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QV pharmacies is set to be placed under final judicial management after the company recorded a slight increase in gross profit for the two months ending 28 February 2014.The company recorded a 5 percent increase in profit from $65 500 recorded in January this year to $68 000 recorded in February 2014.

QV pharmacies provisional judicial manager Mr Winsley Militala in a report to the company’s creditors confirmed that the company is slowly getting back to profitability and regaining its market share.

“The company is cautiously trading its way out of a funding deficit of some $1, 5 million and trading so far has been encouraging.

“The company operated for a long time without sufficient working capital to fund its operations,” he said.

He said “In view of the foregoing and current trading performance, I recommend that the company be placed into final judicial management in order for it to continue on its recuperative path.”

Mr Militala told creditors that the workforce at QV pharmacies was heavily blotted by the inclusion of employees from other group companies, resulting in an unsustainable wage bill.

Funding for the little activity that was taking place was obtained through withholding payments that were due to suppliers of trading stock, as well as those due to landlords and employees.

Mr Militala said during that period there appeared to be no sustainable and legitimate strategies in place to redress the situation. However, the company’s revenue slightly declined from $140 000 recorded in January this year to $139 000 recorded in February.

“The chairman’s voluntary surrender of the Borrowdale branch lease just before the onset of the judicial management process bears testimony to the bankruptcy of ideas and strategy,” he said.

The company’s asset base was badly eroded, with inter-group company indebtedness not having been accounted for property.

QV pharmacies was trading in circumstances of insolvency, with total liabilities being in excess of five times the book of total assets, resulting in the negative equity of $1,3 million.

Total assets of the company in the period under review was sitting at $328 000. Mr Militala said the judicial manager with the co-operation and support of both the applicant creditors and employees has restored order to the governance structure of the company as well as mapping a clear strategic path to be followed.

The strategy by the provisional judicial manager was underpinned by the insistence on prudent conduct throughout the company’s operations.

“The strategy is bearing fruits as evidenced by the regaining of market share and meeting all of the company’s current obligations since the coming on board of judicial management,” said Mr Militala in the report.

Pulse medical care, Medivison Holdings, PCD and Sky Pharmaceuticals in their capacities as creditors, an application was made placing QV pharmacies private limited into provisional judicial management.

Source : The Herald