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Meikles Limited Executive Chairman: Mr J.R.T. Moxon


The Chairman of Meikles Limited (“Meikles”) expressed recently his views on events that have, and continue to have, an effect on the Group. These views are now further updated. This is not a Statement to Shareholders, but it is an attempt to place matters in a proper context to anyone who is interested in the progress of the Group, its employees, its shareholders and other stakeholders.

The Chairman has been closely involved personally and through the efforts of lawyers and others to secure the return to Meikles of its deposit held by the Reserve Bank of Zimbabwe (“RBZ”). His involvement over time in this effort has been very intense. The sum on deposit with the RBZ was placed with the Bank under duress in 1998 and the funds are on deposit and are subject to call by Meikles. The origin of the funds has been clearly communicated to stakeholders in a variety of communications. Suffice to reiterate that these funds arose from the proceeds of foreign investment received in Zimbabwe in what was, at the time, believed to be the largest single foreign investment of new funds into Zimbabwe on the Zimbabwe Stock Exchange (“ZSE”). These funds are therefore unique relative to other debts or deposits that the RBZ has on its books.

The RBZ has, for a long period, been a delinquent debtor to Meikles as it has failed to perform in terms of returning the funds owing to Meikles despite demands appropriate to the return of a call deposit.

In 2013 Meikles, represented by its Chairman and its Company Lawyer, Mr Sternford Moyo, a Senior Partner in the Law Firm Scanlen and Holderness, met at the RBZ with the then Governor, Dr Gono, and an official of the bank, Mr Saburi. The purpose of the meeting was to agree the methodology of calculating the quantum of sums due to Meikles. Agreement was reached. The sum due to Meikles was to be calculated by accruing interest to the capital sum outstanding from time to time at a rate of 8 per cent per annum compounded back-dated to the date when the deposit was made. This arrangement although accepted by Meikles in fact accrues interest to Meikles at a lesser rate than the cost of borrowing to the Company.

A calculation of the sum, together with documentation from the Chairman, Mr Sternford Moyo and Dr Gono, all of which are substantive at law, served to satisfy Directors and External Auditors, who were all involved in the finalization of the Group financials for the year ended 31 March 2014, that the financials were prepared on an accurate basis. The sum due to Meikles had indeed increased to US$90 million due to the agreement on interest referred to above. It is stated that this is a simple mathematical calculation, not a fabrication.

In recent weeks the Member of Parliament for Bikita West, Dr Kereke, a man unknown to Meikles and who has never had any interaction with Meikles, saw fit to publicly accuse Meikles and, by default, all those mentioned above as guilty of fraud due to his personal but uninformed opinion of the Group financials.

In October 2014 another Member of Parliament, in this instance the Member of Bulawayo South, Mr Cross, who is a Shareholder of Meikles, addressed Shareholders who attended the Meikles Annual General Meeting. He proceeded to advise Shareholders of matters that had taken place and decisions made by a Parliamentary Committee of which he is a member, despite a general belief that only confidential deliberations take place in this Committee. He has understandably been reported to the Speaker of Parliament and as a result he may have abused Parliamentary privilege. Mr Cross referred to the sum due to Meikles by the RBZ and advised Shareholders not to count their chickens. Some Shareholders thought he was making reference to the sale of chickens in the supermarkets and others thought the Group had embarked on a chicken farming project. In fact it is an expression in the English language, do not count your chickens before they hatch and Mr Cross was conveying the message that Government, with his participation, were not going to pay to Meikles the full sum
agreed upon in negotiations. In other words he was suggesting there was to be reneging on commitments made in good faith.

We now know that the Securities and Exchange Commission initiated a process which culminated in the ZSE suspending trading in Meikles shares, presumably because they place credibility in the statements of the two individuals referred to above. This being of more importance to these two institutions than the discussions held with the ZSE and Meikles towards the end of 2014 which were positive in their entirety. During this meeting the Chairman of the ZSE raised various issues of mutual concern to the two parties and these were concluded satisfactorily.

Irresponsible reference has been made in public to a so called lack of Corporate Governance in Meikles. The comments being focused on the relatively small number of Directors on the Meikles Board and by the presence of an Executive Chairman which is not appreciated in Zimbabwe, but seems to be acceptable on the New York Stock Exchange, the world's largest stock exchange. The discussions held with the ZSE towards the end of last year, in fact, reached an amicable agreement including timing of when and how these issues would be resolved in conjunction with some very substantial investment strategies that the Group planned to implement, which include a restructuring of the Board of Directors. The action of the ZSE has now possibly put this reconstruction on hold for the time being.

The latest action of the ZSE was implemented without any interaction with Meikles and does not comply with its own rules of engagement.

There is now uncertainty as to whether the Group's planned strategy will be feasible and, if so, when. The ZSE, the detractors mentioned above and perhaps others have put in question an entire investment strategy for this Group and perhaps for others who are interested in furthering the economic interests of Zimbabwe. Meikles will be addressing the implications of the suspension, the manner in which it has been implemented and whether there is any purpose to a listing on the ZSE. Much debate will be necessitated with potential investors to determine their attitude to these matters.

To clarify the current position, the RBZ has recently committed US$76 million of treasury bills and other payments in writing, but they have not yet been received in full by the Company. The interest rates and tenure are compatible with treasury bill issues on the African continent outside of South Africa. The acceptance to the market of the Zimbabwe treasury bills will depend on their credibility and all Zimbabwe should be motivated to witness their success, even the detractors mentioned above, as this is in the best interest of the nation. There is still more negotiation to come on interest and possibly discount implications. The Group has no intention of negotiating in the public domain and will not do so. These matters are sensitive. There is also a debtor related to this matter from which the Group also seeks a recovery. All in all, the Group is within 90 per cent of achieving its targeted receipt. Put differently the outstanding sum to be negotiated represents less than five per cent of Group gross assets. It is interesting to note that based on the agreement negotiated in good faith, the sum due to Meikles is now in excess of US$90 million due to interest accruing from the passage of time. Noise made by the detractors has not been helpful to the conclusion of this matter.

It is recorded that schedules presented to Parliament on the extent of RBZ's indebtedness to third parties, is completely inaccurate insofar as the sum owing to Meikles is concerned. This comment is made in the knowledge that whoever was responsible for advising Parliament of the sum due to Meikles failed to provide Parliament with an accurate position on the matter.

The sum finalized to date will ensure that all short term borrowings in Meikles as a Company will be eliminated or matched with an appropriate deposit. However, the strategy announced to Shareholders, of which the ZSE Committee is fully aware and which was aimed at further expansion in the subsidiaries, the creation of further Shareholder value, the introduction of more investor capital and possibly to even list one subsidiary on the ZSE, are on hold for the time being, due to present uncertainty created by the detractors. This strategy would have been beneficial to anyone interested in ensuring the well-being of Meikles in Zimbabwe and in ensuring the success of the economic future of the nation.

There are now too many bees swarming around the Meikles honeypot. Some of them have negative agendas, which in the end will only damage Meikles, the Securities and Exchange Commission, the ZSE, certain individuals and above all Zimbabwe as a nation in its search for further investment.

JRT Moxon


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