July 14, 2021

Medical Disposables & Supplies LTD (MDS), for the year ended March 31, 2021, reported $2.42 billion for revenue, a 2% decline relative to $2.48 billion booked the previous year. For the quarter, revenues totalled $656.49 million, down 13% year over year (2020: $755.50 million). The Company stated that, “In March 2020 the Government implemented curfews and shuttered businesses. This resulted in reduced business activity and demand for goods and services, particularly the demand for non-essentials products. Fortunately for Medical Disposable and Supplies Limited, there was an increase in the demand for pharmaceuticals, especially medication for the treatment of lifestyle diseases such as hypertension and diabetes.”

Cost of sales went down 5% to close the period at $1.82 billion relative to the $1.92 billion reported for the same period last year. This resulted in gross profit of $598.89 million, a 7% increase compared to $558.93 million reported last year. Gross profit for the quarter amounted to $166.35 million (2020: $160.04 million).

Total operating costs closed the period at $509.66 million, up 9% (2020: $465.83 million). Of this:

• Administrative expenses amounted to $254.83 million (2020: $244.24 million).
• Selling and promotional costs totalled $225.34 million (2020: $184.65 million).
• Depreciation cost closed the period at $28.49 million (2020: $29.34 million).
• Impairment of financial assets totalled $1 million (2020: $7.59 million).

Total operating cost for the fourth quarter closed at $145.88 million (2020: $149.25 million), reflecting a 2% decrease when compared to 2020 fourth quarter.

The Company’s loss on foreign exchange was reported at $11.04 million compared to $19.48 million in 2020. Finance costs and finance income increased to total $70.09 million (2020: $48.14 million) and $484,818 (2020: $2.85 million), respectively. Gain on disposal of property, plant and equipment for the period amounted to $50,000 (2020: $1.50 million). Gain arising on business acquisition amounted to $62.09 million (2020: nil).

As a result, MDS reported profit before tax of $75.94 million, a 114% increase relative to the $35.48 million in 2020. For the quarter, profit before tax closed at $61.89 million (2020: $2.15 million).

Consequently, net profit for the period amounted to $69.61 million relative to $34.56 million in 2020, a 101% increase after incurring a tax charge of $6.32 million (2020: $920,775) for the period. Net profit for the quarter amounted to $57.32 million (2020: $5.39 million).

Earnings per share for the period amounted to $0.26 (2020: $0.13). EPS for the quarter closed at $0.22 relative to $0.02 in 2020. The number of shares used in the calculations is 263,157,895. MDS last traded on July 13, 2021 at $5.00 with a corresponding P/E ratio of 18.90 times.

Management noted, “The first quarter was particularly harsh on business, but the Group started to realise a turn-around by the end of the second quarter. By end of the financial year, sales across the Group had normalised and, in some cases, outpaced previous performance. With the continued inoculation of the population, there is more optimism for a return to normalcy in the medium term.”

Balance Sheet Highlights:

As at March 2021, ‘Total Assets’ amounted to $2.29 billion, relative to $1.74 billion reported in the prior year. This increase was primarily due to an upward movement in, ‘Inventories’ by 49% to $853.80 million (2020: $571.60 million). Also, ‘Property, Plant and Equipment’ contributed to the growth closing at $819.68 million (2020: $611.07 million).

Shareholders’ Equity totalled $894.76 million (2020: $833.76 million) resulting in a book value per share of $3.40 (2020: $3.17).

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