We have extracted below the Chairman’s Statement from the 2018 annual report of MedTech Holdings Limited (MMDZ.zw), listed on the Zimbabwe Stock Exchange:
Group Financial Analysis
The year 2018 was mixed for the Group. Group revenues increased 11% mainly driven by the revenue increase in the FMCG segment (26%). The increased revenue was attributable to changes in the sales mix and focus placed on fast moving items. Revenue decreases were noted for the manufacturing segment (13%) and the medical segment (160%). The Group recorded a profit before tax of $1,422,129. We also evidenced an improvement in operational performance with an operating profit of $4,618,560.
The results for the year are reported at the official rate of USD1: RTGS$1 which shows a profit which we anticipate changing to a significant loss (negative equity) when rates are allowed to move in line with market forces. This is further illustrated by the sensitivity analysis of how different exchange rates would have impacted the consolidated statement of financial position. For this analysis refer to note 27 Subsequent Events to the financial statements.
The challenging operating and economic environment remained depressed causing demand to remain subdued and as such a reduction in sales volumes. The main challenge experienced during the year included inadequate foreign currency reserves necessary to settle international obligations while other challenges were increased competition from unregistered operators and smuggled competing products.
Corporate Social Responsibility
The Group continues to give back to the community and assist where it can. During the period under review, we participated in a number of community beneficial projects. These were mainly donations of personal hygiene products to vulnerable women and children at prisons, hospitals, orphanages and cancer associations.
The trading environment and macro-economic situation remains uncertain. Though the exchange rate has been liberalized, in the short term we do foresee continued delays in remitting foreign payments and this will negatively affect our ability to service existing foreign creditors amounting to ZAR27,7 million (31 December 2017: ZAR35.7million). This may lead to cuts in supply and resultant stock outs.
The sharp rise in general price levels within the economy is expected to persist resulting in a further reduction in consumer spending and this will lead to consumers purchasing smaller pack sizes. We expect a decrease in revenue volumes in 2019. Nevertheless, we will continue to do our best to maintain our market share and sales and keep up the strict cost control.
Given the liquidity challenges and Group’s working capital needs, the Directors resolved not to declare a dividend.
I wish to record my appreciation to all stakeholders, strategic partners and suppliers, customers, management and staff for their support. I also wish to thank the non-executive directors for their considerable guidance.
R Mazula (Mrs)