Turnall Holdings Limited release of 2020 Annual Report

By Published On: August 23rd, 2021Categories: Corporate announcement, Earnings

Turnall Holdings Limited (TURN.zw) 2020 Annual Report

Introduction

On behalf of the Board of Directors, I hereby present the Turnall Holdings Limited audited abridged consolidated fnancial statements for the year ended 31 December 2020.

Operating Environment

The COVID-19 pandemic had a major impact on the economy and the business with the resultant lockdowns and movement restrictions affecting trading activity. The informal sector, which contributes significantly to the economy was the worst affected by trade restrictions and this reduced disposal incomes and products demand.

The Group implemented the appropriate regulatory measures and guidelines to ensure that the business operates in a safe environment for its customers, staff, and all stakeholders.

Management set up a COVID-19 taskforce and operating procedures to ensure that the safety protocols are adhered to. The measures increased the cost of business through acquisition of personal protective clothing, sanitisers, and private hire transport for staff.

The return of the United States dollar as a legal means of exchange in the country, together with the introduction of the foreign currency auction system helped stabilise the exchange rate and price stability. The company is now raising enough foreign currency locally to meet its import requirements.

Financial Performance

The Group prepared fnancial statements in accordance with International Accounting Standard 29, Financial Reporting in Hyperinfationary Economies. This requires Infation adjusted fnancial statements to be presented, as the primary fnancial statements with the historical fnancial statements being prepared for information purposes.

Demand for the company’s products was high during the year. The sales volumes for the year were 9% above the previous year despite the company having lost a full month’s trading in April due to the lockdown.

Turnover for the year was 4% lower than the previous year. The company generated most of its revenues in USD and was converted at the fxed exchange rate ruling at that time resulting in the decrease in revenue compared to the previous year.

The gross proft percentage remained at 33% for the two comparative periods and operating expenses were 27% of revenue compared to 26% in the previous year.

Export volumes were 43% lower than the previous year as they were affected by border closures, international cargo logistics constraints and lack of competitiveness in the regional markets.

The Group infation adjusted net proft after tax for the year was $165 million compared to $434 million for the previous year. Earnings per share were 33.37c vs 88.03c, impacted by a higher tax charge, following utilisation of accumulated tax losses in 2019.

Operating activities generated $320 million of cash, of which $162 million was invested into working capital, $118 million on capital expenditure and $20 million on loan repayment. Cash and cash equivalents increased by $7 million.

Outlook

There are good prospects for growth in the construction industry and particularly individual housing projects as the national housing backlog continues to grow. The new regulations prohibiting the sale of unserviced stands are expected to improve demand for water and sewage reticulation pipes.

The strict lockdown for the frst one and half months of this year reduced the company’s sales volumes as most of the customers’ businesses were deemed not essential and were closed for business. Volumes started to improve in March and the company expects to get to the normal trading levels in the second quarter if its customers can remain open for business.

The Covid -19 pandemic continues to cause disruption and its impact on the business in the short to medium term is uncertain.

Nonetheless, there is hope in the longer term with the introduction of vaccines, and the good rains of late are expected to provide a signifcant stimulus to economy this year. Management has implemented measures to ensure business continuity and viability in the uncertain environment and will continuously review these measures.

The health and safety of our customers, employees and stakeholders is important to us. The company adheres to the WHO COVID-19 guidelines provided by the authorities to ensure a safe working environment.

Dividend

The Board has resolved not to declare a dividend for the period and reinvest profts to improve working capital.

Board and Management

The Managing Director, Roseline Chisveto, left the Group after the expiry of her contract on 31 August 2020. We would like to welcome the new Managing Director, Mr. Zvidzayi Bikwa, who joined the Group on 1 December 2020. We look forward to his contributions to the Group.

Disposal of Turnall shares by the National Social Security Authority (NSSA)

Further to the cautionary statements published earlier, the Board of Directors wish to advise shareholders that one of the company’s shareholders, NSSA, is still engaged in a transaction to dispose its 32.55% shareholding in the business. The transaction if successful, could have a material impact on the value of the Company’s shares.

The Board therefore advises shareholders to continue exercising caution when dealing in their Turnall Holdings Limited shares and to consult their professional advisers before dealing in their shares until such time as the results of the said development are known.

Appreciation

On behalf of the Board of Directors, I would like to thank our customers, suppliers, key stakeholders, my fellow Directors, Management and Staff of Turnall Holdings Limited for their continued support.

By Order of the Board.

Mr. B. P. Nyajeka
Board Chairman


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Turnall Holdings Limited 2020 Annual Report