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Meikles Limited, which is advancing a restructuring exercise aimed at streamlining operations and improving business efficiency, has announced plans to seek shareholder approval for the sale of certain assets at an extraordinary general meeting, to be held on an undisclosed date.
Meikles Limited said in a warning statement to stakeholders that discussions regarding the proposed asset disposal, first announced last month, remain ongoing.
“Further to the warning announcement issued on 25 June 2024, the directors of Meikles Limited wish to inform shareholders that discussions regarding the sale of certain assets are ongoing and, if successfully completed, may have a material impact on the company’s share price. Shareholders are therefore advised to continue to exercise caution when dealing in the company’s securities until a full announcement is issued,” said Mr Thabani Mpofu, company secretary.
In the initial announcement, the company’s chairman, Mr. John Moxon, revealed that the potential transaction may be classified as a “Category 1” transaction under strict regulatory guidelines. According to section 253 of SI134/2019, a “Category 1” transaction involves a transaction with an aggregate percentage ratio of 30% or more, which is calculated by comparing the transaction value to the company’s market capitalization and taking into account potential equity dilution.
Meikles Limited is a listed company on the Zimbabwe Stock Exchange (ZSE) and is known for its diverse business. The company derives approximately 97% of its revenue from its flagship supermarket division, TM Pick n Pay, while it also has interests in hospitality, 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 $20 million and renamed it Hyatt Regency Harare Meikles Hotel. In 2021, the group spun off its agricultural arm, Tanganda Tea Company, which was subsequently relisted on the ZSE on February 3, 2022.
Merkle’s decision to divest the assets comes amid a challenging economic environment in Zimbabwe. Despite these challenges, the company reported a 102% increase in group revenue to $10.4tn in FY2023. Gross margins remained stable at 22.8% despite exchange rate-induced price fluctuations.
However, group net operating costs surged 121%, reflecting the impact of currency depreciation. “Most prices, including wages and salaries, are pegged to the US dollar and converted into local currency at the exchange rate at the time of settlement,” Mr Moxon noted.
The company reported a sharp increase of 430% in after-tax profit to $469.5 billion, up from $88.6 billion the previous year. Other comprehensive income also increased to $359.6 billion from $22.4 billion last year, mainly due to exchange rate changes that affected foreign subsidiaries.
As Meikles Limited navigates a turbulent economic climate, its restructuring and asset disposal plans are seen as key steps to achieving continued growth and ensuring long-term stability. – Herald
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