| Wed 10 Mar 2004, 8:30 | | Interim Results For the Six Months Ended 31 Jan 04 |
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Ceramic - Interim Results For the Six Months Ended 31 January 2004
Ceramic Industries Limited
(Reg. No. 1982/008520/06)
Incorporated in the Republic of South Africa
(CERAMIC)
(Share code: CRM)
ISIN: ZAE000008538
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JANUARY 2004
Abridged group income statement
6 months 6 months Year
ended ended ended
31 January 31 January 31 July
2004 2003 2003
% Unaudited Unaudited Audited
Change R000s R000s R000s
Revenue 13,4 348 663 307 346 625 819
Tiles 14,0 291 279 255 414 520 646
Sanitaryware 10,5 57 384 51 932 105 173
Operating income before
depreciation 2,7 112 357 109 387 224 549
Depreciation 65,5 (34 785) (21 018) (56 235)
Operating income (12,2) 77 572 88 369 168 314
Tiles (14,3) 62 003 72 386 138 107
Sanitaryware (2,6) 15 569 15 983 30 207
Investment income (93,2) 226 3 334 665
Income before taxation (15,2) 77 798 91 703 168 979
Taxation (15,0) (22 424) (26 376) (38 940)
Income after taxation 55 374 65 327 130 039
Minority shareholders
interest - (6) - 28
Net income attributable
to ordinary shareholders (15,2) 55 368 65 327 130 067
Weighted average number of
shares in issue (000s) 18 263 18 263 18 263
Basic earnings per
share (cents) (15,2) 303,2 357,7 712,2
Headline earnings per
share (cents) (14,2) 302,8 352,8 706,5
Dividend per share (cents) - 47,0 47,0 120,0
Reconciliation of
headline earnings
Net income attributable to
ordinary shareholders 55 368 65 327 130 067
Impairment of property,
plant and equipment - - 2 376
Negative goodwill - (816) (3 328)
Surplus on disposal of
plant and equipment (69) (83) (89)
Headline earnings 55 299 64 428 129 026
Abridged group balance sheet
31 January 31 January 31 July
2004 2003 2003
Unaudited Unaudited Audited
R000s R000s R000s
ASSETS
Non-current assets 593 230 391 694 489 393
Property, plant and equipment 577 027 386 606 468 961
Negative goodwill - (2 512) -
Deferred taxation asset 10 203 - 13 632
Payment in advance 6 000 7 600 6 800
Current assets 232 647 262 601 267 104
Inventories 27 793 27 958 35 741
Trade and other receivables 127 503 136 632 124 255
Cash and cash equivalents 77 351 98 011 107 108
Total assets 825 877 654 295 756 497
EQUITIES AND LIABILITIES
Capital and reserves 578 658 475 324 526 899
Share capital 64 962 64 962 64 962
Reserves 10 391 13 833 14 000
Retained earnings 503 305 396 529 447 937
Minority shareholders interest 167 189 161
Non-current liabilities 29 695 9 842 38 794
Deferred taxation liability 16 526 9 842 14 718
Borrowings 13 169 - 24 076
Current liabilities 217 357 168 940 190 643
Trade and other payables and
provisions 213 787 152 035 165 854
Taxation payable 3 466 16 805 24 690
Shareholders for dividends 104 100 99
Total equity and liabilities 825 877 654 295 756 497
Abridged statement of changes in shareholders equity
31 January 31 January 31 July
2004 2003 2003
Unaudited Unaudited Audited
R000s R000s R000s
Balance at beginning of period 526 899 426 831 426 831
Net income attributable to
ordinary shareholders 55 368 65 327 130 067
Movement in foreign currency
translation reserve 9 723 (4 597) (9 178)
Transfer to dividend reserve (8 584) (8 584) (21 916)
Transfer from dividend reserve 8 584 8 584 21 916
Dividends paid (13 332) (12 237) (20 821)
Balance at end of period 578 658 475 324 526 899
Abridged group cash flow statement
6 months 6 months Year
ended ended ended
31 January 31 January 31 July
2004 2003 2003
Unaudited Unaudited Audited
R000s R000s R000s
Operating activities
Income before taxation adjusted
for non-cash items 118 597 104 351 218 101
Changes in working capital 52 633 (28 678) (10 265)
Cash generated from operations 171 230 75 673 207 836
Investment income 226 3 334 665
Dividends paid (13 327) (12 231) (20 816)
Taxation paid (38 411) (42 426) (61 540)
119 718 24 350 126 145
Investing activities
To expand operations (138 568) (129 343) (246 117)
Financing activities
Borrowings (repaid)/raised (10 907) - 24 076
Net decrease in cash
and cash equivalents (29 757) (104 993) (95 896)
Cash and cash equivalents at
beginning of period 107 108 203 004 203 004
Cash and cash equivalents at
end of period 77 351 98 011 107 108
COMMENTARY
FINANCIAL RESULTS
The period under review was characterised by continued strength of the Rand,
which exposed inefficiencies in the older factories and also resulted in
increasing volumes of imported tiles. Ceramic maintained its market share by
selling 10,8 million m2 of tiles, a 23% increase over the comparative period
(2003: 8,8 million m2). Price reductions of approximately 7% were implemented to
maintain the Groups competitive position and as a result revenue from tiles was
14% higher at R291,3 million (2003: R255,4 million) while revenue from
sanitaryware increased 10% to R57,4 million (2003: R51,9 million). Group revenue
for the six months ended 31 January 2004 increased 13% to R348,7 million (2003:
R307,3 million).
Despite improved sales volumes, operating income declined 12% from R88,4 million
to R77,6 million. Operating income for the period under review was impacted by a
66% increase in depreciation from R21,0 million to R34,8 million as a result of
the commissioning of the Pegasus plant. Declining volume throughputs and
increased input costs led unit to cost increases in certain plants, and further
erosion in margins. Restructuring has taken place in a number of plants to
improve productivity and efficiencies.
OPERATING ACTIVITIES
Pegasus
Pegasus has made significant inroads into the high-growth, value-for-money
market segment and competes effectively with low priced imports and alternative
floor coverings. Pegasus is operating at design capacity of 7,5 million m2 per
annum.
Vitro
As a result of process technological problems and work done on developing new
products, production levels at Vitro were reduced, impacting severely on
margins.
Equipment installed in the last financial year to alleviate these constraints
has now been commissioned and should reduce inefficiencies and enable Vitro to
increase its contribution to Group earnings. Management will focus on
maximising throughput in order to reduce the average cost per unit.
Samca 1
The decision in the previous financial year to reduce production in order to
match market demand prevented an improvement in cost per m2 being achieved and
impacted negatively on margins. This decision has subsequently been reviewed and
management has elected to reinstate full output.
A return to maximum efficiency and desired capacity is expected in the next
reporting period.
Samca 2
As previously reported the product range developed at this plant did not
adequately meet the fashion requirements of consumers and the market did not
absorb the volume increases. In the intervening period the range was re-
developed and has subsequently been well accepted by consumers. Production costs
and yields have recovered and the third production line, which was mothballed
last year, recommenced production in February 2004 and should further reduce
unit costs.
A new clay milling plant will be commissioned during April 2004 to increase
capacity and improve quality and productivity.
Betta Sanitaryware
Betta produced 486 000 pieces and is on track to achieve the target of 1,1
million pieces for the full year. Selling prices remain competitive with
imported products and sales grew by 12% to 508 000 pieces.
New product development remains a priority and the new ranges are competing
strongly in the lower end of the market.
FOREIGN INVESTMENT
The Australian project has progressed well. Construction has been completed on
budget and production will commence in March 2004, some three months later than
originally envisaged due to adverse weather conditions during construction and
regulatory requirements. Design capacity is 3 million m2 per annum. It is
anticipated that the plant will begin to generate revenue by the end of April
2004 but no contribution to earnings is anticipated during this financial year.
As reported previously, the Italian investment is in the process of being wound
down.
PROSPECTS
The results for the second half of the financial year are expected to be better
than those of the first half. Improvements instituted during this review period
have started to deliver improved results.
The focus of the management team will be to further reduce costs and improve
productivity throughout the organisation.
ACCOUNTING POLICIES
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.
DIVIDEND
The Board has declared an interim dividend of 47 cents (2003: 47 cents).
On behalf of the Board
G.A.M. Ravazzotti
Chairman
N. Booth
Chief Executive Officer
DIVIDEND ANNOUNCEMENT
The Board has declared an interim dividend (no 28) of 47 cents per ordinary
share to all shareholders recorded in the books of Ceramic at the close of
business on Friday, 23 April 2004. The last day to trade CUM dividend in order
to participate in the dividend will be Friday, 16 April 2004. The shares will
commence trading EX dividend from the commencement of business on Monday, 19
April 2004 and the record date will be Friday, 23 April 2004. The dividend will
be paid on Monday, 26 April 2004. Share certificates may not be rematerialised
or dematerialised between Monday, 19 April 2004 and Friday, 23 April 2004, both
days inclusive.
By order of the Board
E.J. Willis
Secretary
10 March 2004
Directors: G.A.M. Ravazzotti (Chairman), N. Booth (Chief Executive Officer),
S.D. Jagoe, E.M. Mafuna, L. Pereira, K.M. Schultz, P.D. Wickens (British), G.
Zannoni (Italian)
Registered office: 33 Sarel Baard Crescent, Gateway Industrial Park,
Rooihuiskraal Ext. 25, Centurion P O Box 1369, Rivonia 2128
Transfer secretaries: Computershare Limited, 70 Marshall Street, Johannesburg
2001 P O Box 61051, Marshalltown 2107
Date: 10/03/2004 08:00:07 AM Produced by the JSE SENS Department
