Wrap Text
Unaudited interim condensed consolidated results for the six months ended 31 December 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")
UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS
for the six months ended 31 December 2016
HIGHLIGHTS
Revenue decreased by 5.2% to R280.9 million (31 December 2015: R296.2 million)
Operating profit decreased by 73.7% to R4.3 million (31 December 2015: R16.4 million)
Gross profit margin % increased to 55.1% (31 December 2015: 55.0%)
Headline earnings per share decreased by 65.3% to 22.7 cents (31 December 2015: 65.3 cents)
Earnings per share decreased by 68.2% to 20.7 cents (31 December 2015: 65.3 cents)
Net asset value per share decreased by 0.9% to 12.59 cents (31 December 2015: 12.71 cents)
Ordinary dividend per share paid amounted to 27 cents (31 December 2015: 61 cents)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Non-current assets 158 497 148 602 155 705
Property, plant and equipment 56 061 51 319 53 355
Investment property 72 027 73 177 71 849
Intangible assets 24 600 18 717 23 432
Other investments 576 576 576
Deferred tax asset 5 233 4 813 6 493
Current assets 171 600 185 655 182 984
Inventories 74 003 71 601 61 319
Amounts receivable from holding company - 37 -
Trade and other receivables (note 4.5) 23 464 16 347 35 878
Accrued operating lease asset 3 438 2 425 3 219
Forward exchange contracts - 4 383 -
Income tax receivable 1 050 - 1 112
Cash and cash equivalents 69 645 90 862 81 456
Total assets 330 097 334 257 338 689
EQUITY AND LIABILITIES
Capital and reserves 259 428 261 960 260 718
Share capital (note 4.2) 1 777 1 777 1 777
Share premium 25 836 25 836 25 836
Treasury shares (1 133) (1 133) (1 133)
Other reserves (note 4.3) 1 502 1 051 1 502
Retained earnings 231 446 234 429 232 736
Non-current liabilities 23 736 22 856 21 897
Post-retirement liability 1 614 2 044 1 614
Accrued operating lease liability 19 432 18 677 18 104
Deferred tax liability 2 690 2 135 2 179
Current liabilities 46 933 49 441 56 074
Trade and other payables 46 383 48 895 53 860
Forward exchange contracts 519 - 2 176
Income tax payable 31 546 38
Total equity and liabilities 330 097 334 257 338 689
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
% Unaudited Unaudited Audited
change R'000 R'000 R'000
Revenue (5.2) 280 913 296 236 558 626
Turnover (5.3) 270 740 286 042 537 588
Cost of sales (121 463) (128 640) (248 937)
Gross profit (5.2) 149 277 157 402 288 651
Other income 4.0 7 946 7 639 15 726
Other operating costs 2.9 (152 894) (148 611) (292 854)
Operating profit (73.7) 4 329 16 430 11 523
Dividend income 20 20 20
Finance income (12.9) 2 207 2 535 5 292
Finance costs (79) (73) (172)
Profit before tax (65.8) 6 477 18 912 16 663
Income tax expense (2 202) (5 467) (4 903)
Profit for the period (68.2) 4 275 13 445 11 760
Other comprehensive income:
Actuarial gain on post-retirement defined
benefit plan - - 451
Total comprehensive income for the period 4 275 13 445 12 211
Profit attributable to:
Ordinary and "N" ordinary shareholders 4 267 13 437 11 743
Preference shareholders 8 8 17
Profit for the period 4 275 13 445 11 760
Total comprehensive income attributable to:
Ordinary and "N" ordinary shareholders 4 267 13 437 12 194
Preference shareholders 8 8 17
Total comprehensive income for the period 4 275 13 445 12 211
Reconciliation of headline earnings
Profit attributable to equity holders 4 267 13 437 11 743
Adjusted for:
Loss/(profit) from disposal of property,
plant and equipment 398 - (50)
Impairment reversal on equipment
and shopfittings - - (554)
Headline earnings 4 665 13 437 11 139
Basic earnings per ordinary share (cents) (68.2) 20.7 65.3 57.1
Headline earnings per ordinary share
(cents) (65.3) 22.7 65.3 54.1
Diluted earnings per ordinary share
(cents) 20.7 65.2 57.0
Diluted headline earnings per ordinary
share (cents) 22.6 65.2 54.0
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) 20 613 20 609 20 613
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Share capital (note 4.2) 1 777 1 777 1 777
Share premium 25 836 25 836 25 836
Treasury shares (1 133) (1 133) (1 133)
Other reserves (note 4.3) 1 502 1 051 1 502
Opening balance 1 502 1 051 1 051
Actuarial gain on post-retirement defined
benefit plan - - 451
Retained earnings 231 446 234 429 232 736
Opening balance 232 736 233 547 233 547
Profit for the period 4 275 13 445 11 760
Preference dividends paid/declared (8) (8) (17)
Ordinary dividends paid (5 557) (12 555) (12 554)
Total capital and reserves 259 428 261 960 260 718
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Operating profit before working capital changes 16 755 26 828 38 257
Working capital changes (6 638) 8 981 3 947
Interest income 2 207 2 535 5 292
Interest expense (79) (73) (172)
Dividends paid (5 557) (12 555) (12 571)
Dividends received 20 20 20
Income tax paid (375) (2 938) (5 630)
Net cash inflows from operating activities 6 333 22 798 29 143
Additions to property, plant and equipment (11 876) (7 686) (17 539)
Additions to investment properties (1 973) (2 290) (2 749)
Additions to intangible assets (1 508) (2 021) (7 685)
Proceeds from disposal of property, plant
and equipment 152 - 225
Payment for acquisition of business (note 4.1) (2 939) - -
Net cash outflows from investing activities (18 144) (11 997) (27 748)
Net (decrease)/increase in cash and cash equivalents (11 811) 10 801 1 395
Cash and cash equivalents at the beginning
of the period 81 456 80 061 80 061
Cash and cash equivalents at the end of the period 69 645 90 862 81 456
GROUP SEGMENTAL REPORTING
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Revenue
Total external retail revenue 271 310 286 801 539 129
Retail segment revenue 273 418 288 702 542 987
Intersegment revenue earned (2 108) (1 901) (3 858)
Total external property revenue 7 376 6 880 14 185
Property segment revenue 9 893 9 358 19 277
Intersegment revenue earned (2 517) (2 478) (5 092)
Dividends received 20 20 20
Interest income 2 207 2 535 5 292
Total group revenue 280 913 296 236 558 626
Segment operating profit
Retail segment profit 3 174 14 942 9 372
Property segment profit 3 958 4 048 8 450
Group services operating loss (2 803) (2 560) (6 299)
Total group operating profit 4 329 16 430 11 523
Depreciation and amortisation
Retail 10 393 11 508 20 118
Property 1 808 1 678 3 466
Total group depreciation and amortisation 12 201 13 186 23 584
Segment assets
Retail 220 493 223 255 223 584
Property 79 828 80 222 79 042
Group services* 29 776 30 780 36 063
Total group segment assets 330 097 334 257 338 689
Segment liabilities
Retail 62 305 64 545 68 856
Property 5 192 3 412 7 485
Group services* 3 172 4 340 1 630
Total group segment liabilities 70 669 72 297 77 971
Capital expenditure
Retail 12 737 9 683 25 100
Property 2 620 2 314 2 873
Total group capital expenditure 15 357 11 997 27 973
* Group services include corporate costs.
OTHER INFORMATION
Six months Six months Year
ended ended ended
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
Capital commitments
Authorised - not contracted for (R'000) 10 218 16 482 20 786
Authorised - contracted for (R'000) 7 475 6 803 10 655
Gross profit margin (%) 55.1 55.0 53.7
Operating profit margin (%) 1.6 5.7 2.1
Retail segment operating profit margin (%) 1.2 5.2 1.7
Net asset value per share (R) 12.59 12.71 12.65
NOTES
1 Basis of presentation of financial statements
The unaudited condensed consolidated interim financial statements are prepared in
accordance with the requirements of the JSE Limited Listings Requirements and the
requirements of the Companies Act of South Africa. The JSE Listings Requirements
require interim 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 financial statements have been prepared using accounting policies that comply
with IFRS and which are consistent with those applied in the preparation of the
annual financial statements for the year ended 30 June 2016.
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 9 March 2017.
3 Preference dividend
A dividend on the 6% cumulative preference shares for the six months ended
31 December 2016 in the amount of R8 400 was declared by the board of directors
on 14 December 2016 and was paid on 16 January 2017.
4 Note to the financial results
4.1 Acquisition of business
A payment of R2 939 000 was made for the acquisition of the business operated
by Queenspark Proprietary Limited's Namibian franchisee effective 2 October 2016.
The purchase price is comprised of the following:
R'000
Intangible asset 1 100
Fixed assets 500
Inventory 1 339
2 939
4.2 Share capital is comprised of the following:
As at As at As at
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
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
4.3 Other reserves is comprised of the following:
As at As at As at
31 Dec 31 Dec 30 Jun
2016 2015 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Share-based payment reserves 568 568 568
Other reserves 934 483 934
1 502 1 051 1 502
4.4 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 approximate
the fair value.
4.5 Trade and other receivables
The balance of trade and other receivables has increased when compared to the
corresponding period partly due to an increase in the online partner trade
accounts receivable.
COMMENTARY
Group results
Rex Trueform Clothing Company Limited ("the company") and its subsidiaries
(collectively, "the group") performance was negatively influenced by the difficult
trading conditions, which mainly impacted the retail segment. Retail consumer
confidence and spending continued to be adversely impacted by, amongst other things,
the sluggish economy, the increase in living costs and regulatory changes to
credit legislation.
Revenue decreased by 5.2% to R280.9 million (2015: R296.2 million). The gross profit
generated from the retail segment decreased, in line with the decline in turnover,
by 5.2% to R149.3 million (2015: R157.4 million). Other income, which includes rental
income, increased by 4%. Trading expenses were contained and increased by 2.9%.
The above resulted in the operating profit decreasing by 73.7% to R4.3 million
(2015: R16.4 million). Profit after tax decreased by 68.2% to R4.3 million
(2015: R13.4 million) resulting in the earnings per share decreasing by 68.2%.
Retail (Queenspark)
Queenspark Proprietary Limited ("Queenspark") (through a wholly-owned subsidiary) has,
during the period, acquired the Queenspark retail store business operated by its
Namibian franchisee and has opened a further store in Namibia. The retail segment
comprises Queenspark and its Namibian subsidiary.
The retail segment, while operating in a challenging market, produced an operating
profit of R3.2 million (2015: R14.9 million). Turnover, impacted by the tough trading
environment, decreased by 5.3%. The gross profit margin remained stable at 55.1%
(2015: 55.0%). Costs were contained and increased by 1.9%.
Queenspark recently started selling its products on the Spree website with positive
results, with products now available on both the Zando and Spree online platforms.
A lay-by payment option has been implemented at stores in South Africa since
September 2016 and, although still in its infancy, uptake has been pleasing.
Property
The operating profit of this segment amounted to R4.0 million (2015: R4.0 million),
being impacted by certain once-off costs incurred during the period.
Prospects
Retail (Queenspark)
Queenspark will continue to be under severe pressure during the second half of the
year, as economic and market conditions are likely to remain difficult. Shareholders
are reminded that the second six months of the year are generally worse than the
first six months.
Queenspark will continue to focus on store growth. Further product categories are to
be added to existing ranges in an endeavour to improve performance. As a result of
Queenspark products being offered on both the Zando and Spree websites, Queenspark is
now able to service a larger client base. Knowledge gained from Queenspark's online
exposure will be leveraged in an endeavour to refine the offerings going forward.
The new IT Enterprise Resource Planning system caters, amongst other things, for the
improved capturing and analyses of customer and product data, which would inform
business decisions going forward. It is anticipated that these initiatives will
improve performance in the next financial year.
Property
The Rex Trueform Office Park will, as from 1 April 2017, be fully let. The group has
yet to develop two further properties. The one property is classified as a heritage site,
which limits development opportunities. Development options will continue to be
considered in respect of these properties.
Signed on behalf of the board
ML Krawitz CEA Radowsky
(Chairman) (Chief Executive Officer)
Cape Town
10 March 2017
Directors: ML Krawitz** (Chairman), CEA Radowsky (Chief Executive Officer),
DS Johnson (Financial Director), MJA Golding**, HJ Borkum*, PM Naylor* and RV Orlin*
** Non-executive * Independent 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 in order to fill the vacancy arising from the retirement of
PE Shub. MJA Golding retired as a director at the annual general meeting of the
company held on 17 November 2016 and was duly elected as a director by the shareholders.
Registered office: Rex Buildings, 263 Victoria Road, Salt River, Cape Town, 7925
Company secretary: AT Snitcher
Transfer secretaries: Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Sponsor: Java Capital
Website: http://www.queenspark.com - http://www.rextrueform.com
Date: 10/03/2017 11:47:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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