The Sunday Mail
THERE seems to be a lot of activity at Meikles, especially with the recent announcements that the group will soon be investing in mining assets worth more than US$100 million. Its retail unit, TM Supermarkets, has over the years realised significant investment from South African retail behemoth Pick n Pay, but the deflationary environment seems to be posing serious headwinds to continued investments. To get some answers from what it currently happening at the firm, The Sunday Mail Business recently sent questions to the company’s chairman, Mr John Moxon, for his thoughts.
Q: Meikles recently announced in the unaudited results for the year ended March 31 which will be published at the end of July after the resolution of the deposit that is held by the Reserve Bank of Zimbabwe (RBZ). How much is still being held by the RBZ?
A: The opportunity cost to Meikles incurred over the years from not having access to its funds on deposit at the RBZ is presently being calculated by expert consultants, prior to final agreement between the parties on the amount of sums due to Meikles in addition to sums already received. However, it is anticipated that further sums will exceed US$40 million and this has been disclosed in the unaudited financials published at the beginning of July.
Q: Also how many TB’s and of what value have been issued to the company so far?
A: Meikles has recently received TB’s to the value of approximately US$50 million.
Q: But do you believe that these TB’s will be easily tradeable in the market?
A: The TBs will be tradeable in the market. Perhaps not easily, but provided the parties to the TB’s are proactive, we are confident that Meikles will receive full value.
Q: It seems that TM Supermarkets last year increased its store portfolio to 53 but still recorded a drop in revenues in the period.
What were the reasons for the decline, and, in view of the deflationary environment, are shareholders still confident that there are still positive prospects for the business going forward?
A: TM recorded a small decrease of less than 1 percent in sales, but it recorded an 8 percent increase in the number of customers in its supermarkets.
Average selling prices have decreased, which has been positive for shoppers. Performance on the forward direction to date suggests that TM will progress well in the foreseeable future.
Q: How much has Pick n Pay as a shareholder injected in the local retail business, and are they confident that they will be able to get a decent return on their investment?
A: TM is producing a satisfactory return for its shareholders, both Meikles with fifty one percent (51 percent) of the total equity and Pick n Pay with 49 percent.
The two shareholders on a proportionate basis have over a period funded TM and retained earnings in TM in an amount in excess of US$80 million.
Q: It seems the hotelling side of the business performed relatively well, with both occupancies and RevPAR increasing. What are the prospects for the business this year?
A: Two hotels in the group have been extensively renovated. Victoria Falls is trading exceptionally well. Harare will be more quiet and will look to an improvement in the economy for growth. Other hospitality opportunities may become available to the Group.
Q: How much is Meikles, through its subsidiary Meikles Centar Mining, prepared to invest in local mining assets and why did the Group diversify into this sector, particularly at a time when Government has since pronounced that the mining sector should increasingly come under the control of locals?
A: Meikles will not be funding its mining activities. These activities require substantial funding and all finance required will be raised outside Zimbabwe.
There are many growth opportunities in mining in Zimbabwe. Meikles has indigenous status, so it is a local and well positioned to participate in mining. The Group is presently waiting on Government approvals, which will further investment in mining by over US$100 million.
Q: Is the Group still interested in diamond mining assets and what processes have been followed to date to pursue this initiative?
A: Meikles has no involvement in diamond mining.
Q: In the unaudited financials Meikles announced that Mr David Mills, who was the managing director of TM Supermarkets and was scheduled to retire in August 2014, went on pre-retirement leave in May, while Mr Bisset Chimhini, who was the chief operating officer at TM Supermarkets, and Mrs Belinda Sharples, who was the managing director of Thomas Meikle Stores, left the group in June 2014. It was also noted that the group company secretary, Mr Andrew Lane-Michell, had also left the group, reinforcing already existing market suspicions that the company is undergoing a restructure.
In light of these developments, is Meikles now prepared to concede that it is undertaking a staff restructure?
Q: There is a staff restructure taking place in Meikles. Certain positions have already been filled and replacements for the remaining positions have been identified.
The Group will announce appointments in due course.
