Commentary

Macro environment

The challenging global and South African macro-economic environment, impacted by uncertainty and geopolitical conflict persisted during the six-month reporting period to 31 December 2025 (“Interim Period”). Inflation was around 3,2%, close to the government’s target rate of 3%, while interest rates were reduced further.

The trading environment continued to be characterised by intense competition, weak demand and an imbalance between excess supply and weak demand mainly due to the dumping of cheaper products, exacerbated by the strengthening Rand.

Industry and consumer trends and our strategic response

Competitive landscape

The intense competition in the tile manufacturing and retail sectors remains as excess capacity and production in neighbouring countries continues to result in overstocking, depressed pricing and dumping in South Africa. Above-inflation increases in input costs, such as gas, electricity and rates and taxes, and our inability to pass these on to customers, resulted in further margin pressure.

Independent retailers continue to open stores and the informal traders, supplied by the Southern African Development Community (“SADC”) competitors at predatory pricing, continue to offer cheaper products.

The Afrimat Construction Index (“ACI”) continued its long-running downward trend in the third quarter of 2025. The FNB Bureau for Economic Research (“BER”) Building Confidence Index declined in the second and third quarters of 2025 but recovered slightly in the last quarter.

Despite these green shoots, persistent low GDP growth and energy and municipal price increases, far in excess of inflation, continue to weigh on consumer discretionary income, and demand for finishing products in the building sector remains constrained.

We eagerly await the result of the International Trade Administration Commission of South Africa’s (“ITAC”) investigation into the dumping of tile products in South Africa and while we understand that the process could take up to 18 months, we are hopeful that ITAC will reach its decision on interim measures in the first half of the 2026 calendar year.

We believe there is more potential to leverage our world-class technology to ensure enhanced quality and additional product innovation. We continually drive efficiencies and improve productivity to mitigate selling price deflation. Our focus on training and development of our people is ongoing to ensure that our customers experience exceptional service and are delighted by our displays, ranges, value, innovation, fashion and quality.

Unreliable energy transmission and distribution infrastructure, which has resulted in numerous power interruptions, has caused damage to our equipment and reduced productivity and yield.

Consumer trends

During the Interim Period, consumers remained under pressure from debt and diminished income for discretionary spending. They continued to be highly price sensitive, prioritising value and focusing on necessities such as groceries and fuel, while delaying discretionary spend on home renovations. Consumer confidence levels seemed to rise, driven by the lower 2025 annual inflation rate at 3,2%, interest rate cuts, lower petrol prices and the lack of loadshedding, but this has not translated into more visits to our stores.

We continue to curate our imports of a leading range of larger format and specialised finished products to satisfy our discerning customers who continue to show a preference for the larger format and polished tiles. Our investment in rectification technology at Vitro and Gryphon complements our development of large-format rectified products and polished porcelain tiles which will compete with imports.

Customers now use digital channels to compare options before purchasing, with more customers opting to delay payments by choosing the “Buy Now, Pay Later” services. We provide our customers with a range of convenient purchasing options and the use of our market-leading online trading platform has increased.

System-wide turnover for the Interim Period was flat at R6,079 million (2024: R6,075 million). The subdued demand, rising input costs and aggressive competition resulted in severe margin pressure, with the aggregated gross margin across the Group declining to 40,27% compared to 41,11% in the prior year, while sales growth and improved market share remain our key priority. Our focus remains on improving customer experience and support through improved skills of our teams, while continuously updating product ranges. We continued to mitigate cost pressure through cost management and operational efficiencies.

Revenue from Group‑owned stores and entities decreased 2% to R4,70 billion compared to the prior comparable period (2024: R4,78 billion).

In the Retail division, franchise and Groupowned store turnover dropped by 2% to R2,79 billion from R2,84 billion. Retail store system-wide revenue rose by 1% to R4,182 billion from R4,142 billion (2024: 0,4%) on a like-for-like basis. Group-owned store average selling price (“ASP”) inflation was 1,8% (2024: 0,33%). Italtile Retail achieved a 1% increase in sales, due to strong performances in the stores and in the Projects division. Sales volumes in CTM and TopT each declined 3% as customer spending was impacted by reduced available income for home renovations.

In the results for the second quarter of the previous financial year, our performance was buoyed by increased spending following the release of cash as a result of the two-pot pension fund reforms. This benefit was not repeated in the Interim Period, during which we experienced subdued trading and reduced sales than in the prior period.

All three brands recorded reduced profits, impacted by the change in mix of Group‑owned and franchise stores within the existing store network, and due to lower interest rates and cash balances.

Retail margins increased 0,3% despite heightened competitive activity in the market. Despite difficult trading conditions, particularly social unrest in Tanzania and poor economic performance in Botswana, reopening our Eswatini store produced a 1% increase in volumes and a 3% rise in profits in our operations in the rest of Africa.

Our webstores performed well with increased traffic and sales, underpinned by improved, innovative digital content and personalised sales experience.

In the integrated Supply Chain Manufacturing division, combined manufacturing sales declined by 5% to R2,46 billion compared to R2,59 billion in the prior comparable period. The ASP inflation was 1,3% (2024: 0,1% deflation). The change in consumer preference from smaller to larger format tiles has resulted in an increase in the overall ASP, even though the individual selling prices have decreased across most tile sizes and ranges.

Ceramic’s turnover decreased by 7% from R2,01 billion to R1,87 billion, driven by intense competition leading to an ongoing decline in volumes and depressed tile pricing across all the tile categories. While cost improvements were achieved, the benefit of operational improvements was offset by the reduced volumes. Until the decline in volumes and market share can be arrested, unit costs will remain under pressure.

The Tile division reported a 7% drop in volumes sold and a decrease in exports, but a marginal 0,5% increase in ASP due to the market preference for the larger formats that have a higher ASP. Turnover in the Sanware division increased. Ceramic South Africa’s profits decreased by 6% year on year.

In the weak trading environment, Ceramic Australia underperformed, reflected by softer production and sales volumes, which impacted profitability. Operating conditions remained testing as import pressure persisted. The new rectification line has been commissioned and increased sales is a focus for the second half of the financial year. Management is reviewing costs at this business to turn around the poor performance.

In the interim, given the high capex incurred and decline in performance, the Group has advanced the business a loan of AUD 3 million to cover short- to medium-term cashflow requirements. Should it be required, further funding will be assessed and addressed.

During the Interim Period, management identified an inconsistency in Ceramic Australia’s internal monthly reporting. The information established to date indicates that a negative impact of AUD7.6 million – fully adjusted for in the current period – is unlikely to cause adjustments to the prior year results. An enquiry as to the basis of the inconsistency is underway.

Ezee Tile’s profitability continued to improve despite an increase in revenue of only 1% to R560 million (2024: R557 million), as costs were reduced.

Our integrated Supply Chain import businesses serve the Group’s stores and their results closely track our Retail division’s performance. Collectively, the import businesses reported a decline in sales of 9% from R1,2 billion to R1,09 billion. The ASP increase was 0,6% (2024: 2,9% decrease).

We continued to drive cost leadership across the entire business, but efficiencies and improved productivity were insufficient to offset all underlying price increases. Like‑for‑like costs (excluding the AUD7,6 million disclosed above) rose 3,5% from R991 million to R1,0 billion due to above-inflation cost increases in labour, energy and municipal services. Including the impact of the AUD7,6 million, costs rose by 10,6%.

The Group’s trading profit of R1,02 billion declined by 14%.

Basic earnings per share (“EPS”) decreased by 14% to 60,94 cents (2024: 70,59 cents) and basic headline earnings (“HEPS”) decreased by 14% to 60,62 cents (2024: 70,08 cents).

We continued our strong focus on working capital management with consolidated inventory reducing by 16% to R1,2 billion (2024: R1,4 billion).

The cash balance as at 31 December 2025, amounted to R1,5 billion (2024: R1,6 billion) down 6,5% after the payment of the special dividend in September 2025.

We increased our capital expenditure in the Interim Period to R219 million (2024: R110 million), which included the following major projects:

• R95 million on the Gryphon polishing and rectifying plant and associated expenditure, as well as R21 million on other Ceramic factory upgrades and R31 million on the Betta warehouse project.
• R19 million on various Ezee Tile projects, including the Durban plant.
• R10 million on the NCIA rectification.
• R34 million on extensions and renovations in various Retail buildings and stores.

Material cash outflows for the period include:

• Capital expenditure of R219 million (2024: R110 million).
• Tax payments of R269 million (2024: R267 million).
• Total dividend payments of R1,50 billion (2024: R1,26 billion).

Cash proceeds of R25 million were received from the sale of property, plant and equipment.

The Group’s net asset value per share at the end of the Interim Period was 637 cents (2024: 678 cents).

Retail brands:

CTM, Italtile Retail and TopT

Our brand portfolio is strategically structured to appeal to customers across the income and demographic spectrum, from TopT’s entry-level segment, through CTM’s mass middle market, up to Italtile Retail’s premium‑end customers.

The highly competitive trading environment continued to test the resilience and resourcefulness of our operators. In defending and increasing our market share we have prioritised exceptional personalised sales experience through building a robust selling organisation, through development of our teams, focus on desirable product, improving efficiencies and managing costs across the business.

CTM’s positioning, “Big Savings. More Style” was emphasised through the new advertising campaign entrenching the brand’s iconic status as the leading, affordable fashion proposition for customers who appreciate the quality and value we offer.

Our internal drive for customer satisfaction through CTMXperience continued to produce changes in behaviour during customer interactions, improving our customer satisfaction metrics – evident on social media, Google ratings and in our net promoter score – indicating that customers continue to be delighted by our products and personalised service. Our strategic price points, sales promotion activities and marketing campaigns were centred on ensuring the brand was top of mind, to drive growth of our share amidst aggressive competition in this cash-constrained segment of the market.

Our training and development programme resulted in enhanced sales expertise and a higher employee engagement score.

Product development in the Kilimanjaro Edge range of rectified products was well received. The development and repositioning of innovations in the Tivoli range has been successful. We began launching new generation Tivoli product and décor-style central displays in CTM stores. These initiatives will continue during the second half of the financial year.

We reopened a refurbished store in Eswatini and we continue to bed down recently opened stores and assess opportunities for new stores in the rest of Africa. CTM has 75 stores in South Africa, including a webstore, and 25 stores in the rest of Africa, including four webstores

In Botswana, negative GDP growth and currency devaluation resulted in subdued trading and a drop in margins. In Tanzania, the election process and ensuing violence led to a hiatus in consumer purchasing. Amid Kenya’s increasingly protectionist policies for the ceramic tile manufacturing industry, we continue to implement opportunities to differentiate and compete in this market. Sizeable increases in personal and supplementary taxes, as well as food inflation, negatively affected discretionary income in Kenya.

Brandon Wood continues to oversee this business with a focused drive to improve skills and efficiency of the CTM operations team. Recruitment for a new leader for CTM is underway.

Italtile Retail’s aspirational positioning “Live Beautifully” is epitomised through its luxurious imported and local products, stylish stores and the uniquely high calibre of professional service offered by sales consultants with interior design training and specialist product knowledge. Customers visiting our stores experience an unparalleled shopping experience and superior unique products.

Italtile Retail performed well during the Interim Period with improved sales volumes and a growth in market share.

The projects division achieved an improved performance boosted by our appointment as the predominant tile supplier to the Club Med South Africa Beach & Safari project in KwaZulu-Natal.

Italtile Retail has 14 stores in South Africa, including a webstore and one store in Botswana.

TopT’s positioning “Every price a low price” is being entrenched among price conscious consumers in the rural areas and outlying markets. TopT’s inability to gain market share in the Interim Period is evidence of strong competition in this market as independent retailers opened more stores, while the informal traders continue to offer cheaper products.

TopT’s revenue is highly sensitive to consumers’ disposable income evidenced by a spike in sales during December, after bonuses had been paid.

TopT opened one new store and closed one store, retaining its footprint of 96 stores across South Africa, including one webstore.

A strategic objective for TopT is to expand its footprint and in the next six months, four new stores are planned. Marketing campaigns and engagement with local communities will continue. Following the change of paint supplier, increased paint sales are expected. Training and development of sales teams will continue to ensure the growth of the brand.

The Group operates seven webstores, one each for Italtile Retail and TopT and five for CTM in South Africa, Tanzania, Kenya, Botswana and Namibia. Our webstores are an integral part of our omnichannel platform and underpin our strategic objective of providing customers with a seamless shopping experience across our online and physical stores.

Our webstores reported gradually increasing traffic for the Interim Period, attributable to the innovative user interface, and enhanced, creative digital content, as we strive to provide customers with a “store in their pocket”. Key to success is the seamless and well-integrated experience online and in brick-and-mortar stores. The “Buy Now Pay Later” credit option has become increasingly popular as weak economic conditions impact the discretionary income of consumers.

Manufacturers

Ceramic Industries and Ezee Tile

Our manufacturing businesses are Ceramic Industries and Ezee Tile. Ceramic Industries is a leading manufacturer of fashionable affordable tiles in South Africa and Australia, and bathroom-ware in South Africa. Ezee Tile manufactures cement-based adhesives, grouts and related products from six facilities in South Africa and one each in Kenya, Zambia and Zimbabwe.

Ceramic Industries

External trading conditions remained extremely difficult in the Interim Period. Disappointing performance in the retail segment and poor sales resulted in capacity utilisation of 77%. Cost reductions were not sufficient to offset the decline in profitability.

We experienced increased difficulty in exporting our products as we faced aggressive competition, including the introduction of strategies intended to restrict market access in certain SADC countries.

We continued to invest in technology, specifically on the glaze line to differentiate the look and feel of tiles and set the trends in fashion. We are producing two new largeformat rectified tiles from Vitro and anticipate commissioning the Gryphon polishing line in March 2026.

We aim to manufacture products to provide customers with a suitable alternative to discontinued products previously produced by Johnson Tiles to provide customers with a suitable alternative to these discontinued products.

While the sales volumes and profitability at Betta improved, we were disappointed by the overall performance of the business unit. Plans are in process to improve the performance.

Ezee Tile

Ezee Tile’s brand reputation for quality product at affordable prices is leading to stronger demand from third-party customers. The warehouse management system and logistics solutions at the Vulcania factory have been integrated and are delivering the anticipated benefits and results.

The revamped Durban factory improved supply to the KwaZulu‑Natal market. The new Mokopane factory to replace the current operation will position Ezee Tile to grow sales and improve market share in the Limpopo region.

The launch of products for the construction market remains a priority and we have identified opportunities in the formulation of products. While we continue to support sales to Group stores, we see good prospects to gain more market share in the open market as well as outside of South Africa in both Kenya and Zimbabwe.

We will continue to advocate for the introduction of standards in the industry for tile adhesives and ensure that our products are the preferred option due to the high quality we offer.

With the introduction of Group manufacturing experience to Silica Quartz operations, efficiencies improved and losses reduced. Further improvements are planned during the remainder of the financial year to establish this as a profitable business.

Zimbabwe achieved higher sales, albeit at lower margins. Kenya performed well achieving growth in sales and profit.

Integrated Supply Chain: Importers

Cedar Point, International Tap Distributors and Distribution Centre

The stronger Rand, benefits from shipping costs, improved buying and reduced operating costs contributed to a good performance and higher margins in this division. The consolidation of Cedar Point and the DC warehouse in Durban delivered the expected synergy benefits and cost savings.

Associate Investment

Easylife Kitchens ("ELK")

The Group holds a 30% stake in this leading manufacturer of kitchen, bathroom, vanity, built-in cupboards, bar and storage design. Their stores are located on some of our multinode retail sites and continue to afford synergies for both parties. ELK reported sales and profit growth for its year ended 28 February 2026.

The Group’s property portfolio affords strategic advantage to the retail brand operations by ensuring development of purpose-designed, easily accessible, well‑presented and maintained stores, and contributes to an inspirational, aesthetically pleasing shopping experience.

The Property division also plays a key role in driving the Group’s green initiatives to ensure environmental sustainability and reduced dependence on municipal services through programmes to implement solar power generation with, in some cases, battery back-up, rainwater harvesting and boreholes.

During the Interim Period, the property portfolio’s performance (excluding impairments) deteriorated compared to the previous comparable period, impacted by property holding costs, such as municipal services and energy costs that outpaced inflation, and increased third-party rental costs which were higher than the increase in our rental collections. Key initiatives to enhance the value of the portfolio included ongoing maintenance and repairs. Disposing of non-core sites in unviable or non-profitable areas realised a profit of R8 million.

Capex of R34 million, a decrease of 24%, was incurred on ongoing retail property enhancements, extensions and renovations.

The Group’s sustainability agenda is reinforced by our practices, properties and product offerings that are designed and managed to facilitate sustainability of energy supply, reduce reliance on the national water and energy grid, limit the Group’s carbon footprint, enhance the environment of local communities, and ensure the mental and physical wellbeing of our people. Our Proudly South African ethos prioritises selling local products manufactured by local people, thereby creating jobs, providing training and contributing to the economy.

Energy

Availability, pricing and consumption of energy are critical considerations in our business, especially in the Manufacturing division in which seventy percent of total energy requirements are supplied by piped natural gas (“PNG”). Ensuring energy security, including securing sustainable supply of viably priced energy, is critical and business continuity remained a key priority for management during the Interim Period.

Gas update

While the immediate threat to natural gas supply has been delayed to June 2028, we will continue to monitor developments in the supply and pricing of PNG, liquid natural gas, trucked natural gas, methane rich gas, biogas and synthetic gas from coal to assess options for affordable gas supply. We await pricing from Sasol on methane rich gas and will subsequently evaluate the timing of and the necessity for our coal-fired hot air generator project.

Solar power generation developments

The 10 MW solar PPA project in Vereeniging has broken ground and will be ready to start energy supply at the end of the 2026 calendar year. Around 18% of the total electricity consumed by our retail stores is generated from photo voltaic systems. Our Property division will continue to monitor and evaluate emerging technologies to ensure the adoption of optimal solutions.

Lance Foxcroft, who has held the position of CEO of the Group since January 2022, has decided to step down from his position and resign as a director on 30 June 2026 due to changed family circumstances. During his tenure as CEO, Lance has played an instrumental role in driving the Group’s strategic transformation and growth in the retail and logistics segments.

Given his long-standing experience and continued commitment to the Group, Lance will be appointed as CEO of Ceramic Industries. Having previously served as CEO of Ceramic from 2014 until his appointment at Italtile, Lance’s extensive expertise will be invaluable. He will be ably assisted by the incumbent CEO, Gerard Maartens, who will be appointed COO of Ceramic. Gerard has wide-ranging experience across the company’s factories and his new role will provide vital support in partnering with Lance to drive growth in the business in the light of intense operating and competitive challenges. Both appointments will be effective from 1 July 2026.

In line with our long-standing structured succession plan, Brandon Wood was appointed as CEO Designate of Italtile with effect from 1 January 2026. Brandon held the position of Chief Financial Officer (“CFO”) from 2013 to 2018 and again from 2020 to 2024. He was appointed as COO in 2024. Brandon also previously served as Group Executive Director of the Commercial and Supply Chain and Retail divisions. More recently, in his capacity as Group COO, he managed the successful transition of the Ezee Tile business to a new facility and executive team and supervised CTM’s ongoing strategic turnaround programme. Brandon will assume the position of CEO on 1 July 2026. His business and industry insight, leadership skills, and wide-ranging experience across the Group’s operations will ensure consistency and continuity of Italtile’s values and strategic direction.

These changes will achieve our stated intention to build management experience and expertise across the organisation to attain our growth objectives.

We are hopeful that the lower inflation rate and reduction in interest rates will translate into increased activity in the building sector, resulting in more customers in our stores. Growth in the short-term will arise from increasing our market share across all our divisions through intense focus on the customer through aspects we can control in our businesses.

To allow our teams to focus on selling and providing customer satisfaction, we are introducing measures to simplify administration, as well as focusing on the new generation Tivoli product and décor-style central displays in stores and decreasing points of friction for the customers. An ongoing programme is in place to improve the supply chain by strengthening our operational teams.

Leaders in business units are being introduced to AI tools and encouraged through workshops to use these tools to improve productivity. Organisation of our data into suitable data formats to support the use of AI tools is progressing.

We continue to recruit, train and develop exceptional leaders and operational teams to deliver our ambitions. Development of a deeper pipeline of store operators and factory managers is a key focus over the next 12 months.

Our webstores are a strategic resource and critical sales and marketing channel for our products. Projects are underway to improve conversion rates and increase traffic to our stores.

We believe that there is strong potential to sell more product in our existing customer base outside of the Group stores.

The economic outlook for South Africa in the first half of 2026 is characterised by cautious optimism, with expectations of a continued, modest recovery from the 2025 growth trajectory. This is supported by reduced electricity constraints, progress in logistics reforms, lower inflation and further interest rate cuts. Early Sprojections suggest GDP growth will accelerate slightly to between 1,3% and 1,6%.

We are hopeful that these positive factors will be sufficient to reinvigorate building and construction and that home renovations will increase as lower borrowing costs make projects more feasible. However, geopolitical tensions and slow overall economic growth are likely to temper rapid improvement and imports are expected to increase due to the stronger Rand.

Excluding the impact of the amount subject to the ongoing enquiry in NCIA, we are expecting a similar performance in the second half of the financial year to that achieved in the first half.

We will focus on the growth levers within our control so as to realise the opportunities within our business. We will do this by improving our competitiveness at all touchpoints, namely our iconic brands, leading-edge technology and products, vertically integrated supply chain, and resilient, capable teams and franchise partners.

No events occurred subsequent to the Interim Period that require any additional disclosures or adjustments.

Mr Jan Potgieter decided not to stand for re‑election and resigned as a non-executive director on 13 November 2025.

Mr Leon Lourens was appointed as a non‑executive director and a member of the Remuneration and Nominations Committees on 3 October 2025. Mr Lourens worked for the Pepkor Group for 32 years, most recently as CEO from 2017 until his retirement in 2023. His leadership, strategic insights and extensive retail experience will complement the skills and expertise of the other directors.

The Board Committee changes included Mr Brand Pretorius, independent non‑executive director of the Board, stepping down as a member of the Remuneration, Nominations and Social and Ethics Committees on 3 October 2025.

Ms Mamedupi Matsipa, independent non‑executive director of the Board, was appointed as a member of the Social and Ethics Committee on 3 October 2025.

The Group’s dividend cover is two and a half times. The Board has declared an interim gross ordinary cash dividend (number 119) for the Interim Period ended 31 December 2025 of 24,0 cents per ordinary share (2024: 28,0 cents) to all shareholders recorded in the shareholder register of Italtile as at the record date of Friday, 20 March 2026.

In accordance with paragraph 7.23 of the Listings Requirements of the Johannesburg Stock Exchange (“JSE Listings Requirements”), the following additional information is provided::

• the dividend has been declared out of income reserves;
• the local ordinary dividend withholding tax rate is 20% (twenty percent);
• the gross local ordinary dividend amount is 24,0 cents per share for shareholders exempt from the dividends tax;
• the net local ordinary dividend amount is 19,2 cents per share for shareholders liable to pay the dividends tax;
• the local ordinary dividend withholding tax amount is 4,8 cents per share for shareholders liable to pay the dividend tax;
• Italtile’s income tax reference number is 9050182717; and the Group has 1 321 654 148 shares in issue including 21 592 234 shares held by the share incentive and retention trusts, 62 839 093 shares held as Broad-Based Black Economic Empowerment treasury shares and 45 274 730 shares held by Italtile Ceramics Proprietary Limited.

The cash dividend timetable is structured as follows: the last day to trade cum dividend in order to participate in the dividend will be Tuesday, 17 March 2026. The shares will commence trading ex‑dividend from the commencement of business on Wednesday, 18 March 2026 and the record date will be Friday, 20 March 2026. The dividend will be paid on Monday, 23 March 2026. Share certificates may not be rematerialised or dematerialised between Wednesday, 18 March 2026 and Friday, 20 March 2026, both days inclusive.

These unreviewed condensed consolidated interim financial statements for the six months ended 31 December 2025 and cash dividend declaration, and results announcement, were published on SENS on 2 March 2026 and are also available on Italtile’s website at reports and results.

For and on behalf of the Board

L A Foxcroft

Chief Executive Officer

L Booysen

Chief Financial Officer

Johannesburg

27 February 2026