Notes

Basis of preparation

The reviewed interim condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements and the requirements of the Companies Act of South Africa. The Listings Requirements require interim reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of the "IFRS^® Accounting Standard" and subsequent mentions to "IFRS for Accounting Standard" and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.

The accounting policies applied in the preparation of the reviewed interim condensed consolidated financial statements are in terms of IFRS for Accounting Standard and are consistent with those applied in the previous consolidated annual financial statements. These results have been prepared under the supervision of the Chief Financial Officer, Mr. L Booysen.

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of these reviewed interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual consolidated financial statements for the year ended 30 June 2024, except for the adoption of new and amended IFRS for Accounting Standard and International Financial Reporting Interpretations Committee interpretations, which became effective during the current Review Period. The application of these standards and interpretations did not have a significant impact on the Group’s reported results and cash flows for the six months ended 31 December 2024 and the Statement of financial position at 31 December 2024.

There are no material contingent assets or liabilities at 31 December 2024.

Capital commitments will be funded by cash generated by operations.

The Group does not fair value its financial assets or liabilities in accordance with quoted prices in active markets or market observables, as their carrying value approximates fair value due to the short-term nature of these items and/or existing terms are equivalent to market observables. There were no transfers into or out of Level 3 during the period.

On 31 March 2023, the Group implemented a new staff share scheme, which replaced the previous scheme implemented by the Group during the 2014 financial year. Both schemes were implemented for the benefit of all employees of the Group and its franchisees who had been in the employ of the Group and/or franchise network for a period of three uninterrupted years at each specified allotment date in every year from implementation date.

As a result, 3,1 million of the Group’s shares net of forfeitures were held by qualifying staff members at 31 December 2024 (2023: 2,7 million). Until vesting, the shares will continue to be accounted for as treasury shares and have an impact on the diluted weighted average number of shares.

The eighth allotment of shares in the previous scheme, granted in 2020, vested on 31 August 2023. A total of 110 employees qualified for the vesting, all of whom elected to receive the net value of the awards in cash. This resulted in a decrease in treasury shares of 1 419 798 shares in the prior year. This scheme was discontinued.

The schemes are classified as equity-settled schemes in terms of IFRS 2 Share-Based Payment and have resulted in a total expense of R7,3 million (2023: R6,4 million) to the Group’s income.

No adjustments to earnings are required for diluted earning per share calculations, as the share awards do not have an impact on diluted earnings.

In the prior year, the interest-bearing loan of R500 million bore interest at three-month JIBAR plus 1,3% and was repayable in full in November 2024 and was disclosed as current. From June 2022, an interest rate swap was entered into to fix the variable interest rate at 6,85% on the loan amount of R500 million.

Management negotiated facilities with two institutions and drew down on these for the purpose of early settling the abovementioned loan. Simultaneously to the granting of the new facilities, management early terminated the interest rate swap. The interest rates on the new facilities range from 8.40% to 9.05%. These facilities are on demand and subject to bi-annual and annual renewal and are classified as loans on the face of the statement of financial position. The loans are financial liabilities measured at amortised cost in terms of IFRS 9.

Non-current assets held for sale relate to non-productive land and buildings, which are in the process of being sold. During the Review Period, a property classified as held for sale with a value of R71 million was reclassified back into property, plant and equipment as the sale transaction did not materialise.

No impairment loss was recognised on the fair value adjustment on these assets during the Review Period.

The Group is controlled by Rallen (Pty) Ltd which owns 56,46% (2024: 56,46%) of its share capital. Management fees totalling R2,1 million (2024: R3,0 million) were paid by the Group to Rallen (Pty) Ltd during the period. Various other transactions occur between companies within the Group, all of which are eliminated on consolidation. These transactions include rendering of services and supply of product. Key management personnel and prescribed officers comprise only the Group executive directors and executive directors of Ceramic Industries. Executive directors’ remuneration is paid by Italtile Ceramics (Pty) Ltd, a subsidiary of the Company. No balances were owing at half-year end (2024: Rnil).

Other than the dividend declaration, the directors are not aware of any matters or circumstances arising since the end of the reporting period which significantly impact the financial position of the Group at 31 December 2024 or the results of its operations or cash flow for the period then ended.