Company issues advisory to JSE detailing negative impact

Montego Bay-based pharmaceutical company, Indies Pharma Jamaica is reporting that its operations have been hit hard by the COVID-19 pandemic.

The company has issued an advisory to the Jamaica Stock Exchange (JSE), where its shares are traded, detailing the extent of the impact on its operations. In its advisory, Indies Pharma reports, “we hereby take this opportunity to notify to your esteemed authority that the spread of the novel coronavirus disease (COVID-19), declared a global pandemic by the World Health Organization on March 11, 2020, appears to have impacted our revenue streams negatively”.

The collapse in revenue has been identified as mainly due to the breakdown of the supply chain system and therefore key products being out of stock during 2020.

According to Indies Pharma, “although it appeared we were surviving the negative impact in the initial stages, it did affect us to a certain level mainly due to the disruption in supply chain and therefore the stock levels.”

LIMITATIONS ON DELIVERY AND WORK HOURS

In addition, Indies Pharma was negatively impacted on the Jamaican market by the limitations applied to delivery schedules, compounded by the limited number of working days since its entire staff was allowed to work alternate days to maintain social distancing. This was done to reduce the exposure during routine working hours.

Indies Pharma made the point that a reasonable estimate of the impact of COVID 19 cannot be made at this time.

However, “we have been monitoring the situation regularly and have successfully implemented contingency plans to meet the challenges ahead of time so that we will continue to emerge successfully as we mitigate and move forward with the pandemic at the forefront,” Indies Pharma states in its advisory today to the JSE.

With the reopening of the ports and cargo supply channels, Indies Pharma says it is now at an advanced stage of planning production and supply chain channels so that the company can remain self-sufficient and positively productive during its new fiscal year that just started on November 1, 2020.

REVENUES DOWN FOR THE NINE-MONTH PERIOD

For the nine months ended July 31, 2020, Indies Pharma Jamaica achieved revenues of $565.83 million, representing a decrease of 1.7 per cent or $9.98 million over the corresponding period in 2019. This outcome resulted from the delay in shipments due to COVID-19, which led to items being out of stock.

Though revenue was decreased, there was growth and profitability for the nine-month review period. Gross profit went up  2.7 per cent or $10.369 million while net profit went up 34.9 per cent or $41.239 million.

Administrative and other expenses decreased by $29.693 million compared to the same period in the prior year. This was mainly due to the decline in rent, vehicle expenses, Information Technology, security and the lack of one-off expenses such as interest penalty.

Indies Pharma stock price closed at $2.94 on July 31, 2020, representing an increase of 96 per cent or $1.44 per share since the company’s Junior Market listing on August 15, 2018 on the JSE. Liabilities increased by a whopping 754 per cent ($498.280 million), predominantly due to loan for the purchase of land which will be used for the construction of Indies Pharma Corporate Office.

The liabilities also grew because of the company’s adoption of IFRS 16 ‘leases’ which requires the lessee to record a liability for the remaining contractual life of the lease payments. There was also a slight decrease in trade payables.

In the meantime, the company’s liquidity position remained healthy with a current ratio of 1.27:1, meaning that the company has $1.27 of current assets for every $1 of current liabilities.  The current return on equity is 21.5 per cent compared to 17.4 per cent in the similar period in the prior year.

This shows a strong indication of how well Indies Pharma Jamaica Limited is managing its assets to create profits.