| Wed 14 Mar 2001, 0:00 | | Ceramic Industries Ltd - Interim Results |
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CERAMIC INDUSTRIES LIMITED
Interim results for the six months ended 31 January 2001
Abridged group income statement
6 months 6 months Year
ended ended ended
31 January 31 January 31 July
2001 2000 2000
% Reviewed Reviewed Audited
Change R000's R000's R000's
Turnover 18,5 200 170 168 923 348 052
Tiles 15,0 170 945 148 627 304 386
Sanitaryware 43,9 29 225 20 296 43 666
Operating profit before
depreciation 52,4 63 042 41 366 95 886
Depreciation 26,4 (15 850) (12 540) (26 768)
Operating profit 63,7 47 192 28 826 69 118
Tiles 46,4 40 482 27 646 64 971
Sanitaryware 468,6 6 710 1 180 4 147
Investment income 4 383 3 085 7 093
Exceptional items 61 2 435 2 632
Net profit on disposal
of fixed assets 61 135 332
Provision for claim
no longer required - 2 300 2 300
Income before taxation 50,3 51 636 34 346 78 843
Taxation 142,8 (12 351) (5 086) (15 979)
Income attributable to
ordinary shareholders 34,3 39 285 29 260 62 864
Weighted average number
of shares in issue (000's) 18 263 18 263 18 263
Earnings per share (cents) 34,3 215,1 160,2 344,2
Headline earnings
per share (cents) 46,2 214,8 146,9 329,8
Dividend per share (cents) 50,0 30,0 20,0 60,0
Reconciliation of headline earnings
Income attributable to
ordinary shareholders 39
285 29 260 62 864
Exceptional items (61) (2 435) (2 632)
Headline earnings 39 224 26 825 60 232
Abridged group balance sheet
31 January 31 January 31 July
2001 2000 2000
Reviewed Reviewed Audited
R000's R000's R000's
Equity and liabilities
Capital reserves 270 694 210 650 236 886
Deferred taxation 13 838 5 757 9 770
Current liabilities 86 195 78 807 85 316
Total equity and liabilities 370 727 295 214 331 972
Assets Fixed
assets 131 721 126 007 128 877
Current assets 83 128 79 064 89 089
Cash and cash equivalents 155 878 90 143 114 006
Total assets 370 727 295 214 331 972
Net assets value per share (cents) 1 482 1 153 1 297
Commitments for capital expenditure
Contracted 64 857 8
602 29 706
Approved but not contracted 30 000 - -
94 857 8 602 29 706
Statement of changes in shareholders' equity
31 January 31 January 31 July
2001 2000 2000
Reviewed Reviewed Audited
R000's R000's R000's
Balance at beginning of period 236 886 184 979 184 979
Net profit for period 39 285 29 260 62 864
Dividends (5 477) (3 589) (10 957)
Balance at end of period 270 694 210 650 236 886
Abridged group cash flow statement
6 months 6 months Year
ended ended ended
31 January 31 January 31 July
2001 2000 2000
Reviewed Reviewed Audited
R000's R000's R000's
Cash flows from operating
activities 57 661 40 634 81 448
Cash utilised in investing
activities (15 789) (9 903) (26 854)
Net increase in cash and cash
equivalents 41 872 30 731 54 594
Cash and cash equivalents at
beginning of period 114 006 59 412 59 412
Cash and cash equivalents at
end of period 155 878 90 143 114 006
Commentary
Operating activities
Despite modest growth in the building and manufacturing sectors of the economy
during this reporting period, group turnover increased by 19% to R200 million
(from R169 million). The increase in turnover is mainly attributable to:
An increase of 4% in ceramic tile production to 5,7 million square metres and
27% in sanitaryware production to 285 000 pieces;
The growth in demand for locally manufactured products, given the weakening of
the rand;
Increased penetration into the emerging market segment of South Africa;
Price increases (at rates lower than inflation); and
Enhanced exports, which increased by 50% to R28 million compared with the first
six months of the previous financial year.
Ceramic Industries is the leading ceramic tile manufacturer in South Africa and
Betta Sanitaryware is now the leading South African manufacturer of vitreous
china sanitaryware.
The group increased its operating profit by 64% to R47 million (from R29
million) and headline earnings per share by 46% to 215 cents (previously 147
cents). Margins improved despite significant increases in energy costs, mainly
as a result of improved efficiencies and stringent cost controls at the
manufacturing plants.
Headline earnings increased at a lower rate than operating profit because of:
An increase in the average tax rate as a result of a smaller portion of the
group's earnings enjoying tax relief; and
Investment income remaining static compared to the first six months of the
previous financial year.
Local investment and capital expenditure
A capital expenditure programme at Betta is being implemented to increase
production to 0,9 million pieces per annum by June 2001. The Board has approved
an additional R30 million to increase production to 1,2 million pieces per
annum by August 2002 to cater for the increase in demand for sanitaryware in
Southern Africa.
The installation of the new production line at Vitro is expected to be
commissioned by July 2001. This R35 million investment will increase the
plant's production capacity from 0,9 million square metres to 2,5 million
square metres per annum. Due to the success of the Vitro brand in the market
place, further expansion is under consideration.
"Pegasus", the new tile plant to be located near Vereeniging, has been approved
by the Board subject to the finalisation of raw materials supply. The cost of
this project, which should be commissioned during 2002, is estimated at R90
million.
Foreign investment
In line with Ceramic Industries' stated mission to be the preferred global
supplier of ceramic tiles and sanitaryware by 2010, the Board announced twelve
months ago that Ceramic Industries was exploring offshore manufacturing
opportunities in partnership with a leading European manufacturer. The group
has concluded a joint venture with Gruppo Ceramiche Ricchetti - the only listed
tile manufacturer in Italy. Ceramic Industries will invest R40 million in this
project, which will entitle the group to a 50% shareholding in the joint
venture company. The plant will be situated in Parma, Italy, and commissioning
is scheduled for January 2002. The joint venture company will manufacture and
distribute ceramic tiles in Europe. Ceramic Industries will gain access to
European markets, supplier networks and technological developments.
Further offshore expansion opportunities in Australia and Brazil are being
investigated.
Prospects
Ceramic Industries will remain ungeared, with all capital projects financed
through cash reserves and cash flows. The Board believes operating profit from
South African operations will continue to show real growth, although the
Italian joint venture is not expected to contribute to earnings before January
2003. Attributable income, which is also expected to show real growth, will
increase at a lower rate than operating profit due to:
The increased average tax rate; and
Reduced investment income as a result of cash resources used to expand locally
and overseas.
Directorate
Mr. Nicholas Booth was appointed Chief Executive Officer of the group and to
the Board of the company with effect from 1 February 2001. He is committed to
lead the Ceramic Industries team on a path of partnerships, empowerment,
transparency and growth to ensure the achievement of the company's vision.
Review by the independent auditors
Financial information set out herein has been reviewed, but not audited by
PricewaterhouseCoopers Inc. A copy of the unqualified review is available for
inspection at the registered office of the company.
Dividend
The Board has declared an interim dividend of 30 cents per share (20 cents per
share), an increase of 50%.
On behalf of the Board
G.A.M. Ravazzotti
Chairman
N Booth
Chief Executive Officer
15 March 2001
STRATE
Ceramic Industries Limited has been notified by the JSE Securities Exchange to
transfer its share capital to the Share Transactions Totally Electronic
(STRATE) environment as from 2 April 2001. This indicates the date from which
investors' shares can be converted into an electronic record in order to become
eligible for electronic settlement in the STRATE environment. Electronic
trading of Ceramic Industries' shares begins on 23 April 2001. As of this date
there is a legal requirement for shareholders to deposit their shares with a
CSDP or qualifying stockbroker prior to selling them in order for the trade to
settle electronically in STRATE. Ceramic Industries has elected to have its
share register electronically maintained by Computershare Services Ltd (an
approved CSDP) as "Issuer-Sponsored Nominee". Shareholders are therefore
invited to deposit their shares with Computershare on or before 23 April 2001.
Electronic settlement will take place from 30 April 2001. Shareholders will
receive further information to this effect from Ceramic Industries.
Queries regarding dematerialisation should be referred to STRATE on 0800 004
727.
Dividend announcement
Notice is hereby given that interim dividend number 22 of 30 cents per share
has been declared payable to all shareholders registered in the books of the
company at the close of business on 30 March 2001. Payment will be made on or
about 20 April 2001.
By order of the Board
I.A. Mollentze
Secretary
15 March 2001
Directors: G.A.M. Ravazzotti (Chairman), N. Booth (Chief Executive Officer),
S.D. Jagoe, E. Mafuna, .M. Schultz, P. Wickens (British), G. Zannoni (Italian)
Registered office: 33 Sarel Baard Crescent, Gateway Industrial Park, Centurion
POBox 1369, Rivonia 2128
Transfer secretaries: Computershare Services Limited, 41 Fox Street,
Johannesburg 2001 POBox 61051, Marshalltown 2107
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