Meikles Limited releases its half year financial results for the period ended 30 September 2014. Below are excerpts from the Chairman’s Statement:

Chairman’s Statement

The requirements for disclosure to Shareholders are set out in this report. Shareholders are invited to examine the disclosures.

Group trading was generally within the control of management, with the exception of Tanganda, where despite an excellent volume of tea produced in the past season, the company suffered from a fall in international tea prices of 24%, relative to the average achieved in the previous year. Depreciation went up by 53% to $4.4 million, while occupancy costs and employee costs have increased by 11% to $10 million and 7% to $23.2 million respectively. These increases are due to the substantial Group expansion and renovation projects that have been undertaken in all divisions. The Group has not yet had an opportunity to benefit fully from these projects. The turnover for the quarter to September however has exceeded that of the quarter to June by 6%, the main drivers being TM Supermarkets that grew by 8%, hotels by 36% and Mega Mart by 21%. Stores declined by 38%, but this decline was largely expected due to rationalization undertaken by the division. Tanganda reduced by 22% relative to the previous year. TM Supermarkets have traded in two new supermarkets for part of this period, but have also ceased operating in one supermarket following a dispute with the owner of the premises.

Year on year turnover for the six months, although not strictly comparable with the previous period, did increase by 3.1%, with positive contributions to growth from all divisions other than Stores.

Shareholders will note that total borrowings reduced by US$6.8 million, but will also note that cash balances reduced. The reduction in cash balances was mostly due to TM Supermarkets expenditure relating to renovations and expansion.

Outlook

Shareholders will be pleased to learn that October turnover in TM Supermarkets relative to the previous financial year, grew by over 11% and that November is expected to exceed this rate of growth in comparison with November of the previous year. Hotels grew by 4% in October relative to the previous year. Combined Retail division turnover does not have comparative figures for the previous financial year, but Mega Mart continues to grow month on month.

Tanganda is beginning to benefit following the very recent commissioning of new packing machinery and Shareholders are advised that acceptance by the International market of the first coffee crop following plantation development in recent years has been very encouraging.

The Group Guard Service division continues to grow.

Approvals have now been received from the Reserve Bank of Zimbabwe and the Ministry of Youth, Indigenisation and Economic Empowerment for the participation of our foreign partners in gold mining in the Matabeleland area. It is expected that agreements will be finalised in the foreseeable future with our partners, so that this division will progress as outlined to Shareholders in previous releases and reports. Shareholders will be advised of developments as they progress…

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