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PRELIMINARY PROFIT ANNOUNCEMENT
CONSOLIDATED RESULTS FOR THE YEAR ENDED 30 JUNE 1998
THE ITALTILE AND TILE MARKET CTM
COMMENTARY
THE RESULTS FOR THE 1998 FINANCIAL YEAR FULLY MET MANAGEMENT'S EXPECTATIONS
WITH TURNOVER RISING 16,5% TO R298 MILLION AND OPERATING PROFITS GROWING BY
24,3% TO JUST UNDER R30 MILLION:
THE YEAR HAS BEEN CHARACTERISED BY THE FOLLOWING:
THE CONTINUED GROWTH IN THE NUMBER OF RETAIL OUTLETS, BOTH GROUP OWNED AND
FRANCHISED, WHICH HAS RESULTED IN INCREASED MARKET SHARE.
A GROWTH IN SALES VOLUME BY 18,9%. THE FIRST SIX MONTHS OF THE YEAR SAW
SIGNIFICANT SALES GROWTH SUPPORTED BY AN AGGRESSIVE PROMOTIONAL CAMPAIGN, WHICH
RESULTED IN A TEMPORARY SOFTENING IN MARGINS. OPERATING MARGINS CONTINUED TO
FIRM IN THE LATTER HALF OF THE YEAR.
IMPROVED DISTRIBUTION METHODS WHICH HAVE POSITIVELY IMPACTED ON OPERATING
MARGINS.
THE GROUP HAS CONTINUED TO TRADE PRIMARILY ON A "CASH ONLY" BASIS, RESULTING IN
CASH RESOURCES GROWING BY R20 MILLION TO R48 MILLION AT THE YEAR END. THIS
POSITIVE CASH POSITION WILL BE PARTLY UTILISED TO FUND FURTHER STORE EXPANSION
AND PLACE THE GROUP ON A STRONG FOOTING WHEN REPLENISHING ITS STOCK HOLDING.
STOCK LEVELS ROSE TO R53 MILLION, A DIRECT CONSEQUENCE OF THE GROWTH IN THE
NUMBER OF RETAIL OUTLETS FROM 46 STORES IN 1997 TO THE CURRENT 53 STORES.
THE GROUP REMAINS UNGEARED, WITH THE BALANCE SHEET REFLECTING ITS STRONG
FINANCIAL POSITION.
PROSPECTS
WE EXPECT TRADING CONDITIONS IN THE COMING YEAR TO BE VERY DIFFICULT WITH HIGH
INTEREST RATES AND INFLATIONARY PRESSURES SHRINKING DISPOSABLE INCOME. IN
ADDITION, GENERAL BUILDING ACTIVITY IS LIKELY TO BE CONSTRAINED.
THE IMPETUS CREATED BY THE EXPANSION OF THE NUMBER OF OUTLETS IN THE RETAIL
CHAINS WILL CONTINUE, WITH A RESULTANT INCREASE IN MARKET SHARE. WITHIN THIS
ENVIRONMENT IT IS ANTICIPATED THAT ITALTILE WILL CONTINUE ITS GROWTH TREND,
WITH PROJECTED TURNOVER RISING AT THE RATE ACHIEVED IN 1997.
DESPITE A WEAKENING OF THE RAND, THE GROUP IS CONFIDENT THAT MARGINS WILL BE
IMPROVED, BOLSTERED BY TIGHTER COST CONTROL, WHICH WILL BE A PRINCIPAL FOCUS
FOR THE COMING YEAR. THE GROUP WILL EXPLORE TRADING OPPORTUNITIES IN AUSTRALIA
IN THE NEW FINANCIAL YEAR.
DIVIDEND
THE BOARD HAS DECLARED A FINAL DIVIDEND OF 13 CENTS PER SHARE. THIS, TOGETHER
WITH THE INTERIM DIVIDEND OF 12 CENTS PER SHARE, BRINGS THE TOTAL DIVIDEND TO
25 CENTS PER SHARE FOR THE YEAR.
THE GROUP WILL RETAIN ITS DIVIDEND COVER AT APPROXIMATELY 5:1.
FOR AND ON BEHALF OF THE BOARD
G RAVAZZOTTI CHAIRMAN
J COUZIS C.E.O.
11 AUGUST 1998
DIVIDEND ANNOUNCEMENT
NOTICE IS HEREBY GIVEN THAT FINAL DIVIDEND NUMBER 64 OF 13 CENTS PER SHARE HAS
BEEN DECLARED PAYABLE TO ALL SHAREHOLDERS REGISTERED IN THE BOOKS OF ITALTILE
LIMITED AT THE CLOSE OF BUSINESS ON 28 AUGUST 1998. DIVIDEND CHEQUES WILL BE
POSTED ON OR ABOUT 5 SEPTEMBER 1998.
FOR AND ON BEHALF OF THE BOARD
P SWATTON
SECRETARY
11 AUGUST 1998
(RAND 000'S UNLESS OTHERWISE STATED)
ABRIDGED GROUP INCOME STATEMENTS
UNAUDITED AUDITED
YEAR TO YEAR TO
30 JUNE 30 JUNE %
(RAND 000'S UNLESS OTHERWISE STATED) 1998 1997 INCREASE
TURNOVER 298 494 256 244 +16,5
OPERATING PROFIT BEFORE DEPRECIATION 34 733 27 514 +26,2
DEPRECIATION (4 787) (3 416 +40,1
OPERATING PROFIT 29 946 24 098 +24,3
INTEREST RECEIVED 4 588 3 135 +46,3
PROFIT ON SALE OF FIXED PROPERTY 122 932 -86,9
PROFIT BEFORE TAXATION 34 656 28 165 23,0
TAXATION (11 411) (9 048)
PROFIT AFTER TAXATION 23 245 19 117 +21,6
OUTSIDE SHAREHOLDERS' INTEREST (138) (87)
EARNINGS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 23 107 19 030
NUMBER OF SHARES IN ISSUE (000'S) 18 311 18 311
EARNINGS PER SHARE (CENTS) 126,2 103,9 +21,5
HEADLINE EARNINGS PER SHARE (CENTS) 125,5 98,8 +27,0
DIVIDENDS PER SHARE (CENTS) 25,0 20,0 +25,0
RECONCILIATION OF HEADLINE EARNINGS
EARNINGS ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 23 107 19 030
PROFIT ON SALE OF FIXED PROPERTY (122) (932)
HEADLINE EARNINGS 22 985 18 098
ABRIDGED GROUP BALANCE SHEETS
UNAUDITED AT AUDITED AT
30 JUNE 30 JUNE
1998 1997
CAPITAL EMPLOYED
ORDINARY SHAREHOLDERS' INTEREST 115 981 97 453
OUTSIDE SHAREHOLDERS' INTEREST 332 193
116 313 97 646
EMPLOYMENT OF CAPITAL
FIXED ASSETS 65 149 58 947
NET CURRENT ASSETS 51 164 38 699
CURRENT ASSETS 74 513 62 245
LIQUID FUNDS 48 247 28 015
CURRENT LIABILITIES
- INTEREST FREE 71 596 51 561
116 313 97 646
NET ASSET VALUE PER SHARE (CENTS) 635 533
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
6TH FLOOR, 94 PRESIDENT STREET, JOHANNESBURG 2001
(PO BOX 1053, JOHANNESBURG 2000)
DIRECTORS
GAM RAVAZZOTTI (CHAIRMAN), J COUZIS* (CEO), PD SWATTON**, G COUSINS, DH RABIN
*GREEK
**BRITISH
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