HALF YEAR RESULTSJANUARY- JUNE 2011      30 AUGUST 2011      J.A. Jere 1                       Managing Director
HISTORYTurnall Holdings Limited, formerly theBuilding and Construction division ofTH Zimbabwe Limited, operates through tw...
OUR VISIONMissionWe are passionate about the quality of life of ourcustomers; we provide high quality affordableconstructi...
STRATEGIC THEMESOperational               Strategic               Service                                                 ...
DIRECTORATEH. Nkala          - Non Executive ChairmanJ.P. Mutizwa      - Non Executive Deputy ChairmanJ Jere            - ...
EXECUTIVE MANAGEMENTJohn A. Jere       - Managing Director Robert S. Dube     - Finance Director Elizabeth Mamukwa - HR Di...
BUILDING PRODUCTSLeaders in Quality Domestic and IndustrialRoofing•Building Products  •Endurite  •Trafford Tile, Pantile  ...
PANTILE          8
Endurite RoofingLow Cost Market                              9
Trafford TileLow / MediumIncome Market                                10
GCISLow Cost Market                  11
TurnallwareOffice/Home  Market                            12
PIPING PRODUCTSPipes Pressure   (70%) Sewer      (30%)                          13
RAW MATERIALSCement              (90%) Lafarge Cement    (Harare) P.P.C.            (Bulawayo) Sino-Cement       (Gweru)Re...
RAW MATERIALSCement                   (90%)Chrysotile Fibre         (10%) Importation Brazil Russia High world demand Fina...
NEW TECHNOLOGY FIBRESIMPORTED FROM CHINACELLULOSE, PVA, SILICA FUMESADDITIVESAGAIN IMPORT COVER FINANCINGPRICING : USD 5 0...
MANUFACTURINGFactories:• Harare    - 2 sheeting lines ( 80 000T)• Bulawayo - 1 sheeting line ( 40 000T)            - 1 pip...
TOTAL QUALITYQuality Products (SABS / SAZ) SAZ 113:1987    (Pipes) 195:1976 (Sewers) SANS 803:2005 (Boards SANS 685:2006 (...
MARKETSLocal (99% of Sales)  Building Products  • B2B  • B2C (TILES)                       19
MARKETSPipe Projects•Pressure• Sewer Pipes                          20
MARKETSExport           (1% of Sales)  South Africa  Namibia  Botswana        (1%)  Mozambique  Malawi / Angola  U.S.A.  Z...
OVERVIEW OF LOCAL OPERATING ENVIRONMENTFAIRLY STABLE POLITICAL AND MACRO-ECONOMICENVIRONMENT.– SINCE 2009, INTRODUCTION OF...
OPERATING ENVIRONMENTAS A RESULT OF THE TIGHT LIQUIDITY AND HIGH INTEREST RATES :– CAPACITY UTILIZATION REMAINED WITHIN TH...
VOLUME DRIVERSUNDERPINNING THE VOLUME SALES BEING ACHIEVED- AGRICULTURE AND MINING GROWTH IN 2011  UNDERPINNING THE GDP 9%...
IMPACT ON COMPANY PERFORMANCESECTORAL CONTRIBUTIONS FOR BUILDING PRODUCTS:AGRICULTURE                                42%PR...
COMPETITOR ACTIVITYCOMPETITOR ACTIVITY INTENSIFYING IN THEFOLLOWING LINES:– ENTRY OF EVERITE-GROUP FIVE SA WITH NON-ASBEST...
SALES VOLUMES FOR H1’2011            Q1       APRIL     MAY       JUNE      Total                                         ...
SALES VOLUME COMMENTARYTOTAL VOLUMES AT 36 275 ARE 26% AHEAD OF SAMEPERIOD IN 2010.90% OF THESE CAME FROM LOCAL BUILDING P...
HALF YEAR FINANCIAL      RESULTS         TO   30 JUNE, 2011                      29
FINANCIAL HIGHLIGHTS                                                           30.06.2011                                 ...
FINANCIAL HIGHLIGHTS Turnover                 = $22.2 million Exports                  = $0.2 million [1% of T/O]. Admin. ...
INCOME STATEMENT   30.06.2011     30.06.2010    31.12.2010                                           US$            US$   ...
INCOME STATEMENT Cont.                                                 30.06.2011     30.06.2010    31.12.2010            ...
FINANCIAL POSITIONCapital employed         = $36.3 million.$ 3.0 million invested in Property, Plant andEquipment.Stock da...
CONSOLIDATED STATEMENT OF             FINANCIAL POSITION                                        30.06.2011                ...
CONSOLIDATED STATEMENT OF           FINANCIAL POSITION                                   30.06.2011                30.06.2...
INVENTORIES  Stocks                          000Fibre                  6 821Finished Goods         5 450Coils             ...
DIVIDENDS The Board, in view of the need to retainresources to procure and import essential rawmaterials during the period...
OUTLOOK PERIOD                 39
OUTLOOKBUSINESS PERFORMANCE DURING H2’11 WILL BEUNDERPINNED BY DEVELOPMENTS IN THE FOLLOWINGTHREE SECTORS:LOCAL BUILDING P...
DEMAND OUTLOOK H2’11H2’11 GENERALLY ACCOUNTS FOR 60% OFVOLUME SALES.YTD VOLUMES FORECAST AT 60 000T IS 41%AHEAD OF SAME PE...
LOCAL DEMAND OUTLOOKDEMAND TO BE DRIVEN BY USD SALARIES, BONUSES,PROCEEDS FROM MINING ACTIVITIES.LOCAL AUTHORITIES PROJECT...
EXPORT VOLUME OUTLOOK EXPORT VOLUME GROWTH WILL BE KEY DURING H2’11- THE NON ASBESTOS PLANT SUCESSFULLY COMMISSIONED AND E...
3 CHALLENGESFOR DEVELOPING COUNTRIES   FOR OUR PEOPLE:   Affordable Housing    Safe shelter.   Access to Safe Drinking Wat...
LOW COST HOUSING DEMAND PROFILE                   BACKLOG        5 YEAR PERIOD SPREAD                   ( UNITS )         ...
RISK in CONTEXTPREMATURE DEATH (per 10 000)Smoking                                   2190Tobacco smoke (secondary exposure...
QUESTIONS   ?            47
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Turnall Holdings HY2011 presentation

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Turnall Holdings Limited's interim results presentation for the half year ended 30 June 2011.

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Turnall Holdings HY2011 presentation

  1. 1. HALF YEAR RESULTSJANUARY- JUNE 2011 30 AUGUST 2011 J.A. Jere 1 Managing Director
  2. 2. HISTORYTurnall Holdings Limited, formerly theBuilding and Construction division ofTH Zimbabwe Limited, operates through two divisions Turnall Building Products - 1943 Turnall Piping Products - 1972Sole shareholder of four dormant companiesnamely Acacia Holdings Limited Hastt Corporation Limited Hastt Discs (Private) Limited Tractor and Equipment (Pvt) Ltd 2
  3. 3. OUR VISIONMissionWe are passionate about the quality of life of ourcustomers; we provide high quality affordableconstruction materials to help them achieve theirdreams.VisionTo be the preferred supplier of constructionmaterials in the region with an annual turnover of$300m USD by 2015. 3
  4. 4. STRATEGIC THEMESOperational Strategic Service Regional ReachExcellence Partnerships ExcellenceStrategic result: Strategic result: Strategic result: Strategic result:We deliver When together Consistent delivery To haveaffordable high with our partners, of high quality establishedquality products on we have achieved services with regional marketstime and in full. critical mass (scale respect and which contribute and scope) in responsiveness. significantly to distributorship, turnover and financing and sustained market manufacturing share in each capacity. country by 2015. 4
  5. 5. DIRECTORATEH. Nkala - Non Executive ChairmanJ.P. Mutizwa - Non Executive Deputy ChairmanJ Jere - ExecutiveR.S Dube - ExecutiveJ. Mushayavanhu - Non ExecutiveR. Likukuma - Non ExecutiveC.E Dhlembeu - Non ExecutiveL. Manyenga - Non ExecutiveP.C.C Moyo - Non ExecutiveC. M. Gadzikwa - Non ExecutiveK. Naik - Non Executive
  6. 6. EXECUTIVE MANAGEMENTJohn A. Jere - Managing Director Robert S. Dube - Finance Director Elizabeth Mamukwa - HR Director Edwin Kondo - Marketing Director Francis Chigwedere - Technical Director 6
  7. 7. BUILDING PRODUCTSLeaders in Quality Domestic and IndustrialRoofing•Building Products •Endurite •Trafford Tile, Pantile •Flat Sheet Slates •Reeded Roof Tiles •Fascia, Barge Boards, Tapboard •Curved Huts •Accessories , Rainwater Goods 7
  8. 8. PANTILE 8
  9. 9. Endurite RoofingLow Cost Market 9
  10. 10. Trafford TileLow / MediumIncome Market 10
  11. 11. GCISLow Cost Market 11
  12. 12. TurnallwareOffice/Home Market 12
  13. 13. PIPING PRODUCTSPipes Pressure (70%) Sewer (30%) 13
  14. 14. RAW MATERIALSCement (90%) Lafarge Cement (Harare) P.P.C. (Bulawayo) Sino-Cement (Gweru)Regional Pricing – USD 200/T 14
  15. 15. RAW MATERIALSCement (90%)Chrysotile Fibre (10%) Importation Brazil Russia High world demand Financing 3-4 months import cover Price: USD 1 200/T 15
  16. 16. NEW TECHNOLOGY FIBRESIMPORTED FROM CHINACELLULOSE, PVA, SILICA FUMESADDITIVESAGAIN IMPORT COVER FINANCINGPRICING : USD 5 000/T 16
  17. 17. MANUFACTURINGFactories:• Harare - 2 sheeting lines ( 80 000T)• Bulawayo - 1 sheeting line ( 40 000T) - 1 pipe plant ( 20 000T)Personnel:Permanent (500) 17
  18. 18. TOTAL QUALITYQuality Products (SABS / SAZ) SAZ 113:1987 (Pipes) 195:1976 (Sewers) SANS 803:2005 (Boards SANS 685:2006 (Sheets) IS0 9000:2000 - Quality ISO 14001 - Environmental ISO 18000 - Health and Safety 18
  19. 19. MARKETSLocal (99% of Sales) Building Products • B2B • B2C (TILES) 19
  20. 20. MARKETSPipe Projects•Pressure• Sewer Pipes 20
  21. 21. MARKETSExport (1% of Sales) South Africa Namibia Botswana (1%) Mozambique Malawi / Angola U.S.A. Zambia 21
  22. 22. OVERVIEW OF LOCAL OPERATING ENVIRONMENTFAIRLY STABLE POLITICAL AND MACRO-ECONOMICENVIRONMENT.– SINCE 2009, INTRODUCTION OF A MULTI CURRENCY REGIME.– PRICE STABILITY .– ECONOMY FORECAST TO GROW 9.3% .HOWEVER NO MAJOR SIGNS OF FDI.LIQUIDITY REMAINED TIGHT AS A RESULT WITH BORROWINGRATES OF 12%-20%. 22
  23. 23. OPERATING ENVIRONMENTAS A RESULT OF THE TIGHT LIQUIDITY AND HIGH INTEREST RATES :– CAPACITY UTILIZATION REMAINED WITHIN THE 45%- 50% LEVELS (TURNALL 75%).– WE FACED SERIOUS WORKING CAPITAL CONSTRAINTS LARGELY DRIVEN BY THE NEED TO STOCK IMPORTED FIBRES. (3-4 MONTHS COVER USD 6M IN FIBRE STOCKS)- FORCED TO BORROW TO FUND THE STOCK VS PRIOR YEARS. 23
  24. 24. VOLUME DRIVERSUNDERPINNING THE VOLUME SALES BEING ACHIEVED- AGRICULTURE AND MINING GROWTH IN 2011 UNDERPINNING THE GDP 9% GROWTH FORECAST.- TOBACCO, COTTON AND MAIZE WHICH ARE KEY CASH CROPS.- USD SALARIES WHICH ARE DRIVING PRIVATE HOME CONSTRUCTION.- LOCAL AUTHORITIES UPGRADE OF SEWER AND WATER RETICULATION. 24
  25. 25. IMPACT ON COMPANY PERFORMANCESECTORAL CONTRIBUTIONS FOR BUILDING PRODUCTS:AGRICULTURE 42%PRIVATE HOME DEVELOPMENTS (USD SALARIES) 23%INFORMAL MARKET 14%OTHERS (NGO’s, DIAMOND SALES) 21% 25
  26. 26. COMPETITOR ACTIVITYCOMPETITOR ACTIVITY INTENSIFYING IN THEFOLLOWING LINES:– ENTRY OF EVERITE-GROUP FIVE SA WITH NON-ASBESTOS SHEETS.- GALVANIZED IRON SHEETS (IMPORTS/LOCAL ).- THE DECISION TO MANUFACTURE GCIS HAS STARTED PAYING DIVIDENDS. ( CANNIBALIZATION OF AC MARKET).- PVC PIPING IN THE SMALL DIAMETER PIPES. 26
  27. 27. SALES VOLUMES FOR H1’2011 Q1 APRIL MAY JUNE Total % Var. (Tons) (Tons) (Tons) (Tons) (Tons)2011 act 15 553 5 079 6 557 9 086 36 275 +26%2010 act 12 300 5 379 5 091 5 986 28 756 27
  28. 28. SALES VOLUME COMMENTARYTOTAL VOLUMES AT 36 275 ARE 26% AHEAD OF SAMEPERIOD IN 2010.90% OF THESE CAME FROM LOCAL BUILDING PRODUCTS(ENDURITE/CORRUGATED SHEETS).PIPES DID NOT FEATURE STRONGLY DURING H1’11 BUT AT2 400T WERE SIGNIFICANTLY HIGHER THAN THE 1000 TACHIEVED IN 2010.EXPORTS WERE SUBDUED DUE TO THE ASBESTOS BAN INMOZAMBIQUE AND SA. 28
  29. 29. HALF YEAR FINANCIAL RESULTS TO 30 JUNE, 2011 29
  30. 30. FINANCIAL HIGHLIGHTS 30.06.2011 US$Increase in turnover 63.35% to 22.2mIncrease in profit from continuing operations 81.58% to 2.7mIncrease in profit before taxation 41.31% to 2.0mIncrease in attributable profit to equity holders 33.2% to 1.5mBasic earnings per share(cents) 0.27 30
  31. 31. FINANCIAL HIGHLIGHTS Turnover = $22.2 million Exports = $0.2 million [1% of T/O]. Admin. Expenses = $3.0 million [14% of T/O]. Selling & Distribution = $0.9 million [4%]Expenses Profit from operations = $2.7 million [12 % return]. Attributable profit = $1.3 million. Earnings per share = 0.27 cents 31
  32. 32. INCOME STATEMENT 30.06.2011 30.06.2010 31.12.2010 US$ US$ US$Continuing operationsRevenue - local 22,009,746 13,103,464 34,142,896 - export 168,852 474,150 714,070 22,178,598 13,577,614 34,856,966Cost of sales (15,606,372) (9,314,812 ) 23,733,247Gross profit 6,572,226 4,262,802 11,123,719Other income 99,929 18,735 274,553Selling and distribution expenses (942,700) (718,056) 1,416,249Adminstrative expenses (3,046,343) (2,085,815) 4,731,641Profit from continuing operations 2,683,112 1,477,666 5,250,381 32
  33. 33. INCOME STATEMENT Cont. 30.06.2011 30.06.2010 31.12.2010 US$ US$ US$Finance costs (728,317) (94,293) (391,199)Profit before taxation 1,954,795 1,383,373 4,859,181Taxation (643,429) (398,846) (1,441,503)Profit for the year from continuing operations attributable to equity holders 1,311,366 984,527 3,417,678Total comprehensive income for the year 1,311,366 984,527 3,417,678Number of shares in issue (000s) 493,040 483,945 493,040Basic earnings per share (cents) 0.27 0.20 0.70 33
  34. 34. FINANCIAL POSITIONCapital employed = $36.3 million.$ 3.0 million invested in Property, Plant andEquipment.Stock days = 184 days (2010 – 77days)Debtors days = 78 days (2010 - 54 days)Gearing ratio = 13% (2010 – 5%)Current ratio = 1.23:1 (2010 – 1.45:1)Quick ratio = 0.5:1 (2010 – 0.95:1)Cash = $0.2 millionShort-term borrowings = $8.8 million 34Long-term borrowings = $4.0 million
  35. 35. CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30.06.2011 30.06.2010 31.12.2010 US$ US$ US$ASSETSNon‐ current assetsProperty, plant and equipment 31,426,624                        27,145,614 29,254,936Current assetsInventories 15,777,529  3,971,278 8,036,016Short term investments 22,920  20,982 21,129Trade and other receivables 10,393,195 5,699,954 8,674,890Cash and cash equivalents 217,388 1,856,496 1,149,058Total assets 57,837,657 38,694,324  17,881,093EQUITYCapital and reservesShare capital 4,930,403 4,839,449 4,930,403Share premium 181,908  ‐ 181,908Non‐ distributable reserve 7,655,240  7,708,511 7,655,238Revaluation reserve 7,639,504  7,639,504  7,639,504 35Retained earnings 5,411,739  2,520,182  4,953,335
  36. 36. CONSOLIDATED STATEMENT OF FINANCIAL POSITION 30.06.2011 30.06.2011 31.12.2010 US$ US$ US$LIABILITIESNon‐current liabilitiesLoans and borrowings 3,966,847 1,156,716 2,842,991Deferred tax liability 6,515,984                                6,866,499   7,037,481Current liabilitiesLoans and borrowings 8,758,547 940,282  2,922,740Trade and other payables 8,227,600  4,630,509 5,876,936Provisions 718,221  502,359 671,191Taxation 2,585,821  1,867,325 2,420,953Bank overdraft 1,245,843  49,988 3,349Total liabilities 32,018,862  16,013,677  21,775,641Total equity and liabilities 57,837,657 38,694,324 47,136,029 36
  37. 37. INVENTORIES Stocks 000Fibre 6 821Finished Goods 5 450Coils 707Consumables 1 443Work in Progress 661Cement 261Product for Resale 435Total 15 778 37
  38. 38. DIVIDENDS The Board, in view of the need to retainresources to procure and import essential rawmaterials during the period, resolved not todeclare an interim dividend for the half yearended 30 June 2011. 38
  39. 39. OUTLOOK PERIOD 39
  40. 40. OUTLOOKBUSINESS PERFORMANCE DURING H2’11 WILL BEUNDERPINNED BY DEVELOPMENTS IN THE FOLLOWINGTHREE SECTORS:LOCAL BUILDING PRODUCTS INCLUDING GCIS.PIPE PRODUCTS.EXPORTS. 40
  41. 41. DEMAND OUTLOOK H2’11H2’11 GENERALLY ACCOUNTS FOR 60% OFVOLUME SALES.YTD VOLUMES FORECAST AT 60 000T IS 41%AHEAD OF SAME PERIOD LAST YEAR (45 000T).YTD JULY OPERATING PROFIT 76% AHEAD OFSAME PERIOD LAST YEAR.CAPACITY UTILIZATION IS AT AROUND 75%FOR Q3 HAS REMAINED STEADY. 41
  42. 42. LOCAL DEMAND OUTLOOKDEMAND TO BE DRIVEN BY USD SALARIES, BONUSES,PROCEEDS FROM MINING ACTIVITIES.LOCAL AUTHORITIES PROJECTS FOR SEWER ANDWATER RETICULATION .PIPE ORDER BOOK OF 3000T FAIRLY STRONG ON THEBACK OF LOCAL AUTHORITIES PIPE DEMAND. 42
  43. 43. EXPORT VOLUME OUTLOOK EXPORT VOLUME GROWTH WILL BE KEY DURING H2’11- THE NON ASBESTOS PLANT SUCESSFULLY COMMISSIONED AND EXPORTS COMMENCED JUNE 2011. SALES OF USD 1M ALREADY ACHIEVED SINCE MID JUNE 2011. (ORDER BOOK R20M).- TECHNOLOGY TO ALLOW TURNALL TO PENETRATE THE SA, MOZAMBIQUE & BOTSWANA MARKET AND OFFER A FULL RANGE OF FIBRE CEMENT PRODUCTS.- PRODUCT RANGE TO INCLUDE CEILING, FASCIA, BARGE BOARDS AND THE ENDURITE AT GOOD PRICES USD 800/T VS USD 650/T.- SEE A RETURN TO 20%-30% EXPORT VOLUME CONTRIBUTION. 43
  44. 44. 3 CHALLENGESFOR 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. 44
  45. 45. LOW COST HOUSING DEMAND PROFILE BACKLOG 5 YEAR PERIOD SPREAD ( UNITS ) 2011* 2012 2013 2014 2015HIGH DENSITY 488 367 85 000 95 000 97 673 100 000 111 367TOTAL DEMAND  8 790  1 530  1 710  1 758  1 800  2 004 TILES (000)TOTAL DEMAND   398 741 69 400 77 565 79 748 81 648 90 928TONNES Extract from The National Housing Policy Document 2009 45
  46. 46. RISK in CONTEXTPREMATURE DEATH (per 10 000)Smoking 2190Tobacco smoke (secondary exposure) 5-20Radon, indoors 2-5Being struck by lightning 0,3Eating steak cooked on a braai once a 0,1weekOccupying a building containing 0,04asbestosCommins (1985) Weill and Hughes (1986);Wilson and Crouch (1982) 46Harvard University Dec 1989
  47. 47. QUESTIONS ? 47

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