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AUDITED RESULTS
Year ended 31 December 2012
Royal Harare Sports Club20 March 2013
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22
Agenda
Section Presenter
About Turnall J . J ere - Managing Director
Operational review J . J ere - Managing Director
Financial Performance R. Dube - Finance Director
Strategic outlook J . J ere - Managing Director
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ABOUT TURNALL
33
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Operational structure
Turnall 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
44
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Directorate
55
H. Nkala Non-Executive Chairman
J . P. Mutizwa Non-Executive Deputy Chairman
J J ere 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
K. Naik Non Executive
R. Dhliwayo Non Executive
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Executive management
66
J J ere Managing DirectorR. S. Dube Finance Director
E. Mwamuka Human Resources Director
F. Chigwedere Technical Director
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77
Mission and Vision
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Strategic themes
88
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Market segmentation
99
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Product offering
1010
Three broad lines:
Building products
Piping
Turnallware
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Building products
1111
Slates
Pantile
Endurite
Trafford Tile
Ceiling Boards
Fascia & Barge Board
Concrete Tile (new product)
Pavers (new product)
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Slates
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Pantile roofing
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Lowcostmarket
Endurite roofing
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Low/mediumincomemarket
Trafford tile roofing
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Concrete ti les
Medium tohigh market
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Lowlowcostmarket
GCIS
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Pipes
1818
Sewer pipes
Pressure pipes
Localauthoritiesmarket
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Turnallware
1919
Flower pots
Garden benches
Office/Homemarket
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Export markets
2020
South Africa
Namibia
Botswana
Mozambique
Malawi
Angola
Zambia
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Main raw materials
2121
Cement
Chrysotile fibre (continued importation)
New technology fibres:
Imported from China, Chile, Poland, Turkey Cellulose, PVA, Silica FumeAdditives
Average Cost : USD3 500/T 4 500/T
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2 0 1 2 O p e ra t i o n a l p e r f o rm a n c e
r e v i ew
2222
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2323
Key factors affecting performance
Growth in mining sectorPositivefactors Growth in financial services sector
Cash flow constraints / Liquidity crunch
Delays in customer payments
Low FDI inflows Impacting Pipe SalesHigh interest rates 18 - 25%
Subdued demand
Increased competition
Negativefactors
GDP growth 4.4% lower than projection of 9.3%
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2424
Strategic re-alignment of operations
Drive towards working capital management
Reduced emphasis on volume growth
Cost control
Strategic positioning through capacity building
Quality control and efficiencies
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2525
Competitive Environment
[Turnall vulnerable]
[Turnall vulnerable]
[Strong/vulnerable]
[Turnall vulnerable]
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2626
Competitor activity
Price based competitor activity intensified in:
Roofing sheets [Everite and Eddington]
Pricing
Iron Sheets [Import and Local]
PVC Piping in the small diameter pipes
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2727
Capacity utilisation
0
2 0 0 0 0
4 0 0 0 0
6 0 0 0 0
8 0 0 0 0
1 0 0 0 0 0
1 2 0 0 0 0
1 4 0 0 0 0
1 6 0 0 0 0
2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2
I n s t a l l e d C a p a c i t y
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2828
Sales Volumes commentary
2012 Actual(Tonnes)
2011Actual
(Tonnes)% Growth
%Contribution
Bu i l d i n g
P r o d u c t s 6 9 2 0 2 7 3 8 1 1 -6 9 4
E x p o r t s 2 2 8 5 3 3 1 2 -3 1 3
GC IS4 6 9 2 0 8 8 -7 8 1
P i p e s 1 6 0 9 4 6 9 9 -6 6 2
T o t a l 7 3 5 6 5 8 3 9 1 0 -1 2 1 0 0
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2929
Sales Values commentary
2012 ActualUS$000
2011Actual
US$000% Growth
%Contribution
Bu i l d i n g
P r o d u c t s 3 9 . 5 1 4 3 .2 0 -9 9 3
E x p o r t s 0 .9 9 1 .6 0 -3 8 2
GC IS0 .6 0 3 .1 0 -8 1 1
P i p e s 1 .4 0 3 .9 0 -6 4 4
T o t a l 4 2 .5 0 5 1 .8 0 -1 8 1 0 0
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2 0 1 2 F i n a n c i a l r e v i e w
3030
f f f
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3131
Basis of financial information
T h e s e f i n a n c i a l r e s u l t s r e f l e c t em p h a s i s b y m a n a g em e n t o n :
St r a t e g i c p o s i t i o n i n g Wo rk i n g c a p i t a l m a n a g em e n t r a t h e r t h a n v o lu m e
g r o w t h
Ra t i o n a l i s a t i o n o f d i s t r i b u t o r s h i p n e t w o r k s
Co s t c o n t r o l
Qu a l i t y o f p r o d u c t s o f f e r i n g a n d s e r v i c e
Fi i l Hi hli ht
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3232
Financial Highlights
y Turnover = $42.5 million
y
Exports = $1.0 million [2% of T/O]y Gross profit margin = 29.11% [2011:30%]
y Admin. expenses = $6.6 million [15.5% of T/O]
y
Selling & Distr expenses = $1.7 million [4% of T/O]y Profit from operations = $4.3 million [10% return]
y Net finance costs = $3.1 million
y Profit before tax = $1.2 million
y Attributable profit = $1.1 million
y Earnings per share = 0.21 cents
EBITDA
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EBITDA
2012 2011US$ US$
Total comprehensive income for the year 1 059 914 3 968 057
Add back:Add Interest 3 114 517 2 229 437Add taxation 149 974 1 154 223Add Depreciation 2 428 465 1 862 767Amortisation - -
Earnings Before Interest, Taxes, Depreciationand Amortisation (EBIDTA) 6 752 870 9 214 484
3333
Add i th b i t
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3434
Addressing the borrowing costs
Re-aligning of borrowings [short term Vs long term]
Repayments
Accelerating PTA [access to long term funding]
St t t f h i i
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2012 2011US$ US$
Revenue - local 41,516,549 50,206,738- export 991,892 1,658,522
42,508,441 51,865,260
Cost of sales (30,133,932) (36,265,512)
Gross profit 12,374,509 15,599,748
Other income 253,761 172,836
Selling and distributionexpenses (1,711,288) (1,987,399)
Adminstrative expenses (6,592,576) (6 ,433,469)
Profit from operations 4,324,406 7,351,716
Statement of comprehensive income
3535
Statement of comprehensive income
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Statement of comprehensive income (continued)
2012 2011US$ US$
Finance Costs (3,114,517) (2,229,437)
Profit before taxation 1,209,889 5,122,280
Taxation (149,974) (1,154,223)
Profit for the year attributable toequity holders 1,059,914 3,968,057
Number of shares in issue (000s) 493,040 493,040Basic earnings per share(cents) 0.21 0.81
3636
Financial position
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3737
Financial position
Capital employed = $36.1 million.
Capital expenditure = $2.6 million.
Stock days = 175 days [2011 - 149 days]
Debtors days = 128 days [2011 - 86 days]
Gearing ratio = 27% [2011 - 32%] Current ratio = 1.13:1 [2011 - 1.15:1]
Quick ratio = 0.5:1 [2011 - 0.6:1]
Return on Equity = 4% [2011 - 14%] Cash = $1.0 million
Short-term borrowings = $10.8 million
Statement of financial position
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Statement of financial position
2012 2011
ASSETS US$ US$
Property, plant and equipment 31,685,103 31,509,622
Investment property 291,325 297,550Inventories 18,757,112 14,812,361
Short term investments 19,958 19,585
Trade and other receivables 16,233,953 16,217,424
Cash and cash equivalents 993,390 759,848
Total assets 67,980,841 63,616,390
EQUITY
Share capital 4,930,403 4,930,403
Share premium 181,908 181,908Non- distributable reserve 7,655,239 7,655,239
Revaluation reserve 7,639,504 7,639,504
Retained earnings 9,128,346 8,068,431
Total 29,535,400 28,475,485
Statement of financial position ( ti d)
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Statement of financial position (continued)
2012 2011
LIABILITIES US$ US$
Loans and borrowings (long term) - 1,138,295
Loans and borrowings (short term) 10,779,318 12 ,455,545
Deferred tax liability 6,604,513 6,454,677
Trade and other payables 18,472,944 12,149,775
Provisions 605,494 584,343Taxation 1,488,267 2,126,818
Bank overdraft 494,906 231 452
Total 38,445,442 35,140,905
Inventories
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Inventories
2012 2011US$000 US$000
Raw materials 2,736 6,245
Finished good 12,455 7,058
Work in progress 2,057 69Consumables 1,509 1,440
Total 18,757 14,812
Receivables
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Receivables
2012 2011
US$000 US$000
Trade 14,763 15,034
Prepayments 180 384Other 1,291 800
Total 16,234 16,218
Loans and Borrowings
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Loans and Borrowings
2012 2011US$ US$
Total 10,779,318 13, 593,840
Share performance
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Share performance
Dividend
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Dividend
The Board, considering the need to retain resources for
working capital, resolved not to declare a final dividend forthe year ended 31 December 2012
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St r a t e g i c f o c u s a n d o u t l o o k
4545
Key Macro-economic factors
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4646
Key Macro economic factors
High interest rates
Low liquidity
GDP Growth 5%
Agriculture 6.4%
Mining 17% Financial Sector 6%
Manufacturing 1.5%
Increased Government expenditure on sewer and waterreticulation
2013 strategic focus
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0 3 s a eg c ocus
Nutec plant
GCIS
Concrete tile
Pavers
2013 Operational focus
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4848
p
Working capital management rather than volume growth;
Rationalisation of distributorship networks;
Cost control; and
Quality of products and service.
Business growth expectation
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4949
g p
Forecast growth 20%
Local building products - minimum growth
Thus growth underpinned by: Concrete tile
Pavers
Pipes Exports
Pipes (current projects)
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5050
p ( p j )
Sewer and water reticulation:
Zimbabwe
Harare;
Bulawayo; and
Masvingo.
Zambia:
Lusaka; and
Nkana Water Board
Exports
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5151
p
Export volumes to grow to 7 100 tonnes
Mozambique
Zambia
Botswana
South Africa (SBLC and guarantees).
Fibre supply
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5252
Key threat to the business
Usage expected at 9 000 tonnes
US$3-4m tied in fibre stocks.
Local mines (resumption of supply?)
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V o l um e s Ou t l o o k B e y o n d 2 0 1 3
5353
Challenges for developing countries
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5454
Affordable Housing - safe shelter
Access to Safe Drinking Water - about 30% of developingnations population do not have access
Effective Sanitation - less than 50% of developing nationspopulation have access
Zimbabwe specific factors
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Water and sanitation backlog in Zimbabwe
Land redistribution infrastructure
Building Society Housing delivery schemes [USAID]
These in the light of millennium developmental goals
Low Cost Housing Demand Profile
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5656
5 YEAR PERIOD SPREAD
Backlog(units)
2013 2014 2015 2016 2017
High density 488 367 85 000 95 000 97 673 100 000 111 367Total demand(tonnes)
398 741 69 400 77 565 79 748 81 648 90 928
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Qu e s t i o n s&A n sw e r s
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T H AN K YOU
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