| Thu 21 Sep 2006, 12:00 | | Rex Trueform - Reviewed results for the year ended |
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RTN RTO RTOP
RTO
Rex Trueform - Reviewed results for the year ended 30 June 2006
Rex Trueform Clothing Company Limited
(Incorporated in the Republic of South Africa
- Registration number 1937/009839/06)
Share codes: RTO - RTN - RTOP
ISIN: ZAE000006144 - ZAE000009700 - ZAE000006151
REVIEWED RESULTS for the year ended 30 June 2006
INCOME STATEMENT
Consolidated (R"000)
2006 2005
(Reviewed) (Audited)
Continuing operations
Turnover 317 570 312 569
Net operating profit 16 260 23 815
Net interest received 3 531 4 616
Net profit 19 791 28 431
(Loss)/profit from associated company (159) (101)
Profit before taxation 19 632 28 330
Taxation 6 331 9 997
Profit for the year from
continuing operations 13 301 18 333
Discontinued operation
Loss for the year from
discontinued operation (Note 3) (4 553) (39 880)
Profit/(loss) for the year 8 748 (21 547)
Attributable to:
Ordinary and `N" ordinary shareholders 8 732 (21 563)
Preference shareholders 16 16
Profit/(loss) for the year 8 748 (21 547)
Reconciliation of headline earnings
Net profit/(loss) for the year 8 732 (21 563)
Loss arising from discontinuance (Note 3) 666 34 037
Headline earnings 9 398 12 474
Headline earnings per share (cents) 46.7 62.0
Earnings/(loss) per share (cents) 43.4 (107.3)
Diluted headline
earnings per share (cents) 45.6 60.5
Diluted earnings/(loss)
per share (cents) 42.4 (104.5)
Proposed dividend per share (cents) 25.0 25.0
Dividend cover
(based on headline earnings) 1.9 2.5
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) 20 113 20 105
Weighted average number
of equity shares used for
diluted earnings per share (000) 20 592 20 627
ABRIDGED CASH FLOW STATEMENT
Cash generated/(utilised) by operations 24 325 (8 275)
Working capital changes 13 234 29 741
Interest received (net) 3 531 4 616
Taxation (3 730) (8 128)
Dividends paid (5 042) (4 037)
Net cash inflows from operations 32 318 13 917
Net cash outflows
from investing activities
including additions to
property, plant and equipment (16 711) (17 292)
Net increase/(decrease) in cash 15 607 (3 375)
Cash at the beginning of the year 58 647 62 022
Cash at the end of the year 74 254 58 647
OTHER INFORMATION
Capital expenditure 16 990 17 929
Capital commitments
Contracted for 3 697 5 881
Authorised - not contracted for 5 377 1 878
Current ratio 5.4 5.1
NOTES
1. The group has changed its accounting policies to comply with
International Financial Reporting Standards ("IFRS") effective 1 July 2004.
All comparative information has been adjusted accordingly.
2. The weighted number of shares is lower than that in issue due to shares
held by the share incentive trust, which have been eliminated on
consolidation.
3. Discontinued operation
An agreement was concluded in June 2005 in terms of which Rex Trueform
closed its Salt River factory and retrenched approximately 900 employees. A
lease agreement has been entered into with Brimstone who will lease the
property and plant of the Salt River factory.
2006 2005
R"000 R"000
Turnover 10 429 50 846
Loss of discontinued operation (3 887) (8 230)
Loss arising from discontinuance (666) (41 873)
Loss before taxation (4 553) (50 103)
Taxation - (10 223)
Loss for the year from discontinued operation (4 553) (39 880)
4. Compliance with International Financial Reporting Standards ("IFRS")
In order to comply with IFRS the Group has adopted the following accounting
Policies:
4.1 The Group elected to utilise the following exemption in terms of IFRS 1
- First-time adoption. The fair value of certain buildings at the
transition date was adopted as the deemed cost and the applicable
depreciation adjusted accordingly. In order to determine depreciation, the
useful lives and residual values of properties will be reviewed on an
annual basis.
4.2 Share options (share-based payments) granted to employees after 7
November 2002 are valued and this value is charged to the income statement
over the expected life of the option.
These financial statements have been prepared on the standards that were
applicable on 30 June 2006, being the first time that the group has
prepared financial statements under IFRS.
BALANCE SHEET
Consolidated (R"000)
2006 2005
(Reviewed) (Audited)
Assets
Non-current assets 58 640 54 708
Property, plant and equipment 43 656 42 820
Investment property 3 511 -
Investments (unlisted) 2 340 2 446
Deferred taxation 9 133 9 442
Current assets 124 038 125 422
Inventory 38 530 40 273
Trade and other receivables 11 254 25 671
Taxation - 831
Cash 74 254 58 647
Total assets 182 678 180 130
Equity and liabilities
Capital and reserves 149 450 145 534
Share capital 1 776 1 776
Share premium 22 783 22 758
Non-distributable reserves 566 381
Distributable reserves 124 325 120 619
Non-current liabilities 10 181 10 123
Post-retirement liability 5 707 6 191
Operating lease liabilities 4 474 3 932
Current liabilities 23 047 24 473
Trade and other payables 21 586 24 217
Taxation 1 461 -
Amount owing to holding company - 256
Total equity and liabilities 182 678 180 130
SEGMENTAL REPORTING
Turnover
Manufacturing 164 565 215 689
Less: intersegment sales (128 121) (139 051)
External sales 36 444 76 638
Retail 291 555 286 777
Total (continuing and
discontinued operations) 327 999 363 415
Net operating profit/(loss)*
Manufacturing (8 867) (60 804)
Retail 20 670 32 367
Property (1 158) -
Group services 1 045 2 148
Total 11 690 (26 289)
Depreciation included in
net operating profit/(loss)
Manufacturing 1 134 3 253
Retail 11 491 8 867
Total 12 625 12 120
Total segment assets (excluding cash)
Manufacturing 41 669 56 297
Retail 52 094 62 929
Property 8 344 -
Consolidation adjustment (5 156) (10 462)
Total 96 951 108 764
Total segment liabilities
Manufacturing (18 731) (22 672)
Retail (17 076) (18 351)
Consolidation adjustment 4 040 6 683
Total (31 767) (34 340)
Capital expenditure
Manufacturing 1 233 1 057
Retail 15 757 16 872
Total 16 990 17 929
* During the prior year, procurement activities were included in the
manufacturing segment. For the current year this function is included in
the retail segment as it is now considered more closely aligned to retail
activities. The prior year figures have been restated accordingly.
STATEMENT OF CHANGES IN EQUITY
Share capital 1 776 1 776
Share premium 22 783 22 758
Non-distributable reserves
Opening balance 381 (147)
Foreign exchange rate changes 52 366
IFRS: share-based payments (Note 4.2) 133 162
566 381
Distributable reserves
Opening balance 120 619 141 121
IFRS: property,
plant and equipment (Note 4.1) - 5 147
IFRS: share-based payments (Note 4.2) - (65)
Restated opening balance 120 619 146 203
Profit/(loss) after taxation 8 748 (21 547)
Dividends (5 042) (4 037)
124 325 120 619
Total capital and reserves 149 450 145 534
COMMENT
The board is pleased to report that earnings for the year ended June 2006
amounted to 43.4 cents per share compared with a loss of 107.3 cents per
share in 2005. Headline earnings have however fallen short of expectations
having decreased by 25% to 46.7 cents per share.
Following a first half-year during which results were below expectations,
Queenspark produced a much improved performance in the second six months
with turnover improved by 9.5% over the previous year and by 8% on the
first hal of the year.
Queenspark has not reached its full potential having achieved a moderate
increase of 1.7% in turnover for the full year which did not reflect the
buoyant conditions prevailing in the South African market. Margins were
maintained but increased occupancy and employment costs and expenses
incurred in the maintenance of infrastructure to support a higher level of
turnover translated into a reduced contribution to group earnings compared
to last year.
Scaled-down manufacturing operations continued at Salt River during the
period July to December 2005 resulting in a manufacturing loss during that
period. Also, the restructured Atlantis factory has not progressed to a
level of efficiency whereby it is operating profitably. These negatives
have diluted the positive Queenspark contribution to earnings.
Prospects
Although consumer demand has possibly peaked, prospects for the retail
business, barring unforeseen circumstances appear sound.
The Queenspark Summer range, currently in stores has been well received and
turnover which is currently exceeding targets will be further boosted by
the additional turnover generated by at least three new stores which will
be opened during the first half of the current year.
The expected improvement in Queenspark"s performance together with a
containment of losses at the Atlantis factory should have a beneficial
effect on the overall group result in 2007. It must however be noted that
the new import quota system introduced by the authorities is likely to have
an adverse effect on profits.
Dividend
In view of the level of earnings and bearing in mind the strength of the
group"s balance sheet the board has decided to recommend to shareholders
that the dividend on the Ordinary and `N" Ordinary shares be maintained at
25.0 cents per share. This will result in a dividend cover of approximately
1.9 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 22 November 2006. 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 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 October 2006.
Signed on behalf of the board:
ML Krawitz (Chairman) CEA Radowsky (Chief Executive Officer)
Cape Town
21 September 2006
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
Rex Trueform Clothing Company Limited (Incorporated in the Republic of
South Africa - Registration number 1937/009839/06)
Share codes: RTO - RTN - RTOP
ISIN: ZAE000006144 - ZAE000009700 - ZAE000006151
Directors: ML Krawitz (Chairman), CEA Radowsky (Chief Executive Officer),
PM Naylor, JC O"Brien, PE Shub
Secretary: African & Overseas Enterprises Limited
Date: 21/09/2006 12:00:09 PM Produced by the JSE SENS Department
