Business Writer
MEIKLES Limited says it will continue to implement capital expenditure initiatives as the group holds sufficient financial resources to support its growth strategies.
Thabani Mpofu, the group’s secretary, highlighted that the group will be giving a face-lift to its properties in order to maximise rental income opportunities going forward.
In the third quarter to December 2022, Meikles managed to complete the construction and opened two Pick n Pay outlets in Madokero and Simon Mazorodze respectively as part of the group’s branch network expansion and renovation drive.
The above-mentioned were not the only construction tasks initiated by the group as it also commissioned a new store at Highland Park in Harare and completed the renovation of Pick n Pay Triangle in the first half of the 2022 financial year.
As it stands, some of the projects underway include the refurbishment of the Meikles building along Robert Mugabe Road in Harare which commenced sometime in 2022, whose completion is anticipated during the first quarter of 2023. TM Pick n Pay is expected to become the anchor tenant on the premise.
Mpofu noted that the group remains positive on its projections despite the obtaining hurdles in the operating environment, further indicating that the capital expansion projects are being financed from internal operating cash flows.
“The Group is optimistic about its prospects despite the evolving challenges in the operating environment. Its financial stability remains strong with cash and bank balances amounting to more than US$19 million at the end of December 2022.
“The Group has no bank borrowings. Both expansion and replacement capital expenditure plans continue to be implemented as the Group has adequate financial resources at its disposal. To this end, capital projects in progress across the subsidiaries will be completed as planned,” said Mpofu in the trading update for the quarter that ended December 31, 2022.
Mpofu noted the trading environment for the quarter under review was characterised by firm financial mechanisms emanating from policy measures implemented by the Government to stabilise prices and the exchange rate from July 2022.
He, however, noted that the policy measures have had a positive influence on both inflation and the exchange rate.
“… electricity supply challenges worsened during the quarter under review leading to increased use of generators and in some instances reduction in operating hours,” he said.
In terms of performance during the quarter under review, sales volumes for the supermarkets’ segment decreased by 16,49 percent but were resilient to the challenges in the operating environment and grew by 2,50 percent for the nine months period ended December 31, 2022.
Room occupancy for the hospitality segment grew by 9, 85, and 18,43 percentage points for the quarter and nine months respectively.
Revenue per available room improved by 94 percent and 210 percent in US$ terms for the quarter and nine months respectively.
According to Mpofu, group revenue grew by 40 percent and 58 percent in inflation-adjusted terms for the quarter and the nine months respectively.
In historical cost terms, group revenue grew by 399 percent and 411 percent for the quarter and the nine months respectively.
“All operating subsidiaries generated positive cash flows during the period under review,” Mpofu said.
The trading environment for the quarter under review was characterised by tighter financial conditions due to the policy measures implemented by the Government to stabilise prices and the exchange rate from July 2022.
Consequently, the policy measures have had a positive impact on both inflation and the exchange rate.
However, according to Meikles, the electricity supply deficit continued to present a challenge to the group’s operations during the quarter under review leading to increased use of generators and in some instances reduction in operating hours.