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Mr Moxon

Business Reporter
Meikles Limited is considering restructuring some of its subsidiaries in the near future as the group considers exploring more local and regional opportunities.

This came after the company was invited by the Government of the Democratic Republic of Congo to discuss possible future investments in agriculture, hospitality and retail.

Meikles is a diversified group with interests in mining, hospitality, agriculture and retail.

Meikles Limited chairman Mr John Moxon said the group will look at local and regional ventures after the hospitality subsidiary registered a 5 percent growth in revenue to $16,4 million for the year ended March 31, 2015.

“Recently the group was invited by the government of the Democratic Republic of Congo to discuss potential investment and co-operation opportunities between DRC and Meikles in the areas of agriculture, hospitality and retail,” said Mr Moxon.

As the local trading environment continues to be tight, most companies have started exploring new markets and opportunities in the region to increase prospects. On financial performance for the year ended March 31, turnover increased 8 percent with all segments contributing to the increase except for agriculture, which was adversely affected by the decrease in world tea commodity prices.

Mr Moxon said the increased turnover suggests growth in market share, a key objective that is expected to continue in the 2016 financial year, particularly in the retail segments.

Renovations and expansion of group properties and operations during the period increased depreciation costs.

Despite the increase in revenue, the group made a loss of $34,5 million down from a profit of $37,2 million in the prior year.

Employee costs relative to turnover for the period under review increased due to the need to employ personnel and develop their skills prior to their ultimate placement.

Mr Moxon said interest charges for the period remained at unacceptable levels, and reducing them will depend on the timing of the recovery of the outstanding RBZ debt.

The group experienced currency exchange losses on its investment in South Africa due to the devaluation of the South African rand against the US dollar.

During the period, Meikles Stores and Meikles Mega Market incurred substantial restructuring expenditure including regrettable but necessary reductions in employee numbers.

“This was partly a result of the group being unable to access the debt due by the RBZ within the expected time frame, which meant the segment was unable to secure adequate investment in inventory and the resultant momentum,” said Mr Moxon.

He said the group expects to progressively overcome this problem in the forthcoming financial year, and believes Stores and MMM are poised for substantial expansion and a return to profitability.

The group recorded growth in turnover in the supermarkets business, hotels and the wholesaling business.

Turnover declines were, however, recorded in the agriculture and the departmental stores business.

At EBITDA level supermarkets came down to $9,3 million from $10,9 million, hotels increased to $1,9 million from $1,2 million, agriculture was in a loss position of $0,1 million from a positive position of $2,9 million.

The departmental stores and the wholesaling business increased their EBITDA losses to $3,3 million and $2,4 million from $2,1 million and $0,4 million respectively.

Overall EBITDA was at $0,5 million down from $7,8 million prior year comparative.

On treasury bills the group will enter into agreements with different stakeholders to sell treasury bills to the nominal value of about $38 million leaving the company with no further bills to put on the market.