| Wed 12 Mar 2003, 9:33 | | Ceramic - Interim Results for the Six Months Ended |
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Ceramic Industries Limited
(Reg. No. 1982/008520/06)
(CERAMIC)
(CRM)
ISIN: ZAE000008538
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 JANUARY 2003
Abridged group income statement
6 Months 6 Months Year
ended ended ended
31 January 31 January 31 July
2003 2002 2002
% Unaudited Unaudited Audited
Change R000"s R000"s R000"s
Revenue 24,7 307 346 246 530 553 641
Tiles 23,3 258 706 209 796 467 439
Sanitaryware 32,4 48 640 36 734 86 202
Operating profit
before depreciation 33,0 109 387 82 255 183 961
Depreciation 8,2 (21 018) (19 420) (38 336)
Operating profit 40,6 88 369 62 835 145 625
Tiles 33,2 72 151 54 154 120 747
Sanitaryware 86,8 16 218 8 681 24 878
Investment income (50,7) 3 334 6 767 11 886
Profit before taxation 31,8 91 703 69 602 157 511
Taxation (26 376) (18 793) (43 372)
Earnings attributable
to ordinary
shareholders 28,6 65 327 50 809 114 139
Weighted average
number of shares in
issue (000"s) 18 263 18 263 18 263
Basic earnings
per share (cents) 28,6 357,7 278,2 625,0
Headline earnings
per share (cents) 27,2 352,8 277,4 621,9
Dividends per
share (cents) 23,7 47,0 38,0 105,0
RECONCILIATION OF
HEADLINE EARNINGS
Earnings attributable
to ordinary
shareholders 65 327 50 809 114 139
Profit on disposal of
fixed assets (83) (140) (472)
Negative goodwill released (816) - (85)
Headline earnings 64 428 50 669 113 582
Abridged group balance sheet
31 January 31 January 31 July
2003 2002 2002
Unaudited Unaudited Audited
R000"s R000"s R000"s
ASSETS
Non-current assets 391 694 205 094 284 898
Property, plant and equipment 386 606 205 094 282 226
Negative goodwill (2 512) - (3 328)
Payment in advance 7 600 - 6 000
Current assets
Inventories 27 958 10 053 13 243
Trade and other receivables 136 632 87 945 132 571
Cash and cash equivalents 98 011 180 658 203 004
Total assets 654 295 483 750 633 716
EQUITY AND LIABILITIES
Capital and reserves 475 324 370 009 426 831
Ordinary shares 64 962 64 962 64 962
Reserves 13 833 16 354 22 083
Retained earnings 396 529 288 693 339 786
Minority shareholders" interest 189 - 189
Non-current liabilities
Deferred taxation 9 842 16 340 10 826
Current liabilities 168 940 97 401 195 870
Trade creditors, other payables
and provisions 152 035 74 696 161 937
Income tax payable 16 805 22 610 33 839
Shareholders for dividend 100 95 94
Total equity and liabilities 654 295 483 750 633 716
Statement of changes in shareholders" equity
31 January 31 January 31 July
2003 2002 2002
Unaudited Unaudited Audited
R000"s R000"s R000"s
Balance at beginning of period 426 831 319 431 319 431
Earnings attributable to ordinary
shareholders 65 327 50 809 114 139
Movement in foreign currency
translation (4 597) 8 901 9 333
Transfer to dividend reserve (8 584) (6 940) (19 177)
Dividend reserve 8 584 6 940 19 177
Dividend paid (12 237) (9 132) (16 072)
Balance at end of period 475 324 370 009 426 831
Abridged group cash flow statement
6 Months 6 Months Year
ended ended ended
31 January 31 January 31 July
2003 2002 2002
Unaudited Unaudited Audited
R000"s R000"s R000"s
Operating activities
Profit before taxation adjusted
for non-cash items 104 351 82 115 191 962
Changes in working capital (28 678) (20 102) 16 592
Cash generated from operations 75 673 62 013 208 554
Investment income 3 334 6 767 11 886
Dividends paid (12 231) (9 141) (16 082)
Taxation paid (42 426) (9 877) (29 727)
24 350 49 762 174 631
Investing activities (129 343) (43 565) (146 088)
To expand operations (129 343) (43 565) (153 636)
Net cash acquired on
acquisition of foreign
subsidiary - - 7 548
Net (decrease)/increase in cash
and cash equivalents (104 993) 6 197 28 543
Cash and cash equivalents
beginning of period 203 004 174 461 174 461
Cash and cash equivalents
end of period 98 011 180 658 203 004
COMMENTARY
FINANCIAL RESULTS
Ceramic Industries has produced sound results for the six months ended 31
January 2003. Revenue increased 24% to R307,3 million (2002: R246,5 million),
with revenue from tiles up 23% to
R258,7 million (2002: R209,8 million) on volume growth of 21%, while revenue
from sanitaryware improved 32% to R48,6 million (2002: R36,7 million), on volume
growth of 37%.
Operating profit grew 40% to R88,4 million (2002: R62,8 million). Earnings
attributable to shareholders increased 28% to R65,3 million (2002: R50,8
million), while headline earnings per share improved 27% to 352,8 cents (2002:
277,4 cents).
The achievement of these results is attributed to:
Increased volumes and yields at Betta Sanitaryware.
The efficient start up of operations at the Pegasus plant in Vereeniging.
Utilisation of state-of-the-art technology.
Improved margins ensuing from economies of scale at Samca and Vitro.
OPERATING ACTIVITIES
The company entrenched its position as the country"s leading ceramic tile and
sanitaryware manufacturer. Despite increased competition from Chinese and
Brazilian product, the Group"s policy of restricting price increases has ensured
that market share has been retained. The period under review was characterised
by favourable trading conditions and strong market demand. However, with the
strengthening of the Rand during the reporting period imports have once again
become cost competitive.
Manufacturing
Pegasus
The Pegasus factory was commissioned successfully in November 2002. Production
of the glazed pressed floor tiles is in line with the planned 7,5 million m2
output. A second kiln, which will complete the project, is scheduled for
commissioning in
April 2003.
The tax incentive afforded to Pegasus by the Department of Trade and Industry"s
Strategic Industrial Projects programme is anticipated to result in a tax saving
of up to R30 million over the next 3 years.
Vitro
Vitro is currently producing 4,4 million m2 per annum, short of the 5,5 million
m2 targeted by the Group. The additional capacity, commissioned in March 2002,
is taking longer to bed down than anticipated, given the unique implementation
of this technology. The Group is confident that this operation"s full potential
will be realised in the next fiscal year.
The NCI production line, commissioned in November 2002, is operating well and is
producing 1 million m2 per annum.
Samca I
The plant is delivering 7,3 million m2 per annum. Shareholders have been advised
that, following further evaluation, it has been decided not to proceed with a
fourth production line at Samca I.
Samca II
The third production line at Samca II was commissioned in October 2002 and
therefore this plant is currently producing 7,1 million m2 per annum.
Finalisation of investment in the raw material preparation plant should bring
the capacity to 7,5 million m2 per annum.
Betta Sanitaryware
The state-of-the-art technology boosted production and quality at Betta.
Production capacity of 1 million pieces per annum has been achieved and
equipment is being installed to increase this to 1,2 million pieces per annum.
Betta"s strong growth consolidated the division"s position as South Africa"s
leading manufacturer of vitreous china sanitaryware.
Exports
Export growth for the period under review was 23%, contributing 12% to total
turnover. The Group will continue to focus on its export drive into sub-Saharan
Africa, creating new markets for the Group"s additional capacity.
FOREIGN INVESTMENT
Good progress has been accomplished with the Australian venture. The
environmental management plan has been approved and construction of the plant
will commence in April 2003. It is anticipated that the factory will be
commissioned at the end of 2003. Production volumes will initially be 3 million
m2 per annum, approximately 10% of the market in Australia.
The Group has advised shareholders that it will not proceed with its investment
in a tile plant in Italy. The Reserve Bank has given approval for the funds held
in Italy to be used for the Australian project.
PROSPECTS
As noted above, the strengthening of the Rand has affected the Group"s
competitive position and the tile plants are experiencing pressure on margins
due to limited cost reductions. The Group will continue to focus on quality and
pricing to ensure its products remain competitive.
The Group is budgeting to achieve real growth for the next six months, albeit at
a lower rate than achieved in this reporting period.
DIVIDEND
The Board has declared an interim dividend of 47 cents (2002: 38 cents), an
improvement of 24%.
On behalf of the Board
G.A.M. Ravazzotti N. Booth
Chairman Chief Executive Officer
ACCOUNTING POLICY
The financial information has been presented in accordance with South African
Statements of Generally Accepted Accounting Practice. The accounting policies
applied are consistent with those of the prior reporting period, with the
exception of the adoption of AC 133 "Financial Instrument Recognition and
Measurement".
DIVIDEND ANNOUNCEMENT
The Board has resolved to declare an interim dividend (number 26) of 47 cents
per share to all shareholders of Ceramic Industries Limited. The last day to
trade CUM the dividend in order to participate in the dividend will be
Wednesday, 16 April 2003. The shares of Ceramic Industries Limited will commence
trading EX the dividend from the commencement of business on Thursday, 17 April
2003 and the record date will be Friday, 25 April 2003. The dividend will be
paid on Tuesday, 29 April 2003. Share certificates may not be rematerialised or
dematerialised between Thursday, 17 April 2003 and Friday, 25 April 2003, both
days inclusive.
By order of the Board
I.A. Mollentze
Secretary
12 March 2003
Directors: G.A.M. Ravazzotti (Chairman),
N. Booth (Chief Executive Officer), L. Pereira, S.D. Jagoe,
E. Mafuna, K. 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,
70 Marshall Street, Marshalltown, Johannesburg 2001 POBox 61051,
Marshalltown 2107
