| Wed 13 Mar 2002, 0:00 | | Tile Afrika Holdings Limited - Interim Results |
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Share code: TLF
ISIN : ZAE000017604
TILE AFRIKA HOLDINGS LIMITED
Interim results for the six months ended 31 December 2001
HIGHLIGHTS
Revenue up 27%
Income before tax up 25%
Net tangible asset value per share up 32%
ABRIDGED GROUP INCOME STATEMENTS
Unaudited Unaudited Audited
six months six months year ended
31 December 31 December 30 June
2001 2000 2001
R'000 R'000 R'000
Revenue 177 538 139 762 280 881
Owned stores 154 616 124 100 247 670
Franchised stores 22 922 15 662 33 211
Operating income 14 163 12 057 22 460
Finance costs 1 362 1 844 3 114
Net income before taxation 12 801 10 213 19 346
Taxation 3 858 1 479 (2 840)
Earnings attributable
to ordinary shareholders 8 943 8 734 22 186
ABRIDGED GROUP BALANCE SHEETS
Unaudited Unaudited Audited
31 December 31 December 30 June
2001 2000 2001
R'000 R'000 R'000
Assets
Non-current assets 18 536 13 380 20 355
Fixed assets 12 188 12 694 12 578
Intangible asset 2 256 486 2 316
Deferred taxation 4 092 200 5 461
Current assets 108 697 96 998 89 345
Inventories 65 590 72 683 52 885
Trade and other
receivables 37 031 23 589 36 256
Cash resources 6 076 726 204
Total assets 127 233 110 378 109 700
Equity and liabilities
Capital and reserves 69 860 48 965 60 917
Non-current liabilities
Interest-bearing debt 1 002 1 814 1 396
Current liabilities 56 371 59 599 47 387
Trade and other payables 37 910 29 672 43 466
Shareholders for dividend - - 1 500
Taxation 2 490 1 479 2 421
Bank overdrafts 15 971 28 448 -
Total equity and
liabilities 127 233 110 378 109 700
ABRIDGED GROUP CASH FLOW STATEMENTS
Unaudited Unaudited Audited
six months six months year ended
31 December 31 December 30 June
2001 2000 2001
R'000 R'000 R'000
Cash flows from
operating activities (8 558) (2 304) 29 076
Cash flows from
investing activities (1 118) (2 226) (5 600)
Cash flows from
financing activities (423) (122) (202)
Net movement in cash
and cash equivalents 10 099) (4 652) 23 274
Cash and cash equivalents
at beginning of period 204 (23 070) (23 070)
Cash and cash equivalents
at end of period (9 895) (27 722) 204
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
six months six months year ended
31 December 31 December 30 June
2001 2000 2001
R'000 R'000 R'000
Balance at beginning
of period 60 917 40 231 40 231
Net income for the period 8 943 8 734 22 186
Less: Dividend - - (1 500)
Balance at the end
of the period 69 860 48 965 60 917
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
six months six months year ended
31 December 31 December 30 June
2001 2000 2001
R'000 R'000 R'000
Dividend per share (cents) - - 2,5
Earnings per share (cents) 14,9 14,6 37,0
Headline earnings per
share (cents) 14,9 14,6 37,0
Ordinary shares
issued ('000) 60 000 60 000 60 000
Net tangible asset
value per share (cents) 105,9 80,4 88,6
COMMENTARY
INTRODUCTION
Tile Afrika Holdings Limited is the leading value for money ceramic tile,
sanitaryware and allied products brand in South Africa. The group supplies
the do-it-yourself home improvement, residential development and corporate
construction market through its four divisions and network of 29 stores in
South Africa, Namibia and Mozambique.
Tile Afrika's value strategy is based on the premise that there is a clear
niche in the mass market for a value added service provider offering quality
ceramic tiles, sanitaryware and allied products. Tile Afrika is a major
purchaser of ceramic tiles and sanitaryware, both locally and
internationally, ensuring its ability to secure quality products at
competitive prices and giving it the edge over its competitors. The group is
constantly on the lookout for new, quality, value products at optimum prices
to enhance its offering to the market.
The validity of this premise has proved itself over the years and Tile
Afrika's strategy of buying and selling in volume and of passing all value
to the customer, whilst retaining a stable margin for itself, has seen the
business consistently grow revenues at 25% per annum.
FINANCIAL REVIEW
During the period under review group revenue grew by 27% to R177,5 million
(2000: R139,7 million) with a 47% increase coming from the franchised
stores, which saw revenues for the period of
R22,9 million (2000: R15,7 million). Income before taxation grew by 25% to
R12,8 million (2000: R10,2 million) and the group's net tangible asset value
per share increased by 32% to 105,9 cents per share (2000: 80,4 cents per
share).
The change in accounting policy to comply with South African Statements of
Generally Accepted Accounting Practice (SAGAAP) regarding deferred taxation
resulted in an increase in the effective tax charge to 30% (2000: 14,5%).
The net effect of this has resulted in a marginal increase in net earnings.
The group has maintained its margins and incurred capital expenditure of
R1,1 million (2000: R2,2 million) relating to the opening of the stores in
Kenilworth and Klerksdorp.
ACCOUNTING POLICIES
The interim financial statements have been prepared in accordance with SA
GAAP. The accounting policies used are consistent with those used in the
comparative period and in the financial statements for the year ended 30
June 2001, with the exception of deferred taxation.
OPERATIONAL REVIEW
The global economic slump that resulted from the 11 September 2001 attacks
has had no impact on the current set of results, but the ripple effects are
expected to be felt in the remaining half of the financial year. Likewise,
the consequences of the dramatic devaluation of the Rand in December are
only likely to flow through later.
The period under review was characterised by buoyant trade, particularly in
the San Afrika Cash 'n Carry division, which doubled in size over the last
twelve months. Tile Afrika Cash 'n Carry continued on its excellent organic
growth path.
Enhanced stock management systems and practices also positively impacted the
results by ensuring constant availability of high demand items. The newly
implemented quarterly review process has lifted the standard of the stores.
The improved showroom appearance, which focuses on a lifestyle concept, has
lifted revenues at Tile Afrika Cash 'n Carry and San Afrika Cash 'n Carry
stores as consumers include value added products in their purchases.
The Tile Afrika Cash `n Carry and San Afrika Cash `n Carry divisions saw two
new stores each open in the review period, however, neither store
contributed significantly to the results as they were opened in October and
December respectively.
Tile Afrika Projects had a slow start to their year as many niche corporate
accounts delayed projects as a result of the economic upheaval. However,
this trend appears to have turned and an improved second half is expected.
Tile Afrika Franchisees concentrated on operational and procedural issues to
ensure the smooth rollout of the group's plan to convert all owned stores to
franchises. The plan has been met with great enthusiasm from both the market
and current store management.
PROSPECTS
South Africans are a house-proud nation and, irrespective of their income,
tend to invest in their homes. However, the flow through effects of the
global economic slowdown, which include rising local inflation and interest
rates, are expected to reduce the amount of disposable income, which is in
turn expected to result in a slowdown in consumer spending.
This market pressure is only expected to dampen sales over the short-term.
Management, however, believes that the group can continue to deliver steady
growth as it focuses on entrenching Tile Afrika and San Afrika as the
preferred brand in the value for money market segment.
Tile Afrika has substantial upside potential within the current organic
growth pattern, which will continue to be derived from existing operations
as they continue to evolve and mature. The ceramic tile and sanitaryware
markets in South Africa still offer huge potential in both developed and
under-developed sectors of the market, particularly in areas where we are
currently not represented.
The group's third retail concept has been accelerated, as viability studies
were overwhelmingly positive. The opening of the first new `store within a
store' concept is imminent and is expected to contribute significantly to
the group's results.
Whilst only two new Tile Afrika Cash `n Carry and two new San Afrika Cash `n
Carry stores were opened in the review period, the group is on track to open
thirteen stores by the end of 2002, all of which will include the third
retail element. Five more stores should be opened by the end of the current
financial year and the balance is awaiting property proclamation. Tile
Afrika's business model rests in part on its stores occupying prime
locations and the group would therefore rather wait until the best sites
become available than settle for readily obtainable positions. Prime
locations with high visibility contribute enormously to brand awareness.
As a retailer the group appreciates the value of the in-store sales person
and is developing a culture of retail excellence that will set Tile Afrika
apart from its competitors. By adding value to the sale the group intends to
deliver sustainable shareholder value over and above the real, above
inflation returns Tile Afrika has delivered in the past.
DIVIDEND
It is the group's policy to consider dividends at year-end only.
For and on behalf of the board
V Leonardi SJDS Rego
Executive Chairman Managing Director
Johannesburg
14 March 2002
Tile Afrika Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number: 1998/017716/06
("Tile Afrika" or "the group")
Share code: TLF - ISIN number: ZAE000017604
Registered office: Tile Afrika Holdings Limited, 181 Houthammer Road,
Devland 2013
Transfer secretaries: Computershare Services Limited, 4th Floor, Edura
House, 41 Fox Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107)
Directors: V Leonardi* (Chairman), SJDS Rego (Managing), IAI Kara
(Financial), RW Heunis (Non-executive) *Italian
www.tileafrika.co.za
Date: 13/03/2002 05:10:00 PM Produced by the JSE SENS Department
