Meikles Limited subsidiary, TM Pick n Pay has cleared off legacy debts amounting to US$11.07 million from internally generated funds during the financial year ended March 2020.
The development has enabled the leading retail chain to focus on its infrastructure upgrades.
This was announced by the group’s chairperson John Moxon recently who added the business unit had managed to significantly reduce its foreign currency debt to manageable levels.
“Legacy debt was reduced to US$ 2.23 million as of 31 March 2020 from US$ 13.3 million at the beginning of the financial year. The payment of the legacy debt was funded from internally generated funds. After year-end US$ 0.6 million was paid, leaving the outstanding balance at US$ 1.63 million,” he said.
Another $1.63 million was remitted to the Reserve Bank of Zimbabwe (RBZ) to complete central bank’s guidelines on blocked funds or “legacy debt” contained in Exchange Control measures.
“Accordingly, it is anticipated the RBZ will issue an instrument that will settle US$1.63 million without further costs to the segment,” Moxon said.
Under the measures, the central bank undertook to settle companies’ foreign currency obligations which were affected since the dropping of the 1:1 peg of its local dollar to the U.S. unit a year ago.
Early this year, the RBZ approved payment of US$1.2 billion in legacy debt owed to foreign entities, including airlines, fuel and grain suppliers from a total of around US$2.6 billion in legacy debts.
Meanwhile, during the period under review, TM Pick n Pay’s revenue increased by 2% over the previous year in inflation adjusted terms with sales volume declining by 22% due to diminishing customer disposable income over the period.
Profit after tax grew to $674.8 million from a loss of $21 million in the previous year attributed to a focused approach to margin and operating expenditure control.
The profit after tax was after deducting exchange losses of $380.6 million which arose from foreign currency denominated liabilities accumulated prior to the introduction of the local currency on 22 February 2019.