Trading Statement

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