Caps has another excellent year

Pharmaceutical company, CAPS, which barely two years ago was beset with problems of escalating costs, poor morale, lack of adequate product availability, a declining market share and a questionable future, has once again posted remarkable results with profit attributable to shareholders increasing 618 percent for the year ending March from $4.5 million to $32 million.

The only disturbing thing is that the company failed to reduce its gearing from 118.6 percent to 66.8 percent as targeted but ended up with a gearing ratio of 92.2 percent. But the company says the level of borrowing has been a cause of concern and it has sought to address the problem through a tight working capital approach coupled with specific capital raising strategies such as the warehousing of shares for joint venture partners and the rights issue.

It also says after realising that profit target set for the year would be achieved, the company decided to accelerate payments to foreign creditors to manage its exposure because of the highly volatile exchange rates.

This, it says, resulted in a “temporary” increase of $40 million in net short-term borrowing but this situation will reverse in the current financial period ending December because the enhanced creditworthiness of the group’s operations will facilitate better trading terms and the free cash generated will be committed to reducing gearing. It forecast a reduction of gearing to 24 percent by December.

The group’s best performer was CAPS (Pvt) Limited, the manufacturing subsidiary which saw a 48 percent increase in turnover.

Geddes and QV Pharmacies also did well recording real growth of 10 percent and 20 percent respectively.

CAPS Botswana and the South African operation also did well but the Zambian and Malawian operations still posted losses.

The company is now holding discussions with joint venture partners.

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