Turnall suffers 60 percent revenue fall

02 Mar, 2018 - 07:03 0 Views
Turnall suffers 60 percent revenue fall

eBusiness Weekly

Golden Sibanda
Turnall Holdings Limited has suffered extensively from former shareholder and executive mismanagement, causing revenue to fall 60 percent in four years.

Turnall’s revenue plunged 60,5 percent to $17 million over the 4 year period to 2016 weighed down partly by operational challenges, but also mismanagement given the numerous reported instances of fraud by its executives.

The effect of these developments pushed the company into perennial losses and financial instability during that period.

Turnall has on many occasions found itself in the limelight for the wrong reasons including allegations former major shareholder FBC Bank milked the company of $3,4 million in management fees, which one Turnall shareholder disputed.

FBC Bank acquired a 58,32 percent stake in Turnall in 2010 through realisation of pledged security to a non-performing loan. The shares were later sold to one Noel Heyes who alleged irregular conduct both in Turnall and FBC Holdings.

Heyes accused FBCH of misrepresentations, fraud and material non-disclosures, which resulted in him suffering financial prejudice. The investor, apart from Turnall, had also invested significantly in the listed financial services group.

Turnall had to restate its 2013 financial accounts after an internal audit unearthed fraudulent transactions of previous management.

The executive management comprised managing director John Jere, human resources executive Elizabeth Mamukwa and finance director Robert Dube.

Alleged malfeasances include tampered systems, fraud, corporate governance violations and over-stating of stock.

The company’s turnover plummeted terribly from as high as $42,8 million in 2013, $33,8 million in 2014, $29 million in 2015 to a low of $16,9 million by end of 2016. The group’s financial accounts for 2017 are still to be published.

Admittedly, it would be interesting to note by what factor the financial performance for 2017 will improve, with management saying a massive salaries cut across the board resulted in some positives starting to show from the middle of last year.

The plunge in revenue, Turnall said, resulted in huge losses during this period rendering the operations of the business unviable.

It was reported in 2016 that stock exchange listed company was probing a former managing director over suspicion he prejudiced the firm over $300 000 through misrepresentation of a pipes deal with a South African company.

As its challenges mounted from 2013-2016 the firm resorted to drastic cost cutting measures, including salary and board fee cuts, to prevent potential collapse, but the initiatives failed to steer the firm out of its financial quagmire.

Cost cutting measures instituted also entailed reducing contract employees, multi-skilling, freezing recruitment, negotiating price reductions with suppliers, termination of contract employment, retrenchments and reducing working hours.

The company, a manufacturer of fibre cement sheets, pipes, concrete tiles, concrete pavers and garden décor said the interventions to rescue profitability position; it could not “resuscitate the business to its normal levels of operation”.

Eventually, the decision to cuts salaries for its workers has torched a bruising wrangle.

“These measures managed to keep the business afloat, however, the company was still facing closure, given the huge losses that it was making,” Turnall said in a submission made to the Ministry of Public Service, Labour in the labour dispute with workers.

Turnall slashed workers salaries by 30 percent for NEC graded workers, 50 percent for executives while fees for board members were cut by 70 percent.

“Salary reduction, as a cost cutting measure was implemented in order to align the labour costs to the dwindled company revenue,” Turnall said in its submission to the ministry.

In response to one of the complaints lodged by workers over the salary cuts, Turnall Acting chief executive Roseline Chisveto, pleading with workers to bear with the firm, in August last year said the move sought to save the company and jobs.

“The business results are starting to show positive impact of the aforesaid measures and other company decisions, as evidenced by the June and July 2017 performance results,” she said, pleading with workers to bear with the firm.

Turnall said the decision to cut the salaries was agreed in a works council meeting. When workers objected to the cuts saying they were unilateral, it advised them to “take the next stage as enshrined in the Turnall Holdings Code of Conduct.

The decision has sparked an abrasive dispute as the workers are now at odds with management demanding reversal of the salary cuts.

In their submissions to the Ministry of Labour, workers said management unilaterally cut their salaries starting from July 1, 2016 for all national employment council (NEC) graded workers.

At a meeting held to discuss the issue and held after the effective date, workers were told the decision was a board directive.

Workers now claim that they opposed the salary cuts at several works council meetings, but management would not budge.

“Up to as late as 29th June, 2017 the issue of salary cuts remained contentious and at the works council meeting on this date the employees still reiterated the salary cuts were unilateral and that they wanted all that was deducted from their salaries to be reinstated because they considered that to be day light robbery.”

Workers claim, while disputing an agreement was reached for their salaries to be whittled down by 30 percent, that it was illegal at law to “negotiate to diminish or adversely affect employees’ rights and interests.”

“In the circumstances, even if the parties in this matter had negotiated and agreed to cut salaries, which is not conceded, that sort of agreement would have been a nullity,” workers said.

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