| Thu 3 Mar 2005, 16:40 | | RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2004 |
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Rex Trueform Clothing Company Limited - Profit Announcement For The Six Months
Ended 31 December 2004
REX TRUEFORM CLOTHING COMPANY LIMITED
(Registration number 1937/009839/06)
Share codes: RTO - RTN - RTOP
ISIN: ZAE000006144 - ZAE000009700 - ZAE000006151
PROFIT ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2004
* Group operating profit up 45% * Retail revenue up 7%
* HEPS up 43% * Manufacturing losses continued
INCOME STATEMENT
Consolidated (R`000)
Six months ended Year ended
December 31 June 30
2004 2003 2004
(Unaudited) (Unaudited) (Audited)
Revenue 193 279 196 961 373 612
Net operating income before
depreciation 19 893 14 431 15 110
Depreciation 5 944 4 844 10 303
Net operating income 13 949 9 587 4 807
Net interest received 2 232 1 263 2 622
Net income 16 181 10 850 7 429
Income from associated company 26 417 551
Income before taxation 16 207 11 267 7 980
Taxation 5 496 3 793 3 129
Income after taxation 10 711 7 474 4 851
Preference dividends 8 8 16
Net income attributable to
ordinary and `N` ordinary
shareholders 10 703 7 466 4 835
Earnings/headline earnings per
share (cents) 53.2 37.1 24.0
Weighted average number of equity
shares on which
earnings per share is based (000) 20 105 20 105 20 105
Number of equity shares in issue
(000) 20 105 20 105 20 105
ABRIDGED CASH FLOW STATEMENT
Cash generated by operations 19 782 14 562 15 375
Working capital changes (5 052) 3 884 44 912
Interest received (net) 2 232 1 263 2 622
Taxation (3 795) (4 311) (4 675)
Dividends paid (4 029) (4 029) (4 037)
Net cash inflows from operations 9 138 11 369 54 197
Net cash outflows from investing
activities including
additions to fixed assets (9 201) (7 698) (15 899)
Net decrease in cash (63) 3 671 38 298
Cash at the beginning of the
period 62 022 24 006 24 006
Effect of foreign exchange rate
changes 21 18 (282)
Cash at the end of the period 61 980 27 695 62 022
OTHER INFORMATION
Capital expenditure 9 685 7 646 17 067
Capital commitments
Contracted for 1 571 4 408 1 065
Authorised - not contracted for 2 034 2 010 8 476
Current ratio 9.2 8.3 5.0
STATEMENT OF CHANGES IN EQUITY
Share capital 1 776 1 776 1 776
Share premium 22 758 22 758 22 758
Non-distributable reserves
Opening balance (147) 135 135
Foreign exchange rate changes 21 18 (282)
(126) 153 (147)
Distributable reserves
Opening balance 149 291 148 477 148 477
Profit after taxation 10 711 7 474 4 851
Dividends (4 029) (4 029) (4 037)
155 973 151 922 149 291
BALANCE SHEET
Consolidated (R`000)
Six months ended Year ended
at December 31 at June 30
2004 2003 2004
(Unaudited) (Unaudited) (Audited)
Assets
Non-current assets 44 634 38 643 42 809
Fixed assets 41 214 35 052 37 959
Investments (unlisted) 2 318 2 347 2 182
Deferred taxation 1 102 1 244 2 668
Current assets 152 275 156 984 163 481
Inventory 59 657 94 413 73 626
Accounts receivable 30 616 34 876 27 833
Taxation 22 - -
Cash 61 980 27 695 62 022
Total assets 196 909 195 627 206 290
Equity and liabilities
Capital and reserves 180 381 176 609 173 678
Share capital 1 776 1 776 1 776
Share premium 22 758 22 758 22 758
Non-distributable reserves (126) 153 (147)
Distributable reserves 155 973 151 922 149 291
Current liabilities 16 528 19 018 32 612
Accounts payable 14 967 16 919 30 584
Taxation 1 561 991 1 424
Amount owing to holding company - 1 108 604
Total equity and liabilities 196 909 195 627 206 290
SEGMENTAL REPORTING
Revenue
Manufacturing 121 698 138 941 244 613
Less: Intersegment sales (76 969) (81 037) (153 140)
External sales 44 729 57 904 91 473
Retail 148 550 139 057 282 139
Total 193 279 196 961 373 612
Net operating income/(loss)
Manufacturing
- Rex Trueform Salt River (3 466) (2 360) (12 782)
- Rex Trueform Atlantis 1 983 1 560 2 908
Retail 13 628 8 981 13 412
Consolidation adjustment 1 804 1 406 1 269
Total 13 949 9 587 4 807
Depreciation included in net
operating income
Manufacturing 1 834 1 797 3 829
Retail 4 110 3 047 6 474
Total 5 944 4 844 10 303
Total segment assets (excl cash)
Manufacturing 65 880 109 157 105 823
Retail 45 297 80 295 65 623
Consolidation adjustment (20 676) (25 111) (32 028)
Total 90 501 164 341 139 418
Total segment liabilities
Manufacturing (10 052) (9 560) (24 109)
Retail (20 998) (26 972) (32 705)
Consolidation adjustment 16 083 18 505 25 626
Total (14 967) (18 027) (31 188)
Capital expenditure
Manufacturing 996 2 810 3 536
Retail 8 689 4 836 13 531
Total 9 685 7 646 17 067
Notes:
1. Basis of preparation
This report complies with the requirements of AC127, the South African
Statement of Generally Accepted Accounting Practice, governing interim
financial reporting.
The information presented in this report has neither been audited nor reviewed
by the external auditors.
2. Accounting policies
This report has been prepared on the historical cost basis and in accordance
with the accounting policies which were applied in the preparation of the
group`s annual financial statements for the year ended 30 June 2004.
3. Preference dividend
A dividend on the 6% cumulative preference shares for the six months ended 31
December 2004 in the amount of R8 400 was declared in November 2004 and paid on
28 December 2004.
COMMENT
Group Results
Results for the half year to December 2004 reflect a complex and challenging
business environment.
Net operating income improved to R13,949 million from R9,587 million last year,
an increase of 45,5%. Headline earnings improved to 53,2 cents per share from
37,1 cents per share last year, an increase of 43,4%.
Significant losses in manufacturing operations were compensated for by the
sound performance of Queenspark.
Clothing Manufacturing
In the 2004 year-end report shareholders were advised that the company`s
manufacturing operations had also suffered the problems experienced world-wide
by the clothing and textile industry in competing against clothing produced in
the Far East.
Since then there has been a further strengthening of the rand against the US
dollar, which together with the local wage structure and high raw material
input costs, has favoured the importation into South Africa of clothing
produced in Far Eastern countries. It has also mitigated against the export of
clothing manufactured in this country to the USA and elsewhere.
Historically, the core of Rex Trueform`s manufacturing operations has been the
tailoring of men`s suits, jackets and trousers at the Salt River plant. The
strong rand and the general shift in consumer preferences towards casual wear
have severely affected this production, contributing to consistent losses in
the manufacturing division.
Management has made determined and exhaustive efforts to generate production
volumes to sustain the Salt River manufacturing operation. Unfortunately,
further deterioration in the business environment in the recent past has
compelled the company to consult with labour representatives regarding
rationalisation. One option being considered is the possible closure of the
Salt River tailoring facility.
The Rex Trueform Atlantis manufacturing plant is mainly geared toward producing
unstructured garments for Queenspark. In spite of cost pressures, it
continues to operate efficiently and is expected to be profitable at the
year-end.
Retail Operations
Queenspark remains a major customer of Rex Trueform manufacturing but was
nonetheless obliged to continue purchases of fashionable imported clothing to
remain competitive in the retail field.
A 6,8% year-on-year growth in turnover was accompanied by a meaningful
improvement in margins. Costs remained under firm control. This resulted in an
improvement in operating income to R13,628 million, 51,7% higher than last
year.
New stores were opened during the period at Clearwater Mall - Johannesburg,
Musgrave - Durban and La Lucia - Durban all of which are trading successfully.
Improved performance has also been achieved through the relocation of the
Centurion Mall store and the expansion of the Sandton City Shopping Centre
store.
Prospects
Queenspark is enjoying considerable success with the launch of its winter 2005
range. Current indications are that trading performance will remain favourable.
Subject to no deterioration in trading conditions, Queenspark is expected to
deliver a net operating profit of approximately R9,6 million in the second
half of the financial year.
The manufacturing division is expected to incur a net operating loss of
approximately R6,4 million in the traditionally weaker second half of the year.
Neither of the above forecasts for retail or manufacturing operations have been
reviewed nor reported on by Rex Trueform`s external auditors.
Notwithstanding the challenges in the manufacturing environment, future
prospects for the group are positive, underpinned by a growing and successful
retail business and a refocused manufacturing operation.
Signed on behalf of the Board:
GM Thomas CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
3 March 2005
Transfer Secretaries: Registered Office:
Computershare Investor Rex Buildings
Services 2004 (Pty) Ltd 263 Victoria Road
70 Marshall Street Salt River
Johannesburg, 2001 Cape, 7925
Directors: GM Thomas (Chairman), ML Krawitz (Deputy Chairman),
CEA Radowsky (Chief Executive Officer), G Bradley, V Hardy (British),
AA Hodgkinson, JC O`Brien, PE Shub, PM Naylor, CR Hirschsohn
Secretary: African & Overseas Enterprises Limited
Date: 03/03/2005 04:36:39 PM
Produced by the JSE SENS Department
