| Wed 14 Mar 2001, 0:00 | | Tile Africa Holdings Limited - Interim Results |
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TILE AFRIKA HOLDINGS LIMITED
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2000
HIGHLIGHTS
Revenue up 31,2%
Earnings up 25,7%
ABRIDGED GROUP BALANCE SHEETS
Unaudited Audited
as at as at
31 December 31 December 30 June
2000 1999 2000
R'000 R'000 R'000
ASSETS
Non-current assets
Fixed assets 12 694 7 683 11 803
Intangible asset 486 525 499
Current assets 96 998 85 611 93 902
Total assets 110 178 93 819 106 204
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital
and reserves 48 765 32 808 40 031
Minority interest - 85 186
Non-current liabilities 1 814 549 1 750
Current liabilities 59 599 60 377 64 237
Total equity and
liabilities 110 178 93 819 106 204
Net tangible asset
value per
share (cents) 80,4 53,8 65,8
ABRIDGED GROUP INCOME STATEMENTS
Unaudited Audited
as at as at
31 December 31 December 30 June
2000 1999 2000
R'000 R'000 R'000
Revenue 130 194 99 208 203 315
Operating income 12 057 8 697 17 107
Finance costs 1 844 548 1 045
Net income before taxation 10 213 8 149 16 062
Taxation 1 479 1 116 1 705
Net income after taxation 8 734 7 033 14 357
Minority interest - 85 186
Earnings attributable
to ordinary
shareholders 8 734 6 948 14 171
Earnings and headline
earnings per share (cents) 14,6 11,6 23,6
Ordinary shares issued ('000 60 000 60 000 60 000
COMMENTARY
INTRODUCTION
The directors of Tile Afrika Holdings Limited ("TA Holdings") have pleasure in
presenting the group's interim results for the six months ended 31 December
2000.
NATURE OF BUSINESS, SUBSIDIARIES AND OPERATIONS
The TA Holdings group is a national retailer of ceramic tiles, sanitaryware and
associated products.
Its activities are grouped into the following divisions:
* Tile Afrika Cash 'n Carry offers specialised customer service as retailers
of local and imported ceramic tiles and allied products;
* Tile Afrika Projects offers a supply and fixing service of specialist
ceramic products to a niche contracts market;
* Tile Afrika Franchisees offers the group's products in geographical areas
where other divisions of the group are not represented; and
* San Afrika Cash 'n Carry outlets specialise in local and imported
sanitaryware, taps and accessories and are generally situated alongside Tile
Afrika Cash 'n Carry stores.
FINANCIAL PERFORMANCE
The group's strategy of increasing its retail share of both the ceramic tile
and sanitaryware markets is reflected in its revenue, which increased by 31,2%
to R130,19 million compared to R99,21 million for the interim period to 31
December 1999. Earnings increased by 25,7% to R8,73 million compared to R6,95
million in the previous interim period.
The effective income tax rate of 14,5% resulted from assessed losses brought
forward from previous years.
The group continued its aggressive organic growth by operating five more Tile
Afrika Cash 'n Carry stores and eight more San Afrika Cash 'n Carry stores than
in the previous interim period.
The costs associated with the establishment of all additional stores have been
expensed in the period under review.
During the period under review, the Tile Afrika Franchisee stores which were
previously consolidated into the group have been eliminated from the group's
accounts as these stores are now fully-fledged franchised stores.
PROSPECTS
The focus remains on obtaining market share through organic growth and store
expansion. The period to 30 June 2001 will, however, be utilised to consolidate
the extensive growth experienced thus far. Only one Tile Afrika Cash 'n Carry
store, in tandem with a San Afrika Cash 'n Carry store, will be opened in the
second half of the financial year to 30 June 2001. This will allow the group to
optimise stock efficiencies, working capital management and human resource
training, before embarking on an aggressive own-store and franchise store
opening programme in the new financial year.
The organic growth of the individual operations and divisions is extremely
strong, as the group continues to provide "value for money" products without
compromising quality.
San Afrika Cash 'n Carry continues to enjoy positive market response to its
specialised service as a retailer of local and imported baths, basins, toilets,
taps, accessories and other related goods. This is reflected in the division's
contribution to revenue of 21% compared to 9% in the previous interim period.
The Tile Afrika Franchisee division continues seeking expansion opportunities
in areas where the group's other divisions are not represented. All existing
and future Tile Afrika Franchisees will operate as fully-fledged franchised
stores which will have the effect of growing market share and profitability
without a correlative effect on revenue.
DIVIDENDS
No interim dividend has been declared or proposed. The board will review the
dividend policy for the second half of the year ending 30 June 2001.
DIRECTORATE
During the period under review, Mr N Ingledew resigned as a director of TA
Holdings. On 4 December 2000, Mr RW Heunis was appointed to the board of TA
Holdings.
STRATE
TAHoldings transferred its share capital to Share Transactions Totally
Electronic ("STRATE"), an electronic settlement environment for transactions to
be settled and transfer of ownership to be recorded electronically on the JSE
Securities Exchange South Africa ("JSE"), as of 17 October 2000. In terms of
the JSE's revised Listings Requirements, the move to STRATE was obligatory and
will ensure TAHoldings participates in a sophisticated settlement process which
is on a par with international best practice.
STRATE is an electronic settlement and custody system which has been designed
to achieve the contractual, rolling and irrevocable settlement of share
transactions by electronic book entries.
The move to the STRATE system involved many fundamental changes from the
previous paper-based settlement system. One of the primary responsibilities for
investors, as part of the STRATE environment, is the submission of share
certificates to a qualifying stockbroker or Central Securities Depository
Participant ("CSDP"). CSDP is the name given to a custodian bank in the STRATE
environment. The CSDP, or stockbroker, will open a share account for investors
and will ensure that share certificates are converted into an electronic record
- a process known as dematerialisation.
There were three significant dates which formed part of the move to STRATE and
which should be understood by all shareholders:
DEMATERIALISATION
As mentioned above, the dematerialisation date for the share certificates in
circulation representing the share capital of TAHoldings was 17 October 2000.
This indicates the date from which investors' shares could have been converted
into an electronic record in order to become eligible to settle in the STRATE
environment. If shares are not already in safe custody with a CSDP or a
qualifying stockbroker, they should be deposited with either a CSDP or a
qualifying stockbroker as soon as possible. The selected agent will then ensure
that shares are converted into an electronic record and rendered eligible for
settlement under STRATE.
TRADING FOR ELECTRONIC SETTLEMENT
Trading for electronic settlement began on 13 November 2000. As of that date,
there was a legal requirement for TAHoldings' shareholders to deposit their
shares with aCSDP or a qualifying stockbroker prior to selling them in order
for the trade to settle in STRATE. This means that as of 13 November 2000,
TAHoldings shares could not be sold unless they existed in electronic form in
the STRATE environment.
ELECTRONIC SETTLEMENT
Five business days after the above date, ie with effect from 20 November 2000,
electronic settlement of TAHoldings trades took place for the first time. All
trades that took place on or after 13 November 2000, underwent simultaneous,
final, irrevocable settlement in an electronic environment. In other words, the
electronic share accounts of the buyer and seller are simultaneously updated
exactly five business days after the transaction. For the first time,
settlement is contractual and guaranteed.
Paper share certificates did not lose their value once TAHoldings moved to the
STRATEsystem, but they are no longer acceptable for the purposes of settlement.
Tile Afrika encourages all shareholders who have not already done so, to submit
their shares promptly for conversion into electronic form in the interests of
efficiency and security. For this purpose, shareholders will receive relevant
information relating to the implementation of STRATE, a CSDP mandate form and a
Form of Surrender together with a copy of these interim results, which
documents will be posted to shareholders by not later than Wednesday, 21 March
2001. However, investors are within their rights to retain these shares in
paper form until they wish to sell them.
For and on behalf of the board of directors
V Leonardi (Chairman)
SJDS Rego (Managing director)
15 March 2001
Tile Afrika Holdings Limited
Registration number: 1998/017716/06
Directors: V Leonardi* (Chairman), SJDS Rego (Managing), IAI Kara (Financial)
RW Heunis (Non-executive) *Italian
Registered office: Tile Afrika Holdings Limited, 181 Houthammer Road, Devland
2013
Transfer secretaries: Computershare Services Limited, 4th Floor, Edura, 41 Fox
Street, Johannesburg 2001. (PO Box 61051, Marshalltown 2107)
STORE OPENINGS AND ORGANIC GROWTH PUSH TILE AFRIKA EPS UP 25,8%
Thirteen new store openings and strong organic growth lifted Tile Afrika's
earnings per share by 25,8% to 14,6c (11,6c) for the six months to 31 December
2000.
The 27-store tile and sanitaryware chain opened five new Tile Afrika Cash 'n
Carry and eight new San Afrika Cash 'n Carry stores during the period. These
contributed to growth of 31,2% to R130,2 million from R99,2 million for the
comparable period in 1999. Operating income improved by a creditable 38% to R12
million from R8,7 million for the 1999 period.
Attributable earnings improved 25,7% to R8,7 million from R6,9 million for the
previous interim period.
The decision to open San Afrika outlets alongside existing Tile Afrika stores
has had a positive effect on both revenues and profitability. San Afrika's
contribution to group revenue was 21% for the period under review, against 9%
for the previous interim period.
Tile Afrika managing director Sam Rego says more than 85% of group revenues
come from the DIY market, which is experiencing strong growth as a result of an
expanding base of home owners. "This and the fact that the average home owner
moves every five to seven years, underpins the DIY market," says Rego.
SA tile consumption averages only 0,5 square metres per person annually,
against approximately five square metres in developed countries. "Our tile
consumption is very low by world standards, so we see plenty scope for further
growth. We expect tile consumption to rise by about 5% a year over the next
five years," says Rego.
Rego says the group is not dependent on the construction market which is
currently in an up-cycle. The group is a long way from saturating the market,
and plans to double the size of its network to about 60 stores over the next
three years. Ten stores are currently in the development phase, most of which
will open during the second half of calendar 2001.
Rego says Tile Afrika can accommodate 10 to 12 new store openings a year,
though the next six months will be one of consolidation after a period of rapid
store growth. The group plans to open one Tile Afrika and one San Afrika over
the next six months, before recommencing an aggressive store expansion
programme. The period of consolidation will allow the group to optimise stock
efficiencies, working capital management and human resource training.
The costs associated with establishing all new stores were expensed in the
period under review. Tile Afrika Franchisee stores which were previously
consolidated into the group have been eliminated from the group's accounts as
these are now fully fledged franchised stores.
The results show a 64% increase in fixed assets to R12,7 million, reflecting
the growth in the store network, and a 49,4% increase in net tangible asset
value per share to 80,4c (53,8c).
Looking ahead, Rego says the group is capable of maintaining earnings growth of
25% a year which will be achieved through a combination of organic growth, new
store openings and acquisition.
ends
ISSUED FOR : Tile Afrika Holdings Limited
CONTACT : Sam Rego Tel: (011) 938 1287 / 082 455 6967
FAX NO : (011) 938 1538
E-MAIL :
ISSUED BY : TISH STEWART PR ASSOCIATES
CONTACT : Tish Stewart (011) 325 4195 / 082 443 6399
FAX NO : (011) 325-4199
E-MAIL : tish@tspr.co.za
DATE : 14 March 2001
