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ITALTILE LIMITED
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2000
INTERIM PROFIT ANNOUNCEMENT
COMMENTARY
Italtile Limited has delivered a satisfactory set of results for the six months
ended 31 December 2000, in line with management forecasts. The company
reported an improvement in operating profit of 30%, up from R28 million to R37
million. Headline earnings per share increased by 26% to 144 cents per share
(1999: 114 cents). The group remains ungeared.
During the prior reporting period the company declared its strategic thrust to
position itself as a major franchisor. In furthering its stated policy of
streamlining the parent operation while growing market share and fostering
entrepreneurial opportunities, an additional seven group-owned stores were
franchised between January 2000 and January 2001. The effect of this policy is
demonstrated in the segmental analysis which shows the turnover of franchised
stores having increased by 83% from R88 million to R162 million, while turnover
of group-owned stores improved by 3,2% from R238 million to R246 million.
Turnover for the entire group increased by 25%, from R326 million to R407
million.
In the preliminary profit announcement for the year ended 30 June 2000, the
group outlined its key objectives:
* Advance the trend from group-owned to franchised stores;
* Improve efficient utilisation of working capital;
* Focus on distribution, and improve stock levels; and
* Increase presence in foreign markets.
The Board is satisfied that these objectives are being addressed. Stock holding
has been reduced by R11 million, reflecting prudent management.
Despite the depreciating South African rand, Italtile continues to be able to
source product internationally at the most competitive prices because of the
leverage afforded by its position as the largest purchaser of ceramic tiles in
the world.
SOUTHERN AFRICAN OPERATIONS
The Board is pleased to report solid growth by both its divisions, CTM and
Italtile.
The group continued to focus on its ongoing programme of improvements,
investing in in-store enhancements and extensive staff training. The company's
systems upgrade has been successfully implemented and will leverage greater
efficiencies out of the business.
The company now trades out of 18 group-owned CTM stores, 38 franchised CTM
stores and 11 Italtile stores.
During the period under review, the group's fixed assets increased by R24
million with further investment in the property portfolio, raising the value of
the group's real estate to approximately R150 million. Italtile's policy is to
ensure that both group-owned and franchised stores operate out of company-owned
premises. The highly visible, prime-position locations serve to support group
brands and generate cash for the group. The group's flagship Italtile showroom
opened in Peter Place, Bryanston, in November 2000 and has traded successfully.
INTERNATIONAL OPERATIONS
During the previous reporting period, the group announced that within 12 months
it would open a further four stores in Australia. The company now operates
seven stores across Sydney, Melbourne and Brisbane, with additional stores
scheduled to open this year. Despite the company's conservative policy with
regard to set-up costs, and the challenge of establishing brand presence in a
new market, the Australian operations performed satisfactorily and are expected
to break even in the current year. Management is positive about the division's
potential and perceives attractive expansion opportunities in that country.
To date expansion has been funded through company reserves.
ACCOUNTING POLICIES
The accounting policies applied have been consistent with that of the prior
year.
PROSPECTS
The Board is satisfied that Italtile is on track to deliver its tenth
successive year of earnings improvement. The group will continue to focus on
aggressive cost control and improved margins.
DIVIDEND
The Board has declared an interim dividend of 29 cents, an improvement of 26%
(1999: 23 cents). The group will retain its dividend cover at approximately 5
times.
For and on behalf of the Board
G.A.M. Ravazzotti P.D. Swatton
Chairman Chief Executive Officer
13 February 2001
DIVIDEND ANNOUNCEMENT
Notice is hereby given that interim dividend number 69 of 29 cents per share
has been declared payable to all shareholders registered in the books of
Italtile Limited at the close of business on 02 March 2001 and will be payable
on or about 06 April 2001.
STRATE
Italtile Limited has been notified by the JSE Securities Exchange to transfer
its share capital to the electronic Share Transactions Totally Electronic
(STRATE) environment as from 23 April 2001. This indicates the date from which
investors' shares can be converted into an electronic record in order to become
eligible to settle in the STRATE environment. Trading for electronic settlement
begins on 14 May 2001. As of this date there is a legal requirement for
shareholders to deposit their shares with a CSDP or qualifying stockbroker
prior to selling them in order for the trade to settle in STRATE. 21 May 2001
is the date on which electronic settlement of Italtile's trades will take place
for the first time. Shareholders will have received information to this effect
from Italtile, and further queries should be referred to STRATE on: 0800 004
727.
ABRIDGED GROUP INCOME STATEMENTS
(Rand 000's unless otherwise stated)
Unaudited Unaudited Audited
six months to six months to year to
31 December % 31 December 30 June
2000 increase 1999 2000
TURNOVER
- By group owned
stores 245 577 +3,2 237 931 422 534
- By franchise
owned stores 161 808 +83,0 88 420 197 259
TOTAL 407 395 +24,8 326 351 619 793
Trading profit
before depreciation 41 116 +32,5 31 044 70 504
Depreciation (4 049) (2 595) (5 758)
Trading profit 37 069 +30,3 28 449 64 746
Interest received 712 1 780 2 813
Profit on sale of
subsidiary 0 0 1 738
Profit on sale of
fixed property 568 174 943
Profit before
taxation 38 349 +26,1 30 403 70 240
Taxation (11 437) (8 928) (20 046)
Profit after
taxation 26 912 +25,3 21 475 50 194
Outside shareholders'
interest (53) (369) (846)
Earnings attributable
to ordinary
shareholders 26 859 +27,3 21 106 49 346
Number of shares
in issue (000's) 18 311 18 311 18 311
Earnings per share
(cents) 146,7 +27,3 115,3 269,5
Headline earnings
per share (cents) 143,6 +25,6 114,3 254,6
Dividends per share
(cents) 29,0 +26,1 23,0 54,0
RECONCILIATION OF HEADLINE EARNINGS
Earnings attributable
to ordinary
shareholders 26 859 21 106 49 346
Profit on sale of
fixed property (568) (174) (943)
Profit on sale of
subsidiary - (1 738)
Headline earnings 26 291 20 932 46 665
CASH FLOW STATEMENT
Unaudited Unuadited Audited
six months to six months to year to
31 December 31 December 30 June
2000 1999 2000
Cash flows from operating
activities 39 928 41 556 68 104
Trading adjusted for
non-cash items 41 587 34 153 72 248
Working capital movements 15 930 25 950 21 019
Cash generated from
operations 57 517 60 103 93 267
Interest received 712 1 780 2 813
Dividends paid (5 917) (3 862) (8 074)
Taxation paid (12 384) (16 465) (19 902)
Investing activities (35 139) (21 737) (56 698)
To expand operations (32 319) (16 710) (43 353)
To maintain operations (2 820) (5 027) (13 345)
Investment of minorities in
Italtile Australia 2 198 848
Net movement in cash and
cash equivalents 6 987 19 819 12 254
Cash and cash equivalents at
beginning of period 31 756 19 502 19 502
Cash and cash equivalents
at end of period 38 743 39 321 31 756
ABRIDGED GROUP BALANCE SHEETS
Unaudited Unuadited Audited
six months to six months to year to
31 December 31 December 30 June
2000 1999 2000
EMPLOYMENT OF CAPITAL
Fixed assets 180 747 116 586 149 934
Net current assets 24 034 40 699 31 089
Current assets 108 052 93 114 104 643
Liquid funds 38 743 39 321 31 756
Current liabilities 105 074 80 912 65 535
Other payables and accruals 12 697 6 812 34 177
Shareholders for dividend 4 990 4 012 5 598
204 781 157 285 181 023
CAPITAL EMPLOYED
Ordinary shareholders'
interest 200 331 156 414 178 824
Outside shareholders'
interest 4 450 871 2 199
204 781 157 285 181 023
Net asset value per share
(cents) 1 118 859 989
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Unaudited Unuadited Audited
six months to six months to year to
31 December 31 December 30 June
2000 1999 2000
Balance at beginning of
period 178 824 139 370 139 370
Net profit for the period 26 859 21 106 49 346
Dividends (5 310) (4 210) (9 889)
Currency translation reserve (42) 148 117
Dividends paid to outside
shareholders 0 0 (120)
Balance at end of period 200 331 156 414 178 824
REGISTERED OFFICE The Italtile Centre, cnr Peter Place Road and William Nicol,
Bryanston (PO Box 1689 Randburg 2125)
TRANSFER SECRETARIES Computershare Services Limited, Edura, 41 Fox Street,
Johannesburg 2001 (PO Box 61051, Johannesburg 2107)
DIRECTORS G A M Ravazzotti (Chairman), P D Swatton** (C.E.O.), J Couzis*, G
Cousins, D H Rabin, B G van Rooyen, S Galli (alternate) *Greek **British
Refer to Italtile's corporate website at www.Italtile.com
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