Chronicle Editor
Oliver Kazunga, Senior Business Reporter
MEDTECH Holdings says its going concern status is in a precarious position due to a 27,8 million South African rand legacy debt and that delays in meeting the obligations have seen the company cut supplies.
In a financial statement for the period ended December 31, 2019, MedTech said the legacy debt was also impacting on the group’s ability to secure fresh credit lines from the offshore market.
“The group owes legacy debts amounting to ZAR27,8 million to foreign creditors. Some of the debts have been validated by the Reserve Bank of Zimbabwe while appeals have been put in for others.
“At this stage, the group is unsure when payments will be made for the debts validated and when a response will be received for appeals lodged,” it said.
“Delays in the payment of legacy debt has resulted in cuts in supply and stock outs, which is one of the contributing factors to the decreased sales volumes,” it said.
For prudence purposes, the group said these foreign creditors have been restated to the interbank rate of 16,77 at end of the reporting period.
“The extent of liabilities owing to the foreign creditors leaves the group in a precarious position,” it said. Given the liquidity challenges and the group’s working capital needs and loss position, MedTech’s directors have resolved not to declare a dividend.
The group, which has interests in fast moving consumer goods, manufacturing and medical segment, said during the period under review, it recorded a significant sales volume decrease of estimated at 70 percent as compared to the corresponding prior period.
The firm also suffered a 31 percent decline in revenues to $70,5 million from over $100 million in 2018 while operating profit went down by 45 percent to $20,9 million from $37,8 million.
Going forward, MedTech envisages that the trading environment and macro-economic conditions will remain volatile.
The full impact of Covid-19 is yet to be felt but will undoubtedly have a significant adverse impact on the Zimbabwean economy.
“Uncertainty related to payment of legacy debt affects our foreign credit lines, and with no definitive position, this may result in serious challenges and our ability to continue in the future.
“We will continue to do our best to maintain market share and sales and keep up strict cost control,” said MedTech. — @okazunga
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