MEIKLES LIMITED
TRADING UPDATE FOR THE FIRST QUARTER
ENDED 30 JUNE 2020
TRADING ENVIRONMENT
The Group’s first quarter to 30 June
2020 was affected by COVID-19. There were occasions when
some stores of the Supermarket segment were closed due to members
of staff having tested positive to the disease. In all such
occurrences, strict action was taken to render the stores safe for
both the staff and the public before reopening. Similar incidences
affected other segments of the Group.
The fixed exchange rate adopted at the end of March 2020, restricted revenue growth for the
Group’s exporting segments. The introduction of the weekly Reuters
based foreign currency auction system to determine the exchange
rate prior to the end of June 2020
bodes well for Group revenue growth.
GROUP QUARTER FINANCIAL HIGHLIGHTS
Local sales are largely contributed by TM Supermarkets and
Tanganda’s sales of tea, coffee and water. Sales volume at TM
Supermarkets declined by 34% relative to same period of the
previous year. Packed tea and coffee sales volume at Tanganda
increased by 3% compared to same quarter of the previous year. In
volume terms, bulk tea export sales grew by 8% whilst average price
per kg in US$ terms retreated by 12%. Group revenue, in historical
cost terms increased by 663% compared with the previous year but
declined by 12% in inflation adjusted terms.
All Group entities except for The Victoria Falls Hotel, which is
on care and maintenance due to COVID-19, have contributed to a
growth in profit. Group profit after tax for the quarter ended 30
June, in historical cost terms exceeded profit after tax for the
twelve months of the previous financial year and is well ahead of
the inflation for the period.
The Group balance sheet reflects a position that is financially
more secure than at any point since dollarization in 2009 following
the successful restructuring of the Group’s finances during the
previous financial year. The Group is in a good position to fund
challenges arising from COVID-19 implications. Expansion projects
are in progress in all Group entities apart from The Victoria Falls
Hotel renovation, which is delayed due to the present negative
implication affecting tourism.
OUTLOOK
Group entities that are dependant on local turnover may continue
to be affected by reducing volumes but will continue to make
satisfactory profits. Growth in volume of export crops is expected
in the forthcoming season. Our dams are full and power, which is
essential for irrigation and estate factories will be available not
only from traditional sources, but also from the solar
projects.
The Group is a responsible employer and continually increases
employee remuneration but does control other expenditure as far as
practicable to maintain profit margin.
BY ORDER OF THE BOARD
T MPOFU
COMPANY SECRETARY
2 September 2020