FORMER Interfresh Holdings Limited chief executive officer (CEO), Evan Christophides, has taken over FAVCO, the fresh produce retail unit offloaded by Ariston Holdings Limited last year after posting a string of losses, the Financial Gazette’s Companies & Markets (C&M) can reveal.
The Zimbabwe Stock Exchange-listed Ariston hived off FAVCO last year as directors moved to avert further diminution of shareholder value.
Ariston had plumped to a US$1,7 million post tax loss from continuing operations during the year ended September 30, 2015. Discontinued operations reported a US$3,4 million loss during the period, which Ariston chairman, Robbie Mupawose attributed to “poor results of the trading division (FAVCO) and the costs of unwinding the business”.
Ariston CEO Paul Spear, last week confirmed the deal, which gives Christophides the right of first refusal over Ariston’s local produce.
He said Christophides had the capacity to turnaround FAVCO, adding that the arrangement they have with the former Interfresh boss was working “very well”.
Spear said the diversified nature of Ariston could have been behind the troubles that confronted FAVCO because they were not in a position to give the outfit undivided attention.
With Christophides focusing solely on the business on a day-to-day basis, Spear is confident that the business can only improve going into the future.
“He took over the vast majority of the staff and all the equipment,” Spear told C&M after Ariston’s annual general meeting on Friday last week.
“We (are) left with a certain amount of legacy issues to sort out. It was a loss-making operation for us and we sold it, for lack of a better word, as a going concern. He is more dedicated; we probably suffered a little bit from being too diverse. I cannot put a value on the business as it was losing money,” he said.
“The arrangement, going forward, is that he (Christophides) has the right of first refusal on our local produce. And it seems to be working very well,” said Spear.
FAVCO’s assets were valued at US$60 000 during the year to September 30, 2015, from US$2,5 million during the prior comparative period in 2014.
Christophides served at Interfresh for 15 years.
He resigned from Interfresh a few years ago during a Reserve Bank of Zimbabwe investigation into allegations of foreign currency externalisation at the now de-listed horticultural outfit.
But under his stewardship, Interfresh, whose business has been affected by the compulsory acquisition of several of its properties by the State, largely maintained its reasonable performance until his departure.
FAVCO, one of the biggest traders in fresh produce, had been hamstrung by losses since 2009, when the country switched to the multicurrency system.
Between 2009 and June 2015, FAVCO’s cumulative losses reached US$72 million, which leaned heavily on the operations of Ariston, which has found the going tough in a volatile climate precipitated by falling commodity prices on the international markets.
In addition, a shrinking domestic economy, and high interest rates have piled pressure on Ariston’s working capital, which remained at a negative of about US$2 million during the year ended September 30, 2014 and 2015.
Ariston said the working capital strain “has at times been critical”.
This has been worsened by long-term debts.
In a shareholder update last week, Spear said Ariston’s debt currently stood at US$15,6 million, up from US$13 million in September last year.
“A total of US$5 million belong to our major shareholder, who has agreed to convert the debt into equity or deal with it,” he said.
The group has moved to tackle the debts, with reports indicating that Origin Limited, the 68 percent shareholder in Ariston, is likely to increase its stake in a debt to equity deal.
Ariston has been trading under a cautionary statement, advising investors to exercise caution in dealing with its shares.
Spear told shareholders that after FAVCO last traded in June, cash outflows had been significantly reduced.
Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette