Meikles Pushes Forward with Restructuring Plans, Seeks Shareholder Approval for Asset Disposal

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Meikles Limited is advancing its restructuring efforts, aiming to streamline operations and enhance business efficiency. The company has announced plans to seek shareholder approval for the sale of certain assets at an extraordinary general meeting, the date for which is yet to be disclosed.

In a cautionary statement to stakeholders, Meikles Limited indicated that discussions regarding the asset disposal proposal, first announced last month, are still ongoing.

“Further to the cautionary announcement dated June 25, 2024, the directors of Meikles Limited wish to advise shareholders that discussions on the disposal of certain assets are still in progress which, if successfully concluded, may have a material effect on the company’s shares. Accordingly, shareholders are advised to continue exercising caution when dealing in the company’s securities until a full announcement is made,” stated company secretary Mr. Thabani Mpofu.

In the initial announcement, company chairman Mr. John Moxon revealed that the potential transaction could be classified as a “Category 1” deal under stringent regulatory guidelines. According to Section 253 of SI134/2019, a “Category 1” transaction involves deals where the aggregate percentage ratio reaches or exceeds 30 percent, calculated by comparing the transaction’s value to the company’s market capitalization and considering potential share dilution.

Meikles Limited, listed on the Zimbabwe Stock Exchange (ZSE), is renowned for its diverse business interests. The company generates approximately 97 percent of its revenue from its flagship supermarket division, TM Pick n Pay, with additional operations in the hotel industry, property management, and security services.

The company has a history of strategic asset disposals. In 2019, Meikles sold its iconic Meikles Hotel to Dubai-based Albwardy Investments for US$20 million, leading to its rebranding as the Hyatt Regency Harare the Meikles Hotel. In 2021, the group demerged its agricultural arm, Tanganda Tea Company, which subsequently relisted on the ZSE on February 3, 2022.

Meikles’ decision to divest assets comes amid a challenging economic environment in Zimbabwe. Despite these challenges, the company reported a 102 percent increase in group revenue to $10.4 trillion for the financial year 2023. The gross profit margin remained steady at 22.8 percent, despite exchange rate-induced price volatility.

However, group net operating costs surged by 121 percent, reflecting the impact of the depreciating exchange rate. “Most prices, including wages and salaries, were pegged in USD and converted to local currency at exchange rates prevailing at settlement,” noted Mr. Moxon.

The company reported a significant profit after tax increase of 430 percent to $469.5 billion, up from $88.6 billion the previous year. Other comprehensive income also rose to $359.6 billion from $22.4 billion last year, driven by exchange rate movements affecting the translation of foreign subsidiaries.

As Meikles Limited navigates these turbulent economic waters, its restructuring and asset disposal plans are seen as crucial steps towards sustaining growth and ensuring long-term stability. – Herald