8/12/2019 TURN Audited Results for FY Ended 31 Dec 13

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Directors : H. Nkala (Chairman), J. A. Jere*, J. P. Mutizwa, P. C. C. Moyo, L. Manyenga, J. Mushayavanhu, C. E. Dhlembeu, R. Likukuma, C. M. Gadzikwa, K. Naik, R. Dhliwayo (* Executive Director) www.turnall.co.zw

ABRIDGED AUDITED RESULTS FOR

THE YEAR ENDED 31 DECEMBER 2013

 

Consolidated Statement of Comprehensive Income 

2013 2012US$ US$ 

Revenue 42 878 242 42 508 441Cost of sales (32 382 546 ) (30 133 932)

Gross prot 10 495 696 12 374 509

Other opertating income 383 133 253 761Selling and distribution expenses (2 061 492) (1 711 288)Adminstrative expenses (8 692 950) (6 592 576)

Prot from operating activities 124 387 4 324 406

Finance income 19 619 3 285Finance costs (3 222 759) (3 117 802)

Net nance costs (3 203 140) (3 114 517)

(Loss)/prot from operations before income tax expense (3 078 753) 1 209 889

Income tax credit/(expense) 516 173 (149 974) (Loss)/prot for the year (2 562 580) 1 059 915

Other comprehensive income, net of income tax - -

Total comprehensive (loss)/income for the period (2 562 580) 1 059 915

Number of shares in issue (000s) 493 040 493 040Basic and diluted earnings per share (cents) (0.50) 0.21

Consolidated Statement of Changes in Equity 

Share Share Revaluation Non Retainedcapital premium reserve distributable earnings Total

US$ US$ US$ US$ US$ US$

Balance at 1 January 2012  4 930 403 181 908 7 639 504 7 655 239 8 068 431 28 475 485

Total comprehensive incomefor the year - - - - 1 059 915 1 059 915

Balance at 31 December 2012 4 903 403 181 908 7 639 504 7 655 239 9 128 346 29 535 400

Total comprehensive lossfor the year - - - - (2 562 580) (2 562 580)

Balance at 31 December 2013  4 930 403 181 908 7 639 504 7 655 239 6 565 766 26 972 820

Chairman’s Statement

I am pleased to present Turnall Holdings Limited’s nancialresults for the year ended 31 December 2013.

Operating environmentThe results were achieved in an operating environmentcharacterised by uncertainty and subdued economic growth.The manufacturing sector was adversely affected by workingcapital constraints which had a negative impact on capacityutilisation. Businesses continued to face high interest rates,acute liquidity challenges, power outages, lack of mediumto long term funding, as well as deation. The absenceof signicant foreign direct investment in the economyimpacted negatively on companies.

For Turnall Holdings, demand for building products remainedlower than expected due to low disposable incomes in targetmarket segments, as unemployment levels continued toincrease. This was worsened by a drought season whichsaw consumers shifting their priorities from construction. Ashas been the case over the past few years, projects l ined up

for both sewer and water reticulation did not materialise asa result of funding limitations, despite the company havingreceived inquiries and orders.

Exports into South Africa were affected by price volatilitydue to the free fall of the rand thus limiting export volumesduring the year. The company continued to import chrysotilebre from Brazil and Russia in the year under review. Thecontinued importation of key raw materials put pressure onboth production costs and operating cash ows, resulting inmargin decline. The company is following, with keen interest,developments around efforts by Government to resuscitateAA Mines.

Financial performanceOwing to a number of domestic and external factors,2013 was a very challenging year for operators in themanufacturing industry. The Group’s’ results were thereforesignicantly below par.

Revenue of US$42.9 million was 1% above the previousyear’s level for the same period at US$42.5 million.

The Group is of the view that the adverse liquidi ty situation inthe economy will persist in the short to medium term, therebyposing challenges in the collection of trade receivables. Asa result, the company has found it prudent to signicantlyincrease the allowance for credit losses. To that end, animpairment provision of US$3.3 million (2012:US$ 0.027million) has been recognised in the nancial statements.

Gross prot margin was 24% compared with 29% in 2012,with an operating prot margin of 0.29% compared to 10%for the same period l ast year. A negative net prot margin of7% was attained against a positive 2.85% for the previousyear. Operating prot was US$0.124 million compared toUS$4.32 million for the same period in 2012. Net nancecharges were US$3.2 million compared to US$3.1 million forthe previous year.

Sustainability reportingTurnall is implementing an integrated approach in managingsustainability impacts and opportunities based on theGlobal Reporting Initiatives (GRI)’s Sustainability ReportingFramework that the company adopted in 2011 as bestpractice.

This model, which we will report on and publish annually,aims to engage with our key stakeholders and other standardsetters. It progressively improves the quality of non-nancialreporting while reecting Turnall’s true performance andsustainability impacts.

Aspects of our operations such as effective asset utilisation,air quality improvement, waste reduction, employee wellness,gender balance and board responsibil ity, as well as impactsand opportunities of these attributes and their disclosurefor accountability to the public and our stakeholders areavailable for interested parties to understand.

We will be publishing our second sustainability report usingand meeting the requirements of the Global ReportingInitiative (GRI) Sustainability Reporting Framework (G3.1:Level C) as an integrated report with our annual nancialperformance report for 2013.

OutlookLiquidity constraints are expected to persist in the medium tolong term. We believe that our future depends on our abilityto harness all our skills, capabilities and experience in orderto successfully navigate the current harsh economic climate.

In the outlook, working capital and cash ow managementwill play a key role in improving the Group’s operations. Theadditional line that was added to the business at the end of2013, concrete tiles, has helped improve cash receipts asthis is premised on a cash trading model. The bre cementbusiness which has traditionally traded on credit terms hasalso, since the beginning of the year 2014, been modelledaround a similar cash trading model.

The Group remains solid and is well positioned to takeadvantage of opportunities in the medium to long term.Despite the prevailing conditions in the economy, the Groupsees opportunities in the infrastructure upgrade in water andsanitation together with housing construction.

Exports which grew from US$1 million to US$1.7 millioncontinue to offer the greatest opportunity for growth despitethe weakening of the South African Rand. The Group has arm order book as well as inquiries from the export market. 

AppreciationI would like to express my appreciation to all our customers,suppliers and stakeholders for the support and cooperationrendered. I would also like to record my appreciation tomanagement and all staff at Turnall, for their diligence andcontributions. I also want to take this opportunity to expressmy gratitude and appreciation to my colleagues on theBoard, for the support and cooperation during the periodunder review. We have indeed carried on as a team.

Finally, the Group and I would like to express its gratitude tothe late Robert Dube who passed on in January 2014. Wewill certainly miss his invaluable contribution to the business.

Herbert NkalaChairman20 March 2014

Dividend

At a meeting held on 14 March 2014, the Board of Directorsresolved not to declare a nal dividend for the year to 31December 2013 in view of the Group’s lower than expectedperformance.

By Order of the Board

Elizabeth MamukwaCompany secretary20 March 2014

Auditor’s StatementThe nancial results should be read in conjunction with thecomplete set of nancial statements for the year ended31 December 2013, which have been audited by KPMGChartered Accountants (Zimbabwe) and an unmodied auditopinion issued thereon. The auditor’s report on the nancialstatements, which form the basis of these nancial results, isavailable for inspection at the Company’s registered ofce.

 Consolidated Statement of Financial Position 

2013 2012US$ US$

ASSETSNon-current assetsProperty, plant and equipment 32 884 465 31 685 103Investment property 301 621 291 325Trade and other receivables 1 175 191 - Total non-current assets  34 361 277 31 976 428

Current assetsInventories 18 005 899 18 757 112Short term investments 24 027 19 958Trade and other receivables 16 349 038 16 233 953

Cash and cash equivalents 242 384 993 390 Total current assets  34 621 348 36 004 413 Total assets 68 982 625 67 980 841

EQUITY AND LIABILITIES

Capital and reservesShare capital 4 930 403 4 930 403Share premium 181 908 181 908Non-distributable reserve 7 655 239 7 655 239Revaluation reserve 7 639 504 7 639 504Retained earnings 6 565 766 9 128 346 Total equity  26 972 820 29 535 400

Non-current liabilitiesDeferred taxation 6 086 836 6 604 514

Current liabilitiesLoans and borrowings 9 542 352 10 779 318Trade and other payables 24 433 711 19 078 437Taxation 1 488 266 1 488 266Bank overdraft 458 640 494 906 Total current liabilities 35 922 969 31 840 927

Total liabilities 42 009 805 38 445 441

Total equity and liabilities 68 982 625 67 980 841

Notes to the nancial statements

Statement of complianceThe underlying nancial statements to these results have been prepared in accordance with International Financial ReportingStandards and in the manner required by the Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange ListingRequirements.

Accounting policies and reporting currency

There have been no changes in the Group’s accounting policies since the date of the last audited nancial statements. Theunderlying nancial statements to these results are presented in United States dollars, which is the functional currency of theGroup.

  2013 2012 US$ US$

Capital expenditure Purchase of property, plant and equipment 3 816 914 2 604 160

Additions to property, plant and equipment include US$2,8million (2012:US$1,5million)for the concrete tile machine which was commissioned in September 2013.

Commitments for capital expenditureAuthorised by directors and not contracted for 1 150 000 1 500 000

Trade and other payablesTrade payables 9 799 934 8 363 783Amounts owing to group companies 3 094 695 2 353 449Value added tax 4 579 149 4 174 433Other payables 6 959 933 4 186 772

24 433 711 19 078 437

 Trade and other receivablesNon-current trade and other receivables relates to the amount that the business is expecting to receive after 12 months from

the reporting date.

Events after the reporting periodSubsequent to the reporting period date, t here were no material adjusting or non-adjusting events.

 Consolidated Statement of Cash Flows

 

2013 2012US$ US$

CASH FLOWS FROM OPERATING ACTIVITIES

(Loss)/prot for the year (2 562 580 ) 1 059 915

Adjustments for:  Depreciation of property, plant and equipment 2 591 151 2 422 240Depreciation of investment property 6 413 6 225Net nance costs 3 203 140 3 114 517Unrealised exchange losses (141 976 ) (126 110 )(Prot)/loss on disposal of property, plant and equipment (3 283 ) 6 438Net change in other investments (4 069 ) (373 )Interest payable (617 264 ) (288 822 )Income tax (credit)/expense (516 173 ) 149 974

Operating cash ows before reinvestment in working capital 1 955 359 6 344 004Decrease/(increase) in inventories 751 213 (3 944 751 )

Increase in trade and other receivables (1 290 276 ) (16 530 )Increase in provisions, trade and other payables 5 355 274 6 344 320

6 771 570 8 727 043

Withholding tax paid (1 505 ) (137 )Income tax paid - (638 551 )Realised exchange losses (148 995 ) (2 956 )Interest paid (2 314 527 ) (2 699 914 )

(2 465 027 ) (3 341 558 )

Net cash ows from operating activities 4 306 543 5 385 485

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of property, plant and equipment:  - to increase operating capacity (3 086 541 ) (1 542 721 )  - to maintain current capacity (730 373 ) (1 061 439 )

(3 816 914 ) (2 604 160 )Additions to investment property (16 708 ) -Proceeds from the sale of property, plant and equipment 29 685 -Interest received 19 619 3 285

Net cash ows from investing activities (3 784 318 ) (2 600 875 )

CASH FLOWS FROM FINANCING ACTIVITIES Decrease in loans and borrowings (1 236 965 ) (2 814 522 )

DECREASE IN CASH AND CASH EQUIVALENTS  (714 740 ) (29 912 )