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RTO RTOP RTN
RTO
RTN / RTOP - Rex Trueform Clothing Company - Reviewed results for the year
ended 30 June 2010
REX TRUEFORM CLOTHING COMPANY LIMITED
(Incorporated in the Republic of South Africa - Reg No. 1937/009839/06)
Share codes: RTO - RTN - RTOP
ISIN: ZAE000006144 - ZAE000009700 - ZAE000006151
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2010
HIGHLIGHTS:
- OPERATING PROFIT UP 35.6%
- HEADLINE EARNINGS UP 24.5%
- STRONG BALANCE SHEET
COMMENTARY
The group has produced a robust performance in the adverse economic conditions
which persisted throughout the 2010 financial year.
In the group`s interim report for the half-year to December 2009 it was
anticipated that the depressed retail conditions would continue and that the
achievement of sales and profit targets would remain challenging.
In line with expectations revenue was down 2.4% on last year. The group has
however met the challenge regarding performance, an improvement of 35.6% in
group operating profit having been achieved.
Earnings continued to benefit significantly from the Duty Credit Certificate
Scheme during the past year. The use of duty credit certificates will phase out
during the coming year.
A lower level of interest earned and a slightly higher effective tax rate
diluted the full effect of the operating profit improvement on earnings.
Headline earnings per share improved by 24.5% to 154.5 cents per share. Earnings
per share increased by 19.2% to 150.0 cents per share.
Retail
Queenspark delivered a pleasing performance, particularly in the second six
months during which operating profit improved substantially over the previous
year.
The turnover growth of 0.4% in the first half of the year was followed by a more
difficult second half where turnover decreased by 2.6% on last year. Turnover
was down 1.2% for the full year to June 2010.
There were significant increases in costs due to the addition of new stores,
rental escalations and increased electricity charges.
Operating profit improved by 38.6% over last year to R44.4 million. This was
largely due to improved margins achieved through better product sourcing and
less mark-downs.
The ratio of operating profit to turnover improved to 9.6% compared to 6.9%
achieved last year.
Manufacturing
The manufacturing operation in Atlantis experienced a difficult first six months
of the year during which production levels were reduced to match the lower
demand. This plant produced a much improved performance during the second half
of the year during which it delivered a positive return.
Prospects
Four new retail stores were opened by Queenspark during last year. The full
benefit of these together with store refurbishments and relocations will reflect
in performance in the coming year.
Queenspark`s seasonal ranges currently in stores are receiving a high level of
acceptance. Turnover for the first eight weeks of the new financial year was
more than 13% improved on last year.
Dividend
The board is recommending to shareholders that the dividend on the ordinary and
`N` ordinary shares be increased to 40 cents per share. This will result in a
dividend cover of 3.9 times (based on headline earnings).
Shareholders will be asked to consider, and if deemed fit, approve the
directors` dividend recommendation at the annual general meeting of the company
to be held on 17 November 2010.
An announcement detailing the terms of the dividend declaration will be made
immediately following the annual general meeting.
Signed on behalf of the board
ML Krawitz
(Chairman)
CEA Radowsky
(Chief Executive Officer)
Cape Town
7 September 2010
STATEMENT OF COMPREHENSIVE INCOME
Consolidated (R`000)
2010 2009
(Reviewed) (Audited)
Revenue 490 990 502 999
Turnover 480 850 491 023
Cost of sales (221 915) (274 748)
Gross profit 258 935 216 275
Employment costs (83 014) (70 769)
Occupancy costs (62 683) (53 325)
Depreciation and amortisation (13 754) (12 248)
Other operating costs (63 985) (54 519)
Rental income 128 408
Royalties 995 1 118
Management fee income 245 240
Operating profit 36 867 27 180
Dividends received 16 23
Finance income 8 756 10 187
Finance expenses (292) (365)
Profit before taxation 45 347 37 025
Income tax expense (14 801) (11 414)
Profit for the period 30 546 25 611
Other comprehensive income
Net change in fair value for
available-for-sale
financial assets (146) -
Total comprehensive income for
the period 30 400 25 611
Profit attributable to:
Ordinary and `N` ordinary
shareholders 30 529 25 594
Preference shareholders 17 17
Profit for the period 30 546 25 611
Total comprehensive income
attributable to:
Ordinary and `N` ordinary
shareholders 30 383 25 594
Preference shareholders 17 17
Total comprehensive income for
the period 30 400 25 611
Reconciliation of headline
earnings
Attributable earnings 30 529 25 594
Loss/(profit) on disposal of
plant and equipment 917 (346)
Headline earnings 31 446 25 248
Headline earnings per share
(cents) 154.5 124.1
Earnings per share (cents) 150.0 125.8
Diluted headline earnings per
share (cents) 153.4 123.2
Diluted earnings per share (cents) 148.9 124.9
Proposed dividend per share (cents) 40.0 35.0
Dividend cover (based on headline
earnings) 3.9 3.5
Weighted average number of equity
shares on which
earnings per share is based (000) 20 352 20 352
Weighted average number of equity
shares on which
diluted earnings per share
is based (000) 20 499 20 490
Number of equity shares in issue
(000) 20 352 20 352
STATEMENT OF FINANCIAL POSITION
Consolidated (R`000)
2010 2009
Assets (Reviewed) (Audited)
Non-current assets 67 847 60 484
Property, plant and equipment 57 394 47 058
Investment property 3 511 3 511
Intangible assets 2 107 2 720
Investments (unlisted) 576 722
Deferred taxation 4 259 6 473
Current assets 221 866 201 724
Inventories 57 994 68 484
Accounts receivable from holding
company 100 27
Trade and other receivables 21 005 19 205
Forward exchange contracts 522 -
Income tax receivable 614 -
Cash and cash equivalents 141 631 114 008
Total assets 289 713 262 208
Equity and liabilities
Capital and reserves 235 866 212 514
Share capital 1 777 1 777
Share premium 23 631 23 631
Other reserves 900 954
Retained earnings 209 558 186 152
Non-current liabilities 12 492 10 863
Post-retirement liability 3 351 3 332
Accrued operating lease
liability 9 141 7 531
Current liabilities 41 355 38 831
Provisions 560 669
Trade and other payables 40 795 32 393
Forward exchange contracts - 5 642
Income tax payable - 127
Total equity and liabilities 289 713 262 208
ABRIDGED STATEMENT OF CASH FLOWS
Consolidated (R`000)
2010 2009
(Reviewed) (Audited)
Cash generated by operations 53 315 46 189
Working capital changes 11 287 (2 707)
Interest received 8 756 10 187
Interest paid (292) (365)
Dividends paid (7 140) (7 140)
Dividends received 16 23
Taxation paid (13 328) (9 704)
Net cash inflow from
operations 52 614 36 483
Additions to property, plant
and equipment (25 166) (22 090)
Proceeds on disposal of property,
plant and equipment 175 859
Net cash outflow from investing
activities (24 991) (21 231)
Net increase in cash 27 623 15 252
Cash at the beginning of the
period 114 008 98 756
Cash at the end of the period 141 631 114 008
STATEMENT OF CHANGES IN EQUITY
Consolidated (R`000)
2010 2009
(Reviewed) (Audited)
Share capital 1 777 1 777
Share premium 23 631 23 631
Other reserves
Opening balance 954 883
Share-based payments 92 71
Fair value adjustment for
available-for-sale
financial assets (146) -
Closing balance 900 954
Retained earnings
Opening balance 186 152 167 681
Profit for the period 30 546 25 611
Dividends (7 140) (7 140)
Closing balance 209 558 186 152
Total capital and reserves 235 866 212 514
SEGMENTAL REPORTING
Consolidated (R`000)
2010 2009
(Reviewed) (Audited)
Revenue
Retail 462 179 467 558
Manufacturing 19 911 24 823
Manufacturing total 21 170 27 192
Less: intersegment sales (1 259) (2 369)
Property 128 408
Total segment revenue 482 218 492 789
Dividends received 16 23
Finance income 8 756 10 187
Total revenue 490 990 502 999
Segment operating profit/(loss)
Retail 44 409 32 035
Property (202) 507
Manufacturing (2 700) (2 095)
Segment profit 41 507 30 447
Group services* (4 640) (3 267)
Total segment operating profit 36 867 27 180
Segment depreciation included in
operating profit
Retail 13 439 11 759
Manufacturing 555 804
Total segment depreciation 13 994 12 563
Segment assets
Retail 171 239 180 248
Property 9 236 8 725
Manufacturing 13 580 11 348
Group Services 95 658 61 887
Total segment assets 289 713 262 208
Segment liabilities
Retail 46 001 40 638
Property 30 -
Manufacturing 3 636 5 724
Group Services 4 180 3 332
Total segment liabilities 53 847 49 694
Segment capital expenditure
Retail 25 159 22 087
Property - -
Manufacturing 7 3
Total segment capital expenditure 25 166 22 090
* Group services includes corporate costs.
OTHER INFORMATION
Consolidated (R`000)
2010 2009
(Reviewed) (Audited)
Capital commitments
Authorised - not contracted for 16 988 16 168
Gross profit margin 53.8% 44.0%
Operating profit margin 7.7% 5.5%
Retail segment operating profit
margin 9.6% 6.9%
NOTES
1 Basis of preparation
These reviewed results have been prepared in terms of the South African
Companies Act of 1973 (as amended), IFRS ,IAS 34: Interim Financial Reporting
and the JSE Listings Requirements.
2 Accounting policies
The accounting policies applied are consistent with those applied in the
preparation of the group`s annual financial statements for the year ended 30
June 2009.
3 Review by auditors
The financial information has been reviewed by KPMG Inc, whose unqualified
review opinion is available for inspection at the company`s registered office.
It is anticipated that an unqualified audit opinion will be issued once the
detailed financial statements have been finalised.
The annual report containing a detailed review of the operations of the company
together with the audited financial statements will be posted to shareholders
towards the end of September 2010.
Directors: ML Krawitz*(Chairman), CEA Radowsky (Chief Executive Officer), PM
Naylor*, JC O`Brien, DS Johnson, RV Orlin* and PE Shub (alt ML Krawitz)
* non-executive
Rex Trueform Clothing Company Limited
(Incorporated in the Republic of South Africa - Reg No. 1937/009839/06)
Share codes: RTO - RTN - RTOP
ISIN: ZAE000006144 - ZAE000009700 - ZAE000006151
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town,
7925
Secretary: African & Overseas Enterprises Limited
Transfer secretaries: Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
Sponsor: Java Capital
Websites:
www.queenspark.com
www.rextrueform.com
Date: 08/09/2010 15:00:01 Produced by the JSE SENS Department.
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