MEIKLES Africa Ltd, which holds shares in Rebserve, a South African operation, has agreed to merge with Mvelaphanda Holdings Ltd in a reverse listing.
Analysts say the merger will form a major diversified operation in South Africa’s sophisticated industrial hub.
Rebserve is engaged in various support services, security operations, food and catering.
Mvelaphanda is listed on the Johannesburg Securities Exchange.
“We are currently looking at a stake of about 2%,” Meikles chief executive officer Chris Parvin said this week. “We will consider other options when the time comes but for now what we can safely say is that the group is looking at the merger with interest.”
He said the Reserve Bank of Zimbabwe (RBZ) had already given the proposed merger the go-ahead.
Meikles has US$24 million deposited in the RBZ and some of the funds will be used for the planned merger technicalities.
“The money will be released by the RBZ at their discretion,” Parvin said. “The RBZ has approved a plan by Meikles Africa Ltd to increase participation in Rebserve and, therefore, in the new group.”
He said despite an unpredictable and often turbulent operating environment, the company had reported a strong performance for the year ended March 31.
Operating divisions achieved improved results through a successful mix of proactive and reactive management strategies.
The hotel and tourism industry has been facing much difficulty because of the country’s poor international image.
Meikles Africa chairman John Moxon in his annual review statement meanwhile said group turnover had increased 605% to $528 billion, excluding sales tax and value added tax.
Group operating profit was 505%, up to $83,9 billion, against a backdrop of average inflation for the year of 523%.
Operating profit in TM Supermarket and the retail division were ahead of average inflation, although that of the hotel division was not for reasons related to ongoing problems of low occupancy levels bedeviling the hospitality industry.
Moxon said TM Supermarkets increased its market share and experienced sales well in excess of average inflation, a result achieved partly through competitive pricing strategies in an environment of reduced consumer spending and cash shortages.
He said prices in March were on average lower than at Christmas.
Turnover increased 664% and net sales grew from $49,6 billion to $379 billion.
Operating profit grew 561% from $6,3 billion to $41,7 billion.
Moxon said the hotel division experienced an increase in turnover from $12,3 billion to $64 billion, with operating profit rising 289% to $18,3 billion.
He said low occupancy levels continued to be experienced at the five-star Meikles Hotel in Harare and at the Victoria Falls Hotel, which was resulting in a management programme to undertake more aggressive pricing strategies while at the same time not compromising high standards and efforts to achieve continuous improvement of product.
“Cape Grace enjoyed the highest average room rate and revenue per available room in the Cape region but occupancies dropped 15% in common with other establishments in South Africa as a result of several factors such as the appreciating rand,” he said.
The appreciating rand meant that rooms were 12% more expensive than in the previous year, while international issues such as Iraq and the Sars virus caused a significant downturn in American and European travel during the year, Moxon said.
He said Kingdom Financial Holdings Ltd then led by Lysias Sibanda had performed well and emerged from the interest rates turmoil of December/January as a stronger bank.
“Conservative lending policies led to a more consistent performance than other players in the market,” he said.
Meikles has a 25% stake in Kingdom.
Moxon said the outlook for the group remained positive but encouraged authorities to improve the country’s macro-economic fundamentals.
He said he also believed that the foreign currency rate remained unattractive to exporters and earners of foreign currency.