Meikles posts $37m profit

via Meikles posts $37m profit | The Herald 2 July 2014 by Business Reporter
Listed diversified group, Meikles Limited posted an after tax profit of $37,1 million for the full year to March 2014 from $6,5 million the prior year largely due to a huge jump in non-trading income.
Non-trading income for the period rose to $48,8 million during the period under review from $9,7 million last year.

Group revenue was 1,8 percent lower than the prior period largely due to lower turnover from its retail and agricultural subsidiaries while borrowing increased after the Group secured funding for expansion and refurbishments in the supermarket and hotel business and substantial plantation development

Basic earnings per share rose to 13,56c from 0,75c a year earlier. The group presented unaudited results for the period while audited results were expected to be presented at the end of this month.

Group chairman Mr John Moxon said the release of the unaudited results, which was sanctioned by the Zimbabwe Stock Exchange, was precipitated by the need to resolve the issue of the group’s deposit held by the Reserve Bank of Zimbabwe.

“The resolution of the deposit held at the Reserve Bank of Zimbabwe is the most critical factor affecting these results.

“The resolution of this matter will influence the audited results, in terms of the composition of the balance sheet and in the disclosure of post balance sheet events,” he said.

Mr Moxon said intense negotiations with the Ministry of Finance and Economic Planning were in progress with the intention being to facilitate access to the fund by the end of the month.

“All parties to the discussion believe that this timetable is realistic. The resolution will be based on the company being in receipt of Treasury Bills, the terms of which are to be acceptable at face value to the market.

“A number of Treasury Bills have already been given to the Company and efforts are underway to test their marketability in their present form.

According to Mr Moxon the group would have no net borrowings if it received all its funds, which will place it on a strong platform for the future.

“We are pleased with the progress on securing access to our funds and this development is exciting for the entire group.

“The receipts has potential to make a substantial contribution to the Nation, both through the group’s own activities and the corporate social responsibility programmes through the Meikles Foundation where substantial activities are underway for the benefit of the community,“ he said.

In terms of performance, TM supermarket‘s turnover fell to $334 million from $336 million although customer count throughout the store footprint increased by 8 percent compared to the prior year.

The store portfolio increased from 49 in March 2013 to 53 branches during the period under review with the company securing four new sited in prominent areas in the second half of the year, which increased the subsidiary’s trading area by 10 percent to 55 000 square metres.

“Their impact on turnover and profitability will be felt in the ensuing financial period. 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 percent,” Mr Moxon said.

The Meikles Mega Market stores which started operated in December 2013 contributed just over $2 million in turnover during the period under review and the group said plans were underway to open at least four new stores by the end of the 2015 financial year.

In terms of Meikles Store, Mr Moxon said progress has been made in restructuring the departmental stores while trading area was significantly reduced through reallocation of the space to high growth areas of the group.

This resulted in the reduction of departmental stores from 12 in 2013 financial year to five during the period under review.

Turnover for the division came in at $12,5 million which was lower than $18,5 million achieved during the prior year.

The hotel division recorded a 5 percent increase in revenue to $15,6 million as Revenue per available room at the Meikles and Victoria Falls hotels increased by 2 percent and 15 percent respectively due to high quality product offering following refurbishment of the two hotels and positive sentiment in the country.

Tanganda tea company revenues fell 6 percent to $22,6 million during the period under review as plantation development that started in 2011 neared completion.

“An additional 143ha of coffee, 185 ha of avocados, 164 ha of macadamia and 108 ha of timber were added during the year.

“The company had 268 ha, 375 ha 663 ha and 2373 ha and 1415 ha of coffees, avocados, macadamia, tea and timber plantations respectively as at March 31, 2014,” said Mr Moxon.

Packeted tea production at 2,044 tonnes was almost similar to the 2,093 tonnes produced in the prior year as local demand remained depressed while regional markets particularly Zambia showed growth.

“Subsequently 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 percent compared to the prior year and water sales volumes continue on an upward trend.

In terms of the mining division, Mr Moxon said Meikles Centar Mining was in the process of acquiring 51 percent shareholding in a group of gold mines in Matatebeland area at a cost of $3 million with the transaction awaiting regulatory approval.