“This year marks the first full financial year in which the group is truly diversified and not dependent on any one of its operating segments thus ensuring its resilience against adverse economic circumstances,” Damien Franklin, the chief financial officer of Rex Trueform said in the 2023 annual report.
Rex Trueform is a South Africa-based investment holding company, with units including retail, with clothing brands such as Queenspark; property; water infrastructure and group services.
Franklin, said, “We shall continue to use our entrepreneurial flexibility to capitalise on investment opportunities and optimise existing investments in order to maximise shareholder returns, and grow acquisitively and organically over time.”
This despite the financial year under review being characterised by low economic growth, high inflation and high interest rates that inevitably resulted in reduced consumer and business spending across the economy
The net profit after tax was R85.8 million in 2023 from R55.7m the prior year resulting in an earnings per share of 394.8 cents from 282.4c in 2022. Headline earnings per share increased to 399.4 cents from 262.5c.
The group’s investment in capital expenditure of R205.1m from R13.3m was made during the financial year.
A significant portion related to the acquisition of two industrial properties in Epping Industria, Cape Town.
Meanwhile, R45.8m versus R12.7m the prior year in capital expenditure was incurred in the retail segment in order to supplement the store portfolio expansion as well as the right sizing of existing stores.
In its retail segment the store roll-out plan resulted in an addition of 15 new stores, with three unprofitable stores being permanently closed and six stores being downsized.
Total retail sales increased by 18.5% to R708.3m, this combined with the decrease in leased store area saw a 21.3% increase in trading density to R27 601 (2022: R22 755) per m2.
The group’s property portfolio significantly expanded during the financial year through the acquisition of seven fully tenanted industrial properties in Epping Industria, Cape Town.
Revenue, comprising rental income and tenant recoveries, increased by 110.9% to R70.3m resulting in an increase in operating profit of 100.1% to R31.3m.
In its media and broadcasting segment, the group acquired 63.71% of Telemedia, a broad-based media broadcast facility manufacturer and supplier, on March 1, 2022. The current financial year reflected the first full financial year of trading results from Telemedia. The segment contributed R126.9m, in the four months ended June 2022 to group revenue.
Looking ahead, Franklin said the group was seeking to ensure that operating segments had resilient financials and a competitive advantage in their respective industries. In response to the widespread energy crisis, the group was investing in alternative energy sources in order to reduce the current and future adverse impact on operations and profitability.
Chairperson Patrick Naylor said, “We are continuing on the road of our long-term strategy to expand the retail footprint and to significantly diversify the group amidst an ever-changing business environment.”
He said in the past year, the retail division had once again achieved an improvement in the results when compared to the previous year. Customer sentiment was unfortunately negatively affected by continued load shedding, multiple interest rate hikes as well as the substantial increases in the cost of fuel, water, electricity and food, which resulted in a reduction in the retail sales gross profit.
CEO Marcel Golding said the group had expanded its investments in the area of property, and media and broadcasting over the past year.
“These property acquisitions have been functional to our businesses – a new and more efficient distribution centre for Queenspark has dramatically improved the logistics for stores and stock replenishment,“ he said.
The same would apply for the acquisition of the property precinct where Telemedia was located.
“With a new CEO, Patrick Conroy, and an energised management team, Telemedia is destined to grow and diversify beyond its traditional focus,” he said.
However, he said Rex Trueform handled the retail portfolio in the coming years “is going to be our biggest challenge”.
The Queenspark brand remains relatively strong and its promise to our customers had remained consistent over the years.
“The overwhelming concern is how we grow and expand this franchise, and how we add to retail in a more general way,” he added.