Medtech disposes unit for $1

HARARE - Zimbabwe Stock Exchange-listed health care products manufacturer Medtech Holdings Limited (Medtech) is disposing its subsidiary Zimbabwe Pharmaceuticals (Zimpharm) for $1 coupled with guarantees to settle the embattled unit’s debts.

Last month Medtech announced that it had accepted a firm offer from an unnamed local firm for its stake in the loss-making Zimpharm.

Zimpharm’s debts amount to $705 744.

Under the deal, Medtech says the buyer will meet certain conditions such as writing-down debt amounting to $99 321 emanating from the transaction, pay $207 335 for staff severance and arrears payments and $399 088 fair value adjustment on loans receivable from the erstwhile subsidiary.

“There are certain conditions and approvals needed for this transaction to be finalised and shareholders will be kept up to date with developments in this regard,” said Medtech, adding that Zimpharm incurred $734 000 after tax losses in the 11 months to November 2012.

Medtech last year sold its 40 percent in Bulawayo unit to Nu Age Cosmetics, a Dubai-based company.

Meanwhile, pharmaceuticals group realised a $13,8 million in total group revenues in the year to December 2012, a 22 percent increase from $11,3 million achieved in 2011.

It recorded a loss of $325 966 during the period under review from a $4 223 profit registered prior year.

“Gross profit percentage of 27, 1 percent for the period under review improved on the 2011 figure of 26, 6 percent on a better sales mix with higher margins,” Medtech said.

The group’s distribution division grew sales by a modest 17 percent year on year from $8, 2 million in 2011 to $9,6 million in 2012 despite growth being constrained by working capital shortages arising from the need to finance manufacturing losses.

Smart Agencies, Medtech’s retail and wholesale division’s sales dropped five percent to $2,1 million due to discontinuation of some product lines and strong competition in the sector.

“Management is responding by listing major retailers and entering retail partnerships at prime sites in order to make the product more accessible,” the group said, adding that in-store improvements helped maintain sales volumes.

The listed concern’s medical and scientific division posted 300 percent growth in sales to $1,5 million from $361 258 achieved in 2011 in line with expectations although it realised an operating loss of $112 000 as the business is still in the early stages of development with expectations to reach profitability in 2014 after breaking even this year.

Its education and laboratory services division contributed to revenue improvements, but commission sales were lower in 2012 due to liquidity issues.

“The outlook is optimistic and relationships with suppliers have strengthened in recent months. There are many enquires and potential orders,” said Medtech.

The group said it hoped the country holds a peaceful election, which guarantees a stable macro-economic environment.

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