Rex
TrueForm
Clothing
Company
Limited
________
TrueForm
Clothing
Company
Limited
________
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Chairmans Review
CHAIRMANS REVIEW
Overview
I am pleased to present this my first report as chairman of the group having been entrusted with this responsibility at the close of the year currently under review.
The major focus of the group is currently the Queenspark retail chain. Queenspark did not realise its full potential during the past year as turnover increased only marginally by 1,7% over last year and profitability was reduced. After a first half-year during which turnover and profits did not meet expectations, Queenspark achieved a substantially better result during the second half of the year with a turnover increase of 9,5% and a higher level of operating profit.
This is the first year end of the refocused group following the decision to close the Salt River factory in June 2005. This factory continued to be a burden on the group as scaled down operations continued during the period July to December 2005 resulting in a loss for that period. Also, certain costs associated with the maintenance of buildings and plant continued during the second half of the year. In addition the restructured Atlantis factory has not progressed to a level where it is operating profitably.
Certain of the buildings forming part of the Rex Trueform Salt River complex are not occupied and as such have not contributed to the income of the group during the year. The board is currently considering the best strategy for earning income or otherwise realising the value of these buildings.
Earnings and dividend
It is disappointing to report that, despite the buoyant consumer market, headline earnings for the year fell by 25% to 46,7 cents from last year’s 62,0 cents per share. Earnings per share, which are inclusive of all exceptional items, amount to 43,4 cents compared with a loss of 107,2 cents per share last year.
Bearing in mind the continued strength of the group’s balance sheet the board has recommended that the dividend on the ordinary and ‘N’ ordinary shares be maintained at last year's level of 25 cents per share. This equates to headline earnings covering this dividend by 1,9 times.
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