This Interim Management Statement is issued by Meikles Limited in accordance with the UK Listing Authority’s Disclosure and Transparency Rules. Unless stated otherwise, key trends and figures highlighted below refer to the three months ended 30 June 2013 and the corresponding period in the previous financial year.
Zimbabwe approved a new constitution in March 2013 followed by harmonized elections on 31 July 2013. The period leading up to and after these legislative processes was largely peaceful and did not disrupt our businesses as was the case in previous harmonized elections. However, business across the board slowed down, while these processes were underway. The markets became more illiquid; turnover on the stock market reduced, bank deposits decreased and it was reported by Confederation of Zimbabwe Industries that capacity utilisation dropped to 45% from 55% in 2012. The period post the elections is yet to unravel as the country awaits the inauguration of the President and the formation of a new government and cabinet.
Tanganda Tea Company
Tanganda had a good first quarter aided by friendly weather patterns which continued from the end of the last financial year. As a result, tea production was 33% higher than same period in 2012. The company also implemented preventative measures to safeguard the crops from a severe winter and these measures yielded the desired results.
The global average bulk tea prices were 15% up when compared with the corresponding quarter in 2012. The beverage tea sales in the local market slowed down in the first quarter whilst the regional sales in Namibia and Zambia increased. New markets for packeted tea in South Africa, Mozambique and Botswana are being developed. A new state of the art tea packing plant has been ordered to cater for the expanded regional markets and expected increase in local packeted tea volumes.
The young plantations of coffee, macadamia and avocadoes planted in previous periods are doing well. Land preparation continued in the first quarter and further plantings are expected to commence before the end of the second quarter. Purified spring water production has vastly improved and volumes for the quarter were 59% higher than those of the comparative period.
Trading in TM Supermarkets was within expectations for the quarter ended 30 June 2013. Turnover grew by 5% compared to the corresponding period in 2012. Year on year inflation was at 1.87% as at 30 June 2013. The gross margins are similar to those achieved in prior periods.
The branch refurbishment is continuing with work currently underway at the Masvingo, Gweru and Harare CBD branches. The Supermarkets division added two new trading operations in July 2013 bringing its stores portfolio to 51. Apart from the refurbishment of existing branches, at least two new branches will be added to the portfolio by the end of the current financial year.
Thomas Meikle Stores
In TM Stores, the trading remains subdued as reported in previous statements. In spite of the improvement in our stocking and merchandise, the turnover levels are still below sustainable levels due to the challenges in the economic environment characterized by low disposable incomes and absence of credit funding. The company continues to make progress on cost management and achieved a 10% reduction in operating costs during the quarter and, more efforts to reduce costs and stream line the business are currently in progress.
The Hospitality operations registered a 3% decrease in turnover compared to prior period. The legislative processes mentioned earlier affected occupancy levels as the international business travelers and tourists adopted a “wait and see” attitude given experiences of past elections. The UNWTO General Assembly will be taking place from 24 to 29 August 2013 and the country will take this opportunity to showcase its tourist attractions in an environment of peace and tranquility. We therefore expect the occupancy levels to improve in future periods following this conference which is being co-hosted with Zambia.
The refurbishment of the North Wing at the Meikles Hotel will be completed by 31 August 2013. The first phase of the refurbishment at the Victoria Falls Hotel is also nearing completion. At both hotels, the outcome of these refurbishments has surpassed our expectations and created a truly magnificent product which we hope our guests will enjoy.
Funds held on deposit with the Reserve Bank of Zimbabwe (RBZ)
Progress has been made in getting better terms on the funds held on deposit with the RBZ. The discussions are nearing conclusion and will result in a higher interest being accrued on the deposit, with a retrospective implication.
The shareholder agreements pertaining to mining in partnership with Centar were concluded in June 2013 resulting in the formation of a new company, Meikles Centar Mining (Private) Limited. The company has since been licensed by the Zimbabwe Investment Authority and is awaiting other regulatory approvals following which various mining projects will be pursued.
The Group has secured long term funding for all its projects being the refurbishment of the Hotels, the plantation development in Tanganda and the refurbishment and outfitting of new stores in TM Supermarkets. This funding is in line with the Group’s financing policies, previously disclosed to shareholders.
The Group is working on various initiatives to safeguard and improve its performance for the betterment of all stakeholders. We expect the new government to play its part by putting in place policies that promote a conducive economic environment to attract both local and foreign investors.
Issued on 15 August 2013
- The financial information on which this statement is based has not been reviewed and reported on by the Group’s auditors.
- Please note that matters highlighted above may contain forward looking statements which are subject to various risks and uncertainties and other factors, including, but not limited to:
– business conditions.
– political environment
– market related risks.
- A number of these factors are beyond the Group’s control.
- These factors may cause the group’s actual future results, performance or achievements to differ from those expressed or implied.
- Any forward looking statements made are based on the knowledge of the Group as at 15 August 2013.