Meikles Limited is forging ahead with its restructuring programme in a move aimed at streamlining the business.
The group will seek shareholder approval to offload some assets at an extraordinary general meeting whose date is yet to be announced.
In a cautionary statement to stakeholders, the group said discussions were still in progress over the proposal, which was initially announced last month.
"Further to the cautionary announcement dated June 25, 2024, the directors of Meikles Limited wish to advise shareholders that discussions on the disposal of certain assets are still in progress which, if successfully concluded, may have a material effect on the company's shares.
"Accordingly, shareholders are advised to continue exercising caution when dealing in the company's securities until a full announcement is made," said company secretary Mr Thabani Mpofu.
In the initial announcement, the company's chairman, Mr John Moxon, revealed that the potential transaction could be classified as a "Category 1" deal under stringent regulatory guidelines.
A "Category 1" transaction, as defined by Section 253 of SI134/2019, involves a deal where the aggregate percentage ratio reaches or exceeds 30 percent. This ratio is calculated by comparing the transaction's value to the company's market capitalisation and considering potential share dilution.
The Zimbabwe Stock Exchange (ZSE) listed Meikles, renowned for its diverse business interests, derives the bulk of its revenue, approximately 97 percent, from its flagship supermarket division, TM Pick n Pay.
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The remaining operations encompass the hotel business, properties, and security services.
The company has a history of asset disposal. Notably, the sale of its iconic Meikles Hotel to Dubai-based Albwardy Investments for US$20 million in 2019 is a good example. The asset has since rebranded to Hyatt Regency Harare the Meikles Hotel.
In 2021, the group demerged agricultural concern, Tanganda Tea Company, resulting in its relisting on the ZSE on February 3, 2022
Meikles' decision to divest assets comes as the company navigates the challenging environment in Zimbabwe.
During the financial year 2023, group revenue grew to 102 percent to $10,4 trillion. The gross profit margin was maintained at 22,8 percent, the same as last year, despite the exchange rate-induced volatility in the prices of goods.
Group net operating costs increased by 121 percent, reflecting the impact of the depreciating exchange rate.
"Most prices, including wages and salaries, were pegged in USD and converted to local currency at exchange rates prevailing at settlement," said Mr Moxon.
Profit after tax increased by 430 percent to $469,5 billion from $88,6 billion the previous year.
Other comprehensive income was $359,6 billion, up from $22,4 billion last year due to the exchange rate movement, which affected the translation of foreign subsidiaries.
