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 2012 and the corresponding period in the previous year.
Annual General Meeting and Extraordinary Genaral Meeting
The Company held its Annual General Meeting on 15 August 2012 and all the resolutions relating to the adoption of the financial statements for the year ended 31 March 2012, the re-appointment of directors who retired by rotation and offered themselves for re-election, the approval of auditors’ fees and their re-appointment for the ensuing year and the ratification of directors’ fees, were all passed.
The Extraordinary General Meeting also held on 15 August 2012 approved the resolution authorizing the Company to provide financial assistance to its employees for purposes of acquiring shares in the Company.
Review of operations
The Group turnover for the quarter to 30 June 2012 was up 15% to $89 million compared to the same period in 2011. Growth in turnover was registered in TM Supermarkets (“TM”) and Tanganda. TM witnessed the opening of the first Pick n Pay branch in Zimbabwe in late June 2012. The new branch has been well received by customers and has done exceptionally well to date.
For the quarter , Group weighted average gross margins decreased from 22% to 21% largely as a result of mark downs of slow moving stocks in our Stores division, a matter reported on in our Chairman’s statement dated 11 June 2012. We are giving greater focus to high margin areas and product procurement. In this regard, the gross margins in the month of July 2012 surpassed those of the comparative period in 2011.
In TM, we are in the process of refurbishing more branches. By end of the financial year, we expect to have refurbished 5 more branches of which 3 will be branded Pick n Pay and 2 would continue with the TM brand. We have seen a significant uplift in turnover in our most recently refurbished branch and that trend is set to continue as we complete the refurbishment of more branches.
The Meikles Hotel is currently undergoing a refurbishment and the North Wing with 135 rooms has been closed since February 2012, impacting on revenue growth as expected.
Extensive renovations for the Victoria Falls Hotel will commence in November 2012. The Hotel is gearing up for the United Nations World Tourism Organisation Assembly that will take place in August 2013.
Outlook for the Zimbabwe hotels is positive given the increased tourist activity in the Victoria Falls area. The planned referendum and elections that have generated a lot of interest from outside our borders will likely lead to increased traffic in Harare, benefiting our hotel and the hospitality industry as a whole.
Credit has been slowed down in Stores in view of the state of the economy which is characterized by low liquidity, low disposable incomes and hence a growing trend of nonperforming loans. The product range in Stores has been completely revamped and the model is quickly evolving, making it more appealing to our customers. The outlook for this sector very much depends on the confidence in the economic and political environment, and a growth in disposable incomes. However, on a positive note, we will be shortly launching our Meikles branded range of clothing.
Tanganda continues to improve aided by an increase in packed tea prices. The thrust remains of maximizing the production of packed tea. On the plantation development, 163 hectares of macadamia are now planted of which 90 are now in production although the yields are still low as the plants are immature; 75 hectares of avocadoes and 125 hectares of coffee have now been planted. The estates’ rainfall pattern has been erratic with very little winter rains. We have been affected yet again by frost, but not as severely as in the previous year. 1000 hectares were affected and we will be able to fully substantiate the potential loss at the end of the winter season.
The outlook for bulk tea production depends on the summer rainfall season. The forecast thus far is that we will have a normal rainfall season.
The Group is expected to benefit from its investment in Mentor Africa Limited. Improved returns are expected from the Supermarkets and the Hotels while subdued performance is expected from the Stores and the agricultural operations, the latter being dependant on the forthcoming rains. Group revenues are expected to maintain a steady increase, while margins should continue to improve. We have still to recover our deposit from the Reserve Bank of Zimbabwe. We do anticipate a recovery, the effect of which will give us a very strong balance sheet and a substantial saving on interest expense. The prospects of this diversified Group remain positive going into the future.
Issued on 16 August 2012
- 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 16 August 2012.