RBZ payment delays bog Meikles down

Reserve Bank of Zimbabwe

ZIMBABWE Stock Exchange-listed retail and hospitality concern Meikles Limited group said the delays in the payment of funds owed to the group by the Reserve Bank of Zimbabwe (RBZ) has affected operations as well as capacity to pay off its short-term borrowings.

Report by Victoria Mtomba

The company is owed $40,5 million since 1998 and has incurred $26 million interest since dollarisation.

The government has undertaken to settle the central bank’s debt which accumulated at the height of the apex bank’s involvement in quasi-fiscal activities.
The group’s liquidity ratio, stood at 0,66 following short of the standard efficiency of 1.

In a statement accompanying the group’s financial results, Meikles Limited chairman John Moxon said the funds on deposit with the RBZ originated from the listing of the group on both the local bourse and the London Stock Exchange, and the raising of funds from a number of substantial international investors for the benefit of the group.

“This outflow is the result of interest paid to third parties which need not have been incurred. This sum added to the balance of the sum on deposit would total

$82 million and is more sufficient to eliminate all short-term borrowings,” he said.

Moxon said the funds were remitted to Zimbabwe and ultimately placed on deposit with the RBZ at the insistence of the central bank governor Gideon Gono, to be used for balance of payment support.

The group posted a profit of $6,5 million in the year ended March 31 2012 from a loss of $5,4 million in 2011 buoyed by a growth in revenue. Earnings before tax depreciation amortisation for continuing operations stood at $8,9 million.

Moxon said: “We continue to incur substantial interest costs although these costs did not increase relative to the previous year. It is calculated that our inability to recover our deposit from the Reserve Bank of Zimbabwe has resulted in the group paying excessive interest costs of $7 million during the year under review.”

He added that this year the group would incur interest costs of $8 million if it fails to recover the funds from the RBZ.

Moxon said the group would be pursuing mineral operations in 2014 as it had secured mines in the Midlands.

“The group also has opportunities relating to gold and tantalite. We plan to have at least one producing mine in operation in 2014.

“We have signed a memorandum of understanding which will shortly become full shareholders agreement with a substantial technical partner to pursue these opportunities including the provision of necessary capital skills and expertise in mining, ” he added.

The group’s subsidiaries include TM Supermarkets, Thomas Meikles, Meikles Guard Services, Tanganda and Meikles Hospitality.