HARARE - Zimbabwe Stock Exchange (ZSE)-listed pharmaceuticals manufacturer Medtech is facing an uncertain future should a strategic transaction fail to go through this year.
The group’s chairperson, Rose Mazula, yesterday said Medtech’s future lies in the
anticipated transaction, which will see the group place about 70 percent in its medical unit with a potential investor to raise funds.
“The board has made a decision to close the business should the transaction not be concluded in 2016,” she said.
This comes as the struggling company — whose auditors have cast doubt on its ability to continue as a going concern — concluded a transaction to acquire the 40 percent non-controlling shareholders interest in Medtech Medical and Scientific from minorities to allow for the disposal of the unit.
“As such, Medtech Holdings Limited had allotted 240 130 000 ordinary shares as the purchase consideration which increases the shares in issue to 3 039 764 872 ordinary shares,” she said.
Mazula also revealed that the pharmaceutical firm was also in the process of winding down operations at its Smart Retail unit this year.
“Smart Retail posted a loss before tax of $340 027. Operations at Smart Retail are being wound down and the business will be closed in 2016,” she said.
Smart Retail, which falls under the group’s FMCG segment together with Medtech Distribution, recorded a five percent decline in segment sales.
However, margins improved in both Medtech Distribution and Smart Retail due to exchange rate gains in Medtech distribution and a lower inventory write-off in Smart Retail.
“Inventory anomalies in Smart Retail have been rectified and a stock write off of
$244 595 was made in the income statement. The cumulative provisions for stock write-offs in Smart Retail of $589 922 have been reversed in the current year,” she said.
Medtech Distribution managed to post a profit before tax of $710 655 while the medical segment includes MMS and
Education and Laboratory Services Division including Laboratory Services did not perform well.
“Segment sales declined 15 percent mainly due the fact that the business is undercapitalised and has suffered slow debtor repayments. The medical segment posted a loss before tax,” she said.
Mazula said while the economic environment had remained challenging, the pharmaceuticals concern managed to record a profit before tax of $476 914 for the 12 months to December 2015 compared to loss before tax in prior period.