other good agricultural practices such as pruning and fertilisation 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.

Fair value hierarchyIFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can

access at the measurement date;• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or

liability, either directly or indirectly; and• Level 3 inputs are unobservable inputs for the asset or liability.

In determining the fair values of the biological assets as stated above, the Group used the Level 2 fair value hierarchy.


2 0 1 4 A n n u A l R e p o R t

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Group Group 31 March 2014 31 March 2013 US$ 000 US$ 00020. Intangible assets Opening carrying value 2,204 124 Additions 1,404 2,080 Impairment (1,997) - Transfer to property, plant and equipment (83) - Closing carrying value 1,528 2,204 Comprising Business development in mining projects 1,404 2,080 Trade marks 124 124 1,528 2,204

21. Other financial assets Opening carrying value (short term and long term portions) 14,098 19,455 Interest accrual 358 299 Additions 1,872 828 Disposals and repayments (17) (6,484) 16,311 14,098 Less: Short term portion in current assets (3,551) (1,405) Non-current closing carrying value 12,760 12,693 Comprising: Carried at amortised cost: Funds earmarked for investment – Gondor Capital Limited1 11,737 11,737 Staff loans 1,122 1,024 Short term loan – Clayway Investments (Private) Limited 1,643 - Short term loan – Liftbrok Investments (Private) Limited 1,177 1,023 Short term loan – Barkpest Investments (Private) Limited 175 154 Short term loans – other 251 - Available for sale measured at cost less any identified impairment losses: Investment in unlisted securities 206 152 Carried at fair value through profit or loss (FVTPL): Investment in listed securities - 8 16,311 14,098

1 Refer to note 4.2.3 for further details.


2 0 1 4 A n n u A l R e p o R t

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Company Company 31 March 2014 31 March 2013 US$ 000 US$ 000 Opening carrying amount 1,350 646 Additions 1,536 1,010 Interest accrued 283 182 Disposals and repayments (15) (488) Closing net carrying value 3,154 1,350 Less: Short term portion in current assets (2,995) (1,177) Non-current closing carrying value 159 173 Comprising Carried at amortised cost: Short term loan – Clayway Investments (Private) Limited 1,643 - Short term loan – Liftbrok Investments (Private) Limited 1,177 1,023 Short term loan – Barkpest Investments (Private) Limited 175 154 Staff loans 7 13 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 3,154 1,350

Barkpest Investments (Private) Limited, Liftbrok Investments (Private) Limited and Clayway Investments (Private) Limited are staff share purchase vehicles whose shareholders are certain key management personnel who include four Directors of the Company. The share purchase vehicles hold shares in the Company under the names ‘Barkpest Investments (Private) Limited’ and ‘Clayway Investments (Private) Limited’. The loans to Barkpest Investments (Private) Limited and Liftbrok Investments (Private) Limited attract interest at 17% per annum, while the loan to Clayway Investments (Private) Limited attracts interest at 10% per annum. The loans are payable on demand.


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Company Company 31 March 2014 31 March 2013 US$ 000 US$ 00021.1 Investment in subsidiaries - Company Opening carrying value 74,129 74,129 Additions 14,677 - Closing carrying value 88,806 74,129 Comprising: Investment in Meikles Hospitality (Private) Limited 32,761 32,761 Investment in Greatermans (1979) (Private) Limited 31,144 16,620 Investment in TM Supermarkets (Private) Limited 3,977 3,977 Investment in Tanganda Tea Company Limited 20,771 20,771 Investment in Meikles Centar Mining (Private) Limited 153 - 88,806 74,129

Investments in Meikles Resources (Private) Limited and Meikles Guard Services (Private) Limited are not shown above due to rounding off.

21.2 Holdings in material subsidiary companies: Country of Entity Holding Business incorporation Meikles Hospitality (Private) Limited 100% Hotels Zimbabwe Tanganda Tea Company Limited 100% Agriculture Zimbabwe Thomas Meikle Properties (Private) Limited 100% Property owning Zimbabwe Ninety Speke (Private) Limited 100% Property owning Zimbabwe TM Supermarkets (Private) Limited 51% Retail Zimbabwe Greatermans (1979) (Private) Limited 100% Retail Zimbabwe Meikles Resources (Private) Limited 100% Mining Zimbabwe Meikles Centar Mining (Private) Limited 51% Mining Zimbabwe Meikles Guard Services (Private) Limited 100% Security services Zimbabwe Details of other subsidiary companies are disclosed in the Group structure on page 76.


2 0 1 4 A n n u A l R e p o R t

59

21.3

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2 0 1 4 A n n u A l R e p o R t

60

21.4 Interest in joint operation: The Group has a 50% interest in a joint operation which operates The Victoria Falls Hotel in Zimbabwe.

There has been no change in the Group’s ownership or voting interests in this joint operation since inception. The Group accounts for the assets, liabilities, revenues and expenses, relating to its interest in the joint operation in accordance with the applicable standards.

The following amounts are included in the Group financial statements in respect of the joint operation in The Victoria Falls Hotel:

31 March 2014 31 March 2013 US$ 000 US$ 000 Non-current assets 3,226 2,416 Current assets 5,069 3,493 Current liabilities (2,623) (1,860)

Revenue 5,966 5,373 Expenses (4,342) (4,127) Profit for the year 1,624 1,246

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 liability to the dismissed employees in respect of accrued benefits, as at 31 March 2014, is US$612,420 (2013: US$368,869). There are no other contingent liabilities relating to the Group’s interest in the joint operation.

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 31 March 2014 31 March 201322. Cash and bank balances US$ 000 US$ 000 Non-current Balances with the Reserve Bank of Zimbabwe* 90,861 40,514 Current: Cash and other bank balances 22,952 14,198 * Refer notes 4.2.4 and 36 for further details. Company Company 31 March 2014 31 March 2013 US$ 000 US$ 000 Non-current Balances with the Reserve Bank of Zimbabwe* 90,861 40,514 Current: Cash and other bank balances 313 431 * Refer notes 4.2.4 and 36 for further details.


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Group Group 31 March 2014 31 March 201323. Inventories US$ 000 US$ 000 Inventories comprise: Raw materials and consumables 6,065 5,283 Merchandise and manufactured goods 29,397 30,084 Work in progress 1,169 1,341 36,631 36,708

The cost of inventories recognised as an expense includes US$4.5 million (2013: US$1.9 million) in respect of write-offs of inventory due to shrinkage.

Inventories worth US$3 million (2013: US$4.2 million) were pledged to secure borrowings of the Group (see note 26).

Company Company 31 March 2014 31 March 2013 US$ 000 US$ 000

Consumables 3 4

Group Group 31 March 2014 31 March 2013 US$ 000 US$ 00024. Trade and other receivables Trade receivables 10,958 14,168 Allowance for doubtful receivables (2,226) (2,131) Net trade receivables 8,732 12,037 Advance crop expenditure 347 466 Other receivables and prepayments 7,092 4,780 16,171 17,283

• The average credit periods on sale of goods and services are as follows: - 180 days for revolving facilities and up to 365 days for fixed term facilities for department stores - 35 days for hotels - 60 to 90 days for agriculture. Except for department stores trade receivables, trade and other receivables are generally non interest-

bearing. For the department stores debtors, interest is charged on the balance outstanding at the end of the month. However, interest is not charged in the month of purchase.

• 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 installments in arrears for 120 days and above, and specific balances - for hotels - 100% of balances over 120 days and; specific balances in the 60 to 120 days - for agriculture - 100% of balances over 120 days, 50% of balances over 90 days and specific balances. • The net movement in allowance for doubtful debts of US$95,000 comprises further impairment of

US$634,000, recoveries of US$147,000 and write offs of US$392,000. • Overdue but not impaired amounts included above are US$264,000 (2013: US$1,045,000) in the 30 to 60

days category, US$431,000 (2013: US$551,000) in the 60 to 90 days category and US$1,613,000 (2013: US$345,000) over 90 days. No allowance for doubtful debts has been recognised because these amounts are still considered recoverable.


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• Receivables amounting to US$5 million (2013: US$7.8 million) were pledged to secure borrowings of the Group (see note 26).

Company Company 31 March 2013 31 March 2013 US$ 000 US$ 000 Group balances 37,141 34,637 Other receivables 370 255 37,511 34,892

The group balances have no fixed repayment terms.

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

25. Share capital and Directors’ beneficial interests25.1 Share capital Ordinary shares of US1 cent each: Group and Company 31 March 2014 31 March 2013 US$ 000 US$ 000

Issued share capital 2,538 2,538 Group and Company Number Number 31 March 2014 31 March 2013 Shares in issue 253,793,301 253,793,301 Unissued shares 146,206,699 146,206,699 Authorised shares 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 28 million shares are available for acquisition by the Trust. To date, 8,418,510 shares have been issued to 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 19,581,490 shares still to be issued to the Trust, which are under the control of the Directors.

25.2 Directors’ beneficial interests At 31 March 2014 the direct and indirect beneficial interests of the Directors in the ordinary shares of the

Company are shown below:


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Fully paid ordinary shares 31 March 2014 31 March 2013

J.R.T. Moxon 27,048,921 26,852,741 R. Chidembo 1,646,070 1,641,370 B. Chimhini 811,477 811,477 O. Makamba 1,100,774 1,050,774 K. Ncube - - M.L. Wood 1,838,998 1,788,998 Mr J.R.T. Moxon’s indirect beneficial interests through Gondor Capital Limited are included in the

disclosures above. Gondor Capital Limited has a 47.42% shareholding in the Company.

Group Group 31 March 2014 31 March 201326. Borrowings US$ 000 US$ 000 Secured: Acceptance credits, loans and overdrafts 89,454 54,062 Unsecured: Acceptance credits, loans and overdrafts 17,459 12,207 106,913 66,269 Less: Portion repayable within 12 months (69,649) (58,852) Non-current portion 37,264 7,417 Due for repayment: On demand within one year 69,649 58,852 In second year 18,839 2,819 In third year 14,353 2,911 In fourth year 3,119 1,085 In fifth year 953 602 106,913 66,269

• US$3 million (2013: US$4.2 million) worth of the acceptance credits, loans and overdrafts are secured by inventories.

• US$5 million (2013: US$7.8 million) worth of loans are secured by receivables. • US$6.6 million (2013: US$9 million) worth of loans are secured by a negative pledge over assets. • US$57.4 million (2013: US$32.6 million) in freehold land and buildings has been pledged as security for

loans of: (i)US$2.9 million which bears interest at 12.75% per annum with final repayment on 30 August 2016. (ii)US$6.5 million which bears interest at 7.69% per annum with final repayment on 6 May 2018. (iii)US$3.6 million which bears interest at 8.46% per annum with final repayment on 31 August 2017. (iv)US$5.1 million which bears interest at 8.51% per annum with final repayment on 4 September 2017. (v)US$23.3 million which bears interest at 8.5% per annum with final repayment on 15 October 2016. (vi)US$7.4 million which bears interest at 9% per annum with final repayment on 31 December 2016. • The Group has issued cross - company guarantees worth US$30.4 million (2013: US$25.9 million) for

Group borrowing facilities. • Included in the unsecured borrowings is a loan of US$478,000 from Afghan African Holdings Limited,

a minority shareholder in Meikles Centar Mining (Private) Limited. The loan attracts interest at LIBOR and an annual management fee of 4% per annum. There are no fixed repayment terms.

• Included in the unsecured borrowings is a loan of US$721,000 from Mr Ian Hannam, who is connected with Afghan African Holdings Limited. The loan attracts interest at 10% per annum and is repayable by 6 November 2015.


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Company Company 31 March 2014 31 March 2013 US$ 000 US$ 000 Secured: Acceptance credits, loans and overdrafts 30,148 1,498 Unsecured: Acceptance credits, loans and overdrafts 6,881 11,420 37,029 12,918 Less portion repayable within 12 months (36,921) (12,806) Non-current portion 108 112 Due for repayment: On demand and within one year 36,921 12,806 In second year 46 46 In third year 53 52 In fourth year 9 14 37,029 12,918

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$13.9 million (2013: US$29.3 million). These have been netted off amounts due from Group companies.

Group Group 31 March 2014 31 March 2013 US$ 000 US$ 00027. Trade and other payables Trade payables 28,170 35,282 Accruals 10,754 8,195 Other payables 8,369 2,786 47,293 46,263

• The credit period on purchases ranges from 7 to 35 days (2013: 7 to 45 days) from date of statement. 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 2014 31 March 2013 US$ 000 US$ 000 Group balances 2,650 2,593 Provisions and other payables 10,364 1,032 13,014 3,625

The group balances have no fixed repayment terms.


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28. Related party transactions Balances between the Company and its subsidiaries and joint operation, 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 21.

Group Group 31 March 2014 31 March 201328.1 Related party transactions and balances US$ 000 US$ 000 During the year, group entities entered into the following transactions with related parties that are not members of the Group: Short term loan advanced - Clayway Investments (Private) Limited 1,536 - Short term loan advanced - Liftbrok Investments (Private) Limited - 874 Short term loan advanced - Barkpest Investments (Private) Limited - 136 Loan received from Afghan African Holdings Limited 475 - Loan received from Mr Ian Hannam 700 - Interest receivable - Clayway Investments (Private) Limited 107 - Interest receivable - Liftbrok Investments (Private) Limited 154 149 Interest receivable - Barkpest Investments (Private) Limited 21 18 Purchases from Pick n Pay (Proprietary) Limited 3,575 4,828 Interest payable - Afghan African Holdings Limited 3 - Interest payable - Mr Ian Hannam 21 - Cost recoveries - Meikles Consolidated Holdings (Private) Limited 52 30 The following balances were outstanding at the end of the reporting date: Clayway Investments (Private) Limited 1,643 - Liftbrok Investments (Private) Limited 1,177 1,023 Barkpest Investments (Private) Limited 175 154 Afghan African Holdings Limited 478 - Mr Ian Hannam 721 - Pick n Pay (Proprietary) Limited 525 83 Meikles Consolidated Holdings (Private) Limited - current account (12) (4) • Clayway Investments (Private) Limited, Barkpest Investments (Private) Limited and Liftbrok Investments

(Private) Limited are staff share purchase vehicles whose shareholders are certain key management personnel who include four Directors of the Company. The share purchase vehicles hold shares in the Company under the names ‘Barkpest Investments (Private) Limited’ and ‘Clayway Investments (Private) Limited’.

The loans to Barkpest Investments (Private) Limited and Liftbrok Investments (Private) Limited attract interest at 17% per annum, while the loan to Clayway Investments (Private) Limited attracts interest at 10% per annum. The loans are payable on demand.

• The loan from African Afghan Holdings Limited, a minority shareholder in Meikles Centar Mining (Private) Limited, attracts interest at LIBOR and an annual management fee of 4% per annum. There are no fixed repayment terms.


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• The loan from Mr Ian Hannam, who is connected with African Afghan Holdings Limited, attracts interest at 10% per annum and is repayable by 6 November 2015.

• Meikles Consolidated Holdings (Private) Limited is indirectly owned by shareholders who hold 47.42% (2013: 47.42%) of the Company’s issued shares. The current account is unsecured and has no fixed terms of repayment.

28.2 Compensation of and loans to executive Directors and key management personnel

Group Group 31 March 2014 31 March 2013 US$ 000 US$ 000 Short-term benefits 4,306 4,547 Post-employment benefits 453 428 Compensation for loss of office - 349 Total 4,759 5,324 Loans to key management personnel 148 234

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 comprise motor vehicle loans. Of this balance, US$15,554. (2013: US$21,270) 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 starting 1 April 2012.

29. 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 shareholders without the sanction of the Company in a general meeting.

30. Operating lease commitments The Group is a lessee for various properties under operating leases, the majority of which have fixed and

revenue-based rentals. The revenue-based rentals vary from 1% to 10% of revenue. In terms of the leases, the Group is required to pay property rates and maintenance costs. The operating leases are renewable on fixed dates.

Group Group 31 March 2014 31 March 201331. Commitments US$ 000 US$ 000 Commitments for the acquisition of property, plant and equipment Authorised but not yet contracted for 14,128 25,613 Group’s share of capital commitments of joint operation 53 1,783


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32. 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$24.50 and 3.5% of pensionable emoluments per employee per month.

33. 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.

34. Financial instruments34.1 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 26) and equity (comprising issued capital, reserves, retained earnings and non-controlling interests).

The Group is not subject to any externally imposed capital requirements.

The Board reviews the capital structure of the Group at least quarterly. 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 2014 31 March 2013 US$ 000 US$ 000 Long term and short term debt 106,913 66,269 Total equity 186,090 148,431 Debt to equity ratio 57.45% 44.65%

Debt is defined as long - and short - term borrowings as described in note 26.

34.2 Categories of financial instruments The Group’s principal financial instruments comprise: • Cash and bank balances • Loans and receivables • Interest bearing borrowings • Overdrafts • Trade and other payables


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34.3 Financial risk management objectives 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.

The main categories of risk inherent in the business of the Group are: • Credit risk • Liquidity risk • Market risk (including interest risk and currency rate risk) • Climate and weather changes (refer to note 19 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 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.

34.4 Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial

loss to the Group. 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. The Group uses publicly available information and its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved regularly.


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Financial assets, which potentially subject the Group to concentrations of credit risk at 31 March 2014 are as follows:

Group Group 31 March 2014 31 March 2013 US$ 000 US$ 000 Balance with the Reserve Bank of Zimbabwe (RBZ) (note 22) 90,861 40,514 Other financial assets (note 21) 16,311 14,098 Trade and other receivables (note 24) 11,183 14,791 Cash and cash equivalents (note 22) 22,952 14,198

The carrying amounts of financial assets represent the maximum exposure.

Refer to notes 4.2.4 and 36 on the funds with the RBZ.

Trade receivables are amounts owing by customers and are presented net of allowance for doubtful amounts. Trade receivables consist of a large number of customers spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased. Trade receivables are unsecured. The Group does not have significant credit risk exposure to any single counterparty in respect of trade and other receivables.

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.

In addition, the Group is exposed to credit risk in relation to financial guarantees provided to banks by the Group in respect to the Group entities’ borrowings. The Group’s maximum exposure in this respect is the maximum amount the Group could have to pay if the guarantee is called, which is disclosed in note 26.

34.5 Liquidity risk management 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 manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

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 shareholders without the sanction of the Company in a general meeting. Group Treasury maintains strict control over the acceptance and draw-down of any loan facility.


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The following are the contractual maturities of financial liabilities, including accrued interest to the end of the reporting period:

Carrying amount Within 1 year 1 to 5 years US$ 000 US$ 000 US$ 000 Group – 31 March 2014 Secured acceptance credits and loans 89,454 53,389 36,065 Unsecured acceptance credits, loans and overdrafts 17,459 16,260 1,199 Trade and other payables 47,293 47,293 - Total financial liabilities 154,206 116,942 37,264

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

The Group has access to financing facilities as described below, of which US$13.6 million (2013 : US$ 31.1 million) were unused at the end of the reporting period.

Group Group 31 March 2014 31 March 2013 US$ 000 US$ 000 Secured acceptance credits and loans with various maturity dates extending to 2018 - amount drawn down 89,454 54,062 - amount undrawn 12,625 27,067 102,079 81,129 Unsecured acceptance credits, loans and overdrafts reviewed annually - amount drawn down 17,459 12,207 - amount undrawn 988 4,005 18,447 16,212

34.6 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.


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34.7 Foreign currency risk management 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 policy 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 2014 31 March 2013 US$ 000 US$ 000 Assets South African Rand 141 539 Euro 4 20 Botswana Pula - 1 Australian Dollar - 2 British Pound 1 2 146 564 Liabilities South African Rand 623 277

As at 31 March 2014, 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$47,295 (2013: US$19,740) higher or lower, 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 has a 35% interest in Mentor Africa Limited which has operations in South Africa. Refer to notes 4.1.1 and 18 for details. Mentor Africa Limited’s assets and liabilities are denominated in South African rand. Prolonged devaluation of the South African rand against the US$ will present the risk of impairment to the investment carrying value.

The Group did not use forward foreign exchange contracts during the year under review and does not apply cash flow hedge accounting.

34.8 Interest rate risk management The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and

floating interest rates. 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 and by maintaining an appropriate mix between fixed and floating rate borrowings. 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.


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The effective rates on financial instruments at 31 March 2014 are:

Weighted With no fixed

average realisation Within 1 to 5

interest period 1 year years Total

Group – 31 March 2014 rate p.a US$ 000 US$ 000 US$ 000 US$ 000

Financial assets Balances with the Reserve Bank of Zimbabwe (note 22) 8% 90,861 - - 90,861 Trade receivables 48% - 3,660 - 3,660 Staff loans 10% - 306 816 1,122 Short term loans: - Clayway Investments (Private) Limited 10% 1,643 - - 1,643 - Liftbrok Investments (Private) Limited 17% 1,177 - - 1,177 - Barkpest Investments (Private) Limited 17% 175 - - 175 - Other 15% 251 - - 251 Total financial assets 94,107 3,966 816 98,889 Weighted

average Within 1 to 5

interest 1 year years Total

rate p.a US$ 000 US$ 000 US$ 000

Financial liabilities Acceptance credits and loans 11.62% 65,039 37,264 102,303 Bank overdrafts 13.18% 4,610 - 4,610 Total financial liabilities 69,649 37,264 106,913 Weighted With no fixed

average realisation Within 1 to 5

interest period 1 year years Total

Group – 31 March 2013 rate p.a US$ 000 US$ 000 US$ 000 US$ 000

Financial assets Balances with the Reserve Bank of Zimbabwe (note 22) 4.68% 40,514 - - 40,514 Trade receivables 48% - 5,540 - 5,540 Staff loans 10% - 228 796 1,024 Short term loans: - Liftbrok Investments (Private) Limited 17% 1,023 - - 1,023 - Barkpest Investments (Private) Limited 17% 154 - - 154 Total financial assets 41,691 5,768 796 48,255


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34.10 Fair value measurements At 31 March 2014 the carrying amounts, as disclosed in the statement of financial position, of cash and

cash equivalents, loans and receivables, interest bearing borrowings, overdrafts and trade and other payables approximate their fair values. Trade receivables will mature within 45 to 365 days and payables will mature within 7 to 35 days from date of statement.

35. Exchange rates 31 March 2014 31 March 2013 US$1 is equivalent to: Statementof financialpositionrate: South African Rand 10.5792 9.2589 British pound 0.6007 0.6605 Average transaction rate: South African Rand 10.1921 8.5613 British Pound 0.6259 0.6330

36. Subsequent events – Balances with the Reserve Bank of Zimbabwe As at 31 March 2014, funds on deposit with the Reserve Bank of Zimbabwe had increased to US$90.8

million as a result of interest negotiations.

Subsequent to year end, the Company was issued with Treasury Bills amounting to US$49.6 million. The balance of the deposit owed by the Reserve Bank of Zimbabwe is currently being dealt with by the Ministry of Finance and Economic Development in terms of the Reserve Bank of Zimbabwe (Debt Assumption) Bill, 2014. The Ministry of Finance and Economic Development has advised that upon completion of their required processes, Treasury Bills of similar terms to those already in the possession of the Company will be issued.

Weighted

average Within 1 to 5

interest 1 year years Total

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 34.9 Market price The Group currently has no significant investments in listed equity securities and therefore has minimal

exposure to market price risk.


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31 March 2014 31 March 2013 31 March 2012Continuing operations Gross margin (%) Gross profit Revenue 21.8.% 22.21% 20.75% Net margin (%) Operating profit Revenue (0.24%) 1.29% (2.35%) EBITDA Earnings before interest, taxes, depreciation and amortization Revenue 1.43% 2.31% (1.23%) Return on equity (%) Attributable earnings Average shareholders’ funds 5.15% 0.33% (1.46%) The EBITDA is before exchange differences and fair value adjustments.

Key Performance Measures

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Number of Number shareholders % of shares %Analysis of ordinary shareholdings at 31 March 2014 Type of holder Zimbabwe Register Companies 1,185 9.02 164,999,545 65.01Individuals 10,860 82.63 27,012,252 10.64Insurance companies 39 0.30 19,008,058 7.49Nominee companies 293 2.23 9,928,762 3.91Non resident 90 0.68 8,118,084 3.20Pension funds 240 1.83 20,169,701 7.95Totals for Zimbabwe 12,707 96.69 249,236,402 98.20 London Register Banks and nominee companies 15 0.11 553,723 0.22Individuals 411 3.13 3,961,536 1.56Other corporate bodies 9 0.06 40,662 0.02Pension funds and investment trusts 1 0.01 978 0.00Totals for London 436 3.31 4,556,899 1.80 Totals for Zimbabwe and London 13,143 100.00 253,793,301 100.00 Size of holdings 1 – 5 000 12,368 94.10 3,521,182 1.395 001 – 10 000 225 1.71 1,610,720 0.6310 001 – 50 000 333 2.53 7,460,525 2.9450 001 – 100 000 87 0.67 6,029,134 2.38100 001 – 500 000 96 0.73 19,506,546 7.69Exceeding 500 000 34 0.26 215,665,194 84.97Totals 13,143 100.00 253,793,301 100.00 Top ten shareholders Number of shares %At 31 March 2014 Gondor Capital Limited 120,355,076 47.42Old Mutual Life Assurance Company Zimbabwe Limited 17,814,627 7.02Clayway Investments (Private) Limited 12,812,381 5.05Meikles Limited Employee Share Ownership Trust 8,418,510 3.32Stanbic Nominees (Private) Limited 5,282,918 2.08Windward Capital (Pty) Ltd 5,199,856 2.05Old Mutual Zimbabwe Limited 3,911,688 1.54Meikles Consolidated Holdings (Private) Limited 3,850,964 1.52Datvest Nominees (Private) Limited 3,584,371 1.41Willoughby’s Consolidated Plc 3,499,938 1.38 184,730,329 72.79Other 69,062,972 27.21Total 253,793,301 100.00 At 31 March 2013 Gondor Capital Limited 120,355,076 47.42Old Mutual Life Assurance Company Zimbabwe Limited 22,563,681 8.89Clayway Investments (Private) Limited 12,812,381 5.05Meikles Limited Employee Share Ownership Trust 8,418,510 3.32Stanbic Nominees (Private) Limited 5,134,870 2.02Datvest Nominees (Private) Limited 5,010,338 1.97Zimcor Limited 4,310,557 1.70Old Mutual Zimbabwe Limited 4,012,919 1.58AATC 3,335,517 1.31Meikles Consolidated Holdings (Private) Limited 2,789,470 1.10 188,743,319 74.36Other 65,049,982 25.64Total 253,793,301 100.00

Shareholder Information

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Group Structure

Meikles Limited

Meikles Hospitality (Private) Limited(incorporating 50% partnership in The

Victoria Falls Hotel)

Meikles Hotel (Private) Limited

(dormant)

Stripwax Investments(Private) Limited

(dormant)

Cape GraceInvestments Limited

Pick n Pay

TM Supermarkets (Private) LimitedSee note below

Meikles Guard Services(Private) Limited

Isis ManagementHoldings

Fosternate Investments(Private) Limited

Meikles Resources(Private) Limited

Drillreel Investments(Private) Limited

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, National Meats (Private) Limited, Osterland Investments (Private) Limited, Petria Properties (Private) Limited, Proposal Investments Services (Private) Limited, Ringsmoke Investment (Private) Limited and Strove Enterprises (Private) Limited.

Mentor Africa Limited

Meikles Centar Mining(Private) Limited

Kearsley Investments(Private) Limited

Greatermans Stores (1979)(Private) Limited

(Department Stores)

Tanganda TeaCompany Limited

Thomas Meikle Properties(Private) Limited

Tingamira TeaEstates (Private) Limited

Coffee & Tea Services(Private) Limited

Meikles Credit Services(Private) Limited

(dormant)

Tuscarora Investments(Private) Limited

(dormant)

Ninety Speke (Private)Limited

Thomas Meikle Stores(Private) Limited t/a

Meikles Financial Services

49%51% 100%

100%

100%

100%

100%

100%

100% 100%

100%

35%

75%

51%

100%

100%

100%100%

100%

100%

100%

100% 100%

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Zimbabwe TaxThe following summary addresses the Zimbabwe tax consequences for investors who are not residents of Zimbabwe and who hold shares as capital assets.

Dividend withholding taxDividends payable to non-residents are subject to withholding tax of 10% for dividends from securities listed on the Zimbabwe Stock Exchange and 15% in the case of any other dividends. Lesser rates apply where double taxation relief 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 taxSale 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 distributionIn 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 Control 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 pricesThe middle market prices of Meikles Limited shares on the Zimbabwe Stock Exchange during the course of the year were:

31 March 2013 21.0 cents30 June 2013 31.5 cents30 September 2013 24.0 cents31 December 2013 19.0 cents31 March 2014 16.0 cents

Tax Issues and Share Prices

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Meikles Limited(Registration No. 1/37)

Business Address 7th Floor99 Jason Moyo AvenueP.O. Box 3598, HarareHarareZimbabweTelephone +263-4-252068-71Telefax +263-4-252067

Zimbabwe Transfer Secretaries ZB Bank LimitedGround Floor ZB CentreCorner First Street / Kwame Nkrumah AveP.O Box 2540Harare ZimbabweTelephone +263-4-759660/9 email: [email protected]

AuditorsDeloitte & Touche (Chartered Accountants)West BlockBorrowdale Office ParkBorrowdale RoadBorrowdaleP.O. Box 267HarareZimbabweTelephone +263-4-852120-122 +263-4-852124-129Telefax +263-4-852130email: [email protected]

Principal BankersStandard Chartered Bank Zimbabwe Limited2nd Floor Mutual CentreP.O. Box 373HarareZimbabweTelephone +263-4-253801/8email: [email protected]

Principal BankersCABSNorthend Close Northridge ParkHighlandsP.O. Box 2798HarareZimbabweTelephone +263-4-252861email: [email protected] Executive ChairmanJohn R T Moxon

Corporate Information

Registered Office90 Speke AvenueHarareZimbabweTelephone +263-4-252068-71Telefax +263-4-252067Website: www.meiklesinvestor.com

London Transfer Secretaries Computershare Services PLCP.O. Box 82The PavilionsBridgwaterBristol BS99 7NHTelephone +44-870-702 0001Telefax +44-870-703 0005BristolEnglandWebsite: www.computershare.com

London Secretaries PricewaterhouseCoopers Legal LLP6 Hay’s Lane London SE1 2HBTelephone + 44 -20-7212 1616Website:www.pwclegal.co.uk

London Corporate Advisors St James Corporate Services Suite31, Second Floor107 CheapsideLondon ECZV 6DN Telephone + 44-20-7796 8644Telefax + 44-20-7796 8645

Executive Director Finance and AdministrationOnias Makambaemail: [email protected]

Legal PractitionersScanlen and HoldernessP.O. Box 188HarareZimbabweTelephone +263-4-799636/42email: [email protected]

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Notice is hereby given that the seventy-seventh ANNUAL GENERAL MEETING of the shareholders of Meikles Limited in respect of the year ended 31 March 2014 will be held in the Mirabelle, Ground Floor, Meikles Hotel, 3rd Street, Harare on 16 October 2014 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 2014 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:

John Ralph Thomas Moxon

3. To consider the re-appointment of the following Director who retires by rotation and being eligible offers himself for re-election:

Kalizek Ncube

4. To confirm Directors’ fees amounting to US$17,450 for the year ended 31 March 2014.

5. To appoint auditors for the year ending 31 March 2015 and to approve the auditors’ fees of US$93,890 for the year ended 31 March 2014.

Messrs Deloitte & Touche, auditors for the year ended 31 March 2014, have indicated their willingness to continue in office.

6. That 19 581 490 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.

By order of the Board

25 September 2014

Notice of Meeting

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______________________________________________________________________________________

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 16 October 2014 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 __________________________________2014

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

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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.

OFFICE OF THE ZIMBABWE TRANSFERSECRETARIES ZB Bank LimitedGround Floor ZB CentreCorner First Street / Kwame Nkrumah AveP.O Box 2540Harare ZimbabweTelephone +263-4-759660/9

Instructions for Signing and Lodging this Form of Proxy

OFFICE OF THE LONDON TRANSFER SECRETARIESComputershare Services PLCP.O. Box 82The PavilionsBridgwaterBristol BS99 7NHTelephone +44-870-702 0001Telefax +44-870-703 0005BristolEngland

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Notes

Investor Relations

Meikles Limited 2014 annual report