KML resolves to amend financials

It was felt certain sections of the chairman’s statement were preemptive and prejudicial to the ongoing court cases in South Africa.

The resolution for amendments was adopted after a long heated debate on the issues during the company’s Annual General Meeting.

Amendments to the accounts are in respect of litigation between KML and two South African firms Mentor Holdings and Coolbay Investments.

Sources said as it appeared there would be no unanimity on how the issue of provisions made by Mr Masunda should be treated, and a poll was called and the majority voted in favour.

The contentious issue related to KML funds amounting to US$22 million transferred to South Africa, purportedly, to be invested, which are subject to litigation between KML and the two South African firms, Mentor Holdings and Coolbay Investments.

This is as KML attempts to recover the funds, which also resulted in the specification of former chairman John Moxon on allegations of externalisation.

Mr Masunda had in March made provisions for the funds in the company’s full year financials to December 2008, as recovering them looked increasingly uncertain.

The provisions had been made at the request of the majority shareholder (at 42,9 percent) and Moxon.

There also is the issue of the transfer of 26 percent shareholding of Cape Grace Investments, which owns Cape Grace Hotel and rights to head lease the Cape Grace, which was allotted to a trustee in contravention of the South African company law. The consideration price for the transaction was also not paid.

The transaction followed an agreement between Moxon and Mentor Holdings for a put option agreement for the sale of Cape Grace Hotel, however without approval from other directors.

This matter is also subject to litigation in the South African courts.

It is against this background that it appeared KML might not be able to recover the value of such investments, that Mr Masunda had made full provisions in the group’s financial statements.

Shareholders voted for reversal of the provisions, as that action was prejudicial to ongoing litigation.

"The major issue, which attracted a lot of debate, was the approval of accounts and certain things carried in the chairman’s statement published on the 27th of March this year.

"This was presented with amendments proposed by Moxon and the Moxon family, who hold a combined 42.9 percent in KML.

"Shareholders are seeking amendments to these. Shareholders feel there are certain things covered in the chairman’s statement, which are prejudicial to the outcome of the litigation," said Mr Masunda.

He said shareholders and directors agreed that the company’s auditors KPMG and the firm’s lawyers Gill, Godlonton and Gerrans to revisit the issues to establish their real implications.

The action on recommendations would be carried in a statement to be published by the chairman, Mr Masunda in the near future.

Analysts who attended the AGM said the meeting side-stepped real shareholder issues such as what progress had been made towards ensuring that KML resumes trading on the stock market.

KML was suspended from trading on the Zimbabwe Stock Exchange and the London Stock Exchange after it had been specified.

Econometer Global Capital’s Takunda Mugaga said the AGM was stillborn.

"The AGM was tantamount to a typical talk show, as it did not address real shareholder issues. KML is still suspended on ZSE and LSE, but nothing about the issue of shareholder value was discussed," he said.