MedTech Holdings Limited (Zimbabwe) – FY21 abridged audited financial results

By Published On: June 6th, 2022Categories: Corporate announcement, Earnings

MedTech Holdings Limited ( 2021 Abridged Report


It is our pleasure to present the abridged audited financial results for MedTech Holdings Limited for the year ended 31 December 2021. These results largely reflect the performance of MedTech prior to the conversion into a private equity investment holding company, apart from fair value adjustments. We look forward to announcing private equity transactions, currently being pursued, in due course.

Operating environment

The year-on-year official inflation rate closed at 349% in December 2020 before receding to the 50% range from July 2021 and ending the 2021 year at 61%. The official auction exchange rate to the US Dollar was 81.8 on 31 December 2020 and devalued to 108.7 at the end of 2021, a devaluation of 32.9%. Typically, one would expect inflation and devaluation to be similar. The discrepancy may reflect the extent to which the exchange rate was managed during the year. The management of exchange rates has seen a widening gap between the official rate and the parallel market rate, resulting in increased demand for currency from the auction.This disparity has effectively been a tax on exporters and remitters of US Dollars to other local companies through the 40% and 20% surrender requirement, whilst also effectively being a subsidy to importers. The result has been a disincentive to the country’s exporters and local manufacturers – contrary to what we would ordinarily expect to see.

The operating environment remained difficult and unpredictable during the year, and this has worsened since the year end.

Update of changes from MedTech to BridgeFort

We have been advised that the various changes required at the Registrar of Companies and Other Business Entities resulting from the EGM held on 15 November 2021 are expected imminently. Shareholders will be advised as soon as the final documents have been received and the ZSE has approved the announcement to shareholders and the renaming of the shares.

Financial highlights
Class A Portfolio – Consumer Goods
The Class A portfolio primarily includes 50.1% of Zvemvura Trading (Private) Limited, trading as MedTech Distribution, and Chicago Cosmetics (Private) Limited, a 51% subsidiary of MedTech Distribution. These businesses primarily sell goods to retailers and wholesalers. Credit demanded by supermarkets is generally 30 days from statement for slower moving products, which is onerous in Zimbabwe’s unpredictable and inflationary environment. Typically, these businesses aim to hedge the debtors book and unlock the working capital tied up in debtors through bank borrowings. Inflation continually erodes the real value of the facilities in place necessitating regular facility increases with the associated costs being incurred.

The businesses managed well on hedging mechanisms and this, along with a reduction in the real selling price of goods, less stockouts and a reduction in competition from grey imports and smuggled goods drove an increase in the volume of sales by 110% (198% in distribution and 20% in manufacturing). Worsening delays in the payment of successful auction bids have hampered operations and resulted in increased working capital demands. At the year-end successful auction bids to the value of USD465,000 were unpaid.

The validated legacy debts amount to ZAR 23.4 million, with ZAR 5.9 million of this having been settled leaving a validated balance payable of ZAR 17.5 million (which has been provided for in the accounts at the auction rate). This legacy debt continues to hamper relationships with suppliers and timeous supply of goods.