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RTO RTOP RTN
RTO
RTO/RTN/RTOP - Rex Trueform Clothing Company Limited - Unaudited interim group
results for the six months ended 31 December 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
UNAUDITED INTERIM GROUP RESULTS for the six months ended 31 December 2010
HIGHLIGHTS:
- REVENUE UP 17.7%
- OPERATING PROFIT UP 54.2%
- HEADLINE EARNINGS PER SHARE UP 46.2%
COMMENTARY
Group results
Revenue increased by 17.7% during the six-month period to end-December 2010
reflecting an improvement in the trading environment.
Operating profit increased by 54.2%. This was achieved through a better
performance by the group`s core retail activities and an improvement in the
contribution of the manufacturing and property segments of the group compared to
last year. As a result earnings per share increased by 46.0% to 106.7 cents
(73.1 cents in 2009). Headline earnings per share increased by 46.2% to 106.7
cents (73.0 cents in 2009).
Retail
A higher level of consumer confidence resulted in an improvement of 14.4% in the
turnover of the group`s QUEENSPARK and J CREW retail stores. This increase in
turnover was largely generated by existing stores, certain of which were
refurbished, relocated or expanded during the past year. One new store was
opened during the period as management concentrated on improving the performance
of the existing store base. Same store sales increased by 11%.
The operating profit of the retail segment improved by 17.2% representing a
return of 10.1% on turnover compared to 9.9% in the corresponding period of last
year.
Manufacturing
Extraneous expenses related to a reorganisation of the manufacturing operation
during the comparative period of last year impacted negatively on results for
that period. The reorganised operation which represents a relatively modest 6%
of group revenue contributed positively to profit during the period under
review. The volumes realised in this segment were higher than usual and there is
no certainty that this level of profitability will be achieved again in the
future.
Prospects
Although the six months under review reflected some recovery in consumer
confidence, particularly in Queenspark`s niche retail market, it is expected
that the second half of the current financial year will not provide the same
level of growth as achieved during this first half to December 2010. In
particular, the material benefits provided by the Duty Credit Certificate Scheme
are now no longer available from the beginning of January and this, together
with expected inflationary pressures, will result in pressure on margins.
Queenspark continues to focus on initiatives to further strengthen and
consolidate its position in the market-place through the opening of new stores,
upgrades of existing stores and improvements in its product offering. The
achievement of sales and profit targets will, however, remain challenging during
the remainder of the current financial year.
Signed on behalf of the board
ML Krawitz
Chairman
CEA Radowsky
Chief Executive Officer
Cape Town
2 March 2011
STATEMENT OF COMPREHENSIVE INCOME
Consolidated (R`000)
Six months ended
31 December
% 2010
change (Unaudited)
Revenue 17.7% 290 264
Turnover 17.9% 284 911
Cost of sales (136 819)
Gross profit 19.4% 148 092
Employment costs (45 559)
Occupancy costs (34 209)
Depreciation and amortisation (7 481)
Other operating costs (34 406)
Rental income 249
Royalties 503
Management fee income 139
Operating profit 54.2% 27 328
Dividends received 12
Interest received 4 450
Interest paid (122)
Profit before tax 44.9% 31 668
Income tax expense (9 919)
Profit for the period 46.2% 21 749
Other comprehensive income
Net changes in fair
value of available-
for-sale financial assets -
Total comprehensive
income for the period 21 749
Profit attributable to:
Ordinary and `N`
ordinary shareholders 21 741
Preference shareholders 8
Profit for the period 21 749
Total comprehensive
income attributable to:
Ordinary and `N`
ordinary shareholders 21 741
Preference shareholders 8
Total comprehensive
income for the period 21 749
Reconciliation of
headline earnings
Attributable earnings 21 741
(Profit)/loss on
disposal of plant
and equipment (4)
Headline earnings 21 737
Headline earnings per
share (cents) 46.2% 106.7
Earnings per share (cents) 46.0% 106.7
Diluted headline earning
per share (cents) 46.4% 106.3
Diluted earnings per
share (cents) 46.2% 106.3
Weighted average number
of equity shares on
which earnings per share
is based (000) 20 371
Weighted average number
of equity shares used
for diluted earnings per
share (000) 20 449
Consolidated (R`000)
Six months ended Year ended
31 December 30 June
2009 2010
(Unaudited) (Audited)
Revenue 246 652 490 990
Turnover 241 687 480 850
Cost of sales (117 708) (221 915)
Gross profit 123 979 258 935
Employment costs (38 914) (83 014)
Occupancy costs (31 106) (62 683)
Depreciation and amortisation (6 547) (13 754)
Other operating costs (30 342) (63 985)
Rental income 17 128
Royalties 503 995
Management fee income 129 245
Operating profit 17 719 36 867
Dividends received 16 16
Interest received 4 300 8 756
Interest paid (182) (292)
Profit before tax 21 853 45 347
Income tax expense (6 976) (14 801)
Profit for the period 14 877 30 546
Other comprehensive income
Net changes in fair
value of available- for-
sale financial assets - (146)
Total comprehensive
income for the period 14 877 30 400
Profit attributable to:
Ordinary and `N`
ordinary shareholders 14 869 30 529
Preference shareholders 8 17
Profit for the period 14 877 30 546
Total comprehensive
income attributable to:
Ordinary and `N`
ordinary shareholders 14 869 30 383
Preference shareholders 8 17
Total comprehensive
income for the period 14 877 30 400
Reconciliation of
headline earnings
Attributable earnings 14 869 30 529
(Profit)/loss on
disposal of plant and
equipment (17) 917
Headline earnings 14 852 31 446
Headline earnings per
share (cents) 73.0 154.5
Earnings per share (cents) 73.1 150.0
Diluted headline earning
per share (cents) 72.6 153.4
Diluted earnings per
share (cents) 72.7 148.9
Weighted average number
of equity shares on
which earnings per share
is based (000) 20 352 20 352
Weighted average number
of equity shares used
for diluted earnings per
share (000) 20 462 20 500
STATEMENT OF FINANCIAL POSITION
Consolidated (R`000)
As at As at
31 December 30 June
2010 2009 2009
(Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 75 471 65 590 67 847
Property, plant and equipment 65 157 53 883 57 394
Investment property 3 511 3 511 3 511
Intangible assets 1 317 2 065 2 107
Other investments 576 722 576
Deferred taxation 4 910 5 409 4 259
Current assets 226 001 195 531 222 487
Inventories 62 349 50 202 57 994
Accounts receivable from holding company
661 24 100
Trade and other receivables 13 584 16 891 21 005
Forward exchange contracts - - 522
Income tax receivable - 378 1 235
Cash and cash equivalents 149 407 128 036 141 631
Total assets 301 472 261 121 290 334
Equity and liabilities
Capital and reserves 249 818 220 296 235 866
Share capital 1 777 1 777 1 777
Share premium 23 991 23 631 23 631
Other reserves 929 991 900
Retained earnings 223 121 193 897 209 558
Non-current liabilities 12 041 11 606 12 492
Post-retirement liability 3 292 3 338 3 351
Accrued operating lease liability 8 749 8 268 9 141
Current liabilities 39 613 29 219 41 976
Provisions 514 578 560
Trade and other payables 35 625 27 701 40 795
Forward exchange contracts 2 180 940 -
Income tax payable 1 294 - 621
Total equity and liabilities 301 472 261 121 290 334
ABRIDGED STATEMENT OF CASH FLOWS
Consolidated (R`000)
Six months ended Year ended
31 December 30 June
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
Operating profit before working capital
changes 36 701 26 113 53 315
Working capital changes (2 249) 10 180 11 287
Interest received 4 450 4 300 8 756
Interest paid (122) (182) (292)
Taxation paid (8 662) (6 417) (13 328)
Dividends received 12 16 16
Dividends paid (8 186) (7 132) (7 140)
Net cash inflow from operating
activities 21 944 26 878 52 614
Additions to property plant and
equipment (14 726) (12 874) (25 166)
Proceeds on disposal of property
plant and equipment 198 24 175
Net cash outflows from investing
activities (14 528) (12 850) (24 991)
Proceeds on delivery of shares by
share trust 371 - -
Repurchase of own shares (11) - -
Net cash inflows from financing
activities 360 - -
Net increase in cash and cash
equivalents 7 776 14 028 27 623
Cash and cash equivalents at the
beginning of the period 141 631 114 008 114 008
Cash and cash equivalents at the
end of the period 149 407 128 036 141 631
STATEMENT OF CHANGES IN EQUITY
Consolidated (R`000)
As at As at
31 December 30 June
2010 2009 2009
(Unaudited) (Unaudited) (Audited)
Share capital 1 777 1 777 1 777
Share premium 23 991 23 631 23 631
Other reserves
Opening balance 900 954 954
Share-based payments 29 37 92
Fair value adjustment for
available-for-sale financial assets - - (146)
Closing balance 929 991 900
Retained earnings
Opening balance 209 558 186 152 186 152
Profit attributable to equity
holders of the parent 21 749 14 877 30 546
Dividends (8 186) (7 132) (7 140)
Closing balance 223 121 193 897 209 558
Total capital and reserves 249 818 220 296 235 866
SEGMENTAL REPORTING
Consolidated (R`000)
Six months ended Year ended
31 December 30 June
2010 2009 2010
(Unaudited) (Unaudited) (Audited)
Segment revenue
Retail 268 339 234 590 462 179
Property 249 17 128
Property total 1 244 786 1 973
Less: intersegment rentals (995) (769) (1 845)
Manufacturing 17 214 7 729 19 911
Manufacturing total 17 291 8 815 21 170
Less: intersegment sales (77) (1 086) (1 259)
Total segment revenue 285 802 242 336 482 218
Dividends received 12 16 16
Interest received 4 450 4 300 8 756
Total revenue 290 264 246 652 490 990
Segment profit/(loss)
Retail 27 151 23 162 44 409
Property 456 (348) (202)
Manufacturing 1 875 (3 116) (2 700)
Segment profit 29 482 19 698 41 507
Group Services* (2 154) (1 979) (4 640)
Total operating profit 27 328 17 719 36 867
Depreciation and amortisation
Retail 7 359 6 375 13 439
Manufacturing 57 109 190
Total manufacturing depreciation 138 266 430
Less: included in cost of sales (81) (157) (240)
Property 65 63 125
Total depreciation and amortisation 7 481 6 547 13 754
Total segment assets 301 472 261 121 290 334
Retail 178 051 180 388 171 860
Property 10 412 8 695 9 236
Manufacturing 13 117 10 288 13 580
Group Services* 99 892 61 750 95 658
Total segment 51 654 40 825 54 468
Retail 41 691 34 096 46 622
Property 30 - 30
Manufacturing 5 030 2 259 3 636
Group Services* 4 903 4 470 4 180
Capital expenditure 14 726 12 874 25 166
Retail 14 396 12 874 25 159
Property 330 - -
Manufacturing - - 7
Group Services* - - -
* Group Services include corporate costs.
OTHER INFORMATION
Capital commitments (authorised -
not contracted for) 6 011 11 050 16 998
Gross profit margin 52.0% 51.3% 53.8%
Operating profit margin 9.6% 7.3% 7.7%
Retail segment operating profit margin
10.1% 9.9% 9.6%
NOTES
1 Basis of preparation
These interim financial statements have been prepared in accordance with
International Accounting Standard IAS 34: Interim Financial Reporting and the AC
500 Standards as issued by the Accounting Practices Board or its successor.
They are also compliant with International Financial Reporting Standards
(IFRS).
These results have not been audited or reviewed by the company`s auditors, KPMG
Inc.
2 Accounting policies
The accounting policies applied in these interim statements are consistent with
those applied in the preparation of the group`s annual financial statements for
the year ended 30 June 2010.
3 Preference dividend
A dividend on the 6% cumulative preference shares for the six months ended 31
December 2010 in the amount of R8 400 was declared on 1 December 2010 and paid
on 28 December 2010.
Directors: ML Krawitz+ (Chairman), CEA Radowsky (Chief Executive Officer),
PM Naylor*, JC O`Brien, RV Orlin*, DS Johnson and PE Shub (alt ML Krawitz)
* Independent non-executive + 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: 04/03/2011 12:21:03 Produced by the JSE SENS Department.
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