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CONSOLIDATED RESULTS FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 1998
UNAUDITED UNAUDITED AUDITED 6 MONTHS 6 MONTHS YEAR ENDED ENDED ENDED ABRIDGED GROUP 31 DECEMBER 31 DECEMBER % 30 JUNE INCOME STATEMENT 1998 1997 INCREASE 1998 TURNOVER 183 113 160 317 +14,2 298 494 OPERATING PROFIT BEFORE
DEPRECIATION 21 441 16 016 +33,9 34 733 DEPRECIATION (1 923) (1 868) +2,9 (4 787) OPERATING PROFIT 19 518 14 148 +38,0 29 946 INTEREST RECEIVED 3 322 2 482 33,8 4 588 PROFIT ON SALE OF FIXED PROPERTY - - - 122 PROFIT BEFORE TAXATION 22 840 16 630 37,3 34 656 TAXATION (8 441) (5 576) (11 411) PROFIT AFTER TAXATION 14 399 11 054 +30,3 23 245 OUTSIDE SHAREHOLDERS' INTEREST (45) (31) (138) EARNINGS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 14 354 11 023 30,2 23 107 NUMBER OF SHARES IN ISSUE (000'S)18 311 18 311 18 311 EARNINGS PER SHARE (CENTS) 78,4 60,2 +30,2 126,2 HEADLINE EARNINGS PER SHARE
(CENTS) 78,4 60,2 +10,2 125,5 DIVIDENDS PER SHARE (CENTS) 15,0 12,0 +25,0 25,0 RECONCILIATION OF HEADLINE EARNINGS EARNINGS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 14 354 11 023 23 107 PROFIT ON SALE OF FIXED PROPERTY - - (122) HEADLINE EARNINGS 14 354 11 023 22 985 UNAUDITED AT UNAUDITED AT AUDITED ABRIDGED GROUP 31 DECEMBER 31 DECEMBER AT 30 JUNE BALANCE SHEET 1998 1997 1998 CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' INTEREST 127 721 106 277 115 981 OUTSIDE SHAREHOLDERS' INTEREST 675 226 333
128 396 106 503 116 314 EMPLOYMENT OF CAPITAL
FIXED ASSETS 87 550 66 021 65 148 NET CURRENT ASSETS 40 846 40 482 51 166 CURRENT ASSETS 84 574 61 484 74 076 LIQUID FUNDS 35 632 39 137 48 247 CURRENT LIABILITIES
- INTEREST FREE (79 360) (60 139) (71 157) 126 396 106 503 116 314 NET ASSET VALUE PER SHARE (CENTS)701 582 635
CAPITAL EXPENDITURE 18 981 11 492 28 198 CAPITAL COMMITMENTS
- CONTRACTED FOR 14 531 2 750 18 667 - AUTHORISED BUT NOT CONTRACTED
FOR 4 450 8 742 9 531 UNAUDITED UNAUDITED AUDITED 6 MONTHS 6 MONTHS YEAR
ENDED ENDED ENDED 31 DECEMBER 31 DECEMBER 30 JUNE CASH FLOW STATEMENT 1998 1997 1998 CASH FLOWS FROM OPERATING
ACTIVITIES 11 165 20 410 30 919 OPERATING PROFIT BEFORE WORKING
CAPITAL MOVEMENTS 21 154 19 422 35 168 WORKING CAPITAL MOVEMENTS (8 304) 6 422 2 545 CASH GENERATED FROM OPERATIONS 12 850 25 844 37 713 INTEREST RECEIVED 3 322 2 482 4 588 DIVIDENDS PAID (2 380) (2 014) (4 211) TAXATION PAID (2 627) (5 902) (7 171) INVESTING ACTIVITIES (23 780) (9 288) (10 687) TO EXPAND OPERATIONS (21 418) (6 306) (11 095) TO MAINTAIN OPERATIONS (2 362) (2 982) 408 NET MOVEMENT IN CASH AND
CASH EQUIVALENTS (12 615) 11 122 20 232 CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 48 247 28 015 28 015 CASH AND CASH EQUIVALENTS AT
END OF PERIOD 35 632 39 137 48 247 COMMENTARY
GROUP TURNOVER FOR THE SIX MONTHS TO DECEMBER 1998 INCREASED BY 14% TO R183 MILLION, EXCEEDING MANAGEMENT'S EXPECTATIONS. OPERATING PROFIT ROSE 38% TO R19,5 MILLION DESPITE TOUGH TRADING CONDITIONS. IMPROVED REVENUES RESULTED FROM:
- AN INCREASE IN THE NUMBER OF OUTLETS. THE PRESENCE OF THE GROUP'S BRANDED OUTLETS HAS BEEN EXTENDED WITH ONE NEW GROUP-OWNED STORE AND FOUR FRANCHISE OPERATIONS. AN AGGREGATE OF 58 OUTLETS.
- A GROWTH IN SALES VOLUMES. THIS INCREASE, WHICH IS NOT PRICE DRIVEN, HAS BENEFITED FROM AN AGGRESSIVE ADVERTISING STRATEGY AND FOCUS ON PREMIER BRANDS. - A RETURN TO HEALTHIER MARGINS. IN THE PRIOR REPORTING PERIOD, MARGINS WERE TEMPORARILY SACRIFICED AS A RESULT OF AN ACTIVE PROMOTIONAL CAMPAIGN; THE GROUP HAS SUBSEQUENTLY RETURNED TO ITS NORMAL TRADING PHILOSOPHY.
THE GROUP HAS HAD SOME SUCCESS IN CONTAINING OVERHEADS. IMPROVED EFFICIENCIES IN STOCK-HANDLING METHODOLOGIES HAD A POSITIVE EFFECT ON OPERATING MARGINS. STOCKHOLDING LEVELS HAVE RISEN IN ANTICIPATION OF STORE OPENINGS. IT IS FORESEEN THAT THESE LEVELS WILL BE REDUCED BY THE END OF THE CURRENT FINANCIAL YEAR.
TRADING IN AUSTRALIA COMMENCED IN OCTOBER 1998, WITH THE ESTABLISHMENT OF THE GROUP'S PILOT CTM OPERATION IN SYDNEY. IT IS ANTICIPATED THAT THIS OPERATION WILL MAKE A CONTRIBUTION TO GROUP PROFITS IN THE COMING FINANCIAL YEAR. THE GROUP REMAINS UNGEARED; ALL FUTURE EXPANSION WILL BE FUNDED THROUGH OWN CASH RESOURCES. PROSPECTS
CHALLENGING TRADING CONDITIONS ARE EXPECTED TO CONTINUE WITH NO IMMEDIATE IMPROVEMENT PREDICTED. THE GROUP WILL CONTINUE WITH ITS EXPANSION PROGRAMME AND SEVERAL NEW STORES WILL COMMENCE TRADING IN THE COMING MONTHS. ITALTILE IS EXPECTED TO PRODUCE A REAL IMPROVEMENT IN EARNINGS OVER THE REMAINDER OF THE FINANCIAL YEAR. YEAR 2000 COMPLIANCE
THE GROUP'S YEAR 2000 PROJECT, INCLUDING TESTING, IS COMPLETE AND HAS BEEN SUBJECTED TO INDEPENDENT REVIEW. THE DIRECTORS BELIEVE THAT THERE IS NO MATERIAL RISK TO THE GROUP. DIVIDEND
THE BOARD HAS DECLARED AN INTERIM DIVIDEND OF 15 CENTS PER SHARE, A 25% INCREASE OVER THE CORRESPONDING PRIOR PERIOD. DIVIDEND COVER WILL REMAIN AT AROUND 5:1 IN LINE WITH GROUP POLICY. FOR AND BEHALF OF THE BOARD G RAVAZZOTTI CHAIRMAN J COUZIS C.E.O. DIVIDEND ANNOUNCEMENT
NOTICE IS HEREBY GIVEN THAT INTERIM DIVIDEND NUMBER 65 OF 15 CENTS PER SHARE HAS BEEN DECLARED PAYABLE TO ALL SHAREHOLDERS REGISTERED IN THE BOOKS OF ITALTILE LIMITED AT THE CLOSE OF BUSINESS ON 12 MARCH 1999 AND WILL BE PAYABLE ON OR ABOUT 8 APRIL 1999. FOR AND ON BEHALF OF THE BOARD P SWATTON SECRETARY 24 FEBRUARY 1999 REGISTERED OFFICE
THE ITALTILE CENTRE BUILDING, CNR HENDRIK VERWOERD DRIVE AND BURKE STREET, RANDBURG 2194 (PO BOX 1689, RANDBURG 2125) TRANSFER SECRETARIES
MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET, JOHANNESBURG 2001 (PO BOX 1053, JOHANNESBURG 2000) DIRECTORS
G A M RAVAZZOTTI (CHAIRMAN), J COUZIS* (CEO), P D SWATTON**, G COUSINS, D H RABIN, S GALLI (ALTERNATE) *GREEK **BRITISH
