R25m legacy debt haunts Medtech Holdings
DIVERSIFIED retail and services group, MedTech Holdings, is struggling to clear ZAR25,5 million in legacy debt owed to foreign creditors.
Last year, the listed company said its going concern status was in a precarious position due to a ZAR27,8 million legacy debt and delays in meeting the obligations had seen suppliers cutting supplies.
In a trading update for the first quarter ended March 31, 2021, MedTech said uncertainty related to payment of legacy debt was affecting its foreign credit, and with no definitive position, this may result in serious challenges.
“The group owes legacy debts amounting to ZAR25,5 million to foreign creditors. Of the validated debts, ZAR24,3 million is yet to be paid while appeals have been lodged for ZAR2,1 million.
“At this stage, the group is unsure when payments will be made in full for the debts validated, which are owing and when a response will be received for appeals lodged,” it said.
The group said it was hopeful that the prevailing economic policies and measures being implemented by the Government had brought some price stability and will further improve the economic environment going forward.
“Delays in auction bid allocations are causing a severe strain on working capital funding and it is hoped that such allocations are paid within shorter time-frames in future.
“If the economic improvements are accompanied by a level of fiscal discipline can be maintained, then we do expect a better financial performance for the remainder of the year.
“We will continue to do our best to maintain market share and sales and keep up strict cost control,” said the firm.
On group volume performance, MedTech said the first quarter sales volumes increased by 61 percent compared to the comparative prior period.
This was attributable to price stability and increased incomes resulting in improved demand, a reduction in competition from grey imports and smuggled goods due to movement restrictions and improved working capital management to reduce the impact of any currency depreciation.
“This had enabled the group to constantly supply products at competitive prices resulting in increased shelf space and increased market share,” it said.
On segment volume performance, the group’s fast moving consumer goods unit recorded a 145 percent increase in sales volumes compared to the comparative prior period.
Its manufacturing segment also recorded an improvement in sales increasing by eight percent compared to the comparative prior period.
On the medical segment and associate company, there has been no activity as these did not trade during the period under review or comparative prior year period.
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