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Michael Makuza, Business Reporter
DIVERSIFIED listed group, Meikles Limited, has expressed optimism about future prospects as it forges ahead with expansion and capital expenditure plans.

Meikles company secretary, Mr Thabani Mpofu, said the group is well positioned to execute its development plans as it has substantial resources to support its strategies.

“The group is optimistic about its prospects despite the evolving challenges in the operating environment. The group’s financial stability remains strong with cash and bank balances amounting to more than US$19 million at the end of December 2022,” he said in a latest trading update for the third quarter ended 31 December 2022 and the nine months, respectively.

“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.”

Mr Mpofu said the trading environment during the period under review was characterised by tight financial conditions due to the policy measures, which were implemented by the Government to stabilise prices and the exchange rate from July 2022.

“The policy measures had a positive impact on both the inflation and the exchange rate,” he noted.
Inflation and the exchange rate have been largely stable since the Government intensified interventions to squeeze excess liquidity from the market, with the local currency appreciating against the US dollar on the black market while inflation is cooling.

Some of the measures included the introduction of gold coins as a store of value and alternative to the US dollar and a review of all Government supply contracts priced using parallel market exchange rates, which contributed to the creation of excess liquidity.

Reserve Bank of Zimbabwe (RBZ)

The Central Bank also increased the bank policy rate, which determines minimum bank lending rates, from 80 to 200 percent to discourage speculative borrowing for purposes of intermittent interest in illegal currency trading and simultaneously exploiting opportunities on the equities market.

However, Mr Mpofu said power supply challenges led to increased use of generators and at some point, saw a reduction in operating hours.

During the period under review, the group’s revenue grew by 40 percent and 58 percent in inflation-adjusted terms. In historical cost terms, the group’s 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,” said Mr Mpofu.

He said sales volumes for their supermarkets’ segment declined by 16,49 percent but were resilient as the growth of 2,5 percent was recorded in the nine months period ended 31 December 2022.

“Room occupancy for the hospitality segment grew by 9,85 percent and 18,43 percentage points for the quarter and nine months respectively.

“Revenue per available room increased by 94 percent and 210 percent in US$ terms for the quarter and nine months respectively,” said Mr Mpofu.