Zimbabwe: Disposal of Hotel Boosts Meikles

27 August 2020

Diversified hospitality group, Meikles Limited's profit for the year to March 31, 2020 surged 336 percent to $1,4 billion compared to $320,6 million achieved in the prior year boosted by the disposal of Meikles Hotel.

Executive chairman Mr John Moxon, said growth in profit for the year was buoyed by a $118,7 million profit on disposal of the Harare hotel.

The disposal of Meikles Hotel was completed at the end of February 2020 and control was transferred to the buyer in March 2020.

Total comprehensive income for the year was $1,1 billion from $561,4 million last year, of which $790,8 million was attributable to the owners of the parent firm with the remaining balance of $340,7 million being for minority shareholders.

Group revenue for continuing operations grew 6 percent to $8,8 billion from $8,3 billion in the prior year.

The supermarkets division trading as TM Pick n Pay recorded a 2 percent increase in revenue.

Sales volume declined by 22 percent due to diminishing customer disposable income over the period.

Profit after tax went up to $674,8 million from a loss of $21 million in the previous year.

"Profit growth was achieved through a focussed approach to margin and operating expenditure control.

"The profit after tax was after deducting exchange losses of $380,6 million. These exchange losses arose from foreign currency denominated liabilities (legacy debt) accumulated prior to introduction of local currency on 22 February 2019," said Mr Moxon.

Legacy debt, however, reduced to US$2,23 million at 31 March 2020 from US$13,3 million at the beginning of the financial year.

According to the group, the payment of legacy debt was funded from internally generated funds.

After year-end, US$600 000 was paid, leaving the outstanding balance at US$1,63 million.

In addition, $1,63 million was remitted to the Reserve Bank of Zimbabwe (RBZ) to complete all processes according to the apex bank's guidelines on blocked funds or "legacy debt" contained in Exchange Control Directive RU28 dated 21 February 2019 and Exchange Control Circular No 8 of 24 July 2019.

The agriculture division recorded a 52 percent decline in after tax profit of $157,2 million as a result of the hailstorm of January 2019, Cyclone Idai in March 2019 as well as very dry and hot September to November 2019 period that affected tea production and ensuing season's macadamia crop.

Profit after tax from continuing operations for the hospitality division increased to $184,7 million from $72,5 million in the previous year.

The refurbishment of The Victoria Falls Hotel was due to commence in April 2020 but has been disrupted by the outbreak of the Covid-19 pandemic. The hotel closed in March 2020 when international travel and tourism stopped as countries implemented travel restrictions and lockdowns to contain the spread of the corona virus.

Going forward, the Covid-19 pandemic and it's effects are posing uncertainties for businesses across sectors.

Mr Moxon indicated that the group will continue with its financial strategy and is well placed to support long term objectives.

The group's profit for the current financial year is already ahead of expectations despite the absence of income from the hospitality side.

Meikles declared a dividend of 42,5 cents a share bringing the total dividend for the year to 60 cents.

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