Meikles seeks to defer debt

HARARE - Hospitality and retail group, Meikles Limited (Meikles) says they are in negotiations with a financial institution to convert short-term borrowings to medium-term loans, while awaiting for the release of its funds held by government.

Meikles chairperson John Moxon said the anticipated receipt of funds from government would put the group in a position of financial strength.

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

“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.”

The group said it decided not to account for sums due from government in its financial results for the year ended March 31, 2018 after government failed to honour an agreement to settle it by last month.

Moxon said total payment for government debt will be received by the end of March 2019.

“Government has committed itself to pay the amount due to the company and the sums will be included in the financial statements when the final receipt is confirmed.
The settlement will include an agreement on interest to be paid to the company and will provide for payment to be made progressively in tranches,” he said.

He said the receipt of funds from government will be material to the future direction of the group.

The group’s debt accrued in 1998 from transactions related to the group’s dual listing on the Zimbabwe and the London stock exchanges.

It stood at $25 million in 1998 but shot up to $47 million at the end of 2013 after the inclusion of interest.

The group’s overall borrowings net of cash and bank balances as at July 31, 2018 amounted to $21,1 million compared to $39,1 million in the previous comparable period.

Meanwhile, Meikles’ profit before tax went up 225 percent to $19,22 million during the year ended March 31, 2018, from $5,89 million reported in the previous comparable period.

Revenue was up 16 percent to $534,93 million during the review period compared to $457,62 million achieved in the previous comparable period.

Earnings before interest, taxation, depreciation and amortisation (EBITDA) increased 65 percent to $41,1 million during the review period, compared to $24,8 million in the previous comparable period.

On operations, supermarkets trading as TM Pick n Pay’s EBITDA increased 45 percent to $34,5 million during the review period.

Agricultural operations’ EBITDA increased to $10,3 million compared to $6,1 million in the previous comparable period.

The hospitality sector’s EBITDA advanced to $4,1 million during the review period from $1,8 million in the previous year.

For the retail and properties operations, EBITDA was up at $4,2 million compared to $4,1 million in the previous comparable period.

“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 financial year,” Moxon said.

Meikles sold its financial services operation during the year under review.

The group did not declare any dividend.               

— The Financial Gazette

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