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Turnall Holdings Limited HY 2014 financial results presentation

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Turnall Holdings Limited market leader in the manufacture and supply of asbestos-cement roofing, water and sewerage conveyance products in Southern Africa listed on the Zimbabwe Stock Exchange has released its half year results presentation.Check out insights into this company in their presentation which appears below
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Turnall Holdings Limited HY 2014 financial results presentation

  1. 1. UNAUDITED RESULTS Half Year Ended 30 June 2014 Royal Harare Golf Club 28 August 2014
  2. 2. 3 Operational Overview
  3. 3. Company 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 Turnroof Africa [Private ] Limited
  4. 4. Directorate •H. Nkala - Non Executive Chairman •J. P. Mutizwa - Non Executive Deputy Chairman •J. Jere - Executive Director •J. Mushayavanhu - Non Executive •R. Likukuma - Non Executive •C. E. Dhlembeu - Non Executive •L. Sasikwa - Non Executive •P. C. C. Moyo - Non Executive •C. M. Gadzikwa - Non Executive •K. Naik - Non Executive •R. Dhliwayo - Non Executive
  5. 5. Executive Management •John Jere - Managing Director •Caleb Musodza - Marketing Director •Kenias Horonga - Finance Director •Elizabeth Mamukwa - HR Director •Francis Chigwedere - Technical Director
  6. 6. Strategic Focus Areas Operational Partnerships Service Regional Reach Provide affordable high quality products on time and in full Achieve, together with our partners, achieve critical mass [scale and scope] in distributorship, financing and manufacturing capacity Consistent delivery of high quality services with respect and responsiveness Establish regional markets which contribute significantly to turnover and sustained market share
  7. 7. Products : Building Products  Slates  Pantiles  Endurite  Trafford Tile  Ceiling Boards  Fascia & Barge Boards Available in Asbestos and Non-asbestos options
  8. 8. Products : GCIS Low cost market
  9. 9. Products : Turnallware Office/Home market Available in Asbestos and Non-asbestos options
  10. 10. Products : Piping Products PRESSURE 66% SEWER 34% PIPES
  11. 11. Products : Concrete Products Tiles Ridges Pavers
  12. 12. Our Markets Geography Zimbabwe South Africa Zambia Botswana Namibia Usage Roof covering Beauty and enhanced value Water reticulation Sewer reticulation Paving solutions Target Customers Individual projects Commercial projects Government/NGO/Social projects
  13. 13. Production Facilities
  14. 14. Capacity Utilisation
  15. 15. The Business Environment Subdued economy Liquidity issues Constrained aggregate demand High credit risk Funding issues Low FDI Challenges in Exports competitiveness ZAR and Zambia Kwacha depreciation  Construction activities being driven by the residential sector Low investment appetite for commercial projects. Constrained funding for public projects. Limited, short term and expensive funding (mortgage)
  16. 16. Management Responses Review of the Trading Model towards cash Finance operations Reduce debtors book Manage credit risk Reduce borrowing levels Cost alignment to the new Trading Model (in progress) Reduce interest rates (borrowings) Review asbestos fibre procurement model (import) Alignment of labour costs Review of production costs Review of procurement systems
  17. 17. The profitability trend -90% -80% -70% -60% -50% -40% -30% -20% -10% 0% Mar April May June July % profit/turnover
  18. 18. 2014 Financial review
  19. 19. 20 Basis of financial information These financial results reflect emphasis by management on: •Change in business model from being predominantly credit to cash or near cash •Margin shrinkage – reasons for and remedies •Working capital management resulting in: •Reduction in debtors •Reduction in borrowings
  20. 20. 21 Financial Highlights Turnover = $12.88 million Exports = $0.37 million [2% of T/O] Goss profit margin = 6.77% (2013:22%) Admin. expenses = $2.74 million [21.3% of T/O] Selling & Distr expenses = $0.78 million [6.2% of T/O] Loss from operations = $2.62 million Net finance costs = $0.89 million Loss before tax = $3.52 million
  21. 21. Six months ended Six months ended Audited year 30.06.2014 30.06.2013 ended 31.12.13 Revenue - local 12,512,668 18,121,857 41,206,886 - export 365,418 846,334 1,671,356 12,878,086 18,968,191 42,878,242 Cost of sales (12,005,661) (14,795,919) (32,382,546) Gross profit 872,425 4,172,272 10,495,696 Other income 18,195 514,794 383,133 Selling and distribution expenses (775,999) (822,749) (2,061,492) Adminstrative expenses (2,738,383) (2,486,922) (8,692,950) Profit from operations (2,623,762) 1,377,395 124,387 Statement of comprehensive income
  22. 22. Statement of comprehensive income (continued) Six months ended Six months ended Audited year 30.06.2014 30.06.2013 ended 31.12.13 Finance Costs (892,853) (1,351,685) (3,203,140) Loss/(profit) before taxation (3,516,023) 29,320 (3,078,753) Taxation 874 834 (141,195) 516,173 Profit for the year attributable to equity holders (2,641,189) (111,875) (2,562,580) Number of shares in issue (000s) 493,040 493,040 493,040 Basic earnings per share(cents) (0.54) (0.02) (0.50)
  23. 23. 24 Income Statement Comments •Change in business model •Credit sales 50% •Cash sales 42% •70/30 customers 8% •Total 100% •Overall sales reduction of 32% against last year •Margin shrinkage •Reduction from 22% to 7% •Low capacity utilization due to fibre outage. We lost a cumulative of a whole production month! •Write off of obsolete stock amounted to $630,000
  24. 24. 25 Income Statement Comments (cont) •Expenses up 6% - generally well contained •Net interest expense came down from $1,351,685 to $895,853 mainly due reduction in borrowings •We paid off the PTA Bank loan and we are currently putting together proposals for a roll-over.
  25. 25. Statement of financial position Six months ended Six months ended Audited year ASSETS 30.06.2014 30.06.2013 ended 31.12.13 Property, plant and equipment 31,771,100 33,109,121 32,884,465 Investment property 298,299 288,627 301,621 Non-current trade and other receivables 1,582,221 - 1,175,191 Inventories 17,778,180 17,560,016 18,005,899 Short term investments - 25,195 24,027 Current trade and other receivables 11,000,523 17,954,982 16,349,038 Cash and cash equivalents 181,448 1,181,736 242,384 Total assets 62,611,771 70,119,677 68,982,625
  26. 26. Statement of financial position (continued) Six months ended Six months ended Audited year EQUITY AND LIABILITIES 30.06.2014 30.06.2013 ended 31.12.13 Share capital 4,930,403 4,930,403 4,930,403 Share premium 181,908 181,908 181,908 Non- distributable reserve 7,655,239 7,655,239 7,655,239 Revaluation reserve 7,639,504 7,639,504 7,639,504 Retained earnings 3,924,577 9,016,470 6,565,766 Total equity 24,331,631 29,423,524 26,972,820 Loans and borrowings (short term) 7,610,698 10,857,730 9,542,352 Deferred tax liability 5,211,200 6,745,703 6,086,836 Trade and other payables 23,256,988 21,191,732 24,433,711 Taxation 1,488,266 1,488,266 1,488,266 Bank overdraft 712,988 412,722 458,640 Total liabilities 38,280,140 40,696,153 42,009,805 Total equity and liabilities 62,611,771 70,119,677 68,982,625
  27. 27. 28 Balance Sheet Comments •New business model resulted in $4.9m reduction in debtors • Borrowings came down by $1.9m •No significant reduction in inventories – pipe stocks too high – ZIMASSET •Trade and other payables still remain very high
  28. 28. Receivables Six months ended Six months ended Audited year 30.06.2014 30.06.2013 ended 31.12.13 Trade receivables (net of provisions) 10 403 971 6 492 204 14 891 605 Prepayments 317 887 97 485 1 056 080 Other 1 860 886 365 294 1 576 544 Total trade and other receivables 12 582 744 17 954 982 17 524 229 Non-current trade receivables (1 582 221) - (1 175 191) Current trade and other receivables 11 000 523 17 954 982 16 349 038
  29. 29. Inventories Six months ended Six months ended Audited year 30.06.2014 30.06.2013 ended 31.12.13 Raw materials 826,737 1,955,999 1,636,455 Work in progress 205,357 246,449 182,872 Finished goods 15,120,246 14,053,099 13,952,434 Consumable stores 1,625,839 1,304,469 2,234,140 17,778,180 17,560,016 18,005,899
  30. 30. Loans and Borrowings Six months ended Six months ended Audited year 30.06.2014 30.06.2013 ended 31.12.13 PTA Bank - 732,633 142,364 FBC Bank Limited 1,760,000 3,308,060 3,402,352 FBC Reinsurance Limited 1,803,516 1,671,083 1,642,832 Kingdom Bank Limited 276 321 750,000 500,000 BancABC 3,770,861 4,395,954 3,854,804 Total 7,610,698 10,857,730 9,542,352
  31. 31. 32 Strategic Issues and Outlook
  32. 32. The profitability trend… -90% -80% -70% -60% -50% -40% -30% -20% -10% 0% Mar April May June July % profit/turnover
  33. 33. How are we going to sustain journey to profitability? •Working capital management, underpinned by the current trading model. •Cost alignment to trading model •Productivity management •Procurement efficiencies •Nutech opportunities for the local market • Reduction of borrowings •Concrete Tiles and Pavers •GCIS and Chromadeck
  34. 34. The profitability trend BOY 2014 and beyond -90% -80% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% Mar April May June July Aug Sep Oct Nov Dec Jan Feb Mar april may june % profit/turnover
  35. 35. Challenges for Developing Countries Opportunities for Turnall 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 All key elements in ZimAsset
  36. 36. 37 Concrete Roofing contribution 10% revenue
  37. 37. Questions & Answers

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