Meikles in bid to reduce debt

September. The group has expressed concern that the loss position had not changed materially in the third quarter to December.
Meikles attributed the poor performance in three months to December to low levels of liquidity and disposable incomes in the country.

“The group borrowings at approximately US$62 million have remained high and options are being explored to reduce the debt to manageable levels,” said the company.
Group turnover increased by 29 percent in the nine months to December, albeit significantly lower than the 36 percent increase achieved in the 12 months to March 2010. But, group performance could benefit from the US$13 million fresh capital injection into TM Supermarkets by Pick ‘n’ Pay which raised its stake in TM from 25 percent to 49 percent.

Meikles said the funding would be used for refurbishment of the supermarket chain and its branch network expansion in what should improve margins.
The supermarket chain’s performance has been improving since half-year. Year-on-year turnover has increased by 30 percent. At TM Stores, turnover was 59 percent year-on-year but Meikles contends the performance was below the targeted levels.

Low disposable incomes and liquidity constraints in the economy, said Meikles, affected performance in the Stores division.
The Stores trading model was changed from maximising margins to increase volumes as a way to impact positively on profits.
While earnings before interest charges, depreciation and tax have improved, the Stores will report a loss for the year ending March, mainly due to the interest burden on the business.

Hotels registered improvement in the quarter to December, especially Victoria Falls Hotel where occupancy averaged 57 percent.
Meikles Hotel occupancy closed the year at 49 percent while Cape Grace was at 66 percent with revenue per available room increased by 43 percent, 10 percent and 5 percent, respectively.
Meikles Limited said it would start refurbishment of Meikles Hotel next month and that would continue for the next seven months.

Generally, hotels are trading profitably and the group expects the division to report a profit in the full year to March 2012. But the group anticipates a loss at Tanganda in the full year to March after a combination of factors disrupted operations.

Late and low rainfall, frostbite and a heat wave affected tea plantations. The heat wave destroyed about 50 percent of Macadamia.
These factors have driven the company into a loss for the year ending March 2012.
But the plantation development is continuing. Post the half-year 32 hectares coffee, 40ha of macadamia and 34ha of avocados were planted.

More land preparation is taking place while seedlings for coffee, avocados and macadamia for the next planting cycle have been acquired and are in the nursery.
Going forward, the investment in TM Supermarkets will go a long way in restoring its status as the retailer of choice in Zimbabwe. Other operations are also expected to do well in the near future.