Significant Increase in Medika’s Profit

The Medika Group ended the last year with a profit of 48.3 million kuna, which is significantly higher compared to the profit of 18.4 million kuna from 2011, while the company Medika d.d. achieved a profit of 34.4 million kuna, after 12.5 million kuna profit from 2011, according to data from the interim consolidated report.

The report was submitted by Medika today to the Zagreb Stock Exchange, noting that it is provisional and unaudited and as such has not been approved by the Supervisory Board, so it should not serve as a basis for investment decisions for investors, but only as a framework information until the final results are published in March. In addition to Medika d.d., the report also pertains to the Group, which includes six healthcare institutions, i.e., pharmacies in Zagreb, Split, Osijek, Gornji Grad, and Bošnjaci.

The total revenues of the Medika Group last year increased by about 4 percent compared to 2011, reaching 2.27 billion kuna, alongside a simultaneous increase in total expenses of 2.7 percent, to 2.22 billion kuna.

Among the events that marked the business year 2012, the report states that temporary budget financing in the first quarter of last year resulted in weaker collection of receivables from customers, which led Medika to increase its credit indebtedness with commercial banks in order to maintain liquidity. In May, when a partial rehabilitation of the healthcare system was carried out, Medika partially used the received funds to reduce indebtedness, while in September a reprogramming of loans that were in foreign currency to kuna loans was executed, thus reducing currency risk.

The greatest risk for the operations of Medika d.d., the report states, is the long collection period of receivables from customers, especially regarding customers within the HZZO system. However, it adds, since these are, directly or indirectly, receivables from state institutions, the collection of these receivables should not be viewed as a risk of non-collection. Nevertheless, these receivables indirectly increase the need for additional financing, and thus additional costs for Medika’s operations.

Additionally, the risk for the operations of this pharmaceutical and medical supplies trader is represented by the constant reduction of drug prices on the HZZO list, as well as the administrative determination of drug prices and margins, so in order to mitigate the impact of this risk, Medika has expanded its range to include products that are not legally limited in terms of price.