| Thu 8 Sep 2005, 16:14 | | Rex Trueform - Reviewed results for the year ended |
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Rex Trueform - Reviewed results for the year ended 30 June 2005
Rex Trueform Clothing Company Limited
(Registration number 1937/009839/06)
Share codes: RTO - RTN - RTOP
ISIN: ZAE000006144 - ZAE000009700 - ZAE000006151
(Incorporated in the Republic of South Africa)
Reviewed Results Announcement for the year ended 30 June 2005
* Closure of Salt River loss-making manufacturing operations
* Headline earnings increased from 19.3 cents to 62.5 cents per share
* Significantly improved profitability at Queenspark
* Dividend increased to 25 cents per share
* Strong balance sheet to finance expansion of Queenspark
INCOME STATEMENT
Consolidated (R`000)
2005 2004
(Reviewed) (Audited)
Continuing operations
Turnover 312 549 309 745
Net operating income 23 912 15 708
Net interest received 4 616 2 622
Net income 28 528 18 330
(Loss)/income from associated company (101) 551
Income before taxation 28 427 18 881
Taxation 9 997 6 489
Profit for the year from continuing operations 18 430 12 392
Discontinued operation
Loss for the year from discontinued
operation (note 4) (39 880) (8 502)
(Loss)/profit for the year (21 450) 3 890
Preference dividends 16 16
Net (loss)/income attributable to ordinary
and `N` ordinary shareholders (21 466) 3 874
Reconciliation of headline earnings
Attributable (loss)/earnings (21 466) 3 874
Loss arising from discontinuance 34 037 -
Headline earnings 12 571 3 874
Headline earnings per share (cents) 62.5 19.3
(Loss)/earnings per share (cents) (106.8) 19.3
Proposed dividend per share (cents) 25.0 20.0
Dividend cover (based on headline earnings) 2.5 1.0
Weighted average number of equity
shares on which earnings per share
is based (000) 20 105 20 105
Number of equity shares in issue (000) 20 105 20 105
OTHER INFORMATION
Capital expenditure 17 929 17 067
Capital commitments
Contracted for 5 881 1 065
Authorised - not contracted for 1 878 8 476
Current ratio 4.4 4.5
Notes
1. Basis of preparation
This report complies with the South African Statements of Generally Accepted
Accounting Practice.
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 in the prior year, except as follows:
3. Prior year adjustments
3.1 Operating lease payments
The change in the manner of recognising lease payments arises as a result of a
change in interpretation of IAS 17 (AC105) by South African entities in order
to align the South African practice with that applied internationally. The
effect of the revised interpretation is that operating lease payments will be
recognised on a straight-line basis over the lease term, and not as cash is
paid. The required adjustment has been made as required by IAS (AC103) with
the necessary restatement of comparative figures. This change, when applied
consistently in the 2005 and 2004 financial years, had the following impact:
2005 2004
Effect on opening distributable reserves (R`000) - (1 657)
Effect on (loss)/profit for the year (R`000) (439) (663)
Effect on earnings and headline earnings per share
(cents per share) (2.2) (3.3)
The effects disclosed are net of deferred tax at the rates prevailing during
the relevant year.
3.2 Post-retirement benefits
The prior year retained income brought forward on 1 July 2003 has been reduced
by R5.6 million to correct a fundamental error arising from the non-accrual of
post-retirement benefits. This error did not have a significant impact on the
2004 comparative income statement.
4. Discontinued operation
An agreement has been concluded in terms of which Rex Trueform has closed its
Salt River factory and retrenched 984 employees. A lease agreement has been
entered into for the lease of the property and plant of the Salt River
factory.
2005 2004
Turnover 50 866 63 867
Loss of discontinued operation 8 230 12 146
Loss arising from discontinuance 41 873 -
Retrenchment 29 422 -
Impairment 5 916 -
Stock 5 252 -
Other 1 283 -
Loss before taxation 50 103 12 146
Taxation 10 223 3 644
Loss for the year from discontinued operation 39 880 8 502
BALANCE SHEET
Consolidated (R`000)
2005 2004
(Reviewed) (Audited)
Assets
Non-current assets 49 561 43 821
Property, plant and equipment 37 334 37 958
Investments (unlisted) 2 446 2 181
Deferred taxation 9 781 3 682
Current assets 125 422 163 463
Inventory 40 273 73 626
Debtors 26 502 27 815
Cash 58 647 62 022
Total assets 174 983 207 284
Equity and liabilities
Capital and reserves 140 387 165 508
Share capital 1 776 1 776
Share premium 22 758 22 758
Non-distributable reserves 219 (147)
Distributable reserves 115 634 141 121
Non-current liabilities
Post-retirement liability (note 3.2) 6 191 5 850
Current liabilities 28 405 35 926
Accounts payable 28 149 33 898
Taxation - 1 424
Amount owing to holding company 256 604
Total equity and liabilities 174 983 207 284
SEGMENTAL REPORTING
Turnover
Manufacturing 215 689 244 613
Less: intersegment sales (139 051) (153 140)
External sales 76 638 91 473
Retail 286 777 282 139
Total 363 415 373 612
Net operating (loss)/income
Manufacturing (50 707) (10 189)
Retail 22 367 13 412
Consolidation adjustment 2 148 1 269
Total (26 192) 4 492
Depreciation included in net
operating (loss)/income
Manufacturing 3 253 3 829
Retail 8 867 6 474
Total 12 120 10 303
Total segment assets (excluding cash)
Manufacturing 50 814 105 823
Retail 62 929 65 623
Consolidation adjustment (10 462) (32 028)
Total 103 281 139 418
Total segment liabilities
Manufacturing (22 929) (24 109)
Retail (18 351) (32 705)
Consolidation adjustment 6 683 25 626
Total (34 597) (31 188)
Capital expenditure
Manufacturing 1 057 3 536
Retail 16 872 13 531
Total 17 929 17 067
ABRIDGED CASH FLOW STATEMENT
Cash (utilised)/generated by operations (4 373) 14 260
Working capital changes 25 835 45 457
Interest received (net) 4 616 2 622
Taxation (8 125) (4 658)
Dividends paid (4 037) (4 037)
Net cash inflows from operations 13 916 53 644
Net cash outflows from investing activities
including additions to
property, plant and equipment (17 291) (15 628)
Net (decrease)/increase in cash (3 375) 38 016
Cash at the beginning of the year 62 022 24 006
Cash at the end of the year 58 647 62 022
STATEMENT OF CHANGES IN EQUITY
Share capital 1 776 1 776
Share premium 22 758 22 758
Non-distributable reserves
Opening balance (147) 135
Foreign exchange rate changes 366 (282)
219 (147)
Distributable reserves
Opening balance 141 121 148 477
Prior year adjustments - (7 209)
141 121 141 268
(Loss)/profit after taxation (21 450) 3 890
Dividends (4 037) (4 037)
115 634 141 121
Total capital and reserves 140 387 165 508
COMMENT
Continuing operations
These comprise Queenspark and the associated Atlantis factory. Substantially
improved margins were achieved in Queenspark on a modest increase in sales.
Operating costs have been well contained and stock levels have shown a
pleasing reduction. New stores have been opened at La Lucia Mall and Musgrave
in Durban and Clearwater in Johannesburg. Queenspark`s `flagship` store in
Sandton has been increased in size to cope with the growing demand. Plans for
the current year include the opening of new stores at George and Paarl in the
Western Cape and in the Eastgate Shopping Centre in Johannesburg. All of these
projects can be financed without recourse to borrowings.
Discontinued operation
In agreement with the trade union concerned and the management of Brimstone
Clothing Corporation (Pty) Limited, which owns House of Monatic, the company
has retrenched 984 workers at its Salt River factory. Associated with this,
and subject to approval by the Competition Board, the manufacturing facilities
will be leased to Brimstone on very favourable terms thus enabling it to re-
employ a number of the workforce, all of whom have been paid full retrenchment
benefits at rates well in excess of the statutory rates. The company will
finally cease manufacturing at Salt River by the end of 2005.
Prospects
Plans are in motion to capitalise on further opportunities presented by the
strong consumer market, which shows signs of sustainability.
Prospects for the restructured group have improved substantially following the
closure of the loss-making Salt River manufacturing operations, further
enhanced by the expansion of the retail capacity referred to above. After the
payment of retrenchment costs, almost R58,6 million in cash remains in the
company to support further growth initiatives.
Dividend
In view of the increase in the level of headline earnings and the strength of
the group balance sheet the board has decided to recommend to shareholders
that the dividend on the Ordinary and `N` Ordinary shares be increased from 20
cents to 25 cents per share. This will result in a dividend cover of
approximately 2.5 times. Accordingly, shareholders will be asked to consider,
and if deemed fit, approve the directors` recommendation that a dividend of
25.0 cents per share be declared on the ordinary and `N` ordinary shares at
the annual general meeting of the company to be held on 14 November 2005. An
announcement detailing the terms of the dividend declaration will be made
immediately following the annual general meeting.
Review by independent 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 the 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 by mid-October 2005.
Signed on behalf of the board:
GM Thomas (Chairman) CEA Radowsky (Chief Executive Officer)
Cape Town
8 September 2005
Transfer Secretaries:
Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street,
Johannesburg, 2001
Registered Office:
Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
Directors: GM Thomas (Chairman), CEA Radowsky (Chief Executive Officer),
G Bradley, V Hardy (British), CLR Hirschsohn, AA Hodgkinson, ML Krawitz,
PM Naylor, JC O`Brien, PE Shub
Secretary: African & Overseas Enterprises Limited
Date: 08/09/2005 04:11:24 PM
Produced by the JSE SENS Department
