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TREMATON CAPITAL INVESTMENTS LIMITED
(REGISTRATION NUMBER 97/08691/06)
AUDITED GROUP RESULTS FOR THE FINANCIAL YEAR
ENDED 31 AUGUST 1998
GROUP INCOME STATEMENT
31 AUGUST 1998
R'000
SHARE OF RETAINED INCOME EARNED BY PRIVATE EQUITY INVESTMENTS 2 117
FEES AND INVESTMENT INCOME 731
NET INTEREST EARNED 12 087
PROFIT BEFORE EXPENSES 14 935
MANAGEMENT EXPENSES (2 775)
PROFIT BEFORE TAXATION 12 160
TAXATION (3 881)
NET INCOME 8 279
DIVIDEND DECLARED (1 575)
RETAINED INCOME FOR THE PERIOD 6 704
HEADLINE EARNINGS PER SHARE (CENTS) 15,8
FULLY DILUTED EARNINGS PER SHARE (CENTS) 15,9
DIVIDENDS PER SHARE (CENTS) 3,0
NUMBER OF SHARES IN ISSUE (000`S) 52 500
NUMBER OF SHARES IN ISSUE FULLY DILUTED (000`S) 56 498
NET ASSET VALUE PER SHARE
- AT BOOK VALUE (CENTS) 211
- BASED ON DIRECTORS VALUATION OF PRIVATE EQUITY
INVESTMENTS HELD AT YEAR END (CENTS) 235
GROUP BALANCE SHEET
31 AUGUST 1998
R'000
CAPITAL EMPLOYED
SHARE CAPITAL AND PREMIUM 104 023
RETAINED INCOME 6 704
ORDINARY SHAREHOLDERS` INTEREST 110 727
CONVERTIBLE DEBENTURES 7 995
118 722
EMPLOYMENT OF CAPITAL
COMPUTER AND OFFICE EQUIPMENT 649
PRIVATE EQUITY INVESTMENTS 52 992
LOANS 8 252
CURRENT ASSETS
ACCOUNTS RECEIVABLE 2 050
CASH RESOURCES 61 454
63 504
CURRENT LIABILITIES
ACCOUNTS PAYABLE 1 219
TAXATION 3 881
SHAREHOLDERS FOR DIVIDEND 1 575
6 675
NET CURRENT ASSETS 56 829
118 722
GROUP CASH FLOW STATEMENT
31 AUGUST 1998
R'000
NET CASH INFLOW GENERATED FROM OPERATING ACTIVITIES 9 027
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
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (59 848)
ACQUISITION OF COMPUTERS AND OFFICE EQUIPMENT (721)
LOANS (8 252)
PRIVATE EQUITY INVESTMENTS (50 875)
CASH AND CASH EQUIVALENTS AT END OF YEAR 61 197
REVIEW OF RESULTS
GROUP EARNINGS FOR THE YEAR AMOUNTED TO R8,3 MILLION EQUIVALENT TO 15,8 CENTS
PER SHARE. NO COMPARATIVE FIGURES HAVE BEEN PROVIDED AS THIS IS THE FIRST YEAR
OF OPERATIONS. A MAIDEN DIVIDEND OF 3 CENTS PER SHARE HAS BEEN DECLARED. THE
DIVIDEND IS COVERED 5,3 TIMES BY FULLY DILUTED EARNINGS OF 15,9 CENTS PER SHARE
SINCE ITS FORMATION AT THE BEGINNING OF THE FINANCIAL YEAR, TREMATON HAS
PURSUED ITS OBJECTIVE OF INVESTING PRIVATE EQUITY IN BUSINESSES WHICH HAVE
EXCEPTIONAL GROWTH POTENTIAL. IN ADDITION TO PRIVATE EQUITY INVESTMENTS,
TREMATON HAS BROADENED ITS SCOPE OF ACTIVITY TO INCLUDE FINANCIAL SERVICES AND
SUBSEQUENT TO THE YEAR END, INFORMATION TECHNOLOGY.
THE TABLE BELOW SUMMARISES THE INVESTMENTS WHICH WERE MADE IN THE YEAR TO
31 AUGUST 1998 TOGETHER WITH TREMATON'S SHARE OF EARNINGS THAT ACCRUED FROM
EACH OF THOSE INVESTMENTS FROM THE DATE OF ACQUISITION TO THE YEAR END.
DATE % HELD INCOME
INCOME OF BY (LOSS)
(R`000) ACQUISITION TREMATON (R`000)
PRIVATE EQUITY INVESTMENTS
NWJ 18 350 9/97 40,0 2 480
SUPERCART 10 000 11/97 32,5 (50)
JOYTECH 22 500 5/98 27,5 245
FINANCIAL SERVICES 10 025 9/97 100,0 2 343
CASH FUNDS 9 917
PROFIT BEFORE EXPENSES 14 935
PERFORMANCE OF PRIVATE EQUITY INVESTMENTS
NATAL WHOLESALE JEWELLERS (PTY) LIMITED ("NWJ")
NWJ'S RESULTS FOR THE YEAR WERE MOST SATISFACTORY WITH NET INCOME AFTER TAX
GROWING BY 22% TO R6,2 MILLION. THIS INCREASE WAS ACHIEVED DESPITE THE COSTS
INCURRED IN ESTABLISHING TWELVE NEW STORES AND A REGIONAL ADMINISTRATIVE OFFICE
IN GAUTENG WHERE THE MAJORITY OF STORE EXPANSION TOOK PLACE. AT YEAR END THE
CHAIN COMPRISED 24 OUTLETS. A FURTHER THREE HAVE SINCE BEEN OPENED CONFIRMING
THE GROUP'S CLAIM TO BEING ONE OF THE FASTEST GROWING JEWELLERY CHAINS IN SOUTH
AFRICA.
TREMATON'S INITIAL INVESTMENT IN NWJ WAS R15,5 MILLION. DURING THE YEAR THE
NWJ SHAREHOLDERS PROPORTIONATELY INVESTED A FURTHER R7 MILLION CAPITAL INTO THE
COMPANY TO FACILITATE ITS GROWTH. TREMATON'S INVESTMENT IN NWJ THUS ROSE BY
R2,8 MILLION TO R18,3 MILLION.
NOTWITHSTANDING THE DEPRESSED CONDITIONS CURRENTLY PREVAILING IN THE RETAIL
SECTOR, NWJ CONTINUES TO TRADE WELL AND ANTICIPATES A MARKED INCREASE IN
PROFITS IN THE FORTHCOMING YEAR. NWJ AIMS TO BE THE DOMINANT JEWELLERY CHAIN
IN SOUTH AFRICA BY DECEMBER 2002.
SUPERCART HOLDINGS (PTY) LIMITED ("SUPERCART")
SUPERCART IS NOT YET PROFITABLE WHILE IT IS IN THE PROCESS OF ESTABLISHING NEW
MODELS AND NEW MARKETS IN USA AND EUROPE. IN ADDITION, IT INCURRED LOSSES ON
THE START UP OF ITS TROLLEY RENTAL AND MAINTENANCE PROGRAM IN SOUTH AFRICA.
THIS HAS BEEN DISCONTINUED AND NEW MANAGEMENT APPOINTED. THE FOCUS IS NOW ON
NEW TROLLEY SALES AND EXPORTS AND POSITIVE RESULTS ARE ALREADY BEING ACHIEVED.
A REVOLUTIONARY NEW TROLLEY HAS BEEN DESIGNED FOR THE EUROPEAN MARKET AND THIS
WILL BE IN PRODUCTION IN THE FIRST QUARTER OF 1999. ACCEPTANCE BY EUROPEAN
SUPERMARKETS HAS BEEN FAVOURABLE AND FIRM ORDERS HAVE ALREADY BEEN SECURED.
FOLLOWING AN INTENSIVE MARKETING CAMPAIGN IN THE USA AND CANADA NEW TROLLEY
SALES HAVE BEEN GAINING MOMENTUM. SUPERCART NORTH AMERICA HAS RECENTLY BEEN
APPOINTED THE PREFERRED SUPPLIER OF TROLLEYS BY A MAJOR SUPERMARKET CHAIN.
RESEARCH HAS COMMENCED ON THE DESIGN OF A NEW TROLLEY TO SUIT THE UNIQUE
REQUIREMENTS OF THE UNITED STATES MARKET AND THIS SHOULD BE LAUNCHED IN THE
FIRST QUARTER OF 2000.
SUPERCART IS EXPECTED TO RETURN STRONGLY TO PROFITABILITY FROM MARCH 1999.
JOYTECH HOLDINGS LIMITED ("JOYTECH")
JOYTECH IS AN UNLISTED PUBLIC COMPANY IN THE LEISURE AND ENTERTAINMENT INDUSTRY
IN WHICH SHAREHOLDERS HAVE SUBSCRIBED R78 MILLION IN EQUITY. TREMATON INVESTED
IN JOYTECH IN MAY 1998 WHEN IT HAD 10 OUTLETS, TO FACILITATE ITS GROWTH PLANS.
PROFITS FOR THE 3 MONTHS TO AUGUST WERE AFFECTED BY THE COSTS OF ACQUISITION
AND INTEGRATION OF NEWLY ACQUIRED BUSINESSES AND CORPORATE OVERHEAD. BY YEAR
END JOYTECH HAD EXPANDED TO 20 FAMILY ENTERTAINMENT CENTRES IN GAUTENG AND
KWAZULU-NATAL WHICH TRADE UNDER THE NAMES OF JOYLAND, STARGAMES, WONDERLAND AND
TIME OUT.
JOYTECH HAS EMBARKED ON A PROGRAMME TO REFURBISH AND UPGRADE ITS SITES AND TO
ESTABLISH JOYLAND AS ITS MAJOR BRAND NAME. A NUMBER OF OPPORTUNITIES FOR THE
ESTABLISHMENT OF NEW SITES ARE BEING PURSUED. JOYTECH GENERATES STRONG CASH
FLOW, HAS NO DEBT AND IS WELL POSITIONED TO ACHIEVE ITS GROWTH OBJECTIVES
PRIOR TO A FUTURE JOHANNESBURG STOCK EXCHANGE LISTING.
TREMATON FINANCIAL SERVICES (PTY) LTD
TREMATON INITIATED ITS INVOLVEMENT IN FINANCIAL SERVICES IN A LIMITED WAY
THROUGH ADVISORY SERVICES, ASSET MANAGEMENT AND FINANCING. THE INCOME FROM
THESE ACTIVITIES WAS EQUAL TO THAT EARNED FROM PRIVATE EQUITY INVESTMENTS.
THESE ACTIVITIES WILL BE EXPANDED TO MAKE FINANCIAL SERVICES ONE OF THE CORE
ACTIVITIES OF THE GROUP.
THIS STRATEGY HAS LED TO THE ESTABLISHMENT OF TREGIA HOLDINGS (PTY) LTD, THE
HOLDING COMPANY OF TREMATON GLOBAL INVESTMENT SOLUTIONS (PTY) LTD ("TREMATON
GLOBAL") SINCE THE YEAR END. TREMATON HAS INVESTED R8,5 MILLION TO ACQUIRE A
75% STAKE IN TREMATON GLOBAL WHICH OPERATES AS A LINKED INVESTMENT SERVICE
PROVIDER. THE REMAINING 25% IS OWNED BY MANAGEMENT AND STAFF THE MAJORITY OF
WHOM ARE WELL EXPERIENCED IN THE INDUSTRY. TREMATON GLOBAL DISTRIBUTES
INVESTMENT PRODUCTS, MAINLY UNIT TRUSTS AT PRESENT, BUT IT IS INTENDED TO
BROADEN THE PRODUCT OFFERING BY ADDING A RANGE OF INNOVATIVE PRODUCTS. TREMATON
GLOBAL WILL ALSO HAVE THE CAPACITY TO DELIVER BANKING RELATED PRODUCTS TO
FINANCIAL ADVISORS. THE COMPANY HAS MADE A SIGNIFICANT INVESTMENT IN
INFORMATION TECHNOLOGY TO ACHIEVE SUPERIOR LEVELS OF SERVICE, COMMUNICATION AND
ADMINISTRATIVE SYSTEMS WHICH WILL ADD CONSIDERABLE VALUE TO FINANCIAL BROKERS
AND THEIR CLIENTS. OPERATIONS COMMENCED ON 1 NOVEMBER 1998.
OTHER FINANCIAL SERVICES ARE BEING DEVELOPED AND IT IS ANTICIPATED THAT THIS
DIVISION WILL BECOME A MAJOR CONTRIBUTOR TO TREMATON'S RESULTS IN FUTURE YEARS.
AN APPLICATION FOR A BANKING LICENCE IS UNDER CONSIDERATION BY THE SA RESERVE
BANK.
EVENTS AFTER YEAR-END
TREMATON TECHNOLOGIES (PTY) LIMITED
TREMATON TECHNOLOGIES HAS BEEN ESTABLISHED TO PROVIDE PRIVATE EQUITY AND OTHER
INVESTMENT OPPORTUNITIES IN THE INFORMATION TECHNOLOGY FIELD, TO ENSURE THE
GROWTH OF INFORMATION TECHNOLOGY COMPETENCE IN THE GROUP AND ULTIMATELY TO LIST
TREMATON TECHNOLOGIES.
TREMATON TECHNOLOGIES WAS FORMED WITH INITIAL SEED CAPITAL OF R10,0 MILLION OF
WHICH TREMATON CONTRIBUTED 80%. IT COMMENCED BUSINESS ON 1 OCTOBER 1998 AND A
NUMBER OF OPPORTUNITIES ARE BEING EVALUATED AT PRESENT. MR NEIL BUTCHER WHO
HOLDS THE OTHER 20% OF THE SHARES OF TREMATON TECHNOLOGIES, HAS BEEN APPOINTED
AS NON-EXECUTIVE CHAIRMAN AND MR RORY POTTAGE HAS JOINED THE COMPANY AS CHIEF
EXECUTIVE. BOTH HAVE HAD EXTENSIVE EXPERIENCE IN THE INFORMATION TECHNOLOGY
INDUSTRY.
UNISCHOOL (PTY) LIMITED
TREMATON ACQUIRED A 50% INTEREST IN UNISCHOOL FOR R7,0 MILLION WITH EFFECT FROM
1 SEPTEMBER 1998. UNISCHOOL WAS FORMED IN APRIL 1993 AND HAS GROWN TO BECOME
ONE OF THE MAJOR, PRIVATE COMPUTER LITERACY TRAINING BUSINESSES IN SOUTH
AFRICA. IT SPECIALISES IN THE PROVISION OF ENTRY LEVEL INFORMATION TECHNOLOGY
CURRICULA AND EDUCATION PROGRAMS AND SUPPLEMENTS THESE WITH MORE ADVANCED
TRAINING COURSES.
UNISCHOOL IS AFFILIATED TO LEADING SOUTH AFRICAN UNIVERSITIES WHO, TOGETHER
WITH NATIONAL STANDARDS BODIES HAVE ENDORSED UNISCHOOL COURSES. COURSES ARE RUN
IN ALL MAJOR CENTRES THROUGHOUT SOUTH AFRICA. UNISCHOOL'S YOUNG AND
ENTHUSIASTIC MANAGEMENT TEAM PLAN TO USE THE FUNDS INJECTED BY TREMATON TO
ACQUIRE SIMILAR TRAINING BUSINESSES AND DIVERSIFY INTO EMPLOYEE PLACEMENT AND
COMPLEMENTARY ACTIVITIES.
TREGIA HOLDINGS (PTY) LIMITED
TREMATON INVESTED R8,5 MILLION TO ACQUIRE 75% OF TREGIA IN OCTOBER 1998 AS IS
MORE FULLY SET OUT ABOVE.
PROSPECTS
FUTURE INVESTMENTS
CASH FUNDS ON HAND AT 31 AUGUST AMOUNTED TO R61,5 MILLION, OF WHICH
R23,8 MILLION HAS BEEN COMMITTED TO THE ABOVEMENTIONED NEW INVESTMENTS.
A NUMBER OF INVESTMENT OPPORTUNITIES ARE UNDER CONSIDERATION. AS THE GROUP
EXTENDS ITS FOCUS FROM PRIVATE EQUITY TO INVESTMENT BANKING AND FINANCIAL
SERVICES, IT IS LIKELY THAT THE MAJORITY OF FUTURE INVESTMENTS WILL BE IN THE
FINANCIAL AND INFORMATION TECHNOLOGY SECTORS.
EXISTING INVESTMENTS
TREMATON HAS A DIVERSE AND EXCITING PORTFOLIO OF INVESTMENTS IN DIFFERENT
STAGES OF DEVELOPMENT, ALL OF WHICH ENJOY MANAGEMENT TEAMS WHICH HAVE
STRONG LEADERSHIP AND ENTREPRENEURIAL FLAIR. TREMATON WORKS CLOSELY WITH THE
SHAREHOLDERS AND MANAGEMENT OF ITS ASSOCIATED COMPANIES TO IDENTIFY
OPPORTUNITIES FOR ORGANIC GROWTH, ACQUISITIONS AND ULTIMATELY A LISTING ON A
SUITABLE STOCK EXCHANGE. NO LISTINGS ARE SCHEDULED PRIOR TO THE NEXT INTERIM
REPORT, BUT A NUMBER OF ACQUISITION OPPORTUNITIES ARE UNDER DISCUSSION.
YEAR 2000
TREMATON AND ITS SUBSIDIARIES ARE FULLY YEAR 2000 COMPLIANT. MANAGEMENT OF
ASSOCIATED COMPANIES ARE AWARE OF THE NEED TO ENSURE THAT YEAR 2000 COMPLIANCE
IS ACHIEVED TIMEOUSLY. TREMATON WILL ENSURE THAT ALL ASSOCIATED COMPANIES
ALLOCATE SUFFICIENT RESOURCES TO ACHIEVE COMPLIANCE BY 31 AUGUST 1999.
DIVIDEND DECLARATION
A MAIDEN DIVIDEND OF 3 CENTS PER SHARE HAS BEEN DECLARED FOR THE YEAR.
NOTICE IS HEREBY GIVEN THAT DIVIDEND NUMBER 1 OF 3 CENTS PER SHARE HAS BEEN
DECLARED BY THE DIRECTORS IN RESPECT OF THE YEAR ENDED 31 AUGUST 1998, PAYABLE
TO SHAREHOLDERS REGISTERED IN THE BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS
ON FRIDAY, 11 DECEMBER 1998. PAYMENT WILL BE MADE ON OR ABOUT 18 DECEMBER 1998.
BY ORDER OF THE BOARD
S M HOLMES
SECRETARY
25 NOVEMBER 1998
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:
NA LABUSCHAGNE (CHAIRMAN), M FARRER, RB MCELLIGOTT, MG MEEHAN, RE SHERRELL.