Meikles in 101% revenue growth on ZSE

By Allan Mbotshwa

Hospitality entity, Meikles Limited’s revenue grew to ZWL 869.8 billion representing a like-for-like increase of 101%, the growth was primarily due to price adjustments at the supermarkets segment, which contributed 98% of the Group’s revenue.

Gross profit margin was above last year by 5.44 percentage points on a like-for-like basis.

Net operating costs increased by 147% (Historical cost: 872%) on a like-for-like basis.

“Overall, most prices in the economy were pegged in US$ and converted to ZWL at the time of payment during the period under review.

Resultantly, operating costs increases in ZWL were in the main due to the exchange rate depreciation,” said John Moxon, chairman of Meikles Limited group.

Employee costs, which made up 55% of operating costs increased by 169% (Historical cost: 931%) on a like-for-like basis.

“In the current period, salaries and wages were fixed in US$ at collective bargaining forums with an option to pay in ZWL at the interbank exchange rate ruling at the time of payment,” he added.

Accordingly, employee costs increased in ZWL in line with the exchange rate depreciation. Occupancy costs (23% of operating costs) were 201% above the same period last year.

Electricity tariffs were increased by 200% in US$ terms. The retail sector negotiated to pay the bills in ZWL and thus monthly the cost in ZWL escalated in line with the depreciating exchange rate.

Investment income increased to ZWL 1.3 billion from ZWL 63 million on a like-for-like basis and it was primarily interest received on the Group’s offshore subsidiary funds on call.

Interest rates on US$ deposits on call averaged 5% during the period under review up from 1% in the comparative period.

Approximately 83% of finance costs were IFRS 16-related interest charges on lease liabilities, which increased by 91% due to inflation-driven rent reviews.

Profit before tax (“PBT”) for the period increased by 17% to ZWL 30.8 billion translating to a profit margin of 3.54%.

The Group’s effective tax rate in historical cost terms was 34.99% (last year 25.70%) compared to the statutory tax rate of 24.72%. The effective tax rate was negatively impacted by significant disallowed expenses mainly intermediated money transfer tax (IMTT) and cost of canteen meals.

Profit for the period of ZWL 9.6 billion decreased by 30%, profit growth was curtailed by ZWL 10.4 billion in exchange losses on the seven leases, most of which will be reversed in the second half of the financial year.

The Board has declared an interim dividend of 0.6 US$ cents per share to be paid on 14 December 2023. The full dividend notice was published on 14 November 2023.