LISTED group, Meikles Limited, has unveiled plans to venture into power generation and intends to use part of the US$20 million proceeds from the proposed disposal of Meikles Hotel to finance the project.
A United Arab Emirates-based company, Albwardy Investment, recently announced that it was finalising purchase of one of Zimbabwe’s prestigious hotels, the Meikles Hotel in Harare. In an unaudited financial statement for the half-year ended 30 September 2019 Meikles executive chairman, Mr John Moxon, said the group was well placed to take advantage of opportunities that may arise as it has a reasonable mix of foreign currency denominated earnings to support its strategies.
“Trading during the first two months of the second half of the group’s financial year reflects the same trends witnessed during the first half. The group requires capital to build internal power generation capacity to ensure agricultural export operations run smoothly through having access to power supply at critical times of crop development and processing,” he said.
“The proceeds from the proposed disposal of Meikles Hotel will assist the Group to promptly construct the power generation plants.”
The diversified group has operations in agriculture, hospitality and retail sectors. During the period under review Meikles recorded profit after tax from continuing operations amounting to ZWL$158,5 million compared to previous year’s ZWL16,1 million. The group’s other comprehensive income amounted to ZWL$336,4 million and was entirely due to upliftment of foreign assets from the exchange rate at the end of March 2019 (ZWL$3,01:US$) to closing exchange rate at September 30, 2019 (ZWL$15,20:US$).
Mr Moxon said their net cash balance after deducting the group’s bank borrowings amounted to ZWL$73,4 million as at 31 March 2019 and net borrowings of ZWL$30,8 million. The group aims to expunge bank loans at the holding company and department stores from operating cash flows before March 2020.
On the retail sector, Mr Moxon revealed that their TM Supermarkets trading as TM and Pick n Pay during the period under review recorded revenue amounting to ZWL$940,9 million compared to previous year’s ZWL$305,6 million.
“The increase in revenue was due to inflation. Units sold declined by 22 percent during the period under review due to shrinking disposable incomes.
“Despite tough trading conditions, specifically supply challenges, the level of stocking in the stores is satisfactory,” he said.
From the agriculture side, revenue grew to ZWL$104,3 million from ZWL$15,7 million achieved during the six months ended September 2018. Bulk tea export sales of 3 669 tonnes were slightly ahead of 3 638 tonnes sold in the comparative period last year. Average international bulk tea export price for the period retreated to US$1,47 per kilogramme from US$1,68/kg in the six months period to September 30, 2018.
“Bulk tea production for the period declined by 25 percent primarily due to the drought and worsened by the inability to irrigate as well as reduced tea factories operating hours because of intermittent electricity supply.
“The volume of Macadamia production grew significantly by 234 percent from 233 tonnes in prior year to 779 tonnes,” said Mr Moxon.
He said during the period under review, 463 tonnes of the top graded crop had been sold at an average price of US$5,04 per kg compared to 374 tonnes sold in prior year at US$5,07 per kg. The volume of avocado production grew by 44 percent from 1 371 tonnes in previous period to 1 908 tonnes in the period to September 2019.
“Average price of US$1,62/kg was 60 percent above US$1,01/kg realised in the previous period. Despite the adverse effects of two hailstorms and Cyclone Idai on the Avocado crop, high world market price this season compensated for low crop grade,” said Mr Moxon.
On continuing hospitality operations, he said during the half-year period under review, revenue grew to ZWL$33,1 million from ZWL$4,4 million achieved during same period last year.
Revenue per available room retreated by 1 percent in US$ terms to US$194. Room occupancy declined to 67,70 percent from 72,56 percent whilst the average daily rate grew by five percent to US$287.
“Profit after tax for the six month’s period was ZWL$26,2 million (previous year: ZWL$1,8 million). Three mock up rooms for refurbishment works at The Victoria Falls Hotel were completed in October 2019. The roll out of the refurbishment is scheduled to commence in January 2020,” he said.
Source – Chronicle