Meikles records strong annual earnings despite tough operating environment

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  • Revenue from continuing operations grew by 6% from ZWL 8.3 billion in 2019 to ZWL 8.8 billion in 2020
  • Profit after tax from retail operations grew to ZWL 674.8 million from a loss of ZWL 21 million in the previous year
  • “The Group’s profit performance to date for the new financial year is ahead of expectations, but there are uncertainties going forward in terms of risk” – Moxon

Harare – Hospitality and retail group, Meikles Limited was once again able to record a “strong” financial performance in the year ended 31 March 2020. Despite a tough operating environment characterised by liquidity constraints and the unanticipated impact of Covid-19 in the latter part of the financial year, revenue from continuing operations grew by 6% from ZWL 8.3 billion in 2019 to ZWL 8.8 billion in the year under review.

Profit for the year grew by 336% from ZWL 320.6 million in prior year to ZWL 1.4 billion largely boosted by ZWL 118.7 million profit on disposal of Meikles Hotel.

“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,” Executive Chairman John Moxon said in statement accompanying the financials.

The Group’s operations span across retail operations through TM Pick n Pay Supermarkets, agriculture operations under Tanganda Tea Company Limited, Hospitality, Properties and Security Services.

Giving a highlight of segmental contributions to the Group’s financial performance, Moxon said revenue from supermarkets increased by 2% over the previous year in inflation adjusted terms while sales volume declined by 22% due to diminishing customer disposable income over the period.

Profit after tax grew to ZWL 674.8 million from a loss of ZWL 21 million in the previous year.

“Profit growth was achieved through a focussed approach to margin and operating expenditure control,” Moxon said adding that the profit after tax was after deducting exchange losses of ZWL 380.6 million.

“These exchange losses arose from foreign currency denominated liabilities (legacy debt) accumulated prior to introduction of local currency on 22 February 2019.

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

Meanwhile, the agriculture operations faced a myriad of challenges during the period under review including Cyclone Idai in March 2019, a very dry and hot September to November 2019 period which affected tea production and ensuing season’s macademia crop.

Reflecting the adverse weather conditions, tea production of 8 319 tonnes was 18% lower than prior production recorded at 10 171 tonnes.

However, export earnings from macadamia nuts, avocadoes and coffee grew by 78% 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% up from 25% in the prior year.

“Contribution of the high value crops to the Company’s export earnings is expected to rise to 60% by March 2022 as the bulk of them reach maturity,” Moxon said.

Profit after tax from the Hospitality segment continuing operations increased to ZWL 184.7 million in the current year from ZWL 72.5 million in the previous year.

Moxon said that the refurbishment of The Victoria Falls Hotel was due to commence in April 2020 but has been disrupted by the outbreak of the COVID-19 pandemic.

The hotel was forced to close in March 2020 when international travel and tourism stopped as countries implemented travel restrictions and lockdowns to contain the spread of the corona virus.

On the outlook, Moxon said that despite the absence of income from Hospitality together with its continuing cost commitments, the Group’s profit performance to date for the new financial year is ahead of expectations, but there are uncertainties going forward in terms of risk.

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