Turnall 2010 interim results presentation

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For the half year ended 30 June 2010

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Turnall 2010 interim results presentation

  1. 1. HALF YEAR RESULTS JANUARY- JUNE 2010 J.A. Jere 1 27 SEPTEMBER, 2010 Managing Director
  2. 2. HISTORY Turnall Holdings Limited, formerly the Building and Construction division of TH Zimbabwe Limited, operates through two divisions Turnall Building Products - 1943 Turnall Piping Products - 1972 Sole shareholder of four dormant companies namely Acacia Holdings Limited Hastt Corporation Limited Hastt Discs (Private) Limited Tractor and Equipment (Pvt) Ltd 2
  3. 3. OUR VISION Turnall Holdings serves its Zimbabwe & Export Customer needs as the leading brand and manufacturer of quality shelter and pipe products. We will continue to grow and sustain our profitability to satisfy Stakeholders and ourselves by demonstrating our real commitment to our values, environment and the community. 3
  4. 4. DIRECTORATE H. Nkala -Non Executive Chairman J.P. Mutizwa -Non Executive Deputy Chairman J Jere -Executive R.S Dube -Executive J. Mushayavanhu -Non Executive R. Likukuma -Non Executive C.E Dhlembeu -Non Executive L. Manyenga -Non Executive P.C.C Moyo -Non Executive C. M. Gadzikwa -Non Executive
  5. 5. EXECUTIVE MANAGEMENT John A. Jere - Managing Director Robert S. Dube - Finance Director Elizabeth Mamukwa - HR Director Edwin Kondo - Marketing Director Francis Chigwedere - Technical Director 5
  6. 6. BUILDING PRODUCTS Leaders in Quality Domestic and Industrial Roofing •Building Products •Endurite •Trafford Tile, Pantile •Flat Sheet Slates •Reeded Roof Tiles •Fascia, Barge Boards, Tapboard •Curved Huts •Accessories , Rainwater Goods 6
  7. 7. PANTILE 7
  8. 8. Endurite Roofing Low Cost Market 8
  9. 9. Trafford Tile Low / Medium Income Market 9
  10. 10. Turnallware Office/Home Market 10
  11. 11. PIPING PRODUCTS Pipes Pressure (66%) Sewer (34%) 11
  12. 12. RAW MATERIALS Cement (70%) Circle Cement (Harare) P.P.C. (Bulawayo) Sino-Cement (Gweru) Imports Erratic supply of fibre Regional Pricing 12
  13. 13. RAW MATERIALS Cement (70%) Chrysotile Fibre (10%) Importation Brazil Russia High world demand 13
  14. 14. MANUFACTURING Factories: • Harare - 2 sheeting lines • Bulawayo - 1 sheeting line - 1 pipe plant Personnel: Permanent (500) 14
  15. 15. TOTAL QUALITY Quality Products (SABS / SAZ) SAZ 113:1987 (Pipes) 195:1976 (Sewers) SABS 1223:2000 (Pipes) 819:1985 (Sewers) SABS 685:1998 (Sheets) 803:1995 (Boards) IS0 9000:2000 - Quality ISO 14001 - Environmental ISO 18000 - Health and Safety 15
  16. 16. MARKETS Local (94% of Sales) Building Products • B2B • B2C 16
  17. 17. MARKETS Pipe Projects • Pressure • Sewer Pipes 17
  18. 18. MARKETS Export (6% of Sales) South Africa Namibia Botswana (10%) Mozambique (90%) Malawi / Angola U.S.A. 18
  19. 19. OVERVIEW OF LOCAL OPERATING ENVIRONMENT FAIRLY STABLE POLITICAL AND ECONOMIC ENVIRONMENT WHEN COMPARED TO 2008 & PRIOR YEARS. – INTRODUCTION OF A MULTI CURRENCY REGIME & PRICE STABILITY – NECESSARY CONDITIONS ARE CREATED FOR ECONOMIC RECOVERY – ECONOMY TO GROW 7.7%, 5.4% AND NOW 8.1% HOWEVER NO MAJOR SIGNS OF FDI MARKET STILL EXPERIENCING TIGHT LIQUIDITY AS REFLECTED IN THE HIGH BORROWING RATES FOCUS IS ON SURVIVAL “ISSUES” FOOD, FEES ETC. 19
  20. 20. OPERATING ENVIRONMENT IMPACT OF SLUGGISH GROWTH FELT AT THE LEVEL OF – MORTGAGES, – CAPCITY UTILIZATION LEVELS – GENERAL SPENDING POWER • NO SIGN OF DONOR MONEY FOR THE LARGE INFRA- STRUCTURAL PROJECTS DURING FIRST HALF 2010 20
  21. 21. OPERATING ENVIRONMENT ON THE POSITIVE SIDE AND UNDERPINNING THE VOLUME SALES ACHIEVED THIS FAR WERE – PROCEEDS FROM TOBACCO 120M KG SOLD THIS FAR – COTTON AND MAIZE WHICH HAVE SHOWN GROWTH – USD SALARIES WHICH ARE DRIVING PRIVATE HOME CONSTRUCTION – LOCAL AUTHORITIES UPGRADE OF SEWER AND WATER RETICULATION 21
  22. 22. SALES VOLUMES (T) EXPORT LOCAL TOTAL JAN-JUNE 10 1 853 26 824 28 677 JAN-JUNE 09 2 059 8 735 JAN- JUNE 08 4 496 18 597 23 093 22
  23. 23. SALES VOLUME COMMENTARY TOTAL VOLUMES AT 28 677 T ARE 167% AHEAD OF SAME PERIOD LAST YEAR. 90% OF THESE CAME FROM LOCAL BUILDING PRODUCTS ( ENDURITE/CORRUGATED SHEETS) PIPES DID NOT FEATURE STRONGLY DURING FIRST HALF (MTSHABEZI PIPE LINE) 23
  24. 24. EXPORT VOLUMES ASBESTOS BAN OF JULY 2008 IN SOUTH AFRICA AND THE DOMINO EFFECT IN OTHER REGIONAL MARKETS -NEGATIVE IMPACT DIVERTED VOLUMES INTO MOZAMBIQUE AND BOTSWANA – LIMITED DISTRIBUTION CAPACITY (IN GROWTH PHASE) – STRAIGHT SHEETING PRODUCT LINE IS LOW MARGIN – MET STIFF COMPETITION FROM OTHER SUPPLIERS ( EFFECTS OF THE GLOBAL DOWNTURN) 24 COMPETITION FROM ALTERNATIVES
  25. 25. FINANCIAL HIGHLIGHTS 25
  26. 26. FINANCIAL HIGHLIGHTS Historical cost Turnover = $13.6 million Exports = $ 0.5 million [ 4% of T/O]. Admin. Expenses = $2.1 million [ 15.3% of T/O]. Selling & Distribution Expenses = $0.72 million [5.3%] Profit from operations = $1.5 million [ 11 % return]. Attributable profit = $ 0.98 million. Earnings per share = 0.20 cents 26
  27. 27. FINANCIAL POSITION Historical figures Capital employed = $32.2 million. $ 1.4 million invested in Property, Plant and Equipment. Stock days = 57 days. Debtors days = 43 days Cash = $866 226 Short-term borrowings = $940 282 27
  28. 28. INCOME STATEMENT HISTORICAL Six months Six months Audited year ended ended ended 30.06.2010 30.06.2009 31.12.2009 Continuing operations US$ US$ US$ Revenue - local 13,103,464 3,368,526 15,481,191 Turnover -export 474,150 555,827 1,012,090 13,577,614 3,924,353 16,493,281 Cost of sales (9,314,812) (1,932,566) (10,402,926) Gross profit 4,262,802 1,991,787 6,090,355 Other income 18,735 13,715 15,662 Selling and distribution expenses (718,056) (239,090) (860,613) Adminstrative expenses (1,882,152) (711,334) (2,425,249) Management fees (203,664) (50,035) (247,399) Profit from continuing operations 1,477,665 1,005,043 2,572,756 Finance income 9,016 1,010 4,030 Finance costs (103,309) (114,164) (189,256) Profit before taxation 1,383,372 891,889 2,387,530 Taxation (398,846) (585,680) (851,874) Current (255,517) (430,423) (1,245,805) Deferred (143,329) (155,257) 393,931 Profit for the year from continuing operations attributable to equity holders 984,526 306,209 1,535,656 Other comprehensive income for the year, after tax: Net change of property, plant and equipment Revaluationin fair value of available-for-sale financial - - 6,582,675 assetscomprehensive income for the period, net of Other tax - - 6,582,675 Total comprehensive income for the year 984,526 306,209 8,118,331 Number of shares in issue (000s) 483,945 483,945 483,945 Basic earnings per share (cents) 0.2034 0.0633 0.3173
  29. 29. CONSOLIDATED STATEMENT of FINANCIAL POSITION Six months ended Six months ended Audited year ended 30.06.2010 30.06.2009 31.12.2009 US$ US$ US$ ASSETS Non- current assets 25,722,275 18,733,332 25,159,958 Property, plant and equipment 25,722,275 18,733,332 25,159,958 Current assets Inventories 3,971,278 2,890,321 3,392,815 Short term investments 20,982 25,583 24,708 Trade and other receivables 4,149,495 1,846,669 2,912,978 Prepayments 1,550,458 131,241 306,997 Cash and cash equivalents 1,856,496 406,645 996,746 Total current assets 11,548,709 5,300,459 7,634,244 37,270,984 24,033,791 32,794,202 Total assets EQUITY Capital and reserves Share capital 4,839,449 0 0 Non- distributable reserve 7,708,510 15,106,292 12,494,688 Revaluation reserve 6,582,675 0 6,582,675 Reserve for share option granted (27,000) 0 0 Retained earnings 2,520,182 306,210 1,535,656 Total capital and reserves 21,623,816 15,412,502 20,613,019 LIABILITIES Non-current liabilities Loans and borrowings 1,156,716 0 629,545 Deffered tax liability 6,866,499 5,977,514 6,723,170 Total non-current liabilities 8,023,215 5,977,514 7,352,715 Current liabilities Loans and borrowings 940,282 0 201,141 Trade and other payables 4,630,509 1,787,541 2,882,446 Provisions 502,359 247,614 299,066 Taxation 1,500,815 408,620 1,245,806 Bank overdraft 49,988 200,000 200,010 Total current liabilities 7,623,953 2,643,775 4,828,469 Total liabilities 15,647,167 8,621,289 12,181,184 Total equity and liabilities 37,270,984 24,033,791 32,794,203
  30. 30. DIVIDENDS The Board, considering the current economic environment and the need to conserve cash for working capital purposes, resolved not to declare an interim dividend for the half year to 30 June, 2010. 30
  31. 31. OUTLOOK PERIOD 31
  32. 32. LOCAL DEMAND OUTLOOK 2010 WE ARE OPTIMISTIC THE CURRENT VOLUME TRENDS WILL CONTINUE TO YEAR END. YTD SEPTEMBER SALES ARE AT 45 000T AGAINST FULL YEAR PLAN OF 50 000T WE CONTINUE TO BENEFIT FROM TOBACCO PROCEEDS- 120M KGs TOBACCO & COTTON AND MAIZE. LOCAL AUTHORITIES PROJECTS FOR SEWER AND WATER HAVE KICKED OFF 32
  33. 33. LOCAL DEMAND OUTLOOK cont. CAPACITY UTILIZATION NOW STANDS AT AROUND 75% FROM A FIRST HALF LEVEL OF 50-60% PIPE ORDER BOOK FULL ON THE BACK OF LOCAL AUTHORITY PIPE DEMAND PIPE PLANT ON CARE AND MAINTENANCE FOR TWO YEARS NOW RUNNING. 33
  34. 34. FIBRE SUPPLY PERTINENT TO HIGHLIGHT THAT THE THREAT ON THE BUSINESS DUE TO FIBRE SUPPLIES HAS BEEN DEALT WITH SECURED ADEQUATE SUPPLIES OF IMPORTED FIBRE REPRESENTING 6 MONTHS COVER. IMPACT THOUGH IS ON GROSS MARGINS GIVEN THAT IMPORTS ARE AT USD 1200/T AGAINST A LOCAL COST OF USD 690/T 34
  35. 35. EXPORT VOLUME OUTLOOK EXPORT VOLUME GROWTH WILL BE KEY BEYOND 2010 - THE NON ASBESTOS PLANT IS BEING DELIVERED AND COMMISSIONING WILL BE IN DECEMBER 2010. -TECHNOLOGY TO ALLOW TURNALL TO PENETRATE THE LUCRATIVE SA & BOTSWANA MARKET AND OFFER A FULL RANGE OF FIBRE CEMENT PRODUCTS. - SEE A RETURN TO 20%-30% EXPORT VOLUME CONTRIBUTION 35
  36. 36. 3 CHALLENGES FOR DEVELOPING COUNTRIES FOR OUR PEOPLE: Affordable Housing Safe shelter Access to Safe Drinking Water About 30% of developing nations population do not have access Effective Sanitation Less than 50% of developing nations population have access 36
  37. 37. VOLUME OUTLOOK BEYOND 2010 WATER AND SANITATION – BACKLOG IN ZIMBABWE LAND REDISTRIBUTION-INFRASTRUCTURE BUILDING SOCIETY HOUSING DELIVERY SCHEMES ( USAID) THESE IN THE LIGHT OF MILLENIUM DEVELOPMENTAL GOALS; MDG’s ( WSSD ,RIO, JHB,DOHA) 37
  38. 38. LOW COST HOUSING DEMAND PROFILE BACKLO 5 YEAR PERIOD G SPREAD 2011 2012 2011* 2010 2013 ( UNITS HIGH 488 85000 95000 97673 100 111 ) DENSITY 367 000 367 TOTAL 8 790 1 530 1 710 1 758 1 800 2 004 DEMAND TILES (000) TOTAL 398 69 400 77 565 79 748 81 648 90 928 DEMAND 741 TONNES Extract from The National Housing Policy Document 2009 38
  39. 39. QUESTIONS ? 39

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