Meikles cuts legacy debt by 83 percent

By Oliver Kazunga

Diversified listed concern, Meikles Limited, has reduced its legacy debt by 83 percent to US$2,23 million at the close of the financial year ended March 31, 2020 from US$13,3 million at the beginning of the year under review.

Meikles Limited, which has operations in retail, agriculture, hospitality, properties and security services, said the legacy liabilities were funded from internally generated resources.

In a statement accompanying financial results for the period under review, the group said:

“Going forward, there will be no exchange losses as legacy debt exposure has now been eliminated.

“Legacy debt reduced to US$2,23 million at March 31, 2020 from US$13,3 million at the beginning of the financial year.”

The group said after year-end, US$0,6 million was paid leaving the outstanding balance at US$1,63 million. In addition, ZWL$1,63 million was remitted to the Reserve Bank of Zimbabwe (RBZ) to complete all processes according to the Central Bank’s guidelines on blocked funds or legacy debt contained in Exchange Control directive dated February 21, 2019 and Exchange Control Circular Number 8 of July 24, 2019.

“Accordingly, it is anticipated that RBZ will issue an instrument that will settle US$1,63 million without further costs to the segment (supermarket),” it said.

During the period under review, Meikles said it delivered strong financial results in a tough operating environment. “The group’s revenue for continuing operations grew by six percent from ZWL$8,3 billion in 2019 to ZWL$8,8 billion in the year under review.

“Profit for the year grew from ZWL$320,6 million in prior year to ZWL$1,4 billion,” said the group.

It attributed growth in profit for the year as having been boosted by ZWL$118,7 million profit on disposal of Meikles Hotel. The disposal of the hotel was completed in February this year. Total comprehensive income for the year was ZWL$1,1 billion (2019: ZWL$561,4 million), of which ZWL$790,8 million was attributable to the owners of the parent with the remaining balance of ZWL$340,7 million being for minority shareholders.

In terms of segmental contributions to the group’s financial performance, the supermarket segment trading as TM Pick n Pay recorded a profit after tax amounting to ZWL$674,8 million from a loss of ZWL$21 million in the previous year.

Meikles said the profit after tax recorded during the period under review was after deducting exchange losses of ZWL$380,6 million. The exchange losses emanated from foreign currency denominated legacy debt accumulated prior to the introduction of local currency last year.

Profit for the agriculture segment during the period under review was ZWL$157,2 million (2019: ZWL$332 million). “The hailstorm of January 2019, Cyclone Idai in March 2019 as well as very dry and hot September to November 2019 period affected our tea production and ensuing season’s macadamia crop.

“The company’s annual tea production of 8 319 tonnes (2019: 10 171 tonnes) was reflective of these adverse weather conditions.

“International tea prices weakened by 14pc from US$1,64 per kilogramme in prior year to US$1,44 per kg in the year ended 31 March 2020 due to increased supply of tea by Kenya, which has not been matched by corresponding world demand.”

Meikles said the much-needed RBZ authorisation to increase promotional spend in South Africa has been secured. It is believed that this will help to support market penetration efforts to grow packed tea exports.

“Export earnings from macadamia nuts, avocadoes and coffee grew by 78 percent from US$ 4,5 million in prior year to US$8 million in the year ended 31 March 2020. As a percentage of total exports, these three crops contributed 43 percent up from 25 percent in the prior year. Contribution of the high value crops to the company’s export earnings is expected to rise to 60 percent by March 2022 as the bulk of them reach maturity,” said Meikles.

It said in volume terms, macadamia and avocado export sales grew by 129 percent and 39 percent respectively. And to mitigate the inefficiencies caused by power shortages in the country, Meikles has embarked on a 7,5MW solar project covering all estates and Mutare factory. “Phases 1 to 3 of the project covering Ratelshoek, Tingamira and Jersey estates are already under implementation. Ratelshoek’s 1,8 Mega Watt solar plant is expected to be completed by September 2020,” it said. The Chronicle