Chidawu pushed out of Pelhams

HARARE - Businessman Oliver Chidawu has been booted out as Pelhams chairperson after shareholders voted against his re-election at an annual general meeting yesterday.

Simbarashe Mupandanyama a director of the furniture retailer was also shown the door while other directors, Douglas Munatsi, Phineas Whata and Florence Ziumbe voluntarily resigned.

Five board members representing Pelhams’ new majority shareholder, Lifestyle Holdings (formerly TN Financial Holdings), were appointed onto the company’s board in a move market watchers feel could rescue the furniture group with credit facilities from Lifestyle’s diversified services.

Tawanda Nyambirai, Rugare Chidembo, Alexander Gonese, Winston Makamure and Charity Chanetsa were elected as directors of Pelhams.

Lifestyle Holdings nominee Benjamin Balneves withdrew his candidature at the last hour paving way for Liberty Rasunguzwa to be retained onto the new board.

Changes at the listed furniture retailer comes on the back of TN Asset Management Nominees, an investment arm of TN Holdings, last year’s acquisition of Chidawu’s 36 percent stake of the company in a special bargain of 358 207 502 shares at 0,71c each.

Chidawu had used his shares to secure a $3 million loan from controversial businessperson, Jayesh Shah as collateral.

They were the same shares that Shah sold to TN Asset Management nominees after Chidawu failed to honour his obligations.

TN later bought an additional 22 percent stake in Pelhams, giving it a 58 percent effective control of Pelhams. TNH qualifies for a board seat for every 10 percent of equity held.

Presenting Pelhams trading update, company chief executive Oswald Masoha said operations from the beginning of the financial year in April have been subdued mainly due to an inability by the company to access meaningful funding for the debtors book.

“The Pelhams model is driven by credit and in the absence of funding for the debtors book the operations are seriously affected,” he said.

“Turnover for the business in the first quarter of the year at $2,5 million were 16 percent lower than the same period last year. As a result the business in the first quarter of the year operated at a sub-optimal level recording losses on a monthly basis. Credit sales create funding gaps that are normally covered through securitisation of the debtor’s book.”

Credit sales made up 68 percent of total sales for the quarter down from 77 percent at year end in March 2012.

Masoha said in the absence of meaningful debtors funding there has been a deliberate shift in the credit mix from 24 month credit down to 12 months.

At year end 27 percent of the debtors book was above 12 months and in the first quarter this has been reduced to six percent.

The debtors book at the end of the quarter stood at $9 445 208 down 10 percent from the end of the last financial year.

“Margins continued to be tight in a highly competitive market and in an effort to increase cash sales in the interim various discounts are now being offered to customers. Cash sales increased from 23 percent at the end of March 2012 to 32 percent for the quarter although this was off a lower base,” said Masoha.

A gross margin of 22,18 percent was achieved for the quarter compared to 30,01 percent for the same period in the previous year.

Sales volumes on major lines were at 3 561 units for the quarter compared to 3 856 units for the same period in the previous year to 7,7 percent decline.

In the outlook period Masoha said the business will need to be recapitalised to allow for growth, refurbishment and retention of finance charges which at present are being fully securitised when funding is secured.

“2011 showed the potential in this business to grow and effectively leverage off its established brands, staff, branch network and systems. The establishment of a consistent funding model for the debtors book will contribute towards growth in the short term,” he said. - John Kachembere

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