Cape Town - Italtile, the listed retailer of ceramic tiles, bathware and related products, intends to have close to 50 percent of its franchises in black hands within the next five years. Peter Swatton, Italtile's chief financial officer, said that about 16 of the group's 101 stores were currently owned by black franchisees and that between 30 and 35 of the 40 new outlets planned for the next five years would be sold to empowered partners.
Of the 101 outlets, 81 operate as CTM, eight as Italtile and the remaining 12 are in Australia.
Swatton noted that the new outlets were primarily planned for townships, where the company was under-represented.
The group has stipulated that a future condition of its South African franchises will be the incorporation of a black economic empowerment element in all contracts.
This applied to both new and existing franchise agreements when they become eligible for renewal. All but three of the group's outlets operate as franchises and the plan is for all of them to be franchised by year-end.
As for empowerment at the holding company level, Swatton noted that the company planned to have something in place at the end of the next calendar year.
Commenting on the release of the group's annual results to June, Swatton said the group had shown consistent earnings growth for 14 years. Compound headline earnings growth for the past seven years stood at 35 percent a year, and 28 percent a year for the past 14 years.
Headline earnings a share for the year under review came in 25 percent higher at R10.691 on total turnover growth of 25 percent to R1.96 billion and a 26 percent increase to R190.6 million in attributable earnings.
Most of the added earnings came through organic growth, as no new stores were added during the year, while the contribution of acquisitions to earnings was immaterial.
The dividend rose 69 percent to R2.70, with the bonus of a special dividend of R3.30. The group released a special dividend of R1.40 in the previous year.
Portfolio manager Brian Pyle of Old Mutual Asset Managers said the results constituted a solid performance, although they were within expectations.
"The earnings growth was 10 percent ahead of what we initially expected following the already high earnings base of the previous year."
As for the special dividend, Pyle said it did come as a surprise, although investors were after the growth prospects and not so much the dividend.
Based on the latest dividend, the group had a dividend yield (dividend as percentage of share price) of about 1.7 percent, or 3.8 percent if the special dividend was included. This was close to the levels of the construction and building materials sector, and the general retailers sector.
Pyle noted that the group was creating good cash flows, which gave it the capacity to "quite easily continue paying special dividends".
Italtile's share price gained R4.47 to R160 yesterday, while the construction and building materials sector rose 0.04 percent.