DIVERSIFIED group Meikles Limited sees its retail unit returning to profitability in the full year to March next year, driven by the injection of $4 million in working capital, the company said on Monday.
In a profit warning, the group said its retail division consisting of Meikles Stores, Barbours and Meikles Mega Market had its working capital position affected by arbitrary price controls effected nearly a decade ago as well delays in receiving funds held by the Reserve Bank of Zimbabwe.
In July Meikles chairman John Moxon said the group expects to recover $89 million, owed by the Reserve Bank of Zimbabwe since 1998, at the end of July, after taking the apex bank to court.
“The group will now have access to its funds held on deposit at the Reserve Bank. As a result, approximately $4 million will be injected into the retail business, which will have a material impact on the second half of the current financial year,” the group said.
“We believe that the division will return to profit and a positive cash flow in the second half of the financial year, while growing its market share.”
Revenue for the year dropped to $384 million from $391 million weighed down by the group’s departmental stores and poor turnover in the retail and agricultural operations of the group.
Operating costs were 1.7 percent ahead of the prior year while finance costs increased because of borrowings to fund expansion and refurbishments in the supermarkets, hotels and substantial plantation development.Advertisement