Corporate Profile | 1 | |
Corporate Milestones | 3 | |
Corporate Structure | 5 | |
Chairman's Message | 7 | |
Financial Highlights | 9 | |
Financial Review | 11 | |
Business Outlook and Prospects | 13 | |
Research and Development | 15 | |
Corporate Social Responsibility | 16 | |
Corporate Directory | 18 | |
Profile of the Board of Directors | 20 | |
Financial Calendar | 23 | |
Report on Corporate Governance | 24 | |
MEDTECS INTERNATIONAL CORPORATION LIMITED | List of Properties | 49 |
Statistics of Shareholdings | 50 | |
Twenty Largest Shareholders | 52 | |
Interested Person Transactions | 53 | |
Notice of Annual General Meeting | 54 | |
Financial Statements | 63 | |
Directors' Statement | 64 | |
Independent Auditor's Report | 67 | |
Consolidated Statement of Comprehensive Income | 73 | |
Statements of Financial Position | 74 | |
Consolidated Statement of Changes in Equity | 76 | |
Statement of Changes in Equity | 78 | |
Consolidated Statement of Cash Flows | 79 | |
Notes to the Financial Statements | 81 |
Corporate
Profile
Medtecs International Corporation Limited (the "Company" or "Medtecs") is a leading supplier and distributor of personal protective equipment ("PPE") and provider of logistics services to healthcare institutions with over 30 years of experience in the manufacturing of PPE and workwear. The Company and its subsidiaries (collectively, the "Group") commenced operations in 1989 and has since established a strong presence in the United States, Europe and Asia Pacific. The Group has offices and facilities spanning across Asia including Singapore, Taiwan, the Philippines, the People's Republic of China ("China"), Cambodia and the United States of America. The Company was listed on the Singapore Dealing and Automated Quotation System (SESDAQ) of the Singapore Exchange Securities Trading Limited ("SGX-ST") on 6 October 1999 and transitioned to sponsor-supervised regime on Catalist with R & T Corporate Services Pte. Ltd. as its
Medtecs (Taiwan) Coporation
continuing sponsor on 26 February 2010. The Group's Taiwan
Medtex Coporation
Hangzhou Jincheng Medical
Depository Receipts ("TDRs") have been listed on the Taiwan Stock Exchange since 13 December 2002.
The Group's main lines of business include manufacturing, trading and distribution, and providing integrated hospital services. As a manufacturer of a wide range of PPE, workwear apparels and protective coverings for hospitals and manufacturing industries, the Group maintains diversified manufacturing facilities and production lines in the Philippines, Cambodia, Taiwan and China and the United States to reduce supply chain disruptions. For our trading and distribution business, the Group has logistics and warehousing centers in Canada, Europe, Japan and the United States and is working with Amazon, DHL and other e-commerce and logistics services providers to optimise our distribution efficiency. As a hospital services provider, the Group provides hospitals in Taiwan and the Philippines with integrated services which include rental and laundry of linens, management of laundry facilities, hospital automation, as well as procurement solutions for the hospital's PPE and medical devices needs. In Taiwan, the Group is currently the dominant total solutions provider for such hospital services, with a customer base of 19 hospitals.
The Group has also successfully expanded its hospital service in the Philippines, covering 30 hospitals.
The Group is dedicated to safeguarding the health and safety of people worldwide.
1
Supplies Manufacture Co., Ltd.
RMKH Glove (Cambodia) | Medtecs (Cambodia) |
Co., Ltd. | Coporation Limited |
2
Corporate
Milestones
3 | 4 |
Corporate
Structure
The Company and its subsidiaries as at 31 December 2023
5 | 6 |
Chairman's
Message
Dear Shareholders,
First and foremost, on behalf of the Board of Medtecs Group, please accept my sincerest greetings, as well as my profound apologies for the Group's less than ideal operating performance in the post-pandemic era over the past two years.
Faced with an immensely challenging global landscape, we remain focused on carrying out targeted efforts and in executing the Group's operations and we are proactively reinforcing operational resilience to seize opportunities arising from the restructuring of global supply chains, while concurrently planning our foray into the silver economy and long-term care industries.
The Year In Review
In FY2023, the global PPE market continued to decline, especially with weak end-user demand. The Group's total revenue decreased by 6.4% year-over-year to $52.64 million, mainly due to the underperformance of the domestic markets in Taiwan and the Philippines. In the second half of FY2023, customers in the original equipment manufacturer ("OEM") business segment began placing orders to rebuild their stock levels following the depletion of their oversupplied inventory, and revenue from new product lines (such as our nitrile gloves) also showed a warming trend.
The Group still recorded a net loss of $22.49 million in FY2023, mainly due to the provision for doubtful accounts receivable, impairment losses on fixed assets, higher depreciation expenses from fixed asset investments, and one-time costs associated with the retirement of production line employees.
Focus on Core Business, Strengthen Execution
Continued Development of Core Business
We will continue to focus on the development and
7
Clement Yang
Chairman
production of our core product, namely PPE. By enhancing product quality and production efficiency, we can strengthen our competitiveness in the global market.
Over the past two years, we have maintained close communication with our partner customers, and have undertaken structural adjustments to address their concerns over quality assurance, product certification and compliance, production efficiency, and delivery times, which will undoubtedly contribute to our long- term development.
Strict Cost and Expense Managements
Facing the uncertainty of the global economy and the pressure of rising costs, we strive to maintain the Group's competitiveness. With the implementation of our Enterprise Resource Planning ("ERP") system, we will continue to streamline processes and reduce operational expenses by optimising production line efficiency, logistical support department cost management, and energy management. These efforts will help reduce our cost-to-income ratio and enhance our profitability.
Strengthening Supply Chain
Management
Amid the escalating risks of geopolitics and warfare, global supply chains face numerous challenges. The Group has undertaken relevant optimisation in supply chain management, including:
- Utilizing ERP and Artificial Intelligence ("AI") interface to adjust inventory levels
- Establishing robust collaborative relationships with key suppliers
| Optimising production processes through lean |
management and automation to improve | |
efficiency |
- Enhancing logistics and distribution networks to increase delivery speed
Through these efforts, we can effectively reinforce the stability and flexibility of our supply chain, mitigate operational risks, and ensure rapid and efficient fulfillment of customer demands.
Venturing into Long-Term Care
Since the Group's establishment, we have upheld the vision "to better the world's health for everyone, everywhere" and the mission of "providing safe and effective products with speed, warmth, and care". Whether in the production and manufacturing of PPE or the provision of services to medical institutions, we have consistently advanced in accordance with this philosophy.
As developed nations gradually transition into aging societies, the longevity industry is also rapidly evolving. This encompasses, but is not limited to, healthcare, biotechnology, medical equipment, anti-aging research, health management, nutritional supplements, elderly care services, and home nursing care.
The Group is looking to expand product offerings to include home health products and medical devices to address the needs of an aging society. We are actively promoting high-tech elderly care solutions, health management services, and social participation for the elderly. Our aim is to progressively build a comprehensive and diversified longevity industry ecosystem that caters to the diverse needs of the aging population.
Green Future, Sustainable Development
In response to the environmental, social, and governance (ESG) and corporate social responsibility (CSR) requirements, particularly in the realm of green energy, the Group has implemented a series of strategies to enhance sustainability and reduce its environmental footprint. This includes transitioning towards the use of renewable energy sources such as solar and biomass to increase the proportion of green energy consumption at existing production sites, thereby reducing carbon emissions; building a green supply chain; training employees to raise environmental awareness; and participating in green community projects. Through these initiatives, we not only mitigate the environmental impact of our operations but also bolster our corporate image and competitiveness to achieve corporate sustainability.
Acknowledgement
Amidst the fluctuations and challenges in the global political, economic, and financial landscape, and in addition to implementing the aforementioned operational strategies and countermeasures, we will continue our efforts to execute the "4A Project" initiated last year. This encompasses AI, Application Programming Interface (API), Analytics, and Automation, with the aim of enhancing operational efficiency and effectiveness. In 2024, we will persist in actualizing the 4A Project implementation. Furthermore, we will maintain our unwavering commitment to the 5S/7S activities that have been promoted for the past six years. We firmly believe that by upholding our core values of "Customer Focus, Valuing Our People, and Sustainable Practices," we will undoubtedly scale to new heights through the collective efforts of all our colleagues.
Once again, we extend our gratitude to all shareholders for their support and trust. We look forward to continuing this journey with you in the future.
Clement, Yang Ker-Cheng
Chairman
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Financial
Highlights
Revenues slightly declined in FY2023 following decline in global demand but
improved orders from existing OEM customers
Historical Revenue
(US$'m) | 400.3 | |||
300 | ||||
237.7 | ||||
250 | ||||
200 | ||||
150 | 144.2 | |||
100 | 58.9 | |||
162.6 | ||||
56.2 | 52.6 | |||
50 | ||||
85.3 | 24.6 | 26.1 | ||
0 | 31.6 | 26.5 | ||
FY2020 | FY2021 | FY2022 | FY2023 | |
1HFY | 2HFY |
Revenue Breakdown by Business Segment and Geography
Distribution and Others | Distribution and Others | |
11% | ||
7% | ||
Hospital Services | Hospital Services | |
27% | ||
26% | Manufacturing | |
Manufacturing | ||
63% | 66% | |
FY2022 | FY2023 | |
North America | Australia | North America |
1% | ||
16% | ||
17% | Europe | |
25% | Europe | |
39% | ||
Asia | Asia | |
45% | ||
57% | ||
FY2022 | FY2023 |
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FY2023 noted improvements in profits and margins from recovery in OEM orders
and lower inventory provisions
Historical Profits and Margins
(US$'m) | |||||||||
220 | 60.0% | 42.9% | |||||||
171.6 | |||||||||
170 | 40.0% | 29.2% | |||||||
131.7 | 32.9% | ||||||||
120 | 20.0% | 11.5% | 11.3% | ||||||
70 | 42 | 0.0% | -5.9% | ||||||
FY2020 | FY2021 | FY2022 | FY2023 | ||||||
16.5 | |||||||||
20 | -3.3 | 6.0 | -20.0% | ||||||
-30 | FY2021 | FY2022 | FY2023 | FY2023 | -40.0% | -52.0% | -42.8% | ||
-29.3 | -22.5 | ||||||||
Gross Profit | Net Profit | -60.0% | GPM | NPM | |||||
- Improvement in profit margins in FY2023 was due to the higher provisions for inventory losses in FY2022, which was also due to a lowered global demand for the Group's PPE as a result of the easing of COVID-19 prevention measures in FY2022. The Group recognized provision for inventory losses amounting to US$3.1 million in FY2023 in respect mostly of the nitrile gloves.
- The Group has leveraged on its existing OEM customers who have increased PPE orders in FY2023 following depletion of their oversupplied inventories of PPE stockpiled in prior years. The Group also started delivering orders for nitrile gloves after the inauguration of its factory in Cambodia.
Financial Position | ||||||
Balance Sheet Highlights | Capex level - Reduced spending after | |||||
(US$'m) | ||||||
As at | As at | inauguration of new glove factory | ||||
31 Dec 23 | 31 Dec 22 | (US$'m) | Capex | |||
Cash and cash equivalents | 33.0 | 35.3 | 20.0 | |||
Inventories | 37.4 | 36.4 | 18.1 | |||
- Inventory days | 292 | 223 | 14.1 | |||
6.7 | ||||||
3.1 | ||||||
Account Receivables | 24.3 | 30.4 | 0.0 | |||
FY2020 | FY2021 | FY2022 | FY2023 | |||
- AR days | 169 | 197 | ||||
Account Payables | 2.0 | 1.8 | (US$'000) | FY2023 | FY2022 | |
- AP days | 16 | 11 | Cashflow from operating activities | (7,185) | 1,265 | |
Key Ratios | Cashflow from investing activities | 9,608 | (29,163) | |||
Debt / Equity (x) | 0.3x | 0.2x | Cashflow from financing activities | 1,840 | (3,017) | |
Net Debt / Equity (x) | n.m. | n.m. | Net cash flow | 4,263 | (30,915) |
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Financial
Review
Business Overview
The Group's revenue decreased by 6.4% to US$52.6 million in FY2023 from US$56.2 million in FY2022 due to an overall decline in demand of PPE and facemasks and lower stockpiling projects of the Group. Despite that, the Group has leveraged on its existing OEM customers who have increased PPE orders in FY2023 following the depletion of their oversupplied inventories of PPE that were stockpiled in prior years. The Group in FY2023 also started delivering orders for nitrile gloves after the inauguration of its factory in Cambodia in the second half of FY2022. Net loss decreased by 23.2% to US$22.5 million in FY2023 from US$29.3 million in FY2022 due to higher provisions for inventory losses in FY2022, which was also due to a lowered global demand for the Group's PPE as a result of the easing of COVID-19 prevention measures in FY2022.
The Group revenues declined by 6.4% to US$52.6 million and generated a net loss of US$22.5 million on drop in global demand of PPE and provisions from expected credit loss and impairment of property, plant and equipment.
Revenue
Revenue from the Original Product Manufacturing ("OPM") division decreased by 3.1% to US$34.6 million in FY2023 from US$35.7 million in FY2022 due to decline in global demand for PPE and facemasks.
Revenues from Hospital Services division increased slightly by 1.6% to US$14.5 million in FY2023 from US$14.3 million in FY2022 due to increased linen consumption in Taiwan and Philippines. Revenues from Distribution and Others decreased by 43.4% to US$3.5 million in FY2023 from US$6.3 million in FY2022 due also to lower demand in Taiwan for PPE and facemasks.
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Profitability
The Group's gross profit increased significantly by 278.5% to US$6.0 million gross profit in FY2023 from US$3.3 million gross loss in FY2022 due to lower provision for inventory losses in FY2023 amounting to US$1.6 million, compared to US$11.7 million in FY2022. This led to an increase in the Group's gross profit margins to a positive 11.3% in FY2023 from a negative 5.9% in FY2022. Without the provision for inventory losses, the Group's gross margins would be approximately 14.4% in FY2023 and 14.9% in FY2022.
Gross profit from the OPM division increased significantly by 167.0% to US$3.7 million gross profit in FY2023 from US$5.6 million gross loss in FY2022 due to lower inventory provisions and an increase in orders from existing OEM customers in FY2023. This also resulted to OPM gross profits margins to increase by 169.1% to positive 10.9% in FY2023 from negative 15.7% in FY2022.
Hospital Services division gross profit increased by 7.0% to US$1.9 million in FY2023 from US$1.8 million in FY2022 arising from higher linen consumption in Taiwan and Philippines.
Gross profit from Trading, Distribution and Others division decreased by 38.1% to US$301,000 in FY2023 from US$487,000 in FY2022 due also to lower sales.
Other operating income net decreased by 19.3% to US$2.0 million in FY2023 from US$2.5 million in FY2022 from fewer foreign exchange gains and scrap sales of fabrics and factory supplies.
Distribution and selling expenses decreased by 36.4% to US$7.6 million in FY2023 from US$12.0 million in FY2022 from decline in selling and platform fees from lower e- commerce sales. General and administrative expenses increased by 31.5% to US$23.3 million in FY2023 from US$17.7 million in FY2022 from higher provisions for bad debts on trade receivables and provision for impairment loss on machineries.
Financial expenses decreased by 14.2% to US$816,000 in FY2023 from US$951,000 in FY2022 due to lower financing cost from lease liabilities.
Income tax benefit decreased by 98.1% to US$27,000 in FY2023 from US$1.4 million in FY2022 arising from lower loss before tax of the Group.
Net loss decreased by 23.2% to US$22.5 million in FY2023 from US$29.3 million in FY2022 due to lower provision for inventory losses recognized in FY2023 in respect of the Group's nitrile gloves.
Cash Flow and Statements of Financial Position
Total assets of the Group decreased by US$15.2 million to US$166.8 million in FY2023 from US$182.0 million in FY2022 due to higher net cash used from operations and decrease in trade receivables from provision for bad
debts amounting to approximately US$6 million from receivables that have been outstanding for more than six months. Property, plant and equipment decreased to US$40.6 million in FY2023 from US$43.6 million in FY2022 from depreciation expense and provision for impairment loss on machineries.
The Group used cash from its operating cash flow of US$7.2 million in FY2023 from US$1.3 million generated from FY2022, attributable to the lower net working capital generated for the period. Cash outflow for investing activities decreased to US$9.6 million generated in FY2023 from US$29.2 million used in FY2022, due to the completion of the construction of the nitrile glove production factory in Cambodia and reduction of fixed deposit placements. Cash inflow from financing activities of US$1.8 million came from new bank borrowings, partially offset by payments of interest and lease liabilities.
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Business Outlook and Prospects
Manufacturing
Manufacturing remains the dominant segment in the Group in terms of revenue and profitability.
commerce platforms. We are working on having long- term PPE and facemask stockpiling arrangement with governments and hospital groups to provide stability in
As we look ahead to 2024, the Group is poised for growth, building on our legacy of safeguarding personal and family health with our products and services. Our outlook is anchored in a strategic commitment to expanding our offerings in home health products and medical devices to address the needs of an aging society and enhance our product lines for improved business resilience.
We plan to expand the Group's market reach and innovation through reaching new customers as well as developing new products and channels of distribution. Developing and launching new products, such as health supplements, bug repellents, anti-viral disinfectants, and medical devices equipped with AI technology, remains a cornerstone of our strategy. These efforts are geared towards aligning our portfolio with changing market demands. The Group will also be exploring new distribution channels to enhance market penetration and consumer access to our products.
To support our growth, we will continue to review our Group's operations in order to enhance operational efficiency, by streamlining processes and reducing operational expenses so as to achieve a leaner, more agile operational model. This includes a thorough reassessment of back-office, management, and sales expenses.
Building on our commitment to overcoming challenging business environments in 2023, we remain dedicated to further strengthening our supply chain in 2024. Our focus will be on building resilience, optimizing demand forecasting, and enhancing cooperative relationships with suppliers and distributors. This strategic approach is designed to enable swift responses to market changes and customer needs, ensuring we remain agile and responsive in a dynamic industry landscape.
Our diversification efforts include the full operation of Resilient Medical Pte. Ltd., to support our strategy for global stockpiling business and expanding into the business-to-consumer ("B2C") sector. As part of the effort, we are currently exploring the possibility of
installing solar panels in our existing factories and pursuing renewable energy opportunities in collaboration with strategic partners in Cambodia and the Philippines.
As disclosed previously, we remain open to exploring renewable energy markets to develop another growth driver for the Group, such as solar power and energy storage services. This initiative reflects our commitment to sustainability efforts and green manufacturing and will be explored in partnership with external strategic partners. As and when there are developments, more information on future plans will be provided to, and requisite approvals will be obtained from, shareholders at the appropriate juncture.
With the completion of the nitrile glove factory in Cambodia through its subsidiary, Resilient Medical Pte. Ltd., the manufacturing operations of the Group are poised to benefit from our diversification efforts with an expanded product base. The Group is also entering strategic partnership and alliances with suppliers to enhance its supply chain management to ensure flexibility on changing demands in our product lines.
The Group will also leverage on the heightened awareness of our healthcare and safety products globally. We have also invested in branding and marketing initiatives to develop and promoted the "Medtecs" and "CoverU" brands for both facemasks and PPEs and will leverage on the brand. We have boosted our E-commerce sites like Amazon and retail chains to make our products more accessible globally.
We have tapped the business-to-business and B2C business models to channel the growth in our operations and are working to expand our presence in more e-
demand and be the lead partner in abating infectious diseases globally.
Hospital Services
Our Hospital Services division provides us with a stable source of income. We are looking to strengthen our market presence and grow our market share in both Philippines and Taiwan with more hospitals outsourcing trend for non-core hospital operations over the region. We are also undertaking cost-reduction procedures to optimise margins in this segment.
Trading and Distribution and Others
Our trading and distribution business is critical to the Group not only as a stand-alone profit center but also provides auxiliary support to our other divisions. The Group aims to be one-stop total solutions healthcare provider and the heightened awareness on the healthcare industry has boosted this division.
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14
Research and Development
As we enter the post-pandemic era, Medtecs is not only enhancing its PPE line but also leveraging existing sales channels and crafting new business strategies. In 2023, we launched cleaning products and consumer goods to enrich our product portfolio to meet evolving needs of our target consumer.
In 2023, the Group broadened its Amazon protective clothing lineup with the introduction of the Coverall Yellow and Coverall Collar. These products, crafted from PPSB fabric coated with PE film, meet the AAMI Level 4 standard, ensuring comprehensive protection for users. Furthermore, we added nitrile glove to our product portfolio. Nitrile gloves are favored for their enhanced durability, puncture resistance, and longevity compared to latex gloves. They are ideal for prolonged use and eliminate the risk of latex allergies, making them versatile for various uses, such as medical exams and food processing.
We also launched the OMO Acne Patch ("OMO"), which features a patented zero-contact easy removal technology from Korea and an ultra-thin design of 0.01 centimeters. This innovation overcomes the drawbacks of current market offerings, making removal easier and more hygienic. The successful introduction of OMO has
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allowed Medtecs to tap into physical beauty retail channels smoothly.
In 2023, we continued to prioritize product certifications, receiving U.S. Food and Drug Administration 510(k) premarket notification for our nitrile gloves and Taiwan Food and Drug Administration Class I Medical Device Permit Licenses for four of our products. Additionally, we obtained four Taiwan Food and Drug Administration medical device permits for our surgical mask and CoverU Coverall, along with one pharmaceutical distributor license. These certifications underscore our commitment to providing high-quality and safe products to our customers.
For 2024, our strategy includes closely monitoring market trends and consistently introducing new safety and health-related products to offer a broader variety of options to consumers. This approach aligns with the Company's vision and mission to better the health of everyone, everywhere and provide safe and effective products with speed, warmth, and care. The products planned for launch include bug repellent, which is safe, effective, gentle and non-irritating, with super long- lasting anti-mosquito effect, and a series of healthcare products so that we can offer a more diversified and complete product line for consumers.
Corporate
Social
Responsibility
Medtecs Group is committed to enhancing global health, safety, and environmental sustainability. As a leading producer of PPE, we embrace the responsibility to extend our influence beyond mere business operations. In 2023, we participated in initiatives across Taiwan, the Philippines, and Cambodia that reinforce our dedication to community welfare and environmental stewardship.
Taiwan
In Taiwan, Medtecs demonstrated its commitment to public health through strategic partnerships with local healthcare organizations. We donated 150,000 medical masks to facilitate blood drive campaigns organized by Lotung Bo-Ai Hospital in Yilan, Taiwan. We further extended our reach by supplying bouffant caps to the oral health team of Taipei Medical University. This essential support played a crucial role in the team's dental healthcare missions focused on delivering services to remote mountain communities.
As the year drew to a close, we expanded our commitment to community service by teaming up with eight local non-profits focused on assisting people with physical and mental challenges, as well as the elderly. This timely collaboration provided critical support during the flu and COVID-19 season by donating medical supplies to safeguard these vulnerable populations. The
donated items, including masks, face shields, antibacterial wipes, nitrile gloves, and leak-proof bed sheets, helped to enhance care and protection for those most susceptible to illness.
Continuing our tradition from 2022, we reinforced our dedication to environmental conservation with a beach clean-up in September 2023, organized for our Taipei Headquarters staff. The event not only contributed to local ecological efforts but also the enhancement of collective responsibility among our employees.
To raise breast cancer awareness, Medtecs sponsored a charity marathon in partnership with the Taiwan Cancer Clinical Research and Development Foundation. The event drew approximately 5,000 participants and successfully raised awareness and funds. Medtecs awarded participants with acne patches and masks to recognize their efforts and support for the cause.
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Medtecs International Corporation Ltd. published this content on 14 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 April 2024 23:49:02 UTC.