Meikles Limited profit before tax up 225% to end the year at US$19.2 million.

Read the Meikles Limited 2018 annual report

Meikles Limited, listed on the Zimbabwe Stock Exchange under the share code MEIK.zw and operates six business segments; hospitality, retail stores which include department stores, supermarkets and wholesalers, and agricultural, financial services and security  and is primarily invested in the agriculture, hotels and retail sector.

Meikles Limited’s EBITDA soared by 100% to perch at US$24.8 million in 1 year ending March 2017 and improved by US$16.3 million for the company’s lastest business year to attain a closing figure of US$41.1 million.  Revenue grew by US$ 4 million up from US$453.6 million in 2016 and a 1 935% increase of that US$ 4 million led to revenue being recorded at US$534.9 million for the latest year of business for Meikles Limited. Profit before tax went up 225% to end the year at US$19.2 million. The company’s supermarkets and agriculture investments grew by 45% and 168.9% in EBITDA  respectively. A 227.8% rise characterised hospitality’s EBITDA. The company might be seeking funding from cash generating opportunities.

• Meikles Limited on AfricanFinancials.com

The following is an excerpt from their Chairman’s statement:

Group earnings before interest, taxation, depreciation, and amortisation (“EBITDA”) have grown from US$12.2 million in the financial year to 31 March 2016 to US$24.8 million in the financial year to 31 March 2017 to US$41.1 million in the year under review.

Revenue has grown from US$453.6 million in 2016 to US$457.6 million in 2017 to US$534.9 million in the year under review.

Segmental contributions to the Group’s financial performance is set out in note 6.1 of these audited financial statements.

Profit before taxation has grown by 225 percent to US$19.2 million (2017 US$5.9 million).

REVIEW OF OPERATIONS

Supermarkets – trading as TM Pick n Pay EBITDA grew by 45 percent to US$34.5 million. The segment traded in 55 stores. In the fourthcoming financial year, the segment plans to open a number of new stores and there will be further upgrades of existing stores. Consistent growth is anticipated in the coming year.

The segment has no borrowings and has the resources to implement future growth.

Agriculture

EBITDA grew to US$10.3 million from US$6.1 million in the previous year.

The quantum of tea harvested on the Tanganda Estates was an alltime record on a calculated comparative basis.

Selling prices for tea, avocados and macadamias were greater than in the previous year.

The avocado and macadamia areas planted over the last years are significant in size, but remain largely immature. Although volumes of both crops were significantly greater in the year under review than in the previous year, the process to maturity on the existing plantations will take another three years.

Once maturity is reached, production in these areas will exceed current production levels by a very significant tonnage. Sales and profit contribution are expected to grow over the next three years to a level where the historic dependence on tea, both in bulk and in packeted form, will be diminished, not in terms of a reducing tea performance, which is expected to continue to grow in contribution, but by enhanced overall performance following the impact of the new agricultural products.

Tanganda invested in certification by Rainforest Alliance of 706 small scale tea growers. This development will benefit small scale farmers with improved revenues. The development will assist in the conservation of biodiversity and natural resources for the benefit of both present and future generations.

Hospitality

EBITDA increased to US$4.1 million in the current year from US$1.8 million in the previous year.

Sales and profits include the entire results of Meikles Hotel and only 50 percent of The Victoria Falls Hotel, where the segment is in equal partnership with a third party.

A refurbishment programme for The Victoria Falls Hotel will commence before the end of 2018. However, of greater significance a project to enlarge the hotel with additional accommodation is currently in the initial stages of planning, and implementation is to be expedited.

Both hotels are benefiting from a growth in occupancy during the first months of the new financial year.

Retail and properties

The EBITDA loss in retail at US$4.2 million was almost identical to the loss of US$ 4.1 million in the previous year.

This segment was badly affected throughout the year by the absence of funds due to the Group from Government, a position which is still prevalent in the early months of the new financial year.

All Mega Market and M Stores have been permanently closed, partly in the latter months of the year under review and partly in the early months of the new financial year.

Management has successfully reduced expenditures, so going forward losses are reducing.

With the knowledge that funding is to be fourthcoming, the segment will focus on a retail offering that is compatible with the forward requirements of a smaller but more specialised retail offering.

The commercial real estate properties owned by the Group are very well located in the major city centres. These buildings are currently being analysed for redevelopment along a similar concept to that achieved at Village Walk, Borrowdale. It is anticipated that these projects, when completed will generate substantial rental revenue for the Group, together with growth in capital values.

OUTLOOK

Financial performance for the first four months of the financial year to 31 March 2019 have resulted in a growth in turnover of 27 percent to US$213.2 million (previous year US$168.2 million), an improvement in EBITDA of 113 percent to US$20.4 million (previous year US$9.6 million) and an increase in profit before taxation to US$14.1 million (previous year US$3.0 million).

Overall borrowings net of cash and bank balances as at 31 July 2018 were US$21.1 million (31 March 2018 US$39.1 million).

Negotiations are in progress with a banking institution to convert present short term borrowings to medium term loans. This will result in a rationalisation of our relationships with banking institutions. The process is expected to be completed by the end of December 2018.

With anticipated receipt of funds from Government, the Group will be in a position of financial strength. However, the Company may in addition seek funding from further cash generating opportunities, which will become available in the future months.