Wrap Text
Unaudited condensed consolidated interim group results for the six months ended 31 December 2015
REX TRUEFORM CLOTHING COMPANY LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA) (REGISTRATION NUMBER 1937/009839/06)
("the company" or "the group" or "Rex Trueform")
JSE SHARE CODES: RTO - RTN - RTOP
ISIN: ZAE000006144 - ZAE000009700 - ZAE000006151
UNAUDITED CONDENSED CONSOLIDATED INTERIM GROUP RESULTS
for the six months ended 31 December 2015
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
ASSETS
Non-current assets 148 602 148 689 151 146
Property, plant and equipment 4.1 51 319 118 207 54 467
Investment property 4.1 73 177 3 510 72 539
Intangible assets 4.4 18 717 16 039 17 396
Other investments 576 524 576
Deferred tax asset 4 813 10 409 6 168
Current assets 185 655 162 306 174 235
Inventories 71 601 68 334 70 084
Amounts receivable from holding company 37 52 -
Trade and other receivables 16 347 24 635 20 978
Accrued operating lease asset* 2 425 - 1 926
Forward exchange contracts 4.3 4 383 1 498 883
Income tax receivable - 264 303
Cash and cash equivalents 90 862 67 523 80 061
Total assets 334 257 310 995 325 381
EQUITY AND LIABILITIES
Capital and reserves 261 960 249 654 261 078
Share capital 4.5 1 777 1 777 1 777
Share premium 25 836 25 836 25 836
Treasury shares (1 133) (1 133) (1 133)
Other reserves 4.6 1 051 1 081 1 051
Retained earnings 234 429 222 093 233 547
Non-current liabilities 22 856 19 157 20 916
Post-retirement liability 2 044 2 001 2 041
Accrued operating lease liability 18 677 15 533 17 084
Deferred tax liability 2 135 1 623 1 791
Current liabilities 49 441 42 184 43 387
Trade and other payables 48 895 42 152 43 368
Income tax payable 546 32 19
Total equity and liabilities 334 257 310 995 325 381
* Trade and other receivables as at 31 December 2014 included an amount of R1 160 000
relating to an accrued operating lease asset.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
% change R'000 R'000 R'000
Revenue 7.1 296 236 276 578 536 626
Turnover 6.5 286 042 268 660 516 086
Cost of sales (128 640) (121 537) (225 698)
Gross profit 7.0 157 402 147 123 290 388
Other income 7 639 10 505 17 029
Other operating costs 4.9 (148 611) (141 735) (277 483)
Operating profit 3.4 16 430 15 893 29 934
Dividend income 20 18 18
Finance income 2 535 1 259 3 493
Finance costs (73) (98) (163)
Profit before tax 10.8 18 912 17 072 33 282
Income tax expense (5 467) (4 723) (9 470)
Profit for the period 8.9 13 445 12 349 23 812
Other comprehensive income
Actuarial loss on post-retirement defined
benefit plan - - (82)
Fair value adjustment on available-for-sale
financial assets - - 52
Total comprehensive income for the period 13 445 12 349 23 782
Profit attributable to:
Ordinary and 'N' ordinary shareholders 13 437 12 341 23 795
Preference shareholders 8 8 17
Profit for the period 13 445 12 349 23 812
Total comprehensive income attributable to:
Ordinary and 'N' ordinary shareholders 13 437 12 341 23 765
Preference shareholders 8 8 17
Total comprehensive income for the year 13 445 12 349 23 782
Reconciliation of headline earnings
Profit attributable to equity holders 13 437 12 341 23 795
Adjusted for:
Profit from disposal of property, plant
and equipment - (3 236) (3 345)
Impairment loss on equipment and shopfittings - - 554
Headline earnings 13 437 9 105 21 004
Basic earnings per ordinary share (cents) 8.9 65.3 60.0 115.6
Headline earnings per ordinary share (cents) 47.7 65.3 44.2 102.0
Diluted basic earnings per ordinary share
(cents) 65.2 59.9 115.5
Diluted headline earnings per ordinary share
(cents) 65.2 44.2 101.9
Weighted average number of equity shares on
which earnings per share is based (000's) 20 582 20 582 20 582
Weighted average number of equity shares on
which diluted earnings per share is based (000's) 20 609 20 613 20 609
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
Notes R'000 R'000 R'000
Share capital 4.5 1 777 1 777 1 777
Share premium 25 836 25 836 25 836
Treasury shares (1 133) (1 133) (1 133)
Other reserves 4.6
Opening balance 1 051 1 081 1 081
Fair value adjustment of available-for-
sale financial assets - - 52
Actuarial loss on post-retirement defined
benefit plan - - (82)
Closing balance 1 051 1 081 1 051
Retained earnings
Opening balance 233 547 209 752 209 752
Profit for the period 13 445 12 349 23 812
Preference dividends paid/declared (8) (8) (17)
Ordinary dividends paid (12 555) - -
Closing balance 234 429 222 093 233 547
Total capital and reserves 261 960 249 654 261 078
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
R'000 R'000 R'000
Operating profit before working capital changes 26 828 23 849 51 620
Working capital changes 8 981 9 406 4 855
Interest income 2 535 1 259 3 493
Interest expense (73) (98) (163)
Dividends paid (12 555) - (17)
Dividends received 20 18 18
Income tax paid (2 938) (392) (782)
Net cash inflows from operating activities 22 798 34 042 59 024
Additions to property, plant and equipment (7 686) (20 321) (31 775)
Additions to investment properties (2 290) - (5 295)
Additions to intangible assets (2 021) (2 295) (3 823)
Proceeds from disposal of property, plant and equipment - 433 471
Proceeds from disposal of investment property - - 5 795
Net cash outflows from investing activities (11 997) (22 183) (34 627)
Net increase in cash and cash equivalents 10 801 11 859 24 397
Cash and cash equivalents at the beginning of
the period 80 061 55 664 55 664
Cash and cash equivalents at the end of the period 90 862 67 523 80 061
GROUP SEGMENTAL REPORTING
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue
Total external retail revenue 286 801 269 884 517 834
Retail segment revenue 288 702 272 994 522 342
Intersegment revenue earned (1 901) (3 110) (4 508)
Total external property revenue 6 880 5 417 11 417
Property segment revenue 9 358 7 585 15 942
Intersegment revenue earned (2 478) (2 168) (4 525)
Dividends received 20 18 18
Interest income 2 535 1 259 3 493
Profit on sale of property - - 3 864
Total group revenue 296 236 276 578 536 626
Segment operating profit
Retail segment profit 14 942 13 912 26 807
Property segment profit 4 048 4 479 7 825
Group services operating loss (2 560) (2 498) (4 698)
Total group operating profit 16 430 15 893 29 934
Segment profit before tax
Retail segment profit before tax 14 942 13 912 26 807
Property segment profit before tax 4 048 4 479 7 825
Group services loss before tax (78) (1 319) (1 350)
Total group profit before tax 18 912 17 072 33 282
Depreciation and amortisation
Retail 11 508 9 619 20 121
Property 1 678 1 251 2 103
Total group depreciation and amortisation 13 186 10 870 22 224
Segment assets
Retail 223 255 220 345 216 705
Property 80 222 78 001 79 204
Group services* 30 780 12 649 29 472
Total group segment assets 334 257 310 995 325 381
Segment liabilities
Retail 64 545 54 556 55 895
Property 3 412 4 039 4 987
Group services* 4 340 2 746 3 421
Total group segment liabilities 72 297 61 341 64 303
Capital expenditure
Retail 9 683 8 552 21 433
Property 2 314 14 064 19 460
Total group capital expenditure 11 997 22 616 40 893
* Group services include corporate costs.
OTHER INFORMATION
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2015 2014 2015
Unaudited Unaudited Audited
Capital commitments
Authorised - not contracted for (R'000) 16 482 16 929 35 950
Authorised - contracted for (R'000) 6 803 18 193 5 566
Gross profit margin (%) 55.0 54.8 56.3
Operating profit margin (%) 5.7 5.9 5.8
Retail segment operating profit margin (%) 5.2 5.2 5.2
Net asset value (R) 12.71 12.11 12.67
NOTES
1 Basis of presentation of financial statements
These unaudited condensed consolidated interim financial statements for the
six months ended 31 December 2015 have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards ("IFRS"), the interpretations
adopted by the International Accounting Standards Board, the South African Institute
of Chartered Accountants Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Reporting Pronouncements as issued by the
Financial Reporting Standards Council and include disclosure as required by
IAS 34: Interim Financial Reporting, the Companies Act of South Africa 2008 and
the JSE Listings Requirements.
The financial statements have been prepared using accounting policies that comply
with IFRS and which are consistent with those applied in the preparation of the
financial statements for the year ended 30 June 2015.
2 Unaudited results
These results have not been reviewed nor audited by the group's auditors. The
unaudited condensed consolidated interim financial statements have been
prepared under the supervision of Damian Johnson CA(SA) and were approved by the
board of directors on 3 March 2016.
3 Preference dividend
A dividend on the 6% cumulative preference shares for the six months ended
31 December 2015 in the amount of R8 400 was declared by the board of directors
on 14 December 2015 and paid on 11 January 2016.
4 Note to the financial results
4.1 Property, plant and equipment - During the prior year there was a
reclassification from property, plant and equipment to investment property.
This property was previously owner occupied, but was reclassified on
1 January 2015 when Queenspark Proprietary Limited moved to a smaller space
within the building, resulting in the previously occupied space being rented
out to third parties.
4.2 Financial instruments - The carrying value of financial instruments which are
short term in nature, settled within 12 months, substantially approximates
the fair value.
The carrying value of financial instruments which are long term in nature,
settled after 12 months, substantially approximates the fair value.
4.3 Forward exchange contracts - The increase in forward exchange contracts
is due to the significant weakening in the Rand.
4.4 Intangible assets - The increase relates to the implementation of a new ERP system.
4.5 Share capital is comprised of the following:
31 December 31 December 30 June
2015 2014 2015
R'000 R'000 R'000
Ordinary share capital 1 497 1 497 1 497
Preference share capital 280 280 280
1 777 1 777 1 777
4.6 Other reserves is comprised of the following:
Share-based payment reserves 568 568 568
Other reserves 483 513 483
1 051 1 081 1 051
COMMENTARY
Group results
The group produced satisfactory results for the six months ended 31 December 2015.
Revenue increased by 7.1% to R296.2 million (2014: R276.6 million). The gross profit
which is generated from the retail segment increased by 7.0% to R157.4 million
(2014: R147.1 million).
Other income increased by 15.0%, if the previous year's once-off profit of R3.9 million
from the sale of the property situated in Atlantis is excluded from such other income.
Trading expenses, which were a key area of focus, were contained and increased by 4.9%.
The above resulted in the operating profit increasing by 3.4% to R16.4 million
(2014: R15.9 million). Excluding the prior period profit on sale of the property,
the operating profit increased by 36.6%. This increase was mainly due to the improvement
in the trading performance of the property segment.
Profit after tax increased by 8.9% to R13.4 million (2014: R12.3 million), resulting
in the basic earnings per share increasing by 8.9%. Headline earnings per share
(which does not take into account the once-off profit on sale of the property in the
prior period) increased by 47.7%.
Retail (Queenspark)
Queenspark, while operating in a challenging market, increased turnover during the
period by 6.5% to R286.0 million (2014: R268.7 million). The gross profit margin
increased marginally to 55% (2014: 54.8%). This, together with the containment of costs,
contributed to the 7.4% increase in operating profit which increased to R14.9 million
(2014: R13.9 million).
Key business initiatives being introduced include the recent implementation of the
new enterprise resource planning ("ERP") system at the head office and distribution
centre. Queenspark is in the process of rolling out the new point-of-sale system
(connected to the ERP system) at its retail stores.
Property
The operating profit of this segment amounted to R4.0 million. The previous period's
operating profit of R4.5 million includes the R3.9 million profit on the sale of the
property.
Prospects
Retail (Queenspark)
The clothing retail market is expected to remain under pressure due to various factors
that include the sluggish economy. The cost of goods imported is subject to the
weakening of the Rand. Going forward the weaker Rand will likely put pressure on
gross margins.
Initiatives being considered and introduced mainly focus on turnover growth and are
predominantly aimed at improving the performance over the medium to long term. The
recent implementation of the ERP system is expected to provide benefits in the 2017
financial year and thereafter. The company recently started selling its product online
through the Zando website. This is part of the company's strategy towards servicing a
larger customer base and is showing signs of potential.
Property
The group continues to focus on the development of the feasibility studies in respect
of the undeveloped investment properties located in Salt River (Cape Town).
Signed on behalf of the board
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
4 March 2016
Non-executive directors: ML Krawitz (Chairman), HJ Borkum*, PM Naylor*, RV Orlin* and PE Shub
* Independent non-executive director
Executive directors: CEA Radowsky (Chief Executive Officer), DS Johnson (Financial Director)
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
Secretary: AT Snitcher
Transfer secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
Sponsor: Java Capital
Date: 04/03/2016 01:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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