Chronicle Editor
Business Reporter
LISTED manufacturing, retail, distribution and services group, MedTech Holdings, has validated ZAR23,4 million out of a total amount of ZAR25,5 million registered legacy debt owed to foreign creditors.
In 2020, the Zimbabwe Stock Exchange-listed company hinted that its going concern status was in a precarious position due to legacy debt issues and delays in meeting the obligations had seen suppliers cutting supplies.
In a trading update for the half-year ended June 30, 2021, MedTech said it has applied for the registration of legacy debts amounting to ZAR25,5 million to foreign creditors.
“Of the ZAR25,5 million, ZAR23,4 million had been validated while appeals have been lodged for ZAR2,1million. Of the validated debts, an amount of ZAR3,8 million has been paid to foreign creditors,” it said.
“At this stage, the group is unsure when the remaining payments will be made for the debts validated, which are owing and when a response will be received for appeals lodged.”
The company has said uncertainty related to payment of legacy debt was affecting its foreign credit, and with no definitive position, this may result in serious challenges.
For prudence, these foreign creditors, MedTech said, have been restated using the interbank rate of ZWL$85,42 at the end of the reporting period.
“The restatement of foreign creditors leaves the group in a precarious position,” it said.
In terms of dividend declaration, the company said given the liquidity challenge and the group’s working capital needs, the directors decided not to declare any dividend.
During the period under review, MedTech’s revenues improved by 73 percent from $155,3 million last year to $268 million this year.
Profit before tax also improved by 101 percent from a loss before tax of $8,3 million in 2020 to a profit before tax of $68 474 in 2021. On the outlook, the group said the trading environment and macro-economic conditions remain mixed.
“In the second half of year 2021, we are most likely to see a reduction in the pace of sales volume growth due to time lags in the payment of foreign suppliers after having bid allocations on the foreign exchange auction system.
“Most of our foreign suppliers are still on a prepayment basis and these payment time lags may result in interrupted supply and restocking,” it said.
The group through its different segments is involved in the production of cosmetics as well as vast moving consumer goods while its medical segment and associate company have been dormant during the period under review or comparative prior year.
MedTech said it remains hopeful that the prevailing economic policies and measures being implemented by the Government, which have brought some price stability will further improve the economic environment going forward.
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