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ITE
ITE
ITE - Italtile - Interim Profit Announcement Unaudited Group Results
For The Six Months Ended 31 December 2007 and dividend declaration
ITALTILE LIMITED
Incorporated in the Republic of South Africa
Reg. no.: 1955/000558/06
Share code: ITE
ISIN: ZAE000099123
(ITALTILE)
Interim Profit Announcement unaudited group results for the six months ended 31
December 2007
- LIVING THE LIFESTYLE SYSTEM WIDE TURNOVER ANALYSIS
For the period ended 31 December 2007
(Rand millions unless otherwise stated)
% Unaudited Unaudited Audited
Increase six months six months year to
to to 30 June
31 December 31 December 2007
2007 2006
Group and
franchised
turnover
- By group owned 834 747 1 477
stores
- By franchise 582 577 1 101
owned stores
(Unaudited)
TOTAL 7 1 416 1 324 2 578
ABRIDGED GROUP INCOME STATEMENTS
For the period ended 31 December 2007
(Rand millions unless otherwise stated)
% Unaudited Unaudited Audited
six months six months year to
Increase to to 30 June
31 December 31 December 2007
2007 2006
Trading profit 227 195 427
before
depreciation
Depreciation (21) (10) (34)
Profit on sale of 2 - -
property, plant
and equipment
Trading profit 12 208 185 393
Investment income 9 8 17
Profit before 217 193 410
interest paid
Interest paid (7) (1) (2)
Profit before 9 210 192 408
taxation
Taxation (67) (61) (131)
Profit for the 9 143 131 277
year
Attributable to:
Equity holders of 142 126 270
the parent
Minority 1 5 7
interests
9 143 131 277
Number of shares 796 308 798 524 797 336
in issue (000`s)*
Earnings per 13 17,8 15,8 33,9
share (cents)
Headline earnings 11 17,5 15,8 33,9
per share (cents)
Diluted earnings 13 17,7 15,7 33,5
per share (cents)
Diluted headline 11 17,4 15,7 33,6
earnings per
share (cents)
Dividends per (23) 4 5,2 11,4
share (cents)
RECONCILIATION OF
HEADLINE EARNINGS
Earnings 142 126 270
attributable to
ordinary
shareholders
Profit on sale of 2 - -
property, plant
and equipment
Headline earnings 140 126 270
RECONCILIATION OF
SHARES IN ISSUE*
Total number of 821 800 821 800 821 800
shares issued
(000`s)
Share incentive 25 492 23 276 24 464
trust shares
(000`s)
Shares in issue 796 308 798 524 797 336
to external
parties (000`s)
*Comparative shares in issue have been adjusted to reflect the impact of the
44:1 share split effected on 5 November 2007.
ABRIDGED GROUP BALANCE SHEETS
As at 31 December 2007
(Rand millions unless otherwise stated)
Unaudited Unaudited Audited
six months six months year to
to to 30 June
31 December 31 December 2007
2007 2006
ASSETS
Non-current assets 827 655 771
Property, plant and 803 643 753
equipment
Other Long-term assets 15 9 11
Goodwill 6 - 4
Deferred tax 3 3 3
Current assets 641 578 573
Inventories 322 192 224
Trade and other 102 91 91
receivables
Cash and cash equivalents 217 295 258
Total assets 1 468 1 233 1 344
EQUITY AND LIABILITIES
Capital and reserves 1 053 874 976
Stated capital 27 27 27
Non-distributable reserve 29 21 28
Treasury shares (64) (45) (54)
Retained profit 1 037 842 943
Outside shareholders` 24 29 32
interest
Long-term liabilities 119 11 11
Current liabilities 296 348 357
Trade and other payables 241 282 334
Taxation 55 66 23
1 468 1 233 1 344
Net asset value per share 132 109 122
(cents)
CASH FLOW STATEMENT
For the period ended 31 December 2007
(Rand millions unless otherwise stated)
Unaudited Unaudited Audited
year to
30 June
2007
six months six months
to to
31 December 31 December
2007 2006
Cash flow from operating (52) 69 168
activities
Cash flow from investing (95) (114) (255)
activities
Cash flow from financing 106 (3) 2
activities
Net movement in cash and (41) (48) (85)
cash equivalents
Cash and cash equivalents 258 343 343
at beginning of period
Cash and cash equivalents 217 295 258
at end of period
STATEMENT OF CHANGES IN EQUITY
For the period ended 31 December 2007
(Rand millions unless otherwise stated)
Non-
distri-
Stated butable Treasury Minority Retained
Group capital reserve shares interest profit Total
Balance at 27 17 (48) 30 768 794
30 June
2006
Net profit 7 270 277
for the
year
Dividends (4) (95) (99)
paid
Currency 10 10
translation
difference
Share 1 1
option
costs
Unallocated (6) (6)
shares in
share trust
Accumulated - -
surplus in
share trust
Share 1 1
capital
increase
Purchase of (2) (2)
additional
share in
subsidiary
Balance at 27 28 (54) 32 943 976
30 June
2007
Net profit 1 142 143
for the
period
Dividends (1) (48) (49)
paid
Currency - -
translation
difference
Share 1 1
option
costs
Unallocated (13) (13)
shares in
share trust
Accumulated 3 3
surplus in
share trust
Purchase of (8) (8)
additional
share in
subsidiary
Balance at
31 December 27 29 (64) 24 1 037 1 053
2007
SEGMENTAL REPORTING
For the period ended 31 December 2007
(Rand millions unless otherwise stated)
Supply
support
Retail Franchising Properties services Group
Unaudited
period to
December 2007
Revenue* 721 49 77 137 984
Segment results 82 37 57 30 206
Unaudited
period to
December 2006
Revenue* 636 43 58 126 863
Segment results 82 33 44 26 185
*Revenue includes turnover, rentals and royalties.
NOTES
- There are no material contingent liabilities or assets at 31
December 2007
- Capital commitments at 31 December 2007 Rm
Contracted 29
Authorised, not contracted 43
72
- In terms of the articles of association, the company`s borrowing facilities
are unlimited.
RESULTS
Italtile Limited reported acceptable results for the six months ended 31
December 2007. An industry wide downturn in demand during the traditionally
heightened trading months of November and December 2007 dampened the group`s
performance.
Italtile Limited reported a 7% increase in system wide turnover to R1 416
billion (2006: R1 324 billion), showing 6% real growth from its existing store
network as price inflation was contained to less than 1% in an endeavour to
offer value to customers who remain spoilt for choice due to the proliferation
of new competitors in the market.
Trading profit, which increased by 12% to R208 million (2006:
R185 million), reflects the benefits of the group`s ongoing focus on
efficiencies.
The group reported earnings per share growth of 13% to 17,8 cents (2006: 15,8
cents) with headline earnings per share increasing by 11% to 17,5 cents
(2006: 15,8 cents).
Inventory increased by R98 million to R322 million in the last six months,
largely as a consequence of increased volumes in the supply chain. These were
purchased in anticipation of the traditional peak trading period which failed to
materialise.
The group`s cash reserves decreased by R41 million to R217 million
(2006: R95 million), largely due to the increased inventories as well as
investments of R69 million in fixed assets as showrooms and properties were
upgraded in line with the group imperative to deliver quality customer service.
The board approved borrowings of R100 million to fund properties in order to
release working capital to fund operations.
TRADING ENVIRONMENT
While trading from stores in exclusively black residential areas was buoyed by
high volume, spending from middle income earners in the group`s traditional
stores has come under some pressure.
OPERATIONAL REVIEW
As a result of the group`s substantial investments to upgrade and relocate
stores, resulting in significantly expanded average trading areas, and the
transient migration from franchises to group owned stores, Italtile embarked on
several initiatives to consolidate its dominant position in the South African
market. These will also ensure the resilience and sustainability of the business
model in a tougher local economic environment which seems increasingly likely:
- A systematic approach has been adopted to formalise and enhance back office
and retail floor structures to manage the larger stock holdings and support
decision-making;
- Future talent is being nurtured and given formal training to enhance the
group`s strategy to refranchise the 14 stores which are currently owned; and
- Master franchises have been introduced to reward the best performing managers
and offer mentorship to emerging leaders.
The group`s operations in Africa continue to trade, albeit at a marginal level
due to regional unrest.
During the period, progress was made with the Australian operations which remain
profitable.
PROPERTY PORTFOLIO
The group has maintained its conservative stance with regard to investments in
its property portfolio, which increased, in carrying value, by R32 million to
R617 million.
During the six months ended 31 December 2007, the group`s property portfolio
continued to deliver returns which were in line with those of its trading
operations.
BLACK ECONOMIC EMPOWERMENT
Shareholders are referred to the announcement dated 12 July 2007 and are advised
that section 38(2A) of the Companies Act came into effect on 14 December 2007.
Accordingly, the BEE transaction will be effective as soon as the remaining
administrative conditions and requirements have been finalised.
DIRECTORATE
The group welcomes Messrs Giuseppe Zannoni and Gary Morolo
who were appointed to the board of Italtile with effect from
1 December 2007.
Mr John Couzis resigned as a non-executive director of Italtile with effect from
1 December 2007. The board thanks Mr Couzis for his valuable contribution during
the years of his involvement with the Italtile Group.
PROSPECTS
The group expects demand to continue slowing as a result of the present
uncertainty in the South African economy. While projections in the current
environment are difficult, the board anticipates a lower rate of revenue growth
for the full year.
BASIS OF PREPARATION
The interim financial statements have been prepared in accordance with the
listing requirements of the JSE Limited, the South African Companies Act, 1973
and International Financial Reporting Standards (IAS 34 - Interim Financial
Reporting). The accounting policies applied have been consistent with those of
the previous year ended 30 June 2007.
DIVIDEND
The group has increased the dividend cover to 4 times, due to the prevailing
uncertainty in the operating environment.
The board has declared an interim dividend of 4 cents per share (2006: 5,2
cents), a decrease of 23%.
DIVIDEND ANNOUNCEMENT
The Board has declared an interim dividend (number 83) of 4 cents per share to
all shareholders recorded in the books of Italtile Limited. The last day to
trade cum the dividend will be Friday,
29 February 2008. The shares of Italtile Limited will commence trading ex
dividend from the commencement of business on Monday,
3 March 2008 and the record date will be Friday, 7 March 2008. Payment will be
made on Monday, 10 March 2008.
Share certificates may not be rematerialised or dematerialised between Monday, 3
March 2008 and Friday, 7 March 2008, both days inclusive.
For and on behalf of the board
G P E Ravazzotti P D Swatton
Chief Executive Officer Chief Financial Officer
13 February 2008
Registered Office: The Italtile Building, cnr William Nicol Drive and Peter
Place, Bryanston (PO Box 1689, Randburg 2125)
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg 2001 (PO Box 61051,
Marshalltown 2107)
Directors: G A M Ravazzotti (Chairman), G P E Ravazzotti (Chief Executive
Officer), *P D Swatton (Chief Financial Officer).
Non-executive Directors: S I Gama, G Morolo, D H Rabin,
**G Zannoni.
(*British??** Italian)
www.italtile.com
Date: 13/02/2008 07:30:01 Produced by the JSE SENS Department.
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