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Voluntary Trading Statement for the Six Months Ended 31 December 2017
ITALTILE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1955/000558/06)
Share code: ITE ISIN: ZAE000099123
(“Italtile” or “the Group”)
VOLUNTARY TRADING STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
OVERVIEW
Italtile is currently finalising its results for the six months ended 31 December 2017 (“the review
period”).
In the context of sustained subdued economic conditions and socio-political uncertainty, investment
in property remained muted across both the public and private sectors during the review period.
In response to this adverse operating environment, management’s primary focus over the review
period was twofold:
- to leverage opportunities for growth within the business, through intensified implementation
of retail excellence, disciplines and trading innovations; and
- to improve the Group’s working capital position through aggressive enhanced inventory
management and cost leadership.
IMPACT OF CERTAIN TRANSACTIONS ON THE GROUP’S RESULTS AND REPORTING REFERENCE
TERMS
Comparable disclosure and analysis of the Group’s results for the review period has been impacted
upon by the acquisition of Ceramic Industries Limited (“Ceramic”) (“Acquisition”) and the Rights Offer
(“Rights Offer”) as detailed below:
ACQUISITION
Following the Acquisition becoming effective on 2 October 2017, the Group now holds a 95.47% stake
in Ceramic and an effective 71.54% in Ezee Tile Adhesive Manufacturing Proprietary Limited (“Ezee
Tile”). Accordingly, the results for the review period include the consolidated results of both
businesses from 2 October 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).
ISSUED SHARE CAPITAL
In terms of the Acquisition, 150 936 170 Italtile shares were issued to shareholders of Ceramic.
Further, in terms of the Rights Offer, as published on SENS on 23 October 2017 and 2 November 2017,
135 985 156 Italtile shares were subscribed for by the close of the Rights Offer on 24 November 2017
(this equated to a 99% take-up).
The Group’s current issued share capital is 1 320 254 148 shares, reflecting an increase of 27.77% (pre-
Rights Offer and Acquisition: 1 033 332 822 shares). Consequently, the current period weighted
average number of shares is higher than that of the prior period. Furthermore, the weighted average
number of shares for the review period and prior corresponding period have been adjusted in
accordance with IAS 33, Earnings Per Share, in order to account for the deemed bonus element
inherent in the rights issue as a result of the Rights Offer being priced at a discount to the market
share price.
RESULTS
The Group’s system-wide turnover for the review period was R4.3 billion, 21.6% higher than the prior
corresponding period (2016: R3.50 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 retail turnover of franchisees
of the Group.
Like-on-like retail store turnover for the review period decreased by 3.9% compared to the previous
corresponding period, with average selling price deflation estimated at 1%. Retail store turnover is
defined as the aggregate turnover of all stores, either corporate or franchised, in the Group’s retail
network.
Manufacturing sales for the period from 2 October 2017 to 31 December 2017 grew by 8.8% compared
to the previous corresponding period, with manufacturing sales for the review period growing by 3.7%
compared to the prior corresponding period. Average selling price inflation for the review period is
estimated at 2%.
The Group’s basic earnings per share is expected to be between 48.0 cents and 49.1 cents (2016
adjusted: 50.8 cents), representing a decrease of between 5.5% and 3.3% compared to the prior
corresponding period.
Headline earnings per share is expected to be between 48.0 cents and 49.1 cents (2016 adjusted: 46.4
cents), reflecting an increase of between 3.4% and 5.8% compared to the prior corresponding period.
The disparity between basic earnings and headline earnings growth is attributable to:
- a gain of R37 million realised during the prior comparable period on the disposal of the Italtile
Australia property holding business; and
- a gain of R15 million realised during the prior comparable period on the disposal of South
African properties.
While management is dissatisfied with turnover growth recorded by the Group during the review
period, good progress was achieved in terms of stabilising margins and improving profitability through
intensified cost leadership.
REVIEW OF RESULTS
The information on which this announcement is based has not been reviewed or reported on by
Italtile's auditors.
PUBLICATION OF RESULTS
The Group's results for the six months ended 31 December 2017 are expected to be published on SENS
on or about 7 February 2018.
Johannesburg
31 January 2018
Sponsor
Merchantec Capital
Date: 31/01/2018 01:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
