Wrap Text
Reviewed condensed consolidated preliminary financial results for the year ended 30 June 2016
REX TRUEFORM CLOTHING COMPANY LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA) (REGISTRATION NUMBER 1937/009839/06)
JSE SHARE CODES: RTO - RTN - RTOP
ISIN: ZAE000006144 - ZAE000009700 - ZAE000006151
("the company" or "the group" or "Rex Trueform")
REVIEWED CONDENSED CONSOLIDATED PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2016
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at
30 June 30 June
2016 2015
Reviewed Audited
R'000 R'000
ASSETS
Non-current assets 155 705 151 146
Property, plant and equipment 53 355 54 467
Investment property 71 849 72 539
Intangible assets 23 432 17 396
Other investments 576 576
Deferred tax asset 6 493 6 168
Current assets 182 984 174 235
Inventories 61 319 70 084
Trade and other receivables 39 097 22 904
Forward exchange contracts - 883
Income tax receivable 1 112 303
Cash and cash equivalents 81 456 80 061
Total assets 338 689 325 381
EQUITY AND LIABILITIES
Capital and reserves 260 718 261 078
Share capital 1 777 1 777
Share premium 25 836 25 836
Treasury shares (1 133) (1 133)
Other reserves 1 502 1 051
Retained earnings 232 736 233 547
Non-current liabilities 21 897 20 916
Post-retirement liability 1 614 2 041
Accrued operating lease liability 18 104 17 084
Deferred tax liability 2 179 1 791
Current liabilities 56 074 43 387
Trade and other payables 53 860 43 368
Forward exchange contracts 2 176 -
Income tax payable 38 19
Total equity and liabilities 338 689 325 381
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year ended Year ended
30 June 30 June
2016 2015
% Reviewed Audited
change R'000 R'000
Revenue 4.1 558 626 536 626
Turnover 4.2 537 588 516 086
Cost of sales (248 937) (225 698)
Gross profit (0.6) 288 651 290 388
Other income (7.7) 15 726 17 029
Other operating costs 5.5 (292 854) (277 483)
Operating profit (61.5) 11 523 29 934
Dividend income 20 18
Finance income 5 292 3 493
Finance costs (172) (163)
Profit before tax (49.9) 16 663 33 282
Income tax expense (4 903) (9 470)
Profit for the period (50.6) 11 760 23 812
Other comprehensive income:
Actuarial gain/(loss) on post-retirement defined benefit plan 451 (82)
Fair value adjustment on available-for-sale financial assets - 52
Total comprehensive income for the period 12 211 23 782
Profit attributable to:
Ordinary and "N" ordinary shareholders 11 743 23 795
Preference shareholders 17 17
Profit for the period 11 760 23 812
Total comprehensive income attributable to:
Ordinary and "N" ordinary shareholders 12 194 23 765
Preference shareholders 17 17
Total comprehensive income for the period 12 211 23 782
Reconciliation of headline earnings
Profit attributable to equity holders 11 743 23 795
Adjusted for:
Profit from disposal of property, plant and equipment (50) (3 345)
Impairment (reversal)/loss on equipment and shopfittings (554) 554
Headline earnings 11 139 21 004
Basic earnings per ordinary share (cents) (50.6) 57.1 115.6
Headline earnings per ordinary share (cents) (47.0) 54.1 102.0
Diluted earnings per ordinary share (cents) (50.6) 57.0 115.5
Diluted headline earnings per ordinary share (cents) (47.0) 54.0 101.9
Weighted average number of equity shares on which
earnings per share is based (000's) 20 582 20 582
Weighted average number of equity shares on which
diluted earnings per share is based (000's) 20 613 20 609
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
30 June 30 June
2016 2015
Reviewed Audited
R'000 R'000
Share capital 1 777 1 777
Share premium 25 836 25 836
Treasury shares (1 133) (1 133)
Other reserves 1 502 1 051
Opening balance 1 051 1 081
Actuarial (loss)/gains on post-retirement defined benefit plans 451 (82)
Gain on available-for-sale instruments - 52
Retained earnings 232 736 233 547
Opening balance 233 547 209 752
Profit for the year 11 760 23 812
Preference dividends paid (17) (17)
Ordinary dividends paid (12 554) -
Total capital and reserves 260 718 261 078
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended Year ended
30 June 30 June
2016 2015
Reviewed Audited
R'000 R'000
Operating profit before working capital changes 38 257 51 620
Working capital changes 3 947 4 855
Interest received 5 292 3 493
Interest paid (172) (163)
Dividends paid (12 571) (17)
Dividends received 20 18
Income tax paid (5 630) (782)
Net cash inflows from operating activities 29 143 59 024
Additions to property, plant, equipment and investment property (20 288) (37 070)
Additions to intangible assets (7 685) (3 823)
Proceeds from disposal of property, plant, equipment
and investment property 225 6 266
Net cash outflows from investing activities (27 748) (34 627)
Net increase in cash and cash equivalents 1 395 24 397
Cash and cash equivalents at the beginning of the year 80 061 55 664
Cash and cash equivalents at the end of the year 81 456 80 061
GROUP SEGMENTAL REPORTING
Year ended Year ended
30 June 30 June
2016 2015
Reviewed Audited
R'000 R'000
Revenue
Total external retail revenue 539 129 517 834
Retail segment revenue 542 987 522 342
Intersegment revenue earned (3 858) (4 508)
Total external property revenue 14 185 11 417
Property segment revenue 19 277 15 942
Intersegment revenue earned (5 092) (4 525)
Dividends received 20 18
Interest income 5 292 3 493
Profit on sale of property - 3 864
Total group revenue 558 626 536 626
Segment operating profit
Retail segment profit 9 372 26 807
Property segment profit 8 450 7 825
Group services operating loss (6 299) (4 698)
Total group operating profit 11 523 29 934
Depreciation and amortisation
Retail 20 118 20 121
Property 3 466 2 103
Total group depreciation and amortisation 23 584 22 224
Segment assets
Retail 223 584 216 705
Property 79 042 79 204
Group services* 36 063 29 472
Total group segment assets 338 689 325 381
Segment liabilities
Retail 68 856 55 895
Property 7 485 4 987
Group services* 1 630 3 421
Total group segment liabilities 77 971 64 303
Capital expenditure
Retail 25 100 21 433
Property 2 873 19 460
Total group capital expenditure 27 973 40 893
* Group services include corporate costs.
OTHER INFORMATION
Year ended Year ended
30 June 30 June
2016 2015
Reviewed Audited
Capital commitments
Authorised - not contracted for (R'000) 20 786 35 950
Authorised - contracted for (R'000) 10 655 5 566
Gross profit margin (%) 53.7 56.3
Operating profit margin (%) 2.1 5.8
Retail segment operating profit margin (%) 1.7 5.2
Net asset value per share (R) 12.65 12.67
NOTES
1 REVIEW OF THE INDEPENDENT AUDITOR
These condensed consolidated preliminary financial statements of Rex Trueform Clothing
Company Limited for the year ended 30 June 2016 have been reviewed by the company's
auditors, KPMG Inc., who expressed an unmodified review conclusion. The auditor's
report does not necessarily report on all of the information contained in these
financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's engagement they should obtain a copy
of the auditor's report together with the accompanying financial statements from
the issuer's registered office.
2 BASIS OF PREPARATION
The condensed consolidated preliminary financial statements are prepared in accordance
with the requirements of the JSE Limited Listings Requirements for preliminary
reports and the requirements of the Companies Act of South Africa. The JSE Listings
Requirements require preliminary reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements as issued
by the Financial Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34: Interim Financial Reporting.
These reviewed financial statements have been prepared under the supervision of the
group financial director, Damian Johnson CA(SA).
3 ACCOUNTING POLICIES
The accounting policies applied in the preparation of the condensed consolidated
preliminary financial statements are in terms of IFRS and are consistent with those
applied in the previous consolidated annual financial statements.
4 NOTE TO THE FINANCIAL STATEMENTS
4.1 Intangible assets - The balance of intangible assets has increased during the
year due to the acquisition and implementation of a new IT ERP system.
4.2 Trade and other receivables - The balance of trade and other receivables has
increased at 30 June 2016 due to an increase in prepayments made in respect
of imported merchandise.
4.3 Financial instruments - Financial instruments included in trade and other
receivables, trade and other payables and forward exchange contract liabilities
are short term in nature, settled within 12 months, and the carrying value
substantially approximates the fair value.
COMMENTARY
GROUP RESULTS
The group's performance unfortunately did not meet expectations mainly due to the
performance of the retail segment, the volatility of the Rand and the unseasonably warm
winter. Consumer confidence and spending has been adversely impacted by, amongst other
things, the sluggish economy, the increase in living costs, the increase in interest
rates and regulatory changes to credit legislation introduced
during the year.
Revenue increased by 4.1% to R558.6 million (2015: R536.6 million). The gross profit
generated from the retail segment decreased by 0.6% to R288.7 million
(2015: R290.4 million). Other income, which includes rental income, decreased by 7.7%.
Other income increased by 19.5% if the prior year R3.9 million profit on the sale of the
Atlantis property is excluded. Trading expenses were contained and increased by 5.5%.
The above resulted in the operating profit decreasing by 61.5% to R11.5 million
(2015: profit of R29.9 million). The prior year operating profit includes an amount of
R3.9 million in respect of the profit on sale of the Atlantis property. Excluding the
prior year profit on sale of the Atlantis property, the operating profit decreased by
55.8%. Profit after tax decreased by 50.6% to R11.8 million (2015: profit of R23.8 million)
resulting in the earnings per share decreasing by 50.6%.
RETAIL (QUEENSPARK)
Queenspark, while operating in a challenging market, produced an operating profit of
R9.4 million compared to a R26.8 million operating profit in the prior period. Turnover
increased by a modest 4.2%, with the regulatory changes to credit legislation mostly
impacting the second half of the year.
The gross profit margin decreased to 53.7% (2015: 56.3%) impacted by the weakening of
the Rand. A new enterprise resource planning system was implemented during the year.
The company will focus on deriving benefits from this.
PROPERTY
The operating profit of this segment amounted to R8.5 million (2015: R7.8 million
which included the R3.9 million profit on sale of the non-strategic property located
in Atlantis). Excluding the impact of the prior year sale of the Atlantis property,
the segment operating profit increased by 113.3%. This improvement is driven by the
successful development of the Rex Trueform Office Park.
GROUP SERVICES
Group services costs increased by 34% to R6.3 million (2015: R4.7 million). This
increase included the once-off corporate costs relating to the recent comparable offer
made by a consortium to the company's ordinary and "N" ordinary shareholders.
Excluding the once-off costs, the group services costs increased by 7.9%.
PROSPECTS
RETAIL (QUEENSPARK)
The sale of the current summer season's stock during the first eight weeks of the 2017
financial year has been below expectations due to the difficult trading conditions.
During the 2016 financial year the company started selling its products on the Zando
website and results so far have been pleasing. This is part of the company's strategy
towards servicing a larger client base.
Various other initiatives are to be introduced going forward with a view to improving
turnover, however the tough economic trading conditions and regulatory changes to credit
legislation will, amongst other things, continue to impact the business in the short term.
PROPERTY
The business has yet to develop two further properties and has been considering various
development options during the year. The one property is classified as a Heritage site,
which limits the development opportunities and has caused a delay in the development
process. The business will continue to consider feasibilities with a view to developing
the properties.
DIVIDEND
The directors have proposed a distribution of 27 cents per share in respect of the
ordinary and "N" ordinary shares. Shareholders will be asked to approve this proposal
of the board at the annual general meeting of the company.
Signed on behalf of the board
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
8 September 2016
Directors: ML Krawitz** (Chairman), CEA Radowsky (Chief Executive Officer), DS Johnson (FD),
PM Naylor*, RV Orlin*, HJ Borkum* and MJA Golding**
* Independent non-executive ** Non-executive
PE Shub was a non-executive director of the company until her retirement on 15 August 2016.
On 2 September 2016 MJA Golding was appointed as a non-executive director of the company by
the board in order to fill the vacancy arising from the retirement of PE Shub.
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
Websites: http://www.queenspark.com - http://www.rextrueform.com
Date: 08/09/2016 04:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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