Shareholders are informed that the Zimbabwe Stock Exchange,(“ZSE”) have requested the Company to advise Shareholders more fully on matters relevant to the funds held by the Company on deposit at the Reserve Bank of Zimbabwe (“RBZ”). Meikles Limited has received conflicting advice from the ZSE and, as a result, considers an update to the community at large to be appropriate, rather than a statement to Shareholders.

Observers will have noted the increase in the value of funds on deposit as set out in the Group’s audited financials for the year ended 31 March 2014 and the unaudited mid-year financials for the financial year ended 31 March 2015. Shareholders have been advised on several occasions on how these sums have been calculated and, indeed, the terms negotiated with the relevant authorities in mid 2013. The calculation is simply eight per cent (8%) compound interest on the capital on deposit, to be accrued until repayment is effected. It is known that this is, in itself, a compromise by the Company as other creditors have been given up to twelve per cent (12%). This includes a bank in which the Group was previously a shareholder, so that the status on interest granted to others is known to the Company. This fact is brought to the attention of observers, so that they are in a position to appreciate that the Company has been flexible in its position in order to achieve progress in the negotiations. It should be understood that the Company is the largest indigenous corporate creditor of the RBZ. Negotiations have been conducted in a fair and arm’s length manner and due to the fact that the quantum is so substantial, negotiations are being conducted with mutual respect between the parties.

The deposit, together with interest, represents a very substantial asset to the Group. The recognition of the sum owed to the Company is the result of some years of negotiation and the Company’s management deserves recognition for this achievement. The community should be alive to the fact that the entire Group has gained in morale and commitment as a result of continuous progress on the recovery of funds from the RBZ.

Over this period the Group has been aware that most observers in the community have tended to be pessimistic with regard to the chances of recovery of these funds. Indeed those involved in the negotiations have received little support or encouragement from investors, analysts, brokers, or the community at large in its endeavour to recover funds. The Company has generally received expressions of doubt that any recovery will be successful. The doubt is still prevalent in the business community and the Group as a whole has witnessed this attitude with regret because it has not assisted the Company’s negotiating stance or strength in negotiation.

As stated to Shareholders recently a substantial part of funds due and anticipated have been committed to the Group by the present management of the RBZ. For the benefit of the skeptics this has been committed in writing. Performance is in progress, but timelines committed to by the RBZ, have not been completely adhered to.

The ultimate value of the funds which have largely, but not entirely, been committed in the form of Treasury Bills (“TB’s”) is still unknown. The greater number of these TB’s which are about to be issued with satisfactory terms are still to be received by the Company and are still to be placed in the market. The Company is of the opinion that it cannot predict matters pertaining to the receipt, or value of the funds, with precision.

For reasons now outlined, progress is not to be negotiated in the public domain. It is firmly believed that negotiations debated in public will not be in the best interest of stakeholders. This view is held by other participants in the negotiating process. The Company is not alone in expressing this opinion. Observers are asked to understand this negotiating stance. It is not understood by the ZSE, which remains a point of disagreement between the Company and the ZSE, but it appears that the ZSE is isolated in this belief, certainly as far as the parties to the negotiations are concerned.

The Company would have welcomed some encouragement from the investing community and others during 2012, 2013, 2014 and 2015 to date. The Company considers it possible that the authorities may also have welcomed recognition of their efforts to resolve these financial issues, but this has not materialized. Instead, the Company is aware from statements made at its own Annual General Meeting, from press articles in both Zimbabwe and South Africa and from the Company’s general intelligence systems that there are individuals who are working against the Company’s interests. These efforts that began in October 2014 overtly, but earlier in practice, are a concerted effort by individuals, including at least one Member of Parliament, some but certainly not all ex-employees who are unhappy following their removal from office, which in fact was well deserved, and now more recently the ZSE, to disrupt negotiations on the settlement of sums due to the Company, the placing of TB’s on the market and generally to damage the Company’s reputation and well being. The result has been damaging. Observers will already be aware of the overt damage done. Many observers have witnessed events or read articles in the media, but not necessarily the considerable covert damage.

Shareholders in general should note that there are a large number of extremely loyal individuals amongst ex-employees who have retired or have left the Group for various reasons. The Group is grateful for their continued support. They should not be confused with those ex-employees who are determined to damage the Group and its stakeholders. Similarly, the Company is aware and observers should know that there are individuals in the business environment and community at large who for various reasons do not want the Company to receive its dues from the RBZ, or realize appropriate value from the funds, as they become available.

There has been a delay of some months in the receipt of funds due. This delay has been caused, largely in the opinion of those involved in the negotiating process, by the activities of those mentioned above. The community is assured that the delay is to be overcome. In the meantime the delay has resulted in further damage to the Group as a whole, both in the final quantum of funds to be received and just as importantly a delay in the implementation of the Group’s operating strategy. This strategy, together with strategic plans for the enhancement of Group values, has been disclosed to all stakeholders. Implications arising from the delay will only become apparent in their severity in future months and will, where necessary, be communicated to the public.

On a positive note, it can now be disclosed that arrangements finalized with the RBZ will secure the implementation, although delayed, of a substantial part of Group operating strategic objectives. The implementation of the strategic plans for the enhancement of Shareholder values are of necessity delayed, but will resume as soon as the Company’s forward direction from a Shareholder perspective has been determined.

The Company has recently made an effort to interact and perhaps reconcile with the ZSE. However, it would appear that such an effort is futile. The Company representatives who met with the ZSE regrettably found that there may initially have been some common ground but subsequent inconsistencies from within the ZSE have placed doubt on this process. It is now appropriate that the Company proceed with litigation. The Company is the plaintiff and is demanding substantial damages from the ZSE, and certain of its officers in their personal capacities. Shareholders will be kept advised of progress.

The Company will now consider how best to advance the Group’s interests in the best possible manner and which may perhaps be outside the framework of the ZSE. The Company will examine and move towards implementation of methods aimed at ensuring the financial wellbeing of Shareholders in their capacity as owners of shares in the Company. The Company will keep Shareholders advised of developments.

The Company hereby expresses its appreciation to the RBZ and to all those who have facilitated progress in the realization of value to a very important Company asset, namely the deposit with the RBZ.

Despite continued and some very personal attacks on the Company and its offices, observers may be interested to know that a highly regarded international organization has shortlisted the company for an award for the best Corporate Governance in Zimbabwe.

J R T MOXON
EXECUTIVE CHAIRMAN