We have extracted the financial summary from the full year abridged report of MedTech Holdings Limited listed on the Zimbabwe Stock Exchange under the share code MMDZ.zw. MedTech is a manufacturing, retail, distribution and services company in Zimbabwe.
The following is an excerpt from the FY2018 Abridged Report:
The operating and economic environment remained challenging during the year under review. This period was characterised by numerous challenges which included shortages of fuel and foreign currency. In addition price stability was affected and annual inflation closed the year at 42% up from 2.9% in January 2018.
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 net exchange rate loss included in the finance cost for the year of $3,196,431 was mainly due to the effects of constrained exchangeability.
Revenues increased by 11%. However, sales had been restricted so as to preserve shareholder value due to the uncertainty in the operating environment with the main factors being rising inflationary pressures and foreigncurrency constraints.
The FMCG Segment includes MedTech Distribution, Smart Retail and Choice Brands. Segment sales increased by 26% and margins improved due to changes in sales mix and better reordering with fast moving high profit margin lines were concentrated on.
The FMCG segment posted a profit before tax of $1,160,101.
The Medical Segment includes MedTech Medical and Scientific (Private) Limited (“MMS”) and Education and Laboratory Services Division including Laboratory Services. Segment sales declined 160% as stock levels remained low due to foreign suppliers maintaining their stance of cutting lines of credit as a result of inability by banks to remit foreign payment. Margins improved due to changes in sales mix and better reordering with fast moving high profit margin lines were concentrated on.
The medical segment posted a loss before tax of $32,367.
The manufacturing segment comprisers of Chicago Cosmetics (Private) Limited (“CC”). Revenues decreased by 13% due to changes in consumer spending patterns where consumers have shifted from larger to smaller pack sizes and this is a reflection of reduced disposable incomes. Another reason for decreased revenue is due to increased competition from smuggled products. Margins improved due to changes in the sales mix.
Local production of a key line commenced with a test run in quarter four of 2018.
The Manufacturing segment posted a profit before tax of $299,923
The trading environment and macro-economic situation remains uncertain.