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

22

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

??