Government fails to honour Meikles debt

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MEIKLES Limited (Meikles) says it will not include the debt it is owed by the Reserve Bank of Zimbabwe (RBZ) in its financial results for year ended March 2018 after government failed to honour an agreement to settle it by last month.
The hospitality and retail group delayed announcing the results, hoping to include the debt settlement in its financials.
The repayment of the debt would have resulted in Meikles announcing an improved performance compared to the same period last year.
Last year, Meikles reached an agreement with government over a RBZ debt that has been outstanding for two decades.
The debt accrued in 1998 from transactions related to the group’s dual listing on the Zimbabwe and London stock markets. It stood at $25 million in 1998 but shot up to $47 million at the end of 2013 after the inclusion of interest.
In a statement to shareholders yesterday, Meikles company secretary Thabani Mpofu said the audited financial statements are being finalised and will be published within a fortnight.
“Audited financial results for the year ended March 31 were delayed as it was believed finalisation of the settlement agreement with government was to be concluded before the end of August 2018,” he said.
“Regrettably, the company is unable to include the amount due from government in the financial statements for the financial year ended March 2018,” Mpofu said.
Meikles said government had undertaken to repay outstanding funds in terms of the Reserve Bank of Zimbabwe Debt Assumption Act of July 2015.
The Act stipulates that an interest rate of five percent is applied to all creditors.
Previously, Meikles claimed it was owed $90 million in debt and interest by RBZ.
“Government has committed itself to pay the amount due and finalisation of the settlement agreement is under way. Shareholders are advised that short term loans from local bankers are to be converted to long term loans. The process is expected to be complete by the end of December 2018,” said Mpofu.
Giving a trading update, Mpofu said the group’s financial performance for the first three months of the financial year to March 2019 reflects a growth in turnover of 21 percent. The increase is an improvement in earnings before interest, tax, depreciation and amortisation of 86 percent and an increase in profit before taxation of 321 percent.