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Zimplow Limited analyst briefing - March 2010

Zimplow Limited analyst briefing - March 2010

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  • 1. ANALYST BRIEFING BULAWAYO GOLF CLUB 5 MARCH 2010 1
  • 2. 2
  • 3. WELCOME to our Analyst Briefing. The team today comprises of:- Z. Kumwenda D. Mkonto F. Rwakonda B. Mitchell S. Vithal 3
  • 4. MISSION “To avail quality affordable and reliable steel products on time every time to the mining, farming, construction and manufacturing sectors” Vision: “To have a local presence in all African countries south of the Sahara by 2020 (36 by 2020)” 4
  • 5. The group comprises of 3 divisions: Mealie Brand, CT Bolts and Tassburg 1. Mealie Brand is the largest of the 3 divisions and is involved in the manufacture and export of animal drawn implements and hoes. The factory is based in Bulawayo. 2. CT Bolts is a distributor of mild steel bolts and nuts, nails and a wide range of other fasteners. The division also manufactures specialised fasteners at its Bulawayo factory. 3. Tassburg is a manufacturer of Wood screws, Veranda Bolts and High tensile bolts. The factory is based in Harare 4. The 3 divisions employ about 500 employees amongst themselves. 5
  • 6. Values: Integrity - Being absolutely truthful and accepting responsibility for our actions Quality - Being professional and quality oriented in everything we do. Teamwork - Working together to achieve the common goal. Dependability - Our customers, employees and suppliers must be able to count on us. Fun- Embracing a positive attitude and spontaneity. 6
  • 7. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009 ASSETS Non current assets Property,plant and equipment 2,668,756 Available for Sale financial assets 177,604 2,846,360 Current assets 8,124,392 Inventory 5,829,151 Trade and other receivables 1,163,878 Other current assets 91,412 Cash and cash equivalent 1,039,951 TOTAL ASSETS 10,970,752 EQUITY AND LIABILITIES Share holders Funds 8,997,645 Non Current Liabilities Deferred tax liability 618,860 Current liabilities Trade and other payables 1,354,247 TOTAL EQUITY AND LIABILITIES 10,970,752 7
  • 8. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2009 US$ TURNOVER 9,061,718 Domestic 5,631,169 Export 3,430,549 PROFIT BEFORE INTEREST AND TAXATION 2,791,066 Finance income 57,362 Finance costs (29,175) Net Finance income 28,187 PROFIT BEFORE TAXATION 2,819,253 Income tax expense (597,300) PROFIT FOR THE YEAR 2,221,953 Total comprehensive income for the year 2,221,953 Profit attributable to owners of parent compa 2,221,953 Other comprehensive income: Net Value Gain on avalaible for sale financial ass 101,597 Basic Earnings per share US$) 0.01 8
  • 9. CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 31 DECEMBER 2009 US$ CASH FLOWS FROM OPERATING ACTIVITIES Operating income before non-cash items and working capital changes 2,791,066 Non cash items Depreciation of property,plant and equipment 224,352 Loss on disposal of property,plant and equipment 2,173 Loss on disposal of shares 167 Impairment loss 4,435 Operating income before working capital changes 3,022,193 Working capital changes (1,118,547) Cash generated from operations 1,903,646 Taxation paid (342,455) Net finance costs 28,187 Net cash generated from operating activities 1,589,378 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (343,072) Proceeds on disposal of property, plant and equipment 23,538.00 Proceeds on disposal shares 974.00 Net cash invested (318,560) CASHFLOWS FROM FINANCING ACTIVITIES Dividend paid to equity sahreholders (392,486) Increase in cash & cash equivalents 878,332 Cash & cash equivalents at 1 January 2009 161,619 Cash & cash equivalents at 31 December 2009 1,039,951 9
  • 10. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share Avalaible fof Capital and sale financial Retained reserves assets earnings Total equity US$ US$ US$ US$ Balance at 1 January 2009 7,066,581 - - 7,066,581 Payment of dividend - - (392,486) (392,486) Total Comprehensive income for the year - 101,597 2,221,953 2,323,550 Balance at 31 December 2009 7,066,581 101,597 1,829,467 8,997,645 10
  • 11. TURNOVER Jan -Dec 2009 Jan -Dec 2008 % CHANGE IMPLEMENTS LOCAL (units) 25,556 21,735 18% EXPORT(units) 28,979 62,161 -53% TOTAL 54,535 83,896 -35% HOES(units) 20,850 41,849 -50% SPARES(total) 610,793 251,567 143% 11
  • 12. Analysis of spares GROSS MAR LOCAL MARKET QUANTITY GIN SPARES( MEALIE BRAND) 2,009 2,008 % CHANGE 2,009 Revenue shares 154,213 10,957 1307% 60% Landsides 29,632 3,058 869% 59% Other components 63,161 5,163 1123% 63% Boughtouts 64,122 10,016 540% 58% 311,128 29,194 966% 60% 20% IMPLEMENTS 25,556 21,735 18% 43% 34% 12
  • 13. Analysis of spares EXPORT MARKET % CHAN SPARES( MEALIE BRAND) 2,009 2,008 GE 2,009 Revenue shares 124,146 83,172 49% 55% Landsides 27,937 21,432 30% 52% Other components 86,908 50,197 73% 43% Boughtouts 60,674 67,572 -10% 43% 299,665 222,373 35% 49% 16% IMPLEMENTS 28,979 62,161 -53% 36% 30% 46% 13
  • 14. MEALIE BRAND IMPLEMENTS TURNOVER 100,000 90,000 80,000 70,000 Local export 60,000 Units Implements T otal 50,000 40,000 30,000 20,000 10,000 0 2004 2005 2006 2007 2008 2009 YEAR 14
  • 15. OPERATIONS TURNOVER Mealie Brand The analysis is a comparative of two trading periods Jan – Dec 2008 and Jan – Dec 2009. Implements units sales are overall down by 35% from the prior year. Local implements units sales are up by 18% due to recapitalisation of local distributors. Exports dropped by 53% from prior year. Spares were up by 143% which is an indication of improved disposable income. 15
  • 16. Energy Problems Drought/floods conditions Brand attack from East Africa Lack of working Capital in the Economy Decimation of the local Supply chain Deterioration of infrastructure. Flight of possible FDI Labour costs driven by consumption and not production Strong competition from the East Removal of export incentives. 16
  • 17. OPERATIONS Cost Drivers The biggest cost driver for the whole Group is steel Steel reacts sharply to global events It suffer from both the oil shocks. The business reviewed costs to reflect net realisable amounts. Labour costs 17
  • 18. Export Sales 65,000 60,000 55,000 50,000 Units Implements 45,000 2007 40,000 2008 2009 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - January February March April May June July August September October November December Month 18
  • 19. Local Sales 40,000 35,000 30,000 2007 25,000 2008 Units Implements 2009 20,000 15,000 10,000 5,000 - January February March April May June July August September October November December Month 19
  • 20. Summary Sales 2007 -2009 85,000 80,000 75,000 70,000 65,000 60,000 55,000 2007 2008 Units Implements 50,000 2009 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - January February March April May June July August September October November December Month 20
  • 21. DIVISIONAL PERFORMANCE CT BOLTS Dec-09 Dec-08 % Change MILD STEEL BOLTS(KGS) 44,537 8,862 503% NAILS(KG) 16,362 2,445 669% TOTAL KGS 60,900 11,307 539% MILD STEEL(UNITS) 3,596,969 109,436 3287% HT BOLTS 795,106 46,703 1702% SCREWS 4,414,671 282,422 1563% MISCELLANEOUS 850,159 139,288 610% FACTORY STOCK 463,798 147,825 314% TOTAL UNITS 10,120,703 725,674 1395% 21
  • 22. DIVISIONAL PERFORMANCE CT BOLTS - OVERVIEW Have started to move towards a growth mode The local market have improved significantly since Multi-currency introduction and the subsequent removal of price controls. There is still room for more growth if the mining sector improves. The division will grow the top line by around 80% this year all things being equal. Profit growth is likely to be lower as margins are now settling at the right numbers Should be able to slowly recapitalise itself. 22
  • 23. DIVISIONAL PERFORMANCE TASSBURG - OVERVIEW We are still building up Volume statistics on this business. Depends on the mining and construction sector activity Lost some market share to foreign players during hyper-inflation times. The Bolt Plant has been moved to Mealie-Brand. We are investigating the possibility of manufacturing liner-Bolts for the mining sector in addition to the HT Bolts and Nuts. The Harare Plant will remain focussed on screws. This plant should improve capacity utilisation to about 40% 23
  • 24. Trading update Turnover to end of February USD800K Local Implements sales up by 2900% over same period last year. Export implements down by 14% from last year. Gross margins of around 40% on average 2010 budget: FY10 Budgeted Turnover USD12.9Million Operating Profit FY10 USD3.3Million After tax profit FY10 USD 2.6Million 24
  • 25. THANK YOU 25