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INTERIM REPORT FOR THE SIX MONTHS
ENDED 28 FEBRUARY 1998
TREMATON CAPITAL INVESTMENTS LIMITED
(REGISTRATION NUMBER 97/08691/06)
INTERIM REPORT FOR THE SIX MONTHS
ENDED 28 FEBRUARY 1998
GROUP INCOME STATEMENT
UNAUDITED
SIX MONTHS
28 FEBRUARY 1998
R'000
TURNOVER 384
NET INTEREST RECEIVED 6 014
NET MANAGEMENT EXPENSES 781
PROFIT BEFORE TAXATION 5 233
TAXATION 1 878
PROFIT AFTER TAXATION 3 355
SHARE OF ASSOCIATED COMPANIES' INCOME 1 738
PROFIT ATTRIBUTABLE TO ORDINARY SHAREHOLDERS 5 093
NUMBER OF ORDINARY SHARES IN ISSUE ('000) 52 500
EARNINGS PER SHARE (CENTS) 9,7
DILUTED EARNINGS PER SHARE (CENTS) 9,4
GROUP BALANCE SHEET UNAUDITED
SIX MONTHS
28 FEBRUARY 1998
R'000
CAPITAL EMPLOYED
SHARE CAPITAL AND PREMIUM 104 023
RETAINED INCOME 5 093
ORDINARY SHAREHOLDERS' INTEREST 109 116
CONVERTIBLE DEBENTURES 7 995
117 111
EMPLOYMENT OF CAPITAL
FIXED ASSETS 145
INVESTMENTS AND LOANS 30 283
CURRENT ASSETS
ACCOUNTS RECEIVABLE 954
CASH RESOURCES 88 021
88 975
CURRENT LIABILITIES
ACCOUNTS PAYABLE 414
TAXATION 1 878
2 292
NET CURRENT ASSETS 88 683
117 111
GROUP CASH FLOW STATEMENT UNAUDITED
SIX MONTHS
28 FEBRUARY 1998
R'000
CASH GENERATED BY OPERATIONS 4 705
NET CASH FLOW FROM INVESTING ACTIVITIES (28 702)
ACQUISITION OF FIXED ASSETS 157
ACQUISITION OF INVESTMENTS 28 545
NET CASH FLOW FROM FINANCING ACTIVITIES 112 018
ISSUE OF SHARES AT A PREMIUM NET OF LISTING EXPENSES 104 023
ISSUE OF CONVERTIBLE DEBENTURES 7 995
CASH AND CASH EQUIVALENTS AT END OF PERIOD 88 021
COMMENT
DURING THE SIX MONTHS ENDED 28 FEBRUARY 1998 THE GROUP EARNED R5 093 000 FOR
EARNINGS OF 9,7 CENTS PER SHARE. NO PROFIT FORECAST WAS CONTAINED IN THE
PRE-LISTING STATEMENT, AND AS THE COMPANY WAS REGISTERED IN JULY 1997, NO
COMPARATIVE FIGURES ARE PROVIDED. THE FIGURES INCLUDED IN THIS REPORT HAVE NOT
BEEN AUDITED BUT HAVE BEEN REVIEWED BY THE AUDITORS, KPMG.
THE TABLE BELOW INDICATES THE INVESTMENTS THAT HAVE BEEN MADE TO DATE TOGETHER
WITH THE EARNINGS THAT HAVE BEEN ACHIEVED FROM THESE INVESTMENTS AND INTEREST
EARNED ON CASH FUNDS. INCOME FROM INVESTMENTS HAS BEEN ACCOUNTED FOR ON AN
EQUITY ACCOUNTING BASIS.
INCOME (LOSS) INVESTMENT
R'000 (R'000)
INVESTMENTS
NWJ 1 896 15 550
SUPERCART (52) 13 000
TREMATON FINANCIAL SERVICES 529 10 000
CASH FUNDS 5 379 68 000
PROFIT BEFORE EXPENSES 7 752
NET MANAGEMENT EXPENSES 781
NET PROFIT BEFORE TAXATION 6 971
TAXATION 1 878
NET INCOME AFTER TAXATION 5 093
EARNINGS PER SHARE (CENTS) 9,7
NATAL WHOLESALE JEWELLERS ("NWJ")
FOLLOWING TREMATON'S INVESTMENT IN NWJ IN THE THIRD QUARTER OF 1997, NWJ HAS
OPENED FIVE NEW STORES IN GAUTENG AND ONE IN KWAZULU-NATAL. AT 28 FEBRUARY THE
CHAIN HAD EXPANDED TO EIGHTEEN OUTLETS. NWJ'S BUSINESS IS SEASONALLY BIASED TO
THE FIRST HALF OF THE YEAR AND THIS EXPANSION CONTRIBUTED TO A 62% GROWTH IN
CHRISTMAS SALES.
DESPITE THE DIFFICULT TRADING CONDITIONS WHICH PREVAILED GENERALLY IN THE
RETAIL SECTOR IN THE PERIOD UNDER REVIEW, NWJ'S EARNINGS GREW STRONGLY.
HOWEVER, THE INCREASE HAS NOT BEEN PROPORTIONAL TO THE MARKED TURNOVER INCREASE
AS A RESULT OF PROMOTIONAL COSTS ASSOCIATED WITH THE LAUNCH OF THE GAUTENG
OUTLETS AND THE COSTS OF ESTABLISHING A REGIONAL INFRASTRUCTURE IN THAT
PROVINCE.
SINCE THE REPORTING DATE TWO ADDITIONAL STORES HAVE BEEN OPENED AND AT LEAST A
FURTHER THREE WILL BE COMPLETED BEFORE THE YEAR END. A NUMBER OF STRATEGIC
GROWTH OPPORTUNITIES HAVE BEEN IDENTIFIED AND ARE BEING PURSUED BY NWJ. THE
INVESTMENT IN THE ESTABLISHMENT OF THE GAUTENG REGIONAL OFFICE AND IN THE
EXPANSION OF THE MANAGEMENT TEAM WILL FACILITATE A RAPID EXPANSION OF
ACTIVITIES. TREMATON AND THE OTHER SHAREHOLDERS HAVE AGREED TO INJECT
ADDITIONAL EQUITY CAPITAL INTO NWJ PRIOR TO YEAR END TO FUND THIS GROWTH.
SUPERCART
DURING THE PERIOD SUPERCART COMMENCED REPOSITIONING ITS ACTIVITIES FROM BEING A
SUPERMARKET TROLLEY DISTRIBUTOR IN SOUTH AFRICA TO AN INTERNATIONAL OPERATOR.
IT WILL NOW FOCUS ITS ACTIVITIES ON RESEARCH, PRODUCT DEVELOPMENT AND THE
MARKETING OF TROLLEYS AND WILL APPOINT REGIONAL LICENSEES TO FACILITATE SALES
AND DISTRIBUTION. MANUFACTURING WILL CONTINUE TO BE OUTSOURCED, BUT WHEREVER
POSSIBLE, SUPERCART WILL OWN THE MOULDS FROM WHICH THE TROLLEYS ARE
MANUFACTURED.
A NEW GENERATION OF MODELS, DESIGNED IN THE UK AND FRANCE, WHICH HAVE WORLDWIDE
APPLICATION ARE AT PROTOTYPE STAGE. MARKETING OF THESE NEW MODELS WILL COMMENCE
IN EUROPE, TOWARDS THE END OF 1998.
A BOSTON OFFICE HAS BEEN ESTABLISHED TO RELAUNCH THE PRODUCT IN THE NORTH
AMERICAN MARKET WHERE TROLLEY SALES EXCEED 2 MILLION UNITS PER ANNUM. NEW
MANUFACTURING ARRANGEMENTS HAVE BEEN CONCLUDED AND REGIONAL DISTRIBUTORS ARE
BEING APPOINTED. SALES HAVE ALREADY COMMENCED AND ARE LIKELY TO REACH
PROFITABLE LEVELS WITHIN TWELVE MONTHS.
IN SOUTH AFRICA, SUPERCART ENJOYS 40% OF THE MARKET AND ANTICIPATES INCREASING
THIS SHARE THROUGH ITS FULL MAINTENANCE LEASE RENTAL PROGRAMME WHICH WAS
INTRODUCED AT THE END OF 1997.
THE COSTS OF ESTABLISHING THE USA OFFICE, THE DEVELOPMENT COSTS IN EUROPE AND
THE COSTS OF INITIATING THE TROLLEY RENTAL BUSINESS IN SOUTH AFRICA HAVE ALL
CONTRIBUTED TO SUPERCART INCURRING A SMALL LOSS IN 1998. AN IMPROVEMENT IS
EXPECTED TO FEBRUARY 1999, BUT SUPERIOR LEVELS OF PROFITABILITY ARE ONLY
EXPECTED TOWARDS THE END OF THE NEXT FINANCIAL PERIOD FOLLOWING THE
INTRODUCTION OF THE NEW MODELS.
FINANCIAL SERVICES
TREMATON INTENDS EXPANDING ITS CORE INVESTMENT BANKING ACTIVITIES THROUGH THE
PROVISION OF A COMPREHENSIVE RANGE OF FINANCIAL SERVICES. A WHOLLY OWNED
SUBSIDIARY, TREMATON FINANCIAL SERVICES HAS BEEN ESTABLISHED WITH INITIAL SEED
CAPITAL OF R10 MILLION FOR THIS PURPOSE.
TREMATON ANTICIPATES ENTERING INTO JOINT VENTURES, ESTABLISHING OR ACQUIRING
BUSINESSES AND ACTIVITIES FOCUSED ON:
- INVESTMENT BANKING
- PRIVATE AND CORPORATE BANKING
- STRUCTURED FINANCE
- ASSET MANAGEMENT
- UNIT TRUST MANAGEMENT
- INSURANCE BROKING AND UNDERWRITING
NEGOTIATIONS ARE PROGRESSING SATISFACTORILY WITH A NUMBER OF PARTICIPANTS IN
THIS SECTOR AS WELL AS WITH THE REGULATORY AUTHORITIES.
TREMATON BELIEVES CONSIDERABLE OPPORTUNITY EXISTS FOR THE ESTABLISHMENT OF A
BANK BASED IN KWAZULU-NATAL FOCUSING PRIMARILY ON THE NEEDS OF HIGH NET WORTH
INDIVIDUALS, SMALL TO MEDIUM SIZED CORPORATES AND FACILITATING REGIONAL
INDUSTRIAL, TOURISM AND INFRASTRUCTURAL DEVELOPMENT. THIS BANK WILL ALSO
PROVIDE AN APPROPRIATE CORE FOR THE OTHER FINANCIAL SERVICES, COMPLEMENTING
THEIR ACTIVITIES. ACCORDINGLY, AN APPLICATION FOR A BANKING LICENCE HAS BEEN
SUBMITTED TO THE SA RESERVE BANK.
ADDITIONAL CAPITAL WILL BE RAISED AND CONTRIBUTED TO TREMATON FINANCIAL
SERVICES WHEN REQUIRED.
JOYTECH
SUBSEQUENT TO THE REPORTING DATE, TREMATON HAS ALSO INVESTED R14,5 MILLION TO
ACQUIRE A 27,1% SHAREHOLDING IN JOYTECH.
JOYTECH IS INVOLVED IN THE LEISURE AND ENTERTAINMENT SECTOR AND OPERATES 16
FAMILY ENTERTAINMENT CENTRES UNDER THE TRADE NAMES JOYLAND, STARGAMES,
WONDERLAND AND TIME OUT. THESE CENTRES ARE LOCATED IN SHOPPING MALLS AND HOTELS
AND PROVIDE SOPHISTICATED ELECTRONIC AND COMPUTERISED ENTERTAINMENT AIMED
MAINLY AT THE YOUNG ADULT AND FAMILY MARKET.
CONSIDERABLE OPPORTUNITY FOR GROWTH EXISTS BOTH ORGANICALLY AND BY WAY OF
ACQUISITION. JOYTECH IS CURRENTLY DEBT FREE AND ENJOYS A STRONG CASH FLOW WHICH
WILL FACILITATE THE PLANNED RAPID EXPANSION PROGRAMME BOTH NATIONALLY AND
INTERNATIONALLY.
FUTURE INVESTMENTS
TREMATON REMAINS COMMITTED TO ITS STRATEGY OF INVESTING EQUITY CAPITAL IN
EMERGING BUSINESSES WHICH HAVE EXCEPTIONAL GROWTH POTENTIAL, THE ABILITY TO BE
LISTED IN THE MEDIUM TERM AND WHICH MEET OUR INVESTMENT CRITERIA. TREMATON
CURRENTLY HAS R67 MILLION IN CASH RESOURCES AVAILABLE FOR FUTURE INVESTMENT.
A NUMBER OF INVESTMENT OPPORTUNITIES IN THE INFORMATION TECHNOLOGY, LEISURE,
RETAIL, ELECTRONICS AND PLASTICS INDUSTRIES ARE CURRENTLY UNDER INVESTIGATION.
DIVIDEND
NO INTERIM DIVIDEND HAS BEEN DECLARED AS TREMATON ANTICIPATES PAYING ONE
DIVIDEND PER ANNUM.
BY ORDER OF THE BOARD
H W NEL
SECRETARY
REGISTERED OFFICE: POSTAL ADDRESS:
25 MARRIOTT ROAD PO BOX 712
BEREA DURBAN
DURBAN, 4001 4000
TELEPHONE NO: (031) 309-8440
FAX NO: (031) 309-8432
DIRECTORS: N A LABUSCHAGNE (CHAIRMAN), M FARRER, R B MCELLIGOTT, M G MEEHAN,
R E SHERRELL
PRESS RELEASE NO 5.
TREMATON CAPITAL INVESTMENTS LTD
TREMATON ANNOUNCES ITS MAIDEN RESULTS AND A FURTHER ACQUISITION
TREMATON CAPITAL INVESTMENTS WHICH WAS LISTED ON THE JSE ON 20 NOVEMBER 1997
FOLLOWING ITS FORMATION IN JULY OF THAT YEAR HAS PRODUCED ITS FIRST INTERIM
RESULTS TO 28 FEBRUARY 1998. EARNINGS PER SHARE WERE 9.7 CENTS AND IN KEEPING
WITH THE POLICY OF ONLY PAYING A DIVIDEND AT YEAR END NO INTERIM DIVIDEND HAS
BEEN DECLARED.
EARNINGS FOR THE YEAR TOTALLED R5,1 MILLION OF WHICH 36% WAS DERIVED FROM THE
INVESTMENTS MADE IN SUPERCART AND NWJ, 10% FROM THE FLEDGLING INVESTMENT IN
FINANCIAL SERVICES WHICH WAS COMMENCED DURING THE PERIOD WHILST THE REMAINDER
WAS DERIVED FROM THE INVESTMENT OF THE GROUP'S SURPLUS FUNDS.
SPEAKING FROM TREMATON'S HEAD OFFICE IN DURBAN MARK FARRER SAID "DEAL FLOW HAD
BEEN PARTICULARLY GOOD AND INVESTIGATIONS INTO NEW INVESTMENT OPPORTUNITIES
CONTINUED AGGRESSIVELY DURING THE PERIOD. THIS HAD LED TO ONE NEW INVESTMENT
AND OTHERS WHICH COULD BE COMPLETED DURING THE NEXT REPORTING PERIOD. HOWEVER
THE MAIN FOCUS DURING THIS PERIOD HAD BEEN THE INITIATION OF THE FINANCIAL
SERVICES ACTIVITIES."
TREMATON INTENDS EXPANDING ITS CORE INVESTMENT BANKING ACTIVITIES THROUGH
ACQUISITIONS OR INVESTMENTS IN FINANCIAL SERVICES SO THAT THE GROUP BECOMES A
FOCUSSED AND POWERFUL FINANCIAL SERVICES PLAYER BOTH WITHIN KWAZULU-NATAL AND
BEYOND. CENTRAL TO FINANCIAL SERVICES WOULD BE A BANK FOCUSSING ON THE NEEDS OF
HIGH NET WORTH INDIVIDUALS, MEDIUM SIZE CORPORATES, STRUCTURED FINANCE AND
PROJECT FINANCE FOR THE MANY PROJECTS SCHEDULED FOR KWAZULU-NATAL AND TO THIS
END APPLICATION HAS BEEN MADE TO THE RESERVE BANK FOR A BANKING LICENCE.
SINCE THE REPORTING DATE TREMATON HAS ACQUIRED 27,5% OF JOYTECH (PTY) LTD FOR
R14,5 MILLION. JOYTECH OPERATES ENTERTAINMENT VENUES FOR YOUNG ADULTS AND
FAMILIES. THESE ENTERTAINMENT VENUES WHICH ARE LOCATED IN SHOPPING MALLS AND
HOTELS THROUGHOUT SOUTH AFRICA PROVIDE SOPHISTICATED ELECTRONIC VIDEO AND
COMPUTER GAMES AND ARE ENJOYING CONSIDERABLE GROWTH. THE EXPANSION OF LEISURE
TIME AND THE ADDITIONAL SPENDING POWER OF YOUNGER PEOPLE IN SOUTH AFRICA TODAY
HAS LED TO INCREASING DEMAND FOR ENTERTAINMENT IN SHOPPING MALLS WHICH PROVIDE
A SECURE ENVIRONMENT. THE EXPANSION OF SHOPPING CENTRES THROUGHOUT SOUTH AFRICA
AND THE INCREASING DEMAND FOR THIS FORM OF ENTERTAINMENT WILL LEAD TO
SIGNIFICANT EXPANSION OF THIS OPERATION. THERE ARE ALSO SIGNIFICANT
OPPORTUNITIES FOR OVERSEAS EXPANSION AND THESE ARE BEING EXPLORED AT PRESENT.
FOR MORE INFORMATION ON THIS PRESS RELEASE PLEASE CONTACT (031) 309 8440: MARK
FARRER - 083 628 5409
RICHARD MCELLIGOTT - 082 652 3047
MIKE MEEHAN - 083 325 2289
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