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ITE
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ITE - Italtile - Interim Profit Announcement unaudited group results for the six
months ended 31 December 2008
Italtile Limited
Share code: ITE ISIN: ZAE000099123 Reg. no.: 1955/000558/06
Incorporated in the Republic of South Africa
("Italtile" or "the Group")
Interim Profit Announcement unaudited group results for the six months ended 31
December 2008
SYSTEM WIDE TURNOVER ANALYSIS
For the period ended (Rand millions unless otherwise
31 December 2008 stated)
Unaudited Unaudited Audited
six months six months year
to 31 to 31 to 30
% December December June
change 2008 2007 2008
Group and
franchised
turnover
- By group owned 667 834 1 635
stores
- By franchise 722 582 1 133
owned stores
(unaudited)
TOTAL (2) 1 389 1 416 2 768
ABRIDGED GROUP INCOME STATEMENTS
For the period ended (Rand millions unless otherwise
31 December 2008 stated)
Unaudited Unaudited Audited
six months six months year to 30
to 31 to 31
% December December June
change 2008 2007 2008
Trading profit 214 227 463
before
depreciation
BEE share option (25)
expense
Depreciation (20) (21) (41)
Profit on sale - 2 2
of property,
plant and
equipment
Trading profit (7) 194 208 399
Investment 10 9 20
income
Profit before 204 217 419
interest paid
Interest paid (7) (7) (14)
Profit before (6) 197 210 405
taxation
Taxation (58) (67) (128)
Profit for the (3) 139 143 277
year
Attributable to:
Equity holders 136 142 275
of the parent
Minority 3 1 2
interests
(3) 139 143 277
Number of shares 793 893 796 308 793 823
in issue
(000`s)*
Earnings per (4) 17,1 17,8 34,6
share (cents)
Headline (2) 17,1 17,5 34,4
earnings per
share (cents)
Adjusted (2) 17,1 17,5 37,5
headline
earnings per
share (cents)
Diluted earnings (3) 17,1 17,7 34,4
per share
(cents)
Diluted headline (2) 17,1 17,4 34,2
earnings per
share (cents)
Dividends per 50 6,0 4,0 12,0
share (cents)
RECONCILIATION
OF HEADLINE
EARNINGS
Earnings 136 142 275
attributable to
ordinary
shareholders
Profit on sale - (2) (2)
of property,
plant and
equipment
Headline (3) 136 140 273
earnings
RECONCILIATION
OF SHARES IN
ISSUE*
Total number of 909 800 909 800 909 800
shares issued
(000`s)
Share Incentive 27 907 25 492 27 977
Trust shares
(000`s)
BEE treasury 88 000 88 000 88 000
shares (000`s)
Shares in issue 793 893 796 308 793 823
to external
parties (000`s)
ABRIDGED GROUP BALANCE SHEETS
As at 31 December (Rand millions unless otherwise stated)
2008
Unaudited Unaudited Audited
six months to six months to year to
31 December 31 December 30 June
2008 2007 2008
ASSETS
Non-current assets 911 827 887
Property, plant and 886 803 861
equipment
Other long-term 17 15 17
assets
Goodwill 6 6 6
Deferred tax 2 3 3
Current assets 657 641 680
Inventories 224 322 263
Trade and other 127 102 136
receivables
Cash and cash 306 217 281
equivalents
Total assets 1 568 1 468 1 567
EQUITY AND
LIABILITIES
Capital and reserves 1 241 1 053 1 183
Stated capital 417 27 417
Non-distributable 64 29 80
reserve
Treasury shares (475) (64) (473)
Retained profit 1 207 1 037 1 134
Minority interest 28 24 25
Long-term liabilities 104 119 98
Current liabilities 223 296 286
Trade and other 186 241 276
payables
Taxation 37 55 10
1 568 1 468 1 567
Net asset value per 156 132 149
share (cents)
CASH FLOW STATEMENT
For the period ended (Rand millions unless otherwise stated)
31 December 2008
Unaudited Unaudited Audited
six months to six months to year to
31 December 31 December 30 June
2008 2007 2008
Cash flow from 65 (52) 107
operating
activities
Cash flow from (46) (95) (138)
investing
activities
Cash flow from 6 106 54
financing
activities
Net movement in 25 (41) 23
cash and cash
equivalents
Cash and cash 281 258 258
equivalents at
beginning of
period
Cash and cash 306 217 281
equivalents at
end of period
STATEMENT OF CHANGES IN EQUITY
For the period ended (Rand millions unless otherwise stated)
31 December 2008
Non-
distri-
Stated butable Treasury Minority Retained
Group capital reserve shares interest profit Total
Balance at 27 28 (54) 32 943 976
30 June 2007
Net profit 2 275 277
for the
period
Dividends (1) (84) (85)
paid
Currency 26 26
translation
difference
Share-based 1 1
payment
reserve
BEE share-
based payment
reserve 25 25
BEE shares
issued and
treated
as treasury 402 (402)
shares
BEE share (12) (12)
issue
expenses
Unallocated
shares in
share trust (20) (20)
Accumulated
surplus in
share trust 3 3
Purchase of (8) (8)
additional
share
in subsidiary
Balance at 417 80 (473) 25 1 134 1 183
30 June 2008
Net profit 3 136 139
for the
period
Dividends (63) (63)
paid
Currency (16) (16)
translation
difference
Unallocated
shares in
share trust (1) (1)
Accumulated
surplus in
share trust (1) (1)
Balance at 417 64 (475) 28 1 207 1 241
31 December
2008
SEGMENTAL REPORTING
For the period ended (Rand millions unless otherwise stated)
31 December 2008
Supply
and
support
Retail Franchising Properties services Group
Unaudited
period to
December 2008
Revenue* 567 35 40 121 763
Segment 105 49 21 19 194
results
Unaudited
period to
December 2007
Revenue* 723 30 32 131 916
Segment 127 37 14 30 208
results
*Revenue includes turnover, rentals and royalties.
Commitments and contingencies
(Rand millions unless otherwise stated)
- There are no material contingent liabilities or assets
at 31 December 2008
- Capital commitments at 31 December 2008
Contracted 10
Authorised, not contracted 39
49
- In terms of the articles of association, the company`s
borrowing facilities are unlimited.
Results
The Group reported a 2% decline in system-wide turnover to R1,39 billion
(2007: R1,42 billion). Price inflation year-on-year was limited to 2,5%,
reflecting the tight trading conditions. Foot traffic across the store network
is down on the previous period, however, the Group experienced better than
expected December trading.
Reported trading profit decreased by 6,7% to R194 million (2007: R208 million),
reflecting a marginal decrease in the Group operating margin to 14,0% from
14,7% in the previous year as the Group responded to the highly pressured
trading environment to protect CTM`s brand position as the leading value player
in the market.
The entry level market segment showed substantial growth, while sales in the
established market declined. Although sales declined slightly, consumers have
become more discerning in their purchasing decisions, gravitating towards
products which offer value. As a result, the Group is seeing greater demand for
its locally procured merchandise rather than imports. Its strategic alliances
with local suppliers are supporting lower inventory levels and efficiencies in
the supply chain.
The Group maintained its concerted efforts to clear its inventories which were
successfully decreased to R224 million from R263 million in June 2008,
representing a drop of 15%. Having run down its slower moving stock, the Group
now has the flexibility to purchase products meeting customers` current
requirements.
The Group`s cash reserves increased by R25 million to R306 million
(2008: R281 million) through effective inventory management.
The tangible net asset value per share has increased by 5% to 156 cents
(2008: 149 cents).
Operational review
The Group is starting to reap the benefits of the operational programmes to
cement its leadership in the South African market which were initiated 18 months
ago. The enhanced in-store systems and controls are enabling a better shopping
experience. Although the focus on training and mentorship is paying off with the
quality of leadership starting to increase and better service levels, the Group
is not satisfied that these have reached their full potential and will continue
to concentrate on training.
The Group continues to evolve and develop Top T, the retail brand established to
service the highly price-sensitive entry level market, which is suited to the
current trading environment.
The Group maintained its conservative approach to building a presence in Africa.
The stores in Kenya and Uganda are delivering profits and the Group is currently
evaluating the feasibility of re-entering the Zambian and Malawian markets.
The Group`s Australian operation, comprised of eight stores, broke even as
demand has been severely impacted by current economic conditions.
Property portfolio
Although the Group evaluates investment opportunities on an ongoing basis, land
prices have not sufficiently declined to reflect the uncertain global economic
outlook and sellers` expectations remain unrealistic. The Group has a long-term
property investment horizon and will maintain its conservative and selective
approach with regard to location and price to ensure that its property portfolio
is positioned to sustainably deliver the required return.
Prospects
The Group will be unable to maintain the level of earnings for the full year,
that were achieved in the previous year.
Basis of preparation
The preliminary profit announcement has been prepared in accordance with IFRS
and IAS 34 Interim Financial Reporting. The same accounting policies and methods
of computation have been applied as in the most recent annual financial
statements.
Dividend
The Group has maintained its dividend cover of around three times.
The board has declared an interim dividend of 6,0 cents per share
(2007: 4,0 cents), an increase of 50%.
Dividend announcement
The board has declared an interim cash dividend (number 85) of 6 cents per share
to all shareholders recorded in the books of Italtile Limited for the six-month
period ended 31 December 2008. The last day to trade cum the dividend will be
Friday, 27 February 2009. The shares of Italtile Limited will commence trading
ex dividend from the commencement of business on Monday, 2 March 2009 and the
record date will be Friday, 6 March 2009. Payments will be made on Monday, 9
March 2009.
Share certificates may not be rematerialised or dematerialised between Monday,
2 March 2009 and Friday, 6 March 2009, both days inclusive.
For and on behalf of the board
G P E Ravazzotti P D Swatton
Chief Executive Officer Chief Financial Officer
9 February 2009
Registered Office: The Italtile Building, cnr William Nicol Drive and Peter
Place, Bryanston (PO Box 1689, Randburg 2125)
Transfer Secretaries: Computershare Investor Services (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 K Morolo, D H Rabin, **G Zannoni.
(*British ** Italian)
www.italtile.com
Date: 09/02/2009 07:05:02 Produced by the JSE SENS Department.
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