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Mr Moxon

Business Reporter
MEIKLES Limited returned to profitability at a pre-tax level in the year to March 2017 from an $18 million loss at the same level last year. The group reported a $5,4 million pre-tax profit and also narrowed its net loss to $746 000 from $22,68 million previously.

The diversified group recorded a marginal increase in revenue of 0,88 percent to $457,6 million driven by an exciting performance of its flagship retail unit, TM/Pick n Pay Supermarkets.

TM/Pick n Pay contributed 90,5 percent to total revenue, which grew five percent to $414 million, defying the negative effect of depressed consumer demand that prevailed during the financial year.

Meikles Limited executive chairman John Moxon in a statement accompanying the group’s financial results on Friday said revenue for other retail segments declined due to adverse trading conditions.

“Expenditure was tightly controlled at all segments and significant ground was covered in reducing operating costs during the period,” said Mr Moxon.

Net operating costs for the group declined by 2 percent relative to the prior year, translating to a net $7,8 million reduction in costs, despite an increase in rentals paid by supermarkets following expansion.

Mr Moxon said the initiatives on cost reduction have positioned the group for leaner times the country is experiencing with declining revenue being the norm.

He said the group, however, achieved strong earnings before interest, tax, depreciation and amortisation growth, achieved under tough trading conditions. EBITDA increased by $12,6 million from $12,2 million to $24,8 million.

“The turnaround was achieved primarily due to strong EBITDA growth assisted by absence of impairment charges on investment in Mentor Africa Limited as well as reduced losses on discounting Treasury Bills,” said Mr Moxon.

Group borrowings for the year stood at $66,2 million and were $11,8 million lower than the level of $78 million of the prior year.

Consequently, interest paid for the year fell 13 percent to $9,2 million. Mr Moxon said the restructuring of short-term loans to medium-term facilities is in progress.

Total assets increased to $282,7 million from $281,1 million in the previous year. Net cash generated from operations during the period rose to $30,8 million from $20,2 million previously.

On segments, the agriculture division generated EBITDA of $6,1 million compared to $255,000 of the previous inspite of revenue declining six percent to $21,2 million due to a 20 percent fall in bulk tea exports.

The hospitality division recorded a seven percent decline in revenue to $14,7 million owing to a decline in room occupancy and average room rates in Harare.

The flagship Meikles Hotel’s room occupancy and average daily rate declined 3,41 percent and 13 percent on prior year resulting in a 20 percent decline in revenue per available room.

Departmental stores and the Meikles Mega Market divisions also recorded a decline in revenue in the year. Mr Moxon said the group closed the year with Treasury Bills amounting to $3,024 million from $11,1 million of the prior year.

He also said the company has reached an agreement with the Government over a Reserve Bank of Zimbabwe debt which has been outstanding for two decades. “The sum due to the company together with accrued interest amounted to $42,6 million as at September 30, 2016.

“Although the basis of the agreement has been reached, Government has not yet completed the necessary documentation to conclude the formalities relevant to the agreement,” he added.