Pelhams posts a $1,7m loss

Published: 09 July 2013

PELHAMS Limited posted a $1,7 million loss for the year ended March 31, 2013 compared to a profit of $1,5 million for the same period last year due to liquidity challenges.

In a statement accompanying its financial results, company chairperson Tawanda Nyambirai said during the period under review current liabilities exceeded current assets by $1,1 million.

"The losses incurred during the year are mainly a result of the challenges that the company faced in raising funding for its debtors book. The liquidity challenges that the market faced in the financial year made it increasingly difficult for the company to access the required funding," he said.

He said sales for the year declined by 50% from the prior year to $8,4 million from $16,7 million as the company sought to strike a balance between its credit and cash sales and to unwind expensive debt structures.

Credit sales contributed 69% of total sales compared to 82% the previous year.

Revenue for the group declined to $11,4 million from $21,1 million in 2012.

Nyambirai said during the period under review, gross margin decreased marginally to 26% from 27% as the company focused on better quality local products that cost more than imported products.

Gross debtors' book reduced by 44% to $5,8 million during the period under review from $10,3 million while finance income was reduced by 31% to
$3,1 million.

Nyambirai said Lifestyle Holdings Limited, a major shareholder in the company, had agreed to subordinate $1,23 million due to it for a period of one year to allow the company to manage the working capital gaps arising from the year-end gap.

In the first quarter of the financial year, Pelhams embarked on realignment of overheads and the relocation and closure of non-performing branches and research and manufacturing of exclusive lines to increase margins and the conclusion of capital-raising initiatives is expected to contribute to the company's return to profitability.
- newsday