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ITALTILE LIMITED
PRELIMINARY PROFIT ANNOUNCEMENT FOR THE YEAR ENDED 30 JUNE 2000
COMMENTARY
AHEAD OF FORECASTS, ITALTILE LIMITED HAS RECORDED A 23% IMPROVEMENT IN
TURNOVER, FROM R343MILLION TO R423 MILLION. OPERATING PROFIT INCREASED BY 50%
FROM R43 MILLION TO R65MILLION AND HEADLINE EARNINGS WERE 254,8 CENTS PER SHARE
(1999: 180,4 CENTS), UP 41%. THE GROUP REMAINS UNGEARED.
THE COMPANY, WHICH TRADES OUT OF 20 GROUP-OWNED CTM STORES, 33 FRANCHISED CTM
STORES, 3 CTM STORES IN AUSTRALIA AND 11 ITALTILE CENTRES, NOTES THAT THESE
RESULTS ARE A REFLECTION OF FOCUSING ON CORE BUSINESS, AGGRESSIVE COST CONTROL
AND IMPROVED MARGINS.
SEVERAL KEY STRATEGIC DECISIONS WERE TAKEN DURING THE PERIOD UNDER REVIEW,
WHICH ALSO IMPACTED FAVOURABLY ON CONTAINING OVERHEADS AND IMPROVING RETURNS
FROM THE FRANCHISE DIVISION:
IN LINE WITH COMPANY POLICY OF STREAMLINING THE PARENT OPERATION WHILE GROWING
MARKET SHARE AND FOSTERING ENTREPRENEURIAL OPPORTUNITIES, 5 GROUP-OWNED STORES
WERE FRANCHISED DURING THE FINANCIAL YEAR, AND A FURTHER 3 WILL BE FRANCHISED
WITH EFFECT FROM JANUARY 2001.
THIS POLICY HAS HAD, AND WILL CONTINUE TO HAVE, A SIGNIFICANT EFFECT ON THE
COMPANY'S RESULTS, AND IS REFLECTED POSITIVELY IN PROFIT GROWTH, BUT HAS NO
CORRELATIVE EFFECT ON TURNOVER GROWTH.
DURING THE PERIOD UNDER REVIEW THE COMPANY MADE SIGNIFICANT INVESTMENT IN ITS
PROPERTY PORTFOLIO, WHICH HAS HAD THE EFFECT OF SUPPORTING GROUP BRANDS,
IMPROVING TURNOVER LEVELS AND GENERATING CASH FOR THE GROUP.
THE COMPANY AIMS TO EXTEND ITS ACTIVITIES IN MAJOR CORPORATE PROJECT
DEVELOPMENTS, WHICH HAS NOT TRADITIONALLY BEEN AN AREA OF FOCUS FOR THE GROUP.
INROADS HAVE ALREADY BEEN MADE IN THIS REGARD AND THE GROUP CURRENTLY HAS
SEVERAL SHOPPING CENTRE AND HOTEL PROJECTS UNDER WAY.
INTERNATIONAL OPERATIONS
THE AUSTRALIAN OPERATION, WHICH CAME ON STREAM IN 1998, WITH THE MOST RECENT
STORE HAVING OPENED SHORTLY BEFORE THE CURRENT YEAR-END, CONTRIBUTED
SATISFACTORILY TO GROUP PROFITS. THE COMPANY IS BULLISH ABOUT THE POTENTIAL IN
THE AUSTRALIAN MARKET AND HAS PLANS FOR OPENING ANOTHER 4 STORES BY THE END OF
CALENDAR YEAR 2000 AND A FURTHER 10 STORES BY THE END OF THE FOLLOWING YEAR.
IN TERMS OF OTHER NEW MARKETS, ITALTILE IS CURRENTLY EVALUATING EXPANSION
PROSPECTS IN THE UNITED KINGDOM.
SOUTHERN AFRICAN OPERATIONS
THE COMPANY HAS ALSO IDENTIFIED A NUMBER OF OPPORTUNITIES IN THE EAST AFRICAN
MARKET. THE FIRST CTM STORE WILL OPEN IN TANZANIA IN SEPTEMBER 2000. THIS
VENTURE WILL PROVIDE AN IMPORTANT OPPORTUNITY FOR THE COMPANY TO MASTER THE
LOGISTICS OF TRADING IN AFRICA AND PARTICULARLY HOW TO OPTIMISE DISTRIBUTION.
BASED ON THAT EXPERIENCE, FURTHER EXPANSION PLANS WILL BE IMPLEMENTED IN THE
REGION.
IN TERMS OF THE SOUTH AFRICAN MARKET, THE GROUP IS PLEASED TO REPORT
SATISFACTORY GROWTH IN ALL DIVISIONS.
SIGNIFICANT INVESTMENT IN IN-STORE IMPROVEMENTS IN THE CTM DIVISION AIMED AT
ENHANCING CUSTOMER EXPERIENCE HAS BEEN WELL RECEIVED. THIS PROCESS HAS BEEN
IMPLEMENTED IN SELECT STORES AND WILL BE ROLLED OUT TO THE ENTIRE DIVISION.
THE RE-BRANDING OF THE ITALTILE CENTRE STORES HAS BEEN EFFECTIVE AND THE
CURRENT MARKETING CAMPAIGN HAS REAPED IMPORTANT BENEFITS, REFLECTED IN
SUCCESSFUL NEW STORE OPENINGS AND RECORD SALES ACHIEVED THROUGHOUT. THE MOVE TO
THE NEW FLAGSHIP SHOWROOM IN SANDTON, THE HEART OF THE COMPANY'S TARGET MARKET,
IN SEPTEMBER 2000 WILL BE A FURTHER BOOST FOR THE ITALTILE CENTRE BRAND.
THE GROUP ANTICIPATES OPENING A FURTHER 3 GROUP-OWNED CTM STORES, 4 FRANCHISED
CTM STORES AND 2 ITALTILE CENTRES IN THE CURRENT FINANCIAL YEAR.
EXCEPTIONAL ITEM
ITALTILE DISPOSED OF ITS SMALL, NON-CORE MANUFACTURING CONCERN, VOGUE BATHROOM
FURNITURE, TO AN EXISTING SUPPLIER. THE TRANSACTION IS REFLECTED IN THE PROFIT
ON SALE OF SUBSIDIARY.
DIRECTORATE
MR BRIAN VAN ROOYEN, CEO OF LABAT AFRICA LIMITED, HAS BEEN APPOINTED TO THE
BOARD OF DIRECTORS WITH IMMEDIATE EFFECT. THE BOARD WELCOMES MR LABAT AND LOOKS
FORWARD TO HIS VALUABLE CONTRIBUTION TO GROUP AFFAIRS.
PROSPECTS
TARGETING ITALTILE'S TENTH SUCCESSIVE YEAR OF EARNINGS IMPROVEMENT, THE BOARD
FORECASTS ACCEPTABLE GROWTH FOR THE COMING FINANCIAL YEAR.
THE GROUP WILL AIM FOR INCREASINGLY EFFICIENT UTILISATION OF WORKING CAPITAL BY
CONTINUING TO FOCUS ON DISTRIBUTION AND IMPROVED STOCK LEVELS AND ADVANCING THE
TREND FROM GROUP OWNED TO FRANCHISED STORES.
DIVIDEND
THE BOARD HAS DECLARED A FINAL DIVIDEND OF 31 CENTS, WHICH, TOGETHER WITH THE
INTERIM DIVIDEND OF 23 CENTS, BRINGS THE TOTAL DIVIDEND FOR THE YEAR TO 54
CENTS, AN IMPROVEMENT OF 54% OVER THE PREVIOUS FINANCIAL YEAR (35 CENTS).
FOR AND ON BEHALF OF THE BOARD
G RAVAZZOTTI CHAIRMAN P SWATTON C.E.O.
DIVIDEND ANNOUNCEMENT
NOTICE IS HEREBY GIVEN THAT FINAL DIVIDEND NUMBER 68 OF 31 CENTS PER SHARE HAS
BEEN DECLARED PAYABLE TO ALL SHAREHOLDERS REGISTERED IN THE BOOKS OF ITALTILE
LIMITED AT THE CLOSE OF BUSINESS ON 1SEPTEMBER2000 AND WILL BE PAYABLE ON OR
ABOUT 6 OCTOBER 2000.
THE GROUP WILL RETAIN ITS DIVIDEND COVER AT APPROXIMATELY 5:1.
FOR AND ON BEHALF OF THE BOARD
P SWATTON SECRETARY
16 AUGUST 2000
(RAND 000'S UNLESS OTHERWISE STATED)
ABRIDGED GROUP INCOME STATEMENTS
UNAUDITED AUDITED
YEAR TO YEAR TO
30 JUNE 30 JUNE %
2000 1999 INCREASE
TURNOVER 422 534 342 910 +23,2
TRADING PROFIT BEFORE DEPRECIATION 70 504 47 282 +49,1
DEPRECIATION (5 758) (4 066) +41,6
TRADING PROFIT 64 746 43 216 +49,8
INTEREST RECEIVED 2 813 5 036 (44,1)
PROFIT ON SALE OF SUBSIDIARY 1 738 -
PROFIT ON SALE OF FIXED PROPERTY 943 -
PROFIT BEFORE TAXATION 70 240 48 252 45,6
TAXATION (20 046) (15 782)
PROFIT AFTER TAXATION 50 194 32 470 +54,6
OUTSIDE SHAREHOLDERS' INTEREST (848) 564
EARNINGS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 49 346 33 034 49,4
NUMBER OF SHARES IN ISSUE (000'S) 18 311 18 311
EARNINGS PER SHARE (CENTS) 269,5 180,4 +49,4
HEADLINE EARNINGS PER SHARE (CENTS) 254,8 180,4 +41,3
DIVIDENDS PER SHARE (CENTS) 54,0 35,0 +54,3
RECONCILIATION OF HEADLINE EARNINGS
EARNINGS ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 49 346 33 034
PROFIT ON SALE OF FIXED PROPERTY (943) -
PROFIT ON SALE OF SUBSIDIARY (1 738) -
HEADLINE EARNINGS 46 665 33 034
ABRIDGED GROUP BALANCE SHEETS
UNAUDITED AUDITED
YEAR YEAR
ENDED ENDED
30 JUNE 30 JUNE
2000 1999
CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' INTEREST 178 824 139 370
OUTSIDE SHAREHOLDERS' INTEREST 2 199 502
181 023 139 872
EMPLOYMENT OF CAPITAL
FIXED ASSETS 149 934 102 729
NET CURRENT ASSETS 31 089 37 143
CURRENT ASSETS 104 643 88 780
LIQUID FUNDS 31 756 19 502
CURRENT LIABILITIES (65 535) (41 977)
OTHER PAYABLE AND ACCRUALS (34 177) (25 499)
SHAREHOLDERS FOR DIVIDENDS (5 598) (3 663)
181 023 139 872
NET ASSET VALUE PER SHARE (CENTS) 989 764
CASH FLOW STATEMENT
UNAUDITED AUDITED
YEAR YEAR
ENDED ENDED
30 JUNE 30 JUNE
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES 68 104 21 438
OPERATING PROFIT BEFORE WORKING
CAPITAL MOVEMENTS 72 248 47 177
WORKING CAPITAL MOVEMENTS 21 019 (10 661)
CASH GENERATED FROM OPERATIONS 93 267 36 516
INTEREST RECEIVED 2 813 5 036
DIVIDENDS PAID (8 074) (5 127)
TAXATION PAID (19 902) (14 987)
INVESTING ACTIVITIES (56 698) (50 917)
TO EXPAND OPERATIONS (43 353) (37 348)
TO MAINTAIN OPERATIONS (13 345) (13 569)
INVESTMENT OF MINORITIES IN ITALTILE AUSTRALIA 848 734
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 12 254 (28 745)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19 502 48 247
CASH AND CASH EQUIVALENTS AT END OF PERIOD 31 756 19 502
REGISTERED OFFICE THE ITALTILE CENTRE BUILDING CNR BURKE STREET AND HENDRIK
VERWOERD DRIVE, 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), P D SWATTON** (C.E.O.), J COUZIS*, G
COUSINS, D H RABIN, B G VAN ROOYEN, S GALLI (ALTERNATE) *GREEK **BRITISH
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