Zimplow FY2011 Analyst briefing presentation

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Results For the Year ended 31 December 2011

Analyst Briefing 23 February 2012

Presentation OutlineStrategic & Operational Overview Zondi Kumwenda Chief Executive OfficerFinancial Performance Overview Francis Rwakonda Finance DirectorStrategic Issues & Outlook Zondi Kumwenda Chief Executive Officer

2Analyst Briefing 23 February 2012

STRATEGIC & OPERATIONAL OVERVIEW

“Mealie Brand from Generation to Generation”


Z.Kumwenda, Chief Executive Officer

MISSION AND VISIONMISSION“To avail quality affordable and reliable steel

products on time every time to the mining, farming, construction and manufacturing sectors”

Vision: “To be a market leader in the Design, Sourcing and

Distribution of at least one of our products in 18 countries south of the Sahara by 2020”


ZIMPLOW VALUES1. Integrity - Being absolutely truthful and

accepting responsibility for our actions2. Quality – Excellence in everything we do.3. Teamwork – Leverage on each other’s

strength4. Dependability - Our stakeholders, must

be able to count on us.5. Fun- Enjoy every moment.


GENERAL BACKGROUNDThe group comprises of 3 divisions: Mealie Brand, CT Bolts and

Tassburg and a new South African subsidiary-Afritrac1. Mealie Brand is the largest of the 3 divisions and is involved

in the supply of animal drawn implements and hoes. The factory is based in Bulawayo.

2. CT Bolts is a distributor of mild steel bolts and nuts, nails and a wide range of other fasteners. The division also manufactures specialised fasteners at its Bulawayo factory.

3. Tassburg is a supplier of Wood screws, Veranda Bolts and High tensile bolts. The factory is based in Harare.

4. African Traction and Associated Technologies is engaged in import and sale of animal drawn implements and tools

5. The group employs 503 employees.


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Solid Group Performance


26%

24%

17% -

15.5M 3.6M 2.7M 1 cent

12.3M 2.9M

2.3M

1 cent

REVENUE EBT NET INCOME

EPS

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MEALIE-BRAND OPERATIONS


Local implements(units)

Export implements(units)

Total Implements(units)

Spares(units) Production(kgs)

2010

2011

46%

29 102

42 389

2010

2011

8%

29 433

31 724

2010

2011

-11%

642 236 570

464

2010

2011

27%

58 535

2010

2011

-1%

3 262 520

74 113

3 224 281

Drought in East Africa, delayed seasonal take –off and cheap competing products from the far east were major factors affecting exports

The late rains in the region affected both export and domestic revenues.

Liquidity challenges which intensified towards the end of 2011affected domestic revenue.

Local cost increases especially labour and electricity weighed down margins.

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MEALIE-BRAND OPERATIONS CONTINUED


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CT BOLTS OPERATIONS


2010 2011

22%

97 465

118 674

2010 2011

-6%

29 098

27 488

2010 2011

34%

3 592 629 4 815 025

2010 2011

32%

13 577 960

17 915 457

2010 2011

87%

1 782 391

3 338 082

2010 2011

-14%

116 311

Mild Steel Bolts(kgs)

Nails(Kgs) Mild Steel(Units)

HT Bolts(Units)

Screws(Units)

Production(kgs)

2010 2011

-12%

1 517 394

Miscellaneous

1 743 668 128

012

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TASSBURG OPERATIONS


2010 2011

17%

1 087 1 271

2010 2011

59%

59 002

93 903

2010 2011

3%

12 805 13 163Rivets(kgs) Screws(kgs) Verandah

(kgs)

MAJOR COST MOVERSEmployment costs driven mainly by a 20%

increaseSteel prices increased by an average of 33%.

Heavy snow storm in the US and Europe caused shortages of scrap, hence affecting the global prices

We expect the steel prices to settle as and when the coal or iron ore prices correct themselves.

Fuel prices up 17% from January 2011 and so are haulage costs.


FINANCIAL OVERVIEW

F. RWAKONDA, GROUP FINANCE DIRECTOR


“But seek first the kingdom of God and His righteousness and all these things will be added to you.”Matthew 6 v 33

Summarized Group income statement

Revenue 15 503 306 12 298 300 26%Domestic 11 235 468 8 635 365 30%Export 4 267 838 3 662 935 16%PBIT 3 464 529 2 776 062 24%Net Interest income 170 744 146 191 16%PBT 3 635 273 2 922 253 24%Taxation (904 991) (580 252) 55%Attributable Income 2 730 282 2 342 001 16%


31 Dec 2011 31 Dec 2010 Variance

Group Income Statement.

Analyst Briefing 23 February 2012 15

26%

24%

17% -

15.5M 3.6M 2.7M 1 cent

12.3M 2.9M

2.3M

1 cent

REVENUE EBT NET INCOME

EPS

Revenue Contribution

11,658,940

2,522,583

797,9931,523,940

Sales

Mealie BrandCT BoltsTassburgAfritrac


Profitability contribution

3,226,979

261,216 18,631

144,816

Mealie BrandCT BoltsTassburgAfritrac


Strong Market Leadership


11 235 468

4 021 664

246 174 -

2,000,000.00

4,000,000.00

6,000,000.00

8,000,000.00

10,000,000.00

12,000,000.00

ZIMBABWE SOUTHERN AFRICA EAST AFRICA

SALES BY REGION

Group Statement of Financial Position


31 Dec 2011 31 Dec 2010AssetsProperty, Plant & Equipment 3 053 206 2 845 090Current Assets 13 692 191 10 648 562Total Assets Equity and liabilitiesTotal Equity 14 237 832 11 342 051Liabilities 2 507 565 2 151 601Total equity and liabilities

16 745 397

13 493 652

16 745 397

13 493 652

Group Statement of Cash flows


31 Dec 2011 31 Dec 2010Operating income before Working Capital Changes 3 685 540 3 006 698 Working Capital Movement (1 096 393) (468 951)Net Cash flow From OperatingActivities 1 849 819 2 220 579Financing and Investing Activities 803 487 226 942 Net Cash Flows 3 947 912 3 033 588

The group has an investment with Renaissance Merchant Bank amounting to USD 420 027.

Business environmentMore cost pressures that will be brought about by huge wage demands Electricity tariff increases by ZESA of 51% and increase in all utilities will be fully felt in 2012Rainfall patterns in the region continue to be erraticThe Company is still pursuing its growth strategies aimed at improving local and regional competitiveness.

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LOOKING AHEAD


ZIMPLOW LIMITED

THANK YOUTHANK YOU

AND GOD BLESSAND GOD BLESSZimplow LimitedZimplow Limited

39 Steelworks Rd39 Steelworks RdSteeldaleSteeldaleBulawayoBulawayo

ZimbabweZimbabwe

www.zimplow.co.zwwww.zimplow.co.zw


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Zimplow FY2011 Analyst briefing presentation