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ITALTILE LIMITED - Voluntary Sales Update and Notification of Site Visit and Related Information Available on the Italtile Website

Release Date: 16/11/2017 07:45
Code(s): ITE     PDF:  
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Voluntary Sales Update and Notification of Site Visit and Related Information Available on the Italtile Website

ITALTILE LIMITED

(Incorporated in the Republic of South Africa)
(Registration number: 1955/000558/06)
Share code: ITE ISIN: ZAE000099123
(“Italtile” or “the Group”)
__________________________________________________________________________________

VOLUNTARY SALES UPDATE AND NOTIFICATION OF SITE VISIT AND RELATED INFORMATION
AVAILABLE ON THE ITALTILE WEBSITE
__________________________________________________________________________________


Management is hosting an investors’ visit to Italtile’s facilities today, and as part of the presentation,
will provide a sales update for the 19 weeks from 1 July to 10 November 2017 (“the Review Period”),
as discussed below. Please note that in the interests of equal dissemination of information, other
information conveyed to investors on this site visit will be available on the Group’s website
(www.italtile.com) from 09:30 today.

Following the acquisition of Ceramic Industries Limited (“Ceramic”) with effect from 2 October 2017,
the Group holds a 95.47% stake in Ceramic and an effective 71.54% in Ezee Tile Adhesive
Manufacturing Proprietary Limited (“Ezee Tile”). Accordingly, this sales update includes the
contribution of both businesses for the period from 2 October to 10 November 2017. Sales related
to Ceramic and Ezee Tile are referred to as “manufacturing” sales to distinguish them from “retail”
sales reported by Italtile’s retail brands (CTM, Italtile Retail and TopT).

Total consolidated system-wide turnover for the Review Period was R2.8 billion. System-wide
turnover is defined as the aggregate of the Group’s consolidated turnover (total sales by Group-
owned entities and corporate stores, excluding sales from owned supply chain businesses to
corporate stores) and the turnover of franchisees of the Group. Group-owned entities’ sales include
sales of Ceramic and Ezee Tile from 2 October 2017. Their contribution to total system-wide
turnover for the specified period was R561 million (including sales to corporate stores).

Like-on-like retail store turnover declined by 5.4% compared to the previous corresponding period,
with average selling price deflation estimated at 1%. Manufacturing sales for the period 2 October to
10 November 2017 grew by 8.5% compared to the previous corresponding period, with average
selling price inflation estimated at 1.9%. Manufacturing sales for the Review Period grew by 1.8%
compared to the previous corresponding period.

The weak trading conditions experienced in the second half of the prior financial year persisted
during the Review Period, with subdued investor sentiment and constrained consumer discretionary
spend remaining key features. In this context, management’s primary focus has been on leveraging
opportunities for growth within the business by enhancing competencies and efficiencies, and
further improving the working capital position through intensified control of inventory as well as
overhead costs. Aligned to this has been the drive to offer a customer-centric shopping experience
which constantly delights customers through improved service, value, convenience, product range
and in-store innovations.

While homeowners across the income spectrum in general invested less freely in their homes than
in prior years, CTM’s middle income market, specifically, experienced more severe financial pressure
than other segments, as reflected in the brand’s lower sales for the period. TopT continued to report
double-digit like-on-like sales, although there has been a slow-down from former robust growth
levels. At the upper-end of the market, Italtile Retail reported a slight recovery, with homeowners
seeming to overcome their pessimism and resume investment in their properties, albeit not at
previous levels.

One Italtile Retail, one CTM and six TopT stores were opened during the period, however their full
contribution to revenue will only be reflected in the following six months. By the end of November
2017, the Group plans to have opened a total of 11 TopT stores.

The above information has not been reviewed and reported on by the Group’s external auditors.

Johannesburg
16 November 2017

Sponsor
Merchantec Capital

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