Deloitte signs off Turnall financial accounts

18 Aug, 2017 - 00:08 0 Views
Deloitte signs off Turnall financial accounts

eBusiness Weekly

Enacy Mapakame
Auditors Deloitte Zimbabwe have finally signed off Turnall Holdings Ltd’s 2016 financial accounts, but are concerned about the “material uncertainty” of the asbestos tile and pipe maker’s status as a going concern.

A material uncertainty over a company’s going concern usually means the auditors are concerned the company might not be able to continue operating in the foreseeable future, probably after the next 12 months. Reasons could be recurring losses among other ills.

Turnall initially released its unaudited earnings for last year on May 2, 2017, which showed losses of $6 million before tax. That has since come down to $1,7 million after management reached a deal with its creditors over millions in debt, which it has struggled to pay, according to the audited figures — released this August.

Deloitte had already ringed the alarm bells when Turnall Holdings’ debts outstripped its assets by $14,8 million in 2015, suggesting the firm was technically insolvent. And as the solvency issues persisted, coming off only marginally to $10,9 million in 2016, the auditors maintained an “unmodified opinion” on Turnall Holdings’  future.

But Turnall chairman Rita Likukuma is convinced a deal to restructure debt struck with lenders FBC Bank, ABC Bank, Afrasia Bank, CABS and other creditors, will boost operations. In a statement accompanying the results she said the deal had already added about $2,8 million to shareholders funds, helping ease the funding headaches.

“The major change is in other income where the company has now confirmed the renegotiation of some liabilities,” she said.

As at December 31, 2016, the Group’s current liabilities exceeded current assets by $10,932 million (2015: $14,8 million).

Turnall has failed to repay its loans amounting to $6,9 million owed to various banks and creditors because the company is not generating enough money from its business.

The company owes financial services providers in loans that were secured by the group’s properties through a security sharing arrangement on a pari-pasu basis. The average cost of borrowing for the year ended December 31, 2016 was 14 percent.

Management indicated the company was continuously engaging its creditors and lenders.

“The board believes that the business will continue in operating existence for the foreseeable future and believes the strategies implemented will ensure that the Company generates sustained profitability into the future,” said Turnall.

Turnall Holdings financial results came in late than is expected as per the Zimbabwe Stock Exchange regulations. The company reported its total revenue for the period to December 2016,  fell 41 percent to $16,9 million from $29 million recorded in the prior year.

Current year revenues were predominantly on cash basis in line with the revised business model thereby achieving lower sales but of a higher quality. Sales volumes were 39 percent weaker to 36,791 tonnes from 60,451 tonnes the previous year and export sales contribution fell to 0,52 percent.

Export sales for the period were affected by pricing due to high cost of production in Zimbabwe, a direct consequence of the weakening regional currencies against the United States dollar. Turnall does not anticipate any major changes to the operating environment, which is likely to remain challenging.

The company says it will focus on its key priorities among them formulation and implementation of strategic policies, good corporate governance and implementation of balance sheet restructuring scheme as well as the ability to turnaround and trade profitably. Market watchers project companies in construction and related industry to cash in on Government’s plan to provide housing for civil servants.

But as Government remains cash strained, the sector will be mainly dependent on small scale and individual residential projects.

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