STRATE: Letter to Investors

22 January 2001

Dear Investor

We are writing to inform you that Italtile Limited has been notified by the JSE Securities Exchange to transfer its share capital to the electronic STRATE¹ environment as from 23 April 2001. In terms of the revised listings requirements of the JSE, our move to STRATE is obligatory and it will ensure that we participate in a sophisticated settlement process which is on a par with international best practice.

The move to the STRATE system will involve many fundamental changes from the current paper-based settlement system. One of the primary responsibilities for investors as part of your preparation for the STRATE environment will be the submission of share certificates to a qualifying stockbroker or Central Securities Depository Participant (CSDP). CSDP is the name given to a custodian bank in the STRATE environment. The CSDP or stockbroker will open a share account for you and will ensure that your share certificates are converted into an electronic record - a process known as dematerialisation. Thereafter, you will regularly receive statements from the CSDP recording your ownership of these holdings in the same way as a bank statement. A list of CSDPs and their contact details appears in Italtile's Essential Shareholder Facts document enclosed herewith.

There are three significant dates that form part of our move to STRATE and which should be understood by our shareholders:

Dematerialisation:

As mentioned above, the dematerialisation date for the share certificates in circulation representing the share capital of Italtile Limited, is 23 April 2001. This indicates the date from which investors' shares can be converted into an electronic record in order to become eligible to settle in the STRATE environment. If your shares are not already in safe custody with a CSDP or qualifying stockbroker, they should be deposited with either a CSDP or qualifying stockbroker of your choice on or soon after this date. Your selected agent will then ensure that your shares are converted into an electronic record and rendered eligible for settlement under STRATE.

You will be unable to sell your shares while they are being converted into an electronic record. The conversion generally takes a few days. However, depending on the volume of certificates due to be processed by the transfer secretary, the conversion may take up to ten days. It is also worth remembering that if your certificates were initially not accurately registered, a longer delay may be caused.

It is therefore advisable to submit your shares to your CSDP/qualifying stockbroker on or as soon as possible after 23 April 2001 to avoid any delays with future trading.

Trading for electronic settlement:

Trading for electronic settlement begins on 14 May 2001. As of this date, there is a legal requirement for our shareholders to deposit their shares with a CSDP or qualifying stockbroker prior to selling them in order for the trade to settle in STRATE. This means that as of 14 May 2001, you will not be able to sell your Italtile shares unless they exist in an electronic form in the STRATE environment, i.e. unless you have deposited them with a CSDP for conversion into an electronic record.

Electronic settlement:

Five business days after the above date, i.e. on 21 May 2001, electronic settlement of Italtile's trades will take place for the first time. Any trades that took place on or after 14 May 2001 will undergo simultaneous, final, irrevocable settlement in an electronic environment. In other words, the electronic share accounts of the buyer and seller will be simultaneously updated exactly five business days after the transaction. For the first time, settlement will be contractual and guaranteed.

Paper share certificates will not lose their value once Italtile moves to the STRATE system, however, they are no longer acceptable for the purposes of settlement. We encourage all shareholders to submit their shares promptly for conversion into electronic form in the interests of efficiency and security. You are within your rights, however, to retain these shares in paper form until you wish to sell them.

For your benefit, we have enclosed a pamphlet entitled "Italtile's Essential Shareholder Facts" providing additional information regarding the transfer to STRATE. Should you require any further information in this regard, please feel free to make use of STRATE's Information Centre on the number indicated below. For general company information, please contact Italtile's communications consultants, Signatures Investor Relations.

Yours faithfully

P D SWATTON
Company Secretary

Contact Details

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