| Thu 8 Sep 2011, 8:03 | | RTO/RTN/RTOP - Rex Trueform Clothing Company Limited - Reviewed results for the |
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RTO RTOP RTN
RTO
RTO/RTN/RTOP - Rex Trueform Clothing Company Limited - Reviewed results for the
year ended 30 June 2011
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 2011
HIGHLIGHTS:
- REVENUE FROM CONTINUING OPERATIONS UP 10.1%
- OPERATING PROFIT FROM CONTINUING OPERATIONS UP 15.8%
- HEADLINE EARNINGS PER SHARE FROM CONTINUING OPERATIONS UP 14.8%
STATEMENT OF COMPREHENSIVE INCOME
Consolidated (R`000)
2011 2010
(Reviewed) (Audited)
Continuing operations
Revenue 518 796 471 079
Turnover 508 078 460 939
Cost of sales (221 987) (200 760)
Gross profit 286 091 260 179
Employment costs (91 672) (83 014)
Occupancy costs (70 729) (64 637)
Depreciation and amortisation (15 595) (13 636)
Other operating costs (65 600) (61 903)
Rental income 605 128
Royalties 1 009 995
Management fee income 294 245
Operating profit 44 403 38 357
Dividends received 12 16
Interest received 8 798 8 756
Interest paid (302) (292)
Profit before tax 52 911 46 837
Income tax expense (16 116) (15 218)
Profit for the year from continuing operations 36 795 31 619
Profit/(loss) from discontinued operation (net of
income tax) 3 135 (1 073)
Profit for the year 39 930 30 546
Other comprehensive income
Net change in fair value for available-for-sale
financial assets - (146)
Total comprehensive income for the year 39 930 30 400
Profit attributable to:
Ordinary and `N` ordinary shareholders 39 913 30 529
Preference shareholders 17 17
Profit for the year 39 930 30 546
Total comprehensive income attributable to:
Ordinary and `N` ordinary shareholders 39 913 30 383
Preference shareholders 17 17
Total comprehensive income for the year 39 930 30 400
Reconciliation of headline earnings
Profit/(loss) attributable to equity holders 39 913 30 529
Continuing operations 36 778 31 602
Discontinued operation 3 135 (1 073)
Adjusted for:
Loss on disposal of plant and equipment 673 917
Profit on sale of discontinued operation (122) -
Headline earnings/(loss) 40 464 31 446
Continuing operations 37 451 32 519
Discontinued operation 3 013 (1 073)
Basic earnings per ordinary share (cents) 195.6 150.0
Continuing operations 180.2 155.3
Discontinued operation 15.4 (5.3)
Headline earnings per ordinary share (cents) 198.3 154.5
Continuing operations 183.5 159.8
Discontinued operation 14.8 (5.3)
Diluted basic earnings per ordinary share (cents) 194.8 148.9
Continuing operations 179.5 154.1
Discontinued operation 15.3 (5.2)
Diluted headline earnings per ordinary share (cents) 197.5 153.4
Continuing operations 182.8 158.6
Discontinued operation 14.7 (5.2)
Dividend cover (based on headline earnings) 3.8 3.9
Weighted average number of equity shares on which earnings
per share is based (`000) 20 410 20 352
Weighted average number of equity shares on which
diluted earnings share is based (`000) 20 487 20 500
STATEMENT OF FINANCIAL POSITION
Consolidated (R`000)
2011 2010
(Reviewed) (Audited)
ASSETS
Non-current assets 80 584 67 847
Property, plant and equipment 69 328 57 394
Investment property 5 776 3 511
Intangible assets 1 455 2 107
Other investments 576 576
Deferred taxation 3 449 4 259
Current assets 243 827 222 487
Inventories 71 099 57 994
Accounts receivable from holding company 282 100
Trade and other receivables 21 562 21 005
Forward exchange contracts - 522
Income tax receivable 2 035 1 235
Cash and cash equivalents 148 849 141 631
Total assets 324 411 290 334
EQUITY AND LIABILITIES
Capital and reserves 268 113 235 866
Share capital 1 777 1 777
Share premium 25 836 25 847
Treasury shares (1 762) (2 216)
Other reserves 968 900
Retained earnings 241 294 209 558
Non-current liabilities 12 828 12 492
Post-retirement liability 3 251 3 351
Accrued operating lease liability 9 577 9 141
Current liabilities 43 470 41 976
Provisions 467 560
Trade and other payables 42 283 40 795
Forward exchange contracts 602 -
Income tax payable 118 621
Total equity and liabilities 324 411 290 334
STATEMENT OF CHANGES IN EQUITY
Consolidated (R`000)
2011 2010
(Reviewed) (Audited)
Share capital 1 777 1 777
Share premium
Opening balance 25 847 25 847
Share repurchases (11) -
Closing balance 25 836 25 847
Treasury shares
Opening balance (2 216) (2 216)
Net effect of take up of employee share options 454 -
Closing balance (1 762) (2 216)
Other reserves
Opening balance 900 954
Share-based payment 68 92
Fair value adjustment for available-for-sale
financial assets - (146)
Closing balance 968 900
Retained earnings
Opening balance 209 558 186 152
Profit for the year 39 930 30 546
Preference dividends paid (17) (17)
Ordinary dividends paid (8 177) (7 123)
Closing balance 241 294 209 558
ABRIDGED STATEMENT OF CASH FLOW
Consolidated (R`000)
2011 2010
(Reviewed) (Audited)
Operating profit before working capital changes 66 510 53 315
Working capital changes (11 702) 11 287
Interest received 8 798 8 756
Interest paid (302) (292)
Dividends paid (8 194) (7 140)
Dividends received 12 16
Taxation paid (17 828) (13 328)
Net cash inflow from operating activities 37 294 52 614
Additions to property, plant and equipment (31 191) (25 166)
Proceeds on disposal of property, plant and equipment 672 175
Net cash outflows from investing activities (30 519) (24 991)
Proceeds on delivery of shares by share trust 454 -
Repurchase of own shares (11) -
Net cash inflows from financing activities 443 -
Net increase in cash and cash equivalents 7 218 27 623
Cash and cash equivalents at the beginning of the year 141 631 114 008
Cash and cash equivalents at the end of the year 148 849 141 631
OTHER INFORMATION
Capital commitments (authorised - not contracted for) 53 436 16 998
Gross profit margin from continuing operations 56.3% 56.4%
Operating profit margin from continuing operations 8.7% 8.3%
Retail segment operating profit margin 9.2% 9.4%
SEGMENTAL REPORTING
Consolidated (R`000)
2011 2010
(Reviewed) (Audited)
Revenue
Total external retail revenue 509 381 462 179
Retail segment revenue 511 601 464 277
Intersegment revenue earned from continuing operations (1 548) (1 446)
Intersegment revenue earned from discontinued operation (672) (652)
Total external property revenue 605 128
Property segment revenue 4 758 1 973
Intersegment revenue earned from continuing operations (3 635) (1 365)
Intersegment revenue earned from discontinued operation (518) (480)
Dividends received 12 16
Interest received 8 798 8 756
Segment revenue from continuing operations 518 796 471 079
Total external manufacturing revenue 34 990 19 911
Manufacturing segment revenue 35 067 21 170
Less: Intersegment revenue (77) (1 259)
Segment revenue from discontinued operation 34 990 19 911
Total revenue 553 786 490 990
Segment operating profit/(loss)
Retail segment profit 46 906 43 678
Property segment profit/(loss) 1 331 (681)
Group services operating loss* (3 834) (4 640)
Group profit from continuing operations 44 403 38 357
Manufacturing operating profit/(loss) - discontinued
operation 4 354 (1 490)
Total group operating profit 48 757 36 867
Depreciation and amortisation
Retail 15 417 13 518
Property 179 118
Segment depreciation and amortisation from
continuing operations 15 596 13 636
Manufacturing - discontinued operation 259 358
Total depreciation and amortisation 15 855 13 994
Segment assets
Retail 200 355 171 860
Property 10 571 9 236
Group services* 102 113 95 658
Segment assets from continuing operations 313 039 276 754
Manufacturing - discontinued operation 11 372 13 580
Total segment assets 324 411 290 334
Segment liabilities
Retail 48 239 46 622
Property 751 30
Group services* 4 196 4 180
Segment liabilties from continuing operations 53 186 50 832
Manufacturing - discontinued operation 3 112 3 636
Total segment liabilities 56 298 54 468
Capital expenditure
Retail 30 559 25 159
Property 602 -
Capital expenditure from continuing operations 31 161 25 159
Manufacturing - discontinued operation 30 7
Total capital expenditure 31 191 25 166
* Group services include corporate costs.
NOTES
1. Basis of preparation
These reviewed results have been prepared in terms of the South African
Companies Act (71 of 2008, as amended), IFRS, IAS 34: Interim Financial
Reporting, the JSE Listings Requirements and the AC 500 Standards as issued by
the Accounting Practices Board or its successor. These reviewed results have
been prepared under the supervision of the group financial director, Damian
Johnson (CA(SA)).
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 2010.
3. Reclassification
The group is presenting the sale of its manufacturing division as a discontinued
operation in the current year and where applicable certain comparative
information has been reclassified.
4. 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 2011.
Commentary
The group continued to perform well despite the unfavourable global and domestic
economic conditions which resulted in a difficult trading environment.
As anticipated in the interim report, turnover growth in the second half of the
financial year slowed down following the high level of performance during the
first six months of the year. Accordingly, and in line with expectations, group
revenue from continuing operations for the year was restricted to an increase of
10.1% over the previous year with an increase in operating profit from
continuing operations of 15.8%. Total group operating profit increased by 32.3%.
The property and manufacturing segments contributed positively and profit was
further supplemented by a marginal increase in interest earned and a slightly
lower effective rate of tax.
Group profit after tax amounted to R39.9 million compared to R30.5 million last
year, an increase of 30.7%.
In line with performance, headline earnings improved by 28.3% to 198.3 cents per
share. Earnings increased by 30.4% to 195.6 cents per share.
Retail
The Queenspark retail segment achieved R508.1 million in turnover, an
improvement of 10.2% on last year.
As a consequence of the reallocation of intersegment rentals, retail operating
profit was restricted to an improvement of 7.4% over the comparative period.
Had the reallocation not taken place the retail segment operating profit would
have improved by 10.8%.
Manufacturing
The manufacturing segment posted a positive return for the year. This followed
losses in the previous years where interventions were required to downsize the
business as a consequence of a decrease in orders from the major customer.
The group disposed of the manufacturing facility on 30 June 2011 in line with
group strategy.
Prospects
It is likely that the South African economy will be faced with slower growth and
higher inflation during the remainder of the current year. This scenario will
result in extended low levels of confidence in consumers as they continue to
feel the effects of a depressed economy.
The group benefited in the 2011 and prior financial years from the Duty Credit
Certificate Scheme. This benefit ceased during the course of last year and as a
result there will be a materially negative impact on operating profit in the
2012 financial year.
Although Queenspark is presently experiencing a reasonable level of acceptance
of its current ranges in stores, we anticipate the achievement of turnover and
profit targets will remain challenging.
Dividend
The board is recommending to shareholders that the dividend on the ordinary and
`N` ordinary shares be increased to 52 cents per share. This will result in a
dividend cover of 3.8 times.
Shareholders will be asked to consider and approve the directors` dividend
recommendation at the annual general meeting of the company to be held on 16
November 2011.
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 CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
8 September 2011
Directors: ML Krawitz+ (Chairman), CEA Radowsky (Chief Executive Officer),
DS Johnson, JC O`Brien, PM Naylor*, RV Orlin* and RW Rees (UK)*
+Non-executive * Independent non-executive
Registered office
Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
Secretary
AA Hodgkinson
Transfer secretaries
Computershare Investor Services (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001
Sponsor
Java Capital
Websites
www.queenspark.com
www.rextrueform.com
Date: 08/09/2011 08:03:20 Produced by the JSE SENS Department.
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