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A challenging operating environment and internal shortcomings resulted in a decrease in volumes and earnings during the year, with margins and profitability in the manufacturing businesses being most impacted.

Brandon Wood,
Chief Financial Officer

It is my privilege to report on the Group’s results for the 2023 financial year.

The analysis that follows focuses on the key elements of the Group’s financial performance and statement of financial position, which management believes is important for the understanding of the Group’s results. The review should be read together with the annual financial statements in Statements of comprehensive income to Analysis of shareholders.


Group financial results summary

  2023   % change
from 2022
Group and franchise results        
Turnover (Rm)        
– by Group-owned stores and entities 9 136   2 8 981
– by franchise-owned stores 2 366   2 364
System-wide turnover (Rm) 11 502   1 11 345
Number of stores* 216   2 211
Group results        
Turnover (Rm) 9 136   2 8 981
Trading profit (Rm) 2 318   (15) 2 717
Total assets (Rm) 9 769   12 8 749
Cash and cash equivalents (Rm) 1 049   143 431
Number of shares in issue (‘000) 1 321 654   1 321 654
Headline earnings per share (cents) 132,3   (13) 152,1
Ordinary dividends declared per share (cents) 53,0   (13) 61,0
Net asset value per share (cents) 642   12 575
Number of employees 2 477   (7) 2 652
* Includes webstores.

Turnover, trading profit and trading profit margin (Rm)

Profit contribution per segment (%)


System-wide turnover for the financial year increased marginally, by 1%, due to muted sales growth resulting from difficult macro-economic conditions, increased competition and internal inefficiencies.

Consolidated turnover was 2% higher when compared to the prior year (R9 136 million versus R8 981 million).


Gross retail store turnover increased 1,2% versus the prior year, and on a like-for-like basis, decreased by 0,3%. Overall, average selling prices increased 6,7% in the retail businesses, with decreases in volumes on the prior year being reported for all merchandise categories except shower enclosures (of which sales increased by 3,5% versus the prior year).

Company-owned stores’ sales growth for the year was 1,7%, while franchise stores’ sales increased 0,2% year-on-year. Italtile Retail Projects achieved commendable results, growing 36% on the prior year. The Group’s online sales grew by 13,2% on the prior year, increasing the overall contribution to retail sales from 1,69% to 1,89%.

Integrated supply chain – import businesses

Collectively, supply chain business (Cedar Point, ITD and DC) sales were 4% lower than the prior year; low double-digit average selling price increases were implemented. It became necessary to increase prices due to exchange rate fluctuations, increased shipping costs in the first half of the year, and higher pricing from suppliers. These increases were delayed as long as possible to support competitive pricing at the retail level and were staggered throughout the prior and current financial year, which had a mixed impact on margins from a timing perspective. Average selling price inflation was slightly offset by changes in the sales basket (a move to lower-priced products, as customers shopped-down).

Integrated supply chain – manufacturing

Manufacturing sales (aggregation of Ceramic Industries, Ezee Tile and PiViCal Panels), increased by 3.7% on the prior year to R5,3 billion. Comparability of year-on-year sales growth is impacted by the timing in the prior year of price increases passed, as well as the commissioning of Samca+.

Similar to the supply chain businesses, the muted sales performance of the Group’s retail brands impacted the sales of both Ceramic and Ezee Tile.

Gross margin

On a consolidated level, achieved gross margin for the year decreased to 43,2% from 45,8% in the prior year.

The manufacturing businesses collectively recorded a gross margin percentage decrease of 4,1% from the prior year, which had a significant impact on the overall Group gross margin. Factors which impacted the gross margin include input cost pressures (price inflation imported raw materials, fuel and electricity, and equipment spare parts), a deterioration in factory yields due to internal inefficiencies, and a decrease in production volumes (including as a result of reduced demand).

Collectively, the supply chain businesses’ gross margin percentage decreased by 0,2%, due to the increased cost of goods purchased resulting from higher prices from suppliers, elevated shipping costs in the first half of the year, and the weakening of the Rand. Increased logistics costs, due to fuel price increases, also impacted negatively on gross margins. The 1,4% decrease in margin for the first half of the financial year improved during the second half, as benefits were realised from some of the price increases passed and the lower cost of purchase in the second half (due to shipping cost decreases and improved buying prices/ranges).

While the manufacturing and supply chain businesses continued to limit and delay price increases to retailers in order to support competitive pricing, retail margins nonetheless decreased by 0,5% given the competitive environment and customers shopping down.

At a Group level, a decrease in the total inventory provision income statement charges for the year from R20 million in the prior year to R7 million in the current year, slightly offset the decrease in achieved gross margin percentages. In addition, changes in the store mix (movements in sales volumes between Company-owned and franchised stores) resulted in mix changes in the inter-company sales elimination on consolidation which may increase/decrease the margin, depending on the nature of store sales mix change.

Other operating income

Other operating income comprises various income received from franchised stores (rental, royalties, IT, and other service fees). The decrease, notwithstanding muted retail sales growth, is attributable to:

  • a decrease in franchise renewals versus the prior year (timing differences);
  • duty refunds recorded by Cedar Point in the prior year (due to a tariff heading reclassification on vinyl flooring and shower enclosures);
  • a reduction in clawback income charged to franchisees; and
  • a decrease in foreign exchange gains from the prior year.
Operating expenses

Operating expenses increased by 8,9% on the prior year (on a like-for-like basis, the increase was 8,4%). Notable movements for the year versus the prior year were recorded on the following expense items:

  • manpower costs (including share-based payments and profit share) included in operating expenses increased 4,7%, mainly as a result of annual salary increases (approximately 6%) which was offset by an 8,8% decrease in share-based payment expenses. On a like-for-like basis, manpower costs included in operating expenses increased by 4,0%. The focus on productivity has assisted with containing costs;
  • manpower costs including profit share related to the manufacturing businesses (included in the cost of sales line) decreased 1,7%. Excluding profit share and share-based payment expenses, an increase of 8,6% was recorded;
  • JV profit share decreased 9,5% from the prior year due to a decrease in the number of JV partner retail stores and lower profitability in these stores;

Return on shareholders’ interest (%)

Per share figures (cents)

  • stock control costs increased by 7,5% from the prior year in the retail stores and distribution business. Elevated average stock levels during the year placed upward pressure on stock control costs, particularly breakages. Encouragingly, count variance costs decreased 16,8% from the prior year, although they remain disappointingly high. Sample and display costs increased by 7,3% on the prior year as a result of ongoing store revamps and higher product costs;
  • property costs included in operating expenses (excluding IFRS 16) increased 8,9% on the prior year on a like-for-like basis;
  • depreciation (excluding IFRS 16) included in operating expenses increased by 6,1% from the prior year, while depreciation included in cost of sales (manufacturing businesses) increased by 10,7%, as a result of capital expenditure in both the prior and current year. Return on recent capital spend has thus not been adequate. The total depreciation charge (excluding IFRS 16) across all businesses increased by 9,9% versus the prior year;
  • net retail marketing costs decreased by 15,5% from the prior year as spend was more focused and savings extracted where possible;
  • total donations by the Foundation Trust and Group companies increased 5,8% on the prior year to R37 million;
  • travel and related expenses increased 23,2% for the year, as lockdowns and travel restrictions were eased and/or lifted in the prior financial year, and due to increased fuel prices;
  • information technology costs increased by 24,8% from the prior year, as cost savings related to early settlement of subscriptions in the prior year were not repeated in the current year. Excluding the impact of the prior year benefit, costs increased 6,9% on the prior year; and
  • due to significant increases in fuel prices, net distribution costs of Ceramic Industries and Ezee Tile (included in operating expenses) increased by 14,2%. Net distribution costs in the retail and supply chain businesses increased by 2,2% as a result of reduced sales volumes, coupled with improved control of distribution costs and recovery of fees from customers in the retail businesses. Total net distribution costs for the Group increased by 11,9% on the prior year.
Trading profit

Trading profit decreased by 15% on the prior year as the impact of low sales growth and decrease in gross margin percentage was compounded by the decrease in other operating income and increased operating costs. These movements were slightly offset by the net impact of an increase in profit on disposal of assets from the prior year.

Finance income

Finance income increased by 67% from the prior year, which is largely attributable to an increase in the average cash holdings for the year and escalations in deposit/investment rates (following increases in the prime rate).

Finance costs

Finance costs increased by 30% from the prior year. Although the average debt balances and leasing arrangements remained fairly consistent versus the prior year, escalations in lending rates as a result of increases in the prime rate have increased finance costs. The figure includes finance costs of R31 million relating to the IFRS 16 accounting of leases (2022: R30 million).


The taxation expense decreased by 15% from the prior year as net profit before tax decreased. Despite the decrease in the corporate income tax rate in the current year to 27% from 28%, the effective rate remains above 28% as a result of non-deductible expenses, derecognition of certain deferred tax assets and prior year underprovisions.

Non-controlling interest

Earnings attributable to non-controlling interests decreased from the prior year as a result of the decrease in profits of businesses with minority partners.

Cash flows (Rm)

Liquidity ratios (times)

Earnings per share

Earnings per share (“EPS”) and headline earnings per share (“HEPS”) decreased to 132,6 cents and 132,3 cents respectively from the prior year.

A 0,5% decrease in the weighted number of shares from 1 217 million to 1 210 million shares (as a result of own share purchases during the previous and current financial years) resulted in the slightly lower decrease in earnings per share compared to the decrease in attributable profits after tax.

The HEPS decline is slightly higher, given after-tax profits on asset disposals of R4 million in the current year versus R1 million in the prior year.

Property, plant and equipment

Capital expenditure of R671 million was incurred during the year, with significant capital spend being as follows:

  • new Ezee Tile factory: R74 million;
  • Betta Robotic warehouse: R48 million;
  • Vitro Poppi Kiln replacement (including building): R37 million;
  • other Ceramic Industries’ factory upgrades and capital expenditure: R226 million;
  • new property build (including East Africa): R86 million;
  • other retail buildings spend (extensions and renovations): R106 million; and
  • retail store revamps: R53 million.

The inventory balance of the Group, net of provisions and including goods on the water, has increased marginally to R1 315 million from R1 286 million at 30 June 2022. On a gross basis, prior to provisions and the goods in transit balance, total inventory holdings increased by 5% versus the prior year-end (R1 530 million versus R1 464 million).

This increase is predominantly attributable to high levels of raw materials and finished goods at Ceramic Industries. Stock balances at the other divisions remained largely consistent year-on-year, despite price inflation on purchased goods, with those divisions recording decreases in stock volume levels from the financial half year.

Total inventory provisions increased slightly by 7% from the prior financial year-end to R259 million (2022 year-end: R243 million). The obsolescence provision increased by R16 million as the inventory provisions at U-Light, Ezee Tile and Ceramic Industries were conservatively increased to cater for aged stock and potential write-offs/clearance losses. The unrealised profit provision at year-end remained at R129 million (2022 year-end: R129 million) because although the overall inventory balance increased, the decrease in supply chain and manufacturing gross margins resulted in less unrealised profit to be reversed on consolidation.

The 12-month average financial stock turn of most businesses decreased from the prior financial year average as a result of increased average inventory holdings and lower sales growth. The average Group turn reduced by 4,9% to 6,2 times from 6,5 times in the previous financial year.

Cash and cash equivalents

The Group’s cash balance increased to R1 049 million from R431 million as at 30 June 2022, with cash generated by operations being offset by the following outflows during the year:

Cash flow waterfall (Rm)

  • capital expenditure of R671 million;
  • dividend payments of R785 million;
  • taxation payments of R633 million;
  • repayment of the US$3,5 million East Africa loan facility; and
  • treasury share purchases of R104 million.
Trade and other receivables

The 7% increase in net trade and other receivables from the prior financial year-end is attributable to timing differences on receipt of payments from debtors and year-end sales cut-off entries. Overall, there has not been any noticeable deterioration in the average collection period on trade receivable balances.

The doubtful debt provision increased to R101 million from the prior financial year-end (30 June 2022: R61 million) as a result of the provision raised on the Ezee Tile Zambia and U-Light inter-company balances.

Trade and other payables

The 56% increase in net trade and other payables from the prior financial year-end is attributable to:

  • timing differences on trade payable payments;
  • lower prepayments for imports; and
  • recognition of an accrual for potential retrospective price charges from Sasol.

The 4% increase in the provision balance is attributable to an increase in the rehabilitation provision following the acquisition of a sand quarry, and an increase in the leave pay provision of 17%. These increases have been offset by a decrease of 12% in the incentive bonus/profit share provision given the lower profitability year-on-year, and thus a lower level of provisioning for profit share.

Interest-bearing loans

The decrease in interest-bearing loans to R500 million from the previous financial year-end balance of R552 million is attributable to the settlement of the US$3,5 million facility for the East Africa operation at the end of June 2023. The facility was settled early given increased interest and foreign exchange rate exposures related to the facility.


The directors are not aware of any matters or circumstances arising since the end of the reporting period which will significantly affect the Group’s financial position at 30 June 2023 or the results of its operations or cash flow for the year then ended.


The general control environment remains robust and I have no knowledge of any fraud or suspected fraud which could have a material effect on the results of the Group.


Value delivery is an integral part of our IT journey to ensure a memorable customer experience from a technology perspective, and to ensure operational efficiencies throughout our business. The role of the Group’s IT department is to create a vision and roadmap of strategic projects that support the Group’s business strategy and operations. Tangible benefits such as data and information security, cost reduction, process improvement, automation, improved data acquisition and overall business efficiency are critical to all projects undertaken by the Group’s IT department.

During the 2023 financial year, we improved the general control environment of our IT systems, renegotiated key service agreements to extract savings, and contracted with new service providers to enhance our access to industry-leading skills and expertise. Over the next financial year, we will continue to invest in strengthening our team, advance our innovation journey, which provides us with competitive advantage in various operational areas, and improve on the security of our IT systems.


The Group’s performance in the year under review was disappointing, with internal shortcomings compounding the challenges presented by a difficult external environment. Over the next year, we will continue to focus on the internal levers and opportunities within our control in order to extract market share gains and growth. The year ahead will also serve as a period of consolidation for the Group – we will work to optimise the full benefit of recent capital expenditure and improve returns which have fallen short of expectations. This will not be possible without the efforts of the dedicated teams throughout our business.

I would like to extend my sincere appreciation to:

  • our shareholders for their constructive engagements and support over the year;
  • our customers for their continued support for our business and brands;
  • our management and staff for their determination and commitment to ultimately deliver a world-class shopping experience and manufacturing process;
  • our finance teams for delivery of sound financial information and reports;
  • our CEO, Lance Foxcroft, for his leadership and mentorship;
  • our non-executive directors for their sound guidance and support;
  • Mr Ravazzotti for his inspirational leadership and consistent passion to improve the business; and
  • our new Chairman, L R Langenhoven, whom we are excited to work with to continue to develop our exceptional company.

B G Wood
Chief Financial Officer