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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 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
