Jump in profit for Rex Trueform as store expansion continues
The owner of Queenspark opened eight new stores in its year to end-June, resulting in a 15.5% rise in turnover
Rex Trueform, which is controlled by a consortium led by trade unionist turned businessperson Marcel Golding, said on Monday that its focus on cutting costs and expanding its footprint resulted in a in a 77% jump in operating profit in its year to end-June.
The Queenspark owner opened eight new stores during the period, bringing its total to 77.
A focus on cost-cutting saw trading and employee costs decrease as a proportion of turnover, resulting in a 289.6% surge in operating profit to R32.6m for its retail segment. Headline earnings per share rose 17.5% to 73.1c.
Retail turnover rose 15.5% to R678.9m, while finance income surged 165.3% to R12.3m, due to loan funding granted to an associated entity.
Rex Trueform CEO Catherine Lloyd said on Wednesday that the company intended to open about eight stores in the current financial year, and had no imminent rationalisation plans.
“We continue to review opportunities to expand on our other assets in the water and property sectors,” she said. “In addition, we continue to assess new businesses with a view to the continued diversification of the Rex Trueform Group.”
Rex Trueform is in the midst of a strategic shift, and is looking to diversify from its retail business and property interests. The company acquired a 33.78% interest in SA Water Works (SAWW) in September 2018 for a nominal value of R125, although the company provided R125m in loan funding.
A new shareholder in SAWW was subsequently introduced, reducing Rex Trueform’s holding to 15.16%, although this was subsequently raised to 30% in February 2019, again at a nominal purchase price of R175.
The reduction in shareholding resulted in a R14.8m dilution loss on its investment, it said.
“Management considered the events giving rise to the changes in shareholding to be part of one indivisible transaction and in line with the purchase agreements originally entered into, which also afforded certain minority protections, as well as guaranteed board representation on SAWW and subsidiary boards,” the company said.
During the period the company’s net asset value per share rose 14.09% to R15.06. The company’s share price closed at R21 on Monday, having risen 5% so far in 2019.