Moxon breaks with the past

BY SHAME MAKOSHORI

MEIKLES Limited chairperson John Moxon says he is to revamp one of Zimbabwe’s biggest corporations, breaking it from a conglomerate to several profitable independent operations with fuller appreciation of their markets.

The tycoon said the era of conglomerates was over and enterprises must be weaned off and given space to grow and enhance shareholder value.

His new thrust kicked off with an injection of US$20,8 million into Tanganda, the business’s horticultural operation that is due to be unbundled and separately listed on the Zimbabwe Stock Exchange (ZSE).

Further strategic reviews will follow the Tanganda deal, Moxon said, noting that the ZSE conglomerate was exploring several ways of running its property business independently.

The giant is trimming its operations to give full attention to its supermarket interests.

However, a decision was yet to be reached on the future of Meikles’ hospitality business.

In a way, developments at Meikles will be in line with a strategy being pursued by another conglomerate, Innscor Africa Limited, which has separately listed its crocodile breeding business, Padenga, as well as Axia Corporation and Simbisa.

“There has been a historical view that a grouping of related entities into a conglomerate structure is the most suitable for shareholders in terms of value creation,” Moxon said in a commentary to Meikles’ financial results for the year ended March 31, 2021.

“However, there is a growing opinion that an entity should be an independent business with its own focussed identity and will then be well placed to unlock shareholder value. Meikles Limited has provided additional capital to Tanganda since 2011 to support the crop diversification thrust; this capital being additional to Tanganda’s normal annual capital expenditure.

“As at March 31, 2021, Meikles has cumulatively injected US$20,8 million for macadamia nuts and avocados plantations development, an avocado processing facility and recently for solar power plants. Further capital has been provided subsequent to the year-end.

“Tanganda is now in a strong financial position and well set to independently sustain its operations going forward. Subject to shareholders’ approval, Tanganda is to be unbundled in the months before the end of the calendar year and is to be separately listed. It will cease to have any financial connection with the group.

“The strategy is expected to unlock the value of the capital invested in crop diversification for the shareholders,” Moxon said.

The Tanganda listing gathered pace in April when Meikles appointed advisors to spearhead the transaction, as plans got underway to seek shareholder approval and proceed.

Tanganda is one of the country’s top tea processing firms that produces the popular Tanganda Tea brand under large swathes of prime estates in Zimbabwe’s eastern districts.

Despite its massive operation spanning over eight decades, the firm has been indirectly listed through Meikles.

“The separate financial reporting will enhance understanding by financial markets leading to a more accurate valuation of the business. The group has a large portfolio of properties. Strategic alternatives are being examined on how best to unbundle properties and to provide an opportunity for shareholders to enhance value. A strategy will be determined and implemented after the Tanganda unbundling process. The status of the hospitality assets is yet to be decided, but a strategy to unlock and enhance shareholder value will be determined. It is envisaged that Meikles Limited will focus on the retention of its investment in retail, primarily supermarkets,” Moxon added.

Group revenue from continuing operations grew by 3% to ZWL$28,4 billion (about US$330 million) during the review period, from ZWL$27,6 billion (about US$325 million) in 2020, while profit after tax from continuing operations dropped to ZWL$373,3 million (about US$4,3 million) from ZWL$3,5 billion (about US$41 million) previously.