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11J.A. JereManaging Director
YEAR END RESULTS YEAR END RESULTS
JANUARY JANUARY –– DECEMBER 2011DECEMBER 2011
29 February 2012
HISTORYHISTORYTurnall Holdings Limited, Turnall Holdings Limited, formerly theformerly theBuilding and Construction division ofBuilding and Construction division ofTH Zimbabwe Limited, TH Zimbabwe Limited, operates through two divisions operates through two divisions
Turnall Building Products Turnall Building Products -- 19431943Turnall Piping Products Turnall Piping Products -- 19721972
Sole shareholder of four dormant companies Sole shareholder of four dormant companies namelynamely
Acacia Holdings LimitedAcacia Holdings LimitedHastt Corporation LimitedHastt Corporation LimitedHastt Discs (Private) LimitedHastt Discs (Private) LimitedTractor and Equipment (Pvt) LtdTractor and Equipment (Pvt) Ltd
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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
HISTORY
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• K. Naik ‐ Non Executive• R. Dhliwayo ‐ Non Executive
EXECUTIVE MANAGEMENT
• John Jere ‐Managing Director• Robert Dube ‐ Finance Director• Elizabeth Mamukwa ‐ HR Director• Edwin Kondo ‐Marketing Director• Francis Chigwedere ‐ Technical Director
We are passionate about the quality of life of our customers; we provide high quality affordable construction materials to help them achieve their dreams.
To be the preferred supplier of construction materials in the region with an annual turnover of $300m USD by 2015.
STRATEGIC THEMESOperational Excellence
Strategic Partnerships
Service Excellence Regional Reach
Strategic result:
We deliver affordable high quality products on time and in full.
Strategic result:
When together with our partners, we have achieved critical mass (scale and scope) in distributorship, financing and manufacturing capacity.
Strategic result:
Consistent delivery of high quality services with respect and responsiveness.
Strategic result:
To have established regional markets which contribute significantly to turnover and sustained market share in each country by 2015.
TURNALL’S PRODUCT OFFERING
•FIBRE CEMENT BUILDING PRODUCTS
•GALVANIZED CORRUGATED IRON SHEETS (GCIS)
•FIBRE CEMENT PIPES
BUILDING PRODUCTSLeaders in Quality Domestic Leaders in Quality Domestic and Industrial and Industrial RoofingRoofing
Building ProductsBuilding Products•• SLATESSLATES
•• PANTILESPANTILES
•• ENDURITE (BIG SIX)ENDURITE (BIG SIX)
•• TRAFFORD TILE TRAFFORD TILE
•• CEILING BOARDSCEILING BOARDS
•• FASCIA & BARGE BOARDSFASCIA & BARGE BOARDS
PANTILE
ENDURITE ROOFING
Low cost market
TRAFFORD TILE
Low/medium income market
GCIS
Low cost market
TURNALLWARE
Office/Home market
PIPING PRODUCTS
PipesPipes
Pressure Pressure (66(66%)%)
SewerSewer (34(34%)%)
MARKET SEGMENTATION
Four distinct segments in roofing have emerged in the last three
years:•HIGH COST ROOFING ( SLATES/CONCRETE TILE)
•MEDIUM COST (CONCRETE, PANTILE)
•LOW COST ( ENDURITE)
•LOW “LOW” COST ( GCIS)
TURNALL MARKET SHARE
•High cost segment 5%
•Medium cost 3%
•Low cost 84%
•Low “low” end 26%
PIPE MARKETMarket share 26%
Pipe Pipe ProjectsProjects
•• PressurePressure
•• Sewer PipesSewer Pipes
EXPORTS
LARGELY BUILDING PRODUCTSLARGELY BUILDING PRODUCTS
‐‐ ENDURITE (BIG SIX) FASCIA,BARGES ENDURITE (BIG SIX) FASCIA,BARGES
‐‐ CEILING BOARDSCEILING BOARDS
COMPETITION FROM LOCAL (SA) COMPANIES COMPETITION FROM LOCAL (SA) COMPANIES
‐‐ BRAZIL, INDIA, FAR EAST!!! BRAZIL, INDIA, FAR EAST!!!
EXPORT MARKETS
Export Export (3 % (3 % of of Sales)Sales)South Africa South Africa (90%)(90%)
Namibia Namibia
Botswana Botswana (7%)(7%)
MozambiqueMozambique (3%)(3%)
Malawi / AngolaMalawi / Angola
U.S.AU.S.A..
ZambiaZambia
RAW MATERIALS
Cement Cement ((70%)70%)
Circle CementCircle Cement ((Harare)Harare)
P.P.C. P.P.C. (Bulawayo)(Bulawayo)
SinoSino‐‐Cement Cement (Gweru)(Gweru)
ImportsImports
Cement cost USD 185/T Cement cost USD 185/T
Erratic supply during 2011 had to Erratic supply during 2011 had to bring cement by rail from Byo.bring cement by rail from Byo.
RAW MATERIALS
Chrysotile Chrysotile Fibre Fibre (10%)(10%)
Zvishavane Zvishavane ‐‐ Shabanie MineShabanie Mine
Mashava Mashava ‐‐ Gaths MineGaths Mine
ALL asbestos fibres are ALL asbestos fibres are importedimported
High world High world demand ( prices)demand ( prices)
Landed price USD 1 300/TLanded price USD 1 300/T
NEW TECHNOLOGY FIBRES
IMPORTED FROM CHINA, CHILE, POLAND, TURKEY IMPORTED FROM CHINA, CHILE, POLAND, TURKEY
CELLULOSE, PVA, SILICA FUMESCELLULOSE, PVA, SILICA FUMES
ADDITIVESADDITIVES
COST : USD 3 500/T COST : USD 3 500/T -- 5 000/T5 000/T
MANUFACTURINGFactories:Factories:
Harare Harare ‐‐ 2 sheeting 2 sheeting lineslines
‐‐ 1 GCIS line1 GCIS line
‐‐ 1 IBR line1 IBR line
Bulawayo Bulawayo ‐‐ 1 sheeting line 1 sheeting line
‐‐ 1 pipe 1 pipe plantplant
PersonnelPersonnel::
Permanent Permanent (500)(500)
CAPACITY UTILISATIONCAPACITY UTILISATION
Volumes (tonnes)
TOTAL QUALITY
Quality Products (SABS / SAZ)Quality Products (SABS / SAZ)SAZ SAZ 113:1987 113:1987 ((Pipes) 195:1976 (Sewers)Pipes) 195:1976 (Sewers)
SABS SABS 1223:2000 1223:2000 ((Pipes) 819:1985 (Sewers)Pipes) 819:1985 (Sewers)
SABS SABS 685:1998 685:1998 ((Sheets) 803:1995 (Boards)Sheets) 803:1995 (Boards)
IS0 IS0 9000:2000 9000:2000 –– QualityQuality
ISO ISO 14001 14001 –– EnvironmentalEnvironmental
ISO ISO 18000 18000 –– Health and SafetyHealth and Safety
OVERVIEW OF LOCAL OPERATING ENVIRONMENT
POSITIVE VOLUME DRIVERS
CONSTRAINING FACTORS
COMPETITIVE LANDSCAPE
THE POSITIVES
GDP GROWTH 9.3%
GROWTH IN AGRICULTURE ( tobacco, cotton, maize)
GROWTH IN MINING
GROWTH IN FINANCIAL SERVICES SECTOR
VOLUME DRIVERSVOLUME DRIVERS
POSITIVELY IMPACTING:POSITIVELY IMPACTING:
Individuals deciding to build houses as a result of improved Individuals deciding to build houses as a result of improved USD salariesUSD salaries
Uptake of mortgage loans to build housesUptake of mortgage loans to build houses
Cash crop proceeds being used for infraCash crop proceeds being used for infra--structural upgrades, structural upgrades, poultry, piggery projectspoultry, piggery projects
Local authorities upgrade of sewer and water reticulationLocal authorities upgrade of sewer and water reticulation. .
IMPACT ON COMPANY PERFORMANCEIMPACT ON COMPANY PERFORMANCE
SECTORAL CONTRIBUTIONS FOR BUILDING PRODUCTS:SECTORAL CONTRIBUTIONS FOR BUILDING PRODUCTS:
AGRICULTUREAGRICULTURE 48%48%
PRIVATE HOME DEVELOPMENT (USD Salaries)PRIVATE HOME DEVELOPMENT (USD Salaries) 33%33%
INFORMAL MARKETINFORMAL MARKET 15%15%
OTHERS (NGOOTHERS (NGO’’s, DIAMOND SALES)s, DIAMOND SALES) 44%%
CONSTRAINING FACTORSLIQUIDITY CRUNCH LEADING TO
CASHFLOW CONSTRAINTS
DELAYS IN CUSTOMER PAYMENTS
LOW FDI INFLOWS
HIGH INTEREST RATES 18%‐ 25%
OPERATING ENVIRONMENT cont.Overall, the sector benefited from the positives despite the liquidity challenges.
•With increased construction activity levels attracting interest from outsiders.
•With mortgage backed housing construction at a three year high.
•Increased capacity utilization 57% vs Turnall’s 75%
•Agriculture growth contribution @ 48% is highest ever for Turnall
COMPETITIVE ENVIRONMENTCOMPETITIVE ENVIRONMENT
(Turnall vulnerable)
(Strong)
(Turnall vulnerable)
(Turnall vulnerable)
COMPETITOR ACTIVITYCOMPETITOR ACTIVITY
PRICE BASED COMPETITOR ACTIVITY INTENSIFYING IN PRICE BASED COMPETITOR ACTIVITY INTENSIFYING IN THE FOLLOWING LINES:THE FOLLOWING LINES:
-- ENTRY OF EVERITEENTRY OF EVERITE--GROUP FIVE SA WITH NONGROUP FIVE SA WITH NON--ASBESTOS ASBESTOS SHEETS.SHEETS.
-- GALVANIZED IRON SHEETS (IMPORTS/LOCAL).GALVANIZED IRON SHEETS (IMPORTS/LOCAL).
-- THE DECISION TO MANUFACTURE GCIS HAS STARTED PAYING THE DECISION TO MANUFACTURE GCIS HAS STARTED PAYING DIVIDENDS. (CHOICE ).DIVIDENDS. (CHOICE ).
-- PVC PIPING IN THE SMALL DIAMETER PIPES.PVC PIPING IN THE SMALL DIAMETER PIPES.
EXPORT VOLUME DRIVERS
GDP GROWTH @ 4.5% AGAINST 5% DESIRABLE FOR SA
ANC GVT UNDER PRESSURE TO DELIVER HOUSING THROUGH RDP PROGRAM.
BUDGET ALLOCATION TOWARDS HOUSING STILL SIGNIFICANT.
GENERALLY A LIQUID ECONOMY
SALES VOLUME COMMENTARYSALES VOLUME COMMENTARY
SALES VOLUME COMMENTARYSALES VOLUME COMMENTARYTotal volumes at Total volumes at 84 000T84 000T
•• 23% up on 2010 ( 68 000t) 23% up on 2010 ( 68 000t)
88% of these came from local building products 88% of these came from local building products ((EEndurite/Big Six).ndurite/Big Six).
Pipes at 4 700t Pipes at 4 700t •• 121% up on 2010121% up on 2010
Exports at 3 300t Exports at 3 300t •• 22% up on 201022% up on 2010
FULL YEAR FINANCIAL RESULTSTO
31 DECEMBER, 2011
3939
FINANCIAL HIGHLIGHTS31.12.201131.12.2011
US$US$
Increase in turnover Increase in turnover 48.79% to 51.9m48.79% to 51.9m
Increase in EBITDAIncrease in EBITDA 35.30% to 9.2m35.30% to 9.2m
Increase in profit from continuing operations (EBIT) 40Increase in profit from continuing operations (EBIT) 40.02% to 7.4m.02% to 7.4m
Increase in attributable profit to equity holders Increase in attributable profit to equity holders 16.10% to 4.0m16.10% to 4.0m
Basic earnings per share(cents)Basic earnings per share(cents) 15.94% to 0.8015.94% to 0.80
FINANCIAL HIGHLIGHTS
Turnover ‐ $51.9 million
Exports ‐ $1.7 million [ 3% of T/O].
Admin. Expenses ‐ $6.4 million [ 12% of T/O].
Selling & Distribution Expenses ‐ $2.0 million [4%]
Finance Charges ‐ $2.2 million
Profit from operations ‐ $7.4 million [ 14% return].
Attributable profit ‐ $3.9 million.
Earnings per share ‐ 0.80cents
INCOME STATEMENT31/12/2011 31/12/2010
US$ US$Continuing operations
Turnover ‐ local 50 ,206,737 34,142,896
‐ export 1, 658, 523 714,070
51, 865, 260 34,856,966
Cost of sales (36, 265, 512) (23,733,247)
Gross profit 15, 599,748 11,123,719
Other income 172,836 274,553
Selling and distribution expenses (1,987,399) (1,416,249)
Adminstrative expenses (6, 433, 469) (4,731,642)
Profit from continuing operations 7,351,716 5,250,382
31.12.2011 31.12.2010
US$ US$
Finance income 76,145 22,015
Finance costs (2, 305, 582) (413,214)
Profit before taxation 5, 122,279 4,859,182
Taxation (1, 154, 222) (1,441,504)
Current 1, 737, 026 (1,493,703)
Deferred (582, 804) 52,199
Profit for the year from continuing operations
attributable to equity holders 3,968,057 3,417,678
Other comprehensive income for the year, after tax:
Revaluation of property, plant and equipment ‐ ‐
Other comprehensive income for the period, net of tax ‐ ‐
Total comprehensive income for the year 3,968,057 3,417,678
Number of shares in issue (000s) 493 040 493,040 Basic earnings per share (cents) 0.80 0.69
INCOME STATEMENT cont’d
FINANCIAL POSITION
• Capital employed = $42.1 million.
• $ 4.4 million invested in Property, Plant and Equipment.
• Stock days = 149 days (2010 – 124 days)
• Trade Debtors = 86 days (2010 -72 days)
• Gearing ratio = 32% (2010 – 18%)
• Current ratio = 1.15:1 (2010 – 1.5:1)
• Return on Equity = 14% (2010 – 13%)
• Cash = $0.8 million
• Short-term borrowings = $12.5 million (2010 – $2.9m)
• Long-term borrowings = $1.1 million (2010 – $2.8m)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31.12.2011 31.12.2010US$ US$
ASSETSNon‐ current assetsProperty, plant and equipment 31, 807, 172 29,254,936
Current assets 31, 809 218 17,881,093 Inventories 14, 812, 361 8,036,016
Other investments 19, 585 21,129 Trade and other receivables 16, 217,424 8,674,890
Cash and cash equivalents 759, 848 1,149,058
Total assets 63,616,390 47,136,029
EQUITYCapital and reserves 28,475,485 25,360,388 Share capital 4, 930, 403 4,930,403
Share premium 181, 908 181,908 Non‐ distributable reserve 7, 655, 239 7,655,239 Revaluation reserve 7, 639, 504 7,639,504 Retained earnings 8,063,431 4,953,334
31.12.2011 31.12.2010US$ US$
LIABILITIES
Non‐current liabilities 7,592,972 9,880,471
Loans and borrowings 1,138,295 2,842,991
Deferred tax liability 6, 454, 677 7,037,480
Current liabilities 27,547,933 11,895,170
Loans and borrowings 12,455,545 2,922,741
Trade and other payables 12, 149, 775 5,876,935
Provisions 584, 343 671,192
Taxation 2, 126, 818 2,420,953
Bank overdraft 231, 452 3,349
Total liabilities 35, 140, 905 21,775,641
Total equity and liabilities 63, 616,390 47,136,029
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Cont’d
INVENTORIES
Inventories 2011 2010
Raw Materials 6 245 209 3 265 055Finished Goods 7 127 423 3 067 126Consumables 1 439 729 1 703 834Total 14 812 361 8 036 016
Trade and other Receivables
Trade debtors 15 034 195 6 769 299Prepayments 383 827 1 394 658Other 799 612 510 933Total 16 217 624 8 674 890
DIVIDEND
The Board, in view of the need to build resources for both working capital and new projects that will enhance the company’s medium to long‐term competitive advantage and capacity to respond to developments in its chosen markets, resolved not to declare a final dividend for the full year to 31 December 2011.
OUTLOOK PERIOD
2012
LOCAL DEMAND OUTLOOK 2012LOCAL DEMAND OUTLOOK 2012Key environmental factorsKey environmental factors
GDP GROWTH 9.4% ( 5% ???)
AGRICULTURE 11.6% ( early opening of tobacco floors & a better price)
MINING 16%
FINANCIAL SECTOR 23%
MANUFACTURING 6%
LOCAL DEMAND OUTLOOK 2012LOCAL DEMAND OUTLOOK 2012GROWTH IN THE ECONOMY WILL TRANSLATE GROWTH IN THE ECONOMY WILL TRANSLATE INTO:INTO:
INCREASED PROCEEDS FROM AGRICULTURE (48%)
INCREASED USD SALARIES
INCREASED MORTGAGE LENDING
INCREASED INFRA‐STRUCTURAL REHABILITIATION
WATER AND SEWER RETICULATION PROGRAMS
OUTLOOK PERIODDespite these positives, the outlook period will continue to be burdened by:
•LIQUIDITY CONCERNS
•CASHFLOW CONSTRAINTS
•HIGH BORROWING RATES
FIBRE SUPPLYFIBRE SUPPLYRepresents a key threat to the businessRepresents a key threat to the business
Demand for fibre on current plan is around 9 000 Demand for fibre on current plan is around 9 000 tonnestonnes
Our Business Plan for 2012 takes the view that Our Business Plan for 2012 takes the view that importation of fibre will continue.importation of fibre will continue.
That USD 3That USD 3‐‐4m will remain tied in fibre stocks at 4m will remain tied in fibre stocks at any one moment any one moment
VOLUME OUTLOOK VOLUME OUTLOOK
Our view is that we balance income streams through:Our view is that we balance income streams through:
Export growthExport growth
Pipe sales growthPipe sales growth
Taking a larger share of mortgage based projects Taking a larger share of mortgage based projects
EXPORT VOLUME OUTLOOKEXPORT VOLUME OUTLOOKExport volumes to grow to 16 000t Export volumes to grow to 16 000t
New Technology plant now running well and New Technology plant now running well and exports started November 2011.exports started November 2011.
Currently supplying into a 6 500 housing project Currently supplying into a 6 500 housing project in KZN. in KZN.
New Technology will also allow Turnall to New Technology will also allow Turnall to penetrate Botswana and Mozambique.penetrate Botswana and Mozambique.
Q1Q1’’ 2012 VOLUME OUTLOOK2012 VOLUME OUTLOOK
January & February 2012 volumes are 29% ahead of January & February 2012 volumes are 29% ahead of 2011. 2011.
Exports into SA already showing growth with 800 Exports into SA already showing growth with 800 tonnes already sent. tonnes already sent.
Capacity utilization has remained steady at 75%.Capacity utilization has remained steady at 75%.
Pipes have started slowly but we envisage a good Pipes have started slowly but we envisage a good outout‐‐turn given the discussions already under way on turn given the discussions already under way on major projects.major projects.
3 CHALLENGES FOR DEVELOPING COUNTRIES3 CHALLENGES FOR DEVELOPING COUNTRIES
For our peopleFor our people
Affordable Affordable HousingHousing –– safe sheltersafe shelter
Access to Access to Safe Drinking WaterSafe Drinking Water –– about 30% of about 30% of developing nations population do not have accessdeveloping nations population do not have access
Effective Effective SanitationSanitation –– less than 50% of developing less than 50% of developing nations population have accessnations population have access
VOLUME OUTLOOK BEYOND 2012VOLUME OUTLOOK BEYOND 2012
WATER AND SANITATION WATER AND SANITATION –– BACKLOG IN ZIMBABWEBACKLOG IN ZIMBABWE
LAND REDISTRIBUTION INFRASTRUCTURELAND REDISTRIBUTION INFRASTRUCTURE
BUILDING SOCIETY HOUSING DELIVERY SCHEMES BUILDING SOCIETY HOUSING DELIVERY SCHEMES (USAID)(USAID)
THESE IN THE LIGHT OF MILLENIUM DEVELOPMENTAL THESE IN THE LIGHT OF MILLENIUM DEVELOPMENTAL GOALSGOALS
INFRAINFRA--STRUCTURAL KEY VOLUME INFLUENCESSTRUCTURAL KEY VOLUME INFLUENCES
International Role:International Role:World Summit Sustainable DevelopmentWorld Summit Sustainable DevelopmentMillenium Development TargetsMillenium Development TargetsHealth (HIV / Aids)Health (HIV / Aids)Poverty Alleviation (Subsidies, Market access)Poverty Alleviation (Subsidies, Market access)
National Investment:National Investment:Housing Policies (RDP, National Policy)Housing Policies (RDP, National Policy)Water InfrastructureWater Infrastructure•• Agriculture (Irrigation)Agriculture (Irrigation)•• Water & Sanitation (W.A.S.H.) Water & Sanitation (W.A.S.H.)
LOW COST HOUSING DEMAND PROFILELOW COST HOUSING DEMAND PROFILE
5 YEAR PERIOD SPREADBacklog (units) 2010 2011 2012 2013 2014
High density 488 367 85 000 95 000 97 673 100 000 111 367
Total demand 8 790 1 530 1 710 1 758 1 800 2 004
Tiles (000)
Total demand (tonnes)
398 741 69 400 77 565 79 748 81 648 90 928
COMPETITIVE ENVIRONMENTCOMPETITIVE ENVIRONMENT
(Turnall vulnerable)
(Strong)
(Turnall vulnerable)
(Turnall vulnerable)
STRATEGIC THEMESOperational Excellence
Strategic Partnerships
Service Excellence Regional Reach
Strategic result:
We deliver affordable high quality products on time and in full.
Strategic result:
When together with our partners, we have achieved critical mass (scale and scope) in distributorship, financing and manufacturing capacity.
Strategic result:
Consistent delivery of high quality services with respect and responsiveness.
Strategic result:
To have established regional markets which contribute significantly to turnover and sustained market share in each country by 2015.
PRODUCTPRODUCTExisting
Existing
New/ResurrectedNew/ResurrectedExistingExisting
NewNew
PENETRATIONPENETRATION
Defend low cost market Defend low cost market shareshare
Steal market share in Steal market share in mortgagesmortgages
INTRODUCEINTRODUCE
Export forays with Newtech Export forays with Newtech Products into:Products into:ooSouth AfricaSouth AfricaooBotswanaBotswanaooMozambiqueMozambique
GCIS/Two new productsGCIS/Two new products
MARKET
MARKET
GROWTH DIRECTIONS ?
QUESTIONSQUESTIONS
??